As filed with the Securities and Exchange Commission on December 20, 2001
Registration No._______
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM S-3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
LIGHTPATH TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 86-0708398
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) (Identification No.)
3819 Osuna, N.E., Albuquerque, New Mexico 87109
(505) 342-1100
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
Donna Bogue
Chief Financial Officer
LightPath Technologies, Inc.
3819 Osuna, NE
Albuquerque, New Mexico 87109
(505) 342-1100
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copy to:
Joseph M. Crabb, Esq.
Squire, Sanders & Dempsey L.L.P
40 North Central Avenue
Phoenix, AZ 85004
Telephone: (602) 528-4000
Facsimile: (602) 253-8129
APPROXIMATE DATE OF PROPOSED SALE TO PUBLIC: As soon as practicable after the
effective date of this Registration Statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box [ ]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462 (b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] ___
If this Form is a post-effective amendment filed pursuant to Rule 462 (c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
====================================================================================================================
Proposed maximum Proposed maximum
Title of each class of Amount to be offering price aggregate offering Amount of
securities to be registered registered per unit (1) price (1) registration fee
- --------------------------------------------------------------------------------------------------------------------
Class A common stock, $0.01
par value (2) 181,000 $3.89 $ 704,090 $168.28
- --------------------------------------------------------------------------------------------------------------------
Class A common stock, $0.01
par value (3) 201,250 $3.89 $ 782,863 $187.10
- --------------------------------------------------------------------------------------------------------------------
TOTAL: 382,250 $1,486,953 $355.38
====================================================================================================================
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rules 457(c) and 457(g) under the Securities Act, of 1933, as
amended, based on the average of the high and low prices of a share of
Class A Common Stock as reported on the Nasdaq National Market on December
17, 2001.
(2) Represents shares of Common Stock issuable upon exercise of options issued
to officers and employees of the Company (the "stock options").
(3) Represents shares of Common Stock issuable upon exercise of options issued
to certain holders of the Company's Class E shares, in connection with the
settlement of certain litigation related thereto (the "settlement
options").
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THE
SELLING SHAREHOLDER MAY NOT SELL THESE SECURITIES PURSUANT TO THIS REGISTRATION
STATEMENT UNTIL THIS REGISTRATION STATEMENT FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION IS DECLARED EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO
SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES
IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED DECEMBER 20, 2001
PROSPECTUS
382,250 SHARES
OF CLASS A COMMON STOCK
LIGHTPATH TECHNOLOGIES, INC.
3819 Osuna, N.E.
Albuquerque, New Mexico 87109
Telephone: (505) 342-1100
All of the shares of Class A Common Stock being sold are being offered and sold
by certain of our shareholders on a delayed or continuous basis, pursuant to the
exercise of registration rights. We have agreed to bear all the expenses of
registration of the shares in this Prospectus.
Our Class A Common Stock is traded in the over-the-counter market through the
Nasdaq National Market system under the symbol LPTH. On December 17, 2001, the
closing price of the Class A Common Stock on the Nasdaq National Market system
was $4.08 per share.
THIS INVESTMENT INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD PURCHASE SHARES ONLY
IF YOU CAN AFFORD A COMPLETE LOSS. SEE "RISK FACTORS" BEGINNING AT PAGE 9.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
The date of this prospectus is December __, 2001.
TABLE OF CONTENTS
Page
----
Where You Can Find More Information (ii)
Prospectus Summary 1
The Offering 6
Risk Factors 8
Selling Shareholders 25
Use of Proceeds 27
Determination of Offering Price 27
Plan of Distribution 27
Description of Securities 29
Legal Matters 29
Experts 29
Interest of Named Experts and Counsel 29
Indemnification 29
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports and other information with
the U.S. Securities and Exchange Commission. You may read and copy any document
that we have filed at the SEC's Public Reference Room at 450 Fifth Street, N.W.,
Washington, DC, 20549. Please call the SEC at 1-800-SEC-0330 for further
information about the operation of its public reference facilities. Our SEC
filings are also available to you free of charge at the SEC's web site at
http://www.sec.gov.
Copies of publicly available documents that we have filed with the SEC can
also be inspected and copied at the offices of the National Association of
Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C. 20006.
We have filed a registration statement on Form S-3 with the SEC that covers
the resale of the common stock offered by this prospectus. This prospectus is a
part of that registration statement, but the prospectus does not include all of
the information included in the registration statement. You should refer to the
registration statement for additional information about us and the common stock
being offered in this prospectus. Statements that we make in this prospectus
relating to any documents filed as an exhibit to the registration statement or
any document incorporated by reference into the registration statement may not
be complete and you should review the referenced document itself for a complete
understanding of its terms.
The SEC allows us to "incorporate by reference" to the information we file with
them, which means that we can disclose important information to you in this
prospectus by referring you to those documents. The documents that have been
incorporated by reference are an important part of the prospectus, and you
should be sure to review that information in order to understand the nature of
any investment by you in the common stock. In addition to previously filed
documents that are incorporated by reference, documents that we file with the
ii
SEC after the date of this prospectus will update and supersede this
information. We incorporate by reference the documents listed below and any
future filings made with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934, as amended, until the offering is complete:
+ our annual report on Form 10-KSB for the fiscal year ended June 30, 2001;
+ our proxy statement relating to the 2001 Annual Meeting;
+ our quarterly report on Form 10-Q for the fiscal quarter ended September
30, 2001; and
+ the description of our Class A Common Stock included in our registration
statement on Form 8-A filed on January 13, 1996.
We will provide you with copies of any of the documents incorporated by
reference, at no charge to you, however, we will not deliver copies of any
exhibits to those documents unless the exhibit itself is specifically
incorporated by reference. If you would like a copy of any document, please
write or call us at:
LightPath Technologies, Inc. 3819 Osuna, N.E. Albuquerque, New Mexico 87109
Attn: Investor Relations Telephone: (505) 342-1100
You should only rely upon the information included in or incorporated by
reference into this prospectus or in any prospectus supplement that is delivered
to you. We have not authorized anyone to provide you with additional or
different information. You should not assume that the information included in or
incorporated by reference into this prospectus or any prospectus supplement is
accurate as of any date later than the date on the front of the prospectus or
prospectus supplement.
This prospectus does not constitute an offer of these securities in any
state where the offer is not permitted. The selling shareholders are offering to
sell, and seeking offers to buy, shares of our Class A Common Stock only in
jurisdictions where offers and sales are permitted. The information contained in
this prospectus is accurate only as of the date of this prospectus, regardless
of the time of delivery of this prospectus or any sale of Class A Common Stock.
iii
PROSPECTUS SUMMARY
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THE
SELLING SHAREHOLDER MAY NOT SELL THESE SECURITIES PURSUANT TO THIS REGISTRATION
STATEMENT UNTIL THIS REGISTRATION STATEMENT FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION IS DECLARED EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO
SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES
IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
THE FOLLOWING SUMMARY SHOULD BE READ TOGETHER WITH THE MORE DETAILED INFORMATION
IN OTHER SECTIONS OF THIS PROSPECTUS. YOU SHOULD CAREFULLY CONSIDER THE FACTORS
DESCRIBED UNDER THE HEADING "RISK FACTORS" AT PAGE 8 OF THIS PROSPECTUS.
LIGHTPATH TECHNOLOGIES, INC.
LightPath is a manufacturer of families of high-performance fiber-optic
collimator and isolator products, GRADIUM(R) glass lenses and utilizes other
optical materials to produce products that manipulate light. We also perform
research and development for optical solutions in the fiber telecommunications
and traditional optics markets. On April 14, 2000, we acquired Horizon
Photonics, Inc. ("Horizon"), a California corporation originally founded in July
1997. Horizon is an emerging leader in the automated production of passive
optical components for the telecommunications and data communications markets.
Horizon manufactures isolator products at their Walnut, California facility. On
September 20, 2000, the Company acquired Geltech, Inc., a Delaware corporation,
("Geltech"), a leading manufacturer of precision molded aspherical optics used
in the active telecom components market to provide a highly efficient means to
couple laser diodes to fibers or waveguides.
We operate through two operating segments; optoelectronics and fiber
telecommunications ("telecom"), and traditional optics (e.g. lasers, data
storage, bar coding, medical equipment, consumer optics, etc.). We manufacture
and sell the following types of telecom products: (i) collimators, (ii)
isolators and (iii) molded aspheric lenses. Collimators are assemblies that are
used to straighten and make parallel diverging light as it exits a fiber. An
isolator is used to prevent the back reflection of optical signals that can
degrade transmitter and amplifier performance. Molded aspheres are used in
telecom applications to collimate or couple light as it emerges from a fiber.
Collimators, isolators, molded aspheres and other optical components are used
throughout fiber optic systems. Such systems are used by the telecommunications
industry with a goal of increased bandwidth, through the development of all
optical networks, by combining multiple light streams from individual
transmissions onto a single optical fiber. We are also planning to develop other
products related to the optoelectronics and telecommunications industry through
licenses and relationships with other manufacturers.
We also manufacture traditional optics products including: (i) GRADIUM
glass products, lenses, prisms and (ii) molded aspheric lenses. GRADIUM glass is
an optical quality glass material with varying refractive indices used for
optics such as lenses for YAG lasers. Molded aspheres are used in non-telecom
applications such as optical data storage, high precision printing, bar coding
and by manufacturers of medical equipment. In addition, we manufacture a family
of traditional optics including laser flow tubes, polished cylinders and flats,
and prisms.
WHAT IS GRADIUM GLASS? GRADIUM glass is an optical quality glass material
with varying refractive indices, capable of reducing optical aberrations
inherent in conventional lenses and performing with a single lens tasks
traditionally performed by multi-element conventional lens systems. We believe
that GRADIUM glass lenses provide advantages over conventional lenses for
certain applications. By reducing optical aberrations and the number of lenses
in an optical system, GRADIUM glass can provide more efficient light
transmission and greater brightness, lower production costs, and a simpler,
1
smaller product. While we believe that other researchers have sought to automate
production of passive optical components and to produce optical quality lens
material with the properties of GRADIUM glass, we are not aware of any other
person or firm that has developed a repeatable manufacturing process comparable
to our abilities or with the ability to produce such material on a prescribable
basis.
TO WHICH INDUSTRIES ARE LIGHTPATH'S PRODUCTS BEING MARKETED? - Our
management and marketing focus is organized with the intended purpose of serving
two separate markets: (1) optoelectronics and fiber telecommunications
("telecom"), and (2) traditional optics (e.g. lasers, data storage, bar coding,
medical equipment, consumer optics, etc.). We believe that GRADIUM glass and
other optical materials can potentially be marketed for use in many optics and
optoelectronics products.
OPTOELECTRONICS AND FIBER TELECOMMUNICATIONS (TELECOM PRODUCTS)
Optoelectronics technologies consist of an overlap of photonics and
electronics and are key enablers of "Information Age" technologies, such as
fiber optic communications, optical data storage, laser printers, digital
imaging, and sensors for machine vision and environmental monitoring. The
telecom/datacom networks are facing explosive growth. The dramatic rise of the
Internet, office automation, videoconferencing, local and wide area networking,
and remote access telecommunications has fueled the demand for more and more
network capacity in both long-haul telecommunications and cable television
networks.
Given the inherently faster speed of light signals in fiber-optic networks
and their immunity from electromagnetic interference, fiber-optic systems are
replacing existing copper wire networks for long-haul (more than 600 kilometers)
telecommunications networks. Cable television networks are also shifting to
fiber-optic solutions for the distribution of signals from the broadcast station
to the local cable distribution hubs. Today, fiber-optic cable is the primary
medium for long-haul telecommunications and cable television networks and is
making inroads to replace copper in the shorter distance "metro loops" that
serve larger metropolitan and other public networks with transmission distances
of less than 100 kilometers. By the beginning of 1999, over 44 million
kilometers of fiber was installed throughout the world, and analysts estimate
that this figure will grow to 67 million kilometers by the year 2001. (Kessler
Marketing Intelligence).
COLLIMATORS
Prior to 1998, we targeted various optoelectronic industry market niches as
potential purchasers of our GRADIUM glass products. During 1998, we began the
development of products for the emerging optoelectronics markets, specifically
in the areas of fiber telecommunications. With our resolution of packaging and
alignment issues we demonstrated our first passive optoelectronic product, the
SMF Assembly, in 1998. This product is manufactured with automated production
techniques we developed which utilizes laser fusion and fiber attachment. During
1999 and 2000, we expanded this product line, demonstrating to the
telecommunication optical components industry that we can provide low cost
products and solutions to meet their telecom-related collimator needs.
ISOLATORS AND WDM SYSTEMS
The demand for increased bandwidth in fiber-optic networks has led to the
widespread use of a once-theoretical method for transmitting multiple signals at
slightly different wavelengths through a single fiber to achieve efficient use
of fiber capacity. This technique, known as wavelength division multiplexing, or
WDM, requires separate source lasers transmitting slightly different wavelengths
for each signal or "channel" and more complex modulators and optical amplifiers
2
to control and amplify the signal in the network. WDM systems, originally
developed for eight separate channels in 1996, are currently being designed to
carry as many as 128 separate channels with 0.4 of a nanometer in
differentiation between wavelengths. In theory, a single pair of optical fibers
can carry more than 10 terabits of information per second, which is roughly
equivalent to 156 million voice channels or 500,000 simultaneous two-way HDTV
channels. Through Horizon and our investment in LightChip, we have positioned
ourselves with products that are used within WDM systems.
With our acquisition of Horizon, we acquired an emerging leader in the
automated production of passive optical components for the telecommunications
and data communications markets. Horizon believes its primary strength is the
design of optical subassemblies for automation. Horizon's team has a
comprehensive background in the field of fiber optics, taking research efforts
"off the bench" and into manufacturing. Drawing upon years of experience in
automation, optoelectronic package design and testing, and a multitude of
technical disciplines, Horizon has demonstrated novel solutions for today's WDM
design and processing challenges. By targeting product families and creating
common platforms for each, Horizon can rapidly tailor variations within a
family, as the customer demands, and without major process or tooling changes.
This philosophy is evident in their proprietary micro-fixture design and
automated platform manufacturing process. This platform allows robots to mount
micro-optics in small transferable fixtures that can be processed at various
levels and converted into a variety of finished products. We believe Horizon has
a competitive advantage for a certain segment of OEM business, especially as it
relates to isolator products, since its proprietary platform allows Horizon to
produce unique designs at competitive prices in a flexible, automated process.
In fiscal 2001, Horizon released a new line of isolator assemblies for
application in the metro and access telecom markets. This new line is based on a
flexible manufacturing platform which can address a wide range of customer
specifications while attracting lower cost applications.
ASPHERIC LENSES
Lenses in telecommunications applications perform two major tasks. One is
for the collimation of light as it emerges from the fiber. This collimated light
then passes through multiple components including isolators, filters, and a
second collimator, before returning back into a fiber. The second major task is
coupling light at the output of a laser diode to a fiber or waveguide. Aspheric
lenses and lens arrays are used in both of these configurations.
Telecom products manufactured using this technology include aspheric
lenses, sub-millimeter lenses and lens arrays. Several new products targeting
telecommunications applications, and using this technology are under development
at Geltech. These new products include low-cost aspheric lenses, anamorphic
lenses, cross cylinder lenses, multifunctional optical components and new
components for low cost WDM products. All of these products have key relevancy
for many different applications in the telecommunications market.
SWITCHES
In 1999, we entered into an exclusive licensing agreement with Herzel Laor
for the commercialization of two fiberoptic opto-mechanical switch technologies.
In August 2000 we introduced the LP1600 opto-mechanical switch at the National
Fiber Optics Engineers Conference in Denver, Colorado. The Company planned to
manufacture the switch at its Albuquerque location using its patented automated
fiber fusion however, due to the current economic environment we have elected to
delay expenditures required to launch this product in fiscal 2002. We will
concentrate instead on development of further enhancements to existing product
lines.
3
WAVEGUIDES
Waveguides and Waveguide Array Gratings are important technologies for
coupling and splitting wavelengths of light in DWDM applications. Typical
configurations are made of silica on silicon and new developments are being made
using Sol-Gel. The largest market segment for waveguide usage is in the area of
multiplexing/demultiplexing.
OTHER PRODUCTS
We are currently developing additional optoelectronics products based on
our proprietary technologies. Key strategic alliances with technology and
marketing partners to design, build and sell next generation integrated
components and devices may be considered in the future. However, we do not
currently have any agreements, other than those discussed above, to enter into
any strategic alliances for this purpose.
TRADITIONAL OPTICS
LASER MARKETS FOR GRADIUM LENSES
We initially emphasized laser products because we believed GRADIUM lenses
could have a substantial immediate commercial impact in laser products with a
relatively small initial investment. The majority of the increase from sales of
lenses is due to optics used by YAG lasers. Generally, optical designers can
substitute our standard GRADIUM glass components for existing laser lens
elements. Lasers are presently used extensively in a broad range of consumer and
commercial products, including robotics, wafer chip inspection, bar code
reading, document reproduction and audio and video compact disc machines.
Because GRADIUM glass can concentrate light transmission into a much smaller
focal spot than conventional lenses, we believe, and customers test results
confirm, that GRADIUM glass has the ability to improve the current standard of
laser performance. In 1998, our distributor, Permanova Lasersystems AB of
Sweden, completed a lengthy trial and testing period on GRADIUM YAG lenses which
they qualified into systems produced by Rofin-Sinar GmbH, a major OEM
manufacturer of high-powered CO2 and YAG lasers, headquartered in Germany.
Our growth strategy is to increase our emphasis on key laser market niches
and establish the necessary products and partnership alliances to sell into
Europe and Asia as well as the U.S. market. During fiscal 1999, LightPath and
Rodenstock Prazisionsoptik GmbH (Rodenstock) executed an agreement to transfer
to Rodenstock the exclusive, application-related utilization and distribution of
GRADIUM lenses throughout Europe. The agreement was for an initial five-year
period. Rodenstock sold their precision optics division to Linos AG, a pioneer
in the field of photonics, in June 2000. We believe our agreement and
relationships will continue to grow under the Linos AG/Rodenstock alliance. We
also have established relationships with eight additional foreign distributors.
MOLDED ASPHERES
In 1994, Geltech acquired the Precision Molded Optics process from Corning,
Inc. Geltech's traditional optics product applications are molded aspheres used
in optical data storage, high precision printing, bar coding and by
manufacturers of medical equipment. In addition to the molded aspheres, Geltech
also manufactures a family of traditional optics including laser flow tubes,
polished cylinders and flats, and prisms. These devices are primarily sold to
manufacturers of medical devices, laser eye surgery equipment, and other
traditional optic applications.
HOW HAS LIGHTPATH DEVELOPED GRADIUM GLASS PRODUCTS? From our inception in
1985 until June 1996, we were classified as a development stage enterprise that
engaged in basic research and development. We believe that most of our product
sales made during this period were to persons evaluating the commercial
4
application of GRADIUM glass or using the products for research and development.
During fiscal year 1997, our operational focus began to shift to commercial
product development and sales.
In fiscal year 1998, we began to explore the development of products for
emerging markets such as optoelectronics, photonics and solar due to the number
of potential customer inquiries into the ability of GRADIUM glass to solve
optoelectronic problems, specifically in the areas of fiber telecommunications.
In 1998, the resolution of packaging and alignment issues, along with advances
made by LightChip with WDM equipment, led us to develop a strategy to enter the
telecom optical components market. This strategy is built around automated
production of the telecom components using laser fusion and fiber attachment
techniques we have developed. We have also maintained our emphasis on optical
materials where we gained expertise during the development of GRADIUM glass.
During fiscal 1998, sales of lenses to the traditional optics market continued
with increases in sales of lenses used in the YAG laser market, catalog and
distributor sales and lenses used in the wafer inspection markets. During this
time, we reorganized internally and realigned our marketing efforts with the
purpose of expanding our focus to include the optoelectronics and fiber
telecommunications markets in addition to the traditional optics market.
In designing our optoelectronic devices, we focused on automation of the
manufacturing process. Although many other manufacturers in this industry rely
on offshore production to control costs, we believe that automation of the
manufacturing process can yield significant costs savings over the long term.
Our patented laser fusion and fiber attachment techniques are highly automated,
and we believe these techniques provide improve quality and a better flexibility
to increase manufacturing capacity in response to growth in demand. Our
automation concept was expanded upon with our fiscal 2000 acquisition of Horizon
Photonics, Inc. ("Horizon") where we employ the use of robotic welders in
manufacturing of isolators.
The current focus of our development efforts has been to develop new
products based on our optical and automation platforms in the areas of
isolators, and next generation optical subassemblies, diffractive gratings,
waveguides, switches, micro-collimators and lens arrays for use in the
telecommunications field as well as new GRADIUM glass materials to be used in
various telecom applications.
We were issued a patent in fiscal year 2000 for development of a process
utilizing high-powered lasers for fusion, splicing and polishing of optical
material to include optical fiber. Our original process patent is for producing
an optical quality material, GRADIUM glass, with an "axial" gradient refractive
index (i.e., the index gradient runs parallel to the optical lens axis, rather
than perpendicular to the lens axis or "radial"). The GRADIUM glass designated
curve is achieved by the controlled combination of multiple glass molecule
densities. We have developed a set of proprietary software design tools so that
the light upon leaving the glass can be precisely modeled. GRADIUM glass lenses
can be produced across a large diameter range (currently 1mm-100mm). Growth in
our manufacturing capabilities has led to improved yield and automation,
advancing our goal of producing competitively priced optoelectronic and GRADIUM
glass products.
We were issued a patent in fiscal year 2001 relating to our robotic
assembly platform used for the manufacturing of isolators and have several other
patents in process. We have approximately 50 US and foreign patents in the areas
of precision molded optics and Sol-Gel technologies. We also hold the exclusive
right to certain materials we believe are key to the development of high
precision molded optics.
In addition, we utilize other optical materials and specialized optical
packaging concepts to manipulate light and perform research and development for
optical solutions in the fiber telecommunications and traditional optics
markets.
WHERE YOU CAN FIND US. LightPath was incorporated in Delaware in 1992. Our
corporate headquarters are located at 3819 Osuna, N.E., Albuquerque, New Mexico,
87109 and our telephone number is (505) 342-1100.
5
THE OFFERING
Securities Offered by the
Selling Shareholders .............. A maximum of 382,250 shares of Class A Common Stock are
covered by this prospectus.
Represents 181,000 shares of Class A Common Stock issuable
upon exercise of options issued to officers and employees of
the Company (the "stock options"), and 201,250 shares of
Class A Common Stock issuable upon exercise of 40,250
options issued to certain holders of the Company's Class E
shares, in connection with the settlement of certain
litigation related thereto (3)(the "settlement options").
Class A Common Stock Outstanding
as of November 30, 2001............ 19,378,667 shares(1)(2)
Use of Proceeds ................... We will not receive any of the proceeds of sales of Class A
Common Stock by the selling shareholders but we could
receive up to $2.1 million from the exercise, if any, of the
stock options, and up to $750,663 from the exercise, if any,
of the settlement options.
Risk Factors ...................... The shares of Class A Common Stock offered hereby involve a
high degree of risk. See "Risk Factors" on page 9.
Nasdaq National Market Symbol ..... "LPTH"
(1) Does not include shares underlying options outstanding to purchase 4,260,449
shares of Class A Common Stock which are exercisable at option exercise prices
ranging from $.63 to $51.56 per share and approximately 470,000 shares of Class
A Common Stock reserved for issuance upon future grants of options under
LightPath's stock option plans at September 30, 2001.
(2) Does not include an aggregate of 1,167,492 shares of Class A Common Stock at
September 30, 2001 consisting of (i) 299,300 shares of Class A Common Stock
issuable upon exercise of private placement and other warrants; and (ii) 868,192
shares of Class A Common Stock issuable upon conversion of the 127 remaining
shares of Series F Preferred Stock (minimum of 288,001 shares based on the fixed
conversion price at closing).
(3)The Settlement Options will be issued as part of the settlement of certain
class action litigation involving the holders of the Company's Class E shares.
As part of the Settlement Agreement, the Class E shareholders have been offered,
in exchange for their settlement of the class action lawsuit, the choice of
either: (i) $0.40 per Class E share, or (ii) an Option, for every one hundred
(100) Class E shares held, to purchase five (5) shares of the Company's Class A
Common Stock at an exercise price of $3.73. Alternatively, the Class E
shareholders have the right to exclude themselves from the Settlement Agreement
and preserve their claim. The Options will be distributed to those non-excluded
Class E shareholders who have chosen to receive the Option in settlement of
their claim (the "Optionholders"). Because the Class E shareholders have not
made the foregoing elections as of the time of this filing, the Optionholders to
be included herein cannot be determined at this time. The number of shares of
common stock registered hereby assumes that all Class E shareholders will elect
to receive the Options.
6
FORWARD-LOOKING STATEMENTS
Throughout this prospectus and the other documents incorporated by
reference into this prospectus we make certain "forward-looking" statements.
These are statements about future events, results of operations, business plans
and other matters. We use words such as "expect", "anticipate", "intend" or
other similar words to identify forward-looking statements. These statements are
made based on our current knowledge and understanding. However, there can be no
assurances as to whether or not actual results will be consistent with these
statements. In fact, actual events or results could vary dramatically from these
statements as a result of among other factors:
+ Economic conditions, domestically and internationally
+ Technological developments
+ Industry trends
+ Risk factors described in this prospectus.
We have no obligation to update the forward-looking statements made in this
prospectus or incorporated by reference herein.
7
RISK FACTORS
THE FOLLOWING RISK FACTORS SHOULD BE READ BY YOU TOGETHER WITH THE MORE DETAILED
INFORMATION INCLUDED AT OTHER SECTIONS OF THIS PROSPECTUS AND INCORPORATED BY
REFERENCE IN THIS PROSPECTUS BEFORE PURCHASING THE CLASS A COMMON STOCK OFFERED
HEREBY. IN ADDITION, YOU SHOULD CAREFULLY CONSIDER THE FACTORS DESCRIBED UNDER
"RISK FACTORS" BEGINNING AT PAGE 8 OF THIS PROSPECTUS. OUR FISCAL YEAR ENDS ON
JUNE 30 AND REFERENCES TO YEARS IN THIS PROSPECTUS REFER TO OUR FISCAL YEAR
ENDED AS OF JUNE 30 OF THE REFERENCED CALENDAR YEAR.
RISKS RELATED TO OUR FINANCIAL RESULTS
WE HAVE A HISTORY OF LOSSES AND MAY CONTINUE TO INCUR LOSSES.
We incurred net losses of $60.8 million and $15.6 million for the fiscal years
ended June 30, 2001 and 2000, respectively. We had accumulated deficits of $105
million and $116 million as of June 30, 2001 and September 30, 2001,
respectively. In June 2001, we announced lower net revenue guidance for our
fiscal year ending June 30, 2002 from $85 million to $35-55 million due to the
unanticipated widespread softening of the U.S. economy and the
telecommunications industry in particular. We have experienced order
cancellations and extensions of product shipment dates by our customers who are
adjusting their inventory levels in response to slower industry growth. These
cancellations and extensions adversely impact our revenues and could result in
higher inventory levels than required to support our sales levels. These
conditions may significantly delay, and could prevent, our ability to achieve
profitability. We expect to continue to incur significant product development,
sales and marketing and administrative expenses, and, as a result, we will need
to generate increased revenues to achieve profitability. Even if we achieve
profitability, given the competition in, and the evolving nature of, the optical
networking market, we may not be able to sustain or increase profitability on a
quarterly or annual basis. As a result, we will need to generate significantly
higher revenues while containing costs and operating expenses if we are to
achieve profitability.
WE FACE ORDER CANCELLATIONS AND EXTENSIONS OF PRODUCT SHIPMENT DATES BY SOME OF
OUR CUSTOMERS.
Our sales are generally made pursuant to purchase orders that are subject to
cancellation, modification or rescheduling without significant penalties to our
customers. We have recently experienced order cancellations and extensions of
product shipment dates by some of our customers. If these or other current
customers stop placing orders, or further reduce orders, we may not be able to
replace these orders with orders from new customers. The majority of our current
customers do not have any minimum purchase obligations, and they may stop
placing orders with us at any time, regardless of any forecast they may have
previously provided. The loss of any of our key customers or further reductions
in sales to these customers would reduce our net revenues from the levels
currently expected.
8
WE HAVE ONLY RECENTLY BEGUN SELLING PRODUCTS TO THE TELECOMMUNICATIONS INDUSTRY.
We have only generated revenues from the sale of products to the
telecommunications industry since fiscal 1999. Through June 1996, our primary
activities were basic research and development of glass material properties.
Moreover, our ability to accurately forecast revenues is impacted by weaknesses
and uncertainties regarding overall demand within the telecommunications
industry, inventory levels within the industry, sudden order reductions and
cancellations by customers, lower backlog of customer orders, and potential
pricing pressures that may arise from supply/demand conditions within the
industry. Because we have only recently begun to sell these products, we have in
the past and may in the future be unable to accurately forecast our revenues
from sales of these products, and we have limited meaningful historical
financial data upon which to plan future operating expenses. Many of our
expenses are fixed in the short term, and we may not be able to quickly reduce
spending if our revenue is lower than we project. Major new product
introductions will also result in increased operating expenses in advance of
generating revenues, if any. Therefore, net losses in a given quarter could be
greater than expected. We may not be able to address the risks associated with
our limited operating history in an emerging market and our business strategy
may not be sustainable. Failure to accurately forecast our revenues and future
operating expenses could cause quarterly fluctuations in our net revenues and
may result in volatility or a decline in our stock price.
OUR PRODUCTS ARE AT AN EARLY STAGE OF DEVELOPMENT AND MAY NOT ACHIEVE MARKET
ACCEPTANCE.
Many of our telecommunications products are still in the introductory phase, and
our current line of GRADIUM products and other traditional optics, have not
generated sufficient revenues to sustain operations. While we believe our
existing products are commercially viable, we anticipate the need to educate the
optical components market in order to generate market demand and market feedback
may require us to further refine these products. Development of additional
product lines will require significant further research, development, testing
and marketing prior to commercialization. There can be no assurance that any
proposed products will be successfully developed, demonstrate desirable optical
performance, be capable of being produced in commercial quantities at reasonable
costs or be successfully marketed.
OUR PRODUCTS HAVE NOT BEEN DEMONSTRATED TO BE COMMERCIALLY SUCCESSFUL.
Our collimator products have not yet achieved broad commercial acceptance, our
isolator sales first entered the commercial production phase in April 2000 with
one significant customer and our molded aspheres telecom applications are new.
Although we are engaged in negotiations and discussions with potential
customers, there can be no assurance that any such discussions will lead to
development of commercially viable products or significant revenues, if any, or
that any products currently existing or to be developed in the future will
attain sufficient market acceptance to generate significant revenues. We must
also satisfy industry-standard Telcordia testing on telecommunication products
to meet customer requirements, as well as satisfy prospective customers that we
will be able to meet their demand for quantities of products, since we may be
the sole supplier and licensor. We do not have demonstrated experience as a
9
manufacturer for all our product lines and have limited financial resources. We
may be unable to accomplish any one or more of the foregoing to the extent
necessary to develop market acceptance of our products.
Although our traditional optics products have been accepted commercially, the
benefits of the GRADIUM glass line are not widely known. In order to persuade
potential customers to purchase GRADIUM products, we will need to overcome
industry resistance to, and suspicion of, gradient lens technology that has
resulted from previous failed attempts by various researchers and manufacturers
unrelated to us to develop a repeatable, consistent process for producing lenses
with variable refractive indices. Prospective customers will need to make
substantial expenditures in order to redesign products to incorporate GRADIUM
lenses. There can be no assurances that potential customers will view the
benefits of our products as sufficient to warrant such design expenditures.
WE DEPEND ON A FEW KEY CUSTOMERS.
In the fiscal year ended June 30, 2001, Agere Systems, Inc., Corning
Incorporated and JDS Uniphase accounted for 44%, 7.4%, and 5.2% of our net
revenues, respectively. We anticipate that our operating results will continue
to depend on sales to a relatively small number of significant customers. The
loss of any of these customers, or a significant reduction in sales to any such
customers, could adversely affect our revenues.
RISKS RELATED TO THE OPTICAL NETWORKING INDUSTRY
SALES OF OUR PRODUCTS DEPENDS UPON DEPLOYMENT OF OPTICAL NETWORKS TO SATISFY
INCREASED BANDWIDTH REQUIREMENTS.
Our future success depends on the continuing increase in the amount of data
transmitted over communications networks, or bandwidth, and the growth of
optical networks to meet the increased demand for bandwidth. If the Internet
does not continue to expand as a widespread communications medium and commercial
marketplace, the need for significantly increased bandwidth across networks and
the market for optical networking products may not continue to develop. Future
demand for our products is uncertain and will depend to a great degree on the
continued growth and upgrading of optical networks. If the growth and upgrading
of optical networks does not continue, sales of our products may decline, which
would adversely affect our revenues.
THE OPTICAL NETWORKING MARKET IS NEW AND UNPREDICTABLE AND CHARACTERIZED BY
RAPID TECHNOLOGICAL CHANGES AND EVOLVING STANDARDS.
The optical networking market is relatively new and is characterized by rapid
technological change, frequent new product introductions, changes in customer
requirements and evolving industry standards. Because this market is relatively
new, it is difficult to predict its potential size or future growth rate.
Widespread adoption of optical networks is critical to our future success.
Potential end-user customers who have invested substantial resources in their
10
existing copper lines or other systems may be reluctant or slow to adopt a new
approach, like optical networks. Our success in generating revenues in this
emerging market will depend on, among other things:
- maintaining and enhancing our relationships with our customers;
- the education of potential end-user customers and network service
providers about the benefits of optical networks; and
- our ability to accurately predict and develop our products to meet
industry standards.
If we fail to address changing market conditions, the sales of our products may
decline, which would adversely impact our revenues.
WE MUST INCREASE OUR SALES VOLUMES, REDUCE OUR COSTS OR INTRODUCE HIGHER MARGIN
PRODUCTS TO OFFSET ANTICIPATED REDUCTIONS IN THE AVERAGE SELLING PRICES OF OUR
PRODUCTS.
We have experienced decreases in the average selling prices of some of our
products, including most of our passive component products. We anticipate that
as products in the optical component and module market become more commoditized,
the average selling prices of our products may decrease in response to
competitive pricing pressures, new product introductions by us, our competitors
or other factors. The optical component and module market is experiencing
extreme volatility as a result of lower product demand, which will make it
difficult for us to increase our sales volume. If we are unable to offset the
anticipated decrease in our average selling prices by increasing our sales
volumes or product mix, our net revenues and gross margins will decline. In
addition, to maintain or improve our gross margins, we must continue to reduce
the manufacturing cost of our products, and we must develop and introduce new
products and product enhancements with higher margins. If we cannot maintain or
improve our gross margins, our financial position may be harmed and our stock
price may decline.
RISKS RELATED TO OUR BUSINESS
OUR FUTURE SUCCESS DEPENDS ON OUR ABILITY TO DEVELOP AND SUCCESSFULLY INTRODUCE
NEW AND ENHANCED PRODUCTS THAT MEET THE NEEDS OF OUR CUSTOMERS.
Our future success depends on our ability to anticipate our customers' needs and
develop products that address those needs. Introduction of new products and
product enhancements will require that we effectively transfer production
processes from research and development to manufacturing and coordinate our
efforts with the efforts of our suppliers to rapidly achieve efficient volume
production. If we fail to effectively transfer production processes, develop
product enhancements or introduce new products that meet the needs of our
customers as scheduled, our net revenues may decline.
IF WE ARE UNABLE TO SUCCESSFULLY INTEGRATE ACQUIRED COMPANIES, OUR BUSINESS MAY
BE ADVERSELY AFFECTED.
During the calendar year ended December 31, 2000, we acquired both Horizon and
Geltech in separate transactions. The efficient integration of these businesses
into our organization will be important to our success. If our integration
efforts prove to be unsuccessful, our business will suffer. We have spent, and
11
expect to continue to spend, significant financial, management and other
resources to integrate these businesses into our organization. Our headcount
increased substantially as a result of the acquisitions, and these new employees
must be integrated with our existing employees. Both Horizon and Geltech were
privately held and may require substantial investments in operational and
financial infrastructure to ensure that their systems and processes adequately
support operating as a publicly held organization. Each of these organizations
will also need additional investments in manufacturing infrastructure in order
to develop new products and ramp up production volumes. There can be no
assurances that we will be able to retain the key employees of Horizon and
Geltech. We have limited experience with integrating acquired businesses into
our organization. Our integration efforts may not be successful and may result
in unanticipated operations problems, expenses and liabilities and the diversion
of management attention. If we are unable to integrate these companies into our
organization in a timely and effective manner, our business and our operating
results will be adversely affected.
We anticipate that in the future, as part of our business strategy, we may
continue to make strategic acquisitions of complementary companies, products or
technologies. In the event of any further future acquisitions, we could:
- issue stock that would dilute our current stockholders' percentage
ownership;
- incur debt;
- assume liabilities; or
- incur expenses related to in-process research and development,
amortization of intangible assets.
Any future acquisitions also could involve numerous risks, including:
- problems associated with combining the acquired operations,
technologies or products;
- unanticipated costs or liabilities;
- diversion of management's attention from our core business;
- adverse effects on existing business relationships with suppliers and
customers;
- risks associated with entering markets in which we have no or limited
prior experience; and
- potential loss of key employees, particularly those of the acquired
businesses.
We cannot assure that we will be able to successfully integrate any businesses,
products, technologies or personnel that we might acquire in the future, which
may harm our business.
COMPETITION MAY INCREASE, WHICH COULD REDUCE OUR SALES AND GROSS MARGINS, OR
CAUSE US TO LOSE MARKET SHARE.
Competition in the optical component and module market in which we compete is
intense. Many of our competitors are large public companies that have longer
operating histories and significantly greater financial, technical, marketing
and other resources than we have. As a result, these competitors are able to
devote greater resources than we can to the development, promotion, sale and
support of their products. In addition, the market capitalization and cash
reserves of several of our competitors are much larger than ours, and, as a
result, these competitors are much better positioned than we are to acquire
other companies in order to gain new technologies or products that may displace
our product lines. Such acquisitions could give our competitors a strategic
12
advantage. For example, if our competitors acquire any of our significant
customers, these customers may reduce the amount of products they purchase from
us. Alternatively, some of our competitors may spin-out new companies in the
optical component and module market. These companies may compete more
aggressively than their former parent companies due to their greater dependence
on our markets. In addition, many of our potential competitors have
significantly more established sales and customer support organizations, much
greater name recognition, more extensive customer bases, more developed
distribution channels and broader product offerings than we have. These
companies can leverage their customer bases and broader product offerings and
adopt aggressive pricing policies to gain market share. Additional competitors
may enter the market, and we are likely to compete with new companies in the
future. We expect to encounter potential customers that, due to existing
relationships with our competitors, are committed to the products offered by
these competitors. As a result of the foregoing factors, we expect that
competitive pressures may result in price reductions, reduced margins and loss
of market share.
We compete with manufacturers of conventional spherical lens products and
aspherical lens products, producers of optical quality glass and other
developers of gradient lens technology as well as telecom product manufacturers.
In both the optical lens and telecommunications components markets, we are
competing against, among others, established international industry giants. Many
of these companies also are primary customers for optical and telecommunication
components, and therefore have significant control over certain markets for our
products. We are also aware of other companies that are attempting to develop
radial gradient lens technology. There may also be others of which we are not
aware that are attempting to develop axial gradient lens technology similar to
our technology. There can be no assurance that existing or new competitors will
not develop technologies that are superior to or more commercially acceptable
than our existing and planned technologies and products.
OUR PRODUCTS MAY CONTAIN UNKNOWN DEFECTS.
Some of our products are designed to be deployed in large and complex optical
networks. Because of the nature of these products, they can only be fully tested
for reliability when deployed in networks for long periods of time. Our fiber
optic products may contain undetected defects when first introduced or as new
versions are released, and our customers may discover defects in our products
only after they have been fully deployed and operated under peak stress
conditions. In addition, our products often are combined with products from
other vendors. As a result, should problems occur, it may be difficult to
identify the source of the problem. If we are unable to fix defects or other
problems, we could experience, among other things:
- loss of customers;
- damage to our brand reputation;
- failure to attract new customers or achieve market acceptance;
- diversion of development and engineering resources; and
- legal actions by our customers or third parties.
13
The occurrence of any one or more of the foregoing factors could cause our net
revenues to decline or otherwise have an adverse effect on our business.
WE FACE PRODUCT LIABILITY RISKS.
The sale of our optical products will involve the inherent risk of product
liability claims by others. We do not currently maintain product liability
insurance coverage, although we do intend to procure such insurance in the
future. Product liability insurance is expensive, subject to various coverage
exclusions and may not be obtainable on terms acceptable to us. Moreover, the
amount and scope of any coverage may be inadequate to protect us in the event
that a product liability claim is successfully asserted.
OUR PRODUCTS HAVE LONG AND VARIABLE SALES CYCLES.
The timing of our revenue is difficult to predict because of the length and
variability of the sales and implementation cycles for our products. We do not
recognize revenue until a product has been shipped to a customer, all
significant vendor obligations have been performed and collection is considered
probable. Customers often view the purchase of our products as a significant and
strategic decision. As a result, customers typically expend significant effort
in evaluating, testing and qualifying our products and our manufacturing
process. This customer evaluation and qualification process frequently results
in a lengthy initial sales cycle (often one year or longer). While our customers
are evaluating our products and before they place an order with us, we may incur
substantial sales and marketing and research and development expenses to
customize our products to the customer's needs. We may also expend significant
management efforts, increase manufacturing capacity and order long lead-time
components or materials prior to receiving an order. Even after this evaluation
process, a potential customer may not purchase our products. Because of the
evolving nature of the optical component and module market, we cannot predict
the length of these sales and development cycles. The recent slowdown in the
U.S. economy has resulted in order cancellations and extensions of product
shipment dates by our customers. These long sales cycles, coupled with the
uncertain affects of the slowdown in the U.S. economy, may cause our revenues
and operating results to vary significantly and unexpectedly from quarter to
quarter, which could continue to cause volatility in our stock price.
WE DEPEND ON KEY PERSONNEL TO MANAGE OUR BUSINESS EFFECTIVELY.
Our future success depends upon the continued services of our executive officers
and other key engineering, sales, marketing, manufacturing and support
personnel. Our inability to retain or attract key employees could have a
material adverse effect on our business and results of operations. Our
operations depend, to a great extent, upon the efforts of our senior officers.
We also depend upon our ability to attract additional members to our management
and operations teams to support our expansion strategy. The loss of any of these
key employees would adversely affect our business. We had approximately 200
full-time employees on September 30, 2001. Although we have reduced our
workforce by approximately 190 people during the last three quarters, we expect
to continue to hire selectively in the manufacturing, engineering, sales and
marketing and administrative functions to the extent consistent with our
business levels. Our ability to continue to attract and retain highly skilled
personnel will be a critical factor in determining whether we will be
14
successful. Competition for highly skilled personnel is intense. We may not be
successful in attracting, assimilating or retaining qualified personnel to
fulfill our current or future needs, which could adversely impact our ability to
develop and sell our products.
WE HAVE LIMITED PRODUCT OFFERINGS, SOME OF WHICH ARE CURRENTLY EXPERIENCING A
DECLINE IN DEMAND.
We derive a substantial portion of our net revenues from a limited number of
products. Specifically, in the fiscal year ended June 30, 2001, we derived
approximately 50%, 16%, 14.5% and 19.5% of our net revenues from our isolators,
collimators, molded aspheric lenses and traditional optics, respectively. We
expect that net revenues from a limited number of products will continue to
account for a substantial portion of our total net revenues. Demand for these
and other optical component and module products has declined as a result of the
recent slowdown in the economy and we have recently experienced order
cancellations and delays in product shipment dates by our customers. Aside from
the current slowdown in the telecommunications industry, continued and
widespread market acceptance of our products is critical to our future success.
We cannot assure you that, once the telecommunication industry conditions
improve, our current products will achieve market acceptance at the rate at
which we expect, or at all, which could adversely affect our results of
operations.
WE MUST ACCURATELY TIME OUR MANUFACTURING CAPACITY WITH THE DEMAND FOR OUR
PRODUCTS.
We face a challenge in accurately timing the installation of our manufacturing
capacity with the demand for our products. Throughout fiscal 2001 we expanded
our manufacturing capacity through the expansion of facilities and the hiring of
employees and through the acquisition of Geltech. At September 30, 2001, we had
a total of 200 full-time employees, up from 125 employees at June 30, 2000 but
down from 300 at June 30, 2001. As a result of the recent, and sudden, order
cancellations and extensions of product shipment dates by our customers, we are
slowing the rate of production of some of our products. We also may curtail
efforts to install new equipment in our facilities until market conditions
improve. We believe this approach will allow us to quickly ramp production if
unit demand for our products merits. However, if demand for our products
continues to decline, we may have more employees and facility space than
necessary to deliver our products, which would adversely impact our ability to
achieve profitability, and could require us to further reduce the size of our
operations.
Despite our recent announcement to slow down expansion of our business, we still
face challenges as a result of our rapid expansion over the past few fiscal
years. The increase in employees as a result of the acquisitions and the growth
in our operations, combined with the challenges of managing
geographically-dispersed operations, have placed, and will continue to place, a
significant strain on our management systems and resources. We expect that we
will need to continue to improve our financial and managerial controls,
reporting systems and procedures and continue to expand, train and manage our
work force. The failure to effectively manage our recent growth and to
accurately time any future growth with market demand for our products could
adversely impact our ability to manufacture and sell our products, which could
reduce our revenues.
15
WE MUST EXPAND OUR SALES ORGANIZATION.
The sale of our products requires long and involved efforts targeted at several
key departments within our prospective customers' organizations. Sales of our
products require the prolonged efforts of executive personnel and specialized
systems and applications engineers working together with a small number of
dedicated salespersons. Currently, our sales organization is limited. We will
need to grow our sales force in order to increase market awareness and sales of
our products. Competition for these individuals is intense, and we might not be
able to hire the kind and number of sales personnel and applications engineers
we need. If we are unable to expand our sales operations, we may not be able to
increase market awareness or sales of our products, which would prevent us from
increasing our revenues.
WE MUST MAKE SALES IN A FRAGMENTED MARKET.
The markets for optical lenses and telecommunication components are highly
fragmented. Consequently, we will need to identify and successfully target
particular market segments in which we believe we will have the most success.
These efforts will require a substantial, but unknown, amount of effort and
resources. The fragmented nature of the optical products market may impede our
ability to achieve commercial acceptance for our products. In addition, our
success will depend in great part on our ability to develop and implement a
successful marketing and sales program. There can be no assurance that any
marketing and sales efforts undertaken by us will be successful or will result
in any significant product sales.
CURRENT AND PENDING LITIGATION.
On May 2, 2000, the Company commenced a class action lawsuit in the Chancery
Court of Delaware, New Castle County (the "Court"). In this action, the Company
sought a declaratory judgment with respect to the Company's right to redeem the
Class E Common Stock on March 31, 2001 for $.0001 per share, the right of the
holders of Class E Common Stock to vote at the Annual Meeting to be held on
October 6, 2000, and for certification of the holders of Class E Common Stock as
a class and the named defendants as its representatives. The Options are being
distributed as part of the Settlement Agreement that was approved by the Court
on November 9, 2001, in settlement of this lawsuit. The Settlement Agreement
permits the Class E shareholders to elect not to participate in the settlement
and thus will not be binding on any Class E shareholders who so elect.
On or about June 9, 2000, a small group of holders of Class E Common Stock
commenced an action in a state court in Texas (the "Texas Action"). Plaintiffs
in the Texas Action have made various allegations regarding the circumstances
surrounding the issuance of the Class E Common Stock and seek damages based upon
those allegations. Although management believes the allegations underlying the
Texas litigation are without merit, we are unable to predict the outcome of this
litigation.
The Company may from time to time become involved in other lawsuits and legal
proceedings. Litigation is subject to inherent uncertainties, and an adverse
result in any such matters that may arise from time to time may adversely impact
our operating results or financial condition. Additionally, any litigation to
which we are subject could require significant involvement of our senior
management and may divert management's attention from our business and
operations.
16
WE FACE RISKS ASSOCIATED WITH INTERNATIONAL SALES.
For the fiscal year ended June 30, 2001, 14.9% of our net revenues were from
sales to international customers. Our international sales will be limited if we
cannot establish and/or maintain relationships with international distributors,
establish foreign operations, expand international sales, and develop
relationships with international service providers. Additionally, our
international sales may be adversely affected if international economies weaken.
We are subject to risks including the following:
- greater difficulty in accounts receivable collection and longer
collection periods;
- the impact of recessions in economies outside the United States;
- unexpected changes in regulatory requirements;
- sudden and unexpected reductions in demand in particular countries in
response to exchange rate fluctuations;
- certification requirements;
- reduced protection for intellectual property rights in some countries;
- potentially adverse tax consequences; and
- political and economic instability.
While we expect our international revenues to be denominated predominantly in
U.S. dollars, in the future a portion of our international revenues and expenses
may be denominated in foreign currencies. Accordingly, we could experience the
risks of fluctuating currencies and the corresponding exchange rates.
OUR STOCK PRICE IS VOLATILE.
Broad market fluctuations or fluctuations in our operations may adversely affect
the market price of our Common Stock. The market for our Common Stock is
volatile. The trading price of our Common Stock has been and will continue to be
subject to:
- volatility in the trading markets generally and in our particular
market segment;
- significant fluctuations in response to quarterly variations in
operating results;
- announcements regarding our business or the business of our
competitors;
- changes in prices of our or our competitors' products and services;
- changes in product mix;
- changes in revenue and revenue growth rates; and
- other events or factors.
Statements or changes in opinions, ratings or earnings estimates made by
brokerage firms or industry analysts relating to the markets in which we operate
or expect to operate could have an adverse effect on the market price of our
Common Stock. In addition, the stock market as a whole, as well as our
particular market segment, have from time to time experienced extreme price and
17
volume fluctuations which have particularly affected the market price for the
securities of many companies and which often have been unrelated to the
operating performance of these companies.
OWNERSHIP BY EXISTING MANAGEMENT.
If our management and shareholders act in concert, disposition of matters
submitted to shareholders or the election of the entire Board of Directors may
be hindered. We estimate that management and our principal shareholders
beneficially owned approximately 26.2% of the aggregate Common Stock outstanding
as of August 1, 2001.
SOME PROVISIONS IN OUR CHARTER DOCUMENTS AND BYLAWS MAY HAVE ANTI-TAKEOVER
EFFECTS.
Our Certificate of Incorporation and Bylaws contain some provisions that could
have the effect of discouraging a prospective acquirer from making a tender
offer, or which may otherwise delay, defer or prevent a change in control.
ABSENCE OF DIVIDENDS TO SHAREHOLDERS.
Our Board has never declared a dividend on our Common Stock. We do not
anticipate paying dividends on the Common Stock in the foreseeable future. It is
anticipated that earnings, if any, will be reinvested in the expansion of our
business.
OUR CONVERTIBLE PREFERRED STOCK, WARRANTS AND OPTIONS MAY AFFECT OUR FUTURE
FINANCING.
The existence of our outstanding Convertible Preferred Stock, options or
warrants may adversely affect the terms on which we can obtain additional
financing. As of September 30, 2001, there were outstanding:
- warrants issued in private placement and other transactions pursuant
to which 299,300 shares of Common Stock are issuable;
- 127 shares of Series F Convertible Preferred Stock, $.01 par value per
share, pursuant to which 868,192 shares of Common Stock are reserved
for issuance to the holders of the shares of Series F Convertible
Preferred Stock upon conversion of such shares (minimum of 288,001
shares based on the fixed conversion price at closing); and
- outstanding options to purchase an aggregate of 4,260,449 shares of
Common Stock.
In addition, approximately 470,000 shares of Common Stock were reserved as of
September 30, 2001 for issuance pursuant to future grants to be made under the
Omnibus Incentive Plan and Directors Stock Incentive Plan.
For the life of such options, warrants and Convertible Preferred Stock, the
holders will have the opportunity to profit from a rise in the price of the
underlying common stock, with a resulting dilution in the interest of other
18
holders of common stock upon exercise or conversion. Further, the option and
warrant holders can be expected to exercise their options and warrants at a time
when we would, in all likelihood, be able to obtain additional capital by an
offering of our unissued common stock on terms more favorable to us than those
provided by such options or warrants.
WE HAVE AGREED TO CERTAIN LIMITATIONS UPON POTENTIAL LIABILITY OF OUR DIRECTORS.
Our Certificate of Incorporation provides that directors will not be personally
liable for monetary damages to LightPath or its shareholders for a breach of
fiduciary duty as a director, subject to limited exceptions. Although such
limitation of liability does not affect the availability of equitable remedies
such as injunctive relief or rescission, the presence of these provisions in the
Certificate of Incorporation could prevent the recovery of monetary damages by
LightPath or its shareholders.
WE MUST MAINTAIN COMPLIANCE WITH CERTAIN CRITERIA IN ORDER TO MAINTAIN LISTING
OF OUR SHARES ON THE NASDAQ MARKET.
The Company's Common Stock is currently traded on the Nasdaq National Market.
Failure to meet the applicable quantitative and/or qualitative maintenance
requirements of Nasdaq could result in our securities being delisted from the
Nasdaq National Market. If delisted from the Nasdaq National Market, our
securities may be eligible for trading on the Nasdaq SmallCap Market, the OTC
Bulletin Board or on other over-the-counter markets, although there can be no
assurance that our securities will be eligible for trading on any alternative
exchanges or markets. As a consequence of such delisting, an investor could find
it more difficult to dispose of or to obtain accurate quotations as to the
market value of our securities. Among other consequences, delisting from Nasdaq
may cause a decline in the stock price and difficulty in obtaining future
financing.
WE MAY NOT HAVE ENOUGH FUNDS AVAILABLE TO REDEEM OUTSTANDING SHARES OF PREFERRED
STOCK.
In the event of automatic conversion of the Series F Preferred Stock, three
years after issuance LightPath has the right to redeem such preferred stock for
cash. In addition, a Liquidation Event, as defined in the applicable Certificate
of Designation, may require redemption of the Series F Preferred Stock for cash.
There can be no assurance that we will have adequate cash to effect such cash
redemptions in the future.
19
WE WILL RECOGNIZE A SUBSTANTIAL CHARGE TO INCOME UPON CONVERSION OF OUR CLASS E
COMMON STOCK.
In the event any shares of the Class E Common Stock held by shareholders who are
officers, directors, employees or consultants of the Company converted into
shares of Common Stock, we will record compensation expense for financial
reporting purposes during the period conversion appears probable. These
conversion rights expired on September 30, 2000 based on the operating results
of the Company for the year ended June 30, 2000. Our management believes the
conversion rights have not been met and that, as a result, the Class E Common
Stock will be subject to redemption for a nominal amount. However, we continue
to be involved in litigation regarding the Class E Common Stock, the outcome of
which cannot be determined at this time. Any adverse determination in such
litigation, including any determination resulting in a conversion of the Class E
Common Stock, could have a material adverse effect on the market price of the
Common Stock.
RISK THAT FORWARD-LOOKING STATEMENTS MAY NOT COME TRUE.
This report contains forward-looking statements that involve risks and
uncertainties. We use words such as "believe", "expect," "anticipate," "plan" or
similar words to identify forward-looking statements. Forward-looking statements
are made based upon our belief as of the date that such statements are made.
These forward-looking statements are based largely on our current expectations
and are subject to a number of risks and uncertainties, many of which are beyond
our control. You should not place undue reliance on these forward-looking
statements, which speak as of the date of this report. Our actual results could
differ materially from those anticipated in these forward-looking statements for
many reasons, including the risks faced by us described above and elsewhere in
this report.
ELECTRICAL BLACKOUTS AND OTHER BUSINESS INTERRUPTIONS COULD ADVERSELY AFFECT OUR
BUSINESS.
Our operations are vulnerable to interruption by fire, earthquake, power loss,
telecommunications failure and other events beyond our control. We do not have a
detailed disaster recovery plan. We carry only a limited amount of business
interruption insurance, which may not sufficiently compensate us for losses that
may occur. Our facilities in the State of California may be subject to
electrical blackouts as a consequence of a shortage of available electrical
power in the state. We currently do not have backup generators or alternate
sources of power in the event of a blackout. If blackouts interrupt our power
supply, we would be temporarily unable to continue operations at our affected
facilities. Any losses or damages incurred by us as a result of blackouts or
other business interruptions could impair our reputation, harm our ability to
retain existing customers and to obtain new customers, and could result in lost
revenue, any of which could substantially harm our business and results of
operations.
20
WE MAY NEED ADDITIONAL FUTURE FINANCING IN ORDER TO FUND OUR OPERATIONS AND
PLANS FOR GROWTH.
There can be no assurance that the Company will generate sufficient revenues to
fund its future operations and growth strategies. We may need to obtain
additional financing in the future. We do not have any commitments from others
to provide additional financing in the future and there can be no assurance that
any such additional financing will be available if needed or, if available, will
be on terms favorable to us. In the event such needed financing is not obtained,
our operations will be materially adversely affected and we could be forced to
cease or substantially reduce operations. Any additional equity financing may be
dilutive to shareholders, and debt financings, if available, may involve
restrictive covenants.
OUR BUSINESS DEPENDS UPON THE EFFORTS OF THIRD PARTIES.
Our strategy for the research, development and commercialization of certain
products entails entering into various arrangements with corporate partners,
OEMs, licensees and others in order to generate product sales, license fees,
royalties and other funds adequate for product development. We may also rely on
our collaborative partners to conduct research efforts, product testing and to
manufacture and market certain of our products. Although we believe that parties
to any such arrangements would have an economic motivation to succeed in
performing their contractual responsibilities, the amount and timing of
resources to be devoted to these activities may not be within our control. There
can also be no assurance that we will be successful in establishing any such
collaborative arrangements or that, if established, the parties to such
arrangements will assist us in commercializing products. We have a non-exclusive
agreement with a catalog company to distribute certain of our products. We have
formalized relationships with eight foreign distributors to create markets for
GRADIUM in their respective countries. There can be no assurance that these
parties, or any future partners, will perform their obligations as expected or
that any revenue will be derived from such arrangements.
RISKS RELATED TO MANUFACTURING OUR PRODUCTS
IF WE DO NOT ACCURATELY PROJECT DEMAND FOR OUR PRODUCTS, WE WILL HAVE EXCESS
MANUFACTURING CAPACITY OR INSUFFICIENT MANUFACTURING CAPACITY.
We currently manufacture substantially all of our products in our facilities
located in Albuquerque, New Mexico, Walnut, California and Orlando, Florida.
Based on the recent and sudden change in U.S. economic conditions, we now expect
lower demand for our products in fiscal 2002. We intend to lower production
output during the first part of fiscal 2002 while retaining flexibility to meet
demand if it should increase in the near future. We expect that the production
slowdown will negatively impact our gross margins during the first half of
fiscal 2002. If we fail to accurately coordinate our production capacity and
output with demand for our products in the future, we may have excess capacity
or insufficient capacity, either of which may seriously harm our results of
operations.
Furthermore, we may experience delays, disruptions or quality control problems
in our manufacturing operations, and, as a result, product shipments to our
customers could be delayed beyond the revised shipment schedules requested by
our customers, which would negatively impact our revenues, competitive position
21
and reputation. For example, we have, in the past, experienced a disruption in
the manufacture of some of our products due to changes in our manufacturing
processes, which resulted in reduced manufacturing yields and delays in the
shipment of our products. If we experience similar disruptions in the future, it
may result in lower yields or delays of our product shipments, which could
adversely affect our revenues, gross margins and results of operations.
OUR FAILURE TO ACCURATELY FORECAST MATERIAL REQUIREMENTS COULD CAUSE US TO INCUR
ADDITIONAL COSTS, HAVE EXCESS INVENTORIES OR HAVE INSUFFICIENT MATERIALS TO
BUILD OUR PRODUCTS.
We use rolling forecasts based on anticipated product orders to determine our
materials requirements. It is very important that we accurately predict both the
demand for our products and the lead times required to obtain the necessary
materials. Lead times for materials that we order vary significantly and depend
on factors such as specific supplier requirements, the size of the order,
contract terms and current market demand for the materials at a given time. If
we overestimate our material requirements, we may have excess inventory, which
would increase our costs. If we underestimate our material requirements, we may
have inadequate inventory, which could interrupt our manufacturing and delay
delivery of our products to our customers. Any of these occurrences would
negatively impact our results of operations. Recent order cancellations and
extension of product delivery dates by our customers have created a risk of
material obsolescence. Additionally, in order to avoid excess material
inventories we may incur cancellation charges associated with modifying existing
purchase orders with our vendors.
IF WE DO NOT ACHIEVE ACCEPTABLE MANUFACTURING YIELDS OR SUFFICIENT PRODUCT
RELIABILITY, OUR ABILITY TO SHIP PRODUCTS TO OUR CUSTOMERS COULD BE DELAYED.
The manufacture of our products involves complex and precise processes. Our
manufacturing costs for several products are relatively fixed, and, thus,
manufacturing yields are critical to our results of operations. Changes in our
manufacturing processes or those of our suppliers, or the use of defective
materials, could significantly reduce our manufacturing yields and product
reliability. In addition, we may experience manufacturing delays and reduced
manufacturing yields upon introducing new products to our manufacturing lines.
We may experience lower than targeted product yields in the future which could
adversely affect our operating results.
IF OUR CUSTOMERS DO NOT QUALIFY OUR MANUFACTURING LINES FOR VOLUME SHIPMENTS,
OUR OPERATING RESULTS COULD SUFFER.
Generally, customers do not purchase our products, other than limited numbers of
evaluation units, prior to qualification of the manufacturing line for volume
production. Our existing manufacturing lines, as well as each new manufacturing
line, must pass through varying levels of qualification with our customers.
Customers may require that we be registered under international quality
standards, such as ISO 9001. This customer qualification process determines
whether our manufacturing lines meet the customers' quality, performance and
22
reliability standards. If there are delays in qualification of our products, our
customers may drop the product from a long-term supply program, which would
result in significant lost revenue opportunity over the term of that program.
WE DEPEND ON SINGLE OR LIMITED SOURCE SUPPLIERS FOR SOME OF THE KEY MATERIALS IN
OUR PRODUCTS, WHICH MAKES US SUSCEPTIBLE TO SUPPLY SHORTAGES OR PRICE
FLUCTUATIONS.
We currently purchase several key materials used in the manufacture of our
products from single or limited source suppliers. We may fail to obtain required
materials in a timely manner in the future, or could experience further delays
from evaluating and testing the products of these potential alternative
suppliers. The recent softening of demand in the telecommunications industry
could adversely impact the financial condition of our suppliers, many of whom
have limited financial resources. We have in the past, and may in the future, be
required to provide advance payments in order to secure key materials from
financially limited suppliers. Financial or other difficulties faced by these
suppliers could limit the availability of key components or materials.
Additionally, financial difficulties could impair our ability to recover
advances made to these suppliers. Any interruption or delay in the supply of any
of these materials, or the inability to obtain these materials from alternate
sources at acceptable prices and within a reasonable amount of time, would
impair our ability to meet scheduled product deliveries to our customers and
could cause customers to cancel orders.
RISKS RELATED TO OUR INTELLECTUAL PROPERTY
WE MAY NOT BE ABLE TO PROTECT OUR PROPRIETARY TECHNOLOGY.
We rely on a combination of patent, copyright, trademark and trade secret laws
and restrictions on disclosure to protect our intellectual property rights. We
cannot assure that our patent applications will be approved, that any patents
that may issue will protect our intellectual property or that third parties will
not challenge any issued patents. Other parties may independently develop
similar or competing technology or design around any patents that may be issued
to us.
WE MAY BECOME INVOLVED IN INTELLECTUAL PROPERTY DISPUTES AND LITIGATION.
We anticipate, based on the size and sophistication of our competitors and the
history of rapid technological advances in our industry, that several
competitors may have patent applications in progress in the United States or in
foreign countries that, if issued, could relate to products similar to ours. If
such patents were to be issued, the patent holders or licensees may assert
infringement claims against us or claim that we have violated other intellectual
property rights. These claims and any resulting lawsuits, if successful, could
subject us to significant liability for damages and invalidate our proprietary
rights. The lawsuits, regardless of their merits, could be time-consuming and
expensive to resolve and would divert management time and attention. Any
potential intellectual property litigation could also force us to do one or more
of the following, any of which could harm our business:
23
- stop selling, incorporating or using our products that use the
disputed intellectual property;
- obtain from third parties a license to sell or use the disputed
technology, which license may not be available on reasonable terms, or
at all; or
- redesign our products that use the disputed intellectual property.
IF WE ARE UNABLE TO PROTECT AND ENFORCE OUR INTELLECTUAL PROPERTY RIGHTS, WE MAY
BE UNABLE TO COMPETE EFFECTIVELY.
We regard substantial elements of our technology as proprietary and attempt to
protect them by relying on patent, trademark, service mark, copyright and trade
secret laws. We also rely on confidentiality procedures and contractual
provisions with our employees, consultants and corporate partners. The steps we
take to protect our intellectual property may be inadequate, time consuming and
expensive. Furthermore, despite our efforts, we may be unable to prevent third
parties from infringing upon or misappropriating our intellectual property,
which could harm our business.
It may be necessary to litigate to enforce our patents, copyrights, and other
intellectual property rights, to protect our trade secrets, to determine the
validity of and scope of the proprietary rights of others or to defend against
claims of infringement or invalidity. Such litigation can be time consuming,
distracting to management, expensive and difficult to predict. Our failure to
protect or enforce our intellectual property could have an adverse effect on our
business, financial condition, prospects and results of operation.
NECESSARY LICENSES OF THIRD-PARTY TECHNOLOGY MAY NOT BE AVAILABLE TO US OR MAY
BE VERY EXPENSIVE.
From time to time we may be required to license technology from third parties to
develop new products or product enhancements. We cannot assure you that
third-party licenses will be available to us on commercially reasonable terms,
or at all. The inability to obtain any third-party license required to develop
new products and product enhancements could require us to obtain substitute
technology of lower quality or performance standards or at greater cost, either
of which could seriously harm our ability to manufacture and sell our products.
24
SELLING SHAREHOLDERS
During our fiscal year ended June 30, 2001, we issued options to purchase
181,000 shares of Class A Common Stock to officers and employees pursuant to a
Stock Option Agreement entered into for each named individual. Each option
entitles the holder to purchase one share of Class A Common Stock at an exercise
price of $11.63 per share, with an average of a four year vesting period, and a
term of ten years. On November 9, 2001 we offered 201,250 options to purchase
shares of Class A Common Stock to pursuant to a settlement of certain class
action litigation involving the holders of the Company's Class E shares. Each
option entitles the holder to purchase five share of Class A Common Stock at an
exercise price of $3.73 per share, with immediate vesting, and a term of two
years. This Prospectus covers shares of Class A Common Stock that may be
acquired by the selling shareholders upon exercise of these options.
The following table provides information as of November 30, 2001, with
respect to the Class A Common Stock beneficially owned by each selling
shareholder after giving effect to the issuance of shares for the exercise of
the option being registered. For purposes of the information set forth in this
table, the number of shares beneficially owned includes shares issuable upon the
exercise of a warrant, incentive stock options or director stock options that
are vested on November 30, 2001 or within sixty days thereafter.
TOTAL SHARES CLASS A COMMON STOCK
OUTSTANDING AS OF NOVEMBER 30, 2001: 19,378,667
Beneficially Owned
After the Offering
Number of ----------------------
Shares Percent of
Beneficially Number of Class A
Position, Office or Owned Prior to Shares being Number Common
Material Relationship the Offering (1) Offered Of Shares Stock (12)
--------------------- ---------------- ------- --------- ----------
Shares of Common Stock underlying
Stock Options:
Donald Lawson Former CEO 280,500 (2) 25,000 (2) 255,500 1.4%
Mark Fitch Senior Vice President 51,000 (3) 16,000 (3) 35,000 *
CFO and Senior Vice
Donna Bogue President 49,750 (4) 16,000 (4) 33,750 *
William Walters VP Engineering 56,500 (5) 12,000 (5) 44,500 *
Jeanne Mordarski VP 29,500 (6) 12,000 (6) 17,500 *
Stephen Barna VP Sales 37,400 (7) 16,000 (7) 21,400 *
Jean-Luc Nogues CEO, Geltech Inc. 36,000 (8) 16,000 (8) 20,000 *
D. Todd Childress Geltech Inc. -Finance 24,500 (9) 12,000 (9) 12,500 *
Ed Patton Geltech Inc.- Sales 16,250 (10) 10,000 (10) 6,250 *
Robert Cullen CEO, Horizon
Photonics Inc. 234,279 20,000 214,279 1.2%
Richard Sweeney Horizon Photonics
Inc. - Manuf. 404,579 16,000 388,579 2.1%
Randall Niles Horizon Photonics
Inc.- Operations 14,250 (11) 10,000 (11) 4,250 *
-------- ----
Stock Options - Employees 181,000 6.4%
Shares of Common Stock underlying
Settlement Options:
Recipients of Settlement Options (**) (**) 201,250 (**) (**)
-------- ----
Settlement Options 201,250 (**)
-------- ----
Total Stock Options 382,250 (**)
======== ====
25
* Represents beneficial ownership of less than 1%
** The Settlement Options will be issued as part of the settlement of certain
class action litigation involving the holders of the Company's Class E
shares. As part of the Settlement Agreement, the Class E shareholders have
been offered, in exchange for their settlement of the class action lawsuit,
the choice of either: (i) $0.40 per Class E share, or (ii) an Option, for
every one hundred (100) Class E shares held, to purchase five (5) shares of
the Company's Class A Common Stock at an exercise price of $3.73.
Alternatively, the Class E shareholders have the right to exclude
themselves from the Settlement Agreement and preserve their claim. The
Options will be distributed to those non-excluded Class E shareholders who
have chosen to receive the Option in settlement of their claim (the
"Optionholders"). Because the Class E shareholders have not made the
foregoing elections as of the time of this filing, the Optionholders to be
included herein cannot be determined at this time. The number of shares of
common stock registered hereby assumes that all Class E shareholders will
elect to receive the Options.
1) Except as otherwise noted, and subject to community property laws, where
applicable, each person named in the table has sole voting power and
investment power with respect to all shares shown as beneficially owned.
2) Includes 213,000 shares underlying options, does not include 97,500 shares
issuable upon the exercise of options to purchase Class A Common Stock that
are not vested.
3) Includes 35,000 shares underlying options, does not include 42,500 shares
issuable upon the exercise of options to purchase Class A Common Stock that
are not vested.
4) Includes 33,750 shares underlying options, does not include 26,250 shares
issuable upon the exercise of options to purchase Class A Common Stock that
are not vested.
5) Includes 44,500 shares underlying options, does not include 22,500 shares
issuable upon the exercise of options to purchase Class A Common Stock that
are not vested.
6) Includes 17,500 shares underlying options, does not include 35,000 shares
issuable upon the exercise of options to purchase Class A Common Stock that
are not vested.
7) Includes 21,400 shares underlying options, does not include 24,200 shares
issuable upon the exercise of options to purchase Class A Common Stock that
are not vested.
8) Includes 20,000 shares underlying options, does not include 60,000 shares
issuable upon the exercise of options to purchase Class A Common Stock that
are not vested.
9) Includes 12,500 shares underlying options, does not include 37,500 shares
issuable upon the exercise of options to purchase Class A Common Stock that
are not vested.
10) Includes 6,250 shares underlying options, does not include 18,750 shares
issuable upon the exercise of options to purchase Class A Common Stock that
are not vested.
11) Includes 4,250 shares underlying options, does not include 12,750 shares
issuable upon the exercise of options to purchase Class A Common Stock that
are not vested.
12) The percentage interest of each selling shareholder is based on the
beneficial ownership of that selling shareholder divided by the sum of the
current outstanding shares of Class A Common Stock plus the additional
shares, if any, which would be issued to that selling shareholder (but not
any other selling shareholder) after the exercising of the options in the
future.
26
USE OF PROCEEDS
Each of the selling shareholders will receive the net proceeds from the
sale of its shares of Class A Common Stock. LightPath will not receive any
proceeds from these sales. We will however receive proceeds from the exercise of
the stock options and the settlement options. Each stock option entitles the
holder to purchase shares of common stock at a price per share of $11.63. This
purchase price is payable in cash or by surrendering a number of shares of our
common stock having a fair market value equal to the applicable exercise price
on the exercise date. If all of the stock options were exercised, we would
receive gross proceeds of up to $2,105,030 which we expect would be used for
general corporate purposes. Each settlement option entitles the holder to
purchase five (5) shares of the Company's Class A Common Stock, at a price per
share of $3.73, the average closing price from November 26, 2001 through
December 7, 2001. If all of the settlement options were exercised, we would
receive gross proceeds of up to $750,663, which we expect would be used for
general corporate purposes.
DETERMINATION OF OFFERING PRICE
The selling shareholders may use this prospectus from time to time to sell
their shares of common stock at a price determined by the shareholder making
such sale. The price at which the common stock is sold may be based on market
prices prevailing at the time of sale, at prices relating to such prevailing
market prices, or at negotiated prices.
PLAN OF DISTRIBUTION
The Class A Common Stock may be sold from time to time by the selling
shareholders, or by pledgees, donees, transferees or other successors in
interest. Such sales may be made on one or more exchanges or in the
over-the-counter market or otherwise, at prices and at terms then prevailing or
at prices related to the then current market price, or in negotiated
transactions. The common stock may be sold in one or more of the following types
of transactions:
(a) a block trade in which a selling shareholder will engage a
broker-dealer who will then attempt to sell the common stock, or position and
resell a portion of the block as principal to facilitate the transaction;
(b) purchases by a broker-dealer as principal and resale by such
broker-dealer for its account pursuant to this prospectus;
(c) an exchange distribution in accordance with the rules of such exchange;
(d) ordinary brokerage transactions and transactions in which the broker
solicits purchasers; and
(e) any combination of the foregoing, or by any other legally available
means. In effecting sales, broker-dealers engaged by the selling shareholders
may arrange for other broker-dealers to participate in the resales.
27
In connection with distributions of the common stock or otherwise, the
selling shareholders may enter into hedging transactions with broker-dealers. In
connection with such transactions, broker-dealers may engage in short sales of
the common stock in the course of hedging the positions they assume with selling
shareholders. The selling shareholders may also sell common stock short and
redeliver the common stock to close out such short positions. The selling
shareholders may also enter into option or other transactions with
broker-dealers that require the delivery to the broker-dealer of the common
stock, which the broker-dealer may resell or otherwise transfer pursuant to this
prospectus. The selling shareholders may also loan or pledge common stock to a
broker-dealer and the broker-dealer may sell the common stock so loaned or, upon
a default, the broker-dealer may effect sales of the pledged common stock
pursuant to this prospectus.
Broker-dealers or agents may receive compensation in the form of
commissions, discounts or concessions from the selling shareholders in amounts
to be negotiated in connection with the sale. Such broker-dealers and any other
participating broker-dealers may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales and any such
commission, discount or concession may be deemed to be underwriting discounts or
commissions under the Securities Act. In addition, any securities covered by
this prospectus which qualify for sale pursuant to Rule 144 promulgated under
the Securities Act may be sold in an unregistered transaction under Rule 144
rather than pursuant to this prospectus.
LightPath will bear all of the costs and expenses of registering under the
Securities Act the sale of the common stock offered by this prospectus.
Commissions and discounts, if any, attributable to the sales of the common stock
will be borne by the selling shareholders.
LightPath has agreed to indemnify the selling shareholders against certain
liabilities in connection with the offering of the common stock, including
liabilities arising under the Securities Act. The selling shareholders may agree
to indemnify any broker-dealer or agent that participates in transactions
involving sales of the common stock against various liabilities, including
liabilities arising under the Securities Act.
In order to comply with the securities laws of various states, if
applicable, sales of the common stock made in those states will only be made
through registered or licensed brokers or dealers. In addition, some states do
not allow the securities to be sold unless they have been registered or
qualified for sale in the applicable state or an exemption from the registration
or qualification requirement is available and is complied with by us and the
selling shareholders.
Under applicable rules and regulations of the Exchange Act, any person
engaged in the distribution of the common stock may not simultaneously engage in
market-making activities with respect to our common stock for a period of up to
five business days prior to the commencement of such distribution. In addition
to those restrictions, each selling shareholder will be subject to the Exchange
Act and the rules and regulations under the Exchange Act, including, Regulation
M and Rule 10b-7, which provisions may limit the timing of the purchases and
sales of our securities by the selling shareholders.
28
DESCRIPTION OF SECURITIES
We have previously registered our Class A Common Stock under the Exchange
Act by filing a Form 8-A on January 13, 1996. Please refer to that registration
statement for a description of the rights, privileges and preferences of our
Class A Common Stock.
LEGAL MATTERS
Certain legal matters have been passed upon for us by Squire, Sanders &
Dempsey L.L.P., Phoenix, Arizona.
EXPERTS
The consolidated financial statements of LightPath Technologies, Inc. as of
June 30, 2001 and 2000, and for the years then ended, have been incorporated by
reference herein and in the registration statement, in reliance upon the report
of KPMG LLP, independent certified public accountants, incorporated by reference
herein, and upon the authority of said firm as experts in accounting and
auditing.
INTERESTS OF NAMED EXPERTS AND COUNSEL
On October 6, 2000, James L. Adler, Jr. was elected to serve as a director
of LightPath until the 2003 annual meeting of shareholders. Mr. Adler is a
partner of the law firm of Squire, Sanders & Dempsey L.L.P., which has issued an
opinion as to the validity of the shares offered by this prospectus and also
provides legal services to us on a regular basis. Mr. Adler holds options under
the Directors Stock Option Plan to purchase 59,176 shares of Class A Common
Stock at exercise prices ranging from $3.25 to $28.03. As of October 31, 2001,
these shares represented less than 1% of the total outstanding shares of Class A
Common Stock.
INDEMNIFICATION
Article TENTH of LightPath's Certificate of Incorporation, as amended,
provides as follows:
TENTH: No director of the corporation shall be personally liable to the
corporation or its shareholders for monetary damages for breach of fiduciary
duty as a director; provided, however, that the foregoing clause shall not apply
to any liability of a director (i) for any breach of the director's duty of
loyalty to the corporation or its shareholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) for any transaction from which the director derived an improper
personal benefit, or (iv) under Section 174 of the DGCL. This Article shall not
eliminate or limit the liability of a director for any act or omission occurring
prior to the time this Article became effective.
Article VII of the LightPath's Bylaws provides, in summary, that LightPath
is required to indemnify to the fullest extent permitted by applicable law, any
person made or threatened to be made a party or involved in a lawsuit, action or
29
proceeding by reason that such person is or was an officer, director, employee
or agent of LightPath. Indemnification is against all liability and loss
suffered and expenses reasonably incurred. Unless required by law, no such
indemnification is required by LightPath of any person initiating such suit,
action or proceeding without board authorization. Expenses are payable in
advance if the indemnified party agrees to repay the amount if he is ultimately
found to not be entitled to indemnification.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of LightPath
pursuant to the foregoing provisions, or otherwise, we have been informed that
in the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable.
30
===================================== =======================================
NO DEALER, SALES PERSON OR OTHER
PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY
REPRESENTATION OTHER THAN THOSE
CONTAINED IN THIS PROSPECTUS AND, IF LIGHTPATH TECHNOLOGIES, INC.
GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY OR ANY UNDERWRITER. THIS
PROSPECTUS DOES NOT CONSTITUTE AN 382,250 SHARES
OFFER TO SELL OR A SOLICITATION OF AN CLASS A COMMON STOCK
OFFER TO BUY ANY OF THE SECURITIES
OFFERED HEREBY BY ANYONE IN ANY
JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION IS NOT AUTHORIZED OR IN
WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO
SO OR TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION IN SUCH JURISDICTION.
NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE PROSPECTUS
HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THE INFORMATION HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO
THE DATE HEREOF OR THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE
COMPANY SINCE SUCH DATE.
TABLE OF CONTENTS
Page
----
Where You Can Find More
Information (ii)
Prospectus Summary 1
The Offering 6
Risk Factors 8
Selling Shareholders 25
Use of Proceeds 27
Determination of Offering Price 27
Plan of Distribution 27
Description of Securities 29
Legal Matters 29
Experts 29
Interest of Named Experts
and Counsel 29 DECEMBER 20, 2001
Indemnification 29
===================================== =======================================
PART II TO FORM S-3
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
It is estimated that the following expenses will be incurred in connection
with the proposed offering hereunder. All of such expenses will be borne by
LightPath:
Amount
-----------
SEC Registration Fee........................................ $ 355.38
Legal fees and expenses..................................... $ 10,000.00(1)
Accounting fees and expenses................................ $ 10,000.00(1)
Printing expenses........................................... $ 500.00(1)
-----------
Total....................................................... $ 20,855.38
===========
(1) Estimated
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article TENTH of the Company's Certificate of Incorporation, as amended,
provides as follows:
TENTH: No director of the corporation shall be personally liable to the
corporation or its shareholders for monetary damages for breach of fiduciary
duty as a director; provided, however, that the foregoing clause shall not apply
to any liability of a director (i) for any breach of the director's duty of
loyalty to the corporation or its shareholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) for any transaction from which the director derived an improper
personal benefit, or (iv) under Section 174 of the DGCL. This Article shall not
eliminate or limit the liability of a director for any act or omission occurring
prior to the time this Article became effective.
Article VII of the Company's Bylaws provides, in summary, that the Company
is required to indemnify to the fullest extent permitted by applicable law, any
person made or threatened to be made a party or involved in a lawsuit, action or
proceeding by reason that such person is or was an officer, director, employee
or agent of the Company. Indemnification is against all liability and loss
suffered and expenses reasonably incurred. Unless required by law, no such
indemnification is required by the Company of any person initiating such suit,
action or proceeding without board authorization. Expenses are payable in
advance if the indemnified party agrees to repay the amount if he is ultimately
found to not be entitled to indemnification.
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ITEM 16. EXHIBITS.
Exhibit Page Number or
Number Description Method of Filing
- ------ ----------- ----------------
5 Opinion of Squire, Sanders & Dempsey LLP *
23.1 Consent of KPMG LLP *
23.3 Consent of Squire, Sanders & Dempsey LLP Included in Exhibit 5
24 Powers of Attorney See signature page
- ----------
* Filed herewith.
ITEM 17. UNDERTAKINGS
A. The undersigned Registrant hereby undertakes to:
(1) File, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:
(i) include any prospectus required by section 10(a)(3) of the
Securities Act;
(ii) reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the information in
the registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any deviation
from the low or high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in the volume and price represent no
more than a 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration statement;
(iii) include any additional or changed material information on
the plan of distribution; provided, however, that paragraphs (a)(1)(i) and
(a)(1)(ii) do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic reports
filed by the Registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) For determining liability under the Securities Act, treat each
such post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial bona
fide offering.
(3) File a post-effective amendment to remove from registration any of
the securities that remain unsold at the end of the offering.
B. Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers, and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, there unto duly
authorized, in the City of Albuquerque, State of New Mexico, on December 19,
2001.
LIGHTPATH TECHNOLOGIES, INC.,
a Delaware corporation
/s/ Donna Bogue
----------------------------------------
By: Donna Bogue, Chief Financial Officer
and Treasurer
SPECIAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned, constitutes
and appoints each of Robert Ripp and Donna Bogue, his true and lawful
attorney-in-fact and agent with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign any
and all pre and post-effective amendments (including all subsequent registration
statements and amendments thereto filed pursuant to Rule 462(b)) to this Form
S-3 Registration Statement, and to file the same with all exhibits thereto, and
all documents in connection therewith, with the Securities and Exchange
Commission, granting such attorney-in-fact and agents, full power and authority
to do and perform each and every act and thing requisite and necessary to be
done in person, hereby ratifying and confirming all that such attorney-in-fact
and agents may lawfully do or cause to be done by virtue hereof. Pursuant to the
requirements of the Securities Act of 1933, this Registration Statement has been
signed by the following persons in the capacities and on the dates stated.
Signature Title Date
--------- ----- ----
/s/ Robert Ripp Chairman of the Board and December 19, 2001
- ------------------------ Interim CEO (Interim Principal
Robert Ripp Executive Officer)
/s/ Donna R. Bogue CFO and Treasurer (Principal December 19, 2001
- ------------------------ Financial and Accounting
Donna R. Bogue Officer)
/s/ James L. Adler, Jr. Director December 19, 2001
- ------------------------
James L. Adler, Jr.
/s/ Louis Leeburg Director December 19, 2001
- ------------------------
Louis Leeburg
/s/ Robert Bruggeworth Director December 19, 2001
- ------------------------
Robert Bruggeworth
/s/ Dr. Steve Brueck Director December 19, 2001
- ------------------------
Dr. Steve Brueck
/s/ Gary Silverman Director December 19, 2001
- ------------------------
Gary Silverman
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