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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________________ to _________________
Commission file number 0-21168
CHROMATICS COLOR SCIENCES INTERNATIONAL, INC.
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(Exact Name of Registrant as Specified in Its Charter)
New York 13-3253392
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(State or Other Jurisdiction of (I.R.S. Employer Identification Number)
Incorporation or Organization)
5 East 80th Street, New York, New York 10021
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(Address of principal executive offices)
(212) 717-6544
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(Registrant's Telephone Number, Including Area Code)
(Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report)
Indicate by check whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes /X/ No / /
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check whether the registrant has filed all documents and reports
required to be filed by Section 12, 13 or
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15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of
securities under a plan confirmed by court. Yes / / No / / N/A
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date: 15,535,481.
EXPLANATORY NOTE
This Quarterly Report on Form 10-Q/A amends and restates in its entirety the
text of Items 2 and 6 of Part II - Other Information of the Company's Quarterly
Report on Form 10-Q for the second quarter ended June 30, 1999 which was filed
with the Securities and Exchange Commission on August 23, 1999.
Item 2. Changes in Securities and Use of Proceeds.
On April 15, 1999 the Company issued an aggregate of $5,000,000 14% senior
convertible debentures due April 15, 2002 (the "Debentures") in a private
placement. The purchaser of the Debentures was Gary W. Schreiner. Payments of
interest on the outstanding principal amount of the Debentures are due on the
earlier of the maturity date or upon any conversion of the Debentures into the
Company's Common Stock. The accrued interest may be paid either in cash, shares
of the Company's Common Stock or a combination of Common Stock and cash, at the
option of the Company.
The outstanding principal amount of the Debentures (together with accrued
interest thereon) is not convertible until after the first anniversary of the
closing. At that time, the Debentures are convertible into shares of Common
Stock, at the option of the holder or holders thereof, at the conversion price
of $5.00. However, at any time prior to April 14, 2000, such portion of the
Debentures may be converted, at the option of the holder or holders thereof, as
shall result in the issuance, upon such conversion, of not more than an
aggregate of 200,000 shares of Common Stock. Subject to applicable securities
laws, the holder or holders of such shares, in the aggregate, may only sell not
more than an aggregate of 50,000 shares of such Common Stock issued upon such
conversion during any one month period ending prior to April 14, 2000. At any
time after the 18 month anniversary of the closing, the Company may prepay the
entire amount of the Debentures or any portion thereof for a prepayment price
equal to the original principal amount of the Debentures plus all accrued and
unpaid interest. At any time after the 18 month anniversary of the closing and
prior to the Maturity Date, in the event the average closing bid price (as
reported on the Nasdaq SmallCap Market or such other principal market or
exchange on which the Common Stock is then traded) of the Company's Common Stock
for any 10 consecutive trading days equals or exceeds $10.29, the Company can
require conversion of the outstanding principal amount (together with accrued
interest) of the Debentures into Common Stock at a conversion price of $5.00 per
share.
On June 15, 1999, the Company completed a private placement of 40,000
shares of a newly authorized series of the Company's preferred stock, designated
as Class B Series 2 preferred stock, at a price of $100 per share and for an
aggregate total consideration of $4,000,000. The purchaser of the Class B Series
2 preferred stock was LB I Group, an affiliate of Lehman Brothers, Inc. The
shares of Class B Series 2 preferred stock issued are convertible into shares of
Common Stock at an initial conversion price of $7.25 per share, subject to
adjustment for stock splits, combinations and similar recapitalizations
affecting the Company's Common Stock and in certain circumstances involving the
issuance of shares of the Company's Common Stock at prices below $7.25 per
share. The holders of the Class B Series 2 preferred stock also received an
aggregate of 270,690 five year warrants to purchase shares of the Company's
Common Stock. The warrants have an initial exercise price of $8.25 per share,
which may be subject to adjustment similar to that of the Class B Series 2
preferred stock.
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The Company also agreed to issue and sell an additional 40,000 shares of a
newly authorized series of the Company's Class B Series 2 preferred stock, at a
price of $100 per share and for an aggregate total consideration of $4,000,000.
The terms of the Class B Series 2 preferred stock to be sold in the second
closing would be identical to those described above except that the conversion
price would be equal to the lower of $7.25 per share or 90% of the closing bid
price of the common stock over the five consecutive trading days ending on the
date prior to the second closing date. The terms of the warrants to be sold at
the second closing would be identical to the warrant terms described above
except that the exercise price would be equal to the lower of $8.25 per share or
100% of the average closing bid price of the Common Stock on the second closing
date. The Company may in its discretion elect not to proceed with the second
closing if the conversion price of the convertible preferred stock to be sold
would be less that $7.25 per share or if the exercise price of the warrants to
be sold would be less than $8.25 per share.
The issuance of the shares of the Class B Series 2 preferred stock will
modify the rights of the holders of the Common Stock of the Company in so far as
the Class B Series 2 preferred stock will have a liquidation preference equal to
the aggregate purchase price of $4,000,000.
The shares of Class B Series 2 preferred stock, Debentures and warrants
issued in these private placements were exempt under Section 4(2) of the
Securities Act of 1933, as amended (the "Securities Act"), based on
representations and warranties made to the Company by the purchasers of these
securities that such purchasers were accredited investors (as such term is used
in the Securities Act) purchasing the securities for their own account, for
investment purposes only and not with a view towards a public sale or
distribution thereof. These purchasers further acknowledged that they understood
that they were purchasing securities that were not freely transferable in the
public securities market and that the certificates evidencing the securities
they received would contain a restrictive legend to the effect that such
securities may not be transferred in the absence of registration pursuant to the
Securities Act or an opinion of counsel satisfactory in form and content to the
Company that registration is not required.
In connection with these private placements, the Company agreed to register
the shares of its common stock issuable upon the conversion of the Debentures,
Class B Series 2 preferred stock and warrants for resale under the Securities
Act of 1933.
Item 6. Exhibits and Reports on Form 8-K.
3.1 Restated Articles of Incorporation of the Company, as amended (incorporated
by reference to the Company's Quarterly Report on Form 10-Q for the three
months ended June 30, 1999, filed on August 23, 1999).
3.2 By-Laws of the Company (incorporated by reference to Exhibit 3.1 to the
Company's Registration Statement on Form S-1 (File No. 33-54256) filed on
November 5, 1992, as amended)
4.1 Preferred Stock Purchase Agreement, dated as of June 11, 1999, by and
between Chromatics Color Sciences International, Inc. and LB I Group Inc.
(incorporated by reference to Exhibit 4.1 to the Company's Form 8-K filed
on July 1, 1999).
4.2 Warrant Agreement, dated as of June 11, 1999, by and between Chromatics
Color Sciences International, Inc. and LB I Group Inc. (incorporated by
reference to Exhibit 4.2 to the Company's Form 8-K filed on July 1, 1999).
10.1 Agreement, dated as of June 7, 1999, between Chromatics Color Sciences
International, Inc. and Datex-Ohmeda, Inc. (incorporated by reference
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to Exhibit 10.1 to the Company's Form 8-K filed on June 18, 1999).
27.1 Financial Data Schedule (incorporated by reference to the Company's
Quarterly Report on Form 10-Q for the three months ended June 30, 1999,
filed on August 23, 1999).
During the three month period ended June 30, 1999, the Company filed Current
Reports on Form 8-K on the following dates:
- - April 30, 1999 (Private placement of 14% Senior Convertible Debentures on
April 15, 1999) and
- - June 18, 1999 (Distribution Agreement with Datex-Ohmeda, Inc. executed on June
7, 1999).
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
CHROMATICS COLOR SCIENCES INTERNATIONAL, INC.
Date: January 20, 2000 By: /s/ Darby S. Macfarlane
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Darby S. Macfarlane
Chief Executive Officer
Date: January 20, 2000 By: /s/ Leslie Foglesong
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Leslie Foglesong
Treasurer and Chief Financial
and Principal Accounting Officer
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