Good day, ladies and gentlemen, and welcome to the Bioanalytical Systems, Incorporated Q3 2015 Earnings Conference Call. At this time, all participants on the phone lines have been placed on mute. Later, we will conduct a question-and-answer session. [Operator Instructions] Do note today’s program is being recorded. I would now like introduce your host, Ms. Jacqueline Lemke, BASI’s President and Chief Executive Officer. Please again.

Thank you, operator. Good morning and thank you all for joining us for BASI’s 2015 third quarter earnings conference call and webcast. BASIs role as contract research organization and a laboratory instruments provider is twofold. First, we seek to excel in our ability to support the large and mid tier pharmaceutical companies, the emerging bio technology companies and the academic research organizations in their request to bring safe, effective, often life saving drugs to the market. With each study and instrument sale, we focus on our clients’ needs and consistently deliver quality, innovation and regulatory excellence. And also, second, not second in rank, but second, we deliver as we deliver the excellence needed to support drug discovery research, BASI seeks to build shareholder value. The current financial report towards the third quarter and year-to-date fiscal 2015 reflects that continued positive progress is being made towards our goals with both our clients and our shareholders. Without going overall the numbers since Jeff will cover them shortly, I’d like to call your attention that adjusted EBITDA is 30.8% of revenue for the quarter and a 11.1% of revenue year-to-date for fiscal 2015, we’re well receive our prior fiscal year adjusted EBITDA of 16% and a 11.5% respectively for the third quarter and year-to-date. Beside our relatively small scale versus our industry competitors, this is a highly competitive return. Revenue is increasing versus the prior quarter and the same quarter last year. The cost of financing has decreased year-to-date versus the prior year by 45%. We are investing in a long-term capital needs of the business, use of the cash revolved has been minimized to be available for strategic investments. Our long-term debt is decreasing and we’ve maximized the use of our 125,000 square foot building in [indiscernible] by implementing a sub link.…

Thanks, Jackie, and good morning, everyone and thank you for joining us on today’s third quarter conference call. Before we begin the discussion, I’d like to remind you that the statements we make during today’s conference call about our future expectations, our plans and prospects for the company constitute forward-looking statements for the purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may vary materially from those indicated by these forward-looking statements as a result of various important factors including those discussed in the company’s filings with the Securities and Exchange Commission. The statements made on this call are made only as of the date of this call and the company assumes no obligation to update these statements. In addition, we will discuss certain non-GAAP financial measures on this call which should be considered a supplement to and not a substitute for financial measures prepared in accordance with Generally Accepted Accounting Principles. A reconciliation of these non-GAAP measures to the comparable Generally Accepted Accounting Principle measures are included in the press release. Now to the results. Revenues for the third quarter amounted to $6,150,000, a 2% increase compared to the third quarter one-year ago and a 7.4% increase sequentially. Increases in service revenue or our Bioanalytical and Preclinical businesses offset lower reported revenue by our product segment and other laboratory services. Our revenue performance for the quarter did benefit from the early termination of two preclinical service projects which resulted an accelerating a recognition of revenue earlier than anticipated. This benefit was roughly $600,000 in the quarter. On a year-to-date basis, revenue amounted o $17,721,000 compared to $18,164,000 a 2.4% decline year-over-year. Revenue increased in our bio analytical and preclinical businesses for the first nine months of the year, but was more…

Okay, all right. Thank you Jeff, thanks for all those details and people can read into more details or access Jeff and myself at any time. [indiscernible] the first paragraph that I’ll drawing your attention to EBITDA as a percent of revenue I realized that I gave you some numbers that were little inverted, so let me go over that again. The adjusted EBITDA during the third quarter fiscal 2015 was 30.8% of revenue, and year-to-date was 16% of revenue. For the prior year the adjusted EBITDA was a 11.1% for the third quarter and 11.5% year-to-date. So, for the quarter year-on-year it was 19.7 percentage points improvement. For the year 4.5 percentage point improvement on pretty solid base of a 11.5% of EBITDA. So I wanted to bring it back to your attention, there were lot of numbers, a lot of things going on but bottom line, we are showing ourselves as very competitive. We will continue to focus on positioning BASIs to preferred partner for outsource [indiscernible] early stage development products and services. Stretching out to clients, pursuing strategic alliances and promoting cross selling opportunities are just a few examples of the actions we are taking to build sustainable growth over the long-term. Although we report our business in two segments, we present our portfolio of businesses to our clients at the unified product and service offering which we can support, we used to support them throughout the drug research process. We are intensifying our focus on our commercial efforts, adding more experienced scientist and business development people, sharpening our process and sales targeting and increasing the involvement of our scientists and business unit leaders in our client development. I believe that there are many changes we’ve made and initiatives we are implementing today enhance our ability to accelerate sales, earnings and pre cash for growth over the longer term. I remain solidly convinced that the changes we are undertaking are required to position BASI for long-term success. As we look forward to the rest of the year we’re determined to improve on our execution. We’ll continue to look for ways to make BASI a stronger company. In closing, I’d like to thank our employees for their continued focus and committed to our strategy as we strive to be the partner towards for our clients and as always our shareholders for their support. Operator, we are ready for the first question.

Thank you. [Operator Instructions] We do have a question from the line of George [indiscernible]. Your line is now open.

Yes, good morning. Jackie, I’d like to ask you about this lease situation, I was a little confused by listening to your final – how many years is the lease for that you have executed on your facility?

It’s almost 10 full years, it’s nine years and ten months I think, 11 months.

10 full years, okay. And then if I understand that final year it’s 50,000 approximately a month and it goes to 57,000 per month for the final year, is that it?

Correct.

Okay, all right. And then secondly, the termination of the – where you picked up the revenue for the quarter I’ve heard pre-closure business execution. How is it that that you picked up a profit on that early closure, was it because they were paying to get out of the contract with you or what?

Yeah, they canceled the contract but we were so far down through the process and through the services that we had delivered that what you’re seeing is just an acceleration of the reporting of the revenue.

I got you.

But we have done most of the projects that they’ve decided at that compound that they were going to start doing the work on it.

Yeah just to clarify just a little bit on that for anybody else on the call as well, the project was over two years in duration. The results didn’t look promising, so they made a decision to do the early termination. You brought up the point about cash versus revenue recognition, there are two elements. One, we established certain milestones with our customers to try to accelerate the cash portion of the contract with different milestones reach that helps fund the activities, then we have the other which is more of a percentage of completion for actually earning the revenue in an accounting cent. So as the project was coming to a closure with some minor adjustments made based on the terms and conditions that the early termination, so the majority of cost essentially will recognize in what we saw was – I wouldn’t call it a windfall because this is something that actually happens as a normal course of business, we don’t have unusually this large happening this often but it is a normal course, and some go the other way where they delay their project. So that’s kind of a quick summary, hope they didn’t confuse you.

No, okay I appreciate that. And then also it’s nice to see the improvement, I might add in the shareholder equity as a debt to shareholder equity situation, it looks like maybe your equity was up like $0.23 a share. It looks like maybe around a $1.30 or I’m just guessing at that number but on a per share basis which is good, and it’s one of the better representations I’ve seen in the company for quite a while. And also wondering what you’re into – is there anything you can share with us on diversification or trying to expand your product client at this point in time to build a broader revenue stream?

Yeah, we have a few things happening but I’m hesitant to announce them yet until they’re fully formed, because I don’t want to cannibalize our existing product lines but we will be announcing a few things probably at the end of the next quarter.

Okay.

Because we have been both developing internally improvements to our existing line and acquisitions of [indiscernible] new innovation.

Great, okay. And then lastly, you still have what about 700,000 shares covered on a conversion situation that terminates, can you give me the data of that termination next year and am I correct in thinking it’s at $2 that there is a conversion price through a certain date?

Right. There is $799,000 once outstanding and they expire May 11, 2016.

Okay, all right. Thank you kindly.

Thank you.

Thank you. [Operator Instructions] Our next question comes from the line of Lenny Dunn. Your line is now your open. Your question please.

Good morning. I’m certainly pleased with the balance sheet disclosures and the cash flows and everything else, but I’m not as pleased with the sales growth. And I really thought we’d be seeing a little better sales growth this quarter and want to know if in the current quarter which we’re already a month and half into if you’re seeing a better sales picture?

Lenny, this is Jeff. It’s clearly the benefit of the early terminal if you look at that, and as I said, it’s a normal course, but it really wasn’t an acceleration. If you take that into account, we’re still as I mentioned in my comments entirely focused on the sales growth we know that’s important to us, we are getting the balance sheet in shape and the team is doing a good job there. We are doing a lot of things that are not ultimately showing up in the top line yet. All we can continue to stress is, it’s not stay with us, I guess we’re [indiscernible] be patient, right now we – and I don’t want to comment on the fourth quarter or into the first, we’re going into our budget cycle shortly. We’ll be looking at that but to Jackie’s comments about what we’re trying to do to align ourselves with customers, upgrading the product line as Jackie mentioned, these were all things that are really gearing towards revenue growth. It has been lower than maybe we’ve had here a year ago or two years ago and said, we can get this business growing, we’d all probably say yes, but I don’t think we’re all discouraged about the activities that we’re doing, it just that ultimately we are going to have to demonstrate that we can grow on the top line but we just don’t want to make the comment right now that we’ll necessarily see a huge spike moving forward in the near term.

We don’t even need a huge spike, we just need reasonable growth because it’s going to really flow to the bottom line because overhead stays pretty much the same.

Correct, yeah it absolutely will, it will grow – it will flow significantly to the bottom line and that’s what we’re working on. We’ve got all kinds of programs in place. We’re visiting existing clients, we’re visiting new clients. We have lots of talks in place. It’s just an industry that takes a while to commit and then we are the service provider, so we’re their variable costs, so at some point when push comes to [indiscernible] and their timing is changed it changes our timing, that’s why we’re trying to make sure we have plenty in the pipeline, but we are close to accept it or close to issue basis is much increased than in prior year. So, we’re going to see things coming in, we just can’t predict the quarter right now.

This is a company with just a modest increase in sales could make $0.10 every quarter or better and with the – if you go anywhere near the type of sales we used to have you can make $0.25 a quarter. So you just have to get the top line growing so the bottom line goes, and as the company certainly can’t get in trouble with the current balance sheet so that’s not my concern. But we just have to get that top line growing whatever has to be done.

Yeah, we understand.

Okay.

Thanks.

Thanks, Lenny.

Thank you. I’m showing no further questions at this time. I’d like to turn the program back over to management for any additional remarks.

Okay, thank you operator, thank you everyone for joining us. We have no more comments until we do announce at the end of the year.

Yeah, we’ll targeting right now, not exact date but it’ll be December, we’ll like to move that up a little bit in the month. But we’ll look forward to talking to you next time.

Thank you.

Ladies and gentlemen, thank you very much for your participation. This does conclude the program. You may now disconnect.