<PAGE>
FORM 10-Q
---------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 1996
-------------
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
---- ----
Commission file number 0-26380
-------------------------------
PIXTECH, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 04-3214691
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
Avenue Olivier Perroy, 13790 Rousset, France
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
011-33-42-29-10-00
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(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No .
- --
The number of shares outstanding of each of the issuer's classes of common stock
as of
Class Outstanding at June 30, 1996
----- ----------------------------
Common Stock, $.01 par value 8,136,146
<PAGE>
PIXTECH, INC.
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TABLE OF CONTENTS
-----------------
PAGE NO.
PART I FINANCIAL INFORMATION
ITEM 1 Financial Statements
Balance Sheets as of June 30, 1996
and December 31, 1995.......................... 3
Statements of Operations for the Six Months
Ended June 30, 1996 and 1995,
and the period from June 18, 1992 Ended
June 30, 1996.................................. 4
Statements of Cash Flows for the Six Months
ended June 30, 1996 and 1995, and the period
from June 18, 1992 Ended June 30, 1996......... 5
Statement of Stockholders' Equity.............. 6 - 7
Notes to Financial Statements.................. 8 - 9
ITEM 2 Management's Discussion and Analysis
of Financial Condition and Results of
Operations..................................... 10 - 11
PART II OTHER INFORMATION
ITEM 1 Legal Proceedings.............................. 12
ITEM 2 Changes in Securities.......................... 12
ITEM 3 Default upon Senior Securities................. 12
ITEM 4 Submission of matters to a vote of
security holders............................. 12
ITEM 5 Other Information.............................. 12
ITEM 6 Exhibits and Reports on Form 8-K............... 12
Signatures...................................................... 13
- 2 -
<PAGE>
PixTech, Inc.
(a development stage company)
CONDENSED CONSOLIDATED BALANCE SHEET
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
------------- ----------------
ASSETS (unaudited)
Current assets:
<S> <C> <C>
Cash and cash equivalents............. $ 11,704 $ 17,563
Accounts receivable:
Trade............................... 3,690 5,420
Other............................... 57 187
Inventory............................. 604 411
Other................................. 3,142 3,229
--------- ---------
Total current assets.............. 19,197 26,810
Land and building under construction.... 597 --
Property, plant and equipment, net...... 11,989 12,608
Goodwill, net ......................... 334 --
Deferred tax assets..................... 5,252 5,469
Other assets - long term................ 375 492
--------- ---------
Total assets...................... $ 37,744 $ 45,379
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long term debt..... $ 623 $ 623
Current portion of capital lease
obligations.......................... 904 907
Current portion of long term
liabilities.......................... 1,650 1,650
Accounts payable...................... 3,074 6,140
Accrued expenses...................... 1,550 1,290
Other................................. 24 281
--------- ---------
Total current liabilities......... 7,825 10,891
Deferred revenue - long term............ 2,772 3,093
Long term debt, less current portion.... 2,977 3,268
Capital lease obligation, less current
portion................................ 1,314 1,825
Other long term liabilities, less
current portion........................ 1,757 1,772
--------- ---------
Total liabilities................. 16,645 20,849
======== ========
Stockholders' equity
Convertible preferred stock........... -- --
Common stock.......................... 81 81
Other stockholders' equity............ 33,773 34,359
Deficit accumulated during development
stage................................. (12,755) (9,910)
Total stockholders' equity........ 21,099 24,530
--------- ---------
Total liabilities and
stockholders' equity............. $ 37,744 $45,379
======== ========
</TABLE>
See accompanying notes.
- 3 -
<PAGE>
PixTech, Inc.
(a development stage company)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
Period from
June 18, 1992
Three Months Ended Six Months Ended (date of
June 30, June 30, inception)
through
---------------------- -------------------- June 30,
1996 1995 1996 1995 1996
---------- ----------- ---------- --------- ---------------
<S> <C> <C> <C> <C> <C>
Revenues:
Cooperation & license revenues........ $ 2,636 $ 3,000 $ 4,526 $ 3,000 $ 22,364
Product sales......................... 178 -- 361 102 1,206
Other revenues........................ 47 305 981 509 2,364
-------- -------- -------- -------- ---------
2,861 3,305 5,868 3,611 25,934
-------- -------- -------- -------- ---------
Cost of revenues
License fees and royalties............ -- 600 -- 600 1,314
-------- -------- -------- -------- ---------
Gross margin............................ 2,861 2,705 5,868 3,011 24,620
-------- -------- -------- -------- ---------
Operating expenses:
Research and development:
Acquisition of intellectual property
rights............................... -- 3,111 -- 3,111 4,895
Other................................ 3,721 2,467 7,222 5,395 28,986
-------- -------- -------- -------- ---------
3,721 5,578 7,222 8,506 33,881
Sales and marketing................... 214 307 446 550 3,035
General and administrative............ 787 465 1,475 913 6,654
-------- -------- -------- -------- ---------
Total operating expenses........... 4,722 6,350 9,143 9,969 43,570
-------- -------- -------- -------- ---------
Loss from operations.................... (1,861) (3,645) (3,275) (6,958) (18,950)
Other income/(expense)
Interest income/(expense)............. (9) (69) 88 (272) 361
Foreign exchange gains/(losses)....... 316 (74) 342 601 686
-------- -------- -------- -------- ---------
307 (143) 430 329 1,047
Loss before income tax benefit.......... (1,554) (3,788) (2,845) (6,629) (17,903)
Income tax benefit...................... -- 507 -- 707 5,148
-------- -------- -------- -------- ---------
Net Loss................................ $(1,554) $(3,281) $(2,845) $(5,922) (12,755)
======== ======== ======== ======== =========
Pro Forma Net Loss per share: $(.19) $(.53) $(.35) $(.95)
======= ======= ======= =======
Shares used in computing proforma net
loss per share 8,139 6,218 8,131 6,217
======= ======= ======= =======
</TABLE>
See accompanying notes.
- 4 -
<PAGE>
PixTech, Inc.
(a development stage company)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
Period from
June 18, 1992
(date of
inception)
Six Months Ended through
June 30, June 30,
-------------------- -------------
1996 1995 1996
--------- --------- -------------
<S> <C> <C> <C>
Net loss................................ $(2,845) $(5,922) $ (12,755)
Total adjustments to net loss........... 259 668 2,026
------- ------- ---------
Net cash used in operating activities... (2,586) (5,254) (10,729)
------- ------- ---------
Investing activities
Additions to property plant and
equipment.............................. (2,196) (1,246) (12,625)
Additions to intangible assets.......... (130) -- (130)
------- ------- ---------
Net cash used in investing activities... (2,326) (1,246) (12,755)
Financing activities
Stock issued............................ 4 5 33,924
Sale of treasury stock.................. -- 11 --
Proceeds from long-term borrowings...... -- 4,160 6,190
Proceeds from sale leaseback
transactions........................... -- 2,730 2,731
Payments for equipment purchases
financed by accounts payable........... -- (2,364) (2,709)
Repayment of long term borrowing and
capital lease obligations ............ (535) (1,137) (3,464)
------- ------- ---------
Net cash (used in)/provided by
financing activities................... (531) 3,405 36,672
------- ------- ---------
Effect of exchange rates on cash........ (416) (1,074) (1,484)
------- ------- ---------
Net (decrease)/increase in cash and
cash equivalents....................... (5,859) (4,169) 11,704
Cash and cash equivalents beginning of
period................................. 17,563 4,736 --
------- ------- ---------
Cash and cash equivalents end of period. $11,704 $ 567 $ 11,704
======== ======== =========
</TABLE>
See accompanying notes.
- 5 -
<PAGE>
PixTech, Inc.
(a development stage company)
Condensed Consolidated Statement of Stockholders' Equity
(in thousands, except share amounts)
<TABLE>
<CAPTION>
Convertible Preferred stock
---------------------------------------------------------------------------------
Series A Series B Series C Series D
Shares issued Amount Shares issued Amount Shares issued Amount Shares Issued Amount
------------- -------- --------------- -------- --------------- -------- ------------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at June 18, 1992
Issuance of Series A
convertible preferred
stock, net of issuance
costs -- $9 in June......... 211,681 $ 130
Issuance of Series B
convertible
preferred stock
in June .................... 57,522 $38
Issuance of Common
stock in June..
Issuance of
Series A
convertible preferred
stock in August............. 29,451 32
Issuance of Series A
convertible preferred
stock in September.......... 293,455 544
Issuance of
Series B convertible
preferred stock
in September................ 65,483 121
Translation adjustment......
Net Loss from
June 18, 1992
(date of inception)
through December 31, 1992...
------------- -------- --------------- --------
Balance at December 31, 1992 534,587 706 123,005 159
Issuance of Series A
convertible preferred
stock in January............ 145,600 181
Issuance of Common
stock in January............
Issuance of
Series A convertible
preferred stock in March.... 876,816 1,481
Issuance of
Series B convertible
preferred stock 240,442 430
in March....................
Issuance of
Series C convertible
preferred stock,
net of issuance
costs -- $71 in December.... 1,999,011 $5,686
Issuance of
Series D convertible
preferred stock,
net of issuance
costs -- $15
in December................. 430,208 $1,224
Translation adjustment......
Net income --
Year ended
December 31, 1993...........
------------- -------- --------------- -------- --------------- -------- ------------- ------
Balance at December 31, 1993 1,557,003 2,368 363,447 589 1,999,011 5,686 430,208 1,224
Issuance of Common
stock under stock
option plan in April........
Purchase of 28,761
shares of Common
stock - Treasury
stock in April..............
Issuance of
Series C convertible
preferred stock,
net of issuance
costs $37 in April.......... 472,918 1,324
Issuance of
Series C convertible
preferred shares,
net of issuance
costs -- $45 in June........ 572,917 1,609
Translation adjustment......
Net loss --
Year ended
December 31, 1994...........
------------- -------- --------------- -------- --------------- -------- ------------- ------
Balance at December 31, 1994 1,557,003 2,368 363,447 589 3,044,846 8,615 430,208 1,224
Reissuance of 28,761
shares of Common
stock held in
treasury in January ........
Issuance of Common
stock under stock
option plan ................
Common stock issued
in initial public
offering, net of
issuance costs -- $ 1,090...
Conversion of preferred
stock.......................(1,557,003) (2,368) (363,447) (589) (3,044,846) (8,615) (430,208) (1,224)
Translation adjustment .....
Net loss -- Twelve months
ended December 31, 1995 ....
------------- -------- --------------- -------- --------------- -------- ------------- ------
BALANCE AT DECEMBER 31, 1995
Issuance of Common
stock under stock
option plan (unaudited).....
Issuance of warrants
in connection with
acquisition of the
assets of PanoCorp
(unaudited).................
Translation adjustment
(unaudited).................
Net loss -- Six
months ended
June 30, 1996 (unaudited)...
------------- -------- --------------- -------- --------------- -------- ------------- ------
Balance at June 30, 1996
============= ======== =============== ======== =============== ======== ============= ======
</TABLE>
<PAGE>
PixTech, Inc.
(a development stage company)
Condensed Consolidated Statement of Stockholders' Equity
(in thousands, except share amounts)
<TABLE>
<CAPTION>
Common stock
-----------------------
Deficit
accumulated
Additional Cumulative during
Paid-in translation Development Treasury
Shares issued Amount Capital adjustment stage stock TOTAL
------------- -------- ---------- ----------- ----------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at June 18, 1992
Issuance of Series A convertible preferred
stock, net of issuance costs -- $9 in June..... 130
Issuance of Series B convertible preferred
stock in June ................................. 38
Issuance of Common stock in June............... 115,045 $1 $ 75 76
Issuance of Series A convertible preferred
stock in August................................ 32
Issuance of Series A convertible preferred
stock in September............................. 544
Issuance of Series B convertible preferred
stock in September............................. 121
Translation adjustment......................... $ 1 1
Net Loss from June 18, 1992 (date of inception)
through December 31, 1992...................... (506) (506)
------------- -------- ---------- ----------- ----------- -------- -------
Balance at December 31, 1992 115,045 1 75 1 (506) 438
Issuance of Series A convertible preferred
stock in January............................... 181
Issuance of Common stock in January............ 17,256 0 21 21
Issuance of Series A convertible preferred
stock in March................................. 1,481
Issuance of Series B convertible preferred
stock in March................................. 430
Issuance of Series C convertible preferred
stock, net of issuance costs -- $71 in
December....................................... 5,686
Issuance of Series D convertible preferred
stock, net of issuance costs -- $15 in
December....................................... 1,224
Translation adjustment......................... (50) (50)
Net income -- Year ended December 31, 1993..... (120) (120)
------------- -------- ---------- ----------- ----------- -------- -------
Balance at December 31, 1993 132,301 1 96 (49) (626) 9,289
Issuance of Common stock under stock option
plan in April.................................. 77,356 1 20 29
Purchase of 28,761 shares of Common stock -
Treasury stock in April........................ (11) (11)
Issuance of Series C convertible preferred
stock, net of issuance costs $37 in April...... 1,324
Issuance of Series C convertible preferred
shares, net of issuance costs -- $45 in June... 1,605
Translation adjustment......................... 230 230
Net loss -- Year ended December 31, 1994....... (2,979) (2,979)
------------- -------- ---------- ----------- ----------- -------- -------
Balance at December 31, 1994 209,657 2 123 181 (3,605) (11) 9,487
Reissuance of 28,761 shares of Common stock
held in treasury in January ................... 3 11 14
Issuance of Common stock under stock option
plan .......................................... 6,902 6 3 3
Common stock issued in initial public offering,
net of issuance costs -- $ 1,090............... 2,500,000 25 20,973 20,998
Conversion of preferred stock ................. 5,395,504 54 12,742
Translation adjustment ........................ 334 334
Net loss -- Twelve months ended December 31, ..
1995 .......................................... (6,305) (6,305)
------------- -------- ---------- ----------- ----------- -------- -------
Balance at December 31st, 1995 8,112,063 $81 $33,844 $515 $(9.910) $24,530
Issuance of Common stock under stock option
plan (unaudited)............................... 24,083 0 8 9
Issuance of warrants in connection with
acquisition of the assets of PanoCorp
(unaudited).................................... 230 230
Translation adjustment (unaudited)............. (825) (825)
Net loss -- Six months ended June 30, 1996
(unaudited).................................... (2,845) (2,845)
------------- -------- ---------- ----------- ----------- -------- -------
Balance at June 30, 1996 8,136,146 $82 $34,083 $(310) $(12,755) $21,099
============= ======== ========== =========== =========== ======== =======
</TABLE>
<PAGE>
PixTech, Inc.
(a development stage company)
Notes to Condensed Consolidated Financial Statements
(all amounts in thousands except share amounts)
(unaudited)
Note A -- Basis of presentation
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results of the three-month period ending June 30, 1996
are not necessarily indicative of the results that may be expected for the year
ending December 31, 1996. For further information, refer to the consolidated
financial statements and footnotes thereto for the year ending December 31, 1995
(the "1995 Financial Statements"), included in the Company's Annual Report on
Form 10-K for the year ended December 31, 1995.
Note B -- Inventories
Inventory consists of raw material and spare parts.
Note C -- Purchase of PanoCorp assets
On February 20, 1996, the Company acquired substantially all the assets of
PanoCorp, Inc., a research and development company located in Fremont,
California, in a transaction accounted for as a purchase. The assets of
PanoCorp, Inc., including principally fixed assets valued at $120, were
purchased for $250 in cash plus 150,000 warrants to purchase shares of the
Company's common stock at an exercise price of $11.67.
The fair value of the 150,000 warrants was computed using the price of stock,
the exercise price of the warrants, the expected dividend yield of the stock
price, the expected volatility of stock, the expected life of the warrants and
the risk-free interest rate, using the Black-Scholes model. Pursuant to the APB
Statement 16, the value of such warrants was estimated at $230 and the global
transaction generated a goodwill of $360. This goodwill will be depreciated over
5 years.
The purchase agreement also calls for the issuance of additional warrants to the
shareholders of PanoCorp, Inc., contingent upon the achievement by the Company
of specified technical milestones over the next 3 years.
Note D -- Termination of Cooperation and License Agreement with Texas
Instruments
On March 21, 1996, the Company was informed by Texas Instruments of its
intention to suspend its development of FEDs. Discussions then began on the
effect of this decision on the Cooperation and License Agreement with Texas
Instruments Incorporated dated June 29, 1993 ("the TI Agreement"). These
discussion resulted in the execution of a Termination Agreement dated July 15,
1996.
Under this agreement, Texas Instruments acknowledged that all payments
heretofore made in kind to the Company with respect to technology transfer from
the Company to Texas Instruments are and shall remain the property of the
Company.
Included in accounts payable at December 31, 1995 and March 31, 1996 was $1,336
representing goods delivered and services rendered by Texas Instruments as in-
kind technology transfer payments pursuant to the Cooperation and License
Agreement (see note 6. Accounts payable of the 1995 Financial Statements.
- 8 -
<PAGE>
Following Texas Instruments' decision to suspend their FED efforts, and
following the subsequent confirmation that the in-kind liability to Texas
Instruments would not be payable, the Company recorded cooperation and license
revenues in the amount of $1,336 during the three-month period ended June 30,
1996, and canceled the in-kind liability of same amount included in accounts
payable.
Note E: Property and Equipment
At December 31, 1995 and March 31, 1996, machinery and equipment included $671
and $719 respectively on which the Company and LETI (Laboratoire Electronique de
Technologie et d'Instrumentation) each had a 50% title. This equipment was
recorded by the Company at 50% of its cost and was depreciated based on this
acquisition value (see note 5 - Accounts payable of the 1995 Financial
Statements).
On March 22, 1996, the Company entered into an agreement with Leti under which
(i) certain pieces of equipment, with an acquisition value and a net value in
the Company's books of $380 and $240 at March 31, 1996, respectively, became the
sole property of the Company; these assets were recorded at April 1, 1996 in
the Company's books with an acquisition value of $509, and are now depreciated
over their remaining expected lifetime ; and (ii) certain pieces of equipment
with an acquisition value and a net value in PixTech's books of $336 and $238,
respectively, became the sole property of Leti.
- 9 -
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Results of operations
Cooperation and License revenues. The Company recognized cooperation and license
revenues under the FED Alliance agreements of $2.6 million in the three-month
period ending June 30, 1996, as compared to $3.0 million in the three-month
period ending June 30, 1995. These revenues represent the achievement by the
Company of contractual milestones with FED Alliance members, in the amount of
$1.3 million, and the value of in-kind payments with respect to technology
transfer made by the Company to TI under the Cooperation and License agreement
with Texas Instruments executed on June 29, 1993 and terminated on July 15, 1996
(see note D to the notes to the condensed consolidated financial statements for
the period ended June 30, 1996).
The Company recognized cooperation and license revenues under the FED Alliance
agreements of $4.5 million in the six-month period ending June 30, 1996, as
compared to $3.0 million in the six-month period ending June 30, 1995.
Product sales. The Company recognized product sales of $361 in the six-month
period ending June 30, 1996 and $102 in the six-month period ending June 30,
1995. These product sales represented shipment of FED cathodes to members of the
FED Alliance, and the shipment of limited quantities of FED displays for
evaluation by OEM customers.
Other revenues. Other revenues amounted to $47 in the three-month period ending
June 30, 1996 as compared to $305 during the three-month period ending June 30,
1995. Other revenues amounted to $981 in the six-month period ending June 30,
1996 as compared to $509 during the six-month period ending June 30, 1995. Of
the revenues recorded in 1996, $800 are related to a grant from the French
Ministry of Industry to support manufacturing of Field Emission Displays.
Research and Development Expenses - The Company expensed $3.7 million for
research and development costs during the three-month period ending June 30,
1996, an increase of 51% over R&D expenses incurred in the three-month period
ending June 30, 1995, which amounted to $2.5 million, excluding acquisition of
intellectual property rights. These expenses included contract consulting fees,
salaries and associated operating expenses for in-house research and development
activities and the cost of staffing and operating the Company's pilot
manufacturing facility. The increase reflects the continued development of the
Company's FED technology and manufacturing processes. R&D expenses, excluding
acquisition of intellectual property rights, amounted to $7.2 million for the
six-month period ending June 30, 1996 as compared to $5.4 million during the
six-month period ending June 30, 1995.
General and Administrative Expenses. General and Administrative expenses
increased by 69% from $465 in three-month period ending June 30, 1995 to $787 in
the three-month period ending June 30, 1996, reflecting the increase in the
number of full time employees. G&A amounted to $1.5 million for the six-month
period ending June 30, 1996 as compared to $0.9 million during the six-month
period ending June 30, 1995.
Income tax. Income tax benefits represent tax credits for research and
development activities conducted in France and the benefits of net operating
loss carryforwards, net of valuation allowance. Research and development tax
credits will be paid in cash to the Company if the Company is not able to credit
them against future income tax liabilities within three fiscal years. The
Company did not recognize any income tax benefit during the six-month period
ending June 30, 1996, as compared to $707 for the six ending June 30, 1995. The
Company does not expect to record additional tax credits for research and
development activities in the future as the benefit is based on increases in
eligible research and development expenses in a given year over the two previous
fiscal years.
- 10 -
<PAGE>
Outlook: issues and risks
The Company is focused on the continued development of the FED technology, the
strengthening and expansion of the FED Alliance, the improvement of
manufacturing yields, and the reliability testing of new products which the
Company expects will lead to the shipment of an increased quantity of commercial
products in the near future. In evaluating this outlook, the following risks and
issues, among others, should be considered.
Revenues from FED Alliance members. The Company primarily recognizes its
revenues when it has achieved certain milestones which are contractually defined
with FED Alliance members. Failure to achieve a specific technical milestone in
a given quarter could result in significant unexpected fluctuations in revenues.
To date, the Company has recorded a significant portion of the expected revenues
associated with the achievement of contractual milestones with existing FED
Alliance members and may not be able to maintain the level of cooperation and
license revenues that has been achieved historically. Consequently, future FED
Alliance milestone revenues are mostly subject to expansion of the Alliance.
There can be no assurance that the Company will be successful in entering into
any new FED Alliance agreements with other companies that have proprietary
display-related technology and failure to expand the FED Alliance could
adversely affect the Company.
Products and manufacturing processes under development. The Company's products
and its manufacturing processes are in the development stage and delays in the
development of its products and processes could occur.
Cost of products. The Company currently produces only limited quantities of FED
prototypes at its pilot manufacturing production line in Montpellier. Until the
Company has shipped products in quantities, it is not considered meaningful to
determine a cost of product sold. Product cost will depend on the level of
yields achieved.
Foreign exchange. A large percentage of the Company's net assets and of the
Company's costs is expressed in French Francs. Fluctuations of the parity of the
US dollar versus French Franc may cause significant foreign exchange gains or
losses.
Financial Condition
Cash used in operations was $2.6 for the six-month period ended June 30, 1996,
as compared to cash used in operations of $5.3 million for the six-month period
ended June 30, 1995.
The Company has used $10.7 million in cash funding its operations from inception
through June 30, 1996 and has incurred $12.8 million in capital expenditures. To
date, the Company has funded its operations and capital expenditures primarily
from the proceeds of equity financing aggregating $33.9 million and from
proceeds aggregating $8.9 million from borrowings and sale-leaseback
transactions.
Capital expenditures were $2.3 million during the six-month period ended June
30, 1996 as compared to $1.2 million during the same period of 1995. In 1996,
capital expenditures included the purchase of production equipment for the
Company's pilot production line. In addition, the Company acquired on February
20, 1996, the assets of PanoCorp Inc., as described in Note C of the condensed
consolidated financial statements. The cash flows relating to this acquisition
amounted to $130 for intangible assets and $120 for equipment.
The three-month period ended June 30, 1996 generated negative cash flows of $5.9
million as compared to $4.2 million for the six-month period ended June 30,
1995.
Cash available at the end of June 1996 amounted to $11.7 million as compared to
$17.6 million at the end of December 1995. The Company expects that cash
available at June 30, 1996 will be sufficient to meet its cash requirements for
at least 12 months.
The Company's expectations regarding the sufficiency of its sources of cash over
a future period is a forward-looking statement. The rate of expenditures by the
Company will be affected by numerous matters including the rate of development
of the Company's products and manufacturing capabilities as well as market
demand for such products.
In the future, the Company will require substantial funds to conduct research,
development and testing, to develop and expand commercial-scale manufacturing
systems and to market any resulting products. Changes in technology or a growth
of sales beyond currently anticipated levels will also require further
investments. There can be no assurance that funds for these purposes, whether
from equity or debt financing, or other sources, will be available when needed
or on terms acceptable to the Company.
- 11 -
<PAGE>
PIXTECH, INC.
June 30, 1996
PART II Other Information
ITEM 1 Legal Proceedings:
Not applicable.
ITEM 2 Changes in Securities:
Not applicable.
ITEM 3 Defaults upon Senior Securities:
Not applicable.
ITEM 4 Submission of matters to a vote of security holders:
The Company held its annual meeting of stockholders on
Thursday, April 25, 1996. The only proposal submitted to a vote
of the stockholders at such meeting was a proposal to elect a
director. Jean-Pierre Noblanc, by a vote of 4,680,957 votes in
favor and 4,200 votes withheld, was re-elected as a director of
the Company. There were no abstention or broker non-votes. The
terms of office of the following directors continued after the
meeting: Jean-Luc Grand-Clement, Pierre-Michel Piccino, William
C. Schmidt and John A. Hawkins.
ITEM 5 Other Information:
None.
ITEM 6 Exhibits and reports on Form 8-K:
(a) Exhibits
10 Termination Agreement
dated July 15, 1996
between the Registrant and
Texas Instruments
Incorporated.
(b) Reports on Form 8-K - None
- 12 -
<PAGE>
PIXTECH, INC.
June 30, 1996
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PIXTECH, INC.
Date: July 31, 1996 BY: /s/ Yves Morel
---------------
Yves Morel
Duly Authorized Officer and
Director of Finance and
Administration
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<PAGE>
EXHIBIT INDEX
Exhibit No. Description Page no.
- ----------- ----------- --------
10 Termination Agreement dated July 15,
1996 between the Registrant and Texas
Instruments Incorporated.
<PAGE>
TERMINATION AGREEMENT
---------------------
This Termination Agreement is made this 15th day of July, 1996 (the
"Effective Date") between Texas Instruments Incorporated, a corporation
organized and existing under the laws of the state of Delaware, U.S.A., having
an office for the transaction of business at 8330 LBJ Freeway, Dallas, Texas
75243 (together with its subsidiaries, "TI") and PixTech S.A., formerly known as
Pixel International S.A., a corporation organized and existing under the laws of
France, with its principal place of business at Avenue Victoire, Zone
Industrielle de Rousset, 13790 Rousset France ("PixTech").
Whereas, TI and PixTech are parties to a Cooperation and License Agreement
dated as of June 29, 1993 (the "License Agreement");
Whereas, pursuant to the License Agreement PixTech and TI granted to each
other certain licenses under their respective Technologies and Improvements to
develop and commercialize Display Components in the FED Field (as such terms are
defined in the License Agreement);
Whereas, TI has determined in its reasonable judgment, pursuant to Section
29.5 of the License Agreement, that unforeseen alternative technical
developments have occurred since the execution of the License Agreement, which
have had a material adverse impact upon TI's specific application of the
Technology; and
Whereas, TI has decided to terminate its participation in the
Commercialization Period activities (as such term is defined in the License
Agreement) as a result of such developments, and PixTech has exercised its
option to terminate TI's licenses under the License Agreement pursuant to
Section 29.5;
Now Therefore, in consideration of the premises and of the mutual covenants
contained herein, the parties hereto agree as follows:
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<PAGE>
1. Definitions. All capitalized terms used in this Termination
-----------
Agreement which are not otherwise defined herein shall have those meanings
ascribed to them in the License Agreement.
2. Termination of License Agreement. Subject to the terms, conditions,
--------------------------------
agreements and acknowledgements set forth below, TI and PixTech each hereby
agree that the License Agreement is hereby terminated, as of March 20, 1996 (the
"Termination Date"), pursuant to Section 29.5 thereof, and that as of the
Termination Date TI ceased to be an Industrial Class Licensee.
3. Survival. Notwithstanding Section 30.0 SURVIVAL FROM THIS AGREEMENT
--------
of the License Agreement, TI and PixTech hereby agree that only the following
sections of the License Agreement, as such sections are specifically amended
below, survive and continue in effect after the Termination Date:
(i) Section 1.0 DEFINITIONS.
(ii) Subsection 7.3 of Section 7.0 LICENSES; provided, however, that
-------- -------
PixTech's license thereunder shall be limited to TI's patents, copyrights, trade
secrets, mask works and know how made, acquired or used by TI in its
manufacturing of Panels through the Termination Date. For the avoidance of
doubt, the said license includes a license under any patents issuing from patent
applications filed prior to the Termination Date.
(iii) The licenses from TI to PixTech (but not from PixTech to TI) under
Subsection 7.4 of the Improvements TI has made or commissioned through the
Termination Date.
(iv) Subsection 7.5 of Section 7.0 LICENSES; provided that PixTech may
--------
grant sublicenses thereunder only to Motorola, Inc., Raytheon Company and Futaba
Corporation (collectively, the "Existing Industrial Class Licensees").
(v) The representations and warranties under Subsections 10.1, 10.2,
10.3 and 10.4 of Section 10.0 REPRESENTATIONS AND WARRANTIES.
(vi) Section 9.0 INFORMATION TRANSFERS.
(vii) Section 11.0 INVENTION RIGHTS.
(viii) Section 14.0 PUBLIC DISCLOSURE.
(ix) Section 24.0 COMPLIANCE WITH GOVERNMENT LEGAL REQUIREMENTS.
(x) Section 25.0 GOVERNING LAW.
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<PAGE>
(xi) Section 28.0 WAIVER OF OBLIGATION.
All of the remaining provisions of the License Agreement are hereby
terminated as of the Termination Date, and each party hereto releases the other
party from any and all continuing obligations thereunder.
4. Patent Filings. Attached hereto as Exhibit A is a list of (i) all
-------------- ------- -
patent applications owned or controlled by TI which have been filed anywhere in
the world and have neither lapsed nor become abandoned and (ii) all unexpired
patents owned or controlled by TI which have been issued by any country in the
world and have not been declared invalid or unenforceable by a court of
competent jurisdiction or an administrative agency from which no appeal can be
or is taken, which patents and patent applications relate to PixTech's
continuing licenses under Subsections 7.3 and 7.4 of Section 7.0 LICENSES of the
License Agreement.
5. Release. TI and PixTech each release each other and their respective
-------
affiliates, and each of its or their officers, directors, agents and employees
from any and all obligations, claims, demands, actions, causes of action, suits,
covenants, contracts or agreements, and any and all expenses, costs, losses or
damages which either TI or PixTech now has or at any time has had against the
other based on or arising out of the License Agreement; provided that such
--------
release shall not apply to such obligations, claims, demands, actions, causes of
action, suits, covenants, contracts or agreements, and any and all expenses,
costs, losses or damages which relate to the rights and obligations of either
party under this Termination Agreement.
6. Prior Payments. Without in any way limiting the generality of the
--------------
foregoing, PixTech acknowledges and agrees that, as of the Effective Date, TI is
relieved of any payment obligations in cash or in kind under the License
Agreement, and TI hereby acknowledges and agrees that all payments heretofore
made in cash or in kind to PixTech are and shall remain the property of PixTech.
7. Publicity. The terms of this Termination Agreement shall be treated
---------
by each party as Confidential Information of the other party (as that term is
defined in the License Agreement), and may not be disclosed by either party to
any third party without the consent of the other except to the extent such
disclosure is required by applicable law or regulations.
8. Non-Disparagement. Each party hereto agrees that it will not
-----------------
disparage or make negative statements about the other party or any of its
officers, trustees, agents, employees, successors and assigns in connection with
their relationship under the License Agreement or its termination hereunder.
9. Entire Agreement. This Termination Agreement constitutes the entire
----------------
understanding between the parties and supersedes any prior agreements, written
or oral,and any negotiations with respect to the subject matter hereof.
-3-
<PAGE>
10. Binding Effect. This Termination Agreement shall be binding upon and
--------------
inure to the benefit of and be enforceable by the parties hereto and their
respective successors and permitted assigns.
11. Governing Law. This Termination Agreement shall be governed by and
-------------
construed and interpreted in accordance with the laws of the State of Delaware.
-4-
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Termination License
Agreement as of the Effective Date first shown above written.
TEXAS INSTRUMENTS PIXTECH S.A.
INCORPORATED
By: /s/ Delbert A. Whitaker By: /s/ Jean-Luc Grand-Clement
------------------------ ---------------------------
Title: Sr. Vice President Title: President
------------------- ----------
Date: July 15, 1996 Date: July 14, 1996
------------- --------------
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<PAGE>
Schedule A
----------
Patents and Patent Applications
-------------------------------
(Confidential Information)
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