10QSB

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

FORM 10-QSB

xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarter Ended June 30, 2006

OR

oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 0-11336

CIPRICO INC.

(Exact name of Registrant as specified in its charter)

DELAWARE	41-1749708
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification Number)

17400 Medina Road
Plymouth, Minnesota 55447
(Address of principal executive offices)

Registrant’s telephone number, including area code:  (763) 551-4000

Check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 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 requirement for the past 90 days.  Yes  x   No  o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  o  No  x

The number of shares outstanding of the registrant’s Common Stock, $.01 par value, as of August 1, 2006 was 5,004,131 shares.

Transitional Small Business Disclosure Format (Check one):  Yes  o  No  x

CIPRICO INC.

FORM 10-QSB

INDEX

		Page
PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements	3
	Condensed Balance Sheet at June 30, 2006	3
	Condensed Statements of Operations for the Three and Nine-Month
	Periods Ended June 30, 2006 and 2005	4
	Condensed Statements of Cash Flows for the
	Nine-Month Periods Ended June 30, 2006 and 2005	5
	Notes to Condensed Financial Statements	6-9
Item 2.	Management’s Discussion and Analysis of Financial Condition and
	Results of Operations	10-12
Item 3.	Controls and Procedures	12
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	13
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	13
Item 3.	Defaults Upon Senior Securities	13
Item 4.	Submission of Matters to a Vote of Security Holders	13
Item 5.	Other Information	13
Item 6.	Exhibits	13
SIGNATURES		13
EXHIBITS

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PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

CIPRICO INC.
CONDENSED BALANCE SHEET
(Unaudited)

(In thousands)	June 30, 2006
ASSETS
Current assets:
Cash and cash equivalents	$	5,326
Marketable securities and short term investments	6,795
Accounts receivable, less allowance	1,249
Inventories	1,849
Other current assets	156
Total current assets	15,375
Property and equipment, net of depreciation	312
Goodwill	2,784
Other intangibles, net of amortization	161
Other assets	62
	$	18,694
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	865
Acquisition note payable	50
Other accrued expenses	1,097
Deferred revenue	61
Total current liabilities	2,073
Stockholders’ equity:
Capital stock	50
Additional paid-in capital	35,956
Retained deficit	(19,385		)
Total stockholders’ equity	16,621
	$	18,694

See accompanying notes to condensed financial statements.

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CIPRICO INC.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)

	Three Months						Nine Months
	Ended						Ended
	June 30,						June 30,
(In thousands, except per share amounts)	2006			2005			2006			2005
NET SALES	$	2,705		$	3,107		$	9,128		$	9,133
Cost of sales	1,654			1,937			5,647			5,878
GROSS PROFIT	1,051			1,170			3,481			3,255
OPERATING EXPENSES:
Research and development	927			946			2,803			2,604
Sales and marketing	773			736			2,315			1,981
General and administrative	564			466			1,552			1,249
Restructuring (1)	—			—			—			(181		)
Total operating expenses	2,264			2,148			6,670			5,653
LOSS FROM OPERATIONS	(1,213		)	(978		)	(3,189		)	(2,398		)
Other income, primarily interest	169			137			502			398
LOSS BEFORE INCOME TAXES	(1,044		)	(841		)	(2,687		)	(2,000		)
Income taxes	—			—			—			—
NET LOSS	$	(1,044	)	$	(841	)	$	(2,687	)	$	(2,000	)
Shares used to calculate net loss per share:
Basic and diluted	4,969			4,770			4,885			4,755
NET LOSS PER COMMON SHARE:
Basic and diluted	$	(0.21	)	$	(0.18	)	$	(0.55	)	$	(0.42	)

(1) Restructuring amount for the nine months ended June 30, 2005 includes an amount of $466,000 that represents an adjustment to previously recorded lease abandonment charges associated with a sublease agreement executed during the period partially offset by additional restructuring charges of $285,000 related to workforce reductions.

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CIPRICO INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)

	Nine Months Ended
	June 30,
(In thousands)	2006			2005
Cash flows from operating activities:
Net loss	$	(2,687	)	$	(2,000	)
Depreciation and amortization	239			326
Changes in operating assets and liabilities	(967		)	(1,911		)
NET CASH FLOWS USED IN OPERATING ACTIVITIES	(3,415		)	(3,585		)
Cash flows from investing activities:
Equipment purchases	(227		)	(97		)
Purchases of marketable securities	(4,709		)	(13,183		)
Proceeds from sale or maturity of marketable securities	9,912			14,892
Cash paid for business asset acquisitions	(964		)	(1,412		)
NET CASH FLOWS PROVIDED BY INVESTING ACTIVITIES	4,012			200
Cash flows from financing activities:
Proceeds from issuance of common stock	635			136
NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES	635			136
Net increase (decrease) in cash and cash equivalents	1,232			(3,249		)
Cash and cash equivalents at beginning of period	4,094			4,394
Cash and cash equivalents at end of period	5,326			1,145
Marketable securities, current	6,795			12,635
Marketable securities, long-term	—			2,606
Total cash, cash equivalents and marketable securities	$	12,121		$	16,386

See accompanying notes to condensed financial statements.

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CIPRICO INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
June 30, 2006
(Unaudited)

NOTE A – DESCRIPTION OF BUSINESS

Ciprico Inc. designs, manufactures and markets appliances, services and solutions for digital media applications.  Our solutions combine storage, networking and computing technologies to improve the productivity of customer workflows for the capture, creation, manipulation, archival, management and distribution of digital assets.   Our storage appliances are designed primarily for visual computing applications ranging from high-speed image data capture, through processing and analysis, to real-time playback at sustained performance levels within our target markets: content creation (including both pre-media and video), post production (including digital cinema), broadcast, military and government and other rich media application markets.

NOTE B – BASIS OF PRESENTATION

Significant Accounting Policies and Estimates- Note 1 of the Notes to the Consolidated Financial Statements included in the Annual Report on Form 10-K includes a summary of the significant accounting policies and methods used in the preparation of our Financial Statements.

In the opinion of management, the accompanying unaudited condensed financial statements contain all necessary adjustments and disclosures to present fairly the financial position as of June 30, 2006 and the results of operations for the three and nine-month periods ended June 30, 2006 and 2005, and the cash flows for the nine-month periods ended June 30, 2006 and 2005. The results of operations for the three and nine-months ended June 30, 2006 are not necessarily indicative of the results for the full year.  These condensed financial statements should be read in conjunction with the financial statements and the notes thereto included in the Company’s Form 10-K filed on December 6, 2005.

In preparation of the Company’s financial statements, management is required to make estimates and assumptions that affect reported amounts of assets and liabilities and related revenues and expenses. Actual results could differ from the estimates used by management.

NOTE C – BUSINESS ASSET ACQUISITIONS

On June 6, 2006, Ciprico Inc. entered into a Technology License and Asset Purchase Agreement (“Agreement”) with Broadcom Corporation, a California corporation.  This Agreement involves the purchase of assets from Broadcom’s RAIDCore™ business and the cross license of software technology between Ciprico and Broadcom.  The initial amount paid at closing was allocated in its entirety to fixed assets, primarily computer equipment.  No goodwill or intangibles were recorded as part of this transaction.  Subsequent to closing, the Agreement also provides for the purchase of inventory at Broadcom’s cost.  A copy of the Agreement was attached as Exhibit 10.1 to the Form 8-K filed on June 8, 2006.

The Agreement with Broadcom also provides for payment of royalties and commissions based on actual revenue from board sales and licensing fees.  The Agreement further provides for contingent consideration in the form of warrants to purchase Ciprico stock at certain prices, these warrants vest only when certain revenue targets are achieved. Copies of these warrants were attached as Exhibits 10.2, 10.3 and 10.4 to the Form 8-K filed on June 8, 2006.

In January 2005, Ciprico Inc. purchased substantially all of the assets (primarily the MediaVaultä product line) of Huge Systems, Inc. (“Huge”).  Huge was a privately held company and a leading supplier of data storage solutions for graphic and video content creation marketplace.  The total transaction cost of approximately $3.4 million included an allocation of $2,784,000 to goodwill.  As part of the analysis of the acquisition, it was determined there was no material in-process research and development at the date of acquisition.

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Part of the purchase price included a promissory note and at June 30, 2006, the remaining amount due on the promissory note of $50,000 is included in the Acquisition payable line item on the balance sheet. This note bears interest at a rate of 5% per annum.  In conjunction with the acquisition, Ciprico also issued certain warrants to purchase an aggregate of 30,000 shares of Ciprico common stock at a price of $5.00 per share to certain stockholders of Huge.  The warrants become exercisable ratably over the course of the next four years and terminate five years from the date of issuance.

NOTE D – GOODWILL AND INTANGIBLE ASSETS

In accordance with SFAS No. 142, goodwill and other intangible assets with indefinite lives are not amortized, they are instead tested for impairment annually or whenever events or changes in circumstances indicate that the asset may be impaired.  Intangible assets with finite lives that are subject to amortization are listed in the table below as of June 30, 2006 (in thousands):

	Estimated Life (in years)	Estimated Value		Accumulated Amortization			Net
RAID technology	3	$	170	$	(81	)	$	89
Noncompete agreements	3	135		(63		)	72
		$	305	$	(144	)	$	161

Estimated amortization expense for the fiscal years ending September 30, 2006, 2007 and 2008 are $102,000, $102,000 and $34,000, respectively.

NOTE E – MARKETABLE SECURITIES

The Company has invested its excess cash in commercial paper and other asset-backed investments.  These investments are classified as held-to-maturity given the Company’s intent and ability to hold the securities to maturity and are carried at amortized cost.  Investments that have maturities of less than one year have been classified as current marketable securities.

At June 30, 2006, amortized cost approximates the fair value of held-to-maturity investments, which consist of the following (in thousands):

	June 30, 2006
Current marketable securities:
Commercial paper	$	3,045
Asset-backed investments	3,750
	$	6,795

NOTE F – INVENTORIES

Inventories are stated at the lower of cost or replacement market.  Cost is determined using an average cost method. Inventory costs include outside assembly charges, allocated manufacturing overhead and direct material costs.  As of June 30, 2006, inventory consists of the following (in thousands):

	June 30, 2006
Finished Goods	$	433
Work-in-Process	531
Raw Materials	885
	$	1,849

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NOTE G – WARRANTY COSTS

The Company estimates future warranty claims based on historical experience and anticipated costs to be incurred.  Warranty expense is accrued at the time of sale with an additional accrual for specific items after the sale when their existence is known and amounts are determinable.

The following represents a reconciliation of changes in the Company’s accrued warranty as of June 30, (in thousands):

	Balance at		Charged to Costs and				Balance at
Year	September 30		Expenses		Deductions		June 30
2005	$	240	$	133	$	169	$	204
2006	$	220	$	102	$	85	$	237

NOTE H – RESTRUCTURING

In the second quarter of fiscal 2005, the Company recorded a charge of $285,000 for restructuring related to a workforce reduction in March.

In December 2004, the Company entered into an agreement to sub-lease a portion of its headquarters facility.  For the period ended December 31, 2004, the Company recorded a restructuring adjustment of $466,000 to reduce a portion of the lease abandonment charges previously recorded in fiscal 2004 based upon expected future rental income, net of any costs associated with the sub-lease agreement.

As of June 30, 2006, restructuring charges of $130,000 related to the headquarters facility will be paid out through October 2007.

NOTE I – STOCKHOLDERS’ EQUITY

Stock Option Plan

The Company has a stock option plan under which officers, directors, employees and consultants have been or may be granted incentive and nonqualified stock options to purchase the Company’s common stock at fair market value on the date of grant.  The options become exercisable over varying periods and expire up to 10 years from the date of grant.  The Company applies APB Opinion 25, Accounting for Stock Issued to Employees, and related interpretations in accounting for its plans.  No stock-based employee compensation cost is reflected in net income, as all options granted under this plan had an exercise price equal to the market value of the underlying common stock on the date of the grant.

The Financial Accounting Standards Board (“FASB”) issued FASB Statement No. 123 (revised 2004), Share-Based Payment, on December 16, 2004.  This statement supersedes APB Opinion 25 and requires the compensation cost relating to share-based payment transactions to be recognized in a company’s financial statements.  That cost will be measured based on the fair value of the equity or liability instruments issued.   The Company is not required to adopt Statement 123(R) until the fiscal year that begins after December 15, 2005.  The Company has not completed its evaluation of Statement 123(R).

The following table illustrates the effect on net loss and loss per share if the Company had applied the fair value recognition provisions of FASB Statement 123, Accounting for Stock-Based Compensation, to stock-based employee compensation.

8

	Three Months Ended						Nine Months Ended
	June 30,						June 30,
	2006			2005			2006			2005
Net loss, as reported	$	(1,044	)	$	(841	)	$	(2,687	)	$	(2,000	)
Deduct: Total stock-based employee compensation expense determined under fair value based, net of related tax effects	(54		)	(81		)	(163		)	(224		)
Pro forma net loss	$	(1,098	)	$	(922	)	$	(2,850	)	$	(2,224	)
Loss per share
Basic and Diluted – as reported	$	(0.21	)	$	(0.18	)	$	(0.55	)	$	(0.42	)
Basic and Diluted – pro forma	$	(0.22	)	$	(0.19	)	$	(0.58	)	$	(0.47	)

Additional Paid In Capital

During the nine months ended June 30, 2006, Additional Paid In Capital increased $590,000 due to the exercise of stock options and $395,000 related to the issuance of Restricted Stock Awards.

Deferred Compensation From Restricted Stock

During the nine months ended June 30, 2006, there were Restricted Stock Awards of 68,500 shares and $34,900 of expense was recognized related to outstanding Restricted Stock Awards.  The vesting period for these awards currently ranges from one to two years.  Those that vest over a one-year period vest without other conditions.  Those that vest over a two-year period vest only if certain performance criteria are met.

NOTE J – NET LOSS PER SHARE

The Company’s basic loss per share amounts have been computed by dividing net loss by the weighted average number of outstanding common shares. Diluted loss per share is computed by dividing net loss by the weighted average number of outstanding common shares and common share equivalents attributable to the assumed exercise of stock options, if such effects are dilutive.

NOTE K – INCOME TAXES

In July 2006, the FASB issued FASB Interpretation No. 48 ("FIN 48"), Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement 109. FIN 48 prescribes a comprehensive model for recognizing, measuring, presenting and disclosing in the financial statements tax positions taken or expected to be taken on a tax return, including the decision whether to file or not to file in a particular jurisdiction. FIN 48 is effective for fiscal years beginning after December 15, 2006. If there are changes in net assets as a result of application of FIN 48 these will be accounted for as an adjustment to retained earnings. The Company is currently assessing the impact of FIN 48 on its consolidated financial position and results of operations.

NOTE L – SIGNIFICANT CUSTOMERS

Sales to significant customers as a percentage of sales for the nine-month period ended June 30, are shown in the chart below.

	2006		2005
Customer A	14	%	4	%
Customer B	13		24
	27	%	28	%

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Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.

FORWARD-LOOKING STATEMENTS

Certain statements in this Form 10-QSB are forward-looking and should be read in conjunction with cautionary statements in Ciprico’s other SEC filings, reports to stockholders and news releases.  Such forward-looking statements, which reflect our current view of sales growth rates, product development, adequacy of cash and other future events and financial performance, involve known and unknown risks that could cause actual results and facts to differ materially from those expressed in the forward-looking statements for a variety of reasons.  These risks and uncertainties include, but are not limited to: (i) competitive factors, including pricing pressures; (ii) variability in quarterly sales; (iii) economic trends generally and in various markets; (iv) general economic conditions; (v) market acceptance and unanticipated risks associated with introducing new products and features; (vi) successful integration of new businesses; (vii) sales and distribution issues, (viii) dependence on suppliers, (ix) limited backlog and (x) other events and important factors disclosed previously and from time to time in our filings with the SEC. Investors should take such risks into account when making investment decisions. Future SEC filings, future press releases and oral or written statements made by us or with our approval, which are not statements of historical fact, may also contain forward-looking statements. Stockholders and other readers are cautioned not to place undue reliance on these forward-looking statements.  Forward-looking statements speak only as of the date on which they were made, and except as required by law, we assume no obligation to update any forward-looking statements. Although we believe that the expectations reflected in these statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.  We do not intend to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.

OVERVIEW

Ciprico Inc. designs, manufactures and markets appliances, services and solutions for digital media applications.  Our solutions combine storage, networking and computing technologies to improve the productivity of customer workflows for the capture, creation, manipulation, archival, management and distribution of digital assets.   Our storage appliances are designed primarily for visual computing applications ranging from high-speed image data capture, through processing and analysis, to real-time playback at sustained performance levels within our target markets: content creation (including both pre-media and video), post production (including digital cinema), broadcast, military and government and other rich media application markets.

The following discussion and analysis of the financial condition and results of operations of Ciprico Inc. should be read in conjunction with the Condensed Financial Statements and the Notes thereto, included elsewhere in Part I, Financial Information.

RESULTS OF OPERATIONS

Three and Nine-Month Period Ended June 30, 2006
Sales for the quarter of $2.7 million were $200,000 less than sales in the previous quarter and $400,000 less than the third quarter of the prior fiscal year.  The third quarter was a weak sales quarter for our marketplace in general which impacted our company as well. This overall softness affected our MediaVault™ line as sales growth only increased 6% from the previous year’s third quarter, a significant decline in growth rate from the last four quarters but one we believe will be reversed as the new products announced in April begin shipping for revenue in the fourth quarter.  Within the MediaVault™ line, there was consistent growth in the newer 4-Gig products while sales of the more mature products have fallen off somewhat.  Non-MediaVaultä sales were consistent with the previous quarter but off 32% or $1 million compared to the third quarter a year ago.  The mix of new products continues to provide us with revenue growth and improving margins while the legacy product sales continue to decline.  For the nine months ended June 30, 2006, sales of $9.1 million were consistent with the same prior year period.  As noted for the quarter results, the legacy product sales continue to decline and the sales continue to rise for products introduced in the last 24 months. The MediaVaultä product line was purchased in the second quarter of the prior year and sales related to this product line for the first nine months of fiscal 2006 were $5.2 million. Current year to date results also include revenue related to custom engineering work done for customers of the FlexSTORE™ services platform.

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Our revenue growth is dependent on the growing use of our products in customer applications, market acceptance of new products, our ability to market products obtained through acquisition, expansion of products into new applications within targeted market segments and the success of programs that specify Ciprico products.  Recent product introductions have been received well by the market and we are investing to bring more product innovations to market.

Despite the relative stagnant sales level, gross profit as a percentage of sales improved over both the previous quarter and the prior-year third quarter to 39% compared to 37% for the prior quarter. For the nine-month period ended June 30, 2006, gross profit of $3.5 million represented 38% as a percentage of revenue vs. 36% in the prior-year period.  The increase in gross margin percentage can be primarily attributed to the sales of the MediaVault™ product line, which carries higher margins, as well as margin related to the engineering work done for certain customers of the FlexSTORE™ services platform.

Total operating expenses for the quarter were $2.3 million, slightly higher than either the previous quarter or the prior-year third quarter.  Operating expenses of $6.7 million for the nine-month period ended June 30, 2006 were an increase of 18% over the $5.7 million for same prior year period.  The prior-year nine-month period includes only 5 months of MediaVault™ product line expenses, as it was not purchased until January 31, 2005. In addition, the prior fiscal year included a positive restructuring adjustment of $466,000 to reduce a portion of the lease abandonment charges previously recorded in fiscal 2004 as a result of an agreement to sub-lease a portion of it’s headquarters facility.  A discussion of the three components of operating expenses follows.

Research and development expenses were $927,000 and $946,000 for the three-month periods ended June 30, 2006 and 2005, respectively.  Research and development expenses were $2.8 million and $2.6 million for the nine-month periods ended June 30, 2006 and 2005, respectively.  This reflects an increase in headcount, contracted outside services, and expense related to the MediaVault™ product line and MediaVault™ Services, additional investments in both the DiMeda® product family and the FlexSTORE™ platform, offset by drastic reductions in expense related to legacy products.

Sales and marketing expenses were $773,000 and $736,000 for the three-month periods ended June 30, 2006 and 2005, respectively. Sales and marketing expenses were $2.3 million and $2.0 million for the nine-month periods ended June 30, 2006 and 2005, respectively. The increase between comparable periods is primarily the result of our reinvestment into sales and marketing as new products are being brought to market.

General and administrative expenses were $564,000 and $466,000 for the three-month periods ended June 30, 2006 and 2005, respectively. General and administrative expenses were $1.6 million and $1.2 million for the nine-month periods ended June 30, 2006 and 2005, respectively.  In addition to increasing costs for insurance, professional fees related to an increasing regulatory environment, the comparison is affected by several accounting adjustments that favorably impacted the prior year costs.

Other income is primarily interest income and is up over the previous year’s third quarter, despite lower invested balances, due to market conditions and aggressive management of our investments.

Net loss for the three-month period ended June 30, 2006 was ($1.04 million), ($0.21) a share, which is approximately $100,000 more than the net loss of the previous quarter and $200,000 more than the net loss of ($841,000), ($0.18) per share, for the same prior-year period. Net loss for the nine-month period ended June 30, 2006 was ($2.7 million), ($0.55) a share, compared to a ($2.5 million) net loss for the same period in the prior year, excluding the sublease restructuring adjustment noted above.   Including all restructuring items, the prior-year net loss was ($2.0 million).

The Company believes discussion of operating expense and earnings information excluding the restructuring adjustment to be useful information that allows investors to better understand and compare the operational performance of the Company among periods.

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LIQUIDITY AND CAPITAL RESOURCES

As of June 30, 2006, we had cash, cash equivalents and marketable securities totaling $12.1 million compared to $16.1 million at September 30, 2005.  The decrease is directly related to funding of the loss of the first three quarters and payments related to the MediaVault™ product line acquisition and to a lesser extent to the purchase of the assets related to the RAIDCore™ product line.  Cash flows used in operating activities were $3.4 million for the nine-months ended June 30, 2006 compared to a use of $3.6 million for the same period last year.

The acquisition of the MediaVault™ product line included a promissory note.   At June 30, 2006 there is a remaining balance of $50,000 on the promissory note. This note bears interest at a rate of 5% per annum and requires quarterly payments through September 2006. The purchase of the RAIDCore™ product line also involves the purchase of some related inventory, the majority of such purchase will take place in the fourth quarter.

We believe our available cash and cash equivalents are adequate to fund: operations, anticipated capital expenditures and obligations related to the acquisitions, as well as any possible future acquisitions.

Item 3. Controls and Procedures

Ciprico management, including the Chief Executive Officer and Chief Financial Officer, have conducted an evaluation of the effectiveness of disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(f).  Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that the disclosure controls and procedures are effective in ensuring that all information required to be disclosed by the Company in reports that it files under the Exchange Act is recorded and reported within the time period covered by this report.  There have been no significant changes in the Company’s internal control over financial reporting that occurred during the period covered by this report that have materially affected or are reasonably likely to materially affect the Company’s control over financial reporting.

Management of Ciprico is responsible for establishing and maintaining effective internal control over financial reporting as is defined in Exchange Act Rule 13a-15(f).  The financial statements and other information presented in this report have been prepared in accordance with accounting principles generally accepted in the United States.  Ciprico’s internal control system is designed to provide reasonable assurance to our management and board of directors regarding the preparation and fair presentation of published financial statements.  Disclosure controls and procedures, no matter how well designed and implemented, can provide only reasonable assurance of achieving an entity’s disclosure objectives.  The likelihood of achieving such objectives is affected by limitations inherent in disclosure controls and procedures.  These include the fact that human judgment in decision-making can be faulty and that breakdowns in internal control can occur because of human failures such as simple errors or mistakes or intentional circumvention of the established process.  Management will continue to review our disclosure controls and procedures periodically to determine their effectiveness and to consider modifications or additions to them.

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PART II - OTHER INFORMATION

Item 1.Legal Proceedings

None

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds

As previously disclosed in an Form 8-K filing dated June 6, 2006: In connection with the Technology License and Asset Purchase Agreement entered into with Broadcom Corporation on June 6, 2006, Ciprico issued Broadcom a series of Warrants to purchase Ciprico common stock at certain set prices, provided that certain revenue targets are achieved by Ciprico in the future.  A copy of the Warrants was filed with the Form 8-K.

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

31.1Certification of the Chief Executive Officer Pursuant to 17 C.F.R
Section 240.13a-14(a)(Section 302 of the Sarbanes-Oxley Act of 2002)

31.2Certification of the Chief Financial Officer Pursuant to 17 C.F.R
Section 240.13a-14(a)(Section 302 of the Sarbanes-Oxley Act of 2002)

32.1Certification of the Chief Executive Officer Pursuant to 18 U.S.C
Section 1350 (Section 906 of the Sarbanes-Oxley Act of 2002)

32.2Certification of the Chief Financial Officer Pursuant to 18 U.S.C
Section 1350 (Section 906 of the Sarbanes-Oxley Act of 2002)

SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

CIPRICO INC.
Dated: August 11, 2006	/s/ James W. Hansen
	James W. Hansen,
	Chief Executive Officer
Dated: August 11, 2006	/s/ Monte S. Johnson
	Monte S. Johnson,
	Chief Financial Officer

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EX-31.1

EXHIBIT 31.1

CERTIFICATION PURSUANT TO
C.F.R SECTION 240.13a-14(a)
(SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002)

I, James W. Hansen, Chief Executive Officer of Ciprico Inc. (“the Company”), certify that:

1.             I have reviewed this report on Form 10-QSB of Ciprico Inc.;

2.             Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.             Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;

4.             The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, is made known to us by others within the Company, particularly during the period in which this report is being prepared;

(b) Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c) Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the Company’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and

5.             The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors:

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.

Dated: August 11, 2006	Signature:	/s/ James W. Hansen
		James W. Hansen
		Chief Executive Officer

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EX-31.2

EXHIBIT 31.2

CERTIFICATION PURSUANT TO
C.F.R SECTION 240.13a-14(a)
(SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002)

I, Monte S. Johnson, Chief Financial Officer of Ciprico Inc.(“the Company”), certify that:

1.             I have reviewed this report on Form 10-QSB of Ciprico Inc.;

2.             Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.             Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;

4.             The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, is made known to us by others within the Company, particularly during the period in which this report is being prepared;

(b) Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c) Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the Company’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and

5.             The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors:

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.

Dated: August 11, 2006	Signature:	/s/ Monte S. Johnson
		Monte S. Johnson
		Chief Financial Officer

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EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Ciprico Inc. (the “Company”) on Form 10-QSB for the quarter ended June 30, 2006 as filed with the Securities and Exchange Commission (the “Report”), I, James W. Hansen, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1)           The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)           The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: August 11, 2006	/s/ James W. Hansen
	James W. Hansen Chief Executive Officer

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EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Ciprico Inc. (the “Company”) on Form 10-QSB for the quarter ended June 30, 2006 as filed with the Securities and Exchange Commission (the “Report”), I, Monte S. Johnson, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1)           The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)           The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: August 11, 2006	/s/ Monte S. Johnson
	Monte S. Johnson Chief Financial Officer

1