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Biotech / Medical : Chromatics Color Sciences International. Inc; CCSI
CCSI 29.32+4.6%Oct 31 9:30 AM EST
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To: JanyBlueEyes who wrote (4914)2/11/1999 12:12:00 PM
From: Bob Trocchi   of 5736
 
Janybird..

I have no position in this stock but I did make several points shorting CCSI some time ago. I was very lucky to have covered at 3 or so. I am beginning to feel it is ready to short again.

The announcement I feel was weak although it surely is pushing the price up today. For example.

1. It did not mention at all, the number of hospitals that have "purchased" the system.

2. At a list price of $3-$5K, they will need to sell a bundle of them to even come close to making ends meet.

3. At a list price of $3k-$5k, they need to sell these without a sales person as the sales cost will eat them alive. What is their distribution system? In order reach the volume they need to meet critical mass they need significant demand (hence the limited time offer) and a clearly defined distribution system. At 3-5k per unit I doubt that many medical product distributors will take it on as a priority item.

4. In the announcement, it is not really clear if they really sold these first systems or whether they were shipped for evaluation. Note the "spin" on the wording. When I see words like limited time offer and evaluation, I get the feeling they are shipping these to some hospitals for testing and then hopefully they will purchase and CCSI can begin to use them as reference accounts.

>>The first hospitals having placed purchase orders for the systems under the Limited Time Offer have been scheduled for in-servicing over the next week and will begin receiving the TLc-BiliTest(TM) Systems this week.

The transcutaneous bilirubinometer has a list price of $3,000 to $5,000 depending on the model, may be leased, or used under the Limited Time Offer for use and evaluation of the System; all with either purchase of minimum monthly supplies of the TLc-Lensette(TM) calibration standards @ $10 per TLc-Lensette(TM) or minimum monthly charges of $10 per use under a Managed Use Program.

5. Finally, their total cash of approx. $6.0M and a prior 12 month loss of $7.0M indicates they need a shot of financing which I suspect will be dilutive.

I surely can be very wrong in my assessment. I will continue to follow CCSI closely. Surely as we speak, longs are in the drivers seat today as it is up 1 at 12.7%

Good Luck
Bob T.
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