Beauty-Aid Products
From the Annual Report (10K) Filed on March 30,1998, updated by the Quarterly Report (10Q) dated August 14, 1998
....The Company previously marketed its cosmetics, My Colors by Chromatics(R), through the use of the Colormate(TM) units. The previous cosmetics line included underbase makeup, eyeshadow, blushers, eyeliner pencils, lipliner pencils, lipstick and nail polish, and was manufactured to the Company's color specifications by private label manufacturers, including IMS. The Company is not currently actively marketing this line, and renewed cosmetics marketing efforts will be based on a new line as discussed below.
The Colormate(TM) System makes use of only skin coloration in assigning each complexion to one of approximately 200 measurable skin color categories. Each category is then assigned to one of four broader product color categories....
The Company's cosmetics are divided into these same four color classifications, and the product shades in each have been scientifically measured and balanced chromatically to be compatible with the approximately 200 skin colorations within the four broad classifications. The product shades recommended by the Colormate(TM) System are individually prescribed for color coordination with each of the approximately 200 skin color categories.
The Company's cosmetics line is scientifically formulated and balanced to provide color coordinated products for the skin color of all races. Each product shade also has been measured and cross-balanced to be compatible with all other shades in each of the four broad classifications, so that the colors blend together, and color coordinate with each other after they are applied.
The Company has also developed its own line of scientifically color coordinated proprietary cosmetics ("My Colors by Chromatics(TM)") and scientifically color coordinated proprietary color charts and material swatchpacks for use in the cosmetics, beauty, dental and fashion industries. The Company's Colormate(TM) System products, cosmetic line and material swatchpacks are referred to herein, collectively, as the "Beauty-Aid Products."
.....The Company also entered into leases and licensing agreements with respect to its Colormate(TM) System with Gordon Laboratories Inc. ("Gordon Laboratories")* and IMS Cosmetics, Inc. ("IMS"), as well as with various beauty-related businesses and beauty salons. In this regard, the Company recently completed its line of custom blended foundations for Gordon Laboratories, and has completed with IMS its new line of foundations, lipsticks and blushes.
In addition, in conjunction with the Gordon Laboratories contract, the Company has completed a new product line consisting of custom blended foundations, which will be color compatible with the Company's new cosmetics line.....
......the Company completed its inventory of a new line of chromatically balanced and color coordinated cosmetics in the first two quarters of 1998, and although there can be no assurance, expects to commence marketing its new line of custom blended foundations in the third quarter of 1998. Although there can be no assurance, the Company believes these factors may enhance its ability to achieve revenues from its beauty-related operations.
...The Company believes the new cosmetics line will be comparable in quality and performance to cosmetics sold in leading department stores, but generally will be priced lower than the cosmetics sold at the prestige end of the market.....
......the Company has completed research and development for the working prototype of a hand-held less expensive light-emitting diode ("LED") model of the Colormate(TM) System (the "Colormate(TM) LED Device") which the Company anticipates will enhance its marketing efforts.
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The Company sells its Beauty-Aid Products for resale to the public to persons leasing the Colormate(TM) units and licensing the Intellectual Properties. The Company intends to sell "tester" sets of its new cosmetics line, in connection with the placement of the Colormate(TM) units, in order to stimulate cosmetic sales.
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...Other than the units provided to IMS and Gordon Laboratories, the Company has leased or intends to lease the Colormate(TM) units for cosmetic use to beauty salons, beauty-related businesses, direct sales representatives and distributors and specialty stores
(i) at a monthly rental fee ranging from $165 to $250 (depending on the length of the lease terms), if rented on a full-time basis, and at a proportionately higher rate if the machine is leased for shorter periods, or
(ii) on a minimum monthly guarantee cosmetic product purchase basis.
The Company's marketing plan currently anticipates that the skin color analysis capability of the Colormate(TM) units will be marketed in conjunction with the Beauty-Aid Products at a variety of price points--i.e., the color analysis alone will be priced at $25 and the analysis will be done on a complimentary basis for a customer who purchases Beauty-Aid Products for at least $25.
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Prior to receipt of the FDA marketing clearance, the Company's marketing activities have principally involved licensing the Intellectual Properties, including conducting laboratory product chromaticity studies ("Chromaticity Studies"), leasing the Colormate(TM) System and
marketing the Beauty-Aid Products in the cosmetic, hair color, beauty aid and fashion industries
(i) in a national sales program (the "Avon Project") with Avon Products, Inc. ("Avon"), and in limited test markets with Clairol, Inc. ("Clairol") and Hanes Hosiery, Inc. ("Hanes"), all conducted prior to June 1991, and
(ii) under a current agreement with Gordon Laboratories, Inc. ("Gordon Laboratories") and under certain leases and licenses to beauty-related businesses and beauty salons.
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Since 1990 limited revenues have been derived from licenses, leases, service contracts and Beauty-Aid Product sales to several beauty-related businesses, testing and laboratory fees from potential licensees evaluating the Company's technology, and from an exclusive licensing and lease contract with IMS Cosmetics, Inc. ("IMS").
In 1997 and the first two quarters of 1998, the Company did not generate any lease, license and service contract revenues from IMS. To the extent the Company receives payments from licensees, distributors or other sources, such payments may occur at various times during the year. Accordingly, these payments have had, and payments that may be received in the future will have, a significant impact on quarter-to-quarter comparisons inasmuch as the Company has not developed stable sources of repeat revenues.
The Company maintains its own product liability insurance with respect to cosmetic and beauty aid applications.......
Prior Marketing Attempts. Other than the Company's marketing efforts with Avon, its current arrangements with IMS and its beauty salon placements, the Company's own attempts to license and/or lease its Intellectual Properties and the Colormate(TM) units and to market its Beauty-Aid Products independently and/or through licensees never proceeded beyond the test marketing stage.......In addition, other than its installation of Colormate(TM) units in beauty salons and beauty-related businesses (which are not generating current revenue), the Company's revenue generating activities have been primarily conducted in conjunction with its former licensees (i.e., Clairol, Hanes and Avon), that provided substantial economic, administrative, marketing and advertising support......
The Company anticipates that it will continue to incur substantial and increasing net losses for the foreseeable future as increased expenses are incurred in implementing its long-range business plan for the medical application of its technologies and as revenues from the cosmetics, beauty aid and fashion areas are anticipated to continue to be insignificant relative to the Company's anticipated expenses in the foreseeable future.
* - techstocks.com - Gordon Laboratory News 12-16-96
* - gordonlabs.com |
