Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | ||||
Dec. 31, 2012 | Feb. 11, 2013 | ||||
Document And Entity Information [Abstract] | |||||
Document Type | 10-Q | ||||
Amendment Flag | TRUE | ||||
Document Period End Date | 31-Dec-12 | ||||
Document Fiscal Year Focus | 2013 | ||||
Document Fiscal Period Focus | Q1 | ||||
Trading Symbol | BASI | ||||
Entity Registrant Name | BIOANALYTICAL SYSTEMS INC | ||||
Entity Central Index Key | 720154 | ||||
Current Fiscal Year End Date | -21 | ||||
Entity Filer Category | Smaller Reporting Company | ||||
Entity Common Stock, Shares Outstanding | 7,656,718 | ||||
Amendment Description | Explanatory Note | ||||
Bioanalytical Systems, Inc. ("we", "us", "our", or the "Company") is filing this Amended Quarterly Report on Form 10-Q/A (this "Amendment") to amend our Quarterly Report on Form 10-Q for the quarter ended December 31, 2012, originally filed with the Securities and Exchange Commission (the "SEC") on February 14, 2013 (the "Original Filing"). The Amendment restates our unaudited condensed consolidated financial statements and related disclosures for the three months ended December 31, 2011 and December 31, 2012. This Amendment also amends certain other Items in the Original Filing, as listed in "Items Amended in this Amendment" below, as a result of the restatement. Details of the impact of this restatement are discussed below and in Note 2 to the accompanying unaudited condensed consolidated financial statements and in Management's Discussion and Analysis of Financial Condition and Results of Operations. | |||||
Restatement Background | |||||
In August 2013, we announced a delay in filing our Form 10-Q for the three and nine months ended June 30, 2013 until management resolved a complex accounting issue related to the accounting treatment for our outstanding warrants. In the same month, we announced that investors should no longer rely upon our previously issued consolidated financial statements and the related independent auditors' reports for the fiscal years ended September 30, 2012 and September 30, 2011 or the quarterly financial statements for the first two quarters of fiscal 2013, or any earnings releases relating to these periods, because of errors in such financial statements. | |||||
As a result of the identification of such errors, we have undertaken a comprehensive review of our previously filed consolidated financial statements. We concluded that the warrants issued in connection with our public offering in May 2011 were incorrectly accounted for as equity and the fair value of those warrants should have been recorded as a liability. As a result, we have restated our previously reported consolidated financial statements for the years ended September 30, 2012 and 2011, as well as the condensed consolidated financial statements for the three months ended December 31, 2012. The restatement adjustments to the full fiscal years ended September 30, 2012 and 2011 are more fully described in Note 3 to the Consolidated Financial Statements in our Form 10-K/A for the year ended September 30, 2012, which was filed on the date hereof. | |||||
Internal Control Consideration | |||||
Our management has determined that there was a control deficiency in our internal control over financial reporting that constitutes a material weakness and has concluded that our disclosure controls and procedures were not effective as of December 31, 2012 as a result of the issues that resulted in the restatement of our financial statements for the period and as discussed in Part I - Item 4 of this Amendment. A material weakness is a control deficiency, or combination of control deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim condensed consolidated financial statements will not be prevented or detected on a timely basis. For a discussion of management's consideration of our disclosure controls and procedures, internal control over financial reporting and the material weakness identified, see Part I - Item 4 included in this Amendment. | |||||
Items Amended in This Amendment | |||||
For the convenience of the reader, this Amendment sets forth the Original Filing, in its entirety, as modified and superseded where necessary to reflect the restatement. The following items in the Original Filing have been amended as a result of, and to reflect, the restatement: | |||||
• | Part I - Item 1. Financial Statements; | ||||
• | Part I - Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations; and | ||||
• | Part I- Item 4. Controls and Procedures. | ||||
In accordance with applicable SEC rules, this Amendment includes new certifications required under the Securities and Exchange Act of 1934, as amended ("Exchange Act"), dated as of the filing date of this Amendment. | |||||
We have not updated items in this Amendment to reflect events occurring after the Original Filing date, other than those associated with the restatement of our financial statements. |
CONDENSED_CONSOLIDATED_BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) | Dec. 31, 2012 | Sep. 30, 2012 |
In Thousands, unless otherwise specified | ||
Current assets: | ||
Cash and cash equivalents | $670 | $721 |
Accounts receivable | ||
Trade | 2,002 | 3,366 |
Unbilled revenues and other | 898 | 921 |
Inventories | 1,703 | 1,656 |
Prepaid expenses | 179 | 228 |
Total current assets | 5,452 | 6,892 |
Property and equipment, net | 18,167 | 18,628 |
Goodwill | 1,383 | 1,383 |
Debt issue costs | 10 | 18 |
Other assets | 52 | 54 |
Total assets | 25,064 | 26,975 |
Current liabilities: | ||
Accounts payable | 3,996 | 3,934 |
Accrued expenses | 1,285 | 2,067 |
Customer advances | 2,327 | 3,012 |
Income tax accruals | 17 | 17 |
Revolving line of credit | 962 | 1,444 |
Fair value of warrant liability | 1,096 | 1,213 |
Current portion of capital lease obligation | 280 | 330 |
Current portion of long-term debt | 5,676 | 583 |
Total current liabilities | 15,639 | 12,600 |
Capital lease obligation, less current portion | 689 | 739 |
Long-term debt, less current portion | 5,259 | |
Shareholders' equity: | ||
Preferred shares, authorized 1,000,000 shares, no par value: 1,335 Series A shares at $1,000 stated value issued and outstanding at December 31, 2012 and at September 30, 2012 | 1,335 | 1,335 |
Common shares, no par value: Authorized 19,000,000 shares; 7,656,718 issued and outstanding at December 31, 2012 and 7,638,738 at September 30, 2012 | 1,876 | 1,871 |
Additional paid-in capital | 19,725 | 19,635 |
Accumulated deficit | -14,237 | -14,493 |
Accumulated other comprehensive income | 37 | 29 |
Total shareholders' equity | 8,736 | 8,377 |
Total liabilities and shareholders' equity | 25,064 | 26,975 |
Series A Preferred Stock [Member] | ||
Shareholders' equity: | ||
Preferred shares, authorized 1,000,000 shares, no par value: 1,335 Series A shares at $1,000 stated value issued and outstanding at December 31, 2012 and at September 30, 2012 | $1,335 | $1,335 |
CONDENSED_CONSOLIDATED_BALANCE1
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Dec. 31, 2012 | Sep. 30, 2012 |
Common stock, no par value | ||
Common stock, shares authorized | 19,000,000 | 19,000,000 |
Common stock, shares issued | 7,656,718 | 7,638,738 |
Common stock, shares outstanding | 7,656,718 | 7,638,738 |
Series A Preferred Stock [Member] | ||
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, no par value | ||
Preferred stock, shares issued | 1,335 | 1,335 |
Preferred stock, shares outstanding | 1,335 | 1,335 |
Preferred stock, stated value per share | $1,000 | $1,000 |
CONDENSED_CONSOLIDATED_STATEME
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (USD $) | 3 Months Ended | |
In Thousands, except Per Share data, unless otherwise specified | Dec. 31, 2012 | Dec. 31, 2011 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND CONPREHENSIVE INCOME [Abstract] | ||
Service revenue | $4,670 | $5,611 |
Product revenue | 1,133 | 1,905 |
Total revenue | 5,803 | 7,516 |
Cost of service revenue | 3,382 | 5,256 |
Cost of product revenue | 566 | 778 |
Total cost of revenue | 3,948 | 6,034 |
Gross profit | 1,855 | 1,482 |
Operating expenses: | ||
Selling | 370 | 998 |
Research and development | 85 | 178 |
General and administrative | 1,098 | 1,608 |
Total operating expenses | 1,553 | 2,784 |
Restructuring charges | ||
Operating income (loss) | 302 | -1,302 |
Interest expense | -165 | -189 |
Change in fair value of warrant liability - (increase) decrease | 117 | -56 |
Other income | 2 | |
Income (loss) before income taxes | 256 | -1,547 |
Income tax expense | ||
Net income (loss) | 256 | -1,547 |
Other comprehensive income (loss): | ||
Foreign currency translation adjustment | 8 | -1 |
Comprehensive income (loss) | $264 | ($1,548) |
Basic net income (loss) per share | $0.03 | ($0.22) |
Diluted net income (loss) per share | $0.03 | ($0.22) |
Weighted common shares outstanding: | ||
Basic | 7,639 | 6,946 |
Diluted | 8,406 | 6,946 |
CONDENSED_CONSOLIDATED_STATEME1
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2012 | Dec. 31, 2011 |
Operating activities: | ||
Net income (loss) applicable to common shareholders | $256 | ($1,547) |
Adjustments to reconcile net income (loss) to net cash (used) provided by operating activities: | ||
Depreciation and amortization | 473 | 551 |
Change in fair value of warrant liability - increase (decrease) | -117 | 56 |
Employee stock compensation expense | 74 | 47 |
Provision for doubtful accounts | -26 | 3 |
Loss on sale of property and equipment | 2 | 2 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 1,413 | 570 |
Inventories | -47 | -226 |
Refundable income taxes | -46 | |
Prepaid expenses and other assets | 59 | 110 |
Accounts payable | 82 | 911 |
Accrued expenses | -782 | 139 |
Customer advances | -685 | 20 |
Net cash provided by operating activities | 702 | 590 |
Investing activities: | ||
Capital expenditures | -10 | -712 |
Net cash used by investing activities | -10 | -712 |
Financing activities: | ||
Payments of long-term debt | -166 | -188 |
Payments on revolving line of credit | -6,118 | -7,612 |
Borrowings on revolving line of credit | 5,636 | 7,519 |
Payments on capital lease obligations | -100 | -151 |
Net cash used by financing activities | -748 | -432 |
Effect of exchange rate changes | 5 | 3 |
Net decrease in cash and cash equivalents | -51 | -551 |
Cash and cash equivalents at beginning of period | 721 | 2,963 |
Cash and cash equivalents at end of period | $670 | $2,412 |
DESCRIPTION_OF_THE_BUSINESS
DESCRIPTION OF THE BUSINESS | 3 Months Ended | ||
Dec. 31, 2012 | |||
DESCRIPTION OF THE BUSINESS [Abstract] | |||
DESCRIPTION OF THE BUSINESS | 1 | DESCRIPTION OF THE BUSINESS AND BASIS OF PRESENTATION | |
Bioanalytical Systems, Inc. and its subsidiaries ("We," the "Company" or "BASi") engage in contract laboratory research services and other services related to pharmaceutical development. We also manufacture scientific instruments for life sciences research, which we sell with related software for use in industrial, governmental and academic laboratories. Our customers are located throughout the world. | |||
We have prepared the accompanying unaudited interim condensed consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") regarding interim financial reporting. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles ("GAAP"), and therefore should be read in conjunction with our audited consolidated financial statements, and the notes thereto, for the year ended September 30, 2012. In the opinion of management, the condensed consolidated financial statements for the three months ended December 31, 2012 and 2011 include all adjustments which are necessary for a fair presentation of the results of the interim periods and of our financial position at December 31, 2012. The results of operations for the three months ended December 31, 2012 are not necessarily indicative of the results for the year ending September 30, 2013. |
RESTATEMENT_OF_PREVIOUSLY_ISSU
RESTATEMENT OF PREVIOUSLY ISSUED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS | 3 Months Ended | ||||||||||||||||||||||||
Dec. 31, 2012 | |||||||||||||||||||||||||
RESTATEMENT OF PREVIOUSLY ISSUED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS [Abstract] | |||||||||||||||||||||||||
RESTATEMENT OF PREVIOUSLY ISSUED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS | 2 | RESTATEMENT OF PREVIOUSLY ISSUED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS | |||||||||||||||||||||||
In August 2013, we announced a delay in filing our Form 10-Q for the three and nine months ended June 30, 2013 until management resolved a complex accounting issue related to the accounting treatment for our outstanding warrants. In the same month, we announced that investors should no longer rely upon our previously issued consolidated financial statements and the independent auditors' reports thereon for the fiscal years ended September 30, 2012 and 2011 or the quarterly financial statements for the first two quarters of fiscal 2013, or any earnings releases relating to these periods, because of errors in such financial statements. | |||||||||||||||||||||||||
As a result of the identification of such errors, we have undertaken a comprehensive review of our previously filed consolidated financial statements. We concluded that the warrants issued in connection with our public offering in May 2011 were incorrectly accounted for as equity and should have been recorded as a liability. As a result, we have restated our previously reported consolidated financial statements for the years ended September 30, 2012 and 2011 as well as the condensed consolidated financial statements for three months ended December 31, 2012. The restatement adjustments to the full fiscal years ended September 30, 2012 and 2011 are more fully described in Note 3 to the Consolidated Financial Statements in our Form 10-K/A for the year ended September 30, 2012. | |||||||||||||||||||||||||
As of December 31, 2012 and September 30, 2012, respectively, the restatement adjustments resulted in a cumulative net decrease to total shareholders' equity of $1,096 and $1,213. As a result of the adjustments, we reported an increase of $117 in previously reported net income for the three months ended December 31, 2012 and an increase of $56 to previously reported net loss for the three months ended December 31, 2011. The changes in net income (loss) were a result of the changes in the fair value of the warrant liability that are now correctly recorded in other income as a change in the fair value of the liability. Except as otherwise specified, all information presented in the accompanying condensed consolidated financial statements and the related notes are presented after inclusion of all such adjustments. There was no net effect on the consolidated statements of cash flows for the three months ended December 31, 2012 and 2011, respectively, as the change in the fair value of the warrant liability is a non-cash item. | |||||||||||||||||||||||||
The following table summarizes the effects of the restatement adjustments, previously discussed, on the consolidated statements of operations and comprehensive income (loss) items for the three months ended December 31: | |||||||||||||||||||||||||
2012 | 2011 | ||||||||||||||||||||||||
As Reported | Adjustment | Restated | As Reported | Adjustment | Restated | ||||||||||||||||||||
Total revenue | $ | 5,803 | $ | - | $ | 5,803 | $ | 7,516 | $ | - | $ | 7,516 | |||||||||||||
Total cost of revenue | 3,948 | - | 3,948 | 6,034 | - | 6,034 | |||||||||||||||||||
Gross profit | 1,855 | - | 1,855 | 1,482 | - | 1,482 | |||||||||||||||||||
Total operating expenses | 1,553 | - | 1,553 | 2,784 | - | 2,784 | |||||||||||||||||||
Operating income (loss) | 302 | - | 302 | (1,302 | ) | - | (1,302 | ) | |||||||||||||||||
Interest expense | (165 | ) | - | (165 | ) | (189 | ) | - | (189 | ) | |||||||||||||||
Change in fair value of warrant liability - (increase) decrease | - | 117 | 117 | - | (56 | ) | (56 | ) | |||||||||||||||||
Other income | 2 | - | 2 | - | - | - | |||||||||||||||||||
Income (loss) before income taxes | 139 | 117 | 256 | (1,491 | ) | (56 | ) | (1,547 | ) | ||||||||||||||||
Income tax expense | - | - | - | - | - | ||||||||||||||||||||
Net income (loss) | 139 | 117 | 256 | (1,491 | ) | (56 | ) | (1,547 | ) | ||||||||||||||||
Other comprehensive income (loss): | |||||||||||||||||||||||||
Foreign currency translation adjustment | 8 | - | 8 | (1 | ) | - | (1 | ) | |||||||||||||||||
Comprehensive income (loss) | $ | 147 | $ | 117 | $ | 264 | $ | (1,492 | ) | $ | (56 | ) | $ | (1,548 | ) | ||||||||||
Basic EPS | $ | 0.02 | $ | 0.01 | $ | 0.03 | $ | (0.21 | ) | $ | (0.01 | ) | $ | (0.22 | ) | ||||||||||
Diluted EPS | $ | 0.02 | $ | 0.01 | $ | 0.03 | $ | (0.21 | ) | $ | (0.01 | ) | $ | (0.22 | ) | ||||||||||
The following table summarizes the effects of the restatement adjustments, previously discussed, on the consolidated balance sheet items as of December 31, 2012 and September 30, 2012: | |||||||||||||||||||||||||
31-Dec-12 | 30-Sep-12 | ||||||||||||||||||||||||
As Reported | Adjustment | Restated | As Reported | Adjustment | Restated | ||||||||||||||||||||
Total assets | $ | 25,064 | $ | - | $ | 25,064 | $ | 26,975 | $ | - | $ | 26,975 | |||||||||||||
Total other current liabilities | 14,543 | - | 14,543 | 11,387 | - | 11,387 | |||||||||||||||||||
Fair value of warrant liability | - | 1,096 | 1,096 | - | 1,213 | 1,213 | |||||||||||||||||||
Total current liabilities | 14,543 | 1,096 | 15,639 | 11,387 | 1,213 | 12,600 | |||||||||||||||||||
Other long-term debt | 689 | - | 689 | 5,998 | - | 5,998 | |||||||||||||||||||
Total liabilities | 15,232 | 1,096 | 16,328 | 17,385 | 1,213 | 18,598 | |||||||||||||||||||
Shareholders' equity: | |||||||||||||||||||||||||
Preferred Shares | 1,335 | - | 1,335 | 1,335 | - | 1,335 | |||||||||||||||||||
Common Shares | 1,876 | - | 1,876 | 1,871 | - | 1,871 | |||||||||||||||||||
Additional paid-in capital | 20,541 | (816 | ) | 19,725 | 20,451 | (816 | ) | 19,635 | |||||||||||||||||
Accumulated deficit | (13,957 | ) | (280 | ) | (14,237 | ) | (14,096 | ) | (397 | ) | (14,493 | ) | |||||||||||||
Accumulated other comprehensive income | 37 | - | 37 | 29 | 29 | ||||||||||||||||||||
Total shareholders' equity | 9,832 | (1,096 | ) | 8,736 | 9,590 | (1,213 | ) | 8,377 | |||||||||||||||||
Total liabilities and shareholders' equity | $ | 25,064 | $ | - | $ | 25,064 | $ | 26,975 | $ | - | $ | 26,975 |
STOCKBASED_COMPENSATION
STOCK-BASED COMPENSATION | 3 Months Ended | ||||||||||||
Dec. 31, 2012 | |||||||||||||
STOCK-BASED COMPENSATION [Abstract] | |||||||||||||
STOCK-BASED COMPENSATON | 3 | STOCK-BASED COMPENSATION | |||||||||||
The 2008 Stock Option Plan ("the Plan") is used to promote our long-term interests by providing a means of attracting and retaining officers, directors and key employees and aligning their interests with those of our shareholders. The Plan is described more fully in Note 10 in the Notes to the Consolidated Financial Statements in our Form 10-K/A for the year ended September 30, 2012. All options granted under the Plan had an exercise price equal to the market value of the underlying common shares on the date of grant. We expense the estimated fair value of stock options over the vesting periods of the grants. We recognize expense for awards subject to graded vesting using the straight-line attribution method, reduced for estimated forfeitures. Forfeitures are revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates and an adjustment is recognized at that time. The Compensation Committee may also issue non-qualified stock option grants with vesting periods different from the 2008 Plan. As of December 31, 2012, there are 125 shares outstanding that were granted outside of the Plan. The assumptions used are detailed in Note 10 to the Consolidated Financial Statements in our Form 10-K/A for the year ended September 30, 2012. Stock based compensation expense for the three months ended December 31, 2012 and 2011 was $74 and $47, respectively. | |||||||||||||
A summary of our stock option activity for the three months ended December 31, 2012 is as follows (in thousands except for share prices): | |||||||||||||
Options | Weighted- | Weighted- | |||||||||||
(shares) | Average | Average | |||||||||||
Exercise Price | Grant Date | ||||||||||||
Fair Value | |||||||||||||
Outstanding - October 1, 2012 | 354 | $ | 1.99 | $ | 1.46 | ||||||||
Exercised | - | - | - | ||||||||||
Granted | 50 | 1.32 | 1.09 | ||||||||||
Terminated | (10 | ) | 1.01 | ||||||||||
Outstanding - December 31, 2012 | 394 | $ | 1.93 | $ | 1.43 |
INCOME_LOSS_PER_SHARE
INCOME (LOSS) PER SHARE | 3 Months Ended | ||||||||
Dec. 31, 2012 | |||||||||
INCOME (LOSS) PER SHARE [Abstract] | |||||||||
INCOME (LOSS) PER SHARE | 4 | INCOME (LOSS) PER SHARE | |||||||
We compute basic income (loss) per share using the weighted average number of common shares outstanding. | |||||||||
The Company has three categories of dilutive potential common shares: the Series A preferred shares issued in May 2011 in connection with the registered direct offering, the Warrants issued in connection with the same offering in May 2011, and shares issuable upon exercise of options. We compute diluted earnings per share using the if-converted method for preferred stock and the treasury stock method for stock options and warrants. Shares issuable upon exercise of options were not considered in computing diluted earnings per share for the quarters ended December 31, 2012 and 2011, respectively, because they were anti-dilutive. Warrants for 1,377 common shares were not considered in computing diluted earnings per share for the quarter ended December 31, 2012 because they were anti-dilutive. Warrants for 2,753 common shares and 1,068 common shares issuable upon conversion of preferred shares were not considered in computing diluted earnings per share for the quarter ended December 31, 2011 because they were also anti-dilutive. | |||||||||
The following table reconciles our computation of basic income (loss) per share to diluted income (loss) per share: | |||||||||
Three Months Ended | |||||||||
December 31, | |||||||||
2012 | 2011 | ||||||||
(Restated) | (Restated) | ||||||||
Basic net income (loss) per share: | |||||||||
Net income (loss) applicable to common shareholders | $ | 256 | $ | (1,547 | ) | ||||
Weighted average common shares outstanding | 7,639 | 6,946 | |||||||
Basic net income (loss) per share | $ | 0.03 | $ | (0.22 | ) | ||||
Diluted net income (loss) per share: | |||||||||
Diluted net income (loss) applicable to common shareholders | $ | 256 | $ | (1,547 | ) | ||||
Weighted average common shares outstanding | 7,639 | 6,946 | |||||||
Plus: Incremental shares from assumed conversions | |||||||||
Series A preferred shares | 767 | - | |||||||
Diluted weighted average common shares outstanding | 8,406 | 6,946 | |||||||
Diluted net income (loss) per share | $ | 0.03 | $ | (0.22 | ) |
INVENTORIES
INVENTORIES | 3 Months Ended | ||||||||
Dec. 31, 2012 | |||||||||
INVENTORIES [Abstract] | |||||||||
INVENTORIES | 5 | INVENTORIES | |||||||
Inventories consisted of the following: | |||||||||
December 31, | September 30, | ||||||||
2012 | 2012 | ||||||||
Raw materials | $ | 1,407 | $ | 1,407 | |||||
Work in progress | 349 | 283 | |||||||
Finished goods | 257 | 276 | |||||||
$ | 2,013 | $ | 1,966 | ||||||
Obsolescence reserve | (310 | ) | (310 | ) | |||||
$ | 1,703 | $ | 1,656 |
SEGMENT_INFORMATION
SEGMENT INFORMATION | 3 Months Ended | ||||||||
Dec. 31, 2012 | |||||||||
SEGMENT INFORMATION [Abstract] | |||||||||
SEGMENT INFORMATION | 6 | SEGMENT INFORMATION | |||||||
We operate in two principal segments - research services and research products. Our Services segment provides research and development support on a contract basis directly to pharmaceutical companies. Our Products segment provides liquid chromatography, electrochemical and physiological monitoring products to pharmaceutical companies, universities, government research centers and medical research institutions. Our accounting policies in these segments are the same as those described in the summary of significant accounting policies found in Note 2 to Consolidated Financial Statements in our annual report on Form 10-K/A for the year ended September 30, 2012. | |||||||||
Three Months Ended December 31, | |||||||||
2012 | 2011 | ||||||||
(Restated) | (Restated) | ||||||||
Revenue: | |||||||||
Service | $ | 4,670 | $ | 5,611 | |||||
Product | 1,133 | 1,905 | |||||||
$ | 5,803 | $ | 7,516 | ||||||
Operating income (loss): | |||||||||
Service | $ | 199 | $ | (1,266 | ) | ||||
Product | 103 | (36 | ) | ||||||
$ | 302 | $ | (1,302 | ) | |||||
Interest Expense | (165 | ) | (189 | ) | |||||
Change in fair value of warrant liability - (increase) decrease | 117 | (56 | ) | ||||||
Other income | 2 | - | |||||||
Income (loss) before income taxes | $ | 256 | $ | (1,547 | ) |
INCOME_TAXES
INCOME TAXES | 3 Months Ended | ||
Dec. 31, 2012 | |||
INCOME TAXES [Abstract] | |||
INCOME TAXES | 7 | INCOME TAXES | |
We use the asset and liability method of accounting for income taxes. We recognize deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. We measure deferred tax assets and liabilities using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. We recognize the effect on deferred tax assets and liabilities of a change in tax rates in income in the period that includes the enactment date. We record valuation allowances based on a determination of the expected realization of tax assets. | |||
We recognize the tax benefit from an uncertain tax position only if it is more likely than not to be sustained upon examination based on the technical merits of the position. We measure the amount of the accrual for which an exposure exists as the largest amount of benefit determined on a cumulative probability basis that we believe is more likely than not to be realized upon ultimate settlement of the position. | |||
At December 31, 2012 and September 30, 2012, we had a $16 liability for uncertain income tax positions. | |||
We record interest and penalties accrued in relation to uncertain income tax positions as a component of income tax expense. Any changes in the liability for uncertain tax positions would impact our effective tax rate. We do not expect the total amount of unrecognized tax benefits to significantly change in the next twelve months. | |||
We file income tax returns in the U.S., several U.S. States, and the United Kingdom. We remain subject to examination by taxing authorities in the jurisdictions in which we have filed returns for years after 2008. |
DEBT
DEBT | 3 Months Ended | |
Dec. 31, 2012 | ||
DEBT [Abstract] | ||
DEBT | 8 | DEBT |
Mortgages and note payable | ||
We have a term loan from Regions Bank ("Regions") aggregating approximately $5,676 at December 31, 2012, which is secured by mortgages on our facilities in West Lafayette and Evansville, Indiana. | ||
On November 29, 2010, we executed amendments on two loans with Regions. As part of the amendments, we agreed to a $500 principal payment on one of the loans and a $500 principal payment on the other loan in exchange for certain modifications to the financial covenants in the loan agreements described below. The principal payments were made on December 17, 2010 and February 11, 2011, respectively. Upon receipt of these two payments, Regions incorporated the two loans into a replacement note payable for $1,341 maturing on November 1, 2012. The replacement note payable bore interest at a per annum rate equal to the 30-day LIBOR plus 300 basis points (minimum of 4.5%) with monthly principal payments of approximately $14 plus interest. The replacement note payable was secured by real estate at our West Lafayette and Evansville, Indiana locations. | ||
As part of the amendment, Regions also agreed to amend the loan covenants for the related debt to be more favorable to us. Regions requires us to maintain a fixed charge coverage ratio of not less than 1.25 to 1.00 and a total liabilities to tangible net worth ratio of not greater than 2.10 to 1.00. | ||
On November 9, 2012, we executed a sixth amendment with Regions which we further modified on December 21, 2012. In the sixth amendment, Regions agreed to extend the term loan and mortgage loan maturity dates to October 31, 2013. The unpaid principal on the notes was incorporated into a replacement note payable for $5,786 bearing interest at LIBOR plus 400 basis points (minimum of 6.0%) with monthly principal payments of approximately $47 plus interest. The replacement note payable is secured by real estate at our West Lafayette and Evansville, Indiana locations. At December 31, 2012, the replacement note payable had a balance of $5,676. | ||
At December 31, 2012 on a restated basis, we were in compliance with the fixed charge coverage, but out of compliance with the total liabilities to tangible net worth ratios in the Regions agreements. Due to the reclassification of the Class A Warrants to a liability from equity as described in Note 2, we expect to be out of compliance with the total liabilities to tangible net worth ratio for our second fiscal quarter of 2013. On September 10, 2013, Regions waived compliance with the total liabilities to tangible net worth ratio for the current quarter and for our expected breach for our second fiscal quarter. Failure to comply with those covenants in future quarters would be a default under the Regions loans, requiring us to negotiate with Regions regarding loan modifications or waivers. If we are unable to obtain such modifications or waivers, Regions could accelerate the maturity of the loans and cause a cross default with our other lender. | ||
The Regions loan agreements both contain cross-default provisions with each other and with the revolving line of credit with Entrepreneur Growth Capital LLC ("EGC") described below. | ||
The replacement note payable with Regions matures in the first quarter of fiscal 2014. We intend to refinance the amounts in lieu of making balloon payments for the remaining principal balances or sell the building in West Lafayette, Indiana. On July 12, 2012, we listed for sale our 7.25 acres and 120,000 square foot facility at 2701 Kent Avenue, West Lafayette, Indiana with the intent to leaseback 80% of that square footage in which to continue our laboratory and manufacturing operations. The asking price was $12,500. We performed an impairment analysis on the building when we listed it for sale, but noted no impairment necessary. As of December 31, 2012, the net book value of the facility and land was $9,481. | ||
We may be unsuccessful in renegotiating the terms of the debt or those terms may be unfavorable to us. For these reasons, if we are unsuccessful at refinancing our long-term debt, our operating results and financial condition could be adversely affected. | ||
Revolving Line of Credit | ||
We have a $3,000 revolving line of credit agreement ("Credit Agreement") with EGC. The term of the Credit Agreement expires on January 31, 2014. If we terminate prior to the expiration of the term, then we are subject to an early termination fee equal to the minimum interest charge of $15 for each of the months remaining until expiration. | ||
Borrowings under the Credit Agreement bear interest at an annual rate equal to Citibank's Prime Rate plus five percent (5%), or 8.25% as of December 31, 2012, with minimum monthly interest of $15. Interest is paid monthly. The line of credit also carries an annual facilities fee of 2% and a 0.2% collateral monitoring fee. Borrowings under the Credit Agreement are secured by a blanket lien on our personal property, including certain eligible accounts receivable, inventory, and intellectual property assets, a second mortgage on our West Lafayette and Evansville real estate and all common stock of our U.S. subsidiaries and 65% of the common stock of our non-United States subsidiary. Borrowings are calculated based on 75% of eligible accounts receivable. Under the Credit Agreement, the Company has agreed to restrict advances to subsidiaries, limit additional indebtedness and capital expenditures and maintain a minimum tangible net worth of at least $8,500. Pursuant to the terms of the Credit Agreement, the line of credit will automatically renew on January 31, 2014 unless either party gives a 60-day notice of intent to terminate or withdraw. | ||
On December 21, 2012, we negotiated an amendment to this Credit Agreement. The amendment reduced the minimum tangible net worth covenant requirement from $8,500 to $8,000, effective on January 1, 2013, and waived all non-compliances with this covenant through December 31, 2012. | ||
The Credit Agreement also contains cross-default provisions with the Regions loans and any future EGC loans. At December 31, 2012, we were not in compliance with the minimum tangible net worth covenant requirement, which was waived by EGC as part of the amendment. Based on the reclassification of the Class A Warrants to a liability from equity as discussed in Note 2, we expect to be in breach of the tangible net worth covenant for the second and third fiscal quarters of 2013. On October 9, 2013, EGC waived compliance with the tangible net worth covenant for our expected breach for the second and third fiscal quarters of fiscal 2013. | ||
At December 31, 2012, we had available borrowing capacity of $1,302 on this line, of which $962 was outstanding. | ||
Settlement of Contingent Liability | ||
In June of 2008, as part of selling our Baltimore Clinical Pharmacology Research Unit, we subleased the building space it occupied to the purchaser of the assets. We remained contingently liable for the rent payments of $800 per year through 2015 in the event the sublessor did not perform. In 2009, the purchaser ceased operations in Baltimore and sought to renegotiate the terms of its sublease. In March of 2010, a settlement was reached with the landlord of the building which canceled the sublessor's and our obligations under the lease in exchange for a cash payment from the sublessor. We agreed to contribute $250 to the settlement, payable in twenty-five monthly installments of $10 without interest. We recorded the discounted liability of $216 in March 2010 and recognized the related expense in general and administrative expenses. In May 2012, we made the final payment and extinguished the liability. |
RESTRUCTURING
RESTRUCTURING | 3 Months Ended | ||||||||||||||||||||
Dec. 31, 2012 | |||||||||||||||||||||
RESTRUCTURING [Abstract] | |||||||||||||||||||||
RESTRUCTURING | 9 | RESTRUCTURING | |||||||||||||||||||
In March 2012, we announced a plan to restructure our bioanalytical laboratory operations. We consolidated our laboratory in McMinnville, Oregon into our 120,000 square foot headquarters facility in West Lafayette, Indiana. This plan was implemented to reduce operating costs and strengthen our ability to meet clients' needs by improving laboratory utilization. In the fourth fiscal quarter of 2012, we decided to initiate closure of our facility and bioanalytical laboratory in Warwickshire, United Kingdom after careful evaluation of its financial performance and analysis of our strategic alternatives. We will continue to sell our products globally while further consolidating delivery of our CRO services into our Indiana locations. As part of the overall evaluation of our business, personnel reductions in the Selling, R&D and General and Administrative functions were also implemented at both of our Indiana locations during the second half of fiscal 2012. In total, 74 employees were terminated as part of the restructuring activities in fiscal 2012. | |||||||||||||||||||||
We have reserved for lease payments at the UK location as of the cease use date and have considered free rent, sublease rentals and the number of days it would take to restore the space to its original condition prior to our improvements. In the first fiscal quarter of 2013, we began amortizing into normal operating income, equally through the cease use date, the estimated rent income of $200K from the prior fiscal year. Based on these, we have $818 reserved for UK lease related costs. | |||||||||||||||||||||
The following table sets forth the rollforward of the restructuring activity for the three months ended December 31, 2012. | |||||||||||||||||||||
Balance, | Total | Cash | Other | Balance, | |||||||||||||||||
September 30, | Charges | Payments | December 31, | ||||||||||||||||||
2012 | 2012 | ||||||||||||||||||||
One-time termination benefits | $ | 448 | $ | - | $ | (398 | ) | $ | - | $ | 50 | ||||||||||
Lease related costs | 800 | - | - | 18 | 818 | ||||||||||||||||
Equipment moving costs and method transfers | 49 | - | (49 | ) | - | - | |||||||||||||||
Travel and relocation costs | 4 | - | (4 | ) | - | - | |||||||||||||||
Loss on sale of equipment | (93 | ) | - | - | 21 | (72 | ) | ||||||||||||||
Other costs | 197 | - | (42 | ) | - | 155 | |||||||||||||||
Total | $ | 1,405 | $ | - | $ | (493 | ) | $ | 39 | $ | 951 | ||||||||||
Other costs include legal and professional fees and other costs incurred in connection with transitioning services from sites being closed as well as costs incurred to remove improvements previously made to the UK facility. Other activity in the reserve rollforward primarily reflects a receivable for settlement of the capital lease in the UK. |
FAIR_VALUE_OF_FINANCIAL_INSTRU
FAIR VALUE OF FINANCIAL INSTRUMENTS | 3 Months Ended | ||||||||
Dec. 31, 2012 | |||||||||
FAIR VALUE OF FINANCIAL INSTRUMENTS [Abstract] | |||||||||
FAIR VALUE OF FINANCIAL INSTRUMENTS | 10 | FAIR VALUE OF FINANCIAL INSTRUMENTS | |||||||
The carrying amounts for cash and cash equivalents, accounts receivable, inventories, prepaid expenses and other assets, accounts payable and other accruals approximate their fair values because of their nature and respective duration. The fair value of the revolving credit facility and certain long-term debt is equal to their carrying values due to the variable nature of their interest rates. Our long-term fixed rate debt was initiated in February 2011 and renewed on November 1, 2012. | |||||||||
We have Class A and B Warrants from the May 2011 offering that are measured at fair value on a recurring basis. We recorded these warrants as a liability determining the fair value at inception on May 11, 2011. Subsequent quarterly fair value measurements, using the Black Scholes model which is considered a level 2 measurement under ASC 820-10, are calculated with changes charged to the statement of operations and comprehensive income (loss)as other income (expense) labeled change in fair value of warrant liability. Class B Warrants expired in May 2012 and the liability was reduced to zero. The assumptions used to compute the fair value of the warrants at December 31, 2012 and September 30, 2012 were as follows: | |||||||||
31-Dec-12 | 30-Sep-12 | ||||||||
Warrant A | Warrant A | ||||||||
Risk-free interest rate | 0.43 | % | 0.41 | % | |||||
Dividend yield | 0 | % | 0 | % | |||||
Volatility of the Company's common stock | 102.4 | % | 117.3 | % | |||||
Expected life of the options (years) | 3.4 | 3.6 | |||||||
Fair value per unit | $ | 0.796 | $ | 0.881 |
MANAGEMENTS_PLAN
MANAGEMENT'S PLAN | 3 Months Ended | |
Dec. 31, 2012 | ||
MANAGEMENT'S PLAN [Abstract] | ||
MANAGEMENT'S PLAN | 11 | MANAGEMENT'S PLAN |
Our long-term strategic objective is to maximize the Company's intrinsic value per share. However, in response to our financial performance through the second quarter of fiscal 2012, we began to operate the business in a manner designed to place more emphasis on cash flow generation. Thus, our short-term tactical objective is to maximize free cash flow from operating activities. | ||
During the first fiscal quarter of 2013, revenues declined approximately 22.8%, but gross margin improved 25.2% from the first fiscal quarter of 2012. We reported a positive net operating income for the first fiscal quarter of 2013. We also generated $702 in cash from operations and maintained strict controls on expenditures. | ||
We negotiated an amendment to our loans with Regions Bank, extending the maturity date to October 2013. Our line of credit with Entrepreneur Growth Capital LLC was renewed for another year. Further, we listed for sale our headquarters facility in West Lafayette, Indiana with the intent to leaseback 80% of that square footage in which to continue our laboratory and manufacturing operations. Proceeds from this transaction would be used to pay down our debt. | ||
For the remainder of fiscal 2013, we will continue to assess the need for additional cost controls such as freezing non-essential capital expenditures, reducing non-essential expenses, and monitoring our operations for efficiencies to further reduce our break-even point. For the remainder of fiscal 2013, we expect to see slow but continued improvement in the volume of new bookings with little improvement in pricing. We also expect improved gross profit margins from fiscal 2012 due to cost controls implemented and restructuring activities. We have debt and lease obligations of approximately $6.0 million due in the next twelve months through December 2013, including $5.7 million for the Regions loans. Based on our expected revenue, the availability on our line of credit, the impact of the cost reductions implemented and restructuring activities during fiscal 2012, we project that we will have the liquidity required to meet our fiscal 2013 operations and debt obligations. If we are unable to refinance our debt or enter into a sale-leaseback for the building in West Lafayette, we may not have sufficient liquidity to meet our debt obligations coming due in October 2013 and be able to continue our business. |
RESTATEMENT_OF_PREVIOUSLY_ISSU1
RESTATEMENT OF PREVIOUSLY ISSUED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Tables) | 3 Months Ended | ||||||||||||||||||||||||
Dec. 31, 2012 | |||||||||||||||||||||||||
RESTATEMENT OF PREVIOUSLY ISSUED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS [Abstract] | |||||||||||||||||||||||||
Schedule of Effects of Restatement Adjustments | The following table summarizes the effects of the restatement adjustments, previously discussed, on the consolidated statements of operations items for the three months ended December 31: | ||||||||||||||||||||||||
2012 | 2011 | ||||||||||||||||||||||||
As Reported | Adjustment | Restated | As Reported | Adjustment | Restated | ||||||||||||||||||||
Total revenue | $ | 5,803 | $ | - | $ | 5,803 | $ | 7,516 | $ | - | $ | 7,516 | |||||||||||||
Total cost of revenue | 3,948 | - | 3,948 | 6,034 | - | 6,034 | |||||||||||||||||||
Gross profit | 1,855 | - | 1,855 | 1,482 | - | 1,482 | |||||||||||||||||||
Total operating expenses | 1,553 | - | 1,553 | 2,784 | - | 2,784 | |||||||||||||||||||
Operating income (loss) | 302 | - | 302 | (1,302 | ) | - | (1,302 | ) | |||||||||||||||||
Interest expense | (165 | ) | - | (165 | ) | (189 | ) | - | (189 | ) | |||||||||||||||
Change in fair value of warrant liability - (increase) decrease | - | 117 | 117 | - | (56 | ) | (56 | ) | |||||||||||||||||
Other income | 2 | - | 2 | - | - | - | |||||||||||||||||||
Income (loss) before income taxes | 139 | 117 | 256 | (1,491 | ) | (56 | ) | (1,547 | ) | ||||||||||||||||
Income tax expense | - | - | - | - | - | ||||||||||||||||||||
Net income (loss) | 139 | 117 | 256 | (1,491 | ) | (56 | ) | (1,547 | ) | ||||||||||||||||
Other comprehensive income (loss): | |||||||||||||||||||||||||
Foreign currency translation adjustment | 8 | - | 8 | (1 | ) | - | (1 | ) | |||||||||||||||||
Comprehensive income (loss) | $ | 147 | $ | 117 | $ | 264 | $ | (1,492 | ) | $ | (56 | ) | $ | (1,548 | ) | ||||||||||
Basic EPS | $ | 0.02 | $ | 0.01 | $ | 0.03 | $ | (0.21 | ) | $ | (0.01 | ) | $ | (0.22 | ) | ||||||||||
Diluted EPS | $ | 0.02 | $ | 0.01 | $ | 0.03 | $ | (0.21 | ) | $ | (0.01 | ) | $ | (0.22 | ) | ||||||||||
The following table summarizes the effects of the restatement adjustments, previously discussed, on the consolidated balance sheet items as of December 31, 2012 and September 30, 2012: | |||||||||||||||||||||||||
31-Dec-12 | 30-Sep-12 | ||||||||||||||||||||||||
As Reported | Adjustment | Restated | As Reported | Adjustment | Restated | ||||||||||||||||||||
Total assets | $ | 25,064 | $ | - | $ | 25,064 | $ | 26,975 | $ | - | $ | 26,975 | |||||||||||||
Total other current liabilities | 14,543 | - | 14,543 | 11,387 | - | 11,387 | |||||||||||||||||||
Warrant liability | - | 1,096 | 1,096 | - | 1,213 | 1,213 | |||||||||||||||||||
Total current liabilities | 14,543 | 1,096 | 15,639 | 11,387 | 1,213 | 12,600 | |||||||||||||||||||
Other long-term debt | 689 | - | 689 | 5,998 | - | 5,998 | |||||||||||||||||||
Total liabilities | 15,232 | 1,096 | 16,328 | 17,385 | 1,213 | 18,598 | |||||||||||||||||||
Shareholders' equity: | |||||||||||||||||||||||||
Preferred Shares | 1,335 | - | 1,335 | 1,335 | - | 1,335 | |||||||||||||||||||
Common Shares | 1,876 | - | 1,876 | 1,871 | - | 1,871 | |||||||||||||||||||
Additional paid-in capital | 20,541 | (816 | ) | 19,725 | 20,451 | (816 | ) | 19,635 | |||||||||||||||||
Accumulated deficit | (13,957 | ) | (280 | ) | (14,237 | ) | (14,096 | ) | (397 | ) | (14,493 | ) | |||||||||||||
Accumulated other comprehensive income | 37 | - | 37 | 29 | 29 | ||||||||||||||||||||
Total shareholders' equity | 9,832 | (1,096 | ) | 8,736 | 9,590 | (1,213 | ) | 8,377 | |||||||||||||||||
Total liabilities and shareholders' equity | $ | 25,064 | $ | - | $ | 25,064 | $ | 26,975 | $ | - | $ | 26,975 |
STOCKBASED_COMPENSATION_Tables
STOCK-BASED COMPENSATION (Tables) | 3 Months Ended | ||||||||||||
Dec. 31, 2012 | |||||||||||||
STOCK-BASED COMPENSATION [Abstract] | |||||||||||||
Summary of Stock Option Activity | A summary of our stock option activity for the three months ended December 31, 2012 is as follows (in thousands except for share prices): | ||||||||||||
Options | Weighted- | Weighted- | |||||||||||
(shares) | Average | Average | |||||||||||
Exercise Price | Grant Date | ||||||||||||
Fair Value | |||||||||||||
Outstanding - October 1, 2012 | 354 | $ | 1.99 | $ | 1.46 | ||||||||
Exercised | - | - | - | ||||||||||
Granted | 50 | 1.32 | 1.09 | ||||||||||
Terminated | (10 | ) | 1.01 | ||||||||||
Outstanding - December 31, 2012 | 394 | $ | 1.93 | $ | 1.43 |
INCOME_LOSS_PER_SHARE_Tables
INCOME (LOSS) PER SHARE (Tables) | 3 Months Ended | ||||||||
Dec. 31, 2012 | |||||||||
INCOME (LOSS) PER SHARE [Abstract] | |||||||||
Reconciliation of Computation of Basic Loss Per Share to Diluted Net Loss Per Share | The following table reconciles our computation of basic income (loss) per share to diluted income (loss) per share: | ||||||||
Three Months Ended | |||||||||
December 31, | |||||||||
2012 | 2011 | ||||||||
(Restated) | (Restated) | ||||||||
Basic net income (loss) per share: | |||||||||
Net income (loss) applicable to common shareholders | $ | 256 | $ | (1,547 | ) | ||||
Weighted average common shares outstanding | 7,639 | 6,946 | |||||||
Basic net income (loss) per share | $ | 0.03 | $ | (0.22 | ) | ||||
Diluted net income (loss) per share: | |||||||||
Diluted net income (loss) applicable to common shareholders | $ | 256 | $ | (1,547 | ) | ||||
Weighted average common shares outstanding | 7,639 | 6,946 | |||||||
Plus: Incremental shares from assumed conversions | |||||||||
Series A preferred shares | 767 | - | |||||||
Diluted weighted average common shares outstanding | 8,406 | 6,946 | |||||||
Diluted net income (loss) per share | $ | 0.03 | $ | (0.22 | ) |
INVENTORIES_Tables
INVENTORIES (Tables) | 3 Months Ended | ||||||||
Dec. 31, 2012 | |||||||||
INVENTORIES [Abstract] | |||||||||
Summary of Inventories | Inventories consisted of the following: | ||||||||
December 31, | September 30, | ||||||||
2012 | 2012 | ||||||||
Raw materials | $ | 1,407 | $ | 1,407 | |||||
Work in progress | 349 | 283 | |||||||
Finished goods | 257 | 276 | |||||||
$ | 2,013 | $ | 1,966 | ||||||
Obsolescence reserve | (310 | ) | (310 | ) | |||||
$ | 1,703 | $ | 1,656 |
SEGMENT_INFORMATION_Tables
SEGMENT INFORMATION (Tables) | 3 Months Ended | ||||||||
Dec. 31, 2012 | |||||||||
SEGMENT INFORMATION [Abstract] | |||||||||
Opertaing Segments | Our accounting policies in these segments are the same as those described in the summary of significant accounting policies found in Note 2 to Consolidated Financial Statements in our annual report on Form 10-K/A for the year ended September 30, 2012. | ||||||||
Three Months Ended December 31, | |||||||||
2012 | 2011 | ||||||||
(Restated) | (Restated) | ||||||||
Revenue: | |||||||||
Service | $ | 4,670 | $ | 5,611 | |||||
Product | 1,133 | 1,905 | |||||||
$ | 5,803 | $ | 7,516 | ||||||
Operating income (loss): | |||||||||
Service | $ | 199 | $ | (1,266 | ) | ||||
Product | 103 | (36 | ) | ||||||
$ | 302 | $ | (1,302 | ) | |||||
Interest Expense | (165 | ) | (189 | ) | |||||
Change in fair value of warrant liability - (increase) decrease | 117 | (56 | ) | ||||||
Other income | 2 | - | |||||||
Income (loss) before income taxes | $ | 256 | $ | (1,547 | ) |
RESTRUCTURING_Tables
RESTRUCTURING (Tables) | 3 Months Ended | ||||||||||||||||||||
Dec. 31, 2012 | |||||||||||||||||||||
RESTRUCTURING [Abstract] | |||||||||||||||||||||
Summary of Restructuring Activity | The following table sets forth the rollforward of the restructuring activity for the three months ended December 31, 2012. | ||||||||||||||||||||
Balance, | Total | Cash | Other | Balance, | |||||||||||||||||
September 30, | Charges | Payments | December 31, | ||||||||||||||||||
2012 | 2012 | ||||||||||||||||||||
One-time termination benefits | $ | 448 | $ | - | $ | (398 | ) | $ | - | $ | 50 | ||||||||||
Lease related costs | 800 | - | - | 18 | 818 | ||||||||||||||||
Equipment moving costs and method transfers | 49 | - | (49 | ) | - | - | |||||||||||||||
Travel and relocation costs | 4 | - | (4 | ) | - | - | |||||||||||||||
Loss on sale of equipment | (93 | ) | - | - | 21 | (72 | ) | ||||||||||||||
Other costs | 197 | - | (42 | ) | - | 155 | |||||||||||||||
Total | $ | 1,405 | $ | - | $ | (493 | ) | $ | 39 | $ | 951 |
FAIR_VALUE_OF_FINANCIAL_INSTRU1
FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables) | 3 Months Ended | ||||||||
Dec. 31, 2012 | |||||||||
FAIR VALUE OF FINANCIAL INSTRUMENTS [Abstract] | |||||||||
Summary of Assumptions Used to Compute Fair Value of Warrants | The assumptions used to compute the fair value of the warrants at December 31, 2012 and September 30, 2012 were as follows: | ||||||||
31-Dec-12 | 30-Sep-12 | ||||||||
Warrant A | Warrant A | ||||||||
Risk-free interest rate | 0.43 | % | 0.41 | % | |||||
Dividend yield | 0 | % | 0 | % | |||||
Volatility of the Company's common stock | 102.4 | % | 117.3 | % | |||||
Expected life of the options (years) | 3.4 | 3.6 | |||||||
Fair value per unit | $ | 0.796 | $ | 0.881 |
RESTATEMENT_OF_PREVIOUSLY_ISSU2
RESTATEMENT OF PREVIOUSLY ISSUED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Statements of Operations) (Details) (USD $) | 3 Months Ended | |
In Thousands, except Per Share data, unless otherwise specified | Dec. 31, 2012 | Dec. 31, 2011 |
Total revenue | $5,803 | $7,516 |
Total cost of revenue | 3,948 | 6,034 |
Gross profit | 1,855 | 1,482 |
Total operating expenses | 1,553 | 2,784 |
Operating income (loss) | 302 | -1,302 |
Interest expense | -165 | -189 |
Change in fair value of warrant liability - (increase) decrease | 117 | -56 |
Other income | 2 | |
Income (loss) before income taxes | 256 | -1,547 |
Income tax expense | ||
Net income (loss) | 256 | -1,547 |
Other comprehensive income (loss): | ||
Foreign currency translation adjustment | 8 | -1 |
Comprehensive income (loss) | 264 | -1,548 |
Basic EPS | $0.03 | ($0.22) |
Diluted EPS | $0.03 | ($0.22) |
As Reported [Member] | ||
Total revenue | 5,803 | 7,516 |
Total cost of revenue | 3,948 | 6,034 |
Gross profit | 1,855 | 1,482 |
Total operating expenses | 1,553 | 2,784 |
Operating income (loss) | 302 | -1,302 |
Interest expense | -165 | -189 |
Change in fair value of warrant liability - (increase) decrease | ||
Other income | 2 | |
Income (loss) before income taxes | 139 | -1,491 |
Income tax expense | ||
Net income (loss) | 139 | -1,491 |
Other comprehensive income (loss): | ||
Foreign currency translation adjustment | 8 | -1 |
Comprehensive income (loss) | 147 | -1,492 |
Basic EPS | $0.02 | ($0.21) |
Diluted EPS | $0.02 | ($0.21) |
Adjustment [Member] | ||
Total revenue | ||
Total cost of revenue | ||
Gross profit | ||
Total operating expenses | ||
Operating income (loss) | ||
Interest expense | ||
Change in fair value of warrant liability - (increase) decrease | 117 | -56 |
Other income | ||
Income (loss) before income taxes | 117 | -56 |
Income tax expense | ||
Net income (loss) | 117 | -56 |
Other comprehensive income (loss): | ||
Foreign currency translation adjustment | ||
Comprehensive income (loss) | $117 | ($56) |
Basic EPS | $0.01 | ($0.01) |
Diluted EPS | $0.01 | ($0.01) |
RESTATEMENT_OF_PREVIOUSLY_ISSU3
RESTATEMENT OF PREVIOUSLY ISSUED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Balance Sheet) (Details) (USD $) | Dec. 31, 2012 | Sep. 30, 2012 |
In Thousands, unless otherwise specified | ||
Total assets | $25,064 | $26,975 |
Total other current liabilities | 14,543 | 11,387 |
Fair value of warrant liability | 1,096 | 1,213 |
Total current liabilities | 15,639 | 12,600 |
Other long-term debt | 689 | 5,998 |
Total liabilities | 16,328 | 18,598 |
Shareholders' equity: | ||
Preferred Shares | 1,335 | 1,335 |
Common Shares | 1,876 | 1,871 |
Additional paid-in capital | 19,725 | 19,635 |
Accumulated deficit | -14,237 | -14,493 |
Accumulated other comprehensive income | 37 | 29 |
Total shareholders' equity | 8,736 | 8,377 |
Total liabilities and shareholders' equity | 25,064 | 26,975 |
As Reported [Member] | ||
Total assets | 25,064 | 26,975 |
Total other current liabilities | 14,543 | 11,387 |
Fair value of warrant liability | ||
Total current liabilities | 14,543 | 11,387 |
Other long-term debt | 689 | 5,998 |
Total liabilities | 15,232 | 17,385 |
Shareholders' equity: | ||
Preferred Shares | 1,335 | 1,335 |
Common Shares | 1,876 | 1,871 |
Additional paid-in capital | 20,541 | 20,451 |
Accumulated deficit | -13,957 | -14,096 |
Accumulated other comprehensive income | 37 | 29 |
Total shareholders' equity | 9,832 | 9,590 |
Total liabilities and shareholders' equity | 25,064 | 26,975 |
Adjustment [Member] | ||
Total assets | ||
Total other current liabilities | ||
Fair value of warrant liability | 1,096 | 1,213 |
Total current liabilities | 1,096 | 1,213 |
Other long-term debt | ||
Total liabilities | 1,096 | 1,213 |
Shareholders' equity: | ||
Preferred Shares | ||
Common Shares | ||
Additional paid-in capital | -816 | -816 |
Accumulated deficit | -280 | -397 |
Accumulated other comprehensive income | ||
Total shareholders' equity | -1,096 | -1,213 |
Total liabilities and shareholders' equity |
STOCKBASED_COMPENSATION_Narrat
STOCK-BASED COMPENSATION (Narrative) (Details) (USD $) | 3 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2012 | Dec. 31, 2011 | Sep. 30, 2012 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Employee stock compensation expense | $74 | $47 | |
Shares outstanding | 394 | 354 | |
Options granted | 50 | ||
Non-qualified Plan [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Shares outstanding | 125 |
STOCKBASED_COMPENSATION_Summar
STOCK-BASED COMPENSATION (Summary of Stock Option Activity) (Details) (USD $) | 3 Months Ended |
In Thousands, except Per Share data, unless otherwise specified | Dec. 31, 2012 |
Options (shares) | |
Outstanding - October 1, 2012 | 354 |
Exercised | |
Granted | 50 |
Terminated | -10 |
Outstanding - December 31, 2012 | 394 |
Weighted-Average Exercise Price | |
Outstanding - October 1, 2012 | $1.99 |
Exercised | |
Granted | $1.32 |
Terminated | $1.01 |
Outstanding - December 31, 2012 | $1.93 |
Weighted-Average Grant Date Fair Value | |
Outstanding - October 1, 2012 | $1.46 |
Exercised | |
Granted | |
Terminated | |
Outstanding - December 31, 2012 | $1.43 |
INCOME_LOSS_PER_SHARE_Narrativ
INCOME (LOSS) PER SHARE (Narrative) (Details) | 3 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2012 | Dec. 31, 2011 |
Warrant [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive shares not considered in computing diluted earnings per share | 1,377 | 2,753 |
Common Stock [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive shares not considered in computing diluted earnings per share | 1,068 |
INCOME_LOSS_PER_SHARE_Reconcil
INCOME (LOSS) PER SHARE (Reconciliation of Computation of Basic Income or Loss Per Share to Diluted Income or Loss Per Share) (Details) (USD $) | 3 Months Ended | |
In Thousands, except Per Share data, unless otherwise specified | Dec. 31, 2012 | Dec. 31, 2011 |
Basic net income (loss) per share: | ||
Net income (loss) applicable to common shareholders | $256 | ($1,547) |
Weighted average common shares outstanding | 7,639 | 6,946 |
Basic net income (loss) per share | $0.03 | ($0.22) |
Diluted net income (loss) per share: | ||
Diluted net income (loss) applicable to common shareholders | $256 | ($1,547) |
Weighted average common shares outstanding | 7,639 | 6,946 |
Plus: Incremental shares from assumed conversions | ||
Series A preferred shares | 767 | |
Diluted weighted average common shares outstanding | 8,406 | 6,946 |
Diluted net income (loss) per share | $0.03 | ($0.22) |
INVENTORIES_Details
INVENTORIES (Details) (USD $) | Dec. 31, 2012 | Sep. 30, 2012 |
In Thousands, unless otherwise specified | ||
INVENTORIES [Abstract] | ||
Raw materials | $1,407 | $1,407 |
Work in process | 349 | 283 |
Finished goods | 257 | 276 |
Gross inventories | 2,013 | 1,966 |
Obsolescence reserve | -310 | -310 |
Inventories | $1,703 | $1,656 |
SEGMENT_INFORMATION_Details
SEGMENT INFORMATION (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2012 | Dec. 31, 2011 |
Segment Reporting Information [Line Items] | ||
Revenue: | $5,803 | $7,516 |
Operating income (loss): | 302 | -1,302 |
Interest Expense | -165 | -189 |
Change in fair value of warrant liability - (increase) decrease | 117 | -56 |
Other income | 2 | |
Income (loss) before income taxes | 256 | -1,547 |
Service [Member] | ||
Segment Reporting Information [Line Items] | ||
Revenue: | 4,670 | 5,611 |
Operating income (loss): | 199 | -1,266 |
Product [Member] | ||
Segment Reporting Information [Line Items] | ||
Revenue: | 1,133 | 1,905 |
Operating income (loss): | $103 | ($36) |
INCOME_TAXES_Details
INCOME TAXES (Details) (USD $) | Dec. 31, 2012 | Sep. 30, 2012 |
In Thousands, unless otherwise specified | ||
INCOME TAXES [Abstract] | ||
Liability for other uncertain income tax positions | $16 | $16 |
DEBT_Details
DEBT (Details) (USD $) | 1 Months Ended | 3 Months Ended | 3 Months Ended | 3 Months Ended | 3 Months Ended | ||||||
Mar. 31, 2010 | Dec. 31, 2012 | Dec. 31, 2012 | Dec. 31, 2012 | Dec. 31, 2012 | Dec. 31, 2012 | Dec. 31, 2012 | Dec. 31, 2012 | Dec. 17, 2010 | Feb. 11, 2011 | Dec. 31, 2012 | |
acre | Revolving Line of Credit [Member] | Revolving Line of Credit [Member] | Revolving Line of Credit [Member] | Notes Payable to Regions Bank [Member] | Mortgage Notes Payable One and Two [Member] | Replacement Note Payable [Member] | Note Payable, Maturing December 18, 2010 [Member] | Mortgage Payable, Maturing February 11, 2011[Member] | Second Replacement Note Payable [Member] | ||
sqft | Original Covenant Terms [Member] | Minimum [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||||
Long-term debt | $5,676,000 | $5,676,000 | |||||||||
Debt instrument, maturity date | 31-Jan-14 | 1-Nov-12 | 1-Nov-12 | 31-Oct-13 | |||||||
Debt instrument, interest rate | 4.10% | ||||||||||
Debt instrument, frequency of periodic payments | monthly | monthly | monthly | ||||||||
Debt instrument, principal payment | 38,000 | 14,000 | 47,000 | ||||||||
Debt instrument, one-time principal payment | 500,000 | 500,000 | |||||||||
Debt instrument, face amount | 5,128,000 | 1,341,000 | 5,786,000 | ||||||||
Debt instrument, variable interest reference rate | Citibank's Prime Rate | 30-day LIBOR | LIBOR | ||||||||
Debt instrument, basis spread on variable rate | 5.00% | 3.00% | 4.00% | ||||||||
Debt instrument, minimum interest rate | 4.50% | 6.00% | |||||||||
Fixed charge coverage ratio | 1.25 | ||||||||||
Total liabilities to tangible net worth ratio | 2.1 | ||||||||||
Debt instrument, effective interest rate | 8.25% | ||||||||||
Line of credit, maximum borrowing capacity | 3,000,000 | ||||||||||
Line of credit, frequency of periodic payments | monthly | ||||||||||
Line of credit, periodic interest payments | 15,000 | ||||||||||
Line of credit, frequency of facilities fee payments | annually | ||||||||||
Line of credit, facilities fee, percentage | 2.00% | ||||||||||
Line of credit, collateral monitoring fee, percentage | 0.20% | ||||||||||
Line of credit, collateral | Borrowings under the Credit Agreement are secured by a blanket lien on our personal property, including certain eligible accounts receivable, inventory, and intellectual property assets, and a second mortgage on our West Lafayette and Evansville real estate and all common stock of our U.S. subsidiaries and 65% of the common stock of our non-United States subsidiary. | ||||||||||
Line of credit, borrowings, based on eligible accounts receivable, percentage | 75.00% | ||||||||||
Minimum net worth convenant requirement | 8,500,000 | 8,000,000 | |||||||||
Line of credit, current borrowing capacity | 1,302,000 | ||||||||||
Line of credit, amount outstanding | 962,000 | ||||||||||
Acres of land | 7.25 | ||||||||||
Acres of headquarters facility | 120,000 | ||||||||||
Net book value of facility and land | 9,481,000 | ||||||||||
Asking price | 12,500,000 | ||||||||||
Contingent rent payments, amount per payment | 800 | ||||||||||
Settlement agreement for cancellation of obligations under lease, agreed contribution amount | 250 | ||||||||||
Settlement consideration, monthly installments | 10 | ||||||||||
Settlement agreement for cancellation of obligations under lease, discounted liability | $216 |
RESTRUCTURING_Narrative_Detail
RESTRUCTURING (Narrative) (Details) (USD $) | 3 Months Ended |
Dec. 31, 2012 | |
sqft | |
Restructuring Cost and Reserve [Line Items] | |
Acres of headquarters facility | 120,000 |
Restructuring charges | |
Lease Related Costs [Member] | |
Restructuring Cost and Reserve [Line Items] | |
Restructuring charges |
RESTRUCTURING_Summary_of_Restr
RESTRUCTURING (Summary of Restructuring Activity) (Details) (USD $) | 3 Months Ended |
In Thousands, unless otherwise specified | Dec. 31, 2012 |
Restructuring Cost and Reserve [Line Items] | |
Balance | $1,405 |
Total Charges | |
Cash Payments | 493 |
Other | 39 |
Balance | 951 |
One-time Termination Benefits [Member] | |
Restructuring Cost and Reserve [Line Items] | |
Balance | 448 |
Total Charges | |
Cash Payments | 398 |
Other | |
Lease Related Costs [Member] | |
Restructuring Cost and Reserve [Line Items] | |
Balance | 800 |
Total Charges | |
Cash Payments | |
Other | 18 |
Equipment Moving Costs And Method Transfers [Member] | |
Restructuring Cost and Reserve [Line Items] | |
Balance | 49 |
Total Charges | |
Cash Payments | 49 |
Other | |
Travel and Relocation Costs [Member] | |
Restructuring Cost and Reserve [Line Items] | |
Balance | 4 |
Total Charges | |
Cash Payments | 4 |
Other | |
Loss on Sale of Equipment [Member] | |
Restructuring Cost and Reserve [Line Items] | |
Balance | -93 |
Total Charges | |
Cash Payments | |
Other | 21 |
Other Costs [Member] | |
Restructuring Cost and Reserve [Line Items] | |
Balance | 197 |
Total Charges | |
Cash Payments | 42 |
Other |
FAIR_VALUE_OF_FINANCIAL_INSTRU2
FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) (USD $) | Dec. 31, 2012 | Sep. 30, 2012 | 31-May-12 | Dec. 31, 2012 | Sep. 30, 2012 |
In Thousands, except Per Share data, unless otherwise specified | Class B Warrant [Member] | Derivative Financial Instruments, Liabilities [Member] | Derivative Financial Instruments, Liabilities [Member] | ||
Class A Warrant [Member] | Class A Warrant [Member] | ||||
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items] | |||||
Risk-free interest rate | 0.43% | 0.41% | |||
Dividend yield | 0.00% | 0.00% | |||
Volatility of the Company's common stock | 102.40% | 117.30% | |||
Expected life of the options | 3 years 4 months 24 days | 3 years 7 months 6 days | |||
Fair value per unit | $0.80 | $0.88 | |||
Fair value of warrant liability | $1,096 | $1,213 | $0 |
MANAGEMENTS_PLAN_Details
MANAGEMENT'S PLAN (Details) (USD $) | 3 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2012 | Dec. 31, 2011 | Sep. 30, 2012 |
MANAGEMENT'S PLAN [Abstract] | |||
Revenue decline to previous period, percentage | 22.80% | ||
Gross margin improvement to prior period, percentage | 25.20% | ||
Cash generated from operations | $702 | $590 | |
Long-term debt and capital lease obligations, current | 6,000 | ||
Current portion of long-term debt | $5,676 | $583 |