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LightPath Technologies Announces Profitable First Quarter

November 8, 2012

ORLANDO, Fla., Nov. 8, 2012 /PRNewswire/ — LightPath Technologies, Inc. (NASDAQ: LPTH) (“LightPath”, the “Company” or “we”), a global manufacturer, distributor and integrator of proprietary optical components and high-level assemblies, announced today its financial results for the first quarter ended September 30, 2012.

First Quarter Highlights:

  • Net income was $101,000, or $0.01 per share for the quarter compared to a net loss of $198,000, or $0.02 loss per share in the first quarter of fiscal 2012.
  • 12-month backlog was $5.46 million as of September 30, 2012, an increase of 12% or $566,000 from June 30, 2012.
  • Revenue for the first quarter of fiscal 2013 increased 6% to $2.89 million compared to $2.73 million for the first quarter of fiscal 2012.
  • Gross margin for the quarter was 41% as compared to 40% in the first quarter of fiscal 2012.
  • EBITDA increased 379% to $341,000 compared to $71,000 in the first quarter of fiscal 2012.

Jim Gaynor, President and Chief Executive Officer of LightPath, commented, “LightPath continues to execute on its business plan with improved bookings, revenue, gross margin, EBITDA and net income in the first quarter of fiscal 2013 compared to the first quarter last year. The Company’s ability to serve diverse markets has resulted in steady growth in our precision molded optics business, with higher volumes of both custom lenses and lower-cost lenses. We see the initial signs of market recovery for our industrial tools, which posted revenue growth of 30 percent in the quarter, as order volumes and customer count increased. Gross margin improved as a result of cost reductions such as glass conversion to lower cost materials and lower material prices. We committed $171,000 during the quarter in investment to fund our anti-reflective coating cost reduction project which remains a point of our differentiation and value proposition. We also continued developing our infrared product line which we believe will play a material role in the company’s growth in future quarters.”

Mr. Gaynor added, “LightPath has continued to grow during a period in which the markets we participate in have been weak, and have grown our backlog for three consecutive quarters. Our product offerings, which serve a diverse group of end-markets, have found growth opportunities for our core business in precision molded optics and are building a presence in the infrared market. We will continue to work hard to ensure that we are positioned to capitalize on the many opportunities we see ahead for our products and technology. Subsequent to the quarter’s end we announced a new licensing deal in Asia with New HuaGuang Information Materials Company, Ltd., a major optics supplier in China for our GRADIUM® product line. This license will broaden the exposure of our GRADIUM® products in Asia and will continue to expand LightPath’s distribution network.”

Financial Results for Three Months Ended September 30, 2012

Revenue for the first quarter of fiscal 2013 totaled approximately $2.89 million compared to approximately $2.73 million for the first quarter of fiscal 2012, an increase of 6%. This increase was primarily attributable to increases in sales of custom optics and an increase in our industrial tool products offset by slightly lower sales volumes in our collimator and GRADIUM® product lines. Growth in sales for the next several quarters is expected to be derived primarily from the precision molded lens product line, with an initial recovery in low cost lenses being sold in Asia and from new business with penetration into imaging applications. Infrared products, now being designed and introduced are expected to accelerate the Company’s growth more meaningfully beginning in the second half of fiscal 2013 and continuing in fiscal 2014.

The gross margin percentage in the first quarter of fiscal 2013 was 41%, compared to 40% for the first quarter of fiscal 2012. Total manufacturing costs of $1.71 million increased by approximately $63,000 in the first quarter of fiscal 2013 compared to the same period of the prior fiscal year due to an increase of $163,000 in direct costs associated with the infrared project partially offset by lower fixed and tooling costs. Direct costs overall, which include material, labor and services, were 22% of revenue in the first quarter of fiscal 2013, as compared to 29% of revenue in the first quarter of fiscal 2012.

During the first quarter of fiscal 2013, total costs and expenses decreased by approximately $88,000 compared to the same period of the prior year. Selling, general and administrative expenses were $982,000 for the first quarter of fiscal 2013. Total operating loss for the first quarter of fiscal 2013 improved to approximately $27,000 compared to $209,000 for the same period in fiscal 2012.

In the first quarter of fiscal 2013 we recognized a gain of approximately $96,000 related to the change in the fair value of derivative warrants issued in our June 2012 private placement. This fair value will be re-measured each reporting period throughout the five year life of the warrants or until exercised.

Investment and other income increased by approximately $28,000 to $63,000 in the first quarter of fiscal 2013 from approximately $35,000 in the first quarter of fiscal 2012. In the first quarter of fiscal 2013 we sold a technology license for our GRADIUM® product line in Asia and recognized the first milestone of that agreement.

Net income for the first quarter of fiscal 2013 was $101,000 or $0.01 per basic and diluted common share, compared with a net loss of $198,000 or $0.02 per basic and diluted common share for the same period in fiscal 2012. Weighted-average basic shares outstanding increased to 11,771,392 in the first quarter of fiscal 2013 compared to 9,746,107 in the first quarter of fiscal 2012 which is primarily due to the issuance of shares of common stock in the June 2012 private placement, shares issued for the payment of interest on our convertible debentures and the shares issued for our employee stock purchase plan.

Cash and cash equivalents totaled approximately $2.16 million as of September 30, 2012. The current ratio as of September 30, 2012 was 2.26 to 1 compared to 3.59 to 1 as of June 30, 2012. The change was primarily due to our convertible debt moving from long term to short term debt. Total stockholders’ equity as of September 30, 2012 totaled approximately $4.25 million compared to $4.02 million as of June 30, 2012.

As of September 30, 2012, our 12-month backlog was $5.46 million compared to $4.89 million as of June 30, 2012.

Investor Conference Call and Webcast Details:

LightPath will host an audio conference call and webcast on Thursday, November 8th at 4:30 p.m. ET to discuss the Company’s financial and operational performance for the first quarter of fiscal 2013.

Conference Call Details
Date: Thursday, November 8, 2012
Time: 4:30 p.m. (ET)
Dial-in Number: 1-800-860-2442
International Dial-in Number: 1-412-858-4600

It is recommended that participants dial-in approximately 5 to 10 minutes prior to the start of the 4:30 p.m. call. 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. The Company’s products are used in various markets, including industrial, medical, defense, test and measurement and telecommunications. LightPath has a strong patent portfolio that has been granted or licensed to it in these fields. For more information visit www.lightpath.com.

The discussions of our results as presented in this release include use of non-GAAP terms “EBITDA” and “gross margin.” Gross margin is determined by deducting the cost of sales from operating revenue. Cost of sales includes manufacturing direct and indirect labor, materials, services, fixed costs for rent, utilities and depreciation, and variable overhead. Gross margin should not be considered an alternative to operating income or net income, which is determined in accordance with Generally Accepted Accounting Principles (“GAAP”). We believe that gross margin, although a non-GAAP financial measure is useful and meaningful to investors as a basis for making investment decisions. It provides investors with information that demonstrates our cost structure and provides funds for our total costs and expenses. We use gross margin in measuring the performance of our business and have historically analyzed and reported gross margin information publicly. Other companies may calculate gross margin in a different manner.

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, amortization, and loss on extinguishment of debt and interest expense. 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, including statements regarding our ability to expand our presence in certain markets, future sales growth, continuing reductions in cash usage and implementation of new distribution channels. 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.

    Contacts:

    Jim Gaynor, President & CEO  Dorothy Cipolla, CFO
    LightPath Technologies, Inc. LightPath Technologies, Inc.
    Tel: 407-382-4003            Tel: 407-382-4003 x305
    Email: jgaynor@lightpath.com Email: dcipolla@lightpath.com
    Web: www.lightpath.com       Web: www.lightpath.com

    Brett Maas, Managing Partner
    Hayden IR
    Tel: 646-536-7331
    Email: Brett@haydenir.com
    Web: www.haydenir.com
    ---------------------

                                                                                  LIGHTPATH TECHNOLOGIES, INC.
                                                                                  Consolidated Balance Sheets

                                                                                                                    (Unaudited)
                                                                                                                   September 30,                                            June 30,
                                        Assets                                                                                           2012                                                2012
                                                                                                                                         ----                                                ----
    Current assets:
                      Cash and cash
                      equivalents                                                       $2,161,729                                               $2,354,087
                      Trade accounts
                      receivable, net of
                      allowance of $6,596
                      and $18,214                                                        2,082,146                                                2,133,079
                     Inventories, net                                                    1,601,001                                                1,513,384
                     Other receivables                                                     246,021                                                   41,000
                      Prepaid interest
                      expense                                                               72,500                                                    7,250
                      Prepaid expenses and
                      other assets                                                         297,185                                                  201,459
                                                   Total current assets                                                             6,460,582                                           6,250,259

                      Property and
                      equipment, net                                                     1,890,897                                                1,920,950
                     Intangible assets, net                                                 60,048                                                   68,265
                     Debt costs, net                                                         3,016                                                    3,882
                     Other assets                                                           27,737                                                   27,737
                                                          Total assets                                                             $8,442,280                                          $8,271,093
                                                                                                                                   ==========                                          ==========
                              Liabilities and Stockholders' Equity
    Current liabilities:
                     Accounts payable                                                   $1,170,915                                               $1,129,708
                     Accrued liabilities                                                   110,611                                                  183,910
                      Accrued payroll and
                      benefits                                                             486,880                                                  386,234
                     Deferred revenue                                                            -                                                   37,750
          8% convertible debentures to related parties                                                                              1,012,500                                                   -
          8% convertible debentures, net of debt discount                                                                              75,000                                                   -
                      Capital lease
                      obligation, current
                      portion                                                                3,602                                                    3,602

                                                   Total current liabilities                                                        2,859,508                                           1,741,204

    Capital lease obligation, less current portion                                                                                      6,003                                               6,903
    Deferred rent                                                                                                                     333,121                                             345,726
    Derivative liability, warrant                                                                                                     991,512                                           1,087,296
    8% convertible debentures to related parties                                                                                            -                                           1,012,500
    8% convertible debentures                                                                                                               -                                              75,000
                                                                                                                                                                                           ------
                                     Total
                                      liabilities                                         4,190,144                                                4,268,629
                                                                                          ---------                                                ---------

    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;
                      11,801,684 and
                       11,711,952
                      shares issued and
                      outstanding,
                      respectively                                                         118,017                                                  117,120
                      Additional paid-in
                      capital                                                          208,560,927                                              208,410,216
                      Accumulated other
                      comphrehensive income                                                 85,101                                                   88,258
                     Accumulated deficit                                             (204,511,909)                                            (204,613,130)
                                                   Total stockholders' equity                                                       4,252,136                                           4,002,464
                                                                                                                                    ---------                                           ---------
                                                    Total liabilities and
                                                    stockholders' equity                                                           $8,442,280                                          $8,271,093
                                                                                                                                   ==========                                          ==========
                                                  LIGHTPATH TECHNOLOGIES, INC.
                                 Consolidated Statements of Operations and Comprehensive Income
                                                          (Unaudited)

                                                                                                           Three Months ended
                                                                                                              September 30,
                                                                                                               2012                     2011
                                                                                                               ----                     ----
    Product sales, net                           $2,891,054                                $2,733,125
    Cost of sales                                                                                         1,713,742                1,650,501
                                                                                                          ---------                ---------
                                                                           Gross margin                   1,177,312                1,082,624
    Operating expenses:
                                                  Selling, general and
                                                  administrative                             982,455                   995,621
                                                  New product
                                                  development                                212,457                   287,719
                                                  Amortization of
                                                  intangibles                                  8,217                     8,217
                                                  Loss on disposal of
                                                  property and
                                                  equipment                                      702                         -

                                                                           Total costs and expenses       1,203,831                1,291,557
                                                                                                          ---------                ---------
                                                                           Operating loss                   (26,519)                (208,933)
    Other income (expense):
                                                 Interest expense                            (30,440)                  (23,420)
                                                  Interest expense -
                                                  debt costs                                    (866)                     (800)
                                                  Change in fair value
                                                  of derivative
                                                  warrant                                     95,784                         -
                                                 Other income, net                            63,262                    34,706

                                                  Total other expense,
                                                  net                                        127,740                    10,486

                                                              Net income
                                                              (loss)                         $101,221                 $(198,447)
                                                                                             ========                 =========
    Income (loss) per common share (basic)            $0.01                                     (0.02)
                                                      =====                                     =====
    Number of shares used in per share calculation                                                       11,771,902                9,746,107
                                                                                                         ==========                =========
        (basic)
    Income (Loss) per common share (diluted)          $0.01                                    $(0.02)
                                                      =====                                    ======
    Number of shares used in per share calculation                                                       12,698,704                9,746,107
                                                                                                         ==========                =========
        (diluted)
    Foreign currency translation adjustment                                                                  (3,157)                  11,856
                                                                                                                                      ------
                    Comprehensive income (loss)     $98,064                                  (186,591)
                                                    =======                                  ========


                           LIGHTPATH TECHNOLOGIES, INC.
                      Consolidated Statements of Cash Flows
                                    (Unaudited)

                                           Three Months ended
                                             September 30,
                                             -------------
                                                2012                   2011
                                                ----                   ----
    Cash flows from operating
     activities
    Net
     income
     (loss)                                 $101,221              $(198,447)
    Adjustments to reconcile net loss
     to net cash provided by (used in)
     operating activities:
            Depreciation
            and
            amortization                     208,637                245,438
            Interest
            from
            amortization
            of
            debt
            costs                                866                    800
           Loss
            on
            disposal
            of
            property
            and
            equipment                            702                      -
            Stock
            based
            compensation                      60,814                 64,546
            Change
            in
            provision
            for
            doubtful
            accounts
            receivable                          (623)                     -
            Change
            in
            fair
            value
            of
            warrant
            laibility                        (95,784)                     -
            Deferred
            rent                             (12,605)               (28,657)
    Changes in operating assets and
     liabilities:
         Trade
         accounts
         receivables                          51,556               (236,935)
         Other
         receivables                        (205,021)                30,943
        Inventories                          (87,617)              (195,552)
         Prepaid
         expenses
         and
         other
         assets                              (73,976)                 2,746
         Accounts
         payable
         and
         accrued
         liabilities                          68,554                432,467
         Deferred
         revenue                             (37,750)                     -
                                             -------
                      Net
                       cash
                       provided
                       by
                       (used
                       in)
                       operating
                       activities            (21,026)               117,349
                                             -------                -------
    Cash flows from investing
     activities
        Purchase
        of
        property
        and
        equipment                           (171,069)              (347,228)
                      Net
                       cash
                       used
                       in
                       investing
                       activities           (171,069)              (347,228)
                                            --------               --------
    Cash flows from financing
     activities
         Proceeds
         from
         sale
         of
         common
         stock
         from
         employee
         stock
         purchase
         plan                                  3,794                  7,871
         Deferred
         costs
         associated
         with
         equity
         financing                                 -                (25,000)
         Payments
         on
         capital
         lease
         obligation                             (900)                     -
                                                ----                    ---
                     Net
                      cash
                      provided
                      by
                      financing
                      activities               2,894                (17,129)
     Effect
     of
     exchange
     rate
     on
     cash
     and
     cash
     equivalents                              (3,157)                11,856
                                              ------                 ------
     Decrease
     in
     cash
     and
     cash
     equivalents                            (192,358)              (235,152)
    Cash
     and
     cash
     equivalents,
     beginning
     of
     period                                2,354,087                928,900
                                           ---------                -------
    Cash
     and
     cash
     equivalents,
     end
     of
     period                               $2,161,729               $693,748
                                          ==========               ========

    Supplemental disclosure of cash
     flow information:
         Interest
         paid
         in
         cash                                 $1,380           $          -
         Income
         taxes
         paid                                  1,736                  1,755
     Supplemental disclosure of non-
      cash investing & financing
      activities:
           Accrued
           deferred
           costs
           associated
           with
           equity
           financing                               -                 32,139
           Prepaid
           interest
           on
           convertible
           debentures
           through
           the
           issuance
           of
           common
           stock                              87,000                 87,000
                                                                                      LIGHTPATH TECHNOLOGIES, INC.
                                                                             Consolidated Statement of Stockholders' Equity
                                                                                 Three Months ended September 30, 2012
                                                                                              (Unaudited)

                                                                                                                                          Accumulated
                                                                                                                           Class A          Additional     Other                                        Total
                                                                        Common Stock                                       Paid-in        Comprehensive Accumulated         Stockholders'
                                                                           Shares                                   Amount       Capital    Income      Deficit               Equity
                                                                           ------                                   ------       -------    ------      -------               ------
    Balance at June 30, 2012                                                                                       11,711,952    $117,120 $208,410,216              $88,258             $(204,613,130) $4,002,464

    Issuance of common stock for:
                                            Employee stock purchase plan                                                5,261          53        3,741                    -                         -       3,794
                                            Interest payment on convertible debentures                                 84,471         844       86,156                    -                         -      87,000
    Stock based compensation on stock
                                            options and restricted stock units                                              -           -       60,814                    -                         -      60,814
    Net income                              -                                                                               -           -            -              101,221                   101,221
    Foreign currency translation adjustment -                                                                               -           -       (3,157)                   -                    (3,157)

    Balance at September 30, 2012                                                                                  11,801,684    $118,017 $208,560,927              $85,101             $(204,511,909) $4,252,136
                                                                                                                   ==========    ======== ============              =======             =============  ==========
     LIGHTPATH TECHNOLOGIES, INC.
                         EBITDA

                                     (Unaudited)
                                  Three months ended
                                    September 30,
                                                   2012               2011
                                                   ----               ----

     Net income
     (loss)              $101,221                       $(198,447)
     Depreciation
     and
     amortization         208,637                         245,438
     Interest
     expense               31,306                          24,220
                  EBITDA                       $341,164            $71,211
                                               ========            =======

SOURCE LightPath Technologies, Inc.


Source: PR Newswire