Revenue Increases 106% While Continuing to Focus on Global Market Penetration
ORLANDO, FL / ACCESSWIRE / May 4, 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 third quarter ended March 31, 2017.
Fiscal 2017 Third Quarter Highlights and Recent Developments:
- Revenue for the third quarter of fiscal 2017 increased 106%
to $8.5 million, as compared to $4.1 million for the third quarter of fiscal 2016. - Total costs and expenses as a percentage of
revenue continues to decline, improving to 35% in the third quarter of fiscal 2017, as compared to 49% in the third quarter last
year. - Operating income for the third quarter of fiscal 2017 was $1.3 million, an increase of 500% as compared to $213,000 for the
third quarter of fiscal 2016. - Net income for the third quarter of fiscal 2017 was $101,000, as compared to $776,000 for the third
quarter of fiscal 2016. - Adjusted net income* for the third quarter of fiscal 2017, which excludes the non-cash income or expense
related to the change in fair value of the Company's warrant liability, was $849,000, as compared to $114,000 for the third quarter
of fiscal 2016. - EBITDA* for the third quarter of fiscal 2017 was approximately $1.3 million, as compared to approximately $1.1
million in the third 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 $2.0 million in the third quarter of fiscal 2017, an increase of 333%
as compared with $469,000 in the third quarter of fiscal 2016. - 12-month backlog was approximately $11.1 million at March 31,
2017, as compared to $6.6 million at June 30, 2016.
*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, "We believe that the acquisition of ISP Optics
Corporation ("ISP"), which was completed last quarter, better positions us for accelerated revenue and profitability growth. The
results of this third quarter demonstrate that growth. The comparisons are without ISP in the third quarter of fiscal 2016.
Revenues generated by LightPath's core business increased by 20% and revenues generated by ISP grew by 22% during the third quarter
of 2017, compared to the same quarter of 2016. Excluding the change in fair value of our warrant liability, amortization of
intangibles as a result of the ISP acquisition, and the costs incurred in connection with the ISP acquisition, the true underlying
performance has been overall better than our expectations. Our financial results for the third quarter of fiscal 2017 reflect
successful implementation of our growth strategies, with revenues at $8.5 million, an increase of 106%, gross margin strong at 50%,
operating income increasing by 500% to $1.3 million, and adjusted EBITDA margin at $2.0 million, an improvement of 333%."
"Even though we have experienced rapid growth in some of our business lines and strengthened our competitive position, partially
as a result of the ISP acquisition, we continue to remain vigilant in maintaining a strong financial condition. A key performance
measure in this regard is our cash balance, which improved to $6.8 million at the end of the fiscal 2017 third quarter, an increase
of 135% from June 30, 2016."
"Despite the intake of new orders remaining strong during the third quarter of fiscal 2017, our 12-month backlog at March 31,
2017 decreased as compared to December 31, 2016. On occasion we take in large orders that are scheduled for shipment over a 12 or
even 18 month period. This can result in our 12-month backlog decreasing as we fulfill and ship against these orders until that
business is renewed the following year. This was particularly the case this quarter as we began fulfilling large orders placed
during the second quarter of fiscal 2017. Certain of ISP's customers prefer to place a large order once a year, versus placing
smaller orders throughout a 12-month period. The change in our backlog was as expected given the large order for ISP in the second
quarter that we are now shipping against and will continue to ship through the next several quarters. Overall, our consolidated
business continued to ramp in the third quarter of fiscal 2017, with particular strength from the telecommunications, industrial
tools and thermal end markets. The Company's consolidated 12-month backlog remains healthy at approximately $11.1 million at March
31, 2017, an improvement from $6.6 million at June 30, 2016."
"We believe that the 106% revenue growth, which is partially attributable to ISP, reflects our ability to diversify our product
lines and end markets, which we believe is one of our competitive strengths. The catalysts that have been driving our markets
remain in place. In fact, the telecommunications market which has been very strong continues to see an increasing demand for more
bandwidth to support not only the upgrade of the metro core networks, the data center interconnect growth, and requirements for
emerging countries but now also the increasing trend to send videos and pictures in place of texting. The latter business catalyst
provides us with opportunities to supply products for the transmission of content on fiber networks and through data centers and
also the components incorporated by consumer electronic original equipment manufacturers in smart devices and other items that are
part of the process to create video and picture content."
"We continue to invest in research and development as well as in global sales and marketing initiatives in a concerted effort to
drive future growth. Subsequent to the end of the third quarter of 2017, we were awarded a large scale order for precision glass
optics used in optical encoder systems from a UK-based world leader in metrology products. We believe this order validates our
continued investment in research and development and our efforts to partner with large market participants, all in an effort to
expand our global reach."
"With the acquisition of ISP, we made significant progress in setting the stage for continued growth in the infrared market
which is a market growing both larger and faster than the market for our molded optical lens. In addition to investments in
research and development, we have hired new marketing and business development personnel and added distributors around the world.
We have also begun to improve our processes to further enhance our volume production and turnaround time in light of our recent
growth."
"Across the board we are experiencing strong demand for our products and believe we have the technology and the personnel to
capitalize on these opportunities. With impressive fiscal 2017 third quarter financial results, we are very encouraged by our
future prospects. I encourage you to join our investor conference call on Thursday, May 4th at 4:30 p.m. ET where we will discuss
in more detail, specific LightPath and ISP accomplishments."
Financial Results for Three Months Ended March 31, 2017 Compared to the Three Months Ended March 31, 2016
Revenue for the third quarter of fiscal 2017 was approximately $8.5 million, an increase of approximately $4.4 million, or 106%,
as compared to the same period of the prior fiscal year. The increase from the third quarter of the prior fiscal year is
attributable to an approximately $3.5 million increase, or 893%, in revenues generated by infrared products, primarily attributable
to ISP, and an approximately $1.2 million increase, or 132%, in sales of high volume precision molded optics ("HVPMO") lenses,
partially offset by an approximately $323,000 decrease, or 38%, in revenues from specialty products and an approximately $30,000
decrease, or 17%, 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 $272,000 of revenues generated in the third quarter of fiscal 2016 for a
final order of custom fiber collimator assemblies. This specific product technology was transferred to the customer pursuant to a
license agreement entered into in fiscal 2015. Thus, the customer is no longer placing orders for fiber collimator assemblies with
us.
Gross margin in the third quarter of fiscal 2017 was $4.2 million, an increase of 90% as compared to $2.2 million in the prior
year period. Gross margin as a percentage of revenue was 50% for the third quarter of fiscal 2017, compared to 54% for the third
quarter of fiscal 2016. The change in gross margin as a percentage of revenue is primarily attributable to the inclusion of
revenues generated by ISP, and the associated cost of sales, for the full quarter. Total cost of sales was approximately $4.3
million for the third quarter of fiscal 2017, an increase of approximately $2.4 million as compared to the same period of the prior
fiscal year. This increase in total cost of sales is entirely due to the increase in volume of sales, primarily as a result of the
acquisition of ISP.
During the third quarter of fiscal 2017, total costs and expenses were approximately $2.9 million, an increase of approximately
$932,000 compared to the same period of the prior fiscal year. The increase was primarily due to an approximately $406,000 increase
in wages, an approximately $305,000 increase in the amortization of intangibles due to the ISP acquisition, an approximately
$143,000 increase in research and development expenses, an approximately $131,000 increase in professional fees, an approximately
$71,000 increase in travel expenses and an approximately $45,000 increase in expenses related to the acquisition of ISP. The
Company also increased its research and development expenses by 87% to $308,000 in the third quarter of fiscal 2017, compared to
$165,000 in the previous year, as part of its growth strategy.
In the third quarter of fiscal 2017, the Company recognized non-cash expense of approximately $748,000 related to the change in
the fair value of warrants issued in connection with the June 2012 private placement. In the third quarter of fiscal 2016, the
Company recognized non-cash income of approximately $662,000 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 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 $266,000 in the third quarter of
fiscal 2017, an increase of $139,000 compared to the third 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 the third quarter of fiscal 2017
was primarily attributable to income taxes associated with the Company's Chinese subsidiaries and to a lesser extent income taxes
attributable to ISP Latvia. 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. 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 Latvia is governed by the Law of Corporate Income Tax 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. Excluding the impact of the change in the fair value of the warrant
liability the impact of foreign translation, which are both excluded when completing taxable income, the effective tax rate was
24%.
Net income for the third quarter of fiscal 2017 was $101,000, or $0.00 per basic and diluted common share, which includes
non-cash expense of approximately $748,000, or $0.04 per basic and diluted common share, for the change in the fair value of the
warrant liability, compared with net income of approximately $776,000, or $0.05 per basic and $0.04 per diluted common share, which
includes non-cash income of approximately $662,000, or $0.04 per basic and $0.03 per 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 increases in the following: (i)
the change in the fair value of the warrant liability, (ii) amortization of intangibles, (iii) selling general and administrative
("SG&A") expenses, (iv) interest expense, (v) income taxes and (vi) new product development costs in the third quarter of
fiscal 2017 as compared to the prior year period. Approximately 73% of the increase in SG&A expenses 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 645% to approximately $849,000 in the third quarter of fiscal 2017, as compared to $114,000 in the same period
of fiscal 2016.
The Company had foreign currency exchange income in the third quarter of fiscal 2017 due to changes in the value of the Chinese
Yuan and Euro in the amount of approximately $18,000, which had no impact on basic and diluted earnings per share, compared to
foreign currency exchange income of $26,000, with no impact on earnings per share in the same period of the prior fiscal year.
Weighted-average basic and diluted common shares outstanding increased to 23,818,136 and 25,628,703, respectively, in the third
quarter of fiscal 2017 from 15,530,574 and 17,404,152, respectively, in the third quarter of fiscal 2016. The increase was
primarily due to 8 million 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 third quarter of fiscal 2017 was approximately $1.3 million compared to approximately $1.1 million in the third
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 expenses, of which approximately $45,000 were associated with the acquisition of ISP, and
the recognition of non-cash expense associated with the change 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 third quarter of fiscal 2017, an increase of 333% as compared with approximately $469,000 for the
same period of the prior fiscal year.
Financial Results for Nine Months Ended March 31, 2017 Compared to the Nine Months Ended March 31, 2016
Revenue for the first nine months of fiscal 2017 was approximately $19.4 million, an increase of approximately $6.8 million, or
54%, as compared to the same period of the prior fiscal year. The increase from the first nine months of the prior fiscal year is
attributable to an approximately $4.2 million increase, or 375%, in revenues generated primarily by sales of ISP's infrared lenses,
an approximately $3.2 million increase, or 121%, in revenues generated by sales of HVPMO lenses, and an approximately $888,000
increase, or 17%, in revenues generated by sales of LVPMO lenses, partially offset by an approximately $1.2 million decrease, or
40%, in revenues from specialty products and an approximately $166,000 decrease or 32% decrease in revenues from NRE projects. The
decrease in revenues generated by the specialty products group was due to the absence of approximately $1.0 million of revenues
generated in the first nine months of fiscal 2016 due to a final order of custom fiber collimator assemblies. This specific product
technology was transferred to the customer pursuant to a license agreement entered into in fiscal 2015. Thus, the customer is no
longer placing orders for fiber collimator assemblies with us.
Gross margin as a percentage of revenue in the first nine months of fiscal 2017 was 53%, compared to 55% in the first nine
months of fiscal 2016. Gross profit in the first nine months of fiscal 2017 was $10.4 million, compared to $6.8 million in the
prior year period, an increase of 51%. Total cost of sales was approximately $9.0 million for the first nine months of fiscal 2017,
an increase of approximately $3.3 million compared to the same period of the prior fiscal year. The 58% increase in cost of sales
was entirely due to the increased volume largely due to the acquisition of ISP.
During the first nine months of fiscal 2017, total costs and expenses were approximately $7.3 million, an increase of
approximately $2.0 million compared to the same period of the prior fiscal year. The increase was primarily due to: (i) a $653,000
increase in expenses related to the acquisition of ISP, (ii) a $305,000 increase in amortization of intangible due to the ISP
acquisition, (iii) a $680,000 increase in wages, iv) a $194,000 increase in professional fees, and v) a $107,000 increase in travel
expenses.
In the first nine months of fiscal 2017, the Company recognized non-cash expense of approximately $458,000 related to the change
in the fair value of warrants issued in connection with the June 2012 private placement. In the first nine months of fiscal 2016,
the Company recognized non-cash expense of approximately $25,000 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 $772,000 in the first nine months of fiscal 2017, an increase of $641,000 from the first
nine months 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 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 the Company's Chinese subsidiaries and to a
lesser extent income taxes attributable to the ISP Latvia. 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. 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 Latvia is governed by the Law of Corporate Income Tax 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. Excluding the impact of the change
in the fair value of the warrant liability the impact of foreign translation, which are both excluded when computing taxable
income, the effective tax rate was 25%.
Net income for the first nine months of fiscal 2017 was $1.3 million, or $0.07 per basic and diluted common share, which
includes non-cash expense of approximately $458,000, or $0.03 per basic and diluted common share, for the change in the fair value
of the warrant liability, compared with net income of approximately $1.1 million, or $0.07 per basic and $0.06 diluted common
share, which includes non-cash expense of approximately $25,000, or no impact 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 nine months of fiscal 2017 as compared to the prior
year period, including higher SG&A expenses, new product development costs, and an approximately $653,000 increase in expenses
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 $1.8 million in the first nine months of fiscal 2017, as compared to $1.1 million in the
same period of fiscal 2016.
The Company had foreign currency exchange expense in the first nine months of fiscal 2017 due to changes in the value of the
Chinese Yuan and Euro in the amount of approximately $254,000, which had a $0.01 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 earnings per share in the same period
of the prior fiscal year.
Weighted-average basic and diluted common shares outstanding increased to 18,621,072 and 20,145,976, respectively, in the first
nine months of fiscal 2017 from 15,339,337 and 16,843,880, respectively, in the first nine months of fiscal 2016. The increase was
primarily due to 8 million 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 nine months of fiscal 2017 was approximately $3.6 million compared to approximately $1.9 million in the
first nine months of fiscal 2016. The difference in EBITDA between periods was principally caused by increased revenues and
operating income, partially offset by the increased SG&A costs of which approximately $653,000 were 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 $4.0 million in the first nine months of fiscal 2017 as compared with approximately $1.9 million for the same period
of the prior fiscal year.
Cash and cash equivalents totaled approximately $6.8 million as of March 31, 2017, a 135% increase from June 30, 2016. Cash flow
provided by operations was approximately $2.9 million for the first nine months of fiscal 2017, compared with $1.2 million in the
prior year period. During the first nine months of fiscal 2017, the Company expended approximately $1.4 million for capital
equipment while growing its cash balance, as compared to $756,000 in the same period last year.
The current ratio as of March 31, 2017 and June 30, 2016 was 3.5 to 1. Total stockholders' equity as of March 31, 2017 was
approximately $22.9 million, a 109% increase compared to approximately $10.9 million as of June 30, 2016. The increase is largely
due to our Class A common stock public offering in December 2016, in which we received net proceeds of approximately $8.7 million,
and accumulated net income.
As of March 31, 2017, the Company's 12-month backlog was $11.1 million, compared to $6.6 million as of June 30, 2016, an
increase of approximately 59%, partially attributable to ISP.
*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. The Company'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 which expire at the end of 2017.
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.
The Company 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.
Investor Conference Call and Webcast Details
LightPath will host an audio conference call and webcast on Thursday, May 4 at 4:30 p.m. ET to discuss its financial and
operational performance for the fiscal 2017 third quarter ended March 31, 2017.
Date: Thursday May 4, 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/lpth170504.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 May 18, 2017. To listen to the replay, dial 1-877-344-7529 (domestic) or
1-412-317-0088 (international), and enter conference ID # 10105734.
About LightPath Technologies
LightPath Technologies, Inc. (NASDAQ: LPTH) is a leading global, vertically integrated provider of optics, photonics and
infrared solutions for the industrial, defense, telecommunications, testing and measurement, and medical industries. LightPath
designs, manufactures, and distributes proprietary 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. The Company is headquartered in Orlando, Florida,
with manufacturing and sales offices in New York, Latvia and China.
LightPath's wholly-owned subsidiary ISP Optics Corporation manufactures a full range of infrared products from high performance
MWIR and LWIR lenses and lens assemblies. ISP's infrared lens assembly product line includes athermal lens systems used in cooled
and un-cooled thermal imaging cameras. Manufacturing is performed in-house to provide precision optical components including
spherical, aspherical and diffractive coated infrared lenses. ISP's optics processes allow it to manufacture its products from all
important types of infrared materials and crystals. Manufacturing processes include CNC grinding and CNC polishing, diamond
turning, continuous and conventional polishing, optical contacting and advanced coating technologies.
For more information on LightPath and its businesses, please visit www.lightpath.com.
Forward-Looking Statements
This news release includes statements that constitute forward-looking statements made pursuant to the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995, including statements regarding our ability to expand our presence in certain
markets, future sales growth, continuing reductions in cash usage and implementation of new distribution channels. This information
may involve risks and uncertainties that could cause actual results to differ materially from such forward-looking statements.
Factors that could cause or contribute to such differences include, but are not limited to, factors detailed by LightPath
Technologies, Inc. in its public filings with the Securities and Exchange Commission. Except as required under the federal
securities laws and the rules and regulations of the Securities and Exchange Commission, we do 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 LightPath Technologies, Inc. Tel: 407-382-4003 jgaynor@lightpath.com Web: www.lightpath.com
Dorothy Cipolla, CFO LightPath Technologies, Inc. Tel: 407-382-4003 x305 dcipolla@lightpath.com Web: www.lightpath.com
Jordan Darrow Darrow Associates, Inc. Tel: 512-551-9296 jdarrow@darrowir.com Web: www.darrowir.com
LIGHTPATH TECHNOLOGIES,
INC. Consolidated Balance Sheets (unaudited) March 31, June 30, Assets 2017 2016 Current assets: Cash and cash equivalents $
6,831,521 $ 2,908,024 Trade accounts receivable, net of allowance of $7,313 and $4,598 5,740,041 3,545,871 Inventories, net
5,083,350 3,836,809 Other receivables 77,336 209,172 Prepaid expenses and other assets 615,353 652,308 Total current assets
18,347,601 11,152,184 Property and equipment, net 9,763,042 4,370,045 Intangible assets, net 10,930,191 - Goodwill 513,940 - Other
assets 158,414 66,964 Total assets $ 39,713,188 $ 15,589,193 Liabilities and Stockholders' Equity Current liabilities: Accounts
payable $ 1,597,144 $ 1,361,914 Accrued liabilities 1,215,080 328,144 Accrued payroll and benefits 1,419,357 1,356,255 Loans
payable, current portion 833,750 - Capital lease obligation, current portion 239,981 166,454 Total current liabilities 5,305,312
3,212,767 Capital lease obligation, less current portion 193,518 178,919 Deferred Rent 481,492 548,202 Warrant liability 665,406
717,393 Loans payable, less current portion 10,166,505 - Total liabilities 16,812,233 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; 24,115,733 and 15,590,945 shares issued and outstanding 241,157 155,909 Additional
paid-in capital 225,092,607 214,661,617 Accumulated other comprehensive income 239,926 126,108 Accumulated deficit (202,672,735 )
(204,011,722 ) Total stockholders' equity 22,900,955 10,931,912 Total liabilities and stockholders' equity $ 39,713,188 $
15,589,193 LIGHTPATH TECHNOLOGIES, INC. Consolidated Statements of Comprehensive Income (Loss) Three months ended Nine months ended
March 31, March 31, 2017 2016 2017 2016 Revenue, net $ 8,490,042 $ 4,111,973 $ 19,360,109 $ 12,538,634 Cost of sales 4,267,318
1,887,146 9,007,180 5,702,239 Gross margin 4,222,724 2,224,827 10,352,929 6,836,395 Operating expenses: Selling, general and
administrative 2,329,762 1,812,205 6,190,705 4,822,118 New product development 308,394 164,990 853,939 481,403 Amortization of
intangibles 304,809 - 304,809 - Loss on disposal of property and equipment - 34,189 - 46,065 Total costs and expenses 2,942,965
2,011,384 7,349,453 5,349,586 Operating income 1,279,759 213,443 3,003,476 1,486,809 Other income (expense): Interest expense
(154,639 ) (8,287 ) (167,832 ) (30,100 ) Interest expense -debt costs (38,338 ) - (38,338 ) - Change in fair value of warrant
liability (748,169 ) 661,854 (457,784 ) (25,211 ) Other income (expense), net 27,985 35,718 (228,935 ) (217,296 ) Total other
income (expense), net (913,161 ) 689,285 (892,889 ) (272,607 ) Net income before income taxes 366,598 902,728 2,110,587 1,214,202
Income taxes 265,774 126,970 771,600 131,054 Net income $ 100,824 $ 775,758 $ 1,338,987 $ 1,083,148 Foreign currency translation
adjustment 38,636 26,258 113,818 47,181 Comprehensive income $ 139,460 $ 802,016 $ 1,452,805 $ 1,130,329 Earnings per common share
(basic) $ 0.00 $ 0.05 $ 0.07 $ 0.07 Number of shares used in per share calculation (basic) 23,818,136 15,530,574 18,621,072
15,339,337 Earnings per common share (diluted) $ 0.00 $ 0.04 $ 0.07 $ 0.06 Number of shares used in per share calculation (diluted)
25,628,703 17,404,152 20,145,976 16,843,880 LIGHTPATH TECHNOLOGIES, INC. Consolidated Statement of Stockholders' Equity Nine months
ended March 31, 2017 (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 478,897 4,789 579,890 - - 584,679 Employee Stock
Purchase Plan 12,106 121 19,511 - - 19,632 Exercise of RSU or options 33,785 338 (338 ) - - - Public equity placement, net of costs
8,000,000 80,000 8,650,209 - - 8,730,209 Reclassification of warrant liability upon exercise - - 509,771 - - 509,771 Stock based
compensation on stock options & RSU - - 671,947 - - 671,947 Foreign currency translation adjustment - - - 113,818 - 113,818 Net
income - - - - 1,338,987 1,338,987 Balances at March 31, 2017 24,115,733 $ 241,157 $ 225,092,607 $ 239,926 $ (202,672,735 ) $
22,900,955 LIGHTPATH TECHNOLOGIES, INC. Consolidated Statements of Cash Flows (unaudited) Nine months ended March 31, 2017 2016
Cash flows from operating activities Net income $ 1,338,987 $ 1,083,148 Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization 1,240,232 609,029 Interest from amortization of debt costs 3,861 - Loss on
disposal of property and equipment - 46,065 Stock based compensation 319,182 261,615 Provision for doubtful accounts receivable
(29,551 ) (289 ) Change in fair value of warrant liability 457,784 25,211 Change in fair value of seller's note 34,476 - Deferred
rent (66,710 ) 43,153 Inventory write-offs to reserve 47,895 - Deferred tax expense (40,000 ) - Changes in operating assets and
liabilities: Trade accounts receivables (1,032,243 ) (133,884 ) Other receivables 142,919 42,947 Inventories (253,179 ) (657,596 )
Prepaid expenses and other assets 171,753 (241,450 ) Accounts payable and accrued liabilities 595,624 157,877 Net cash provided by
operating activities 2,931,030 1,235,826 Cash flows from investing activities Purchase of property and equipment (1,412,738 )
(755,800 ) Proceeds from sale of equipment - 5,916 Acquisition of ISP Optics, net of cash acquired (11,777,336 ) - Net cash used in
investing activities (13,190,074 ) (749,884 ) Cash flows from financing activities Proceeds from exercise of stock options - 6,430
Proceeds from sale of common stock from employee stock purchase plan 19,632 22,903 Loan costs (72,224 ) - Borrowings on loan
payable 5,000,000 - Proceeds from issuance of common stock under public equity placement 8,730,209 - Proceeds from exercise of
warrants, net of costs 584,679 391,082 Net payments on loan payable - (51,585 ) Payments on capital lease obligations (141,874 )
(96,718 ) Net cash provided by financing activities 14,120,422 272,112 Effect of exchange rate on cash and cash equivalents 62,119
460,612 Change in cash and cash equivalents 3,923,497 1,218,666 Cash and cash equivalents, beginning of period 2,908,024 1,643,920
Cash and cash equivalents, end of period $ 6,831,521 $ 2,862,586 Supplemental disclosure of cash flow information: Interest paid in
cash $ 91,525 $ 30,101 Income taxes paid $ 344,820 $ 2,056 Supplemental disclosure of non-cash investing & financing activities:
Purchase of equipment through capital lease arrangements $ 230,000 $ - Reclassification of warrant liability upon exercise $
509,771 $ - Derecognition of liability associated with stock option grants $ 352,765 $ 143,125 Seller note issued to acquire ISP
Optics, at fair value $ 6,327,208 $ -
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: Nine months ended: March 31, 2017 March 31, 2016 March 31, 2017 March 31, 2016 Net income $ 100,824 $ 775,758 $ 1,338,987 $
1,083,148 Change in fair value of warrant liability 748,169 (661,854 ) 457,784 25,211 Adjusted net income $ 848,993 $ 113,904 $
1,796,771 $ 1,108,359 % of revenue 10 % 3 % 9 % 9 % (Unaudited) (Unaudited) Three months ended: Nine months ended: March 31, 2017
March 31, 2016 March 31, 2017 March 31, 2016 Net income $ 100,824 $ 775,758 $ 1,138,987 $ 1,083,148 Depreciation and amortization
721,636 219,377 1,240,232 609,029 Income taxes 265,774 126,970 771,600 131,054 Interest expense 192,977 8,287 206,170 30,100 EBITDA
$ 1,281,211 $ 1,130,392 $ 3,556,989 $ 1,853,331 Change in fair value of warrant liability 748,169 (661,854 ) 457,784 25,211
Adjusted EBITDA $ 2,029,380 $ 468,538 $ 4,014,773 $ 1,878,542 % of revenue 24 % 11 % 21 % 15 %
SOURCE: LightPath Technologies, Inc.
