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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 3, 2000
REGISTRATION NO.333-46020
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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CHROMATICS COLOR SCIENCES INTERNATIONAL, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
NEW YORK 13-3253392
(STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)
</TABLE>
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5 EAST 80TH STREET
NEW YORK, NY 10021
(212) 717-6544
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
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WITH A COPY TO:
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<S> <C>
DARBY S. MACFARLANE JEFFREY E. LAGUEUX, ESQ.
CHAIRPERSON OF THE BOARD PATTERSON, BELKNAP, WEBB & TYLER LLP
5 EAST 80TH STREET 1133 AVENUE OF THE AMERICAS
NEW YORK, NY 10021 NEW YORK, NY 10036-6710
(212) 717-6544 (212) 336-2000
</TABLE>
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
AGENT FOR SERVICE)
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are being offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [ ]
If this form is filed to register additional securities pursuant to Rule
462(b) under the Securities Act of 1933, please check the following box and list
the Securities Act of 1933 registration statement number of the earlier
effective registration statement for the same offering. [ ] ----------
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act of 1933, check the following box and list the
Securities Act of 1933 registration statement number of the earlier effective
registration statement for the same offering. [ ] ----------
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
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AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TO BE OFFERING PRICE AGGREGATE REGISTRATION
TITLE OF SHARES TO BE REGISTERED REGISTERED PER SHARE(1) OFFERING PRICE(1) FEE(2)
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<S> <C> <C> <C> <C>
Common Stock, par value $.001..... 4,249,948 $1.0625 $4,515,569.75 $2,020.61
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</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee. These
estimates have been calculated in accordance with Rule 457(c) under the
Securities Act of 1933 and are based upon the average of the high and low
prices per share of the Registrant's common stock on the Nasdaq SmallCap
Market on November 2, 2000.
(2) Paid on September 18, 2000.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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<PAGE> 2
PROSPECTUS
CHROMATICS COLOR SCIENCES
INTERNATIONAL, INC.
4,249,948 SHARES OF COMMON STOCK
The selling stockholders named in this prospectus are offering and selling
shares of our common stock. A portion of these shares were issued in connection
with our recent acquisition of Gordon Acquisition Corp., a manufacturer of
cosmetics, hair care and other personal care products. Another portion of these
shares were issued to Millennium Partners, L.P. in a recent private financing,
with additional shares to be acquired by Millennium and our financial advisor
upon the exercise of warrants issued by us in connection with this private
financing. The remaining shares will be acquired by another financial advisor
upon the exercise of warrants issued by us as compensation for certain financial
advisory and investment banking services.
The selling stockholders may sell the shares of common stock described in
this prospectus in a number of different ways. The prices at which the selling
stockholders may sell the shares of common stock will be determined by
prevailing market prices for the shares or by negotiated transactions. We will
not receive any of the proceeds from the sale of shares, but we will receive the
exercise price of the warrants.
Our common stock is listed on the Nasdaq SmallCap Market under the symbol
"CCSI." On November 2, 2000 the closing sales price of our common stock on the
Nasdaq SmallCap Market was $1.125.
You should read the description of risks under the caption "Risk Factors"
beginning on page 4 before purchasing any of the common stock offered by this
prospectus.
The shares offered or sold under this prospectus have not been approved or
disapproved by the Securities and Exchange Commission or any state securities
commission, nor have these organizations determined that this prospectus is
accurate or complete. Any representation to the contrary is a criminal offense.
The date of this prospectus is November 2, 2000.
<PAGE> 3
ABOUT CHROMATICS
We are engaged in the business of researching, developing and
commercializing intellectual property rights, technology and instrumentation we
have developed in the field of color science. Color science involves the
objective, standardized analysis, description and measurement by instrument to a
laboratory standard of accuracy of the colors composing the visual color
spectrum and their related physical properties in relation to each other.
We have incorporated some of these intellectual property rights, technology
and instrumentation into a proprietary color measurement system and software
marketed for various applications known as the ColorMate(R) System. We have
developed our intellectual property and the ColorMate(R) System for:
- the color measurement to a laboratory standard of accuracy and
classification of human tissue, fluid, hair and/or teeth color,
- the color coordination of these human skin, tissue, fluid, hair and/or
teeth color classifications in relation to products,
- the color measurement to a laboratory standard of accuracy,
classification and organization based on color of various color-sensitive
consumer products including chromaticity studies of cosmetics, hair
coloring, hosiery, clothing, tooth enamel, paint and textiles,
- the color measurement to a laboratory standard of accuracy to monitor
infant jaundice,
- the color measurement in detecting and monitoring those diseases which we
believe can be diagnosed or monitored by the coloration of human skin,
tissue and fluids and
- the color coordination of products in relation to other products.
In July 1997 we received clearance from the U.S. Food and Drug
Administration for commercial marketing of our ColorMate(R) System device for
the non-invasive monitoring of infant jaundice by healthcare professionals in
the hospital, institutional, pediatricians' office or home setting. In June 1999
we entered into an agreement for the exclusive distribution of this product in
the hospital, pediatricians' office and home healthcare markets in the United
States with Datex-Ohmeda, Inc. and its Ohmeda Medical Division. The current
procedure for the initial screening for infant jaundice is the visual
observation of the yellowing of the skin by professional care providers. This is
a subjective determination prone to errors due to different skin colors. If the
initial clinical assessment suggests the possibility of infant jaundice, the
current procedure requires that a blood sample be obtained by lancing the
infant. We believe that a non-invasive instrument that monitors infant jaundice
represents a significant improvement in patient care.
The ColorMate(R) TLc-BiliTest(R) System monitors the incremental change of
the yellow content of the skin color in infants of all races by non-invasively
measuring the color of the skin of the newborn. Color measurements are obtained
by placing the device on different physical sites of the newborn for five to ten
seconds. Accuracy of the color measurements is ensured by use of the
TLc-Lensette(TM) calibration standard used prior to each baby's measurement.
On June 2, 2000 we acquired the common stock and certain debt of Gordon
Laboratories, Inc., a Carson City, California based formulator and manufacturer
of cosmetics, hair care and other personal care products. We acquired an
approximately 85% equity interest in Gordon for approximately $5.5 million,
principally in stock, and will acquire the remaining interest within one year of
June 2, 2000. Gordon is recognized within the personal and beauty care industry
as a high quality formulator, packager and contract manufacturer of cosmetics
and other beauty care products for branded consumer product marketers and
private label retailers. The Company's customer base consists of leading brand
marketers, major mass merchandisers and direct-sale marketers such as Sears, The
Gap, Kmart, Tora, Gerber, Herbalife, The Body Shop, Bath + Body works and
Victoria's Secret. In connection with the acquisition of Gordon, Brian
Fitzpatrick, the former Chairman, President and Chief Executive Officer of
Gordon, was named President and Chief Operating Officer of Chromatics and has
recently been appointed Acting Chief Executive Officer of Chromatics and a
member of our board of directors. Along with Mr. Fitzpatrick, the acquisition of
Gordon provides us with an experienced management team fully operational in the
cosmetics and beauty care industry, as we move to establish our presence there.
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Gordon provides us with the needed infrastructure to commercialize our
color science technology in the cosmetics and hair colorant markets. We expect
to capitalize on Gordon's manufacturing and marketing capabilities to generate
expanded revenues from laboratory chromaticity studies, color-measuring systems
and related products. In addition, Gordon has the capability to produce
TLc-Lensette(TM) calibration standards for the Company's medical device, the
ColorMate(R) TLc-BiliTest(R) non-invasive monitoring system for infant jaundice.
We are currently in the early stages of the commercialization of our
ColorMate(R) TLc-BiliTest(R) System for the monitoring of infant jaundice. We
are also developing a business plan for our recently acquired Gordon division,
establishing a new management structure and commercializing new applications of
our technology. We will need to generate substantial revenues from the sale of
our products and the financial markets in order to develop other medical and
non-medical applications for our intellectual property rights, technology and
instrumentation and to fund our continuing operations. If we are not successful
in generating adequate revenues, we may be forced to curtail our operations and
seek protection from our creditors under applicable bankruptcy laws.
In connection with the acquisition of Gordon, we issued to the stockholders
of Gordon a total of 721,231 shares of our common stock and paid them $609,000
in cash. In addition, in connection with our August 2000 private financing we
issued 641,026 shares of our common stock and warrants to purchase 2,588,974
shares of our common stock for gross proceeds of $3,000,000. Finally, as
compensation for certain services rendered pursuant to a financial advisory and
investment banking agreement, we issued warrants to purchase 298,717 shares of
our common stock to Josephthal & Co. Inc. The shares of common stock issued
pursuant to the Gordon acquisition, the August financing and the Josephthal
agreement, which in the aggregate equal 4,249,948, are the subject of this
prospectus.
We were incorporated in New York in March 1984. Our principal executive
offices are located at 5 East 80th Street, New York, New York 10021 and our
telephone number at that address is (212) 717-6544.
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RISK FACTORS
Investing in our common stock is very risky. You should be able to bear a
complete loss of your investment. You should carefully consider the following
factors, in addition to the other information in this prospectus, before
investing in our common stock.
WE HAVE A LIMITED OPERATING HISTORY
We have a limited operating history and have generated insignificant
revenues prior to the acquisition of Gordon. Although we have recently entered
into agreements for the manufacturing and distributing of our ColorMate(R)
TLc-BiliTest(R) System, to date we have not produced or sold substantial
quantities of this product. We cannot assure you that this product can be
manufactured in commercial quantities or at an acceptable cost or marketed
successfully. We also cannot assure you that we will be successful in our
efforts to commercialize our ColorMate(R) System for other applications.
WE EXPECT TO CONTINUE TO OPERATE AT A LOSS AND WE MAY NEVER ACHIEVE
PROFITABILITY
We cannot be certain that we will ever achieve and sustain profitability.
To date, we have been engaged in research and development activities and have
not generated any significant revenues from sales of our ColorMate(R)
TLc-BiliTest(R) System or TLc-Lensette(TM) calibration standards, although we
recently began generating revenues from Gordon's manufacturing and marketing
activities. As of June 30, 2000, we had an accumulated deficit of $40,969,000.
We expect that we will continue to incur operating losses for the foreseeable
future. We also cannot be certain that Gordon, which has sustained operating
losses during its last three fiscal years, will ever achieve and sustain
profitability.
IF WE DO NOT SECURE ADDITIONAL FINANCING WE WILL NOT BE ABLE TO DEVELOP AND
MARKET OUR PRODUCTS
We will require substantial additional funds for our research and product
development programs, for contractual obligations, for operating expenses, to
pursue regulatory approvals and to develop and commercialize other applications
of our ColorMate(R) System. In addition, Gordon has working capital and capital
equipment financing needs necessary to sustain and expand its business
operations. Adequate funds for these purposes, whether through the financial
markets or other sources, may not be available when needed. Additionally, under
the terms of our manufacturing agreement we must provide our manufacturing
partner with a number of key component parts to be assembled into our
ColorMate(R) System and our ColorMate(R) TLc-BiliTest(R) System. Without the
funds to provide these component parts, our products cannot be manufactured and
we will be unable to fulfill our obligations to our distribution partner. The
terms of the convertible preferred stock issued in the June 1999 and February
2000 Lehman financings that require a downward adjustment in the conversion
price if we issue shares of common stock at a price of less than $4.68 per share
(other than issuances specifically exempt from adjustment, as agreed to by
Lehman, including but limited to, issuances of preferred stock and/or warrants
to Crescent International Ltd. for aggregate proceeds of not more than
$4,000,000) will increase the cost to us of any subsequent equity financing
effected at less than $4.68 per share. If we fail to make any payment required
or if we are otherwise in default under the manufacturing and distribution
agreements relating to our ColorMate(R) System and our ColorMate(R) TLc
BiliTest(R) System, the other parties will have the right to terminate the
agreements. Termination of any of these agreements would have a material adverse
effect on our business by rendering us unable to manufacture and distribute our
ColorMate(R) System and our ColorMate(R) TLc-BiliTest(R) System until
replacement agreements were entered into.
WE HAVE LIMITED MANUFACTURING AND MARKETING CAPABILITIES OF OUR OWN AND WILL
CONTINUE TO DEPEND ON OTHER PARTIES FOR MANUFACTURING AND MARKETING FOR THE
FORESEEABLE FUTURE
We currently do not have the resources to manufacture or market
independently on a commercial scale the ColorMate(R) System, the ColorMate(R)
TLc-BiliTest(R) System or any other products that we may develop, although
through our recent acquisition of Gordon we soon expect to have the capability
to produce TLc-Lensette(R) calibration standards for our ColorMate(R)
TLc-BiliTest(R) System. We rely on our corporate partners to manufacture and to
market our ColorMate(R) TLc-BiliTest(R) System and will continue to rely on
corporate partners to manufacture and to market our ColorMate(R) System for
other applications. The amount and timing of resources to be devoted to these
activities by these other parties may not be within our control. We cannot
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assure you that these parties will perform their obligations as expected or that
we will derive any revenue from these arrangements. To date, our distribution
partner, Datex-Ohmeda, Inc. and its Ohmeda Medical Division, has not achieved
the annual minimum market penetration performance standards, nor has it
purchased and placed the minimum quantities of our ColorMate(R) TLc-BiliTest(R)
System and TLc-Lensette(TM) calibration standards, set forth in our June 7, 1999
distribution agreement, as amended. We cannot assure you that Datex-Ohmeda will
meet these minimum performance standards and purchase and placement requirements
in accordance with the terms of our agreement. We have little or no experience
in manufacturing or marketing any medical products and have only recently,
through our acquisition of Gordon, developed experience in manufacturing and
marketing products for the beauty industry. The failure of our corporate
partners to perform their obligations relating to the manufacturing and
distributing of our ColorMate(R) System or ColorMate(R) TLc-BiliTest(R) System
would have a material adverse effect on our business by rendering us unable to
manufacture and distribute our ColorMate(R) System and our ColorMate(R)
TLc-BiliTest(R) System until a replacement arrangement was entered into.
WE MAY NOT BE SUCCESSFUL IN COMMERCIALIZING OUR COLORMATE(R) TLC-BILITEST(R)
SYSTEM
Our success in commercializing our ColorMate(R) TLc-BiliTest(R) System will
be dependent upon its acceptance by healthcare professionals and the ability of
our distribution partner to penetrate the healthcare market. The acceptance of
our ColorMate(R) TLc-BiliTest(R) System by healthcare professionals will largely
depend on our ability to show them its ability to reduce the need for heelsticks
in monitoring infant jaundice as well as its utility compared to other
non-invasive methods that currently exist or that may be developed in the future
by others with respect to:
- safety,
- effectiveness,
- ease of use and
- price.
We cannot assure that our ColorMate(R) TLc-BiliTest(R) System will be
competitive with respect to these factors.
WE HAVE NOT YET SUCCESSFULLY COMMERCIALIZED OUR COLORMATE(R) SYSTEM FOR OTHER
POTENTIAL MEDICAL APPLICATIONS
Although we have received FDA clearance to commercially market our
ColorMate(R) TLc-BiliTest(R) System for monitoring infant jaundice, our clinical
and research and development programs for other medical applications of our
ColorMate(R) System are at a very preliminary stage. Substantial additional
research and development and further clinical trials will be necessary before
commercial versions of any additional proposed products are submitted for FDA
marketing clearance or approval and produced for other medical applications. We
cannot assure you that we will be able to successfully address the problems that
may arise during the development, FDA review process and commercialization of
these other medical applications or that any of our proposed products for these
other medical applications will be successfully developed, proven safe and
effective in clinical trials, cleared or approved by the FDA for marketing or
meet applicable regulatory standards and requirements.
WE HAVE NOT YET SUCCESSFULLY COMMERCIALIZED NON-MEDICAL APPLICATIONS OF OUR
PRODUCTS
To date, we have not achieved commercial market penetration for our
ColorMate(R) System in any non-medical industry. In order to commercialize our
ColorMate(R) System in connection with non-medical applications we will need to
develop additional marketing skills, incur significant expenses on sales and
marketing activities, hire additional employees and consultants and enter into
arrangements with third party distributors. Our recent acquisition of Gordon has
enabled us to develop certain of the skills and resources that we will need to
commercialize our products in the cosmetics and beauty industry. We cannot
assure you that we will be successful in our efforts to commercialize any
non-medical application of our ColorMate(R) System.
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EXTENSIVE GOVERNMENTAL REGULATION COULD DELAY, RESTRICT OR PREVENT THE MARKETING
OF OUR PRODUCTS
Governmental regulation may significantly delay the marketing of our
products, prevent marketing of products altogether or impose costly requirements
on our activities. The FDA and comparable foreign regulatory authorities
generally require rigorous pre-clinical testing, clinical trials and government
premarket review and clearance or approval for the type of human medical device
we market or contemplate marketing. Numerous regulations govern, among other
things, the manufacturing, safety, labeling, promotion, storage, record keeping,
reporting and marketing of medical devices. A delay in obtaining or failure to
obtain or maintain regulatory clearances or approvals for any of our products
would have an adverse effect on our business. We cannot predict the adverse
effects that existing or future government regulations may have on our business.
Even though our ColorMate(R) TLc-BiliTest(R) System received FDA marketing
clearance for monitoring infant jaundice, we may still face difficulties in
manufacturing and marketing this product. A marketed product and its
manufacturer's practices are subject to regulatory review and the manufacturer's
facilities are subject to periodic establishment inspections. The discovery of
previously unknown problems with a product, manufacturer or facility may result
in restrictions on the product or manufacturer, including withdrawal of the
product from the market. The failure to comply with applicable regulatory
requirements can, among other things, result in:
- fines,
- suspended or withdrawn regulatory approvals,
- refusal to clear or approve pending applications,
- refusal to permit exports or to allow imports from the United States,
- product recalls,
- seizure of products,
- injunctions,
- operating restrictions and
- criminal prosecutions.
WE MAY BE UNABLE TO DEVELOP POTENTIAL INTERNATIONAL MARKETS AND OBTAIN FOREIGN
REGULATORY APPROVALS
Although we believe that sales of our products to customers outside of the
United States represent a significant potential source of growth we may not be
able to obtain agreements with third party distributors for marketing outside of
the United States. We also cannot be certain that we will be able to maintain
our existing ISO 9001/EN46001 certification or that we will obtain any further
regulatory approvals in other countries. In order to market our products outside
of the United States, we must comply with numerous and varying foreign
regulatory requirements implemented by foreign authorities. The approval
procedure varies among countries and can involve additional testing. The time
required to obtain further foreign clearances or approvals may differ from that
required to obtain FDA clearances or approvals for commercial marketing. The
foreign regulatory approval process includes all of the risks associated with
obtaining FDA clearances or approvals set forth above, and clearance or approval
by the FDA does not ensure clearance or approval by the authorities of any other
country.
THE MEDICAL COMMUNITY MAY BE RELUCTANT TO ACCEPT OUR TECHNOLOGY
The commercial acceptance of our ColorMate(R) TLc-BiliTest(R) System is
substantially dependent on its acceptance by the medical community for the
monitoring of infant jaundice. Because the medical community is relatively slow
to adopt new technologies we cannot assure you that the medical community will
perceive a need for, or accept, our ColorMate(R) TLc-BiliTest(R) System or be
willing to commit funds to its purchase and
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use. Widespread acceptance of the ColorMate(R) TLc-BiliTest(R) System for
monitoring infant jaundice will require educating the medical community about
its advantages, reliability, cost effectiveness and utility. In addition,
acceptance of the ColorMate(R) TLc-BiliTest(R) System may be adversely affected
by competing products which may have more utility, a lower cost or be received
in a better way than our ColorMate(R) TLc-BiliTest(R) System.
OUR MAIN COMPETITORS GENERALLY HAVE MORE RESOURCES THAN WE HAVE
The medical device industry is characterized by rapid technological
advances, evolving industry standards and technological obsolescence. Our
inability to meet or surpass our competitors' technological advances in this
industry could have a material adverse effect on our business. We have several
competitors in this industry, none of whom we believe to be dominant. We believe
that, in addition to our ColorMate(R) TLc-BiliTest(R) System the only other
commercially available non-invasive devices for the monitoring of infant
jaundice with FDA marketing clearance in the United States are the Minolta
Jaundice Meter, manufactured by Minolta Co., Ltd. which is distributed by Air
Shields and the SpectRx Bilicheck, manufactured by SpectRx and Respironics. Both
Minolta and Respironics have financial, marketing and other resources greater
than our own. Our competitors in this industry may develop products which may
render our ColorMate(R) TLc-BiliTest(R) System obsolete or which have advantages
over our ColorMate(R) TLc-BiliTest(R) System, including greater accuracy and
precision or greater acceptance by the medical community.
To the extent that we are able to commercialize our ColorMate(R) System for
non-medical applications we will also encounter competition. We cannot assure
you that we will be able to compete successfully in these non-medical markets.
In addition, the market for Gordon's products is extremely competitive with
respect to price and quality and Gordon's competitors generally have greater
resources than Gordon. We cannot assure you that Gordon will be able to
successfully compete in its marketplace nor that it will be able to sustain and
expand its current customer base.
OUR BOARD OF DIRECTORS IS AUTHORIZED TO ISSUE PREFERRED STOCK WITHOUT
STOCKHOLDER AUTHORIZATION WHICH COULD BE USED AS AN ANTI-TAKEOVER DEVICE
Our Board of Directors is authorized to issue from time to time without
stockholder authorization shares of preferred stock. The issuance of preferred
stock could decrease the amount of assets and earnings available for
distribution to our other stockholders. Preferred stockholders could receive
voting rights and rights to payments on liquidation or of dividends or other
rights which are greater than the rights of the holders of our common stock. In
addition, the issuance of preferred stock may make it more difficult for a third
party to acquire, or may discourage a third party from acquiring, voting control
of our stock. This provision could also discourage an unsolicited acquisition
and could make it less likely that stockholders receive a premium for their
shares as a result of any unsolicited acquisition proposal.
OUR DIRECTORS AND EXECUTIVE OFFICERS OWN A SIGNIFICANT AMOUNT OF STOCK OF
CHROMATICS AND EXERT CONSIDERABLE INFLUENCE OVER CHROMATICS
As of August 17, 2000, our directors and executive officers beneficially
owned approximately 18% of voting power represented by our outstanding common
and preferred stock. As a result, these stockholders are able to significantly
influence all matters requiring stockholder approval, including the election of
directors and the approval of significant corporate transactions. This
concentration of ownership could also delay or prevent a change in control that
may be favored by other stockholders.
WE WILL NEED TO HIRE ADDITIONAL PERSONNEL TO MANAGE OUR TRANSITION FROM A
DEVELOPMENT STAGE COMPANY TO AN OPERATING COMPANY
In order to generate and service sales of our products we will need to
attract and retain significant additional senior and midlevel personnel
experienced in financial, administrative, marketing, sales and regulatory
matters, particularly in the medical and beauty industries. We currently have 84
full-time employees. Our success will depend in part on our ability to hire,
train and retain new and existing personnel.
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Competition for qualified personnel is intense and we cannot assure you that we
will be successful in hiring, training or retaining additional personnel to
support our executive, operations, marketing, sales, research and product
development needs and efforts.
WE DEPEND ON THE SERVICES OF KEY PERSONNEL
Our success depends to a significant extent upon the efforts of Darby
Simpson Macfarlane, the Chairperson of our Board of Directors, Chief Technology
Officer and one of our major stockholders, and David Kenneth Macfarlane, our
Vice President, Research and Development. They are co-inventors of our
ColorMate(R) System and possess unique technical knowledge required in
connection with its production. Brian T. Fitzpatrick, our President and Acting
Chief Executive Officer, is also an integral part of our organization. Although
we have purchased key-man life insurance policies in the amounts of $1,000,000
on the lives of each of Ms. and Mr. Macfarlane, we cannot assure you that the
proceeds from these policies would enable us to retain suitable replacements for
them. The loss of the services of Ms. Macfarlane, Mr. Macfarlane or Mr.
Fitzpatrick could adversely affect our business.
WE FACE THE RISK OF PRODUCT LIABILITY CLAIMS WHICH MAY EXCEED THE SCOPE OR
AMOUNT OF OUR INSURANCE COVERAGE
The manufacture and sale of human medical devices entails significant risk
of product liability claims. In determining the amount of product liability
coverage to obtain we were advised by an insurance broker with knowledge and
experience regarding prevailing insurance practices in the medical device
industry. Although we believe that the amount and scope of coverage obtained is
consistent with prevailing medical device industry practice, we cannot assure
you that our product liability coverage will be adequate to protect us from any
liabilities we might incur in connection with the use or sale of our products.
In addition, we may require increased product liability coverage as additional
products are commercialized. Product liability insurance is expensive and in the
future may not be available on acceptable terms, if at all. A successful product
liability claim or series of claims brought against us in excess of our
insurance coverage could have a material adverse effect on our business and
results of operations. We must indemnify our distribution partner against any
product liability claims brought against it arising out of products developed by
us.
OUR SUCCESS IS DEPENDENT UPON OUR ABILITY TO EFFECTIVELY MAINTAIN OUR PATENTS
AND PROPRIETARY RIGHTS RELATING TO OUR COLORMATE(R) SYSTEM AND OUR COLORMATE(R)
TLC-BILITEST(R) SYSTEM, WHICH WE MAY NOT BE ABLE TO DO
Proprietary technology maintained in our trade secrets and other
proprietary information claimed by our patents is incorporated into the
proprietary software and measurement system used in our ColorMate(R) System, our
ColorMate(R) TLc-BiliTest(R) System and our TLc-Lensette(TM) calibration
standards. Because we are dependent on the commercialization of these products
our success will depend to a significant degree on our ability to preserve our
trade secrets, to obtain and maintain our patents and to operate without
infringing the proprietary rights of others. We cannot assure you that our
competitors will not seek to apply for and obtain patents that prevent, limit or
interfere with our ability to make, use and sell our products either in the
United States or in foreign countries. We also cannot assure you that we will
not become subject to patent infringement claims brought by third parties or to
re-examination of previously issued patents or interference proceedings to
determine the priority of inventions.
We also rely on a combination of trade secret and copyright law, employee
and third-party nondisclosure agreements and other protective measures to
protect intellectual property rights pertaining to our products and
technologies. We cannot be certain that these measures will provide protection
of our proprietary information. In addition, the laws of a small number of
foreign jurisdictions may not protect our intellectual property rights to the
same extent as the laws of the United States.
8
<PAGE> 10
OUR ASSUMPTIONS REGARDING THE BUSINESS PLAN AND STRATEGY FOR OUR COLORMATE(R)
TLC-BILITEST(R) SYSTEM, OUR GORDON DIVISION, AND FOR THE COMMERCIALIZATION OF
OUR TECHNOLOGY MAY PROVE TO BE INACCURATE
Our business plan and strategy for the commercialization of our
ColorMate(R) TLc-BiliTest(R) System is based upon assumptions made by our
distribution partner in our contract regarding the size of the infant jaundice
monitoring market, our short-term and eventual share of this market, the price
at which we believe we will be able to sell or lease this product and consumer
acceptance of this product. We are currently working with our distribution
partner on revising our sales and marketing strategies as well as on product
improvements based on the results of the initial launch of our products by our
distributor. We cannot assure you that our initial or revised assumptions will
prove to be correct. The medical community has thus far not used a non-invasive
device for monitoring infant jaundice as a standard of care. Assumptions made by
our distribution partner about the size of the existing market were based on the
current standard of care (an invasive blood test) and, accordingly, there can be
no assurance that the market size of the ColorMate(R) TLc-BiliTest(R) System
will be the same.
In addition, we are developing business plans for Gordon and for the
commercialization of new applications of our proprietary technology. In
connection with the business plan for Gordon, we expect to capitalize on
Gordon's management team and its experience in the cosmetics and beauty care
industry as we move to establish our presence there. We also expect to
capitalize on Gordon's infrastructure to commercialize our color science
technology in the cosmetics and hair colorant markets. The assumptions we have
made in our business plan about Gordon's experience in the cosmetics and beauty
care industry and how it will enable us to commercialize our products in that
marketplace may prove to be inaccurate.
OUR STOCK PRICE COULD BE ADVERSELY AFFECTED IF WE WERE DELISTED FROM THE NASDAQ
SMALLCAP MARKET
Our common stock is presently traded on the Nasdaq SmallCap Market. In
September 2000 we received a letter from Nasdaq informing us that we did not
meet at least one of the required maintenance criteria for continued listing of
our common stock on the Nasdaq SmallCap Market. We subsequently agreed with
Nasdaq on a plan that would enable us to regain compliance by meeting the
requirement that we have net tangible assets of at least $2.0 million, which
included obtaining commitments from three of our major investors to restructure
the terms of their respective securities and consummating a $2.0 million equity
financing with a private investor. Although we now meet Nasdaq's net tangible
assets requirement and therefore meet the required criteria for continued
listing, there can be no assurance that we will continue to do so in the future.
In addition, the bid price of our common stock has recently closed below $1.00
per share on several trading days. If the minimum bid price of our common stock
were to close below $1.00 for thirty consecutive trading days and it then does
not trade over $1.00 for ten consecutive trading days during the ninety calender
day period thereafter and/or we fail to meet other Nasdaq SmallCap continued
listing requirements, Nasdaq could seek to have our common stock delisted from
the Nasdaq SmallCap Market.
If our common stock is delisted the market value of our common stock could
fall and holders of common stock would likely find it more difficult to dispose
of and to obtain accurate quotations as to the market value of our common stock.
If our common stock is delisted from the Nasdaq SmallCap Market it could become
subject to rules adopted by the SEC regulating broker-dealer practices in
connection with transactions in "penny stocks." The penny stock rules require a
broker-dealer prior to a transaction in a penny stock not otherwise exempt from
the rules to deliver a standardized risk disclosure document which provides
information about penny stocks and the nature and level of risks in the penny
stock market. These disclosure requirements may have the effect of reducing the
level of trading activity in the secondary market for a stock that becomes
subject to these penny stock rules. If our common stock becomes subject to the
penny stock rules, you may be unable to readily sell shares of our common stock.
9
<PAGE> 11
OUR STOCK PRICE MAY BE VOLATILE
The market price of our common stock has historically been volatile as a
result of:
- analyst recommendations,
- announcements of technological innovations or new commercial products by
us or our competitors,
- market conditions relating to the medical device industry,
- sales of substantial amounts of our common stock by existing
stockholders, including short sales,
- adverse publicity related to accusations by short sellers and
- obtaining regulatory clearances in both the U.S. and in foreign
countries.
A short sale involves the sale of borrowed shares with the expectation that
the market price of the security will decline in the future. If the anticipated
price decline occurs the short seller replaces the borrowed securities with
shares bought in the market at the lower price and realizes a profit equal to
the difference between the price at which the borrowed shares were sold and the
price at which the replacement shares are purchased. From time to time in the
past concentrated periods of short selling of our common stock have created an
imbalance between the number of shares offered to the market for sale and the
willingness of the market to absorb these shares at prevailing price levels
which has resulted in rapid and substantial declines in the market price of our
common stock.
GORDON MAY NOT HAVE SUFFICIENT FUNDS AVAILABLE TO SATISFY ITS LONG TERM DEBT
OBLIGATIONS
Gordon has a long-term debt obligation to a financial institution of
approximately $2.8 million which requires monthly payments of approximately
$55,000. We cannot assure you that Gordon will have sufficient funds available
to satisfy this obligation. Failure to satisfy this obligation would have a
material adverse effect on Gordon's business and could force Gordon to close its
operations and seek protection from its creditors under applicable bankruptcy
laws.
CONVERSION OF THE CONVERTIBLE PREFERRED STOCK AND EXERCISE OF OUTSTANDING
WARRANTS WILL DILUTE THE INTERESTS OF EXISTING STOCKHOLDERS
The conversion prices of our outstanding convertible preferred stock may be
less than the current market price of our common stock on the date of
conversion. Similarly, the exercise prices of our outstanding warrants may be
less than the current market price of our common stock on the date of exercise.
So long as these securities remain outstanding and unconverted or unexercised,
the terms under which we could obtain additional equity financing may be
adversely affected. To the extent of any conversion or exercise of these
securities, the interests of our existing stockholders will be diluted
proportionately.
COST CONTAINMENT RELATING TO HEALTHCARE REFORM COULD ADVERSELY AFFECT OUR
BUSINESS
Political, economic and regulatory influences are subjecting the healthcare
industry in the United States to fundamental change and are increasing
cost-containment efforts. We anticipate that Congress, state legislatures and
the private sector will continue to review and assess alternative benefits,
controls on healthcare spending through limitations on the growth of private
health insurance premiums and Medicare and Medicaid spending, the creation of
large insurance purchasing groups, price controls on pharmaceuticals and medical
devices and other fundamental changes to the healthcare delivery system. Any
changes of this nature could negatively impact our ultimate profitability. Also,
the trend toward managed healthcare in the United States and the concurrent
growth of organizations like healthcare management organizations, which could
control or significantly influence the purchase of healthcare services and
products, may result in lower prices for our medical product candidates than we
currently expect. We cannot predict what impact the adoption of any federal or
state healthcare reform measures or future private sector reforms may have on
our business.
10
<PAGE> 12
OUR PRODUCTS MUST BE ACCEPTED FOR REIMBURSEMENT BY THIRD-PARTY PAYORS
Our ability to successfully commercialize our ColorMate(R) TLc-BiliTest(R)
System and our other medical product candidates will depend in part on the
extent to which appropriate reimbursement codes and authorized cost
reimbursement levels of our products and related treatment are obtained from
governmental authorities, private health insurers and other organizations, like
health maintenance organizations. Third-party payors are increasingly
challenging the prices charged for medical products and services. American
Medical Association CPT codes are generally used to facilitate the processing of
insurance reimbursement claims and to provide a simplified reporting procedure.
However, assignment of a code does not assure that the insurer will provide
reimbursement or that the AMA endorses the medical procedure at issue. In March
1998, we were assigned AMA CPT Code 82250 for processing claims for use of the
ColorMate(R) TLc-BiliTest(R) System. This same code is assigned for the
reimbursement of laboratory blood tests currently used to monitor infant
jaundice. Subsequently, the AMA informed us that CPT Code 84999, not Code 82250,
was the assigned code. However, the AMA indicated that it was reviewing coding
in this area generally. Although we believe that the original code assignment to
our ColorMate(R) TLc-BiliTest(R) System was correct, we cannot assure you that
our belief will be sustained. Claims for reimbursement under CPT Code 84999 may
not be as readily processed for reimbursement as claims made under CPT Code
82250.
WE EXPECT TO ISSUE ADDITIONAL SHARES IN THE FUTURE WHICH WOULD DILUTE THE
OUTSTANDING SHARES
In order to finance the commercialization of our ColorMate(R)
TLc-BiliTest(R) System and other applications of our ColorMate(R) System, we
expect to issue and sell additional shares of our common stock or securities
convertible into our common stock, such as the securities which we issued to the
selling stockholder, in the future. As of August 17, 2000, approximately 23
million shares of our common stock were authorized but unissued and unreserved.
These shares may be issued in the future without stockholder approval. The
prices at which we sell these securities and other terms and provisions will
depend on prevailing market conditions and other factors in effect at that time,
all of which are beyond our control. Shares may be issued at prices which are
less than the then-current market price of our common stock and/or at prices
which are less than the prices at which the shares of common stock being offered
by the selling stockholder hereby are sold.
THE TERMS OF THE CONVERTIBLE PREFERRED STOCK MAY ADVERSELY AFFECT THE RIGHTS OF
THE COMMON STOCK HOLDERS.
Our convertible preferred stock will be entitled to priority of payment in
the event we are liquidated and dissolved in preference to any distribution to
the holders of our common stock. In addition, for as long as the shares of
convertible preferred stock are outstanding we are prohibited from issuing any
class or series of preferred stock with a priority of payment superior or equal
to the priority of payment of the convertible preferred stock without the
written consent of the holders thereof.
11
<PAGE> 13
RECENT EVENTS
In June 2000 we completed the acquisition of Gordon. We acquired from the
shareholders of Gordon:
- approximately 85% of the outstanding shares of common stock, par value
$.001, of Gordon,
- options to purchase the remaining shares of Gordon, subject to mandatory
exercise by us on the first anniversary of the closing date if not sooner
exercised within one year and
- notes in the aggregate principal amount of $1,854,000 made by Gordon in
favor of its shareholders.
In exchange, we issued to the shareholders of Gordon a total of 721,231
shares of our common stock and paid them $609,000 in cash. In addition, we
agreed to register the shares of our common stock issued to the shareholders of
Gordon for resale under the Securities Act of 1933 and use our reasonable best
efforts to maintain the effectiveness of this registration statement until the
earlier of the date that all of the shares of our common stock held by such
shareholders have been sold or 360 days after the effective date of the
registration statement.
In order to finance our activities, we recently completed the following
private placements of securities. In August 2000, we sold to a private investor
for gross proceeds of $3,000,000:
- 641,026 shares of our common stock,
- a warrant to purchase 150,000 shares of our common at an exercise price
equal to $5.26 and
- an additional warrant to purchase, on two different vesting dates, at an
exercise price equal to $.001, a number of shares of our common stock to
be adjusted according to the closing bid prices of our common stock
during the forty trading days preceding each respective vesting date.
As compensation for services rendered in connection with this private
placement, an additional warrant to purchase 30,000 shares of our common stock
was issued to our financial advisor on the same terms and conditions as the
warrant issued to the purchaser.
We have agreed to prepare and file a registration statement covering the
resale of the shares of common stock purchased by the purchaser and the shares
of common stock issuable upon exercise of the warrants. For purposes of this
registration statement, we have estimated that the number of shares issuable
pursuant to the adjustable warrant will be 2,378,974. Should the number of
shares of our common stock issuable pursuant to the adjustable warrant exceed
the number registered under this registration statement, we have agreed to
prepare and file a subsequent registration statement reflecting the number of
additional shares to registered. We also agreed to use our best efforts to keep
this and any future registration statement effective until the earlier of two
years after the relevant effective date or the date when these securities have
been sold or may be sold without volume restrictions pursuant to SEC Rule
144(k).
Within five trading days following the date that the registration statement
is declared effective, unless the closing sales price of our common stock for
any of the three trading days following the effective date is less than $4.01
per share, we have agreed to issue to the purchaser an additional 213,675 shares
of our common stock and a warrant to purchase 50,000 additional shares of our
common for gross proceeds of $1,000,000.
In June 1999 we sold 40,000 shares of convertible preferred stock and
warrants to purchase 270,690 shares of our common stock to an affiliate of
Lehman Brothers, Inc for aggregate proceeds of $4,000,000. In February 2000 we
sold 40,000 shares of convertible preferred stock and warrants to purchase
304,372 shares of our common stock to the same Lehman affiliate for aggregate
proceeds of $4,000,000. The shares of preferred stock issued during these
financings are convertible into shares of our common stock at a conversion price
of $4.68 per share and the warrants have an exercise price of $4.68 per share.
The shares of preferred stock and the warrants are subject to adjustment for
stock splits, combinations and similar recapitalizations affecting our common
stock and in certain circumstances involving the issuance of shares of our
common stock at prices below $4.68 per share. 575,062 of the warrants issued
during these financings are currently outstanding.
In June 2000 we engaged Josephthal & Co. Inc. as our financial advisor.
Under a non-exclusive agreement, Josephthal will provide us with financial
advice and general investment banking services with
12
<PAGE> 14
respect to proposed business transactions and financings. As compensation for
such services, we agreed to pay Josephthal a non-refundable retainer fee of
$100,000 and to issue to its designees warrants to purchase 298,717 shares of
our common stock. These warrants will expire five years from the date of
issuance, have an exercise price of $4.68 and are subject to adjustment for
stock splits, combinations and similar recapitalizations affecting our common
stock and in certain circumstances involving the issuance of shares of our
common stock at prices below $4.68. We have agreed to prepare and file a
registration statement covering the resale of the shares of common stock
issuable upon exercise of these warrants.
On October 11, 2000, we obtained commitments from three of our major
investors to restructure the terms of their respective securities. Millennium
and the Lehman affiliate agreed to eliminate provisions in their respective
purchase documents involving antidilution and provisions imposing monetary
penalties in the event that our common stock is delisted from Nasdaq. They also
agreed to delete those provisions granting them rights to require us to
repurchase shares of our common stock or preferred stock for cash, except in
certain limited circumstances within our control. The convertible debenture
holders agreed to convert the entire principal amount of their debentures, and
any accrued but unpaid interest thereon, into a newly authorized series of
convertible preferred stock, effective October 31, 2000. This new class of
convertible preferred:
- will have a conversion price of $4.68 per share,
- will rank senior and prior to all existing and future classes or series
of our capital stock in the event of the distribution of our assets upon
liquidation, dissolution or winding up,
- be entitled to cumulative dividends beginning on April 15, 2002 at a rate
of 8% per annum, to be increased in the event a dividend payment is missed
to 11% until all accrued dividends are paid in full,
- be subject to involuntary conversion at our option into shares our common
stock at a conversion price of $4.68 per share if the average closing bid
price of our common stock for ten consecutive trading days exceeds $10.29
and
- be subject to adjustment for stock splits, combinations and similar
recapitalizations affecting our common stock.
The purpose of this restructuring was to assist us in meeting the net tangible
assets requirement for continued listing on the Nasdaq SmallCap Market. The
commitments of these investors were subject to certain conditions, including our
securing confirmation from Nasdaq of our eligibility for continued listing on
the Nasdaq SmallCap Market and the closing of the equity financing with Crescent
International Ltd., pursuant to which we issued and sold to Crescent shares of a
newly-authorized series of preferred stock and warrants for an aggregate
purchase price of $2,000,000. Each of these conditions were satisfied on or
prior to November 1, 2000. In consideration of their agreements to restructure
their respective securities, we agreed to issue to each of the Lehman affiliate
and the debenture holders 200,000 five-year warrants to purchase our common
stock at an exercise price of $1.50 per share. We also agreed with the debenture
holders not to incur or permit any future liens on any of our properties or
assets, not to grant any security interests in our future revenues and not to
consummate any future financing which involves the issuance of debentures.
WHERE YOU CAN GET MORE INFORMATION
We are a reporting company and file annual, quarterly and current reports,
proxy statements and other information with the SEC. You may read and copy these
reports, proxy statements and other information at the SEC's public reference
rooms in Washington, DC, New York, NY and Chicago, IL. You can request copies of
these documents by writing to the SEC and paying a fee for the copying cost.
Please call the SEC at 1-800-SEC-0330 for more information about the operation
of the public reference rooms. Our SEC filings are also available at the SEC's
web site at "http://www.sec.gov." In addition, you can read and copy our SEC
filings at the office of the National Association of Securities Dealers, Inc. at
1735 K Street, N.W., Washington, DC 20006.
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<PAGE> 15
The SEC allows us to "incorporate by reference" information that we file
with it, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus, and information that we file later with
the SEC will automatically update and supersede this information. We incorporate
by reference the documents listed below and any future filings we will make with
the SEC under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act
of 1934:
- Current Report on Form 8-K filed on November 3, 2000,
- Current Report on Form 8-K filed November 3, 2000,
- Current Report on Form 8-K filed September 1, 2000,
- Quarterly Report on Form 10-Q for the period ended June 30, 2000 filed
August 18, 2000,
- Current Report on Form 8-K filed June 19, 2000, as amended by Form 8-K/A
filed August 18, 2000,
- Quarterly Report on Form 10-Q for the period ended March 30, 2000 filed
May 15, 2000,
- Annual Report on Form 10-K for the year ended December 31, 1999 filed
March 30, 2000, as amended by Form 10-K/A No. 1 filed March 31, 2000,
- The description of the common stock contained in Chromatics Color
Sciences International, Inc. Registration Statement on Form 8-A filed
February 1, 1993,
- The description of the purchase rights for Class B Series 1 preferred
stock contained in the Chromatics Color Sciences International, Inc.
Registration Statement on Form 8-A filed January 5, 1999,
- Registration Statement on Form 8-A/A amending the description of the
common stock filed November 12, 1999,
- Registration Statement on Form 8-A/A amending the description of the
purchase rights for Class B Series 1 preferred stock filed November 12,
1999,
You may request a copy of these filings at no cost, by writing or
telephoning us at the following address:
Ms. Leslie Foglesong
Secretary
Chromatics Color Sciences International, Inc.
5 East 80th Street
New York, NY 10021
(212) 717-6544
FORWARD-LOOKING STATEMENTS
Some of the statements in this prospectus and the documents incorporated by
reference are forward-looking statements. These forward-looking statements are
subject to certain risks and uncertainties, including, among others, those
listed under "Risk Factors" above and in the documents incorporated by
reference.
SELLING STOCKHOLDERS
In connection with the acquisition of Gordon, in June 2000 we issued to the
selling stockholders shares of our common stock and agreed to use our reasonable
best efforts to file a resale registration statement with the SEC covering these
shares and to maintain the effectiveness of the registration statement until all
of the shares are sold under the registration statement or until 360 days after
the effective date thereof. In connection with our August 2000 private
financing, we agreed to prepare and file a registration statement covering the
resale of the shares of common stock purchased by the purchaser and the shares
of common stock issuable upon exercise of the warrants and to use our best
efforts to keep this registration statement effective until the earlier of two
years after the date it is declared effective or the date when these securities
have been sold or may be
14
<PAGE> 16
sold without volume restrictions pursuant to SEC Rule 144(k). In connection with
the issuance of warrants to Josephthal, we agreed to prepare and file a
registration statement covering the resale of the shares of common stock
issuable upon the exercise of the warrants and to use our reasonable best
efforts to keep this registration statement effective for a period of nine
consecutive months after the date it is declared effective. Our registration of
the shares of common stock does not necessarily mean that the selling
stockholders will sell all or any of the shares.
The following table sets forth pertinent information regarding the
beneficial ownership of the common stock, as of August 17, 2000, of the selling
stockholders. The information provided in the table below with respect to the
selling stockholders has been obtained from the selling stockholders. Except as
otherwise disclosed below, the selling stockholders do not have, nor within the
past three years have had, any position, office or other material relationship
with us. Because the selling stockholders may sell all or some portion of the
shares of common stock beneficially owned by them, we cannot estimate the number
of shares of common stock that will be beneficially owned by the selling
stockholders after this offering. In addition, the selling stockholders may have
sold, transferred or otherwise disposed of, or may sell, transfer or otherwise
dispose of, at any time or from time to time since the date on which they
provided the information regarding the shares of common stock beneficially owned
by them, all or a portion of the shares of common stock beneficially owned by
them in transactions exempt from the registration requirements of the Securities
Act of 1933. The following table assumes that all of the shares of common stock
being registered will be sold by the selling stockholders.
Beneficial ownership is determined in accordance with Rule 13d-3(d)
promulgated by the SEC under the Securities Exchange Act of 1934, as amended.
Shares of common stock issuable pursuant to options, warrants and convertible
securities, to the extent these securities are currently exercisable or
convertible within 60 days of August 17, 2000, are treated as outstanding for
computing the percentage of the person holding these securities but are not
treated as outstanding for computing the percentage of any other person. Unless
otherwise noted, the person identified possesses sole voting and investment
power with respect to the shares. Shares not outstanding but deemed beneficially
owned by virtue of the right of a person to acquire them within 60 days are
treated as outstanding only for purposes of determining the number of and
percent owned by that person.
<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY NUMBER OF SHARES NUMBER OF SHARES PERCENTAGE
OWNED AS OF REGISTERED FOR SALE BENEFICIALLY OWNED OWNERSHIP AFTER
NAME OF SELLING STOCKHOLDER AUGUST 17, 2000 HEREUNDER AFTER OFFERING OFFERING
--------------------------- ---------------- ------------------- ------------------ ---------------
<S> <C> <C> <C> <C>
Brian T. Fitzpatrick (1).......... 106,233(2) 106,233 0 0%
c/o Gordon Laboratories, Inc.
751 East Artesia Boulevard
Carson, CA 90746
Odyssey Capital Group, L.P. ...... 213,469(3) 213,469 0 0%
c/o Gordon Laboratories, Inc.
751 East Artesia Boulevard
Carson, CA 90746
Simon Rubenstein.................. 19,559(4) 19,559 0 0%
c/o Gordon Laboratories, Inc.
751 East Artesia Boulevard
Carson, CA 90746
Anthony Frank..................... 18,094(5) 18,094 0 0%
c/o Gordon Laboratories, Inc.
751 East Artesia Boulevard
Carson, CA 90746
</TABLE>
15
<PAGE> 17
<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY NUMBER OF SHARES NUMBER OF SHARES PERCENTAGE
OWNED AS OF REGISTERED FOR SALE BENEFICIALLY OWNED OWNERSHIP AFTER
NAME OF SELLING STOCKHOLDER AUGUST 17, 2000 HEREUNDER AFTER OFFERING OFFERING
--------------------------- ---------------- ------------------- ------------------ ---------------
<S> <C> <C> <C> <C>
Globcon Limited................... 18,094(6) 18,094 0 0%
c/o Gordon Laboratories, Inc.
751 East Artesia Boulevard
Carson, CA 90746
Philip Fitzpatrick................ 293(7) 293 0 0%
c/o Gordon Laboratories, Inc.
751 East Artesia Boulevard
Carson, CA 90746
E. Michael Thoben................. 29,229(8) 29,229 0 0%
c/o Gordon Laboratories, Inc.
751 East Artesia Boulevard
Carson, CA 90746
Bruce Gustafsen................... 9,743(9) 9,743 0 0%
c/o Gordon Laboratories, Inc.
751 East Artesia Boulevard
Carson, CA 90746
Doug Scudamore.................... 584(10) 584 0 0%
c/o Gordon Laboratories, Inc.
751 East Artesia Boulevard
Carson, CA 90746
David Cohen....................... 9,743(11) 9,743 0 0%
c/o Gordon Laboratories, Inc.
751 East Artesia Boulevard
Carson, CA 90746
Morgan D. Gaffney and Suzanne C.
Gaffney, Trustees, Gaffney
Family Revocable Trust UTD
9/4/91.......................... 217,312(12) 217,312 0 0%
c/o Gordon Laboratories, Inc.
751 East Artesia Boulevard
Carson, CA 90746
Whittier Trust Company............ 78,878(13) 78,878 0 0%
c/o Gordon Laboratories, Inc.
751 East Artesia Boulevard
Carson, CA 90746
Millennium Partners, L.P. ........ 791,026(14) 3,200,000(15) 0 0%
c/o Millennium Management,
L.L.C.
666 Fifth Avenue
New York, NY 10103
Wharton Capital Partners, Ltd. ... 30,000(16) 30,000 0 0%
545 Madison Avenue
New York, NY 10022
X Securities, Ltd. ............... 149,359(17) 149,359 0 0%
c/o Josephthal & Co., Inc.
200 Park Avenue, 25th Floor
New York, NY 10166
</TABLE>
16
<PAGE> 18
<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY NUMBER OF SHARES NUMBER OF SHARES PERCENTAGE
OWNED AS OF REGISTERED FOR SALE BENEFICIALLY OWNED OWNERSHIP AFTER
NAME OF SELLING STOCKHOLDER AUGUST 17, 2000 HEREUNDER AFTER OFFERING OFFERING
--------------------------- ---------------- ------------------- ------------------ ---------------
<S> <C> <C> <C> <C>
John O'Brien...................... 85,881(18) 85,881 0 0%
c/o Josephthal & Co., Inc.
200 Park Avenue, 25th Floor
New York, NY 10166
Edmund Belak...................... 63,477(19) 63,477 0 0%
c/o Josephthal & Co., Inc.
200 Park Avenue, 25th Floor
New York, NY 10166
</TABLE>
---------------
(1) Mr. Fitzpatrick is a member of the Board of Directors of Chromatics as well
as its President and Acting Chief Executive Officer.
(2) Represents 1,000 shares of common stock subject to the Pledge and Escrow
Agreement, dated as of June 2, 2000 (the "Escrow Agreement"), by and
between the parties thereto, pursuant to which such shares were pledged as
collateral security for the holder's indemnification obligation under the
Agreement of Purchase and Sale, dated as of April 17, 2000, by and among
Chromatics and the other parties thereto, as amended.
(3) Represents 12,880 shares of common stock subject to the Escrow Agreement.
(4) Represents 1,180 shares of common stock subject to the Escrow Agreement.
(5) Represents 1,092 shares of common stock subject to the Escrow Agreement.
(6) Represents 1,092 shares of common stock subject to the Escrow Agreement.
(7) Represents 18 shares of common stock subject to the Escrow Agreement.
(8) Represents 1,764 shares of common stock subject to the Escrow Agreement.
(9) Represents 588 shares of common stock subject to the Escrow Agreement.
(10) Represents 35 shares of common stock subject to the Escrow Agreement.
(11) Represents 588 shares of common stock subject to the Escrow Agreement.
(12) Represents 1,176 shares of common stock subject to the Escrow Agreement.
(13) Represents 4,759 shares of common stock subject to the Escrow Agreement.
(14) Includes (i) 641,026 shares of common stock and (ii) 150,000 shares of
common stock which may be acquired within 60 days of August 17, 2000 upon
the exercise of a warrant issued to the selling stockholder.
(15) Includes (i) 641,026 shares of common stock, (ii) 150,000 shares of common
stock which may be acquired upon the exercise of a warrant issued to the
selling stockholder and (iii) 2,408,974 shares of common stock which may be
acquired upon the exercise of an adjustable warrant issued to the selling
stockholder.
(16) Represents 30,000 shares of common stock which may be acquired within 60
days of August 17, 2000 upon the exercise of a warrant issued to the
selling stockholder.
(17) Represents 149,359 shares of common stock which may be acquired within 60
days of August 17, 2000 upon the exercise of a warrant issued to the
selling stockholder.
(18) Represents 85,881 shares of common stock which may be acquired within 60
days of August 17, 2000 upon the exercise of a warrant issued to the
selling stockholder.
(19) Represents 63,477 shares of common stock which may be acquired within 60
days of August 17, 2000 upon the exercise of a warrant issued to the
selling stockholder.
17
<PAGE> 19
PLAN OF DISTRIBUTION
The selling stockholders or their transferees may, from time to time, sell
all or a portion of the shares of common stock being registered pursuant to this
prospectus in privately negotiated transactions or otherwise, at fixed prices
that may be changed, at market prices prevailing at the time of sale, at prices
related to these market prices or at negotiated prices. The shares may be sold
by the selling stockholders by one or more of the following methods, without
limitation:
- block trades in which the broker or dealer so engaged will attempt to
sell the shares as agent but may position and resell a portion of the
block as principal to facilitate the transaction,
- purchases by a broker or dealer as principal and resale by that broker or
dealer for its account pursuant to this prospectus,
- an exchange distribution in accordance with the rules of the applicable
exchange,
- ordinary brokerage transactions and transactions in which the broker
solicits purchasers,
- privately negotiated transactions,
- short sales
- a combination of any of these methods of sale and
- any other method permitted pursuant to applicable law.
The selling stockholders and any broker-dealers or agents that participate
with the selling stockholders in sales of the shares may be deemed to be
"underwriters" within the meaning of the Securities Act of 1933 in connection
with these sales. If so, any commissions received by these broker-dealers or
agents and any profit on the resale of the shares purchased by them may be
deemed to be underwriting commissions or discounts under the Securities Act of
1933.
From time to time, the selling stockholders may engage in short sales,
short sales against the box (in which the seller owns shares of our common stock
at the time of the sale but borrows other shares of our common stock to sell in
the short sale), puts and calls and other transactions in our securities or
derivatives of these securities, and may sell and deliver the shares in
connection therewith or in settlement of securities loans. From time to time,
the selling stockholders may pledge their shares pursuant to the margin
provisions of their customer agreements with their brokers. Upon a default by a
selling stockholder, the broker may offer and sell the pledged shares from time
to time.
In effecting sales, brokers and dealers engaged by the selling stockholders
may arrange for other brokers or dealers to participate in these sales. Brokers
or dealers may receive commissions or discounts from the selling stockholders
(or, if any broker-dealer acts as agent for the purchaser of the shares, from
that purchaser) in amounts to be negotiated which are not expected to exceed
those customary in the types of transactions involved. Broker-dealers may agree
with the selling stockholders to sell a specified number of shares at a
stipulated price per share, and, to the extent the broker-dealer is unable to do
so acting as agent for the selling stockholders, to purchase as principal any
unsold shares at the price required to fulfill the broker-dealer commitment to
the selling stockholders.
Broker-dealers who acquire shares as principal may thereafter resell the
shares from time to time in transactions (which may involve block transactions
and sales to and through other broker-dealers, including transactions of the
nature described above) in the over-the-counter market or otherwise at prices
and on terms then prevailing at the time of sale, at prices then related to the
then-current market price or in negotiated transactions and, in connection with
these resales, may pay to or receive from the purchasers of the shares
commissions as described above. The selling stockholders may also sell the
shares in accordance with Rule 144 under the Securities Act of 1933, rather than
pursuant to this prospectus.
We have agreed to indemnify the selling stockholders against losses,
claims, damages and liabilities arising under the Securities Act of 1933.
We have informed the selling stockholders that the anti-manipulation
provisions of Regulation M under the Securities Exchange Act of 1934 may apply
to the sales of its shares offered hereby. We have also advised
18
<PAGE> 20
the selling stockholders of the requirement for delivery of this prospectus in
connection with any sale of the shares offered hereby.
The selling stockholders may from time to time purchase shares of common
stock in the open market. The selling stockholders have been notified that they
should not commence any distribution of shares unless they have terminated their
purchasing and bidding for common stock in the open market as provided in
applicable securities regulations.
There is no assurance that the selling stockholders or their transferees
will sell any or all of the shares offered by them in this prospectus.
LEGAL MATTERS
The validity of the shares of common stock offered hereby will be passed
upon for us by Patterson, Belknap, Webb & Tyler LLP, 1133 Avenue of the
Americas, New York, New York.
EXPERTS
Our financial statements as of December 31, 1999 and December 31, 1998 and
for the years then ended incorporated by reference in this prospectus and
registration statement have been audited by BDO Seidman, LLP, independent
auditors, as set forth in their report dated March 10, 2000 and are included in
reliance upon the authority of BDO Seidman, LLP as experts in accounting and
auditing. Our financial statements for the year ended December 31, 1997
incorporated by reference in this prospectus and registration statement have
been audited by Wiss & Company, independent auditors, as set forth in their
report dated February 17, 1998 and are included in reliance upon the authority
of Wiss & Company as experts in accounting and auditing. The financial
statements of Gordon Laboratories, Inc. as of May 31, 1999 and May 31, 1998 and
for the years then ended incorporated by reference in this prospectus and
registration statement have been audited by BDO Seidman, LLP, independent
auditors, as set forth in their report (which contains a going concern
explanatory paragraph) dated December 20, 1999, except for certain notes that
are dated February 23, 2000 and April 17, 2000, and are included in reliance
upon the authority of BDO Seidman, LLP as experts in accounting and auditing.
19
<PAGE> 21
------------------------------------------------------
------------------------------------------------------
WE HAVE NOT AUTHORIZED ANY DEALER, SALESMAN OR OTHER PERSON TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS. DO NOT RELY ON ANY INFORMATION
OR REPRESENTATION NOT CONTAINED IN HEREIN. THIS PROSPECTUS IS NOT AN OFFER TO
SELL ANY OF THE SECURITIES OFFERED HEREBY IN THOSE JURISDICTIONS WHERE SUCH AN
OFFER WOULD BE UNLAWFUL.
------------------------
CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
About Chromatics...................... 2
Risk Factors.......................... 4
Recent Events......................... 12
Where You Can Get More Information.... 13
Forward-Looking Statements............ 14
Selling Stockholders.................. 14
Plan of Distribution.................. 18
Legal Matters......................... 19
Experts............................... 19
</TABLE>
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
4,249,948 SHARES OF
COMMON STOCK
CHROMATICS
COLOR SCIENCES
INTERNATIONAL, INC.
------------------------
PROSPECTUS
------------------------
------------------------------------------------------
------------------------------------------------------
<PAGE> 22
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the various estimated amount of fees and
expenses payable in connection with this offering other than sales commissions.
All of these expenses will be borne by the registrant.
<TABLE>
<CAPTION>
AMOUNT OF
ITEM EXPENSES
---- ----------
<S> <C>
SEC Registration Fee.................................... $ 2,020.61
Printing Expenses....................................... 10,000.00*
Accounting Fees and Expenses............................ 1,000.00*
Legal Fees and Expenses................................. 5,000.00*
Miscellaneous Expenses.................................. 1,000.00*
----------
Total.............................................. $19,020.61*
==========
</TABLE>
---------------
* Estimated
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 722 of the Business Corporation Law of the State of New York and
Article X of Chromatics' Certificate of Incorporation contain provisions for the
indemnification of officers and directors of Chromatics. The Certificate of
Incorporation requires Chromatics to indemnify officers and directors to the
full extent permitted by New York Law. Each person will be indemnified in any
proceeding if he or she acted in good faith and in a manner which he or she
reasonably believed to be in, or not opposed to, the best interests of
Chromatics. Indemnification would cover judgments, fines, amounts paid in
settlement and reasonable expenses, including attorney's fees.
Chromatics has directors' and officers' liability insurance. This insurance
may cover liabilities asserted against any present or past director or officer
incurred in the capacity of director or officer arising out of his or her
status, whether or not Chromatics would have the power to indemnify this person.
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
NUMBER DESCRIPTION OF DOCUMENT
------ -----------------------
<C> <C> <S>
3.1 -- Restated Articles of Incorporation of Chromatics
(incorporated by reference to Exhibit 3.1 to Chromatics'
Quarterly Report on Form 10-Q for the Quarter Ended June 30,
1999.
3.2 -- Certificate of Amendment to Articles of Incorporation of
Chromatics, (incorporated by reference to Exhibit 3.1.1 to
Chromatics' 1999 Annual Report on Form 10-K).
3.3 -- By-Laws of Chromatics (incorporated by reference to Exhibit
3.2 to Chromatics' 1999 Annual Report on Form 10-K).
4.1 -- Restated Articles of Incorporation of Chromatics
(incorporated by reference to Exhibit 3.1 to Chromatics'
Quarterly Report on Form 10-Q for the Quarter Ended June 30,
1999).
4.2 -- Certificate of Amendment to Articles of Incorporation of
Chromatics, filed on February 10, 2000 (included in Exhibit
3.2)
4.3 -- Agreement of Purchase and Sale, dated as of April 17, 2000
(the "Gordon Agreement"), among Chromatics and the
shareholders and certain noteholders Gordon Acquisition
Corp. (incorporated by reference to Exhibit 2.1 to
Chromatics' Current Report on Form 8-K filed on June 19,
2000).
4.4 -- Amendment No. 1 to the Gordon Agreement, dated May 15, 2000
(incorporated by reference to Exhibit 2.2 to Chromatics'
Current Report on Form 8-K filed on June 19, 2000).
</TABLE>
II-1
<PAGE> 23
<TABLE>
<CAPTION>
NUMBER DESCRIPTION OF DOCUMENT
------ -----------------------
<C> <C> <S>
4.5 -- Amendment No. 2 to the Gordon Agreement, dated May 25, 2000
(incorporated by reference to Exhibit 2.3 to Chromatics'
Current Report on Form 8-K filed on June 19, 2000).
4.6 -- Amendment No. 3 to the Gordon Agreement, dated May 31, 2000
(incorporated by reference to Exhibit 2.4 to Chromatics'
Current Report on Form 8-K filed on June 19, 2000).
4.7 -- Securities Purchase Agreement, dated as of August 16, 2000,
between Chromatics and Millennium Partners, L.P.
(incorporated by reference to Exhibit 4.1 to Chromatics'
Current Report on Form 8-K filed on September 1, 2000).
4.8 -- Registration Rights Agreement, dated as of August 16, 2000,
between Chromatics and Millennium Partners, L.P.
(incorporated by reference to Exhibit 4.4 to Chromatics'
Current Report on Form 8-K filed on September 1, 2000).
4.9 -- Warrant No. CW1, dated as of August 16, 2000, made by
Chromatics in favor of Millennium Partners, L.P.
(incorporated by reference to Chromatics' Registration
Statement on Form S-3 filed on September 18, 2000).
4.10 -- Warrant dated as of August 16, 2000 made by Chromatics in
favor of Millennium Partners, L.P. (incorporated by
reference to Chromatics' Registration Statement on Form S-3
filed on September 18, 2000).
4.11 -- Warrant No. CW2, dated as of August 16, 2000, made by
Chromatics in favor of Wharton Capital Partners, Ltd.
(incorporated by reference to Chromatics' Registration
Statement on Form S-3 filed on September 18, 2000).
4.12 -- Warrant Agreement, dated as of June 30, 2000, between
Chromatics and Josephthal & Co. Inc. (incorporated by
reference to Chromatics' Registration Statement on Form S-3
filed on September 18, 2000).
4.13 -- Warrant Certificate No. W-01, dated as of June 30, 2000 made
by Chromatics in favor of X Securities, Ltd. (incorporated
by reference to Chromatics' Registration Statement on Form
S-3 filed on September 18, 2000).
4.14 -- Warrant Certificate No. W-02, dated as of June 30, 2000,
made by Chromatics in favor of John O'Brien. (incorporated
by reference to Chromatics' Registration Statement on Form
S-3 filed on September 18, 2000).
4.15 -- Warrant Certificate No. W-03, dated as of June 30, 2000,
made by Chromatics in favor of Edmund Belak. (incorporated
by reference to Chromatics' Registration Statement on Form
S-3 filed on September 18, 2000).
4.16 -- Financial Advisory and Investment Banking Agreement, dated
as of June 12, 2000, between Chromatics and Josephthal & Co.
Inc. (incorporated by reference to Chromatics' Registration
Statement on Form S-3 filed on September 18, 2000).
5.1 -- Opinion Regarding Legality.
23.1 -- Consent of BDO Seidman, LLP.
23.2 -- Consent of Wiss & Company.
23.3 -- Consent of Patterson, Belknap, Webb & Tyler LLP (included in
Exhibit 5.1).
24.1 -- Power of Attorney (see page II-3).
</TABLE>
II-2
<PAGE> 24
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) to file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represents a fundamental change in the information set forth
in the registration statement;
(iii) to include any material information with respect to the plan
of distribution not previously disclosed in this registration statement
or any material change to such information in this registration
statement;
provided, however, that paragraphs (i) and (ii) do not apply to this
registration statement if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic
reports filed by the registrant pursuant to Section 13 or Section 15(d) of
the Securities Exchange Act of 1934 and incorporated by reference in this
registration statement;
(2) that, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof;
(3) to remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) the undersigned registrant hereby undertakes that, for the purpose of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in this
registration statement shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the provisions described in the first paragraph of
Item 15 above, or otherwise, the registrant has been advised that in the opinion
of the SEC such indemnification is against public policy as expressed in said
Securities Act of 1933 and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit, or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
II-3
<PAGE> 25
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in New York, State of New York, on November 3, 2000.
CHROMATICS COLOR SCIENCES
INTERNATIONAL, INC.
Date: November 3, 2000
By: /s/ BRIAN T. FITZPATRICK
------------------------------------
Brian T. Fitzpatrick,
President and Acting Chief Executive
Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Darby Simpson Macfarlane and Brian T.
Fitzpatrick, jointly and severally, his or her true and lawful attorneys-in-fact
and agents, each with full power of substitution and resubstitution, for him or
her and in his or her name, place and stead, in any and all capacities, to sign
any and all amendments to this registration statement, and to file the same,
with exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the premises,
as fully to all intents and purposes as he or she might or could do in person,
hereby ratifying and confirming all that each of said attorneys-in-fact and
agents, or his or her substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
IN ACCORDANCE WITH THE SECURITIES ACT OF 1933, THIS REPORT HAS BEEN SIGNED
BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE REGISTRANT AND IN THE CAPACITIES
AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
--------- -------- ----
<C> <S> <C>
/s/ BRIAN T. FITZPATRICK Director, President and Acting November 3, 2000
------------------------------------------------ Chief Executive Officer
Brian T. Fitzpatrick (Principal Executive Officer)
/s/ FRANCIS MARCHESE Chief Financial Officer November 3, 2000
------------------------------------------------ (Principal Financial and
Francis Marchese Accounting Officer)
/s/ DARBY S. MACFARLANE Chairperson of the Board and November 3, 2000
------------------------------------------------ Chief Technology Officer
Darby S. Macfarlane
/s/ LESLIE FOGLESONG Director November 3, 2000
------------------------------------------------
Leslie Foglesong
/s/ DAVID KENNETH MACFARLANE Director, November 3, 2000
------------------------------------------------ Vice-President -- Research and
David Kenneth Macfarlane Development
/s/ EDMUND VIMOND Director November 3, 2000
------------------------------------------------
Edmund Vimond
/s/ EDWARD MAHONEY Director November 3, 2000
------------------------------------------------
Edward Mahoney
/s/ JAMES BERGMAN Director November 3, 2000
------------------------------------------------
James Bergman
</TABLE>
II-4
<PAGE> 26
EXHIBIT INDEX
<TABLE>
<CAPTION>
NUMBER DESCRIPTION OF DOCUMENT
------ -----------------------
<S> <C> <C>
3.1 -- Restated Articles of Incorporation of Chromatics
(incorporated by reference to Exhibit 3.1 to Chromatics'
Quarterly Report on Form 10-Q for the Quarter Ended June 30,
1999.
3.2 -- Certificate of Amendment to Articles of Incorporation of
Chromatics, (incorporated by reference to Exhibit 3.1.1 to
Chromatics' 1999 Annual Report on Form 10-K).
3.3 -- By-Laws of Chromatics (incorporated by reference to Exhibit
3.2 to Chromatics' 1999 Annual Report on Form 10-K).
4.1 -- Restated Articles of Incorporation of Chromatics
(incorporated by reference to Exhibit 3.1 to Chromatics'
Quarterly Report on Form 10-Q for the Quarter Ended June 30,
1999).
4.2 -- Certificate of Amendment to Articles of Incorporation of
Chromatics, filed on February 10, 2000 (included in Exhibit
3.2)
4.3 -- Agreement of Purchase and Sale, dated as of April 17, 2000
(the "Gordon Agreement"), among Chromatics and the
shareholders and certain noteholders Gordon Acquisition
Corp. (incorporated by reference to Exhibit 2.1 to
Chromatics' Current Report on Form 8-K filed on June 19,
2000).
4.4 -- Amendment No. 1 to the Gordon Agreement, dated May 15, 2000
(incorporated by reference to Exhibit 2.2 to Chromatics'
Current Report on Form 8-K filed on June 19, 2000).
4.5 -- Amendment No. 2 to the Gordon Agreement, dated May 25, 2000
(incorporated by reference to Exhibit 2.3 to Chromatics'
Current Report on Form 8-K filed on June 19, 2000).
4.6 -- Amendment No. 3 to the Gordon Agreement, dated May 31, 2000
(incorporated by reference to Exhibit 2.4 to Chromatics'
Current Report on Form 8-K filed on June 19, 2000).
4.7 -- Securities Purchase Agreement, dated as of August 16, 2000,
between Chromatics and Millennium Partners, L.P.
(incorporated by reference to Exhibit 4.1 to Chromatics'
Current Report on Form 8-K filed on September 1, 2000).
4.8 -- Registration Rights Agreement, dated as of August 16, 2000,
between Chromatics and Millennium Partners, L.P.
(incorporated by reference to Exhibit 4.4 to Chromatics'
Current Report on Form 8-K filed on September 1, 2000).
4.9 -- Warrant No. CW1, dated as of August 16, 2000, made by
Chromatics in favor of Millennium Partners, L.P.
(incorporated by reference to Chromatics' Registration
Statement on Form S-3 filed on September 18, 2000).
4.10 -- Warrant dated as of August 16, 2000 made by Chromatics in
favor of Millennium Partners, L.P. (incorporated by
reference to Chromatics' Registration Statement on Form S-3
filed on September 18, 2000).
4.11 -- Warrant No. CW2, dated as of August 16, 2000, made by
Chromatics in favor of Wharton Capital Partners, Ltd.
(incorporated by reference to Chromatics' Registration
Statement on Form S-3 filed on September 18, 2000).
4.12 -- Warrant Agreement, dated as of June 30, 2000, between
Chromatics and Josephthal & Co. Inc. (incorporated by
reference to Chromatics' Registration Statement on Form S-3
filed on September 18, 2000).
4.13 -- Warrant Certificate No. W-01, dated as of June 30, 2000 made
by Chromatics in favor of X Securities, Ltd. (incorporated
by reference to Chromatics' Registration Statement on Form
S-3 filed on September 18, 2000).
</TABLE>
<PAGE> 27
<TABLE>
<CAPTION>
NUMBER DESCRIPTION OF DOCUMENT
------ -----------------------
<S> <C> <C>
4.14 -- Warrant Certificate No. W-02, dated as of June 30, 2000,
made by Chromatics in favor of John O'Brien. (incorporated
by reference to Chromatics' Registration Statement on Form
S-3 filed on September 18, 2000).
4.15 -- Warrant Certificate No. W-03, dated as of June 30, 2000,
made by Chromatics in favor of Edmund Belak. (incorporated
by reference to Chromatics' Registration Statement on Form
S-3 filed on September 18, 2000).
4.16 -- Financial Advisory and Investment Banking Agreement, dated
as of June 12, 2000, between Chromatics and Josephthal & Co.
Inc. (incorporated by reference to Chromatics' Registration
Statement on Form S-3 filed on September 18, 2000).
5.1 -- Opinion Regarding Legality.
23.1 -- Consent of BDO Seidman, LLP.
23.2 -- Consent of Wiss & Company.
23.3 -- Consent of Patterson, Belknap, Webb & Tyler LLP (included in
Exhibit 5.1).
24.1 -- Power of Attorney (see page II-3).
</TABLE>
