As filed with the Securities and Exchange Commission on
January 22, 1998
Registration No. 333-43467
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------
Amendment No. 1 to
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------------
ACCENT COLOR SCIENCES, INC.
(Exact Name of Registrant as Specified in its Charter)
---------------------------
CONNECTICUT 06-1380314
(State or other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
800 Connecticut Boulevard
East Hartford, Connecticut, 06108
(860) 610-4000
(Address, including Zip Code, and Telephone Number, including Area Code, of
Registrant's Principal Executive Offices)
---------------------------
Norman L. Milliard
President and Chief Executive Officer
Accent Color Sciences, Inc.
800 Connecticut Boulevard
East Hartford, Connecticut 06108
(860) 610-4000
(Name, Address, including Zip Code, and Telephone Number, including Area C
ode, of Agent for Service)
---------------------------
Copy to:
Willard F. Pinney, Jr.
Murtha, Cullina, Richter and Pinney
Cityplace I
185 Asylum Street, 29th Floor
Hartford, Connecticut 06103-3469
(860) 240-6000
---------------------------
Approximate date of commencement of proposed sale to the public: From time
to time after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, check the
following box. / /
If any of the securities being registered on this Form are to be 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. /X/
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act 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, check the following box and list the
Securities Act 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. / /
CALCULATION OF REGISTRATION FEE
Title of each Proposed Proposed
class of Amount maximum maximum Amount of
securities to to be offering price aggregate registration
be registered registered per unit (1) offering price fee (2)
Common Stock
$.01 par value 2,605,781 shares $2.50 $6,514,452.50 $2,039.32
(1) Estimated solely for the purpose of computing the amount of the
registration fee pursuant to Rule 457(c) under the Securities Act of
1933, on the basis of the average of the high and low sale prices
reported on the Nasdaq National Market Automated Quotation System on
January 16, 1998.
(2) Consisting of $1,998.52 which has already been paid in connection
with the filing of the Registration Statement on Form S-3 of 2,550,455
shares based on a proposed maximum offering price of $2.65625 filed
with the Commission on December 30, 1997 and $40.80 based on 55,326
shares registered hereby at a proposed maximum offering price of
$2.50.
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.
PROSPECTUS
2,605,781 SHARES
ACCENT COLOR SCIENCES, INC.
COMMON STOCK
All shares of common stock, no par value (the "Common
Stock") of Accent Color Sciences, Inc. ("Accent Color" or the
"Company") offered hereby (the "Shares") are being offered by
certain stockholders and other security holders of the Company
named herein (the "Selling Stockholders"). It is anticipated
that the Selling Stockholders will generally offer shares of
Common Stock for sale at prevailing prices on the Nasdaq National
Market on the date of sale. See "Plan of Distribution." Of the
2,605,781 Shares being offered for resale: (i) 2,005,042 shares
were outstanding at December 26, 1997 and (ii) 600,739 shares are
issuable upon exercise of certain warrants outstanding at
December 26, 1997 (the "Warrants") and are being offered for the
accounts of the holders of such Warrants.
The distribution of the Shares by the Selling
Stockholders may be effected from time to time in one or more
transactions for their own accounts (which may include block
transactions) on the Nasdaq National Market or any exchange on
which the Common Stock may then be listed, in negotiated
transactions or a combination of such methods of sale, at fixed
prices which may be changed, at market prices prevailing at the
time of sale, at prices related to such prevailing market prices
or at negotiated prices. The Selling stockholders may effect such
transactions by selling Shares to or through broker-dealers,
including broker-dealers who may act as underwriters, and such
broker-dealers may receive compensation in the form of discounts,
concessions or commissions from the Selling Stockholders and/or
the purchasers of Shares for whom such broker-dealers may act as
agent or to whom they sell as principal or both (which
compensation as to a particular broker-dealer might be in excess
of customary commissions). The Selling Stockholders may also sell
Common Stock pursuant to Rule 144 promulgated under the
Securities Act of 1933, as amended (the "Securities Act") or
pledge Shares as collateral for margin accounts, and such Shares
could be resold pursuant to the terms of such accounts.
The Company intends that the Registration Statement will
remain effective for a period of two years from the date on which
it is declared effective by the Securities and Exchange
Commission or such earlier date as of which such Registration
Statement is no longer required for the transfer of the subject
securities.
The Common Stock of the Company is traded on the Nasdaq
National Market under the symbol "ACLR". On January 16, 1998 the
closing price of the Company's Common Stock, as reported by the
Nasdaq Automated Quotation System was $ 2.375.
ANY INVESTMENT IN THE COMMON STOCK OFFERED HEREBY
INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS" COMMENCING ON
PAGE 4 FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE
CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED
HEREBY.
The Selling Stockholder and any broker executing selling
orders on behalf of the Selling Stockholder may be deemed to be
an "underwriter" within the meaning of the Securities Act.
Commissions received by any such broker may be deemed to be
underwriting commissions under the Securities Act.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is , 1998
AVAILABLE INFORMATION
The Company is subject to the informational reporting
requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and in accordance therewith files reports,
proxy statements and other information with the Securities and
Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at
the Public Reference Room of the Commission, 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the Commission's regional
offices at 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511; and copies of such material can be obtained from the
Public Reference Section of the Commission, Washington, D.C.
20549, at prescribed rates.
INFORMATION INCORPORATED BY REFERENCE
There are hereby incorporated by reference in this
Prospectus the following documents and information heretofore
filed with the Commission:
(1) The Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1996 filed pursuant to Section 13 of the
Exchange Act.
(2) The Company's Quarterly Reports on Form 10-Q for the fiscal
quarters ended March 31, 1997, June 30, 1997 and September 30,
1997 filed pursuant to Section 13 of the Exchange Act.
(3) The Company's Current Report on Form 8-K filed with the
Commission on January 9, 1998.
(4) The description of the Company's Common Stock contained in
the Company's Registration Statement on Form 8-A, which became
effective December 23, 1996, filed pursuant to Section 12(g) of
the Exchange Act, including any amendment or report filed for the
purpose of updating such description.
All documents filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date of this
Prospectus and prior to the termination of the offering of
securities contemplated hereby shall be deemed to be incorporated
by reference in this Prospectus or any Prospectus Supplement and
to be a part hereof from the date of filing of such documents.
Any statement contained in a document incorporated by reference
or deemed to be incorporated by reference in this Prospectus or
any Prospectus Supplement shall be deemed to be modified or
superseded for all purposes of this Prospectus or such Prospectus
Supplement to the extent that a statement contained herein,
therein or in any subsequently filed document that also is
incorporated or deemed to be incorporated by reference herein or
in such Prospectus Supplement modifies or supersedes such
statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute
a part of this Prospectus or any Prospectus Supplement.
The Company will provide without charge to each person
to whom a copy of this Prospectus has been delivered, upon the
written or oral request of such person, a copy of any and all of
the documents referred to above that have been or may be
incorporated in this Prospectus by reference (other than exhibits
to such documents, unless such exhibits are specifically
incorporated by reference therein). Requests for such copies
should be directed to: the Company's Vice President and Chief
Financial Officer, Accent Color Sciences, Inc., 800 Connecticut
Boulevard, East Hartford, Connecticut, 06108. The Company's
telephone number at that location is (860) 610-4000.
The documents incorporated by reference herein contain
forward-looking statements that involve risks and uncertainties.
The Company's actual results may differ materially from the
results discussed in the forward-looking statements. Factors
that might cause such a difference include, but are not limited
to, those discussed in such documents and in "Risk Factors"
below.
No person is authorized to give any information or to
make any representations, other than those contained in this
Prospectus, in connection with the offering described herein,
and, if given or made, such information or representations must
not be relied upon as having been authorized by the Company. This
Prospectus does not constitute an offer to sell, or a
solicitation of an offer to buy, nor shall there be any sale of
these securities by any person in any jurisdiction in which it is
unlawful for such person to make such offer, solicitation or
sale. Neither the delivery of this Prospectus nor any sale made
hereunder shall under any circumstances create an implication
that the information contained herein is correct as of any time
subsequent to the date hereof.
THE COMPANY
Accent Color designs, manufactures and sells innovative,
high-speed, spot color printing systems ("Truecolor Systems") for
integration with digital, high-speed, black-on-white printers and
sells related consumables. Spot color printing involves the use
of color to enhance traditional black-on-white documents by
accenting critical information, such as a balance due on a
billing statement, or by printing graphics, such as a company
logo. Truecolor Systems are designed to print spot color in
high-speed, high-volume applications at a low incremental cost
per page without diminishing the speed or performance of the
high-speed, black-on-white host printer or affecting the end
user's existing operational methods and are capable of printing
up to 480 pages per minute, simultaneously utilizing up to eight
different colors, including custom colors, to print or highlight
fixed or variable data. Truecolor Systems combine the Company's
proprietary paper handling technology with patented ink jet
technology from Spectra, Inc. ("Spectra"). Under the agreement
with Spectra, the Company holds an exclusive right to supply
products which include Spectra printheads to print color on the
black-on-white output from specified high-speed printers from
Xerox, IBM, Oce and certain other manufacturers through the year
2002. The Company also holds a right to extend the agreement
with Spectra for an additional seven years.
The Company also sells consumables comprised of standard and
custom color wax-based inks, as well as spare parts used with
Truecolor Systems. The Company expects that consumables will
generate recurring revenue which the Company believes will
increase as the installed base and usage of Truecolor Systems
increase.
Accent Color was incorporated under the laws of Connecticut
in May 1993. The Company's principal executive offices are
located at 800 Connecticut Boulevard, East Hartford, Connecticut,
06108 and its telephone number at that address is (860) 610-4000.
RISK FACTORS
An investment in the shares of Common Stock offered hereby
involves a high degree of risk. In addition to the risks set
forth in the Company's Annual Report on Form 10-K for the year
ended December 31, 1996, and the Company's Quarterly Reports on
Form 10-Q for the quarters ended March 31, 1997, June 30, 1997
and September 30, 1997, the other documents incorporated herein
by reference and the other information in this Prospectus, the
following factors should be considered carefully in evaluating
the Company and its business before purchasing the Common Stock
offered hereby.
The risk factors described below, as well as the documents
incorporated herein by reference, contain forward-looking
statements that involve risks and uncertainties. The Company's
actual results may differ materially from the results discussed
in the forward-looking statements.
Immediate and Future Capital Requirements
The Company has ongoing working capital, capital equipment
and operations loss-funding requirements in order to continue to
operate and grow. As a result, the Company has and will likely
continue to seek equity or debt financing to fund operating
losses, future improvements and expansion of the Company's
research and manufacturing capabilities. There can be no
assurance that such financing will be available when needed, or
that, if available, it will be on satisfactory terms. The
failure to obtain financing would hinder the Company's ability to
make continued investments in capital equipment and expansion,
which could materially adversely affect results of operations.
Any such equity financing would result in dilution to the
then-existing stockholders of the Company.
Volatility of Stock Price
The Company's stock price has been, and in the future is
expected to be, volatile and to experience market fluctuation as
a result of a number of factors, including, but not limited to,
current and anticipated results of operations, future product
offerings by the Company or its competitors and factors unrelated
to the operating performance of the Company. The trading price
of the Company's Common Stock may also vary as a result of
changes in the business, operations, or financial results of the
Company, prospects of general market and economic conditions and
other factors.
Development Risks
Accent Color is a development stage company. The Company
has products in various stages of development, and minimal
revenue has been recognized from the sale of its products. The
Company has developed and plans to market new products and new
applications of technology and, accordingly, is subject to risks
associated with such ventures. The Company has delivered
prototype, pre-production and production Truecolor Systems and is
entering the pre-production phase for the enhanced version of
these systems. The probability of success of the Company must be
considered in light of the expenses and delays frequently
encountered in connection with the operation of a new business
and the development of practical production techniques for new
products.
The Company considers the enhancement of its present
products to be the Company's first development priority. Many of
these enhancements are contemplated in the Company's contract
with IBM, including the Company's plan to devote substantial
resources to improve its technology in the areas of printhead
width and print resolution. In addition, the Company's customers
have requested advanced paper handling functionality,
particularly duplex printing (the ability to print on both sides
of a page). There can be no assurance, however, that the Company
will be successful in developing enhancements for its products or
that these enhancements will prove to be desirable to end users
or that the Company will be able to obtain the necessary
components for contemplated product enhancements. Failure to
develop enhancements to its existing products, particularly the
enhancements contemplated by the agreement with IBM, could have a
material adverse effect on the market acceptance of the Company's
products. As a result, any such failures could have a material
adverse effect on the Company's business, financial condition and
results of operations. Further, the development of product
enhancements will likely render portions of the Company's
inventory obsolete, which could have a material adverse effect on
the Company's ability to sell such inventory profitably.
Limited History of Product Manufacturing
To date, the Company has manufactured only limited
quantities of Truecolor Systems. To be profitable, the Company's
products must be manufactured in sufficient quantities and at
acceptable costs. To date, manufacturing costs have exceeded
average selling price. Future production in sufficient
quantities may pose technical and financial challenges for the
Company. The Company has limited manufacturing history, and no
assurance can be given that the Company will be able to make a
successful transition to high-volume production. The failure to
make a successful transition and to manufacture at a cost
sufficiently below its selling price could have a material
adverse effect on the business, financial condition and results
of operations of the Company.
Limited Operating History; History of Losses; Uncertainty of
Future Financial Results;
The Company was formed in May 1993 and is a development
stage company with a limited operating history. The Company
incurred net losses of $45,000, $1,154,000, $4,217,000,
$13,739,000 and $13,106,000 for the period from inception to
December 31, 1993, the years ended December 31, 1994, 1995 and
1996 and the nine-month period ended September 30, 1997,
respectively. These losses were primarily due to the substantial
research and development costs associated with the development of
Truecolor Systems, all of which costs were expensed as incurred.
Through September 30, 1997, $1,285,000 of revenue had been
recognized from the sale of the Company's products. As a result
of these losses, as of September 30, 1997, the Company had an
accumulated deficit of $32,260,000 and total shareholders' equity
of $8,368,000. It is expected that quarterly net losses will
continue through at least the 2nd quarter of 1998. There can be
no assurance that the Company will be profitable thereafter or
that profitability, if achieved, will be sustained. In order to
support the anticipated growth of its business, the Company
expects to expand its manufacturing, marketing and sales
capabilities, technical and other customer support functions, and
research and product development activities. The anticipated
increase in the Company's operating expenses caused by any
expansion could have a material adverse effect on the Company's
operating results if revenue does not increase at an equal or
greater rate. Also, the Company's expenses for these and other
activities are based in significant part on its expectations
regarding future revenue and are fixed to a large extent in the
short term. The Company may be unable to adjust spending in a
timely manner to compensate for any unexpected revenue
shortfalls.
Uncertainty of Market Development; Acceptance of Accent Color's
Products
The digital, high-speed printing market has traditionally
relied mainly on black-on-white print. There can be no assurance
that a market for high-speed, variable data color printing will
develop or achieve significant growth. The failure of such
market to develop or achieve significant growth would have a
material adverse effect on the Company's business, financial
condition and results of operations.
The Company's products are currently designed for the
digital, high-speed production printing and production publishing
market segments. There can be no assurance that the Company will
be successful in developing or marketing its existing or future
products or that, if any such products achieve market acceptance,
such acceptance will be sustained. The Company also plans to
further enhance its products and is investing substantial capital
and other resources in the development of such enhancements. The
Company plans to devote substantial resources to improve
technology in the areas of ink jet printhead width. There can be
no assurance that the Company's Truecolor Systems or enhancements
will be a preferable alternative to existing products or that
they will not be rendered obsolete or noncompetitive by products
offered by other companies. Any quality, durability or
reliability problems with the Company's products, regardless of
materiality, or any other actual or perceived problems with any
Company products, could have a material adverse effect on market
acceptance of such products. There can be no assurance that such
problems or perceived problems will not arise or that, even in
the absence of such problems, the Company's products will achieve
market acceptance. A failure of any of the Company's products to
achieve market acceptance for any reason could have a material
adverse effect on the Company's business, financial condition and
results of operations. In addition, the announcement by the
Company or its OEM customers or competitors of new products and
technologies could cause customers to defer purchases of the
Company's existing products, which could have a material adverse
effect on the Company's business, financial condition and results
of operations.
Dependence on a Limited Number of Customers; Revenue
Concentration
The Company anticipates that sales of its Truecolor Systems
and consumables to a limited number of customers will account for
substantially all of the Company's revenue. As of September 30,
1997, the Company had contracts with two customers, International
Business Machines Corporation ("IBM") and Groupe SET ("SET"), and
was in contract discussions with Oce Printing Systems USA, Inc.
("Oce"). Generally, the Company's customers provide non-binding
forecasts of future orders. There can be no assurance that these
customers will purchase a significant volume of the Company's
products. A substantial difference between forecast orders and
actual orders by any one of its customers, or the failure of its
customers to purchase a significant volume of the Company's
products, could have a material adverse effect on the business,
financial condition and results of operations of the Company.
There can be no assurance that the Company's OEM customers,
including IBM and SET, or other companies will not compete with
the Company in the future.
Dependence on Third Party Marketing, Distribution and Support
A significant element of the Company's marketing strategy is
to form alliances with third parties for the marketing and
distribution of its products. To this end, the Company is a
party to multi-year agreements with IBM (the "IBM Agreement") and
Groupe Set and is in contract discussions with Oce, for the
marketing, distribution and support of the Company's products.
The Company's contract with IBM is for an initial term of three
years with IBM having the right to terminate its contract in
certain circumstances, such as a material breach of the contract
by Accent Color or the Company's bankruptcy or insolvency. There
can be no assurance that (i) the Company will be successful in
maintaining such alliances or forming and maintaining other
alliances, (ii) the Company will be able to satisfy its
contractual obligations with its OEM customers or (iii) the
Company's OEM customers will devote adequate resources to market
and distribute the Company's products successfully. Any
disruption in the Company's relationships with IBM or SET, or any
future customer of the Company, may have a material adverse
effect on the Company's business, financial condition or results
of operations.
As a result of its relationships with its OEM customers, the
Company's ability to interact with end users of Truecolor Systems
and observe their experience with the Company's products may be
limited. The Company also does not have control over the
marketing, distribution and support efforts of its OEM customers.
This may result in a delay by the Company in the recognition and
correction of any problems experienced by the OEM customers or
the end users. Failure of the Company to respond to customer and
end-user preferences or experience with its products, or a
failure by the Company's OEM customers to market and support the
Company's products successfully, could have a material adverse
effect on the business, financial condition and results of
operations of the Company. In addition, the Company's OEM
customers will control the timing of the introduction of the
Company's products, including its existing products.
Consequently, the timing of the introduction of the Company's
products may be delayed for reasons unrelated to the Company and
its products, such as delays in the introduction of products
offered by the OEM customers with which the Company's products
are integrated. Delays in the introduction of the Company's
products could have a significant adverse effect on the Company's
business, financial condition and results of operations.
Further, third-party distribution provides the Company with less
information regarding the amount of inventory that is in the
process of distribution. This lack of information may reduce the
Company's ability to predict fluctuations in revenue resulting
from a surplus or a shortage in its distribution channels and
contribute to volatility in the Company's financial results, cash
flow and inventory.
Dependence on Spectra
The Company is dependent on Spectra, a wholly owned
subsidiary of Markem, Inc., as its sole source supplier of ink
jet printheads and the hot melt, wax-based inks used by Truecolor
Systems. Spectra has agreed to supply the Company with ink jet
printheads and wax-based inks under a supply agreement, subject
to a number of conditions. The Company's reliance on Spectra
involves several risks, including a potential inability to obtain
an adequate supply of required printheads or inks, and reduced
control over the quality, pricing and timing of delivery of these
items. Because the production of printheads is specialized and
requires long lead times, there can be no assurance that delays
or shortages of printheads will not occur. To date, Spectra has
only produced a limited number of ink jet printheads.
Accordingly, there can be no assurance that Spectra will be able
to provide a stable source of supply of these components. As the
Company increases the production of Truecolor Systems, it will
become more reliant upon Spectra's ability to manufacture and
deliver ink jet printheads as required. Any interruption in the
Company's ability to obtain Spectra printheads could have a
material adverse effect on the Company's business, financial
condition and results of operations. Further, the Company and
Spectra are devoting substantial resources to improve technology
in the areas of ink jet printhead width. There can be no
assurance that, if such improvements are made, Spectra will be
able to produce printheads embodying such improvements for the
Company in sufficient quantities at an acceptable price, or at
all. Any inability to incorporate such improvements or produce
printheads embodying them could have a material adverse effect on
the Company's business, financial condition and results of
operations.
Spectra, itself, is also reliant upon licenses granted to it
by third parties. The Spectra agreement allows the Company, in
certain instances, to utilize Spectra's technology to either
manufacture wax-based inks or ink jet printheads itself or
arrange for their manufacture by third parties utilizing such
technology. There can be no assurance, however, that, if
necessary, the Company would be able to manufacture ink jet
printheads and wax-based inks itself or negotiate with third
parties for the timely manufacture of ink jet printheads or
supply of wax-based inks on acceptable terms or at all.
Furthermore, the use of Spectra's technology may require the
consent of certain other licensors to Spectra, and there is no
assurance that the Company will be able to obtain any such
consents on acceptable terms or at all.
Spectra has granted the Company the exclusive right to
supply products including Spectra printheads in the worldwide
market for printing color on the output from specified
high-speed, black-on-white printers manufactured or marketed by
Xerox, IBM, Oce and certain other manufacturers through December
31, 2002 with the Company holding an option to renew the contract
for an additional seven years. To maintain such exclusive
rights, the Company is required to purchase a minimum number of
ink jet printheads each year, to continue to purchase its
wax-based ink requirements from Spectra and to make certain
payments. There can be no assurance that the Company will be
able to meet the minimum purchase requirements or make these
payments. The Company's agreement with Spectra required
quarterly payments of $250,000 through 1997 to maintain the
exclusivity rights. These specified payments, together with
similar payments from other Spectra customers (which vary in
amount from customer to customer), are used by Spectra to fund
ink jet printhead development, the results of which are available
to participating customers. In addition, the Company has a
development arrangement with Spectra that requires the Company to
make additional payments to support developing a wider printhead
manufacturing capability. Any disruption in the Company's
relationship with Spectra, or in Spectra's relationship with its
licensors, may have a material adverse effect on the Company's
business, financial condition and results of operations.
Dependence on Major Subcontractors and Suppliers
The Company relies on subcontractors and suppliers to
manufacture, subassemble and perform certain testing of some
modules and parts of Truecolor Systems. Currently, the Company's
ink jet printheads are manufactured solely by Spectra. The
Company currently performs the final assembly and testing of
various Truecolor System components and of each complete
Truecolor System. The Company plans to outsource the manufacture
of major components and complete final assembly and testing of
Truecolor Systems in house. The inability to develop
relationships with, or the loss of, subcontractors or suppliers,
or the failure of its subcontractors or suppliers to meet the
Company's price, quality, quantity and delivery requirements,
could have a material adverse effect on the Company's business,
financial condition and results of operations.
Significant Fluctuations in Quarterly Results
The Company's quarterly operating results are likely to vary
significantly in the future based upon a number of factors,
including the volume, timing, delivery and acceptance of customer
orders, the introduction and market acceptance of new products
offered by the Company and its OEM customers or competitors,
changes in the pricing policies of the Company or its OEM
customers or competitors, the level of product and price
competition, the relative proportion of printer and consumables
sales, the timely availability of sufficient volume of sole
source components, fluctuations in research and development
expenditures, the availability of financing arrangements for
certain of the Company's customers, general economic conditions,
as well as other factors. Additionally, because the purchase of
a printing system and peripherals involves a significant capital
commitment, the sales cycle for the Company's products is
susceptible to delays and lengthy acceptance procedures
associated with large capital expenditures. Historically, there
has existed seasonality in the purchase of major equipment such
as the Company's Truecolor Systems, with many companies
experiencing higher sales in the fourth calendar quarter. The
Company expects such seasonality to apply to the purchase of its
systems. Furthermore, due to the Company's high average sales
price and low unit volume, a delay in the sale of, or the
recognition of revenue from the sale of a few units could have a
material adverse effect on the results of operations for a fiscal
quarter.
Quarterly revenue and operating results depend primarily on
the volume, timing, shipping and acceptance of orders during the
quarter, which are difficult to forecast due to the length of the
sales cycle. As of September 30, 1997, the Company has
recognized $1,285,000 of revenue from the sale of its products.
Through September 30, 1997, the Company had shipped 15 production
versions of its Truecolor Systems. Consequently, the Company has
minimal experience with the rate of customer and end-user
acceptance of its products or the volume or nature of warranty
claims relating to its products. The Company's policy is to
recognize revenue upon customer acceptance, which generally
occurs at the end of the warranty period. Thereafter, once the
Company gains sufficient experience regarding customer acceptance
of, and warranty claims regarding, its products, the Company
intends to recognize revenue upon shipment of the products. As a
result, the Company expects a difference between the timing of
shipments and the recognition of related revenue, which may be
substantial and inconsistent. There can be no assurance that the
timing of revenue recognition will not result in significant
fluctuations in the Company's quarterly operating results. A
significant portion of the Company's operating expenses is
relatively fixed in the short term, and planned expenditures are
based on sales forecasts. Sales forecasts by the Company's
customers are generally not binding. If revenue levels are below
expectations, operating results may be disproportionately
affected because only a small portion of the Company's expenses
vary with revenue in the short term, which could have a material
adverse effect on the Company's business, financial condition and
results of operations. There can be no assurance that the
Company will experience or sustain any revenue growth or
profitability.
Potential Need for Additional Funding for Operating and Capital
Requirements
The Company's currently anticipated levels of revenue and
cash flow are subject to many uncertainties and cannot be
assured. Further, the Company's business plan may change, or
unforeseen events may occur, requiring the Company to raise
additional funds. The amount of funds required by the Company
will depend on many factors, including the extent and timing of
the sale of Truecolor Systems, the timing and cost associated
with the expansion of the Company's manufacturing, development
and engineering, sales and marketing and customer support
capabilities and the Company's operating results. There can be
no assurance that, if and when needed, additional financing will
be available, or available on acceptable terms. The inability to
obtain additional financing or generate sufficient cash from
operations could require the Company to reduce or eliminate
expenditures for research and development, production or
marketing of its products, or otherwise to curtail or discontinue
its operations, which could have a material adverse effect on the
Company's business, financial condition and results of
operations.
Product Warranty; Limit on Prices for Spare Parts
The Company warrants its Truecolor Systems to be free of
defects in workmanship and materials for 90 days from
installation at the location of the end user. Furthermore, under
the IBM Agreement, the Company has agreed to provide spare parts
for its products to IBM at prices which will yield a monthly
parts cost per Truecolor System not to exceed a specified amount.
There can be no assurance that the Company will not experience
warranty claims or parts failure rates in excess of those which
it has assumed in pricing its products and spare parts. Any such
excess warranty claims or spare parts failure rates could have a
material adverse effect on the Company's business, financial
condition or results of operations. The Company currently has
minimal experience with the volume or nature of warranty claims
relating to its products.
Dependence on a Single Product Line
The Company anticipates that it will derive substantially
all of its revenue in the foreseeable future from sales of
Truecolor Systems, related consumables and spare parts. If the
Company is unable to generate sufficient sales of Truecolor
Systems due to market conditions, manufacturing difficulties or
other reasons, it may not be able to continue its business.
Similarly, if purchasers of Truecolor Systems were to purchase
wax-based ink or spare parts from suppliers other than the
Company, the Company's business, results of operations and
financial condition could be materially adversely affected.
Dependence on a single product line makes the Company
particularly vulnerable to the successful introduction of
competitive products.
Rapid Technological Change Requires Ongoing Product Development
Efforts
The high-speed printer industry is characterized by evolving
technology and changing market requirements. The Company's
future success will depend on a number of factors, including its
ability to continue to develop and manufacture new products and
to enhance existing products. Consequently, the Company
considers the enhancement of its products to be a development
priority. Certain enhancements of its existing products are
required by the Company's contract with IBM. Additionally, in a
new and evolving market, customer preferences can change rapidly
and new technology could render existing technology and product
inventory obsolete. Failure by the Company to respond adequately
to changes in its target market, to develop or acquire new
technology or to successfully conform to market preferences could
have a material adverse effect on the business, financial
condition and results of operations of the Company. The failure
by the Company to anticipate or respond adequately to competitive
and technological changes could have a material adverse effect on
the business, financial condition and results of operations of
the Company.
Risk of Delisting from Nasdaq Stock Market
The Company's stock is currently traded on the Nasdaq
National Market. There are no assurances, however, that the
Company's Common Stock will continue to be included in such
market, or that an active market for such stock will exist. The
failure to meet the listing requirements for the National Market
could result in the Company's Common Stock alternatively either
being listed on the Nasdaq Small Capitalization Market if the
Company could meet the initial listing criteria for that market
or deletion from the Nasdaq Stock Market altogether if the
Company failed to meet the National or Small Capitalization
Market listing criteria. The delisting of the Company's stock
from the Nasdaq Stock Market would cause disruption in trading of
the Company's Common Stock and would have a material adverse
effect on the Company.
Limited Protection of Proprietary Technology and Risks of
Third-party Claims
The Company's ability to compete effectively will depend, in
part, on the ability of the Company to maintain the proprietary
nature of its technology. The Company relies, in part, on
proprietary technology, know-how and trade secrets related to
certain aspects of its principal products and operations but
there can be no assurance that others, including the Company's
OEM customers, may not independently develop the same or similar
technology or otherwise obtain access to the Company's
proprietary technology. To protect its rights in these areas,
the Company generally requires its OEM customers, suppliers,
employees and independent contractors to enter into nondisclosure
agreements. There can be no assurance, however, that these
agreements will provide meaningful protection for the Company's
trade secrets, know-how or other proprietary information. If the
Company is unable to maintain the proprietary nature of its
products through nondisclosure agreements or other protection,
its business could be materially adversely affected. The U.S.
Patent and Trademark Office (the "Patent Office") has granted
patent number 5,602,624 related to the Company's color printing
apparatus. In addition, the Patent Office has filed a Notice of
Allowance with respect to another patent application filed by the
Company relating to the paper path and the placement of print on
a page. Furthermore, the Company has filed additional
applications for patents related to certain enhancements of the
Truecolor Systems. There can be no assurance, however, as to the
degree of protection offered by the Notice of Allowance, or as to
the likelihood that pending patent applications will be issued.
There can be no assurance that potential competitors, many of
which may have substantially greater resources than the Company
and may have made substantial investments in competing
technologies, do not currently have or will not obtain patents
that will prevent, limit or interfere with the Company's ability
to make, use or sell its products or will not intentionally
infringe on the Company's patents if and when issued. Moreover,
no assurance can be given that Accent Color's technology does not
conflict with existing enforceable patents. Although patents may
be issued to Accent Color as a result of patent applications it
has filed, Accent Color's technology may fall within the scope of
existing enforceable patents. There can be no assurance that the
steps taken by the Company to protect its proprietary rights will
be adequate to prevent misappropriation of its technology or
independent development by others of similar technology. In
addition, the laws of some foreign countries do not protect the
Company's proprietary rights to the same extent as do the laws of
the U.S. There can be no assurance that these protections will be
adequate.
The Company has an exclusive right, under an agreement with
Spectra, to supply products including Spectra's ink jet
printheads in the worldwide market for printing color on the
output from specified high-speed, black-on-white printers
marketed by Xerox, IBM, Oce and certain other parties through
December 31, 2002. The Company also has an option to renew this
agreement for an additional seven year term. To the extent that
wax-based inks and ink jet printheads purchased from Spectra are
covered under patents or licenses, the Company relies on
Spectra's rights under such patents and licenses and Spectra's
willingness and ability to enforce its patents and maintain its
licenses. There can be no assurance that Spectra will be willing
or able to enforce its patents and maintain its licenses and any
such unwillingness or inability could have a material adverse
effect on the Company's business, financial condition and results
of operations.
Although the Company believes that its products and
technology do not infringe any existing proprietary rights of
others, there can be no assurance that third parties will not
assert such claims against the Company in the future or that such
future claims will not be successful. The Company could incur
substantial costs and diversion of management resources with
respect to the defense of any claims relating to proprietary
rights, which could have a material adverse effect on the
Company's business, financial condition and results of
operations. Furthermore, parties making such claims could secure
a judgment awarding substantial damages, as well as injunctive or
other equitable relief, which could effectively block the
Company's ability to make, use, sell, distribute or market its
products and services in the U.S. or abroad. Such a judgment
could have a material adverse effect on the Company's business,
financial condition and results of operations. In the event a
claim relating to proprietary technology or information is
asserted against the Company, the Company may seek licenses to
such intellectual property. There can be no assurance, however,
that such a license could be obtained on commercially reasonable
terms, if at all, or that the terms of any offered licenses will
be acceptable to the Company. The failure to obtain the
necessary licenses or other rights could preclude the sale,
manufacture or distribution of the Company's products and,
therefore, could have a material adverse effect on the Company's
business, financial condition and results of operations. The
cost of responding to any such claim may be material, whether or
not the assertion of such claim is valid.
Difficulties in Managing Rapid Growth
Since inception, the Company has experienced rapid growth,
which has placed a significant strain on the Company's (i)
administrative, operational and financial personnel, (ii)
management information systems, (iii) manufacturing operations
and (iv) other resources. The Company's future development plans
anticipate additional management, operating and financial
resources. For example, the Company intends to significantly
increase production capacity, create new marketing programs, hire
additional personnel and develop further enhancements to the
Company's products. There can be no assurance that the Company
will be able to successfully implement its business strategy,
that operations will generate sufficient cash flow, or that
adequate financing will be available on acceptable terms to fund
continuing growth, or that management will successfully manage
continued growth. The failure to manage growth effectively may
have a material adverse effect on the Company's business,
financial condition and results of operations.
Dependence on Key Personnel
The business of the Company is substantially dependent on
the capabilities and services of a number of key technical and
managerial personnel, including Richard J. Coburn, its Chairman,
and Norman L. Milliard, its President and Chief Executive
Officer. Mr. Coburn has an employment agreement with the Company
which has a term that expires at the end of 1998. Mr. Milliard
entered into a three-year contract with the Company at the end of
1994 which is automatically extended each year for one year
unless Mr. Milliard or the Company gives notice prior to the year
end. Both Mr. Coburn and Mr. Milliard may terminate the
employment relationship with the Company at any time with no
penalty other than the loss of future compensation. The loss of
the services of Messrs. Coburn or Milliard or other key personnel
could have a material adverse effect upon the business of the
Company. The Company has keyman life insurance on Messrs. Coburn
and Milliard in the amount of $1,000,000 each. There can be no
assurance, however, that the Company will continue such insurance
coverage or that such amount is sufficient. The Company's future
success will further depend on both its ability to retain key
personnel and its ability to attract qualified personnel.
Competition for qualified personnel is intense, and there can be
no assurance that the Company will be successful in hiring or
retaining them. The inability of the Company to retain key
personnel or attract qualified personnel may have a material
adverse effect on the Company's business, financial condition and
results of operations.
Competition
The Company expects to encounter varying degrees of
competition in the markets in which it competes. The Company
competes, in significant part, on the basis of advanced
proprietary technology in the areas of paper handling, ink jet
color printing and interface software which allows the Company's
products to print variable data, in multiple standard and custom
colors at high speeds.
Competition to supply color printing is fragmented. The
Xerox 4890 (a similar product is also marketed by Xerox as the
DocuTech 390HC) is a spot color printer which prints in black and
one color per job (out of a limited palette). It is capable of
printing 92 pages per minute but does not offer custom colors.
BESTE Bunch Systems markets a color offset press used as a
downstream add-on to an Oce or IBM high-speed, black-on-white
printer. While providing color logos and fixed data, it does not
offer variable data, requires longer time to set up, and is more
labor intensive. It also requires additional processes of
negative production and plate making. There are production full
process color printers available which have relatively high per
page print costs and operate at much lower speeds than those
required by typical production printing, making them impractical
for high-speed print jobs. However, many of the companies that
may compete with the Company in the future have longer operating
histories and significantly greater financial, technical, sales,
marketing and other resources, as well as greater name
recognition than the Company.
In addition to direct competition from other firms utilizing
high-speed color technologies, there exists potential direct
competition from firms improving technologies used in low-speed
to medium-speed color printers and indirect competition from
firms producing pre-printed forms.
Products or product improvements based on new technologies
could be introduced by other companies with little or no advance
notice. Manufacturers of high-speed, black-on-white printers may
also, in time, develop comparable or more effective color
capability within their own products which may render the
Company's products obsolete. There can be no assurance that the
Company will be able to compete against future competitors
successfully or that competitive pressures faced by the Company
will not have a material adverse effect upon its business,
financial condition and results of operations.
Risks Associated with International Operations
The Company intends to have its products marketed worldwide
and therefore may enter into contracts with foreign companies.
International sales are subject to certain inherent risks,
including unexpected changes in regulatory requirements, tariffs
and other trade barriers, fluctuations in exchange rates, credit
risks, government controls, political instability, longer payment
cycles, increased difficulties in collecting accounts receivable
and potentially adverse tax consequences. There can be no
assurance that these factors will not have a material adverse
effect on the Company's business, financial condition and results
of operations.
Dividends
The Company has not declared or paid dividends on its common
stock in the past and does not anticipate declaring or paying any
dividends in the foreseeable future.
Environmental Regulation
The Company is subject to regulation under various federal,
state and local laws relating to the environment and to employee
safety and health. These environmental regulations relate to the
generation, storage, transportation, disposal and emission of
various substances into the environment. The Company cannot
predict the environmental legislation or regulations that may be
enacted in the future or how existing or future laws or
regulations will be administered or interpreted. Compliance with
more stringent laws or regulations, as well as more vigorous
enforcement policies of the regulatory agencies or stricter
interpretation of existing laws, may require additional
expenditures by the Company, some or all of which may be
material.
Potential Adverse Impact of Anti-takeover Provisions on Market
Price of Shares
The Company's Restated Certificate of Incorporation contains
provisions that could discourage a proxy contest or make more
difficult the acquisition of a substantial block of the Company's
Common Stock. The Restated Certificate of Incorporation provides
for a classified Board of Directors, and members of the Board of
Directors may be removed only upon the affirmative vote of
holders of at least two-thirds of the shares of capital stock of
the Company issued and outstanding and entitled to vote. In
addition, the Board of Directors is authorized to issue shares of
Common Stock and Preferred Stock which, if issued, could dilute
and adversely affect various rights of the holders of shares of
Common Stock and, in addition, could be used to discourage an
unsolicited attempt to acquire control of the Company.
The Company is subject to the Connecticut Business
Corporation Act (the "Connecticut Act"), some provisions of which
prohibit a publicly held Connecticut corporation from engaging in
a "business combination" (including the issuance of equity
securities which have an aggregate market value of 5% or more of
the total market value of the outstanding shares of the Company)
with an "interested shareholder" (as defined in the Connecticut
Act) for a period of five years from the date of the
shareholder's purchase of stock unless approved in a prescribed
manner. The application of this statute could prevent a change
of control of the Company. Generally, approval is required by
the Board of Directors and by a majority of the non-employee
directors of the Company and by 80% of the outstanding voting
shares of the Company and two-thirds of the voting power of the
outstanding shares of the voting stock other than shares held by
the interested shareholder. There can be no assurance that these
provisions will not prevent the Company from entering into a
business combination that otherwise would be beneficial to the
Company. The Connecticut Act also requires that any action of
the stockholders of the Company taken by written consent without
a meeting must be unanimous.
SELLING STOCKHOLDERS
The following table shows (i) the name of the Selling
Stockholders (ii) the number of shares of Common Stock
beneficially owned by each Selling Stockholder or issuable upon
the exercise of currently outstanding warrants prior to the sale
of shares registered hereby, (iii) the aggregate number of shares
of Common Stock to be sold by each from time to time pursuant to
this Prospectus, and (iv) the number of shares beneficially owned
after the sale of all shares registered hereby:
Shares Beneficially Shares to be Shares
Name of Selling Owned Prior to Sold in the Owned
Stockholder the Offering the Offering After the
Offering
Xerox Corporation 425,000 425,000 0
ProFutures Special
Equity Fund, L.P. 192,323 192,323 0
Gary H. Halbert 74,926 74,926 0
FT Trading Corp. 74,926 74,926 0
Elara Ltd. 187,323 187,323 0
Brian Leung
Hung Tak 187,323 187,323 0
Bexley Enterprises
Limited 187,323 187,323 0
Luzon Investments
LTD. 374,646 374,646 0
Gregory A.
Robertshaw 37,463 37,463 0
Steven C. &
Elizabeth
A. Widman 9,366 9,366 0
Albert G. Nickel 18,731 18,731 0
Joseph P. Crugnale 37,463 37,463 0
E. Buckley Griswold 18,731 18,731 0
C.R. Welling 18,731 18,731 0
Kevin G. Kett 18,731 18,731 0
David B. Payne 9,366 9,366 0
Russell D. Barnard 9,366 9,366 0
Ivy M. Leverone 9,366 9,366 0
Kathleen M. Donovan 18,731 18,731 0
James T. Roberto 18,731 18,731 0
Kristine Szabo 37,463 37,463 0
Deed of Trust
of Frank
J. Campbell, TTL 23,498 23,498 0
Kristen M. Hansen 13,821 13,821 0
Penelope S. Hansen
c/f Jennifer Hansen 13,821 13,821 0
Penelope s. Hansen
c/f Mark Hansen 13,821 13,821 0
Richard A.
Hansen, II 13,821 13,821 0
Ronald B. Mandell 20,733 20,733 0
Irving L.
Mazer, Esq. 45,738 45,738 0
Irving L.
Mazer, Esq.
Special Account 5,072 5,072 0
Draper & Co. FBO
PMG 401K 45,618 45,618 0
Jack Silver 82,946 82,946 0
Charles Robins 12,571 12,571 0
Arnold A. Phipps 18,000 18,000 0
Rush & Co. 12,300 12,300 0
Dr. Gershon Stern 35,000 35,000 0
Peter D. Kamenstein 12,498 12,498 0
Gary Hindes,
Trustee 9,000 9,000 0
MarketCorp
Ventures L.P. 74,411 74,411 0
Newport Advisors 38,583 38,583 0
Frank J.
Campbell III 12,501 12,501 0
Frank J. Campbell
III & Richard
A. Hansen T/U/W
Jane D. Campbell 24,999 24,999 0
James J. Kim 37,500 37,500 0
Agnes C. Kim 37,500 37,500 0
Bryanston Asset
Management
LTD Pension
Fund Account 6,000 6,000 0
Barclays Bank
Guernsey 15,000 15,000 0
Finemost LTD 15,000 15,000 0
USE OF PROCEEDS
All the shares offered hereby are being offered for the
account of the Selling Stockholders. Accordingly the Company
will not receive any proceeds of any sales made hereunder.
PLAN OF DISTRIBUTION
The Company has been advised by the Selling Stockholders
that they intend to sell all or a portion of the shares offered
hereby from time to time in the Nasdaq National Market and that
sales will be made at prices prevailing in the market at the
times of such sales. The Selling Stockholders may also make
private sales directly or through a broker or brokers, who may
act as agent or as principal. In connection with any sales, the
Selling Stockholders and any brokers participating in such sales
may be deemed to be "underwriters" within the meaning of the
Securities Act although the offering of these securities will not
be underwritten by a broker-dealer firm. The Company will
receive no proceeds from sales made hereunder.
Any broker-dealer participating in such transactions as
agent may receive commissions from the Selling Stockholders (and,
if they act as agent for the purchaser of such shares, from such
purchaser). Usual and customary brokerage fees will be paid by
the Selling Stockholders. 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 such a
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 such shares from time to time in
transactions (which may involve crosses and block transactions
and which may involve sales to and through other broker-dealers,
including transactions of the nature described above) in the
Nasdaq National Market, in negotiated transactions or otherwise
at market prices prevailing at the time of sale or at negotiated
prices, and in connection with such resales may pay to or receive
from the purchasers of such shares commissions computed as
described above.
Each Selling Stockholder and any other persons participating
in a distribution of securities will be subject to applicable
provisions of the Exchange Act and the rules and regulations
thereunder, including, without limitation, Regulation M, which
may restrict certain activities of, and limit the timing of
purchases and sales of securities by, Selling Stockholders and
other persons participating in a distribution of securities.
Furthermore, under Regulation M, persons engaged in a
distribution of securities are prohibited from simultaneously
engaging in market making and certain other activities with
respect to such securities for a specified period of time prior
to the commencement of such distributions subject to specified
exceptions or exemptions. All of the foregoing may affect the
marketability of the securities offered hereby.
Any securities covered by this Prospectus that qualify for
sale pursuant to Rule 144 under the Securities Act may be sold
under that Rule rather than pursuant to this Prospectus.
There can be no assurance that the Selling Stockholders will
sell any or all of the shares of Common Stock offered by them
hereunder.
LEGAL MATTERS
Counsel for the Company, Murtha, Cullina, Richter and
Pinney, CityPlace I, 185 Asylum Street, Hartford, Connecticut
06103-3469, has rendered an opinion to the effect that the Common
Stock offered for resale hereby is duly and validly issued, fully
paid and non-assessable. Willard F. Pinney, Jr., a partner in
such firm, is a stockholder of the Company as well as Corporate
Secretary and a Director.
EXPERTS
The financial statements incorporated in this Prospectus by
reference to the Annual Report on Form 10-K of Accent Color
Sciences, Inc. for the year ended December 31, 1996 have been so
incorporated in reliance on the report of Price Waterhouse LLP,
independent accountants, given on the authority of said firm as
experts in auditing and accounting.
ADDITIONAL INFORMATION
The Company has filed with the Commission a Registration
Statement on Form S-3, under the Securities Act, with respect to
the shares of Common Stock offered hereby. This Prospectus does
not contain all of the information set forth in the Registration
Statement and the exhibits thereto. For further information with
respect to the Company and the Common Stock offered hereby,
reference is made to the Registration Statement and the exhibits
filed therewith or incorporated by reference. Statements
contained in this Prospectus regarding the contents of any
contract or any other document referred to are necessarily
incomplete, and in each instance reference is made to the copy of
such contract or other document filed as an exhibit to the
Registration Statement or otherwise filed with the Commission,
each statement being qualified in all respects by such reference.
The Registration Statement may be inspected without charge at the
offices of the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549, and copies of all or any part thereof may be obtained
from such office upon the payment of the fees prescribed by the
Commission.
ACCENT COLOR SCIENCES, INC.
REGISTRATION STATEMENT ON FORM S-3
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
AMOUNT
- ----------
Registration Fees - Securities and
Exchange Commission $1,998.52
Legal Fees and Expenses... 10,000.00*
Accounting Fees and Expenses... 7,500.00*
TOTAL......................................$ 19,498.52
=======
*Estimated.
The Company shall pay reasonable legal and accounting fees,
filing and registration fees of the Registration. The Selling
Stockholder shall pay all commissions, transfer taxes, and the
fees and expenses of counsel to the Selling Stockholders.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company is a Connecticut corporation. Sections 33-770
through 33-778 of the Connecticut Act provide that, unless
limited by its certificate of incorporation, a corporation shall
indemnify any director or officer of the corporation against
reasonable expenses incurred by him in connection with any
action, suit or proceeding in which he is made or is threatened
to be made a party by reason of having been a director or officer
of the corporation if he was wholly successful in the action, on
the merits or otherwise.
In addition, such sections of the Connecticut Act allow a
corporation by action of the Board of Directors to indemnify an
individual made a party to a proceeding because he was a director
or officer of the corporation if: (1) he conducted himself in
good faith, and (2) he reasonably believed (A) in the case of
conduct in his official capacity with the corporation, his
conduct was in the best interests of the corporation and (B) in
all other cases, that his conduct was at least not opposed to the
best interests of the corporation and (3) in the case of any
criminal proceeding, he had no reasonable cause to believe his
conduct was unlawful. Section 33-771 also provides, however,
that a corporation may not indemnify a director or officer (1) in
connection with a proceeding by or in the right of the
corporation in which the director or officer was adjudged liable
to the corporation or (2) in connection with any other proceeding
charging improper personal benefit to the director or officer in
which he was adjudged liable on the basis that personal benefit
was improperly received by him, whether or not the action
involved was taken in his official capacity.
The Restated Certificate of Incorporation of the Company
includes a provision limiting the personal liability of a
director to the Company or its shareholders for monetary damages
for breach of duty as a director, to an amount equal to the
amount of compensation received by the Director for serving the
Company during the calendar year in which the violation occurred,
subject to a number of exceptions, including violations involving
a knowing and culpable violation of law, a breach of duty which
enables a director or an associate to receive an improper
personal gain, conduct showing a lack of good faith and conscious
disregard of duty to the Company, a sustained and unexcused
pattern of inattention, or the approval of an illegal
distribution of assets of the Company to its shareholders. An
associate of a director, in terms of improper personal gains, is
defined as (A) any corporation or organization of which a Company
director is an officer or partner or is, directly or indirectly,
the beneficial owner of ten percent or more of any class of
voting stock, (B) any trust or other estate in which a Company
director has at least ten percent beneficial interest or as to
which a Company director serves as trustee or in a similar
fiduciary capacity and (C) any relative or spouse of a Company
director, or any relative of such spouse who has the same name as
the Company director. In addition, the Company also maintains a
directors' and officers' insurance and reimbursement policy.
Item 16. EXHIBITS.
3 (i) Restated Certificate of Incorporation of the
Registrant, as amended*
3 (ii) Bylaws of the Registrant, as amended December 29, 1997**
5 Opinion of Murtha, Cullina, Richter and Pinney***
23 (i) Consent of Murtha, Cullina, Richter and Pinney
(included in the opinion under Exhibit 5)
23 (ii) Consent of Price Waterhouse LLP***
24 Power of Attorney pursuant to which this Registration
Statement is signed by certain Directors**
* incorporated by reference to Exhibit 3(ii) filed in connection
with the Current Report on Form 8-K dated January 9, 1998 and
filed with the Commission
** previously filed with the Registration Statement on Form S-3
filed with the Commission on December 30, 1997
*** refiled herewith
Item 17. UNDERTAKINGS.
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, to the extent that the
information required to be included in the post-effective
amendment is not contained in periodic reports filed by the
Company with or furnished to the SEC pursuant to Section 13 or
Section 15(d)of the Securities Exchange Act of 1934 and
incorporated by reference herein;
(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, represent a fundamental change
in the information set forth in the Registration Statement, to
the extent that the information required to be included in the
post-effective amendment is not contained in periodic reports
filed by the Company with or furnished to the SEC pursuant to
Section 13 or Section 15(d)of the Securities Exchange Act of 1934
and incorporated by reference herein; and
(iii) To include any material information with
respect to the plan of distribution not previously disclosed in
the Registration Statement or any material change to such
information in the Registration Statement.
(2) That, for the purpose of determining any liability under
the Securities Act, 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.
The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act,
each filing of the Registrant's annual report pursuant to Section
13(a) or Section 15(d) of the Exchange Act that is incorporated
by reference in this Registration Statement 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.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act
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 and will be governed by
the final adjudication of such issue.
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 Amendment No. 1 to the Registration
Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of East Hartford, State of
Connecticut on this 22nd day of January 1998.
ACCENT COLOR SCIENCES, INC.
By: /s/ Normal L. Milliard
Title: President, Chief
Executive Officer and Director
Pursuant to the requirements of the Securities Act of 1933,
this Amendment No. 1 to the Registration Statement has been
signed below by the following persons in the capacities and on
the dates indicated.
Signature Title Date
/s/ Norman L. Milliard President, January 22, 1998
Chief Executive
- ----------------------- Officer(Principal
Norman L. Milliard Executive Officer)
and Director
/s/ Patrick J. Pedonti
- ----------------------- Chief Financial January 22, 1998
Patrick J. Pedonti Officer and
Treasurer
(Principal Financial
and Accounting Officer)
* Director - January 22, 1998
- -----------------------
Richard J. Coburn
* Director -
- -----------------------
Richard Hodgson
* Director -
- -----------------------
Willard F. Pinney, Jr.
* Director -
- -----------------------
Robert H. Steele
/s/ Norman L. Milliard January 22, 1998
- -----------------------
Norman L. Milliard,
Attorney-in-Fact
* Signature by Attorney-in-Fact
EXHIBIT INDEX
Exhibit No. Description Page No.
- -------- ---------- ------
3 (i) Restated Certificate of Incorporation
of the Registrant, as amended *
3 (ii) Bylaws of the Registrant, as amended December 29,
1997 **
5 Opinion of Murtha, Cullina, Richter and Pinney ***
23 (i) Consent of Murtha, Cullina, Richter and Pinney
(included in the opinion under Exhibit 5)
23 (ii) Consent of Price Waterhouse LLP ***
24 Power of Attorney pursuant to which this
Registration Statement is signed by Certain Directors **
* incorporated by reference to Exhibit 3(ii) filed in connection
with the Current Report on Form 8-K dated January 9, 1998 and
filed with the Commission
** previously filed with the Registration Statement on Form S-3
filed with the Commission on December 30, 1997
*** refiled herewith
Securities and Exchange Commission
January 22, 1998
Page 2
January 22, 1998
Securities and Exchange Commission
450 Fifth Street, N.W.
Judiciary Plaza
Washington, D.C. 20549
Re: Accent Color Sciences, Inc.
Ladies and Gentlemen:
We have acted as counsel for Accent Color Sciences, Inc., a
Connecticut corporation ("the Company"), in connection with the
registration by the Company of up to an aggregate of 2,605,781
shares of the Company's common stock, without par value (the
"Common Stock"), for the account of certain security holders of
the Company (the "Registration") as described in the Company's
Registration Statement on Form S-3 (the "Registration Statement")
being filed this date under the Securities Act of 1933, as
amended.
In connection with the following opinion, we have reviewed
the Registration Statement and are familiar with the action taken
by the Company to date with respect to the approval and
authorization of the Registration. We have examined originals,
or copies, certified or otherwise authenticated to our
satisfaction, of such corporate records of the Company,
agreements and other instruments, certificates of public
officials, officers and representatives of the Company and such
other documents as we have deemed necessary as a basis for the
opinion hereinafter expressed. We are furnishing this opinion in
connection with the filing of the Registration Statement.
Based upon the foregoing, we are of the opinion that, upon
the effectiveness of the Registration Statement, the shares of
Common Stock proposed to be registered by the Company under the
Registration Statement will be, when sold, validly issued, fully
paid and non-assessable.
We hereby consent to the inclusion of this opinion as an
exhibit to the Registration Statement and to the reference to our
firm under the caption "Legal Matters" in the prospectus
constituting a part of the Registration Statement.
Very truly yours,
MURTHA, CULLINA, RICHTER AND PINNEY
By /s/ Willard F. Pinney, Jr.
Willard F. Pinney, Jr.
A Partner
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the
Prospectus constituting part of this Amendment No. 1 to the
Registration Statement on Form S-3 of our report dated
February 26, 1997, except as to Note 13, which is as of
March 27, 1997, appearing on page 16 of Accent Color Sciences,
Inc.'s Annual Report on Form 10-K for the year ended
December 31, 1996. We also consent to the reference to us under
the heading "Experts" in such Prospectus.
/s/ Price Waterhouse LLP
Hartford, CT
January 22, 1998
