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U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-QSB
(Mark One)
[X] Quarterly report under Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the quarterly period ended September 30, 1998
[ ] Transition report under Section 13 or 15(d) of the Securities Exchange Act
of 1934
Commission File No. 0-21721
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CLINICOR, INC.
(Name of Small Business Issuer as Specified in Its Charter)
NEVADA 88-0309093
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1717 WEST SIXTH STREET, SUITE 400, AUSTIN, TEXAS 78703
(Address of Principal Executive Offices) (Zip Code)
(512) 344-3300
(Issuer's Telephone Number, Including Area Code)
--------------------
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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. Yes X No
--- ---
As of November 10, 1998, 4,169,734 shares of the Issuer's Common Stock, $.001
par value, were outstanding.
Transitional Small Business Disclosure Format (check one): Yes No X
--- ---
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TABLE OF CONTENTS
Page
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PART I
FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Condensed Balance Sheets - September 30, 1998 and December 31, 1997 3
Condensed Statements of Operations - three and nine months ended
September 30, 1998 and 1997 4
Condensed Statements of Cash Flows - nine months ended September
30, 1998 and 1997 5
Notes to Condensed Financial Statements 6
Item 2. Management's Discussion and Analysis of Results of Operations
and Financial Condition 7
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 15
2
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PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Clinicor, Inc.
Balance Sheet
===============================================================================
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
(Unaudited) (Note A)
----------- -----------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 2,122,045 $ 3,255,182
Accounts receivable, net 2,130,022 2,472,928
Prepaid and other current assets 216,408 129,823
----------- -----------
Total current assets 4,468,475 5,857,933
Property and equipment, net 987,822 1,029,122
----------- -----------
Total assets $ 5,456,297 $ 6,887,055
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of obligations under capital leases $ 45,431 $ 45,929
Accounts payable and accrued liabilities 851,796 991,002
Dividends payable 183,613 61,955
Line of credit 782,336 --
Deferred revenue 758,912 1,053,150
----------- -----------
Total current liabilities 2,622,088 2,152,036
Obligations under capital leases, less current portion 285,272 68,173
----------- -----------
Total liabilities 2,907,360 2,220,209
Shareholders' equity:
Class A convertible preferred stock, no par value, 5,181 shares authorized,
4,087 and 3,930 shares issued and outstanding, respectively 4,087,000 3,930,000
Class B convertible preferred stock, no par value, 50,000 shares authorized,
issued and outstanding 5,000,000 5,000,000
Common stock, $0.001 par value, 75,000,000 shares authorized,
4,169,734 and 4,086,400 shares issued and outstanding, respectively 4,170 4,086
Additional paid-in capital 951,795 1,875,536
Deferred compensation (27,745) (66,892)
Accumulated deficit (7,466,283) (6,075,884)
----------- -----------
Total shareholders' equity 2,548,937 4,666,846
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 5,456,297 $ 6,887,055
=========== ===========
</TABLE>
Note A: The balance sheet at December 31, 1997 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.
The accompanying notes are an integral part of these financial statements.
3
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CLINICOR, INC.
STATEMENT OF OPERATIONS
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<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30 NINE MONTHS ENDED SEPTEMBER 30
------------------------------- -------------------------------
1998 1997 1998 1997
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Service revenue:
Gross revenue $ 2,374,007 $ 2,837,949 $ 8,565,452 $ 8,234,840
Reimbursable costs 800,135 975,294 2,745,404 3,058,130
------------- ------------- ------------- -------------
Net service revenue 1,573,872 1,862,655 5,820,048 5,176,710
------------- ------------- ------------- -------------
Operating costs and expenses:
Direct costs 1,236,629 1,430,288 4,478,488 3,615,620
Selling, general and administrative 794,648 798,090 2,449,117 2,522,425
Depreciation and amortization 107,063 118,300 320,876 362,659
------------- ------------- ------------- -------------
Total operating costs and expenses 2,138,340 2,346,678 7,248,481 6,500,704
------------- ------------- ------------- -------------
Loss from operations (564,468) (484,023) (1,428,433) (1,323,994)
Other income and expenses:
Interest income 33,637 15 109,242 20,746
Interest expense 29,638 167,289 71,210 198,793
------------- ------------- ------------- -------------
Other income and expenses 3,999 (167,274) 38,032 (178,047)
------------- ------------- ------------- -------------
NET LOSS $ (560,469) $ (651,297) $ (1,390,401) $ (1,502,041)
============= ============= ============= =============
Net loss $ (560,469) $ (651,297) $ (1,390,401) $ (1,502,041)
Preferred stock dividends (233,113) (77,496) (690,325) (222,754)
------------- ------------- ------------- -------------
Net loss applicable to common stock $ (793,582) $ (728,793) $ (2,080,726) $ (1,724,795)
============= ============= ============= =============
NET LOSS APPLICABLE TO COMMON
STOCK PER SHARE $ (0.19) $ (0.18) $ (0.50) $ (0.42)
============= ============= ============= =============
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES EQUIVALENT OUTSTANDING 4,169,734 4,086,400 4,144,367 4,086,400
============= ============= ============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
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CLINICOR, INC.
STATEMENT OF CASH FLOWS
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<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
----------------------------------
1998 1997
(UNAUDITED) (UNAUDITED)
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<S> <C> <C>
OPERATING ACTIVITIES:
Net loss $ (1,390,401) $ (1,502,041)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation and amortization 320,876 362,659
Noncash stock option compensation expense (235,859) 118,431
Accretion of debt discount -- 90,000
Net changes in assets and liabilities:
Accounts receivable 342,906 (1,247,548)
Prepaid expenses and other assets (86,585) (194,259)
Accounts payable and accrued liabilities (139,206) 795,634
Deferred revenue (294,238) 472,786
--------------- ---------------
Net cash used in operating activities (1,482,507) (1,104,338)
INVESTING ACTIVITIES:
Purchases of property and equipment (29,999) (235,524)
FINANCING ACTIVITIES:
Payments on capital leases (32,967) (19,174)
Net proceeds from issuing common stock 41,667 0
Proceeds from issuing preferred stock -- 180,000
Proceeds from term loan -- 820,000
Payments on shareholder loans -- (105,000)
Proceeds from certificate of deposit -- 1,000,000
Net borrowings under line of credit 782,336 (850,000)
Preferred stock dividends (411,667) --
--------------- ---------------
Net cash provided by financing activities 379,369 1,025,826
--------------- ---------------
Net decrease in unrestricted cash and cash equivalents (1,133,137) (314,036)
Unrestricted cash and cash equivalents at beginning of year 3,255,182 474,134
--------------- ---------------
Unrestricted cash and cash equivalents at end of period $ 2,122,045 $ 160,098
=============== ===============
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Interest paid $ 71,210 $ 88,480
=============== ===============
Non-cash financing activities:
Preferred stock dividends $ 157,000 $ 145,000
=============== ===============
Capital lease obligations $ 249,568 $ 115,808
=============== ===============
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
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CLINICOR, INC.
NOTES TO FINANCIAL STATEMENTS
September 30, 1998 (Unaudited)
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NOTE L - BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the instructions to Form 10-QSB and Item 310(b) of Regulation SB.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the three and nine months ended September 30, 1998 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 1998. For further information, refer to the financial statements
and footnotes thereto included in the Company's annual report on Form 10-KSB
filed on March 30, 1998 for the fiscal year ended December 31, 1997 (Commission
File No. 0-21721).
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Certain amounts related to the prior year have been reclassified to conform to
the current year presentation.
NOTE 2 - NET INCOME (LOSS) PER SHARE
Net loss applicable to common stock per share has been calculated by dividing
the Company's net loss applicable to common stock by the weighted average number
of shares of the Company's outstanding common stock. Common stock equivalent
shares are not included in the per share calculations where the effect of their
inclusion would be anti-dilutive.
At September 30, 1998 and September 30, 1997, stock options and warrants to
purchase 1,905,706 and 1,493,940 shares of common stock, respectively; Class A
Convertible Preferred Stock convertible into 2,724,667 and 2,517,333 shares of
common stock, respectively; and Class B Convertible Preferred Stock
convertible into 1,666,667 and 0 shares of common stock, respectively, were not
included in the calculation of basic/diluted earnings per share because the
effect of including these options, warrants and convertibles would have been
anti-dilutive.
NOTE 3 - REPORTING COMPREHENSIVE INCOME
In September 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting
Comprehensive Income." The new standard, which is effective for financial
statements issued for periods ending after December 15, 1997, established
standards for reporting, in addition to net income, comprehensive income and its
components including, as applicable, foreign currency items, minimum pension
liability adjustments and unrealized gains and losses on certain investments in
debt and equity securities. Upon adoption, the Company is also required to
reclassify financial statements for earlier periods provided for comparative
purposes. The Company adopted this standard in the first quarter of 1998. The
difference between the Company's net income as reported and comprehensive income
is immaterial for disclosure.
NOTE 4 - SEGMENT REPORTING
In September 1997, the FASB issued SFAS No. 131, "Disclosure about Segments of
an Enterprise and Related Information", which the company adopted in the first
quarter of 1998. The standard establishes requirements for reporting
information about operating segments in annual financial statements and
requires selected information about operating segments in interim financial
reports issued to shareholders. It also establishes standards for related
disclosures about products and services, geographic areas and major customers.
Under SFAS No. 131, operating segments are to be determined consistent with the
way management organizes and evaluates financial information internally for
making operating decisions and assessing performance. The disclosure provisions
of this standard are not applicable for interim periods in the year of adoption.
The adoption of this new standard is not expected to have a material impact on
the Company's consolidated balance sheet or statement of income.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
The information set forth and discussed below for the three and nine months
ended September 30, 1998 and 1997, are derived from the Condensed 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 other
quarters or for the entire year.
OVERVIEW
The Company is a fully integrated contract research organization ("CRO")
serving the pharmaceutical, biotechnology and medical device industries
("sponsors"). The Company designs, manages and monitors clinical trials in
North America and Europe and provides integrated clinical and product
development services, including patient recruitment, data management,
biostatistical analysis, regulatory affairs, medical device and other
consultation and quality assurance and quality control ("QA/QC") services for
its sponsors. The Company generates substantially all of its revenue from
services related to the clinical testing of new pharmaceutical, medical device
and biotechnology products. The Company commenced operations in September 1992
and has achieved its growth through internal development.
The Company's contracts for services generally vary from a few months to
several years in duration. A portion of the contract fee is typically required
to be paid when the contract is initiated, with the balance payable in
installments over the contract's duration. The installment payments are based
on performance or the achievement of milestones, relating payment to previously
negotiated events such as patient enrollment, patient completion or delivery of
databases, or periodic, based on personnel fees and actual expenses, typically
billed on a monthly basis.
In accordance with the terms of the Company's contracts, sponsors may
terminate or delay the performance of a contract, potentially causing the
Company to experience periods of excess capacity and reductions in service
revenue and net income. Trials may be terminated or delayed for a variety of
reasons, including unexpected or undesired results, production problems
resulting in shortages of the product or delays in supplying the product,
adverse patient reaction to the product, or the sponsor's decision to de-
emphasize a particular trial. If a trial is terminated, the contract generally
provides for a short continuation or wind-down period, as the Company manages
required investigator obligations through the termination date. Therefore, the
Company is typically entitled to all amounts owed for work performed through the
notice of termination and all costs associated with termination of the study.
In addition, contracts may require the payment of a separate early termination
fee, the amount of which usually declines as the trial progresses.
7
<PAGE>
Revenue from contracts is recognized as work is performed. Some contracts
contain a fixed price per patient plus either fixed or variable fees for
additional service components such as monitoring, project management,
advertising, travel, data management, consulting and report writing. Other
contracts are time and materials based. Payments received on contracts in
excess of amounts earned are recorded as deferred revenue.
The Company's gross revenue backlog consists of anticipated service revenue
from clinical trials and other services that have not been completed and that
generally specify completion dates within 24 months. To qualify as "backlog"
anticipated projects must be represented by contracts or letter agreements or
must be projects for which the Company has commenced a significant level of
effort based upon sponsor commitment and approval of a written budget. Once
work commences, service revenue is recognized over the life of the contract. The
Company's gross revenue backlog was approximately $8.3 million at September 30,
1998 as compared to $14.0 million at December 31, 1997. The decline in gross
revenue backlog reflects the impact of cancellations of certain clinical
studies, representing approximately $5.5 million in gross revenues, because the
Sponsor's drug did not meet the Sponsor's performance expectations. The
Company's sales efforts for the nine months ended September 30, 1998 generated
approximately $8.4 million in new contract backlog, which was sufficient to
offset earned gross revenue of approximately $8.6 million. The Company believes
that its backlog at any given date is not necessarily a meaningful predictor of
future results, and no assurances can be given that the Company will fully
realize all of its backlog as service revenue.
Reimbursable costs can include patient and investigator stipends,
Institutional Review Board fees, laboratory and medical supplies, patient
recruitment advertising, travel and consulting fees. Reimbursable costs that
are paid to the Company directly by the client, and for which the Company does
not bear the risk of economic loss, are deducted from gross service revenue in
accordance with CRO industry practice.
Direct costs include project personnel costs and related allocated overhead
costs such as rent, supplies, postage, express delivery and telecommunications,
as well as study-related costs not reimbursed by clients. Selling, general and
administrative expenses consist primarily of compensation and benefits for
marketing and administrative personnel, professional services, facility costs,
and other allocated overhead items.
QUARTERLY RESULTS
Quarterly operating results are subject to variation, and are expected to
continue to be subject to variation, as a result of factors such as delays in
initiating or completing significant drug development trials and any termination
of drug development trials. Delays and terminations are the result of actions
by sponsors or regulatory authorities and are not controllable by the Company.
Since a large part of the Company's operating costs are relatively fixed while
revenue is subject to fluctuation, minor variations in the commencement,
progress or completion of drug development trials may cause significant
variations in quarterly operating results.
8
<PAGE>
RESULTS OF OPERATIONS
Three months ended September 30, 1998 compared with three months ended September
30, 1997
The following table sets forth, for the periods indicated, certain items
included in the Company's unaudited statements of operations for the three
months ended September 30, 1998 and 1997, and the percentage of net service
revenue for each item. Any results or trends illustrated in the following table
may not be indicative of future results or trends.
For the quarter ended September 30,
----------------------------------
1998 1997
----------- -----------
Service revenues $ 2,374,007 $ 2,837,949
Reimbursable costs 800,135 975,294
----------- -----------
Net service revenue 1,573,872 100.0% 1,862,655 100.0%
Operating costs and expenses:
Direct costs 1,236,629 78.6% 1,430,288 76.8%
Selling, general and administrative 794,648 50.5% 798,090 42.8%
Depreciation and amortization 107,063 6.8% 118,300 6.4%
----------- -----------
Total operating costs and expenses 2,138,340 135.9% 2,346,678 126.0%
Loss from operations (564,468) -35.9% (484,023) -26.0%
Net interest income (expense) 3,999 0.3% (167,274) - 9.0%
----------- -----------
Net loss $ (560,469) -35.6% $ (651,297) -35.0%
=========== ===========
Net service revenues decreased approximately $ 290,000, or 16%. The
decrease is primarily attributable to a decline in the number of ongoing
clinical trials.
Direct costs decreased approximately $194,000, or 14%. The decrease in
direct costs is consistent with the percentage decrease in net service revenues
for the three months ended September 30, 1998. As a percentage of net service
revenues, direct costs were approximately 79% for the three months ended
September 30, 1998 as compared to approximately 77% for the same period in 1997.
Selling, general and administrative expenses decreased by approximately
$3,000. Selling, general and administrative expenses were approximately 50% of
net service revenue for the three months ended September 30, 1998, as compared
to 43% for the corresponding 1997 period. The increase in this percentage is
directly related to the decrease in revenue during the quarter.
9
<PAGE>
Depreciation and amortization expenses decreased approximately $11,000 or
10%. Depreciation expense as a percentage of net service revenues was 6.8% for
the three months ended September 30, 1998 as compared to 6.4% for the prior
period. The Company has committed to invest approximately $750,000 to install
an Oracle database on a Unix network server to support its operations. This
installation is expected to be complete in the fourth quarter of 1998.
Interest income increased by approximately $34,000 during the three months
ended September 30, 1998 as compared to the comparable period in 1997. This is
primarily attributable to the increase in funds available for investment
resulting from the sale of preferred stock in late 1997. Interest expense
decreased by approximately $138,000. This decrease is due to higher interest
costs incurred in 1997 related to loan issuance costs and the valuation of
warrants issued on a 1997 term loan.
The Company recorded no income tax benefit as a result of the net operating
losses for the three months ended September 30, 1998 and 1997, due to the
uncertainty that the loss carryforwards will be utilized.
Nine months ended September 30, 1998 compared with nine months ended September
30, 1997
The following table sets forth, for the periods indicated, certain items
included in the Company's unaudited statements of operations for the nine months
ended September 30, 1998 and 1997, and the percentage of net service revenue for
each item. Any results or trends illustrated in the following table may not be
indicative of future results or trends.
For the nine months ended September 30,
--------------------------------------
1998 1997
----------- -----------
Service revenues $ 8,565,452 $ 8,234,840
Reimbursable costs 2,745,404 3,058,130
----------- -----------
Net service revenue 5,820,048 100.0% 5,176,710 100.0%
Operating costs and expenses:
Direct costs 4,478,488 76.9% 3,615,620 69.9%
Selling, general and administrative 2,449,117 42.1% 2,522,425 48.7%
Depreciation and amortization 320,876 5.5% 362,659 7.0%
----------- -----------
Total operating costs and expenses 7,248,481 124.5% 6,500,704 125.6%
----------- -----------
Loss from operations (1,428,433) -24.5% (1,323,994) -25.6%
Net interest income (expense) 38,032 0.7% (178,047) -03.4%
----------- -----------
Net loss $(1,390,401) -23.8% $(1,502,041) -29.0%
=========== ===========
10
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Net service revenues increased approximately $643,000, or 12%. The
increase is primarily attributable to an increase in the volume and size of
clinical trials.
Reimbursable costs decreased to approximately 47% of gross revenue for the
nine months ended September 30, 1998 as compared to approximately 59% of gross
revenue for the same period in 1997. This decrease is a direct result of the
contract mix for which revenue was recognized during the respective periods.
During 1998 contracts in process consisted of a greater percentage of time and
materials contracts which generally have less reimbursed costs.
Direct costs increased approximately $863,000, or 24%. Most of the
increase in direct costs is due to additions of full-time study, patient and
data management staff and related overhead. As a percentage of net service
revenues, direct costs increased to approximately 77% from approximately 70% for
the prior period. Staffing levels were increased in 1997 in anticipation of
certain sponsor programs, which were scheduled to commence in 1997, but which
were delayed and ultimately canceled in June 1998. Management expects the
percentage of direct costs to net service revenue to decline should net service
revenues continue to increase in the future.
Selling, general and administrative expenses decreased approximately
$73,000 or 3%. Selling, general and administrative expenses declined to 42% of
net service revenue from 49% in the prior period. This decrease is primarily
attributable to the growth in net service revenue exceeding the growth in
personnel costs. Management expects this percentage to decrease should the
growth in net service revenues continue to increase in the future.
Depreciation and amortization expenses decreased approximately $42,000 or
12%. Depreciation expense decreased to 5.5% of net service revenues for the
nine months ended September 30, 1998 as compared to 7.0% in the prior period.
Depreciation expense will increase in the fourth quarter of 1998 based upon the
completion of the Oracle database project and is expected to be approximately
7.0% of net service revenues.
Interest income increased by approximately $88,000 during the nine months
ended September 30, 1998. This is primarily attributable to the increase in
funds available for investment resulting from the sale of preferred stock in
late 1997. Interest expense decreased by approximately $128,000. This decrease
is due to higher interest costs incurred in 1997 related to loan issuance costs
and the valuation of warrants issued on a 1997 term loan.
The Company recorded no income tax benefit as a result of the net operating
losses for the nine months ended September 30, 1998 and 1997, due to the
uncertainty that the loss carryforwards will be utilized.
11
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LIQUIDITY AND CAPITAL RESOURCES
Since its inception, the Company has financed its operations and internal
growth with proceeds from private placements of equity securities, advances from
shareholders and borrowing arrangements under capital lease obligations and bank
lines of credit. Investing activities have consisted of capital expenditures,
primarily for leasehold improvements, information systems, furniture and office
equipment.
Typically, cash flows from contracts include a payment at the time a
contract commences and the balance in installments over the contract's duration,
in some cases on a milestone completion basis. Consequently, cash receipts do
not necessarily correspond to costs incurred and revenue recognized on
contracts. The Company's cash flow is influenced by changes in the level of
accounts receivable. Accounts receivable decreased to approximately $2,130,000
at September 30, 1998 from approximately $2,473,000 at December 31, 1997. Cash
collections from clinical study contracts for the nine months ended September
30, 1998, totaled approximately $8.6 million as compared with approximately $7.4
million for the corresponding period in 1997.
Net cash flow used in operating activities was approximately $1,483,000 for
the nine months ended September 30, 1998, as compared to approximately
$1,104,000 in the corresponding period in 1997. The continuation of the
negative trend in net cash used in operations in 1998 is primarily attributable
to the net loss incurred for the nine months ended September 30, 1998. Net cash
decreased by approximately $1,133,000 during the nine months ended September 30,
1998.
Investing activities are attributable to purchases of property and
equipment and they declined to approximately $30,000 in the nine months ended
September 30, 1998 as compared to approximately $236,000 in the comparable
period of 1997. The Company has committed to invest approximately $750,000 in
Oracle database software and a Unix network system during the next 3 months.
This investment will be financed with operating and capital leases.
Financing activities consist of net borrowings under the Company's
revolving working capital line of credit. At September 30, 1998, there was
approximately $782,000 in outstanding borrowings and a remaining availability of
$1,720,000 under the line of credit. Pursuant to its Class B preferred stock
agreement, the Company paid approximately $410,000 in dividends during the nine
months ended September 30, 1998.
Management believes that its existing capital resources and borrowing
capacity under its working capital line and lease lines of credit will be
sufficient to fund its current operations for the next twelve months. In the
future, the Company may acquire businesses to expand its contract backlog and to
enhance its therapeutic expertise. Any such acquisition would require
additional external financing, and the Company may seek such funds from public
or private issuance of equity, debt securities, or bank financing. There can be
no assurance that such financing will be available on terms acceptable to the
Company.
12
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YEAR 2000
Information systems are an integral part of the services and products the
Company provides. The Company is assessing the Year 2000 issue from an
internal, supplier and customer perspective. The Company is in the process of
installing new software systems that are expected to be completed by December
31, 1998, which are Year 2000 compliant. Although the Company believes at this
time that neither the costs nor expenses of the Year 2000 issue will be material
to the Company, the ultimate costs and expenses are currently unknown and such
costs or the consequences of failure to correct any Year 2000 issues could have
a material impact on the Company's financial condition, business or operations.
INFORMATION ABOUT FORWARD-LOOKING STATEMENTS
Certain statements made in this Form 10-QSB, in other SEC filings or
written materials, or orally by the Company or it representatives may constitute
"forward-looking" statements within the meaning of the federal securities laws.
The Company notes that a variety of factors could cause the Company's actual
results and experience to differ materially from the anticipated results
expressed in the Company's forward-looking statements. The risks and
uncertainties that may affect the operations, performance, development and
results of the Company's business include the factors discussed in "Risk
Factors" under Item 1 of the Company's Annual Report on Form 10-KSB for the year
ended December 31, 1997.
13
<PAGE>
PART II
OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS.
27 Financial Data Schedule
(b) REPORTS ON FORM 8-K.
No reports on Form 8-K were filed during the fiscal quarter covered by this
report.
14
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SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934,
the registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
CLINICOR, INC.
Date November 10, 1998 By /s/ Robert S. Sammis
--------------------- ----------------------------------------
Robert S. Sammis
President
(Principal Executive Officer)
Date November 10, 1998 By /s/ James W. Clark, Jr.
--------------------- ----------------------------------------
James W. Clark, Jr.
Vice President and Chief Financial Officer
(Principal Financial Officer)
15
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CLINICOR,
INC. FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 1998, AND FOR THE 3- AND 9-MONTH
PERIODS ENDED SEPTEMBER 30, 1998, AND THE ACCOMPANYING NOTES AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1998
<PERIOD-START> JUL-01-1998 JAN-01-1998
<PERIOD-END> SEP-30-1998 SEP-30-1998
<CASH> 2,122,045 2,122,045
<SECURITIES> 0 0
<RECEIVABLES> 2,346,430 2,346,430
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 4,468,475 4,468,475
<PP&E> 1,547,739 1,547,739
<DEPRECIATION> 997,573 997,573
<TOTAL-ASSETS> 5,206,729 5,206,729
<CURRENT-LIABILITIES> 2,622,088 2,622,088
<BONDS> 35,704<F1> 35,704<F1>
0 0
9,087,000 9,087,000
<COMMON> 4,170 4,170
<OTHER-SE> (6,542,233) (6,542,233)
<TOTAL-LIABILITY-AND-EQUITY> 5,206,729 5,206,729
<SALES> 2,374,007 8,565,452
<TOTAL-REVENUES> 2,374,007 8,565,452
<CGS> 2,036,764 7,223,892
<TOTAL-COSTS> 2,938,475 9,993,885
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 3,999<F2> 38,032<F2>
<INCOME-PRETAX> (560,469) (1,390,401)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (560,469) (1,390,401)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (560,469) (1,390,401)
<EPS-PRIMARY> (0.19) (0.50)
<EPS-DILUTED> (0.19) (0.50)
<FN>
<F1>Consists of capitalized lease obligations, excluding current portions.
<F2>Net interest expense is net of interest revenue.
</FN>
</TABLE>
