Form: 10QSB

Optional form for quarterly and transition reports of small business issuers

May 15, 2001

10QSB: Optional form for quarterly and transition reports of small business issuers

Published on May 15, 2001



U.S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-QSB

(Mark One)

X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
- ----- OF THE SECURITIES EXCHANGE ACT OF 1934


For the quarterly period ended March 31, 2001

_____ 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: 001-13467

COMMONWEALTH BIOTECHNOLOGIES, INC.
(Exact name of small business issuer as specified in its charter)



Virginia 54-1641133
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)

601 Biotech Drive, Richmond, Virginia 23235
(Address of principal executive offices)

(804) 648-3820
(Issuer's telephone number)
_________________________________________

Check mark whether the registrant: (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months
(or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. Yes X No
------- -------

As of May 14, 2001, 2,076,164 shares of common stock, no par value, of the
registrant were outstanding.

Transitional Small Business Disclosure Format (Check one) Yes: No: X
----- -----

PART I
FINANCIAL INFORMATION

Item 1. Financial Statements.

Commonwealth Biotechnologies, Inc.
Balance Sheets




- -----------------------------------------------------------------------------------------------------------

March 31, December 31,
2001 2000
---------------- --------------
(Unaudited) (Note 1)

Assets
Current Assets
Cash and cash equivalents $ 248,580 $ 587,156
Accounts receivable 830,481 792,071
Investments 525,326 995,789
Prepaid expenses and inventory 313,983 94,866
- -----------------------------------------------------------------------------------------------------------
Total current assets 1,918,370 2,469,882
- -----------------------------------------------------------------------------------------------------------
Property and Equipment, net 7,091,282 7,153,852
Other Assets
Restricted cash 457,570 445,020
Bond issue costs, net 236,007 238,693
Contract acquisition costs 137,285 33,047
Deposits ----- 3,200
- -----------------------------------------------------------------------------------------------------------
Total other assets 830,862 719,960
- -----------------------------------------------------------------------------------------------------------

$ 9,840,514 $10,343,694
- -----------------------------------------------------------------------------------------------------------

Liabilities and Stockholders' Equity
Current Liabilities
Demand note payable $ 119,680 $ 134,680
Current maturities of long term debt and capital lease 212,080 207,431
Accounts payable and other current liabilities 654,201 548,914
Deferred revenue 19,334 25,718
- -----------------------------------------------------------------------------------------------------------
Total current liabilities 1,005,295 916,743
- -----------------------------------------------------------------------------------------------------------
Long Term Debt
Bonds payable 3,825,000 3,915,000
Capital lease 133,398 162,386
- -----------------------------------------------------------------------------------------------------------
Total long term debt 3,958,398 4,077,386
- -----------------------------------------------------------------------------------------------------------
Stockholders' Equity
Common stock, no par value, 10,000,000 shares authorized - -
March 31, 2001- 2,076,164; December 31, 2000 - 2,076,164
shares issued and outstanding
Additional paid-in capital 11,905,864 11,905,864
Accumulated deficit (7,039,650) (6,565,155)
Accumulated other comprehensive income 10,607 8,856
Total stockholders' equity 4,876,821 5,349,565
- -----------------------------------------------------------------------------------------------------------

$ 9,840,514 $10,343,694
- -----------------------------------------------------------------------------------------------------------

See notes to financial statements.

2

Commonwealth Biotechnologies, Inc.
Statements of Operations


- -------------------------------------------------------------------------------------------------------------------
Three Months Ended
-----------------------------
March 31, March 31,
2001 2000
-----------------------------
(Unaudited)


Revenue
Lab services $ 140,982 $ 180,057
Commercial contracts 648,375 399,657
Government contracts 470,471 563,795
Genetic identity 75,304 38,882
Clinical services 24,600 ------
Product sales 2,520 3,160
Other revenue 1,235 330
- ---------------------------------------------------------------------------------------------------

Total revenue 1,363,487 1,185,881
- ---------------------------------------------------------------------------------------------------

Cost of Services
Direct Labor 358,351 270,210
Direct Materials 202,583 141,677
Subcontractor Costs 93,176 10,640
Overhead 482,023 347,721
Other 48,532 2,686
- ---------------------------------------------------------------------------------------------------

Total Cost of Services 1,184,665 772,934
- ---------------------------------------------------------------------------------------------------

Selling, General & Administrative 623,715 260,548
- ---------------------------------------------------------------------------------------------------

Operating income (loss) (444,893) 152,399

Other income (expense)
Interest expense (69,946) (82,645)
Interest income 40,344 6,922
- ---------------------------------------------------------------------------------------------------

Total other income (expense) (29,602) (75,723)
- ---------------------------------------------------------------------------------------------------

Net income (loss) $ (474,495) $ 76,676
- ---------------------------------------------------------------------------------------------------

Basic earnings (loss) per common share $(0.23) $0.05
Diluted earnings (loss) per common share $(0.23) $0.04
- ---------------------------------------------------------------------------------------------------



See notes to financial statements.
3

Commonwealth Biotechnologies, Inc.
Statements of Cash Flows


- --------------------------------------------------------------------------------------------------------------------------


Three Months Ended
--------------------------------------------
March 31, 2001 March 31, 2000
------------------ ----------------
(Unaudited)

Cash flows from operating activities

Net income (loss) $(474,495) $ 76,676
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities
Depreciation and amortization 207,971 144,978
Realized gains on sale of investments (11,922) --
Changes in assets and liabilities:
Accounts receivable (38,410) (77,685)
Prepaid expenses and inventory (219,117) (98,797)
Accounts payable and accrued expenses 105,287 18,481
Deferred revenue (6,384) 38,724
Deposits 3,200 --
- --------------------------------------------------------------------------------------------------------------------------

Net cash provided by (used in) operating activities (433,870) 102,377
- --------------------------------------------------------------------------------------------------------------------------

Cash flows from investing activities
Contract acquisition costs (150,000) --
Purchases of debt securities, available for sale (296,889) --
Sale of debt securities, available for sale 781,464
Purchases of property, plant and equipment (97,392) (45,536)
- --------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) investing activities 237,183 (45,536)
- --------------------------------------------------------------------------------------------------------------------------

Cash flows from financing activities
Proceeds from issuance of common stock -- 602,725
Principal payments on long term debt, note payable and capital lease obligation (129,339) (32,044)
Restricted cash (12,550) (5,518)
- --------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities (141,889) 565,163
- --------------------------------------------------------------------------------------------------------------------------

Net increase (decrease) in cash and cash equivalents (338,576) 622,004
Cash and cash equivalents, beginning of period 587,156 31,630
- --------------------------------------------------------------------------------------------------------------------------

Cash and cash equivalents, end of year $ 248,580 $653,634
- --------------------------------------------------------------------------------------------------------------------------
Supplemental Disclosure of Cash Flow Information
Cash payments for interest $ 226,865 $ 76,644
- --------------------------------------------------------------------------------------------------------------------------

Supplemental schedule of non-cash investing and financing activities
Capital lease obligation incurred for use of equipment $ -- $ 90,250
- --------------------------------------------------------------------------------------------------------------------------



See notes to financial statements.
4

Commonwealth Biotechnologies, Inc.
Notes To Financial Statements


Note 1. Basis of Presentation

The accompanying unaudited financial statements (except for the balance sheet at
December 31, 2000, which is derived from audited financial statements) have been
prepared in accordance with generally accepted accounting principles for interim
financial statements and Regulation S-B. Accordingly, they do not include all
of the information required by generally accepted accounting principles for
complete financial statements. In the opinion of the Company, all adjustments
(consisting of only normal recurring accruals) necessary to present fairly the
financial position and the results of operations for the periods presented have
been included. The results of operations for the three months ended March
31,2001 are not necessarily indicative of the results that may be expected for
the year ending December 31, 2001.

Note 2. Earnings (Loss) Per Share

The Company follows the guidance provided in FASB Statement No. 128 which
requires dual presentation of basic and diluted earnings per share with a
reconciliation of the numerator and denominator of the earnings per share
computations. Basic per share amounts are based on the weighted average shares
of common stock outstanding. Diluted earnings per share assume the conversion,
exercise or issuance of all potential common stock instruments such as options,
warrants and convertible securities, unless the effect is to reduce a loss or
increase earnings per share. Accordingly, this presentation has been adopted
for all periods presented. The basic and diluted weighted average shares
outstanding are as follows:




Three months ended March 31,
2001 2000
--------- ----------

Weighted average shares outstanding
shares used for basic EPS 2,076,164 1,682,326
Plus incremental shares from assumed
issuance of stock options - 224,962
---------- ----------

Weighted average outstanding shares
used for diluted EPS 2,076,164 1,907,288
========== =========


Net Income (loss) $ (474,495) $ 76,676
========== ==========

Basic earnings (loss) per share $ (.23) $ .05
========== ==========
Diluted earnings (loss) per share $ (.23) $ .04
========== ==========


5

Note 3. Contract Purchase

On January 1, 2001, the Company purchased contracts and rights to pending
contracts held by the drug development group of SRA Life Sciences, Inc. of Falls
Church, Virginia for $150,000. In connection with this purchase, the Company
incurred acquisition costs, during 2000, totaling $33,047. These costs have been
capitalized and will be amortized over the life of the contracts which all
expire in 2001.

Note 4. Business Considerations

In June 1997, the Company sold 60 convertible subordinated notes, with a
principal amount of $50,000, in a private placement offering at an offering
price of $50,000 per note. Each note was automatically converted into a minimum
of 8,333.33 shares of the Company's stock at the closing of the Company's
initial public offering (IPO). The Company received proceeds of $2,626,269, net
underwriting and other offering costs.

Upon closing of the private placement offering, the Company issued warrants to
management for the purchase of 100,000 shares of common stock. The warrants are
exercisable for a period of ten years at an exercise price of $9.90 per share.

In October 1997, the Company closed its initial public offering (IPO) and
received net proceeds of $5,417,578, net of underwriting and other costs. In
connection with the IPO, the underwriters purchased warrants for 101,500 shares
of common stock. The warrants are exercisable for a period of five years at
an exercise price of $9.90 per share.

6

Since 1997 and through 2000, the Company has incurred recurring operating losses
due to increased operating costs without corresponding increases in revenues.
Through 1999, these deficits were substantially funded through use of funds
obtained from the private placement and the IPO. The Company has also used
proceeds from its offerings for capital acquisitions, which were primarily
funded through its issuance of Industrial Revenue Development Bonds. On
September 27, 2000 the Company completed a private placement of 348,000 shares
of common stock and warrants that provided net proceeds of $2,350,397. The
proceeds received from the private placement were used to pay off the line of
credit and to fund general working capital needs.

The Company's financial position has improved from prior years and management
believed that the Company would be able to generate positive net cash flows from
new and existing contracts and by continued monitoring and reduction of
operating costs in 2001. However, the Company experienced a significant loss in
the first quarter of 2001 that was larger than expected. Cash flows from new and
existing contracts that were expected to occur in the first Quarter either were
postponed to subsequent periods or did not materialize. As a result, management
is seeking sources of new capital, which it believes will be necessary to fund
future operations.

7

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

The following should be read in conjunction with the Company's Financial
Statements and Notes included herein.

Business Considerations

In June 1997, the Company sold 60 convertible subordinated notes, with a
principal amount of $50,000, in a private placement offering at an offering
price of $50,000 per note. Each note was automatically converted into a minimum
of 8,333.33 shares of the Company's stock at the closing of the Company's
initial public offering (IPO). The Company received proceeds of $2,626,269, net
underwriting and other offering costs.

Upon closing of the private placement offering, the Company issued warrants to
management for the purchase of 100,000 shares of common stock. The warrants are
exercisable for a period of ten years at an exercise price of $9.90 per share.

In October 1997, the Company closed its initial public offering (IPO) and
received net proceeds of $5,417,578, net of underwriting and other costs. In
connection with the IPO, the underwriters purchased warrants for 101,500 shares
of common stock. The warrants are are exercisable for a period of five years at
an exercise price of $9.90 per share.

Since 1997 and through 2000, the Company has incurred recurring operating losses
due to increased operating costs without corresponding increases in revenues.
Through 1999, these deficits were substantially funded through use of funds
obtained from the private placement and the IPO. The Company has also used
proceeds from its offerings for capital acquisitions, which were primarily
funded through its issuance of Industrial Revenue Development Bonds. On
September 27, 2000 the Company completed a private placement of 348,000 shares
of common stock and warrants that provided net proceeds of $2,350,397. The
proceeds received from the private placement were used to pay off the line of
credit and to fund general working capital needs.

The Company's financial position has improved from prior years and management
believed that the Company would be able to generate positive net cash flows from
new and existing contracts and by continued monitoring and reduction of
operating costs in 2001. However, the Company experienced a significant loss in
the first quarter of 2001 that was larger than expected. Cash flows from new and
existing contracts that were expected to occur in the first quarter either were
postponed to subsequent periods or did not materialize. As a result, management
is seeking sources of new capital, which it believes will be necessary to fund
future operations.

Overview

The Company's revenues are derived principally from providing macromolecular
synthetic and analytical services to researchers in the biotechnology industry
or who are engaged in life sciences research in government or academic labs
throughout the world. Development of innovative technologies for biotechnology

8

requires sophisticated laboratory techniques and the Company provides these
services to customers on a contract basis. The Company's customers consist of
private companies, academic institutions and government agencies, all of which
use biological processes to develop products for health care, agricultural, and
other purposes.

The Company generally derives revenue from two types of customers: those who
require a discrete set of services ("lab services"), and those who contract with
the Company on an extended basis for performance of a variety of integrated
services ("commercial and government contracts"). More often than not, the
Company's customers provide repeat business to the Company. The Company views
commercial and government contracts as the more important source of revenue, and
has continued to focus its efforts on identifying these customers. These
contracts generally range from a few months to more than a year. Revenues are
generally recognized as services are rendered or as products are delivered. In
addition, revenue is also recognized with performance-based installments payable
over the contract duration as milestones are achieved.

The Company also derives revenues from genetic identity and clinical services.
There has been a dramatic and constant increase in the number of private
paternity cases implemented at the Company. The Company routinely processes
upwards of 125 inquiries per month. The Company implemented rapid and novel
techniques for genotyping analysis that have been applied to cell culture lines.
Consequently, the company performs identity and lineage analysis on different
cell lines for various clients.

Another source of revenue implemented in January 2001 was that of the Company
contracts and rights to pending contracts held by the drug development group of
SRA Life Sciences, Inc. of Falls Church, Virginia. This technology complements
its current inventory of services and allows CBI to offer complete development
of potential human pharmaceuticals, from conception through pre-clinical trials
and onto early phase clinical trials (I and II). Drug Development is a primary
focus for the Company's new Concept-to-Clinic mission and marketing approach.

The Company realized a loss from operations for the three months ended March 31,
2001 of $474,495. These results were not expected in the Company's business plan
and resulted because certain new and existing contracts did not produce expected
revenues as they were either postponed to subsequent periods or did not
materialize. The Company believes losses from operations will continue for the
foreseeable future.





Results of Operations

Three Months Ended March 31, 2001 Compared with Three Months Ended March 31,
2000.

9

Revenues

The Company experiences fluctuations in all revenue categories. Continuation of
existing projects, or engagement for future projects is usually dependent upon
the customer's satisfaction with the scientific results provided in initial
phases of the scientific program. Continuation of existing projects or
engagement of future projects also often depends upon factors beyond the
Company's control, such as the timing of product development and
commercialization programs of the Company's customers. The combined impact of
commencement and termination of research contracts from several large customers
and unpredictable fluctuations in revenue for laboratory services can result in
very large fluctuations in financial performance.

Gross revenues increased by $177,606 or 15.0% from $1,185,881 during the first
quarter of 2000 (the "2000 Quarter") to $1,363,487 during first quarter of 2001
(the "2001 Quarter").

Revenues realized from lab services decreased by $39,075 or 21.7% from $180,057
during the 2000 Quarter to $140,982 during the 2001 Quarter. Even with
management's decision to focus on commercial and government projects, the
Company continues to view lab services as a potential revenue source.
Historically, net revenues have been earned from lab services, however, the
Company views commercial and government projects as the more important source of
revenue (as mentioned below) and has continued to focus its efforts on
identifying long-term customers.

Revenues realized from various commercial contracts increased by $248,718 or
62.2%, from $399,657 during the 2000 Quarter to $648,375 during the 2001
Quarter. This increase is primarily due to work being done on thirty-seven
individual projects compared to sixteen projects in progress during the 2000
Quarter. Of the $648,375 in commercial contracts one major client represents
30.2% of the revenue earned during the 2001 Quarter.

Revenues realized from various government contracts decreased by $93,324 or
16.5%, from $563,795 during the 2000 Quarter to $470,471 during the 2001
Quarter. This category primarily consists of the project that was awarded from
the Illinois Institute of Technology Research Institute (see "Business
Considerations"). During the third Quarter of 2000, the second year of this
contract was awarded to the Company and is expected to provide revenues of
approximately $1.2 million which is less than it was in the prior period. This
revenue will be recognized during the first three quarters of 2001. The
Company's management continues to take an active role in negotiating new
contracts.

Revenues realized from various genetic testing increased by $36,422 or 93.7%,
from $38,882 during the 2000 Quarter to $75,304 during the 2001 Quarter. This
increase is due to a dramatic and constant increase in the number of private
paternity cases during the 2001 Quarter.

In 2001, the Company implemented rapid and novel techniques for genotyping
analysis that have been applied to cell culture lines. Consequently, the
company performs identity and lineage analysis on different cell lines for
various clients. Total revenue derived from genotyping services alone amounted
to $24,600 during the 2001 Quarter.

10
Cost of Services

Cost of services consists primarily of materials, labor, subcontractor costs and
overhead. The cost of goods increased by $411,731, or 53.3%, from $772,934
during the 2000 Quarter to $1,184,665 during 2001 Quarter. The cost of services
as a percentage of revenue was 86.8% and 62.5% during the 2001 and 2000
quarters, respectively.

Labor costs increased by $88,141, or 32.6%, from $270,210 during the 2000
Quarter to $358,351 during the 2001 Quarter. This increase reflects a
reallocation of the Company's resources to the general operations of the
business from the General and Administrative areas.

The costs for direct materials increased by $60,906, or 43.0%, from $141,677
during the 2000 Quarter, to $202,583 during the 2001 Quarter. These increased
costs are directly attributable to the increase of revenue generated by the
Company.

Subcontractor costs increased by $82,536, or 775.7%, from $10,640 during the
2000 Quarter to $93,176 during the 2001 Quarter. This increase is due to costs
incurred from subcontractors in the new drug development activity.

Overhead cost consists of indirect labor, depreciation, freight charges, repairs
and miscellaneous supplies not directly related to a particular project. Total
overhead costs increased by $134,302, or 38.6%, from $347,721 during the 2000
Quarter to $482,023 during the 2001 Quarter.

Sales, General and Administrative

Sales, general and administrative expenses ("SGA") consist primarily of
compensation and related costs for administrative, marketing and sales
personnel, facility expenditures, professional fees, consulting, taxes, and
depreciation. Total SGA costs increased by $363,167, or 139.4%, from $260,548
during the 2000 Quarter to $623,715 during 2001 Quarter. As a percentage of
revenue, these costs were 45.7% and 22.0% during 2001 and 2000, respectively.

Total compensation and benefits increased by $160,173 or 647.1% from $24,752
during the 2000 Quarter to $184,925 during the 2001 Quarter. This increase is

11

primarily attributable to the reallocation of personnel that were once charged
to work on the subcontract from the Illinois Institute of Technology Research
Institute back to the administrative area. In addition, three employees were
added to assist in the administrative support of the Company. Facility costs
increased by $30,708 or 69.9% from $43,948 during the 2000 Quarter to $74,656
during the 2001Quarter. This increase is primarily due to rent paid for the
offices of the drug development division. Professional fees increased by
$41,444, or 63.5%, from $65,239 during the 2000 Quarter to $106,683 during the
2001 Quarter. This increase is primarily due to consulting fees incurred to
insure the continuation of a smooth transition of the drug development offices.
In addition, the Company opted to increase its coverage in personal liability
for both the corporate and drug development offices. Legal fees increased due to
the defense required under patent number 6,110,683 (see Note 4 to the interim
financial statements). Marketing costs increased by $91,612 or 548.6%, from
$16,701 during the 2000 Quarter to $108,313 during the 2001 Quarter. During the
first quarter of 2001, the Company opted to increase its marketing exposure
throughout the marketplace with major increases in advertising and public
relations.

Other Income (Expenses)

Interest income increased by $33,422, or 482.8% from $6,922 during the 2000
Quarter to $40,344 during the 2001 Quarter. Interest income has been derived
from investing the unused portion of the restricted cash realized by the Company
from the successful sale (March 1998) of Industrial Revenue Bonds (IRBs) for
construction of the Company's new facility. Interest income also increased due
to the investing of the proceeds received from the private placement on
September 27, 2000.

Interest costs incurred by the Company during the 2000 and 2001 Quarter's
included (1) interest paid to financial institutions for loans made to the
Company; 2) interest paid for the Company's IRBs; and 3) amortization of costs
incurred as a consequence of the completion of the Company's IRB financing.
Interest expense decreased $12,699 or 15.4% from $82,645 during the 2000 Quarter
to $69,946 during the 2001 Quarter.

Liquidity and Capital Resources

The 2001 Period reflected a decrease in cash of $463,870 from operating
activities, as compared to an increase of $102,377 from operating activities
during the 2000 Period. The significant cash outflow for 2001 was primarily due
to substantial investments made by the Company in facility costs, personnel,
equipment, sales, and marketing efforts. The cost outlays in 2001 were made
possible by capital realized from the Company's private placement on September
27, 2000.

Net working capital as of March 31, 2001 and December 31, 2000 was $913,075 and
$1,553,139 respectively. This decrease is a direct result of the significant

12

loss in the first quarter of $474,495. Cash flows from new and existing
contracts that were expected to occur in the first quarter either were postponed
to subsequent periods or did not materialize. As a result management is seeking
sources of new capital which it believes will be necessary to fund future
operations.

The Company continues to search for long-term projects as the more important
source of revenue and has continued to focus its efforts on identifying long-
term customers. Long-term projects generally range from a few months to more
than a year. In the fourth quarter of 1999, the Company was awarded a five-year
subcontract with the Illinois Institute of Technology Research Institute. The
contract is valued at approximately $8.5 million. During the third quarter of
2000, the second year of this contract was awarded to the Company and is
expected to provide revenues of approximately $1.2 million. This revenue will be
recognized during the first three-quarters in 2001.

At March 31,2001, the Company has approximately thirty contracts out for bid
with various potential customers. These contracts, if awarded, would provide the
Company with approximately $5.1 million to $12.2 million in revenues over the
next two to five years.

Management has in the past and will continue to seek additional equity and or
debt financing in the future to further the Company's development.

Forward Looking Statements

Management has included herein certain 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. When used, statements
that are not historical in nature, including the words "anticipated",
"estimate", "should", "expect", "believe", "intend", and similar expressions are
intended to identify forward-looking statements. Such statements are, by their
nature, subject to certain risks and uncertainties.

Among the factors that could cause the actual results to differ materially from
those projected are the following:

o business conditions and the general economy,

o the development and implementation of the Company's long-term business
goals,

13

o federal, state, and local regulatory environment,

o lack of demand for the Company's services,

o the ability of the Company's customers to perform services similar to
those offered by the Company "in-house,"

o potential cost containment by the Company's customers resulting in
fewer research and development projects,

o the Company's ability to receive accreditation to provide various
services, including, but not limited to paternity testing, and

o the Company's ability to hire and retain highly skilled employees,

Other risks, uncertainties, and factors that could cause actual results to
differ materially from those projected are detailed from time to time in reports
filed by the company with the Securities and Exchange Commission, including
Forms 8-K, 10-QSB, and 10-KSB.






PART II
OTHER INFORMATION

Item 1. Legal Proceedings

On November 22, 2000, the Company filed a complaint in the United States
District Court for the Eastern District of Virginia, Richmond Division, styled
Commonwealth Biotechnologies, Inc. v. PE Corporation d/b/a Applied Biosystems

14

Group (f/k/a PE Biosystems Group), The Gel Company and Genome Therapeutics
Corporation, in which the Company sought unspecified damages and injunctive
relief for alleged patent infringement, misappropriation of trade secrets and
antitrust violations relating to the Company's patent (U.S. Patent No.
6,110,683) for its AccuTrac DNA lane tracking dye technology. The defendants in
this matter filed a counterclaim requesting a dismissal of the Company's
claim asserting the invalidity of the Company's patent.

On April 30, 2001, the Company settled the claim referenced above and granted
a patent license to Applied Biosystems Group of PE Corporation, New York, for
the Company's patented DNA lane tracking technology for automated DNA
sequencing.


Item 2. Changes in Securities and Use of Proceeds

Not applicable.


Item 3. Defaults Upon Senior Securities

Not applicable.


Item 4. Submission of Matters to a Vote of Security Holders

Not applicable.

Item 5. Other Information

Not applicable.


Item 6. Exhibits and Reports on Form 8-K


(a) Exhibits.



Exhibit Number Description of Exhibit

3.1 Amended and Restated Articles of Incorporation (1)
3.2 Amended and Restated Bylaws (1)
4.1 Form of Common Stock Certificate (1)
4.2 Indenture of Trust by and between the Virginia Small Business
Financing Authority and Crestar Bank relating to the issuance
of industrial revenue bonds for the benefit of the Company (2)



15




10.1 Warrant Agreement between the Company and Richard J. Freer, as
amended (1)
10.2 Warrant Agreement between the Company and Thomas R. Reynolds,
as amended (1)
10.3 Warrant Agreement between the Company and Robert B. Harris, as
amended (1)
10.4 Employment Agreement for Richard J. Freer (1)
10.5 Employment Agreement for Thomas R. Reynolds (1)
10.6 Employment Agreement for Robert B. Harris (1)
10.7 Executive Severance Agreement for Richard J. Freer (1)
10.8 Executive Severance Agreement for Thomas R. Reynolds (1)
10.9 Executive Severance Agreement for Robert B. Harris (1)
10.10 1997 Stock Incentive Plan, as amended (1)
10.11 Loan Agreement by and between the Virginia Small Business
Financing Authority and the Company (2)

- ----------------------------------------------------
(1) Incorporated by reference to the Company's Registration Statement on Form
SB-2, Registration No. 333-31731, as amended.
(2) Incorporated by reference to the Company's Current Report on Form 8-K,
dated April 6, 1998, File No. 001-13467.

(b) Reports on Form 8-K. On January 16, 2001, the Company filed a Current
Report on Form 8-K announcing the purchase of the current contracts and the
rights to the pending contracts of the Drug Development Group of SRA Life
Sciences Inc.

On January 22, 2001, the Company filed a Current Report on Form 8K announcing
the resignation of one director and the appointed of three additional members to
the Company's Board of Directors.

16

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned thereunto duly
authorized.


COMMONWEALTH BIOTECHNOLOGIES, INC.



By: /s/ James H. Brennan
---------------------------------------------
James H. Brennan
Controller and Principal Accounting Officer

May 15, 2001

17

EXHIBIT INDEX




Exhibit Number Description of Exhibit

3.1 Amended and Restated Articles of Incorporation (1)
3.2 Amended and Restated Bylaws (1)
4.1 Form of Common Stock Certificate (1)
4.2 Indenture of Trust by and between the Virginia Small Business
Financing Authority and Crestar Bank relating to the issuance
of industrial revenue bonds for the benefit of the Company (2)
10.1 Warrant Agreement between the Company and Richard J. Freer, as
amended (1)
10.2 Warrant Agreement between the Company and Thomas R. Reynolds,
as amended (1)
10.3 Warrant Agreement between the Company and Robert B. Harris, as
amended (1)
10.4 Employment Agreement for Richard J. Freer (1)
10.5 Employment Agreement for Thomas R. Reynolds (1)
10.6 Employment Agreement for Robert B. Harris (1)
10.7 Executive Severance Agreement for Richard J. Freer (1)
10.8 Executive Severance Agreement for Thomas R. Reynolds (1)
10.9 Executive Severance Agreement for Robert B. Harris (1)
10.10 Form of Incentive Stock Option Agreement (1)
10.11 Loan Agreement by and between the Virginia Small Business
Financing Authority and the Company (2)

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(1) Incorporated by reference to the Company's Registration Statement on Form
SB-2, Registration No. 333-31731, as amended.
(2) Incorporated by reference to the Company's Current Report on Form 8-K,
dated April 6, 1998, File No. 001-13467.