8-K/A: Current report filing

Published on December 24, 1997



SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549


FORM 8-K/A


CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934




Date of Report (Date of earliest event reported): December 5, 1997

Emcore Corporation
- -------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)

New Jersey
- -------------------------------------------------------------------------------
(State or Other Jurisdiction of Incorporation)


000-22175 22-2746503
- -------------------------------------------------------------------------------
(Commission File Number) (I.R.S. Employer Identification No.)


394 Elizabeth Avenue, Somerset, New Jersey 08873
- -------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)


(732) 271-9090
- -------------------------------------------------------------------------------
(Registrant's Telephone Number, Including Area Code)

Not Applicable
- -------------------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)







ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.

On December 5, 1997 (the "Effective Date"), Emcore
Corporation ("Emcore") acquired MicroOptical Devices, Inc. ("MODE"), a Delaware
corporation, pursuant to an Agreement and Plan of Merger (the "Merger
Agreement"), among Emcore, EMKR Acquisition Corporation (the "Merger
Subsidiary"), MODE, and certain stockholders of MODE. Pursuant to the Merger
Agreement, the Merger Subsidiary was merged with and into MODE
(the "Merger"). As a result of the Merger, MODE became a wholly-owned
subsidiary of Emcore. A total of 1,461,866 shares of Common Stock of Emcore
were issued to the stockholders of MODE in exchange for all of the issued and
outstanding shares of capital stock of MODE. In addition, Emcore has agreed
to assume certain unexpired and unexercised options and warrants to acquire
Common Stock of MODE, and to issue upon exercise thereof a certain number of
shares of the Common Stock of Emcore, as appropriately adjusted pursuant to
the terms of the Merger Agreement.

MODE designs and develops high-quality optical components and
subsystems based on vertical cavity surface-emitting laser ("VCSEL")
technology. Emcore currently intends to operate MODE as a wholly-owned
subsidiary and to continue MODE's business substantially in the manner
conducted by MODE immediately prior to the Merger.

The foregoing description of the Merger Agreement does not
purport to be complete and is qualified in its entirety by reference to the
full text of the Merger Agreement.

This Form 8-K contains forward-looking statements relating to
future events that involve risks and uncertainties, including, without
limitation, statements about future financial performance of EMCORE and MODE
and the effects of the proposed acquisition on EMCORE's business, financial
performance, and results of operations. Among the factors which could cause
actual results to differ materially from those in the forward-looking
statements are failure of the proposed acquisition to achieve the desired
synergies and efficiencies; risks associated with the reaction to the proposed
acquisition by the market, as well as employees, customers, distributors and
others who affect the businesses of EMCORE and/or MODE; the variability of
future operating results of EMCORE, MODE or the combined companies following
the proposed acquisition; cancellations, rescheduling or delays in product
shipments; manufacturing capacity constraint; lengthy sales and qualification
cycles; difficulties in the production process; the future financial
performance of the combined entity; delays in developing and commercializing
new products; increased competition; changes in the compound semiconductor
industry, including overall growth of the industry and the continued acceptance
of the Company's MOCVD technologies, as well as the newly acquired VCSEL
technologies; and other factors detailed in Emcore's filings with the
Securities and Exchange Commission, including the registration statement on
Form S-1 filed on March 4, 1997.


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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.


(a) Financial Statements of Business Acquired.




ARTHUR ANDERSEN LLP


Report of Independent Public Accountants
----------------------------------------

To the Stockholders and Board of Directors of
MicroOptical Devices, Inc.:

We have audited the accompanying balance sheets of MICROOPTICAL
DEVICES, INC. (a Delaware corporation in the development stage)
(the "Company") as of December 31, 1996 and 1995, and the related
statements of operations, stockholders' equity and cash flows for
the year ended December 31, 1996 and for the period from inception
(August 3, 1995) through December 31, 1995 and 1996. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements
based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of MicroOptical Devices, Inc.
as of December 31, 1996 and 1995, and the results of its operations and its
cash flows for the year ended December 31, 1996 and for the period from
inception (August 3, 1995) through December 31, 1995 and 1996, in conformity
with generally accepted accounting principles.


/s/ ARTHUR ANDERSEN LLP

Albuquerque, New Mexico
March 21, 1997

MICROOPTICAL DEVICES, INC.
(A Development Stage Corporation)

BALANCE SHEETS

AS OF DECEMBER 31, 1996 AND 1995



1996 1995
---------- --------
ASSETS

CURRENT ASSETS:
Cash and cash equivalents $ 991,066 $125,837
Trade accounts receivable 3,850 150
Inventory 83,926 -
Other current assets 26,544 9,029
---------- --------
Total current assets 1,105,386 135,016

PROPERTY AND EQUIPMENT, net 2,388,953 5,220

ORGANIZATION COSTS, net 2,814 3,571
---------- --------
Total assets $3,497,153 $143,807
========== ========

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 29,580 $ 18,148
Accrued liabilities 74,600 746
Current portion of obligations under capital leases 38,676 -
Deferred revenue 125,000 -
---------- --------
Total current liabilities 267,856 18,894
---------- --------

LONG-TERM LIABILITIES:
Obligations under capital leases, net of current portion 107,648 -
---------- --------


COMMITMENTS AND CONTINGENCIES (Notes 8 and 9)

STOCKHOLDERS' EQUITY:
Series A Convertible Preferred Stock, $.001 par value;
1,200,000 shares authorized; 666,666 shares issued and
outstanding 666 222
Series B Convertible Preferred Stock, $.001 par value;
5,333,334 shares authorized, 4,076,088 shares issued
and outstanding 4,076 -
Common Stock, $.001 par value; 6,000,000 shares authorized:
3,000,000 shares issued and outstanding 3,000 1,000
Additional paid-in capital 3,251,532 181,596
Deficit accumulated during development stage (137,625) (57,905)
---------- --------
Total stockholders' equity 3,121,649 124,913
========== ========


Total liabilities and stockholders' equity $3,497,153 $143,807
========== ========


The accompanying notes to financial statements
are an integral part of these balance sheets.

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MICROOPTICAL DEVICES, INC.
(A Development Stage Corporation)

STATEMENTS OF OPERATIONS

FOR THE PERIOD FROM INCEPTION (AUGUST 3, 1995)
THROUGH DECEMBER 31, 1996
AND FOR THE YEAR ENDED DECEMBER 31, 1996
AND FOR THE PERIOD FROM INCEPTION THROUGH DECEMBER 31, 1995





PERIOD FROM
INCEPTION INCEPTION
(AUGUST, 1995) YEAR ENDED THROUGH
THROUGH DECEMBER 31 DECEMBER 31,
DECEMBER 31, 1996 1996 1995
----------------------- ------------------- -------------------


REVENUES $ 661,350 $ 661,350 $ -


COST OF GOODS SOLD 222,967 222,967 -
----------------------- ------------------- -------------------

GROSS MARGIN 438,383 438,383 -
----------------------- ------------------- -------------------

EXPENSES:
Research and development 339,696 292,592 47,104
General and administrative 192,105 178,540 13,565
Sales and marketing 85,169 85,169 -
----------------------- ------------------- -------------------

Total expenses 616,970 556,301 60,669
----------------------- ------------------- -------------------

Operating (loss) (178,587) (117,918) (60,669)

INTEREST INCOME 40,962 38,198 2,764
----------------------- ------------------- -------------------

NET LOSS $ (137,625) $ (79,720) $ (57,905)
======================= =================== ===================

NET LOSS PER SHARE $ (.05) $ (.03) $ (.02)
======================= =================== ===================
Weighted Average Number of
Post-Split Common Shares
Outstanding 3,000,000 3,000,000 3,000,000
======================= =================== ===================




The accompanying notes to financial statements
are an integral part of these statements.

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MICROOPTICAL DEVICES, INC.
(A Development Stage Corporation)

STATEMENTS OF STOCKHOLDERS' EQUITY

FOR THE PERIOD FROM INCEPTION (AUGUST 3, 1995) THROUGH DECEMBER 31, 1996





SERIES A SERIES B DEFICIT
CONVERTIBLE CONVERTIBLE ACCUMULATED
PREFERRED STOCK PREFERRED STOCK COMMON STOCK ADDITIONAL DURING
--------------- --------------- ---------------- PAID-IN DEVELOPMENT
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT CAPITAL STAGE TOTAL
------ ------ ------ ------ ------ ------ ------- ----- -----

BALANCE, at inception - $ - - $ - - $ - $ - $ - $ -

ISSUANCE OF COMMON STOCK - - - - 1,000,000 1,000 - - 1,000

ISSUANCE OF SERIES A
CONVERTIBLE PREFERRED STOCK:
Net of $18,182 in issuance
costs 222,222 222 - - - - 181,596 - 181,818

NET LOSS - - - - - - - (57,905) (57,905)
------- ----- --------- ------ ---------- ------- ---------- ---------- ----------
BALANCE, December 31, 1995 222,222 222 - - 1,000,000 1,000 181,596 (57,905) 124,913

ISSUANCE OF SERIES B
CONVERTIBLE PREFERRED STOCK:
Net of $48,545 in issuance
costs - - 1,293,479 1,294 - - 2,925,162 - 2,926,456

CONVERSION OF NOTE PAYABLE - - 65,217 65 - - 149,935 - 150,000

THREE FOR ONE STOCK SPLIT 444,444 444 2,717,392 2,717 2,000,000 2,000 (5,161) - -

NET LOSS - - - - - - - (79,720) (79,720)
------- ----- --------- ------ ---------- ------- ---------- ---------- ----------


BALANCE, December 31, 1996 666,666 $666 4,076,088 $4,076 3,000,000 $ 3,000 $3,251,532 $ (137,625) $3,121,649
======= ===== ========= ====== ========== ======= =========== ========== ==========




The accompanying notes to financial statements
are an integral part of these statements.

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MICROOPTICAL DEVICES, INC.
(A Development Stage Corporation)

STATEMENTS OF CASH FLOWS

FOR THE PERIOD FROM INCEPTION (AUGUST 3, 1995)
THROUGH DECEMBER 31, 1996
AND FOR THE YEAR ENDED DECEMBER 31, 1996
AND FOR THE PERIOD FROM INCEPTION THROUGH DECEMBER 31, 1995



PERIOD FROM
INCEPTION INCEPTION
(AUGUST, 1995) YEAR ENDED THROUGH
THROUGH DECEMBER 31, DECEMBER 31,
DECEMBER 31, 1996 1996 1995
----------------- ------------- -------------

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (137,625) $ (79,720) $(57,905)
Adjustments to reconcile net loss to net cash
provided by operating activities--
Depreciation and amortization 34,430 31,894 536
----------------- ------------- -------------
(105,195) (47,826) (57,369)
----------------- ------------- -------------
Changes in certain operating accounts--
Trade accounts receivable (3,850) (3,700) (150)
Inventory (83,926) (83,926) --
Other current assets (26,544) (17,515) (9,029)
Accounts payable 29,580 11,432 18,148
Accrued liabilities 74,600 73,854 746
Deferred revenue 125,000 125,000 --
----------------- ------------- -------------
114,860 105,145 9,715
----------------- ------------- -------------
Net cash provided by (used in)
operating activities 9,665 57,319 (47,654)
----------------- ------------- -------------
CASH FLOWS USED BY INVESTING ACTIVITIES:
Additions to equipment (2,420,513) (2,414,970) (5,543)
Proceeds from sale and leaseback of equipment 150,234 150,234 --
Additions to organization costs (3,784) -- (3,784)
----------------- ------------- -------------
Net cash used in investing activities (2,274,063) (2,264,736) (9,327)
----------------- ------------- -------------
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES:
Proceeds from issuance of notes payable 150,000 150,000 --
Repayments of obligations under capital
leases (3,810) (3,810) --
Net proceeds from issuance of preferred stock 3,108,274 2,926,456 181,818
Net proceeds from issuance of common stock 1,000 -- 1,000
----------------- ------------- -------------
Net cash provided by financing activities 3,255,464 3,072,646 182,818
----------------- ------------- -------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 991,066 865,229 125,837
CASH AND CASH EQUIVALENTS, beginning of period -- 125,837 --
----------------- ------------- -------------
CASH AND CASH EQUIVALENTS, end of period $ 991,066 $ 991,066 $125,837
================= ============= =============
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest $ 1,776 $ 1,776 $ --
================= ============= =============
NON-CASH STOCK ACTIVITY:
Conversion of note payable to preferred stock $ 150,000 $ 150,000 $ --
================= ============= =============
NON-CASH FINANCING ACTIVITY:
Equipment capital leases $ 146,000 $ 146,000 $ --
================= ============= =============


The accompanying notes to financial statements
are an integral part of these statements.

-7-









MICROOPTICAL DEVICES, INC.
----------------------------------------------
(A Development Stage Corporation)

NOTES TO FINANCIAL STATEMENTS

FOR THE PERIOD FROM INCEPTION (AUGUST 3, 1995)
THROUGH DECEMBER 31, 1996
AND FOR THE YEAR ENDED DECEMBER 31, 1996
AND FOR THE PERIOD FROM INCEPTION THROUGH DECEMBER 31, 1995


(1) ORGANIZATION AND SUMMARY OF SIGNIFICANT RISK FACTORS:

MicroOptical Devices, Inc. (the "Company" or "MODE"), was incorporated
under the laws of the State of Delaware on August 3, 1995 for the
purpose of developing technology and manufacturing of advanced
optoelectronic components and systems for specific use in commercial
identification and communications markets.

The Company funded its marketing, development and operational activities
to date from the proceeds of two equity offerings. Since inception, the
Company has devoted substantially all of its efforts and resources to
marketing and development of its technology and remains in the
development stage. Ultimately, the Company's ability to achieve
profitable operations is dependent, in large part, upon making the
transition to a manufacturing company.

On July 16, 1996, an amendment to the Certificate of Incorporation of
MODE (the "Amendment") was filed, which (a) increased the total number
of its common shares, which the Company is authorized to issue from two
million to four million, and (b) increased the total number of
authorized shares of its Convertible Preferred Stock, from four thousand
to two million (222,222 shares of Series A Convertible Preferred Stock
and 1,777,778 shares of Series B Convertible Preferred Stock).


(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Accounting Basis - The financial books and records of the Company are
maintained on the accrual basis of accounting. As a development stage
company, cumulative results of operations from inception are presented.

Use of Estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.


-8-


Cash Equivalents - For the purposes of presenting cash flows, cash and
cash equivalents represent cash balances and highly liquid investments
with original maturities of less than 90 days.

Inventory - Inventories are stated at the lower of standard cost (which
approximates actual cost using the first-, first-out method) or market
and consist of raw materials.

Property and Equipment - Equipment is stated at cost, net of accumulated
depreciation. Depreciation is computed on the straight-line method based
on estimated useful lives ranging from three to five years. Leasehold
improvements are amortized using the straight-line method over the
shorter of the estimated useful life of the asset or the remaining term
of the lease.

Organization Costs - Costs to organize the Company are capitalized and
amortized on a straight-line basis over five years.

Research and Development - The costs of research and development
activities are charged to expense as incurred.

Fair Value of Financial Instruments - The carrying value of all
financial instruments approximates fair market value at December 31,
1996 and 1995.

Stock-Based Compensation - The Company accounts for stock-based
compensation using the intrinsic value method prescribed in Accounting
Principles Board Opinion No. 25 ("APB Opinion No. 25"), "Accounting for
Stock Issued to Employees," and related Interpretations. Accordingly,
compensation cost for stock options is measured as the excess, if any,
of the quoted market price of the Company's stock at the date of the
grant over the amount an employee must pay to acquire the stock.
Financial Accounting Standards Board Statement No. 123, "Accounting for
Stock-Based Compensation" ("SFAS 123"), was issued in 1995 and the
Company has adopted the disclosure requirements of SFAS 123 (see Note
6).

Income Taxes - MODE accounts for income taxes using the asset and
liability method. Deferred tax assets and liabilities are recognized for
the future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and liabilities
and their respective tax bases and operating loss and tax credit
carryforwards. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or
settled. Under Financial Accounting Standards Board Statement No. 109,
"Accounting for Income Taxes" ("SFAS No. 109"), the effect on deferred
tax assets and liabilities of a change in tax rates is recognized in
operations in the period that includes the enactment date.

Net Loss Per Share - Net loss per share for each period was calculated
based upon the weighted average number of Common Stock outstanding
during each period, using post split shares resulting from the three-
for-one stock split effective August 1996. Common Stock equivalents
were excluded in the calculation of weighted average shares
outstanding since their inclusion would have had an anti-dilutive
effect.


-9-

Accounting Pronouncement Not Yet Adopted - The Financial Accounting
Standards Board issued SFAS No. 128, "Earnings Per Share," which is
effective for calendar years beginning after December 15, 1997 at
which time it will require restatement of prior years earnings per
share calculations. Management has not yet determined the effect, if
any, of SFAS No. 128 on the financial statements.

(3) PROPERTY AND EQUIPMENT:

Property and equipment at December 31 by major classification are as
follows:

1996 1995
-------------- ----------
Manufacturing equipment $ 1,781,487 $ -
Leasehold improvements 570,397 -
Furniture and fixtures 68,529 5,443
-------------- ----------
2,420,413 5,443
Less accumulated depreciation and
amortization 31,460 323
-------------- ----------
$ 2,388,953 $ 5,220
============== ==========


(4) CAPITAL LEASES:

In 1996, the Company financed certain manufacturing equipment, leasehold
improvements, and furniture and fixtures under a Master Equipment Lease
Agreement ("the Lease") expiring June 30, 1997, which provides for
financing of up to $2,000,000. The Company had only nominal borrowings
under the Lease at December 31, 1996. The capital leases have terms of
42 months and are collateralized by manufacturing equipment. The
transactions under the Lease are accounted for as a financing, whereby
the property remains on the books and continues to be depreciated and
amortized. Obligations under capital leases representing the proceeds
was recorded, and is reduced based on payments under capital lease
obligations. All items are sold and leasedback at original purchase
price, therefore no gain or loss was recorded on such transactions
during 1996.

At December 31, 1996, approximately $146,000 of manufacturing equipment
was under capital lease. The future minimum lease payments for assets
under capital lease and the present value of the net minimum lease
payments at December 31, 1996, are as follows:


Fiscal year Minimum payment
-------------------------------------- ---------------
1997 $ 49,964
1998 49,964
1999 49,964
2000 20,575
----------------
Total minimum lease payments 170,467
Less amount representing interest 24,143
----------------
Present value of net
minimum 146,324
lease payments
Less current portion 38,676
----------------
$107,648
================

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In connection with the Lease, the Company issued a warrant to purchase
208,695 shares of MODE's Series B convertible preferred stock, on a post
stock split basis (see Note 5), exerciseable at any time for a period of
up to ten years ending on August 21, 2006 at a price of $.77 per share.
The warrant may terminate sooner in connection with certain significant
corporate events.

(5) STOCKHOLDERS' EQUITY:

Effective August, 1996, the Company declared a stock split on all
existing preferred and common shares at a ratio of three to one. The
accompanying financial statements for the year ended December 31, 1996,
have been adjusted to reflect the stock split.

On July 17, 1996, the Company issued 4,076,088 shares, on a post stock
split basis, of its Series B Convertible Preferred Stock ("Series B").
Each share of Series B, which has a liquidation preference of $.77, is
convertible to one share of the Company's Common Stock and earns
dividends at the rate declared for each share of Common Stock. No such
dividends have been declared as of December 31, 1996. Terms of the
agreements with Preferred Shareholders require the Company to comply
with terms similar to those specified in the Series A issuance.

As specified in the Series A Convertible Preferred Stock ("Series A")
issuance, the Series A Preferred Stockholder purchased $150,000 of
Convertible Promissory Notes (the "Notes"), during 1996. The Notes,
which bore interest at the prime rate compounded monthly, were
convertible at a price equal to the per share purchase price of the
Series B stock issuance. On July 17, 1996, the Notes and the related
interest of $1,169 were converted to Series B convertible preferred
stock in conjunction with the Series B stock issuance.

On August 29, 1995, the Company issued 666,666 shares, on a post stock
split basis, of its Series A. Each share of Series A, which has a
liquidation preference of $.3, is convertible to one share of the
Company's Common Stock and earns dividends at the rate declared for each
share of Common Stock. No such dividends have been declared as of
December 31, 1996. An agreement with the Series A Preferred Stockholder
requires the Company to, among other items, maintain keyman life
insurance on certain key employees, and obtain the Preferred
Stockholders' approval to make key changes in the operations of the
Company.

On August 3, 1995, the Company issued 3,000,000 shares, on a post stock
split basis, of its Common Stock at a par value of $.001 per share.


(6) DEFERRED COMPENSATION PLAN:

In July 1996, the Company adopted the 1996 Stock Option Plan (the
"Plan"), where options granted to an employee are qualified "incentive
stock options" under the Internal Revenue Code and options granted to a
non-employee are "non-statutory stock options", for which 1,800,000
shares were reserved, on a post stock split basis. The Company


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accounts for options granted to employee's under this Plan in accordance
with APB Opinion No. 25, under which no compensation cost has been
recognized. The compensation costs for the Plan determined consistent
with SFAS 123 is immaterial. Options granted to non-employee's under
this Plan are accounted for in accordance with the provisions of SFAS
123.

The Company has granted options on 645,500 shares through December 31,
1996. Under the Plan, the option exercise price equals the common stocks
market price on date of grant. All options are immediately exerciseable
and expire ten years from date of grant. The options granted to MODE's
founders are subject to repurchase by the Company, at the original
exercise price, upon the cessation of service prior to vesting in such
shares. Such shares vest in a series of 72 successive equal monthly
installments over a six year period, however, such vesting shall
accelerate to 48 successive equal monthly installments upon the Company
meeting performance milestones as provided for by the Board. At December
31, 1996, the Company has achieved two out of five of its performance
measures. All other shares vest at the rate of 25 percent of the shares
upon the optionee's continued service to the Company through the initial
vesting date, with the remaining shares vesting in a series of 36
successive equal monthly installments. The vesting period accelerates in
connection with certain significant corporate events.

A summary of the status of the Company's option Plan at December 31,
1996, and changes during the year then ended is presented in the table
and narrative below:



Weighted Average
Exercise Price
Shares
----------------- ----------------

Outstanding at beginning of year - $ -
Granted 645,500 .077
Exercised - -
Forfeited - -
Expired - -
=================
Outstanding at end of year 645,500 $ .077
=================

Exerciseable at end of year 645,500 $ .077

Weighted average fair value of options granted
during the year $.02


The options outstanding at December 31, 1996, have a weighted average
remaining contractual life of 9.5 years.

The fair value of each option grant is estimated on the date of grant
using Black-Scholes option pricing model with the following average
assumptions used: risk-free interest rate of 6.65%; expected lives of
ten years; a divided yield of 0%; and expected volatility of .01%.



-12-


(7) INCOME TAXES:

MODE had no income tax expense and there were no income taxes currently
payable for the year ended December 31, 1996 and period ended December
31, 1995. Deferred income taxes at December 31, 1996 and 1995, are
offset by a valuation allowance as follows:


1996 1995
------------- -------------
Deferred tax asset:
Net operating loss $ 16,197 $ 14,000
Deferred revenue 48,750 -
------------- -------------

64,947 14,000
Valuation allowance (40,926) (14,000)
------------- -------------

24,021 -
------------- -------------
Deferred tax liability:
Depreciation and amortization (22,535) -
Other (1,486) -
------------- -------------
(24,021) -
------------- -------------
Net deferred taxes $ - $ -
============= =============

The Company has established a valuation allowance for the entire
deferred tax asset due to the uncertainty of future earnings (see Note
1). A net operating loss carry forward of $46,214 is available to offset
future taxable income for the next fifteen years.


(8) COMMITMENTS AND CONTINGENCIES:

Technology Assistance and Royalty Agreement

On February 22, 1996, the Company entered into a technical assistance
and royalty agreement (as subsequently amended) in which the Company
agreed to further develop laser technology in return for eight years of
co-exclusive rights to five existing patents covering this technology.
The Company is required to pay $7,500 in 1997, plus royalty payments
beginning in 1998 of 1.5% to 2.5%, subject to minimum annual payments
ranging from up to $50,000 over the life of the patents provided that
the technology is developed and the related products are manufactured in
Albuquerque, New Mexico. In the event that the Company fails to develop
or abandons development of this technology, all rights to the technology
become nonexclusive. The Company paid $7,500 under this Agreement in
1996.

In October, 1996, the Company signed an agreement for research and
development, which expires March 31, 1998. Under the Agreement, the
Buyer paid the Company $95,000 for non-recurring engineering expense,
plus all applicable fees and taxes, which

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payment is non-refundable. Buyer will pay MODE the balance of the
payment upon demonstration of feasibility.

Keyman Life Insurance

The Company is beneficiary to $500,000 of term life insurance for each
of its two founders.

Licensing Agreement

On March 21, 1996, the Company signed a license agreement (the
"Agreement") with a major manufacturer in the identification market (the
"Manufacturer"). Under the Agreement, the Manufacturer paid the Company
a $500,000 license fee (the "Payment") plus all applicable gross
receipts tax that the Company is required to pay thereon.

The Manufacturer retains exclusive rights to use and sell any products
or components which the Company develops for the Manufacturer's portion
of the identification market (the "Product") for a limited period of
time. After the exclusive rights period expires, the Company is required
to first offer these Products, if achieved to the Manufacturer under
similar sales terms as the Products are offered to any other party for
a limited period of time.

Within approximately one year of the receipt of the Payment, the Company
and the Manufacturer will negotiate in good faith to enter into a supply
agreement for the Product, if achieved. If no agreement is reached, then
the Company can elect to sell the Product, if achieved to the
Manufacturer for an additional license fee and, for each Product sold,
the cost of the Product plus a specified factor for overhead and profit.

Should the Company fail to pursue development or sell the Product to the
Manufacturer, the Manufacturer will be granted certain nonexclusive
sub-licensing rights.

At December 31, 1996, $325,000 has been earned under the terms of this
agreement.

Leased Property

The Company leases its facility under an operating lease with a term of
three years. Rental expense under operating leases was $18,214 for the
year end December 31, 1996. There was no rental expense incurred for the
period from inception through December 31, 1995. The minimum future
lease commitments for all operating leases are $34,332 for each of the
years ending December 31, 1997 and 1998 and $17,166 for year end
December 31, 1999.


-14-



(9) SUBSEQUENT EVENT:

Purchase and Supply Agreement

On February 14, 1997, the Company signed a purchase and supply contract
(the "Contract"). Under the Contract, MODE established the terms and
conditions controlling potential sales of vertical-cavity
surface-emitting laser ("VCSEL") chips, devices and arrays in the event
they occur. The initial term of the Contract is five years, and can be
canceled by either party upon written notice 360 days prior to the end
of the initial term or any subsequent term. The Contract also may
terminate prior to the five year period under certain circumstances.
Products sold under the agreement are subject to a warranty period not
to exceed the earlier of 18 months from the date the product is
delivered to customer, or one year from the date of delivery by customer
to its end-users, or one year from the date the products are placed in
service.

Sale/Leaseback of Assets

Subsequent to year end, the Company financed an additional $1,850,000 of
its property via a sale-leaseback transaction with a leasing company
under the terms of the Master Equipment Lease Agreement (see Note 4).


-15-



(b) Pro Forma Financial Information:

EMCORE CORPORATION
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


The following unaudited pro forma consolidated balance sheet and the unaudited
pro forma consolidated statement of operations (together the "pro forma
financial statements") are based on the historical financial statements of
Emcore Corporation ("Emcore") and MicroOptical Devices, Inc. ("MODE"),
adjusted to give the effect to the acquisition of MODE by Emcore. The unaudited
pro forma balance sheet assumes that the acquisition of MODE by Emcore occurred
on September 30, 1997, and the unaudited pro forma consolidated statement of
operations assumes that the acquisition of MODE by Emcore occurred as of
October 1, 1996.

The pro forma financial information reflects the purchase method of accounting
for the acquisition of MODE using estimated purchase accounting adjustments,
based upon preliminary valuations and is subject to post-closing adjustments.
The accompanying unaudited pro forma information does not give effect to any
cost savings that may be realized as a result of the integration of Emcore and
MODE, or to any changes in the revenues of the combined entity, resulting from
such integration.

The accompanying unaudited pro forma financial information should be read in
conjunction with the Company's historical financial statements and the notes
thereto included in its Form S-1 dated March 6, 1997 and the MODE historical
financial statements and the notes thereto included herein. Such unaudited pro
forma financial information does not purport to be indicative of the results of
operations of Emcore in the future or what its financial position and results
of operation would have been had the acquisition occurred at the dates
indicated above.


- 16 -




EMCORE CORPORATION
PRO FORMA CONSOLIDATED BALANCE SHEET (UNAUDITED)
FOR THE YEAR ENDED SEPTEMBER 30, 1997


HISTORICAL
EMCORE MODE


ASSETS

Current Assets

Cash and equivalents $3,653,145 $643,542
Restricted cash 312,500
Accounts receivable, net 8,439,704 173,710
Accounts receivable - related party 2,500,000
Inventories, net 7,185,626 131,931
Prepaid expenses and other current assets 120,393 22,314
-------------------------------------

Total current assets 22,211,368 971,497
-------------------------------------

Property and equipment, net 16,797,833 2,405,541

Other assets, net 453,608 2,247
-------------------------------------

Total assets 39,462,809 3,379,285
=====================================


LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
Accounts payable 4,050,216 70,589
Accrued expenses 3,867,589 755,568
Advance billings 1,998,183
Unearned service revenue 124,279
Capitalized lease obligations - current 15,030 91,664
-------------------------------------

Total current liabilities 10,055,297 917,821
-------------------------------------

Subordinated notes, net 7,499,070
Capitalized lease obligations, net of current portion 77,870 1,753,994

Stockholders' equity
Common stock 45,816,774 2,575
Preferred Stock - Series A 181,818
Preferred Stock - Series B 3,076,456
In process research and development
Accumulated deficit (23,777,658) (2,553,379)
-------------------------------------

22,039,116 707,470

Notes receivable from warrant issuances and stock sales (208,544)
-------------------------------------

Total stockholders' equity 21,830,572 707,470
-------------------------------------

-------------------------------------
Total liabilities and shareholders' equity $39,462,809 $3,379,285
=====================================



17
(RESTUBBED TABLE CONTINUED FROM ABOVE)









PRO FORMA
ADJUSTMENTS COMBINED


ASSETS

Current Assets

Cash and equivalents (2) ($500,000) $3,796,687
Restricted cash 312,500
Accounts receivable, net 8,613,414
Accounts receivable - related party 2,500,000
Inventories, net 7,317,557
Prepaid expenses and other current assets 142,707
----------------------------------------------

Total current assets (500,000) 22,682,865
----------------------------------------------

Property and equipment, net 19,203,374
Goodwill (1) 2,827,784 2,827,784
Other assets, net 455,856
----------------------------------------------

Total assets 2,327,784 45,169,878
==============================================


LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
Accounts payable 4,120,805
Accrued expenses 4,623,157
Advance billings 1,998,183
Unearned service revenue 124,279
Capitalized lease obligations - current 106,694
----------------------------------------------

Total current liabilities 10,973,118
----------------------------------------------

Subordinated notes, net 7,499,070
Capitalized lease obligations, net of current portion 1,831,864

Stockholders' equity
Common stock (3) 32,326,379 78,145,728
Preferred Stock - Series A (3) (181,818)
Preferred Stock - Series B (3) (3,076,456)
Accumulated deficit (3) 2,553,379
(4) (29,293,700) (53,071,358)
----------------------------------------------

2,327,784 25,074,370

Notes receivable from warrant issuances and stock sales (208,544)
----------------------------------------------

Total stockholders' equity 2,327,784 24,865,826
----------------------------------------------

----------------------------------------------
Total liabilities and shareholders' equity $2,327,784 $45,169,878
==============================================


THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE PRO FORMA FINANCIAL
STATEMENTS

18





EMCORE CORPORATION
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE YEAR ENDED SEPTEMBER 30, 1997

HISTORICAL PRO FORMA
EMCORE MODE ADJUSTMENTS COMBINED


Revenue $ 47,752,572 $ 560,648 $ 48,313,220

Cost of Sales 30,094,015 447,318 30,541,333
--------------------------- ---------------------------

Gross Profit 17,658,557 113,330 17,771,887
--------------------------- ---------------------------

Operating Expenses
Selling, general and administrative 9,346,329 869,113 (5) $ 942,595 11,158,037
Research and development 9,001,188 1,791,087 10,792,275
--------------------------- ---------------------------

Operating loss (688,960) (2,546,870) 942,595 (4,178,425)
--------------------------- ---------------------------

Other expenses
Stated interest expense (income), net 519,422 (54,306) 465,116
Imputed warrant interest, non-cash 3,988,390 3,988,390
--------------------------- ---------------------------

Loss before income taxes and extraordinary item (5,196,772) (2,492,564) 942,595 (8,631,931)

Provision for income taxes 137,000 137,000
--------------------------- ---------------------------

Net loss before extraordinary item (5,333,772) (2,492,564) 942,595 (8,768,931)

Extraordinary item - loss on early retirement of debt 285,595 285,595
--------------------------- ---------------------------

Net loss $ (5,619,367) $ (2,492,564) $ 942,595 $ (9,054,526)
=========================== ===========================

Shares used in computation of net loss 5,029,806 (6) 1,692,963 6,722,769
=========================== ===========================

Net loss per share before extraordinary item $ (1.06) $ (1.30)
=========================== ==========================

Net loss per share $ (1.12) $ (1.35)
=========================== ==========================






THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE PRO FORMA FINANCIAL
STATEMENTS

19


Pro Forma Notes:

Unaudited Pro Forma Balance Sheet

(1) Emcore acquired MODE on December 5, 1997, in exchange for (i) the
issuance of 1,461,866 shares of common stock, and (ii) the assumption of
(x) up to 200,966 common stock purchase options (exercise prices
ranging from $0.43 to $0.59) and (y) 47,118 common stock purchase warrants
(exercise prices ranging from $4.32 to $5.92). The transaction purchase
price amounted to approximately $32,900,000, including approximately
$500,000 of direct acquisition costs. The Company's common stock was valued
based upon the average closing price of the Company's common stock for the
five days before and after the announcement of the acquisition.

The purchase price was allocated to the assets acquired (approximately
$3,379,000) and liabilities assumed (approximately $2,672,000), based upon
the fair value at the date of acquisition. In addition, the Company
recorded a one-time write-off of approximately $29,294,000 relating to
purchased in-process research and development. Goodwill of approximately
$2,828,000 was recorded as a result of the acquisition.

(2) To reflect direct acquisition costs of approximately $500,000.

(3) Adjustment to eliminate MODE's historical capital structure.

(4) To reflect the one-time-write-off of $29,293,700 relating to purchased
in-process research and development.

Unaudited Pro Forma Statement of Operations

(5) To reflect the amortization of goodwill over a period of three years.

(6) To reflect the pro forma effect of the shares and common stock purchase
options and warrants issued in connection with the acquisition of MODE
by Emcore on the weighted average common shares outstanding.

The pro forma statement of operations for the year ended September 30, 1997,
does not reflect the non-recurring write-off of the purchased in-process
research and development.

- 20 -





SIGNATURES


Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.


Emcore Corporation
-----------------------------------------------
(Registrant)

By: /s/ Thomas G. Werthan
-----------------------------------------------
Name: Thomas G. Werthan
-----------------------------------------------
Title: Chief Financial Officer and Secretary
-----------------------------------------------



Dated: December 23, 1997



INDEX TO EXHIBITS


Exhibit Number Description

2* Agreement and Plan of Merger, dated as of December 5,
1997, among Emcore, the Merger Subsidiary, MODE and the
Principal Stockholders.

4* Registration Rights Agreement, dated as of December 5,
1997, relating to the shares issued pursuant to the
Merger Agreement.

10.1* Escrow Agreement, dated as of December 5, 1997, among
Emcore, the Principal Stockholders and the Escrow
Agent.

10.2* Employment Agreement, dated as of December 5, 1997,
between Emcore and Robert Bryan.

10.3* Employment Agreement, dated as of December 5, 1997,
between Emcore and Thomas Brennan.

10.4 Consent and Amendment Agreement, dated as of December
2, 1997, between First Union National Bank and Emcore.

10.5 Unconditional Guaranty, dated as of December 5, 1987,
among Emcore, MODE and First Union National Bank.

10.6 Security Agreement, dated as of December 5, 1997,
between MODE and First Union National Bank.

23 Consent of Arthur Andersen, LLP, independent auditors.

99* Press Release issued December 5, 1997.


* Previously filed