Pennsylvania
|
23-2372688
|
|
(State
or other jurisdiction of
|
(I.R.S.
Employer Identification No.)
|
|
incorporation
or organization)
|
||
375
Phillips Boulevard
|
||
Ewing,
New Jersey
|
08618
|
|
(Address
of principal executive offices)
|
(Zip
Code)
|
Large
accelerated filer ___
|
Accelerated
filer
X
|
Non-accelerated
filer ___ (Do not check if a smaller reporting
company)
|
Smaller
reporting company ___
|
ITEM 1
.
|
FINANCIAL
STATEMENTS
|
Three
Months Ended June 30,
|
||||||||
2009
|
2008
|
|||||||
REVENUE:
|
||||||||
Commercial
revenue
|
$ | 1,239,056 | $ | 1,395,487 | ||||
Developmental
revenue
|
1,717,298 | 750,111 | ||||||
Total
revenue
|
2,956,354 | 2,145,598 | ||||||
OPERATING
EXPENSES:
|
||||||||
Cost
of chemicals sold
|
318,191 | 246,962 | ||||||
Research
and development
|
5,324,695 | 4,377,329 | ||||||
Selling,
general and administrative
|
2,715,071 | 2,679,944 | ||||||
Patent
costs
|
823,729 | 676,024 | ||||||
Royalty
and license expense
|
85,431 | 95,284 | ||||||
Total
operating expenses
|
9,267,117 | 8,075,543 | ||||||
Operating
loss
|
(6,310,763 | ) | (5,929,945 | ) | ||||
INTEREST
INCOME
|
188,593 | 737,368 | ||||||
INTEREST
EXPENSE
|
(298 | ) | (13,213 | ) | ||||
LOSS
ON STOCK WARRANT LIABILITY
|
(292,710 | ) | — | |||||
NET
LOSS
|
$ | (6,415,178 | ) | $ | (5,205,790 | ) | ||
BASIC
AND DILUTED NET LOSS PER COMMON SHARE
|
$ | (0.18 | ) | $ | (0.15 | ) | ||
WEIGHTED
AVERAGE SHARES USED IN COMPUTING BASIC AND DILUTED NET LOSS PER COMMON
SHARE
|
36,383,255 | 35,900,554 | ||||||
Six
Months Ended June 30,
|
||||||||
2009
|
2008
|
|||||||
REVENUE:
|
||||||||
Commercial
revenue
|
$ | 2,608,193 | $ | 2,950,552 | ||||
Developmental
revenue
|
3,182,019 | 1,911,865 | ||||||
Total
revenue
|
5,790,212 | 4,862,417 | ||||||
OPERATING
EXPENSES:
|
||||||||
Cost
of chemicals sold
|
489,178 | 442,438 | ||||||
Research
and development
|
10,543,757 | 8,817,467 | ||||||
Selling,
general and administrative
|
5,338,016 | 5,053,490 | ||||||
Patent
costs
|
1,555,260 | 1,387,410 | ||||||
Royalty
and license expense
|
168,362 | 198,469 | ||||||
Total
operating expenses
|
18,094,573 | 15,899,274 | ||||||
Operating
loss
|
(12,304,361 | ) | (11,036,857 | ) | ||||
INTEREST
INCOME
|
441,993 | 1,656,562 | ||||||
INTEREST
EXPENSE
|
(2,941 | ) | (18,880 | ) | ||||
LOSS
ON STOCK WARRANT LIABILITY
|
(119,468 | ) | — | |||||
NET
LOSS
|
$ | (11,984,777 | ) | $ | (9,399,175 | ) | ||
BASIC
AND DILUTED NET LOSS PER COMMON SHARE
|
$ | (0.33 | ) | $ | (0.26 | ) | ||
WEIGHTED
AVERAGE SHARES USED IN COMPUTING BASIC AND DILUTED NET LOSS PER COMMON
SHARE
|
36,341,840 | 35,835,600 | ||||||
Six
months Ended June 30,
|
||||||||
2009
|
2008
|
|||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Net
loss
|
$ | (11,984,777 | ) | $ | (9,399,175 | ) | ||
Non-cash
charges to statement of operations:
|
||||||||
Depreciation
|
1,036,126 | 926,330 | ||||||
Amortization
of intangibles
|
847,536 | 847,536 | ||||||
Amortization
of premium and discount on investments, net
|
(266,946 | ) | (827,330 | ) | ||||
Stock-based
employee compensation
|
989,611 | 801,339 | ||||||
Stock-based
non-employee compensation
|
6,518 | 4,119 | ||||||
Non-cash
expense under a development agreement
|
582,301 | 558,035 | ||||||
Stock-based
compensation to Board of Directors and Scientific Advisory
Board
|
176,511 | 233,613 | ||||||
Loss
on stock warrant liability
|
119,468 | — | ||||||
(Increase)
decrease in assets:
|
||||||||
Accounts
receivable
|
689,681 | 665,751 | ||||||
Inventory
|
879 | 38,956 | ||||||
Other
current assets
|
(97,556 | ) | (67,326 | ) | ||||
Other
assets
|
(167,136 | ) | 5,000 | |||||
Increase
(decrease) in liabilities:
|
||||||||
Accounts
payable and accrued expenses
|
422,769 | 1,201,365 | ||||||
Deferred
license fees
|
(340,799 | ) | (255,800 | ) | ||||
Deferred
revenue
|
(812,340 | ) | (261,371 | ) | ||||
Net
cash used in operating activities
|
(8,798,154 | ) | (5,528,958 | ) | ||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Purchase
of property and equipment
|
(126,253 | ) | (481,573 | ) | ||||
Purchase
of short-term investments
|
(52,014,248 | ) | (50,542,476 | ) | ||||
Proceeds
from sale of short-term investments
|
43,144,000 | 60,824,000 | ||||||
Net
cash (used in) provided by investing activities
|
(8,996,501 | ) | 9,799,951 | |||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Proceeds
from the exercise of common stock options and warrants
|
198,970 | 2,148,183 | ||||||
Payment
of withholding taxes related to stock-based employee
compensation
|
(844,474 | ) | (749,770 | ) | ||||
Net
cash (used in) provided by financing activities
|
(645,504 | ) | 1,398,413 | |||||
(DECREASE)
INCREASE IN CASH AND CASH EQUIVALENTS
|
(18,440,159 | ) | 5,669,406 | |||||
CASH
AND CASH EQUIVALENTS, BEGINNING OF PERIOD
|
28,321,581 | 33,870,696 | ||||||
CASH
AND CASH EQUIVALENTS, END OF PERIOD
|
$ | 9,881,422 | $ | 39,540,102 | ||||
The
following non-cash activities occurred:
|
||||||||
Unrealized
loss on available-for-sale securities
|
$ | 21,186 | $ | 14,367 | ||||
Common
stock issued to Board of Directors and Scientific Advisory Board that was
earned in a previous period
|
309,802 | 299,968 | ||||||
Common
stock issued to employees that was earned in a previous period, net of
shares withheld for taxes
|
838,831 | 880,352 | ||||||
Common
stock issued for royalties that was earned in a previous
period
|
81,954 | 66,403 | ||||||
Common
stock issued to non-employee that was earned in a previous
period
|
— | 991 |
1.
|
BACKGROUND
|
2.
|
BASIS
OF PRESENTATION
|
3.
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CASH,
CASH EQUIVALENTS AND SHORT-TERM
INVESTMENTS
|
Amortized
|
Unrealized
|
Aggregate
Fair
|
||||||||||||||
Investment
Classification
|
Cost
|
Gains
|
(Losses)
|
Market
Value
|
||||||||||||
June
30, 2009 –
|
||||||||||||||||
Certificates
of deposit
|
$ | 9,346,929 | $ | 10,193 | $ | (6,926 | ) | $ | 9,350,196 | |||||||
U.S.
Government bonds
|
48,796,386 | 102,044 | — | 48,898,430 | ||||||||||||
$ | 58,143,315 | $ | 112,237 | $ | (6,926 | ) | $ | 58,248,626 | ||||||||
December
31, 2008 –
|
||||||||||||||||
Certificates
of deposit
|
$ | 10,318,000 | $ | 35,577 | $ | (3,323 | ) | $ | 10,350,254 | |||||||
U.S.
Government bonds
|
38,688,122 | 96,121 | (1,878 | ) | 38,782,365 | |||||||||||
$ | 49,006,122 | $ | 131,698 | $ | (5,201 | ) | $ | 49,132,619 |
Fair
Value Measurements, Using
|
||||||||||||||||
Total
carrying value as of June 30, 2009
|
Quoted
prices in active markets
(Level
1)
|
Significant
other observable inputs
(Level
2)
|
Significant
unobservable inputs
(Level
3)
|
|||||||||||||
Investments
|
$ | 58,248,626 | $ | 58,248,626 | $ | — | $ | — |
4.
|
RESEARCH
AND LICENSE AGREEMENTS WITH PRINCETON, USC AND
MICHIGAN
|
5.
|
EQUITY
AND CASH COMPENSATION UNDER THE PPG INDUSTRIES
AGREEMENTS
|
6.
|
SHAREHOLDERS’
EQUITY
|
Unrealized
|
||||||||||||||||||||||||||||||||
Preferred
Stock,
|
Additional
|
Gain
on
|
||||||||||||||||||||||||||||||
Series
A
|
Common
Stock
|
Paid-In
|
Available-for-
|
Accumulated
|
Total
|
|||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
Sale
Securities
|
Deficit
|
Equity
|
|||||||||||||||||||||||||
BALANCE,
JANUARY 1, 2009
|
200,000 | $ | 2,000 | 36,131,981 | $ | 361,320 | $ | 256,696,849 | $ | 126,497 | $ | (180,472,203 | ) | $ | 76,714,463 | |||||||||||||||||
Cumulative
effect of the adoption of EITF 07-5, see Note 2
|
- | - | - | - | (6,557,928 | ) | - | 3,868,818 | (2,689,110 | ) | ||||||||||||||||||||||
Exercise
of common stock options (A)
|
- | - | 34,265 | 343 | 198,627 | - | - | 198,970 | ||||||||||||||||||||||||
Stock-based
employee compensation, net of shares withheld for taxes
(B)
|
- | - | 143,378 | 1,434 | 1,624,241 | - | - | 1,625,675 | ||||||||||||||||||||||||
Stock-based
non-employee compensation
|
- | - | 409 | 4 | 6,514 | - | - | 6,518 | ||||||||||||||||||||||||
Issuance
of common stock to Board of Directors and Scientific Advisory Board
(C)
|
- | - | 50,614 | 506 | 485,807 | - | - | 486,313 | ||||||||||||||||||||||||
Issuance
of common stock in connection with development and license agreements
(D)
|
- | - | 81,328 | 813 | 663,442 | - | - | 664,255 | ||||||||||||||||||||||||
Net
loss
|
- | - | - | - | - | - | (11,984,777 | ) | (11,984,777 | ) | ||||||||||||||||||||||
Unrealized
loss on available-for-sale securities
|
- | - | - | - | - | (21,186 | ) | - | (21,186 | ) | ||||||||||||||||||||||
Comprehensive
loss
|
(12,005,963 | ) | ||||||||||||||||||||||||||||||
BALANCE,
JUNE 30, 2009
|
200,000 | $ | 2,000 | 36,441,975 | $ | 364,420 | $ | 253,117,552 | $ | 105,311 | $ | (188,588,162 | ) | $ | 65,001,121 | |||||||||||||||||
(A)
|
During
the six months ended June 30, 2009, the Company issued 34,265 shares of
common stock upon the exercise of common stock options, resulting in cash
proceeds of $198,970.
|
(B)
|
Includes
$1,480,538 that was earned in a previous period and charged to expense
when earned, but issued in 2009, less shares withheld for taxes in
the amount of $641,707.
|
(C)
|
Includes
$309,802 that was earned in a previous period and charged to expense when
earned, but issued in 2009.
|
(D)
|
The
Company was required to pay Motorola royalties of $163,916 for the year
ended December 31, 2008. In March 2009, the Company issued
to Motorola 12,015 shares of the Company’s common stock, valued at
$81,954, and paid Motorola $81,962 in cash to satisfy the royalty
obligation.
|
7.
|
STOCK-BASED
COMPENSATION
|
8.
|
COMMITMENTS
AND CONTINGENCIES
|
9.
|
CONCENTRATION
OF RISK
|
ITEM 2
.
|
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
|
·
|
the
timing of our receipt of license fees and royalties, as well as fees for
future technology development and evaluation;
|
·
|
the
timing and volume of sales of our OLED materials for both commercial usage
and evaluation purposes;
|
·
|
the
timing and magnitude of expenditures we may incur in connection with our
ongoing research and development activities; and
|
·
|
the
timing and financial consequences of our formation of new business
relationships and alliances.
|
·
|
an
increase in operating expenses of $1,191,574; and
|
·
|
a
decrease in interest income of $548,775; and
|
·
|
a
loss on stock warrant liability of $292,710;
|
·
|
partially
offset by an increase in revenues of
$810,756.
|
·
|
the
timing of $438,866 in costs associated with subcontractors and consultants
under government contracts;
|
·
|
increased
employee costs of $316,185; and
|
·
|
increased
costs incurred under our sponsored research agreements of
$165,623;
|
·
|
partially
offset by a decrease of $141,853 in costs incurred under our agreement
with PPG Industries, Inc. (“PPG
Industries”).
|
·
|
an
increase in operating expenses of $2,195,299;
|
·
|
a
decrease in interest income of $1,214,569; and
|
·
|
a
loss on stock warrant liability of $119,468;
|
·
|
partially
offset by an increase in revenues of
$927,795.
|
·
|
the
timing of $401,523 in costs associated with subcontractors and consultants
under government contracts;
|
·
|
an
increase of $541,589 in costs incurred under our agreement with PPG
Industries;
|
·
|
increased
employee costs of $324,240; and
|
·
|
increased
costs incurred under our sponsored research agreements of
$284,385.
|
ITEM 3
.
|
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
|
ITEM 4
.
|
CONTROLS
AND PROCEDURES
|
ITEM 1
.
|
LEGAL
PROCEEDINGS
|
ITEM 1A
.
|
RISK
FACTORS
|
ITEM 2
.
|
UNREGISTERED
SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS
|
Period
|
Total
Number of Shares Purchased
|
Average
Price Paid per Share
|
Total
Number of Shares Purchased as Part of Publicly Announced
Program
|
Approximate
Dollar Value of Shares that May Yet Be Purchased Under the
Program
|
||||||||||||
April
1 – April 30
|
-- | $ | -- | n/a | -- | |||||||||||
May
1 – May 31
|
362 | 8.79 | n/a | -- | ||||||||||||
June
1 – June 30
|
362 | 10.31 | n/a | -- | ||||||||||||
Total
|
724 | $ | 9.55 | n/a | -- |
ITEM 3
.
|
DEFAULTS
UPON SENIOR SECURITIES
|
ITEM 4
.
|
SUBMISSION
OF MATTERS TO A VOTE OF SECURITY
HOLDERS
|
Name
|
Number
of Votes
FOR
|
Number
of Votes
WITHHELD
|
Percentage
FOR of
Total
Votes Cast*
|
|||||||||
Steven
V. Abramson
|
30,432,960 | 2,008,703 | 93.8 | % | ||||||||
Leonard
Becker
|
31,962,482 | 479,181 | 98.5 | % | ||||||||
Elizabeth
H. Gemmill
|
31,972,288 | 469,375 | 98.6 | % | ||||||||
C.
Keith Hartley
|
32,197,588 | 244,075 | 99.2 | % | ||||||||
Lawrence
Lacerte
|
32,194,451 | 247,212 | 99.2 | % | ||||||||
Sidney
D. Rosenblatt
|
30,109,796 | 2,333,867 | 92.8 | % | ||||||||
Sherwin
I. Seligsohn
|
30,098,335 | 2,343,328 | 92.8 | % |
Number
of Votes FOR
|
Number
of Votes
AGAINST
|
Number
of
ABSTENTIONS
|
Number
of Broker Non-Votes
|
Percentage
FOR of
Total
Votes Cast*
|
||||||||||||||
17,126,895 | 756,740 | 92,933 | 14,465,095 | 95.8 | % |
Number
of Votes FOR
|
Number
of Votes
AGAINST
|
Number
of
ABSTENTIONS
|
Percentage
FOR of
Total
Votes Cast*
|
|||||||||||
32,125,897 | 72,223 | 242,841 | 99.8 | % |
ITEM 5
.
|
OTHER
INFORMATION
|
ITEM 6
.
|
EXHIBITS
|
Exhibit
|
|||
Number
|
Description
|
||
10.1*
|
Amendment
No. 2 to the Sponsored Research Agreement between the registrant and the
University of Southern California, dated as of May 1,
2009
|
||
10.2+
|
2009
Employee Stock Purchase Plan, approved as of June 25,
2009
|
||
31.1*
|
Certifications
of Steven V. Abramson, Chief Executive Officer, as required by
Rule 13a-14(a) or Rule 15d-14(a)
|
||
31.2*
|
Certifications
of Sidney D. Rosenblatt, Chief Financial Officer, as required
by Rule 13a-14(a) or Rule 15d-14(a)
|
||
32.1**
|
Certifications
of Steven V. Abramson, Chief Executive Officer, as required by
Rule 13a-14(b) or Rule 15d-14(b), and by 18
U.S.C. Section 1350. (This exhibit shall not be
deemed “filed” for purposes of Section 18 of the Securities Exchange
Act of 1934, as amended, or otherwise subject to the liability of that
section. Further, this exhibit shall not be deemed to be
incorporated by reference into any filing under the Securities Act of
1933, as amended, or the Securities Exchange Act of 1934, as
amended.)
|
||
32.2**
|
Certifications
of Sidney D. Rosenblatt, Chief Financial Officer, as required by
Rule 13a-14(b) or Rule 15d-14(b), and by 18
U.S.C. Section 1350. (This exhibit shall not be
deemed “filed” for purposes of Section 18 of the Securities Exchange
Act of 1934, as amended, or otherwise subject to the liability of that
section. Further, this exhibit shall not be deemed to be
incorporated by reference into any filing under the Securities Act of
1933, as amended, or the Securities Exchange Act of 1934, as
amended.)
|
*
|
Filed
herewith.
|
|
**
|
Furnished
herewith.
|
|
+
|
Filed
as an exhibit to the Definitive Proxy Statement for the 2009 Annual
Meeting of Shareholders, filed with the SEC on April 24,
2009.
|
|
Note:
Any of the exhibits listed in the foregoing index not included with this
report may be obtained, without charge, by writing to Mr. Sidney D.
Rosenblatt, Corporate Secretary, Universal Display Corporation, 375
Phillips Boulevard, Ewing, New
Jersey 08618.
|
Date:
August 10, 2009
|
By:
/s/ Sidney D.
Rosenblatt
|
Sidney D. Rosenblatt
|
|
Executive Vice President and Chief Financial
Officer
|
Universal
Display Corporation
|
The
University of Southern California
|
|||
By:
|
/s/ Steven V. Abramson
|
By:
|
/s/ Jean Chan
|
|
Name:
|
Steven V. Abramson
|
Name:
|
Jean Chan
|
|
Title:
|
President
|
Title:
|
Senior Contracts & Grants Administrator
|
|
Date:
|
May 7, 2009
|
Date:
|
5/4/09
|
|
/s/ Mark E. Thompson
|
/s/ Stephen Forrest
|
|||
Professor Mark E. Thompson
|
Professor Stephen R. Forrest
|
|||
USC Principal Investigator
|
Michigan Principal Investigator
|
|||
Date:
|
May 1, 2009
|
Date:
|
May 6, 2009
|
|
Date:
August 10, 2009
|
By:
/s/ Steven V.
Abramson
|
Steven
V. Abramson
|
|
President
and Chief Executive
Officer
|
Date:
August 10, 2009
|
By:
/s/ Sidney D.
Rosenblatt
|
Sidney
D. Rosenblatt
|
|
Executive
Vice President and Chief Financial
Officer
|
(1)
|
The
Report fully complies with the requirements of section 13(a) or 15(d) of
the Securities Exchange Act of 1934; and
|
(2)
|
The
information contained in the Report fairly presents, in all material
respects, the financial condition and result of operations of the
Company.
|
Date:
August 10, 2009
|
By:
/s/ Steven V.
Abramson
|
Steven
V. Abramson
|
|
President
and Chief Executive
Officer
|
(1)
|
The
Report fully complies with the requirements of section 13(a) or 15(d) of
the Securities Exchange Act of 1934; and
|
(2)
|
The
information contained in the Report fairly presents, in all material
respects, the financial condition and result of operations of the
Company.
|
Date:
August 10, 2009
|
By:
/s/ Sidney D.
Rosenblatt
|
Sidney
D. Rosenblatt
|
|
Executive
Vice President and Chief Financial
Officer
|