<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to _________
Commission File No. 0-28146*
UNIVERSAL DISPLAY CORPORATION
(Exact name of small business issuer as specified in its charter)
PENNSYLVANIA 23-2372688
------------ ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
THREE BALA PLAZA EAST
SUITE 104
BALA CYNWYD, PA 19072
(Address of principal executive offices) (Zip Code)
(610) 617-4010
(Issuer's telephone number, including area code)
UNIVERSAL DISPLAY CORPORATION, 1221 CENTENNIAL ROAD, PENN VALLEY, PA 19072
(Former name, former address and former fiscal year if changed since last
report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15 (d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports)
and (2) has been subject to such filing requirements for the past 90 days.
Yes X No ________
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15 (d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court.
Yes_______ No_______
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: As of June 30, 1996, the
registrant had outstanding 8,937,268 shares of common stock, par value $.01 per
share.
Transitional Small Business Disclosure Format (check one):
Yes_______ No_______
* The Company has registered its common stock under Section 12(b) of the
Securities and Exchange Act on a Form 8-A filed August 6, 1996 but has not
received a file number concerning such registration.
<PAGE> 2
<TABLE>
<CAPTION>
INDEX PAGE
----- ----
<S> <C>
Part I - Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets
June 30, 1996 and December 31, 1995 3
Consolidated Statements of Operations - Three months
ended June 30, 1996 and 1995, and inception to date 4
Consolidated Statement of Operations - Six months
ended June 30, 1996 and 1995, and inception to date 5
Consolidated Statements of Cash Flows - Six months
ended June 30, 1996 and 1995, and inception to date 6
Notes to Consolidated Financial Statements 7-9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10-11
Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K. 11
</TABLE>
<PAGE> 3
PART I. - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARY
(A DEVELOPMENT-STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS June 30, 1996 December 31, 1995
------ ------------- -----------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents (see note 2) $1,972,507 $ 40
Short term investments (see note 2) 2,026,502 --
----------
Other current assets 160,033 --
---------- ----------
Total current assets 4,159,042 40
========== ==========
EQUIPMENT, net of accumulated depreciation 10,136 5,144
of $2,230 and $1,029 ---------- ----------
Total Assets $4,169,178 $ $5,184
========== ==========
LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable and accrued expenses $10,302 $ 483,700
Payable to related parties -- 105,476
---------- ----------
Total current liabilities 10,302 589,176
========== ==========
SHAREHOLDERS' DEFICIT:
Preferred Stock, par value $.01 per share,
5,000,000 shares authorized 200,000 shares
designated - Series A Nonconvertible Preferred
Stock, par value $.01 per share, 200,000 shares
issued and outstanding (liquidation value of $7.50 2,000 2,000
per share or $1,500,000)
Common Stock par value $.01 per share, 25,000,000
shares authorized, 8,937,268 shares issued and
outstanding in 1996 and 7,637,268 shares issued and
outstanding in 1995 89,373 76,373
Additional paid in capital 7,914,345 2,421,417
Deficit accumulated during development-stage (3,846,842) (3,083,782)
---------- ----------
Total shareholders' equity (deficit) 4,158,876 (583,992)
Total liabilities and shareholders' equity (deficit) $4,169,178 $ 5,184
========== ==========
</TABLE>
The accompanying notes are an integral part of these statements
-3-
<PAGE> 4
UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARY
(A DEVELOPMENT-STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Period From Inception
------------ ---------------------
Ended June 30, (June 17, 1995 to June
-------------- ----------------------
30, 1996)
---------
1996 1995
---- ----
<S> <C> <C> <C>
OPERATING EXPENSES:
Research and development (see note 3) $182,513 $1,707,739 $2,439,252
General and administrative 291,454 452,273 1,455,005
---------- ---------- ----------
Total operating expenses 473,967 2,160,012 3,894,257
========== ========== ==========
OTHER INCOME AND EXPENSES:
Interest income 47,415 -- 47,415
---------- ---------- ----------
Total other income and expenses 47,415 -- 47,415
---------- ---------- ----------
NET LOSS ($426,552) ($2,160,012) ($3,846,842)
========== ========== ==========
NET LOSS PER COMMON SHARE ($0.05) ($0.28)
========== ==========
WEIGHTED AVERAGE NUMBER OF
SHARES USED IN COMPUTING NET
LOSS PER COMMON SHARE 8,794,411 8,145,806
========== ==========
</TABLE>
The accompanying notes are an integral part of these statements
-4-
<PAGE> 5
' UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARY
(A DEVELOPMENT-STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
Six Months Period From Inception
---------- ---------------------
Ended June 30, (June 17, 1995 to June
-------------- ----------------------
30, 1996
--------
1996 1995
---- ----
<S> <C> <C> <C>
OPERATING EXPENSES:
Research and development (see note 3) $ 365,513 $1,707,739 $2,439,252
General and administrative 444,962 592,280 1,455,005
---------- ---------- ----------
Total operating expenses 810,475 2,300,019 3,894,257
---------- ---------- ----------
OTHER INCOME AND EXPENSES:
Interest income 47,415 -- 47,415
---------- ---------- ----------
Total other income and expenses 47,415 -- 47,415
---------- ---------- ----------
NET LOSS ($763,060) ($2,300,019) ($3,846,842)
========== ========== ==========
NET LOSS PER COMMON SHARE ($0.09) ($0.28)
========== ==========
WEIGHTED AVERAGE NUMBER OF
SHARES USED IN COMPUTING NET
LOSS PER COMMON SHARE 8,541,537 8,145,806
========= =========
</TABLE>
The accompanying notes are an integral part of these statements
-5-
<PAGE> 6
UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARY
(A DEVELOPMENT-STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Six Months Period From Inception
---------- ---------------------
Ended June 30, (June 17, 1995 to June
-------------- ----------------------
30, 1996
--------
1996 1995
---- ----
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net Loss ($763,060) ($2,300,019) ($3,846,842)
Adjustments to reconcile net loss to
net cash used in operating activities -- -- --
Depreciation 1,200 -- 2,230
Issuance of Common Stock options -- 9,950 9,950
Acquired in-process technology -- 350,000 350,000
Changes in current assets and
liabilities: other current assets (160,033) -- (160,033)
Increases (decreases) in - Accounts
payable and accrued expenses (473,398) 579,295 (33,858)
Payable to related parties (105,476) 74,383 250,000
Net cash used in operating activities (1,500,767) 1,286,391 (3,428,554)
---------- --------- ----------
INVESTING ACTIVITIES:
Purchases of equipment (6,192) -- (12,365)
Purchases of Short Term Investments (2,026,502) -- (2,026,502)
---------- ---------- ----------
Net cash used in investing activities (2,031,644) -- (2,038,867)
---------- ---------- ----------
FINANCING ACTIVITIES:
Proceeds from issuance of common stock 5,505,928 1,513,000 7,439,928
Net cash provided by financing 5,505,928 1,513,000 7,439,928
INCREASE IN CASH AND CASH EQUIVALENT 1,972,467 226,609 1,972,507
CASH AND CASH EQUIVALENTS BEGINNING PERIOD 40 -- --
---------- ---------- ----------
CASH AND CASH EQUIVALENTS END OF PERIOD $1,972,507 $ 226,609 $1,972,507
========== ========== ==========
</TABLE>
-6-
<PAGE> 7
UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARY
(A DEVELOPMENT-STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. - BACKGROUND
Universal Display Corporation (the "Company"), a development-stage company, was
organized to fund the research and development of organic light emitting diode
("OLED") technology for potential commercial applications in full color, flat
panel, emissive light displays. The Company intends to enter into licensing
arrangements and other strategic alliances for the manufacture and marketing of
flat panel displays utilizing the OLED technology.
The Company, formerly known as Enzymatics, Inc. ("Enzymatics"), was
incorporated under the laws of the Commonwealth of Pennsylvania on April 24,
1985 and commenced its current business activities on August 1, 1994. The New
Jersey corporation formerly known as Universal Display Corporation ("UDC") was
incorporated under the laws of the State of New Jersey on June 17, 1994. On
June 22, 1995, a wholly-owned subsidiary of the Company consummated an
Agreement and Plan of Reorganization with UDC (the "Merger"). At the time of
the Merger, UDC was engaged in the business which is currently being conducted
by the Company. Prior to the Merger, the Company was known as Enzymatics, an
inactive Pennsylvania corporation, and was engaged in a business separate from
and unrelated to that of UDC.
The Merger was treated, for accounting purposes, as a recapitalization of UDC
whereby UDC issued 523,268 shares of Common Stock to the Enzymatics
shareholders and assumed Enzymatics shareholders deficit of $184,160. The
assets and liabilities of both companies have been recorded at their historical
book values in these financial statements. The assets of Enzymatics consisted
of cash and its liabilities consisted of payables related to the Merger and
other professional fees.
UDC was the surviving corporation in the Merger, changed its name to UDC, Inc.
and, as a result of the Merger, became a wholly-owned subsidiary of Enzymatics.
At the effective time of the Merger, Enzymatics changed its name to Universal
Display Corporation.
Research and development of the OLED technology is being conducted at the
Advanced Technology Center for Photonics and Optoelectronic Materials at
Princeton University and at the University of Southern California ("USC") (on a
subcontract basis with Princeton University), pursuant to a Sponsored Research
Agreement dated August 1, 1994, as amended (the "1994 Sponsored Research
Agreement"), originally between the Trustees of Princeton University
("Princeton University") and American Biomimetics Corporation ("ABC"), a
privately held Pennsylvania corporation and affiliate of the Company. The 1994
Sponsored Research Agreement, assigned to the Company by ABC in November 1995,
expires on July 31, 1997. Pursuant to a license agreement dated August 1, 1994
(the "1994 License Agreement") between Princeton University and ABC, assigned
to the Company by ABC in June 1995, the Company has a worldwide exclusive
license to manufacture and market products based on Princeton University's
pending patent application relating to the OLED technology and the right to
obtain a similar license to inventions conceived or discovered under the 1994
Sponsored Research Agreement. Sherwin I. Seligsohn, Chairman, President and
Chief Executive Officer of the Company, holds similar positions in ABC, a
company which is controlled by members of his family.
The Company is a development-stage entity with no significant operating
activity to date. Expenses incurred have primarily been in connection with
research and development funding, business planning, obtaining financing and
administrative activities. The developmental nature of the activities is such
that significant inherent risks exist in the Company's operations. To the
extent that Princeton University's research efforts do not result in the
development of commercially viable applications for the OLED technology, the
Company will not have any meaningful operations. Even if a product
incorporating the OLED technology is developed and introduced into the
marketplace, additional time and funding may be necessary before significant
revenues are realized. In addition, if a commercial sale is not made in the
required time period, as defined, Princeton University may terminate the 1994
Sponsored Research and License Agreements. Completion of the commercialization
of the Company's technology will require funds substantially greater than the
proceeds of the April 11, 1996 public offering. There is no assurance that
such financing will be available to the Company when needed, on commercially
reasonable terms or at all. Also, while the Company funds the OLED technology
research, the scope of and technical aspects of the research and the resources
and efforts directed to
-7-
<PAGE> 8
such research is subject to the control of Princeton University and the
principal investigators. Accordingly, the Company's success is dependent on
the efforts of Princeton University and the principal investigators. The 1994
Sponsored Research Agreement provides that if certain of the principal
investigators are unavailable to continue to serve as a principal investigator,
because such person is no longer associated with Princeton University or USC or
otherwise, and a successor acceptable to both the Company and Princeton
University is not available, the 1994 Sponsored Research Agreement will
terminate. Further, the 1994 Sponsored Research Agreement expires in July
1997.
NOTE 2. - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
SUMMARY FINANCIAL INFORMATION AND RESULTS OF OPERATIONS
In the opinion of the Company, the accompanying unaudited Consolidated
Financial Statements contain all adjustments (consisting of only normal
recurring adjustments) necessary to present fairly the financial position as of
June 30, 1996, the results of operations for the three and six months ended
June 30, 1996 and 1995, and the cash flows for the six months ended June 30,
1996 and 1995.
INTERIM FINANCIAL INFORMATION
While the Company believes that the disclosures presented are adequate to make
the information not misleading, these Consolidated Financial Statements should
be read in conjunction with the Consolidated Financial Statements and the notes
in the Company's latest year end financial statements, which were included in a
registration statement filed on Form SB-2.
PUBLIC OFFERING
On April 11, 1996, the Company consummated a public offering of 1,300,000
shares of common stock at a price of $5.00 per share and redeemable warrants to
purchase 1,495,000 shares of common stock at an exercise price of $3.50 per
share, at a price of $.10 per warrant. The Company received net cash proceeds
of $5,282,665 from the public offering (excluding $223,263 representing a
portion of the offering expenses previously charged to general and
administration expenses). Subsequent to the public offering, Arthur Andersen
LLP reissued their report of independent public accountants and removed its
going concern explanatory paragraph (see exhibit 99).
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Universal Display
Corporation and its wholly-owned subsidiary, UDC, Inc. All significant
intercompany transactions and accounts have been eliminated.
MANAGEMENT'S USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles 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 revenues and expenses during the reporting period.
Actual results could differ from those estimates.
STATEMENTS OF CASH FLOWS
For purposes of the Consolidated Statements of Cash Flows, the Company
considers all highly liquid debt instruments consisting of money market
accounts with original maturities of three months or less to be cash
equivalents. Included in short term investments are certificate of deposits
whose maturities are less than one year.
EQUIPMENT
Equipment is stated at cost and depreciated on a straight-line basis over 3
years.
-8-
<PAGE> 9
NET LOSS PER COMMON SHARE
Net loss per Common share was calculated by dividing the net loss by the
weighted average number of Common shares outstanding for the respective
periods. Pursuant to the requirements of the Securities and Exchange
Commission, Common stock issued by the Company during the twelve months
immediately preceding the initial public offering has been included in the
calculation of shares used in computing net loss per Common share as if they
were outstanding for all periods presented up to the April 1996 public
offering. In addition, options and warrants to purchase Common stock issued by
the Company during the twelve months immediately preceding the public offering
have been included in the calculation of shares used in computing net loss per
Common share as if they were outstanding for all periods presented up to the
April 1996 public offering (using the treasury stock method and an initial
offering price of $5.00 per share).
RESEARCH AND DEVELOPMENT
Expenditures for research and development expense are charged to operations as
incurred.
NOTE 3. - SPONSORED RESEARCH AGREEMENT WITH PRINCETON UNIVERSITY
On August 1, 1994, ABC entered into the 1994 Sponsored Research Agreement with
Princeton University which was transferred to the Company in 1995, to fund and
develop the OLED technology over a three-year period. Research is also being
performed at USC on a subcontract basis with Princeton University. The
Company has an exclusive worldwide license to manufacture and market products
based on Princeton University's pending patent application relating to the OLED
technology and the right to obtain a similar license to inventions conceived or
discovered under the 1994 Sponsored Research Agreement. The Company is required
to pay Princeton University a royalty in the amount of 3% of the Company's net
sales of products utilizing the OLED technology. In certain circumstances where
the Company sublicenses the OLED technology (except to affiliates), the Company
must pay Princeton University one-half of all amounts received by the Company.
These royalty rates are subject to upward adjustments under certain conditions.
In connection with the 1994 Sponsored Research Agreement, the Company is
obligated to make certain payments to Princeton University. The minimum
payments under this agreement as of June 30, 1996 are as follows:
<TABLE>
<S> <C>
August 1, 1996 173,687
November 1, 1996 173,687
February 1, 1997 173,687
May 1, 1997 173,687
----------
$694,748
==========
</TABLE>
On February 2, 1996, the Company received a deferral from Princeton University
of the February 1, 1996 required payment until the contemplated public offering
was completed or March 30, 1996, whichever was earlier. On March 20, 1996, the
deferral from Princeton University was amended to state that the payment was
due immediately upon consummation of the contemplated public offering. On April
11, 1996, the Company consummated its public offering and the February 1, 1996
payment of $183,000 was made to Princeton University.
-9-
<PAGE> 10
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
Since inception, the Company has been engaged, and for the foreseeable future
expects to continue to be engaged, exclusively in funding research and
development activities related to the OLED technology and attempting to
commercialize such technology. To date, the Company has not generated any
revenues and does not expect to generate any meaningful revenues for the
foreseeable future and until such time, if ever, as it successfully
demonstrates that the OLED technology is commercially viable for one or more
flat panel display applications and enters into license agreements with third
parties respecting the technology. The Company has incurred significant losses
since its inception, resulting in an accumulated deficit of $3,846,842 at June
30, 1996. The rate of loss is expected to increase as the Company's activities
increase and losses are expected to continue for the foreseeable future and
until such time, if ever, as the Company is able to achieve sufficient levels
of revenue from the commercial exploitation of the OLED technology to support
its operations.
The Company's present commercialization strategy is to seek to license the OLED
technology initially for use in multi-color, small area, low information
content displays, such as alpha-numeric displays for use in cellular
telephones, other consumer electronic products and appliances and indicator
lights for instrument panels. The Company also intends to seek to license the
OLED technology for application in full color, large area, high resolution,
high information content displays, such as portable and desktop computer
monitors and televisions.
RESULTS OF OPERATIONS / LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 1996, the Company had cash of $1,972,507 compared to $40 at
December 31, 1995. On April 11, 1996, the Company completed a public offering
of 1,300,000 shares of common stock at a price of $5.00 per share and redeemable
warrants to purchase 1,495,000 shares of common stock at an exercise price of
$3.50 per share, at a price of $.10 per warrant. The Company received net cash
proceeds of $5,282,665 from the public offering (excluding $223,263
representing a portion of the offering expenses previously charged to general
and administrative expenses). Net working capital increased to $4,148,740
at June 30, 1996 from $(589,136) at December 31, 1995, as a result of the
April 11, 1996 public offering.
The Company anticipates, based on management's internal forecasts and
assumptions relating to its operations (including assumptions regarding the
progress of research and development, the availability and amount of other
sources of funding available to Princeton University for research relating to
the OLED technology and the timing and costs associated with the preparation,
filing and prosecution of patent applications and the enforcement of
intellectual property rights), that the proceeds of April 11, 1996 offering
will be sufficient to satisfy the Company's contemplated cash requirements for
a minimum of twelve months from April 11, 1996.
QUARTER ENDED JUNE 30, 1996 COMPARED TO QUARTER ENDING MARCH 31, 1995
The Company had a net loss of $426,552 (or $.05 per share) for the period
ending June 30, 1996 compared to a loss of $2,160,012 (or $.27 per share) for
the quarter ending June 30, 1995. The loss for the quarter ended June 30, 1996
is attributed to research and development expenses associated with the
development of OLED technology and the 1994 Sponsored Research Agreement with
Princeton University and general and administrative expenses. The loss for the
quarter ending June 30, 1995 was due to the sublicense agreement with payments
for sponsored research paid to Princeton University and reimbursement to ABC
for prior payments to Princeton University and costs associated with financing
activities (see Notes 1 and 3 of the Consolidated Financial Statements). These
costs were incurred as the merger with Enzymatics and a private placement
Company's securities was consummated. The net proceeds from the private
placement was $1,513,000 (excluding issuance expenses previously charged to
general and administrative expenses) and the Company sold 781,500 units at a
price of $2.00 per unit. Each unit consisted of one share of Common stock and
one warrant to purchase one share of common stock at a price of $3.50 per
share.
-10-
<PAGE> 11
SIX MONTHS ENDED JUNE 30, 1996 COMPARED TO SIX MONTHS ENDED JUNE 30, 1995
The Company had a net loss of $763,050 (or $.09 per share) for the six months
ended June 30, 1996 compared to $2,300,019 (or $.28 per share) for the same
period in 1995. The loss for the period ended June 30, 1996 was attributed to
research and development expenses associated with the development of OLED
technology and the 1994 Sponsored Research Agreement with Princeton University
and general and administrative expenses. The loss for the same period in 1995
was attributed to the sublicense agreement with ABC, payments for sponsored
research paid to Princeton University and reimbursement to ABC for prior
payments to Princeton University, costs associated with financing activities
and general and administrative expenses. See Notes 1 and 3 of the Consolidated
Financial Statements.
This Quarterly Report contains forward-looking statements which involve risks
and uncertainties. The Company's actual results may differ significantly from
the results discussed in forward-looking statements. Factors that might cause a
difference include, but are not limited to those discussed in "Risk Factors".
PART II. - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS:
<TABLE>
<CAPTION>
Exhibit
Number
<S> <C>
11 Net loss per common share calculation
27 Financial Data Schedule
99 Revised Report of Independent Public Accountants
</TABLE>
(B) REPORTS ON FORM 8-K:
None to report.
-11-
<PAGE> 12
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
UNIVERSAL DISPLAY CORPORATION
/s/ Sidney D. Rosenblatt
Date: August 14, 1996 -------------------------------
Sidney D. Rosenblatt
(Executive Vice President, Chief
Financial Officer, Treasurer and
Secretary)
-12-
<PAGE> 13
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Sequential
Number Description Page No.
- ------- ----------- ---------
<S> <C>
11 Net loss per common share calculation
27 Financial Data Schedule
99 Revised Report of Independent Public Accountants Audit Report
</TABLE>
<PAGE> 1
UNIVERSAL DISPLAY CORPORATION
(A DEVELOPMENT-STAGE COMPANY)
NET LOSS PER COMMON SHARE CALCULATION (A)
<TABLE>
<CAPTION>
Three Months Six months
------------ ----------
Ended June 30, Ended June 30,
-------------- --------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net loss per common share:
Net Loss......................... (426,552) (2,160,012) (763,060) (2,300,019)
Weighted average number of shares
outstanding...................... 8,794,411 6,000,000 8,287,268 6,000,000
Incremental number of shares related
to Common Stock issuances within
12 months of the initial public
offering......................... -- 1,637,268 -- 1,637,268
Incremental number of shares related
to Common Stock options and warrants
granted within 12 months of the
initial public offering.......... -- 508,538 254,269 508,538
--------- ---------- ---------- ---------
Adjusted weighted average
number of shares 8,794,411 8,145,806 8,541,537 8,145,806
outstanding...................... ========= ========= ========= =========
Net loss per common share............ ($0.05) ($0.27) ($0.09) ($0.28)
===== ===== ===== =====
</TABLE>
(A) Net loss per Common share was calculated by dividing the net loss by the
weighted average number of Common shares outstanding for the respective
periods. Pursuant to the requirements of the Securities and Exchange
Commission, Common stock issued by the Company during the twelve months
immediately preceding the initial public offering has been included in the
calculation of shares used in computing net loss per Common share as if
they were outstanding for all periods presented up to the April 1996 public
offering. In addition, options and warrants to purchase Common stock issued
by the Company during the 12 months immediately preceding the public
offering have been included in the calculation of shares used in computing
net loss per Common share as if they were outstanding for all periods
presented up to the April 1996 public offering (using the treasury stock
method and an initial public offering price of $5.00 per share.)
<PAGE> 1
ARTHUR ANDERSEN LLP
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Universal Display Corporation:
We have audited the accompanying consolidated balance sheets of Universal
Display Corporation (a Pennsylvania corporation in the development-stage) and
subsidiary as of December 31, 1994 and 1995, and the related consolidated
statements of operations, shareholders' deficit and cash flows for the period
from inception (June 17, 1994) to December 31, 1994, the year ended December
31, 1995 and the period from inception (June 17, 1994) to December 31, 1995.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. 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
Universal Display Corporation and subsidiary as of December 31, 1994 and 1995,
and the results of their operations and their cash flows for the period from
inception (June 17, 1994) to December 31, 1994, the year ended December 31,
1995 and the period from inception (June 17, 1994) to December 31, 1995, in
conformity with generally accepted accounting principles.
/s/ ARTHUR ANDERSEN LLP
Philadelphia, Pa.,
February 2, 1996 (except with
respect to the matters discussed
in Notes 3 and 10, as to which
the date is April 11, 1996)
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 1,972,507
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0
2,000
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</TABLE>
