SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10 - Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
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 1-10352
COLUMBIA LABORATORIES, INC.
(Exact name of Company as specified in its charter)
DELAWARE 59-2758596
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2665 SOUTH BAYSHORE DRIVE
MIAMI, FLORIDA 33133
(Address of principal executive offices) (Zip Code)
Company's telephone number, including area code: (305) 860-1670
Indicate by check mark whether the Company (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 Company was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. Yes X No __
Number of shares of the Common Stock of Columbia Laboratories, Inc.
issued and outstanding as of April 30, 1995: 25,122,265
<PAGE>
COLUMBIA LABORATORIES, INC. AND SUBSIDIARIES
PART 1 - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The following unaudited, condensed consolidated financial
statements of the Company have been prepared in accordance with the
instructions to Form 10-Q and, therefore, omit or condense certain
footnotes and other information normally included in financial statements
prepared in accordance with generally accepted accounting principles. In
the opinion of management, all adjustments (consisting only of normal
recurring accruals) necessary for a fair presentation of the financial
information for the interim periods reported have been made. Results of
operations for the three months ended March 31, 1995 are not necessarily
indicative of the results for the year ending December 31, 1995.
2 of 12
<PAGE>
COLUMBIA LABORATORIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
----------- ------------
(Unaudited)
<S> <C> <C>
ASSETS:
Current assets-
Cash and cash equivalents $ 425,794 $ 689,749
Accounts receivable, net 1,548,612 904,277
Inventories 967,745 1,117,243
Prepaid expenses 189,010 125,832
---------- -----------
Total current assets 3,131,161 2,837,101
Property and equipment, net 857,572 915,623
Intangible assets, net 1,730,362 1,786,037
Other investment, net 1,500,000 1,600,000
Other assets 1,277,644 1,268,803
----------- -----------
$ 8,496,739 $ 8,407,564
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities-
Accounts payable $ 5,023,023 $ 3,707,966
Accrued expenses 847,494 1,059,960
Deferred revenue 1,410,534 1,540,549
Estimated liability for returns
and allowances 376,453 387,075
----------- ------------
Total current liabilities 7,657,504 6,695,550
----------- ------------
Long-term debt, net of current portion 1,740,941 6,217,649
Other long-term liabilities 89,731 86,743
Stockholders' equity-
Preferred stock, $.01 par value; 1,000,000 shares
authorized;
Series A Convertible Preferred Stock, 1,515
shares issued and outstanding in 1995
and 1994 15 15
Series B Convertible Preferred Stock, 2,000
shares issued and outstanding in 1995
and 1994 20 20
Common stock, $.01 par value; 40,000,000 shares
authorized; 25,070,411 and 23,778,897 shares
issued and outstanding in 1995 and 1994,
respectively 250,705 237,789
Capital in excess of par value 69,055,818 64,206,507
Accumulated deficit (70,386,138) (69,253,356)
Cumulative translation adjustment 88,142 216,647
------------ ------------
Total stockholders' equity (991,438) ( 4,592,378)
------------ ------------
$ 8,496,739 $ 8,407,564
============ ===========
</TABLE>
See notes to condensed consolidated financial statements
3 of 12
<PAGE>
COLUMBIA LABORATORIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31,
1995 1994
---------- -----------
<S> <C> <C>
NET SALES $3,205,366 $ 1,502,782
COST OF GOODS SOLD 1,631,813 703,729
----------- -----------
Gross profit 1,573,553 799,053
----------- -----------
OPERATING EXPENSES:
Selling and distribution 643,775 485,003
General and administrative 652,290 786,424
Research and development 1,529,512 2,637,741
----------- -----------
Total operating expenses 2,825,577 3,909,168
----------- -----------
Loss from operations (1,252,024) (3,110,115)
----------- -----------
OTHER INCOME (EXPENSE):
Interest income 5,787 20,935
Interest expense (71,569) (356,552)
Other, net 185,027 (20,979)
------------ -----------
119,245 (356,596)
------------ -----------
Net loss $(1,132,779) $(3,466,711)
=========== ===========
NET LOSS PER COMMON SHARE $ ( .05) $ (.16)
============== =============
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 24,931,000 22,165,000
============ ===========
</TABLE>
See notes to condensed consolidated financial statements
4 of 12
<PAGE>
COLUMBIA LABORATORIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31,
1995 1994
------------ -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(1,132,779) $(3,466,711)
Adjustments to reconcile net loss to net
cash used for operating activities-
Depreciation and amortization 227,637 203,377
Provision for doubtful accounts - 35,489
Interest expense - 173,865
Changes in assets and liabilities-
(Increase) decrease in:
Accounts receivable (759,767) 215,192
Inventories 149,499 (170,142)
Prepaid expenses 91,406 83,539
Other assets (3,400) 14,983
Increase (decrease) in:
Accounts payable 1,259,354 585,669
Accrued expenses (74,764) (183,522)
Deferred revenue - (113,168)
Estimated liability for returns
and allowances (10,622) -
----------- ---------
Net cash used for operating activities (253,436) (2,621,429)
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (8,052) (120,601)
Purchase of other investment - (900,000)
----------- ----------
Net cash used for investing activities (8,052) (1,020,601)
----------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of notes payable and
long-term debt - (37,527)
Proceeds from issuance of common stock 78,147 -
Proceeds from exercise of options and warrants - 50,000
---------- -----------
Net cash provided by financing activities 78,147 12,473
---------- -----------
(Continued)
</TABLE>
5 of 12
<PAGE>
COLUMBIA LABORATORIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Continued)
<TABLE>
<CAPTION>
Three Months Ended March 31,
1995 1994
------------ -----------
<S> <C> <C>
EFFECT OF EXCHANGE RATE CHANGES ON CASH (80,614) 103,975
----------- -----------
NET DECREASE IN CASH
AND CASH EQUIVALENTS (263,955) (3,525,582)
CASH AND CASH EQUIVALENTS,
beginning of period 689,749 5,280,829
----------- ----------
CASH AND CASH EQUIVALENTS,
end of period $ 425,794 $1,755,247
========== ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid during the period $ 12,435 $ -
============ =======
</TABLE>
SUPPLEMENTAL SCHEDULE OF NONCASH OPERATING AND FINANCING ACTIVITIES:
During the three months ended March 31, 1995, the Company issued
85,382 shares of Common Stock in payment of accrued interest, which totaled
$310,362.
During the three months ended March 31, 1994, the Company issued
2,808 shares of Common Stock in payment of consulting fees, which totaled
$15,000.
As of March 31, 1995, dividends on the Series A Preferred Stock of
$89,731 ($2,988 relating to the three months ended March 31, 1995) have
been earned but have not been declared and are included in other long-term
liabilities in the March 31, 1995 condensed consolidated balance sheet.
See notes to condensed consolidated financial statements
6 of 12
<PAGE>
COLUMBIA LABORATORIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) SIGNIFICANT ACCOUNTING POLICIES:
The accounting policies followed for quarterly financial reporting
are the same as those disclosed in Note (1) of the Notes to Consolidated
Financial Statements included in the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1994.
7 of 12
<PAGE>
COLUMBIA LABORATORIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITIONS AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents decreased from approximately $690,000 at
December 31, 1994 to approximately $426,000 at March 31, 1995, primarily as
a result of approximately $253,000 used for operating activities offset by
approximately $78,000 received from the issuance of Common Stock. The loss
for the three months ending March 31, 1995, was approximately $1.1 million,
resulting in stockholders' deficit of approximately $990,000 as of March
31, 1995.
During 1995, the Company repaid $4,787,069 of long-term debt and
accrued interest through the issuance of 1,273,905 shares of the Company's
Common Stock.
Based on the current cash flow, the Company expects to need
additional funds to continue and complete research and development, conduct
pre-clinical and clinical trials and apply for regulatory approval. The
Company is currently in discussions with several large pharmaceutical
companies regarding the licensing of some of the Company's products. In
addition, the Company is in discussions regarding potential product
development agreements with certain of these companies, in which the cost
of development would be borne by the strategic alliance partner. The
Company expects to receive both upfront payments and ongoing royalties upon
consummation of any such agreements.
There can be no assurance that the Company will be able to enter
into any such agreements or that any upfront payments or ongoing royalties
will be received or, if received, will be sufficient to meet the Company's
funding requirements. The Company's future cash flow requirements are
substantially dependent upon the receipt of such upfront payments and on
the marketing efforts of its strategic alliance partners. If such payments
are not received, the Company will seek to raise additional capital, the
success of which is not determinable. If the Company is unable to raise
sufficient additional capital, the Company will explore the alternatives
available to it at such time, including without limitation, delaying
clinical studies or otherwise reducing its operating activities or seeking
other ways to reduce its cash requirements.
In December 1993, the Company entered into an Option and License
Agreement with a French research group based in Marseille, France, pursuant
to which it was granted an option to obtain an exclusive license to the
North and South American rights to a potential AIDS treatment. The option
cost $2 million, of which $1.1 million was paid in December 1993 and the
remaining $900,000 was paid in February 1994. The potential product was
recently granted a Clinical Trials Exemption (CTX) in the United Kingdom
(UK) and clinical trials in humans are now underway.
The option, which must be exercised upon the occurrence of certain
events, expires in December 1998. Upon exercise of the option, the Company
will be required to pay an additional $5 million. If the Company does not
exercise its option upon the occurrence of certain events, the Company's
rights to the option are terminated.
The FDA, in 1988, initiated a review to determine whether drugs
containing quinine sulfate for night leg cramps, an ingredient in Legatrin,
should remain on the market. The FDA issued a final monograph, which became
effective on February 22, 1995, restricting manufacturer's from selling
over-the-counter quinine sulfate based-products for the relief of night leg
cramps.
As a result, the Company reformulated Legatrin(R), and recently
introduced New Advanced Formula Legatrin PM. Legatrin PM(TM) provides
relief of occasional pain and sleeplessness associated with minor muscle
aches such as leg cramps. Sales of Legatrin and gross profit derived from
sales of Legatrin approximated $4 million and $3 million, respectively, for
each of the three years ended December 31, 1994.
8 of 12
<PAGE>
There can be no assurance as to what future sales of Legatrin PM will be.
In connection with the 1989 purchase of the assets of
Bio-Mimetics, Inc., which assets consisted of the patents underlying the
Company's Bioadhesive Delivery System, other patent applications and
related technology, the Company pays Bio-Mimetics, Inc. a royalty equal to
two percent of the net sales of products based on the Bioadhesive Delivery
System, to an aggregate of $7.5 million. The Company is required to prepay
a portion of the remaining royalty obligation, in cash or stock at the
option of the Company, if certain conditions are met.
As of March 31, 1995, the Company has outstanding exercisable
options and warrants that, if exercised, would result in approximately $13
million of additional capital. However, there can be no assurance that such
options or warrants will be exercised.
Material expenditures anticipated by the Company in the near
future are concentrated on production commitments related to Replens and
research and development related to new products. The Company has committed
to spend an aggregate of approximately $850,000 on additional molding
capacity at its suppliers during 1995 and 1996.
As of December 31, 1994, the Company had available net operating
loss carryforwards of approximately $40 million to offset its future U.S.
taxable income. In accordance with Statement of Financial Standards No.
109, as of December 31, 1994, other assets in the accompanying consolidated
balance sheet includes a deferred tax asset of approximately $14 million
(consisting primarily of a net operating loss carryforward) which has been
fully reserved as its ultimate realizability is not assured.
RESULTS OF OPERATIONS - THREE MONTHS ENDED MARCH 31, 1995 VERSUS
THREE MONTHS ENDED MARCH 31, 1994
Sales have increased in 1995 as compared to 1994 primarily as a
result of Advantage 24(TM) now being available on drug store shelves
throughout the U.S., renewed sales activity from the Company's OTC segment,
including the introduction of Legatrin PM, as well as revenue from a
research agreement which began in late 1994. While the strategic alliance
agreements in the United States and abroad have not produced desired unit
sales as quickly as planned, the Company believes it has established
effective working relationships with its partners which the Company
believes form a solid foundation to build sales of Replens and the other
products in the development pipeline. In addition, upon granting of the
European multistate license, Replens should become a reimbursable product
in certain countries. The Company believes that sales of Replens in Europe
should increase significantly once the licenses are granted. The Company's
success to a great extent is dependent on the marketing efforts of its
strategic alliance partners, over which the Company has limited ability to
influence.
Gross profit as a percentage of sales decreased in 1995 as
compared to 1994 primarily as a result of a change in product mix sold.
Selling and distribution expenses increased as a result of costs
associated with the introduction of Legatrin PM.
Research and development expenditures have decreased as a result
of the completion of a majority of the clinical studies related to Crinone
and Advantage 24.
The decrease in interest expense is primarily the result of
repayment of a portion of the 1993 Notes.
As a result, the net loss for 1995 was $1,132,779 or $.05 per
share as compared to a net loss in 1994 of $3,466,711 or $.16 per common
share.
9 of 12
<PAGE>
COLUMBIA LABORATORIES, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In April 1992, the Company filed an action against Bank Piquet
("Piquet"), and certain other defendants (all of whom except
Piquet have defaulted), for a declaratory judgement ("Action"), in
the United States District Court for the Southern District of
Florida ("Court"), relating to the ownership and rights to
exercise certain warrants to purchase shares of the Company's
Common Stock ("Warrants"). The Action was commenced by the Company
when it determined that Piquet, the purported holder of the
Warrants, was not the registered owner in accordance with the
procedures for transfer set forth in the warrant agreement, and
Piquet's ownership claims were from an entity different from the
entity to whom the Warrants were issued. Thereafter, Piquet filed
a counterclaim claiming $600,000 in damages as a result of the
Company's denying Piquet the right to exercise the Warrants. The
Company filed the Action in order to avoid being exposed to
duplicate claims to the right to exercise the Warrants, and the
attendant liability thereto. The Company believes that the
counterclaim is without merit and continues to vigorously
administer the Action.
This Action is set for trial begining May 9, 1995.
In September 1994, two related actions (the "Related Actions")
were filed in the United States District Court for the Southern
District of Florida ("Court"), alleging that the Company owes fees
and/or commissions in the amount of approximately $1,150,000. The
Related Actions were both filed by the same law firm on the same
date. In the first of the Related Actions, the plaintiff, Ian J.
ffrench, alleges he is owed fees or commissions of $900,000 for
investment banking services allegedly provided by him to the
Company. The Company has answered each of these claims denying the
allegations contained therein and intends to vigorously defend
this Action. In the second of the Related Actions, the plaintiff,
Leman Trust Company, alleges the Company owes it approximately
$250,000 as a result of the Company failing to grant certain
warrants to purchase shares of the Company's Common Stock as a
part of a certain loan transaction consummated in 1991. The
Company believes that the loan was fully repaid in 1991 and all of
the written requirements of the loan transaction were complied
with. The Company has answered each of these claims denying the
allegations contained therein and intends to vigorously defend
this Action. This Action is set for trial begining June 5, 1995.
Certain claims and complaints have been filed or are pending
against the Company with respect to various matters. In the
opinion of management and counsel, all such matters are adequately
reserved for or covered by insurance or, if not so covered, are
without any or have little merit or involve such amounts that if
disposed of unfavorably would not have a material adverse effect
on the Company.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
As of May 12, 1995, dividends on the Series A Preferred
Stock of $91,192 have been earned but have not been
declared.
10 of 12
<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
None.
11 of 12
<PAGE>
SIGNATURES
Pursuant to the requirements 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.
COLUMBIA LABORATORIES, INC.
/S/ MARGARET J. ROELL
---------------------------------------
MARGARET J. ROELL, Vice President-
Finance and Administration,
Chief Financial Officer
DATE: MAY 12, 1995
12 of 12
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 425,794
<SECURITIES> 0
<RECEIVABLES> 1,646,982
<ALLOWANCES> 98,370
<INVENTORY> 967,745
<CURRENT-ASSETS> 3,131,161
<PP&E> 1,498,023
<DEPRECIATION> 640,451
<TOTAL-ASSETS> 8,496,739
<CURRENT-LIABILITIES> 7,657,504
<BONDS> 1,740,941
<COMMON> 250,705
0
35
<OTHER-SE> (1,242,178)
<TOTAL-LIABILITY-AND-EQUITY> 8,496,739
<SALES> 3,205,366
<TOTAL-REVENUES> 3,205,366
<CGS> 1,631,813
<TOTAL-COSTS> 1,631,813
<OTHER-EXPENSES> 2,825,577
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 71,569
<INCOME-PRETAX> (1,132,779)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,132,779)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,132,779)
<EPS-PRIMARY> (.05)
<EPS-DILUTED> (.05)
</TABLE>
