BASi Files Form 8K Notice of Non-Compliance with a Continued Listing Rule Non-Reliance on Previously

BASi Files Form 8K Notice of Non-Compliance with a Continued Listing Rule Non-Reliance on Previously Issued Financial Statements

WEST LAFAYETTE, Ind.--(BUSINESS WIRE)-- Bioanalytical Systems, Inc. (Nasdaq: BASI) announced today that on August 15, 2013, the Company received a letter from the Nasdaq Listing Qualifications Department stating that the Company no longer complies with the Listing Rules for continued listing of the Company's common shares on the Nasdaq Capital Market since the Company has not yet filed its Form 10-Q for the period ended June 30, 2013 with the Securities and Exchange Commission.


The Letter further stated that, under the listing rules, the Company has until October 14, 2013 to submit a plan to regain compliance. If the Company's plan is accepted, the Company may be granted an exception of up to 180 calendar days from the initial filing's due date, or until February 10, 2014, to regain compliance. The Company intends to comply with the dates given above in order to regain compliance with the listing rules.

On August 14, 2013, the Company filed a 12b-25 indicating that the Company could not, without unreasonable effort or expense, file its Form 10-Q for the three and nine months ended June 30, 2013 by the original due date of August 14, 2013 until management could resolve a complex accounting issue related to the accounting treatment for the outstanding warrants.

Non-Reliance on Previously Issued Financial Statements

On August 19, 2013, the Audit Committee of Bioanalytical Systems, in consultation with management, concluded that, because of an error identified in the Company's previously issued financial statements for the fiscal years ended September 30, 2011, September 30, 2012 and the first two fiscal quarters of 2013, the Company should restate its previously issued financial statements for the relevant periods. Accordingly, investors should no longer rely upon the Company's previously released financial statements and related auditors' reports for these periods or any earnings releases or other communications relating to these periods.

The error, identified by management, is related to the accounting for the Class A and B Warrants as part of the May 2011 public offering. At the time of the transaction, the Company incorrectly recorded the fair value of the warrants as equity. The proper treatment under ASC 815-40 would have been to record the fair value of the warrants as a liability due to the provision in Section 3e of the Common Stock Purchase Warrant that could require net cash settlement of the warrants. The Audit Committee and management have discussed the matters reported herein with the Company's prior and current independent registered accounting firms, as applicable. The Audit Committee, with the assistance of independent counsel, is conducting an investigation into the circumstances surrounding the error.

The Company is evaluating the debt covenants at each reporting period and expects to be in breach of the tangible net worth ratios in fiscal 2013. The Company is communicating with its lenders to obtain waivers for the applicable periods, if necessary.

The Company expects all amendments and restatements to the financial statements affected to be non-cash in nature.

The Company has determined that the below-detailed restatements of its financial statements resulted from a material weakness in its internal control over financial reporting, specifically related to its process and procedures related to the accounting for stock purchase warrants. The Company has been actively engaged in developing a remediation plan to address the material weakness. Implementation of the remediation plan is in process and consists of, among other things, redesigning the procedures to enhance its identification, capture, review, approval and recording of contractual terms included in equity arrangements. The Company also intends to seek the counsel of other experts in accounting before discussions with its auditors on future unusual and non-recurring transactions.

The following tables summarize the effects of the previously discussed unaudited restatement adjustments on the consolidated statements of operations for the periods ended:

   

Three Months ended

                  
June 30, 2011Fiscal 2011Fiscal 2012
As      AsAs
Reported   Error   RestatedReported   Error   RestatedReported   Error   Restated
 
Total revenue$8,478$--$8,478$33,144$-$33,144$28,208$-$28,208
Total cost of revenue 5,733     --     5,733  22,638     -     22,638  21,370         21,370 
 
Gross profit2,745--2,74510,506--10,5066,838--6,838
 
Total operating expenses2,264--2,2649,219--9,2199,3299,329
Restructuring charges --     --     --  --     --     --  3,195         3,195 
 
Operating income (loss)481--4811,287--1,287(5,686)--(5,686)
 
Interest expense(70)--(70)(706)--(706)(714)--(714)
Warrant valuation (increase) decrease--(185)(185)--1,7591,759--7373
Other income 7     --     7  12     --     12  12     --    12 
 
Income (loss) before income taxes418(185)2335931,7592,352(6,388)73(6,315)
 
Income tax expense --     --     --  50     --     50  2         2 
 
Net income (loss)418(185)2335431,7592,302(6,390)73(6,317)
 
Less: Deemed dividend for
Series A Preferred Shares(3,277)(2,229)(5,506)(3,277)(2,229)(5,506)------
Less: Preferred stock dividends(991)--(991)(991)--(991)------
                           
Net loss applicable to
common shareholders$(3,850)   $(2,414)   $(6,264)$(3,725)   $(470)   $(4,195)$(6,390)   $73   $(6,317)
 
Basic net income (loss) per share$(0.65)$(0.41)$(1.06)$(0.66)$(0.08)$(0.74)$(0.89)$0.01$(0.88)
 

                           
Three Months EndedThree Months EndedSix Months ended
December 31, 2012March 31, 2013March 31, 2013
AsAsAs
Reported   Error   RestatedReported   Error   RestatedReported   Error   Restated
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