Mr. Marconi,
CCSI has filed an S-3, while I have not yet read the whole thing, some of the Risk Factors provide sobering reading.
edgar-online.com
Investing in our common stock is very risky. You should be able to bear a complete loss of your investment. You should carefully consider the following factors, in addition to the other information in this prospectus, before investing in our common stock.
WE HAVE A LIMITED OPERATING HISTORY
We have a limited operating history and have generated insignificant revenues to date. Although we have recently entered into agreements for the manufacturing and distributing of our ColorMate(Registered) TLc biliTest(Trademark) System, to date we have not produced or sold substantial quantities of this product. We cannot assure you that this product can be manufactured in commercial quantities or at an acceptable cost or marketed successfully. We also cannot assure you that we will be successful in our efforts to commercialize our
ColorMate(Registered) System for other applications.
WE EXPECT TO CONTINUE TO OPERATE AT A LOSS AND WE MAY
NEVER ACHIEVE PROFITABILITY
We cannot be certain that we will ever achieve and sustain profitability. To date, we have been engaged in research and development activities and have not generated any significant revenues from product sales. As of July __, 1999, we had an accumulated deficit of $____. We expect that we will continue to incur operating losses for the foreseeable future.
WE MUST SECURE ADDITIONAL FINANCING, OTHERWISE WE WILL NOT
BE ABLE TO DEVELOP OUR PRODUCTS
We will require substantial additional funds for our research and product development programs, for our obligations to our manufacturing and distribution
partners, for operating expenses, to pursue regulatory approvals and to develop and commercialize other applications of our ColorMate(Registered) System.
Adequate funds for these purposes, whether through the financial markets or other sources, may not be available when needed. If our funds are insufficient, we may be unable to meet our obligations under manufacturing agreements and
the distribution agreements relating to our ColorMate(Registered) System and our ColorMate(Registered) TLc BiliTest(Trademark) System or under other
agreements we may enter into in the future. If we fail to make any payment required to be made or if we are otherwise in default under these
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agreements relating to our ColorMate(Registered) System and our ColorMate(Registered) TLc BiliTest(Trademark) System, the other parties will have the right to terminate the agreements. Termination of any of these agreements would have a material adverse effect on our business by rendering
us unable to manufacture and distribute our ColorMate(Registered) System and our ColorMate(Registered) TLc BiliTest(Trademark) System until replacement
agreements were entered into.
WE WILL INCUR SUBSTANTIAL FINANCIAL LIABILITIES IF THE CONVERTIBLE DEBENTURES AND CONVERTIBLE PREFERRED STOCK ISSUED TO THE SELLING STOCKHOLDERS IS NOT CONVERTED INTO SHARES OF OUR COMMON STOCK PRIOR TO MATURITY
If the selling stockholders do not elect to convert the senior convertible debentures or the convertible preferred stock we issued to them into shares of our common stock and we are unable to compel such conversion pursuant to the mandatory conversion provisions described above relating to the market price of our common stock we will be obligated
to repay such selling stockholders in cash on the maturity date of the convertible debentures and the redemption date of the convertible preferred stock. In addition, if an event of default occurs with respect to the convertible debentures prior to the stated maturity date the selling stockholders may elect to accelerate the maturity of the convertible debentures with the effect that the principal amount and
all accrued but unpaid interest would become immediately due and payable. We cannot assure you that we would have sufficient funds available to us to satisfy such obligations. Failure to satisfy such obligations would have a material adverse effect on our business and could force us to close operations and seek protection from our
creditors under applicable bankruptcy laws.
WE HAVE LIMITED MARKETING AND SALES EXPERIENCE
We have not previously licensed our intellectual property for use in any industry other than the beauty aid, hosiery and cosmetics industries and our management has not had any experience in marketing our intellectual property, ColorMate(Registered) System or our other products in
any other field. Prior to licensing our intellectual property in any industry, including the cosmetic, beauty aids and fashion industries, we will be required to develop additional marketing skills relevant to such industries and conduct significant further marketing activities.
In addition, in certain of these industries we will also have to overcome regulatory hurdles and professional skepticism and develop practical applications. Our medical support and sales division was only recently established and we cannot assure you that it will successfully
generate commercial levels of sales, that we will be able to
successfully maintain a marketing and sales force or that we will be able to enter into additional marketing and sales agreements with third parties on acceptable terms.
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And it continues...... |
