LightPath Technologies Inc. (LPTH) filed Quarterly Report for the period ended 2009-09-30.
LightPath Techonologies Inc. manufactures proprietary collimator assemblies GRADIUM glass products and other optical telecommunications products at its headquarters in Albuquerque. The Company's subsidiaries Horizon Photonics and Geltech manufacture isolator products utilizing proprietary automation technology in Walnut California and precision molded aspheric optics used in the active telecom components market in Orlando Florida. Lightpath Technologies Inc. has a market cap of $15.5 million; its shares were traded at around $1.94 with and P/S ratio of 2.1.
Highlight of Business Operations:
EBITDA- Our EBITDA for the three months ended September 30, 2009 and 2008, was a loss of $254,678, compared to a loss of $688,434 for the three months ended September 30, 2008. The increase in EBITDA was principally caused by lower selling, general and administrative expenses. For comparision purposes, net loss was approximately $706,000 or $0.09 per basic and diluted common share during the first quarter of fiscal 2010, compared with the first quarter of fiscal 2009, in which we reported a net loss of $1,024,000 or $0.19 basic and diluted per common share.
The accompanying condensed consolidated financial statements have been prepared assuming that we will continue as a going concern. Because of the current operating loss of $527,253 for the three months ended September 30, 2009 as well as recurring operating losses during fiscal years 2009 and 2008 of $3.8 million and $5.5 million, respectively, and cash used in operations for the three months ended September 30, 2009 of $704,000 as well as cash used in operations during fiscal years 2009 and 2008 of $1.5 million and $3.4 million, respectively, there is substantial doubt about our ability to continue as a going concern. Our continuation as a going concern is dependent on attaining profitable operations through achieving revenue growth targets.
In July 2007 we raised gross proceeds of approximately $3,200,000 by way of the sale of newly issued common stock and warrants to certain institutional and private investors, resulting in net proceeds to the Company of $2,978,544 through the issuance of 800,000 shares of common stock at $4.00 per share. Professional fees of $230,456 were paid to First Montauk for its role as exclusive placement agent and financial advisor and for attorney and escrow agent fees. The investors along with First Montauk and its principals, the placement agent, also received warrants which vested 100% on January 26, 2008 and can be exercised through January 26, 2013 for the future purchase of 320,000 shares of our common stock, 238,750 warrants are at $5.50 per share and 81,250 warrants are at $2.61 per share. If all of the warrants are ultimately exercised an additional $1,525,000 will be raised. Effective August 1, 2008, in conjunction with the convertible debenture agreement (see below), the exercise price of half of the warrants issued to First Montauk and all of the warrants issued to the four investors that also participated in the August transaction, were reduced from $5.50 per share to $2.61 per share, this decreased the potential proceeds to be received upon exercise of such warrants by $234,813.
On December 31, 2008 the Debentures were amended to allow debenture holders to convert 25% of their debentures into common stock. As a result, $732,250 of the debentures were converted into 475,496 common shares. As an inducement to convert the debentures, we issued additional warrants (valued at $215,975 using the Black-Scholes-Merton method) and prepaid the interest of $453,995 on the unconverted portion of the Debentures through the maturity date of August 1, 2011, which resulted in the issuance of 589,614 shares of common stock. Interest payment of $58,580 for the quarter ended December 31, 2008 resulted in the issuance of 76,078 shares of common stock. As a result of the Debenture conversion, $304,382 of debt discount was written off to interest expense. During the year ended June 30, 2009, $640,695 of the debt discount was amortized through interest expense on the consolidated statement of operations. For the quarter ended September 30, 2009, $90,928 of the amortized debt discount was amortized through interest expense and the remaining unamortized debt discount was $659,842 at September 30, 2009. On May 29, 2009 we filed a registration statement to register those additional interest shares and warrants which were issued in December 2008. The registration statement was declared effective on June 16, 2009.
During the first quarter of fiscal 2010, selling, general and administrative (“SG&A”) costs were approximately $962,000, which was a decrease of approximately $268,000 compared to the first quarter of fiscal 2009. This decrease in selling, general and administrative expenses included a reduction in salaries and benefits of $194,000 for the first quarter of fiscal 2010 compared to the same period in fiscal 2009 resulting from reduced headcount and salary reductions. We also had a $58,000 decrease in rental costs, a $32,000 decrease in accounting fees and a decrease of $26,000 in insurance expense. Also, in the first quarter of fiscal 2010, LightPath benefited from receipt of a one-time payment in the amount of $276,000 from our prior D&O insurance carrier as a reimbursement of legal expenses we incurred. This was partially offset by investor relations expenses of $150,000 and legal expenses for possible payments in connection with our current litigation, see footnote 11. We intend to maintain SG&A costs generally at current levels, but we are considering adding to our sales force in China while continuing to seek additional cost reductions opportunities. In December 2007, we renegotiated the lease for our Orlando, Florida headquarters and manufacturing facility to reduce the space leased from approximately 40,000 square feet to approximately 21,000 square feet resulting in the rental cost (SG&A) savings of approximately $58,000 noted above.
Interest expense was approximately $180,000 in the first quarter of fiscal 2010 as compared to $159,000 in the first quarter of fiscal 2009. Approximately $3,000 of the interest expense for the first quarter of fiscal 2010 is attributable to our equipment term loan and our capital equipment lease. The Debentures issued in August 1, 2008 accounted for approximately $177,000 of interest during the quarter ended September 30, 2009 representing interest at 8%, amortization and write-off of the related debt issuance costs and debt discount, and value of common shares and warrants issued as incentive to participate in the debenture placement and to induce the conversion of the debt to equity. Future interest expense on the Debentures is expected to be approximately $43,000 per quarter. In future quarters combined amortization of both the debt issuance costs and debt discount is expected to average approximately $124,000 per quarter. Investment and other income was approximately $500 in the first quarter of fiscal 2010 and $10,000 in the first quarter of fiscal 2009.
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