eMagin Corporation

Good morning and welcome to Imagine Corporation's second quarter 2023 earnings conference call. Please note this event is being recorded. I will now turn the conference over to Mark Koch, Imagine CFO. Please go ahead.

Thank you and good morning everyone. Welcome to Imagine's second quarter 2023 earnings conference call. Before we begin, I would like to remind you that in the following prepared remarks, we will be making statements about expected future results that may be forward-looking for the purpose of federal securities law, including Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements are based on the company's current expectations, estimates, and projections about the expected date of closing of the proposed transaction and the potential benefits thereof, its business and industry, management's beliefs, and certain assumptions made by the company and Samsung Display Company Limited, all of which are subject to change. These forward-looking statements should be considered only in conjunction with the detailed information contained in our SEC filings, including the risk factors described in our 2022 Annual Report on Form 10-K and the definitive proxy statement related to our proposed merger agreement with Samsung Display. During this call, we will also refer to adjusted EBITDA, a non-GAAP financial measure to provide additional information to investors. A reconciliation of adjusted EBITDA to net income, which is the most directly comparable GAAP financial measure, is provided in the press release that we issued this morning. Non-GAAP financial measures such as adjusted EBITDA are not meant to be considered in isolation or as a substitute for our GAAP financial measures and financial statements. With that, I will turn the call over to our CEO, Andrew Scully.

Thanks, Mark, and good morning, everyone. As I'm sure you've seen by now, Imagine has entered into a definitive merger agreement with Samsung Display Company, which is a subsidiary of Samsung Electronics and a leading manufacturer and distributor of display products. Under the terms of the agreement, all shares of Imagine stock would be acquired by Samsung for $2.08 per share in an all-cash transaction. We will hold a virtual special meeting of shareholders on August 31, at which time IMAGINE's shareholders will be asked to vote on the adoption of the merger agreement. This merger represents a significant moment for IMAGINE, and we believe it is in the best interest of our shareholders. Our decision to enter into the agreement was reached only after careful consideration by our board of directors, including a formal and thorough review of strategic alternatives to maximize shareholder value. That process included the solicitation of competing offers among eight strategic counterparties, but did not yield any actionable alternatives. It is worth noting that a significant expenditure of several hundred million dollars would be required by such a strategic counterparty to build a DPD OLED micro display line capable of serving the AR VR consumer market. In addition, such a line would take a number of years to design and build. As such, even if a strategic partner were available today and willing to make the required investment, it would likely be several years before Imagine could begin to realize meaningful and sustainable revenues from licensing its DPD technology. The Board's unanimous decision was also based on a number of critical factors, including a recognition that Imagine would need to raise significant capital in the near term and that such a capital raise would be dilutive for existing shareholders. In what were extensive negotiations with Samsung, our board sought a transaction price that would provide certainty and immediate value to Imagine shareholders. As detailed in our definitive proxy statement, the proposed price represents a premium relative to Imagine's preannounced share price as well as to a range of historical market prices. In the unanimous opinion of the board and on a risk adjusted and time adjusted basis, this merger is more favorable to our shareholders than any other alternative reasonably available to us. That includes the continued operation of Imagine as a standalone company and the pursuit of other potential strategic or financial transactions. In fact, we had explored the possibility of a commercial partnership with Samsung Display prior to discussing a potential sales transaction. The Board had to consider Imagine's assets and cash position, business prospects and competitive position, projected financial performance, and a number of operational factors, including the significant capital expenditures that will be needed to manufacture Imagine's products at a large scale. In our final analysis, it became clear to both the Board and the management team that our proposed merger with Samsung Display represents the best available outcome for Imagine and its shareholders. I remain tremendously proud of Imagine's accomplishments to date and appreciative of the support of our loyal shareholders. I am also grateful to everyone at the company for their hard work in meeting the challenges we have endured by operating independently for so long. I would like to thank all of you for your support. I will now turn the call over to Mark, who will review our Q2 financials.