10-Q 1 0001.txt SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 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 June 30, 2000 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 1-10352 COLUMBIA LABORATORIES, INC. (Exact name of Company as specified in its charter) Delaware 59-2758596 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 2875 Northeast 191st Street, Ste 400 Aventura, Florida 33180 (Address of principal executive offices) (Zip Code) Company's telephone number, including area code: (305) 933-6089 Indicate by check mark whether the Company (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 Company was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes __X__ No ____ Number of shares of the Common Stock of Columbia Laboratories, Inc. issued and outstanding as of July 31, 2000: 30,477,782 COLUMBIA LABORATORIES, INC. AND SUBSIDIARIES PART 1 - FINANCIAL INFORMATION Item 1. Financial Statements The following unaudited, condensed consolidated financial statements of the Company have been prepared in accordance with the instructions to Form 10-Q and, therefore, omit or condense certain footnotes and other information normally included in financial statements prepared in accordance with generally accepted accounting principles. In the opinion of management, all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of the financial information for the interim periods reported have been made. Results of operations for the six months ended June 30, 2000 are not necessarily indicative of the results for the year ending December 31, 2000. Except for historical information contained herein, the matters discussed in this document are forward looking statements made pursuant to the safe harbor provisions of the Securities Litigation Reform Act of 1995. Such statements involve risks and uncertainties, including but not limited to economic, competitive, governmental and technological factors affecting the Company's operations, markets, products and prices, and other factors discussed elsewhere in this report. Page 2 of 17 COLUMBIA LABORATORIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, December 31, 2000 1999 ------------- ------------- ASSETS Current assets- Cash and cash equivalents $ 9,221,413 $ 1,982,085 Accounts receivable, net 2,327,181 1,835,086 Inventories 1,468,412 1,848,816 Prepaid expenses 453,852 468,948 Other current assets 316,201 568,259 ------------- ------------- Total current assets 13,787,059 6,703,194 Property and equipment, net 820,710 1,008,553 Intangible assets, net 1,894,560 4,860,212 Other assets 282,684 415,654 ------------- ------------- TOTAL ASSETS $ 16,785,013 $ 12,987,613 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY) Current liabilities- Accaounts payable $ 1,819,572 $ 2,089,260 Accrued expenses 1,203,599 1,072,567 Deferred revenue 100,000 100,000 ------------- ------------- Total current liabilities 3,123,171 3,261,827 Convertible subordinated note payable 10,000,000 10,000,000 ------------- ------------- TOTAL LIABILITIES 13,123,171 13,261,827 ------------- ------------- Stockholders' equity (deficiency)- Preferred stock, $.01 par value; 1,000,000 shares authorized: Series A Convertible Preferred Stock, 33 and 923 shares issued and outstanding in 2000 and 1999, respectively -- 9 Series B Convertible Preferred Stock, 1,630 shares issued and outstanding in 2000 and 1999 16 16 Series C Convertible Preferred Stock, 4,110 and 5,260 shares issued and outstanding in 2000 and 1999, respectively 41 53 Common stock, $.01 par value; 100,000,000 shares in 2000 and 40,000,000 shares in 1999 authorized; 30,477,782 and 29,124,686 shares issued and outstanding in 2000 and 1999, respectively 304,778 291,246 Capital in excess of par value 106,084,808 99,575,803 Accumulated deficit (102,736,627) (100,198,848) Accumulated other comprehensive income 8,826 57,507 ------------- ------------- TOTAL STOCKHOLDERS' EQUITY (DEFICIENCY) 3,661,842 (274,214) ------------- ------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY) $ 16,785,013 $ 12,987,613 ============= =============
See notes to condensed consolidated financial statements Page 3 of 17 COLUMBIA LABORATORIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Six Months Ended Three Months Ended June 30, June 30, 2000 1999 2000 1999 ------------------ ------------------ ----------------- ------------------ NET SALES $5,705,955 $12,625,578 $2,716,025 $7,159,117 COST OF GOODS SOLD 2,100,165 3,625,038 880,317 1,848,197 ------------------ ------------------ ----------------- ------------------ Gross profit 3,605,790 9,000,540 1,835,708 5,310,920 ------------------ ------------------ ----------------- ------------------ OPERATING EXPENSES: Selling and distribution 1,414,589 2,012,089 601,719 1,154,262 General and administrative 1,844,833 2,774,490 1,056,705 1,289,892 Research and development 2,529,611 2,875,246 1,166,199 1,485,170 ------------------ ------------------ ----------------- ------------------ Total operating expenses 5,789,033 7,661,825 2,824,623 3,929,324 ------------------ ------------------ ----------------- ------------------ Income (loss) from operations (2,183,243) 1,338,715 (988,915) 1,381,596 ------------------ ------------------ ----------------- ------------------ OTHER INCOME (EXPENSE): License fees, net of expenses - 387,500 - - Interest income 135,909 56,263 107,605 25,768 Interest expense (377,676) (377,676) (188,838) (188,838) Corporate restructuring expense (285,000) - (285,000) - Other, net 172,234 (20,198) 179,068 968 ------------------ ------------------ ----------------- ------------------ (354,533) 45,889 (187,165) (162,102) ------------------ ------------------ ----------------- ------------------ Income (loss) before income taxes (2,537,776) 1,384,604 (1,176,080) 1,219,494 Provision for income taxes - 69,000 - 44,000 ------------------ ------------------ ----------------- ------------------ Net income (loss) ($2,537,776) $1,315,604 ($1,176,080) $1,175,494 ================== ================== ================= ================== INCOME (LOSS) PER COMMON AND POTENTIAL COMMON SHARE: Basic $ (.09) $ .04 $ (.04) $ .03 ================== ================== ================= ================== Diluted $ (.09) $ .04 $ (.04) $ .03 ================== ================== ================= ================== WEIGHTED AVERAGE NUMBER OF COMMON AND POTENTIAL COMMON SHARES OUTSTANDING: Basic 29,986,278 28,685,000 30,445,392 28,686,000 ================== ================== ================= ================== Diluted 29,986,278 29,474,000 30,445,392 29,881,000 ================== ================== ================= ==================
See notes to condensed consolidated financial statements Page 4 of 17 COLUMBIA LABORATORIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE OPERATIONS (Unaudited)
Six Months Ended Three Months Ended June 30, June 30, 2000 1999 2000 1999 ----------------- ---------------- ------------------ ---------------- NET INCOME (LOSS) ($2,537,776) $1,315,604 ($1,176,080) $1,175,494 Other comprehensive income (loss): Foreign currency translation, net of tax 48,681 (9,373) (2,866) (47,663) ----------------- ---------------- ------------------ ---------------- Comprehensive income (loss) ($2,489,095) $1,306,231 ($1,178,946) $1,127,831 ================= ================ ================== ================
See notes to condensed consolidated financial statements Page 5 of 17 COLUMBIA LABORATORIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Six Months Ended June 30, 2000 1999 ----------------- ---------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) ($2,537,776) $1,315,604 Adjustments to reconcile net income (loss) to net cash used in operating activities- Depreciation and amortization 412,490 498,235 Issuance of warrants for consulting services 71,370 25,398 Gain on sale of assets (158,629) - Loss on disposal of fixed assets 9,927 - Changes in assets and liabilities- (Increase) decrease in: Accounts receivable (492,095) (3,255,718) Inventories 380,404 647,199 Prepaid expenses 15,096 (162,284) Other assets 385,028 7,931 Increase (decrease) in: Accounts payable (269,688) (1,313,339) Accrued expenses 105,982 (184,300) ----------------- ---------------- Net cash used in operating activities (2,077,891) (2,421,274) ----------------- ---------------- CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from sale of assets 4,119,729 - Purchase of property and equipment (5,025) (55,456) Acquisition of licensing rights (525,000) (100,000) ----------------- ---------------- Net cash provided by (used in) investing activities 3,589,704 (155,456) ----------------- ---------------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of preferred stock - 5,789,639 Dividends paid (115,308) (266,721) Proceeds from exercise of options and warrants 5,891,504 26,875 ----------------- ---------------- Net cash provided by financing activities 5,776,196 5,549,793 ----------------- ----------------
(Continued) Page 6 of 17 COLUMBIA LABORATORIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Continued)
Six Months Ended June 30, 2000 1999 ---------------- ---------------- EFFECT OF EXCHANGE RATE CHANGES ON CASH (48,681) 9,866 ---------------- ---------------- NET INCREASE IN CASH AND CASH EQUIVALENTS 7,239,328 2,982,929 CASH AND CASH EQUIVALENTS, Beginning of period 1,982,085 315,288 ---------------- ---------------- CASH AND CASH EQUIVALENTS, End of period $9,221,413 $3,298,217 ================ ================
See notes to condensed consolidated financial statements Page 7 of 17 COLUMBIA LABORATORIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (1) SIGNIFICANT ACCOUNTING POLICIES: The accounting policies followed for quarterly financial reporting are the same as those disclosed in Note (1) of the Notes to Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1999. (2) INVENTORIES: June 30, December 31, 2000 1999 ------------------- ------------------- Finished goods $838,295 $1,029,574 Raw materials 630,117 819,242 ------------------- ------------------- $1,468,412 $1,848,816 =================== =================== (3) SALE OF ASSETS Effective May 5, 2000, the Company sold various tangible and intangible assets related to the U.S. rights for Replens for a total of $4.5 million cash. Additionally, the purchaser agreed to buy up to $500,000 of Replens inventory from the Company and to pay future royalties of up to $2 million equal to 10% of future U.S. sales of Replens. Additionally, effective May 5, 2000, the Company licensed its Legatrin PM, Legatrin GCM, Vaporizer in a Bottle and Diasorb brands to the same purchaser mentioned above. Under the terms of these agreements, the Company will receive license fees equal to 20% of the licensee's net sales of these brands. These agreements each have five-year terms with provisions for renewal and contain options that allow the licensee to acquire the brands from the Company. As of June 30, 2000, the Company has received approximately $169,000 in royalty and license fees which have been included in net sales in the accompanying statements of operations. Page 8 of 17 (4) INCOME (LOSS) PER COMMON AND COMMON EQUIVALENT SHARE: The calculation of basic and diluted income (loss) per common and common equivalent share is as follows:
Six Months Ended March 31, Three Months Ended June 30, 2000 1999 2000 1999 ------------------ ----------------- ------------------ ---------------- Net income (loss) ($2,537,776) $1,315,604 ($1,176,080) $1,175,494 Less: Preferred stock dividends (115,308) (145,064) (52,904) (85,096) Deduction related to Series C Convertible Preferred Stock - (133,320) - (133,320) ------------------ ----------------- ------------------ ---------------- Net income (loss) applicable to common stock ($2,653,084) $1,037,220 ($1,228,984) $957,078 ================== ================= ================== ================ Basic: Weighted average number of common shares outstanding 29,986,278 28,685,000 30,445,392 28,686,000 ================== ================= ================== ================ Basic net income (loss) per common share $ (.09) $ .04 $ (.04) $ .03 ================== ================= ================== ================ Diluted: Weighted average number of common shares outstanding 29,986,278 28,685,000 30,445,392 28,686,000 Weighted average number of potential common shares - 789,000 - 1,195,000 ------------------ ----------------- ================== ================ Weighted average number of common and potential shares outstanding 29,986,278 29,474,000 30,445,392 29,881,000 ================== ================= ================== ================ Diluted net income (loss) per common share $ (.09) $ .04 $ (.04) $ .03 ================== ================= ================== ================
Page 9 of 17 (5) SEGMENT INFORMATION: The Company and its subsidiaries are engaged in one line of business, the development and sale of pharmaceutical products and cosmetics. The following table shows selected unaudited information by geographic area:
Income Net (Loss) from Identifiable Sales Operations Assets ------------------ ----------------- ------------------ As of and for the six months ended June 30, 2000- United States $4,649,408 ($854,570) $10,989,429 Europe 1,056,547 (1,328,673) 5,795,584 ------------------ ----------------- ------------------ $5,705,955 ($2,183,243) $16,785,013 ================== ================= ================== As of and for the six months ended June 30, 1999- United States $11,065,160 $4,217,655 $12,091,114 Europe 1,560,418 (2,878,940) 5,194,457 ------------------ ----------------- ------------------ $12,625,578 $1,338,715 $17,285,571 ================== ================= ================== As of and for the three months ended June 30, 2000- United States $2,236,624 ($709,743) Europe 479,401 (279,172) ------------------ ----------------- $2,716,025 ($988,915) ================== ================= As of and for the three months ended June 30, 1999- United States $6,566,273 $2,989,092 Europe 592,844 (1,607,496) ------------------ ----------------- $7,159,117 $1,381,596 ================== =================
(6) LITIGATION: In June and July 2000, six class action lawsuits were filed in the United States District Court for the Southern District of Florida purportedly on behalf of purchasers of the Company's common stock during the period from November 8, 1999 to June 9, 2000. The complaints allege, among other things, that the Company and other defendants made materially misleading statements and omissions about the likely prospects for two of the Company's products. The Company believes that the lawsuits are without merit and intends to defend the lawsuits vigorously. The Company filed an action in the United States District Court for the Southern District of Florida ("Florida Page 10 of 17 Action") in November 1997 seeking a declaratory judgment on certain issues related to its relationship with Lake Consumer Products, Inc. ("Lake") as governed by the contract between the Company and Lake. Lake filed an action against the Company in the United States District Court, Northern District of Illinois ("Illinois Action") , for damages alleged by Lake to have been suffered by it as a result of the FDA's allegations in July 1997 that the Company's nonoxynol-9 product, then marketed by Lake under the tradename Advantage 24, was not permitted to be sold under the monograph. The Illinois Action was dismissed by the Illinois Court and transferred to the Florida Court for consolidation as a counterclaim in the Florida Action. On March 16, 2000, the Company and Lake settled all outstanding issues in the consolidated Florida Action by the Company having bought out the contract for the sum of $1,200,000 ($600,000 in cash and $600,000 in the form of Company common stock). As a result, the Company reacquired the U.S. rights to the Advantage product and both parties agreed to have their legal actions dismissed. The total amount of the settlement plus certain attorney's fees, related solely to the reacquisition of the product rights, have been capitalized as part of intangible assets in the accompanying balance sheets. Page 11 of 17 COLUMBIA LABORATORIES, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS Liquidity and Capital Resources The Company and its representatives from time to time make written or verbal forward looking statements, including statements contained in this and other filings with the Securities and Exchange Commission and in the Company's reports to stockholders, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements include, without limitation, the Company's expectations regarding sales, earnings or other future financial performance and liquidity, product introductions, entry into new geographic regions and general optimism about future operations or operating results. Although the Company believes that its expectations are based on reasonable assumptions within the bounds of its knowledge of its business and operations, there can be no assurance that actual results will not differ materially from its expectations. Factors that could cause actual results to differ from expectations include, without limitation: (i) increased competitive activity from companies in the pharmaceutical industry, some of which have greater resources than the Company; (ii) social, political and economic risks to the Company's foreign operations, including changes in foreign investment and trade policies and regulations of the host countries and of the United States; (iii) changes in the laws, regulations and policies, including changes in accounting standards, that affect, or will affect, the Company in the United States and abroad; (iv) foreign currency fluctuations affecting the relative prices at which the Company and foreign competitors sell their products in the same market; and (v) the ability of the Company and third parties, including customers or suppliers, to adequately address Year 2000 issues. Additional information on factors that may affect the business and financial results of the Company can be found in filings of the Company with the Securities and Exchange Commission. All forward-looking statements should be considered in light of these risks and uncertainties. The Company assumes no responsibility to update forward-looking statements made herein or otherwise. Cash and cash equivalents increased from approximately $1,982,000 at December 31, 1999 to approximately $9,221,000 at June 30, 2000. The Company received approximately $5.9 million, from the exercise of outstanding options and warrants, and $4.5 million from the sale of various tangible and intangible assets related to the U.S. rights for Replens. The Company has a worldwide, except for South Africa, license and supply agreement with Ares-Serono ("Serono") a Swiss pharmaceutical company, to market Crinone. Under the terms of the agreement, as of June 30, 2000, the Company has earned $17 million in milestone payments and will continue to receive additional milestone payments. The Company also supplies Crinone to Serono at a price equal to 30% of Serono's net selling price In connection with the 1989 purchase of the assets of Bio-Mimetics, Inc., which assets consisted of the patents underlying the Company's Bioadhesive Delivery System, other patent applications and related technology, the Company pays Bio-Mimetics, Inc. a royalty equal to two percent of the net sales of products based on the Bioadhesive Delivery System, to an aggregate of $7.5 million. The Company is required to prepay a portion of the remaining royalty obligation, in cash or stock at the option of the Company, if certain conditions are met. Through June 30, 2000, the Company has paid approximately $1.7 million in royalty payments. In March 1999, the Company entered into a license and supply agreement with Mipharm SpA under which Mipharm SpA will be the exclusive marketer of the Company's previously unlicensed women's healthcare products in Italy, Portugal, Greece and Ireland with a right of first refusal for Spain. Under the terms of the agreement, the Company received a $462,500 in 1999, net of expenses, and expects to receive future milestone payments as products are made available by the Company. The Company believes that sales and liquidity will increase as Crinone is fully marketed by Ares-Serono. As of June 30, 2000, the Company has outstanding exercisable options and warrants that, if exercised, would Page 12 of 17 result in approximately $46.3 million of additional capital. However, there can be no assurance that such options or warrants will be exercised. Significant expenditures anticipated by the Company in the near future are concentrated on research and development related to new products. The Company anticipates it will spend approximately $6 million on research and development in 2000 and an additional $100,000 on property and equipment. As of June 30, 2000, the Company had available net operating loss carryforwards of approximately $50 million to offset its future U.S. taxable income. In accordance with Statement of Financial Accounting Standards No. 109, as of June 30, 2000 and December 31, 1999, other assets in the accompanying consolidated balance sheets include deferred tax assets of approximately $18 million and $17 million, respectively, (comprised primarily of a net operating loss carryforward) for which a valuation allowance has been recorded since the realizability of the deferred tax assets are not determinable. Results of Operations - Six Months Ended June 30, 2000 versus Six Months Ended June 30, 1999 Net sales decreased by approximately $6.9 million from approximately $12.6 million in 1999 compared to $5.7 million in 2000. The decrease is primarily the result of decreased Crinone sales of approximately $5.6 million in 2000 from approximately $8.5 million in 1999 to approximately $2.9 million in 2000 as result of Ares-Serono's transition to marketing Crinone in the U.S and abroad. The remainder of the decrease in sales totaling approximately $1.2 million is the result of the Company's sale of the Replens line and licensing of the other over-the-counter brands. Gross profit as a percentage of net sales decreased in 2000 to 63% as compared to 71% in 1999. The lower gross profit in 2000 is the result of the decrease in Crinone sales in which has a higher gross profit. Selling and distribution expenses decreased by approximately $597,000 in 2000 to approximately $1,415,000 in 2000 from $2,012,000 in 1999. The reduction is due primarily to the Company's sale of its Replens line and licensing of the over-the-counter brands resulting in an approximately $362,000 reduction in advertising and marketing expenses, an approximately $56,000 reduction broker expenses, an approximately $51,000 reduction in Replens amortization expense and an approximately $67,000 reduction in warehousing and freight costs. These reductions were offset in part with an approximately $185,000 increase in advertising allowances in 2000 which the Company assumed as a part of the transaction. Due to the reduction in Crinone sales there was a reduction of approximately $113,000 in royalties and an approximately $64,000 reduction in warehousing and freight costs. General and administrative expenses decreased by approximately $929,000 in 2000 to approximately $1,845,000 in 2000 compared to approximately $2,774,000 in 1999. The majority of the decrease is the result of a decrease in legal expenses of approximately $781,000 related to litigation settled in March 2000. Research and development decreased in 2000 by approximately $345,000 from approximately $2,875,000 in 1999 to $2,530,000 in 2000. The decrease is primarily related to decreased stability and regulatory expenses totaling approximately $356,000 related to decreased Crinone production. Corporate restructure expenses of $285, 000 relate to estimated costs associated with the Company's closing of its corporate and accounting operations in Florida. Net license fees of $387,500 in 1999 represent an upfront payment received in connection with a licensing agreement entered into in March 1999. No such fees were received in 2000. Interest expense related to the convertible subordinated note payable totaled approximately $378,000 in 2000 and 1999. Page 13 of 17 In 2000, the Company recorded a $69,000 alternative minimum tax provision for U.S. federal taxes. No such provision is required in 2000. As a result, the net loss for the six months ended June 30, 2000 was $2,537,776 or $(.09) per common share as compared to a net income for the six months ended June 30, 1999 of $1,315,604 or $.04 per common share. Results of Operations - Three Months Ended June 30, 2000 versus Three Months Ended June 30, 1999 Net sales decreased by approximately $4.4 million from approximately $7.2 million in 1999 compared to $2.7 million in 2000. The decrease is primarily the result of decreased Crinone sales of approximately $3.6 million in 2000 from approximately $5.3 million in 1999 to approximately $1.7 million in 2000 as result of Ares-Serono's transition to marketing Crinone in the U.S and abroad. The remainder of the decrease in sales totaling approximately $1 million is the result of the Company's sale of the Replens line and licensing of the other over-the-counter brands. Gross profit as a percentage of net sales decreased in 2000 to 68% as compared to 74% in 1999. The lower gross profit in 2000 is the result of the decrease in Crinone sales in which has a higher gross profit. Selling and distribution expenses decreased by approximately $552,000 in 2000 to approximately $602,000 in 2000 from $1,154,000 in 1999. The reduction is due primarily to the Company's sale of its Replens line and licensing of the over-the-counter brands resulting in an approximately $326,000 reduction in advertising and marketing expenses, an approximately $41,000 reduction broker expenses, an approximately $51,000 reduction in Replens amortization expense and an approximately $49,000 reduction in warehousing and freight costs. Due to the reduction in Crinone sales there was a reduction of approximately $70,000 in royalties and an approximately $46,000 reduction in warehousing and freight costs. General and administrative expenses decreased by approximately $233,000 in 2000 to approximately $1,057,000 in 2000 compared to approximately $1,290,000 in 1999. The majority of the decrease is the result of a decrease in legal expenses of approximately $68,000 related to litigation settled in March 2000 and approximately $76,000 in reduction in insurance expenses. Research and development decreased in 2000 by approximately $319,000 from approximately $1,485,000 in 1999 to $1,166,000 in 2000. The decrease is primarily related to decreased stability and regulatory expenses totaling approximately $123,000 related to decreased Crinone production. Corporate restructure expenses of $285,000 relate to estimated costs associated with the Company's closing of its corporate and accounting operations in Florida. Interest expense related to the convertible subordinated note payable totaled approximately $189,000 in 2000 and 1999. In 2000, the Company recorded a $44,000 alternative minimum tax provision for U.S. federal taxes. No such provision is required in 2000. As a result, the net loss for the three months ended June 30, 2000 was $1,176,080 or $(.04) per common share as compared to a net income for the three months ended June 30, 1999 of $1,175494 or $.03 per common share. Page 14 of 17 COLUMBIA LABORATORIES, INC. AND SUBSIDIARIES PART II - OTHER INFORMATION Item 1. Legal Proceedings In June and July 2000, six class action lawsuits were filed in the United States District Court for the Southern District of Florida purportedly on behalf of purchasers of the Company's common stock during the period from November 8, 1999 to June 9, 2000. The complaints allege, among other things, that the Company and other defendants made materially misleading statements and omissions about the likely prospects for two of the Company's products. The Company believes that the lawsuits are without merit and intends to defend the lawsuits vigorously. The Company filed an action in the United States District Court for the Southern District of Florida ("Florida Action") in November 1997 seeking a declaratory judgment on certain issues related to its relationship with Lake Consumer Products, Inc. ("Lake") as governed by the contract between the Company and Lake. Lake filed an action against the Company in the United States District Court, Northern District of Illinois ("Illinois Action"), for damages alleged by Lake to have been suffered by it as a result of the FDA's allegations in July 1997 that the Company's nonoxynol-9 product, then marketed by Lake under the tradename Advantage 24, was not permitted to be sold under the monograph. The Illinois Action was dismissed by the Illinois Court and transferred to the Florida Court for consolidation as a counterclaim in the Florida Action. On March 16, 2000, the Company and Lake settled all outstanding issues in the consolidated Florida Action by the Company having bought out the contract for the sum of $1,200,000 ($600,000 in cash and $600,000 in the form of Company common stock). As a result, the Company reacquired the U.S. rights to the Advantage product and both parties agreed to have their legal actions dismissed. Other claims and lawsuits have been filed against the Company. In the opinion of management and counsel, none of these lawsuits are material and they are all adequately reserved for or covered by insurance or, if not so covered, are without any or have little merit or involve such amounts that if disposed of unfavorably would not have a material adverse effect on the Company. Item 2. Changes in Securities None. Item 3. Defaults upon Senior Securities None. Item 4. Submission of Matters to a Vote of Security Holders The 2000 annual meeting of shareholders was held on May 31, 2000 for the purpose of electing the following eight directors (with each nominee receiving at least 27,058,906 votes out of a possible 30,466,863 votes): James J. Apostolakis, William J. Bologna, Jean Carvais, M.D., Dominique de Ziegler, M.D., Norman M. Meier, Denis O'Donnell, M.D., Selwyn Oskowitz, M.D. and Robert C. Strauss. Also approved by a majority of those voting was a proposal to amend the Certificate of Incorporation of the Company to increase from 40 million to 100 million the aggregate number of authorized shares of the Company's common stock and a proposal to amend the Company's 1996 Long-Term Performance Plan (the "Plan") in order to increase the number of authorized shares available under the Plan to four million and to amend certain other provisions of the Plan. Page 15 of 17 Item 5. Other Information None. Item 6. Exhibits and Reports on Form 8-K A. Exhibits 27.1 - Financial Data Schedule (SEC use only) B. Reports on Form 8-K None. Page 16 of 17 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. COLUMBIA LABORATORIES, INC. /S/ DAVID L. WEINBERG --------------------- DAVID L. WEINBERG, Vice President- Finance and Administration, Chief Financial Officer DATE: August 14, 2000 Page 17 of 17 INDEX TO EXHIBITS EXHIBIT NUMBERS ------- 27.1 - Financial Data Schedule