SEC Info - Lightpath Technologies Inc - ‘424B2’ on 3/31/98

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Lightpath Technologies Inc – ‘424B2’ on 3/31/98

As of: Tuesday, 3/31/98 · Accession #: 950147-98-251 · File #: 333-47905

  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 3/31/98  Lightpath Technologies Inc        424B2                  1:86K                                    Imperial Fin’l … Corp/FA

Prospectus — Rule 424(b)(2)
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 424B2       Prospectus                                            20    134K

Document Table of Contents

Page	(sequential)	\|	(alphabetic)	Top
			Alternative Formats (Word, et al.) Blair & Co Certain Relationships Plan of Distribution Possible Restrictions and Potential Effect of Blair & Co. Acquisition on Market-Making Activities in Company's Securities Risk Factors Selling Securityholders Use of Proceeds
1	1st Page - Filing Submission
7	Risk Factors
13	Blair & Co
"	Possible Restrictions and Potential Effect of Blair & Co. Acquisition on Market-Making Activities in Company's Securities
15	Use of Proceeds
16	Selling Securityholders
18	Certain Relationships
"	Plan of Distribution

424B2 1st Page of 20 TOC ↑Top Previous Next ↓Bottom Just 1st
 
Prospectus                                                                      

LIGHTPATH TECHNOLOGIES, INC.

1,758,490 Shares of Class A Common Stock

         This  Prospectus  relates to an aggregate of up to 1,750,000  shares of
Class A  Common  Stock,  $.01  par  value  (the  "Common  Stock")  of  LightPath
Technologies,  Inc.,  a  Delaware  corporation  (the  "Company")  issuable  upon
conversion  of 375 shares of Series C  Preferred  Stock and  exercise of 337,078
redeemable   Class  G   Warrants   and  58,427   redeemable   Class  H  Warrants
(collectively,  the  "Warrants")  which were  issued to  investors  in a private
placement  completed  by  the  Company  in  February  1998.  In  addition,  this
Prospectus relates to 8,490 shares of Class A Common Stock outstanding as of the
date of this  Prospectus,  all of which,  were issued to the placement agent for
services  rendered  in  connection  with the Series C  Preferred  Stock  private
placement  (collectively  the  "Selling  Securityholders"  ). All of the  shares
covered by this Prospectus are being offered by the Selling Securityholders.    

         The  securities  offered by this  Prospectus may be resold from time to
time by the Selling Securityholders.  The distribution of the securities offered
hereby may be  effected in one or more  transactions  that may take place on the
over-the-counter  market,  including ordinary brokers'  transactions,  privately
negotiated  transactions  or through  sales to one or more dealers for resale of
such securities as principals,  at market prices prevailing at the time of sale,
at prices related to such prevailing market prices or at negotiated paces. Usual
and customary or  specifically  negotiated  brokerage fees or commissions may be
paid by the Selling Securityholders.                                            

         None of the  proceeds  from  the sale of the  shares  of  Common  Stock
offered  hereby will be  received  by the  Company,  however,  the Company  will
receive proceeds from the exercise,  if any, of the Warrants.  Substantially all
of the expenses in connection with the  registration of the Common Stock will be
borne by the  Company,  except for any  underwriters',  brokers',  and  dealers'
commissions and/or discounts. See "Plan of Distribution".                       

         The Common Stock of the Company is quoted on the Nasdaq SmallCap Market
under the symbol "LPTHA".  On March 9, 1998, the last reported bid price for the
Common Stock, as reported by Nasdaq Stock Market was $7.25.                     

         The  Selling  Securityholders  and  intermediaries  through  whom  such
securities  are sold may be deemed  "underwriters"  within  the  meaning  of the
Securities Act of 1933, as amended (the "Securities  Act"),  with respect to the
securities  offered,  and any profits  realized or  commissions  received may be
deemed  underwriting  compensation.  The  Company  has agreed to  indemnify  the
Selling Securityholders against certain liabilities, including liabilities under
the Act.  The Company  will not receive any of the  proceeds  from the resale of
securities by the Selling Securityholders.                                      

THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK.
 SEE "RISK FACTORS" BEGINNING AT PAGE 7.

 THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
 SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
 SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
--------------------
The date of this Prospectus is March 31, 1998.
--------------------

424B2 2nd Page of 20 TOC 1st Previous Next ↓Bottom Just 2nd
 AVAILABLE INFORMATION

         The Company has filed with the Securities and Exchange  Commission (the
"Commission"),  a Registration  Statement on Form S-3, of which this  Prospectus
forms a part,  ("Registration  Statement")  under the Securities Act of 1933, as
amended with respect to the securities offered hereby.  Statements  contained in
this Prospectus as to the contents of any contract or other document referred to
are not necessarily  complete. In each instance reference is made to the copy of
such  contract  or  other  document  filed  as an  exhibit  to the  Registration
Statement or incorporated  by reference,  each such statement being qualified in
all respects by such reference.                                                 

         The  Company  is  subject  to  the  informational  requirements  of the
Securities  Exchange  Act of 1934,  as  amended,  (the  "Exchange  Act")  and in
accordance therewith files reports,  proxy statements and other information with
the  Commission.  For  further  information  with  respect to the  Company,  its
reports,  proxy  statements and other  information  and the  securities  offered
hereby,   reference  is  made  to  such  reports,  proxy  statements  and  other
information,  the Registration Statement and the exhibits filed as part thereof.
The Registration  Statement and the reports and other  information  filed by the
Company in  accordance  with the Exchange Act can be inspected and copied at the
public reference facilities of the Commission at Room 1024, Judiciary Plaza, 450
Fifth Street,  N.W.,  Washington,  D.C.  20549,  and at the  following  regional
offices of the Commission:  7 World Trade Center,  New York, New York, 10048 and
Citicorp Center 500, West Madison Street,  Suite 1400, Chicago, IL 60661. Copies
of such  material  may be  obtained  from the  Public  Reference  Section of the
Commission at its  principal  office 450 Fifth Street,  N.W.,  Washington,  D.C.
20549,  upon payment of the fees prescribed by the  Commission.  In addition the
Commission maintains a website (http://www.sec.gov) that contains reports, proxy
and information statements regarding registrants, such as the Company, that file
electronically with the Commission.                                             

 INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

         The  following  documents  have been filed with the  Commission  by the
Company and are hereby incorporated by reference into this Prospectus:          

i.       The  Company's  Annual  Report on Form 10-KSB for the fiscal year ended
         June  30,   1997.   The  report  of  KPMG  Peat   Marwick  LLP  on  the
         aforementioned  financial statements contains an explanatory  paragraph
         that states that the Company's  recurring  losses from  operations  and
         resulting  continued  dependence  on external  sources of capital raise
         substantial  doubt  about the  entity's  ability to continue as a going
         concern.  The financial  statements do not include any adjustments that
might result from the outcome of that uncertainty;            
ii.      The Company's  Quarterly Report on Form 10-QSB for the quarterly period
ended September 30, 1997;                                     
iii.     The Company's  Quarterly Report on Form 10-QSB for the quarterly period
ended December 31, 1997;                                      
iv.      The description of the Company's Class A Common Stock, Class A Warrants
         and Class B Warrants contained in the Company's  Registration Statement
         on Form 8-A filed with the Commission  pursuant to Section 15(d) of the
Exchange Act dated January 13, 1996; and                      
v.       The Company's Proxy Statement  relating to its 1997 Annual Meeting,  as
         filed with the Commission pursuant to Section 14 of the Exchange Act on
September 11, 1997.                                           

All other documents and reports filed pursuant to Sections  13(a),  13(c), 14 or
15(d) of the  Exchange  Act from the date of this  Prospectus  and  prior to the
termination  of the  offering  shall be deemed to be  incorporated  by reference
herein  and shall be deemed to be a part  hereof  from the date of the filing of
such reports and documents.                                                     

         Any  statement   contained  in  a  document   incorporated   or  deemed
incorporated  by reference  herein shall be deemed to be modified or  superseded
for purposes of this Prospectus to the extent that a statement  contained herein
or in any subsequently  filed document that is also deemed to be incorporated by
reference  herein modifies or supersedes  such statement.  Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.                                        

         The Company hereby  undertakes to provide without charge to each person
to whom a  Prospectus  is  delivered,  upon written or oral request of each such
person, a copy of any document incorporated herein by reference,  (not including
exhibits to the document that have been incorporated  herein by reference unless
such exhibits are  specifically  incorporated by reference in this  Prospectus).
Requests should be directed to Investor Relations, LightPath Technologies, Inc.,
6820  Academy  Parkway  East  NE,  Albuquerque,  New  Mexico,  87109,  telephone
(505)342-1100.                                                                  
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PROSPECTUS SUMMARY

--------------------------------------------------------------------------------
         The  following  summary  should  be read in  conjunction  with,  and is
qualified  in its  entirety  by the  more  detailed  information  and  financial
statements  (including  the notes  thereto)  incorporated  by reference.  Unless
otherwise  indicated,  the information in this Prospectus assumes no exercise of
any  other   outstanding   warrants  or  options.   This   Prospectus   contains
forward-looking  statements  that involve certain risks and  uncertainties.  The
Company's actual results may differ  significantly from the results discussed in
the  forward-looking  statements.  Factors  that might  cause  such  differences
include, but are not limited to, those discussed in the "Risk Factors."         

 The Company

         LightPath  Technologies,  Inc.  ("LightPath" or the "Company") produces
GRADIUM(R)  glass and performs  research and development on future GRADIUM glass
applications.  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. The Company believes that
GRADIUM glass lenses provide  advantages  over  conventional  lenses for certain
applications. By reducing optical aberrations, the Company believes that GRADIUM
glass  lenses  can  provide  sharper  images,  higher  resolution,   less  image
distortion,  a wider  usable  field of view and a smaller  focal spot  size.  By
reducing the number of lenses in an optical  system,  the Company  believes that
GRADIUM  glass  can  provide  more  efficient  light  transmission  and  greater
brightness,  lower production costs, and a simpler,  smaller product.  While the
Company  believes that other  researchers have sought to produce optical quality
lens material with the properties of GRADIUM glass,  the Company is not aware of
any other person or firm that has developed a repeatable  manufacturing  process
for producing such material on a prescribable  basis.  LightPath has been issued
fourteen  patents  and has  pending  filed  patent  applications  related to its
materials  composition,   product  design  and  fabrication  processes  for  the
production  of GRADIUM  glass  products.  The Company  continues  to develop new
GRADIUM glass materials with various  refractive index and dispersion  profiles,
whole  value  added lens  systems  for a variety of  optical  applications,  and
multiplexers and interconnects for the telecommunications field.                

         The Company believes that GRADIUM glass can potentially be marketed for
use in most optics and optoelectronics  products.  In an attempt to more rapidly
establish  initial  sales  volume,  to date the  Company  has  emphasized  laser
products that it believes may have the greatest immediate commercial impact with
the least  initial  investment.  Generally,  optical  designers  can  substitute
GRADIUM glass components from the Company's standard line of products in lieu of
existing conventional laser lens elements. Lasers are presently used extensively
in a broad range of consumer and commercial  products,  including  fiber optics,
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, the
Company  believes and customers' test results confirm that GRADIUM glass has the
ability to improve laser performance. The Company's growth strategy is to target
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
year 1997, the Company established relationships with seven foreign distributors
and a Silicon Valley  manufacturer  representative.  The Company  believes these
relationships  will enable it to rapidly establish a presence in certain foreign
and domestic markets.  In addition to laser applications,  the Company,  through
its printed and  Internet  on-line  catalog,  offers a standard  line of GRADIUM
glass lenses for commercial  sales to optical  designers  developing  particular
systems for original equipment manufacturers ("OEMs") or in-house products.     

         Because complex optical  systems contain many optical  components,  and
GRADIUM  glass  lenses can be utilized to reduce the number of lens  elements in
such  systems,  the Company  believes that GRADIUM glass lenses can simplify the
design and improve the performance of complex optical systems.  However,  design
and  production of an optical  product is a lengthy  process,  and it could take
years for producers to redesign  complex  optical  systems using GRADIUM  glass,
reconfigure the product  housing,  re-engineer the assembly process and commence
commercial quantity orders for GRADIUM glass components.                        
--------------------------------------------------------------------------------
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--------------------------------------------------------------------------------
         The  Company  can not  predict  how  much  time  will be  required  for
manufacturers of existing optical systems to incorporate GRADIUM glass into such
systems , if ever.  Accordingly,  the  Company  intends  to focus its  long-term
marketing  efforts  on  emerging  niche  industries,   such  as  multimedia  and
telecommunications,   that  are  currently  designing   next-generation  optical
systems, and performance driven industries,  such as medical  instruments,  that
are seeking to optimize performance of existing optical products.               

         The   Company's   growth   strategy   is  also  to  develop   strategic
relationships  with OEMs that  incorporate or produce  optical  components.  The
Company  believes  OEM  relationships  may  expand  and  develop  the  Company's
technology base by evolving into more  sophisticated  joint development  efforts
and, as a result, complex products,  although there can be no assurances in this
regard.   The  Company's   existing  OEM  relationships  have  resulted  in  the
development of prototype lenses a leading manufacturer of endoscopes, Karl Storz
GMBH & Co., camera television lenses, wafer chip inspection and the optimization
of a high performance riflescope for a gunsight manufacturer.                   

         Optoelectronics  technologies  represent  an overlap of  photonics  and
electronics  and are key enablers of  "Information  Age"  technologies,  such as
fiberoptic  communications,   optical  data  storage,  laser  printers,  digital
imaging, and sensors for machine vision and environmental monitoring. As part of
its growth strategy,  the Company has targeted various  optoelectronic  industry
market niches and is currently developing  additional GRADIUM glass products and
key strategic alliances with technology and marketing partners to design,  build
and sell next generation integrated components and devices. The Company believes
that  GRADIUM  glass can  provide  industry  wide  solutions  to  optoelectronic
problems associated with light gathering, packaging and alignment.              

         Since  its  inception  in 1985  until  June  1996,  the  Company  was a
development  stage  enterprise  that engaged in basic research and  development.
During  fiscal  year 1997,  the  Company's  operational  focus began to shift to
product  development and commercial sales. The Company believes that most of its
product  sales  prior to fiscal  year 1997 have been to persons  evaluating  the
commercial  application  of GRADIUM glass or using the products for research and
development.  During  1997,  numerous  prototypes  for  production  orders  were
completed.  In addition,  catalog sales of standard profiles were received.  The
Company currently offers standard, computer-based profiles of GRADIUM glass that
engineers  can use for  product  design.  The  current  focus  of the  Company's
technology department  development efforts is the expansion of GRADIUM product's
applications  to  the  areas  of   multiplexers   and   interconnects   for  the
telecommunications field, the addition of the Company's crown glass product line
to supplement its existing flint products, development of acrylic axial gradient
material to extend the range of existing product  applications,  and the upgrade
of proprietary  material  design software and optical design tools to facilitate
product design.                                                                 

         The  Company  was  incorporated  in  Delaware  in 1992.  Its  corporate
headquarters  are located at 6820 Academy  Parkway East N.E.,  Albuquerque,  New
Mexico, 87109 and its telephone number is (505) 342-1100.                       

         The Private  Securities  Litigation  Reform Act of 1995 provides a safe
harbor for forward looking  statements made by or on behalf of the Company.  All
statements, other than statements of historical facts, which address activities,
events or developments that the Company expects or anticipates will or may occur
in the future,  including  such things as future capital  expenditures,  growth,
product development,  sales, business strategy and other such matters constitute
forward-looking  statements.  These forward-looking statements are based largely
on the Company's  expectations  and  assumptions  and are subject to a number of
risks and uncertainties,  many of which are beyond the Company's control. Actual
results could differ materially from the forward-looking  statements as a result
of a number of factors, including, but not limited to, the Company's early stage
of development,  the need for additional  financing,  and intense competition in
various aspects of its business. In light of these risks and uncertainties,  all
of the  forward-looking  statements  made  are  qualified  by  these  cautionary
statements and there can be no assurance that the actual results or developments
anticipated by the Company will be realized.                                    
--------------------------------------------------------------------------------
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The Offering
--------------------------------------------------------------------------------

Securities Offered by Selling                1,758,490  shares of Class A Common
Securityholders:                             Stock                              

                                             1,750,000  shares  of the  Class  A
                                             Common  Stock  offered  hereby  are
                                             issuable upon  conversion of Series
                                             C Preferred  Stock and  exercise of
                                             outstanding  Class G  Warrants  and
                                             Class  H  Warrants.  Each  Class  G
                                             Warrant is  exercisable at any time
                                             on  or  before   February  2001  to
                                             purchase  for  $6.68  one  share of
                                             Class A Common  Stock,  subject  to
                                             adjustment. Each Class H Warrant is
                                             exercisable   at  any  time  on  or
                                             before  February  2003 to  purchase
                                             for  $6.68  one  share  of  Class A
                                             Common Stock subject to adjustment.
                                             8,490  shares of the Class A Common
                                             Stock offered  hereby are currently
                      outstanding.

                                             Each  share of  Series C  Preferred
                                             Stock   has  a  stated   value  and
                                             liquidation  preference of $10,000,
                                             plus an 8% per annum premium.  Each
                                             share of Series C  Preferred  Stock
                                             is  convertible  into a  number  of
                                             shares  of Class A Common  Stock at
                                             the option of holder,  with  volume
                                             limitations,  during  the  first  9
                                             months,  based on its stated  value
                                             at the conversion date divided by a
                                             conversion  price.  The  conversion
                                             price is  defined  as the lesser of
                                             (i)  $6.675  or  (ii)  85%  of  the
                                             average  closing  bid  price of the
                                             Company's  Class A Common Stock for
                                             the   five   days   preceding   the
                          conversion date.
--------------------------------------------------------------------------------
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Company's Capitalization
--------------------------------------------------------------------------------
Common Stock Outstanding December 31,                                           
1997(1)(3):                                                                     

Class A Common Stock                      2,988,746 shares(1)(3)          

Class E-1 Common Stock                    1,481,584 shares(2)             

Class E-2 Common Stock                    1,481,584 shares(2)             

Class E-3 Common Stock                      987,715 shares(2)             

Use of Proceeds                              The Company  intends to use the net
                                             proceeds received upon the exercise
                                             of  the   Warrants,   if  any,  for
                                             general   corporate   purposes  and
                                             working    capital    to    support
                                             anticipated     growth    including
                                             research and  development  programs
                                             and continuing product development.
                                             See "Use of Proceeds." All proceeds
                                             received  upon resale of any of the
                                             shares  of  Class  A  Common  Stock
                                             offered  hereby will be received by
                                      the Selling Securityholders.

Risk Factors                                 The   securities   offered   hereby
                                             involve  a high  degree of risk and
                                             immediate  substantial  dilution to
                                             public investors.  An investment in
                                             the  Class A Common  Stock  offered
                                             hereby  should be made only after a
                                             careful    consideration   of   the
                                             various  risks which may affect the
                                             Company  and  its  operations.  See
                        "Risk Factors"

Nasdaq  Symbols                              Units - LPTHU                      
                                      Class A Common Stock - LPTHA
                                  Class A Warrants - LPTHW
                                  Class B Warrants - LPTHZ

--------                                                                        

(1)  Does not  include  outstanding  options at  December  31,  1997 to purchase
     809,175  shares of Class A Common  Stock and  117,862  shares of Class E-1,
     117,862  shares of Class E-2 and 78,575  shares of Class E-3  Common  Stock
     which are  exercisable  at option  exercise  prices  ranging  from $5.00 to
     $51.56 per share and 1,138,226  shares of Class A Common Stock reserved for
     issuance upon future grants of options  issuable under the Company's  stock
option plans.                                                         
(2)  Each share of  outstanding  Class E-1 Common Stock,  Class E-2 Common Stock
     and Class E-3 Common Stock (collectively,  the "Class E Shares") will, on a
     class basis,  automatically convert into Class A Common Stock if and as the
     Company  attains  certain  earnings  levels  or  the  market  price  of the
     Company's  Class A Common Stock  achieves  certain  targets with respect to
     each of the three separate classes.  The Class E Shares will be redeemed by
     the Company for a nominal  amount if such  earnings  levels or market price
targets are not achieved.                                             
(3)  Does not include an aggregate of 12,088,000  shares of Class A Common Stock
     issuable upon exercise of (i) the Unit Purchase  Option  granted to the IPO
     underwriter  and the Class A and  Class B Common  Stock  Purchase  Warrants
     underlying the Unit Purchase Option;  (ii) the Class A Warrants and Class B
     Warrants forming part of the IPO Units,  (iii) the 839,000 Class A Warrants
     issued at the IPO; (iv) the 839,000  additional  Class B Warrants  issuable
     upon exercise of the Class A Warrants  referred to in (iii) above,  and (v)
     the  additional  4,250,000  shares of Class A Common  Stock  issuable  upon
     conversion of Series A, Series B, and Series C Preferred Stock and exercise
of Class C, Class D, Class E, Class F, Class G and Class H Warrants.  
--------------------------------------------------------------------------------
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RISK FACTORS

         An investment in the securities  offered hereby  involves a high degree
of risk and should  only be made by  investors  who can afford the loss of their
entire  investment.   Prospective  investors,  prior  to  making  an  investment
decision,   should  give  careful  consideration,   in  addition  to  the  other
information contained in the documents  incorporated herein by reference and the
documents  filed  by the  Company  from  time to time  with the  Securities  and
Exchange Commission, to the following risk factors.                             

         Accumulated  Deficit,  Working Capital and Capital Deficiency;  Limited
Operating History. The Company's  predecessor  commenced operations in 1985, and
the Company was a  development  stage  company  through June 30, 1996.  Prior to
fiscal year 1997, the Company's  primary  activities had been basic research and
development.  At June 30,  1997,  the  Company  had an  accumulated  deficit  of
($17,212,516). For the year ended June 30, 1997, the Company recognized revenues
of  $673,677  and had a net  loss of  ($2,998,290).  For  the six  months  ended
December 31, 1997, the Company recognized revenues of $372,203 and a net loss of
($1,764,290).  The  Company's  products  currently  are  at an  early  stage  of
development  and the Company  believes  that most of its product  sales prior to
fiscal  year 1997 were to  parties  evaluating  the  commercial  application  of
GRADIUM or using the products for research and  development.  During fiscal year
1997, numerous prototypes for production orders were completed but no commercial
orders  have been  received to date.  During  fiscal  year 1998,  the  Company's
increase in lens sales has been primarily due to laser  customers,  distributors
and wafer chip  inspection  markets.  While the Company has been engaged in some
marketing   efforts  over  the  past  few  years  that  have  resulted  in  some
collaborative arrangements or purchases by parties considering the incorporation
of GRADIUM in their product designs, these efforts have not resulted in material
sales revenues. The Company has continued to operate at a deficit and expects to
continue to operate at a deficit  for fiscal  year 1998 and until such time,  if
ever,  as the Company's  operations  generate  sufficient  revenues to cover its
costs.  The likelihood of the success of the Company must be considered in light
of the delays, uncertainties, difficulties and risks inherent in a new business,
many of which may be beyond the Company's  control.  These include,  but are not
limited to,  unanticipated  problems relating to product  development,  testing,
manufacturing, marketing and competition, and additional costs and expenses that
may exceed  current  estimates.  There can be no assurance  that  revenues  will
increase  significantly  in the  future or that the  Company  will ever  achieve
profitable operations.                                                          

         Independent  Auditors' Report as to Company's  Ability to Continue as a
Going Concern.  The Company has received a report from its independent  auditors
that includes an explanatory  paragraph regarding  uncertainty as to the ability
of the Company to continue as a going  concern.  Among the factors  cited by the
auditors as raising substantial doubt as to the Company's ability to continue as
a going  concern are that the Company's  recurring  losses from  operations  and
resulting continued  dependence on external sources of capital raise substantial
doubt about the entity's ability to continue as a going concern. The Company may
incur losses for the foreseeable  future due to the significant costs associated
with the  development,  manufacturing  and marketing of its GRADIUM products and
due to the continued research and development  activities that will be necessary
to further refine the Company's  technology and products and to develop products
with additional applications.                                                   

         Anticipation of Operating Losses;  Need for Additional  Financing.  The
Company anticipates  continuing to incur substantial operating losses for fiscal
year 1998 and until such time,  if ever, as the  Company's  operations  generate
sufficient   revenues  to  offset  its  costs.  The  Company  expects  to  incur
substantial  expenses  principally as the result of the various costs associated
with the Company's implementation of a sales and marketing program, distribution
channels,  recruitment and training of personnel and other operating  activities
and its continuing  research and development efforts to expand its product line,
and capital expenditures for the scale-up of its manufacturing  operations.  The
Company's  potential  receipt of  revenues  from  product  sales are  subject to
substantial contingencies,  and there can be no assurances concerning the timing
and  amount  of  future  revenues  from  product  sales,  if  any.  The  Company
anticipates  that product sales and the net proceeds from the Company's  private
placements  of  preferred  stock  completed  in July and  October  1997  will be
sufficient to finance the Company's  working capital  requirements  for at least
fiscal year 1998,  although the Company's  capital  requirements  are subject to
numerous  contingencies  associated  with a  company  in  its  early  stages  of
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operations.  The net proceeds from the Company's private placement  completed in
February 1998 provides  working capital into fiscal 1999 and more rapid entrance
into  optoelectronics  development and sales. The Company's capital requirements
after  such  period  will  depend  on the  extent  that  GRADIUM  glass  becomes
commercially  accepted,  if at all, and if the  Company's  marketing  program is
successful in generating sales  sufficient to sustain its operations.  There can
be no assurance that the Company will generate  sufficient  revenues to fund its
operations.  The Company may be required  to seek  additional  financing  in the
event the proceeds from its private  placements  of Series A Preferred  Stock in
July 1997, Series B Preferred Stock in October 1997 and Series C Preferred Stock
in February 1998 are insufficient to offset costs associated with  unanticipated
delays, cost overruns,  unanticipated  expenses or in the event the Company does
not realize anticipated revenues.  The Company has no commitments from others to
provide such  additional  financing and there can be no assurance  that any such
additional  financing  will be available if needed or, if available,  will be on
terms  acceptable to the Company.  In the event such necessary  financing is not
obtained, the Company's operations will be materially adversely affected and the
Company will have to cease or substantially  reduce  operations.  Any additional
equity  financing  may be  dilutive to  stockholders,  and debt  financings,  if
available, may involve restrictive covenants.                                   

         Early  Stage of  Development  of  Proposed  Products;  Need for  Market
Acceptance.  Through June 1996,  the  Company's  primary  activities  were basic
research and  development of glass material  properties.  The Company's  current
line of GRADIUM  products have not been widely sold ( approximately 90 customers
as of June 30,  1997) or  marketed.  While the  Company  believes  its  existing
products are  commercially  viable,  market  feedback may require the Company to
further  refine these  products.  Development  of additional  product lines will
require significant further research,  development,  testing and marketing prior
to commercialization.  In particular, the Company's lens technology will require
substantial  further  refinement  to  develop  products  capable  of  correcting
chromatic  optical  applications,  which is required  for many  optical  product
applications.  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.  In order for its  products  to  achieve  commercial  acceptance,  the
Company must educate the optical  components markets to create product awareness
and  demand,  and,  in large  part,  persuade  potential  customers  to redesign
existing products and retool existing assembly  processes in order to substitute
GRADIUM for existing  materials.  There can be no assurance that the Company can
accomplish the foregoing to the extent necessary to develop market acceptance of
its products.                                                                   

         Uncertainty of Commercialization of the Company's  Technology;  Limited
Number of Potential  Customers Testing the Company's  Technology.  The Company's
existing products have not yet achieved  commercial  acceptance.  Through fiscal
1996, product revenues received by the Company have been from purchasers engaged
in  prototype  development,  evaluation  of the  commercial  application  of the
Company's products, or other research and development activities,  and purchases
have not reached  commercial  quantities.  Most of the Company's fiscal 1997 and
1998 product sales have been to laser customers, distributors and the wafer chip
inspection  market.   Although  the  Company  is  engaged  in  negotiations  and
discussions with other potential  customers,  there can be no assurance that any
such  discussions  will lead to development of  commercially  viable products or
significant  revenues  for the Company,  if any, or that any products  currently
existing  or to be  developed  in  the  future  will  attain  sufficient  market
acceptance  to generate  significant  revenues.  In order to persuade  potential
customers  to  purchase  GRADIUM  products,  the  Company  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 the  Company  to  develop a  repeatable,  consistent  process  for
producing lenses with variable refractive indices. The Company must also satisfy
prospective  customers  that it will be able to meet their demand for quantities
of GRADIUM  products,  since the Company will be the sole supplier and licensor.
The Company does not have demonstrated experience as a manufacturer and does not
have a  substantial  net worth.  There can be no assurance  that the Company can
accomplish the foregoing to the extent necessary to develop market acceptance of
its products.  Prospective customers will need to make substantial  expenditures
to redesign products to incorporate  GRADIUM lenses.  There can be no assurances
that potential  customers will view GRADIUM's  benefits as sufficient to warrant
such design expenditures.                                                       
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         Dependence  on  Key  Personnel,  Need  for  Additional  Personnel.  The
operations  of the Company  depend to a  significant  extent upon the efforts of
Leslie A. Danziger,  the Company's  Chairman of the Board and CEO, who conceived
the Company's technology and strategic plan and who is substantially responsible
for planning and guiding the  Company's  direction.  In addition,  the Company's
success  depends  upon the  contributions  of Donald E.  Lawson,  the  Company's
President,   whose  responsibilities  for  the  Company's  operations  are  very
substantial. Each of the foregoing officers has an employment agreement with the
Company that provides, among other things, for severance compensation in certain
events.  The loss of any of these  key  employees  would  adversely  affect  the
Company's  business.  The Company  has  obtained  key  employee  life  insurance
policies in the amount of $3,000,000 on the life of Ms.  Danziger and $1,000,000
on the life of Mr. Lawson.  The Company had  thirty-one  employees on January 1,
1998.  Additional  personnel  will  need to be hired if the  Company  is able to
successfully  expand its operations.  There can be no assurance that the Company
will  be able  to  identify,  attract  and  retain  employees  with  skills  and
experience  necessary  and relevant to the future  operations  of the  Company's
business.                                                                       

         Competition.  The optical  lens and  components  markets are  intensely
competitive  and  numerous  companies,  substantially  all of which have greater
financial and other  resources than the Company,  provide  products and services
that  compete  with those  offered by the  Company.  The Company  competes  with
manufacturers  of  conventional  spherical  lens  products and  aspherical  lens
products,  producers of optical  quality glass and other  developers of gradient
lens  technology  and  products.  In the markets for  conventional  and aspheric
lenses,  the  Company  will be  competing  against,  among  others,  established
international  industry  giants.  Many  of  these  companies  also  are  primary
customers for optical  components,  and therefore have significant  control over
certain  markets  for the  Company's  products.  The  Company  is aware of other
companies that are attempting to develop radial gradient lens technology, and it
is  possible  that  other  companies  of which the  Company is not yet aware are
attempting to develop axial  gradient lens  technology  similar to the Company's
technology.  There can be no assurance that existing or new competitors will not
develop  technologies that are superior to or more commercially  acceptable than
the Company's technology and products.                                          

         Limited  Marketing  and  Sales  Capabilities;  Fragmented  Market.  The
Company's  operating  results  will  depend to a large  extent on its ability to
educate the various  industries  utilizing optical glass about the advantages of
GRADIUM  and to  market  GRADIUM  products  to  the  participants  within  those
industries.  The Company currently has very limited  marketing  capabilities and
experience  and will  need to hire  additional  sales and  marketing  personnel,
develop additional sales and marketing programs and establish sales distribution
channels in order to achieve and sustain  commercial  sales of its products.  In
October 1997,  the Company hired a Vice  President of Sales to develop its sales
and marketing program and recruit  personnel.  While the Company has developed a
marketing plan,  there can be no assurance that the plan will be implemented or,
if implemented,  will succeed in creating  sufficient  levels of customer demand
for the Company's  products.  The markets for optical  lenses and components are
highly  fragmented.  Consequently,  the Company  will need to target  particular
market  segments in which it believes  it may have the most  success.  It may be
very difficult for the Company to penetrate any particular  market segment,  and
any  attempt  will  require a  substantial,  but  unknown,  amount of effort and
resources.  The fragmented  nature of the optical products market may impede the
Company's  ability  to  achieve  commercial  acceptance  for  its  products.  In
addition,  the  Company's  success  will  depend in great part on its ability to
develop and implement a successful marketing and sales program.  There can be no
assurance that any marketing and sales efforts undertaken by the Company will be
successful or will result in any significant sales of the Company's products. If
the sales and  marketing  efforts  implemented  by the  Company do not  generate
expected revenues,  the Company may be required to seek additional  financing or
alter its business plan.                                                        

         Dependence on Patents and Proprietary Technology. The Company's success
will depend,  in part, on its ability to obtain  protection for its products and
technologies  under United States and foreign patent laws, to preserve its trade
secrets,  and to operate  without  infringing  the  proprietary  rights of third
parties.  There can be no  assurance  that patent  applications  relating to the
Company's  products or potential  products  will result in patents being issued,
that any issued patents will afford adequate                                    
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protection  to the  Company  or not be  challenged,  invalidated,  infringed  or
circumvented,  or that any rights  granted  thereunder  will afford  competitive
advantages to the Company.  Furthermore,  there can be no assurance  that others
have not independently  developed,  or will not independently  develop,  similar
products  and/or  technologies,  duplicate  any  of  the  Company's  product  or
technologies,  or, if patents are issued to, or licensed by, the Company, design
around such patents. There can be no assurance that patents owned or licensed by
the  Company  and  issued  in one  jurisdiction  will  also  issue in any  other
jurisdiction.  Furthermore,  there  can be no  assurance  that the  Company  can
adequately  preserve  proprietary  technology and processes that it maintains as
trade secrets. An inability by the Company to develop and adequately protect its
proprietary  technology and other assets could have a material adverse effect on
the Company's business, financial condition and results of operations.          

         Dependence  on  Others.   The  Company's  strategy  for  the  research,
development and  commercialization  of certain of its 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. The Company may also rely on its collaborative
partners to conduct  research  efforts,  product  testing and to manufacture and
market  certain of the Company's  products.  Although the Company  believes 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 the control of the
Company.  There can also be no assurance  that the Company will be successful in
establishing any such  collaborative  arrangements or that, if established,  the
parties  to  such  arrangements  will  assist  the  Company  in  commercializing
products. Presently the Company has entered into a development agreement with an
endoscope  manufacturer  pursuant to which it has  developed  prototype  lenses.
There can be no assurance  that such endoscope  manufacturer  will progress to a
production  phase or, if  production  commences,  that the Company  will receive
significant revenues from this relationship. In 1996, the Company terminated its
agreement  with a catalog  company to  distribute  certain of its products on an
exclusive  basis.  While the Company has no agreement with such catalog  company
with  respect  to  the  future  distribution  of  the  Company's  products,   it
anticipates  continuing such relationship on a non-exclusive basis. In 1997, the
Company  formalized  relationships  with seven  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.            

         Limited Manufacturing Capability.  Prior to the Company's February 1996
IPO, the Company had minimal experience in manufacturing optical components.  In
addition,  the  Company had  limited  resources  to  manufacture  its  products.
Proceeds from the IPO were primarily used to expand its manufacturing facilities
and hire personnel to scale-up production activities. In March 1996, the Company
entered  into  a 5  year  lease  for a new  corporate  headquarters  and  larger
manufacturing  facility in  Albuquerque,  New Mexico.  Within such 13,300 square
foot facility, the Company established its present manufacturing  processes. The
Company  believes that the present  manufacturing  facilities are sufficient for
its planned  operations over the next several years.  However,  the Company does
not have any experience  manufacturing products in quantities sufficient to meet
commercial  demand.  If the  Company is unable to  manufacture  its  products in
sufficient  quantities  and in a timely  manner  to meet  customer  demand,  the
Company's  business,  financial  condition  and  results of  operations  will be
materially adversely affected.                                                  

         Product Liability Exposure.  The sale of the Company's optical products
will involve the inherent risk of product  liability claims against the Company.
The Company  currently does not maintain product liability  insurance  coverage,
but intends 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 the  Company.  Moreover,  the  amount  and scope of any
coverage  may be  inadequate  to protect the Company in the event that a product
liability claim is successfully asserted against the Company.                   

         Immediate  and  Substantial  Dilution.  Purchasers  of  the  securities
offered hereby will incur  immediate  substantial  dilution in the per share net
tangible book value of their Class A Common Stock. Therefore,  purchasers of the
securities offered hereby will bear a proportionately  greater risk of loss than
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the Company's current stockholders.                                             

         Charge to Income in the Event of Conversion of Class E Common Stock. In
the event any shares of the Company's  Class E Common Stock held by stockholders
who are  officers,  directors,  employees  or  consultants  of the  Company  are
converted  into  shares  of  Class A  Common  Stock,  the  Company  will  record
compensation expense for financial reporting purposes during the period in which
such conversion  occurs.  Therefore,  if the Company attains any of the earnings
thresholds  or the  Company's  Class A Common  Stock meets  certain  minimum bid
prices  required for the conversion of the shares of Class E Common Stock,  such
conversion  will be  deemed  additional  compensation  expense  of the  Company.
Accordingly,  the Company  will,  in the event of the  conversion of the Class E
Common  Stock,  recognize  during  the period in which the  reportable  earnings
thresholds  are met or  such  minimum  bid  prices  obtained,  what  could  be a
substantial  charge that would have the effect of  significantly  increasing the
Company's  reportable loss or reducing or eliminating  reportable  earnings,  if
any,  for such  period.  Such charge  will equal the fair  market  value of such
shares on the date of release, which may be substantial.  Although the amount of
compensation  expense  recognized  by the Company will not affect the  Company's
total stockholders' equity, it may have a material negative effect on the market
price of the  Company's  securities.  Since  Class E shares  are not  treated as
outstanding for purposes of earnings per share calculations, the increase in the
number of shares of Class A Common Stock upon  conversion of any series of Class
E Common Stock will have a material adverse effect on the Company's earnings per
share.                                                                          

         Control by Present Holders of Common Stock; Voting Trust. The Company's
principal  stockholders  beneficially  owned  250,210  shares  of Class A Common
Stock, 1,106,809 shares of the combined Class E Common Stock, representing 9% of
the outstanding  Class A Common Stock, 28% of the combined  outstanding  Class E
Common Stock,  and 20% of the total  combined  voting power of all of the Common
Stock  outstanding at September 12, 1997. In addition,  certain  stockholders of
the Company  holding  approximately  18% of the total  voting power have entered
into a voting trust agreement. Additional stockholders may subsequently join the
voting trust.  Pursuant to the voting trust,  Leslie A. Danziger,  the Company's
Chairman and CEO, is granted the authority to vote all of the shares  subject to
the voting trust on all matters that the Company's  stockholders are entitled to
vote. Accordingly, Ms. Danziger will likely be able to influence the election of
the Company's directors and thereby direct the policies of the Company.  Holders
of the Company's  issued and outstanding  Preferred Stock have no voting rights.
Consequently, the holders thereof will have no such rights until and unless such
shares are converted into Class A Common Stock.                                 

         Future Sales of Common Stock.  As of February 22, 1998, less than 5% of
the Company's outstanding Common Stock are "restricted  securities" as that term
is defined  under Rule 144  promulgated  under the  Securities  Act of 1933,  as
amended (the  "Securities  Act"),  and under certain  circumstances  may be sold
without  registration  pursuant to such rule. Although no significant sales have
occurred, the Company is unable to predict the effect that sales made under Rule
144, or otherwise, may have on the then prevailing market price of the Company's
securities  although  any future  sales of  substantial  amounts  of  securities
pursuant to Rule 144 could adversely affect prevailing market prices.           

         Dividends Unlikely.  The Company has not paid any cash dividends on its
Common  Stock  and does not  intend  to  declare  or pay cash  dividends  in the
foreseeable  future.  The  Company  expects  that it will  retain all  available
earnings, if any, to finance and expand its business.                           

         Arbitrary  Determination  of Warrant Exercise Price. The exercise price
of the  warrants  and  other  terms of such  securities  have  been  arbitrarily
established by negotiation  between the Company and one Underwriter with respect
to the Class A and Class B Warrants and with the placement agent with respect to
the Class C, Class D, Class E, Class F, Class G and Class H Warrants, and do not
necessarily  bear any  relationship to the Company's  asset value,  net worth or
financial condition of the Company or any generally recognized criteria of value
and should not be regarded as an  indication  of any future  market price of the
Company's securities.                                                           

         Effect of  Outstanding  Options and Warrants.  As of December 31, 1997,
the  Company  had  outstanding  (i)  2,679,000  Class A Warrants  to purchase an
aggregate of  2,679,000  shares of Class A Common  Stock and  2,679,000  Class B
Warrants;  (ii) 1,840,000 Class B Warrants to purchase 1,840,000                
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shares of Class A Common Stock;  (iii) the Unit  Purchase  Option to purchase an
aggregate of 240,000 Units; (iv) 832,000 shares of Class A Common Stock reserved
for the conversion of Series A Preferred Stock and exercise of Class C and Class
D  Warrants,  (v)  1,500,000  shares of Class A Common  Stock  reserved  for the
conversion  Series  B  Preferred  Stock  and  exercise  of  Class E and  Class F
Warrants; (vi) 1,750,000 shares of Class A Common Stock reserved for the Selling
Securityholders  Securities;  and  (vii)  outstanding  options  to  purchase  an
aggregate of 809,175  shares of Class A Common  Stock,  117,862  shares of Class
E-1, 117,862 shares of Class E-2 and 78,575 shares of Class E-3 Common Stock. As
of December 31, 1997,  the Company also has an  additional  1,138,226  shares of
Class A Common Stock reserved for issuance under its Omnibus  Incentive Plan and
Directors  Stock  Incentive  Plan.  For the  respective  terms of such Warrants,
options  and the  Unit  Purchase  Option,  the  holders  thereof  are  given  an
opportunity  to profit from a rise in the market price of the Company's  Class A
Common  Stock  with  a  resulting   dilution  in  the  interests  of  the  other
stockholders.  Further,  the terms on which the  Company  may obtain  additional
financing during the period such options and Warrants remain  exercisable may be
adversely affected by the existence of such options and Warrants. The holders of
the Company's  outstanding Warrants may exercise them at a time when the Company
might be able to obtain additional  capital through a new offering of securities
on terms more favorable than those provided therein.                            

         Potential  Adverse  Effect of Redemption  of IPO  Warrants.  Commencing
February  22,  1997,  the Class A and Class B Warrants  may be  redeemed  by the
Company at a redemption  price of $.05 per Warrant upon 30 days' notice provided
the average  closing bid price (as defined  herein) of the Class A Common  Stock
for any 30  consecutive  trading  days  ending  within 15 days of the  notice of
redemption exceeds $9.10, in the case of the Class A Warrants, or $12.25, in the
case of the Class B Warrants (subject to adjustment in each case). Redemption of
the  Warrants  could  force the  holders to exercise  the  Warrants  and pay the
exercise  price at a time when it may be  disadvantageous  for the holders to do
so, to sell the  Warrants  at the then  current  market  price  when they  might
otherwise wish to hold the Warrants, or to accept the redemption price, which is
likely to be  substantially  less than the market  value of the  Warrants at the
time of redemption.                                                             

         Possible   Adverse  Effects  of   Authorization   of  Preferred  Stock,
Anti-Takeover Provisions.  The Company's Certificate of Incorporation authorizes
the  issuance of 5,000,000  shares of "blank  check"  Preferred  Stock with such
designations,  rights and  preferences as may be determined from time to time by
the Board of  Directors.  Accordingly,  the  Board of  Directors  is  empowered,
without stockholder approval, to issue additional Preferred Stock with dividend,
liquidation, conversion, voting or other rights which could adversely affect the
voting power or other rights of the holders of the Company's  Common  Stock.  In
the  event of  issuance,  Preferred  Stock  could  be  utilized,  under  certain
circumstances,  as a method of discouraging,  delaying or preventing a change in
control of the  Company.  As of the date of this  Prospectus,  the  Company  has
authorized  250  shares  of Series A  Preferred  Stock,  300  shares of Series B
Preferred  Stock,  and 500 shares of Series C Preferred Stock, of which 180, 230
and 375  shares,  respectively,  have been  issued  and 55,  225 and 375  shares
respectively, were outstanding. Although the Company has no present intention to
issue any additional  shares of Preferred Stock,  there can be no assurance that
the Company will not do so in the future. In addition, the Company's Certificate
of  Incorporation  requires a super  majority  vote of  stockholders  to approve
certain  transactions,  a  classified  Board  of  Directors  and  certain  other
provisions  that may have the effect of  discouraging a change of control of the
Company. Further, the Company is subject to the provisions of Section 203 of the
Delaware  General  Corporation  Law  which may have the  effect of  discouraging
persons from pursuing a  non-negotiated  takeover of the Company and delaying or
preventing certain changes of control.                                          

         Limitation of Liability of  Directors.  The  Company's  Certificate  of
Incorporation  provides  that  directors of the Company  shall not be personally
liable for monetary  damages to the Company or its  stockholders 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
against directors of the Company.                                               
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         Possible  Adverse  Effect on the Liquidity of the Company's  Securities
Due to Securities and Exchange  Commission  Investigation of the IPO Underwriter
and Blair & Co. and Recent  Settlement by Blair & Co. with NASD.  The Securities
and Exchange  Commission  (the  "Commission")  is  conducting  an  investigation
concerning  various business  activities of the Underwriter in the Company's IPO
(the "IPO  Underwriter")  and D.H. Blair & Co., Inc.,  ("Blair & Co.") a selling
group member  which  distributed  a  substantial  portion of the IPO Units.  The
Company has been advised by the IPO Underwriter that the  investigation has been
ongoing since at least 1989 and that it is cooperating  with the  investigation.
The IPO Underwriter  cannot predict whether this  investigation will ever result
in any type of formal  enforcement action against the IPO Underwriter or Blair &
Co.                                                                             

         In July 1997,  Blair & Co.,  its Chief  Executive  Officer and its head
trader consented,  without admitting or denying any violations,  to a settlement
with the NASD Regulation, Inc. ("NASDR"), the regulatory oversight subsidiary of
the National Association of Securities Dealers,  Inc. ("NASD") District Business
Conduct  Committee  for District No. 10 to resolve  allegation  of NASD rule and
securities law violations in connection  with mark-up and pricing  practices and
adequacy of disclosures to customers regarding market-making activities of Blair
& Co. in connection with certain  securities  issues during the period from June
1993 through May 1995 where Blair & Co. was the primary  selling  group  member.
NASDR alleged the firm failed to accurately  calculate the contemporaneous  cost
of securities in instances where the firm dominated and controlled  after-market
trading,  thereby causing the firm to charge its customers  excessive  mark-ups.
NASDR also alleged the firm did not make adequate  disclosure to customers about
its market-making  activities in two issues. As part of the settlement,  Blair &
Co. has consented to censure and has agreed to pay a $2 million fine,  make $2.4
million in restitution to retail customers, employ an independent consultant for
two years to review and make recommendations to strengthen the firm's compliance
procedures,  and has  undertaken  for  twelve  months  not to sell to its retail
customers  (excluding banks and other institutional  investors) more than 60% of
the total securities sold in any securities offering in which it participates as
an underwriter or selling group member.  The Chief Executive  Officer of Blair &
Co.  has agreed to settle  failure  to  supervise  charges  by  consenting  to a
censure,  the  imposition  of a  $300,000  fine  and a  90-day  suspension  from
associating   with  any  member  firm  and  has   undertaken   to  take  certain
requalification  examinations.  The  settlement  with NASDR does not  involve or
relate to the IPO Underwriter,  its chief executive  officer or any of its other
officers or directors.                                                          

         Blair & Co.  currently  makes a market in the Company's  securities see
"Possible  Restrictions  and  Potential  Effect  of Blair & Co.  Acquisition  on
Market-Making  Activities  in  Company's  Securities."  The Company is unable to
predict  whether  Blair & Co.'s  settlement  with the  NASDR or any  unfavorable
resolution of the Commission's investigation will have any effect on such firm's
ability to make a market in the  Company's  securities  and, if so,  whether the
liquidity or price of the Company's securities would be adversely affected.     

         Possible  Restrictions and Potential Effect of Blair & Co.  Acquisition
on  Market-Making  Activities  in  Company's  Securities.  On  January  9, 1998,
Barington  Capital Group L.P. , a New York  investment  bank,  agreed to acquire
most of the  assets of Blair & Co.  The  Company  is not able to  determine  the
impact, if any, this acquisition will have on the Company's securities.  Blair &
Co.  currently  makes  a  market  in  the  Company's  securities.  In  addition,
Regulation M, which was adopted to replace Rule 10b-6 under the Exchange Act may
prohibit Blair & Co. from engaging in any  market-making  activities with regard
to the Company's  securities for the period of up to five business days (or such
other  applicable  period as Regulation M may provide) prior to any solicitation
by the IPO Underwriter of the exercise of Class A and Class B Warrants until the
later of the  termination of such  solicitation  activity or the termination (by
waiver or otherwise) of any right that such IPO  Underwriter may have to receive
a fee for the exercise of Warrants  following  such  solicitation.  As a result,
Blair & Co.  may be unable  to  provide a market  for the  Company's  securities
during certain periods while the Warrants are  exercisable.  In addition,  under
applicable  rules and regulations  under the Exchange Act, any person engaged in
the distribution of the Class A Warrants issued to the Bridge Securityholders in
the  Company's  IPO and  offered  for  sale  may not  simultaneously  engage  in
market-making  activities  with respect to any securities of the Company for the
applicable  restricted  period prior to the  commencement of such  distribution.
Accordingly,  in the  event  the IPO  Underwriter  or Blair & Co.  engages  in a
distribution  of any of the Bridge                                              
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424B2 14th Page of 20 TOC 1st Previous Next ↓Bottom Just 14th
Securityholders'  Warrants,  neither of such firms will be able to make a market
in the  Company's  securities  during the  applicable  restrictive  period.  Any
temporary  cessation  of such  market-making  activities  could  have an adverse
effect on the market price of the Company's securities.                         

         Risk of Low-Priced  Stock.  If the Company's  securities  were delisted
from Nasdaq (See "Risk Factors--Nasdaq  Listing and Maintenance  Requirements"),
they could become  subject to Rule 15g-9 under the Exchange  Act,  which imposes
additional  sales  practice  requirements  on  broker-dealers  which  sell  such
securities  to  persons  other  than   established   customers  and  "accredited
investors"  (generally,  individuals  with net worth in excess of  $1,000,000 or
annual incomes exceeding $200,000, or $300,000 together with their spouses). For
transactions  covered  by  this  rule,  a  broker-dealer  must  make  a  special
suitability  determination  for the purchaser and have received the  purchaser's
written consent to the transaction  prior to sale.  Consequently,  such rule may
adversely affect the ability of broker-dealers to sell the Company's  securities
and may adversely affect the ability of purchasers in the IPO to sell any of the
securities acquired hereby in the secondary market.                             

         The Commission has adopted  regulations which generally define a "penny
stock" to be any non-Nasdaq  equity security that has a market price (as therein
defined)  of less than  $5.00 per share or with an  exercise  price of less than
$5.00 per share, subject to certain exceptions.  For any transaction involving a
penny stock, unless exempt, the rules require delivery, prior to any transaction
in a penny stock, of a disclosure  schedule prepared by the Commission  relating
to the  penny  stock  market.  Disclosure  is also  required  to be  made  about
commissions payable to both the broker-dealer and the registered  representative
and current  quotations  for the  securities.  Finally,  monthly  statements are
required to be sent disclosing recent price information for the penny stock held
in the account and information on the limited market in penny stocks.           

         The foregoing  required penny stock  restrictions will not apply to the
Company's  securities if such  securities  are listed on Nasdaq and have certain
price and volume information  provided on a current and continuing basis or meet
certain minimum net tangible assets or average revenue criteria. There can be no
assurance  that the Company's  securities  will qualify for exemption from these
restrictions.  In any event,  even if the Company's  securities were exempt from
such  restrictions,  it would remain subject to Section 15(b)(6) of the Exchange
Act,  which gives the  Commission  the  authority to prohibit any person that is
engaged in unlawful  conduct while  participating  in a distribution  of a penny
stock from  associating  with a broker-dealer or participating in a distribution
of a penny stock,  if the Commission  finds that such a restriction  would be in
the public interest.                                                            

         If the Company's securities were subject to the existing rules on penny
stocks,  the market  liquidity  for the Company's  securities  could be severely
adversely affected.                                                             

         Non-Registration  in Certain  Jurisdictions  of Shares  Underlying  the
Warrants and Preferred Stock; Need for Current Prospectus.  Although none of the
shares of Common Stock  offered  hereby will  knowingly be sold to purchasers in
jurisdictions in which such securities are not registered or otherwise qualified
for sale,  purchasers may buy such securities in the aftermarket in, or may move
to,  jurisdictions in which such shares of Common Stock are not so registered or
qualified  during the period that the Warrants are  exercisable or the Preferred
Stock is convertible. In this event, the Company would be unable to issue shares
to those persons  desiring to exercise their Warrants or convert their Preferred
Stock unless and until the underlying  securities could be qualified for sale in
jurisdictions  in  which  such  purchasers  reside,  or  an  exemption  to  such
qualification  exists in such jurisdiction.  In addition,  investors will not be
able to exercise their Warrants or convert their Preferred Stock,  unless at the
time of exercise  the Company has a current  prospectus  covering  the shares of
Class A Common Stock  underlying the Warrants and Preferred  Stock,  as the case
may be. No  assurances  can be given that the Company will be able to effect any
required registration or qualification or maintain a current prospectus.        

         Nasdaq Listing and  Maintenance  Requirements,  Risk of Delisting.  The
Units,  Class A Common  Stock  and Class A and Class B  Warrants  are  currently
traded on  Nasdaq  SmallCap  Market  ("Nasdaq").  Under the rules for  continued
listing on Nasdaq  SmallCap  Market,  a company is required to maintain at least
$2,000,000 in "net tangible  assets" ("net tangible  assets" equals total assets
less total  liabilities  and goodwill) or at least  $35,000,000  in total market
capitalization  or at least  $500,000 in net income in two out of its last three
fiscal  years,  as well as at least  500,000  shares in public  float,  at least
14

424B2 15th Page of 20 TOC 1st Previous Next ↓Bottom Just 15th
$4,000,000  in market value of the public float and a bid price of not less than
$1.00 per share, and meet certain corporate governance standards. Upon notice of
a deficiency in one or more of the maintenance  requirements,  the Company would
be  given  between  10 to 90  days  (depending  on  the  criteria  which  is not
satisfied) to comply with the maintenance  standards.  Failure of the Company to
meet the  maintenance  requirements  of Nasdaq  could  result  in the  Company's
securities  being  delisted  from  Nasdaq,  with the result  that the  Company's
securities  would  trade  on the OTC  Bulletin  Board  or in the  "pink  sheets"
maintained by the National  Quotation Bureau  Incorporated.  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 the Company's  securities.
Among other consequences, delisting from Nasdaq may cause a decline in the stock
price and difficulty in obtaining future financing.                             

         Stock Market Volatility.  There have been periods of extreme volatility
in the  stock  market,  which in many  cases  were  unrelated  to the  operating
performance of, or announcements concerning,  the issuers of the affected stock.
General market price declines or market volatility in the future could adversely
affect the price of the Common Stock. In certain cases,  volatility in the price
of a given security can result from the short-term trading strategies of certain
market   segments.   Such  volatility  can  distort  market  value  and  can  be
particularly severe in the case of smaller capitalization stocks and immediately
before or after an important corporate event such as a public offering.         

         Risk of  Insufficient  Funds  Available to Effect  Redemptions.  In the
events of  conversion  of the Series A, Series B or Series C Preferred  Stock or
exercise  of  their  accompanying  Class  C,  Class  E  and  Class  G  Warrants,
respectively,  in a manner  that  would  cause an undue  dilution  of its Common
Stock, the Company has the right to redeem such preferred stock and warrants for
cash. In addition,  a Liquidation Event (as defined in the Company's  applicable
Certificates of Designation) may require redemption of the Series A, Series B or
Series C Preferred  Stock for cash.  There can be no assurance that in either of
the  foregoing  events that the Company will have  adequate  cash to effect such
cash redemptions.                                                               

 USE OF PROCEEDS

         All proceeds from the resale of any  securities  offered hereby will be
received by the respective Selling Securityholders. In the event that all of the
337,078 outstanding Class G Warrants,  and all of the 58,427 outstanding Class H
Warrants are exercised,  the Company would receive net proceeds of approximately
$2,642,000.  Holders of Warrants are not obligated to exercise  their  Warrants.
There can be no assurance that the Warrantholders will choose to exercise all or
any of their Warrants. The Company intends to use the net proceeds received upon
the exercise of the Warrants, if any, for general corporate purposes and working
capital,   including  but  not  limited  to  marketing  efforts,   research  and
development programs and continuing product development.                        

 DETERMINATION OF OFFERING PRICE

         An aggregate of up to 1,750,000 of the 1,758,490 shares of Common Stock
offered are  issuable  upon the exercise of the Class G and Class H Warrants and
the  conversion  of the Series C Preferred  Stock.  The  subsequent  sale of the
shares of Common Stock  received upon exercise of the Warrants and conversion of
the  Series C  Preferred  Stock and the sale of the  remaining  8,490  shares of
Common Stock currently  outstanding will be determined by the respective Selling
Securityholder  at prices and on terms then  prevailing or at prices  related to
the then current market price, or in negotiated transactions.                   
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424B2 16th Page of 20 TOC 1st Previous Next ↓Bottom Just 16th
 SELLING SECURITYHOLDERS

         An aggregate of 1,758,490 shares of Class A Common Stock may be offered
for resale by the Selling Securityholders from time to time. The shares of Class
A Common Stock offered hereby include  1,750,000  shares which are issuable upon
exercise  of 337,078  Class G  Warrants,  and 58,427  Class H Warrants  and upon
conversion of 375 shares of Series C Preferred Stock, all of which are currently
outstanding.  Each Class G and Class H Warrant is  exercisable  for one share of
Class A Common Stock. Each share of Series C Preferred Stock is convertible into
a number of shares of Class A Common  Stock  determined  by dividing  its stated
value on the date of conversion by a conversion  price.  The conversion price is
defined as the lesser of (i) $6.675 or (ii) 85% of the average closing bid price
of the Company's Class A Common Stock for the five days preceding the conversion
date. All of the Class G Warrants,  Class H Warrants,  Series C Preferred  Stock
and  Class A Common  Stock  were  acquired  by the  Selling  Securityholders  in
connection with a private placement completed by the Company in February 1998.  

         The following table sets forth certain  information with respect to the
beneficial  ownership of Common Stock as of February 1, 1998, and as adjusted to
reflect  the sale of the  Class A Common  Stock  being  offered  hereby,  by the
Selling  Securityholders.  Except as  described  below,  there  are no  material
relationships  between any of the Selling  Securityholders and the Company,  nor
have any such material relationships existed within the past three years.       

                                                        [Enlarge/Download Table]

                                                                        ---------------------------------------------

                                                                                   Shares Beneficially owned         
                                                                                         After Offering (1)          
                                                                        ---------------------------------------------
                                --------------------- -----------------                                              
                                Shares Beneficially      Number of          Number        Percent of     Percent of  
                                 owned Prior to the     Shares Being                        Class A         All      
                                 Offering (1)(2)(3)     Offered (3)                      Common Stock    Classes of  
                                                                                                        Common Stock 
                                --------------------- ----------------- ---------------- -------------- -------------
                                                                                                                     
Cranshire Capital LLP                   200,513(4)         93,035(5)       107,478(4)         3%            1.5%     
EP Opportunity Fund, LLC                548,295(6)        232,588(7)       310,307(6)         8%             4%      
JRA Enterprises                          11,629(8)            11,629              -0-          *             *       
Kopin Rice Corporation                   69,776(9)            69,776              -0-          *             *       
Keyway Investments, LTD                908,206(10)       465,175(11)      443,031(10)         12%            6%      
Swartz Family Partnership, LP       42,948(12)(21)            15,309       27,639(12)          *             *       
KendrickFamily Partnership LLP      33,549(13)(21)            15,309       18,240(13)          *             *       
Brad Hathorn                         4,928(14)(21)             2,000        2,925(14)          *             *       
Jerry Harris                         8,698(15)(21)             2,500        6,198(15)          *             *       
Carl Johnson                         5,500(17)(21)             1,500        4,000(17)          *             *       
Davis Holden                         6,500(18)(21)             1,500        5,000(18)          *             *       
Frank Mauro                         32,810(16)(21)            15,309       27,640(16)          *             *       
Chuck Whiteman                       4,265(19)(21)             1,500        2,765(19)          *             *       
Dwight Bronnum                       1,000(20)(21)               250            750(20)        *             *       
Robert Hopkins                       1,000(20)(21)               250            750(20)        *             *       
H. Nelson Logan                          1,000(21)             1,000                  0        *             *       
James Mills                              1,000(21)             1,000                  0        *             *       
Kelley Smith                             1,000(21)             1,000                  0        *             *       
Swartz Investments LLC                       8,490             8,490                  0        *             *       

* Represents beneficial ownership of less than 1%.                    

(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)  As noted below,  the information set forth below includes shares of Class A
     Common Stock issuable upon  conversion of shares of the Company's  Series A
     and Series B Preferred Stock which are presently outstanding. Each share of
     Series A and  Series B  Preferred  Stock is  convertible  into a number  of
     shares of Class A Common Stock  determined  by dividing its stated value on
the date of  conversion  by a                                         
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424B2 17th Page of 20 TOC 1st Previous Next ↓Bottom Just 17th
     conversion  price. The Series A and Series B conversion price is defined as
     the  lesser of (i)  $5.625  and  $7.2375  respectively,  or (ii) 85% of the
     average  closing bid price of the  Company's  Class A Common  Stock for the
     five days  preceding the conversion  date. For purposes of the  information
     set forth in this  table,  it is  assumed  that each  outstanding  share of
     Series A and Series B  Preferred  Stock was  converted  as of March 1, 1998
     into approximately 1,872 and 1,427 shares, respectively,  of Class A Common
Stock.                                                                
(3)  As noted below,  the information set forth below includes shares of Class A
     Common Stock issuable upon  conversion of shares of the Company's  Series C
     Preferred  Stock which are  presently  outstanding.  Each share of Series C
     Preferred  Stock is  convertible  into a number of shares of Class A Common
     Stock  determined by dividing its stated value on the date of conversion by
     a conversion  price.  The conversion  price is defined as the lesser of (i)
     $6.675 or (ii) 85% of the average  closing bid price of the Company's Class
     A Common  Stock  for the five  days  preceding  the  conversion  date.  For
     purposes of the  information  set forth in this table,  it is assumed  that
     each share of Series C Preferred  Stock was  converted  as of March 1, 1998
into approximately 1,505 shares of Class A Common Stock.              
(4)  Includes  200,513  shares of which 44,396 were received from the conversion
     of 15 shares of Series A Preferred  Stock and related  Class C Warrants and
     156,117  shares  issuable upon (A)  conversion of (i) 20 shares of Series B
     Preferred Stock and (ii) 40 shares of Series C Preferred Stock and upon (B)
     the  exercise  of (i)  34,542  Class E  Warrants  and (ii)  35,955  Class G
Warrants to purchase shares of Class A Common Stock.                  
(5)  Includes  93,035 shares  issuable upon  conversion of 40 shares of Series C
     Preferred  Stock and assumes  the  exercise of Class G Warrants to purchase
35,955 shares of Class A Common Stock.                                
(6)  Includes  548,295  shares  issuable upon (A) conversion of (i) 35 shares of
     Series A  Preferred  Stock (ii) 65 shares of Series B  Preferred  Stock and
     (iii) 100 shares of Series C Preferred  Stock and upon (B) the  exercise of
     (i) Class C  Warrants  to  purchase  62,222  shares,  (ii)  89,810  Class E
     Warrants and (iii)  89,888  Class G Warrants to purchase  shares of Class A
Common Stock.                                                         
(7)  Includes  232,588 shares issuable upon conversion of 100 shares of Series C
     Preferred  Stock and assumes  the  exercise of Class G Warrants to purchase
89,888 shares of Class A Common Stock.                                
(8)  Includes  11,629 shares  issuable  upon  conversion of 5 shares of Series C
     Preferred  Stock and assumes  the  exercise of Class G Warrants to purchase
4,494 shares of Class A Common Stock.                                 
(9)  Includes  69,776 shares  issuable upon  conversion of 30 shares of Series C
     Preferred  Stock and assumes  the  exercise of Class G Warrants to purchase
26,966 shares of Class A Common Stock.                                
(10) Includes  908,206  shares which 82,162 were received from the conversion of
     45 shares of Series A Preferred  Stock and 826,044 shares issuable upon (A)
     conversion  of (i) 100  shares  of  Series B  Preferred  Stock and (ii) 200
     shares of Series C Preferred  Stock and upon (B) the exercise of (i) 80,000
     Class C Warrants  (ii) 138,169  Class E Warrants  and (ii) 179,775  Class G
Warrants to purchase shares of Class A Common Stock.                  
(11) Includes  465,175 shares issuable upon conversion of 200 shares of Series C
     Preferred  Stock and assumes  the  exercise of Class G Warrants to purchase
179,775 shares of Class A Common Stock.                               
(12) Includes  42,948  shares  issuable  upon the  exercise  of  15,750  Class D
Warrants, 11,889 Class F Warrants and 15,309 Class H Warrants.        
(13) Includes  33,549  shares of which 6,351 were  received from the exercise of
     Class D Warrants  and 27,198  shares  issuable  upon the exercise of 11,889
Class F Warrants and 15,309 Class H Warrants.                         
(14) Includes 4,928 shares of which 928 were received from the exercise of Class
     D Warrants  and 4000  shares  issuable  upon the  exercise of 2,000 Class F
Warrants and 2,000 Class H Warrants.                                  
(15) Includes  8,698  shares of which 2,198 were  received  from the exercise of
     Class D Warrants and 6,500 shares issuable upon the exercise of 4,000 Class
F Warrants and 2,000 Class H Warrants.                                
(16) Includes  32,810  shares of which 5,611 were  received from the exercise of
     Class D Warrants  and 27,199  shares  issuable  upon the exercise of 11,890
Class F Warrants and 15,309 Class H Warrants.                         
(17) Includes  5,500  shares  issuable  upon the  exercise  of (i) 2,000 Class D
 Warrants, (ii) 2,000 Class F Warrants and (iii) 1,500 Class H Warrants.
(18) Includes  6,500  shares  issuable  upon the  exercise  of (i) 3,000 Class D
  Warrants, (ii) 2,000 Class F Warrants and (iii) 1,500 Class H Warrants..
(19) Includes  4,265  shares of which 1,265 were  received  from the exercise of
     Class D Warrants and 3,000 shares issuable upon the exercise of 1,500 Class
F Warrants and 1,500 Class H Warrants.                                
(20) Includes 1,000 shares of which 500 were received from the exercise of Class
     D  Warrants  and 500  shares  issuable  upon the  exercise  of 250  Class F
Warrants and 250 Class H Warrants.                                    
(21) Each of these persons were designated by Swartz Investments, LLC to receive
certain securities issuable to Swartz. See "Certain Relationships".   
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 CERTAIN RELATIONSHIPS

         All of  the  Class  D and  Class  F  Warrants  were  issued  to  Swartz
Investments,  LLC or its  designees  (collectively  "Swartz")  along  with  cash
placement  fees  as  consideration  for  its  services  as  placement  agent  in
connection with the Company's sales of Series A Preferred Stock in July 1997 and
Series B Preferred Stock in October 1997, respectively.                         

         All of the Class G Warrants were issued to Swartz with a cash placement
fee of $187,500 and 8,490 shares of unregistered Class A Common Stock equal to 1
1/2% of the  gross  proceeds  from  the  sale of  Series  C  Preferred  Stock as
compensation  for their  services  as  placement  agent in  connection  with the
February 1998 private placement of 375 shares of its Series C Preferred Stock.  

         The  purchasers  of the  Company's  Series  A,  Series  B and  Series C
Preferred  Stock have a right of first offer to  participate in any issuances of
equity or debt  securities by the Company  during the respective one year period
commencing  on the date  which  such  shares of  Series A,  Series B or Series C
Preferred Stock, as the case may be, were sold.  Swartz  Investments LLC has the
right of first  refusal to act as  placement  agent  with  respect to any future
private financings by the Company during the one year period ended July 1998.   

PLAN OF DISTRIBUTION

         The   shares   of   Common   Stock   offered   hereby   the   ("Selling
Securityholders'  Securities")  may be sold  from  time  to time by the  Selling
Securityholders,  or by pledgees,  donees,  transferees  or other  successors in
interest. Such sales may be made 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  Selling  Securityholders'
Securities  may be sold in one or more of the following  types of  transactions:
(a) a block trade in which the broker-dealer so engaged will attempt to sell the
Selling  Securityholders'  Securities  as agent but may  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; and (d) ordinary brokerage transactions and transactions
in which the broker  solicits  purchasers.  In effecting  sales,  broker-dealers
engaged by the Selling  Securityholders may arrange for other  broker-dealers to
participate in the resales.                                                     

         In  connection  with  distributions  of  the  Selling  Securityholders'
Securities  or  otherwise,  the Selling  Securityholders  may enter into hedging
transactions  with   broker-dealers.   In  connection  with  such  transactions,
broker-dealers  may  engage  in  short  sales  of the  Selling  Securityholders'
Securities  in the course of hedging the  positions  they  assume  with  Selling
Securityholders.   The   Selling   Securityholders   may   also   sell   Selling
Securityholders'  Securities  short and redeliver  the Selling  Securityholders'
Securities to close out such short positions.  The Selling  Securityholders  may
also enter into option or other transactions with  broker-dealers  which require
the delivery to the  broker-dealer of the Selling  Securityholders'  Securities,
which the  broker-dealer  may  resell or  otherwise  transfer  pursuant  to this
Prospectus.  The  Selling  Securityholders  may  also  loan  or  pledge  Selling
Securityholders'  Securities to a broker-dealer  and the  broker-dealer may sell
the  Selling  Securityholders'  Securities  so loaned or,  upon a  default,  the
broker-dealer   may  effect  sales  of  the  pledged  Selling   Securityholders'
Securities pursuant to this Prospectus.                                         

         Broker-dealers  or  agents  may  receive  compensation  in the  form of
commissions,  discounts  or  concessions  from the  Selling  Securityholders  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 under the Securities
Act may be sold under Rule 144 rather than pursuant to this Prospectus.         

         All costs, expenses and fees in connection with the registration of the
Selling Securityholders' Securities offered hereby will be borne by the Company.
Commission  and  discounts,  if any,  attributable  to the sales of the  Selling
Securityholders'   Securities   will  be   borne  by  the   respective   Selling
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Securityholders.   The  Selling  Securityholders  may  agree  to  indemnify  any
broker-dealer or agent that participates in transactions  involving sales of the
Selling  Securityholders'  Securities  against  certain  liabilities,  including
liabilities  arising  under the  Securities  Act.  The  Company  and the Selling
Securityholders   have   agreed   to   indemnify   certain   persons   including
broker-dealers  or agents against  certain  liabilities  in connection  with the
offering  of the  Selling  Securityholders'  Securities,  including  liabilities
arising under the Securities  Act.  Insofar as  indemnification  for liabilities
arising  under the  Securities  Act may be permitted to  directors,  officers or
persons  controlling  the  Company,  the Company has been  informed  that in the
opinion of the  Commission  such  indemnification  is against  public  policy as
expressed in the Securities Act and is therefore unenforceable.                 

 DESCRIPTION OF SECURITIES

         For a  description  of the  Company's  Class  A  Common  Stock  see the
Company's  Registration  Statement  on Form SB-2  filed with the  Commission  on
December 7, 1995 and incorporated by reference into this Prospectus.            

         Each Class G Warrant entitles the holder to purchase one share of Class
A Common Stock at $6.68 per share at any time through  February 2001. Each Class
H Warrant  entitles  the holder to purchase one share of Class A Common Stock at
$6.68 per share at any time through  February  2003.  For a  description  of the
Class G Warrants  and Class H Warrants  see  Exhibit  4.7 and Exhibit 4.8 to the
Registration Statement.                                                         

         Each share of Series C Preferred Stock is convertible  into a number of
shares  of  Class A  Common  Stock  at the  option  of the  holder  at any  time
commencing in June, 1998, subject to certain volume limitations applicable until
November,  1998.  The  number of shares of Class A Common  Stock  issuable  upon
conversion of the Series C Preferred  Stock is determined by dividing the stated
value of the Series C Preferred  Stock on the date of conversion by a conversion
price.  The conversion  price is defined as the lesser of (i) $6.675 or (ii) 85%
of the average  closing bid price of the Company's  Class A Common Stock for the
five days preceding the conversion  date. Each share of Series C Preferred Stock
has a stated value of $10,000 plus an 8% per annum premium.                     

 LEGAL MATTERS

         Certain  legal  matters with respect to the Company and the validity of
the  securities  offered  hereby  will be passed upon for the Company by Squire,
Sanders & Dempsey L.L.P., Phoenix, Arizona.                                     

INTERESTS OF NAMED EXPERTS AND COUNSEL

         On October 13, 1997,  James L. Adler,  Jr. was  appointed to serve as a
Director of the Company for a two year term.  Mr.  Adler is a partner of the law
firm of Squire, Sanders & Dempsey, L.L.P.                                       

 EXPERTS

         The financial  statements  of the Company as of June 30, 1997,  and for
the year then ended,  have been  incorporated by reference in this Prospectus in
reliance upon the report of KPMG Peat Marwick LLP, independent  certified public
accountants,  incorporated by reference  herein,  and upon the authority of said
firm as experts in accounting and auditing.                                     

         The  report  of KPMG  Peat  Marwick  LLP  covering  the June 30,  1997,
financial  statements  contains an  explanatory  paragraph  that states that the
Company's recurring losses from operations and resulting continued dependence on
external sources of capital raise  substantial  doubt about the entity's ability
to continue as a going  concern.  The  financial  statements  do not include any
adjustments that might result from the outcome of that uncertainty.             

         The statements of operations,  stockholders'  equity (deficiency in net
assets),  and cash  flows of the  Company,  for the year  ended  June 30,  1996,
incorporated by reference in this Prospectus, have been audited by Ernst & Young
LLP, independent  auditors, to the extent indicated in their report thereon also
incorporated by reference (which contains an explanatory  paragraph with respect
to going  concern  mentioned  in the Notes to the  financial  statements).  Such
financial statements have been incorporated herein by reference in reliance upon
such report given upon the authority of such firm as experts in  accounting  and
auditing.                                                                       
19

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         No dealer, salesman or any other person has been authorized to give any
information or to make any  representations  other than those  contained in this
Prospectus in connection with the offer made by this Prospectus and, if given or
made,  such  information and  representations  must not be relied upon as having
been authorized by the Company or the Selling  Securityholders.  This Prospectus
does not constitute an offer to sell or the solicitation of any offer to buy any
security  other  than  the  shares  of  Class A  Common  Stock  offered  by this
Prospectus,  nor does it  constitute an offer to sell or a  solicitation  of any
offer to buy the shares of Class A Common Stock 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.  Neither the delivery of
this  Prospectus nor any sale made  hereunder  shall,  under any  circumstances,
create any implication  that  information  contained herein is correct as of any
time subsequent to the date hereof.                                             

--------------------
 TABLE OF CONTENTS
                                      Page
                                      ----
Available Information              2
Prospectus Summary                 3
Risk Factors                       7
 Use of Proceeds                    15
 Determination of Offering Price    15
 Selling Securityholders            16
 Certain Relationships              18
 Plan of Distribution               18
 Description of Securities          19
 Legal Matters                      19
 Experts                            19

--------------------

LIGHTPATH TECHNOLOGIES, INC.

1,758,490 Shares of Class A Common Stock

--------------------
PROSPECTUS
--------------------
 March 31 , 1998

20

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Dates Referenced Herein and Documents Incorporated by Reference

		Referenced-On Page
This ‘424B2’ Filing	Date	First	Last	Other Filings

Filed on:	3/31/98	1		10QSB
	3/9/98	1
	3/1/98	17
	2/22/98	11
	2/1/98	16
	1/9/98	13
	1/1/98	9
	12/31/97	2	12	10QSB
	10/13/97	19		DEF 14A, PRE 14A
	9/30/97	2		10QSB
	9/12/97	11
	9/11/97	2		10KSB40, DEF 14A
	6/30/97	2	19	10KSB40
	2/22/97	12
	6/30/96	7	19	10KSB
	1/13/96	2
	12/7/95	19
				List all Filings

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Filing Submission 0000950147-98-000251 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)

Lightpath Technologies Inc – ‘424B2’ on 3/31/98

As of: Tuesday, 3/31/98 · Accession #: 950147-98-251 · File #: 333-47905

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Prospectus — Rule 424(b)(2)Filing Table of Contents

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Dates Referenced Herein and Documents Incorporated by Reference

Prospectus — Rule 424(b)(2)
Filing Table of Contents