Lightpath investor wants money back, claiming misrepresentation in $3.2 million private placement

By Devika Patel

Knoxville, Tenn., Oct. 30 - Lightpath Technologies, Inc. settled a $3.2 million private placement of stock and warrants sometime during the month of July. On Sept. 24, the company received notice that an unnamed investor was demanding rescission of his or her investment and indemnification for expenses incurred by the transaction, according to an 8-K filed Oct. 24 with the Securities and Exchange Commission.

The investor purchased $500,000 of common stock, according to the filing, and is alleging that Lightpath failed to disclose pertinent facts that might have dissuaded the investor from partaking in the placement.

Examples of the alleged omissions include then-CEO Kenneth J. Brizel's employment termination and the company's financial health. The investor also alleges the company breached certain unspecified representations and warranties set forth in the securities purchase agreement, according to the filing.

The filing states that the company has been served with a complaint filed by the investor.

In the complaint, the investor is seeking rescission of the purchase and the return of the $500,000 investment, as well as reimbursement for expenses incurred through the investment.

Lightpath said in the filing it intends to fight this litigation "vigorously." The company said it believes there is no factual basis for the investor's claims and has responded by rejecting the investor's demands.

As previously reported, the company sold 800,000 common shares at $4.00 apiece in the deal. The shares were accompanied by warrants to purchase 240,000 shares at $5.25 apiece for five years beginning on Jan. 26, 2008. The company said in the filing it paid approximately $207,000 in professional fees for this deal.

Based in Orlando, Fla., LightPath Technologies manufactures optical components and higher level assemblies.

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