/raid1/www/Hosts/bankrupt/TCR_Public/960517.MBX BANKRUPTCY CREDITORS' SERVICE, INC.


Bankruptcy News For - May 17, 1996



  1. SIDT reports first quarter results and reorganization plan




SIDT reports first quarter results and corporate reorganization plan

        
            HOUSTON, TX -- May 17, 1996 -- SI Diamond Technology
        Inc. (Nasdaq: SIDT) today reported its first quarter results and the
        adoption of a corporate reorganization plan in order to reduce
        expenses and streamline operations.  
        


            For the first quarter, SIDT reported revenues of $848,367, a 278
        percent increase from the $224,527 in revenues during the 1995 first
        quarter.  The net loss from continuing operations was $5,170,551, or
        48 cents a share, compared to a net loss from continuing operations
        of $1,651,493, or 21 cents a share, for the 1995 first quarter.
        SIDT's total net loss including discontinued operations was
        $6,170,051, or 57 cents a share, compared to a net loss of
        $1,932,026, or 25 cents a share, for the same period a year-ago.  

        
            There were 10,859,724 weighted average shares outstanding for
        the quarter compared to 7,681,707 weighted average shares
        outstanding for the 1995 first quarter.  The increase in shares
        outstanding was due to the various equity offerings the company
        completed during 1995.  
   

     
            "Revenues nearly quadrupled during the quarter compared to the
        same period a year-ago, the majority of which, $581,000, came from
        contract research," Howard K. Schmidt, SI Diamond's chairman and CEO
        stated.  "This resulted primarily from increased Diamond Field
        Emission Display (DFED) development related to the $2,625,000
        National Institute of Science and Technology contract which began in
        the 1995 third quarter.  
      

  
            "Currently the company has a contract research backlog of
        approximately $2,139,000, compared to a backlog of $1,539,000 at the
        end of the first quarter a year-ago," Dr. Schmidt said.  

        
            "The increase in the net loss is attributable to four items, two
        of which are the result of the company's reorganization; a $850,000
        loss on impairment of net assets held for sale and a $999,500 loss
        on discontinued operations.  Additionally, increases in SG&A and
        research and development contributed to the net loss for the
        quarter," continued Dr. Schmidt.  "The expenses associated with the
        reorganization are from the discontinuation of SIDT Coatings Inc.
        and the probable disposition of our Diamond Tech One facility.  
        


            "SI Diamond plans to divest the SIDT Coatings operations as soon
        as possible in order to concentrate corporate funds on the DFED
        program.  Additionally, certain operations at the Diamond Tech One
        subsidiary will be reduced significantly and at least a major part
        of its assets will likely be sold," Dr. Schmidt said.  "To date,
        SIDT has been the largest user of Diamond Tech One's specialized
        services for the advancement of several processes supporting DFED
        development. Management believes these processes are now
        sufficiently well defined that they can be obtained from commercial
        vendors in larger quantities at lower costs.  

        
            "As part of our corporate reorganization the company plans to
        reduce the number of employees by approximately 50 percent, not
        including those associated with Diamond Tech One or SIDT Coatings,"
        Dr. Schmidt said.  "This is being done in order to streamline
        operations and reduce the company's SG&A expenditures.  
   

     
            "Also, during the quarter the company was able to successfully
        close an $11.9 million equity offering.  We believe that this
        funding should be sufficient to bring the company up to our "super-
        pilot"  stage of development of our Diamond Field Emission Lamp
        (DFEL), at which time the company may need additional financing,"
        Dr. Schmidt said.  

        
            "Management is confident that these moves will greatly improve
        the allocation of resources and sharpening of our focus on both the
        DFED and Diamond Field Emission Lamp (DFEL) programs.  SI Diamond's
        high luminance lamp technology (DFEL) is being received with much
        enthusiasm and management anticipates having production samples
        available by the end of 1996 with commercial revenues to follow in
        1997," Dr. Schmidt concluded.  
   

     
            Houston-based SI Diamond is an innovative developer of thin-film
        diamond technology with potential for a variety of applications
        including flat panel displays and high luminance lamps.  Through its
        Plasmatron subsidiary, the company also develops and installs
        industrial coating systems.  SI Diamond trades on Nasdaq under the
        symbol "SIDT."



        
                  SI DIAMOND TECHNOLOGY, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                  (UNAUDITED)
                                          
                                        March 31,        December 31,
                                          1996              1995   
                                    _____________        ____________
        ASSETS                                                             
         
        Current assets:
          Cash and cash equivalents     $   5,095,026        $    293,593
          Accounts receivable, trade          442,888             151,422
          Stock subscriptions
           receivable                              --           9,583,750
          Notes receivable                    400,000             400,000
          Costs and estimated
           earnings in excess of billings                          
           on uncompleted contracts           528,844             300,485
        Prepaid expenses and other assets     110,273              43,238
                                    _____________        ____________
             Total current assets       6,577,031          10,772,488
        Property, plant and equipment,
         net                                1,590,631           1,476,241
        Intangible assets, net                477,537             500,079
        Net assets of discontinued
         operations and net
         assets available for sale          1,642,920           2,542,704
        Other assets, net                     126,844              17,394
                                    _____________        ____________
             Total assets           $  10,414,963        $ 15,308,906
                                    _____________        ____________
                                    _____________        ____________
                                                                    
        LIABILITIES AND STOCKHOLDERS' EQUITY
         
        Current liabilities:
          Accounts payable              $   1,722,341        $    430,048
          Notes payable                        32,054             271,853
          Accrued liabilities                 380,977           1,864,095
          Billings in excess of costs
           and estimated earnings                     
           on uncompleted contracts            35,385              49,891
                                    _____________        ____________
             Total current
              liabilities               2,170,757           2,615,887
        Notes payable, long term               82,611              86,687
        Commitments and contingencies
        
        Stockholders' equity:
          Preferred Stock, $1.00
          par value, 2,000,000 shares
          authorized;
          Series A Convertible Preferred,
          100 shares issued and
          outstanding at March 31, 1996
          and December 31, 1995
          ($100,000 aggregate liquidation
           preference)                            100                 100
          Series E convertible preferred,
          1,190 shares issued and
          outstanding at March 31, 1996
          (11,900,000 aggregate
           liquidation preference)              1,190                  --
          Common Stock, 120,000,000
          shares authorized, $.001 par
          value, 10,862,889 shares issued
          and outstanding at March 31, 1996:
          10,858,899 shares issued and
          outstanding at December 31, 1995     10,863              10,859
          Additional paid - in capital     45,311,064          34,681,872
        Preferred stock subscribed
         but unissued                                           8,905,072
                  
        Accumulated deficit               (37,161,622)        (30,991,571)
                                    _____________        ____________
        Total stockholders' equity          8,161,595          12,606,332
                                    _____________        ____________
        Total liabilities and
         stockholders' equity            $ 10,414,963        $ 15,308,906
                                    _____________        ____________
                                    _____________        ____________
        
               SI DIAMOND TECHNOLOGY, INC. AND SUBSIDIARIES
                  CONSOLIDATED STATEMENTS OF OPERATIONS
                               (UNAUDITED)
        
                                       For the Three Months Ended
                                                March 31,             
                                    _________________________________
                                          1996              1995   
                                    _____________        ____________
        Revenues                         $    848,367       $    224,527
                                    _____________        ____________
        Cost of sales                       1,052,114            141,648
        
        Selling, general and
         administrative expenses            2,203,592            664,173
        Stock compensation                     16,986              9,793  
        Research & development              2,127,425          1,124,779
        Loss on impairment of net assets
         held for sale                        850,000                 --
                                    _____________        ____________
          Operating costs and expenses      6,250,117          1,940,393
                                    _____________        ____________
        
        Other income, net                     231,199             64,373
                                    _____________        ____________
         Loss from continuing operations $ (5,170,551)      $ (1,651,493)
                                    _____________        ____________
        Discontinued operations:
         Loss from discontinued operations   (649,500)          (280,533)
         Provisions for loss on disposition
          discontinued operations            (350,000)                --
                                    _____________        ____________
          Total losses on discontinued
           operations                        (999,500)          (280,533)
                                    _____________        ____________
        
        Net loss                         $ (6,170,051)      $ (1,932,026)
                                    _____________        ____________
                                    _____________        ____________
        Net loss per share from
         continuing operations           $      (0.48)      $      (0.21)
        Net loss per share from
         discontinued operations         $      (0.09)      $      (0.04)  
                                    _____________        ____________
        Net loss per share               $      (0.57)      $      (0.25)
                                    _____________        ____________
                                    _____________        ____________
        
        Average shares outstanding         10,859,724           7,681,707
                                    _____________        ____________
                                    _____________        ____________
        
                 SRI DIAMOND TECHNOLOGY, INC. AND SUBSIDIARIES
                   CONSOLIDATED STATEMENTS OF CASH FLOWS
        
                                       For the Three Months Ended
                                                March 31,             
                                    _________________________________
                                          1996              1995   
                                    _____________        ____________
        
        Cash flows from operating
         activities:           
        Continuing operations:
         Net loss from continuing
         operations                      $ (5,170,551)      $ (1,651,493)
        Adjustments to reconcile net
         loss to net cash required by
         operating activities:  
         Non-cash compensation of
          employees and consultants upon
          issuance of common stock                 --              9,793
         Depreciation and amortization
          expense                              83,610            112,536
         Revaluation of stock warrants        450,000                 --
         Loss on impairment of net assets     850,000                 --
         Changes in assets and liabilities:
          Accounts receivable, trade         (291,466)           755,213
          Costs and estimated earnings in
           excess of billings on
           uncompleted contracts/projects    (228,359)           (43,394)  
          Prepaid expenses                    (67,035)            (4,538)
          Accounts payable and accrued
           liabilities                       (190,825)            11,262
          Billings in excess of cost and
           estimated earnings on
           uncompleted contracts              (14,506)          (130,481)
          Net assets available for sale      (260,263)                --
                                    _____________        ____________
          Total adjustments                   331,156            710,391
                                    _____________        ____________
          Net cash required by
           continuing operations           (4,839,395)          (941,102)
                                    _____________        ____________
        Discontinued operations:
          Net loss from discontinued
           operations                        (999,500)          (280,533)
          Reserves for discontinued
           operations                         505,000                 --
          Increase in net assets of
           discontinued operations           (194,953)                --
                                    _____________        ____________
          Net cash required by
           discontinued operations           (689,453)          (280,533)
                                    _____________        ____________
          Net cash required by operations  (5,528,848)        (1,221,635)
                                    _____________        ____________
        Cash flows from investing
         activities:
          Capital expenditures               (175,458)                --
          Expenditures for intangibles and
           other assets                      (109,450)          (991,822)
                                    _____________        ____________
        Net cash required by investing
         activities                      (284,908)          (991,822)
                                    _____________        ____________
        Cash flows from financing
         activities:  
          Repayment of notes payable         (243,875)                --
          Proceeds of stock issuance, net
           of costs                        10,859,064          4,902,247
                                    _____________        ____________
           Net cash provided by financing  
        activities                     10,615,189          4,902,247   
                                    _____________        ____________
        Net increase in cash and cash
         equivalents                        4,801,433          2,688,790
        Cash and cash equivalents,
         beginning of year                    293,593          1,687,104
                                    _____________        ____________
        Cash and cash equivalents, end
         of period                       $  5,095,026       $  4,375,894
                                    _____________        ____________
                                    _____________        ____________
        
        
        CONTACT:  SI Diamond Tech
                  Trey Fecteau, 713/529-9040
                    or
                  The Investor Relations Co.
                  Tom Laughran/Christine Harmon, 847/564-5610