As filed with the Securities and Exchange Commission on December 8, 2003
Reg. No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
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
incorporation or organization) identification No.)
2070 Route 52, Hopewell Junction, New York 12533
(Address of principal executive offices) (Zip Code)
2003 STOCK OPTION PLAN and COMPENSATION AGREEMENT
(full time of plan)
Gary Jones, President
2070 Route 52
Hopewell Junction, New York 12533
(Name and address of agent for service)
(845) 892-1900
(Telephone number, including area code, of agent for service)
CALCULATION OF REGISTRATION FEE
--------------------------------------------------------------------------------
Proposed maximum Proposed maximum
Amount to be offering price Aggregate offering Amount of
Title of securities Registered per share* Price Registration fee to be registered
----------------------- --------------------- -------------------- --------------------- -----------
Common Stock 9,250,000 $1.52 $14,060,000 $1,137.46
($.001 par value)
----------------------- --------------------- -------------------- --------------------- -----------
* Computed pursuant to Rule 457(c) of the Securities Act of 1933, as amended,
solely for the purpose of calculating the registration fee and not as a
representation as to any actual proposed price. The offering price per share,
maximum aggregate offering price and registration fee is based upon the average
of the high and the low price on the American Stock Exchange on December 5,
2003.
EXPLANATORY NOTE
This registration statement on Form S-8 relates to the issuance of up to
9,200,000 shares of common stock, underlying options, to various employees,
non-employee directors and consultants, of which 5,855,244 options were issued
to officers and directors, and approved by shareholders, in 2003. Of these
options, 4,523,879 were granted in 2002 and issued into the 2003 Employee Stock
Option Plan.
WITH THE EXECPTION OF 115,000, ALL OF THESE OPTIONS WERE PREVIOUSLY REPORTED IN
PRIOR QUARTERS.
In addition, this registration statement on Form S-8 relates to the
issuance of up to 50,000 shares of common stock to a consultant.
The prospectus filed as part of this registration statement has been
prepared in accordance with the requirements of Form S-3 and may be used for
reofferings and resales of registered shares of common stock, which will be
issued upon the exercise of the above-referenced 5,855,244 options held by
officers and directors.
2
Prospectus
eMAGIN CORPORATION
5,855,244 SHARES OF COMMON STOCK
issued pursuant to the
2003 Stock Option Plan
This prospectus relates to the sale of up to 5,855,244 shares of common
stock of eMagin Corporation offered by our officers and directors and acquired
upon the exercise of options issued to such persons pursuant to our 2003 Stock
Option Plan. The shares may be offered by the selling stockholders from time to
time in regular brokerage transactions, in transactions directly with market
makers or in certain privately negotiated transactions. For additional
information on the methods of sale, you should refer to the section entitled
"Plan of Distribution." We will not receive any of the proceeds from the sale of
the shares by the selling stockholders. Each of the selling stockholders may be
deemed to be an "underwriter," as such term is defined in the Securities Act of
1933.
Our common stock trades on The American Stock Exchange under the symbol
"EMA." On December 1, 2003, the closing sale price of the common stock was $1.44
per share. The securities offered hereby are speculative and involve a high
degree of risk and substantial dilution. Only investors who can bear the risk of
loss of their entire investment should invest. See "Risk Factors" beginning on
page 6.
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 December 8, 2003.
3
TABLE OF CONTENTS
Page
Prospectus Summary 5
Risk Factors 6
Selling Stockholders 10
Plan of Distribution 12
Interests of Named Experts and Counsel 13
Incorporation of Certain Documents by Reference 13
Disclosure of Commission Position on Indemnification For Securities Act Liabilities 13
Available Information 14
4
Prospectus Summary
Overview
We design and manufacture miniature display modules, which we refer to as
OLED-on-silicon-microdisplays, primarily for incorporation into the products of
other manufacturers. Microdisplays are typically smaller than a postage stamp,
but when viewed through a magnifier they can contain all of the information
appearing on a high-resolution personal computer screen. Our microdisplays use
organic light emitting diodes, or OLEDs, which emit light themselves when a
current is passed through the device. Our technology permits OLEDs to be coated
onto silicon chips to produce high resolution OLED-on-silicon microdisplays.
We believe that our OLED-on-silicon microdisplays offer a number of
advantages in near to the eye applications over other current microdisplay
technologies, including lower power requirements, less weight, fast video speed
without flicker, and wider viewing angles. In addition, many computer and video
electronic system functions can be built directly into the OLED-on-silicon
microdisplay, resulting in compact systems with lower expected overall system
costs relative to alternate microdisplay technologies.
Since our inception in 1996, we derived substantially all of our revenues
from fees paid to us under research and development contracts, primarily with
the U.S. federal government. We have devoted significant resources to the
development and commercial launch of our products. We commenced limited initial
sales of our SVGA+ microdisplay in May 2001 and commenced shipping samples of
our SVGA-3D microdisplay in February 2002. As of September 30, 2003, we had
recognized an aggregate of approximately $3.4 million from sales of our
products, and have a backlog of more than $27 million in products ordered for
delivery through 2005. 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, and
wearable computers to be manufactured by original equipment manufacturer (OEM)
customers. We have also shipped a limited number of prototypes of our eGlass II
Head-wearable Display systems. In addition to marketing OLED-on-silicon
microdisplays as components, we also offer microdisplays as an integrated
package, which we call Microviewer that includes a compact lens for viewing the
microdisplay and electronic interfaces to convert the signal from our customer's
product into a viewable image on the microdisplay. Through our wholly owned
subsidiary, Virtual Vision, Inc., we are also developing head-wearable displays
that incorporate our Microviewer.
We license our core OLED technology from Eastman Kodak and we have
developed our own technology to create high performance OLED-on-silicon
microdisplays and related optical systems. We believe our technology licensing
agreement with Eastman Kodak, coupled with our own intellectual property
portfolio, gives us a leadership position in OLED and OLED-on-silicon
microdisplay technology. We are the only company to demonstrate publicly and
market full-color OLED-on-silicon microdisplays.
Our principal offices are located at 2070 Route 52, Hopewell Junction, New
York 12533, and our telephone number is (845) 892-1900. We are a Delaware
corporation.
This Offering
Shares of common stock outstanding prior to this offering........................42,343,583 as of December 1, 2003
Shares offered in this prospectus..................................................................... 5,855,244
Total shares outstanding after this offering.......................................................... 48,198,827*
Use of proceeds................. We will not receive any proceeds from the sale of the shares of common stock
offered in this prospectus.
Does not include the following:
o 3,135,540 shares underlying option plans;
o 10,107,207 shares underlying convertible securities
o 12,626,911 shares underlying warrants
5
Risk Factors
Investment in our common stock involves a high degree of risk. You should
consider the following discussion of risks as well as other information in this
prospectus. The risks and uncertainties described below are not the only ones.
Additional risks and uncertainties not presently known to us or that we
currently deem immaterial also may impair our business operations. If any of the
following risks actually occur, our business could be harmed. In such case, the
trading price of our common stock could decline.
Except for historical information, the information contained in our SEC
prospectuses are "forward-looking" statements about our expected future business
and performance. Our actual operating results and financial performance may
prove to be very different from what we might have predicted as of the date of
this prospectus.
Risks Related To Our Financial Results
If we cannot operate as a going concern, our stock price will decline and you
may lose your entire investment. Our auditors included an explanatory paragraph
in their report on our financial statements for the year ended December 31, 2002
which states that, due to recurring losses from operations since inception of
the Company, there is substantial doubt about our ability to continue as a going
concern. Our financial statements for the three months ended September 30, 2003
do not include any adjustments that might result from our inability to continue
as a going concern. These adjustments could include additional liabilities and
the impairment of certain assets. If we had adjusted our financial statements
for these uncertainties, our operating results and financial condition would
have been materially and adversely affected.
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 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.
The financing commitments provided in April 2003 substantially improves our
probability of success, but there is no guarantee that any additional expenses
or delays may not adversely effect our cash requirements beyond that provided by
the recent financing. Any significant delay in revenue or increased expense
could result in the default of the secured note agreement, which could result in
a significant or total loss of any unsecured investments in eMagin.
We may not be able to satisfy The American Stock Exchange's (the "Exchange")
continued listing requirements. To maintain the listing of our common stock on
the Exchange, we are required to meet certain continued listing requirements,
including, but not limited to, the requirement that our common stock not sell
for a substantial period of time at a low price per share, the requirement that
we maintain a minimum of $2 million in shareholder equity. In its review of
whether a share price is too low or whether a reverse split is appropriate, the
Exchange will consider all pertinent factors, including market conditions in
general, the number of shares outstanding, plans which may have been formulated
by management, applicable regulations of the state of incorporation or of any
governmental agency having jurisdiction over eMagin, and the relationship to
other Exchange policies regarding continued listing. If the Exchange were to
determine that our share price is too low and that we should reverse split our
shares but we were unable to comply for any reason, our common stock may be
delisted from the Exchange. Delisting of our common stock could materially
adversely affect the market price, the market liquidity of our common stock and
our ability to raise necessary capital. Moreover, it would likely be more
difficult to trade in or to obtain accurate quotations as to the market price of
our common stock. If the Exchange were to determine that we
6
were filing to satisfy the minimum shareholder equity standards, then we may be
required to establish a plan to increase the shareholder equity to over $2
million. The financing that we completed in April 2003 was debt based, and did
not directly increase shareholder equity. However, shareholder equity did
improve through the related conversion of other debt to stock and through
negotiated write-downs of debt. Nevertheless, there will still be a substantial
gap remaining that may increase in subsequent quarters before it begins to
improve. If this additional equity cannot be accomplished through operations,
then it may be done through the sale of equity, which could result in additional
dilution to existing shareholders. The failure to satisfy any Exchange concerns
regarding the minimum equity standards could result in a delisting of our common
stock from the Exchange.
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 its 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.
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. Other as yet
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 expect to incur losses for
the foreseeable future. Accumulated losses excluding non-cash transactions as of
September 30, 2003, were $32.5 million and acquisition related non-cash
transactions were $101.9 million, which resulted in an accumulated net loss of
$134.4 million, the majority of which was related to the March 2000 merger and
its subsequent write-down of its 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 operating 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. federal
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, 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, and the termination of this license, 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. 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.
7
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 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 yearly 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 who we must displace.
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: 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. 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 go construct leading to frequent mismatches between supply and demand. The
OLED microdisplay sector may experience 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.
8
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 to OEMs who will incorporate them into 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 our silicon integrated circuits on which we
incorporate the OLED. 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
could result in 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. We expect to begin commercial production
during 2003 and 2004 to meet anticipated demand for our products. 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 extensive. No assurance
can be given that we will not lose potential sales or be unable to meet
production orders 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.
9
Risks Related To Our Business
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. The
failure to attract and retain additional management or personnel could have a
material adverse effect on our operating results and financial performance.
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 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 materially adverse
affect on our business and our operating results. In addition, difficulties in
hiring and retaining technical personnel could delay the implementation of our
business plan.
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. Our current
purchase agreements can be cancelled or revised without penalty or a minimal
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, out
business may suffer and the value of your investment in the Company may decline.
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 in to will realize their objectives. Failure to do so would have a
material adverse effect on our business.
We may need to obtain additional financing, which may not be available on
suitable terms, and as a result our ability to grow or continue existing
operations may be limited. Our future liquidity and capital requirements are
difficult to predict because they depend on numerous factors, including our
success in completing the development of our products, manufacturing and
marketing our products and competing technological and market developments. We
may not be able to generate sufficient cash from our operations to meet
additional working capital requirements, support additional capital expenditures
or take advantage of acquisition opportunities. In addition, substantial
additional capital may be required in the future to fund product development and
product launches. No assurance can be given that such additional financing will
be available or that, if available, such financing will be obtainable on terms
favorable to our shareholders or us. To the extent we raise additional capital
by issuing equity or securities convertible into equity, our current
shareholders will suffer dilution in ownership. If needed capital is
unavailable, our ability to continue to operate and grow our business could be
adversely affected. Even if capital is available at acceptable cost, we might
not be able to manage growth effectively.
Our business depends to some extent on international transactions. We purchase
needed materials from
10
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 give expose us to
various risks including management of a multi-national organization, the
complexities of complying with foreign law and custom, political instability and
the complexities of taxation in multiple jurisdictions.
Our business may expose us to product liability claims. Our business exposes us
to potential product liability claims. Although no such claim has 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 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 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 December 2, 2003, we have outstanding options to
purchase 12,188,320 shares. There are also outstanding warrants to purchase
12,986,221 shares of common stock. In addition, there are 10,107,207 shares
underlying secured notes, which may be issued upon conversion of such notes.
Exercise of options and warrants or conversion of the secured notes is not
certain, even if the share price increases substantially. If the options and
warrants were to be exercised or the secured notes were to be converted, it
would result in additional outstanding common shares.
We have a staggered Board of Directors and other anti-takeover provisions, which
could inhibit potential investors or delay or prevent a change of control that
may favor you. Our Board of Directors is divided into three classes and our
Board members are elected for terms that are staggered. This could discourage
the efforts by others to obtain control of the company. Some of the provisions
of our certificate of incorporation, our bylaws and Delaware law could, together
or separately, discourage potential acquisition proposals or delay or prevent a
change in control. In particular, our board of directors is authorized to issue
up to 10,000,000 shares of preferred stock (less any outstanding shares of
preferred stock) with rights and privileges that might be senior to our common
stock, without the consent of the holders of the common stock.
11
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 and options.
Of the 5,855,244 options, 4,523,879 were granted in 2002 and issued into the
2003 Employee Stock Option Plan in July of 2003. WITH THE EXECPTION OF 115,000,
ALL OF THESE OPTIONS WERE PREVIOUSLY REPORTED IN PRIOR QUARTERS.
The following table also sets forth the name of each person who is offering
the resale of shares of common stock by this prospectus, the number of shares of
common stock beneficially owned by each person, the number of shares of common
stock that may be sold in this offering and the number of shares of common stock
each person will own after the offering, assuming they sell all of the shares
offered.
Shares Beneficially Owned Shares Beneficially Owned
--------------------------------- ------------------------------
Prior to the Offering After the Offering
--------------------------------- ------------------------------
Name Number Percent Total Number Percent
Shares Offered
Gary W. Jones (1) 8,509,971 17.1% 4,551,464 3,958,507 8.7%
Susan K. Jones (1) 8,509,971 17.1% 4,551,464 3,958,507 8.7%
K. C. Park (2) 1,241,369 2.8% 924,197 317,172 *
Jack Rivkin (3) 1,098,129 2.5% 124,167 973,962 2.3%
Claude Charles (4) 266,112 * 118,334 147,778 *
Paul Cronson (5) 172,915 * 43,750 129,165 *
Jack Goldman (6) 31,666 * 31,666 - 0 - *
Adm Thomas Paulsen (7) 30,833 * 30,833 - 0 - *
Jill Wittels (8) 30,833 * 30,833 - 0 - *
* Less than one percent.
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 stockholder has sole or shared voting power or investment power and
also any shares, which the selling stockholder has the right to acquire within
60 days. The actual number of shares of common stock issuable upon the
conversion of the debentures and exercise of the debenture warrants is subject
to adjustment depending on, among other factors, the future market price of the
common stock, and could be materially less or more than the number estimated in
the table.
(1) This figure represents the following securities owned by Gary Jones
and Susan Jones who are married to each other, including (i) 1,051,060
shares of common stock, (ii) 4,253,270 shares of common stock issuable
upon exercise of stock options held by Gary Jones, all of which are
currently exercisable at $0.18-$1.25 and (iii) 3,205,641 shares of
common stock issuable upon exercise of stock options held by Susan
Jones, all of which are currently exercisable at $0.18-$1.72. Does not
include 3,104 shares of common stock issuable upon exercise of stock
options held by Susan Jones that are not presently exercisable and are
not exercisable within 60 days of December 2, 2003.
(2) Represents shares of common stock underlying options exercisable at
$0.18-$1.72. Does not include 1,178 shares of common stock issuable
upon exercise of stock options that are not presently exercisable and
are not exercisable within 60 days of December 2, 2003.
(3) Represents (i) 91,107 shares of common stock underlying warrants
exercisable at $0.55 per share; (ii) 212,826 shares of common stock
underlying warrants exercisable at $0.8110 per
12
share; (iii) 395,278 shares of common stock underlying options
exercisable at $0 21-$2.25 per share and (iv) 398,918 shares of common
stock underlying convertible debt. Does not include 23,055 shares of
common stock issuable upon exercise of stock options that are not
presently exercisable and are not exercisable within 60 days of
December 2, 2003.
(4) Represents shares of common stock underlying options, exercisable at
$0.21-$2.25. Does not include 18,888 shares of common stock issuable
upon exercise of stock options that are not presently exercisable and
are not exercisable within 60 days of December 2, 2003.
(5) Represents (i) 129,165 shares of common stock underlying warrants
exercisable at $0.97 per share and (ii) 43,750 shares of common stock
underlying options exercisable at $0.56 per share. Does not include
31,250 shares of common stock issuable upon exercise of stock options
that are not presently exercisable and are not exercisable within 60
days of December 2, 2003.
(6) Represents shares of common stock underlying options, exercisable at
$0.56-$1.50. Does not include 43,334 shares of common stock issuable
upon exercise of stock options that are not presently exercisable and
are not exercisable within 60 days of December 2, 2003.
(7) Represents shares of common stock underlying options, exercisable at
$0.67-$1.50. Does not include 34,167 shares of common stock issuable
upon exercise of stock options that are not presently exercisable and
are not exercisable within 60 days of December 2, 2003.
(8) Represents shares of common stock underlying options, exercisable at
$0.59-$1.50. Does not include 34,167 shares of common stock issuable
upon exercise of stock options that are not presently exercisable and
are not exercisable within 60 days of December 2, 2003.
13
Plan of Distribution
Sales of the shares may be effected by or for the account of the selling
stockholders from time to time in transactions (which may include block
transactions) on The American Stock Exchange, in negotiated transactions,
through a combination of such methods of sale, or otherwise, at fixed prices
that may be changed, at market prices prevailing at the time of sale or at
negotiated prices. The selling stockholders may effect such transactions by
selling the shares directly to purchasers, through broker-dealers acting as
agents of the selling stockholders, or to broker-dealers acting as agents for
the selling stockholders, or to broker-dealers who may purchase shares as
principals and thereafter sell the shares from time to time in transactions
(which may include block transactions) on The American Stock Exchange, in
negotiated transactions, through a combination of such methods of sale, or
otherwise. In effecting sales, broker-dealers engaged by a selling stockholder
may arrange for other broker-dealers to participate. Such broker-dealers, if
any, may receive compensation in the form of discounts, concessions or
commissions from the selling stockholders and/or the purchasers of the shares
for whom such broker-dealers may act as agents or to whom they may sell as
principals, or both (which compensation as to a particular broker-dealer might
be in excess of customary commissions).
The selling stockholders and any broker-dealers or agents that participate
with the selling stockholders in the distribution of the shares may be deemed to
be "underwriters" within the meaning of the Securities Act of 1933. Any
commissions paid or any discounts or concessions allowed to any such persons,
and any profits received on the resale of the shares purchased by them may be
deemed to be underwriting commissions or discounts under the Securities Act of
1933.
We have agreed to bear all expenses of registration of the shares other
than legal fees and expenses, if any, of counsel or other advisors of the
selling stockholders. The selling stockholders will bear any commissions,
discounts, concessions or other fees, if any, payable to broker-dealers in
connection with any sale of their 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 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 thereof.
14
Interests of Named Experts and Counsel
The validity of the shares of common stock offered hereby will be passed
upon for the Registrant by Sichenzia Ross Friedman Ference LLP, 1065 Avenue of
the Americas, 21st Floor, New York, NY 10018.
Information Incorporated by Reference
The Securities and Exchange Commission allows us to incorporate by
reference certain of our publicly-filed documents into this prospectus, which
means that such information is considered part of this prospectus. Information
that we file with the SEC subsequent to the date of this prospectus will
automatically update and supersede this information. We incorporate by reference
the documents listed below and any future filings made with the SEC under all
documents subsequently filed by us pursuant to Section 13(a), 13(c), 14 or 15(d)
of the Securities Exchange Act of 1934 until the selling stockholders have sold
all of the shares offered hereby or such shares have been deregistered.
The following documents filed with the SEC are incorporated herein by reference:
o Reference is made to the Registrant's annual report on Form 10-K for
the year ended December 31, 2002, as filed with the SEC on April 15,
2003, which is hereby incorporated by reference.
o Reference is made to the Registrant's quarterly reports on Form 10-QSB
for the fiscal 2003 to date, as filed with the SEC under file number
001-15751, which is hereby incorporated by reference.
o Reference is made to the Registrant's current reports on Form 8-K
filed with the Commission under file number 001-15751 for the fiscal
year 2002 to date.
o The description of the Registrant's common stock is incorporated by
reference to the Registrant's Registration Statement on Form 10-SB, as
filed with the Commission under file number 000-24757 on January 23,
1996.
We will provide without charge to each person to whom a copy of this
prospectus has been delivered, on written or oral request a copy of any or all
of the documents incorporated by reference in this prospectus, other than
exhibits to such documents. Written or oral requests for such copies should be
directed to Mr. Gary W. Jones, EMagin Corporation, 2070 Route 52, Hopewell
Junction, New York 12533.
Disclosure Of Commission Position On Indemnification For
Securities Act Liabilities
EMagin's Articles of Incorporation, as amended, provide to the fullest
extent permitted by Delaware law, a director or officer of EMagin shall not be
personally liable to EMagin or its shareholders for damages for breach of such
director's or officer's fiduciary duty. The effect of this provision of EMagin's
Articles of Incorporation, as amended, is to eliminate the right of EMagin and
its shareholders (through shareholders' derivative suits on behalf of EMagin) 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.
EMagin believes that the indemnification provisions in its Articles of
Incorporation, as amended, are necessary to attract and retain qualified persons
as directors and officers.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to its directors, officers and controlling persons pursuant to
the foregoing provisions or otherwise, EMagin has been advised that in the
opinion of the SEC such indemnification is against public policy as expressed in
the Securities Act and is, therefore, unenforceable.
15
Additional Information Available to You
This prospectus is part of a Registration Statement on Form S-8 that we
filed with the SEC. Certain information in the Registration Statement has been
omitted from this prospectus in accordance with the rules of the SEC. We file
annual, quarterly and special reports, proxy statements and other information
with the SEC. You can inspect and copy the Registration Statement as well as
reports, proxy statements and other information we have filed with the SEC at
the public reference room maintained by the SEC at 450 Fifth Street, NW,
Washington, D.C. 20549, You can obtain copies from the public reference room of
the SEC at 450 Fifth Street, NW, Washington, D.C. 20549, upon payment of certain
fees. You can call the SEC at 1-800-732-0330 for further information about the
public reference room. We are also required to file electronic versions of these
documents with the SEC, which may be accessed through the SEC's World Wide Web
site at http://www.sec.gov. Our common stock is listed on The American Stock
Exchange.
16
No dealer, salesperson or other person is authorized to give any
information or to make any representations other than those contained in this
prospectus, and, if given or made, such information or representations must not
be relied upon as having been authorized by us. This prospectus does not
constitute an offer to buy any security other than the securities offered by
this prospectus, or an offer to sell or a solicitation of an offer to buy any
securities by any person in any jurisdiction where such offer or solicitation is
not authorized or is unlawful. Neither delivery of this prospectus nor any sale
hereunder shall, under any circumstances, create any implication that there has
been no change in the affairs of our company since the date hereof.
------------------------
5,855,244 SHARES OF COMMON STOCK
---------------
PROSPECTUS
---------------
December 8, 2003
17
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
Information required by Part I of Form S-8 to be contained in a prospectus
meeting the requirements of Section 10(a) of the Securities Act of 1933, as
amended (the "Securities Act"), is not required to be filed with the Securities
and Exchange Commission and is omitted from this registration statement in
accordance with the explanatory note to Part I of Form S-8 and Rule 428 of the
Securities Act.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The Registrant hereby incorporates by reference into this Registration
Statement the documents listed below. In addition, all documents subsequently
filed pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange
Act of 1934 (the "Exchange Act"), prior to the filing of a post-effective
amendment which indicates that all securities offered have been sold or which
deregisters all securities then remaining unsold, shall be deemed to be
incorporated by reference into this Registration Statement and to be a part
hereof from the date of filing of such documents:
o Reference is made to the Registrant's annual report on Form 10-K for
the year ended December 31, 2002, as filed with the SEC on April 15,
2003, which is hereby incorporated by reference.
o Reference is made to the Registrant's quarterly reports on Form 10-QSB
for the fiscal 2003 to date, as filed with the SEC under file number
001-15751, which is hereby incorporated by reference.
o Reference is made to the Registrant's current reports on Form 8-K
filed with the Commission under file number 001-15751 for the fiscal
year 2002 to date.
o The description of the Registrant's common stock is incorporated by
reference to the Registrant's Registration Statement on Form 10-SB, as
filed with the Commission under file number 000-24757 on January 23,
1996.
Item 4. Description of Securities.
Not Applicable.
Item 5. Interests of Named Experts and Counsel.
The validity of the shares of common stock offered hereby will be
passed upon for the Registrant by Sichenzia Ross Friedman Ference LLP, 1065
Avenue of Americas, 21st flr., New York, NY 10018.
Item 6. Indemnification of Directors and Officers.
The Registrant's Certificate of Incorporation limits, to the maximum
extent permitted by Delaware law, the personal liability of directors for
monetary damages for breach of their fiduciary duties as a director. The
Registrant's Bylaws provided that the Registrant shall indemnify its officers
and directors and may indemnify its employees and other agents to the fullest
extent permitted by Delaware law.
18
Section 145 of the Delaware General Corporation Law provides that a
corporation may indemnify a director, officer, employee or agent made a party to
an action by reason of that fact that he or she was a director, officer employee
or agent of the corporation or was serving at the request of the corporation
against expenses actually and reasonably incurred by him or her in connection
with such action if he or she acted in good faith and in a manner he or she
reasonably believed to be in, or not opposed to, the best interests of the
corporation and with respect to any criminal action, had no reasonable cause to
believe his or her conduct was unlawful.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or persons controlling the Registrant
pursuant to the foregoing provisions, the Registrant has been advised that in
the opinion of the Commission, such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable.
Item 7. Exemption from Registration Claimed.
Not Applicable.
Item 8. Exhibits.
EXHIBIT
NUMBER EXHIBIT
4.1 2003 Stock Option Plan
4.2 Compensation Agreement dated November 18, 2003 - Spike Anderson
5.1 Opinion of Sichenzia Ross Friedman Ference LLP
23.1 Consent of Sichenzia Ross Friedman Ference LLP is contained in Exhibit 5.1
23.2 Consent of Grant Thornton
19
Item 9. 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:
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, each such post-effective amendment
shall be deemed to be a new Registration Statement relating
to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which
remain unsold at the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933,
each filing of the registrant's annual report pursuant to Section
13(a) or Section 15(d) of the Securities Exchange Act of 1934
that is incorporated by reference in the Registration Statement
shall be deemed to be a new Registration Statement relating to
the securities offered herein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 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.
20
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Hopewell Junction, State of New York on December 8, 2003.
EMAGIN CORPORATION
By: /s/ Gary Jones
---------------
Gary Jones
President and Chief Executive Office
and Director (Principal Executive
Officer), Acting Principal
Accounting Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the date indicated.
Signature Title Date
--------- ----- ----
/s/ Claude Charles Director December 8, 2003
------------------
Claude Charles
/s/ Paul Cronson Director December 8, 2003
----------------
Paul Cronson
/s/ Jack Rivkin Director December 8, 2003
----------------
Jack Rivkin
/s/ Jack Goldman Director December 8, 2003
----------------
Jack Goldman
/s/ Dr. Jill Wittels Director December 8, 2003
--------------------
Dr. Jill Wittels
/s/ Rear Admiral Thomas Paulsen, USN Director December 8, 2003
------------------------------------
Rear Admiral Thomas Paulsen, USN
21
EXHIBIT
NUMBER EXHIBIT
4.1 2003 Stock Option Plan
4.2 Compensation Agreement dated November 18, 2003 - Spike Anderson
5.1 Opinion of Sichenzia Ross Friedman Ference LLP
23.1 Consent of Sichenzia Ross Friedman Ference LLP is contained in Exhibit 5.1.
23.2 Consent of Grant Thornton
24.1 Power of Attorney (included in the Signature Page).
22