FORM 10-Q
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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 March 31, 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.
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(Exact name of registrant as specified in its charter)
Delaware 04-3214691
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(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
Avenue Olivier Perroy, 13790 Rousset, France
2700 Augustine Drive, Suite 255, Santa Clara, CA 95054
(Address of principal executive offices) (Zip code)
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011-33-4-42-29-10-00
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(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 May 14, 2001
----- ---------------------------
Common Stock, $.01 par value 56,045,198
PIXTECH, INC.
(A DEVELOPMENT STAGE COMPANY)
PIXTECH, INC.
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TABLE OF CONTENTS
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PAGE NO.
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PART I FINANCIAL INFORMATION
ITEM 1 Financial Statements
Condensed Consolidated Balance Sheets as of
March 31, 2001 and December 31, 2000. . . . . . . . . . . . . . . 3
Condensed Consolidated Statements of Comprehensive
Operations for the Three Month Periods Ending March
31, 2001 and 2000, and the period from June 18, 1992
(date of inception) through March 31, 2001. . . . . . . . . . 4
Condensed Consolidated Statements of Cash Flows
for the Three Month Periods ending March 31, 2001
and 2000, and the period from June 18, 1992
(date of inception) through March 31, 2001. . . . . . . . . . 5
Condensed Consolidated Statements of Stockholders' Equity . . . . . 6
Notes to Condensed Consolidated Financial Statements. . . . . . 7 - 9
ITEM 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . . . . . . 10 - 13
ITEM 3 Quantitative and Qualitative Disclosures Regarding
Market Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
PART II OTHER INFORMATION
ITEM 2 Changes in Securities. . . . . . . . . . . . . . . . . . . . . . 14
ITEM 6 Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . 15
Signature. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
____________________________________________________
Pixtech, Inc - Form 10Q - March 31, 2001 -Page 2/14
PIXTECH, INC.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
MARCH 31, DECEMBER 31,
2001 2000
----------- --------------
(UNAUDITED)
ASSETS
Current assets
Cash and cash equivalents available. . . . . . . . . . . . . . . . . $ 10,446 $ 16,847
Restricted cash - short term . . . . . . . . . . . . . . . . . . . . 833 833
Accounts receivable
Trade. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94 148
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 794 596
Inventories
Raw Materials . . . . . . . . . . . . . . . . . . . . . . . . . . 1,236 1,019
Finished Goods . . . . . . . . . . . . . . . . . . . . . . . . . . 37 41
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 708 737
----------- --------------
Total current assets . . . . . . . . . . . . . . . . . . . . . . 14,148 20,221
Restricted cash - long term. . . . . . . . . . . . . . . . . . . . . . 208 417
Property, plant and equipment, net . . . . . . . . . . . . . . . . . . 17,152 19,014
Goodwill, net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 6
Other assets - long term . . . . . . . . . . . . . . . . . . . . . . . 55 58
----------- --------------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . $ 31,563 $ 39,716
=========== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current portion of long term debt. . . . . . . . . . . . . . . . . $ 894 $ 1,146
Current portion of capital lease obligations . . . . . . . . . . . 101 157
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . 6,586 7,885
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . 1,638 1,612
----------- --------------
Total current liabilities. . . . . . . . . . . . . . . . . . . . 9,219 10,800
Deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,078 580
Long term debt, less current portion . . . . . . . . . . . . . . . . . 2,725 2,962
Capital lease obligation, less current portion . . . . . . . . . . . . 5,169 5,133
Other long term liabilities, less current portion. . . . . . . . . . . 35 37
----------- --------------
Total liabilities. . . . . . . . . . . . . . . . . . . . . . . . 18,226 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-56,045,198 and 55,682,464 respectively . 560 557
Additional paid-in capital .. . . . . . . . . . . . . . . . . . . 132,037 131,983
Cumulative other comprehensive income . . . . . . . . . . . . . . (3,929) (4,076)
Deficit accumulated during development stage .. . . . . . . . . . (115,332) (108,261)
----------- --------------
Total stockholders' equity .. . . . . . . . . . . . . . . . . 13,337 20,204
----------- --------------
Total liabilities and stockholders' equity .. . . . . . . . . $ 31,563 $ 39,716
=========== ==============
See accompanying notes.
____________________________________________________
Pixtech, Inc - Form 10Q - March 31, 2001 -Page 3/14
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 Months (date of
------------------ inception)
Ending March 31, through
------------------ March 31,
2001 2000 2001
-------- -------- ----------
Revenues
Cooperation and license revenues . . . . . . . . . . . . . . $ -- $ -- $ 26,449
Product sales. . . . . . . . . . . . . . . . . . . . . . . . 51 86 3,692
Other revenues . . . . . . . . . . . . . . . . . . . . . . . 1,098 1,904 17,921
-------- -------- ----------
Total revenues . . . . . . . . . . . . . . . . . . . . . . 1,149 1,990 48,062
-------- -------- ----------
Cost of revenues
License fees and royalties . . . . . . . . . . . . . . . . . (3) (88) (2,190)
-------- -------- ----------
Gross margin . . . . . . . . . . . . . . . . . . . . . . . . . 1,146 1,902 45,872
-------- -------- ----------
Operating expenses
Research and development:
Acquisition of intellectual property rights. . . . . . . . . -- (57) (5,022)
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . (7,196) (7,794) (136,419)
-------- -------- ----------
(7,196) (7,851) (141,441)
Marketing and sales. . . . . . . . . . . . . . . . . . . . . (200) (313) (9,191)
Administrative and general expenses. . . . . . . . . . . . . (760) (813) (19,328)
-------- -------- ----------
(8,156) (8,977) (169,960)
-------- -------- ----------
Loss from operations . . . . . . . . . . . . . . . . . . . . . (7,010) (7,075) (124,088)
Other income / (expense)
Interest income. . . . . . . . . . . . . . . . . . . . . . . 190 338 5,135
Interest expense . . . . . . . . . . . . . . . . . . . . . . (87) (309) (5,103)
Foreign exchange (losses) / gains. . . . . . . . . . . . . . (190) 359 617
Other revenues . . . . . . . . . . . . . . . . . . . . . . . 26 -- 214
-------- -------- ----------
(61) 388 863
Loss before income tax benefit . . . . . . . . . . . . . . . . (7,071) (6,687) (123,225)
Income tax benefit . . . . . . . . . . . . . . . . . . . . . . -- -- 7,893
-------- -------- ----------
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . $(7,071) $(6,687) $(115,332)
======== ======== ==========
Dividends accrued to holders of Preferred Stock. . . . . . . (3) (89) (644)
-------- -------- ----------
Net loss to holders of Common Stock. . . . . . . . . . . . . . $(7,074) $(6,776) $(115,976)
======== ======== ==========
Net loss per share of Common Stock . . . . . . . . . . . . . $ (0.13) $ (0.16)
======== ========
Shares of Common Stock used in computing net loss per share. 55,948 40,562
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . $(7,071) $(6,687) $(115,976)
Change in other comprehensive income . . . . . . . . . . . . 147 (748) (3,929)
-------- -------- ----------
Comprehensive net loss . . . . . . . . . . . . . . . . . . . $(6,924) $(7,435) $(119,105)
======== ======== ==========
See accompanying notes.
____________________________________________________
Pixtech, Inc - Form 10Q - March 31, 2001 -Page 4/14
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
THREE MONTHS ENDING INCEPTION)
MARCH 31, THROUGH
------------------------ MARCH 31,
2001 2000 2001
----------- ----------- -----------
Net loss. . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (7,071) (6,687) (115,332)
Total adjustments to net loss . . . . . . . . . . . . . . . . . 2,004 2,717 44,993
----------- ----------- -----------
Net cash used in operating activities . . . . . . . . . . . . . (5,067) (3,970) (70,339)
----------- ----------- -----------
INVESTING ACTIVITIES
Additions to property, plant, and equipment . . . . . . . . . . (334) (761) (22,737)
Reclassification of restricted cash as cash available . . . . . 208 5,625 (1,191)
Additions to intangible assets. . . . . . . . . . . . . . . . . -- -- (130)
----------- ----------- -----------
Net cash provided by / (used in) investing activities . . . . . (126) 4,864 (24,058)
FINANCING ACTIVITIES
Stock issued. . . . . . . . . . . . . . . . . . . . . . . . . . -- 3,296 112,333
Proceeds from long-term borrowings. . . . . . . . . . . . . . . -- -- 19,028
Proceeds from sale leaseback transactions . . . . . . . . . . . -- -- 2,731
Payments for equipment purchases financed by accounts payable . -- -- (3,706)
Repayments of long term borrowing and capital lease obligations (312) (5,832) (20,041)
----------- ----------- -----------
Net cash provided by used in financing activities . . . . . . . (312) (2,536) 110,345
----------- ----------- -----------
Effect of exchange rates on cash. . . . . . . . . . . . . . . . (896) (685) (5,502)
----------- ----------- -----------
Net increase / (decrease) in cash and cash equivalents. . . . . (6,401) (2,327) 10,446
Cash and cash equivalents beginning of period . . . . . . . . . 16,847 14,663 --
----------- ----------- -----------
Cash and cash equivalents end of period . . . . . . . . . . . . $ 10,446 $ 12,336 $ 10,446
=========== =========== ===========
See accompanying notes.
____________________________________________________
Pixtech, Inc - Form 10Q - March 31, 2001 -Page 5/14
PIXTECH, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (IN THOUSANDS, EXCEPT SHARE AMOUNTS)
CONVERTIBLE PREFERRED COMMON STOCK
------------------- -------------------
STOCK
-------------------
DIVIDENDS
------------
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
Issuance of Series E convertible preferred stock
in December, 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 costs -- $511 7,133,562 71 14,134
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 Costs -- $36 12,427,146 124 19,839
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 in December 98 450
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 issuance costs of
195 2,003,295 20 4,785
Issuance of common stock in connection with
Coloray 16,000 -- 57
Issuance of common stock in connection with
private placement, net of issuance costs -- $13 9,320,359 93 14,893
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 December 98
(unaudited) (3)
Conversion of Series E Preferred Stock
(unaudited) (18,766) (0) 362,734 3 (8) 65
Translation adjustment (unaudited)
Net loss-Three months ended March 31, 2001
(unaudited)
--------- -------- ---------- ------- ------------ ------------
BALANCE AT MARCH 31, 2001 (UNAUDITED) 3,329 $ 1 56,045,198 $ 560 $ 132,050 $ (13)
- ------------------------------------------------------ --------- -------- ---------- ------- ------------ ------------
OTHER DEFICIT
--------- -------
OTHER ACCUMULATED
--------- -----------
COMPRE DURING
--------- ------
HENSIVE 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
Issuance of Series E convertible preferred stock
in December, 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 costs -- $511 14,205
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 Costs -- $36 19,963
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 in December 98 450
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 issuance costs of
195 4,805
Issuance of common stock in connection with
Coloray 57
Issuance of common stock in connection with
private placement, net of issuance costs -- $13 14,987
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 December 98
(unaudited) (3)
Conversion of Series E Preferred Stock
(unaudited) 60
Translation adjustment (unaudited) 147 147
Net loss-Three months ended March 31, 2001
(unaudited) (7,071) (7,071)
--------- ------------- ---------
BALANCE AT MARCH 31, 2001 (UNAUDITED) $ (3,929) $ (115,332) $ 13,337
- ------------------------------------------------------ --------- ------------- ---------
See accompanying notes
____________________________________________________
Pixtech, Inc - Form 10Q - March 31, 2001 -Page 6/14
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 March 31, 2001, and for the three-month periods
ended March 31, 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 March 31, 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 Unipac Optoelectronics Corp. ("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 between Unipac and us 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 $1,041 at March 31, 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 $10,079 at March 31,
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 $5,640 at March 31, 2001. Depreciation of $420 was
recorded during the three-month period ended March 31, 2001. As of March 31,
2001, the related capital lease obligation amounted to $5,169, 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. According 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 $5,169 at March 31, 2001 (see note B-restricted cash and
note C-property, plant and equipment).
____________________________________________________
Pixtech, Inc - Form 10Q - March 31, 2001 -Page 7/14
PIXTECH, INC.
(A DEVELOPMENT STAGE COMPANY)
Future minimum payments under capital lease obligations at March 31, 2001 are as
follow:
YEARS ENDING DECEMBER 31,
2001 . . . . . . . . . . . . . . . . . . . . . . . . . $ 105
2002 . . . . . . . . . . . . . . . . . . . . . . . . . 602
2003 . . . . . . . . . . . . . . . . . . . . . . . . . 1,735
2004 .. . . . . . . . . . . . . . . . . . . . . . . . 3,004
-------
Total minimum payments .. . . . . . . . . . . . . . . 5,447
Less amount representing interest . . . . . . . . . . (177)
-------
Present value of minimum capitalized lease payments . $5,270
-------
NOTE E - LONG TERM DEBT
During the three-month period ended March 31, 2001, long term debt was reduced
by $489. The reduction was mainly due to the payment to Heller Financial of our
last maturity.
Long-term debt consists of certain loans payable under which future minimum
payments, at March 31, 2001, are as follow:
YEARS ENDING DECEMBER 31,
2001 . . . . . . . . . . . . . . . . . . . . 808
2002 . . . . . . . . . . . . . . . . . . . . 1,068
2003 . . . . . . . . . . . . . . . . . . . . 175
2004 . . . . . . . . . . . . . . . . . . . . 256
2005 . . . . . . . . . . . . . . . . . . . . 1,312
------
Total minimum payments . . . . . . . . . . $3,619
======
NOTE F - STOCKHOLDERS' EQUITY
Convertible Preferred Stock:
In the three-month period ended March 31, 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.
At March 31, 2001, there were 3,329 shares of Series E Preferred Stock
outstanding. 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.
The holders of Series E Preferred Stock are entitled to cumulative dividends. At
March 31, 2001 a dividend of $13 was accrued and recorded against
stockholders'equity.
In addition, we are required to reserve, out of the authorized but unissued
shares, 150% of the number of shares of Common Stock that the Series E Stock are
convertible into. As of March 31, 2001, the Series E Stock would have been
convertible into 54,518 shares of Common Stock, thus requiring us to reserve
81,777 shares of the remaining authorized but unissued shares.
NOTE G - FINANCIAL POSITION
During the three-month period ended March 31, 2001, we have continued to
experience losses and have used cash in operating activities of $5,067. As of
March 31, 2001, we had a net working deficit of $6,356 and a deficit accumulated
during development stage of $115,333.
____________________________________________________
Pixtech, Inc - Form 10Q - March 31, 2001 -Page 8/14
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. 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.
RESULTS OF OPERATIONS
Product Sales
--------------
We recognized product sales of $51,000 in the three-month period ended
March 31, 2001 as compared to $86,000 in the three-month period ended March 31,
2000. In the three-month period ended March 31, 2001 and 2000, product revenues
primarily consisted of shipments of displays sold at volume prices to Zoll
Medical. Since the last quarter of 1998, we have been shipping field emission
displays manufactured by our contract manufacturer, Unipac, to our customers in
limited quantities.
Other Revenues
---------------
Other revenues consist of funding under various public development
contracts and other miscellaneous revenues. We recognized other revenues of
$1,098,000 for the three-month period ended March 31, 2001, as compared to
$1,904,000 in the same period of 2000. Of these revenues, in the three-month
period ending March 31, 2001, $1,083,000 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 in April 2000 and January
2001. Under the terms of this DARPA contract, we recognized and received a total
amount of $4.7 million, which represented the entire amount of this initial
DARPA funding. In April 2000, we began development efforts on a 12.1 inch color
field emission display under the same DARPA contract of which we have received
$4,965,000 as of March 31, 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 for an additional funding for the
continued development of the 12.1 inch color, high voltage field emission
display technology. As of March 31, 2001, the remaining DARPA funding that we
are entitled to receive is approximately $4.5 million.
Other Research and Development Expenses
-------------------------------------------
We have spent $7.2 million for research and development during the
three-month period ended March 31, 2001 as compared to $7.8 million in the same
period of 2000. This decrease is mainly due to lower depreciation costs as major
equipment in our pilot plant in Montpellier have been acquired in 1994 and 1995
and are now fully amortized, as well as a decrease in rental costs and property
tax.
Sales and Marketing Expenses
-------------------------------
Sales and marketing expenses decreased 37% from $313,000 in the three-month
period ended March 31, 2000 to $200,000 in the three-month period ended March
31, 2001. We reported last year our investors relation expenses in sales and
marketing, while this year expenses are included in the general and
administration expenses. However, 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.
____________________________________________________
Pixtech, Inc - Form 10Q - March 31, 2001 -Page 9/14
PIXTECH, INC.
(A DEVELOPMENT STAGE COMPANY)
General and Administrative Expenses
--------------------------------------
We spent $760,000 in general and administrative during the three-month
period ended March 31, 2001, compared to $813,000 during the same period in
2000. This decrease reflects a decrease in consulting and legal fees from the
previous year.
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. Net
interest income was $103,000 in the three-month period ended March 31, 2001,
compared to a net interest income of $29,000 in the same period of 2000 due to
higher 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 loss of $190,000 in the first quarter of 2001 compared to a
net foreign exchange gain of $359,000 during the same period last year. 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 $5.0 million during the three-month period ended
March 31, 2001, compared to $3.9 million in the three-month period ended March
31, 2001.
We have used $70.3 million in cash to fund our operations since inception
through March 31, 2001 and have incurred $24.0 million in capital expenditures.
Capital expenditures were $334,000 during the three-month period ended March 31,
2001, compared to $761,000 during the same period in 2000. These capital
expenditures exclude assets acquired under capital lease obligations. During the
three-month period ended March 31, 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 $10.1 million as of March 31, 2001. We expect that additional
capital expenditures will be required by the end of 2001 and in 2002, and that
we will increase capacity at Unipac and complete implementation of manufacturing
processes for both monochrome and color products.
During the three-month period ended March 31, 2001, restricted cash was
reclassified as cash available in the amount of $208,000. 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 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 $1,041,000 at March 31, 2001.
Cash used in financing activities was $312,000 in the three-month period ended
March 31, 2001, compared to $2.5 million used in the three-month period ended
March 31, 2000. In the three-month period ended March 31, 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 $3.3 million while repayment of long term liabilities amounted
to $5.8 million, including the $5.0 million prepayment made to Unipac.
____________________________________________________
Pixtech, Inc - Form 10Q - March 31, 2001 -Page 10/14
PIXTECH, INC.
(A DEVELOPMENT STAGE COMPANY)
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 second 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 expect to receive $215,000 in the second quarter of 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 $4.9 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 $7.9 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.
In 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 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. Through March 31, 2001, we have drawn a total
amount of $6.0 million under the equity line.
In 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.
Cash available as of March 31, 2001 was $10.4 million, compared to $16.8 million
as of December 31, 2000. We expect that cash available on March 31, 2001, with
the anticipated proceeds from the Kingsbridge equity-based line of credit, and
cash from various grants and loans described above and from research and
development tax credits, will be sufficient to meet our cash requirements for
the near future.
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 make assurance 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 - March 31, 2001 -Page 11/14
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 - March 31, 2001 -Page 12/14
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.
After this transaction, the remaining Series E Stock outstanding,
including accrued dividends, is convertible into 54,518 shares of
Common Stock using a conversion price of $1.60938. As of May 14,
2001, there were 3,329 shares of Series E Preferred Stock
outstanding.
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.
(b) Reports on Form 8-K:
-----------------------
No reports on Form 8-K were filed during the first quarter
of 2001.
____________________________________________________
Pixtech, Inc - Form 10Q - March 31, 2001 -Page 13/14
PIXTECH, INC.
(A DEVELOPMENT STAGE COMPANY)
PIXTECH, INC.
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: May 14, 2001
BY: /s/ Marie Boem
------------------
Marie Boem,
Principal Financial Officer
____________________________________________________
Pixtech, Inc - Form 10Q - March 31, 2001 -Page 14/14