-- Net income for the second quarter of fiscal 2010 was a positive $42,000
compared to a loss of $706,000 in the first quarter of fiscal 2010 and
a loss of $1.7 million for the second quarter in fiscal 2009.
-- Backlog scheduled to ship within the next 12 months is $4.0 million, an
increase of $908,000 from September 30, 2009 and an increase of $1.7
million from June 30, 2009.
-- Gross margin remained at 43% for the second quarter of fiscal 2010 when
compared to the first quarter of fiscal 2010 and increased from 25% to
43% as compared to the second quarter in fiscal 2009.
-- EBITDA for the second quarter of fiscal 2010 improved to a gain of
$363,000 compared to a loss of $382,000 in the first quarter of fiscal
2010 and a loss of $728,000 in the second quarter of fiscal 2009.
-- Cash on hand as of December 31, 2009 was $906,000 as compared to $1.2
million on September 30, 2009 and $580,000 on June 30, 2009.
-- Revenue for the second quarter of fiscal 2010 was $2.2 million compared
to $1.6 million in the first quarter of fiscal 2010 and $1.9 million
for the second quarter of fiscal 2009.
-- Unit shipment volume in precision molded optics is up 158% in the
second fiscal quarter of 2010 compared to the same period last year.
Mr. Jim Gaynor, President and CEO of LightPath, commented, "I am extremely
pleased to report LightPath's first positive net income quarter in our
history. We were able to achieve this net income due to higher revenue,
solid margin performance and lower SG&A expenses. Second fiscal quarter
revenue increased 37.5% over the first fiscal quarter and we continued to
grow our order backlog which increased 29% over the first quarter of fiscal
2010. This growth is driven primarily by increased business resulting from
our new recently released low cost RoHS compliant lenses for laser tools
and telecom applications. SG&A expenses in the second fiscal quarter were
lower due a one time payment related to a D&O insurance claim and the
extension of our investor relations media contract. As we continue to grow
our top line and increase our unit volume we anticipate continued margin
improvement and profitability resulting from better fixed cost utilization
and our previously announced direct cost improvements."
Mr. Gaynor continued, "We have identified markets that offer substantial
growth opportunity and we have introduced products designed for these
markets. We have organized our sales channels to address these markets and
we are implementing our strategic plan to penetrate these markets. These
improvements along with continued aggressive cash management have
positioned LightPath to become cash positive and reach its profitability
goals."
Financial Results for Three Months Ended December 31, 2009
Revenue for the second quarter of fiscal 2010 ended December 31, 2009
totaled $2.2 million compared to $1.9 million for the second quarter of
fiscal 2009, an increase of 16%. The increase from the second quarter of
the prior fiscal year was primarily attributable to higher sales volumes of
precision molded optics offset by lower volumes of isolators. Our precision
molded optics sales units were significantly higher but our average selling
price was lower. This is the result of our pursuit of the high volume low
cost lenses. Our current cost structure has allowed us to sell product at
lower prices while improving gross margins. Growth in sales going forward
is expected to be derived primarily from the precision molded optics
product line, particularly our low cost lenses being sold in Asia.
Our gross margin percentage in the second quarter of fiscal 2010 compared
to second quarter of fiscal 2009 increased to 43% from 25%. Total
manufacturing cost of $1,269,000 was approximately $170,000 lower in the
second quarter of fiscal 2010 compared to the same period of the prior
fiscal year. This was due to lower production costs. Unit shipment volume
in precision molded optics is up 158% in the second fiscal quarter of 2010
compared to the same period last year. This resulted in better absorption
of overhead costs which results in improved fixed cost utilization which
lowers our unit cost. Direct costs, which include material, labor and
services were increased to 26% of revenue in the first quarter of fiscal
2010, as compared to 22% of revenue in the second quarter of fiscal 2009.
Gross margins improved as a result of the cost reduction programs we have
implemented and better production yields and efficiencies.
During the second quarter of fiscal 2010 total costs and expenses decreased
$590,000 to $754,000 compared to $1.3 million for the same period in fiscal
2009. Included in total costs and expenses for the second quarter of fiscal
2010 were $544,000 in selling, general and administrative expenses, which
decreased $565,000 or 51% from $1.1 million for the same period in the
prior fiscal year. Our decrease in selling, general and administrative
expenses included a reduction in salaries and benefits of $124,000 for the
second quarter of fiscal 2010 compared to the same period in fiscal 2009
resulting from reduced headcount and salary reductions. We also had an
$88,000 decrease in consulting fees, a $27,000 decrease in rent expense a
$33,000 decrease in board of directors fees and a decrease of $11,000 in
accounting fees. Also, in the second quarter of fiscal 2010, LightPath
benefited from the receipt of a one-time payment in the amount of $280,000
from the sale of our insurance claim against our prior D&O insurance
carrier as a reimbursement of legal expenses we incurred. As a result,
total operating income for the second quarter of fiscal 2010 improved to
$204,000 compared to a loss of $877,000 for the same period in fiscal 2009.
Interest expense was approximately $163,000 in the second quarter of fiscal
2010 as compared to $854,000 in the second quarter of fiscal 2009.
Approximately $2,000 of the interest expense for the second quarter of
fiscal 2010 is attributable to our equipment term loan and our capital
equipment lease. The debentures issued in August 1, 2008 accounted for
approximately $161,000 of interest during the quarter ended December 31,
2009 representing periodic interest at 8%, amortization and write-off of
the related debt issuance costs and debt discount, and value of common
shares and warrants issued as incentive to participate in the debenture
placement and to induce the conversion of the debt to equity. The
debentures issued in August 1, 2008 accounted for approximately $847,000 of
interest during the quarter ended December 31, 2008 representing periodic
interest at 8%, amortization and write-off of the related debt issuance
costs, and debt discount and value of common shares and warrants issued as
incentive to participate in the debenture placement and to induce the
conversion of the debt to equity. On December 31, 2008, 25% of the
debentures were converted into common stock and $304,382 of debt discount
and $121,255 of debt issue costs were written-off to interest expense in
the second quarter of fiscal 2009.
Net income for the second quarter of fiscal 2010 was $42,000 or $0.01 per
basic and $0.00 per diluted common share, compared with a net loss of $1.7
million or $0.29 per basic and diluted per common share for the same period
in fiscal 2009. This represents a $1.8 million decrease in net loss
compared to the second quarter of fiscal 2009. Also, there was a $748,000
improvement in net loss from the net loss of $706,000 or $0.08 per basic
and diluted common share for the first quarter of fiscal 2010.
Weighted-average shares outstanding increased to 8,163,675 in the second
quarter of fiscal 2010 compared to 5,892,829 in the second quarter in
fiscal 2009 primarily due to the issuance of shares of common stock related
to a private placement in the first quarter of fiscal 2010.
Financial Results for Six Months Ended December 31, 2009
Revenue for the first six months of fiscal 2010 ended December 31, 2009
totaled $3.8 million compared to $4.2 million for the first half of fiscal
2009, a decrease of 11%. The decrease from the first half of the prior
fiscal year was primarily attributable to lower sales volumes across all
product lines except precision molded optics. Our precision molded optics
sales units were significantly higher but our average selling price was
lower. This is the result of our pursuit of the high volume low cost lenses.
Our current cost structure has allowed us to sell product at lower prices
while improving gross margins. Growth in sales going forward is expected to
be derived primarily from the precision molded optics product line,
particularly our low cost lenses being sold in Asia.
Our gross margin percentage in the first half of fiscal 2010 compared to
the first half of fiscal 2009 increased to 43% from 26%. Total
manufacturing cost of $2.2 million was $988,000 lower in the first half of
fiscal 2010 compared to the same period of the prior fiscal year. This was
due to lower production costs. Unit shipment volume in precision molded
optics is up 177% in the first half of fiscal 2010 compared to the same
period last year. This resulted in better absorption of overhead costs
which results in improved fixed cost utilization which lowers our unit cost.
Direct costs, which include material, labor and services were decreased to
22% of revenue in the first half of fiscal 2010, as compared to 23% of
revenue in the first half of fiscal 2009. Gross margins improved as a
result of the cost reduction programs we have implemented and better
production yields and efficiencies.
During the first half of fiscal 2010 total costs and expenses decreased
$900,000 to $1.9 million compared to $2.8 million for the same period in
fiscal 2009. Included in total costs and expenses for the first half of
fiscal 2010 were $1.5 million in selling, general and administrative
expenses, which decreased $833,000 or 36% from $2.3 million for the same
period in the prior fiscal year. Our decrease in selling, general and
administrative expenses included a reduction in salaries and benefits of
$300,000 for the first half of fiscal 2010 compared to the same period in
fiscal 2009 resulting from reduced headcount and salary reductions. We
also had an $82,000 decrease in rental costs, a $43,000 decrease in
accounting fees, a $38,000 decrease in insurance expense and a decrease of
$38,000 in travel expenses. Also, in the first half of fiscal 2010,
LightPath benefited from receipt of two one-time payments totaling $576,000.
The first payment in the amount of $276,000 was from our prior D&O
insurance carrier, Reliance, as a reimbursement of legal expenses we
incurred. The second payment in the amount of $280,000 was from the sale of
the balance of our insurance claim against Reliance. This was partially
offset by higher investor relations expenses of $158,000 and higher legal
expenses for payments in connection with our recent litigation. As a result,
total operating loss for the first half of fiscal 2010 improved to $323,000
compared to a loss of $1.8 million for the same period in fiscal 2009.
Interest expense was approximately $343,000 in the first half of fiscal
2010 as compared to $1,012,000 in the first half of fiscal 2009.
Approximately $3,000 of the interest expense for the first half of fiscal
2010 is attributable to our equipment term loan and our capital equipment
lease. The debentures issued in August 1, 2008 accounted for approximately
$338,000 of interest during the six months ended December 31, 2009
representing periodic interest at 8%, amortization and write-off of the
related debt issuance costs and debt discount, and value of common shares
and warrants issued as incentive to participate in the debenture placement
and to induce the conversion of the debt to equity. The debentures issued
in August 1, 2008 accounted for approximately $982,000 of interest during
the six months ended December 31, 2008 representing periodic interest at 8%,
amortization and write-off of the related debt issuance costs, and debt
discount and value of common shares and warrants issued as incentive to
participate in the debenture placement and to induce the conversion of the
debt to equity. On December 31, 2008, 25% of the debentures were converted
into common stock and $304,382 of debt discount and $121,255 of debt issue
costs were written-off to interest expense in the second quarter of fiscal
2009.
Net loss for the first half of fiscal 2010 was $665,000 or $0.09 per basic
and diluted common share, compared with a net loss of $2.7 million or $0.49
per basic and diluted per common share for the same period in fiscal 2009.
This represents a $2.1 million decrease in net loss compared to the first
half of fiscal 2009. Weighted-average shares outstanding increased to
7,739,087 in the first half of fiscal 2010 compared to 5,652,444 in the
first half in fiscal 2009 primarily due to the issuance of shares of common
stock related to the private placement in the first quarter of fiscal 2010.
Cash and cash equivalents totaled $906,000 at December 31, 2009. Total
current assets and total assets at December 31, 2009 were $3.9 million and
$6.6 million compared to $3.3 million and $5.8 million, respectively, at
June 30, 2009. Total current liabilities and total liabilities at December
31, 2009 were $1.6 million and $3.8 million compared to $2.0 million and
$4.1 million, respectively, for June 30, 2009. As a result, the current
ratio as of December 31, 2009 improved to 2.66 to 1 compared to 2.43 to 1
as of June 30, 2009. Total stockholders' equity at December 31, 2009
totaled $2.7 million compared to $1.7 million at June 30, 2009.
As of December 31, 2009 our backlog of orders scheduled to ship in the next
12 months, was $4.0 million compared to $2.3 million as of June 30, 2009.
Jim Gaynor concluded, "Our results for the second fiscal quarter of 2010
are a result of the dedication, hard work and effort by the team at
LightPath to control costs, mitigate expenses and bring the right new
products to our defined markets. We are seeing the effect of increased unit
volumes in precision molded optics and these volumes are improving the
absorption of our fixed costs and reducing cash usage in operations. With
our current operating efficiencies and low cost structure our focus will
continue to be on revenue growth.
"Our efforts to penetrate high volume lower cost commercial markets in
Asia show tremendous promise for this fiscal year and we are excited by the
acceptance of the new lenses we have recently introduced. Going forward we
will continue to focus on these market opportunities and on implementing
new distribution channels to expand our presence in the Asian precision
optic lens market."
Investor Conference Call and Webcast Details:
LightPath will host an audio conference call and webcast on Thursday,
February 4th at 4:00 p.m. EST to discuss the Company's financial and
operational performance for the second quarter of fiscal year 2010.
Conference Call Details Date: Thursday, February 4, 2010 Time: 4:00 p.m. (EST) Dial-in Number: 1-877-407-8033 International Dial-in Number: 1-201-689-8033It 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. LightPath has a strong patent portfolio that has been granted or licensed to us in these fields. LightPath common stock trades on the NASDAQ Capital Market under the stock symbol LPTH. For more information visit www.lightpath.com The discussions of our results as presented in this release include use of the 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 are 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.
LIGHTPATH TECHNOLOGIES, INC.
EBITDA
(Unaudited)
Three months ended Six months ended
December 31, December 31,
2009 2008 2009 2008
------------- ------------ ------------ ------------
Net Income (loss) $ 41,676 $ (1,725,508) $ (664,697) $ (2,749,317)
Depreciation and
amortization 158,267 144,265 303,431 320,918
Interest expense 163,402 853,526 342,988 1,012,248
------------- ------------ ------------ ------------
EBITDA $ 363,345 $ (727,717) $ (18,278) $ (1,416,151)
============= ============ ============ ============
LIGHTPATH TECHNOLOGIES, INC.
Consolidated Balance Sheets
Unaudited
December 31, June 30,
Assets 2009 2009
------------ ------------
Current assets:
Cash and cash equivalents $ 906,140 $ 579,949
Trade accounts receivable, net of
allowance of $27,024 and $26,131 1,467,357 973,634
Inventories, net 1,052,962 983,278
Other receivables - 183,413
Prepaid interest expense 316,690 366,219
Prepaid expenses and other assets 203,653 173,882
------------ ------------
Total current assets 3,946,802 3,260,375
Property and equipment - net 2,210,432 2,024,571
Intangible assets - net 150,435 166,869
Debt costs, net 229,232 299,080
Other assets 27,737 78,701
------------ ------------
Total assets $ 6,564,638 $ 5,829,596
============ ============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 1,258,334 $ 1,376,599
Accrued liabilities 76,112 181,318
Accrued payroll and benefits 258,988 332,609
Note payable, current portion 27,640 152,758
Capital lease obligation, current
portion - 5,050
------------ ------------
Total current liabilities 1,621,074 2,048,334
Deferred rent 622,289 644,056
8% convertible debentures to related parties,
net of debt discount 195,294 175,255
8% convertible debentures, net of debt discount 1,388,515 1,270,725
------------ ------------
Total liabilities 3,827,172 4,138,370
------------ ------------
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;
8,205,261 and 6,696,992 shares issued
and outstanding, respectively 82,053 66,970
Additional paid-in capital 204,858,863 203,151,364
Foreign currency translation adjustment 46,588 58,233
Accumulated deficit (202,250,038) (201,585,341)
------------ ------------
Total stockholders' equity 2,737,466 1,691,226
------------ ------------
Total liabilities and
stockholders' equity $ 6,564,638 $ 5,829,596
============ ============
LIGHTPATH TECHNOLOGIES, INC.
Consolidated Statements of
Operations
(Unaudited)
Three months ended Six months ended
December 31, December 31,
2009 2008 2009 2008
----------- ----------- ----------- -----------
Product sales, net $ 2,226,454 $ 1,905,202 $ 3,783,433 $ 4,242,964
Cost of sales 1,268,531 1,438,234 2,156,874 3,144,992
----------- ----------- ----------- -----------
Gross margin 957,923 466,968 1,626,559 1,097,972
Operating expenses:
Selling, general and
administrative 543,703 1,108,931 1,505,465 2,338,450
New product
development 201,764 227,775 427,674 502,468
Amortization of
intangibles 8,217 8,217 16,434 16,434
Gain on sale of
property and
equipment - (1,200) - (7,707)
----------- ----------- ----------- -----------
Total costs
and expenses 753,684 1,343,723 1,949,573 2,849,645
----------- ----------- ----------- -----------
Operating
income (loss) 204,239 (876,755) (323,014) (1,751,673)
Other income (expense):
Interest expense (45,378) (280,983) (97,811) (343,382)
Interest expense -
debt discount (84,401) (409,438) (175,329) (478,320)
Interest expense -
debt costs (33,623) (163,105) (69,848) (190,546)
Investment and other
income 839 4,773 1,305 14,604
----------- ----------- ----------- -----------
Total other expense,
net (162,563) (848,753) (341,683) (997,644)
----------- ----------- ----------- -----------
Net income
(loss) $ 41,676 $(1,725,508) $ (664,697) $(2,749,317)
=========== =========== =========== ===========
Income (Loss) per
common share (basic) $ 0.01 $ (0.29) $ (0.09) $ (0.49)
=========== =========== =========== ===========
Number of shares used
in per share
calculation (basic) 8,163,675 5,892,829 7,739,087 5,652,444
=========== =========== =========== ===========
Income (Loss) per
common share (diluted) $ 0.00 $ (0.29) $ (0.09) $ (0.49)
=========== =========== =========== ===========
Number of shares used
in per share
calculation (diluted) 8,595,396 5,892,829 7,739,087 5,652,444
=========== =========== =========== ===========
LIGHTPATH TECHNOLOGIES, INC.
Consolidated Statements of Cash Flows
(Unaudited)
Six months ended
December 31,
--------------------------
2009 2008
------------ ------------
Cash flows from operating activities
Net loss $ (664,697) $ (2,749,317)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 303,431 320,918
Interest from amortization of debt
discount 175,329 478,320
Fair value of warrants issued to induce
debenture conversion - 215,975
Interest from amortization of debt costs 69,848 190,546
Issuance of common stock for interest on
convertible debentures - 97,633
Common stock issued for legal settlement 50,000 -
Gain on sale of property and equipment - (7,707)
Stock based compensation 64,910 52,452
Provision for doubtful accounts
receivable 893 12,952
Deferred rent (21,767) (427)
Common stock issued for payment of
consulting services 150,000 49,800
Changes in operating assets and liabilities:
Trade accounts receivables (494,616) 14,691
Other receivables 183,413 -
Inventories (69,684) 169,155
Prepaid expenses and other assets 70,722 17,301
Accounts payable and accrued liabilities (297,092) (949,878)
------------ ------------
Net cash used in operating
activities (479,310) (2,087,586)
------------ ------------
Cash flows from investing activities
Purchase of property and equipment (472,858) (116,013)
Proceeds from sale of equipment - 37,791
------------ ------------
Net cash used in investing
activities (472,858) (78,222)
Cash flows from financing activities
Proceeds from sale of common stock, net of
costs 1,417,090 -
Proceeds from sale of common stock from
employee stock purchase plan 3,082 11,191
Borrowings on 8% convertible debenture, net
of issuance costs - 2,672,430
Payments on secured note payable - (260,828)
Payments on capital lease obligation (5,050) (8,992)
Payments on note payable (125,118) (83,323)
------------ ------------
Net cash provided by financing activities 1,290,004 2,330,478
------------ ------------
Effect of exchange rate on cash and cash
equivalents (11,645) 382
------------ ------------
Increase in cash and cash equivalents 326,191 165,052
Cash and cash equivalents, beginning of period 579,949 358,457
------------ ------------
Cash and cash equivalents, end of period $ 906,140 $ 523,509
============ ============
Supplemental disclosure of cash flow
information:
Interest paid in cash $ 3,057 $ 27,639
Income taxes paid 2,110 2,625
Supplemental disclosure of non-cash investing
& financing activities:
Convertible debentures converted into
common stock 37,500 732,250
Fair value of warrants issued to broker of
debt financing - 194,057
Fair value of warrants and incentive
shares issued to debenture holders - 790,830
Intrinsic value of beneficial conversion
feature underlying convertible
debentures - 600,635
LIGHTPATH TECHNOLOGIES, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
Six months ended December 31, 2009
(Unaudited)
Foreign
Currency
Class A Total
Additional Trans- Stock-
Common Stock Paid-in lation Accumulated holders'
Shares Amount Capital Adjustment Deficit Equity
--------- ------- ----------- ------ ------------- ---------
Balance at
June 30,
2009 6,696,992 $66,970 $203,151,364 $58,233 $(201,585,341) $1,691,226
Issuance
of common
stock
for:
Employee
Stock
Purchase
Plan 5,569 56 3,026 - - 3,082
Vested
restricted
stock
units 20,000 200 (200) - - -
Conversion
of
debentures 24,351 244 37,256 - - 37,500
Cashless
exercise
of
warrants 63,622 636 (636) - - -
Settlement
of
litigation 26,455 265 49,735 - - 50,000
Consulting
services 69,445 694 149,306 - - 150,000
Stock
based
compensa-
tion on
stock
options
and
restricted
stock
units - - 64,910 - - 64,910
Sale of
common
stock and
warrants,
net 1,298,827 12,988 1,404,102 - - 1,417,090
Foreign
currency
translation
adjustment - - - (11,645) - (11,645)
Net loss - - - - (664,697) (664,697)
---------
Compre-
hensive
loss (676,342)
--------- ------- ------------ ------- ------------- ----------
Balance at
December
31, 2009 8,205,261 $82,053 $204,858,863 $46,588 $(202,250,038) $2,737,466
--------- ------- ------------ ------- ------------- ----------
Contact Information: Contacts: LightPath Technologies, Inc. Jim Gaynor President & CEO or Dorothy Cipolla CFO +1 (407) 382-4003 dcipolla@lightpath.com