<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------
FORM 10-Q
(Mark one)
[X] Quarterly Report Under Section 13 or 15(d) of the Securities Exchange
Act of 1934 For the quarterly period ended SEPTEMBER 30, 1999
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: 1-12748
CHESAPEAKE BIOLOGICAL LABORATORIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MARYLAND 52-1176514
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
1111 S. PACA STREET, BALTIMORE, MARYLAND 21230 2834
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) (SIC)
(410) 843-5000
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
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 X No
---- ----
The number of shares outstanding of each of the Registrant's classes of common
stock, as of September 30, 1999: Class A Common Stock, $.01 per share -
5,590,351 shares Class B Common Stock, $.01 per share - none
This Form 10-Q consists of 12 pages.
1
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CHESAPEAKE BIOLOGICAL LABORATORIES, INC.
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
Part I. Financial Information
Item 1. Financial Statements:
Consolidated Balance Sheets
as of September 30, 1999 and March 31, 1999 ...................................... 3
Consolidated Statements of Operations
for the three and six months ended September 30, 1999 and 1998 ................... 4
Consolidated Statements of Changes in Stockholders' Equity
for the six months ended September 30, 1999 ...................................... 5
Consolidated Statements of Cash Flows
for the six months ended September 30, 1999 and 1998 ............................. 6
Notes to Consolidated Financial Statements 7-8
Item 2. Management's Discussion and Analysis of Financial Condition
And Results of Operations ............................................... 9-10
Part II. Other Information
Item 1. Legal Proceedings ........................................................ 11
Item 5. Other Information ........................................................ 11
Item 6. Exhibits and Reports on Form 8-K ......................................... 11
Signatures ................................................................................ 12
</TABLE>
2
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CHESAPEAKE BIOLOGICAL LABORATORIES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS SEPTEMBER 30, 1999 MARCH 31, 1999
------------------ --------------
CURRENT ASSETS (Unaudited) (Audited)
<S> <C> <C>
Cash and cash equivalents $ 1,153,389 $ 410,595
Restricted cash 350,000 350,000
Accounts receivable, net of allowances of 1,491,386 1,114,674
$ 73,490 and $55,490, respectively
Inventories 1,035,264 491,177
Prepaid expenses 325,707 477,319
Deferred tax asset 124,084 124,084
------------- --------------
TOTAL CURRENT ASSETS 4,479,830 2,967,849
Property, plant and equipment, net 10,106,241 10,171,932
Deferred financing costs and other assets 98,971 101,375
------------- ---------------
TOTAL ASSETS $ 14,685,042 $ 13,241,156
------------- --------------
------------- --------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 933,248 $ 799,089
Line of credit --- 644,445
Current portion of long term debt 703,407 717,369
Current portion of capital lease obligations 16,148 853
Current portion of accrued restructuring costs 333,618 523,094
Deferred revenue 675,379 382,208
------------- --------------
TOTAL CURRENT LIABILITIES 2,661,800 3,067,058
Long term debt, net of current portion 6,979,676 7,564,276
Capital lease obligations, net of current portion 72,375 ---
Accrued restructuring costs, net of current portion 527,890 561,215
Other liabilities 30,000 30,000
Deferred tax liability 124,084 124,084
------------- --------------
TOTAL LIABILITIES 10,395,825 11,346,633
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Series A-1 convertible preferred stock, par value $.01
per share; liquidation preference of $1,551,000,
6% cumulative dividends, beginning May 31, 2001,
15,510 shares authorized, issued and outstanding 155 ---
Class A common stock, par value $.01 per share;
7,984,490 shares authorized; 5,590,351 and
5,365,101 shares issued and outstanding 55,904 53,651
Class B common stock, par value $.01 per share;
2,000,000 shares authorized; no shares issued
and outstanding --- ---
Additional paid-in capital 9,328,023 7,613,014
Additional paid-in capital - warrants outstanding 422,170 ---
Accumulated deficit (5,517,035) (5,772,142)
------------- --------------
TOTAL STOCKHOLDERS' EQUITY 4,289,217 1,894,523
------------- --------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 14,685,042 $ 13,241,156
------------- --------------
------------- --------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF
THESE CONSOLIDATED BALANCE SHEETS.
3
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CHESAPEAKE BIOLOGICAL LABORATORIES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three months ended Six months ended
September 30, September 30,
-----------------------------------------------------
1999 1998 1999 1998
---- ---- ---- ----
(Unaudited) (Unadudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Revenues $2,614,284 $2,282,696 $ 5,063,478 $3,399,868
Cost of sales 1,826,453 2,054,512 3,590,219 3,256,328
--------- --------- --------- ---------
Gross profit 787,831 228,184 1,473,259 143,540
Operating expenses:
General and administrative 400,018 462,896 702,886 834,754
Selling 126,467 175,299 267,399 386,362
------- ------- ------- -------
Profit (loss) from operations 261,346 (410,011) 502,974 (1,077,576)
Interest expense (147,877) (101,075) (302,697) (146,065)
Interest income & other, net 29,861 53,967 54,830 113,798
--------- --------- --------- ---------
Earnings (loss) before taxes 143,330 (457,119) 255,107 (1,109,843)
Benefit from taxes --- 182,848 --- 443,937
--------- --------- --------- ---------
Net earnings (loss) $ 143,330 $ (274,271) $ 255,107 $ (665,906)
--------- --------- --------- ---------
--------- --------- --------- ---------
Earnings (Loss) Per Common Share:
Basic
Net earnings (loss) $0.03 $(0.05) $0.05 $ (0.13)
--------- --------- --------- ---------
--------- --------- --------- ---------
Diluted
Net earnings (loss) $0.02 $(0.05) $0.04 $ (0.13)
--------- --------- --------- ---------
--------- --------- --------- ---------
Weighted average common shares outstanding:
Basic 5,590,351 5,321,500 5,580,412 5,302,100
--------- --------- --------- ---------
--------- --------- --------- ---------
Diluted 6,419,988 5,321,500 6,246,126 5,302,100
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE
CONSOLIDATED STATEMENTS.
4
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CHESAPEAKE BIOLOGICAL LABORATORIES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
PREFERRED STOCK COMMON STOCK
SHARES PAR VALUE SHARES PAR VALUE
------ --------- ------ ---------
<S> <C> <C> <C> <C>
BALANCE, MARCH 31, 1999 --- $ --- 5,365,101 $53,651
Issuance of shares pursuant to 225,000 2,250
private placement
Issuance of convertible
Preferred stock, net of issuance 15,510 155
costs of $158,340
Issuance of preferred stock warrants
Compensation expense related to
stock grants
Issuance of debt warrants
Issuance of shares pursuant 250 3
To exercise of stock options
Net income
------ ----- --------- -------
BALANCE, SEPTEMBER 30, 1999 15,510 $ 155 5,590,351 $55,904
------ ----- --------- -------
------ ----- --------- -------
</TABLE>
<TABLE>
<CAPTION>
ADDITIONAL
PAID-IN CAPITAL-
ADDITIONAL WARRANTS ACCUMULATED
PAID-IN CAPITAL OUTSTANDING DEFICIT TOTAL
--------------- ----------- ------- -----
<S> <C> <C> <C> <C>
BALANCE, MARCH 31, 1999 $7,613,014 $ --- $ (5,772,142) $1,894,523
Issuance of shares pursuant to 447,750 450,000
private placement
Issuance of convertible
Preferred stock, net of issuance 1,392,505 1,392,660
costs of $158,340
Issuance of preferred stock warrants (153,218) 153,218 0
Compensation expense related to 27,600 27,600
stock grants
Issuance of debt warrants 268,952 268,952
Issuance of shares pursuant 372 375
To exercise of stock options
Net income 255,107 255,107
---------- -------- ------------ ----------
BALANCE, SEPTEMBER 30, 1999 $9,328,023 $422,170 $ (5,517,035) $4,289,217
---------- -------- ------------ ----------
---------- -------- ------------ ----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE
CONSOLIDATED STATEMENTS.
5
<PAGE>
CHESAPEAKE BIOLOGICAL LABORATORIES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Six months ended
September 30,
---------------------------------
1999 1998
---- ----
(Unaudited) (Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $255,107 $(665,906)
Adjustments to reconcile net income (loss) to net cash
used in operating activities:
Depreciation and amortization 327,847 201,886
Deferred financing costs 2,404 ---
Non-cash compensation expense 27,600 ---
Deferred income taxes --- (443,937)
(Increase) decrease in accounts receivable (376,712) 407,848
Increase in inventories (544,087) (150,650)
Decrease (increase) in prepaid expenses and other assets 151,612 (161,644)
Increase in accounts payable
and accrued expenses 134,159 107,369
Decrease in accrued restructuring costs (222,801) ---
Increase in deferred revenue 293,171 176,208
Decrease in other non-current liabilities --- (15,034)
------------- --------------
NET CASH FLOWS FROM (USED) IN OPERATING ACTIVITIES 48,300 (543,860)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment net of capital leases (166,182) (968,778)
Decrease in bond funds held by trustee --- 513,943
-------------- ----------
NET CASH FLOWS USED IN INVESTING ACTIVITIES (166,182) (454,835)
CASH FLOWS FROM FINANCING ACTIVITIES:
(Repayments of) proceeds from short term borrowings, net (644,445) 219,462
Repayments of long-term debt (329,611) (11,210)
Payment of capital lease obligations (8,303) (15,870)
Net proceeds from sale of common and preferred stock 1,843,035 15,218
--------- ------
NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES 860,676 207,600
------- -------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 742,794 (791,095)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 410,595 3,041,705
---------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 1,153,389 $ 2,250,610
------------- --------------
------------- --------------
CASH PAID DURING THE PERIOD FOR:
Interest $ 302,697 $ 144,896
Income taxes $ --- $ ---
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE
CONSOLIDATED STATEMENTS.
6
<PAGE>
CHESAPEAKE BIOLOGICAL LABORATORIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION
Chesapeake Biological Laboratories, Inc. ("CBL" or the "Company") is a
provider of pharmaceutical and biopharmaceutical parenteral product
development and production services on a contract basis for a broad range
of customers, from major international pharmaceutical firms to emerging
biotechnology companies. Since 1990, CBL has provided its parenteral
product development services to more than 100 pharmaceutical and
biotechnology companies and has contributed to the development and
production of more than 100 therapeutic products intended for human
clinical trials. Customers contract with the Company to produce development
stage products for use in U.S. Food and Drug Administration ("FDA")
clinical trials and to produce and manufacture FDA approved parenteral
products for commercial sale. The Company's business depends in part on
strict government regulation of the drug development process, especially in
the United States. CBL's production facilities operate under the current
Good Manufacturing Practices ("cGMP") established and regulated by the FDA.
The Company's operations are treated as one operating segment,
pharmaceutical and biopharmaceutical product development and production
services, as it only reports profit and loss information on an aggregate
basis to operating management of the Company.
During the fiscal year ended March 31, 1999, the Company successfully
validated and completed the FDA initial inspection of the new Camden
production facility, and reorganized and expanded the sales and marketing
organization to utilize the additional capacity now available to the
Company. The Company also initiated a management reorganization, including
hiring a new President and Chief Executive Officer, implemented a workforce
reduction and began to consolidate all production into the Camden facility.
These actions were taken to address the Company's recent significant
operating losses which resulted from costs associated with the start-up of
the new Camden facility and the related delay in the new sales and
marketing programs. The implementation of these plans have resulted in a
positive sales trend in the first half of the current fiscal year 2000 and
the recent signing of new customer agreements. Additionally as described in
note 5, in first fiscal quarter of 2000, the Company raised $1.8 million,
net of related fees of approximately $158,000, in private placements of
common and convertible preferred stock. During June 1999, the Company also
negotiated revised loan covenants with its primary lender allowing the
Company to be in compliance at March 31, 1999 and for subsequent quarters
of the current fiscal year (see Note 3). The Company is required to, and
has achieve substantial growth in the first six months of fiscal 2000 in
revenues and improvements in operating results over the prior year in order
to meet these covenants and its obligations through March 31, 2000.
Management believes its plans will generate sufficient cash resources to
meet its covenants and other cash needs through at least April 2000.
However, there can be no assurance that this will occur.
2. INVENTORIES
Inventories consisted of the following at:
<TABLE>
<CAPTION>
September 30, 1999 March 31, 1999
------------------ --------------
<S> <C> <C>
Raw materials $ 402,883 $ 273,506
Work-in-process 632,381 217,671
------- -------
$1,035,264 $ 491,177
---------- --------
---------- --------
</TABLE>
3. LONG TERM DEBT
Under the documentation applicable to the bond financing, the Company is
obligated to maintain certain financial ratios and balances, including a
minimum tangible net worth, a liability to net worth ratio, and a EBITDA
ratio and current ratio, all as defined and established in the applicable
documents. As of March 31, 1999, the Company was not in compliance on three
covenants due to the fiscal year operating loss. Subsequent to March 31,
1999, the Bank modified the covenants as of March 31, 1999 and for the
fiscal year ending March 31, 2000. As of September 30, 1999, the Company
was in compliance with the modified covenants. In return for the covenant
modifications, the Company issued warrants for 75,000 shares of Class A
Common stock at $2.25 per share, which was the market price at the date of
the agreement. Using the Black-Scholes option pricing model, these warrants
have a fair value of $268,952 and are included as Additional Paid-in
Capital - Warrants Outstanding and debt issuance costs in the accompanying
balance sheet at September 30, 1999. These debt issuance costs are being
amortized as interest expense over the life of the related debt.
7
<PAGE>
CHESAPEAKE BIOLOGICAL LABORATORIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
4. RESTRUCTURING CHARGES
In the fourth quarter of fiscal year 1999, the Company implemented a
realignment of management, a workforce reduction and decided to close its
Seton experimental facility during fiscal year 2000 and consolidate its
operation into the new Camden facility. The workforce reduction resulted
in the termination of full time and temporary employees. This action in
addition to other non-personnel cost reductions resulted in a
restructuring charge of $1.2 million in fiscal 1999.
Restructuring expenses totaling $93,000 and $222,000 were charged against
the accrual for the three months and six months ended September 30, 1999,
respectively. Of the remaining accrual balance of $862,000, $334,000 is
classified in current liabilities as accrued restructuring cost and is
expected to be paid over the next 12 months, with the remaining balance
of $528,000 recorded as a non-current liability.
5. STOCKHOLDERS' EQUITY
In April 1999, the Company raised $450,000 through the private placement
sale of 225,000 shares of its Common Stock to eight investors. The
investors include board members Thomas P. Rice, Harvey L. Miller, Regis
F. Burke, and Narlin B. Beaty. The proceeds from the sale will be used
for general corporate purposes.
In May 1999, the Company also raised $1.4 million, net of related
issuance costs of approximately $158,000, through the sale of 15,510
shares of its Series A-1 convertible Preferred Stock (the "Preferred
Stock") together with warrants to purchase an aggregate of 51,700 shares
of the Company's Common Stock at an exercise price of $1.50 per share.
Under the terms of the Preferred Stock, the investors are permitted, as a
separate class, to elect one person to the Company's Board of Directors.
In addition, the preferred stock is convertible into 1,034,000 shares of
common stock. The proceeds from the sale will be used for general
corporate purposes.
In connection with the issuance of the Preferred Stock, the Company
issued warrants to purchase 51,700 shares of the Company's Common Stock
at an exercise price of $1.50 per share. Using the Black-Scholes option
pricing model, the fair value of these warrants is $153,218 and have been
included as Additional Paid-in Capital - Warrants Outstanding in the
accompanying balance sheet as of September 30, 1999.
8
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CHESAPEAKE BIOLOGICAL LABORATORIES, INC. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Management's discussion below should be read in conjunction with the Company's
Annual Report on Form 10-K for the fiscal year ended March 31, 1999.
THREE AND SIX MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
Operating revenues for the three months ended September 30, 1999 increased 14%
to $2,614,000 from $2,283,000 for the three months ended September 30, 1998.
Operating revenues for the six months ended September 30, 1999 increased 49% to
$5,063,000 from $3,400,000 for the six months ended September 30, 1998. These
revenues for this six-month period are the highest in the Company's history and
were generated by over 50 customers. While the Company's revenues continue to be
primarily non-commercial, these customers have chosen the Company for current
developmental work due to the Company's ability to provide long-term commercial
scale volume after product approval by the FDA.
Gross margin as a percent of revenues was 30% for the three months ended
September 30, 1999 and 29% for the six-months ended September 30, 1999 as
compared to 10% and 4%, respectively, for the comparable prior year periods. A
major factor in this improvement was the Company's increased sales volume,
particularly the use of the new Camden facility which was not in service during
the same three and six month period last year.
General and administrative expenses decreased 14% to $400,000 for the three
months ended September 30, 1999 and 16% to $705,000 for the six months ended
September 30, 1999 as compared to the prior year periods. The decrease in
expenses and the increase in revenue resulted in general and administrative
expenses decreasing to 15% of revenues for the three months ended September 30,
1999 compared to 20% in the prior year period. For the six months ended
September 30, 1999 general and administrative expenses as a percentage of
revenues were 14% versus 25% for the comparable six month period of the previous
year. Sales and marketing costs decreased 28% to $126,000 for the three months
ended September 30, 1999. For the six months ended September 30, 1999, sales and
marketing costs decreased 31% to $267,000 from $386,000 as compared to the six
months ended September 30, 1998. As a percentage of revenues, these costs for
the three months ended September 30, 1999 were 5% versus 8% for the three months
ended September 30, 1998. Sales and marketing costs for the six months ended
September 30, 1999 were 5% versus 11% for the six months ended September 30,
1998. These cost reductions in both general administration and sales and
marketing are the result of the reorganization and operational changes made in
the last quarter of the prior fiscal year.
As a result of the revenue increases and cost reductions, operating income, was
$261,000 for the three months ended September 30, 1999 and $503,000 for the six
months ended September 30, 1999, as compared to losses of $410,000 and
$1,078,000, respectively, for the comparable prior year periods.
Interest expense was $148,000 for the three months ended September 30, 1999 and
$303,000 for the six months ended September 30, 1999 as compared to $101,000 and
$146,000, respectively, for the three and six month periods in the prior year.
During the first four months of the prior year, interest related to the
construction of the new facility was being capitalized. The current fiscal year
includes interest expense applicable to the entire new facility, which is now
fully operational.
Due to the net operating losses generated by the Company during the fiscal year
ended March 31, 1999, there is no tax provision related to the current year,
resulting in net income of $143,000 and $255,000 for the three and six month
periods ended September 30, 1999, respectively. The pre-tax losses for the three
and six months ended September 30, 1998 were reduced by tax benefits resulting
in reported net losses of $274,000 and $666,000, respectively.
FINANCIAL CONDITION AND LIQUIDITY
At September 30, 1999, CBL had cash and cash equivalents of $1,153,000, compared
to $411,000 at March 31, 1999. These
9
<PAGE>
balances do not include $350,000 held as collateral for the Company's obligation
under the Letter of Credit and Reimbursement Agreement with First Union National
Bank of North Carolina. Under this agreement, a letter of credit was issued as
credit enhancement for bonds issued by the Maryland Industrial Development
Financing Authority. The proceeds of these bonds were used by the Company to
finance a portion of the purchase price, renovation and equipping of the Camden
production facility.
The Company continues to maintain a $750,000 Revolving Line of Credit from First
Union National Bank of Maryland. There was no outstanding balance as of
September 30, 1999, as the Company used a portion of the proceeds from the May
1999 equity placement to pay down the line of credit, which had an outstanding
balance of $644,000 at March 31, 1999.
In May 1999, the Company completed two private placements of equity securities
grossing $2.0 million, before expenses. The equity includes 225,000 shares of
the Company's Common Stock with proceeds of $450,000 purchased by a group led by
Company officers and directors. An investment banking and management firm
purchased 15,510 shares of convertible Preferred Stock for $1,551,000. The
shares of Preferred Stock are convertible at any time into 1,034,000 shares of
Common Stock. In addition, warrants to purchase 51,700 shares of Common Stock
were issued with the Preferred Stock placement.
The $742,000 increase in the cash position from $411,000 at March 31, 1999 to
$1,153,000 at September 30, 1998 was the result of several factors, including
the equity placements and operating profits. These increases were offset in part
by the pay down of the March 31, 1999 revolving credit balance, capital
expenditures, payments on long-term debt, and increases in the accounts
receivable and inventory balances required to support the operating revenue
increase. Management believes that, based on the current financial position, its
operating plan will generate sufficient cash resources to meet its covenants and
other cash needs through at least April 2000. However there can be no assurance
this will occur.
YEAR 2000 ISSUE
The year 2000 issue, (Y2K) refers to computer applications using only the last
two digits to refer to a year rather than all four digits. As a result, some
applications could fail or create incorrect results if they interpret "00" as
the year 1900 rather than 2000. The Company addressed the Y2K situation during
the construction of the Camden facility.
In conjunction with the Company's expansion of its commercial production
capabilities, the Company has upgraded both its computer hardware and software.
Management believes the upgrades have resolved the Y2K issue for the Company.
The equipment installed in the Company's new commercial production facility over
the past two years has been certified by the suppliers as Y2K compliant.
Due to the nature of CBL's business, it is unlikely that a customer with a Y2K
problem would adversely affect CBL to any significant degree. CBL does not
expect to be dependent on one customer or a small group of customers, which
limits CBL's exposure if some customers do not resolve their Y2K problems. The
Company is working on contingency plans, which include increasing inventory
levels and potential staff adjustments. There can be no assurance that these
contingency plans will be successful. There have been no material changes in
plans or costs since the Company's fiscal year-end on March 31, 1999.
STATEMENTS REGARDING FORWARD-LOOKING DISCLOSURE
Certain information contained in this report includes forward-looking
statements, which can be identified by the use of forward-looking terminology
such as "may", "will", "expects", "should", "believes", "anticipates",
"intends", or words of similar import. These statements may involve risks and
uncertainties, as outlined in Item 1 of the Company's March 31, 1999, Form 10-K
that could cause actual results to differ materially from those described in the
statements. These risks and uncertainties include (without limitation) general
economic and business conditions, changes in business strategy or development
plans, and others. Given these uncertainties, the reader is cautioned not to
place undo reliance on such forward-looking statements.
10
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. EXHIBITS:
27 - Financial Data Schedule
b. REPORTS ON FORM 8-K:
A Form 8-K was filed September 17, 1999 detailing the
Series A-1 Convertible Preferred Stock.
11
<PAGE>
SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
CHESAPEAKE BIOLOGICAL LABORATORIES, INC.
<TABLE>
<S> <C>
By: /s/ Thomas P. Rice By: /s/ John T. Janssen
----------------------- --------------------
Thomas P. Rice John T. Janssen
President and Chief Executive Officer Treasurer and Chief Financial Officer
</TABLE>
12
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<CIK> 0000799485
<NAME> CHESAPEAKE BIOLOGICAL LABORATORIES
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-START> APR-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 1,503
<SECURITIES> 0
<RECEIVABLES> 1,565
<ALLOWANCES> 73
<INVENTORY> 1,035
<CURRENT-ASSETS> 4,480
<PP&E> 13,072
<DEPRECIATION> 2,966
<TOTAL-ASSETS> 14,685
<CURRENT-LIABILITIES> 2,662
<BONDS> 6,980
0
0
<COMMON> 56
<OTHER-SE> 4,233
<TOTAL-LIABILITY-AND-EQUITY> 14,685
<SALES> 2,614
<TOTAL-REVENUES> 2,614
<CGS> 1,826
<TOTAL-COSTS> 2,353
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 9
<INTEREST-EXPENSE> 118
<INCOME-PRETAX> 143
<INCOME-TAX> 0
<INCOME-CONTINUING> 143
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 143
<EPS-BASIC> .03
<EPS-DILUTED> .02
</TABLE>
