lptha moving strong....LIGHTPATH TECHNOLOGIES INC FILES FORM 10QSB (4 those with a little time..)
EDGAR Online SEC Filings - May 12, 2000 13:59
The EDGAR Online Glimpse is an extraction of the Management's
Discussion and Analysis section contained in the full 10QSB, available
from EDGAR Online
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All SEC Filings for LIGHTPATH TECHNOLOGIES INC from EDGAR Online
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 ("THE ACT")
PROVIDES A SAFE HARBOR FOR FORWARD LOOKING STATEMENTS MADE BY OR ON BEHALF OF
THE COMPANY. ALL STATEMENTS IN THIS "MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS" AND ELSEWHERE IN THIS REPORT,
OTHER THAN STATEMENTS OF HISTORICAL FACTS, WHICH ADDRESS ACTIVITIES, EVENTS OR
DEVELOPMENTS THAT THE COMPANY EXPECTS OR ANTICIPATES WILL OR MAY OCCUR IN THE
FUTURE, INCLUDING SUCH THINGS AS FUTURE CAPITAL EXPENDITURES, GROWTH, PRODUCT
DEVELOPMENT, SALES, BUSINESS STRATEGY AND OTHER SIMILAR MATTERS ARE
FORWARD-LOOKING STATEMENTS. THESE FORWARD-LOOKING STATEMENTS ARE BASED LARGELY
ON THE COMPANY'S CURRENT EXPECTATIONS AND ASSUMPTIONS AND ARE SUBJECT TO A
NUMBER OF RISKS AND UNCERTAINTIES, MANY OF WHICH ARE BEYOND THE COMPANY'S
CONTROL. ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THE FORWARD-LOOKING
STATEMENTS SET FORTH HEREIN AS A RESULT OF A NUMBER OF FACTORS, INCLUDING, BUT
NOT LIMITED TO, THE COMPANY'S EARLY STAGES OF PRODUCT DEVELOPMENT, THE NEED FOR
ADDITIONAL FINANCING, INTENSE COMPETITION IN VARIOUS ASPECTS OF ITS BUSINESS AND
OTHER RISKS DESCRIBED IN THE COMPANY'S REPORTS ON FILE WITH THE SECURITIES AND
EXCHANGE COMMISSION. IN LIGHT OF THESE RISKS AND UNCERTAINTIES, ALL OF THE
FORWARD-LOOKING STATEMENTS MADE HEREIN ARE QUALIFIED BY THESE CAUTIONARY
STATEMENTS AND THERE CAN BE NO ASSURANCE THAT THE ACTUAL RESULTS OR DEVELOPMENTS
ANTICIPATED BY THE COMPANY WILL BE REALIZED. THE COMPANY UNDERTAKES NO
OBLIGATION TO UPDATE OR REVISE ANY OF THE FORWARD LOOKING STATEMENTS CONTAINED
HEREIN.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2000 ("2000") COMPARED WITH THE THREE MONTHS ENDED
MARCH 31, 1999 ("1999")
During the third quarter of fiscal 2000 the Company's optoelectronics and
fiber telecommunications segment was bolstered by 1) receipt of approximately
$38 million in proceeds from the exercise of warrants and options which are
available to grow this segment, 2) product announcement of the Gen3 collimator
which has the lowest documented insertion loss reported in these devices, 3)
qualification by Avanex Corporation of our collimator products, and 4) the
expansion of our telecom products to include isolators through the acquisition
of privately held Horizon Photonics, Inc. ("HPI") completed on April 14, 2000.
Substantially all of the remaining Class A Warrants and 2.6 million Class B
Warrants, which were issued as part of the February 1996 IPO, were exercised for
net proceeds of approximately $33 million during the quarter. In addition,
another $5 million of net proceeds were received from the exercise of private
placement warrants and stock options. The Company intends to use a portion of
this capital to 1) expand our collimator production facility and staff in
Albuquerque, 2) to open a facility in New Jersey for development of the optical
switch engine to be sold as an enabling component for an optical cross connect
system, 3) to increase the size of our current product and technology
development team which continues to improve upon and expand our current telecom
products built around the single mode fiber collimator, and 4) broaden the
Company's telecom component offerings and automation base through additional
strategic acquisitions and strategic alliances.
The Company's internal focus has been on the sale and shipment of products
and samples of LightPath's single-mode fiber collimator assembly (SMF assembly).
The Company currently offers three telecom product levels: the collimating lens,
a SMF assembly and a large-beam collimating assembly. The Company's Gen3
collimator, which is the next generation of the SMF products, has the lowest
documented insertion loss reported to date in these devices. The Company
produced and shipped telecom products totaling $170,397 during the quarter which
represents a 225% increase from the second quarter. The Company continued with
the fiberoptic, mechanical switch development process with a separate business
unit of E-TEK, Kaifa Technology, which E-TEK acquired in July 1999. The Company
is uncertain how the recent acquisition of E-TEK by JDS-Uniphase will impact
this relationship. LightPath anticipates that the mechanical switch project will
remain on schedule. At March 31, 2000 the Company had a backlog of $283,000 in
telecom orders for all three of the Company's collimator products as compared to
$202,000 at December 31, 1999.
The Company has continued to move forward with a key telecom component OEM
account. This customer has completed quality certifications and on-site visits
during the reporting period. They have continued to order production volumes of
the specific large beam collimator product which was designed to meet their
needs for incorporation into a next generation optical networking product. This
OEM account represents $108,000 or 22% of the total sales backlog. Avanex
Corporation announced they have qualified the Company as a vendor for the
collimator products. In addition, the Company expanded its strategic alliance
with Hikari Glass Co., Ltd. to include products based on the Company's automated
laser polishing and laser fusion processes. The Company believes this agreement
will increase the Company's presence throughout Asia where Hikari has a strong
marketing and sales presence.
12
LIGHTPATH TECHNOLOGIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The sales cycle of component products for acceptance by a telecom customer,
is rigorous and consists of multiple steps. Therefore, all of the Company's
products are subjected to Bellcore testing in addition to meeting the customer's
specifications. The Company has sold products or sent samples of collimators to
in excess of 100 actual or potential customers over the past twelve to fifteen
months. After the products are qualified, some of these targeted customers
purchase a larger quantity to perform additional testing. After successful
testing and evaluation of the product, many customers then require some
customization of the collimator. Finally the Company will receive a request for
quotation on production size quantities prior to receiving manufacturing orders.
This is the process the Company utilized to be qualified by Avanex Corporation.
Sales orders from another OEM of $108,000 also reflects such a process, however,
this amount represents the OEM's continuous reorder of the large beam collimator
product. The Company believes that it will become a qualified vendor to this OEM
and that the collimator product will be successfully incorporated into their
production. The Company is also at various stages in this process with a number
of customers.
During the third quarter, the Company began acquisition talks with Horizon
Photonics, Inc., due to their automated production of passive optical components
and complimentary product line of isolators. The April 14, 2000 acquisition
represents a purchase price of $36.2 million of which $1 million was paid in
cash and the balance was exchanged for 1.2 million shares of Class A common
stock (subject to post closing adjustments). Horizon currently has a $6 million
sales backlog for its isolator products from Lucent Technologies, Inc. These
products are expected to be supplied during the next twelve to eighteen months.
During the third quarter of fiscal 2000, the majority of the Company's
$162,778 in sales to the traditional optics segment were comprised of laser
optic lenses. The Company and the German optical products manufacturer
Rodenstock Prazisionsoptik GmbH ("Rodenstock") are proceeding with the marketing
program for the development, production and joint-distribution of GRADIUM based
optical products in Europe. The Company's remaining distributors continue to
work with existing markets for GRADIUM in their respective countries primarily
in the area of the YAG laser market. At March 31, 2000, the Company had a total
backlog of $213,000 in lens products as compared to $148,000 at December 31,
1999.
The Company's revenues totaled $333,175 for 2000, an increase of
approximately $42,000 or 14% over 1999. The increase was primarily attributable
to sales of telecom products offset by a reduction in product
development/license fees. Sales during this period exceeded those occurring
during any other quarter to date. At March 31, 2000, the Company's total backlog
was $496,000 consisting of $283,000 for collimator sales and $213,000 for lens
sales. Sales revenues from these orders will be recognized in future quarters as
the products are shipped.
In 2000, cost of sales was 43% of product sales, a decrease from 1999, when
cost of sales was 50% of product sales. The decrease was primarily due to higher
margins on telecom products and sales to traditional optics distributors during
the quarter. It is anticipated that the Company's telecom products will continue
to maintain a lower cost of sales than its traditional optics products.
Additionally, with increased volume and the increased utilization of off-shore
lens finishers, the cost of traditional optics production could be decreased.
Selling, general and administrative costs increased by $1,522,100 from 1999 to
$2,232,574, primarily due to $779,437 non-cash charge for stock based
compensation and $742,663 due to the increased personnel in sales,
administration and manufacturing support. Research and development costs
increased by $177,393 to $378,021 in 2000 versus 1999. The majority of
development work consisted of expenses associated with the collimator assembly
design, manufacturing process and the New Jersey facility where development work
is on-going to expand the Company's products to the areas of switches,
interconnects and cross-connects for the telecommunications industry.
During the period, the Company invested heavily in additional personnel,
equipment and facility assets. The Company's salaried staff doubled over the
previous quarter and, an additional 17,000 square foot facility was leased in
Albuquerque to house the manufacturing operation. Additionally, an engineering
team was assembled which began construction of twenty additional laser fusion
production stations. The Company expects the manufacturing building and
production equipment to be completed by June 1, 2000. During this period while
the production capacity was in a state of expansion, the Company implemented
three shift production schedules in order to address the increasing sales
backlog. The Company believes that the automated production capacity that is
currently being put in place, will be sufficient for the Company's expected
needs for the next fiscal year.
13
LIGHTPATH TECHNOLOGIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Investment income increased approximately $317,000 in 2000 due to the
increase in interest earned on temporary investments as a result of an increase
in cash balances. Interest and other expense was not significant in 2000 or
1999. The Company accounts for its investment in LightChip at historical cost,
beginning in December 1999. The Company discontinued application of the equity
method of accounting when its pro-rata share of LightChip's losses
(approximately 15% based on its pro-rata investment in LightChip preferred
stock) had reduced the investment to zero. As a result, the Company recognized
LightChip losses of $0 for the 2000 quarter versus $10,324 in 1999.
Net loss of $2,120,287 in 2000 was an increase of approximately $1.4
million from 1999 of which $780,000 relates to a noncash charge for stock based
compensation and $743,000 was due to increased costs primarily in selling,
general and administrative expense. These increased costs were partially offset
by a $42,000 increase in total revenues and $317,000 increase in interest income
and $10,000 in reduced losses by LightChip. Net loss applicable to common
shareholders of $3,134,329 included an additional noncash charge of $958,042 for
an imputed dividend and $56,000 attributable to the premium on the Company's
outstanding preferred stock. Net loss per share of $.29 in 2000 was an increase
of $.13 from the 1999 net loss per share due primarily to the increased expenses
and preferred stock imputed dividend offset by the increase in weighted shares
outstanding. The increase in the number of weighted shares outstanding for 2000
versus 1999 decreased the Net loss applicable to common shareholders by $.39.
The 1999 net loss per share contains $38,018 attributable to the premium on the
preferred stock.
NINE MONTHS ENDED MARCH 31, 2000 ("2000") COMPARED WITH THE NINE MONTHS ENDED
MARCH 31, 1999 ("1999")
During the first nine months of fiscal 2000, the Company's optoelectronics
and fiber telecommunications segment was impacted by 1) receipt of approximately
$42 million in proceeds from the exercise of warrants and options and the net
financial investment of $4.7 million in July and November private placements
which are available to grow this segment, 2) the November addition of Robert
Ripp, former Chairman and CEO of AMP, Inc. whose business experience and
knowledge of the telecommunications industry have been beneficial to the
Company, 3) the enhancement of our Management team by the hiring of Stephen
Barna, formerly of Lucent and AT&T, as VP Marketing & Sales, 4) continued record
sales bookings which reflect customers such as Avanex Corp.'s qualification of
our collimator lens and continued product enhancements such as the Gen3
collimator which has the lowest documented insertion loss reported to date in
these devices, 5) the expansion of our telecom products through the acquisition
of privately held Horizon Photonics, Inc. completed on April 14, 2000 and the
increase in the Company's investment in LightChip by $1.6 million (December 1999
private placement investors included Morgenthaler, J.P. Morgan Capital, AT&T
Ventures and LightPath). As the second quarter came to a close, the Company
achieved a significant milestone by meeting the criteria to call the Class A
Warrants which were issued as part of the February 1996 IPO. Substantially all
of the Class A Warrants and 2.6 million Class B Warrants and various private
placement warrants were exercised for net proceeds of approximately $38 million
during the third quarter. The Company intends to use a portion of this capital
to 1) expand the collimator production facility and staff in Albuquerque, 2) to
open a facility in New Jersey for development of the optical switch engine to be
sold as an enabling component for an optical cross connect system, 3) to
increase the size of the Company's current product and technology development
team which continues to improve upon and expand our current telecom products
built around the single mode fiber collimator, and 4) broaden the Company's
telecom component offerings and automation base through additional strategic
acquisitions and strategic alliances.
To date in fiscal 2000 the Company's optoelectronics and fiber
telecommunications segment continued its efforts to 1) increase the sale of
collimator assemblies and lenses and the distribution of collimator samples to
potential customers for testing, 2) develop fiberoptic switches and 3) obtain
patent protection for its proprietary telecommunications products and processes.
The Company's internal focus continues to be on the sale and shipment of
products and samples of LightPath's single-mode fiber collimator assembly (SMF
assembly). The Company currently offers three telecom product levels, the
collimating lens, a SMF assembly and a large-beam collimating assembly. The
Company displayed all three of these products at industry trade shows in early
calendar 1999 and the enhanced Gen3 collimator was displayed at the January 2000
Photonics West trade show. These shows allow the Company to deliver additional
samples and to meet with potential customers to distribute information on the
Company's products or to discuss test results from samples previously sent.
Based on the results of the customers' testing and qualification of our
collimating lens by Avanex Corp.,the Company believes higher-volume production
orders will develop in the future. The Company anticipates such orders to be
received in response to customer use that confirms the SMF assembly offers
superior performance in the areas of back reflection and insertion loss at a
14
LIGHTPATH TECHNOLOGIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
very competitive price. The Company's tests on the Gen3 collimator indicates it
has the lowest documented insertion loss reported to date in these devices. The
Company believes that its increased sales orders for the nine months reflect
this positive feedback and customer qualification. Telecom product sales
increased to $255,324 which is a 348% increase from the entire telecom revenues
of $57,029 in fiscal 1999. In addition, the backlog for these products increased
to $283,000 from $10,000 at June 30, 1999. The Company completed the
installation of a clean room in its original manufacturing area to meet
anticipated future customer demands. The Company, in response to the acceptance
of its collimator product line by various customers, began an expansion of its
manufacturing production capability. An additional 3,600 square feet of leased
space adjacent to our original Albuquerque facility now houses the engineering,
glass research and development projects. During January 2000, the Company also
completed negotiations on an additional lease for more than 17,000 square feet
of manufacturing space in the same vicinity of our existing facility and in this
space we are currently adding additional clean rooms and manufacturing
collimator production lines. In addition, the Company leased approximately
11,500 square feet at a facility in New Jersey for development of the optical
switch engine to be sold as an enabling component for an optical cross connect
system. The Company has continued the fiberoptic, mechanical switch development
process with a separate business unit of E-TEK, Kaifa Technology, which E-TEK
acquired in July 1999. The Company is uncertain how the recent acquisition of
E-TEK by JPS-Uniphase will impact this relationship. LightPath anticipates that
the mechanical switch project will remain on schedule. The Company believes
these relationships will accelerate its planned introduction of fiberoptic
mechanical switching products for the telecommunications market. In addition,
the Company expanded its strategic alliance with Hikari Glass Co., Ltd. to
include products based on the Company's automated laser polishing and laser
fusion processes. The Company believes this agreement will increase our presence
throughout Asia where Hikari has a strong marketing and sales presence. To date
in 2000, the Company was been awarded five additional US patents and one foreign
patent. Three of these patents relate to telecom products or processes, with the
most significant being the proprietary process to fuse fibers directly to a
larger optical component such as the collimator lens. One in process patent was
terminated.
The Company began acquisition talks with Horizon Photonics, Inc. in
February 2000, due to our interest in their automated production of passive
optical components and complimentary product lines of isolators. The April 14,
2000 acquisition represents a purchase price of $36.2 million of which $1
million was paid in cash and the balance was exchanged for 1.2 million shares of
Class A common stock (subject to post closing adjustments). Horizon currently
has a $6 million sales backlog for its isolator products from Lucent
Technologies, Inc. These products are expected to be supplied during the next
twelve to eighteen months.
During the first nine months of fiscal 2000, the majority of the Company's
sales to the traditional optics segment were comprised of laser optic lenses.
Revenues of $624,751 for the nine month period included $125,000 in license fees
and $42,423 in revenues for government funded subcontracts utilizing GRADIUM
glass in optoelectronics applications. The Company and the German optical
products manufacturer Rodenstock Prazisionsoptik GmbH ("Rodenstock") are
proceeding with the marketing program for the development, production and
joint-distribution of GRADIUM based optical products in Europe. The Company
believes the relationship with Rodenstock may create new and sustain existing
markets for GRADIUM in Europe primarily in the area of imaging systems. The
Company's remaining distributors continue to work with existing markets for
GRADIUM in their respective countries primarily in the area of the YAG laser
market. At March 31, 2000, the Company had a backlog of $213,000 as compared to
$35,000 in lens products at June 30, 1999.
The Company's revenues totaled $880,075 for 2000, an increase of
approximately $143,000 or 19% over 1999. The increase was attributable to a 39%
increase, or $199,000, in additional product sales, primarily for telecom
products, offset by a $56,000 decrease in product development/license fees as
the government subcontract has concluded. At March 31, 2000, the Company's total
backlog was $496,000 consisting of $213,000 for lens sales, $283,000 for
collimator sales as compared to June 30, 1999 backlog of $35,000 for lens sales,
$10,000 for collimator sales and $100,000 for government project funding. Sales
revenues from orders will be recognized in future quarters as the products are
shipped.
In 2000, cost of sales was 47% of product sales, a decrease from 1999, when
cost of sales was 58% of product sales. The decrease was primarily due to higher
margins on telecom products and sales to traditional optics distributors during
the quarter. It is anticipated that the Company's telecom products will continue
to maintain a lower cost of sales than its traditional optics products.
Additionally, with increased volume and the increased utilization of off-shore
lens finishers, the cost of traditional optics production could be decreased.
Selling, general and administrative costs increased by $1.7 million from 1999 to
$3,890,420, primarily due to $780,000 in a non-cash stock based compensation
15
LIGHTPATH TECHNOLOGIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
charges and approximately $887,000 from increases in personnel in administration
and manufacturing support. Research and development costs increased by
approximately $166,000 to $668,286 in 2000 versus 1999. The majority of
development work consisted of expenses associated with the collimator assembly
design and the New Jersey facility where development work is on-going to expand
the Company's products to the areas of switches, interconnects and
cross-connects for the telecommunications industry.
Investment income increased approximately $301,000 in 2000 due to the
increase in interest earned on temporary investments as a result of an increase
in cash balances. In July 1999, the Company issued $1 million aggregate
principal amount of 6% convertible debentures and paid approximately $10,000 of
interest expense. The Company recognized an interest charge of $381,869 in the
first quarter of fiscal year 2000 for the "beneficial conversion feature"
associated with the Debentures and $43,926 of the remaining debt discount was
amortized from the issuance date through September 24, 1999 when all of the
Debentures were converted and related warrants were exercised into approximately
one million shares of Class A Common Stock. Interest expense was not significant
in 1999. The Company accounts for its investment in LightChip under the cost
method as of December 1999. The Company discontinued application of the equity
method of accounting when its pro-rata share of LightChip's losses
(approximately 15% based on its pro-rata investment in LightChip preferred
stock) had reduced the investment to zero. As a result, the Company recognized
LightChip total losses of $0 in 2000 versus $361,671 in 1999.
Net loss of $4,093,244 in 2000 was an increase of approximately $1.5
million from 1999 of which $780,000 relates to non-cash stock based compensation
charges and $458,000 from the recognition of charges associated with the
debenture issuance and interest expense, $922,000 increase in cost of sales and
operating costs primarily in selling, general and administrative expense and
$166,000 increase in research and development costs. These increased costs were
partially offset by the $143,000 increase in total revenues, $301,000 increase
in interest income and the $362,000 reduction of the Company's share of
LightChip's loss. Net loss applicable to common shareholders of $6,298,486
included an additional charge of $2,094,662 for the imputed dividend and
$110,580 attributable to the premium on the Company's outstanding preferred
stock. Net loss per share of $.83 in the first nine months of fiscal year 2000
was $.15 more than the 1999 net loss per share of $.68. Net loss per share was
decreased due to the preferred stock dividend, however, the decrease was offset
by an increase in the number of weighted shares outstanding for 2000 versus
1999. The 1999 net loss per share contains $196,659 attributable to the premium
on the preferred stock.
16
LIGHTPATH TECHNOLOGIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
FINANCIAL RESOURCES AND LIQUIDITY
LightPath financed its initial operations through private placements of
equity and debt until February 1996 when its initial public offering of units of
common stock and Class A and B Warrants generated net proceeds of approximately
$7.2 million. From June 1997 through February 1998, the Company completed three
preferred stock private placements which generated total net proceeds of
approximately $7.2 million. In July 1999 the Company issued convertible
debentures with warrants resulting in net proceeds of approximately $893,000. In
September 1999 all of the debentures were converted to shares of common stock
and all of the associated warrants were exercised resulting in additional net
proceeds of $940,000. In November 1999 the Company issued 408 shares of its
Series F Convertible Preferred Stock and warrants in a private placement. Net
proceeds from the private placement were approximately $3.9 million. Since June
30, 1999, the Company has also received net proceeds of approximately $42
million from the exercise of options and warrants issued at the initial public
offering or in connection with private placements.
Cash used in operations for the first nine months of fiscal 2000 totaled
approximately $2.7 million, a increase of approximately $523,000 from fiscal
1999, due primarily to increased sales and administrative costs. The Company
expects to continue to incur net losses until such time, if ever, as it obtains
market acceptance for its products at sale prices and volumes which provide
adequate gross revenues to offset its operating costs. During fiscal 2000, the
Company has expended approximately $1.4 million for capital equipment and patent
protection and has outstanding commitments to expend an additional $1.2 million
in the fourth quarter. The majority of the capital expenditures during the year
were related to the development of its clean room and equipment used to expand
the Company's manufacturing facilities for collimator production. In October
1999, the Company funded the remaining $570,000 of its commitment to LightChip
upon completion of the product development requirements in the September 1998
agreement. In addition, the Company funded $1 million for LightChip preferred
stock in December 1999 at which time LightChip issued $16 million of preferred
stock in a private placement. In April 2000, the Company acquired Horizon
Photonics, Inc. "HPI" a California corporation for an aggregate purchase price
of approximately $36.2 million. On that date, the Company acquired all of the
outstanding shares of HPI for approximately 1.2 million shares of Class A common
stock (subject to post closing adjustment) and $1 million cash. The Company also
assumed approximately $250,000 of indebtedness of HPI, which was repaid upon
closing of the transaction. The cash portion of the purchase price was provided
from working capital. The Company has committed approximately $3 million to fund
HPI capital expenditures for expansion of HPI's manufacturing facilities during
the next twelve months.
Projected product sales as well as the proceeds from the July 1999 sale of
6% Convertible Debentures and related warrants exercised will be used for
working capital for fiscal 2000. Proceeds from the November 1999 issuance of
Series F Convertible Preferred Stock of approximately $3.9 million will be used
to expand collimator production, development of the optical switch and working
capital. Proceeds of $42 million were received from the exercise of options and
the Class A, Class B and various private placement warrants in the second and
third quarters of fiscal 2000. The proceeds will be used for working capital,
expansion of the Albuquerque facility in terms of both capital equipment and
leased facilities and the addition of a leased facility in New Jersey. The
Company's ability to generate future sales will depend on the SMF assembly,
collimating lenses and GRADIUM glass becoming commercially accepted at levels
sufficient to sustain its operations. There can be no assurance that the Company
will generate sufficient revenues to fund its future operations and growth
strategies. The Company may also be required to alter its busi |
