-----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, TPO6ZNMWYa/i1+cegZKIawa3tioB1cUT+U0jDYVZRczI6H2rPB9lroR736e+MZVG LY+Y5sl81VudriJvNxbgww== 0000950147-96-000494.txt : 19961101 0000950147-96-000494.hdr.sgml : 19961101 ACCESSION NUMBER: 0000950147-96-000494 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961031 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: 96650913 BUSINESS ADDRESS: STREET 1: 6820 ACADEMY PARKWAY EAST N E CITY: ALBUQUERQUE STATE: NM ZIP: 87109 BUSINESS PHONE: 5053421100 10QSB 1 QUARTERLY REPORT ================================================================================ 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 September 30, 1996 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 X NO ----- ---- 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 2,741,291 shares Common Stock, Class E-1, $.01 par value 1,449,942 shares Common Stock, Class E-2, $.01 par value 1,449,942 shares Common Stock, Class E-3, $.01 par value 966,621 shares - --------------------------------------- -------------- Class Outstanding at October 31, 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 7 Part II Other information Legal Proceedings 9 Changes in Securities 9 Defaults Upon Senior Securities 9 Submission of Matters to Vote of Security Holders 9 Other Items 9 Exhibits and Reports on Form 8-K 9 Signatures 10 LightPath Technologies, Inc. (A Development Stage Company) Balance Sheet
September 30, June 30, 1996 1996 ------------------------------------- Unaudited Assets Current assets: Cash and cash equivalents $ 3,244,016 $ 4,335,133 Trade accounts receivable 128,473 23,500 Inventories 131,093 66,186 Advances to employees 14,203 14,445 Prepaid expenses and other 40,420 82,608 ------------------------------------- Total current assets 3,558,205 4,521,872 Property and equipment - net 599,924 438,726 Intangible assets - net 263,338 250,206 ------------------------------------- Total assets $ 4,421,467 $ 5,210,804 ===================================== Liabilities and Stockholders' Equity Current liabilities: Accounts payable and accrued liabilities $ 329,727 $ 362,206 Accrued payroll and benefits 264,089 274,237 ------------------------------------- Total current liabilities 593,816 636,443 Note payable to related parties 30,000 30,000 Redeemable common stock Class E-1 - performance based and redeemable common stock 1,449,942 and 1,454,547, shares issued and outstanding at September 30, 1996 and June 30, 1996, respectively 14,499 14,545 Class E-2 - performance based and redeemable common stock 1,449,942 and 1,454,547 shares issued and outstanding at September 30, 1996 and June 30, 1996, respectively 14,499 14,545 Class E-3 - performance based and redeemable common stock 966,621 and 969,691, issued and outstanding at September 30, 1996 and June 30, 1996, respectively 9,666 9,697 Stockholders' equity Preferred stock, $.01 par value; 5,000,000 shares authorized; none issued and outstanding at September 30, 1996 or June 30, 1996 - - Common stock: Class A, $.01 par value; 34,500,000 shares authorized, voting 2,741,291 and 2,722,191, shares issued and outstanding at September 30, 1996 and June 30, 1996, respectively 27,414 27,222 Additional paid-in capital 18,702,928 18,692,578 Deficit accumulated during the development stage (14,971,355) (14,214,226) ------------------------------------- Total stockholders' equity 3,758,987 4,505,574 ------------------------------------- Total liabilities and stockholders' equity $ 4,421,467 $ 5,210,804 =====================================
See accompanying notes. 2 LightPath Technologies, Inc. (A Development Stage Company) Statements of Operations
Inception August 23, 1985 Unaudited through Three Months Ended September September 30 30 ------------------------------------------------------ 1996 1995 1996 ------------------------------------------------------ Revenues: Product development fees $ 111,347 $ 30,000 $ 380,347 Lenses and other 12,123 128 132,511 ------------------------------------------------------ Total revenues 123,470 30,128 512,858 Costs and expenses: Cost of goods sold 12,687 - 219,542 Selling, general and administrative 662,750 293,874 11,809,186 Research and development 246,943 12,570 6,921,397 Amortization of unearned compensation - 867,642 2,076,217 ------------------------------------------------------ Total costs and expenses 922,380 1,174,086 21,026,342 ------------------------------------------------------ Operating loss (798,910) (1,143,958) (20,513,484) Other income(expense) Investment income 42,558 - 136,009 Interest expense (777) (90,880) (1,851,144) ------------------------------------------------------ Net loss $ (757,129) $(1,234,838) $(22,228,619) ====================================================== Net loss per share $(.28) $(1.65) - ====================================================== Number of shares used in per share 2,735,287 748,898 - calculation ======================================================
See accompanying notes. 3 LightPath Technologies, Inc. (A Development Stage Company) Statements of Cash Flows
Inception August 23, 1985 Three Months Ended through Unaudited September 30 September 30 ------------------------------------------- 1996 1995 1996 ------------------------------------------- Operating activities Net loss $ (757,129) $(1,234,838) $(22,228,619) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 35,511 20,216 491,566 Accretion of bridge notes - 38,623 244,808 Services provided for common stock 110,419 5,000 1,251,232 Write-off abandoned patent applications - - 111,059 Amortization of unearned compensation - 867,642 2,076,217 Changes in operating assets and liabilities: Receivable, advances to employees (104,731) 41,374 (142,676) Inventories (64,907) - (131,093) Prepaid expenses and other 42,188 (240,274) (40,420) Accounts payable and accrued expenses (42,627) 445,502 1,879,480 ------------------------------------------- Net cash used in operating activities (781,276) (56,755) (16,488,446) Cash flows from investing activities Property and equipment additions (193,919) - (1,060,405) Costs incurred in acquiring patents (15,922) (2,392) (405,480) ------------------------------------------- Net cash used in investing activities (209,841) (2,392) (1,465,885) Cash flows from financing activities Proceeds from notes payable - 14,489 4,398,606 Payments on notes payable - - (1,097,350) Proceeds from convertible notes payable - - 1,465,529 Repayments of convertible notes payable - - (212,500) Proceeds from bridge loans - 35,433 1,765,748 Repayments of bridge loans - - (1,250,000) Proceeds from sales of common stock - 9,567 9,189,443 Repurchase of common stock (100,000) - (669,512) Proceeds from sales of treasury stock - - 351,119 Proceeds from sales of limited partnership units - - 7,257,264 ------------------------------------------- Net cash provided by financing activities (100,000) 59,489 21,198,347 ------------------------------------------- Net increase (decrease) in cash and cash equivalents (1,091,117) 342 3,244,016 Cash and cash equivalents at beginning period 4,335,133 11,177 - =========================================== Cash and cash equivalents at end of period $3,244,016 $ 11,519 $ 3,244,016 =========================================== Supplemental disclosure of cash flow information: Class A common stock issued for services $ 110,419 $ 4,904 $ 1,222,036 Debt and accrued interest converted into Class A common stock - 16,877 6,281,164 Stock options granted for services - - 98,500 Class E common stock issued - 96 38,801
See accompanying notes. 4 LightPath Technologies, Inc. (A Development Stage Company) Notes to Financial Statements - Unaudited Organization and Purpose LightPath Technologies, Inc. (the Company) was incorporated in Delaware on June 15, 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. With the proceeds from the initial public offering (IPO) on February 22, 1996, the Company began to focus on product development and sales. 1. Summary of Significant Accounting Matters The accompanying unaudited financial statements 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 accounting principles. These financial statements should be read in conjunction with the Company's financial statements and related notes included in the Form 10-KSB as filed with the Securities and Exchange Commission on August 28, 1996. The information furnished, in the opinion of management, reflects all adjustments, which include normal recurring adjustments, necessary to present fairly the results of operations of the Company for the three month periods ended September 30, 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. Cash and cash equivalents consist of cash in the bank and temporary investments with maturities of ninety days or less when purchased. Inventories which consists principally of raw materials, lenses and components are stated at the lower of cost, on a first-in, first-out basis, or market. Inventory costs include material, labor and manufacturing overhead. 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 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. 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. 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 occurs from sales of product upon shipment. 5 Research and development costs are expensed as incurred. Stock based employee compensation is accounted for under the provision of APB Opinion No. 25, Accounting for Stock Issued to Employees, which requires no recognition of compensation expense when the exercise price of the employees stock option equals the market price of the underlying stock on the date of grant. Per share data is computed using the weighted average number of common shares and common equivalent shares outstanding during each period after giving retroactive effect to the recapitalization. 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 September 30, 1996 is not presented as the Company's predecessor was a limited partnership and no common shares were outstanding. Management uses estimates and makes assumptions during the preparation of the Company's financial statements 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. Financial instruments of the Company are valued 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 approximate fair value. 2. Inventories The components of inventories include the following at September 30, 1996: Finished goods and work in process $ 72,987 Raw materials 58,106 ---------------- Total inventories $131,093 ================= 6 LightPath Technologies, Inc. (A Development Stage Company) Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations - --------------------- Three months ended September 30, 1996 compared with three months ended September 30, 1995 Revenue totaled $123,470 for the three months ended March 31, 1996, an increase of $93,342, over the comparable period last year. The increase was attributable to an additional $81,000 in product development fees and an additional $12,000 in lens sales. The new sales were derived from government funded subcontracts in the area of solar energy to allow satellites to produce their own power and the next generation of multiplexing devices used in conjunction with optical fiber. The total award of the subcontracts was $285,000. The Company did not enter into any new OEM projects during the quarter. Cost of sales approximated product sales due to shipment of samples, outside finishing expenses, and the low volume of inventory production. It is anticipated that with increased volume the cost of production will decrease. Administrative costs increased $368,876 or 126% primarily due to the addition of personnel in all areas, sales and marketing, administration and operations along with increased overhead in these areas as a result of an expected scale-up of operations. Research and development costs increased from $12,570 to $246,943. The research department staff has increased to 4.5 full time equivalents, which were hired to continue the Company's research and development efforts in the area of new glass families. There were no costs related to unearned compensation from incentive stock options during the current quarter representing a decrease of $867,642 for the period. Investment income increased $42,588 due to the interest earned on temporary investments. Interest expense decreased approximately $90,000 due primarily to the conversion of debt to equity in conjunction with the completion of the Company's IPO. Net loss of $757,129 was a decrease of $477,709 from the comparable period last year due to the increased gross margin $80,655, decrease of $867,642 in unearned compensation and the increase in other income of $132,661. These gains were offset by the increase in selling, general and administrative costs $368,876 and research and development $234,373. Net loss per share of $.28 was an improvement of $1.37 due to increased gross margin $.03, the decrease unearned compensation $.32 and the increase in other income $.05, offset by the increase in selling, general and administrative costs $.13 and research and development other expenses $.09. The remaining $1.19 gain was due to the increase in weighted common stock due to the IPO. 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. Company has budgeted its cash requirements for fiscal 1997 at $3,700,000 a substantial increase from fiscal 1996 due to the implementation of a sales program, additional personnel and overhead costs. During the first quarter the Company's actual cash requirements were approximately $280,000 under this budget. In addition, the Company budgeted $700,000 for fiscal 1997 to continue its research and development efforts. During the first quarter the Company's actual cash requirements for research and development equaled this budget. The Company also budgeted $800,000 primarily to be used for equipment to expand its manufacturing facilities during fiscal year 1997. During first quarter the Company incurred approximately $210,000 in capital equipment and patent costs. The Company anticipates purchasing approximately $170,000 in capital equipment and patent costs by December 31, 1996. 7 LightPath Technologies, Inc. (A Development Stage Company) Management's Discussion and Analysis of Financial Condition and Results of Operations 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. 8 LightPath Technologies, Inc. (A Development Stage Company) PART II ------- Item 1. Legal Proceedings In October 1996 the Company was informed that a lawsuit filed in the U.S. District Court, Tucson, by a former employee had been terminated by the employee following the discovery phase. There have been no material developments in any other legal actions since the Company's Form 10-KSB for the year ended June 30, 1996. LightPath is subject to various claims and lawsuits in the ordinary course of business, none of which is material to the Company's financial condition and results of operations. Item 2. Changes in Securities None Item 3. Defaults Upon Senior Securities None Item 4. Submission of Matters to a Vote of Security Holders LightPath Technologies, Inc. conducted its regular 1996 Annual Meeting of Stockholders on September 30, 1996. Actions concluded at the meeting through submission of matters to a vote by stockholders was conducted by proxy and included the following: 1. Election of one Class III Director to hold office until the Annual Meeting of Stockholders in 1999 and his successor is elected and qualified. The election of Mr. Louis Leeburg as Class III Director of the Company was approved by the stockholders by a vote of 5,399,518 FOR and 32,500 ABSTENTIONS. 2. Ratification of the selection of KPMG Peat Marwick LLP as independent accounts for the Company for the fiscal year ending June 30, 1997 was approved by the stockholders by a vote of 5,368,532 FOR, 24,506 AGAINST and 38,980 ABSTENTIONS. 3. Ratification of the proposal to increase the number of shares of Common Stock which may be issued upon exercise of options granted under the Company's 1992 Omnibus Incentive Plan from 104,545 to 325,000 was approved by the stockholders by a vote of 3,706,918 FOR, 228,833 AGAINST and 972,034 ABSTENTIONS. Item 5. Other Items None Item 6. Exhibits and Reports on Form 8-K The following reports were filed under the Securities and Exchange Act of 1934 during the quarter ended September 30, 1996: Current Report on Form 8-K dated August 15, 1996 to announce the termination of Ernst & Young LLP as principal accountants effective with the conclusion of the June 30, 1996 reporting period. Current Report on Form 8-K/A No. 1 dated September 3, 1996 to announce that KPMG Peat Marwick LLP was engaged as principal accountants for the Company. 9 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 October 31, 1996 ---------------------------------------- Donald Lawson Date Executive Vice President and Treasurer 10 EX-27 2 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from the Form 10-QSB for the three month period ended September 30, 1996 and is qualified in its entirety by reference to such financial statements. 1 U.S. Dollars 3-MOS JUN-30-1997 SEP-30-1996 1 3,244,016 0 128,473 0 131,093 3,558,205 1,038,637 438,713 4,421,467 593,816 0 0 0 27,414 18,702,928 4,421,467 12,123 123,470 12,687 12,687 0 0 777 (757,129) 0 (757,129) 0 0 0 (757,129) (.28) 0
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