<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 June 30, 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
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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 July 31, 1997
was 6,401,414.
<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)
June 30, December 31,
1997 1996
------------ ------------
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 7,792,170 $ 5,509,460
Short-term investments 26,659,882 29,173,736
Accounts receivable, less allowances 5,805,192 8,420,539
Taxes receivable 98,996 --
Prepaid expenses 1,050,189 661,292
------------ ------------
Total current assets 41,406,429 43,765,027
Property and equipment, at cost
net of accumulated depreciation and amortization 2,558,279 1,620,781
Goodwill, less accumulated amortization 7,923,982 8,131,875
Other assets 120,361 168,910
------------ ------------
Total assets $ 52,009,051 $ 53,686,593
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,048,753 $ 1,900,060
Accrued expenses 1,561,259 1,306,285
Deferred revenue 578,890 932,460
------------ ------------
Total current liabilities 3,188,902 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 6,401,414 shares as of June 30, 1997 49,689,207 49,511,964
Retained earnings (accumulated deficit) (869,058) 35,824
------------ ------------
Total shareholders' equity 48,820,149 49,547,788
------------ ------------
Total liabilities and shareholders' equity $ 52,009,051 $ 53,686,593
============ ============
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.
</TABLE>
See notes to condensed consolidated financial statements.
2
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<TABLE>
<CAPTION>
COLLABORATIVE CLINICAL RESEARCH, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------- ---------------------------
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenue $ 4,458,869 $ 6,842,221 $ 9,037,153 $ 12,144,437
Direct costs 3,218,481 4,830,545 6,389,288 8,843,152
------------ ------------ ------------ ------------
Gross profit 1,240,388 2,011,676 2,647,865 3,301,285
Selling, general and administrative expenses 2,112,284 1,520,903 4,125,486 2,613,516
Depreciation and amortization 242,212 143,755 468,405 243,193
------------ ------------ ------------ ------------
Income (loss) from operations (1,114,108) 347,018 (1,946,026) 444,576
Other income (expense):
Interest income 522,167 86,624 989,936 104,517
Interest expense -- (57,349) -- (93,616)
Income (loss) from joint venture 6,449 7,219 (47,788) 2,700
------------ ------------ ------------ ------------
Income (loss) before income taxes (585,492) 383,512 (1,003,878) 458,177
Income tax expense (benefit) (98,996) 95,800 (98,996) 114,500
------------ ------------ ------------ ------------
Net income (loss) $ (486,496) $ 287,712 $ (904,882) $ 343,677
============ ============ ============ ============
Net income (loss) per share $ (0.08) $ 0.08 $ (0.14) $ 0.10
============ ============ ============ ============
Weighted average common shares outstanding 6,384,362 3,770,558 6,363,466 3,433,942
============ ============ ============ ============
See notes to condensed consolidated financial statements.
</TABLE>
3
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<TABLE>
<CAPTION>
COLLABORATIVE CLINICAL RESEARCH, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended June 30,
--------------------------------
1997 1996
------------ ------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $ (904,882) $ 343,677
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization 468,405 243,193
Other (416,340) (21,385)
Changes in operating assets and liabilities:
Accounts receivable 2,393,600 (2,258,821)
Accounts payable and accrued expenses (425,717) 397,328
Other (760,990) 259,937
------------ ------------
Net cash provided by (used in) operating activities 354,076 (1,036,071)
INVESTING ACTIVITIES
Purchases of property and equipment (1,190,137) (384,840)
Purchase of businesses (net of cash acquired) (7,868) (4,022,044)
Maturities of short term investments 29,488,377 1,858,178
Purchases of short term investments (26,450,951) (28,715,003)
Investment in HRI (79,712) (27,225)
------------ ------------
Net cash provided by (used in) investing activities 1,759,709 (31,290,934)
FINANCING ACTIVITIES
Borrowings on line of credit -- 1,271,111
Payments on line of credit -- (2,402,520)
Net proceeds from issuance of common shares 168,925 37,713,838
------------ ------------
Net cash provided by financing activities 168,925 36,582,429
------------ ------------
Increase in cash and cash equivalents 2,282,710 4,255,424
Cash and cash equivalents at beginning of period 5,509,460 1,156,925
------------ ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 7,792,170 $ 5,412,349
============ ============
See notes to condensed consolidated financial statements.
</TABLE>
4
<PAGE> 5
COLLABORATIVE CLINICAL RESEARCH, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 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 six month periods ended June
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 June 30, 1997.
5
<PAGE> 6
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 five 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 June 30, 1997 was $24.6 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 June 30, 1997 compared with three months ended June
30, 1996
Revenue for the three months ended June 30, 1997 decreased 33.8% to
$4.5 million as compared to $6.8 million in the three month period ended June
30, 1996. The decrease was the result of a $3.5 million decline in revenue from
clinical trials conducted within the Company's network of Affiliated Sites,
offset by a $1.2 million increase in revenue from acquired operations. The
Company's WCE subsidiary, acquired in October 1996, contributed $1.6 million of
revenue for the three months ended June 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 $1.6 million, or 33.3%, from $4.8 million to $3.2 million for the three
months ended June 30, 1996 and 1997, respectively. As a percentage of revenue,
direct costs increased from 70.6% during the three months ended June 30, 1996 to
71.1% during the three months ended June 30, 1997. The reduction in gross profit
percentage was the result of the Company's low level of revenue and its
inability to leverage its fixed 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.
6
<PAGE> 7
Selling, general and administrative costs for the three month period
ended June 30, 1997 increased 40.0% to $2.1 million as compared to $1.5
million during the three months ended June 30, 1996. Of the $600,000
increase, $316,000 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 $120,000 associated
with DataTRAK(SM). As a percentage of revenue, selling, general and
administrative expenses increased from 22.1% to 46.7% for the three months
ended June 30, 1996 and 1997, respectively. Part of the increase in selling,
general and administrative expenses as a percentage of revenue was the result
of the Company's low level of revenue being unable to absorb its fixed
operating costs.
Depreciation and amortization expense increased from $144,000 in the
three month period ended June 30, 1996 to $242,000 during the three months ended
June 30, 1997. Of the $98,000 increase, $32,000 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.
Other income increased $493,000 from $36,000 in the three month period
ended June 30, 1996 to $529,000 in the three month period ended June 30, 1997.
This was the result of a $436,000 increase in interest income caused by the
investment of funds from the Company's initial public offering in June 1996 and
a $57,000 decrease in interest expense.
As a result of the Company's projected net operating loss for the year
ended December 31, 1997, a $100,000 income tax benefit has been recorded at June
30, 1997. This benefit represents approximately half of the benefit the Company
expects to receive from its net operating loss carryback for federal income tax
purposes.
Six months ended June 30, 1997 compared with six months ended June 30,
1996
Revenue for the six months ended June 30, 1997 decreased 25.6% to $9.0
million as compared to $12.1 million in the six month period ended June 30,
1996. The decrease was the result of a $5.9 million decrease in revenue from
clinical trials conducted within the Company's network of Affiliated Sites. The
decrease was offset by the $2.8 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 $2.4 million, or 27.3%, from $8.8 million to
$6.4 million for the six months ended June 30, 1996 and 1997, respectively. As a
percentage of revenue, direct costs decreased from 72.7% during the six months
ended June 30, 1996 to 71.1% during the six months ended June 30, 1997. The
increase in gross profit as a percentage of revenue reflects the higher margins
associated with WCE's operations, offset in part by the Affiliated Network and
other acquired research facilities inability to leverage fixed costs due to
their low levels of revenue.
Selling, general and administrative costs for the six month period
ended June 30, 1997 increased 57.7% to $4.1 million as compared to $2.6 million
during the six months ended June 30, 1996. Of the $1.5 million increase,
approximately $300,000 reflects expenses related to the terminated negotiations
for a potential acquisition, $495,000 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 $120,000
associated with DataTRAK. As a percentage of revenue, selling, general and
administrative expenses increased from 21.5% to 45.6% for the six months ended
June 30, 1996 and 1997, respectively. Part of the increase in selling, general
and administrative expenses as a percentage of revenue was the result of the
Company's low level of revenue being unable to absorb its fixed operating costs
and it was also due in part to the increased costs associated with the Company's
strategic initiatives.
7
<PAGE> 8
Depreciation and amortization expense increased from $243,000 in the
six month period ended June 30, 1996 to $468,000 during the six months ended
June 30, 1997. Of the $225,000 increase, $22,000 resulted from the acquisition
of WCE's assets, $92,000 was the result of amortization of goodwill due to the
Company's acquisitions and $111,000 was due to the Company's increased capital
expenditures.
Other income increased $928,000 from $14,000 in the six month period
ended June 30, 1996 to $942,000 in the six month period ended June 30, 1997.
This was the result of a $885,000 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 $51,000 increase in
the Company's share of Health Research Innovations, L.L.C's ("HRI") net loss for
the six months ended June 30, 1997. The Company's share of HRI's net losses for
the six month period ended June 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 $5.8 million at June 30, 1997 and $8.4 million at
December 31, 1996. Deferred revenue was $579,000 at June 30, 1997 and $932,000
at December 31, 1996.
Cash and cash equivalents increased $2.3 million during the six months
ended June 30, 1997. This was the result of $400,000 of cash provided by
operating activities, $1.7 million of cash provided by investing activities, and
$200,000 of cash from financing activities. Operating activities provided cash
through the collection of accounts receivable, less the amounts required to fund
working capital needs. Cash provided by investing activities resulted primarily
from the maturities of short-term investments less the new investments made, and
was offset by the purchases of property and equipment. The exercise of stock
options was the source of funds from financing activities.
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. 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.
8
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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 June 30, 1997. The line of credit has
been extended to October 29, 1997, and is currently being reviewed by the bank
for a two year renewal.
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.
9
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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
10
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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.
<TABLE>
<CAPTION>
Collaborative Clinical Research, Inc.
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Registrant
<S> <C>
Date: August 12, 1997 /s/ Jeffrey A. Green
----------------------------- --------------------------------------------------------
Jeffrey A. Green,
President and Chief Executive Officer and a Director
(Principal Executive Officer)
Date: August 12, 1997 /s/ Terry C. Black
----------------------------- --------------------------------------------------------
Terry C. Black,
Vice President of Finance, Chief Financial Officer,
Treasurer and Assistant Secretary
(Principal Financial Officer)
</TABLE>
11
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<TABLE>
<CAPTION>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION PAGE
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<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
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<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE
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<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)
10.19 Employment Agreement between the Company and Philip A. Stark, dated May 2, 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 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 10.19
AGREEMENT
---------
THIS AGREEMENT is made and effective as of this 2nd day of May
1997, by and between COLLABORATIVE CLINICAL RESEARCH, INC., an Ohio corporation
(the "Company"), and PHILIP A. STARK (the "Employee").
WITNESSETH:
-----------
WHEREAS, the Employee wishes to become employed by the
Company; and
WHEREAS, the Company desires to employ Employee consistent
with the terms of this Agreement, and to ensure, to the extent possible, that
certain knowledge gained by the Employee in association with his employment with
the Company is not used to the detriment of the Company; and
WHEREAS, the Employee and the Company desire to enter into an
agreement expressly indicating the terms and conditions of their relationship;
NOW, THEREFORE, in consideration of the mutual promises and
covenants contained herein, the Company and the Employee agree as follows:
1. DUTIES. The Company shall employ Employee in the position
of Vice President Corporate Development. Employee shall report to the Chief
Executive Officer or Chief Operating Officer, if any, and shall be generally
responsible for developing and implementing a process for negotiating and
closing merger and acquisition transactions, working to negotiate and close such
transactions, and such other services as the Chief Executive Officer or Chief
Operating Officer, if any, may designate. Employee's specific job duties shall
include, but not be limited to, the duties detailed in the Company Job
Description attached to this Agreement as Exhibit A. The Company may change
Employee's position and duties from time to time in its absolute discretion,
provided that Employee shall at all times be a management executive of the
Company. During the course of his employment, Employee will devote his full time
and efforts toward the success of the Company, and devote his skill and
experience to serving the interests of the Company.
2. COMPENSATION AND BENEFITS.
(a) BASE SALARY. During the first year of the Term
of this Agreement, as defined in Section 5 of this Agreement, the Company will
pay Employee for his performance of the duties specified herein at an initial
base salary of One Hundred Sixteen Thousand Dollars ($116,000.00) per year to be
paid in equal installments in accordance with the Company's customary payroll
practices, minus appropriate withholdings and deductions. For each year
thereafter, Employee's Base Salary will be One Hundred Thirty Two Thousand
Dollars ($132,000) (the "Base Salary"). Both parties agree that the above
reference to an "annual base salary" does not in any way guarantee and/or add to
the express length of employment of Employee.
1
<PAGE> 2
(b) STOCK OPTION PLAN.
(i) Pursuant to the Company's Amended and Restated 1996
Key Employees and Consultants Stock Option Plan (the "Plan"), upon the
commencement of Employee's employment with the Company, Employee shall receive
options (the "Stock Options") to purchase an aggregate of 40,000 Common Shares,
without par value, of the Company at a per share exercise price equal to the
closing price of the Company's Common Shares as reflected on the Nasdaq National
Market on the date of grant. All such stock options shall be incentive stock
options within the meaning of Section 422 of the Internal Revenue Code.
(ii) Except as stated in Sections 2(b)(ii)a and 2(b)(ii)b
below, the Stock Options will vest in 25% increments annually beginning on the
first anniversary of the date of grant:
a. In the event of a "change of control," as that
term is defined in Section 7(d) of the Plan, all previously unvested Stock
Options outstanding will become immediately vested and exercisable; and
b. Except as provided in Sections 4.5 and 4.8 of this
Agreement, and as set forth in the Stock Option Agreement referenced in Section
2(b)(iii) of this Agreement, in the event and upon the date that Employee ceases
to be an employee of the Company or its subsidiaries, all unvested Stock Options
outstanding will terminate, and Employee will have no rights to exercise all or
any portion of any unvested Stock Options.
(iii) All other terms of the Stock Options granted hereby
shall be set forth in the Stock Option Agreement to be executed by the
parties, a form of which is attached hereto as Exhibit B.
(c) BONUS. In addition to the salary specified in Section 2(a)
for the first year of the Term of this Agreement, on the first anniversary of
this Agreement, Employee shall be paid in cash a bonus of Sixteen Thousand
Dollars ($16,000.00). For each year thereafter, the Company may pay Employee
additional compensation in the form of a discretionary bonus. The bonus
structure is open-ended and the bonus amount in any given year is determined
from time to time by the Compensation Committee of the Company's Board of
Directors. The bonus may be payable in cash, equity securities of the Company,
stock options (or other similar awards), or in any combination thereof, as the
Compensation Committee may from time to time determine.
(d) BENEFITS. During the Term of this Agreement, the Company
shall provide Employee with such benefits as are provided for its other
management executives and/or employees, subject to all eligibility requirements,
including health insurance under the Company's regular group policy and
participation in any pension and profit-sharing plans which may be established.
The Company 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 Company.
2
<PAGE> 3
(e) EXPENSES. During the Term of this Agreement, Employee
shall be reimbursed for expenses reasonably incurred in connection with the
business of the Company, subject to approval of the Chief Executive Officer or
Chief Operating Officer, if any.
(f) COMPENSATION REVIEW. The Compensation Committee of the
Company's Board of Directors shall annually review Employee's compensation
hereunder, and may change Employee's Base Salary in its absolute discretion,
provided that Employee's Base Salary shall not be decreased other than in
connection with a decrease in the base salaries of the management executives of
the Company generally.
3. VACATIONS. Employee shall earn and be entitled to paid vacation
during each fiscal year of the Company and such additional time as the Chief
Executive Officer or Chief Operating Officer, if any, approves. The amount of
paid vacation will be as outlined in the Company's Employee Handbook. Vacations
shall be scheduled, and Employee shall make his request for vacation periods,
reasonably in advance. Vacation time accrued in any fiscal year but not taken in
that year shall carry over as provided in the Company's Employee Handbook.
4. TERMINATION.
4.1 DEATH. If Employee dies while employed by the Company, his
employment shall terminate immediately and (a) his Base Salary shall continue
through the last day of the month following death, (b) he shall be entitled to a
bonus, if any is determined to be paid under Section 2(c) for such year, pro
rated to the last day of the month following death based upon the actual bonus
which would have been earned for the entire year, and (c) he shall be entitled
to any accrued and unpaid expense reimbursement as of the date of death. Any
payments to be made hereunder by the Company 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 becomes unable or (ii) he is deemed by the
Chief Executive Officer, or Chief Operating Officer, if any, with the approval
of the Chief Executive Officer, in his judgment reasonably and in good faith
exercised, to have become unable, during the Term of this Agreement, to perform
the essential functions of his 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 he 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) his Base Salary
through the date of such termination, (b) a bonus, if any is determined to be
paid under Section 2(c) for such year, pro rated to the date of such
termination, based upon the actual bonus which would have been earned for the
entire year, and (c) any accrued and unpaid expense reimbursement as of the date
of termination.
4.3 TERMINATION FOR CAUSE. The Company may terminate
Employee's employment hereunder at any time during the Term of this Agreement in
the event Employee is convicted of a felony or if the Chief Executive Officer,
or Chief Operating Officer, if any, with the approval of the Chief Executive
Officer, determines, in his judgment reasonably and in good faith exercised,
that Employee was engaged in: (i) fraud; (ii) breach of the material provisions
of this Agreement; or (iii) a willful failure to perform his duties as required
under this
3
<PAGE> 4
Agreement; provided, however, that in the case of (ii) or (iii) above, the
Company 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 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 is a
participant.
4.4 TERMINATION BY EMPLOYEE FOR GOOD REASON. Employee may
terminate his employment hereunder for "Good Reason" as hereinafter defined, by
giving written notice to such effect to the Company. For these purposes,
Employee shall be deemed to have "Good Reason" for terminating his employment if
at any time, (a) the Company commits a breach of any material provision of this
Agreement or (b) except in connection with the termination by the Company of
Employee's employment in strict compliance with the terms of this Agreement, the
Company shall have (i) failed to employ Employee as a management executive of
the Company, or (ii) failed to vest Employee with the powers and authority
customarily associated with management executives of the Company. In the event
of any termination under this Section 4.4, Employee shall be entitled to receive
(a) his 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 COMPANY. If (i) a majority of the outstanding
shares of capital stock of the Company entitled to vote are sold and/or
transferred in a single transaction or a series of related transactions (other
than a merger in which the holders of common stock of all classes of the Company
immediately prior to the merger would have the same proportion of ownership of
common stock of the surviving corporation immediately after the merger), (ii)
all or substantially all of the assets of the Company are sold and/or
transferred 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 regardless of whether Employee's
employment is or is not continued by the purchaser or successor, Employee shall
be entitled to receive (a) on or about the date of closing of such transaction,
a payment equal to three times his then-current annual Base Salary, provided
that the annual Base Salary for such calculation shall not be lower than
$132,000, and (b) all previously unvested stock options held by Employee shall
be fully and immediately vested prior to such closing, such that Employee shall
have the opportunity to participate ratably as a stockholder in any such
transaction.
The salary multiplier set forth in this Section 4.5 shall be
reduced to reflect stock options granted to Employee in the ordinary course of
the Company's business prior to the date of the sale of the Company, such that
after a total of 55,000 stock options have been granted to Employee (i.e., an
additional 15,000 stock options), the salary multiplier shall be reduced to two
times, and after a total of 70,000 stock options have been granted to Employee
(i.e., an additional 30,000 stock options), the salary multiplier shall be
reduced to one times his then-current annual Base Salary.
The parties acknowledge and agree that in the event of a sale
of the Company as described in this Section 4.5, Employee shall be entitled only
to those payments set forth in this
4
<PAGE> 5
Section 4.5 of this Agreement, and shall not be entitled to any of the payments
described in any other provision of this Section 4 of this Agreement.
4.6 VOLUNTARY TERMINATION WITHOUT GOOD REASON. Employee may
terminate his employment with the Company for other than Good Reason at any time
after the first anniversary of this Agreement upon at least ninety (90) days
advance written notice to such effect to the Company. In the event of such
termination, Employee shall be entitled to receive his Base Salary through the
date of termination, although the Company may terminate Employee's services at
any time after Employee provides the advance written notice required by this
Section 4.6, in which case Employee shall be entitled to receive his Base Salary
through the end of the notice period.
4.7 TERMINATION BY COMPANY FOR SUFFICIENT REASON. The Company
may terminate Employee's employment hereunder at any time during the Term of
this Agreement for Sufficient Reason. "Sufficient Reason" shall mean the good
faith determination by the Chief Executive Officer, or Chief Operating Officer,
if any, with the approval of the Chief Executive Officer, that Employee shall
have failed (i) to adequately perform his duties as an officer of the Company,
following sixty (60) days' notice from the Chief Executive Officer, or Chief
Operating Officer, if any, with the approval of 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 Company and the supervision of
its employees commensurate with his 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, or Chief
Operating Officer, if any, with the approval of the Chief Executive Officer, of
dissatisfaction with Employee's performance or (iii) to achieve the business
objectives for Employee or the Company mutually established from time to time by
the Chief Executive Officer or Chief Operating Officer, if any, with the
approval of the Chief Executive Officer, and Employee (with such business
objectives initially being provided in the Company Job Description attached
hereto as Exhibit A). In the event of any termination under this Section 4.7,
Employee shall be entitled to receive (a) his Base Salary through 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
Company may, at any time during the Term of this Agreement, 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 Base Salary through the date of
such termination and for a period of two (2) years following the date of such
termination, (b) full and immediate vesting of all previously unvested stock
options, and (c) any accrued and unpaid expense reimbursement as of the date of
termination.
4.9 EFFECT OF TERMINATION. Except for (i) the rights of the
Company to enforce the covenants of Employee under Section 8 below, which
covenants shall survive the termination of employment in accordance with the
terms thereof, and (ii) the obligations of the Company under this Section 4,
under the Plan (and any Stock Option Agreement entered into by the Company and
Employee pursuant thereto), and under other benefit plans, policies and programs
with respect to which Employee is a participant, the Company 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
5
<PAGE> 6
providing such benefits, and (b) the covenants of Employee under Section 8
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 Company as
to which section of this Section 4 governs such termination (i.e., if the party
terminating Employee's employment (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 provision
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 Company. The authority of the
arbitrators hereunder shall be limited to determining which provision 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 provision of this Section 4, or to award Employee or the Company 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 bases for termination shall expire.
5. TERM OF THIS AGREEMENT. Except as otherwise provided
herein, this Agreement shall commence on the date hereof, and shall continue for
a period of four (4) years. This Agreement shall automatically renew for
successive additional 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 renewal term.
6. NONDISCLOSURE. Employee agrees and understands that he will
be exposed to and given information regarding the confidential and proprietary
trade secrets and processes of the Company. Therefore, Employee covenants and
agrees that he shall, at all times, hold in strictest confidence, and will not
directly or indirectly reveal or otherwise make available to any other person,
except in the ordinary course of performing his duties as an employee of the
Company, any and all confidential information, data, know-how, knowledge, or
trade secrets regarding products, services, technology, business, suppliers,
customers or methods of operation of the Company and its customers without the
express written consent of the Company. Such confidential information includes,
without limitation, financial information, sales and distribution information,
price lists, the identity and lists of actual and potential customers and
technical information. Employee further agrees that all documents, records,
notebooks, notes, computer software systems or programs, memoranda, blueprints,
drawings, schematics and other materials made or compiled by Employee at any
time or made available to him during his
6
<PAGE> 7
employment with the Company concerning the present or prospective activities of
the Company (including copies thereof), whether or not intermingled with other
information, shall be and remain the property of the Company and shall be
delivered to the Chief Executive Officer or Chief Operating Officer, if any,
upon termination of his employment with the Company and upon request by the
Company at any other time.
7. NONINTERFERENCE. Employee covenants and agrees that he
shall not, at any time, without the prior written consent of the Company,
directly or indirectly induce or attempt to induce any employee, agent, or other
representative or associate of the Company to terminate its relationship with
the Company, or in any way directly or indirectly interfere with such a
relationship or any relationship between the Company, and any of its suppliers,
customers or clients.
8. NONCOMPETITION. Employee covenants and agrees that during
the entire period he is employed by the Company, and for a period of two (2)
years following his cessation of employment with the Company, Employee shall
not, without the prior written consent of the Company, accept employment with or
directly or indirectly operate or perform any services for, invest in (other
than stock in a publicly-held Company which is traded on a recognized securities
exchange or over-the-counter, provided that the ownership of such equity
interest does not give Employee greater than one percent (1%) of the equity or
voting power of such Company), or otherwise become associated with in any
capacity, any company, partnership, organization, proprietorship, Contract
Research Organization, or other entity engaged in (a) the performance of
contract clinical research, or (b) the maintenance, administration, development,
and/or start-up of a clinical research network, or (c) any other business which
competes with the then-current or future business of the Company, within those
geographical areas in which the Company then conducts its business.
Notwithstanding the foregoing provisions of this Section 8 to
the contrary, Employee shall not be prohibited from performing services as an
investment banker or an investor relations consultant, without regard to the
clientele served by Employee in such capacity. Employee acknowledges that the
restrictions on his activities under Sections 6 and 7 of this Agreement shall
remain in force in the event he performs services as an investment banker or
investor relations consultant as permitted herein.
9. REPRESENTATIONS OF EMPLOYEE. Employee represents and
warrants to the Company that he has the capacity to enter into this Agreement
that he is not a party to any agreement, arrangement or other understanding with
any person or entity which might affect, restrain or conflict with the
provisions of this Agreement.
10. REMEDY FOR CERTAIN BREACHES. Employee acknowledges that
the restrictions on his activities under Sections 6, 7, and 8 hereof are
required for the reasonable protection of the Company. Employee further
acknowledges and agrees that a breach of such obligations and agreements will
result in irreparable and continuing damage to the Company and its business for
which there will be no adequate remedy at law and agrees that in the event of
any breach of said obligations and agreements, the Company, and its successors
and assigns, shall be entitled to temporary and permanent injunctive relief and
to such other further relief, including damages, as is proper in the
circumstance.
7
<PAGE> 8
11. REFORMATION OF AGREEMENT; SEVERABILITY. In the event that
any of Sections 6, 7, and 8 shall be found by a court of competent jurisdiction
to be invalid or unenforceable as against public policy, such court may exercise
its discretion in reforming such provisions to the end that Employee shall be
subject to nondisclosure, noninterference, and noncompetition covenants that are
reasonable under the circumstances and enforceable by the Company. In the event
that any other provision or term of this Agreement is found to be void or
unenforceable to any extent for any reason, it is the agreed-upon intent of the
parties hereto that all remaining provisions or terms of the Agreement shall
remain in full force and effect to the maximum extent permitted and that the
Agreement shall be enforceable as if such void or unenforceable provision or
term had never been a part hereof.
12. ASSIGNMENT. This Agreement shall inure to the benefit of,
and shall be binding upon, the Company, its successors and assigns. Employee
shall not assign this Agreement without the prior written consent of the
Company.
13. NOTICE. Any notice required to be given under the terms of
this Agreement shall be in writing, and mailed to the recipient's last known
address or delivered in person. If sent by registered or certified mail, such
notice shall be effective when mailed; otherwise, it shall be effective upon
delivery.
14. ENTIRE AGREEMENT; AMENDMENTS; WAIVERS. This Agreement
contains the entire agreement between the parties hereto with respect to the
subject matter hereof and replaces or supersedes any previous agreement on such
subject matter. It may not be changed orally, but only by agreement, in writing,
signed by each of the parties hereto. The terms or covenants of this Agreement
may be waived only by a written instrument specifically referring to this
Agreement, executed by the party waiving compliance. The failure of either party
at any time, or from time to time, to require performance of any of the other
party's obligations under this Agreement shall in no manner affect such first
party's right to enforce any provisions of this Agreement at a subsequent time;
and the waiver by either party of any right arising out of any breach hereof by
the other party shall not be construed as a waiver of any right arising out of
any subsequent breach.
15. COUNTERPARTS. This Agreement may be executed in multiple
counterparts each of which shall be deemed an original but all of which together
shall constitute one and the same document.
16. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Ohio without giving effect
to the conflict of law provisions thereof.
8
<PAGE> 9
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
COLLABORATIVE CLINICAL RESEARCH, INC.
"The Company"
By: /s/ Jeffrey A. Green
-----------------------------------------
Title: President and Chief Executive Officer
--------------------------------------------
/S/ Philip A. Stark
--------------------------------------------
Philip A. Stark
"Employee"
9
<PAGE> 1
EXHIBIT 11
<TABLE>
<CAPTION>
COLLABORATIVE CLINICAL RESEARCH, INC. AND SUBSIDIARIES
STATEMENT REGARDING COMPUTATION
OF NET INCOME (LOSS) PER SHARE
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Three Months Six Months
Ended June 30, Ended June 30,
----------------- -----------------
1997 1996 1997 1996
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net income (loss) $ (487) $ 288 $ (905) $ 344
======= ======= ======= =======
Weighted average common shares outstanding 6,384 3,306 6,363 2,960
Net effect of dilutive common share options
and dilutive common share warrants - Note A -- 465 -- 474
Shares used in calculation of net income
------- ------- ------- -------
(loss) per common share 6,384 3,771 6,363 3,434
======= ======= ======= =======
Net income (loss) per common share - Note B $ (0.08) $ 0.08 $ (0.14) $ 0.10
======= ======= ======= =======
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.
</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
June 30, 1997, and the related condensed consolidated statements of operations
and cash flows for the three-month and the six-month periods ended June 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
July 23, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM JUNE 30,
1997 CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 34,452,052
<SECURITIES> 0
<RECEIVABLES> 6,116,692
<ALLOWANCES> 311,500
<INVENTORY> 0
<CURRENT-ASSETS> 41,406,429
<PP&E> 3,269,124
<DEPRECIATION> 710,845
<TOTAL-ASSETS> 52,009,051
<CURRENT-LIABILITIES> 3,188,902
<BONDS> 0
<COMMON> 49,689,207
0
0
<OTHER-SE> (869,058)
<TOTAL-LIABILITY-AND-EQUITY> 52,009,051
<SALES> 0
<TOTAL-REVENUES> 9,037,153
<CGS> 0
<TOTAL-COSTS> 6,389,288
<OTHER-EXPENSES> 4,545,891
<LOSS-PROVISION> 48,000
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,003,878)
<INCOME-TAX> (98,996)
<INCOME-CONTINUING> (904,882)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (904,882)
<EPS-PRIMARY> (0.142)
<EPS-DILUTED> (0.137)
</TABLE>
