Document And Entity Information
Document And Entity Information - shares | 3 Months Ended | |
Dec. 31, 2018 | Feb. 09, 2019 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Dec. 31, 2018 | |
Document Fiscal Year Focus | 2,019 | |
Document Fiscal Period Focus | Q1 | |
Entity Registrant Name | BIOANALYTICAL SYSTEMS INC | |
Entity Central Index Key | 720,154 | |
Current Fiscal Year End Date | --09-30 | |
Entity Filer Category | Non-accelerated Filer | |
Trading Symbol | BASI | |
Entity Common Stock, Shares Outstanding | 10,290,011 | |
Entity Emerging Growth Company | false | |
Entity Small Business | true |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2018 | Sep. 30, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 723 | $ 773 |
Accounts receivable | ||
Trade, net of allowance of $1,950 at December 31, 2018 and $1,948 at September 30, 2018 | 3,665 | 4,128 |
Unbilled revenues and other | 984 | 1,012 |
Inventories, net | 1,171 | 1,182 |
Prepaid expenses | 1,194 | 966 |
Total current assets | 7,737 | 8,061 |
Property and equipment, net | 16,761 | 16,610 |
Goodwill | 3,072 | 3,072 |
Other intangible assets, net | 3,154 | 3,318 |
Lease rent receivable | 121 | 115 |
Deferred tax asset | 31 | 62 |
Other assets | 27 | 30 |
Total assets | 30,903 | 31,268 |
Current liabilities: | ||
Accounts payable | 3,073 | 3,192 |
Restructuring liability | 558 | 1,117 |
Accrued expenses | 1,888 | 1,571 |
Customer advances | 5,320 | 4,925 |
Current portion of capital lease obligation | 54 | 87 |
Current portion of long-term debt | 920 | 909 |
Total current liabilities | 11,813 | 11,801 |
Capital lease obligation, less current portion | 32 | 37 |
Long-term debt, less current portion, net of debt issuance costs | 8,310 | 8,546 |
Total liabilities | 20,155 | 20,384 |
Shareholders' equity: | ||
Preferred shares, authorized 1,000,000 shares, no par value: 35 Series A shares at $1,000 stated value issued and outstanding at December 31, 2018 and at September 30, 2018 | 35 | 35 |
Common shares, no par value: Authorized 19,000,000 shares; 10,245,277 issued and outstanding at December 31, 2018 and 10,245,277 at September 30, 2018 | 2,523 | 2,523 |
Additional paid-in capital | 24,582 | 24,557 |
Accumulated deficit | (16,392) | (16,231) |
Total shareholders' equity | 10,748 | 10,884 |
Total liabilities and shareholders' equity | $ 30,903 | $ 31,268 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2018 | Sep. 30, 2018 |
Allowance for Doubtful Accounts Receivable, Current | $ 1,950 | $ 1,948 |
Common Stock, No Par Value | $ 0 | $ 0 |
Common Stock, Shares Authorized | 19,000,000 | 19,000,000 |
Common Stock, Shares, Issued | 10,245,277 | 10,245,277 |
Common Stock, Shares, Outstanding | 10,245,277 | 10,245,277 |
Series A Preferred Stock [Member] | ||
Preferred Stock, Shares Authorized | 1,000,000 | 1,000,000 |
Preferred Stock, No Par Value | $ 0 | $ 0 |
Preferred Stock, Shares Issued | 35 | 35 |
Preferred Stock, Shares Outstanding | 35 | 35 |
Preferred Stock, Par or Stated Value Per Share | $ 1,000 | $ 1,000 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Total revenue | $ 8,625 | $ 5,377 |
Total cost of revenue | 6,206 | 3,796 |
Gross profit | 2,419 | 1,581 |
Operating expenses: | ||
Selling | 653 | 294 |
Research and development | 124 | 139 |
General and administrative | 1,601 | 1,137 |
Total operating expenses | 2,378 | 1,570 |
Operating income | 41 | 11 |
Interest expense | 126 | 52 |
Other income | 1 | 0 |
Net (loss) before income taxes | (84) | (41) |
Income taxes (benefit) expense | 1 | (67) |
Net income (loss) | (85) | 26 |
Other comprehensive income: | 0 | 0 |
Comprehensive income (loss) | $ (85) | $ 26 |
Basic net income (loss) per share | $ (0.01) | $ 0 |
Diluted net income (loss) per share | $ (0.01) | $ 0 |
Weighted common shares outstanding: | ||
Basic | 10,245 | 8,244 |
Diluted | 10,245 | 8,795 |
Service [Member] | ||
Total revenue | $ 7,735 | $ 4,525 |
Total cost of revenue | 5,597 | 3,273 |
Product [Member] | ||
Total revenue | 890 | 852 |
Total cost of revenue | $ 609 | $ 523 |
CONSOLIDATED STATEMENTS OF SHAR
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) $ in Thousands | Total | Preferred Shares [Member] | Common Shares [Member] | Additional paid-in capital [Member] | Accumulated deficit [Member] |
Balance at Sep. 30, 2017 | $ 8,467 | $ 1,035 | $ 2,023 | $ 21,446 | $ (16,037) |
Balance (in shares) at Sep. 30, 2017 | 1,035 | 8,243,896 | |||
Comprehensive income (loss): | |||||
Net income (loss) | 26 | 26 | |||
Stock based compensation expense | 34 | 34 | |||
Stock option exercise | 1 | $ 0 | 1 | ||
Stock option exercise (in shares) | 305 | ||||
Balance at Dec. 31, 2017 | 8,528 | $ 1,035 | $ 2,023 | 21,481 | (16,011) |
Balance (in shares) at Dec. 31, 2017 | 1,035 | 8,244,201 | |||
Balance at Sep. 30, 2018 | 10,884 | $ 35 | $ 2,523 | 24,557 | (16,231) |
Balance (in shares) at Sep. 30, 2018 | 35 | 10,245,277 | |||
Adoption of accounting standard | (76) | (76) | |||
Comprehensive income (loss): | |||||
Net income (loss) | (85) | (85) | |||
Stock based compensation expense | 25 | 25 | |||
Balance at Dec. 31, 2018 | $ 10,748 | $ 35 | $ 2,523 | $ 24,582 | $ (16,392) |
Balance (in shares) at Dec. 31, 2018 | 35 | 10,245,277 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Operating activities: | ||
Net income (loss) | $ (85) | $ 26 |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Depreciation and amortization | 713 | 404 |
Employee stock compensation expense | 25 | 34 |
(Gain)/Loss on disposal of property and equipment | (3) | 1 |
Unrealized foreign currency gains | (146) | 0 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 516 | 419 |
Inventories | 10 | (18) |
Income tax accruals | 0 | (67) |
Prepaid expenses and other assets | (227) | (173) |
Accounts payable | (532) | (327) |
Accrued expenses | 317 | 178 |
Customer advances | 319 | 283 |
Net cash provided by operating activities | 907 | 760 |
Investing activities: | ||
Capital expenditures | (684) | (175) |
Net cash used in investing activities | (684) | (175) |
Financing activities: | ||
Payments of long-term debt | (224) | (55) |
Payments of debt issuance costs | (11) | 0 |
Payments on revolving line of credit | (5,892) | (2,811) |
Borrowings on revolving line of credit | 5,892 | 2,811 |
Payments on capital lease obligations | (38) | (31) |
Net cash used in financing activities | (273) | (86) |
Net increase (decrease) in cash and cash equivalents | (50) | 499 |
Cash and cash equivalents at beginning of period | 773 | 434 |
Cash and cash equivalents at end of period | 723 | 933 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | $ 116 | $ 48 |
DESCRIPTION OF THE BUSINESS AND
DESCRIPTION OF THE BUSINESS AND BASIS OF PRESENTATION | 3 Months Ended |
Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [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,” “Our,” “Us,” 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 by pharmaceutical companies, universities, government research centers and medical research institutions. 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, 2018. In the opinion of management, the condensed consolidated financial statements for the three months ended December 31, 2018 and 2017 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, 2018. The results of operations for the three months ended December 31, 2018 may not be indicative of the results for the year ending September 30, 2019. |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 3 Months Ended |
Dec. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
STOCK-BASED COMPENSATION | 2. STOCK-BASED COMPENSATION The Company’s 2008 Stock Option Plan (“the Plan”) was 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 fiscal year ended September 30, 2018. All options granted under the Plan had an exercise price equal to the fair 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. Stock based compensation expense for the three months ended December 31, 2018 and 2017 was $25 and $34, respectively. In March 2018, our shareholders approved the amendment and restatement of the Plan in the form of the Amended and Restated 2018 Equity Incentive Plan (the “Equity Plan”) and future equity awards will be granted from the Equity Plan. The purpose of the Equity Plan is to promote our long-term interests by providing a means of attracting and retaining officers, directors and key employees. The maximum number of common shares that may be granted under the Equity Plan is 700 shares. A summary of our stock option activity for the three months ended December 31, 2018 is as follows (in thousands except for share prices): Options (shares) Weighted- Average Exercise Price Weighted- Average Grant Date Fair Value Outstanding – September 30, 2018 301 $ 1.73 $ 1.38 Exercised - Granted - Forfeited (3 ) $ 1.71 - Outstanding - December 31, 2018 298 $ 1.73 $ 1.38 Exercisable at December 31, 2018 171 As of December 31, 2018, our total unrecognized compensation cost related to non-vested stock options was $156 and is expected to be recognized over a weighted-average service period of 1.6 years. |
INCOME (LOSS) PER SHARE
INCOME (LOSS) PER SHARE | 3 Months Ended |
Dec. 31, 2018 | |
Earnings Per Share [Abstract] | |
NET 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 two categories of dilutive potential common shares: Series A preferred shares issued in May 2011 in connection with our registered direct offering 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, respectively. Shares issuable upon exercise of 298 options were not considered in computing diluted income (loss) per share for the three months ended December 31, 2018 because they were anti-dilutive. The following table reconciles our computation of basic net income (loss) per share to diluted income per share: Three Months Ended December 31, 2018 2017 Basic net income (loss) per share: Net income (loss) applicable to common shareholders $ (85 ) $ 26 Weighted average common shares outstanding 10,245 8,244 Basic net income (loss) per share $ (0.01 ) $ 0.00 Diluted net income (loss) per share: Diluted net income (loss) applicable to common shareholders $ (85 ) $ 26 Weighted average common shares outstanding 10,245 8,244 Plus: Incremental shares from assumed conversions: Series A preferred shares - 518 Dilutive stock options/shares - 33 Diluted weighted average common shares outstanding 10,245 8,795 Diluted net income (loss) per share $ (0.01 ) $ 0.00 |
INVENTORIES
INVENTORIES | 3 Months Ended |
Dec. 31, 2018 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | 4. INVENTORIES Inventories consisted of the following: December 31 , 2018 September 30, 2018 Raw materials $ 914 $ 939 Work in progress 112 89 Finished goods 327 342 1,353 $ 1,370 Obsolescence reserve (182 ) (188 ) $ 1,171 $ 1,182 |
SEGMENT INFORMATION
SEGMENT INFORMATION | 3 Months Ended |
Dec. 31, 2018 | |
Segment Reporting [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 fiscal year ended September 30, 2018. Three Months Ended December 31, 2018 2017 Revenue: Service $ 7,735 $ 4,525 Product 890 852 $ 8,625 $ 5,377 Operating income (loss): Service $ 215 $ 182 Product (175 ) (171 ) $ 41 $ 11 Interest expense (126 ) (52 ) Other income 1 — Loss before income taxes $ (84 ) $ (41 ) |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [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 carry-forwards. 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. On December 22, 2017, the United States (“U.S.”) enacted significant changes to the U.S. tax law following the passage and signing of H.R.1, “An Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018” (the “Tax Act”) (previously known as “The Tax Cuts and Jobs Act”). The Tax Act included significant changes to existing tax law, including a permanent reduction to the U.S. federal corporate income tax rate from 35% to 21%. Accordingly, the Company’s income tax provision as of December 31, 2017 reflects the current year impacts of the U.S. Tax Act on the estimated annual effective tax rate. The Tax Act reduces the U.S. federal corporate tax rate from 35% to 21%. The impact from the permanent reduction to the U.S. federal corporate income tax rate from 35% to 21% is effective January 1, 2018 (the “Effective Date”). When a U.S. federal tax rate change occurs during a fiscal year, taxpayers are required to compute a weighted daily average rate for the fiscal year of enactment and as a result the Company calculated a U.S. federal statutory income tax rate of 21% for the current fiscal year end September 30, 2019. The difference between the enacted federal statutory rate of 21% and our effective rate of (0.34) % for the quarterly period ended December 31, 2018 is due to changes in our valuation allowance on our net deferred tax assets. The impact of the newly enacted federal statutory rate as a result of the Tax Act to the net deferred tax assets is a $1,648 decrease with any offsetting decrease to the valuation allowance. 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 settlement of the position. At December 31, 2018 and September 30, 2018, we had no 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. and several U.S. states. We remain subject to examination by taxing authorities in the jurisdictions in which we have filed returns for years after 2013. |
DEBT
DEBT | 3 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
DEBT | 7. DEBT Credit Facility On June 23, 2017, we entered into a Credit Agreement with First Internet Bank of Indiana (“FIB”), which Credit Agreement was amended on July 2, 2018, September 6, 2018 and September 28, 2018 (as amended, the “Credit Agreement”). The Credit Agreement includes two term loans (the “Initial Term Loan” and “Subsequent Term Loan,” respectively), a revolving line of credit (the “Revolving Facility”), a construction draw loan (the “Construction Draw Loan”) and an equipment draw loan (the “Equipment Draw Loan”). The Initial Term Loan for $4,500 bears interest at a fixed rate of 3.99%, with monthly principal and interest payments of approximately $33. The Initial Term Loan matures in June 2022. The balance on the Initial Term Loan at December 31, 2018 was $4,165. We used the proceeds from the Initial Term Loan to satisfy our indebtedness with Huntington Bank and terminated the related interest rate swap. The July 2, 2018 amendment to the Credit Facility provided the Company with the Subsequent Term Loan in the amount of $5,500, the proceeds of which were used to fund a portion of the cash consideration for the Seventh Wave Laboratories acquisition. Amounts outstanding under the Subsequent Term Loan bear interest at a fixed per annum rate of 5.06%, with monthly principal and interest payments equal to $78. The Subsequent Term Loan matures July 2, 2023 and the balance on the Subsequent Term Loan at December 31, 2018 was $5,226. The Revolving Facility provides a line of credit for up to $3,500 which the Company may borrow from time to time, subject to the terms of the Credit Agreement, including as may be limited by the amount of the Company’s outstanding eligible receivables. The Revolving Credit Facility matures in June 2019 and bears interest at the Prime Rate (generally defined as the highest rate identified as the “Prime Rate” in The Wall Street Journal “Money Rates” column on the date the interest rate is to be determined, or if that date is not a publication date, on the publication date immediately preceding) less Twenty-five (25) Basis Points (0.25%). The balance on the Revolving Facility at December 30, 2018 was $0. We must pay accrued and unpaid interest on the outstanding balance under Revolving Facility on a monthly basis. The September 28, 2018 amendment provided the Company with the Construction Draw Loan in a principal amount not to exceed $4,445 and the Equipment Draw Loan in a principal amount not to exceed $1,429. The Construction Draw Loan and Equipment Draw Loan each mature on March 28, 2025. As of December 31, 2018, there was a $0 balance, respectively, on both of these loans. Subject to certain conditions precedent, the Construction Draw Loan and Equipment Draw Loan each permit the Company to obtain advances aggregating up to the maximum principal amount available for such loan through March 28, 2020. Amounts outstanding under these loans bear interest at a fixed per annum rate of 5.20%. The Construction Draw Loan and the Equipment Draw Loan each require monthly payments of accrued interest on amounts outstanding through March 28, 2020, and thereafter monthly payments of principal and interest on amounts then outstanding through maturity. The Credit Agreement contains various restrictive covenants, including restrictions on the Company's ability to dispose of assets, make acquisitions or investments, incur debt or liens, make distributions to shareholders or repurchase outstanding stock, enter into related party transactions and make capital expenditures, other than upon satisfaction of the conditions set forth in the Credit Agreement. The Credit Agreement also requires us to maintain (i) a minimum debt service coverage ratio of not less than 1.25 to 1.0 and (ii) a cash flow coverage ratio whereby, the ratio of the Company’s total funded debt (as defined in the Credit Agreement) as of the last day of each fiscal quarter to its EBITDA (as defined in the Credit Agreement) for the 12 months ended on such date may not exceed 4.50 to 1.00. Upon an event of default, which includes certain customary events such as, among other things, a failure to make required payments when due, a failure to comply with covenants, certain bankruptcy and insolvency events, and defaults under other material indebtedness, FIB may cease advancing funds, increase the interest rate on outstanding balances, accelerate amounts outstanding, terminate the agreement and foreclose on all collateral. The Company was in compliance with these covenants as of December 31, 2018. The Company’s obligations under the Credit Agreement are guaranteed by BAS Evansville, Inc. (“ BASEV |
ACCRUED EXPENSES
ACCRUED EXPENSES | 3 Months Ended |
Dec. 31, 2018 | |
Payables and Accruals [Abstract] | |
ACCRUED EXPENSES | 8. ACCRUED EXPENSES As part of a fiscal 2012 restructuring, we accrued for lease payments at the cease use date for our United Kingdom facility 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. Based on these matters, we had a $1,117 reserve for lease related costs and for legal and professional fees and other costs to remove improvements previously made to the facility. During the first quarter of fiscal 2019, the company released a portion of the reserve for lease related liabilities that were no longer owed due to the statute of limitations. At December 31, 2018 and September 30, 2018, respectively, we had $558 and $1,117 reserved for the remaining liability. The reserve is classified as a current liability on the Condensed Consolidated Balance Sheets. |
NEW ACCOUNTING PRONOUNCEMENTS
NEW ACCOUNTING PRONOUNCEMENTS | 3 Months Ended |
Dec. 31, 2018 | |
Accounting Changes and Error Corrections [Abstract] | |
NEW ACCOUNTING PRONOUNCEMENTS | 9. NEW ACCOUNTING PRONOUNCEMENTS On October 1, 2018, the Company adopted Accounting Standard Codification, or ASC Topic 606, “ Revenue from Contracts with Customers ,” (Topic 606), using the modified retrospective method for all contracts that were not completed as of October 1, 2018. Comparative prior period information continues to be reported under the accounting standards in effect for the period presented. Topic 606 superseded the revenue recognition requirements in ASC Topic 605, Revenue Recognition. Topic 606 requires the Company to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new guidance requires the Company to apply the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when, or as, the Company satisfies a performance obligation. The cumulative effect of initially applying the new revenue standard was $(76) and has been recorded as an adjustment to the opening balance of retained earnings. The cumulative adjustment relates primarily to the recognition of revenue for free archive storage offered to customers. Gross sales and deferred revenue of $(76), respectively, were recorded as part of the cumulative effect adjustment. The comparative information has not been restated and it is reported in accordance with accounting standard Topic 605, which was in effect for those periods. On October 1, 2018 the Company adopted ASU 2016-15, Statement of Cash Flows (Topic 230), which addresses eight specific cash flow issues and is intended to reduce diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The guidance is effective for interim and annual periods beginning after December 15, 2017. The adoption of this guidance had no material impact on our consolidated financial statements. In February 2016, the FASB issued updated guidance on leases which, for operating leases, requires a lessee to recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments, in its balance sheet. The standard also requires a lessee to recognize a single lease cost, calculated so that the cost of the lease is allocated over the lease term, on a generally straight-line basis. The guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with earlier application permitted. We are currently evaluating the effects of adoption and have not yet determined the impact the revised guidance will have on our condensed consolidated financial statements and related disclosures. In January 2017, the FASB issued ASU 2017-01, Business Combinations – Clarifying the definition of a business (Topic 805). This ASU clarifies the definition of a business with the objective of providing a more robust framework to evaluate whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The guidance will be effective for fiscal years beginning after December 15, 2017, including interim periods within that fiscal year, with early adoption permitted. The amendments are to be applied prospectively to business combinations that occur after the effective date. |
BUSINESS COMBINATIONS
BUSINESS COMBINATIONS | 3 Months Ended |
Dec. 31, 2018 | |
Business Combinations [Abstract] | |
BUSINESS COMBINATIONS | 10. BUSINESS COMBINATIONS Overview On July 2, 2018, the Company, through its wholly-owned subsidiary Seventh Wave Laboratories, LLC (f/k/a Cardinal Laboratories LLC) (the “Purchaser”), acquired (the “Acquisition”) substantially all of the assets of SW Chrysalis, LLC (f/k/a Seventh Wave Laboratories LLC) (the “Seller”), a consulting-based contract research laboratory located in Maryland Heights, Missouri providing integrated services for discovery and preclinical drug development, under the terms and conditions of an Asset Purchase Agreement, dated July 2, 2018, among the Purchaser, the Company, the Seller and certain members of the Seller. The total consideration for the Acquisition was approximately $9,234, which consisted of $6,759 in cash, including an indemnity escrow of $750, and 1,500,000 of the Company’s common shares valued at $2,475, using the closing price of the Company’s common shares on June 29, 2018. The Purchaser is operated as a wholly-owned subsidiary of the Company. The Company funded the cash portion of the purchase price for the Acquisition with cash on hand and the net proceeds from the refinancing of its credit arrangements with FIB, as described in Note 7. Pro Forma Results The Company’s unaudited pro forma results of operations for the three months ended December 31, 2017 assuming the Acquisition had occurred as of October 1, 2017 are presented for comparative purposes below. These amounts are based on available information of the results of operations of the Seller’s operations prior to the acquisition date and are not necessarily indicative of what the results of operations would have been had the Acquisition been completed on October 1, 2017. The unaudited pro forma information is as follows: Three Months Ended December 31, 2017 Total revenues $ 9,118 Net income 249 Pro forma basic net income per share $ 0.03 Pro forma diluted net income per share $ 0.03 |
REVENUE RECOGNITION
REVENUE RECOGNITION | 3 Months Ended |
Dec. 31, 2018 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE RECOGNITION | 11. REVENUE RECOGNITION In accordance with ASC 606, the company disaggregates its revenue from customers into two revenue streams, service revenue and product revenue. At contract inception the Company assesses the services promised in the contract with the customers to identify performance obligations in the arrangements. Service revenue The Company enters into contracts with customers to provide drug discovery and development services with payments based on mainly fixed-fee arrangements. The Company also offers free archive storage services on certain contracts. Customers can also enter into separate archive storage contracts after the expiration of the free storage period. The Company’s drug discovery and development services contracts that include a free storage period are considered a single performance obligation because the company provides a highly integrated service. The inclusion of free storage fee in the measurement of progress under the discovery and development service contracts creates a timing difference between the amounts the company is entitled to receive in reimbursement of cost incurred and amount of revenue recognized on such costs, which is recognized as deferred revenue and classified as customer advances on the condensed consolidated balance sheet. The Company’s fixed fee arrangements may involve bioanalytical and pharmaceutical method development and validation, nonclinical research services and the analysis of bioanalytical and pharmaceutical samples. For bioanalytical and pharmaceutical method validation services and nonclinical research services, revenue is recognized over time using the input method based on the ratio of direct costs incurred to total estimated direct costs. For contracts that involve method development or the analysis of bioanalytical and pharmaceutical samples, revenue is recognized over time when samples are analyzed or when services are performed. The Company generally bills for services on a milestone basis. These contracts represent a single performance obligation and due to the Company’s right to payment for work performed, revenue is recognized over time. Research services contract fees received upon acceptance are deferred until earned, and classified within customer advances on the condensed consolidated balance sheet. Unbilled revenues represent revenues earned under contracts in advance of billings. Archive services provide climate controlled archiving for client’s data and samples. The archive revenue is recognized over time, generally when the service is provided. These arrangements typically include only one performance obligation. Amounts related to future archiving or prepaid archiving contracts for customers where archiving fees are billed in advance are accounted for as deferred revenue and recognized ratably over the period the applicable archive service is performed. Product revenue The Company’s products can be sold to multiple customers and have alternative use. Both the transaction sales price and shipping terms are agreed upon in the customer order. For these products, all revenue is recognized at a point in time, generally when title of the product and risk of loss is transferred to the customer based upon shipping terms. These arrangements typically include only one performance obligation. Certain products have maintenance agreements available for customers to purchase. These are typically billed in advance and are accounted for as deferred revenue and recognized ratably over the applicable maintenance period. The adoption of the new revenue standard impacted the consolidated financial statements as follows: Income Statement As Reported Effect of Change Higher/(Lower) Amount Without Adoption of ASC 606 Service revenue $ 7,735 $ 6 $ 7,729 Product revenue 890 890 Total revenue 8,625 6 8,619 Total cost of revenue 6,206 6,206 Gross profit 2,419 6 2,413 Operating income 41 6 35 Net loss before income taxes (84 ) 6 (90 ) Income taxes expense 1 1 Net loss $ (85 ) $ 6 $ (91 ) Diluted net loss per share $ (0.01 ) $ (0.00 ) $ (0.01 ) Balance Sheet As Reported Effect of Change Higher/(Lower) Amount Without Adoption of ASC 606 Current Liabilities: Customer advances $ 5,320 $ (70 ) $ 5,250 Shareholder’s equity: Retained earnings $ (16,392 ) $ 70 $ (16,322 ) |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 3 Months Ended |
Dec. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Share-based Compensation, Stock Options, Activity | A summary of our stock option activity for the three months ended December 31, 2018 is as follows (in thousands except for share prices): Options (shares) Weighted- Average Exercise Price Weighted- Average Grant Date Fair Value Outstanding – September 30, 2018 301 $ 1.73 $ 1.38 Exercised - Granted - Forfeited (3 ) $ 1.71 - Outstanding - December 31, 2018 298 $ 1.73 $ 1.38 Exercisable at December 31, 2018 171 |
INCOME (LOSS) PER SHARE (Tables
INCOME (LOSS) PER SHARE (Tables) | 3 Months Ended |
Dec. 31, 2018 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | The following table reconciles our computation of basic net income (loss) per share to diluted income per share: Three Months Ended December 31, 2018 2017 Basic net income (loss) per share: Net income (loss) applicable to common shareholders $ (85 ) $ 26 Weighted average common shares outstanding 10,245 8,244 Basic net income (loss) per share $ (0.01 ) $ 0.00 Diluted net income (loss) per share: Diluted net income (loss) applicable to common shareholders $ (85 ) $ 26 Weighted average common shares outstanding 10,245 8,244 Plus: Incremental shares from assumed conversions: Series A preferred shares - 518 Dilutive stock options/shares - 33 Diluted weighted average common shares outstanding 10,245 8,795 Diluted net income (loss) per share $ (0.01 ) $ 0.00 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 3 Months Ended |
Dec. 31, 2018 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory, Current | Inventories consisted of the following: December 31 , 2018 September 30, 2018 Raw materials $ 914 $ 939 Work in progress 112 89 Finished goods 327 342 1,353 $ 1,370 Obsolescence reserve (182 ) (188 ) $ 1,171 $ 1,182 |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 3 Months Ended |
Dec. 31, 2018 | |
Segment Reporting [Abstract] | |
Schedule of Operating Segments | Three Months Ended December 31, 2018 2017 Revenue: Service $ 7,735 $ 4,525 Product 890 852 $ 8,625 $ 5,377 Operating income (loss): Service $ 215 $ 182 Product (175 ) (171 ) $ 41 $ 11 Interest expense (126 ) (52 ) Other income 1 — Loss before income taxes $ (84 ) $ (41 ) |
BUSINESS COMBINATIONS (Tables)
BUSINESS COMBINATIONS (Tables) | 3 Months Ended |
Dec. 31, 2018 | |
Business Combinations [Abstract] | |
Business Acquisition, Pro Forma Information | The unaudited pro forma information is as follows: Three Months Ended December 31, 2017 Total revenues $ 9,118 Net income 249 Pro forma basic net income per share $ 0.03 Pro forma diluted net income per share $ 0.03 |
REVENUE RECOGNITION (Tables)
REVENUE RECOGNITION (Tables) | 3 Months Ended |
Dec. 31, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Schedule Of The New Revenue, Standard Impacted The Consolidated Financial Statements | The adoption of the new revenue standard impacted the consolidated financial statements as follows: Income Statement As Reported Effect of Change Higher/(Lower) Amount Without Adoption of ASC 606 Service revenue $ 7,735 $ 6 $ 7,729 Product revenue 890 890 Total revenue 8,625 6 8,619 Total cost of revenue 6,206 6,206 Gross profit 2,419 6 2,413 Operating income 41 6 35 Net loss before income taxes (84 ) 6 (90 ) Income taxes expense 1 1 Net loss $ (85 ) $ 6 $ (91 ) Diluted net loss per share $ (0.01 ) $ (0.00 ) $ (0.01 ) Balance Sheet As Reported Effect of Change Higher/(Lower) Amount Without Adoption of ASC 606 Current Liabilities: Customer advances $ 5,320 $ (70 ) $ 5,250 Shareholder’s equity: Retained earnings $ (16,392 ) $ 70 $ (16,322 ) |
STOCK-BASED COMPENSATION (Detai
STOCK-BASED COMPENSATION (Details) - Employee Stock Option [Member] shares in Thousands | 3 Months Ended |
Dec. 31, 2018$ / sharesshares | |
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items] | |
Options (shares) Outstanding | shares | 301 |
Options (shares) Exercised | shares | 0 |
Options (shares) Granted | shares | 0 |
Options (shares) Forfeited | shares | (3) |
Options (shares) Outstanding | shares | 298 |
Options (shares) Exercisable | shares | 171 |
Weighted-Average Exercise Price Outstanding | $ / shares | $ 1.73 |
Weighted-Average Exercise Price Forfeited | $ / shares | 1.71 |
Weighted-Average Exercise Price Outstanding | $ / shares | 1.73 |
Weighted-Average Grant Date Fair Value Outstanding | $ / shares | 1.38 |
Weighted-Average Grant Date Fair Value Forfeited | $ / shares | 0 |
Weighted-Average Grant Date Fair Value Outstanding | $ / shares | $ 1.38 |
STOCK-BASED COMPENSATION (Det_2
STOCK-BASED COMPENSATION (Details Textual) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
2018 Equity Incentive Plan [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized | 700 | |
Employee Stock Option [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Stock Options | $ 156 | |
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition | 1 year 7 months 6 days | |
Allocated Share-based Compensation Expense | $ 25 | $ 34 |
INCOME (LOSS) PER SHARE (Detail
INCOME (LOSS) PER SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Basic net income (loss) per share: | ||
Net income (loss) applicable to common shareholders | $ (85) | $ 26 |
Weighted average common shares outstanding | 10,245 | 8,244 |
Basic net income (loss) per share | $ (0.01) | $ 0 |
Diluted net income (loss) per share: | ||
Diluted net income (loss) applicable to common shareholders | $ (85) | $ 26 |
Weighted average common shares outstanding | 10,245 | 8,244 |
Plus: Incremental shares from assumed conversions: | ||
Series A preferred shares | 0 | 518 |
Dilutive stock options/shares | 0 | 33 |
Diluted weighted average common shares outstanding | 10,245 | 8,795 |
Diluted net income (loss) per share | $ (0.01) | $ 0 |
INCOME (LOSS) PER SHARE (Deta_2
INCOME (LOSS) PER SHARE (Details Textual) | 3 Months Ended |
Dec. 31, 2018shares | |
Employee Stock Option [Member] | |
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 298 |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Sep. 30, 2018 |
Inventory [Line Items] | ||
Raw materials | $ 914 | $ 939 |
Work in progress | 112 | 89 |
Finished goods | 327 | 342 |
Gross inventories | 1,353 | 1,370 |
Obsolescence reserve | (182) | (188) |
Inventories | $ 1,171 | $ 1,182 |
SEGMENT INFORMATION (Details)
SEGMENT INFORMATION (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Segment Reporting Information [Line Items] | ||
Revenue | $ 8,625 | $ 5,377 |
Operating income (loss) | 41 | 11 |
Interest expense | (126) | (52) |
Other income | 1 | 0 |
Loss before income taxes | (84) | (41) |
Service Segment [Member] | ||
Segment Reporting Information [Line Items] | ||
Revenue | 7,735 | 4,525 |
Operating income (loss) | 215 | 182 |
Product Segment [Member] | ||
Segment Reporting Information [Line Items] | ||
Revenue | 890 | 852 |
Operating income (loss) | $ (175) | $ (171) |
INCOME TAXES (Details Textual)
INCOME TAXES (Details Textual) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2017 | |
Income Taxes [Line Items] | ||||
Operating Loss Carryforwards | $ 1,648 | |||
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 21.00% | 21.00% | 35.00% | |
Effective Income Tax Rate Reconciliation, Percent | (0.34%) | |||
Scenario, Plan [Member] | ||||
Income Taxes [Line Items] | ||||
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 21.00% |
DEBT (Details Textual)
DEBT (Details Textual) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | |
Sep. 28, 2018 | Jul. 02, 2018 | Dec. 31, 2018 | |
Credit Arrangements [Member] | |||
Debt Instrument [Line Items] | |||
Business Combination, Contingent Consideration Arrangements, Description | The Credit Agreement also requires us to maintain (i) a minimum debt service coverage ratio of not less than 1.25 to 1.0 and (ii) a cash flow coverage ratio whereby, the ratio of the Company’s total funded debt (as defined in the Credit Agreement) as of the last day of each fiscal quarter to its EBITDA (as defined in the Credit Agreement) for the 12 months ended on such date may not exceed 4.50 to 1.00. | ||
Equipment Draw Loan [Member] | |||
Debt Instrument [Line Items] | |||
Debt Instrument, Maturity Date | Mar. 28, 2025 | ||
Long-term Debt | $ 0 | ||
Line of Credit Facility, Maximum Borrowing Capacity | $ 1,429 | ||
Construction Draw Loan [Member] | |||
Debt Instrument [Line Items] | |||
Debt Instrument, Maturity Date | Mar. 28, 2025 | ||
Long-term Debt | 0 | ||
Line of Credit Facility, Maximum Borrowing Capacity | $ 4,445 | ||
First Internet Bank of Indiana [Member] | |||
Debt Instrument [Line Items] | |||
Debt Instrument, Periodic Payment | $ 33 | ||
Debt Instrument, Interest Rate, Stated Percentage | 3.99% | ||
Debt Instrument, Face Amount | $ 4,500 | ||
Long-term Debt, Gross | 4,165 | ||
First Internet Bank of Indiana [Member] | Revolving Credit Facility [Member] | |||
Debt Instrument [Line Items] | |||
Line of Credit Facility, Maximum Borrowing Capacity | $ 3,500 | ||
Debt Instrument, Description of Variable Rate Basis | less Twenty-five (25) Basis Points (0.25%). | ||
Long-term Line of Credit | $ 0 | ||
Subsequent Term Loan [Member] | First Internet Bank of Indiana [Member] | |||
Debt Instrument [Line Items] | |||
Debt Instrument, Periodic Payment | $ 78 | ||
Debt Instrument, Interest Rate, Stated Percentage | 5.06% | ||
Debt Instrument, Face Amount | $ 5,500 | ||
Debt Instrument, Maturity Date | Jul. 2, 2023 | ||
Long-term Debt | $ 5,226 | ||
Current Credit Agreement [Member] | |||
Debt Instrument [Line Items] | |||
Debt Instrument, Interest Rate, Stated Percentage | 5.20% |
ACCRUED EXPENSES (Details Textu
ACCRUED EXPENSES (Details Textual) - USD ($) $ in Thousands | Dec. 31, 2018 | Sep. 30, 2018 |
Restructuring Cost and Reserve [Line Items] | ||
Restructuring Reserve, Current | $ 558 | $ 1,117 |
Lease Related Costs | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring reserves | $ 1,117 |
NEW ACCOUNTING PRONOUNCEMENTS (
NEW ACCOUNTING PRONOUNCEMENTS (Details Textual) $ in Thousands | 3 Months Ended |
Dec. 31, 2018USD ($) | |
Accounting Changes and Error Corrections [Abstract] | |
Cumulative Effect on Retained Earnings, Net of Tax | $ (76) |
BUSINESS COMBINATIONS (Details)
BUSINESS COMBINATIONS (Details) $ / shares in Units, $ in Thousands | 3 Months Ended |
Dec. 31, 2017USD ($)$ / shares | |
Total revenues | $ | $ 9,118 |
Net income | $ | $ 249 |
Pro forma basic net income per share | $ / shares | $ 0.03 |
Pro forma diluted net income per share | $ / shares | $ 0.03 |
BUSINESS COMBINATIONS (Details
BUSINESS COMBINATIONS (Details Textual) - USD ($) $ in Millions | 1 Months Ended | |||
Jul. 02, 2018 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 29, 2018 | |
Business Combination, Contingent Consideration, Asset | $ 9,234 | |||
Business Combination, Consideration Transferred | 6,759 | |||
Escrow Deposit Disbursements Related to Property Acquisition | $ 750 | |||
Common Stock, Shares, Issued | 1,500,000 | 10,245,277 | 10,245,277 | |
Business Acquisition, Equity Interest Issued or Issuable, Value Assigned | $ 2,475 |
REVENUE RECOGNITION (Details)
REVENUE RECOGNITION (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Total revenue | $ 8,625 | $ 5,377 |
Total cost of revenue | 6,206 | 3,796 |
Gross profit | 2,419 | 1,581 |
Operating income | 41 | 11 |
Net loss before income taxes | (84) | (41) |
Income taxes expense | 1 | (67) |
Net loss | $ (85) | $ 26 |
Diluted net loss per share | $ (0.01) | $ 0 |
Product [Member] | ||
Total revenue | $ 890 | $ 852 |
Total cost of revenue | 609 | 523 |
Service [Member] | ||
Total revenue | 7,735 | 4,525 |
Total cost of revenue | 5,597 | $ 3,273 |
Previously Reported [Member] | ||
Total revenue | 8,619 | |
Total cost of revenue | 6,206 | |
Gross profit | 2,413 | |
Operating income | 35 | |
Net loss before income taxes | (90) | |
Income taxes expense | 1 | |
Net loss | $ (91) | |
Diluted net loss per share | $ (0.01) | |
Previously Reported [Member] | Product [Member] | ||
Total revenue | $ 890 | |
Previously Reported [Member] | Service [Member] | ||
Total revenue | 7,729 | |
New Accounting Pronouncement, Early Adoption, Effect [Member] | ||
Total revenue | 6 | |
Gross profit | 6 | |
Operating income | 6 | |
Net loss before income taxes | 6 | |
Net loss | $ 6 | |
Diluted net loss per share | $ 0 | |
New Accounting Pronouncement, Early Adoption, Effect [Member] | Service [Member] | ||
Total revenue | $ 6 |
REVENUE RECOGNITION (Detail 1)
REVENUE RECOGNITION (Detail 1) - USD ($) $ in Thousands | Dec. 31, 2018 | Sep. 30, 2018 |
Current Liabilities: | ||
Customer advances | $ 5,320 | $ 4,925 |
Shareholder's equity: | ||
Retained earnings | (16,392) | $ (16,231) |
Previously Reported [Member] | ||
Current Liabilities: | ||
Customer advances | 5,250 | |
Shareholder's equity: | ||
Retained earnings | (16,322) | |
New Accounting Pronouncement, Early Adoption, Effect [Member] | ||
Current Liabilities: | ||
Customer advances | (70) | |
Shareholder's equity: | ||
Retained earnings | $ 70 |