<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 DECEMBER 31, 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
incorporation or organization) Number)
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 December 31, 1999: Class A Common Stock, $.01 per share - 5,591,726
shares
This Form 10-Q consists of 12 pages.
1
<PAGE>
CHESAPEAKE BIOLOGICAL LABORATORIES, INC. AND SUBSIDIARY
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
Part I. Financial Information
Item 1. Financial Statements:
Consolidated Balance Sheets
as of December 31, 1999 and March 31, 1999 ................................ 3
Consolidated Statements of Operations
for the three and nine months ended December 31, 1999 and 1998 ............ 4
Consolidated Statements of Changes in Stockholders' Equity
for the nine months ended December 31, 1999 ............................... 5
Consolidated Statements of Cash Flows
for the nine months ended December 31, 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........................................................... 10
Item 4. Submission of Matters to a Vote of Security Holders......................... 11
Item 5. Other Information........................................................... 11
Item 6. Exhibits and Reports on Form 8-K............................................ 11
Signatures................................................................................... 12
</TABLE>
2
<PAGE>
CHESAPEAKE BIOLOGICAL LABORATORIES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS DECEMBER 31, 1999 MARCH 31, 1999
----------------- --------------
CURRENT ASSETS (Unaudited) (Audited)
<S> <C> <C>
Cash and cash equivalents $ 919,698 $ 410,595
Restricted cash 350,000 350,000
Accounts receivable, net of allowances of
$ 82,490 and $55,490, respectively 1,361,990 1,114,674
Inventories 1,315,000 491,177
Prepaid expenses 476,302 477,319
Deferred tax asset 124,084 124,084
------------ -----------
TOTAL CURRENT ASSETS 4,547,074 2,967,849
Property, plant and equipment, net 9,983,297 10,171,932
Deferred financing costs and other assets 97,771 101,375
------------ -----------
TOTAL ASSETS $ 14,628,142 $ 13,241,156
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 919,944 $ 799,089
Line of credit --- 644,445
Current portion of long term debt 711,351 717,369
Current portion of capital lease obligations 16,776 853
Current portion of accrued restructuring costs 263,215 523,094
Deferred revenue 774,939 382,208
---------- ----------
TOTAL CURRENT LIABILITIES 2,686,225 3,067,058
Long term debt, net of current portion 6,760,468 7,564,276
Capital lease obligations, net of current portion 68,062 ---
Accrued restructuring costs, net of current portion 519,185 561,215
Other liabilities --- 30,000
Deferred tax liability 124,084 124,084
----------- -----------
TOTAL LIABILITIES 10,158,024 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;
14,984,490 shares authorized; 5,591,726 and
5,365,101 shares issued and outstanding, respectively 55,917 53,651
Additional paid-in capital 9,316,579 7,613,014
Additional paid-in capital - warrants outstanding 422,170 ---
Accumulated deficit (5,324,703) (5,772,142)
------------ -----------
TOTAL STOCKHOLDERS' EQUITY 4,470,118 1,894,523
------------ -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 14,628,142 $ 13,241,156
============= ============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE
CONSOLIDATED BALANCE SHEETS.
3
<PAGE>
CHESAPEAKE BIOLOGICAL LABORATORIES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three months ended Nine months ended
December 31, December 31,
------------ ------------
-------------------------------------------------------
1999 1998 1999 1998
---- ---- ---- ----
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Revenues $2,991,140 $1,621,277 $8,054,617 $5,021,145
Cost of sales 2,135,494 2,022,402 5,725,713 5,278,730
--------- ----------- --------- ---------
Gross profit (loss) 855,646 (401,125) 2,328,904 (257,585)
Operating expenses:
General and administrative 388,482 439,533 1,091,367 1,274,287
Selling 167,990 213,499 435,390 599,860
--------- ----------- --------- ---------
Profit (loss) from operations 299,174 (1,054,157) 802,147 (2,131,732)
Interest expense (149,012) (143,551) (451,709) (289,617)
Interest income & other, net 42,170 24,331 97,001 138,130
--------- ----------- --------- ---------
Earnings (loss) before taxes 192,332 (1,173,377) 447,439 (2,283,219)
Provision for benefit from taxes --- (412,061) --- 31,876
--------- ----------- --------- ---------
Net earnings (loss) $ 192,332 $(1,585,438) $ 447,439 $(2,251,343)
========== ============ ========== ============
Earnings (Loss) Per Common Share:
Basic
Net earnings (loss) $0.03 $(0.30) $0.08 $(0.42)
===== ======= ===== =======
Diluted
Net earnings (loss) $0.03 $(0.30) $0.07 $(0.42)
===== ======= ===== =======
Weighted average common shares outstanding:
Basic 5,590,835 5,328,627 5,583,897 5,310,975
========= ========= ========= =========
Diluted 6,406,494 5,328,627 6,253,910 5,310,975
========= ========= ========= =========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE
CONSOLIDATED STATEMENTS.
4
<PAGE>
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 series
A-1 preferred stock, net of 15,510 155
issuance costs of $185,634
Issuance of preferred stock warrants
Compensation expense related to
stock option grants
Issuance of debt warrants
Issuance of shares pursuant 1,625 16
to exercise of stock options
Net income
------ ---- --------- -------
BALANCE, DECEMBER 31, 1999 15,510 $155 5,591,726 $55,917
====== ==== ========= =======
<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 series
A-1 preferred stock, net of 1,365,211 1,365,366
issuance costs of $185,634
Issuance of preferred stock warrants (153,218) 153,218 ---
Compensation expense related to 41,400 41,400
stock option grants
Issuance of debt warrants 268,952 268,952
Issuance of shares pursuant 2,422 2,438
to exercise of stock options
Net income 447,439 447,439
---------- -------- ------------ ----------
BALANCE, DECEMBER 31, 1999 $9,316,579 $422,170 $(5,324,703) $4,470,118
========== ======== ============ ==========
</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>
Nine months ended
December 31,
---------------------------------
1999 1998
----------- -----------
(Unaudited) (Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 447,439 $(2,251,344)
Adjustments to reconcile net income (loss) to net cash
used in operating activities:
Depreciation and amortization 493,236 368,688
Deferred financing costs 3,604 (11,538)
Non-cash compensation expense 41,400 ---
Deferred income taxes --- (31,876)
(Increase) decrease in accounts receivable (247,316) 532,869
Increase in inventories (823,823) (126,605)
Decrease (increase) in prepaid expenses and other assets 1,017 (10,530)
Increase in accounts payable
and accrued expenses 120,855 142,661
Decrease in accrued restructuring costs (301,909) ---
Increase in deferred revenue 392,731 37,278
Decrease in other non-current liabilities (30,000) (22,523)
--------- ----------
NET CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES 97,234 (1,372,920)
------ -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment net of capital leases (208,628) (1,195,018)
Decrease in bond funds held by trustee --- 778,454
--------- ---------
NET CASH FLOWS USED IN INVESTING ACTIVITIES (208,628) (416,564)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
(Repayments of) proceeds from short term borrowings, net (644,445) 549,390
Repayments of long-term debt (540,874) (220,487)
Payment of capital lease obligations (11,988) (23,948)
Net proceeds from sale of common and preferred stock 1,817,804 16,717
--------- ------
NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES 620,497 321,672
------- -------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 509,103 (1,467,812)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 410,595 3,041,705
---------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 919,698 $ 1,573,893
======= =========
CASH PAID DURING THE PERIOD FOR:
Interest $ 451,709 $ 255,448
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 three quarters 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 $186,000, 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 achieved substantial growth in the first nine months
of fiscal 2000 in revenues and improvements in operating results over the
prior year in order to meet these covenants. The Company expects to be in
compliance through March 31, 2000. Management believes its plans will
generate sufficient cash from operations, which when combined with capital
availability will enable the Company to meet its covenants and cash needs
for the foreseeable future. However, there can be no assurance that this
will occur.
2. INVENTORIES
Inventories consisted of the following:
<TABLE>
<CAPTION>
December 31, 1999 March 31, 1999
----------------- --------------
<S> <C> <C>
Raw materials $ 641,922 $ 273,506
Work-in-process 673,078 217,671
---------- -------
$1,315,000 $ 491,177
========== ========
</TABLE>
3. LONG TERM DEBT
In conjunction with 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, an 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 December 31, 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
had a fair value of $268,952 at the time of issuance and are included as
Additional Paid-in Capital - Warrants Outstanding and debt issuance costs
in the accompanying balance sheet at December 31, 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 $80,000 and $302,000 were charged against
the accrual for the three months and nine months ended December 31, 1999,
respectively. Of the remaining accrual balance of $782,000, $263,000 is
classified in current liabilities as accrued restructuring costs and is
expected to be paid over the next 12 months, with the remaining balance of
$519,000 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 are being used for
general corporate purposes.
In May 1999, the Company also raised $1.4 million, net of related issuance
costs of approximately $186,000, through the sale of 15,510 shares of its
series A-1 convertible preferred stock (the "Preferred Stock"). The
Preferred Stock was issued 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 are being
used for general corporate purposes.
In connection with the issuance of the series A-1 convertible 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 was
$153,218 at the time of issuance and have been included as Additional
Paid-in Capital - Warrants Outstanding in the accompanying balance sheet
as of December 31, 1999.
8
<PAGE>
CHESAPEAKE BIOLOGICAL LABORATORIES, INC. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The management 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 NINE MONTHS ENDED DECEMBER 31, 1999 AND 1998
Operating revenues for the three months ended December 31, 1999 increased 84%
to $2,991,000 from $1,621,000 for the three months ended December 31, 1998.
Operating revenues for the nine months ended December 31, 1999 increased 60%
to $8,055,000 from $5,021,000 for the nine months ended December 31, 1998.
Revenues for the nine-month period exceeded annual revenues for all but one
year in the Company's history. While the revenues continue to be primarily
non-commercial, these customers have chosen CBL for current developmental
work due to the Company's ability to provide long-term commercial scale
volume after product approval by the FDA. The Company has signed agreements
with customers related to the manufacture of commercial products, which
should commence during the fiscal year beginning April 1, 2000.
Gross margin as a percent of revenues was 29% for both the three and the
nine-month periods ended December 31, 1999 as compared to a negative margin
generated for the comparable prior year periods. The increased sales volume,
particularly the use of the new Camden facility which was not in full service
during the same three and nine month period in the prior fiscal year was a major
factor in the improvement.
General and administrative expenses decreased $51,000 and $183,000 respectively
to $388,000 for the three months and $1,091,000 for the nine month period ended
December 31, 1999. General and administrative expenses as a percentage of sales
decreased to 13% for both the three month and nine month periods ended December
31, 1999, compared to 27% and 25% for the three month and nine month periods,
respectively for the prior year. Selling expenses were 6% and 5% of revenues
respectively, for the three and nine-month periods ended December 31, 1999
compared to 13% and 12% for the comparable prior year period. Although the
actual amount of general and administrative and selling expenses decreased in
the current periods, the primary reason for the decrease as a percent of
revenue was the significant increase in revenues in the current periods.
As a result of the revenue increases and expense decreases, operating income
for the three months and nine months ended December 31, 1999, was $299,000
and $802,000, respectively as compared to losses of $1,054,000 and
$2,132,000, respectively, for the comparable prior year periods.
Interest expense for the three months and nine months ended December 31, 1999,
was $149,000 and $452,000, respectively, as compared to $143,000 and $289,000,
respectively, for the three and nine month period 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 Camden facility, which is now fully
operational.
Due to the net operating losses generated during the fiscal year ended March 31,
1999, there is no tax provision related to the current year, resulting in net
income of $192,000 and $447,000 for the three and nine-month period ended
December 31, 1999, respectively. In December 1998, the Company reversed the
previously recorded tax benefit associated with the loss for the six months
ended September 30, 1998, and did not record a tax benefit for the three months
ended December 31, 1998.
FINANCIAL CONDITION AND LIQUIDITY
9
<PAGE>
At December 31, 1999, CBL had cash and cash equivalents of $920,000 compared to
$411,000 at March 31, 1999. These 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. 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 December
31, 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 Class A Common Stock with proceeds of
$450,000 purchased by a small group of investors 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 the holder's option into 1,034,000 shares of Class A
Common Stock using the current conversion ratios. In addition, warrants to
purchase 51,700 shares of the Company's Class A Common Stock were issued in
conjunction with this Preferred Stock placement.
The $509,000 increase in the cash position from $411,000 at March 31, 1999 to
$920,000 at December 31, 1998 was the result of several factors, including the
equity placements and operating profits. This was offset in part by the pay down
of the March 31, 1999 revolving credit balance, capital expenditures, payments
on long-term debt, and the increase 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 from operations, which when combined with capital availability
will enable the Company to meet its covenants and cash needs for the foreseeable
future. 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 upgraded both its computer hardware and software. The
suppliers certify the equipment and software installed in the Company's new
commercial production facility over the past three years as Y2K compliant. The
Company experienced no significant problems related to the Y2K issue. Management
believes the upgrades have resolved the Y2K issue for the Company.
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.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
10
<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On October 14, 1999 the Company held its annual meeting. In
addition to the election of all the Directors, who were unopposed,
listed in the Proxy Statement were three (3) matters voted on at
the meeting:
1. Adoption of the Company's Fifth Stock Incentive Plan
which, provides for granting a maximum of 750,000 shares
was approved by a vote of:
For 3,205,604
Against 875,235
Abstain 25,300
2. Approval of an amendment to the Company's Charter to
increase the number of authorized shares of capital stock
from 10,000,000 to 15,000,000 shares and to eliminate the
unissued Class B Common Stock and Series A Preferred Stock
by a vote of:
For 3,702,096
Against 396,279
Abstain 21,994
3. Ratified the reappointment of Arthur Andersen LLP as the
Company's independent auditor for the fiscal year ending
March 31, 2000 by a vote of:
For 6,003,713
Against 16,545
Abstain 8,100
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:
None
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.
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
12
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-START> APR-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 1,270
<SECURITIES> 0
<RECEIVABLES> 1,444
<ALLOWANCES> 82
<INVENTORY> 1,315
<CURRENT-ASSETS> 4,547
<PP&E> 13,115
<DEPRECIATION> 3,132
<TOTAL-ASSETS> 14,628
<CURRENT-LIABILITIES> 2,686
<BONDS> 6,760
0
0
<COMMON> 56
<OTHER-SE> 4,414
<TOTAL-LIABILITY-AND-EQUITY> 14,628
<SALES> 2,991
<TOTAL-REVENUES> 2,991
<CGS> 2,135
<TOTAL-COSTS> 2,692
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 9
<INTEREST-EXPENSE> 149
<INCOME-PRETAX> 192
<INCOME-TAX> 0
<INCOME-CONTINUING> 192
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 192
<EPS-BASIC> .03
<EPS-DILUTED> .03
</TABLE>
