================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________
QUARTERLY REPORT FOR SMALL BUSINESS ISSUERS SUBJECT
TO THE 1934 ACT REPORTING REQUIREMENTS
FORM 10-QSB
_____________________
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
This paper filing granted pursuant to Section 202-(D) of Regulation ST
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE REPORT OF 1934
For the transition period from ___________ to ____________
Commission file number 000-27548
______________________
LIGHTPATH TECHNOLOGIES, INC.
______________________
(Exact name of registrant as specified in its charter)
DELAWARE 86-0708398
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6820 Academy Parkway East, NE 87109
Albuquerque, New Mexico (ZIP Code)
(Address of principal executive offices)
Registrant's telephone number, including area code:
(505)342-1100
-----------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities and Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES NO X
----- ------
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practical date:
Common Stock, Class A, $.01 par value 2,722,460 shares
Common Stock, Class E-1, $.01 par value 1,454,951 shares
Common Stock, Class E-2, $.01 par value 1,454,951 shares
Common Stock, Class E-3, $.01 par value 969,960 shares
--------------------------------------- ------------------
Class Outstanding at May 3, 1996
================================================================================
<PAGE>
LigthPath Technologies, Inc.
( A Development Stage Company)
Form 10-Q
Index
Item Page
Part I Financial information
Balance Sheet 2
Statements of Operations 3
Statements of Cash Flows 4
Notes to Financial Statements 5
Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
Part II Other information
Legal Proceedings 11
Changes in Securities 11
Defaults Upon Senior Securities 11
Submission of Matters to Vote of Security Holders 11
Other Items 11
Exhibits and Reports on Form 8-K 11
Signatures 12
1
<PAGE>
LightPath Technologies, Inc.
(A Development Stage Company)
Balance Sheet
<TABLE>
<CAPTION>
March 31, June 30,
1996 1995
------------------------------------
Unaudited
<S> <C> <C>
Assets
Current assets:
Cash $ 5,189,901 $ 11,177
Advances to employees 20,880 82,344
Prepaid expenses and other 95,736 10,942
------------------------------------
Total current assets 5,306,517 104,463
Property and equipment, net (Note 2) 213,741 247,325
Deferred costs of securities registration - 21,978
Intangible assets (Note 3) 216,535 211,357
====================================
Total assets $ 5,736,793 $ 585,123
====================================
Liabilities and deficiency in net assets
Current liabilities: (Note 4)
Accounts payable and accrued liabilities $ 102,644 $ 624,098
Accrued payroll and benefits 300,011 789,449
Payables to related parties 117,481 867,876
Notes payable to related parties 30,000 2,103,113
Notes payable - 338,000
Convertible notes payable to related parties - 266,500
Convertible notes payable - 218,029
Bridge loans to related parties - 511,555
------------------------------------
Total current liabilities 550,136 5,718,620
Commitments and contingencies
Redeemable common stock (Note 4 and 5)
Class E-1 - performance based and redeemable common stock
1,454,951 and 1,094,488, shares issued and outstanding at March
31, 1996 and June 30, 1995, respectively 14,550 10,945
Class E-2 - performance based and redeemable common stock
1,454,951 and 1,094,488 shares issued and outstanding at March
31, 1996 and June 30, 1995, respectively 14,550 10,945
Class E-3 - performance based and redeemable common stock
969,960 and 729,659, issued and outstanding at March 31, 1996 and
June 30, 1995, respectively 9,700 7,297
Deficiency in net assets (Note 4 and 5)
Preferred stock, $.01 par value; 5,000,000 shares authorized; none
issued and outstanding at March 31, 1996 or June 30, 1995 - -
Common stock:
Class A, $.01 par value; 34,500,000 shares authorized, voting
2,722,460 and 729,659, shares issued and outstanding at March
31, 1996 and June 30, 1995, respectively 27,225 7,297
Additional paid-in capital 18,706,562 7,186,982
Treasury stock; 191,083 shares at cost at June 30, 1995 - (190,000)
Unearned compensation - (867,642)
Deficit accumulated during the development stage (13,585,930) (11,299,321)
------------------------------------
Deficit in net assets 5,147,857 (5,162,684)
====================================
Total liabilities and deficiency in net assets $ 5,736,793 $ 585,123
====================================
</TABLE>
See accompanying notes.
2
<PAGE>
LightPath Technologies, Inc.
(A Development Stage Company)
Statements of Operations
<TABLE>
<CAPTION>
Inception
August 23,
1985
Three Months Ended March 31 Nine Months Ended through
Unaudited March 31 March 31
------------------------------------------------------------------------------
1996 1995 1996 1995 1996
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenues:
Product development fees $ 62,000 $ - $ 137,000 $ 52,000 $ 239,000
Lenses and other 22,472 22,719 32,066 54,525 119,010
------------------------------------------------------------------------------
Total revenues 84,472 22,719 169,066 106,525 358,010
Costs and expenses:
Cost of goods sold 10,949 50,980 16,427 118,649 204,719
Selling, general and administrative 576,798 419,403 1,166,068 1,009,846 10,493,889
Research and development 9,752 17,247 30,073 106,557 6,621,453
Amortization of unearned compensation - 296,732 867,642 785,258 2,076,217
------------------------------------------------------------------------------
Total costs and expenses 597,499 784,362 2,080,210 2,020,310 19,396,278
------------------------------------------------------------------------------
(513,027) (761,643) (1,911,144) (1,913,785) (19,038,268)
Investment Income 21,833 - 21,833 - 44,281
Interest expense (201,892) (135,125) (397,298) (307,056) 1,849,207
==============================================================================
Net loss $ (693,086) $ (896,768) $(2,286,609) $(2,220,841) $20,843,194
==============================================================================
Net loss per share $(0.44) $(1.27) $(2.18) $(3.21) -
==============================================================================
Number of shares used in per share 1,580,945 704,271 1,049,819 691,851 -
calculation
==============================================================================
</TABLE>
See accompanying notes.
3
<PAGE>
LightPath Technologies, Inc.
(A Development Stage Company)
Statements of Cash Flows
<TABLE>
<CAPTION>
Inception
August 23,
1985
Nine Months Ended through
Unaudited March 31 March 31
-------------------------------------------
1996 1995 1996
-------------------------------------------
<S> <C> <C> <C>
Operating activities
Net loss $(2,286,609) $(2,220,841) $20,843,194
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization 56,701 72,878 443,887
Accretion of bridge notes 223,135 19,359 254,375
Services provided for common stock 5,000 34,552 1,140,843
Write-off abandoned patent applications 1,895 - 111,059
Amortization of unearned compensation 867,642 785,258 2,076,217
Changes in operating assets and liabilities:
Advances to employees 61,464 (11,101) (20,880)
Prepaid expenses and deferred costs of securities
registration (62,816) 1,352 (95,736)
Accounts payable and accrued expenses (633,419) 361,544 1,810,189
-------------------------------------------
Net cash used in operating activities (1,767,007) (956,999) (15,123,270)
Cash flows from investing activities
Property and equipment additions (17,070) (7,344) (617,443)
Costs incurred in acquiring patents (13,120) (6,540) (352,717)
-------------------------------------------
Net cash used in investing activities (30,190) (13,884) (970,160)
Cash flows from financing activities
Proceeds from notes payable 40,000 76,100 4,398,606
Payments on notes payable (314,511) (104,107) (1,097,350)
Proceeds from convertible notes payable - 391,000 1,465,529
Repayments of convertible notes payable (162,500) (50,000) (212,500)
Proceeds from bridge loans 1,285,433 346,456 1,765,748
Repayments of bridge loans (1,250,000) - (1,250,000)
Proceeds from sales of common stock 7,202,499 273,495 9,175,428
Repurchase of common stock for treasury (26,000) (10,000) (555,512)
Proceeds from sales of treasury stock 201,000 67,203 336,119
Proceeds from sales of limited partnership units - - 7,257,264
-------------------------------------------
Net cash provided by financing activities 6,975,921 990,147 21,283,332
-------------------------------------------
Net increase in cash 5,178,724 19,264 5,189,901
Cash at beginning period 11,177 40,203
===========================================
Cash at end of period $5,189,901 $ 59,467 $ 5,189,901
===========================================
Supplemental disclosure of noncash financing activities:
Class A common stock issued for services $ 4,992 $ 34,470 $ 1,111,617
Debt and accrued interest converted into Class A common
stock 4,242,824 495,424 6,227,584
Stock options granted for services - 98,500 98,500
Class E common stock issued 9,613 2,413 38,800
</TABLE>
See accompanying notes.
4
<PAGE>
LightPath Technologies, Inc.
(A Development Stage Company)
Notes to The Financial Statements
Unaudited
Organization and Purpose
LightPath Technologies, Inc. (the Company) was incorporated in Delaware on July
1, 1992 as the successor to LightPath Technologies Limited Partnership formed in
1989, and its predecessor, Integrated Solar Technologies Corporation formed on
August 23, 1985. The Company is a development stage enterprise engaged in the
research, development and production of GRADIUM(TM) lenses. GRADIUM is an
optical quality glass material with varying refractive indices, capable of
reducing optical aberrations inherent in conventional lenses and performing with
a single lens, or fewer lenses, tasks performed by multi-element conventional
lens systems. Since its inception in 1985, the Company has been engaged in basic
research and development and only recently began to focus on product
development.
1. Summary of Significant Accounting Matters
The accompanying unaudited financial statments have been prepared in accordance
with the instructions to Article 10 of Regulation S-X and, therefore, do not
include all information and footnotes necessary for a fair presentation of
financial position, results of operations, and cash flows in conformity with
generally accepted accouting principles. These financial statements should be
read in conjunction with the Company's financial statements and related notes
included in the Form SB-2 as filed with the Securities and Exchange Commission
on February 22, 1996.
The information furnished, in the opinion of managment, reflects all
adjustments, which include normal recurring adjustments, necessary to present
fairly the results of operations of the Company for the three month and nine
month periods ended March 31, 1996 and 1995. Results of operations for interim
periods are not necessarily indicative of results which may be expected for the
year as a whole.
Property and Equipment Property and equipment are stated at cost and depreciated
using the straight-line method over the estimated useful lives of the related
assets from three to seven years.
Intangible Assets Intangible assets, consisting of patents and trademarks, are
recorded at cost. These assets are being amortized on the straight-line basis
over the estimated useful lives of the related assets from ten to seventeen
years.
Deferred Costs of Securities Registration The Company completed an initial
public offering in February 1996. The costs associated with this offering have
been accrued as incurred, and were recorded as a reduction of the proceeds of
the offering.
Income Taxes The Company accounts for income taxes under the provisions of
Statement of Financial Accounting Standards No. 109, Accounting for Income
Taxes, which requires an asset and liability approach to financial accounting
and reporting for income taxes.
Deferred income tax assets and liabilities are computed for differences between
the financial statement and tax bases of assets and liabilities that will result
in taxable or deductible amounts in the future based upon enacted tax laws and
rates applicable to the periods in which the differences are expected to affect
taxable income. Valuation allowances are established when necessary to reduce
deferred tax assets to the amount expected to be realized. Income tax expense is
the tax payable or refundable for the period plus or minus the change in
deferred tax assets and liabilities during the period.
Revenue Recognition Revenue from sales of product is recognized upon shipment.
Research and Development Research and development costs are expensed as
incurred.
Per Share Data Net loss per share is computed using the weighted average number
of common shares and common equivalent shares outstanding during each period
after giving retroactive effect to the
5
<PAGE>
LightPath Technologies, Inc.
(A Development Stage Company)
Notes to The Financial Statements
Unaudited
recapitalization (see Note 5). Restricted Class E common shares and stock
options for the purchase of Class E common shares are considered contingently
issuable and, accordingly, are excluded from the weighted average number of
common and common equivalent shares outstanding.
Net loss per share for the period from inception through June 30, 1995 is not
presented as the Company's predecessor was a limited partnership and no common
shares were outstanding.
Use of Estimates The preparation of the Company's financial statements requires
management to make estimates and assumptions that affect amounts reported in the
financial statements and accompanying notes. Such estimates and assumptions
could change in the future as more information becomes known, which in turn
could impact the amounts reported and disclosed herein.
2. Property and Equipment
Property and equipment include accumulated depreciation of $400,757 and $350,104
at March 31, 1996 and June 30, 1995, respectively.
3. Intangible Assets
Intangible assets include accumulated amortization of $25,123 and $19,075 at
March 31, 1996 and June 30, 1995, respectively.
4. Debt
Bridge Financing
In November 1995, the Company completed a bridge financing consisting of an
aggregate of $1,250,000 principal amount of Bridge Notes and 625,000 Bridge
Warrants from which it received net proceeds of $1,070,380, after deducting
commissions and expenses of such financing. The Bridge Notes and accumulated
interest were repaid with proceeds from the initial public offering. The Bridge
Warrants entitled the holders to purchase one share of common stock for $3 per
share, which were automatically exchanged on the closing of the initial public
offering into 625,000 Class A warrants with exercise price of $6.50 per share.
The warrants, which have been valued at $62,500 by management have been recorded
as debt discount. Debt discount and deferred financing costs are being amortized
over the life of the loan.
Conversion of Debt into Equity
In October and November 1995, the majority of the holders of bridge notes agreed
to convert $440,000 in principal and related accrued interest under such notes
into shares of Class A and Class E common stock at a conversion rate of $5.50
per share. In February 1996, the Company converted the remaining $215,000 in
principal and related accrued interest into shares of Class A and Class E common
stock at a conversion rate of $5.50 per share. As additional consideration for
the debt conversion, the Company issued 214,000 Class A warrants to the
noteholders.
Certain key employees and directors of the Company have agreed to make the
payment of certain accrued liabilities owed to them by the Company, totaling
$275,000, contingent upon the Company meeting the conditions for conversion of
the Class E-1 common stock into Class A common stock (as discussed in Note 5).
Furthermore, subsequent to June 30, 1995, certain other debtholders agreed to
convert approximately $4.3 million in outstanding debt into shares of Class A
and Class E common stock at a conversion price of $5.50 per share.
6
<PAGE>
LightPath Technologies, Inc.
(A Development Stage Company)
Notes to The Financial Statements
Unaudited
5. Stockholder's Equity
Initial Public Offering
The Company completed an initial public offering on February 22, 1996 for the
sale of units which consisted of one share of Class A common stock, one Class A
warrant and one Class B warrant. The initial public offering price per unit was
$5.00.
Common Stock
The Company's common stock and preferred stock consists of the following:
o Authorized 34,500,000 shares of Class A common stock, $.01 par value. The
stockholders of Class A common stock are entitled to one vote for each
share held.
o Authorized 2,000,000 shares of Class E-1 common stock, $.01 par value. The
stockholders of Class E-1 common stock are entitled to one vote for each
share held. Each Class E-1 share will automatically convert into one share
of Class A common stock in the event that (i) the Company's income before
provision of income taxes and extraordinary items or any charges which
result from the conversion of the Class E common stock is equal to or
exceeds $8,000,000 in fiscal 1996, 1997, 1998 or 1999, or is at least
$10,300,000 in fiscal 2000; or (ii) the Company's bid price per share of
Class A common stock averages in excess of $5.00 multiplied by 2.5 (subject
to adjustment for stock splits) for 30 consecutive business days during the
18-month period commencing on February 22, 1996, or (iii) the bid price per
share of Class A common stock averages in excess of $5.00 multiplied by
3.35 (subject to adjustment for stock splits) for 30 consecutive business
days during the period from 18 months through 36 months after February 22,
1996, or (iv) the Company is acquired by or merged with or into another
entity during any of the periods referred to in (ii) or (iii) and as a
result thereof holders of the Class A common stock of the Company receive
per share consideration (after giving effect to the conversion of the Class
E-1 common stock) equal to or greater than the respective bid price amounts
set forth in (ii) or (iii) above, respectively, as applicable.
o Authorized of 2,000,000 shares of Class E-2 common stock, $.01 par value.
The stockholders of Class E-2 common stock are entitled to one vote for
each share held. Each Class E-2 share will automatically convert into one
share of Class A common stock in the event that (i) the Company's income
before provision of income taxes and extraordinary items or any charges
which result from the conversion of the Class E common stock is equal to or
exceeds $10,900,000 in fiscal 1996, 1997, 1998 or 1999, or is at least
$14,000,000 in fiscal 2000; or (ii) the Company is acquired by or merged
with or into another entity during any of the periods referred to below and
as a result thereof holders of the Class A common stock of the Company
receive per share consideration (after giving effect to the conversion of
the Class E-1 and Class E-2 common stock) equal to or greater than 3.6
times $5.00 during the 18-month period commencing on February 22, 1996, or
4.6 times $5.00 during the period from 18 months through 36 months after
February 22, 1996 set forth in (ii) or (iii) above, respectively, as
applicable.
o Authorized of 1,500,000 shares of Class E-3 common stock, $.01 par value.
The stockholders of Class E-3 common stock are entitled to one vote for
each share held. Each Class E-3 share will automatically convert into one
share of Class A common stock in the event that (i) the Company's income
before the provision of income taxes and extraordinary items or any charges
which result from the conversion of the Class E common stock is equal to or
exceeds $28,000,000 in fiscal 1996, 1997, 1998, 1999 or 2000; or (ii) the
Company is acquired by or merged with or into another entity during the
periods referred to below and as a result thereof holders of Class A common
stock of the Company receive per share consideration (after giving effect
to the conversion of the Class E-1, E-2 and E-3 common stock) equal to or
greater than 6 times $5.00 price during the 18-month period
7
<PAGE>
LightPath Technologies, Inc.
(A Development Stage Company)
Notes to The Financial Statements
Unaudited
commencing on February 22, 1996, or 8 times $5.00 during the period from 18
months through 36 months after February 22, 1996.
The shares of Class E common stock will be redeemed on September 30, 2000
by the Company for $.0001 per share and will be canceled by the Company
without further obligation to the stockholder if such earnings levels a
market price targets are not achieved.
The Class E common stock performance shares have the characteristics of
escrowed shares; therefore, shares owned by key officers, employees,
directors or consultants of the Company are subject to variable plan
compensation accounting. In the event the Company attains any of the
earnings thresholds or the Company's Class A common stock meets certain
minimum market prices required for the conversion of Class E common stock
by such stockholders, the Company will be required to recognize
compensation expense in the periods in which the stated criteria for
conversion are probable of being met.
o Authorized of 5,000,000 shares of preferred stock; no par value, none of
which have been issued. Designations, rights, and preferences related to
these shares may be determined by the Board of Directors. The terms of any
series of preferred stock may include priority claims to assets and
dividends and voting or other rights.
Warrants
Class A Warrants entitles the holder to purchase one share of Class A
Common Stock and one Class B Warrant at an exercise price of $6.50 until
February 22, 2001. Commencing one year from the offering, the Class A Warrants
are redeemable by the Company on 30 day's written notice at a redemption price
of $.05 per warrant if the closing price of the Class A Common Stock for any 30
consecutive trading days ending within 15 days of the notice averages in excess
of $9.10 per share.
Class B Warrants entitles the holder to purchase one share of Class A
Common Stock at an exercise price of $8.75 until February 22, 2001. Commencing
one year from the offering, the Class B Warrants are redeemable by the Company
on 30 day's written notice at a redemption price of $.05 per warrant if the
closing price of the Class A Common Stock for any 30 consecutive trading days
ending within 15 days of the notice averages in excess of $12.25 per share. All
Class B Warrants must be redeemed if any are redeemed.
All of the Class A Warrants, the Class A Common Stock and Class B Warrants
issuable upon exercise of such Class A Warrants and the Class A Common Stock
issuable upon exercise of the Class B Warrants were registered and tradeable
subject to a contractual restriction that such Class A Warrants and underlying
securities may not be sold for a period of between 90 and 270 days after the
effective date of the Offering. Original securityholders have also agreed not to
exercise their Warrants for a period of one year following the effective date of
the Offering; provided, however, that subsequent purchasers of the Warrants are
not subject to such restrictions on exercise.
8
<PAGE>
LightPath Technologies, Inc.
(A Development Stage Company)
Management's Discussion Analysis Of Financial Condition and
Results of Operations
6. Commitments and Contingencies
Effective April 1, 1996 Company has entered into a 5 year lease agreement for a
13,300 square foot manufacturing and office facility in Albuquerque, New Mexico
at a monthly cost of $6,500.
A former employee has commenced a lawsuit against the Company for deferred
compensation, reimbursable expenses and damages for alleged wrongful discharge.
This former employee is seeking treble damages under Arizona law. Furthermore, a
second lawsuit was commenced by this same person alleging wrongful discharge in
violation of public policy, failure to pay wrongs within a specified period of
time from termination, breach of employment contract and improper interference
with contract. Management believes that it has valid defense to wrongful
discharge and intends to file a counterclaim for tortuous interference with
contract and breach of contract. The Company has not accrued any liability
relative to this matter at March 31, 1996.
The Company is involved in other various legal actions arising in the normal
course of business. After taking into consideration legal counsel's evaluation
of such actions, management is of the opinion that their outcome will not have a
significant effect on the Company's financial statements.
9
<PAGE>
LightPath Technologies, Inc.
(A Development Stage Company)
Management's Discussion Analysis Of Financial Condition and
Results of Operations
Results of Operations
- ---------------------
Three months ended March 31, 1996 compared with three months ended March 31,
1995
Revenue totaled $84,472 for the three months ended March 31, 1996, an
increase of $61,753, or 272% over the comparable period last year. The increase
was attributable to receipt of $62,000 OEM product development fees. Cost of
sales was 49% of product sales, a decline of approximately $40,000 over the
comparable period in which cost of sales exceeded product revenue.
Administrative costs increased $157,395 or 37% primarily due to accretion costs
for the bridge financing. The Company expects selling, general and
administrative costs to increase significantly in the future as the Company adds
personnel, sales and marketing staff and general overhead as a result of an
expected scale-up of operations. Research and development costs decreased from
$17,247 to $9,752. Research personnel were not utilized during the quarter due
to limited resources prior to the Offering and the Company's relocation. It is
anticipated that research costs will increase over the next several quarters as
personnel are hired to continue our research and development efforts. Costs
related to unearned compensation from incentive stock options decreased $296,732
for the period, resulting in a net decrease of total operating costs $186,863.
Investment income increased $21,833 due to the interest earned on the
Offering proceeds. Interest expense increased $66,767 due to the November 1995
bridge loans which were subsequently repaid with Offering proceeds.
Net loss of $693,086 was a decrease of $203,682 from the comparable
period last year due to the increased gross margin $101,784, the decrease in
administrative costs $146,832, offset by the increase in other expenses $44,934.
Net loss per share of $.44 was an improvement of $.83 due to increased gross
margin $.06, and the decrease in administrative costs $.09, offset by the
increase in other expenses $.03. The remaining $.71 gain was due to the increase
in weighted common stock due to the Offering.
Nine months ended March 31, 1996 compared with nine months ended March 31, 1995
Revenue totaled $169,066 for the nine months ended March 31, 1996, an
increase of $62,541 or 59% over the comparable period last year. Increase was
mainly attributable to OEM product development fees. Cost of sales was 51% of
product sales, a decline of approximately $102,000 over the comparable period in
which cost of sales exceeded product revenue. Administrative costs increased
$156,222 or 15% primarily due to accretion costs for the bridge financing
obtained in November 1995. Research and development costs decreased from
$106,557 to $30,073. Research personnel and consultants were cut-back during the
year due to limited resources prior to the Offering. It is anticipated that
research costs will increase over the next several quarters as personnel are
hired to continue our research and development efforts. Costs related to
unearned compensation from incentive stock options increased $82,384 for the
period. The net variances resulted in an increase of total operating costs
$59,900.
Investment income increased $21,833 due to the interest earned on the
Offering proceeds. Interest expense increased $90,242 due to the bridge loans
and other interest bearing notes which were subsequently repaid with Offering
proceeds.
Net loss totaled $2,286,609 an increase of $65,768 or 3% from the
comparable period last year. The increase in net loss was attributable to an
increased gross margin $164,763, offset by the increase in administrative costs
$162,122 and interest expense $68,409. Net loss per share of $2.18 was an
improvement of $1.03 from the prior year due to increased gross margin $.16,
offset by the increase in administrative costs $.15, and other expenses $.07.
The remaining $1.09 gain was due to the increase in weighted common stock due to
the Offering.
10
<PAGE>
LightPath Technologies, Inc.
(A Development Stage Company)
Management's Discussion Analysis Of Financial Condition and
Results of Operations
Financial Resources and Liquidity
- ---------------------------------
LightPath has financed its operations through private placements of
equity, borrowings or debt until February 1996 when an initial public offering
generated net proceeds of approximately, $7.452 million. The Company expects to
continue to incur losses until such time, if ever, as it obtains market
acceptance for its product at selling prices and volumes which provide adequate
gross profit to cover operating costs. The Company expects its cash requirements
to increase due to the implementation of a sales and marketing program,
additional personal and overhead costs. In addition, the company will need
substantial funds to continue its research and development efforts and to
purchase capital equipment to expand its manufacturing facilities.
Effective April 1, 1996 Company has entered into a 5 year lease
agreement for a 13,300 square foot manufacturing and office facility in
Albuquerque, New Mexico at a monthly cost of $6,500. The company has relocated
its staff and manufacturing equipment as of this date. No significant costs were
incurred in the move. The Company anticipates purchasing approximately $380,000
in capital equipment by June 30, 1996 to increase its manufacturing capability.
Since the Company has principally been engaged in basic research and
development of its products, it has not been significantly impacted by
inflation. The Company does not believe that seasonality will have a significant
impact on its business.
PART II
Item 1. Legal Proceedings
LightPath is subject to various claims and lawsuits in the ordinary
course of business, none of which is material.
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Items
The Company offered a position on the Board of Directors to Mr. Louis
Leeburg. On May 1, 1996 Mr. Leeburg accepted the offer on a temporary basis
pending his ratification at the next annual meeting. Mr. Leeburg is currently a
principal of the John E. Fetzer Institute which is stockholder of the Company.
Item 6. Exhibits and Reports on Form 8-K
The Company filed no Current Reports on Form 8-K under the Securities
and Exchange Act of 1934 during the quarter ended March 31, 1996.
11
<PAGE>
LightPath Technologies, Inc.
(A Development Stage Company)
Management's Discussion Analysis Of Financial Condition and
Results of Operations
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Report to be signed in its behalf by the
undersigned, thereunto duly authorized.
LIGHTPATH TECHNOLOGIES, INC.
By: /s/ Donald Lawson May 14, 1996
----------------------------------
Donald Lawson Date
Executive Vice President and Treasurer
12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial
information extracted from the Form 10-QSB for the
three and nine month periods ended March 31, 1996
and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> MAR-31-1996
<EXCHANGE-RATE> 1
<CASH> 5,189,901
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 5,306,517
<PP&E> 614,498
<DEPRECIATION> 400,757
<TOTAL-ASSETS> 5,736,793
<CURRENT-LIABILITIES> 550,136
<BONDS> 0
0
0
<COMMON> 27,225
<OTHER-SE> 18,706,562
<TOTAL-LIABILITY-AND-EQUITY> 5,736,793
<SALES> 32,066
<TOTAL-REVENUES> 169,066
<CGS> 16,427
<TOTAL-COSTS> 16,427
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 397,298
<INCOME-PRETAX> (2,286,609)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,286,609)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,286,609)
<EPS-PRIMARY> (2.18)
<EPS-DILUTED> 0
</TABLE>
