BIOQUAL (Pinksheets: BIOQ) has received notice from the National Cancer Institute (NCI) that the NCI will not be exercising its option to renew the contract “Facility for Breeding, Housing, and Handling Genetically Manipulated and Chimeric Mice” for the sixth option year of six possible options, which would have extended the contract for the period from September 16, 2012, to September 15, 2013, and that any remaining work under the contract will be taken over by NCI. However, the NCI also notified the Company that if the final transition of the contract to NCI’s facility is not completed by September 15, 2012, the sixth option year will be split into 4 quarterly periods funded at approximately $950,000 each. Those options would be solely at the discretion of the NCI. During the fiscal year ending May 31, 2012, BIOQUAL recorded approximately $3,975,000 in revenues (or approximately 17% of total revenues for the year) as a result of this contract. For fiscal year 2013, the Company could have expected revenues of approximately $4,400,000 if all original options were exercised by NCI; however, due to the non-renewal of the contract, the Company now expects approximately only $1,000,000 to $1,200,000 in revenue in fiscal 2013.

BIOQUAL has previously disclosed that its actual results could differ from those currently anticipated due to a number of factors including risks relating to the extension of current government contracts.

The Company anticipates achieving savings in operating expenses as a result of the non-exercise of the NCI contract option, although not as much as the expected revenue under the contract. BIOQUAL has not received any other notices from any of its other government contract customers of their intention not to renew their contracts. As previously disclosed, a number of BIOQUAL’s current contracts require the Company to compete for each task order issued by the government, so that no amount is guaranteed to be received under such contracts.

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