<PAGE>
================================================================================
U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------
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 March 31, 2000
[_] Transition report under Section 13 or 15(d) of the Securities Exchange
Act of 1934
Commission File No. 0-21721
-------------
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 May 1, 2000, 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
---
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
PART I
FINANCIAL INFORMATION
<TABLE>
<CAPTION>
<S> <C>
Item 1. Financial Statements (unaudited) 3
Balance Sheets - March 31, 2000 and December 31, 1999 3
Statements of Operations - three months ended March 31,
2000 and 1999 4
Statements of Cash Flows - three months ended March 31,
2000 and 1999 5
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition 7
PART II
OTHER INFORMATION
Item 3. Defaults Upon Senior Securities 13
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 14
</TABLE>
2
<PAGE>
Clinicor, Inc.
Balance Sheet
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
(Unaudited) (Note A)
----------------- ------------------
Assets
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 530,628 $ 673,370
Accounts receivable, net 1,632,737 3,306,653
Prepaid and other current assets 405,346 350,037
----------------- ------------------
Total current assets 2,568,711 4,330,060
Property and equipment, net 988,651 1,083,927
Other assets, net 9,730 8,013
----------------- ------------------
Total assets $ 3,567,092 $ 5,422,000
================= ==================
Liabilities, convertible preferred stock subject to
redemptiom and shareholders' deficit
Current liabilities:
Current portion of obligations under capital leases $ 414,706 $ 453,259
Accounts payable and accrued liabilities 1,889,390 2,422,548
Dividend Payable 643,365 400,778
Line of credit 553,726 948,586
Deferred revenue 720,547 825,061
----------------- ------------------
Total current liabilities 4,221,734 5,050,232
Obligations under capital leases, less current portion 59,174 144,975
----------------- ------------------
Total liabilities 4,280,908 5,195,207
Convertible preferred stock subject to redemption:
Class A convertible preferred stock, no par value,
5,181 shares authorized 4,603 shares issued
and outstanding, at liquidation value 4,603,000 4,603,000
Class B convertible preferred stock, no par value,
50,000 shares authorized, issued and
outstanding, at liquidation value 5,000,000 5,000,000
----------------- ------------------
Total convertible preferred stock subject to redemption 9,603,000 9,603,000
Shareholders' deficit:
Common stock, $0.001 par value, 75,000,000 shares
authorized, 4,169,734 shares issued and
outstanding 4,170 4,170
Additional paid-in capital 0 0
Deferred compensation 0 0
Accumulated deficit (10,320,986) (9,380,377)
----------------- ------------------
Total shareholders' deficit (10,316,816) (9,376,207)
----------------- ------------------
Total liabilities, convertible preferred stock subject to
redemption and shareholders' deficit $ 3,567,092 $ 5,422,000
================= ==================
</TABLE>
Note A: The balance sheet at December 31, 1999 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
<PAGE>
Clinicor, Inc.
Statement of Operations
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended March 31,
-------------------------------------------
2000 1999
------------------ -------------------
Service revenue:
<S> <C> <C>
Gross revenue $ 1,822,005 $ 3,190,315
Reimbursable costs 414,140 1,577,134
------------------ -------------------
Net service revenue 1,407,865 1,613,181
Operating costs and expenses:
Direct costs 1,112,384 1,081,566
Selling, general and administrative 854,644 871,928
Depreciation and amortization 93,887 101,063
------------------ -------------------
Total operating costs and expenses 2,060,915 2,054,557
------------------ -------------------
Loss from operations (653,050) (441,376)
Other income and expenses:
Interest income 10,325 29,509
Interest expense (56,028) (40,247)
Other income 731 -
------------------ -------------------
Other income and expenses (44,972) (10,738)
------------------ -------------------
Net loss $ (698,022) $ (452,114)
================== ===================
Net loss $ (698,022) $ (452,114)
Dividends on convertible preferred stock
subject to redemption (242,587) (235,074)
------------------ -------------------
Net loss applicable to common stock $ (940,609) $ (687,188)
================== ===================
Basic/diluted earnings (loss) per share $ (0.23) $ (0.16)
================== ==================
Weighted average common shares
outstanding 4,169,734 4,169,734
================== ==================
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
Clinicor, Inc.
Statement of Cash Flows
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended March 31,
-------------------------------------------
2000 1999
(Unaudited) (Unaudited)
--------------------- --------------------
Operating activities:
<S> <C> <C>
Net loss $ (698,022) $ (452,114)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation and amortization 93,887 101,063
Noncash stock option compensation expense 0 5,550
Net changes in assets and liabilities:
Accounts receivable 1,673,916 31,996
Prepaid expenses and other assets (57,026) (80,213)
Accounts payable and accrued liabilities (533,158) 127,648
Deferred revenue (104,514) (360,594)
--------------------- --------------------
Net cash provided by (used in) operating activities 375,083 (626,664)
Investing activities:
Disposal (purchase) of property and equipment 1,389 (37,308)
Financing activities:
Payments on capital leases (124,354) (54,655)
Net proceeds from issuing common stock 0 0
Net borrowings under line of credit (394,860) 377,500
Dividends paid on convertible preferred stock subject to redemption 0 (150,000)
--------------------- --------------------
Net cash provided by (used in) financing activities (519,214) 172,845
--------------------- --------------------
Net decrease in unrestricted cash and cash equivalents (142,742) (491,127)
Unrestricted cash and cash equivalents at beginning of year 673,370 1,665,672
--------------------- --------------------
Unrestricted cash and cash equivalents at end of period $ 530,628 $ 1,174,545
===================== ====================
Supplemental cash flow disclosures:
Interest paid $ 56,028 $ 40,247
===================== ====================
Non-cash financing activities:
Accrued dividends on convertible preferred stock subject to redemption $ 150,000 $ --
===================== ====================
Capital lease obligations $ 0 $ 160,223
===================== ====================
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
Clinicor, Inc
Notes to Financial Statements
March 31, 2000 (Unaudited)
================================================================================
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 months ended March 31, 2000 are not necessarily
indicative of the results that may be expected for the year ending December 31,
2000. 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, 2000 for the fiscal year ended December 31, 1999 (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 March 31, 2000 and March 31, 1999, stock options and warrants to purchase
1,926,411 and 2,223,331 shares of common stock, respectively; Class A
Convertible Preferred Stock convertible into 3,068,667 and 2,835,333 shares of
common stock, respectively; and Class B Convertible Preferred Stock
convertible into 1,818,182 shares of common stock, 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 - Recent Accounting Pronouncements
- -----------------------------------------
In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin 101, Revenue Recognition ("SAB 101"). SAB 101 summarizes certain of the
SEC staff's views in applying generally accepted accounting principles to
selected revenue recognition issues in financial statements. Implementation of
SAB 101 is required in the second quarter of 2000. The Company is currently in
the process of evaluation the impact, if any, SAB 101 will have on its
consolidated financial position or results of operations.
6
<PAGE>
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 31, 2000 and 1999, 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, quality assurance and other
consultation 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 net service 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 18 to 48 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 net service revenue backlog was approximately $6.2
million at March 31, 2000 as compared to $4.0 million at December 31, 1999. As
of April 30, 2000, net service revenue backlog has increased to approximately
$8.6 million. Many of the new contracts awarded in 2000, while as large or
larger in size than the contracts the Company has previously been awarded, are
longer in average duration, and are starting more slowly than expected, the
effect of which will result in the realization of less net service revenue in
the early stages of contract performance than in the past. This trend will have
a negative impact on revenues earned in 2000 and on the Company's liquidity
during this period. See "Liquidity and Capital Resources" below. 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 its entire backlog as service revenue.
Reimbursable costs can include patient and investigator stipends,
Institutional Review Board fees, laboratory fees, 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 March 31, 2000 compared with three months ended March 31,
- ----------------------------------------------------------------------------
1999
- ----
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 March 31, 2000 and 1999, 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.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
For the quarter ended March 31,
- ------------------------------------------------------------------------------------------
2000 1999
<S> <C> <C>
Service revenues $ 1,822,005 $ 3,190,315
Reimbursable costs 414,140 1,577,134
----------- -----------
Net service revenue 1,407,865 100.0% 1,613,181 100.0%
Operating costs and expenses:
Direct costs 1,112,384 79.0% 1,081,566 67.0%
Selling, general and administrative 854,644 60.7% 871,928 54.1%
Depreciation and amortization 93,887 6.7% 101,063 6.3%
----------- -----------
Total operating costs and expenses 2,060,915 146.4% 2,054,557 127.4%
----------- -----------
Loss from operations (653,050) -46.4% (441,376) -27.4%
Net interest income (expense) (44,972) -3.2% (10,738) -0.6%
----------- -----------
Net loss $ (698,022) -49.6% $ (452,114) -28.0%
=========== ===========
</TABLE>
Net service revenues decreased approximately $205,000 or 13%. The decrease
is primarily attributable to certain contract cancellations which occurred in
the third quarter of 1999, to a decrease in the average net service revenues
generated by active trials, and to the timing of the start-up, the size and
average duration of the new trials that have been added to backlog in 2000.
Based upon the current backlog in net service revenues, quarterly revenues in
2000 are expected to continue to be less than those earned in 1999.
Reimbursable costs decreased to approximately 23% of gross revenue for the
three months ended March 31, 2000 as compared to 49% of gross revenue for the
same period in 1999. This decrease is a direct result of the contract mix for
which revenue was recognized during the respective periods.
Direct costs increased approximately $31,000, or 3%. As a percentage of net
service revenues, direct costs were approximately 79% for the three months ended
March 31, 2000 as compared to approximately 67% for the same period in 1999. The
increase in this percentage is directly related to the reduction of net service
revenues during the respective periods.
Selling, general and administrative expenses decreased by approximately
$17,000 or 2% during the first quarter of 2000 as compared to the comparable
period in 1999. Selling, general and administrative expenses were approximately
61% of net service revenue for the three months ended March 31, 2000, as
compared to 54% for the corresponding period in 1999. The increase in the
percentage of selling, general and administrative expenses to net service
9
<PAGE>
revenues is primarily a result of the decline in net service revenues during the
respective periods.
Depreciation and amortization expenses decreased approximately $7,000
during the three months ended March 31, 2000 as compared to the comparable
period in 1999. Depreciation expense as a percentage of net service revenue was
approximately 7% for the three months ended March 31, 2000 as compared to 6% for
the corresponding period in 1999. The increase in the percentage of depreciation
expense to net service revenues is primarily a result of the decline in net
service revenues during the respective periods.
Interest income decreased by approximately $19,000 during the three months
ended March 31, 2000 as compared to the comparable period in 1999. This is
primarily the result of the decrease in the funds available for investment.
Interest expense increased by approximately $16,000 during the three months
ended March 31, 2000 as compared to the comparable period in 1999.
The Company recorded no income tax benefit as a result of the net operating
losses for the three months ended March 31, 2000 and 1999, due to the
uncertainty that the loss carryforwards will be utilized.
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
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 levels of
accounts receivable and deferred revenue. Accounts receivable decreased to
approximately $1,633,000 at March 31, 2000 from approximately $3,300,000 at
December 31, 1999. Deferred revenues decreased to approximately $721,000 at
March 31, 2000 from approximately $825,000 at December 31, 1999. Cash
collections from clinical study contracts for the three months ended March 31,
2000, totaled approximately $3,356,000 as compared with approximately $2,900,000
for the corresponding period in 1999.
Net cash flow provided by operating activities was approximately $375,000
for the three months ended March 31, 2000, as compared to approximately
$(626,000) used in the corresponding period in 1999. The improvement in cash
flow from operations in 2000 is primarily attributable to the reduction in
accounts receivable which occurred in the three months ended March 31, 2000.
Net cash decreased by approximately $143,000 for the three months ended March
31, 2000, as compared to $490,000 in the year earlier period.
10
<PAGE>
Investing activities are attributable to purchases of property and
equipment and they decreased to approximately $1,000 in the three months ended
March 31, 2000 as compared to approximately $37,000 in the comparable period of
1999.
Financing activities consist of net borrowings under the Company's $2.5
million revolving working capital line of credit. At March 31, 2000, there was
approximately $550,000 in outstanding borrowings. The line of credit provides a
borrowing base primarily determined as a percentage of billed accounts
receivable up to a maximum borrowing amount of $2,500,000.
Pursuant to its Class B preferred stock agreement, the Company accrued
$150,000 for suspended dividend payments during the three months ended March 31,
2000. The Company suspended cash dividend payments in August 1999 in order to
maintain adequate working capital to fund its operations. As of May 1, 2000,
the Company had missed a total of four quarterly dividends payable to the Class
B preferred stockholder, representing aggregate payments of $600,000. The
Company's Articles of Incorporation provide that, in the event that the Company
misses a total of six consecutive quarterly dividend payments or fails to pay
cumulative dividends of $900,000 or more ("Class B Nonpayment Event"), then the
holders of the Class A and B preferred stock may assume voting control of the
Board of Directors of the Company. The Company intends to assess its ability to
pay preferred dividends on an ongoing basis. There can be no assurance that
future dividend payments will be made.
As discussed above, the Company has experienced a trend toward contracts
that are longer in average duration than the contracts the Company has
previously entered into and that are expected to result in the realization of
less net service revenue in the early stages of contract performance than has
been the case in the past. Largely as a result of this trend and as a result of
certain contract cancellations that occurred in the third quarter of 1999, the
Company believes that net service revenue and cash flows from operations will
likely fall short of internal projections during the remainder of 2000. As a
result, management believes that existing capital resources, together with cash
flows from operations and borrowing capacity under its working capital line of
credit, will not be sufficient to fund operations through the balance of 2000.
The Company currently has limited cash reserves. Until such time as the Company
is able to obtain external financing, it will fund its operations from accounts
receivable collections, from its working capital line of credit, from increases
in accounts payable and other liabilities, and from customer advance payments.
There can be no assurance that the Company will succeed in obtaining external
financing. The Company's ability to manage its cash flow depends in part upon
the success of the Company's ongoing marketing efforts and the progress of
clinical research projects currently underway, the timing of which are of
critical importance.
The Company is actively seeking external financing, which may be in the
form of public or private issuances of equity or debt securities or bank
financing. There can be no assurance that debt or equity financing can be
obtained or obtained on terms acceptable to the Company. If additional funds are
raised through the issuance of equity securities, the Company's stockholders may
experience significant dilution. If the Company fails to obtain external
financing, this failure could have a material adverse effect on the Company's
business, financial condition and results of operations.
Regardless of the availability of external financing, the Company intends
to continue to investigate strategies to preserve working capital. Such
strategies include deferring payment of future quarterly dividends on its
Class B preferred Stock and reducing expenses to more closely align with our
revised revenue forecasts.
In addition to seeking external financing, the Company is pursuing other
strategic alternatives, which includes seeking a buyer for the Company. The
Company is also continuing to investigate the possibility of acquiring other
CROs to expand its contract backlog, to enhance its therapeutic expertise, and
to enhance the Company's attractiveness to an acquirer or outside financing
sources. Any such acquisition would also require additional external financing.
There can be no assurance that financing to fund either operations or future
acquisitions will be available on terms acceptable to the Company.
11
<PAGE>
YEAR 2000
Information systems are an integral part of the services the Company
provides. Since many computer and software systems were designed to handle
dates with just two digits to represent the year applicable to a transaction,
these systems may not operate properly when the last two digits of the year
become "00". For example, on January 1, 2000, these systems may interpret "00"
as the year 1900 not 2000. If the computer equipment and software used in the
operation of the Company do not correctly recognize date information when the
year changes to 2000, there could be an adverse impact on the Company's
operations.
The Company began its assessment of the Year 2000 issue from an internal
perspective in late 1997. The Company decided to change its information
technology ("IT") systems including those relating to clinical operations, data
management operations and financial operations, to Year 2000 compliant software
applications on an Oracle database platform in the first quarter of 1998. These
new systems were implemented to improve management's control of the organization
and increase operating efficiency. The installation of these software systems
was substantially completed by December 31, 1998, and they are currently in
production. The Company estimates that it has spent approximately $750,000 on
its hardware and software systems to accommodate the Oracle database and related
software applications. These expenditures were primarily financed through
operating and capital leases.
The Company has also reviewed and tested its non-IT systems such as fax
machines and telephone systems without experiencing any material failures. The
Company performed an integrated systems test on August 21, 1999 to assure itself
that all IT and non-IT systems will be fully capable of handling the Year 2000
issue. That test was successful and the Company's systems were Year 2000 ready
on September 1, 1999. In addition, certain Sponsor companies successfully
audited the Company's Year 2000 readiness plan.
Since January 1, 2000, the Company has not encountered any material Year
2000 issues. The Company has also not experienced any third party supplier or
client issues. The Company is alert to potential Year 2000 issues that may
arise in the future, but believes that there will be no material impact on
operations, liquidity or financial condition.
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, 1999.
12
<PAGE>
PART II
OTHER INFORMATION
Item 3. Defaults Upon Senior Securities.
Pursuant to its Class B preferred stock agreement, the Company is obligated
to pay quarterly dividends of $150,000 to the extent that funds are legally
available therefor. The Company suspended cash dividend payments in August 1999
in order to maintain adequate working capital to fund its operations. As of May
1, 2000, the Company had missed a total of four quarterly dividends payable to
the Class B preferred stockholder, representing aggregate payments of $600,000.
The Company's Articles of Incorporation provide that, in the event that the
Company misses a total of six consecutive quarterly dividend payments or fails
to pay cumulative dividends of $900,000 or more, then the holders of the Class A
and B preferred stock may assume voting control of the Board of Directors of the
Company. The Company intends to assess its ability to pay preferred dividends on
an ongoing basis. There can be no assurance that future dividend payments will
be made.
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.
13
<PAGE>
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: May 22, 2000 By: /s/ Robert S. Sammis
-----------------------------------
Robert S. Sammis
President
(Principal Executive Officer)
Date: May 22, 2000 By: /s/ James W. Clark, Jr.
-----------------------------------
James W. Clark, Jr.
Vice President and Chief
Financial Officer
(Principal Financial Officer)
14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CLINICOR,
INC. FINANCIAL STATEMENTS AS OF MARCH 31, 2000, AND FOR THE 3-MONTH PERIOD ENDED
MARCH 31, 2000, AND THE ACCOMPANYING NOTES AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 530,628
<SECURITIES> 0
<RECEIVABLES> 1,652,737
<ALLOWANCES> 20,000
<INVENTORY> 415,076
<CURRENT-ASSETS> 2,578,441
<PP&E> 1,931,311
<DEPRECIATION> 942,660
<TOTAL-ASSETS> 3,567,092
<CURRENT-LIABILITIES> 4,221,734
<BONDS> 59,174<F1>
0
9,603,000
<COMMON> 4,170
<OTHER-SE> (10,320,986)
<TOTAL-LIABILITY-AND-EQUITY> 3,567,092
<SALES> 1,822,005
<TOTAL-REVENUES> 1,822,005
<CGS> 1,112,384
<TOTAL-COSTS> 2,475,055
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (44,972)
<INCOME-PRETAX> (698,022)
<INCOME-TAX> 0
<INCOME-CONTINUING> (698,022)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (698,022)
<EPS-BASIC> (0.23)
<EPS-DILUTED> (0.23)
<FN>
<F1>Consists of capitalized lease obligations, excluding current portions.
</FN>
</TABLE>
