As filed with the Securities and Exchange
Commission on June 9, 2004
Registration No. 333-115161
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Amendment No. 2
to the
FORM S-3
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
EMAGIN CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
Delaware 56-1764501
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
2070 Route 52
Hopewell Junction, New York 12533
(845) 838-7900
(Address, Including Zip Code, and Telephone Number,
Including Area Code, of Registrant's Principal Executive Offices)
Gary W. Jones
Chief Executive Officer
2070 Route 52
Hopewell Junction, New York 12533
(845) 838-7900
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
WITH COPIES TO:
Richard A. Friedman, Esq.
Darrin M. Ocasio, Esq.
Sichenzia Ross Friedman Ference LLP
11065 Avenue of the Americas
New York, New York 10018
(212) 930-9700
Approximate date of commencement of proposed sale to the public:
From time to time, at the discretion of the selling shareholders
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, 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,
check the following box. [ ]
CALCULATION OF REGISTRATION FEE
======================================== =============== =================== ===================== =====================
Proposed Proposed
Title of Each Class of Securities to Amount to be Maximum Offering Maximum Aggregate Amount of
be Registered Registered Price per Unit Offering Price Registration Fee (4)
---------------------------------------- --------------- ------------------- --------------------- ---------------------
Shares of common stock $50,000,000(1) 100%(2) $50,000,000.00(2) $6,335.00
---------------------------------------- --------------- ------------------- --------------------- ---------------------
Shares of preferred stock (1)
---------------------------------------- --------------- ------------------- --------------------- ---------------------
Warrants (3) (1)
---------------------------------------- --------------- ------------------- --------------------- ---------------------
Shares of common stock 2,500,000 $2.45 (2) $6,125,000.00 (2) $776.04
---------------------------------------- --------------- ------------------- --------------------- ---------------------
Shares of common stock 100,000 $2.15 (2) $215,000.00 (2) $27.25
---------------------------------------- --------------- ------------------- --------------------- ---------------------
Totals $56,340,000.00 $7,138.29*
======================================== =============== =================== ===================== =====================
* Previously paid.
1) Not specified as to each class of the above-referenced securities being
registered hereby, pursuant to General Instruction II.D of Form S-3. In no event
will the aggregate initial offering price of the securities registered hereby
exceed $50,000,000 or the equivalent thereof in one or more foreign currencies
or composite currencies, including currency units. The securities registered
hereby may be sold separately, together or in units with other securities
registered hereby. This registration statement also includes any securities
issuable upon stock splits or similar transactions pursuant to Rule 416 under
the Securities Act.
2) Estimated solely for the purpose of computing the registration fee,
pursuant to Rule 457(o) under the Securities Act. The proposed maximum offering
price per unit will be determined from time to time by the registrant in
connection with the issuance by the registrant of the securities registered
hereby.
3) There are being registered hereby an indeterminate number of warrants
entitling the holders thereof to purchase shares of common stock which may be
sold separately, together or in units with other securities registered hereby.
4) The prospectus that forms part of this registration statement, as the
prospectus may be amended or supplemented from time to time, is deemed to relate
to the $56,340,000 of securities being registered pursuant to this registration
statement and, pursuant to Rule 429 under the Securities Act, to $39,872,155.68
of securities registered and issuable by the registrant pursuant to the prior
registration statement on Form SB-2 of the registrant, Commission File No.
333-105750 (the "2003 Registration Statement"). The amount of filing fees
associated with the securities registered pursuant to the 2003 Registration
Statement is $3,668.24.
----------------------
Pursuant to Rule 429 under the Securities Act, the prospectus filed as part of
this registration statement also relates to securities of the registrant
registered pursuant to the registration statement of the registrant, Commission
File No. 333-105750.
----------------------
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 Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
================================================================================
2
THE INFORMATION CONTAINED IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED.
THESE SECURITIES MAY NOT BE SOLD 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.
PROSPECTUS SUBJECT TO COMPLETION, DATED JUNE 9, 2004
eMagin Corporation
$50,000,000
Common Stock
Preferred Stock
Warrants
Offered By Issuer
and
52,089,060 Shares of Common Stock
Offered by Selling Stockholders
By this prospectus, eMagin Corporation may from time to time offer
securities to the public. This prospectus provides a general description of the
common stock, preferred stock and warrants eMagin may offer from time to time.
Each time eMagin sells securities, eMagin will provide a supplement to this
prospectus that contains specific information about the offering and the
specific terms of the securities offered. You should read this prospectus and
the applicable prospectus supplement carefully before you invest in eMagin's
securities. This prospectus may not be used to consummate a sale of eMagin's
securities by eMagin unless accompanied by the applicable prospectus supplement.
The aggregate initial offering price of all securities sold by eMagin under
this prospectus will not exceed $50,000,000. eMagin's common stock is listed on
the American Stock Exchange under the symbol "EMA." The last reported sales
price per share of our common stock as reported by the American Stock Exchange
on April 29, 2004, was $2.45.
In addition, this prospectus relates to the resale by the selling
stockholders of up to (i) 2,600,000 shares of our common stock, 2,500,000 of
which are issuable upon the exercise of common stock purchase warrants issued to
our former note holders, and (ii) 49,489,060 shares of common stock that were
previously issued and registered in July 2003.
The selling stockholders may sell common stock from time to time in the
principal market on which the stock is traded at the prevailing market price or
in negotiated transactions. The selling stockholders may be deemed underwriters
of the shares of common stock, which they are offering. We will pay the expenses
of registering these shares.
INVESTING IN THESE SECURITIES INVOLVES SIGNIFICANT RISKS.
SEE "RISK FACTORS" BEGINNING ON PAGE 7.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
--------------------
The date of this prospectus is June 9, 2004
3
TABLE OF CONTENTS Page
Where You Can Find More Information......................................... 5
Forward-Looking Statements.................................................. 6
Prospectus Summary.......................................................... 7
About This Propectus........................................................ 7
Risk Factors................................................................ 8
Securities Offerd By This Prospectus........................................ 15
Use of Proceeds............................................................. 15
Description of Capital Stock................................................ 15
Plan of Distribution........................................................ 18
Selling Security Holders.................................................... 22
Legal Matters............................................................... 26
Experts..................................................................... 26
eMagin has not authorized anyone to give any information or make any
representation about eMagin that is different from or in addition to, that
contained in this prospectus or in any of the materials that eMagin has
incorporated by reference into this document. Therefore, if anyone does give you
information of this sort, you should not rely on it. If you are in a
jurisdiction where offers to sell, or solicitations of offers to purchase, the
securities offered by this document are unlawful, or if you are a person to whom
it is unlawful to direct these types of activities, then the offer presented in
this document does not extend to you. The information contained in this document
speaks only as of the date of this document, unless the information specifically
indicates that another date applied.
4
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports and other information with
the Securities and Exchange Commission. You may read and copy any of these
documents at the SEC's public reference room at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference rooms. Our SEC filings are also available to
the public at the SEC's website at www.sec.gov.
The SEC allows us to "incorporate by reference" the information we file
with it, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be an important part of this prospectus. Any information that we
incorporate by reference is automatically updated and superseded if information
contained in this prospectus modifies or replaces that information. In addition,
any information that we file with the SEC after the date of this prospectus will
update and supersede the information in this prospectus. You must look at all of
our SEC filings that we have incorporated by reference to determine if any of
the statements in a document incorporated by reference have been modified or
superseded.
We incorporate by reference the documents listed below and any future
filings made with the SEC under Section 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934 until all of the shares registered hereby have
been sold:
o Our annual report on Form 10-KSB for the year ended December 31, 2003;
o Our Form SB-2 File No. 333-105750;
o Our Definitive Proxy filed on May 24, 2004.
o Our quarterly report on Form 10QSB filed on May 14, 2004
If you request, either orally or in writing, we will provide you with a
copy of any or all documents which are incorporated by reference. We will
provide such documents to you free of charge, but will not include any exhibits,
unless those exhibits are incorporated by reference into the document:
eMagin Corporation
2070 Route 52
Hopewell Junction, New York 12533
Attention: Secretary
(845) 838-7900
You should rely only on the information contained in this prospectus or to
which we have referred you. We have not authorized anyone to provide you with
information that is different. This prospectus may only be used where it is
legal to sell these securities. The information in this prospectus may only be
accurate on the date of this prospectus.
5
FORWARD-LOOKING STATEMENTS
This prospectus, any prospectus supplement and the documents incorporated
by reference in this prospectus contain forward-looking statements. We have
based these forward-looking statements on our current expectations and
projections about future events.
These statements include, but are not limited to:
o our liquidity and capital resources, operating expenses and future
expenditures;
o the timing and amount of anticipated revenues from government
contracts and from future sales of our microdisplays and other
products;
o the timing of the release of our SXGA microdisplay and other potential
future products;
o the development and anticipated growth of the markets for our
products, including the development of high speed telecommunications
networks;
o expectations as to incorporation of our products by product
manufacturers and customer responses;
o expectations as to our ability to manufacture our products in
commercial quantities and the expected capacity of our manufacturing
line;
o trends in industry activity generally.
In some cases, you can identify forward-looking statements by words such as
"may," "will," "should," "expect," "plan," "could," "anticipate," "intend,"
"believe," "estimate," "predict," "potential," "goal," or "continue" or similar
terminology. These statements are only predictions and involve known and unknown
risks, uncertainties and other factors, including the risks outlined under "Risk
Factors," that may cause our or our industry's actual results, levels of
activity, performance or achievements to be materially different from any future
results, levels of activity, performance or achievements expressed or implied by
such forward-looking statements.
Unless we are required to do so under U.S. federal securities laws or other
applicable laws, we do not intend to update or revise any forward-looking
statements.
6
PROSPECTUS SUMMARY
eMagin Corporation
eMagin Corporation designs, develops, and markets OLED (organic light
emitting diode)-on-silicon microdisplays and related information technology
solutions. We integrate high resolution OLED displays (smaller than one-inch
diagonal), magnifying optics, and systems technologies to create a virtual image
that appears comparable to that of a computer monitor or a large-screen
television. We have developed unique technology for producing high performance
OLED microdisplays and related optical systems. We are the only company to
announce, publicly show, and sell full-color active matrix OLED-on-silicon
microdisplays. We are now supplying our first two commercial microdisplay
products (SVGA+ and SVGA 3D OLED microdisplays) in initial commercial quantities
to OEMS. In addition we sell integrated display and optics modules to military,
homeland defense, industrial, and medical customers. These products are being
applied or considered for near-eye and headset applications in products such as
entertainment and gaming headsets, handheld Internet and telecommunication
appliances, viewfinders, night vision viewers, firefighting helmets, simulation
tools, and wearable computers manufactured by original equipment manufacturer
(OEM) customers.
Our principal offices are located at 2070 Route 52, Hopewell Junction, New
York 12533, and our telephone number is (845) 838-7900. We are a Delaware
corporation. Our website is www.emagin.com.
ABOUT THIS PROSPECTUS
This prospectus describes certain securities of eMagin Corporation, a
Delaware corporation. We sometimes refer to eMagin Corporation, together with
its wholly owned subsidiary, Virtual Vision, using the words "we," "our" or
"us," or as the "Company." This prospectus is part of a registration statement
that we filed with the SEC utilizing a "shelf" registration process, which
allows us to offer and sell any combination of the securities described in this
prospectus in one or more offerings. Using this prospectus, we may offer up to
$50,000,000 worth of securities.
The types of securities that eMagin may offer and sell from time to time by
this prospectus are:
o common stock;
o preferred stock; and
o warrants entitling the holders to purchase common stock or preferred
stock;
This prospectus contains a general description of the securities we may
offer. We will describe the specific terms of these securities, as necessary, in
supplements that we attach to this prospectus for each offering. Each supplement
will also contain specific information about the terms of the offering it
describes. The supplements may also add, update or change information contained
in this prospectus. In addition, as we describe below in the section entitled
"Where You Can Find More Information," we have filed and plan to continue to
file other documents with the SEC that contain information about us. Before you
decide whether to invest in our securities, you should read this prospectus, the
supplement that further describes the offering of those securities and the
information we otherwise file with the SEC.
In addition, selling stockholders are offering for resale up to (i)
2,600,000 shares of our common stock including 2,500,000 shares issuable upon
the exercise of common stock purchase warrants; and (ii) 49,489,060 shares of
common stock that were previously issued and registered in July 2003. eMagin
will not be involved in the offer or sale of these shares other than registering
such shares for resale pursuant to this prospectus. The Company will not receive
any proceeds from the sale of these shares.
7
RISK FACTORS
This investment has a high degree of risk. Before you invest you should
carefully consider the risks and uncertainties described below and the other
information in this prospectus. If any of the following risks actually occur,
our business, operating results and financial condition could be harmed and the
value of our stock could go down. This means you could lose all or a part of
your investment.
Risks Related To Our Financial Results
If we do not obtain additional cash to operate our business, we may not be able
to execute our business plan and may not achieve profitability.
In the event that cash flow from operations is less than anticipated and we
are unable to secure additional funding to cover these added losses, in order to
preserve cash, we would be required to further reduce expenditures and effect
further reductions in our corporate infrastructure, either of which could have a
material adverse effect on our ability to continue or increase our current level
of operations. To the extent that operating expenses increase or we need
additional funds to make acquisitions, develop new technologies or acquire
strategic assets, the need for additional funding may be accelerated and there
can be no assurances that any such additional funding can be obtained on terms
acceptable to us, if at all. If we are not able to generate sufficient capital,
either from operations or through additional financing, to fund our current
operations, we may not be able to continue as a going concern. If we are unable
to continue as a going concern, we may be forced to significantly reduce or
cease our current operations. This could significantly reduce the value of our
securities, which could result in our de-listing from the American Stock
Exchange and cause investment losses for our shareholders.
We may not be able to satisfy the American Stock Exchange's continued listing
requirements.
The AMEX staff notified us in June 2003 that we have fallen below Section
1003(a)(i) of the AMEX Company Guide for having shareholders' equity of less
than $2,000,000 and losses from continuing operations and/or net losses in two
out of the three most recent fiscal years. We were afforded the opportunity to
submit a plan of compliance to the AMEX and presented a plan to the AMEX in July
2003. On September 9, 2003, we received notice from the staff of the AMEX that
the AMEX had accepted our plan to regain compliance with AMEX's continued
listing standards and granted us an extension until December 4, 2004 to regain
compliance with those standards. The failure to execute our plan and remain in
compliance with the AMEX equity requirement could result in a delisting of our
common stock.
We will be subject to periodic review by the AMEX staff during the
extension period. During this time, we must make progress consistent with the
terms of the plan or maintain compliance with the continued listing standards.
While we anticipate that, as a result of our recently completed financing in
January 2004 and the conversion of our outstanding promissory notes in March
2004, our balance sheet as of March 31, 2004 will reflect that we meet AMEX's $2
million shareholder equity requirement, there can be no assurance that AMEX will
waive this requirement prior to December 4, 2004 or that we will be in
compliance with this requirement at December 4, 2004. Other unidentified issues
may arise that could adversely affect the financial or the potential listing
status of the company.
We have a history of losses since our inception and may incur losses for the
foreseeable future.
Accumulated losses excluding non-cash transactions as of December 31, 2003,
were $34.4 million and acquisition related non-cash transactions were $101.9
million, which resulted in an accumulated net loss of $136.3 million, the
majority of which was related to the March 2000 merger
8
and the subsequent write-down of our goodwill. The non-cash losses were
dominated by the amortization and write-down of goodwill and purchased
intangibles and write-down of acquired in-process research and development
related to the March 2000 acquisition, and also included some non-cash
stock-based compensation. We have not yet achieved profitability and we can give
no assurances that we will achieve profitability within the foreseeable future
as we fund our operations and capital expenditures in areas such as
establishment and expansion of markets, sales and marketing, operating equipment
and research and development. We cannot assure investors that we will ever
achieve or sustain profitability or that our operating losses will not increase
in the future.
We were previously primarily dependent on U.S. government contracts.
The majority of our revenues to date have been derived from research and
development contracts with the U.S. government. We cannot continue to rely on
such contracts for revenue. We plan to submit proposals for additional
development contract funding; however, funding is subject to legislative
authorization and even if funds are appropriated such funds may be withdrawn
based on changes in government priorities. No assurances can be given that we
will be successful in obtaining new government contracts. Our inability to
obtain revenues from government contracts could have a material adverse effect
on our results of long-term operations, unless substantial product or
non-government contract revenue offsets any lack of government contract revenue.
Risks related to our intellectual property
We rely on our license agreement with Eastman Kodak for the development of
our products. Eastman Kodak's licensing of its OLED technology to others for
microdisplay applications, or the sublicensing by Eastman Kodak of our OLED
technology to third parties, could have a material adverse impact on our
business.
Our principal products under development utilize OLED technology that we
license from Eastman Kodak. We rely upon Eastman Kodak to protect and enforce
key patents held by Eastman Kodak, relating to OLED display technology. Eastman
Kodak's patents expire at various times in the future from near term in 2004
through long term patents that are just being issued in 2004. Our license with
Eastman Kodak could terminate if we fail to perform any material term or
covenant under the license agreement. Since our license from Eastman Kodak is
non-exclusive, Eastman Kodak could also elect to become a competitor itself or
to license OLED technology for microdisplay applications to others who have the
potential to compete with us. The occurrence of any of these events could have a
material adverse impact on our business.
We may not be successful in protecting our intellectual property and proprietary
rights.
We rely on a combination of patents, trade secret protection, licensing
agreements and other arrangements to establish and protect our proprietary
technologies. If we fail to successfully enforce our intellectual property
rights, our competitive position could suffer, which could harm our operating
results. Patents may not be issued for our current patent applications, third
parties may challenge, invalidate or circumvent any patent issued to us,
unauthorized parties could obtain and use information that we regard as
proprietary despite our efforts to protect our proprietary rights, rights
granted under patents issued to us may not afford us any competitive advantage,
others may independently develop similar technology or design around our
patents, our technology may be available to licensees of Eastman Kodak, and
protection of our intellectual property rights may be limited in certain foreign
countries. We may be required to expend significant resources to monitor and
police our intellectual property rights. Any future infringement or other claims
or prosecutions related to our intellectual property could have a material
adverse effect on our business. Any such claims, with or without merit, could be
time consuming to defend, result in costly litigation, divert
9
management's attention and resources, or require us to enter into royalty or
licensing agreements. Such royalty or licensing agreements, if required, may not
be available on terms acceptable to us, if at all. Protection of intellectual
property has historically been a large expense for eMagin. We have not been in a
financial position to properly protect all of our intellectual property, and may
not be in a position to properly protect our position or stay ahead of
competition in new research and the protecting of the resulting intellectual
property.
Risks related to the microdisplay industry
The commercial success of the microdisplay industry depends on the widespread
market acceptance of microdisplay systems products.
The market for microdisplays is emerging. Our success will depend on
consumer acceptance of microdisplays as well as the success of the
commercialization of the microdisplay market. As an OEM supplier, our customer's
products must also be well accepted. At present, it is difficult to assess or
predict with any assurance the potential size, timing and viability of market
opportunities for our technology in this market. The viewfinder microdisplay
market sector is well established with entrenched competitors with whom we must
compete.
The microdisplay systems business is intensely competitive.
We do business in intensely competitive markets that are characterized by
rapid technological change, changes in market requirements and competition from
both other suppliers and our potential OEM customers. Such markets are typically
characterized by price erosion. This intense competition could result in pricing
pressures, lower sales, reduced margins, and lower market share. Our ability to
compete successfully will depend on a number of factors, both within and outside
our control. We expect these factors to include the following:
o our success in designing, manufacturing and delivering expected new
products, including those implementing new technologies on a timely
basis;
o our ability to address the needs of our customers and the quality of
our customer services;
o the quality, performance, reliability, features, ease of use and
pricing of our products;
o successful expansion of our manufacturing capabilities;
o our efficiency of production, and ability to manufacture and ship
products on time;
o the rate at which original equipment manufacturing customers
incorporate our product solutions into their own products;
o the market acceptance of our customers' products; and
o product or technology introductions by our competitors.
Our competitive position could be damaged if one or more potential OEM
customers decide to manufacture their own microdisplays, using OLED or alternate
technologies. In addition, our customers may be reluctant to rely on a
relatively small company such as eMagin for a critical component. We cannot
assure you that we will be able to compete successfully against current and
future competition, and the failure to do so would have a materially adverse
effect upon our business, operating results and financial condition.
The display industry is cyclical.
The display industry is characterized by fabrication facilities that
require large capital expenditures and long lead times for supplies and the
subsequent processing time, leading to frequent mismatches between supply and
demand. The OLED microdisplay sector may experience
10
overcapacity if and when all of the facilities presently in the planning stage
come on line leading to a difficult market in which to sell our products.
Competing products may get to market sooner than ours.
Our competitors are investing substantial resources in the development and
manufacture of microdisplay systems using alternative technologies such as
reflective liquid crystal displays (LCDs), LCD-on-Silicon ("LCOS")
microdisplays, active matrix electroluminescence and scanning image systems, and
transmissive active matrix LCDs. Some of these products have been introduced
years ahead of our products and some are established in segments of the
microdisplay and virtual imaging markets that we have yet to enter. Displacing
entrenched competitors may be difficult, especially in long-term projects or
products, even if our product proves itself to be better.
Our competitors have many advantages over us.
As the microdisplay market develops, we expect to experience intense
competition from numerous domestic and foreign companies including
well-established corporations possessing worldwide manufacturing and production
facilities, greater name recognition, larger retail bases and significantly
greater financial, technical, and marketing resources than us, as well as from
emerging companies attempting to obtain a share of the various markets in which
our microdisplay products have the potential to compete.
Our products are subject to lengthy OEM development periods.
We plan to sell most of our microdisplays and related products to OEMs who
will incorporate them into or with products they sell. OEMs determine during
their product development phase whether they will incorporate our products. The
time elapsed between initial sampling of our products by OEMs, the custom design
of our products to meet specific OEM product requirements, and the ultimate
incorporation of our products into OEM consumer products is significant. If our
products fail to meet our OEM customers' cost, performance or technical
requirements or if unexpected technical challenges arise in the integration of
our products into OEM consumer products, our operating results could be
significantly and adversely affected. Long delays in achieving customer
qualification and incorporation of our products could adversely affect our
business.
Our products will likely experience rapidly declining unit prices.
In the markets in which we expect to compete, prices of established
products tend to decline significantly over time. In order to maintain our
profit margins over the long term, we believe that we will need to continuously
develop product enhancements and new technologies that will either slow price
declines of our products or reduce the cost of producing and delivering our
products. While we anticipate many opportunities to reduce production costs over
time, there can be no assurance that these cost reduction plans will be
successful. We may also attempt to offset the anticipated decrease in our
average selling price by introducing new products, increasing our sales volumes
or adjusting our product mix. If we fail to do so, our results of operations
would be materially and adversely affected.
Risks related to manufacturing
We expect to depend on semiconductor contract manufacturers to supply our
silicon integrated circuits and other suppliers of key components, materials and
services.
We do not manufacture the silicon integrated circuits on which we
incorporate our OLED
11
technology. Instead, we expect to provide the design layouts to semiconductor
contract manufacturers who will manufacture the integrated circuits on silicon
wafers. We also expect to depend on suppliers of a variety of other components
and services, including circuit boards, graphic integrated circuits, passive
components, materials and chemicals, and equipment support. Our inability to
obtain sufficient quantities of high quality silicon integrated circuits or
other necessary components, materials or services on a timely basis has resulted
in delays could result in future manufacturing delays, increased costs and
ultimately in reduced or delayed sales or lost orders which could materially and
adversely affect our operating results.
The manufacture of OLED-on-silicon is new and OLED microdisplays have not been
produced in significant quantities.
If we are unable to produce our products in sufficient quantity, we will be
unable to attract customers. In addition, we cannot assure you that once we
commence volume production we will attain yields at high throughput that will
result in profitable gross margins or that we will not experience manufacturing
problems which could result in delays in delivery of orders or product
introductions.
We are dependent on a single manufacturing line.
We initially expect to manufacture our products on a single manufacturing
line. If we experience any significant disruption in the operation of our
manufacturing facility or a serious failure of a critical piece of equipment, we
may be unable to supply microdisplays to our customers. For this reason, some
OEMs may also be reluctant to commit a broad line of products to our
microdisplays without a second production facility in place. Interruptions in
our manufacturing could be caused by manufacturing equipment problems, the
introduction of new equipment into the manufacturing process or delays in the
delivery of new manufacturing equipment. Lead-time for delivery of manufacturing
equipment can be long. No assurance can be given that we will not lose potential
sales or be able to meet sales orders delivery requirements due to production
interruptions in our manufacturing line. In order to meet the requirements of
certain OEMs for multiple manufacturing sites, we will have to expend capital to
secure additional sites and may not be able to manage multiple sites
successfully.
We currently lease space from IBM on a month-to-month basis.
We currently lease such space from IBM that houses our principal executive
offices, our equipment for OLED microdisplay fabrication and research and
development, as well as our assembly operations and storage. We currently occupy
such space on a month-to-month basis. We are currently in negotiations with IBM
for a new lease. No assurance can be given that we will execute a new lease, or
that such new lease will be on terms that are favorable to us. In the event that
we are forced to locate new space, we may experience a disruption in our
operations, which could have a material adverse affect on our results of
operations.
Risks related to our business
Our success depends on attracting and retaining highly skilled and qualified
technical and consulting personnel.
We must hire highly skilled technical personnel as employees and as
independent contractors in order to develop our products. The competition for
skilled technical employees is intense and we may not be able to retain or
recruit such personnel. We must compete with companies that possess greater
financial and other resources than we do, and that may be more attractive to
potential
12
employees and contractors. To be competitive, we may have to increase
the compensation, bonuses, stock options and other fringe benefits offered to
employees in order to attract and retain such personnel. The costs of retaining
or attracting new personnel may have a material adverse affect on our business
and operating results. In addition, difficulties in hiring and retaining
technical personnel could delay the implementation of our business plan.
Our success depends in a large part on the continuing service of key personnel.
Changes in management could have an adverse effect on our business. We are
dependent upon the active participation of several key management personnel,
including Gary W. Jones, our chief executive officer. This is especially an
issue while the company staffing is small. We will also need to recruit
additional management in order to expand according to our business plan. We are
currently recruiting a chief financial officer. The failure to attract and
retain additional management or personnel could have a material adverse effect
on our operating results and financial performance.
Our business depends on new products and technologies.
The market for our products is characterized by rapid changes in product,
design and manufacturing process technologies. Our success depends to a large
extent on our ability to develop and manufacture new products and technologies
to match the varying requirements of different customers in order to establish a
competitive position and become profitable. Furthermore, we must adopt our
products and processes to technological changes and emerging industry standards
and practices on a cost-effective and timely basis. Our failure to accomplish
any of the above could harm our business and operating results.
We generally do not have long-term contracts with our customers.
Our business is operated on the basis of short-term purchase orders and we
cannot guarantee that we will be able to obtain long-term contracts for some
time. Such purchase orders can be cancelled or revised without penalty,
depending on the circumstances. In the absence of a backlog of orders that can
only be canceled with penalty, we plan production on the basis of internally
generated forecasts of demand, which makes it difficult to accurately forecast
revenues. If we fail to accurately forecast operating results, our business may
suffer and the value of your investment in the Company may decline. Large,
long-term supply line commitments and large inventories of various types of
displays and other products will be required to support our business and provide
reasonable order turn around for customers. Potentially enabling rapid sales
growth targets can greatly increase the cash requirement for these accounts.
Such supplies and inventories are subject to potential obsolescence, long delays
before sale, and potential damage or loss.
Our business strategy may fail if we cannot continue to form strategic
relationships with companies that manufacture and use products that could
incorporate our OLED-on-silicon technology.
Our prospects will be significantly affected by our ability to develop
strategic alliances with OEMs for incorporation of our OLED-on-silicon
technology into their products. While we intend to continue to establish
strategic relationships with manufacturers of electronic consumer products,
personal computers, chipmakers, lens makers, equipment makers, material
suppliers and/or systems assemblers, there is no assurance that we will be able
to continue to establish and maintain strategic relationships on commercially
acceptable terms, or that the alliances we do enter into will realize their
objectives. Failure to do so would have a material adverse effect on our
business.
13
Our business depends to some extent on international transactions.
We purchase needed materials from companies located abroad and may be
adversely affected by political and currency risk, as well as the additional
costs of doing business with a foreign entity. Some customers in other countries
have longer receivable periods or warranty periods. In addition, many of the
OEMs that are the most likely long-term purchasers of our microdisplays are
located abroad exposing us to additional political and currency risk. We may
find it necessary to locate manufacturing facilities abroad to be closer to our
customers which could expose us to various risks, including management of a
multi-national organization, the complexities of complying with foreign laws and
customs, political instability and the complexities of taxation in multiple
jurisdictions.
Our business may expose us to product liability claims.
Our business may expose us to product liability claims. Although no such
claims have been brought against us to date, and to our knowledge no such claim
is threatened or likely, we may face liability to product users for damages
resulting from the faulty design or manufacture of our products. While we plan
to maintain product liability insurance coverage, there can be no assurance that
product liability claims will not exceed coverage limits, fall outside the scope
of such coverage, or that such insurance will continue to be available at
commercially reasonable rates, if at all.
Our business is subject to environmental regulations and possible liability
arising from governmental claims related to the disposal of hazardous substances
and/or potential employee claims of exposure to harmful substances used in the
development and manufacture of our products.
We are subject to various governmental regulations related to toxic,
volatile, experimental and other hazardous chemicals used in, and disposed of in
connection with, our design and manufacturing process. Our failure to comply
with these regulations could result in the imposition of fines or in the
suspension or cessation of our operations. Compliance with these regulations
could require us to acquire costly equipment or to incur other significant
expenses. We develop, evaluate and utilize new chemical compounds in the
manufacture of our products. While we attempt to ensure that our employees are
protected from exposure to hazardous materials, we cannot assure you that
potentially harmful exposure will not occur or that we will not be liable to
employees as a result.
Risks related to our stock
The substantial number of shares that are or will be eligible for sale could
cause our common stock price to decline even if the company is successful.
Sales of significant amounts of common stock in the public market, or the
perception that such sales may occur, could materially affect the market price
of our common stock. These sales might also make it more difficult for us to
sell equity or equity-related securities in the future at a time and price that
we deem appropriate. As of April 30, 2004, we have outstanding (i) options to
purchase 7,794,856 shares; and (ii) warrants to purchase 18,187,964 shares of
common stock.
14
SECURITIES OFFERED BY THIS PROSPECTUS
Using this prospectus, we may offer from time to time, in one or
more series, together or separately, at prices and on terms to be determined at
the time of offering:
o shares of common stock, $0.001 par value;
o shares of preferred stock, $0.001 par value; and
o warrants to purchase shares of common stock or preferred stock;
In addition, selling stockholders are offering for resale up to (i)
2,600,000 shares of our common stock including 2,500,000 shares issuable upon
the exercise of common stock purchase warrants; and (ii) 49,489,060 shares of
common stock previously issued and registered in July 2003.
USE OF PROCEEDS
Unless otherwise provided in the applicable prospectus supplement
accompanying this prospectus, the net proceeds, if any, from the sale of the
securities offered by eMagin will be used for general corporate purposes,
including the acquisition or development of properties, assets, entities or
technologies. As of the date of this prospectus, we have not identified as
probable any specific material proposed uses of these proceeds. If, as of the
date of any prospectus supplement, we have identified any such uses, we will
describe them in the prospectus supplement. The amount of securities offered
from time to time pursuant to this prospectus and any prospectus supplement, and
the precise amount of the net proceeds we will receive from the sale of such
securities, as well as the timing of receipt of those proceeds, will depend upon
our funding requirements. If we elect at the time of an issuance of securities
to make different or more specific uses of the proceeds than as set forth
herein, we will describe those uses in the applicable prospectus supplement.
We will not receive any proceeds from the sale of the shares by the
selling stockholders.
DESCRIPTION OF CAPITAL STOCK
COMMON STOCK
We are authorized to issue up to 200,000,000 shares of Common Stock,
par value $.001. As of April 30, 2004, there were 63,666,244 shares of common
stock outstanding. Holders of the common stock are entitled to one vote per
share on all matters to be voted upon by the stockholders. Holders of common
stock are entitled to receive ratably such dividends, if any, as may be declared
by the Board of Directors out of funds legally available therefore. Upon the
liquidation, dissolution, or winding up of our company, the holders of common
stock are entitled to share ratably in all of our assets which are legally
available for distribution after payment of all debts and other liabilities and
liquidation preference of any outstanding common stock. Holders of common stock
have no preemptive, subscription, redemption or conversion rights.
We have engaged Continental Stock Transfer & Trust Company of New York,
as independent transfer agent and registrar.
PREFERRED STOCK
The following description of preferred stock and the description of the
terms of a particular series of preferred stock that will be described in the
related prospectus supplement are not complete. These descriptions are qualified
in their entirety by reference to the certificate of designations relating to
that series. The rights, preferences, privileges and restrictions of the
preferred stock of each series
15
will be fixed by the certificate of designations relating to that series. You
should read the applicable certificate of designations for a complete
description of a series of preferred stock. As you read this section, please
remember that the specific terms of a particular series of preferred stock as
described in the applicable prospectus supplement will supplement and, if
applicable, may modify or replace the general terms described in this section.
If there are any differences between the applicable prospectus supplement and
this prospectus, the applicable prospectus supplement will control. As a result,
the statements eMagin makes in this section may not apply to the preferred stock
you purchase.
The eMagin board may issue authorized shares of eMagin preferred stock in
one or more series and may, subject to the Delaware general corporate law:
o Fix its rights, preferences, privileges and restrictions;
o Fix the number of shares and designations of any series; and
o Increase or decrease the number of shares of any series if not
adjusting to a level below the number of then outstanding shares.
Although eMagin presently does not have specific plans to do so, its board
may issue eMagin preferred stock with voting, liquidation, dividend, conversion
and such other rights which could negatively affect the voting power or other
rights of the eMagin common stockholders without the approval of the eMagin
common stockholders. Any issuance of eMagin preferred stock may delay or prevent
a change in control of eMagin.
WARRANTS
We may issue separately, or together with any common stock or preferred
stock offered by any prospectus supplement, warrants for the purchase of other
shares of common stock or preferred stock ("Warrants"). The Warrants may be
issued under warrant agreements (each, a "Warrant Agreement") to be entered into
between us and a bank or trust company, as warrant agent (the "Warrant Agent"),
or may be represented by certificates evidencing the Warrants (the "Warrant
Certificates"), all as set forth in the prospectus supplement relating to the
particular series of Warrants. The following summaries of certain provisions of
the Warrants do not purport to be complete and are subject to, and are qualified
in their entirety by reference to, all the provisions of any related Warrant
Agreement and Warrant Certificate, respectively, including the definitions
therein of certain terms. Wherever defined terms of the Warrant Agreement are
summarized herein or in a prospectus supplement, it is intended that such
defined terms shall be incorporated herein or therein by reference. If there are
any differences between the applicable prospectus supplement and this
prospectus, the applicable prospectus supplement will control. In connection
with any offering of Warrants, any such Warrant Agreement or a form of any such
Warrant Certificate will be filed with the SEC as an exhibit to or incorporated
by reference in the registration statement.
General
The prospectus supplement relating to the particular series of Warrants
offered thereby will describe the terms of the offered Warrants, any related
Warrant Agreements and Warrant Certificates, including the following, to the
extent applicable:
o if the Warrants are offered for separate consideration, the offering
price and the currency for which Warrants may be purchased;
o the number of shares of common or preferred stock purchasable upon
exercise of warrants and the price at which such number of shares of
common or preferred stock may be purchased upon such exercise;
16
o the date, if any, on and after which the offered warrants and the
related shares of common or preferred stock will be separately
transferable;
o the date on which the right to exercise the offered Warrants shall
commence and the date on which such right shall expire;
o a discussion of the specific U.S. federal income tax, accounting and
other considerations applicable to the Warrants, or to any securities
purchasable upon the exercise of the Warrants;
o whether the offered Warrants represented by Warrant Certificates will
be issued in registered or bearer form, and if registered, where they
may be transferred and registered;
o any applicable anti-dilution provisions;
o any applicable redemption or call provisions;
o any applicable book-entry provisions; and
o any other terms of the offered Warrants.
Warrant Certificates will be exchangeable on the terms specified in the
related prospectus supplement for new Warrant Certificates of different
denominations and Warrants may be exercised, as applicable, at our corporate
offices, the corporate trust office of the Warrant Agent or any other office
indicated in the prospectus supplement relating thereto. Prior to the exercise
of their Warrants, holders of Warrants will not have any of the rights of
holders of the shares of common or preferred stock purchasable upon such
exercise, including the right to receive payments of dividends or distributions
of any kind, if any, on the shares of common stock or preferred stock
purchasable upon exercise or to exercise any applicable right to vote such
shares.
Exercise of Warrants
Each Warrant will entitle the holder thereof to purchase such number of
shares of common stock or preferred stock at such exercise price as shall in
each case be set forth in, or be determinable from, the prospectus supplement
relating to such Warrant, by payment of such exercise price in full in the
currency and in the manner specified in such prospectus supplement. Warrants may
be exercised at any time up to the close of business on their expiration date(s)
(or any later date to which we may extend such expiration date(s); unexercised
Warrants will become null and void.
Upon receipt at the corporate trust office of the Warrant Agent or any
other office indicated in the related prospectus supplement of (a) payment of
the exercise price and (b) the Warrant Certificate properly completed and duly
executed, we will, as soon as practicable, forward the shares of common stock or
preferred stock purchasable upon such exercise to the holder of such Warrant. If
less than all of the Warrants represented by such Warrant Certificate are
exercised, a new Warrant Certificate will be issued for the remaining number of
Warrants.
17
PLAN OF DISTRIBUTION
Shares to be sold by eMagin
We may sell the securities being offered hereby: (a) directly to
purchasers; (b) through agents; (c) through underwriters; (d) through dealers;
or (e) through a combination of any such methods of sale.
The distribution of the securities may be effected from time to time in one
or more transactions:
o at a fixed price or at final prices, which may be changed;
o at market prices prevailing at the time of sale;
o at prices related to such prevailing market prices; or
o at negotiated prices.
Offers to purchase securities may be solicited directly by us, or by agents
designated by us, from time to time. Any such agent, which may be deemed to be
an underwriter as that term is defined in the Securities Act of 1933, as amended
(the "Securities Act"), involved in the offer or sale of the securities in
respect of which this prospectus is delivered will be named, and any commissions
payable by us to such agent will be set forth, in the applicable prospectus
supplement.
If an underwriter is, or underwriters are, utilized in the offer and sale
of securities in respect of which this prospectus and any accompanying
prospectus supplement are delivered, we will execute an underwriting agreement
with such underwriter(s) for the sale to it or them and the name(s) of the
underwriter(s) and the terms of the transaction, including any underwriting
discounts and other items constituting compensation of the underwriters and
dealers, if any, will be set forth in such prospectus supplement, which will be
used by the underwriter(s) to make resales of the securities in respect of which
this prospectus and such prospectus supplement are delivered to the public. The
securities will be acquired by the underwriters for their own accounts and may
be resold from time to time in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices determined
at the time of sale. Any public offering price and any discounts or concessions
allowed or reallowed or paid to dealers may be changed from time to time.
If a dealer is utilized in the sale of the securities in respect of which
this prospectus is delivered, we will sell such securities to the dealer, as
principal. The dealer may then resell such securities to the public at varying
prices to be determined by such dealer at the time of resale. The name of the
dealer and the terms of the transaction will be identified in the applicable
prospectus supplement.
If an agent is used in an offering of securities being offered by this
prospectus, the agent will be named, and the terms of the agency will be
described, in the applicable prospectus supplement relating to the offering.
Unless otherwise indicated in a prospectus supplement, an agent will act on
a best efforts basis for the period of its appointment.
18
If indicated in the applicable prospectus supplement, we will authorize
underwriters or their other agents to solicit offers by certain institutional
investors to purchase securities from us pursuant to contracts providing for
payment and delivery at a future date. Institutional investors with which these
contracts may be made include commercial and savings banks, insurance companies,
pension funds, investment companies, educational and charitable institutions and
others. In all cases, these purchasers must be approved by us. The obligations
of any purchaser under any of these contracts will not be subject to any
conditions except that (a) the purchase of the securities must not at the time
of delivery be prohibited under the laws of any jurisdiction to which that
purchaser is subject, and (b) if the securities are also being sold to
underwriters, we must have sold to these underwriters the securities not subject
to delayed delivery. Underwriters and other agents will not have any
responsibility in respect of the validity or performance of these contracts.
Certain of the underwriters, dealers or agents utilized by us in any
offering hereby may be customers of, including borrowers from, engage in
transactions with, and perform services for us or one or more of our affiliates
in the ordinary course of business. Underwriters, dealers, agents and other
persons may be entitled, under agreements which may be entered into with us, to
indemnification against certain civil liabilities, including liabilities under
the Securities Act of 1933, as amended.
Until the distribution of the securities is completed, rules of the SEC may
limit the ability of the underwriters and certain selling group members, if any,
to bid for and purchase the securities. As an exception to these rules, the
representatives of the underwriters, if any, are permitted to engage in certain
transactions that stabilize the price of the securities. Such transactions may
consist of bids or purchases for the purpose of pegging, fixing or maintaining
the price of the securities.
If underwriters create a short position in the securities in connection
with the offering thereof (in other words, if they sell more securities than are
set forth on the cover page of the applicable prospectus supplement), the
representatives of such underwriters may reduce that short position by
purchasing securities in the open market. Any such representatives also may
elect to reduce any short position by exercising all or part of any
over-allotment option described in the applicable prospectus supplement.
Any such representatives also may impose a penalty bid on certain
underwriters and selling group members. This means that if the representatives
purchase securities in the open market to reduce the underwriters' short
position or to stabilize the price of the securities, they may reclaim the
amount of the selling concession from the underwriters and selling group members
who sold those shares as part of the offering thereof.
In general, purchases of a security for the purpose of stabilization or to
reduce a syndicate short position could cause the price of the security to be
higher than it might otherwise be in the absence of such purchases. The
imposition of a penalty bid might have an effect on the price of a security to
the extent that it were to discourage resales of the security by purchasers in
the offering.
Neither we nor any of the underwriters, if any, makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the securities. In addition, neither we
nor any of the underwriters, if any, makes any representation that the
representatives of the underwriters, if any, will engage in such transactions or
that such transactions, once commenced, will not be discontinued without notice.
The anticipated date of delivery of the securities offered by this
prospectus will be described in the applicable prospectus supplement relating to
the offering. The securities offered by this prospectus may or may not be listed
on a national securities exchange or a foreign securities
19
exchange. We cannot give any assurances that there will be a market for any of
the securities offered by this prospectus and any prospectus supplement.
We estimate that the total expenses we will incur in offering the
securities to which this prospectus relates, excluding underwriting discounts
and commissions, if any, will be approximately $198,000.
Shares to be sold by the Selling Stockholders
The selling stockholders and any of their respective pledgees, donees,
assignees and other successors-in-interest may, from time to time, sell any or
all of their shares of common stock on any stock exchange, market or trading
facility on which the shares are traded or in private transactions. These sales
may be at fixed or negotiated prices. The selling stockholders may use any one
or more of the following methods when selling shares:
o ordinary brokerage transactions and transactions in which the
broker-dealer solicits the purchaser;
o block trades in which the broker-dealer will attempt to sell the
shares as agent but may position and resell a portion of the block as
principal to facilitate the transaction;
o purchases by a broker-dealer as principal and resale by the
broker-dealer for its account;
o an exchange distribution in accordance with the rules of the
applicable exchange;
o privately-negotiated transactions;
o short sales that are not violations of the laws and regulations of any
state or the United States;
o broker-dealers may agree with the selling stockholders to sell a
specified number of such shares at a stipulated price per share;
o through the writing of options on the shares or a combination of any
such methods of sale; and
o any other method permitted pursuant to applicable law.
The selling stockholders may also sell shares under Rule 144 under the
Securities Act, if available, rather than under this prospectus. The selling
stockholders shall have the sole and absolute discretion not to accept any
purchase offer or make any sale of shares if they deem the purchase price to be
unsatisfactory at any particular time.
The selling stockholders may also engage in short sales against the box,
puts and calls and other transactions in our securities or derivatives of our
securities and may sell or deliver shares in connection with these trades.
The selling stockholders or their respective pledgees, donees, transferees
or other successors in interest, may also sell the shares directly to market
makers acting as principals and/or broker-dealers acting as agents for
themselves or their customers. Such broker-dealers may receive compensation in
the form of discounts, concessions or commissions from the selling stockholders
20
and/or the purchasers of shares for whom such broker-dealers may act as agents
or to whom they sell as principal or both, which compensation as to a particular
broker-dealer might be in excess of customary commissions. Market makers and
block purchasers purchasing the shares will do so for their own account and at
their own risk. It is possible that a selling stockholder will attempt to sell
shares of common stock in block transactions to market makers or other
purchasers at a price per share which may be below the then market price. The
selling stockholders cannot assure that all or any of the shares offered in this
prospectus will be issued to, or sold by, the selling stockholders. The selling
stockholders and any brokers, dealers or agents, upon effecting the sale of any
of the shares offered in this prospectus, may be deemed to be "underwriters" as
that term is defined under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, or the rules and regulations under
such acts. In such event, any commissions received by such broker-dealers or
agents and any profit on the resale of the shares purchased by them may be
deemed to be underwriting commissions or discounts under the Securities Act.
We are required to pay all fees and expenses incident to the registration
of the shares, excluding brokerage commissions or underwriter discounts.
The selling stockholders, alternatively, may sell all or any part of the
shares offered in this prospectus through an underwriter. No selling stockholder
has entered into any agreement with a prospective underwriter and there is no
assurance that any such agreement will be entered into.
The selling stockholders may pledge their shares to their brokers under the
margin provisions of customer agreements. If a selling stockholder defaults on
a margin loan, the broker may, from time to time, offer and sell the pledged
shares. The selling stockholders and any other persons participating in the sale
or distribution of the shares will be subject to applicable provisions of the
Securities Exchange Act of 1934, as amended, and the rules and regulations under
such act, including, without limitation, Regulation M. These provisions may
restrict certain activities of, and limit the timing of purchases and sales of
any of the shares by, the selling stockholders or any other such person. In the
event that the selling stockholders are deemed affiliated purchasers or
distribution participants within the meaning of Regulation M, then the selling
stockholders will not be permitted to engage in short sales of common stock.
Furthermore, under Regulation M, persons engaged in a distribution of securities
are prohibited from simultaneously engaging in market making and certain other
activities with respect to such securities for a specified period of time prior
to the commencement of such distributions, subject to specified exceptions or
exemptions. In regards to short sells, the selling stockholder can only cover
its short position with the securities they receive from us upon conversion. In
addition, if such short sale is deemed to be a stabilizing activity, then the
selling stockholder will not be permitted to engage in a short sale of our
common stock. All of these limitations may affect the marketability of the
shares.
We have agreed to indemnify the selling stockholders, or their transferees
or assignees, against certain liabilities, including liabilities under the
Securities Act of 1933, as amended, or to contribute to payments the selling
stockholders or their respective pledgees, donees, transferees or other
successors in interest, may be required to make in respect of such liabilities.
If the selling stockholders notify us that they have a material arrangement
with a broker-dealer for the resale of the common stock, then we would be
required to amend the registration statement of which this prospectus is a part,
and file a prospectus supplement to describe the agreements between the selling
stockholders and the broker-dealer.
21
SELLING SECURITY HOLDERS
February 2004 - Warrants Issued to Holders of Notes Issued in April 2003
Financing
On April 25, 2003, we issued certain subordinated promissory notes that
were convertible into shares of our common stock at a conversion price of
$0.7742 per share. In February 2004, in order to induce the holders of the Notes
to convert the Notes into shares of our common stock, we entered into an
agreement with the holders of the Notes pursuant to which we issued warrants to
purchase an aggregate of 2.5 million shares of common stock, which Warrants are
exercisable at a price of $2.76 per share. 1.5 million of the Warrants are
exercisable until the later of (i) twelve (12) months from the date upon which a
registration statement covering the shares issuable upon exercise of the
Warrants is declared effective by the Securities and Exchange Commission, or
(ii) December 31, 2005. The remaining 1.0 million of the Warrants are
exercisable until four (4) years from the date upon which the registration
statement covering such shares is declared effective by the Securities and
Exchange Commission.
Registration Rights Agreement
In connection with the transaction described above, we entered into a
registration rights agreement which provides that we will prepare and file with
the Securities and Exchange Commission a registration statement covering the
resale of all of the shares of common stock underlying the Warrants.
On March 8, 2003, eMagin Corporation entered into a compensation agreement
for legal services with Sichenzia Ross Friedman Ference LLP. The compensation
under this agreement provided for the issuance of up to 200,000 shares of common
stock in lieu of cash for services rendered. As of the date of this prospectus,
100,000 shares have been issued. This prospectus covers the resale of the
remaining 100,000 shares to be issued under the compensation agreement.
The table below sets forth information concerning the resale of the shares
of common stock by the selling stockholders. We will not receive any proceeds
from the resale of the common stock by the selling stockholders. We may receive
proceeds from the exercise of the warrants. Assuming all the shares registered
below are sold by the selling stockholders, none of the selling stockholders
will continue to own any shares of our common stock.
Shares Owned Shares Owned
Prior to the Offering After the Offering (2)
-------------------------------- ---------------------------------
Total
Name Number(1) Percent Shares Registered Number Percent
---- --------- ------- ----------------- ------ -------
Stillwater LLC (3) 13,991,367 20.0% 1,294,402 - -
George Haywood (4) 7,169,952 10.8% 619,877 - -
Ginola Limited (5) 6,110,074 9.3% 416,308 - -
Jack Rivkin (6) 1,046,607 1.6% 83,347 - -
Emerald Venture Fund (7) 520,487 * 45,220 - -
Robert N. Verratti (8) 179,711 * 15,692 - -
Emerald Advantage Fund (9) 143,826 * 12,577 - -
Emerald Advantage Offshore Fund (10) 143,826 * 12,577 - -
Richard A. Friedman (11) 100,000 * 100,000
------------------------------------------------------------------------------------------------------------------------------------
* Less than one percent.
(1) The number and percentage of shares beneficially owned is determined in
accordance with Rule 13d-3 of the Securities Exchange Act of 1934, and the
information is not necessarily indicative of beneficial ownership for any other
purpose. Under such rule, beneficial ownership includes any shares as to which
the selling stockholders has sole or shared voting power or investment power and
also any shares, which the selling stockholders has the right to acquire within
60 days.
(2) Assumes that all securities being offered for sale pursuant to this
prospectus will be sold.
(3) This figure represents:
(i) 7,472,999 shares owned by Stillwater LLC, which includes 1,051,216 shares
owned by Rainbow Gate, in which the sole member of Stillwater LLC is the
investment manager of Rainbow Gate Corporation; and
22
(ii) warrants held by Stillwater LLC to purchase 6,518,368 shares, which
includes:
(a) a warrant to purchase 300,000 shares that may not be exercised by Stillwater
LLC so long as Stillwater LLC is the beneficial owner, directly or indirectly,
of more than ten percent (10%) of the common stock of eMagin for purposes of
Section 16 of the Securities Exchange Act of 1934, and (b) a warrant to purchase
289,310 shares held by Rainbow Gate Corporation, in which the sole member of
Stillwater LLC is the investment manager of Rainbow Gate Corporation.
(4) Includes 2,586,664 shares underlying warrants.
(5) This figure represents:
(i) 3,770,860 shares owned by Ginola Limited which include 1,051,216 shares held
indirectly by Rainbow Gate Corporation, 119,116 shares owned by Ogier Trustee
Limited and 396,223 shares owned by Crestflower Corporation. Ginola Limited
disclaims beneficial ownership of the shares owned by Crestflower Corporation
and Ogier Trustee Limited; and
(ii) warrants held by Ginola Limited to purchase 2,339,214 common
shares which includes a warrant to purchase 289,310 shares held by Rainbow Gate
Corporation, in which the sole shareholder of Ginola Limited is also the sole
shareholder of Rainbow Gate Corporation.
(6) Includes 225,824 shares underlying warrants and 324,167 shares underlying
options.
(7) Includes 45,220 shares underlying warrants.
(8) Includes 80,274 shares underlying warrants.
(9) Includes 12,577 shares underlying warrants.
(10) Includes 12,577 shares underlying warrants.
(11) Mr. Friedman is a member of the firm Sichenzia Ross Friedman Ference
LLP, counsel to eMagin Corporation. Such shares will be issued
for legal services.
July 2003 Registration Statement - Securities previously issued and registered.
This prospectus, as it may be amended or supplemented from time to time, is
also deemed to relate to the 49,489,060 shares of common stock that were
previously issued and registered pursuant to a registration statement on Form
SB-2, Commission File No. 333-105750. We are incorporating by reference the July
2003 registration statement in order to keep such information current and
satisfy our registration rights obligation to such selling stockholders.
The table below sets forth information concerning the resale of the shares
of common stock by the selling stockholders. We will not receive any proceeds
from the resale of the common stock by the selling stockholders. We will receive
proceeds from the exercise of the warrants. Assuming all the shares registered
below are sold by the selling stockholders, none of the selling stockholders
will continue to own any shares of our common stock.
Shares Owned Shares Owned
Prior to the Offering After the Offering (2)
-------------------------------- ---------------------------------
Total
Name Number(1) Percent Shares Registered Number Percent
---- --------- ------- ----------------- ------ -------
Stillwater LLC (3) 13,991,367 20.0% 12,696,965 - -
George Haywood (4) 7,169,952 10.8% 6,550,075 - -
Ginola Limited (5) 6,110,074 9.3% 5,693,766 - -
Travelers Insurance Company (6) 5,031,719 7.7% 5,031,719 - -
SK Corporation (7) 2,701,312 4.2% 2,701,312 - -
Triton West Group, Inc. 2,010,561 3.2% 2,010,561 - -
Rohm Corporation (8) 1,903,245 3.0% 1,903,245 - -
Rainbow Gate Corporation (9) 1,340,526 2.1% 1,340,526 - -
23
Vertical Ventures Investments, LLC 1,121,663 1.8% 1,121,663 - -
Newington Invest Limited 1,102,204 1.7% 1,102,204 - -
Finova Capital Corporation 1,053,684 1.7% 1,053,684 - -
Jack Rivkin (10) 1,046,607 1.6% 963,260 - -
ASM Lithography 844,156 * 844,156 - -
Farmers Insurance Company 734,191 * 734,191 - -
Mid-Century Insurance 734,191 * 734,191 - -
Emerald Venture (11) 520,487 * 475,267 - -
Ben Johnson 457,172 * 457,172 - -
Crestflower Corporation (12) 396,223 * 396,223 - -
Verus 288,642 * 288,642 - -
Eric Friedland 275,552 * 275,552 - -
Andrea Della Valle 223,715 * 223,715 - -
David Zierk 220,441 * 220,441 - -
Robert N. Verratti (13) 179,711 * 164,019 - -
Emerald Advantage (14) 143,826 * 131,249 - -
Emerald Advantage Offshore (15) 143,826 * 131,249 - -
Paul Cronson (16) 129,165 * 129,165 - -
Robert Goodwin (17) 129,166 * 129,166 - -
Robert C. Mayer, Jr. (18) 129,165 * 129,165 - -
Ogier Trustee Limited, as Trustee (19) 119,116 * 119,116 - -
UA 10/14/88
Northwind Associates 150,000 * 150,000 - -
E-Pin 96,038 * 96,038 - -
Martin Solomon 51,370 * 51,370 - -
Ajmal Khan 41,096 * 41,096 - -
Xybernaut Corp. 36,164 * 36,164 - -
James Arkoosh (20) 10,274 * 10,274 - -
Amalkamar Ghosh 2,113 * 2,113 - -
Walter Johnstone 346 * 346 - -
------------------------------------------------------------------------------------------------------------------------------------
* Less than one percent.
(1) The number and percentage of shares beneficially owned is determined in
accordance with Rule 13d-3 of the Securities Exchange Act of 1934, and the
information is not necessarily indicative of beneficial ownership for any other
purpose. Under such rule, beneficial ownership includes any shares as to which
the selling stockholders has sole or shared voting power or investment power and
also any shares, which the selling stockholders has the right to acquire within
60 days.
(2) Assumes that all securities being offered for sale pursuant to this
prospectus will be sold.
(3) This figure represents:
(i) 7,472,999 shares owned by Stillwater LLC, which includes 1,051,216 shares
owned by Rainbow Gate, in which the sole member of Stillwater LLC is the
investment manager of Rainbow Gate Corporation; and
(ii) warrants held by Stillwater LLC to purchase 6,518,368 shares, which
includes;
(a) a warrant to purchase 300,000 shares that may not be exercised by Stillwater
LLC so long as Stillwater LLC is the beneficial owner, directly or indirectly,
of more than ten percent (10%) of the common stock of eMagin for purposes of
Section 16 of the Securities Exchange Act of 1934; and
(b) a warrant to purchase 289,310 shares held by Rainbow Gate Corporation, in
which the sole member of Stillwater LLC is the investment manager of Rainbow
Gate Corporation.
(4) Includes 2,586,664 shares underlying warrants.
(5) This figure represents:
(i) 3,770,860 shares owned by Ginola Limited which include 1,051,216 shares held
indirectly by Rainbow Gate Corporation, 119,116 shares owned by Ogier Trustee
Limited and 396,223 shares owned by Crestflower Corporation. Ginola Limited
disclaims beneficial ownership of the shares owned by Crestflower Corporation
and Ogier Trustee Limited; and
(ii) warrants held by Ginola Limited to purchase 2,339,214 common shares which
includes a warrant to purchase 289,310 shares held by Rainbow Gate Corporation,
in which the sole shareholder of Ginola Limited is also the sole shareholder of
Rainbow Gate Corporation.
(6) Includes 1,651,843 shares underlying warrants.
(7) Includes 205,479 shares underlying warrants.
(8) Includes 512,820 shares underlying warrants.
24
(9) Includes 289,310 shares underlying warrants.
(10) Includes 225,824 shares underlying warrants and 324,167 shares underlying
options.
(11) Includes 45,220 shares underlying warrants.
(12) Crestflower Corporation has overlapping directors with Ginola Limited,
however, Ginola Limited disclaims beneficial ownership of the shares owned
by Crestflower Corporation.
(13) Includes 80,274 shares underlying warrants.
(14) Includes 12,577 shares underlying warrants.
(15) Includes 12,577 shares underlying warrants.
(16) The amount represents shares underlying warrants.
(17) The amount represents shares underlying warrants.
(18) The amount represents shares underlying warrants.
(19) Ogier Trustee Limited has overlapping directors with Ginola Limited,
however, Ginola Limited disclaims beneficial ownership of the shares owned
by Ogier Trustee Limited.
(20) Represents 10,274 shares underlying warrants.
25
LEGAL MATTERS
The validity of the issuance of the shares being offered hereby will be
passed upon for us by Sichenzia Ross Friedman Ference LLP, New York, New York. A
member of such firm, Richard A. Friedman, will receive up to 100,000 shares of
common stock for legal services. All such shares are registered in this
prospectus.
EXPERTS
The consolidated financial statements and schedule of eMagin appearing in
eMagin's Annual Report on Form 10-KSB for the year ended December 31, 2003, have
been audited by Eisner LLP, independent auditors, as set forth in their report
included therein and incorporated herein by reference. Such consolidated
financial statements are incorporated herein by reference in reliance upon such
report given on the authority of such firm as experts in accounting and
auditing.
The consolidated financial statements and schedule of eMagin appearing in
eMagin's Annual Report on Form 10-K for the year ended December 31, 2002, have
been audited by Grant Thornton LLP, independent registered public accounting
firm, as set forth in their report included therein and incorporated herein by
reference. Such consolidated financial statements are incorporated herein by
reference in reliance upon such report given on the authority of such firm as
experts in accounting and auditing.
26
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distributions.
SEC registration fee.......................................... $8,000
Printing and engraving fees $25,000
Legal fees.................................................... $125,000
Accounting fees............................................... $40,000
---------
Total......................................................... $198,000*
=========
*Estimated
Item 15. Indemnification of Directors and Officers.
Our Articles of Incorporation, as amended and restated, provide to the
fullest extent permitted by Section 145 of the General Corporation Law of the
State of Delaware, that our directors or officers shall not be personally liable
to us or our shareholders for damages for breach of such director's or officer's
fiduciary duty. The effect of this provision of our Articles of Incorporation,
as amended and restated, is to eliminate our rights and our shareholders
(through shareholders' derivative suits on behalf of our company) to recover
damages against a director or officer for breach of the fiduciary duty of care
as a director or officer (including breaches resulting from negligent or grossly
negligent behavior), except under certain situations defined by statute. We
believe that the indemnification provisions in our Articles of Incorporation, as
amended, are necessary to attract and retain qualified persons as directors and
officers.
Our By-Laws also provide that the Board of Directors may also authorize the
company to indemnify our employees or agents, and to advance the reasonable
expenses of such persons, to the same extent, following the same determinations
and upon the same conditions as are required for the indemnification of and
advancement of expenses to our directors and officers. As of the date of this
Registration Statement, the Board of Directors has not extended indemnification
rights to persons other than directors and officers.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers or persons controlling us
pursuant to the foregoing provisions, or otherwise, we have been advised that in
the opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable.
27
Item 16. Exhibits.
The exhibits filed as part of this Registration Statement are as
follows:
Exhibit Number Description
------------------ -- ----------------------------------------------------------
5.1 Opinion of Counsel
23.1 Consent from Independent Auditors
23.2 Consent from Independent Certified Public Accountants
23.3 Consent from Counsel (incorporated in Exhibit 5.1)
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:
(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 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 Commission pursuant to Rule 424(b) if, in the aggregate,
the changes on 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; and
(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,
2. That, for the purpose of determining any liability under the
Securities Act of 1933, 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.
4. 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
28
Annual Report pursuant to Section 13(a) or Section 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.
5. Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended (the "Act"), 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 Securities and Exchange Commission
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.
6. The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus
is sent or given, the latest annual report to security holders that is
incorporated by reference in the prospectus and furnished pursuant to
and meeting the requirements of Rule 14-a or Rule 14c-3 under the
Securities Exchange Act of 1934; and, where interim financial
information required to be presented by Article 3 of Regulations S-X
are not set forth in the prospectus, to deliver, or cause to be
delivered to each person to whom the prospectus is sent or given, the
latest quarterly report that is specifically incorporated by reference
in the prospectus to provide such interim financial information.
29
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant, Emagin Corporation, certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form S-3 and has
duly caused this Registration Statement on Form S-3 to be signed on its behalf
by the undersigned, thereunto duly authorized, in the city of Hopewell, State of
New York, on the 9th day of June 2004.
EMAGIN CORPORATION
By: /s/ Gary W. Jones
-------------------------
Name: Gary W. Jones
Title: President
30
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Gary W.
Jones his or her true and lawful attorney in fact and agent, with full power of
substitution and resubstitution, for him or her and in his name, place and
stead, in any and all capacities, to sign any or all amendments (including post
effective amendments) to the Registration Statement, and to sign any
registration statement for the same offering covered by this Registration
Statement that is to be effective upon filing pursuant to Rule 462(b) under the
Securities Act of 1933, as amended, and all post effective amendments thereto,
and to file the same, with all exhibits thereto, and all documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he or she might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and
agent, each acting alone, or his or her substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form S-3 has been signed below by the following
persons in the capacities and on the dates indicated:
NAME TITLE DATE
---- ----- ----
/s/ Gary Jones Chief Executive Officer, President, and June 9, 2004
--------------------------- Acting Chief Financial Officer and Director
Gary Jones (Principal Executive Officer)
/s/ Claude Charles Director June 9, 2004
---------------------------
Claude Charles
/s/ Jacob E. Goldman Director June 9, 2004
---------------------------
Dr. Jacob E. Goldman
/s/ Jack Rivkin Director June 9, 2004
---------------------------
Jack Rivkin
/s/ Paul Cronson Director June 9, 2004
---------------------------
Paul Cronson
/s/ Jill Wittels Director June 9, 2004
---------------------------
Dr. Jill Wittels
/s/ Thomas Paulsen Director June 9, 2004
---------------------------
Adm. Thomas Paulsen
31