-----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, DRCtFi1hPvGP8GUEimuokkLYspTuEX/3+0wHqePa1oqynkBeXn8dIWEg/RcCuItU mdVKWRHP8/BZTz+mMVskPw== 0000950147-96-000207.txt : 19960523 0000950147-96-000207.hdr.sgml : 19960523 ACCESSION NUMBER: 0000950147-96-000207 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960522 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: LIGHTPATH TECHNOLOGIES INC CENTRAL INDEX KEY: 0000889971 STANDARD INDUSTRIAL CLASSIFICATION: GLASS PRODUCTS, MADE OF PURCHASED GLASS [3231] IRS NUMBER: 860708398 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-27548 FILM NUMBER: 96571065 BUSINESS ADDRESS: STREET 1: 6820 ACADEMY PARKWAY EAST N E CITY: ALBUQUERQUE STATE: NM ZIP: 87109 BUSINESS PHONE: 5053421100 10QSB 1 FORM 10-QSB ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ___________________ QUARTERLY REPORT FOR SMALL BUSINESS ISSUERS SUBJECT TO THE 1934 ACT REPORTING REQUIREMENTS FORM 10-QSB _____________________ [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1996 This paper filing granted pursuant to Section 202-(D) of Regulation ST OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE REPORT OF 1934 For the transition period from ___________ to ____________ 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 87109 Albuquerque, New Mexico (ZIP Code) (Address of principal executive offices) Registrant's telephone number, including area code: (505)342-1100 ----------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES NO X ----- ------ Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practical date: Common Stock, Class A, $.01 par value 2,722,460 shares Common Stock, Class E-1, $.01 par value 1,454,951 shares Common Stock, Class E-2, $.01 par value 1,454,951 shares Common Stock, Class E-3, $.01 par value 969,960 shares --------------------------------------- ------------------ Class Outstanding at May 3, 1996 ================================================================================ LigthPath Technologies, Inc. ( A Development Stage Company) Form 10-Q Index Item Page Part I Financial information Balance Sheet 2 Statements of Operations 3 Statements of Cash Flows 4 Notes to Financial Statements 5 Management's Discussion and Analysis of Financial Condition and Results of Operations 10 Part II Other information Legal Proceedings 11 Changes in Securities 11 Defaults Upon Senior Securities 11 Submission of Matters to Vote of Security Holders 11 Other Items 11 Exhibits and Reports on Form 8-K 11 Signatures 12 1 LightPath Technologies, Inc. (A Development Stage Company) Balance Sheet
March 31, June 30, 1996 1995 ------------------------------------ Unaudited Assets Current assets: Cash $ 5,189,901 $ 11,177 Advances to employees 20,880 82,344 Prepaid expenses and other 95,736 10,942 ------------------------------------ Total current assets 5,306,517 104,463 Property and equipment, net (Note 2) 213,741 247,325 Deferred costs of securities registration - 21,978 Intangible assets (Note 3) 216,535 211,357 ==================================== Total assets $ 5,736,793 $ 585,123 ==================================== Liabilities and deficiency in net assets Current liabilities: (Note 4) Accounts payable and accrued liabilities $ 102,644 $ 624,098 Accrued payroll and benefits 300,011 789,449 Payables to related parties 117,481 867,876 Notes payable to related parties 30,000 2,103,113 Notes payable - 338,000 Convertible notes payable to related parties - 266,500 Convertible notes payable - 218,029 Bridge loans to related parties - 511,555 ------------------------------------ Total current liabilities 550,136 5,718,620 Commitments and contingencies Redeemable common stock (Note 4 and 5) Class E-1 - performance based and redeemable common stock 1,454,951 and 1,094,488, shares issued and outstanding at March 31, 1996 and June 30, 1995, respectively 14,550 10,945 Class E-2 - performance based and redeemable common stock 1,454,951 and 1,094,488 shares issued and outstanding at March 31, 1996 and June 30, 1995, respectively 14,550 10,945 Class E-3 - performance based and redeemable common stock 969,960 and 729,659, issued and outstanding at March 31, 1996 and June 30, 1995, respectively 9,700 7,297 Deficiency in net assets (Note 4 and 5) Preferred stock, $.01 par value; 5,000,000 shares authorized; none issued and outstanding at March 31, 1996 or June 30, 1995 - - Common stock: Class A, $.01 par value; 34,500,000 shares authorized, voting 2,722,460 and 729,659, shares issued and outstanding at March 31, 1996 and June 30, 1995, respectively 27,225 7,297 Additional paid-in capital 18,706,562 7,186,982 Treasury stock; 191,083 shares at cost at June 30, 1995 - (190,000) Unearned compensation - (867,642) Deficit accumulated during the development stage (13,585,930) (11,299,321) ------------------------------------ Deficit in net assets 5,147,857 (5,162,684) ==================================== Total liabilities and deficiency in net assets $ 5,736,793 $ 585,123 ====================================
See accompanying notes. 2 LightPath Technologies, Inc. (A Development Stage Company) Statements of Operations
Inception August 23, 1985 Three Months Ended March 31 Nine Months Ended through Unaudited March 31 March 31 ------------------------------------------------------------------------------ 1996 1995 1996 1995 1996 ------------------------------------------------------------------------------ Revenues: Product development fees $ 62,000 $ - $ 137,000 $ 52,000 $ 239,000 Lenses and other 22,472 22,719 32,066 54,525 119,010 ------------------------------------------------------------------------------ Total revenues 84,472 22,719 169,066 106,525 358,010 Costs and expenses: Cost of goods sold 10,949 50,980 16,427 118,649 204,719 Selling, general and administrative 576,798 419,403 1,166,068 1,009,846 10,493,889 Research and development 9,752 17,247 30,073 106,557 6,621,453 Amortization of unearned compensation - 296,732 867,642 785,258 2,076,217 ------------------------------------------------------------------------------ Total costs and expenses 597,499 784,362 2,080,210 2,020,310 19,396,278 ------------------------------------------------------------------------------ (513,027) (761,643) (1,911,144) (1,913,785) (19,038,268) Investment Income 21,833 - 21,833 - 44,281 Interest expense (201,892) (135,125) (397,298) (307,056) 1,849,207 ============================================================================== Net loss $ (693,086) $ (896,768) $(2,286,609) $(2,220,841) $20,843,194 ============================================================================== Net loss per share $(0.44) $(1.27) $(2.18) $(3.21) - ============================================================================== Number of shares used in per share 1,580,945 704,271 1,049,819 691,851 - calculation ==============================================================================
See accompanying notes. 3 LightPath Technologies, Inc. (A Development Stage Company) Statements of Cash Flows
Inception August 23, 1985 Nine Months Ended through Unaudited March 31 March 31 ------------------------------------------- 1996 1995 1996 ------------------------------------------- Operating activities Net loss $(2,286,609) $(2,220,841) $20,843,194 Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 56,701 72,878 443,887 Accretion of bridge notes 223,135 19,359 254,375 Services provided for common stock 5,000 34,552 1,140,843 Write-off abandoned patent applications 1,895 - 111,059 Amortization of unearned compensation 867,642 785,258 2,076,217 Changes in operating assets and liabilities: Advances to employees 61,464 (11,101) (20,880) Prepaid expenses and deferred costs of securities registration (62,816) 1,352 (95,736) Accounts payable and accrued expenses (633,419) 361,544 1,810,189 ------------------------------------------- Net cash used in operating activities (1,767,007) (956,999) (15,123,270) Cash flows from investing activities Property and equipment additions (17,070) (7,344) (617,443) Costs incurred in acquiring patents (13,120) (6,540) (352,717) ------------------------------------------- Net cash used in investing activities (30,190) (13,884) (970,160) Cash flows from financing activities Proceeds from notes payable 40,000 76,100 4,398,606 Payments on notes payable (314,511) (104,107) (1,097,350) Proceeds from convertible notes payable - 391,000 1,465,529 Repayments of convertible notes payable (162,500) (50,000) (212,500) Proceeds from bridge loans 1,285,433 346,456 1,765,748 Repayments of bridge loans (1,250,000) - (1,250,000) Proceeds from sales of common stock 7,202,499 273,495 9,175,428 Repurchase of common stock for treasury (26,000) (10,000) (555,512) Proceeds from sales of treasury stock 201,000 67,203 336,119 Proceeds from sales of limited partnership units - - 7,257,264 ------------------------------------------- Net cash provided by financing activities 6,975,921 990,147 21,283,332 ------------------------------------------- Net increase in cash 5,178,724 19,264 5,189,901 Cash at beginning period 11,177 40,203 =========================================== Cash at end of period $5,189,901 $ 59,467 $ 5,189,901 =========================================== Supplemental disclosure of noncash financing activities: Class A common stock issued for services $ 4,992 $ 34,470 $ 1,111,617 Debt and accrued interest converted into Class A common stock 4,242,824 495,424 6,227,584 Stock options granted for services - 98,500 98,500 Class E common stock issued 9,613 2,413 38,800
See accompanying notes. 4 LightPath Technologies, Inc. (A Development Stage Company) Notes to The Financial Statements Unaudited Organization and Purpose LightPath Technologies, Inc. (the Company) was incorporated in Delaware on July 1, 1992 as the successor to LightPath Technologies Limited Partnership formed in 1989, and its predecessor, Integrated Solar Technologies Corporation formed on August 23, 1985. The Company is a development stage enterprise engaged in the research, development and production of GRADIUM(TM) lenses. GRADIUM is an optical quality glass material with varying refractive indices, capable of reducing optical aberrations inherent in conventional lenses and performing with a single lens, or fewer lenses, tasks performed by multi-element conventional lens systems. Since its inception in 1985, the Company has been engaged in basic research and development and only recently began to focus on product development. 1. Summary of Significant Accounting Matters The accompanying unaudited financial statments have been prepared in accordance with the instructions to Article 10 of Regulation S-X and, therefore, do not include all information and footnotes necessary for a fair presentation of financial position, results of operations, and cash flows in conformity with generally accepted accouting principles. These financial statements should be read in conjunction with the Company's financial statements and related notes included in the Form SB-2 as filed with the Securities and Exchange Commission on February 22, 1996. The information furnished, in the opinion of managment, reflects all adjustments, which include normal recurring adjustments, necessary to present fairly the results of operations of the Company for the three month and nine month periods ended March 31, 1996 and 1995. Results of operations for interim periods are not necessarily indicative of results which may be expected for the year as a whole. Property and Equipment Property and equipment are stated at cost and depreciated using the straight-line method over the estimated useful lives of the related assets from three to seven years. Intangible Assets Intangible assets, consisting of patents and trademarks, are recorded at cost. These assets are being amortized on the straight-line basis over the estimated useful lives of the related assets from ten to seventeen years. Deferred Costs of Securities Registration The Company completed an initial public offering in February 1996. The costs associated with this offering have been accrued as incurred, and were recorded as a reduction of the proceeds of the offering. Income Taxes The Company accounts for income taxes 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. 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. Income tax expense is the tax payable or refundable for the period plus or minus the change in deferred tax assets and liabilities during the period. Revenue Recognition Revenue from sales of product is recognized upon shipment. Research and Development Research and development costs are expensed as incurred. Per Share Data Net loss per share is computed using the weighted average number of common shares and common equivalent shares outstanding during each period after giving retroactive effect to the 5 LightPath Technologies, Inc. (A Development Stage Company) Notes to The Financial Statements Unaudited recapitalization (see Note 5). Restricted Class E common shares and stock options for the purchase of Class E common shares are considered contingently issuable and, accordingly, are excluded from the weighted average number of common and common equivalent shares outstanding. Net loss per share for the period from inception through June 30, 1995 is not presented as the Company's predecessor was a limited partnership and no common shares were outstanding. Use of Estimates The preparation of the Company's financial statements requires management to make estimates and assumptions that affect amounts reported in the financial statements and accompanying notes. Such estimates and assumptions could change in the future as more information becomes known, which in turn could impact the amounts reported and disclosed herein. 2. Property and Equipment Property and equipment include accumulated depreciation of $400,757 and $350,104 at March 31, 1996 and June 30, 1995, respectively. 3. Intangible Assets Intangible assets include accumulated amortization of $25,123 and $19,075 at March 31, 1996 and June 30, 1995, respectively. 4. Debt Bridge Financing In November 1995, the Company completed a bridge financing consisting of an aggregate of $1,250,000 principal amount of Bridge Notes and 625,000 Bridge Warrants from which it received net proceeds of $1,070,380, after deducting commissions and expenses of such financing. The Bridge Notes and accumulated interest were repaid with proceeds from the initial public offering. The Bridge Warrants entitled the holders to purchase one share of common stock for $3 per share, which were automatically exchanged on the closing of the initial public offering into 625,000 Class A warrants with exercise price of $6.50 per share. The warrants, which have been valued at $62,500 by management have been recorded as debt discount. Debt discount and deferred financing costs are being amortized over the life of the loan. Conversion of Debt into Equity In October and November 1995, the majority of the holders of bridge notes agreed to convert $440,000 in principal and related accrued interest under such notes into shares of Class A and Class E common stock at a conversion rate of $5.50 per share. In February 1996, the Company converted the remaining $215,000 in principal and related accrued interest into shares of Class A and Class E common stock at a conversion rate of $5.50 per share. As additional consideration for the debt conversion, the Company issued 214,000 Class A warrants to the noteholders. Certain key employees and directors of the Company have agreed to make the payment of certain accrued liabilities owed to them by the Company, totaling $275,000, contingent upon the Company meeting the conditions for conversion of the Class E-1 common stock into Class A common stock (as discussed in Note 5). Furthermore, subsequent to June 30, 1995, certain other debtholders agreed to convert approximately $4.3 million in outstanding debt into shares of Class A and Class E common stock at a conversion price of $5.50 per share. 6 LightPath Technologies, Inc. (A Development Stage Company) Notes to The Financial Statements Unaudited 5. Stockholder's Equity Initial Public Offering The Company completed an initial public offering on February 22, 1996 for the sale of units which consisted of one share of Class A common stock, one Class A warrant and one Class B warrant. The initial public offering price per unit was $5.00. Common Stock The Company's common stock and preferred stock consists of the following: o Authorized 34,500,000 shares of Class A common stock, $.01 par value. The stockholders of Class A common stock are entitled to one vote for each share held. o Authorized 2,000,000 shares of Class E-1 common stock, $.01 par value. The stockholders of Class E-1 common stock are entitled to one vote for each share held. Each Class E-1 share will automatically convert into one share of Class A common stock in the event that (i) the Company's income before provision of income taxes and extraordinary items or any charges which result from the conversion of the Class E common stock is equal to or exceeds $8,000,000 in fiscal 1996, 1997, 1998 or 1999, or is at least $10,300,000 in fiscal 2000; or (ii) the Company's bid price per share of Class A common stock averages in excess of $5.00 multiplied by 2.5 (subject to adjustment for stock splits) for 30 consecutive business days during the 18-month period commencing on February 22, 1996, or (iii) the bid price per share of Class A common stock averages in excess of $5.00 multiplied by 3.35 (subject to adjustment for stock splits) for 30 consecutive business days during the period from 18 months through 36 months after February 22, 1996, or (iv) the Company is acquired by or merged with or into another entity during any of the periods referred to in (ii) or (iii) and as a result thereof holders of the Class A common stock of the Company receive per share consideration (after giving effect to the conversion of the Class E-1 common stock) equal to or greater than the respective bid price amounts set forth in (ii) or (iii) above, respectively, as applicable. o Authorized of 2,000,000 shares of Class E-2 common stock, $.01 par value. The stockholders of Class E-2 common stock are entitled to one vote for each share held. Each Class E-2 share will automatically convert into one share of Class A common stock in the event that (i) the Company's income before provision of income taxes and extraordinary items or any charges which result from the conversion of the Class E common stock is equal to or exceeds $10,900,000 in fiscal 1996, 1997, 1998 or 1999, or is at least $14,000,000 in fiscal 2000; or (ii) the Company is acquired by or merged with or into another entity during any of the periods referred to below and as a result thereof holders of the Class A common stock of the Company receive per share consideration (after giving effect to the conversion of the Class E-1 and Class E-2 common stock) equal to or greater than 3.6 times $5.00 during the 18-month period commencing on February 22, 1996, or 4.6 times $5.00 during the period from 18 months through 36 months after February 22, 1996 set forth in (ii) or (iii) above, respectively, as applicable. o Authorized of 1,500,000 shares of Class E-3 common stock, $.01 par value. The stockholders of Class E-3 common stock are entitled to one vote for each share held. Each Class E-3 share will automatically convert into one share of Class A common stock in the event that (i) the Company's income before the provision of income taxes and extraordinary items or any charges which result from the conversion of the Class E common stock is equal to or exceeds $28,000,000 in fiscal 1996, 1997, 1998, 1999 or 2000; or (ii) the Company is acquired by or merged with or into another entity during the periods referred to below and as a result thereof holders of Class A common stock of the Company receive per share consideration (after giving effect to the conversion of the Class E-1, E-2 and E-3 common stock) equal to or greater than 6 times $5.00 price during the 18-month period 7 LightPath Technologies, Inc. (A Development Stage Company) Notes to The Financial Statements Unaudited commencing on February 22, 1996, or 8 times $5.00 during the period from 18 months through 36 months after February 22, 1996. The shares of Class E common stock will be redeemed on September 30, 2000 by the Company for $.0001 per share and will be canceled by the Company without further obligation to the stockholder if such earnings levels a market price targets are not achieved. The Class E common stock performance shares have the characteristics of escrowed shares; therefore, shares owned by key officers, employees, directors or consultants of the Company are subject to variable plan compensation accounting. In the event the Company attains any of the earnings thresholds or the Company's Class A common stock meets certain minimum market prices required for the conversion of Class E common stock by such stockholders, the Company will be required to recognize compensation expense in the periods in which the stated criteria for conversion are probable of being met. o Authorized of 5,000,000 shares of preferred stock; no par value, none of which have been issued. Designations, rights, and preferences related to these shares may be determined by the Board of Directors. The terms of any series of preferred stock may include priority claims to assets and dividends and voting or other rights. Warrants Class A Warrants entitles the holder to purchase one share of Class A Common Stock and one Class B Warrant at an exercise price of $6.50 until February 22, 2001. Commencing one year from the offering, the Class A Warrants are redeemable by the Company on 30 day's written notice at a redemption price of $.05 per warrant if the closing price of the Class A Common Stock for any 30 consecutive trading days ending within 15 days of the notice averages in excess of $9.10 per share. Class B Warrants entitles the holder to purchase one share of Class A Common Stock at an exercise price of $8.75 until February 22, 2001. Commencing one year from the offering, the Class B Warrants are redeemable by the Company on 30 day's written notice at a redemption price of $.05 per warrant if the closing price of the Class A Common Stock for any 30 consecutive trading days ending within 15 days of the notice averages in excess of $12.25 per share. All Class B Warrants must be redeemed if any are redeemed. All of the Class A Warrants, the Class A Common Stock and Class B Warrants issuable upon exercise of such Class A Warrants and the Class A Common Stock issuable upon exercise of the Class B Warrants were registered and tradeable subject to a contractual restriction that such Class A Warrants and underlying securities may not be sold for a period of between 90 and 270 days after the effective date of the Offering. Original securityholders have also agreed not to exercise their Warrants for a period of one year following the effective date of the Offering; provided, however, that subsequent purchasers of the Warrants are not subject to such restrictions on exercise. 8 LightPath Technologies, Inc. (A Development Stage Company) Management's Discussion Analysis Of Financial Condition and Results of Operations 6. Commitments and Contingencies Effective April 1, 1996 Company has entered into a 5 year lease agreement for a 13,300 square foot manufacturing and office facility in Albuquerque, New Mexico at a monthly cost of $6,500. A former employee has commenced a lawsuit against the Company for deferred compensation, reimbursable expenses and damages for alleged wrongful discharge. This former employee is seeking treble damages under Arizona law. Furthermore, a second lawsuit was commenced by this same person alleging wrongful discharge in violation of public policy, failure to pay wrongs within a specified period of time from termination, breach of employment contract and improper interference with contract. Management believes that it has valid defense to wrongful discharge and intends to file a counterclaim for tortuous interference with contract and breach of contract. The Company has not accrued any liability relative to this matter at March 31, 1996. The Company is involved in other various legal actions arising in the normal course of business. After taking into consideration legal counsel's evaluation of such actions, management is of the opinion that their outcome will not have a significant effect on the Company's financial statements. 9 LightPath Technologies, Inc. (A Development Stage Company) Management's Discussion Analysis Of Financial Condition and Results of Operations Results of Operations - --------------------- Three months ended March 31, 1996 compared with three months ended March 31, 1995 Revenue totaled $84,472 for the three months ended March 31, 1996, an increase of $61,753, or 272% over the comparable period last year. The increase was attributable to receipt of $62,000 OEM product development fees. Cost of sales was 49% of product sales, a decline of approximately $40,000 over the comparable period in which cost of sales exceeded product revenue. Administrative costs increased $157,395 or 37% primarily due to accretion costs for the bridge financing. The Company expects selling, general and administrative costs to increase significantly in the future as the Company adds personnel, sales and marketing staff and general overhead as a result of an expected scale-up of operations. Research and development costs decreased from $17,247 to $9,752. Research personnel were not utilized during the quarter due to limited resources prior to the Offering and the Company's relocation. It is anticipated that research costs will increase over the next several quarters as personnel are hired to continue our research and development efforts. Costs related to unearned compensation from incentive stock options decreased $296,732 for the period, resulting in a net decrease of total operating costs $186,863. Investment income increased $21,833 due to the interest earned on the Offering proceeds. Interest expense increased $66,767 due to the November 1995 bridge loans which were subsequently repaid with Offering proceeds. Net loss of $693,086 was a decrease of $203,682 from the comparable period last year due to the increased gross margin $101,784, the decrease in administrative costs $146,832, offset by the increase in other expenses $44,934. Net loss per share of $.44 was an improvement of $.83 due to increased gross margin $.06, and the decrease in administrative costs $.09, offset by the increase in other expenses $.03. The remaining $.71 gain was due to the increase in weighted common stock due to the Offering. Nine months ended March 31, 1996 compared with nine months ended March 31, 1995 Revenue totaled $169,066 for the nine months ended March 31, 1996, an increase of $62,541 or 59% over the comparable period last year. Increase was mainly attributable to OEM product development fees. Cost of sales was 51% of product sales, a decline of approximately $102,000 over the comparable period in which cost of sales exceeded product revenue. Administrative costs increased $156,222 or 15% primarily due to accretion costs for the bridge financing obtained in November 1995. Research and development costs decreased from $106,557 to $30,073. Research personnel and consultants were cut-back during the year due to limited resources prior to the Offering. It is anticipated that research costs will increase over the next several quarters as personnel are hired to continue our research and development efforts. Costs related to unearned compensation from incentive stock options increased $82,384 for the period. The net variances resulted in an increase of total operating costs $59,900. Investment income increased $21,833 due to the interest earned on the Offering proceeds. Interest expense increased $90,242 due to the bridge loans and other interest bearing notes which were subsequently repaid with Offering proceeds. Net loss totaled $2,286,609 an increase of $65,768 or 3% from the comparable period last year. The increase in net loss was attributable to an increased gross margin $164,763, offset by the increase in administrative costs $162,122 and interest expense $68,409. Net loss per share of $2.18 was an improvement of $1.03 from the prior year due to increased gross margin $.16, offset by the increase in administrative costs $.15, and other expenses $.07. The remaining $1.09 gain was due to the increase in weighted common stock due to the Offering. 10 LightPath Technologies, Inc. (A Development Stage Company) Management's Discussion Analysis Of Financial Condition and Results of Operations Financial Resources and Liquidity - --------------------------------- LightPath has financed its operations through private placements of equity, borrowings or debt until February 1996 when an initial public offering generated net proceeds of approximately, $7.452 million. The Company expects to continue to incur losses until such time, if ever, as it obtains market acceptance for its product at selling prices and volumes which provide adequate gross profit to cover operating costs. The Company expects its cash requirements to increase due to the implementation of a sales and marketing program, additional personal and overhead costs. In addition, the company will need substantial funds to continue its research and development efforts and to purchase capital equipment to expand its manufacturing facilities. Effective April 1, 1996 Company has entered into a 5 year lease agreement for a 13,300 square foot manufacturing and office facility in Albuquerque, New Mexico at a monthly cost of $6,500. The company has relocated its staff and manufacturing equipment as of this date. No significant costs were incurred in the move. The Company anticipates purchasing approximately $380,000 in capital equipment by June 30, 1996 to increase its manufacturing capability. Since the Company has principally been engaged in basic research and development of its products, it has not been significantly impacted by inflation. The Company does not believe that seasonality will have a significant impact on its business. PART II Item 1. Legal Proceedings LightPath is subject to various claims and lawsuits in the ordinary course of business, none of which is material. Item 2. Changes in Securities None Item 3. Defaults Upon Senior Securities None Item 4. Submission of Matters to a Vote of Security Holders None Item 5. Other Items The Company offered a position on the Board of Directors to Mr. Louis Leeburg. On May 1, 1996 Mr. Leeburg accepted the offer on a temporary basis pending his ratification at the next annual meeting. Mr. Leeburg is currently a principal of the John E. Fetzer Institute which is stockholder of the Company. Item 6. Exhibits and Reports on Form 8-K The Company filed no Current Reports on Form 8-K under the Securities and Exchange Act of 1934 during the quarter ended March 31, 1996. 11 LightPath Technologies, Inc. (A Development Stage Company) Management's Discussion Analysis Of Financial Condition and Results of Operations 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 14, 1996 ---------------------------------- Donald Lawson Date Executive Vice President and Treasurer 12 EX-27 2 FDS --
5 This schedule contains summary financial information extracted from the Form 10-QSB for the three and nine month periods ended March 31, 1996 and is qualified in its entirety by reference to such financial statements. 1 U.S. DOLLARS 9-MOS JUN-30-1996 JUL-01-1995 MAR-31-1996 1 5,189,901 0 0 0 0 5,306,517 614,498 400,757 5,736,793 550,136 0 0 0 27,225 18,706,562 5,736,793 32,066 169,066 16,427 16,427 0 0 397,298 (2,286,609) 0 (2,286,609) 0 0 0 (2,286,609) (2.18) 0
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