Financial Quick Reference
(in millions, except for per share data)
Three months ended Nine months ended
Mar. 31, Mar. 31, Mar. 31, Mar. 31,
2008 2007 2008 2007
Revenues $ 2.11 $ 2.90 $ 6.44 $ 11.08
Gross Profit $ 0.42 $ 0.72 $ 0.66 $ 3.00
Net Loss $ (1.19) $ (0.52) $ (4.34) $ (1.32)
Loss per share (basic &
diluted) $ (0.22) $ (0.12) $ (0.81) $ (0.29)
Financial Highlights and Nine-Month Impact of One Time Charges on Cost of
Sales
Revenue Summary
(in millions)
3/31/2008 3/31/2007 3/31/2008 3/31/2007
Q3 2008 Q3 2007 Q3 YTD Q3 YTD
---------- ---------- ---------- ----------
Industrial $ 1.81 $ 1.65 $ 5.37 $ 5.33
Telecom $ 0.30 $ 1.25 $ 1.07 $ 5.75
---------- ---------- ---------- ----------
Total $ 2.11 $ 2.90 $ 6.44 $ 11.08
========== ========== ========== ==========
Revenue from our industrial base is growing and is up over 9% in the third
quarter of fiscal 2008 compared to the same period last year and up
slightly for the nine months ended March 31, 2008 compared to the same
period last year. Our revenue shortfall is primarily due to the weakness in
the telecommunications market and a slow down of defense orders. Revenues
from telecommunications customers was 14% of total revenue in fiscal third
quarter 2008 compared to 43% of total revenue in fiscal third quarter 2007.
Revenues from telecommunications customers was only 17% of total revenue in
the nine months ended March 31, 2008 compared to 52% of total revenue in
the nine months ended March 31, 2007.
Disclosure Backlog
(in millions)
3/31/2008 3/31/2007
Q3 2008 Q3 2007
---------- ----------
Industrial $ 2.67 $ 1.56
Telecom $ 0.38 $ 0.52
---------- ----------
Total $ 3.05 $ 2.08
========== ==========
Our disclosure backlog at March 31, 2008 has increased 47% from the March
31, 2007 and increased 65% from the fourth quarter of fiscal year ended
June 30, 2007, when backlog was $1.85 million. We are beginning to see the
results of our efforts to enter the high volume lower cost commercial
markets with orders for laser tools now in our backlog. With the
continuing diversification of our backlog and the smaller percentage of
telecom business in our backlog we expect to show increases in revenue
starting with the fiscal fourth quarter 2008.
Cost of Sales Analysis
(in millions)
Nine Months Nine Months
Q3 FY 2008 Q3 FY 2007 FY 2008 FY 2007
Direct Costs 0.52 0.81 1.72 4.12
Overhead 1.18 1.37 3.54 3.96
One time adjustment - - 0.52 -
----------- ----------- ----------- -----------
1.70 2.18 5.78 8.08
=========== =========== =========== ===========
Direct cost as a % of
revenue 24% 28% 27% 37%
Gross margin 20% 25% 10% 27%
Direct costs, which include material, labor and services, were 24% of
revenue in the third quarter of fiscal 2008 compared to 28% of revenue in
the third quarter of fiscal 2007. We have continued to improve our direct
costs as a result of the cost reduction programs we are implementing.
During the second and third quarters of fiscal year 2008, 83% of our
precision molded optics were produced at our Shanghai facility. Material
costs are improving with the use of in-house built holders, the conversion
to lower cost glass preforms and improved production yields in both
Shanghai and Orlando. However, the direct cost improvement did not
completely offset the effect of the lower revenue. Gross margin was
negatively impacted by unabsorbed overhead costs. As we replace the revenue
shortfall we expect to see significant improvement in our margins.
The gross margin was negatively impacted by a total of $524,000 for
one-time inventory charges in September and December of 2007, including a
$150,000 charge for inventory, which was declared obsolete in September
2007, and a $374,000 charge for re-valuation of our inventory as a result
of adjusting our standard costs to reflect our lower current costs in
December 2007. The impact of the $524,000 charge was to reduce gross
margin by 8 percentage points for the nine months of fiscal 2008, from 18%
to the reported gross margin of 10%. Cost of goods sold, excluding the
one-time inventory charges, reflects the continued improvements we are
making in managing and controlling our direct costs.
We have taken several actions since July 2007 to reduce manufacturing costs
and overhead. We also have reduced Orlando facility lease costs by 50%.
Operating and Other Expenses
(in millions)
Three months ended Nine months ended
Mar. 31, Mar. 31, Mar. 31, Mar. 31,
2008 2007 2008 2007
Stock options $ 0.09 $ 0.09 $ 0.28 $ 0.22
Severance/Public
Company/Building 0.31 0.10 1.65 1.34
All other 1.21 1.05 3.07 2.75
---------- ---------- ---------- ----------
$ 1.61 $ 1.24 $ 5.00 $ 4.31
---------- ---------- ---------- ----------
Operating and other expenses include sales, new product development,
amortization, interest expense, interest income and corporate executive
salaries and overhead. Severance/public company/building expenses include
severance to the former CEO and executive search fees, accounting and legal
fees, transfer agent fees, rent, utilities and depreciation on leasehold
improvements. Total operating and other expenses were higher by $686,000 in
the nine months ended March 31, 2008 due to a non-recurring charge of
$150,000 for a termination fee to re-negotiate our Orlando facility lease
and $476,000 for severance and executive search fees related to the
resignation of our former CEO and $148,000 for legal fees related to
litigation and our joint venture in China executed in January 2008. These
non-recurring charges were partially offset by reductions in various
general & administrative expenses.
Cash Status: We are continuing to invest in equipment and facilities for
our China operations which management believes will achieve both cost
reductions and growth opportunities. For the nine months ended March 31,
2008, net cash used for operating and investing activities was $3.75
million. Cash was used to support operations as a result of the low revenue
levels and investment in future growth. In anticipation of a summer start
up of the joint venture, we invested $240,000 for capital equipment with
longer lead time for the joint venture, $18,000 for legal fees for
representation related to the joint venture, and severance expenses of
$150,000 for work force reductions implemented in the first nine months of
fiscal year 2008.
Comments: Jim Gaynor, CEO of LightPath, stated, "With our lower cost
structure in place our near term focus is on growing our revenue through
increasing sales in Asia, implementation of the joint venture and expansion
of our Black Diamond product line. Our backlog is up and with lower cost of
manufacturing for materials, tooling and glass, LightPath is well
positioned to increase volumes in all segments of our business."
"The work on improving our gross margins continues. Additional sales volume
will positively impact gross margin, as will the overhead reductions and
facility lease reduction actions that have been taken. The benefits of
these actions have not fully materialized in the first nine months of
fiscal 2008, but we believe they will have a positive impact in the next
quarter and beyond."
Mr. Gaynor continued, "LightPath is continuing to implement its business
strategy to diversify its served markets and position itself to participate
in lower cost, higher volume opportunities. We have demonstrated lower
direct costs for the last two quarters. We have reached agreement with our
Chinese partner, CDGM Optical Glass Co., to open a joint venture business
focused on high volume low cost products. We have expanded our Shanghai
manufacturing capacity, producing over 83% of our second and third quarter
lens volume in that factory. We are implementing 'RoHS' (RoHS is a
European Union Standard that restricts the use of certain hazardous
materials such as lead and mercury) compliant glass and qualifying lower
cost glass materials. As a result of the actions taken we are seeing
positive results in yield improvement, production rates and cost reductions
which will benefit us as we continue to position LightPath to take
advantage of higher volume market opportunities."
Webcast Details:
LightPath plans to hold an audio webcast at 4:00 p.m. EDT on May 22, 2008
to discuss details regarding the company's performance for the third
quarter and nine months of fiscal 2008. The session may be accessed at
www.lightpath.com. A transcript archive of the webcast will be available
for viewing or download on our web site shortly after the call is
concluded.
Additional information concerning the Company and its products can be found
at the Company's web site at www.lightpath.com.
LightPath manufactures optical products, including precision molded
aspheric optics, precision molded infrared optics, GRADIUM® glass
products, proprietary collimator assemblies, isolators utilizing
proprietary automation technology, higher-level assemblies and packing
solutions. LightPath has a strong patent portfolio that has been granted or
licensed to us in these fields. LightPath common stock trades on the NASDAQ
Capital Market under the symbol "LPTH." Investors are encouraged to go to
LightPath's web site for additional financial information.
This news release includes statements that constitute forward-looking
statements made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. This information may involve
risks and uncertainties that could cause actual results to differ
materially from such forward-looking statements. Factors that could cause
or contribute to such differences include, but are not limited to, factors
detailed by LightPath Technologies, Inc. in its public filings with the
Securities and Exchange Commission.
LIGHTPATH TECHNOLOGIES, INC.
Condensed Consolidated Balance Sheets
Unaudited
March 31, June 30,
Assets 2008 2007
------------ ------------
Current assets:
Cash and cash equivalents $ 420,129 $ 1,291,364
Trade accounts receivable, net of allowance
of $46,869 and $28,968 1,387,171 1,408,815
Inventories, net 1,452,893 1,853,324
Prepaid expenses and other assets 314,594 220,860
------------ ------------
Total current assets 3,574,787 4,774,363
Property and equipment - net 2,044,256 1,563,250
Intangible assets - net 207,954 232,605
Other assets 57,306 57,306
------------ ------------
Total assets $ 5,884,303 $ 6,627,524
============ ============
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable $ 1,413,518 $ 1,278,328
Accrued liabilities 468,554 326,525
Accrued severance 181,942 -
Accrued payroll and benefits 329,855 413,576
Notes payable 166,645 166,645
Capital lease obligations, current portion 17,994 16,285
------------ ------------
Total current liabilities 2,578,508 2,201,359
------------ ------------
Capital lease obligations, excluding current
portion 9,936 23,653
Note payable, excluding current portion 152,758 277,741
------------ ------------
Total liabilities 2,741,202 2,502,753
Stockholders’ equity:
Preferred stock: Series D, $.01 par value,
voting; 5,000,000 shares authorized; none
issued and outstanding -- --
Common stock: Class A, $.01 par value,
voting; 34,500,000 shares authorized;
5,332,655 and 4,512,543 shares issued and
outstanding 53,326 45,125
Additional paid-in capital 199,712,633 196,417,217
Foreign currency translation adjustment 8,122 (43,059)
Accumulated deficit (196,630,980) (192,294,512)
------------ ------------
Total stockholders’ equity 3,143,101 4,124,771
------------ ------------
Total liabilities and stockholders’
equity $ 5,884,303 $ 6,627,524
============ ============
Condensed Consolidated Statements of Operations
Unaudited Unaudited
Three months ended Nine months ended
March 31, March 31,
2008 2007 2008 2007
------------ ------------ ------------ ------------
Product sales, net $ 2,114,196 $ 2,899,602 $ 6,444,515 $ 11,075,237
Cost of sales 1,694,679 2,177,375 5,780,978 8,079,957
------------ ------------ ------------ ------------
Gross margin 419,517 722,227 663,537 2,995,280
Operating expenses:
Selling, general
And administrative 1,272,269 945,021 4,063,080 3,504,196
New product
development 308,302 289,254 924,049 830,733
Amortization of
intangibles 8,217 8,217 24,651 24,651
Loss on disposal
of assets 13,707 - 13,707 -
------------ ------------ ------------ ------------
Total costs
and expenses 1,602,495 1,242,492 5,025,487 4,359,580
------------ ------------ ------------ ------------
Operating loss (1,182,978) (520,265) (4,361,950) (1,364,300)
Other income
(expense)
Interest expense (19,357) (11,041) (48,285) (33,957)
Investment and
other income 12,066 11,708 73,767 79,457
------------ ------------ ------------ ------------
Net loss $ (1,190,269) $ (519,598) $ (4,336,468) $ (1,318,800)
============ ============ ============ ============
Foreign currency
translation
adjustment 9,771 - 51,181 -
------------ ------------ ------------ ------------
Comprehensive
loss $ (1,180,498) $ (519,598) $ (4,285,287) $ (1,318,800)
============ ============ ============ ============
Loss per share
(basic and
diluted) $ (0.22) $ (0.12) $ (0.81) $ (0.29)
============ ============ ============ ============
Number of shares
used in per share
calculation 5,332,655 4,506,230 5,326,003 4,497,081
============ ============ ============ ============
LIGHTPATH TECHNOLOGIES, INC.
Condensed Consolidated Statements of Cash Flows
Unaudited
Nine Months Ended
March 31,
--------------------------
2008 2007
------------ ------------
Cash flows from operating activities
Net loss $ (4,336,468) $ (1,318,800)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 330,636 363,060
Foreign exchange translation adjustment 51,181 -
Gain on sale of fixed assets (7,000) -
Stock based compensation 280,525 217,356
Provision for doubtful accounts receivable 17,901 37,560
Loss on abandonment of fixed assets 20,707 -
Changes in operating assets and liabilities:
Trade receivables 3,743 (14,922)
Inventories 400,431 163,861
Prepaid expenses and other assets (93,734) (140,908)
Accounts payable and accrued expenses 213,762 (746,449)
------------ ------------
Net cash used in operating activities (3,118,316) (1,439,242)
------------ ------------
Cash flows from investing activities
Purchase of property and equipment (646,020) (701,248)
Proceeds from sale of assets 7,000 -
------------ ------------
Net cash used in investing activities (639,020) (701,248)
Cash flows from financing activities
Proceeds from exercise of stock options - 54,681
Proceeds from sale of common stock, net of
expenses 2,978,544 -
Proceeds from sale of common stock from
employee stock purchase 44,548 -
Borrowings on line of credit - 229,224
Payments on capital lease obligation (12,008) (10,511)
Payments on note payable (124,983) (13,887)
------------ ------------
Net cash provided by financing activities 2,886,101 259,507
------------ ------------
Increase (Decrease) in cash and cash
equivalents (871,235) (1,880,983)
Cash and cash equivalents, beginning of period 1,291,364 3,763,013
------------ ------------
Cash and cash equivalents, end of period $ 420,129 $ 1,882,030
============ ============
Supplemental disclosure of cash flow
information:
Interest paid $ 29,993 $ 33,957
Supplemental disclosure of non-cash investing
activity:
Landlord payments for leasehold
improvements $ 161,678 $ -
Contact Information: Contact: Dorothy Cipolla CFO LightPath Technologies, Inc. (407) 382-4003 Internet: www.lightpath.com