<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, 1998
Commission file number 000-20699
COLLABORATIVE CLINICAL RESEARCH, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Ohio 34-1685364
- -------------------------------------------- --------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
20600 Chagrin Boulevard
Cleveland, Ohio 44122
- -------------------------------------------- --------------------------
(Address of principal executive offices) (Zip Code)
(216) 491-9930
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(Registrants telephone number, including area code)
N/A
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. X Yes No
--- ---
Indicate the number of shares outstanding of each of the issuers classes of
common stock, as of the latest practical date.
The number of Common Shares, without par value, outstanding as of July 31, 1998
was 6,422,872.
<PAGE> 2
PART I. FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
COLLABORATIVE CLINICAL RESEARCH, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(Note A) (Unaudited)
December 31, June 30,
1997 1998
----------------- ------------------
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 6,381,512 $ 3,472,477
Short-term investments 27,231,976 25,043,548
Accounts receivable, less allowances 4,497,255 1,994,526
Prepaid expenses and other current assets 880,500 374,321
----------------- ------------------
Total current assets 38,991,243 30,884,872
Property and equipment, at cost
net of accumulated depreciation and amortization 1,560,851 2,655,141
Goodwill, less accumulated amortization 7,727,014 7,515,995
Other assets 41,530 56,911
----------------- ------------------
Total assets $ 48,320,638 $ 41,112,919
================= ==================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 779,542 $ 635,710
Accrued expenses 4,338,686 3,145,302
Deferred revenue 852,132 820,133
----------------- ------------------
Total current liabilities 5,970,360 4,601,145
Shareholders' equity:
Foreign currency translation ----- (11,589)
Serial preferred shares, without par value, authorized 1,000,000
shares; none issued ----- -----
Common shares, without par value, authorized 15,000,000
shares; issued and outstanding 6,412,872 shares as of
December 31, 1997 and 6,422,872 as of June 30, 1998 49,697,057 49,704,378
Retained earnings (accumulated deficit) (7,346,779) (13,181,015)
----------------- ------------------
Total shareholders' equity 42,350,278 36,511,774
----------------- ------------------
Total liabilities and shareholders' equity $ 48,320,638 $ 41,112,919
================= ==================
</TABLE>
Note A: The balance sheet at December 31, 1997 has been derived from the
audited consolidated financial statements at that date, but does not
include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements.
See notes to condensed consolidated financial statements.
2
<PAGE> 3
COLLABORATIVE CLINICAL RESEARCH, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------------------- -------------------------------
1997 1998 1997 1998
----------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
Revenue $ 4,458,869 $ 2,653,548 $ 9,037,153 $ 5,017,831
Direct costs 3,218,481 2,353,844 6,389,288 4,378,921
----------- ----------- ----------- -----------
Gross profit 1,240,388 299,704 2,647,865 638,910
Selling, general and administrative expenses 2,077,179 2,380,226 4,055,276 5,037,537
Special items ----- 271,425 ----- 1,711,187
Depreciation and amortization 242,212 286,216 468,405 556,806
----------- ----------- ----------- -----------
Loss from operations (1,079,003) (2,638,163) (1,875,816) (6,666,620)
Other income (expense):
Interest income 522,167 447,252 989,936 912,384
Income (loss) from joint venture 6,449 ----- (47,788) -----
----------- ----------- ----------- -----------
Loss before income taxes (550,387) (2,190,911) (933,668) (5,754,236)
Income tax expense (benefit) (63,891) 25,000 (28,786) 80,000
----------- ----------- ----------- -----------
Net loss $ (486,496) $(2,215,911) $ (904,882) $(5,834,236)
=========== =========== =========== ===========
Net loss per share $ (0.08) $ (0.35) $ (0.14) $ (0.91)
=========== =========== =========== ===========
Weighted average common shares outstanding 6,384,362 6,422,685 6,363,466 6,420,750
=========== =========== =========== ===========
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE> 4
COLLABORATIVE CLINICAL RESEARCH, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended June 30,
-------------------------------------
1997 1998
---------------- ----------------
<S> <C> <C>
OPERATING ACTIVITIES
Net loss $ (904,882) $ (5,834,236)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization 468,405 556,806
Special items ----- 1,711,187
Other (416,340) (727,257)
Changes in operating assets and liabilities:
Accounts receivable 2,393,600 2,451,287
Accounts payable and accrued expenses (425,717) (3,061,149)
Other (760,990) 287,031
---------------- ----------------
Net cash provided by (used in) operating activities 354,076 (4,616,331)
INVESTING ACTIVITIES
Purchases of property and equipment (1,190,137) (1,436,867)
Purchase of businesses (net of cash acquired) (7,868) -----
Maturities of short-term investments 29,488,377 34,962,312
Purchases of short-term investments (26,450,951) (31,992,014)
Investment in HRI (79,712) 6,800
---------------- ----------------
Net cash provided by investing activities 1,759,709 1,540,231
FINANCING ACTIVITIES
Repayment of note receivable-officer ----- 165,000
Net proceeds from issuance of common shares 168,925 2,100
---------------- ----------------
Net cash provided by financing activities 168,925 167,100
---------------- ----------------
Effect of exchange rate on cash ----- (35)
---------------- ----------------
Increase (decrease) in cash and cash equivalents 2,282,710 (2,909,035)
Cash and cash equivalents at beginning of period 5,509,460 6,381,512
---------------- ----------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 7,792,170 $ 3,472,477
================ ================
</TABLE>
See notes to condensed consolidated financial statements.
4
<PAGE> 5
COLLABORATIVE CLINICAL RESEARCH, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998
(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, 1998 are not necessarily indicative of the results that may be expected for
the year ended December 31, 1998. 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, 1997 (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. FOREIGN CURRENCY TRANSLATION
The assets and liabilities of the Company's foreign subsidiaries are translated
into U.S. dollars at current exchange rates. Revenue and expense accounts of
these operations are translated at average rates prevailing during the period.
These translation adjustments are accumulated in a separate component of
shareholders' equity. Foreign currency transaction gains and losses are included
in determining net income (loss) for the period in which the exchange rate
changes.
3. NET LOSS PER SHARE
The following table sets forth the computation of basic and diluted earnings per
share.
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
---------------------------------------------------------------------------
1997 1998 1997 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net loss used in the calculation of basic and
diluted loss per share $ (486,496) $ (2,215,911) $ (904,882) $ (5,834,236)
============== ============== ============== ==============
Denominator for basic net loss per share -
weighted average Common Shares
outstanding 6,384,362 6,422,685 6,363,466 6,420,750
Effect of dilutive Common Share options and
warrants --- --- --- ---
-------------- -------------- -------------- --------------
Denominator for diluted net loss per share 6,384,362 6,422,685 6,363,466 6,420,750
============== ============== ============== ==============
Basic net loss per share $ (0.08) $ (0.35) $ (0.14) $ (0.91)
============== ============== ============== ==============
Diluted net loss per share $ (0.08) $ (0.35) $ (0.14) $ (0.91)
============== ============== ============== ==============
</TABLE>
Common Share options were excluded from the computation of diluted earnings per
share due to the Company's net loss. Inclusion of these options in the
computation of diluted earnings per share would have an antidilutive effect on
net loss per share.
5
<PAGE> 6
COLLABORATIVE CLINICAL RESEARCH, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
JUNE 30, 1998
(UNAUDITED)
4. SPECIAL ITEMS
In March 1998, the Company announced a reorganization plan including a reduction
of its personnel. In connection with this plan, the Company recorded a charge of
$1,439,762 in the first quarter of 1998 to recognize costs associated with
employee severance and other special items. In June 1998, an additional special
items charge of $271,425 was recorded related to the closing of the Company's
United Kingdom operations, the termination of a joint venture in the United
Kingdom and other activities.
5. SEGMENT DISCLOSURES AND RELATED INFORMATION
In June 1997, the Financial Accounting Standards Board issued Statement No. 131,
"Disclosures about Segments of an Enterprise and Related Information" ("SFAS No.
131"), which is effective for years beginning after December 15, 1997. SFAS 131
establishes standards for the way that public business enterprises report
information about operating segments in annual financial statements and requires
that those enterprises report selected information about operating segments in
interim financial reports. It also establishes standards for related disclosures
about products and services, geographic areas and major customers. Management
has not completed its review of SFAS 131, but anticipates reporting information
for two segments (Clinical division and DataTRAK, Inc.) for the year ended
December 31, 1998.
6. RECLASSIFICATION
Certain prior year amounts have been reclassified to conform to the current year
reporting presentation.
6
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
GENERAL
Collaborative Clinical Research, Inc. ("Collaborative" or the "Company") is a
multi-specialty Site Management Organization ("SMO"). Collaborative's customers
("Sponsors") are primarily pharmaceutical and biotechnology companies and, to a
lesser extent, contract research organizations ("CRO's"). The Company, through
its Clinical division and its wholly owned subsidiary, DataTRAK, Inc., assists
Sponsors in conducting the clinical research necessary to obtain regulatory
approval for new drugs. Collaborative's Clinical division provides Sponsors with
an innovative, timely, cost effective and low risk means of selecting clinical
research sites and managing clinical trials through its international network of
over 540 affiliated research sites ("Affiliated Sites"). The Clinical division
also conducts clinical research at the Company's three owned research sites.
DataTRAK will provide certain electronic data management services, through its
EDC software and quality review center, to improve quality, efficiency, and
timeliness of the clinical research process.
Through the Clinical division, the Company enters into contracts that provide a
fixed price for each component or service delivered. The ultimate contract value
depends on such variables as the number of research sites selected, patients
enrolled and other services required by the Sponsor. Generally, these contracts
range in duration from several months to several years. As services are
performed over the life of the contract, revenue is earned under the percentage
of completion method utilizing units of delivery. Costs associated with contract
revenue are recognized as incurred. 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 clinical trial costs can include
investigator meeting fees, 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 July 28, 1998 was $18.1 million, as compared to backlog
of $25.9 million at December 31, 1997. The current backlog reflects the addition
of $3.7 million of new backlog in addition to the $10.5 million of new backlog
reported at the end of the first quarter of 1998. The amount of backlog is not
necessarily indicative of the Company's future quarterly or annual revenues. The
Company has taken several steps to reorganize its sales and operating structure
and expects revenue for the second half of 1998 to be stronger than the first
half; however, it does not expect to reach a breakeven during 1998.
RESULTS OF OPERATIONS
Three months ended June 30, 1998 compared with three months ended June
30, 1997
Revenue for the three months ended June 30, 1998 decreased 40.0% to $2.7 million
as compared to $4.5 million in the three month period ended June 30, 1997. The
decrease was the result of a decline in revenue from clinical trials conducted
within the Company's Clinical division, caused by the Clinical division's
inability to attract sufficient new business and convert existing backlog into
revenue during the three months ended June 30, 1998. Management has taken
actions that it believes will result in growth in the Company's level of backlog
and the conversion of backlog into revenue during the remainder of 1998. The
Company's DataTRAK division, which began operations in the second half of 1997,
contributed $67,000 of revenue for the three months ended June 30,1998.
Direct costs include compensation and related fringe benefits for
non-administrative employees (including employees at company-owned research
facilities) and other expenses directly related to contracts, which can be
subcontracted to the Affiliated Sites and other vendors. These costs decreased
by $800,000, or 25.0%, from $3.2 million to $2.4 million for the three months
ended June 30, 1997 and 1998, respectively. As a percentage of revenue, direct
costs increased from 71.1% during the three months ended June 30, 1997 to 88.9%
during the three months ended June 30, 1998. The reduction in gross profit
percentage was the
7
<PAGE> 8
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 ("SG&A") expenses include all administrative
personnel costs, business and Affiliated Site development costs, and all other
expenses not directly chargeable to a specific contract. These costs for the
three month period ended June 30, 1998 increased 14.3% to $2.4 million as
compared to $2.1 million during the three months ended June 30, 1997. The
increase consists of approximately $400,000 of ongoing expenses incurred for the
development of DataTRAK, offset by a $100,000 decrease in SG&A expenses incurred
by the Company's Clinical division. The decrease in the Clinical division's SG&A
expenses is the result of the reorganization of that division during the first
quarter of 1998. As a percentage of revenue, selling, general and administrative
expenses increased from 46.7% to 88.9% for the three months ended June 30, 1997
and 1998, 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.
Special items for the three months ended June 30, 1998 were $271,000. These
costs were related to the closing of the Company's United Kingdom operations,
and the exiting of a joint venture in the United Kingdom and other activities.
Depreciation and amortization expense increased from $242,000 in the three month
period ended June 30, 1997 to $286,000 during the three months ended June 30,
1998. The increase was a result of the Company's increased capital expenditures,
primarily incurred by its DataTRAK division, including the cost to acquire the
software now known as DataTRAK EDC(TM).
Other income decreased $82,000 from $529,000 in the three month period ended
June 30, 1997 to $447,000 in the three month period ended June 30, 1998. This
was primarily the result of a decrease in interest income caused by the
Company's use of cash to fund its operating losses and other working capital
needs.
Six months ended June 30, 1998 compared with six months ended June 30,
1997
Revenue for the six months ended June 30, 1998 decreased 44.4% to $5.0 million
as compared to $9.0 million in the six month period ended June 30, 1997. The
decrease was the result of a decline in revenue from clinical trials conducted
within the Company's Clinical division, caused by the Clinical division's
inability to attract sufficient new business and convert existing backlog into
revenue during the six months ended June 30, 1998. The Company's DataTRAK
division, which began operations in the second half of 1997, contributed $78,000
of revenue for the six months ended June 30, 1998.
Direct costs decreased by $2.0 million, or 31.3%, from $6.4 million to $4.4
million for the six months ended June 30, 1997 and 1998, respectively. As a
percentage of revenue, direct costs increased from 71.1% during the six months
ended June 30, 1997 to 88.0% during the six months ended June 30, 1998. 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 costs for the six month period ended June
30, 1998 increased 24.4% to $5.1 million as compared to $4.1 million during the
six months ended June 30, 1997. Of the $1.0 million increase, approximately
$900,000 reflects ongoing expenses incurred for the development of the DataTRAK
division. SG&A expenses incurred by the Clinical division increased by $220,000
as a result of the rebuilding of that division's sales and operating structure.
An additional $180,000 of the increase was due to the development of the
Company's corporate infrastructure. These increases were offset by the absence
of $300,000 of expenses that were incurred during the six months ended June 30,
1997, as a result of the Company's terminated negotiations to acquire U-Gene
Research BV. As a percentage of revenue, selling, general and administrative
expenses increased from 45.6% to 102.0% for the six months ended June 30, 1997
and 1998, 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
8
<PAGE> 9
operating costs and it was also due in part to the increased costs associated
with the Company's strategic initiatives.
Special items for the six months ended June 30, 1998 were $1.7 million. Of this
total, $1.4 million was incurred as part of the Company's reorganization plan,
announced during the first quarter of 1998, and include costs for employee
severance and other special items. The remaining $300,000 was incurred in June
1998 and related to the closing of the Company's United Kingdom operations, and
the exiting of a joint venture in the United Kingdom and other activities.
Depreciation and amortization expense increased from $468,000 in the six month
period ended June 30, 1997 to $557,000 during the six months ended June 30,
1998. The increase was a result of the Company's increased capital expenditures,
including the cost to acquire the software now known as DataTRAK EDC(TM).
Other income decreased $30,000 for the six month period ended June 30, 1998
compared to the six months ended June 30, 1997. The decrease was primarily the
result of a decrease in interest income caused by the Company's use of cash to
fund its operating losses and other working capital needs. This decrease was
partially offset by the termination of the Company's HRI joint venture during
1997. During the six month period ended June 30, 1997, the Company's share of
the loss from this joint venture was $48,000.
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. Accounts receivable will fluctuate due to
the timing and size of cash receipts. Accounts receivable (net of allowance for
doubtful accounts) was $2.0 million at June 30, 1998 and $4.5 million at
December 31, 1997. Deferred revenue was $820,000 at June 30, 1998 and $850,000
at December 31, 1997.
Cash and cash equivalents decreased by $2.9 million during the six months ended
June 30, 1998. This was the result of $4.6 million being used for operating
activities, offset by $1.7 million being provided by investing and financing
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 used for investing activities resulted from $1.4 million being
used to purchase fixed assets, primarily for DataTRAK, offset by $3.0 million
provided by net maturities of short-term investments. Cash provided by financing
activities was due to the collection of a note receivable from an officer of the
Company.
In January 1998, the Company announced the termination of its technology
alliance agreement with ISSC, a unit of IBM Global Services. The alliance was
formed in June 1996 to develop and market an electronic data collection and
project management system for use in clinical trials. The Company and IBM Global
Services disagreed on a number of issues concerning the parties' financial
responsibilities in connection with the termination of the alliance, and in 1997
the Company recorded a provision for its best estimate of its financial
obligations associated with the resolution of these disagreements. In June 1998,
Collaborative and IBM Global Services resolved these issues, and the provision
was adjusted accordingly.
In January 1998, DataTRAK purchased the EDC software known as OpusTWO from EDS
Germany. The Company will be responsible for funding the market introduction and
future development and testing of this software, which has been renamed DataTRAK
EDC(TM).
The Company anticipates that its capital expenditures for the remainder of 1998
will be approximately $500,000 for its DataTRAK subsidiary and Clinical
division. 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.
9
<PAGE> 10
The Company expects to continue expanding its operations through internal
growth, joint ventures and alliances, and after its turn-around has been
accomplished, through strategic acquisitions. 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.
The Company has a line of credit agreement with a bank, which provides for
borrowings up to $5.0 million and bears interest at rates not to exceed prime
(no amounts are outstanding at June 30, 1998). The Company's accounts receivable
are pledged as collateral on the line of credit. The line of credit agreement
also requires that the Company maintain investments of $2.0 million with the
bank. Of the $5.0 million line of credit, $2.0 million is considered to be
committed and is subject to renewal at January 31, 2000. The $3.0 million
uncommitted amount is subject to renewal at October 29, 1998.
The Company is currently assessing all of its computer systems and related
equipment which may rely on computer technologies to ensure that they are Year
2000 compliant. As a result of this assessment, The Company does not believe it
has any Year 2000 issues that will affect it directly. The Company does not
anticipate incurring any material operating expenses or significant computer
system investments to be Year 2000 compliant. However, Year 2000 issues incurred
by the Company's Affiliated Sites, Sponsors or other vendors and customers could
indirectly affect the Company.
The Company believes that cash generated from operations, maturities of
short-term investments and amounts available under its line of credit will be
sufficient to fund its working capital and capital expenditure requirements for
the foreseeable future. However, selective acquisitions and joint ventures may
play a role in the Company's growth strategy. To the extent that the Company
were 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 and other factors many of which are beyond the Company's control. The
Company's success also depends on the various strategic initiatives that it has
undertaken, all of which are based on assumptions made by the Company concerning
trends in the clinical research market and the health care industry. 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, 1997.
10
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
On June 8, 1998, the Company reached a settlement with its two
former executive officers, who claimed that their employment
agreements were violated by the Company.
Item 2. Changes in Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
At the Annual Meeting of Shareholders held on May 28, 1998
(the "Annual Meeting"), the shareholders voted to elect Seth
B. Harris and Alan G. Walton each to an additional three-year
term as director of the Company.
The following is a summary of the voting:
<TABLE>
<CAPTION>
Votes Seth B. Harris Alan G. Walton
----- -------------- --------------
<S> <C> <C>
For 4,622,045 5,362,931
Withheld 758,379 17,493
</TABLE>
Item 5. Other Information
None.
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
No reports were filed on form 8-K during the three months
ended June 30, 1998.
11
<PAGE> 12
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: 8/12/98 /s/ Jeffrey A. Green
---------------------- ---------------------------------------
Jeffrey A. Green,
President and Chief Executive Officer
and a Director
(Principal Executive Officer)
Date: 8/12/98 /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 (B)
3.2 Third Amended and Restated Code of Regulations (B)
4.1 Specimen Certificate of the Company's Common Shares, without par value (A)
4.2 Credit Agreement between the Company and Key Bank, dated October 1, 1997 (C)
4.3 Second Amended and Restated Registration Agreement, dated July 15,1994,
as amended on June 1, 1995 and February 5, 1996 (A)
15.1 Independent Accountants' Review Report
27.1 Financial Data Schedule
</TABLE>
- --------------------------------------------------------------------------------
(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-Q for the quarterly period ended June 30, 1996
(Commission file No. 000-20699).
(C) Incorporated herein by reference to the appropriate exhibit to the
Company's Form 10-K for the year ended December 31, 1997 (Commission
file No. 000-20699).
E-1
<PAGE> 1
EXHIBIT 15.1
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, 1998, and the related condensed consolidated statements of operations
for the three-month and six-month periods ended June 30, 1998 and 1997, and the
condensed consolidated statements of cash flows for the six-month periods ended
June 30, 1997 and 1998. 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 accompanying 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, 1997, 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 January 30, 1998, 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, 1997 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 20, 1998
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<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM JUNE 30,
1998 CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
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