<PAGE> 1
Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Quarterly Period Ended March 31, 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 April 30, 1998
was 6,422,372.
<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, March 31,
1997 1998
----------------- ------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 6,381,512 $ 5,722,973
Short-term investments 27,231,976 27,545,873
Accounts receivable, less allowances 4,497,255 1,635,889
Prepaid expenses 517,510 435,380
----------------- ------------------
Total current assets 38,628,253 35,340,115
Property and equipment, at cost
net of accumulated depreciation and amortization 1,560,851 2,276,503
Goodwill, less accumulated amortization 7,727,014 7,621,504
Other assets 404,520 272,757
----------------- ------------------
Total assets $ 48,320,638 $ 45,510,879
================= ==================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 779,542 $ 602,318
Accrued expenses 4,338,686 5,189,744
Deferred revenue 852,132 983,815
----------------- ------------------
Total current liabilities 5,970,360 6,775,877
Shareholders' equity:
Foreign currency translation ----- (1,714)
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 6,412,872 shares as of
December 31, 1997 and 6,422,372 as of March 31,1998 49,697,057 49,701,821
Retained earnings (accumulated deficit) (7,346,779) (10,965,105)
----------------- ------------------
Total shareholders' equity 42,350,278 38,735,002
----------------- ------------------
Total liabilities and shareholders' equity $ 48,320,638 $ 45,510,879
================= ==================
</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
March 31,
-------------------------------------
1997 1998
---------------- ----------------
<S> <C> <C>
Revenue $ 4,578,284 $ 2,364,283
Direct costs 3,170,807 2,025,077
---------------- ----------------
Gross profit 1,407,477 339,206
Selling, general and administrative expenses 1,978,095 2,657,311
Special items ----- 1,439,762
Depreciation and amortization 226,193 270,590
---------------- ----------------
Loss from operations (796,811) (4,028,457)
Other income (expense):
Interest income 467,769 465,132
Loss from joint venture (54,237) -----
---------------- ----------------
Loss before income taxes (383,279) (3,563,325)
Income tax expense 35,107 55,000
---------------- ----------------
Net loss $ (418,386) $ (3,618,325)
================ ================
Basic and diluted net loss per share $ (0.07) $ (0.56)
================ ================
Weighted average common shares outstanding 6,342,339 6,418,794
================ ================
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE> 4
COLLABORATIVE CLINICAL RESEARCH, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended March 31,
-------------------------------------
1997 1998
---------------- ----------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $ (418,386) $ (3,618,325)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization 226,193 270,590
Other (74,487) (368,119)
Changes in operating assets and liabilities:
Accounts receivable 2,609,582 2,835,364
Accounts payable and accrued expenses (377,852) 673,829
Other (165,640) 173,776
---------------- ----------------
Net cash provided by (used in) operating activities 1,799,410 (32,885)
INVESTING ACTIVITIES
Purchases of property and equipment (132,282) (884,949)
Purchase of businesses (net of cash acquired) (23,623)
Maturities of short term investments 16,315,377 15,970,008
Purchases of short term investments (16,133,738) (15,885,321)
Investment in HRI (25,000) 6,800
---------------- ----------------
Net cash provided by (used in) investing activities 734 (793,462)
FINANCING ACTIVITIES
Repayment of note receivable-officer ----- 165,000
Net proceeds from issuance of common shares 33,775 1,950
---------------- ----------------
Net cash provided by (used in) financing activities 33,775 166,950
Effect of exchange rate on cash ----- 858
---------------- ----------------
Increase (decrease) in cash and cash equivalents 1,833,919 (658,539)
Cash and cash equivalents at beginning of period 5,509,460 6,381,512
---------------- ----------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 7,343,379 $ 5,722,973
================ ================
</TABLE>
See notes to condensed consolidated financial statements.
4
<PAGE> 5
COLLABORATIVE CLINICAL RESEARCH, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 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 month period ended March 31, 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 MARCH 31,
-------------------------------
1997 1998
---- ----
<S> <C> <C>
Net loss used in the calculation of basic and
diluted earnings per share $ (418,386) $ (3,618,325)
========== =============
Denominator for basic net loss per share -
weighted average Common Shares
outstanding 6,342,339 6,418,794
Effect of dilutive Common Share options and
Warrants --- ---
---------- -------------
Denominator for diluted net loss per share 6,342,339 6,418,794
========== =============
Basic net loss per share $ (0.07) $ (0.56)
========== =============
Diluted net loss per share $ (0.07) $ (0.56)
========== =============
</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
MARCH 31, 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.
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
The information set forth and discussed below for the three months ended March
3l, 1998 is derived from the Condensed Consolidated Financial Statements
included elsewhere herein. The financial information set forth and discussed
below is unaudited, but in the opinion of management, reflects all adjustments
(consisting of normal recurring accruals) necessary for a fair presentation of
such information. The Company's results of operations for a particular quarter
may not be indicative of results expected during the other quarters or for the
entire year.
GENERAL
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.
The Company's contracts 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, the Company's 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 April 22, 1998 was $17.1 million, as compared to
backlog of $25.9 million at December 31, 1997. In connection with management's
conservative approach to backlog and the realignment of the Company's business,
a large contract, which has not been performing as expected, together with
several smaller contracts have been removed from backlog. The removal of these
contracts reduced backlog by $16.9 million. This reduction was partially offset
by $10.5 million of new contracts added to backlog since December 31, 1997. 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; however, its future financial performance
continues to depend on its success in bringing in new business and converting
backlog into revenue. To that end, management expects its financial performance
in the first half of 1998 to continue to reflect the weaknesses experienced in
the second half of 1997, but believes the remainder of the year will begin to
evidence a turn-around in the Company's business.
7
<PAGE> 8
RESULTS OF OPERATIONS
Three months ended March 31, 1998 compared with three months ended
March 31, 1997
Revenue for the three months ended March 31, 1998 decreased 47.8% to $2.4
million as compared to $4.6 million in the three month period ended March 31,
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 March 31, 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 1998. The Company's
DataTRAK subsidiary, which began operations in the second half of 1997,
contributed $11,000 of revenue for the three months ended March 31,1998.
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 and the performance
of clinical research, which can be subcontracted to the Affiliated Sites and
other vendors. These costs decreased by $1.2 million, or 37.5%, from $3.2
million to $2.0 million for the three months ended March 31, 1997 and 1998,
respectively. Of the $1.2 million decrease, $1.3 million was due to the drop in
revenue generated by the Clinical division, offset in part by a $100,000
increase in DataTRAK's direct costs. As a percentage of revenue, direct costs
increased from 69.6% during the three months ended March 31, 1997 to 83.3%
during the three months ended March 31, 1998. The increase in direct cost
percentage was the result of the Company's low level of revenue, in both its
Clinical division and DataTRAK subsidiary, and its subsequent inability to
leverage fixed costs.
Selling, general and administrative ("SG&A") expenses include all administrative
personnel costs and business and Affiliated Site development costs. SG&A costs
for the three month period ended March 31, 1998 increased 35.0% to $2.7 million
as compared to $2.0 million during the three months ended March 31, 1997. Of the
$679,000 net increase, approximately $517,000 reflects ongoing expenses incurred
for the development of DataTRAK. SG&A expenses incurred by the Clinical division
increased by $294,000 as a result of the rebuilding of that division's sales and
operating structure. An additional $168,000 of the increase was due to the
reorganization of the Company's corporate administrative staff and to fund
various corporate strategic initiatives. These increases were offset by the
absence of $300,000 of expenses that were incurred during the three months ended
March 31, 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 43.5% to 112.5% for the three months
ended March 31, 1997 and 1998, respectively.
Special items for the three months ended March 31, 1998 were $1.4 million. These
costs were incurred as part of the Company's recently announced reorganization
plan and included costs for employee severance and other special items.
Depreciation and amortization expense increased by $45,000, or 19.9%, from
$226,000 during three months ended March 31, 1997 to 271,000 in the three months
ended March 31, 1998. The increase was a result of the Company's increased
capital expenditures, primarily incurred by its DataTRAK subsidiary, including
the cost, incurred in the first quarter of 1998, to acquire the software now
known as DataTRAK EDC(TM).
Other income increased $51,000 for the three month period ended March 31, 1998
compared to the three months ended March 31, 1997. The increase was primarily
the result of the termination of the Company's HRI joint venture during 1997.
During the three month period ended March 31, 1997, the Company's share of the
loss from this joint venture was $54,000.
8
<PAGE> 9
The Company has operations in several states, each with different tax laws.
Income tax expense at March 31, 1998 represents the Company's state income tax
liability for the three months ended March 31, 1998.
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 $1.6 million at March 31, 1998 and $4.5 million at
December 31, 1997. Deferred revenue was $984,000 at March 31, 1998 and $852,000
at December 31, 1997.
Cash and cash equivalents decreased by $659,000 during the three months ended
March 31, 1998. This was the result of $826,000 being used for operating and
investing activities, offset by $167,000 being provided by 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 $885,000 being
used to purchase fixed assets, primarily for DataTRAK, offset by $85,000
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 disagree on a number of issues concerning the parties' financial
responsibilities in connection with the termination of the alliance, and have
engaged in discussions concerning those matters. To date, those discussions have
not resulted in an acceptable resolution of these issues. The Company does not
believe that it has any continuing financial obligations to IBM Global Services
and, based on information known to date, does not believe that additional
expenditures associated with the termination of this alliance, if any, will have
a material adverse effect on the Company's results of operations and financial
condition.
In January 1998, DataTRAK purchased the EDC software known as OpusTWO from EDS.
The Company will be responsible for funding the future development and testing
of this software, which has been renamed DataTRAK EDC(TM). The Company will
continue to invest in the development of the DataTRAK(R) process.
The Company anticipates that its capital expenditures for the remainder of 1998
will be approximately $1.1 million 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, capital expenditure requirements,
and the development of its DataTRAK(R) process and service business. 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 March 31, 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 July 31, 1998.
9
<PAGE> 10
As the Year 2000 approaches, an issue has emerged regarding how existing
application software and operating systems can accommodate this date value. The
Company is reviewing its systems to determine if any Year 2000 problems may
occur. Management 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
<PAGE> 11
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
On March 7, 1998, an arbitration panel ruled in favor of two
former executive officers of the Company, who claimed that
their employment agreements were violated by the Company.
Under the terms of the employment agreements, each of the
former employees claimed entitlement to an amount equal to one
year's annual salary. The Company is presently exploring its
options with respect to compliance with the arbitrators'
award.
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
None.
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 March 31, 1998 other than the following:
Current Report on Form 8-K, date January 15, 1998, reporting
under item 5 the termination of the Company's technology
alliance with ISSC, a unit of IBM Global Services.
Current Report on Form 8-K, date January 26, 1998, reporting
under item 5 the purchase of OpusTWO software by the Company's
wholly owned subsidiary, DataTRAK, Inc.
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.
<TABLE>
<S> <C>
Collaborative Clinical Research, Inc.
------------------------------------------------------------
Registrant
Date: 5/12/98 /s/ Jeffrey A. Green
----------------------------------- ------------------------------------------------------------
Jeffrey A. Green,
President and Chief Executive Officer and a Director
(Principal Executive Officer)
Date: 5/12/98 /s/ Terry C. Black
----------------------------------- ------------------------------------------------------------
Terry C. Black,
Vice President of Finance, Chief Financial Officer,
Treasurer and Assistant Secretary
(Principal Financial Officer)
</TABLE>
12
<PAGE> 13
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
March 31, 1998, and the related condensed consolidated statements of operations
and cash flows for the three-month periods ended March 31, 1998 and 1997. 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
April 20, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MARCH 31,
1998 CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 33,268,846
<SECURITIES> 0
<RECEIVABLES> 27,881,835
<ALLOWANCES> 335,962
<INVENTORY> 0
<CURRENT-ASSETS> 35,340,115
<PP&E> 3,261,074
<DEPRECIATION> 984,571
<TOTAL-ASSETS> 45,510,879
<CURRENT-LIABILITIES> 6,775,877
<BONDS> 0
0
0
<COMMON> 49,701,821
<OTHER-SE> (10,966,819)
<TOTAL-LIABILITY-AND-EQUITY> 45,510,879
<SALES> 0
<TOTAL-REVENUES> 2,364,283
<CGS> 0
<TOTAL-COSTS> 2,025,077
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