<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 September 30, 1997
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Commission file number 000-20699
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COLLABORATIVE CLINICAL RESEARCH, INC.
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(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
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(Address of principal executive offices) (Zip Code)
(216) 491-9930
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(Registrant's telephone number, including area code)
N/A
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(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 October 31,
1997 was 6,407,247.
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PART 1. FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
COLLABORATIVE CLINICAL RESEARCH, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(Unaudited) (Note A)
September 30, December 31,
1997 1996
------------------ -----------------
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 5,263,779 $ 5,509,460
Short-term investments 27,278,021 29,173,736
Accounts receivable, less allowances 6,463,640 8,420,539
Notes receivable-officer 165,000 -----
Taxes receivable 148,493 -----
Prepaid expenses 976,796 661,292
------------ ------------
Total current assets 40,295,729 43,765,027
Property and equipment, at cost
net of accumulated depreciation and amortization 2,548,462 1,620,781
Goodwill, less accumulated amortization 7,822,745 8,131,875
Other assets 69,720 168,910
============ ============
Total assets $ 50,736,656 $ 53,686,593
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 884,630 $ 1,900,060
Accrued expenses 1,902,601 1,306,285
Deferred revenue 588,152 932,460
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Total current liabilities 3,375,383 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 6,402,914 shares as of September 30, 1997 49,692,656 49,511,964
Retained earnings (accumulated deficit) (2,331,383) 35,824
------------ ------------
Total shareholders' equity 47,361,273 49,547,788
============ ============
Total liabilities and shareholders' equity $ 50,736,656 $ 53,686,593
============ ============
</TABLE>
Note A: The balance sheet at December 31, 1996 has been derived from the
audited 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.
See notes to condensed consolidated financial statements.
2
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COLLABORATIVE CLINICAL RESEARCH, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------------------- -------------------------------------------
1997 1996 1997 1996
---------------- ---------------- ----------------- ----------------
<S> <C> <C> <C> <C>
Revenue $ 3,647,445 $ 7,176,477 $ 12,684,598 $ 19,320,913
Direct costs 2,809,942 4,881,977 9,199,230 13,725,124
------------ --------- ------------ -----------
Gross profit 837,503 2,294,500 3,485,368 5,595,789
Selling, general and administrative expenses 2,535,408 1,721,702 6,660,894 4,335,222
Depreciation and amortization 294,871 161,995 763,276 405,188
------------ --------- ------------ -----------
Income (loss) from operations (1,992,776) 410,803 (3,938,802) 855,379
Other income (expense):
Interest income 480,954 539,404 1,470,890 643,921
Interest expense ----- ----- ----- (93,616)
Loss from joint venture ----- (4,400) (47,788) (1,700)
------------ --------- ------------ -----------
Income (loss) before income taxes (1,511,822) 945,807 (2,515,700) 1,403,984
Income tax expense (benefit) (49,497) 236,700 (148,493) 351,200
------------ --------- ------------ -----------
Net income (loss) $ (1,462,325) $ 709,107 $ (2,367,207) $ 1,052,784
============ ========= ============ ===========
Net income (loss) per share $ (0.23) $ 0.11 $ (0.37) $ 0.23
============ ========= ============ ===========
Weighted average common shares outstanding 6,402,343 6,649,994 6,376,568 4,518,937
============ ========= ============ ===========
</TABLE>
See notes to condensed consolidated financial statements.
3
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COLLABORATIVE CLINICAL RESEARCH, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended September 30,
-------------------------------------
1997 1996
---------------- ----------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $ (2,367,207) $ 1,052,784
Adjustments to reconcile net income (loss) to net cash
used in operating activities:
Depreciation and amortization 763,276 405,188
Other (726,677) (429,802)
Changes in operating assets and liabilities:
Accounts receivable 1,877,548 (2,116,683)
Accounts payable and accrued expenses (466,283) 222,403
Other (723,243) 519,060
---------------- ----------------
Net cash used in operating activities (1,642,586) (347,050)
INVESTING ACTIVITIES
Purchases of property and equipment (1,326,790) (746,418)
Purchase of businesses (net of cash acquired) (7,868) (4,108,183)
Maturities of short term investments 46,309,484 11,990,178
Purchases of short term investments (43,548,411) (42,619,573)
Investment in HRI (33,660) (27,225)
---------------- ----------------
Net cash provided by (used in) investing activities 1,392,755 (35,511,221)
FINANCING ACTIVITIES
Borrowings on line of credit ----- 1,271,111
Payments on line of credit ----- (2,402,520)
Issuance of notes receivable-officer (165,000) -----
Net proceeds from issuance of common shares 169,150 42,393,694
---------------- ----------------
Net cash provided by financing activities 4,150 41,262,285
---------------- ----------------
Increase (decrease) in cash and cash equivalents (245,681) 5,404,014
Cash and cash equivalents at beginning of period 5,509,460 1,156,925
---------------- ----------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 5,263,779 $ 6,560,939
================ ================
</TABLE>
See notes to condensed consolidated financial statements.
4
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COLLABORATIVE CLINICAL RESEARCH, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 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 and nine month periods ended
September 30, 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 basic 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 net income (loss) per share
as reported for the quarter ended September 30, 1997.
3. NOTE RECEIVABLE FROM OFFICER
In September 1997, the Company loaned an officer of DataTRAK, Inc. (a wholly
owned subsidiary of the Company) $165,000 as part of a relocation package. The
loan bears interest at the applicable federal rate, adjusted on a monthly basis.
The note, plus any accrued but unpaid interest, is payable on demand.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
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 540 multi-therapeutic clinical research
sites ("Affiliated Sites"). Revenue is derived principally from the
identification, placement, monitoring and management of clinical trial programs
within the Company's network of Affiliated Sites and its four 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 September 30, 1997 was $24.3 million, as
compared to backlog of $22.5 million at December 31, 1996. While backlog as of
any particular date is not necessarily a meaningful predictor of future results,
the Company expects to report a net loss for the year ended December 31, 1997.
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 September 30, 1997 compared with three months ended
September 30, 1996
Revenue for the three months ended September 30, 1997 decreased 50.0%
to $3.6 million as compared to $7.2 million in the three month period ended
September 30, 1996. The decrease was the result of a $3.9 million decline in
revenue from clinical trials conducted within the Company's network of
Affiliated Sites, offset by a $336,000 increase in revenue from acquired
operations. The Company's WCE subsidiary, acquired in October 1996, contributed
$1.0 million of revenue for the three months ended September 30, 1997. The low
level of revenue generated by the Affiliated Sites and the GFI subsidiary was
the result of the Company's low level of backlog and its lack of success in
attracting new business.
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 $2.1 million, or 42.9%, from $4.9 million to $2.8 million for the three
months ended September 30, 1996 and 1997, respectively. As a percentage of
revenue, direct costs increased from 68.1% during the three months ended
September 30, 1996 to 77.8% during the three months ended September 30, 1997.
The reduction in gross profit percentage was the result of the Company's low
level of revenue and its resulting inability to leverage its fixed costs.
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 September 30, 1997
increased 47.1% to $2.5 million as compared to $1.7 million during the three
months ended September 30, 1996. Of
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the $814,000 increase, $306,000 was the result of expenses incurred at acquired
research facilities and the remainder was the result of expenses incurred by the
Company in its various strategic initiatives, including $325,000 associated with
DataTRAK(SM). As a percentage of revenue, selling, general and administrative
expenses increased from 23.6% to 69.4% for the three months ended September 30,
1996 and 1997, respectively. The increase in selling, general and administrative
expenses as a percentage of revenue reflects the lower absorption of fixed
operating costs resulting from decreased revenues, as well as the impact of
additional expenses incurred to support the Company's strategic initiatives.
Depreciation and amortization expense increased from $162,000 in the
three month period ended September 30, 1996 to $295,000 during the three months
ended September 30, 1997. Of the $133,000 increase, $28,000 resulted from the
amortization of goodwill acquired by the Company through its WCE acquisition,
and the remainder was due to the Company's increased capital expenditures,
including $69,000 associated with DataTRAK.
Other income decreased $54,000 from $535,000 in the three month period
ended September 30, 1996 to $481,000 in the three month period ended September
30, 1997. This was the result of a decrease in interest income due to the
Company's reduced level of cash and short-term investments.
As a result of the Company's projected net operating loss for the year
ended December 31, 1997, a $148,000 income tax benefit has been recorded at
September 30, 1997. This benefit represents approximately three-fourths of the
benefit the Company expects to receive from its net operating loss carryback for
federal income tax purposes.
Nine months ended September 30, 1997 compared with nine months ended
September 30, 1996
Revenue for the nine months ended September 30, 1997 decreased 34.2% to
$12.7 million as compared to $19.3 million in the nine month period ended
September 30, 1996. The decrease was the result of a $10.4 million decrease in
revenue from clinical trials conducted within the Company's network of
Affiliated Sites and its GFI subsidiary. The decrease was offset in part by the
$3.8 million of revenue generated by the Company's WCE subsidiary, which was
acquired in October 1996. The low level of revenue generated by the Affiliated
Sites was the result of the Company's low level of backlog and its lack of
success in attracting new business.
Direct costs decreased by $4.5 million, or 32.8%, from $13.7 million to
$9.2 million for the nine months ended September 30, 1996 and 1997,
respectively. As a percentage of revenue, direct costs increased from 71.0%
during the nine months ended September 30, 1996 to 72.4% during the nine months
ended September 30, 1997. The decrease in gross profit as a percentage of
revenue reflects the inability of the Affiliated Network and other acquired
research facilities to leverage fixed costs due to their low levels of revenue.
Selling, general and administrative costs for the nine month period
ended September 30, 1997 increased 55.8% to $6.7 million as compared to $4.3
million during the nine months ended September 30, 1996. Of the $2.4 million
increase, approximately $371,000 reflects expenses related to the terminated
negotiations for a potential acquisition, $800,000 was the result of expenses
incurred at acquired research facilities and the remainder was the result of
expenses incurred by the Company in its various strategic initiatives, including
$444,000 associated with DataTRAK. As a percentage of revenue, selling, general
and administrative expenses increased from 22.3% to 52.8% for the nine months
ended September 30, 1996 and 1997, respectively. The increase in selling,
general and administrative expenses as a percentage of revenue reflects the
lower absorption of fixed operating costs resulting from decreased revenues, as
well as the impact of additional expenses incurred to support the Company's
strategic initiatives.
Depreciation and amortization expense increased from $405,000 in the
nine month period ended September 30, 1996 to $763,000 during the nine months
ended September 30, 1997. Of the $358,000 increase, $33,000 resulted from the
acquisition of WCE's assets, $126,000 was the result of amortization of
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goodwill due to the Company's acquisitions and $199,000 was due to the Company's
increased capital expenditures. DataTRAK accounted for $69,000 of the Company's
increase in depreciation due to capital expenditures.
Other income increased $875,000 from $548,000 in the nine month period
ended September 30, 1996 to $1.4 million in the nine month period ended
September 30, 1997. This was the result of a $827,000 increase in interest
income caused by the investment of funds from the Company's initial public
offering in June 1996 and a $94,000 decrease in interest expense which was
offset by a $46,000 increase in the Company's share of Health Research
Innovations, L.L.C's ("HRI") net loss for the nine months ended September 30,
1997. The Company's share of HRI's net losses for the nine month period ended
September 30, 1997 was $48,000. HRI was formed through the Company's joint
venture with Pharmaceutical Marketing Services, Inc. ("PMSI"). During the second
quarter of 1997, the Company terminated its joint venture with PMSI due to the
net losses being incurred by HRI. For financial reporting purposes, the Company
had recorded its share of the net income or loss from HRI using the equity
method of accounting.
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 $6.5 million at September 30, 1997 and $8.4 million at
December 31, 1996. Deferred revenue was $588,000 at September 30, 1997 and
$932,000 at December 31, 1996.
Cash and cash equivalents decreased $246,000 during the nine months
ended September 30, 1997. This was the result of $1.6 million of cash used in
operating activities offset by $1.4 million of cash provided by investing
activities. Cash used for operating activities resulted from the funding of net
operating losses and other working capital needs offset by accounts receivable
collections. Cash provided by investing activities resulted primarily from the
maturities of short-term investments less purchases of new investments, and was
offset by the acquisition of property and equipment.
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 its efforts to expand 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. During June 1997, the
Company invested $1.0 million in the technology alliance. Approximately $800,000
of this investment was for the software and licenses required to operate
DataTRAK, which will be depreciated over a three year period. The Company
anticipates providing additional financial support of an amount at least equal
to what was invested during June of 1997, prior to December 31, 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 and is payable on demand. $2.0 million of the credit facility is
collateralized by a $2.0 million investment with the bank and is considered to
be committed. The remaining $3.0 million is collateralized by substantially all
of the Company's tangible assets and is
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considered to be uncommitted. The committed portion of the line is subject to
renewal at September 30, 1999, and the uncommitted portion is subject to renewal
at July 31, 1998. There were no borrowings under the line at September 30, 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,
including the additional financial support required for DataTRAK, 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.
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
On July 18, 1997, two former executive officers of the Company
claimed that their employment agreements were violated by the
Company and, by letter, each demanded payment from the Company
an amount equal to one year's annual salary. The Company
believes their claims are without merit, and is pursuing the
non-compete provisions of the employment contracts. Under the
terms of their employment agreements, the dispute will be
resolved through arbitration. To date, the arbitration hearing
has not occurred.
Item 2. Changes in Securities and Use of Proceeds
In 1996 the Company sold 3,450,000 of its Common Shares in an
underwritten public offering (the "Offering"). The net
proceeds to the Company from the sale of shares in the
Offering were approximately $41.7 million, after deduction of
underwriting discounts and commissions and expenses of the
offering. Pending future uses, the Company has invested the
unused proceeds in short-term interest bearing obligations.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
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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
The Company filed one report on form 8-K, dated July 24, 1997,
during the three months ended September 30, 1997. The Company
reported financial results for the three-month and the
six-month periods ended June 30, 1997.
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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.
Collaborative Clinical Research, Inc.
--------------------------------------------
Registrant
Date: 11/12/97 /s/ Jeffrey A. Green
----------------------- --------------------------------------------
Jeffrey A. Green,
President and Chief Executive Officer and a
Director (Principal Executive Officer)
Date: 11/12/97 /s/ Terry C. Black
----------------------- --------------------------------------------
Terry C. Black,
Vice President of Finance, Chief Financial
Officer, Treasurer and Assistant Secretary
(Principal Financial Officer)
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION Page
- ----------- ----------- ----
<S> <C> <C>
3.1 Fifth Amended and Restated Articles of Incorporation (C)
3.2 Third Amended and Restated Code of Regulations (A)
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 (B)
4.3 Second Amended and Restated Registration Agreement, dated July 15,1994,
as amended on June 1, 1995 and February 5, 1996 (C)
10.1 Employment Agreement between the Company and Patrick Chassaigne,
dated July 6, 1997
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 Form 10-K for the year ended December 31, 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)
</TABLE>
E-1
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EXHIBIT 10.1
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT is made and entered into by and between
Collaborative Clinical Research, Inc., an Ohio corporation (the "Corporation"),
and Patrick Chassaigne ("Employee").
WHEREAS, the Corporation and Employee desire to enter into an agreement
providing for the Corporation to retain the services of the Employee.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
SECTION 1. - PARTIES. The Corporation is engaged in the business of
conducting biopharmaceutical and medical device clinical research and data
collection projects. The Corporation hereby agrees to employ, and the Employee
hereby accepts such employment, on the terms set forth in this Agreement.
SECTION 2. - EMPLOYMENT AND DUTIES. During the term of this Agreement,
Employee shall, under the general supervision of the Corporation's Chief
Executive Officer or his assign (the "Chief Executive Officer"), serve as an
executive officer, with a title and specific job description as set forth on
Exhibit A to this Agreement, of the Corporation and its wholly-owned subsidiary,
Data TRAK, Inc., and to provide such additional services for the Corporation as
the Chief Executive Officer may designate. In such capacity, Employee shall
devote his/her skill and experience to serving the interests of the Corporation,
expressly including Data TRAK, Inc. Employee agrees to accept election to and
serve as an Officer of the Corporation and/or Data TRAK, Inc., as designated by
the Board of Directors of each Corporation. The parties hereby acknowledge and
agree that Employee will devote his/her full time and efforts toward the success
of the Corporation, including Data TRAK, Inc., as may be determined by the Chief
Executive Officer.
SECTION 3. - COMPENSATION AND BENEFITS.
3.1 BASE SALARY. During the term of this Agreement, the
Corporation shall pay Employee an annual base salary ("Base Salary") of One
Hundred Fifty Thousand Dollars ($150,000) to be paid in equal installments in
accordance with Data TRAK, Inc.'s customary payroll practices. Increases in
Employee's Base Salary shall be in such amounts as may be determined by the
Corporation's Board of Director's Compensation Committee. Such Base Salary may
be altered from time to time by mutual agreement of the parties evidenced by a
written memorandum executed by the parties, but which shall not affect or vary
the other provisions of this Agreement.
3.2 STOCK OPTION PLAN. Employee shall receive a stock option
plan to receive 30,000 shares (at _____/share) of the Corporation's Common Stock
("stock option") with the execution of this employment agreement. Employee shall
have 10,000 shares vest on each of the
<PAGE> 2
first, second, and third anniversary dates of this Agreement. A separate Stock
Option Agreement shall be executed in parallel with this Agreement.
3.3 BENEFITS. During the term of this Agreement the
Corporation shall provide Employee with such benefits as are currently provided
by the Corporation to its employees, subject to all eligibility requirements.
The Corporation shall have the right periodically to review such benefits and
make such adjustments or modifications as may be necessary at any time during
Employee's employment with the Corporation.
3.4 VACATION. Employee shall be entitled to three (3) weeks
paid vacation during each fiscal year of the Corporation and such additional
time as the Chief Executive Officer approves. Vacations shall be scheduled, and
Employee shall make his request for vacation periods, reasonably in advance.
3.5 EXPENSES. Employee shall be reimbursed for expenses
reasonably incurred in connection with the business of the Corporation and Data
TRAK, Inc., subject to approval of the Chief Executive Officer.
SECTION 4. - TERMINATION.
4.1 DEATH. If Employee dies while employed by Corporation,
his/her employment shall terminate immediately and (a) his/her Base Salary shall
continue through the last day of the month following death, and (b) he/she shall
be entitled to any accrued and unpaid expense reimbursement as of the date of
death. Any payments to be made hereunder by the Corporation after Employee's
death shall be payable to Employee's estate or heirs as Employee may designate.
4.2 DISABILITY. Employee shall be considered absent from
employment because of disability if, as a result of disease, mental or emotional
illness or physical injury, (i) he/she becomes unable or (ii) he/she is deemed
by the Chief Executive Officer, in his judgment reasonably and in good faith
exercised, to have become unable, during the term of this agreement or any
renewal term, to perform the essential functions of Employee's position
hereunder for a period of one hundred twenty (120) days or more, in the
aggregate, during any twelve (12) month period. Notwithstanding the foregoing,
however, the Employee shall not be terminated under this subsection based on any
period of time during which she has taken advantage of the provisions of the
Family and Medical Leave Act. In the event of such termination, Employee shall
be entitled to (a) Base Salary through the date of such termination, and (b) any
accrued and unpaid expense reimbursement as of the date of termination.
4.3 TERMINATION FOR CAUSE. The Corporation may terminate
Employee's employment hereunder at any time during the original term of this
Agreement or any renewal term in the event Employee is convicted of a felony or
if the Chief Executive Officer determines, in his judgment reasonably and in
good faith exercised, that Employee was engaged in: (i) fraud
2
<PAGE> 3
related to his/her duties as an employee or the conviction of the Employee of a
felony against the Corporation (or a written confession thereof given by
Employee); (ii) breach of the material provisions of this Agreement; or (iii) a
willful failure to perform his/her duties as required under this Agreement;
provided however, that in the case of (ii) or (iii) above, the Corporation shall
first give written notice to Employee of such breach or failure to perform and
thereafter Employee shall have a period of not less than thirty (30) days to
cure such breach or to perform. In the event of such termination, Employee shall
be entitled to (a) his/her Base Salary through the date of such termination and
(b) any accrued and unpaid expense reimbursement as of the date of termination.
Any termination under this Section 4.3 shall not affect any vested vacation,
pension or profit sharing benefits or any conversion privileges which Employee
might have under any benefit programs in which he/she is a participant.
4.4 TERMINATION BY EMPLOYEE FOR GOOD REASON. Employee may
terminate his/her employment hereunder for "Good Reason" as hereinafter defined,
by giving written notice to such effect to the Corporation. For these purposes,
Employee shall be deemed to have "Good Reason" for terminating his/her
employment if at any time, (a) the Corporation commits a breach of any material
provision of this Agreement, or (b) except in connection with the termination by
the Corporation of Employee's employment in strict compliance with the terms of
this Agreement, the Board of Directors of the Corporation shall have (i) failed
to elect Employee as an officer of the Corporation or Data TRAK, Inc. or shall
have removed him/her from any of such offices, (ii) failed to vest Employee with
the powers and authority customarily associated with such offices, or (iii) in
any other way significantly diminished Employee's responsibilities, duties,
powers or authority. In the event of any termination under this Section 4.4,
Employee shall be entitled to receive (a) his/her Base Salary through the date
of such termination and for a period of one (1) year following the date of such
termination, and (b) any accrued and unpaid expense reimbursement as of the date
of termination.
4.5 SALE OF THE CORPORATION. If (i) a majority of the
outstanding shares of capital stock of the Corporation entitled to vote are sold
and/or transferred in a single transaction or a series of related transactions
(except with respect to a public offering of the Corporation's shares of capital
stock), (ii) all or substantially all of the assets of the Corporation are sold
and/or transferred (other than to an affiliate of the Corporation) in a single
transaction or a series of related transactions, or (iii) a merger or
consolidation having either of the effects described in clauses (i) or (ii)
above is effected, and Employee's employment is not continued by the purchaser
or successor, Employee shall be entitled to receive (a) his/her Base Salary for
one (1) year following the date of Employee's termination following the sale of
the Corporation, and (b) any accrued and unpaid expense reimbursement as of the
date of termination.
4.6 VOLUNTARY TERMINATION WITHOUT GOOD REASON. Employee may
terminate his/her employment with the Corporation for other than Good Reason at
any time upon at least ninety (90) days advance written notice to such effect to
the Corporation. In the event of such termination, Employee shall be entitled to
receive his/her Base Salary through the date of termination.
3
<PAGE> 4
4.7 TERMINATION BY CORPORATION FOR SUFFICIENT REASON. The
Corporation may terminate Employee's employment hereunder at any time during the
original term of this agreement or any renewal term for Sufficient Reason.
"Sufficient Reason" shall mean the good faith determination by the Chief
Executive Officer that Employee shall have failed (i) to adequately perform
his/her duties as an officer of the Corporation or Data TRAK, Inc. following
sixty (60) days' notice from the Chief Executive Officer of dissatisfaction with
Employee's performance; (ii) to exercise and employ a level of judgment and
skill in the management of the Corporation and the supervision of its employees
commensurate with his/her position and comparable to the judgment and skill
employed by executives of companies of similar size and development, following
sixty (60) days' notice from the Chief Executive Officer of dissatisfaction with
Employee's performance; or (iii) to achieve the business objectives for Employee
or the Corporation mutually established from time to time by the Chief Executive
Officer and Employee (with such business objectives initially being as provided
on Exhibit A attached hereto and made a part hereof). In the event of any
termination under this Section 4.7, Employee shall be entitled to receive (a)
his/her Base Salary through the date of such termination and for a period of one
(1) year following the date of such termination and (b) any accrued and unpaid
expense reimbursement as of the date of termination.
4.8 TERMINATION WITHOUT CAUSE OR SUFFICIENT REASON. The
Corporation may, at any time during the original term of this Agreement or any
renewal term, terminate Employee's employment hereunder, upon not less than
thirty (30) days' notice, without cause or Sufficient Reason. In the event of
any termination under this Section 4.8, Employee shall be entitled to receive
(a) his/her Base Salary through the date of such termination and for a period of
two (2) years following the date of such termination and (b) any accrued and
unpaid expense reimbursement as of the date of termination.
4.9 EFFECT OF TERMINATION. Except for (i) the rights of the
Corporation to enforce the covenants of Employee under Section 6 below, which
covenants shall survive the termination of employment in accordance with the
terms thereof, and (ii) the obligations of the Corporation under this Section 4
and under other benefit plans, policies and programs with respect to which
Employee is a participant, the Corporation will have no further rights or
obligations under this Agreement from and after the termination date of
Employee's employment. Except for (a) Employee's rights under this Section 4 and
Employee's rights to receive all other benefits in accordance with the terms of
the plans, policies and programs providing such benefits, and (b) the covenants
of Employee under Section 6 hereof, which covenants shall survive the
termination of employment in accordance with the terms thereof, Employee will
have no further rights or obligations under this Agreement from and after the
termination date of Employee's employment.
4.10 BINDING ARBITRATION. In the event, upon termination of
Employee's employment, a disagreement exists between Employee and the
Corporation as to which section of this Section 4 governs such termination
(i.e., if the party terminating Employee's employment
4
<PAGE> 5
(the "Terminating Party") claims that "Cause", "Good Reason" or "Sufficient
Reason" or "Disability" exists and the other party (the "Disputing Party")
disputes such claim), the issue of which section should govern such termination
shall be submitted by the parties to binding arbitration in accordance with the
provisions of this Section 4.10. Within thirty (30) days after termination of
Employee's employment the Disputing Party may challenge the claimed basis for
termination by giving written notice (the "Dispute Notice") of such challenge to
the Terminating Party. Within fourteen (14) days after delivery of such Dispute
Notice, the parties shall appoint an independent arbitrator experienced in
employment matters who shall determine which section of this Section 4 applies
to the termination. In the event the parties cannot agree on an arbitrator
within fourteen (14) days after delivery of the Dispute Notice, then each party
shall appoint one arbitrator, and the two arbitrators shall appoint a third
arbitrator. In either case, the determination of the arbitrator or the majority
of the arbitrators, as the case may be, shall be final and binding upon both
Employee and the Corporation. The authority of the arbitrators hereunder shall
be limited to determining which section of this Section 4 governs, and the
arbitrators shall not have authority to reinstate Employee, to alter the amount
of the payment due to Employee under the applicable section of this Section 4,
or to award Employee or the corporation any other amounts by way of damages or
otherwise. Any arbitration hereunder shall be conducted in Cleveland, Ohio in
accordance with the Rules of the American Arbitration Association. In the event
the Disputing party fails to give the Dispute Notice within the thirty (30) day
period provided above, all rights of the Disputing Party to challenge the
claimed basis for termination shall expire.
SECTION 5. - TERM OF EMPLOYMENT. Except as otherwise provided herein,
this Agreement shall become effective on the effective date set forth in Section
3.1, and shall continue for a term of three (3) years. This Agreement shall
renew automatically for successive one (1) year terms unless either party gives
notice of non-renewal at least one hundred twenty (120) days prior to the
commencement of such a renewal term.
SECTION 6. - RESTRICTIVE COVENANTS OF EMPLOYEE.
6.1 NONCOMPETITION. During the period of Employee's employment
by the Corporation and, (i) in the case of the termination of Employee's
employment under either Section 4.3 or 4.6 hereof, for a period of fifteen (15)
months thereafter or (ii) in the case of the termination of Employee's
employment under Section 4.7 hereof, for a period of twelve (12) months
thereafter (the "Noncompetition Period"), Employee shall not, directly or
indirectly, whether as an individual on his own account, or as a shareholder,
partner, joint venturer, director, officer, employee, consultant, creditor
and/or agent or otherwise, in any State of the United States in which the
Corporation now or hereafter conducts business:
(i) enter into or engage in any business including, without
limitation, for a contract research organization (a "CRO"), or
otherwise perform any contract clinical research, which competes with
the business now or hereafter carried on by the Corporation or any
parent or subsidiary of, or entity controlled by the Corporation
5
<PAGE> 6
("Corporation Affiliates");
(ii) solicit customers, business patronage or orders on
behalf of, or perform other services for, any business, including,
without limitation, any CRO, which directly or indirectly competes with
the business of the Corporation or any Corporation Affiliate; or
(iii) promote or assist, financially or otherwise, any person,
firm, association, corporation or other entity, including, without
limitation, any CRO, engaged in the business which competes with the
current or future business of the Corporation or any Corporation
Affiliates;
provided, however, that the foregoing covenant shall not be deemed to have been
violated solely by (a) the ownership of equity securities of any entity which
competes with a future business of the Corporation or any Corporation Affiliate,
to the extent that such securities are acquired prior to the date that the
Corporation or Corporation Affiliate commences such future business; or (b) the
ownership for investment purposes of less than five percent (5%) of the equity
securities of an entity which has equity securities listed on a national
securities exchange or publicly traded in the over-the-counter-market.
6.2 CONFIDENTIALITY AND WORK PRODUCT. Employee acknowledges
that during his/her employment with the Corporation he/she has had and will have
access to confidential information, knowledge, and data regarding the business
of the Corporation and Corporation Affiliates, whether received, acquired or
developed by him/her or otherwise, including, without limitation, trade secrets,
design information, research methods and techniques, scientific data and
formulae, pricing data, customer information and all other information or data
relevant to the business of the Corporation (collectively, except any of the
foregoing which is at the time generally known to the public and which did not
become generally known through the breach of any agreement restricting its
disclosure, "Proprietary Information"). Employee further acknowledges that in
the course of his/her employment he/she may be producing designs, analyses,
recommendations, reports, complications, studies and other worth product,
acquiring information on behalf of the Corporation and any conceive of ideas,
innovations, processes and improvements relating to the business of the
Corporation (collectively, "Work Product"). As to the ownership, disclosure and
use of Proprietary Information and Work Product, Employee agrees that, from and
after the date hereof:
(i) he/she will promptly disclose in writing to the
Corporation all Work Product;
(ii) all Proprietary Information, all Work Product and all
rights therein are and shall be the sole and exclusive property of the
Corporation and all rights or interest of Employee therein are hereby
assigned by Employee to the Corporation, and Employee will cooperate
with and assist the Corporation from time to time, in any manner
6
<PAGE> 7
reasonably requested by the Corporation, in obtaining title or
ownership therein or evidence thereof;
(iii) Employee shall not divulge, disclose or communicate to
any third party in any manner, directly or indirectly, Proprietary
Information or Work Product;
(iv) Employee will not use for his/her own benefit or
purposes or for the benefit or purposes of any third party or permit or
assist, by acquiescence or otherwise, any third party to use in any
manner, directly or indirectly, Proprietary Information or Work
Product;
(v) upon the termination of his/her employment, Employee will
promptly deliver to the Corporation all Proprietary Information and
Work Product, including, without limitation, any reproductions, copies,
abstracts, summaries or other documents or records of Proprietary
Information or Work Product; and
(vi) Following termination of the Noncompetition Period, the
obligations of Employee in this Section 6.2 shall not apply to
Proprietary Information or Work Product of DATA TRAK, INC. as it
existed on the effective date hereof but shall continue for all
Proprietary Information of the Corporation or any Affiliate, whenever
developed, and any Proprietary Information and Work Product of Data
TRAK, Inc. for the period after such effective date.
6.3 NO INTERFERENCE. During the Noncompetition Period,
Employee agrees that he/she shall not:
(i) take any action which would:
(a) interfere with the contractual relationship of
the Corporation, any Corporation Affiliate,
customers, suppliers, employees or other which relate
to the business of the Corporation or any Corporation
Affiliate; or
(b) induce any employee or representative of the
Corporation or any Corporation Affiliate not to
continue as an employee or representative of the
Corporation or any Corporation Affiliate;
(ii) make remarks or take any other action which disparages
or diminishes the reputation of the Corporation or any Corporation
Affiliate;
(iii) without limiting the generality of the foregoing,
without the prior written consent of the Chief Executive Officer,
directly or indirectly employ, whether as an employee, officer,
director, agent, consultant or independent contractor, any person who
was an employee, representative, officer or director of the Corporation
or any
7
<PAGE> 8
Corporation Affiliate at any time during the six-month period prior to
the date of such proposed employment; provided, however, that the
covenants contained in this clause (iii) shall not apply with respect
to such person terminated by action of the Corporation or any
Corporation Affiliate or who has resigned their position with the
Corporation or any Corporation Affiliate.
6.4 INJUNCTIVE RELIEF. Both parties hereto recognize that the
services to be rendered by Employee to the Corporation are special, unique and
of extraordinary character, that the market for the Corporation's services and
products is worldwide, and that if Employee hereafter fails to comply with the
restrictions and obligations imposed upon him/her hereunder, the Corporation may
not have an adequate remedy at law. Accordingly, the Corporation, in addition to
any other rights which it may have, shall be entitled to seek injunctive relief
to enforce such restrictions and obligations without the necessity of posting
any bond.
SECTION 7. - MISCELLANEOUS
7.1 PARTIES BOUND. This Agreement shall be binding upon and be
for the benefit of Corporation and its successors and assigns. It shall be
binding upon and be for the benefit of Employee and his/her personal
representatives, executors, administrators, and heirs, but the right and
responsibility to render services shall be personal to Employee.
7.2 ENTIRE AGREEMENT AND AMENDMENT. This Agreement is the
entire employment agreement between the parties and shall be modified only by
written amendment signed by the party or parties upon whom the amendment imposes
or may impose any additional duties or obligations. Such amendment may be in the
form of minutes of a meeting of the Board of Directors or other document;
provided that such minutes or other document are signed by the Chief Executive
Officer of the Corporation and also signed by Employee if additional obligations
are imposed upon Employee or Employee's compensation or benefits are reduced.
7.3 TAXES. The Corporation shall have the right to withhold
any federal, state and local taxes from any compensation of any nature paid to
Employee.
7.4 APPLICABLE LAW. This Agreement shall be construed and
enforced in accordance with the laws of the State of Ohio.
7.5 CONSTRUCTION. The captions preceding the Sections in this
Agreement have been inserted for convenience only and shall not be used to
modify, expand or construe the provisions of this Agreement.
7.6 SEVERABILITY. In the event any one or more provisions of
this Agreement are deemed by a court of competent jurisdiction to be
unenforceable, such unenforceability shall not affect the other provisions of
this Agreement. It is the intention of the parties that, in the event a court
determines that any provision of this Agreement is unenforceable because it is
8
<PAGE> 9
overbroad as to scope of activity, geographic area or time, such overbroad
provision be reduced to the maximum enforceable scope and thereafter enforced as
so reduced.
7.7 COUNTERPARTS. This Agreement may be executed in one or
more counterparts and each of such counterparts shall for all purposes be deemed
to be an original and all of such counterparts shall for all purposes be deemed
to be an original and all of such counterparts shall constitute one and the same
instrument.
THE BALANCE OF THIS PAGE IS INTENTIONALLY BLANK
9
<PAGE> 10
EXECUTED the 6th day of July, 1997.
COLLABORATIVE CLINICAL RESEARCH, INC.
By: /s/ Jeffrey A. Green
---------------------------------
Jeffrey A. Green, President
"Corporation"
/s/ Patrick Chassaigne
-------------------------------------
Patrick Chassaigne
"Employee"
<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 Nine Months
Ended September 30, Ended September 30,
---------------------------- ----------------------------
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net income (loss) $ (1,462) $ 709 $ (2,367) $ 1,053
============ ============ ============ ============
Weighted average common shares outstanding 6,402 6,271 6,377 4,071
Net effect of dilutive common share options
and dilutive common share warrants - Note A 379 448
----- -----
Shares used in calculation of net income
(loss) per common share 6,402 6,650 6,377 4,519
============ ============ ============ ============
Net income (loss) per common share - Note B $ (0.23) $ 0.11 $ (0.37) $ 0.23
============ ============ ============ ============
</TABLE>
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 - Fully diluted net income (loss) per common share has not been
presented because the effect is either immaterial or
anti-dilutive.
<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
September 30, 1997, and the related condensed consolidated statements of
operations and cash flows for the three-month and the nine-month periods ended
September 30, 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
October 20, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SEPTEMBER
30, 1997 CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 32,541,800
<SECURITIES> 0
<RECEIVABLES> 6,954,265
<ALLOWANCES> 325,625
<INVENTORY> 0
<CURRENT-ASSETS> 40,295,729
<PP&E> 3,405,777
<DEPRECIATION> 857,315
<TOTAL-ASSETS> 50,736,656
<CURRENT-LIABILITIES> 3,375,383
<BONDS> 0
0
0
<COMMON> 49,692,656
<OTHER-SE> (2,331,383)
<TOTAL-LIABILITY-AND-EQUITY> 50,736,656
<SALES> 0
<TOTAL-REVENUES> 12,684,598
<CGS> 0
<TOTAL-COSTS> 9,199,230
<OTHER-EXPENSES> 7,352,170
<LOSS-PROVISION> 72,000
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (2,515,700)
<INCOME-TAX> (148,493)
<INCOME-CONTINUING> (2,367,207)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,367,207)
<EPS-PRIMARY> (.371)
<EPS-DILUTED> (.358)
</TABLE>
