LightPath Technologies, Inc. Announces First Quarter Fiscal 2008 Financial Results

Market Wire, November, 2007

LightPath Technologies, Inc. (NASDAQ: LPTH), manufacturer and integrator of families of precision molded aspheric optics, precision molded infrared optics, GRADIUM® glass products, and high performance fiber-optic collimators and isolators, today announced results for its first quarter of fiscal 2008 ending September 30, 2007.

Summary

First Quarter 2008 results compared to Fourth Quarter of 2007:

--  Revenue for the first quarter of fiscal year 2008 ended September 30,
    2007 increased 1% or $32,000.
--  Gross Margin increased by $188,000.
--  Gross Margin percentage increased to 10% in the first quarter of 2008
    from 2% in the fourth quarter of fiscal 2007 (ended June 30, 2007).
--  Operating and other costs below the gross profit line increased by
    $391,000 in the first quarter of 2008 compared to the fourth quarter of
    2007 due to severance costs and other non-recurring charges.
--  These factors combined to contribute to a higher net loss of $1.5
    million or $(0.28) per share compared with $1.3 million or $(0.29) per
    share in the fourth quarter of 2007.
--  Disclosure backlog as of September 30, 2007 was $2.6 million up 44%
    from the backlog as of June 30, 2007 of $1.8 million.
    

                    Financial Quick Reference

In millions, except earnings per share data


                                           Three months ended
                                   Sept. 30,        June 30,      Sept. 30,
                                      2007           2007           2006
Revenues                       $        2.31  $        2.28  $        4.39
Gross Profit                   $        0.24  $        0.05  $        1.07
Net Loss                       $       (1.50) $       (1.30) $       (0.45)
Loss per share (basic &
 diluted)                      $       (0.28) $       (0.29) $       (0.10)


Cash used by operations        $       (1.25) $       (0.42) $       (0.30)



                                  September 30,     June 30,     June 30,
                                      2007            2007         2006
Cash and cash equivalents      $        2.88  $        1.29  $        3.76

Detailed comments about the first quarter of fiscal 2008: For the quarter ended September 30, 2007, the Company reported total revenues of $2.31 million compared to $2.28 million for the quarter ended June 30, 2007, an increase of 1%. Net loss for the quarter ended September 30, 2007was $1.5 million or $0.28 per share compared to a net loss of $1.3 million, or $0.29 per share in the quarter ended June 30, 2007. Our non-telecommunications industry sales are increasing but they have not grown fast enough to make up for the decline in the telecommunications sector sales.

At September 30, 2007 our disclosure backlog was $2.6 million, an increase of 44% over our disclosure backlog of $1.8 million for the fourth quarter of 2007 ending June 30, 2007.

Gross Margin increased in the first quarter of fiscal 2008 compared to the previous quarter. Gross Margin for the quarter ended September 30, 2007 was approximately $239,000, or 10%, which included a $150,000 inventory adjustment for scrap compared to $50,000, or 2% for the quarter ended June 30, 2007. The increase in gross margin in the first quarter of 2008 was mainly attributable to improved production yields and productivity at our China facility offset by non-recurring charges for freight and travel to China and lower average lens prices. We are experiencing cost improvements in our direct expenses, but the lower sales levels are not adequate to cover our overhead costs. As we improve our revenues we expect our margins to improve.

Selling, general & administrative expenses increased by $425,000 due to non-recurring charges for severance and executive search fees relating to the recent departure of our former CEO, contributing to an increase in our net loss of $1.5 million for the first quarter of 2008 compared to a net loss of $1.3 million in the fourth quarter of 2007.

Comments: Jim Gaynor, Interim CEO of LightPath, stated, "In the first quarter, revenue flattened but remained low due to the continued weakness of the telecom and defense markets. Our telecom business was 16% of total revenue compared to 33% of total revenue in the prior quarter and 59% of total revenue for the first quarter of fiscal 2006. While our other business segments improved and our backlog of new orders grew 39% over the prior quarter it did not offset the lower telecom sales. Direct costs for material, labor and services continued to show improvement as a result of the cost reduction strategy we are implementing. These costs were 21% of revenue in the first quarter of 2008 as compared to 47% of revenue for the first quarter of 2007 and 42% of revenue for all of fiscal 2007. Overhead and SG&A costs are in line with our budget with the exception of the severance costs for our former CEO."

Mr. Gaynor went on to state, "LightPath is continuing to implement its business strategy to diversify its served markets and position the Company to participate in lower cost, higher volume opportunities. We have expanded our China manufacturing capacity, producing over 75% of our first quarter lens volume in that factory. We are implementing "RoHS"(RoHS is a European Union Standard that restricts the use of certain hazardous materials such as lead and mercury) compliant glass, developing lower cost glass materials and implementing other cost reductions. As a result of the management actions taken we are seeing positive results in yield improvement, production rates and cost reductions. We are continuing to position the company to participate in higher volume market opportunities."