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Biotech / Medical : Chromatics Color Sciences International. Inc; CCSI -- Ignore unavailable to you. Want to Upgrade?

To: JanyBlueEyes who wrote (705)	12/24/1997 9:36:00 AM
From: Skidrow	Respond to of 5736

While the stock split seems desirable for liquidity and other reasons, parts (ii) and (iii) of the announcement seem to portend a significant dilution of the common stock. From the Form 10-KSB for the fiscal year ended 12/31/96, it states "Outstanding Voting Preferred Stock. The Company has outstanding 1,380,000 shares of Series A convertible Preferred Stock. Each share of Preferred Stock has voting rights equivalent to each share of Common Stock and is convertible to Common Stock if (i) the Company's earnings (i.e., pre tax operating income, before interest expense, but excluding extraordinary items and revenues or earnings generated by acquired businesses) for any two consecutive calendar years ending on December 31, 1997 exceed $20,000,000 or (ii) the closing bid price of the Common Stock has been at least $46.67 on 30 consecutive trading days at any time ending on December 31, 1997. Further the Preferred Stock has a $13,800 liquidation preference and earns an annual non-cumulative dividend of $0.001 per share. The voting rights, conversion rights, dividend rights and liquidation preference of the Preferred Stock may adversely affect the trading value or the market price of the Common Stock and the Warrants." It appears, because of failure to meet the designated performance standards, the Preferred Shares now have a value of $13,800. To extend the time for performance (although maybe justified on some modified terms) could increase the Common Shares by 1.38M. Will the perfromance standards be increased to reflect the additional time being granted? Who owns those Preferred Shares? When I started buying this stock at $4.50, I would have been elated to have to convert the Preferred to Common because the stock would have traded at $46.67 for 30 consecutive days in 1997. That hasn't happened. While I see only a bright future for this Company, how are the Preferred Shares to be restructured? What is the impact to be on the investment of the Common Shareholders? A long time lurker now come out of the closet, I thank those of you who have taken your time, knowledge, and energy and shared it so freely with those of us just getting initiated into investing.