-- Disclosure backlog scheduled to ship within the next twelve months is
$3.0 million similar to the backlog level at September 30, 2008
-- The second quarter revenue was $1.91 million compared to $2.02
million, a decrease of 6% from the same period last year, and was impacted
by a $400,000 order cancellation from a major customer whose end customer
filed bankruptcy
-- Second quarter fiscal 2009 gross margin improves to 25% compared to 0%
for the same period in the previous fiscal year
-- The second quarter EBITDA improved to a loss of $700,000 compared to a
loss of $1.5 million in the same period last year
-- Cash usage was reduced to $631,000 in the second quarter of fiscal
2009 from a usage of $1.4 million in the same quarter in the prior year
-- The legal suit filed in October 2007 by Harborview has been dismissed
in federal court
Mr. Jim Gaynor, Chief Executive Officer of LightPath, commented, "During
the second quarter of fiscal 2009 we faced financial challenges along with
many in the industries we do business with, as the worldwide economic
instability continued to create turbulence in the market. I am pleased
that we were able to continue to manage our costs and increase our gross
margins year over year. This is a good indication of how efficiently the
business we have been operating over the past few quarters has become
despite the market challenges we are facing. Our gross margin for the
second quarter of fiscal 2009 improved from 0% to 25% compared to the
second quarter of fiscal 2008, and to 26% for the first half of fiscal
2009, compared to 6% the first half of fiscal 2008."
"We have improved our gross margins as a result of the cost reduction
programs we have implemented. During the second quarter of fiscal year
2009, over 96% of our precision molded optics were produced at our Shanghai
facility. Direct labor productivity has improved 71% in our Shanghai
factory. This efficiency improvement combined with the high percentage of
product now produced in this facility has significantly reduced our labor
cost. Production yields for the first half of fiscal 2009 averaged 85%
compared to an average of 67% for the fiscal year 2008. We are also
continuing to convert to high temperature lower cost glass materials and
this conversion combined with the 18 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 already low direct costs in future quarters.
"In addition to these direct cost reductions we have implemented a series
of overhead cost reductions. With the transfer of our manufacturing
operations to Shanghai workforce in Orlando has been reduced by 38% since
December 2007. And as a result of the productivity improvements in Shanghai
we have reduced the workforce there by 20% in December 2008. In addition
we implemented a 10% salary reduction for the majority of our US based
personnel in January 2009.
"The result of all of these changes has resulted in a reduction of our cash
used in operations by 49% from the first fiscal quarter of 2009 to the
second fiscal quarter of 2009. If the impacts of our implemented
efficiencies had been in place for the full quarter our cash used in
operations would have been below $300,000, as compared to actual cash used
in the quarter of $771,000. 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 at least 50% again over the
next two quarters. This improvement is expected to continue for the
remainder of fiscal 2009 providing significant organic growth opportunity,"
further commented Mr. Gaynor.
Financial Results for Three Months Ended December 31, 2008
Revenue for the second quarter of fiscal 2009 ended December 31, 2008
totaled $1.9 million compared to $2.0 million for the second quarter of
fiscal 2008, a decrease of 6%. The decrease from the second quarter of last
year was primarily attributable to lower sales volumes of molded optics
products, collimators and gradium products, offset by higher sales volumes
of isolators. The reduction in molded optics sales volume was primarily
attributed to an order cancellation related to a bankruptcy of an end user
of our major customer and we do not expect this level of impact to occur
again given the nature of our backlog. 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.
Our gross margin percentage in the second quarter of fiscal 2009 compared
to second quarter fiscal 2008 increased to 25% from 0%. Total manufacturing
cost of $1.4 million was $0.6 million lower in the second quarter of fiscal
2009 compared to the same period of the prior fiscal year. Direct costs,
which include material, labor and services, remain stable at 22% of revenue
in the second quarter of fiscal 2009, as compared to 24% in the second
quarter 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
quarter ended December 31, 2007 that was not incurred during the quarter
ended December 31, 2008.
During the second quarter of fiscal 2009 total costs and expenses decreased
$326,000 to $1.3 million compared to $1.7 million for the same period in
fiscal 2008. Included in total costs and expenses for fiscal 2009 were $1.1
million in selling, general and administrative expenses which for the
second quarter of fiscal 2009 decreased $245,000 or 18% from $1.4 million
for the same period in the prior year. As a result, total operating loss
for the second quarter of fiscal 2009 improved to $0.9 million compared to
a loss of $1.7 million for the same period in fiscal 2008.
Net loss for the second quarter of fiscal 2009 ended December 31, 2008 was
$1.7 million or $0.29 per basic and diluted share, compared with a net loss
of $1.6 million or $0.31 basic and diluted per share for the same period in
fiscal 2008. This compared to a net loss of $1.0 million or $0.19 per basic
and diluted share for the first quarter of fiscal 2009 ended September 30,
2008. This represents an $82,000 increase in net loss. The net loss for the
quarter ended December 31, 2008 includes $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 second quarter of
fiscal 2009 compared to the second quarter in fiscal 2008 primarily due to
the issuance of common shares related to the debenture conversion.
Financial Results for the Six Months Ended December 31, 2008
Revenue for the six months ended December 31, 2008 totaled $4.2 million
compared to $4.3 million for the first six months of fiscal 2008, a
decrease of 2%. The decrease from last year was primarily attributable to
lower sales volumes of collimators and gradium, products, partially offset
by higher sales volumes of isolators. Growth in sales going forward are
expected to be derived primarily from the precision molded optics driven by
low cost lenses in Asia.
Our gross margin percentage in the first half of fiscal 2009 compared to
first half of fiscal 2008 increased to 26% from 6%. Total cost of sales was
$3.1 million which represents a $941,000 decrease in the first half of
fiscal 2009 compared to $4.1 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 half of fiscal 2009, as compared to
22% in the first half 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 six months ended December 31, 2007 that was not incurred
during the six months ended December 31, 2008.
During the first half of fiscal 2009 total costs and expenses decreased
approximately $573,000 to $2.8 million compared to $3.4 million for the
same period in fiscal 2008. Included in total costs and expenses for the
first half of fiscal 2009 were $2.3 million in selling, general and
administrative expenses which decreased $452,000 to $2.3 million compared
to $2.8 million for the same period in the prior fiscal year. As a result,
total operating loss for the first half of fiscal 2009 improved to $1.8
million compared to $3.2 million for the same period in fiscal 2008.
Net loss for the six months ended December 31, 2008 totaled $2.8 million or
$0.49 per basic and diluted share, compared with a net loss of $3.1 million
or $0.59 basic and diluted per share for the same period in fiscal 2008.
This represents a $397,000 decrease in net loss. The net loss for the first
half 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 half of fiscal 2009 compared to the first half 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 $523,509 at
December 31, 2008. Total current assets and total assets at December 31,
2008 were $3.6 million and $5.9 million compared to $3.3 million and $5.5
million at June 30, 2008, respectively. Total current liabilities and total
liabilities at December 31, 2008 were $1.8 million and $3.3 million
compared to $3.0 million and $3.3 million, respectively, for June 30, 2008.
As a result, the current ratio as of December 31, 2008 improved to 2.0 to 1
compared to 1.10 to 1 for the year end June 30, 2008. Total stockholders'
equity at December 31, 2008 totaled $2.61 million compared to $2.2 million
at June 30, 2008.
As of December 31, 2008 the Company's backlog of orders to be filled in
less than one year, was to $3.0 million compared to $3.2 million as of
September 30, 2008.
Jim Gaynor concluded, "On January 30, 2009 the district court in New York
dismissed all claims of the lawsuit by Harborview. We are pleased with the
court's decision and to have this lawsuit completed.
"Our results for the first half 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 marginal 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 will bring cash usage going forward lower than the current
second quarter of fiscal 2009. Our cash balance at December 31, 2008 was
$523,000. 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
$3.0 million, and the number of new product proposals we have undertaken in
the past six months. Our efforts to penetrate high volume lower cost
commercial markets in Asia show tremendous promise for the second half of
our fiscal year. Going forward we will continue our 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,
February 12th at 4:15 p.m. EST to discuss the Company's financial and
operational performance for the second quarter and first half of fiscal
2009.
Conference Call Details Date: Thursday, February 12, 2009 Time: 4:15 p.m. (EST) Dial-in Number: 1-800-762-8908 International Dial-in Number: 1-480-248-5085It 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. 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.
EBITDA Comparison
Actual Actual Actual Actual Actual Actual
Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009
--------- --------- --------- --------- --------- ---------
Revenue 2,308,753 2,021,566 2,114,196 2,381,956 2,337,762 1,905,202
Cost of
sales 2,070,042 2,016,257 1,694,679 1,814,420 1,706,758 1,438,234
--------- --------- --------- --------- --------- ---------
Gross
margin 238,711 5,309 419,517 567,536 631,004 466,968
10% 0% 20% 24% 27% 25%
--------- --------- --------- --------- --------- ---------
Total
operating
costs and
expenses 1,753,554 1,669,438 1,602,495 1,665,083 1,505,922 1,343,723
--------- --------- --------- --------- --------- ---------
Operating
loss (1,514,843)(1,664,129)(1,182,978)(1,097,547) (874,918) (876,755)
Other
income
(expense) 11,795 20,978 (7,291) (33,754) (148,891) (848,753)
--------- --------- --------- --------- --------- ---------
Net Loss (1,503,048)(1,643,151)(1,190,269)(1,131,301)(1,023,809)(1,725,508)
========= ========= ========= ========= ========= =========
--------- --------- --------- --------- --------- ---------
EBITDA (1,381,348)(1,522,452)(1,053,747) (964,070) (669,936) (704,371)
========= ========= ========= ========= ========= =========
LIGHTPATH TECHNOLOGIES, INC.
Condensed Consolidated Balance Sheets
Unaudited
December 31, June 30,
Assets 2008 2008
------------ ------------
Current assets:
Cash and cash equivalents $ 523,509 $ 358,457
Trade accounts receivable, net of allowance
of $57,813 and $44,862 1,307,213 1,334,856
Inventories, net 1,154,400 1,323,555
Prepaid expenses and other assets 568,772 277,359
------------ ------------
Total current assets 3,553,894 3,294,227
Property and equipment - net 1,760,784 1,937,741
Intangible assets - net 183,303 199,737
Debt costs, net 363,764 --
Other assets 57,306 57,306
------------ ------------
Total assets $ 5,919,051 $ 5,489,011
============ ============
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable $ 1,092,076 $ 1,827,461
Accrued liabilities 88,495 196,125
Accrued severance 4,229 97,401
Accrued payroll and benefits 409,531 423,222
Secured note payable -- 260,828
Note payable, current portion 166,645 166,645
Capital lease obligation, current portion 14,661 18,603
------------ ------------
Total current liabilities 1,775,637 2,990,285
------------ ------------
Deferred rent 222,391 222,818
Capital lease obligation, excluding current
portion -- 5,050
Note payable, excluding current portion 27,774 111,097
8% convertible debentures to related parties,
net of debt discount 146,025 --
8% convertible debentures, net of debt discount 1,137,580 --
------------ ------------
Total liabilities 3,309,407 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;
6,653,621 and 5,331,664 shares issued and
outstanding, respectively 66,536 53,317
Additional paid-in capital 203,032,955 199,847,356
Foreign currency translation adjustment 21,751 21,369
Accumulated deficit (200,511,598) (197,762,281)
------------ ------------
Total stockholders' equity 2,609,644 2,159,761
------------ ------------
Total liabilities and stockholders'
equity $ 5,919,051 $ 5,489,011
============ ============
LIGHTPATH TECHNOLOGIES, INC.
Condensed Consolidated Statements of Operations
Unaudited Unaudited
Three months ended Six months ended
December 31, December 31,
2008 2007 2008 2007
----------- ----------- ----------- -----------
Product sales, net $ 1,905,202 $ 2,021,566 $ 4,242,964 $ 4,330,319
Cost of sales 1,438,234 2,016,257 3,144,992 4,086,299
----------- ----------- ----------- -----------
Gross margin 466,968 5,309 1,097,972 244,020
Operating expenses:
Selling, general and
administrative 1,108,931 1,353,954 2,338,450 2,790,811
New product
development 227,775 307,267 502,468 615,747
Amortization of
intangibles 8,217 8,217 16,434 16,434
Gain on sale of
property & equipment (1,200) - (7,707) -
----------- ----------- ----------- -----------
Total costs and
expenses 1,343,723 1,669,438 2,849,645 3,422,992
----------- ----------- ----------- -----------
Operating loss (876,755) (1,664,129) (1,751,673) (3,178,972)
Other income (expense):
Interest expense (853,526) (11,190) (1,012,248) (28,928)
Investment and other
income 4,773 32,168 14,604 61,701
----------- ----------- ----------- -----------
Net loss $(1,725,508) $(1,643,151) $(2,749,317) $(3,146,199)
=========== =========== =========== ===========
Foreign currency
translation adjustment (11,410) 20,614 382 41,410
----------- ----------- ----------- -----------
Comprehensive
loss $(1,736,918) $(1,622,537) $(2,748,935) $(3,104,789)
=========== =========== =========== ===========
Loss per share (basic
and diluted) $ (0.29) $ (0.31) $ (0.49) $ (0.59)
=========== =========== =========== ===========
Number of shares used
in per share
calculation 5,892,829 5,323,511 5,652,444 5,322,678
=========== =========== =========== ===========
LIGHTPATH TECHNOLOGIES, INC.
Condensed Consolidated Statements of Cash Flows
Unaudited
Six Months Ended
December 31,
------------------------
2008 2007
----------- -----------
Cash flows from operating activities
Net loss $(2,749,317) $(3,146,199)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 320,918 213,471
Foreign exchange translation adjustment 382 41,410
Interest from amortization of debt
discount 478,320 -
Fair value of warrants issued to induce
debenture conversion 215,975 -
Amortization of debt costs 190,546 -
Issuance of common stock for interest on
convertible debentures 97,633 -
Gain on sale of property and equipment (7,707) -
Stock based compensation 52,452 187,624
Provision for doubtful accounts receivable 12,952 22,538
Deferred rent (427) -
Common stock issued for payment of consulting
services 49,800 -
Changes in operating assets and liabilities:
Trade accounts receivables 14,691 128,929
Inventories 169,155 310,593
Prepaid expenses and other assets 17,301 126,142
Accounts payable and accrued liabilities (949,878) (227,336)
----------- -----------
Net cash used in operating
activities (2,087,204) (2,342,828)
----------- -----------
Cash flows from investing activities
Purchase of property and equipment (116,013) (349,736)
Proceeds from sale of equipment 37,791 -
----------- -----------
Net cash used in investing
activities (78,222) (349,736)
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 11,191 27,632
Borrowings on 8% convertible debenture,
net of issuance costs 2,672,430 -
Payments on secured note payable (260,828) -
Payments on capital lease obligation (8,992) (7,872)
Payments on note payable (83,323) (83,322)
----------- -----------
Net cash provided by financing activities 2,330,478 2,914,982
----------- -----------
Increase in cash and cash equivalents 165,052 222,418
Cash and cash equivalents, beginning of period 358,457 1,291,364
----------- -----------
Cash and cash equivalents, end of period $ 523,509 $ 1,513,782
=========== ===========
Supplemental disclosure of cash flow information:
Interest paid in cash $ 27,639 $ 13,945
Supplemental disclosure of non-cash investing &
financing activities:
Landlord credits for leasehold
improvements $ - $ 74,899
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
Six months ended December 31, 2008
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 10,000 100 (100)
Employee Stock Purchase
Plan 9,648 96 11,095
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 52,452
Foreign currency adjustment
Net loss
--------------- --------------- --------------
Balances at December 31,
2008 6,653,621 $ 66,536 $ 203,032,955
=============== =============== ==============
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 11,191
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 52,452
Foreign currency adjustment 382 382
Net loss (2,749,317) (2,749,317)
--------------- -------------- --------------
Balances at December 31,
2008 $ 21,751 $ (200,511,598) $ 2,609,644
=============== ============== ==============
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