-- Disclosure backlog scheduled to ship within the next twelve months is
$3.4 million.
-- Third quarter fiscal 2009 gross margin improves to 25% compared to 20%
for the same period in the previous fiscal year.
-- The third quarter EBITDA improved to a loss of $460,000 compared to a
loss of $1.1 million in the same period last year and $704,000 from the
second quarter of fiscal 2009.
-- Cash usage was reduced to $143,000 in the third quarter of fiscal 2009
from a usage of $1.1 million in the same quarter in the prior year and
$631,000 from the second quarter of fiscal 2009.
Mr. Jim Gaynor, Chief Executive Officer of LightPath, commented, "During
the third quarter of fiscal 2009 we continued to address the financial
challenges presented by the current market economy. During this quarter we
continued to experience the weakness in the market demand but we believe we
are near the bottom and expect to see slightly stronger demand over the
next several quarters. We have been working diligently to penetrate new
markets for LightPath and have made significant progress with our efforts
in the laser tool market, particularly in Asia. These efforts have produced
significant orders that we anticipate to be in production over the next 3
to 6 months subject to customer qualifications.
"I am pleased that we were able to continue to manage our costs and
increase our gross margins year over year. We have continued to find ways
to reduce our costs and continue to efficiently operate our business. Our
gross margin for the third quarter of fiscal 2009 improved from 20% to 25%
compared to the third quarter of fiscal 2008, and to 26% for the first nine
months of fiscal 2009, compared to 10% the first nine months of fiscal
2008. This margin improvement has been accomplished in spite of lower sales
and competitive price pressures.
"During the third quarter of fiscal year 2009, over 95% of our precision
molded optics were produced at our Shanghai facility where our direct labor
productivity has improved 66%. Our improved efficiency, combined with the
high percentage of our product now produced in the Shanghai facility has
significantly reduced our labor cost. Production yields for the first nine
months of fiscal 2009 averaged 87% compared to an average of 67% for the
fiscal year 2008. We are also continuing to convert to high temperature,
lower cost glass materials, when combined with the 20 percentage point
improvement in yield has lowered our material costs. We have also
implemented new programs to reduce our service costs aimed at tooling and
our anti-reflective coating processes. As these programs come on line we
expect to see continued improvement in our direct costs in future
quarters."
"Additionally we have implemented a series of overhead cost reductions.
With the transfer of the majority of our manufacturing operations to
Shanghai, workforce in Orlando has been reduced by 42% since December 2007.
As a result of the productivity improvements in Shanghai, we have reduced
the workforce there by 20% since December 2008. In addition we implemented
a 20% salary reduction for the majority of our US based personnel in March
2009. All of these changes has resulted in a reduction of our cash used in
operations by 94% from the first fiscal quarter of 2009 compared to the
third fiscal quarter of 2009 and 81% from the second fiscal quarter of 2009
compared to the third fiscal quarter of 2009. As the full impact of these
improvements are realized and our forecasted revenues are achieved, we
believe we will see continued reductions of cash used in operations."
Financial Results for Three Months Ended March 31, 2009
Revenue for the third quarter of fiscal 2009 ended March 31, 2009 totaled
$1.66 million compared to $2.11 million for the third quarter of fiscal
2008, a decrease of 22%. The decrease from the third quarter of last year
was primarily attributable to lower sales volumes of molded optics products
and isolators. Growth in sales going forward is expected to be derived
primarily from the precision molded optics product line driven by low cost
lenses in Asia and our infrared lenses.
Our gross margin percentage in the third quarter of fiscal 2009 compared to
third quarter fiscal 2008 increased to 25% from 20%. Total manufacturing
cost of $1.2 million was $0.5 million lower in the third quarter of fiscal
2009 compared to the same period of the prior fiscal year. Direct costs,
which include material, labor and services, were reduced 3% points to 21%
of revenue in the third quarter of fiscal 2009, as compared to 24% of
revenue in the third quarter of fiscal 2008. Gross margins improved as a
result of the cost reduction programs the Company has implemented.
During the third quarter of fiscal 2009 total costs and expenses decreased
$591,000 to $1.0 million compared to $1.6 million for the same period in
fiscal 2008. Included in total costs and expenses for fiscal 2009 were
$817,000 in selling, general and administrative expenses which for the
third quarter of fiscal 2009 decreased $455,000 or 36% from $1.3 million
for the same period in the prior year. As a result, total operating loss
for the third quarter of fiscal 2009 improved to $0.6 million compared to a
loss of $1.2 million for the same period in fiscal 2008.
Net loss for the third quarter of fiscal 2009 ended March 31, 2009 was
$756,000 or $0.11 per basic and diluted share, compared with a net loss of
$1.2 million or $0.22 per basic and diluted share for the same period in
fiscal 2008. This compared to a net loss of $1.7 million or $0.29 per basic
and diluted share for the second quarter of fiscal 2009 ended December 31,
2008. This represents a $969,000 decrease in net loss. The net loss for the
quarter ended December 31, 2008 included $641,000 in charges related to
fees, debt costs, and debt discount write-offs associated with the
conversion of 25% of outstanding debentures into common stock.
Weighted-average shares outstanding increased in the third quarter of
fiscal 2009 compared to the third quarter in fiscal 2008 primarily due to
the issuance of common shares related to the debenture conversion and the
prepayment of interest in common shares.
Financial Results for the Nine Months Ended March 31, 2009
Revenue for the nine months ended March 31, 2009 totaled $5.9 million
compared to $6.4 million for the first nine months of fiscal 2008, a
decrease of 8%. The decrease from the prior fiscal year was primarily
attributable to lower sales volumes of molded optics, collimators and
gradium. Growth in sales going forward is expected to be derived primarily
from the precision molded optics driven by low cost lenses in Asia and
infrared lenses.
Our gross margin percentage in the first nine months of fiscal 2009
compared to first nine months of fiscal 2008 increased to 26% from 10%.
Total cost of sales was $4.4 million which represents a $1.4 million
decrease in the first nine months half of fiscal 2009 compared to $5.8
million in the same period of the prior fiscal year. Direct costs, which
include material, labor and services, remain stable at 23% of revenue in
the first nine months of fiscal 2009, as compared to 23% in the first nine
months of fiscal 2008. Gross margins improved as a result of the cost
reduction programs the Company has implemented. In addition, we incurred a
one-time inventory valuation adjustment of approximately $374,000 for the
nine months ended March 31, 2008 that was not incurred during the nine
months ended March 31, 2009.
During the first nine months of fiscal 2009 total costs and expenses
decreased approximately $1.2 million to $3.9 million compared to $5.0
million for the same period in fiscal 2008. Included in total costs and
expenses for the first nine months of fiscal 2009 were $3.2 million in
selling, general and administrative expenses which decreased $908,000 from
the same period in the previous fiscal year. As a result, total operating
loss for the first nine months of fiscal 2009 improved to $2.3 million
compared to $4.4 million for the same period in fiscal 2008.
Net loss for the nine months ended March 31, 2009 totaled $3.5 million or
$0.58 per basic and diluted share, compared with a net loss of $4.3 million
or $0.81 per basic and diluted share for the same period in fiscal 2008.
This represents an $831,000 decrease in net loss. The net loss for the
first nine months includes $641,000 in charges related to fees, debt costs,
and debt discount write-offs associated with the conversion of 25% of the
outstanding debentures.
Weighted-average shares outstanding increased in the first nine months of
fiscal 2009 compared to the first nine months of fiscal 2008 primarily due
to the issuance of common shares related to the conversion of the
debentures.
On the balance sheet, cash and cash equivalents totaled $380,068 at March
31, 2009. Total current assets and total assets at March 31, 2009 were $3.2
million and $5.5 million, respectively, compared to $3.3 million and $5.5
million at June 30, 2008, respectively. Total current liabilities and total
liabilities at March 31, 2009 were $2.0 million and $3.5 million,
respectively, compared to $3.0 million and $3.3 million, respectively, for
June 30, 2008. As a result, the current ratio as of March 31, 2009 improved
to 1.65 to 1 compared to 1.10 to 1 for the year end June 30, 2008. Total
stockholders' equity at March 31, 2009 totaled $1.9 million compared to
$2.2 million at June 30, 2008.
As of March 31, 2009 the Company's backlog of orders to be filled in less
than one year, was $3.4 million compared to $3.0 million as of December 31,
2008.
Jim Gaynor concluded, "Our results for the first nine months of this year
are a positive reflection of much hard work and effort by the team at
LightPath, to control cost and mitigate expenses. Despite a decrease in
our revenues we managed to dramatically enhance our gross margins and
decrease our loss over the previous year. We expect the full effect of the
efficiencies we have implemented to lower cash usage going forward compared
to the third quarter of fiscal 2009. Our cash balance at March 31, 2009 was
$380,000. We have taken certain actions to conserve our cash including
extending payment terms with certain of our suppliers. We have negotiated
payment plans with some key vendors and are working with other vendors to
develop payment plans.
"We believe LightPath currently has sufficient cash to fund its operations
through October 31, 2009 assuming our revenue stays at current levels and
no additional sources of capital are used. This quarter we expect to
receive approximately $276,000 for a D&O insurance settlement from a claim
filed in 2007. These funds should provide additional flexibility in
sustaining operations.
"The extent to which we can sustain our operations beyond this timeframe
will depend on our ability to increase revenues from low cost and infrared
lenses or a sale of non-strategic assets or from future equity or debt
financing. Recent booking trends have been slower than planned given the
current economic condition. However, we believe that taking the current
booking rate combined with the existing order backlog that we will be able
to generate increased revenues.
"We remain confident that the changes we have made over the past year will
reap positive rewards as we generate more sales and build our pipeline of
business. We remain encouraged by our disclosure backlog at $3.4 million
and the number of new product proposals we have undertaken in the past nine
months. Our efforts to penetrate high volume lower cost commercial markets
in Asia show tremendous promise for the remainder of our fiscal year. Going
forward we will continue to focus on the lower cost higher volume market
opportunities and broaden our exposure in the Asian precision optic lens
market."
Investor Conference Call and Webcast Details:
LightPath will host an audio conference call and webcast on Thursday, May
14th at 4:15 p.m. EDT to discuss the Company's financial and operational
performance for the third quarter and first nine months of fiscal 2009.
Conference Call Details Date: Thursday, May 14, 2009 Time: 4:15 p.m. (EDT) Dial-in Number: 1-877-941-6009 International Dial-in Number: 1-480-629-9770It is recommended that participants dial-in approximately 5 to 10 minutes prior to the start of the 4:15 p.m. call. The call is also being webcast and may be accessed at LightPath's website at www.lightpath.com. A transcript archive of the webcast will be available for viewing or download on the company web site shortly after the call is concluded. A replay of the conference call will be available approximately 3 hours after the completion of the call for 7 days, until May 21, 2009. To listen to the replay, dial 1-800-406-7325 if calling within the U.S. and 1-303-590-3030 if calling internationally and enter the pass code 4068699. The call is also being webcast and may be accessed at the call organizer website of ViaVid at www.viavid.net. The webcast will be archived and accessible on the Company website. About LightPath Technologies LightPath manufactures optical products including precision molded aspheric optics, GRADIUM® glass products, proprietary collimator assemblies, laser components utilizing proprietary automation technology, higher-level assemblies and packing solutions. LightPath has a strong patent portfolio that has been granted or licensed to us in these fields. LightPath common stock trades on the NASDAQ Capital Market under the stock symbol LPTH. For more information visit www.lightpath.com EBITDA is a non-GAAP financial measure used by management, lenders and certain investors as a supplemental measure in the evaluation of some aspects of a corporation's financial position and core operating performance. Investors sometimes use EBITDA as it allows for some level of comparability of profitability trends between those businesses differing as to capital structure and capital intensity by removing the impacts of depreciation and amortization. EBITDA also does not include changes in major working capital items such as receivables, inventory and payables, which can also indicate a significant need for, or source of, cash. Since decisions regarding capital investment and financing and changes in working capital components can have a significant impact on cash flow, EBITDA is not a good indicator of a business's cash flows. We use EBITDA for evaluating the relative underlying performance of the Company's core operations and for planning purposes. We calculate EBITDA by adjusting net loss to exclude net interest expense, income tax expense or benefit, depreciation and amortization, thus the term "Earnings Before Interest, Taxes, Depreciation and Amortization" and the acronym "EBITDA." This news release includes statements that constitute forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. This information may involve risks and uncertainties that could cause actual results to differ materially from such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, factors detailed by LightPath Technologies, Inc. in its public filings with the Securities and Exchange Commission. Except as required under the federal securities laws and the rules and regulations of the Securities and Exchange Commission, we do not have any intention or obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
LightPath Technologies
EBITDA Comparison
Actual Actual Actual Actual
Q1 2008 Q2 2008 Q3 2008 Q4 2008
----------- ----------- ----------- -----------
Revenue 2,308,753 2,021,566 2,114,196 2,381,956
Cost of sales 2,070,042 2,016,257 1,694,679 1,814,420
----------- ----------- ----------- -----------
Gross margin 238,711 5,309 419,517 567,536
10% 0% 20% 24%
----------- ----------- ----------- -----------
Total operating costs
and expenses 1,753,554 1,669,438 1,602,495 1,665,083
----------- ----------- ----------- -----------
Operating loss (1,514,843) (1,664,129) (1,182,978) (1,097,547)
Other income (expense) 11,795 20,978 (7,291) (33,754)
----------- ----------- ----------- -----------
Net Loss (1,503,048) (1,643,151) (1,190,269) (1,131,301)
=========== =========== =========== ===========
----------- ----------- ----------- -----------
EBITDA (1,381,348) (1,522,452) (1,053,747) (964,070)
=========== =========== =========== ===========
Actual Actual Actual
Q1 2009 Q2 2009 Q3 2009
----------- ----------- -----------
Revenue 2,337,762 1,905,202 1,656,889
Cost of sales 1,706,758 1,438,234 1,242,291
----------- ----------- -----------
Gross margin 631,004 466,968 414,598
27% 25% 25%
----------- ----------- -----------
Total operating costs
and expenses 1,505,922 1,343,723 1,011,596
----------- ----------- -----------
Operating loss (874,918) (876,755) (596,998)
Other income (expense) (148,891) (848,753) (159,177)
----------- ----------- -----------
Net Loss (1,023,809) (1,725,508) (756,175)
=========== =========== ===========
----------- ----------- -----------
EBITDA (688,434) (727,717) (483,258)
=========== =========== ===========
LIGHTPATH TECHNOLOGIES, INC.
Condensed Consolidated Balance Sheets
Unaudited
March 31, June 30,
Assets 2009 2008
------------ ------------
Current assets:
Cash and cash equivalents $ 380,068 $ 358,457
Trade accounts receivable, net of allowance
of $44,304 and $44,862 1,052,949 1,334,856
Inventories, net 1,207,970 1,323,555
Prepaid expenses and other assets 581,801 277,359
------------ ------------
Total current assets 3,222,788 3,294,227
Property and equipment - net 1,666,410 1,937,741
Intangible assets - net 175,086 199,737
Debt costs, net 331,744 --
Other assets 57,306 57,306
------------ ------------
Total assets $ 5,453,334 $ 5,489,011
============ ============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 1,342,987 $ 1,827,461
Accrued liabilities 178,693 196,125
Accrued severance -- 97,401
Accrued payroll and benefits 271,696 423,222
Secured note payable -- 260,828
Note payable, current portion 152,624 166,645
Capital lease obligation, current portion 9,936 18,603
------------ ------------
Total current liabilities 1,955,936 2,990,285
------------ ------------
Deferred rent 220,066 222,818
Capital lease obligation, excluding current
portion -- 5,050
Note payable, excluding current portion -- 111,097
8% convertible debentures to related parties,
net of debt discount 120,891 --
8% convertible debentures, net of debt discount 1,243,093 --
------------ ------------
Total liabilities 3,539,986 3,329,250
Stockholders' equity:
Preferred stock: Series D, $.01 par value,
voting; 5,000,000 shares authorized; none
issued and outstanding -- --
Common stock: Class A, $.01 par value,
voting; 40,000,000 shares authorized;
6,676,453 and 5,331,664 shares issued
and outstanding, respectively 66,765 53,317
Additional paid-in capital 203,089,544 199,847,356
Foreign currency translation adjustment 24,812 21,369
Accumulated deficit (201,267,773) (197,762,281)
------------ ------------
Total stockholders' equity 1,913,348 2,159,761
------------ ------------
Total liabilities and stockholders'
equity $ 5,453,334 $ 5,489,011
============ ============
LIGHTPATH TECHNOLOGIES, INC.
Condensed Consolidated Statements of Operations
Unaudited Unaudited
Three months ended Nine months ended
March 31, March 31,
2009 2008 2009 2008
----------- ------------ ------------ ------------
Product sales, net $ 1,656,889 $ 2,114,196 $ 5,899,853 $ 6,444,515
Cost of sales 1,242,291 1,694,679 4,387,283 5,780,978
----------- ------------ ------------ ------------
Gross margin 414,598 419,517 1,512,570 663,537
Operating expenses:
Selling, general
and
administrative 816,805 1,272,269 3,155,255 4,063,080
New product
development 184,111 308,302 686,579 924,049
Amortization of
intangibles 8,217 8,217 24,651 24,651
Loss (Gain) on
sale of
property &
equipment 2,463 13,707 (5,244) 13,707
----------- ------------ ------------ ------------
Total
costs and
expenses 1,011,596 1,602,495 3,861,241 5,025,487
----------- ------------ ------------ ------------
Operating loss (596,998) (1,182,978) (2,348,671) (4,361,950)
Other income
(expense):
Interest expense (161,330) (19,357) (1,173,578) (48,285)
Investment and
other income 2,153 12,066 16,757 73,767
----------- ------------ ------------ ------------
Net loss $ (756,175) $ (1,190,269) $ (3,505,492) $ (4,336,468)
=========== ============ ============ ============
Foreign currency
translation
adjustment 3,061 9,771 3,443 51,181
----------- ------------ ------------ ------------
Comprehensive
loss $ (753,114) $ (1,180,498) $ (3,502,049) $ (4,285,287)
=========== ============ ============ ============
Loss per share
(basic and diluted) $ (0.11) $ (0.22) $ (0.58) $ (0.81)
=========== ============ ============ ============
Number of shares
used in per share
calculation 6,674,453 5,332,655 5,993,114 5,326,003
=========== ============ ============ ============
LIGHTPATH TECHNOLOGIES, INC. Unaudited
Condensed Consolidated Statements of Cash Flows Nine Months Ended
March 31,
--------------------------
2009 2008
------------ ------------
Cash flows from operating activities
Net loss $ (3,505,492) $ (4,336,468)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 432,505 330,636
Foreign exchange translation adjustment 3,443 51,181
Interest from amortization of debt discount 558,699 -
Fair value of warrants issued to induce
debenture conversion 215,975 -
Amortization of debt costs 222,564 -
Issuance of common stock for interest on
convertible debentures 97,633 -
Gain on sale of property and equipment (5,244) (7,000)
Stock based compensation 106,241 280,525
Provision for doubtful accounts receivable (558) 17,901
Loss on abandonment of fixed assets - 20,707
Deferred rent (2,752) -
Common stock issued for payment of consulting
services 49,800 -
Changes in operating assets and liabilities:
Trade accounts receivables 282,465 3,743
Inventories 115,585 400,431
Prepaid expenses and other assets 686 (93,734)
Accounts payable and accrued liabilities (750,833) 213,762
------------ ------------
Net cash used in operating activities (2,179,283) (3,118,316)
------------ ------------
Cash flows from investing activities
Purchase of property and equipment (123,884) (646,020)
Proceeds from sale of equipment 37,791 7,000
------------ ------------
Net cash used in investing activities (86,093) (639,020)
Cash flows from financing activities
Proceeds from sale of common stock, net of
costs - 2,978,544
Proceeds from sale of common stock from
employee stock purchase plan 14,220 44,548
Borrowings on 8% convertible debenture, net
of issuance costs 2,672,430 -
Payments on secured note payable (260,828) -
Payments on capital lease obligation (13,717) (12,008)
Payments on note payable (125,118) (124,983)
------------ ------------
Net cash provided by financing activities 2,286,987 2,886,101
------------ ------------
Increase in cash and cash equivalents 21,611 (871,235)
Cash and cash equivalents, beginning of period 358,457 1,291,364
------------ ------------
Cash and cash equivalents, end of period $ 380,068 $ 420,129
============ ============
Supplemental disclosure of cash flow
information:
Interest paid in cash $ 31,568 $ 29,993
Supplemental disclosure of non-cash investing
& financing activities:
Landlord credits for leasehold improvements $ - $ 161,678
Convertible debentures exchanged into
common stock $ 732,250 $ -
Fair value of warrants issued to broker of
debt financing $ 194,057 $ -
Fair value of warrants & incentive shares
issued to debenture holders $ 790,830 $ -
Intrinsic value of beneficial conversion
feature underlying convertible debentures $ 600,635 $ -
LIGHTPATH TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Nine months ended March 31, 2009
Unaudited
Class A Additional
Common Stock Paid-in
Shares Amount Capital
-------------- -------------- -------------
Balances at June 30, 2008 5,331,664 $ 53,317 $ 199,847,356
Issuance of common stock for:
Current interest on
convertible debentures 103,971 1,040 96,593
Incentive to participate in
convertible debenture
placement, recorded as
debt discount 73,228 732 74,399
Prepayment of interest on
convertible debentures 589,614 5,896 448,099
Conversion of 25% of
debentures 475,496 4,755 727,495
Payment on consulting
service arrangements 60,000 600 49,200
Vested restricted stock units 27,700 277 (277)
Employee Stock Purchase Plan 14,780 148 14,072
Issuance of warrants to
private placement agent
recorded as debt costs 194,057
Debt discount and beneficial
conversion feature
on convertible debentures 1,316,334
Issuance of warrants as
inducement to convert
debentures 215,975
Stock based compensation on
stock options and restricted
stock units 106,241
Foreign currency adjustment
Net loss
-------------- -------------- -------------
Balances at March 31, 2009 6,676,453 $ 66,765 $ 203,089,544
============== ============== =============
Foreign
Currency Total
Translation Accumulated Stockholders'
Adjustment Deficit Equity
-------------- ------------- -------------
Balances at June 30, 2008 $ 21,369 $(197,762,281) $ 2,159,761
Issuance of common stock for:
Current interest on
convertible debentures 97,633
Incentive to participate in
convertible debenture
placement, recorded as
debt discount 75,131
Prepayment of interest on
convertible debentures 453,995
Conversion of 25% of
debentures 732,250
Payment on consulting
service arrangements 49,800
Vested restricted stock units -
Employee Stock Purchase Plan 14,220
Issuance of warrants to
private placement agent
recorded as debt costs 194,057
Debt discount and beneficial
conversion feature
on convertible debentures 1,316,334
Issuance of warrants as
inducement to convert
debentures 215,975
Stock based compensation on
stock options and restricted
stock units 106,241
Foreign currency adjustment 3,443 3,443
Net loss (3,505,492) (3,505,492)
-------------- ------------- -------------
Balances at March 31, 2009 $ 24,812 $(201,267,773) $ 1,913,348
============== ============= =============
Contact Information: Contacts: LightPath Technologies, Inc. Jim Gaynor President & CEO or Dorothy Cipolla CFO +1 (407) 382-4003 Alliance Advisors, LLC Mark McPartland +1 (910) 686-0455 or Valter Pinto +1 (914) 669-0222