<PAGE> 1
Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Quarterly Period Ended March 31, 1997
--------------
Commission file number 000-20699
---------
COLLABORATIVE CLINICAL RESEARCH, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Ohio 34-1685364
- ------------------------------------------ ------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
20600 Chagrin Boulevard
Cleveland, Ohio 44122
- ------------------------------------------ ------------------------------
(Address of principal executive offices) (Zip Code)
(216) 491-9930
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
N/A
- --------------------------------------------------------------------------------
(Former name, former address and former 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
------ ------
The number of Common Shares, without par value, outstanding as of April 30, 1997
was 6,366,664.
<PAGE> 2
PART I. FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
COLLABORATIVE CLINICAL RESEARCH, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(Unaudited) (Note A)
March 31, December 31,
1997 1996
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 7,343,379 $ 5,509,460
Short-term investments 29,153,572 29,173,736
Accounts receivable, less allowances 5,778,299 8,420,539
Prepaid expenses 619,139 661,292
------------ ------------
Total current assets 42,894,389 43,765,027
Property and equipment, at cost
net of accumulated depreciation and amortization 1,637,242 1,620,781
Goodwill, less accumulated amortization 8,045,133 8,131,875
Other assets 139,673 168,910
------------ ------------
Total assets $ 52,716,437 $ 53,686,593
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,308,092 $ 1,900,060
Accrued expenses 1,514,876 1,306,285
Deferred revenue 724,667 932,460
------------ ------------
Total current liabilities 3,547,635 4,138,805
Shareholders' equity:
Serial preferred shares, without par value, 1,000,000 shares
authorized, none issued -- --
Common shares, without par value, authorized 15,000,000
shares; issued and outstanding 6,310,414 shares as of
December 31, 1996 and 6,360,414 as of March 31,1997 49,551,364 49,511,964
Retained earnings (accumulated deficit) (382,562) 35,824
------------ ------------
Total shareholders' equity 49,168,802 49,547,788
------------ ------------
Total liabilities and shareholders' equity $ 52,716,437 $ 53,686,593
============ ============
<FN>
Note A: The balance sheet at December 31, 1996 has been derived from the
audited consolidated financial statements at that date, but does not
include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements.
</TABLE>
See notes to condensed consolidated financial statements.
2
<PAGE> 3
COLLABORATIVE CLINICAL RESEARCH, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
--------------------------
1997 1996
----------- -----------
<S> <C> <C>
Revenue $ 4,578,284 $ 5,302,216
Direct costs 3,170,807 4,012,607
----------- -----------
Gross profit 1,407,477 1,289,609
Selling, general and administrative expenses 2,013,202 1,092,613
Depreciation and amortization 226,193 99,438
----------- -----------
Income (loss) from operations (831,918) 97,558
Other income (expense):
Interest income 467,769 17,893
Interest expense -- (36,267)
Loss from joint venture (54,237) (4,519)
----------- -----------
Income (loss) before income taxes (418,386) 74,665
Income tax expense -- 18,700
----------- -----------
Net income (loss) $ (418,386) $ 55,965
=========== ===========
Net income (loss) per share $ (0.06) $ 0.02
=========== ===========
Weighted average common shares outstanding 6,651,731 3,096,273
=========== ===========
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE> 4
COLLABORATIVE CLINICAL RESEARCH, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended March 31,
---------------------------
1997 1996
------------ -----------
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $ (418,386) $ 55,965
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization 226,193 99,438
Other (74,487) 24,890
Changes in operating assets and liabilities:
Accounts receivable 2,609,582 (827,866)
Accounts payable and accrued expenses (377,852) 392,514
Other (165,640) 24,595
------------ -----------
Net cash provided by (used in) operating activities 1,799,410 (230,464)
INVESTING ACTIVITIES
Purchases of property and equipment (132,282) (251,740)
Purchase of businesses (net of cash acquired) (23,623) (1,997,044)
Maturities of short term investments 16,315,377 1,858,178
Purchases of short term investments (16,133,738) --
Investment in HRI (25,000) --
------------ -----------
Net cash provided by (used in) investing activities 734 (390,606)
FINANCING ACTIVITIES
Borrowings on line of credit -- 1,021,111
Payments on line of credit -- (1,152,520)
Net proceeds from issuance of common shares 33,775 1,915
------------ -----------
Net cash provided by (used in) financing activities 33,775 (129,494)
------------ -----------
Increase (decrease) in cash and cash equivalents 1,833,919 (750,564)
Cash and cash equivalents at beginning of period 5,509,460 1,156,925
------------ -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 7,343,379 $ 406,361
============ ===========
</TABLE>
See notes to condensed consolidated financial statements.
4
<PAGE> 5
COLLABORATIVE CLINICAL RESEARCH, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 1997
(UNAUDITED)
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 of 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 accruals) considered necessary for a fair presentation have
been included. Operating results for the three month period ended March 31, 1997
are not necessarily indicative of the results that may be expected for the year
ended December 31, 1997. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Company's Form 10-K
for the year ended December 31, 1996 (File No. 000-20699).
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
might affect the amounts reported in the financial statements and accompanying
notes. Actual results could differ from those estimates.
2. NET INCOME (LOSS) PER SHARE
Net income (loss) per share is determined by dividing net income (loss)
applicable to common shares by the weighted average number of common shares and
common share equivalents outstanding during the period. Common share equivalents
consist of convertible preferred shares (all of which converted, according to
their terms, upon completion of the Company's initial public offering in June,
1996) and common shares which are issuable upon exercise of outstanding options
and warrants to purchase common shares. The dilutive effect of all options and
warrants outstanding was calculated using the treasury stock method. See Exhibit
11 for further information on the computation of earnings per common share. The
Company's stock is quoted on the Nasdaq National Market under the symbol "CCLR".
In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, "Earnings Per Share" ("SFAS No. 128"), which is required to be adopted
on December 31, 1997. At that time, the Company will be required to change the
method currently used to compute earnings per share and restate all prior
periods. Under the new requirements for calculating primary earnings per
share, the dilutive effect of stock options will be excluded. The effect of
the adoption of SFAS No. 128 will not materially change earnings per share as
reported for the quarter ended March 31, 1997.
5
<PAGE> 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
The information set forth and discussed below for the three months
ended March 31, 1997 is derived from the Condensed Consolidated Financial
Statements included elsewhere herein. The financial information set forth and
discussed below is unaudited but, in the opinion of management, reflects all
adjustments (consisting of normal recurring accruals) necessary for a fair
presentation of such information. The Company's results of operations for a
particular quarter may not be indicative of results expected during the other
quarters or for the entire year.
GENERAL
The Company provides a full range of clinical research services to
sponsors of clinical research (primarily pharmaceutical and biotechnology and,
in selected cases, contract research organizations ("CROs") collectively,
"Sponsors") through its network of over 500 multi-therapeutic clinical research
sites ("Affiliated Sites"). Revenue is derived principally from the
identification, placement, monitoring and management of clinical trial programs
and health-economic data evaluations within the Company's network of Affiliated
Sites and owned research facilities.
The Company's clinical research service contracts generally have terms
ranging from several months to several years. A portion of the contract fee is
generally payable upon execution of the contract, with the balance payable in
installments over the life of the contract. Revenue and related direct costs of
revenue are recognized as specific contract terms are fulfilled under the
percentage-of-completion method (the units-of-delivery method). The Company's
contracts are broken down into discrete units of deliverable services for which
a fixed fee for each unit is established. Pass-through costs that are paid
directly by the Company's Sponsors, and for which the Company does not bear the
risk of economic loss, are excluded from revenue. These costs can include
investigator meeting fees, Institutional Review Board (IRB) fees and travel
costs. The termination of a contract results in no material adjustments to
revenue or direct costs previously recognized, and the Company is entitled to
payment for all work performed through the date of notice of termination and all
costs associated with termination of a study.
The Company's backlog at March 31, 1997 was $26.5 million, as compared
to backlog of $22.5 million at December 31, 1996. The backlog at March 31, 1997,
while stronger than that reported at December 31, 1996, is lower than the
Company originally anticipated. While backlog as of any particular date is not
necessarily a meaningful predictor of future results, the Company's results of
operations for the second quarter of 1997 will be below original expectations,
due to the lower than anticipated backlog level at March 31, 1997. The
Company's financial performance for the remainder of 1997 will depend in large
part upon its success in attracting new business and in converting new backlog
into revenue. The Company is continuing its efforts to attract new business,
however there can be no assurance as to the results of the Company's efforts to
attract new business, nor as to the timing of revenues associated with new or
existing backlog.
RESULTS OF OPERATIONS
Three months ended March 31, 1997 compared with three months ended
March 31, 1996
Revenue for the three months ended March 31, 1997 decreased 13.2% to
$4.6 million as compared to $5.3 million in the three month period ended March
31, 1996. The decrease was primarily the result of a 55% decrease in revenue
from clinical trials conducted within the Company's network of Affiliated Sites.
The low level of revenue generated by the Affiliated Sites is the result of the
Company's low level of backlog, limiting the number of projects performed at the
Affiliated Sites. Acquired operations contributed $2.6 million of revenue for
the three months ended March 31, 1997.
6
<PAGE> 7
Direct costs include compensation and related fringe benefits for
non-administrative employees (including employees at company-owned research
facilities) and other expenses directly related to contracts, which can be
subcontracted to the Affiliated Sites and other vendors. These costs decreased
by $800,000, or 20.0%, from $4.0 million to $3.2 million for the three months
ended March 31, 1996 and 1997, respectively. As a percentage of revenue, direct
costs decreased from 75.5% during the three months ended March 31, 1996 to 69.6%
during the three months ended March 31, 1997. The improvement in gross profit
percentage is the result of Collaborative's ability to leverage its fixed direct
costs at its company-owned research facilities.
Selling, general and administrative expenses include all administrative
personnel costs, business and Affiliated Site development costs, and all other
expenses not directly chargeable to a specific contract. Selling, general and
administrative costs for the three month period ended March 31, 1997 increased
81.8% to $2.0 million as compared to $1.1 million during the three months ended
March 31, 1996. Of the $900,000 increase, approximately $300,000 reflects
expenses related to the terminated negotiations for Collaborative to acquire
U-Gene Research BV, $297,000 is the result of expenses incurred at acquired
research facilities and the remainder is the result of expenses incurred by the
Company in its various strategic initiatives. As a percentage of revenue,
selling, general and administrative expenses increased from 20.8% to 43.5% for
the three months ended March 31, 1996 and 1997, respectively. Part of the
increase in selling, general and administrative expenses as a percentage of
revenue is the result of the Company's low level of revenue being unable to
absorb its fixed operating costs.
Depreciation and amortization expense increased from $99,000 in the
three month period ended March 31, 1996 to $226,000 during the three months
ended March 31, 1997. Of the $127,000 increase, $62,000 resulted from the
amortization of goodwill acquired by the Company through its acquisitions, and
the remainder was due to the Company's increased capital expenditures.
Other income increased $437,000 from $23,000 of expense in the three
month period ended March 31, 1996 to $414,000 of income in the three month
period ended March 31, 1997. This was the result of a $450,000 increase in
interest income caused by the investment of funds from the Company's initial
public offering in June 1996 and a $36,000 decrease in interest expense. This
was offset by a $49,000 increase in the Company's share of Health Research
Innovations, L.L.C's. ("HRI") net loss for the three months ended March 31,
1997. The Company's share of HRI's net losses for the three month periods ended
March 31, 1997 and 1996 are $54,000 and $5,000 respectively. HRI, formed through
the Company's joint venture with Pharmaceutical Marketing Services, Inc.
("PMSI"), contracts with the Company to use its Affiliated Site network for the
collection of outcomes assessment, health-economic and disease management data.
For financial reporting purposes, the Company records its share of the net
income or loss from HRI using the equity method of accounting.
As a result of the Company's net operating loss for the three months
ended March 31, 1997, no tax provision was booked for this period. The Company
will carryforward this loss to offset income in future quarters.
LIQUIDITY AND CAPITAL RESOURCES
The Company's contracts usually require a portion of the contract
amount to be paid at the time the contract is initiated. Additional payments are
generally made upon completion of negotiated performance requirements throughout
the life of the contract. Cash receipts do not necessarily correspond to costs
incurred and revenue recognized (revenue recognition is based on the
units-of-delivery method of percentage of completion accounting). The Company
typically receives a low volume of large-dollar receipts. As a result, the
number of days outstanding in accounts receivable will fluctuate due to the
timing and size of cash receipts. Accounts receivable (net of allowance for
doubtful accounts) was $5.8 million at March 31, 1997 and $8.4 million at
December 31, 1996. Deferred revenue was $725,000 at March 31, 1997 and $932,000
at December 31, 1996.
7
<PAGE> 8
Cash and cash equivalents increased $1.8 million during the three
months ended March 31, 1997. This was primarily the result of cash provided by
operations. Cash provided by operating activities resulted primarily from the
decrease in accounts receivable offset by cash used to fund working capital
needs.
The Company's principal cash needs on both a short-term and long-term
basis are for the funding of its operations and capital expenditure
requirements. The Company expects to continue expanding its operations through
internal growth, strategic acquisitions, joint ventures and alliances. The
Company expects such activities will be funded from existing cash and cash
equivalents, maturities of short-term investments, cash flow from operations and
borrowings under its line of credit.
On June 28, 1996, the Company and Integrated Systems Solutions
Corporation ("ISSC"), a unit of IBM Global Services, signed an exclusive
ten-year technology alliance agreement to develop and market an electronic data
collection and project management system for use in clinical trials. As part of
the technology alliance agreement, ISSC will fund the development of the
electronic data collection and project management system. The Company expects to
make a $1.0 million capital expenditure in the technology alliance during 1997.
The Company has a line of credit with a commercial bank providing a
maximum credit facility of $5.0 million, that bears interest at rates up to
prime. Amounts outstanding under the line of credit are collateralized by
substantially all of the Company's tangible assets, and are payable on demand.
There were no borrowings under the line at March 31, 1997. The line of credit is
subject to renewal by the bank at July 31, 1997.
The Company believes that cash generated from operations, amounts
available under its line of credit and maturities of short-term investments will
be sufficient to fund its working capital and capital expenditure requirements
for the foreseeable future. However, selective acquisitions of research
organizations are anticipated to play an important role in the Company's growth
strategy. The Company has engaged in preliminary discussions with several
potential acquisition candidates. To the extent that the Company is successful
in its effort to acquire additional research organizations, it may require
additional capital. There can be no assurance as to the Company's ability to
obtain additional financing.
INFORMATION ABOUT FORWARD-LOOKING STATEMENTS
Certain statements made in this Form 10-Q, other SEC filings or written
materials or orally by the Company or its representatives may constitute forward
looking statements. These forward-looking statements are subject to the safe
harbor provided by the Securities Litigation Reform Act of 1995. Without
limitation, factors that may cause actual results to differ from these
forward-looking statements include the Company's success in attracting new
business, the size and duration of the clinical trials in which the Company and
members of its network of Affiliated Sites participate, the timing of Sponsor
decisions to conduct new clinical trials or cancellation or delays of ongoing
trials, the Company's ability to complete and successfully integrate strategic
acquisitions and other factors many of which are beyond the Company's control.
In addition, actual results and performance could differ materially from those
expressed or implied in these forward-looking statements as a result of a number
of known and unknown risks which are discussed in the Company's Annual Report on
Form 10-K for the year ended December 31, 1996.
8
<PAGE> 9
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
See the Exhibit Index at page E - 1 of this Form 10 - Q.
(b) Reports on Form 8-K
None
9
<PAGE> 10
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.
<TABLE>
<S> <C>
Collaborative Clinical Research, Inc.
------------------------------------------------------------
Registrant
Date: May 13, 1997 /s/ Jeffrey A. Green
----------------------------------- ------------------------------------------------------------
Jeffrey A. Green,
President and Chief Executive Officer and a Director
(Principal Executive Officer)
Date: May 13, 1997 /s/ Terry C. Black
----------------------------------- ------------------------------------------------------------
Terry C. Black,
Vice President of Finance, Chief Financial Officer,
Treasurer and Assistant Secretary
(Principal Financial Officer)
</TABLE>
10
<PAGE> 11
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE
- ----------- ----------- ----
<S> <C> <C>
2.1 Stock Purchase Agreement among GFI, Ohio Valley IRB, Inc., Debra S. Adamson,
the Revocable Trust of Debra S. Adamson, UAT dated August 26, 1992, Mary L.
Westrick and the Company, dated February 5, 1996 (A)
2.2 Asset Purchase Agreement, dated October 16, 1996, between Collaborative
Holdings, Inc. and Walker Information, Inc. (B)
3.1 Fifth Amended and Restated Articles of Incorporation (C)
3.2 Third Amended and Restated Code of Regulations (C)
4.1 Specimen Certificate of the Company's Common Shares, without par value (A)
4.2 Demand Promissory Note, dated as of June 30, 1996, payable to the order of Key Bank (E)
4.3 Second Amended and Restated Registration Agreement, dated July 15,1994,
as amended on June 1, 1995 and February 5, 1996 (A)
10.1 Amended and Restated 1994 Directors' Share Option Plan (D)
10.2 Amended and Restated 1996 Outside Directors' Stock Option Plan (D)
10.3 Amended and Restated 1992 Share Incentive Plan (D)
10.4 Amended and Restated 1996 Key Employees' and Consultants
Stock Option Plan (D)
10.5 Form of Affiliation Agreement by and among the Company and physicians (A)
10.6 Form of Affiliation Agreement by and among the Company and research institutions (A)
10.7 Form of Indemnification Agreement (A)
10.8 Limited Liability Company Agreement, dated as of June 1, 1995, by and among the
Company and PMSI (A)
10.9 Employment Agreement between the Company and Debra S. Adamson, dated
February 1, 1996 (A)
10.10 Employment Agreement between the Company and Mary L. Westrick,
dated February 1, 1996 (A)
10.11 Employment Agreement between the Company and Richard J. Kasmer, dated
June 14, 1994 (A)
10.12 Employment Agreement between the Company and Jeffrey A. Green, dated
July 1, 1994 (A)
</TABLE>
E - 1
<PAGE> 12
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE
- ----------- ----------- ----
<S> <C> <C>
10.13 Employment Agreement between the Company and William H. Stigelman, Jr.,
dated July 15, 1994 (A)
10.14 Employment Agreement between the Company and Terry C. Black,
dated July 20, 1994 (A)
10.15 Collaborative Clinical Research, Inc. Retirement Savings Plan (F)
10.16 Lease Agreement between St. Mary's Medical Center of Evansville, Inc. and GFI
Pharmaceutical Services, Inc., dated January 5, 1996 (A)
10.17 Supplemental Lease Agreement between St. Mary's Medical Center of Evansville, Inc.
and GFI Pharmaceutical Services, Inc., dated June 28, 1996 (C)
10.18 License Agreement, dated October 16, 1996, between Collaborative Holdings, Inc. and
Walker Information, Inc. (B)
11 Statement re Computation of Net Income (Loss) Per Common Share
15 Independent Accountants Review Report
27 Financial Data Schedule
(A) Incorporated herein by reference to the appropriate exhibit to the
Company's Registration Statement on Form S-1 (Registration statement
No. 333-2140).
(B) Incorporated herein by reference to the appropriate exhibit to the
Company's Current Report on Form 8-K, dated October 25, 1996
(Commission File No. 000-20699).
(C) Incorporated herein by reference to the appropriate exhibit to the
Company's Form 10-Q for the quarterly period ended June 30, 1996
(Commission file No. 000-20699).
(D) Incorporated herein by reference to the appropriate exhibit to the
Company's Registration Statement on Form S-8 (Registration statement
No. 333-16061).
(E) Incorporated herein by reference to the appropriate exhibit to the
Company's Form 10-K for the year ended December 31, 1996 (Commission
file No. 000-20699).
(F) Incorporated herein by reference to the appropriate exhibit to the
Company's Registration Statement on Form S-8 (Registration statement
No. 333-26251).
</TABLE>
E - 2
<PAGE> 1
EXHIBIT 11
COLLABORATIVE CLINICAL RESEARCH, INC. AND SUBSIDIARIES
STATEMENT REGARDING COMPUTATION
OF NET INCOME (LOSS) PER SHARE
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Three Months
Ended March 31,
------------------
1997 1996
------- ------
<S> <C> <C>
Net income (loss) $ (418) $ 56
======= ======
Weighted average common shares outstanding 6,651 2,475
Net effect of dilutive common share options
and dilutive common share warrants - Note A -- 483
Net effect of preferred share dividends - Note B -- 138
------- ------
Shares used in calculation of net income
(loss) per common share 6,651 3,096
======= ======
Net income (loss) per common share - Note C $ (0.06) $ 0.02
======= ======
<FN>
NOTE A - Common share options and warrants granted within a twelve month
period preceding the Company's initial public offering are included as
if they were outstanding for all periods presented, prior to the
Company's initial public offering. The dilutive effect of all options
outstanding was calculated using the treasury stock method.
NOTE B - Preferred share dividends declared within a twelve month period
preceding the Company's initial public offering are included as if they
were outstanding for all periods presented, prior to the Company's
initial public offering. Preferred shares were converted into common
shares upon completion of the initial public offering.
NOTE C - Fully diluted net income (loss) per common share has not been
presented because the effect is either immaterial or anti-dilutive.
</TABLE>
<PAGE> 1
EXHIBIT 15
INDEPENDENT ACCOUNTANTS' REVIEW REPORT
The Board of Directors and Shareholders
Collaborative Clinical Research, Inc.
We have reviewed the accompanying condensed consolidated balance sheet of
Collaborative Clinical Research, Inc. and subsidiaries (the "Company") as of
March 31, 1997, and the related condensed consolidated statements of operations
and cash flows for the three-month periods ended March 31, 1997 and 1996. These
financial statements are the responsibility of the Company's management.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical review
procedures to financial data, and making inquiries of persons responsible for
financial and accounting matters. It is substantially less in scope than an
audit conducted in accordance with generally accepted auditing standards, which
will be performed for the full year with the objective of expressing an opinion
regarding the financial statements taken as a whole. Accordingly, we do not
express such an opinion.
Based on our reviews, we are not aware of any material modifications that should
be made to the condensed consolidated financial statements referred to above for
them to be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Collaborative Clinical Research,
Inc. and subsidiaries as of December 31, 1996, and the related consolidated
statements of operations, shareholders' equity and cash flows for the year then
ended, not presented herein, and in our report dated February 13, 1997, we
expressed an unqualified opinion on those consolidated financial statements. In
our opinion, the information set forth in the accompanying condensed
consolidated balance sheet as of December 31, 1996 is fairly stated, in all
material respects, in relation to the consolidated balance sheet from which it
has been derived.
Cleveland, Ohio ERNST & YOUNG LLP
April 30, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MARCH 31,
1997 CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S.DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<EXCHANGE-RATE> 1
<CASH> 36,496,951
<SECURITIES> 0
<RECEIVABLES> 6,065,799
<ALLOWANCES> 287,500
<INVENTORY> 0
<CURRENT-ASSETS> 42,894,389
<PP&E> 2,211,269
<DEPRECIATION> 574,027
<TOTAL-ASSETS> 52,716,437
<CURRENT-LIABILITIES> 3,547,635
<BONDS> 0
<COMMON> 49,551,364
0
0
<OTHER-SE> (382,562)
<TOTAL-LIABILITY-AND-EQUITY> 52,716,437
<SALES> 0
<TOTAL-REVENUES> 4,578,284
<CGS> 0
<TOTAL-COSTS> 3,170,807
<OTHER-EXPENSES> 2,231,395
<LOSS-PROVISION> 8,000
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (418,386)
<INCOME-TAX> 0
<INCOME-CONTINUING> (418,386)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (418,386)
<EPS-PRIMARY> (0.063)
<EPS-DILUTED> (0.063)
</TABLE>
