-----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, WkQQ+5zMwgMkjYeRyWXXORw+QWQX26FDP+C4TQO39J9/3KCCee17uTGXMAOfyjcs P2nWL33/a6yYKjJABFYUww== 0000950144-99-012927.txt : 19991115 0000950144-99-012927.hdr.sgml : 19991115 ACCESSION NUMBER: 0000950144-99-012927 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 19991112 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CELERIS CORP CENTRAL INDEX KEY: 0000946994 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMMERCIAL PHYSICAL & BIOLOGICAL RESEARCH [8731] IRS NUMBER: 411545493 STATE OF INCORPORATION: MN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-26390 FILM NUMBER: 99749814 BUSINESS ADDRESS: STREET 1: 1801 WEST END AVENUE STREET 2: SUITE 750 CITY: NASHVILLE STATE: TN ZIP: 37203 BUSINESS PHONE: 6153410223 MAIL ADDRESS: STREET 1: 1801 WEST END AVENUE STREET 2: SUITE 750 CITY: NASHVILLE STATE: TN ZIP: 37203 FORMER COMPANY: FORMER CONFORMED NAME: SUMMIT MEDICAL SYSTEMS INC /MN/ DATE OF NAME CHANGE: 19950621 10-Q 1 CELERIS CORPORATION 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1999 Or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ------------ ---------- Commission File Number 0-26390 CELERIS CORPORATION (Exact name of registrant as specified in its charter) MINNESOTA 41-1545493 (State or other jurisdiction of incorporation or organization) (IRS Employer ID No.) 1801 WEST END AVENUE SUITE 750 NASHVILLE, TN 37203 (615) 341-0223 (Address including zip code, of Registrant's principal executive offices and telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and has been subject to such filing requirements for the past 90 days. [X] Yes [ ] No As of October 15, 1999 there were 3,092,329 shares of the registrant's common stock outstanding. 2 CELERIS CORPORATION TABLE OF CONTENTS PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Condensed Consolidated Balance Sheets as of September 30, 1999 and December 31, 1998 ...........................1 Condensed Consolidated Statements of Operations For the Three and Nine Months Ended September 30, 1999 and 1998 .....................................................................2 Condensed Consolidated Statements of Cash Flows For the Nine Months Ended September 30, 1999 and 1998 .....................................................................3 Notes to Condensed Consolidated Financial Statements ...........................................................4 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations..................7 Item 3. Quantitative and Qualitative Disclosures About Market Risks ...........................................10 PART II. OTHER INFORMATION Item 1. Legal Proceedings .....................................................................................11 Item 5. Other Information .....................................................................................12 Item 6. Exhibits and Reports on Form 8-K ......................................................................12
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements include statements regarding intent, belief or current expectations of Celeris Corporation (the "Company") and its management. Such forward-looking statements are not guarantees of future performance and involve risks and uncertainties that may cause the Company's actual results to differ materially from the results discussed in the forward-looking statements. Risks and uncertainties that might cause such differences include, but are not limited to: (1) the Company's ability to control costs and keep increases in expenditures below revenue growth, if any, to achieve profitability and positive cash flow; (2) the Company's lack of an operating history in the clinical research services market on which to base expectations for future performance; (3) uncertainty of market acceptance of the Company's clinical research services; (4) fluctuations in quarterly operating results as a result of delays in implementing or termination of particular clinical trials; (5) the Company's dependence on the amount of research and development activities, particularly clinical trials, of pharmaceutical, medical device and biotechnology companies; (6) intense competition in the market for clinical research services; (7) changes in the Company's backlog including potential cancellation, delay or change in the scope of client contracts for clinical research services which may leave the Company with excess capacity; (8) challenges presented by the Company's new clinical research operations, which will require the Company to attract and integrate new key employees and to develop new operational and financial systems, procedures and controls; (9) the Company's dependence on regulation of the pharmaceutical, medical device and biotechnology industries; (10) a material portion of the Company's future revenue is dependent on a single client; (11) the possibility of adverse outcomes related to the Company's shareholder lawsuits or SEC investigation; (12) the possibility that the Company may be unable to regain compliance with Nasdaq National Market continued listing requirements, the Company's appeal to maintain listing on the Nasdaq National Market may be unsuccessful, or that the Company will be unable to meet the continued listing requirements for the Nasdaq SmallCap Market; and (13) risks associated with the Company's discontinued operations, including the failure to realize the Company's assumptions regarding estimated charges and performance of the assets sold. The forward-looking statements herein are qualified in their entirety by the cautionary statement 3 and risk factors set forth in Item 1, under the caption "Cautionary Statement and Risk Factors," of the Company's Annual Report on Form 10-K, dated March 30, 1999. A copy of the Form 10-K may be obtained from the Public Reference Branch of the SEC at 450 Fifth Street NW, Washington, DC at prescribed rates. 4 ITEM 1. FINANCIAL STATEMENTS (UNAUDITED) CELERIS CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, DECEMBER 31, 1999 1998 ------------ ------------ ASSETS Current assets: Cash and cash equivalents $ 6,372,260 $ 8,138,542 Short-term investments 3,051,643 7,083,851 Accounts receivable, net of allowance of $287,000 and $172,000, respectively 1,964,766 1,516,712 Other current assets 405,345 412,360 ------------ ------------ Total current assets 11,794,014 17,151,465 Net furniture, fixtures and equipment 1,338,050 1,012,986 ------------ ------------ Total assets $ 13,132,064 $ 18,164,451 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable and accrued expenses $ 1,049,057 $ 1,024,837 Deferred revenue and payables 532,056 398,653 Accrued compensation 368,212 279,853 Net current liabilities of discontinued operations 1,770,115 4,256,332 ------------ ------------ Total current liabilities 3,719,440 5,959,675 COMMITMENTS AND CONTINGENCIES (Note 5) -- -- SHAREHOLDERS' EQUITY: Common stock, $.01 par value - 13,511,111 shares authorized; 3,092,329 and 3,139,810 shares issued and outstanding, respectively 30,923 31,398 Additional paid-in capital 67,480,206 67,591,615 Accumulated deficit (58,098,505) (55,418,237) ------------ ------------ Total shareholders' equity 9,412,624 12,204,776 ------------ ------------ Total liabilities and shareholders' equity $ 13,132,064 $ 18,164,451 ============ ============
The accompanying notes are an integral part of these condensed consolidated financial statements. 1 5 CELERIS CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED SEPTEMBER 30 SEPTEMBER 30 ------------------------- --------------------------- 1999 1998 1999 1998 ----------- ----------- ----------- ------------ Revenue $ 2,300,558 $ 1,457,854 $ 6,632,149 $ 4,202,378 Cost of sales 1,487,531 1,075,285 4,504,609 2,733,344 ----------- ----------- ----------- ------------ Gross profit 813,027 382,569 2,127,540 1,469,034 Selling, general and administrative expenses 1,848,200 1,504,659 5,706,506 3,337,117 ----------- ----------- ----------- ------------ Loss from operations (1,035,173) (1,122,090) (3,578,966) (1,868,083) Interest income, net 114,845 289,586 423,698 971,747 ----------- ----------- ----------- ------------ Loss from continuing operations (920,328) (832,504) (3,155,268) (896,336) Discontinued operations: Loss from discontinued operations -- -- -- (4,706,639) Gain (loss) on disposal of discontinued operations 75,000 -- 475,000 (5,349,000) ----------- ----------- ----------- ------------ Total discontinued operations 75,000 -- 475,000 (10,055,639) ----------- ----------- ----------- ------------ Net loss $ (845,328) $ (832,504) $(2,680,268) $(10,951,975) =========== =========== =========== ============ Basic income (loss) per common share: Continuing operations $ (0.29) $ (0.26) $ (1.01) $ (0.28) Discontinued operations 0.02 -- 0.15 (3.13) ----------- ----------- ----------- ------------ $ (0.27) $ (0.26) $ (0.86) $ (3.41) =========== =========== =========== ============ Diluted income (loss) per common share: Continuing operations $ (0.29) $ (0.26) $ (1.01) $ (0.28) Discontinued operations 0.02 -- 0.15 (3.13) ----------- ----------- ----------- ------------ $ (0.27) $ (0.26) $ (0.86) $ (3.41) =========== =========== =========== ============ Weighted average shares outstanding: Basic 3,092,350 3,186,404 3,122,174 3,208,347 Diluted 3,092,350 3,186,404 3,122,174 3,208,347
The accompanying notes are an integral part of these condensed consolidated financial statements. 2 6 CELERIS CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30 --------------------------- 1999 1998 ----------- ------------ OPERATING ACTIVITIES: Net loss $(2,680,268) $(10,951,975) Adjustments to reconcile net loss to net cash used in continuing operating activities: Depreciation 329,536 95,676 Provision for bad debts 142,200 87,361 Loss from discontinued operations -- 4,706,639 Loss (gain) on disposal of discontinued operations (475,000) 5,349,000 Value of options issued for consulting services 26,938 -- Changes in operating assets and liabilities: Accounts receivable (590,254) (181,163) Other current assets 7,015 (233,413) Accounts payable and accrued expenses 71,238 (2,052) Deferred revenue and payables 133,403 88,879 Accrued compensation 88,359 154,365 ----------- ------------ Net cash used in continuing operating activities (2,946,833) (886,683) INVESTING ACTIVITIES: Purchase of short-term investments -- (9,453,057) Sales and maturities of short-term investments 4,032,208 19,335,188 Purchases of furniture, fixtures and equipment (701,618) (690,727) ----------- ------------ Net cash provided by investing activities 3,330,590 9,191,404 FINANCING ACTIVITIES: Repurchase of common stock (196,913) (836,885) Net proceeds from issuance of common stock 36,343 48,000 ----------- ------------ Net cash used in financing activities (160,570) (788,885) Cash used in discontinued operations (1,989,469) (6,495,681) ----------- ------------ Increase (decrease) in cash and cash equivalents (1,766,282) 1,020,155 Cash and cash equivalents at beginning of period 8,138,542 5,949,478 ----------- ------------ Cash and cash equivalents at end of period $ 6,372,260 $ 6,969,633 =========== ============ SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the period for interest $ -- $ 4,386
The accompanying notes are an integral part of these condensed consolidated financial statements. 3 7 CELERIS CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements of Celeris Corporation (the "Company") have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (including normal recurring accruals) considered necessary for a fair presentation have been included. Certain prior period amounts have been reclassified to conform with current presentation. Operating results for the three and nine month periods ended September 30, 1999 are not necessarily indicative of the results that may be expected for the year ended December 31, 1999. For further information, refer to the consolidated financial statements and footnotes thereto for the year ended December 31, 1998 in the Company's Annual Report on Form 10-K. 2. INCOME (LOSS) PER COMMON SHARE Basic income (loss) per common share is computed by dividing income (loss) for the period by the weighted average number of shares of common stock outstanding during the period. The computation of diluted income (loss) per common share requires that the number of weighted average shares outstanding be increased for the assumed exercise of dilutive options using the treasury stock method. Diluted loss per share for the three and nine months ended September 30, 1999 does not include common stock equivalents of 604,136 as their effect would be antidilutive. 3. DISCONTINUED OPERATIONS On June 10, 1998 the Company announced its intention to transition out of the healthcare provider software market and focus its attention on its clinical research services segment. On December 24, 1998 the Company completed the sale of its healthcare provider software business. As consideration for the sale, the Company agreed to a total purchase price of up to $2.0 million, contingent upon the performance of the assets sold and the buyer's costs to perform prepaid support and service obligations after the closing. In addition, the Company agreed to reimburse the buyer for the performance of prepaid support and service obligations on assigned contracts in the amount of $500,000, which was completed June 30, 1999. Subsequent to September 30, 1999 the Company determined that, under the terms of the sale agreement, the purchase price would be fixed at $1.5 million. To date the Company has received $675,000 in proceeds from the sale, all of which has been recorded as gain on disposal of discontinued operations. A payment of $200,000 was due September 30, 1999, $75,000 of which was collected and the Company has agreed to accept payment of the remaining $125,000 prior to December 31, 1999. Additional proceeds of $700,000 representing the remaining balance of the purchase price are also due prior to December 31, 1999. The Company will record the remaining proceeds from the sale of the software segment as gain on the disposal of discontinued operations in the period collection is assured. The Company has retained certain liabilities related to the software segment including certain amounts due under customer contracts and other liabilities related to the disposal of the segment. The financial position and results of operations of the healthcare provider software segment are reported as discontinued operations and all prior periods have been restated to reflect the discontinued operations. There were no revenues related to the discontinued segment for the three months and nine months ended September 30, 1999. Revenues related to the discontinued segment were $423,480 and $2,704,723 for the three months and nine months ended September 30, 1998, respectively. 4 8 4. ONE-FOR-THREE REVERSE STOCK SPLIT On July 26, 1999, the Board of Directors declared a one-for-three reverse stock split applicable to shareholders of record July 29, 1999. The stated par value of the Company's common stock was not changed from $0.01. As a result, a total of $61,646 was reclassified from the Company's common stock account to the Company's additional paid-in capital account. Income (loss) per share, common stock outstanding and stock option data referred to in the financial statements and notes hereto have been adjusted retroactively to give effect to the reverse stock split. 5. CONTINGENCIES The Company is a defendant in IN RE SUMMIT MEDICAL SYSTEMS, INC. SECURITIES LITIGATION, a consolidated federal court securities action venued in the United States District Court, District of Minnesota. The putative class action was filed on March 10, 1997 and alleges violations of Section 10(b) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") and Rule 10b-5, Section 20(a) of the Exchange Act, Section 11 of the Securities Act of 1933, as amended (the "Securities Act"), and Section 15 of the Securities Act. The Company is also a defendant in a federal court securities action captioned TEACHERS' RETIREMENT SYSTEM OF LOUISIANA V. SUMMIT MEDICAL SYSTEMS, INC. ET. AL. The Teachers' Retirement action was filed on April 16, 1997 in the United States District Court, District of Minnesota and is not a class action. In addition to the claims alleged in the consolidated action, the Teachers' Retirement complaint alleges a claim under Section 18(a) of the Exchange Act, common law fraud, and negligent misrepresentation. Each action alleges, in essence, that the Company made misleading public disclosures relating to its financial statements and seeks compensatory damages for losses incurred as a result of each alleged misleading public disclosure. As to federal securities law claims, both actions are subject to the Private Securities Litigation Reform Act of 1995 (the "Reform Act"). The actions do not state the monetary damages that are being sought at this time. The Company intends to defend against these actions vigorously. There can be no assurance that any judgment, order or decree against the Company arising out of these actions will not have a material adverse effect on the Company or its business. The Division of Enforcement of the Securities and Exchange Commission (the "Commission") is conducting an investigation of the Company, relating to the Company's restatement of certain financial statements. The Company is cooperating fully with the Commission and its investigation. There can be no assurance that any order, decree or other action issued or taken by the Commission arising out of its investigation will not result in sanctions against the Company or certain individuals that could have a material adverse effect on the Company or its business. On July 22, 1999, the District Court of Hennepin County, Minnesota ruled in favor of the Company's motion for summary judgment in the declaratory relief action, DAVID FOSTER ET.AL. V. SUMMIT MEDICAL SYSTEMS, INC. ET. AL. The District Court held that the Company's directors' and officers' insurance policies cover claims related to the Company's pending federal securities actions and the investigation by the Commission. The insurance underwriters of the Company's directors' and officers' insurance policies had sought to deny coverage. On October 6, 1999, the insurance underwriters filed a notice of appeal of the District Court's order with the Minnesota Court of Appeals. The Company intends to respond to this appeal vigorously. There can be no assurance that any decision by the Minnesota Court of Appeals arising out of this appeal will not have a material adverse effect on the Company or its business. 6. SEGMENT REPORTING INFORMATION The Company has adopted SFAS No. 131, "Disclosures About Segments of an Enterprise and Related Information." SFAS No. 131 established standards for disclosure of financial information related to operating segments of the Company. SFAS No. 131 defines an operating segment as a component of a company for which operating results are reviewed regularly by the chief operating decision maker to determine resource allocation and assess performance. The Company has four segments reportable under the guidelines of SFAS No. 131: C.L. McIntosh, the Company's regulatory consulting and clinical research services subsidiary; site research and clinical trial staffing services group, a start-up operation formed in the second quarter of 1998; data management and biostatistical services group, a start-up operation formed in the fourth quarter of 1998; and the Company's corporate operating function. 5 9 The Company's operating segment disclosures are as follows:
SITE RESEARCH & CLINICAL DATA MONITORING MANAGEMENT & STAFFING BIOSTATISTICAL C.L. MCINTOSH SERVICES SERVICES CORPORATE CONSOLIDATED ------------- -------- -------- --------- ------------ THREE MONTHS ENDED SEPTEMBER 30, 1999 - ------------------------------------- Revenue $ 1,578,301 $ 125,615 $ 596,642 $ -- $ 2,300,558 Income (loss) from continuing operations 10,341 (362,343) (60,690) (507,636) (920,328) Segment assets 2,462,873 337,801 967,413 9,363,977 13,132,064 THREE MONTHS ENDED SEPTEMBER 30, 1998 - ------------------------------------- Revenue $ 1,457,854 $ -- $ -- $ -- $ 1,457,854 Loss from continuing operations (98,752) (592,578) (131,813) (9,361) (832,504) Segment assets 1,661,065 360,543 -- 19,259,905 21,281,513 (a) NINE MONTHS ENDED SEPTEMBER 30, 1999 - ------------------------------------ Revenue $ 5,112,335 $ 303,586 $ 1,216,228 $ -- $ 6,632,149 Loss from continuing operations (120,845) (1,010,652) (554,717) (1,469,054) (3,155,268) Segment assets 2,462,873 337,801 967,413 9,363,977 13,132,064 NINE MONTHS ENDED SEPTEMBER 30, 1998 - ------------------------------------ Revenue $ 4,202,378 $ -- $ -- $ -- $ 4,202,378 Income (loss) from continuing operations (54,275) (895,501) (169,965) 223,405 (896,336) Segment assets 1,661,065 360,543 -- 19,259,905 21,281,513 (a)
(a) Excludes net long-term assets of discontinued operations of $1,242,026. 6 10 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW The Company is a provider of specialty clinical research services to pharmaceutical, medical device and biotechnology manufacturers. Services offered by the Company include regulatory consulting and strategy, device evaluation, product and manufacturing quality assurance, statistical analysis and clinical study design. In addition, in 1998 the Company expanded its service offerings to include investigative site selection and qualification, clinical monitoring staffing services, data management and biostatistical consulting. On June 10, 1998 the Company announced its intention to transition out of the healthcare provider software market and focus its attention on its clinical research services segment. On December 24, 1998 the Company completed the sale of its healthcare provider software business. As consideration for the sale, the Company agreed to a total purchase price of up to $2.0 million, contingent upon the performance of the assets sold and the buyer's costs to perform prepaid support and service obligations after the closing. In addition, the Company agreed to reimburse the buyer for the performance of prepaid support and service obligations on assigned contracts in the amount of $500,000, which was completed June 30, 1999. Subsequent to September 30, 1999 the Company determined that, under the terms of sale agreement, the purchase price would be fixed at $1.5 million. To date the Company has received $675,000 in proceeds from the sale, all of which has been recorded as gain on disposal of discontinued operations. A payment of $200,000 was due September 30, 1999, $75,000 of which was collected and the Company has agreed to accept payment of the remaining $125,000 prior to December 31, 1999. Additional proceeds of $700,000 representing the remaining balance of the purchase price are also due prior to December 31, 1999. The Company will record the remaining proceeds from the sale of the software segment as gain on the disposal of discontinued operations in the period collection is assured. The Company has retained certain liabilities related to the software segment including certain amounts due under customer contracts and other liabilities related to the disposal of the segment. The financial position and results of operations of the healthcare provider software segment are reported as discontinued operations and all prior period amounts have been restated to reflect the discontinued operations. Effective January 29, 1999 the Company changed its name from Summit Medical Systems, Inc. to Celeris Corporation. On July 26, 1999, the Company's Board of Directors approved a one-for-three reverse stock split of its common stock, applicable to shareholders of record at the close of trading July 29, 1999. The reverse stock split was intended, in part, to address compliance for continued listing of the Company's common stock with the Nasdaq Stock Market(R) criteria, which requires a minimum bid price of $1.00 per share. Income (loss) per share, common stock outstanding and stock option data included in this form have been adjusted retroactively to give effect to the reverse stock split. Giving effect to the reverse split, the Company had approximately 3.1 million shares of common stock outstanding as of September 30, 1999. As of September 30, the Company had a backlog of projects for clinical studies management, data management, clinical monitoring and site research services valued at approximately $6.2 million. The value of the Company's backlog may be affected by potential cancellation, delay or change in the scope of projects. RESULTS OF OPERATIONS Three Months Ended September 30, 1999 Compared to Three Months Ended September 30, 1998 The Company incurred a net loss of $845,000, or $0.27 per diluted share, for the three months ended September 30, 1999 as compared to a net loss of $833,000, or $0.26 per diluted share, for the year earlier period. The 1999 results include a loss from continuing operations of $920,000, or $0.29 per diluted share, and a gain on disposal of discontinued operations of $75,000, or $0.02 per diluted share. The 1998 results consist solely of a loss from continuing operations of $833,000, or $0.26 per diluted share. 7 11 Continuing Operations. Revenue from continuing operations for the three months ended September 30, 1999 was $2.30 million compared to $1.46 million for the year earlier period, an increase of 57.8%. This increase in revenue is attributed primarily to increased volume of services performed related to the Company's expanded service capabilities. However, given the Company's current size, management believes that fluctuations in the timing of new business may impact revenue growth rates on a quarterly basis. Cost of sales were $1.49 million for the 1999 period, or 64.7% of revenue, compared to $1.08 million for the 1998 period, or 73.8% of revenue. This decrease in cost of sales as a percentage of revenue is primarily due to increased utilization of the Company's client service personnel. Selling, general and administrative expenses were $1.85 million, or 80.3% of revenue, for the 1999 period compared to $1.50 million, or 103.2% of revenue, for the 1998 period. This increase in total expenses is primarily due to the addition of salaries, benefits and other overhead costs associated with the expansion of the Company's service offerings, including related business development efforts, which began in the second quarter of 1998. The Company currently has in place a significant portion of the infrastructure necessary to support the expanded service offerings and does not anticipate selling, general and administrative expense growth rates in future periods will match the expense growth rate between 1998 and 1999. Interest income for the 1999 period was $115,000 compared to $290,000 for the 1998 period. The decrease is due to the Company's cash and cash equivalents balance, including short-term investments, which decreased to $9.42 million at September 30, 1999 from $19.13 million at September 30, 1998, due to losses incurred related to the Company's continuing and discontinued operations, as well as capital expenditures. Discontinued Operations. The gain on disposal of discontinued operations of $75,000 in the 1999 period represents cash received from the sale of the assets of the discontinued healthcare provider software segment. Losses from discontinued operations had no effect on the results of operations during the three months ended September 30, 1998. Nine Months Ended September 30, 1999 Compared to Nine Months Ended September 30, 1998 The Company incurred a net loss of $2.68 million, or $0.86 per diluted share, for the nine months ended September 30, 1999 as compared to a net loss of $10.95 million, or $3.41 per diluted share, for the year earlier period. The 1999 results include a loss from continuing operations of $3.16 million, or $1.01 per diluted share, and a gain on disposal of discontinued operations of $475,000, or $0.15 per diluted share. The 1998 results include loss from continuing operations of $896,000, or $0.28 per diluted share, and a loss from discontinued operations of $10.06 million, or $3.13 per diluted share. Continuing Operations. Revenue from continuing operations for the nine months ended September 30, 1999 was $6.63 million compared to $4.20 million for the year earlier period, an increase of 57.8%. This increase in revenue is attributed primarily to increased volume of services performed related to the Company's expanded service capabilities. Cost of sales were $4.50 million for the 1999 period, or 67.9% of revenue, compared to $2.73 million for the 1998 period, or 65.0% of revenue. This increase is primarily the result of the addition of client service personnel related to the expansion of the Company's service offerings, which began in the second quarter of 1998. These additional resources have had and may continue to have a negative effect on operating margins until such time the individuals are fully utilized as billable resources. Selling, general and administrative expenses were $5.71 million, or 86.0% of revenue, for the 1999 period compared to $3.34 million or 79.4% of revenue, for the 1998 period. This increase is primarily due to the addition of salaries, benefits and other overhead costs associated with the expansion of the Company's service offerings, including related business development efforts, which began in the second quarter of 1998. The Company currently has in place a significant portion of the infrastructure necessary to support the expanded service offerings and does not anticipate selling, general and administrative expense growth rates in future periods will match the expense growth rate between 1998 and 1999. 8 12 Interest income for the 1999 period was $424,000 compared to $972,000 for the 1998 period. The decrease is due to the Company's cash and cash equivalents balance, including short-term investments, which decreased to $9.42 million at September 30, 1999 from $19.13 million at September 30, 1998, due to losses incurred related to the Company's continuing and discontinued operations, as well as capital expenditures. Discontinued Operations. The gain on disposal of discontinued operations of $475,000 in the 1999 period represents cash received from the sale of the assets of the discontinued healthcare provider software segment. For the 1998 period, the loss from discontinued operations was $10.06 million. LIQUIDITY AND CAPITAL RESOURCES The Company's cash and cash equivalents, including short-term investments, totaled $9.42 million as of September 30, 1999, a decrease of $5.80 million from December 31, 1998. This decrease was primarily due to a) $2.95 million used in continuing operations, b) $1.99 million used in discontinued operations, c) $702,000 used for the purchase of furniture, fixtures and equipment, principally computer and computer systems equipment, d) $197,000 used for the repurchase of the Company's common stock, and e) $36,000 provided by the issuance of common stock in the Employee Stock Purchase Plan. As of September 30, 1999 the Company had net working capital of $8.07 million, compared to $11.19 million at December 31, 1998. This decrease resulted primarily from net losses of $2.68 million incurred during the nine months ended September 30, 1999. Management anticipates the Company will continue to experience operating losses at least through 1999, and as a result, it believes working capital will continue to decline. As of September 30, 1999, the Company had $1.96 million in accounts receivable, net of bad debt allowance, related to continuing operations compared to $1.52 million as of December 31, 1998. The Company believes its current allowance of $287,000 for bad debts is adequate. The Company's days sales outstanding in accounts receivable was 79 days at September 30, 1999 compared to 88 days at December 31, 1998. Days sales outstanding in accounts receivable may increase in future periods as the Company's mix of business related to the expanded service offerings continues to evolve. The Company sold its healthcare provider software business effective December 24, 1998. Related to the sale of this business, the Company has received $675,000 in proceeds to date. Of the $200,000 due September 30, 1999, the Company has received $75,000 and has agreed to accept payment of the remaining $125,000 prior to December 31, 1999. Additional proceeds of $700,000, representing the remaining balance of the purchase price, are also due prior to December 31, 1999. Also related to the sale of the software business, the Company has retained certain liabilities of $1.77 million as of September 30, 1999, including certain amounts due under customer contracts and other liabilities related to the disposal of the segment. The Company's Board of Directors has authorized a stock repurchase program under which up to 666,667 shares of the Company's common stock may be repurchased. From inception of the stock repurchase program in August 1997 through September 30, 1999, the Company has repurchased 439,867 shares of common stock for approximately $3.05 million. As of September 30, 1999, there were 3,092,329 shares of the Company's common stock issued and outstanding. The Company anticipates capital expenditures for the balance of 1999 will be approximately $100,000. In addition, the Company intends to enter into a three-year lease for equipment worth approximately $380,000. These lease commitment and capital expenditure estimates are primarily for computer and computer-related equipment and software associated with the Company's expanded clinical research services as well as capital expenditures required for new employees. The Company believes that continued expenditure of funds will be necessary to support its future operations, and that cash and cash equivalents of $9.42 million on hand at September 30, 1999 will be sufficient to fund its operations, capital requirements, and expansion goals through 2000. However, there can be no assurances that the Company will generate sufficient revenue, or adequately control costs, to achieve profitability or positive cash flow for periods in or beyond 1999. If the Company cannot achieve profitability or positive cash flow or its contingencies 9 13 result in material expenditures, the Company may require additional external financing in the future. There can be no assurances that such financing will be available on terms acceptable to the Company. The Company has experienced operating losses for each of the past five years. Net losses for the year ended December 31, 1998 were $12.65 million, and for the three months and nine months ended September 30, 1999 were $845,000 and $2.68 million, respectively. The Company had an accumulated deficit of $58.10 million as of September 30, 1999. The Company's ability to increase revenue, and to achieve profitability and positive cash flow will depend on a number of factors as summarized above under "Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995" and under "Cautionary Statement and Risk Factors" included in Item 1 of the Company's Annual Report on Form 10-K, dated March 30, 1999. Year 2000 Issue. The Company has substantially completed its readiness preparations for the potential effect of the situation commonly referred to as the "Year 2000 Issue," which involves the inability of certain software and hardware systems to properly recognize and process dates for the year 2000 and beyond. The Company, with the assistance of outside consultants, has developed and implemented a plan to evaluate the Company's internal systems and material third-party relationships. The Company's clinical research services, particularly its data management services, depend on the use of hardware and software supplied by third-party vendors. The Company has determined that substantially all of the hardware and software it uses to be Year 2000 compliant, including all mission critical systems. This determination is based upon Year 2000 compliance statements received from vendors of the hardware and software the Company uses, as well as an internal testing program. The Company has yet to receive Year 2000 compliance statements from its vendors of certain desktop applications it uses. Should unforeseen circumstances prevent a timely completion of all remaining necessary Year 2000 compliance measures, the Company believes that adequate alternatives are available for information processing. The Company also has a disaster recovery plan in place should unforeseen events call for its use. The Company does not expect to incur material costs to upgrade or replace its Year 2000 non-compliant hardware or software systems. However, the estimates of costs to complete Year 2000 compliance procedures are based, in part, on compliance statements received from third-party vendors of the Company's hardware and software systems. Subsequent revisions to these compliance statements by third-party vendors could result in revised estimated costs to complete Year 2000 compliance measures. The Company cannot predict whether these revisions, if any, will be material. The Company has paid third parties approximately $185,000 on Year 2000 testing, auditing, and modifications or upgrades through September 30, 1999. The costs of Year 2000 compliance have been and will be expensed as incurred. The Company does not anticipate that further expenditures will be necessary to complete Year 2000 compliance measures. The Company ended all expenditures on Year 2000 testing of its healthcare provider software products upon the sale of these assets on December 24, 1998. In connection with the sale of the assets of the Company's healthcare provider software segment, the Company made certain representations regarding Year 2000 compliance of the Company's software products and agreed to indemnify the buyer against losses related to a breach of representations and certain third-party claims related to the operation of the assets prior to the sale. Although the Company's tests and audits of these software products prior to the asset sale did not indicate any issues with Year 2000 compliance, if an issue with Year 2000 compliance of these products were to arise, the Company could face claims under its indemnification obligations. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company has no derivative financial instruments or derivative commodity instruments in its cash and cash equivalents and short-term investments. The Company invests its cash and cash equivalents and short-term investments in investment grade, highly liquid investments, consisting of money market instruments, U.S. Treasury bills, U.S. Treasury notes, commercial paper and discounted notes and does not believe these investments are subject to material market risks. In addition, all of the Company's transactions are conducted and accounts are denominated in U.S. dollars. Accordingly, the Company is not exposed to foreign currency risks. 10 14 PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS The Company is a defendant in IN RE SUMMIT MEDICAL SYSTEMS, INC. SECURITIES LITIGATION, a consolidated federal court securities action venued in the United States District Court, District of Minnesota. The putative class action was filed on March 10, 1997 and alleges violations of Section 10(b) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") and Rule 10b-5, Section 20(a) of the Exchange Act, Section 11 of the Securities Act of 1933, as amended (the "Securities Act"), and Section 15 of the Securities Act. The Company is also a defendant in a federal court securities action captioned TEACHERS' RETIREMENT SYSTEM OF LOUISIANA V. SUMMIT MEDICAL SYSTEMS, INC. ET. AL. The Teachers' Retirement action was filed on April 16, 1997 in the United States District Court, District of Minnesota and is not a class action. In addition to the claims alleged in the consolidated action, the Teachers' Retirement complaint alleges a claim under Section 18(a) of the Exchange Act, common law fraud, and negligent misrepresentation. Each action alleges, in essence, that the Company made misleading public disclosures relating to its financial statements and seeks compensatory damages for losses incurred as a result of each alleged misleading public disclosure. As to federal securities law claims, both actions are subject to the Private Securities Litigation Reform Act of 1995 (the "Reform Act"). The actions do not state the monetary damages that are being sought at this time. The Company intends to defend against these actions vigorously. There can be no assurance that any judgment, order or decree against the Company arising out of these actions will not have a material adverse effect on the Company or its business. The Division of Enforcement of the Securities and Exchange Commission (the "Commission") is conducting an investigation of the Company, relating to the Company's restatement of certain financial statements. The Company is cooperating fully with the Commission and its investigation. There can be no assurance that any order, decree or other action issued or taken by the Commission arising out of its investigation will not result in sanctions against the Company or certain individuals that could have a material adverse effect on the Company or its business. On July 22, 1999, the District Court of Hennepin County, Minnesota ruled in favor of the Company's motion for summary judgment in the declaratory relief action, DAVID FOSTER ET.AL. V. SUMMIT MEDICAL SYSTEMS, INC. ET. AL. The District Court held that the Company's directors' and officers' insurance policies cover claims related to the Company's pending federal securities actions and the investigation by the Commission. The insurance underwriters of the Company's directors' and officers' insurance policies had sought to deny coverage. On October 6, 1999, the insurance underwriters filed a notice of appeal of the District Court's order with the Minnesota Court of Appeals. The Company intends to respond to this appeal vigorously. There can be no assurance that any decision by the Minnesota Court of Appeals arising out of this appeal will not have a material adverse effect on the Company or its business. 11 15 ITEM 5. OTHER INFORMATION The staff of the Nasdaq Stock Market has notified the Company that the current market value of its public float does not comply with the Nasdaq National Market continued listing requirements. Under the applicable continued listing requirement, the market value of the Company's public float must be at least $5,000,000. The public float excludes all common shares beneficially held by the Company's officers, directors and 10 percent shareholders. As of November 8, 1999, the market value of the Company's public float was $3.0 million, based on a public float of approximately 2.4 million shares of common stock. The Company has until January 7, 2000 to regain compliance with this continuing listing requirement. In order to regain compliance, the market value of the Company's public float must equal or exceed the $5,000,000 minimum for at least ten consecutive trading days prior to the January 7 deadline. The Nasdaq staff, however, may require that the Company demonstrate compliance with the requirement for a longer time period. The Company intends to utilize Nasdaq's appeal process to maintain its listing on the National Market. Any appeal would stay the Company's delisting pending review by the appropriate Nasdaq panel. The Company cannot predict whether an appeal of any delisting determination will be effective. The Company may seek to avoid delisting from the Nasdaq Stock Market by applying to be listed on The Nasdaq SmallCap Market on or before January 7, 2000. The SmallCap Market is Nasdaq's market for smaller capitalization companies which provides similar liquidity, market making and corporate governance features as the National Market. The Company believes that it currently meets the continued listing requirements for the Nasdaq SmallCap Market and it intends to apply for listing on such market if it is unable to maintain its listing on the Nasdaq National Market. The Company cannot predict whether a listing on the Nasdaq SmallCap Market will have a material adverse effect on the Company's common stock price and the trading market for the Company's common stock. A complete delisting of the Company from the Nasdaq Stock Market would have a material adverse effect on the liquidity of the trading market for the Company's common stock. The Company has attached as Exhibit 99 its press release dated November 9, 1999. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 3.1 Articles of Incorporation of the Company (incorporated by reference to Exhibits 3.1 and 3.2 of the Company's Annual Report on Form 10-K for the year ended December 31, 1998) 3.2 Bylaws of the Company (incorporated by reference to Exhibit 3.3 of the Company's Annual Report on Form 10-K for the year ended December 31, 1998) 3.3 Amendment to Amended Articles of Incorporation of the Company 27.1 Financial Data Schedule (for SEC use only)-Nine Months Ended September 30, 1999 99.1 Press Release dated October 27, 1999 99.2 Press Release dated November 9, 1999 (b) Reports on Form 8-K None. 12 16 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Celeris Corporation Date: November 12, 1999 By: /s/ Barbara A. Cannon ------------------------------------- Barbara A. Cannon President and Chief Executive Officer Date: November 12, 1999 By: /s/ Paul R. Johnson ------------------------------------- Paul R. Johnson Vice President and Chief Financial Officer 13 EX-3.3 2 AMENDMENT TO AMENDED ARTICLES 1 EXHIBIT 3.3 AMENDMENT TO AMENDED ARTICLES OF INCORPORATION, AS AMENDED TO DATE, OF CELERIS CORPORATION 1. The name of this corporation is Celeris Corporation, a Minnesota corporation. 2. The following amendment to the Amended Articles of Incorporation, as amended to date, of Celeris Corporation was adopted by the Board of Directors of Celeris Corporation by resolution adopted on July 26, 1999, pursuant to Section 302A.402, Subdivision 3 of the Minnesota Business Corporation Act: The first sentence of Article III is hereby amended to read as follows: "The aggregate number of authorized shares of stock which this Corporation shall have the authority to issue is 13,511,111, par value $.01 per share, of which 533,333 shares are designated as Series A Convertible Preferred Stock." 3. The amendment will not adversely affect the rights or preferences of the holders of outstanding shares of any class or series and will not result in the percentage of authorized shares that remain unissued after such amendment exceeding the percentage of authorized shares that were unissued before such amendment. 4. The document attached hereto as Exhibit A sets forth the resolutions duly approved by the members of the Board of Directors of Celeris Corporation by resolutions dated July 26, 1999, which resolutions state the manner in which the Company's share combination will be effected. 5. The amendment has been adopted pursuant to Chapter 302A of the Minnesota Business Corporation Act. IN WITNESS WHEREOF, the undersigned, the Secretary of Celeris Corporation, being duly authorized on behalf of Celeris Corporation, has executed this document on this 29th day of July, 1999. /s/ Paul R. Johnson ---------------------------------- Paul R. Johnson Secretary EX-27.1 3 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED FINANCIAL STATEMENTS OF CELERIS CORPORATION DATED SEPTEMBER 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 9-MOS DEC-31-1999 JAN-01-1999 SEP-30-1999 6,372,260 3,051,643 1,964,766 287,000 0 11,794,014 1,338,050 0 13,132,064 3,719,440 0 0 0 30,923 9,381,701 13,132,064 6,632,149 6,632,149 4,504,609 5,706,506 0 0 0 (3,155,268) 0 (3,155,268) 475,000 0 0 (2,680,268) (0.86) (0.86)
EX-99.1 4 PRESS RELEASE DATED OCTOBER 27, 1999 1 EXHIBIT 99.1 (CELERIS LOGO) CELERIS CORPORATION NEWS RELEASE 1801 West End Avenue, Suite 750 Nashville, Tennessee 37203 phone: 615.341.0223 fax: 615.341.0615 FOR IMMEDIATE RELEASE CONTACT: PAUL R. JOHNSON CHIEF FINANCIAL OFFICER (615) 341-0223 CELERIS CORPORATION REPORTS 58% INCREASE IN REVENUES ---------------------------------------------------- COMPANY REPORTS BACKLOG OF NEW BUSINESS NASHVILLE, Tennessee (October 27, 1999)...Celeris Corporation (Nasdaq/NM:CRSC), a provider of specialty clinical research services to pharmaceutical, medical device and biotechnology companies, today announced results from operations for the third quarter and nine months ended September 30, 1999. The Company also announced a backlog of new projects for clinical studies management, data management, clinical monitoring and site research services presently valued at approximately $6.2 million. Barbara A. Cannon, president and chief executive officer of Celeris Corporation, said, "We are pleased with our continuing progress and improving financial performance. We believe we are headed in the right direction as evidenced by our signing $8.9 million in new business so far this year, resulting in our current backlog of $6.2 million. This is in addition to our regulatory consulting services, which, year to date, have generated approximately $1.0 million in revenue per quarter. Our increasing revenue base has generated improved margins which, coupled with our reduced overhead, has allowed us to decrease our losses from quarter to quarter and will drive us toward our goal of profitability. In addition, our balance sheet remains strong with a cash balance of $9.4 million at the end of September." Revenues for the third quarter ended September 30, 1999, were $2.30 million, a 58% increase over revenues of $1.46 million in the third quarter of 1998. Loss from continuing operations for the quarter was $920,328, or $0.29 per diluted share, compared with a loss from continuing operations of $832,504, or $0.26 per diluted share, in the prior year period. During the third quarter, the Company recorded a gain on the disposal of discontinued operations of $75,000, or $0.02 per diluted share, representing a portion of the proceeds due related to the previously announced sale of its discontinued healthcare provider software business. Including this gain, the Company reported a loss for the third quarter of $845,328, or $0.27 per diluted share. Revenues for the nine-month period ended September 30, 1999, were $6.63 million, a 58% increase over revenues of $4.20 million in the year-ago period. Loss from continuing operations for the nine-month period was $3.16 million, or $1.01 per diluted share, compared with a loss from continuing operations of $896,336, or $0.28 per diluted share, in the prior year period. The Company recorded a gain of $475,000 and a loss of $10.06 million, respectively, for the nine-month periods ended -MORE- 2 CRSC Reports Third Quarter Results Page 2 October 27, 1999 September 30, 1999 and 1998, for discontinued operations. Net loss, including discontinued operations, was $2.68 million, or $0.86 per diluted share, for the nine months ended September 30, 1999, compared with $10.95 million, or $3.41 per diluted share, for the nine months ended September 30, 1998. Ms. Cannon added, "I think it is also important to point out that while we are improving margins and containing costs, we are bringing on board extremely qualified staff to ensure continued growth and a high degree of client satisfaction. We also believe that our use of the Oracle(R) Clinical data management system, which has been fully validated by an independent consulting group and is now in use with all of our data projects, will be a factor in differentiating our business in the future." Celeris Corporation is a provider of specialty clinical research services to pharmaceutical, medical device and biotechnology manufacturers. Services offered by Celeris include regulatory consulting and strategy, device evaluation, product and manufacturing quality assurance, statistical analysis and clinical study design and management. In addition, Celeris has expanded its service offerings to include investigative site selection and qualification, clinical monitoring staffing services, data management and biostatistical consulting. This press release may contain "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements include statements of intent, belief or current expectations of Celeris Corporation and its management. Such forward-looking statements are not guarantees of future results and involve risks and uncertainties that may cause actual results to differ materially from the results discussed in the forward-looking statements. Risks and uncertainties that may cause such differences include, but are not limited to the uncertainty of market acceptance of the Company's new clinical research services; changes in the Company's backlog including potential cancellation, delay or change in the scope of client contracts for clinical research services; the Company's dependence on a single client for a material portion of the Company's revenues; the possibility of failure of assumptions related to the discontinued healthcare provider software business, including the performance of the assets sold as well as estimated remaining liability amounts; and other risk factors detailed in the Company's Securities and Exchange Commission filings, including the Company's Form 10-K for the year ended December 31, 1998. -MORE- 3 CRSC Reports Third Quarter Results Page 3 October 27, 1999 CELERIS CORPORATION AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data)
Three Months Ended Nine Months Ended Sept. 30, June 30, Sept. 30, Sept. 30, Sept. 30, 1999 1999 1998 1999 1998 ----------- ----------- ---------- ----------- ----------- Revenue $ 2,301 $ 2,399 $ 1,458 $ 6,632 $ 4,202 Cost of sales 1,488 1,644 1,075 4,504 2,733 ----------- ----------- ----------- ----------- ----------- Gross Profit 813 755 383 2,128 1,469 Selling, general and administrative expenses 1,848 1,930 1,505 5,707 3,337 ----------- ----------- ----------- ----------- ----------- Loss from operations (1,035) (1,175) (1,122) (3,579) (1,868) Interest income, net 115 139 290 424 972 ----------- ----------- ----------- ----------- ----------- Loss from continuing operations (920) (1,036) (832) (3,155) (896) Discontinued operations: Loss from discontinued operations (4,707) Gain (loss) on disposal of discontinued operations 75 200 475 (5,349) ----------- ----------- ----------- ----------- ----------- Total discontinued operations 75 200 475 (10,056) ----------- ----------- ----------- ----------- ----------- Net loss $ (845) $ (836) $ (832) $ (2,680) $ (10,952) =========== =========== =========== =========== =========== Basic and diluted income (loss) per common share:(1) Continuing operations $ (0.29) $ (0.33) $ (0.26) $ (1.01) $ (0.28) Discontinued operations 0.02 0.06 0.15 (3.13) ----------- ----------- ----------- ----------- ----------- $ (0.27) $ (0.27) $ (0.26) $ (0.86) $ (3.41) =========== =========== =========== =========== =========== Basic and diluted weighted average shares outstanding(1) 3,092,350 3,134,883 3,186,404 3,122,174 3,208,347
(1)Adjusted to reflect a reverse three-for-one stock split on July 29, 1999. -MORE- 4 CRSC Reports Third Quarter Results Page 4 October 27, 1999 CELERIS CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars In thousands)
Sept. 30, Dec., 31 1999 1998 --------- --------- ASSETS Current Assets: Cash and cash equivalents $ 6,372 $ 8,139 Short-term investments 3,052 7,084 Accounts receivable, net of allowance of $287 and $172, respectively 1,965 1,517 Other current assets 405 412 -------- -------- Total current assets 11,794 17,152 Net furniture, fixtures and equipment 1,338 1,013 -------- -------- Total Assets $ 13,132 $ 18,165 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts payable and accrued expenses $ 1,049 $ 1,025 Deferred revenue and payables 532 399 Accrued compensation 368 280 Net current liabilities of discontinued operations 1,770 4,256 -------- -------- Total current liabilities 3,719 5,960 Commitments and Contingencies Shareholder' Equity: Common stock, $0.01 par value - 13,511,111 shares authorized; 3,092, 329 and 3,139,810 shares issued and outstanding, respectively 31 31 Additional paid-in capital 67,480 67,592 Accumulated deficit (58,098) (55,418) -------- -------- Total shareholders' equity 9,413 12,205 -------- -------- Total Liabilities and Shareholders' Equity $ 13,132 $ 18,165 ======== ========
-END- EX-99.2 5 PRESS RELEASE DATED NOVEMBER 9, 1999 1 EXHIBIT 99.2 (CELERIS LOGO) CELERIS CORPORATION NEWS RELEASE 1801 West End Avenue, Suite 750 Nashville, Tennessee 37203 phone: 615.341.0223 fax: 615.341.0615 FOR IMMEDIATE RELEASE CONTACT: PAUL R. JOHNSON CHIEF FINANCIAL OFFICER (615) 341-0223 CELERIS CORPORATION IN DISCUSSIONS WITH NASDAQ REGARDING LISTING REQUIREMENTS NASHVILLE, Tennessee (November 9, 1999) - Celeris Corporation (Nasdaq/NM:CRSC), a provider of specialty clinical research services to pharmaceutical, medical device and biotechnology companies, today announced that the current market value of its public float does not comply with the Nasdaq National Market continuing listing requirements. Under the applicable continued listing requirement, the market value of the Company's public float must be at least $5 million. The public float excludes all common shares beneficially held by the Company's officers, directors and 10 percent or greater shareholders. As of November 8, 1999, the market value of the Company's public float was $3.0 million, based on a public float of approximately 2.4 million shares of common stock. The Company has until January 7, 2000, to regain compliance with this continuing listing requirement. In order to regain compliance, the market value for the Company's public float must equal or exceed the $5 million minimum for at least ten consecutive trading days prior to the January 7 deadline. The Nasdaq staff, however, may require that the Company demonstrate compliance with the requirement for a longer time period. Barbara A. Cannon, president and chief executive officer of Celeris Corporation, said, "We are making every effort to comply with the continuing listing requirements for the Nasdaq National Market. However, if we are unable to demonstrate compliance with the market value requirement, we intend to utilize Nasdaq's appeal process to maintain our listing on the National Market. If we are not successful on appeal, we will apply for listing on the Nasdaq SmallCap Market. We believe we currently meet continued listing requirements for The Nasdaq SmallCap market, which is Nasdaq's market for smaller capitalization companies and provides liquidity, market making and corporate governance features similar to those of the National Market. In spite of the current market capitalization, we are pleased with the progress we have made this year by increasing our revenues, decreasing our losses, and establishing a backlog of new business. Our management team remains focused on growing the Company with the objective of building a profitable organization known for its high level of client satisfaction." -MORE- 2 CRSC In Discussion with Nasdaq Page 2 November 9, 1999 Celeris Corporation is a provider of specialty clinical research services to pharmaceutical, medical device and biotechnology manufacturers. Services offered by Celeris include regulatory consulting and strategy, device evaluation, product and manufacturing quality assurance, statistical analysis and clinical study design and management. In addition, Celeris has expanded its service offerings to include investigative site selection and qualification, clinical monitoring staffing services, data management and biostatistical consulting. This press release may contain "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements include statements of intent, belief or current expectations of Celeris Corporation and its management. Such forward-looking statements are not guarantees of future results and involve risks and uncertainties that may cause actual results to differ materially from the results discussed in the forward-looking statements. Risks and uncertainties that may cause such differences include, but are not limited to, the possibility that the Company may be unable to regain compliance with Nasdaq National Market continued listing requirements, the Company's appeal to maintain listing on the Nasdaq National Market may be unsuccessful, or that the Company will be unable to meet the continued listing requirements for the Nasdaq SmallCap Market and other risk factors detailed in the Company's Securities and Exchange Commission filings, including the Company's Form 10-K for the year ended December 31, 1998. -END- -----END PRIVACY-ENHANCED MESSAGE-----