10Q dated 8/14/98 - Recent Events (Part 1)
The Company experienced a series of significant developments during the second and third quarters of 1998........
During the first and second quarters of 1998, a significant "short position" built up in the Company's publicly traded common stock. In June 1998, a series of negative, and what the Company believes to be false, press reports were issued by Asensio and Company, Inc. ("Asensio") (a short-seller which publicly admitted it held a 300,000 share short position in the Company's stock) amid increased trading volume and short-selling activity in the Company's stock.
The Company publicly responded to these reports, denying Asensio's allegations and providing additional support for the Company's prior public statements. The public trading price of the Company's stock decreased from 12 1/4 to 4 1/2 in the two days immediately following Asensio's reports (and decreased from a high of 17 5/8 on May 4, 1998 before such reports and increased trading activity, to a low of 3 3/4 on June 30, 1998).
Following the release of the Asensio reports, the Company and certain of its officers were sued in federal class actions alleging violations of the securities laws based on Asensio's allegations. The Company believes the suits are without merit and intends to defend them vigorously. The Company is also exploring all of its legal remedies against those persons it believes have unlawfully harmed the Company.
As a result of these recent actions and in order to assist the Company in connection with certain related investor relations and public relations matters, the Company recently retained Rubenstein Associates, Inc., in addition to the existing public relations services provided by Hill & Knowlton.
Although the Company has been in ongoing negotiations to reach a definitive agreement for global distribution of the Colormate(TM) TLc - Bilitest(TM), the Company has experienced delays in concluding these negotiations in order to provide additional due diligence and supporting materials requested as a result of the recent flurry of press reports and legal activity surrounding the Asensio allegations.
While the Company's board of directors, executive, financial consultants and legal advisors intend to evaluate the distribution proposals, accommodate due diligence requests and review applicable legal documentation, due to the requests from the medical community for the Colormate(TM) TLc - Bilitest(TM) generated by the Company's recent exhibitions of the Colormate(TM) TLc - BiliTest(TM) to the medical community the Company is currently negotiating for the assembly of the Colormate(TM) TLc - BiliTest(TM) with a contract manufacturer.
In this regard, the Company has recently opened a medical marketing, sales and distribution support division in Connecticut. The Company has entered into an office lease for this division and has hired Sheila Kempf as Vice President of this medical division, in addition to two regulatory personnel, two registered nurses, administrative staff and is in the process of hiring national sales managers for this division.
Ms. Kempf is a former Vice President - Marketing of Corometrics, a Marquette Medical Inc. company, and a former director of Marketing for Sensors and accessories of Nelcor Puritan Bennet, Inc. and has extensive experience for over 13 years in the medical marketing field. Ms. Kempf holds a bachelor of science nursing degree from Villanova University and a masters degree from Columbia Unviversity.
The newly formed division will initially ensure support for the Colormate(TM) TLc - BiliTest(TM) delivered to customers in the medical community, including hospitals, pediatricians, clinics and home health care agencies, and will perform delivery, training and in-servicing for customers initially generated by the Company's presentations at the Pediatric Academic Societies, Sinomed and International Congress of Pediatric exhibitions.
The division will additionally
-be available to provide the training, technical and marketing support anticipated in the transition period expected when the Company enters into any contracts with potential global distributors,
-oversee the setup of the new offices to be opened in Beijing China (for which 2 employees have been hired, as discussed below),
-coordinate the business relationships with the Ministry of Health in China and develop the marketing plans for the home health care markets for the Colormate(TM) TLc - Bilitest(TM) worldwide.
In support of its marketing efforts to the medical community,
the Company began independent multi-center studies of the Colormate Bilirubin Device. These studies were successfully completed at William Beaumont Hospital (Detroit) and showed a high correlation between the results of the Company's technology and standard blood serum testing.
Such studies are currently ongoing at Parkland Hospital (Dallas); preliminary results of this study continue to show the same high correlation, as compared to standard blood serum testing, as was achieved in the completed studies. |
