LETTER TO SHAREHOLDERS 12/19/97
Dear Shareholder,
As the end of year approaches, I would like to take this opportunity to bring you up to date on some of the activities of your Company during the last few months.
As you know on November 5, 1997 the Company's warrants expired, and of the warrants outstanding since Chromatics received FDA clearance on July 30, 1997, 1,138,992 were exercised for $5 per share generating $5,694,960 in proceeds, and bringing the Company's cash balance to $9,385,000 at November 15, 1997.
The Company announced on October 1, 1997 the issuance on September 30, 1997 of a new United States patent #5,671,735 for "Method and Apparatus for Detecting and Measuring Conditions Affecting Color" relating to the noninvasive monitoring of certain medical conditions, including the monitoring of Bilirubin Infant Jaundice for which the Company recently received FDA clearance for commercial marketing.
We also announced that we had retained the services of Frederick Frank, Vice Chairman of Lehman Brothers, and a leading health care industry authority, to assist the Company in increasing shareholder value and to provide investment banking and other business consulting services on an exclusive basis in the field of noninvasive monitoring of chromogenic diseases based on color science.
His initial focus will be assistance in the evaluation and negotiations related to the Company's business plans and potential agreements for the global distribution of the Company's noninvasive bilirubin monitoring device.
In this regard, Mr. Frank has submitted to the Board his recommended agenda involving the Company's ongoing business discussions and negotiations with medical companies interested in global distribution rights. He has also recommended additional potential licensing and distribution partners involving licensing for other applications for the Company's proprietary technology.
We are extremely proud to have an advisor of Mr. Frank's expert reputation and ability on board, and believe that any added time taken to follow his guidance in structuring the Company's licensing and distribution arrangements at this stage will justify any reasonable potential extension of time in the Company's original schedule for finalizing a licensing and distribution partner.
During this same time period, we have also added a new independent Director to the Company's Board of Directors, Mr. Edmund Vimond. Mr. Vimond was an early shareholder of the Company in 1985 and served on its Board when the Company originally became a public company. He then became CEO for another newly started company for a number of years, has completed that tenure and is joining us again as a Director.
Mr. Vimond is a former Chief Executive Officer of Shulton (a subsidiary of American Cyanamid Company) and R.J. Reynolds Tobacco International (a subsidiary of RJ. Reynolds Tobacco Company) in addition to earlier general management positions at Johnson & Johnson and Warner-Lambert Company.
Additionally, two new physicians have joined the Company's Medical Advisory Board and have signed exclusive consulting agreements with the Company in the field of noninvasive bilirubinometry.
The first new member, Dr. Ian Holzman, Chief, Division of Newborn Medicine at Mt. Sinai Hospital in New York City, Professor of Pediatrics, Obstetrics and Gynecology, was also the principal investigator for the Company's extensive clinical trials conducted at Mt. Sinai Hospital for the Company's FDA 510K submission on noninvasive monitoring of bilirubin jaundice.
The other new member, Dr. M. Jeffrey Maisels, Chairman Department of Pediatrics, William Beaumont Hospital, Clinical Professor of Pediatrics and Communicable Diseases, University of Michigan Medical School, is an internationally recognized medical expert on Bilirubin infant jaundice. Dr. Maisels has written extensively on bilirubin and we are fortunate indeed to have his expert assistance in moving forward into the global presentation to the medical community of our medical systems for noninvasive monitoring of bilirubin.
We have also completed the next steps toward completion of the mass manufacturing prototype of the new miniaturized Colormate. As I previously informed you, this involved the successful performance of the instrument in measuring a series of specified laboratory standards under the supervision of qualified color scientists with the results approved as passing the color science criteria, which has now been accomplished.
The next step will be building the few hand-constructed working models of the mass manufacturing prototype and testing the instruments for mechanical and structural reliability. The Company's engineering department estimates completion of this next phase in the first quarter of 1998.
Finally, your Board has adopted proposals, for submission to the shareholders for their approval, to effect
(i) a 3 for 2 forward split of the outstanding shares of common stock,
(ii) an extension to December 31, 1999 of the expiration date of the conversion feature of the Company's Series A preferred Stock (similar to the changes previously approved at annual meetings of the shareholders), and
(iii) a revision to the market price conversion feature of the Series A Preferred Stock to adjust for the stock split.
These matters will be presented to the shareholders in the near future for their review and approval.
In closing, we appreciate your continued support of our Company and look forward to sharing the next steps of our Company's expansion together with you. I wish you all very Happy Holidays and a joyous New Year.
Sincerely,
Darby S. Macfarlane
Chief Executive Officer
Chromatics Color Sciences International, Inc.
(212) 717-6544
FAX: (212) 717-6675
Certain of the matters discussed in this letter constitute forward-looking statements.................. I'm sure you all understand the requirement for this formal statement. |
