Reports Second Quarter Results

Reports Second Quarter Results

WEST LAFAYETTE, IN, May

12, 2016 -- Bioanalytical Systems, Inc. (NASDAQ:BASI) ("BASi" or the "Company") today announced

financial results for the second quarter and first six months of fiscal 2016.

Second Quarter Results

For the three months ended March

31, 2016, revenue was $5,339,000 a 6.8% decrease from $5,726,000 in the second quarter of fiscal 2015, but a 9.1% increase sequentially

from the first quarter of fiscal 2016.

Service revenue for the second

quarter of fiscal 2016 decreased 10.5% to $4,053,000 compared to $4,530,000 for the same period in fiscal 2015. Preclinical services

revenue declined 7% due to customer delays and Bioanalytical revenue decreased due to fewer samples received and analyzed and a

mix favoring method development and validation projects in the second quarter of fiscal 2016 versus the comparable period in fiscal

Sales in our Product segment

increased 7.5% in the second quarter of fiscal 2016 to $1,286,000 from $1,196,000 in the same period in fiscal 2015. The majority

of the increase stems from increased instrument sales from our BASi Culex automated in-vivo sampling line,

plus an increase in other instruments offset slightly by lower sales of our analytical instruments and consumables over the same

period in fiscal 2015.

Gross profit decreased to $1,316,000,

or 24.6% of revenue, in the second quarter of fiscal 2016, compared to $1,802,000, or 31.5% of revenue, during the comparable fiscal

2015 period. The principal cause for the decrease was the decline in revenue which led to lower absorption of the fixed costs in

Operating expenses for the second

quarter of fiscal 2016 decreased 11.1% to $1,578,000 compared to $1,774,000 during the second quarter of fiscal 2015. The principal

reasons for the decrease were lower utilization of outsourced professional engineering services and additional building rental

income of $109,000 which was deducted from general and administrative expenses.

Net loss for the second quarter

of fiscal 2016 amounted to $254,000, or $0.03 per diluted share, compared to net income of $150,000 for the second quarter of fiscal

2015. Diluted net loss, which includes the adjustment for the change in fair value of warrant liability, was $49,000, or $0.01

per diluted share for the second quarter of fiscal 2015.

Adjusted EBITDA was $84,000 for

the second quarter of fiscal 2016, compared to Adjusted EBITDA of $399,000 for the second quarter of fiscal 2015.

For the six months ended March

31, 2016, revenue decreased 11.6% to $10,234,000 compared to $11,571,000 for the first six months of fiscal 2015. The decline was

due to lower Bioanalytical and Other Laboratory service revenues and a decline in instrument sales from our BASi Culex

automated in-vivo sampling line and our analytical instruments. Gross profit decreased to $2,300,000, or 22.5% of revenue,

compared to $3,706,000, or 32.0% of revenue, for the same period of the prior fiscal year. The decline was driven by a decrease

in revenues which led to lower absorption of fixed costs and a change in sales mix in the Products segment.

Operating expenses for the six

months ended March 31, 2016 decreased 12.5% to $3,091,000 from $3,536,000 for the comparable fiscal 2015 period. The principal

reasons for the decrease were lower utilization of outsourced professional engineering services and additional building rental

income of $268,000 which was deducted from general and administrative expenses.

Net loss amounted to $760,000,

or $0.09 per diluted share, for the first six months of fiscal 2016. Net income amounted to $332,000 for the first six months of

fiscal 2015. Diluted net income, which includes the adjustment for the change in fair value of warrant liability, was $13,000 or

$0.00 per diluted share for the first six months of fiscal 2015.

Adjusted EBITDA was negative

$87,000 for the first six months of fiscal 2016, compared to a positive Adjusted EBITDA of $949,000 for the first six months of

Cash Provided by Operating

Cash provided by operating

activities was $126,000 for the first six months of fiscal 2016, a decrease from $440,000 in the comparable fiscal 2015

period, due to the operating loss in the first half of fiscal 2016 offset in part by slightly lower working

capital levels. The Company had $453,000 in cash and cash equivalents at March 31, 2016. During the first six months of

fiscal 2016, proceeds from borrowings net of repayments, and cash on hand funded capital expenditures for plant, machinery

and equipment of approximately $632,000.

Debt Covenant Non-Compliance

On May 14, 2014, we entered into

a Credit Agreement ("Agreement") with Huntington Bank. The Agreement includes both a term loan and a revolving loan

and is secured by mortgages on our facilities in West Lafayette and Evansville, Indiana and liens on our personal property. As

highlighted in the first quarter, on February 10, 2016, Huntington Bank advised us that the failure to meet the financial covenants

for the December 31, 2015 period constituted an event of default under the Agreement and reserved all of their rights with respect

thereto, including the ability to accelerate the outstanding debt under our term loan and revolving loan, to exercise their security

interest and collect on the underlying collateral, to refrain from making additional advances under the revolving loan and to terminate

our interest rate swap. On April 27, 2016, we executed a Forbearance Agreement and Second Amendment to the Credit Agreement ("Forbearance

Agreement"). Pursuant to the Forbearance Agreement, Huntington Bank agreed to forbear from exercising its rights and remedies

under the Agreement and from terminating the Company's related swap agreement with respect to the Company's non-compliance

with the applicable financial covenants under the Agreement and any further non-compliance with such covenants during the forbearance

period ending June 30, 2016 (unless terminated earlier due to non-compliance with the Forbearance Agreement or the underlying credit

documents). Because the forbearance period under the Forbearance Agreement ends June 30, 2016, we have classified the entire term

loan payable to and interest rate swap with Huntington Bank as a current liability of the Company.

The Forbearance Agreement provides

management with additional time to engage in discussions with other parties regarding replacing our debt, including amounts outstanding

under the revolving loan, and to explore alternative liquidity solutions.

The Company is exploring initiatives

to address solutions to our credit issues, which include the evaluation and pursuit of various sources of financing. Management

is also undergoing a detailed review of all current pricing strategies and market programs and has introduced new initiatives designed

to increase revenue. Management has been, and continues to be actively engaged in driving operating costs lower by more effectively

controlling operating costs.

As of May 11, 2016, the remaining

unexercised Class A warrants from our 2011 public offering have expired. The liability will be reduced to zero in our third fiscal

quarter of 2016. As a result, we do not expect any additional charges to the Condensed Consolidated Statements of Operations and

Comprehensive Income (Loss) following this date.

Jacqueline Lemke, BASi's

President and Chief Executive Officer stated, "While revenue was lower compared to the second quarter of fiscal 2015,

revenue increased sequentially from our first fiscal quarter of 2016. We are beginning to gain traction with the targeted initiatives

in four key areas as highlighted in the first quarter: increasing our IND-enabling studies in nonhuman primates, partnering with

clinics for sample analysis and sample kit preparation, offering bioequivalence study expertise to our generics clients and increasing

market awareness and adoption of the BASi Culex In-vivo Automated Blood Sampling System and related consumables

via equipment grants. In addition, we recently launched our new website and e-catalogue to improve the customer experience and

to provide an easier route for our customers to order our instruments and consumables or to request a quote for services. We have

already experienced an increase in the number of the orders submitted via our website as a result."

Ms. Lemke continued, "We

are continuing our strategy to reach out to current and prospective clients to provide the scientific connection needed to assist

in their drug development process. Recently, we introduced the next generation electrochemical analyzer, the Epsilon EClipseTM,

providing very precise quantitative and qualitative electrochemical characterization to enable scientific researchers to continue

conducting cutting edge research and development. Also, our addition of experienced business development representatives in the

Northeast and the West expands our reach in those important markets."

Ms. Lemke concluded, "We

at BASi remain committed to delivering on our growth initiatives. As we partner with our clients, we are confident we will succeed."

Earnings Conference Call

BASi has scheduled a conference