Delaware
|
|
3679
|
|
56-1764501
|
(State
or other Jurisdiction of
|
|
(Primary
Standard Industrial
|
|
(I.R.S.
Employer
|
Incorporation
or Organization)
|
|
Classification
Code Number)
|
|
Identification
No.)
|
Title
of each class of securities to be
registered
|
|
Amount
to
be registered |
Proposed
maximum offering
price |
Proposed
maximum aggregate(1)
|
Amount
of registration fee |
|||||||||||
Common Stock, $0.001 par value per share | 2,450,000 | $ | 1.50 | $ | 3,675,000 | $ | 113.00 | |||||||||
(1)
|
|
Estimated
solely for purposes of calculating the registration fee in accordance
with
Rule 457(c) and Rule 457(g) under the Securities Act of 1933, using
the
average of the sale prices as reported on the OTCBB on July 23,
2007, which was $1.50 per
share.
|
Page
|
||
Prospectus
Summary
|
|
5
|
Risk
Factors
|
|
9
|
Forward
Looking Statements
|
|
14
|
Use
of Proceeds
|
|
14
|
Market
For Equity and Related Stockholder Matters
|
|
14
|
Selected
Financial Data
|
|
15
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
|
16
|
Business
|
|
24
|
Description
of Property
|
|
35
|
Legal
Proceedings
|
|
35
|
Management
|
|
36
|
Executive
Compensation
|
|
40
|
Security
Ownership of Certain Beneficial Owners and Management
|
|
46
|
Indemnification
for Securities Act Liabilities
|
48
|
|
Plan
of Distribution
|
48
|
|
Description
of Securities
|
|
50
|
Selling
Stockholders
|
|
50
|
Transactions
With Related Persons, Promoters and Certain Control
Persons
|
|
51
|
Legal
Matters
|
|
53
|
Experts
|
|
53
|
Available
Information
|
|
53
|
Index
to Financial Statements
|
|
54
|
Common
stock offered by selling stockholders
|
|
Up
to 2,450,000 shares, consisting of the following:
|
|
|
|
|
|
·
1,450,000 shares of common stock issuable upon conversion of the
$500,000
Stillwater Notes at a conversion price of $0.35 per
share;
|
|
|
|
|
|
·
up
to 1,000,000 shares of common stock issuable upon the exercise of
common
stock purchase warrants at an exercise price of $0.48 per
share.
|
|
|
|
Common
Stock to be outstanding after the offering
|
13,714,657
shares*
|
|
Use
of proceeds
|
|
We
will not receive any proceeds from the sale of the common stock,
however,
we will receive proceeds from the exercise of our
warrants.
|
|
|
|
Over-The-Counter
Bulletin Board Symbol
|
|
EMAN
|
Principal
Amount
|
Due
Date*
|
|
|
|
$250,000
|
|
July
21, 2007
|
|
|
$250,000
|
|
January
21, 2008
|
|
|
· |
The
due date for the outstanding Notes (totaling after conversions an
aggregate of $6,020,000) has been extended to December 21, 2008;
|
· |
The
Amended Notes are convertible into (i) 8,407,612 shares of the Company’s
common stock. The conversion price for $5,770,000 of principal was
revised
from $2.60 to $0.75 per share. The conversion price of $0.35 per
share for
$250,000 of principal was unchanged.
|
· |
$3,010,000
of the Notes can convert into (ii) 3,010 shares of the Company’s newly
formed Series A Convertible Preferred Stock (the “Preferred”) at a
conversion price of $1,000 per share. The Preferred is convertible
into
common stock at the same price allowable by the Amended Notes,
subject to adjustment as provided for in the Certificate of
Designations;
|
· |
The
Amended Notes adjust the exercise price from $3.60 to $1.03 per share
for
1,553,468 Warrants and require the issuance of 3,831,859 Warrants
exercisable at $1.03 per share pursuant to which the holders may
acquire
common stock, until July 21, 2011; and
|
· |
As
of July 23, 2007 the interest rate was raised from 6% to
8%.
|
Year
Ended December 31,
|
Three
Months Ended March 31,
|
|||||||||||||||||||||
2006
|
2005
|
2004
|
2003
|
2002
|
2007
|
2006
|
||||||||||||||||
(In
thousands, except per share data)
|
||||||||||||||||||||||
Revenue
|
$
|
8,169
|
$
|
3,745
|
$
|
3,593
|
$
|
2,578
|
$
|
2,128
|
$
|
3,609
|
$
|
1,641
|
||||||||
Cost
of goods sold
|
11,359
|
10,219
|
5,966
|
5,141
|
—
|
3,115
|
3,029
|
|||||||||||||||
Gross
(loss) profit
|
(3,190
|
)
|
(6,474
|
)
|
(2,373
|
)
|
(2,563
|
)
|
2,128
|
494
|
(1,388
|
)
|
||||||||||
Operating
expenses:
|
||||||||||||||||||||||
Research
and development
|
4,406
|
4,020
|
898
|
19
|
7,255
|
853
|
1,238
|
|||||||||||||||
Stock
based compensation (1)
|
—
|
—
|
88
|
2,183
|
1,647
|
—
|
—
|
|||||||||||||||
Selling,
general and administrative
|
8,860
|
6,316
|
4,340
|
3,529
|
5,832
|
2,221
|
2,588
|
|||||||||||||||
Total
operating expenses
|
13,266
|
10,336
|
5,326
|
5,731
|
14,734
|
3,074
|
3,826
|
|||||||||||||||
Loss
from operations
|
(16,456
|
)
|
(16,810
|
)
|
(7,699
|
)
|
(8,294
|
)
|
(12,606
|
)
|
(2,580
|
)
|
(5,214
|
)
|
||||||||
Other
income (expense), net
|
1,190
|
282
|
(5,012
|
)
|
3,571
|
(2,306
|
)
|
(357
|
)
|
54
|
||||||||||||
Net
loss
|
$
|
(15,266
|
)
|
$
|
(16,528
|
)
|
$
|
(12,711
|
)
|
$
|
(4,723
|
)
|
$
|
(14,912
|
)
|
$
|
(2,937
|
)
|
$
|
(5,160
|
)
|
|
|
||||||||||||||||||||||
Basic
and diluted loss per share
|
$
|
(1.52
|
)
|
$
|
(1.94
|
)
|
$
|
(1.98
|
)
|
$
|
(1.31
|
)
|
$
|
(5.07
|
)
|
$
|
(0.27
|
)
|
$
|
(0.52
|
)
|
|
|
||||||||||||||||||||||
Shares
used in calculation of loss per share:
|
||||||||||||||||||||||
Basic
and diluted
|
10,058
|
8,541
|
6,428
|
3,599
|
2,941
|
10,792
|
10,004
|
|||||||||||||||
(1)
Represents amounts reported under APB 25.
|
December
31,
|
March
31,
|
|||||||||||||||||||||
2006
|
2005
|
2004
|
2003
|
2002
|
2007
|
2006
|
||||||||||||||||
(In
thousands)
|
||||||||||||||||||||||
Cash
and cash equivalents
|
$
|
1,415
|
$
|
6,727
|
$
|
13,457
|
$
|
1,054
|
$
|
83
|
$
|
192
|
$
|
1,662
|
||||||||
Working
(deficit) capital
|
(305
|
)
|
8,868
|
14,925
|
106
|
(13,602
|
)
|
(3,997
|
)
|
4,742
|
||||||||||||
Total
assets
|
7,005
|
14,142
|
18,436
|
3,749
|
1,834
|
5,691
|
9,160
|
|||||||||||||||
Long-term
obligations
|
2,229
|
56
|
22
|
6,161
|
228
|
89
|
47
|
|||||||||||||||
Total
shareholders’ (deficit) equity
|
$
|
(1,164
|
)
|
$
|
10,401
|
$
|
16,447
|
$
|
(4,767
|
)
|
$
|
(12,808
|
)
|
$
|
(2,967
|
)
|
$
|
6,083
|
·
|
our
success in designing, manufacturing and delivering expected new products,
including those implementing new
technologies
on a timely basis;
|
·
|
our
ability to address the needs of our customers and the quality of
our
customer services;
|
·
|
the
quality, performance, reliability, features, ease of use and pricing
of
our products;
|
·
|
successful
expansion of our manufacturing capabilities;
|
·
|
our
efficiency of production, and ability to manufacture and ship products
on
time;
|
·
|
the
rate at which original equipment manufacturing customers incorporate
our
product solutions into their own products;
|
·
|
the
market acceptance of our customers' products; and
|
product
or technology introductions by our
competitors.
|
|
High
|
|
Low
|
||
Fiscal
2006
|
|
|
|
||
First
Quarter
|
$
|
7.10
|
|
$
|
4.60
|
Second
Quarter
|
$
|
5.70
|
|
$
|
2.50
|
Third
Quarter
|
$
|
3.80
|
|
$
|
1.80
|
Fourth
Quarter
|
$
|
2.50
|
|
$
|
1.01
|
Fiscal
2007
|
|||||
First
Quarter
|
$
|
1.08
|
$
|
0.26
|
|
Second
Quarter*
|
$
|
0.85
|
$
|
0.42
|
Year
Ended December 31,
|
Three
Months Ended March 31,
|
|||||||||||||||||||||
2006
|
2005
|
2004
|
2003
|
2002
|
2007
|
2006
|
||||||||||||||||
(In
thousands, except per share data)
|
||||||||||||||||||||||
Revenue
|
$
|
8,169
|
$
|
3,745
|
$
|
3,593
|
$
|
2,578
|
$
|
2,128
|
$
|
3,609
|
$
|
1,641
|
||||||||
Cost
of goods sold
|
11,359
|
10,219
|
5,966
|
5,141
|
—
|
3,115
|
3,029
|
|||||||||||||||
Gross
(loss) profit
|
(3,190
|
)
|
(6,474
|
)
|
(2,373
|
)
|
(2,563
|
)
|
2,128
|
494
|
(1,388
|
)
|
||||||||||
Operating
expenses:
|
||||||||||||||||||||||
Research
and development
|
4,406
|
4,020
|
898
|
19
|
7,255
|
853
|
1,238
|
|||||||||||||||
Stock
based compensation (1)
|
—
|
—
|
88
|
2,183
|
1,647
|
—
|
—
|
|||||||||||||||
Selling,
general and administrative
|
8,860
|
6,316
|
4,340
|
3,529
|
5,832
|
2,221
|
2,588
|
|||||||||||||||
Total
operating expenses
|
13,266
|
10,336
|
5,326
|
5,731
|
14,734
|
3,074
|
3,826
|
|||||||||||||||
Loss
from operations
|
(16,456
|
)
|
(16,810
|
)
|
(7,699
|
)
|
(8,294
|
)
|
(12,606
|
)
|
(2,580
|
)
|
(5,214
|
)
|
||||||||
Other
income (expense), net
|
1,190
|
282
|
(5,012
|
)
|
3,571
|
(2,306
|
)
|
(357
|
)
|
54
|
||||||||||||
Net
loss
|
$
|
(15,266
|
)
|
$
|
(16,528
|
)
|
$
|
(12,711
|
)
|
$
|
(4,723
|
)
|
$
|
(14,912
|
)
|
$
|
(2,937
|
)
|
$
|
(5,160
|
)
|
|
|
||||||||||||||||||||||
Basic
and diluted loss per share
|
$
|
(1.52
|
)
|
$
|
(1.94
|
)
|
$
|
(1.98
|
)
|
$
|
(1.31
|
)
|
$
|
(5.07
|
)
|
$
|
(0.27
|
)
|
$
|
(0.52
|
)
|
|
|
||||||||||||||||||||||
Shares
used in calculation of loss per share:
|
||||||||||||||||||||||
Basic
and diluted
|
10,058
|
8,541
|
6,428
|
3,599
|
2,941
|
10,792
|
10,004
|
|||||||||||||||
(1)
Represents amounts reported under APB 25.
|
December
31,
|
March
31,
|
|||||||||||||||||||||
2006
|
2005
|
2004
|
2003
|
2002
|
2007
|
2006
|
||||||||||||||||
(In
thousands)
|
||||||||||||||||||||||
Cash
and cash equivalents
|
$
|
1,415
|
$
|
6,727
|
$
|
13,457
|
$
|
1,054
|
$
|
83
|
$
|
192
|
$
|
1,662
|
||||||||
Working
(deficit) capital
|
(305
|
)
|
8,868
|
14,925
|
106
|
(13,602
|
)
|
(3,997
|
)
|
4,742
|
||||||||||||
Total
assets
|
7,005
|
14,142
|
18,436
|
3,749
|
1,834
|
5,691
|
9,160
|
|||||||||||||||
Long-term
obligations
|
2,229
|
56
|
22
|
6,161
|
228
|
89
|
47
|
|||||||||||||||
Total
shareholders’ (deficit) equity
|
$
|
(1,164
|
)
|
$
|
10,401
|
$
|
16,447
|
$
|
(4,767
|
)
|
$
|
(12,808
|
)
|
$
|
(2,967
|
)
|
$
|
6,083
|
Year
ended December 31,
|
Three
Months Ended March 31,
|
||||||||||
2006
|
|
2005
|
|
2004
|
2007
|
2006
|
|||||
(Unaudited)
|
|||||||||||
Revenue
|
100
|
%
|
100
|
%
|
100
|
%
|
100
|
%
|
100
|
%
|
|
Cost
of goods sold
|
139
|
273
|
|
166
|
|
86
|
185
|
||||
Gross
(loss)/income
|
(39)
|
(173)
|
(66)
|
14
|
(85)
|
||||||
Operating
expenses:
|
|
|
|
||||||||
Research
and development
|
54
|
107
|
25
|
24
|
75
|
||||||
Stock
based compensation
|
—
|
—
|
2
|
||||||||
Selling,
general and administrative
|
109
|
169
|
121
|
61
|
158
|
||||||
Total operating expenses
|
163
|
276
|
148
|
85
|
233
|
||||||
Loss
from operations
|
(202)
|
(449)
|
(214)
|
(71)
|
(318)
|
||||||
Other
income (expense)
|
15
|
8
|
(140)
|
(10)
|
3
|
||||||
Net
loss
|
(187)
|
%
|
(441)
|
%
|
(354)
|
%
|
(81)
|
%
|
(315)
|
%
|
|
|
Year
ended December 31,
|
Three
Months Ended March 31,
|
|||||||||||||||
2006
|
2005
|
2004
|
2007
|
2006
|
||||||||||||
(Unaudited)
|
||||||||||||||||
(In
thousands, except per share data)
|
||||||||||||||||
Revenue
|
$
|
8,169
|
$
|
3,745
|
$
|
3,593
|
$
|
3,609
|
$
|
1,641
|
||||||
Cost
of goods sold
|
11,359
|
10,219
|
5,966
|
3,115
|
3,029
|
|||||||||||
Gross
(loss)/income
|
(3,190
|
)
|
(6,474
|
)
|
(2,373
|
)
|
494
|
(1,388
|
)
|
|||||||
Operating
expenses:
|
||||||||||||||||
Research
and development
|
4,406
|
4,020
|
898
|
853
|
1,238
|
|||||||||||
Stock
based compensation
|
—
|
—
|
88
|
—
|
—
|
|||||||||||
Selling,
general and administrative
|
8,860
|
6,316
|
4,340
|
2,221
|
2,588
|
|||||||||||
Total operating expenses
|
13,266
|
10,336
|
5,326
|
3,074
|
3,826
|
|||||||||||
Loss
from operations
|
(16,456
|
)
|
(16,810
|
)
|
(7,699
|
)
|
(2,580
|
)
|
(5,214
|
)
|
||||||
Other
income (expense)
|
1,190
|
282
|
(5,012
|
)
|
(357
|
)
|
54
|
|||||||||
Net
loss
|
$
|
(15,266
|
)
|
$
|
(16,528
|
)
|
$
|
(12,711
|
)
|
$
|
(2,937
|
)
|
$
|
(5,160
|
)
|
|
Net
loss per share, basic and diluted
|
$
|
(1.52
|
)
|
$
|
(1.94
|
)
|
$
|
(1.98
|
)
|
$
|
(0.27
|
)
|
$
|
(0.52
|
)
|
Years
ended December 31,
|
Three
Months Ended March 31,
|
|||||||||||||||
2006
|
2005
|
2004
|
2007
|
2006
|
||||||||||||
Cash
flow data:
|
(unaudited)
|
|||||||||||||||
Net
cash used in operating activities
|
$
|
(10,389
|
)
|
$
|
(15,713
|
)
|
$
|
(8,297
|
)
|
$
|
(1,204
|
)
|
$
|
(5,000
|
)
|
|
Net
cash used in investing activities
|
(257
|
)
|
(1,072
|
)
|
(820
|
)
|
(4
|
)
|
(56
|
)
|
||||||
Net
cash provided by (used in) financing activities
|
5,334
|
10,055
|
21,520
|
(15
|
)
|
(9
|
)
|
|||||||||
Net
increase (decrease) in cash and cash equivalents
|
(5,312
|
)
|
(6,730
|
)
|
(12,403
|
)
|
(1,223
|
)
|
(5,065
|
)
|
||||||
Cash
and cash equivalents, beginning of period
|
6,727
|
13,457
|
1,054
|
1,415
|
6,727
|
|||||||||||
Cash
and cash equivalents, end of period
|
$
|
1,415
|
$
|
6,727
|
$
|
13,457
|
$
|
192
|
$
|
1,662
|
· |
finalized
an agreement with our note holders that defers the note payments
until
December 2008;
|
· |
are in
the process of finalizing an agreement that establishes a $2.5
million revolving credit line; and
|
· |
have
entered into an intellectual property agreement with Kodak where
we have
assigned Kodak the rights, title, and interest to a specific patent
and in
consideration, Kodak has waived the royalties for the first six months
of
2007, reduced the royalty payments by 50% for the second half of
2007 and
for the entire calendar year of 2008, and delayed the minimum royalty
payment until December 1st
for the years 2007 and 2008.
|
|
|
Payments
due by period
|
|
||||||||||
|
|
Total
|
|
1
Year
|
|
2-3
Years
|
|
4-5
Years
|
|
||||
Capital
lease obligations
|
|
$
|
6
|
|
$
|
6
|
|
$
|
—
|
|
$
|
—
|
|
Operating
lease obligations
|
|
|
3,387
|
|
|
1,405
|
|
|
1,982
|
|
|
—
|
|
Purchase
obligations (a)
|
|
|
1,476
|
|
|
1,476
|
|
|
—
|
|
|
—
|
|
Other
long-term liabilities (b)
|
|
|
787
|
|
|
183
|
|
|
354
|
|
|
250
|
|
Total
|
|
$
|
5,656
|
|
$
|
3,070
|
|
$
|
2,336
|
|
$
|
250
|
|
· |
As
of July 23, 2007 the interest rate was raised from 6% to
8%.
|
· |
The
due date for the outstanding Notes (totaling after conversions an
aggregate of $6,020,000) has been extended to December 21, 2008;
|
· |
The
Amended Notes are convertible into (i) 8,407,612 shares of the Company’s
common stock. The conversion price for $5,770,000 of principal was
revised
from $2.60 to $.75 per share. The conversion price of $.35 per share
for
$250,000 of principal was unchanged.
|
· |
$3,010,000
of the Notes can convert into (ii) 3,010 shares of the Company’s newly
formed Series A Convertible Preferred Stock (the “Preferred”) at a
conversion price of $1,000 per share. The Preferred is convertible
into
common stock at the same price allowable by the Amended Notes,
subject to adjustment as provided for in the Certificate of
Designations;
|
· |
The
Amended Notes adjust the exercise price from $3.60 to $1.03 per share
for
1,553,468 Warrants and require the issuance of 3,831,859 Warrants
exercisable at $1.03 per share pursuant to which the holders may
acquire
common stock, until July 21, 2011; and
|
|
·
|
the
user does not need to accurately position the head-wearable display
to the
eye;
|
·
|
the
image will change minimally with eye movement and appear more natural;
and
|
·
|
the
display can be placed further from the eye and not cut off part of
the
image.
|
·
|
Entertainment
and gaming video headset systems, which permit individuals to view
television, including HDTV, video CDs, DVDs and video games on virtual
large screens or stereovision in private without disturbing others.
We
believe that these new headset game systems can provide a game or
telepresence experience not otherwise practical using conventional
direct
view display technology. The advent of video iPods and the rapidly
increasing amount of downloadable content have accelerated the movement
toward portable video technology. At the same time, the desire for
larger
screen sizes while retaining the iPod portability has been referenced
in
many publications. Virtual imaging uniquely provides a large, high
resolution view in a small portable package, and we believe that
our OLED
on silicon technology is a best fit to help open this market.
|
·
|
Notebook
computers, which can use head-wearable devices to reduce power
requirements as well as expand the apparent screen size and increase
privacy. Current notebook computers do not use microdisplays. Our
products
can apply not only to new models of notebook computers, but also
as
aftermarket attachments to older notebooks still in use. The display
can
be easily used as a second monitor on notebook computers for ease
of
editing multiple documents to provide multiple screens or for data
privacy
while traveling. It can also be used to provide larger screen capability
for viewing spreadsheets or complex computer aided design (CAD) files.
We
expect to market our head-wearable displays to be used as plug-in
peripherals to be compatible with most notebook computers. We believe
that
the SVGA-3D microdisplay is well suited for most portable PC headsets.
Our
microdisplays can be operated using the USB power source of most
portable
computers. This eliminates added power supplies, batteries, and rechargers
and reduces system complexity and cost.
|
·
|
Handheld
personal computers, whose small, direct view screens are often
limitations, but which are now capable of running software applications
that would benefit from a larger display. Microdisplays can be built
into
handheld computers to display more information content on virtual
screens
without forfeiting portability or adding the cost a larger direct
view
screen. Microdisplays are not currently used in this market. We believe
that GPS viewers and other novel products are likely to develop as
our
displays become more available.
|
·
|
Leverage
our superior technology to establish a leading market position. As
the
first to exploit OLED-on-silicon microdisplays, we believe that we
enjoy a
significant advantage in bringing this technology to market.
|
·
|
Optimize
manufacturing efficiencies by outsourcing while protecting proprietary
processes. We outsource certain portions of microdisplay production,
such
as chip fabrication, to minimize both our costs and time to market.
We
intend to retain the OLED application and OLED sealing processes
in-house.
We believe that these areas are where we have a core competency and
manufacturing expertise. We also believe that by keeping these processes
under tight control we can better protect our proprietary technology
and
process know-how. This strategy will also enhance our ability to
continue
to optimize and customize processes and devices to meet customer
needs. By
performing the processes in-house we can continue to directly make
improvements in the processes, which will improve device performance.
We
also retain the ability to customize certain aspects such as color
balance, which is known as chromaticity, as well as specialized boards
or
interfaces, and to adjust other parameters at the customer's request.
In
the area of lenses and head-wearable displays, we intend to focus
on
design and development, while working with third parties for the
manufacture and distribution of finished products. We intend to prototype
new optical systems, provide customization of optical systems, and
manufacture limited volumes, but we intend to outsource high volume
manufacturing operations. There are numerous companies that provide
these
outsource services.
|
·
|
Build
and maintain strong internal design capabilities. As more circuitry
is
added to OLED-on-silicon devices, the cost of the end product using
the
display can be decreased; therefore integrated circuit design capability
will become increasingly important to us. To meet these requirements,
we
utilize in-house design capabilities supplemented by outsourced design
services. Building and maintaining this capacity will allow us to
reduce
engineering costs, accelerate the design process and enhance design
accuracy to respond to our customers' needs as new markets develop.
In
addition, we intend to maintain a product design staff capable of
rapidly
developing prototype products for our customers and strategic partners.
Contracting third party design support to meet demand and for specialized
design skills will also remain a part of our overall long term strategy.
|
·
|
Low
manufacturing cost;
|
·
|
Low
cost system solutions;
|
·
|
Wide
angle light emission resulting in large apparent screen size;
|
·
|
Low
power consumption for improved battery life and longer system life;
|
·
|
High
brightness for improved viewing;
|
·
|
High-speed
performance resulting in clear video images; and
|
·
|
Wide
operating temperature range;
|
·
|
Can
be very low cost, with minimal assembly. A one piece, molded plastic
optic
attached to the microdisplay has been introduced and may potentially
serve
consumer end-product markets. Since our process is plastic molding,
our
per unit production costs are low;
|
·
|
Allows
a compact and lightweight lens system that can greatly magnify a
microdisplay to produce a large field of view. For example, our WF05
prism
lens, in combination with our SVGA OLED microdisplay, provides a
virtual
view equivalent to that of a 105-inch diagonal display viewed at
12 feet;
|
·
|
Can
use single-piece molded microdisplay lenses to permit high light
throughput making the display image brighter or permitting the use
of less
power for an acceptable brightness;
|
·
|
Can
be designed to provide focusing to enable users with various eyesight
qualities to view images clearly; and
|
·
|
Can
optionally provide focal plane adjustment for simultaneous focusing
of
computer images and real world objects. For example, this characteristic
is beneficial for word processing or spreadsheet applications where
a
person is typing data in from reference material. This feature can
make it
easier for people with moderately poor accommodation to use a
head-wearable display as a portable computer-viewing accessory.
|
·
|
OLED
Materials, Structures, and Processes;
|
·
|
Display
Color Processing and Sealing;
|
·
|
Active
Matrix Circuit Methodologies and Designs;
|
·
|
Field
Emission and General Display Technologies;
|
·
|
Lenses
and Tracking (Eye and Head);
|
·
|
Ergonomics
and Industrial Design; and
|
·
|
Wearable
Computer Interface Methodology
|
Name
|
Age
|
Position
|
K.C.
Park
|
70
|
Interim
Chief Executive Officer, President
|
John
Atherly
|
48
|
Chief
Financial Officer
|
Susan
Jones
|
55
|
Chief
Marketing and Strategy Officer, Secretary
|
Adm.
Thomas Paulsen (Ret.)(2)(3*)
|
70
|
Chairman
of the Board, Director
|
Claude
Charles(1)
|
70
|
Director
|
Paul
Cronson
|
50
|
Director
|
Irwin
Engelman (1*)
|
72
|
Director
|
Dr.
Jacob Goldman(2*)(3)
|
83
|
Director
|
Brig.
Gen. Stephen Seay (Ret.) (1)
|
60
|
Director
|
(1) |
Audit
Committee
|
(2) |
Governance
& nominating Committee
|
(3) |
Compensation
Committee
|
|
•
|
|
high
personal and professional ethics and integrity;
|
|
•
|
|
the
ability to exercise sound judgment;
|
|
•
|
|
the
ability to make independent analytical inquiries;
|
|
•
|
|
a
willingness and ability to devote adequate time and resources to
diligently perform Board and committee duties; and
|
|
•
|
|
the
appropriate and relevant business experience and acumen.
|
|
•
|
|
whether
the person possesses specific industry expertise and familiarity
with
general issues affecting our business;
|
|
•
|
|
whether
the person’s nomination and election would enable the Board to have a
member that qualifies as an “audit committee financial expert” as such
term is defined by the Securities and Exchange Commission (the “SEC”) in
Item 401 of Regulation S-K;
|
|
•
|
|
whether
the person would qualify as an “independent” director;
|
|
•
|
|
the
importance of continuity of the existing composition of the Board
of
Directors to provide long term stability and experienced oversight;
and
|
|
•
|
|
the
importance of diversified Board membership, in terms of both the
individuals involved and their various experiences and areas of expertise.
|
The
objectives of our compensation program are as
follows:
|
•
|
Reward
performance that drives substantial increases in shareholder value,
as
evidenced through both future operating profits and increased market
price
of our common shares; and
|
|
•
|
Attract,
hire and retain well-qualified
executives.
|
Name
& Principal Position
|
Year
|
Salary
($) (a)
|
Option
Awards ($)
(b)
|
Non-Equity
Incentive Plan Compensation ($) (c)
|
All
Other Compensation ($) (d)
|
Total ($)
|
|
||||||||||||
Gary
Jones
Chief
Executive Officer
|
2006
|
$368,170
|
$788,180
|
—
|
$127,928
|
$1,268,808
|
|
||||||||||||
John
Atherly
Chief
Financial Officer
|
2006
|
$242,308
|
$244,890
|
—
|
—
|
$487,198
|
|
||||||||||||
Susan
Jones
Chief
Strategy and Marketing Officer
|
2006
|
$289,163
|
$538,817
|
$81,379
|
—
|
$895,188
|
|
|
Number
of Securities Underlying Unexercised Options (#)
|
|
|
|
Name
|
Exercisable
|
Unexercisable
(a)
|
Option
Exercise Price ($)
|
Option
Expiration Date
|
Gary
Jones (b)
|
32,500(1)
|
$
2.60
|
1/19/07
|
|
|
44,435
|
$
3.40
|
7/14/07
|
|
|
|
15,254(1)
|
$ 2.60
|
4/24/13
|
|
|
9,152(1)
|
$
2.60
|
8/30/13
|
|
|
9,152(1)
|
$
2.60
|
12/1/13
|
|
|
78,000(2)
|
$
2.60
|
5/17/09
|
|
|
22,750(3)
|
$
2.60
|
3/17/10
|
|
|
11,700(4)
|
$
2.60
|
11/30/12
|
John
Atherly
|
|
32,500(5)
|
$
2.60
|
6/16/11
|
|
|
25,000(6)
|
$
2.60
|
6/16/11
|
|
|
16,250(7)
|
$
2.60
|
3/17/12
|
|
|
11,700(8)
|
$
2.60
|
11/30/12
|
Susan
Jones
|
|
16,770(1)
|
$
2.60
|
1/11/10
|
|
|
9,685(1)
|
$
2.60
|
1/11/10
|
|
|
6,500(1)
|
$
2.60
|
1/2/07
|
|
|
2,405(1)
|
$
2.60
|
1/14/07
|
|
|
19,500(1)
|
$
2.60
|
5/1/07
|
|
32,458
|
—
|
$
3.40
|
7/14/07
|
|
|
11,932(1)
|
$
2.60
|
4/24/13
|
|
|
7,159(1)
|
$
2.60
|
8/30/13
|
|
|
7,159(1)
|
$
2.60
|
12/1/13
|
|
|
48,750(9)
|
$
2.60
|
5/17/09
|
|
|
16,250(10)
|
$
2.60
|
3/17/10
|
|
|
11,700(11)
|
$
2.60
|
11/30/12
|
(a) |
The
options in this column were repriced. On July 21, 2006, certain employees
agreed to cancel a portion of their existing stock options in return
for
repricing the remaining stock options at $2.60 per share. The repriced
unvested options continue to vest on the original schedule however
will
not vest prior to January 19, 2007. The previously vested repriced
options
will not vest prior to January 19, 2007, also.
|
(b) |
Mr.
Jones resigned from his positions of CEO and President in January
of 2007
and agreed to forfeit all options held as part of his severance agreement.
|
(1) |
Options
will be fully vested and exercisable after January 19, 2007.
|
(2) |
69,189
shares subject to the option vest after January 19, 2007 and an additional
2,167 shares shall vest monthly until the option is fully
vested.
|
(3) |
11,375
shares subject to the option vest after January 19, 2007 and an additional
11,375 shares shall vest on March 17,
2007.
|
(4) |
5,850
shares subject to the option vest after January 19, 2007 and an additional
5,850 shares shall vest on November 30,
2007.
|
(5) |
17,875
shares subject to the option vest after January 19, 2007 and an additional
488 shares shall vest at each subsequent quarter until the option
is fully
vested.
|
(6) |
25,000
shares subject to the option vest when the Company successfully completes
four consecutive EBITA positive
quarters.
|
(7) |
8,125
shares subject to the option vest after January 19, 2007 and an additional
8,125 shares shall vest on March 17,
2007.
|
(8) |
5,850
shares subject to the option vest after January 19, 2007 and an additional
5,850 shares shall vest on November 30,
2007.
|
(9) |
43,243
shares subject to the option vest after January 19, 2007 and an additional
1,354 shares shall vest monthly until the option is fully
vested.
|
(10) |
8,125
shares subject to the option vest after January 19, 2007 and an additional
8,125 shares shall vest on March 17,
2007.
|
(11) |
5,850
shares subject to the option vest after January 19, 2007 and an additional
5,850 shares shall vest on November 30,
2007.
|
Name
|
Voluntary
Resignation w/o Good Reason
|
Voluntary
Resignation for Good Reason
|
Involuntary
Termination without Cause
|
Involuntary
Termination with Cause
|
Involuntary
Termination with a Change in Control
|
|||||||||||
Susan
Jones
|
$
|
——
|
$
|
——
|
||||||||||||
Cash
severance
|
$
|
——
|
$
|
510,172
(1
|
)
|
$
|
510,172
(1
|
)
|
$
|
——
|
$
|
510,172
(1
|
)
|
|||
Post-termination
health and welfare
|
$
|
——
|
$
|
——
|
$
|
11,663
(2
|
)
|
$
|
——
|
$
|
——
|
|||||
Vesting
of stock options
|
$
|
——
|
$
|
——
(3
|
)
|
$
|
——
|
$
|
——
|
$
|
——
(3
|
)
|
Name
and Description
|
Amount
|
Gary
Jones:
|
|
Cash
severance
|
$102,060
(1)
|
Stock
grant
|
$430,000
(2)
|
Advances
for legal and accounting fees
|
$
30,000 (3)
|
Post-termination
health and welfare
|
$
11,663 (4)
|
Other
|
$497,500
(5)
|
Name
(a)
|
|
Fees
Earned or
Paid
in Cash
($)
(b)
|
|
Option
Awards
($)
(c)
|
|
Total
($)
|
|
|||
Charles
Claude
|
|
$
|
——
|
|
$
|
2,509
|
|
$
|
2,509
|
|
Paul
Cronson
|
|
$
|
——
|
|
$
|
38
|
|
$
|
38
|
|
Irwin
Engelman
|
|
$
|
——
|
|
$
|
25,592
|
|
$
|
25,592
|
|
Jacob
Goldman
|
|
$
|
——
|
|
$
|
842
|
|
$
|
842
|
|
Thomas
Paulsen
|
|
$
|
20,835
|
|
$
|
——
|
|
$
|
20,835
|
|
Stephen
Seay
|
|
$
|
——
|
|
$
|
5,759
|
|
$
|
5,759
|
|
Number
of Securities Underlying Unexercised Options (#)
|
|||
Name
|
Exercisable
|
Unexercisable
(a)
|
Option
Exercise Price ($)
|
Charles
Claude
|
18,200(1)
|
$2.60
|
|
10,000
|
$2.10
|
||
1,000
|
$3.50
|
||
Paul
Cronson
|
10,400(1)
|
$2.60
|
|
Irwin
Engelman
|
5,038(2)
|
$2.60
|
|
Jacob
Goldman
|
12,026(1)
|
$2.60
|
|
Thomas
Paulsen
|
11,213(1)
|
$2.60
|
|
Stephen
Seay
|
3,900(3)
|
$2.60
|
Name
of Beneficial Owner
|
Common
Stock Beneficially Owned
|
Percentage
of Common Stock
|
Stillwater
LLC (1)
|
4,052,041
|
20.0%
|
Alexandra
Global Master Fund Ltd (2)
|
2,012,799
|
9.9%
|
Ginola
Limited (3)
|
1,910,287
|
9.4%
|
Gary
W. Jones (4)
|
1,106,683
|
5.5%
|
Susan
K Jones (4)
|
1,106,683
|
5.5%
|
Rainbow
Gate Corporation (5)
|
804,822
|
4.0%
|
Paul
Cronson (6)
|
181,934
|
*
|
K.
C. Park (7)
|
104,741
|
*
|
John
Atherly (8)
|
68,164
|
*
|