<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB A
(Mark One)
/X/ Annual report under Section 13 or 15(d) of the Securities Exchange Act of
1934
For the fiscal year ended December 31, 1996
/ / Transition report under Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the transition period from to
Commission file number 0-21168
CHROMATICS COLOR SCIENCES INTERNATIONAL, INC.
(Name of Small Business Issuer in Its Charter)
NEW YORK 13-3253392
(State or Other Jurisdiction of (I.R.S. Employer Identification Number)
Incorporated or Organization)
5 East 80th Street, New York, NY 10021
(Address of Principal Executive Offices) (Zip Code)
(212) 717-6544
(Issuer's Telephone Number, Including Area Code
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, par value $0.001 per share
(Title of Class)
Common Stock Purchase Warrants
(Title of Class)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes X No
----- -----
Check if disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB.
Issuer's revenues for its most recent fiscal year: $287,400.
As of March 25, 1997, approximately 7,308,497 shares of common stock
and 2,731,441 common stock purchase warrants of the registrant were outstanding
and the aggregate market value of the voting stock (computed based on the
average of the last bid and asked price on such date) held by non-affiliates was
approximately $35,050,302.
Documents incorporated by reference: None
<PAGE>
(All page references refer to the Company's Form 10-KSB filed with the
Commission on April 1, 1997)
1. The fourth full paragraph appearing on page 5 is replaced in its
entirety by the following paragraph:
"The Colormate(TM) II System can also be used to perform Chromaticity
Studies of various product lines in manufactured or applied forms (e.g., hair
coloring, hosiery, other cosmetic lines) on behalf of licensees. The
Colormate(TM) II System was used in this capacity for Avon, and was test
marketed in this capacity for Hanes, Clairol and Regis, and is currently being
used in this capacity in tests being conducted for IMS. This capability permits
the organization of the licensee's products into scientific color categories so
that the consumer can be assisted with proper color coordination within the
licensee's product line."
2. The first paragraph of "Proposed Marketing Program" appearing on
page 9 is replaced in its entirety by the following paragraphs:
"The Company's marketing plan for the beauty salon and beauty-related
business markets initially focused on direct marketing by the Company through
commissioned sales representatives and indirect marketing through independent
distributors. The Company now believes, based on its prior experience with
regional distributors, that, in order to achieve any significant penetration in
these markets, it will be necessary for the Company to establish relationships
with larger distributors having substantial sales forces and a national
presence. The pricing, revenue sharing or other terms on which it may establish
relationships with distributors will likely result in lower operating margins on
such sales than on sales effected through commissioned sales representatives.
The Company will seek to market by establishing relationships with
national distributors or other companies that it believes could effectively
market and/or utilize the Company's technology and Intellectual Property for
medical applications following FDA clearances in the United States, as well as
in the cosmetics, beauty aid, hair and fashion industries and for industrial
applications. These relationships could take the form of lease/license
arrangements, marketing and distribution arrangements, joint ventures or
acquisitions."
3. The last paragraph appearing on page 15 is replaced in its entirety by
the following paragraph:
"The Company filed its application with the FDA under the 510(k)
procedure in November, 1996. The company promptly responded to certain FDA
inquiries regarding the usages of certain "substantially equivalent" devices in
January and February of 1997. The FDA is continuing its review of the Company's
510(k) submission to date. While any 510(k) submission or PMA application is
pending at the FDA, commercial marketing in the United States of the Company's
medical applications and methods would be prohibited. If, prior to the
completion of the FDA's review process, the Company's proposed products do not
qualify for the 510(k) procedure and are required to undergo the PMA procedure,
or if any required clearances or approvals are delayed or denied, sales of the
Company's proposed medical devices would be prohibited during the period the
Company does not have such clearances or approvals."
4. The fourth paragraph appearing on page 29 is replaced in its entirety
by the following paragraph:
"The Company incurred research and development expenses primarily
consisting of compensation of officers, employees and consultants of $194,400
and $419,500 for fiscal years 1996 and 1995, respectively. The Company estimates
that such expenses for fiscal 1997 will approximate $700,000 although there can
be no assurance that such expenses will not exceed that amount. Of such amount,
approximately $300,000 will be applied to developing the mass manufacture
housing prototype for the medical application of the Company's technology in the
detection and monitoring of infant jaundice, approximately $100,000 will be
applied to completing the hand-held, less expensive version of the Colormate(TM)
II System, $100,000 will be applied to fabricate molds for each of the foregoing
prototypes, and $200,000 will be applied to the Company's ongoing research and
development efforts."
2
<PAGE>
5. The table appearing on page 45 is replaced in its entirety by the
following table:
Summary Compensation Table
The following table summarizes all compensation awarded to, earned by,
or paid to, the Company's executive officers for services rendered in all
capacities to the Company for the fiscal years ended December 31, 1994, 1995 and
1996. See "Certain Relationships and Related Transactions" for information with
respect to the shares of Preferred Stock issued to Mrs. Macfarlane in 1992 in
consideration of her transfer to the Company of certain intellectual properties,
and "Description of Properties" regarding certain payments made to her by the
Company for office space.
<TABLE>
<CAPTION>
Long-Term All Other
Annual Compensation Compensation Compensation
------------------- ------------ ------------
Awards
------
Name and
Principal Salary Bonus Options
Position Year ($) ($) (#)
---- ----- ------- -------
<S> <C> <C> <C> <C> <C>
Darby S. Macfarlane, 1994 125,000 0 0 85,000(1)
Chief Executive Officer ----
1995 125,037 0 0 26,689(2)
----
1996 125,000 20,000 300,000
----
Arthur Guiry, President 1995 168,101(3) 0 0
1996 200,000 0 0
David Kenneth Macfarlane, 1994 100,000 0 0 0
Vice President, 1995 114,034(4) 0 0 0
Research and Development 1996 125,000 4,500 200,000 0
Leslie Fogelsong, 1994 75,000 0 10,000
Secretary and Treasurer 1995 75,000 0 50,000
1996 75,000 103,650(5) 100,000
</TABLE>
- ----------------------
(1) Represents payment pursuant to Mrs. Macfarlane's employment agreement,
under which she is entitled to receive 33% of the first $1,000,000 of the
Company's net recovery in excess of $2,000,000 from the Avon lawsuit.
(2) Represents interest payments pursuant to the $262,400 balance owed to Mrs.
Macfarlane pursuant to the Avon Settlement.
(3) Includes $23,000 of fees paid to Mr. Guiry in 1995 as a consultant prior to
his employment as President.
(4) Includes $14,000 of fees paid to Mr. Macfarlane in 1995 as a consultant.
(5) Includes 1995 bonus not paid until 1996.
3
<PAGE>
6. Note 6 to Consolidated Financial Statements is amended to show that
the Company's Stock Option Plan provides for options to purchase 2,000,000
shares.
4
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act
of 1934, the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
CHROMATICS COLOR SCIENCES INTERNATIONAL, INC.
By: /s/ Darby S. Macfarlane Date: April 2, 1997
---------------------------------------- -------------
Darby S. Macfarlane,
Chief Executive Officer
By: /s/ Leslie Foglesong Date: April 2, 1997
---------------------------------------- -------------
Leslie Foglesong,
Treasurer
(chief financial and accounting officer)
In accordance with the Securities Exchange Act of 1934, this report has
been signed below by the following persons on behalf of the registrant and in
the capacities and on the dates indicated.
By: /s/ Darby S. Macfarlane Date: April 2, 1997
---------------------------------------- -------------
Darby S. Macfarlane,
CEO; Chairman of the Board;
Director
By: /s/ David K. Macfarlane Date: April 2, 1997
---------------------------------------- -------------
David K. Macfarlane,
Vice President, Research & Development;
Director
By: /s/ Leslie Foglesong Date: April 2, 1997
---------------------------------------- -------------
Leslie Foglesong,
Secretary; Treasurer; Director
5
