Filed pursuant to Rule 424(b)(3)
Registration Statement File No. 333-87001
PROSPECTUS SUPPLEMENT DATED AUGUST 17, 2001
TO
PROSPECTUS DATED JUNE 6, 2001
PIXTECH, INC.
This prospectus supplement should be read in conjunction with our
prospectus dated June 6, 2001. This prospectus supplement includes the attached
Quarterly Report on Form 10-Q of PixTech, Inc. previously filed by PixTech with
the Securities and Exchange Commission on August 16, 2001.
AMENDMENT NO. 2
TO
FORM 10-Q
---------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ending June 30, 2001
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ______ to ______
Commission file number 0-26380
_______________________________________
PIXTECH, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 04-3214691
- --------------------------------------------------------------------------------
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
Avenue Olivier Perroy, 13790 Rousset, France
2700 Augustine Drive, Suite 255, Santa Clara, CA 95054
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
011-33-4-42-29-10-00
- -------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No __
The number of shares outstanding of each of the issuer's classes of Common Stock
as of
Class Outstanding at July 19, 2001
----- ----------------------------
Common Stock, $.01 par value 56,129,792
PixTech, Inc.
(A DEVELOPMENT STAGE COMPANY)
PIXTECH, INC.
-------------
TABLE OF CONTENTS
-----------------
PAGE NO.
PART I FINANCIAL INFORMATION
ITEM 1 Financial Statements
Condensed Consolidated Balance Sheets as of June 30, 2001 and
December 31, 2000.................................................... 3
Condensed Consolidated Statements of Comprehensive Operations for
the Three Month Periods and Six Month Periods Ending June 30, 2001
and 2000, and the period from June 18, 1992 (date of inception) 4
through June 30, 2001................................................
Condensed Consolidated Statements of Cash Flows for the Six Month
Periods ending June, 2001 and 2000, and the period from June 18,
1992 (date of inception) through June 30, 2001....................... 5
Condensed Consolidated Statements of Stockholders' Equity............ 6
Notes to Condensed Consolidated Financial Statements................. 7 - 8
ITEM 2 Management's Discussion and Analysis of Financial Condition and
Results of Operations................................................ 9 - 13
ITEM 3 Quantitative and Qualitative Disclosures Regarding Market Risk....... 14
PART II OTHER INFORMATION
ITEM 2 Changes in Securities................................................ 15
ITEM 4 Submission of Matters to a vote of Security Holders.................. 15
ITEM 6 Exhibits and Reports on Form 8-K..................................... 16
Signature............................................................................. 17
Exhibit Index......................................................................... 18
------------------------------------------------
PixTech, Inc.--Form 10Q--June 30, 2001 Page 2
PixTech, Inc.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
JUNE 30, DECEMBER 31,
2001 2000
----------- -------------
(UNAUDITED)
ASSETS
Current assets
Cash and cash equivalents available................................... $ 7,531 $16,847
Restricted cash - short term.......................................... 833 833
Accounts receivable...................................................
Trade................................................................ 90 148
Other................................................................ 436 596
Inventories
Raw Materials........................................................ 1,166 1,019
Finished Goods....................................................... 82 41
Other................................................................ 739 737
------- -------
Total current assets................................................ 10,877 20,221
Restricted cash - long term............................................. -- 417
Property, plant and equipment, net...................................... 15,469 19,014
Goodwill, net........................................................... -- 6
Other assets - long term................................................ 149 58
------- -------
Total assets........................................................ $26,495 $39,716
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current portion of long term debt..................................... $ -- $ 1,146
Current portion of capital lease obligations.......................... 66 157
Accounts payable...................................................... 7,468 7,885
Accrued expenses...................................................... 1,623 1,612
Total current liabilities........................................... 9,157 10,800
Deferred revenue........................................................ 1,157 580
Long term debt, less current portion.................................... 3,475 2,962
Capital lease obligation, less current portion.......................... 4,930 5,133
Other long term liabilities, less current portion....................... 35 37
------- -------
Total liabilities................................................... 18,754 19,512
======= =======
STOCKHOLDERS' EQUITY
Convertible preferred stock Series E, $0.01 per value, authorized
shares--1,000,000 ; issued and outstanding shares--3,329 and 22,095
respectively......................................................... 1 1
Common Stock, $0.01 per value, authorized shares--100,000,000 ;
issued and outstanding shares--56,047,198 and 55,682,464 560 557
respectively.........................................................
Additional paid-in capital............................................ 132,039 131,983
Cumulative other comprehensive income................................. (3,913) (4,076)
Deficit accumulated during development stage.......................... (120,946) (108,261)
------- -------
Total stockholders' equity......................................... 7,741 20,204
------- -------
Total liabilities and stockholders' equity.......................... $ 26,495 $ 39,716
======= =======
See accompanying notes.
------------------------------------------------
PixTech, Inc.--Form 10Q--June 30, 2001 Page 3
PixTech, Inc.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE OPERATIONS
(in thousands, except per share amounts)
(UNAUDITED)
Period from
June 18, 1992
Three Six (date of
Months Months inception)
Ending Ending through
June 30, June 30, June 30,
-------------------- --------------------- -----------------
2001 2000 2001 2000 2001
--------- --------- --------- -------- -----------------
Revenues
Cooperation and license revenues....................... $ -- $ -- $ -- $ -- $ 26,449
Product sales.......................................... 45 131 96 217 3,737
Other revenues......................................... 1,135 2,009 2,233 3,913 19,056
------- ------- -------- -------- ----------
Total revenues...................................... 1,180 2,140 2,329 4,130 49,242
------- ------- -------- -------- ----------
Cost of revenues
License fees and royalties............................. -- (94) (3) (182) (2,190)
------- ------- -------- -------- ----------
Gross margin............................................. 1,180 2,046 2,326 3,948 47,052
------- ------- -------- -------- ----------
Operating expenses
Research and development:
Acquisition of intellectual property rights............ -- -- -- (57) (5,022)
Other.................................................. (6,885) (7,920) (14,081) (15,714) (143,304)
------- ------- -------- -------- ----------
(6,885) (7,920) (14,081) (15,771) (148,326)
Marketing and sales.................................... (275) (258) (475) (571) (9,466)
Administrative and general expenses.................... (728) (684) (1,488) (1,497) (20,056)
------- ------- -------- -------- ----------
(7,888) (8,862) (16,044) (17,839) (177,848)
------- ------- -------- -------- ----------
Loss from operations..................................... (6,708) (6,816) (13,718) (13,892) (130,796)
Other income / (expense)
Interest income........................................ 129 274 319 612 5,264
Interest expense....................................... (78) (134) (165) (443) (5,181)
Foreign exchange (losses) / gains...................... 322 (27) 132 332 939
Other revenues......................................... 31 17 57 17 245
404 130 343 518 1,267
Loss before income tax benefit........................... (6,304) (6,686) (13,875) (13,373) (129,529)
Income tax benefit....................................... 690 -- 690 -- 8,583
------- ------- -------- -------- ----------
Net loss................................................. $(5,614) $(6,686) $(12,685) $(13,373) $(120,946)
======= ======= ======== ======== ==========
Dividends accrued to holders of Preferred Stock........ (2) (8) (5) (97) (646)
------- ------- -------- -------- ----------
Net loss to holders of Common Stock...................... $(5,616) $(6,694) $(12,690) $(13,470) $(121,592)
======= ======= ======== ======== ==========
Net loss per share of Common Stock..................... $(0.10) $(0.13) $(0.23) $(0.29)
======= ======= ======== ========
Shares of Common Stock used in computing net loss per 56,046 51,718 55,997 46,140
share.................................................
Net loss............................................... $(5,614) $(6,686) $(12,685) $(13,373) $(115,976)
Change in other comprehensive income................... 16 (66) 163 (812) (3,929)
------- ------- -------- -------- ----------
Comprehensive net loss................................. $(5,598) $(6,752) $(12,522) $(14,185) $(119,105)
======= ======= ======== ======== ==========
See accompanying notes.
------------------------------------------------
PixTech, Inc.--Form 10Q--June 30, 2001 Page 4
PixTech, Inc.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, except per share amounts)
(UNAUDITED)
PERIOD FROM
JUNE 18, 1992
(DATE OF
SIX MONTHS ENDING INCEPTION)
JUNE 30, THROUGH
JUNE 30,
----------------------------- ----------
2001 2000 2001
----------- ----------- ----------
Net loss.................................................... $(12,685) $(13,373) $(120,946)
Total adjustments to net loss............................... 6,022 5,175 49,011
-------- -------- ---------
(6,663) (8,198) (71,935)
-------- -------- ---------
Net cash used in operating activities.......................
INVESTING ACTIVITIES
Additions to property, plant, and equipment................. (635) (1,327) (23,038)
Reclassification of restricted cash as cash available....... 416 5,833 (983)
Additions to intangible assets.............................. -- -- (130)
-------- -------- ---------
Net cash provided by / (used in) investing activities....... (219) 4,506 (24,151)
FINANCING ACTIVITIES
Stock issued................................................ -- 18,212 112,333
Proceeds from long-term borrowings.......................... -- -- 19,028
Proceeds from sale leaseback transactions................... -- -- 2,731
Payments for equipment purchases financed by accounts -- -- (3,706)
payable....................................................
Repayments of long term borrowing and capital lease (310) (4,290) (20,039)
obligations................................................
Net cash provided by used in financing activities........... (310) 13,922 110,347
-------- -------- ---------
Effect of exchange rates on cash............................ (2,124) (763) (6,730)
-------- -------- ---------
Net increase / (decrease) in cash and cash equivalents...... (9,316) 9,467 7,531
Cash and cash equivalents beginning of period............... 16,847 14,663 --
-------- -------- ---------
Cash and cash equivalents end of period..................... $ 7,531 $ 24,130 $ 7,531
======== ======== =========
See accompanying notes.
------------------------------------------------
PixTech, Inc.--Form 10Q--June 30, 2001 Page 5
PixTech, Inc.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(In thousands, except share amounts)
DIVIDENDS
CONVERTIBLE PREFERRED STOCK COMMON STOCK ACCRUED TO
--------------------------- ------------------ ADDITIONAL HOLDERS OF
SHARES SHARES PAID-IN PREFERRED
ISSUED AMOUNT ISSUED AMOUNT CAPITAL STOCK
------------- ------------ ---------- ------ ----------- -------------
BALANCE AT DECEMBER 31, 1997....................... 13,762,732 $138 $ 57,067
Common stock issued in private
placements, net of issuance costs -- $ 44......... 1,236,222 12 4,493
Issuance of Series E convertible preferred stock,
net of issuance costs -- $ 822.................... 367,269 $ 4 7,449 (12)
Issuance of common stock under stock option plan 1,375 1
Translation adjustment.............................
Net loss--Year ended December 31, 1998
BALANCE AT DECEMBER 31, 1998....................... 367,269 $ 4 15,000,329 $151 $ 69,012 $ (12)
Common stock issued in private placements 150,000 2 350
Issuance costs and dividends accrued in
relation to Series E convertible
preferred stock issued in December 1998........... (36) (512)
Conversion of Series E preferred stock... (70,000) $(1) 1,114,220 11 (10)
Issuance of common stock in connection
with the acquisition of certain assets
of Micron Display, net of issuance 7,133,562 71 14,134
costs -- $511.....................................
Issuance of warrants............................... 297
Issuance of common stock following
conversion of Sumitomo convertible loan 750,000 8 1,081
Issuance of common stock under stock
option plan....................................... 137,217 1 72
Issuance of common stock in connection
with Equity Line Kingsbridge, net of
issuance costs -- $176............................ 624,809 6 818
Issuance of common stock in connection
with private placement, net of issuance 12,427,146 124 19,839
Costs -- $36......................................
Issuance of common stock in connection
with Coloray...................................... 14,000 1 50
Translation adjustment.............................
Net loss--Year ended December 31, 1999.............
BALANCE AT DECEMBER 31, 1999....................... 297,269 $ 3 37,351,283 $376 $105,606 $(525)
Dividends accrued in relation to Series
E convertible Preferred Stock issued 450
in December 98...................................
Conversion of Series E Preferred Stock (275,174) (3) 4,195,254 42 (38)
Issuance of common stock following
conversion of Sumitomo convertible loan........... 2,126,246 21 3,890
Issuance of common stock following
conversion of Sumitomo straight loan.............. 385,549 4 2,496
Issuance of common stock in connection
with Kingsbridge Equity Line, net of 2,003,295 20 4,785
issuance costs of $195............................
Issuance of common stock in connection
with Coloray...................................... 16,000 -- 57
Issuance of common stock in connection
with private placement, net of issuance 9,320,359 93 14,893
costs -- $13......................................
Issuance of common stock under stock
option plan....................................... 284,478 3 368
Translation adjustment.............................
Net loss--Year ended December 31, 2000.............
-------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 2000....................... 22,095 $ 1 55,682,464 $557 $132,058 $(75)
Dividends accrued in relation to Series
E convertible Preferred Stock issued in (5)
December 98 (unaudited)...........................
Conversion of Series E Preferred Stock
(unaudited)....................................... (18,766) (0) 362,734 3 (8) 65
Issuance of common stock under stock
option plan (unaudited).......................... 2,000 0 3
Translation adjustment (unaudited).................
Net loss--Six months ended June 30, 2001
(unaudited).......................................
------------ -------------------------------------------------------------------------
BALANCE AT JUNE 30, 2001 (Unaudited)................. 3,329 $ 1 56,045,198 $560 $132,053 $(15)
- ------------------------------------------------------- -------- ----------- ---------- ---- -------- -----
DEFICIT
ACCUMULATED
OTHER DURING
COMPREHENSIVE DEVELOPMENT
INCOME STAGE TOTAL
--------------- -------------- ---------
BALANCE AT DECEMBER 31, 1997....................... $(2,132) $ (36,293) $ 18,780
Common stock issued in private
placements, net of issuance costs -- $ 44......... 4,506
Issuance of Series E convertible preferred stock,
net of issuance costs -- $ 822.................... 7,440
Issuance of common stock under stock option plan 1
Translation adjustment............................. 392 392
Net loss--Year ended December 31, 1998 (17,863) (17,863)
------------------------------------------
BALANCE AT DECEMBER 31, 1998....................... $(1,740) $ (54,156) $ 13,257
Common stock issued in private placements 352
Issuance costs and dividends accrued in
relation to Series E convertible
preferred stock issued in December 1998........... (548)
Conversion of Series E preferred stock...
Issuance of common stock in connection
with the acquisition of certain assets
of Micron Display, net of issuance 14,205
costs -- $511.....................................
Issuance of warrants............................... 297
Issuance of common stock following
conversion of Sumitomo convertible loan 1,088
Issuance of common stock under stock
option plan....................................... 73
Issuance of common stock in connection
with Equity Line Kingsbridge, net of
issuance costs -- $176............................ 824
Issuance of common stock in connection
with private placement, net of issuance 19,963
Costs -- $36......................................
Issuance of common stock in connection
with Coloray...................................... 51
Translation adjustment............................. (1,249) (1,249)
Net loss--Year ended December 31, 1999............. (28,428) (28,428)
------------------------------------------
BALANCE AT DECEMBER 31, 1999....................... $(2,989) $ (82,584) $ 19,885
Dividends accrued in relation to Series
E convertible Preferred Stock issued 450
in December 98...................................
Conversion of Series E Preferred Stock 1
Issuance of common stock following
conversion of Sumitomo convertible loan........... 3,912
Issuance of common stock following
conversion of Sumitomo straight loan.............. 2,500
Issuance of common stock in connection
with Kingsbridge Equity Line, net of 4,805
issuance costs of $195............................
Issuance of common stock in connection
with Coloray...................................... 57
Issuance of common stock in connection
with private placement, net of issuance 14,987
costs -- $13......................................
Issuance of common stock under stock
option plan....................................... 370
Translation adjustment............................. (1,087) (1,087)
Net loss--Year ended December 31, 2000............. (25,678) (25,678)
------------------------------------------
BALANCE AT DECEMBER 31, 2000....................... $(4,076) $(108,261) $ 20,204
Dividends accrued in relation to Series
E convertible Preferred Stock issued in (5)
December 98 (unaudited)...........................
Conversion of Series E Preferred Stock
(unaudited)....................................... 60
Issuance of common stock under stock
option plan (unaudited).......................... 3
Translation adjustment (unaudited)................. 163 163
Net loss--Six months ended June 30, 2001
(unaudited)....................................... (12,685) (12,685)
------------------------------------------
BALANCE AT JUNE 30, 2001 (Unaudited)................. $(3,913) $(120,946) $ 7,741
- ------------------------------------------------------ ------- --------- --------
See accompanying notes
------------------------------------------------
PixTech, Inc.--Form 10Q--June 30, 2001 Page 6
PixTech, Inc.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(ALL AMOUNTS IN THOUSANDS EXCEPT SHARE AMOUNTS)
NOTE A - BASIS OF PRESENTATION
The financial information as of June 30, 2001, and for the three-month and six-
month periods ended June 30, 2001 and 2000, is unaudited but includes all
adjustments that are of a normal recurring nature and, in the opinion of
management, necessary for a fair presentation of the financial position and
results of operations for the presented periods. The accompanying unaudited
condensed consolidated financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
Operating results of the three-month period ended June 30, 2001 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 2001. For further information, refer to the consolidated financial
statements and footnotes thereto for the year ending December 31, 2000 included
in our Annual Report on Form 10-K filed with the Securities and Exchange
Commission on March 30, 2001.
NOTE B - RESTRICTED CASH
In August 1997, we provided AU Optronics ("Unipac"), our Asian manufacturing
partner, with a written bank guaranty in the amount of $10,000 pursuant to the
display foundry agreement (the "Foundry Agreement") signed in May 1997 in order
to implement volume production of field emission displays at Unipac's
manufacturing facility. We granted the issuing banks a security interest in cash
and cash equivalents for the same amount. The pledged cash and cash equivalents
have been recorded as short-term and long-term restricted cash on the balance
sheet.
In March 2000, pursuant to an agreement dated December 17, 1999 with Unipac, the
guaranty was reduced by $5,000 in consideration of a payment in cash of the same
amount to Unipac. Pursuant to the terms of this agreement, this $5,000 payment
will be considered as a prepayment against our future payments to Unipac
concerning the equipment leased by Unipac to us. Consequently, the amount of the
security interest to the banks was reduced to $833 at June 30, 2001 (see note D
- - capital leases).
NOTE C - PROPERTY, PLANT AND EQUIPMENT
Pursuant to the Foundry Agreement, volume FED production equipment was installed
at Unipac's facility. That equipment was purchased and funded by Unipac, and a
portion of it is leased to us. This portion amounted to $9,677 at June 30, 2001.
According to Financial Accounting Standard 13, "Accounting for Leases", this
equipment was recorded as an asset under the caption "Property, Plant and
Equipment" and amounted to $5,002 at June 30, 2001. Depreciation of $833 was
recorded during the six-month period ended June 30, 2001. As of June 30, 2001,
the related capital lease obligation amounted to $4,930, all of which is
classified as long term.
Note D - Capital Leases
We are party to certain sale-leaseback transactions for equipment used in our
pilot production plant in Montpellier, France, and, pursuant to the Foundry
Agreement, a portion of volume field emission displays production equipment
installed at Unipac's facility is leased to us. Pursuant to Financial Accounting
Standard 13, "Accounting for Leases", a capital lease obligation was recorded in
1998. In March 2000, the related capital lease obligation was reduced by $5,000
following the prepayment of the same amount made in cash to Unipac and amounted
to $4,930 at June 30, 2001 (see note B--restricted cash and note C--property,
plant and equipment).
------------------------------------------------
PixTech, Inc.--Form 10Q--June 30, 2001 Page 7
Future minimum payments under capital lease obligations at June 30, 2001 are as
follow:
YEARS ENDING DECEMBER 31,
2001................................................... $ 67
2002................................................... 833
2003................................................... 1,797
2004................................................... 2,479
------
Total minimum payments................................. 5,176
Less amount representing interest...................... (180)
------
Present value of minimum capitalized lease payments.... $4,996
======
NOTE E - LONG TERM DEBT
During the six-month period ended June 30, 2001, long term debt was reduced by
$633. The reduction was mainly due to the payment to Heller Financial of our
last maturity and to the strengthening of the US dollar against the Euro.
Because all our remaining debts are expressed in Euros, the strengthening of the
dollar decreases our obligations.
Long-term debt consists of certain loans payable under which future minimum
payments, at June 30, 2001, are as follow:
Years ending December 31,
2001................................................... $ 0
2002................................................... 638
2003................................................... 168
2004................................................... 827
2005................................................... 1,842
------
Total minimum payments $3,475
======
Note F - Stockholders' Equity
Convertible Preferred Stock:
In the six-month period ended June 30, 2001, we issued an aggregate of 362,734
shares of Common Stock upon the conversion of an aggregate of 18,766 shares of
Series E Preferred Stock at an average conversion price of $1.60938. These
shares of Series E Preferred Stock were convertible into shares of Common Stock
using a conversion price equal to the lesser of approximately $1.60938 per share
of Common Stock or the average closing price of our Common Stock over the ten
trading days immediately preceding the notice of conversion. At June 30, 2001,
there were 3,329 shares of Series E Preferred Stock outstanding.
The holders of Series E Preferred Stock are entitled to cumulative dividends. At
June 30, 2001 a dividend of $15 was accrued and recorded against
stockholders'equity.
The conversion of the 3,329 remaining Series E shares was finalized on July 17,
2001 for 82,594 shares of common stock. To date, all Series E Preferred Shares
have been converted.
NOTE G - FINANCIAL POSITION
During the six-month period ended June 30, 2001, we have continued to experience
losses and have used cash in operating activities of $1,596. As of June 30,
2001, we had a net working deficit of $6,644 and a deficit accumulated during
development stage of $120,946.
------------------------------------------------
PixTech, Inc.--Form 10Q--June 30, 2001 Page 8
PixTech, Inc.
(A DEVELOPMENT STAGE COMPANY)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
This Management Discussion and Analysis of Financial Condition and Results of
Operations contains forward-looking statements reflecting management's current
expectation regarding our future financial performance, the impact of the
closing of our Boise Idaho facility on our cash burn rate and our production
process and the projected costs of the Boise closing. Such expectations are
based on certain assumptions and involve risks and uncertainties. These
uncertainties include, but are not limited to, the risk associated with
transitioning to high volume manufacturing of field emission display at Unipac,
product demand and market acceptance risks, the commitment of Unipac and/or of
our licensees, our ability to grant other licenses under field emission display
technology, the validity and enforceability of our patent rights, possible
infringement by us of patent rights of others, the impact of competitive
products and prices, product development risks, commercialization difficulties
and technological delays or difficulties. See also "Outlook: Issues and Risks"
described more fully in our Annual Report on Form 10-K for year ended December
31, 2000 (pages 18 to 23) filed with the Securities and Exchange Commission on
March 30, 2001.
RECENT EVENTS
On July 30, 2001, we announced that we plan to consolidate our operations in
order to:
. optimize our manufacturing and research and development processes, and
. decrease operating expenses.
As a major component of this restructuring plan, we intend to close our Boise,
Idaho facility and reduce our workforce by approximately 30% o approximately
150 employees.
Our restructuring plan includes the following components:
. Work at the AU Optronics (formerly Unipac) facility in Hsinchu, Taiwan
will concentrate on production of our 5.2-inch monochrome display.
. Our employees at the Montpellier, France cathode research and
development facility will support our 7-inch color display development
program and continue additional research activities.
. We expect to close our Boise facility, which currently employs 68, by
the end of September of this year. We plan to transfer the resources and
equipment required to complete the 7-inch color display product
development to Montpellier, France.
We expect this plan to help us to conserve funds during our development stage by
significantly reducing our cash burn rate. At the same time, we intend these
changes to increase the efficiency of our color display development. We expect
the restructuring costs and other associated costs associated with the closure,
including assets write-offs for an amount of approximately $3 million, to total
$4 million and the quarterly savings to be approximately $1.5 million, but we
cannot fully predict what consequences may result from the closing of the Boise
facility.
On July 12, 2001, we received a letter from the Nasdaq Stock Market, Inc.,
notifying us of our failure to maintain a minimum bid price of $1.00 per share
during the preceding 30 consecutive business days as required by Nasdaq's
Marketplace Rule 4450(a)(5). The letter stated that we must demonstrate
compliance with Nasdaq's minimum bid rule by October 10, 2001, and that if we
are not in compliance by that date, Nasdaq will notify us that our common stock
will be delisted from the Nasdaq National Market. If such event occurs, we may
appeal the decision to a Nasdaq Listing Qualifications Panel. We cannot assure
you that our bid price will comply with the requirements for continued listing
of our common stock on the Nasdaq National Market, or any appeal to a decision
to delist our common stock will be successful.
On July 23, 2001, PixTech received correspondence from Commiseriat a l'Energie
Atomique, or CEA, referring to certain disputed royalty payments. We are
working with French counsel to resolve this matter.
RESULTS OF OPERATIONS
Product Sales
- -------------
We recognized product sales of $96,000 in the six-month period ended June 30,
2001 as compared to $217,000 in the six-month period ended June 30, 2000. In the
three-month period
------------------------------------------------
PixTech, Inc.--Form 10Q--June 30, 2001 Page 9
PixTech, Inc.
(A DEVELOPMENT STAGE COMPANY)
ending June 30, 2001 product revenues were $45,000 compared to $131,000 in the
same period last year. In the six-month period ended June 30, 2001 and 2000,
product revenues primarily consisted of shipments of displays sold at volume
prices to Zoll Medical. In the quarter ending June 30, 2001, 10% of our product
sales related to 5.2-inch gray scales displays we sold to ECM for veterinary
uses. The 5.2 inch gray scale displays represented 20% of the second quarter
2001 sales.
Other Revenues
- --------------
Other revenues consist of funding under various public development contracts and
other miscellaneous revenues. We recognized other revenues of $2,233,000 for
the six-month period ended June 30, 2001, as compared to $3,913,000 in the same
period of 2000. Other revenues were $1,135,000 in the second quarter of 2001,
and $2,009,000 in the same period last year. Of these revenues, in the six-month
period ending June 30, 2001, $2,204,000 was related to a development contract
awarded to us by DARPA (Defense Advanced Research Projects Agency) in August
1999 and for which we had received additional funding commitments in April 2000
and January 2001. In April 2000, we began development efforts on a 12.1-inch
color field emission display for DARPA of which we have received $6,086,000 as
of June 30, 2001. We announced the successful delivery of the 12.1-inch full
color field emission displays to U.S. Army on August 14, 2000. Then, in January
2001, we were awarded additional funding for the continued development of the
12.1-inch color, high voltage field emission display technology. As of June 30,
2001, the remaining DARPA project funding is approximately $3.3 million. We are
currently evaluating what impact, if any, the closing of our Boise facility may
have on our DARPA funding
Other Research and Development Expenses
- ---------------------------------------
We spent $14.1 million for research and development during the six-month period
ended June 30, 2001 as compared to $15.7 million in the same period of 2000, we
spent $6,885,000 in the quarter ending June 30, 2001 compared to $7,920,000 in
the same period last year. These decreases of 10% and 13% are mainly due to
lower depreciation costs, as major equipment in our pilot plant in Montpellier
acquired in 1994 and 1995 is now fully amortized. We have also experienced
decreased rental costs and property taxes.
Sales and Marketing Expenses
- ----------------------------
Sales and marketing expenses decreased 17% from $571,000 in the six-month period
ended June 30, 2000 to $475,000 in the six-month period ended June 30, 2001.
Sales and marketing expenses nonetheless increased from $258,000 in the three-
month period ending June 30, 2000 to $275,000 in the three-month period ending
June 30, 2001. Last year we reported our investor relation expenses as sales and
marketing expenses while this year investor relations expenses are included in
the general and administration expenses. We believe sales and marketing
expenses may increase in the future, reflecting the expansion of our sales and
marketing organization both in the United States and in Europe.
General and Administrative Expenses
- -----------------------------------
General and administrative expenses totaled $1,488,000 in the six-month period
ended June 30, 2001 and $1,497,000 in the six-month period ending June 30, 2000.
We spent $728,000 in general and administrative expenses during the three-month
period ended June 30, 2001, compared to $684,000 during the same period in 2000.
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PixTech, Inc.--Form 10Q--June 30, 2001 Page 10
PixTech, Inc.
(A DEVELOPMENT STAGE COMPANY)
Interest Income (Expense), Net
- ------------------------------
Interest income is comprised of interest on available and restricted cash.
Interest expense is comprised of interest payable on long-term obligations.
Interest income was $154,000 during the six-month period ended June 30, 2001,
compared to $169,000 in the same period last year. During the quarters ending
June 30, 2001 and 2000, interest income $51,000 and $140,000 respectively. This
decrease is due to lower cash balances invested in money market instruments.
Currency Fluctuations
- ---------------------
Although a significant portion of our revenues are denominated in U.S. dollars,
a substantial portion of our operating expenses are denominated in Euros. Gains
and losses on the conversion to U.S. dollars of assets and liabilities
denominated in Euros may contribute to fluctuations in our results of
operations, which are reported in U.S. dollars. Most of our capital lease
obligations are expressed in Taiwanese dollars. In the past, fluctuations of the
parity of the Taiwanese dollar versus the Euro caused significant foreign
exchange gains or losses and may continue to do so in the future. We recorded a
net foreign exchange gain of $132,000 in the first six months of 2001 compared
to $332,000 during the same period last year, and a net foreign exchange gain of
$322,000 in the three-month period ended June 30, 2001 compared to a net
exchange loss of $27,000 in the quarter ended June 30, 2000. We cannot predict
the effect of exchange rate fluctuations on future operating results. To date,
we have not undertaken hedging transactions to cover our currency exposure, but
we may do so in the future.
LIQUIDITY AND CAPITAL RESOURCES
Cash used in operations was $6.7 million during the six-month period ended
June 30, 2001, compared to $8.2 million during the six-month period ended
June 30, 2000, and $1.6 million in the three-month period ended June 30, 2001,
compared to $4.2 million in the three month period ended June 30, 2000.
We have used $71.9 million in cash to fund our operations since inception
through June 30, 2001 and have incurred $24.1 million in capital expenditures.
Capital expenditures were $635,000 during the six-month period ended June 30,
2001, compared to $1,327,000 during the same period in 2000, and $301,000 in the
three-month period ended June 30, 2001, compared to $566,000 during the three
month period ended June 30, 2000. These capital expenditures exclude assets
acquired under capital lease obligations. During the six-month period ended
June 30, 2001, capital expenditures were focused on our virtual private
worldwide network, and research and development equipment to improve our new
projects. Implementing volume production at Unipac's manufacturing plant
required significant capital expenditure. Pursuant to the Foundry Agreement,
Unipac funded $14.7 million in capital expenditures for equipment. A portion of
that equipment is leased to us and the gross amount of this equipment is
$9.6 million as of June 30, 2001. We expect that additional capital expenditures
will be required by the end of 2001 and in 2002, in order to increase capacity
at Unipac and complete implementation of manufacturing processes for both
monochrome and color products.
During the six-month period ended June 30, 2001, restricted cash was
reclassified as cash available in the amount of $416,000. Restricted cash was
related to the security interest corresponding to the guaranty granted to Unipac
in connection with the purchase and funding by Unipac of volume field emission
displays production equipment. In March 2000, pursuant to an
------------------------------------------------
PixTech, Inc.--Form 10Q--June 30, 2001 Page 11
PixTech, Inc.
(A DEVELOPMENT STAGE COMPANY)
agreement dated December 17, 1999 signed with Unipac, the guaranty was reduced
by $5.0 million in consideration of a payment in cash of the same amount to
Unipac. Pursuant to the terms of this agreement, this $5.0 million payment will
be considered as a prepayment against our future payments to Unipac related to
the equipment leased by Unipac to us. Consequently, the amount of the security
interest to the banks was reduced by the same amount and amounted to $833,000 at
June 30, 2001.
Cash used in financing activities was $310,000 in the six-month period ended
June 30, 2001, compared to $13.9 million generated in the six-month period ended
June 30, 2000. In the six-month period ended June 30, 2001, we used cash for
repayment of long term borrowing. In the same period last year, cash generated
from financing activities included sales of shares of Common Stock, resulting in
net proceeds of $18.2 million while repayment of long term liabilities amounted
to $4.3 million, including the $5.0 million prepayment made to Unipac and
various reimbursements.
Since our inception, we have funded our operations and capital expenditure
primarily from the proceeds of equity financing aggregating $112.3 million and
from borrowings and sale-leaseback transactions aggregating $21.7 million.
In 1997 and January 1999, we entered into two research and development
agreements with French authorities. Under these agreements, we expect to benefit
from zero-interest loans totaling approximately $3.0 million, of which we
received $482,000 in April 2000 and $2.0 million in 1999. We expect to receive
$200,000 in the third quarter of 2001.
In November 1998, we entered into a research and development agreement with
French authorities. Under this agreement, we expect to receive a total grant of
approximately $679,000, of which we received $196,000 in 1999 and $367,000 in
2000. The $196,000 and $367,000 collected in 1999 and in 2000, respectively,
were not recognized as income as all conditions stipulated in the agreement were
not met. We received $143,000 in June 2001.
On August 5, 1999, DARPA awarded a development contract to us amounting to
$4.7 million, of which we received $1.5 million in 1999 and $3.2 million in
2000. On April 3, 2000, in addition to and as a continuation of the existing
development contract, we were awarded an additional $6.3 million funding for the
development and demonstration of a full color, full video rate, 12.1-inch field
emission display for which to date, we received $6.1 million. On January 22,
2001 we were awarded an additional $3.1 million funding, further supplementing
the August 1999 and April 2000 contracts for the continued development of the
12.1-inch color, high voltage field emission display technology.
We have recognized French income tax benefits of $8.6 million since inception.
These income tax benefits represent tax credits for research and development
activities conducted in France, which are paid in cash to us if it is not
possible to credit them against future income tax liabilities within three
fiscal years. In April 1999, we collected $3.0 million from research and
development tax credit recorded in 1995. We collected $1.1 million in June 2000,
in connection with the research and development tax credit recorded in 1996, and
$690,000 in June 2001 for 1997 tax credit.
On August 9, 1999, we secured a $15.0 million equity-based line of credit with
Kingsbridge Capital Ltd. Under the terms of the equity line, we can draw up to
$15.0 million cash in exchange for our common stock, in increments over a two-
year period. The decision to draw
------------------------------------------------
PixTech, Inc.--Form 10Q--June 30, 2001 Page 12
PixTech, Inc.
(A DEVELOPMENT STAGE COMPANY)
down any of the funds and the timing and account of any such draw are at our
sole discretion, subject to certain conditions. Such conditions include
limitations depending on the volume and the market price of our common stock. In
particular, Kingsbridge is not obligated to accept a put while the market price
of our common stock is below $1. On June 27, 2001 we executed a six-month
extension of the Kingsbridge equity line. Through June 30, 2001, we have drawn a
total amount of $6.0 million under the equity line. The continuing
unavailability of funds from the Kingsbridge equity line due to the low market
price of our common stock has materially decreased our access to additional
cash. Our restructuring plan, discussed above, is intended in part to reduce our
cash burn rate and preserve the cash resources remaining at our disposal.
On January 25, 2000, we signed an agreement with Audi and other partners to
jointly design, develop, test and deliver a 7-inch color field emission display
for automotive applications. This agreement is part of the European Commission
IST program. Under the terms of this agreement, the total funding is
approximately $1.7 million, of which $521,000 was received in January 2001 and
$548,000 is expected in the third quarter of 2001.
Cash available as of June 30, 2001 was $7.5 million, compared to $16.8 million
as of December 31, 2000. In the three-month period ending June 30, 2001, we used
a total of $2.9 million for our activities.
We will require substantial funds to conduct research, development and testing,
to develop and expand commercial-scale manufacturing systems and to market any
resulting products. Changes in technology or a growth of sales beyond currently
anticipated levels will also require further investment. Our capital
requirements will depend on many factors, including the rate at which we can
develop our products, the market acceptance of such products, the levels of
promotion and advertising required to launch such products and attain a
competitive position in the marketplace and the response of competitors to our
products. We cannot assure you that funds for these purposes, whether from
equity or debt financing, or other sources, will be available when needed or on
terms acceptable to us.
------------------------------------------------
PixTech, Inc.--Form 10Q--June 30, 2001 Page 13
PixTech, Inc.
(A DEVELOPMENT STAGE COMPANY)
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The market risk exposure inherent to our international operations creates
potential for losses arising from adverse changes in foreign currency exchange
rates. We are exposed to such foreign currency exchange rate risk in two main
areas: (i) a substantial portion of our operating expenses are, and are expected
to be, denominated in Euros, and (ii) most of our capital lease obligations are
expressed in Taiwanese dollars. Fluctuations of the parity of the Taiwanese
dollar versus the Euro or the U.S. dollar may cause significant foreign exchange
gains or losses. In addition, gains and losses arising from the conversion to
U.S. dollars of assets and liabilities denominated in Euros or in Taiwanese
dollars may contribute to fluctuations in our results of operations, which are
reported in U.S. dollars. To date, we have not undertaken hedging transactions
to cover its currency exposure. We are also exposed to interest rate risks in
connection with certain long-term debt. We do not, however, enter into market
sensitive instruments for trading purposes.
------------------------------------------------
PixTech, Inc.--Form 10Q--June 30, 2001 Page 14
PixTech, Inc.
(A DEVELOPMENT STAGE COMPANY)
PIXTECH, INC.
PART II Other Information
ITEM 2 Changes in Securities:
(a) Not applicable
(b) Not applicable
(c) In January 2001, 18,766 shares of Series E Convertible
Preferred Stock were converted into shares of Common Stock,
resulting in the issuance of 362,734 shares of our Common
Stock. We completed the conversion of 3,329 shares of Series E
Preferred Stock in July 2001, for 82,594 shares of common
stock. After this transaction, all the Series E Convertible
Preferred Stock have been converted.
ITEM 4 Submission to a vote of Security holders
At the Annual Meeting of Stockholders held on May 16, 2001, the
following nominees for director received the number of votes
set opposite their names, in each case constituting a plurality
of the votes cast, and therefore have been duly elected
directors of the Company.
Number of Votes
------------------------
Nominee For Withheld
------- ----------- -----------
Andre Borrel 40,620,322 48,280
Jean-Luc Grand-Clement 40,620,322 48,280
The terms of office as a director of Dieter Mezger, John
Hawkins and Ronald Ritchie continued after the meeting.
Mr. Hawkins subsequently resigned from the board of directors,
and the resulting vacancy was filled by the election of Bruce
Gnade.
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PixTech, Inc.--Form 10Q--June 30, 2001 Page 15
PixTech, Inc.
(A DEVELOPMENT STAGE COMPANY)
ITEM 6 Exhibits and reports on Form 8-K
--------------------------------
(a) Exhibits
3.1 - Certificate of Incorporation of Registrant. Filed as
Exhibit 3.2 to the PixTech, Inc. Registration Statement on
Form S-1 (Commission File No. 33-93024) and incorporated herein
by reference.
3.2 - Restated By-Laws of Registrant. Filed as Exhibit 3.4 to
the PixTech, Inc. Registration Statement on Form S-1
(Commission File No. 33-93024) and incorporated herein by
reference. 3.3 - Certificate of Designations of PixTech, Inc.
Filed as Exhibit 2.1 to the PixTech, Inc. Current Report on
Form 8-K filed January 7, 1999 and incorporated herein by
reference.
3.4 - Certificate of Amendment of Restated Certificate of
Incorporation of Registrant. Filed as an Exhibit with the same
number to the PixTech, Inc. Form 10-Q/A for the fiscal quarter
ended June 30, 1999 filed with the Commission on August 24,
1999 and incorporated herein by reference.
3.5 - Certificate of Amendment of Restated Certificate of
Incorporation of Registrant, dated January 18, 2000. Filed as
an exhibit with the same number to the PixTech, Inc. Annual
Report on Form 10-K for the year ended December 31, 1999 filed
with the commission on March 28, 2000 and incorporated herein
by reference.
10 - First Amendment dated June 25, 2001, to the Private Equity
Line Agreement by and between Kingsbridge Capital Ltd. and
PixTech, Inc. filed herewith.
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the second
quarter of 2001.
------------------------------------------------
PixTech, Inc.--Form 10Q--June 30, 2001 Page 16
PixTech, Inc.
(A DEVELOPMENT STAGE COMPANY)
PIXTECH, INC.
June 30, 2001
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PIXTECH, INC.
Date: August 15, 2001 BY: /s/ Marie Boem
----------------------------
Marie Boem,
Principal Financial Officer
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PixTech, Inc.--Form 10Q--June 30, 2001 Page 17
PixTech, Inc.
(A DEVELOPMENT STAGE COMPANY)
PIXTECH, INC.
June 30, 2001
EXHIBIT INDEX
Exhibit No.
- -----------
3.1 -Certificate of Incorporation of Registrant. Filed as Exhibit 3.2 to
the PixTech, Inc. Registration Statement on Form S-1 (Commission File No.
33-93024) and incorporated herein by reference.
3.2 -Restated By-Laws of Registrant. Filed as Exhibit 3.4 to the PixTech,
Inc. Registration Statement on Form S-1 (Commission File No. 33-93024) and
incorporated herein by reference.
3.3 -Certificate of Designations of PixTech, Inc. Filed as Exhibit 2.1 to
the PixTech, Inc. Current Report on Form 8-K filed January 7, 1999 and
incorporated herein by reference.
3.4 -Certificate of Amendment of Restated Certificate of Incorporation of
Registrant. Filed as an Exhibit with the same number to the PixTech, Inc.
Form 10-Q/A for the fiscal quarter ended June 30, 1999 filed with the
Commission on August 24, 1999 and incorporated herein by reference.
3.5 -Certificate of Amendment of Restated Certificate of Incorporation of
Registrant, dated January 18, 2000. Filed as an exhibit with the same
number to the PixTech, Inc. Annual Report on Form 10-K for the year ended
December 31, 1999 filed with the commission on March 28, 2000 and
incorporated herein by reference.
10 - First Amendment dated June 25, 2001, to the Private Equity Line
Agreement by and between Kingsbridge Capital Ltd. and PixTech, Inc. filed
herewith.
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PixTech, Inc.--Form 10Q--June 30, 2001 Page 18