UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For The Quarterly Period Ended March 31, 1999
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period From _____ to ______
Commission File Number 0-29048
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 No.)
800 Connecticut Boulevard, East Hartford, Connecticut 06108
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (860) 610-4000
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes /X/ No
The number of shares outstanding of the registrant's common stock
as of April 30, 1999 was 14,693,434.
ACCENT COLOR SCIENCES, INC.
FORM 10-Q
For The Quarterly Period Ended March 31, 1999
INDEX
Part I. Financial Information
Item 1. Financial Statements 3
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
Part II. Other Information
Item 1. Legal Proceedings 13
Item 2. Changes in Securities and Use of Proceeds 13
Item 3. Defaults Upon Senior Securities 13
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 14
ACCENT COLOR SCIENCES, INC.
CONDENSED BALANCE SHEETS
March 31, December 31,
1999 1998
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 918,369 $ 1,048,425
Accounts receivable 849,328 1,321,782
Inventories (Note 3) 2,660,489 2,269,016
Prepaid expenses and other
assets 209,677 216,564
Total current assets 4,637,863 4,855,787
Fixed assets, net 1,852,161 1,933,043
Other assets, net
71,378 71,575
Total assets $ 6,561,402 $ 6,860,405
Liabilities and Shareholders'
Equity
Current liabilities:
Obligations under capital
leases $ 64,231 $ 64,014
Accounts payable 1,856,391 961,626
Accrued expenses 792,572 588,966
Customer advances and deposits 260,000 -
Deferred revenue 595,000 595,000
Total current liabilities 3,568,194 2,209,606
Obligation under capital leases 5,737 23,116
Long-term debt, net of discount 2,268,644 2,235,593
(Note 5)
Other long-term liabilities 590,927 601,759
Total non-current
liabilities 2,865,308 2,860,468
Shareholders' equity:
Preferred stock, no par value,
500,000 shares authorized, 2,735
and 3,500 shares issued and
outstanding (Note 4) 2,383,116 3,049,691
Common stock, no par value,
35,000,000 shares authorized,
14,614,314 and 12,841,881
shares issued and outstanding 47,022,179 46,355,604
Accumulated deficit (49,277,395) (47,614,964)
Total shareholders'equity 127,900 1,790,331
Total liabilities and
shareholders' equity $ 6,561,402 $ 6,860,405
The accompanying notes are an integral part of these financial statements.
ACCENT COLOR SCIENCES, INC.
CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
Three months ended March 31,
1999 1998
Revenue (Note 2) $ 2,249,498 $ 916,733
Costs and expenses:
Costs of production 2,144,306 1,628,047
Research and development 951,830 1,478,947
Marketing, general and
administrative 723,241 909,342
3,819,377 4,016,336
Other (income) expense:
Interest expense 97,814 7,783
Interest income (5,262) (32,014)
92,552 (24,231)
Net loss (1,662,431) (3,075,372)
Imputed dividend on preferred
stock (Note 4) - (920,000)
Net loss applicable to common
stock $(1,662,431) $(3,995,372)
Net loss (basic & diluted) per
common share $ (.12) $ (.33)
Weighted average common shares
Outstanding 13,759,120 11,993,188
The accompanying notes are an integral part of these financial statements.
ACCENT COLOR SCIENCES, INC.
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
Three months ended March 31,
1999 1998
Cash flows from operating
activities:
Net loss before imputed
dividend $(1,662,431) $(3,075,372)
Adjustments to reconcile
net loss to net cash used in
operating activities:
Depreciation and
amortization 305,963 288,321
(Gain) loss on disposal
of fixed assets (300) 13,453
Changes in assets and
liabilities:
Accounts receivable 472,454 (183,218)
Inventories (391,473) (572,976)
Prepaid expenses and
other assets 6,887 47,512
Accounts payable and
accrued expenses 1,098,371 167,122
Customer advances and
deposits 260,000 (47,280)
Deferred revenue - 102,800
Other long-term
liabilities (10,832) 49,357
Net cash provided by
(used in) operating
activities 78,639 (3,210,281)
Cash flows from investing
activities:
Purchases of fixed assets (191,533) (9,982)
Net cash used in
investing activities (191,533) (9,982)
Cash flows from financing
activities:
Payment of capital lease
obligations (17,162) (15,747)
Proceeds from exercise of
options & warrants - 44,625
Net proceeds from issuance
of preferred
stock through offerings
and conversion of debt - 3,921,038
Net cash provided by
(used in) financing
activities (17,162) 3,949,916
Net increase
(decrease) in cash and cash
equivalents (130,056) 729,653
Cash and cash
equivalents at beginning of
period 1,048,425 4,005,563
Cash and cash
equivalents at end of period $ 918,369 $ 4,753,216
The accompanying notes are an integral part of these financial statements.
ACCENT COLOR SCIENCES, INC.
CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
Common Stock Preferred Stock Accumulated
Shares Amount Shares Amount Deficit Total
December 31, 1997 11,989,855 $45,114,633 - $ - $(37,845,111) $ 7,269,522
Proceeds from
sale - - 4,500 3,921,037 - 3,921,037
Exercise of
options 37,500 44,625 - - - 44,625
Conversion of
Series B
Preferred
Stock 814,526 871,346 (1,000) (871,346) - -
Warrants issued
with debt - 325,000 - - - 325,000
Net loss before
imputed dividend - - - - (9,769,853) (9,769,853)
December 31, 1998 12,841,881 46,355,604 3,500 3,049,691 (47,614,964) 1,790,331
Conversion of
Series B
Preferred Stock 1,772,433 666,575 (765) (666,575) - -
Net loss - - - - (1,662,431) (1,662,431)
March 31, 1999 14,614,314 $47,022,179 2,735 $ 2,383,116 $(49,277,395) $ 127,900
(unaudited)
The accompanying notes are an integral part of these financial statements.
ACCENT COLOR SCIENCES, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
1. Interim Condensed Financial Statements
In the opinion of the Company, the accompanying unaudited
condensed financial statements contain all adjustments,
consisting only of normal recurring adjustments, necessary to
present fairly its financial position as of March 31, 1999 and
the results of operations and cash flows for the three months
ended March 31, 1999 and 1998. The December 31, 1998 balance
sheet has been derived from the Company's audited financial
statements at that date. These interim condensed financial
statements should be read in conjunction with Management's
Discussion and Analysis and financial statements included in the
Company's Annual Report on Form 10-K for the year ended December
31, 1998.
The results of operations for the three months ended March 31,
1999 are not necessarily indicative of the results to be expected
for the full year.
2. Summary of Significant Accounting Policies
Significant accounting policies followed in the preparation of
these financial statements are as follows:
Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Revenue Recognition
Revenue is generally recognized upon product shipment. The
Company has established warranty policies that, under specific
conditions, enable customers to return products. The Company
provides reserves for potential returns and allowances and
warranty costs at the time of revenue recognition. Prior to
October 1, 1998, the Company did not have adequate information
and experience to estimate potential returns, allowances and
warranty costs, and accordingly, revenue resulting from Truecolor
Systems was deferred until the end of the warranty period.
During the fourth quarter of 1998, the Company concluded that it
had adequate warranty information and experience to begin
recognizing revenue upon the shipment of systems to its primary
OEM customer. The Company will continue to defer revenue on
shipments to its second OEM customer until systems are in
production and are past the warranty period or until the Company
has adequate warranty history with that product.
3. Inventories
Inventories consist of the following:
March 31, December 31,
1999 1998
Raw materials and components $ 1,541,274 $ 1,185,529
Work-in-process 329,980 299,271
Finished goods 789,235 784,216
$ 2,660,489 $ 2,269,016
4. Shareholders' Equity
In December 1997, the Company's Board of Directors designated a
series of 4,500 shares of the Company's previously authorized
preferred stock, no par value per share, to be designated as the
Series B Convertible Preferred Stock ("Series B Stock"). On
January 13, 1998 the Company completed a private equity financing
providing net proceeds to the Company of $3.9 million. In
connection with the financing, the Company issued 4,500 shares of
Series B Stock at a price of $1,000 per share and warrants to
purchase the Company's common stock. The warrants issued are
exercisable into 300,000 shares of common stock with an exercise
price of $2.75 and an expiration date of January 9, 2003.
Additionally, warrants exercisable into 115,385 shares of common
stock with an exercise price of $2.50 and an expiration date of
January 9, 2003 were issued to the placement agent for services
provided. In connection with the sale of the units, the Company
agreed to register the common stock issuable upon the conversion
of the Series B Stock and the execution of the warrants.
The Series B Stock, no par value per share, is convertible into
such number of shares of common stock as is determined by
dividing the stated value ($1,000) of each share of Series B
Stock (as such value is increased by an annual premium of 6%) by
the then current conversion price of the Series B Stock (which is
determined, generally, by reference to 85% of the average of the
closing market price of the common stock during the five
consecutive trading days immediately preceding the date of
determination) subject to certain restrictions and adjustments.
The Series B Stock has voting rights as defined in the Company's
Certificate of Incorporation, bears no dividends and ranks senior
to the Company's common stock and Series A Preferred Stock. In
the event of any voluntary or involuntary liquidation of the
Company, the Series B holders shall be entitled to a liquidation
preference equal to the stated value of the stock plus the
accrued premium through the date of final distribution. Upon
occurrence of specific events, as defined in the agreement, the
holder may redeem the Series B Stock for cash or shares at the
option of the Company. The Company also has optional redemption
rights.
The Company initially reserved 6,300,000 shares of common stock
for issuance pursuant to the conversion of the Series B Stock.
This number of shares represented an estimate based on 200% of
the number of common shares that would have been issuable upon
conversion with an exercise price of $1.875 per share (4,800,000)
plus 1,500,000 shares issuable under the terms of the Certificate
of Designation in the event of certain failures by the Company to
comply with various provisions thereof, including maintaining its
common stock listing on the NASDAQ Stock Market. In addition,
415,385 shares of common stock, subject to adjustments in
accordance with the terms of each warrant, were reserved for
issuance pursuant to the exercise of the warrants described
above.
On August 10, 1998 and March 22, 1999, pursuant to the terms of
the Certificate of Designation and approval by the Board of
Directors, the Company increased the number of reserved shares of
common stock for issuance upon the conversion of the Series B
Stock by 2,567,652 and 3,833,699 shares, respectively. This was
done because the reserved amount had fallen below 135% of the
number of shares of common stock issuable upon conversion of the
then outstanding shares of Series B Stock. As of March 31, 1999,
there were 10,114,392 shares of common stock reserved for
issuance pursuant to the conversion of the remaining 2,735 shares
of Series B Stock issued and outstanding. The actual number of
shares issuable upon conversion could be materially less or more
than this number depending on factors that cannot be predicted by
the Company. The number of shares issuable upon conversion is
dependent on the market price of the common stock at the time of
the conversion. As of March 31, 1999, 1,765 shares of Series B
Stock had been converted into 2,586,959 shares of common stock at
an average conversion price of $.79 per share.
The Company's common stock was delisted from the NASDAQ Stock
Market effective March 17, 1999 as the Company was not in
compliance with NASDAQ's minimum bid price and net tangible asset
level. Consequently, each holder of the Company's Series B
Convertible Preferred Stock has the right, beginning March 31,
1999, to require the Company to redeem such holder's shares of
Series B Preferred Stock, in cash or, at the Company's
option, in common stock, at a redemption price specified in
the Company's Certificate of Incorporation. The Company is not
aware that any such holder intends to require such redemption, but
cannot predict what eachholder may elect to require. In the event a
holder of Series B Preferred Stock were to demand redemption at a
time when the Company's resources are insufficient to redeem such holder's
shares, the rights of such holder would include the right to
receive interest at the annual rate of 24% on the defaulted
payment amount.
5. Subsequent Event
On April 30, 1999, in an effort to retain key personnel, the
Board of Directors approved an increase in the number of shares
of common stock available under the Company's 1995 Stock
Incentive Plan from 2,000,000 shares to 4,000,000 shares and the
issuance of options respecting 1,942,500 shares under the Plan to
active employees and directors of Accent Color Sciences at an
exercise price of $.22 per share, the fair market value as of
that date. This amendment is, and indirectly substantially all
of such options are, subject to shareholder approval in
accordance with the terms of the Plan.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
Quarter Ended March 31, 1999 compared to Quarter Ended March 31,
1998.
Total Net Sales. The Company currently sells its Truecolor
system with a 90-day warranty, which starts when the printer is
installed at the end-user customer site. Prior to the quarter
ended December 31, 1998, the Company deferred revenue on printer
shipments until the end of the 90-day warranty period. During the
quarter ended December 31, 1998, the Company, in accordance with
its revenue recognition policy on printer sales, concluded that
it had adequate warranty experience to begin recognizing revenue
upon shipment of printers to its primary OEM customer. The
Company will continue to defer revenue on shipments to its second
OEM customer until systems are in production and are past the
warranty period or until the Company has adequate warranty
history with that customer. As of March 31, 1999 the Company had
deferred revenue of $595,000 related to Truecolor Systems
shipped. Total net sales were $2,249,000 for the three months
ended March 31, 1999 compared to $917,000 for the three months
ended March 31, 1998. Printer sales represented 80% of total net
sales for the three months ended March 31, 1999 while sales of
consumables and spare parts represented 20%.
Printers. Printer sales were $1,809,000 for the three months
ended March 31, 1999 compared to $493,000 for the three months
ended March 31, 1998. In the first quarter of 1998, revenue from
printer shipments was deferred until the end of the warranty
period, which resulted in revenue recognition on a total of 5
printers. Sales for the first three months of 1999 reflected the
shipment of 14 new systems and 1 system upgrade.
As of March 31, 1999, the Company's backlog consisted of 41
systems, 2 system upgrades and consumables totaling $5,339,000.
Consumables and Spare Parts Sales. Consumables and spare parts
sales were $440,000 for the three months ended March 31, 1999
compared to $424,000 for the three months ended March 31, 1998.
Costs of Production. Costs of production increased 32% from
$1,628,000 for the three months ended March 31, 1998 to
$2,144,000 for the three months ended March 31, 1999. This
increase was attributed to the cost of goods sold related to the
increased sales of printers totaling $1,069,000 and was offset by
a decrease in the cost of goods sold for consumables and spares
totaling $50,000, reduced payroll costs of $386,000 and
reductions in other production related costs totaling $64,000.
Research and Development Expenses. Research and development
expenses primarily consist of the cost of personnel and equipment
needed to conduct the Company's research and development efforts,
including manufacturing prototype systems. Research and
development expenses decreased 36% from $1,479,000 for the three
months ended March 31, 1998 to $952,000 for the three months
ended March 31, 1999 as the Company directed its efforts toward
production and market development with less significant emphasis
on research and development. The decrease in research and
development was primarily attributed to three major factors: (i)
a reduction in payroll and related costs due to the reduction in
personnel, (ii) a reduction in design and development costs paid
to Spectra associated with the development of ink jet printheads
for the enhanced wide-head version of the Truecolor Model HC2
system and (iii) a decrease in materials and supplies associated
with research and development activities.
Marketing, General and Administrative Expenses. Marketing,
general and administrative expenses decreased 20% from $909,000
for the three months ended March 31, 1998 to $723,000 for the
three months ended March 31, 1999. This decrease was primarily
due to a reduction in payroll related costs due to headcount
reductions in addition to a decrease in professional and outside
service costs. These items were offset by an increase of $130,000
resulting from the reclassification of service related costs.
Service costs, consisting primarily of customer technical
support, were classified as costs of production during 1998,
while in 1999, such costs are now classified as marketing,
general and administrative.
Interest Expense and Other (Income) Expense. Interest expense
increased from $8,000 for the three months ended March 31, 1998
to $98,000 for the three months ended March 31, 1999. This
increase was attributed to interest and debt discount
amortization on the IBM loan which was obtained by the Company in
July 1998. Interest income decreased from $32,000 for the three
months ended March 31, 1998 to $5,000 for the three months ended
March 31, 1999. This decrease in interest income was attributed
to a greater amount of cash available for investment in the first
quarter of 1998 due to the private equity financing completed in
January 1998.
Liquidity and Capital Resources
The Company's need for funding has continued from period to
period as it has increased its marketing, sales and service
efforts, continued its research and development activities for
the enhancement of Truecolor systems and increased production of
Truecolor systems. To date, the Company has financed its
operations through customer payments, borrowings and the sale of
equity securities.
Operating activities consumed $3.2 million in cash during the
first quarter of 1998 compared to $79,000 in cash provided from
operations during the first quarter of 1999. This decrease in
cash utilized was primarily attributed to a decrease in the net
loss of the Company, an increase in payments from customers and a
slowdown in the payment of accounts payable.
Capital expenditures increased from $10,000 for the quarter ended
March 31, 1998 to $192,000 for the quarter ended March 31, 1999.
Capital expenditures during the first quarter of 1999 primarily
reflected acquisitions of equipment to support the Company's
value engineering activities. The Company has no significant
capital expenditure commitments at March 31, 1999.
On March 11, 1999, the Company completed a reduction of personnel
to align its expenses with current sales demand. In connection
with this reduction, the Company eliminated 19 positions and
recorded a charge of approximately $61,000 for employee
severance. Of the total reduction, approximately 37% was in the
area of operations, 53% in research and development and 10% in
marketing, general and administrative.
As of March 31, 1999, the Company's primary source of liquidity
was cash and cash equivalents totaling $918,000. Based on the
current operating plan of the Company, the primary requirements
for cash through the remainder of 1999 will be to fund operating
losses, marketing and sales efforts, commercial production of the
enhanced Truecolor System and the further development and
enhancement of the Company's products. The Company's currently
planned research and development activities are focused on value
engineering to improve system profit margin and developing higher
resolution ink jet printing and other enhancements to the
Truecolor Systems.
Based on its current operating plan, the Company anticipates that
additional financing will be required to fund its operations and
capital expenditures during the second half of 1999. Management
is currently in discussions with potential investors to obtain
such funding and, in the meantime, is continuing tight cost
controls. The Company's currently anticipated levels of revenue
and cash flow are subject to many uncertainties and cannot be
assured. The amount of funds required by the Company will depend
on many factors, including the extent and timing of sales of
Truecolor Systems, product costs, engineering and customer and
technical support requirements. The inability to obtain
additional financing and to 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. The Company expects that quarterly net losses
will continue through at least the fourth quarter of 1999.
Year 2000
Year 2000 Compliance. The information presented below related to
year 2000 compliance contains forward-looking statements that are
subject to risks and uncertainties. The Company's actual results
may differ significantly from the results discussed below and
elsewhere in this Form 10-Q regarding Year 2000 compliance.
Year 2000 Issue Defined. The Year 2000 ("Y2K") issue is the
result of certain computer hardware, operating system software
and software application programs having been developed using two
digits rather than four digits to define
a year. For example the clock circuit in the hardware may be
incapable of holding a date beyond the year 1999; some operating
systems recognize a date using "00" as the year 1900 rather than
2000 and certain applications may have limited date processing
capabilities. These problems could result in the failure of major
systems or miscalculations, which could have material impact on
companies through business interruption or shutdown, financial
loss, damage to reputation, and legal liability to third parties.
State of Readiness. The Company's Information Technology ("IT")
department began addressing the Y2K issue in 1996 as we evaluated
the purchase of new software applications and hardware systems.
During the fourth quarter of 1996, IT researched methodologies to
manage the Y2K program and established a process that matched the
resources available within the Company. The initial step in the
process was to organize a team of both IT and non-IT employees
and explain their roles in the process. The second step of the
process was to establish an inventory of all potential areas
where the Y2K problem could exist. The inventory included; server
hardware (BIOS), server operating systems, server application
software, network device hardware and software, PC hardware
(BIOS), PC operating systems, PC application software, phone
system, security system, the Company's products (hardware BIOS
and software), and our vendors. Each area listed in the inventory
was assigned to a team member to evaluate the current Y2K
compliance and where required, recommend a solution correct a Y2K
problem. A database was created for all items to track the status
to completion. All IT systems, except the phone system, have been
updated to be Y2K complaint. The phone system will be updated in
second quarter, 1999. During second quarter 1999, we will test
the compliance of primary software applications in our test
environment to confirm that vendor statements are consistent with
our test results.
Accent Color Sciences Products. The Company designs and
manufactures high-speed color printing systems for integration
with digital high-speed black on white printers. The Company has
tested and confirmed that the printer's BIOS are compliant where
required. Software that operates on the printer has been tested
and is confirmed to be Y2K compliant. Future software releases
will include as part of the software regression test a
reconfirmation that the software remains Y2K compliant.
Third Party Relationships. The Company's business operations are
heavily dependent on third party materials suppliers. The Company
is working with all key external partners to identify and to
mitigate the potential risks of Y2K. The failure of external
parties to resolve their own Y2K issues, in a timely manner,
could result in a material financial risk to the Company. As part
of the overall Y2K program, the Company is actively communicating
with third parties through correspondence. Because the Company's
Y2K compliance is dependant on the timely Y2K compliance of third
parties, there can be no assurance that the Company's efforts
alone will resolve all Y2K issues.
Contingency Plans. The Company has not conducted its assessment
of the reasonably likely worst case scenario of systems or
product failures and their related consequences. It is expected
that the planned testing of IT systems and the completed testing
of the Company's product testing will greatly reduce the need for
substantial contingency planning. Contingency planning, if
required, would begin in third quarter, 1999.
Costs to Address Year 2000 Issues. The Y2K costs incurred to date
have not been material. Most software applications, BIOS and
operating system upgrades to Y2K compliance were incorporated
into the Company's standard licensing agreements. As part of the
contingency planning effort we will examine additional potential
Y2K costs, where applicable.
Forward-Looking Statements
The foregoing statements and analysis contain forward-looking
statements and information including information with respect to
the Company's plans and strategy for its business. Such forward-
looking statements are made pursuant to the "safe harbor"
provisions of Section 21E of the Securities Exchange Act of 1934,
as amended, which were enacted as part of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements
contained in the foregoing analysis include marketing, revenue
and expenditure expectations, and other strategies and
anticipated events. Without limiting the foregoing, the words
"believes", "anticipates", "plans", "expects" and similar
expressions are intended to identify forward-looking statements.
There are a number of important factors that could cause actual
events or the Company's actual results to differ materially from
those indicated by such forward-looking statements. These factors include,
without limitation, (i) the level of customer acceptance of the Company's
products; (ii) the ability of the Company to raise capital
sufficient to support its business plan; (iii) the dependence of
the Company on third party suppliers for certain key technology
elements; (iv) the dependence of the Company on third party
marketing, distribution and support, including the control by the
Company's OEM customers over the timing of the introduction of
its products and the need for the Company to complete and satisfy
extensive testing requirements of its products on a timely basis;
(v) the potential fluctuations in the Company's quarterly results
of operations; and (vi) the ability of the Company to identify
and remediate significant internal Year 2000 problems and ensure
that corrective action, if necessary, is being taken by the
Company's customers and suppliers. Further information on
factors that could cause actual results to differ from those
anticipated is detailed in the Company's Annual Report on Form 10-
K for 1998 as filed with the Securities and Exchange Commission.
Any forward-looking information contained herein should be
considered in light of these factors.
Part II. Other Information
Item 1. Legal Proceedings
The Company is not a party to any material legal proceedings.
Item 2. Changes in Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 27 - Financial data schedule
(b) Reports filed on Form 8-K
There were no reports on Form 8-K filed during the quarter ended
March 31, 1999.
Signatures
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
ACCENT COLOR SCIENCES, INC.
Dated May 14, 1999 By /s/ Charles E. Buchheit
Charles E. Buchheit
President and Chief Executive Officer
By /s/ Tracy L. Hubert
Tracy L. Hubert
Acting Chief Financial Officer
(Principal Financial and
Accounting Officer)