As filed with the Securities and Exchange Commission on June 14, 2000
Registration No. 333-30130
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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Amendment No. 3 to
FORM S-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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ACCENT COLOR SCIENCES, INC.
(Exact Name of Registrant as Specified in its Charter)
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(State or other (Address, including Zip Code, (I.R.S. Employer
Jurisdiction of and Telephone Number, including Identification
Incorporation or Area Code, of Registrant's Number)
Organization) Principal Executive Offices)
800 Connecticut Boulevard
CONNECTICUT East Hartford, Connecticut, 06108 06-1380314
(860) 610-4000
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(Name, Address, including Zip Code, and Telephone Number, including Area
Code, of Agent for Service)
Copy To:
Charles E. Buchheit --------
President and Chief Executive Officer Willard F. Pinney, Jr.
Accent Color Sciences, Inc. Murtha, Cullina, Richter and Pinney, LLP
800 Connecticut Boulevard CityPlace I 185 Asylum Street, 29th Floor
East Hartford, Connecticut 06108 Hartford, Connecticut 06103-3469
(860) 610-4000 (860) 240-6000
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Approximate date of the start of proposed sale to the public: From time to
time after this registration statement becomes effective.
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 check the following box.[X]
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If the registrant elects to deliver its latest annual report to security
holders, or a complete and legible facsimile thereof, pursuant to Item
11(a)(1) of this Form, 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
registrations 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. [ ]
The registrant 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 the date as the Commission, acting pursuant to said Section 8(a),
may determine.
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The information in this prospectus is not complete and may be changed. These
securities may not be sold until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell nor does it seek an offer to buy these securities in any jurisdiction
where the offer or sale is not permitted.
PROSPECTUS
12,718,750 SHARES OF COMMON STOCK
ACCENT COLOR SCIENCES, INC.
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This prospectus relates to the registration for resale of up to 12,718,750
shares of common stock of Accent Color Sciences, Inc. that are offered by the
stockholders named in this prospectus. We will not receive any of the proceeds
from sales of the shares of common stock by the selling stockholders, all of
which will go to the selling stockholders. Please see "Selling Stockholders" at
page 19.
Our common stock is traded on the Over-the-Counter Bulletin Board of the
National Association of Securities Dealers, Inc. under the symbol "ACLR". On
June 13, 2000, the last reported sale price of our common stock as reported on
the OTC Bulletin Board was $.__ per share.
---------------------------
THE SHARES OF COMMON STOCK OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK.
YOU SHOULD PURCHASE SHARES ONLY IF YOU CAN AFFORD A COMPLETE LOSS. SEE "RISK
FACTORS" BEGINNING ON PAGE 4 FOR A DISCUSSION OF THE FACTORS THAT YOU SHOULD
CONSIDER BEFORE YOU PURCHASE ANY SHARES OF OUR COMMON STOCK.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS JUNE __, 2000.
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TABLE OF CONTENTS
PAGE
About Accent Color Sciences, Inc.............................................. 3
Risk Factors.................................................................. 4
Forward Looking Statements....................................................16
Recent Developments...........................................................16
Where You Can Find More Information...........................................17
Documents We Incorporate By Reference.........................................17
Selling Stockholders..........................................................18
Use of Proceeds...............................................................27
Plan of Distribution..........................................................27
Description of Our Securities.................................................29
Legal Matters ................................................................32
Experts ......................................................................32
Index to Exhibits ............................................................41
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ABOUT ACCENT COLOR SCIENCES, INC.
We design, manufacture and sell innovative, high-speed, highlight color
printing systems ("Truecolor Systems") for integration with digital, high-speed,
monochrome printers and also sell related consumables. Highlight color printing
involves the use of color to enhance traditional monochrome documents by
accenting critical information, such as a balance due on a billing statement, or
by printing graphics, like a company logo. Truecolor Systems are designed to
print highlight color in high-speed, high-volume applications at a low
incremental cost per page without diminishing the speed or performance of the
high-speed, monochrome host printer or affecting the end user's existing
operational methods. They are capable of printing up to 501 pages per minute,
simultaneously utilizing up to eight different colors, including custom colors,
to print or highlight fixed or variable data.
We currently sell Truecolor Systems under agreements with two original
equipment manufacturers, International Business Machines Corporation and Xerox
Corporation, for resale by them as IBM or Xerox products. We also sell
consumables including standard and custom color wax-based inks, as well as spare
parts used with Truecolor Systems. We expect that consumables will generate
recurring revenue that we believe will increase as the installed base and usage
of Truecolor Systems increase.
We have incurred losses in each year since our founding and incurred a net
loss of $9,769,853 (before imputed dividend on preferred stock) for the year
ended December 31, 1998 and a net loss of $5,683,479 (before imputed dividend on
preferred stock) for the year ended December 31, 1999. As a result of these
losses, as of December 31, 1999 we had an accumulated deficit of $53,298,443. We
incurred a net loss of $1,596,313 (on an unaudited basis) for the quarter ended
March 31, 2000. Before any imputed dividends or charges related to potentially
beneficial conversion features associated with our Series C Convertible
Preferred Stock, we expect to incur quarterly net losses through the end of the
year 2000.
Accent Color was incorporated under the laws of Connecticut in May 1993.
Our principal executive offices are located at 800 Connecticut Boulevard, East
Hartford, Connecticut, 06108. Our telephone number at that address is (860)
610-4000.
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RISK FACTORS
AN INVESTMENT IN ACCENT COLOR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK.
YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS AND OTHER INFORMATION
IN THIS PROSPECTUS AND THE DOCUMENTS WE INCORPORATE BY REFERENCE IN EVALUATING
OUR COMPANY BEFORE YOU PURCHASE ANY SHARES OF OUR COMMON STOCK. IF ANY OF THE
FOLLOWING RISKS ACTUALLY OCCUR, OUR BUSINESS, FINANCIAL CONDITION OR RESULTS OF
OPERATIONS COULD BE MATERIALLY ADVERSELY AFFECTED. IN THIS CASE, THE TRADING
PRICE OF THE COMMON STOCK COULD DECLINE AND YOU MAY LOSE ALL OR PART OF YOUR
INVESTMENT.
RISKS RELATED TO OUR BUSINESS
WE HAVE AN ACCUMULATED DEFICIT AND ANTICIPATE FURTHER LOSSES, WHICH COULD
JEOPARDIZE OUR BUSINESS.
We have incurred significant losses since we began doing business and had
an accumulated deficit of $53,298,443, as of December 31, 1999. We expect to
incur quarterly net losses through the end of the year 2000. We cannot assure
you that thereafter we will be able to achieve or sustain revenue growth,
profitability or positive cash flow on either a quarterly or annual basis or
that profitability, if achieved, will be sustained. If we are unable to achieve
or sustain profitability, we may not be financially viable in the future and may
have to curtail, suspend or cease operations.
IF INCREASES IN OUR OPERATING EXPENSES OUTPACE GROWTH IN OUR REVENUES, WE
MAY SUFFER ADDITIONAL LOSSES.
Our manufacturing, marketing and research and development expenses are
based largely on our expectations regarding future revenue and are fixed to a
large extent in the short term. Our planned expenditures are based on sales
forecasts by our customers which are generally not binding. If our revenue
levels fall below expectations we could suffer a disproportionately adverse
effect on our operating results since only a small portion of our expenses vary
with revenue in the short term. In addition, if we are unable to adjust our
spending in a timely manner to compensate for any unexpected revenue shortfalls,
we may suffer additional losses that cause our business to suffer and our stock
price to decline.
If we determine to expand our manufacturing and marketing operations, we
anticipate that our operating expenses will increase. The increase in operating
expenses caused by any expansion of our manufacturing and marketing operations
could harm our operating results if our revenue does not increase at an equal or
greater rate.
IF WE SEEK TO RAISE ADDITIONAL CAPITAL IN THE FUTURE BUT ARE UNABLE TO DO
SO, WE MAY BE UNABLE TO CONTINUE OUR BUSINESS.
Depending upon our anticipated levels of revenue, costs of production and
cash flow, we may need to raise additional capital in the future to fund our
operations. If we are unable to obtain needed additional financing or generate
sufficient cash from our
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operations, we may have to reduce or eliminate expenditures for research and
development, production or marketing, or otherwise curtail or discontinue our
operations.
Since our inception, we have financed our operations through customer
payments, borrowings and the sale of debt and equity securities. From time to
time, we have raised additional funding as we have increased our marketing,
research and development and production activities related to our Truecolor
Systems. Although we experienced a slowdown in shipments of our products during
the latter half of 1999, which we believe to be due to year 2000 concerns, we
have received contractual orders and commitments for Truecolor Systems from our
OEM customers of approximately $10 million which are deliverable in the year
2000.
These currently anticipated levels of revenue and cash flow are subject to
many uncertainties and cannot be assured. Further, we may change our business
plans, or unforeseen events may occur which might require us to raise additional
funds. The need for, and the amount of, additional funds we may require will
depend on many factors, including
o the extent and timing of sales of our Truecolor Systems,
o the cost associated with sales, marketing and customer technical
support efforts, and
o our operating results.
We cannot assure you that, if needed, additional financing will be
available, or available on acceptable terms.
OUR DEPENDENCE ON A SINGLE PRODUCT LINE MAKES US PARTICULARLY VULNERABLE
TO THE POTENTIAL FAILURE TO GAIN MARKET ACCEPTANCE AND THE INTRODUCTION OF
COMPETING PRODUCTS.
Because we do not have a variety of product lines, we anticipate that we
will derive substantially all of our revenue in the foreseeable future from
sales of Truecolor Systems, related consumables and spare parts to our principal
OEM customers. If we are unable to generate enough sales of Truecolor Systems,
wax-based ink and/or spare parts due to market conditions, manufacturing
difficulties or other reasons, we may be unable to continue our business. Since
we only have a single product line, we are particularly vulnerable to the
successful introduction of products made by existing or potential competitors,
including our OEM customers which compete with our Truecolor Systems product
line.
WE HAVE A LIMITED HISTORY OF PRODUCT MANUFACTURING AND MAY NOT BE ABLE TO
SUCCESSFULLY TRANSITION TO HIGH-VOLUME PRODUCTION.
So far, we have manufactured only limited quantities of Truecolor Systems
and manufacturing costs have approximated the average selling price of a unit.
To make a profit we must manufacture our products in enough quantities and at
acceptable costs;
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however, future production in enough quantities may pose technical and financial
challenges for us. If we fail to successfully transition to high-volume
production and manufacture our products at a cost adequately below their selling
price, our operating results and business could suffer. As a result, we cannot
assure that we can make a successful transition to high-volume production of our
Truecolor Systems.
BECAUSE OUR PRODUCTS ARE NOT YET WIDELY ACCEPTED IN THE MARKETPLACE, WE
MAY BE UNABLE TO ESTABLISH MARKET SHARE AND MAY SUFFER LOSSES.
Our products are designed for the digital, high-speed production printing
and production publishing market segments that have traditionally relied on
monochrome print. Because our products offer the application of a new technology
to the end users in this market segment, we cannot assure that we will
successfully develop or market our existing or future products or, if any of
these products achieve market acceptance, that we can grow or even sustain
market acceptance. A failure of our products to achieve market acceptance could
increase our losses and harm our business.
Our existing and potential customers may conclude that our products suffer
from real or perceived problems. Any actual or perceived problems with our
products, whether or not they are significant, could have a material adverse
effect on market acceptance of these products. Even in the absence of any real
or perceived problems, our products may fail to achieve market acceptance
because potential customers may continue to rely on existing printing and
publishing techniques for their businesses.
THE INTRODUCTION OF COMPETING PRODUCTS COULD SUPPRESS DEMAND FOR OUR
TRUECOLOR SYSTEMS.
Because our Truecolor Systems have yet to gain widespread market
acceptance, the possible introduction of competing products poses a significant
threat to our success. The announcement by us or our OEM customers or other
competitors of new products and technologies designed for the digital,
high-speed production printing and production publishing market could cause
customers to defer or cancel purchases of our existing products. Such deferrals
or cancellations could increase our losses and force us to suspend or
discontinue our operations. We cannot assure you that our OEM customers,
including IBM and Xerox, or other companies will not compete with us in the
future.
WE HAVE A CONCENTRATED CUSTOMER BASE, THEREFORE THE LOSS OF A SINGLE
CUSTOMER COULD NEGATIVELY AFFECT OUR REVENUES AND OPERATING RESULTS.
We anticipate that sales of our Truecolor Systems and consumables to a
limited number of customers will account for substantially all of our revenue
for the foreseeable future. Generally, our customers (IBM and Xerox) provide
estimates, but not guarantees, of their future orders. A substantial difference
between estimated orders and actual orders by any one of our customers, or the
failure of our customers to purchase a significant number of our products, could
significantly decrease our revenues and harm our business.
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OUR BUSINESS COULD SUFFER IF THIRD PARTY MARKETING, DISTRIBUTION AND
SUPPORT EFFORTS FOR OUR PRODUCTS ARE UNSUCCESSFUL.
A significant element of our marketing strategy is to form alliances with
third parties for the marketing and distribution of our products. Any disruption
in our existing relationships with IBM or Xerox, or any future customer that
markets or distributes our products, may damage our ability to successfully
market our Truecolor Systems to end users and increase our losses. We cannot
assure you that
o we can maintain our existing alliances or form and maintain
alliances with other parties;
o we can satisfy our contractual obligations with our OEM customers;
or
o our OEM customers will devote adequate resources to market and
distribute our products successfully.
Since our products are marketed and distributed via third parties, other
factors may have a material adverse effect on the successful marketing and
distribution of our products, including:
o our limited ability to interact with the end users of our products
and to observe their experience with our products;
o our lack of control of the marketing, distribution and support
efforts of our OEM customers that may make us less responsive in
recognizing and correcting any problems experienced by the OEM
customers or the end users;
o our lack of control as to the timing of the introduction of our
products; and
o a lack of information regarding the amount of inventory currently
available which may reduce our ability to predict fluctuations in
revenue due to a surplus or a shortage of inventory.
IF SPECTRA TERMINATES OUR EXCLUSIVE RIGHTS TO INCLUDE ITS PRODUCTS IN OUR
TRUECOLOR SYSTEMS, IT COULD MARKET ITS COMPONENTS TO OUR POTENTIAL
COMPETITORS WHICH COULD DEPRESS DEMAND FOR OUR PRODUCTS.
Truecolor Systems combine our proprietary paper handling technology with
patented ink jet technology from Spectra. We have an exclusive right, under a
supply 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, monochrome printers marketed by Xerox, IBM and three other
manufacturers through December 31, 2002, however, we are currently not in
compliance with the volume purchase requirements necessary to maintain such
exclusivity. If Spectra chooses to terminate our right of exclusivity under the
supply contract (but not our right to purchase products from Spectra), it could
market its products to our potential customers which
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could depress demand for our products. If this were to occur, our revenues could
be adversely impacted and our business could suffer harm.
WE RELY ON A SOLE SOURCE SUPPLIER FOR A KEY COMPONENT OF OUR PRODUCTS. OUR
BUSINESS WOULD BE HARMED IF WE WERE UNABLE TO OBTAIN SUFFICIENT
SATISFACTORY COMPONENTS.
We rely upon Spectra to act as our sole source supplier of ink jet
printheads and the hot melt, wax-based inks used by Truecolor Systems. As we
increase the production of Truecolor Systems, we will become more reliant upon
Spectra's ability to manufacture and deliver ink jet printheads to us. Any
interruption in our ability to obtain Spectra printheads of an acceptable
quality within the time frame required by us at an affordable cost could result
in production delays and increased costs which would increase our losses and
harm our business. Our reliance on Spectra also involves the risks that we may
o be unable to obtain an adequate supply of required printheads or
inks from another supplier in the event that Spectra is unable or
unwilling to do so; and
o have a reduced level of control over the quality, pricing and timing
of delivery of these items.
WE DEPEND ON MAJOR SUBCONTRACTORS AND SUPPLIERS FOR OTHER MODULES OR PARTS
OF OUR TRUECOLOR SYSTEMS.
We rely on subcontractors and other suppliers to manufacture, subassemble
and perform testing of some modules and parts of Truecolor Systems. Although we
currently perform the final assembly and testing of various Truecolor System
components and of each complete Truecolor System, we plan to hire other parties
to manufacture major components and complete final assembly and testing of
Truecolor Systems in-house. If we do not develop relationships with, or lose,
these subcontractors or suppliers, or if the subcontractors or suppliers fail to
meet our price, quality, quantity and delivery requirements, then we may suffer
losses and fail to achieve our business objectives.
IF WE FACE EXCESSIVE PRODUCT WARRANTY CLAIMS OR FAILURE RATES, WE COULD
SUFFER INCREASED LOSSES.
We warrant that our Truecolor Systems are free of defects in workmanship
and materials. We have also agreed to repair or replace defective products
without charge when defect rates are excessive. If we experience more warranty
claims or product failure rates than we expected when we originally priced our
products and spare parts, we could suffer increased losses which may force us to
curtail or suspend our business operations.
THE LOSS OF OUR SENIOR MANAGEMENT COULD NEGATIVELY AFFECT OUR BUSINESS.
We are substantially dependent on the capabilities and services of our key
technical and management personnel, some of whom have been instrumental in
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developing our products and establishing and maintaining strategic relationships
with our key suppliers and major OEM customers. The loss or interruption of the
continued service of, and the failure to promptly replace, these key personnel
could significantly delay and may prevent the achievement of our business
objectives. These key personnel include Richard J. Coburn, our co-founder and
chairman of the board of directors, and Charles E. Buchheit, our president and
chief executive officer. Mr. Buchheit has an employment agreement with us that
expires on April 14, 2001. Mr. Buchheit may terminate his employment
relationships with us at any time with no penalty other than the loss of future
compensation.
In addition, our future success also depends on our continuing ability to
identify, hire, train and retain other highly qualified technical and managerial
personnel. Competition for these employees is intense and increasing. We may not
be able to attract, assimilate or retain qualified technical and managerial
personnel in the future, and the failure of us to do so could negatively affect
our business.
RISKS RELATED TO OUR INDUSTRY
IF WE FAIL TO KEEP PACE WITH RAPID TECHNOLOGICAL ADVANCES IN THE
HIGH-SPEED PRINTER INDUSTRY, WE MAY SUFFER ADDITIONAL LOSSES BECAUSE OF
DECLINING PRICES AND INVENTORY OBSOLESCENCE.
The high-speed printer industry is characterized by evolving technology
and changing market requirements. Our future success depends on our ability to
continue to develop and manufacture new products and to enhance existing
products. If we fail to achieve these objectives, we may suffer additional
losses on account of declining prices and inventory obsolescence. These losses
may force us to suspend or discontinue our business operations.
As a result of these competitive pressures, the enhancement of our
products is a development priority. However, in a new and evolving market,
customer preferences can change rapidly and new technology could render existing
technology and product inventory obsolete. Our failure in responding adequately
to changes in our target market, in developing or acquiring new technology or
successfully conforming to market preferences could depress sales of our
existing products and technologies.
WE MAY NOT BE ABLE TO ADEQUATELY PROTECT OUR INTELLECTUAL PROPERTY
RIGHTS. IF WE FAIL TO DO SO, OUR BUSINESS COULD SUFFER.
Because our business depends on technology, we believe the maintenance of
our patents, trademarks, service marks and other proprietary rights in our
unpatented know-how and common law trademarks and service marks is critical to
our success and competitive position. If we are unsuccessful in maintaining and
protecting these proprietary rights, third parties could copy and market
products which infringe on our proprietary rights, depressing sales of our
products and harming our business.
As of March 3, 2000, we have secured three patents from the U.S. Patent
and Trademark Office relative to the mechanical design of our paper handling and
color
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printing system, which form the core of the Truecolor Systems. In addition, we
have applied for additional U.S. and foreign patent protection relative to our
products. Our efforts to detect misappropriation of these rights may be
inadequate to prevent others, including our OEM customers, from imitating our
products and infringing on our intellectual property rights. It is also possible
that, if challenged, our intellectual property rights may be narrowed or held
invalid by a court of competent jurisdiction. If our proprietary rights were
narrowed or found to be invalid, we could face significant competition from the
sale of products that compete directly with our Truecolor Systems, preventing us
from gaining market share and leading to increased losses.
IF SPECTRA FAILS TO ADEQUATELY PROTECT ITS INTELLECTUAL PROPERTY RIGHTS,
WE COULD FACE INCREASED COSTS AND SUFFER LOSSES.
We have an exclusive right under our agreement with Spectra to supply
products including Spectra's ink jet printheads to our OEM customers. To the
extent that wax-based inks and ink jet printheads purchased from Spectra are
covered under patents or licenses, we rely on Spectra's rights under its patents
and licenses and Spectra's willingness and ability to enforce them. If Spectra
is unwilling or unable to enforce its patents and maintain its licenses against
third parties, we may be subject to increased costs (including litigation costs
related to Spectra's intellectual property rights) which could increase our
losses and damage our business reputation.
IF THIRD PARTIES CLAIM THAT WE INFRINGE THEIR PROPRIETARY RIGHTS, WE COULD
FACE INCREASED COSTS AND SUFFER SIGNIFICANT LOSSES.
We believe that our products and technology do not infringe any existing
proprietary rights of others. Other parties (including our OEM customers) could,
however, claim in the future that the products we offer have infringed their
proprietary rights. If we are unable to successfully defend against these
claims, we may face increased costs and suffer significant losses. In addition,
o third party competitors, including our OEM customers, could assert
rights in our intellectual property rights;
o competitors may have filed for patent protection that is not as yet
a matter of public knowledge; or
o a court could interpret a third-party's patents broadly so as to
cover some of our products.
We could incur substantial costs and diversion of management resources
with respect to the defense of any claims relating to proprietary rights,
whether or not the assertion of the claim is valid. Any of these claims, if
asserted successfully, could have a material adverse effect on our business,
financial condition and results of operations. Furthermore, parties making these
claims could secure a judgment awarding substantial damages, as well as
injunctive or other equitable relief, which could effectively block our ability
to make, use, sell, distribute or market its products and services in the United
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States or abroad. Any unfavorable judgment could significantly damage our
business prospects and cause a decrease in our stock price.
WE MAY BE UNABLE TO SECURE ANY NECESSARY LICENSES TO USE THIRD PARTY
INTELLECTUAL PROPERTY. IF WE FAIL TO DO SO, OUR BUSINESS COULD BE HARMED.
In the event a claim relating to proprietary technology or information is
asserted against us, we may seek licenses of that intellectual property in order
to use technology we need to conduct our business. We cannot assure you that we
could obtain a license on commercially reasonable terms, if at all, or that the
terms of any offered licenses will be acceptable. If we fail to obtain the
necessary licenses or other rights, we could be effectively precluded from the
sale, manufacture or distribution of our products. This could significantly harm
our business and depress our stock price.
IF WE ARE REQUIRED TO INDEMNIFY OUR OEM CUSTOMERS AGAINST THIRD PARTY
INFRINGEMENT CLAIMS, WE COULD SUFFER ADDITIONAL LOSSES.
We are required to indemnify our OEM customers against third party
infringement claims. If any such infringement claims are asserted against our
OEM customers, we may be required to indemnify our OEM customers against any
such claims. If this occurs, we may suffer additional losses which would harm
our business and could depress our stock price.
COMPETITION COULD PREVENT OUR EFFORTS TO ESTABLISH MARKET ACCEPTANCE AND
INCREASE MARKET SHARE FOR OUR PRODUCTS.
We compete, 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 our products to print variable data, in multiple standard
and custom colors at high speeds. Our current and future competitors may be able
to develop products that are more attractive to customers than our products. If
we are unable to compete successfully in this marketplace, we may fail to
capture the market share necessary to achieve profitability and may suffer
increased losses.
Competition to supply high-speed color printing is fragmented. Many of our
competitors and potential competitors have substantially greater financial and
technical resources, longer operating histories, greater name recognition and
more extensive customer bases that could be used to gain market share or product
acceptance. In addition to direct competition from other firms utilizing
high-speed color technologies, we face 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.
Other companies may introduce products or product improvements based on
new technologies with little or no advance notice. Manufacturers of high-speed,
monochrome printers may also, in time, develop comparable or more effective
color capability within their own products which may render our products
obsolete. If we are unable to compete
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against future competitors successfully, the competitive pressures we face could
have a material adverse effect upon the success of our business.
WE MAY NOT BE SUCCESSFUL IN OUR EFFORTS TO EXPAND INTO INTERNATIONAL
MARKETS.
As part of our business strategy, our OEM customers market and sell our
products to end users outside the United States. We intend to increase our
revenues derived from the sale of our products outside the United States, but
may be unable to do so if our OEM customers are unable to successfully market
our products to international end users. International sales are subject to
certain inherent risks, including:
o unexpected changes in regulatory requirements;
o export and import restrictions, tariffs and other trade barriers;
o government controls and potential political instability; and
o potentially adverse tax consequences.
Any of the above factors or events could prevent or depress international demand
for our Truecolor Systems and have a significant negative effect on our revenues
and profitability.
RISKS RELATED TO THE OFFERING
THE PRICE OF OUR COMMON STOCK IS VOLATILE, WHICH COULD HINDER YOUR ABILITY
TO SELL YOUR STOCK AND AVOID A LOSS ON YOUR INVESTMENT.
Since March 1999, our common stock has been quoted and traded in the
over-the-counter market on the "Electronic Bulletin Board" of the National
Association of Securities Dealers, Inc. under the symbol "ACLR." The market
price of our common stock has fluctuated in the past and may continue to be
volatile in the future. As a result of this volatility, you may find it more
difficult to sell our stock in a declining market and avoid a loss on your
investment than if our shares were traded on a national securities exchange or
on the Nasdaq national market.
OUR QUARTERLY OPERATING RESULTS MAY NOT BE A GOOD INDICATOR OF FUTURE
RESULTS AND MAY CAUSE OUR STOCK PRICE TO FLUCTUATE SIGNIFICANTLY. THESE
FLUCTUATIONS COULD RESULT IN LOWER PRICES FOR OUR STOCK.
We expect our quarterly operating results to fluctuate significantly in
the future based upon a number of factors, some of which are outside our
control. As a result, it is possible that our operating results may be below the
expectations of investors in some future period. If this were to occur, the
trading price of our common stock would likely decline, perhaps significantly.
The factors which affect whether our operating results fluctuate include:
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o the volume, timing, delivery and acceptance of customer orders;
o the rate of customer and end-user acceptance of our products and the
volume or nature of warranty claims;
o the market acceptance of host printing systems offered by our OEM
customers;
o the possible introduction of competing products that could adversely
affect demand for our Truecolor Systems;
o changes in our pricing policies or those of our OEM customers or
competitors;
o the relative proportion of printer and consumables sales;
o the timely availability of sufficient volume of sole source
components;
o fluctuations in our research and development expenditures;
o the availability of financing arrangements for certain of our
customers; and
o economic conditions specific to the high-speed printer industry and
general economic conditions.
Additionally, because the purchase of a printing system and peripherals is
expensive, it may take a significant amount of time from the first sales
negotiations for a customer to complete and pay for its purchase. We expect
fluctuations in our revenue from quarter to quarter to apply to the purchase of
our systems. Since we sell few units at high average prices, a delay in either
the sale or the receipt of the purchase price for only a few units could have a
considerable adverse effect on the results of operations for a fiscal quarter.
OUR DIVIDEND POLICY COULD DEPRESS OUR STOCK PRICE AND HARM OUR
STOCKHOLDERS.
We have never declared or paid dividends on our common stock and do not
anticipate declaring or paying any dividends in the foreseeable future. We plan
to retain any future earnings to reduce our accumulated deficit and finance
growth. As a result, our dividend policy could depress the market price for our
common stock and cause investors to lose some or all of their investment.
OUR ANTI-TAKEOVER PROVISIONS COULD DELAY OR PREVENT A CHANGE IN CONTROL
AND THEREFORE HURT OUR STOCKHOLDERS.
Our Restated Certificate of Incorporation contains provisions that could
discourage a proxy contest or make more difficult the acquisition of a
substantial block of our common stock. For example, our directors are elected on
a rotating basis each year,
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which could make a change in the composition of the board of directors more
difficult and could hinder a third party attempt to acquire control of the
company, even if such change of control might benefit the shareholders. If a
third party sought to acquire control by offering our shareholders a premium for
their common stock but was prevented from succeeding with its offer, our
shareholders would not be able to realize the value of the offered premium for
their shares.
In addition, the board of directors may issue additional 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. If the board of
directors decides to issue this stock it could discourage an unsolicited attempt
to acquire us. As a Connecticut corporation, we are also subject to the
Connecticut Business Corporation Act, some provisions of which might prevent a
change of control, even a change of control that might benefit the company and
its shareholders.
SHARES ELIGIBLE FOR PUBLIC SALE AFTER THIS OFFERING WILL DILUTE THE
INTERESTS OF OUR EXISTING STOCKHOLDERS AND COULD ADVERSELY AFFECT OUR
STOCK PRICE.
We have outstanding options and warrants to acquire 7,426,097 shares of
our common stock. Future sales in the public market of substantial amounts of
this stock will dilute the ownership interests of our existing shareholders. In
addition, the perception that such sales may occur could cause the market price
of our stock to drop significantly, even if our business is doing well. A
decline in our stock price could also impair our ability to raise capital
through the offering of additional debt or equity securities. Such future sales
of common stock include shares:
o issuable upon the exercise of outstanding options we have granted;
o issuable upon the exercise of outstanding warrants we have granted;
and
As of April 19, 2000, we had 22,390,858 shares of common stock issued and
outstanding. If all our outstanding warrants and options are exercised, we will
have approximately 29,816,955 shares of common stock outstanding, or a 33.2%
increase over the amount of our common stock currently issued and outstanding.
OUR CURRENT PREFERRED STOCKHOLDERS WERE ISSUED SHARES AT A DISCOUNT TO THE
MARKET PRICE. IF WE ISSUE ADDITIONAL SHARES AT A DISCOUNT TO THE MARKET
PRICE, OUR STOCK PRICE COULD DECLINE.
At the time of issuance, the terms of conversion of the Series B stock and
the Series C stock afforded the holders a conversion price lower than the market
price of the common stock at the time of issuance of the shares of each series.
Because we issued the Series B and Series C preferred stock at discounts to the
then-current market price of our common stock, the issuances had a dilutive
effect on our common stockholders' equity. If we raise additional financing in
the future by issuing shares at below market prices, our stock price may decline
because of the additional dilutive effects on our stockholders' equity caused by
the below-market issuances.
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IF OUR PREFERRED STOCKHOLDERS CONVERT THEIR SHARES AND SELL THEIR COMMON
STOCK, OUR EXISTING STOCKHOLDERS WILL SUFFER DILUTION AND OUR STOCK PRICE
MAY DECLINE.
As of April 19, 2000, we had outstanding 1,158 shares of Series B
preferred stock and 33,589 Series C preferred stock which together have the
right to convert into a total of 9,573,235 shares of our common stock. As is the
case with our outstanding options and warrants, future sales in the public
market of substantial amounts of this stock will dilute the ownership interests
of our existing shareholders and could depress our stock price.
Both our Series C and Series B preferred stock utilize a fixed conversion
price of $.40 per share. Therefore, our preferred shareholders have an economic
incentive to convert their shares at any time during which the market price of
our common stock exceeds $.40 per share. If all the outstanding shares of series
C and series B preferred stock are converted into shares of common stock and
such common stock is sold, we will have approximately 31,964,093 shares of
common stock outstanding, or a 42.8% increase over the amount of our common
stock currently outstanding.
If all of the selling stockholders holding exercise or conversion rights
elect to fully exercise or convert their warrants or preferred shares into
shares of our common stock, such selling stockholders would own in the aggregate
(taking into account shares currently held by such stockholders) approximately
12,398,017 shares, which would represent approximately 34.5% of the total voting
power of our outstanding common and preferred stock (taking into account the
right of the holder of our Series B preferred stock to vote 1,175,985 shares of
common stock as of April 19, 2000 pursuant to the terms of our Certificate of
Incorporation).
If all the outstanding shares of series C and series B preferred stock are
converted into shares of common stock and if all of our outstanding warrants and
options are exercised, we will have approximately 39,390,190 shares of common
stock outstanding, or a 75.9% increase over the amount of our common stock
currently outstanding.
ANY DECLINE IN OUR STOCK PRICE ACCOMPANYING THE RESALE OF COMMON STOCK BY
OUR PREFERRED STOCKHOLDERS COULD BE ACCELERATED, BECAUSE THIRD-PARTY
INVESTORS MAY ENTER INTO SIGNIFICANT SHORT POSITIONS OF OUR COMMON STOCK,
HOPING TO PROFIT FROM THE PERCEIVED EFFECTS THAT SUCH RESALES WILL HAVE ON
THE MARKET PRICE FOR OUR COMMON STOCK.
The holders of our Series C stock may elect to convert their preferred
shares after the date on which this registration statement becomes effective and
resell publicly some or all of these shares, which could trigger a decline in
our stock price. Third-party investors who did not participate in our Series C
financing might enter into short positions with regard to our common stock
contemporaneously with, or in anticipation of, any such possible resales by our
Series C shareholders. If third-party investors establish short positions, or
significantly increase their pre-existing short positions, and our Series C
holders convert and sell all or a significant portion of their investment, any
resulting
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stock price decline could be accelerated and our stockholders could suffer
losses on their investments.
FORWARD-LOOKING STATEMENTS
In this prospectus and the documents that we incorporate by reference, we
make statements that relate to our future plans, objectives, expectations and
intentions that involve risks and uncertainties. We have based these statements
on our current expectations and projections about future events. These
statements may be identified by the use of words such as "expect," "anticipate,"
"intend," "plan," "believe" and "estimate" and similar expressions. Any
statements that refer to expectations, projections or other characterizations of
future events or circumstances are forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995, and are subject to the
safe harbor created by that Act.
Forward-looking statements necessarily involve risks and uncertainties.
Our actual results could differ materially from those discussed in, or implied
by, these forward-looking statements. Factors that could contribute to such
differences include, but are not limited to, those discussed in the "Risk
Factors" section beginning at page 4 and elsewhere in this prospectus. The
factors set forth in the Risk Factors section and other cautionary statements
made in this prospectus should be read and understood as being applicable to all
related forward-looking statements wherever they appear in this prospectus.
All subsequent written and oral forward-looking statements attributable to
us are expressly qualified in their entirety by the cautionary statements. You
are cautioned not to place undue reliance on these forward-looking statements,
which speak only as of their dates. We undertake no obligations to publicly
update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise.
RECENT DEVELOPMENTS
ADDITION OF RICHARD A. HANSEN TO OUR BOARD OF DIRECTORS
Richard A. Hansen was elected by our board of directors as an
additional member of the board on January 31, 2000. Mr. Hansen founded the
investment banking firm Pennsylvania Merchant Group, Ltd. in 1986 and has
served as its Chairman and Chief Executive Officer for the past thirteen
years. Mr. Hansen also founded Radnor Venture Partners, a venture capital
fund, which was co-managed by PMG and Safeguard Scientifics, Inc. Prior to
forming PMG, Mr. Hansen served as a Vice President with Kidder Peabody & Co.,
Inc. and as Senior Vice President with Blyth Eastman Dillon which was
acquired by PaineWebber Group Inc. Prior to his investment banking career,
he worked for Air Products & Chemicals specializing in merger and acquisition
activity.
Mr. Hansen serves on the board of directors of several private and
public technology-based companies including Ultralife Batteries and Computone
Corporation. He received a B.S. in Mechanical Engineering from the Rochester
Institute of Technology and an M.S. in Industrial Administration from the
Krannert Graduate School of Business of Purdue University.
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DEATH OF RICHARD HODGSON
On March 4, 2000, Richard Hodgson, a director of the company since 1996,
died unexpectedly in an automobile accident. The board of directors has
determined not to fill the vacancy created by Mr. Hodgson's death at this time.
WHERE YOU CAN FIND MORE INFORMATION
We are a public company and file annual, quarterly and special reports and
other information with the SEC. You may read and copy any documents we file at
the SEC's Public Reference Room, 450 Fifth Street, N.W., Washington, D.C. 20549.
You may obtain further information on the operation of the Public Reference Room
by calling the SEC at 1-800-SEC-0330. You can obtain copies of this material
from the Public Reference Section of the SEC, Washington, D.C. 20549, at
prescribed rates. Our reports, proxy and information statements and other
information are also available to the public at the SEC's web site. The Internet
address of that site is http://www.sec.gov.
This prospectus is only part of an amended registration statement filed on
Form S-2 with the SEC under the Securities Act of 1933, as amended, and
therefore omits certain information contained in the registration statement. We
have also filed exhibits and schedules with the registration statement that are
excluded from this prospectus, and you should refer to the applicable exhibit or
schedule for a complete description of any statement referring to any contract
or other document. You may inspect a copy of the registration statement,
including the exhibits and schedules, without charge at the SEC's public
reference room or through its web site.
DOCUMENTS WE INCORPORATE BY REFERENCE
The SEC allows us to "incorporate by reference" the information we file with
it, which means that we can disclose important information to you by referring
you to other documents that contain the information. The information we
incorporate by reference is considered to be a part of this prospectus and
automatically updates and supersedes previously filed information. We
incorporate by reference the following filings and all of our subsequent filings
made pursuant to the Securities Exchange Act of 1934, as amended, prior to the
effectiveness of the registration statement:
o our annual report on Form 10-K for the year ended December 31, 1999;
and
o our quarterly report on Form 10-Q for the period ended March 31,
2000.
Any statement contained in a document incorporated or deemed to be
incorporated by reference in this prospectus shall be deemed to be modified or
superseded for purposes of this prospectus to the extent that a statement
contained herein or in any subsequently filed document which also is or is
deemed to be incorporated by reference herein, modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this prospectus.
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Our latest annual report to stockholders (which includes our Form 10-K for
the year ended December 31, 1999) and our quarterly report on Form 10-Q for the
period ended March 31, 2000 will be delivered together with this prospectus.
You may request additional copies of our Form 10-K for the year ended
December 31, 1999 (including any exhibits thereto) and/or our quarterly report
on Form 10-Q for the period ended March 31, 2000 (including any exhibits
thereto), at no cost, by writing or telephoning us at the following address:
Accent Color Sciences, Inc.
800 Connecticut Boulevard
East Hartford, Connecticut 06108
Attention: Chief Financial Officer
Telephone: (860) 610-4000
Our internet web address is http://www.accentcolor.com. Information
contained on our web site or in our promotional literature is not incorporated
into this prospectus.
You should rely only on the information contained or incorporated by
reference in this prospectus. We have not authorized anyone (including any
broker or salesman) to provide you with information different from that
contained in this prospectus. If anyone provides you with different or
inconsistent information, you should not rely on it. The selling stockholders
are offering to sell and seeking offers to buy shares of our common stock only
in jurisdictions where offers and sales are permitted. You should assume that
the information contained in this prospectus is accurate only as of the date
hereof. You should not assume that this prospectus is accurate as of any other
date.
SELLING STOCKHOLDERS
The shares offered for sale by this prospectus include
o shares issuable upon conversion of the outstanding shares of our
Series C Convertible Preferred Stock; or
o shares previously issued in connection with private placements of
our common stock; or
o shares issuable upon the exercise of warrants that we have granted.
Except as otherwise described in this section or in the footnotes to the
table set forth below, each of the persons listed in the table below purchased
shares of our series C preferred stock in the 1999 private placement.
This prospectus will not be used for the resale of any shares of common
stock issuable upon conversion of shares of our outstanding Series B preferred
stock which was issued in January 1998.
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1999 PRIVATE PLACEMENT OF SERIES C PREFERRED STOCK
On December 7, 1999, we completed an offering of 33,589 shares of series C
preferred stock. The shares of preferred stock were sold at a purchase price of
$100 per share. The Company's net proceeds from this issuance was $2,894,822. In
connection with the issuance of the series C preferred stock, the Company issued
warrants to acquire 71,473 shares of common stock at an exercise price of $.40
per share as partial consideration for placement agent services. SEE
"Description of Our Securities" below.
The series C preferred stock is convertible at any time into shares of the
Company's common stock at a fixed conversion rate of $.40 divided into the $100
purchase price per share (or at a rate of 250 shares of common stock for each
preferred share). Therefore, all outstanding shares of series C preferred stock
are convertible into 8,397,250 shares of common stock. The number of shares
reserved for issuance pursuant to the conversion of the 33,589 shares of
outstanding series C preferred stock was 8,397,250 shares of common stock. All
of these 8,397,250 shares of common stock issuable upon conversion are included
in the table set forth below.
Series C holders are entitled to receive cumulative dividends at a rate of
8% per year of the initial purchase price of $100 per share but only upon the
occurrence of a Liquidation Event, provided that any such dividend is coupled
with an equivalent ratable dividend to the holders of the series B preferred
stock. A "Liquidation Event" is defined to include a merger (except a merger in
which Accent Color is the surviving entity), consolidation, dissolution, winding
up or sale of substantially all of the assets of the company, unless the holders
of at least 75% of the series B and series C stock determine that any such event
is not a Liquidation Event.
SEPTEMBER 7, 1999 BRIDGE FINANCING
The table set forth below also includes shares being registered pursuant
to the exercise of "piggy-back" registration rights which we have agreed to in
the past in connection with previous private placement financings. These include
shares previously issued and shares issuable under outstanding warrants to
purchase our common stock. Except as noted in "Other Transactions" or in the
table and footnotes below, these shares are held by, or are issuable upon the
exercise of warrants held by, two institutional purchasers, the PMG Eagle Fund
and Orbis Pension Trustees Limited. These two investors participated in an
interim or "bridge" financing which concluded on September 7, 1999.
On September 7, 1999, we received $502,719 from the sale of 1,100,000
shares of our common stock to the PMG Eagle Fund. In conjunction with this sale
of common stock, we issued 550,000 warrants to PMG Eagle Fund to purchase common
stock at an exercise price of the lower of $.50 per share of common stock or the
per share common stock equivalent price in our next equity offering involving
net proceeds of at least $1,100,000. On the same day, we also sold a Series A
Convertible Subordinated Note with a face value of $550,000 to Orbis Pension
Fund Trustees. In conjunction with the sale of the series A note, we issued
275,000 warrants to purchase common stock and
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275,000 warrants to purchase common stock contingent upon the noteholder
converting its series A note to common stock.
The warrants were issued at an exercise price of the lower of $0.50 per
share of common stock or the per share common stock equivalent price in our next
equity offering in which we receive net proceeds of at least $1,100,000. The
note accrued interest at the rate of 7% per year. The conversion price of the
note was $0.50 per share of common stock, provided that both this conversion
price and the shares simultaneously sold were subject to adjustment should our
next equity financing resulting in net proceeds to us of at least $1,100,000 be
at a common share equivalent price of less than $0.50 per share.
Therefore, the Series C financing discussed above which was at a per
common share equivalent price of $.40 resulted in three adjustments with respect
to the September 7, 1999 financing as follows:
o the issuance of an additional 275,000 shares to the PMG Eagle Fund
without further consideration thereby adjusting the overall costs of
shares acquired by the PMG Eagle Fund to $0.40 per common share;
o the adjustment of the conversion price under the series A note sold
to Orbis Pension Fund Trustees to $.40 per common share; and
o the adjustment of the exercise price under the warrants issued to
both purchasers to $0.40 per common share with corresponding
adjustments in the number of shares into which the series A note
could be converted and for which such warrants could be exercised.
Simultaneous with the closing of the Series C financing, Orbis Pension
Fund Trustees converted the series A note into 1,375,000 shares of our common
stock.
OTHER TRANSACTIONS
On May 25, 1999, we issued 60,000 shares to Pacific Alliance Limited, LLC,
as payment for services rendered to us. Pacific Alliance is an investment
banking firm that we retained in April 1999 to advise the company with respect
to a number of alternative financing strategies, including a further equity
financing. We issued an additional 10,000 shares to Pacific Alliance in January
2000 as final settlement for services rendered to us pursuant to the April 1999
letter agreement which had been terminated in July 1999. See note 18 to the
table below.
On October 16, 1997, we issued warrants to Elizabeth Steele to purchase
1,500 shares of common stock which were included in units of common stock and
warrants sold in a private financing. See note 23 to the table below.
SELLING STOCKHOLDER TABLE
The following table sets forth the name of each selling stockholder, the
number of shares of common stock beneficially owned by the selling stockholder
as of February 11,
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2000, the number of shares being offered by each selling stockholder and the
number and (where appropriate, the percentage) of shares held by the beneficial
owner after completion of the offering assuming that all shares offered by the
selling stockholders are sold. Except as set forth in the footnotes to the
table, none of the selling stockholders has held any position or office with, or
otherwise had a material relationship with, us in the past three years. All
information is taken from or based on ownership filings made by such persons
with the Securities and Exchange Commission or upon information provided to us
by such persons or their agents.
The selling stockholders are acting individually, not as a group. The
shares which may be offered are being registered to permit public secondary
trading, and the selling stockholders may offer all or part of the shares for
resale from time to time. However, the selling stockholders are under no
obligation to sell all or any portion of the shares nor are the selling
stockholders obligated to sell any shares immediately under this prospectus.
Because the selling stockholders may sell all or part of their shares, we cannot
estimate the number of shares a selling stockholder will hold upon termination
of any offering made pursuant to this registration statement. However, the
following table assumes that all shares included in the offering will be sold.
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NUMBER OF
---------
SHARES SHARES TO BE SHARES BENEFICIALLY
------ ------------ -------------------
BENEFICIALLY INCLUDED OWNED AFTER THE
------------ -------- ---------------
NAME OF SELLING OWNED PRIOR TO IN THE OFFERING (1)(2)
---------------- -------------- -------- ---------------
STOCKHOLDER THE OFFERING (1) OFFERING
----------- ------------- --------
NUMBER PERCENT
------ -------
Billy Parrish #(3) 100,000 62,000 38,000 *
Donald R. Allred #(4) 78,851 43,750 35,101 *
James S. Allsopp # 435,928 250,000 185,928 *
Banque Jenni & Cie, S.A#(5) 100,000 70,000 30,000 *
Robert A. Bedingfield # 62,500 62,500 0 0
Ronald Chao #(6) 636,986 500,000 136,986 *
Joseph T. Brophy #(7) 330,649 250,000 80,649 *
William P. Brown # 50,000 45,000 5,000 *
Charles E. Buchheit #(8) 308,334 100,000 208,334 *
Frank J. Campbell III # (9) 172,000 140,000 32,000 *
Deed of Trust of Frank J 70,526 60,000 10,526 *
Campbell Settlor Dtd
12/30/96, C. Crochiere,
K. Lynam & J. Meyers
Co-TTEES. #(10)
Frank J. Campbell III and 75,000 75,000 0 0
Richard A. Hansen TTEES
Trust U/W Jane D
Campbell #
Richard J. Coburn #(11) 504,303 25,000 479,303 1.3
Thomas D. Cunningham # 250,000 250,000 0 0
Robert G. Donovan # 75,698 62,500 13,698 *
Samuel Garre III # 70,000 40,000 30,000 *
Richard C. Goodwin # 150,000 150,000 0 0
E. Bulkeley and Lila K 77,619 62,500 15,119 *
Griswold # (12)
PMG Eagle Fund #(13) 2,772,500 2,362,500 410,000 1.2
Estate of Richard Hodgson 198,750 100,000 98,750 *
#(14)(15)
James J. Kim # 120,000 120,000 0 0
Richard G. Larsen # 125,000 125,000 0 0
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NUMBER OF
---------
SHARES SHARES TO BE SHARES BENEFICIALLY
------ ------------ -------------------
BENEFICIALLY INCLUDED OWNED AFTER THE
------------ -------- ---------------
NAME OF SELLING OWNED PRIOR TO IN THE OFFERING (1)(2)
---------------- -------------- -------- ---------------
STOCKHOLDER THE OFFERING (1) OFFERING NUMBER PERCENT
----------- ------------- -------- ------ -------
Brian Leung Hung Tak # 636,986 500,000 136,986 *
Robert A. Leverone # 73,349 62,500 10,849 *
Samuel Fang #(16) 1,787,972 1,100,000 787,972 2.3
Irving L. Mazer #(17) 65,215 50,000 15,215 *
Anthony T.S. Montagu # 100,000 76,000 24,000 *
Albert G. Nickel # 138,698 125,000 13,698 *
Pacific Alliance Limited, 70,000 70,000 0 0
LLC(18)
David Parke #(19) 20,000 20,000 0 0
Orbis Pension Trustees 2,687,500 2,312,500 375,000 *
Limited #(20)
David B. Payne # 25,000 25,000 0 0
George L. Perry # 250,000 250,000 0 0
Robert J. Petras and 25,000 25,000 0 0
Christine M. Petras #
Willard F. Pinney Jr. 144,799 25,000 119,799 *
#(14)(21)
Leonide C. Prince # 100,000 100,000 0 0
FH Reichel Jr. TTEE 255,000 100,000 155,000 *
Marian R. Reichel TRUST,
U/A 2/25/66 #
Carol A. Sharp # 250,000 250,000 0 0
Helen and Scudder Smith 15,000 15,000 0 0
(22)
Elizabeth Steele (23) 219,118 1,500 217,618 *
Robert H. Steele #(14)(24) 219,118 112,500 106,618 *
Dr. Gershon Stern # 38,000 38,000 0 0
Thomas V. Zug #(25) 125,000 125,000 0 0
Kristine Szabo # 277,396 250,000 27,396 *
Frederick C. Tecce # 30,000 30,000 0 0
Connecticut Innovations, 1,250,000 1,250,000 0 0
Inc. #(27)
Neil Dunn Trust #(28) 50,000 50,000 0 0
Marianne Margaret Ivory # 37,500 37,500 0 0
Paterson Plumbers Pension 37,500 37,500 0 0
Scheme #(29)
Ptamigan International 500,000 500,000 0 0
Capital Trust #(30)
TOTAL: 12,718,750
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* Represents beneficial ownership of less than 1% of the outstanding shares
of common stock.
# Purchaser of shares of series C preferred stock.
(1) Beneficial ownership is determined in accordance with Rule 13d-3 of the
Securities Exchange Act of 1934, as amended. Shares of common stock
subject to options, warrants, rights or conversion privileges currently
exercisable or exercisable within 60 days of February 11, 2000 are deemed
outstanding for computing the percentage of the person holding such
options, warrants, rights or conversion privileges but are not deemed
outstanding for computing the percentage ownership of any other person.
Unless otherwise indicated, the persons named in the table below have sole
voting and investment power with respect to all shares of common stock
shown as beneficially owned by them.
(2) Assumes all shares offered are sold in the offering. The selling
stockholders may or may not sell all or any portion of the shares included
in this registration statement in their individual discretion.
(3) Includes 62,000 issuable upon conversion of the 248 shares of series C
stock Mr. Parrish purchased through Accrued Investments, Inc., a
corporation over which he exercises sole control.
(4) Mr. Allred serves as the director of research and new business development
of Accent Color. Includes 35,001 shares subject to currently exercisable
options or exercisable within 60 days granted pursuant to the 1995 Stock
Incentive Plan.
(5) Banque Jennie & Cie, S.A. is a bank organized under the laws of
Switzerland. Includes 30,000 shares owned directly by Banque Jennie and
70,000 shares issuable upon conversion of 280 shares of series C stock
purchased by Banque Jennie on behalf of an individual foreign private
investor.
(6) Includes 500,000 shares issuable upon conversion of 2,000 shares of
series C stock owned of record by Bexley Enterprises Limited, a
corporation owned and controlled by Mr. Ronald Chao.
(7) Mr. Brophy serves as a director of Accent Color. Includes 40,000 shares
subject to currently exercisable options granted pursuant to the 1995
Stock Incentive Plan.
(8) Mr. Buchheit serves as President and CEO and as a director of Accent
Color. Includes 88,334 shares subject to options currently exercisable or
exercisable within 60 days granted pursuant to the 1995 Stock Incentive
Plan and 100,000 shares subject to currently exercisable warrants.
(9) Mr. Campbell is a managing director of Pennsylvania Merchant Group, Ltd.,
an investment banking and asset management firm, which acts as the
investment
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adviser to PMG Eagle Fund. See note 13. Pennsylvania Merchant Group also
acted as the placement agent for the 33,589 shares of our series C
preferred stock. Pennsylvania Merchant Group is a registered broker-dealer
and investment adviser.
(10) Includes 10,526 shares subject to currently exercisable warrants.
(11) Mr. Coburn serves as the Chairman of our Board of Directors. Includes
43,334 shares subject to options currently exercisable or exercisable
within 60 days granted pursuant to the 1995 Stock Incentive Plan.
(12) E. Bulkeley Griswold is a partner of L&L Capital Partners, LLC, a business
and financial service consulting firm. L&L Capital acted as an independent
consultant to Pennsylvania Merchant Group in connection with our private
placement of its series C preferred stock in December 1999.
(13) PMG Eagle Fund is an open-ended investment company organized in 1996 under
the Companies (Jersey) Law, 1991 as amended and regulated in Jersey
pursuant to the Collective Investment Funds (Jersey) Law, 1988 as amended.
PMG Eagle Fund also participated in our bridge financing on September 7,
1999, purchasing 1,375,000 shares and receiving warrants to purchase an
additional 687,500 shares.
(14) Includes 70,000 shares subject to currently exercisable options granted
pursuant to the 1995 Stock Incentive Plan.
(15) Mr. Hodgson served as a director from 1996 until his death in March 2000.
Includes 3,750 shares subject to currently exercisable warrants.
(16) Includes 1,100,000 shares issuable upon conversion of 4,000 shares of
series C stock purchased through Luzon Investments, Ltd. and 400 shares
of series C stock purchased through Upgrade Inc. Mr. Fang owns and
controls both Luzon Investments and Upgrade.
(17) Includes 10,215 shares subject to currently exercisable warrants.
(18) Pacific Alliance, LLC is an investment banking firm that was retained by
Accent Color in April 1999 to advise the company with respect to capital
raising and alternative strategies. The company's engagement of Pacific
Alliance terminated in July 1999. For its services, we paid Pacific
Alliance $50,000 in cash and issued 70,000 common shares.
(19) David Parke is a Senior Vice President of Pennsylvania Merchant Group.
See notes (9) and (13) above.
(20) Orbis Pension Trustees Limited is pension fund organized under the laws of
the United Kingdom. Orbis participated in our bridge financing on
September 7, 1999, purchasing a Series A Convertible Subordinated Note
with a face value of $550,000 and warrants to purchase 687,500 common
shares.
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(21) Mr. Pinney serves as the Secretary and as a director of Accent Color.
Includes 30,000 shares of common stock subject to currently exercisable
warrants granted to Murtha Cullina LLP, counsel to the company, of which
Mr. Pinney is a partner.
(22) Includes 15,000 shares issuable upon conversion of 60 shares of Series C
preferred stock purchased by Helen and Scudder Smith through the SS Family
Partnership.
(23) Includes 1,500 shares subject to currently exercisable warrants and
200,500 shares beneficially owned by Robert H. Steele, Mrs. Steele's
spouse, as to all of which Mrs. Steele disclaims beneficial ownership.
(24) Mr. Steele serves as a director of Accent Color. Includes 17,118 shares of
common stock owned by Mr. Steele's spouse, Elizabeth Steele and 1,500
shares of common stock subject to currently exercisable warrants issued to
Elizabeth Steele, as to all of which Mr. Steele disclaims beneficial
ownership.
(25) Includes 100,000 shares issuable upon conversion of 400 shares of series C
stock purchased by Thomas V. Zug through the Sunapee Ltd Partnership, of
which Mr. Zug is the general partner. Includes 25,000 shares issuable upon
conversion of 100 shares of series C stock purchased by the Deed of Trust
of Holly E. Zug Settlor DTD 8/5/97, of which Mr. Zug is the trustee.
(26) Includes 100,000 shares issuable upon conversion of 400 shares of
series C stock beneficially owned by W.T.J. Griffin. These shares are
held of record by Waterhouse Nominees Ltd., a limited company organized
under U.K. law utilized to serve as the record holder of investments
made by Newton Investment Management, an investment management company
organized under U.K. law.
(27) Founded in 1972 as the Connecticut Product Development Corporation,
Connecticut Innovations, Inc. is an investment corporation sponsored by
the State of Connecticut which makes risk capital investments in high-tech
companies throughout the state and fosters the development of high-growth,
knowledge-based industries in the state.
(28) The Neil Dunn Trust is a private trust established under the laws of the
United Kingdom.
(29) Paterson Plumbers Pension Scheme is a pension fund established under the
laws of the United Kingdom.
(30) Ptamigan International Capital Trust is an investment trust established
under the laws of the United Kingdom by Stewart Ivory & Company Ltd., a
U.K. investment management firm.
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USE OF PROCEEDS
All the shares offered by this prospectus are being offered for the
account of the selling stockholders. Accordingly, all net proceeds from any
sales of common stock made hereunder will go to the selling stockholders. The
selling stockholders will pay any underwriting discounts and commissions and
expenses incurred by the selling stockholders for brokerage, accounting, tax or
legal services or any other expenses incurred by the selling stockholders in
disposing of the shares. We have agreed to pay the expenses of registering the
shares under the Securities Act, including registration and filing fees, blue
sky expenses, printing expenses, accounting fees, administrative expenses and
our own counsel fees.
We will receive the exercise price of any warrants exercised by the
selling stockholders. We will use any proceeds received from the exercise of
warrants for working capital and general corporate purposes.
PLAN OF DISTRIBUTION
We are registering the shares of common stock offered in this prospectus
on behalf of the selling stockholders. This offering is self-underwritten;
neither the selling stockholders nor we have employed an underwriter for the
sale of common stock by the selling stockholders. As used in this prospectus,
the term "selling stockholders" includes donees, pledgees, transferees or other
successors-in-interest selling shares received after the date of this prospectus
from a selling stockholder as a gift, pledge, partnership distribution or other
non-sale related transfer.
The selling stockholders will act independently of us in making decisions
with respect to the timing, manner and size of each sale. As a result, there can
be no assurance that the selling stockholders will sell any or all of the shares
of common stock offered by this prospectus. The sale of any the shares may be
made at market prices prevailing at the time of the sale, at prices related to
the prevailing market prices, at negotiated prices, or at fixed prices. The
selling stockholders may offer the shares for sale by one or more of, or a
combination of, the following methods:
o purchases by a broker-dealer as principal and resale by such
broker-dealer for its own account pursuant to this prospectus;
o ordinary brokerage transactions in the OTC marketplace and
transactions in which the broker solicits purchasers;
o block trades in which the broker-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;
o on one or more exchanges on which the shares are then listed (if
any);
o in privately negotiated transactions;
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o in an underwritten offering; or
o by any other legally available means.
In addition, 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.
The selling stockholders may enter into hedging transactions with
broker-dealers who may engage in short sales of shares of common stock in the
course of hedging the positions they assume with the selling stockholders. The
selling stockholders may also enter into option or other transactions with
broker-dealers that require that delivery by the broker-dealers of the shares,
which shares may be resold thereafter pursuant to this prospectus.
To the extent required, this prospectus may be amended or supplemented
from time to time to describe a specific plan of distribution. We have not been
advised, as of the date of this prospectus, of any existing arrangements between
any selling stockholder and any other stockholder, broker, dealer, underwriter
or agent relating to the sale or distribution of the shares.
The selling stockholders may sell their shares directly to purchasers or
to or through broker-dealers, acting as agents or principals. You should be
aware that these broker-dealers may receive compensation for their services and
it is possible that a particular broker-dealer's compensation may exceed
customary commissions. The selling stockholders and/or any broker-dealers acting
in connection with the sale of the shares may be deemed to be underwriters under
Section 2(11) of the Securities Act. Therefore, any commissions or other
compensation received by them and any profits realized by them on the resale of
the shares as principals may be deemed underwriting compensation under the
securities laws. Neither we nor any selling stockholder can presently estimate
the amount of the compensation.
In order to comply with the securities laws of certain states, if
applicable, the shares must be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states the
shares may not be sold unless they have been registered or qualified for sale in
the applicable state or an exemption from the registration or qualification
requirement is available and is complied with.
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 Regulation M,
which may restrict the activities of selling stockholders and other persons
participating in a distribution of securities and limit the timing of their
purchases and sales of securities. Furthermore, under Regulation M, persons
engaged in a distribution of securities are prohibited from simultaneously
engaging in market making and other activities with respect to the securities
for a specified period of time before the beginning of the distributions subject
to specified
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exceptions or exemptions. All of the foregoing may affect the marketability of
the securities offered pursuant to this prospectus.
We have agreed to indemnify the selling stockholders and each of their
officers, directors, members, employees, partners, agents and each person who
controls any of the selling stockholders against expenses, claims, losses,
damages and liabilities (or action, proceeding or inquiry by any regulatory or
self-regulatory organization in respect thereof) relating to a material
misstatement or omission contained in this registration statement or any
violation by us of any rule under the Securities Act which relating to action or
inaction required of us in connection with this registration statement. This
indemnification does not extend to expenses, claims, losses, damages and
liabilities arising out of or based upon any untrue statements or omissions
furnished by the selling stockholders to us. We have also agreed with the
selling stockholders to keep the registration statement of which this prospectus
constitutes a part effective until the earlier of (1) such time as all of the
shares covered by this prospectus have been disposed of pursuant to and in
accordance with the registration statement or (2) the selling stockholders
become eligible to resell the shares covered by this prospectus pursuant to Rule
144(k) under the Securities Act.
DESCRIPTION OF OUR SECURITIES
We are authorized to issue 50,000,000 shares of common stock, no par
value, and 500,000 shares of preferred stock, no par value. Set forth below is a
brief description of our capital stock, including summaries of the relevant
provisions in the Company's restated certificate of incorporation, its Bylaws
and the Connecticut Business Corporations Act (the "Act") and other laws of the
State of Connecticut and are qualified in their entirety by reference to such
documents, copies of which have been filed as exhibits to the registration
statement.
COMMON STOCK
Our common stock is traded on the OTC Bulletin Board of the National
Association of Securities Dealers, Inc. under the symbol "ACLR." The transfer
agent and registrar of our common stock is American Stock Transfer & Trust
Company.
As of April 19, 2000, we had 22,390,858 shares of common stock issued
and outstanding. In addition, there were
o 8,397,250 shares of common stock reserved for issuance on conversion
of shares of series C preferred stock;
o 1,175,985 shares reserved for issuance on conversion of shares of
series B preferred stock;
o 4,268,347 shares reserved for issuance upon exercise of our
outstanding warrants; and
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o 3,157,750 shares reserved for issuance upon exercise of stock
options granted under our 1995 Stock Incentive Plan.
Common stockholders are entitled to receive ratably such dividends as may
be declared on the common stock by our board of directors out of funds legally
available therefor, subject to the prior rights of holders of preferred stock.
Holders of common stock are entitled to one vote for each share held of record
with respect to the election of directors and other matters submitted for a vote
of stockholders and are not entitled to cumulative voting. Holders of common
stock vote together with holders of preferred stock as a single class with
respect to the election of directors and other matters.
Upon the liquidation, dissolution or winding up of the company, the
holders of common stock are entitled to receive ratably the Company's net assets
available after the payment of all debts and other liabilities and subject to
the prior rights of the outstanding shares of our series B and series C
preferred stock. Holders of common stock have no preemptive, subscription,
redemption or conversion rights.
PREFERRED STOCK
The rights, preferences and privileges of holders of common stock are
subject to the prior rights of the outstanding shares of our series B and series
C preferred stock.
SERIES A PREFERRED STOCK
Pursuant to article fourth of our restated certificate of incorporation,
our board or directors has designated a series of preferred stock entitled
series A convertible preferred stock. All previously issued shares of series A
preferred stock have been converted into common stock and there are currently no
shares of such series outstanding.
SERIES B PREFERRED STOCK
In 1997, our board of directors designated a series of 4,500 shares of our
previously authorized preferred stock to be designated as the Series B
Convertible Preferred Stock. On January 9, 1998, we issued 4,500 shares of the
series B stock at a price of $1,000 per share. The series B preferred stock is
convertible into such number of shares of common stock as is determined by
dividing $1,113.43 (being the face value of $1,000 of each share of series B
stock plus a 6% premium from the date of issuance to Nov. 30, 1999 when such
premiums ceased to accrue) by a fixed conversion rate of $0.40. Therefore, each
share of series B stock is convertible into approximately 2,784 shares of common
stock.
The holders of the series B preferred stock carry voting rights as
provided in the our restated certificate of incorporation and as otherwise
provided by the Act. Holders of series B preferred stock vote together with
holders of common stock and holders of series C preferred stock as a single
class with respect to the election of directors and other matters. Each holder
of series B preferred stock is entitled to as many votes with respect to each
share of series B preferred stock held on the record date for such vote as the
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number of shares of common stock into which a share of series B preferred stock
is then convertible.
The series B preferred stock does not bear dividends. The series B
preferred stock ranks senior to our common stock and equal to our series C
preferred stock with respect to liquidation. Each share of series B preferred
stock is entitled to receive $1,113.43 upon liquidation. As of April 19, 2000,
we had outstanding 1,158 shares of Series B preferred stock outstanding, all
held by Zanett Lombardier Ltd., a corporation incorporated under the laws of the
Grand Caymans.
SERIES C PREFERRED STOCK
On November 29, 1999, the board of directors designated a series of 50,000
shares of our previously authorized preferred stock, no par value per share, to
be designated as the Series C Convertible Preferred Stock. On December 7, 1999,
we concluded the issuance of 33,589 shares of series C preferred stock at a
purchase price of $100 per share. The series C preferred stock is convertible at
any time into shares of our common stock at a fixed conversion price of $0.40
divided into the $100 purchase price (or at a rate of 250 shares of common stock
for each preferred share). The number of shares reserved for issuance pursuant
to the conversion of the 33,589 shares of outstanding series C preferred stock
was 8,397,250 shares of common stock.
The holders of the series C preferred stock carry voting rights as
provided in the our restated certificate of incorporation and as otherwise
provided by the Act. Holders of series C preferred stock vote together with
holders of common stock and holders of series B preferred stock as a single
class with respect to the election of directors and other matters. Each holder
of series C preferred stock is entitled to as many votes with respect to each
share of series C preferred stock held on the record date for such vote as the
number of shares of common stock into which a share of series C preferred stock
is then convertible.
Series C holders are entitled to receive noncumulative cash dividends as
declared by the board of directors, except that no such dividend can be declared
unless an equivalent, ratable dividend is also declared on the outstanding
shares of series B preferred stock. In addition, series C holders are entitled
to receive cumulative dividends at a rate of 8% per year of the initial purchase
price of $100 per share but only upon the occurrence of a Liquidation Event,
provided that any such dividend is coupled with an equivalent ratable dividend
to the holders of the series B stock. A "Liquidation Event" is defined to
include a merger (except a merger in which Accent Color is the surviving
entity), consolidation, dissolution, winding up or sale of substantially all of
the assets of the company, unless the holders of at least 75% of the series B
and series C stock determine that any such event is not a Liquidation Event.
In the event of any voluntary or involuntary liquidation of the company,
the series C holders rank equal to the series B holders in right of payment and
senior to the common stock. As of April 19, 2000, there were 33,589 shares of
series C preferred stock outstanding.
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RELEVANT PROVISIONS OF CONNECTICUT LAW AND OUR RESTATED CERTIFICATE OF
INCORPORATION
Our restated certificate of incorporation contains provisions that could
discourage a proxy contest or make more difficult the acquisition of a
substantial block of our 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 our capital stock issued and outstanding and
entitled to vote. In addition, since the board of directors is authorized to
issue shares of common stock and preferred stock any such issuance 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.
As a Connecticut corporation, we are subject to the 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 our
outstanding shares) with an "interested shareholder" (as defined in the 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 section could
prevent a change of control. Generally, approval is required by the board of
directors and by a majority of our non-employee directors and by 80% of our
outstanding shares and two-thirds of the voting power of shares other than
shares held by the interested shareholder. There can be no assurance that these
provisions will not prevent us from entering into a business combination that
otherwise would be beneficial to us.
LEGAL MATTERS
Counsel for Accent Color, Murtha Cullina LLP, CityPlace I, 185 Asylum
Street, Hartford, Connecticut 06103-3469, has rendered an opinion to the effect
that the common stock offered for resale pursuant to this registration statement
is duly and validly issued, fully paid and non-assessable. Murtha Cullina LLP
owns a warrant to acquire up to 30,000 shares of our common stock at an exercise
price of $1.19 per share.
Willard F. Pinney, Jr., a partner in Murtha Cullina Pinney LLP, is a
stockholder of Accent Color. Mr. Pinney has served as our Corporate
Secretary since 1993 and has served as a director since 1996.
EXPERTS
The financial statements incorporated in this prospectus by reference to
Accent Color's Annual Report on Form 10-K for the year ended December 31, 1999
have been so incorporated in reliance on the report of PricewaterhouseCoopers
LLP, independent accountants, given on the authority of PricewaterhouseCoopers
LLP as experts in auditing and accounting.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth our estimates of the expenses incurred in
connection with the sale of common stock being registered, all of which will be
paid by us.
SEC registration fee $ 2,926
Legal fees and expenses $20,000
Accounting fees and expenses $10,000
Miscellaneous fees and expenses $ 2,500
TOTAL: $35,426
The selling stockholders will pay any underwriting discounts and
commissions and expenses incurred by the selling stockholders for brokerage,
accounting, tax or legal services or any other expenses incurred by the selling
stockholders in disposing of the shares of common stock covered by this
prospectus.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
We are a Connecticut corporation. Sections 33-770 through 33-778 of the
Connecticut Business Corporations Act ("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, these sections of the Act permit a corporation by action of
its board of directors to indemnify an individual made a party to a proceeding
because he or she was a director or officer of the corporation if:
o he or she conducted himself or herself in good faith, and
o he or she reasonably believed (1) in the case of conduct in his or
her official capacity with the corporation, his or her conduct was
in the best interests of the corporation and (2) in all other cases,
that his or her conduct was at least not opposed to the best
interests of the corporation; and
o in the case of any criminal proceeding, he or she had no reasonable
cause to believe his or her conduct was unlawful.
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Section 33-771 also provides 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 held 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.
Our restated certificate of incorporation limits 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 during the calendar year in which the violation
occurred. This limit on liability is 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.
For purposes of determining the receipt of improper personal gains, an
"associate" is defined as (1) any corporation or organization of which a
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, (2) any trust or
other estate in which a director has at least ten percent beneficial interest or
as to which a director serves as trustee or in a similar fiduciary capacity and
(3) any relative or spouse of a director, or any relative of the spouse who has
the same name as the director.
In addition, we also maintain a directors' and officers' insurance and
reimbursement policy.
ITEM 16. EXHIBITS
(A) EXHIBITS:
EXHIBIT EXHIBIT
NO.
3.1 Restated Certificate of Incorporation of the Company, as
amended (1).
3.2 Certificate of Amendment to Restated Certificate of
Incorporation, dated Nov. 29, 1999 (1).
3.3 Certificate of Designations, Preferences and Rights of
Series B Convertible Preferred Stock (1).
3.4 Certificate of Designations, Preferences and Rights of
Series C Convertible Preferred Stock, dated Nov. 29, 1999
(1).
3.5 Bylaws of the Company, as amended on Dec. 29, 1996 (2).
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4.1 Letter agreement with holders of Series B Convertible Preferred
Stock modifying rights to conform with Series C Convertible
Preferred Stock (1).
5 Opinion of Murtha, Cullina, Richter and Pinney LLP (1).
10.1 Product Development and Distribution Agreement dated February 16,
1996 between the Company and Xerox Corporation (3).
10.2 Letter of Understanding dated July 2, 1996 between the Company and
Xerox Corporation supplementing the Product Development and
Distribution Agreement (3).
10.3 Amendment to Product Development and Distribution Agreement
between the Company and Xerox Corporation dated Feb. 29,
1996 (3).
10.4 Product Purchase Agreement dated Apr. 16, 1996 between the
Company and International Business Machines Corporation (3).
10.5 Letter Agreement supplementing Product Purchase Agreement
between the Company and International Business Machines
Corporation dated Feb. 23, 1996 (3).
10.6 OEM Supply Agreement dated Jan. 8, 1996 between the Company
and Spectra, Inc. (3).
10.7 Amendment No. 1 to the OEM Supply Agreement dated July 12,
1996 between the Company and Spectra, Inc. (3).
10.8 Lease Agreement dated Feb. 16, 1996 between the Company and
John Hancock Mutual Life Insurance Company (3).
10.9 Accent Color Sciences, Inc. 1995 Stock Incentive Plan, as
amended through Nov. 29, 1999 (1).
10.10 Employment Agreement dated Dec. 14, 1993 between the
Company and Norman L. Milliard (3).
10.11 Amendment No. 1 to Employment Agreement between the Company
and Norman L. Milliard dated as of Jan. 1, 1995 (3).
10.12 Form of nondisclosure agreement between the Company and its
employees (3).
10.13 Form of Registration Rights Agreement Relating to Warrants issued
in connection with Series IV Debentures of the Company (3).
10.14 Form of Registration Rights Agreement Relating to sale of Common
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Stock of the Company (3).
10.15 Registration Rights Agreement Relating to Warrants issued
by the Company to Xerox Corporation (3).
10.16 Form of Registration Rights Agreement Relating to Warrants issued
pursuant to sale of Interim Notes (3).
10.17 Form of Securities Purchase Agreement dated as of Jan. 9,
1998 (4).
10.18 Form of Warrant issued in connection with the 1998 Private
Placement (4).
10.19 Form of Registration Rights Agreement dated as of Jan. 9,
1998 (4).
10.20 Employment Agreement dated Apr. 15, 1998 between Charles E.
Buchheit and the Company (5).
10.21 Loan Agreement between the Company and International
Business Machines Corporation (6).
10.22 Promissory Note between the Company and International
Business Machines Corporation (6).
10.23 Security Agreement between the Company and International
Business Machines Corporation (6).
10.24 Purchase Agreement for Series A Convertible Subordinated
Notes, Common Stock and Warrants, dated Sept. 7, 1999 (7).
10.25 Form of Series A Convertible Subordinated Note (7).
10.26 Form of Warrant to Purchase Common Stock of Accent Color
Sciences, Inc. (7).
10.27 Registration Rights Agreement, dated Sept. 7, 1999 (7).
10.28 Third Amendment to the Apr. 11, 1996 Product Purchase
Agreement
Between International Business Machines Corporation and
Accent Color Sciences, Inc. (7).
10.29 Letter dated July 21, 1999 containing variations to
agreement between Accent Color and SET dated Aug. 27, 1997
(7).
10.30 Form of Securities Purchase Agreement dated as of Nov. 30,
1999 (8).
10.31 Form of Warrant Agreement dated as of Nov. 30, 1999 (8).
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10.32 Form of Registration Rights Agreement dated as of Nov. 30,
1999 (8).
23.1 Consent of Murtha, Cullina, Richter and Pinney LLP (1).
23.2 Consent of PricewaterhouseCoopers LLP (filed herewith).
24 Power of attorney pursuant to which this registration statement is
signed by our directors (8).
(1) previously filed.
(2) incorporated by reference from Accent Color's registration statement on
Form S-3 (file no. 333-43467) filed on Dec. 30, 1997, as amended.
(3) incorporated by reference from Accent Color's registration statement
(file no. 333-14043) on Form S-1 filed on Oct. 15, 1996, as amended.
(4) incorporated by reference from Accent Color's registration statement
(file no. 333-45321) on Form S-3 filed on Jan. 30, 1998, as amended.
(5) incorporated by reference from Accent Color's quarterly report on Form 10-Q
for the quarter ended June 30, 1998.
(6) incorporated by reference from Accent Color's quarterly report on Form
10-Q for the quarter ended Sept. 30, 1998.
(7) incorporated by reference from Accent Color's quarterly report on Form
10-Q for the period ended Sept. 30, 1999.
(8) incorporated by reference from Accent Color's registration statement
(file no. 333-30130) on Form S-3 filed on Feb. 11, 2000.
ITEM 17. UNDERTAKINGS
(a) The undersigned registrant 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, as amended (the
"Securities Act");
(ii) To reflect in the prospectus any facts or events arising
after the effective date of this 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 this Registration Statement. Notwithstanding the foregoing,
any increase or decrease in the volume of securities offered (if the
total dollar value of
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securities offered would not exceed that which was registered) and
any deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed with
the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change
in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
Registration Statement; and
(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;
(2) That, for the purposes of determining any liability under the
Securities Act, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at the
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) 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 the indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. If a claim for indemnification
against these 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 a
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 indemnification by it is against public policy
as expressed in the Securities Act and will be governed by the final
adjudication of the issue.
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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-2 and has duly caused this amendment no. 2 to
the registration statement on Form S-2 to be signed on its behalf by the
undersigned, who is duly authorized, in the City of East Hartford, State of
Connecticut on this 14th day of June, 2000.
ACCENT COLOR SCIENCES, INC.
/S/ RICHARD J. COBURN
-------------------------------------
By: Richard J. Coburn
Title: Chairman
Pursuant to the requirements of the Securities Act of 1933, the following
persons have signed this amendment No. 2 to the registration statement in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
By: /S/ RICHARD J. COBURN* President and Chief June 14, 2000
---------------------- Executive Officer
Name: Charles C. Buchheit
By: /S/ RONALD C. DERBY Chief Financial June 14, 2000
------------------- Officer
Name: Ronald C. Derby
By: /S/ RICHARD J. COBURN* Director June 14, 2000
----------------------
Name: Norman L. Milliard
By: /S/ RICHARD J. COBURN Chairman of the June 14, 2000
--------------------- Board of Directors
Name: Richard J. Coburn
By: /S/ RICHARD J. COBURN* Director June 14, 2000
----------------------
Name: Joseph T. Brophy
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By: /S/ RICHARD J. COBURN* Director June 14, 2000
-----------------------
Name: Willard F. Pinney, Jr.
By: RICHARD J. COBURN* Director June 14, 2000
-------------------
Name: Robert H. Steele
* Signature by Richard J. Coburn, attorney-in-fact
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EXHIBIT INDEX
EXHIBIT EXHIBIT
------- -------
NO.
---
3.1 Restated Certificate of Incorporation of the Company, as
amended (1).
3.2 Certificate of Amendment to Restated Certificate of
Incorporation, dated Nov. 29, 1999 (1).
3.3 Certificate of Designations, Preferences and Rights of
Series B Convertible Preferred Stock (1).
3.4 Certificate of Designations, Preferences and Rights of
Series C Convertible Preferred Stock, dated Nov. 29, 1999
(1).
3.5 Bylaws of the Company, as amended on Dec. 29, 1996 (2).
4.1 Letter agreement with holders of Series B Convertible Preferred
Stock modifying rights to conform with Series C Convertible
Preferred Stock (1).
5 Opinion of Murtha, Cullina, Richter and Pinney LLP (1).
10.1 Product Development and Distribution Agreement dated February 16,
1996 between the Company and Xerox Corporation (3).
10.2 Letter of Understanding dated July 2, 1996 between the Company and
Xerox Corporation supplementing the Product Development and
Distribution Agreement (3).
10.3 Amendment to Product Development and Distribution Agreement
between the Company and Xerox Corporation dated Feb. 29,
1996 (3).
10.4 Product Purchase Agreement dated Apr. 16, 1996 between the
Company and International Business Machines Corporation (3).
10.5 Letter Agreement supplementing Product Purchase Agreement
between the Company and International Business Machines
Corporation dated Feb. 23, 1996 (3).
10.6 OEM Supply Agreement dated Jan. 8, 1996 between the Company
and Spectra, Inc. (3).
10.7 Amendment No. 1 to the OEM Supply Agreement dated July 12,
1996 between the Company and Spectra, Inc. (3).
10.8 Lease Agreement dated Feb. 16, 1996 between the Company and
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John Hancock Mutual Life Insurance Company (3).
10.9 Accent Color Sciences, Inc. 1995 Stock Incentive Plan, as
amended through Nov. 29, 1999 (1).
10.10 Employment Agreement dated Dec. 14, 1993 between the
Company and Norman L. Milliard (3).
10.11 Amendment No. 1 to Employment Agreement between the Company
and Norman L. Milliard dated as of Jan. 1, 1995 (3).
10.12 Form of nondisclosure agreement between the Company and its
employees (3).
10.13 Form of Registration Rights Agreement Relating to Warrants issued
in connection with Series IV Debentures of the Company (3).
10.14 Form of Registration Rights Agreement Relating to sale of Common
Stock of the Company (3).
10.15 Registration Rights Agreement Relating to Warrants issued
by the Company to Xerox Corporation (3).
10.16 Form of Registration Rights Agreement Relating to Warrants issued
pursuant to sale of Interim Notes (3).
10.17 Form of Securities Purchase Agreement dated as of Jan. 9,
1998 (4).
10.18 Form of Warrant issued in connection with the 1998 Private
Placement (4).
10.19 Form of Registration Rights Agreement dated as of Jan. 9,
1998 (4).
10.20 Employment Agreement dated Apr. 15, 1998 between Charles E.
Buchheit and the Company (5).
10.21 Loan Agreement between the Company and International
Business Machines Corporation (6).
10.22 Promissory Note between the Company and International
Business Machines Corporation (6).
10.23 Security Agreement between the Company and International
Business Machines Corporation (6).
10.24 Purchase Agreement for Series A Convertible Subordinated
Notes, Common Stock and Warrants, dated Sept. 7, 1999 (7).
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10.25 Form of Series A Convertible Subordinated Note (7).
10.26 Form of Warrant to Purchase Common Stock of Accent Color
Sciences, Inc. (7).
10.27 Registration Rights Agreement, dated Sept. 7, 1999 (7).
10.28 Third Amendment to the Apr. 11, 1996 Product Purchase
Agreement
Between International Business Machines Corporation and
Accent Color Sciences, Inc. (7).
10.29 Letter dated July 21, 1999 containing variations to
agreement between Accent Color and SET dated Aug. 27, 1997
(7).
10.30 Form of Securities Purchase Agreement dated as of Nov. 30,
1999 (8).
10.31 Form of Warrant Agreement dated as of Nov. 30, 1999 (8).
10.32 Form of Registration Rights Agreement dated as of Nov. 30,
1999 (8).
23.1 Consent of Murtha, Cullina, Richter and Pinney LLP (1).
23.2 Consent of PricewaterhouseCoopers LLP (filed herewith).
24 Power of attorney pursuant to which this registration statement is
signed by our directors (8).
(1) previously filed.
(2) incorporated by reference from Accent Color's registration statement on
Form S-3 (file no. 333-43467) filed on Dec. 30, 1997, as amended.
(3) incorporated by reference from Accent Color's registration statement
(file no. 333-14043) on Form S-1 filed on Oct. 15, 1996, as amended.
(4) incorporated by reference from Accent Color's registration statement
(file no. 333-45321) on Form S-3 filed on Jan. 30, 1998, as amended.
(5) incorporated by reference from Accent Color's quarterly report on Form 10-Q
for the quarter ended June 30, 1998.
(6) incorporated by reference from Accent Color's quarterly report on Form
10-Q for the quarter ended Sept. 30, 1998.
(7) incorporated by reference from Accent Color's quarterly report on Form
10-Q for the period ended Sept. 30, 1999.
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(8) incorporated by reference from Accent Color's registration statement
(file no. 333-30130) on Form S-3 filed on Feb. 11, 2000.
