Good day ladies and gentlemen and welcome to your Q2 2013 Bioanalytical Systems Incorporated Earnings Conference Call hosted Jackie Lemke, President, CEO and CFO. My name is Chris and I’ll be your conference coordinator for today. Throughout this conference, your lines will remain on listen-only until the question-and-answer session begins. (Operator Instructions) Thank you. At this stage, I would like to turn the call over to Jackie Lemke to start. Please go ahead.

Thank you and thank you all for joining us for BASI’s fiscal 2013 second quarter financial results conference call and webcast. Please note that various remarks we may make on this conference call about future expectations, plans and prospectus for the company, constitute forward-looking statements for the purposes of 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. We were disappointed by second quarter revenue, but encouraged by our bottom line performance. We delivered higher gross margin for this year’s second quarter versus prior year, despite the decrease in revenue and we continue to drive our operating expenses sharply lower. The result was essentially breakeven on the operating income line compared to a substantial operating loss last year, and a net loss of just $169,000 versus a net loss of $1.9 million for the second quarter of fiscal 2012. So as we showed in the first quarter, our second quarter results once again demonstrates that we’ve built a sustainable business model and we believe can be effectively leveraged with our existing capacity and an incremental revenue generating investment in people and skilled. For the second quarter, revenue decreased to $5,156,000, compared to revenue of $6,966,000 for the second quarter of fiscal 2012. Gross profit margin increased nearly 50% to 24.4% of revenue, compared to 16.4% of revenue a year earlier. The operating loss for the second quarter of fiscal 2013 was $9,000, compared to an operating loss of $1,705,000…

Thank you, very much. Okay so ladies and gentlemen your question-and-answer session will now begin. (Operator Instructions) Our first question comes from the line of Mr. Cohen from Ladenburg. Please go ahead. Jeffrey Cohen – Ladenburg Thalmann & Company Inc.: Hi Jacqueline, thank you for taking my questions.

Hi Jeff. Jeffrey Cohen – Ladenburg Thalmann & Company Inc.: I have a few, so first could you kind of give us some commentary as far as macroeconomic view as far as the composition of service revenue versus product revenue, I think you excelled on the product side and did not on the service side for the quarter.

Yeah, it’s really the fact that we’re at [CRL] (ph), we are ready to do projects and they get pushed off, I mean timing becomes the norm in this industry and we just have to get better at creating a bigger amount of backlog, so that we can drop and study that one study gets pushed off, and that’s really what happened we lost two – we lost one study but two major studies just got pushed into the next quarter. Jeffrey Cohen – Ladenburg Thalmann & Company Inc.: Okay, studies being on the service side.

Right. Jeffrey Cohen – Ladenburg Thalmann & Company Inc.: Okay. Could you comment as far as the total operating expenses for the quarter. Do you expect that level approximately $1.27 million to continue through the balance of the year as we’re estimating slightly higher around $1.55 million.

I think it’s going to go up slightly probably because we are going to hire more people and they will go under our operating expense, but it’s not going to go up to $1.5 million. Jeffrey Cohen – Ladenburg Thalmann & Company Inc.: Okay, okay, and any commentary about the status of the buildings that were leased back over the past few months?

No, we are still working on it. We had an interested party through just yesterday, so, it’s kind of, it is or it isn’t, at this point, we have people looking at it I just can’t say we have anything yet, but I will let people know when we do. Jeffrey Cohen – Ladenburg Thalmann & Company Inc.: Got it, any commentary on the Culex, either the NxT system or the upgrades as far as number of units that will be switched, and number of systems on order for NxT, and when do you expect those to materially affect your balance?

Yeah, we have new users’ coming on, which is exciting for us, it’s not just repeat users, but we also have upgrades. So, just this quarter, we are going to have at least 28 upgrades, so that will hit our revenue for the products in quarter three, and we are also selling another 4-station cart a new one, but we have several chances for new orders in the next six months, so, that what we are working on. Jeffrey Cohen – Ladenburg Thalmann & Company Inc.: Okay, what kind of cost is associated with the upgrades?

That’s a good question. The number I have in my head for the most recent order is about $200,000. I am not sure how many of the upgrades that is, so, sorry, I don’t have a good answer to that, (inaudible). Jeffrey Cohen – Ladenburg Thalmann & Company Inc.: That’s okay, I am almost done. Cash position, looking forward for the coming quarter, adequate to get you through the quarter that’s currently estimated?

Yes, yes, I just checked that yesterday as a matter of fact, because it doesn’t look great, the level we were at, at the end of March, but that’s just a timing issue in terms of paying down some payables, but yeah we have enough to get through the quarter. Jeffrey Cohen – Ladenburg Thalmann & Company Inc.: Okay and last one, could you talk about the mortgage payable so it's [$5.55 million] (ph) and the whole amount is due in October.

It is, right now it's extension through October 31st so I’m talking to another bank in case the sale leaseback doesn’t go through, in case a sale leaseback doesn’t happen to see if we would be refinanced, and I am also talking to our existing lender to see if we can extend, but its all going to be dependent upon our strategy and where we’re going, so that’s what I’m pulling together to make sure people understand where we’re at Jeffrey Cohen – Ladenburg Thalmann & Company Inc.: Okay perfect thank you for taking our questions.

Okay.

Thank you for your question. Our next question comes from the line of Greg Gaspar. Please go ahead.

Hi, George Gaspar. Just to extend the question here on the company’s borrowing capacity relative to where you are currently, and you did make some comment there about some re-negotiations, but where are you, what capacity do you have to borrow at this point in time yet?

I don’t understand what you’re saying. Right now we have the $5 million $5.5 million in mortgage, but we have an asset worth at least $10 million in the property.

Okay. Now what I’m asking is, how much room do you have relative to where your, the level at you are borrowing at currently and what is left that you can utilize to borrow against that authority, are you saying it's the difference between the $5.5 million and $10 million value or…

Well, we have that and then we have our outstanding quotes in our backlogs to our future revenue streams.

The future revenue stream as what you’re indicating is a level of your borrowing capacity?

Yes and we also have our inventory.

Okay. And then I noticed that your G&A was considerably lower and some of that obviously is because of the decline in the revenue value for the quarter. How do you envision G&A moving back, let’s say if you got back to the level of revenue stream that you had even let’s say a year past in the same quarter, how would you envision G&A moving back up. What I am driving at is you have some economy to scale here now on the selling expense side and G&A that you’re going to be able to keep this higher operating margin as you move back up in terms of sales volume?

Yeah, definitely, what we did was we – when we did the consolidations last year, we also cut some of the overhead that we didn’t feel we would need even at double the volume. So right now we think we’re at a good level in terms of our G&A. We will have some more selling expense in there, but it’s going to be variable and in terms of that if selling goes up a couple hundred thousand, revenue will go up a million.

Yes.

So, we will move up a little but it won’t be anything noticeable compared to the revenue that we’ll be getting to do it. We’ll also put in a little bit more for R&D because we want to keep up for being innovative…

Right

For a little while there we didn’t do that, so we’ll be doing that.

And the your comment on R&D, the variable on that, as you look at your strategy going forward and trying to maybe broaden your horizon to maybe take go another avenue or add an avenue. Is there anything particular that you’re looking at this point in time that you could feel comfortable with broadening the revenue generating potential?

Yeah, I mean, we’re looking closely on product side. We announced the DSI study that we started that I think will be done at the end of May. And that opens up our ability to do [white paper] to talk to people about we have actual data to show how they could do more central nervous system study with both the DSI telemetry and the Culex NxT system. And then with the Pinnacle announcements that we’ve made, the glucose monitoring, that could open up a lot of doors in terms of the study of the glucose impact and using the automated sampling system. We’re also looking into whether that would be useful and we’ve talked to a few vets in the companion animal market and in terms of when you bring your dog in to measure their diabetes level and they stay overnight for three days and how are they monitored versus the tech coming in the pooling blood, manually they could use the Culex system we might have to modify somewhat. So on the product side, we’re looking to expand our applications and to kind of reintroduce everything to people, so they know what it can do.

Okay. All right, well that’s good. Thank you very much.

Okay.

Thank you for your question. Our next question comes from the line of Lenny Dunn. Please go ahead. Lenny Dunn – Freedom Investors Corporation: Good morning. You managed to stay marginally about water with the revenues that I never thought I would say, but you’re slipping the deals into this quarter, so is it reasonable to expect that this quarter will be a little stronger than you originally planned for because it was some of the business that slipped into this quarter?

Yeah, I wish I could say that but I think it’s the norm rather than the exception. So yes, the thing that puts in last quarter came to this quarter and now accounting on certain things to happen this quarter that might slip to next quarter. So I can’t really commit. I think this quarter will be better than, I mean, whoever thought we would do (inaudible). I hope we’ll be better than that, but we’re watching it and we are working on some commitments. So yesterday we did signed a $2.9 million deal. We’re talking about another over $1 million deal in the discovery side that we maybe signing in the next two weeks. So it’s more getting out there, getting our products in our services norm and getting the relationship and the trust in signing on deals. So I can’t necessarily commit to one quarter at a time, yes, but we’re working on it. Lenny Dunn – Freedom Investors Corporation: I do understand the business is lumpy but overbooking would go a long way to solving some of the slippage.

Right, right and that’s what we’re working on. We’re working on the stack that this is a norm, so let’s take on – let’s quote a lot of jobs and then of course we want to schedule in when they’re suppose to be and we will be there to deliver them, but if one slipped, we’re not so reliant on that for that quarters revenue, specifically assets. Lenny Dunn – Freedom Investors Corporation: Yes, you also mentioned that you’re capable with the current staffing of doubling your current revenues without hiring anybody, so there is some room there?

Yes, did I say doubling, I hope you remember that, but yeah there is definitely some room in terms of what falls through the bottom line, I would say probably 75% to 80% of revenues incrementally should falling through to the bottom line, so we get to a certain level. Lenny Dunn – Freedom Investors Corporation: Okay. And are you comfortable that everyone that is currently working in the website is onboard and understands that this is a profit making business as opposed to research lab?

Yeah, I’m. I am working with them and we have meetings, my leadership has meetings once a month. I talk to them every week about strategy, they talk to their team, I talk to their teams, everybody knows what’s going on in terms of understanding the big picture. I mean we need people to spend their time on what they’re experts at and n terms of delivering the good data, managing a good relationships, making sure that what we do is compliant with FDA regulations, but they also know the big picture, which is we’re here to commercialize what we do and to offer our services for profits. Lenny Dunn – Freedom Investors Corporation: Yeah, we have a lot of very bright people there, but they all have to be, they have to understand that this is not a branch (inaudible) but it’s a profit making business that has the profits help them to retain their job?

Great and it helps us again more modern equipment, more into the signs that we do. Lenny Dunn – Freedom Investors Corporation: Okay. And again congratulations on taking, what I would consider very poor revenues and still managing not to lose money, so thank you for that.

Thanks.

Thank you for your question. We have no further questions at this time. (Operator Instructions) Our next question just comes through from the line of Thomas Harenburg from Carl M. Hennig, Incorporated. Please go ahead. Thomas Harenburg – Carl M. Hennig, Incorporated: Yeah. Good morning Jacky. Listen you [alluded] to the backlog on George’s call, can you tell us what that backlog is?

The number of the backlog? Thomas Harenburg – Carl M. Hennig, Incorporated: Yeah, the size?

Yeah, no I can’t tell you that right now. Thomas Harenburg – Carl M. Hennig, Incorporated: Okay, that might be helpful going forward in your press release as to just let us know kind of where that backlog is going forward?

Yeah, I know, we saw it before time about the book-to-bill ratio in the backlog and I’m working on that, because we have such a mix of businesses that is different for each one. Some of them like a $2.9 million contract we just got, we don’t know until they’re ready to go that we’re signed to go, whereas some of them, they’ll sign and they will be five to six months later before we start the project. So I am working on that. Thomas Harenburg – Carl M. Hennig, Incorporated: Okay. Also with your new accounting from McGladrey, will it be possible to get those earnings out on a little more a timely basis going forward?

Yeah, I know you’ll ask me that, but it’s not really McGladrey’s fault, it’s us, we have less people than ever. So we’re happy to meet the deadline. Thomas Harenburg – Carl M. Hennig, Incorporated: Okay.

So we will try, we’ll try to see if we can by access it, let me get through this fiscal year and then we’ll have a process for everybody is caught up because we had some turnover in finance and then we’ll see if we can move it up a week or so.

Okay sounds good and good luck in the quarter.

Thank you.

Thank you for your question. We have another question from the line of Lenny Dunn. Please go ahead. Lenny Dunn – Freedom Investors Corporation: Good morning again and I want to swing back to the Culex sales which are obviously much higher margin than the laboratory work and you are starting to roll that out better and I’m very encouraged that you are considering the veterinary market because I think that could be huge market for those Culex and has a thought been given to perhaps other users for Culex beyond just being using as a research tool?

I don’t know yet only because I don’t feel we’ve tapped that market much at all, since it was first introduced. So right now we have some, our user group coming up in June and works up in July and other works up in August. We want to get our name out there for what we do. We don’t have a lot of resources to go down too many paths at once, so we are working on this one, but we can think that’s through, I mean just this idea of this glucose monitoring and potentially a use in the veterinary market I think is the huge thing to consider and figure out how to get to. Lenny Dunn – Freedom Investors Corporation: No, no. I understand, it’s a huge market I mean you talking about literally a few thousand units which would be just dramatic for the company.

Great Lenny Dunn – Freedom Investors Corporation: Okay. Well that’s all. Thank you.

Okay. Thanks Lenny.

Thank you for you question. We have no further question at this time. So I would like to turn the call back to you Jackie Lemke for closing remarks.

Okay thank you. Thank you everybody for joining us this afternoon, this morning actually we look forward to speaking with you on our fiscal 2013 third quarter results conference call in about three months. Now I’ll turn it back to you.

Thank you, very much. Okay ladies and gentlemen that does now conclude your conference call for today. And you may disconnect your lines. Have a great day. Thank you very much for joining.