BIOANALYTICAL SYSTEMS INC (Form: 10-Q, Received: 05/15/2015 15:57:44)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the quarterly period ended March 31, 2015

OR

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the transition period from __________ to _____________.

Commission File Number 000-23357

BIOANALYTICAL SYSTEMS, INC.

(Exact name of the registrant as specified in its charter)

INDIANA

(State or other jurisdiction of incorporation or
organization)

35-1345024

(I.R.S. Employer Identification No.)

2701 KENT AVENUE

WEST LAFAYETTE, INDIANA

(Address of principal executive offices)

47906

(Zip code)

(765) 463-4527

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES x NO ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES x NO ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ¨ Accelerated filer ¨ Non-accelerated filer ¨ Smaller Reporting Company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). YES ¨ NO x

As of May 11, 2015, 8,076,378 of the registrant's common shares were outstanding.

TABLE OF CONTENTS

		Page
PART I	FINANCIAL INFORMATION

Item 1	Condensed Consolidated Financial Statements (Unaudited):

	Condensed Consolidated Balance Sheets as of March 31, 2015 and September 30, 2014	3

	Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the Three and Six Months Ended March 31, 2015 and 2014	4

	Condensed Consolidated Statements of Cash Flows for the Six Months Ended March 31, 2015 and 2014	5

	Notes to Condensed Consolidated Financial Statements	6

Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14

Item 3	Quantitative and Qualitative Disclosures about Market Risk	25

Item 4	Controls and Procedures	26

PART II	OTHER INFORMATION

Item 1A	Risk Factors	26

Item 5	Other Information	26

Item 6	Exhibits	26

	Signatures	27

BIOANALYTICAL SYSTEMS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts)

	March 31, 2015			September 30, 2014
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	536		$	981
Accounts receivable
Trade, net of allowance $52 at March 31, 2015 and $54 at September 30, 2014, respectively		3,029			2,557
Unbilled revenues and other		722			878
Inventories		1,672			1,564
Prepaid expenses		445			675
Total current assets		6,404			6,655

Property and equipment, net		15,451			15,949
Goodwill		1,009			1,009
Debt issue costs		108			122
Other assets		36			39
Total assets	$	23,008		$	23,774

Liabilities and shareholders’ equity
Current liabilities:
Accounts payable	$	2,550		$	2,672
Accrued expenses		1,300			1,842
Customer advances		3,482			2,990
Income tax accruals		18			20
Revolving line of credit		—			202
Fair value of warrant liability		357			676
Current portion of capital lease obligation		259			279
Current portion of long-term debt		786			786
Total current liabilities		8,752			9,467

Fair value of interest rate swap		46			21
Capital lease obligation, less current portion		167			298
Long-term debt, less current portion		4,059			4,452
Total liabilities		13,024			14,238

Shareholders’ 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 March 31, 2015 and September 30, 2014, respectively		1,185			1,185
Common shares, no par value:
Authorized 19,000,000 shares; 8,076,106 shares and 8,075,335 issued and outstanding at March 31, 2015 and September 30, 2014, respectively		1,981			1,980
Additional paid-in capital		21,202			21,154
Accumulated deficit		(14,458	)		(14,790	)
Accumulated other comprehensive income		74			7
Total shareholders’ equity		9,984			9,536
Total liabilities and shareholders’ equity		$ 23,008			$23,774

The accompanying notes are an integral part of the condensed consolidated financial statements.

BIOANALYTICAL SYSTEMS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME (LOSS)

(In thousands, except per share amounts)

(Unaudited)

	Three Months Ended March 31,						Six Months Ended March 31,
	2015			2014			2015			2014

Service revenue	$	4,530		$	4,526		$	8,928		$	9,442
Product revenue		1,196			1,386			2,643			2,690
Total revenue		5,726			5,912			11,571			12,132

Cost of service revenue		3,242			3,330			6,498			6,653
Cost of product revenue		682			570			1,367			1,322
Total cost of revenue		3,924			3,900			7,865			7,975

Gross profit		1,802			2,012			3,706			4,157
Operating expenses:
Selling		426			479			762			916
Research and development		138			170			329			313
General and administrative		1,210			1,258			2,445			2,361
Total operating expenses		1,774			1,907			3,536			3,590

Operating income		28			105			170			567

Interest expense		(75	)		(121	)		(156	)		(285	)
Change in fair value of warrant liability – decrease (increase)		199			(200	)		319			(1,161	)
Other income (expense)		(1	)		4			1			5
Net income (loss) before income taxes		151			(212	)		334			(874	)

Income taxes		1			7			2			7

Net income (loss)	$	150		$	(219	)	$	332		$	(881	)

Other comprehensive income (loss):
Fair value adjustment of interest rate swap		(15	)		—			(25	)		—
Foreign currency translation adjustment		51			(8	)		93			(34	)

Comprehensive income (loss)	$	186		$	(227	)	$	400		$	(915	)

Basic net income (loss) per share	$	0.02		$	(0.03	)	$	0.04		$	(0.11	)
Diluted net income (loss) per share	$	(0.01	)	$	(0.03	)	$	0.00		$	(0.11	)

Weighted common shares outstanding:
Basic		8,076			7,964			8,076			7,848
Diluted		8,105			7,964			8,863			7,848

BIOANALYTICAL SYSTEMS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Six Months Ended March 31,
	2015			2014

Operating activities:
Net income (loss)	$	332		$	(881	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		730			799
Change in fair value of warrant liability – (decrease) increase		(319	)		1,161
Employee stock compensation expense		48			45
Provision for doubtful accounts		(2	)		2
Loss on sale of property and equipment		2			1
Changes in operating assets and liabilities:
Accounts receivable		(314	)		442
Inventories		(108	)		(128	)
Income tax accruals		—			(8	)
Prepaid expenses and other assets		243			(488	)
Accounts payable		(122	)		(180	)
Accrued expenses		(542	)		(32	)
Customer advances		492			272
Net cash provided by operating activities		440			1,005

Investing activities:
Capital expenditures		(231	)		(150	)
Net cash used by investing activities		(231	)		(150	)

Financing activities:
Payments of long-term debt		(393	)		(301	)
Payments of debt issuance costs		—			(60	)
Payments on revolving line of credit		(3,532	)		(9,543	)
Borrowings on revolving line of credit		3,330			8,128
Proceeds from Class A warrant exercises		—			161
Payments on capital lease obligations		(151	)		(131	)
Net cash used by financing activities		(746	)		(1,746	)

Effect of exchange rate changes		92			(34	)

Net decrease in cash and cash equivalents		(445	)		(925	)
Cash and cash equivalents at beginning of period		981			1,304
Cash and cash equivalents at end of period	$	536		$	379

Supplemental disclosure of non-cash financing activities:
Preferred stock dividends paid in common shares	$	—		$	(36	)
Fair value of warrants exercised	$	—		$	839

The accompanying notes are an integral part of the condensed consolidated financial statements.

BIOANALYTICAL SYSTEMS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands except per share data or as otherwise indicated)

(Unaudited)

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 U.S. 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, 2014. In the opinion of management, the condensed consolidated financial statements for the three and six months ended March 31, 2015 and 2014 include all adjustments which are necessary for a fair presentation of the results of the interim periods and of our financial position at March 31, 2015. The results of operations for the three and six months ended March 31, 2015 are not necessarily indicative of the results for the year ending September 30, 2015.

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, 2014. 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 Plan. As of March 31, 2015, there are 155 shares underlying options 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, 2014. Stock based compensation expense for the three and six months ended March 31, 2014 was $0 and $45, respectively. Stock based compensation expense for the three and six months ended March 31, 2015 was $19 and $48, respectively.

A summary of our stock option activity for the six months ended March 31, 2015 is as follows (in thousands except for share prices):

	Options (shares)			Weighted- Average Exercise Price		Weighted- Average Grant Date Fair Value

Outstanding - October 1, 2014		426		$	1.83	$	1.41
Exercised		(2	)		1.40		1.15
Granted		35			2.38		1.98
Foreitures		(24	)		4.39		3.02
Outstanding -March 31, 2015		435		$	1.73	$	1.37

During the six months ended March 31, 2015, 2 options were exercised cashlessly and we granted options for 35 common shares under the Plan. The fair value of the option grant is estimated on the date of the grant. The weighted-average assumptions used to compute the fair value of these options were as follows:

Risk-free interest rate		1.93% - 2.13%
Dividend yield		0.00%
Expected volatility		88.00% - 100.06%
Expected life of the options (years)		8.0
Forfeitures		3.00%

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 and 592 common shares issuable upon conversion of preferred shares were not considered in computing diluted earnings per share for the three months ended March 31, 2015 because they were anti-dilutive. Shares issuable upon exercise of options, warrants for 810 common shares and 595 common shares issuable upon conversion of preferred shares also were not considered in computing diluted earnings per share for the three and six months ended March 31, 2014, respectively, because they were also anti-dilutive.

The following table reconciles our computation of basic net income (loss) per share to diluted net loss per share:

	Three Months Ended March 31,						Six Months Ended March 31,
	2015			2014			2015			2014

Basic net income (loss) per share:

Net income (loss) applicable to common shareholders	$	150		$	(219	)	$	332		$	(881	)
Weighted average common shares outstanding		8,076			7,964			8,076			7,848

Basic net income (loss) per share	$	0.02		$	(0.03	)	$	0.04		$	(0.11	)

Diluted net loss per share:

Net Income (loss) applicable to common shareholders	$	150		$	(219	)	$	332		$	(881	)
Change in Fair Value of Warrant Liability		(199	)		-			(319	)		-

Diluted net income (loss) applicable to common shareholders	$	(49	)	$	(219	)	$	13		$	(881	)

Weighted average common shares outstanding		8,076			7,964			8,076			7,848
Plus: Incremental shares from assumed conversions:
Series A preferred shares		-			-			592			-
Class A warrants		29			-			64			-
Stock options/shares		-			-			131			-

Diluted weighted average common shares outstanding		8,105			7,964			8,863			7,848

Diluted net loss per share:	$	(0.01	)	$	(0.03	)	$	0.00		$	(0.11	)

INVENTORIES

Inventories consisted of the following:

	March 31, 2015			September 30, 2014

Raw materials	$	1,280		$	1,228
Work in progress		329			295
Finished goods		388			340
	$	1,997		$	1,863
Obsolescence reserve		(325	)		(299	)
	$	1,672		$	1,564

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 the Consolidated Financial Statements in our annual report on Form 10-K for the year ended September 30, 2014.

	Three Months Ended March 31,						Six Months Ended March 31,
	2015			2014			2015			2014

Revenue:
Service	$	4,530		$	4,526		$	8,928		$	9,442
Product		1,196			1,386			2,643			2,690
	$	5,726		$	5,912		$	11,571		$	12,132

Operating income (loss):
Service	$	60		$	(38	)	$	81		$	377
Product		(32	)		143			89			190
	$	28		$	105		$	170		$	567

Interest expense		(75	)		(121	)		(156	)		(285	)
Change in fair value of warrant liability – decrease (increase)		199			(200	)		319			(1,161	)
Other income (expense)		(1	)		4			1			5

Net income (loss) before income taxes	$	151		$	(212	)	$	334		$	(874	)

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.

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 March 31, 2015 and September 30, 2014, we had a $16 liability for uncertain income tax positions. The difference between the federal statutory rate of 34% and our effective rate of 0.5% 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 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 2009.

DEBT

Note payable

Prior to obtaining the new credit facility described below, we had a term loan from Regions Bank (“Regions”), which was secured by mortgages on our facilities in West Lafayette and Evansville, Indiana.

On October 31, 2013, we executed a seventh amendment with Regions to extend the note payable maturity date to October 31, 2014. The unpaid principal on the note was incorporated into a replacement note payable for $5,205 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 was secured by real estate at our West Lafayette and Evansville, Indiana locations.

Regions required 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 would have been a default under the Regions loan, requiring us to negotiate with Regions regarding loan modifications or waivers. If we were unable to obtain such modifications or waivers, Regions could have accelerated the maturity of the loan and caused a cross default with our other lender. The Regions loan agreements contained cross-default provisions with each other and formerly with the revolving line of credit with EGC described below that was terminated in January 2014.

Revolving Line of Credit

On January 31, 2014, we paid off the remaining balance on our $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 and the line of credit terminated on that date.

During the first four months of fiscal 2014, borrowings under the Credit Agreement bore interest at an annual rate equal to Citibank’s Prime Rate plus five percent (5%) with minimum monthly interest of $15. Interest was paid monthly. The line of credit also carried an annual facilities fee of 2% and a 0.2% collateral monitoring fee. Borrowings under the Credit Agreement were 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 were calculated based on 75% of eligible accounts receivable. Under the Credit Agreement, as amended, the Company had 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 contained cross-default provisions with the Regions loan and any future EGC loans.

Current Credit Facility

On May 14, 2014, we entered into a Credit Agreement (“Agreement”) with Huntington Bank. The Agreement includes both a term loan and a revolving loan and is secured by mortgages on our facilities in West Lafayette and Evansville, Indiana and liens on our personal property.

The term loan for $5,500 bears interest at LIBOR plus 325 basis points with monthly principal payments of approximately $65, plus interest. The term loan matures in May 2019. On May 15, 2014, we used the proceeds from the term loan to pay off the Regions replacement note payable. The balance on the term loan at March 31, 2015 and September 30, 2014 was $4,845 and $5,238, respectively.

The revolving loan for $2,000 matures in May 2016 and bears interest at LIBOR plus 300 basis points with interest paid monthly. The revolving loan also carries a facility fee of .25%, paid quarterly, for the unused portion of the revolving loan. The revolving loan includes an annual clean-up provision that requires the Company to maintain a balance of not more than 20% of the maximum loan of $2,000 for a period of 30 days in any 12 month period while the revolving loan is outstanding. The revolving loan balance was $0 and $202 at March 31, 2015 and September 30, 2014, respectively.

As of March 31, 2015, the Agreement required us to maintain a fixed charge coverage ratio of not less than 1.10 to 1.00. The Agreement also requires us to maintain a maximum total leverage ratio of not greater than 3.00 to 1.00 from the date of the Agreement through September 30, 2015 and 2.50 to 1.00 commencing after October 1, 2015 until maturity. The Agreement also contains various other covenants, including restrictions on the incurrence of certain indebtedness, liens, investments, acquisitions, asset sales and cash dividends. As of December 31, 2014 and March 31, 2015, we were not incompliance with the fixed charge coverage ratio due to depressed operating income in the first half of the current fiscal year. We were in compliance with all other covenants, including the maximum total leverage ratio, as of December 31, 2014 and March 31, 2015.

On May 14, 2015, we executed a first amendment to the Agreement with Huntington Bank. As part of the amendment, Huntington Bank waived our noncompliance with the fixed charge coverage ratio for the periods ended December 31, 2014 and March 31, 2015, respectively. Also, the fixed charge coverage ratio was amended to not less than 1.05 to 1.00 for the fiscal quarters ending June 30, 2015, September 30, 2015 and December 31, 2015, respectively. The ratio returns to not less than 1.10 to 1.00 for the period ending March 31, 2016 until maturity. The fixed charge coverage ratio calculation was also amended to exclude up to $1,000 in capital expenditures related to the building renovation costs associated with the lease agreement with Cook Biotech, Inc. executed in January 2015.

We entered into an interest rate swap agreement with respect to the above loans to fix the interest rate with respect to 60% of the value of the term loan at approximately 5.0%. We entered into this derivative transaction to hedge interest rate risk of the related debt obligation and not to speculate on interest rates. The changes in the fair value of the interest rate swap are recorded in Accumulated Other Comprehensive Income (AOCI) to the extent effective. We assess on an ongoing basis whether the derivative that is used in the hedging transaction is highly effective in offsetting changes in cash flows of the hedged debt. The terms of the interest rate swap match the terms of the underlying debt resulting in no ineffectiveness.

We incurred $134 of costs in connection with the issuance of the credit facility. These costs were capitalized and are being amortized to interest expense over five years based on the contractual term of the credit facility. As of March 31, 2015 and September 30, 2014, the unamortized portion of debt issuance costs related to the credit facility was $108 and $122, respectively, and was included in debt issue costs, net on the consolidated balance sheets.

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 and closed our facility and bioanalytical laboratory in Warwickshire, United Kingdom. We continue to sell our products globally while further consolidating delivery of our CRO services into our Indiana locations.

We reserved for lease payments at the cease use date for our UK 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. 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 matters, we have $1,000 reserved for UK lease related costs at March 31, 2015.

The following table sets forth the roll forward of the restructuring activity for the six months ended March 31, 2015.

	Balance, September 30, 2014		Total Charges		Cash Payments		Other		Balance, March 31, 2015
Lease related costs	$	961	$	39	$	-	$	-	$	1,000
Other costs		117		-		-		-		117
Total	$	1,078	$	39	$	-	$	-	$	1,117

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.

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. The Class B Warrants expired in May 2012 and the liability was reduced to zero. The Class A Warrants expire in May 2016 and are (and the Class B Warrants were) measured at fair value on a recurring basis. We recorded the 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). The assumptions used to compute the fair value of the Class A warrants at March 31, 2015 and September 30, 2014 are as follows:

	March 31, 2015			September 30, 2014

Risk-free interest rate		0.30	%		0.41	%
Dividend yield		0.00	%		0.00	%
Volatility of the Company's common stock		51.28	%		63.58	%
Expected life of the options (years)		1.1			1.6

Fair value per unit	$	0.447		$	0.846

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 carrying value of the note payable approximates fair value due to the variable nature of the interest rates.

We use an interest rate swap, designated as a hedge, to fix 60% of the term loan debt from our credit facility with Huntington Bank. We did not enter into this derivative transaction to speculate on interest rates, but to hedge interest rate risk. The swap is recognized as a liability on the balance sheet at its fair value. The fair value is determined utilizing a cash flow model that takes into consideration interest rates and other inputs observable in the market from similar types of instruments, and is therefore considered a level 2 measurement.

The following table summarizes fair value measurements by level as of March 31, 2015, for the Company’s financial liabilities measured at fair value on a recurring basis:

	Level 1		Level 2		Level 3

Interest rate swap agreement	$	-	$	46	$	-
Class A warrant liability	$	-	$	357	$	-

The following table summarizes fair value measurements by level as of September 30, 2014, for the Company’s financial liabilities measured at fair value on a recurring basis:

	Level 1		Level 2		Level 3

Interest rate swap agreement	$	-	$	21	$	-
Class A warrant liability	$	-	$	676	$	-

10.

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The changes in accumulated other comprehensive income (loss) by component were as follows:

	Three Months Ended March 31, 2015						Six Months Ended March 31, 2015
	2015			2014			2015			2014
Foreign currency translation
Balance, beginning of period	$	69		$	6		$	27		$	32
Other comprehensive income (loss):
Foreign currency translation adjustments		51			(8	)		93			(34	)
Balance, end of period	$	120		$	(2	)	$	120		$	(2	)


Interest rate swap
Balance, beginning of period	$	(31	)	$	-		$	(21	)	$	-
Other comprehensive loss:
Fair value adjustment		(15	)		-			(25	)		-
Balance, end of period	$	(46	)	$	-		$	(46	)	$	-

Total accumulated other comprehensive income (loss)	$	74		$	(2	)	$	74		$	(2	)

No amounts have been reclassified from accumulated other comprehensive income (loss) into the condensed consolidated statement of operations.

11.

MANAGEMENT’S PLAN

Our long-term strategic objective is to maximize the Company’s intrinsic value per share. While we remain focused on reducing our costs through productivity and better processes and a continued emphasis on generating free cash flow, we are dedicated to the strategies that drive our top-line growth. We are intensifying our efforts to improve our processes, embrace change and wisely employ our stronger liquidity position.

Over the past several periods, we have focused on targeted initiatives that were designed to stabilize our business, improve our liquidity and lower our break-even point. While we remain dedicated to increasing our productivity and internal processes with the intent to continue to grow free cash flow, we are actively pursuing strategies to drive top-line growth. In the remainder of fiscal 2015, we plan to continue focus on sales execution, operational excellence and building strategic partnerships with pharmaceutical and biotechnology companies, to differentiate our company and create value for our clients and shareholders. By improving revenue growth and managing our costs effectively, combined with the availability of our credit facility with Huntington Bank with substantially more favorable terms than the long-term debt and line of credit it replaces, we enhance our ability to implement our growth plan. We have taken several steps to strengthen our management team in roles that will be vital to helping drive our top line performance. We are expanding our marketing efforts by building on the Company’s inherent strengths in specialty assay and drug discovery, regulatory excellence, and our Culex ® automated sampling system. We recognize that our growth depends upon our ability to continually improve and create new client relationships. In addition, strengthening the overall leadership team represents an important step forward in the Company’s continuing program to build a management team with the depth, experience and dedication to position the Company to deliver profitable growth over the long-term. In January 2015, we entered into a lease agreement with an initial term of approximately nine years and 11 months for approximately 51,000 square feet of office, manufacturing and warehouse space located at the Company’s headquarters to monetize underutilized space. The lease agreement will provide the Company with additional cash of approximately $50 per month during the first year of the initial term to approximately $57 per month during the final year of the initial term. This long term source of cash will help to fund our growth programs. Certain capital improvements up to approximately $800 will be required to relocate manufacturing and update our office and meeting space. The relocation and associated improvements will also help to create a more lean manufacturing process. We are determined to follow through on the initiatives that support our strategy to strengthen the Company for fiscal 2015 and beyond.

ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This report contains statements that constitute forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements appear in a number of places in this Report and may include, but are not limited to, statements regarding our intent, belief or current expectations with respect to (i) our strategic plans; (ii) trends in the demand for our products and services; (iii) trends in the industries that consume our products and services; (iv) our ability to develop new products and services; (v) our ability to make capital expenditures and finance operations; (vi) global economic conditions, especially as they impact our markets; (vii) our cash position; (viii) our ability to integrate a new sales and marketing team; (ix) our ability to service our outstanding indebtedness and (x) our expectations regarding the volume of new bookings, pricing, gross profit margins and liquidity. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties. Actual results may differ materially from those in the forward looking statements as a result of various factors, many of which are beyond our control.

In addition, we have based these forward-looking statements on our current expectations and projections about future events. Although we believe that the assumptions on which the forward-looking statements contained herein are based are reasonable, actual events may differ from those assumptions, and as a result, the forward-looking statements based upon those assumptions may not accurately project future events. The following discussion and analysis should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto included or incorporated by reference elsewhere in this Report. In addition to the historical information contained herein, the discussions in this Report may contain forward-looking statements that may be affected by risks and uncertainties, including those discussed in Item 1A, Risk Factors contained in our annual report on Form 10-K for the fiscal year ended September 30, 2014. Our actual results could differ materially from those discussed in the forward-looking statements.

Amounts are in thousands, unless otherwise indicated.

Overview

We are an international contract research organization providing drug discovery and development services. Our clients and partners include pharmaceutical, biotechnology, academic and governmental organizations. We apply innovative technologies and products and a commitment to quality to help clients and partners accelerate the development of safe and effective therapeutics and maximize the returns on their research and development investments. We offer an efficient, variable-cost alternative to our clients' internal product development programs. Outsourcing development work to reduce overhead and speed drug approvals through the Food and Drug Administration ("FDA") is an established alternative to in-house development among pharmaceutical companies. We derive our revenues from sales of our research services and drug development tools, both of which are focused on determining drug safety and efficacy. The Company has been involved in the research of drugs to treat numerous therapeutic areas for over 40 years.

We support the preclinical and clinical development needs of researchers and clinicians for small molecule and large biomolecule drug candidates. We believe our scientists have the skills in analytical instrumentation development, chemistry, computer software development, physiology, medicine, analytical chemistry and toxicology to make the services and products we provide increasingly valuable to our current and potential clients. Our principal clients are scientists engaged in analytical chemistry, drug safety evaluation, clinical trials, drug metabolism studies, pharmacokinetics and basic research at many of the small start-up biotechnology companies and the largest global pharmaceutical companies.

Our business is largely dependent on the level of pharmaceutical and biotechnology companies' efforts in new drug discovery and approval. Our services segment is a direct beneficiary of these efforts, through outsourcing by these companies of research work. Our products segment is an indirect beneficiary of these efforts, as increased drug development leads to capital expansion, providing opportunities to sell the equipment we produce and the consumable supplies we provide that support our products.

Developments within the industries we serve have a direct, and sometimes material, impact on our operations. Currently, many large pharmaceutical companies have major "block-buster" drugs that are nearing the end of their patent protections. This puts significant pressure on these companies both to develop new drugs with large market appeal, and to re-evaluate their cost structures and the time-to-market of their products. Contract research organizations ("CRO's") have benefited from these developments, as the pharmaceutical industry has turned to out-sourcing to both reduce fixed costs and to increase the speed of research and data development necessary for new drug applications. The number of significant drugs that have reached or are nearing the end of their patent protection has also benefited the generic drug industry. Generic drug companies provide a significant source of new business for CROs as they develop, test and manufacture their generic compounds.

We also believe that the development of innovative new drugs is going through an evolution, evidenced by the significant reduction of expenditures on research and development at several major international pharmaceutical companies, accompanied by increases in outsourcing and investments in smaller start-up companies that are performing the early development work on new compounds. Many of these smaller companies are funded by either venture capital or pharmaceutical investment, or both, and generally do not build internal staffs that possess the extensive scientific and regulatory capabilities to perform the various activities necessary to progress a drug candidate to the filing of an Investigative New Drug application with the FDA.

A significant portion of innovation in the pharmaceutical industry is now being driven by biotech and small, venture capital funded, drug development companies. Many of these companies are "single-molecule" entities, whose success depends on one innovative compound. While several of the biotech companies have reached the status of major pharmaceuticals, the industry is still characterized by smaller entities. These developmental companies generally do not have the resources to perform much of the research within their organizations, and are therefore dependent on the CRO industry for both their research and for guidance in preparing their FDA submissions. These companies have provided significant new opportunities for the CRO industry, including us. They do, however, provide challenges in selling, as they frequently have only one product in development, which causes CROs to be unable to develop a flow of projects from a single company. These companies may expend all their available funds and cease operations prior to fully developing a product. Additionally, the funding of these companies is subject to investment market fluctuations, which changes as the risk profiles and appetite of investors change.

While continuing to maintain and develop our relationships with large pharmaceutical companies, we intend to aggressively promote our services to developing businesses, which will require us to expand our existing capabilities to provide services early in the drug development process, and to consult with clients on regulatory strategy and compliance leading to their FDA filings. We have recently launched our Enhanced Drug Discovery services as part of this strategy, utilizing our proprietary Culex ® technology to provide early experiments in our laboratories that previously would have been conducted in the sponsor’s facilities. As we move forward, we must balance the demands of the large pharmaceutical companies with the personal touch needed by smaller biotechnology companies to develop a competitive advantage. We intend to accomplish this through the use of and expanding upon our existing project management skills, strategic partnerships and relationship management.

Research services are capital intensive. The investment in equipment and facilities to serve our markets is substantial and continuing. While our physical facilities are adequate to meet market needs for the near term, rapid changes in automation, precision, speed and technologies necessitate a constant investment in equipment and software to meet market demands. We are also impacted by the heightened regulatory environment and the need to improve our business infrastructure to support our increasingly diverse operations, which will necessitate additional capital investment. Our ability to generate capital to reinvest in our capabilities, both through operations and financial transactions, is critical to our success. While we are currently committed to fully utilizing capacity, sustained growth will require additional investment in future periods. Our financial position could limit our ability to make such investments.

Executive Summary

Our revenues are dependent on a relatively small number of industries and clients. As a result, we closely monitor the market for our services. In the first six months of fiscal 2015, we experienced a 5.4% decrease in revenues in our Contract Research services segment and a 1.7% decrease in revenues for our Products segment as compared to the first six months of fiscal 2014. Our Contract Research services revenue was impacted by client delays. The revenue decline in our Product segment was mainly due to lower other instruments revenue partially offset by slightly increased sales of our analytical instruments and Culex automated in vivo sampling systems as compared to the prior fiscal year period. For the remainder of fiscal 2015, we will continue to focus on sales execution, operational excellence and building strategic partnerships with pharmaceutical and biotechnology companies, to differentiate our company and create value for our clients and shareholders.

We review various metrics to evaluate our financial performance, including revenue, margins and earnings. In the first six months of fiscal 2015, revenues decreased 4.6%, gross margin decreased 10.8% and operating expenses were lower by 1.5% in the first six months of fiscal 2015 as compared to the same period in fiscal 2014. The lower revenue and gross margin decrease, offset in part by slightly lower operating expenses, contributed to lower operating income of $170 for the first six months of fiscal 2015 as compared to $567 for the prior year period. For a detailed discussion of our revenue, margins, earnings and other financial results for the three and six months ended March 31, 2015, see “Results of Operations” below.

As of March 31, 2015, we had $536 of cash and cash equivalents as compared to $981 of cash and cash equivalents at the end of fiscal 2014. In the first half of fiscal 2015, we generated $440 in cash from operations partially due to an increase in customer advances. Total capital expenditures were $231 for the first half of 2015, up from $150 for the first half of 2014 reflecting continued investment in our business as a result of our improved liquidity position and our credit facility entered into in fiscal 2014. We are focused on improving our cash flow from operations in the remainder of fiscal 2015.

In January 2015, we entered into a lease agreement with an initial term of approximately nine years and 11 months for 50,730 square feet of office, manufacturing and warehouse space located at the Company’s headquarters to monetize underutilized space. We do not believe the lease will materially impact the Company’s business or service capabilities over the foreseeable future. The lease agreement will provide the Company with additional cash in the range of approximately $50 per month during the first year of the initial term to approximately $57 per month during the final year of the initial term. The Company also agreed to repair and relayer some or all of the parking lot serving the building with the tenant reimbursing forty percent of the cost, not to exceed a maximum paid by the Tenant of $60. Certain capital improvements up to approximately $800 will be required to relocate manufacturing and update our office and meeting space. The relocation and associated improvements will also help to create a more lean manufacturing process. We expect to incur these capital improvements in the second half of fiscal 2015.

Results of Operations

The following table summarizes the condensed consolidated statement of operations as a percentage of total revenues:

	Three Months Ended March 31,						Six Months Ended March 31,
	2015			2014			2015			2014

Service revenue		79.1	%		76.5	%		77.2	%		77.8	%
Product revenue		20.9			23.5			22.8			22.2
Total revenue		100.0			100.0			100.0			100.0

Cost of service revenue *(a)*		71.6			73.6			72.8			70.5
Cost of product revenue *(a)*		57.0			41.1			51.7			49.1
Total cost of revenue		68.5			66.0			68.0			65.7

Gross profit		31.5			34.0			32.0			34.3

Total operating expenses		31.0			32.2			30.6			29.6

Operating income (loss)		0.5			1.8			1.4			4.7

Other income (expense)		2.2			(5.4	)		1.4			(11.9	)

Income (loss) before income taxes		2.7			(3.6	)		2.8			(7.2	)

Income tax expense		0.0			0.1			0.0			0.1

Net Income (loss)		2.7	%		(3.7	)%		2.8	%		(7.3	)%

(a)

Percentage of service and product revenues, respectively

Three Months Ended March 31, 2015 Compared to Three Months Ended March 31, 2014

Service and Product Revenues

Revenues for the fiscal quarter ended March 31, 2015 decreased 3.13% to $5,726 compared to $5,912 for the same period last year.

Our Service revenue amounted to $4,530 in the second quarter of fiscal 2015 compared to $4,526 for the prior year period. Preclinical services revenues increased due to an increase in the number of rat studies from the prior year period. Bioanalytical analysis revenues increased due to an increase in samples received and analyzed. Other laboratory services revenues were impacted by lower pharmaceutical analysis revenues due to study delays by clients which we believe are temporary.

	Three Months Ended March 31,
	2015		2014		Change			%
Bioanalytical analysis	$	1,829	$	1,744	$	85			4.9	%
Preclinical services		2,428		2,257		171			7.6	%
Other laboratory services		273		525		(252	)		-48.0	%

Revenues in our Products segment decreased 13.7% in the second fiscal quarter of 2015 from $1,386 to $1,196 when compared to the same period in the prior fiscal year. The decrease stems from lower sales of our analytical products, our Culex automated in vivo sampling systems, as well as our other instruments versus the same period in the prior fiscal year.

	Three Months Ended March 31,
	2015		2014		Change			%
Culex ® , in-vivo sampling systems	$	550	$	605	$	(55	)		-9.1	%
Analytical instruments		475		541		(66	)		-12.2	%
Other instruments		171		240		(69	)		-28.8	%

Cost of Revenues

Cost of revenues for the three months ended March 31, 2015 was $3,924 or 68.5% of revenue, compared to $3,900, or 66.0% of revenue for the prior year period.

Cost of Service revenue as a percentage of Service revenue decreased to 71.6% in the current quarter from 73.6% in the comparable period last year. The principal cause of this decrease was reduced spending on supplies along with the slight increase in revenues, which led to higher absorption of the fixed costs in our Service segment. A significant portion of our costs of productive capacity in the Service segment are fixed. Thus, increases in revenues lead to decreases in costs as a percentage of revenue.

Cost of Products revenue as a percentage of Product revenue in the second quarter of fiscal 2015 increased to 57.0% versus 41.1% from the comparable prior year period. The increase is mainly due to the mix of products sold and an increase in our obsolescence reserve compared to the same period of prior fiscal year.

Operating Expenses

Selling expenses for the second quarter of fiscal 2015 decreased 11.1% to $426 from $479 for the comparable period last year. The decrease was primarily due to the elimination of sales personnel in the UK and in our Evansville facility in fiscal 2014, partially offset by slightly higher costs for sales personnel travel and commissions.

Research and development expenses for the second quarter of fiscal 2015 decreased 18.8% over the comparable period last year to $138 from $170. The decrease was primarily due to a reduction in salaries and lower costs for temporary labor, partially offset by slightly increased utilization of outsourced professional engineering services.

General and administrative expenses for the second quarter of fiscal 2015 decreased 3.9% to $1,210 from $1,258 for the comparable prior year period. The principal reasons for the decrease were lower spend on outside consultants as well as lower employee search and moving expenses. The building rent received in the current quarter amounting to $49 was recorded as a reduction to general and administrative expenses.

Other Income (Expense)

Other income (expense) for the second quarter of fiscal 2015 amounted to income of $123 compared to an expense of $(317) for the same quarter of the prior fiscal year. The primary reason for the differential is the change in the fair value of the warrant liability as well as a decrease in interest expense from the credit facility entered into in May of 2014.

Income Taxes

Our effective tax rate for the quarters ended March 31, 2015 and 2014 was 0.5% and (3.3)%, respectively. The current year expense primarily relates to state taxes and federal alternative minimum tax.

Six Months Ended March 31, 2015 Compared to Six Months Ended March 31, 2014

Service and Product Revenues

Revenues for the six months ended March 31, 2015 decreased 4.6% to $11,571 compared to $12,132 for the same period last year.

Our Service revenue decreased 5.4% to $8,928 in the first six months of fiscal 2015 compared to $9,442 for the prior year period. Preclinical services revenues increased due to an increase in the number of rat and primate studies from the prior year period. Bioanalytical analysis revenues were negatively impacted by temporary client delays and fewer samples received to assay. Other laboratory services revenues were impacted by lower pharmaceutical analysis revenues due to study delays by clients which we believe are temporary.

	Six Months Ended March 31,
	2015		2014		Change			%
Bioanalytical analysis	$	3,562	$	3,691	$	(129	)		-3.5	%
Preclinical services		4,779		4,419		360			8.1	%
Other laboratory services		587		1,332		(745	)		-55.9	%

Revenues in our Products segment decreased 1.7% in the first six months of fiscal 2015 from $2,690 to $2,643 when compared to the same period in the prior fiscal year. The majority of the decrease stems from lower hardware maintenance and service revenues, partially offset by slightly increased sales of our Culex automated in vivo sampling systems.

	Six Months Ended March 31,
	2015		2014		Change			%
Culex ® , in-vivo sampling systems	$	1,328	$	1,254	$	74			5.9	%
Analytical instruments		1,003		981		22			2.2	%
Other instruments		312		455		(143	)		-31.4	%

Cost of Revenues

Cost of revenues for the first six months of fiscal 2015 was $7,865 or 68% of revenue, compared to $7,975, or 65.7% of revenue for the prior year period.

Cost of Service revenue as a percentage of Service revenue increased to 72.8% in the first six months of fiscal 2015 from 70.5% in the comparable period of the prior year. The principal cause of this increase was the decrease in service revenues which led to lower absorption of the fixed costs in our Service segment. A significant portion of our costs of productive capacity in the Service segment are fixed. Thus, decreases in revenues lead to increases in costs as a percentage of revenue.

Cost of Products revenue as a percentage of Product revenue in the first six months of fiscal 2015 increased to 51.7% from 49.1% in the comparable prior year period. This increase is mainly due to a change in the mix of products sold in the first six months of fiscal 2015.

Operating Expenses

Selling expenses for the six months ended March 31, 2015 decreased 16.8% to $762 from $916 for the comparable period last year. The decrease was primarily due to the elimination of sales personnel in the UK and in our Evansville facility in FY14 slightly offset by higher costs for sales personnel travel and commissions.

Research and development expenses for the first half of fiscal 2015 increased 5.1% over the comparable prior year period to $329 from $313. The increase was primarily due to increased utilization of outsourced professional engineering services.

General and administrative expenses for the first half of fiscal 2015 increased 3.6% to $2,445 from $2,361 for the comparable prior year period. The principal reasons for the increase were higher personnel costs due to the addition of personnel in Finance and Client Services in the second half of fiscal 2014 as well as increased employee health care costs and software maintenance fees in the first six months of fiscal 2015.

Other Income (Expense)

Other expense for the first six months of fiscal 2015 amounted to income of $164 as compared to an expense of ($1,441) for the same period of the prior fiscal year. The primary reason for the differential is the change in the fair value of the warrant liability as well as a decrease in interest expense from the credit facility entered into in May of 2014.

Income Taxes

Our effective tax rate for the six months ended March 31, 2015 and 2014 was 0.5% and (0.8)%, respectively. The current year expense primarily relates to state taxes and federal alternative minimum tax.

Restructuring Activities

We reserved for lease payments at the cease use date for our UK 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. 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 factors, we have $1,000 reserved for UK lease related costs.

The following table sets forth the rollforward of the restructuring activity for the six months ended March 31, 2015.

	Balance, September 30, 2014		Total Charges		Cash Payments		Other		Balance, March 31, 2015
Lease related costs	$	961	$	39	$	-	$	-	$	1,000
Other costs		117		-		-		-		117
Total	$	1,078	$	39	$	-	$	-	$	1,117

Liquidity and Capital Resources

Comparative Cash Flow Analysis

At March 31, 2015, we had cash and cash equivalents of $536, compared to $981 at September 30, 2014.

Net cash provided by operating activities was $440 for the six months ended March 31, 2015, compared to $1,005 for the six months ended March 31, 2014. The decrease in cash provided by operating activities in the first six months of fiscal 2015 partially resulted from lower operating income versus the prior year period. Other factors contributing to our cash from operations were noncash charges of $730 for depreciation and amortization, a decrease in prepaid expenses of $244 and an increase in customer advances of $491. These factors were partially offset by a net increase in accounts receivable of $314 as well as a decrease in accrued expenses of $542. Days’ sales in accounts receivable increased to 59 days at March 31, 2015 from 49 days at September 30, 2014 due to a delay in payments from certain customers . It is not unusual to see a fluctuation in the Company's pattern of days’ sales in accounts receivable. Customers may expedite or delay payments from period-to-period for a variety of reasons including, but not limited to, the timing of capital raised to fund on-going research and development projects. Historically, the Company has experienced very few significant bad debt write-offs.

Included in operating activities for the first six months of fiscal 2014 are non-cash charges of $799 for depreciation and amortization, a decrease in accounts receivable of $442, and an increase in customer advances of $272 partially offset by a net decrease in accounts payable of $180 and an increase in prepaid and other assets of $488. The impact on operating cash flow of other changes in working capital was not material.

Investing activities used $231 in the first half of fiscal 2015 due to capital expenditures as compared to $150 in the first six months of fiscal 2014. The investing activity in fiscal 2015 consisted of investments in computing infrastructure and other capital improvements and equipment replacement.

Financing activities used $746 in the first six months of fiscal 2015 as compared to $1,746 used for the first six months of fiscal 2014. The main use of cash in the first half of fiscal 2015 was for long-term debt and capital lease payments of $544 as well as net payments on our line of credit of $202. In the first half of fiscal 2014, we had long-term debt and capital lease payments of $432 as well as the payoff of our prior line of credit of $1,415. Additionally, we received $161 from the exercises of Class A warrants in the first six months of fiscal 2014.

Capital Resources

Credit Facility

On May 14, 2014, we entered into a Credit Agreement (the “Agreement”) with Huntington Bank. The Agreement includes both a term loan and a revolving loan and is secured by mortgages on our facilities in West Lafayette and Evansville, Indiana and liens on our personal property.

The term loan for $5,500 bears interest at LIBOR plus 325 basis points with monthly principal payments of approximately $65 plus interest. The term loan matures in May 2019. On May 15, 2014, we used the proceeds from the term loan to pay off our indebtedness to Regions Bank. The balance on the term loan at March 31, 2015 and September 30, 2014 was $4,845 and $5,238, respectively.

As of March 31, 2015, the Agreement required us to maintain a fixed charge coverage ratio of not less than 1.10 to 1.00. The Agreement also requires us to maintain a maximum total leverage ratio of not greater than 3.00 to 1.00 from the date of the Agreement through September 30, 2015 and 2.50 to 1.00 commencing after October 1, 2015 until maturity. The Agreement also contains various other covenants, including restrictions on the incurrence of certain indebtedness, liens, investments, acquisitions, asset sales and cash dividends. As of December 31, 2014 and March 31, 2015 we were not in compliance with the fixed charge coverage ratio due to the lower operating income in the first half of the current fiscal year. We were in compliance with all other covenants, including the maximum total leverage ratio, as of December 31, 2014 and March 31, 2015.

We entered into an interest rate swap agreement to fix the interest rate with respect to 60% of the value of the term loan at approximately 5.0%. We entered into this derivative transaction to hedge interest rate risk of the related debt obligation and not to speculate on interest rates.

Building Lease

On January 28, 2015, the Company entered into a lease agreement (the “Lease Agreement”) with Cook Biotech, Inc. (“Tenant”), pursuant to which the Company will lease to Tenant approximately 50,730 square feet of office, manufacturing and warehouse space located at the Company’s headquarters. The initial term of the Lease Agreement runs for approximately nine years and 11 months, with Tenant options to extend the initial term for two additional five-year terms at market rent, as agreed to by the parties. As called for in the Lease Agreement, the Company delivered possession of the leased space in phases over a three-month period ended May 1, 2015. As a result, base rent under the Lease Agreement will range from approximately $50 per month during the first year of the initial term to approximately $57 per month during the final year of the initial term. Certain capital improvements up to approximately $800 will be required to relocate manufacturing and update our office and meeting space. The relocation and associated improvements will also help to create a more lean manufacturing process.

The Lease Agreement contains customary events of default and termination provisions. In addition to these customary provisions, Tenant may terminate the lease with applicable notice: (i) if the Company is unable to deliver possession of the leased space in appropriate condition with separately metered utilities by May 31, 2015 and (ii) if an environmental safety assessment to be provided within the first 30 days of the lease term identifies hazardous materials adversely affecting Tenant’s use of the leased space. The Company expects to meet these requirements. Tenant may also terminate the lease if Tenant determines, based upon regulatory considerations for its products, that the leased space is not fit for its business use, in which case Tenant must give six months' notice of termination and pays an additional six months’ rent upon termination.

The Company is responsible for the repair and maintenance of the exterior structure and common areas of the building and all building systems as well as landscaping, parking and driveway areas except for damage caused by the Tenant. The Company also agreed to repair and replace some or all of the parking lot serving the building with the tenant reimbursing forty percent of the cost, not to exceed a maximum paid by the Tenant of $60.

During the term of the Lease Agreement and so long as Tenant is not in default, Tenant has the right to match any third-party offer to purchase the building. The Company is entering into the Lease Agreement to monetize underutilized space at its headquarters, and management does not believe the lease will materially impact the Company’s business or service capabilities over the foreseeable future.

Based on our expected revenue and the impact of cost reductions implemented as well as the availability of our line of credit and the rental income received from the lease agreement signed in January 2015, we project that we will have the liquidity required to fund initiatives in support of our strategy for fiscal 2015, to fund expected costs to be incurred as part of the relocation of our space and to meet our debt obligations.

Critical Accounting Policies

"Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Liquidity and Capital Resources" discuss the unaudited condensed consolidated financial statements of the Company, which have been prepared in accordance with accounting principles generally accepted in the United States. Preparation of these financial statements requires management to make judgments and estimates that affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosures of contingent assets and liabilities. Certain significant accounting policies applied in the preparation of the financial statements require management to make difficult, subjective or complex judgments, and are considered critical accounting policies. We have identified the following areas as critical accounting policies.

Revenue Recognition

The majority of our bioanalytical and analytical research service contracts involve the development of analytical methods and the processing of bioanalytical samples for pharmaceutical companies and generally provide for a fixed fee for each sample processed. Revenue is recognized under the specific performance method of accounting and the related direct costs are recognized when services are performed. Our preclinical research service contracts generally consist of preclinical studies, and revenue is recognized under the proportional performance method of accounting. Revisions in profit estimates, if any, are reflected on a cumulative basis in the period in which such revisions become known. The establishment of contract prices and total contract costs involves estimates we make at the inception of the contract. These estimates could change during the term of the contract and impact the revenue and costs reported in the consolidated financial statements. Revisions to estimates have generally not been material. Research service contract fees received upon acceptance are deferred until earned, and classified within customer advances. Unbilled revenues represent revenues earned under contracts in advance of billings.

Product revenue from sales of equipment not requiring installation, testing or training is recognized upon shipment to customers. One product includes internally developed software and requires installation, testing and training, which occur concurrently. Revenue from these sales is recognized upon completion of the installation, testing and training when the services are bundled with the equipment sale.

Long-Lived Assets, Including Goodwill

Long-lived assets, such as property and equipment, and purchased intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset.

We carry goodwill at cost. Other intangible assets with definite lives are stated at cost and are amortized on a straight-line basis over their estimated useful lives. All intangible assets acquired that are obtained through contractual or legal right, or are capable of being separately sold, transferred, licensed, rented, or exchanged, are recognized as an asset apart from goodwill. Goodwill is not amortized.

Goodwill is tested annually for impairment and more frequently if events and circumstances indicate that the asset might be impaired. First, we can assess qualitative factors in determining whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. Then, we follow a two-step quantitative process. In the first step, we compare the fair value of each reporting unit, as computed primarily by present value cash flow calculations, to its book carrying value, including goodwill. We do not believe that market value is indicative of the true fair value of the Company mainly due to average daily trading volumes of less than 1%. If the fair value exceeds the carrying value, no further work is required and no impairment loss is recognized. If the carrying value exceeds the fair value, the goodwill of the reporting unit is potentially impaired and we would then complete step 2 in order to measure the impairment loss. In step 2, the implied fair value is compared to the carrying amount of the goodwill. If the implied fair value of goodwill is less than the carrying value of goodwill, we would recognize an impairment loss equal to the difference. The implied fair value is calculated by allocating the fair value of the reporting unit (as determined in step 1) to all of its assets and liabilities (including unrecognized intangible assets) and any excess in fair value that is not assigned to the assets and liabilities is the implied fair value of goodwill.

The discount rate, gross margin and sales growth rates are the material assumptions utilized in our calculations of the present value cash flows used to estimate the fair value of the reporting units when performing the annual goodwill impairment test. Our reporting units with goodwill at March 31, 2015 are bioanalytical services and preclinical services, which are both included in our Services segment, based on the discrete financial information available which is reviewed by management. We utilize a cash flow approach in estimating the fair value of the reporting units, where the discount rate reflects a weighted average cost of capital rate. The cash flow model used to derive fair value is sensitive to the discount rate and sales growth assumptions used.

Considerable management judgment is necessary to evaluate the impact of operating and macroeconomic changes and to estimate future cash flows. Assumptions used in our impairment evaluations, such as forecasted sales growth rates and our cost of capital or discount rate, are based on the best available market information. Changes in these estimates or a continued decline in general economic conditions could change our conclusion regarding an impairment of goodwill and potentially result in a non-cash impairment loss in a future period. The assumptions used in our impairment testing could be adversely affected by certain of the risks discussed in “Risk Factors” in Item 1A of our 10-K for the fiscal year ended September 30, 2014. There have been no significant events since the timing of our impairment tests that have triggered additional impairment testing.

At March 31, 2015, remaining recorded goodwill was $1,009.

Stock-Based Compensation

We recognize the cost resulting from all share-based payment transactions in our financial statements using a fair-value-based method. We measure compensation cost for all share-based awards based on estimated fair values and recognize compensation over the vesting period for awards. We recognized stock-based compensation related to stock options of $19 and $48 during the three and six months ended March 31, 2015, respectively. We recognized stock based compensation related to stock options of $0 and $45 for the three and six months ended March 31, 2014, respectively. The expense for the second quarter of fiscal 2014 was reduced by forfeitures in the same period.

We use the binomial option valuation model to determine the grant date fair value. The determination of fair value is affected by our stock price as well as assumptions regarding subjective and complex variables such as expected employee exercise behavior and our expected stock price volatility over the term of the award. Generally, our assumptions are based on historical information and judgment is required to determine if historical trends may be indicators of future outcomes. We estimated the following key assumptions for the binomial valuation calculation:

	•	Risk-free interest rate. The risk-free interest rate is based on U.S. Treasury yields in effect at the time of grant for the expected term of the option.

	•	Expected volatility. We use our historical stock price volatility on our common stock for our expected volatility assumption.

	•	Expected term. The expected term represents the weighted-average period the stock options are expected to remain outstanding. The expected term is determined based on historical exercise behavior, post-vesting termination patterns, options outstanding and future expected exercise behavior.

	•	Expected dividends. We assumed that we will pay no dividends.

Employee stock-based compensation expense recognized in the first three and six months of fiscal 2015 and 2014 was calculated based on awards ultimately expected to vest and has been reduced for estimated forfeitures. Forfeitures are revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates and an adjustment will be recognized at that time.

Changes to our underlying stock price, our assumptions used in the binomial option valuation calculation and our forfeiture rate as well as future grants of equity could significantly impact compensation expense to be recognized in fiscal 2015 and future periods.

Income Taxes

As described in Note 6 to the condensed consolidated financial statements, 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 record interest and penalties accrued in relation to uncertain income tax positions as a component of income tax expense. Any changes in the accrued liability for uncertain tax positions would impact our effective tax rate. Over the next twelve months we do not anticipate changes to the carrying value of our reserve. Interest and penalties are included in the reserve.

As of March 31, 2015 and September 30, 2014, we had a $16 liability for uncertain income tax positions.

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 2009.

A valuation allowance fully reserves the deferred income tax balance.

Inventories

Inventories are stated at the lower of cost or market using the first-in, first-out (FIFO) cost method of accounting. We evaluate inventories on a regular basis to identify inventory on hand that may be obsolete or in excess of current and future projected market demand. For inventory deemed to be obsolete, we provide a reserve for this inventory. Inventory that is in excess of current and projected use is reduced by an allowance to a level that approximates the estimate of future demand.

Fair Value of Warrant Liability

In May 2011, we issued Class A and B Warrants. The Class B Warrants expired in May 2012 and the liability was reduced to zero. The Class A Warrants expire in May 2016 and are (and the Class B Warrants were) 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 fair value measurement, are calculated with fair value changes charged to the statement of operations and comprehensive income (loss). As of March 31, 2015, 578 Class A warrants have been exercised, leaving 799 outstanding. The fair value of the warrants exercised was $854. The following table sets forth the changes in the fair value of the warrant liability since inception:

											Change in
	Fair Value per Share				Fair Value in $$						Fair Value
Evaluation Date	Warrant A		Warrant B		Warrant A		Warrant B		Total		(Income) Expense
5/11/2011	$	1.433	$	0.779	$	1,973	$	1,072	$	3,045	$	-
6/30/2011		1.536		0.811		2,114		1,116		3,230		185
9/30/2011		0.844		0.091		1,162		124		1,286		(1,944	)
12/31/2011		0.901		0.074		1,240		102		1,342		56
3/31/2012		0.933		0.001		1,284		2		1,286		(56	)
6/30/2012		0.602		-		828		-		828		(458	)
9/30/2012		0.881		-		1,213		-		1,213		385
12/31/2012		0.796		-		1,096		-		1,096		(117	)
3/31/2013		0.899		-		1,238		-		1,238		142
6/30/2013		0.668		-		920		-		920		(318	)
9/30/2013		0.444		-		612		-		612		(308	)
12/31/2013		1.396		-		1,573		-		1,573		961
3/31/2014		1.152		-		934		-		934		200
6/30/2014		1.067		-		852		-		852		(66	)
9/30/2014		0.846		-		676		-		676		(160	)
12/31/2014		0.696		-		556		-		556		(120	)
3/31/2015		0.447		-		357		-		357		(199	)

Interest Rate Swap

The Company uses an interest rate swap designated as a cash flow hedge to fix the interest rate on 60% of the Huntington term loan debt due to changes in interest rates. The changes in the fair value of the interest rate swap are recorded in Accumulated Other Comprehensive Income (“AOCI”) to the extent effective. We assess on an ongoing basis whether the derivative that is used in the hedging transaction is highly effective in offsetting changes in cash flows of the hedged debt. The terms of the interest rate swaps match the terms of the underlying debt resulting in no ineffectiveness. When we determine that a derivative is not highly effective as a hedge, hedge accounting is discontinued and we reclassify gains or losses that were accumulated in AOCI to other income (expense), net on the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

Building Lease

The Lease Agreement with Cook Biotech, Inc. for a portion of the Company’s headquarters facility is recorded as an operating lease with the escalating rents being recognized on a straight-line basis once the Tenant took full possession of the space on May 1, 2015 through the end of the lease on December 31, 2024. The straight line rents of $53 per month are recorded as a reduction to general and administrative expenses on the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) and other accounts receivable on the Condensed Consolidated Balance Sheets. The cash rent received is recorded in other accounts receivable on the Condensed Consolidated Balance Sheets. The variance between the straight line rents recognized and the actual cash rents received will net to zero by the end of the agreement on December 31, 2024.

ITEM 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

A smaller reporting company is not required to provide the information required by this Item 3.

ITEM 4 - CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to provide reasonable assurance to our management and board of directors that information required to be disclosed in the reports we file or submit to the Securities and Exchange Commission is recorded, processed, summarized and reported within the time periods specified by the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

During the course of preparing this Form 10-Q for the period ended March 31, 2015, we determined that we had been calculating the fixed charge coverage ratio as defined in our Credit Agreement with Huntington Bank incorrectly. Applying the correct calculation, management further determined that as of December 31, 2014 and March 31, 2015 we were not in compliance with the covenant. As disclosed under “Liquidity and Capital Resources – Credit Facility” we remedied the noncompliance by obtaining waivers of noncompliance from Huntington Bank. Given these developments and based on an evaluation conducted under the supervision and with the participation of the Company’s management, including our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2015, we, including our Chief Executive Officer and Chief Financial Officer, determined that our disclosure controls and procedures were not effective as of March 31, 2015.

Management has taken appropriate steps to ensure that going forward we calculate all relevant covenants under the Credit Agreement correctly, including conferring with Huntington Bank regarding such calculations.

Changes in Internal Controls

Other than as disclosed directly above under “Disclosure Controls and Procedures” there were no changes in our internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, during the first six months of fiscal 2015 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

PART II

ITEM 1A - RISK FACTORS

You should carefully consider the risks described in our Annual Report on Form 10-K for the year ended September 30, 2014, including those under the heading “Risk Factors” appearing in Item 1A of Part I of the Form 10-K and other information contained in this Quarterly Report before investing in our securities. Realization of any of these risks could have a material adverse effect on our business, financial condition, cash flows and results of operations.

ITEM 5 – OTHER INFORMATION

On May 14, 2015, we executed a first amendment to the Credit Agreement with Huntington Bank. As part of the amendment, Huntington Bank waived our noncompliance with the fixed charge coverage ratio for the periods ended December 31, 2014 and March 31, 2015, respectively. Also, the fixed charge coverage ratio was amended to not less than 1.05 to 1.00 for the fiscal quarters ending June 30, 2015, September 30, 2015 and December 31, 2015, respectively. The ratio returns to not less than 1.10 to 1.00 for the period ending March 31, 2016 until maturity. The fixed charge coverage ratio calculation was also amended to exclude up to $1,000 in capital expenditures related to the building renovation costs associated with the lease agreement with Cook Biotech, Inc. executed in January 2015.

ITEM 6 - EXHIBITS

(a)

Exhibits:

See the Exhibit Index to this Form 10-Q, which is incorporated herein by reference.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized:

	BIOANALYTICAL SYSTEMS, INC.
	(Registrant)

Date: May 15, 2015	By:	/s/ Jacqueline M. Lemke
	Jacqueline M. Lemke
	President and Chief Executive Officer

	BIOANALYTICAL SYSTEMS, INC.
	(Registrant)

Date: May 15, 2015	By:	/s/ Jeffrey Potrzebowski
	Jeffrey Potrzebowski
	Chief Financial Officer and Vice President of Finance (Principal Financial Officer and Principal Accounting Officer)

EXHIBIT INDEX

Number		Description of Exhibits

(10)	10.1	Lease Agreement between Bioanalytical Systems, Inc. and Cook Biotech, effective January 28, 2015 (filed herewith).

(31)	31.1	Certification of Chief Executive Officer (filed herewith).
	31.2	Certification of Chief Financial Officer (filed herewith).
(32)	32.1	Written Statement of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350) (filed herewith). ^.

	32.2	Written Statement of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350) (filed herewith). ^.

	101	XBRL data file (filed herewith).

Exhibit 10.1

LEASE AGREEMENT

BY THIS LEASE AGREEMENT, Bioanalytical Systems, Inc. , an Indiana corporation (“Landlord”), and Cook Biotech, Inc. (“Tenant”), in consideration of their mutual undertakings, agree as follows:

ARTICLE I

Premises

Section 1.1 Lease and Premises. Landlord hereby leases and demises to Tenant and Tenant hereby leases from Landlord that portion of the building commonly known as 2701 Kent Avenue, West Lafayette, Indiana 47906 (“Building”) shown and designated on the attached floor plan that is made a part hereof as Exhibit "A" ("Premises") being a portion of the Building defined as Suites A, B and C, together with the nonexclusive right to use the common facilities which Landlord may from time to time provide for tenants in the Building containing the Premises ("Common Facilities" or "Common Areas"). The total square footage to be leased to Tenant is approximately 50,730 square feet.

Section 1.2 Building. The Premises are situated on real estate described in Exhibit "B" located at 2701 Kent Avenue, West Lafayette, Indiana 47906 (the “Building”). Landlord reserves the right to make additions, deletions, and modifications to the Building, from time to time, without the consent or approval of Tenant, provided that no such action shall adversely affect Tenant’s use of the Premises under this Lease and so long as Landlord complies with the terms and provisions of this Lease.

Section 1.3 Improvements. Landlord shall, at its sole cost and expense, remove all personal property in the Premises, provide Tenant with a current Phase I environmental assessment of Premises certified to Tenant to ensure the absence of any Hazardous Substances. Landlord shall also provide documentation that the Premises are ADA accessible. Except as stated in the foregoing sentence and except for the existence of Hazardous Substances prior to Tenant’s occupation of the Premises, Tenant accepts the Premises in an “as-is” and “where-is” condition. Landlord and Tenant acknowledge that construction in the leased portion is residential construction quality.

Section 1.4 Parking. Tenant shall have the exclusive right to park in the designated areas set forth on Exhibit A.

ARTICLE II

Term and Possession

Section 2.1 Term. The initial term (“Initial Term”) of this Lease shall be nine (9) years eleven (11) months. The Initial Term shall commence on the date of signing (the “Commencement Date") and end on the 31 ^st day of December, 2024, unless sooner terminated as herein provided. Tenant agrees that in the event of inability of Landlord to deliver possession of the Premises on the Commencement Date pursuant to possession phases as set out in Section 2.5 of this Lease, Landlord shall not be liable for any damage thereby nor shall this Lease be void or voidable. Until the entire Premises are delivered to Tenant, Tenant shall only pay pro-rata rent based on those portions of the Premises that are ready for possession.

Notwithstanding the foregoing, in the event Landlord is not able to deliver possession of Suite A, B and C in a completely vacated, broom-clean condition with utilities separately metered, by May 31, 2015, then Tenant shall have the right to terminate this Lease by providing written notice to Landlord on or before June 15, 2015. In the event of such termination, Tenant shall restore the Premises to substantially the condition of the Premises prior to possession. If Tenant fails to timely terminate the Lease as allowed herein, then the above Tenant’s right to terminate shall lapse and be of no further force or effect.

In the event that an environmental safety assessment of the Premises to be provided certified to tenant in the first thirty (30) days of the Term results in the identification of any Hazardous Materials that adversely affect Tenant’s use of the Premises, Tenant has the right to terminate this Lease without penalty, provided that the notice to terminate is given within 15 days after receiving the environmental safety assessment report. In the event of such termination, Tenant shall restore the Premises to substantially the condition of the Premises prior to possession.

Notwithstanding anything contained in this Lease to the contrary, in the event that Tenant determines based upon regulatory consideration for its products that the Building is not fit for its business use, Tenant can terminate this Lease with six (6) months’ notice prior to termination, such notice to include Tenant’s explanation of the reasons why the Building is not fit for Tenant’s business use and payment of six (6) month’s Rent at termination.

Section 2.2 Option to Extend. Upon the expiration of the Initial Term, if Tenant is not in default, Landlord hereby grants to Tenant the right to extend the term of this Lease for two (2) additional terms of five (5) years each. The Tenant shall exercise this option to extend this Lease by giving written notice to Landlord as provided in this Lease at least one hundred thirty-five (135) days prior to the expiration of the then current term. The Rent payable by Tenant to Landlord during this extension shall be as set forth in Article IV below. If Tenant fails to give written notice of extension to Landlord within the time specified, or if this Lease is terminated, any subsequent options to extend shall expire and be of no force or effect. The exercise of any option to extend shall be ineffective if Tenant is in default on the last day of the prior term. The Initial Term and any extended term may hereinafter be referred to as the “Demised Term”.

In the event, Tenant is then leasing the Premises, and Tenant is not then in default of this Lease, and Landlord decides to sell the Building, Tenant has the right to purchase Building (“Refusal Option”) pursuant to the following procedures:

Upon notification in writing by Landlord to Tenant that an acceptable bona fide offer to purchase the Building or an acceptable bona fide letter of intent, (“Offer”) has been received, Tenant shall have ten (10) calendar days thereafter in which to notify Landlord in writing of its election to purchase the Building at such purchase price and other terms contained in the Offer (“Tenant’s Offer”). If Tenant timely notifies Landlord in writing that it is exercising the Refusal Option, Landlord and Tenant shall execute a Purchase Agreement within five (5) calendar days after Tenant’s exercise of the Refusal Option upon the same terms and conditions contained in the Offer or if the Offer did not include a purchase agreement, then within fifteen (15) calendar days. Tenant’s Offer is contingent upon receipt of a satisfactory title commitment, survey, Phase I environmental report and appraisal which shall be paid for by Tenant. Tenant shall be deemed to have waived such contingencies unless the transaction is terminated in writing by Tenant within thirty (30) days after Tenant’s exercise of the Refusal Option. Tenant shall close the transaction within the time stated in the Offer or if none, within five (5) days after receipt by Tenant of the later of the title commitment, survey, Phase I environmental report or appraisal (“Closing Date”). If Tenant fails to timely execute a Purchase Agreement or fails to close the transaction on or before the Closing Date, then- Landlord shall be free to sell the Building. The conveyance documents, closing costs, prorations and other terms of the transaction shall be in strict accordance with the terms of the Offer.

Section 2.3 Lease Year and Partial Year Defined. The term "Lease Year" means a period of twelve (12) consecutive calendar months, with the exception of the first Lease Year which commences on the Commencement Date, unless the Commencement date is not the first day of a calendar month in which case the Lease Year shall commence on the first day of the first calendar month following the Commencement Date and and end on December 31, 2015. Each succeeding full Lease Year shall commence upon the first of January. Any portion of the Demised Term commencing prior to the first Lease Year, or after the expiration of the last full Lease Year, shall be deemed a "partial lease year".

Section 2.4 Holding Over. Tenant shall pay to Landlord for each day Tenant retains possession of all or a part of the Premises after Termination or expiration of this Lease a sum equal to one hundred twenty five percent (125%) of the monthly Rent for the last period prior to the date of such termination or expiration divided by thirty (30) days per month. In addition, Tenant shall pay Landlord for all damages sustained by Landlord by reason of such retention. Acceptance by Landlord of rent after termination or expiration shall not constitute a renewal or extension of this Lease, this provision shall not constitute a renewal or extension of this Lease, and this provision shall not be deemed to waive Landlord’s right of re-entry or any other right under this Lease or at law.

Section 2.5 Possession. Landlord will deliver possession of the Premises to Tenant in phases. On the Commencement Date, Landlord shall deliver possession of Suite A. On or before March 1, 2015, Landlord shall deliver possession of Suite C. On or before May 1, 2015, Landlord shall deliver possession of Suite B. Landlord agrees to notify Tenant in writing when possession of each portion of the Premises is available for possession. Except as provided in Section 2.1, Tenant agrees that, in the event of inability of Landlord to deliver possession of any portion of the Premises prior to May 1, 2015, Landlord shall not be liable for any damage thereby nor shall this Lease be void or voidable, but Tenant shall not be liable to pay rent on any portion of the Premises until that portion of the Premises are ready for possession. As such, until the entire Premises is delivered to Tenant, Tenant shall only pay pro-rata Rent based on those portions of the Premises that are ready for possession.

ARTICLE III

Occupancy and Use

Section 3.1 Occupancy. Tenant shall use and occupy the Premises only for warehousing, office, lab, manufacturing, business and related incidental uses and shall not use the Premises for any other purpose except with the prior written consent of the Landlord.

Section 3.2 Use of Premises — Rules and Regulations. Tenant shall use the Premises for no unlawful purpose or act; shall commit or permit no hazardous waste on or damage to the Premises; shall materially comply with and obey all laws, regulations, and orders of any governmental authority or agency, and all reasonable directions of the Landlord, including such building rules and regulations as Landlord may from time to time promulgate on reasonable written notice to Tenant; shall not do nor permit anything to be done in or about the Premises which will in any way unreasonably obstruct or interfere with the rights of other tenants or occupants of the Building or injure or annoy them; and shall not house flammable material unless stored in proper containers. Landlord shall not be responsible to Tenant for the nonperformance of any of the rules and regulations of Landlord, by any other tenant or occupant of Building, but Landlord agrees to take reasonable measures to assure each tenant's compliance.

Section 3.3 Rights Reserved to Landlord. Landlord shall have the following rights exercisable without notice (except as provided in paragraph (b) hereunder) and without liability to Tenant for damage or injury to property, person or business (all claims for damage being hereby released) and without affecting an eviction or disturbance of Tenant's use or possession or giving rise to any claim for off-sets or abatement of rent.

( a) To approve prior to installation, Tenant's signage on the exterior of Building. Tenant's signage shall be obtained at Tenant’s expense.

(b) Upon reasonable notice to Tenant, in cooperation with the Tenant and in compliance with regulations applicable to Tenant, to enter Premises to make inspections, repairs, alterations or additions in or to Premises or Building or to exhibit Premises to prospective tenants, purchasers or others, at reasonable hours and at any time in the event of an emergency, and to perform any acts related to the safety, protection, preservation, reletting, sale or improvement of Premises or Building.

(c) To approve the weight, size and location of safes, other heavy equipment and articles whether freestanding on the floor, hanging on any wall, or hanging from the ceiling in and about the Premises. Any damage to Premises caused by Tenant’s installation of such items shall be Tenant's responsibility. Tenant shall pay for any and all damages to the Premises and expenses incurred to repair such damages, within thirty (30) days after receiving a statement of expenses from Landlord. Landlord may require all such items to be moved in and out of Premises only at such times and in such manner as Landlord shall direct and in all events at Tenant's sole risk and responsibility.

(d) To decorate, alter, repair, or improve the Building at any time, and Landlord and its representatives may enter on and about Premises for that purpose with such material as Landlord may deem reasonably necessary, may erect scaffolding and all other necessary structures on or about the Building and may close or temporarily suspend operations of entrances, doors, corridors, elevators or other facilities. In the exercise of its rights under this subparagraph, Landlord will not unreasonably interfere with the conduct of Tenant's business. Tenant waives any claim for damages including the loss of business resulting therefrom. Notwithstanding the foregoing, if Landlord shall block all access to the Premises by any means, without creating a temporary entrance, then Tenant shall be entitled to abate its rent for the period of time that it is not entitled to access the Premises.

(e) To do or permit any work in or about the Premises or the Building or any adjacent or nearby building, land, street, or alley.

ARTICLE IV

Rent

Section 4.1 Annual Gross Rent. Tenant shall pay Landlord as annual rent for the Premises, without relief from valuation and appraisement laws, the following amounts payable in equal monthly installments (the “Rent”). The term “Rent” shall also include any other monetary obligations of Tenant pursuant to this Lease.

Payment of monthly Rent installments shall be made on the first day of each calendar month of the Term. Tenant also agrees to pay Landlord any excise, sales or privilege tax, if any, imposed by any governmental authority on account of this Lease or the rental paid hereunder.

The Rent and monthly installment for each renewal term shall be pursuant to Exhibit “C” attached hereto and made a part hereof:

Section 4.2 Partial Month. In the event Tenant's obligation to pay Rent commences on a day other than the first day of the calendar month, Tenant shall pay a daily pro-rata share of the Rent at the beginning of such partial month.

Section 4.3 Place for Payment of Rent: All Rent shall be payable to Landlord or to such other person or place as the Landlord may designate in writing at Bioanalytical Systems, Inc., 2701 Kent Avenue, West Lafayette, Indiana 47906 .

Section 4.4 Late Charges. Tenant recognizes and acknowledges the costs incurred by landlord, including, without limitation, administrative costs, opportunity costs, and interest expense. Accordingly, in the event any installment of Rent is paid later than ten (10) days after it is due, a late charge equal to four percent (4%) of the amount of such may be assessed by the Landlord against Tenant for the delinquent installment. An additional late charge may be charged for each month that the delinquency continues.

ARTICLE V

Reimbursements to Landlord

Section 5.1 Gross Lease. Except for costs or expenses specifically set out in this Lease as being the obligation of Tenant, this is a “gross lease”. The Rent specified in Article IV includes common area expenses (except initial parking lot repairs pursuant to Section 6.3 of this Lease). Landlord agrees to pay, prior to delinquency, all common area utilities (but not those separately-metered utilities that exclusively serve the Premises), real estate taxes, insurance and assessments of any kind or nature levied upon the Building or the real estate or both, during the term of this Lease. Regarding utilities serving the Premises, the parties shall comply with the procedures set out in Section 6.1(b) of this Lease and the Tenant shall pay for all such separately-metered utilities exclusively serving the Premises. If Landlord shall fail to pay such charges for utilities, taxes and insurance, Tenant shall be entitled to pay such costs and deduct such amounts from its Rent.

ARTICLE VI

Services, Alterations, Repairs

Section 6.1 Services. Provided that Tenant shall not be in default hereunder and subject to the provisions elsewhere contained in this Lease, Landlord agrees to furnish to the Tenant:

(a) Common Area Services. Landlord shall provide common area services including trash removal and snow and ice removal on sidewalk and access areas.

(b) Utilities. Landlord shall provide water, electricity, sewers, heat and air conditioning, subject to reimbursements as outlined in Article V hereof. Once the Premises are separately metered for any utilities, Tenant shall be responsible for and pay all such utilities that are separately metered. Landlord intends to separately meter some or all of such utilities serving the Premises. Upon such separation, Tenant shall contract for and pay all such separately metered utilities. Prior to such separation, Landlord shall pay the utility invoices and bill Tenant a pro-rated amount of such utility invoices as reasonably determined by Landlord. Tenant shall pay such utility invoices within fifteen (15) days of receipt and such charges by Landlord shall be deemed as additional Rent owed by Tenant.

(c) Disruption of Service. Landlord reserves the right to suspend service of the heating, plumbing, electrical, air conditioning or other mechanical or electrical systems when necessary by reason of governmental regulations, labor disputes, civil commotion or riot, accident or emergency or for repairs, alterations or improvements which are in reasonable judgment of Landlord desirable or necessary, or for any other reason beyond the power or control of Landlord without liability in damages therefore. The exercise of such right by Landlord shall not constitute an actual or constructive eviction in whole or in part or entitle Tenant to any abatement or diminution of rent or relieve Tenant from any of Tenant's obligations under this Lease or impose any liability upon Landlord or its agents by reason of inconvenience or annoyance to Tenant or injury to or interruption of Tenant's business or otherwise.

Section 6.2 Alterations to Premises. Landlord shall not be obligated and Tenant shall not be permitted to make any alterations, additions, repairs, improvements or decorations to the Premises except as specifically provided for herein or without advance written consent and approval of the Landlord. Tenant shall not affix or cause to be affixed to the Premises, including the windows, any sign, advertisement or notice without the advance written consent of Landlord. In the absence of a written agreement to the contrary, all fixtures including those placed in the Premises by the Tenant, except office furniture, portable enclosures and equipment of Tenant, shall become a part of the Premises and shall remain in the Premises at the termination of the Lease as the property of Landlord. Notwithstanding the foregoing, Tenant shall have the right to demolish and remove all interior partitions and other improvements in the Premises so long as Tenant does not demolish or remove any load bearing wall, and so long as Tenant provides plans and specifications to the Landlord for Landlord’s approval, and Landlord has no written objection within 5 days. If Landlord has no response within 5 days or expresses no objection within 5 days, Tenant’s plans and specifications shall be deemed approved and Tenant is free to execute the plans and specifications. If Landlord objects within 5 days, Landlord’s objection shall contain a detailed description of the elements of the plan that are not acceptable and potential recommended changes to the plan that would be acceptable. If Landlord’s recommended changes are acceptable to the Tenant, the plan including recommended changes shall be deemed approved by Landlord and Tenant is free to execute the plans and specifications. If Landlord’s recommended changes are not acceptable to the Tenant, Landlord and Tenant agree to discuss alternate plans addressing the Landlord’s concerns. All such work by Tenant shall be performed in a good and workmanlike manner and shall not cause harm to the Building or disturb other tenants or occupants of the Building.

Section 6.3 Maintenance and Repair of Premises.

(a) Landlord shall repair and maintain the exterior structure and common areas of the Building, and all building systems, including, the roof, foundation, structural walls, exterior doors, sprinklers, water, sewer, and plumbing systems, electric and gas lines to the point where they enter the Premises, the HVAC system, and landscaping, parking and driveway areas in a condition comparable to top quality commercial space in West Lafayette, Indiana except for damage caused by Tenant, its employees or invitees in excess of ordinary wear and tear.

Landlord shall in due course, re-stripe, repair and relayer some or all of the parking lot serving the Building (“Parking Lot Repairs”). Upon completion of the Parking Lot Repairs, Tenant shall, within thirty (30) days of billing reimburse Landlord forty percent (40%) of the cost of the Parking Lot Repairs, not to exceed a maximum paid by Tenant of Sixty Thousand and 00/100 Dollars ($60,000.00).

(b) Tenant shall, at Tenant's sole cost and expense, repair, clean and maintain all interior items of Premises, and the restrooms and restroom fixtures serving the Premises, including, without limitation, all interior walls and wall coverings, floors and floor coverings, interior partition walls, interior doors, water, sewer, electric and gas lines from the point where they enter the Premises, all in a condition comparable to top quality commercial and office space in West Lafayette, Indiana, or at least to the quality of Premises at the beginning of the Term, and shall be responsible to Landlord for all damage to the Premises, including window glass and plate glass, in excess of ordinary wear and tear, and shall be responsible for damage caused to any portion of the Building or parking areas at the Building caused by the acts or negligence of Tenant, its agents, contractors, employees, invitees and customers.

ARTICLE VII

Liens

Tenant shall keep the leased Premises and the Building free from any liens created or suffered by Tenant, including but not limited to mechanics' and material-men's liens. In the event any lien is filed against the Premises or the Building by virtue of an act or failure to act on the part of Tenant, Tenant shall immediately cause such lien to be released of record. Tenant’s failure to comply with the requirements of this Article VII shall be a default by Tenant under the Lease. Upon any such default, in addition to any right of remedy of Landlord under this lease, or under Indiana law, Landlord shall have the right, but no obligation to pay the amount of such lien, to cause its release, and such amount shall be considered additional Rent to be paid to Landlord by Tenant on demand with interest at twelve percent (12%) per year from date of payment by Landlord of the lien. All liens and encumbrances created or suffered by Tenant shall attach to Tenant's interest only.

ARTICLE VIII

Assignment and Subletting

Tenant shall not have the right to assign this Lease or Sublet the Premises in whole or in part without Landlord’s prior written consent which consent shall not be unreasonably delayed, conditioned or withheld. Landlord’s consent need not be given unless and until Landlord is satisfied that the replacement tenant is wholly satisfactory to Landlord. In making such a decision, Landlord may take into account the financial strength, type of business, general reputation, and other reasonable factors pertaining to such proposed replacement tenant. The consent by Landlord to an assignment or subletting shall not be constructed to relieve Tenant from obtaining the consent in writing of Landlord to any further proposed assignment or subletting. Notwithstanding the foregoing, Landlord’s consent shall not be required if Tenant sublets all or a portion of the Premises to entities owned or controlled by Cook Group Incorporated. In all events, Tenant shall remain liable under this Lease and shall not be released from liability hereunder.

ARTICLE IX

Indemnity, Insurance, Waiver of Subrogation/Real Estate Taxes

Section 9.1 Liability Insurance. Tenant shall obtain and keep in effect during the term of this lease at Tenant's sole expense, a policy of general commercial liability and property damage insurance on the Premises protecting Landlord and Tenant from all claims arising out of the ownership, use, occupancy or maintenance of the Premises, including Tenant's own negligence, having minimum limits of liability of Five Million Dollars ($5,000,000.00), for death, bodily injury and property damage combined. The policy shall name Landlord as an additional insured. Tenant shall deliver to Landlord a Certificate of Insurance evidencing such liability insurance coverage on an annual basis. Such policies shall contain a standard waiver of subrogation provision in favor of Landlord. This policy shall be the primary liability insurance coverage on the Premises and all insurance maintained by Tenant shall be primary and Landlord's insurance shall be noncontributing except in the event of Landlord’s sole negligence. Landlord shall procure and maintain during the term of this Lease general commercial liability and property damage insurance on the common areas of the Building, if any.

Section 9.2 Indemnification. Landlord and Tenant shall indemnify, defend, protect and hold each other harmless from and against any and all claims arising from each party’s use of the Premises or from any activity or work done, permitted to be done by Tenant in or about the Premises, except for such matters arising from the sole negligence or willful misconduct of the other party. Landlord and Tenant shall further indemnify, defend, protect and hold each other harmless from and against any and all claims arising from any breach or default in the performance of any obligation on each other’s part to be performed under the terms of this Lease, or arising from any negligence of either party or their contractors or employees, and from and against all costs, attorneys' fees, expenses and liabilities incurred in the defense of any claim or any action or proceeding brought thereon, except for the sole negligence or breach of the other party. Tenant, as a material part of the consideration to Landlord, hereby assumes all risk of damage to property or injury to persons, in, upon or about the Premises arising from any cause and holds Landlord harmless from all claims arising there from except for the sole negligence or willful misconduct of Landlord.

Section 9.3 Waiver of Claims by Tenant. Landlord and its agents shall have no liability to Tenant for any damage to the property of Tenant, located in or about the Premises, no matter what the cause, except for Landlord and its agent negligence. Tenant hereby waives all claims for recovery from Landlord for any loss or damage to the Building or the Premises. Tenant shall be responsible to insure Tenant’s own contents and leasehold improvements located in the Premises. All fire and extended coverage insurance carried by Tenant with respect to property located in and about the premises shall be endorsed with a clause waiving rights of recovery against landlord. No such occurrence shall be deemed to be an actual or constructive eviction from the Premises or result in abatement or rental, except as provided in Article XII.

Section 9.4 Waiver of Subrogation. Landlord and Tenant hereby waive any and all rights of recovery each against the other, or against the officers, employees, agents and representatives of the other, for loss of or damage to each other or their respective property or the property of others under their control to the extent that such loss or damage is insured against under any insurance policy in force at the time of such loss or damage. Landlord and Tenant shall, upon obtaining the policies of insurance required hereunder, give notice to the insurance carrier or carriers that the foregoing waiver of subrogation is contained in this Lease.

Section 9.5 Landlord’s Insurance. Landlord shall keep the Building (but not the contents thereof or any personal property or trade or business fixtures of Tenant) in which the Premises are located, and all improvements and facilities of Landlord (including, without limiting the generality of the foregoing, any and all signs and sign structures, whether insured under separate policy or otherwise) within the common areas insured during the Demised Term against loss or damage by fire and other perils normally covered by standard all-risk insurance or the essential equivalent thereof (subject to the general availability of such coverage in the insurance industry), in an amount not less than five million dollars ($5,000,000), having deductibles and with insurance carriers or companies decided upon by Landlord within Landlord's reasonable discretion. Landlord shall also maintain such liability insurance and other forms of insurance as Landlord deems appropriate from time to time. All insurance obtained by Landlord shall be referred to herein as “Landlord’s Insurance” and the costs of such insurance shall be referred to herein as “Landlord Insurance Premiums”. The Landlord Insurance Premiums are considered in the Tenant’s gross lease Rent and shall be paid by the Landlord during the Initial Term. Thereafter, if Tenant exercises its first Option to Extend, then Tenant shall pay during such Option period in monthly installments as additional Rent that amount of increase in the Insurance as measured between the payable amount in 2015 and the payable amount in 2024 times a fraction wherein the size of the Premises is the numerator and the size of the Building is the denominator. Thereafter, if Tenant exercises its second Option to Extend, then Tenant shall pay during such Option period in monthly installments as additional Rent that amount of increase in the Insurance as measured between the payable amount in 2024 and the payable amount in 2029 times a fraction wherein the size of the Premises is the numerator and the size of the Building is the denominator.

Section 9.6 Real Estate Taxes. The term “Real Estate Taxes” shall include any form of real estate tax payable or assessment, general, special, ordinary or extraordinary and any license fee, commercial rental tax, improvement bond or bonds, levy or tax (other than inheritance, personal income or estate taxes) imposed upon the Building or payable by Landlord (or against Landlord’s business of leasing the Building) during the Demised Term by any authority having the direct or indirect power to tax, together with costs and expenses of contesting the validity or amount of the Real Estate Taxes. The Real Estate Taxes are considered in the Tenant’s gross lease Rent and shall be paid by the Landlord during the Initial Term. Thereafter, if Tenant exercises its first Option to Extend then Tenant shall pay during such Option period in monthly installments as additional Rent that amount of increase in the Real Estate Taxes as measured between the payable amount in 2015 and the payable amount in 2024 times a fraction wherein the size of the Premises is the numerator and the size of the Building is the denominator. Thereafter, if Tenant exercises its second Option to Extend then Tenant shall pay during such Option period in monthly installments as additional Rent that amount of increase in the Real Estate Taxes as measured between the payable amount in 2024 and the payable amount in 2029 times a fraction wherein the size of the Premises is the numerator and the size of the Building is the denominator.

ARTICLE X

Subordination of Mortgages/Estoppel

This Lease and all rights of Tenant hereunder are subject and subordinate to the rights of the lien or liens of any mortgage or mortgages now or at any time hereafter in force and the interest of Landlord, in the Building, and to all advances made or hereafter to be made upon the security thereof. If requested by the holder of any such mortgage or mortgages, Tenant agrees to execute and deliver to such holder an instrument, in form and substance satisfactory to the holder, specifically subordinating this Lease to the lien of such mortgage or mortgages, and attorning to the rights of such mortgage holder.

Landlord shall, prior to May 1, 2015 obtain from any current lender of Landlord a subordination, non-disturbance and attornment agreement ("SNDA") in form reasonably acceptable to such lender and Tenant, and providing that as long as Tenant is not in default hereunder, the Tenant's right to possession of the Premises will not be disturbed. Tenant shall execute such SNDA from the current lender, and Tenant agrees to execute such an SNDA for the benefit of any future lender of Landlord.

Within ten (10) days following receipt of a request from Landlord, Tenant shall execute and deliver to Landlord, without cost, an estoppel certificate (“Estoppel Certificate”) in such form as Landlord may reasonably request certifying (i) that this Lease is in full force and effect and unmodified (or, if modified, stating the nature of such modification), (ii) the date to which rent has been paid, (iii) that there are not, to Tenant's knowledge, any uncured defaults (or specifying such defaults if any are claimed), (iv) the amount of any leasing commissions being claimed by Tenant’s real estate agent or broker due as a result of this Lease; and (v) any other matters or state of facts reasonably required respecting the Lease or Tenant's occupancy of the Premises. Such estoppel may be relied upon by Landlord and by any purchaser or mortgagee of all or any part of the Building. Tenant's failure to deliver such statement within such period shall be conclusive upon Tenant that this Lease is in full force and effect and unmodified and that there are no uncured defaults in Landlord's performance hereunder.

ARTICLE XI

Default of Tenant

The occurrence of any one or more of the following matters constitutes a Default by Tenant under this Lease:

(a) Failure by Tenant to pay rent or any other monies due and payable from Tenant to Landlord under this Lease within ten (10) days after written notice from the Landlord;

(b) Failure by Tenant to observe or perform any of the covenants in respect of Assignment and Subletting set forth in Article VIII;

(c) Failure by Tenant to cure forthwith, immediately after receipt of notice from Landlord, any hazardous condition which Tenant has created in violation of law or of this Lease;

(d) Failure by Tenant to observe or perform any other covenant, agreement, condition or provision of this Lease, if such failure shall continue for thirty (30) days after written notice to Tenant by Landlord;

(e) The levy upon leasehold under execution or the attachment by legal process of the leasehold interest of Tenant, or the filing or creation of a lien in respect of such leasehold interest;

(f) The Tenant becomes insolvent or bankrupt or admits in writing Tenant's inability to pay debts as they mature, or makes an assignment for the benefit of creditors, or applies for or consents to the appointment of a trustee or receiver for the Tenant or for the major part of Tenant's property.

ARTICLE XII

Remedies upon Default of Tenant

Section 12.1 Remedies. If a Default by Tenant occurs, Landlord shall have the rights and remedies hereinafter set forth, which shall be distinct, separate and cumulative and shall not operate to exclude or deprive the Landlord of any other right or remedy allowed it by law:

Landlord may (i) elect to terminate the Lease, (ii) immediately re-enter the Premises and remove all persons and property from the Premises without such re-entry being deemed to terminate the Lease, and Landlord may store any property recovered at the cost of and for the account of Tenant, or (iii) perform the covenant of Tenant which is in default (entering on the Premises if necessary) and Landlord's performance of such covenant shall neither subject Landlord to liability for any loss, inconvenience, or damage to Tenant nor be construed as a waiver of Tenant's default or of any other right or remedy respecting such default, and Tenant shall pay the cost thereof plus a fifteen percent (15%) administrative fee. Should Landlord elect to re-enter as herein provided, take possession pursuant to legal proceedings or pursuant to any notice provided for by law, or terminate Tenant's rights under this Lease, Landlord may, but shall not be obligated to, relet the Premises or any part thereof for such term or terms (which may be for a term extending beyond the Demised Term) and at such rental or rentals and upon such other terms and conditions as Landlord in the exercise of Landlord's sole discretion may deem advisable, with the right to make alterations and repairs to the Premises. Such re-entry, repossession or reletting shall not constitute an acceptance by Landlord of a surrender of the Premises by Tenant. Upon each such reletting (a) Tenant immediately shall be liable for payment to Landlord, of any indebtedness of Tenant other than rental due hereunder, the cost and expense of such reletting (including but not limited to leasing commissions payable to Landlord, or its affiliates, or to independent brokers) and of such alterations and repairs incurred by Landlord, and the amount, if any, by which the rental reserved in this Lease for the period of such reletting (up to but not beyond the Demised Term) discounted to the present value at the prime rate of interest exceeds the amount agreed to be paid as rental for the Premises for such period of such reletting; or (b) at the option of Landlord, rentals received by Landlord from such reletting shall be applied first, to the payment of any indebtedness of Tenant other than rental due hereunder; second, to the payment of any cost and expense of such reletting and of such alterations and repairs; third, to the payment of rental due and unpaid hereunder; and the residual amount, if any, shall be held by Landlord and applied in payment of future rental as the same may become due and payable hereunder. Notwithstanding any reletting without termination, Landlord may at any time thereafter elect to terminate this Lease for Tenant's previous default. Upon termination of this Lease, Landlord’s remedies shall survive such termination, and as such, Landlord shall nevertheless be entitled to recover from Tenant all damages Landlord may incur by reason of Tenant's default, including the cost of recovering the Premises, and including the rental reserved and charged in this Lease for the remainder of the Demised Term , all of which amounts shall be immediately due and payable with attorneys' fees from Tenant to Landlord. In addition to any other remedy Landlord may have, Landlord may recover from Tenant all damages Landlord may incur by reason of Tenant's default, including the cost of recovering the Premises, and including the rental reserved and charged in this Lease for the remainder of the Demised Term, all of which amounts shall be immediately due and payable with attorneys' fees from Tenant to Landlord. Notwithstanding anything contained in this Section 12.1 to the contrary, Landlord shall be obligated to use commercially reasonable efforts to mitigate its damages resulting from Tenant’s default.

Section 12.2 Property. All property removed from the Premises by Landlord pursuant to any provision of this Lease or of law may be removed or stored by the Landlord at the cost and expense of the Tenant, and the Landlord shall in no event be responsible for the value, preservation or safekeeping of the property. Tenant shall pay Landlord for all expenses incurred by Landlord in such removal and storage charges against such property so long as the same shall be in Landlord's possession or under Landlord's control. All property not removed from the Premises or retaken from storage by Tenant within thirty (30) days after the end of the Term, however terminated, shall be conclusively deemed to have been conveyed by Tenant to Landlord as by bill of sale without further payment or credit by Landlord to Tenant.

Section 12.3 Expenses. Tenant shall pay all of Landlord's reasonable costs, charges and expenses, including court costs and attorneys’ fees, incurred in enforcing Tenant's obligations under this Lease or incurred by Landlord in any litigation, negotiation or transactions in which the Landlord becomes involved or concerned due to Landlord's relationship to Tenant.

ARTICLE XIII

Damage by Fire and Eminent Domain

Section 13.1 Fire or Casualty. If all or any substantial part of the Building is damaged or made untenantable by fire or other casualty, whether or not the Premises are damaged, the Landlord shall determine, within ninety (90) days of such casualty whether to restore the Building. If the Landlord shall determine not to restore the Building, either party may, by notice to the other party, given within ninety (90) days after such determination, terminate this Lease. If the Landlord does determine to restore the Building Landlord shall proceed diligently to make such repairs and restoration and must complete such reconstruction within two hundred seventy (270) days of the casualty. If the Premises are not restored within such 270-day period, then Tenant, upon written notice to Landlord, may terminate this Lease. If all the Premises are untenantable, all rent shall abate from the casualty date until the Premises are substantially restored and reasonably accessible for occupancy by Tenant or this Lease is terminated as hereinabove provided; if part of the Premises are untenantable, rent shall be pro-rated on a per diem basis and apportioned in accordance with the part of the Premises which is usable by Tenant until the damaged part is ready for tenant's occupancy, or this Lease is terminated as hereinabove provided. In all cases, due allowance shall be made for reasonable delay caused by adjustment of insurance loss, strikes, labor difficulties or any cause beyond Landlord's control. Landlord shall have no duty to repair, restore or replace Tenant's improvements, including, but not limited to, wall and floor coverings, light fixtures, built-in cabinets and bookshelves, and other improvements installed by or for Tenant.

Section 13.2 Eminent Domain. If all or any substantial part of the Premises, or (at the option of Landlord) if a substantial part of the Building (whether or not the Premises are affected) shall be taken or condemned by any competent authority for any public or quasi-public use or purpose, the Term of this Lease shall end upon and not before the date when the possession of the part so taken shall be required for such use of purpose, and without apportionment of the award to or for the benefit of the Tenant, except that Landlord shall not be entitled to any award made directly to Tenant for moving expenses.

ARTICLE XIV

Surrender of Premises

At the end of the Demised Term or other earlier termination of this Lease, the Tenant will peaceably deliver to the Landlord possession of the Premises, together with all improvements or additions upon or belonging to the same, by whomsoever made, in good condition, ordinary wear and tear, condemnation, and damage by fire, earthquake, act of God, or the elements alone excepted. Upon the termination of this Lease, Tenant shall at Tenant's sole cost, remove all counters, trade fixtures, office furniture and equipment installed by Tenant, unless otherwise agreed to in writing by Landlord. Tenant shall also repair any damage caused by such removal. Tenant's obligation to pay for the removal of such counters, fixtures and equipment and the repair of such damage shall survive the termination of this Lease. Property not so removed shall be deemed abandoned at the termination of this Lease by the Tenant, and title to the same shall thereupon pass to Landlord. Tenant shall indemnify the Landlord against any loss or liability to a succeeding tenant resulting from delay by Tenant in surrendering the Premises.

ARTICLE XV

Waiver

The waiver by Landlord of any term, covenant, or condition contained in this Lease shall be in writing, and waiver in one instance shall not be deemed to be a waiver of such term, covenant, or condition in the future, or any subsequent breach of the same or any other term, covenant, or condition contained in this Lease. The subsequent acceptance of rent or other performance hereunder by Landlord shall not be deemed to be a waiver of any preceding breach by Tenant of any term, covenant, or condition of this Lease, regardless of Landlord's knowledge of such preceding breach at the time of acceptance of such rent or other performance, unless Landlord shall specifically so state in writing.

ARTICLE XVI

Notices

All notices and demands which may or are required to be given by either party to the other under this Lease shall be in writing and shall be sent by United States first class or certified mail, postage prepaid, or nationally recognized overnight courier addressed to Umesh Patel, Vice President and General Manager, Cook Biotech Inc., 1425 Innovation Place, West Lafayette, IN 47906 (Tenant) and addressed to Jeff Potrzebowski, CFO, Bioanalytical Systems, Inc., 2701 Kent Avenue, West Lafayette, Indiana 47906 (Landlord), or to such other place as either party may from time to time designate in writing to the other.

ARTICLE XVII

Quiet Enjoyment

Landlord covenants the Tenant, upon paying the rent and performing each and every covenant and agreement hereof, shall peacefully and quietly hold, occupy and enjoy the Premises and the Common Facilities throughout the term of this lease, without hindrance by any person claiming or holding under or through Landlord.

ARTICLE XVIII

Landlord Default

The failure by Landlord to observe or perform any covenant, agreement, condition or provision of this Lease, if such failure shall continue for thirty (30) days after written notice to Landlord by Tenant shall constitute a Default by Landlord under this Lease. Tenant shall look solely to the estate and property of Landlord in the Building for the collection of any judgment (or other judicial process) requiring the payment of money by Landlord in the event of any default or breach by Landlord with respect to any of the terms, covenants, and conditions of this Lease to be observed and/or performed by Landlord, and no other property or assets of Landlord shall be subject to levy, execution or other enforcement procedures for the satisfaction of Tenant's remedies. In no event shall individual officers, directors, trustees, partners, shareholders, managing agents, or employees of Landlord, or of any subsidiary wholly owned by Landlord, be personally liable hereunder.

ARTICLE XIX

INSOLVENCY OR BANKRUPTCY

Section 19.01. Insolvency or Bankruptcy In the event Tenant shall become a debtor under Chapter 7 of the Federal Bankruptcy Code ("Code") or a petition for reorganization or adjustment of debts is filed concerning a petition for reorganization or adjustment of debts if filed concerning Tenant under Chapters 11 or 13 of the Code or a proceeding is filed under Chapter 7 and is transferred to Chapters 11 or 13, the Trustee or Tenant, as Debtor-in-Possession may not elect to assume this Lease unless, at the time of such assumption, the Trustee, as Debtor-in-Possession has:

(i) Cured or provided Landlord "adequate assurance" (as defined below) that:

(a) within ten (10) days from the date of such assumption, the Trustee or Debtor-In-Possession will cure all monetary defaults under this Lease; and

(b) Within thirty (30) days from the date of such assumption, the Trustee or Debtor-in-Possession will cure all non-monetary defaults under this Lease.

(ii) For purposes of this Section, Landlord and Tenant acknowledge that, in the context of bankruptcy proceedings of Tenant, at a minimum "adequate assurance" shall mean:

(a) The Trustee or Debtor-in-Possession has and will continue to have sufficient unencumbered assets after the payment of all secured obligations and administrative expenses to assure Landlord that the Trustee or Debtor-in-Possession will have sufficient funds to fulfill the obligations of Tenant under this Lease, and to keep the Premises stocked with merchandise and properly staffed with sufficient employees to conduct a fully-operational, actively promoted business in the Premises; and

(b) The Bankruptcy Court shall have entered an Order segregating sufficient cash payable to Landlord and/or the Trustee or Debtor-in-Possession shall have granted a valid and perfected first lien and security interest and/or mortgage in property of Tenant, the Trustee or Debtor-in-Possession, acceptable as to value and kind to Landlord to secure to Landlord the obligation of the Trustee or Debtor-in-Possession to cure the monetary and/or non-monetary defaults under this Lease with the time periods set forth above.

If the Trustee or Debtor-in-Possession has assumed the Lease pursuant to the provisions of this Section for the purpose of assigning Tenant's interest hereunder to any other person or entity, such interest may be assigned only after the Trustee, Debtor-in-Possession or the proposed assignee have complied with all of the terms, covenants and conditions of this Lease, with Landlord and Tenant acknowledging that such terms, covenants and conditions are commercially reasonable in the context of a bankruptcy proceeding of Tenant. When, pursuant to the code, the Trustee or Debtor-In-Possession shall be obligated to pay reasonable use and occupancy charges for the use of the Premises or any portion thereof, such charges shall not be less than the rent payable by Tenant hereunder, or in the event Tenant has ceased doing business in the Premises, the reasonable use and occupancy charge shall be equal to the then reasonable rental value of the Premises. The rights, remedies and liabilities of Landlord and Tenant set forth in this Section shall be in addition to those which may now or hereafter be accorded, or imposed upon, Landlord and Tenant by the Code.

Section 19.02. Landlord Insolvency or Bankruptcy . In the event Landlord shall become a debtor under Chapter 7 of the Federal Bankruptcy Code ("Code") or a petition for reorganization or adjustment of debts is filed concerning a petition for reorganization or adjustment of debts is filed concerning Landlord under Chapters 11 or 13 of the Code or a proceeding is filed under Chapter 7 and is transferred to Chapters 11 or 13, Tenant shall have all rights and remedies available to a lessee under Section 365(h) of the Code.

ARTICLE XX

ENVIRONMENTAL

Section 20.01 . Definitions and Tenant’s Obligations and Indemnification As used herein, the term "Hazardous Material" means any hazardous or toxic substance, material, or waste, or pollutant or contaminant which is or becomes regulated by any local governmental authority, the State of Indiana or the United States Government. Landlord agrees to conduct or have conducted an environmental safety assessment of the premises and warrants that the Premises leased by the Tenant are free of Hazardous Material prior to Tenant’s possession. Tenant shall not cause, allow, or permit any Hazardous Material to be brought upon, generated, manufactured, stored, handled, disposed of, or used at, on, about, or beneath the Premises or any portion of the Premises by Tenant, its agents, employees, contractors, invitees, or licensees without the prior written consent of Landlord. Tenant represents and warrants to Landlord that Tenant shall comply fully with all federal, state, and local environmental, health, or safety statutes, rules, regulations, or ordinances. If Tenant breaches the obligations stated in this Article XX, or if the presence of Hazardous Material on the Premises or the Building caused Tenant results in contamination of the Premises or the Building, or if contamination of the Premises or the Building by Hazardous Material otherwise occurs for which Tenant is legally liable to Landlord for damages resulting therefrom, then Tenant shall indemnify, defend by counsel acceptable to Landlord and hold harmless Landlord, its subsidiaries, affiliates, successors, and assigns from any and all claims, judgments, damages, penalties, fines, costs, liabilities, or losses (including, without limitation, diminution in value of the Premises or the Building, damages for the loss or restriction on use of rentable or usable space or of any amenity of the Premises or the Building, damages arising from any adverse impact on marketing of space, and sums paid in settlement of claims, attorneys' fees, consultant fees, and expert fees) which arise during or after the Demised Term as a result of such contamination. The provisions of this Article shall survive, and remain in full force and effect after, the date hereof and termination of the Demised Term.

Additionally, in order to maintain a safe work environment, Tenant shall provide to Landlord within five (5) days after execution of this Lease (and within five (5) days after any updates or modifications) with a copy of Tenant’s safety procedures (“Safety Procedures”) that shall be in place to protect Tenant’s employees and visitors and other occupants of the Building, when a spill, a leak or an environmental contamination occurs (including, but not limited to evacuation procedures). The Safety Procedures shall include, but not be limited to a plan for IMMEDIATELY notifying Landlord and other tenants or occupants of the Building. Once Safety Procedures that are acceptable to Landlord are in place, Tenant shall comply with the Safety Procedures. Tenant’s failure to comply with the Safety Procedures, after notice and opportunity to cure, shall be a default under this Lease.

ARTICLE XXI

Miscellaneous Provisions

Section 21.1 Governing Law. This Lease shall be governed by the laws of the State of Indiana.

Section 21.2 Writing Controls. It is agreed that Landlord has not made any statement, promise or agreement or taken upon itself any engagement whatever orally or in writing in conflict with the terms of this Lease or that in any way modifies, varies, alters, enlarges, or invalidates any of its provisions and that no obligation of Landlord shall be implied in addition to the obligations herein.

Section 21.3 Air and Light. This Lease does not grant or guarantee Tenant a continuance of light and air over any real estate adjoining the Premises.

Section 21.4 Costs and Expenses of Enforcement. If Tenant shall default in the performance of any of Tenant's obligations under this Lease and such default continues after the expiration of the notice or grace period provided in this Lease, Landlord may perform such obligation and all expenses of Landlord incurred in performing any of the obligations of Tenant under this Lease, together with interest at the prime rate as published in the Wall Street Journal , on a per annum basis, shall become additional rent under this Lease and shall be due and payable by Tenant on demand.

Section 21.5 Successors and Assigns. Except as limited in this Lease, this Lease shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

Section 21.6 Amendment. No amendment or addendum to this Lease shall be valid or binding unless such amendment or addendum is in writing and executed by the parties.

Section 21.7 No Option. Submission of this Lease for examination or signature by Tenant does not constitute a reservation of or option for the Premises. This instrument becomes effective as a Lease only upon execution and delivery by both Landlord and Tenant.

Section 21.8 Relationship of Parties. Nothing contained in this Lease shall be deemed or construed by the parties, nor by any third party, as creating the relationship of principal and agent, partnership, joint venture, or any relationship other than that of landlord and tenant.

Section 21.9 Access to Premises. Landlord and Landlord’s authorized representatives shall have the right to enter upon the Leased Premises, without notice and at all reasonable hours, for the purpose of inspecting the Premises, making repairs, or exhibiting the Lease Premises to prospective tenants, purchasers, or others.

Section 21.10 Headings. The headings, titles, and subtitles in the Lease have been inserted solely for convenient reference and shall be ignored in its construction.

Section 21.11 Interpretation. All provisions are to be construed as covenants and agreements as though the words importing such covenants and agreements were used in each section. The necessary grammatical changes required to make the provisions of this Lease apply in the plural sense where there is more than one Landlord or Tenant and to corporations, limited liability companies, partnerships, or individuals, male or female, shall in all instances be assumed as though in each case fully expressed. If any provision of this Lease shall be held invalid, the validity of the remainder of this Lease shall not be affected.

Section 21.12 Memorandum. These parties agree that a Memorandum of Lease may be prepared in a form acceptable to both parties and recorded in the office of the Recorder of Tippecanoe County, Indiana.

Section 21.13 Venue. If any litigation arises from a dispute between the parties with regard to the validity, performance, and enforcement of this Lease, the parties agree that such litigation may be filed and conducted in the courts of Tippecanoe County, Indiana. Tenant hereby waives any claims based on lack of personal jurisdiction or an inconvenient forum.

Section 21.14 Attorneys’ Fees. If either party shall determine it necessary to hire an attorney to enforce the provisions of this Lease against the other party, the prevailing party in any such dispute shall be entitled to recover its reasonable attorneys’ fees, costs and expenses expended in enforcing the provisions of this Lease.

Section 21.15. Remedies Cumulative . The remedies of Landlord shall be cumulative, and no one remedy shall be construed as exclusive of any other or of any remedy provided by law.

Section 21.16. Force Majeure . In the event that Landlord or Tenant shall be delayed or hindered in or prevented from doing or performing any act or thing required in this Lease by reason of fire, flood, earthquake or any other casualty, or Acts of God, then such party shall not be liable or responsible for any such delays and the doing or performing of such act or thing shall be excused for the period of the delay and the period for the performance of any such act shall be extended for a period equivalent to the period of such delay.

Section 21.17. Complete Agreement . This Lease contains a complete expression of the agreement between the parties and there are no promises, representations or inducements except such as are herein provided.

Signature Page Follows

IN WITNESS WHEREOF, the parties have executed this Lease this 28 ^th day of January, 2015.

	Cook Biotech, Inc.

	By:	Umesh Patel
	Its:	Vice President and General Manager

	Bioanalytical Systems, Inc.

	By: Jacqueline Lemke
	Its: President & CEO

Exhibit A

Exhibit B

BASi Building	West Lafayette, IN

SUMMARY OF FACTS AND CONCLUSIONS

Property Identification And Location:	The subject property is located along the southwest side of Kent Avenue in West Lafayette, Wabash Township, Tippecanoe County, Indiana. The property address is 2701 Kent Avenue. Since the subject property was combined from two (once separate) properties, the subject is sometimes referred to as 2701 and 2801 Kent Avenue.

Land Size:	7.28 acres

Description of Improvements:	The subject property consists of an 115,580 square foot building with a 5,175 square foot finished basement. The total usable area including the basement is 120,755 square feet. The space allocation is as follows: Offices/labs: 91,117 SF (incl. 5,175 SF bsmt and ~1,500 SF health clinic completed in 2011/2012), 75% of GBA Manufacturing: 20,466 SF, 17% of GBA Warehouse: 9,172 SF, 8% of GBA

Intended Use of the Appraisal:	This appraisal develops opinions of the ^“ As Is” fee simple market value of the subject property, at of the effective date of valuation. The use of this appraisal is fer financing decisions regarding the property by Regions Bank as requested by Mr. Terry Lee (the intended user).

Property Rights Appraised:	Fee simple estate

Date of Inspection:	July 11,2013

Effective Dates of Value:	“As Is” - July 11, 2013

Zoning:	OR – Office/Research
Parcel Number(s):	164-05500-043-9, new parcel #79 06-12-201 005.000-026

Excerpt from Appraisal Report of:

Don R. Scheidt & Co., Inc.

2927 Union Street

Lafayette, IN 47904-2786

Exhibit C

		Total Annual Rent Payments		Rent Due Each Month

Yr 1:	5/1/15 - 12/31/15	$	399,740.29	$	49,967.54
Yr 2:	1/1/16 - 12/31/16	$	599,610.44	$	49,967.54
Yr 3:	1/1/17 - 12/31/17	$	599,610.44	$	49,967.54
Yr 4:	1/1/18 - 12/31/18	$	611,602.65	$	50,966.89
Yr 5:	1/1/19 - 12/31/19	$	623,834.70	$	51,986.22
Yr 6:	1/1/20 - 12/31/20	$	636,311.39	$	53,025.95
Yr 7:	1/1/21 - 12/31/21	$	649,037.62	$	54,086.47
Yr 8:	1/1/22 - 12/31/22	$	662,018.37	$	55,168.20
Yr 9:	1/1/23 - 12/31/23	$	675,258.74	$	56,271.56
Yr 10:	1/1/24 - 12/31/24	$	688,763.92	$	57,396.99

If option to extend is exercised:
Yrs 11-15:	Market rent as agreed to by Parties.
Yrs 16-20:	Market rent as agreed to by Parties.

Rent Payable with Phase-In of Possession
	Rent Due Each Month
Section A Only	$	12,986.48
Section A and C Only	$	35,174.04
Full Occupancy - See Above

Bioanalytical Systems, Inc. and Cook Biotech, Inc. lease dated 26 Jan 2015

Exhibit 31.1

CERTIFICATIONS

I, Jacqueline M. Lemke, President and Chief Executive Officer, certify that:

I have reviewed this report on Form 10-Q of Bioanalytical Systems, Inc.;

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.

The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions);

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

	/s/ Jacqueline M. Lemke
	Jacqueline M. Lemke
Date: May 15, 2015	President and Chief Executive Officer

Exhibit 31.2

CERTIFICATIONS

I, Jeffrey Potrzebowski, Vice President of Finance and Chief Financial Officer, certify that:

I have reviewed this report on Form 10-Q of Bioanalytical Systems, Inc.;

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

	/s/ Jeffrey Potrzebowski

	Jeffrey Potrzebowski
Date: May 15, 2015	Vice President of Finance and Chief Financial Officer

Exhibit 32.1

Certifications of Chief Executive Officer

Pursuant to Section 906

Of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350)

The undersigned, the President and Chief Executive Officer of Bioanalytical Systems Inc. (the “Company”), hereby certifies that, to the best of her knowledge:

(a)

the Form 10-Q Quarterly Report of the Company for the three and six months ended March 31, 2015 filed with the Securities and Exchange Commission (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(b)

the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

	By: /s/ Jacqueline M. Lemke
	Jacqueline M. Lemke
	President and Chief Executive Officer
	Date: May 15, 2015

Exhibit 32.2

Certifications of Chief Financial Officer

Pursuant to Section 906

Of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350)

The undersigned, the Vice President of Finance and Chief Financial Officer of Bioanalytical Systems Inc. (the “Company”), hereby certifies that, to the best of his knowledge:

(a)

(b)

the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

	By: /s/ Jeffrey Potrzebowski
	Jeffrey Potrzebowski
	Vice President of Finance and Chief Financial Officer
	Date: May 15, 2015