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8-K - CURRENT REPORT - LIGHTPATH TECHNOLOGIES INC | lpth_8k.htm |
Exhibit 99.1
For
Immediate Release
LightPath Technologies Reports 119% Increase in Operating Income
for Fiscal 2017 Second Quarter Financial
Results
Revenues
Increase 39%;
Efficiency programs continue to yield improvements in operating
income and net income;
ISP Optics Acquisition Integration
and Synergistic Growth Strategies on
Track
ORLANDO,
FL – February 14, 2017 – LightPath Technologies, Inc.
(NASDAQ: LPTH) (“LightPath,” the “Company,”
or “we”), a leading vertically integrated global manufacturer,
distributor and
integrator of
proprietary optical and
infrared components and high-level assemblies, today
announced financial results for the fiscal 2017 second quarter
ended December 31, 2016. As a result of the acquisition of ISP
Optics Corporation (“ISP”) on December 21, 2016, the
Company’s financial results include 10 days of operations for
ISP.
Fiscal
2017 Second Quarter Highlights and Recent
Developments:
●
Acquired ISP for a
purchase price of approximately $18 million, subject to
post-closing adjustments, which was funded through net proceeds
from the issuance of 8 million shares of Class A common stock at a
public offering price of $1.21 per share, an acquisition term loan
of $5 million and a seller note of $6 million.
●
Revenue for the
second quarter of fiscal 2017 increased 39% to $5.9 million, as
compared to $4.2 million for the second quarter of fiscal 2016.
Revenue for LightPath, excluding ISP revenue, increased 26%,
compared to the second quarter of fiscal 2016.
●
Transaction
expenses of $125,000 were incurred in the second quarter of fiscal
2017 in connection with the acquisition of ISP.
●
Total costs and
expenses as a percentage of revenue continues to decline, improving
to 33% in the second quarter of fiscal 2017, as compared to 41% in
the second quarter last year, while research and development
expenses increased to 5% of revenue compared to 4% in the same
period of last year.
●
Operating income
for the second quarter of fiscal 2017 was $1.3 million, an increase
of 119% as compared to $609,000 for the second quarter of fiscal
2016.
●
Net income for the
second quarter of fiscal 2017 was $1.1 million, as compared to a
loss of ($536,000) for the second quarter of fiscal
2016.
●
EBITDA* for the
second quarter of fiscal 2017 was approximately $1.6 million, as
compared to a loss of approximately ($316,000) in the second
quarter of fiscal 2016.
●
Adjusted EBITDA*,
which excludes the non-cash income or expense related to the change
in fair value of the Company’s warrant liability, was $1.4
million in the second quarter of fiscal 2017, an increase of 85% as
compared with $739,000 in the second quarter of fiscal
2016.
●
12-month backlog,
which includes ISP, was approximately $12.4 million at December 31,
2016, as compared to approximately $5.8 million at September 30,
2016 and $6.6 million at June 30, 2016.
1
*This
press release includes references to earnings before interest,
taxes, depreciation, and amortization (“EBITDA”),
adjusted EBITDA, adjusted net income (loss), and gross margin, all
of which are non-GAAP financial measures. A “non-GAAP
financial measure” is generally defined as a numerical
measure of a company’s historical or future performance that
excludes or includes amounts, or is subject to adjustments, so as
to be different from the most directly comparable measure
calculated and presented in accordance with GAAP. Our management
believes that certain non-GAAP financial measures, when considered
together with the GAAP financial measures, provide information that
is useful to investors in understanding period-over-period
operating results separate and apart from items that may, or could,
have a disproportionately positive or negative impact on results in
any particular period. A reconciliation of GAAP to non-GAAP results
is provided in this press release in the accompanying tables. A
more complete explanation of these measures is also included below
under the heading “Use of Non-GAAP Financial
Measures”.
Management Comments
Jim
Gaynor, President and Chief Executive Officer of LightPath,
commented, “On December 21, 2016 we closed on the acquisition
of ISP, setting in motion a transformative event for LightPath.
With the addition of ISP, we have positioned the Company for
accelerated long-term growth in revenues and profitability with
comprehensive capabilities at a time when our target markets are
increasingly demanding infrared and optical components. Our
financial results for the second quarter of fiscal 2017 only
reflected the results of ISP for the ten-day period following the
effective date of the acquisition;therefore we have not seen the
full impact of its contributions. However, with only a ten-day
impact from ISP, we reported significant growth in numerous
operating performance metrics, including revenue and EBITDA. We
achieved increases in quarterly revenue, operating income, net
income, adjusted EBITDA, and 12-month backlog and cash balance. At
the same time, we incurred acquisition expenses that partially
diminished the impressive financial performance delivered in the
period. Between our base business lines that have been progressing
at a rapid pace, the acquisition of ISP and the cross-selling
opportunities anticipated as a result of the ISP acquisition, we
believe LightPath is poised for an exciting
future.”
“LightPath’s
base business was very strong for the second quarter of fiscal
2017, with continued strength from telecom, industrial tools and
molded infrared business lines. Revenues increased 39% to the
highest level of quarterly revenue in the Company’s recent
history – this mark would have been achieved without the
contribution from the ISP acquisition. The revenue growth reflects
our ability to diversify our product lines and end markets, which
we believe is one of our competitive strengths. The ISP acquisition
has heightened our prominence in the market and the successful
execution of our global marketing initiatives has led to our
backlog at the end of the second quarter reaching nearly $12.4
million, another high for the Company. In addition, operating
income, net income and adjusted EBITDA all significantly increased
from the prior year period. We see no
abatement to the trends experienced during the past three years of
increased volume production and revenues on almost every
year-over-year period as well as sequential quarter
comparison. It is a testament to the excellence of our team
that we were able to deliver this performance while focusing on
completing the ISP acquisition. The addition of ISP strengthens our position and will further add
to our growth and provide the basis for cross selling and other
synergistic benefits.”
“Going forward, we anticipate ISP to materially contribute to
our financial results. We expect significantly higher revenues, net
income and cash flow on a consolidated basis. We also anticipate
our gross margins to temporarily decline a few percentage points
from the current level, until we are able to successfully integrate
our high volume manufacturing practices with ISP’s business.
Meanwhile, with the operational improvements in our business and
access to a larger market with anticipated growth in revenues, we
are excited by the prospects for increased operating income, net
income and cash flow margins during the remainder of fiscal 2017
and longer term. In the immediate future, we expect that the
Company’s adjusted EBITDA will be sufficient to cover the
costs associated with the ISP acquisition, including normalized
amortization of principal and interest payments on the acquisition
term loan and sellers note, while simultaneously allowing for
continued investment in product development and capital
expenditures and increased working capital to support our growth
strategies, all of which does not take into account the anticipated
improvements in financial performance as a result of the
acquisition of ISP.”
2
“LightPath’s
long-term growth drivers include increasing demand in
telecommunications, growth in industrial tools, government and
military spending, and the commercialization of infrared products.
From fully or partially autonomous cars to unmanned aerial systems
to LIDAR (light imaging, detection and ranging) applications, our
optical and infrared technologies are beneficiaries of some of the
fastest growing trends impacting the industrial and consumer
economies. These elements are critical catalysts for our business
as we successfully execute our strategy to diversify our product
lines and end markets.”
“We
remain committed to investing in our products and processes that
enable us to deliver high volumes of industry-leading quality
lenses at comparatively low cost. Furthermore, ISP significantly
accelerates our infrared capabilities. In turn, with a legacy of
improving manufacturing yields, we are able to enhance our product
portfolio while providing better value for our customers. LightPath
has a proven track record of combining its proprietary technology
and manufacturing efficiencies to open up new end market
applications that stimulate volume demand increases. However large
our addressable market is today as a highly diversified industrial
technology component supplier, we believe we have become a far more
formidable player that will benefit from the development of new
demand creation to drive organic growth with the ability to
strengthen our platform through opportunistic and accretive
acquisitions.”
Financial
Results for Three Months Ended December 31, 2016 Compared to the
Three Months Ended December 31, 2015
Revenue
for the second quarter of fiscal 2017 was approximately $5.9
million, an increase of approximately $1.6 million, or 39%, as
compared to the same period of the prior fiscal year. The increase from the second quarter of the
prior fiscal year is attributable to an 151% increase in revenues
generated by sales of high volume precision molded optics
(“HVPMO”) lenses, a 161% increase in revenues generated
by infrared lenses, and a 32% increase in revenues generated by
sales of low volume precision molded optics (“LVPMO”)
lenses, partially offset by a 48% decrease in revenues from
specialty products and a 66% decrease in revenues from
non-recurring engineering (“NRE”) projects. The
decrease in revenues generated by the specialty products group was
due to the absence of approximately $358,000 of revenues generated
in the second quarter of fiscal 2016 due to fiber collimator
assemblies sold to a customer pursuant to a license agreement,
which was not generated this period.
Gross
margin in the second quarter of fiscal 2017 was $3.3 million, an
increase of 40% as compared to $2.4 million in the prior year
period. Gross margin as a percentage of revenue remained at 56%,
compared to the second quarter of fiscal 2016. Total cost of sales
was approximately $2.6 million for the second quarter of fiscal
2017, an increase of approximately $697,000 as compared to the same
period of the prior fiscal year. The 37% increase in cost of sales
favorably compares to the 39% increase in revenue to deliver the
improved gross profit.
During the second quarter of fiscal 2017, total costs and expenses
were approximately $2.0 million, an increase of approximately
$212,000 compared to the same period of the prior fiscal year. The
increase was primarily due to a $125,000 increase in expenses
related to the acquisition of ISP and a $200,000 increase in wages,
partially offset by a reduction of $113,000 in other expenses
resulting from the Company’s continued emphasis on expense
management. Consistent with its growth strategy and included in
total costs and expenses, the Company increased its research and
development expenses by 60% to $268,000 in the second quarter of
fiscal 2017, compared to $168,000 in the previous
year.
3
In the
second quarter of fiscal 2017, the Company recognized non-cash
income of approximately $247,000 related to the change in the fair
value of warrants issued in connection with the June 2012 private
placement. In the second quarter of fiscal 2016, the Company
recognized non-cash expense of approximately $1.1 million related
to the change in the fair value of these warrants. The applicable
accounting rules for the warrant liability requires the recognition
of either non-cash expense or non-cash income, which has a
significant correlation to the change in the market value of the
Company’s Class A common stock for the period being reported
and the assumptions on when the warrants will be exercised. The
likelihood of exercise increases as the expiration date of the
warrant approaches. The warrants have a five-year life and will
expire in December 2017. The fair value will be re-measured
each reporting period until the warrants are exercised or
expire.
Income
tax expense was approximately $241,000 in the second quarter of
fiscal 2017, an increase of $239,000 compared to the second quarter
of fiscal 2016. Although the Company has net operating loss
(“NOL”) carry forward benefits of $86 million against
net income as reported on a consolidated basis in the United
States, the NOL does not apply to taxable income from foreign
subsidiaries. The increase in income tax expense in fiscal 2017 was
primarily attributable to income taxes associated with
LightPath’s Chinese subsidiaries and to a much lesser extent,
income taxes attributable to ISP’s Latvian subsidiary. The
Company extinguished all NOL carryforwards in China relating to its
operations in that country during fiscal 2016. Accordingly, the
Company now accrues income taxes in China during fiscal 2016. The
Company’s Chinese subsidiaries are governed by the Income Tax
Law of the People’s Republic of China, which is applicable to
privately run and foreign invested enterprises, and which generally
subjects such enterprises to a statutory rate of 25% on income
reported in the statutory financial statements after appropriate
tax adjustments. ISP’s Latvian subsidiary is governed by the
Income Tax Law of Latvia, which is applicable to privately run and
foreign invested enterprises, and which generally subjects such
enterprises to a statutory rate of 15% on income reported in the
statutory financial statements after appropriate tax
adjustments.
Net
income for the second quarter of fiscal 2017 was $1.1 million, or
$0.07 per basic and $0.06 per diluted common share, which includes
non-cash income of approximately $247,000, or $0.02 per basic and
diluted common share, for the change in the fair value of the
warrant liability, compared with net loss of approximately
($536,000), or ($0.04) per basic and diluted common share, which
includes non-cash expense of approximately $1.1 million, or $0.07
per basic and diluted common share, for the change in the fair
value of the warrant liability for the same period in fiscal 2016.
Net income was affected by the increase in selling, general and
administrative (“SG&A”) and new product development
costs in the second quarter of fiscal 2017 as compared to the prior
year period. Approximately 55% of the increase in SG&A was
related to the acquisition of ISP.
Adjusted
net income, which is adjusted for the effect of the non-cash change
in the fair value of the warrant liability, increased by nearly 64%
to approximately $851,000 in the second quarter of fiscal 2017, as
compared to $520,000 in the same period of fiscal
2016.
The
Company had foreign currency exchange expense in the second quarter
of fiscal 2017 due to changes in the value of the Chinese
Yuan and Euro in the
amount of approximately $237,000, which had a $0.01 impact on basic
and diluted earnings per share. This compares to foreign currency
exchange income of $26,000, with no impact on income per share in
the same period of the prior fiscal year.
Weighted-average
basic and diluted common shares outstanding increased to 16,541,205
and 17,902,712, respectively, in the second quarter of fiscal 2017
from 15,250,146 and 15,250,146, respectively, in the second quarter
of fiscal 2016. The increase was primarily due to shares of Class A
common stock issued in connection with the acquisition of ISP,
shares of Class A common stock issued under the 2014 Employee Stock
Purchase Plan and shares of Class A common stock issued as a result
of the exercises of stock options and warrants.
EBITDA
for the second quarter of fiscal 2017 was approximately $1.6
million compared to a loss of approximately ($316,000) in the
second quarter of fiscal 2016. The difference in EBITDA between
periods was principally caused by increased revenues and operating
income, partially offset by increased SG&A of which
approximately $125,000 in costs was associated with the acquisition
of ISP, and changes relating to non-cash income in the fair value
of the June 2012 warrant liability. Adjusted EBITDA, which
eliminates the non-cash income or expense related to the change in
fair value of the June 2012 warrant liability, was approximately
$1.4 million in the second quarter of fiscal 2017, an increase of
85% as compared with approximately $739,000 for the same period of
the prior fiscal year.
4
Financial
Results for Six Months Ended December 31, 2016 Compared to the Six
Months Ended December 31, 2015
Revenue
for the first half of fiscal 2017 was approximately $10.9 million,
an increase of approximately $2.4 million, or 29%, as compared to
the same period of the prior fiscal year. The increase from the first half of the
prior fiscal year is attributable to an 115% increase in revenues
generated by sales of HVPMO lenses, a 98% increase in revenues
generated by infrared lenses, and a 24% increase in revenues
generated by sales of LVPMO lenses, partially offset by a 41%
decrease in revenues from specialty products and a 40% decrease in
revenues from NRE projects. The decrease in revenues generated by
the specialty products group was due to the absence of
approximately $733,000 of revenues generated in the first half of
fiscal 2016 due to fiber collimator assemblies sold to a customer
pursuant to a license agreement, which was not generated this
period.
Gross
margin as a percentage of revenue in the first half of fiscal 2017
was 56%, compared to 55% in the first half of fiscal 2016. Gross
profit in the first half of fiscal 2017 was $6.1 million, compared
to $4.6 million in the prior year period, an increase of 33%. Total
cost of sales was approximately $4.7 million for the first half of
fiscal 2017, an increase of approximately $925,000 compared to the
same period of the prior fiscal year. The 24% increase in cost of
sales favorably compares to the 29% increase in revenue to deliver
the improved gross margin.
During the first half of fiscal 2017, total costs and expenses were
approximately $4.4 million, an increase of approximately $1.1
million compared to the same period of the prior fiscal year. The
increase was primarily due to: (i) a $609,000 increase in expenses
related to the acquisition of ISP, (ii) a $272,000 increase in
wages, iii) a $96,000 increase in commissions due to higher sales,
and iv) a $55,000 increase in materials for research and
development projects.
In the
first half of fiscal 2017, the Company recognized non-cash income
of approximately $290,000 related to the change in the fair value
of warrants issued in connection with the June 2012 private
placement. In the first half of fiscal 2016, the Company recognized
non-cash expense of approximately $687,000 related to the change in
the fair value of these warrants. The applicable accounting rules
for the warrant liability requires the recognition of either
non-cash expense or non-cash income, which has a significant
correlation to the change in the market value of our Class A common
stock for the period being reported and the assumptions on when the
warrants will be exercised. The likelihood of exercise increases as
the expiration date of the warrant approaches. The warrants have a
five-year life and will expire in December 2017. The fair value will be re-measured
each reporting period until the warrants are exercised or
expire.
Income
tax expense was approximately $506,000 in the first half of fiscal
2017, an increase of $502,000 from the first half of fiscal 2016.
Although the Company has NOL carry forward benefits of $86 million
against net income as reported on a consolidated basis in the
United States, the NOLs do not apply to taxable income from foreign
subsidiaries. The increase in income tax expense in fiscal 2017 was
primarily attributable to income taxes associated with
LightPath’s Chinese subsidiaries and, to a lesser extent
ISP’s Latvian subsidiary operations. The Company extinguished
all NOL carryforwards in China during fiscal 2016. Accordingly,
LightPath now accrues income taxes in China related to such
operations. The Company’s Chinese subsidiaries are governed
by the Income Tax Law of the People’s Republic of China,
which is applicable to privately run and foreign invested
enterprises, and which generally subjects such enterprises to a
statutory rate of 25% on income reported in the statutory financial
statements after appropriate tax adjustments. ISP’s Latvian
subsidiary is governed by the Income Tax Law of Latvia, which is
applicable to privately run and foreign invested enterprises, and
which generally subjects such enterprises to a statutory rate of
15% on income reported in the statutory financial statements after
appropriate tax adjustments.
5
Net
income for the first half of fiscal 2017 was $1.2 million, or $0.08
per basic and $0.07 per diluted common share, which includes
non-cash income of approximately $290,000, or $0.02 per basic and
diluted common share, for the change in the fair value of the
warrant liability, compared with net income of approximately
$307,000, or $0.06 per basic and $0.05 per diluted common share,
which includes non-cash expense of approximately $687,000, or $0.01
per basic and diluted common share, for the change in the fair
value of the warrant liability for the same period in fiscal
2016.
Net
income was affected by the increase in operating expenses in the
first half of fiscal 2017 as compared to the prior year period,
including higher SG&A and product development costs, and
approximately $609,000 as a result of expenses incurred related to
the acquisition of ISP.
Adjusted
net income, which is adjusted for the effect of the non-cash change
in the fair value of the warrant liability, and other non-cash
expenses, was approximately $948,000 in the first half of fiscal
2017, as compared to $994,000 in the same period of fiscal
2016.
The
Company had foreign currency exchange expense in the first half of
fiscal 2017 due to changes in the value of the Chinese
Yuan and Euro in the
amount of approximately $272,000, which had a $0.02 impact on basic
and diluted earnings per share. This compares to foreign currency
exchange expense of $176,000, which had a $0.01 impact on income
per share in the same period of the prior fiscal year.
Weighted-average
basic and diluted common shares outstanding increased to 16,079,030
and 17,523,743, respectively, in the first half of fiscal 2017 from
15,244,747 and 16,594,759, respectively, in the first half of
fiscal 2016. The increase was primarily due to shares of Class A
common stock issued in connection with the acquisition of ISP,
shares of Class A common stock issued under the 2014 Employee Stock
Purchase Plan and shares of Class A common stock issued as a result
of exercises of stock options and warrants.
EBITDA
for the first half of fiscal 2017 was approximately $2.3 million
compared to approximately $723,000 in the first half of fiscal
2016. The difference in EBITDA between periods was principally
caused by increased revenues and operating income, the increase in
SG&A costs which included approximately $609,000 as a result of
expenses incurred related to the acquisition of ISP, and changes
relating to non-cash income in the fair value of the June 2012
warrant liability. Adjusted EBITDA, which eliminates the non-cash
income or expense related to the change in fair value of the June
2012 warrant liability, was approximately $2.0 million in the first
half of fiscal 2017 as compared with approximately $1.4 million for
the same period of the prior fiscal year.
Cash
and cash equivalents totaled approximately $5.7 million as of
December 31, 2016, a 95% increase from June 30, 2016. Cash flow
provided by operations was approximately $1.1 million for the first
six months of fiscal 2017, compared with $1.0 million in the prior
year period. During the first half of fiscal 2017, the Company
expended approximately $873,000 for capital equipment while growing
its cash balance, as compared to $596,000 in the same period last
year.
The
current ratio as of December 31, 2016 was 3.3 to 1, compared to 3.5
to 1 as of June 30, 2016. Total stockholders’ equity as of
December 31, 2016 was approximately $21.8 million, a 99% increase
compared to approximately $10.9 million as of June 30, 2016,
reflecting the Class A common stock public offering in December
2016 and accumulated net income.
6
As of
December 31, 2016, the Company’s 12-month backlog was $12.4
million, compared to $6.6 million as of June 30, 2016, an increase
of approximately 93%. This backlog increased $7.5 million due to
the acquisition of ISP Optics.
*Use
of Non-GAAP Financial Measures
To
provide investors with additional information regarding our
financial results, this press release includes references to
EBITDA, adjusted EBITDA, adjusted net income (loss), and gross
margin, all of which are non-GAAP financial measures. For a
reconciliation of these non-GAAP financial measures to the most
directly comparable financial measures calculated in accordance
with GAAP, see the tables provided in this press
release.
A
“non-GAAP financial measure” is generally defined as a
numerical measure of a company’s historical or future
performance that excludes or includes amounts, or is subject to
adjustments, so as to be different from the most directly
comparable measure calculated and presented in accordance with
GAAP. LightPath’s management believes that these non-GAAP
financial measures, when considered together with the GAAP
financial measures, provide information that is useful to investors
in understanding period-over-period operating results separate and
apart from items that may, or could, have a disproportionately
positive or negative impact on results in any particular period.
Management also believes that these non-GAAP financial measures
enhance the ability of investors to analyze underlying business
operations and understand performance. In addition, management may
utilize these non-GAAP financial measures as guides in forecasting,
budgeting, and planning. Non-GAAP financial measures should be
considered in addition to, and not as a substitute for, or superior
to, financial measures presented in accordance with
GAAP.
The
Company calculates EBITDA by adjusting net income (loss) to exclude
net interest expense, income tax expense or benefit, depreciation,
and amortization. Similarly, the Company calculates adjusted EBITDA
by adjusting net income (loss) to exclude net interest expense,
income tax expense or benefit depreciation, amortization, and the
change in the fair value of the warrants issued in connection with
the private placement in June 2012.
The
fair value of the warrants issued in connection with the private
placement in 2012 is re-measured each reporting period until the
warrants are exercised or expire. Each reporting period, the change
in the fair value of these warrants is either recognized as
non-cash expense or non-cash income. The change in the fair value
of the warrants has a significant correlation to the change in the
market value of the Company’s Class A common stock for the
period being reported and is not impacted by actual operations
during such period. Management believes that by excluding the
change in the fair value of these warrants enhances the ability of
investors to analyze and better understand the underlying business
operations and performance.
The
Company calculates adjusted net income by adjusting net income
(loss) to exclude the change in the fair value of the warrants
issued in connection with the private placement in June
2012.
LightPath
calculates gross margin by deducting the cost of sales from
operating revenue. Cost of sales includes manufacturing direct and
indirect labor, materials, services, fixed costs for rent,
utilities and depreciation, and variable overhead. Gross margin
should not be considered an alternative to operating income or net
income, which is determined in accordance with GAAP. The Company
believes that gross margin, although a non-GAAP financial measure,
is useful and meaningful to investors as a basis for making
investment decisions. It provides investors with information that
demonstrates cost structure and provides funds for total costs and
expenses. The Company uses gross margin in measuring the
performance of its business and has historically analyzed and
reported gross margin information publicly. Other companies may
calculate gross margin in a different manner.
7
Investor
Conference Call and Webcast Details:
LightPath will host
an audio conference call and webcast on Monday, February 14 at 4:30
p.m. ET to discuss its financial and operational performance for
the fiscal 2017 second quarter ended December 31,
2016.
Date:
Tuesday, February 14, 2017
Time:
4:30 PM (ET)
Dial-in
Number: 1-877-317-2514
International
Dial-in Number: 1-412-317-2514
Webcast: http://services.choruscall.com/links/lpth170214.html
Participants should
dial-in or log-on approximately 10 minutes prior to the start of
the event. A replay of the call will be available approximately one
hour after completion through February 28, 2017. To listen to the
replay, dial 1-877-344-7529 (domestic) or 1-412-317-0088
(international), and enter conference ID # 10100893.
About
LightPath Technologies
LightPath
Technologies, Inc. (NASDAQ: LPTH) provides optics and photonics
solutions for the industrial, defense, telecommunications, testing
and measurement, and medical industries. LightPath designs,
manufactures, and distributes optical and infrared components
including molded glass aspheric lenses and assemblies, infrared
lenses and thermal imaging assemblies, fused fiber collimators, and
gradient index GRADIUM® lenses. LightPath also offers custom
optical assemblies, including full engineering design support. For
more information, visit www.lightpath.com.
Forward-Looking
Statements
This
release includes statements that constitute “forward-looking
statements” within the meaning of federal securities laws,
which are statements other than historical facts and that
frequently use words such as “anticipate,”
“believe,” “continue,” “could,”
“estimate,” “expect,”
“forecast,” “intend,” “may,”
“plan,” “position,”“should,”
“strategy,” “target,” “will”
and similar words. All forward-looking statements speak only as of
the date of this release. Although the Company believes that the
plans, intentions, and expectations reflected in or suggested by
the forward-looking statements are reasonable, there is no
assurance that these plans, intentions, or expectations will be
achieved. Therefore, actual outcomes and results could materially
differ from what is expressed, implied, or forecasted in such
statements. This release contains certain forward-looking
statements that are based on current plans and expectations and are
subject to various risks and uncertainties. LightPath’s
business may be influenced by many factors that are difficult to
predict, involve uncertainties that may materially affect results,
and are often beyond our control. Factors that could cause or
contribute to such differences include, but are not limited to,
factors detailed in the Company’s public filings with the
Securities and Exchange Commission. All forward-looking statements
included in this press release are expressly qualified in their
entirety by such cautionary statements. Except as required under
the federal securities laws and the rules and regulations of the
Securities and Exchange Commission, the Company does not have any
intention or obligation to update publicly any forward-looking
statements, whether as a result of new information, future events
or otherwise.
Contacts:
Jim Gaynor, President &
CEO
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Dorothy Cipolla,
CFO
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Jordan
Darrow
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LightPath Technologies, Inc.
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LightPath
Technologies, Inc.
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Darrow
Associates, Inc.
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Tel: 407-382-4003
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Tel: 407-382-4003
x305
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Tel: 512-551-9296
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jgaynor@lightpath.com
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dcipolla@lightpath.com
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jdarrow@darrowir.com
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Web: www.lightpath.com
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Web: www.lightpath.com
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Web:www.darrowir.com
|
(tables
follow)
8
LIGHTPATH
TECHNOLOGIES, INC.
Consolidated Balance Sheets
(unaudited)
|
|
December
31,
|
|
|
June
30,
|
|
||
Assets
|
|
2016
|
|
|
2016
|
|
||
Current
assets:
|
|
|
|
|
|
|
||
Cash and cash
equivalents
|
|
$
|
5,681,109
|
|
|
$
|
2,908,024
|
|
Trade accounts
receivable, net of allowance of $6,761 and $4,598
|
|
|
5,594,409
|
|
|
|
3,545,871
|
|
Inventories,
net
|
|
|
5,004,957
|
|
|
|
3,836,809
|
|
Other
receivables
|
|
|
528,800
|
|
|
|
209,172
|
|
Prepaid expenses
and other assets
|
|
|
353,554
|
|
|
|
652,308
|
|
Total current
assets
|
|
|
17,162,829
|
|
|
|
11,152,184
|
|
|
|
|
|
|
|
|
|
|
Property and
equipment, net
|
|
|
9,510,052
|
|
|
|
4,370,045
|
|
Intangible assets,
net
|
|
|
10,759,000
|
|
|
|
—
|
|
Goodwill
|
|
|
1,227,752
|
|
|
|
—
|
|
Other
assets
|
|
|
152,323
|
|
|
|
66,964
|
|
Total
assets
|
|
$
|
38,811,956
|
|
|
$
|
15,589,193
|
|
Liabilities
and Stockholders’ Equity
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
1,709,171
|
|
|
$
|
1,361,914
|
|
Accrued
liabilities
|
|
|
924,947
|
|
|
|
328,144
|
|
Accrued payroll and
benefits
|
|
|
1,476,457
|
|
|
|
1,356,255
|
|
Deferred
revenue
|
|
|
198,863
|
|
|
|
—
|
|
Loans payable,
current portion
|
|
|
555,556
|
|
|
|
—
|
|
Capital lease
obligation, current portion
|
|
|
240,629
|
|
|
|
166,454
|
|
Total current
liabilities
|
|
|
5,105,623
|
|
|
|
3,212,767
|
|
|
|
|
|
|
|
|
|
|
Capital lease
obligation, less current portion
|
|
|
244,667
|
|
|
|
178,919
|
|
Deferred
rent
|
|
|
493,540
|
|
|
|
548,202
|
|
Warrant
liability
|
|
|
342,231
|
|
|
|
717,393
|
|
Loans payable, less
current portion
|
|
|
10,827,779
|
|
|
|
—
|
|
Total
liabilities
|
|
|
17,013,840
|
|
|
|
4,657,281
|
|
|
|
|
|
|
|
|
|
|
Stockholders’
equity:
|
|
|
|
|
|
|
|
|
Preferred stock:
Series D, $.01 par value, voting;
|
|
|
|
|
|
|
|
|
100,000 shares
authorized; none issued and outstanding
|
|
|
—
|
|
|
|
—
|
|
Common stock:
Class A, $.01 par value, voting;
|
|
|
|
|
|
|
|
|
34,500,000 shares
authorized; 23,726,787 and 15,590,945
|
|
|
|
|
|
|
|
|
shares issued and
outstanding
|
|
|
237,268
|
|
|
|
155,909
|
|
Additional paid-in
capital
|
|
|
224,133,117
|
|
|
|
214,661,617
|
|
Accumulated other
comprehensive income
|
|
|
201,290
|
|
|
|
126,108
|
|
Accumulated
deficit
|
|
|
(202,773,559
|
)
|
|
|
(204,011,722
|
)
|
Total
stockholders’ equity
|
|
|
21,798,116
|
|
|
|
10,931,912
|
|
Total liabilities
and stockholders’ equity
|
|
$
|
38,811,956
|
|
|
$
|
15,589,193
|
|
9
LIGHTPATH
TECHNOLOGIES, INC.
Consolidated
Statements of Comprehensive Income (Loss)
(unaudited)
|
|
Three
months ended
|
|
|
Six
months ended
|
|
||||||||||
|
|
December
31,
|
|
|
December
31,
|
|
||||||||||
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
||||
Revenue,
net
|
|
$
|
5,869,837
|
|
|
$
|
4,236,331
|
|
|
$
|
10,870,066
|
|
|
$
|
8,426,661
|
|
Cost of
sales
|
|
|
2,573,380
|
|
|
|
1,876,331
|
|
|
|
4,739,861
|
|
|
|
3,815,093
|
|
Gross
margin
|
|
|
3,296,457
|
|
|
|
2,360,000
|
|
|
|
6,130,205
|
|
|
|
4,611,568
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general
and administrative
|
|
|
1,695,881
|
|
|
|
1,571,321
|
|
|
|
3,860,943
|
|
|
|
3,009,913
|
|
New product
development
|
|
|
267,527
|
|
|
|
168,067
|
|
|
|
545,545
|
|
|
|
316,413
|
|
Loss on disposal of
property and equipment
|
|
|
—
|
|
|
|
11,876
|
|
|
|
—
|
|
|
|
11,876
|
|
Total costs and
expenses
|
|
|
1,963,408
|
|
|
|
1,751,264
|
|
|
|
4,406,488
|
|
|
|
3,338,202
|
|
Operating
income
|
|
|
1,333,049
|
|
|
|
608,736
|
|
|
|
1,723,717
|
|
|
|
1,273,366
|
|
Other income
(expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
(6,252
|
)
|
|
|
(8,942
|
)
|
|
|
(13,193
|
)
|
|
|
(21,813
|
)
|
Change in fair
value of warrant liability
|
|
|
246,885
|
|
|
|
(1,055,179
|
)
|
|
|
290,385
|
|
|
|
(687,065
|
)
|
Other income
(expense), net
|
|
|
(235,389
|
)
|
|
|
(78,170
|
)
|
|
|
(256,920
|
)
|
|
|
(253,014
|
)
|
Total other income
(expense), net
|
|
|
5,244
|
|
|
|
(1,142,291
|
)
|
|
|
20,272
|
|
|
|
(961,892
|
)
|
Net income (loss)
before income taxes
|
|
|
1,338,293
|
|
|
|
(533,555
|
)
|
|
|
1,743,989
|
|
|
|
311,474
|
|
Income
taxes
|
|
|
240,626
|
|
|
|
2,028
|
|
|
|
505,826
|
|
|
|
4,084
|
|
Net income
(loss)
|
|
$
|
1,097,667
|
|
|
$
|
(535,583
|
)
|
|
$
|
1,238,163
|
|
|
$
|
307,390
|
|
Earnings (loss) per
common share (basic)
|
|
$
|
0.07
|
|
|
$
|
(0.04
|
)
|
|
$
|
0.08
|
|
|
$
|
0.02
|
|
Number of shares
used in per share calculation (basic)
|
|
|
16,541,205
|
|
|
|
15,250,146
|
|
|
|
16,079,030
|
|
|
|
15,244,747
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per
common share (diluted)
|
|
$
|
0.06
|
|
|
$
|
(0.04
|
)
|
|
$
|
0.07
|
|
|
$
|
0.02
|
|
Number of shares
used in per share calculation (diluted)
|
|
|
17,902,712
|
|
|
|
15,250,146
|
|
|
|
17,523,743
|
|
|
|
16,594,759
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency
translation adjustment
|
|
|
43,629
|
|
|
|
8,848
|
|
|
|
75,182
|
|
|
|
20,923
|
|
Comprehensive
income (loss)
|
|
$
|
1,141,296
|
|
|
$
|
(526,735
|
)
|
|
$
|
1,313,345
|
|
|
$
|
328,313
|
|
10
LIGHTPATH
TECHNOLOGIES, INC.
Consolidated
Statements of Cash Flows
(unaudited)
|
|
Six
months ended
|
|
|||||
|
|
December
31,
|
|
|||||
|
|
2016
|
|
|
2015
|
|
||
Cash flows from
operating activities
|
|
|
|
|
|
|
||
Net
income
|
|
$
|
1,238,163
|
|
|
$
|
307,390
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
|
518,596
|
|
|
|
389,652
|
|
Loss
on disposal of property and equipment
|
|
|
—
|
|
|
|
11,876
|
|
Stock
based compensation
|
|
|
211,001
|
|
|
|
174,588
|
|
Provision
for doubtful accounts receivable
|
|
|
(29,009
|
)
|
|
|
(289
|
)
|
Change
in fair value of warrant liability
|
|
|
(290,385
|
)
|
|
|
687,065
|
|
Deferred
rent
|
|
|
(54,662
|
)
|
|
|
72,546
|
|
Inventory
write-offs to reserve
|
|
|
44,651
|
|
|
|
—
|
|
Deferred
tax expense
|
|
|
(40,000
|
)
|
|
|
—
|
|
Changes in
operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Trade accounts
receivables
|
|
|
(950,145
|
)
|
|
|
40,438
|
|
Other
receivables
|
|
|
94,432
|
|
|
|
64,048
|
|
Inventories
|
|
|
(157,254
|
)
|
|
|
(331,414
|
)
|
Prepaid
expenses and other assets
|
|
|
403,928
|
|
|
|
(137,279
|
)
|
Accounts
payable and accrued liabilities
|
|
|
584,365
|
|
|
|
(232,585
|
)
|
Deferred
revenue
|
|
|
(31,543
|
)
|
|
|
—
|
|
Net
cash provided by operating activities
|
|
|
1,542,138
|
|
|
|
1,046,036
|
|
|
|
|
|
|
|
|
|
|
Cash flows from
investing activities
|
|
|
|
|
|
|
|
|
Purchase
of property and equipment
|
|
|
(873,220
|
)
|
|
|
(596,072
|
)
|
Proceeds
from sale of equipment
|
|
|
—
|
|
|
|
5,916
|
|
Acquisition
of ISP Optics, net of cash acquired
|
|
|
(11,777,336
|
)
|
|
|
—
|
|
Net
cash used in investing activities
|
|
|
(12,650,556
|
)
|
|
|
(590,156
|
)
|
|
|
|
|
|
|
|
|
|
Cash flows from
financing activities
|
|
|
|
|
|
|
|
|
Proceeds from
exercise of stock options
|
|
|
—
|
|
|
|
2,808
|
|
Proceeds from sale
of common stock from employee stock purchase plan
|
|
|
9,598
|
|
|
|
8,228
|
|
Loan
costs
|
|
|
(72,224
|
)
|
|
|
—
|
|
Borrowings on loan
payable
|
|
|
5,000,000
|
|
|
|
—
|
|
Proceeds from
issuance of common stock under public equity placement
|
|
|
8,731,850
|
|
|
|
—
|
|
Proceeds from
exercise of warrants, net of costs
|
|
|
162,868
|
|
|
|
27,632
|
|
Net
payments on loan payable
|
|
|
—
|
|
|
|
(32,216
|
)
|
Payments
on capital lease obligations
|
|
|
(90,077
|
)
|
|
|
(62,764
|
)
|
Net
cash provided by (used in) financing activities
|
|
|
13,742,015
|
|
|
|
(56,312
|
)
|
Effect of exchange
rate on cash and cash equivalents
|
|
|
139,488
|
|
|
|
459,565
|
|
Change in cash and
cash equivalents
|
|
|
2,773,085
|
|
|
|
859,133
|
|
Cash and cash
equivalents, beginning of period
|
|
|
2,908,024
|
|
|
|
1,643,920
|
|
Cash and cash
equivalents, end of period
|
|
$
|
5,681,109
|
|
|
$
|
2,503,053
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosure of cash flow information:
|
|
|
|
|
|
|
|
|
Interest
paid in cash
|
|
$
|
13,193
|
|
|
$
|
21,813
|
|
Income
taxes paid
|
|
$
|
113,804
|
|
|
$
|
4,084
|
|
Supplemental
disclosure of non-cash investing & financing
activities:
|
|
|
|
|
|
|
|
|
Purchase
of equipment through capital lease arrangements
|
|
$
|
230,000
|
|
|
$
|
-
|
|
Reclassification
of warrant liability upon exercise
|
|
$
|
84,777
|
|
|
$
|
-
|
|
Derecognition
of liability associated with stock option grants
|
|
$
|
352,765
|
|
|
$
|
143,125
|
|
Seller
note issued to acquire ISP Optics, at fair value
|
|
$
|
6,455,559
|
|
|
$
|
-
|
|
11
LIGHTPATH
TECHNOLOGIES, INC.
Consolidated
Statement of Stockholders' Equity
Six months ended
December 31, 2016
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
||||||
|
|
Class
A
|
|
|
|
|
|
Additional
|
|
|
Other
|
|
|
|
|
|
Total
|
|
||||||
|
|
Common
Stock
|
|
|
|
|
|
Paid-in
|
|
|
Comprehensive
|
|
|
Accumulated
|
|
|
Stockholders’
|
|
||||||
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Income
|
|
|
Deficit
|
|
|
Equity
|
|
||||||
Balances at June
30, 2016
|
|
|
15,590,945
|
|
|
$
|
155,909
|
|
|
$
|
214,661,617
|
|
|
$
|
126,108
|
|
|
$
|
(204,011,722
|
)
|
|
$
|
10,931,912
|
|
Issuance of common
stock for:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercise of
warrants
|
|
|
130,294
|
|
|
|
1,304
|
|
|
|
161,564
|
|
|
|
—
|
|
|
|
—
|
|
|
|
162,868
|
|
Employee Stock
Purchase Plan
|
|
|
5,548
|
|
|
|
55
|
|
|
|
9,543
|
|
|
|
—
|
|
|
|
—
|
|
|
|
9,598
|
|
Public equity
placement, net of costs
|
|
|
8,000,000
|
|
|
|
80,000
|
|
|
|
8,651,850
|
|
|
|
—
|
|
|
|
—
|
|
|
|
8,731,850
|
|
Reclassification of
warrant liability upon exercise
|
|
|
—
|
|
|
|
—
|
|
|
|
84,777
|
|
|
|
—
|
|
|
|
—
|
|
|
|
84,777
|
|
Stock based
compensation on stock options & RSU
|
|
|
—
|
|
|
|
—
|
|
|
|
563,766
|
|
|
|
—
|
|
|
|
—
|
|
|
|
563,766
|
|
Foreign currency
translation adjustment
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
75,182
|
|
|
|
—
|
|
|
|
75,182
|
|
Net
income
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,238,163
|
|
|
|
1,238,163
|
|
Balances at
December 31, 2016
|
|
|
23,726,787
|
|
|
$
|
237,268
|
|
|
$
|
224,133,117
|
|
|
$
|
201,290
|
|
|
$
|
(202,773,559
|
)
|
|
$
|
21,798,116
|
|
12
To supplement our
consolidated financial statements presented in accordance with U.S.
GAAP, we provide additional non-GAAP financial measures. Our
management believes these non-GAAP financial measures, when
considered together with the GAAP financial measures, provide
information that is useful to investors in understanding
period-over-period operating results separate and apart from items
that may or could, have a disproportionally positive or negative
impact on results in any particular period. Our management also
believes that these non-GAAP financial measures enhance the ability
of investors to analyze our underlying business operations and
understand our performance. In addition, our management may utilize
these non-GAAP financial measures as guides in forecasting,
budgeting, and planning. Any analysis on non-GAAP financial
measures should be used in conjunction with results presented in
accordance with GAAP. A reconciliation of these non-GAAP financial
measures with the most directly comparable financial measures
calculated in accordance with GAAP is presented in the tables
below.
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
||||||||||
|
|
Three
months ended:
|
|
|
Year
ended:
|
|
||||||||||
|
|
Dec.
31,
2016
|
|
|
Dec.
31,
2015
|
|
|
Dec.
31,
2016
|
|
|
Dec.
31,
2015
|
|
||||
Net income
(loss)
|
|
$
|
1,097,667
|
|
|
$
|
(535,583
|
)
|
|
$
|
1,238,163
|
|
|
$
|
307,390
|
|
Change in fair
value of warrant liability
|
|
|
(246,885
|
)
|
|
|
1,055,179
|
|
|
|
(290,385
|
)
|
|
|
687,065
|
|
Adjusted net
income
|
|
$
|
850,782
|
|
|
$
|
519,596
|
|
|
$
|
947,778
|
|
|
$
|
994,455
|
|
% of
revenue
|
|
|
14
|
%
|
|
|
12
|
%
|
|
|
9
|
%
|
|
|
12
|
%
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
||||||||||
|
|
Three
months ended:
|
|
|
Six
months ended:
|
|
||||||||||
|
|
Dec.
31,
2016
|
|
|
Dec.
31,
2015
|
|
|
Dec.
31,
2016
|
|
|
Dec.
31,
2015
|
|
||||
Net income
(loss)
|
|
$
|
1,097,667
|
|
|
$
|
(535,583
|
)
|
|
$
|
1,238,163
|
|
|
$
|
307,390
|
|
Depreciation and
amortization
|
|
|
269,131
|
|
|
|
208,450
|
|
|
|
518,596
|
|
|
|
389,652
|
|
Income
taxes
|
|
|
240,626
|
|
|
|
2,028
|
|
|
|
505,826
|
|
|
|
4,084
|
|
Interest
expense
|
|
|
6,252
|
|
|
|
8,942
|
|
|
|
13,193
|
|
|
|
21,812
|
|
EBITDA
|
|
$
|
1,613,676
|
|
|
$
|
(316,163
|
)
|
|
$
|
2,275,778
|
|
|
$
|
722,938
|
|
Change in fair
value of warrant liability
|
|
|
(246,885
|
)
|
|
|
1,055,179
|
|
|
|
(290,385
|
)
|
|
|
687,065
|
|
Adjusted
EBITDA
|
|
$
|
1,366,791
|
|
|
$
|
739,016
|
|
|
$
|
1,985,393
|
|
|
$
|
1,410,003
|
|
% of
revenue
|
|
|
23
|
%
|
|
|
17
|
%
|
|
|
18
|
%
|
|
|
17
|
%
|
13