Subject: Audit Qualification Is Taken in Stride By Carrington Chief
Date: Published: 3/20/87 74 lines
Source:  Wall Street Journal.  Copyright Dow Jones & Co. Inc. 

   Audit Qualification
   Is Taken in Stride
   By Carrington Chief
    ---
   Opinion Is Due to Lawsuit;
   Pharmaceutical Company
   Says Case Is Not 'Serious'
    ---
   By Cynthia F. Mitchell
   Staff Reporter of The Wall Street Journal

   DALLAS -- The president of Carrington Laboratories Inc. 
talks as if everything at his company is fine.
   But the company's year-end filing with the Securities and
Exchange Commission discloses that Carrington's auditors,
Arthur Andersen & Co., qualified its opinion of the company's
financial statements because of the potential adverse effects
of a pending lawsuit.
   In the filing, the company said that it hasn't received
any payments since November from Nutri-Metics International
Inc. -- which is suing Carrington -- for Nutri-Metics'
purchase last year of Carrington's direct-sales business.
   Nutri-Metics filed suit against Carrington in January,
claiming breach of contract and other charges, and asking for
upward of $4 million in punitive damages, the filing said.
Payments from the Industry, Calif.-based direct-sales concern
constituted about 26% of Carrington's sales for its fiscal
year ended Nov. 30, 1986.
   On top of that, the filing also disclosed that Carrington
doesn't currently have working capital to carry it past 1987,
and that it doesn't have a bank line of credit or other
arrangement through which it can obtain additional funds.  For
its fiscal year ended Nov. 30, Carrington reported a loss of
$3.4 million on sales of $3.5 million.
   But Clinton Howard, Carrington's president, is unfazed.
The lawsuit, to which Carrington has responded with its own,
is "insignificant" in his opinion, and didn't warrant a press
release at the time it was filed.  "We've been negotiating for
settlement.  Our own attorneys have agreed with us and felt
that Nutri-Metics didn't have any serious suit, so we didn't
feel it was worthy of sending (a press release) over," he
said.
   Carrington will generate working capital past 1987, Mr. 
Howard and the filing said, by granting other companies
licenses to develop and market products containing Carrisyn,
a pharmaceutical using derivatives from the aloe vera plant
that the company claims successfully treats bedsores,
ulcerative colitis, and acquired immune deficiency syndrome.
The company says it plans to seek approval soon from the Food
and Drug Administration for human clinical tests of its
compound as an AIDS treatment.  In October, the FDA ordered a
private physician to stop his independent human tests of the
compound as an AIDS treatment.
   Mr. Howard said the company is in "serious" discussions
with three large drug companies for Carrisyn licensing
agreements.  Also, he said, the company's wound-treatment
division is "growing fast' and alone could support the
company's cash needs in about a year.
   As for the company's profitability, Mr. Howard predicts
Carrington will be in the black by the end of the year.
   Nutri-Metics could not immediately be reached for comment.
   In national over-the-counter trading yesterday, Carrington
common stock, which has traded as high as $33 and as low as
$9.25 in the past year, closed at $21, down 25 cents.

(This article is made available here by Dow Jones Co. for the 
personal and non-commercial use of callers to this bbs, in the 
hope that it will be of some help to those who are suffering 
from the disease and others who are seeking to help them.)