As filed with the Securities and Exchange Commission on
December 30 1997
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------------
ACCENT COLOR SCIENCES, INC.
(Exact Name of Registrant as Specified in its Charter)
---------------------------
CONNECTICUT 06-1380314
(State or other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
800 Connecticut Boulevard
East Hartford, Connecticut, 06108
(860) 610-4000
(Address, including Zip Code, and Telephone Number, including Area Code, of
Registrant's Principal Executive Offices)
---------------------------
Norman L. Milliard
President and Chief Executive Officer
Accent Color Sciences, Inc.
800 Connecticut Boulevard
East Hartford, Connecticut 06108
(860) 610-4000
(Name, Address, including Zip Code, and Telephone Number, including Area C
ode, of Agent for Service)
---------------------------
Copy to:
Willard F. Pinney, Jr.
Murtha, Cullina, Richter and Pinney
Cityplace I
185 Asylum Street, 29th Floor
Hartford, Connecticut 06103-3469
(860) 240-6000
---------------------------
Approximate date of commencement of proposed sale to the public: From time
to time after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, check the
following box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in
connection with dividend or interest reinvestment plans, check the
following box. /X/
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same
offering. / /
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
CALCULATION OF REGISTRATION FEE
Title of each Proposed Proposed Amount of
class of Amount maximum maximum registration
securities to to be offering price aggregate fee
be registered registered per unit (1) offering price
Common Stock 2,550,455 shares $2.65625 $6,774,646.09 $1,998.52
$.01 par value
(1) Estimated solely for the purpose of computing the amount of the
registration fee pursuant to Rule 457(c) under the Securities Act of
1933, on the basis of the average of the high and low sale prices
reported on the Nasdaq National Market Automated Quotation System on
December 26, 1997.
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the
Registrant shall file a further amendment which specifically states
that this Registration Statement shall thereafter become effective in
accordance with Section 8(a) of the Securities Act of 1933 or until
the Registration Statement shall become effective on such date as the
Commission, acting pursuant to said Section 8(a), may determine.
PROSPECTUS
2,550,455 SHARES
ACCENT COLOR SCIENCES, INC.
COMMON STOCK
All shares of common stock, no par value (the "Common
Stock") of Accent Color Sciences, Inc. ("Accent Color" or the
"Company") offered hereby (the "Shares") are being offered by
certain stockholders and other security holders of the Company
named herein (the "Selling Stockholders"). It is anticipated
that the Selling Stockholders will generally offer shares of
Common Stock for sale at prevailing prices on the Nasdaq National
Market on the date of sale. See "Plan of Distribution." Of the
2,550,455 Shares being offered for resale: (i) 2,005,042 shares
were outstanding at December 26, 1997 and (ii) 545,413 shares are
issuable upon exercise of certain warrants outstanding at
December 26, 1997 (the "Warrants") and are being offered for the
accounts of the holders of such Warrants.
The distribution of the Shares by the Selling
Stockholders may be effected from time to time in one or more
transactions for their own accounts (which may include block
transactions) on the Nasdaq National Market or any exchange on
which the Common Stock may then be listed, in negotiated
transactions or a combination of such methods of sale, at fixed
prices which may be changed, at market prices prevailing at the
time of sale, at prices related to such prevailing market prices
or at negotiated prices. The Selling stockholders may effect such
transactions by selling Shares to or through broker-dealers,
including broker-dealers who may act as underwriters, and such
broker-dealers may receive compensation in the form of discounts,
concessions or commissions from the Selling Stockholders and/or
the purchasers of Shares for whom such broker-dealers may act as
agent or to whom they sell as principal or both (which
compensation as to a particular broker-dealer might be in excess
of customary commissions). The Selling Stockholders may also sell
Common Stock pursuant to Rule 144 promulgated under the
Securities Act of 1933, as amended (the "Securities Act") or
pledge Shares as collateral for margin accounts, and such Shares
could be resold pursuant to the terms of such accounts.
The Company intends that the Registration Statement will
remain effective for a period of two years from the date on which
it is declared effective by the Securities and Exchange
Commission or such earlier date as of which such Registration
Statement is no longer required for the transfer of the subject
securities.
The Common Stock of the Company is traded on the Nasdaq
National Market under the symbol "ACLR". On December 26, 1997
the closing price of the Company's Common Stock, as reported by
the Nasdaq Automated Quotation System was $ 2.75.
ANY INVESTMENT IN THE COMMON STOCK OFFERED HEREBY
INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS" COMMENCING ON
PAGE 4 FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE
CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED
HEREBY.
The Selling Stockholder and any broker executing selling
orders on behalf of the Selling Stockholder may be deemed to be
an "underwriter" within the meaning of the Securities Act.
Commissions received by any such broker may be deemed to be
underwriting commissions under the Securities Act.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is , 1998
AVAILABLE INFORMATION
The Company is subject to the informational reporting
requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and in accordance therewith files reports,
proxy statements and other information with the Securities and
Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at
the Public Reference Room of the Commission, 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the Commission's regional
offices at 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511; and copies of such material can be obtained from the
Public Reference Section of the Commission, Washington, D.C.
20549, at prescribed rates.
INFORMATION INCORPORATED BY REFERENCE
There are hereby incorporated by reference in this
Prospectus the following documents and information heretofore
filed with the Commission:
(1) The Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1996 filed pursuant to Section 13 of the
Exchange Act.
(2) The Company's Quarterly Reports on Form 10-Q for the fiscal
quarters ended March 31, 1997, June 30, 1997 and September 30,
1997 filed pursuant to Section 13 of the Exchange Act.
(3) The description of the Company's Common Stock contained in
the Company's Registration Statement on Form 8-A, which became
effective December 23, 1996, filed pursuant to Section 12(g) of
the Exchange Act, including any amendment or report filed for the
purpose of updating such description.
All documents filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date of this
Prospectus and prior to the termination of the offering of
securities contemplated hereby shall be deemed to be incorporated
by reference in this Prospectus or any Prospectus Supplement and
to be a part hereof from the date of filing of such documents.
Any statement contained in a document incorporated by reference
or deemed to be incorporated by reference in this Prospectus or
any Prospectus Supplement shall be deemed to be modified or
superseded for all purposes of this Prospectus or such Prospectus
Supplement to the extent that a statement contained herein,
therein or in any subsequently filed document that also is
incorporated or deemed to be incorporated by reference herein or
in such Prospectus Supplement modifies or supersedes such
statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute
a part of this Prospectus or any Prospectus Supplement.
The Company will provide without charge to each person
to whom a copy of this Prospectus has been delivered, upon the
written or oral request of such person, a copy of any and all of
the documents referred to above that have been or may be
incorporated in this Prospectus by reference (other than exhibits
to such documents, unless such exhibits are specifically
incorporated by reference therein). Requests for such copies
should be directed to: the Company's Vice President and Chief
Financial Officer, Accent Color Sciences, Inc., 800 Connecticut
Boulevard, East Hartford, Connecticut, 06108. The Company's
telephone number at that location is (860) 610-4000.
The documents incorporated by reference herein contain
forward-looking statements that involve risks and uncertainties.
The Company's actual results may differ materially from the
results discussed in the forward-looking statements. Factors
that might cause such a difference include, but are not limited
to, those discussed in such documents and in "Risk Factors"
below.
No person is authorized to give any information or to
make any representations, other than those contained in this
Prospectus, in connection with the offering described herein,
and, if given or made, such information or representations must
not be relied upon as having been authorized by the Company. This
Prospectus does not constitute an offer to sell, or a
solicitation of an offer to buy, nor shall there be any sale of
these securities by any person in any jurisdiction in which it is
unlawful for such person to make such offer, solicitation or
sale. Neither the delivery of this Prospectus nor any sale made
hereunder shall under any circumstances create an implication
that the information contained herein is correct as of any time
subsequent to the date hereof.
THE COMPANY
Accent Color designs, manufactures and sells innovative,
high-speed, spot color printing systems ("Truecolor Systems") for
integration with digital, high-speed, black-on-white printers and
sells related consumables. Spot color printing involves the use of
color to enhance traditional black-on-white documents by accenting
critical information, such as a balance due on a billing statement,
or by printing graphics, such as a company logo. Truecolor Systems
are designed to print spot color in high-speed, high-volume
applications at a low incremental cost per page without diminishing
the speed or performance of the high-speed, black-on-white host
printer or affecting the end user's existing operational methods and
are capable of printing up to 480 pages per minute, simultaneously
utilizing up to eight different colors, including custom colors, to
print or highlight fixed or variable data. Truecolor Systems combine
the Company's proprietary paper handling technology with patented ink
jet technology from Spectra, Inc. ("Spectra"). Under the agreement
with Spectra, the Company holds an exclusive right to supply products
which include Spectra printheads to print color on the black-on-white
output from specified high-speed printers from Xerox, IBM, Oce and
certain other manufacturers through the year 2002. The Company also
holds a right to extend the agreement with Spectra for an additional
seven years.
The Company also sells consumables comprised of standard and
custom color wax-based inks, as well as spare parts used with
Truecolor Systems. The Company expects that consumables will
generate recurring revenue which the Company believes will increase
as the installed base and usage of Truecolor Systems increase.
Accent Color was incorporated under the laws of Connecticut in
May 1993. The Company's principal executive offices are located
at 800 Connecticut Boulevard, East Hartford, Connecticut, 06108 and
its telephone number at that address is (860) 610-4000.
RISK FACTORS
An investment in the shares of Common Stock offered hereby
involves a high degree of risk. In addition to the risks set forth
in the Company's Annual Report on Form 10-K for the year ended
December 31, 1996, and the Company's Quarterly Reports on Form 10-Q
for the quarters ended March 31, 1997, June 30, 1997 and September
30, 1997, the other documents incorporated herein by reference and
the other information in this Prospectus, the following factors
should be considered carefully in evaluating the Company and its
business before purchasing the Common Stock offered hereby.
The risk factors described below, as well as the documents
incorporated herein by reference, contain forward-looking statements
that involve risks and uncertainties. The Company's actual results
may differ materially from the results discussed in the
forward-looking statements.
Immediate and Future Capital Requirements
The Company has ongoing working capital, capital equipment and
operations loss-funding requirements in order to continue to operate
and grow. As a result, the Company has and will likely continue to
seek equity or debt financing to fund operating losses, future
improvements and expansion of the Company's research and
manufacturing capabilities. There can be no assurance that such
financing will be available when needed, or that, if available, it
will be on satisfactory terms. The failure to obtain financing would
hinder the Company's ability to make continued investments in capital
equipment and expansion, which could materially adversely affect
results of operations. Any such equity financing would result in
dilution to the then-existing stockholders of the Company.
Volatility of Stock Price
The Company's stock price has been, and in the future is
expected to be, volatile and to experience market fluctuation as a
result of a number of factors, including, but not limited to, current
and anticipated results of operations, future product offerings by
the Company or its competitors and factors unrelated to the operating
performance of the Company. The trading price of the Company's
Common Stock may also vary as a result of changes in the business,
operations, or financial results of the Company, prospects of general
market and economic conditions and other factors.
Development Risks
Accent Color is a development stage company. The Company has
products in various stages of development, and minimal revenue has
been recognized from the sale of its products. The Company has
developed and plans to market new products and new applications of
technology and, accordingly, is subject to risks associated with such
ventures. The Company has delivered prototype, pre-production and
production Truecolor Systems and is entering the pre-production phase
for the enhanced version of these systems. The probability of
success of the Company must be considered in light of the expenses
and delays frequently encountered in connection with the operation of
a new business and the development of practical production techniques
for new products.
The Company considers the enhancement of its present products to
be the Company's first development priority. Many of these
enhancements are contemplated in the Company's contract with IBM,
including the Company's plan to devote substantial resources to
improve its technology in the areas of printhead width and print
resolution. In addition, the Company's customers have requested
advanced paper handling functionality, particularly duplex printing
(the ability to print on both sides of a page). There can be no
assurance, however, that the Company will be successful in developing
enhancements for its products or that these enhancements will prove
to be desirable to end users or that the Company will be able to
obtain the necessary components for contemplated product
enhancements. Failure to develop enhancements to its existing
products, particularly the enhancements contemplated by the agreement
with IBM, could have a material adverse effect on the market
acceptance of the Company's products. As a result, any such failures
could have a material adverse effect on the Company's business,
financial condition and results of operations. Further, the
development of product enhancements will likely render portions of
the Company's inventory obsolete, which could have a material adverse
effect on the Company's ability to sell such inventory profitably.
Limited History of Product Manufacturing
To date, the Company has manufactured only limited quantities of
Truecolor Systems. To be profitable, the Company's products must be
manufactured in sufficient quantities and at acceptable costs. To
date, manufacturing costs have exceeded average selling price.
Future production in sufficient quantities may pose technical and
financial challenges for the Company. The Company has limited
manufacturing history, and no assurance can be given that the Company
will be able to make a successful transition to high-volume
production. The failure to make a successful transition and to
manufacture at a cost sufficiently below its selling price could have
a material adverse effect on the business, financial condition and
results of operations of the Company.
Limited Operating History; History of Losses; Uncertainty of Future
Financial Results;
The Company was formed in May 1993 and is a development stage
company with a limited operating history. The Company incurred net
losses of $45,000, $1,154,000, $4,217,000, $13,739,000 and
$13,106,000 for the period from inception to December 31, 1993, the
years ended December 31, 1994, 1995 and 1996 and the nine-month
period ended September 30, 1997, respectively. These losses were
primarily due to the substantial research and development costs
associated with the development of Truecolor Systems, all of which
costs were expensed as incurred. Through September 30, 1997,
$1,285,000 of revenue had been recognized from the sale of the
Company's products. As a result of these losses, as of September 30,
1997, the Company had an accumulated deficit of $32,260,000 and total
shareholders' equity of $8,368,000. It is expected that quarterly
net losses will continue through at least the 2nd quarter of 1998.
There can be no assurance that the Company will be profitable
thereafter or that profitability, if achieved, will be sustained. In
order to support the anticipated growth of its business, the Company
expects to expand its manufacturing, marketing and sales
capabilities, technical and other customer support functions, and
research and product development activities. The anticipated
increase in the Company's operating expenses caused by any expansion
could have a material adverse effect on the Company's operating
results if revenue does not increase at an equal or greater rate.
Also, the Company's expenses for these and other activities are based
in significant part on its expectations regarding future revenue and
are fixed to a large extent in the short term. The Company may be
unable to adjust spending in a timely manner to compensate for any
unexpected revenue shortfalls.
Uncertainty of Market Development; Acceptance of Accent Color's
Products
The digital, high-speed printing market has traditionally relied
mainly on black-on-white print. There can be no assurance that a
market for high-speed, variable data color printing will develop or
achieve significant growth. The failure of such market to develop or
achieve significant growth would have a material adverse effect on
the Company's business, financial condition and results of
operations.
The Company's products are currently designed for the digital,
high-speed production printing and production publishing market
segments. There can be no assurance that the Company will be
successful in developing or marketing its existing or future products
or that, if any such products achieve market acceptance, such
acceptance will be sustained. The Company also plans to further
enhance its products and is investing substantial capital and other
resources in the development of such enhancements. The Company plans
to devote substantial resources to improve technology in the areas of
ink jet printhead width. There can be no assurance that the
Company's Truecolor Systems or enhancements will be a preferable
alternative to existing products or that they will not be rendered
obsolete or noncompetitive by products offered by other companies.
Any quality, durability or reliability problems with the Company's
products, regardless of materiality, or any other actual or perceived
problems with any Company products, could have a material adverse
effect on market acceptance of such products. There can be no
assurance that such problems or perceived problems will not arise or
that, even in the absence of such problems, the Company's products
will achieve market acceptance. A failure of any of the Company's
products to achieve market acceptance for any reason could have a
material adverse effect on the Company's business, financial
condition and results of operations. In addition, the announcement
by the Company or its OEM customers or competitors of new products
and technologies could cause customers to defer purchases of the
Company's existing products, which could have a material adverse
effect on the Company's business, financial condition and results of
operations.
Dependence on a Limited Number of Customers; Revenue Concentration
The Company anticipates that sales of its Truecolor Systems and
consumables to a limited number of customers will account for
substantially all of the Company's revenue. As of September 30,
1997, the Company had contracts with two customers, International
Business Machines Corporation ("IBM") and Groupe SET ("SET"), and was
in contract discussions with Oce Printing Systems USA, Inc. ("Oce").
Generally, the Company's customers provide non-binding forecasts of
future orders. There can be no assurance that these customers will
purchase a significant volume of the Company's products. A
substantial difference between forecast orders and actual orders by
any one of its customers, or the failure of its customers to purchase
a significant volume of the Company's products, could have a material
adverse effect on the business, financial condition and results of
operations of the Company. There can be no assurance that the
Company's OEM customers, including IBM and SET, or other companies
will not compete with the Company in the future.
Dependence on Third Party Marketing, Distribution and Support
A significant element of the Company's marketing strategy is to
form alliances with third parties for the marketing and distribution
of its products. To this end, the Company is a party to multi-year
agreements with IBM (the "IBM Agreement") and Groupe Set and is in
contract discussions with Oce, for the marketing, distribution and
support of the Company's products. The Company's contract with IBM
is for an initial term of three years with IBM having the right to
terminate its contract in certain circumstances, such as a material
breach of the contract by Accent Color or the Company's bankruptcy or
insolvency. There can be no assurance that (i) the Company will be
successful in maintaining such alliances or forming and maintaining
other alliances, (ii) the Company will be able to satisfy its
contractual obligations with its OEM customers or (iii) the Company's
OEM customers will devote adequate resources to market and distribute
the Company's products successfully. Any disruption in the Company's
relationships with IBM or SET, or any future customer of the Company,
may have a material adverse effect on the Company's business,
financial condition or results of operations.
As a result of its relationships with its OEM customers, the
Company's ability to interact with end users of Truecolor Systems and
observe their experience with the Company's products may be limited.
The Company also does not have control over the marketing,
distribution and support efforts of its OEM customers. This may
result in a delay by the Company in the recognition and correction of
any problems experienced by the OEM customers or the end users.
Failure of the Company to respond to customer and end-user
preferences or experience with its products, or a failure by the
Company's OEM customers to market and support the Company's products
successfully, could have a material adverse effect on the business,
financial condition and results of operations of the Company. In
addition, the Company's OEM customers will control the timing of the
introduction of the Company's products, including its existing
products. Consequently, the timing of the introduction of the
Company's products may be delayed for reasons unrelated to the
Company and its products, such as delays in the introduction of
products offered by the OEM customers with which the Company's
products are integrated. Delays in the introduction of the Company's
products could have a significant adverse effect on the Company's
business, financial condition and results of operations. Further,
third-party distribution provides the Company with less information
regarding the amount of inventory that is in the process of
distribution. This lack of information may reduce the Company's
ability to predict fluctuations in revenue resulting from a surplus
or a shortage in its distribution channels and contribute to
volatility in the Company's financial results, cash flow and
inventory.
Dependence on Spectra
The Company is dependent on Spectra, a wholly owned subsidiary
of Markem, Inc., as its sole source supplier of ink jet
printheads and the hot melt, wax-based inks used by Truecolor
Systems. Spectra has agreed to supply the Company with ink jet
printheads and wax-based inks under a supply agreement, subject to a
number of conditions. The Company's reliance on Spectra involves
several risks, including a potential inability to obtain an adequate
supply of required printheads or inks, and reduced control over the
quality, pricing and timing of delivery of these items. Because the
production of printheads is specialized and requires long lead times,
there can be no assurance that delays or shortages of printheads will
not occur. To date, Spectra has only produced a limited number of
ink jet printheads. Accordingly, there can be no assurance that
Spectra will be able to provide a stable source of supply of these
components. As the Company increases the production of Truecolor
Systems, it will become more reliant upon Spectra's ability to
manufacture and deliver ink jet printheads as required. Any
interruption in the Company's ability to obtain Spectra printheads
could have a material adverse effect on the Company's business,
financial condition and results of operations. Further, the Company
and Spectra are devoting substantial resources to improve technology
in the areas of ink jet printhead width. There can be no assurance
that, if such improvements are made, Spectra will be able to produce
printheads embodying such improvements for the Company in sufficient
quantities at an acceptable price, or at all. Any inability to
incorporate such improvements or produce printheads embodying them
could have a material adverse effect on the Company's business,
financial condition and results of operations.
Spectra, itself, is also reliant upon licenses granted to it by
third parties. The Spectra agreement allows the Company, in certain
instances, to utilize Spectra's technology to either manufacture
wax-based inks or ink jet printheads itself or arrange for their
manufacture by third parties utilizing such technology. There can be
no assurance, however, that, if necessary, the Company would be able
to manufacture ink jet printheads and wax-based inks itself or
negotiate with third parties for the timely manufacture of ink jet
printheads or supply of wax-based inks on acceptable terms or at all.
Furthermore, the use of Spectra's technology may require the consent
of certain other licensors to Spectra, and there is no assurance that
the Company will be able to obtain any such consents on acceptable
terms or at all.
Spectra has granted the Company the exclusive right to supply
products including Spectra printheads in the worldwide market for
printing color on the output from specified high-speed,
black-on-white printers manufactured or marketed by Xerox, IBM, Oce
and certain other manufacturers through December 31, 2002 with the
Company holding an option to renew the contract for an additional
seven years. To maintain such exclusive rights, the Company is
required to purchase a minimum number of ink jet printheads each
year, to continue to purchase its wax-based ink requirements from
Spectra and to make certain payments. There can be no assurance that
the Company will be able to meet the minimum purchase requirements or
make these payments. The Company's agreement with Spectra required
quarterly payments of $250,000 through 1997 to maintain the
exclusivity rights. These specified payments, together with similar
payments from other Spectra customers (which vary in amount from
customer to customer), are used by Spectra to fund ink jet printhead
development, the results of which are available to participating
customers. In addition, the Company has a development arrangement
with Spectra that requires the Company to make additional payments to
support developing a wider printhead manufacturing capability. Any
disruption in the Company's relationship with Spectra, or in
Spectra's relationship with its licensors, may have a material
adverse effect on the Company's business, financial condition and
results of operations.
Dependence on Major Subcontractors and Suppliers
The Company relies on subcontractors and suppliers to
manufacture, subassemble and perform certain testing of some modules
and parts of Truecolor Systems. Currently, the Company's ink jet
printheads are manufactured solely by Spectra. The Company currently
performs the final assembly and testing of various Truecolor System
components and of each complete Truecolor System. The Company plans
to outsource the manufacture of major components and complete final
assembly and testing of Truecolor Systems in house. The inability to
develop relationships with, or the loss of, subcontractors or
suppliers, or the failure of its subcontractors or suppliers to meet
the Company's price, quality, quantity and delivery requirements,
could have a material adverse effect on the Company's business,
financial condition and results of operations.
Significant Fluctuations in Quarterly Results
The Company's quarterly operating results are likely to vary
significantly in the future based upon a number of factors, including
the volume, timing, delivery and acceptance of customer orders, the
introduction and market acceptance of new products offered by the
Company and its OEM customers or competitors, changes in the pricing
policies of the Company or its OEM customers or competitors, the
level of product and price competition, the relative proportion of
printer and consumables sales, the timely availability of sufficient
volume of sole source components, fluctuations in research and
development expenditures, the availability of financing arrangements
for certain of the Company's customers, general economic conditions,
as well as other factors. Additionally, because the purchase of a
printing system and peripherals involves a significant capital
commitment, the sales cycle for the Company's products is susceptible
to delays and lengthy acceptance procedures associated with large
capital expenditures. Historically, there has existed seasonality in
the purchase of major equipment such as the Company's Truecolor
Systems, with many companies experiencing higher sales in the fourth
calendar quarter. The Company expects such seasonality to apply to
the purchase of its systems. Furthermore, due to the Company's high
average sales price and low unit volume, a delay in the sale of, or
the recognition of revenue from the sale of a few units could have a
material adverse effect on the results of operations for a fiscal
quarter.
Quarterly revenue and operating results depend primarily on the
volume, timing, shipping and acceptance of orders during the quarter,
which are difficult to forecast due to the length of the sales cycle. As of
September 30, 1997, the Company has recognized $1,285,000 of revenue from
the sale of its products. Through September 30, 1997, the Company had
shipped 15 production versions of its Truecolor Systems.
Consequently, the Company has minimal experience with the rate of
customer and end-user acceptance of its products or the volume or
nature of warranty claims relating to its products. The Company's
policy is to recognize revenue upon customer acceptance, which
generally occurs at the end of the warranty period. Thereafter,
once the Company gains sufficient experience regarding customer
acceptance of, and warranty claims regarding, its products, the
Company intends to recognize revenue upon shipment of the products.
As a result, the Company expects a difference between the timing of
shipments and the recognition of related revenue, which may be
substantial and inconsistent. There can be no assurance that the
timing of revenue recognition will not result in significant
fluctuations in the Company's quarterly operating results. A
significant portion of the Company's operating expenses is relatively
fixed in the short term, and planned expenditures are based on sales
forecasts. Sales forecasts by the Company's customers are generally
not binding. If revenue levels are below expectations, operating
results may be disproportionately affected because only a small
portion of the Company's expenses vary with revenue in the short
term, which could have a material adverse effect on the Company's
business, financial condition and results of operations. There can
be no assurance that the Company will experience or sustain any
revenue growth or profitability.
Potential Need for Additional Funding for Operating and Capital
Requirements
The Company's currently anticipated levels of revenue and cash
flow are subject to many uncertainties and cannot be assured.
Further, the Company's business plan may change, or unforeseen events
may occur, requiring the Company to raise additional funds. The
amount of funds required by the Company will depend on many factors,
including the extent and timing of the sale of Truecolor Systems, the
timing and cost associated with the expansion of the Company's
manufacturing, development and engineering, sales and marketing and
customer support capabilities and the Company's operating results.
There can be no assurance that, if and when needed,
additional financing will be
available, or available on acceptable terms. The inability to obtain
additional financing or generate sufficient cash from operations
could require the Company to reduce or eliminate expenditures for
research and development, production or marketing of its products, or
otherwise to curtail or discontinue its operations, which could have
a material adverse effect on the Company's business, financial
condition and results of operations.
Product Warranty; Limit on Prices for Spare Parts
The Company warrants its Truecolor Systems to be free of defects
in workmanship and materials for 90 days from installation at the
location of the end user. Furthermore, under the IBM Agreement, the
Company has agreed to provide spare parts for its products to IBM at
prices which will yield a monthly parts cost per Truecolor System not
to exceed a specified amount. There can be no assurance that the
Company will not experience warranty claims or parts failure rates in
excess of those which it has assumed in pricing its products and
spare parts. Any such excess warranty claims or spare parts failure
rates could have a material adverse effect on the Company's business,
financial condition or results of operations. The Company currently
has minimal experience with the volume or nature of warranty claims
relating to its products.
Dependence on a Single Product Line
The Company anticipates that it will derive substantially all of
its revenue in the foreseeable future from sales of Truecolor
Systems, related consumables and spare parts. If the Company is
unable to generate sufficient sales of Truecolor Systems due to
market conditions, manufacturing difficulties or other reasons, it
may not be able to continue its business. Similarly, if purchasers
of Truecolor Systems were to purchase wax-based ink or spare parts
from suppliers other than the Company, the Company's business,
results of operations and financial condition could be materially
adversely affected. Dependence on a single product line makes the
Company particularly vulnerable to the successful introduction of
competitive products.
Rapid Technological Change Requires Ongoing Product Development
Efforts
The high-speed printer industry is characterized by evolving
technology and changing market requirements. The Company's future
success will depend on a number of factors, including its ability to
continue to develop and manufacture new products and to enhance
existing products. Consequently, the Company considers the
enhancement of its products to be a development priority. Certain
enhancements of its existing products are required by the Company's
contract with IBM. Additionally, in a new and evolving market,
customer preferences can change rapidly and new technology could
render existing technology and product inventory obsolete. Failure
by the Company to respond adequately to changes in its target market,
to develop or acquire new technology or to successfully conform to
market preferences could have a material adverse effect on the
business, financial condition and results of operations of the
Company. The failure by the Company to anticipate or respond
adequately to competitive and technological changes could have a
material adverse effect on the business, financial condition and
results of operations of the Company.
Risk of Delisting from Nasdaq Stock Market
The Company's stock is currently traded on the Nasdaq National
Market. There are no assurances, however, that the Company's Common
Stock will continue to be included in such market, or that an active
market for such stock will exist. The failure to meet the listing
requirements for the National Market could result in the Company's
Common Stock alternatively either being listed on the Nasdaq Small
Capitalization Market if the Company could meet the initial listing
criteria for that market or deletion from the Nasdaq Stock Market
altogether if the Company failed to meet the National or Small
Capitalization Market listing criteria. The delisting of the
Company's stock from the Nasdaq Stock Market would cause disruption
in trading of the Company's Common Stock and would have a material
adverse effect on the Company.
Limited Protection of Proprietary Technology and Risks of Third-party
Claims
The Company's ability to compete effectively will depend, in
part, on the ability of the Company to maintain the proprietary
nature of its technology. The Company relies, in part, on
proprietary technology, know-how and trade secrets related to certain
aspects of its principal products and operations but there can be no
assurance that others, including the Company's OEM customers, may not
independently develop the same or similar technology or otherwise
obtain access to the Company's proprietary technology. To protect
its rights in these areas, the Company generally requires its OEM
customers, suppliers, employees and independent contractors to enter
into nondisclosure agreements. There can be no assurance, however,
that these agreements will provide meaningful protection for the
Company's trade secrets, know-how or other proprietary information.
If the Company is unable to maintain the proprietary nature of its
products through nondisclosure agreements or other protection, its
business could be materially adversely affected. The U.S. Patent
and Trademark Office (the "Patent Office") has granted patent number
5,602,624 related to the Company's color printing apparatus. In
addition, the Patent Office has filed a Notice of Allowance with
respect to another patent application filed by the Company relating
to the paper path and the placement of print on a page. Furthermore,
the Company has filed additional applications for patents related to
certain enhancements of the Truecolor Systems. There can be no
assurance, however, as to the degree of protection offered by the
Notice of Allowance, or as to the likelihood that pending patent
applications will be issued. There can be no assurance that
potential competitors, many of which may have substantially greater
resources than the Company and may have made substantial investments
in competing technologies, do not currently have or will not obtain
patents that will prevent, limit or interfere with the Company's
ability to make, use or sell its products or will not intentionally
infringe on the Company's patents if and when issued. Moreover, no
assurance can be given that Accent Color's technology does not
conflict with existing enforceable patents. Although patents may be
issued to Accent Color as a result of patent applications it has
filed, Accent Color's technology may fall within the scope of
existing enforceable patents. There can be no assurance that the
steps taken by the Company to protect its proprietary rights will be
adequate to prevent misappropriation of its technology or independent
development by others of similar technology. In addition, the laws
of some foreign countries do not protect the Company's proprietary
rights to the same extent as do the laws of the U.S. There can be no
assurance that these protections will be adequate.
The Company has an exclusive right, under an agreement with
Spectra, to supply products including Spectra's ink jet printheads in
the worldwide market for printing color on the output from specified
high-speed, black-on-white printers marketed by Xerox, IBM, Oce and
certain other parties through December 31, 2002. The Company also
has an option to renew this agreement for an additional seven year
term. To the extent that wax-based inks and ink jet printheads
purchased from Spectra are covered under patents or licenses, the
Company relies on Spectra's rights under such patents and licenses
and Spectra's willingness and ability to enforce its patents and
maintain its licenses. There can be no assurance that Spectra will
be willing or able to enforce its patents and maintain its licenses
and any such unwillingness or inability could have a material adverse
effect on the Company's business, financial condition and results of
operations.
Although the Company believes that its products and technology
do not infringe any existing proprietary rights of others, there can
be no assurance that third parties will not assert such claims
against the Company in the future or that such future claims will not
be successful. The Company could incur substantial costs and
diversion of management resources with respect to the defense of any
claims relating to proprietary rights, which could have a material
adverse effect on the Company's business, financial condition and
results of operations. Furthermore, parties making such claims could
secure a judgment awarding substantial damages, as well as injunctive
or other equitable relief, which could effectively block the
Company's ability to make, use, sell, distribute or market its
products and services in the U.S. or abroad. Such a judgment could
have a material adverse effect on the Company's business, financial
condition and results of operations. In the event a claim relating
to proprietary technology or information is asserted against the
Company, the Company may seek licenses to such intellectual property.
There can be no assurance, however, that such a license could be
obtained on commercially reasonable terms, if at all, or that the
terms of any offered licenses will be acceptable to the Company. The
failure to obtain the necessary licenses or other rights could
preclude the sale, manufacture or distribution of the Company's
products and, therefore, could have a material adverse effect on the
Company's business, financial condition and results of operations.
The cost of responding to any such claim may be material, whether or
not the assertion of such claim is valid.
Difficulties in Managing Rapid Growth
Since inception, the Company has experienced rapid growth, which
has placed a significant strain on the Company's (i) administrative,
operational and financial personnel, (ii) management information
systems, (iii) manufacturing operations and (iv) other resources.
The Company's future development plans anticipate additional
management, operating and financial resources. For example, the
Company intends to significantly increase production capacity, create
new marketing programs, hire additional personnel and develop further
enhancements to the Company's products. There can be no assurance
that the Company will be able to successfully implement its business
strategy, that operations will generate sufficient cash flow, or that
adequate financing will be available on acceptable terms to fund
continuing growth, or that management will successfully manage
continued growth. The failure to manage growth effectively may have
a material adverse effect on the Company's business, financial
condition and results of operations.
Dependence on Key Personnel
The business of the Company is substantially dependent on the
capabilities and services of a number of key technical and managerial
personnel, including Richard J. Coburn, its Chairman, and Norman L.
Milliard, its President and Chief Executive Officer. Mr. Coburn has
an employment agreement with the Company which has a term that
expires at the end of 1998. Mr. Milliard entered into a three-year
contract with the Company at the end of 1994 which is automatically
extended each year for one year unless Mr. Milliard or the Company
gives notice prior to the year end. Both Mr. Coburn and Mr. Milliard
may terminate the employment relationship with the Company at any
time with no penalty other than the loss of future compensation. The
loss of the services of Messrs. Coburn or Milliard or other key
personnel could have a material adverse effect upon the business of
the Company. The Company has keyman life insurance on Messrs. Coburn
and Milliard in the amount of $1,000,000 each. There can be no
assurance, however, that the Company will continue such insurance
coverage or that such amount is sufficient. The Company's future
success will further depend on both its ability to retain key
personnel and its ability to attract qualified personnel.
Competition for qualified personnel is intense, and there can be no
assurance that the Company will be successful in hiring or retaining
them. The inability of the Company to retain key personnel or
attract qualified personnel may have a material adverse effect on the
Company's business, financial condition and results of operations.
Competition
The Company expects to encounter varying degrees of competition
in the markets in which it competes. The Company competes, in
significant part, on the basis of advanced proprietary technology in
the areas of paper handling, ink jet color printing and interface
software which allows the Company's products to print variable data,
in multiple standard and custom colors at high speeds.
Competition to supply color printing is fragmented. The Xerox
4890 (a similar product is also marketed by Xerox as the DocuTech
390HC) is a spot color printer which prints in black and one color
per job (out of a limited palette). It is capable of printing 92
pages per minute but does not offer custom colors. BESTE Bunch
Systems markets a color offset press used as a downstream add-on to
an Oce or IBM high-speed, black-on-white printer. While providing
color logos and fixed data, it does not offer variable data, requires
longer time to set up, and is more labor intensive. It also requires
additional processes of negative production and plate making. There
are production full process color printers available which have
relatively high per page print costs and operate at much lower speeds
than those required by typical production printing, making them
impractical for high-speed print jobs. However, many of the
companies that may compete with the Company in the future have longer
operating histories and significantly greater financial, technical,
sales, marketing and other resources, as well as greater name
recognition than the Company.
In addition to direct competition from other firms utilizing
high-speed color technologies, there exists potential direct
competition from firms improving technologies used in low-speed to
medium-speed color printers and indirect competition from firms
producing pre-printed forms.
Products or product improvements based on new technologies could
be introduced by other companies with little or no advance notice.
Manufacturers of high-speed, black-on-white printers may also, in
time, develop comparable or more effective color capability within
their own products which may render the Company's products obsolete.
There can be no assurance that the Company will be able to compete
against future competitors successfully or that competitive pressures
faced by the Company will not have a material adverse effect upon its
business, financial condition and results of operations.
Risks Associated with International Operations
The Company intends to have its products marketed worldwide and
therefore may enter into contracts with foreign companies.
International sales are subject to certain inherent risks, including
unexpected changes in regulatory requirements, tariffs and other
trade barriers, fluctuations in exchange rates, credit risks,
government controls, political instability, longer payment cycles,
increased difficulties in collecting accounts receivable and
potentially adverse tax consequences. There can be no assurance that
these factors will not have a material adverse effect on the
Company's business, financial condition and results of operations.
Dividends
The Company has not declared or paid dividends on its common
stock in the past and does not anticipate declaring or paying any
dividends in the foreseeable future.
Environmental Regulation
The Company is subject to regulation under various federal,
state and local laws relating to the environment and to employee
safety and health. These environmental regulations relate to the
generation, storage, transportation, disposal and emission of various
substances into the environment. The Company cannot predict the
environmental legislation or regulations that may be enacted in the
future or how existing or future laws or regulations will be
administered or interpreted. Compliance with more stringent laws or
regulations, as well as more vigorous enforcement policies of the
regulatory agencies or stricter interpretation of existing laws, may
require additional expenditures by the Company, some or all of which
may be material.
Potential Adverse Impact of Anti-takeover Provisions on Market Price
of Shares
The Company's Restated Certificate of Incorporation contains
provisions that could discourage a proxy contest or make more
difficult the acquisition of a substantial block of the Company's
Common Stock. The Restated Certificate of Incorporation provides for
a classified Board of Directors, and members of the Board of
Directors may be removed only upon the affirmative vote of holders of
at least two-thirds of the shares of capital stock of the Company
issued and outstanding and entitled to vote. In addition, the Board
of Directors is authorized to issue shares of Common Stock and
Preferred Stock which, if issued, could dilute and adversely affect
various rights of the holders of shares of Common Stock and, in
addition, could be used to discourage an unsolicited attempt to
acquire control of the Company.
The Company is subject to the Connecticut Business Corporation
Act (the "Connecticut Act"), some provisions of which prohibit a
publicly held Connecticut corporation from engaging in a "business
combination" (including the issuance of equity securities which have
an aggregate market value of 5% or more of the total market value of
the outstanding shares of the Company) with an "interested
shareholder" (as defined in the Connecticut Act) for a period of five
years from the date of the shareholder's purchase of stock unless
approved in a prescribed manner. The application of this statute
could prevent a change of control of the Company. Generally,
approval is required by the Board of Directors and by a majority of
the non-employee directors of the Company and by 80% of the
outstanding voting shares of the Company and two-thirds of the voting
power of the outstanding shares of the voting stock other than shares
held by the interested shareholder. There can be no assurance that
these provisions will not prevent the Company from entering into a
business combination that otherwise would be beneficial to the
Company. The Connecticut Act also requires that any action of the
stockholders of the Company taken by written consent without a
meeting must be unanimous.
SELLING STOCKHOLDERS
The following table shows (i) the name of the Selling
Stockholders (ii) the number of shares of Common Stock beneficially
owned by each Selling Stockholder or issuable upon the exercise of
currently outstanding warrants prior to the sale of shares registered
hereby, (iii) the aggregate number of shares of Common Stock to be
sold by each from time to time pursuant to this Prospectus, and (iv)
the number of shares beneficially owned after the sale of all shares
registered hereby:
Name of Selling Shares Beneficially Shares to be Shares
Stockholder Owned Prior to Sold in the Owned After
the Offering Offering the Offering
Xerox Corporation 425,000 425,000 0
ProFutures Special
Equity Fund, L.P. 187,648 187,648 0
Gary H. Halbert 73,056 73,056 0
FT Trading Corp. 73,056 73,056 0
Elara Ltd. 182,648 182,648 0
Brian Leung Hung Tak 182,648 182,648 0
Bexley Enterprises
Limited 182,648 182,648 0
Luzon Investments LTD. 365,296 365,296
Gregory A. Robertshaw 36,528 36,528 0
Steven C. & Elizabeth
A. Widman 9,132 9,132 0
Albert G. Nickel 18,264 18,264 0
Joseph P. Crugnale 36,528 36,528 0
E. Buckley Griswold 18,264 18,264 0
C.R. Welling 18,264 18,264 0
Kevin G. Kett 18,264 18,264 0
David B. Payne 9,132 9,132 0
Russell D. Barnard 9,132 9,132 0
Ivy M. Leverone 9,132 9,132 0
Kathleen M. Donovan 18,264 18,264 0
James T. Roberto 18,264 18,264 0
Kristine Szabo 36,528 36,528 0
Deed of Trust of Frank
J. Campbell, TTL 22,912 22,912 0
Kristen M. Hansen 13,476 13,476 0
Penelope S. Hansen
c/f Jennifer Hansen 13,476 13,476 0
Penelope s. Hansen
c/f Mark Hansen 13,476 13,476 0
Richard A. Hansen, II 13,476 13,476 0
Ronald B. Mandell 20,216 20,216 0
Irving L. Mazer, Esq. 45,221 45,221 0
Irving L. Mazer, Esq.
Special Account 5,020 5,020 0
Draper & Co. FBO
PMG 401K 44,480 44,480 0
Jack Silver 80,876 80,876 0
Charles Robins 12,332 12,332 0
Arnold A. Phipps 18,000 18,000 0
Rush & Co. 12,300 12,300 0
Dr. Gershon Stern 35,000 35,000 0
Peter D. Kamenstein 12,498 12,498 0
Gary Hindes, Trustee 9,000 9,000 0
MarketCorp Ventures L.P. 67,500 67,500 0
Newport Advisors 35,000 35,000 0
Frank J. Campbell III 12,501 12,501 0
Frank J. Campbell III &
Richard A. Hansen T/U/W
Jane D. Campbell 24,999 24,999 0
James J. Kim 37,500 37,500 0
Agnes C. Kim 37,500 37,500 0
Bryanston Asset Management
LTD Pension Fund Account 6,000 6,000 0
Barclays Bank Guernsey 15,000 15,000 0
Finemost LTD 15,000 15,000 0
USE OF PROCEEDS
All the shares offered hereby are being offered for the
account of the Selling Stockholders. Accordingly the Company will
not receive any proceeds of any sales made hereunder.
PLAN OF DISTRIBUTION
The Company has been advised by the Selling Stockholders that
they intend to sell all or a portion of the shares offered hereby
from time to time in the Nasdaq National Market and that sales will
be made at prices prevailing in the market at the times of such
sales. The Selling Stockholders may also make private sales directly
or through a broker or brokers, who may act as agent or as principal.
In connection with any sales, the Selling Stockholders and any
brokers participating in such sales may be deemed to be
"underwriters" within the meaning of the Securities Act. The Company
will receive no proceeds from sales made hereunder.
Any broker-dealer participating in such transactions as agent
may receive commissions from the Selling Stockholders (and, if they
act as agent for the purchaser of such shares, from such purchaser).
Usual and customary brokerage fees will be paid by the Selling
Stockholders. Broker-dealers may agree with the Selling Stockholders
to sell a specified number of shares at a stipulated price per share,
and, to the extent such a broker-dealer is unable to do so acting as
agent for the Selling Stockholders, to purchase as principal any
unsold shares at the price required to fulfill the broker-dealer
commitment to the Selling Stockholders. Broker-dealers who acquire
shares as principal may thereafter resell such shares from time to
time in transactions (which may involve crosses and block
transactions and which may involve sales to and through other
broker-dealers, including transactions of the nature described above)
in the Nasdaq National Market, in negotiated transactions or
otherwise at market prices prevailing at the time of sale or at
negotiated prices, and in connection with such resales may pay to or
receive from the purchasers of such shares commissions computed as
described above.
The Company has advised the Selling Stockholders that the
anti-manipulative Rules of Regulation M promulgated by the Commission
may apply to their respective sales in the market, has furnished the
Selling Stockholders with a copy of these Rules and has informed them
of the need for delivery of copies of this Prospectus. The Selling
Stockholders may indemnify any broker-dealer that participates in
transactions involving the sale of the shares against certain
liabilities, including liabilities arising under the Securities Act.
Any commissions paid or any discounts or concessions allowed to any
such broker-dealers, and any profits received on the resale of such
shares, may be deemed to be underwriting discounts and commissions
under the Securities Act if any such broker-dealers purchase shares
as principal.
Any securities covered by this Prospectus that qualify for sale
pursuant to Rule 144 under the Securities Act may be sold under that
Rule rather than pursuant to this Prospectus.
There can be no assurance that the Selling Stockholders will
sell any or all of the shares of Common Stock offered by them
hereunder.
LEGAL MATTERS
Counsel for the Company, Murtha, Cullina, Richter and Pinney,
CityPlace I, 185 Asylum Street, Hartford, Connecticut 06103-3469, has
rendered an opinion to the effect that the Common Stock offered for
resale hereby is duly and validly issued, fully paid and
non-assessable. Willard F. Pinney, Jr., a partner in such firm, is a
stockholder of the Company as well as Corporate Secretary and a
Director.
EXPERTS
The financial statements incorporated in this Prospectus by
reference to the Annual Report on Form 10-K of Accent Color Sciences,
Inc. for the year ended December 31, 1996 have been so incorporated
in reliance on the report of Price Waterhouse LLP, independent
accountants, given on the authority of said firm as experts in
auditing and accounting.
ADDITIONAL INFORMATION
The Company has filed with the Commission a Registration
Statement on Form S-3, under the Securities Act, with respect to the
shares of Common Stock offered hereby. This Prospectus does not
contain all of the information set forth in the Registration
Statement and the exhibits thereto. For further information with
respect to the Company and the Common Stock offered hereby, reference
is made to the Registration Statement and the exhibits filed
therewith or incorporated by reference. Statements contained in this
Prospectus regarding the contents of any contract or any other
document referred to are necessarily incomplete, and in each instance
reference is made to the copy of such contract or other document
filed as an exhibit to the Registration Statement or otherwise filed
with the Commission, each statement being qualified in all respects
by such reference. The Registration Statement may be inspected
without charge at the offices of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549, and copies of all or any part thereof
may be obtained from such office upon the payment of the fees
prescribed by the Commission.
ACCENT COLOR SCIENCES, INC.
REGISTRATION STATEMENT ON FORM S-3
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
AMOUNT
- ----------
Registration Fees--Securities and Exchange Commission $ 1,998.52
Legal Fees and Expenses... 10,000.00*
Accounting Fees and Expenses... 7,500.00*
TOTAL............................................$19,498.52
*Estimated.
The Company shall pay reasonable legal and accounting fees,
filing and registration fees of the Registration. The Selling
Stockholder shall pay all commissions, transfer taxes, and the fees
and expenses of counsel to the Selling Stockholders.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company is a Connecticut corporation. Sections 33-770
through 33-778 of the Connecticut Act provide that, unless limited
by its certificate of incorporation, a corporation shall indemnify
any director or officer of the corporation against reasonable
expenses incurred by him in connection with any action, suit or
proceeding in which he is made or is threatened to be made a party
by reason of having been a director or officer of the corporation
if he was wholly successful in the action, on the merits or
otherwise.
In addition, such sections of the Connecticut Act allow a
corporation by action of the Board of Directors to indemnify an
individual made a party to a proceeding because he was a director
or officer of the corporation if: (1) he conducted himself in good
faith, and (2) he reasonably believed (A) in the case of conduct in
his official capacity with the corporation, his conduct was in the
best interests of the corporation and (B) in all other cases, that
his conduct was at least not opposed to the best interests of the
corporation and (3) in the case of any criminal proceeding, he had
no reasonable cause to believe his conduct was unlawful. Section
33-771 also provides, however, that a corporation may not indemnify
a director or officer (1) in connection with a proceeding by or in
the right of the corporation in which the director or officer was
adjudged liable to the corporation or (2) in connection with any
other proceeding charging improper personal benefit to the director
or officer in which he was adjudged liable on the basis that
personal benefit was improperly received by him, whether or not the
action involved was taken in his official capacity.
The Restated Certificate of Incorporation of the Company
includes a provision limiting the personal liability of a director
to the Company or its shareholders for monetary damages for breach
of duty as a director, to an amount equal to the amount of
compensation received by the Director for serving the Company
during the calendar year in which the violation occurred, subject
to a number of exceptions, including violations involving a knowing
and culpable violation of law, a breach of duty which enables a
director or an associate to receive an improper personal gain,
conduct showing a lack of good faith and conscious disregard of
duty to the Company, a sustained and unexcused pattern of
inattention, or the approval of an illegal distribution of assets
of the Company to its shareholders. An associate of a director, in
terms of improper personal gains, is defined as (A) any corporation
or organization of which a Company director is an officer or
partner or is, directly or indirectly, the beneficial owner of ten
percent or more of any class of voting stock, (B) any trust or
other estate in which a Company director has at least ten percent
beneficial interest or as to which a Company director serves as
trustee or in a similar fiduciary capacity and (C) any relative or
spouse of a Company director, or any relative of such spouse who
has the same name as the Company director. In addition, the
Company also maintains a directors' and officers' insurance and
reimbursement policy.
Item 16. EXHIBITS.
3 (ii) Bylaws of the Registrant, as amended December 29, 1997
5 Opinion of Murtha, Cullina, Richter and Pinney
23 (i) Consent of Murtha, Cullina, Richter and Pinney
(included in the opinion under Exhibit 5)
23 (ii) Consent of Price Waterhouse LLP
24 Power of Attorney pursuant to which this Registration
Statement is signed by certain Directors
Item 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) to file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933, to the extent that the
information required to be included in the post-effective amendment
is not contained in periodic reports filed by the Company with or
furnished to the SEC pursuant to Section 13 or Section 15(d)of the
Securities Exchange Act of 1934 and incorporated by reference
herein;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration Statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change in
the information set forth in the Registration Statement, to the
extent that the information required to be included in the
post-effective amendment is not contained in periodic reports filed
by the Company with or furnished to the SEC pursuant to Section 13
or Section 15(d)of the Securities Exchange Act of 1934 and
incorporated by reference herein; and
(iii) To include any material information with
respect to the plan of distribution not previously disclosed in the
Registration Statement or any material change to such information
in the Registration Statement.
(2) That, for the purpose of determining any liability under
the Securities Act, each such post-effective amendment shall be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act,
each filing of the Registrant's annual report pursuant to Section
13(a) or Section 15(d) of the Exchange Act that is incorporated by
reference in this Registration Statement shall be deemed to be a
new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer
or controlling person of the Registrant in the successful defense
of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in
the Securities Act and will be governed by the final adjudication
of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of
1933, the Registrant certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form
S-3 and has duly caused this Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the
City of East Hartford, State of Connecticut on this 30th day of
December 1997.
ACCENT COLOR SCIENCES, INC.
By: /s/ Norman L. Milliard
Title: President, Chief Executive
Officer and Director
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.
Signature Title Date
President, Chief December 30, 1997
/s/ Norman L. Milliard Executive Officer
- -------------------------- (Principal
Norman L. Milliard Executive Officer) and
Director
/s/ Patrick J. Pedonti
- ------------------------- Chief Financial Officer December 30,1997
Patrick J. Pedonti and Treasurer (Principal Financial
and Accounting Officer)
* Director - December 30, 1997
- -------------------------
Richard J. Coburn
* Director -
- -------------------------
Richard Hodgson
* Director -
- --------------------------
Willard F. Pinney, Jr.
* Director -
- --------------------------
Robert H. Steele
/s/ Norman L. Milliard December 30, 1997
- ---------------------------
Norman L. Milliard,
Attorney-in-Fact
* Signature by Attorney-in-Fact
Exhibit index
3 (ii) Bylaws of the Registrant, as amended December 29, 1997
5 Opinion of Murtha, Cullina, Richter and Pinney
23 (i) Consent of Murtha, Cullina, Richter and Pinney (included
in the opinion under Exhibit 5
23 (ii)Consent of Price Waterhouse LLP
24 Power of Attorney pursuant to which this Registration
Statement is signed by certain Directors