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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the quarterly period ended March 31, 2005
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 1-12031
UNIVERSAL DISPLAY CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Pennsylvania 23-2372688
- -------------------------------------------------------------- ------------------------------------
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
375 Phillips Boulevard
Ewing, New Jersey 08618
- -------------------------------------------------------------- ------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (609) 671-0980
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock (par value $0.01 per share)
----------------------------------------
(Title of Class)
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 ___
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes _X_ No ___
As of May 2, 2005, the registrant had outstanding 28,385,722 shares of common
stock.
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets - March 31, 2005 (unaudited) and December 31, 2004..............1
Consolidated Statements of Operations - Three months ended March 31, 2005 and
2004 (unaudited)............................................................................2
Consolidated Statements of Cash Flows - Three months ended March 31, 2005 and
2004 (unaudited)............................................................................3
Notes to Consolidated Financial Statements (unaudited)......................................4
Item 2. Management's Discussion and Analysis of Financial Condition and Results of
Operations.......................................................................................10
Item 3. Quantitative and Qualitative Disclosures About Market Risk.......................................13
Item 4. Controls and Procedures..........................................................................13
PART II - OTHER INFORMATION
Item 1. Legal Proceedings................................................................................13
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds......................................13
Item 3. Defaults Upon Senior Securities..................................................................14
Item 4. Submission of Matters to a Vote of Security Holders..............................................14
Item 5. Other Information................................................................................14
Item 6. Exhibits.........................................................................................14
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
March 31,2005 December 31,
(unaudited) 2004
------------- ------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $20,163,499 $18,930,581
Short-term investments 21,674,048 26,258,463
Accounts receivable 1,145,528 2,588,279
Inventory 39,691 19,941
Other current assets 316,979 237,927
------------ ------------
Total current assets 43,339,745 48,035,191
PROPERTY AND EQUIPMENT, net 10,763,946 9,551,532
ACQUIRED TECHNOLOGY, net 9,285,863 9,709,631
INVESTMENTS 2,981,773 2,290,451
RESTRICTED CASH 4,100,000 4,200,000
OTHER ASSETS 105,358 105,358
------------ ------------
$ 70,576,685 $ 73,892,163
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 300,000 $ 300,000
Accounts payable 762,940 723,512
Accrued expenses 2,930,076 3,697,432
Deferred license fees 2,266,667 1,766,667
Deferred revenue 1,116,667 916,667
------------ ------------
Total current liabilities 7,376,350 7,404,278
DEFERRED LICENSE FEES 3,100,000 3,100,000
LONG-TERM DEBT, less current portion 4,100,000 4,200,000
------------ ------------
14,576,350 14,704,278
COMMITMENTS AND CONTINGENCIES (Note 8)
SHAREHOLDERS' EQUITY:
Preferred Stock, par value $0.01 per share, 5,000,000 shares authorized,
200,000 shares of Series A Nonconvertible Preferred Stock issued and
outstanding (liquidation value of $7.50 per share or $1,500,000) 2,000 2,000
Common Stock, par value $0.01 per share, 50,000,000 shares authorized,
28,107,447 and 27,903,385 shares issued and outstanding 281,074 279,034
Additional paid-in-capital 175,168,725 173,372,344
Deferred compensation -- (17,446)
Accumulated other comprehensive loss (92,353) (79,837)
Accumulated deficit (119,359,111) (114,368,210)
------------ ------------
Total shareholders' equity 56,000,335 59,187,885
------------ ------------
$ 70,576,685 $ 73,892,163
============ ============
The accompanying notes are an integral part of these statements.
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UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended March 31,
-------------------------------
2005 2004
------------- -------------
REVENUE:
Contract research $ 699,056 $ 412,232
Development chemical 413,362 796,358
Commercial chemical 31,395 66,420
Royalty and license fees 73,255 154,980
Technology development fees 250,000 700,000
------------- -------------
Total revenue 1,467,068 2,129,990
------------- -------------
OPERATING EXPENSES:
Cost of chemicals sold 26,867 57,561
Research and development 4,605,325 4,323,715
General and administrative 1,894,863 1,849,407
Royalty expense 150,000 91,579
------------- -------------
Total operating expenses 6,677,055 6,322,262
------------- -------------
Operating loss (5,209,987) (4,192,272)
------------- -------------
INTEREST INCOME 262,163 130,946
INTEREST EXPENSE (43,077) (98)
------------- -------------
NET LOSS (4,990,901) (4,061,424)
------------- -------------
DEEMED DIVIDEND -- (46,176)
------------- -------------
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS $ (4,990,901) $ (4,107,600)
============= =============
BASIC AND DILUTED NET LOSS PER
COMMON SHARE $ (0.18) $ (0.17)
============= =============
WEIGHTED AVERAGE SHARES USED IN COMPUTING
BASIC AND DILUTED NET LOSS PER COMMON SHARE 28,029,297 24,688,264
============= =============
The accompanying notes are an integral part of these statements.
- 2 -
UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended March 31,
-------------------------------
2005 2004
------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (4,990,901) $ (4,061,424)
Non-cash charges to statement of operations:
Depreciation 331,456 328,607
Amortization of intangibles 423,768 423,768
Amortization of premium and discount on investments (49,186) 67,913
Common stock, options and warrants in
connection with Development Agreement 881,724 919,930
Issuance of common stock to Board of Directors and
Scientific Advisory Board 526,551 643,720
Common stock to employees 379,248 83,558
Issuance of common stock options and warrants for services (6,713) 1,079
(Increase) decrease in assets:
Accounts receivable 1,442,751 (303,081)
Inventory (19,750) 5,717
Other current assets (79,052) (25,405)
Other assets -- 13,000
Increase (decrease) in liabilities:
Accounts payable and accrued expenses (712,871) 396,760
Deferred license fees 500,000 --
Deferred revenue 200,000 (400,000)
------------- -------------
Net cash used in operating activities (1,172,975) (1,905,858)
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (1,543,870) (40,329)
Purchases of investments (3,962,237) (2,799,128)
Proceeds from sale of investments 7,892,000 3,637,163
------------- -------------
Net cash provided by investing activities 2,385,893 797,706
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of common stock -- 28,036,218
Payment of loan (100,000) --
Restricted cash 100,000 --
Proceeds from the exercise of common stock options
and warrants 20,000 2,551,942
Principal payments on capital lease -- (1,256)
------------- -------------
Net cash provided by financing activities 20,000 30,586,904
------------- -------------
INCREASE IN CASH AND CASH EQUIVALENTS 1,232,918 29,478,752
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 18,930,581 14,070,207
------------- -------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 20,163,499 $ 43,548,959
============= =============
Cash paid for interest $ 41,881 $ --
============= =============
The accompanying notes are an integral part of these statements.
- 3 -
UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BACKGROUND
Universal Display Corporation (the "Company") is engaged in the research,
development and commercialization of organic light emitting diode ("OLED")
technologies for use in a variety of flat panel display and other applications.
The Company conducts a substantial portion of its OLED technology development
activities at its technology development and transfer facility in Ewing, New
Jersey. The Company moved its operations to this facility in the fourth quarter
of 1999 and expanded the facility from 11,000 square feet to 21,000 square feet
in 2001. In December 2004, the Company acquired the entire 41,000 square foot
building at which the facility is located. The Company is in the process of
expanding its operations into the remainder of the building.
The Company also leases approximately 1,600 square feet of laboratory space in
South Brunswick, New Jersey, and 850 square feet of office space in Coeur
d'Alene, Idaho.
The Company also sponsors substantial OLED technology research being conducted
at Princeton University and at the University of Southern California ("USC") (on
a subcontract basis with Princeton University), pursuant to a Research Agreement
between the Company and the Trustees of Princeton University dated October 9,
1997 (as amended, the "1997 Research Agreement") (Note 3).
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INTERIM FINANCIAL INFORMATION
In the opinion of management, the accompanying unaudited consolidated financial
statements contain all adjustments (consisting of only normal recurring
adjustments) necessary to present fairly the financial position as of March 31,
2005, and the results of operations and cash flows for the three months ended
March 31, 2005 and 2004. While management believes that the disclosures
presented are adequate to make the information not misleading, these unaudited
consolidated financial statements should be read in conjunction with the audited
consolidated financial statements and the notes thereto in the Company's latest
year-end financial statements, which were included in the Company's Annual
Report on Form 10-K for the year ended December 31, 2004.
MANAGEMENT'S USE OF ESTIMATES
The preparation of financial statements in conformity with U.S. 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.
CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS
The Company considers all highly liquid investments purchased with an original
maturity of three months or less to be cash equivalents. The Company classifies
its existing marketable securities as available-for-sale in accordance with the
provisions of Statement of Financial Accounting Standards No. 115, "Accounting
for Certain Investments in Debt and Equity Securities."
These securities are carried at fair market value, with unrealized gains and
losses reported in shareholders' equity as a component of other comprehensive
loss. Gains or losses on securities sold are based on the specific
identification method. The Company reported accumulated unrealized holding
losses of $92,353 and $79,837 at March 31, 2005 and December 31, 2004,
respectively.
RESTRICTED CASH
At March 31, 2005, the Company had $4,400,000 of restricted cash, of which
$4,100,000 was classified as a noncurrent asset. The restricted cash serves as
collateral for a note payable in connection with the purchase of building and
property at which our main facility is located. The cash is held by the issuing
bank, is restricted, as to withdrawal or use, up to the outstanding balance of
the note, and is currently invested in corporate bonds. Income from these
investments is paid to the Company. The current portion of restricted cash of
$300,000 is classified as cash and cash equivalents and represents the amount of
the current liability due under the note.
- 4 -
INVENTORY
Inventory consists of chemicals held at the Company's location. Inventory is
valued at the lower of cost or market, with the cost determined using the
specific identification method.
ACQUIRED TECHNOLOGY
Acquired technology consists of acquired license rights for patents and know-how
obtained from PD-LD, Inc. and Motorola, Inc. (Note 4). These intangible assets
consist of the following:
March 31, December 31,
2005 2004
----------- -----------
PD-LD, Inc. $ 1,481,250 $ 1,481,250
Motorola, Inc. 15,469,468 15,469,468
----------- -----------
16,950,718 16,950,718
Less: Accumulated amortization (7,664,855) (7,241,087)
----------- -----------
Acquired Technology, net $ 9,285,863 $ 9,709,631
=========== ===========
Acquired technology is amortized on a straight-line basis over its estimated
useful life of ten years.
NET LOSS PER COMMON SHARE
Basic net loss per common share is computed by dividing the net loss
attributable to common shareholders by the weighted-average number of shares of
common stock outstanding for the period. Diluted net loss per common share
reflects the potential dilution from the exercise, or conversion of securities
into common stock. For the three months ended March 31, 2005 and 2004, the
effects of the exercise of outstanding stock options and warrants of 9,066,482
and 8,487,640, respectively, were excluded from the calculation of diluted EPS
as the impact would be antidilutive.
RESEARCH AND DEVELOPMENT
Expenditures for research and development are charged to operations as incurred.
STATEMENT OF CASH FLOW INFORMATION
The following non-cash investing and financing activities occurred:
Three Months Ended March 31,
----------------------------
2005 2004
---------- ---------
Unrealized gain (loss) on available-for-sale securities $ (12,516) $ 8,018
STOCK OPTIONS
The Company accounts for its stock option plans under Accounting Principles
Board Opinion ("APB") No. 25, "Accounting for Stock Issued to Employees," under
which no compensation cost is recognized for options issued to employees when
the option price is equal to or greater than the fair market value of the
Company's stock price on the date of grant. In 1995, the Financial Accounting
Standards Board issued SFAS No. 123, "Accounting for Stock-Based Compensation."
SFAS No. 123 established a fair value based method of accounting for stock-based
compensation plans. SFAS No. 123 requires that a company's financial statements
include certain disclosures about stock-based employee compensation arrangements
regardless of the method used to account for the plan.
As allowed by SFAS No. 123, the Company has elected to continue to account for
its employee stock-based compensation plans under APB Opinion No. 25, and
adopted only the disclosure requirements of SFAS No. 123 as amended by SFAS No.
148, "Accounting for Stock-Based Compensation-Transition and Disclosure". SFAS
No. 148 amended SFAS No. 123 to provide alternative methods of transition for a
voluntary change to the fair value method of accounting for stock-based employee
compensation and amended the disclosure requirements of SFAS No. 123 to require
prominent disclosures in both annual and interim financial statements. Had the
- 5 -
Company recognized compensation cost for its stock based compensation plans
consistent with the provisions of SFAS No. 123, the Company's net loss and net
loss per share would have been increased to the following pro forma amounts:
Three Months Ended March 31,
------------------------------
2005 2004
------------ ------------
Net loss attributable to common shareholders:
As reported $ (4,990,901) $ (4,107,600)
Add stock-based employee compensation
expense included in reported net income, net of tax 542,027 730,069
Deduct total stock-based employee compensation
expense determined under fair-value-based
method for all rewards, net of tax (2,880,800) (4,790,007)
------------ ------------
Pro forma $ (7,329,674) $ (8,167,538)
Basic and diluted net loss per share:
As reported $ (0.18) $ (0.17)
Pro forma (0.26) (0.33)
The Company accounts for its stock option and warrant grants to non-employees in
exchange for goods or services in accordance with SFAS No. 123 and Emerging
Issues Task Force No. 96-18 ("EITF 96-18"). SFAS No. 123 and EITF 96-18 require
that the Company account for its option and warrant grants to non-employees
based on the fair value of the options and warrants granted.
RECENT ACCOUNTING PRONOUNCEMENTS
In November 2004, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standard ("SFAS") No. 151, Inventory Costs,
which amends the guidance in Accounting Research Bulletin ("ARB") No. 43,
Chapter 4, Inventory Pricing, to clarify the accounting for abnormal amounts of
idle facility expense, freight, handling costs and wasted material. SFAS No. 151
requires that those items be recognized as current-period charges regardless of
whether they meet the criterion of "so abnormal." In addition, SFAS No. 151
requires allocation of fixed production overheads to the costs of conversion be
based on the normal capacity of the production facilities. SFAS No. 151 is
effective for inventory costs incurred during fiscal years beginning after June
15, 2005. The Company believes the adoption of SFAS No. 151 will not have an
impact on its financial statements.
In December 2004, the FASB issued SFAS No. 153, Exchanges of Nonmonetary Assets.
SFAS No. 153 is an amendment to APB Opinion No. 29, Accounting for Nonmonetary
Transactions. SFAS No. 153 eliminates the exception for nonmonetary exchanges of
similar productive assets and replaces it with a general exception for exchanges
of nonmonetary assets that do not have commercial substance. The provision of
SFAS No. 153 is effective for nonmonetary asset exchanges occurring in fiscal
periods beginning after June 15, 2005.
In December 2004, the FASB issued SFAS No. 123R, Share-Based Compensation, which
supersedes Accounting Principles Board ("APB") Opinion No. 25, Accounting for
Stock Issued to Employees, and its related implementation guidance. SFAS No.
123R focuses primarily on accounting for transactions in which an entity obtains
employee services through share-based payment transactions. SFAS No. 123R
requires a public entity to measure the cost of employee services received in
exchange for the award of equity investments based on the fair value of the
award at the date of grant. The cost will be recognized over the period during
which an employee is required to provide services in exchange for the award.
SFAS No. 123R is effective as of the beginning of the first fiscal year that
begins after June 15, 2005. The impact on net earnings as a result of the
adoption of SFAS No. 123R, from a historical perspective, is set forth above.
The Company is currently evaluating the provisions of SFAS No. 123R and will
adopt it in 2006, as required. The Company believes that the adoption of SFAS
No. 123R will have a significant impact on its financial statements.
3. RESEARCH AND LICENSE AGREEMENTS WITH PRINCETON UNIVERSITY
The Company previously sponsored OLED technology research conducted at Princeton
University under a Sponsored Research Agreement between the Trustees of
Princeton University and American Biomimetics Corporation ("ABC") dated August
1, 1994 (as amended, the "1994 Sponsored Research Agreement"). ABC, a privately
held Pennsylvania corporation that is affiliated with the Company, assigned its
rights and obligations under the 1994 Sponsored Research Agreement to the
Company in October 1995.
In April 2002, the Company amended the 1997 Research Agreement (Note 1) with
Princeton University providing, among other things, for an additional five-year
term. The Company is obligated to pay Princeton University up to $7,477,993
under the 1997 Research Agreement from July 31, 2002 through July 31, 2007.
Payments to Princeton University under this agreement are charged to research
and development expenses when they become due.
- 6 -
Pursuant to a License Agreement between the Trustees of Princeton University and
ABC dated August 1, 1994 (as amended, the "1994 License Agreement"), Princeton
University granted the Company a worldwide exclusive license, with rights to
sublicense, to make, have made, use, lease and/or sell products and to practice
processes based on a pending patent application of Princeton University relating
to OLED technology. Under the 1994 License Agreement, Princeton University
further granted ABC similar license rights with respect to patent applications
and issued patents arising out of work performed by Princeton University under
the 1994 Sponsored Research Agreement. ABC assigned its rights and obligations
under the 1994 License Agreement to the Company in June 1995. On October 9,
1997, the Company and Princeton University entered into an Amended License
Agreement that amended and restated the 1994 License Agreement (as amended, the
"1997 Amended License Agreement"). Under the 1997 Amended License Agreement,
Princeton University granted the Company corresponding license rights with
respect to patent applications and issued patents arising out of work performed
by Princeton University and USC under the 1997 Research Agreement.
Under the 1997 Amended License Agreement with Princeton University and the
University of Southern California ("USC"), the Company is required to pay
Princeton University royalties for licensed products sold by the Company or its
sublicensees. For licensed products sold by the Company, the Company is required
to pay Princeton University 3% of the net sales price of these products. For
licensed products sold by the Company's sublicensees, the Company is required to
pay Princeton University 3% of the revenues received by the Company from these
sublicensees. These royalty rates are subject to renegotiation for products not
reasonably conceivable as arising out of the Research Agreement if Princeton
University reasonably determines that the royalty rates payable with respect to
these products are not fair and competitive.
The Company is obligated under the 1997 Amended License Agreement to pay to
Princeton University minimum annual royalties. The minimum royalty payment is
$100,000 per year. The Company accrued $25,000 of royalty expense for the three
months ended March 31, 2005.
The Company also is required under the 1997 Amended License Agreement to use
commercially reasonable efforts to bring the licensed OLED technology to market.
However, this requirement is deemed satisfied provided the Company performs its
obligations under the 1997 Research Agreement and, when that agreement ends, the
Company invests a minimum of $800,000 per year in research, development,
commercialization or patenting efforts respecting the patent rights licensed to
the Company.
4. ACQUIRED TECHNOLOGY
On July 19, 2000, the Company, PD-LD, Inc. ("PD-LD"), its president Dr. Vladimir
Ban and the Trustees of Princeton University entered into a Termination,
Amendment and License Agreement whereby the Company acquired all PD-LD's rights
to certain issued and pending OLED technology patents in exchange for 50,000
shares of the Company's common stock. Pursuant to this transaction, these
patents were included in the patent rights exclusively licensed to the Company
under the 1997 Amended License Agreement. The acquisition of these patents had a
fair value of $1,481,250 (Note 2).
On September 29, 2000, the Company entered into a License Agreement with
Motorola, Inc. ("Motorola"). Pursuant to this agreement, the Company licensed
from Motorola what are now 74 issued U.S. patents and corresponding foreign
patents relating to OLED technologies. These patents expire between 2012 and
2018. The Company has the sole right to sublicense these patents to OLED display
manufacturers. As consideration for this license, the Company issued to Motorola
200,000 shares of the Company's common stock (valued at $4,412,500) and 300,000
shares of the Company's Series B Convertible Preferred Stock (valued at
$6,618,750). On October 6, 2004, all 300,000 shares of the Series B Convertible
Preferred Stock were converted into 418,916 shares of the Company's common stock
based on a specified conversion formula. As part of this transaction, the
Company also issued to Motorola a warrant to purchase 150,000 shares of the
Company's common stock at $21.60 per share. This warrant became exercisable on
September 29, 2001, and will remain exercisable until September 29, 2008. The
warrant was recorded at a fair market value of $2,206,234 based on the Black-
Scholes option-pricing model, and was recorded as a component of the cost of the
acquired technology.
In connection with the Motorola transaction, the Company also issued a warrant
to an unaffiliated third party to acquire 150,000 shares of common stock as a
finder's fee in connection with this transaction. This warrant was granted with
an exercise price of $21.60 per share and is exercisable immediately and will
remain exercisable until September 29, 2007. This warrant was accounted for at
its fair value based on the Black-Scholes option pricing model and $2,206,234
was recorded as a component of the cost of the acquired technology. The Company
used the following assumptions in the Black-Scholes option pricing model for the
300,000 warrants issued in connection with this transaction: (1) 6.3% risk-free
interest rate, (2) expected life of seven years, (3) 60% volatility, and (4)
zero expected dividend yield. In addition, the Company incurred $25,750 of
direct cash transaction costs that have been included in the cost of the
acquired technology. In total, the Company recorded an intangible asset of
$15,469,468 for the technology acquired from Motorola (Note 2).
The Company is required under the License Agreement to pay Motorola on gross
revenues earned by the Company for its sales of OLED products or components, or
from its sublicensees for their sales of OLED products or components, whether or
not these products or components are based on inventions claimed in the patent
rights licensed from Motorola. Moreover, the Company was required to pay
- 7 -
Motorola minimum royalties of $150,000 for the two-year period ending on
December 31, 2002, and $500,000 for the two-year period ending on December 31,
2004. The Company is also required to pay Motorola minimum royalties of
$1,000,000 for the two-year period ending on December 31, 2006. All minimum
royalties are payable, at the Company's discretion, in either all cash or up to
50% in shares of the Company's common stock and the remainder in cash. The
number of shares of common stock used to pay the stock portion of the royalty
payment is equal to the amount to be paid in stock divided by the average daily
closing price per share of the Company's common stock over the 10 trading days
ending two business days prior to the date the stock is issued.
For the two-year period ending on December 31, 2004, the Company issued to
Motorola 35,516 shares of the Company's common stock, valued at $249,997, and
paid Motorola $250,003 in cash to satisfy the minimum royalty obligation of
$500,000. Since the minimum royalty obligation exceeded actual royalties for the
three months ended March 31, 2005, the Company accrued $125,000 in royalty
expense.
5. LONG-TERM DEBT
March 31, December 31,
2005 2004
----------- -----------
Note payable to bank in monthly installments of $25,000,
plus interest at LIBOR plus 1.25% (4.12% at March 31,
2005), due in December 2009, secured by restricted cash $ 4,400,000 $ 4,500,000
Less: current portion 300,000 300,000
----------- -----------
Long-term debt $ 4,100,000 $ 4,200,000
=========== ===========
6. EQUITY AND CASH COMPENSATION UNDER THE PPG AGREEMENTS
On October 1, 2000, the Company entered into a five-year Development and License
Agreement ("Development Agreement") and a seven-year Supply Agreement ("Supply
Agreement") with PPG Industries, Inc. ("PPG"). Under the Development Agreement,
team of PPG scientists and engineers assists the Company in developing its
proprietary OLED materials and supplies the Company with these materials for
evaluation purposes. Under the Supply Agreement, PPG supplies the Company with
its proprietary OLED materials that are intended for resale to customers for
commercial purposes.
For the period from inception of the Development Agreement through December
2004, the Company issued shares of its common stock and warrants to acquire its
common stock to PPG on an annual basis in consideration of the services provided
under the agreement. The consideration to PPG for these services was determined
by reference to an agreed-upon annual budget and was subject to adjustment based
on costs actually incurred for work performed during the budget period. The
specific number of shares of common stock and warrants issued to PPG was
determined based on the average closing price of the Company's common stock
during a specified period prior to the start of the budget period. In January
2003, the Company and PPG amended the Development Agreement, providing for
additional consideration to PPG for additional services to be provided under
that agreement, which services were paid for in cash. All materials provided by
PPG under the Supply Agreement were also paid for in cash.
In December 2004, the Company and PPG amended both the Development Agreement and
the Supply Agreement to alter the charges and method of payment for services and
materials provided by PPG under both agreements. Under the amended Development
Agreement, the Company compensates PPG on a cost-plus basis for the services
provided during each calendar quarter. The Company is required to pay for some
of these services in cash and for other of the services in common stock. Payment
for up to 50% of the remaining services may be paid, at the Company's sole
discretion, in cash or shares of common stock, with the balance payable in all
cash. The specific number of shares of common stock issuable to PPG is
determined based on the average closing price for the Company's common stock
during a specified period prior to the end of that quarter. If, however, this
average closing price is less than a specified dollar amount, the Company is
required to compensate PPG in all cash. The Company records these expenses to
research and development as they are incurred. Under the amended agreement, the
Company is no longer is required to issue warrants to PPG.
Under the amended Supply Agreement, the Company also compensates PPG on a
cost-plus basis for services and materials provided during each calendar
quarter. The Company is required to pay for all materials and for some of these
services in cash. Payment for up to 50% of the remaining services may be paid,
at the Company's sole discretion, in cash or shares of common stock, with the
balance payable in all cash. As under the Development Agreement, the specific
number of shares of common stock issuable to PPG is determined based on the
average closing price for the Company's common stock during a specified period
prior to the end of that quarter. If, however, this average closing price is
less than a specified dollar amount, the Company is required to compensate PPG
in cash.
- 8 -
On January 1, 2004, the Company issued to PPG 157,609 shares of the Company's
common stock as consideration, determined by reference to the agreed-upon
budget, for services to be provided by PPG under the Development Agreement
during 2004. For the quarter ended March 31, 2004, the Company recorded a charge
of $495,674 to research and development expense for the portion of these shares
that was attributable to services provided during such period. The charge was
determined based on the fair value of the Company's common stock as of the end
of the period.
On February 15, 2005, the Company issued 27,276 shares of common stock to PPG
based on a final accounting for actual costs incurred by PPG under the
Development Agreement for the year ended December 31, 2004. Accordingly, the
Company accrued $245,484 of additional research and development expense as of
December 31, 2004, based on the fair value of these additional shares as of the
end of 2004.
In further consideration of the services performed by PPG under the Development
Agreement in 2004, the Company issued warrants to PPG to acquire 184,885
additional shares of the Company's common stock. The number of warrants earned
and issued was based on the total number of shares of common stock that the
Company issued to PPG for services provided during 2004. The warrants were
earned and charged to research and development expenses during 2004, but were
not issued until February 15, 2005. The Company is not required to issue any
warrants to PPG for services performed in 2005.
On April 20, 2005, the Company issued to PPG 121,274 shares of the Company's
common stock as consideration, determined by reference to work actually
performed, for services provided by PPG under the Development Agreement and the
Supply Agreement during the quarter ended March 31, 2005. The Company recorded a
charge of $845,037 to research and development expense for these shares. The
charge was determined based on the fair value of the Company's common stock as
of the end of the period. The Company also recorded $77,218 to research and
development for the cash portion of the work performed by PPG during the quarter
ended March 31, 2005.
Also, in accordance with the development agreement, the Company is required to
reimburse PPG for its raw materials and conversion costs for all development
chemicals produced on behalf of the Company. The Company recorded $12,958 and
$171,046 in research and development expenses related to these costs during the
quarters ended March 31, 2005 and 2004, respectively.
The Company is required to grant options to purchase the Company's common stock
to PPG employees performing development services for the Company under the
Development Agreement, in a manner consistent with that for issuing options to
its own employees. Subject to certain contingencies, these options vest one year
following the date of grant and expire 10 years from the date of grant.
On December 23, 2003, the Company granted to PPG employees performing services
under the agreement options to purchase 21,000 shares of the Company's common
stock at an exercise price of $13.92. During the three months ended March 31,
2004, the Company recorded $57,154 in research and development costs related to
these options.
On January 18, 2005, the Company granted to PPG employees performing development
services under the agreement options to purchase 30,500 shares of the Company's
common stock at an exercise price of $8.14. During the three months ended March
31, 2005, the Company recorded $36,687 in research and development costs related
to these options.
The Company determined the fair value of the options earned during the three
months ended March 31, 2005 and 2004, using the Black-Scholes option-pricing
model with the following assumptions: (1) risk free interest rate of 4.21% and
3.83%-4.28%, respectively, (2) no expected dividend yield, (3) expected life of
10 years and (4) expected volatility of 79.95% and 94%, respectively.
7. SHAREHOLDERS' EQUITY
Preferred Stock,
Series A Common Stock Additional
---------------- -------------------- Paid-In Deferred
Shares Amount Shares Amount Capital Compensation
------- ------- ---------- -------- ------------ ------------
BALANCE, JANUARY 1, 2005 200,000 $ 2,000 27,903,385 $279,034 $173,372,344 $ (17,446)
Exercise of Common Stock
options and warrants -- -- 5,000 50 19,950 --
Issuance of Common Stock to
Employees -- -- 88,270 882 725,532 --
Issuance of Common Stock to
Board of Directors and
Scientific Advisory Board -- -- 48,000 480 526,071 --
Issuance of Common Stock in
Connection with License
Agreement -- -- 35,516 355 249,642 --
Issuance of Common Stock and
options in connection with
Development Agreement -- -- 27,276 273 281,899 --
Issuance of Common Stock
options to non-employees -- -- -- -- (6,713) --
Amortization of deferred
Compensation -- -- -- -- -- 17,446
Unrealized loss on available-
for-sales securities -- -- -- -- -- --
Net loss -- -- -- -- -- --
------- ------- ---------- -------- ------------ ------------
BALANCE, MARCH 31, 2005 200,000 $ 2,000 28,107,447 $281,074 $175,168,725 $ --
======= ======= ========== ======== ============ ============
Other
Accumulated Comprehensive Total
Deficit Loss Equity
------------- ------------- ------------
BALANCE, JANUARY 1, 2005 $(114,368,210) $ (79,837) $ 59,187,885
Exercise of Common Stock
options and warrants -- -- 20,000
Issuance of Common Stock to
Employees -- -- 726,414
Issuance of Common Stock to
Board of Directors and
Scientific Advisory Board -- -- 526,551
Issuance of Common Stock in
Connection with License
Agreement -- -- 249,997 (A)
Issuance of Common Stock and
options in connection with
Development Agreement -- -- 282,172 (B)
Issuance of Common Stock
options to non-employees -- -- (6,713)
Amortization of deferred
Compensation -- -- 17,446
Unrealized loss on available-
for-sales securities -- (12,516) (12,516)
Net loss (4,990,901) -- (4,990,901)
------------- ------------- ------------
BALANCE, MARCH 31, 2005 $(119,359,111) $ (92,353) $ 56,000,335
============= ============= ============
- 9 -
(A) In accordance with the Motorola License Agreement (Note 4), the Company
issued shares to Motorola to satisfy part of the minimum royalty due for the two
year period ending on December 31, 2004.
(B) In accordance with the PPG Development Agreement (Note 6), the Company
issued shares issued to PPG based on a final accounting for actual costs
incurred by PPG under the agreement for the year ended December 31, 2004 and the
pro-rata portion of the options to purchase shares of the Company's common
stock, that were granted to certain PPG employees, for the three months ended
March 31, 2005.
8. COMMITMENTS AND CONTINGENCIES
Under the terms of the Company's License Agreement with Motorola (Note 4), the
Company agreed to make minimum royalty payments. To the extent that the
royalties otherwise payable to Motorola under this agreement are not sufficient
to meet the minimums, the Company is required to pay the shortfall, at its
discretion, in all cash or in 50% cash and 50% common stock within 90 days after
the end of each two-year period specified below in which the shortfall occurs.
For the two-year period ending on December 31, 2004, the Company issued to
Motorola 35,516 shares of the Company's common stock, valued at $249,997, and
paid Motorola $250,003 in cash as a result of the minimum royalty due of
$500,000. For the two-year period ending December 31, 2006, the Company will be
required to make a minimum royalty payment of $1,000,000. Since the minimum
royalty obligation exceeded actual royalties for the three months ended March
31, 2005, the Company accrued $125,000 in royalty expense.
In accordance with the April 2002 amendment to the 1997 Research Agreement with
the Princeton University, the Company is required to pay annually to Princeton
University up to $1,495,999 for the period from July 31, 2002 through July 31,
2007.
Under the terms of the 1997 Amended License Agreement (Note 3), the Company is
required to pay Princeton University minimum royalty payments. To the extent
that the royalties otherwise payable to Princeton University under this
agreement are not sufficient to meet the minimums, the Company is required to
pay Princeton University the difference between the royalties paid and the
minimum royalty. The minimum royalty is $100,000 per year.
9. SUBSEQUENT EVENTS
On April 19, 2005, we entered into an OLED Patent License Agreement and an OLED
Supplemental License Agreement with Samsung SDI Co., Ltd. Under the terms of
those agreements, we granted Samsung SDI Co., Ltd. license rights under various
patents owned or controlled by us for Samsung SDI Co., Ltd. to make and sell
specified OLED display products. In consideration of this license grant, Samsung
SDI Co., Ltd. agreed to pay us up front license fees and running royalties on
its sales of these display products.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with the consolidated financial
statements and related notes above.
CAUTIONARY STATEMENT
CONCERNING FORWARD-LOOKING STATEMENTS
This discussion and analysis contains some "forward-looking
statements." Forward-looking statements concern our possible or assumed future
results of operations, including descriptions of our business strategies. These
statements often include words such as "believe," "expect," "anticipate,"
"intend," "plan," "estimate," "seek," "will," "may" or similar expressions.
These statements are based on assumptions that we have made in light of our
experience in the industry, as well as our perceptions of historical trends,
current conditions, expected future developments and other factors we believe
are appropriate in these circumstances.
As you read and consider this discussion and analysis, you should not
place undue reliance on any forward-looking statements. You should understand
that these statements involve substantial risk and uncertainty and are not
guarantees of future performance or results. They depend on many factors
including, but not limited to: the success of alternatives to OLEDs for flat
panel displays; the success of competing OLED technologies, or of other flat
panel display technologies; potential lack of demand for OLED displays or
downturns in demand for flat panel displays in general; we and our partners
failing to make sufficient advances in OLED technology and materials research;
- 10 -
our being unable to form or maintain lasting business relationships with display
manufacturers and others; and our being unable to obtain and maintain
appropriate intellectual property protection for our OLED technologies and
materials, or being required to incur excessive expenditures to enforce our
intellectual property rights. These and other similar factors are discussed in
greater detail in the section entitled "Factors that May Affect Future Results
and Financial Condition" in our Annual Report on Form 10-K for the year ended
December 31, 2004. Changes or developments in any of these areas could affect
our financial results or results of operations, and could cause actual results
to differ materially from those contemplated in the forward-looking statements.
All forward looking statements speak only as of the date of this
report. Except for special circumstances in which a duty to update arises when
prior disclosure becomes materially misleading in light of subsequent events, we
do not intend to update any of these forward-looking statements to reflect
events or circumstances after the date of this report or to reflect the
occurrence of unanticipated events.
OVERVIEW
We are a leader in the research, development and commercialization of organic
light emitting diode, or OLED, technologies for use in a variety of flat panel
display and other applications. Since 1994, we have been exclusively engaged,
and expect to continue to be exclusively engaged, in funding and performing
research and development activities relating to OLED technologies and materials,
and in attempting to commercialize these technologies and materials. Our
revenues are generated through contract research, sales of development and
commercial chemicals, technology development and evaluation agreements and
license fees. In the future, we anticipate that the revenues from licensing our
intellectual property will become a more significant part of our revenue stream.
While we have made significant progress over the past few years developing and
commercializing our family of OLED technologies (PHOLED(TM), TOLED(TM),
FOLED(TM), etc.) we have incurred significant losses and will continue to do so
until our OLED technologies become more widely adopted by flat panel display
manufacturers. We have incurred losses since our inception, resulting in an
accumulated deficit of $119,359,111 as of March 31, 2005.
We anticipate fluctuations in our annual and quarterly results of operations due
to uncertainty regarding:
o the timing of our receipt of license fees and fees for future
technology development and evaluation;
o the timing and volume of sales of our OLED materials for both
commercial usage and evaluation purposes;
o the timing and magnitude of expenditures we may incur in connection
with our ongoing research and development activities; and
o the timing and financial consequences of our formation of new business
relationships and alliances.
RESULTS OF OPERATIONS
We had a net loss attributable to common shareholders of $4,990,901 (or $0.18
per diluted share) for the quarter ended March 31, 2005, compared to a net loss
attributable to holders of our common stock of $4,107,600 (or $0.17 per diluted
share) for the same period in 2004. The increased loss was primarily due to a
decrease in total revenue and an increase in research and development expenses.
Our revenues were $1,467,068 for the quarter ended March 31, 2005, compared to
$2,129,990 for the same period in 2004. The decrease in revenue is due to a
decrease in chemical sales, license fees and technology development fees as
discussed below.
We earned $699,056 in contract research revenue from the U.S. government in the
quarter ended March 31, 2005, compared to $412,232 for the same period in 2004.
The increase in 2005 was primarily due to commencement of work under three new
subcontracts and two new government contracts.
We earned $413,362 from our sales of OLED materials for evaluation purposes in
the quarter ended March 31, 2005, compared to $796,358 for corresponding sales
in the same period in 2004. The decrease was mainly due to the timing of
purchases of materials in connection with development efforts. The company
cannot predict the usage or timing of such purchases due to the early stage of
the OLED industry.
Our commercial chemical revenue and license fees for the quarter ended March 31,
2005 were $31,395 and $73,255, respectively, compared to $66,420 and $154,980
for the corresponding period in 2004. The decrease was due to the timing of
purchases of our proprietary PHOLED materials by a customer for use in the
exterior sub-display of a mobile phone being sold in Japan. The amount and
timing of the sale of our commercial chemicals is difficult to predict due to
the early stage of the OLED industry.
- 11 -
We recognized $250,000 in technology development revenue in the quarter ended
March 31, 2005 in connection with one technology development and evaluation
agreement entered into in September 2003, compared to $700,000 for the same
period in 2004. The decrease is due to the fact that one agreement from 2004
expired in accordance with its terms at the end of March 2004. The amount and
timing of our receipt of fees for technology development and evaluation services
is difficult to predict due to the early stage of the OLED industry.
We incurred research and development expenses of $4,605,325 for the quarter
ended March 31, 2005, compared to $4,323,715 for the same period in 2004. The
increase was due to an increase in costs of $238,178 for the further development
and operation of our facility in Ewing, New Jersey and an increase in costs of
$175,922 associated with patent filings. These increases were offset by a
decrease of $119,074 in charges in connection with our Development Agreement
with PPG.
General and administrative expenses were $1,894,863 for the quarter ended March
31, 2005, compared to $1,849,407 for the same period in 2004. General and
administrative expenses have remained relatively consistent from 2004 to 2005.
Interest income increased to $262,163 for the quarter ended March 31, 2005,
compared to $130,946 for the same period in 2004. This was the result of
increased cash balances available for investing from our registered offering of
common stock which closed in March 2004.
Interest expense increased to $43,077 for the quarter ended March 31, 2005,
compared to $98 for the same period in 2004. The increase was the result of the
debt agreement entered into by us in December 2004 associated with the
acquisition of our Ewing, New Jersey facility.
There were no deemed dividends for the quarter ended March 31, 2005, compared to
$46,176 for the same period in 2004. In 2004, we issued a warrant to purchase
shares of our common stock and completed an offering that was deemed dilutive
under the terms of a warrant we had previously issued and resulted in the
reduction of the exercise price of that warrant and an increase in the number of
shares issuable under that warrant. We treated this occurrence as a deemed
dividend of $46,176.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 2005, we had cash and cash equivalents of $20,163,499,
short-term investments of $21,674,048 and investments in certificates of deposit
and other liquid instruments with an original maturity of more than one year of
$2,981,773. This compares to cash and cash equivalents of $18,930,581,
short-term investments of $26,258,463 and investments in certificates of deposit
and other liquid instruments with an original maturity of more than one year of
$2,290,451 as of December 31, 2004. The overall decrease in cash and cash
equivalents and short-term and long-term investments of $2,660,175 was primarily
due to cash used in operating activities and for the purchase of equipment
during the quarter.
Cash used in operating activities was $1,172,975 for the quarter ended March 31,
2005, as compared to $1,905,858 for the same period in 2004. The decrease was
mainly due to collection of accounts receivable and cash received from customers
which resulted in an increase in deferred license fees and deferred revenue.
In March 2004, we completed a public offering of 2,500,000 shares of our common
stock at a price of $12.00 per share. The offering resulted in proceeds to us of
$28,036,218, net of $1,963,782 in costs associated with completion of the
offering.
Working capital decreased to $35,963,395 as of March 31, 2005, from working
capital of $40,630,913 as of December 31, 2004. The net decrease was due
primarily to the use of cash for operations, the costs associated with the
expansion of our facility, and the costs for the purchase of new equipment.
We anticipate, based on our internal forecasts and assumptions relating to our
operations (including, among others, assumptions regarding our working capital
requirements, the progress of our research and development efforts, the
availability of sources of funding for our research and development work, and
the timing and costs associated with the preparation, filing, prosecution,
maintenance and enforcement of our patents and patent applications), that we
have sufficient cash, cash equivalents and short-term investments to meet our
obligations for at least the next twelve months. We believe that potential
additional financing sources for us include long-term and short-term borrowings,
public and private sales of our equity and debt securities and the receipt of
cash upon the exercise of warrants and options. We have an effective shelf
registration statement that would enable us to offer, from time to time, up to
$44,725,524 of our common stock, preferred stock, debt securities and other
securities, subject to market conditions and other factors. It should be noted,
however, that additional funding may be required in the future for research,
development and commercialization of our OLED technologies and materials, to
obtain and maintain patents respecting these technologies and materials, and for
working capital and other purposes, the timing and amount of which are difficult
to ascertain. There can be no assurance that additional funds will be available
to us when needed, on commercially reasonable terms or at all.
- 12 -
CRITICAL ACCOUNTING POLICIES
Refer to our Annual Report on Form 10-K for the year ended December 31, 2004 for
a discussion of our critical accounting policies.
CONTRACTUAL OBLIGATIONS
Refer to our Annual Report on Form 10-K for the year ended December 31, 2004 for
a discussion of our contractual obligations.
OFF-BALANCE SHEET ARRANGEMENTS
Refer to our Annual Report on Form 10-K for the year ended December 31, 2004 for
a discussion of off-balance sheet arrangements. As of March 31, 2005, we had no
off-balance sheet arrangements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We do not utilize financial instruments for trading purposes and hold no
derivative financial instruments, other financial instruments or derivative
commodity instruments that could expose us to significant market risk. Our
primary market risk exposure with regard to financial instruments is to changes
in interest rates, which would impact interest income earned on investments.
ITEM 4. CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
Our management, with the participation of our Chief Executive Officer and Chief
Financial Officer, evaluated the effectiveness of our disclosure controls and
procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of
1934, as amended as of the end of the period covered by this report. Based on
that evaluation, the Chief Executive Officer and Chief Financial Officer
concluded that our disclosure controls and procedures, as of the end of the
period covered by this report, are functioning effectively to provide reasonable
assurance that the information required to be disclosed by us in reports filed
or submitted under the Securities Exchange Act of 1934, as amended, is (i)
recorded, processed, summarized and reported within the time periods specified
in the SEC's rules and forms, and (ii) accumulated and communicated to our
management, including the Chief Executive Officer and Chief Financial Officer,
as appropriate to allow timely decisions regarding disclosure.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
During our most recent fiscal quarter, there was no change in our internal
control over financial reporting that has materially affected, or is reasonably
likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We are not currently a party to any legal proceedings of a material nature.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
ISSUANCE OF SECURITIES TO PPG INDUSTRIES
Pursuant to our Development Agreement with PPG we are required to issue shares
of our common stock to PPG in return for services performed by PPG under that
agreement. On February 15, 2005, we issued 27,276 shares of our common stock to
PPG as additional consideration for services provided by PPG under the agreement
during 2004. We recorded a charge of $245,484 to research and development
expense in 2004 for the issuance of these shares.
Prior to its amendment in December 2004, the Development Agreement also required
us to issue warrants to PPG to acquire shares of our common stock in return for
services performed by PPG under that agreement. The number of shares issuable
upon exercise of each warrant was to be based on the number of shares of common
stock issued to PPG under the agreement for all services provided during the
preceding calendar year. On February 15, 2005, we issued a warrant to PPG to
acquire 184,885 shares of our common stock at an exercise price of $24.28 per
share. We recorded a charge of $1,296,748 to research and development expense in
2004 for the issuance of this warrant. The warrant vested immediately and may be
exercised for seven years from the date of issuance.
- 13 -
The securities issued to under the Development Agreement were not registered
under the Securities Act of 1933, as amended. The issuances were exempt from
registration under Section 4(2) of the Securities Act, as not involving any
public offering.
ISSUANCE OF SECURITIES TO MOTOROLA, INC.
Pursuant to our License Agreement with Motorola, we were required to pay
Motorola minimum royalties of $500,000 for the two-year period ending on
December 31, 2004. In partial satisfaction of this obligation, we issued 35,516
shares of our common stock to Motorola on March 29, 2005. We recorded a charge
of $249,997 to royalty expense in 2004 for the issuance of these shares.
The securities issued to Motorola under the License Agreement were not
registered under the Securities Act of 1933, as amended. The issuances were
exempt from registration under Section 4(2) of the Securities Act, as not
involving any public offering.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
We submitted no matters to a vote of our security holders in the first quarter
of 2005.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
The following is a list of the exhibits filed as part of this report. Where so
indicated by footnote, exhibits that were previously filed are incorporated by
reference. For exhibits incorporated by reference, the location of the exhibit
in the previous filing is indicated parenthetically, together with a reference
to the filing indicated by footnote.
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
10.1+ Amendment Number 6 to the Development and License Agreement between
the registrant and PPG Industries, Inc., dated as of March 30, 2005.
10.2+ Amendment Number 2 to the Supply Agreement between the registrant
and PPG Industries, Inc., dated as of March 30, 2005.
31.1* Certifications of Sherwin I. Seligsohn, Chief Executive Officer, as
required by Rule 13a-14(a) or Rule 15d-14(a)
31.2* Certifications of Sidney D. Rosenblatt, Chief Financial Officer, as
required by Rule 13a-14(a) or Rule 15d-14(a)
32.1** Certifications of Sherwin I. Seligsohn, Chief Executive Officer, as
required by Rule 13a-14(b) or Rule 15d-14(b), and by 18 U.S.C.
Section 1350. (This exhibit shall not be deemed "filed" for purposes
of Section 18 of the Securities Exchange Act of 1934, as amended, or
otherwise subject to the liability of that section. Further, this
exhibit shall not be deemed to be incorporated by reference into any
filing under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended.)
32.2** Certifications of Sidney D. Rosenblatt, Chief Financial Officer, as
required by Rule 13a-14(b) or Rule 15d-14(b), and by 18 U.S.C.
Section 1350. (This exhibit shall not be deemed "filed" for purposes
of Section 18 of the Securities Exchange Act of 1934, as amended, or
otherwise subject to the liability of that section. Further, this
exhibit shall not be deemed to be incorporated by reference into any
filing under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended.)
______________________
+ Filed as an Exhibit to Registration Statement (No. 333-124306) on Form S-3,
filed with the SEC on April 25, 2005. Confidential treatment has been
requested as to certain portions of this exhibit pursuant to Rule 406 under
the Securities Act of 1933, as amended.
* Filed herewith.
** Furnished herewith.
Note: Any of the exhibits listed in the foregoing index not included
with this report may be obtained, without charge, by writing to Mr.
Sidney D. Rosenblatt, Corporate Secretary, Universal Display
Corporation, 375 Phillips Boulevard, Ewing, New Jersey 08618.
- 14 -
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized:
UNIVERSAL DISPLAY CORPORATION
Date: May 9, 2005 By: /s/ Sidney D. Rosenblatt
--------------------------------
Sidney D. Rosenblatt
Executive Vice President and
Chief Financial Officer
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