Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Dec. 31, 2013 | Feb. 11, 2014 | |
Document And Entity Information [Abstract] | ' | ' |
Document Type | '10-Q | ' |
Amendment Flag | 'false | ' |
Document Period End Date | 31-Dec-13 | ' |
Document Fiscal Year Focus | '2014 | ' |
Document Fiscal Period Focus | 'Q1 | ' |
Trading Symbol | 'BASi | ' |
Entity Registrant Name | 'BIOANALYTICAL SYSTEMS INC | ' |
Entity Central Index Key | '0000720154 | ' |
Current Fiscal Year End Date | '--09-30 | ' |
Entity Filer Category | 'Smaller Reporting Company | ' |
Entity Common Stock, Shares Outstanding | ' | 7,965,387 |
CONDENSED_CONSOLIDATED_BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) | Dec. 31, 2013 | Sep. 30, 2013 |
In Thousands, unless otherwise specified | ||
Current assets: | ' | ' |
Cash and cash equivalents | $841 | $1,304 |
Accounts receivable | ' | ' |
Trade, net of allowance $87 at December 31, 2013 and September 30, 2013, respectively | 2,396 | 3,621 |
Unbilled revenues and other | 977 | 691 |
Inventories | 1,451 | 1,379 |
Prepaid expenses | 407 | 238 |
Total current assets | 6,072 | 7,233 |
Property and equipment, net | 16,564 | 16,913 |
Goodwill | 1,383 | 1,383 |
Debt issue costs | 55 | 21 |
Other assets | 45 | 47 |
Total assets | 24,119 | 25,597 |
Current liabilities: | ' | ' |
Accounts payable | 3,215 | 3,584 |
Accrued expenses | 1,538 | 1,689 |
Customer advances | 2,891 | 2,815 |
Income tax accruals | 16 | 30 |
Revolving line of credit | 168 | 1,415 |
Fair value of warrant liability | 1,573 | 612 |
Current portion of capital lease obligation | 272 | 268 |
Current portion of long-term debt | 5,205 | 613 |
Total current liabilities | 14,878 | 11,026 |
Capital lease obligation, less current portion | 401 | 471 |
Long-term debt, less current portion | ' | 4,641 |
Total liabilities | 15,279 | 16,138 |
Stockholders' equity: | ' | ' |
Preferred shares, authorized 1,000,000 shares, no par value: 1,185 Series A shares at $1,000 stated value issued and outstanding at December 31, 2013 and 1,335 at September 30, 2013 | 1,185 | 1,335 |
Common shares, no par value: Authorized 19,000,000 shares; 7,885,229 issued and outstanding at December 31, 2013 and 7,703,891 at September 30, 2013 | 1,933 | 1,887 |
Additional paid-in capital | 20,098 | 19,925 |
Accumulated deficit | -14,382 | -13,720 |
Accumulated other comprehensive income | 6 | 32 |
Total shareholders' equity | 8,840 | 9,459 |
Total liabilities and shareholders' equity | 24,119 | 25,597 |
Series A Preferred Stock [Member] | ' | ' |
Stockholders' equity: | ' | ' |
Preferred shares, authorized 1,000,000 shares, no par value: 1,185 Series A shares at $1,000 stated value issued and outstanding at December 31, 2013 and 1,335 at September 30, 2013 | $1,185 | $1,335 |
CONDENSED_CONSOLIDATED_BALANCE1
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Dec. 31, 2013 | Sep. 30, 2013 |
In Thousands, except Share data, unless otherwise specified | ||
Allowance for doubtful accounts | $87 | $87 |
Common stock, no par value | ' | ' |
Common stock, shares authorized | 19,000,000 | 19,000,000 |
Common stock, shares issued | 7,885,229 | 7,703,891 |
Common stock, shares outstanding | 7,885,229 | 7,703,891 |
Series A Preferred Stock [Member] | ' | ' |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, no par value | ' | ' |
Preferred stock, shares issued | 1,185 | 1,335 |
Preferred stock, shares outstanding | 1,185 | 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, 2013 | Dec. 31, 2012 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) [Abstract] | ' | ' |
Service revenue | $4,916 | $4,670 |
Product revenue | 1,304 | 1,133 |
Total revenue | 6,220 | 5,803 |
Cost of service revenue | 3,323 | 3,382 |
Cost of product revenue | 752 | 566 |
Total cost of revenue | 4,075 | 3,948 |
Gross profit | 2,145 | 1,855 |
Operating expenses: | ' | ' |
Selling | 437 | 370 |
Research and development | 143 | 85 |
General and administrative | 1,103 | 1,098 |
Total operating expenses | 1,683 | 1,553 |
Operating income | 462 | 302 |
Interest expense | -164 | -165 |
Change in fair value of warrant liability - (increase) decrease | -961 | 117 |
Other income | 1 | 2 |
Income (loss) before income taxes | -662 | 256 |
Income taxes | ' | ' |
Net income (loss) | -662 | 256 |
Other comprehensive income (loss): | ' | ' |
Foreign currency translation adjustment | -26 | 8 |
Comprehensive income (loss) | ($688) | $264 |
Basic net income (loss) per share | ($0.09) | $0.03 |
Diluted net income (loss) per share | ($0.09) | $0.03 |
Weighted common shares outstanding: | ' | ' |
Basic | 7,735 | 7,639 |
Diluted | 7,735 | 8,406 |
CONDENSED_CONSOLIDATED_STATEME1
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Operating activities: | ' | ' |
Net income (loss) | ($662) | $256 |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ' | ' |
Depreciation and amortization | 402 | 473 |
Change in fair value of warrant liability - increase (decrease) | 961 | -117 |
Employee stock compensation expense | 47 | 74 |
Loss on sale of property and equipment | ' | 2 |
Changes in operating assets and liabilities: | ' | ' |
Accounts receivable | 939 | 1,387 |
Inventories | -72 | -47 |
Income tax accruals | -14 | ' |
Prepaid expenses and other assets | -145 | 74 |
Accounts payable | -345 | 82 |
Accrued expenses | -151 | -782 |
Customer advances | 76 | -685 |
Net cash provided by operating activities | 1,036 | 717 |
Investing activities: | ' | ' |
Capital expenditures | -51 | -10 |
Net cash used by investing activities | -51 | -10 |
Financing activities: | ' | ' |
Payments of long-term debt | -49 | -166 |
Payments of debt issuance costs | -60 | -15 |
Payments on revolving line of credit | -7,619 | -6,118 |
Borrowings on revolving line of credit | 6,372 | 5,636 |
Payments on capital lease obligations | -66 | -100 |
Net cash used by financing activities | -1,422 | -763 |
Effect of exchange rate changes | -26 | 5 |
Net decrease in cash and cash equivalents | -463 | -51 |
Cash and cash equivalents at beginning of period | 1,304 | 721 |
Cash and cash equivalents at end of period | 841 | 670 |
Supplemental disclosure of non-cash financing activities: | ' | ' |
Preferred stock dividends paid in common shares | ($18) | ($20) |
DESCRIPTION_OF_THE_BUSINESS_AN
DESCRIPTION OF THE BUSINESS AND BASIS OF PRESENTATION | 3 Months Ended | ||
Dec. 31, 2013 | |||
DESCRIPTION OF THE BUSINESS AND BASIS OF PRESENTATION [Abstract] | ' | ||
DESCRIPTION OF THE BUSINESS AND BASIS OF PRESENTATION | ' | ||
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, included in the Company's annual report on Form 10-K for the year ended September 30, 2013. In the opinion of management, the condensed consolidated financial statements for the three months ended December 31, 2013 and 2012 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, 2013. The results of operations for the three months ended December 31, 2013 are not necessarily indicative of the results for the year ending September 30, 2014. |
STOCKBASED_COMPENSATION
STOCK-BASED COMPENSATION | 3 Months Ended | ||||||||||||
Dec. 31, 2013 | |||||||||||||
STOCK-BASED COMPENSATION [Abstract] | ' | ||||||||||||
STOCK-BASED COMPENSATON | ' | ||||||||||||
2 | 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 9 in the Notes to the Consolidated Financial Statements in our Form 10-K for the year ended September 30, 2013. 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, 2013, there are 155 shares outstanding that were granted outside of the Plan. The assumptions used are detailed in Note 9 to the Consolidated Financial Statements in our Form 10-K for the year ended September 30, 2013. Stock based compensation expense for the three months ended December 31, 2013 and 2012 was $47 and $74, respectively. | |||||||||||||
A summary of our stock option activity for the three months ended December 31, 2013 is as follows (in thousands except for share prices): | |||||||||||||
Options | Weighted- | Weighted- | |||||||||||
(shares) | Average | Average | |||||||||||
Exercise Price | Grant Date | ||||||||||||
Fair Value | |||||||||||||
Outstanding - October 1, 2013 | 479 | $ | 1.77 | $ | 1.35 | ||||||||
Exercised | - | - | - | ||||||||||
Granted | - | - | - | ||||||||||
Terminated | (40 | ) | 2.29 | ||||||||||
Outstanding - December 31, 2013 | 439 | $ | 1.72 | $ | 1.32 |
INCOME_LOSS_PER_SHARE
INCOME (LOSS) PER SHARE | 3 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
INCOME (LOSS) PER SHARE [Abstract] | ' | ||||||||
INCOME (LOSS) PER SHARE | ' | ||||||||
3 | 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, 2013 and 2012, respectively, because they were anti-dilutive. Warrants for 1,376,500 common shares were not considered in computing diluted earnings per share for the quarters ended December 31, 2012 because they were anti-dilutive. Warrants for 1,126,500 common shares and 660,902 common shares issuable upon conversion of preferred shares were not considered in computing diluted earnings per share for the quarter ended December 31, 2013 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, | |||||||||
2013 | 2012 | ||||||||
Basic net income (loss) per share: | |||||||||
Net income (loss) applicable to common shareholders | $ | (662 | ) | $ | 256 | ||||
Weighted average common shares outstanding | 7,735 | 7,639 | |||||||
Basic net income (loss) per share | $ | (0.09 | ) | $ | 0.03 | ||||
Diluted net income (loss) per share: | |||||||||
Diluted net income (loss) applicable to common shareholders | $ | (662 | ) | $ | 256 | ||||
Weighted average common shares outstanding | 7,735 | 7,639 | |||||||
Plus: Incremental shares from assumed conversions | |||||||||
Series A preferred shares | - | 767 | |||||||
Diluted weighted average common shares outstanding | 7,735 | 8,406 | |||||||
Diluted net income (loss) per share | $ | (0.09 | ) | $ | 0.03 |
INVENTORIES
INVENTORIES | 3 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
INVENTORIES [Abstract] | ' | ||||||||
INVENTORIES | ' | ||||||||
4 | INVENTORIES | ||||||||
Inventories consisted of the following: | |||||||||
December 31, | September 30, | ||||||||
2013 | 2013 | ||||||||
Raw materials | $ | 1,281 | $ | 1,157 | |||||
Work in progress | 235 | 322 | |||||||
Finished goods | 323 | 259 | |||||||
$ | 1,839 | $ | 1,738 | ||||||
Obsolescence reserve | (388 | ) | (359 | ) | |||||
$ | 1,451 | $ | 1,379 |
SEGMENT_INFORMATION
SEGMENT INFORMATION | 3 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
SEGMENT INFORMATION [Abstract] | ' | ||||||||
SEGMENT INFORMATION | ' | ||||||||
5 | 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 for the year ended September 30, 2013. | |||||||||
Three Months Ended | |||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
Revenue: | |||||||||
Service | $ | 4,916 | $ | 4,670 | |||||
Product | 1,304 | 1,133 | |||||||
$ | 6,220 | $ | 5,803 | ||||||
Operating income: | |||||||||
Service | $ | 424 | $ | 199 | |||||
Product | 38 | 103 | |||||||
$ | 462 | $ | 302 | ||||||
Interest Expense | (164 | ) | (165 | ) | |||||
Change in fair value of warrant liability - (increase) decrease | (961 | ) | 117 | ||||||
Other income | 1 | 2 | |||||||
Income (loss) before income taxes | $ | (662 | ) | $ | 256 |
INCOME_TAXES
INCOME TAXES | 3 Months Ended | ||
Dec. 31, 2013 | |||
INCOME TAXES [Abstract] | ' | ||
INCOME TAXES | ' | ||
6 | 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, 2013 and September 30, 2013, we had a $16 liability for uncertain income tax positions. The difference between the federal statutory rate of 34% and our effective rate of 0% is due to changes in our valuation allowance on our net deferred tax assets. | |||
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, 2013 | |||
DEBT [Abstract] | ' | ||
DEBT | ' | ||
7 | DEBT | ||
Mortgages and note payable | |||
We have a term loan from Regions Bank ("Regions") aggregating approximately $5,205 at December 31, 2013, which is secured by mortgages on our facilities in West Lafayette and Evansville, Indiana. | |||
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 September 30, 2013, the replacement note payable had a balance of $5,254. | |||
On October 31, 2013, we executed a seventh amendment with Regions to extend the note payable maturity date to October 31, 2014. | |||
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. 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 2015. 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. We have 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. We enlisted a new realtor in the third fiscal quarter of 2013 and changed the asking price to $10,800. We performed an impairment analysis on the building when we listed it for sale, but noted no impairment necessary. As of December 31, 2013, the net book value of the facility and land was $9,126. | |||
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 | |||
At December 31, 2013, we had a $3,000 revolving line of credit agreement ("Credit Agreement") with EGC. Pursuant to the terms of the Credit Agreement, the line of credit would have automatically renewed on January 31, 2014 unless either party gave a 60-day notice of intent to terminate or withdraw. On October 30, 2013, we informed EGC of our intent not to renew the line of credit on January 31, 2014. On January 31, 2014, we paid off the remaining balance on this line of credit. | |||
At December 31, 2013, 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, 2013, 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, as amended, 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 $8,000. The Credit Agreement also contains cross-default provisions with the Regions loan and any future EGC loans. At December 31, 2013, we had available borrowing capacity of $1,845 on this line, of which $168 was outstanding. At September 30, 2013, we had $1,415 outstanding on this line. | |||
At December 31, 2013, we were not in compliance with the minimum tangible net worth covenant requirement mainly due to the increase in the warrant liability. On January 29, 2014, EGC waived our breach with this covenant. | |||
We are actively pursuing alternatives to replace this line of credit. We are focused on growing our revenues and improving our cash flow from operations in fiscal 2014 to reduce our reliance on our line of credit. |
RESTRUCTURING
RESTRUCTURING | 3 Months Ended | ||||||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||||||
RESTRUCTURING [Abstract] | ' | ||||||||||||||||||||
RESTRUCTURING | ' | ||||||||||||||||||||
8 | 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 reserved for lease payments at 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 quarter of fiscal 2013, we began amortizing into general and administrative expense, equally through the cease use date, the estimated rent income of $200 when the reserve was originally established. We have been unsuccessful at subleasing the facility. Based on these, we have $898 reserved for UK lease related costs. | |||||||||||||||||||||
The following table sets forth the rollforward of the restructuring activity for the three months ended December 31, 2013. | |||||||||||||||||||||
Balance, | Total | Cash | Other | Balance, | |||||||||||||||||
September 30, | Charges | Payments | December 31, | ||||||||||||||||||
2013 | 2013 | ||||||||||||||||||||
One-time termination benefits | $ | - | $ | - | $ | - | $ | - | $ | - | |||||||||||
Lease related costs | 877 | - | - | 21 | 898 | ||||||||||||||||
Equipment moving costs and method transfers | - | - | - | - | - | ||||||||||||||||
Travel and relocation costs | - | - | - | - | - | ||||||||||||||||
Loss on sale of equipment | (16 | ) | - | - | 8 | (8 | ) | ||||||||||||||
Other costs | 117 | - | - | - | 117 | ||||||||||||||||
Total | $ | 978 | $ | - | $ | - | $ | 29 | $ | 1,007 | |||||||||||
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, 2013 | |||||||||
FAIR VALUE OF FINANCIAL INSTRUMENTS [Abstract] | ' | ||||||||
FAIR VALUE OF FINANCIAL INSTRUMENTS | ' | ||||||||
9 | FAIR VALUE OF FINANCIAL INSTRUMENTS | ||||||||
The provisions of the Fair Value Measurements and Disclosure Topic defines fair value, establishes a consistent framework for measuring fair value and provides the disclosure requirements about fair value measurements. This Topic also establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company's judgment about the assumptions market participants would use in pricing the asset or liability based on the best information available in the circumstances. The hierarchy is broken down into three levels based on the inputs as follows: | |||||||||
• | Level 1 - Valuations based on quoted prices for identical assets or liabilities in active markets that the Company has the ability to access. | ||||||||
• | Level 2 - Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly. | ||||||||
• | Level 3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement. | ||||||||
In May 2011, we issued Class A and B Warrants 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, are calculated with fair value changes charged to the statement of operations and comprehensive income (loss). 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, 2013 and September 30, 2013: | |||||||||
31-Dec-13 | 30-Sep-13 | ||||||||
Warrant A | Warrant A | ||||||||
Risk-free interest rate | 0.52 | % | 0.51 | % | |||||
Dividend yield | 0 | % | 0 | % | |||||
Volatility of the Company's common stock | 72.83 | % | 71.15 | % | |||||
Expected life of the options (years) | 2.35 | 2.6 | |||||||
Fair value per unit | $ | 1.396 | $ | 0.444 | |||||
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 October 31, 2013. |
MANAGEMENTS_PLAN
MANAGEMENT'S PLAN | 3 Months Ended | |
Dec. 31, 2013 | ||
MANAGEMENT'S PLAN [Abstract] | ' | |
MANAGEMENT'S PLAN | ' | |
10 | 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 2014, revenues improved 7.2% as did gross margin by 15.6% and operating income by 53.0% from the first fiscal quarter of 2013. We also generated $976 in cash from operations, maintained strict controls on expenditures and paid down our line of credit $1.2 million while meeting all of our other obligations. | ||
We negotiated an amendment to our loans with Regions Bank, extending the maturity date to October 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. 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. | ||
For the remainder of fiscal 2014, we will focus on growing our revenues and continue initiatives to control costs and improve productivity to further reduce our break-even point and achieve our financial objectives. We expect to see improvement in the volume of new bookings in fiscal 2014 along with the continued improvements in gross profit margins. We have debt service and lease obligations of approximately $1.7 million in fiscal 2014. Based on our expected revenue, 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 2014 operations and debt obligations. Though our current line of credit expired on January 31, 2014, we were able to pay off the remaining balance while continuing to meet all other debt obligations and working capital requirements. Although management believes our cash flow from operations will generate sufficient cash flow for our debt obligations, working capital requirements and capital expenditures, we are pursuing alternatives to replace this line of credit. |
STOCKBASED_COMPENSATION_Tables
STOCK-BASED COMPENSATION (Tables) | 3 Months Ended | ||||||||||||
Dec. 31, 2013 | |||||||||||||
STOCK-BASED COMPENSATION [Abstract] | ' | ||||||||||||
Summary of Stock Option Activity | ' | ||||||||||||
A summary of our stock option activity for the three months ended December 31, 2013 is as follows (in thousands except for share prices): | |||||||||||||
Options | Weighted- | Weighted- | |||||||||||
(shares) | Average | Average | |||||||||||
Exercise Price | Grant Date | ||||||||||||
Fair Value | |||||||||||||
Outstanding - October 1, 2013 | 479 | $ | 1.77 | $ | 1.35 | ||||||||
Exercised | - | - | - | ||||||||||
Granted | - | - | - | ||||||||||
Terminated | (40 | ) | 2.29 | ||||||||||
Outstanding - December 31, 2013 | 439 | $ | 1.72 | $ | 1.32 |
INCOME_LOSS_PER_SHARE_Tables
INCOME (LOSS) PER SHARE (Tables) | 3 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
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, | |||||||||
2013 | 2012 | ||||||||
Basic net income (loss) per share: | |||||||||
Net income (loss) applicable to common shareholders | $ | (662 | ) | $ | 256 | ||||
Weighted average common shares outstanding | 7,735 | 7,639 | |||||||
Basic net income (loss) per share | $ | (0.09 | ) | $ | 0.03 | ||||
Diluted net income (loss) per share: | |||||||||
Diluted net income (loss) applicable to common shareholders | $ | (662 | ) | $ | 256 | ||||
Weighted average common shares outstanding | 7,735 | 7,639 | |||||||
Plus: Incremental shares from assumed conversions | |||||||||
Series A preferred shares | - | 767 | |||||||
Diluted weighted average common shares outstanding | 7,735 | 8,406 | |||||||
Diluted net income (loss) per share | $ | (0.09 | ) | $ | 0.03 |
INVENTORIES_Tables
INVENTORIES (Tables) | 3 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
INVENTORIES [Abstract] | ' | ||||||||
Summary of Inventories | ' | ||||||||
Inventories consisted of the following: | |||||||||
December 31, | September 30, | ||||||||
2013 | 2013 | ||||||||
Raw materials | $ | 1,281 | $ | 1,157 | |||||
Work in progress | 235 | 322 | |||||||
Finished goods | 323 | 259 | |||||||
$ | 1,839 | $ | 1,738 | ||||||
Obsolescence reserve | (388 | ) | (359 | ) | |||||
$ | 1,451 | $ | 1,379 |
SEGMENT_INFORMATION_Tables
SEGMENT INFORMATION (Tables) | 3 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
SEGMENT INFORMATION [Abstract] | ' | ||||||||
Operating Segments | ' | ||||||||
Three Months Ended | |||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
Revenue: | |||||||||
Service | $ | 4,916 | $ | 4,670 | |||||
Product | 1,304 | 1,133 | |||||||
$ | 6,220 | $ | 5,803 | ||||||
Operating income: | |||||||||
Service | $ | 424 | $ | 199 | |||||
Product | 38 | 103 | |||||||
$ | 462 | $ | 302 | ||||||
Interest Expense | (164 | ) | (165 | ) | |||||
Change in fair value of warrant liability - (increase) decrease | (961 | ) | 117 | ||||||
Other income | 1 | 2 | |||||||
Income (loss) before income taxes | $ | (662 | ) | $ | 256 |
RESTRUCTURING_Tables
RESTRUCTURING (Tables) | 3 Months Ended | ||||||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||||||
RESTRUCTURING [Abstract] | ' | ||||||||||||||||||||
Summary of Restructuring Activity | ' | ||||||||||||||||||||
The following table sets forth the rollforward of the restructuring activity for the three months ended December 31, 2013. | |||||||||||||||||||||
Balance, | Total | Cash | Other | Balance, | |||||||||||||||||
September 30, | Charges | Payments | December 31, | ||||||||||||||||||
2013 | 2013 | ||||||||||||||||||||
One-time termination benefits | $ | - | $ | - | $ | - | $ | - | $ | - | |||||||||||
Lease related costs | 877 | - | - | 21 | 898 | ||||||||||||||||
Equipment moving costs and method transfers | - | - | - | - | - | ||||||||||||||||
Travel and relocation costs | - | - | - | - | - | ||||||||||||||||
Loss on sale of equipment | (16 | ) | - | - | 8 | (8 | ) | ||||||||||||||
Other costs | 117 | - | - | - | 117 | ||||||||||||||||
Total | $ | 978 | $ | - | $ | - | $ | 29 | $ | 1,007 |
FAIR_VALUE_OF_FINANCIAL_INSTRU1
FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables) | 3 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
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, 2013 and September 30, 2013: | |||||||||
31-Dec-13 | 30-Sep-13 | ||||||||
Warrant A | Warrant A | ||||||||
Risk-free interest rate | 0.52 | % | 0.51 | % | |||||
Dividend yield | 0 | % | 0 | % | |||||
Volatility of the Company's common stock | 72.83 | % | 71.15 | % | |||||
Expected life of the options (years) | 2.35 | 2.6 | |||||||
Fair value per unit | $ | 1.396 | $ | 0.444 |
STOCKBASED_COMPENSATION_Narrat
STOCK-BASED COMPENSATION (Narrative) (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Options outstanding that were granted outside of the plan | 155 | ' |
Employee Stock Option [Member] | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Stock-based compensation expense | $47 | $74 |
STOCKBASED_COMPENSATION_Summar
STOCK-BASED COMPENSATION (Summary of Stock Option Activity) (Details) (Employee Stock Option [Member], USD $) | 3 Months Ended |
In Thousands, except Per Share data, unless otherwise specified | Dec. 31, 2013 |
Employee Stock Option [Member] | ' |
Options (shares) | ' |
Outstanding - October 1, 2013 | 479 |
Exercised | ' |
Granted | ' |
Terminated | -40 |
Outstanding - December 31, 2013 | 439 |
Weighted-Average Exercise Price | ' |
Outstanding - October 1, 2013 | $1.77 |
Exercised | ' |
Granted | ' |
Terminated | $2.29 |
Outstanding - December 31, 2013 | $1.72 |
Weighted-Average Grant Date Fair Value | ' |
Outstanding - October 1, 2013 | $1.35 |
Exercised | ' |
Granted | ' |
Terminated | ' |
Outstanding - December 31, 2013 | $1.32 |
INCOME_LOSS_PER_SHARE_Narrativ
INCOME (LOSS) PER SHARE (Narrative) (Details) | 3 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Warrant [Member] | ' | ' |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ' | ' |
Antidilutive shares not considered in computing diluted earnings per share | 1,126,500 | 1,376,500 |
Series A Preferred Stock [Member] | ' | ' |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ' | ' |
Antidilutive shares not considered in computing diluted earnings per share | 660,902 | ' |
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, 2013 | Dec. 31, 2012 |
Basic net income (loss) per share: | ' | ' |
Net income (loss) applicable to common shareholders | ($662) | $256 |
Weighted average common shares outstanding | 7,735 | 7,639 |
Basic net income (loss) per share | ($0.09) | $0.03 |
Diluted net income (loss) per share: | ' | ' |
Diluted net income (loss) applicable to common shareholders | ($662) | $256 |
Weighted average common shares outstanding | 7,735 | 7,639 |
Plus: Incremental shares from assumed conversions | ' | ' |
Series A preferred shares | ' | 767 |
Diluted weighted average common shares outstanding | 7,735 | 8,406 |
Diluted net income (loss) per share | ($0.09) | $0.03 |
INVENTORIES_Details
INVENTORIES (Details) (USD $) | Dec. 31, 2013 | Sep. 30, 2013 |
In Thousands, unless otherwise specified | ||
INVENTORIES [Abstract] | ' | ' |
Raw materials | $1,281 | $1,157 |
Work in process | 235 | 322 |
Finished goods | 323 | 259 |
Gross inventories | 1,839 | 1,738 |
Obsolescence reserve | -388 | -359 |
Inventories | $1,451 | $1,379 |
SEGMENT_INFORMATION_Details
SEGMENT INFORMATION (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
segments | ||
Segment Reporting Information [Line Items] | ' | ' |
Number of segments | 2 | ' |
Revenue: | $6,220 | $5,803 |
Operating income: | 462 | 302 |
Interest expense | -164 | -165 |
Change in fair value of warrant liability - (increase) decrease | -961 | 117 |
Other income | 1 | 2 |
Income (loss) before income taxes | -662 | 256 |
Service [Member] | ' | ' |
Segment Reporting Information [Line Items] | ' | ' |
Revenue: | 4,916 | 4,670 |
Operating income: | 424 | 199 |
Product [Member] | ' | ' |
Segment Reporting Information [Line Items] | ' | ' |
Revenue: | 1,304 | 1,133 |
Operating income: | $38 | $103 |
INCOME_TAXES_Details
INCOME TAXES (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | Sep. 30, 2013 |
INCOME TAXES [Abstract] | ' | ' |
Liability for other uncertain income tax positions | $16 | $16 |
Statutory federal income tax rate | 34.00% | ' |
Effective income tax rate | 0.00% | ' |
DEBT_Note_Payable_Details
DEBT (Note Payable) (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | Sep. 30, 2013 |
Debt Instrument [Line Items] | ' | ' |
Net book value of facility and land | $9,126 | ' |
Asking price | 10,800 | ' |
Second Replacement Note Payable [Member] | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Long-term debt | 5,205 | 5,254 |
Debt instrument, maturity date | 31-Oct-14 | ' |
Debt instrument, interest rate | 6.00% | ' |
Debt instrument, frequency of periodic payments | 'monthly | ' |
Debt instrument, principal payment | 47 | ' |
Debt instrument, face amount | $5,786 | ' |
Debt instrument, variable interest reference rate | 'LIBOR | ' |
Debt instrument, basis spread on variable rate | 4.00% | ' |
Debt instrument, minimum interest rate | 6.00% | ' |
Fixed charge coverage ratio | 1.25 | ' |
Total liabilities to tangible net worth ratio | 2.1 | ' |
DEBT_Revolving_Line_of_Credit_
DEBT (Revolving Line of Credit) (Details) (Revolving Line of Credit [Member], USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | Sep. 30, 2013 |
Debt Instrument [Line Items] | ' | ' |
Line of credit, maximum borrowing capacity | $3,000 | ' |
Expiration date of credit agreement | 31-Jan-14 | ' |
Debt instrument, variable interest reference rate | 'Citibanks' Prime Rate | ' |
Debt instrument, basis spread on variable rate | 5.00% | ' |
Interest rate at end of period | 8.25% | ' |
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, 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 covenant requirement | 8,000 | ' |
Line of credit, current borrowing capacity | 1,845 | ' |
Line of credit, amount outstanding | 168 | 1,415 |
Minimum [Member] | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Line of credit, frequency of periodic payments | 'monthly | ' |
Line of credit, periodic interest payments | $15 | ' |
RESTRUCTURING_Narrative_Detail
RESTRUCTURING (Narrative) (Details) (USD $) | 12 Months Ended | 3 Months Ended | |||||
In Thousands, unless otherwise specified | Sep. 30, 2012 | Dec. 31, 2013 | Dec. 31, 2013 | Sep. 30, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Sep. 30, 2013 |
employees | acre | sqft | Scenario, Forecast [Member] | Lease Related Costs [Member] | Lease Related Costs [Member] | ||
Restructuring Cost and Reserve [Line Items] | ' | ' | ' | ' | ' | ' | ' |
Area of headquarters facility | ' | 7.25 | 120,000 | ' | ' | ' | ' |
Number of employees terminated | 74 | ' | ' | ' | ' | ' | ' |
Rent income | ' | ' | ' | ' | $200 | ' | ' |
Restructuring reserve | ' | ' | $1,007 | $978 | ' | $898 | $877 |
RESTRUCTURING_Summary_of_Restr
RESTRUCTURING (Summary of Restructuring Activity) (Details) (USD $) | 3 Months Ended |
In Thousands, unless otherwise specified | Dec. 31, 2013 |
Restructuring Cost and Reserve [Line Items] | ' |
Balance | $978 |
Total Charges | ' |
Cash Payments | ' |
Other | 29 |
Balance | 1,007 |
One-time Termination Benefits [Member] | ' |
Restructuring Cost and Reserve [Line Items] | ' |
Balance | ' |
Total Charges | ' |
Cash Payments | ' |
Other | ' |
Balance | ' |
Lease Related Costs [Member] | ' |
Restructuring Cost and Reserve [Line Items] | ' |
Balance | 877 |
Total Charges | ' |
Cash Payments | ' |
Other | 21 |
Balance | 898 |
Equipment Moving Costs And Method Transfers [Member] | ' |
Restructuring Cost and Reserve [Line Items] | ' |
Balance | ' |
Total Charges | ' |
Cash Payments | ' |
Other | ' |
Balance | ' |
Travel and Relocation Costs [Member] | ' |
Restructuring Cost and Reserve [Line Items] | ' |
Balance | ' |
Total Charges | ' |
Cash Payments | ' |
Other | ' |
Balance | ' |
Loss on Sale of Equipment [Member] | ' |
Restructuring Cost and Reserve [Line Items] | ' |
Balance | -16 |
Total Charges | ' |
Cash Payments | ' |
Other | 8 |
Balance | -8 |
Other Costs [Member] | ' |
Restructuring Cost and Reserve [Line Items] | ' |
Balance | 117 |
Total Charges | ' |
Cash Payments | ' |
Other | ' |
Balance | $117 |
FAIR_VALUE_OF_FINANCIAL_INSTRU2
FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) (USD $) | Dec. 31, 2013 | Sep. 30, 2013 | 12-May-12 | Dec. 31, 2013 | Sep. 30, 2013 |
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 | ' | ' | ' | 0.52% | 0.51% |
Dividend yield | ' | ' | ' | 0.00% | 0.00% |
Volatility of the Company's common stock | ' | ' | ' | 72.83% | 71.15% |
Expected life of the options | ' | ' | ' | '2 years 4 months 6 days | '2 years 7 months 6 days |
Fair value per unit | ' | ' | ' | $1.40 | $0.44 |
Fair value of warrant liability | $1,573 | $612 | $0 | ' | ' |
MANAGEMENTS_PLAN_Details
MANAGEMENT'S PLAN (Details) (USD $) | 3 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
MANAGEMENT'S PLAN [Abstract] | ' | ' |
Revenue growth (decline), percent | 7.20% | ' |
Gross margin growth (decline), percent | 15.60% | ' |
Operating income growth (decline), percent | 53.00% | ' |
Cash generated from operations | $1,036,000 | $717,000 |
Net paydown on line of credit | -1,200,000 | ' |
Debt and lease obligations, current | $1,700,000 | ' |