As filed with the Securities and Exchange Commission on
Registration No. 333-87001
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------
POST-EFFECTIVE AMENDMENT NO. 2 TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
PIXTECH, INC.
(Exact name of Registrant as specified in its charter)
------------------------------------------------------
Delaware 3679 04-3214691
-------- ---- ----------
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation) Classification Code Number) Identification No.)
AVENUE OLIVIER PERROY, 13790 ROUSSET, FRANCE, 011 33 4-42-29-10-00 AND
2700 AUGUSTINE DRIVE, SUITE 255, SANTA CLARA, CA 95054
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
-----------------------------------------
MARIE BOEM, CHIEF FINANCIAL OFFICER
PIXTECH, INC.
AVENUE OLIVIER PERROY, 13790 ROUSSET, FRANCE
011-33-4-42-29-10-00
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
with copies to:
RICHARD B. SMITH, ESQ.
Palmer & Dodge LLP
One Beacon Street
Boston, Massachusetts 02108
(617) 573-0100
Approximate date of commencement of proposed sale to the public: From time to
time after this Post-Effective Amendment to the Registration Statement is
declared effective.
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]
If this form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
The registrant hereby amends this Post-Effective Amendment No. 2 to Registration
Statement on Form S-1, File No. 333-87001, on such date or dates as may be
necessary to delay our effective date until the registrant shall file a further
amendment which specifically states that this Post-Effective Amendment No. 2
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until this Post-Effective Amendment No. 2 shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
PixTech, Inc.
(a development stage company)
PROSPECTUS
Subject to Completion, dated May 23, 2001
16,100,000 Shares
PIXTECH, INC.
Common Stock
This prospectus may be used only in connection with the resale:
(i) by Kingsbridge Capital Limited, from time to time, of up to 15,100,000
shares of the common stock of PixTech as follows:
- 15,000,000 shares of common stock which may be issued by us to
Kingsbridge pursuant to an equity line agreement; and
- 100,000 shares of common stock issuable upon exercise of a
warrant held by Kingsbridge; and
(ii) by Sumitomo Corporation, from time to time, of up to 1,000,000 shares
of common stock to be issued upon conversion of a certain convertible
note issued by us to Sumitomo.
To date, we have issued 2,628,104 shares of common stock to Kingsbridge
under the equity line agreement and more than 1,000,000 shares of common stock
to Sumitomo upon conversion of the convertible note.
The price at which the common stock will be issued by us to Kingsbridge
will be 88-90% of the market price of the stock on the date we issue shares,
depending on certain factors described in the equity line agreement. The price
at which the common stock was issued by us to Sumitomo was 80% of the market
price of the stock on the date of conversion.
Our common stock is listed on the Nasdaq National Market under the symbol
"PIXT."
INVESTING IN OUR COMMON STOCK INVOLVES CERTAIN RISKS WHICH ARE DESCRIBED IN
THE "RISK FACTORS" SECTION BEGINNING ON PAGE 5.
The information in this prospectus is not complete and may be changed. This
prospectus is not an offer to sell these securities and it is not soliciting an
offer to buy these securities in any state where the offer or sale is not
permitted.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
PixTech, Inc.
(a development stage company)
Page
PROSPECTUS SUMMARY. . . . . . . . . . . . . . . . . . . . . 4
RISK FACTORS. . . . . . . . . . . . . . . . . . . . . . . . 5
THE EQUITY LINE AGREEMENT . . . . . . . . . . . . . . . . . 11
SUMMARY CONSOLIDATED FINANCIAL INFORMATION. . . . . . . . . 12
PRICE RANGE OF OUR COMMON STOCK . . . . . . . . . . . . . . 13
DIVIDEND POLICY . . . . . . . . . . . . . . . . . . . . . . 13
USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . 13
SELECTED CONSOLIDATED FINANCIAL DATA. . . . . . . . . . . . 14
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS. . . . . . . . . . . . . . . 15
OUR BUSINESS. . . . . . . . . . . . . . . . . . . . . . . . 24
MANAGEMENT. . . . . . . . . . . . . . . . . . . . . . . . . 31
EXECUTIVE COMPENSATION. . . . . . . . . . . . . . . . . . . 35
SHARE OWNERSHIP . . . . . . . . . . . . . . . . . . . . . . 38
SELLING STOCKHOLDERS. . . . . . . . . . . . . . . . . . . . 40
DESCRIPTION OF CAPITAL STOCK. . . . . . . . . . . . . . . . 41
PLAN OF DISTRIBUTION. . . . . . . . . . . . . . . . . . . . 43
WHERE YOU CAN FIND MORE INFORMATION . . . . . . . . . . . . 45
LEGAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . 45
EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . 45
PixTech, Inc.
(a development stage company)
PROSPECTUS SUMMARY
The Offering
PixTech and Kingsbridge entered into a private equity line agreement on
August 9, 1999. This agreement entitles us to sell, from time to time, up to
$15,000,000 (after deducting Kingsbridge's discount) worth of our common stock
to Kingsbridge. Pursuant to the agreement, we have:
- filed a registration statement for 15,000,000 shares of common stock
which we may sell to Kingsbridge pursuant to the agreement, which
Kingsbridge may offer to the public through this prospectus; and
- issued a warrant to Kingsbridge to purchase 100,000 shares of our
common stock at an exercise price of $2.30 per share. Shares issuable
on exercise of the Kingsbridge warrant may also be offered to the
public through this prospectus.
On October 27, 1997, we issued a convertible note to Sumitomo. This note
was fully converted into shares of our common stock in January and February 2000
at a price equal to 80% of the market price of our common stock at the time of
conversion.
Through this prospectus, Kingsbridge may offer to the public the common
stock acquired under the equity line agreement and the warrant. Sumitomo has
already completed its sales under this prospectus.
Shares Offered by the Selling 16,100,000 shares of common stock of PixTech,
Stockholders Inc.
Offering Price Determined at the time of sale by the selling
stockholders.
Common stock outstanding as of 56,045,198 shares
April 27, 2001
Use of Proceeds We will not receive any of the proceeds of
the shares offered by the selling
stockholders. Any proceeds we receive from
the sale of common stock pursuant to the
equity line agreement and the exercise of the
warrant will be used primarily for general
corporate purposes. See "Use of Proceeds."
Dividend Policy We currently intend to retain any future
earnings to fund the development and growth
of our business. Therefore, we do not
currently anticipate paying cash dividends.
See "Dividend Policy."
Nasdaq National Market Symbol PIXT
Addresses and Phone Numbers Avenue Olivier Perroy
13790 Rousset, France
011-33-4-42-29-10-00
2700 Augustine Drive, Suite 255
Santa Clara, CA 95054
408-986-8868
PixTech, Inc.
(a development stage company)
RISK FACTORS
We are currently focused on the following activities, which we believe are
necessary to the success of our business:
- successfully implementing the manufacture of field emission displays
by our Taiwanese contract manufacturer, Unipac;
- improving our manufacturing processes and yields at Unipac;
- expanding our customer base and product offering, and;
- continuing the development of our field emission display technology,
including the development of large and color field emission displays.
You should carefully consider the following risks and issues, among others
that are common among development stage companies such as ours. It is especially
important to keep these risk factors in mind when reading forward-looking
statements. These are statements that relate to future periods and include
discussions relating to market opportunities, acquisition opportunities,
revenues, stock price and our ability to compete. Generally, the words
"anticipate," "believe," "expect," "intend" and similar expressions identify
such forward-looking statements. Forward-looking statements involve risks and
uncertainties, and our actual results could differ materially from the results
discussed in the forward-looking statements because of these and other factors.
We do not have any obligation to disclose if forward-looking statements, or the
circumstances they are based on, change.
WE HAVE A HISTORY OF LOSSES AND ACCUMULATED DEFICIT THAT MAY CONTINUE IN THE
FUTURE.
We have a history of losses as follows:
Operating Net Losses Loss to Common Stockholders
-------------------- ---------------------------
Year Ended December 31, 2000 $ 27.4 million $ 25.7 million
Year Ended December 31, 1999 $ 26.5 million $ 28.9 million
Year Ended December 31, 1998 $ 19.7 million $ 17.9 million
Year Ended December 31, 1997 $ 15.8 million $ 14.7 million
The losses were due in part to limited revenues and to various
expenditures, including expenditures associated with:
- research and development activities;
- pilot production activities; and
- start-up costs for volume manufacturing at Unipac.
We expect to incur operating losses in the future due primarily to:
- continuing research and development activities to develop field
emission displays monochrome and color displays;
- manufacturing ramp-up costs in Taiwan; and
- expansion of our sales and marketing activities.
As a result of these losses, as of March 31, 2001, we had an accumulated
deficit of $115.3 million. Our ability to achieve and maintain profitability is
highly dependent upon the successful commercialization of our monochrome and
color displays. We cannot assure you that we will ever be able to successfully
commercialize our products or that we will ever achieve profitability.
PixTech, Inc.
(a development stage company)
WE WILL NEED ADDITIONAL CAPITAL IN THE FUTURE.
We have incurred negative cash flows from operations since inception, and
have expended, and will need to expend, substantial funds to complete our
planned product development efforts, including:
- continuous improvement of our manufacturing processes in order to
achieve yields that will lead to an acceptable cost of products;
- continuous product development activities in order to develop color
displays that meet market requirements and to develop a range of
products offered for sales;
- continuous research and development activities in order to develop
displays larger than 12-inch in diagonal; and
- expansion of our marketing, sales and distribution activities.
In addition to the above requirements, we expect that we will require
additional capital either in the form of debt or equity, regardless of w hether
and when we reach profitability, for the following activities:
- working capital;
- acquisition of manufacturing equipment to expand manufacturing
capacity; and
- further product development.
Our future capital requirements and the adequacy of our available funds
depend on numerous factors, including:
- the rate of increase in manufacturing yields by Unipac;
- the magnitude, scope and results of our product development efforts;
- the costs of filing, prosecuting, defending and enforcing patent
claims and other intellectual property rights;
- competing technological and market developments; and
- expansion of strategic alliances for the development, manufacturing,
sale, marketing and distribution of our products.
IF WE FAIL TO CONTINUE TO MEET NASDAQ'S LISTING MAINTENANCE REQUIREMENTS, NASDAQ
MAY DELIST OUR COMMON STOCK.
There is a possibility that our common stock could be delisted from the
Nasdaq National Market. While our common stock is currently quoted on the
Nasdaq National Market, in order to remain quoted on the Nasdaq National Market,
we must meet certain requirements with respect to:
- market capitalization, the market value of all outstanding shares of
our common stock;
- public float, the number of outstanding shares of Common stock held by
those not affiliated with us;
- market value of our public float;
- market price of our common stock;
- number of market makers;
- number of shareholders;
- net tangible assets, total assets minus total liabilities and
intangible assets.
If the price of our common stock were to remain below $1.00, Nasdaq may
approach us regarding our continued listing on the Nasdaq National Market. If
Nasdaq were to begin delisting proceedings against us, it could reduce the level
of liquidity currently available to our stockholders.
In order to continue to be listed on Nasdaq, the minimum bid price of our
common stock must stay above $1.00. In addition to the fluctuations of the
market in general and our common stock in particular, our stock price could be
impacted from selling activities of our large corporate investors. This may
drive the minimum bid price of our common stock below $1.00, thus violating a
Nasdaq maintenance requirement. During the period from April 4, 2001 through
April 10, 2001, on May 9, 2001 and from May 17, 2001 through May 18, 2001, the
closing price for our stock was below $1.00.
PixTech, Inc.
(a development stage company)
If our common stock is delisted from the Nasdaq National Market, we could
apply to have the common stock quoted on the Nasdaq SmallCap Market. The Nasdaq
SmallCap Market has a similar set of criteria for initial and continued
quotation. We may not, however, meet the requirements for initial or continued
quotation on the Nasdaq SmallCap Market. If we were not able to meet the
requirements of the Nasdaq SmallCap Market, trading of our common stock could be
conducted on an electronic bulletin board established for securities that do not
meet the Nasdaq SmallCap Market listing requirements, in what is commonly
referred to as the "pink sheets."
In addition, if our common stock were delisted from the Nasdaq National
Market, we may not have the right to obtain funds under the equity line
agreement and it could be more difficult for us to obtain future financing. In
addition, if our common stock is delisted, investors' interest in our common
stock would be reduced, which would materially and adversely affect trading in,
and the price of, our common stock.
BECAUSE WE USE A SINGLE CONTRACT MANUFACTURER TO MANUFACTURE OUR FIELD EMISSION
DISPLAYS WE MAY BE UNABLE TO OBTAIN AN ADEQUATE SUPPLY OF PRODUCTS AND WE MAY
HAVE LESS CONTROL OVER COST.
Unipac, a liquid crystal display manufacturer and an affiliate of United
Microelectronics Corporation, is our only contract manufacturer. In the future,
we expect that the products that will be manufactured at Unipac and sold to our
customers will represent the majority of our revenues. If we are not able to
implement our manufacturing plans with Unipac as we expect, we will not be able
to ship medium to large volumes of field emission display products. Moreover, we
will have less control over the cost of the finished products, the timeliness of
their delivery and their reliability and quality. We are also dependent on
Unipac's overall manufacturing strategy. Changes of these strategy could require
the set-up of another manufacturing site. This situation would materially
adversely affect our revenues and cost of producing products.
Expectations about the final timing of this manufacturing plan with Unipac
are forward-looking statements reflecting our risks and uncertainties, including
the ease or difficulty of the transfer of the field emission display technology
to Unipac, and Unipac's overall manufacturing strategy.
Our failure to adequately manage this contract manufacturing relationship
or any delays in the shipment of our products would adversely affect us.
OUR MANUFACTURING PROCESSES ARE STILL UNDER DEVELOPMENT AND WE STILL NEED TO
OBTAIN COMMERCIALLY ACCEPTABLE YIELDS AND ACCEPTABLE COSTS OF PRODUCTS OR OUR
COSTS TO PRODUCE OUR DISPLAYS WILL BE TOO HIGH FOR US TO BE PROFITABLE
In order for us to succeed, we must continue to develop and produce a range
of products incorporating our field emission display technology. At this time,
we have successfully developed only one monochrome field emission display
product that has been incorporated into a commercial end-user application and
that is being targeted at various markets. We will need to complete the
development of additional field emission display products to enlarge our market
opportunity, and there is no guarantee that we will succeed in these development
efforts. If we do not develop these new products, we will need to rely on sales
of a single product to be successful.
We have used our manufacturing facility in Montpellier, France to develop
manufacturing processes but it has produced only a limited number of products
suitable for sale. Additionally, to date, we have not completed testing of our
manufacturing processes at Unipac. In order for us to be successful, we must
improve our manufacturing yields in order to demonstrate the low cost potential
of our field emission display technology. Even if we succeed in completing the
development and testing of our manufacturing processes, we can not be sure that
the favorable characteristics demonstrated by our current displays manufactured
at our pilot manufacturing facility will be reproduced on a cost-effective basis
in commercial production.
We have, at this time, encountered a number of delays in the development of
our products and processes, and it is possible that further delays will occur.
Any significant delays could cause us to miss certain market opportunities and
could reduce our product sales.
WE NEED TO FURTHER ENHANCE OUR DISPLAY PERFORMANCE OF OUR COLOR DISPLAYS OR OUR
DISPLAYS MAY NEVER BE ACCEPTED BY A LARGE NUMBER OF POTENTIAL CUSTOMERS.
We may never improve the performance characteristics of our color displays
to a level that is commercially acceptable or we may fail to do so on a timely
basis. Either case could result in potential customers not buying our products.
Key elements of display performance are brightness, power efficiency and
stability over time (lifetime and reliability). We are seeking to balance
brightness with power efficiency to produce bright and low power-consumption
displays. Display reliability depends on a large number of factors, including
the manufacturing process used in assembling the displays as well as the
characteristics of the materials, including phosphors, used in the display. In
order to produce color displays that will provide the product life and other
characteristics necessary for most applications, we need to make further
advances in our manufacturing processes and in the selection of the materials we
use.
WE MAY NEVER BE ABLE TO FUND THE RESEARCH AND DEVELOPMENT ACTIVITIES NEEDED TO
DEVELOP LARGE DISPLAYS.
We need to conduct a significant research and development effort for our
current 12-inch field emission display prototype to be manufactured in volume at
an acceptable cost. We may never be able to fund that effort. Even if we were
able to develop a product that could be manufactured, we would have to locate or
build a manufacturing facility to produce our displays. Currently, Unipac has a
facility and equipment to build small displays only. We may not be able to fund
the amount needed in order to acquire or build a manufacturing facility for our
large displays. If we are unable to develop or manufacture large displays, we
will miss large market opportunities for flat panel displays.
WE FACE INTENSE COMPETITION AND NEED TO COMPETE WITH CURRENT AND FUTURE
COMPETING TECHNOLOGIES THAT MAY OUTPERFORM OUR DISPLAYS THUS MAKING OUR DISPLAY
UNDESIRABLE.
Our competitors may succeed in developing products that outperform our
displays or that are more cost effective. If our competitors develop products
that offer significant advantages over our products and we are unable to improve
our technology, or develop or acquire alternative technology that is more
competitive, we may not be able to sell our displays.
Products utilizing liquid crystal display technology currently dominate the
market for flat panel display products. Certain liquid crystal display
manufacturers, such as Canon, Sharp, NEC, Hitachi, Samsung and Toshiba, have
substantially greater name recognition and financial, technological, marketing
and other resources than we do. Currently liquid crystal displays are in short
demand and independent forecasts predict that this may continue over a certain
period of time. However, liquid crystal display manufacturers have made, and
continue to make, substantial investments in increasing capacity as well as
product performance. We believe that, over time, these investments in capacity,
combined with new competitors entering the flat panel displays market, may cause
over-supply conditions and may have the effect of reducing average selling
prices of flat panel displays. To effectively compete, we could be required to
increase the performance of our products or reduce prices. In the event of price
reductions, we will not be able to maintain gross margins unless we reduce our
cost of sales.
There are a number of domestic and international companies developing and
marketing display devices using alternative technologies to liquid crystal
display technology, such as vacuum fluorescent displays, electro-luminescent
panels and plasma panels. Additionally, some of the basic field emission display
technology is in the public domain and, as a result, we have a number of
potential direct competitors developing field emission displays or developing
fundamental field emission displays technology. These companies, including
Canon, Futaba, Sony, Fujitsu, Samsung and Toshiba, as well as smaller companies,
including Candescent and Silicon Diamond Technology. Although we own the rights
to significant technological advances in field emission display technology,
potential competitors may have developed or may soon develop comparable or
superior field emission display technology. Many of the developers of
alternative flat panel display and competing field emission display technologies
have substantially greater name recognition and financial, research and
development, manufacturing and marketing resources than we do, and have made and
continue to make substantial investments in improving their technologies and
manufacturing processes.
PixTech, Inc.
(a development stage company)
BECAUSE POTENTIAL CUSTOMERS MAY NOT ACCEPT OUR PRODUCTS WE MAY NEVER SELL THE
NUMBER OF DISPLAYS REQUIRED TO MAKE OUR BUSINESS PROFITABLE.
We are uncertain about the potential size and timing of our target market
opportunities. We anticipate marketing our displays to original equipment
manufacturer customers, which are customers that will incorporate our product
into their final product. It is possible that demand for any particular product
by these customers will not last or that new markets will fail to develop as we
expect, or at all. Our ability to have consumer products sold that incorporate
our displays will depend, in part, on the following factors:
- whether original equipment manufacturers select our products for
incorporation into their products;
- the successful introduction of such products by the original equipment
manufacturers; and
- the successful commercialization of products developed by parties
incorporating our products.
It takes a long time for any product to achieve market success, and any success
is never certain. The introduction of new products is often delayed by the need
to have the products selected by an original equipment manufacturer and designed
into the original equipment manufacturer's products. For certain products, the
delay attributable to a manufacturer's design cycle may be a year or longer.
Factors affecting the length of these delays include:
- the size of the manufacturer;
- the type of application; and
- whether the displays are being designed into new products or fitted
into existing applications.
If volume production of such products is delayed for any reason, our
competitors may introduce new technologies or refine existing technologies that
could diminish the commercial acceptance of our products.
WE HAVE LIMITED SALES, MARKETING AND DISTRIBUTION CAPABILITIES.
We have limited internal sales, marketing and distribution experience and
capabilities. We are a development stage company with small product sales.
Consequently, we had not established significant sales, marketing, or
distribution operations within our company. Recently, however, we have begun
selling our displays to customers. We will not be able to develop significant
revenues from the sales of our products unless we can attract and retain highly
qualified employees to market and oversee the distribution of our products. If
we are unable to establish and maintain significant sales, marketing and
distribution efforts, either internally or through arrangements with third
parties, we may not be able to generate revenues.
WE MAY HAVE DIFFICULTY PROTECTING PATENTS AND OTHER PROPRIETARY RIGHTS TO OUR
TECHNOLOGY AND MAY THEREFORE BE UNABLE TO PREVENT COMPETITORS FROM USING OUR
TECHNOLOGY.
We have been granted, have filed applications for, and have been licensed
under a number of patents in the United States and other countries. We rely on
these patents and licenses for an advantage in our industry and any infringement
of these patents and licenses will lessen our advantage. However, rights granted
under patents may not provide us with any competitive advantage over competitors
with similar technology, and any issued patents may not contain claims
sufficiently broad to protect against these competitors.
We have not conducted an independent review of patents issued to other
companies. We cannot be certain that we were the first creator of inventions
covered by pending patent applications or the first to file patent applications
on such inventions because patent applications in the United States are
maintained in secrecy until patents issue and the publication of discoveries in
scientific or patent literature tends to lag behind actual discoveries by
several months. Competitors in both the United States and other countries may
have applied for or obtained, or may in the future apply for and obtain, patents
that will prevent, limit or interfere with our ability to make and sell our
products.
PixTech, Inc.
(a development stage company)
We also rely on unpatented, proprietary technology, which is significant to
the development and manufacture of our displays. Others may independently
develop the same or similar technology or obtain access to our unpatented
technology. If we are unable to maintain the proprietary nature of our
technologies, our competitors may develop products using our technology.
Moreover, claims that our products infringe on the proprietary rights of
others are more likely to be asserted after we begin commercial sales of
products using our technology. It is possible that competitors will infringe our
patents. Defending and prosecuting patent suits is costly and time consuming.
The adverse outcome of a patent suit could subject us to significant liabilities
to other parties.
BECAUSE A LARGE PERCENTAGE OF OUR NET ASSETS AND OUR COSTS IS EXPRESSED IN
EUROS, CURRENCY FLUCTUATIONS MAY CAUSE GAINS OR LOSSES.
A large percentage of our net assets and of our costs is expressed in
Euros, but our financial statements are stated in U.S. dollars. In 1998, 50% of
our assets and 60% of our costs, in 1999, 37% of our assets and 69% of our costs
and in 2000, 46% of our assets, and 67% of our losses were expressed in Euros.
Fluctuations of the value of the U.S. dollar versus the Euro may cause
significant gains or losses. Most of our capital lease obligations are expressed
in Taiwanese dollars and thus fluctuations of the value of the Taiwanese dollar
versus the Euro may also cause significant foreign exchange gains or losses.
CERTAIN ANTI-TAKEOVER PROVISIONS THAT WE HAVE INSTITUTED MAY LIMIT OUR STOCK
PRICE.
Certain provisions of our restated certificate of incorporation and by-laws
may discourage a third party from offering to purchase our company and may also
adversely affect the market price of our common stock. These provisions,
therefore, inhibit actions that would result in a change in control of our
company, including an action that may give the holders of our common stock the
opportunity to realize a premium over the then-prevailing market price of their
stock.
In addition, under our restated certificate of incorporation we can issue
preferred stock with such designations, rights and preferences as our board of
directors determines from time to time. We do not currently intend to issue any
additional shares of preferred stock, but we retain the right to do so in the
future.
Furthermore, we are subject to Section 203 of the Delaware General
Corporation Law, which may discourage takeover attempts.
OUR BUSINESS MAY SUFFER IF WE ARE UNABLE TO ATTRACT OR RETAIN KEY PERSONNEL.
We are highly dependent on the principal members of our management and
staff, the loss of whose services might significantly delay or prevent the
achievement of research, development or strategic objectives. Our success
depends on our ability to retain key employees and to attract additional
qualified employees. Competition for such personnel is intense, and we may not
be able to retain existing personnel and to attract, assimilate or retain
additional highly qualified employees in the future.
PixTech, Inc.
(a development stage company)
THE EQUITY LINE AGREEMENT
On August 9, 1999, we entered into the equity line agreement with
Kingsbridge, pursuant to which, subject to the satisfaction of certain
conditions, we may issue and sell, from time to time, up to an aggregate of
$15,000,000, after deducting discounts, of our common stock.
Beginning on September 27, 1999, the date the registration statement, of
which this prospectus forms a part, was declared effective by the SEC, and
continuing for a period of 24 months thereafter, we may from time to time in our
sole discretion sell, or put, shares of our common stock to Kingsbridge at a
price equal to 90% of the then current average market price of our common stock,
if the current average market price is greater than or equal to $3.00 per share,
or 88% of the then current average market price if the current average market
price is less than $3.00 per share. The current average market price of our
common stock, for purposes of calculating the purchase price, is the average of
the lowest trading prices of our common stock on the Nasdaq National Market for
the five days beginning two days before and ending two days after we notify
Kingsbridge of our intention to put common stock.
To date, we have sold $6,000,000 worth of our common stock to Kingsbridge
under the equity line agreement, a total of 2,628,104 shares.
There are many conditions in the equity line agreement, and we may not be
able to satisfy all conditions required under the equity line agreement to put
additional shares to Kingsbridge. If we fail to maintain the quotation of our
common stock on the Nasdaq National Market, we may not be able to sell
additional common stock pursuant to the equity line agreement. See "Risk Factors
- - If We Fail To Continue To Meet Nasdaq's Listing Maintenance Requirement,
Nasdaq May Delist Our Common Stock." In addition, the amount of shares that we
can put to Kingsbridge depends on our trading price and trading volume. Also, we
cannot put shares to Kingsbridge at a time when we have not publicly disclosed
material information about our company. Kingsbridge has agreed that it will not
engage in short sales of our common stock except that it may engage in short
sales or other hedging investments for three days after we notify Kingsbridge of
a put, as long as the number of shares sold short or used for hedging does not
exceed the number of shares being sold to Kingsbridge under the put.
We have filed a registration statement, of which this prospectus forms a
part, in order to permit Kingsbridge to resell to the public any common stock it
buys pursuant to the equity line agreement. Kingsbridge may be entitled to
indemnification by us for lawsuits based on language in this prospectus. We will
prepare and file such amendments and supplements to the registration statement
as may be necessary in accordance with the Securities Act and the rules and
regulations promulgated under it, in order to keep it effective as long as
shares covered by the prospectus have not been sold by Kingsbridge. We have
agreed to bear certain expenses (other than broker discounts and commissions, if
any) in connection with the registration statement.
In conjunction with the equity line agreement, on August 9, 1999, we issued
to Kingsbridge a warrant to purchase 100,000 shares of our common stock at an
exercise price of $2.30 per share. The Kingsbridge warrant is exercisable
through February 6, 2003.
The warrant contains provisions that protect Kingsbridge against dilution
by adjustment of the exercise price and the number of shares issuable there
under upon the occurrence of certain events, such as a merger, stock split or
reverse stock split, stock dividend or recapitalization. The exercise price of
the Kingsbridge warrant is payable either in cash or by cashless exercise. In a
cashless exercise, the number of shares of common stock issuable pursuant to the
warrant having a fair market value at the time of exercise equal to the
aggregate exercise price are cancelled as payment of the exercise price.
PixTech, Inc.
(a development stage company)
SUMMARY CONSOLIDATED FINANCIAL INFORMATION
The following tables set forth our summary consolidated financial data. The
summary consolidated financial data as of December 31, 1998, 1999 and 2000 and
for the years then ended are derived from consolidated financial statements
included elsewhere in this prospectus which have been audited by Ernst & Young,
independent auditors. The summary consolidated financial data as of December
31, 1996 and 1997 and for the years then ended are derived from audited
consolidated financial statements not included in this prospectus. The selected
financial data for the three months period ended March 31, 2000 and 2001 has
been derived from the unaudited consolidated financial statements of PixTech,
Inc. that are included elsewhere in this prospectus. You should read this data
in conjunction with our consolidated financial statements and related notes and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included elsewhere in this prospectus.
THREE MONTHS ENDED
FISCAL YEAR ENDED DECEMBER 31, MARCH 31,
-------------------------------------------------------
1996 1997 1998 1999 2000 2000 2001
----------- --------- --------- --------- --------- --------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
OPERATIONS
Total revenues. . . . . . . . . . . . . . . . . $ 7,644 $ 3,819 $ 3,652 $ 5,392 $ 6,340 $ 1,990 $ 1,149
Loss from operations . . . . . . . . . . . . . (12,041) (15,774) (19,686) (26,487) (27,415) (7,075) (7,010)
Net loss . . . . . . . . . . . . . . . . . . . (11,719) (14,664) (17,863) (28,427) (25,678) (6,687) (7,071)
Net loss to holders of common stock .. . . . . (11,719) (14,664) (17,875) (28,940) (25,794) (6,776) (7,074)
Net loss per share . . . . . . . . . . . . . . (1.44) (1.12) (1.23) (1.26) (0.51) (0.16) (0.13)
Shares used in computing net loss per share .. 8,137 13,140 14,548 22,948 50,662 40,562 55,948
THREE MONTHS ENDED
FISCAL YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------------------------------- -------------------
1996 1997 1998 1999 2000 2000 2001
----------- --------- --------- --------- --------- --------- --------
(IN THOUSANDS)
(UNAUDITED)
BALANCE SHEET
Working deficit / capital .. . . . . . . . . . (859) 9,290 145 (17,740) (8,259) (10,554) (6,356)
Total assets, less current assets .. . . . . . 19,701 24,058 32,592 32,313 19,495 25,691 17,415
Long term liabilities, less current portion .. 6,743 14,568 19,480 11,019 8,712 5,634 9,007
Stockholders' equity . . . . . . . . . . . . . 12,099 18,780 13,257 19,884 20,204 22,672 13,337
PixTech, Inc.
(a development stage company)
PRICE RANGE OF OUR COMMON STOCK
Our common stock is currently quoted on the Nasdaq National Market under
the symbol "PIXT." For each quarter since the beginning of 1999, the high and
low trading prices for our common stock, as reported by Nasdaq, were as follows:
HIGH LOW
------- --------
YEAR ENDED DECEMBER 31, 1999
First Quarter $3 5/16 $ 1 1/2
Second Quarter $ 2 5/8 $11 1/32
Third Quarter $ 2 1/4 $1 15/32
Fourth Quarter $ 2 5/8 $ 1 1/2
YEAR ENDED DECEMBER 31, 2000
First Quarter $11 5/8 $ 1 3/4
Second Quarter $ 5 1/8 $ 1 7/8
Third Quarter $ 4 5/7 $ 1 8/15
Fourth Quarter
$ 2 3/4 $0 15/16
YEAR ENDED DECEMBER 31, 2001
First Quarter 2 1
The foregoing bid quotations reflect inter-dealer prices, without retail
mark-ups, mark-downs or commissions, and may not represent actual transactions.
As of May 1, 2001, there were approximately 79 holders of record of our common
stock.
DIVIDEND POLICY
We have never paid or declared any cash dividends on our common stock. We
currently intend to retain any future earnings for our business and, therefore,
do not anticipate paying cash dividends in the foreseeable future. Future
dividends, if any, will depend on, among other things, our results of
operations, capital requirements, restrictions in loan agreements and on other
factors our board of directors, in their discretion, may consider relevant.
USE OF PROCEEDS
The proceeds from the sale of the common stock will be received by the
selling stockholders. We will receive no proceeds from the sale of the common
stock offered in this prospectus. However, we will receive the put price
pursuant to the equity line agreement to the extent that our common stock is
sold under the equity line agreement. The put price equals 88-90% of the then
current average market price of our common stock, as determined by the equity
line agreement. We may also receive proceeds relating to the exercise, if any,
of the warrant. See "The Equity Line Agreement" on page 11. We intend to use
the proceeds from puts and the exercise of the warrant to support general
corporate purposes, including continuous support of our manufacturing plans at
Unipac and development of our color and large field emission displays.
PixTech, Inc.
(a development stage company)
SELECTED CONSOLIDATED FINANCIAL DATA
(in thousands except per share data)
The following tables set forth our selected consolidated financial data.
The selected consolidated financial data as of December 31, 1998, 1999 and 2000
and for the years then ended are derived from consolidated financial statements
included elsewhere in this prospectus which have been audited by Ernst & Young,
independent auditors. The selected consolidated financial data as of December
31, 1996 and 1997 and for the years then ended are derived from audited
consolidated financial statements not included in this prospectus. The selected
consolidated financial data for the three months ended March 31, 2000 and 2001
have been derived from our unaudited consolidated financial statements that are
included elsewhere in this prospectus. You should read this data in conjunction
with our consolidated financial statements and related notes and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
included elsewhere in this prospectus.
THREE MONTHS ENDED
FISCAL YEAR ENDED DECEMBER 31, MARCH 31,
OPERATIONS 1996 1997 1998 1999 2000 2000 2001
--------- --------- --------- --------- --------- --------- --------
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Revenue
Corporation and license
revenues. $ 5,440 $ 1,932 $ 1,239 $ -- $ -- $ -- $ --
Product sales 791 745 445 484 331 86 51
Other revenues. 1,413 1,142 1,968 4,908 6,009 1,904 1,098
--------- --------- --------- --------- --------- --------- --------
Total revenues. 7,644 3,819 3,652 5,392 6,340 1,990 1,149
Operating Expenses
Research and development:
Acquisition of intellectual
property rights -- -- (125) (75) (57) (57) --
Other research and
development. (15,848) (15,497) (19,289) (27,181) (29,514) (7,794) (7,196)
--------- --------- --------- --------- --------- --------- --------
(15,848) (15,497) (19,414) (27,256) (29,571) (7,851) (7,196)
Sales and marketing (1,089) (1,496) (1,433) (1,279) (1,105) (313) (200)
General and administrative. (2,703) (2,419) (2,515) (2,983) (2,769) (813) (760)
========= ========= ========= ========= ========= ========= ========
Total operating expenses. (19,640) (19,412) (23,362) (31,518) (33,445) (8,977) (8,156)
Loss from operations (12,041) (15,774) (19,686) (26,487) (27,415) (7,075) (7,010)
Other income/(expenses)
Interest income (expense), net. 66 470 (708) (864) 692 29 103
Foreign exchange gains (losses) 256 54 372 (1,076) 857 359 (190)
Other -- -- -- -- 188 -- 26
Loss before income tax benefit (11,719) (15,250) (20,022) (28,427) (25,678) (6,687) (7,071)
Income tax benefit. -- 586 2,159 -- -- -- --
Net loss (11,719) (14,664) (17,863) (28,427) (25,678) (6,687) (7,071)
Net loss to holders of Common Stock (11,719) (14,664) (17,875) (28,940) (25,794) (6,776) (7,074)
Net loss per share (1.44) (1.12) (1.23) (1.26) (.51) (.16) (.13)
Shares used in computing net loss
per share 8,137 13,140 14,548 22,948 50,662 40,562 55,948
THREE MONTHS ENDED
BALANCE SHEET FISCAL YEAR ENDED DECEMBER 31, MARCH 31,
1996 1997 1998 1999 2000 2000 2001
--------- --------- --------- --------- --------- --------- --------
(UNAUDITED)
(IN THOUSANDS)
Working deficit / capital (859) 9,290 145 (17,740) (8,259) (10,554) (6,356)
Total assets, less current assets 19,701 24,058 32,592 32,313 19,495 25,691 17,415
Total assets. 29,565 41,648 47,394 51,169 39,716 41,523 31,563
Long term liabilities, less current
portion 6,743 14,568 19,480 11,019 8,712 5,634 9,007
Total long term debt(1) 4,709 13,428 22,389 21,302 9,435 9,202 8,924
Stockholders' equity. 12,099 18,780 13,257 19,884 20,204 22,672 13,337
(1) Including capital leases and current portion.
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.
OVERVIEW
PixTech was founded in June 1992 to develop and commercialize field
emission displays. Since inception, we have been a development stage company
and our operating activities related primarily to raising capital, conducting
research and development activities, concluding cooperation and license
agreements with certain displays manufacturers, including Motorola, Inc. and
Futaba Corporation, and establishing manufacturing capabilities for our field
emission displays.
Pursuant to a contract manufacturing agreement signed with Unipac in May 1997,
and after the adaptation of Unipac's plant, including addition of certain
equipment and the transfer of our manufacturing processes, we are producing
fully qualified displays at Unipac. While current shipments of field emission
displays are still below our expectations, we expect to increase significantly
the production volumes throughout the year 2001. However, we do not anticipate
generating positive gross margins on our sales of products in the year 2001.
In March 1999, we acquired certain assets of Micron Technology, Inc. relating to
field emission displays including equipment and other tangible assets, certain
contract rights and cash. The accompanying financial statements reflect the
acquisition of assets for a cost of $17,932,000 and the assumption of certain
liabilities in the amount of $2,958,000 in consideration of the issuance of
7,133,562 shares of common stock and a warrant to purchase 310,000 shares of
common stock.
Our revenues from 2000 resulted mainly from the DARPA contract.
Under a license agreement with the French Atomic Energy Commission, we are
obligated to make royalty payments on our product sales and to pass-through a
portion of royalties on sales of royalty-bearing products by our sublicenses.
Under an amendment to the Laboratoire d'Electronique, de Technologie et
d'Instrumentation license agreement signed in 1997, the royalty rates and
minimum payments payable to French Atomic Energy Commission were temporarily
increased for a period of three years.
Royalty amounts accrued under this agreement were:
Year Royalty Amount
-------- ----------------
1996 . $ 45,000
1997 . $ 109,000
1998 . $ 308,000
1999 . $ 364,000
2000 . $ 279,000
(See notes to consolidated financial statements-note 16-related party
transactions).
PixTech, Inc.
(a development stage company)
All of our expenses to date, except royalties and pass-through expenses
payable to French Atomic Energy Commission and tax expenses directly associated
with revenues from cooperation and license agreements, have been recorded as
operating expenses, since we have not shipped enough products to determine a
meaningful cost of products sold category.
We have incurred cumulative losses of $115.332 million from inception to
March 31, 2001. We have recorded operating losses every quarter since 1996, and
we expect to incur additional operating losses. The magnitude and duration of
our future losses will depend on a number of factors within and outside of our
control, including the rate at which we can successfully manufacture and
commercialize our field emission displays, if at all, and the related costs of
such efforts. Successful commercialization of our displays will in turn depend
on a number of factors, including the successful development of sufficient
market demand for our products.
RESULTS OF OPERATIONS: THE THREE MONTHS ENDED MARCH 31, 2001 COMPARED TO THE
THREE MONTHS ENDED MARCH 31, 2000
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. In 2000 we reported our investors relation expenses in sales and
marketing, while this year investor relations 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.
(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 is denominated in U.S.
dollars, a substantial portion of our operating expenses is 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: THE THREE MONTHS ENDED MARCH 31, 2001 COMPARED
TO THE THREE MONTHS ENDED MARCH 31, 2000
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, 2000.
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.
(a development stage company)
RESULTS OF OPERATIONS: THE YEAR ENDED DECEMBER 31, 2000 COMPARED TO THE YEARS
ENDED DECEMBER 31, 1999 AND 1998.
Cooperation and License Revenues:
------------------------------------
We recognized revenues under our cooperation and license agreements of $1.2
million in 1998; we recognized no cooperation and license agreement revenues in
1999 and 2000. The significant decrease in cooperation and license revenues in
1999 and 2000 over 1998 reflects the achievement at the end of 1996 of most of
our contractual milestones. The cooperation phase of these agreements, which had
generated milestone revenues for us, expired in June 1998. In the future, we may
derive royalty revenues only under existing cooperation and license agreements.
These royalty revenues will be based on licensees' sales, if any, of
royalty-bearing products.
We may grant royalty-bearing licenses to third parties to the field
emission display technology cross-licensed to us from our licensees, subject to
certain restrictions. Royalties payable to us under these third-party licenses
would be shared with the existing licensees.
In 1997, we entered into a cooperation agreement with a major Japanese
cathode ray tube manufacturer to demonstrate a 15-inch field emission display.
Revenues generated under this agreement in 1997 and 1998 were included in
cooperation and license revenues. In February 1999, we entered into a subsequent
cooperation agreement with our cathode ray tube partner. We will not record any
significant revenues under this agreement.
Product Sales:
- ---------------
We recognized product sales of $445,000 in 1998, $484,000 in 1999 and
$331,000 in 2000. In 1998, these product sales primarily represented the
shipment of a few high-priced field emission display displays and cathodes to
customers for evaluation and product development purposes. In 1999, product
revenues remained relatively constant compared to 1998, and primarily reflected
the shipment of displays to our first volume customer, Zoll Medical. In 2000,
our product revenues reflected our shipments to Zoll Medical in lower volume, as
well as shipments to new customers.
Other Revenues:
- ----------------
Other revenues consisted of funding under European development contracts,
our DARPA contract and other miscellaneous revenues. Other revenues were $1.9
million in 1998, $4.9 million in 1999 and $6.0 million in 2000. Of these
revenues, $1.2 million in 1998 related to a development contract granted in
December 1994 from the French Ministry of Industry to support manufacturing of
field emission displays. There were no revenues under this contract in 1999 and
2000. We successfully completed this development contract in 1998 and will not
derive any additional revenue from it. We received $2.0 million from DARPA in
1999 and $5.9 million in 2000. In addition, we expect to earn
development-contract related revenues in 2001, primarily from expected
recognition as income of certain amounts which we collected before December 31,
2000, and previously recorded as deferred revenues (see notes to consolidated
financial statements-note 12-other and deferred revenues).
Research and Development Expenses-Acquisition of Intellectual Property
---------------------------------------------------------------------------
Rights:
- -------
Since inception, we have expensed $5.0 million for the acquisition of
intellectual property rights from our licensees and other third parties. In
2000, we expensed $57,000 in connection with a license agreement with Coloray
Display Corporation, a California corporation, providing us with a worldwide,
non-exclusive royalty-free license on certain technologies related to field
emission displays.
PixTech, Inc.
(a development stage company)
Other Research and Development Expenses:
--------------------------------------------
These expenses include salaries and associated expenses for in-house
research and development activities conducted both in our pilot plant and our
research and development facility in Boise, Idaho, the cost of staffing and
operating our pilot manufacturing facility and the cost of supporting the
transfer and adaptation of our field emission display technology to Unipac, as
well as obligations to Commissariat a l'Energie Atomique under the Laboratoire
d'Electronique, de Technologie et d'Instrumentation research agreement, and
miscellaneous contract consulting fees. As part of the acquisition of Micron's
display assets in May 1999, we hired 44 employees to continue research and
development work in the Boise facility, thus reinforcing our field emission
display technology development efforts. In addition, the development team
located in Santa Clara was moved to Boise to focus our efforts on the expansion
of the large display effort.
As a result, other research and development expenses increased from $19.2
million in 1998 and $27.2 million in 1999 to $29.5 million in 2000. The increase
primarily reflected the costs associated with the research and development
activities conducted in Boise following the acquisition of assets from Micron
which was signed at the end of May 1999 and the cost of supporting the
manufacturing start-up at Unipac.
Sales and Marketing Expenses:
--------------------------------
We incurred sales and marketing expenses of $1.4 million in 1998, $1.2
million in 1999 and $1.1 million in 2000. 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, in order to achieve a
successful commercialization phase for our products.
General and Administrative Expenses:
---------------------------------------
General and administrative expenses amounted to $2.7 million in 2000, a
decrease of 6.9% over the expenses incurred in 1999, which amounted to $2.9
million. This decrease was mainly due to a reduction in consulting expenses.
General and administrative expenses amounted to $2.5 million in 1998.
Interest Income (Expense), Net:
----------------------------------
Interest income consists of interest on available and restricted cash.
Interest expense consists of interest payable on long-term obligations. Net
interest expense was $692,000 in 2000, compared to $864,000 in 1999 and $708,000
in 1998, reflecting the decrease in long-term liabilities in connection with the
conversion into shares of our common stock of the entire Sumitomo debt (see
notes to consolidated financial statements - note 7 - long term debt).
Currency Fluctuations:
-----------------------
Although a significant portion of our revenues is denominated in U.S.
dollars, a substantial portion of our operating expenses is 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. Since 1998, fluctuations of the
Taiwanese dollar versus the Euro caused significant foreign exchange gains or
losses. We incurred net foreign exchange gains of $372,000 in 1998, a net
foreign exchange loss of $1,076,000 in 1999 and a net foreign exchange gain of
$857,000 in 2000. We cannot predict the effect of exchange rate fluctuations on
future operating results. To date, we have not yet undertaken hedging
transactions to cover our currency exposure.
Income tax:
------------
We have recognized French income tax benefits of $7.8 million since our
inception, including $758,000 in 1998 and $43,000 in 1999. These income tax
benefits represent tax credits for research and development activities we
conducted in France and the benefit of net operating loss carry forward, net of
valuation allowance. As of December 31, 2000, we provided for a valuation
allowance of $1.5 million against a net deferred tax asset of $1.5 million. We
will collect the tax credits for research and development in cash if we are not
able to credit them against future income tax liabilities within three fiscal
years. We collected $2.8 million in 1998 for our 1993 and 1994 income tax
benefits, $2.8 million in 1999 for our 1995 income tax benefits and $1.1 million
in 2000 for our 1996 income tax benefits.
PixTech, Inc.
(a development stage company)
In the future, we may not record significant additional tax credit for
research and development activities in France, as the benefit is based on
increases in eligible research and development expenses in a given year over the
two previous fiscal years.
As of December 31, 2000, our net operating losses carried forward in France
were approximately $56.6 million, of which $4.7 million will expire in 2001,
$8.5 million in 2002, $12.3 million in 2003, $13.3 million in 2004 and $17.1
million in 2005, if they are not utilized.
QUARTERLY RESULTS OF OPERATIONS
The following table presents certain unaudited quarterly financial
information for each quarter in 1999 and 2000 and for the first quarter of 2001.
In the opinion of our management, this information has been prepared on the same
basis as the audited consolidated financial statements appearing elsewhere in
this report and includes all adjustments (consisting only of normal recurring
adjustments) necessary to present fairly the unaudited quarterly results set
forth herein. Our quarterly results are subject to fluctuations and thus, the
operating results for any quarter are not necessarily indicative for any future
period.
(AMOUNTS IN THOUSANDS) THREE MONTHS ENDED
------------------
MAR. 31, JUNE 30, SEPT. 30, DEC. 31, MAR. 31, JUNE 30, SEPT. 30,
------------ ---------- ----------- ---------- ---------- ---------- -----------
1999 1999 1999 1999 2000 2000 2000
------------ ---------- ----------- ---------- ---------- ---------- -----------
Revenues: (Unaudited)
Cooperation and license
revenues . $ - $ - $ - $ - $ - $ - $ -
Product sales . 161 178 71 74 86 131 -
Other revenues . 2,000 314 877 1,717 1,904 2,009 854
------------ ---------- ----------- ---------- ---------- ---------- -----------
2,161 492 948 1,791 1,990 2,140 854
Cost of revenues:
License fees and royalties . (87) (85) (82) (107) (88) (94) (73)
------------ ---------- ----------- ---------- ---------- ---------- -----------
Gross margin: 2,074 407 866 1,684 1,902 2,046 781
Operating expenses:
Research and development 5,587 6,616 7,210 7,843 7,851 7,920 7,013
Sales and marketing . 351 329 338 261 313 258 269
General and administrative 730 772 787 694 813 684 645
------------ ---------- ----------- ---------- ---------- ---------- -----------
Total operating expenses 6,668 7,717 8,335 8,798 8,977 8,862 7,928
------------ ---------- ----------- ---------- ---------- ---------- -----------
Loss from operations . (4,594) (7,310) (7,469) (7,114) (7,075) (6,816) (7,147)
Interest income (expense), net (266) (98) (244) (256) 29 140 288
Foreign exchange gain (loss) (516) (621) 112 (51) 359 (27) (5)
Other revenues (expenses) - - - - - 17 57
------------ ---------- ----------- ---------- ---------- ---------- -----------
Loss before income tax benefit . (5,376) (8,029) (7,601) (7,421) (6,687) (6,686) (6,807)
Income tax benefit . - - - - - - -
------------ ---------- ----------- ---------- ---------- ---------- -----------
Net income (loss) . $ (5,376) $ (8,029) $ (7,601) $ (7,421) $ (6,687) $ (6,686) $ (6,807)
============ ========== =========== ========== ========== ========== ===========
DEC. 31, MAR. 31,
---------- ----------
2000 2001
---------- ----------
Revenues:
Cooperation and license
revenues . $ - $ -
Product sales . 114 51
Other revenues . 1,242 1,098
---------- ----------
1,356 1,149
Cost of revenues:
License fees and royalties . (55) (3)
---------- ----------
Gross margin: 1,301 1,146
Operating expenses:
Research and development 6,787 7,196
Sales and marketing . 265 200
General and administrative 626 760
---------- ----------
Total operating expenses 7,678 8,156
---------- ----------
Loss from operations . (6,377) (7,010)
Interest income (expense), net 235 103
Foreign exchange gain (loss) 530 (190)
Other revenues (expenses) 114 26
---------- ----------
Loss before income tax benefit . (5,498) (7,071)
Income tax benefit . - -
---------- ----------
Net income (loss) . $ (5,498) $ (7,071)
========== ==========
PixTech, Inc.
(a development stage company)
LIQUIDITY AND CAPITAL RESOURCES
From our inception through March 31, 2001, we have used $70.3 million in
cash to fund our operations and $24.0 million in capital expenditures and
investments. Through March 31, 2001, we have funded our operations and capital
expenditures primarily from sales of $112.3 million of equity securities and
$21.7 million of proceeds from borrowings and sale-leaseback transactions.
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.
In 2000, we used $15.3 million in cash and generated $4.4 million from investing
activities to fund our operations. In March 2000, restricted cash was
reclassified as cash available in the amount of $5.6 million. Restricted cash
was related to the security interest corresponding to the guaranty granted to
Unipac in relation to the purchase and funding by Unipac of volume field
emission displays production equipment. In March 2000, pursuant to an agreement
with Unipac dated December 17, 1999, the guaranty to Unipac was reduced by $5.0
million in consideration of a payment in cash of 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 concerning 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 $1.0 million at March 31,
2001 (see notes to consolidated financial statements - note 6 - short-term and
long-term restricted cash).
As of March 31, 2001, we had commitments for capital expenditures of
approximately $390,000. Capital expenditures were $1.8 million in 1998, $1.2
million in 1999 and $1.8 million in 2000. Capital expenditures exclude the
assets acquired from Micron in 1999 as those assets were acquired in exchange
for our common stock. Capital expenditures also exclude assets acquired under
capital lease obligations.
Implementing volume production at Unipac's manufacturing plant required
significant capital expenditures. Under the foundry agreement with Unipac,
Unipac acquired and funded $14.9 million of capital expenditures for equipment.
Unipac leases a portion of that equipment to us, which amounted to $10.079
million as of March 31, 2001.
Restricted cash amounted to $7.5 million in 1999 and $1.2 million in 2000.
Restricted cash is related to the security interest that we granted to Unipac
pursuant to the foundry agreement, in connection with the purchase and funding
by Unipac of volume field emission displays production equipment. Both the
amounts of this bank guaranty and the corresponding security interest to the
banks are expected to continue decreasing in the future.
We had existing contracts with French authorities providing for the payment
of grants totaling approximately $4.0 million, which were fully paid to us as of
December 31, 1998. 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 $2.0 million during 1999, $722,000 in 2000 and of which we
expect to receive $199,000 in 2001.
In November 1998, we entered into a research and development agreement with
French authorities. Under this agreement, we expect to benefit from a grant
totaling approximately $857,000, of which we collected $248,000 in 1999,
$351,000 in 2000 and expect to collect $214,000 in 2001.
In January 2000, we entered into 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 the agreement, PixTech will receive
funding from the European Commission of approximately $1.7 million to design and
develop the field emission displays, of which we received $521,000 in January
2001. Audi will perform the testing and evaluation. The development program
began in January 2000. PixTech expects to deliver qualified field emission
displays for testing in 2001. These field emission displays will be 7-inch
diagonally, full color, have a 16:9 aspect ratio with 480 x 234 resolution and
will be true video rate capable. Upon successful completion of testing, these
displays will be used for navigation, entertainment, and as a multi-functional
display in the A8 automobile with other models to follow. Partners of the 3
million Euro European Commission IST funded project include PixTech, Audi, XSYS,
Laboratoire d'Electronique and SAES Getters. PixTech will be responsible for the
development and manufacturing of the field emission displays. Audi, a subsidiary
PixTech, Inc.
(a development stage company)
of Volkswagen AG will be responsible for testing and evaluation. XSYS, a
subsidiary of Harman International, will be responsible for systems integration.
Laboratoire d'Electronique de Technologie et d'Instrumentation, the research arm
of Commissariat a l'Energie Atomique, will be responsible for special tasks and
SAES Getter, a world leader in getters, will optimize getter materials for field
emission displays.
Since inception, we have recognized French income tax benefits of $7.9
million. These income tax benefits represent tax credits for research and
development activities conducted in France, which are paid in cash if we are not
able to credit them against future income tax liabilities within three fiscal
years. In 1998, we collected $2.5 million, representing research and development
tax credits recorded in 1993 and 1994. In April 1999, we collected $2.7 million
from research and development tax credits recorded in 1995. In April 2000, we
received $1.1 million corresponding to 1996 tax benefit.
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. Under
this funding, we received $2.4 million in 2000 and expect to collect $3.9
million in 2001. On January 22, 2001 we were awarded an additional $3.1 million
funding further supplementing the August 1999 and April 2000 contracts. The
remaining amounts are expected to be received in 2001 and 2002.
We generated $14.5 million in cash flows from financing activities in 2000,
as compared to $21.0 million in 1999. This financing consisted primarily of
sales of shares of common stock, resulting in net proceeds of $19.7 million (net
of issuance costs). Cash flow generated from financing activities exclude
non-cash transactions related to (i) the issuance of 16,000 shares of our common
stock to Coloray Display Corporation with a value of $57,000 (See notes to
consolidated financial statements - note 11 - stockholders' equity) (ii) the
reversal of dividends attached to the shares of convertible preferred stock in
the amount of $450,000 and the conversion into 4,195,254 shares of our common
stock (See notes to consolidated financial statements - note 11 - stockholders'
equity) and (iii) issuance of 2,511,795 shares of our common stock to Sumitomo
with a value of $ 6,412,000 (See notes to consolidated financial statements -
note 7 - long term debt).
On August 9, 1999, we entered into a private equity line agreement with
Kingsbridge Capital Ltd. Under the terms of the equity line agreement, we have
the irrevocable right, subject to certain conditions, to draw up to $15 million
cash in exchange for our common stock, in increments over a two-year period. We
began to draw off the equity line agreement in 1999, resulting in net proceeds
of $824,000 in 1999 and $4.8 million in 2000. Through March 31, 2001, we have
drawn a total amount of $6.0 million under the equity line. In April 2000,
pursuant to an amendment, signed in February 2000, to the common stock purchase
agreement dated October 6, 1999 with Unipac Optoelectronics Corporation, we
completed a $15 million equity private placement with United Microelectronics
Corporation. Under the term of this agreement, United Microelectronics
Corporation received 9.3 million shares of common stock.
Long-term liabilities increased by $727,000 in 2000, representing two
zero-interest loans granted to PixTech by French local authorities and by a
French public agency, Anvar. Long term liabilities were $8.9 million at March
31, 2001.
Repayment of long term liabilities were $1.1 million in 2000, of which $1.0
million have been paid to Bank of Boston, a loan we took over following the
Micron transaction (see notes to consolidated financial statements - note 20 -
Micron transaction).
We believe that cash available at March 31, 2001, which amounted to $10.4
million, together with the anticipated proceeds during the remainder of 2001
from research and development tax credits and from the various grants and loans
described above, will be sufficient to meet our cash requirements for the
upcoming year.
PixTech, Inc.
(a development stage company)
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 levels we currently anticipate 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 our products, the levels of
promotion and advertising required to launch our products and attain a
competitive position in the marketplace and the response of competitors to our
products. Funds for these purposes, whether from equity or debt financing, or
other sources, may not be available when needed or on terms acceptable to us.
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, (ii) most of our capital lease obligation is
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 our 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.
(a development stage company)
OUR BUSINESS
PixTech, Inc. was incorporated in Delaware in November 1993 as the parent
company of PixTech S.A., a French corporation formed in June 1992. Our principal
executive offices are located at Avenue Olivier Perroy, 13790, Rousset, France
and at 2700 Augustine Drive, Suite 255, Santa Clara, California 95054, USA. Our
main telephone number in Rousset is 33-4-4229-1000 and our main telephone number
in Santa Clara is (408) 986-8868.
We are dedicated to commercializing our field emission displays, a type of
flat panel displays. We expect that field emission displays will provide higher
viewing quality, lower manufacturing costs and more efficient power consumption
than current flat panel display technologies. In 1992, we exclusively licensed
key patents from an electronics research institute, Laboratoire d'Electronique,
de Technologie et d'Instrumentation, and since then, have focused on advancing
field emission display technology towards high volume manufacturing and wide
market acceptance.
Since our inception, our strategy has been to collaborate with third
parties in order to accelerate the development of field emission display
technology and to optimize financial and human resources to achieve our
objective. Initially, we applied this strategy to fundamental research and
product development by licensing our technology to certain display
manufacturers, including Futaba Corporation and Motorola, Inc. After completing
the development and initial commercialization of our first product, we applied
our collaboration strategy to our manufacturing efforts. We have established a
manufacturing relationship with Unipac, a Taiwanese liquid crystal display
manufacturer. Having this relationship has reduced investment costs for volume
manufacturing of field emission displays. During 2000, we concentrated our
efforts on establishing a volume manufacturing process at Unipac's Taiwanese
facility.
Our research and development team was instrumental in successfully
transferring the technology from the pilot facility in Montpellier to the
production facility in Taiwan by providing experienced individuals and the basic
"know-how". Extensive collaboration between the two facilities was critical to
enable the Unipac facility to produce fully qualified products. During 2000 the
assembly activity has been reduced to only research and the Montpellier
organization has been refocused on cathode research and development. Since the
fourth quarter of 2000, we have been shipping fully qualified products to our
customers, 100 % of which are in Taiwan. To date, no other company has been able
to reach this level of commercialization of field emission technology.
In 1999, we acquired the display division from Micron in Boise, Idaho. This
facility is dedicated to research and development of FED anodes, spacer
technology and assembly. It is also the design center of our 12.1-inch color
display development Defense Advanced Research Projects Agency, known as DARPA.
In August 1999, Micron's development contract with DARPA was transferred to
PixTech. We subsequently received additional funding in April 2000 and in
January 2001.
In 1999, we delivered two 12.1-inch monochrome displays and in 2000, we
delivered six 12.1-inch color displays to DARPA. The displays were cooperatively
manufactured from our Montpellier (cathodes) and Boise (anodes, assembly, and
electronics) facilities.
We are currently focused on:
- increasing production yields at the Unipac facility;
- expanding our customer base and;
- development of our color products.
PixTech, Inc.
(a development stage company)
THE FLAT PANEL DISPLAY MARKET
According to Stanford Resources, Inc., a display market research
organization, the market for flat panel displays is expanding rapidly and
projected to grow from $22 billion in 2000 to $46 billion in 2005. This
represents a compounded growth rate of 16% per year.
- Driving forces for this growth include:
- existing applications, such as laptop computers, handheld computers,
handheld organizer products, and industrial equipment;
- new applications, such as flat televisions, automotive applications
and desktop computer terminals;
- new emerging applications such as wireless web appliances.
The "information age" is not only driving computer and communication
technology, but also the human interface to those technologies.
As viewing quality improves and costs decrease, we expect flat panel
displays to capture more and more of the total display market. Field emission
technology has the potential to successfully penetrate major parts of this
market.
Currently, cathode ray tubes have the majority of the total display market,
with 52% of the total display market in dollar terms according to Stanford
Resources, Inc. Despite that cathode ray tubes offer the lowest cost per display
today, limitation on weight, size and power dissipation are expected to reduce
the market position to 36% by 2005 according to Stanford Resources, Inc. Today,
active matrix liquid crystal displays are the technology of choice for the
applications where we believe field emission displays will have a successful
entry. After many years of continuous development with hundreds of million of
dollars research and development expenses, active matrix liquid crystal displays
still have viewing quality deficiencies compared to cathode ray tubes and field
emission displays.
The following table summarizes some of the differentiating characteristics
of cathode ray tube, active matrix liquid crystal display and field emission
display technologies (1):
CHARACTERISTICS CRT* AMLCD** FED***
Viewing angle Very wide horizontal and Wide horizontal Very wide horizontal
vertical limited vertical and vertical
Video speed High speed over full Adequate speed over High speed over full
temperature range limited temperature range temperature range
Brightness range From low to very high, easy From low to medium, From low to very high,
to dim limited dimming easy to dim
capabilities
Dynamic range High Limited High
Operating temperature Wide range Limited range due to Wide range and instant-on at
liquid crystal behavior low temperature
Power consumption High Current industry standard Comparable to current
industry standard
Manufacturability Mature process Complex process Early stage of manufacturing
offering lowest cost development, fewer process
steps than AMLCD
- - Dynamic range results from a combination of contrast and peak brightness.
* CRT = cathode ray tubes
** AMLCD = active matrix liquid crystal displays
*** FED = field emission displays
- --------------------------------
(1) The information set forth in this table is based upon our assessment of
existing cathode ray tube and active matrix liquid crystal display products when
compared to field emission display products and prototypes manufactured at our
pilot plant. We cannot assure you that field emission displays, if manufactured
in commercial quantities, will achieve such performance characteristics on a
cost-effective basis.
PixTech, Inc.
(a development stage company)
TECHNOLOGY
The cathodoluminescent effect
The smooth, soft, bright, naturally colored and video-rated images we have
enjoyed for so long, and still enjoy when watching television, comes from the
light emitted by "phosphors" when stricken by electrons. It is the
"cathodoluminescent effect".
Field Emission Displays are Cathode Ray Tubes; both are cathodoluminescent
devices
Negatively charged electrons are extracted from a source known as the
''cathode'' and collected by a phosphor-coated screen known as the ''anode'',
which is held at a positive voltage to accelerate electrons. Electrons travel in
a vacuum between cathode and anode plates. The phosphor coating is a
cathodoluminescent material that emits light when hit by electrons. Color shades
are created, using three fundamental colors generated by three different
phosphors. Therefore, each picture element or pixel consists of three
sub-elements or sub-pixel each covered with one of the different phosphors.
Field Emission Displays are Flat Panel Displays
While cathode ray tubes or CRTs have only three electron emitters to
provide electrons all over the surface of the image, in field emission displays,
each individual picture has electrons provided by hundreds of tiny electron
sources built on a large and flat cathode plate. The cathode surface, organized
into a matrix of rows and columns, is held close to the receiving anode.
Selection of cathode row and column voltages determines which pixel will be
illuminated.
PixTech believes that it has a robust cathode technology
The manufacturing process of the field emitters used in our displays was
first developed in our prototype line in Montpellier, France. Today cathodes are
manufactured in volume in the Unipac production facility in Taiwan. Our cathodes
use the so-called "resistive layer" concept invented by Laboratoire
d'Electronique and for which we believe we hold a strong patent position.
Low, Medium and High Anode Voltage
We originally developed a low anode voltage technology, which we still use
for our monochrome FE 524 display products. In 1996, we started to develop
higher anode voltage displays when we acquired the assets of PanoCorp, a small
research and development company. With this acquisition we demonstrated a
15-inch display featuring 5,000-volt anodes. This development was then enhanced
in 1999 when we acquired the display division of Micron Technology and took over
the development of a 12.1-inch color display for military applications.
STRATEGY
Our strategy is to develop, manufacture and market flat panel displays
using field emission technology as the key product attribute to distinguish us
from our competitors.
MARKET ENTRY
Our market entry strategy is to focus on niche applications where the
unique performance of our field emission displays, such as wide viewing angles,
high contrast ratio and low power consumption, are highly valued by the customer
and have not yet been equaled by other display technologies. Applications such
as portable medical devices and industrial equipment have display costs that
represent a small percentage of the total equipment cost. In addition, these
applications generally have small to medium volume requirements that we will be
able to serve with our manufacturing partner in Taiwan. A second step will be
penetrating consumer monochrome applications with different form factors. We
expect that 2 to 8-inch diagonal, monochrome field emission displays for
industrial usage will provide the majority of product revenues for the next two
years.
PixTech, Inc.
(a development stage company)
INCREASE MARKET PENETRATION
To increase market penetration, product revenues and profitability, we
intend to launch color products with larger volumes, and capture consumer
oriented market segments. We have targeted the various applications in the
automobile market sector, which are currently using a variety of display
technologies. This market is expected to grow very fast with major car
manufacturers adopting an aggressive strategy to incorporate flat panel displays
in their applications. Field emission displays' wide operating temperature
range, wide viewing angle and environmental friendly technology will play a
major role in penetrating this large market segment. We are currently
participating with a large automotive manufacturer and several other companies
in a European supported development program to develop a specific 7-inch color
field emission display for an automotive application. If successful during the
development phase, we will have a system integrator and automotive manufacturer
with high volume needs.
RESEARCH AND DEVELOPMENT EFFORT
The development of field emission display manufacturing processes and
products require a significant ongoing effort. Since inception, we have
leveraged the development activities of Laboratoire d'Electronique de
Technologie et d'Instrumentation, where we have obtained an exclusive license of
many key patents. With increased development efforts and a shift of our
priorities to volume manufacturing, our relationship with Laboratoire
d'Electronique de Technologie et d'Instrumentation remains vital.
Our Montpellier team will concentrate on cathode development, process
architecture, process flow and product development. Our Boise team will focus on
its strengths: anode development, sealing and spacer technology, and will
concentrate on the back-end part of the color and large display process
development programs.
OUR LICENSING PROGRAM
Between 1993 and 1995, we entered into a bilateral cooperation and license
agreements with Futaba, Texas Instruments, Raytheon and Motorola to advance
field emission displays technology. These agreements gave us a royalty-free
license to any field emission displays technology held by these companies at the
term of the agreements, with certain rights to sublicense. In addition, we
received milestone revenues during the cooperation phase. Although the
cooperation phases of these agreements have all ended, we were granted
royalty-free licenses to all field emission display technology held by each
party at the end of each cooperation period, with certain rights to sublicense.
We are also entitled to royalties on future sales by any of these licensees of
any field emission display products, which are based on our technology. These
agreements provided each of these companies other than Texas Instruments, which
cooperation agreement did not reach its three-year term, with a license subject
to certain limitations, to all field emission displays technology owned by its
Laboratoire d'Electronique de Technologie et d'Instrumentation and the other
parties.
MICRON
In May 1999, we purchased certain assets and liabilities of Micron
Technology's display division in Boise, Idaho. At the same time, we hired 44
Micron employees who have continued to work in the Boise facility. Since that
time, additional development personnel from Santa Clara have been relocated to
Boise, and the integrated team will continue to focus on color products and
large displays.
In connection with our acquisition, Micron granted us a ten-year, worldwide
royalty-free license to Micron's field emission display-related patents and
patent applications. In addition, we now lease Micron's facility, which had been
used by Micron's display division.
PixTech, Inc.
(a development stage company)
MANUFACTURING
Our present strategy is to outsource volume manufacturing. In 1997, we
entered into a contract manufacturing agreement with Unipac, a Taiwanese liquid
crystal display manufacturer and an affiliate of United Microelectronics
Corporation, Taiwan's second largest semiconductor manufacturer. We determined
that the fastest way to volume manufacturing with the lowest equipment
investment costs was to enter into this relationship, which allowed us to use
existing clean room facilities, existing infrastructures and some of the
equipment commonly used in liquid crystal displays and the field emission
displays process. Under this agreement, we will purchase displays from Unipac on
a cost plus basis after the field emission display process is installed and
certain production criteria are met. During the start-up phase, PixTech will
bear all costs associated with this activity. After the production phase is
reached, Unipac has the responsibility to take care of volume expansion
investments to meet PixTech's demand of field emission display products.
In 1998, we installed all of the field emission display specific equipment
at the Unipac facility and started to transfer the process from the pilot line
in Montpellier. This task was more complicated than originally expected due to
key equipment being different and they each required specific process
calibration programs. During 1999 and 2000, we needed to change key pieces of
equipment. After completion of this activity, the quality of the manufactured
displays improved to a level comparable to the quality of the products
manufactured in our pilot line in Montpellier.
In 2001, we will concentrate on yield improvements, cycle time reduction
and increased production line loading. At the present time, we do not expect to
meet our manufacturing cost objectives on a per unit base before end of 2001.
Presently, we intend to produce our 7-inch color product at Unipac as soon as
the development is completed and the market demand supports this activity.
LARGE DISPLAY DEVELOPMENT ACTIVITY
In 1998, we were able to demonstrate the world's first 15-inch color field
emission display under a program to understand the technology requirements for a
large field emission display. Since that time, we have started a development
program with a major Japanese cathode ray tube manufacturer with the goal to
develop a 17.0-inch extended graphic adapter (XGA) display for the desktop
computing market.
After the transfer of the DARPA contract from Micron to PixTech, we
developed a 12.1-inch monochrome display and continued with the color displays
delivering six units in the year 2000. We believe that the requirements for
future desktop computing, including full motion video, wide viewing angle and
fast response for computer games, can be met with field emission technology. We
also believe that the emerging market of wireless web applications requires the
same kind of display performance characteristics.
PRODUCTS
Our current available product is a 5.2-inch monochrome display. This
display has 320 lines and 240 columns, 1/4 video graphic adapter (VGA) format, a
pixel pitch of 0.33 millimeters, and a viewing angle or more than 160 degrees
both horizontally and vertically. Its brightness varies over a range from 120 to
240 candelas per square meter (cd/m2). Its power consumption is approximately
2.4 watts, depending on the content of the image, and its weight is less than
200 grams.
We expect to sell the first samples of our full color 7-inch display, which
is currently under development, during the later half of 2001 to customers in
the automotive industry. In addition, we intend to expand our product range
within the 2 to 8-inch display market segment.
PixTech, Inc.
(a development stage company)
MARKETING AND SALES
Target Segments We are currently marketing our 5.2-inch monochrome
displays directly to original equipment manufacturers in the instrumentation
medical and military market segments where the benefits of our products are
highly valued. We have not targeted high volume consumer application market
segments yet, which are large but extremely price competitive. Furthermore,
these market segments require volume commitments, which are beyond our present
capabilities.
Pricing We believe that field emission displays will provide
significant quality and operational advantages compared with competing flat
panel displays. Therefore, we believe that we can achieve premium pricing for
the near future. This allows us to reach more economical production levels at a
time we have to compete on both pricing and features.
Distribution and Sales We intend to achieve sales coverage through a
combination of:
- Direct sales and marketing force which will address major original
equipment manufacturing customers in the United States and Europe;
- a network of sales representatives to expand coverage mainly in the
United States;
- a network of distributors to address specific areas of the worldwide
market and to offer technical and commercial customer support.
We have granted exclusive distribution rights to Sumitomo in Japan to cover the
Japanese market.
Customers To date, we have sold samples of our displays to more
than one hundred customers, mostly based in the United States and in Europe.
Since early 1998, we shipped a large percentage of our products to Zoll Medical
Corporation, an U.S. medical equipment manufacturer, which markets a portable
defibrillator incorporating our field emission displays. In 1996, we received a
purchase order to deliver 50,000 displays to Zoll Medical over a 5 year period.
Zoll Medical uses the displays as a key differentiator against competing
products using liquid crystal display screens, emphasizing some of the key
characteristics of field emission displays, including brightness and viewing
angle. We are negotiating with potential new customers, and we believe that we
can book new orders.
Our marketing strategy for our color and large screen products will
initially differ from the above described strategy. We believe that the
uniqueness of the field emission display requires close cooperation with
potential customers at the development phase. Therefore, our initial products
aimed for volume manufacturing will be developed with a leading customer in the
target market such as major cathode ray tubes manufacturer in Japan for the
17-inch XGA product and with Audi in Germany for the initial 7-inch automotive
product. We have not yet selected a potential partner for the emerging 10 to
12-inch web application market.
COMPETITION
The flat panel display market is intensely competitive in all product sizes
and applications. It is currently dominated by liquid crystal technology. Liquid
crystal display manufacturers, such as Sharp, NEC and Hitachi, have greater
brand and name recognition than we have and they have substantially more
financial, technological and marketing resources. Substantial investments are
still being made by these companies to improve liquid crystal display
technologies. Liquid crystal displays manufacturers have focused on enhancing
their manufacturing processes, built more manufacturing facilities and developed
new equipment for larger size substrates, ultimately increasing their display
outputs resulting in an overall increase in flat panel display manufacturing
capacities. This, coupled with the entrance of new competitors and other flat
panel display technologies, can cause an 'over-supply' situation leading to
reductions in the average selling price of flat panel displays. To effectively
compete, we may be required to continuously increase the performance of our
products and reduce prices. In the event of price reductions, our ability to
maintain gross margins would depend on our ability to effectively reduce our
cost of sales.
PixTech, Inc.
(a development stage company)
There are a number of domestic and international companies developing and
marketing display devices using alternative technologies. These technologies
include:
- Passive matrix liquid crystal displays;
- Active matrix liquid crystal displays;
- Vacuum fluorescent displays;
- Electro luminescent panels;
- Plasma panels;
- Organic electro luminescent.
Our cooperation phase with Futaba concluded in January 1997 and our
cooperation phase with Motorola ended in June 1998. However, Futaba continues
development and investments in field emission display technology and we expect
to face competition from them in the future. In addition, some of the basic
field emission display technology is now in the public domain and, as a result,
we have a number of additional potential direct competitors developing field
emission displays.
We are aware of several other companies developing field emission display
technologies similar to ours, including but not limited to:
- Sony;
- Fujitsu;
- Samsung;
- Candescent;
- FED Corporation; and
- SI Diamond Technology Incorporated.
Many of these companies have made, and may continue to make, significant
advancements to their field emission display technologies.
PATENTS AND TRADE SECRETS
Laboratoire d'Electronique de Technologie et d'Instrumentation develops our
fundamental technology and licensed the technology to us in 1992. Under this
license agreement, which has a term of twenty years, Commissariat a l'Energie
Atomique granted us an exclusive, worldwide, royalty-bearing license, with right
to sublicense all of field emission display technologies developed by
Commissariat a l'Energie Atomique, including Laboratoire d'Electronique, de
Technologie et d'Instrumentation.
Taking into account our own patent portfolio and license agreements signed
with Commissariat a l'Energie Atomique, Motorola, Texas Instruments, Futaba,
Raytheon, Coloray and Micron Technology, we hold or have licensed 1583 patents
and pending patent applications as of March 31, 2001. This represents a total of
822 original patents and pending patent applications, of which 450 are U.S.
patents, 258 are U.S. pending patent applications and 114 are foreign patents or
pending patent applications. As further development continues, we expect to file
additional patent applications as appropriate.
PROPERTIES
Montpellier, France: We rent a facility including a clean room, office
area, and engineering laboratories in Montpellier, France, having 31,100 square
feet (2,900 square meters) of space. The Montpellier lease terminates in 2003,
with an option to renew. The lease is renewable for several additional one-year
terms.
Boise, Idaho: We lease a total of approximately 73,000 square feet (6,500
square meters) of space in Boise, Idaho, including a clean room, devoted to our
research and development activities, under a three-year lease from Micron
expiring in May 2002. The lease is renewable for an additional three-year term.
PixTech, Inc.
(a development stage company)
Santa Clara, California: We lease a total of approximately 2,570 square
feet (250 square meters) of space in Santa Clara, California for our head
management and sales offices under a lease, which terminates in July 2001.
Rousset, France: Our corporate offices are located in an approximately
11,000 square foot (1,000 square meters) facility located in Rousset, France. We
own the facility and occupy approximately 5,500 square feet (500 square meters)
of floor space. A third party rents the rest of the area under a lease which
terminates in June 2002.
LEGAL PROCEEDINGS
We received correspondence from Futaba Corporation and its legal counsel
beginning in February 1998 alleging that (i) we are infringing one or more
patents owned by Futaba relating to the construction and manufacture of our
displays that are not expressly included under the license agreement between us
and Futaba, (ii) our use of terms such as "alliance" and "partners" in
describing the nature of our contractual relationships with Motorola, Raytheon
and Futaba in reports filed with the SEC is misleading; and (iii) certain
provisions in our agreement with Unipac constitute an impermissible sublicense
of Futaba technology. Futaba also claimed that we improperly supplied certain
Futaba proprietary information to Unipac, and that Unipac has, in turn,
disclosed such information to a third party vendor.
On December 19, 2000 PixTech and Futaba executed a settlement agreement
resolving the allegations discussed above.
EMPLOYEES
As of March 31, 2001, we had approximately 211 employees worldwide, of whom
47 were in research and development, 131 in process development and production,
5 in marketing and sales, and 28 in administrative positions.
In addition, as of March 31, 2001, Laboratoire d'Electronique de
Technologie et d'Instrumentation had 10 full-time employees working exclusively
for our research and development program. Unipac had 79 full-time employees
working exclusively on the start-up of our field emission display manufacturing
process while relying on other manufacturing employees to perform a significant
portion of the manufacture of field emission displays.
We believe that our future success will depend, in part, on our ability to
attract and retain highly skilled technical, marketing and management personnel.
Management believes that its employee relations are good.
MANAGEMENT
As of March 31, 2001, our directors and executive officers were as follows:
NAME AGE POSITION HELD WITH US
- ----------------------- --- --------------------------------------------------
Jean-Luc Grand-Clement 61 Chairman of the Board of Directors
Dieter Mezger 57 President, Chief Executive Officer and Director
Marie Boem 50 Chief Financial Officer
James J. Cathey 36 Vice President, Marketing and Business Development
Donald E. Crim 58 Vice President, Manufacturing, Taiwan
Michel Garcia 51 Vice President, Chief Technology Officer
Jean-Jacques Louart 53 Vice President, Operations
Andre Borrel 64 Director
Bruce Gnade (1) 45 Director
Ronald J. Ritchie 59 Director
John A. Hawkins (2) 40 Director
<FN>
(1) Mr. Gnade was elected Director on May 22, 2001
(2) Mr. John A. Hawkins resigned from our Board on May 18, 2001
Each officer's term of office extends until the first meeting of the Board
of Directors following the next annual meeting of stockholders and until a
successor is elected and qualified.
PixTech, Inc.
(a development stage company)
Jean-Luc Grand-Clement, a founder of PixTech, has been our Chairman of the
Board of Directors since our inception in 1992. Mr. Grand-Clement was our
President through March 1998 and our Chief Executive Officer through January
1999. Prior to founding PixTech, Mr. Grand-Clement co-founded European Silicon
Structures, a European applications specific integrated circuit supplier for
cell based and full custom semiconductor products, and served as Chief Executive
Officer and then as Chairman of the Board of Directors of European Silicon
Structures from its founding in 1985 until 1991. From 1967 to 1978 and from 1982
to 1985, Mr. Grand-Clement held various positions with Motorola, Inc., most
recently as Vice-President and Assistant General Manager of the Motorola
European Semiconductor Group from 1983 to 1985. From 1978 to 1982, Mr.
Grand-Clement was the Managing Director of Eurotechnique, a metal-oxide
semiconductor design and fabrication joint venture between National
Semiconductor and Saint-Gobain. Mr. Grand-Clement graduated from Ecole Nationale
Superieure des Telecommunications in Paris.
Dieter Mezger joined PixTech in March 1998 as President and was elected
Chief Executive Officer in January 1999. Between 1996 and 1998, Mr. Mezger
worked as a marketing consultant in California. Between 1990 and 1996, Mr.
Mezger was President of Compass Design Automation, a wholly owned subsidiary of
VLSI Technology, Inc. which develops and markets computer assisted design
software tools for integrated circuits designs. From 1984 to 1990, Mr. Mezger
established VLSI's European presence in Munich, building the European marketing
and sales organizations, design centers, research and development operations, as
well as its finance and human resources departments. Mr. Mezger simultaneously
built VLSI's wireless and Global System for mobile communication businesses.
Prior to joining VLSI, Mr. Mezger career included fifteen years with Texas
Instruments, where he rose to the position of Manager, Sales and Marketing,
Europe. He holds a BS in engineering from the University of Stuttgart.
Marie Boem was appointed Chief Financial Officer in February 2000. Prior to
joining PixTech, Mrs. Boem served as Director of Finance of Compass Design
Automation, a wholly owned subsidiary of VLSI Technology, Inc. which develops
and markets computer assisted design software tools for IC designs from 1991 to
1998. She has also held the positions of International and European Controller
for Compass. Mrs. Boem joined Compass from VLSI Technology, Inc. where she was
the Financial Controller for the Western Europe organization and for the
European Research and Development Center from 1987 to 1991. Prior to joining
VLSI, Mrs. Boem was Finance Controller with National Semiconductor, from 1984 to
1987. Mrs. Boem holds a Master of Professional Accountancy and a Bachelor Degree
in Business Administration from Toulouse University.
James J. Cathey has been our Vice President, Marketing and Business
Development since May 1999. Mr. Cathey served as Vice President Sales and
Marketing for the Display Division of Micron Technology, Inc., from 1994 to
1999. From 1991 to 1994 Mr. Cathey was Vice President Sales and Marketing for
G2, Inc., a software development company. From 1989 to 1991 he was key accounts
manager for Micron Technology's Memory applications group. Mr. Cathey holds a
BA in Marketing from Boise State University.
Donald E. Crim has been our Vice President, Manufacturing, Taiwan since
April 1999. From June 1988 to December 1995, Mr. Crim was senior vice president
wafer fabrication and technology at Silicon Systems, Inc. Over that period, he
grew the manufacturing activities to support sales growth from $100 million to
$400 million. His responsibilities included overseeing all semiconductor wafer
manufacturing, technology development and wafer foundry services. Additional
responsibilities included establishing outside foundry suppliers in Taiwan,
Japan, Korea, Singapore and USA. Since June 1998 and in 1996, Mr. Crim was a
consultant for several companies. His customers included IBM, Dallas
Semiconductor, Tower Semiconductor and others.
Michel Garcia, a founder of PixTech, is our Vice President, Chief
Technology Officer since July 2000. From August 1995 to June 2000, he had served
as our Vice President, Industrial Partners. From inception to August 1995, he
had served as Vice-President of Equipment Engineering. In 1986, Mr. Garcia
founded Microsolve, a semiconductor processing equipment company, which he
managed for five years. From 1981 to 1985, he served as operations manager at
Eurotechnique; from 1979 to 1981, he served as fab process manager at
Eurotechnique, and from 1977 to 1979 he served as a process engineer at
Motorola. In 1970, Mr. Garcia graduated from Ecole Nationale Superieure
d'Electronique et de Radioelectricite de Grenoble, and he received a degree of
Doctor of Microelectronics from Grenoble University.
PixTech, Inc.
(a development stage company)
Jean-Jacques Louart joined PixTech in May 1997 as Vice-President of
Operations. Mr. Louart served as Quality Director of LX Management, a consultant
agency, from 1995 to 1997. From 1993 to 1995, he was president of SIP, an
equipment engineering company. Prior to that, Mr. Louart spent 18 years with
IBM, holding process and manufacturing management positions. Mr. Louart
graduated from Ecole de l'Air and holds a management degree from CPA, Paris.
Andre Borrel was elected to our board of directors effective February 2,
2000. Mr. Borrel is a 33-year veteran of the semiconductor industry. He retired
in 1994 from Motorola as senior vice president and general manager of the
Communications, Power and Signal Technology Group, a $1.5 billion operation with
13,000 employees. Prior to that, Mr. Borrel held a number of management
positions with Motorola, including vice president of International Operations of
Motorola Semiconductor Sector from 1986 to 1990. Mr. Borrel currently serves on
the boards of directors of Mitel, a Canadian telecom and semiconductor company,
Chartered Semiconductor Manufacturing in Singapore and MiCS, Microchemical
Systems, a chemical sensor company in Switzerland.
Bruce Gnade was elected to our board of directors effective May 22, 2001.
Mr. Gnade served as a program manager at the Defense Advanced Research Projects
Agency, known as DARPA, from 1996 to 1999. Prior to DARPA, Mr. Gnade held
several positions with Texas Instruments including manager of the FED Technology
Development division. Mr. Gnade has served as the Chairman of the Department of
Materials Science at the University of North Texas in Denton, Texas since 1998.
He served as co-chair of the SPIE Conference on Liquid Crystal Materials,
Devices and Flat Panel Displays in January of 1999 and 2000 and participates on
the proposal review panel of the United States Civilian Research and Development
Foundation. From 1996 to 1998 he was a visiting scientist in the Department of
Materials and Nuclear Engineering at the University of Maryland. His areas of
expertise include electronic materials, display technology, materials
characterization and nuclear chemistry. Mr. Gnade holds a Ph.D. in Nuclear
Chemistry from Georgia Institute of Technology and a BA in Chemistry from St.
Louis University.
Ronald J. Ritchie was elected to our board of directors effective October
27, 1999. From 1998 to 1999 until its recent acquisition, Mr. Ritchie was
chairman of the board of VXI electronics, Inc., a private power conversion
company based in Oregon. From 1996 to 1998, Mr. Ritchie was president and chief
executive officer of Akashic Memories Corporation, a private manufacturer of
thin film, hard disk media used in disk drives. From 1994 to 1996, Mr. Ritchie
was a consultant for start-up or high-tech companies. Prior to that, Mr. Ritchie
held various senior executive positions with various multinational firms,
including Texas Instruments, from 1965 to 1992, where he begun his career and
rose to the position of vice president, Worldwide S/C Marketing. Mr. Ritchie
holds degrees from the Southern Methodist University and Stanford University.
Mr. Ritchie serves as a director of SBE, Inc., a company that provides
communications connectivity and application solutions for servers and other
communications systems.
John A. Hawkins served as one of our directors since 1994 through May 18,
2001, on which date he resigned from our board. Since August 1995, Mr. Hawkins
has been a managing partner of Generation Capital Partners, L.P., a private
equity firm. From 1992 until August 1995, Mr. Hawkins was a general partner of
various funds affiliated with Burr, Egan, Deleage & Co. He is currently a
limited partner of various funds associated with Burr, Egan, Deleage & Co. He
was an associate at Burr, Egan, Deleage & Co. from 1987 to 1992, prior to which
he was an associate with Alex Brown & Sons Incorporated. Mr. Hawkins is a
director of P-Com, Inc., a telecommunications company, and HotJobs.com, Ltd., an
internet recruiter. Mr. Hawkins holds degrees from Harvard College and Harvard
Business School.
PixTech, Inc.
(a development stage company)
COMMITTEES OF THE BOARD
The audit committee, which met 4 times during the fiscal year ended
December 31, 2000, is currently composed of two directors, Mr. Ritchie and Mr.
Borrel, both of whom are independent as defined by applicable NASDAQ listing
standards. The board of directors intends to appoint a third independent
director to the audit committee prior to June 14, 2001. The audit committee
selects and evaluates PixTech's independent auditors, reviews the audited
financial statements and discusses the adequacy of PixTech's internal controls
with management and the auditors. The audit committee operates under a written
charter adopted by the board, a copy of which was filed with the SEC along with
the definitive proxy statement for our 2001 annual meeting of stockholders.
The compensation committee, whose members in 2000 were Messrs. Hawkins and
Ritchie, acts for the board of directors with respect to our compensation
practices and their implementation. It sets and implements the compensation of
our officers and administers the amended and restated 1993 stock option plan and
the 1995 employee stock purchase plan. The compensation committee held 2
meetings in 2000. After Mr. Hawkins resignation, on May 18, 2001, the
compensation committee currently consists of Messrs. Borrel and Ritchie.
The entire board of directors functions as a nominating committee,
considering nominations submitted by the chairman of the board.
The board of directors held 4 meetings during 2000, and each director
attended at least 75% of the meetings of the board and of all committees of the
board on which he served.
DIRECTOR COMPENSATION
Director Fees
Non-employee directors are reimbursed for expenses incurred in attending
meetings, and they also receive $1,500 for each meeting of the board of
directors that they attend, plus an additional $4,000 if they attend at least
four meetings in a year. Such payments may not exceed a total of $10,000 in any
one-year. Messrs. Mezger and Grand-Clement are the only directors who are our
employees and they will not receive additional compensation for their services
as directors.
1995 Director Stock Option Plan
The 1995 director stock option plan provides that each director who is not
our employee and who is elected or re-elected into office following the annual
meeting of stockholders receives an automatic grant of options to purchase 6,000
shares of common stock. The options become exercisable in increments of 2,000
shares as follows: 2,000 shares on the grant date, and an additional 2,000
shares at each of the following two annual meetings of stockholders so long as
the director remains in office. The options expire ten years from the grant
date. The exercise price of each option is the fair market value of our common
stock on the day immediately preceding the grant date. In 2000, Andre Borrel
received a grant under the Director Plan of an option to purchase 6,000 shares
of our common stock.
The director plan authorizes the grant of stock options to purchase up to a
maximum of 50,000 shares, (subject to adjustment in the event of a stock split
or other recapitalization) of our common stock. Messrs. Hawkins, Ritchie and
Borrel are currently eligible to participate under the director plan. As of
March 31, 2001, options to purchase 26,000 shares of our common stock were
outstanding pursuant to the director plan.
Options granted under the director plan are not intended to qualify as
incentive stock options under the Internal Revenue Code. The exercise of an
option under the director plan results in ordinary income to the director and a
corresponding deduction for us, in each case equal to the difference between the
option price and the fair market value of the shares on the date of exercise.
PixTech, Inc.
(a development stage company)
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE (1)
The following table provides summary information on the cash compensation
and certain other compensation paid, awarded, or accrued by us and our
subsidiaries to or for our chief executive officer and each of our other four
most highly compensated executive officers for 2000.
Long-Term
Compensation
Name and Principal Position Annual Compensation (1) Awards
- ----------------------------------------- ------------------------------------------------ ------------
Year Salary ($) Other ($)
----------------------- ---------- ----------- Securities
Underlying
Options (#)
Dieter Mezger 2000 177,288 5,400 (2) 600,000
President and Chief Executive Officer 1999 180,000 300,000
1998 156,000 300,000
Donald Crim (3) 2000 161,827 76,860 (4) 250,000
Vice President, Taiwan Operations 1999 165,000 37,460 (4) 160,000
James J. Cathey (5) 2000 140,000 44,413 (6) 220,000
Vice President, Marketing and 1999 84,541 165,333 (6) 154,000
Business Development
Michel Garcia 2000 92,462 35,858 (7) 200,000
Vice President, Chief Technology Officer 1999 91,891 44,714 (7) 100,000
1998 101,728 53,808 (7)
Jean-Luc Grand-Clement 2000 112,141
Former President, Former Chief Executive 1999 133,329 100,000
Officer, Current Chairman of the Board
1998 192,246
<FN>
_________________________________
(1) Some dollar amounts shown for Messrs. Garcia and Grand-Clement reflect the
conversion of Euros to U.S. dollars at an average conversion rate for Euros
to U.S. dollars of 0.8992 in 1998, 0.9954 in 1999 and 1.075 in 2000.
(2) Automobile expenses.
(3) Mr. Crim joined PixTech in June 1999.
(4) In 2000, consisted in $76,860 daily expenses. In 1999, consisted in $32,460
daily expenses and $5,000 relocation expenses.
(5) Mr. Cathey joined PixTech in May 1999.
(6) In 2000, bonus in connection with the DARPA program contract. In 1999,
bonus in connection with the acquisition of Micron Technology, Inc.'s field
emission display division.
(7) In 2000, consisted of $31,787 daily expenses, $3,498 in rent and $573 in
automobile expenses. In 1999, consisted of $36,500 in daily expenses,
$6,500 in rent, and $1,714 in automobile expenses.
PixTech, Inc.
(a development stage company)
STOCK OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information on stock options granted during
2000 to the executive officers named in the summary compensation table.
Number of % of Total
Securities Options Potential Realized Value at
Underlying Granted to Assumed Annual Rates of Stock
Options Employees Exercise Price Expiration Price Appreciation for Option
-----------------------------
Name Granted (#) in 2000 ($/share) Date Term ($) (1)
- ---------------------- ----------- --------------- ---------- -----------------------------
Dieter Mezger 400,000 (2) 22.45 2.083 01/18/10 554,618 1,376,669
200,000 (3) 2.250 10/30/10 283,003 717,184
Donald Crim 150,000 (4) 9.36 2.083 01/18/10 207,982 516,251
100,000 (5) 2.250 10/30/10 141,501 358,592
James J. Cathey 120,000 (6) 8.23 2.083 01/18/10 166,385 413,001
100,000 (7) 2.250 10/30/10 141,501 358,592
Michel Garcia 100,000 (8) 7.49 2.083 01/18/10 138,655 344,167
100,000 (9) 2.250 10/30/10 141,501 358,592
Jean-Luc Grand-Clement -- -- -- -- -- --
<FN>
______________________________
(1) The dollar amounts under these columns are the result of calculations at the 5% and 10% appreciation
rate set by the Securities and Exchange Commission of a value for the common stock equal to the market
price of the common stock on the date of grant of the option. These amounts are not intended to
forecast possible future appreciation, if any, in the price of the common stock.
(2) This option vests as to 400,000 shares on January 18, 2005. The exercisability of 133,334 of these
shares shall be accelerated at any time after the price of the stock has been at $6.00 for
three consecutive months; the exercisability of 133,333 of the shares shall be accelerated at any
time after the production output at Unipac has reached 2,500 displays in one month, and the
exercisability of the 133,333 remaining shares shall be accelerated at any time after the date a
cumulative net product billing of $5 million has been reached, starting from January 1, 2000.
(3) This option vests as to 200,000 shares on October 30, 2005. The exercisability of 80,000 of such
shares will be accelerated upon the achievement of the 2001 product revenue goal for first six
months for January-June 2001. The exercisability of 80,000 additional shares will be accelerated
upon the achievement of the 2001 product revenue goal for second six months for July-December 2001.
The exercisability of 40,000 remaining shares shall be accelerated upon the occurrence of an average
closing price of our common stock of at least $6 for any three consecutive months.
(4) This option vests as to 150,000 shares on January 18, 2005. The exercisability of 75,000 of these
shares shall be accelerated at any time after the achievement of a 3 months production output at
Unipac of 1,000 units per month, and the exercisability of the remaining 75,000 shares shall be
accelerated at any time after a 3 months production output at Unipac of 2,500 units per month.
(5) This option vests as to 100,000 shares on October 30, 2005. The exercisability of 33,334 of such
shares shall be accelerated upon the achievement of a 45% overall yield for 4 weeks. The
exercisability of 33,333 shares will be accelerated upon the achievement of a 60% overall yield for 4
weeks. The exercisability of the 33,333 remaining shares shall be accelerated upon the occurrence of
an average closing price of our common stock of at least $6 for any three consecutive months.
(6) This option vests as to 120,000 shares on January 18, 2005. The exercisability of 40,000 of these
shares shall be accelerated at any time after completion of invoicing of the DARPA 2000 program
with minimum $6 million; the exercisability of 40,000 of the shares shall be accelerated at any time
after entering orders representing cumulative $5 million revenue, starting January 1, 2000, with firm
delivery dates, and the exercisability of the remaining 40,000 shares shall be accelerated at any time
after entering orders representing cumulative $20 million revenue, starting January 1, 2000, with firm
delivery dates.
(7) This option vests as to 100,000 shares on October 30, 2005. The exercisability of 33,334 of such shares
shall be accelerated upon the occurrence of a $5 million 5.2 inch monochrome display revenue. The
exercisability of 33,333 additional shares shall be accelerated upon the occurrence of a $20 million
5.2 inch monochrome display and 7 inch color display revenue. The exercisability of the remaining
33,333 shares shall be accelerated upon the occurrence of an average closing price of our common stock
of at least $6 for any three consecutive months.
(8) This option vests in four equal installments on July 18, 2001, July 18, 2002, July 18, 2003 and July
18, 2004.
(9) This option vests as to 100,000 shares on October 30, 2005. The exercisability of 33,334 of such shares
shall be accelerated upon the achievement of 5,000 hours lifetime of monochrome 5.2 inch display
with less than 5% differential aging. The exercisability of 33,333 additional shares shall be
accelerated upon the achievement of the same results on the 7-inch color display. The exercisability
of the remaining 33,333 shares shall be accelerated upon the occurrence of an average closing price
of our common stock of at least $6 for any three consecutive months.
PixTech, Inc.
(a development stage company)
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR-END STOCK OPTION VALUES
The following table sets forth certain information concerning the
exercisable and unexercisable stock options as of December 31, 2000, held by
executive officers named in the summary compensation table.
Shares
Acquired Number of Securities Value of Unexercised
On Exercise Value Realized Underlying Unexercised Options In-The Money Options
Name (#) ($) at 12/31/00 (#) at 12/31/00 ($) (1)
- ---------------------- ------------ --------------------- ------------------------------- --------------------------
Exercisable Unexercisable Exercisable Unexercisable
------------ --------------------- -------------- --------------- ----------- -------------
Dieter Mezger 100,000 682,380 462,500 637,500 0 0
Donald Crim 20,000 147,919 40,000 350,000 0 0
James J. Cathey -- -- 77,000 297,000 0 0
Michel Garcia 50,000 432,405 108,605 308,500 0 0
Jean-Luc Grand-Clement -- -- 637,711 173,750 0 0
<FN>
_________________________________
(1) Based on the difference between the respective option exercise price and the closing market price of our common
stock on December 31, 2000, which was $1.094.
EXECUTIVE EMPLOYMENT AGREEMENTS
Each of Messrs. Grand-Clement, Garcia and Louart have entered into
employment agreements in substantially the same form as most of the Company's
other employees. The material terms of the employment agreements provide for
employment by each individual for an indefinite period. Pursuant to the
employment agreements, each individual agrees to non-competition and
non-solicitation provisions, which survive for a one-year period following
termination of employment. The employment agreements also contain obligations of
each employee concerning confidentiality and assignment of inventions and
intellectual property to PixTech. Messrs. Mezger, Crim and Cathey have entered
into employment agreements providing for employment for an indefinite period,
non-competition and non-solicitation for one year following termination, and
confidentiality provisions. However, Mr. Mezger's employment agreement includes
the following provisions: (i) upon a change of control all of Mr. Mezger's
options accelerate and vest, (ii) upon termination of Mr. Mezger's employment by
PixTech without cause, Mr. Mezger's options accelerate and vest and PixTech is
obligated to pay Mr. Mezger a lump sum equal to two years base salary, and (iii)
upon termination of Mr. Mezger's employment by Mr. Mezger due to a demotion or a
decrease in base salary, PixTech is obligated to pay Mr. Mezger a lump sum equal
to two years base salary. Mr. Cathey's employment agreement includes the
following provisions: (i) upon a change of control all of Mr. Cathey's options
accelerate and vest, (ii) upon termination of Mr. Cathey's employment by PixTech
without cause, PixTech is obligated to pay Mr. Cathey a lump sum equal to six
month base salary plus any benefits to which he is entitled to. Mr. Crim's
employment agreement includes the following provisions (i) all options will vest
in case of change of majority ownership of PixTech, (ii) upon termination of Mr.
Crim's employment by Pixtech without cause, Mr. Crim will be entitled to a one
time payment equal to six month salary and his stock options will continue to
vest for 12 months.
PixTech, Inc.
(a development stage company)
SHARE OWNERSHIP
The following tables set forth certain information regarding the ownership
of our common stock and series E preferred stock as of March 28, 2001 by (i)
persons known by us to be beneficial owners of more than 5% of our common stock
and series E preferred stock, (ii) our executive officers, (iii) our directors,
and (iv) all of our current executive officers and directors as a group:
COMMON STOCK
BENEFICIAL OWNER
- ---------------- SHARES OF
COMMON STOCK
BENEFICIALLY
OWNED (1) PERCENT OF
SHARES CLASS
-------------- ------------
Unipac Optoelectronics Corporation 12,427,146 (1) 22.1%
No. 5 Hsin Road VI
Science Based Industrial Park
Hsin Chu City, Taiwan, R.O.C.
United Microelectronics Corporation 9,883,470 (2) 17.6%
2F, NO. 76 SEC 2,
Tunhwa S. RD.,
Taipei, Taiwan, R.O.C.
Micron Technology, Inc. 7,443,562 (3) 13.2%
8000 South Federal Way
Boise, Idaho 83716-9632
Jean-Luc Grand-Clement 653,428 (4) 1.2%
Dieter Mezger 550,000 (5) 1.0%
Michel Garcia 148,366 (6) *
Marie Boem 71,667 (7) *
James Cathey 82,000 (8) *
Don Crim 40,000 (9) *
John A. Hawkins 6,000 (10) *
Ronald J. Ritchie 4,000 (11) *
Andre Borrel 4,000 (12) *
All directors and executive officers 1,559,461 2.7%
As a group (10 persons)
<FN>
________________________________________
* Less than one percent
(1) Except as otherwise indicated in these footnotes, the persons and entities
named in the table have sole voting and investment power with respect to
all shares beneficially owned by them. Share ownership information includes
shares of common stock issuable pursuant to outstanding options, which may
be exercised within 60 days after March 28, 2001.
(2) Excludes 12,427,146 shares held by Unipac. In a Schedule 13D/A filed with
the Securities and Exchange Commission on November 22, 1999, United
Microelectronics stated its view that Unipac's shares need not be
aggregated with its shares.
(3) Consists of 7,133,562 shares of common stock and a warrant to purchase
310,000 shares of common stock exercisable until May 19, 2001.
(4) Consists of shares of common stock subject to options exercisable as of
March 28, 2001 or within 60 days thereafter, 6,967 are subject to options
held by Mr. Grand-Clement's wife.
(5) Consists of 50,000 shares of common stock and of 500,000 shares of common
stock subject to options exercisable as of March 28, 2001 or within 60 days
thereafter.
(6) Consists of 12,261 shares of Common Stock and of 136,105 shares of Common
Stock subject to options exercisable as of March 28, 2001 or within 60 days
thereafter.
(7) Consists of 5,000 shares of common stock and 66,667 shares of Common
Stock subject to options exercisable as of March 28, 2001 or within 60 days
thereafter.
(8) Consists of 5,000 shares of common stock and 77,000 shares of Common Stock
subject to options exercisable as of March 28, 2001 or within 60 days
thereafter.
(9) Consists of 40,000 shares of Common Stock subject to options exercisable as
of March 28, 2001 or within 60 days thereafter.
(10) Consists of 6,000 shares of common stock subject to options exercisable as
of March 28, 2001 or within 60 days thereafter.
(11) Consists of 4,000 shares of common stock subject to options exercisable as
of March 28, 2001 or within 60 days thereafter.
(12) Consists of 4,000 shares of common stock subject to options exercisable as
of March 28, 2001 or within 60 days thereafter.
SERIES E PREFERRED STOCK
SHARES OF SERIES E PREFERRED STOCK BENEFICIALLY OWNED
-----------------------------------------------------
BENEFICIAL OWNER SHARES PERCENT OF CLASS
- ----------------------------- ------------------------ ---------------------------
Banque Generale du Luxembourg 3,329 (1) 100
<FN>
(1) As of March 28, 2001, these shares of series E stock would have been
convertible into 80,626 shares of common stock.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
We lease a total of approximately 73,000 square feet (7,300 square meters)
of space from Micron Technology, Inc. in Boise, Idaho, under a three-year lease
expiring in May 2002 at a monthly rent of $25,000 per month. The lease is
renewable for an additional term of three years. This rented space includes a
clean room devoted to our research and development activities. Micron is a
greater than ten percent shareholder of PixTech.
In May 1997, we entered into a Foundry Agreement with Unipac, a Taiwanese
liquid crystal display manufacturer, in order to accelerate the time to
manufacturing and to reduce the huge investment costs needed for a volume
production of our field emission displays. This agreement will terminate on
December 31, 2005. We have granted Unipac a non-exclusive right and license,
without the right to grant sublicenses, under all of PixTech's intellectual
property rights, to make and sell FED devices only to PixTech and its industrial
partners and their respective affiliates. Unipac has acquired at its own expense
the key equipment for use in connection with FED devices and PixTech may use
equipment belonging to Unipac. In addition to and independently of the charges
for FED components and devices under the agreement, PixTech pays Unipac a
monthly service fee of approximately NTD 20 million. Unipac is a greater than
ten percent shareholder of PixTech.
PixTech, Inc.
(a development stage company)
SELLING STOCKHOLDERS
The following table sets forth certain information regarding beneficial
ownership of our common stock by Kingsbridge and Sumitomo as of April 30, 2001:
Name and Address of Number of Shares of Common Remaining Number of Number of Shares of
Stockholder Stock Beneficially Owned Shares of Common Stock Common Stock
Prior to the Offering Offered Hereby Beneficially Owned
Following the Offering
Number Per Cent Number Per Cent
------------- ----------- ---------- -----------
Sumitomo Corporation 0 -- 0 0 --
1-2-2 Hitotsubashi, Chiyoda-Ku
Tokyo, 100 Japan (1)
Kingsbridge Capital Limited 240,084 (3) (4) 12,371,896 0 (5) 0
Dawson Building
Main Street
Road Town
Tortola,
British Virgin Islands(2)
<FN>
(1) Sumitomo has completed its sales under this prospectus.
(2) The natural person controlling Kingsbridge Capital Limited is Valentine O'Donoghue.
(3) Includes 100,000 shares of common stock issuable pursuant to the Kingsbridge warrant.
(4) Less than 1%.
(5) Assumes that all shares acquired pursuant to the equity line agreement and the warrant are sold pursuant to this
prospectus. Kingsbridge has not had any material relationship with us or our affiliates other than as a result
of the ownership of common stock or as a result of the negotiation and the execution of the equity line agreement.
The shares offered hereby are to be acquired by Kingsbridge pursuant to the equity line agreement or upon exercise
of the warrant.
PixTech, Inc.
(a development stage company)
DESCRIPTION OF CAPITAL STOCK
Our authorized capital stock of consists of 100,000,000 shares of common
stock, and 1,000,000 shares of preferred stock.
The following summary of certain provisions of the common stock and
preferred stock does not purport to be complete and is subject to, and qualified
in its entirety by, the provisions of our restated certificate of incorporation
and our amended and restated by-laws and by the provisions of applicable law.
COMMON STOCK
Holders of common stock are entitled to one vote per share on matters to be
voted upon by the stockholders. There are no cumulative voting rights. Holders
of common stock are entitled to receive ratable dividends when declared by our
board of directors. Upon the liquidation, dissolution or winding up of PixTech,
holders of common stock share ratably in PixTech's assets available for
distribution to our stockholders, subject to the preferential rights of any
preferred stock. The common stock outstanding upon the effective date of this
prospectus is fully paid and nonassessable. As of April 27, 2001, 56,045,198
shares of our common stock are issued and outstanding, and 520,000 were reserved
for issuance upon the exercise of certain outstanding warrants and approximately
5,336,045 were reserved for issuance pursuant to stock option plans and employee
stock purchase plans.
We have issued a warrant to Micron to purchase an aggregate of 310,000
shares of our common stock at $2.25313 per share.
We are obligated to issue a warrant to purchase 35,000 shares of our common
stock to Needham & Company, Inc., in connection with an agreement for financial
advisory services, which is exercisable at a price of $2.26 per share and
expires on May 10, 2004.
We are obligated to issue a warrant to purchase 75,000 shares of our common
stock to Josephthal and Co, in connection with an agreement for financial
advisory services, which is exercisable at a price of $2.26 per share and
expires on June 17, 2004.
In addition, we have issued a warrant to Kingsbridge to purchase 100,000
shares of our common stock at $2.30 per share, which expires on February 6,
2003.
PREFERRED STOCK
In December 1998, we issued 367,269 shares of series E stock, at a price of
$22.5313 per share, to certain institutional investors. The series E stock is
generally convertible into our common stock at a rate equal to the lesser of (a)
$1.60938, and (b) the average closing price of our common stock over the ten
trading day ending period ending on the day immediately preceding the day upon
conversion.
There currently are 500,000 shares of preferred stock designated as series
E stock, 3,329 shares of which are currently outstanding. The holders of series
E stock will receive cumulative compounding dividends, if declared, at the rate
of six percent per year which we may pay with additional shares of common stock
upon conversion of the series E stock. In addition, we are required to pay an
additional dividend equal to the higher of (a) two percent per year, pro rated
on the basis of twelve 30-day months and a 360-day year, for the number of days
that our common stock has a closing bid price that is less than $2.25313 and (b)
four percent per year, pro rated on the basis of twelve 30-day months and a
360-day year, for the number of days that our common stock has a closing bid
price that is less than $1.12657.
Our board of directors has the authority to issue 500,000 shares of
additional preferred stock in one or more series and to fix the relative rights,
preferences, privileges, qualifications, limitations and restrictions, including
dividend rights, dividend rates, conversion rights, voting rights, terms of
redemption, redemption prices, liquidation preferences and the number of shares
constituting any series or the designation of such series, without further vote
or action by the stockholders. Our board of directors could, without the
approval of the stockholders, issue preferred stock having voting or conversion
rights that could adversely affect the voting power of the holders of common
stock, and the issuance of preferred stock could be used, under certain
circumstances, to render more difficult or discourage a hostile takeover of
PixTech. We have no present plans to issue any additional shares of preferred
stock.
PixTech, Inc.
(a development stage company)
ANTI-TAKEOVER MEASURES
In addition to the directors' ability to issue shares of preferred stock in
one or more series, our restated certificate of incorporation and by-laws
contain several other provisions that are commonly considered to have an
anti-takeover effect. Our restated certificate includes a provision classifying
our board of directors into three classes with staggered three-year terms, a
provision prohibiting stockholder action by written consent except as otherwise
provided by law and a provision requiring 70% stockholder approval for certain
acquisitions, including a merger consolidation, sale or other disposition of all
or substantially all of our assets, which has not been approved by a majority of
the independent members of our board of directors. Under our restated
certificate and by-laws, the directors may enlarge the size of our board and
fill any vacancies on the board. Our by-laws provide that nominations for
directors may not be made by stockholders at any annual or special meeting
unless the stockholder intending to make a nomination notifies us of its
intention a specified period in advance and furnishes certain information. Our
by-laws also provide that special meetings of our stockholders may be called
only by the President or the directors and require advance notice of business to
be brought by a stockholder before the annual meeting.
We are subject to the provisions of Section 203 of the Delaware General
Corporation Law, a law regulating corporate takeovers. In certain circumstances,
the Anti-Takeover Law prevents certain Delaware corporations, including those
whose securities are listed on the Nasdaq National Market, from engaging in a
"business combination" with an "interested stockholder" for three years
following the date on which this stockholder became an "interested stockholder"
subject to certain exceptions, unless the transaction is approved by the board
of directors and the holders of at least 66 2/3% of the outstanding voting stock
of the corporation, excluding shares held by the interested stockholder.
Engaging in a business combination includes a merger or sale of more than ten
percent of the corporation's assets, and an interested stockholder is a
stockholder who owns 15% or more of the corporation's outstanding voting stock.
The statutory ban does not apply if, upon consummation of the transaction in
which any person becomes an interested stockholder, the interested stockholder
owns at least 85% of the outstanding voting stock of the corporation, excluding
shares held by persons who are both directors and officers or by certain
employee stock plans. A Delaware corporation subject to the Anti-Takeover Law
may "opt out" of the Anti-Takeover Law with an express provision either in its
certificate of incorporation or by-laws resulting from a stockholders' amendment
approved by at least a majority of the outstanding voting shares; such an
amendment is effective following expiration of twelve months from adoption. We
have not "opted out" of the Anti-Takeover Law.
The provisions of the restated certificate of incorporation and by-laws and
Delaware law described above could have the effect of discouraging others from
attempting hostile takeovers of PixTech and, as a consequence, they may also
inhibit temporary fluctuations in the market price of our common stock that
might result from actual or rumored hostile takeover attempts. These provisions
may also have the effect of preventing changes in our management. It is possible
that these provisions could make it more difficult to accomplish transactions,
which stockholders may otherwise deem to be in their best interests.
TRANSFER AGENT
The transfer agent and registrar for our common stock is American Stock
Transfer & Trust Company.
PixTech, Inc.
(a development stage company)
PLAN OF DISTRIBUTION
To the extent required under the Securities Act, a supplemental prospectus
will be filed, disclosing (a) the name of any broker-dealers; (b) the number of
shares of common stock involved; (c) the price at which this common stock is to
be sold; (d) the commissions paid or discounts or concessions allowed to these
broker-dealers, where applicable; (e) that these broker- dealers did not conduct
any investigation to verify the information set out or incorporated by reference
in this prospectus, as supplemented; and (f) other facts material to the
transaction.
Under applicable rules and regulations under the Exchange Act, any person
engaged in a distribution of the common stock may not simultaneously engage in
market making activities with respect to the securities for a period beginning
when the person becomes a distribution participant and ending upon the person's
completion of participation in a distribution, including stabilization
activities in the common stock to effect covering transactions, to impose
penalty bids or to effect passive market making bids. In addition and without
limiting the foregoing, in connection with transactions in the common stock,
PixTech and the selling stockholders will be subject to applicable provisions of
the Exchange Act and the rules and regulations under it, including, without
limitation, Rule 10b-5 and, insofar as PixTech and the selling stockholders are
distribution participants, Regulation M and Rules 100, 101, 102, 103, 104 and
105 thereof. All of the foregoing may affect the marketability of the common
stock.
KINGSBRIDGE
We have been advised by Kingsbridge that it may sell the common stock from
time to time in transactions on the Nasdaq National Market (or any exchange
where the common stock is then listed) in negotiated transactions, or otherwise,
or by a combination of these methods, at fixed prices which may be changed, at
market prices at the time of sale, at prices related to market prices or at
negotiated prices. Kingsbridge may effect these transactions by selling the
common stock to or through broker-dealers, who may receive compensation in the
form of discounts, concessions or commissions from Kingsbridge or the purchasers
of the common stock for whom the broker-dealer may act as an agent or to whom it
may sell the common stock as a principal, or both. The compensation to a
particular broker-dealer may be in excess of customary commissions.
Kingsbridge is an "underwriter" within the meaning of the Securities Act in
connection with the sale of the common stock offered hereby. Assuming that we
are in compliance with the conditions of the equity line agreement, Kingsbridge
must accept puts of shares from us, subject to minimum and maximum aggregate
dollar amounts, during the term of the equity line agreement. Broker-dealers who
act in connection with the sale of the common stock may also be deemed to be
underwriters. Profits on any resale of the common stock as a principal by these
broker-dealers and any commissions received by these broker-dealers may be
deemed to be underwriting discounts and commissions under the Securities Act.
Any broker-dealer participating in these transactions as agent may receive
commissions from Kingsbridge (and, if they act as agent for the purchaser of
this common stock, from this purchaser). Broker-dealers may agree with
Kingsbridge to sell a specified number of shares of common stock at a stipulated
price per share, and, to the extent the a broker- dealer is unable to do so
acting as agent for Kingsbridge, to purchase as principal any unsold common
stock at the price required to fulfill the broker-dealer commitment to
Kingsbridge. Broker-dealers who acquire common stock as principal may thereafter
resell the common stock from time to time in transactions (which may involve
crosses and block transactions and which may involve sales to and through other
broker-dealers, including transactions of the nature described above) in the
over-the-counter market, in negotiated transactions or otherwise at market
prices prevailing at the time of sale or at negotiated prices, and in connection
with these resales may pay to or receive from the purchasers of the common stock
commissions computed as described above.
Kingsbridge has agreed that it will not engage in short sales of our common
stock except for three days after it receives notice of the company's intent to
put common stock.
Any short sales by Kingsbridge may be covered only with shares of common
stock issued to Kingsbridge pursuant to the equity line agreement.
PixTech, Inc.
(a development stage company)
Kingsbridge will pay all commissions and certain other expenses associated
with the sale of the common stock. The common stock offered hereby is being
registered pursuant to our contractual obligations, and we have agreed to pay
the costs of registering the shares hereunder, including legal fees up to a
maximum of $5,000, commissions, transfer taxes and certain other expenses for
resale of the common stock. We have also agreed to indemnify Kingsbridge with
respect to the common stock offered hereby against certain liabilities,
including, without limitation, certain liabilities under the Securities Act, or,
if this indemnity is unavailable, to contribute toward amounts required to be
paid in respect of these liabilities.
We have also agreed to reimburse Kingsbridge for costs and expenses
incurred in connection with this offering. These may include the fees, expenses
and disbursements of counsel for Kingsbridge for the preparation of the equity
line agreement and associated documentation and the registration statement of
which this prospectus forms a part, up to a maximum of $5,000. In addition, we
have agreed to reimburse Kingsbridge for expenses incurred in obtaining
insurance against liability under the Securities Act of 1933 and Securities
Exchange Act of 1934, as amended, in an amount initially equal to 3% of each put
amount.
The price at which the common stock will be issued by us to Kingsbridge
will be 88-90% of the market price, as defined in the equity line agreement, on
the date we issue shares. Assuming an offering price of $1.135 per share (based
on the average of the high and low bid prices of the common stock as reported by
the Nasdaq National Market on April 30, 2001), underwriting compensation is as
follows:
- discount to Kingsbridge, $0.1362 per share;
- warrant to purchase 100,000 shares of common stock exercisable by
Kingsbridge at $2.30 per share;
- costs associated with the preparation of this prospectus,
approximately $80,000; and
- reimbursement for securities liability insurance equal to 3% of each
put amount.
SUMITOMO
Sumitomo held a note in the principal amount of $5,000,000, the entire
amount of which has been converted into our common stock and sold. Therefore,
Sumitomo will not sell additional shares under this prospectus.
PixTech, Inc.
(a development stage company)
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the Securities and Exchange Commission, Washington, D.C.
20549, two post-effective amendments to the registration statement on Form S-1
under the Securities Act with respect to the shares of common stock offered by
this prospectus. This prospectus does not contain all of the information set
forth in the registration statement and the exhibits and schedules thereto. For
further information with respect to PixTech and the common stock offered by this
prospectus, refer to the registration statement and the accompanying exhibits
and schedules. Statements contained in this prospectus as to the contents of any
contract or any other document referred to are not necessarily complete, and in
each instance you should refer to the copy of the contract or other document
filed as an exhibit to the registration statement. A copy of the registration
statement may be inspected without charge at the offices of the SEC in
Washington, D.C. 20549, and copies of all or any part of the registration
statement may be obtained from the Public Reference Section of the SEC,
Washington, D.C. 20549 upon the payment of the fees prescribed by the SEC. The
SEC maintains a web site (http://www.sec.gov) that contains reports, proxy and
information statements and other information regarding registrants, such as us,
that file electronically with the Commission. We also maintain a web site
(http://www.pixtech.com), which is not a part of this prospectus.
LEGAL MATTERS
Palmer & Dodge LLP, Boston, Massachusetts, counsel to PixTech, is giving
PixTech an opinion on the validity of the shares covered by this prospectus.
Richard B. Smith, a partner at Palmer & Dodge LLP, is our secretary.
EXPERTS
Ernst & Young Audit, independent auditors, have audited our consolidated
financial statements at December 31, 2000 and 1999, and for the three years in
the period ended December 31, 2000, as set forth in their report. We have
included our financial statements in the prospectus and elsewhere in the
registration statement in reliance on Ernst & Young Audit's report, given on
their authority as experts in accounting and auditing.
PixTech, Inc.
(a development stage company)
INDEX TO FINANCIAL STATEMENTS
PAGE
----
Report of Independent Auditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Consolidated Balance Sheets at December 31, 2000, 1999 and March 31, 2001(unaudited) . . . . . . . . . 48
Consolidated Statements of Comprehensive Operations for the years ended December 31, 2000, 1999, 1998,
for the three months ended March 31, 2001 and 2000 (unaudited) and the period from June 18, 1992 (date
of inception) through March 31, 2001 (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Consolidated Statements of Stockholders' Equity (Deficit) for the years ended December 31, 2000, 1999,
1998, for the three months ended March 31, 2001 and 2000 (unaudited) and the period from June 18, 1992
(date of inception) through March 31, 2001 (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . 50
Consolidated Statements of Cash Flows for the years ended December 31, 2000, 1999, 1998, for the three
months ended March 31, 2001 and 2000 (unaudited) and the period from June 18, 1992 (date of inception)
through March 31, 2001 (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
PixTech, Inc.
(a development stage company)
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Shareholders
PixTech, Inc.
We have audited the accompanying consolidated balance sheets of PixTech,
Inc. (a development stage company) as of December 31, 1999 and 2000 and the
related consolidated statements of operations, shareholders' equity, and cash
flows for the period from June 18, 1992 (date of inception) through December 31,
2000, and for each of the three years in the period ended December 31, 2000.
These financial statements are the responsibility of PixTech's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
PixTech, Inc. (a development stage company) as of December 31, 1999 and 2000 and
the consolidated results of its operations and its cash flows for the period
June 18, 1992 (date of inception) through December 31, 2000 and for each of the
three years in the period ended December 31, 2000 in conformity with accounting
principles generally accepted in the United States.
Ernst & Young AUDIT
Represented by: Christine Blanc-Patin
Marseille
March 05, 2001
PixTech, Inc.
(a development stage company)
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
DECEMBER 31, DECEMBER 31, MARCH 31,
1999 2000 2001
-------------- -------------- ------------
(UNAUDITED)
-------------- -------------- ------------
ASSETS
Current assets:
Cash & cash equivalents available . . . . . . . . . . . . . . . $ 14,663 $ 16,847 $ 10,446
Restricted cash - short term. . . . . . . . . . . . . . . . . . 1,667 833 833
Accounts receivable:
Trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 148 94
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . 709 596 794
Inventories
Raw Materials . . . . . . . . . . . . . . . . . . . . . . . 1,109 1,019 1,236
Finished Goods. . . . . . . . . . . . . . . . . . . . . . . -- 41 37
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . 651 737 708
-------------- -------------- ------------
Total current assets. . . . . . . . . . . . . . . . . . . . 18,856 20,221 14,148
Restricted cash - long term . . . . . . . . . . . . . . . . . . . . 5,833 417 208
Property, plant and equipment, net . . . . . . . . . . . . . . . . 24,933 19,014 17,152
Goodwill, net . . . . . . . . . . . . . . . . . . . . . . . . . 78 6 --
Deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . 1,255 -- --
Other assets - long term. . . . . . . . . . . . . . . . . . . . . . 214 58 55
-------------- -------------- ------------
Total assets. . . . . . . . . . . . . . . . . . . . . . . . $ 51,169 $ 39,716 $ 31,563
============== ============== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long term debt . . . . . . . . . . . . . . . $ 8,128 $ 1,146 $ 894
Current portion of capital lease obligations . . . . . . . . . 2,455 157 101
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . 7,548 7,885 6,586
Accrued expenses. . . . . . . . . . . . . . . . . . . . . . . . 2,135 1,612 1,638
-------------- -------------- ------------
Total current liabilities . . . . . . . . . . . . . . . . . 20,266 10,800 9,219
Deferred revenue. . . . . . . . . . . . . . . . . . . . . . . . . . 248 580 1,078
Long term debt, less current portion. . . . . . . . . . . . . . . . 3,075 2,962 2,725
Capital lease obligation, less current portion. . . . . . . . . . . 7,644 5,133 5,169
Other long term liabilities, less current portion . . . . . . . . . 52 37 35
-------------- -------------- ------------
Total liabilities . . . . . . . . . . . . . . . . . . . . . 31,285 19,512 18,226
============== ============== ============
STOCKHOLDERS' EQUITY
Convertible preferred stock Series E, $0.01 par value, authorized
shares-1,000,000; issued and outstanding shares-297,269 ; 22,095 and
3,029 respectively . . . . . . . . . . . . . . . . . . . . . . . . . 3 1 1
Common stock, $0.01 par value, authorized shares-60,000,000 and
100,000,000 respectively; issued and outstanding shares-37,351,283;
55,682,464 and 56,045,198 respectively .. . . . . . . . . . . . . . 373 557 560
Additional paid-in capital . . . . . . . . . . . . . . . . . . . 105,081 131,983 132,037
Cumulative translation adjustment .. . . . . . . . . . . . . . . (2,988) (4,076) (3,929)
Deficit accumulated during development stage . . . . . . . . . . (82,585) (108,261) (115,332)
-------------- -------------- ------------
Total stockholders' equity . . . . . . . . . . . . . . . . . 19,884 20,204 13,337
-------------- -------------- ------------
Total liabilities and stockholders' equity . . . . . . . . . $ 51,169 $ 39,716 $ 31,563
============== ============== ============
See accompanying notes.
PixTech, Inc.
(a development stage company)
CONSOLIDATED STATEMENTS OF COMPREHENSIVE OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Period from
June 18,
1992 (date
of inception)
Year Ended Three Months Ended through
December 31, March 31, March 31,
------------------------------- -------------------------- ------------
1998 1999 2000 2000 2001 2001
--------- --------- --------- ------------ ------------ ------------
(unaudited) (unaudited) (unaudited)
Revenues
Cooperation & license revenues . . . . . . . . . $ 1,239 $ -- $ -- $ -- $ -- $ 26,449
Product sales . . . . . . . . . . . . . . . . . 445 484 331 86 51 3,692
Other revenues . . . . . . . . . . . . . . . . . 1,968 4,908 6,009 1,904 1,098 17,921
--------- --------- --------- ------------ ------------ ------------
Total revenues . . . . . . . . . . . . . . . 3,652 5,392 6,340 1,990 1,149 48,062
--------- --------- --------- ------------ ------------ ------------
Cost of revenues
License fees and royalties . . . . . . . . . . . 24 (361) (310) (88) (3) (2,190)
--------- --------- --------- ------------ ------------ ------------
Gross margin. . . . . . . . . . . . . . . . . . . . . 3,676 5,031 6,030 1,902 1,146 45,872
--------- --------- --------- ------------ ------------ ------------
Operating expenses
Research and development:
Acquisition of intellectual property rights (125) (75) (57) (57) -- (5,022)
Other. . . . . . . . . . . . . . . . . . . . (19,289) (27,181) (29,514) (7,794) (7,196) (136,419)
--------- --------- --------- ------------ ------------ ------------
(19,414) (27,256) (29,571) (7,851) (7,196) (141,441)
Marketing & sales . . . . . . . . . . . . . . . . (1,433) (1,279) (1,105) (313) (200) (9,191)
Administrative & general expenses . . . . . . . . (2,515) (2,983) (2,769) (813) (760) (19,328)
--------- --------- --------- ------------ ------------ ------------
(23,362) (31,518) (33,445) (8,977) (8,156) (169,960)
--------- --------- --------- ------------ ------------ ------------
Loss from operations. . . . . . . . . . . . . . . . (19,686) (26,487) (27,415) (7,075) (7,010) (124,088)
Other income / (expense)
Interest income . . . . . . . . . . . . . . . . . 828 800 1,297 338 190 5,135
Interest expense. . . . . . . . . . . . . . . . . (1,536) (1,664) (605) (309) (87) (5,103)
Foreign exchange gains / (losses) . . . . . . . . 372 (1,076) 857 359 (190) 617
Other revenues / (expenses) . . . . . . . . . . . -- -- 188 -- 26 214
--------- --------- --------- ------------ ------------ ------------
(336) (1,940) 1,737 388 (61) 863
Loss before income tax benefit. . . . . . . . . . . . (20,022) (28,427) (25,678) (6,687) (7,071) (123,225)
Income tax benefit. . . . . . . . . . . . . . . . . . 2,159 -- -- -- -- 7,893
--------- --------- --------- ------------ ------------ ------------
Net loss. . . . . . . . . . . . . . . . . . . . . . . $(17,863) $(28,427) $(25,678) $ (6,687) $ (7,071) $ (115,332)
========= ========= ========= ============ ============ ============
Dividend accrued to holders of Preferred Stock . . . (12) (513) (116) (89) (3) (644)
--------- --------- --------- ------------ ------------ ------------
Net loss to holders of Common stock . . . . . . . . . $(17,875) $(28,940) $(25,794) $ (6,776) $ (7,074) $ (115,976)
========= ========= ========= ============ ============ ============
Net loss per share of Common stock . . . . . . . .$ (1.23) $ (1.26) $ (.51) $ (.16) $ (.13)
========= ========= ========= ============ ============
Shares of Common stock used in computing net
loss per share . . . . . . . . . . . . . . . . . . 14,548 22,948 50,662 40,562 55,948
Net loss . . . . . . . . . . . . . . . . . . . . . . .$(17,863) $(28,427) $(25,678) $ (6,687) $ (7,071) $ (115,976)
Change in cumulative translation adjustment. . . . . . 392 (1,249) (1,087) (748) 147 (3,929)
Comprehensive net loss . . . . . . . . . . . . . . . .$(17,471) $(29,676) $(26,765) $ (7,435) $ (6,924) $ (119,105)
See accompanying notes.
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 -- $822 367,269 $ 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 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.
(a development stage company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
PERIOD FROM
JUNE 18, 1992
(DATE OF
INCEPTION)
YEAR ENDED THREE MONTHS ENDED THROUGH
DECEMBER 31ST, MARCH 31ST, MARCH. 31ST,
1998 1999 2000 2000 2001 2001
--------- --------- --------- ------------ ------------ ------------
(unaudited) (unaudited) (unaudited)
OPERATING ACTIVITIES
Net loss . . . . . . . . . . . . . . . . . . . . . $(17,863) $(28,427) $(25,678) $ (6,687) $ (7,071) $ (115,332)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization .. . . . . . . . . . 4,359 6,999 7,063 1,860 1,728 31,715
Gain on disposal of fixed assets . . . . . . . . . (12) - - - - (43)
Deferred taxes . . . . . . . . . . . . . . . . . . 680 2,854 1,165 - - (464)
''In kind'' transactions. . . . . . . . . . . . . . - - - - - 1,420
Change in assets and liabilities
Accounts receivable-Trade .. . . . . . . . . . . 337 398 (92) (23) 60 22
Accounts receivable-Other .. . . . . . . . . . . (75) (574) 610 (105) (199) 157
Inventory .. . . . . . . . . . . . . . . . . . . (223) (19) (41) (166) (264) (1,342)
Other assets . . . . . . . . . . . . . . . . . . 996 841 (69) 203 173 377
Accounts payable, accrued expenses and
other assets and liabilities . . . . . . . . . . 2,948 1,797 1,370 781 (39) 11,776
Deferred revenue . . . . . . . . . . . . . . . . (490) (1,814) 355 167 545 1,376
--------- --------- --------- ------------ ------------ ------------
NET CASH USED IN OPERATING ACTIVITIES .. . . . . . (9,343) (17,945) (15,317) (3,970) (5,067) (70,339)
--------- --------- --------- ------------ ------------ ------------
INVESTING ACTIVITIES
Additions to property, plant, and equipment .. . . (1,860) (1,235) (1,848) (761) (334) (22,737)
Reclassification of cash equivalents as restricted
cash. . . . . . . . . . . . . . . . . . . . . . . . (32) 2,464 6,249 5,625 208 (1,191)
Additions to patents . . . . . . . . . . . . . . . - - - - - (130)
--------- --------- --------- ------------ ------------ ------------
NET CASH USED IN INVESTING ACTIVITIES .. . . . . . (1,892) 1,229 4,401 4,864 (126) (24,058)
FINANCING ACTIVITIES
Stock issued . . . . . . . . . . . . . . . . . . . 11,906 25,105 19,724 3,296 - 112,333
Proceeds from long-term borrowings . . . . . . . . - 2,014 727 - - 19,028
Proceeds from sale leaseback transactions .. . . . - - - - - 2,731
Payments for equipment purchases financed by
accounts payable . . . . . . . . . . . . . . . . . - - - - - (3,706)
Repayment of long-term borrowings .. . . . . . . . (739) (4,038) (1,180) (396) (296) (9,329)
Repayment of capital lease obligations . . . . . . (1,695) (1,987) (4,707) (5,436) (16) (10,712)
--------- --------- --------- ------------ ------------ ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES .. . . . 9,472 21,094 14,564 (2,536) (312) 110,345
Effect of exchange rates on cash . . . . . . . . . (499) 119 (1,464) (685) (896) (5,502)
--------- --------- --------- ------------ ------------ ------------
Net increase / (decrease) in cash equivalents .. . (2,262) 4,497 2,184 (2,327) (6,401) 10,446
CASH AND CASH EQUIVALENTS BEGINNING OF PERIOD .. . . 12,428 10,166 14,663 14,663 16,847 -
--------- --------- --------- ------------ ------------ ------------
CASH AND CASH EQUIVALENTS END OF PERIOD .. . . . . . $ 10,166 $ 14,663 $ 16,847 $ 12,336 $ 10,446 $ 10,446
========= ========= ========= ============ ============ ============
SUPPLEMENTAL DISCLOSURES OF NON CASH ACTIVITIES:
Equipment acquired under capitalized leases . . . . . $ 12,048 $ 688 $ 168 - - $ 14,113
Equipment purchases financed by accounts payable. . . - - - - - $ 920
Repayment of long-term borrowings by issuance of
Common stock. . . . . . . . . . . . . . . . . . . . . - - $ 6,412 - - $ 6,412
Long term debt assumed following Micron Transaction . - $ 2,875 - - - $ 2 875
Property, plant and equipment acquired by issuance of
Common stock. . . . . . . . . . . . . . . . . . . . . - $ 13,375 - - - $ 13,375
Licenses acquired payable over two or three years .. - - - - - $ 3,765
Acquisitions of intangible by issuance of warrants . - - - - - $ 230
Fixed assets disposed of in like-kind exchange . . . - - - - - $ 468
Fixed assets acquired through like-kind exchange . . - - - - - $ 499
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid .. . . . . . . . . . . . . . . . . . . $ 729 $ 994 $ 258 $ 190 $ 4 $ 2,181
See accompanying notes.
PixTech, Inc.
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(ALL AMOUNTS IN THOUSANDS EXCEPT SHARE AMOUNTS)
(INFORMATION AS OF MARCH 31, 2001 AND FOR THE THREE MONTHS
PERIODS ENDED MARCH 31, 2000 AND 2001 IS UNAUDITED)
1. ORGANIZATION AND BUSINESS ACTIVITY
PixTech, Inc. was incorporated under the laws of Delaware on October 27,
1993. On November 30, 1993, PixTech, Inc. acquired 100% beneficial ownership of
PixTech S.A., through a share exchange agreement. PixTech S.A. was incorporated
under the laws of France on June 18, 1992. For accounting purposes, the
acquisition has been treated as a recapitalization of PixTech S.A. As used
herein, ''we'' refers to PixTech, Inc. and PixTech S.A.
We are dedicated to improving, utilizing and licensing certain background
technology developed by Laboratoire Electronique de Technologie et
d'Instrumentation, a French government-owned research and development laboratory
in the field of flat panel displays using electron emitters.
We have devoted substantially all our efforts to raising capital,
conducting research and development activities, concluding cooperation and
license agreements with certain displays manufacturers, and establishing
manufacturing capabilities for our field emission displays. Revenues from
principal planned operations will mainly consist of product sales. As these
revenues have not been significant and therefore, we are still in a development
stage and fall under the provisions of FAS No. 7, ''Accounting and Reporting by
Development Stage Enterprises''.
2. SUMMARY OF THE SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying consolidated financial statements were prepared in
accordance with generally accepted accounting principles in the United States.
The preparation of financial statements requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities, and
disclosure of contingent assets and liabilities, at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of PixTech, Inc.
and its wholly owned subsidiary PixTech S.A. Inter-company accounts and
transactions have been eliminated in consolidation.
FISCAL YEAR
We end our fiscal year on December 31.
REVENUE RECOGNITION-COOPERATION AND LICENSE AGREEMENTS
We have entered into cooperation and license agreements with certain
display manufacturers. Under these contracts, we share technology with such
members through cross licensing provisions. Each contract provides for certain
fees and royalties to be paid to us. We believe that each of the cooperation and
license agreements are long-term construction/production contracts pursuant to
SOP 81-1 and that the criteria have been satisfied to entitle us to partially
recognize the revenue under those contracts. Certain fees payable to us under
these agreements were milestone-related and were due upon the achievement of
milestones. In accordance with the terms of the agreements, such fees are
irrevocable when paid. We recognized this milestone-related revenue only when
each milestone had been fully performed, as agreed by the parties. Costs
incurred under these contracts were considered costs in the period incurred,
regardless of when related revenue is recognized.
PixTech, Inc.
(a development stage company)
TEXAS INSTRUMENTS: We entered into a cooperation and license agreement
with Texas Instruments Incorporated on June 29, 1993. This agreement was
terminated on July 15, 1996. In 1996, we recognized cooperation and license
revenues under this terminated agreement in the amount of $1,336.
FUTABA CORPORATION: We entered into a cooperation and license agreement
with Futaba Corporation ("Futaba") on November 27, 1993 (the ''Futaba
agreement''). Pursuant to the Futaba agreement, Futaba agreed to pay us a
license fee upon signing the agreement, which was recognized upon execution of
the agreement. Futaba also agreed to a technology transfer fee, payable to us in
three installments upon the achievement of certain milestones, and an additional
fee payable annually upon the achievement of further product development
milestones. Finally, to the extent that Futaba successfully incorporates the
cross-licensed technology into its own products, Futaba must make royalty
payments in connection with the sale of products incorporating the technology we
licensed. At that time, we will recognize royalty revenues.
In order to reach certain specified milestones under the Futaba agreement,
we performed certain services in the field of technology development. In
accordance with the terms of the Futaba agreement, the milestone-related
revenues were recognized when certain milestones were achieved. The cooperation
period with Futaba expired in January 1997 and we will not record any additional
milestone based revenues in the future.
RAYTHEON COMPANY: We entered into a cooperation and license agreement with
Raytheon Company ("Raytheon") on June 1, 1994 (the ''Raytheon agreement'').
Pursuant to the Raytheon agreement, Raytheon agreed to pay us a license fee
payable in part upon the signing of the agreement and for a specified number of
months thereafter. Such license fee was recognized when due. Raytheon also
agreed to make two additional payments based on the achievement of certain
milestones. Raytheon also must make royalty payments in connection with the sale
of products incorporating technology we licensed.
In June 1997, the cooperation period with Raytheon was extended for a
period of two years but no revenue was associated with such extension. To the
extent that Raytheon successfully incorporates the cross-licensed technology
into its own products, we will recognize royalty revenues as Raytheon sells the
products. We believe that Raytheon Company may have suspended its internal
program to develop field emission displays.
MOTOROLA, INC.: We entered into a cooperation and license agreement with
Motorola, Inc. ("Motorola") on June 13, 1995 (the ''Motorola agreement'').
Pursuant to the Motorola agreement, Motorola agreed to pay us a license fee upon
signing the agreement, which was recognized upon execution of the agreement.
Motorola also agreed to a technology transfer fee, payable to us upon the
occurrence of certain milestones, and an additional technology update fee
payable annually over a period of three years. Finally, Motorola must make
royalty payments in connection with the sale of its own products incorporating
the technology we licensed.
In order to reach certain of the specified milestones under the Motorola
agreement, we performed services in the field of technology development. In
accordance with the Motorola agreement, the milestone-related payments were
irrevocable when paid. Cash milestone-related revenues were recognized when
certain milestones were achieved. The cooperation period with Motorola expired
in June 1998 and we will not record any additional milestone based revenues in
the future. To the extent that Motorola successfully incorporates the
cross-licensed technology into its own products, we will recognize royalty
revenues as Motorola sells the products.
REVENUE RECOGNITION-PRODUCT REVENUE
Product revenue is recognized upon shipment in the case of standard
deliveries and upon acceptance by the customer in the case of first delivery of
a specified product.
PixTech, Inc.
(a development stage company)
REVENUE RECOGNITION-GRANTS
We recognize revenue from unconditional grants received from
governmental agencies in the period granted. Revenue from conditional grants
received is recognized when all conditions outlined in the grant have been met.
FOREIGN CURRENCY TRANSLATION
Assets and liabilities of PixTech S.A. are translated into U.S. dollars
equivalent at the rate of exchange in effect on the balance sheet date; income
and expenses are translated at the average rates of exchange prevailing during
the period. The related translation adjustments are reflected in stockholders'
equity. Foreign currency gains or losses resulting from transactions are
included in results of operations, except for transaction gains and losses
attributable to inter-company transactions. For foreign currency transactions or
cash balances that hedge foreign currency commitments, such transactions and
cash balances are recorded in the same manner as translation adjustments, as
required by the Statement of Financial Accounting Standards No 52, ''Foreign
currency translation'' ("SFAS 52").
NET INCOME (LOSS) PER SHARE
On December 31, 1997, we adopted Statement of Financial Accounting
Standards No 128, ''Earnings per Share", ("SFAS 128").
Prior to the adoption of SFAS 128, net income (loss) per share had been
calculated in accordance with the provisions of Accounting Principles Board
Opinion No 15, ''Earnings per Share" "APB 15", using the weighted average number
of shares, convertible preferred shares assuming conversion at date of issuance,
and dilutive equivalent shares from stock options and warrants using the
treasury stock method. Net income (loss) per share also reflects, for all
periods presented, a 2 for 3 reverse stock split, which was effective at the
closing of our initial public offering.
Pursuant to SFAS 128, we were required to change the method formerly used
to compute earnings per share and to restate all prior periods. SFAS 128
replaced the calculation of primary and fully diluted earnings per share with
basic and diluted earnings per share. Unlike primary earnings per share, basic
earnings per share exclude any dilutive effects of options, warrants and
convertible securities.
There is no impact of Statement 128 on the previous calculation of loss per
share for the financial years ended December 31, 1998, 1999 or 2000. As net
losses have been reported in these periods, the dilutive effects of stock
options, preferred stock and warrants were excluded from the calculation of net
loss per share under APB 15.
COMPREHENSIVE INCOME
Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income", requires that items defined as other comprehensive
income, such as foreign currency translation adjustments, be separately
classified in the financial statements and that the accumulated balance of other
comprehensive income be reported separately from retained earnings and
additional paid-in capital in the equity section of the balance sheet. The
components of comprehensive income for the years ended December 31, 1998, 1999
and 2000 consist solely of foreign currency translation adjustments.
CASH AND CASH EQUIVALENTS
We consider all highly liquid investments purchased with an original maturity of
three months or less to be cash equivalents.
PixTech, Inc.
(a development stage company)
INVESTMENTS
We account for investments in accordance with Statement of Financial
Accounting Standards No 115, ''Accounting for Certain Investments in Debt and
Equity Securities''. We had no investments at December 31, 1999 or December 31,
2000, other than pledged cash (see note to consolidated financial statements -
note 6 - short term and long term restricted cash). There were no realized gains
or losses on sales of investments in 1998, 1999 or 2000.
INVENTORIES
Inventory of raw materials and spare parts is valued at the lower of
cost (first-in, first-out basis) or market. Inventory of finished goods is
valued at product standard costs.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are recorded at cost. Depreciation and
amortization are provided on a straight-line basis over the estimated useful
lives of the assets, generally five years for pilot production equipment and six
years for Unipac volume production equipment, ten years for building
improvements and twenty years for buildings. Equipment financed under capital
leases are depreciated over the shorter of the estimated useful life or the
lease term. Amortization expense is included within depreciation expense.
IMPAIRMENT OF LONG-LIVED ASSETS
Long Lived assets to be held and used are reviewed for impairment whenever
events or changes in circumstances indicate that the related carrying amount may
not be recoverable. When required, impairment losses on assets to be held and
used are recognized based on the excess of the asset's carrying amount and fair
value of the asset and long lived assets to be disposed of are reported at the
lower of carrying amount or fair value less cost to sell.
PATENTS AND OTHER INTANGIBLE ASSETS
Patent application and establishment costs are expensed as incurred.
Other intangible assets include primarily goodwill. The carrying value of
goodwill is reviewed on an ongoing basis to assess if facts or circumstances
suggest that our goodwill may be impaired. If this review indicates that
goodwill will not be recoverable, based on the expected future cash flows to be
generated by these assets over their remaining amortization period, our carrying
value of the goodwill is reduced by the estimated shortfall of discounted cash
flows.
EMPLOYEE STOCK OPTION PLANS
In 1996, we adopted the disclosure provisions of Statement of Financial
Accounting Standards No 123 ("SFAS 123"), "Accounting for Stock Based
Compensation". As permitted by SFAS 123, we have elected to continue to account
for our employee stock option plan and the Employee Stock Purchase Plan in
accordance with the provisions of the Accounting Principles Board Opinion No 25
"Accounting for Stock Issued to Employees" ("APB 25"). Under APB 25, when the
exercise price of our employee stock options is less than the market price of
the underlying shares of the date of grant, compensation expense is recognized.
ACCOUNTING FOR INCOME TAXES
We use the liability method in accounting for income taxes. Under this
method, deferred tax assets and liabilities are determined based on differences
between financial reporting and tax bases of assets and liabilities and are
measured using the enacted tax rates and laws that will be in effect when the
differences are expected to reverse.
PixTech, Inc.
(a development stage company)
PENSION COSTS
In France, legislation requires that lump sum retirement indemnities be
paid to employees based upon their years of services and compensation at
retirement. The actuarial liability of this unfunded obligation was $76 as of
December 31, 1999 and $77 as of December 31, 2000. Pension expense incurred was
$35 in 1998, $3 in 1999, and $6 in 2000.
RECENT PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued Statement No.
133, Accounting for Derivative Instruments and Hedging Activities, as amended,
which is required to be adopted in years beginning after June 15, 2000. Because
of our minimal use of derivatives, management does not anticipate that the
adoption of the new Statements will have a significant effect on earnings or on
our financial position.
3. OTHER CURRENT ASSETS
The components of other current assets are as follows:
DECEMBER 31,
1999 2000
----- -----
Value added tax refundable . $ 507 $ 482
Other .. . . . . . . . . . . 144 255
----- -----
$ 651 $ 737
===== =====
4. PROPERTY, PLANT AND EQUIPMENT
The components of Property, Plant and Equipment are as follows:
DECEMBER 31,
1999 2000
--------- ---------
Land . . . . . . . . . . . . . . $ 199 $ 185
Buildings and improvements .. . 2,350 2,184
Machinery and equipment . . . . 38,922 37,704
Furniture and fixtures .. . . . 1,224 944
--------- ---------
42,695 41,017
Less accumulated depreciation . (17,762) (22,003)
--------- ---------
$ 24,933 $ 19,014
========= =========
In 1994, we entered into capital lease agreements for production equipment.
The gross and net book values of equipment financed under capital leases
amounted to $2,353 and $342, respectively, at December 31, 1999 and $386 and
$140, respectively, at December 31, 2000.
Land and buildings with a net book value of $924 and $815 at December 31,
1999 and December 31, 2000 respectively, have been pledged to guarantee a
$10,000 loan received from Sumitomo Corporation in November 1997. See notes to
consolidated financial statements - note 7 - long-term debt.
PixTech, Inc.
(a development stage company)
Pursuant to the Display Foundry Agreement signed in 1997 with Unipac, volume
field emission displays production equipment was installed at Unipac's facility.
That equipment was purchased and funded by Unipac, and a portion of it is leased
to PixTech, which amounts to $11,283 and $10,618 as of December 31, 1999 and
2000, respectively. According to Financial Accounting Standard 13, Accounting
for Leases, PixTech's share of equipment was recorded as assets under the
caption Property, Plant and Equipment, in the net amount of $8,607 and $6,384 as
of December 31, 1999 and 2000. Depreciation of $1,936 was recorded during 1999
and $1,742 during 2000. As of December 31, 2000, the related capital lease
obligation amounts to $5,133 compared to $9,686 as of December 31, 1999 (see
notes to consolidated financial statements - note 8 - capital leases). In
connection with the Micron Transaction (see notes to consolidated financial
statements - note 20 - Micron transaction"), we acquired the production
equipment located in Boise, Idaho, in May 1999. This acquisition was recorded in
the amount of $13,375. The historical cost of net assets acquired in the Micron
Transaction was approximately $9,098 in excess of the fair value of these
assets. The historical cost of property, plant and equipment of $22,473 was
proportionally reduced to the extent that the fair value of net assets was below
historical cost, resulting in property plant and equipment of $13,375 (see notes
to consolidated financial statements - note 20 - Micron transaction).
5. GOODWILL
On February 20, 1996, we acquired substantially all the assets of PanoCorp,
Inc. ("PanoCorp"), a research and development company located in California, in
a transaction accounted for as a purchase. The assets of PanoCorp, Inc.,
principally including fixed assets valued at $120, were purchased for $250 in
cash plus 150,000 warrants to purchase shares of our Common stock at an exercise
price of $11.67 per share. See note to consolidated financial statements - note
11-stockholders' equity - warrants.
The fair value of the 150,000 warrants was computed using the Black-Scholes
model. Pursuant to APB Opinion 16, the value of such warrants was estimated at
$230 and the entire transaction generated goodwill of $360. This goodwill is
being amortized over 5 years.
6. SHORT-TERM AND LONG-TERM RESTRICTED CASH
In August 1997, we provided Unipac Optoelectronics Corp. ("Unipac"), our
Asian manufacturing partner, with a written bank guaranty in an amount of
$10,000 pursuant to the display foundry agreement (the "Foundry agreement")
signed in May 1997 between us and Unipac in order to implement volume production
of field emission displays at Unipac's manufacturing line. 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 in the balance sheet. Under certain conditions of
the Foundry agreement, Unipac can sell us certain equipment. The payment for
such equipment will be secured by Unipac through the exercise of the bank
guaranty. In March 2000, pursuant to an agreement dated December 17, 1999 signed
with Unipac, the guaranty to Unipac was reduced by $5,000 in consideration of a
payment in cash of 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 related to the equipment leased by Unipac to us. Both
the amount of the guaranty to Unipac and the amount of the security interest to
the banks are expected to decrease to match the net amount of equipment leased
by Unipac to us. This security interest amounted to $1.0 million as of March
31,2001 (unaudited).
PixTech, Inc.
(a development stage company)
7. LONG-TERM DEBT
Long-term debt consists of the following:
DECEMBER 31, MARCH 31,
1999 2000 2001
-------- -------- -----------
(UNAUDITED)
Loan payable (a) . . . . . . . . . . . . . . . . . $ 6,412 $ -- $ --
Non interest bearing loan from ANVAR (b) . . . . . 1,868 1,986 1,885
Loan payable (c) . . . . . . . . . . . . . . . . . 30 -- --
R&D agreement with French Local authorities (d) .. 1,469 1,827 1,734
Loan payable (e) . . . . . . . . . . . . . . . . . 1,329 295 --
Loan payable (f) . . . . . . . . . . . . . . . . . 94 -- --
-------- -------- -----------
11,202 4,108 3,619
Less: current portion .. . . . . . . . . . . . . . (8,128) (1,146) (894)
-------- -------- -----------
Total long-term debt, less current portion . . . . $ 3,075 $ 2,962 $ 2,725
======== ======== ===========
(a) In November 1997, Sumitomo Corporation ("Sumitomo") granted us a
$10,000 loan repayable over a period of three years. Of this $10,000 amount,
$5,000 represented a straight loan payable in four equal installments every 6
months starting April 7, 1999, bearing interest at prime rate plus 0.75% per
annum. The remaining amount of $5,000 represented a convertible loan payable in
November 2000, bearing interest at prime rate plus 0.75% per annum, and
partially or totally convertible, at Sumitomo's option, into shares of Common
stock of PixTech at a conversion price equal to 80% of the market price on the
conversion date. This option became exercisable in April 1999. During 1999,
Sumitomo converted 750,000 shares. The remaining $3,912 of principal was
converted into 2,126,246 shares of our Common stock issued in January and
February 2000. The straight loan, which had remaining principal due of $2,500 as
of December 31, 1999, was converted into 385,549 shares of our Common stock in
March 2000.
(b) We entered into two development contracts with a French public agency,
in 1993. Under these agreements, we received non-interest-bearing loans. The
first repayment, for a total of $1.8 million has an amount outstanding as of
December 31, 2000 of $1.2 million. The second repayment, for a total amount of
$908, of which we had received $709 through December 31, 2000 and we expect to
receive $199 during the first quarter of 2001. The repayments are scheduled to
be paid in 2002, 2003 and 2004.
(c) In 1995, we were granted a bank loan, which bore interest at 6.37% and
was repayable in 20 installments of approximately $20 over a 5 year period. The
loan was repaid in April 2000.
(d) 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 $3,000, of which $1,469 was
received in April 1999 and $466 in April 2000.
(e) (f) In connection with the Micron Transaction (see notes to
consolidated financial statements - note 20 - Micron transaction), we took over
two equipment loans from Micron.
The first one (e), with Bank of Boston, at an interest rate of 7.63%, was
recorded for $2,040 in May. The principal due as of December 31, 2000 is $295.
This loan is repayable at the rate of approximately $94 per month through
February 2001.
The second one (f), with Heller, at an interest rate of 7.47%, was recorded for
$835. The loan was repaid in January 2000.
Future minimum payments under these obligations are as follows:
AS OF MARCH 31, 2001
YEAR ENDING DECEMBER 31, (UNAUDITED)
2001 . . . . . . . . . . $ 1,146 $ 808
2002 . . . . . . . . . . 1,125 1,068
2003 . . . . . . . . . . 184 175
2004 . . . . . . . . . . 270 256
2005 . . . . . . . . . . 1,383 1,312
---------------------- ------
Total minimum payments . $ 4,108 $3,619
====================== ======
PixTech, Inc.
(a development stage company)
8. CAPITAL LEASES
DECEMBER 31, AS OF MARCH 31, 2001
(UNAUDITED)
1999 2000 2001
-------- ------- -------------------
Capital lease obligations . $10,099 $5,290 $ 5,270
Less: current portion .. . (2,455) (157) (101)
-------- ------- -------------------
$ 7,644 $5,133 $ 5,169
-------- ------- -------------------
In December 1994, we completed several sale-leaseback transactions whereby
equipment with a net book value of $4,219 was financed through three to
five-year capital lease obligations, effective December 1994. At December 31,
2000, the net book value of this equipment was $140 (see notes to consolidated
financial statements - note 4 - property, plant and equipment).
Pursuant to the Display Foundry agreement signed in 1997 with Unipac, PixTech's
share of volume field emission displays production installed at Unipac's
facility is leased to us. As of December 31, 2000, the related capital lease
obligation amounts to $5,133, all recorded as long-term portion (see notes to
consolidated financial statements - note 4 - property, plant and equipment).
Future minimum payments under capital lease obligations are as follows:
AS OF MARCH 31, 2001
YEAR ENDING DECEMBER 31, (UNAUDITED)
2001 . . . . . . . . . . . . . . . . . . . . . . . . . $ 502 $ 105
2002 . . . . . . . . . . . . . . . . . . . . . . . . . 667 602
2003 .. . . . . . . . . . . . . . . . . . . . . . . . 3,604 1,735
2004 .. . . . . . . . . . . . . . . . . . . . . . . . 1,436 3,004
2005 .. . . . . . . . . . . . . . . . . . . . . . . . 0 0
---------- -------------------
Total minimum payments .. . . . . . . . . . . . . . . 6,209 5,447
Less amount representing interest . . . . . . . . . . (919) (177)
---------- -------------------
Present value of minimum capitalized lease payments . $ 5,290 5,270
---------- -------------------
9. COMMITMENTS AND CONTINGENCIES
Operating leases
We are obligated under operating lease agreements for equipment and
manufacturing and office facilities.
We lease our main manufacturing and office facilities under a
non-cancelable operating lease, which expires September 2003, with an option to
renew.
Minimum annual rental commitments under non-cancelable leases at December
31, 2000 are as follows:
YEAR ENDING DECEMBER 31,
2001 . . . . . . . . . $ 939
2002 . . . . . . . . . 609
2003 . . . . . . . . . 353
2004 . . . . . . . . . 4
2005. . . . . . . . . . 2
Thereafter. . . . . . . 0
======
Total minimum payments. $1,907
======
PixTech, Inc.
(a development stage company)
Rental expense for all operating leases consisted of the following:
1998 1999 2000
------ ------ ------
Rent expense for operating leases $1,188 $1,454 $1,239
====== ====== ======
License agreement and research and development agreement with Commissariat a
l'Energie Atomique
See notes to consolidated financial statements - note 16 - related
party transactions
10. FAIR VALUE OF FINANCIAL INSTRUMENTS
At December 31, 1999 and 2000, the carrying values of financial
instruments, such as cash and cash equivalents, short term investments, accounts
receivable and payable, other receivables and accrued liabilities and the
current portion of long-term debt, approximated their market values based on the
short-term maturities of these instruments.
At December 31, 1999 and 2000, the fair values of long-term debt and other
long-term liabilities, with book value of $21,354 and $4,145 were $15,043 and
$3,440, respectively. Fair value is determined based on expected future cash
flows, discounted at market interest rates, and other appropriate valuation
methodologies.
11. STOCKHOLDERS' EQUITY
The share amounts and per share dollar amounts included herein reflect the
effect of the 2 for 3 reverse stock split which was effective on July 18, 1995.
Common stock
In July 18, 1995, we sold 2,500,000 shares of Common stock for net proceeds
of $20,998 in our initial public offering on Nasdaq.
In February 7, 1997, we sold 3,333,000 shares of Common stock in a public
offering in Europe resulting in net proceeds of $15,927.
In February 1997, we sold 463,708 and 1,111,111 shares of our Common stock
to Motorola, Inc. and to United Microelectronics Corporation, the parent company
of Unipac Optoelectronics Corporation, respectively, in private placements
resulting in net proceeds of $2,086 and $5,000, respectively.
In March 1998, we sold 1,000,000 shares of our Common stock to The Kaufmann
Fund Inc., in a private placement at a price of $4.00 per share, resulting in
net cash proceeds of $4,000 before expenses payable by us, which amounted to
$44.
In March 1998, we entered into a license agreement with Coloray Display
Corporation, a California corporation ("Coloray"), providing us with a
worldwide, non-exclusive royalty-free license on certain technologies related to
field emission displays. In consideration of the license and rights granted to
us, we paid an amount of $75 and issued 14,000 shares of our Common stock,
valued at a price of $3.57 per share, representing a total amount of $50.
In December 1998, we sold 222,222 shares of our Common stock in a private
placement at a price of $2.25 per share, resulting in net proceeds of $500.
PixTech, Inc.
(a development stage company)
In January 1999, we sold 150,000 shares of our Common stock in a private
placement at a price of $2.35 per share, resulting in net proceeds of $352. In
consideration of the Micron Transaction (see notes to consolidated financial
statements - note 20 - Micron transaction), we issued in May 1999 7,133,562
shares of our Common stock, representing a total amount of $14,205, and a
warrant to purchase 310,000 shares of our Common stock at an exercise price of
approximately $2.25 per share. The fair value of the 310,000 warrants was
computed using the Black-Scholes model and was estimated at $257. In
consideration of the 7,133,562 shares of Common stock and 310,000 warrants
issued pursuant to the Micron Transaction, we were granted certain assets,
assumed certain liabilities, and received $4.3 million in cash.
In August 1999, we secured a $15 million equity-based line of credit with
Kingsbridge Capital Limited, an institutional investor specializing in equity
lines. Under the terms of the equity line, we can draw up to $15 million cash in
exchange for our Common stock, in increments over a two-year period. The
decision to draw on any of the funds and the timing and amount of any such draw
are at our sole discretion, subject to certain conditions. Such conditions
include limitations depending on the volume and the price of our Common stock.
Also the minimum amount we have to draw is $5M within the two-year period. These
shares will be issued at a 10% or 12% discount to the market price at the time
of any draw. In November 1999, we issued 624,809 shares of Common stock,
representing $ 824 ($1,000 less issuance costs of $176).
In October 1999, we completed a $20 million equity private placement with
Unipac Optoelectronics Corporation ("Unipac"). Under the terms of the agreement,
Unipac, an active matrix liquid crystal display manufacturer based in Taiwan
received 12.4 million shares of our Common stock at a purchase price of $1.61
per share. With this transaction, Unipac became our largest shareholder. The net
cash of this transaction was $19,963 (net of issuance costs of $36).
In relation with the Sumitomo loan (see notes to consolidated financial
statements - note 7 - long term debt), we issued, starting July 23, 1999 750,000
shares of our Common stock in 1999, representing a decrease of our obligation of
$1,088.
In December 1999, in relation with the Coloray agreement, we paid an amount
of $25 and issued 14,000 shares of our Common stock, valued at a price of $3.57
per share, representing a total amount of $50.
In January and February 2000, we issued 2,126,246 shares of our Common
stock to Sumitomo Corporation upon the conversion in full of $3,912 then
outstanding under a $5,000 convertible note issued in 1997 to Sumitomo
Corporation. This note, with a remaining principal balance of $3,912, was
converted at Sumitomo Corporation's option into shares of our Common stock at a
price of the Common stock at the conversion date.
In March 2000, we issued to Sumitomo Corporation 385,549 shares of our
Common stock, valued at a price of $6,48 for a total conversion price of $5,000
representing the entire outstanding amount of the straight loan payable in two
installments due in May and November 2000
In March 2000, in connection with an agreement signed with Coloray Display
Corporation, we issued 16,000 shares of our Common stock, valued at a price of
$3.57 per share, representing a total amount of $57 in consideration for the
transfer to us of the rights and obligations of Micron Technology, Inc. under
the license agreement dated as of April 8, 1992 between Coloray Display
Corporation and Micron Technology, Inc.
During the year 2000, pursuant to Kingsbridge equity-based line, we issued
2,003,925 shares of our Common stock representing a total amount of $4,805 (net
of issuance cost $195). At December 31, 2000 we have drawn $6,000 out of the
$15,000 available.
In April 2000, pursuant to an amendment, signed in February 2000, to the
Common stock Purchase Agreement dated October 6, 1999 with Unipac
Optoelectronics Corporation, we completed a $15 million equity private placement
with United Microelectronics Corporation. Under the term of this agreement,
United Microelectronics Corporation received 9,320,359 shares of Common stock at
a purchase price of $1.6094 per share. With this transaction Unipac our largest
shareholder, combined with its affiliate United Microelectronics Corporation
(UMC), owns approximately 40% percent of our shares of Common stock outstanding.
The net cash of this transaction was $15,000.
PixTech, Inc.
(a development stage company)
There were 55,682,464 shares of Common stock outstanding at December 31,
2000.
Preferred Stock
Our Board of Directors has the authority to issue up to 1,000,000 shares of
Preferred Stock and to fix the relative rights thereof. In December 1998,
500,000 shares of Preferred Stock were reserved for the issuance of "Series E
Convertible Preferred Stock".
Convertible Preferred Stock
In December 1998, we issued 367,269 shares of Series E Convertible
Preferred Stock. The Preferred Stock was sold in a private placement at a price
of approximately $22.53 per share, resulting in net proceeds of $8,275, before
expenses payable by PixTech, which amounted to $822. The amount representing
Preferred Stock we sold is generally convertible into shares of Common stock
starting from June 21, 1999 at a conversion price equal to the lesser of
approximately $1.60938 per share of Common stock or the average of the closing
price of the Common stock over the ten trading days immediately preceding the
notice of conversion. In addition to the conversion feature, the Preferred
Stock has a liquidation preference equal to the purchase price of the preferred
stock and a cumulative dividend. The Preferred Stock will automatically convert
into Common stock on December 22, 2003. The Preferred Stock is redeemable at the
option of PixTech at the issue price upon certain events. The holders of shares
of Series E Preferred Stock are entitled to the number of votes equal to the
number of shares of Common stock into which the shares of Series E Preferred
Stock held by such holder are convertible.
At December 31, 2000, 345,174 shares of Series E Convertible Preferred
Stock had been converted into shares of Common stock.
The holders of Series E Preferred Stock are entitled to receive cumulative
dividends. In December 31, 2000 a dividend of $75 was accrued and recorded
against Stockholders' Equity.
In addition, we agreed to reserve, out of the authorized but unissued
shares, 150% of the number of shares of Common stock that the Series E Stock is
convertible into. As of December 31, 2000, the Series E Stock would have been
convertible into 520,187 shares of Common stock thus requiring us to reserve
780,281 shares of the remaining authorized but unissued shares.
Convertible Preferred Stock - unaudited
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.
PixTech, Inc.
(a development stage company)
Stock Options
1993 Stock Option Plan
We adopted a stock option plan on November 30, 1993, the "1993 Stock Option
Plan" (which was amended and restated in May 1995 and in April 1997), under
which options to purchase shares of Common stock may be granted to our key
employees and consultants. The plan provides that the Compensation Committee of
the Board of Directors shall determine the option price and that no portion of
the option may be exercised beyond ten years from the date of grant. Options,
which are outstanding at December 31, 2000, become exercisable within a certain
period of time or when specific milestones are completed.
The activity under the option plan was as follows:
WEIGHTED
AVERAGE
SHARES OPTIONS OPTION PRICE
AVAILABLE OUTSTANDING PER SHARE
----------- ------------ -------------
BALANCE AT DECEMBER 31, 1997. . . 421,899 2,068,142
----------- ------------
Options granted .. . . . . . . . (444,960) 444,960 $ 4,626
Options exercised .. . . . . . . - (1,375) 0,656
Options terminated unexercised . 362,535 (362,535) 4,632
----------- ------------
BALANCE AT DECEMBER 31, 1998. . . 339,474 2,149,192
----------- ------------
Additional shares reserved . . . 2,500,000 -
Options granted .. . . . . . . . (2,167,505) 2,167,505 $ 1,949
Options exercised .. . . . . . . - (137,217) 0,535
Options terminated unexercised . 376,655 (376,655) 3,490
----------- ------------
BALANCE AT DECEMBER 31, 1999 . . 1,048,624 3,802,825
----------- ------------
Additional shares reserved . . . 6,000,000
Options granted .. . . . . . . . (2,672,150) 2,672,150 $ 2,235
Options exercised .. . . . . . . (284,478) 1,326
Options terminated unexercised . 840,684 (840,684) 3,099
----------- ------------
BALANCE AT DECEMBER 31, 2000 . . 5,217,158 5,349,813
----------- ------------
Options to purchase 1,776,081 shares and 1,663,083 shares were exercisable
at weighted-average exercise prices of $2.10 and $2.243 at December 31, 1999 and
December 31, 2000, respectively.
Exercise prices for options outstanding as of December 31, 2000 ranged from
$0.375 to $9.750. The weighted average remaining contractual life of those
options is 7.97 years.
The following is additional information related to options outstanding as
of December 31, 2000:
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
------------------- -------------------
WEIGHTED
EXERCISE AVERAGE WEIGHTED WEIGHTED
PRICE NUMBER REMAINING AVERAGE NUMBER AVERAGE
RANGE OUTSTANDING CONTRACTUAL LIFE EXERCISE PRICE EXERCISABLE EXERCISE PRICE
- --------------- ----------- ---------------- -------------- ----------- --------------
$0.375 - $1.625 655,365 3.54 years . . 0,545 643,925 0,527
$1.626 - $3.000 3,866,493 8.93 years . . 2,033 619,083 1,971
$3.001 - $6.500 795,305 6.94 years . . 4,465 390,375 5,341
$6.501 - $9.750 32,650 7.87 years . . 8,364 10,450 8,345
----------- -----------
TOTAL 5,349,813 1,663,833
PixTech, Inc.
(a development stage company)
Pro forma information regarding net loss and loss per share is required by
SFAS 123, and has been determined as if we had accounted for our employee stock
options under the fair value method of SFAS 123. The fair value for these
options was estimated at the date of grant using a Black-Scholes option-pricing
model with the following average assumptions:
YEARS ENDED DECEMBER 31,
2000 1999 1998
------ ----- ----
Expected Stock option term: 4 years 4 years 4 years
Interest rate 3% 3% 3%
Volatility 1.4889 0.922 0.74
Dividends 0% 0% 0%
For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the option's vesting period. Our pro forma
information follows (in thousands except for loss per share information):
1998 1999 2000
--------- --------- ---------
Pro forma net loss . . . $(18,690) $(29,893) $(27,586)
Pro forma loss per share $ (1.29) $ (1.30) $ (0.54)
The weighted-average fair values of options granted during 1998, 1999 and
2000 were $2.82, $1.39 and $2.22, respectively.
Director Stock Option Plan
- -----------------------------
Director Stock Option Plan
In May 1995, we adopted the 1995 Director Stock Option Plan (the "Director
Stock Plan''), which provides for the issuance of up to 50,000 shares of our
stock. The Director Stock Plan provides for an automatic grant of options to
purchase our stock at its fair market value to our non-employee directors upon
election or re-election to the Board of Directors.
The activity under the option plan was as follows:
WEIGHTED
AVERAGE OPTION
SHARES OPTIONS PRICE
AVAILABLE OUTSTANDING PER SHARE
--------------- ------------ ----------
BALANCE AT DECEMBER 31, 1998. . . . 34,000 16,000
--------------- ------------
Options granted .. . . . . . . . (6,000) 6,000 $ 1,843
BALANCE AT DECEMBER 31, 1999. . . . 28,000 22,000
--------------- ------------
Options granted .. . . . . . . . (6,000) 6,000 $ 4,760
Options terminated unexercised . 2,000 (2,000) $ 5,270
--------------- ------------
BALANCE AT DECEMBER 31, 2000. . . . 24,000 26,000
--------------- ------------
As of December 31, 2000 and at the date of grant, the exercise prices of
each stock option grant under the Director Stock Plan was above our stock price.
Therefore, no compensation expense was incurred.
PixTech, Inc.
(a development stage company)
Warrants
In December 1994, in connection with various equipment leases, we entered
into a warrant agreement. Under this agreement, we granted a right to purchase
62,500 shares of Common stock of PixTech at a purchase price of $2.88 per share.
No value was ascribed to the warrant. This warrant expired unexercised on July
18, 2000.
In February 1996, in order to finance partially the purchase of PanoCorp
assets, we granted 150,000 warrants to purchase shares of our Common stock at an
exercise price of $11.67 per share. See notes to consolidated financial
statements - note 5 - Goodwill.
In February 1997, in connection with the purchase of 463,708 shares of our
Common stock, Motorola received warrants to purchase an additional 463,708
shares of our Common stock at a price of $5.50 per share, which expired
unexercised on December 31, 1998.
In May 1999, we issued a warrant to Micron to purchase 310,000 shares of
our Common stock at $2.25313 per share.
We are obligated to issue a warrant to purchase 35,000 shares of our Common
stock to Needham & Company, Inc. in connection with an agreement for financial
advisory services, which is exercisable at a price of $2.26 per share and
expires on May 10, 2004.
We are obligated to issue a warrant to purchase 75,000 shares of our Common
stock to Josephthal and Co. in connection with an agreement for financial
advisory services, which is exercisable at a price of $2.26 per share and
expires on June 17, 2004.
In addition, we have issued a warrant to Kingsbridge to purchase 100,000
shares of our Common stock at $2.30 per share that expires on February 6, 2003.
Employee Stock Purchase Plan
In May 1995, we adopted an employee stock purchase plan (the ''Purchase
Plan'') under which employees may purchase shares of Common stock at a discount
from fair market value. 100,000 shares of Common stock are reserved for issuance
under the Purchase Plan. To date, no shares have been issued under the Purchase
Plan. Rights to purchase Common stock under the Purchase Plan are granted at the
discretion of the Compensation Committee, which determines the frequency and
duration of individual offerings under the Plan and the dates when the stock may
be purchased. Eligible employees, which represent all full-time employees (as
defined by the Purchase Plan), participate voluntarily and may withdraw from any
offering at any time before the stock is purchased. The purchase price per share
of Common stock in an offering is 85% of the lesser of its fair market value at
the beginning of the offering period or on the applicable exercise date and may
be paid through payroll deductions, periodic lump sum payments or a combination
of both. The Purchase Plan terminates on May 9, 2005.
Shares available for issuance
On January 18, 2000 the stockholders approved the increase of authorized
shares of Common stock from 60,000,000 to 100,000,000 shares.
PIXTECH, INC.
(A DEVELOPMENT STAGE COMPANY)
13. OTHER AND DEFERRED REVENUES
Other revenues and deferred revenues include the following:
DECEMBER, 31
1998 1999 2000
----------------- ----------------- -----------------
Other Deferred Other Deferred Other Deferred
------ --------- ------ --------- ------ ---------
Grant from French Ministry of Industry (a) . . $1,211 $ - $ - $ - $ - $ -
Grant from French local authorities (b) . . . 290 1,396 1,344 - - -
Grant from European Union, Esprit Program (c). 96 766 962 - - -
Grant from DARPA (d) . . . . . . . . . . . . . - - 2,092 - 5,934 -
Grant from French Ministry of Research (e) . . - - - 248 - 580
Other . . . . . . . . . . . . . . . . . . . . 371 - 510 - 75 -
------ --------- ------ --------- ------ ---------
TOTAL . . . . . . . . . . . . . . . . . . . . $1,968 $ 2,162 $4,908 $ 248 $6,009 $ 580
====== ========= ====== ========= ====== =========
<FN>
(a) In December 1994, we were awarded a grant from the French Ministry of
Industry to support manufacturing of field emission displays. The total
contribution of the French Ministry of Industry amounted to $2,674. We
recognized as income $800 in 1996, $663 in 1997, $1,211 in 1998.
(b) PixTech SA was awarded certain incentives to establish its manufacturing
facilities in Montpellier, France. These incentives are partially subject
to maintaining an operating facility in this location for a certain period
of time. In 1999, revenue recognized in the amount of $87 was related to
various incentives granted by French local authorities. In April 1995, we
signed a grant agreement with DATAR (Delegation a l'Amenagement du
Territoire et a l'Action Regionale), an agency of French Home Office. The
obligations related to the recognition of the associated revenue were
reached in 1999 for $1,257.
(c) In February 1997, we entered into a research and development agreement with
the European Union. The total contribution of the European Union to the
costs we incurred amounts to $962. We received prepayments in 1997, 1998
and 1999 but revenues were recognized as income in 1999, as all conditions
stipulated in the agreement have been met and we recognized the entire
revenue.
(d) In August 5, 1999, we were awarded a development contract by DARPA (Defense
Advanced Research Projects Agency). Under the terms of the contract, we
will receive approximately $4,700 to develop and produce a low-power, wide
angle of view, spatial color field emission display for rapid information
update applications. On April 3, 2000, an additional funding, as a
continuation of the existing contract, was awarded to us for the
development and demonstration of a full color, full video rate, 12.1-inch
field emission display. Under this additional funding, we will receive
approximately $6,300. On January 22, 2001, an additional funding of $3.1
million for the continued development of the 12.1-inch color was awarded to
us. Milestone related revenue is recognized upon the achievement of such
milestones as defined by the contract. Costs incurred under this contract
are recognized in the period incurred as research and development expenses.
(e) In December 1998, we were awarded a grant of the French Ministry of
Research for certain research and development tasks. We received $248 in
1999 and $378 in 2000, which were not recognized as revenues, and we expect
to receive $200 in April 2001.
On January 25, 2000, we entered into a research and development 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 the
agreement, PixTech is expected to receive funding from the European Commission
of approximately $1.6 million to design and develop the field emission displays.
We received a prepayment of $550 in 2001.
13. INCOME TAXES
Loss before income tax benefit consists of the following:
DECEMBER 31,
1998 1999 2000
--------- --------- ---------
France. . . . . . . . . . . . . . $(16,614) $(21,003) $(17,178)
United States . . . . . . . . . . (3,408) (7,424) (8,500)
--------- --------- ---------
Loss before income tax benefit. . $(20,022) $(28,427) $(25,678)
========= ========= =========
PIXTECH, INC.
(A DEVELOPMENT STAGE COMPANY)
The income tax benefit consists of $2,159, $0 and $0 as of December 31,
1998, 1999 and 2000, respectively, and relates to operations in France.
A reconciliation of income taxes computed at the French statutory rate
(36.67%, 40% and 36.67% respectively) to the income tax benefit is as follows:
DECEMBER 31,
1998 1999 2000
-------- --------- --------
Income taxes computed at the French statutory rate . $ 7,341 $ 11,771 $ 9,414
Lower statutory rate of United States .. . . . . . . (91) (569) (141)
Operating losses not utilized .. . . . . . . . . . . (7,250) (11,202) (9,273)
Research credits . . . . . . . . . . . . . . . . . . 2,159 - -
-------- --------- --------
Total . . . . . . . . . . . . . . . . . . . . . . . . 2,159 - -
======== ========= ========
No income tax expense was realized and no income taxes were paid in years
ended December 31, 1998, 1999 and 2000.
Deferred taxes reflect the net tax effects of temporary differences between
the carrying amounts of assets and liabilities for financial reporting purposes
and the amounts used for income tax purposes. Significant components of our
deferred taxes consist of the following:
DECEMBER 31,
1998 1999 2000
--------- --------- ---------
Deferred tax assets:
Net operating loss carryforwards $ 18,108 $ 24,032 $ 25,699
Deferred revenue . . . . . . . . 75 (3) 1
Research credit carryforwards. . 6,448 2,849 1,478
--------- --------- ---------
24,631 26,878 27,178
Deferred tax liabilities:
Deferred revenue . . . . . . . . (760) (1) (2)
Deferred expense . . . . . . . . (53) (8) --
--------- --------- ---------
Total deferred tax assets. . . 23,818 26,869 27,176
Valuation allowance . . . . . . . (19,175) (25,614) (27,176)
--------- --------- ---------
Deferred tax assets . . . . . . . $ 4,643 $ 1,255 $ 0
========= ========= =========
Net operating loss carry forwards can be credited against future income in
France. Net operating loss carry forward of: $4,746 expires in 2001, $8,499 in
2002, $12,322 in 2003, $13,935 in 2004, $17,108 in 2005 and $13,469 can be
carried forward indefinitely.
Research credit carry forwards derive from our subsidiary, PixTech SA. In
France, research credit carry forwards are calculated following certain rules
defined by the tax administration. We are entitled to full payment by the tax
administration of these research credit carry forwards if they are not credited
against income tax liabilities within a period of three financial years. We
collected $2,913 in 1999 and $1,100 in 2000.
14. INDUSTRY AND GEOGRAPHIC INFORMATION
Our long lived-assets may be summarized as follow:
DECEMBER 31,
1998 1999 2000
------- ------- -------
United States $ 227 $11,570 $ 9,237
France . . . 7,282 4,756 2,884
Taiwan . . . 11,317 8,607 6,893
------- ------- -------
18,826 24,933 19,014
PIXTECH, INC.
(A DEVELOPMENT STAGE COMPANY)
15. SIGNIFICANT CUSTOMERS AND VENDORS
Historically, we derived our revenues principally from cooperation and
license agreements with certain display manufacturers. Net revenues from
cooperation and license agreements represented approximately 34% of our net
revenues for the fiscal year 1998. We do not expect any significant additional
milestone related revenues to be directly derived from existing cooperation and
license agreements.
In 1999 and 2000, product sales primarily reflected the shipment of
displays to our first volume customer, Zoll Medical Inc.
Service fees paid to our single manufacturer to manufacture its field
emission displays represent 36% and 34% of total of operation activity in 1999
and 2000, respectively. In addition, the obligations resulting from the research
and development agreement with the Commissariat a l'Energie Atomique (see notes
to consolidated financial statements - note 16 - related party transactions)
represent 18% of our operations in 1999, and 5% in 2000.
16. RELATED PARTY TRANSACTIONS
Commissariat a l'Energie Atomique license agreement
In September 1992, we entered into a license agreement with Commissariat a
l'Energie Atomique. Commissariat a l'Energie Atomique holds a controlling
interest in Commissariat a l'Energie Atomique Industrie, a shareholder of
PixTech. Under this agreement, Commissariat a l'Energie Atomique granted to us a
royalty bearing, worldwide, exclusive license to all patents held by
Commissariat a l'Energie Atomique in the field of field emission displays, with
a right to sublicense these patents under certain conditions. The consideration
for this license is a payment of license fees and royalties based on our sales
and the license fees and royalties we collected. No expense was recorded in 1993
and 1994 with respect to license fees and royalties due to Commissariat a
l'Energie Atomique. In 1995, $1,000 was accrued in respect of license fees and
royalties due to Commissariat a l'Energie Atomique in 1996. In order for us to
maintain an exclusive license, it was required to make minimum royalty payments
beginning in 1996. An amount of $45 payable to Commissariat a l'Energie Atomique
in 1997 was accrued in 1996. By paying the remaining amount due to Laboratoire
d'Electronique, de Technologie et d'Instrumentation, we will fulfill the minimum
royalty obligations to Laboratoire d'Electronique, de Technologie et
d'Instrumentation through 1999.
In 1997, an amendment to the Laboratoire d'Electronique, de Technologie et
d'Instrumentation license agreement was signed between the Commissariat a
l'Energie Atomique and us (the "1997 Commissariat a l'Energie Atomique
Amendment") for a period of three years, in return for Commissariat a l'Energie
Atomique guarantying certain contingent payment obligations towards Sumitomo.
See notes to consolidated financial statements - note 7 - long term debt. The
royalty rates and minimum payments from us to Commissariat a l'Energie Atomique
were increased for a period of three years. In addition, we gave a security
interest to Commissariat a l'Energie Atomique on all its patents during the term
of the amendment. An amount of $364 and $279 was accrued respectively in 1999
and in 2000, which included a minimum royalty obligation of $357 and $279,
respectively pursuant to the 1997 Commissariat a l'Energie Atomique Amendment.
Commissariat a l'Energie Atomique Research and Development Agreement
In September 1992, we entered into a three-year renewable research and
development agreement with Commissariat a l'Energie Atomique, under which
Commissariat a l'Energie Atomique, through its laboratory "Laboratoire
d'Electronique, de Technologie et d'Instrumentation" performs certain research
and development activities for our benefit. This program is expected to be
extended for a third three-year period ending on January 1, 2002, subject to
further extension by mutual agreement of the parties. The consideration accrued
for the Commissariat a l'Energie Atomique for this research and development
activity in 2000 amounted to approximately $696.
PIXTECH, INC.
(A DEVELOPMENT STAGE COMPANY)
17. LICENSE
In connection with our license of our technology to a display manufacturer,
we acquired a worldwide, non-exclusive royalty-free license to such licensee's
background field emission display technology, as well as a right to grant
royalty-free sublicenses to certain other companies. We were obligated to pay
certain license fees in connection with the acquisition of these rights from
such licensee; these payments to the licensee were $650 in 1995 and $650 in
1996. In 1997, we recorded cooperation and license revenues in the amount of
$707, in consideration of the cancellation of same amount that had been included
in accounts payable in relation to accrued license fees due this licensee.
In connection with the license of our technology to another display
manufacturer, we also acquired a worldwide, non-exclusive license, without the
right to sublicense, to certain technology of such licensee. We were obligated
to pay certain license fees in connection with the acquisition of these rights;
these payments to the licensee were $1,000 in 1995 and $1,000 in 1996. The
remaining license fees payable to this licensee in the amount of $1,400 were
canceled in 1997, as consideration for the purchase by such licensee of shares
of our Common stock in February 1997.
In March 1998, we entered into a license agreement with Coloray, providing
PixTech with a worldwide, non-exclusive royalty-free license on certain
technologies related to field emission displays. In 1998, in consideration of
the license and rights granted to PixTech, we paid an amount of $75 and issued
14,000 shares of our Common stock, valued at a price of $3.57 per share,
representing a total amount of $50. In 1999, we paid an amount of $25 and issued
14,000 shares of our Common stock, representing a total amount of $50. In 2000,
we issued 16,000 shares of our Common stock, representing an amount of $57,000
(see notes to consolidated financial statements - note 11 -stockholders'
equity).
18. LITIGATION
To our knowledge, there are no exceptional facts or litigation that could
have or that have in the recent past had any significant impact on its business,
results, financial situation, or assets and liabilities.
19. FINANCIAL POSITION
During 2000, we have incurred losses in the amount of $25,678 and used cash
in operating activities of $15,317, which has adversely affected our liquidity.
At December 31, 2000, we had net working deficit of $8,259 and a deficit
accumulated during the development stage of $108,261. In 2000, we significantly
improved our liquidity and financial position with the completion of $15.0
million equity private placement with UMC. We expect that cash available at
December 2000 together with the anticipated proceeds from Kingsbridge agreement,
from various grants and loans and from research and development tax credits,
will be sufficient to meet our cash requirements until at least December 2001.
We intent to continue improving our liquidity and financial position through
capital increases expected to take place in 2001. There can be no assurance that
additional funds will be available through capital increase when needed or on
terms acceptable to us.
PIXTECH, INC.
(A DEVELOPMENT STAGE COMPANY)
20. MICRON TRANSACTION
On March 19, 1999, we entered into a definitive agreement to purchase
certain assets of Micron Technology, Inc. relating to field emission displays
including equipment and other tangible assets, certain contract rights and cash
(the "Micron Transaction"). The Micron Transaction was closed on May 19, 1999
between PixTech and Micron and was accounted for as an acquisition of assets.
The financial statements as of June 30, 1999 reflect the acquisition of assets
for a cost of $17,932 and the assumption of certain liabilities in the amount of
$2,958, in consideration of the issuance of 7,133,562 shares of our Common
stock, representing a total amount of $14,205, and a warrant to purchase 310,000
shares of our Common stock. The fair value of the 310,000 warrants was computed
using the Black-Scholes model and was estimated at $257. The estimated fair
value of net assets acquired in the Micron Transaction was approximately $9,157
in excess of the cost of net assets acquired. Consequently, the estimated fair
value of property, plant and equipment of $22,473 was proportionally reduced to
the extent that the fair value of net assets acquired exceeded cost resulting in
property plant and equipment of $13,316. In addition, we received cash in the
amount of $4,350. Therefore, of the assets acquired for $17,932, $13,316 was
reflected under the caption "Property, Plant and Equipment", and $4,350 under
the caption "Cash available" in our 1999 consolidated financial statements.
The following unaudited pro forma financial information presents the
combined results of operations for the year ended December 31, 1998 and 1999 as
if the transaction had been completed at the beginning of the periods indicated,
after giving effect to certain adjustments, including additional personnel costs
and depreciation expenses. The pro forma financial information does not
necessarily reflect the results of operations that would have occurred, had the
transaction been completed at the beginning of the periods indicated, and may
not be indicative of the future results.
YEAR ENDED
DECEMBER 31,
1998 1999
--------- ---------
Net loss. . . . . . . . . . . . . . $(26,986) $(32,105)
Net loss to holders of Common stock $(26,998) $(32,617)
Net loss per share of Common stock. $ (1,25) $ (1,27)
21. SUBSEQUENT EVENTS
On January 22, 2001, PixTech was awarded additional funding from DARPA,
Defense Advanced Research Projects Agency. Under the terms of the contract, we
will receive approximately $3.1 million for the continued development of the
12.1-inch color, high voltage field emission display technology. This funding
supplements the existing DARPA contract under which PixTech received $6.3
million in April 2000.
In January 2001, 18,766 shares of Series E Preferred Stock were converted
into 362,734 shares of Common stock. As of March 13, 2001, there are 3,329
shares of Series E Preferred Stock outstanding.
On January 24, 2001, we received the first advanced payment of $549,000 on
the European Commission IST program.
PIXTECH, INC.
(A DEVELOPMENT STAGE COMPANY)
PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following expenses incurred in connection with the sale of the
securities being registered were borne by PixTech. Other than the registration
fee, the amounts stated below are estimates.
Registration Fee. . . . . . . . . . . . . . $ 7,600
Legal Fees and Expenses . . . . . . . . . $ 57,000
Nasdaq Listing Fees. . . . . . . . . . . . $ 17,500
Printing and Engraving Expenses . . . . . $ 10,000
Accounting Fees and Expenses. . . . . . . $ 5,000
Other. . . . . . . . . . . . . . . . . . . . $ 4,900
TOTAL . . . . . . . . . . . . . . . . . $ 102,000
===== =========
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law permits us to indemnify
our directors, officers, employees and agents against actual and reasonable
expenses (including attorneys' fees) incurred by them in connection with any
action, suit or proceeding brought against them by reason of their status or
service as a director, officer, employee or agent by or on behalf of us, and
against expenses (including attorneys' fees), judgments, fines and settlements
actually and reasonably incurred by him in connection with any such action, suit
or proceeding, if (i) he acted in good faith and in a manner he reasonably
believed to be in or not opposed to our best interests, and (ii) in the case of
a criminal proceeding, he had no reasonable cause to believe his conduct was
unlawful. Except as ordered by a court, no indemnification shall be made in
connection with any proceeding brought by or in the right of the corporation
where the person involved is adjudged to be liable to us.
Article FIFTH of our restated certificate of incorporation provides that we
shall, to the fullest extent permitted by the General Corporation Law of the
State of Delaware, as amended from time to time, indemnify each person who was
or is a party to any action, suit or proceeding by reason of the fact that he is
or was, or has agreed to become a director or officer of PixTech. The
indemnification provided for in Article FIFTH is expressly not exclusive of any
other rights to which those seeking indemnification may be entitled under any
law, agreement or vote of shareholders or directors or otherwise, and shall
inure to the benefit of the heirs, executors and administrators of these
persons. Article FIFTH also permits the board of directors to authorize the
grant of indemnification rights to our other employees and agents and these
rights may be equivalent to, or greater or less than, those set forth in Article
FIFTH.
Article V, Section 1 of our restated by-laws provides that we shall have
the power to purchase and maintain insurance on behalf of its officers,
directors, employees and agents, against any liability asserted against and
incurred by these persons in any such capacity.
We have entered into indemnification agreements with each of our directors
and have obtained insurance covering our officers and directors against certain
losses and insuring us against certain of its obligations to indemnify its
directors and officers.
Pursuant to the Delaware General Corporation Law, Article FIFTH of our
restated certificate of incorporation eliminates a director's personal liability
for monetary damages to us and our shareholders for breach of fiduciary duty as
a director, except in circumstances involving a breach of the director's duty of
loyalty to us or our shareholders, acts or omissions not in good faith,
intentional misconduct, knowing violations of the law, self-dealing or the
unlawful payment of dividends or repurchase of stock.
We believe that courts in Europe and the U.S. may have jurisdiction in an
action against us, our directors or officers. Such jurisdiction will be
delivered by the laws of the jurisdiction in effect at that time.
PIXTECH, INC.
(A DEVELOPMENT STAGE COMPANY)
ITEM 15 RECENT SALE OF UNREGISTERED SECURITIES.
Since May 1998, we have sold and issued the following unregistered
securities:
On December 22, 1998, we sold 367,269 shares of our series E preferred
stock to certain investors at a price of approximately $22.53 per share and an
aggregate offering price of $8,275,000. In addition, on December 22, 1998, we
sold 222,222 shares of our common stock to certain investor at a price of
approximately $2.25 per share and an aggregate offering price of $500,000.
In January 1999, we sold 150,000 shares of common stock in a private
placement at a price of $2.35 per share, resulting in net proceeds of $352,000.
In May 1999, we issued 7,133,562 shares of common stock and a warrant to
purchase 310,000 shares of our common stock to Micron Technology, Inc. in a
private placement, in consideration of the acquisition of assets from Micron
Technology, Inc. for $17.9 million, including cash for $4.4 million and the
assumption of certain liabilities in the amount of $2.9 million. The warrant may
be exercised until May 19, 2001, and has an exercise price of $2.25313 per
share.
In October 1999, we issued 12,427,146 shares of common stock to Unipac
Optoelectronics Corporation in a private placement at a price of $1.60938 per
share, resulting in net proceeds of $20,000,000.
In April 2000, we issued 9,320,359 to United Microelectronics Corporation
in a private placement at a price of $1.60938 per share, resulting in net
proceeds of $15,000,000.
On August 9, 1999, we entered into the equity line agreement with
Kingsbridge, pursuant to which we may issue and sell, from time to time, shares
of its common stock for cash consideration up to an aggregate of $15 million.
Pursuant to the requirements of the equity line agreement, we have filed this
registration statement in order to permit the investor to resell to the public
any shares that it acquires pursuant to the equity line agreement. Commencing
the date this registration statement was declared effective by the Securities
and Exchange Commission and continuing for a period of 24 months thereafter,
PixTech may from time to time at its sole discretion, and subject to certain
restrictions set forth in the equity line agreement, sell, or put, shares of its
common stock to the investor at a price equal to 88-90 percent of the then
current average market price of our common stock, as determined under the equity
line agreement. Puts can be made every 20 trading days in amounts ranging from a
minimum of $125,000 to a maximum of $1,300,000, depending on the trading volume
and the market price of the common stock at the time of each put. To date, we
have put a total of 2,628,104 shares of our common stock to Kingsbridge.
In conjunction with the equity line agreement, in August 1999, we issued to
Kingsbridge a warrant which entitles the holder to purchase 100,000 shares of
our common stock at a price of $2.30 per share. The warrant is exercisable at
any time ending in February, 2003. The warrant contains provisions that protect
against dilution by adjustment of the exercise price and the number of shares
issuable there under upon the occurrence of certain events, such as a merger,
stock split or reverse stock split, stock dividend or recapitalization. The
exercise price of the warrant is payable either (i) in cash or (ii) by a
"cashless exercise", in which that number of shares of common stock underlying
the warrant having a fair market value at the time of exercise equal to the
aggregate exercise price are cancelled as payment of the exercise price.
PIXTECH, INC.
(A DEVELOPMENT STAGE COMPANY)
No underwriter was engaged in connection with the foregoing issuance of
securities. The above described issuances of common stock, series E preferred
stock, and warrants to purchase common stock were made in reliance upon Section
4(2) of the Securities Act as transactions not involving any public offering and
Regulations D and S promulgated under it. We have reason to believe that all of
the foregoing purchasers were familiar with or had access to information
concerning our operations and financial conditions, and all of those individuals
were acquiring the shares for investment and not with a view to the distribution
thereof. At the time of issuance, all of the foregoing shares of common stock
(other than those shares issued to Kingsbridge pursuant to the equity line
agreement) and series E preferred stock were deemed to be restricted securities
for purposes of the Act and the certificates representing these securities bore
legends to that effect.
PIXTECH, INC.
(A DEVELOPMENT STAGE COMPANY)
ITEM 16. EXHIBITS.
EXHIBIT INDEX
NUMBER DESCRIPTION
2.1 Acquisition agreement between Micron Technology, Inc. and the
Registrant dated March 19, 1999. Filed as an Exhibit with the same
number to the PixTech, Inc. Form 10-Q for the fiscal quarter ended
March 31, 1999 and incorporated herein by reference.
2.2 Amendment Number 1 to Acquisition agreement between Micron
Technology, Inc. and the Registrant dated April 23, 1999. Filed as an
Exhibit with the same number to the PixTech, Inc. Form 10-Q for the
fiscal quarter ended March 31, 1999 and incorporated herein by
reference.
2.3 Amendment Number 2 to Acquisition agreement between Micron Technology,
Inc. and the Registrant dated May 17, 1999. Filed as an Exhibit with
the same number to the PixTech, Inc. Form 10-Q for the fiscal quarter
ended March 31, 1999 and incorporated herein by reference.
3.1 Restated Certificate of Incorporation of Registrant. Filed as Exhibit
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.
4.1 Specimen certificate for shares of Common stock of the Registrant.
Filed as an exhibit with the same number to the PixTech, Inc.
Registration Statement on Form S-1 (Commission File No. 33-93024) and
incorporated herein by reference.
4.2 Warrant to purchase 310,000 shares of Common stock of the Registrant
issued to Micron Technology, Inc. Filed as Exhibit 3 to Micron
Technology, Inc.'s Schedule 13D filed with the Commission on May 28,
1999 and incorporated herein by reference.
4.3 Warrant to purchase 100,000 shares of Common stock of the Registrant
issued to Kingsbridge Capital Limited. Filed as Exhibit 4.7 to the
PixTech, Inc. Registration Statement on Form S-1 (Commission File No.
333-87001) and incorporated herein by reference.
5.1 Opinion of Palmer & Dodge LLP as to the legality of the securities
being registered hereunder. Filed as Exhibit 5.1 to the PixTech, Inc.
Registration Statement on Form S-1 (Commission File No. 333-87001) and
incorporated herein by reference.
10.1 License agreement in the Field of Flat Microtip Screens dated as of
September 17, 1992 between the Registrant and the Commissariat a
l'Energie Atomique, as amended. Filed as Exhibit 10.1 to the PixTech,
Inc. Registration Statement on Form S-1 (Commission File No. 33-93024)
and incorporated herein by reference. English translation filed.
Certain confidential material contained in the document has been
omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 406 of the Securities Act of 1933, as
amended.
10.2 Research and Development agreement in the Field of Flat Microtip
Screens dated September 17, 1992 between the Registrant and the
Commissariat a l'Energie Atomique. Filed as Exhibit 10.2 to the
PixTech, Inc. Registration Statement on Form S-1 (Commission File No.
33-93024) and incorporated herein by reference. English translation
filed. Certain confidential material contained in the document has
been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 406 of the Securities Act of 1933, as
amended.
10.3 Cooperation and license agreement dated June 29, 1993 between the
Registrant and Texas Instruments Incorporated. Filed as Exhibit 10.3
to the PixTech, Inc. Registration Statement on Form S-1 (Commission
File No. 33-93024) and incorporated herein by reference. Certain
confidential material contained in the document has been omitted and
filed separately with the Securities and Exchange Commission pursuant
to Rule 406 of the Securities Act of 1933, as amended.
PIXTECH, INC.
(A DEVELOPMENT STAGE COMPANY)
NUMBER DESCRIPTION
10.4 Cooperation and license agreement dated November 27, 1993 between the
Registrant and Futaba Corporation. Filed as Exhibit 10.4 to the
PixTech, Inc. Registration Statement on Form S-1 (Commission File No.
33-93024) and incorporated herein by reference. Certain confidential
material contained in the document has been omitted and filed
separately with the Securities and Exchange Commission pursuant to
Rule 406 of the Securities Act of 1933, as amended.
10.5 License agreement dated November 27, 1993 between the Registrant and
Futaba Corporation. Filed as Exhibit 10.5 to the PixTech, Inc.
Registration Statement on Form S-1 (Commission File No. 33-93024) and
incorporated herein by reference. Certain confidential material
contained in the document has been omitted and filed separately with
the Securities and Exchange Commission pursuant to Rule 406 of the
Securities Act of 1933, as amended.
10.6 Cooperation and license agreement dated June 1, 1994 between the
Registrant and Raytheon Company. Filed as Exhibit 10.6 to the PixTech,
Inc. Registration Statement on Form S-1 (Commission File No. 33-93024)
and incorporated herein by reference. Certain confidential material
contained in the document has been omitted and filed separately with
the Securities and Exchange Commission pursuant to Rule 406 of the
Securities Act of 1933, as amended.
10.7 ESPRIT Project: 8730 Active Interest for Multimedia with Field
emission display dated December 1, 1993 among the Registrant and other
project participants. Filed as Exhibit 10.7 to the PixTech, Inc.
Registration Statement on Form S-1 (Commission File No. 33-93024) and
incorporated herein by reference.
10.8 Master Lease agreement dated December 12, 1994 between COMDISCO France
S.A. and PixTech France. Filed as Exhibit 10.8 to the PixTech, Inc.
Registration Statement on Form S-1 (Commission File No. 33-93024) and
incorporated herein by reference.
10.9 Purchase agreement dated December 23, 1994 between COMDISCO France
S.A. and PixTech France. Filed as Exhibit 10.9 to the PixTech, Inc.
Registration Statement on Form S-1 (Commission File No. 33-93024) and
incorporated herein by reference.
10.10 Guarantee dated November 29, 1994 between the Registrant and COMDISCO.
Filed as Exhibit 10.10 to the PixTech, Inc. Registration Statement on
Form S-1 (Commission File No. 33-93024) and incorporated herein by
reference.
10.11 Leaseback agreement dated April 5, 1995 between COMDISCO France S.A.
and PixTech France. Filed as Exhibit 10.11 to the PixTech, Inc.
Registration Statement on Form S-1 (Commission File No. 33-93024) and
incorporated herein by reference.
10.12 Contract between L'Agence Nationale de Valorisation de la Recherche
and PixTech France dated March 3, 1993. Filed as Exhibit 10.12 to the
PixTech, Inc. Registration Statement on Form S-1 (Commission File No.
33-93024) and incorporated herein by reference. English translation
filed.
10.13 Amended and Restated 1993 Stock Option Plan. Filed as an appendix to
PixTech's definitive proxy statement filed with the commission on
March 28, 2000.
10.14 1995 Director Stock Option Plan. Filed as Exhibit 10.15 to the
PixTech, Inc. Registration Statement on Form S-1 (Commission File No.
33-93024) and incorporated herein by reference.
10.15 1995 Employee Stock Purchase Plan. Filed as Exhibit 10.16 to the
PixTech, Inc. Registration Statement on Form S-1 (Commission File No.
33-93024) and incorporated herein by reference.
10.16 Real Estate agreement between PixTech France and IBM France dated
February 15, 1994 for space located in Montpellier, France. Filed as
Exhibit 10.18 to the PixTech, Inc. Registration Statement on Form S-1
(Commission File No. 33-93024) and incorporated herein by reference.
English translation filed.
10.17 Agreement of State Support of Technical Development and Research dated
December 30, 1994 between PixTech France and the Ministry of Industry,
Postal Services and Telecommunications and Foreign Trade. Filed as
Exhibit 10.19 to the PixTech, Inc. Registration Statement on Form S-1
(Commission File No. 33-93024) and incorporated herein by reference.
English translation filed. Certain confidential material contained in
the document has been omitted and filed separately with the Securities
and Exchange Commission pursuant to Rule 406 of the Securities Act of
1933, as amended.
10.18 Form of Indemnification agreement between the Registrant and each of
its directors. Filed as Exhibit 10.20 to the PixTech, Inc.
Registration Statement on Form S-1 (Commission File No. 33-93024) and
incorporated herein by reference.
PIXTECH, INC.
(A DEVELOPMENT STAGE COMPANY)
NUMBER DESCRIPTION
10.19 Cooperation and license agreement dated as of June 12, 1995 between
the Registrant and Motorola, Inc. Filed as Exhibit 10.21 to the
PixTech, Inc. Registration Statement on Form S-1 (Commission File No.
33-93024) and incorporated herein by reference. Certain confidential
material contained in the document has been omitted and filed
separately with the Securities and Exchange Commission pursuant to
Rule 406 of the Securities Act of 1933, as amended.
10.20 Lease dated as of March 1, 1996, between the Registrant, as Lessee,
and Frank Deverse as Lessor. Filed as Exhibit 10.23 to the PixTech,
Inc. Form 10-K for the fiscal year ended December 31, 1995 and
incorporated herein by reference.
10.21 Termination agreement dated July 15, 1996 between the Registrant and
Texas Instrument Incorporated. Filed as Exhibit 10 to the PixTech,
Inc. Form 10-Q for the fiscal quarter ended June 30, 1996 and
incorporated herein by reference. Certain confidential material
contained in the document has been omitted and filed separately with
the Securities and Exchange Commission pursuant to Rule 24b-2
promulgated under the Securities Act of 1934, as amended.
10.22 Amendment No. 1 dated February 6, 1997, to the Cooperation and license
agreement between the Registrant and Motorola. Certain confidential
material contained in the document has been omitted and filed
separately with the Securities and Exchange Commission pursuant to
Rule 24b-2 promulgated under the Securities Act of 1934, as amended.
10.23 Foundry agreement between PixTech, S.A. and Unipac Optoelectronics
Corporation dated May 22, 1997. Filed as Exhibit 10.29 to the PixTech,
Inc. Form 10-K for the fiscal year ended December 31, 1997 and
incorporated herein by reference.
10.24 Distribution and Financing agreement between Sumitomo Corporation,
PixTech Inc. and PixTech S.A. dated as of July 21, 1997. Filed as
Exhibit 10.30 to the PixTech, Inc. Form 10-K for the fiscal year ended
December 31, 1997 and incorporated herein by reference.
10.25 Cross-Licensing Period Extension between Raytheon Company and Pixel
International, S.A. (now PixTech S.A.) dated as of September 4, 1997.
Filed as Exhibit 10.31 to the PixTech, Inc. Form 10-K for the fiscal
year ended December 31, 1997 and incorporated herein by reference.
10.26 Amendment No 14 to the license agreement on the Microtips Display
between PixTech, Inc. and the Commissariat a l'Energie Atomique. Filed
as Exhibit 10.32 to the PixTech, Inc. Form 10-K for the fiscal year
ended December 31, 1997 and incorporated herein by reference.
10.27 License agreement, dated March 16, 1998, between the Registrant and
Coloray Display Corporation. Filed as Exhibit 10.1 to the PixTech,
Inc. Form 10-Q for the fiscal quarter ended March 31, 1998 and
incorporated herein by reference.
10.28 Employment agreement of Jean-Luc Grand-Clement dated January 19, 1999.
Filed as Exhibit 10.38 to the PixTech, Inc. Form 10-Q for the fiscal
quarter ended March 31, 1999 and incorporated herein by reference.
10.29 Employment agreement of Michel Garcia dated September 9, 1992. Filed
as Exhibit 10.39 to the PixTech, Inc. Form 10-Q for the fiscal quarter
ended March 31, 1999 and incorporated herein by reference.
10.30 Employment agreement of Jean-Jacques Louart dated April 7, 1997. Filed
as Exhibit 10.40 to the PixTech, Inc. Form 10-Q for the fiscal quarter
ended March 31, 1999 and incorporated herein by reference.
10.31 Lease agreement, dated as of May 19, 1999, between the Registrant and
Micron Technology, Inc. Filed as Exhibit 10.44 to the PixTech, Inc.
Form 10-Q for the fiscal quarter ended June 30, 1999 and incorporated
herein by reference.
10.32 Employment agreement of James J. Cathey dated May 20, 1999. Filed as
Exhibit 10.45 to the PixTech, Inc. Form 10-Q for the fiscal quarter
ended June 30, 1999 and incorporated herein by reference.
10.33 Patent cross license agreement dated May 19, 1999 between the
Registrant and Micron Technology, Inc. Filed as Exhibit 10.46 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.
10.34 Investor Rights agreement dated as of May 19, 1999 between the
Registrant and Micron Technology, Inc. Filed as Exhibit 2 to Micron
Technology, Inc.'s Schedule 13D filed with the Commission on May 28,
1999 and incorporated herein by reference.
10.35 Private Equity Line agreement by and between Kingsbridge Capital
Limited and PixTech, Inc. dated as of August 9, 1999. Filed as Exhibit
10.48 to the PixTech, Inc. Registration Statement on Form S-1
(Commission File No. 333- 87001) and incorporated herein by reference.
PIXTECH, INC.
(A DEVELOPMENT STAGE COMPANY)
NUMBER DESCRIPTION
10.36 Registration Rights agreement dated as of August 9, 1999 by and
between PixTech, Inc. and Kingsbridge Capital Limited. Filed as
Exhibit 10.49 to the PixTech, Inc. Registration Statement on Form S-1
(Commission File No. 333- 87001) and incorporated herein by reference.
10.37 Common stock Purchase Agreement by and between PixTech, Inc. Unipac
Optoelectronics Corporation dated as of October 6, 1999. Filed as
Exhibit 10.50 to the PixTech, Inc. Current Report on form 8-K filed on
October 28, 1999 and incorporated herein by reference.
10.38 Employment Agreement of Dieter Mezger dated February 2nd, 2000. Filed
as Exhibit 10.51 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.
10.39 Amendment, dated February 29, 2000, to Common stock Purchase Agreement
by and between PixTech, Inc. and Unipac Optoelectronics Corporation
dated as of October 6, 1999. Filed as Exhibit 2.1 to the PixTech, Inc.
Current Report on Form 8-K filed on May 8, 2000 and incorporated
herein by reference.
21.1 Subsidiaries of the Registrant. Filed as an exhibit with the same
number to the PixTech, Inc. Registration Statement on Form S-1
(Commission File No. 33-93024) and incorporated herein by reference.
23.1 Consent of Ernst & Young. Filed herewith.
23.2 Consent of Palmer & Dodge. Included in Exhibit 5.1.
PIXTECH, INC.
(A DEVELOPMENT STAGE COMPANY)
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of this Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represents a fundamental change in the information set
forth in this Registration Statement. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
20 percent change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the effective
Registration Statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in this Registration Statement
or any material change to such information in this Registration
Statement;
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination
of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
the Registrant's annual report pursuant to Section 13(a) or Section 15(d)
of the Securities Exchange Act of 1934 (and, where applicable, each filing
of an employee benefit plan's annual report pursuant to Section 15(d) of
the Securities Exchange Act of 1934) that is incorporated by reference in
this Registration Statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial bona fide
offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the provisions referred to in Item 15 hereof, or
otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense
of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
PIXTECH, INC.
(A DEVELOPMENT STAGE COMPANY)
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, we certify that
it has reasonable grounds to believe that it meets all of the requirements for
filing on Form S-1 and has duly caused this Post-Effective Amendment No. 2 to
the Registration Statement on Form S-1, File No. 333-87001, to be signed on its
behalf by the undersigned, thereunto duly authorized on this 23rd day of May,
2001.
PIXTECH, INC
------------------------------------------------
Dieter Mezger
President and Chief Executive Officer,
Pursuant to the requirements of the Securities Act of 1933, this Post-Effective
Amendment to Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated:
Signature Title Date
- --------- ----- ----
____________________ President and Chief Executive Officer May 23, 2001
Dieter Mezger (Principal Executive Officer) and
Director
_____________________ Chairman of the Board May 23, 2001
Jean-Luc Grand-Clement
____________________ Chief Financial Officer (Principal May 23, 2001
Marie Boem Financial and Accounting Officer)
_______________________ Director May 23, 2001
Bruce Gnade
_________________ Director May 23, 2001
Ronald J. Ritchie
____________________ Director May 23, 2001
Andre Borrel