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U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
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[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT 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.)
2603 CHALLENGER TECH CT. SUITE 100 HTTP://WWW.LIGHTPATH.COM 32826
ORLANDO, FLORIDA (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code:
(407) 382-4003
Check whether the registrant (1) 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 [X] NO [ ]
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 20,677,071 shares
CLASS OUTSTANDING AT OCTOBER 30, 2002
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LIGHTPATH TECHNOLOGIES, INC.
FORM 10-Q
INDEX
ITEM PAGE
- ---- ----
PART I FINANCIAL INFORMATION
Item 1 Condensed Consolidated Balance Sheets 2
Condensed Consolidated Statements of Operations 3
Condensed Consolidated Statements of Cash Flows 4
Notes to Condensed Consolidated Financial Statements 5
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations 12
Item 3 Quantitative and Qualitative Disclosures About Market Risk 16
Item 4 Controls and Procedures 16
PART II OTHER INFORMATION
Legal Proceedings 17
Changes in Securities and Use of Proceeds 17
Defaults Upon Senior Securities 17
Submission of Matters to a Vote of Security Holders 17
Other Information 18
Exhibits and Reports on Form 8-K 18
SIGNATURES 19
CERTIFICATION 20
1
LIGHTPATH TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
SEPTEMBER 30, JUNE 30,
2002 2002
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ASSETS
Current assets:
Cash and cash equivalents $ 9,047,164 $ 13,177,624
Trade accounts receivable - less allowance of $318,995 and $278,255 1,101,265 1,560,198
Inventories 2,338,915 2,403,644
Prepaid expenses and other receivables 988,226 1,531,367
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Total current assets 13,475,570 18,672,833
Property and equipment - net 6,029,937 6,664,374
Goodwill - net 2,276,472 2,276,472
Intangible assets - net 4,980,053 5,777,707
Investment in LightChip, Inc. and other assets 171,226 3,585,842
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Total assets $ 26,933,258 $ 36,977,228
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 533,957 $ 1,002,374
Accrued liabilities 571,780 1,835,040
Accrued payroll and benefits 685,453 549,241
Accrued severance and exit costs 641,929 1,059,680
Other current liabilities 77,613 88,550
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Total current liabilities 2,510,732 4,534,885
Commitments and contingencies - (Note 10)
Stockholders' equity:
Common stock: Class A, $.01 par value, voting;
34,500,000 shares authorized; 20,677,071 shares
issued and outstanding 206,771 206,771
Additional paid-in capital 188,314,133 188,276,439
Accumulated deficit (164,098,378) (156,040,867)
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Total stockholders' equity 24,422,526 32,442,343
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Total liabilities and stockholders' equity $ 26,933,258 $ 36,977,228
============= =============
SEE ACCOMPANYING NOTES.
2
LIGHTPATH TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED
SEPTEMBER 30,
----------------------------
2002 2001
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REVENUES
Sales $ 1,644,983 $ 3,350,054
Product development fees and other sales -- 107,992
------------ ------------
Total revenues 1,644,983 3,458,046
COSTS AND EXPENSES
Cost of sales (exclusive of stock-based compensation
of ($30,551) and $6,956, for the three months ended
September 30, 2002 and 2001, respectively) 2,243,251 3,113,767
Selling, general and administrative (exclusive of
stock-based compensation of $55,358 and $2,809,052 for
the three months ended September 30, 2002 and
2001, respectively) 2,022,734 3,837,268
Research and development (exclusive of stock-based
compensation of $12,887 and $13,767 for the three months
ended September 30, 2002 and 2001, respectively) 933,789 2,052,454
Asset impairment 3,537,791 --
Stock-based compensation 37,694 2,829,775
Amortization of goodwill and intangibles 812,865 2,690,756
Consolidation and relocation expense 199,113 --
------------ ------------
Total costs and expenses 9,787,237 14,524,020
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Operating loss (8,142,254) (11,065,974)
OTHER INCOME (EXPENSE)
Investment and other income, net 84,743 709,723
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Net loss $ (8,057,511) $(10,356,251)
Imputed dividend on preferred stock -- (25,609)
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Net loss applicable to common shareholders $ (8,057,511) $(10,381,860)
============ ============
Basic and diluted net loss per share $ (0.39) $ (0.54)
============ ============
Number of shares used in per share calculation 20,677,071 19,371,167
============ ============
SEE ACCOMPANYING NOTES.
3
LIGHTPATH TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
THREE MONTHS ENDED
SEPTEMBER 30,
----------------------------
2002 2001
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (8,057,511) $(10,356,251)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization 1,301,320 3,434,447
Asset impairment 3,537,791 --
Stock-based compensation 37,694 2,829,775
Provision for uncollectible accounts receivable 40,740 --
Changes in operating assets and liabilities:
Trade receivables 418,193 (81,146)
Inventories 64,729 (43,474)
Prepaid expenses and other 554,714 295,401
Accounts payable and accrued expenses (2,013,216) 629,512
------------ ------------
Net cash used in operating activities (4,115,546) (3,291,736)
CASH FLOWS FROM INVESTING ACTIVITIES
Property and equipment additions, net (104,774) (1,099,969)
Proceeds from sale of assets 116,008 270,000
Patent and license agreement costs, net (15,211) (48,201)
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Net cash used in investing activities (3,977) (878,170)
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on capital leases (10,937) (116,312)
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Net cash provided by financing activities (10,937) (116,312)
------------ ------------
Net decrease in cash and cash equivalents (4,130,460) (4,286,218)
Cash and cash equivalents at beginning of period 13,177,624 29,273,034
------------ ------------
Cash and cash equivalents at end of period $ 9,047,164 $ 24,986,816
============ ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Note receivable in exchange for equipment $ -- $ 270,000
Preferred stock premium $ -- $ (25,609)
SEE ACCOMPANYING NOTES.
4
LIGHTPATH TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
SEPTEMBER 30, 2002
ORGANIZATION
LightPath Technologies, Inc. ("LightPath" or the "Company") was incorporated in
Delaware on June 15, 1992. On April 14, 2000, the Company acquired Horizon
Photonics, Inc. ("Horizon"). On September 20, 2000, the Company acquired
Geltech, Inc. ("Geltech"). The Company is engaged in the production of
collimator, isolator, and precision molded aspherical optics used in the telecom
components market, GRADIUM(R) glass lenses and other optical materials. The
Company also performs research and development for optical solutions for the
fiber telecommunications and traditional optics markets. As used herein, the
terms ("LightPath" or the "Company"), refer to LightPath individually or, as the
context requires, collectively with its subsidiaries on a consolidated basis.
The Company has incurred substantial losses since inception. During fiscal year
1996, the Company completed an initial public offering ("IPO") and in fiscal
years 1997, 1998 and 2000 the Company completed four private placements of
convertible preferred stock and one private placement for convertible debentures
to raise additional capital. These funds were used to further research,
development and commercialization of optoelectronic products and GRADIUM glass
lenses. During fiscal year 2000, warrants issued at the IPO and private
placement warrants were exercised for approximately $65.5 million.
The optical components markets have experienced a severe downturn since
mid-2001, resulting in a significant decline in the demand for our products as
well as our competitors. Cash used in operations for the quarter ended September
30, 2002 was approximately $4.1 million, an increase of approximately $2.1
million from the quarter ended June 30, 2002. The decrease was principally due
to reduced revenues combined with the payment of $1.2 million related to the
settlement of certain litigation and $0.6 million of cash used in connection
with the consolidation and relocation efforts during the quarter. We will
continue to reduce our cash expenditures through improved manufacturing
efficiencies, suspension of selected development projects and consolidation of
equipment and facilities. During the first quarter of fiscal 2003, we initiated
the consolidation of our lens product lines in Florida, ceased manufacturing
operations in our New Mexico facilities and reorganized internally, all of which
we believe will further decrease our cash requirements for the remainder of
fiscal 2003. While the Company has no firm commitments for any future financing
at this time, with a cash balance of approximately $9 million at September 30,
2002, we will take the necessary actions to manage through this downturn. We
believe that our financial resources will be sufficient to finance the Company's
operations and capital expenditures, excluding acquisitions, for the next twelve
months.
BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with the requirements of 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 accounting principles. These consolidated
financial statements should be read in conjunction with the Company's
consolidated financial statements and related notes included in its Form 10-K
for the fiscal year ended June 30, 2002, as filed with the Securities and
Exchange Commission on September 4, 2002.
These statements are unaudited but include all adjustments, which include normal
recurring adjustments, that the Company considers necessary to present fairly
the financial position, results of operations and cash flows of the Company for
the interim periods presented. Results of operations for interim periods are not
necessarily indicative of results which may be expected for the year as a whole.
5
LIGHTPATH TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CONSOLIDATED FINANCIAL STATEMENTS include the accounts of the Company and its
wholly-owned subsidiaries. All significant intercompany balances and
transactions have been eliminated in consolidation.
CASH AND CASH EQUIVALENTS consist of cash in the bank and temporary investments
with maturities of ninety days or less when purchased.
INVENTORIES which consists principally of raw materials, lenses, isolators,
collimators and components are stated at the lower of cost or market, on a
first-in, first-out basis. Inventory costs include materials, labor and
manufacturing overhead.
PROPERTY AND EQUIPMENT are stated at cost and depreciated using both
straight-line and accelerated methods over the estimated useful lives of the
related assets ranging from three to seven years. Platinum molds less estimated
salvage value are depreciated on a straight-line basis over the estimated useful
lives ranging from one to two years.
INTANGIBLE ASSETS consisting of customer list and supply contracts, licenses,
patents, trademarks and others are recorded at cost. Upon issuance of the
license, patent or trademark, these assets are being amortized on the
straight-line basis over the estimated useful lives of the related assets
ranging from ten to seventeen years. Customer list and supply contracts and
other intangibles are being amortized on straight-line basis over the estimated
period of benefit ranging from two to five years. The recoverability of the
carrying values of these intangible assets are evaluated on a recurring basis.
Long-lived assets are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of the assets may not be
recoverable. When an evaluation is required, the estimated future undiscounted
cash flows associated with the asset are compared to the asset's carrying amount
to determine if a write-down to fair value is required.
The Company adopted Statement of Financial Accounting Standards No. 142,
GOODWILL AND OTHER INTANGIBLE ASSETS (SFAS 142) on July 1, 2002. SFAS 142
eliminates the amortization of goodwill and other intangible assets that have
indefinite useful lives. Amortization will continue to be recorded for
intangible assets with definite useful lives. SFAS 142 also requires at least an
annual impairment review of goodwill and other intangible assets. Any asset
deemed to be impaired is to be written down to its fair value. The Company has
not completed its review of goodwill for impairment in accordance with SFAS 142,
however, the review will be completed by December 31, 2002.
INVESTMENTS consists of the Company's ownership interest in LightChip Inc.
(LightChip) which is accounted for under the cost method.
INCOME TAXES are accounted for under the asset and liability method. 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.
REVENUE is generally recognized from product sales when products are shipped to
the customer provided that LightPath has received a valid purchase order, the
price is fixed, title has transferred, collection of the associated receivable
is reasonably assured, and there are no remaining significant obligations.
Revenues from product development agreements are recognized as milestones are
completed in accordance with the terms of the agreements. Provisions for
estimated losses are made in the period in which such losses are determined.
RESEARCH AND DEVELOPMENT costs are expensed as incurred.
STOCK-BASED COMPENSATION is accounted for using the intrinsic value method as
prescribed by APB Opinion No. 25, ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES,
under which no compensation expense is recognized when the exercise price of the
employees stock option equals or exceeds the market price of the underlying
stock on the date of grant and other requirements are met. For stock options
granted to non-employees, stock-based compensation is determined using the fair
6
LIGHTPATH TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
value method as prescribed by SFAS 123, "Accounting for Stock-Based
Compensation."
MANAGEMENT MAKES ESTIMATES and assumptions during the preparation of the
Company's consolidated financial statements 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.
FAIR VALUES OF FINANCIAL INSTRUMENTS of the Company are disclosed as required by
Statement of Financial Accounting Standards No. 107, DISCLOSURES ABOUT FAIR
VALUES OF FINANCIAL INSTRUMENTS. The carrying amounts of cash and cash
equivalents, trade accounts receivable, accounts payable and accrued liabilities
approximate fair value.
2. INVENTORIES
The components of inventories include the following at:
September 30 June 30
2002 2002
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Raw materials $1,912,006 $1,670,488
Work in process 322,251 380,987
Finished goods 104,658 352,169
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Total inventories $2,338,915 $2,403,644
========== ==========
3. PROPERTY AND EQUIPMENT
In the fourth quarter of fiscal 2002, the Company recorded asset impairment
charges of $3.2 million to write down the carrying value to estimated fair value
less costs to sell certain manufacturing and other equipment, and leasehold
improvements held for disposal in connection with the Company's plan to relocate
manufacturing operations and corporate headquarters to Florida during fiscal
2003. During the first quarter of fiscal 2003 additional asset impairment
charges of $134,748 were recorded as a result of the relocation and disposal of
equipment in connection with the consolidation of operations. The net carrying
value of the equipment remaining which was held for disposal at September 30,
2002 is approximately $80,000.
4. GOODWILL AND INTANGIBLE ASSETS
Effective July 1, 2002, the Company no longer amortizes goodwill in accordance
with SFAS 142. Accordingly, amortization expense decreased by approximately
$445,000 for the three-month period ended September 30, 2002. The following
table presents the impact of the adoption of SFAS 142 on the Company's reported
net loss and net loss per applicable common share had SFAS 142 been in effect in
fiscal 2001:
September 30, September 30,
Three month periods ended: 2002 2001
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Reported net loss applicable to common shareholders $ (8,057,511) $(10,381,860)
------------- ------------
Adjustment - amortization of goodwill -- 445,210
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Adjusted net loss applicable to common shareholders $ (8,057,511) $ (9,936,650)
============= ============
Reported net loss per applicable common share $ (0.39) $ (0.54)
Adjusted net loss per applicable common share $ (0.39) $ (0.52)
7
LIGHTPATH TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
The following table discloses information regarding the carrying amounts and
associated accumulated amortization for intangible assets subject to
amortization after the adoption of SFAS 142.
INTANGIBLE ASSETS
As of September 30, 2002
-------------------------------------------------
Gross carrying Accumulated Net carrying
Amortized intangible assets: amount amortization amount
------------ ------------ ------------
Customer list and supply contract $ 1,041,750 $ 284,113 $ 757,637
Developed technology 6,064,981 3,399,540 2,665,441
Covenant not-to-compete 3,100,000 2,410,185 689,815
Other intangibles 2,860,000 2,503,333 356,667
Patents and trademarks granted 643,388 222,863 420,525
Patent applications in process 89,968 -- 89,968
------------ ------------ ------------
Total $ 13,800,087 $ 8,820,034 $ 4,980,053
============ ============ ============
As of June 30, 2002
-------------------------------------------------
Gross carrying Accumulated Net carrying
Amortized intangible assets: amount amortization amount
------------ ------------ ------------
Customer list and supply contract $ 1,041,750 $ 189,409 $ 852,341
Developed technology 6,064,981 3,066,360 2,998,621
Covenant not-to-compete 3,100,000 2,151,852 948,148
Other intangibles 2,860,000 2,391,111 468,889
Patents and trademarks granted 643,388 208,437 434,951
Patent applications in process 74,757 -- 74,757
------------ ------------ ------------
Total $ 13,784,876 $ 8,007,169 $ 5,777,707
============ ============ ============
The following table summarizes the amortization expense attributable to
intangible assets for the three month periods ended September 30, 2002 and 2001,
as well as estimated amortization expense for the fiscal years ending in June
2003 through 2007.
Aggregate amortization expense:
For the three-months ended:
September 30, 2002 $ 812,865
September 30, 2001 $ 2,690,756 (a)
Estimated amortization expense:
For the fiscal years ending:
June 30, 2003 $ 2,841,000
June 30, 2004 $ 1,973,000
June 30, 2005 $ 608,000
June 30, 2006 $ 90,000
June 30, 2007 $ 60,000
(a) Totals for the three months ended September 30, 2001 includes $445,210
of goodwill amortization.
8
LIGHTPATH TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
There were no changes in the carrying value of the Company's goodwill, all
included in the Laser Component Group, during the three month period ended
September 30, 2002.
5. INVESTMENT IN LIGHTCHIP, INC.
During the quarter ended September 30, 2002, LightChip ceased operations.
Subsequently, the Board of Directors of LightChip approved the sale of the
assets to two corporations who also agreed to hire the Company's remaining
employees. As a result, the Company recorded an impairment charge of $3,403,043
to write down the remaining carrying value of it's investment in LightChip to
zero during the quarter ended September 30, 2002.
6. RESTRUCTURING
On June 27, 2002, the Company announced a restructuring plan to consolidate its
corporate headquarters and manufacturing facilities in Albuquerque, New Mexico
to Orlando, Florida by September 30, 2002. A restructuring accrual for employee
severance and other exit costs was recorded at June 30, 2002 for approximately
$1.1 million, which includes employee severance for 67 employees and other lease
costs. As of September 30, 2002, $417,751 of the restructuring costs accrued
were paid. The severance benefits will be paid prior to December 31, 2002 and
the lease payments will be substantially complete by June 30, 2003.
In addition, the Company also recorded consolidation and relocation expenses
totaling approximately $199,000 during the quarter ended September 30, 2002.
The restructuring accrual and its activity during the period are summarized as
follows:
Balance at Balance at
June 30, Amounts September 30,
2002 paid 2002
------------ ------------ ------------
Severance $ 631,181 $ (282,316) $ 348,865
Lease and other 428,499 (135,435) 293,064
------------ ------------ ------------
$ 1,059,680 $ (417,751) $ 641,929
============ ============ ============
7. STOCKHOLDERS' EQUITY
On September 30, 2000, the Company redeemed 2,000,000 shares of Class E-1 common
stock, 2,000,000 shares of Class E-2 common stock and 1,500,000 shares of Class
E-3 common stock (collectively the "E Shares") with $.01 par value since the
conversion provisions expired without being met. The former holders of E Shares
received their redemption value of $.0001 per share upon resolution of certain
stockholder litigation relating to E Shares by September 30, 2002. See Note 10.
8. NET LOSS PER SHARE
Basic net loss per common share is computed based upon the weighted average
number of shares of Class A common stock outstanding during each period
presented. The computation of Diluted net loss per common share does not differ
from the basic computation because potentially issuable securities would be
anti-dilutive. The following outstanding securities were not included in the
computation of diluted earnings per share at September 30, 2002: 4,256,595
shares of Class A common stock issuable upon exercise of outstanding stock
options, and 299,300 shares of Class A common stock issuable upon exercise of
private placement and other warrants. A seven percent premium earned by the
preferred shareholders increased the net loss applicable to common shareholders
by $25,609 for the three months ended September 30, 2001.
9
LIGHTPATH TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
9. SEGMENT INFORMATION
Beginning in fiscal 2003, the Company reorganized into the Optical Lens Group
("Optical Lens") and Laser Component Group ("Laser Component") as the Company's
reportable segments under SFAS No. 131, "Disclosure about Segments of an
Enterprise and Related Information". For the three months ended September 30,
2002. Optical lens product sales represent approximately 85.5% of total revenues
and laser component product sales represent approximately 14.5% of total
revenues of the Company.
The Optical Lens segment is based in Florida and includes the core lens business
of the Company, precision molded aspheric optics, GRADIUM lenses and
collimators. We believe the aspheric lens product line, in particular, has broad
applicability to industrial markets beyond telecom. We are aggressively pursuing
new opportunities in the application areas of medical devices, barcode scanners,
optical data storage, machine vision, sensors, and environmental monitoring.
The Laser Component segment is based in California and includes the integrated
platform segment of our business with a focus on optical packaging solutions.
The Laser Component Group will be also perform research and development, in
support of optical generation and detection applications, such as transmitters,
transceivers and pumps. In addition, current passive optical packages such as
OASIS(TM) and Vectra(TM) collimator arrays will be included within this segment.
Summarized financial information concerning the Company's reportable segments
for the three months ended September 30, is shown in the following table. Prior
years have been restated to conform to the new reportable segments of the
business.
Optical Laser Corporate and
Lens Component Other (1) Total
------------ ------------ ------------- ------------
THREE MONTHS ENDED
SEPTEMBER 30
Revenues (2)
2002 $ 1,388,458 256,525 -- $ 1,644,983
2001 $ 2,237,641 1,220,405 -- $ 3,458,046
Segment operating loss (3)
2002 $ (1,043,654) (1,034,365) (6,064,235) $ (8,142,254)
2001 $ (2,392,652) (826,700) (7,846,622) $(11,065,974)
(1) Corporate functions include certain members of executive management,
the corporate accounting and finance function, non-cash charges and
other typical administrative functions as well as the restructuring
expenses which are not allocated to segments.
(2) There were no material inter-segment sales during all periods
presented.
(3) In addition to unallocated corporate functions, management does not
allocate interest expense, interest income, and other non-operating
income and expense amounts in the determination of the operating
performance of the reportable segments.
10. CONTINGENCIES
In December 2001, the Company agreed to proceed with the settlement of a May 2,
2000 class action lawsuit which the Company had commenced in the Chancery Court
of Delaware. The settlement includes a provision that each former E shareholder
has the right to request exclusion from the settlement class. By June 30, 2002,
the final settlement arrangements had been mailed to former holders of Class E
Common Stock pursuant to which they would receive a settlement payment of $0.40
for each share. Approximately 3.6 million shares or 88% of Class E Common Stock
will participate in the settlement whereas holders of approximately 0.5 million
10
LIGHTPATH TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
shares or 12% opted out of the settlement. At June 30, 2002, the Company accrued
an estimated settlement charge of $1.5 million of which approximately $1.27
million was distributed by September 30, 2002.
On or about June 9, 2000, a small group of holders of Class E Common Stock (the
"Texas Plaintiffs") commenced an action in a state court in Texas (the "Texas
Action"). The Texas Plaintiffs allege that the actions of the Company, and
certain named individuals, leading up to and surrounding the Company's 1995
proxy statement constitute fraud, negligent misrepresentation, fraudulent
inducement, breach of fiduciary duty and civil conspiracy. In general, the Texas
Plaintiffs allege misrepresentations and omissions in connection with a request
from the Company that its shareholders consent to a recapitalization, resulting
in a 5.5 to 1 reverse stock split and the issuance of certain Class E Common
Stock. The Texas Plaintiffs further allege that, as a result of the defendants'
actions, they were induced to consent to the Company's recapitalization. The
Company believes the allegations underlying the Texas Action have no basis in
fact and that this lawsuit is without merit. The Company has retained counsel
and is vigorously defending against these claims. During the first quarter of
fiscal 2003, the Texas court granted a motion for Summary Judgment filed by the
Company. The plaintiffs sought reconsideration of the ruling, however, on
October 24, 2002 the Texas court denied their motion. The Company is in the
process of seeking to have the two remaining named individuals dismissed from
the action.
During the three months ended September 30, 2002, the Company incurred and
expensed legal fees associated with the Texas Action of approximately $155,000,
however, an insurance claim for the aggregate amount incurred in connection with
the Texas Action in excess of applicable deductibles has been filed by the
Company. During the first quarter of fiscal 2002, one of the insurance companies
responsible for the claim, which had previously filed for reorganization, was
declared insolvent. The Company is working with regulatory agencies to resolve
and collect the monies due under this policy, although the Company currently
considers any potential recovery under this policy as speculative. Accordingly,
no claim for recovery is recorded as of September 30, 2002. On March 6, 2002,
the Company commenced an action in a state court in New Mexico for various
claims surrounding the now insolvent insurance carrier and the Company's former
insurance broker.
LightPath is subject to various other claims and lawsuits in the ordinary course
of its business, none of which are currently considered material to the
Company's financial condition and results of operations. Except as set forth
above, there have been no material developments in any legal actions reported in
the Company's Form 10-K for the year ended June 30, 2002.
11
LIGHTPATH TECHNOLOGIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 PROVIDES A SAFE HARBOR FOR
FORWARD LOOKING STATEMENTS MADE BY OR ON BEHALF OF THE COMPANY. ALL STATEMENTS
IN THIS "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS" AND ELSEWHERE IN THIS REPORT, OTHER THAN STATEMENTS OF HISTORICAL
FACTS, WHICH ADDRESS ACTIVITIES, EVENTS OR DEVELOPMENTS THAT THE COMPANY EXPECTS
OR ANTICIPATES WILL OR MAY OCCUR IN THE FUTURE, INCLUDING SUCH THINGS AS FUTURE
CAPITAL EXPENDITURES, GROWTH, PRODUCT DEVELOPMENT, SALES, BUSINESS STRATEGY AND
OTHER SIMILAR MATTERS ARE FORWARD-LOOKING STATEMENTS. THESE FORWARD-LOOKING
STATEMENTS ARE BASED LARGELY ON THE COMPANY'S CURRENT EXPECTATIONS AND
ASSUMPTIONS AND ARE SUBJECT TO A NUMBER OF RISKS AND UNCERTAINTIES, MANY OF
WHICH ARE BEYOND THE COMPANY'S CONTROL. ACTUAL RESULTS COULD DIFFER MATERIALLY
FROM THE FORWARD-LOOKING STATEMENTS SET FORTH HEREIN AS A RESULT OF A NUMBER OF
FACTORS, INCLUDING, BUT NOT LIMITED TO, THE COMPANY'S EARLY STAGE OF
DEVELOPMENT, THE NEED FOR ADDITIONAL FINANCING, INTENSE COMPETITION IN VARIOUS
ASPECTS OF ITS BUSINESS AND OTHER RISKS DESCRIBED IN THE COMPANY'S REPORTS ON
FILE WITH THE SECURITIES AND EXCHANGE COMMISSION. IN LIGHT OF THESE RISKS AND
UNCERTAINTIES, ALL OF THE FORWARD-LOOKING STATEMENTS MADE HEREIN ARE QUALIFIED
BY THESE CAUTIONARY STATEMENTS AND THERE CAN BE NO ASSURANCE THAT THE ACTUAL
RESULTS OR DEVELOPMENTS ANTICIPATED BY THE COMPANY WILL BE REALIZED. THE COMPANY
UNDERTAKES NO OBLIGATION TO UPDATE OR REVISE ANY OF THE FORWARD LOOKING
STATEMENTS CONTAINED HEREIN.
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 2002 COMPARED TO THE THREE MONTHS ENDED
SEPTEMBER 30, 2001
CONSOLIDATED OPERATIONS
Our consolidated revenues totaled $1.6 million for the first quarter of
fiscal 2003, a decrease of approximately $1.8 million or 52% compared to
revenues for the first quarter of fiscal 2002. The decrease was primarily
attributable to a decrease in laser component product sales of $1 million or 56%
and a decrease in optical lens sales of $0.8 million or 44%.
In the first quarter of fiscal 2003, consolidated cost of sales was
approximately 136% of product sales, an increase from the comparable period of
fiscal 2002 in which we reported cost of sales of 90%. The increase of 46% from
the comparable period of fiscal 2002 is attributable principally to the
underutilization of manufacturing facilities and staff because of reduced sales
as well as the write down of approximately $157,000 of collimators deemed
obsolete due to changes in customer demand during the quarter.
During the first quarter of fiscal 2003, selling, general and
administrative costs decreased by $1.8 million from the first quarter of fiscal
2002 to $2 million. The decrease is due primarily to a $1.2 million legal
settlement accrual included in fiscal 2002 and a $0.6 million decrease in
administrative personnel costs due to consolidation of facilities. We incurred
several non-cash charges during the first quarter of fiscal 2003, including $3.4
million related to the write down of the Company's investment in LightChip,
$135,000 of asset impairment charges, $0.8 million in amortization of
intangibles from acquisitions, and $38,000 in stock-based compensation charges.
Research and development costs decreased by approximately $1.1 million to
$0.9 million in the first quarter of fiscal 2003 versus the first quarter of
fiscal 2002. The majority of development work consisted of expenses associated
with automation development and products in the areas of isolators and next
generation optical subassemblies and sub-assembly technologies.
During the quarter, the Company also recorded approximately $199,000 of
consolidation and relocation expenses incurred in connection with its previously
announced plans to consolidate its corporate headquarters and manufacturing
facilities in Albuquerque, New Mexico to Orlando, Florida by September 30, 2002.
These expenses consist primarily of costs to dispose and move our remaining
equipment to Florida and travel expenses. In addition, during the first quarter
of fiscal 2003, we paid approximately $0.4 million of employee severance and
lease termination fees accrued at June 30, 2002.
Investment and other income decreased approximately $625,000 as interest
earned on investments in the first quarter of fiscal 2003 declined due to lower
interest rates and a decrease in cash balances. In addition, the first quarter
of fiscal 2002 included a gain on the sale of assets of approximately $390,000
12
LIGHTPATH TECHNOLOGIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
not present in fiscal 2003. Interest and other expense in the first quarter of
fiscal 2003 and fiscal 2002 was not significant.
Net loss was $8.1 million during the first quarter of fiscal 2003. Included
in the net loss was approximately $4.4 million from the non-cash charges
described above and $199,000 in consolidation and relocation expenses, which, if
excluded would have resulted in a net loss of $3.4 million. This compares with
the first quarter of fiscal 2002 in which we reported a net loss of $10.4
million including $5.5 million in non-cash charges and a $1.2 million charge
related to litigation settlement costs, which, if excluded would have resulted
in a net loss of $3.7 million. The $0.3 million decrease in net loss excluding
the non-cash and other charges was due primarily to the reductions in operating
costs, primarily in selling, general and administrative expense and research and
development offset in part by reduced margins. Net loss of $8.1 million for the
first quarter of fiscal 2003 resulted in a net loss per share of $0.39, a
decrease of $0.15 compared to the first quarter of fiscal 2002 net loss per
applicable common share of $0.54. Net loss applicable to common shareholders for
the first quarter of fiscal 2002 of $10.4 million included $25,609 attributable
to a premium on the Company's preferred stock previously outstanding.
SEGMENTS
In June 2002 we announced plans for fiscal 2003 to consolidate lens product
lines in Florida and reorganize internally into two segments; the Optical Lens
Group and the Laser Component Group.
OPTICAL LENS GROUP
The Optical Lens Group will manage the collimator and aspheric lens
products, which continues as the core capability for LightPath. These product
lines will be consolidated in the Orlando, Florida facility. We believe the
aspheric lens product line, in particular, has broad applicability to market
segments beyond telecom. We are aggressively pursuing new opportunities in the
application areas of medical devices, barcode scanners, optical data storage,
machine vision, sensors, and environmental monitoring. For the first quarter of
fiscal 2003, lens product sales decreased $0.85 million to approximately $1.4
million from $2.2 million for the comparable period last year.
The optical lens group incurred a segment operating loss of $1.0 million
for the first quarter of fiscal 2003 as compared to $2.4 million for the
comparable period last year due primarily to overhead reductions offset by
reduced margins.
LASER COMPONENT GROUP
Located in the Company's Walnut, California facility, the Laser Component
Group's emphasis is on optical packaging solutions, integrated platforms, and
providing a second site capability in response to our customers' requirements.
As our customers ask for more demanding optical performance we see a great
opportunity to provide the entire solution from laser to fiber. The Laser
Component Group will be investing a modest amount in capital expenditures and
research and development in support of optical generation and detection
applications, such as transmitters, transceivers and pumps. The Optical
Integration Group will allow LightPath to augment current passive optical
packages such as OASIS(TM) and Vectra(TM) collimator arrays with new innovative
passive optical modules, such as multiport and hybrid devices, to provide
effective optical management solutions for our customers. During the first
quarter of fiscal 2003, the Company reported approximately $256,000 of laser
component sales, compared with $1.2 million for the comparable period last year.
The decrease of approximately $1 million from the comparable period of the prior
year was due primarily to reduced sales of isolator products used by our largest
customer due to declining demand.
The laser component group incurred a segment operating loss of
approximately $1.0 million for the first quarter of fiscal 2003 as compared to
approximately $0.8 million for the comparable period last year. The increased
loss during the quarter was primarily due to reduced sales and margins.
13
LIGHTPATH TECHNOLOGIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
CRITICAL ACCOUNTING POLICIES
The preparation of the Consolidated Financial Statements in conformity with
generally accepted accounting principles requires the Company to select
appropriate company accounting policies, and to make judgments and estimates
affecting the application of those accounting policies. In applying the
Company's accounting policies, different business conditions or the use of
different assumptions may result in materially different amounts reported in the
Consolidated Financial Statements.
In response to the Securities and Exchange Commission's ("SEC") Release No.
33-8040, "Cautionary Advice Regarding Disclosure About Critical Accounting
Policies," the Company has identified the most critical accounting principles
upon which the Company's financial status depends. The critical principles were
determined by considering accounting policies that involve the most complex or
subjective decisions or assessments. The most critical accounting principles
identified relate to: (i) revenue recognition; (ii) inventory valuation; (iii)
long-lived assets; (iv) investment in LightChip and (v) intangible assets. These
critical accounting policies and the Company's other significant accounting
policies are disclosed in Note 1 to the Company's Consolidated Financial
Statements.
REVENUE RECOGNITION. The Company recognizes revenue upon shipment of the product
provided that persuasive evidence of a final agreement exists, title has
transferred, the selling price is fixed or determinable and collectibility is
reasonably assured.
INVENTORY VALUATION. The Company regularly assesses the valuation of inventories
and writes down those inventories that are obsolete or in excess of forecasted
usage to estimated net realizable value. Estimates of realizable value are based
upon the Company's analyses and assumptions including, but not limited to,
forecasted sales levels by product, expected product lifecycle, product
development plans and future demand requirements. If market conditions are less
favorable than the Company's forecast or actual demand from customers is lower
than the Company's estimates, the Company may be required to record additional
inventory write-downs. If demand is higher than expected, the Company may sell
inventories that have previously been written down.
LONG-LIVED ASSETS. The Company evaluates the carrying value of long-lived
assets, including property and equipment, whenever certain events or changes in
circumstances indicate that the carrying amount may not be recoverable. Such
events or circumstances include, but are not limited to, a prolonged industry
downturn, a significant decline in the Company's market value, or significant
reductions in projected future cash flows. If facts and circumstances warrant
such a review, under the current standard, a long-lived asset would be impaired
if future undiscounted cash flows, without consideration of interest, are
insufficient to recover the carrying amount of the long-lived asset. Once deemed
impaired, the long-lived asset is written down to its fair value which could be
considerably less than the carrying amount or future undiscounted cash flows.
The determination of future cash flows and, if required, fair value of a
long-lived asset is by its nature, a highly subjective judgment. Fair value is
generally determined by calculating the discounted future cash flows using a
discount rate based upon the Company's weighted average cost of capital.
Significant judgments and assumptions are required in the forecast of future
operating results used in the preparation of the estimated future cash flows,
including long-term forecasts of the amounts and timing of overall market growth
and the Company's percentage of that market, groupings of assets, discount rate
and terminal growth rates. Changes in these estimates could have a material
adverse effect on the assessment of property and equipment, thereby requiring
the Company to write down the assets.
INTANGIBLE ASSETS. The Company generally obtains intangible assets in connection
with a purchase (for example, in a business combination). The assignment of
value to individual intangible assets generally requires the use of a
specialist, such as an appraiser. The assumptions used in the appraisal process
are forward-looking, and thus subject to significant judgment. Because
individual intangible assets may be: (i) expensed immediately upon acquisition
(for example, purchased in-process research and development assets); or (ii)
amortized over their estimated useful life (for example, acquired technology or
goodwill), their assigned values could have a material affect on current and
14
LIGHTPATH TECHNOLOGIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
future period results of operations. Further, intangible assets are subject to
the same judgments when evaluating for impairment as other long-lived assets.
LIQUIDITY AND CAPITAL RESOURCES
We financed our initial operations through private placements of equity and
debt until February 1996 when our initial public offering of units of common
stock and Class A and B Warrants generated net proceeds of approximately $7.2
million. From June 1997 through November 1999, we completed four preferred stock
and one convertible debt private placements which generated total net proceeds
of approximately $12 million. During fiscal 2000 and 2001, we received net
proceeds of approximately $67.6 million from the exercise of stock options and
warrants issued at the initial public offering or in connection with previous
private placements. We expect to continue to incur net losses until such time,
if ever, as we obtain market acceptance for our products at sale prices and
volumes which provide adequate gross revenues to offset our operating costs.
The optical components markets have experienced a severe downturn for the
last eighteen months, resulting in a significant decline in the demand for our
products as well as our competitors. We believe the Company has the financial
resources, and will take the necessary actions, to manage through this downturn.
However, a prolonged downturn in the optical components markets or the
unsuccessful move to sell our optical components into non-telecom markets,
failure by the Company to anticipate or respond to product technological
changes, changes by our customers or suppliers, or any significant delays in the
introduction of new products, could have a material adverse effect on the
Company's financial condition, operating results or cash flows.
Cash used in operations for the quarter ended September 30, 2002 was
approximately $4.1 million, an increase of approximately $2.1 million from the
quarter ended June 30, 2002. The increase was principally due to reduced
revenues combined with the payment of $1.2 million related to the settlement of
certain litigation and $0.6 million of cash used in connection with the
consolidation and relocation efforts during the quarter. We will continue to
reduce our cash expenditures through improved manufacturing efficiencies,
suspension of selected development projects and consolidation of equipment and
facilities. During the first quarter of fiscal 2003, we initiated the
consolidation of our lens product lines in Florida, ceased manufacturing
operations in our New Mexico facilities and reorganized internally, all of which
we believe will further decrease our cash requirements for the remainder of
fiscal 2003. While the Company has no firm commitments for any future financing
at this time, with a cash balance of approximately $9 million at September 30,
2002, we will take the necessary actions to manage through this downturn. We
believe that our financial resources will be sufficient to finance the Company's
operations and capital expenditures, excluding acquisitions, for the next twelve
months.
For the three months ended September 30, 2002, cash used in operations
excluding cash requirements related to changes in working capital, was
approximately $3.1 million, a decrease of approximately $1.0 million from the
same period of fiscal 2002. During the first quarter of fiscal 2003, working
capital needs used approximately $1 million in cash, primarily due to the
payment of the cash settlement in the Delaware action of $1.2 million. During
the first quarter of fiscal 2002 changes in working capital resulted in an
increase of approximately $0.8 million in cash due primarily to growth in
accounts payable and accrued expenses. During the three months ended September
30, 2002, there were no significant expenditures for capital equipment and
patent protection, and proceeds from the sale of assets totaled approximately
$116,000.
15
LIGHTPATH TECHNOLOGIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The table below presents the Company's contractual obligations and
commercial commitments as of September 30, 2002:
CONTRACTUAL OBLIGATIONS
Stated
(dollars in 000's) Total Maturity Comments
------- -------- --------
Note payable $ 78 Jul. 1999 Negotiating settlement with third party
Operating leases $ 3,700 2003-2008 Real estate leases with monthly payments
Employee severance and other exit costs $ 642 Apr. 2005 Severance costs to be paid by 12/31/02.
Lease costs will be substantially paid by 6/30/03
Legal settlement payments on Delaware action $ 300 Not applicable Settlement costs to be paid by June 30, 2003
The Company does not engage in any activities involving special purpose
entities or off-balance sheet financing.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 2002, the FASB issued Statement No. 146, ACCOUNTING FOR COSTS
ASSOCIATED WITH EXIT OR DISPOSAL ACTIVITIES which the Company will be required
to adopt for any future costs associated with an exit or disposal activity. The
Company does not believe the adoption of SFAS 146 will have a material effect on
our results of operations or financial position.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company invests liquid cash primarily in money market accounts,
certificates of deposit or in overnight repurchase agreements. Due to the
short-term nature of these investments, we believe that the market risk related
to these investments is minimal.
CONTROLS AND PROCEDURES
Within the 90-day period prior to the filing of this report, an evaluation
was carried out under the supervision and with the participation of the
Company's management, including the Chief Executive Officer ("CEO") and Chief
Financial Officer ("CFO"), of the effectiveness of our disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14(c) and 15-d-14(c)). Based on
that evaluation, the CEO and CFO have concluded that the Company's disclosure
controls and procedures are effective to ensure that information required to be
disclosed by the Company in reports that it files or submits under the
Securities Exchange Act of 1934 is recorded, processed, summarized and reported
within the time periods specified in Securities and Exchange Commission rules
and forms.
Subsequent to the date of their evaluation, there were no significant
changes in the Company's internal controls or in other factors that could
significantly affect the disclosure controls, including any corrective actions
with regard to significant deficiencies and material weaknesses.
16
LIGHTPATH TECHNOLOGIES, INC.
PART II
ITEM 1. LEGAL PROCEEDINGS
In December 2001, the Company agreed to proceed with the settlement of a
May 2, 2000 class action lawsuit which the Company had commenced in the Chancery
Court of Delaware. The settlement includes a provision that each former E
shareholder has the right to request exclusion from the settlement class. By
June 30, 2002, the final settlement arrangements had been mailed to former
holders of Class E Common Stock pursuant to which they would receive a
settlement payment of $0.40 for each share. Approximately 3.6 million shares or
88% of Class E Common Stock will participate in the settlement whereas holders
of approximately 0.5 million shares or 12% opted out of the settlement. At June
30, 2002, the Company accrued an estimated settlement charge of $1.5 million of
which approximately $1.27 million was distributed by September 30, 2002.
On or about June 9, 2000, a small group of holders of Class E Common Stock
(the "Texas Plaintiffs") commenced an action in a state court in Texas (the
"Texas Action"). The Texas Plaintiffs allege that the actions of the Company,
and certain named individuals, leading up to and surrounding the Company's 1995
proxy statement constitute fraud, negligent misrepresentation, fraudulent
inducement, breach of fiduciary duty and civil conspiracy. In general, the Texas
Plaintiffs allege misrepresentations and omissions in connection with a request
from the Company that its shareholders consent to a recapitalization, resulting
in a 5.5 to 1 reverse stock split and the issuance of certain Class E Common
Stock. The Texas Plaintiffs further allege that, as a result of the defendants'
actions, they were induced to consent to the Company's recapitalization. The
Company believes the allegations underlying the Texas Action have no basis in
fact and that this lawsuit is without merit. The Company has retained counsel
and is vigorously defending against these claims. During the first quarter of
fiscal 2003, the Texas court granted a motion for Summary Judgment filed by the
Company. The plaintiffs sought reconsideration of the ruling, however, on
October 24, 2002 the Texas court denied their motion. The Company is in the
process of seeking to have the two remaining named individuals dismissed from
the action.
During the three months ended September 30, 2002, the Company incurred and
expensed legal fees associated with these claims of approximately $155,000,
however, an insurance claim for the aggregate amount incurred in connection with
the Texas Action in excess of applicable deductibles has been filed by the
Company. During the first quarter of fiscal 2002, one of the insurance companies
responsible for the claim, which had previously filed for reorganization, was
declared insolvent. The Company is working with regulatory agencies to resolve
and collect the monies due under this policy, although the Company currently
considers any potential recovery under this policy as speculative. Accordingly,
no claim for recovery is recorded as of September 30, 2002. On March 6, 2002,
the Company commenced an action in a state court in New Mexico for various
claims surrounding the now insolvent insurance carrier and the Company's former
insurance broker.
LightPath is subject to various other claims and lawsuits in the ordinary
course of its business, none of which are currently considered material to the
Company's financial condition and results of operations. Except as set forth
above, there have been no material developments in any legal actions reported in
the Company's Form 10-K for the year ended June 30, 2002.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
17
LIGHTPATH TECHNOLOGIES, INC.
ITEM 5. OTHER INFORMATION
Currently the Company's common stock trades on the Nasdaq National Market.
During the first quarter of fiscal 2003, the Company's common stock traded at a
price per share less than $1 for a period of 30 consecutive trading days which
is not consistent with the Nasdaq minimum trading price requirement. As of
October 22, 2003, the 90-day period during which the Company's stock price must
have traded above $1 for at least 10 trading days to cure this default expired.
As of October 30, 2003 the Company has requested a hearing with Nasdaq to
determine the appropriate action to take.
As part of the Company's facility consolidation efforts, some members of the
management group changed during the quarter as follows: Dennis Yost, Senior Vice
President, Optical Lens Group elected not to move to Florida and is no longer
with the Company; Mark Fitch, Senior Vice President has assumed all the
operational duties for the Optical Lens Group; and Donna Bogue, Chief Financial
Officer started the transition process of her job responsibilities to Todd
Childress, Vice President Finance, which will continue during the second quarter
of fiscal 2003.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
None
b) The following reports on Form 8-K were filed under the Securities
Exchange Act of 1934 during the quarter ended September 30, 2002:
1. Current report on Form 8-K dated July 17, 2002, announced the
fourth quarter and fiscal 2002 conference call would be held on
August 1, 2002.
2. Current report on Form 8-K dated August 2, 2002 included the
press release of the fourth quarter and fiscal 2002 financial
results made on August 1, 2002.
18
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
LIGHTPATH TECHNOLOGIES, INC.
By: /s/ Donna Bogue October 31, 2002
--------------------------------
DATE
CHIEF FINANCIAL OFFICER
19
Certification of the Principal Executive Officer
Pursuant to 15 U.S.C. 78m(a) or 78o(d)
(Section 302 of the Sarbanes-Oxley Act of 2002)
I, Ken Brizel, the President and Chief Executive Officer of LightPath
Technologies, Inc. (the "Company"), certify that:
(1) I have reviewed this quarterly report on Form 10-Q of the Company;
(2) Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
(3) Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the Company as of, and for, the periods presented in
this quarterly report;
(4) The Company's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the Company and
we have:
(a) designed such disclosure controls and procedures to ensure that
material information relating to the Company, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
(b) evaluated the effectiveness of the Company's disclosure controls
and procedures as of a date within 90 days prior to the filing
date of this quarterly report (the "Evaluation Date"); and
(c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
(5) The Company's other certifying officers and I have disclosed, based on
our most recent evaluation, to the Company's auditors and the audit
committee of Company's board of directors (or persons performing the
equivalent function):
(a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the Company's
ability to record, process, summarize and report financial data
and have identified for the Company's auditors any material
weaknesses in internal controls; and
(b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the Company's
internal controls; and
(6) The Company's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
/s/ Ken Brizel
- -------------------------------------
Ken Brizel
LightPath Technologies, Inc.
President and Chief Executive Officer
October 31, 2002
20
Certification of the Principal Financial Officer
Pursuant to 15 U.S.C. 78m(a) or 78o(d)
(Section 302 of the Sarbanes-Oxley Act of 2002)
I, Donna Bogue, the Chief Financial Officer of LightPath Technologies, Inc. (the
"Company"), certify that:
(1) I have reviewed this quarterly report on Form 10-Q of the Company;
(2) Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
(3) Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the Company as of, and for, the periods presented in
this quarterly report;
(4) The Company's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the Company and
we have:
(a) designed such disclosure controls and procedures to ensure that
material information relating to the Company, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
(b) evaluated the effectiveness of the Company's disclosure controls
and procedures as of a date within 90 days prior to the filing
date of this quarterly report (the "Evaluation Date"); and
(c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
(5) The Company's other certifying officers and I have disclosed, based on
our most recent evaluation, to the Company's auditors and the audit
committee of Company's board of directors (or persons performing the
equivalent function):
(a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the Company's
ability to record, process, summarize and report financial data
and have identified for the Company's auditors any material
weaknesses in internal controls; and
(b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the Company's
internal controls; and
(6) The Company's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
/s/ Donna Bogue
- -------------------------------------
Donna Bogue
LightPath Technologies, Inc.
Chief Financial Officer
October 31, 2002
21
Certification of the Principal Executive Officer
Pursuant to 18 U.S.C. 1350
(Section 906 of the Sarbanes-Oxley Act of 2002)
I, Ken Brizel, the President and Chief Executive Officer of LightPath
Technologies, Inc. (the "Company") certify that to the best of my knowledge,
based upon a review of the Quarterly Report on Form 10-Q for the period ended
September 30, 2002 of the Company (the "Report"):
(1) The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934, as amended; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations
of the Company.
/s/ Ken Brizel
- -------------------------------------
Ken Brizel
LightPath Technologies, Inc.
President and Chief Executive Officer
October 31, 2002
I, Donna Bogue, the Chief Financial Officer of LightPath Technologies, Inc. (the
"Company") certify that to the best of my knowledge, based upon a review of the
Quarterly Report on Form 10-Q for the period ended September 30, 2002 of the
Company (the "Report"):
(1) The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934, as amended; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations
of the Company.
/s/ Donna Bogue
- -------------------------------------
Donna Bogue
LightPath Technologies, Inc.
Chief Financial Officer
October 31, 2002
22