-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, F4e5QmszSwkMhiM1cd1vyuKm69a1JfwqX9UEA2iLcAVtkURYntDlvkdJ7U+P63ZJ dpAGJ/WZz7eMZgpd5KDR2Q== 0000950147-00-000802.txt : 20000522 0000950147-00-000802.hdr.sgml : 20000522 ACCESSION NUMBER: 0000950147-00-000802 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20000414 ITEM INFORMATION: FILED AS OF DATE: 20000519 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LIGHTPATH TECHNOLOGIES INC CENTRAL INDEX KEY: 0000889971 STANDARD INDUSTRIAL CLASSIFICATION: SEMICONDUCTORS & RELATED DEVICES [3674] IRS NUMBER: 860708398 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 000-27548 FILM NUMBER: 640301 BUSINESS ADDRESS: STREET 1: 6820 ACADEMY PKWY E N E STREET 2: STE 103 CITY: ALBUQUERQUE STATE: NM ZIP: 87109 BUSINESS PHONE: 5053421100 8-K/A 1 AMENDMENT NO. 1 TO FORM 8-K ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------- FORM 8-K/A Amendment No. 1 ---------- PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): April 14, 2000 Commission File Number 000-27548 LIGHTPATH TECHNOLOGIES, INC. ------------------------------------------------------ (Exact name of registrant as specified in its charter) Delaware 86-0708398 ------------------------------- ------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 6820 Academy Parkway East, NE Albuquerque, New Mexico 87109 - ---------------------------------------- ---------- (Address of principal executive offices) (Zip Code) (505) 342-1100 ---------------------------------------------------- (Registrant's telephone number, including area code) ================================================================================ LIGHTPATH TECHNOLOGIES, INC. FORM 8-K/A-1 LightPath Technologies, Inc. hereby amends the following items, financial statements, exhibits, or other portions of its Current Report on Form 8-K, originally filed with the Securities and Exchange Commission on April 19, 2000 (the "Form 8-K") as set forth in the pages attached hereto: ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. (a) Financial Statements of the Businesses Acquired. The audited financial statements of Horizon Photonics, Inc. are attached as Exhibit 99.2. (b) Pro Forma Financial Information. The unaudited pro forma consolidated financial statements of LightPath Technologies, Inc. are attached as Exhibit 99.3. (c) Exhibits. Exhibit Description ------- ----------- 23.1 Consent of Windes & McClaughry Accountancy Corporation (1) 99.1 Press release issued April 17, 2000 (2) 99.2 Financial statements of Horizon Photonics, Inc. (1) 99.3 Pro Forma financial statements of LightPath Technologies, Inc. (1) ---------- (1) Filed herewith. (2) Filed on Form 8-K dated April 19, 2000. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed in its behalf by the undersigned, thereunto duly authorized. LIGHTPATH TECHNOLOGIES, INC. By: /s/ Donald Lawson May 17, 2000 ------------------------------------ Donald Lawson CEO and President 2 EXHIBIT INDEX Exhibit Number Description - -------------- ----------- 23.1 Consent of Windes & McClaughry Accountancy Corporation 99.2 Financial statements of Horizon Photonics, Inc. 99.3 Pro Forma financial statements of LightPath Technologies, Inc. EX-23.1 2 CONSENT OF WINDES & MCCLAUGHRY To the Board of Directors of LightPath Technologies, Inc. We hereby consent to the incorporation by reference in the Prospectus constituting part of the Registration Statement (No.'s 333-23511, 333-23515, 333-41705, 333-92017, and 333-96083) on Form S-8 and (No.'s 333-37443, 333-39641, and 333-94303) on Form S-3 of LightPath Technologies, Inc. of our report dated May 3, 2000, relating to the financial statements of Horizon Photonics, Inc., which appears in the Current Report on Form 8-K/A-1 of LightPath Technologies, Inc. dated May 17, 2000. /s/ WINDES & McCLAUGHRY ACCOUNTANCY CORPORATION Long Beach, California May 17, 2000 EX-99.2 3 FINANCIAL STATEMENTS OF HORIZON PHOTONICS, INC. FINANCIAL STATEMENTS OF HORIZON PHOTONICS, INC. MARCH 31, 2000 AND 1999 Independent Auditors' Report.............................................. 1 Balance Sheets............................................................ 2 Statements of Operations.................................................. 3 Statements of Stockholders' Equity........................................ 4 Statements of Cash Flows.................................................. 5 Notes to Financial Statements............................................. 6-17 INDEPENDENT AUDITORS' REPORT To the Board of Directors and Stockholders of Horizon Photonics, Inc. We have audited the accompanying balance sheets of Horizon Photonics, Inc. (formerly Horizon Photonics, LLC) as of March 31, 2000 and 1999, and the related statements of operations, stockholders' equity, and cash flows for the years then ended. 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 Horizon Photonics, Inc. as of March 31, 2000 and 1999, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. /s/ WINDES & McCLAUGHRY ACCOUNTANCY CORPORATION Long Beach, California May 3, 2000 1 HORIZON PHOTONICS, INC. BALANCE SHEETS MARCH 31, ------------------------- 2000 1999 ASSETS ----------- ----------- CURRENT ASSETS Cash and cash equivalents $ 108,699 $ 5,970 Trade accounts receivable 476,406 56,682 Related party receivable 600,000 Inventories 709,852 46,383 Prepaid expenses 8,469 ----------- ----------- 1,903,426 109,035 ----------- ----------- PROPERTY AND EQUIPMENT, net 1,112,267 166,737 ----------- ----------- INTANGIBLE ASSETS, net 29,016 19,432 ----------- ----------- TOTAL ASSETS $ 3,044,709 $ 295,204 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 299,305 $ 10,697 Accrued liabilities 86,007 55,678 Capital lease obligations, current portion 19,420 17,293 ----------- ----------- 404,732 83,668 ----------- ----------- NONCURRENT LIABILITIES Capital lease obligations, net of current portion 43,699 63,120 Note payable to stockholder 250,000 250,000 ----------- ----------- 293,699 313,120 ----------- ----------- COMMITMENTS AND CONTINGENCIES (Notes 9, 10 and 11) STOCKHOLDERS' EQUITY Preferred stock, $0.0001 par value, 235,405 shares authorized; Series A convertible shares, 235,405 issued and outstanding 3,200,000 Common stock, $0.0001 par value, 915,405 shares authorized; 510,000 shares issued and outstanding 15,000 Accumulated deficit or members' capital account (868,722) (101,584) ----------- ----------- 2,346,278 (101,584) ----------- ----------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 3,044,709 $ 295,204 =========== =========== The accompanying notes are an integral part of these statements. 2 HORIZON PHOTONICS, INC. STATEMENTS OF OPERATIONS FOR THE YEAR ENDED MARCH 31, ----------------------------- 2000 1999 ----------- ----------- REVENUES Product sales $ 937,437 $ 348,709 Contract manufacturing 382,737 R&D services 60,000 14,384 System design 5,700 226,112 ----------- ----------- 1,385,874 589,205 ----------- ----------- COSTS AND EXPENSES Cost of goods sold 963,286 215,083 Selling, general and administrative 550,964 197,694 Research and development 647,472 216,213 ----------- ----------- 2,161,722 628,990 ----------- ----------- OPERATING LOSS (775,848) (39,785) ----------- ----------- OTHER INCOME (EXPENSE) Interest income 38,462 Interest expense (33,421) (31,577) Other expense (3,531) (7,366) ----------- ----------- 1,510 (38,943) ----------- ----------- LOSS BEFORE PROVISION FOR INCOME TAX (774,338) (78,728) PROVISION FOR INCOME TAX 800 800 ----------- ----------- NET LOSS $ (775,138) $ (79,528) =========== =========== The accompanying notes are an integral part of these statements. 3 HORIZON PHOTONICS, INC. STATEMENTS OF STOCKHOLDERS' EQUITY PREFERRED COMMON ACCUMULATED STOCK STOCK DEFICIT ----------- ----------- ----------- Balance at April 1, 1998 $ (36,256) Member contributions 14,200 Net Loss (79,528) ----------- Balance at March 31, 1999 (101,584) Member contributions 8,000 Issuance of Stock $ 3,200,000 $ 15,000 Net Loss (775,138) ----------- ----------- ----------- Balance at March 31, 2000 $ 3,200,000 $ 15,000 $ (868,722) =========== =========== =========== The accompanying notes are an integral part of these statements. 4 HORIZON PHOTONICS, INC. STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED MARCH 31, --------------------------- 2000 1999 ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITES Net loss $ (775,138) $ (79,528) Adjustments to reconcile net loss to net cash from operating activities Depreciation and amortization 184,572 71,895 Changes in assets and liabilities: (Increase) decrease in: Trade accounts receivable (419,724) (41,750) Inventories (663,469) 261 Prepaid expenses (8,469) Increase in: Accounts payable 288,608 3,955 Accrued liabilities 30,329 47,345 ----------- ----------- Net Cash Provided By (Used In) Operating Activities (1,363,291) 2,178 ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES Intangible assets (9,584) (19,432) Purchases of property and equipment (1,130,102) (12,934) ----------- ----------- Net Cash Used In Investing Activities (1,139,686) (32,366) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES Members' contributions 8,000 14,200 Payments on capital lease obligations (17,294) (24,450) Proceeds from issuance of preferred and common stock 2,615,000 ----------- ----------- Net Cash Provided By (Used In) Financing Activities 2,605,706 (10,250) ----------- ----------- CHANGE IN CASH AND CASH EQUIVALENTS 102,729 (40,438) CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 5,970 46,408 ----------- ----------- CASH AND CASH EQUIVALENTS AT END OF YEAR $ 108,699 $ 5,970 =========== =========== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid during the year for: Interest $ 33,421 $ 31,577 Income taxes $ 800 $ 800 NONCASH FINANCING ACTIVITIES Preferred stock was issued in exchange for cash of $2,600,000 and a receivable of $600,000. The Company acquired capital leases totaling $104,863 during fiscal 1999. The accompanying notes are an integral part of these statements. 5 HORIZON PHOTONICS, INC. NOTES TO THE FINANCIAL STATEMENTS MARCH 31, 2000 AND 1999 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION Horizon Photonics, Inc. (Corporation) was incorporated in California on February 24, 1999 as the successor to Horizon Photonics, LLC, a Delaware limited liability company (LLC) founded in July 1997. Horizon Photonics, Inc. and its predecessor formally merged effective May 20, 1999 (the Company). The Company designs and manufactures fiber optic components for the telecom and datacom industries. The Company has developed a family of passive products that utilize a proprietary micro-fixture design and robotic platform process. This automated process allows for micro-optics to be mounted in small transferable fixtures that are processed in arrays and converted into a variety of optical components and component subsystems. The Company is currently manufacturing a qualified line of OEM isolators, and expects to qualify a series of other products and contract assemblies during the next fiscal year. BASIS OF PRESENTATION The operations for the year ended March 31, 2000 include the accounts of the Corporation from the date of the merger to March 31, 2000 and the accounts of the LLC from April 1, 1999 through May 20, 1999. The operations for the year ended March 31, 1999 consists of the LLC accounts only. During the year ended March 31, 2000, the Company completed a private placement of convertible preferred stock to raise additional capital to fund research and development of its product and manufacturing processes. The Company is using the proceeds from the private placement to complete construction of its manufacturing facilities, including clean rooms, equipment purchases, research and development, and to finance the Company's working capital needs. The Company is also developing and building equipment to create a "second source" for its own manufacturing processes with its major customer, who is also the preferred stock owner. The revenues from such equipment development are designed to cover the cost of construction and development. 6 HORIZON PHOTONICS, INC. NOTES TO THE FINANCIAL STATEMENTS MARCH 31, 2000 AND 1999 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) BASIS OF PRESENTATION (CONTINUED) The Company has certain products that are in production and are being sold as of March 31, 2000. The revenues from product sales and machinery construction are not currently sufficient to finance operations of the Company on its own. As a result, the Company continues to be dependent upon its sources of capital until sales increase to a sustainable level. As disclosed in Notes 10 and 11, the Company has significant sources of new capital available. STATEMENT OF CASH FLOWS - CONCENTRATION OF CREDIT RISK For purposes of the statement of cash flows, the Company considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents. At March 31, 2000 and throughout the periods, the Company has maintained cash balances at its financial institution in excess of federally insured limits. INVENTORIES Inventories consist principally of raw materials and finished goods and are stated at the lower of cost or market, on a first-in, first-out basis. PROPERTY AND EQUIPMENT Property and equipment is stated at cost and depreciated using straight-line and accelerated methods over the estimated useful lives of the related assets, ranging from three to seven years. INCOME TAXES Income taxes are accounted for under the provisions of Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes, which requires an asset and liability approach to financial accounting and reporting for income taxes. 7 HORIZON PHOTONICS, INC. NOTES TO THE FINANCIAL STATEMENTS MARCH 31, 2000 AND 1999 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) INCOME TAXES (CONTINUED) Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based upon enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. PRO FORMA NET INCOME (UNAUDITED) Prior to May 20, 1999, the Company's members elected to be treated as a Limited Liability Company (LLC) for federal and state income tax purposes. The Company terminated its LLC upon merger into the Corporation on May 20, 1999 (Note 6). Pro forma net income is approximately equivalent to reported amounts, and represents net income after a pro forma tax provision, using a tax rate of 40%, net of a valuation allowance, for the two years ended March 31, 2000, to reflect the estimated income tax expense of the Company as if it had been subject to normal federal and state income taxes during the respective reporting periods. REVENUE RECOGNITION Revenue recognition occurs from sales of products upon shipment or as earned under product development agreements. RESEARCH AND DEVELOPMENT Costs related to designing and developing new products are expensed as research and product development expenses are incurred. STOCK-BASED COMPENSATION Stock-based compensation is accounted for using the intrinsic value method as prescribed by Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees, under which no compensation expense is recognized when the exercise price of the employee's stock option equals or exceeds the market price of the underlying stock on the date of grant. 8 HORIZON PHOTONICS, INC. NOTES TO THE FINANCIAL STATEMENTS MARCH 31, 2000 AND 1999 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) STOCK-BASED COMPENSATION (CONTINUED) Pro forma information required by Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation, has been presented under the fair value method using a Black-Scholes option-pricing model. USE OF ESTIMATES AND ASSUMPTIONS Management uses estimates and assumptions in preparing financial statements in accordance with generally accepted accounting principles. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could vary from the estimates that were assumed in preparing the financial statements. FAIR VALUES OF FINANCIAL INSTRUMENTS Fair values of financial instruments of the Company are disclosed as required by Statement of Financial Accounting Standards No. 107, Disclosures About Fair Values of Financial Instruments. The carrying amounts of cash and cash equivalents, trade accounts receivable, account payable and notes payable to stockholder approximate fair value. NOTE 2 - INVENTORIES The composition of inventories is: MARCH 31, ----------------------- 2000 1999 -------- -------- Raw materials $550,683 $ 46,383 Finished goods 17,194 Work in progress 48,630 Lucent machinery 93,345 -------- -------- $709,852 $ 46,383 ======== ======== 9 HORIZON PHOTONICS, INC. NOTES TO THE FINANCIAL STATEMENTS MARCH 31, 2000 AND 1999 NOTE 3 - PROPERTY AND EQUIPMENT Property and equipment consists of the following: MARCH 31, ------------------------- 2000 1999 ---------- ---------- Manufacturing equipment $1,125,438 $ 222,499 Computer equipment and software 23,117 21,808 Furniture and fixtures 19,384 3,933 Leasehold 210,403 ---------- ---------- 1,378,342 248,240 Less: accumulated depreciation (266,075) (81,503) ---------- ---------- $1,112,267 $ 166,737 ========== ========== NOTE 4 - INTANGIBLE ASSETS Intangible assets consist of capitalized patent application costs for the product and processes involved. The Company will begin amortization of the patents once they are issued or will expense such amounts if approval is denied. NOTE 5 - CAPITAL LEASE OBLIGATIONS The Company is obligated under four capital leases. The total cost of equipment under the capital leases was $104,863 at March 31, 2000 and 1999. The total accumulated depreciation was $46,142 and $20,973 at March 31, 2000 and 1999, respectively. One of the leases expires in 2001, and the other three expire in 2003. The monthly payments total approximately $2,100. 10 HORIZON PHOTONICS, INC. NOTES TO THE FINANCIAL STATEMENTS MARCH 31, 2000 AND 1999 NOTE 5 - CAPITAL LEASE OBLIGATIONS (CONTINUED) Future minimum lease payments on the capital leases, excluding purchase option, are: Year Ending March 31, ----------- 2001 $25,715 2002 22,956 2003 22,116 2004 4,450 ------- Total minimum lease payments 75,237 Less: amounts representing interest 12,118 ------- Present value of minimum lease payments $63,119 ======= Future maturities of capital lease obligations are as follows: Year Ending March 31, ----------- 2001 $19,420 2002 19,322 2003 20,357 2004 4,020 ------- $63,119 ======= NOTE 6 - NOTE PAYABLE TO STOCKHOLDER At March 31, 2000 and 1999, the Company has a note payable to a stockholder in the amount of $250,000, with interest at 10%, payable semi-annually, commencing February 1, 2000 and continuing until February 1, 2002. The $250,000 principal balance and any remaining accrued interest is due and payable on August 1, 2002, subject to certain limitations based on the Company's "free cash flow" at the time of payment. In addition, as of March 31, 2000 and 1999, respectively, the Company owes the stockholder accrued interest of $4,167 and $19,107. (See Note 11.) 11 HORIZON PHOTONICS, INC. NOTES TO THE FINANCIAL STATEMENTS MARCH 31, 2000 AND 1999 NOTE 7 - INCOME TAXES Major components of the Company's income tax provision are: MARCH 31, ------------------------ 2000 1999 --------- --------- Currently payable: Federal None None State $ 800 $ 800 --------- --------- 800 800 --------- --------- Deferred: Provision for deferred tax None None --------- --------- $ 800 $ 800 ========= ========= The annual tax provision is different from the amount which would be provided by applying the statutory federal and state tax rates to the Company's pre-tax income. The reasons for the differences are as follows: MARCH 31, ------------------------ 2000 1999 --------- --------- Computed statutory credit $(307,175) $ (17,496) Permanent differences 1,001 396 Tax credits (140,000) (10,000) Valuation allowance 446,974 27,900 --------- --------- $ 800 $ 800 ========= ========= The Company's total deferred tax assets and liabilities are as follows: Total deferred tax assets - noncurrent $ 474,874 $ 27,900 Valuation allowance (474,874) (27,900) --------- --------- Net deferred tax asset None None ========= ========= 12 HORIZON PHOTONICS, INC. NOTES TO THE FINANCIAL STATEMENTS MARCH 31, 2000 AND 1999 NOTE 7 - INCOME TAXES (CONTINUED) At March 31, 2000, the Company has net operating loss carryforwards for federal and California income tax purposes of approximately $800,000 and $400,000, which will begin to expire in 2020 (federal) and 2008 (California), respectively, if not previously utilized. The Company also has research and development credit carryforwards and Manufacturers Investment Tax Credit carryforwards of approximately $140,000, which will begin to expire in 2020, if not previously utilized. NOTE 8 - STOCKHOLDERS' EQUITY STOCK OPTION PLAN In April 1999, the Company implemented the Horizon Photonics, Inc. 1999 Stock Option Plan (Option Plan), pursuant to which 160,000 shares of common stock have been reserved for issuance to employees and consultants. The Company applies APB Opinion No. 25 and related Interpretations in accounting for the Option Plan. No compensation costs have been recognized for its stock option grants where the "fair market value" of the underlying common stock equaled the option price at the date of grant. As of March 31, 2000, incentive options to purchase an aggregate of 119,000 shares had been granted to twelve employees at exercise prices ranging from $1.00 to $8.15 per share. The options were granted at "fair market value" as of the date of grant, vest over an average period of four years, and terminate no more than ten years from the date of grant. The fair value for the $1.00 per share options was determined by the Company when no readily determinable value existed and, as such, the Company used the best information available considering sales revenues and multiples in the industry. The $8.15 per share option price was determined based upon the valuation established by the preferred stockholder, subject to discounts. All outstanding options immediately vest in the event of a sale or merger of the Company. 13 HORIZON PHOTONICS, INC. NOTES TO THE FINANCIAL STATEMENTS MARCH 31, 2000 AND 1999 NOTE 8 - STOCKHOLDERS' EQUITY (CONTINUED) STOCK OPTION PLAN (CONTINUED) A summary of the status of the Option Plan as of March 31, 2000 is presented below: Outstanding at April 1, 1999 None Granted 119,000 Exercised -- Lapsed or canceled -- --------- Outstanding at March 31, 2000 119,000 ========= Options exercisable at March 31, 2000 10,000 ========= The following table summarizes information about stock options outstanding at March 31, 2000: NUMBER NUMBER OUTSTANDING AT REMAINING EXERCISABLE AT EXERCISE MARCH 31, CONTRACTUAL MARCH 31, PRICE 2000 LIFE 2000 -------- -------- ---------- ------- $1.00 70,000 9.2 years 10,000 $8.15 49,000 9.7 years -------- ------- $1 to $8.15 119,000 9.4 years 10,000 ======== ======= The weighted-average grant date fair values of options granted under the Option Plan during the period ended March 31, 2000 totaled $3.94. The fair value of each incentive option grant is estimated on the date of grant using the Black-Scholes option-pricing model, with the following weighted-average assumptions used for grants for the year ended March 31, 2000: dividend yield of 0%; expected volatility of 0%; risk-free interest rate of 6.50%; and expected lives ranging from 1 to 4 years. Had the Company elected to measure compensation cost based on the fair value of the stock options, the net loss for the period would have increased by approximately $57,000. 14 HORIZON PHOTONICS, INC. NOTES TO THE FINANCIAL STATEMENTS MARCH 31, 2000 AND 1999 NOTE 8 - STOCKHOLDERS' EQUITY (CONTINUED) COMMON STOCK The holders of common stock are entitled to normal common voting rights and dividends. PREFERRED STOCK The holder of Series A Preferred Stock has certain voting rights and is entitled to receive dividends, pro rata with the common stock, on an as-converted basis. In the event of any liquidation, dissolution or winding up of the Company, the holder of Series A Preferred Stock is entitled to receive, prior and in preference to any distribution to the holders of common stock, an amount equal to $13.59 per share, plus declared but unpaid dividends. The preferred stock is convertible into common stock at any time, at the option of the holder, at an initial conversion price of $13.59 per share, subject to adjustment for certain dilutive issuances, splits and combinations. The Series A Preferred Stock automatically converts into common stock upon the public offering of the Company's common stock, resulting in cash proceeds to the Company of at least $25,000,000. NOTE 9 - COMMITMENTS Effective November 11, 1999, the Company entered into a four-year lease for the rental of office and manufacturing space. Rent expense recognized for the period ended March 31, 2000 and 1999 was $77,062 and $17,892, respectively. Commitments under this operating lease are $80,556 per year for 2000-2002 and $67,130 for 2003. NOTE 10 - RELATED PARTY TRANSACTIONS In August 1999, Horizon closed a funding transaction with Lucent Technologies Inc. (Lucent), pursuant to which Lucent purchased 235,405 shares of the Company's Series A Preferred Stock. As consideration for the Series A Preferred Stock, Lucent is obligated to pay an aggregate of $3,200,000, of which $2,000,000 was paid in August 1999, $600,000 was paid in January 2000, and $600,000 is due in April 2000. (See Note 11.) As part of the stock purchase transaction, the Company, its founding stockholders, and Lucent entered into an Investors' Rights Agreement, Right of First Refusal and Co-Sale Agreement, Voting Agreement, Non-Competition Agreement and Commercial Agreement to cover various matters related to equity, control and intellectual property. In addition, the Company and Lucent are parties to separate manufacturing and licensing agreements. 15 HORIZON PHOTONICS, INC. NOTES TO THE FINANCIAL STATEMENTS MARCH 31, 2000 AND 1999 NOTE 10 - RELATED PARTY TRANSACTIONS (CONTINUED) The Company sold or purchased from Lucent approximately: FOR THE YEAR ENDED MARCH 31, --------------------------- 2000 1999 ---------- ---------- Sales $1,188,000 $ 576,000 Purchases $ 534,000 $ 66,000 Additionally, accounts receivable with Lucent as of March 31, 2000 and 1999 are $152,589 and $52,000, respectively. Accounts payable as of March 31, 2000 and 1999 are $2,405 and none. The related party receivable at March 31, 2000 of $600,000 is due from Lucent. NOTE 11 - SUBSEQUENT EVENTS LUCENT On April 4, 2000, the Company received Lucent's final installment of $600,000 against the aggregate purchase price for the Series A Preferred Stock. LIGHTPATH MERGER Effective April 14, 2000, the Company entered into a merger agreement (merger) with LightPath Technologies, Inc., a Delaware corporation (LightPath), pursuant to which all of the outstanding shares of the Company's Common Stock were exchanged for $35,200,000 of LightPath's Class A Common Stock and $1,000,000 in cash. The number of shares of LightPath's Class A Common Stock issued to the former stockholders of the Company is subject to post-closing adjustment based on the trading price of the Class A Common Stock over a specified time period. Immediately prior to the closing of the merger, Lucent elected to convert all shares of the Company's Series A Preferred Stock into shares of the Company's Common Stock. 16 HORIZON PHOTONICS, INC. NOTES TO THE FINANCIAL STATEMENTS MARCH 31, 2000 AND 1999 NOTE 11 - SUBSEQUENT EVENTS (CONTINUED) LIGHTPATH MERGER (CONTINUED) In connection with the merger, LightPath fully retired the Company's note payable to a stockholder by delivering the total sum of $258,115 directly to the stockholder. (See Note 6.) This amount represented the entire $250,000 principal balance and accrued interest to the date of repayment. In addition, LightPath committed $5,250,000 to fund the Company's expansion. At the closing of the merger, $4,000,000 of this amount was delivered to the Company, with the remainder due on or about July 1, 2000. At the closing of the merger, the Company's outstanding options to purchase shares of the Company's Common Stock fully vested and converted into options to purchase shares of LightPath Class A Common Stock. It is expected that the Company will be operated as a wholly owned subsidiary of LightPath from the Company's current facility in Walnut, California. The Company's parent, LightPath, has incurred significant losses since its inception in 1985. LightPath's financial statements for the year ended June 30, 1999 include a reference to various going-concern issues. The impact of its parent operations on Horizon are not readably determinable. 17 EX-99.3 4 PROFORMA CONSOLIDATED FINANCIAL STATEMENTS PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS LIGHTPATH TECHNOLOGIES, INC. (UNAUDITED) LightPath Technologies, Inc. (the "Company") acquired, on April 14, 2000, all of the outstanding shares of Horizon Photonics, Inc. ("HPI"), for an aggregate purchase price of approximately $36.2 million, comprised of approximately 1.2 million shares of Class A common stock and $1 million in cash. The Company also assumed approximately $250,000 of indebtedness of HPI, which was repaid upon closing of the transaction. The number of shares of Class A common stock issued to the former shareholders of HPI is subject to post closing adjustment based on the trading price of the Class A common stock as defined in the agreement but no later than May 29, 2000. HPI, a California corporation, is an emerging leader in the automated production of passive optical components for the telecommunications and data communications markets. The acquisition will be accounted for under the purchase method, whereby the purchase price will be allocated to the underlying assets acquired and liabilities assumed based upon their estimated fair values. The allocation of the purchase price is in process and it is expected that a portion of the purchase price will be allocated to in-process research and development which, under generally accepted accounting principles, will be immediately expensed by LightPath. The charge to earnings will be recoginized in the quarter ending June 30, 2000. The unaudited Pro Forma Consolidated Financial Statements reflect the following: (1) adjust for the purchase accounting and estimated fair value allocation of the assets acquired and the obligations assumed; and (2) the use of a portion of the Company's cash reserves and issuance of Class A Common Stock to acquire HPI. The unaudited Pro Forma Consolidated Balance Sheet as of March 31, 2000, was prepared as if the transaction had occurred on that date. The unaudited Pro Forma Statement of Operations for the nine month period ended March 31, 2000 and the twelve month period ended June 30, 1999 were prepared as if the transaction had occurred on July 1, 1998. In the opinion of Company management, all adjustments necessary to present fairly such Pro Forma Consolidated Financial Statements have been made based on the terms and structure of the acquisition. These unaudited Pro Forma Consolidated Financial Statements are not necessarily indicative of what actual results would have been had the transaction occurred at the beginning of the period nor do they purport to indicate the results of future operations of the Company. These unaudited Pro Forma Consolidated Financial Statements should be read in conjunction with the accompanying notes and with the historical financial statements for the Company (filed previously) and HPI financial statements filed herewith. 1 LIGHTPATH TECHNOLOGIES, INC. PRO FORMA CONSOLIDATED BALANCE SHEET (UNAUDITED)
MARCH 31, 2000 PRO FORMA LPTH HPI ADJUSTMENTS PRO FORMA ------------- ------------- ------------- ------------- ASSETS Current assets: Cash and cash equivalents $ 41,867,441 $ 108,699 $ (2,408,115)(1) $ 39,568,025 Trade accounts receivable 350,766 476,406 827,172 Inventories 608,588 709,852 1,318,440 Advances to employees and related parties 16,773 600,000 616,773 Prepaid expenses and other 345,446 8,469 353,915 ------------- ------------- ------------- ------------- Total current assets 43,189,014 1,903,426 (2,408,115) 42,684,325 Property and equipment - net 1,880,970 1,112,267 2,993,237 Intangible assets: Intangible assets 573,999 29,016 21,820,000 (4) 22,423,015 Goodwill -- -- 11,752,335 (4) 11,752,335 Investment in LightChip, Inc. 1,000,000 1,000,000 ------------- ------------- ------------- ------------- Total assets $ 46,643,983 $ 3,044,709 $ 31,164,220 $ 80,852,912 ============= ============= ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued liabilities $ 457,534 $ 385,312 $ (8,115)(1) $ 834,731 Accrued payroll and benefits 77,668 -- 77,668 Capital lease obligations, current portion -- 19,420 19,420 ------------- ------------- ------------- ------------- Total current liabilities 535,202 404,732 (8,115) 931,819 Capital lease obligations, net of current portion 43,699 43,699 Note payable to stockholder -- 250,000 (250,000)(1) -- Commitments and contingencies Redeemable common stock - E1, E2, E3 40,178 -- 40,178 Stockholders' equity Preferred stock 2 3,200,000 (3,200,000)(3) 2 Common stock 137,534 15,000 (15,000)(3) 149,605 12,071 (1) Additional paid-in capital 78,830,257 37,956,542 (1) 116,786,799 Accumulated deficit (32,899,190) (868,722) 868,722 (3) (37,099,190) (4,200,000)(4) ------------- ------------- ------------- ------------- Total stockholders' equity 46,068,603 2,346,278 31,422,335 79,837,216 ------------- ------------- ------------- ------------- Total liabilities and stockholders' equity $ 46,643,983 $ 3,044,709 $ 31,164,220 $ 80,852,912 ============= ============= ============= =============
See accompanying notes 2 LIGHTPATH TECHNOLOGIES, INC. PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
9 MONTHS ENDED 9 MONTHS ENDED UNAUDITED MARCH 31, 2000 MARCH 31, 2000(1) PRO FORMA PRO FORMA LPTH HPI ADJUSTMENTS COMBINED ------------ ------------ ------------ ------------ Revenues $ 880,075 $ 1,221,501 $ -- $ 2,101,576 Cost of goods sold 331,808 892,504 1,224,312 Selling, general and administrative expenses 3,890,420 467,559 4,357,979 Research and development expenses 668,286 600,004 1,268,290 Acquired in-process R&D charge -- -- -- -- Amortization of intangible assets -- -- 7,154,813(4) 7,154,813 ------------ ------------ ------------ ------------ Operating loss (4,010,439) (738,566) (7,154,813) (11,903,818) Other income(expense) (82,805) (25,037) (90,000)(5) (197,842) ------------ ------------ ------------ ------------ Net loss (4,093,244) (763,603) (7,244,813) (12,101,660) Imputed dividends and premiums on Preferred Stock (2,205,242) -- (2,205,242) ------------ ------------ ------------ ------------ Net loss applicable to common shareholders $ (6,298,486) $ (763,603) $ (7,244,813) $(14,306,902) ============ ============ ============ ============ Basic and diluted net loss per share $ (.83) $ (1.63) ============ ============ Number of shares used in per share calculation 7,550,091 1,207,158 (6) 8,757,249 ============ ============
The operating results of HPI for the nine month period ending March 31, 2000 were derived by subtracting the activity for the three months ending June 30, 1999 from the year end March 31, 2000 balances. The three month activity excluded was as follows: Revenue $164,373 Expense $201,655 Other income (expense) $ 25,757 Net loss $ 11,535 See accompanying notes 3 LIGHTPATH TECHNOLOGIES, INC. PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
12 MONTHS ENDED 12 MONTHS ENDED UNAUDITED JUNE 30, 1999 MARCH 31, 1999 PRO FORMA PRO FORMA LPTH HPI ADJUSTMENTS COMBINED ------------ ------------ ------------ ------------ Revenues $ 1,086,126 $ 589,205 $ -- $ 1,675,331 Cost of goods sold 409,417 215,083 624,500 Selling, general and administrative expenses 2,918,184 197,694 3,115,878 Research and development expenses 615,371 216,213 831,584 Acquired in-process R&D charge -- -- -- -- Amortization of intangible assets -- -- 9,539,750(4) 9,539,750 ------------ ------------ ------------ ------------ Operating loss (2,856,846) (39,785) (9,539,750) (12,436,381) Other income(expense) (277,172) (39,743) (120,000)(5) (436,915) ------------ ------------ ------------ ------------ Net loss (3,134,018) (79,528) (9,659,750) (12,873,296) Imputed dividends and premiums on Preferred Stock (224,651) -- (224,651) ------------ ------------ ------------ ------------ Net loss applicable to common shareholders $ (3,358,669) $ (79,528) $ (9,659,750) $(13,097,947) ============ ============ ============ ============ Basic and diluted net loss per share $ (.79) $ (2.39) ============ ============ Number of shares used in per share calculation 4,271,313 1,207,158 (6) 5,478,471 ============ ============
See accompanying notes. 4 LIGHTPATH TECHNOLOGIES, INC. NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED 1. Adjustment to cash and stockholders equity consists of the following: Purchase price paid in cash plus acquisition costs $ 2,408,115 Issuance of 1,207,158 shares of LightPath Class A common stock 35,200,000 Estimated fair value of stock options based on the Black-Scholes model 2,768,613 ------------ Cost of acquisition $ 40,376,728 ============ 2. Excess of estimated cost of acquisition over the fair value of the tangible net assets acquired and the liabilities assumed: Purchase price plus acquisition costs $ 40,376,728 Less the fair value of the tangible net assets acquired and liabilities assumed of HPI 2,604,393 ------------ Excess purchase price $ 37,772,335 ============ 3. Elimination of HPI historical stockholders' equity. 4. The purchase price was allocated to tangible net assets and identifiable intangible assets with the unallocated purchase price attributed to goodwill. The value of tangible assets acquired and liabilites assumed approximated their historical book value at March 31, 2000. The estimated fair value of identifiable intangible assets and goodwill, based on assessment of management together with an independent valuation firm, along with their estimated lives for amortization, are as follows: Annual Life Fair Value Amortization ---- ---------- ------------ In-process research and development * $ 4,200,000 * Customer related intangibles 4 $15,900,000 $3,975,000 Developed technology 2 $ 2,400,000 $1,200,000 Covenants not-to-compete 3 $ 2,000,000 $ 666,666 Trademark & tradename 2 $ 1,300,000 $ 650,000 Acquired work force 2 $ 220,000 $ 110,000 Goodwill 4 $11,752,335 $2,938,084 * The Company will record an immediate write-off of in-process research and development based on an assessment of purchased technology of HPI at the acquisition date. A non-recurring charge of $4.2 million will be reflected in the actual financial statements of the Company in the quarter ending June 30, 2000. The in-process research and development charge is not reflected in the unaudited pro forma consolidated income statements for the year ended June 30, 1999 or the nine month period ended March 31, 2000. The assessment determined that $4.2 million of HPI's purchase price represented technology that did not meet the accounting definitions of "completed technology," and thus should be charged to earnings under generally accepted accounting principles. This assessment analyzed certain Micro-Collimator products as well as active alignment and isolator injection molding technologies that were under development at the time of acquisition. These programs were in various stages of completion ranging from 50% to 60% of completion, with estimated completion dates through June 2001. This in-process research will have no alternative future uses if the products are not feasible. Revenues from in-process products are estimated primarily beginning in the second quarter of fiscal 2001, with projected research and development costs-to-complete 5 of approximately $1.1 million. The fair value of these development programs was determined in accordance with views expressed by the staff of the Securities and Exchange Commission 5. Reduction of interest income for the year ended June 30, 1999 and the nine months ended March 31, 2000, respectively due to the use of cash investments to fund a portion of the purchase price. 6. The number of shares used in Basic net loss per common share calculation was adjusted as if the 1,207,158 shares for the acquisition were issued as of July 1, 1998. Basic net loss per common share is computed based upon the weighted average number of common shares outstanding during each period presented. The computation of Diluted net loss per common share does not differ from the basic computation because potentially issuable securities would be anti-dilutive. 6 -----END PRIVACY-ENHANCED MESSAGE-----