Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the quarterly period ended December 31, 2021 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 INOTIV, INC. (Exact name of the registrant as specified in its charter) IN ...

Inotiv, Inc. (NASDAQ:NOTV) Q1 2022 Earnings Conference Call February 10, 2022 4:30 PM ET Company Participants Bob Leasure ??? President and Chief Executive Officer Beth Taylor ??? Chief Financial Officer Kalle Ahl ??? The Equity Group Conference Call Participants Kyle Bauser ??? Colliers Securities Matt Hewitt ??? Craig-Hallum Capital Group Frank Takkinen ??? Lake Street Capital Markets Operator Greetings. Welcome to Inotiv, Inc's First Quarter Fiscal 2022 Financial Results conference call. At this time, a ...

PART I [Business](index=3&type=section&id=Item%201.%20Business) Inotiv, Inc. provides nonclinical and analytical drug discovery and development services, significantly expanding its scope and market position through strategic acquisitions in fiscal year 2021, notably Envigo * Inotiv operates as a contract research organization (CRO) specializing in nonclinical and analytical drug discovery and development services, also selling analytical instruments to the pharmaceutical and research industries[9](index=9&type=chunk) Fiscal 2021 Segment Revenue | Segment | FY 2021 Revenue (in millions) | | :--- | :--- | | Contract Research Services | $85.8 | | Research Products | $3.8 | * The company pursued an aggressive growth strategy through multiple acquisitions in fiscal 2021, including HistoTox Labs, Bolder BioPATH, BioReliance assets, and Gateway Pharmacology, culminating in the Envigo acquisition closing in November 2021[15](index=15&type=chunk)[16](index=16&type=chunk)[17](index=17&type=chunk) * The transformative acquisition of Envigo, a major provider of research models and services, significantly expanded the company's business scope and market position[21](index=21&type=chunk)[102](index=102&type=chunk) [Acquisition Activity and New Service Offerings](index=5&type=section&id=Acquisition%20Activity%20and%20New%20Service%20Offerings) In fiscal 2021 and early 2022, Inotiv pursued significant growth through multiple acquisitions, including Envigo, to expand service offerings, alongside internal investments in new service development Key Acquisitions in FY2021 and Early FY2022 | Acquired Company/Assets | Date | Specialization | Consideration Highlights | | :--- | :--- | :--- | :--- | | HistoTox Labs, Inc. | Apr 30, 2021 | Histology, pathology, image analysis | ~$22.4 million cash | | Bolder BioPATH, Inc. | May 3, 2021 | In vivo autoimmune/inflammation models | ~$17.5 million cash, 1.59 million shares, $1.5 million seller notes | | BioReliance Corp. (assets) | Jul 9, 2021 | Genetic toxicology services | $175K cash, 10% royalty on net sales | | Gateway Pharmacology Labs | Aug 2, 2021 | DMPK, in vitro pharmacology/toxicology | ~$1.7 million cash, 45,323 shares | | Envigo RMS Holding Corp. | Nov 5, 2021 | Research models, diets, bedding | ~$271 million cash, 9.04 million shares | | Plato BioPharma, Inc. | Oct 4, 2021 | In vivo pharmacology (cardiovascular, renal, etc.) | ~$10 million cash, 57,587 shares, $3 million notes | * The company significantly invested in new internal service offerings, with spending increasing from **$333 thousand in FY2020 to $1,477 thousand in FY2021**, covering areas like clinical pathology and biotherapeutics[23](index=23&type=chunk) [Company Services and Products](index=17&type=section&id=Company%20Services%20and%20Products) Inotiv operates two segments: Contract Research Services, offering nonclinical and analytical services ($85.8 million in FY2021), and Research Products, selling analytical instruments and in vivo sampling systems ($3.8 million in FY2021) * The Contract Research Services segment provides comprehensive drug development support, including analytical method development, DMPK testing, stability testing, in vivo pharmacology, non-clinical toxicology, and archiving services[54](index=54&type=chunk) * The Research Products segment expedites preclinical screening via Analytical Products (liquid chromatography and electrochemical instruments) and In vivo Sampling Products (Culex® automated systems)[56](index=56&type=chunk)[59](index=59&type=chunk) [Competition and Government Regulation](index=22&type=section&id=Competition%20and%20Government%20Regulation) Inotiv competes with other CROs based on quality and expertise, operating under extensive federal, state, and local regulations including FDA GLP/GMP and USDA Animal Welfare Act, where compliance is critical * Key competitors in the CRO services space include large organizations like Covance (LabCorp), Charles River Laboratories, and WuXi Biologics, with competition based on regulatory record, quality, scientific expertise, and price[68](index=68&type=chunk)[69](index=69&type=chunk) * The company's operations are heavily regulated by agencies like the FDA and USDA, requiring adherence to standards such as GLP, GMP, and the Animal Welfare Act to ensure data integrity and humane animal treatment[73](index=73&type=chunk)[77](index=77&type=chunk)[79](index=79&type=chunk) * The company manages controlled and hazardous substances, complying with regulations from the DEA, EPA, and DOT, while also adhering to workplace safety standards from OSHA and patient privacy rules under HIPAA[83](index=83&type=chunk)[84](index=84&type=chunk)[89](index=89&type=chunk) [Envigo Business Overview](index=31&type=section&id=Envigo%20Business%20Overview) Post-acquisition, Envigo operates as a wholly owned subsidiary, providing research models, diets, and services globally, driven by increased R&D spending and demand for specialized models, while adhering to stringent animal welfare regulations * Envigo is a major commercial provider of research models, offering over **130 strains of animals**, Teklad brand diets, and associated services to the global research community[103](index=103&type=chunk)[104](index=104&type=chunk) * Market trends benefiting Envigo include rising biopharmaceutical R&D spending, strong demand for Non-Human Primates (NHPs) for biologics safety testing, and increasing demand for specific, genetically-altered animal models[107](index=107&type=chunk)[108](index=108&type=chunk)[109](index=109&type=chunk) * Envigo's Research Models and Services (RMS) business comprises Research Models (small and large animals), Diets and Bedding (Teklad), and Research Model Services (surgical modifications, contract breeding)[115](index=115&type=chunk)[116](index=116&type=chunk)[123](index=123&type=chunk) * As of September 30, 2021, Envigo had approximately **1,200 employees**, with **65% in North America**, and is committed to animal welfare standards and the '3Rs' (Replacement, Reduction, and Refinement)[139](index=139&type=chunk)[147](index=147&type=chunk) * The COVID-19 pandemic impacted Envigo's operations, notably disrupting the supply of NHPs from China, though alternative sources have been secured[164](index=164&type=chunk)[165](index=165&type=chunk) [Risk Factors](index=47&type=section&id=Item%201A.%20Risk%20Factors) The company faces numerous risks including COVID-19 impacts, industry and client dependence, operational challenges, financial vulnerabilities from increased leverage, and significant integration risks from the Envigo acquisition * The **COVID-19 pandemic** has adversely affected and may continue to impact business operations, product demand, and financial condition, with a **$2.0 million** impact from program delays in fiscal 2020[181](index=181&type=chunk)[182](index=182&type=chunk) * The business is highly dependent on R&D spending by pharmaceutical and biotech companies, with **five clients representing 20.5% of total sales in FY2021**, posing a material risk if a major client is lost[186](index=186&type=chunk)[188](index=188&type=chunk) * Operational risks include intense competition in the CRO industry, client contracts terminable on short notice (typically **30 days**), and financial exposure from underpricing fixed-price contracts or service errors[191](index=191&type=chunk)[192](index=192&type=chunk)[193](index=193&type=chunk) * Financial and control risks include significantly increased debt from acquisitions and a material weakness in internal control over financial reporting related to tax accounting for acquisitions, leading to a Q3 2021 financial restatement[198](index=198&type=chunk)[203](index=203&type=chunk)[204](index=204&type=chunk) * The Envigo acquisition introduces significant integration challenges, increased exposure to animal rights activists, and regulatory scrutiny, with one Envigo facility currently under a formal USDA investigation[235](index=235&type=chunk)[240](index=240&type=chunk)[241](index=241&type=chunk) [Properties](index=70&type=section&id=Item%202.%20Properties) As of September 30, 2021, Inotiv operated from multiple owned and leased facilities across the United States, including key sites for executive offices and contract research services, which are deemed adequate for current operations Key Operating Locations as of September 30, 2021 | Location | Key Operations | Ownership Status | | :--- | :--- | :--- | | West Lafayette, IN | Principal executive offices, CRO services, product manufacturing | Partially owned, partially leased | | Evansville, IN | Nonclinical toxicology testing | Owned | | Maryland Heights, MO | CRO services, animal model testing | Owned (purchased May 2021) | | Gaithersburg, MD | CRO services | Leased | | Fort Collins, CO | CRO services (pharma & medical device) | Owned | | Boulder, CO | CRO services | Leased | [Legal Proceedings](index=72&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in routine claims and proceedings but does not consider itself a party to any material pending legal proceedings as of the report date * As of the report date, the company is not party to any legal proceedings considered material[263](index=263&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=72&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common shares trade on NASDAQ under 'NOTV', with **476 stockholders of record** as of December 1, 2021, and no cash dividends paid or anticipated in the foreseeable future * The company's common stock is listed on the NASDAQ Capital Market under the ticker symbol **'NOTV'**[265](index=265&type=chunk) * As of December 1, 2021, there were **476 stockholders of record**[266](index=266&type=chunk) * The company did not pay cash dividends in FY2021 or FY2020 and does not plan to in the foreseeable future[267](index=267&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=74&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In FY2021, Inotiv's revenue grew **48.2% to $89.6 million**, driven by organic growth and acquisitions, leading to a **65.4% increase in gross profit** but an operating loss due to higher expenses, while net income was boosted by non-operating gains and cash significantly increased to **$156.9 million** from convertible notes [Results of Operations](index=82&type=section&id=Results%20of%20Operations) In FY2021, total revenue grew **48.2% to $89.6 million**, driven by Services segment growth and acquisitions, leading to a **65.4% increase in gross profit** but a wider operating loss of **$5.6 million** due to higher expenses, while net income reached **$10.9 million** primarily from PPP loan forgiveness and convertible note remeasurement gains Consolidated Statement of Operations Summary (FY2021 vs. FY2020) | Metric (in thousands) | FY 2021 | FY 2020 | % Change | | :--- | :--- | :--- | :--- | | Total Revenue | $89,605 | $60,469 | 48.2% | | Gross Profit | $30,156 | $18,237 | 65.4% | | Operating Expenses | $35,774 | $21,300 | 68.0% | | Operating Loss | ($5,618) | ($3,063) | 83.4% | | Net Income (Loss) | $10,895 | ($4,685) | N/A | Revenue by Segment (FY2021 vs. FY2020) | Segment (in thousands) | FY 2021 | FY 2020 | % Change | | :--- | :--- | :--- | :--- | | Services Revenue | $85,832 | $57,177 | 50.1% | | Products Revenue | $3,773 | $3,292 | 14.6% | * The **78.9% increase** in general and administrative expenses to **$30.4 million** was primarily driven by transaction costs for multiple acquisitions and investments in infrastructure to support growth[308](index=308&type=chunk) * Other income of **$13.4 million** in FY2021 was primarily due to an **$8.36 million** non-cash gain from the fair value remeasurement of convertible senior notes and a **$4.85 million** gain from PPP loan forgiveness[309](index=309&type=chunk) [Liquidity and Capital Resources](index=88&type=section&id=Liquidity%20and%20Capital%20Resources) As of September 30, 2021, the company's liquidity significantly strengthened, with total cash reaching **$156.9 million**, primarily from a **$140 million convertible senior notes issuance** to fund the Envigo acquisition, while operating cash flow improved to **$10.7 million** and investing activities used **$54.1 million** for acquisitions and capital expenditures Cash and Liquidity Position (as of Sept 30) | Metric (in thousands) | 2021 | 2020 | | :--- | :--- | :--- | | Cash and cash equivalents | $138,924 | $1,406 | | Restricted cash | $18,000 | $0 | | Total Cash | $156,924 | $1,406 | Cash Flow Summary (Year Ended Sept 30) | Metric (in thousands) | 2021 | 2020 | | :--- | :--- | :--- | | Net cash from Operating Activities | $10,740 | $1,290 | | Net cash used in Investing Activities | ($54,054) | ($10,131) | | Net cash from Financing Activities | $198,832 | $9,641 | * In September 2021, the company issued **$140 million** in **3.25% Convertible Senior Notes due 2027** to fund a portion of the Envigo acquisition's cash purchase price[329](index=329&type=chunk) * In July 2021, the company received forgiveness for **$4.85 million** of its **$5.05 million** Paycheck Protection Program (PPP) loan[328](index=328&type=chunk) [Critical Accounting Policies and Significant Judgments and Estimates](index=93&type=section&id=Critical%20Accounting%20Policies%20and%20Significant%20Judgments%20and%20Estimates) The company's critical accounting policies involve significant judgment, particularly in revenue recognition for fixed-fee services, annual goodwill impairment testing (with goodwill increasing to **$51.9 million** in FY2021), and fair value measurement of financial instruments like convertible senior notes * **Revenue Recognition:** For fixed-fee service contracts, revenue is recognized over time using a cost-to-cost input method, requiring estimation of total direct project costs[336](index=336&type=chunk) * **Goodwill:** Goodwill is tested annually for impairment, with its balance increasing from **$4.4 million in FY2020 to $51.9 million in FY2021** primarily due to acquisitions, and no impairment was found as of September 30, 2021[342](index=342&type=chunk)[344](index=344&type=chunk) * **Fair Value of Financial Instruments:** The conversion feature of the convertible senior notes is treated as an embedded derivative, measured at fair value using a Black-Scholes model, resulting in an **$8.36 million non-cash gain** in Q4 2021[405](index=405&type=chunk)[407](index=407&type=chunk) [Financial Statements and Supplementary Data](index=98&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents Inotiv, Inc.'s audited consolidated financial statements for fiscal years 2021 and 2020, including balance sheets, statements of operations, cash flows, and detailed notes covering accounting policies, business combinations, debt, and significant subsequent events like the Envigo acquisition [Consolidated Financial Statements](index=99&type=section&id=Consolidated%20Financial%20Statements) FY2021 consolidated financial statements reflect significant growth, with total assets reaching **$321.9 million** and total liabilities **$216.7 million** due to acquisitions and financing, resulting in a net income of **$10.9 million** compared to a prior year loss Consolidated Balance Sheet Highlights (as of Sept 30) | Metric (in thousands) | 2021 | 2020 | | :--- | :--- | :--- | | Total Current Assets | $189,019 | $15,300 | | Goodwill | $51,927 | $4,368 | | Total Assets | $321,856 | $61,593 | | Total Current Liabilities | $55,109 | $31,642 | | Long-Term Debt | $154,209 | $18,826 | | Total Liabilities | $216,728 | $53,997 | | Total Shareholders' Equity | $105,128 | $7,596 | Consolidated Statement of Operations Highlights (Year Ended Sept 30) | Metric (in thousands) | 2021 | 2020 | | :--- | :--- | :--- | | Total Revenue | $89,605 | $60,469 | | Gross Profit | $30,156 | $18,237 | | Operating Loss | ($5,618) | ($3,063) | | Net Income (Loss) | $10,895 | ($4,685) | | Diluted EPS | $0.19 | ($0.43) | [Notes to Consolidated Financial Statements](index=103&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail accounting policies and financial results, including business combinations in FY2021 that increased goodwill, the **$140 million convertible senior notes** issuance, and significant subsequent events like the transformative Envigo acquisition funded by new debt * **Business Combinations (Note 12):** Several FY2021 acquisitions, including HistoTox Labs, Bolder BioPATH, and Gateway, resulted in significant goodwill recognition (**$9.1 million for HistoTox, $36.2 million for Bolder**) and intangible assets from preliminary purchase price allocations[490](index=490&type=chunk)[500](index=500&type=chunk)[510](index=510&type=chunk) * **Debt (Note 7):** Total long-term debt substantially increased to **$154.2 million** as of September 30, 2021, from **$18.8 million in 2020**, primarily due to the issuance of **$140 million in 3.25% Convertible Senior Notes due 2027**[456](index=456&type=chunk)[467](index=467&type=chunk) * **Subsequent Events (Note 16):** Post-fiscal year-end, the company acquired Plato BioPharma (Oct 2021) and Envigo (Nov 2021), with the Envigo acquisition involving approximately **$218 million in cash** and **8.25 million Inotiv common shares**, financed partly by a new **$165 million term loan facility**[536](index=536&type=chunk)[542](index=542&type=chunk)[549](index=549&type=chunk) [Controls and Procedures](index=161&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were ineffective as of September 30, 2021, due to a material weakness in tax accounting for acquisitions, leading to a Q3 2021 restatement, with a remediation plan outlined * Management determined that disclosure controls and procedures were not effective as of September 30, 2021[574](index=574&type=chunk) * A material weakness in internal control over financial reporting existed due to an error in accounting for tax attributes of an acquisition, leading to the restatement of Q3 2021 financial statements[575](index=575&type=chunk) * Management plans to remediate the material weakness by enhancing processes, improving access to accounting literature, increasing communication with third-party professionals, and re-assessing external tax advisors[576](index=576&type=chunk) PART III [Directors, Executive Officers and Corporate Governance](index=163&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) This section details the company's executive officers and board of directors, noting the board's expansion and new appointments following the Envigo acquisition, governed by a Shareholders Agreement, and the adoption of a Code of Business Conduct and Ethics * Executive officers include Robert W. Leasure, Jr. (President & CEO), John E. Sagartz (Chief Strategy Officer), and Beth A. Taylor (CFO)[167](index=167&type=chunk)[168](index=168&type=chunk)[170](index=170&type=chunk) * A Shareholders Agreement, established with the Envigo acquisition, grants certain former Envigo shareholders the right to designate two board nominees, leading to the appointments of Nigel Brown and Scott Cragg[590](index=590&type=chunk)[591](index=591&type=chunk)[593](index=593&type=chunk) * The company maintains a Code of Business Conduct and Ethics applicable to all directors, officers, and employees, available on its website[598](index=598&type=chunk) [Executive Compensation](index=171&type=section&id=Item%2011.%20Executive%20Compensation) Fiscal 2021 executive compensation for Named Executive Officers included base salary, non-equity incentives, and stock awards, with CEO Robert W. Leasure, Jr.'s total compensation at **$1.31 million**, while non-employee directors received cash retainers and stock awards Fiscal 2021 Summary Compensation Table for Named Executive Officers | Name | Position | Salary ($) | Bonus ($) | Nonequity Incentive ($) | Stock Awards ($) | Total ($) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Robert W. Leasure, Jr. | President & CEO | 450,751 | 100,000 | 240,000 | 508,836 | 1,306,233 | | John E. Sagartz | Chief Strategy Officer | 322,674 | 56,000 | - | 88,006 | 474,907 | | Beth A. Taylor | CFO | 273,635 | 56,000 | - | 63,753 | 401,586 | * CEO Robert Leasure's 2021 employment agreement provides for an annual base salary of **$480,000** and an annual incentive opportunity of up to **50% of his base salary**[621](index=621&type=chunk) * Non-employee directors receive an annual retainer of **$55,000** for board membership, with additional retainers for serving as Chairman or on committees[606](index=606&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=183&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) As of December 1, 2021, the company's directors and executive officers collectively owned **10.1%** of common shares, with key beneficial owners including P2 Capital Partners, LLC (**12.1%**), Andrew H. Baker (**9.5%**), and Peter T. Kissinger, Ph.D., and Candice B. Kissinger (each **5.3%**) Security Ownership as of December 1, 2021 | Owner | Percent of Class | | :--- | :--- | | P2 Capital Partners, LLC | 12.1% | | Andrew H. Baker | 9.5% | | Peter T. Kissinger, Ph.D. | 5.3% | | Candice B. Kissinger | 5.3% | | Directors and Officers as a Group (15 persons) | 10.1% | [Certain Relationships and Related Transactions, and Director Independence](index=187&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) The Board has determined **five directors are independent**, and the company disclosed related-party transactions including consulting fees paid to a firm managed by the CEO and a facility purchase from an entity owned by executives * The Board of Directors has determined that Gregory C. Davis, R. Matthew Neff, Richard A. Johnson, Nigel Brown, and Scott Cragg are independent directors[649](index=649&type=chunk) * The company paid consulting fees of **$86,000** in fiscal 2021 to LS Associates LLC, a firm partially owned by CEO Robert W. Leasure Jr[651](index=651&type=chunk) * In May 2021, the company purchased a building for **$4.7 million** from SWL Properties, LLC, an entity owned by executives including Dr. John E. Sagartz, having previously paid **$260,000** in rent to SWL in fiscal 2021[652](index=652&type=chunk) [Principal Accounting Fees and Services](index=189&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) The company's independent registered public accounting firm is RSM US LLP, to whom total fees of **$929,994** were paid in fiscal year 2021 for audit, audit-related, and tax services, all pre-approved by the Audit Committee Fees Paid to Independent Registered Public Accounting Firm (RSM US LLP) | Fee Type | FY 2021 ($) | FY 2020 ($) | | :--- | :--- | :--- | | Audit Fees | 372,000 | 415,000 | | Audit-Related Fees | 514,589 | 131,000 | | Tax Fees | 43,405 | 0 | | **Total Fees** | **$929,994** | **$546,000** | PART IV [Exhibits, Financial Statement Schedules](index=190&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists documents filed as part of the Form 10-K report, including financial statements and an index of all exhibits such as asset purchase agreements, articles of incorporation, and debt agreements * This section contains the index to the consolidated financial statements and a list of all exhibits filed with the annual report[660](index=660&type=chunk)[661](index=661&type=chunk)

Inotiv, Inc. (NASDAQ:NOTV) Q4 2021 Results Conference Call December 16, 2021 4:30 PM ET Company Participants Devin Sullivan - SVP, The Equity Group Bob Leasure - President and CEO Beth Taylor - CFO Conference Call Participants Kyle Bauser - Colliers Securities Matt Hewitt - Craig-Hallum Capital Group Dave Windley - Jefferies Operator Greetings. Welcome to Inotiv, Inc.???s Fourth Quarter Fiscal 2021 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-an ...

[PART I FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) [Item 1. Condensed Consolidated Financial Statements](index=4&type=section&id=Item%201%20Condensed%20Consolidated%20Financial%20Statements) The unaudited condensed consolidated financial statements for the periods ended June 30, 2021, and 2020, detail the company's financial position, operations, and cash flows Condensed Consolidated Balance Sheet Highlights (Unaudited) | Account | June 30, 2021 (In thousands) | September 30, 2020 (In thousands) | | :--- | :--- | :--- | | **Total Current Assets** | $48,062 | $15,300 | | **Total Assets** | **$171,873** | **$61,593** | | **Total Current Liabilities** | $47,062 | $31,642 | | **Total Liabilities** | $82,979 | $53,997 | | **Total Shareholders' Equity** | $88,894 | $7,596 | | **Total Liabilities and Shareholders' Equity** | **$171,873** | **$61,593** | Condensed Consolidated Statements of Operations Highlights (Unaudited) | Metric (In thousands) | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Nine Months Ended June 30, 2021 | Nine Months Ended June 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | **Total Revenue** | $22,892 | $15,765 | $59,529 | $44,695 | | **Gross Profit** | $7,646 | $5,064 | $19,848 | $13,846 | | **Operating Loss** | $(1,703) | $(477) | $(2,210) | $(1,692) | | **Net Loss** | **$(2,265)** | **$(879)** | **$(3,354)** | **$(2,893)** | | **Diluted Net Loss Per Share** | $(0.15) | $(0.08) | $(0.27) | $(0.27) | Condensed Consolidated Statements of Cash Flows Highlights (Unaudited) | Cash Flow Activity (In thousands) | Nine Months Ended June 30, 2021 | Nine Months Ended June 30, 2020 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $8,049 | $1,586 | | **Net cash used in investing activities** | $(49,054) | $(9,094) | | **Net cash provided by financing activities** | $64,259 | $9,850 | | **Net increase in cash and cash equivalents** | $23,254 | $2,342 | | **Cash and cash equivalents at end of period** | $24,660 | $2,948 | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail accounting policies and financial data, highlighting a corporate name change, a significant equity offering, major acquisitions, and new debt facilities - On March 18, 2021, the company changed its corporate name from Bioanalytical Systems, Inc, to **Inotiv, Inc**[16](index=16&type=chunk) - On April 23, 2021, the company closed a public offering of 3,044,117 common shares at $17,00 per share, generating net proceeds of approximately **$49.0 million**[20](index=20&type=chunk) - The company operates in two principal segments: **Services (contract research)** and **Products (scientific instruments)**, with the Services segment being the primary driver of revenue[30](index=30&type=chunk)[32](index=32&type=chunk) - On July 16, 2021, the company received notice that its Paycheck Protection Program (PPP) loan of **$4,851 thousand was fully forgiven** by the SBA[100](index=100&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=34&type=section&id=Item%202%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses significant revenue growth driven by internal expansion and acquisitions, covering operating results, liquidity, capital resources, and recent financing activities [Recent Developments and Executive Summary](index=34&type=section&id=Recent%20Developments%20and%20Executive%20Summary) The company pursued growth through acquisitions, facility expansions, and new services, funded by a $49.0 million public stock offering and additional debt financing - Key growth initiatives include the acquisitions of **HistoTox Labs** and **Bolder BioPATH**, expansion of the St, Louis facility, and new service offerings[106](index=106&type=chunk)[112](index=112&type=chunk) - Completed an underwritten public offering of common stock, resulting in net proceeds of approximately **$49.0 million** to support growth initiatives[106](index=106&type=chunk)[112](index=112&type=chunk) - Subsequent to the quarter end, the company acquired assets from MilliporeSigma's BioReliance portfolio and Gateway Pharmacology Laboratories to expand its offerings[111](index=111&type=chunk) [Results of Operations](index=40&type=section&id=Results%20of%20Operations) Financial performance showed significant revenue growth and improved gross margins, though increased operating expenses related to investments and acquisitions led to a higher net loss Q3 FY2021 vs Q3 FY2020 Revenue Comparison | Metric | Q3 2021 (In thousands) | Q3 2020 (In thousands) | % Change | | :--- | :--- | :--- | :--- | | **Total Revenue** | **$22,892** | **$15,765** | **45.2%** | | Service Revenue | $21,924 | $14,852 | 47.6% | | Product Revenue | $968 | $913 | 6.1% | Nine Months FY2021 vs FY2020 Revenue Comparison | Metric | Nine Months 2021 (In thousands) | Nine Months 2020 (In thousands) | % Change | | :--- | :--- | :--- | :--- | | **Total Revenue** | **$59,529** | **$44,695** | **33.2%** | | Service Revenue | $56,858 | $42,185 | 34.8% | | Product Revenue | $2,671 | $2,510 | 6.4% | - Gross profit margin improved from **31.4% to 33.4%** for the third quarter and from **30.5% to 33.3%** for the nine-month period, reflecting greater capacity utilization[123](index=123&type=chunk)[128](index=128&type=chunk)[129](index=129&type=chunk) - Operating expenses increased significantly, with General & Administrative expenses rising **69.0% in Q3** and **52.3% in the nine-month period** due to investments and acquisition costs[133](index=133&type=chunk)[147](index=147&type=chunk) [Liquidity and Capital Resources](index=45&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity strengthened significantly due to a public stock offering and new debt, which funded acquisitions and capital expenditures - Cash and cash equivalents increased to **$24,660 thousand** at June 30, 2021, from $1,406 thousand at September 30, 2020[151](index=151&type=chunk) - Net cash from financing activities was **$64.3 million** for the nine months ended June 30, 2021, primarily from a **$49.0 million** public stock offering and **$17.1 million** in new long-term loans[157](index=157&type=chunk)[173](index=173&type=chunk) - The company entered into an Amended and Restated Credit Agreement with First Internet Bank, which includes multiple term loans and a **$5.0 million** revolving line of credit[158](index=158&type=chunk)[163](index=163&type=chunk)[164](index=164&type=chunk) - The company's PPP loan of **$4,851 thousand** was fully forgiven in July 2021, subsequent to the quarter's end[171](index=171&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=53&type=section&id=Item%203%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) As a smaller reporting company, Inotiv, Inc, is not required to provide the information for this item - The company is a smaller reporting company and is not required to provide the information required by this Item[177](index=177&type=chunk) [Item 4. Controls and Procedures](index=53&type=section&id=Item%204%20Controls%20and%20Procedures) Management evaluated and concluded that the company's disclosure controls and procedures were effective, with no material changes to internal controls during the quarter - Management concluded that the company's disclosure controls and procedures were **effective** as of June 30, 2021[179](index=179&type=chunk) - There were **no material changes** in internal control over financial reporting during the third quarter of fiscal 2021[180](index=180&type=chunk) [PART II OTHER INFORMATION](index=53&type=section&id=PART%20II%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=53&type=section&id=Item%201%20Legal%20Proceedings) No material changes to the company's legal proceedings were reported during the third quarter of fiscal 2021 - **No material changes** to legal proceedings were reported for the third quarter of fiscal 2021[181](index=181&type=chunk) [Item 1A. Risk Factors](index=53&type=section&id=Item%201A%20Risk%20Factors) Key risks include challenges in integrating recent acquisitions, potential share price dilution from future stock sales, and constraints from increased indebtedness - The company faces risks in integrating the **HistoTox Labs** and **Bolder BioPATH** acquisitions, including retaining key personnel and realizing anticipated synergies[184](index=184&type=chunk)[188](index=188&type=chunk) - Future sales of a substantial number of common shares, including the **1,588,235 shares** issued in the Bolder BioPATH merger, could cause the stock price to decline[184](index=184&type=chunk)[185](index=185&type=chunk) - The company has incurred **significant additional debt**, which may impair its ability to raise further capital or service its existing debt obligations[187](index=187&type=chunk)[189](index=189&type=chunk) - The company may need to raise additional capital, which may not be available on reasonable terms, potentially hindering growth[190](index=190&type=chunk)[191](index=191&type=chunk)[192](index=192&type=chunk) [Item 6. Exhibits](index=58&type=section&id=Item%206%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including key agreements and required officer certifications - Exhibits filed include the Amended and Restated Credit Agreement, acquisition agreements for HistoTox Labs and Bolder BioPATH, and required officer certifications[194](index=194&type=chunk)

Financial Data and Key Metrics Changes - Inotiv's revenue grew by approximately 45% year-over-year to $22.9 million, driven by internal growth of $2.9 million and $4.3 million from acquisitions [27][34] - Gross profit increased approximately 51% year-over-year to $7.6 million due to higher revenue [27] - Adjusted EBITDA increased approximately 148% to $2.2 million from $894,000 in the prior year quarter [28][39] - The book-to-bill ratio for the third quarter was 1.3 times, with a backlog of $62 million, up 15% from $53.9 million in March 2021 [29][40] Business Line Data and Key Metrics Changes - Service segment revenue increased 47.6% to $21.9 million from $14.9 million in the prior year period, with service gross margin rising to 33% from 31.9% [34] - Product segment revenue increased 6% to $968,000, with product gross margin increasing to 43.7% from 35.6% [35] Market Data and Key Metrics Changes - The company reported a significant increase in demand across all service lines, with a notable improvement in the ability to handle larger programs due to expanded service offerings [75] Company Strategy and Development Direction - The company is focused on building a complete suite of contract research services, supported by three strategic growth pillars: acquisitions, expansion of existing operations, and new service startups [9][25] - Recent acquisitions of HistoTox Labs and Bolder BioPATH are expected to enhance service offerings and client base, particularly in cell and gene therapy [10][11] - The company is actively pursuing additional acquisitions and expanding facilities to meet growing demand [12][18] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's growth trajectory, highlighting a strong demand for services and a robust backlog [29][32] - The company aims to achieve a long-term adjusted corporate G&A of 6% to 7% of revenue as it scales [48] - Management noted challenges in the labor market but emphasized efforts to maintain a low turnover rate and improve company culture [71] Other Important Information - The company completed equity and debt financings in April 2021, providing net proceeds of approximately $49 million and $17 million, respectively [26] - The PPP loan of $4.9 million has been forgiven, improving the company's financial position [26][44] Q&A Session Summary Question: Margin contribution from Bolder and HistoTox acquisitions - Management indicated that the EBITDA contribution from both acquisitions is about 32%, exceeding expectations [47] Question: G&A expenses and future leverage - Management expects unallocated corporate G&A to decrease to 6% to 7% as the company grows, despite current increases due to acquisitions and new business initiatives [48][49] Question: Targeting organic and inorganic growth rates - Management noted a historical organic growth rate of over 35% and indicated that they expect to maintain this pace [51][52] Question: M&A strategy and prioritization - Corporate culture alignment is critical in M&A decisions, with a focus on companies that share similar service-oriented values [53][54] Question: Sustainability of the book-to-bill ratio - Management expressed uncertainty about the sustainability of the current high book-to-bill ratio but noted strong demand and increasing backlog [56][57] Question: St. Louis facility build-out timeline - The St. Louis facility is expected to be operational by early 2022, with potential phased openings starting in October [59] Question: Capacity and revenue potential without acquisitions - Management indicated that there is potential for additional revenue growth from existing facilities, with ongoing efforts to expand capacity [64][66] Question: Labor market challenges - The company has successfully increased headcount but continues to face challenges in recruiting scientific talent [70][71] Question: Demand across service areas - Demand remains strong and balanced across all service lines, with an increase in larger programs due to expanded service capabilities [75]

PART I - FINANCIAL INFORMATION [Item 1 - Condensed Consolidated Financial Statements](index=3&type=section&id=Item%201%20-%20Condensed%20Consolidated%20Financial%20Statements) Inotiv, Inc.'s unaudited condensed consolidated financial statements and notes are presented for the periods ended March 31, 2021, and September 30, 2020 [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Presents the company's financial position, including assets, liabilities, and equity, at specific dates Condensed Consolidated Balance Sheets (in thousands of dollars) | Metric | March 31, 2021 (Unaudited) | September 30, 2020 | | :-------------------------------- | :--------------------------- | :------------------- | | **Assets** | | | | Cash and cash equivalents | $2,186 | $1,406 | | Total current assets | $17,871 | $15,300 | | Total assets | $64,571 | $61,593 | | **Liabilities and Shareholders' Equity** | | | | Total current liabilities | $36,070 | $31,642 | | Total liabilities | $57,495 | $53,997 | | Total shareholders' equity | $7,076 | $7,596 | | Total liabilities and shareholders' equity | $64,571 | $61,593 | - Total assets increased by **$2,978 (4.8%)** from **$61,593** at September 30, 2020, to **$64,571** at March 31, 2021[10](index=10&type=chunk) - Total liabilities increased by **$3,498 (6.5%)** from **$53,997** at September 30, 2020, to **$57,495** at March 31, 2021[10](index=10&type=chunk) - Total shareholders' equity decreased by **$520 (6.8%)** from **$7,596** at September 30, 2020, to **$7,076** at March 31, 2021[10](index=10&type=chunk) [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Details the company's revenues, expenses, and net loss over specific reporting periods Condensed Consolidated Statements of Operations (in thousands of dollars) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | Six Months Ended March 31, 2021 | Six Months Ended March 31, 2020 | | :------------------------ | :-------------------------------- | :-------------------------------- | :------------------------------ | :------------------------------ | | Total revenue | $18,751 | $16,012 | $36,636 | $28,930 | | Gross profit | $6,280 | $5,193 | $12,201 | $8,670 | | Operating loss | $(521) | $(195) | $(507) | $(1,215) | | Net loss | $(723) | $(588) | $(1,089) | $(2,014) | | Basic net loss per share | $(0.06) | $(0.05) | $(0.10) | $(0.19) | | Diluted net loss per share | $(0.06) | $(0.05) | $(0.10) | $(0.19) | - Total revenue increased by **17.1%** for the three months ended March 31, 2021, and by **26.6%** for the six months ended March 31, 2021, compared to the respective prior periods[12](index=12&type=chunk) - Net loss increased for the three-month period (from **$(588)** to **$(723)**) but decreased for the six-month period (from **$(2,014)** to **$(1,089)**)[12](index=12&type=chunk) [Consolidated Statement of Shareholders' Equity](index=5&type=section&id=Consolidated%20Statement%20of%20Shareholders'%20Equity) Outlines changes in shareholders' equity, including common shares and accumulated deficit Consolidated Statement of Shareholders' Equity (in thousands of dollars) | Metric | September 30, 2020 | March 31, 2021 | | :-------------------------- | :------------------- | :------------- | | Preferred Shares (Amount) | $25 | $0 | | Common Shares (Amount) | $2,706 | $2,756 | | Additional paid-in capital | $26,775 | $27,319 | | Accumulated deficit | $(21,910) | $(22,999) | | Total shareholders' equity | $7,596 | $7,076 | - Total shareholders' equity decreased from **$7,596** at September 30, 2020, to **$7,076** at March 31, 2021, primarily due to net losses[15](index=15&type=chunk) - Preferred shares were converted, resulting in a decrease from **$25** to **$0**, while common shares increased due to stock option exercises and stock-based compensation[15](index=15&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Summarizes cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (in thousands of dollars) | Metric | Six Months Ended March 31, 2021 | Six Months Ended March 31, 2020 | | :------------------------------------ | :------------------------------ | :------------------------------ | | Net cash provided by operating activities | $4,526 | $346 | | Net cash used in investing activities | $(2,425) | $(7,351) | | Net cash used/provided by financing activities | $(1,321) | $6,597 | | Net increase in cash and cash equivalents | $780 | $(408) | | Cash, cash equivalents, and restricted cash at end of period | $2,186 | $198 | - Net cash provided by operating activities significantly increased to **$4,526** in the six months ended March 31, 2021, from **$346** in the prior year, driven by noncash charges and increased customer advances[17](index=17&type=chunk)[154](index=154&type=chunk) - Net cash used in investing activities decreased to **$2,425** from **$7,351**, primarily due to lower capital expenditures and no cash paid in acquisitions during the current period[17](index=17&type=chunk)[157](index=157&type=chunk) - Net cash used in financing activities was **$1,321**, a shift from **$6,597** provided in the prior year, mainly due to payments on long-term debt and finance leases, partially offset by stock option exercises[17](index=17&type=chunk)[158](index=158&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Provides detailed explanations and disclosures supporting the condensed consolidated financial statements [1. Description of the Business and Basis of Presentation](index=8&type=section&id=1.%20DESCRIPTION%20OF%20THE%20BUSINESS%20AND%20BASIS%20OF%20PRESENTATION) Describes Inotiv, Inc.'s business operations and the basis for financial statement presentation - Inotiv, Inc. is a contract research organization specializing in nonclinical and analytical drug discovery and development services, also manufacturing scientific instruments for life sciences research[20](index=20&type=chunk) - The company changed its corporate name from Bioanalytical Systems, Inc. to Inotiv, Inc. on March 18, 2021[20](index=20&type=chunk) [2. Stock-Based Compensation](index=8&type=section&id=2.%20STOCK-BASED%20COMPENSATION) Details the company's stock-based compensation plans and related expenses Stock-Based Compensation Expense (in thousands of dollars) | Metric | Three Months Ended March 31, 2021 | Six Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | Six Months Ended March 31, 2020 | | :-------------------------- | :-------------------------------- | :------------------------------ | :-------------------------------- | :------------------------------ | | Stock based compensation expense | $278 | $460 | $123 | $204 | - The Company's Equity Plan aims to attract and retain officers, directors, and key employees, with **663 shares** available for grants as of March 31, 2021[24](index=24&type=chunk) - Effective October 1, 2020, the Company prospectively changed its accounting policy for forfeitures, adjusting expense in the period a forfeiture occurs rather than reducing for estimated forfeitures[25](index=25&type=chunk) - As of March 31, 2021, total unrecognized compensation cost for non-vested stock options was **$592 (over 2.1 years)** and for non-vested restricted shares was **$1,193 (over 1.9 years)**[28](index=28&type=chunk)[30](index=30&type=chunk) [3. Income (Loss) Per Share](index=9&type=section&id=3.%20INCOME%20(LOSS)%20PER%20SHARE) Presents the calculation of basic and diluted net loss per share for common shareholders Income (Loss) Per Share Data (in dollars, except shares) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | Six Months Ended March 31, 2021 | Six Months Ended March 31, 2020 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | :------------------------------ | :------------------------------ | | Net loss applicable to common shareholders | $(723) | $(588) | $(1,089) | $(2,014) | | Weighted average common shares outstanding | 11,151 | 10,843 | 11,083 | 10,756 | | Basic net loss per share | $(0.06) | $(0.05) | $(0.10) | $(0.19) | - Diluted net loss per share was the same as basic net loss per share for both periods, as potential common shares (stock options and preferred shares) were anti-dilutive[31](index=31&type=chunk)[32](index=32&type=chunk) [4. Inventories](index=10&type=section&id=4.%20INVENTORIES) Provides a breakdown of inventory components and changes over the reporting periods Inventories, Net (in thousands of dollars) | Inventory Type | March 31, 2021 | September 30, 2020 | | :--------------- | :------------- | :----------------- | | Raw materials | $545 | $577 | | Work in progress | $69 | $70 | | Finished goods | $421 | $230 | | Obsolescence reserve | $(163) | $(177) | | Total Inventories, net | $872 | $700 | - Net inventories increased by **$172 (24.6%)** from **$700** at September 30, 2020, to **$872** at March 31, 2021, primarily due to an increase in finished goods[33](index=33&type=chunk) [5. Segment Information](index=10&type=section&id=5.%20SEGMENT%20INFORMATION) Reports financial performance and operating results for the company's distinct business segments - The Company operates in two segments: Research Services (contract research and development support) and Research Products (scientific instruments and related software)[34](index=34&type=chunk) Segment Revenue and Operating Income (Loss) (in thousands of dollars) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | Six Months Ended March 31, 2021 | Six Months Ended March 31, 2020 | | :------------------ | :-------------------------------- | :-------------------------------- | :------------------------------ | :------------------------------ | | **Revenue** | | | | | | Service | $17,902 | $15,191 | $34,934 | $27,333 | | Product | $849 | $821 | $1,702 | $1,597 | | **Operating Income (Loss)** | | | | | | Service | $3,794 | $2,575 | $6,905 | $3,933 | | Product | $(26) | $(200) | $141 | $(470) | | Corporate | $(4,289) | $(2,570) | $(7,553) | $(4,678) | | Total Operating Loss | $(521) | $(195) | $(507) | $(1,215) | - Service segment revenue increased by **17.8%** and **27.8%** for the three and six months ended March 31, 2021, respectively, driving overall revenue growth[35](index=35&type=chunk) - The Service segment's operating income significantly improved, while the Product segment moved from an operating loss to a profit for the six-month period[35](index=35&type=chunk) [6. Income Taxes](index=10&type=section&id=6.%20INCOME%20TAXES) Explains the company's accounting policies for income taxes and deferred tax assets/liabilities - The Company uses the asset and liability method for income taxes and recognizes deferred tax assets/liabilities for temporary differences and carry-forwards[36](index=36&type=chunk) - The effective tax rate for the six months ended March 31, 2021, was **(4.58%)**, primarily due to changes in the valuation allowance on net deferred tax assets[37](index=37&type=chunk) - The Company reversed a **$1,276** deferred tax asset related to PPP loan expenses as of December 31, 2020, following clarification in the Consolidated Appropriations Act, 2021, allowing full deduction of these expenses[41](index=41&type=chunk)[42](index=42&type=chunk) [7. Debt](index=11&type=section&id=7.%20DEBT) Details the company's various debt instruments, credit agreements, and financial covenants - As of March 31, 2021, the Company's Credit Agreement with First Internet Bank included five term loans, a revolving line of credit, a construction draw loan, an equipment draw loan, and two capital expenditure instruments[44](index=44&type=chunk) Long-term Debt (in thousands of dollars) | Loan Type | March 31, 2021 | September 30, 2020 | | :-------------------------------- | :------------- | :----------------- | | Initial Term Loan | $3,622 | $3,748 | | Second Term Loan | $3,634 | $4,004 | | Third Term Loan | $1,018 | $1,115 | | Fourth Term Loan | $1,286 | $1,425 | | Fifth Term Loan | $1,858 | $1,891 | | Initial Capex Line | $826 | $920 | | Second Capex Line | $2,865 | $0 | | Construction and Equipment loans | $5,119 | $5,496 | | Seller Note – Smithers Avanza | $480 | $650 | | Seller Note – Preclinical Research Services | $719 | $752 | | Paycheck protection program loan | $5,051 | $5,051 | | Total Long-term debt (net of current portion and debt issuance costs) | $17,925 | $18,826 | - The Company is subject to financial covenants, including Fixed Charge Coverage Ratio and Cash Flow Leverage Ratio, which become more stringent over time[56](index=56&type=chunk) - The Company has a **$5,051 PPP loan**, for which it has applied for forgiveness of **$4,851**[59](index=59&type=chunk) [8. Accrued Expenses](index=14&type=section&id=8.%20ACCURUED%20EXPENSES) Discusses changes and releases related to the company's accrued expenses and liabilities - During the three and six months ended March 31, 2021, the Company released all of the remaining **$168** reserve for lease-related liabilities from a fiscal 2012 restructuring[62](index=62&type=chunk) [9. New Accounting Pronouncements](index=14&type=section&id=9.%20NEW%20ACCOUNTING%20PRONOUNCEMENTS) Outlines the adoption and impact of recently issued accounting standards on financial reporting - The Company adopted ASU 2016-13 "Financial Instruments (Topic 326) Measurement of Credit Losses on Financial Instrument" (CECL) effective October 1, 2020, which did not have a material impact on its consolidated financial statements[63](index=63&type=chunk)[64](index=64&type=chunk) [10. Business Combinations](index=16&type=section&id=10.%20BUSINESS%20COMBINATIONS) Describes the accounting for significant business acquisitions and their pro forma financial impact [PCRS Acquisition](index=16&type=section&id=PCRS%20acquisition) Details the acquisition of Pre-Clinical Research Services, Inc. (PCRS) and its financial terms - On December 1, 2019, Inotiv indirectly acquired substantially all assets of Pre-Clinical Research Services, Inc. (PCRS) for **$5,857**, including cash, common shares, and a promissory note[66](index=66&type=chunk) - The acquisition included real property in Fort Collins, Colorado, for **$2,500**, funded by cash on hand and debt refinancing[66](index=66&type=chunk) [Accounting for the Transaction](index=16&type=section&id=Accounting%20for%20the%20Transaction) Explains the allocation of acquired assets and assumed liabilities for the PCRS acquisition PCRS Acquisition: Assets Acquired and Liabilities Assumed (as of Dec 1, 2019) (in thousands of dollars) | Assets Acquired and Liabilities Assumed (as of Dec 1, 2019) | Allocation as of March 31, 2021 | | :------------------------------------------------ | :------------------------------ | | Receivables | $578 | | Property and equipment | $2,836 | | Unbilled receivables | $162 | | Prepaid expenses | $27 | | Intangible assets | $2,081 | | Goodwill | $751 | | Accounts payable | $(109) | | Accrued expenses | $(118) | | Customer advances | $(351) | | Total | $5,857 | - Goodwill of **$751** was recorded, reflecting enhanced scientific expertise, expanded client base, and broader service solutions, allocated to the Services segment[68](index=68&type=chunk) - PCRS Purchaser recorded revenues of **$3,813** and net income of **$711** for the six-month period ending March 31, 2021[68](index=68&type=chunk) [Pro Forma Results](index=16&type=section&id=Pro%20Forma%20Results) Presents hypothetical financial results assuming the PCRS acquisition occurred earlier PCRS Acquisition: Pro Forma Results (in thousands of dollars) | Metric | Six Months Ended March 31, 2020 (Pro Forma) | | :-------------------------- | :---------------------------------------- | | Total revenues | $29,847 | | Net loss | $(1,887) | | Pro forma basic net loss per share | $(0.17) | | Pro forma diluted net loss per share | $(0.17) | - Pro forma results for the six months ended March 31, 2020, assuming the PCRS Acquisition occurred on October 1, 2019, show total revenues of **$29,847** and a net loss of **$1,887**[71](index=71&type=chunk) [11. Revenue Recognition](index=18&type=section&id=11.%20REVENUE%20RECOGNITION) Explains the company's policies for recognizing revenue across its service and product streams - The Company disaggregates revenue into three streams: service revenue, product revenue, and royalties, recognizing revenue over time for services and at a point in time for products[73](index=73&type=chunk)[77](index=77&type=chunk) - Service revenue, including nonclinical research, bioanalytical, pharmaceutical method development, and archive services, is recognized over time based on costs incurred or services performed[75](index=75&type=chunk)[76](index=76&type=chunk) Contract Balances (in thousands of dollars) | Contract Item | Balance at September 30, 2020 | Additions | Deductions | Balance at March 31, 2021 | | :-------------------------- | :---------------------------- | :-------- | :--------- | :------------------------ | | Contract Assets: Unbilled receivables | $1,879 | $1,371 | $(857) | $2,393 | | Contract liabilities: Customer advances | $11,392 | $77,700 | $(73,906) | $15,186 | - Customer advances, a contract liability, increased from **$11,392** to **$15,186**, reflecting significant additions of **$77,700** and deductions of **$73,906** during the six-month period[80](index=80&type=chunk) [12. Leases](index=18&type=section&id=12.%20LEASES) Details the company's accounting for operating and finance leases, including ROU assets and liabilities - The Company records right-of-use (ROU) assets and lease liabilities for most leases, recognizing lease expense on a straight-line basis over the lease term[81](index=81&type=chunk) Lease Balances (in thousands of dollars) | Lease Type | March 31, 2021 | September 30, 2020 | | :------------------------------ | :------------- | :----------------- | | Operating right-of-use assets, net | $4,105 | $4,001 | | Total operating lease liabilities | $4,282 | $4,210 | | Finance right-of-use assets, net | $4,710 | $4,778 | | Total finance lease liabilities | $4,706 | $4,772 | Lease Costs (in thousands of dollars) | Lease Cost Component | Three months Ended March 31, 2021 | Six months Ended March 31, 2021 | | :-------------------------------- | :-------------------------------- | :------------------------------ | | Fixed operating lease costs | $242 | $474 | | Short-term lease costs | $42 | $52 | | Lease income | $(159) | $(318) | | Amortization of right-of-use asset expense (Finance) | $35 | $72 | | Interest on finance lease liability | $68 | $137 | | Total lease cost | $228 | $417 | - The weighted-average remaining lease term for operating leases is **4.49 years** with a discount rate of **5.24%**, while for finance leases it is **0.37 years** with a discount rate of **5.82%**[87](index=87&type=chunk) [13. Subsequent Events](index=21&type=section&id=13.%20SUBSEQUENT%20EVENTS) Reports significant events occurring after the balance sheet date, including acquisitions and financing - On April 30, 2021, the Company acquired HistoTox Labs, Inc. for **$22.0 million** in cash and completed a merger with Bolder BioPATH, Inc. for **$18.5 million** in cash, **1,588,235 common shares**, and **$1.5 million** in seller notes[89](index=89&type=chunk)[90](index=90&type=chunk)[91](index=91&type=chunk) - On April 23, 2021, the Company closed a public offering of **3,044,117 common shares**, generating approximately **$49.0 million** in net proceeds, used in part to fund the HistoTox Labs Acquisition and the Merger[92](index=92&type=chunk) - On April 30, 2021, the Company refinanced its credit arrangements with First Internet Bank, securing additional debt financing to fund acquisitions and other corporate initiatives, including new financial covenants[93](index=93&type=chunk)[94](index=94&type=chunk)[96](index=96&type=chunk) - The refinanced credit agreement includes **eleven term loans**, an equipment draw loan of up to **$3.0 million**, and a revolving line of credit of up to **$5.0 million**[93](index=93&type=chunk)[97](index=97&type=chunk)[98](index=98&type=chunk)[99](index=99&type=chunk) [Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202%20-%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the Company's financial condition and results of operations, highlighting recent growth initiatives, significant accomplishments, and a detailed comparison of financial performance for the three and six months ended March 31, 2021, versus the prior year [Recent Developments and Executive Summary](index=24&type=section&id=Recent%20Developments%20and%20Executive%20Summary) Summarizes key strategic initiatives, acquisitions, and operational improvements undertaken by the company - Inotiv has undertaken significant internal and external growth initiatives, including acquisitions (Seventh Wave, Smithers Avanza, PCRS) and facility expansions (Evansville)[106](index=106&type=chunk) - Subsequent to March 31, 2021, the Company acquired two additional businesses (HistoTox Labs and Bolder BioPATH), completed a public offering, and refinanced credit arrangements to fund these initiatives[107](index=107&type=chunk) - Infrastructure improvements include a new corporate name (Inotiv, Inc.), new accounting software, IT platform investments, and enhanced program management and client services[108](index=108&type=chunk) [Significant Accomplishments during three months ended March 31, 2021](index=25&type=section&id=Significant%20Accomplishments%20during%20three%20months%20ended%20March%2031,%202021) Highlights major achievements and strategic advancements during the first fiscal quarter of 2021 - Announced initiatives to broaden clinical pathology service offerings and expand cardiovascular safety pharmacology[110](index=110&type=chunk) - Appointed Greg Beattie as Chief Operating Officer[110](index=110&type=chunk) - Made investments in laboratory infrastructure, data and study management technologies, and internal expertise for SEND capabilities[110](index=110&type=chunk) - Announced investments in additional vivarium capacity at the West Lafayette, IN facility[110](index=110&type=chunk) - Corporate name change to Inotiv, Inc[110](index=110&type=chunk) [Events subsequent to March 31, 2021](index=26&type=section&id=Events%20subsequent%20to%20March%2031,%202021) Details critical financial and operational events that occurred after the reporting period end - Financial results for Q1 2021 were positively impacted by increased sales and gross margins in the Service business, but operating expenses rose due to recruiting, compensation, new systems, and acquisition-related transaction costs[112](index=112&type=chunk) - The Company maintained operations during the COVID-19 pandemic as an "essential critical infrastructure" industry, supporting drug discovery and development, including COVID-19 related therapies[113](index=113&type=chunk) - The Company received a **$5,051 PPP loan** in April 2020 and applied for forgiveness of **$4,851**, with the debt recorded as a liability[114](index=114&type=chunk) - Subsequent events include the HistoTox Labs Acquisition, the Merger with Bolder BioPATH, a public offering of common shares (**$49.0 million** net proceeds), and debt refinancing with First Internet Bank[115](index=115&type=chunk)[117](index=117&type=chunk) [Business Overview](index=26&type=section&id=Business%20Overview) Provides an overview of Inotiv's business model, services, products, and market positioning - Inotiv provides drug discovery and development services and sells analytical instruments to pharmaceutical, chemical, and medical device industries, aiming to accelerate safe and effective drug/product development[116](index=116&type=chunk) - The Company serves clients from small biotechnology startups to large global pharmaceutical companies, offering expertise in various scientific disciplines[119](index=119&type=chunk) - The CRO industry benefits from large pharmaceutical companies outsourcing R&D to reduce costs and speed time-to-market, and from smaller, venture-capital-funded drug discovery companies lacking internal resources[120](index=120&type=chunk)[122](index=122&type=chunk) [Results of Operations](index=28&type=section&id=Results%20of%20Operations) Analyzes the company's financial performance, including revenue, expenses, and net loss, over periods [Three Months Ended March 31, 2021 Compared to Three Months Ended March 31, 2020](index=30&type=section&id=Three%20Months%20Ended%20March%2031,%202021%20Compared%20to%20Three%20Months%20Ended%20March%2031,%202020) Compares financial results for the three-month periods, highlighting key performance drivers and changes Comparative Results of Operations (Three Months Ended March 31) (in thousands of dollars) | Metric | March 31, 2021 | March 31, 2020 | Change | % Change | | :------------------------ | :------------- | :------------- | :----- | :------- | | Total Revenue | $18,751 | $16,012 | $2,739 | 17.1% | | Service Revenue | $17,902 | $15,191 | $2,711 | 17.8% | | Product Revenue | $849 | $821 | $28 | 3.4% | | Cost of Service Revenue (% of Service Revenue) | 66.7% | 67.2% | -0.5% | | | Cost of Product Revenue (% of Product Revenue) | 61.5% | 74.6% | -13.1% | | | Selling Expenses | $1,175 | $1,447 | $(272) | -18.8% | | Research and Development Expenses | $203 | $162 | $41 | 25.3% | | General and Administrative Expenses | $5,423 | $3,779 | $1,644 | 43.5% | | Interest Expense | $366 | $392 | $(26) | -6.6% | | Net Loss | $(723) | $(588) | $(135) | 22.9% | - Service revenue growth was driven by an increase in the number of studies and expanded capacity, while product revenue saw a modest increase from analytical and other instruments[129](index=129&type=chunk)[130](index=130&type=chunk) - Gross profit margins improved due to greater utilization of expanded capacity in services and expense reductions in products[132](index=132&type=chunk)[133](index=133&type=chunk) - General and administrative expenses significantly increased due to strategic investments in corporate infrastructure, including recruiting, compensation, new systems, and acquisition-related transaction costs[137](index=137&type=chunk) [Six Months Ended March 31, 2021 Compared to Six Months Ended March 31, 2020](index=31&type=section&id=Six%20Months%20Ended%20March%2031,%202021%20Compared%20to%20Six%20Months%20Ended%20March%2031,%202020) Compares financial results for the six-month periods, detailing revenue growth and loss reduction Comparative Results of Operations (Six Months Ended March 31) (in thousands of dollars) | Metric | March 31, 2021 | March 31, 2020 | Change | % Change | | :------------------------ | :------------- | :------------- | :----- | :------- | | Total Revenue | $36,636 | $28,930 | $7,706 | 26.6% | | Service Revenue | $34,934 | $27,333 | $7,601 | 27.8% | | Product Revenue | $1,702 | $1,597 | $105 | 6.6% | | Cost of Service Revenue (% of Service Revenue) | 67.3% | 69.9% | -2.6% | | | Cost of Product Revenue (% of Product Revenue) | 54.8% | 71.5% | -16.7% | | | Selling Expenses | $2,138 | $2,665 | $(527) | -19.8% | | Research and Development Expenses | $399 | $324 | $75 | 23.1% | | General and Administrative Expenses | $10,171 | $6,896 | $3,275 | 47.5% | | Interest Expense | $713 | $703 | $10 | 1.4% | | Net Loss | $(1,089) | $(2,014) | $925 | -45.9% | - Service revenue increased due to incremental revenue from Fort Collins, CO operations and organic growth[142](index=142&type=chunk) - Net loss significantly decreased by **45.9%** due to higher revenues and improved gross margins, despite increased operating expenses[152](index=152&type=chunk) [Liquidity and Capital Resources](index=32&type=section&id=Liquidity%20and%20Capital%20Resources) Assesses the company's ability to meet short-term obligations and fund long-term growth initiatives [Comparative Cash Flow Analysis](index=32&type=section&id=Comparative%20Cash%20Flow%20Analysis) Analyzes cash flows from operating, investing, and financing activities across reporting periods Comparative Cash Flow Analysis (in thousands of dollars) | Cash Flow Activity | Six Months Ended March 31, 2021 | Six Months Ended March 31, 2020 | | :------------------------------------ | :------------------------------ | :------------------------------ | | Net cash provided by operating activities | $4,526 | $346 | | Net cash used in investing activities | $(2,425) | $(7,351) | | Net cash used/provided by financing activities | $(1,321) | $6,597 | | Cash and cash equivalents at period end | $2,186 | $198 | - Operating cash flow significantly improved due to noncash charges (depreciation, amortization, stock compensation) and a **$3,831** increase in customer advances, partially offset by a **$1,927** increase in accounts receivable[154](index=154&type=chunk) - Investing activities primarily consisted of **$2,427** in capital expenditures for laboratory equipment and facility improvements[157](index=157&type=chunk) - Financing activities shifted from a net cash provider to a net cash user, mainly due to long-term debt and finance lease payments[158](index=158&type=chunk) [Capital Resources](index=34&type=section&id=Capital%20Resources) Examines the company's sources of funding, including credit facilities and equity offerings [Credit Facility](index=34&type=section&id=Credit%20Facility) Details the company's credit arrangements, debt obligations, and associated financial covenants - The Company refinanced its credit arrangements with First Internet Bank on April 30, 2021, to secure additional debt financing for acquisitions and other corporate initiatives[159](index=159&type=chunk) - As of March 31, 2021, the Credit Agreement included five term loans, a revolving line of credit, construction and equipment draw loans, and two capital expenditure lines[160](index=160&type=chunk) - The Company's obligations under the Credit Agreement are guaranteed by its wholly-owned subsidiaries and secured by first priority security interests in substantially all assets[171](index=171&type=chunk) - The Company is required to maintain specific financial covenants, including Fixed Charge Coverage Ratio and Cash Flow Leverage Ratio, with increasing requirements over time[172](index=172&type=chunk) - Additional debt includes unsecured promissory notes from the Smithers Avanza and PCRS acquisitions, and seller notes from the Merger[174](index=174&type=chunk) - Management believes current liquidity sources (operations, cash on-hand, credit facilities, public offering proceeds) are sufficient for operations, capital expenditures, and working capital for the next twelve months[177](index=177&type=chunk) [Item 3 - Quantitative and Qualitative Disclosures about Market Risk](index=37&type=section&id=Item%203%20-%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) As a smaller reporting company, Inotiv, Inc. is not required to provide the information typically mandated for Quantitative and Qualitative Disclosures about Market Risk - The Company is exempt from providing market risk disclosures as it qualifies as a smaller reporting company[178](index=178&type=chunk) [Item 4 - Controls and Procedures](index=37&type=section&id=Item%204%20-%20Controls%20and%20Procedures) This section details the Company's disclosure controls and procedures, confirming their effectiveness as of March 31, 2021, and stating that there were no material changes in internal control over financial reporting during the second fiscal quarter [Disclosure Controls and Procedures](index=37&type=section&id=Disclosure%20Controls%20and%20Procedures) Evaluates the effectiveness of the company's controls for timely and accurate financial reporting - Management, including the CEO and CFO, evaluated the effectiveness of disclosure controls and procedures as of March 31, 2021, and determined them to be effective[180](index=180&type=chunk) - Disclosure controls are designed to provide reasonable assurance that required information is accumulated and communicated timely to management[179](index=179&type=chunk) [Changes in Internal Controls](index=37&type=section&id=Changes%20in%20Internal%20Controls) Reports on any material changes to the company's internal control over financial reporting - There were no material changes in internal control over financial reporting during the second quarter of fiscal 2021[181](index=181&type=chunk) PART II - OTHER INFORMATION [Item 1 - Legal Proceedings](index=37&type=section&id=Item%201%20-%20Legal%20Proceedings) This section states that there were no material changes to the Company's legal proceedings disclosure during the second quarter of fiscal 2021 - No material changes to legal proceedings were reported during the second quarter of fiscal 2021[182](index=182&type=chunk) [Item 1A - Risk Factors](index=37&type=section&id=Item%201A%20-%20Risk%20Factors) This section outlines various risks that could materially affect the Company's business, financial condition, and operating results, including those related to recent acquisitions, potential dilution from future stock sales, increased indebtedness, and the need for additional capital - The HistoTox Labs Acquisition and the Merger may present risks, including failure to realize expected benefits, difficulties in managing new services or retaining key personnel, and unanticipated adverse impacts on business or operating results[185](index=185&type=chunk)[189](index=189&type=chunk) - Future sales of common shares by the Company or existing shareholders, including those from recent acquisitions and stock options, could depress the market price of common shares[185](index=185&type=chunk)[186](index=186&type=chunk)[187](index=187&type=chunk) - Significant additional indebtedness incurred recently may impair the Company's ability to raise further capital, service its debt, and comply with financial covenants[188](index=188&type=chunk)[190](index=190&type=chunk) - The Company may need additional capital, which might not be available on reasonable terms or at all, potentially forcing a reduction in operating expenses and impacting long-term strategic growth[191](index=191&type=chunk)[192](index=192&type=chunk)[193](index=193&type=chunk) [Item 6 - Exhibits](index=39&type=section&id=Item%206%20-%20Exhibits) Lists all supplementary documents and data files filed as exhibits to the report - Exhibits include the Second Amended and Restated Articles of Incorporation and Bylaws, an offer letter to John Gregory Beattie, certifications from principal officers, and XBRL data files[195](index=195&type=chunk) [Signatures](index=40&type=section&id=Signatures) Contains the official certifications and signatures of the company's principal executive and financial officers - The report is signed by Robert W. Leasure, President and Chief Executive Officer, and Beth A. Taylor, Chief Financial Officer and Vice President of Finance, on May 14, 2021[196](index=196&type=chunk)

Inotiv, Inc. (NASDAQ:NOTV) Q2 2021 Earnings Conference Call May 5, 2021 4:30 PM ET Company Participants Kalle Ahl - IR, The Equity Group Robert Leasure Jr. - President and CEO Beth A. Taylor - VP, Finance and CFO John Sagartz - Chief Strategy Officer Conference Call Participants Unidentified Analyst - Operator Greetings and welcome to Inotiv???s Second Quarter Fiscal 2021 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow t ...

[PART I FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) This section provides the unaudited condensed consolidated financial statements and related management discussion for the reporting period [Item 1 Condensed Consolidated Financial Statements](index=3&type=section&id=Item%201%20Condensed%20Consolidated%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for Bioanalytical Systems, Inc., including the balance sheets, statements of operations, shareholders' equity, and cash flows, along with detailed notes explaining significant accounting policies, segment information, debt, and recent acquisitions [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This statement presents the Company's financial position, including assets, liabilities, and shareholders' equity, at specific reporting dates Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | December 31, 2020 | September 30, 2020 | Change (QoQ) | % Change (QoQ) | | :-------------------------------- | :------------------ | :------------------- | :------------- | :--------------- | | Total Assets | $62,798 | $61,593 | $1,205 | 1.96% | | Total Liabilities | $55,342 | $53,997 | $1,345 | 2.49% | | Total Shareholders' Equity | $7,456 | $7,596 | $(140) | -1.84% | | Cash and cash equivalents | $1,155 | $1,406 | $(251) | -17.85% | | Accounts receivable (net) | $8,937 | $8,681 | $256 | 2.95% | | Customer advances | $13,635 | $11,392 | $2,243 | 19.69% | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This statement details the Company's revenues, expenses, and net income or loss over specific reporting periods Condensed Consolidated Statements of Operations Highlights (in thousands, except per share amounts) | Metric | Three Months Ended Dec 31, 2020 | Three Months Ended Dec 31, 2019 | Change (YoY) | % Change (YoY) | | :-------------------------- | :------------------------------ | :------------------------------ | :----------- | :--------------- | | Total Revenue | $17,885 | $12,918 | $4,967 | 38.45% | | Service Revenue | $17,032 | $12,142 | $4,890 | 40.27% | | Product Revenue | $853 | $776 | $77 | 9.92% | | Gross Profit | $5,877 | $3,477 | $2,400 | 69.03% | | Operating Income (Loss) | $14 | $(1,020) | $1,034 | -101.37% | | Net Loss | $(366) | $(1,426) | $1,060 | -74.33% | | Basic Net Loss Per Share | $(0.03) | $(0.13) | $0.10 | -76.92% | | Diluted Net Loss Per Share | $(0.03) | $(0.13) | $0.10 | -76.92% | [Consolidated Statement of Shareholders' Equity](index=6&type=section&id=Consolidated%20Statement%20of%20Shareholders%27%20Equity) This statement outlines changes in the Company's shareholders' equity, including net loss, stock option exercises, and stock-based compensation Shareholders' Equity Changes (in thousands) | Item | Three Months Ended Dec 31, 2020 | Three Months Ended Dec 31, 2019 | | :---------------------- | :------------------------------ | :------------------------------ | | Balance at Sep 30 | $7,596 | $10,710 | | Net Loss | $(366) | $(1,426) | | Stock Option Exercises | $45 | — | | Stock-Based Compensation | $181 | $81 | | Balance at Dec 31 | $7,456 | $10,370 | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This statement summarizes the cash inflows and outflows from operating, investing, and financing activities for the reporting period Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Three Months Ended Dec 31, 2020 | Three Months Ended Dec 31, 2019 | | :-------------------------------- | :------------------------------ | :------------------------------ | | Net Cash Provided by Operating Activities | $1,652 | $1,452 | | Net Cash Used in Investing Activities | $(1,474) | $(6,096) | | Net Cash (Used in) Provided by Financing Activities | $(429) | $4,549 | | Net Decrease in Cash | $(251) | $(95) | | Cash at End of Period | $1,155 | $511 | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements [1. DESCRIPTION OF THE BUSINESS AND BASIS OF PRESENTATION](index=9&type=section&id=1.%20DESCRIPTION%20OF%20THE%20BUSINESS%20AND%20BASIS%20OF%20PRESENTATION) This note describes the Company's core business activities and the accounting principles used for interim financial reporting - The Company, operating as Bioanalytical Systems, Inc. and Inotiv, provides contract laboratory research services for pharmaceutical, chemical, and medical device development, biomedical research, and government-sponsored research, also manufacturing and selling scientific instruments globally[19](index=19&type=chunk) - The unaudited interim condensed consolidated financial statements are prepared in accordance with SEC rules for interim financial reporting and should be read with the annual Form 10-K[20](index=20&type=chunk) [2. STOCK-BASED COMPENSATION](index=9&type=section&id=2.%20STOCK-BASED%20COMPENSATION) This note details the Company's equity incentive plan, stock option activity, restricted share grants, and related compensation expenses - The Company's Equity Incentive Plan aims to attract and retain officers, directors, and key employees, with **680 shares remaining available for grants** as of December 31, 2020[22](index=22&type=chunk) - Effective October 1, 2020, the Company prospectively changed its accounting policy for forfeitures, no longer reducing stock-based compensation expense for estimated forfeitures, but adjusting it in the period a forfeiture occurs, with the impact deemed immaterial[23](index=23&type=chunk) Stock-Based Compensation Expense (in thousands) | Period | Stock-Based Compensation Expense | | :------------------------------ | :------------------------------- | | Three Months Ended Dec 31, 2020 | $181 | | Three Months Ended Dec 31, 2019 | $81 | Stock Option Activity (in thousands of shares, except for share prices) | Activity | Options (shares) | Weighted-Average Exercise Price | | :-------------------------------- | :--------------- | :------------------------------ | | Outstanding – October 1, 2020 | 712 | $2.21 | | Granted | 22 | $5.19 | | Exercised | (23) | $1.90 | | Forfeited | (5) | $3.41 | | Expired | (1) | $1.78 | | Outstanding – December 31, 2020 | 704 | $2.31 | | Exercisable at December 31, 2020 | 318 | $1.75 | - As of December 31, 2020, total unrecognized compensation cost for non-vested stock options was **$515 thousand**, expected to be recognized over a weighted-average service period of **2.0 years**[27](index=27&type=chunk) Restricted Share Activity (in thousands of shares, except for fair value) | Activity | Restricted Shares | Weighted Average Grant Date Fair Value | | :-------------------------- | :---------------- | :------------------------------------- | | Outstanding – Sep 30, 2020 | 128 | $3.88 | | Granted | 117 | $7.86 | | Forfeited | — | — | | Outstanding – Dec 31, 2020 | 245 | $5.77 | - As of December 31, 2020, total unrecognized compensation cost for non-vested restricted shares was **$1,160 thousand**, expected to be recognized over a weighted-average service period of **2.1 years**[28](index=28&type=chunk) [3. INCOME (LOSS) PER SHARE](index=11&type=section&id=3.%20INCOME%20%28LOSS%29%20PER%20SHARE) This note presents the calculation of basic and diluted net loss per share, including the impact of anti-dilutive securities Basic Net Loss Per Share | Metric | Three Months Ended Dec 31, 2020 | Three Months Ended Dec 31, 2019 | | :-------------------------------- | :------------------------------ | :------------------------------ | | Net loss applicable to common shareholders | $(366) | $(1,426) | | Weighted average common shares outstanding | 11,016 | 10,669 | | Basic net loss per share | $(0.03) | $(0.13) | - **704 options and 12 common shares** (from preferred conversion) were anti-dilutive and thus not included in diluted EPS calculation for the three months ended December 31, 2020[29](index=29&type=chunk) [4. INVENTORIES](index=12&type=section&id=4.%20INVENTORIES) This note provides a breakdown of the Company's inventory components, including raw materials, work in progress, finished goods, and obsolescence reserves Inventories (in thousands) | Category | December 31, 2020 | September 30, 2020 | | :---------------- | :------------------ | :------------------- | | Raw materials | $573 | $577 | | Work in progress | $67 | $70 | | Finished goods | $396 | $230 | | Total | $1,036 | $877 | | Obsolescence reserve | $(160) | $(177) | | Net Inventories | $876 | $700 | [5. SEGMENT INFORMATION](index=12&type=section&id=5.%20SEGMENT%20INFORMATION) This note disaggregates the Company's financial performance into its Research Services and Research Products operating segments - The Company operates in two principal segments: **Research Services** (contract R&D support for pharmaceutical companies) and **Research Products** (liquid chromatography, electrochemical, and physiological monitoring products)[33](index=33&type=chunk) Revenue and Operating Income (Loss) by Segment (in thousands) | Metric | Three Months Ended Dec 31, 2020 | Three Months Ended Dec 31, 2019 | | :-------------------- | :------------------------------ | :------------------------------ | | **Revenue:** | | | | Service | $17,032 | $12,142 | | Product | $853 | $776 | | Total Revenue | $17,885 | $12,918 | | **Operating Income (Loss):** | | | | Service | $3,111 | $1,263 | | Product | $167 | $(271) | | Corporate | $(3,264) | $(2,012) | | Total Operating Income (Loss) | $14 | $(1,020) | [6. INCOME TAXES](index=13&type=section&id=6.%20INCOME%20TAXES) This note explains the Company's income tax accounting policies, effective tax rates, and the impact of deferred tax assets and valuation allowances - The Company uses the asset and liability method for income taxes, recognizing deferred tax assets and liabilities for temporary differences and carry-forwards[36](index=36&type=chunk) - The effective income tax rate for the three months ended December 31, 2020, was **(9.89)%**, primarily due to changes in the valuation allowance on net deferred tax assets[37](index=37&type=chunk) - The Company reversed a **$1,276 thousand deferred tax asset** and corresponding valuation allowance related to PPP loan expenses as of December 31, 2020, following clarification in the Consolidated Appropriations Act, 2021, allowing full deduction of these expenses[41](index=41&type=chunk)[42](index=42&type=chunk) [7. DEBT](index=14&type=section&id=7.%20DEBT) This note details the Company's various credit facilities, term loans, and other debt instruments, including their balances and key terms - The Company's Credit Agreement with First Internet Bank of Indiana includes five term loans, a revolving line of credit, a construction draw loan, an equipment draw loan, and two capital expenditure instruments[43](index=43&type=chunk) Long-Term Debt Balances (in thousands) | Debt Type | December 31, 2020 | September 30, 2020 | | :-------------------------------- | :------------------ | :------------------- | | Initial Term Loan | $3,686 | $3,748 | | Second Term Loan | $3,820 | $4,004 | | Third Term Loan | $1,067 | $1,115 | | Fourth Term Loan | $1,356 | $1,425 | | Fifth Term Loan | $1,875 | $1,891 | | Initial Capex Line | $872 | $920 | | Construction and Equipment Loans | $5,308 | $5,496 | | Seller Note – Smithers Avanza | $570 | $650 | | Seller Note – Pre-Clinical Research Services | $735 | $752 | | Paycheck Protection Program Loan | $5,051 | $5,051 | | **Total Long-term Debt (net of current portion & issuance costs)** | **$17,208** | **$18,826** | - The Revolving Facility had **no outstanding balance** as of December 31, 2020, and its maturity was extended to **May 31, 2021**[49](index=49&type=chunk) - The Company received a **$5,051 thousand PPP loan** in April 2020 and applied for forgiveness of **$4,851 thousand**, with repayment pending the forgiveness decision[59](index=59&type=chunk) [8. ACCRUED EXPENSES](index=16&type=section&id=8.%20ACCRUED%20EXPENSES) This note provides information on the Company's accrued expenses, specifically detailing the restructuring liability related to a facility lease Restructuring Liability (in thousands) | Date | Restructuring Liability | | :------------------ | :---------------------- | | December 31, 2020 | $178 | | September 30, 2020 | $168 | - The restructuring liability relates to lease payments and other costs for a United Kingdom facility from a fiscal 2012 restructuring[62](index=62&type=chunk) [9. NEW ACCOUNTING PRONOUNCEMENTS](index=16&type=section&id=9.%20NEW%20ACCOUNTING%20PRONOUNCEMENTS) This note discusses the adoption of new accounting standards and their impact on the Company's consolidated financial statements - The Company adopted ASU 2016-13 "Financial Instruments (Topic 326) Measurement of Credit Losses on Financial Instrument" (CECL) on October 1, 2020, which did not have a **material impact** on its consolidated financial statements[63](index=63&type=chunk) [10. BUSINESS COMBINATIONS](index=17&type=section&id=10.%20BUSINESS%20COMBINATIONS) This note outlines the accounting treatment for business acquisitions, including purchase price allocation and pro forma financial information - The Company accounts for acquisitions under ASC 805, valuing consideration, assets, and liabilities at fair market value at the acquisition date, with acquisition costs generally expensed as incurred[65](index=65&type=chunk) - On December 1, 2019, the Company acquired substantially all assets of Pre-Clinical Research Services, Inc. (PCRS) for a total consideration of **$5,857 thousand**, including cash, common shares, and an unsecured promissory note[67](index=67&type=chunk) PCRS Acquisition Purchase Price Allocation (as of December 31, 2020, in thousands) | Category | Allocation | | :-------------------------- | :--------- | | Receivables | $578 | | Property and equipment | $2,836 | | Unbilled receivables | $162 | | Prepaid expenses | $27 | | Intangible assets | $2,081 | | Goodwill | $751 | | Accounts payable | $(109) | | Accrued expenses | $(118) | | Customer advances | $(351) | | **Total** | **$5,857** | - Goodwill from the PCRS acquisition, allocated to the Services segment, is derived from enhanced scientific expertise, expanded client base, and broader service solutions[69](index=69&type=chunk) PCRS Pro Forma Results (Three Months Ended December 31, 2019, in thousands) | Metric | Amount | | :-------------------------- | :----- | | Total Revenues | $13,835 | | Net Loss | $(1,299) | | Pro Forma Basic Net Loss Per Share | $(0.12) | | Pro Forma Diluted Net Loss Per Share | $(0.12) | [11. REVENUE RECOGNITION](index=19&type=section&id=11.%20REVENUE%20RECOGNITION) This note describes the Company's policies for recognizing revenue from its service and product offerings, including contract assets and liabilities - The Company disaggregates revenue into service revenue, product revenue, and royalties, identifying performance obligations at contract inception[73](index=73&type=chunk) - Service revenue from fixed-fee arrangements (nonclinical research, bioanalytical, method development) is recognized over time using the input method or when services are performed; archive services revenue is recognized ratably over the service period[75](index=75&type=chunk)[76](index=76&type=chunk) - Product revenue is recognized at a point in time, generally when title and control transfer to the client based on shipping terms, with maintenance agreements recognized ratably over the service period[77](index=77&type=chunk) Changes in Contract Assets and Liabilities (in thousands) | Category | Balance at Sep 30, 2020 | Additions | Deductions | Balance at Dec 31, 2020 | | :------------------------ | :---------------------- | :-------- | :--------- | :---------------------- | | Unbilled receivables | $1,879 | $720 | $(420) | $2,179 | | Customer advances | $11,392 | $35,042 | $(32,799) | $13,635 | [12. LEASES](index=20&type=section&id=12.%20LEASES) This note details the Company's accounting for leases, including right-of-use assets, lease liabilities, and related lease costs - The Company records a right-of-use (ROU) asset and lease liability for most leases (excluding those 12 months or less) in accordance with ASU 842, recognizing lease expense on a straight-line basis[81](index=81&type=chunk) Lease Assets and Liabilities (in thousands) | Metric | December 31, 2020 | December 31, 2019 | | :-------------------------------- | :------------------ | :------------------ | | Operating right-of-use assets, net | $4,093 | $4,739 | | Total operating lease liabilities | $4,307 | $4,908 | | Finance right-of-use assets, net | $4,742 | $4,641 | | Total finance lease liabilities | $4,733 | $4,633 | Total Lease Cost (in thousands) | Period | Total Lease Cost | | :------------------------------ | :--------------- | | Three Months Ended Dec 31, 2020 | $187 | | Three Months Ended Dec 31, 2019 | $169 | Weighted-Average Lease Terms and Discount Rates | Metric | December 31, 2020 | December 31, 2019 | | :-------------------------------- | :------------------ | :------------------ | | Weighted-average remaining lease term (Operating) | 4.51 years | 5.41 years | | Weighted-average remaining lease term (Finance) | 0.88 years | 0.58 years | | Weighted-average discount rate (Operating) | 5.22% | 5.22% | | Weighted-average discount rate (Finance) | 5.84% | 5.95% | [Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations](index=19&type=section&id=Item%202%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the Company's financial condition and operational results for the three months ended December 31, 2020, highlighting growth initiatives, the impact of acquisitions, revenue and expense trends, and liquidity [Forward-Looking Statements](index=22&type=section&id=Forward-Looking%20Statements) This section cautions readers about the inherent risks and uncertainties associated with the Company's forward-looking projections and expectations - The report contains forward-looking statements regarding strategic plans, demand trends, product development, capital expenditures, global economic conditions, cash position, integration of acquisitions, expansion efforts, talent retention, marketing, debt servicing, bookings, margins, liquidity, and COVID-19 impact[89](index=89&type=chunk) - Readers are cautioned that forward-looking statements are not guarantees of future performance and involve risks and uncertainties, with actual results potentially differing materially from expectations[89](index=89&type=chunk)[90](index=90&type=chunk) [Recent Developments and Executive Summary](index=23&type=section&id=Recent%20Developments%20and%20Executive%20Summary) This section highlights the Company's strategic growth initiatives, recent acquisitions, operational performance, and the impact of external factors like COVID-19 - The Company has undertaken significant growth initiatives, including acquisitions (Seventh Wave, Smithers Avanza, PCRS), facility expansion in Evansville, and investments in infrastructure, scientific capabilities, and leadership[92](index=92&type=chunk) - Financial results for the three months ended December 31, 2020, were positively impacted by **increased sales and gross margins** from acquisitions and internal growth in the Service business, along with improved margins and expense reductions in the Products segment[93](index=93&type=chunk) - Despite the COVID-19 pandemic, the Company maintained operations as an "essential critical infrastructure" industry, implementing safety measures and work-from-home arrangements, and utilized a **$5,051 thousand PPP loan**[94](index=94&type=chunk)[95](index=95&type=chunk) - The Company proposes adopting **Inotiv, Inc. as its formal corporate name** at the 2021 annual meeting of shareholders to further establish its brand[96](index=96&type=chunk) [Business Overview](index=24&type=section&id=Business%20Overview) This section describes the Company's core business of providing drug discovery and development services and selling analytical instruments, along with relevant industry trends - The Company provides drug discovery and development services and sells analytical instruments, aiming to deliver superior scientific research and innovative instrumentation to accelerate drug and product development[98](index=98&type=chunk) - Key industry trends benefiting the Company include large pharmaceutical companies outsourcing R&D due to patent expirations and cost pressures, the growth of the generic drug industry, and the reliance of smaller, venture capital-funded biotech companies on CROs for research and regulatory guidance[100](index=100&type=chunk)[101](index=101&type=chunk) [Financial Performance Metrics](index=25&type=section&id=Financial%20Performance%20Metrics) This section presents key financial indicators, including revenues, gross profit, operating expenses, and cash flow metrics, for the reporting period Key Financial Performance Metrics (in thousands) | Metric | Three Months Ended Dec 31, 2020 | Three Months Ended Dec 31, 2019 | Change (YoY) | % Change (YoY) | | :-------------------------- | :------------------------------ | :------------------------------ | :----------- | :--------------- | | Total Revenues | $17,885 | $12,918 | $4,967 | 38.5% | | Gross Profit | $5,877 | $3,477 | $2,400 | 69.1% | | Operating Expenses | $5,863 | $4,497 | $1,366 | 30.4% | | Cash and Cash Equivalents | $1,155 | $1,406 (Sep 30, 2020) | $(251) | -17.85% | | Cash from Operations | $1,652 | $1,452 | $200 | 13.77% | | Capital Expenditures | $1,474 | $2,165 | $(691) | -31.92% | - As of December 31, 2020, the Company had **no outstanding balance** on its **$5,000 thousand general line of credit** but had a **$3,000 thousand balance** on its **$3,000 thousand capex line of credit**[104](index=104&type=chunk) [Results of Operations](index=26&type=section&id=Results%20of%20Operations) This section provides a detailed analysis of the Company's revenues, cost of revenues, operating expenses, and net income or loss for the reporting period [Service and Product Revenues](index=26&type=section&id=Service%20and%20Product%20Revenues) This section breaks down the Company's total revenue into service and product categories, detailing changes and contributing factors - Total revenues increased by **38.5% to $17,885 thousand** for the three months ended December 31, 2020, compared to **$12,918 thousand** in the prior year[107](index=107&type=chunk) Service Revenue Breakdown (in thousands) | Service Type | Three Months Ended Dec 31, 2020 | Three Months Ended Dec 31, 2019 | Change (YoY) | % Change (YoY) | | :---------------------- | :------------------------------ | :------------------------------ | :----------- | :--------------- | | Bioanalytical analysis | $1,650 | $1,327 | $323 | 24.3% | | Nonclinical services | $13,687 | $10,128 | $3,559 | 35.1% | | Other laboratory services | $1,695 | $687 | $1,008 | 146.7% | | **Total Service Revenue** | **$17,032** | **$12,142** | **$4,890** | **40.3%** | Product Revenue Breakdown (in thousands) | Product Type | Three Months Ended Dec 31, 2020 | Three Months Ended Dec 31, 2019 | Change (YoY) | % Change (YoY) | | :-------------------------- | :------------------------------ | :------------------------------ | :----------- | :--------------- | | Culex, in-vivo sampling systems | $261 | $176 | $85 | 48.3% | | Analytical instruments | $504 | $389 | $115 | 29.6% | | Other instruments | $88 | $211 | $(123) | -58.3% | | **Total Product Revenue** | **$853** | **$776** | **$77** | **9.9%** | [Cost of Revenues](index=27&type=section&id=Cost%20of%20Revenues) This section analyzes the cost of service and product revenues, highlighting changes in percentages and underlying operational efficiencies - Cost of Service revenue as a percentage of Service revenue decreased to **68.1%** (from 73.4% YoY), reflecting operating leverage and greater utilization of expanded capacity[112](index=112&type=chunk) - Cost of Products revenue as a percentage of Products revenue decreased to **48.2%** (from 68.2% YoY) due to expense reductions and improved margins on existing sales[113](index=113&type=chunk) [Operating Expenses](index=27&type=section&id=Operating%20Expenses) This section details the Company's selling, research and development, and general and administrative expenses, explaining significant fluctuations - Selling expenses decreased by **29.1% to $625 thousand**, primarily due to a reduction in non-recurring costs related to the Inotiv brand launch and lower trade show/travel expenses due to COVID-19[114](index=114&type=chunk) - Research and development expenses increased by **21.0% to $196 thousand**, mainly driven by internal development investments for new services[115](index=115&type=chunk) - General and administrative expenses increased by **46.0% to $5,042 thousand**, primarily due to increased employee-related costs (including non-cash stock compensation) and additional expenses from the PCRS acquisition[116](index=116&type=chunk) [Other Income (Expense)](index=27&type=section&id=Other%20Income%20%28Expense%29) This section reports non-operating income and expenses, primarily focusing on interest expense from debt arrangements - Other expense for the first quarter of fiscal 2020 was **$347 thousand**, an increase from **$309 thousand** in the prior year, mainly due to higher interest expense from the PPP loan and credit arrangements with FIB[117](index=117&type=chunk) [Net Income/Loss](index=28&type=section&id=Net%20Income/Loss) This section presents the Company's overall profitability or loss for the period, comparing it to the prior year - The Company reported a net loss of **$366 thousand** for the three months ended December 31, 2020, a significant reduction from the **$1,426 thousand net loss** in the comparable prior year period[118](index=118&type=chunk) [Income Taxes](index=28&type=section&id=Income%20Taxes) This section discusses the Company's income tax expense, effective tax rate, and the factors influencing tax provisions Effective Income Tax Rate | Period | Effective Income Tax Rate | | :------------------------------ | :------------------------ | | Three Months Ended Dec 31, 2020 | (9.89)% | | Three Months Ended Dec 31, 2019 | (7.32)% | - The tax expense primarily relates to certain credits arising when deferred tax liabilities from indefinite-lived assets cannot support the realization of deferred tax assets for valuation allowance purposes[119](index=119&type=chunk) [Liquidity and Capital Resources](index=28&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses the Company's ability to meet its short-term and long-term financial obligations, including cash flow and debt management [Comparative Cash Flow Analysis](index=28&type=section&id=Comparative%20Cash%20Flow%20Analysis) This section analyzes the Company's cash flows from operating, investing, and financing activities, highlighting significant changes - Cash and cash equivalents decreased to **$1,155 thousand** at December 31, 2020, from **$1,406 thousand** at September 30, 2020[121](index=121&type=chunk) - Net cash provided by operating activities increased to **$1,652 thousand** for the three months ended December 31, 2020, from **$1,452 thousand** in the prior year, driven by noncash charges, increased customer advances, and accounts payable, partially offset by increases in accounts receivable and prepaid expenses[122](index=122&type=chunk) - Investing activities used **$1,474 thousand** in the first three months of fiscal 2021 for capital expenditures, a decrease from **$6,096 thousand** in the prior year which included the PCRS acquisition cash payment[125](index=125&type=chunk) - Financing activities used **$429 thousand** in the first three months of fiscal 2021, a shift from **$4,549 thousand** provided in the prior year, primarily due to payments on long-term debt and finance leases, partially offset by capex line borrowings and stock option exercises[126](index=126&type=chunk) - Days' sales in accounts receivable decreased to **49 days** at December 31, 2020, from **56 days** at September 30, 2020[123](index=123&type=chunk) [Capital Resources](index=29&type=section&id=Capital%20Resources) This section details the Company's available capital, including credit facilities and debt arrangements, and management's outlook on future liquidity - The Company's Credit Agreement with First Internet Bank includes various term loans, a revolving facility, construction/equipment draw loans, and capex lines, with balances detailed in Note 7[127](index=127&type=chunk) - A Credit Agreement modification on December 18, 2020, suspended Fixed Charge Coverage Ratio testing for December 31, 2020, and revised future covenant calculations, which would have otherwise resulted in non-compliance[140](index=140&type=chunk) - Future financial covenants include maintaining a Fixed Charge Coverage Ratio of at least **1.05 to 1.0** by March 31, 2021, increasing to **1.20 to 1.00** by September 30, 2021, and a Cash Flow Leverage Ratio not exceeding **6.00 to 1.00** by December 31, 2020, decreasing to **4.25 to 1.00** by September 30, 2021[141](index=141&type=chunk) - The Company's liquidity for fiscal 2021 is expected to come from cash generated from operations, cash on-hand, and additional borrowings under its Credit Agreement, which management believes will be sufficient to fund operations and capital expenditures[146](index=146&type=chunk) [Item 3 Quantitative and Qualitative Disclosures about Market Risk](index=32&type=section&id=Item%203%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) As a smaller reporting company, Bioanalytical Systems, Inc. is not required to provide quantitative and qualitative disclosures about market risk - A smaller reporting company is not required to provide the information required by Item 3[147](index=147&type=chunk) [Item 4 Controls and Procedures](index=32&type=section&id=Item%204%20Controls%20and%20Procedures) This section details the Company's disclosure controls and procedures, confirming their effectiveness, and reports no material changes in internal control over financial reporting during the quarter [Disclosure Controls and Procedures](index=32&type=section&id=Disclosure%20Controls%20and%20Procedures) This section confirms that management, including the CEO and CFO, evaluated and determined the effectiveness of the Company's disclosure controls and procedures - Management, including the CEO and CFO, evaluated the effectiveness of the Company's disclosure controls and procedures as of December 31, 2020, and determined them to be **effective**[149](index=149&type=chunk) [Changes in Internal Controls](index=33&type=section&id=Changes%20in%20Internal%20Controls) This section reports that there were no material changes in the Company's internal control over financial reporting during the first quarter of fiscal 2021 - There were **no changes** in the Company's internal control over financial reporting during the first quarter of fiscal 2021 that materially affected or are reasonably likely to materially affect internal control over financial reporting[150](index=150&type=chunk) [PART II OTHER INFORMATION](index=29&type=section&id=PART%20II%20OTHER%20INFORMATION) This section provides additional disclosures not covered in the financial statements, including legal proceedings, risk factors, and exhibits [Item 1 Legal Proceedings](index=33&type=section&id=Item%201%20Legal%20Proceedings) This section states that there were no material changes to the Company's legal proceedings disclosure during the first quarter of fiscal 2021 - There were **no material changes** during the first quarter of fiscal 2021 to the Company's disclosure in Item 3 of its Form 10-K for fiscal 2020 regarding legal proceedings[151](index=151&type=chunk) [Item 1A Risk Factors](index=33&type=section&id=Item%201A%20Risk%20Factors) This section refers investors to the comprehensive risk factors detailed in the Company's Annual Report on Form 10-K and acknowledges that new or currently immaterial risks may emerge - Investors should carefully consider the risks described in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2020, including those under "Risk Factors"[152](index=152&type=chunk) - The Company acknowledges that new risk factors or risks currently deemed immaterial may emerge, and it is not possible to predict all such factors or their potential impact[153](index=153&type=chunk) [Item 6 Exhibits](index=33&type=section&id=Item%206%20Exhibits) This section lists the exhibits filed as part of the Form 10-Q, including amendments to the credit agreement, an employment agreement, and various certifications - Key exhibits filed include the **Third Amendment to the Amended and Restated Credit Agreement** (December 18, 2020), the **Amended and Restated Employment Agreement with Robert W. Leasure, Jr.** (December 29, 2020), and certifications from the Principal Executive Officer and Chief Financial Officer[154](index=154&type=chunk) [Signatures](index=34&type=section&id=Signatures) This section contains the official signatures of the Company's President and Chief Executive Officer, and Chief Financial Officer and Vice President of Finance, certifying the report

Bioanalytical Systems, Inc. (BASI) Q1 2021 Results Conference Call February 9, 2021 4:30 PM ET Company Participants Kalle Ahl - IR, The Equity Group Bob Leasure - President and CEO Beth Taylor - CFO John Sagartz - Chief Strategy Officer Conference Call Participants David Windley - Jefferies Lenny Dunn - Mutual Trust Company Operator Greetings and welcome to Bioanalytical Systems, Inc.???s First Quarter Fiscal 2021 Financial Results Call. At this time, all participants are in a listen-only mode. A question-a ...