-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IA6HPfNFMC+C0xvJ4gqk0ldsN5hR3WvFR43uYq1u1XXrn7ryhwu6pkdIQa4W3oar pqz0KtWcOo2VBemZb32qRg== 0000930661-99-001186.txt : 19990517 0000930661-99-001186.hdr.sgml : 19990517 ACCESSION NUMBER: 0000930661-99-001186 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990514 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CLINICOR INC CENTRAL INDEX KEY: 0000941818 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-TESTING LABORATORIES [8734] IRS NUMBER: 880309093 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-21721 FILM NUMBER: 99624447 BUSINESS ADDRESS: STREET 1: 1717 WEST SIXTH STREET SUITE 400 CITY: AUSTIN STATE: TX ZIP: 78746 BUSINESS PHONE: 5123443300 MAIL ADDRESS: STREET 1: 1717 WEST SIXTH STREET SUITE 400 CITY: AUSTIN STATE: TX ZIP: 78703 10QSB 1 FORM 10-QSB ================================================================================ 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, 1999 [_] 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 5, 1999, 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 --- --- ================================================================================ TABLE OF CONTENTS Page ---- PART I FINANCIAL INFORMATION Item 1. Financial Statements (unaudited) Condensed Balance Sheets - March 31, 1999 and December 31, 1998 3 Condensed Statements of Operations - three months ended March 31, 1999 and 1998 4 Condensed Statements of Cash Flows - three months ended March 31, 1999 and 1998 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 13 Signatures 14 2 PART I FINANCIAL INFORMATION Item 1. Financial Statements (unaudited) CLINICOR, INC. BALANCE SHEET ================================================================================
MARCH 31 DECEMBER 31, 1999 1998 (UNAUDITED) (NOTE A) -------------- ------------- ASSETS Current assets: Cash and cash equivalents $ 1,174,545 $ 1,665,672 Accounts receivable, net 2,240,382 2,272,376 Prepaid and other current assets 431,397 352,337 -------------- ------------- Total current assets 3,846,324 4,290,385 Property and equipment, net 1,193,905 1,097,441 Other assets, net 2,870 1,717 -------------- ------------- TOTAL ASSETS $ 5,043,099 $ 5,389,543 ============== ============= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of obligations under capital leases $ 405,479 $ 307,796 Accounts payable and accrued liabilities 1,627,359 1,414,636 Line of credit 794,123 416,624 Deferred revenue 628,947 989,540 -------------- ------------- Total current liabilities 3,455,908 3,128,596 Obligations under capital leases, less current portion 332,260 324,376 -------------- ------------- Total liabilities 3,788,168 3,452,972 Shareholders' equity: Class A convertible preferred stock, no par value, 5,181 shares authorized 4,253 and 4,253 shares issued and outstanding, respectively , at liquidation value 4,253,000 4,253,000 Class B convertible preferred stock, no par value, 50,000 shares authorized, issued and outstanding, at liquidation value 5,000,000 5,000,000 Common stock, $0.001 par value, 75,000,000 shares authorized, 4,169,734 and 4,169,734 shares issued and outstanding, respectively 4,170 4,170 Additional paid-in capital 483,608 718,683 Deferred compensation (16,647) (22,196) Accumulated deficit (8,469,200) (8,017,086) -------------- ------------- Total shareholders' equity 1,254,931 1,936,571 -------------- ------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 5,043,099 $ 5,389,543 ============== =============
Note A:The balance sheet at December 31, 1998 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 CLINICOR, INC. STATEMENT OF OPERATIONS ================================================================================
THREE MONTHS ENDED MARCH 31, ---------------------------- 1999 1998 ----------- ----------- Service revenue: Gross revenue $ 3,190,315 $ 2,867,196 Reimbursable costs 1,577,134 668,280 ----------- ----------- Net service revenue 1,613,181 2,198,916 Operating costs and expenses: Direct costs 1,081,566 1,851,327 Selling, general and administrative 871,928 826,053 Depreciation and amortization 101,063 105,356 ----------- ----------- Total operating costs and expenses 2,054,557 2,782,736 ----------- ----------- Loss from operations (441,376) (583,820) Other income and expenses: Interest income 29,509 37,609 Interest expense (40,247) (15,011) ----------- ----------- Other income and expenses (10,738) 22,598 ----------- ----------- NET LOSS $ (452,114) $ (561,222) =========== =========== Net loss $ (452,114) $ (561,222) Preferred stock dividends (235,074) (228,606) ----------- ----------- Net loss applicable to common stock $ (687,188) $ (789,828) =========== =========== BASIC/DILUTED EARNINGS (LOSS) PER SHARE $ (0.16) $ (0.19) =========== =========== WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 4,169,734 4,124,654 =========== ===========
The accompanying notes are an integral part of these financial statements. 4 CLINICOR, INC. STATEMENT OF CASH FLOWS ================================================================================
THREE MONTHS ENDED MARCH 31, ---------------------------------- 1999 1998 (UNAUDITED) (UNAUDITED) ------------- ------------- OPERATING ACTIVITIES: Net loss $ (452,114) $ (561,222) Adjustments to reconcile net loss to cash used in operating activities: Depreciation and amortization 101,063 105,356 Noncash stock option compensation expense 5,550 (246,951) Net changes in assets and liabilities: Accounts receivable 31,996 72,299 Prepaid expenses and other assets (80,213) (56,477) Accounts payable and accrued liabilities 127,648 (69,709) Deferred revenue (360,594) 142,756 ------------- ------------- Net cash used in operating activities (626,665) (613,948) INVESTING ACTIVITIES: Purchases of property and equipment (37,308) (10,874) FINANCING ACTIVITIES: Payments on capital leases (54,655) (10,643) Net proceeds from issuing common stock 0 5,000 Net borrowings under line of credit 377,500 572,669 Preferred stock dividends (150,000) (111,667) ------------- ------------- Net cash provided by financing activities 172,845 455,359 ------------- ------------- Net decrease in unrestricted cash and cash equivalents (491,128) (169,463) Unrestricted cash and cash equivalents at beginning of year 1,665,672 3,255,182 ------------- ------------- Unrestricted cash and cash equivalents at end of period $ 1,174,545 $ 3,085,719 ============= ============= SUPPLEMENTAL CASH FLOW DISCLOSURES: Interest paid $ 40,247 $ 15,011 ============= ============= Non-cash financing activities: Capital lease obligations $ 160,223 $ - ============= =============
The accompanying notes are an integral part of these financial statements. 5 Clinicor, Inc. Notes to Financial Statements March 31, 1999 (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, 1999 are not necessarily indicative of the results that may be expected for the year ending December 31, 1999. 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, 1999 for the fiscal year ended December 31, 1998 (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, 1999 and March 31, 1998, stock options and warrants to purchase 2,223,331 and 1,930,274 shares of common stock, respectively; Class A Convertible Preferred Stock convertible into 2,835,333 and 2,620,000 shares of common stock, respectively; and Class B Convertible Preferred Stock convertible into 1,818,182 and 1,666,667 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. 6 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION The information set forth and discussed below for the three months ended March 31, 1999 and 1998, 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 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 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 net service revenue backlog was approximately $5.1 million at March 31, 1999 as compared to $4.4 million at December 31, 1998. 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 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 RESULTS OF OPERATIONS Three months ended March 31, 1999 compared with three months ended March 31, - ---------------------------------------------------------------------------- 1998 - ----- 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, 1999 and 1998, 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 March 31, ---------------------------------------- 1999 1998 ---------------------------------------- Service revenues $ 3,190,315 $ 2,867,196 Reimbursable costs 1,577,134 668,280 --------- --------- Net service revenue 1,613,181 100.0% 2,198,916 100.0% Operating costs and expenses: Direct costs 1,081,566 67.0% 1,851,327 84.2% Selling, general and administrative 871,928 54.1% 826,053 37.6% Depreciation and amortization 101,063 6.3% 105,356 4.8% --------- --------- Total operating costs and expenses 2,054,557 127.4% 2,782,736 126.6% --------- --------- Loss from operations (441,376) -27.4% (583,820) -26.6% Net interest income (expense) (10,738) -0.6% 22,598 1.0% --------- --------- Net loss $ (452,114) -28.0% $ (561,222) -25.6% ========= =========
Net service revenues decreased approximately $ 586,000 or 27%. The decrease is primarily attributable to a decrease in the number of active trials and to the increase in reimbursed costs. Reimbursable costs increased to approximately 49% of gross revenue for the three months ended March 31, 1999 as compared to 23% of gross revenue for the same period in 1998. This increase is a direct result of the contract mix for which revenue was recognized during the respective periods. Direct costs decreased approximately $770,000, or 42%. The decrease in direct costs is due to a reduced level of clinics that were directly managed by the Company in the first quarter of 1999, as well as reductions of full-time study, patient and data management staff and related overhead that occurred during 1998 as a result of contract cancellations. As a percentage of net service revenues, direct costs were approximately 67% for the three months ended March 31, 1999 as compared to approximately 84% for the same period in 1998. Selling, general and administrative expenses increased by approximately $46,000 during the first quarter of 1999 as compared to the comparable period in 1998. Selling, general and administrative expenses were approximately 54% of net service revenue for the three months ended March 31, 1999, as compared to 38% for the corresponding period in 1998. The increase 9 in the percentage of selling, general and administrative expenses to net service revenues is primarily a result of the decline in net service revenues. Depreciation and amortization expenses decreased approximately $4,000 during the three months ended March 31, 1999 as compared to the comparable period in 1998. Depreciation expense as a percentage of net service revenue was approximately 6% for the three months ended March 31, 1999 as compared to 4% for the corresponding period in 1998. The increase in the percentage of depreciation expense to net service revenues is primarily a result of the decline in net service revenues. Interest income decreased by approximately $8,000 during the three months ended March 31, 1999 as compared to the comparable period in 1998. This is primarily the result of the decrease in the funds available for investment. Interest expense increased by approximately $25,000 during the three months ended March 31, 1999 as compared to the comparable period in 1998. The Company recorded no income tax benefit as a result of the net operating losses for the three months ended March 31, 1999 and 1998, 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 $2,240,000 at March 31, 1999 from approximately $2,270,000 at December 31, 1998. Deferred revenues decreased to approximately $630,000 at March 31, 1999 from approximately $990,000 at December 31, 1998. Cash collections from clinical study contracts for the three months ended March 31, 1999, totaled approximately $2,900,000 as compared with approximately $3,000,000 for the corresponding period in 1998. Net cash flow used in operating activities was approximately $626,000 for the three months ended March 31, 1999, as compared to approximately $614,000 in the corresponding period in 1998. The continuation of the negative trend in net cash used in operations in 1999 is primarily attributable to the net loss and the decline in deferred revenue, which occurred in the three months ended March 31, 1999. Net cash decreased by approximately $490,000 for the three months ended March 31, 1999. The net cash operating loss for the first quarter of 1998 was primarily financed with the proceeds from a working capital line of credit and short-term investments. 10 Investing activities are attributable to purchases of property and equipment and they increased to approximately $37,000 in the three months ended March 31, 1999 as compared to approximately $11,000 in the comparable period of 1998. Management believes that its existing capital resources, together with cash flows from operations and borrowing capacity under its working capital line of credit, will be sufficient to fund its operations in 1999. Should anticipated growth in contract backlog levels and net service revenue not occur as expected during the remainder of 1999 or should pending projects be delayed or cancelled, the Company will be required to seek additional external financing in early 2000. Such external financing might be in the form of public or private issuances of equity or debt securities or bank financing. There can be no assurance that such financing can be obtained or obtained on terms acceptable to the Company. Regardless of the availability of external financing, the Company intends to continue to investigate strategies to preserve working capital. Such strategies may include deferring payment of future quarterly dividends on its Class B Preferred Stock or negotiating to pay such dividends in securities of the Company, rather than cash. In addition, the Company may acquire in the future businesses to expand its contract backlog and to enhance its therapeutic expertise. Any such acquisition would also require additional external financing. There can be no assurance that such financing will be available on terms acceptable to the Company. 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. One of the software applications will require a minor upgrade to a new version release in order to be certified by Oracle to be Year 2000 compliant. This upgrade is expected to be completed by June 30, 1999. 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 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 intends to perform 11 an integrated systems test in the third quarter to assure itself that all IT and non-IT systems will be fully capable of handling the Year 2000 issue. The Company is in the process of contacting its principal clients concerning the state of their Year 2000 readiness. Until that effort is completed, the Company cannot be assured that those other systems will be Year 2000 compliant on time and is unable to estimate the impact of such a failure. The Company believes that its most likely worst case Year 2000 scenarios would relate to problems with the systems of unrelated third parties rather than the Company's internal systems or those of its clients. It is clear that the Company has the least ability to assess and remediate the Year 2000 problems of third parties. The Company believes the risks are greatest with infrastructure (e.g. electricity supply and water service), telecommunications and transportation systems. The Company is not in a position to identify or to avoid all possible scenarios; however, the Company is currently assessing scenarios. This contingency planning will continue through 1999 as the Company learns more about the preparations and vulnerabilities of third parties regarding Year 2000 issues. Due to the large number of variables involved, the Company cannot provide an estimate of the damage it might suffer if any of these scenarios were to occur. As we get closer to December 31, 1999, certain of the Company's customers may decide to delay starting or awarding new clinical trials as a part of a general restriction of awarding new clinical trials. Should any of the Company's customers adopt such a strategy, this would have a material adverse impact of the Company's future operating results. Based on currently available information, management does not believe that the Year 2000 issues discussed above related to internal systems will have a material adverse impact on the Company's financial condition or overall trends in results of operations. However, it is uncertain to what extent the Company may be affected by such matters. In addition, there can be no assurance that the failure to ensure Year 2000 capability by a customer or other third party would not have a material adverse effect on the Company's financial condition or overall trends in results of 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, 1998. 12 PART II OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits. 10(r) Employment Agreement effective February 16, 1999 between the registrant and Rosina Maar, M.D. 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 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 14, 1999 By: /s/ Robert S. Sammis ------------------------------------- Robert S. Sammis President (Principal Executive Officer) Date: May 14, 1999 By: /s/ James W. Clark, Jr. ------------------------------------- James W. Clark, Jr. Vice President and Chief Financial Officer (Principal Financial Officer) 14 EX-10.R 2 EMPLOYMENT AGREEMENT FOR ROSINA MAAR, M.D. EXHIBIT 10(R) EMPLOYMENT AGREEMENT THIS AGREEMENT is executed to be effective February 16, 1999 (the "Effective Date") between Clinicor, Inc., a Nevada corporation (the "Corporation"), and Rosina Maar, M.D. (the "Employee"). W I T N E S S E T H: ------------------- 1. Employment. The Corporation hereby employs the Employee and the ---------- Employee hereby accepts such employment and agrees to perform the services specified herein upon the terms and conditions hereinafter set forth. 2. Term. Subject only to the provisions for termination as hereinafter ---- set forth, the term of this Agreement shall begin on the Effective Date and shall terminate two (2) years and one (1) day thereafter. Unless either party gives the other thirty (30) days written notice prior to the expiration of the initial or any renewal term hereof, this Agreement shall automatically renew for three (3) additional periods of one (1) year each. 3. Compensation. The Corporation shall pay to the Employee a minimum base ------------ salary of Two Hundred Twenty-Five Thousand and No/100 Dollars ($225,000.00) per year, payable in equal bi-monthly installments, net of applicable withholdings. The Corporation shall also pay to the Employee an initial signing bonus of Thirty-Five Thousand and No/100 Dollars ($35,000.00), payable within forty-five (45) days after the Effective Date. The Employee shall be entitled to receive such further compensation in the form of bonuses and salary increases as shall be authorized by the Board of Directors of the Corporation (the "Board") from time to time. 1 4. Benefits. -------- (a) In addition to the direct remuneration provided for in the preceding Section 3, the Employee shall be entitled to participate in and to receive benefits consistent with those of other executive officers of the Corporation. Set forth on Exhibit A hereto is a summary of company benefits --------- currently made available to executive officers of the Corporation. The Employee understands and acknowledges that these benefits may change from time to time in the ordinary course of the Corporation's business. With respect to the Corporation's vacation policy only, the Employee shall be credited with three (3) years of service, in addition to actual years of service, so that she shall initially be entitled to three (3) weeks of vacation per year. (b) The Corporation shall, simultaneously with the commencement of the Employee's employment hereunder (or as soon thereafter as a meeting of the Board may conveniently be convened, but in no event more than two (2) month following the Effective Date), grant to the Employee options to purchase a total of three hundred thousand (300,000) shares of the Corporation's common stock. The exercise price applicable to such options shall be the closing price of such stock on the Over-the-Counter Bulletin Board (or, if such stock is not traded on the Over-the-Counter Bulletin Board, on such other market as the stock is publicly traded) on the business day immediately preceding the date of grant. Twenty percent (20%) of the options shall vest on the date of grant, and the balance of the options shall vest in four (4) equal annual increments on the anniversary of the Effective Date, commencing on the first anniversary of the Effective Date, in the year 2000, provided the Employee is still employed by the Corporation on such dates. The options, 2 if unexercised, shall terminate and expire ninety (90) days after the termination of the Employee's employment by the Corporation, and in any event no later than the seventh anniversary of the Effective Date, in the year 2006. The Employee understands and acknowledges that the grant of options as set forth above does not constitute a promise by the Corporation to continue the term of the Employee's employment hereunder beyond the term provided for in Section 2 hereof. The description of the terms and conditions of the options contained in this Section 4(b) is in all respects subject to and qualified by the terms and conditions of the Corporation's Amended and Restated 1995 Director, Employee and Consultant Stock Option Plan and the standard form of Option Agreement thereunder, each of which has been supplied to the Employee. (c) The Corporation acknowledges that Employee will maintain a residence, in Cary, North Carolina during the term of this Agreement. The Corporation agrees to provide living accommodations and a means of travel (subject to the expense limitations and other terms set forth on Exhibit B --------- hereto) when the Employee is present in Austin, Texas. (d) The Corporation shall reimburse to the Employee all business expenditures reasonably incurred by the Employee, subject to the Corporation's expense reimbursement policy in effect from time to time and to the expense limitations set forth on Exhibit B hereto. --------- 5. Duties. The Employee has been selected to serve as Chief Operating ------ Officer of the Corporation, and she agrees to perform the duties normally incidental to this office for as long as she holds the office. The Employee acknowledges that she occupies this office at the discretion of the Board and that her title may be changed at any time and that such change will not constitute a breach 3 of this Agreement. The Employee agrees to perform for the Corporation such duties and responsibilities as may reasonably be prescribed from time to time by the Board. 6. Extent of Service. The Employee shall devote her full time, attention ----------------- and energy to the business of the Corporation and shall faithfully, industriously, and to the best of her ability perform all of the duties that may be required of her as an employee and as an officer of the Corporation. The Employee shall not directly or indirectly render any services to any other person or organization, whether for compensation or otherwise, without the prior consent of the Board. The Employee will not engage in activities, businesses, or investments that would in any way conflict with the best interests of the Corporation. The parties agree that the passive ownership by the Employee of up to one percent (1%) of the outstanding shares of capital stock of a publicly held entity shall not be deemed to violate the provisions of this Section 6, even if such entity competes with the Corporation. 7. Confidentiality and Non-Solicitation. ------------------------------------ (a) The Employee recognizes and acknowledges that she will have access to certain Confidential Information of the Corporation (as hereinafter defined) and that such information constitutes valuable, special and unique property of the Corporation. The Employee will not, during the term of her employment or for a period of one (1) year thereafter, directly or indirectly divulge, disclose or otherwise communicate or make available any of such Confidential Information to any person, firm, corporation, association, or other entity for any reason or purpose whatsoever without the prior written consent of the Corporation. Confidential Information includes 4 without limitation each of the following with respect to the Corporation: (i) financial information; (ii) information concerning marketing plans or strategies; (iii) information concerning sponsors, investigators and other third parties with whom the Corporation has contacts; (iv) information concerning the Corporation's markets and potential markets; (v) information concerning business methods and practices; (vi) client proprietary information, contracts, proposals, work in process and research; (vii) information concerning development or marketing programs or plans or client lists; and (viii) any other information that the Corporation reasonably treats and identifies as confidential. Confidential Information shall also include without limitation any information or materials received by the Corporation from third parties in confidence (or subject to nondisclosure or similar agreements). Notwithstanding the foregoing, Confidential Information does not include information the Employee had prior to her employment with the Corporation or information that is generally available to the public or in the pharmaceutical industry. The Employee should consider all information coming into her possession by virtue of her employment relationship with the Corporation to be Confidential Information unless it is freely available to the public. (b) The Employee shall not, during her employment with the Corporation or for a period of six (6) months thereafter, directly or indirectly, willfully solicit, or willfully interfere with the Corporation's relationships with, or willfully entice away from the Corporation, any sponsor, any investigator with whom the Employee has had a relationship during her employment at the Corporation or any other person, firm or corporation who has at any time during the term of the Employee's employment hereunder done business with the Corporation; provided, however, nothing 5 herein shall prevent the Employee from doing business with any person, firm or entity with whom she has had a business relationship prior to the Employee's employment with the Corporation. The Employee shall not, during the term of her employment with the Corporation or for a period of six (6) months thereafter, offer employment to or procure employment for any person who has at any time during the term of the Employee's employment hereunder been employed by the Corporation. 8. Materials. All data, protocols, listings, charts, drawings, records, --------- documents, programs, software, documentation, memoranda, journals, notebooks, records, files, drafts, specifications and similar items relating to the business of the Corporation or its customers, whether compiled by the Employee, furnished to the Employee by the Corporation, its customers or clients or otherwise made accessible to the Employee or coming into her possession, while the Employee is in the employ of the Corporation, and copies of any such items, shall be and remain the sole and exclusive property of the Corporation or its customers or clients, as the case may be, and none of such items shall be removed from the Corporation's business premises by the Employee without the prior consent of the Corporation, except as required in the course of her employment. All of such items shall be returned to the Corporation by the Employee upon the termination of her employment with the Corporation for whatever reason. The provisions of this Section 8 shall not, however, prohibit the Employee from using any materials published by the Corporation and made available (without breach of this Section) to the general public. 6 9. Termination. ----------- (a) Death or Disability. Subject to any broader rights granted the ------------------- Employee under applicable law, including under the Family Medical Leave Act or under the Americans with Disabilities Act, in the event of the Employee's death or in the event of her disability for a period in excess of one (1) month during the term of this Agreement, the Corporation may terminate this Agreement, in which event the Corporation shall pay to the Employee or to her heirs or personal representatives the amount of compensation and benefits accrued under Sections 3 and 4 hereof through the date of death or (in case of disability) through the end of the one-month period commencing with the onset of disability. The Corporation shall thereafter have no further liability under this Agreement to the Employee or her heirs or personal representatives. "Disability" for purposes hereof shall be deemed to have occurred if the Employee because of injury or sickness is unable to perform each of the material duties of her occupation. (b) Termination with Cause by the Corporation. At any time during the ----------------------------------------- term hereof, the Corporation shall have the right to terminate for cause the Employee's employment under this Agreement upon the occurrence of any of the following events by the Employee: (i) willful or repeated violation of any of the material provisions of this Agreement, or persistent neglect of her material duties hereunder, provided that any termination pursuant to this subparagraph (i) shall be conducted in accordance with any applicable procedures contained at the time of such termination in the Corporation's Employee Handbook; (ii) dishonesty, fraud, embezzlement, defalcation, conviction of any felonious offense; or 7 (iii) intentionally imparting Confidential Information, as defined in Section 7, to competitors or to other third parties other than in the course of carrying out her corporate duties. Such termination shall be effective immediately upon the delivery to the Employee by the Corporation of written notice of such termination. In the event of a termination of the Employee's employment for cause in accordance with the provisions of this Section 9(b), the Corporation shall pay to the Employee on the date of termination all compensation and benefits accrued under Sections 3 and 4 of this Agreement to the date of such termination. Thereafter, the Corporation shall have no further obligation to the Employee. (c) Termination with Cause by the Employee. At any time during the -------------------------------------- term hereof, the Employee shall have the right to terminate her employment hereunder for cause upon the failure of the Corporation to comply with any of the material terms of this Agreement. Such termination shall be effective immediately upon the delivery to the Corporation by the Employee of written notice of such termination. In the event of a termination of the Employee's employment for cause in accordance with the provisions of this Section 9(c), the Corporation shall pay to the Employee on the date of termination all compensation and benefits accrued under Sections 3 and 4 of this Agreement to the date of such termination. Thereafter, neither the Corporation nor the Employee shall have any obligation to the other hereunder, except as accrued prior to the date of termination or as set forth in Sections 7 and 8 hereof. 10. No Termination Without Cause by the Corporation. The Corporation ----------------------------------------------- shall not be entitled to terminate the Employee's employment during either the initial or any renewal term hereof 8 without cause. The Corporation may, however, with or without cause, suspend the performance of the Employee's duties hereunder, such suspension to be effective immediately upon written notification by the Corporation to the Employee. In such event, the Employee shall continue to be an employee of the Corporation through the conclusion of the initial or renewal term during which suspension of duties occurs, and the Employee shall be entitled during such initial or renewal term to receive all compensation and benefits provided for herein, including any benefits related to the vesting of options pursuant to any Stock Option Agreement to which the Employee is a party. 11. Matters Involving Current Employer. The Employee represents and ---------------------------------- warrants to the Corporation that her execution, delivery and performance of this Employment Agreement will not in any respect contravene any obligations owed by her to any third party, including the Employee's former employer, Quintiles, Inc. 12. Notices. Any notice required or permitted to be given under this ------- Agreement shall be sufficient if in writing and if delivered (including delivery by private courier or facsimile transmittal) or sent by registered or certified mail, postage prepaid, return receipt requested to the Employee at 106 Preston Ridge, Cary, North Carolina 27513, or to the Corporation at 1717 West Sixth Street, Suite 400, Austin, Texas 78703, or to such other address as either party shall designate by written notice to the other. Such notice shall be effective as of the earlier of the date received or, if mailed as described above, three days after the date of mailing. 13. Assignment. This Agreement may not be assigned by either party hereto ---------- without the consent of the other party. Subject to the foregoing, the rights and obligations of the Corporation 9 under this Agreement shall inure to the benefit of and shall be binding upon the successors and assigns of the Corporation, and the rights of the Employee under this Agreement shall inure to the benefit of the heirs and personal representatives of the Employee. 14. Appointment to Board. The parties mutually acknowledge that the -------------------- Employee will be considered for a position on the Corporation's Board of Directors, commencing with the election of directors to be held at the Corporation's 1999 annual meeting. The Employee understands and acknowledges that her nomination for a Board position will be subject to the pro rata representation rights of the Corporation's preferred shareholders and, in particular, will be subject to the agreement of such preferred shareholders to expand the present size of the Board. There can be no assurance that the preferred shareholders will approve expansion of the Board. 15. Miscellaneous. ------------- (a) This Agreement shall be subject to and governed by the laws of the State of Texas and is performable in Travis County, Texas. (b) Whenever the context requires, the gender of all words used herein shall include the masculine, feminine and neuter, and the number of all words shall include the singular and plural. Titles of sections are for convenience only and neither limit nor amplify any of the provisions contained herein. (c) Upon execution of this Agreement, the right, duties and obligations of the parties hereto with respect to the matters set forth herein shall be governed solely by the provisions of this Agreement, and all representations, warranties, terms and conditions with respect to such 10 matters which may be contained in any prior writing executed by any of the parties shall be null and void and of no further force and effect. (d) Whenever possible, each provision of this Agreement will be interpreted in such a manner as to be effective and valid under applicable law, but if any provision of this Agreement, or the application thereof to any party hereto or under any circumstances, shall be invalid or unenforceable to any extent under applicable law, such provision shall be deemed severed from this Agreement with respect to such party or such circumstance, without invalidating the remainder of this Agreement or the application of such provision to other persons or circumstances, and a new provision shall be deemed to be substituted in lieu of the provision so severed which new provision shall, to the extent possible, accomplish the intent of the parties hereto as evidenced by the provision so severed. (e) In the event of a breach or threatened breach by the Employee of any provision of this Agreement, then in addition to any other available remedy to which the Corporation may be entitled, including the recovery of damages, the Corporation shall be entitled to an injunction restraining the Employee from breaching or attempting to breach, in whole or in part, any of the provisions of this Agreement. In addition, in the event of a breach by either party of any provision of this Agreement, the non-breaching or (in the event of litigation) the prevailing party shall be entitled to recover from the other party (the "Non-Prevailing Party") all reasonable costs and attorneys' fees incurred by the non-breaching or prevailing party in seeking any of such remedies; provided, however, the Non-Prevailing Party shall not be required to pay any amount of the other 11 party's costs and attorneys' fees that is in excess of one and one-half (1-1/2) times such Non-Prevailing Party's own bona fide costs and attorneys' fees incurred in connection with the matter. IN WITNESS WHEREOF, the parties have executed this Agreement to be effective as of the date set forth above. CLINICOR, INC. By: /s/ James W Clarke CFO -------------------------------------- JAMES W. CLARK, JR., Vice President of Finance, Treasurer and CFO "CORPORATION" /s/ Rosina Maar MD -------------------------------------- ROSINA MAAR, M.D. "EMPLOYEE" 12 EXHIBIT A --------- Summary of Benefits ------------------- WORKERS' COMPENSATION INSURANCE Workers' compensation benefits are provided in accordance with the Texas Workers' Compensation Act. Policy with Hartford Insurance allowing coverage throughout the United States. MEDICAL Clinicor provides a PPO medical insurance plan with Fortis Benefits for all full-time employees and their eligible dependents. A new employee is eligible for group medical coverage on the first day of the month immediately following 30 days of uninterrupted service. Clinicor pays the medical and dental premiums for each full-time employee. Preferred Provider One Hundred Plan 1000 - Deductible Amount: $1,000 - Family Deductible: $2,000 - Contracting Outpatient Physician Co-Pay: $20.00 - Emergency Room Co-Pay: Contracting - $50 each visit Non-Contracting - $100 each visit - Non Contracting Hospital Admission Co-Pay: $200 DENTAL - Preventive: $0 - Basic and Major: $50 (deductible) - Yearly Maximum Benefit: $1,000 - One year waiting period for major dental PRESCRIPTION DRUG CARD PLAN - Generic Prescription Drugs: $5 - Brand Name Prescription Drugs: $10 plus 30% 13 LIFE INSURANCE & SHORT AND LONG-TERM DISABILITY Benefits include a group life insurance and AD&D policy with Fortis Benefits for all full-time employees, with the premiums paid in full by Clinicor. A new employee is eligible for this coverage on the first day of the month immediately following 90 days of uninterrupted service. Clinicor provides group short-term and long-term disability insurance to all regular full-time employees. A new employee is eligible for this coverage on the first day of the month immediately following 90 days of uninterrupted service. 401(K) RETIREMENT PLAN Principal Financial Group offers a mix of investment profiles. Principal offers an internet site to find daily account values and information about investment options. Clinicor provides eligible employees with retirement benefits under a 401(k) Profit Sharing Plan. Clinicor matches 20% of the first 5%. Regular full-time employees become eligible for this plan on a quarterly basis. Clinicor also offers rollover options into Clinicor's qualified 401(k) plan for employees who wish to transfer their funds from other retirement plans into Clinicor's 401(k) plan. SECTION 125 FLEXIBLE BENEFIT PLAN The Flexible Benefit Plan allows employees to pay for certain eligible expenses with pre-tax dollars under Section 125 of the Internal Revenue Code. PERSONAL DAYS Eligible full-time employees accrue paid personal days off at the rate of 5.3 hours per month worked; however, no employee shall take a paid- personal day off until they have worked the 90 day introductory period with Clinicor. This policy takes the place of the more conventional "sick leave". We believe our policy will give employees more flexibility in their personal lives and will allow for better planning between employees and supervisors. Every eligible employee is entitled to 8 paid personal days per year of work. These personal days can be used for any combination of illness, doctors' appointments, family business, childcare, or other personal needs. They may include personal "mental health" days as needed, to avoid suffering from excessive stress. 14 VACATION DAYS Vacation pay will be at the same rate as any other regularly scheduled work week. The vacation pay is designed as an incentive and reward for length of service with Clinicor. After the first three months of employment, vacation is accrued at the following monthly rates, based on a forty-hour week. Eligible employees working at least 32 but less than 40 hours per week will receive vacation on a prorated basis. - Up to 3 years of service: 6.67 hours per month (80 hours per year) - From 3 to 8 years of service: 10 hours per month (120 hours per year) - More than 8 years of service: 13.3 hours per month (160 hours per year) HOLIDAYS The following are the national holidays, which are observed as paid holidays by Clinicor: New Year's Day Memorial Day Independence Day (July 4/th/) Labor Day Thanksgiving Day Day after Thanksgiving Christmas Day Details concerning the foregoing benefits are as set forth in the Corporation's Employee Handbook, which the Corporation reserves the right to modify from time to time. 15 EXHIBIT B --------- Expenses to be Reimbursed in Connection with -------------------------------------------- Employee's Presence in Austin, Texas ------------------------------------ As long as the Corporation requires the Employee to maintain her primary office in Austin, Texas, the Corporation agrees to reimburse the Employee for certain living expenses to be incurred when working at the Corporation's headquarters in Austin, Texas, and to provide a leased automobile for use by the Employee in Austin, as detailed below: . Housing: The Corporation will reimburse the Employee $1,100.00 per month for housing accommodations in Austin. . Transportation: The Corporation will provide the Employee a leased automobile for use in Austin. . Travel: The Corporation agrees to reimburse the Employee for two round trip airline tickets per month for travel by the Employee between Austin and her residence in North Carolina. The foregoing list includes all expenses to be reimbursed by the Corporation in respect of Employee's presence in Austin. The Corporation will reimburse the Employee ordinary business expenses, pursuant to travel and entertainment policies in effect from time to time, for expenses incurred in connection with entertaining clients and in connection with travel outside of Austin. 16 EX-27 3 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CLINICOR, INC. FINANCIAL STATEMENTS AS OF MARCH 31, 1999, AND FOR THE 3-MONTH PERIOD ENDED MARCH 31, 1999, AND THE ACCOMPANYING NOTES AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 3-MOS DEC-31-1999 JAN-01-1999 MAR-31-1999 1,174,545 0 2,260,382 20,000 434,267 3,849,194 2,100,916 907,011 5,043,099 3,455,908 332,260 0 9,253,000 4,170 (8,002,239) 5,043,099 1,613,181 1,613,181 1,081,566 2,054,557 0 0 (10,738) (452,114) 0 (452,114) 0 0 0 (452,114) (0.16) (0.16) CONSISTS OF CAPITALIZED LEASE OBLIGATIONS, EXCLUDING CURRENT PORTIONS.
-----END PRIVACY-ENHANCED MESSAGE-----