Inotiv : 2nd Qtr 10Q

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 March 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)
INDIANA				35-1345024
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
2701 KENT AVENUE
WEST LAFAYETTE, INDIANA				47906
(Address of principal executive offices)				(Zip code)

[phone]

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

				Name of each exchange
Title of each class		Trading Symbol(s)		on which registered
Common Shares		NOTV		NASDAQ Capital Market

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant

was required to submit such files). YES 

NO 

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

Large accelerated filer  Accelerated filer  Non-accelerated filer 

Smaller Reporting Company  Emerging growth company 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

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

As of May 6, 2021, 15,827,839 of the registrant's common shares were outstanding.

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	TABLE OF CONTENTS
		Page
PART I	FINANCIAL INFORMATION
Item 1	Condensed Consolidated Financial Statements:
	Condensed Consolidated Balance Sheets as of March 31, 2021 (Unaudited) and September 30, 2020	3
	Condensed Consolidated Statements of Operations for the Three Months and Six Months Ended March 31, 2021 and
	2020 (Unaudited)	4
	Consolidated Statement of Shareholders' Equity for the Three Months and Six Months Ended March 31, 2021 and
	2020 (Unaudited)	5
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended March 31, 2021 and 2020 (Unaudited)	6
	Notes to Condensed Consolidated Financial Statements	8
Item 2	Management's Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3	Quantitative and Qualitative Disclosures about Market Risk	29
Item 4	Controls and Procedures	29
PART II	OTHER INFORMATION	30
Item 1	Legal Proceedings	30
Item 1A	Risk Factors	30
Item 6	Exhibits	32
	Signatures	32

2

INOTIV, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts)

					March 31,	September 30,
					2021				2020
					(Unaudited)
Assets
Current assets:
	Cash and cash equivalents	$	2,186			$	1,406
	Accounts receivable
	Trade, net of allowance of $500 at March 31, 2021 and $561 at September 30, 2020		9,340				8,681
	Unbilled revenues and other		3,338				2,142
	Inventories, net		872				700
	Prepaid expenses		2,135				2,371
	Total current assets		17,871				15,300
Property and equipment, net		29,353				28,729
Operating lease right-of-use assets, net		4,105				4,001
Finance lease right-of-use assets, net		4,710				4,778
Goodwill		4,368				4,368
Other intangible assets, net		3,949				4,261
Lease rent receivable		129				75
Other assets		86				81
	Total assets			$	64,571			$	61,593
Liabilities and shareholders' equity
	Current liabilities:
	Accounts payable	$	3,967			$	3,196
	Restructuring liability						168
	Accrued expenses		2,932				2,688
	Customer advances		15,186				11,392
	Capex line of credit		-		2,613
	Current portion on long-term operating lease		1,004				866
	Current portion of long-term finance lease		4,664				4,728
	Current portion of long-term debt				8,317				5,991
	Total current liabilities				36,070				31,642
Long-term operating leases, net		3,278				3,344
Long-term finance leases, net		42				44
Long-term debt, less current portion, net of debt issuance costs		17,925				18,826
Deferred tax liabilities		180				141
	Total liabilities				57,495				53,997
Shareholders' equity:
	Preferred shares, authorized 1,000,000 shares, no par value:
	No Series A shares at March 31, 2021 and 25 shares at September 30, 2020 issued and
	outstanding at $1,000 stated value		-		25
	Common shares, no par value:
	Authorized 19,000,000 shares; 11,179,041 issued and outstanding at March 31, 2021 and
	10,977,675 at September 30, 2020		2,756				2,706
Additional paid-in capital		27,319				26,775
Accumulated deficit		(22,999)			(21,910)
	Total shareholders' equity				7,076				7,596
	Total liabilities and shareholders' equity			$	64,571			$	61,593

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

3

INOTIV, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)

		Three Months Ended March 31,		Six Months Ended March 31,
		2021			2020			2021			2020
Service revenue	$	17,902		$	15,191		$	34,934		$	27,333
Product revenue		849			821			1,702			1,597
Total revenue		18,751			16,012			36,636			28,930
Cost of service revenue		11,949			10,207			23,502			19,118
Cost of product revenue		522			612			933			1,142
Total cost of revenue		12,471			10,819			24,435			20,260
Gross profit		6,280			5,193			12,201			8,670
Operating expenses:
Selling		1,175			1,447			2,138			2,665
Research and development		203			162			399			324
General and administrative		5,423			3,779			10,171			6,896
Total operating expenses		6,801			5,388			12,708			9,885
Operating loss		(521)			(195)			(507)			(1,215)

Interest expense	(366)	(392)	(713)	(703)
Other income	179	10	179	12
Net loss before income taxes	(708)	(577)	(1,041)	(1,906)

Income tax expense		15			11			48			108
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)
Weighted common shares outstanding:
Basic		11,151			10,843			11,083			10,756
Diluted		11,151			10,843			11,083			10,756

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

4

INOTIV, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(In thousands, except number of shares)

							Six Month Period Ended March 31, 2021
													Additional							Total
	Preferred Shares	Common Shares			paid-in		Accumulated	shareholders'
	Number			Amount		Number			Amount			capital			deficit		equity
Balance at
September 30, 2020	25		$	25		10,977,675		$	2,706	$	26,775		$	(21,910)		$	7,596
Net loss																		(366)			(366)
Stock option
exercises							23,350				6			39								45
Stock based
compensation							116,974				29			152								181
Balance at December
31, 2020	25			$	25		11,117,999			$	2,741		$	26,966			$	(22,276)		$	7,456
Net loss																		(723)			(723)
Stock based
compensation							12,502				3			275								278
Stock option
exercises							36,040				9			56								65
Preferred stock
conversion	(25)			(25)	12,500				3			22

Balance March 31,
2021	0	$	0	11,179,041	$	2,756	$	27,319	(22,999)	$	7,076

							Six Month Period Ended March 31, 2020
													Additional						Total
	Preferred Shares	Common Shares			paid-in		Accumulated	shareholders'
	Number			Amount			Number			Amount			capital			deficit		equity
Balance at
September 30, 2019	35	$	35			10,510,694		$	2,589	$	25,183		$	(17,097)	$	10,710
Adoption of
accounting standard																		(128)		(128)

Net loss										(1,426)		(1,426)
Stock issued in
acquisition				240,000		60		1,073				1,133
Stock based
compensation				54,363		14		67				81
Balance at December
31, 2019	35	$	35	10,805,057	$	2,663	$	26,323	$	(18,651)	$	10,370
Net loss										(588)		(588)
Stock based
compensation				26,521		7		116				123
Stock option
exercises				32,703		8		12				20

Balance March 31, 2020

35

$

35

10,864,281

$

2,678

$

26,451

(19,239)

$

9,925

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

5