-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Ut8+ltFf/TeYiNKflepVUKj7anI6UfpmiWIpD5AQupKRXGZRJkh0fk9wT3yaJdwF bD9TIFvb7UrEVeyjLZlpqA== 0000927016-96-000839.txt : 19960816 0000927016-96-000839.hdr.sgml : 19960816 ACCESSION NUMBER: 0000927016-96-000839 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960814 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: PIXTECH INC /DE/ CENTRAL INDEX KEY: 0000946144 STANDARD INDUSTRIAL CLASSIFICATION: COMPUTER TERMINALS [3575] IRS NUMBER: 043214691 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-26380 FILM NUMBER: 96612061 BUSINESS ADDRESS: STREET 1: AVENUE VICTOIRE 13790 CITY: ROUSSET FRANCE STATE: I0 10-Q 1 QUARTERLY REPORT 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 - -------------------------------------------------------------------------------- (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 - -------------------------------------------------------------------------------- (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 PIXTECH, INC. ------------- 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 - PixTech, Inc. (a development stage company) CONDENSED CONSOLIDATED BALANCE SHEET (in thousands, except per share amounts)
June 30, December 31, 1996 1995 ------------- ---------------- ASSETS (unaudited) Current assets: 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 ======== ========
See accompanying notes. - 3 - PixTech, Inc. (a development stage company) CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) (unaudited)
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 ---------- ----------- ---------- --------- --------------- 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 ======= ======= ======= =======
See accompanying notes. - 4 - PixTech, Inc. (a development stage company) CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands, except per share amounts) (unaudited)
Period from June 18, 1992 (date of inception) Six Months Ended through June 30, June 30, -------------------- ------------- 1996 1995 1996 --------- --------- ------------- 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 ======== ======== =========
See accompanying notes. - 5 - PixTech, Inc. (a development stage company) Condensed Consolidated Statement of Stockholders' Equity (in thousands, except share amounts)
Convertible Preferred stock --------------------------------------------------------------------------------- Series A Series B Series C Series D Shares issued Amount Shares issued Amount Shares issued Amount Shares Issued Amount ------------- -------- --------------- -------- --------------- -------- ------------- ------ 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 ============= ======== =============== ======== =============== ======== ============= ======
PixTech, Inc. (a development stage company) Condensed Consolidated Statement of Stockholders' Equity (in thousands, except share amounts)
Common stock ----------------------- Deficit accumulated Additional Cumulative during Paid-in translation Development Treasury Shares issued Amount Capital adjustment stage stock TOTAL ------------- -------- ---------- ----------- ----------- -------- ------- 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 ============= ======== ========== =========== =========== ======== =======
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 - 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 - 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 - 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 - 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 - 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 - 13 - EXHIBIT INDEX Exhibit No. Description Page no. - ----------- ----------- -------- 10 Termination Agreement dated July 15, 1996 between the Registrant and Texas Instruments Incorporated. EX-10 2 TERMINATION AGREEMENT 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: -1- 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. -2- (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- 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- 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 ------------- -------------- -5- Schedule A ---------- Patents and Patent Applications ------------------------------- (Confidential Information) EX-27 3 FINANCIAL DATA SCHEDULE
5 1,000 3-MOS DEC-31-1995 APR-01-1996 JUN-30-1996 11,704 0 3,747 0 604 19,197 12,586 (5,158) 37,744 7,825 0 0 0 81 33,773 37,744 178 2,861 0 (4,722) 0 0 (9) 0 0 0 0 0 0 (1,554) (0.19) 0
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