<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 205498
FORM 10-Q
(Mark One)
[ X ] Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934.
For the quarterly period ended March 31, 1999
or
[ ] Transitional report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transitional period from _______________to_____________
Commission file number 0-29100
-------
PREMIER RESEARCH WORLDWIDE, LTD.
--------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
<S> <C>
Delaware 22-3264604
- --------------------------------------------- -------------------------------------
(State or other jurisdiction of incorporation (I.R.S. Employeer Identification No.)
or organization)
30 South 17th Street
Philadelphia, PA 19103
- --------------------------------------------- -------------------------------------
(Address of principal executive offices) (Zip Code)
</TABLE>
215-972-0420
(Registrant's telephone number, including area code)
N/A
- --------------------------------------------------------------------------------
(Former name, former address and formal fiscal year,
if changed since last report)
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. X Yes
No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
The number of shares of Common Stock, $.01 par value, outstanding as of May 12,
1999, was 7,114,720.
<PAGE>
PREMIER RESEARCH WORLDWIDE, LTD. AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
Page
Part I. Financial Information
<S> <C> <C>
Item 1. Consolidated Financial Statements
Condensed consolidated balance sheets--March 31, 1999 (unaudited) and
December 31, 1998 3
Condensed consolidated statements of operations (unaudited)--Three Months
Ended March 31, 1999 and 1998 4
Condensed consolidated statements of cash flows (unaudited)--Three Months
Ended March 31, 1999 and 1998 5
Notes to condensed consolidated financial statements (unaudited) 6-7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of
Operations 8-11
Item 3. Qualitative and Quantitative Disclosures about Market Risk 11
Part II. Other Information
Item 2. Changes in Securities and Use of Proceeds 12
Item 6. Exhibits and Reports on Form 8-K 13
a.) Exhibits
10.24 Consulting Agreement between AmericasDoctor.com, Inc. and
Premier Research Worldwide
27.0 Financial Data Schedule
b.) Reports on Form 8-K
None
Signatures 14
Exhibits
</TABLE>
2
<PAGE>
PREMIER RESEARCH WORLDWIDE, LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
<TABLE>
<CAPTION>
March 31, 1999 December 31, 1998
-------------- -----------------
(unaudited)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 8,769 $ 10,822
Short-term investments 6,068 5,668
Accounts receivable, net 12,283 10,423
Prepaid expenses and other 1,342 2,176
Deferred income taxes 159 159
-------- --------
Total current assets 28,621 29,248
Property and equipment, net 4,588 4,110
Goodwill, net 2,081 2,160
Other assets 1,023 1,023
Deferred income taxes 3,352 3,631
-------- --------
$ 39,665 $ 40,172
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,448 $ 2,519
Accrued expenses 1,421 1,156
Deferred revenues 4,395 5,556
-------- --------
Total current liabilities 8,264 9,231
-------- --------
Commitments and contingencies
Stockholders' equity:
Preferred stock-$10 par value, 500,000 shares authorized,
none issued and outstanding -- --
Common stock-$.01 par value, 15,000,000 shares authorized,
7,236,520 and 7,217,520 shares issued and outstanding 72 72
Additional paid-in capital 37,103 37,061
Treasury stock, 177,800 shares at cost (779) (779)
Accumulated deficit (4,995) (5,413)
-------- --------
Total stockholders' equity 31,401 30,941
-------- --------
$ 39,665 $ 40,172
======== ========
</TABLE>
The accompanying notes are an integral part of these statements
3
<PAGE>
PREMIER RESEARCH WORLDWIDE, LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share information)
<TABLE>
<CAPTION>
Three Months Ended March 31
---------------------------
1999 1998
---- ----
(unaudited)
<S> <C> <C>
Revenues $ 12,287 $ 8,013
Less-Reimbursed costs (2,778) (1,240)
-------- --------
Net revenues 9,509 6,773
-------- --------
Costs and expenses:
Direct costs 4,707 2,758
Selling, general and administrative 3,740 3,825
Depreciation and amortization 513 343
-------- --------
Total costs and expenses 8,960 6,926
-------- --------
Income (loss) from operations 549 (153)
Other income, net 148 262
Income before income taxes 697 109
Income tax provision 279 44
-------- --------
Net income $ 418 $ 65
Basic and diluted net income per share $ 0.06 $ 0.01
======== ========
</TABLE>
The accompanying notes are an integral part of these statements
4
<PAGE>
PREMIER RESEARCH WORLDWIDE, LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
Three Months Ended March 31
---------------------------
1999 1998
---- ----
(unaudited)
<S> <C> <C>
Operating activities:
Net income $ 418 $ 65
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 513 343
Provision for losses on accounts receivable 30 --
Deferred income taxes 279 44
Changes in assets and liabilities:
Accounts receivable (1,890) (644)
Prepaid expenses and other 834 (272)
Accounts payable (71) (548)
Accrued expenses 265 (97)
Deferred revenues (1,161) 1,693
-------- --------
Net cash provided by (used in) operating activities (783) 584
-------- --------
Investing activities:
Purchases of property and equipment (912) (609)
Purchases of short-term investments (400) --
Proceeds from sales of short-term investments -- 4,387
-------- --------
Net cash provided by (used in) investing activities (1,312) 3,778
-------- --------
Financing activities:
Net proceeds from exercise of stock options 42 534
Net increase (decrease) in cash and cash equivalents (2,053) 4,896
Cash and cash equivalents, beginning of period 10,822 4,679
-------- --------
Cash and cash equivalents, end of period $ 8,769 $ 9,575
======== ========
</TABLE>
The accompanying notes are an integral part of these statements
5
<PAGE>
PREMIER RESEARCH WORLDWIDE, LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring adjustments) considered necessary for fair presentation have
been included. Operating results for the three month period ended March 31,
1999, are not necessarily indicative of the results that may be expected for the
year ending December 31, 1999. Further information on potential factors that
could affect the Company's financial results can be found in the Company's S-1
Registration Statement and its Reports on Forms 10-K and 10-Q filed with the
Securities and Exchange Commission.
Note 2. Net Income per Share
The Company follows SFAS No. 128 "Earnings per Share". This statement requires
the presentation of basic and diluted earnings per share. Basic net income per
share is computed by dividing net income by the weighted average number of
shares of common stock outstanding during the year. Diluted net income per share
is computed by dividing net income by the weighted average number of shares of
common stock outstanding during the year, adjusted for the dilutive effect of
common stock equivalents, which consist primarily of stock options, using the
treasury stock method.
The table below sets forth the reconciliation of the numerators and denominators
of the basic and diluted net income per share computations.
<TABLE>
<CAPTION>
Three Months Ended March 31, Per
Net Share
1999 Income Shares Amount
- ------------------------------------------------ ------ ------ ------
<S> <C> <C> <C>
Basic net income................................ $ 418,000 7,049,000 $ 0.06
Effect of dilutive shares....................... 108,000 --
--------------- ----------- -----------
Diluted net income.............................. $ 418,000 7,157,000 $ 0.06
=============== ========= ===========
1998
- ------------------------------------------------
Basic net income................................ $ 65,000 7,082,000 $ 0.01
Effect of dilutive shares....................... 146,000 --
--------------- ----------- -----------
Diluted net income.............................. $ 65,000 7,228,000 $ 0.01
=============== =========== ===========
</TABLE>
Options to purchase 215,635 and 300,983 shares of common stock were outstanding
at March 31, 1999 and 1998, respectively, but were not included in the
respective computations of diluted net income per share because the option
exercise prices were greater than the average market price of the Company's
common stock during the respective periods.
6
<PAGE>
Note 3. Comprehensive Income
The Company follows SFAS No. 130, "Reporting Comprehensive Income." The
Company's comprehensive income includes net income and unrealized gains and
losses from foreign currency translation and short-term investments. These
unrealized gains and losses were immaterial as of March 31, 1999 and 1998.
Note 4 Operating Segments
In June 1997, SFAS No. 131, "Disclosure about Segments of an Enterprise and
Related Information," was issued, effective for fiscal years ending after
December 15, 1998. The Company adopted this statement for the year ended
December 31, 1998. The Company's reportable segments are strategic business
units that offer different products and services to a common client base. The
segments are managed separately because each business requires different
technology.
The Company's products and services are provided through two business segments,
both in the United States and internationally: Clinical Operations, which
includes centralized diagnostic testing services, clinical trial management
services and clinical data management services; and Technology Operations, which
includes clinical trial and data management software, support and consulting
services. The Company's discontinued Phase I Clinical Research Unit and income
and expense not allocated to reportable segments are reported as Other.
The Company evaluates performance based on the net revenues and operating
earnings performance of the respective business segments.
<TABLE>
<CAPTION>
Segment information is as follows:
Three months ended March 31,1999
-------------------------------------------------------------------
Clinical
Operations Technology Other Total
---------- ---------- ----- -----
<S> <C> <C> <C>
Net revenues from external customers $7,491,000 $2,018,000 -- $9,509,000
Income from operations 266,000 283,000 -- 549,000
Identifiable assets 16,131,000 4,025,000 19,509,000 39,665,000
Three months ended March 31, 1998
-------------------------------------------------------------------
Clinical
Operations Technology Other Total
---------- ---------- ----- -----
Net revenues from external customers $4,186,000 $2,513,000 $74,000 $6,773,000
Income (loss) from operations (676,000) 559,000 (36,000) (153,000)
Identifiable assets 8,001,000 3,434,000 26,986,000 38,421,000
</TABLE>
7
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Overview
The Company is a clinical research organization providing a broad range
of integrated product development services on a global basis to its clients in
the pharmaceutical, biotechnology and medical device industries. The Company's
products and services are provided, both in the United States and
internationally, through two business segments: Clinical Operations, which
includes centralized diagnostic testing services, clinical trial management
services and clinical data management services; and Technology Operations, which
includes the development, marketing and support of clinical trial and data
management software, support and consulting services. The Company had operated a
Phase I Clinical Research Unit, which was closed in the first quarter of 1998.
The Company's centralized diagnostic testing services are on a
fee-for-service basis and contracts generally have terms of one month to two
years. A portion of the Company's fee frequently is paid upon contract execution
as a non-refundable up-front payment, with the remaining amounts billed monthly.
Clinical trial and data management services are generally fixed priced
contracts, with certain variable components, and range in duration from a few
months to two years. A portion of the Company's fee frequently is paid upon
contract execution as a non-refundable up-front payment, with the balance billed
in accordance with the contract terms. The Company's contracts generally may be
terminated with or without cause on 30 to 90 days notice. Clients terminate or
delay contracts for a variety of reasons, including, among others, the failure
of the product(s) being tested to satisfy safety or efficacy requirements;
unexpected or undesired clinical results of the product; the client's decision
to forego a particular study; insufficient patient enrollment or investigator
recruitment, and production problems resulting in shortages of required
supplies. Revenues from clinical trial software and services are derived
primarily from software license fees, software maintenance and support and
consulting services.
Revenues from centralized diagnostic testing services are recognized as
the services are performed. Revenues from clinical trial and data management
services are generally recognized on a percentage of completion basis as work is
performed. The Company regularly subcontracts with third-party investigators in
connection with clinical trials and with other third-party providers for
specialized services. These and other reimbursable costs are paid by the Company
and reimbursed by clients and, in accordance with industry practice, are
included in revenues. Since reimbursed costs may vary significantly from
contract to contract and are not meaningful for analyzing trends in revenues,
they are included in gross revenues but excluded from net revenues.
Revenues from technology software licenses are recognized upon shipment
of the software and related documentation when collectibility is deemed probable
and the license fee is deemed fixed and determinable. Revenues from software
maintenance and continuing support contracts are recognized on a straight-line
basis over the period in which the software maintenance and continuing support
is provided, generally twelve months. Revenues from consulting and training
services are recognized when the services are performed.
Results of Operations
Three months ended March 31, 1999 compared to three months ended March 31, 1998.
Net revenues for the three months ended March 31, 1999, increased $2,736,000 or
40.4 % to $9,509,000 compared to $6,773,000 for the three months ended March 31,
1998.
The Company experienced a strong increase in net revenues in its Clinical
Operations, which increased $ 3,305,000 or 79.0% to $7,491,000 for the period
ended March 31, 1999 compared to $4,186,000 for the same period in 1998. The
increase in net revenues was due to the Company's strong performance in
centralized diagnostic testing services which increased $1,638,000 or 88.3% to
$3,494,000 in the 1999 period from $1,856,000 in the 1998 period. In addition,
the Company's clinical trial and data management services net revenues increased
$1,667,000 or 71.5% to $3,997,000 for the three months ended March 31, 1999 from
$2,330,000 for the three months ended March 31, 1998. Overall, the increase in
net revenues for Clinical Operations resulted from revenues recognized from the
Company's contract backlog and new clinical contracts signed during the first
three months of 1999.
8
<PAGE>
Net revenues for Technology Operations declined $495,000 or 19.7% to $2,018,000
for the three months ended March 31, 1999 from $2,513,000 for the three months
ended March 31, 1998. The decline in net revenues was due entirely to revenues
from significant software license and consulting contracts during the first
quarter of 1998 while comparable contracts did not occur during the first
quarter of 1999. Included in the net revenues for Technology Operations of the
three months ended March 31, 1999 was $575,000 in consulting revenues relating
to the Company's consulting contract with AmericasDoctor.com, Inc. (see
Liquidity and Capital Resources).
During the first quarter of 1998, the Company recorded net revenues of $74,000
from its Phase I unit, which was closed during that quarter.
Direct costs for the three months ended March 31, 1999 increased $1,949,000 or
70.7% to $4,707,000 from $2,758,000 for the three months ended March 31, 1998.
Direct costs, as a percentage of net revenues, increased to 49.5% for the three
months ended March 31, 1999 compared to 40.7% for the same period in 1998. The
increase in direct costs is due to increased staffing and subcontracting costs
to support client contract requirements and to accommodate projected future net
revenues. The increase in direct costs as a percentage of net revenues is due to
the increase in staff and subcontracting costs and to the mix of revenues as
Clinical Operations net revenues have a higher direct cost ratio than Technology
Operations net revenues.
Selling, general and administrative expenses declined slightly to $3,740,000 for
the three months ended March 31, 1999 from $3,825,000 for the three months ended
March 31, 1998. The decline in selling, general and administrative expenses is
due to personnel related and other expenses incurred in the first three months
of 1998 which were not incurred in the first three months of 1999. As a
percentage of net revenues, selling, general and administrative expenses were
39.3% for the first three months of 1999 compared to 56.5% for the first three
months of 1998. The decline in the percentage was due entirely to the
stabilization of expenses year to year and increasing net revenues.
Depreciation and amortization expense increased to $513,000 in the first quarter
of 1999 from $343,000 in the comparable 1998 quarter. The increase was due to
increased depreciation expense resulting from additional capital spending to
support the growth in net revenues.
Other income, which consists primarily of interest earned on the Company's cash,
cash equivalents and short-term investments, decreased to $148,000 from $262,000
for the three months ended March 31, 1999 and 1998, respectively. The decrease
is due to lower cash and short-term investment balances in 1999 as a result of
the Company's investment in AmericasDoctor.com, Inc., in July 1998, and general
uses of cash to support working capital and capital expenditure needs during
1998 and in the first quarter of 1999.
The Company's effective tax rate was 40.0% for the three months ended March 31,
1999 and 1998, respectively.
Liquidity and Capital Resources
For the three months ended March 31, 1999, the Company used cash in operations
of $783,000 compared to cash provided by operations of $584,000 for the three
months ended March 31, 1998. The year-to-year change was primarily the result of
increased accounts receivable and decreased deferred revenues, reflecting the
Company's increasing revenues, partially offset by increased net income and
cash provided by changes in other working capital accounts.
At March 31, 1999, the Company had $8,769,000 of cash and cash equivalents on
hand and $6,068,000 invested in short-term investments. The Company generally
places its investments in A1P1 rated commercial bonds and paper, municipal
securities and certificates of deposit with maturities of less than one year.
During the three months ended March 31, 1999, the Company purchased $912,000 of
equipment compared to $609,000 during the three months ended March 31, 1998. The
increase in equipment purchases reflects the additional capital equipment needed
to support the growth of the Company.
9
<PAGE>
During the three months ended March 31, 1999, the Company received $42,000 in
cash from the exercise of 19,000 employee stock options.
On March 22, 1999, the Company announced that it had entered into a two-year,
$4.6 million consulting contract with AmericasDoctor.com, Inc. Under the terms
of the contract, the Company will provide consulting services to enhance this
internet company's capability to effectively support patient identification,
recruitment and referral to clinical investigational sites for both Premier
Research and other companies in the pharmaceutical, biotechnology and medical
device industries. The Company's consulting fees will be paid in eight equal
quarterly installments through December, 2000.
The Company has a line of credit with a bank, through June 30, 1999, that
provides for borrowings up to $3,000,000 at an interest rate of prime minus 35
basis points. The line of credit agreement includes certain covenants, the most
restrictive of which limit future indebtedness and require compliance with a
liabilities-to-tangible net worth ratio. To date, the Company has not borrowed
any amounts under its line of credit.
The Company expects that existing cash and cash equivalents, short-term
investments, cash flows from operations and borrowings under its line of credit
will be sufficient to meet its foreseeable cash needs for at least the next
year. However, there may be acquisition and other growth opportunities that
require additional external financing and the Company may from time to time seek
to obtain additional funds from the public or private issuances of equity or
debt securities. There can be no assurance that such financings will be
available or available on terms acceptable to the Company.
Year 2000
The Company is aware of the issues and problems associated with the Year 2000
date change. The Company has been addressing company-wide data processing and
infrastructure issues since 1995. Premier Research has undertaken a Year 2000
Compliance Plan that will be completed by September 1, 1999. In addition, the
Company also plans to have all clinical systems Year 2000 compliant by June 30,
1999. The purpose of this plan is to assure that Premier Research, as a
corporate entity, has assessed and taken appropriate actions necessary to become
compliant with any issues regarding Year 2000 requirements. The problems
surrounding Year 2000 compliance are of extreme concern to the Company, since
Premier Research is a clinical research organization providing diagnostic
testing and clinical research services to the pharmaceutical industry, as well
as a developer of clinical database management software. The Company produces
and delivers information that is date sensitive, especially in deriving date and
time calculations; Premier Research currently can provide to its clients, date
formats that contain century markers or 4-digit year fields for any of its
clinical and diagnostic information.
The Company's strategy to address Year 2000 compliance is to replace potentially
non-compliant software and hardware with new compliant systems or updated Year
2000 compliant versions. The inventory and assessment phases of the Year 2000
plan have primarily been completed for its hardware and software systems. The
Company has begun its remediation phase of the plan through the replacement and
updating of systems.
As of today over 90% of the Company's information technology infrastructure has
been assessed and found to be free from any Year 2000 issues. Those that have
shown not to be in compliance are currently being evaluated and renovated for
compliance. If a system can not be made compliant to the requirements, the
system will be replaced with one that is compliant.
The Company is also assessing its facilities worldwide that it leases or owns,
and plans to complete its deployment of applicable contingency plans by
September 1, 1999.
The Company is also assessing and surveying its suppliers of third party
products and services. Based upon information received from such parties, the
Company believes that most of its suppliers are developing, assessing and
remediating any issues associated with their Year 2000 plans. The Company cannot
at this time fully assess the status of its suppliers until they have completed
their own efforts. It will review the readiness of the suppliers on an on-going
basis throughout the remainder of the year and will implement specific actions
to rectify potential problems in its supply chain.
10
<PAGE>
As with any other company in its industry or any business in general, the
Company is exposed to risks associated with failures in the private and public
sector to become Year 2000 compliant. These risks include the possibility that
public infrastructure systems, such as electricity, water, natural gas or
telecommunications may fail in this country and other countries in the world
that the Company does business. In addition, there are those risks that the
internal systems of the Company's suppliers, service providers and customers
will fail. The Company also relies considerably on travel and could be adversely
affected, if air and train travel is disrupted by issues related to the Year
2000.
The Company also relies heavily on the healthcare industry. This industry and
its related clinical investigational sites may not have focused their efforts on
the Year 2000 issue to the same degree. Thus the Company has an increased risk
that its investigational sites, necessary for the conduct of clinical trials,
will be unable to provide timely answers and data that it needs to perform
services on time to its contractual clients. Also, the failure of the Company's
customers to address the Year 2000 issue could negatively impact on their
ability to use the Company's services. While contingency plans will be developed
to address these risks, the Company cannot assure that those plans will
sufficiently protect the Company from the effects of those risks. Any
disruptions from the realization of any of these risks could adversely affect
the Company's ability to perform its services.
The Company estimates that the costs associated with its Year 2000 program will
be approximately $ 0.5 million, including costs already incurred. Total Year
2000 costs of approximately $0.3 million have been incurred by the Company
through March 31, 1999. The estimates of cost, timing and impact of addressing
the Year 2000 issue are based on numerous assumptions of future events,
including the continued availability of certain resources, the ability of the
Company to meet its deadlines and the cooperation of third parties. However,
there can be no guarantee that the assumptions will be correct and that these
estimates will be achieved. Actual results could differ significantly from those
expected by the Company.
Inflation
The Company believes the effects of inflation generally do not have a material
adverse effect on its results of operations or financial condition.
Cautionary Statement for Forward-Looking Information.
Statements included in Management's Discussion and Analysis of Financial
Condition and Results of Operations set forth above may constitute
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Such statements involve a number of risks and
uncertainties such as competitive factors, technology development, market demand
and the Company's ability to obtain new contracts and accurately estimate net
revenues due to variability in size, scope and duration of projects, and
internal issues of the sponsoring client. Further information on potential
factors that could affect the Company's financial results can be found in the
Company's S-1 Registration Statement and its Reports on Form 10-K and 10-Q filed
with the Securities and Exchange Commission.
Item 3. Qualitative and Quantitative Disclosures About Market Risk
The Company's primary financial market risks include fluctuations in interest
rates and currency exchange rates.
There have been no significant changes since December 31, 1998.
11
<PAGE>
Part II. Other Information
Item 2. Changes in Securities and Use of Proceeds
(1) Effective Date of Securities Act Registration Statement: February 3, 1997
registration No.: 333-17001
(2) Offering Date: February 4, 1997
(3) Not Applicable
(4) (i) The offering terminated after all shares registered were sold
(ii) Managing Underwriters: Montgomery Securities
Furman Selz
Genesis Merchant Group
(iii) Class of Securities Registered: Common Stock
<TABLE>
<CAPTION>
(iv) Account of Company Account of Selling Shareholder
------------------ ------------------------------
<S> <C> <C>
Amount Registered 2,206,250 common stock 956,250 common stock
Aggregate price of
Amount Registered $37,506,250 $16,256,250
Amount Sold 2,206,250 956,250
Aggregate Offering
Price of Amount Sold $37,506,250 16,256,250
(v) Expenses of offering for account of the Company:
Underwriting Discount and Commission $2,625,437
Other expenses $698,813
Total Expenses $3,324,250
(A) There were no direct or indirect payments to directors, officers, general partners
of the issuer or their associates; to persons owning ten (10) percent or more of common
stock of the Company; or affiliates of the Company.
(B) All of the above payments were direct or indirect payments to others not described in clause (A).
(vi) Net Offering Proceeds to the Company: $34,182,000
(vii) Use of Proceeds as of March 31, 1999:
Net cash paid for business acquisition: 8,655,000
Net cash paid for minority equity investment 1,000,000
Purchase of Equipment: 5,772,000
Working Capital: 3,919,000
Temporary Investments (consisting of short-term,
Investment-grade securities): 6,068,000
All of the above payments were to others not described in item (v) (A) above.
(viii) The use of proceeds is consistent with the Prospectus
</TABLE>
12
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
a.) Exhibits
10.24 Consulting agreement between AmericasDoctor.com, Inc. and
Premier Research Worldwide
27.0 Financial Data Schedule
b.) Reports on Form 8-K
None
13
<PAGE>
Signatures
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
PREMIER RESEARCH WORLDWIDE, LTD.
(Registrant)
Date: May 17, 1999 By: /s/ Joel Morganroth
-----------------------------------
Joel Morganroth, MD
Chief Executive Officer
Date: May 17, 1999 By: /s/ Fred M. Powell
-----------------------------------
Fred M. Powell
Chief Financial Officer
(Principal Financial and Accounting
Officer)
14
<PAGE>
The following exhibits are filed herewith, unless otherwise marked:
10.24 Consulting Agreement between AmericasDoctor.com, Inc. and Premier
Research (filed herewith)
27.0 Financial Data Schedule (filed herewith)
<PAGE>
MARKETING SERVICE AGREEMENT
THIS MARKETING SERVICE AGREEMENT (the "Marketing Agreement"), is made
this ____ day of March, 1999 (the "Effective Date"), by and between PREMIER
RESEARCH WORLDWIDE, LTD., a Delaware corporation with its principal place of
business located at 30 South 17th Street, Philadelphia, PA 19103 (referred to
herein as "PRWW") and AMERICA'S DOCTOR, INC., a Delaware corporation with its
principal place of business located at 11403 Cronridge Drive, Suite 200, Owings
Mills, MD 21117 (referred to herein as "AD").
WHEREAS, PRWW and AD entered into a Stock Purchase Agreement, dated July
2, 1998, and a Support and Service Agreement on July 2, 1998, as amended from
time to time (the "Support and Service Agreement");
WHEREAS, AD desires to market AD's services regarding obtaining subjects
for clinical trials for third parties, including contract research organizations
("CRO's") and pharmaceutical companies;
WHEREAS, PRWW has specialized expertise in obtaining and marketing
subjects in clinical trials; and
WHEREAS, AD acknowledges that PRWW's specialized expertise is not
readily available in the marketplace and will add great value to AD;
WHEREAS, PRWW desires to assist AD in the marketing of AD's services to
such third parties by, among other things, providing AD with education and
training on how to obtain and market subjects for clinical trials;
NOW THEREFORE, intending to be legally bound, the parties hereto agree
as follows:
1. Recitals. The abovementioned recitals are incorporated as if fully set
forth herein.
2. Term. The term of this Marketing Agreement shall be deemed to have
commenced on January l, 1999 (the "Effective Date") and expire on December 31,
2000.
3. PRWW Marketing Services. Whereas, AD desires to determine the commercial
feasibility of recruiting candidates for clinical trials and marketing said
candidates to pharmaceutical, biotechnology and medical device companies and
clinical/contract research organizations (CRO).
In consideration of AD's use of potential clinical trial candidate data supplied
to PRWW and for PRWW's services, as defined below, supplied in support of AD's
test of commercial feasibility, AD agrees to pay PRWW in accordance with the
amounts set forth in paragraph 4.
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<PAGE>
Within ninety days of expiration of this agreement, AD can elect to purchase
PRWW's exclusive right to patient data, as set forth in the Support and Service
Agreement, section 4, for an additional sum of $200,000 as specified in
paragraph 4.
3.1 Scope of Service. PRWW and specifically, the CEO of PRWW (or other
officer(s) of PRWW mutually agreed upon by AD and PRWW), shall consult
with and provide marketing services to the Board of Directors and the
officers of AD, at reasonable times, concerning matters pertaining to the
marketing of AD's services to CRO's and other third parties interested in
recruitment, quantification and qualification of volunteers for
clinical/medical studies (the "PRWW Marketing Services"). PRWW's
Marketing Services to AD shall include, but not be limited to the
following duties and functions: (i) educate and train AD officers,
employees and representatives about volunteer and patient recruitment and
marketing techniques for volunteer and patient recruitment; (ii) impart
personal expertise and knowledge as to the workings of CRO and
pharmaceutical organizations with regard to the recruitment,
quantification and qualification of volunteers for clinical/medical
studies; (iii) reasonably make available the resources of PRWW to AD's
marketing efforts to other CRO's and pharmaceutical companies; (iv)
accompany representatives of AD on marketing and sales presentations; (v)
use its best efforts to introduce AD to CRO's and pharmaceutical
companies; (vi) assist in determining appropriate pricing levels for AD's
products and services; and (vii) any other marketing/sales related
activities reasonably requested by AD or its Directors. PRWW's Marketing
Services shall not be required to exceed two hundred (200) hours for each
three (3) month calendar period under this Marketing Agreement. In
addition, AD shall use its best efforts to provide PRWW with timely
notification of when the PRWW Marketing Services will be required. PRWW
and its representatives shall not represent AD, AD's Board of Directors,
AD's officers or any other member of AD in any transaction or
communication nor shall PRWW and its representatives make claim to do so,
unless authorized by AD, its officers or its Directors.
During the term of this agreement, Sections 4.1, 4.2, and 4.3 of the
Support and Service Agreement shall be deleted in their entirety and
replaced with the following:
"4.1 AD may provide similar solicitation, quantification, recruitment or
other services as those provided to PRWW pursuant to this Agreement to
any other person or entity at AD's sole discretion.
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<PAGE>
4.2 AD may contract with other CRO's (or any other person or entity
with an interest in volunteer recruitment, solicitation or qualification)
in any manner whatsoever, at AD's sole discretion, provided that AD does
not materially interfere with the Services granted to PRWW. PRWW agrees
that there is no material interference provided that PRWW has the right
to solicit, quantify, qualify and recruit volunteers for its studies
pursuant to Section 3.2 of the Support and Service Agreement as amended.
Specifically, AD may provide the Services to PRWW while simultaneously
providing the same or similar recruitment, quantification or
qualification services to a third party, regardless of whether such same
or similar services conflict in whole or in part with the provision of
the Services to PRWW. For example, if AD has contracted with a CRO to
provide recruits for a study that conflicts with either: (a) a study
ongoing by PRWW; or (b) a study to be commenced by PRWW, in either case,
AD shall provide both PRWW and the other CRO with the right to solicit,
quantify and recruit patients simultaneously.
4.3 All materials, documents, volunteer data, and other information
provided to PRWW by AD during the course of this Agreement shall be
deemed to be, between AD and PRWW, confidential information
("Information") which shall be owned by AD. Upon termination of this
Agreement, PRWW may retain all Information provided to PRWW by AD
pursuant to Section 3.1 hereunder provided that PRWW may only use such
Information for the express purpose of recruitment of volunteers for
studies in which PRWW participates and for which PRWW properly notified
AD pursuant to Section 3.2 of the Agreement. During the Term of this
Agreement PRWW may only use the Information for the express purpose of
recruitment of volunteers for studies in which PRWW participates and for
which PRWW properly notified AD pursuant to Section 3.2 of the Agreement.
PRWW shall be liable for any unauthorized use or disclosure of the
Information by PRWW's employees which could have reasonably been
prevented by PRWW."
3
<PAGE>
4. Fee. AD shall pay PRWW a total fee of Four Million Six Hundred Thousand
Dollars ($4,600,000) in installments of Five Hundred Seventy Five Thousand
Dollars ($575,000) per three (3) month calendar period (the "Fee") with an
additional $200,000 due upon AD's decision to purchase PRWW's exclusive right to
patient data. The payment schedule shall be as follows and there shall be a five
(5) day grace period for all payments:
a. $575,000 due on March 15, 1999 (for the three month period
commencing January 1, 1999);
b. $575,000 due on June 15, 1999 (for the three month period
commencing April 1, 1999);
c. $575,000 due on September 15, 1999 (for the three month period
commencing July 1, 1999);
d. $575,000 due on December 15, 1999 (for the three month period
commencing October 1, 1999);
e. $575,000 due on March 15, 2000 (for the three month period
commencing January 1, 2000);
f. $575,000 due on June 15, 2000 (for the three month period
commencing April 1, 2000);
g. $575,000 due on September 15, 2000 (for the three month period
commencing July 1, 2000);
h. $575,000 due on December 15, 2000 (for the three month period
commencing October 1, 2000).
i. $200,000 due on or before the expiration of this agreement,
contingent upon AD decision to purchase PRWW's exclusive right to patient data.
5. Relationship of the parties. The parties are independent contractors.
Nothing in this Marketing Agreement or in the activities contemplated by the
parties pursuant to this Marketing Agreement shall be deemed to create an
agency, partnership, employment or joint venture relationship between the
parties. Each party shall be deemed to be acting solely on its own behalf and,
except as expressly stated, has no authority to pledge the credit of, or incur
obligations or perform any acts or make any statements on behalf of, the other
party. Neither party shall represent to any person or permit any person to act
upon the belief that it has any such authority from the other party. Neither
party's officers or employees, agents or contractors shall be deemed officers,
employees, agents or contractors of the other party for any purpose.
4
<PAGE>
6. Information. In connection with this Marketing Agreement, AD and its
Directors, officers and representatives will furnish PRWW and its
representatives with data, material and information concerning AD (the
"Information") which PRWW reasonably requests or is necessary for the
performance by PRWW hereunder. PRWW agrees that any Information received by PRWW
or its representatives during any furtherance of PRWW's obligations hereunder
will be treated by PRWW in full confidence and will not be revealed to any other
person, firm, organizations or entity except to PRWW's agents, employees, and
representatives in connection with the PRWW Marketing Services to be performed
on behalf of AD: (i) who will be informed of the confidential nature of the
Information; and (ii) who will treat such Information in full confidence and
shall not reveal any Information to any other person, firm, organization or
entity. PRWW shall be responsible for any breach of this provision by any of its
agents, employees or representatives.
7. Termination. AD may terminate this agreement by giving one hundred eighty
(180) days written notice to PRWW. Upon AD's termination of this agreement, the
exclusive patient data revert back to PRWW pursuant to the Support and Service
Agreement between PRWW and AD, dated July 2, 1998,
8. Termination for Cause/Liquidated Damages. In the event that AD fails to
make any or all payments due under Section 4 above within forty-five (45) days
of when such payment(s) is due, then PRWW may terminate this Marketing Agreement
for cause by notifying AD of such termination in writing. In the event this
Marketing Agreement is terminated by PRWW for cause as provided in this Section
8, AD shall pay liquidated damages to PRWW in an amount equal to the actual
amount due at the time of termination by PRWW plus and amount equal to the fees
which would have been earned over the next two calendar quarters.
9. Trademarks. Nothing herein confers or shall confer upon PRWW any right,
title or interest in any goodwill, trademark, trade name, service mark, brand
name, knowledge or credibility of AD. PRWW acknowledges that all such interests
are the exclusive property of AD. PRWW shall not utilize any goodwill,
trademark, service mark, trade name, brand name, knowledge or credibility of AD
without prior written consent of AD and shall not assert any claim of ownership
or right to same.
5
<PAGE>
10. Indemnification. Each party hereto shall indemnify and hold the other
party and its directors, officers, employees, agents, subsidiaries, parents,
affiliates, consultants and subcontractors (all "Associates") harmless from any
claim, liability, loss, damages or expense, together with all reasonable costs
and expenses relating thereto, including reasonable attorneys' fees, resulting
from the negligent, reckless or willful acts or omissions of such party or its
Associates in connection with the providing of the PRWW Marketing Services
hereunder. Each party hereto shall indemnify and hold the other party and its
directors, officers, employees, agents, subsidiaries, parents, affiliates,
consultants and subcontractors (all "Associates") harmless from any claim,
liability, loss, damages or expense, together with all reasonable costs and
expenses relating thereto, including reasonable attorneys' fees, arising out of
or resulting from any breach of any representation, warranty, covenant or
obligation of such party contained in this Marketing Agreement herein.
11. Survival. The parties respective rights and obligations under Sections 4
("Fee"), 6 ("Information'), 8 ("Trademarks') and 9 ("Indemnification") shall
survive any expiration or termination of this Marketing Agreement.
12. Representations by PRWW. PRWW represents, warrants, covenants and agrees
that the PRWW Marketing Services shall be furnished and in all respects provided
in conformance and compliance with applicable laws. PRWW represents and warrants
that it has the authority to enter into this Marketing Agreement and the right
to provide the PRWW Marketing Services to AD hereunder without breach of any
obligation to any other third party, and that its performance under this
Marketing Agreement will not breach any contract, agreement, rule, law or
regulation of whatever nature.
13. Representations by AD. AD represents and warrants that it has the
authority to enter into this Marketing Agreement without breach of any
obligation to any other third party, and that its performance under this
Marketing Agreement will not breach any contract, agreement, rule, law or
regulation of whatever nature.
14. Entire Agreement/Amendments. This Marketing Agreement constitutes the
entire agreement between the parties and supersedes and takes precedence over
all prior agreement or understandings, whether oral or written, between the
parties. This Marketing Agreement shall not be construed to govern any other
transactions between AD and PRWW. No changes, amendments or modifications of any
of the terms or conditions of this Agreement shall be valid unless made by an
instrument in writing signed by both parties.
15. Assignment. Neither party shall assign any of its rights nor delegate
any of its obligations under this Agreement without the prior written consent of
the other party; however, PRWW may assign its rights under this Agreement to any
successor to PRWW by merger or consolidation or any person or entity which
acquires substantially all of the assets and business of PRWW, which assignee
shall assume PRWW's duties and obligations hereunder.
6
<PAGE>
16. Arbitration. Any controversy or claim arising out of or relating to this
Marketing Agreement, or the breach thereof, shall be settled by arbitration in
accordance of the rules of the American Arbitration Association, and judgment
upon the award rendered by the arbitrator(s) shall be entered in any court
having jurisdiction thereof. For that purpose, the parties hereto consent to the
jurisdiction and venue of an appropriate court located in the State of Maryland.
The parties acknowledge that in no event shall the aggregate contribution of the
other party, its agents, members, employees, and affiliates of each,
collectively exceed the amount of the Fee provided in Section 4 of this
Marketing Agreement.
17. Miscellaneous.
17.1 This Marketing Agreement shall be governed by and construed in
accordance with the laws of the State of Maryland without regard to conflict of
law principles.
17.2 Section heading are included for convenience only and are not to
be used to construe or interpret this Agreement.
17.3 Whenever this Marketing Agreement requires either party's
approval, consent or satisfaction, the response shall not be unreasonably or
arbitrarily withheld or delayed.
17.4 The failure of either party to object to, or to take affirmative
action with respect to, any conduct of the other party that violates any term or
condition of this Marketing Agreement shall be limited to that particular
instance, and shall not be construed as a waiver of that party's right for such
breach or as a waiver of such remedies for future breaches by the other party.
17.5 If any provision of this Marketing Agreement becomes unlawful or
unenforceable in any jurisdiction, such provision shall be ineffective only to
the extent of such invalidity or enforceability without invalidating the
remaining provisions of this Marketing Agreement, and any such invalidity or
unenforceability in any jurisdiction shall not invalidate such provision or
render it unenforceable in any other jurisdiction.
17.6 This Marketing Agreement may be executed by the parties in one or
more counterparts; each of which when so executed shall be an original, but all
such counterparts shall constitute one and the same instrument.
17.7 All pronouns and words shall be read in appropriate number and
gender; the masculine, feminine and neuter shall be interpreted interchangeably;
and the singular shall include the plural and vice versa, as the circumstances
may require.
7
<PAGE>
17.8 The parties hereto represent that they have carefully read the
foregoing Marketing Agreement, understood its terms, had the opportunity to
consult with an attorney of their choice, and voluntarily signed the same as
their own free act with the intent to be legally bound thereby. The parties
acknowledge that the normal rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall not be employed
in the interpretation of this Agreement or any amendments hereto. The terms of
this Marketing Agreement are contractual and not a mere recital.
17.9 Notices and other communications shall be transmitted in writing
by certified U.S. Mail, postage prepaid, return receipt requested or by
overnight courier, addressed to the parties at the address first set forth
above. Such notices and communications shall be deemed effective four (4) days
after the date of mailing or upon receipt as evidenced by the U.S. Postal
Service return receipt cards, whichever is earlier, or upon receipt if sent by
overnight courier.
(CONTINUED NEXT PAGE)
8
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Marketing
Agreement to be duly executed as of the date first above-written, such parties
acting by their representatives being thereunto duly authorized.
PREMIER RESEARCH WORLDWIDE, LTD.
- --------------------------------
By: Joel Morganroth, CEO
AMERICA'S DOCTOR, INC.
/s/ Scott M. Rifkin
- ---------------------------------
By: Scott M. Rifkin, CEO
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