PROSPECTUS
LIGHTPATH TECHNOLOGIES, INC.
2,279,847 SHARES
OF CLASS A COMMON STOCK
THE ISSUER
We manufacture, market and distribute optoelectronic, fiber telecommunication
and traditional optics products that incorporate our proprietary GRADIUM glass
and other fiber optic packaging technologies. Our current product line consists
of glass lenses, single mode fiber collimators and fiberoptic optomechanical
switches. To date, we have made sales primarily to laser manufacturers and third
parties for their evaluation of our products as components of their own product
offerings. We have not yet made substantial sales of telecommunication products
for broad commercial use.
We can be located at:
LightPath Technologies, Inc.
6820 Academy Parkway, N.E.
Albuquerque, New Mexico 87109
Telephone: (503) 342-1100
THE OFFERING
All of the shares of common stock being offered in this prospectus will be
issued by LightPath Technologies to the shareholders who are offering them for
sale. The total shares covered by this prospectus have previously been issued to
the selling shareholders or will be issued to the selling shareholders upon
conversion of Series F Preferred Stock and upon exercise of their outstanding
warrants. The selling shareholders can use this prospectus to sell all or part
of the shares they receive through the exercise of their Series F Preferred
Stock and warrants. In addition, this prospectus relates to 73,597 shares
outstanding from prior sales of common stock and 281,250 shares that will be
issuable to the Chairman of the Board upon exercise of a warrant.
MARKET FOR COMMON STOCK
Our common stock is traded in the over-the counter market through the Nasdaq
SmallCap Market system.
Closing Price
Symbol on January 5, 2000
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LPTHA $20.875
PROCEEDS FROM THIS OFFERING
The shares offered here will be sold at prices agreed to by the selling
shareholders, which may be the then prevailing market price or a negotiated
price. All of the proceeds from sales of the shares will be received by the
shareholders making the sale, minus any commissions or expenses they incur. We
will receive up to $4,760,500 from the exercise, if any, of warrants by the
selling shareholders. We will bear all of the costs and expenses of registering
the shares under the federal and state securities laws. These total costs and
expenses are estimated to be $34,564.
THIS INVESTMENT INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD PURCHASE SHARES ONLY
IF YOU CAN AFFORD A COMPLETE LOSS. SEE "RISK FACTORS" BEGINNING AT PAGE 6.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is January 18, 2000.
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WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports and other information with
the U.S. Securities and Exchange Commission. You may read and copy any document
that we have filed at the SEC's Public Reference Room at 450 Fifth Street, N.W.,
Washington, DC, 20549. Please call the SEC at 1-800-SEC-0330 for further
information about the operation of its public reference facilities. Our SEC
filings are also available to you free of charge at the SEC's web site at
http://www.sec.gov.
Copies of publicly available documents that we have filed with the SEC can
also be inspected and copied at the offices of the National Association of
Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C. 20006.
We have filed a registration statement on Form S-3 with the SEC that covers
the resale of the common stock offered by this prospectus. This prospectus is a
part of that registration statement, but the prospectus does not include all of
the information included in the registration statement. You should refer to the
registration statement for additional information about us and the common stock
being offered in this prospectus. Statements that we make in this prospectus
relating to any documents filed as an exhibit to the registration statement or
any document incorporated by reference into the registration statement may not
be complete and you should review the referenced document itself for a complete
understanding of its terms.
The SEC allows us to "incorporate by reference" to the information we file
with them, which means that we can disclose important information to you in this
prospectus by referring you to those documents. The documents that have been
incorporated by reference are an important part of the prospectus, and you
should be sure to review that information in order to understand the nature of
any investment by you in the common stock. In addition to previously filed
documents that are incorporated by reference, documents that we file with the
SEC after the date of this prospectus will automatically update the registration
statement. The documents that we have previously filed and that are incorporated
by reference into this prospectus include the following:
* our annual report on Form 10-KSB/A-2 for the fiscal year ended June 30,
1999;
* our proxy statement relating to the 1999 Annual Meeting except that
information shown under "Security Ownership of Principal Stockholders and
management" has been modified by certain recent events as described in this
prospectus on page 14;
* our quarterly report on Form 10-QSB/A for the quarter ended September 30,
1999; and
* the description of our Class A Common Stock included in our registration
statement on Form 8-A filed on January 13, 1996.
All documents and reports filed by us pursuant to Sections 13 (a), 13 (c),
14 or 15 (d) of the Securities Exchange Act of 1934 after the date of this
prospectus and prior to the date that this offering is terminated will
automatically be incorporated by reference into this prospectus.
We will provide you with copies of any of the documents incorporated by
reference, at no charge to you, however, we will not deliver copies of any
exhibits to those documents unless the exhibit itself is specifically
incorporated by reference. If you would like a copy of any document, please
write or call us at:
LightPath Technologies, Inc.
6820 Academy Parkway, N.E.
Albuquerque, New Mexico 87109
Attn: Corporate Secretary
Telephone: (505) 342-1100
You should only rely upon the information included in or incorporated by
reference into this prospectus or in any prospectus supplement that is delivered
to you. We have not authorized anyone to provide you with additional or
different information. You should not assume that the information included in or
incorporated by reference into this prospectus or any prospectus supplement is
accurate as of any date later than the date on the front of the prospectus or
prospectus supplement.
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PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY SHOULD BE READ BY YOU TOGETHER WITH THE MORE DETAILED
INFORMATION INCLUDED AT OTHER SECTIONS OF THIS PROSPECTUS. IN ADDITION, YOU
SHOULD CAREFULLY CONSIDER THE FACTORS DESCRIBED UNDER "RISK FACTORS" BEGINNING
AT PAGE 6 OF THIS PROSPECTUS. OUR FISCAL YEAR ENDS ON JUNE 30 AND REFERENCES TO
YEARS IN THIS PROSPECTUS REFER TO OUR FISCAL YEAR ENDED AS OF JUNE 30 OF THE
REFERENCED CALENDAR YEAR.
LIGHTPATH TECHNOLOGIES, INC.
LightPath produces GRADIUM(R) glass, utilizes other optical materials and
specialized optical packaging concepts to produce products that manipulate
light, and performs research and development for optical solutions in the fiber
telecommunications and traditional optics markets.
WHAT IS GRADIUM GLASS? GRADIUM glass 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 tasks
traditionally performed by multi-element conventional lens systems. We believe
that GRADIUM glass lenses provide advantages over conventional lenses for
certain applications. By reducing optical aberrations, we believe that GRADIUM
glass lenses can provide sharper images, higher resolution, less image
distortion, a wider usable field of view and a smaller focal spot size. By
reducing the number of lenses in an optical system, GRADIUM glass can provide
more efficient light transmission and greater brightness, lower production
costs, and a simpler, smaller product. Although other researchers have likely
sought to produce optical quality lens material with properties similar to that
of GRADIUM glass, we are not aware of any other person or firm that has
developed a repeatable manufacturing process for producing such material on a
prescribable basis. To date, LightPath has been issued eighteen US patents for
GRADIUM glass products and currently has numerous filed patent applications
pending related to our GRADIUM glass materials composition, product design and
fabrication processes for production. Additional patent applications have been
filed or are in process for laser fusion techniques and fiberoptic
optomechanical switch technologies. We are continually developing new GRADIUM
glass materials with various refractive index and dispersion profiles and for
the telecommunications field; fiberoptic optomechanical switches, multiplexers,
interconnects and cross-connects.
TO WHAT INDUSTRIES ARE LIGHTPATH'S GRADIUM GLASS PRODUCTS BEING MARKETED?
We believe that GRADIUM glass and our other optical materials can potentially be
marketed for use in most optics and optoelectronics products. During 1998, we
restructured our internal organization and marketing focus with the intended
purpose of serving two distinct markets: optoelectronics and fiber
telecommunications and traditional optics (e.g. lasers, medical equipment,
consumer optics, etc.).
Optoelectronics technologies consist of an overlap of photonics and
electronics and are key enablers of "Information Age" technologies, such as
fiber optic communications, optical data storage, laser printers, digital
imaging, and sensors for machine vision and environmental monitoring. Prior to
1998, we targeted various optoelectronic industry market niches as potential
purchasers of our GRADIUM glass products. During 1998, we began to develop
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products for the emerging optoelectronics markets, specifically in the areas of
fiber telecommunications. With the resolution of fiber optic issues concerning
packaging and alignment and utilizing advances made by LightChip, an affiliate,
in the area of WDM equipment, we began to produce and demonstrate a passive
optoelectronic product, the single mode fiber collimator assembly. During 1999
we expanded this product line with the goal of demonstrating to the
telecommunication optical components industry our ability to provide low cost
products and provide solutions to their telecom needs.
For traditional optics, we initially emphasized laser products because our
management believed at that time that GRADIUM lenses could have a substantial
immediate commercial impact in laser products with a relatively small initial
financial investment. Generally, optical designers can substitute GRADIUM glass
components from our standard line of products in lieu of existing conventional
laser lens elements. Lasers are presently used extensively in a broad range of
consumer and commercial products, including fiber optics, robotics, wafer chip
inspection, bar code reading, document reproduction and audio and video compact
disc machines. Because GRADIUM glass can concentrate light transmission into a
much smaller focal spot than conventional lenses, we believe, and customers'
test results confirm, that GRADIUM glass has the ability to improve the current
standard of laser performance. One of our distributors, Permanova Lasersystems
AB of Sweden, qualified GRADIUM YAG lenses into systems produced by Rofin-Sinar
GmbH, a significant original equipment manufacturer, OEM, of high-powered CO2
and YAG lasers headquartered in Germany. Our growth strategy is to increase our
emphasis on key laser market niches and establish the necessary products and
partnership alliances to sell into Europe and Asia as well as the U.S. market.
During fiscal 1999, LightPath and Rodenstock Prazisionsoptik GmbH (Rodenstock)
executed an agreement to transfer to Rodenstock the exclusive,
application-related utilization and distribution of GRADIUM lenses throughout
the whole of Europe. The agreement was for an initial five-year period.
Rodenstock's one hundred years of experience in the field of advanced optical
systems and employs over 6,000 people worldwide, will be a strong asset to the
expansion of LightPath's presence in Europe. We have established relationships
with eight foreign distributors. We believe these distributors will enable us to
establish and maintain a presence in foreign and domestic markets without
further investment in this product area. In addition to laser applications, we,
through our printed and Internet on-line catalog, offer a standard line of
GRADIUM glass lenses for commercial sales to optical designers developing
particular systems for OEMs or in-house products.
HOW HAS LIGHTPATH DEVELOPED GRADIUM GLASS PRODUCTS? From our inception in
1985 until June 1996, we were classified as a development stage enterprise that
engaged in basic research and development. We believe that most of our product
sales made during this period were to persons evaluating the commercial
application of GRADIUM glass or using the products for research and development.
During fiscal year 1997, our operational focus begin to shift to commercial
product development and sales. We completed numerous prototypes for production
orders and received our first orders for catalog sales of standard lens
profiles. We also began to offer standard, computer-based profiles of GRADIUM
glass that engineers use for product design. During fiscal 1998, sales of lenses
to the traditional optics market continued with significant increases in sales
of lenses used in the YAG laser market, catalog and distributor sales, and
lenses used in the wafer inspection markets. In fiscal year 1998, we also began
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to explore the development of products for emerging markets such as
optoelectronics, photonics and solar due to the number of potential customers
inquiries into the ability of GRADIUM glass to solve optoelectronic problems,
specifically in the areas of fiber telecommunications. Our resolution of
packaging and alignment issues, and advances made by LightChip, an affiliate,
with WDM equipment, led us in 1998 to develop a strategy for entering the
optoelectronic markets. Our first passive optoelectronic product, a single mode
fiber collimator assembly, or SMF assembly, was demonstrated in February 1998.
The SMF assembly is a key element in all fiber optic systems, including WDM
equipment. The SMF assembly straighten and make parallel, diverging light as it
exits a fiber. Beginning in fiscal 1999, we began offering, and have delivered
for testing to potential customers, three product levels, the collimating lens,
the SMF assembly and the large beam collimating assembly. The telecommunications
collimator marketplace is currently estimated by industry experts to generate
annual gross revenues of $125 million in 1999 with projected growth to $256
million in five years.
The current focus of our development group has been to expand application
of GRADIUM products to the areas of fiberoptic optomechanical switches,
multiplexers, interconnects and cross-connects for the telecommunications field,
further refinement of the crown glass product line to supplement its existing
flint products, and further development of acrylic axial gradient material to
extend the range of existing product applications.
WHERE YOU CAN FIND US. LightPath was incorporated in Delaware in 1992. Our
corporate headquarters are located at 6820 Academy Parkway East N.E.,
Albuquerque, New Mexico, 87109 and our telephone number is (505) 342-1100.
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THE OFFERING
Securities Offered by
the Selling Shareholders......... A total of 2,279,847 shares of Class A
Common Stock are covered by this
prospectus. These shares are being
offered as follows:
1,925,000 shares issuable upon conversion
of outstanding Series F Preferred Stock
and upon exercise of Class K and Class L
warrants;
73,597 shares of outstanding restricted
common stock; and
281,250 shares issuable upon exercise of
the Warrant held by Mr. Ripp.
A description of the terms of the common
stock, preferred stock and warrants are
included in this prospectus under
"Selling Shareholders" at page 15.
Common Stock Outstanding as of November 30, 1999:
Class A Common Stock 6,833,199 shares(1)(3)
Class E-1 Common Stock 1,492,480 shares(2)
Class E-2 Common Stock 1,492,480 shares(2)
Class E-3 Common Stock 994,979 shares(2)
Use of Proceeds.................... We will not receive any of the proceeds
of sales of common stock by the selling
shareholders but we will receive up to
$4,760,500 from the exercise, if any, of
warrants by the selling shareholders.
Risk Factors....................... The shares of common stock offered hereby
involve a high degree of risk. See "Risk
Factors" on page 6.
Nasdaq SmallCap Market Symbols..... Class A Common Stock - "LPTHA"
Units - "LPTHU"
Class A Warrants - "LPTHW"
Class B Warrants - "LPTHZ"
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(1) Does not include shares underlying options outstanding at November 30, 1999
to purchase 1,284,516 shares of Class A Common Stock, (which includes
71,102 options which the holders receives, upon exercise, 71,102 Class A
shares, 106,652 shares of Class E-1, 106,652 shares of Class E-2 and 71,102
shares of Class E-3 Common Stock) which are exercisable at option exercise
prices ranging from $2.84 to $51.56 per share and 887,984 shares of Class A
Common Stock reserved for issuance upon future grants of options under
LightPath's stock option plans.
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(2) Each share of outstanding Class E-1 Common Stock, Class E-2 Common Stock
and Class E-3 Common Stock, collectively referred to as the Class E shares,
will, on a class basis, automatically convert into Class A Common Stock if
and as the Company attains certain earnings levels with respect to each of
the three separate classes. The Class E shares will be redeemed by
LightPath for a nominal amount if such earnings levels are not achieved.
(3) Does not include an aggregate of 10,984,735 shares of Class A Common Stock
issuable upon exercise of (i) the Unit Purchase Option (160,000 Class A
common shares) granted to the IPO underwriter and the 160,000 Class A and
160,000 Class B Common Stock Purchase Warrants underlying the Unit Purchase
Option; (ii) the 160,000 additional Class B Warrants issuable upon exercise
of the Class A Warrants referred to in (i); (iii) 1,828,649 Class A
Warrants and 1,851,351 Class B Warrants forming part of the IPO Units; (iv)
the 1,828,649 additional Class B Warrants issuable upon exercise of the
Class A Warrants referred to in (iii); (v) the 839,000 Class A Warrants
issued at the IPO; (vi) the 839,000 additional Class B Warrants issuable
upon exercise of the Class A Warrants referred to in (v) above, (vii) the
additional 801,836 shares of Class A Common Stock issuable upon exercise of
the Class C, Class D, Class E, Class F, Class G, and Class H Warrants,
(viii) the additional 150,000 shares of Class A Common Stock issuable upon
exercise of the Class J Warrants (ix) 1,925,000 shares of Class A Common
Stock issuable upon conversion of the Series F Preferred Stock and exercise
of the Class K and Class L Warrants and (x) 281,250 shares of Class A
Common Stock issuable upon exercise of the Chairman's Warrant.
FORWARD-LOOKING STATEMENTS
Throughout this prospectus and the other documents incorporated by
reference into this prospectus we make certain "forward-looking" statements.
These are statements about future events, results of operation, business plans
and other matters. We use words such as "expect", "anticipate", "intend" or
other similar words to identify forward looking statements. These statements are
made based on our current knowledge and understanding. However, there can be no
assurances as to whether or not actual results will be consistent with these
statements. In fact, actual events or results could vary dramatically from these
statements as a result of among other factors:
* Economic conditions, domestically and internationally
* Technological developments
* Industry trends
* Risk factors described in this prospectus.
We have no obligation to update the forward-looking statements made in this
prospectus or incorporated by reference herein.
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RISK FACTORS
BEFORE YOU BUY ANY OF THE SHARES OF COMMON STOCK BEING OFFERED BY THIS
PROSPECTUS, YOU SHOULD CAREFULLY READ AND CONSIDER EACH OF THE RISK FACTORS WE
HAVE DESCRIBED IN THIS SECTION. YOU SHOULD BE PREPARED TO ACCEPT ALL OF THESE
RISKS, INCLUDING THE RISK THAT YOU MAY LOSE YOUR ENTIRE INVESTMENT, BEFORE YOU
MAKE A DECISION TO BUY ANY OF THE SHARES OF COMMON STOCK.
WE HAVE EXPERIENCED LOSSES IN PRIOR YEARS
Our operations have never been profitable. We believe that our introduction
of products for the telecommunication market in 1999 may generate sales in
excess of amounts realized to date, although there can be no assurance in this
regard. We expect to continue operating at a deficit during the current fiscal
year and until such time, if ever, as our operations generate sufficient
revenues to cover our costs. The likelihood of our financial success must be
considered in light of the delays, uncertainties, difficulties and risks
inherent in a new business, many of which are beyond our ability to control.
These risks include, but are not limited to, unanticipated problems relating to
product development, testing, manufacturing, marketing and competition, and
additional costs and expenses that may exceed our current estimates. There can
be no assurance that our revenues will increase significantly in the future or
that, even if they do, our operations will ever be profitable.
WE MAY BE UNABLE TO CONTINUE OPERATING AS A GOING CONCERN.
We have received a report from our independent auditors that includes an
explanatory paragraph regarding uncertainty as to our ability to continue as a
going concern. The factors cited by the auditors as raising substantial doubt as
to our ability to continue as a going concern are our recurring losses from
operations and resulting continued dependence on external sources of capital. We
may incur losses for the foreseeable future due to the significant costs
associated with the development, manufacturing and marketing of our products and
due to the continued research and development activities that will be necessary
to further refine our technology and products and to develop products with
additional applications.
WE ANTICIPATE THE NEED FOR ADDITIONAL FUTURE FINANCING IN ORDER TO FUND OUR
OPERATIONS AND PLANS FOR GROWTH.
We anticipate that our projected product sales and the net proceeds from
our private placement of 6% Convertible Debentures and related warrants,
completed in July 1999, will be available to fund our working capital needs for
fiscal 2000. The net proceeds from the sale in November 1999 of Series F
Preferred Stock, approximately $3.9 million, and $250,000 purchase of 62,500
shares of Class A Common Stock by Robert Ripp, will be used to expand collimator
production, further development of the optical switch and provide working
capital. In addition, our ability to fund future capital requirements will
depend on the extent that our products become commercially accepted, if at all,
and if our marketing program is successful in generating sales sufficient to
sustain our operations. At this time, the Company does not believe product sales
will reach the level required to sustain its operations and growth plans in the
near term; therefore, the Company is actively pursuing additional financing. We
do not have any commitments from others to provide such additional financing and
there can be no assurance that any such additional financing will be available
if needed or, if available, will be on terms favorable to us. In the event such
needed financing is not obtained, our operations will be materially adversely
affected and we will have to cease or substantially reduce operations. Any
additional equity financing may be dilutive to stockholders, and debt
financings, if available, may involve restrictive covenants.
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WE MAY HAVE DIFFICULTIES IN MANAGING GROWTH
We will need to grow our product sales and manufacturing output
significantly in order to be successful. If we are unable to manage growth
effectively, it could have material adverse effects on our results of
operations, financial condition or business. We cannot guarantee that we will
successfully expand or that any expansion will enhance our profitability. We
expect our planned growth will place a significant strain on our management and
operations. Our future growth will depend in part on the ability of our officers
and other key employees to implement and expand financial control systems and to
expand, train and manage our employee base and provide support to an expanded
customer base.
OUR PRODUCTS ARE AT AN EARLY STAGE OF DEVELOPMENT AND MAY NOT ACHIEVE MARKET
ACCEPTANCE.
Through June 1996, our primary activities were basic research and
development of glass material properties. Our current line of GRADIUM products
have not generated sufficient revenues to sustain operations and our
telecommunications products are still in the introduction phase. While we
believe our existing products are commercially viable, we anticipate the need to
educate the optical components market in order to generate market demand and
market feedback may require us to further refine these products. Development of
additional product lines will require significant further research, development,
testing and marketing prior to commercialization. There can be no assurance that
any proposed products will be successfully developed, demonstrate desirable
optical performance, be capable of being produced in commercial quantities at
reasonable costs or be successfully marketed.
OUR PRODUCTS HAVE NOT BEEN DEMONSTRATED TO BE COMMERCIALLY SUCCESSFUL.
Our telecommunication products have not yet achieved commercial acceptance.
The traditional optics have been accepted commercially, however, their benefits
are not widely known. Although we are engaged in negotiations and discussions
with potential customers, there can be no assurance that any such discussions
will lead to development of commercially viable products or significant
revenues, if any, or that any products currently existing or to be developed in
the future will attain sufficient market acceptance to generate significant
revenues. In order to persuade potential customers to purchase GRADIUM products,
we will need to overcome industry resistance to, and suspicion of, gradient lens
technology that has resulted from previous failed attempts by various
researchers and manufacturers unrelated to us to develop a repeatable,
consistent process for producing lenses with variable refractive indices. We
must also satisfy industry-standard Bellcore Testing on telecommunication
products to meet customer requirements, as well as satisfy prospective customers
that we will be able to meet their demand for quantities of products, since we
may be the sole supplier and licensor. We do not have demonstrated experience as
a manufacturer and do not have a substantial net worth. We may be unable to
accomplish any one or more of the foregoing to the extent necessary to develop
market acceptance of our products. Prospective customers will need to make
substantial expenditures to redesign products to incorporate GRADIUM lenses.
There can be no assurances that potential customers will view the benefits of
our products as sufficient to warrant such design expenditures.
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WE DEPEND UPON KEY PERSONNEL
Our inability to retain or attract key employees could have a material
adverse effect on our business and results of operations. Our operations depend,
to a great extent, upon the efforts of our CEO and President, Donald Lawson, who
conceived our strategic plan and who is substantially responsible for planning
and guiding our direction, and upon Mark Fitch, our senior vice president. We
also depend upon our ability to attract additional members to our management and
operations teams to support our expansion strategy. The loss of any of these key
employees would adversely affect our business. We have obtained a key employee
life insurance policy in the amount $1,000,000 on the life of Mr. Lawson. We had
thirty-three employees on November 30, 1999. Additional personnel will need to
be hired if we are able to successfully expand our operations. There can be no
assurance that we will be able to identify, attract and retain employees with
skills and experience necessary and relevant to the future operations of our
business.
COMPETITION MAY ADVERSELY AFFECT OUR OPERATIONS AND FINANCIAL RESULTS
The optical lens and telecommunication components markets are intensely
competitive and numerous companies offer products and services competitive to
those offered by us. Substantially all of these competitors have greater
financial and other resources than we do. We compete with manufacturers of
conventional spherical lens products and aspherical lens products, producers of
optical quality glass and other developers of gradient lens technology and
telecom product manufacturers. In the markets for conventional and aspheric
lenses, we are competing against, among others, established international
industry giants. Many of these companies also are primary customers for optical
components, and therefore have significant control over certain markets for our
products. We are also aware of other companies that are attempting to develop
radial gradient lens technology. There may also be others of which we are not
aware that are attempting to develop axial gradient lens technology similar to
our technology. There can be no assurance that existing or new competitors will
not develop technologies that are superior to or more commercially acceptable
than our existing and planned technology and products.
WE HAVE LIMITED MARKETING AND SALES CAPABILITIES, AND MUST MAKE SALES IN A
FRAGMENTED MARKET.
Our operating results will depend to a large extent on our ability to
educate the various industries utilizing optical glass about the advantages of
GRADIUM and other optical materials to market products to the participants
within those industries. We currently have very limited marketing capabilities
and experience and will need to hire additional sales and marketing personnel,
develop additional sales and marketing programs and establish sales distribution
channels in order to achieve and sustain commercial sales of our products.
Although we have developed a marketing plan, there can be no assurance that the
plan will be implemented or, if implemented, will succeed in creating sufficient
levels of customer demand for our products. The markets for optical lenses and
telecommunication components are highly fragmented. Consequently, we will need
to identify and successfully target particular market segments in which we
believe we will have the most success. These efforts will require a substantial,
but unknown, amount of effort and resources.
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The fragmented nature of the optical products market may impede our ability
to achieve commercial acceptance for our products. In addition, our success will
depend in great part on our ability to develop and implement a successful
marketing and sales program. There can be no assurance that any marketing and
sales efforts undertaken by us will be successful or will result in any
significant product sales.
WE ARE HIGHLY DEPENDENT ON OUR PATENTS AND PROPRIETARY TECHNOLOGY.
Our success will depend, in part, on our ability to obtain protection for
products and technologies under United States and foreign patent laws, to
preserve trade secrets, and to operate without infringing the proprietary rights
of others. There can be no assurance that patent applications relating to our
products or potential products will result in patents being issued, that any
issued patents will afford adequate protection or not be challenged,
invalidated, infringed or circumvented, or that any rights granted will afford
competitive advantages to us. Furthermore, there can be no assurance that others
have not independently developed, or will not independently develop, similar
products and/or technologies, duplicate any of our product or technologies, or,
if patents are issued to, or licensed by, us, design around such patents. There
can be no assurance that patents owned or licensed and issued in one
jurisdiction will also issue in any other jurisdiction. Furthermore, there can
be no assurance that we can adequately preserve proprietary technology and
processes that we maintain as trade secrets. If we are unable to develop and
adequately protect our proprietary technology and other assets, our business,
financial condition and results of operations will be materially adversely
affected.
OUR BUSINESS DEPENDS UPON THE EFFORTS OF THIRD PARTIES.
Our strategy for the research, development and commercialization of certain
products entails entering into various arrangements with corporate partners,
OEMs, licensees and others in order to generate product sales, license fees,
royalties and other funds adequate for product development. We may also rely on
our collaborative partners to conduct research efforts, product testing and to
manufacture and market certain of our products. Although we believe that parties
to any such arrangements would have an economic motivation to succeed in
performing their contractual responsibilities, the amount and timing of
resources to be devoted to these activities may not be within our control. There
can also be no assurance that we will be successful in establishing any such
collaborative arrangements or that, if established, the parties to such
arrangements will assist us in commercializing products. We currently have
development agreements with a mechanical switch manufacturer and an endoscope
manufacturer pursuant to which we have developed prototypes of products for use
in each of those areas. However, there can be no assurance that such agreements
will progress to a production phase or, if production commences, that we will
receive significant revenues from these relationships. We have a non-exclusive
agreement with a catalog company to distribute certain of its products. We have
formalized relationships with eight foreign distributors to create markets for
GRADIUM in their respective countries. There can be no assurance that these
parties, or any future partners, will perform their obligations as expected or
that any revenue will be derived from such arrangements.
WE HAVE ONLY LIMITED MANUFACTURING CAPABILITIES.
We believe that our present manufacturing facilities, with the clean room
addition which was completed in October 1999, are sufficient for our planned
operations over the next several years. However, we do not have any experience
manufacturing products in quantities sufficient to meet commercial demand. If we
are unable to manufacture products in sufficient quantities and in a timely
manner to meet customer demand, our business, financial condition and results of
operations will be materially adversely affected.
9
<PAGE>
WE FACE PRODUCT LIABILITY RISKS.
The sale of our optical products will involve the inherent risk of product
liability claims by others. We do not currently maintain product liability
insurance coverage, although we do intend to procure such insurance in the
future. Product liability insurance is expensive, subject to various coverage
exclusions and may not be obtainable on terms acceptable to us. Moreover, the
amount and scope of any coverage may be inadequate to protect us in the event
that a product liability claim is successfully asserted.
WE WILL RECOGNIZE A SUBSTANTIAL CHARGE TO INCOME UPON CONVERSION OF OUR CLASS E
COMMON STOCK.
In the event any shares of the Class E Common Stock held by stockholders
who are officers, directors, employees or consultants of the Company are
converted into shares of Class A Common Stock, we will record compensation
expense for financial reporting purposes during the period in which such
conversion occurs. Such charge will equal the fair market value of such shares
on the date of release, which may be substantial. Although the amount of
compensation expense recognized will not affect the total stockholders' equity,
it may have a material negative effect on the market price of our securities,
particularly the shares of Class A Common Stock. Additionally, since Class E
shares are not treated as outstanding for purposes of earnings per share
calculations, the increase in the number of shares of Class A Common Stock upon
conversion of any series of Class E Common Stock may have a material adverse
effect on our earnings per share.
OUR OPERATIONS MAY BE ADVERSELY AFFECTED BY PROBLEMS ASSOCIATED WITH THE YEAR
2000 ISSUE.
Some computer applications were originally designed to recognize calendar
years by their last two digits. As a result, calculations performed using these
truncated fields will not work properly with dates from the year 2000 and
beyond. This problem is commonly referred to as the "Year 2000 Issue". We have
determined that our internal computer systems, manufacturing equipment and
software products were produced to be Year 2000 compliant and no material
remediation costs have been incurred or are expected to be incurred by us.
During the third quarter of fiscal 1999, we confirmed in writing whether the
internal business operations of third parties with whom we have a material
relationship will be affected by the Year 2000 Issue. Our assessment of third
parties is complete and based on their responses, we believe our material third
party relationships will not be adversely impacted by the Year 2000 Issue
barring any unforeseen circumstances. Under a worst case scenario we may
experience delays in receiving products and services thereby impacting product
shipments. We plan on having adequate inventory levels to minimize such impact,
if any. We will continue to monitor third parties and develop contingency plans
if a third party is subsequently found to be non-compliant.
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<PAGE>
OUR STOCK PRICE IS VOLATILE
Broad market fluctuations or fluctuations in our operations may adversely
affect the market price of our common stock. The market for our common stock is
volatile. The trading price of our common stock has been and will continue to be
subject to:
* Volatility in the trading markets generally;
* significant fluctuations in response to quarterly variations in
operating results;
* announcements regarding our business or the business of our
competitors;
* changes in prices of our or our competitors' products and services;
* changes in product mix; and
* changes in revenue and revenue growth rates for us as a whole or for
geographic areas, and other events or factors.
Statements or changes in opinions, ratings or earnings estimates made by
brokerage firms or industry analysts relating to the markets in which we operate
or expect to operate could have an adverse effect on the market price of our
common stock. In addition, the stock market as a whole has from time to time
experienced extreme price and volume fluctuations which have particularly
affected the market price for the securities of many small cap companies and
which often have been unrelated to the operating performance of these companies.
POTENTIAL CONTROL BY THE EXISTING MANAGEMENT AND SHAREHOLDERS
If our management and shareholders act in concert, disposition of matters
submitted to shareholders or the election of the entire Board of Directors may
be hindered. The principal stockholders beneficially owned 12% of the total
combined voting power of all of the Common Stock outstanding at August 19, 1999.
SOME PROVISIONS IN OUR CHARTER DOCUMENTS AND BYLAWS MAY HAVE ANTI-TAKEOVER
EFFECTS
Our Articles of Incorporation and Bylaws contain some provisions that could
have the effect of discouraging a prospective acquirer from making a tender
offer, or which may otherwise delay, defer or prevent a change in control.
ABSENCE OF DIVIDENDS TO SHAREHOLDERS
Our Board has never declared a dividend on our common stock. We do not
anticipate paying dividends on the common stock in the foreseeable future. It is
anticipated that earnings, if any, will be reinvested in the expansion of our
business.
OUR WARRANTS AND OPTIONS MAY AFFECT OUR FUTURE FINANCING
The existence of our outstanding Preferred Stock, options or warrants may
adversely affect the terms on which we can obtain additional financing. As of
November 30, 1999, there was outstanding:
11
<PAGE>
* 2,667,649 Class A Warrants to purchase an aggregate of 2,667,649 shares of
Class A Common Stock and 2,667,649 Class B Warrants;
* 1,851,351 Class B Warrants to purchase 1,851,351 shares of Class A Common
Stock;
* the Unit Purchase Option to purchase an aggregate of 160,000 Units, each
Unit consists of 160,000 Class A Common Stock, 160,000 Class A Warrants to
purchase an aggregate of 160,000 shares of Class A Common Stock and 160,000
Class B Warrants; and 160,000 Class B Warrants;
* 160,750 shares of Class A Common Stock issuable upon exercise of Class C
and Class D Warrants;
* 336,177 shares of Class A Common Stock issuable upon exercise of Class E
and Class F Warrants;
* 304,909 shares of Class A Common Stock issuable upon exercise of Class G
and Class H Warrants;
* 150,000 shares of Class A Common Stock issuable upon exercise of Class J
Warrants;
* 1,925,000 shares of Class A Common Stock reserved for issuance to the
selling shareholders upon conversion of the Series F Preferred stock and
exercise of the Class K and Class L Warrants;
* 281,250 shares of Class A Common Stock issuable upon exercise of the
Chairman's Warrant;
* outstanding options to purchase an aggregate of 1,284,516 shares of Class A
Common Stock (which includes 71,102 options which the holder receives, upon
exercise, 71,102 shares of Class A, 106,652 shares of Class E-1, 106,652
shares of Class E-2 and 71,102 shares of Class E-3 Common Stock);
* 887,984 shares of Class A Common Stock reserved for issuance pursuant to
future grants made under the Omnibus Incentive Plan and Directors Stock
Incentive Plan.
For the life of such options, warrants and Preferred Stock, the holders will
have the opportunity to profit from a rise in the price of the underlying common
stock, with a resulting dilution in the interest of other holders of common
stock upon exercise or conversion. Further, the option and warrant holders can
be expected to exercise their options and warrants at a time when we would, in
all likelihood, be able to obtain additional capital by an offering of our
unissued common stock on terms more favorable to us than those provided by such
options or warrants.
The eligibility of the foregoing shares to be sold to the public, whether
pursuant to Rule 144 or an effective registration statement, may have a material
adverse effect on the market value and trading price of the common stock.
WE HAVE AGREED TO CERTAIN LIMITATIONS UPON POTENTIAL LIABILITY OF OUR DIRECTORS.
Our Certificate of Incorporation provides that directors will not be
personally liable for monetary damages to LightPath or its stockholders for a
breach of fiduciary duty as a director, subject to limited exceptions. Although
such limitation of liability does not affect the availability of equitable
remedies such as injunctive relief or rescission, the presence of these
provisions in the Certificate of Incorporation could prevent the recovery of
monetary damages by LightPath or its stockholders.
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<PAGE>
THE LIQUIDITY OF OUR STOCK COULD BE SEVERELY REDUCED IF IT BECOMES CLASSIFIED AS
PENNY STOCK.
If our securities were delisted from Nasdaq, they could become subject to
Rule 15g-9 under the Exchange Act, which imposes additional sales practice
requirements on broker-dealers that sell such securities to persons other than
established customers and "accredited investors".
The Commission has adopted regulations which generally define a "penny
stock" to be any non-Nasdaq equity security that has a market price (as therein
defined) of less than $5.00 per share or with an exercise price of less than
$5.00 per share, subject to certain exceptions. For any transaction involving a
penny stock, unless exempt, the rules require substantial additional disclosure
obligations. The foregoing required penny stock restrictions will not apply to
our securities so long as they continue to be listed on Nasdaq and have certain
price and volume information provided on a current and continuing basis or meet
certain minimum net tangible assets or average revenue criteria. There can be no
assurance that the our securities will qualify for exemption from these
restrictions. In any event, even if our securities were exempt from such
restrictions, they would remain subject to Section 15(b)(6) of the Exchange Act,
which gives the Commission the authority to prohibit any person that is engaged
in unlawful conduct while participating in a distribution of a penny stock from
associating with a broker-dealer or participating in a distribution of a penny
stock, if the Commission finds that such a restriction would be in the public
interest.
If our securities were subject to the existing rules on penny stocks, the
market liquidity for our securities could be severely adversely affected.
WE MUST MAINTAIN COMPLIANCE WITH CERTAIN CRITERIA IN ORDER TO MAINTAIN LISTING
OF OUR SHARES ON THE NASDAQ MARKET.
The Units, Class A Common Stock and Class A and Class B Warrants are
currently traded on the Nasdaq SmallCap Market. Failure to meet the applicable
quantitative and/or qualitative maintenance requirements of Nasdaq could result
in our securities being delisted from Nasdaq, with the result that such
securities would trade on the OTC Bulletin Board or in the "pink sheets"
maintained by the National Quotation Bureau Incorporated. As a consequence of
such delisting, an investor could find it more difficult to dispose of or to
obtain accurate quotations as to the market value of our securities. Among other
consequences, delisting from Nasdaq may cause a decline in the stock price and
difficulty in obtaining future financing.
WE MAY NOT HAVE ENOUGH FUNDS AVAILABLE TO REDEEM OUTSTANDING SHARES OF PREFERRED
STOCK.
In the event of automatic conversion of the Series F Preferred Stock, three
years after issuance, or exercise of their accompanying Class K warrants in a
manner that would cause an undue dilution of its common stock, LightPath has the
right to redeem such preferred stock and warrants for cash. In addition, a
Liquidation Event, as defined in the applicable Certificate of Designation, may
require redemption of the Series F Preferred Stock for cash. There can be no
assurance that in either of the foregoing events we will have adequate cash to
effect such cash redemptions.
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<PAGE>
RISK THAT FORWARD-LOOKING STATEMENTS MAY NOT COME TRUE
This prospectus and the documents incorporated herein by reference, contain
forward-looking statements that involve risks and uncertainties. We use words
such as "believe", "expect," "anticipate," "plan" or similar words to identify
forward-looking statements. Forward-looking statements are made based upon our
belief as of the date that such statements are made. These forward-looking
statements are based largely on our current expectations and are subject to a
number of risks and uncertainties, many of which are beyond our control. You
should not place undue reliance on these forward-looking statements, which apply
only as of the date of this prospectus. Our actual results could differ
materially from those anticipated in these forward-looking statements for many
reasons, including the risks faced by us described above and elsewhere in this
prospectus.
14
<PAGE>
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The Proxy Statement for the 1999 Annual Meeting contained information
concerning the number of shares included in the Voting Trust that Leslie
Danziger, former Chairwoman of the Board of Directors was entitled to vote. As
of September 16, 1999, Ms. Danziger is no longer the Chairwoman of the Board and
as a result the Voting Trust has dissolved by its terms. Information in the
proxy statement or any other documents incorporated by reference into this
prospectus concerning the Voting Trust is no longer applicable and all shares
previously subject to the voting trust are now held directly by their beneficial
owners, each of whom independently votes and has the power to dispose of such
shares.
SELLING SHAREHOLDERS
On November 2, 1999, we issued 408 shares of Series F Preferred Stock for
$4,080,000 and 489,600 attached Class K warrants to the selling shareholders in
a private placement. 125,000 Class L Warrants were also issued to the placement
agent as compensation for their services.
Each Class K and Class L Warrant entitles the holder to purchase one share
of Class A Common Stock at $5.00 per share at any time through November 2, 2004.
For a description of the Class K Warrants see Exhibit 4.4 to our registration
statement. For a description of the Class L Warrants see Exhibit 4.5 to our
registration statement. Each share of Series F Preferred Stock can be converted
by the holder into a number of shares of our Class A Common Stock at the option
of the holder at any time until November 2, 2004. The number of shares of Class
A Common Stock issuable upon conversion of each share of preferred stock is
determined by dividing its stated value on the date of conversion by a
conversion price. The conversion price is defined as the lesser of (i) the fixed
conversion price, $5.00, or (ii) 80% of the five day average closing bid price
of our Class A Common Stock at the conversion date. For purposes of the
information set forth in the table below, it is assumed that each outstanding
share of Series F Preferred Stock was converted at $5.00 as of November 30,
1999. The stated value of the Preferred Stock increases at the rate of 7% per
annum until conversion or a liquidation event.
Mr. Ripp's Warrant entitles the holder to purchase up to 281,250 shares of
Class A Common Stock at $6.00 per share at any time through November 10, 2009.
For a description of the Chairman's Warrant see Exhibit 4.6 to the registration
statement.
This Prospectus covers shares of Class A Common Stock that may be acquired
by the selling shareholders upon conversion of the Series F Preferred Stock and
the shares issuable upon exercise of the Class K and Class L Warrants and the
Chairman's Warrant.
The following table provides information as of November 30, 1999, with
respect to the Class A Common Stock beneficially owned by each selling
shareholder. For purposes of the information set forth in this table, it is
assumed that each share of Series F Preferred Stock outstanding was converted at
$5.00 as of November 30, 1999. Some of these selling shareholders have a
material relationship with us. Information about these relationships is
disclosed in the footnotes to the table. As part of that sale, we entered into
certain agreements with the selling shareholders. These agreements are described
under "Certain Relationships" below. We believe that the selling shareholders
named in the following table have sole voting and investment power with respect
to the respective shares of Class A Common Stock set forth opposite their names.
The shares of Class A Common Stock offered by this prospectus may be offered
from time to time by the selling shareholders named below or their nominees.
15
<PAGE>
TOTAL SHARES OUTSTANDING 6,833,199 CLASS A COMMON STOCK
AS OF NOVEMBER 30, 1999
<TABLE>
<CAPTION>
Beneficially Owned
After Offering
-------------------------------
Shares Percent of Percent of
Beneficially Number of Class A All Classes
owned Prior to the Shares Being Number of Common of Common
Offering(1)(2) Offered(2) Shares(1) Stock(19) Stock
-------------- ---------- --------- --------- -----
<S> <C> <C> <C> <C> <C>
Cranshire Capital, LLP 553,493(3,4) 480,000(4) 73,493(3) 7.6% 4.9%
EP Opportunity Fund, LLC 489,810(5,6) 400,000(6) 89,810(5) 6.7% 4.4%
EP Opportunity Fund
International, LLC 24,000(7) 24,000(7) 0 * *
EP.com Fund, LLC 24,000(8) 24,000(8) 0 * *
EP.com Fund
International, LLC 25,600(9) 25,600(9) 0 * *
The dot Com Fund LLC 160,000(10) 160,000(10) 0 2.3% 1.5%
Keyway Investments Ltd. 572,926(11,12) 160,000(12) 412,926(11) 7.8% 5.1%
JRA Enterprises 36,869(13,14) 32,000(14) 4,869(13) * *
Eric S. Swartz 89,948(19) 47,000 42,948(21) 1.3% *
Kendrick Family Partnership 62,309(19) 47,000 15,309(22) * *
P. Bradford Hathorn 5,500(19) 4,500 4,000(23) * *
Gerald D. Harris 9,500(19) 9,500 0 * *
Carlton M. Johnson, Jr. 10,000(19) 4,500 5,500(24) * *
Glenn R. Archer 4,500(19) 4,500 0 * *
Charles M. Whiteman 3,000(19) 3,000 0 * *
Dwight B. Bronnum 2,000(19) 1,500 500(25) * *
Robert L. Hopkins 2,000(19) 1,500 500(26) * *
H. Nelson Logan 1,000(19) 1,000 0 * *
James D. Mills 1,000(19) 1,000 0 * *
Robert Ripp 161,250(15) 161,250(16) 0 2.3% 1.5%
Irrevocable Trust for the
Benefit of Robert S. Ripp 60,833(17) 60,833(17) 0 * *
Irrevocable Trust for the
Benefit of Kathleen Desmond 60,833(17) 60,833(17) 0 * *
Irrevocable Trust for the
Benefit of Johnathan Ripp 60,834(17) 60,834(17) 0 * *
Donald Lawson 16,129(18) 11,097 5,032 * *
</TABLE>
- ----------
* Represents beneficial ownership of less than 1%.
(1) Except as otherwise noted, and subject to community property laws, where
applicable, each person named in the table has sole voting power and
investment power with respect to all shares shown as beneficially owned.
(2) As noted below, the information set forth below for certain selling
shareholders includes shares of Class A Common Stock issuable upon
conversion of shares of our Series F Preferred Stock. Each share of Series
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<PAGE>
F Preferred Stock is convertible into a number of shares of Class A Common
Stock determined by dividing its stated value on the date of conversion by
a conversion price. The stated value is equal to the original issue price,
$10,000 per share and increases at a rate of 7% per annum. The conversion
price is defined as the lesser of (i) the fixed conversion price $5.00 or
(ii) 80% of the five day average closing bid price of our Class A Common
Stock at the conversion date. For purposes of the information set forth in
this table, it is assumed that each outstanding Series F Preferred Stock
was converted at $5.00 as of November 30, 1999.
As required by SEC regulations, the number of shares shown as beneficially
owned includes shares which could be acquired within 60 days after the date
of this prospectus. The actual number of shares of Class A Common Stock
issuable upon the conversion of the Series F Preferred Stock is subject to
adjustment and could be significantly more than the number estimated in the
table. This variation is due to factors that cannot be predicted by us at
this time. The most significant of these factors is the future market price
of the Class A Common Stock.
(3) Includes 73,493 shares issuable the exercise of 34,542 Class E Warrants and
38,951 Class G Warrants to purchase Class A Common Stock.
(4) Represents 480,000 shares issuable upon (A) conversion of 150 shares of
Series F Preferred Stock and (B) the exercise of 180,000 Class K Warrants
to purchase Class A Common Stock.
(5) Represents 89,810 shares issuable the exercise of 89,810 Class E Warrants
to purchase Class A Common Stock.
(6) Represents 400,000 shares issuable upon (A) conversion of 125 shares of
Series F Preferred Stock and (B) the exercise of 150,000 Class K Warrants
to purchase Class A Common Stock.
(7) Represents 24,000 shares issuable upon (A) conversion of 7.5 shares of
Series F Preferred Stock and (B) the exercise of 9,000 Class K Warrants to
purchase Class A Common Stock.
(8) Represents 24,000 shares issuable upon (A) conversion of 7.5 shares of
Series F Preferred Stock and (B) the exercise of 9,000 Class K Warrants to
purchase Class A Common Stock.
(9) Represents 25,600 shares issuable upon (A) conversion of 8 shares of Series
F Preferred Stock and (B) the exercise of 9,600 Class K Warrants to
purchase Class A Common Stock.
(10) Represents 160,000 shares issuable upon (A) conversion of 50 shares of
Series F Preferred Stock and (B) the exercise of 60,000 Class K Warrants to
purchase Class A Common Stock.
(11) Includes 412,926 shares issuable upon the exercise of 70,000 Class C
Warrants, 138,169 Class E Warrants and 194,757 Class G Warrants to purchase
Class A Common Stock.
(12) Includes 160,000 shares issuable upon (A) conversion of 50 shares of Series
F Preferred Stock and (B) the exercise of 60,000 Class K Warrants to
purchase Class A Common Stock.
(13) Includes 4,869 shares issuable upon the exercise of 4,869 Class G Warrants
to purchase Class A Common Stock.
(14) Includes 32,000 shares issuable upon (A) conversion of 10 shares of Series
F Preferred Stock and (B) the exercise of 12,000 Class K Warrants to
purchase Class A Common Stock.
(15) Mr. Ripp was appointed as Chairman of the Board of Directors of LightPath
on November 11, 1999. Includes 161,250 shares issuable upon the exercise of
a Warrant to purchase Class A Common Stock. In addition, 62,500 shares of
Class A Common Stock and 120,000 shares issuable upon exercise of Warrants
are held by three Irrevocable Trusts for the benefit of Mr. Ripp's
Children.
(16) Includes shares issuable upon the exercise of Warrants.
(17) Includes 40,000 shares issuable upon the exercise of Warrants to purchase
Class A Common Stock.
(18) Mr. Lawson is currently President, Chief Executive Officer and a member of
the Board of Directors of LightPath.
(19) This person is an employee of Dunwoody Brokerage Services, Inc., which
acted as placement agent for the sale of the Series F Preferred Stock and
attached Class K Warrants. The Class L Warrants were originally issued to
Dunwoody as compensation for its services.
(20) The percentage interest of each selling shareholder is based on the
beneficial ownership of that selling shareholder divided by the sum of the
current outstanding shares of Class A Common Stock plus the additional
shares, if any, which would be issued to that selling shareholder (but not
any other selling shareholder) when converting Series F Preferred Stock or
exercising Warrants or other right in the future.
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<PAGE>
(21) Includes 42,948 shares issuable upon the exercise of 15,750 Class D
Warrants, 11,889 Class F Warrants and 15,309 Class H Warrants to purchase
Class A Common Stock.
(22) Includes 15,309 shares issuable upon the exercise of 15,309 Class H
Warrants to purchase Class A Common Stock.
(23) Includes 4,000 shares issuable upon the exercise of 2,000 Class F Warrants
and 2,000 Class H Warrants to purchase Class A Common Stock.
(24) Includes 5,500 shares issuable upon the exercise of 2,000 Class D Warrants,
2,000 Class F Warrants and 1,500 Class H Warrants to purchase Class A
Common Stock.
(25) Includes 500 shares issuable upon the exercise of 250 Class F Warrants and
250 Class H Warrants to purchase Class A Common Stock.
(26) Includes 500 shares issuable upon the exercise of 250 Class F Warrants and
250 Class H Warrants to purchase Class A Common Stock.
USE OF PROCEEDS
The selling shareholders will receive the net proceeds from the sale of
their shares of common stock. We will not receive any proceeds from these sales.
We will however receive proceeds from the exercise of the warrants. Each Class K
and Class L Warrant entitles the holder to purchase shares of common stock at a
price of $5.00 and the Chairman's Warrant may be exercised for $6.00 per share.
This purchase price is payable in cash or by surrendering a number of shares of
our common stock having a fair market value equal to the applicable exercise
price on the exercise date. If all of the warrants are exercised for cash, we
will receive up to $4,760,500.
CERTAIN RELATIONSHIPS
All of the Class L Warrants were issued to Dunwoody Brokerage Services,
Inc., together with a cash placement fee of $163,200 equal to 4% of the gross
proceeds from the sale of Series F Preferred Stock as compensation for their
services as placement agent in connection with the November 1999 private
placement of 408 shares of LightPath's Series F Preferred Stock. Dunwoody
subsequently transferred these warrants to the persons listed in the selling
shareholders table. Dunwoody is affiliated with Swartz Investments LLC, which
acted as placement agent in connection with the sales of our Series A, B and C
Preferred Stock and associated warrants.
The purchasers of the Company's Series F Preferred Stock have a right of
first offer to participate in any issuances of equity or debt securities by the
Company during the one year period ending November 2, 2000. Dunwoody has the
right to additional compensation as placement agent with respect to any future
private financings by the Company during the three year period ending November
2002, if the private placement includes sales to any of the initial investors in
the Series F Preferred Stock.
Mr. Ripp was appointed to serve as Chairman of the Board of Directors on
November 11, 1999. Mr. Lawson is currently President, Chief Executive Officer
and a member of the Board of Directors of LightPath.
DETERMINATION OF OFFERING PRICE
The selling shareholders may use this prospectus from time to time to sell
their shares of common stock at a price determined by the shareholder making
such sale. The price at which the common stock is sold may be based on market
prices prevailing at the time of sale, at prices relating to such prevailing
market prices, or at negotiated prices.
18
<PAGE>
PLAN OF DISTRIBUTION
The common stock may be sold from time to time by the selling shareholders,
or by pledgees, donees, transferees or other successors in interest. Such sales
may be made on one or more exchanges or in the over-the-counter market or
otherwise, at prices and at terms then prevailing or at prices related to the
then current market price, or in negotiated transactions. The common stock may
be sold in one or more of the following types of transactions:
(a) a block trade in which a selling shareholder will engage a
broker-dealer who will then attempt to sell the common stock, or
position and resell a portion of the block as principal to facilitate
the transaction;
(b) purchases by a broker-dealer as principal and resale by such
broker-dealer for its account pursuant to this prospectus;
(c) an exchange distribution in accordance with the rules of such
exchange; and
(d) ordinary brokerage transactions and transactions in which the broker
solicits purchasers. In effecting sales, broker-dealers engaged by the
selling shareholders may arrange for other broker-dealers to
participate in the resales.
In connection with distributions of the common stock or otherwise, the
selling shareholders may enter into hedging transactions with broker-dealers. In
connection with such transactions, broker-dealers may engage in short sales of
the common stock in the course of hedging the positions they assume with selling
shareholders. The selling shareholders may also sell common stock short and
redeliver the common stock to close out such short positions. The selling
shareholders may also enter into option or other transactions with
broker-dealers that require the delivery to the broker-dealer of the common
stock, which the broker-dealer may resell or otherwise transfer pursuant to this
prospectus. The selling shareholders may also loan or pledge common stock to a
broker-dealer and the broker-dealer may sell the common stock so loaned or, upon
a default, the broker-dealer may effect sales of the pledged common stock
pursuant to this prospectus.
Broker-dealers or agents may receive compensation in the form of
commissions, discounts or concessions from the selling shareholders in amounts
to be negotiated in connection with the sale. Such broker-dealers and any other
participating broker-dealers may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales and any such
commission, discount or concession may be deemed to be underwriting discounts or
commissions under the Securities Act. In addition, any securities covered by
this prospectus which qualify for sale pursuant to Rule 144 may be sold in an
unregistered transaction under Rule 144 rather than pursuant to this prospectus.
We are bearing all of the costs and expenses of registering under the
Securities Act the sale of the common stock offered by this prospectus.
Commissions and discounts, if any, attributable to the sales of the common stock
will be borne by the selling shareholders.
We have agreed to indemnify the selling shareholders against certain
liabilities in connection with the offering of the common stock, including
liabilities arising under the Securities Act. The selling shareholders may agree
to indemnify any broker-dealer or agent that participates in transactions
involving sales of the common stock against various liabilities, including
liabilities arising under the Securities Act.
19
<PAGE>
In order to comply with the securities laws of various states, if
applicable, sales of the common stock made in those states will only be made
through registered or licensed brokers or dealers. In addition, some states do
not allow the securities to be sold unless they have been registered or
qualified for sale in the applicable state or an exemption from the registration
or qualification requirement is available and is complied with by us and the
selling shareholders.
Under applicable rules and regulations of the Exchange Act, any person
engaged in the distribution of the common stock may not simultaneously engage in
market-making activities with respect to our common stock for a period of up to
five business days prior to the commencement of such distribution. In addition
to those restrictions, each selling shareholder will be subject to the Exchange
Act and the rules and regulations under the Exchange Act, including, Regulation
M and Rule 10b-7, which provisions may limit the timing of the purchases and
sales of our securities by the selling shareholders.
DESCRIPTION OF SECURITIES
We have previously registered our Class A Common Stock under the Exchange
Act by filing a Form 8-A on January 13, 1996. Please refer to that registration
statement for a description of the rights, privileges and preferences of our
common stock.
LEGAL MATTERS
Certain legal matters have been passed upon for us by Squire, Sanders &
Dempsey L.L.P., Phoenix, Arizona.
EXPERTS
Our financial statements as of June 30, 1999 and 1998, and for the years
then ended, have been incorporated by reference in this Prospectus in reliance
upon the report of KPMG LLP, independent certified public accountants,
incorporated by reference herein, and upon the authority of said firm as experts
in accounting and auditing.
The report of KPMG LLP covering the June 30, 1999, financial statements
contains an explanatory paragraph that states that the Company's recurring
losses from operations and resulting continued dependence on external sources of
capital raise substantial doubt about the Company's ability to continue as a
going concern. The financial statements do not include any adjustments that
might result from the outcome of that uncertainty.
INTERESTS OF NAMED EXPERTS AND COUNSEL
On October 13, 1997, James L. Adler, Jr. was appointed to serve as a
director of LightPath until the 2000 annual meeting of shareholders. Mr. Adler
is a partner of the law firm of Squire, Sanders & Dempsey L.L.P., which has
issued an opinion as to the validity of the shares offered by this prospectus
and also provides legal services to us on a regular basis. Mr. Adler owns
options under the Directors Stock Option Plan to purchase 50,176 shares of Class
A Common Stock at exercise prices ranging from $2.84 to $9.81. As of January 1,
2000, these shares represented less than 1% of the total outstanding shares of
Class A Common Stock.
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INDEMNIFICATION
Article TENTH of the Company's Certificate of Incorporation, as amended,
provides as follows:
TENTH: No director of the corporation shall be personally liable to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director; provided, however, that the foregoing clause shall not apply
to any liability of a director (i) for any breach of the director's duty of
loyalty to the corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) for any transaction from which the director derived an improper
personal benefit, or (iv) under Section 174 of the DGCL. This Article shall not
eliminate or limit the liability of a director for any act or omission occurring
prior to the time this Article became effective.
Article VII of the Company's Bylaws provides, in summary, that the Company
is required to indemnify to the fullest extent permitted by applicable law, any
person made or threatened to be made a party or involved in a lawsuit, action or
proceeding by reason that such person is or was an officer, director, employee
or agent of the Company. Indemnification is against all liability and loss
suffered and expenses reasonably incurred. Unless required by law, no such
indemnification is required by the Company of any person initiating such suit,
action or proceeding without board authorization. Expenses are payable in
advance if the indemnified party agrees to repay the amount if he is ultimately
found to not be entitled to indemnification. For a full text of Article VI of
the Bylaws, see Exhibit 3.3 to this Registration Statement.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, the Act, may be permitted to directors, officers and controlling person
of LightPath pursuant to the foregoing provisions, or otherwise, we have been
informed that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable.
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LIGHTPATH TECHNOLOGIES, INC.
2,279,847 SHARES
CLASS A COMMON STOCK
PROSPECTUS
January 18, 2000
NO DEALER, SALES PERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY ANY OF THE SECURITIES OFFERED HEREBY BY ANYONE IN ANY JURISDICTION IN WHICH
SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH
OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT AS
OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN
THE AFFAIRS OF THE COMPANY SINCE SUCH DATE.
TABLE OF CONTENTS
Page
Where You Can Find More Information (iii)
Prospectus Summary 1
The Offering 4
Risk Factors 6
Security Ownership of Principal Stockholders
and Management 15
Selling Shareholders 15
Use of Proceeds 18
Certain Relationships 18
Determination of Offering Price 18
Plan of Distribution 19
Description of Securities 20
Legal Matters 20
Experts 20
Interest of Named Experts and Counsel 20
Indemnification 21
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