LightPath Technologies, Inc. (NASDAQ: LPTH) ("LightPath", the
"Company" or "we"), a global manufacturer, distributor and
integrator of patented optical components and high-level
assemblies, announced today its financial results for the third
quarter ended March 31, 2011.
Third Quarter Highlights:
-- Backlog scheduled to ship within the next 12 months was $3.63 million
as of March 31, 2011, an increase of 23% or $683,000 from June 30,
2010.
-- EBITDA for the third quarter of fiscal 2011 is $73,000 compared to
$397,000 in the third quarter of fiscal 2010.
-- Unit shipment volume in precision molded optics increased 61% in the
third quarter of fiscal 2011 compared to the same period of last year.
-- Revenue for the third quarter of fiscal 2011 was $2.43 million compared
to $2.66 million for the third quarter of fiscal 2010.
-- Gross margin was 40% for the third quarter of fiscal 2011 as compared
to 47% for the third quarter of fiscal 2010.
-- Cash on hand as of March 31, 2011 was $1.0 million as compared to
$1.46 million on June 30, 2010.
Jim Gaynor, President and Chief Executive Officer of LightPath,
commented, "LightPath continues to make significant progress in the
execution of our business strategy. EBITDA improved by $118,000
from the previous quarter, operating loss improved 41% from the
previous quarter and backlog grew 11% from the previous quarter. We
used cash for expansion by increasing the number of tools available
and completing the installation of our new press stations. During
the third quarter we improved our working capital position by
extending the maturity date of our convertible debentures from
August 2011 to August 2013. Although our revenue decreased
slightly, this was a solid quarter for LightPath given the
continued penetration of our target markets and resulting backlog
of orders growth. We have established business with over eleven
major customers in the Asian industrial tool market. Over the next
3 to 6 months this new customer demand equates to an additional
200,000 lenses per month. This increase in unit volume over our
existing business will utilize our recently installed
capacity."
Mr. Gaynor continued, "We continue to position the Company to
take advantage of larger markets with low cost high volume
applications, value added services and thermal imaging and sensing
application designs and products. LightPath is transitioning its
business to focus on providing low cost high volume lenses for
products such as laser levels, range finders, gun sights and
projectors. In addition to the industrial tool market, we are
targeting opportunities in biomedical instruments, communications
and imaging. As we continue to work to grow our revenue, improve
our production efficiencies and continue cost reduction efforts,
our margins and cash flow will continue to improve. We are
confident in our strategy and see the improvements occurring. In
the coming quarters we remain optimistic and in the long run
believe our strategy offers significant financial rewards for the
Company and our stockholders."
Financial Results for Three Months Ended March 31, 2011
Revenue for the third quarter of fiscal 2011 totaled
approximately $2.43 million compared to approximately $2.66 million
for the third quarter of fiscal 2010, a decrease of 9%. The
decrease from the third quarter of the prior fiscal year was
primarily attributable to lower sales prices on increased unit
volume of precision molded optics, lower sales volume of GRADIUM
lenses and isolators offset by higher sales for infrared lenses and
collimators. Growth in sales going forward is expected to be
derived primarily from the precision molded lenses product line,
particularly our low cost lenses being sold in Asia where we have
experienced an increase in bookings during this quarter.
Our gross margin percentage in the third quarter of fiscal 2011
compared to the third quarter of fiscal 2010 was 40% compared to
47%. Total manufacturing costs of $1.46 million were approximately
$47,000 higher in the third quarter of fiscal 2011 compared to the
same period of the prior fiscal year. The increase in manufacturing
costs, as compared to the same period of the prior fiscal year, is
a reflection of a product mix change associated with increased
sales of infrared lenses and collimators, which have a higher
material cost. Unit shipment volume in precision molded optics
increased by 61% in the third fiscal quarter of 2011 compared to
the same period last year. Direct costs, which include material,
labor and services were 24% of revenue in the third quarter of
fiscal 2011, as compared to 26% of revenue in the third quarter of
fiscal 2010. Our average cost per unit decreased by 34% due to
higher unit volume reducing overhead costs per unit offset by
slightly higher labor costs and higher freight costs. This
improvement in the average cost per unit was offset by a 41%
decrease in the average selling price per unit, negatively
impacting our gross margin.
During the third quarter of fiscal 2011, total costs and
expenses increased $80,000 to $1.13 million compared to $1.05
million for the same period in fiscal 2010. This increase was
primarily due to a $76,000 credit in the prior year for the
reversal of an accrual for legal expenses. Also included in total
costs and expenses for the third quarter of fiscal 2011 were
$861,000 in selling, general and administrative expenses. As a
result, total operating loss for the third quarter of fiscal 2011
was approximately $151,000 compared to income of $203,000 for the
same period in fiscal 2010.
Net interest expense was $93,000 in the third quarter of fiscal
2011 as compared to $191,000 in the third quarter of fiscal 2010
represents interest on our convertible debentures, at 8% per annum
and amortization of debt discount and debt costs. Loss on
extinguishment of debt of $132,000 during the third quarter of
fiscal 2011 resulted from the two year extension of the maturity
date of our convertible debentures and included the write-off of
approximately $89,000 of debt issuance costs and debt discount and
premium of $43,000 from debt exchange for a non-related debt
holder.
Net loss for the third quarter of fiscal 2011 was $376,000 or
$0.04 per basic and diluted common share, compared with a net
income of $12,000 or $0.00 per basic and diluted common share for
the same period in fiscal 2010. The $388,000 increase in net loss
resulted primarily from the loss on extinguishment of debt of
$132,000 and a $76,000 reversal of a legal accrual in the prior
year and lower revenue. Weighted-average basic shares outstanding
increased to 9,715,266 in the third quarter of fiscal 2011 compared
to 8,232,496 in the third quarter of fiscal 2010 which is primarily
due to the issuance of shares of common stock related to a private
placement in the fourth quarter of fiscal 2010 and convertible
debentures that were converted to shares of common stock in the
first and second quarters of fiscal 2011.
Financial Results for Nine Months Ended March 31, 2011
Revenue for the first nine months of fiscal 2011 was
approximately $7.22 million compared to approximately $6.44 million
for the first nine months of fiscal 2010, an increase of 12%. This
increase from the first nine months of fiscal 2010 was primarily
attributable to higher sales volumes in all of our product lines.
The number of units of precision molded optics increased 34% due to
our increased production capability and our pursuit of low cost,
high volume lens business. Growth in sales going forward is
expected to be derived primarily from our precision molded optics
product line, particularly our low cost lenses sold in Asia.
Our gross margin percentage in the first nine months of fiscal
2011 compared to the first nine months of fiscal 2010 decreased to
39% from 45%. Total manufacturing costs of $4.41 million were
approximately $846,000 higher in the first nine months of fiscal
2011 compared to the same period of the prior fiscal year. This
increase in manufacturing costs resulted from an increase in costs
necessary to support higher production and sales volumes and a
product mix change to products with a higher material cost, such as
isolators and collimators. Direct costs, which include material,
labor and services increased to 26% of revenue in the first nine
months of fiscal 2011, as compared to 23% of revenue in the first
nine months of fiscal 2010. Our average cost per unit decreased by
8% due to higher unit volume reducing overhead costs per unit
offset by slightly higher labor costs and higher freight costs.
This improvement in the average cost per unit was offset by a 17%
decrease in the average selling price per unit, negatively
impacting our gross margin.
During the first nine months of fiscal 2011, total costs and
expenses increased $686,000 to approximately $3.69 million compared
to approximately $3.00 million for the same period in fiscal 2010.
This increase was due to a $128,000 increase in wages, an $89,000
increase in sales tax, $38,000 in recruiting fees, $46,000 in
outside services for information technology, a $51,000 increase in
stock compensation expense due to stock options granted in the
third quarter of fiscal 2010, and a $24,000 increase in materials
for engineering projects. In addition, in the first nine months of
2010 there was a one time benefit resulting from legal expenses
incurred which was offset by receipt of a reimbursement from our
D&O insurance carrier in the net amount of $278,000 for legal
expenses incurred in connection with litigation. As a result, total
operating loss for the first nine months of fiscal 2011 increased
to a loss of approximately $879,000 compared to a loss of $120,000
for the same period in fiscal 2010.
Net interest expense was approximately $583,000 in the first
nine months of fiscal 2011 as compared to approximately $534,000 in
the first nine months of fiscal 2010. This increase was due to the
write-off of unamortized debt discount and debt costs related to
the conversion of debentures totaling $832,500 into shares of
common stock in the first nine months of fiscal 2011. Our interest
expense included interest on our convertible debentures, at 8% per
annum, the amortization of the related debt issuance costs and debt
discount, and write off of debt issue costs, prepaid interest and
debt discount for convertible debentures that were converted into
shares of common stock during the first nine months of fiscal 2011.
Loss on extinguishment of debt of $132,000 during the nine months
ended March 31, 2011 resulted from the extension of the maturity
date of our convertible debentures from August 2011 to August 2013
and included the write-off of approximately $89,000 of debt costs
and debt discount and $43,000 premium from debt exchange for a
non-related debenture holder.
Net loss for the first nine months of fiscal 2011 was
approximately $1.60 million or $0.17 per basic and diluted common
share, compared with a net loss of approximately $653,000 or $0.08
per basic and diluted common share for the same period in fiscal
2010. The $950,000 increase in net loss was primarily from the loss
on extinguishment of debt of $132,000, the reimbursement of
$278,000 from our D&O insurance carrier for legal expenses,
which was received last year and an increase of $457,000 in wages
associated with the increased unit volume, sales and engineering
development and an increase of $51,000 for stock compensation
expense. Weighted-average basic shares outstanding increased to
9,474,204 in the first nine months of fiscal 2011 compared to
7,901,156 in the first nine months of fiscal 2010 which is
primarily due to the issuance of shares of common stock related to
a private placement in the fourth quarter of fiscal 2010 and
convertible debentures converted into shares of common stock in the
first half of fiscal 2011.
Cash and cash equivalents totaled approximately $1.0 million as
of March 31, 2011. Total current assets and total assets as of
March 31, 2011 were approximately $4.49 million and $7.04 million
compared to approximately $4.80 million and $7.46 million,
respectively, as of June 30, 2010. Total current liabilities and
total liabilities as of March 31, 2011 were approximately $1.54
million and $3.11 million compared to approximately $1.09 million
and $3.21 million, respectively, as of June 30, 2010. As a result,
the current ratio as of March 31, 2011 was 2.92 to 1 compared to
4.41 to 1 as of June 30, 2010. Total stockholders' equity as of
March 31, 2011 totaled approximately $3.92 million compared to
$4.24 million as of June 30, 2010.
As of March 31, 2011 our backlog of orders scheduled to ship in
the next 12 months, was $3.63 million compared to $2.95 million as
of June 30, 2010.
Investor Conference Call and Webcast Details:
LightPath will host an audio conference call and webcast on
Thursday, April 28th at 4:00 p.m. EDT to discuss the Company's
financial and operational performance for the third quarter of
fiscal 2011.
Conference Call Details Date: Thursday, April 28, 2011 Time:
4:00 p.m. (EDT) Dial-in Number: 1-877-407-8033 International
Dial-in Number: 1-201-689-8033
It is recommended that participants dial-in approximately 5 to
10 minutes prior to the start of the 4:00 p.m. call. A transcript
archive of the webcast will be available for viewing or download on
the company web site shortly after the call is concluded.
About LightPath Technologies
LightPath manufactures optical products including precision
molded aspheric optics, GRADIUM® glass products, proprietary
collimator assemblies, laser components utilizing proprietary
automation technology, higher-level assemblies and packing
solutions. The Company's products are used in various markets,
including industrial, medical, defense, test and measurement and
telecommunications. LightPath has a strong patent portfolio that
has been granted or licensed to it in these fields. For more
information visit www.lightpath.com. The discussions of our results
as presented in this release include use of non-GAAP terms "EBITDA"
and "gross margin." Gross margin is determined by deducting the
cost of sales from operating revenue. Cost of sales includes
manufacturing direct and indirect labor, materials, services, fixed
costs for rent, utilities and depreciation, and variable overhead.
Gross margin should not be considered an alternative to operating
income or net income, which is determined in accordance with
Generally Accepted Accounting Principles ("GAAP"). We believe that
gross margin, although a non-GAAP financial measure is useful and
meaningful to investors as a basis for making investment decisions.
It provides investors with information that demonstrates our cost
structure and provides funds for our total costs and expenses. We
use gross margin in measuring the performance of our business and
have historically analyzed and reported gross margin information
publicly. Other companies may calculate gross margin in a different
manner.
EBITDA is a non-GAAP financial measure used by management,
lenders and certain investors as a supplemental measure in the
evaluation of some aspects of a corporation's financial position
and core operating performance. Investors sometimes use EBITDA as
it allows for some level of comparability of profitability trends
between those businesses differing as to capital structure and
capital intensity by removing the impacts of depreciation,
amortization and interest expense. EBITDA also does not include
changes in major working capital items such as receivables,
inventory and payables, which can also indicate a significant need
for, or source of, cash. Since decisions regarding capital
investment and financing and changes in working capital components
can have a significant impact on cash flow, EBITDA is not a good
indicator of a business's cash flows. We use EBITDA for evaluating
the relative underlying performance of the Company's core
operations and for planning purposes. We calculate EBITDA by
adjusting net loss to exclude net interest expense, income tax
expense or benefit, depreciation and amortization, thus the term
"Earnings Before Interest, Taxes, Depreciation and Amortization"
and the acronym "EBITDA."
This news release includes statements that constitute
forward-looking statements made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995,
including statements regarding our ability to expand our presence
in certain markets, future sales growth, continuing reductions in
cash usage and implementation of new distribution channels. This
information may involve risks and uncertainties that could cause
actual results to differ materially from such forward-looking
statements. Factors that could cause or contribute to such
differences include, but are not limited to, factors detailed by
LightPath Technologies, Inc. in its public filings with the
Securities and Exchange Commission. Except as required under the
federal securities laws and the rules and regulations of the
Securities and Exchange Commission, we do not have any intention or
obligation to update publicly any forward-looking statements,
whether as a result of new information, future events or
otherwise.
LIGTHPATH TECHNOLOGIES, INC.
EBITDA
(Unaudited) (Unaudited)
Three months ended Nine months ended
March 31, March 31,
2011 2010 2011 2010
---------- ----------- ------------ ----------
Net Income (Loss) $ (375,728) $ 12,052 $ (1,602,392) $ (652,645)
Depreciation and
amortization 227,861 193,795 655,131 497,226
Loss on extinguishment of
debt 131,784 - 131,784 -
Interest expense 89,560 191,461 583,197 534,449
---------- ----------- ------------ ----------
EBITDA $ 73,477 $ 397,308 $ (232,280) $ 379,030
========== =========== ============ ==========
LIGHTPATH TECHNOLOGIES, INC.
Consolidated Statements of Operations
(Unaudited)
Three months ended Nine months ended
March 31, March 31,
2011 2010 2011 2010
------------ ------------ ------------ ------------
Product sales, net $ 2,434,056 $ 2,660,415 $ 7,216,052 $ 6,443,848
Cost of sales 1,456,758 1,409,356 4,412,173 3,566,230
------------ ------------ ------------ ------------
Gross margin 977,298 1,251,059 2,803,879 2,877,618
Operating expenses:
Selling, general
and
administrative 861,051 816,957 2,929,578 2,322,422
New product
development 265,746 222,607 736,838 650,281
Amortization of
intangibles 8,217 8,217 24,651 24,651
Gain on sale of
property and
equipment (7,211) -- (7,751) --
------------ ------------ ------------ ------------
Total costs
and expenses 1,127,803 1,047,781 3,683,316 2,997,354
------------ ------------ ------------ ------------
Operating
income (loss) (150,505) 203,278 (879,437) (119,736)
Other income
(expense):
Interest expense (32,115) (54,272) (148,414) (152,083)
Interest expense
- debt discount (46,746) (98,107) (316,590) (273,436)
Interest expense
- debt costs (10,699) (39,082) (118,193) (108,930)
Loss on
extinguishment
of debt (131,784) -- (131,784) --
Other income
(expense), net (3,879) 235 (7,974) 1,540
------------ ------------ ------------ ------------
Total other
expense, net (225,223) (191,226) (722,955) (532,909)
------------ ------------ ------------ ------------
Net income
(loss) $ (375,728) $ 12,052 $ (1,602,392) $ (652,645)
============ ============ ============ ============
Income (Loss) per
common share
(basic) $ (0.04) $ 0.00 $ (0.17) $ (0.08)
============ ============ ============ ============
Number of shares
used in per share
calculation (basic) 9,715,266 8,232,496 9,474,204 7,901,156
============ ============ ============ ============
Income (Loss) per
common share
(diluted) $ (0.04) $ 0.00 $ (0.17) $ (0.08)
============ ============ ============ ============
Number of shares
used in per share
calculation
(diluted) 9,715,266 9,339,878 9,474,204 7,901,156
============ ============ ============ ============
LIGHTPATH TECHNOLOGIES, INC.
Consolidated Balance Sheets
(unaudited)
March 31, June 30,
Assets 2011 2010
------------ ------------
Current assets:
Cash and cash equivalents $ 954,546 $ 1,464,351
Trade accounts receivable, net of allowance
of $8,575 and $22,930 1,605,111 1,804,063
Inventories, net 1,679,116 1,137,678
Prepaid interest expense 29,380 167,635
Prepaid expenses and other assets 219,220 223,908
------------ ------------
Total current assets 4,487,373 4,797,635
Property and equipment, net 2,408,809 2,344,692
Intangible assets, net 109,350 134,001
Debt costs, net 7,964 151,530
Other assets 27,737 27,737
------------ ------------
Total assets $ 7,041,233 $ 7,455,595
============ ============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 933,316 $ 511,523
Accrued liabilities 208,066 179,370
Accrued payroll and benefits 383,173 396,863
8% convertible debentures, net of debt
discount 14,147 --
------------ ------------
Total current liabilities 1,538,702 1,087,756
Deferred rent 492,065 569,286
8% convertible debentures to related parties,
net of debt discount 1,016,250 816,397
8% convertible debentures, net of debt discount 71,250 737,468
------------ ------------
Total liabilities 3,118,267 3,210,907
------------ ------------
Stockholders' equity:
Preferred stock: Series D, $.01 par value,
voting; 5,000,000 shares authorized; none
issued and outstanding -- --
Common stock: Class A, $.01 par value,
voting; 40,000,000 shares authorized;
9,711,213 and 8,971,638 shares issued and
outstanding, respectively 97,112 89,716
Additional paid-in capital 207,549,990 206,277,806
Foreign currency translation adjustment 24,556 23,466
Accumulated deficit (203,748,692) (202,146,300)
------------ ------------
Total stockholders' equity 3,922,966 4,244,688
------------ ------------
Total liabilities and stockholders'
equity $ 7,041,233 $ 7,455,595
============ ============
LIGHTPATH TECHNOLOGIES, INC.
Consolidated Statements of Cash Flows Nine months ended
(unaudited) March 31,
--------------------------
2011 2010
------------ ------------
Cash flows from operating activities
Net loss $ (1,602,392) $ (652,645)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 655,131 497,226
Interest from amortization of debt
discount 316,590 273,436
Interest from amortization of debt costs 118,193 108,930
Common stock issued for legal settlement -- 50,000
Gain on sale of property and equipment (7,751) --
Stock based compensation 161,660 110,508
Change in provision for doubtful
accounts receivable (14,355) (1,708)
Deferred rent (77,221) (49,346)
Loss on extinguishment of debt 131,784 --
Common stock issued for payment of
consulting services -- 150,000
Changes in operating assets and liabilities:
Trade accounts receivables 213,307 (999,871)
Other receivables -- 183,413
Inventories (541,438) (107,047)
Prepaid expenses and other assets 142,943 973
Accounts payable and accrued liabilities 436,799 (75,842)
------------ ------------
Net cash used in operating
activities (66,750) (511,973)
------------ ------------
Cash flows from investing activities
Purchase of property and equipment (694,597) (787,758)
Proceeds from sale of equipment 7,751 --
------------ ------------
Net cash used in investing
activities (686,846) (787,758)
------------ ------------
Cash flows from financing activities
Proceeds from exercise of stock options 5,653 8,393
Proceeds from sale of common stock, net of
costs -- 1,417,090
Proceeds from sale of common stock from
employee stock purchase plan 12,137 6,857
Costs associated with conversion of debentures (6,748) --
Exercise of warrants 231,659 --
Payments on capital lease obligation -- (5,050)
Payments on note payable -- (152,758)
------------ ------------
Net cash provided by financing activities 242,701 1,274,532
------------ ------------
Effect of exchange rate on cash and cash
equivalents 1,090 (11,859)
------------ ------------
Increase (decrease) in cash and cash
equivalents (509,805) (37,058)
Cash and cash equivalents, beginning of period 1,464,351 579,949
------------ ------------
Cash and cash equivalents, end of period $ 954,546 $ 542,891
============ ============
Supplemental disclosure of cash flow
information:
Interest paid in cash $ - $ 3,477
Income taxes paid 4,079 5,100
Supplemental disclosure of non-cash investing
& financing activities:
Convertible debentures converted into
common stock $ 832,500 $ 137,500
Premium from debt exchange 42,719 -
LIGHTPATH TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Nine months ended March 31, 2011
(unaudited)
Class A Additional
Common Stock Paid-in
Shares Amount Capital
--------- -------- --------------
Balance at June 30, 2010 8,971,638 $ 89,716 $ 206,277,806
Issuance of common stock for:
Employee Stock Purchase Plan 7,854 78 12,059
Exercise of employee stock options 5,384 54 5,599
Conversion of debentures, net of
costs 540,592 5,406 820,346
Cashless exercise of warrants 56,695 567 (567)
Exercise of warrants 129,050 1,291 230,368
Stock based compensation on stock
options and restricted stock units -- -- 161,660
Premium from debt exchange 42,719
Net loss -- -- --
Foreign currency translation
adjustment -- -- --
Comprehensive loss
--------- -------- --------------
Balance at March 31, 2011 9,711,213 $ 97,112 $ 207,549,990
========= ======== ==============
Foreign
Currency Total
Translation Accumulated Stockholders
Adjustment Deficit Equity
-------- -------------- -----------
Balance at June 30, 2010 $ 23,466 $ (202,146,300) $ 4,244,688
Issuance of common stock for:
Employee Stock Purchase Plan -- -- 12,137
Exercise of employee stock options -- -- 5,653
Conversion of debentures, net of
costs -- -- 825,752
Cashless exercise of warrants -- -- -
Exercise of warrants -- -- 231,659
Stock based compensation on stock
options and restricted stock units -- -- 161,660
Premium from debt exchange 42,719
Net loss -- (1,602,392) (1,602,392)
Foreign currency translation
adjustment 1,090 -- 1,090
-----------
Comprehensive loss (1,601,302)
-------- -------------- -----------
Balance at March 31, 2011 $ 24,556 $ (203,748,692) $ 3,922,966
======== ============== ===========
Contacts: LightPath Technologies, Inc. Jim Gaynor President
& CEO or Dorothy Cipolla CFO +1 (407) 382-4003
dcipolla@lightpath.com
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