As filed with the Securities and Exchange Commission on January 25, 2005
Registration No. 333-120737
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
UNIVERSAL DISPLAY CORPORATION
(Exact name of registrant as specified in its charter)
Pennsylvania 8731 23-2372688
(State or other jurisdiction of (Primary Standard Industrial I.R.S. Employer
incorporation or organization) Classification No.) Identification No.)
375 PHILLIPS BOULEVARD
EWING, NEW JERSEY 08618
(609) 671-0980
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
STEVEN V. ABRAMSON
PRESIDENT AND CHIEF OPERATING OFFICER
UNIVERSAL DISPLAY CORPORATION
375 Phillips Boulevard
Ewing, New Jersey 08618
(609) 671-0980
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies of all communications to:
JUSTIN W. CHAIRMAN, ESQ.
MORGAN, LEWIS & BOCKIUS LLP
1701 Market Street
Philadelphia, PA 19103
(215) 963-5000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. |_|
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. |_|
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
The information in this prospectus is not complete and may change. We may not
sell these securities until the registration statement filed with the Securities
and Exchange Commission is effective. This prospectus is not an offer to sell
these securities and it is not soliciting an offer to buy these securities in
any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED JANUARY 25, 2005
PROSPECTUS
1,377,415 SHARES
UNIVERSAL DISPLAY CORPORATION
COMMON STOCK
The shareholders of Universal Display Corporation identified in this
prospectus under "Selling Shareholders," or their donees, pledgees or other
transferees are offering up to 1,377,415 shares of our common stock for resale
to the public. The selling shareholders will be selling shares of common stock
(a) that they own or will acquire from us in the future and (b) that they can
acquire by exercising warrants that they own or will acquire from us in the
future.
We will not receive any proceeds from the resale of shares of our
common stock by the selling shareholders. We are paying the expenses of this
offering.
The primary market for our common stock is the Nasdaq National Market
System, where it trades under the symbol "PANL." On January 24, 2005, the last
reported sale price of our common stock on the Nasdaq National Market System was
$7.60 per share.
AN INVESTMENT IN OUR COMMON STOCK INVOLVES SIGNIFICANT RISKS. YOU
SHOULD CAREFULLY CONSIDER THE RISK FACTORS DESCRIBED BEGINNING ON PAGE 5 BEFORE
INVESTING IN OUR COMMON STOCK.
The securities have not been approved by the Securities and Exchange
Commission or any state securities commission, nor have they determined if this
prospectus is accurate or complete. Any representation to the contrary is a
criminal offense.
THE DATE OF THIS PROSPECTUS IS ________, 2005
TABLE OF CONTENTS
Page
----
Cautionary Statement Concerning Forward-Looking Statements................ 3
Our Company............................................................... 4
Risk Factors.............................................................. 5
The Offering.............................................................. 12
Use of Proceeds........................................................... 12
Selling Shareholders...................................................... 13
Plan of Distribution...................................................... 15
About this Prospectus..................................................... 16
Where You Can Find More Information....................................... 16
Legal Opinion............................................................. 17
Experts................................................................... 17
-2-
CAUTIONARY STATEMENT
CONCERNING FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated by reference contain
some "forward-looking statements" as defined in the Private Securities
Litigation Reform Act of 1995 and information relating to us that is based on
the beliefs, expectations, hopes or intentions of our management, as well as
assumptions made by, and the information currently available to, our management.
Among other things, these statements include, but are not limited to, the
statements in this prospectus and the documents incorporated by reference
regarding:
o the outcomes of our ongoing and future organic light emitting diode
("OLED") technology research and development activities;
o our ability to access future OLED technology developments of our
academic and commercial research partners;
o our ability to form and continue strategic relationships with
manufacturers of OLEDs and OLED-containing products;
o the protections afforded to us by the patents that we own or license;
o the anticipated success of our OLED technologies, materials and
manufacturing equipment commercialization strategies;
o the potential commercial applications of our OLED technologies and
materials, and of OLED-containing products in general;
o future demand for our OLED technologies and materials;
o the comparative advantages and disadvantages of our OLED technologies
and materials versus competing technologies and materials currently on
the market;
o the nature and potential advantages of any competing technologies that
may be developed in the future;
o the payments that we expect to receive in the future under our existing
contracts;
o our future capital requirements;
o the amount and type of securities that we will issue in the future to
our business partners and others; and
o our future OLED technology licensing and OLED material sales revenues
and results of operations.
In addition, when used in these documents, the words "estimate,"
"project," "believe," "anticipate," "intend," "expect" and similar expressions
are intended to identify forward-looking statements. These statements reflect
our current views with respect to future events and are subject to risks and
uncertainties that could cause actual results to differ materially from those
contemplated in these forward-looking statements, including those risks
discussed in this prospectus and the documents incorporated by reference.
You are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date of this prospectus or the documents
incorporated by reference, as the case may be. 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 prospectus or to reflect the occurrence of unanticipated events.
-3-
OUR COMPANY
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. OLEDs are thin, light-weight and power
efficient devices, highly suitable for use in portable, full-color display
applications. We are focused on licensing our proprietary technologies and
materials to leading display manufacturers on a non-exclusive basis. We believe
this business model allows us to concentrate on our core strengths of technology
development and innovation, while providing significant operating leverage.
During the second half of 2003, we recognized our first commercial chemical
sales and license fee revenues. We are currently selling one of our proprietary
OLED materials to Tohoku Pioneer Corporation, have established a license
agreement with DuPont Displays, Inc. and have entered into technology
development and evaluation agreements with several flat panel display
manufacturers.
Initial applications for OLED displays are small- and medium-sized flat
panel displays in a wide variety of portable consumer electronics devices,
including mobile phones, personal digital assistants, or PDAs, cameras,
camcorders and electronic games. According to DisplaySearch, an independent
market research firm tracking the flat panel display industry, the market for
flat panel displays, which is currently dominated by liquid crystal displays, or
LCDs, is expected to reach an estimated $71.6 billion in 2007. We believe OLED
displays will capture a share of the growing flat panel display market because
they offer potential advantages over competing technologies with respect to
brightness, power efficiency, viewing angle, video response time and
manufacturing cost. According to DisplaySearch, the OLED display market is
expected to experience significant growth with revenues increasing from an
estimated $263 million in 2003 to an estimated $3.5 billion by 2008. We believe
that larger display applications, such as laptop computers, desktop computer
monitors and televisions, also represent a significant opportunity for OLED
displays given the potential advantages of OLED technologies.
Our strategy is to further develop and license our proprietary OLED
technologies to display manufacturers for use in small, medium and large
consumer electronic devices. Our key proprietary technology, phosphorescent
OLEDs, or PHOLEDs, has demonstrated the ability to provide up to four times the
power efficiency of other types of OLEDs and traditional LCDs. We also are
conducting research and development work directed towards both improving our
existing PHOLED technologies and materials and further developing our
proprietary OLED technologies such as transparent OLEDs and flexible OLEDs. Our
focus on next-generation technologies is designed to enable us to continue our
position as a leading provider of OLED technologies.
We believe that our technology leadership and intellectual property
position will enable us to share in the revenues from OLED displays as they
enter the mainstream consumer electronics market. Through our internal research
and development efforts and our relationships with world-class partners such as
Princeton University, the University of Southern California and PPG Industries,
Inc., we have established a significant portfolio of OLED technologies and
associated intellectual property rights. We currently own, exclusively license
or have the sole right to sublicense more than 600 patents issued and pending
worldwide. In addition, our management team has assembled a Scientific Advisory
Board that includes some of the leading researchers in the OLED industry, which
has enhanced our reputation and our competitive profile.
CORPORATE INFORMATION
Our corporation was organized under the laws of the Commonwealth of
Pennsylvania in April 1985. Our current business was commenced in June 1994 by a
New Jersey corporation that has since changed its name to UDC, Inc. UDC, Inc.
now functions as an operating subsidiary of ours and has overlapping officers
and directors. Our principal executive offices are located at 375 Phillips
Boulevard, Ewing, New Jersey 08618 and our telephone number is (609) 671-0980.
Our website is located at www.universaldisplay.com. The information contained on
our website is not a part of this prospectus.
-4-
RISK FACTORS
An investment in our securities involves a high degree of risk. Before
purchasing our common stock, you should carefully consider the risks described
below in this section and the risks described in the documents incorporated by
reference in this prospectus. You should not purchase our securities if you
cannot afford the loss of your entire investment.
RISKS RELATING TO OUR BUSINESS AND INDUSTRY
WE DO NOT EXPECT TO BE PROFITABLE IN THE FORESEEABLE FUTURE, AND MAY NEVER BE
PROFITABLE.
Since inception, we have generated limited revenues while incurring
significant losses. We expect to incur losses for the foreseeable future and
until such time, if ever, as we are able to achieve sufficient levels of revenue
from the commercial exploitation of our OLED technologies and materials to
support our operations. You should note, however, that:
o OLED technologies may never become commercially viable;
o markets for flat panel displays utilizing OLED technologies may be
limited; and
o we may never generate sufficient revenues from the commercial
exploitation of our OLED technologies and materials to become
profitable.
Even if we find commercially viable applications for our OLED
technologies and materials, we may never recover our research and development
expenses.
IF WE DO NOT RECEIVE ADDITIONAL FINANCING IN THE FUTURE, WE MIGHT NOT BE ABLE TO
CONTINUE THE RESEARCH, DEVELOPMENT AND COMMERCIALIZATION OF OUR OLED
TECHNOLOGIES AND MATERIALS.
Our capital requirements have been and will continue to be significant.
Substantial additional funds will be required in the future for research,
development and commercialization of our OLED technologies and materials, to
obtain and maintain patents and other intellectual property rights in these
technologies and materials, and for working capital and other purposes, the
timing and amount of which are difficult to ascertain. Our cash on hand may not
be sufficient to meet all of our future needs. When we need additional funds,
such funds may not be available on commercially reasonable terms or at all. If
we cannot obtain more money when needed, our business might fail. Additionally,
if we attempt to raise money in an offering of shares of our common stock,
preferred stock, warrants or depositary shares, or if we engage in acquisitions
involving the issuance of such securities, the issuance of these shares will
dilute our then-existing shareholders.
IF OUR OLED TECHNOLOGIES AND MATERIALS ARE NOT FEASIBLE FOR BROAD-BASED PRODUCT
APPLICATIONS, WE MAY NEVER GENERATE REVENUES SUFFICIENT TO SUPPORT ONGOING
OPERATIONS.
Before display manufacturers will agree to utilize our OLED
technologies and materials for wide-scale commercial production, they will
likely require us to demonstrate to their satisfaction that our OLED
technologies and materials are feasible for broad-based product applications.
This, in turn, will require substantial advances in our research and development
efforts in a number of areas, including:
o device reliability;
o the development of long-lived OLED materials for full color OLED
displays; and
o issues related to scalability and cost-effective fabrication
technologies for product applications.
Our efforts may never demonstrate the feasibility of our OLED
technologies and materials for broad-based product applications.
-5-
Our research and development efforts remain subject to all of the risks
associated with the development of new products based on emerging and innovative
technologies, including, without limitation, unanticipated technical or other
problems and the possible insufficiency of funds for completing development of
these products. Technical problems may result in delays and cause us to incur
additional expenses that would increase our losses. If we cannot complete
research and development of our OLED technologies and materials successfully, or
if we experience delays in completing research and development of our OLED
technologies and materials for use in potential commercial applications,
particularly after incurring significant expenditures, our business may fail.
EVEN IF OUR OLED TECHNOLOGIES ARE TECHNICALLY FEASIBLE, THEY MAY NOT BE ADOPTED
BY DISPLAY MANUFACTURERS.
The potential size, timing and viability of market opportunities
targeted by us are uncertain at this time. Market acceptance of our OLED
technologies will depend, in part, upon these technologies providing benefits
comparable to cathode ray tube, or CRT, display and LCD technologies (the
current standard display technologies) at an appropriate cost, and the adoption
of these technologies by consumers, neither of which has been achieved. Also,
there may be a number of additional technologies that display manufacturers need
to utilize to be used in conjunction with our OLED technologies in order to
bring OLED displays and products containing them to the market. Many potential
licensees of our OLED technologies manufacture flat panel displays utilizing
competing technologies, and may, therefore, be reluctant to redesign their
products or manufacturing processes to incorporate our OLED technologies.
Moreover, even if our OLED technologies are a viable alternative to competing
technologies, if additional technologies are required to be used in conjunction
with our OLED technologies to bring OLED displays and products containing them
to the market and display manufacturers are unable to obtain access to these
technologies, they may not utilize our OLED technologies.
THERE ARE NUMEROUS POTENTIAL ALTERNATIVES TO OLEDS FOR FLAT PANEL DISPLAYS,
WHICH MAY LIMIT OUR ABILITY TO COMMERCIALIZE OUR OLED TECHNOLOGIES AND
MATERIALS.
The flat panel display market is currently, and will likely continue to
be for some time, dominated by displays based on LCD technology. Numerous
companies are making substantial investments in, and conducting research to
improve characteristics of, LCDs. Several other flat panel display technologies
have been, or are being, developed, including technologies for the production of
field emission, inorganic electroluminescence, gas plasma and vacuum fluorescent
displays. Advances in LCD technology or any of these other technologies may
overcome their current limitations and permit them to become the leading
technologies for flat panel displays, either of which could limit the potential
market for flat panel displays utilizing our OLED technologies and materials.
This, in turn, would cause display manufacturers to avoid entering into
commercial relationships with us, or to terminate or not renew their existing
relationships with us.
OTHER OLED TECHNOLOGIES MAY BE MORE SUCCESSFUL THAN OURS.
Our competitors have developed OLED technologies that differ from or
compete with our OLED technologies. These competing OLED technologies entered
the marketplace prior to ours and may become entrenched in the flat panel
industry before our OLED technologies have a chance to become widely utilized.
Moreover, our competitors may succeed in developing new OLED technologies that
are more cost-effective or have fewer display limitations than our OLED
technologies. If our OLED technologies, and particularly our phosphorescent OLED
technology, are unable to capture a substantial portion of the OLED display
market, our business strategy may fail.
MANY OF OUR COMPETITORS HAVE GREATER RESOURCES, AND IT MAY BE DIFFICULT TO
COMPETE AGAINST THEM.
The flat panel display industry is characterized by intense
competition. Many of our competitors have better name recognition and greater
financial, technical, marketing, personnel and research capabilities than us.
Because of these differences, we may never be able to compete successfully in
the OLED display market.
THE FLAT PANEL DISPLAY INDUSTRY HAS HISTORICALLY EXPERIENCED SIGNIFICANT
DOWNTURNS, WHICH MAY ADVERSELY AFFECT THE DEMAND FOR AND PRICING OF OUR OLED
TECHNOLOGIES AND MATERIALS.
The flat panel display industry has experienced significant periodic
downturns, often in connection with, or in anticipation of, declines in general
economic conditions. These downturns have been characterized by lower product
demand, production overcapacity and erosion of average selling prices. Our
business strategy is dependent on display manufacturers building and selling
displays that incorporate our OLED technologies and materials. Industry-wide
fluctuations and downturns in the demand for flat panel displays, and OLED
displays in particular, could cause significant harm to our business.
-6-
IF OUR RESEARCH PARTNERS FAIL TO MAKE ADVANCES IN THEIR RESEARCH, OR IF THEY
TERMINATE OR ELECT NOT TO RENEW THEIR RELATIONSHIPS WITH US, WE MIGHT NOT
SUCCEED IN COMMERCIALIZING OUR OLED TECHNOLOGIES AND MATERIALS.
Research and development of commercially viable applications for our
OLED technologies and materials depend substantially on the success of the work
conducted by our research partners. We cannot be certain that our research
partners will make additional advances in the research and development of these
technologies and materials. Moreover, although we fund OLED technology research,
the scope of and technical aspects of this research and the resources and
efforts directed to this research are in large part subject to the control of
our research partners.
Our most significant research and development relationships are with
Princeton University and the University of Southern California. Our Research
Agreement with Princeton University expires in July 2007 and both this agreement
and our Amended License Agreement with Princeton University and the University
of Southern California (the agreement under which we license our key OLED
technology patents) can be terminated for various reasons. For example, the
Research Agreement provides that if Dr. Stephen R. Forrest, the principal
investigator for our research program with Princeton University, is unavailable
to continue to serve in this capacity, because he is no longer associated with
Princeton University or for any other reason, and a successor acceptable to both
us and Princeton University is not available, Princeton University has the right
to terminate the Research Agreement without impacting the Amended License
Agreement. Termination of the Research Agreement or the Amended License
Agreement would materially and adversely affect our ability to research, develop
and commercialize our OLED technologies and materials.
IF WE CANNOT FORM AND MAINTAIN LASTING BUSINESS RELATIONSHIPS WITH OLED DISPLAY
MANUFACTURERS, OUR BUSINESS STRATEGY WILL FAIL.
Our business strategy ultimately depends upon our development and
maintenance of commercial licensing and material supply relationships with
high-volume manufacturers of OLED displays. As of November 1, 2004, we had
entered into only two such relationships, one with Dupont Displays, Inc. and one
with Tohoku Pioneer Corporation. All of our other relationships with display
manufacturers currently are limited to technology development and the evaluation
of our OLED technologies and materials for possible use in commercial
production. Some or all of these relationships may not succeed or, even if they
are successful, may not result in the display manufacturers entering into
commercial licensing and material supply relationships with us.
Under our existing technology development and evaluation agreements, we
are working with display manufacturers to incorporate our technologies into
their products for the commercial production of OLED displays. However, these
technology development and evaluation agreements typically last for limited
periods of time, such that our relationships with the display manufacturers will
expire unless they continually are renewed. The display manufacturers may not
agree to renew their relationships with us on a continuing basis. In addition,
we regularly continue working with display manufacturers evaluating our OLED
technologies and materials after our existing agreements with them have expired
while we are attempting to negotiate contract extensions or new agreements with
them. Should our relationships with the display manufacturers not continue or be
renewed, our business would suffer.
Our ability to enter into additional commercial licensing and material
supply relationships, or to maintain our existing technology development and
evaluation relationships, may require us to make financial or other commitments.
We might not be able, for financial or other reasons, to enter into or continue
these relationships on commercially acceptable terms, or at all. Failure to do
so would have a material adverse effect on us.
WE RELY SOLELY ON PPG INDUSTRIES TO MANUFACTURE THE OLED MATERIALS WE USE AND
SELL TO DISPLAY MANUFACTURERS.
-7-
Our business prospects depend significantly on our ability to obtain
proprietary OLED materials for our own use and for sale to display
manufacturers. Our current Development and License Agreement with PPG
Industries, Inc. provides us with a source for these materials for research,
development and evaluation purposes, and our current Supply Agreement with PPG
Industries provides us with a source for these materials for commercial
purposes. However, the Development and License Agreement expires at the end of
2005 and the Supply Agreement expires at the end of 2007. Our inability to
continue obtaining these OLED materials from PPG Industries or another source
would have a material adverse effect on our revenues from sales of these
materials, as well as on our ability to perform research and development work
and to support those display manufacturers currently evaluating our OLED
technologies and materials for possible commercial use.
IF WE CANNOT OBTAIN AND MAINTAIN APPROPRIATE PATENT AND OTHER INTELLECTUAL
PROPERTY RIGHTS PROTECTION FOR OUR OLED TECHNOLOGIES AND MATERIALS, OUR BUSINESS
WILL SUFFER.
The value of our OLED technologies and materials is dependent on our
ability to secure and maintain appropriate patent and other intellectual
property rights protection. Although we own or license many patents respecting
our OLED technologies and materials that have already been issued, there can be
no assurance that additional patents applied for will be obtained, or that any
of these patents, once issued, will afford commercially significant protection
for our OLED technologies and materials, or will be found valid if challenged.
Moreover, we have not obtained patent protection for some of our OLED
technologies and materials in all foreign countries in which OLED displays or
materials might be manufactured or sold. In any event, the patent laws of other
countries may differ from those of the United States as to the patentability of
our OLED technologies and materials and the degree of protection afforded.
We may become engaged in litigation to protect or enforce our patent
and other intellectual property rights, or in International Trade Commission
proceedings to abate the importation of goods that would compete unfairly with
those of our licensees. In addition, we may have to participate in interference
or reexamination proceedings before the U.S. Patent and Trademark Office, or in
opposition, nullity or other proceedings before foreign patent offices, with
respect to our patents or patent applications. All of these actions would place
our patents and other intellectual property rights at risk and may result in
substantial costs to us as well as a diversion of management attention.
Moreover, if successful, these actions could result in the loss of patent or
other intellectual property rights protection for the key OLED technologies and
materials on which our business depends.
IF OUR OLED TECHNOLOGIES OR MATERIALS ARE FOUND TO INFRINGE THE RIGHTS OF
OTHERS, WE MAY NOT BE ABLE TO COMMERCIALLY LICENSE OR SELL THEM.
Other companies and institutions may independently develop OLED
technologies and materials that are equivalent or superior to ours, and may
obtain patent or similar rights with respect to these technologies. There are a
number of other companies and organizations that have been issued patents and
are filing additional patent applications relating to OLED technologies and
materials, including Eastman Kodak Company, Fuji Film Co., Ltd., Canon, Inc.,
Pioneer Corporation, Semiconductor Energy Laboratories Co. and Mitsubishi
Chemical Corporation, all of whom have patent rights related to OLED
technologies and materials. There can be no assurance that the utilization of
our OLED technologies or the sale of our OLED materials, including technologies
and materials developed by or licensed from Princeton University, the University
of Southern California, PPG Industries or Motorola, Inc., will not infringe on
the patent or other intellectual property rights of others. In this event, we or
our partners may be required to obtain licenses, pay damages, modify our
products or methods of operation, or be prohibited from making, using, selling
or offering to sell some or all of our OLED materials or products incorporating
our OLED technologies. We also might not have the financial or other resources
necessary to enforce or defend a patent infringement action, and the licensors
of our licensed patents might not enforce or defend such an action in a timely
manner. If our OLED materials or products incorporating our OLED technologies
are found to infringe on the patent or other intellectual property rights of
others, it could have a material adverse effect on us by limiting our ability to
license our OLED technologies or sell our OLED materials to display
manufacturers.
THE U.S. GOVERNMENT HAS RIGHTS TO OUR OLED TECHNOLOGIES THAT MIGHT PREVENT US
FROM REALIZING THE BENEFITS OF THESE TECHNOLOGIES.
The U.S. government, through various government agencies, has provided
and continues to provide funding to us, Princeton University and the University
of Southern California for research activities related to certain aspects of our
OLED technologies. Because we have been provided with this funding, the
government has rights to these OLED technologies that could restrict our ability
to market them to the government for military and other applications, or to
third parties for commercial applications. Moreover, if the government
determines that we have not taken effective steps to achieve practical
application of these OLED technologies in any field of use in a reasonable time,
the government could require us to grant licenses to other parties in that field
of use. Any of these occurrences would limit our ability to obtain the full
benefits of our OLED technologies.
-8-
IF WE CANNOT KEEP OUR KEY EMPLOYEES OR HIRE OTHER TALENTED PERSONS AS WE GROW,
OUR BUSINESS MIGHT NOT SUCCEED.
Our performance is substantially dependent on the continued services of
senior management and other key personnel, and on our ability to offer
competitive salaries and benefits to our employees. We do not have employment
agreements with any of our management or other key personnel. Additionally,
competition for highly skilled technical, managerial and other personnel is
intense. We might not be able to attract, hire, train, retain and motivate the
highly skilled managers and employees we need to be successful. If we fail to
attract and retain the necessary technical and managerial personnel, our
business will suffer and might fail.
WE CAN ISSUE SHARES OF PREFERRED STOCK THAT MAY ADVERSELY AFFECT YOUR RIGHTS AS
A SHAREHOLDER OF OUR COMMON STOCK.
Our Articles of Incorporation authorize us to issue up to 5,000,000
shares of preferred stock with designations, rights and preferences determined
from time-to-time by our Board of Directors. Accordingly, our Board of Directors
is empowered, without shareholder approval, to issue preferred stock with
dividend, liquidation, conversion, voting or other rights superior to those of
shareholders of our common stock. For example, an issuance of shares of
preferred stock could:
o adversely affect the voting power of the shareholders of our common
stock;
o make it more difficult for a third party to gain control of us;
o discourage bids for our common stock at a premium; or
o otherwise adversely affect the market price of our common stock.
Our Board of Directors has designated and issued two series of
preferred stock as of December 31, 2004: (a) 200,000 shares of Series A
Nonconvertible Preferred Stock, all of which are held by an entity controlled by
members of the family of Sherwin I. Seligsohn, our Chairman of the Board and
Chief Executive Officer; and (b) 300,000 shares of Series B Convertible
Preferred Stock that were held by Motorola. On October 6, 2004, all 300,000
outstanding shares of the Series B Convertible Preferred Stock were
automatically converted into an aggregate of 418,916 shares of our common stock
in accordance with the terms of the Series B Convertible Preferred Stock. We may
issue additional shares of authorized preferred stock at any time in the future.
IF THE PRICE OF OUR COMMON STOCK GOES DOWN, WE MAY HAVE TO ISSUE MORE SHARES
THAN ARE PRESENTLY ANTICIPATED TO BE ISSUED UNDER OUR AGREEMENT WITH PPG
INDUSTRIES.
Under our Development and License Agreement with PPG Industries, we are
required to issue to PPG Industries shares of our common stock for services
rendered by it. The number of shares of common stock that we are required to
deliver to PPG is determined based on a formula requiring that the lower the
price of the Common Stock at and around the time of issuance, the greater the
number of shares that we would be required to issue to PPG Industries. Lower
than anticipated market prices for our common stock, and correspondingly greater
numbers of shares issuable to PPG Industries, with a resulting increase in the
number of shares available for public sale, could cause people to sell our
common stock, including in short sales, which could drive down the price of our
common stock, thus reducing its value and perhaps hindering our ability to raise
additional funds in the future. In addition, such an increase in the number of
outstanding shares of our common stock would further dilute existing holders of
this stock.
OUR EXECUTIVE OFFICERS AND DIRECTORS OWN A LARGE PERCENTAGE OF OUR COMMON STOCK
AND COULD EXERT SIGNIFICANT INFLUENCE OVER MATTERS REQUIRING SHAREHOLDER
APPROVAL, INCLUDING TAKEOVER ATTEMPTS.
-9-
Our executive officers and directors, their respective affiliates and
the adult children of Sherwin Seligsohn, our Chairman of the Board and Chief
Executive Officer, beneficially own as of December 31, 2004, approximately 23.0%
of the outstanding shares of our common stock. Moreover, Pine Ridge Financial
Inc. and First Investors Holding Co., Inc., as successor to Strong River
Investments, Inc., assigned to our management their rights to vote the shares of
our common stock they received or are entitled to receive upon conversion of
warrants, notes and preferred stock issued in an August 2001 private placement
transaction, of which warrants to purchase 744,452 shares remain outstanding as
of December 31, 2004. Accordingly, these shareholders and members of management
may, as a practical matter, be able to exert significant influence over matters
requiring approval by our shareholders, including the election of directors and
the approval of mergers or other business combinations. This concentration also
could have the effect of delaying or preventing a change in control of us.
RISKS RELATING TO THIS OFFERING
THE MARKET PRICE OF OUR COMMON STOCK MIGHT BE HIGHLY VOLATILE.
The market price of our common stock might be highly volatile, as has
been the case with our common stock in the past, as well as the securities of
many companies, particularly other small and emerging-growth companies. Factors
such as the following may have a significant impact on the market price of our
common stock in the future:
o our expenses and operating results;
o announcements by us or our competitors of technological developments,
new product applications or license arrangements; and
o other factors affecting the flat panel display and related industries
in general.
THE ISSUANCE OF ADDITIONAL SHARES OF OUR COMMON STOCK COULD DRIVE DOWN THE PRICE
OF OUR STOCK.
The price of our common stock can be expected to decrease if:
o other shares of our common stock that are currently subject to
restriction on sale become freely salable, whether through an effective
registration statement or based on Rule 144 under the Securities Act of
1933, as amended; or
o we issue additional shares of our common stock that might be or become
freely salable, including shares that would be issued upon conversion
of our preferred stock or the exercise of outstanding warrants and
options.
BECAUSE WE DO NOT INTEND TO PAY DIVIDENDS, SHAREHOLDERS WILL BENEFIT FROM AN
INVESTMENT IN OUR COMMON STOCK ONLY IF IT APPRECIATES IN VALUE.
We have never declared or paid any cash dividends on our common stock.
We currently intend to retain our future earnings, if any, to finance further
research and development and do not expect to pay any cash dividends in the
foreseeable future. As a result, the success of an investment in our common
stock will depend upon any future appreciation in its value. There is no
guarantee that our common stock will appreciate in value or even maintain the
price at which shareholders have purchased their shares.
OUR PAST USE OF ARTHUR ANDERSEN LLP AS OUR INDEPENDENT AUDITOR LIMITS THE
ABILITY OF SHAREHOLDERS TO SEEK POTENTIAL RECOVERIES FROM THEM RELATED TO THEIR
WORK.
On July 30, 2002, we announced that we had appointed KPMG LLP to
replace Arthur Andersen LLP (Arthur Andersen) as our independent public auditor.
Our consolidated financial statements as of and for each of the years ended
December 31, 1999 through 2001 were audited by Arthur Andersen. We have not
obtained Arthur Andersen's consent to the incorporation by reference into the
registration statement, of which this prospectus is a part, of its report with
respect to our financial statements. Under these circumstances, Rule 437a under
the Securities Act of 1933, as amended, allowed us to file the registration
statement without a written consent from Arthur Andersen.
-10-
The absence of this consent may limit recovery on certain claims by
investors in an offering made using this prospectus. In particular, and without
limitation, investors will not be able to assert claims against Arthur Andersen
under Section 11 of the Securities Act of 1933, as amended. In addition, the
ability of Arthur Andersen to satisfy any claims (including claims arising from
Arthur Andersen's provision of auditing and other services to us) will be
limited as a practical matter due to events regarding Arthur Andersen. This
means that if an investor in an offering made using this prospectus were to
assert a claim under Section 11 of the Securities Act of 1933, as amended,
relating to its investment, that investor would not be able to seek damages from
Arthur Andersen. Thus, as compared to a hypothetical investor in an offering by
another company whose inclusion of financial statements in its annual report was
consented to by that company's independent auditor, an investor in an offering
made using this prospectus would have fewer alternatives in seeking damages
relating to its investment.
-11-
THE OFFERING
Of the 1,377,415 shares of our common stock being offered by the
selling shareholders, 772,161 are being offered by PPG Industries. These consist
of the following shares:
o 27,276 shares of common stock that we are obligated to issue to PPG
Industries in February 2005 as additional consideration for services
furnished to us by PPG Industries under our Development and License
Agreement for the period from January 1, 2004 through December 31,
2004.
o 184,885 shares of common stock that will be issuable upon exercise of a
warrant we are required to issue to PPG Industries in February 2005 as
additional consideration for services furnished to us by PPG Industries
under our Development and License Agreement for the period from January
1, 2004 through December 31, 2004, which warrant will be exercisable
for a seven-year period from the date of issuance at an exercise price
to be determined in accordance with the terms of our Development and
License Agreement.
o 140,000 shares of common stock that we expect to issue to PPG in April
2005 as nonrefundable consideration for services to be furnished to us
by PPG Industries under our Development and License Agreement for the
period from January 1, 2005 through March 31, 2005.
o 140,000 shares of common stock that we expect to issue to PPG in July
2005 as nonrefundable consideration for services to be furnished to us
by PPG Industries under our Development and License Agreement for the
period from April 1, 2005 through June 30, 2005.
o 140,000 shares of common stock that we expect to issue to PPG in
October 2005 as nonrefundable consideration for services to be
furnished to us by PPG Industries under our Development and License
Agreement for the period from July 1, 2005 through September 30, 2005.
o 140,000 shares of common stock that we expect to issue to PPG in
January 2006 as nonrefundable consideration for services to be
furnished to us by PPG Industries under our Development and License
Agreement for the period from October 1, 2005 through December 31,
2005.
Pursuant to our Development and License Agreement with PPG Industries,
PPG Industries provides to us a team of PPG Industries' scientists and
engineers to assist us in developing and commercializing various OLED materials
in which we have a proprietary interest, as well as certain other services
relating to the development of our proprietary chemicals. As described in the
subsequent paragraph, PPG Industries receives shares of our common stock and
warrants to purchase shares of our common stock as compensation for this work,
though under limited circumstances PPG Industries has the right to receive
payment in cash in lieu of common stock. PPG Industries also provides us with
OLED materials for purposes of development and manufacturing qualification at
our facilities and the facilities of our customers.
Under the Development and License Agreement, we compensate PPG
Industries in a combination of cash and shares of our common stock for the
services provided to us under such agreement. Specifically, we pay PPG
Industries for its expenses under the Agreement for any calendar quarter, as
determined by the parties based on an agreed upon work plan and the specific
activities performed by PPG Industries during the calendar quarter in question.
The compensation for some of the services is required to be paid in all cash,
and for another portion is required to be paid all in common stock. Up to 50%
of the consideration for the remaining portion of the services may be paid, at
our sole discretion, in shares of common stock, with the remainder payable in
cash. The specific number of shares of common stock issuable to PPG Industries
under our Development and License Agreement is determined based on a formula,
with the number of shares based on the average trading price for our common
stock during a specified period at the end of that quarter. If, however, this
average trading price is less than a specified dollar amount, we are required
to compensate PPG Industries in all cash.
An additional 154,916 of the shares are being offered by Motorola, Inc.
We issued 118,916 of these shares to Motorola on October 6, 2004, based on the
automatic conversion into common stock of all outstanding shares of our Series B
Convertible Preferred Stock in accordance with the terms of the Series B. As a
result of this conversion, all outstanding shares of the Series B have been
converted into 418,916 shares of our common stock, 300,000 of which shares were
previously registered for resale under the Securities Act of 1933, as amended,
on the Registration Statement on Form S-3 of the Company (Commission File No.
333-48810). We expect to issue to Motorola the remaining 36,000 shares
registered for resale by Motorola in March 2005, in our sole discretion, in lieu
of making certain minimum cash royalty payments due to Motorola under a license
agreement between the Company and Motorola. This license agreement is filed as
an exhibit to the registration statement of which this prospectus is a part.
The remaining 450,338 shares are being offered by Sherwin I. Seligsohn,
our Chairman of the Board and Chief Executive Officer, Scott Seligsohn, who is
Sherwin I. Seligsohn's son and an employee of our Company, and the other
shareholders named in the "Selling Shareholders" section of this prospectus. The
shares registered for resale by Messrs. Sherwin I. Seligsohn and Scott Seligsohn
are issuable to those individuals upon the exercise of certain warrants to
purchase shares of our common stock, and the shares registered for resale by the
other selling shareholders are issuable to those individuals upon the exercise
of certain warrants to purchase shares of our common stock pursuant to the
operation of anti-dilution provisions contained in the operative warrant
agreements. The resale of the shares of common stock issuable upon exercise of
those warrants prior to the operation of the anti-dilution provisions was
previously registered by the Company under the Securities Act of 1933, as
amended.
The selling shareholders pursuant to this prospectus may sell the
shares of common stock offered for resale in a secondary offering. Under the
terms of the transactions described above, we are contractually required to
register all of the shares of common stock that are described above.
USE OF PROCEEDS
The selling shareholders will receive the proceeds from the resale of
the shares of common stock. We will not receive any proceeds from the resale of
the shares of common stock by the selling shareholders.
-12-
SELLING SHAREHOLDERS
The following table sets forth information regarding the beneficial
ownership of shares of common stock by the selling shareholders as of December
31, 2004, and the number of shares of common stock covered by this prospectus.
We have entered into a development and license agreement with PPG
Industries, and an amendment thereto, pursuant to which certain of the
securities listed below are being initially issued to PPG Industries in a
private placement. Under the development and license agreement, PPG Industries
has various rights, and is subject to certain restrictions. Among these is the
right, exercisable at any time during the term of that agreement that PPG
Industries owns 5% or more of the outstanding shares of our common stock, to
designate one individual for election to our Board of Directors. If, at any time
during the term of the development and license agreement PPG Industries owns 25%
or more of the outstanding shares of common stock, it shall be entitled to
designate for election one quarter of the total members of our Board of
Directors.
Additionally, PPG Industries has limited preemptive rights under the
development and license agreement. These rights allow PPG Industries to purchase
shares in certain future offerings of our common stock, or securities
convertible into common stock, so that PPG Industries can maintain its overall
percentage ownership of our common stock.
PPG Industries is restricted from engaging in "short sales" of our
securities during the term of the development and license agreement, and may
not, during the 90-day period ending on February 15 of each calendar year, sell,
on any day during that 90-day period, that number of shares of common stock, or
securities convertible into common stock, that would exceed 25% of the average
daily trading volume of common stock for the 90-day period immediately preceding
the 90-day restricted period.
The shares being offered by Messrs. Sherwin I. Seligsohn and Scott
Seligsohn are issuable upon the exercise by those individuals of warrants to
purchase shares of our common stock at an exercise price of $4.125 per share.
The shares being offered by the other Selling Shareholders, except for Dillon
Capital, LLC, which owns its shares outright, are issuable upon the exercise by
those individuals of warrants to purchase shares of our common stock. The per
share exercise prices of these warrants, which are fixed, are: $9.50 for the
warrants held by STAT Holdings, LLC, LBC Capital Corporation, the Harry Leopold
Roth IRA and James F. Mongiardo; $12.39 for the warrants held by Dr. Forrest and
Dr. Thompson; and $17.13 for the warrant held by the Sheldon Drobny Retirement
Plan.
Beneficial ownership is determined in accordance with the rules of the
SEC and generally includes voting or investment power with respect to
securities. The shares of common stock subject to options or warrants currently
exercisable or exercisable within 60 days after December 31, 2004, are deemed
outstanding and to be beneficially owned by the Selling Shareholders holding
such options or warrants.
BENEFICIAL OWNERSHIP
NUMBER OF MAXIMUM AFTER RESALE OF SHARES
SHARES NUMBER OF ---------------------------
NAME OF BENEFICIALLY SHARES BEING NUMBER
SELLING SHAREHOLDER OWNED OFFERED OF SHARES(1) PERCENT(2)
------------------------ ------------ ------------ ------------ ----------
PPG Industries, Inc.(3)(4) 1,933,215 772,161 1,161,054 4.0%
Motorola, Inc.(4)(5) 812,916 154,916 658,000 2.5%
Sherwin I. Seligsohn(6) 688,423 174,500 513,923 1.8%
Scott Seligsohn(7) 3,546,348 200,000 3,346,348 12.0%
Stephen R. Forrest(8) 416,101 13,994 402,107 1.4%
Mark E. Thompson(9) 498,494 13,994 484,500 1.7%
STAT Holdings, LLC(10)(11) 45,000 2,150 42,850 *
Dillon Capital, LLC(12) 5,434 101 5,333 *
LBC Capital Corporation(10)(13) 44,625 2,377 42,248 *
Harry Leopold Roth IRA(10)(13) 51,436 3,565 47,871 *
James F. Mongiardo(14) 17,008 525 16,483 *
Sheldon Drobny Retirement Plan(10)(15) 189,132 39,132 150,000 *
TOTALS 8,072,132 1,377,415 6,694,717 22.1%
_____________
*Less than 1%.
(1) Assumes the sale of all shares being offered by this prospectus.
(2) The percentage ownership for each beneficial owner listed above is
based on 27,913,882 shares of common stock outstanding as of December 31,
2004. In accordance with SEC rules, options to purchase shares of
common stock that are exercisable as of December 31, 2004, or will
become exercisable within 60 days thereafter, are deemed to be
outstanding and beneficially owned by the person holding such options
for the purpose of computing such person's percentage ownership, but
are not deemed to be outstanding for the purpose of computing the
percentage ownership of any other person. The numbers of shares
indicated in the table includes the following number of shares issuable
upon the exercise of warrants or options: PPG Industries, Inc. -
826,496; Motorola, Inc. - 150,000; Sherwin I. Seligsohn - 230,500;
Scott Seligsohn - 63,000; Stephen R. Forrest - 392,412; Mark E.
Thompson - 472,500; STAT Holdings, LLC - 42,850; Dillon Capital, LLC -
5,333; LBC Capital Corporation - 42,248; Harry Leopold Roth IRA -
47,871; James F. Mongiardo - 10,000; Paradigm Group II, LLC - 150,000.
-13-
(3) Includes:
o 334,558 shares of common stock owned by PPG Industries;
o 826,496 shares of common stock that may be acquired by PPG Industries
upon the exercise of warrants that are currently exercisable;
o 140,000 shares of common stock that we expect to issue to PPG
Industries in each of April 2005, July 2005, October 2005 and January
2006.
o 27,276 shares of common stock that we are obligated to issue to PPG
Industries in February 2005; and
o 184,885 shares of common stock that may be acquired by PPG Industries
upon the exercise of warrants that we are obligated to issue to PPG
Industries in February 2005.
(4) This Selling Shareholder is a reporting company under Section 13 or
15(d) of the Securities Exchange Act of 1934, as amended. As such, we
are omitting information regarding the natural persons who exercise
voting and dispositive power with respect to these shares.
(5) Includes:
o 626,916 shares of common stock owned by Motorola, Inc.
o 36,000 shares of common stock that we expect to issue to Motorola, Inc.
in March 2005; and
o 150,000 shares of common stock that may be acquired by Motorola, Inc.
upon the exercise of warrants that are currently exercisable.
(6) Includes:
o 107,423 shares of common stock owned by Mr. Seligsohn;
o 176,000 shares of common stock owned by American Biomimetics
Corporation, of which Mr. Seligsohn is the sole Director, Chairman,
President and Secretary (These shares are also shown as beneficially
owned by Scott Seligsohn); and
o 405,000 shares of common stock that may be acquired by Mr. Seligsohn
upon the exercise of options and warrants that are currently
exercisable.
(7) Includes:
o 107,348 shares of common stock owned by Mr. Seligsohn;
o 1,500,000 shares of common stock owned by the Sherwin I. Seligsohn
Irrevocable Indenture of Trust dated 7/29/93 FBO Lori S. Rubenstein
(the "Rubenstein Trust"), of which Lori S. Rubenstein, Scott
Seligsohn and Clifford D. Schlesinger are co-trustees;
o 1,500,000 shares of common stock owned by the Sherwin I. Seligsohn
Irrevocable Indenture of Trust dated 7/29/93 FBO Scott Seligsohn (the
"Seligsohn Trust"), of which Lori S. Rubenstein, Scott Seligsohn and
Clifford D. Schlesinger are co-trustees;
o 176,000 shares of common stock owned by American Biomimetics
Corporation, of which the Rubenstein Trust and the Seligsohn Trust
are the principal shareholders (These shares are also shown as
beneficially owned by Sherwin Seligsohn); and
o 263,000 shares of common stock that may be acquired by Mr. Seligsohn
upon the exercise of options and warrants that are currently
exercisable.
(8) Includes:
o 9,695 shares of common stock owned by Dr. Forrest; and
o 406,406 shares of common stock that may be acquired by Dr. Forrest
upon the exercise of options and warrants that are currently
exercisable.
(9) Includes:
o 12,000 shares of common stock owned by Dr. Thompson; and
o 486,494 shares of common stock that may be acquired by Dr. Thompson
upon the exercise of options and warrants that are currently
exercisable.
(10) Consists of shares of common stock that may be acquired by these
Selling Shareholders upon the exercise of warrants that are currently
exercisable.
(11) Voting and dispositive power with respect to these shares is shared by
Ethan Kahn and Jim Gosselin.
(12) Includes:
o 101 shares of common stock owned by Dillon Capital, LLC
o 5,333 shares of common stock that may be acquired by Dillon Capital,
LLC upon the exercise of a warrrant that is currently exercisable.
Voting and dispositive power with respect to these shares is exercised
by Stewart Flink. Dillon Capital, LLC is affiliated with a registered
broker-dealer, and acquired the warrants as to which these shares are
issuable in 2000 as compensation for the performance of investment
banking or similar services.
(13) Voting and dispositive power with respect to these shares is exercised
by Harry Leopold.
(14) Includes:
o 6,483 shares of common stock owned by Homewood Capital Group; and
o 10,525 shares of common stock that may be acquired by Mr. Mongiardo
upon the exercise of a warrant that is currently exercisable.
(15) These shares were transferred to the Sheldon Drobny Retirement Plan by
Paradigm Group II, LLC. Voting and dispositive power with respect to
these shares is exercised by Sheldon Drobny.
-14-
PLAN OF DISTRIBUTION
The selling shareholders, including any donees, pledgees or other
transferees who receive shares from the selling shareholders, may, from time to
time, sell all or a portion of the shares of common stock on any market upon
which the common stock my be quoted, in privately negotiated transactions or
otherwise, at fixed prices that may be changed, at market prices prevailing at
the time of sale, at prices related to such market prices or at negotiated
prices. The selling shareholders may sell the shares of common stock by various
methods, including one or more of the following:
o block trades in which the broker or dealer so engaged by the selling
shareholders will attempt to sell the shares of common stock as agent,
but may purchase and resell a portion of the block as principal to
facilitate the transaction;
o purchases by the broker or dealer as principal and resale by the broker
or dealer for its account pursuant to this prospectus;
o an exchange distribution in accordance with the rules of the exchange;
o ordinary brokerage transactions and transactions in which the broker
solicits purchasers;
o negotiated transactions or otherwise, including an underwritten
offering;
o market sales (both long and short to the extent permitted under the
federal securities laws);
o in connection with short sales of the shares of common stock;
o in connection with the writing of non-traded and exchange-traded call
options, in hedge transactions and in settlement of other transactions
in standardized or over-the-counter options, if permitted under the
securities laws, and
o a combination of any of these methods of sale.
In effecting sales, brokers and dealers engaged by the selling
shareholders may arrange for other brokers or dealers to participate. Brokers or
dealers may receive commissions or discounts from the selling shareholders or,
if any such broker-dealer acts as agent for the purchaser of such shares, from
such purchaser, in amounts to be negotiated. These commissions or discounts may
exceed those customary in the types of transactions involved. Broker-dealers may
agree with the selling shareholders to sell a specified number of shares of
common stock at a stipulated price per share, and, to the extent such
broker-dealer is unable to do so acting as agent for the selling shareholders,
to purchase as principal any unsold shares of common stock at the price required
to fulfill the broker dealer commitment to the selling shareholders.
Broker-dealers who acquire shares of common stock as principal may thereafter
resell such shares of common stock form time to time in transactions (which may
involve block transactions and sales to and through other broker-dealers,
including transactions of the nature described above) at prices and on terms
then prevailing at the time of sale, at prices then related to then-current
market price or in negotiated transactions. In connection with such resales,
broker-dealers may pay to or receive from the purchasers of shares of common
stock commissions as described above. The selling shareholders may also sell the
shares of common stock in accordance with Rule 144 under the Securities Act of
1933, as amended, rather than pursuant to this prospectus.
The selling shareholders and any other person selling shares of common
stock pursuant to this registration statement will be subject to the Securities
Exchange Act of 1934, as amended. The Securities Exchange Act of 1934 rules
include, without limitation, Regulation M, which may limit the timing of
purchases and sales of the shares of common stock by the selling shareholders.
In addition, Regulation M may restrict the ability of any person engaged in the
distribution of the shares of common stock to engage in market-making activities
with respect to the shares of common stock being distributed for a period of up
to five business days prior to the commencement of the distribution. This may
affect the marketability of the shares of common stock and the ability of the
selling shareholders and any other person or entity selling shares of common
stock pursuant to this registration statement to engage in market-making
activities with respect to the shares of common stock.
The selling shareholders and any broker-dealers or agents that
participate with the selling shareholders in sales of the shares of common stock
may be deemed to be "underwriters" within the meaning of the Securities Act of
1933, as amended, in connection with those sales. In such event, any commissions
received by such broker-dealers or agents and any profit on the resale of the
shares of common stock purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act of 1933, as amended.
From time to time, the selling shareholders may pledge their shares of
common stock pursuant to the margin provisions of their customer agreements with
their brokers. Upon default by a selling shareholder, the broker may offer and
sell such pledged shares of common stock from time to time. Upon a sale of the
shares of common stock, the selling shareholders intend to comply with the
prospectus delivery requirements under the Securities Act of 1933, as amended,
by delivering a prospectus to each purchaser in the transaction. We intend to
file any amendments or other necessary documents in compliance with the
Securities Act of 1933, as amended, that may be required in the event a selling
shareholder defaults under any customer agreement with a broker.
-15-
We are required to pay all fees and expenses incident to the
registration of the shares of common stock. We have agreed to indemnify certain
of the selling shareholders against certain losses, claims, damages and
liabilities, including liabilities under the Securities Act of 1933, as amended.
Brokerage commissions and similar selling expenses, if any, attributable to the
sale of shares by the selling shareholders will be borne by the selling
shareholders. The selling shareholders may agree to indemnify brokers, dealers
or agents that participate in sales by the selling shareholders against certain
losses, claims, damages and liabilities, including liabilities under the
Securities Act of 1933, as amended.
ABOUT THIS PROSPECTUS
You should only rely on the information contained in this prospectus.
We have not authorized anyone to provide you with information different from
that contained in this prospectus. The information contained in this prospectus
is accurate only as of the date of this prospectus, regardless of the time of
delivery of this prospectus or of any sale of common stock.
WHERE YOU CAN FIND MORE INFORMATION
We are subject to the informational requirements of the Securities
Exchange Act of 1934, as amended. Therefore, we file reports, proxy statements
and other information with, and furnish other reports to, the SEC. You can read
and copy all of these documents at the SEC's public reference facilities in
Washington, D.C., New York, New York and Chicago, Illinois. You may obtain
information on the operation of the SEC's public reference facilities by calling
the SEC at 1-800-SEC-0330. You can also read and copy all of the
above-referenced documents at the offices of the Nasdaq Stock Market, 1735 K
Street N.W., Washington, D.C. 20006. You also may obtain the documents we file
with the SEC from the SEC's Web site on the Internet that is located at
http://www.sec.gov.
We "incorporate by reference" in this prospectus the information we
file with the SEC, which means that we can disclose important information to you
by referring you to another document we file with the SEC. The information
incorporated by reference in this prospectus is an important part of this
prospectus, and information that we file later with the SEC will automatically
update and supersede this information. We incorporate by reference in this
prospectus the documents listed below and any future filings we make with the
SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of
1934, as amended, after the date of this prospectus but before the end of this
offering. The documents that we are incorporating by reference are:
o Our Annual Report on Form 10-K for the year ended December 31, 2003;
o Our Quarterly Reports on Form 10-Q for the quarters ended March 31,
2004, June 30, 2004 and September 30, 2004.
o Our Current Reports on Form 8-K filed with the SEC on March 18, 2004,
November 1, 2004, December 3, 2004 and December 29, 2004; and
o The description of our common stock that is contained in our
Registration Statement on Form 8-A filed with the SEC on August 6,
1996.
You should read the information relating to us in this prospectus,
together with the information in the documents incorporated by reference in this
prospectus.
Any statement contained in a document incorporated by reference in this
prospectus, unless otherwise indicated in that document, speaks as of the date
of the document. Statements contained in this prospectus may modify or replace
statements contained in the documents incorporated by reference. In addition,
some of the statements contained in one or more of the documents incorporated by
reference may be modified or replaced by statements contained in a document
incorporated by reference that is filed thereafter.
You may request a copy of any or all of these filings, at no cost, by
writing or telephoning us at Universal Display Corporation, 375 Phillips
Boulevard, Ewing, New Jersey 08618, Attention: Investor Relations, Telephone:
(609) 671-0980.
-16-
LEGAL OPINION
Morgan, Lewis & Bockius LLP, Philadelphia, Pennsylvania, will pass on
the validity of the shares of common stock that may be offered by the
prospectus.
EXPERTS
The consolidated financial statements of Universal Display Corporation
and subsidiary (a development stage company) as of December 31, 2003 and 2002,
and for the years then ended, and for the period from June 17, 1994 (inception)
through December 31, 2003, have been incorporated by reference herein in
reliance upon the report of KPMG LLP, independent registered public accounting
firm, incorporated by reference herein, and upon the authority of said firm as
experts in accounting and auditing.
The consolidated financial statements of Universal Display Corporation
and subsidiary (a development stage company) as of December 31, 2001 and for the
year ended December 31, 2001, and for the period from June 17, 1994 (inception)
through December 31, 2003 to the extent related to the period from June 17, 1994
(inception) through December 31, 2001, were audited by Arthur Andersen LLP.
Those other auditors have ceased operations. Those other auditors expressed an
unqualified opinion on those consolidated financial statements in their report
dated March 5, 2002. KPMG LLP's opinion on the statements of operations,
shareholders' equity (deficit) and cash flows, insofar as it relates to the
amounts included for the period from June 17, 1994 (inception) through December
31, 2001, is based solely on the report of the other auditors.
There is no effective remedy against Arthur Andersen LLP in connection
with a material misstatement or omission in the financial statements audited by
them, particularly in the event that Arthur Andersen ceases to exist as an
entity or becomes insolvent as a result of the conviction or other proceedings
against it. For more information concerning Arthur Andersen LLP, see "Risk
Factors" in this Prospectus.
-17-
================================================================================
1,377,415 Shares
UNIVERSAL DISPLAY CORPORATION
Common Stock
_______________
PROSPECTUS
_______________
__________, 2005
================================================================================
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The estimated expenses payable by the Registrant in connection with the
issuance and distribution of the securities being registered are as follows:
SEC Registration fee $ 2,180
Transfer agent and registrar fees 1,000
Printing and engraving fees 1,000
Legal and accounting fees 10,000
Miscellaneous --
-------
TOTAL $14,180
=======
The selling shareholders described in the prospectus included herewith will not
pay any of the expenses of this offering.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Chapter 17, Subchapter D of the Pennsylvania Business Corporation Law
of 1988, as amended (the "PBCL") contains provisions permitting indemnification
of officers and directors of a business corporation in Pennsylvania.
Sections 1741 and 1742 of the PBCL provide that a business corporation
may indemnify directors and officers against liabilities and expenses they may
incur as such in connection with any threatened, pending or completed civil,
administrative or investigative proceeding, provided that the particular person
acted in good faith and in a manner he or she reasonably believed to be in, or
not opposed to, the best interests of the corporation, and, with respect to any
criminal proceeding, had no reasonable cause to believe his or her conduct was
unlawful. In general, the power to indemnify under these sections does not exist
in the case of actions against a director or officer by or in the right of the
corporation if the person otherwise entitled to indemnification shall have been
adjudged to be liable to the corporation unless it is judicially determined
that, despite the adjudication of liability but in view of all the circumstances
of the case, the person is fairly and reasonably entitled to indemnification for
specified expenses.
Section 1743 of the PBCL provides that the corporation is required to
indemnify directors and officers against expenses they may incur in defending
actions against them in such capacities if they are successful on the merits or
otherwise in the defense of such actions.
Section 1746 of the PBCL grants a corporation broad authority to
indemnify its directors and officers for liabilities and expenses incurred in
such capacity, except in circumstances where the act or failure to act giving
rise to the claim for indemnification is determined by a court to have
constituted willful misconduct or recklessness.
Section 1747 of the PBCL permits a corporation to purchase and maintain
insurance on behalf of any person who is or was a director or officer of the
corporation, or is or was serving at the request of the corporation as a
representative of another corporation or other enterprise, against any liability
asserted against such person and incurred by him or her in any such capacity, or
arising out of his or her status as such, whether or not the corporation would
have the power to indemnify the person against such liability under Chapter 17
Subchapter D of the PBCL.
The registrant's Bylaws provide a right to indemnification to the full
extent permitted by law, for expenses (including attorney `s fees), damages,
punitive damages, judgments, penalties, fines and amounts paid in settlement,
actually and reasonably incurred by any director or officer whether or not the
indemnified liability arises or arose from any threatened, pending or completed
proceeding by or in the right of the registrant (a derivative action) by reason
of the fact that such director or officer is or was serving as a director,
officer, employee or agent of the registrant or, at the request of the
registrant, as a director, officer, partner, fiduciary or trustee of another
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise, unless the act or failure to act giving rise to the claim for
indemnification is financially determined by a court to have constituted willful
misconduct or recklessness. The Bylaws provide for the advancement of expenses
to an indemnified party upon receipt of an undertaking by the party to repay
those amounts if it is finally determined that the indemnified party is not
entitled to indemnification.
II-1
The registrant's Bylaws authorize the Registrant to take steps to
ensure that all persons entitled to indemnification are properly indemnified,
including, if the Board of Directors so determines, by purchasing and
maintaining appropriate insurance.
ITEM 16. LIST OF EXHIBITS
The exhibits filed as part of this registration statement are as
follows:
EXHIBIT
NUMBER DESCRIPTION
------ -----------
4.1# Warrant Agreement dated as of April 25, 1996 between the
registrant and Sherwin I. Seligsohn (Filed as an Exhibit to
the Annual Report on Form 10K-SB for the year ended December
31, 1996, filed with the SEC on March 31, 1997, and
incorporated by reference herein.)
4.2# Warrant Agreement dated as of April 25, 1996 between the
registrant and Scott Seligsohn.
4.3# Form of Warrant Agreement issuable by the registrant to PPG
Industries, Inc. pursuant to the Development and License
Agreement (Filed as an Exhibit to Amendment No. 1 to
Registration Statement (No. 333-50990) on Form S-3 filed with
the SEC on March 7, 2001.)
5.1# Opinion of Morgan, Lewis & Bockius LLP regarding legality of
securities being registered.
10.1# Development and License Agreement dated as of October 1, 2000,
between the registrant and PPG Industries, Inc. (Filed as an
Exhibit to Amendment No. 1 to Registration Statement (No.
333-50990) on Form S-3 filed with the SEC on March 7, 2001.)*
10.2# Amendment Number 1 to the Development and License Agreement
between the registrant and PPG Industries, Inc., dated as of
March 7, 2001 (Filed as an Exhibit to Amendment No. 1 to
Registration Statement (No. 333-50990) on Form S-3 filed with
the SEC on March 7, 2001.)*
10.3 Amendment Number 2 to the Development and License Agreement
between the registrant and PPG Industries, Inc., dated as of
October 15, 2002 (Filed as an Exhibit to the Annual Report on
Form 10-K for the year ended December 31, 2002, filed with the
SEC on March 31, 2003.)*
10.4 Amendment Number 3 to the Development and License Agreement
between the registrant and PPG Industries, Inc., dated as of
January 21, 2003 (Filed as an Exhibit to the Annual Report on
Form 10-K for the year ended December 31, 2002, filed with the
SEC on March 31, 2003.)*
10.5 Amendment Number 4 to the Development and License Agreement
between the registrant and PPG Industries, Inc., dated as of
April 11, 2003 (Filed as an Exhibit to the Quarterly Report on
Form 10-Q for the quarter ended June 30, 2003, filed with the
SEC on August 13, 2003.)**
10.6+ Amendment Number 5 to the Development and License Agreement
between the registrant and PPG Industries, Inc., dated as of
December 22, 2004.**
10.7# License Agreement between the registrant and Motorola, Inc.,
dated as of September 29, 2000 (Filed as an Exhibit to the
Quarterly Report on Form 10-Q for the quarter ended September
30, 2000, filed with the SEC on November 20, 2001.)*
10.8+ Form of Warrant Agreement issued to Stephen R. Forrest and
Mark E. Thompson.
10.9+ Form of Warrant Agreement issued to STAT Holdings, LLC, Dillon
Capital, LLC, LBC Capital Corporation, the Harry Leopold Roth
IRA, James F. Mongiardo and the Sheldon Drobny Retirement
Plan.
23.1# Consent of Morgan, Lewis & Bockius LLP (included in its
opinion filed as Exhibit 5.1 hereto).
23.2+ Consent of KPMG LLP (Consent of Arthur Andersen LLP omitted
pursuant to Rule 437A as described in Exhibit 23.2.)
24.1+ Powers of Attorney (included as part of the signature page
hereof).
______________________
+ Filed herewith.
* Confidential treatment has been accorded to certain portions of this exhibit
pursuant to Rule 406 under the Securities Act of 1933, as amended.
** Confidential treatment has been requested as to certain portions of this
exhibit pursuant to Rule 406 under the Securities Act of 1933, as amended.
# Previously Filed.
ITEM 17. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration
statement:
II-2
(i) To include any prospectus required by section 10(a)(3) of
the Securities Act of 1933, as amended;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the
most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or
decrease in the volume of securities offered (if the total
dollar value of securities offered would not exceed that which
was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the
form of prospectus filed with the SEC pursuant to Rule 424(b)
if, in the aggregate, the changes in volume and price
represent no more than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed
with or furnished to the SEC by the registrant pursuant to Section 13
or Section 15(d) of the Securities Exchange Act of 1934, as amended,
that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Exchange Act of 1934, as amended, each such
post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered
therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, as amended,
each filing of the registrant's annual report pursuant to Section 13(a)
or 15(d) of the Securities Exchange Act of 1934, as amended, that is
incorporated by reference in the registration statement shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(c) That, insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended, may be permitted to directors,
officers and controlling persons of the registrant pursuant to the
foregoing provisions, or otherwise, the registrant has been advised
that in the opinion of the SEC such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other
than the payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion
of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
the requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Ewing, state of New Jersey, on January 25, 2005.
UNIVERSAL DISPLAY CORPORATION
By: /s/ Sidney D. Rosenblatt
-------------------------------------------
Sidney D. Rosenblatt
Executive Vice President, Chief Financial
Officer, Treasurer, Secretary and Director
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
* Chief Executive Officer and Chairman of the January 25, 2005
---------------------------------------------- Board (principal executive officer)
Sherwin I. Seligsohn
/s/ Steven V. Abramson President, Chief Operating Officer and Director January 25, 2005
----------------------------------------------
Steven V. Abramson
/s/ Sidney D. Rosenblatt Executive Vice President, Chief Financial January 25, 2005
---------------------------------------------- Officer, Treasurer, Secretary and Director
Sidney D. Rosenblatt (principal financial and accounting officer)
* Director January 25, 2005
----------------------------------------------
Leonard Becker
* Director January 25, 2005
----------------------------------------------
C. Keith Hartley
/s/ Elizabeth H. Gemmill Director January 25, 2005
----------------------------------------------
Elizabeth H. Gemmill
* Director January 25, 2005
----------------------------------------------
Lawrence Lacerte
* /s/ Sidney D. Rosenblatt
------------------------
By: Sidney D. Rosenblatt
Attorney-in-Fact
II-4