Lightpath Technologies Inc 10-Q for FY2025 Q3
Lightpath Technologies Inc (LPTH)
About this 10-Q
Lightpath Technologies Inc filed this 10-Q on May 20, 2025, covering the quarter ended March 31, 2025 (FY2025 Q3).
Headline figures
Quarter ended March 31, 2025, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $9.17M
- up 19.1% from $7.7M a year earlier
- Net loss
- $3.58M
- compared with a net loss of $2.6M a year earlier
- Diluted EPS
- -$0.44
- compared with -$0.07 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ___________ to ____________
Commission file number
(Exact name of registrant as specified in its charter) |
| ||
(State or other jurisdiction of |
| (I.R.S. Employer |
incorporation or organization) |
| Identification No.) |
(Address of principal executive offices)
(ZIP Code)
(
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
| Trading Symbol(s) |
| Name of each exchange on which registered |
|
| The Market, LLC |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
☒ | Smaller reporting company | ||
|
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:
LIGHTPATH TECHNOLOGIES, INC.
Form 10-Q
Index
| 2 |
| Table of Contents |
CAUTIONARY NOTE CONCERNING FORWARD-LOOKING STATEMENTS
Certain statements and information in this Quarterly Report on Form 10-Q for the quarter ended March 31, 2025 (the “Quarterly Report”) may constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” or “continue,” or other comparable terminology. These forward-looking statements include, without limitation, statements regarding:
| · | our intentions regarding the use of our earnings generated by our subsidiaries; |
|
|
|
| · | our belief that the our acquisitions will align with our overall strategy; |
|
|
|
| · | our expectations regarding market growth potential and market conditions, including in international markets; |
|
|
|
| · | our belief that our product groups are aligned with our strategic direction, as well as our ability to focus on higher margin products; |
|
|
|
| · | our ability to remain competitive through differentiating technology; |
|
|
|
| · | the impact of trade actions on our operations and financial condition; |
|
|
|
| · | our ability to successfully create a sustainable annuity revenue stream; |
|
|
|
| · | our expectation that our existing contracts will be renewed in future quarters; |
|
|
|
| · | our expectations regarding the performance and demand of our products; |
|
|
|
| · | our anticipated timing for our ability to deliver hardware during the fiscal 2025; and |
|
|
|
| · | any other statements regarding our plans, opinions, expectations, beliefs, objectives, assumptions or projections regarding future events or future results and underlying assumptions and other statements, which are not statements of historical facts. |
These forward-looking statements are based largely on our current expectations and assumptions and are subject to a number of risks and uncertainties, many of which are beyond our control. While management believes that these forward-looking statements are reasonable as and when made, there can be no assurance that future developments affecting us will be those that we anticipate. These statements are subject to many risks, uncertainties, and other important factors that could cause actual future results to differ materially from those expressed in the forward-looking statements including, but not limited to, the impact of tariffs and other governmental trade restrictions, our ability to obtain needed raw materials and components from our suppliers; general economic uncertainty in key global markets and a worsening of global economic conditions or low levels of economic growth; geopolitical tensions, the Russian-Ukraine conflict, and the Hamas/Israel war; the effects of steps that we could take to reduce operating costs; rising inflation and increased interest rates, which diminish capital market cash flow and borrowing power; our inability to sustain profitable sales growth, convert inventory to cash, or reduce our costs to maintain competitive prices for our products; circumstances or developments that may make us unable to implement or realize the anticipated benefits, or that may increase the costs, of our current and planned business initiatives; and those factors detailed by us in our public filings with the Securities and Exchange Commission (the “SEC”), including in Item 1A, Risk Factors, in our Annual Report on Form 10-K for the year ended June 30, 2024. In light of these risks and uncertainties, all of the forward-looking statements made herein are qualified by these cautionary statements and there can be no assurance that the actual results or developments anticipated by us will be realized. We undertake no obligation to update or revise any of the forward-looking statements contained herein.
| 3 |
| Table of Contents |
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
LIGHTPATH TECHNOLOGIES, INC.
Condensed Consolidated Balance Sheets
(unaudited)
|
| March 31, |
|
| June 30, |
| ||
Assets |
| 2025 |
|
| 2024 |
| ||
Current assets: |
|
|
|
|
|
| ||
| Cash and cash equivalents |
| $ |
|
| $ |
| ||
| Trade accounts receivable, net of allowance of $ |
|
|
|
|
|
| ||
| Inventories, net |
|
|
|
|
|
| ||
| Prepaid expenses and deposits |
|
|
|
|
|
| ||
| Other current assets |
|
|
|
|
|
| ||
Total current assets |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
| Property and equipment, net |
|
|
|
|
|
| ||
| Operating lease right-of-use assets |
|
|
|
|
|
| ||
| Intangible assets, net |
|
|
|
|
|
| ||
| Goodwill |
|
|
|
|
|
| ||
| Deferred tax assets, net |
|
|
|
|
|
| ||
| Other assets |
|
|
|
|
|
| ||
| Total assets |
| $ |
|
| $ |
| ||
Liabilities and Stockholders Equity |
|
|
|
|
|
|
|
|
| Current liabilities: |
|
|
|
|
|
|
|
|
| Accounts payable |
| $ |
|
| $ |
| ||
| Accrued liabilities |
|
|
|
|
|
| ||
| Accrued payroll and benefits |
|
|
|
|
|
| ||
| Operating lease liabilities, current |
|
|
|
|
|
| ||
| Loans payable, current portion |
|
|
|
|
|
| ||
| Finance lease obligation, current portion |
|
|
|
|
|
| ||
Total current liabilities |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
| Deferred tax liabilities, net |
|
|
|
|
|
| ||
| Accrued liabilities, noncurrent |
|
|
|
|
|
| ||
| Finance lease obligation, less current portion |
|
|
|
|
|
| ||
| Operating lease liabilities, noncurrent |
|
|
|
|
|
| ||
| Loans payable, less current portion |
|
|
|
|
|
| ||
| Warrant liability |
|
|
|
|
|
|
| |
| Total liabilities |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
| Commitments and Contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Series G Convertible Preferred Stock; $ |
| $ |
|
|
|
| ||
|
|
|
|
|
|
|
|
|
| Stockholders equity: |
|
|
|
|
|
|
|
|
| Preferred stock: Series D, $ |
|
|
|
|
|
|
|
|
| Common stock: Class A, $ |
|
|
|
|
|
| ||
| Additional paid-in capital |
|
|
|
|
|
| ||
| Accumulated other comprehensive income |
|
|
|
|
|
| ||
| Accumulated deficit |
|
| ( | ) |
|
| ( | ) |
| Total stockholders equity |
|
|
|
|
|
| ||
| Total liabilities, convertible preferred stock and stockholders equity |
| $ |
|
| $ |
| ||
The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.
| 4 |
| Table of Contents |
LIGHTPATH TECHNOLOGIES, INC.
Condensed Consolidated Statements of Comprehensive Income (Loss)
(unaudited)
|
| Three Months Ended |
|
| Nine Months Ended |
| ||||||||||
|
| March 31, |
|
| March 31, |
| ||||||||||
|
| 2025 |
|
| 2024 |
|
| 2025 |
|
| 2024 |
| ||||
| Revenue, net |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
| Cost of sales |
|
|
|
|
|
|
|
|
|
|
|
| ||||
| Gross profit |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative |
|
|
|
|
|
|
|
|
|
|
|
| ||||
New product development |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Amortization of intangible assets |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Loss on disposal of property and equipment |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total operating expenses |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Operating loss |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest expense, net |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
| Loss on extinguishment of debt |
|
| ( | ) |
|
|
|
|
| ( | ) |
|
|
| ||
Change in fair value of warrant liability |
|
|
|
|
|
|
|
|
|
|
|
| ||||
| Other income (expense), net |
|
| ( | ) |
|
|
|
|
| ( | ) |
|
|
| ||
| Total other income (expense), net |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
|
| |
| Loss before income taxes |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
| Income tax provision |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net loss |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
Foreign currency translation adjustment |
|
|
|
|
| ( | ) |
|
| ( | ) |
|
|
| ||
Comprehensive loss |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
Loss per common share (basic) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
Number of shares used in per share calculation (basic) |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Loss per common share (diluted) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
Number of shares used in per share calculation (diluted) |
|
|
|
|
|
|
|
|
|
|
|
| ||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 5 |
| Table of Contents |
LIGHTPATH TECHNOLOGIES, INC.
Condensed Consolidated Statements of Changes in Stockholders' Equity
(unaudited)
|
| Temporary Equity |
|
|
|
|
|
|
|
| Accumulated |
|
|
|
|
| ||||||||||||||||
|
| Series G Convertible |
|
| Class A |
|
| Additional |
|
| Other |
|
|
|
| Total |
| |||||||||||||||
|
| Preferred Stock |
|
| Common Stock |
|
| Paid-in |
|
| Comphrehensive |
|
| Accumulated |
|
| Stockholders |
| ||||||||||||||
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Capital |
|
| Income |
|
| Deficit |
|
| Equity |
| ||||||||
Balances at June 30, 2024 |
| - |
|
| - |
|
|
|
|
| $ |
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ |
| |||||||
Issuance of common stock for: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Employee Stock Purchase Plan |
| - |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| - |
|
|
| - |
|
|
|
| ||||||
Exercise of Stock Options, RSUs & RSAs, net |
| - |
|
| - |
|
|
| 70,309 |
|
|
|
|
|
| ( | ) |
|
| - |
|
|
| - |
|
|
|
|
| |||
Issuance of common stock for acquisition of Visimid |
| - |
|
| - |
|
|
| 279,553 |
|
|
|
|
|
|
|
|
| - |
|
|
| - |
|
|
|
| |||||
Stock-based compensation on stock options, RSUs & RSAs |
| - |
|
| - |
|
|
| - |
|
|
| - |
|
|
|
|
|
| - |
|
|
| - |
|
|
|
| ||||
Foreign currency translation adjustment |
| - |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
|
|
|
| - |
|
|
|
| ||||
| Net loss |
| - |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| ( | ) |
|
| ( | ) | ||
Balances at September 30, 2024 |
| - |
|
| - |
|
|
|
|
| $ |
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ |
| |||||||
Issuance of common stock for: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Exercise of Stock Options, RSUs & RSAs, net |
| - |
|
| - |
|
|
| 229,097 |
|
|
|
|
|
| ( | ) |
|
| - |
|
|
| - |
|
|
|
|
| |||
Shares issued as compensation |
| - |
|
| - |
|
|
| 49,000 |
|
|
|
|
|
|
|
|
| - |
|
|
| - |
|
|
|
| |||||
Stock-based compensation on stock options, RSUs & RSAs |
| - |
|
| - |
|
|
| - |
|
|
| - |
|
|
|
|
|
| - |
|
|
| - |
|
|
|
| ||||
Foreign currency translation adjustment |
| - |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| ( | ) |
|
| - |
|
|
| ( | ) | ||
| Net loss |
| - |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| ( | ) |
|
| ( | ) | ||
Balances at December 31, 2024 |
|
|
|
|
|
|
|
|
|
| $ |
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ |
| |||||||
Issuance of preferred stock under private equity placement, net of fees |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Issuance of common stock for: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee Stock Purchase Plan |
|
| - |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| - |
|
|
| - |
|
|
|
| ||||
Exercise of Stock Options, RSUs & RSAs, net |
|
| - |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| - |
|
|
| - |
|
|
|
| ||||
Issuance of common stock for acquisition of Visimid |
|
| - |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| - |
|
|
| - |
|
|
|
| ||||
Issuance of common stock for acquisition of G5 |
|
| - |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| - |
|
|
| - |
|
|
|
| ||||
Issuance of common stock under private equity placement, net of fees |
|
| - |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| - |
|
|
| - |
|
|
|
| ||||
Issuance of warrants under private placement, net of fees |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
|
|
|
| - |
|
|
| - |
|
|
|
| ||
Preferred cumulative dividends plus accretion |
|
| - |
|
|
|
|
|
| - |
|
|
| - |
|
|
| ( | ) |
|
| - |
|
|
| - |
|
|
| ( | ) | |
Stock-based compensation on stock options, RSUs & RSAs |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
|
|
|
| - |
|
|
| - |
|
|
|
| ||
Foreign currency translation adjustment |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
|
|
|
| - |
|
|
|
| ||
| Net loss |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| ( | ) |
|
| ( | ) |
| Balances at March 31, 2025 |
|
|
|
| $ |
|
|
|
|
| $ |
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ |
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balances at June 30, 2023 |
|
|
|
|
|
|
|
|
|
|
|
| $ |
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ |
| |||||
Issuance of common stock for: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee Stock Purchase Plan |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| - |
|
|
| - |
|
|
|
| ||||
Exercise of Stock Options, RSUs & RSAs, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
| - |
|
|
| - |
|
|
|
|
| ||
Issuance of common stock for acquisition of Visimid |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| - |
|
|
| - |
|
|
|
| ||||
Stock-based compensation on stock options, RSUs & RSAs |
|
|
|
|
|
|
|
|
|
| - |
|
|
| - |
|
|
|
|
|
| - |
|
|
| - |
|
|
|
| ||
Foreign currency translation adjustment |
|
|
|
|
|
|
|
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| ( | ) |
|
| - |
|
|
| ( | ) |
| Net loss |
|
|
|
|
|
|
|
|
|
| - |
|
|
| - |
|
|
| - |
|
|
|
|
|
|
| ( | ) |
|
| ( | ) |
Balances at September 30, 2023 |
|
|
|
|
|
|
|
|
|
|
|
| $ |
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ |
| |||||
Issuance of common stock for: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercise of Stock Options, RSUs & RSAs, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
| - |
|
|
| - |
|
|
|
|
| ||
Stock-based compensation on stock options, RSUs & RSAs |
|
|
|
|
|
|
|
|
|
| - |
|
|
| - |
|
|
|
|
|
| - |
|
|
| - |
|
|
|
| ||
Foreign currency translation adjustment |
|
|
|
|
|
|
|
|
|
| - |
|
|
| - |
|
|
| - |
|
|
|
|
|
| - |
|
|
|
| ||
| Net loss |
|
|
|
|
|
|
|
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| ( | ) |
|
| ( | ) |
Balances at December 31, 2023 |
|
|
|
|
|
|
|
|
|
|
|
| $ |
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ |
| |||||
Issuance of common stock for: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee Stock Purchase Plan |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| - |
|
|
| - |
|
|
|
| ||||
Exercise of Stock Options, RSUs & RSAs, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
| - |
|
|
| - |
|
|
|
|
| ||
Issuance of common stock for acquisition of Visimid |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| - |
|
|
| - |
|
|
|
| ||||
Issuance of common stock under public equity placement |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| - |
|
|
| - |
|
|
|
| ||||
Stock-based compensation on stock options, RSUs & RSAs |
|
|
|
|
|
|
|
|
|
| - |
|
|
| - |
|
|
|
|
|
| - |
|
|
| - |
|
|
|
| ||
Foreign currency translation adjustment |
|
|
|
|
|
|
|
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| ( | ) |
|
| - |
|
|
| ( | ) |
| Net loss |
|
|
|
|
|
|
|
|
|
| - |
|
|
| - |
|
|
| - |
|
|
|
|
|
|
| ( | ) |
|
| ( | ) |
| Balances at March 31, 2024 |
|
|
|
|
|
|
|
|
|
|
|
| $ |
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ |
| |||||
The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.
| 6 |
| Table of Contents |
LIGHTPATH TECHNOLOGIES, INC.
Condensed Consolidated Statements of Cash Flows
(unaudited)
|
| Nine Months Ended March 31, |
| |||||
|
| 2025 |
|
| 2024 |
| ||
| Cash flows from operating activities: |
|
|
|
|
|
| ||
| Net loss |
| $ | ( | ) |
| $ | ( | ) |
| Adjustments to reconcile net loss to net cash (used in) provided by operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
|
|
|
| ||
Interest from amortization of loan issuance costs |
|
|
|
|
|
| ||
Loss on extinguishment of debt |
|
|
|
|
|
| ||
Change in fair value of warrant liability |
|
| ( | ) |
|
|
| |
Loss on disposal of property and equipment |
|
|
|
|
|
| ||
Stock-based compensation on stock options, RSUs & RSAs, net |
|
|
|
|
|
| ||
Provision for credit losses |
|
| ( | ) |
|
| ( | ) |
Change in operating lease assets and liabilities |
|
| ( | ) |
|
|
| |
Inventory write-offs to allowance |
|
|
|
|
|
| ||
Deferred taxes |
|
| ( | ) |
|
|
| |
Changes in operating assets and liabilities, net of acquisitions: |
|
|
|
|
|
|
|
|
Trade accounts receivable |
|
| ( | ) |
|
|
| |
Other current assets |
|
|
|
|
| ( | ) | |
Inventories |
|
| ( | ) |
|
|
| |
Prepaid expenses and deposits |
|
| ( | ) |
|
|
| |
Accounts payable and accrued liabilities |
|
|
|
|
|
| ||
Net cash (used in) provided by operating activities |
|
| ( | ) |
|
|
| |
|
|
|
|
|
|
|
|
|
| Cash flows from investing activities: |
|
|
|
|
|
|
|
|
| Purchase of property and equipment |
|
| ( | ) |
|
| ( | ) |
| Proceeds from sale of equipment |
|
|
|
|
|
| ||
| Proceeds from sale-leaseback of equipment |
|
|
|
|
|
| ||
Acquisition of G5 |
|
| ( | ) |
|
|
| |
| Acquisition of Visimid, net of cash acquired |
|
|
|
|
| ( | ) | |
Net cash used in investing activities |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
| Cash flows from financing activities: |
|
|
|
|
|
|
|
|
Proceeds from exercise of stock options |
|
|
|
|
|
| ||
Proceeds from sale of common stock from Employee Stock Purchase Plan |
|
|
|
|
|
| ||
Proceeds from issuance of common stock under public equity placement, net of fees |
|
|
|
|
|
| ||
Proceeds from issuance of common stock under private equity placement, net of fees |
|
|
|
|
|
| ||
Proceeds from issuance of preferred stock under private equity placement, net of fees |
|
|
|
|
|
| ||
Proceeds from issuance of warrants under private equity placement |
|
|
|
|
|
| ||
Deferred payment for acquisition of Visimid |
|
| ( | ) |
|
|
| |
Borrowings on loans payable |
|
|
|
|
|
| ||
Loan issuance costs |
|
| ( | ) |
|
|
| |
Payments on loans payable |
|
| ( | ) |
|
| ( | ) |
Repayment of finance lease obligations |
|
| ( | ) |
|
| ( | ) |
Net cash provided by (used in) financing activities |
|
|
|
|
| ( | ) | |
| Effect of exchange rate on cash and cash equivalents |
|
| ( | ) |
|
|
| |
| Change in cash, cash equivalents and restricted cash |
|
|
|
|
| ( | ) | |
| Cash, cash equivalents and restricted cash, beginning of period |
|
|
|
|
|
| ||
| Cash, cash equivalents and restricted cash, end of period |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
| Supplemental disclosure of cash flow information: |
|
|
|
|
|
|
|
|
Interest paid in cash |
| $ |
|
| $ |
| ||
Income taxes paid |
| $ |
|
| $ |
| ||
| Supplemental disclosure of non-cash investing & financing activities: |
|
|
|
|
|
|
|
|
Purchase of equipment through finance lease arrangements |
| $ |
|
| $ |
| ||
Issuance of common stock for acquisition of Visimid |
| $ |
|
| $ |
| ||
Issuance of common stock for acquisition of G5 |
| $ |
|
| $ |
| ||
Accrual of earnout consideration for acquisition of G5 |
| $ |
|
| $ |
| ||
Extinguishment of debt in exchange for common stock, preferred stock warrants and a note |
| $ |
|
| $ |
| ||
The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.
| 7 |
| Table of Contents |
LIGHTPATH TECHNOLOGIES, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
1. Basis of Presentation
References in this document to the “Company,” “LightPath,” “we,” “us,” or “our” are intended to mean LightPath Technologies, Inc., individually, or as the context requires, collectively with its subsidiaries on a consolidated basis.
These unaudited Condensed Consolidated Financial Statements have been prepared in accordance with the requirements of Article 8 of Regulation S-X promulgated under the Exchange Act and, therefore, do not include all information and footnotes necessary for a fair presentation of financial position, results of operations, and cash flows in conformity with accounting principles generally accepted in the United States of America (“GAAP”). These unaudited Condensed Consolidated Financial Statements should be read in conjunction with our Consolidated Financial Statements and related notes, included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2024, filed with the SEC. Unless otherwise stated, references to particular years or quarters refer to our fiscal years ended June 30 and the associated quarters of those fiscal years.
These Condensed Consolidated Financial Statements are unaudited, but include all adjustments, including normal recurring adjustments, which, in the opinion of management, are necessary to present fairly our financial position, results of operations and cash flows for the interim periods presented. The Condensed Consolidated Balance Sheet as of June 30, 2024 has been derived from the audited financial statements at that date but does not include all of the information and notes required by generally accepted accounting principles for complete financial statements. Results of operations for interim periods are not necessarily indicative of the results that may be expected for the year as a whole. The unaudited Condensed Consolidated Financial Statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.
2. Significant Accounting Policies
Our significant accounting policies are provided in Note 2, Summary of Significant Accounting Policies, in the Consolidated Financial Statements in our Annual Report on Form 10-K for the fiscal year ended June 30, 2024. There have been no material changes to our significant accounting policies during the nine months ended March 31, 2025, from those disclosed in our Annual Report on Form 10-K for the fiscal year ended June 30, 2024.
Use of Estimates
Management makes estimates and assumptions during the preparation of our unaudited Condensed Consolidated Financial Statements that affect amounts reported in the unaudited Condensed Consolidated Financial Statements and accompanying notes. Such estimates and assumptions could change in the future as more information becomes available, which, in turn, could impact the amounts reported and disclosed herein.
Warrants
The Company accounts for warrants as equity or liability classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480, Distinguishing Liabilities from Equity and ASC 815, Derivatives and Hedging. The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own common stock and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding. If a warrant does not meet the conditions for equity classification, it is carried on the consolidated balance sheet as a warrant liability measured at fair value, with subsequent changes in the fair value of the warrant recorded in the condensed consolidated statement of comprehensive income (loss). If a warrant meets both conditions for equity classification, the warrant is initially recorded in additional paid-in capital on the condensed consolidated balance sheets, and the amount initially recorded is not subsequently remeasured at fair value.
Fair Value of Financial Instruments
We account for financial instruments in accordance with the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification Topic 820, “Fair Value Measurements and Disclosures” (“ASC 820”), which provides a framework for measuring fair value and disclosure requirements for fair value measurements of assets and liabilities. ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:
Level 1 - Quoted prices in active markets for identical assets or liabilities.
Level 2 - Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable.
Level 3 - Unobservable inputs that are supported by little or no market activity, therefore requiring an entity to develop its own assumptions about the assumptions that market participants would use in pricing.
| 8 |
| Table of Contents |
Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management.
The respective carrying value of financial instruments recorded on the Condensed Consolidated Balance Sheets approximated their fair values. These financial instruments include accounts receivable, accounts payable and accrued liabilities. Fair values were assumed to approximate carrying values for these financial instruments since they are short term in nature and their carrying amounts approximate fair values or they are receivable or payable on demand. The fair value of the finance lease obligations and loans payable approximate their carrying values, based upon current rates available to us. See Note 12, Leases and Note 13, Loans Payable, to these unaudited Condensed Consolidated Financial Statements for additional information. Management considers these fair value estimates to be Level 2 fair value measurements. The fair value of the warrants currently classified as a liability is considered a Level 3 fair value measurement.
We do not have any other financial or non-financial assets or liabilities that would be characterized as Level 1, Level 2 or Level 3 instruments.
3. Acquisition of G5 Infrared
In February 2025, the Company acquired G5 Infrared LLC (“G5 Infrared”), pursuant to a Membership Interest Purchase Agreement (the “MIPA”) by and among the Company, G5 Infrared, the members of G5 Infrared (collectively, the “Sellers”), and Kenneth R. Greenslade, solely in his capacity as Sellers’ Representative. The Company has acquired from the Sellers all of the issued and outstanding membership interests of G5 Infrared, which transaction closed on February 18, 2025 (the “G5 Acquisition Date”).
G5 Infrared is a vertically-integrated manufacturer of infrared camera systems and imaging solutions, and also provides infrared coatings. G5 Infrared operates from a manufacturing facility in Hudson, New Hampshire. The Company acquired G5 Infrared to expand the Company’s portfolio to include cooled infrared cameras.
Net assets and results of operations of G5 Infrared are reflected in our financial results commencing on the G5 Acquisition Date. Revenue generated by G5 Infrared is included in our infrared and assemblies and modules product groups. We are in the process of further refining our product groups and evaluating our operating segments following the acquisition.
We accounted for the acquisition of G5 Infrared using the acquisition method of accounting, which required us to measure identifiable assets acquired and liabilities assumed in the acquiree at their fair values as of the G5 Acquisition Date, with the excess of the consideration transferred over those fair values recorded as goodwill.
The fair value of the aggregate consideration was approximately $
Description |
| February 18, 2025 |
| |
Cash consideration |
| $ |
| |
Equity portion of consideration |
|
|
| |
Earnout portion of consideration |
|
|
| |
Fair value of consideration transferred |
| $ |
| |
| 9 |
| Table of Contents |
The fair value of the equity portion of the consideration was determined by multiplying the number of shares issued,
Earnout payments of an aggregate of up to $
The following table summarizes the preliminary allocation of the fair value of consideration transferred to assets acquired and liabilities assumed as of the G5 Acquisition Date:
Description |
|
|
| |
Preliminary fair value of estimated purchase consideration |
| $ |
| |
Assets: |
|
|
|
|
Cash |
|
|
| |
Accounts receivable |
|
|
| |
Inventory |
|
|
| |
Prepaid expenses and other current assets |
|
|
| |
Property and equipment |
|
|
| |
Operating right-of-use asset |
|
|
| |
Intangible assets |
|
|
| |
Other assets |
|
|
| |
Total Assets |
|
|
| |
Liabilities: |
|
|
|
|
Accounts payable |
|
|
| |
Accrued liabilities |
|
|
| |
Operating lease liabilities, current |
|
|
| |
Deferred tax liabilities, noncurrent |
|
|
| |
Operating lease liabilities, noncurrent |
|
|
| |
Total Liabilities Assumed |
|
|
| |
Net Assets |
|
|
| |
Goodwill |
| $ |
| |
Due to the timing of the acquisition of G5 Infrared, our accounting for the acquisition remains preliminary. Amounts recorded associated with these assets and liabilities are based on preliminary calculations and estimates. Our preliminary estimates and assumptions are subject to change as we obtain additional information during the measurement period (up to one year from the G5 Acquisition Date). The allocation of the purchase price is determined by management and utilizes certain third-party valuations and other analyses that have not been completed as of the date of this Quarterly Report on Form 10-Q, including but not limited to working capital, certain tax matters, property and equipment, and intangible assets. The final allocation could be materially different from the preliminary allocation used herein and may include (i) changes in fair values of property and equipment; (ii) changes in allocations to intangibles assets as well as goodwill; and (iii) other changes to certain assets and liabilities, including deferred taxes. Any potential adjustments made could be material in relation to the preliminary values presented above.
| 10 |
| Table of Contents |
Intangible assets – All intangible assets acquired in the acquisition of G5 Infrared are subject to amortization. The preliminary fair value of identifiable intangible assets acquired as of the G5 Acquisition Date is as follows:
Intangible Asset |
| Total |
|
| Useful Lives (Years) |
| ||
Backlog |
| $ |
|
|
|
| ||
Know-how |
|
|
|
|
|
| ||
Tradename |
|
|
|
|
|
| ||
Customer relationships |
|
|
|
|
|
| ||
Total |
| $ |
|
|
|
|
| |
The fair value of intangible assets is estimated using the multi-period excess earnings approach for acquired customer relationships and the relief from royalty method for the acquired trade names and know-how. All of these level 3 fair value methods are income-based valuation approaches, which require judgment to estimate appropriate discount rates, royalty rates related to the trade names intangible assets, revenue growth attributable to the intangible assets and remaining useful lives. The acquired intangible assets are not expected to be deductible for New Hampshire state income taxpurposes, which resulted in a deferred tax liability of $
Goodwill – The $
Financial Results
Revenue and loss before income taxes of G5 Infrared included in our Condensed Consolidated Statement of Operations for the G5 Acquisition Date through March 31, 2025 was $
|
| Three Months Ended March 31, |
|
| Nine Months Ended March 31, |
| ||||||||||
|
| 2025 |
|
| 2024 |
|
| 2025 |
|
| 2024 |
| ||||
| Revenue |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
| Income before taxes |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
Acquisition-related costs have been expensed as incurred. In connection with the acquisition of G5 Infrared, we recorded transaction and integration costs of $
| 11 |
| Table of Contents |
Acquisition Financing
Concurrent with the entry into the MIPA on February 13, 2025, we entered into a Securities Purchase Agreement, a Class A Common Securities Purchase Agreement and two promissory notes for total proceeds of approximately $
At the closing of the Securities Purchase Agreement, the Company and the Purchasers entered into a registration rights agreement, pursuant to which the Company agreed to register the Class A Common Stock Issuable upon the conversion of the Series G Convertible Preferred Stock (including those shares of Series G Convertible Preferred Stock that are issuable upon the conversion of the Acquisition Notes) and the Purchasers Warrants (collectively, the “Registrable Securities”) under the Securities Act. The Company filed a registration statement covering the resale of such Registrable Securities on May 2, 2025, which became effective on May 12, 2025.
The Company may not issue Class A Common Stock upon the conversion of the Series G Convertible Preferred Stock or the Purchasers Warrants to the extent such issuances would result in an aggregate number of shares of Class A Common Stock exceeding
On February 13, 2025, the Company also entered into a Securities Purchase Agreement (the “Class A Common Securities Purchase Agreement”) with Lytton-Kambara Foundation (the “Buyer”),
The proceeds were allocated to the instruments as follows: (i) to the Class A Common Stock, Buyer's Warrants, Purchaser Warrants, Series G Convertible Preferred Stock, and Acquisition Note issued to the Lytton Buyers at fair value, as the instruments were issued in exchange for the Bridge Promissory Note outstanding, which was accounted for as an extinguishment as further detailed in Note 13, Loans Payable, (ii) to the remaining Purchasers Warrants at fair value as the Purchasers Warrants are liabilities, and (iii) the remaining proceeds, to the remaining Series G Convertible Preferred Stock, and Acquisition Notes issued on a relative fair value basis, by investor.
| 12 |
| Table of Contents |
Warrants – The Company issued 4,352,775 Purchasers Warrants in connection with the Securities Purchase Agreement and 170,697 Buyer's Warrants in connection with the Class A Securities Purchase Agreement (collectively, the “Warrants”). The exercise price of the Warrants is $
The Purchasers Warrants are not indexed the Company’s own stock due to the Exchange Cap, as shareholder approval is not an input for determining the fair value of a fixed-for-fixed option on the Company’s Class A Common Stock. As such, the Purchasers Warrants are classified as liabilities on the condensed consolidated balance sheets, with subsequent changes in the fair value of the warrant recorded in the change in fair value of warrant liability in other income (expense) on the condensed consolidated statements of comprehensive income (loss). The Buyer's Warrants are indexed to the Company's own stock, and meet the criteria for equity classification. The Warrants are valued using the Black-Scholes-Merton pricing model.
Series G Convertible Preferred Stock – Based on an analysis of the Series G Convertible Preferred Stock, it was concluded that they are more akin to an equity-type instrument. Economic characteristics and risks of an equity-linked conversion option are clearly and closely related to an equity-type host; thus, the conversion option embedded in the Series G Convertible Preferred Stock do not require bifurcation or liability classification under ASC 815, Derivatives and Hedging. It also does not meet the definition of being mandatorily redeemable under ASC 480-10-20 because it does not embody an unconditional obligation to redeem the instrument. The Series G Convertible Preferred Stock is redeemable at the option of the holder after the 5 year Guaranteed Term, thus, it should be classified as mezzanine equity, outside of permanent equity. The Series G Convertible Preferred was valued using a Binomial Lattice Model which considers the ability of the Investor to convert the instrument into common stock at any time, and for the Company's call option and the Investor's put option which are available after 5 years. The model incorporates transaction details such as stock price, contractual conversion price, dividend yield, risk-free rate, historical volatility, market credit spread, estimated yield and investor exercise behavior. The Series G Convertible Preferred Stock bears dividends at a per annum rate of 6.5%. The Company elected to recognize any redemption value changes immediately as they occur and adjust the carrying amount to equal the redemption value at each reporting period.
Promissory Notes – The Acquisition Notes were recorded at fair value based on several probability weighted Binomial Lattice Models which considered the following outcomes: (i) the Company's EBITDA for the fiscal year ended December 31, 2025 would be less than $4,921,875 the ("EBITDA target") which would cause automatic conversion of the Notes into shares of Preferred Stock at a price of $1,000 per share; (ii) the Company would chose to redeem the Notes at a premium of 102% prior to the two year maturity date, or (iii) the Notes will be repaid at maturity. The models incorporate transaction details such as stock price, contractual conversion price, dividend yield, risk-free rate, historical volatility, market credit spread, estimated yield, and the probability the Company will meet the EBITDA target which was based on a simulation technique considering the Company's historical EBITDA. Refer to Note 13, Loans Payable, for further information regarding the Acquisition Notes.
Offering costs – The $
4. Acquisition of Visimid Technologies
In July 2023, the Company acquired Liebert Consulting LLC, dba Visimid Technologies (“Visimid”), pursuant to a Membership Interest Purchase Agreement dated as of July 25, 2023 (the “Visimid Acquisition Date”).
The Company’s unaudited Condensed Consolidated Financial Statements reflect the financial results of Visimid beginning on the Visimid Acquisition Date. The purchase price included $
The total purchase price, net of cash acquired and including the estimated potential earnout, is approximately $
The estimated fair values of the assets acquired and liabilities assumed were recorded as of the Visimid Acquisition Date. As part of the valuation analysis, the Company identified intangible assets, including customer relationships, customer backlog, trade secrets and trademarks. The customer backlog, customer relationships, trade secrets and trademarks were determined to have estimated values of approximately $
| 13 |
| Table of Contents |
The Company incurred a total of approximately $
Prior to the acquisition of Visimid, the Company had a preexisting relationship with Visimid. The Company contracted Visimid for engineering services and purchased infrared camera cores from Visimid on an arms’ length basis. The Company had also partnered with Visimid for the development of the Mantis camera.
5. Revenue
Product Revenue
We are a manufacturer of optical components and higher-level assemblies, including precision molded glass aspheric optics, molded and diamond-turned infrared optical components, and other optical materials used to produce products that manipulate light. We design, develop, manufacture, and distribute optical components and assemblies utilizing advanced optical manufacturing processes. We also provide engineering services and perform research and development for optical solutions for a wide range of optics markets. Revenue is derived primarily from the sale of optical components and assemblies.
Revenue Recognition
Revenue is generally recognized upon transfer of control, including the risks and rewards of ownership, of products or services to customers in an amount that reflects the consideration we expect to receive in exchange for those products or services. We generally bear all costs, risk of loss, or damage and retain title to the goods up to the point of transfer of control of products to customers. Shipping and handling costs are included in the cost of goods sold. We present revenue net of sales taxes and any similar assessments.
Customary payment terms are granted to customers, based on credit evaluations. We currently do not have any contracts where revenue is recognized, but the customer payment is contingent on a future event. We record deferred revenue when cash payments are received or due in advance of revenue recognition. Deferred revenue was $
Nature of Products
Revenue from the sale of optical components and assemblies is recognized upon transfer of control, including the risks and rewards of ownership, to the customer. The performance obligations for the sale of optical components and assemblies are satisfied at a point in time, generally upon shipment. Product development agreements for engineering services are generally short-term in nature, with revenue recognized upon satisfaction of the performance obligation, and transfer of control of the agreed-upon deliverable. Visimid has one longer-term order with a defense customer which includes both product development and hardware deliverables where similar revenue recognition criteria will be applied.
We categorize our products into four product groups: infrared components, visible components, assemblies and modules, and engineering services.
| 14 |
| Table of Contents |
Revenue by product group for the three and nine months ended March 31, 2025 and 2024 was as follows:
|
| Three Months Ended |
|
| Nine Months Ended |
| ||||||||||
|
| March 31, |
|
| March 31, |
| ||||||||||
|
| 2025 |
|
| 2024 |
|
| 2025 |
|
| 2024 |
| ||||
Infrared components |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Visible components |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Assemblies and modules |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Engineering services |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total revenue |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
6. Inventories
The components of inventories include the following:
|
| March 31, 2025 |
|
| June 30, 2024 |
| ||
Raw materials |
| $ |
|
| $ |
| ||
Work in process |
|
|
|
|
|
| ||
Finished goods |
|
|
|
|
|
| ||
Allowance for obsolescence |
|
| ( | ) |
|
| ( | ) |
|
| $ |
|
| $ |
| ||
The value of tooling in raw materials, net of the related allowance for obsolescence, was approximately $
7. Property and Equipment
Property and equipment are summarized as follows:
|
| Estimated Lives (Years) |
|
| March 31, 2025 |
|
| June 30, 2024 |
| |||
Manufacturing equipment |
|
|
| $ |
|
| $ |
| ||||
Computer equipment and software |
|
|
|
|
|
|
|
| ||||
Furniture and fixtures |
|
|
|
|
|
|
|
|
| |||
Leasehold improvements |
|
|
|
|
|
|
|
| ||||
Construction in progress |
|
|
|
|
|
|
|
|
|
| ||
Total property and equipment |
|
|
|
|
|
|
|
|
|
| ||
Less accumulated depreciation and amortization |
|
|
|
|
|
| ( | ) |
|
| ( | ) |
Total property and equipment, net |
|
|
|
|
| $ |
|
| $ |
| ||
Depreciation expense was $
| 15 |
| Table of Contents |
8. Goodwill and Intangible Assets
The change in the net carrying amount of goodwill during the nine months ended March 31, 2025 was as follows:
Goodwill at June 30, 2024 |
| $ |
| |
Acquisition of G5 |
|
|
| |
Goodwill at March 31, 2025 |
| $ |
|
The increase in goodwill during the nine months ended March 31, 2025 was due to the acquisition of G5 Infrared. The Company is in the process of finalizing third-party valuations of certain intangible assets; thus, the provisional measurement of goodwill and intangible assets are subject to change. See Note 3, Acquisition of G5 Infrared, to these unaudited Condensed Consolidated Financial Statements, for more information.
Amortizable intangible assets were comprised of:
|
| Useful Lives (Years) |
|
| March 31, 2025 |
|
| June 30, 2024 |
| |||
Customer relationships |
|
|
| $ |
|
| $ |
| ||||
Trade secrets |
|
|
|
|
|
|
|
| ||||
Trademarks |
|
|
|
|
|
|
|
| ||||
Backlog |
|
|
|
|
|
|
|
|
| |||
Total intangible assets |
|
|
|
|
|
|
|
|
|
| ||
Less accumulated amortization |
|
|
|
|
|
| ( | ) |
|
| ( | ) |
Total intangible assets, net |
|
|
|
|
| $ |
|
| $ |
| ||
Future amortization of intangible assets is as follows:
Fiscal year ending: |
|
|
| |
June 30, 2025 (three months remaining) |
| $ |
| |
June 30, 2026 |
|
|
| |
June 30, 2027 |
|
|
| |
June 30, 2028 |
|
|
| |
June 30, 2029 |
|
|
| |
After June 30, 2029 |
|
|
| |
|
| $ |
| |
9. Income Taxes
A summary of our total income tax expense and effective income tax rate for the three and nine months ended March 31, 2025 and 2024 is as follows:
|
| Three Months Ended |
|
| Nine Months Ended |
| ||||||||||
|
| 2025 |
|
| 2024 |
|
| 2025 |
|
| 2024 |
| ||||
Loss before income taxes |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
Income tax provision |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Effective income tax rate |
|
| ( | )% |
|
| % |
|
| ( | )% |
|
| ( | )% | |
| 16 |
| Table of Contents |
The difference between our effective tax rates in the periods presented above and the federal statutory rate is due to the mix of taxable income and losses generated in our various tax jurisdictions, which include the United States (the “U.S.”), the People’s Republic of China, and the Republic of Latvia. Effective February 28, 2023, the legal entities of LightPath Optical Instrumentation (Shanghai) Co., Ltd. (“LPOI”) and LightPath Optical Instrumentation (Zhenjiang) Co., Ltd. (“LPOIZ”) were merged, with LPOIZ as the surviving company and the operations of the two companies were merged. For the three and nine months ended March 31, 2025 and 2024, income tax expense was primarily related to income taxes from our operations in China, including accruals for withholding taxes on intercompany dividends declared by LPOIZ, and paid or payable to LightPath, its parent company, as well as withholding taxes on payments from LPOIZ to LightPath for administrative services rendered.
We record net deferred tax assets to the extent we believe it is more likely than not that some portion or all of these assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income. We consider the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. As of March 31, 2025 and June 30, 2024, our net deferred tax assets are related to the U.S. jurisdiction and we have provided a valuation allowance to reduce the deferred tax assets to the net amount we estimate is more-likely-than-not to be realized. Our net deferred tax assets as of March 31, 2025 and June 30, 2024 consist primarily of federal and state tax credits with indefinite carryover periods.
U.S. Federal and State Income Taxes
Our U.S. federal and state statutory income tax rate is estimated to be
Income Tax Law of the People’s Republic of China
Our Chinese subsidiary, LPOIZ, is governed by the Income Tax Law of the People’s Republic of China. As of March 31, 2025, LPOIZ was subject to a statutory income tax rate of
The Company routinely declares intercompany dividends to remit a portion of the earnings of its foreign subsidiaries to the U.S. parent company. The Company also intends to reinvest a portion of the earnings generated by its foreign subsidiaries. The Company accrues withholding taxes on the portion of LPOIZ’s earnings that it intends to repatriate. Accrued and unpaid withholding taxes were approximately $
Law of Corporate Income Tax of Latvia
Our Latvian subsidiary, ISP Optics Latvia, SIA (“ISP Latvia”), is governed by the Law of Corporate Income Tax of Latvia. Effective January 1, 2018, the Republic of Latvia enacted tax reform with the following key provisions: (i) corporations are not subject to income tax, but are instead subject to a distribution tax on distributed profits (or deemed distributions, as defined) and (ii) the rate of tax was changed to
10. Stock-Based Compensation
Our directors, officers, and key employees are granted stock-based compensation through our Amended and Restated Omnibus Incentive Plan, as amended (the “Omnibus Plan”), through October 2018 and after that date, through our 2018 Stock and Incentive Compensation Plan (the “SICP”). Such stock-based compensation may include, among other things, incentive stock options, non-qualified stock options, restricted stock awards (“RSAs”) and restricted stock units (“RSUs”). The SICP is administered by the Compensation Committee of the Board of Directors. To date, our stockholders approved an aggregate of
| 17 |
| Table of Contents |
Stock-based compensation expense is based primarily on the fair value of the award as of the grant date and is recognized as an expense over the requisite service period.
The following table shows total stock-based compensation expense for the three and nine months ended March 31, 2025 and 2024, the majority of which is included in selling, general and administrative (“SG&A”) expenses in these unaudited Condensed Consolidated Statements of Comprehensive Income (Loss):
|
| Three Months Ended March 31, |
|
| Nine Months Ended March 31, |
| ||||||||||
|
| 2025 |
|
| 2024 |
|
| 2025 |
|
| 2024 |
| ||||
Stock options |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
RSAs |
|
|
|
|
|
|
|
|
|
|
|
| ||||
RSUs |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
We also adopted the LightPath Technologies, Inc. Employee Stock Purchase Plan (the “2014 ESPP”). The 2014 ESPP permits employees to purchase Class A Common Stock through payroll deductions, subject to certain limitations. A discount of approximately $
Grant Date Fair Values and Underlying Assumptions; Contractual Terms
We estimate the fair value of each stock option as of the date of grant, using the Black-Scholes-Merton pricing model. The fair value of 2014 ESPP shares is the amount of the discount the employee obtains at the date of the purchase transaction.
Most stock
No stock options were granted during the nine months ended March 31, 2025.
Restricted Stock Awards
RSAs are granted primarily to our executive officers, employees and consultants, and typically vest over a one to three year period from the date of grant, although some may vest immediately upon grant. The stock underlying RSAs is issued upon vesting.
Restricted Stock Units
RSUs are granted primarily to our directors, although RSU awards may also be made to executive officers, employees and consultants. RSUs typically vest over a one to four year period from the date of grant, although some may vest immediately upon grant.
| 18 |
| Table of Contents |
Information Regarding Current Share-Based Compensation Awards
A summary of the activity for share-based compensation awards in the nine months ended March 31, 2025 is presented below:
|
| Stock Options |
|
| Restricted Stock Units (RSUs) |
|
| Restricted Stock Awards (RSAs) |
| |||||||||||||||||||
|
|
|
|
| Weighted- |
|
| Weighted- |
|
|
|
|
| Weighted- |
|
|
|
|
| Weighted- |
| |||||||
|
|
|
|
| Average |
|
| Average |
|
|
|
|
| Average |
|
|
|
|
| Average |
| |||||||
|
|
|
|
| Exercise |
|
| Remaining |
|
|
|
|
| Remaining |
|
|
|
|
| Remaining |
| |||||||
|
| Shares |
|
| Price |
|
| Contract |
|
| Shares |
|
| Contract |
|
| Shares |
|
| Contract |
| |||||||
June 30, 2024 |
|
|
|
| $ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Granted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Exercised |
|
| ( | ) |
| $ |
|
|
|
|
|
|
| ( | ) |
|
|
|
|
|
| ( | ) |
|
|
|
| |
Cancelled/Forfeited |
|
| ( | ) |
| $ |
|
|
|
|
|
|
| — |
|
|
|
|
|
|
|
|
|
|
|
| ||
March 31, 2025 |
|
|
|
| $ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Awards exercisable/ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
vested as of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2025 |
|
|
|
| $ |
|
|
|
|
|
|
|
|
| — |
|
|
| — |
|
|
| — |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards unexercisable/ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
unvested as of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2025 |
|
|
|
| $ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
|
|
| 391,817 |
|
|
|
|
|
|
|
|
|
|
| 1,035,886 |
|
|
|
|
|
|
| 125,456 |
|
|
|
|
|
As of March 31, 2025, there was approximately $
Fiscal Year Ending: |
| Stock Options |
|
| RSAs |
|
| RSUs |
|
| Total |
| ||||
June 30, 2025 (remaining three months) |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
June 30, 2026 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
June 30, 2027 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
June 30, 2028 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
11. Earnings (Loss) Per Share
Basic earnings (loss) per share is computed by dividing net income or loss by the weighted-average number of shares of Class A Common Stock outstanding, during each period presented. The computation of diluted earnings (loss) per share further assumes the potential dilutive effect of potential Class A Common Stock using the treasury-stock method and if-converted method, as applicable. During periods in which the average market price of the Company's common stock is above the applicable conversion price of the Company's convertible notes, the impact of conversion would be dilutive and such dilutive effect is reflected in diluted EPS. As a result, in periods where the average market price of the Company's common stock is above the conversion price, under the if-converted method, the Company calculates the number of shares issuable under the terms of the convertible notes based on the average market price of the stock during the period, and includes that number in the total diluted shares outstanding for the period. The Warrants and the Series G Convertible Preferred Stock are participating securities as the holders of such instruments participate in the event a dividend is paid on common stock, however the holders do not have a contractual obligation to share in the Company’s losses. As such, losses are attributed entirely to common stockholders. The computations for basic and diluted earnings (loss) per share of Class A Common Stock are described in the following table:
|
| Three Months Ended |
|
| Nine Months Ended |
| ||||||||||
|
| 2025 |
|
| 2024 |
|
| 2025 |
|
| 2024 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net loss |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
Accretion of dividends on Series G preferred |
|
| ( | ) |
|
| — |
|
|
| ( | ) |
|
| — |
|
Net loss attributable to stockholders |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic number of shares |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Diluted number of shares |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
Diluted |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| 19 |
| Table of Contents |
The following potential dilutive shares were not included in the computation of diluted earnings (loss) per share of Class A Common Stock, as their effects would be anti-dilutive. Potential dilutive shares for the Series G convertible preferred, warrants and convertible notes were calculated based on the Exchange Cap in effect for the respective periods:
|
| Three Months Ended March 31, |
|
| Nine Months Ended March 31, |
| ||||||||||
|
| 2025 |
|
| 2024 |
|
| 2025 |
|
| 2024 |
| ||||
Options to purchase common stock |
|
|
|
|
|
|
|
|
|
|
|
| ||||
RSUs and RSAs |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Series G convertible preferred, warrants & convertible notes |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
12. Leases
Our leases primarily consist of operating leases related to our facilities located in Orlando, Florida; Plano, Texas; Hudson, New Hampshire; Riga, Latvia; and Zhenjiang, China, and finance leases related to certain equipment located in Orlando, Florida and Riga, Latvia. The operating leases for facilities are non-cancelable operating leases, with terms at various times through 2034. We typically include options to renew (or terminate) in our lease term, and as part of our right-of-use (“ROU”) assets and lease liabilities, when it is reasonably certain that we will exercise such options. We currently have fourteen finance lease agreements entered into during fiscal years 2023, 2024 and 2025 with terms ranging from three to five years. The finance leases are for computer and manufacturing equipment.
Our operating lease ROU assets and the related lease liabilities are initially measured at the present value of future lease payments over the lease term. One of our operating leases includes renewal options, which were not included in the measurement of the operating lease ROU assets and related lease liabilities.
We received tenant improvement allowances for the lease of our Orlando Facility. These allowances were used to construct improvements and are included in leasehold improvements and operating lease liabilities. The balance is being amortized over the corresponding lease term. In August 2023, we completed the construction of additional tenant improvements within the premises subject to our continuing lease for our Orlando Facility, of which the landlord provided $
The components of lease expense for the three and nine months ended March 31, 2025 and 2024 were as follows:
|
| Three Months Ended March 31, |
|
| Nine Months Ended March 31, |
| ||||||||||
|
| 2025 |
|
| 2024 |
|
| 2025 |
|
| 2024 |
| ||||
Operating lease cost |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Finance lease cost: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation of lease assets |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Interest on lease liabilities |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total finance lease cost |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total lease cost |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
| 20 |
| Table of Contents |
Supplemental balance sheet information related to the leases as of March 31, 2025 and June 30, 2024 was as follows:
|
| Classification |
| March 31, 2025 |
|
| June 30, 2024 |
| ||
Assets: |
|
|
|
|
|
|
|
| ||
Operating lease assets |
| Operating lease assets |
| $ |
|
| $ |
| ||
Finance lease assets |
| Property and equipment, net(1) |
|
|
|
|
|
| ||
Total lease assets |
|
|
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
Current: |
|
|
|
|
|
|
|
|
|
|
Operating leases |
| Operating lease liabilities, current |
| $ |
|
| $ |
| ||
Finance leases |
| Finance lease liabilities, current |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
|
|
Noncurrent: |
|
|
|
|
|
|
|
|
|
|
Operating leases |
| Operating lease liabilities, less current portion |
|
|
|
|
|
| ||
Finance leases |
| Finance lease liabilities, less current portion |
|
|
|
|
|
| ||
Total lease liabilities |
|
|
| $ |
|
| $ |
| ||
| (1) | Finance lease assets were recorded net of accumulated depreciation of approximately $ |
Lease term and discount rate information related to leases was as follows:
Lease Term and Discount Rate |
| March 31, 2025 |
| |
| Weighted Average Remaining Lease Term (in years) |
|
|
| |
Operating leases |
|
|
| |
Finance leases |
|
|
| |
|
|
|
|
|
| Weighted Average Discount Rate |
|
|
|
|
Operating leases |
|
| % | |
Finance leases |
|
| % | |
Supplemental cash flow information was as follows for the nine months ended March 31, 2025 and 2024:
|
| Nine Months Ended March 31, |
| |||||
|
| 2025 |
|
| 2024 |
| ||
Cash paid for amounts included in the measurement of lease liabilities: |
|
|
|
|
|
| ||
Operating cash used for operating leases |
| $ |
|
| $ |
| ||
Operating cash used for finance leases |
| $ |
|
| $ |
| ||
Financing cash used for finance leases |
| $ |
|
| $ |
| ||
| 21 |
| Table of Contents |
Future maturities of lease liabilities were as follows as of March 31, 2025:
Fiscal year ending: |
| Finance Leases |
|
| Operating Leases |
| ||
June 30, 2025 (remaining three months) |
| $ |
|
| $ |
| ||
June 30, 2026 |
|
|
|
|
|
| ||
June 30, 2027 |
|
|
|
|
|
| ||
June 30, 2028 |
|
|
|
|
|
| ||
June 30, 2029 |
|
|
|
|
|
| ||
Thereafter |
|
|
|
|
|
| ||
Total future minimum payments |
|
|
|
|
|
| ||
Less imputed interest |
|
| ( | ) |
|
| ( | ) |
Present value of lease liabilities |
| $ |
|
| $ |
| ||
13. Loans Payable
Acquisition Notes
On February 18, 2025 we entered into the Securities Purchase Agreement (see Note 3, Acquisition of G5 Infrared), and in connection with the closing of the Securities Purchase Agreement, we issued senior secured promissory notes in an aggregate principal amount of $5.2 million (the “Acquisition Notes”). The Acquisition Notes accrue interest at the rate between
The Acquisition Notes will mature on February 18, 2027, the second anniversary of the issuance date.
The Acquisition Notes will convert into shares of Series G Convertible Preferred Stock if the EBIDTA reported by the Company for the calendar year ending December 31, 2025 is less than $
All or part of the Acquisition Notes may be redeemed by the Company prior to the maturity date at a redemption price equal to the portion of principal so redeemed plus all accrued and unpaid interest thereon, provided that if the funds used for redemption were not generated internally by Company operations, the redemption amount will be multiplied by 102%. In addition, following an event of default or upon a change of control, the Purchaser may require the Company to redeem all or any portion of the Acquisition Notes. Notwithstanding anything to contrary, upon any bankruptcy event of default, the Company will immediately pay the holder an amount in cash representing all outstanding principal and accrued and unpaid interest. The Company determined that these redemption features did not require bifurcation from the Acquisition Notes as these are clearly and closely related to the Acquisition Notes.
The Acquisition Notes include customary affirmative and negative covenants and events of default. Additionally, the Acquisition Notes include financial covenants requiring the Company to maintain a Total Leverage Ratio (as defined in the Acquisition Notes) of not greater than 4.00:1:00 and a Fixed Charge Covered Ratio (as defined in the Acquisition Notes) of greater than 1.20:1.00 for each fiscal quarter beginning with the fiscal quarter ending December 31, 2025.
Bridge Promissory Note
On August 6, 2024, we entered into a bridge promissory note (the “Bridge Note”) with Lytton-Kambara Foundation (the “Lender”, previously defined as the “Buyer”) pursuant to which the Lender extended a loan to the Company in the principal amount of $
The Bridge Note and related accrued interest were settled on February 18, 2025, in conjunction with financing for the acquisition of G5 Infrared and the closing of the Securities Purchase Agreement and Class A Common Securities Purchase Agreement (see Note 3, Acquisition of G5 Infrared) with the Lytton Buyers. The
| 22 |
| Table of Contents |
Equipment Loans
In December 2020, ISP Latvia received an equipment loan from a third party (the “2020 Equipment Loan”), which party is also a significant customer. The 2020 Equipment Loan was collateralized by certain equipment. The initial advance under the 2020 Equipment Loan was 225,000 EUR (or USD $
In May 2023, ISP Latvia entered into an equipment loan with a third party financial institution (the “2023 Equipment Loan”). The 2023 Equipment Loan is collateralized by certain equipment. The initial advance under the 2023 Equipment Loan was 128,815 EUR (or USD $
Future maturities of loans payable are as follows:
|
| Acquisition Notes |
|
| Equipment Loans |
|
| Total |
| |||
| Fiscal year ending: |
|
|
|
|
|
|
|
|
| |||
June 30, 2025 (remaining three months) |
| $ |
|
| $ |
|
| $ |
| |||
June 30, 2026 |
|
|
|
|
|
|
|
|
|
| ||
June 30, 2027 |
|
|
|
|
|
|
|
|
| |||
June 30, 2028 |
|
|
|
|
|
|
|
|
|
| ||
Total payments |
| $ |
|
| $ |
|
| $ |
| |||
Unamortized discount to fair value |
|
|
|
|
|
|
|
|
|
| ( | ) |
Unamortized loan issuance costs |
|
|
|
|
|
|
|
|
|
| ( | ) |
Loans payable |
|
|
|
|
|
|
|
|
|
|
| |
Less current portion |
|
|
|
|
|
|
|
|
|
| ( | ) |
Non-current portion |
|
|
|
|
|
|
|
|
| $ |
| |
14. Foreign Operations
Assets and liabilities denominated in non-U.S. currencies are translated at rates of exchange prevailing on the balance sheet date, and revenues and expenses are translated at average rates of exchange for the period. Gains or losses on the translation of the financial statements of a non-U.S. operation, where the functional currency is other than the U.S. dollar, are reflected as a separate component of equity, which was a cumulative gain of approximately $
Our cash, cash equivalents and restricted cash totaled approximately $
| 23 |
| Table of Contents |
Revenues from foreign countries for the nine months ended March 31, 2025 and 2024 are as follows:
|
| Nine Months Ended March 31, |
| |||||
|
| 2025 |
|
| 2024 |
| ||
Revenues: |
|
|
|
|
|
| ||
United States |
| $ |
|
| $ |
| ||
Europe |
|
|
|
|
|
| ||
China |
|
|
|
|
|
| ||
Other Asian countries |
|
|
|
|
|
| ||
Rest of world |
|
|
|
|
|
| ||
|
| $ |
|
| $ |
| ||
Long-lived assets located in foreign countries as of March 31, 2025 and June 30, 2024 are as follows:
|
| March 31, 2025 |
|
| June 30, 2024 |
| ||
Long-lived assets: |
|
|
|
|
|
| ||
United States |
| $ |
|
| $ |
| ||
Latvia |
|
|
|
|
|
| ||
China |
|
|
|
|
|
| ||
|
| $ |
|
| $ |
| ||
15. Contingencies
Legal
The Company, from time to time, is involved in various legal actions arising in the normal course of business. Management, after reviewing with legal counsel all of these actions and proceedings, believes that the aggregate losses, if any, will not have a material adverse effect on the Company’s financial position or results of operations.
In April 2021, we terminated several employees of our China subsidiaries, LPOIZ and LPOI, including the General Manager, the Sales Manager, and the Engineering Manager, after determining that they had engaged in malfeasance and conduct adverse to our interests, including efforts to misappropriate certain of our proprietary technology, diverting sales to entities owned or controlled by these former employees and other suspected acts of fraud, theft and embezzlement. In connection with such terminations, our China subsidiaries have engaged in certain legal proceedings with the terminated employees. We incurred various expenses associated with the investigation into these matters prior and subsequent to the termination of the employees and the associated legal proceedings. In December 2023, we recovered approximately $
Potential Impact of Economic Conditions in and Trade Relations with China
Due to our operations in China, our business, results of operations, financial condition and prospects may be influenced to a significant degree by economic, political, legal and social conditions in China. China’s economy differs from the economies of other countries in many respects, including with respect to the level of development, growth rate, amount of government involvement, control of foreign exchange and allocation of resources. While China’s economy has experienced significant growth over the past several decades, its growth rate has declined in recent years and may continue to decline. Deteriorating economic conditions in China, as well as geo-political drivers such as sanctions on Chinese companies, generally have led to lower demand for our products in China and thus lower revenues and net income for our subsidiaries in China and the Company overall. A continuation of China’s current economic conditions or a further slowdown in the economic growth, an economic downturn, a recession, or other adverse economic conditions in China is likely to have a further adverse effect on our business and results of operations in future quarters.
| 24 |
| Table of Contents |
In addition, China’s export limitations on Germanium and Gallium, two materials that are commonly used in infrared optical components, are becoming increasingly disruptive to our business with adverse impacts. The initial restrictions imposed in July 2023 required all international customers to provide an end user statement for approval before receiving an export license. Following that announcement, supply of Germanium was disrupted, though not completely stopped. This also resulted in significant price increases in the cost of Germanium material. Following these restrictions we had proactively canceled a number of customer orders for Germanium, to reduce our exposure in case of a supply disruption.
Then, in December 2024, China escalated trade tensions with the U.S. by imposing more stringent export restrictions on critical minerals, including Germanium. The Chinese Ministry of Commerce cited national security concerns as the rationale for these measures, which effectively banned shipments of these minerals to the U.S., and significantly limited shipments of those minerals for dual-use applications in many other countries.
As a purchaser of Germanium, we cannot provide any assurance that we will be able to obtain adequate supplies of Germanium, or that the timing or costs of obtaining such raw materials will be acceptable to us. As a precaution against disruptions in the Germanium supply chain and in anticipation of increased demand for optics produced from other materials, particularly our proprietary BlackDiamond materials, we have, in agreement with a key customer, canceled sales orders for optics made of Germanium and are actively working with our customers to redesign their systems to use our BlackDiamond materials instead of Germanium-based materials. Additionally, we are actively collaborating with our customers to ensure those redesigned systems are tested and qualified as replacements for legacy Germanium-based systems. In some cases, such as complex defense and airborne systems, the re-qualification of such redesigned systems is a lengthy process that can take up to two years. In other systems such as commercial systems and also some specific defense systems, this is a faster process, that takes several months.
In February 2025 , the U.S. announced additional tariffs on goods imported from China, effective immediately, and China announced its intent to follow suit and implement additional tariffs on goods imported to China from the U.S. We have in place a number of strategies to mitigate the impact of tariffs, which we will adjust in response to these additional tariffs. However, given the uncertainty regarding the potential for additional trade actions by the U.S. or other countries, any future impact on our operations and financial results is uncertain and these impacts could be more significant than in the past. Further, we can provide no assurance that the strategies we implemented to mitigate the impact of such tariffs or other trade actions will continue to be successful. To the extent that our supply chain, costs, sales, or profitability are negatively affected by the tariffs or other trade actions, our business, financial condition, and results of operations may be adversely affected.
Impact of Recent Wars
In February 2022, Russian military forces invaded Ukraine. This war has led to ongoing sanctions on Russia, which have had continuing impacts on our supply chain of raw materials, particularly Germanium. Separately, Israel declared war on Hamas in October 2023. Initially, this resulted in a temporary increase in our sales, as Israel worked to replace electro-optical systems that in some cases use our materials. Our sales to customers in this region have since stabilized, however, it is still possible that this war could have a negative impact on our business as a result of the overall economic impact in Israel. In addition to the significant defense related market in Israel, we also serve many commercial related applications and work with commercial companies in Israel, and the business of those customers may be negatively impacted by the war over time. Given the dynamic nature of this situation, we cannot reasonably estimate the impact of either the Russian-Ukraine conflict or the Israel-Hamas war on our financial condition, results of operations or cash flows into the foreseeable future.[NK2]
16. Liquidity
We generally rely on cash from operations and equity and debt offerings, to the extent available, to satisfy our liquidity needs and to maintain our ability to repay our debt.
| 25 |
| Table of Contents |
On February 16, 2022, we filed a shelf registration statement to facilitate the issuance of our Class A Common Stock, warrants exercisable for shares of our Class A Common Stock, and/or units up to an aggregate offering price of $
On January 12, 2023, the Company entered into a securities purchase agreement (“Purchase Agreement”), pursuant to which the Company agreed to issue and sell in a public offering under the shelf registration statement an aggregate of
On February 13, 2025, we announced a strategic acquisition and the related financing, including the issuance of shares of Series G Convertible Preferred Stock. For additional information, refer to Note 3, Acquisition of G5 Infrared.
There are a number of factors that could result in the need to raise additional funds, including a decline in revenue or a lack of anticipated sales growth, increased material costs, increased labor costs, planned production efficiency improvements not being realized, increases in property, casualty, benefit and liability insurance premiums, and increases in other costs. In addition, we may identify opportunities for additional acquisitions and other strategic transactions to expand and further enhance our business that may require that we raise additional capital should we elect to pursue any of such transactions.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Management’s Discussion and Analysis of Financial Condition and Results of Operations is designed to provide a reader of the financial statements with a narrative report on our financial condition, results of operations, and liquidity. This discussion and analysis should be read in conjunction with the attached unaudited Condensed Consolidated Financial Statements and notes thereto and our Annual Report on Form 10-K for the year ended June 30, 2024, including the audited Consolidated Financial Statements and notes thereto. The following discussion contains forward-looking statements that involve risks and uncertainties, such as statements of our plans, objectives, expectations, and intentions. Our actual results could differ materially from those discussed in the forward-looking statements. Please also see the cautionary language at the beginning of this Quarterly Report on Form 10-Q regarding forward-looking statements.
Introduction
We were incorporated in Delaware in 1992 as the successor to LightPath Technologies Limited Partnership, a New Mexico limited partnership, formed in 1989, and its predecessor, Integrated Solar Technologies Corporation, a New Mexico corporation, formed in 1985. Today, LightPath is a global company with major facilities in the U.S., the People’s Republic of China, and the Republic of Latvia.
Subsidiaries
In November 2005, we formed LPOI, a wholly-owned subsidiary, located in Jiading, People’s Republic of China. LPOI provided sales and support functions. In December 2013, we formed LPOIZ, a wholly-owned subsidiary located in the New City district, of the Jiangsu province, of the People’s Republic of China. LPOIZ’s 55,000 square foot manufacturing facility (the “Zhenjiang Facility”) serves as our primary manufacturing facility in China and provides a lower cost structure for production of larger volumes of optical components and assemblies. Effective February 28, 2023, LPOI and LPOIZ were merged, with LPOIZ as the surviving company.
In December 2016, we acquired ISP, and its wholly-owned subsidiary, ISP Latvia. ISP is a vertically-integrated manufacturer offering a full range of infrared products from custom infrared optical elements to catalog and high-performance lens assemblies. Since June 2019, ISP’s manufacturing operation has been located at our Orlando Facility. ISP Latvia is a manufacturer of high precision optics and offers a full range of infrared products, including catalog and custom infrared optics. ISP Latvia’s facility in Riga, Latvia (the “Riga Facility”) functions as its manufacturing facility.
In July 2023, we acquired Visimid. Visimid is an engineering and design firm specializing in thermal imaging, night vision and IOT applications. Visimid provides design and consulting services for DoD contractors, commercial and industrial customers, and OEMs for original new products. Visimid’s core competency is developing and producing custom thermal and night vision cores. We believe that Visimid’s capabilities are aligned with our strategy to focus on engineered solutions. Visimid’s facility is located in Plano, Texas.
| 26 |
| Table of Contents |
For additional information, please refer to our Annual Report on Form 10-K for the year ended June 30, 2024.
In February 2025, we acquired G5 Infrared LLC, a New Hampshire limited liability company. G5 Infrared is a leading vertically-integrated manufacturer of high- performance infrared camera systems and imaging solutions, specializing in advanced thermal imaging technology and long-range mission-critical detection solutions. G5 Infrared’s existing revenue and future growth pipeline are driven by established multi-year contracts and multiple defense programs of record in shipboard long-range surveillance, border security, and counter unmanned aerial systems (“C-UAS”) systems, as well as recurring federal, naval, and law enforcement programs. Additionally, G5 Infrared is an industry-leading provider of cutting-edge advanced infrared coatings, including for materials such as LightPath’s BlackDiamond (“BlackDiamond”) glass. G5 Infrared operates from a state-of-the-art manufacturing facility in Hudson, New Hampshire. We believe that this acquisition strengthens LightPath’s position as a leader in infrared imaging by expanding the Company’s portfolio to include cooled infrared cameras. The combination of LightPath and G5 Infrared creates a more robust, vertically-integrated solutions provider.
Product Groups
We categorize our products into four product groups: infrared components, visible components, assemblies and modules, and engineering services. G5 Infrared’s revenue is generally derived from infrared components (including coating services) and assemblies and modules.
Our infrared components product group is comprised of both molded and turned infrared lenses and assemblies using a variety of infrared glass materials. This product group also includes any revenue from sale of our BlackDiamond glass materials, and G5’s optical component and coating business. This product group includes both conventional and computer numerical control (“CNC”) ground and polished lenses. Advances in chalcogenide materials have enabled compression molding for mid-wave (“MWIR”) and long-wave (“LWIR”) optics in a process similar to precision molded lenses. Our molded infrared optics technology enables high performance, cost-effective infrared aspheric lenses that do not rely on traditional diamond turning or lengthy polishing methods. Utilizing precision molded aspheric optics significantly reduces the number of lenses required for typical thermal imaging systems and the cost to manufacture these lenses. Molding is an excellent alternative to traditional lens processing methods particularly where volume and repeatability is required.
Our visible components product group consists of visible precision molded optics with varying applications. Aspheric lenses are known for their optimal performance. Aspheric lenses simplify and shrink optical systems by replacing several conventional lenses. However, aspheric lenses can be difficult and costly to machine. Our glass molding technology enables the production of both low and high volumes of aspheric optics, while still maintaining the highest quality at an affordable price. Molding is the most consistent and economical way to produce aspheres and we have perfected this method to offer the most precise molded aspheric lenses available.
Between these two component product groups, we have the capability to manufacture lenses from very small (with diameters of a sub-millimeter) to over 300 millimeters, and with focal lengths from approximately 0.4 millimeters to over 2,000 millimeters. In addition, both product groups offer both catalog and custom designed optics.
Our assemblies and modules product group is comprised of other value-added products, including both infrared and visible components, such as mounted lenses, optical assemblies, collimator assemblies, infrared cameras and other custom specialty optics. Most of our optical assemblies are based on our BlackDiamond glass. In recent years and with the growing adoption of our BlackDiamond glass, our optical assemblies business has grown considerably, and we expect to see it continue to grow. Our unique positioning in the market with our BlackDiamond glass allows us to capture a bigger portion of the customers’ Bill of Materials (BOM), which translates to more sales of assemblies, instead of only components. Since the acquisitions of Visimid Technologies and G5 Infrared, this product group is predominantly driven by sales of cameras, both Visimid’s uncooled cameras, and G5 Infrared’s cooled cameras. This product group also includes revenue from camera repair services, primarily from G5 Infrared.
Our engineering services product group represents services we provide pursuant to product development agreements that we enter into with customers. Typically, customers approach us and request that we develop new products or applications utilizing our existing products to fit their particular needs or specifications. The purpose of those engineering services that we offer is not only to provide purely engineering services for a customer, but also to engineer new products which we later manufacture for the customer. The timing and extent of any such product development requests are outside of our control, and the related revenue is recognized upon satisfaction of the performance obligation, and transfer of control of the agreed-upon deliverable. As we continue a strategic shift into highly-engineered solutions, we expect this product group to grow in a similar way as our assemblies and modules business. Furthermore, as the engineering effort precedes the product revenue, the revenue from this product group is often, but not always, a lead indicator to the revenue in assemblies and modules product group.
| 27 |
| Table of Contents |
We believe these four product groups are aligned with our strategic direction and will allow us to better track the results of our focus on engineered solution and assemblies.
Growth Strategy
The optics industry is transforming from a fragmented industry with many component manufacturers into a solution-focused industry with the potential for partnerships for solution development and production. Based on the shifts in the marketplace and the changes that come when a technology, like photonics, moves from being a specialty product to being integrated into mainstream industries and applications, we redefined our strategic direction to leverage our strengths and specifically our subject matter expertise in optics, to provide our wide customer base with complete optical and electro-optical solutions, and to become their partner for the optical engine of their systems.
Since our Chief Executive Officer, Mr. Sam Rubin, joined the Company in 2020, we have been developing a new strategy that we believe is transitioning the Company from a pure component manufacturer to a supplier of imaging subsystems and systems. Our new strategic direction, which is based on our core technological differentiators such as our BlackDiamond glass and proprietary molding technologies, significantly increases our value add to customers. This transition, which is occurring both organically and through acquisitions, such as the July 2023 acquisition of Visimid Technologies, and the recent acquisition of G5 Infrared are expected to position the Company for significant growth and higher profitability in coming years.
Understanding the shifts that are happening in the marketplace and the changes that come when a technology, like photonics, moves from being a specialty to being integrated into mainstream industries and applications, we redefined our strategic direction to provide our wide customer base with domain expertise in optics, and became their partner for the optical engine of their systems. In our view, as the use of photonics evolves, so do customer needs. The industry is transforming from a fragmented industry with a component-oriented supply chain, into a solution-focused industry with the potential for partnerships for solution development and production. Over the last couple of years we have worked to align our organization to this strategy, and leverage our in-house domain expertise in photonics, knowledge and experience in advanced optical technologies, and the necessary manufacturing techniques and capabilities. We have been developing these partnerships by working closely with our customers throughout their design process, designing optical solutions that are tailored to their needs, often times using unique technologies that we own, and supplying the customer with a complete optical subsystem to be integrated into their product. Such an approach builds on our unique, value-added technologies that we currently own, such as infrared materials, optical molding, fabrication, system design, and proprietary manufacturing technologies, along with technologies that we acquired through the acquisitions of Visimid and G5 Infrared such as video processing, infrared camera integration and more. Continually adding differentiating technologies is key to our strategy and we expect to continue to do so both organically and through acquisitions.
Our domain expertise and the extensive “know how” in optical design, fabrication, production and testing technologies will allow our customers to focus on their own development efforts, freeing them from the need to develop subject matter expertise in optics. By providing the bridge into the optical solution world, we are able to partner with our customers on a long-term basis, create value for our customers, and capture that value through the long-term supply relationships we seek to develop.
Further information about our strategic direction can be found in our Annual Report on Form 10-K for the fiscal year ended June 30, 2024.
Results of Operations
Revenue
Three months ended March 31, 2025, compared to three months ended March 31, 2024
Revenue for the third quarter of fiscal 2025 was approximately $9.2 million, an increase of approximately $1.5 million, or 19%, as compared to approximately $7.7 million in the same quarter of the prior fiscal year, primarily driven by an increase in engineering services and assemblies and modules along with slight increases in visible components and infrared components.
| 28 |
| Table of Contents |
Revenue from infrared components was approximately $3.6 million in the third quarter of fiscal 2025, nearly flat as compared to the same quarter of the prior fiscal year. The third quarter of fiscal 2025 includes the addition of $0.5 million of G5 Infrared coating services and components. This increase was offset by a decrease in sales against a large annual contract for Germanium-based products, which was not renewed in the second quarter of fiscal 2024, as we have decided to reduce the amount of optics we produce from Germanium, both to reduce our risk of supply chain disruption, and more importantly, to work with customers to convert their systems to use optics made of our own BlackDiamond materials. The availability of Germanium is becoming increasingly limited due to new trade restrictions and additional tariffs on goods imposed by China. See the section entitled “Potential Impact of Economic Conditions and Policies in China” within Item 2, for additional information and a discussion of economic conditions and policies in China.
Revenue from the visible components product group for the third quarter of fiscal 2025 was $2.8 million, an increase of approximately $0.1 million, or 6%, as compared to the same quarter of the prior fiscal year. The increase in revenue is primarily due to an increase in sales to customers in the defense industry, partially offset by decreases in sales to industrial and commercial customers.
Revenue from assemblies and modules was approximately $1.9 million in the third quarter of fiscal 2025, an increase of approximately $1.0 million, or 123%, as compared to the same quarter of the prior fiscal year. The third quarter of fiscal 2025 includes the addition of $0.9 million of G5 Infrared cameras and modules. The remaining increase is primarily due to sales of infrared cores and cameras, partially offset by the absence of revenue from an end-of-life order for a custom visible lens assembly which shipped complete in the first quarter of fiscal 2025.
Revenue from engineering services increased by $0.3 million, or 54%, for the third quarter of fiscal 2025, as compared to the same quarter of the prior fiscal year. This increase was primarily driven by Visimid’s contract with Lockheed Martin, as well as one of our space-related funded research contracts where revenue is generally recognized based on the achievement of milestones and, therefore, is not always consistent between periods.
Nine months ended March 31, 2025 compared to nine months ended March 31, 2024
Revenue for the first nine months of fiscal 2025 was approximately $25.0 million, an increase of approximately $1.9 million, or 8%, as compared to approximately $23.0 million in the same period of the prior fiscal year, driven by increases in sales of engineering services, assemblies and modules and visible components, partially offset by a decrease in infrared components.
Revenue from infrared components was approximately $9.4 million in the first nine months of fiscal 2025, a decrease of approximately $1.7 million, or 15%, as compared to the same period of the prior fiscal year. The decrease in revenue is primarily due to a decrease in sales against the aforementioned annual contract for Germanium-based products. The decrease in sales to this customer was partially offset by increases in sales to several defense customers in the U.S. and in Europe.
Revenue from the visible components product group for the first nine months of fiscal 2025 was $8.9 million, an increase of approximately $0.9 million, or 10%, as compared to the same period of the prior fiscal year. The increase in revenue is primarily due to an increase in sales to customers in the defense industry.
Revenue from assemblies and modules was approximately $3.8 million for the first nine months of fiscal 2025, an increase of approximately $0.7 million, or 24%, as compared to the same period of the prior fiscal year. The third quarter of fiscal 2025 includes $0.9 million of G5 Infrared cameras and modules. The remaining decrease is due to an end of life order for a custom visible lens assembly which shipped complete in the first quarter of fiscal 2025. This decrease in visible lens assembly sales was partially offset by increased sales of infrared cores and cameras.
Revenue from engineering services increased by $2.0 million, or 221%, for the first nine months of fiscal 2025, as compared to the same period of the prior fiscal year. This increase was primarily driven by Visimid’s contract with Lockheed Martin, as well as revenue from one of our space-related funded research contracts, where revenue is generally recognized based on the achievement of milestones.
| 29 |
| Table of Contents |
Gross Profit
In the third quarter of fiscal 2025, gross profit was approximately $2.6 million, an increase of $1.1 million, or 66%, as compared to the same quarter of the prior fiscal year. Total cost of sales was approximately $6.5 million for the third quarter of fiscal 2025, compared to approximately $6.1 million for the same quarter of the prior fiscal year. Gross margin as a percentage of revenue was 29% for the third quarter of fiscal 2025, compared to 21% for the same quarter of the prior fiscal year. The increase in gross margin as a percentage of revenue is primarily due to a more favorable product mix, with more revenue from assemblies and modules and engineering services, which typically have higher margins than infrared components. We continue to focus our strategic direction on higher margin products.
For the first nine months of fiscal 2025, gross profit was approximately $7.4 million, an increase of $1.3 million, or 22%, as compared to the same period of the prior fiscal year. Total cost of sales was approximately $17.6 million for the first nine months of fiscal 2025, compared to approximately $17.0 million for the same period of the prior fiscal year. Gross margin as a percentage of revenue was 30% for the first nine months of fiscal 2025, compared to 26% for the same period of the prior fiscal year. The increase in gross margin as a percentage of revenue is primarily due to a more favorable product mix, with more revenue from assemblies and modules and engineering services, which typically have higher margins than infrared components.
Selling, General and Administrative
In the third quarter of fiscal 2025, SG&A costs were approximately $4.4 million, an increase of approximately $1.3 million, or 40%, as compared to approximately $3.2 million in the same quarter of the prior fiscal year. For the first nine months of fiscal 2025, SG&A costs were approximately $11.1 million, an increase of approximately $2.4 million, or 27%, as compared to approximately $8.7 million in the same period of the prior fiscal year. The increase in SG&A costs is primarily due to an increase in legal and consulting fees related to business development initiatives. Due diligence and other costs incurred related to the acquisition of G5 Infrared were approximately $0.7 million for the third quarter of fiscal 2025, and $1.3 million for the first nine months of 2025. We have also increased our sales and marketing spend to promote new products, including personnel costs, travel, advertising and tradeshows. The third quarter and first nine months of 2025 also reflect the addition of G5 Infrared’s SG&A costs since the G5 Acquisition Date.
New Product Development
In the third quarter of fiscal 2025, new product development costs were approximately $0.8 million, an increase of approximately $0.2 million, or 33%, as compared to the same quarter of the prior fiscal year. For the first nine months of fiscal 2025, new product development costs were approximately $2.0 million, an increase of approximately $0.2 million, or 10%, as compared to the same period of the prior fiscal year. The increase for the third quarter was primarily driven by materials consumed for continued development of infrared assembly products. For the first nine months, the increase in material spend was offset by a decrease in personnel costs as engineering personnel have shifted toward externally funded, rather than internally-funded, development projects.
Amortization of Intangibles
Amortization of intangibles increased by $0.3 million for the third quarter of fiscal 2025, as compared to the same quarter of the prior fiscal year, and increased by $0.3 million for the first nine months of fiscal 2025, as compared to the same period of the prior fiscal year. The increases are driven by the amortization of identifiable intangible assets associated with the acquisition of G5 Infrared, partially offset by decreases in amortization of intangible assets associated with the acquisition of Visimid, for which the backlog intangible reached full amortization during the first quarter of fiscal 2025. See Note 3, Acquisition of G5 Infrared, and Note 4, Acquisition of Visimid, in the unaudited Condensed Consolidated Financial Statements, for further information.
Other Income (Expense)
Interest expense, net, was approximately $487,000 for the third quarter of fiscal 2025, as compared to $38,000 for the same quarter of the prior fiscal year. For the first nine months of fiscal 2025, interest expense, net was approximately $805,000, as compared to $149,000 for the same period of the prior fiscal year. Interest expense for both the three and nine months ended March 31, 2025 include financing costs associated with the warrant liability of approximately $319,000. The remaining increase in interest expense is due to the interest and amortization of loan issuance costs associated with the Bridge Note, executed in August 2024, which was subsequently replaced by the Acquisition Notes executed in February 2025.
| 30 |
| Table of Contents |
We recorded a loss in extinguishment of debt of $0.4 million during the three and nine months ended March 31, 2025, related to the exchange of the Bridge Note for an Acquisition Note in connection with the financing of the acquisition of G5 Infrared. The loss is based on the difference between the carrying value of the debt being extinguished and the fair value of the new debt, plus any other payments exchanged (e.g. the aforementioned Class A Common Stock, Series G Convertible Preferred Stock and warrants).
Other expense, net, was approximately $124,000 for the third quarter of fiscal 2025, as compared to other income, net, of $29,000 for the same quarter of the prior fiscal year. For the first nine months of fiscal 2025, other expense, net was approximately $119,000, as compared to other income, net, of $234,000 for the same period of the prior fiscal year. Other expense, net, for the third quarter and first nine months of fiscal 2025 includes a non-cash valuation adjustment of $130,000 related to the Visimid acquisition payments that were settled in Class A Common Stock. Other income for the first nine months of fiscal 2024 includes a gain of $190,000 for the return of funds previously misappropriated by our former Chinese management team, as a result of the ongoing legal proceedings described in Note 15, Contingencies, in the unaudited Condensed Consolidated Financial Statements.
Other income, net also includes net gains and losses on foreign exchange transactions. We execute all foreign sales from our U.S. facilities and inter-company transactions in U.S. dollars, partially mitigating the impact of foreign currency fluctuations. Assets and liabilities denominated in non-U.S. currencies, primarily the Chinese Yuan and Euro, are translated at rates of exchange prevailing on the balance sheet date, and revenues and expenses are translated at average rates of exchange for the year. We recognized foreign currency transaction gains of $8,000 and $12,000 for the third quarter of fiscal 2025 and 2024, respectively. For the first nine months of fiscal 2025 and 2024, we recognized foreign currency gains of $12,000 and $41,000, respectively.
Income Taxes
Income tax expense is primarily related to income taxes from our operations in China, including estimated Chinese withholding taxes associated with intercompany dividends declared by LPOIZ and payable to us as its parent company, as well as withholding taxes on payments from LPOIZ to LightPath for administrative services rendered. Income tax expense was approximately $100,000 for the third quarter of fiscal 2025, as compared to $6,000 for the same quarter of the prior fiscal year. For the first nine months of fiscal 2025, income tax expense was $160,000, as compared to $121,000 for the same period of the prior fiscal year. The increases are primarily due to the timing of intercompany dividends.
Net Loss
Net loss for the third quarter of fiscal 2025 was approximately $3.6 million, or $0.09 basic and diluted loss per share, compared to $2.6 million, or $0.07 basic and diluted loss per share, for the same quarter of the prior fiscal year. The increase in net loss of approximately $1.0 million for the third quarter of fiscal 2025, as compared to the same quarter of the prior fiscal year, was primarily attributable to increased SG&A driven by acquisition costs, interest expense and amortization of intangible assets, partially offset by a net favorable change in other income items. Included in SG&A are $0.7 million in non-recurring costs related to the acquisition of G5 Infrared.
Net loss for the first nine months of fiscal 2025 was approximately $7.8 million, or $0.19 basic and diluted loss per share, compared to $5.7 million, or $0.15 basic and diluted loss per share, for the same period of the prior fiscal year. The increase in net loss of approximately $2.1 million for the first nine months of fiscal 2025, as compared to the same period of the prior fiscal year, was primarily attributable to the increased SG&A costs, including non-recurring costs of $1.3 million related to the acquisition of G5 Infrared, as well as increased interest expense and amortization of intangible assets.
Weighted-average common shares outstanding for the third quarter of fiscal 2025 were 41,363,643, basic and diluted, compared to 37,988,770, basic and diluted, in the same quarter of fiscal 2024. Weighted-average common shares outstanding for the first nine months of fiscal 2025 were 40,209,657, basic and diluted, compared to 37,639,464, basic and diluted, in the same period of fiscal 2024. The increase in weighted-average basic common shares was primarily due to the Class A Common Stock issued in conjunction with the Acquisition Financing. The increase is also attributable to: (i) the 585,483 shares of Class A Common Stock issued during the second half of fiscal year 2024 pursuant to the at-the-market equity program; (ii) the shares of Class A Common Stock issued in conjunction with the acquisition of Visimid; and (iii) the issuance of shares of Class A Common Stock under the 2014 ESPP and underlying vested RSUs and RSAs. Potential dilutive common stock equivalents were excluded from the calculation of diluted shares for all periods presented, as their effects would have been anti-dilutive due to net losses in those periods.
| 31 |
| Table of Contents |
Potential Impact of Economic Conditions and Policies in China
Due to our operations in China, our business, results of operations, financial condition and prospects may be influenced to a significant degree by economic, political, legal and social conditions in China. China’s economy differs from the economies of other countries in many respects, including with respect to the level of development, growth rate, amount of government involvement, control of foreign exchange and allocation of resources. While China’s economy has experienced significant growth over the past several decades, its growth rate has declined in recent years and may continue to decline. According to the National Bureau of Statistics of China, the annual economic growth rate in China was 6.9% in 2017, 6.8% in 2018, 6.1% in 2019, 2.3% in 2020, 8.1% in 2021, 3% in 2022, 5.2% in 2023 and 5% in 2024. Deteriorating economic conditions in China generally have led to lower demand for the Company’s products in China and thus lower revenues and net income for our subsidiaries in China and the Company overall, which we expect will continue in future quarters.
On July 4, 2023 China announced export limitations on Germanium and Gallium, two materials that are commonly used in infrared optical components, requiring all international customers to provide an end user statement for approval before receiving an export license. Since that announcement, supply of Germanium was disrupted, though not completely stopped. This also resulted in significant price increases in the cost of Germanium material, by as much as 60%. Following these restrictions we had proactively canceled a number of customer orders for Germanium to reduce our exposure to the supply disruption.
Then, in December 2024, China escalated trade tensions with the U.S. by imposing more stringent export restrictions on critical minerals, including Germanium. The Chinese Ministry of Commerce cited national security concerns as the rationale for these measures, which effectively banned shipments of these minerals to the U.S., and significantly limited shipments of those minerals for dual-use applications in many other countries.
As a purchaser of Germanium, we cannot provide any assurance that we will be able to obtain adequate supplies of Germanium, or that the timing or costs of obtaining such raw materials will be acceptable to us. As a precaution against disruptions in the Germanium supply chain and in anticipation of increased demand for optics produced from other materials, particularly our proprietary BlackDiamond materials, we have, in agreement with a key customer, canceled sales orders for optics made of Germanium and are actively working with our customers to redesign their systems to use our BlackDiamond materials instead of Germanium-based materials. Additionally, we are actively collaborating with our customers to ensure those redesigned systems are tested and qualified as replacements for legacy Germanium-based systems. In some cases, such as complex defense and airborne systems, the re-qualification of such redesigned systems is a lengthy process that can take up to two years. In other systems such as commercial systems and also some specific defense systems, this is a faster process, that takes several months.
In February 2025, the U.S. announced additional tariffs on goods imported from China, effective immediately, and China announced its intent to follow suit and implement additional tariffs on goods imported to China from the U.S. We have in place a number of strategies to mitigate the impact of tariffs, which we will adjust in response to these additional tariffs. However, given the uncertainty regarding the potential for additional trade actions by the U.S. or other countries, any future impact on our operations and financial results is uncertain and these impacts could be more significant than in the past. Further, we can provide no assurance that the strategies we implemented to mitigate the impact of such tariffs or other trade actions will continue to be successful. To the extent that our supply chain, costs, sales, or profitability are negatively affected by the tariffs or other trade actions, our business, financial condition, and results of operations may be adversely affected.
Liquidity and Capital Resources
As of March 31, 2025, we had working capital of approximately $15.9 million and total cash and cash equivalents of approximately $6.5 million, of which, approximately 25% of our cash and cash equivalents was held by our foreign subsidiaries.
Cash and cash equivalents held by our foreign subsidiaries in China and Latvia were generated in-country as a result of foreign earnings. We routinely declare intercompany dividends to remit a portion of the earnings of our foreign subsidiaries to LightPath, as the U.S. parent company. It is still our intent to reinvest a significant portion of earnings generated by our foreign subsidiaries, however, we may also repatriate a portion of their earnings, and we accrue for these taxes on the portion of earnings that we intend to repatriate. We currently do not intend for our Latvian subsidiary to declare intercompany dividends.
| 32 |
| Table of Contents |
In China, before any funds can be repatriated, the retained earnings of the legal entity must equal at least 50% of the registered capital. As of March 31, 2025, LPOIZ had approximately $0.8 million available for repatriation, based on earnings accumulated through December 31, 2024, the end of the most recent statutory tax year, that remained undistributed as of March 31, 2025.
As of March 31, 2025, loans payable consists of two third-party equipment loans and the Acquisition Notes. See Note 13, Loans Payable, in the unaudited Condensed Consolidated Financial Statements, for further information.
On February 16, 2022, we filed a shelf registration statement to facilitate the issuance of our Class A Common Stock, warrants exercisable for shares of our Class A Common Stock, and/or units up to an aggregate offering price of $75.8 million from time to time. In connection with the filing of the shelf registration statement, we also included a prospectus supplement relating to an at-the-market equity program under which we may issue and sell shares of our Class A Common Stock up to an aggregate offering price of $25.2 million from time to time, decreasing the aggregate offering price available under the shelf registration statement to $50.6 million. The shelf registration statement was declared effective by the SEC on March 1, 2022. During the year ended June 30, 2024, we issued 585,483 shares of our Class A Common Stock pursuant to the at-the-market equity program. No additional shares were issued under this program during fiscal year 2025 before the shelf registration expired on March 1, 2025.
On January 12, 2023, the Company entered into a securities purchase agreement (“Purchase Agreement”), pursuant to which the Company agreed to issue and sell in a public offering under the shelf registration statement an aggregate of 9,090,910 shares of the Company’s Class A Common Stock, par value $0.01 per share for a purchase price of $1.10 per share and filed a prospectus supplement with the SEC related thereto. The sale of shares pursuant to the Purchase Agreement closed on January 17, 2023, and resulted in net proceeds of approximately $9.2 million after payment of placement agent fees, and certain other costs and expenses of the offering.
On February 13, 2025, we announced a strategic acquisition and related financing, including the issuance of Series G Convertible Preferred Stock. For additional information, refer to Note 3, Acquisition of G5 Infrared, in the accompanying unaudited Condensed Consolidated Financial Statements.
There are a number of factors that could result in the need to raise additional funds, including a decline in revenue or a lack of anticipated sales growth, increased material costs, increased labor costs, planned production efficiency improvements not being realized, increases in property, casualty, benefit and liability insurance premiums, and increases in other costs. In addition, we may identify opportunities for additional acquisitions and other strategic transactions to expand and further enhance our business that may require that we raise additional capital should we elect to pursue any of such transactions.
Cash Flows – Operating:
Cash used in operations was approximately $5.4 million for the first nine months of fiscal 2025, compared to cash provided by operations of approximately $0.5 million for the same period of the prior fiscal year. Cash used in operations for the first nine months of fiscal 2025 was primarily due to the net loss, coupled with increases in accounts receivable, inventories and prepaid expenses. Cash provided by operations for the first nine months of fiscal 2024 was largely driven by decreases in accounts receivable and inventory, driven by the timing of sales.
Cash Flows – Investing:
During the first nine months of fiscal 2025, we expended approximately $0.6 million in investments in capital equipment, compared to approximately $1.9 million in the same period of the prior fiscal year. The capital spending in the first nine months of fiscal 2024 was largely driven by the Orlando Facility expansion. As disclosed in Note 11, Leases, in the unaudited Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q, we constructed additional tenant improvements in our Orlando Facility subject to our continuing lease, of which the landlord agreed to provide $2.4 million in tenant improvement allowances. We funded the balance of the tenant improvement costs of $3.7 million over fiscal years 2023 and 2024. In the third quarter of fiscal 2025, we expended $20.3 million to acquire G5 Infrared, as disclosed in Note 3, Acquisition of G5 Infrared, in the unaudited Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q. During the first nine months of fiscal 2024, we expended approximately $0.9 million to acquire Visimid, net of cash acquired, as disclosed in Note 4, Acquisition of Visimid Technologies, in the unaudited Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q. The first nine months of fiscal 2024 also reflected proceeds of approximately $365,000 from sale-leasebacks of equipment.
| 33 |
| Table of Contents |
Cash Flows – Financings:
Net cash provided by financing activities was approximately $29.3 million for the first nine months of fiscal 2025, compared to cash used in financing activities of approximately $2.1 million in the same period of the prior fiscal year. Cash provided by financing activities for the first nine months of fiscal 2025 primarily reflects the Acquisition Financing of $27 million, net of financing costs and the Bridge Note conversion, plus $2.7 million in net proceeds from the Bridge Note, offset by approximately $0.3 million in principal payments on our loans and finance leases and $0.1 million for the final cash payment related to the acquisition of Visimid. Cash used in financing activities for the first nine months of fiscal 2024 included $2.3 million in principal payments on our loans and finance leases, offset by approximately $143,000 in proceeds from the 2023 Equipment Loan, $98,000 in proceeds from the sale of Class A Common Stock pursuant to the at-the-market equity program and $40,000 in proceeds from the sale of Class A Common Stock under the 2014 ESPP.
Critical Accounting Policies and Estimates
There have been no material changes to our critical accounting policies and estimates during the nine months ended March 31, 2025 from those disclosed in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, of our Annual Report on Form 10-K for the year ended June 30, 2024.
How We Operate
We have continuing sales of two basic types: sales via ad-hoc purchase orders of mostly standard product configurations (our “turns” business) and the more challenging and potentially more rewarding business of customer product development. In this latter type of business, we work with customers to help them determine optical specifications and even create certain optical designs for them, including complex, multi-component, optical system or sub-system designs that we call “engineered solutions.” These engineered solutions are often based on existing reference designs we have demonstrated, that then get further customized to the customer’s specific needs. This is followed by “sampling” or “prototyping” small numbers of the product for the customers’ test and evaluation. Thereafter, should a customer conclude that our specification or design is the best solution to their product need; we negotiate and “win” a contract (sometimes called a “design win”) – whether of a “blanket purchase order” type or a supply agreement. The strategy is to create an annuity revenue stream that makes the best use of our production capacity and longer-term revenue planning, as compared to the turns business, which is unpredictable and uneven. A key business objective is to convert as much of our business to the design win and annuity model as is possible. We face several challenges in doing so:
| · | Maintaining an optical design and new product sampling capability, including a high-quality and responsive optical design engineering staff; |
|
|
|
| · | The fact that as our customers take products of this nature into higher volume, commercial production they begin to work seriously to reduce costs – which may lead them to turn to larger producers, domestic or overseas, even if sacrificing quality; and |
|
|
|
| · | Our small business mass means that we can only offer a moderate amount of total productive capacity before we reach financial constraints imposed by the need to make additional capital expenditures – in other words, because of our limited cash resources and cash flow, we may not be able to service every opportunity that presents itself in our markets without arranging for such additional capital expenditures. |
Despite these challenges to winning more “annuity” business, we nevertheless believe we can be successful in procuring this business because of our unique capabilities in optical design engineering that we make available on the market to our current and potential customers looking for specific solutions to their needs. Additionally, we believe that we offer value to some customers as a source of supply in the U.S. should they be unwilling to commit to purchase their supply of critical component(s) from foreign sources. For information regarding revenue recognition related to our various revenue streams, refer to Critical Accounting Policies and Estimates in our Annual Report on Form 10-K dated June 30, 2024.
Our Key Performance Indicators:
Typically, on a weekly basis, management reviews a number of performance indicators, both qualitative and quantitative. These indicators change from time to time as the opportunities and challenges in the business change. These indicators are used to determine tactical operating actions and changes. We believe that our non-financial production indicators, such as those noted, are proprietary information.
| 34 |
| Table of Contents |
Financial indicators that are considered key and reviewed regularly are as follows:
| · | Sales backlog; |
|
|
|
| · | Revenue by product group; |
|
|
|
| · | EBITDA and Adjusted EBITDA; and |
|
|
|
| · | Other key indicators. |
These indicators are also used to determine tactical operating actions and changes and are discussed in more detail below. Management continues to evaluate these key indicators as we refine our strategic plan to determine whether any changes or updates to our key indicators are warranted.
Sales Backlog
We believe our sales activity has been and continues to be a key indicator of success. Our best view into the efficacy of our sales efforts is in our “order book.” Our order book equates to sales “backlog.” It has a quantitative and a qualitative aspect: quantitatively, our backlog’s prospective dollar value and qualitatively, what percent of the backlog is scheduled by the customer for date-certain delivery. We evaluate our total backlog, which includes all firm orders requested by a customer that are reasonably believed to remain in the backlog and be converted into revenues. This includes customer purchase orders and may also include amounts under supply contracts for which purchase orders have not yet been received, if those contracts meet the aforementioned criteria. Generally, a higher total backlog is better for us.
Our total backlog at March 31, 2025 was approximately $27.4 million, an increase of 25%, as compared to $22.0 million as of March 31, 2024. Compared to the end of fiscal 2024, our total backlog increased by 39% during the first nine months of fiscal 2025. Backlog change rates for the last five fiscal quarters are:
Quarter |
| Total Backlog ($ 000) |
|
| Change From Prior Year End |
|
| Change From Prior Quarter End |
| |||
Q3 2024 |
| $ | 21,967 |
|
|
| 1 | % |
|
| 4 | % |
Q4 2024 |
| $ | 19,268 |
|
|
| (11 | )% |
|
| (12 | )% |
Q1 2025 |
| $ | 20,542 |
|
|
| 7 | % |
|
| 7 | % |
Q2 2025 |
| $ | 19,767 |
|
|
| 3 | % |
|
| (4 | )% |
Q3 2025 |
| $ | 27,423 |
|
|
| 42 | % |
|
| 39 | % |
The acquisition of G5 Infrared added $5.6 million of backlog, as of the Acquisition Date. As of March 31, 2025, backlog for G5 Infrared products was $9.9 million. The remaining decrease in backlog during the third quarter of fiscal 2025 is primarily due to the timing of shipments against prior period backlog under other annual and multi-year contracts. During the first quarter of fiscal 2025, we received a significant contract renewal for advanced infrared optics for a critical international military program, with a small increase over the previous renewal in the same period of the prior fiscal year, as well as a $0.5 million low-rate initial production order for thermal imaging assemblies with a new tier-1 defense customer. The timing of multi-year contract renewals are not always consistent and, thus, backlog levels may increase substantially when annual and multi-year orders are received, and decrease as shipments are made against these orders.We anticipate that our existing annual and multi-year contracts will be renewed in future quarters.
| 35 |
| Table of Contents |
Markets continue to experience growing demand for infrared products used in the industrial, defense and first responder sectors. Demand for infrared products continues to be fueled by interest in lenses made with our proprietary BD6 and our new BDNL-4 materials. With the global supply of Germanium currently concentrated in Russia and China, global events which have significantly restricted the Germanium supply, particularly to the U.S., are generating renewed interest in Germanium alternatives such as our proprietary BlackDiamond materials, and other materials we are currently developing under an exclusive license with the Naval Research Lab. Several of our customers are actively working to convert their designs to use optics made of our BlackDiamond materials. Additionally, the proliferation in use of drones, both by state players and by non state players and civilians, is driving demand for C-UAS passive detection systems, such as G5’s long range cameras. Passive detection of unmanned aerial systems (“UASs”) is preferred over the use of active systems such as Radar, as the later provides the enemy information on one’s own location. We expect sales of cameras for C-UAS applications to grow substantially in the next few years.
As we have outlined in our strategic direction, we do not expect to see significant growth in our visible components product group in the near future. Competition in that product line has grown substantially over the last few years, and some of our new molding capabilities and technologies such as free-form molded optics, might take longer than anticipated to reach full commercialization, depending on economic conditions and technology trends in the area of AR\VR.
In addition, order bookings for both visible and infrared components and assemblies continue to be slow in China. Domestic sales in China have also been adversely impacted by the economic downturn in China, which continues to negatively impact revenue and bookings in that region.
Revenue by Product Group
The following table sets forth revenue for our four product groups for the three and nine-month periods ended March 31, 2025 and 2024:
|
| (unaudited) |
| |||||||||||||||||||||
|
| Three Months Ended |
|
|
|
| Nine Months Ended |
|
|
| ||||||||||||||
|
| March 31, |
|
| Quarter |
|
| March 31, |
|
| Year-to-date |
| ||||||||||||
|
| 2025 |
|
| 2024 |
|
| % Change |
|
| 2025 |
|
| 2024 |
|
| % Change |
| ||||||
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Infrared components |
| $ | 3,640,517 |
|
| $ | 3,638,674 |
|
|
| 0 | % |
| $ | 9,363,477 |
|
| $ | 11,046,129 |
|
|
| (15 | )% |
Visible components |
|
| 2,838,346 |
|
|
| 2,688,475 |
|
|
| 6 | % |
|
| 8,901,076 |
|
|
| 8,055,714 |
|
|
| 10 | % |
Assemblies and modules |
|
| 1,852,482 |
|
|
| 829,265 |
|
|
| 123 | % |
|
| 3,803,364 |
|
|
| 3,077,987 |
|
|
| 24 | % |
Engineering services |
|
| 836,282 |
|
|
| 542,761 |
|
|
| 54 | % |
|
| 2,924,920 |
|
|
| 912,230 |
|
|
| 221 | % |
Total revenue |
| $ | 9,167,627 |
|
| $ | 7,699,175 |
|
|
| 19 | % |
| $ | 24,992,837 |
|
| $ | 23,092,060 |
|
|
| 8 | % |
Three months ended March 31, 2025
Our revenue increased by 19% in the third quarter of fiscal 2025, as compared to the same quarter of the prior fiscal year, primarily driven by an increase in assemblies and modules and engineering services, along with slight increases in visible components and infrared components.
Revenue generated by the infrared components product group for the third quarter of fiscal 2025 was $3.6 million, nearly flat, as compared to same quarter of the prior fiscal year. The third quarter of fiscal 2025 includes $0.5 million of G5 Infrared coating services and components. The remaining decrease in revenue is primarily due to a decrease in sales to a single customer against a large annual contract for Germanium-based products, which was not renewed in the second quarter of fiscal 2024. Due to the uncertainty surrounding the global Germanium supply, we decided to reduce the amount of optics we produce from Germanium, both to reduce our exposure to the risk of supply chain disruption, and more importantly, to work with customers to convert their systems to use optics made of our own BlackDiamond materials. We continue to work with this single customer, as well as other customers to convert their systems to use BlackDiamond optics. Over the last few quarters we have worked closely with several customers to replace their Germanium optics with solutions made from our BlackDiamond materials. We continue to see growth in the number of customers making that transition, as well as the volume of demand for solutions made using our BlackDiamond materials to replace legacy Germanium systems. As a result, we continue to also add more manufacturing capacity for our BlackDiamond glass, to address the growing number of customers adopting the material. Disruptions in the Germanium supply continue to cause delays in fulfilling orders, and we are accepting fewer orders for Germanium-based products.
| 36 |
| Table of Contents |
Revenue from the visible components product group for the third quarter of fiscal 2025 was $2.8 million, an increase of 6%, as compared to the same quarter of the prior fiscal year. The increase in revenue is primarily due to an increase in sales to customers in the defense industry, partially offset by decreases in sales to industrial and commercial customers.
Revenue from assemblies and modules was $1.9 million, an increase of 123% for the third quarter of fiscal 2025, as compared to the same quarter of the prior fiscal year. The third quarter of fiscal 2025 includes $0.9 million of G5 Infrared cameras and modules. The remaining increase is primarily due to sales of infrared cores and cameras, partially offset by the absence of revenue from an end of life order for a custom visible lens assembly which shipped complete in the first quarter of fiscal 2025.
Revenue from engineering services increased by $0.3 million, or 54%, for the third quarter of fiscal 2025, as compared to the same quarter of the prior fiscal year. This increase was primarily driven by Visimid’s contract with Lockheed Martin, as well as revenue from one of our space-related funded research contracts, where revenue is generally recognized based on the achievement of milestones. During the first quarter of fiscal 2025, we received qualification of our advanced thermal camera system by Lockheed Martin as part of its bid to produce the design of a major missile program for the U.S. Army. Due to the end customer’s requirement for confidentiality, and the competition between Lockheed Martin and other companies vying for the contract to be awarded for this project, we are unable to provide a more comprehensive update on this project, other than the project is currently continuing on schedule.
Nine months ended March 31, 2025
Our revenue increased by 8% in the first nine months of fiscal 2025, as compared to the same period of the prior fiscal year, driven by increases in sales of engineering services, assemblies and modules and visible components, partially offset by decreases in infrared components.
Revenue generated by the infrared components product group for the first nine months of fiscal 2025 was $9.4 million, a decrease of 15%, as compared to same period of the prior fiscal year. The third quarter of fiscal 2025 includes $0.5 million of G5 infrared coating services and components. The decrease in revenue is primarily due to a decrease in sales against the aforementioned annual contract for Germanium-based products. The decrease in sales to this customer was partially offset by increases in sales to several defense customers in the U.S. and in Europe.
Revenue from the visible components product group for the second quarter of fiscal 2025 was $8.9 million, an increase of 10%, as compared to the same period of the prior fiscal year. The increase was primarily driven by customers in the defense industry. The year-over-year increase was largely due to timing; we generally do not expect growth in our visible components product group.
Revenue from assemblies and modules increased by $0.7 million, or 24%, for the first nine months of fiscal 2025, as compared to the same period of the prior fiscal year. The third quarter of fiscal 2025 includes $0.9 million of G5 Infrared cameras and modules. The remaining decrease is due to an end of life order for a custom visible lens assembly which shipped complete in the first quarter of fiscal 2025. This decrease in visible lens assembly sales was partially offset by increased sales of infrared cores and cameras.
Revenue from engineering services increased by $2.0 million, or 221%, for the first nine months of fiscal 2025, as compared to the same period of the prior fiscal year. This increase was primarily driven by Visimid’s contract with Lockheed Martin, as well as revenue from one of our space-related funded research contracts, where revenue is generally recognized based on the achievement of milestones.
Other Key Indicators
Other key indicators include various qualitative and quantitative operating metrics. These indicators change from time to time as the opportunities and challenges in the business change. They are mostly non-financial indicators, such as evaluating the pipeline of sales opportunities, on time delivery trends, production yield rates by major product line, and the output and yield data from significant intermediary manufacturing processes that support the production of the finished shippable product. The data from these reports is used to determine tactical operating actions and changes. Management also assesses business performance and makes business decisions regarding our operations using certain non-GAAP measures. These non-GAAP measures are described in more detail below under the heading “Non-GAAP Financial Measures.”
Non-GAAP Financial Measures
We report our historical results in accordance with GAAP; however, our management also assesses business performance and makes business decisions regarding our operations using certain non-GAAP financial measures. We believe these non-GAAP financial measures provide useful information to management and investors that is supplementary to our financial condition and results of operations computed in accordance with GAAP; however, we acknowledge that our non-GAAP financial measures have a number of limitations. As such, you should not view these disclosures as a substitute for results determined in accordance with GAAP, and they are not necessarily comparable to non-GAAP financial measures that other companies use.
| 37 |
| Table of Contents |
EBITDA and Adjusted EBITDA
EBITDA and Adjusted EBITDA are non-GAAP financial measures used by management, lenders, and certain investors as a supplemental measure in the evaluation of some aspects of a corporation’s financial position and core operating performance. Investors sometimes use EBITDA, as it allows for some level of comparability of profitability trends between those businesses differing as to capital structure and capital intensity by removing the impacts of depreciation and amortization. EBITDA also does not include changes in major working capital items, such as receivables, inventory and payables, which can also indicate a significant need for, or source of, cash. Since decisions regarding capital investment and financing and changes in working capital components can have a significant impact on cash flow, EBITDA is not necessarily a good indicator of a business’s cash flows. We use EBITDA for evaluating the relative underlying performance of our core operations and for planning purposes. We calculate EBITDA by adjusting net income to exclude net interest expense, income tax expense or benefit, depreciation and amortization, thus the term “Earnings Before Interest, Taxes, Depreciation and Amortization” and the acronym “EBITDA.”
We also calculate an adjusted EBITDA, which excludes: (1) the effect of the non-cash income or expense associated with the mark-to-market adjustments, related to the warrants; and (2) the loss on extinguishment of debt. The fair value of the warrants is re-measured each reporting period until the warrants are either exercised or expired (which expiration occurs on February 18, 2031). Each reporting period, the change in the fair value of the warrants is either recognized as a non-cash expense or non-cash income. The change in the fair value of the warrants is not impacted by our actual operations but was instead strongly tied to the change in the market value of our Class A Common Stock. Management uses adjusted EBITDA to evaluate our underlying operating performance and for planning and forecasting future business operations.
We believe EBITDA and Adjusted EBITDA are helpful for investors to better understand our underlying business operations. The following table adjusts net loss to EBITDA and Adjusted EBITDA for the three and nine months ended March 31, 2025 and 2024:
|
| (unaudited) |
| |||||||||||||
|
| Three Months Ended March 31, |
|
| Nine Months Ended March 31, |
| ||||||||||
|
| 2025 |
|
| 2024 |
|
| 2025 |
|
| 2024 |
| ||||
Net loss |
| $ | (3,582,460 | ) |
| $ | (2,597,534 | ) |
| $ | (7,817,202 | ) |
| $ | (5,653,573 | ) |
Depreciation and amortization |
|
| 1,463,150 |
|
|
| 1,042,850 |
|
|
| 3,356,752 |
|
|
| 2,985,850 |
|
Income tax provision |
|
| 100,031 |
|
|
| 5,798 |
|
|
| 160,192 |
|
|
| 121,402 |
|
Interest expense |
|
| 486,833 |
|
|
| 37,649 |
|
|
| 805,246 |
|
|
| 149,048 |
|
EBITDA |
| $ | (1,532,446 | ) |
| $ | (1,511,237 | ) |
| $ | (3,495,012 | ) |
| $ | (2,397,273 | ) |
Loss on extinguishment of debt |
|
| 418,502 |
|
|
| — |
|
|
| 418,502 |
|
|
| — |
|
Change in fair value of warrant liability |
|
| (870,554 | ) |
|
| — |
|
|
| (870,554 | ) |
|
| — |
|
Adjusted EBITDA |
| $ | (1,984,498 | ) |
| $ | (1,511,237 | ) |
| $ | (3,947,064 | ) |
| $ | (2,397,273 | ) |
% of revenue |
|
| (22 | )% |
|
| (20 | )% |
|
| (16 | )% |
|
| (10 | )% |
Our adjusted EBITDA for the quarter ended March 31, 2025 was a loss of approximately $2.0 million, compared to $1.5 million for the same quarter of the prior fiscal year. The decrease in adjusted EBITDA in the third quarter of fiscal 2025 was primarily attributable to increased SG&A, including $0.7 million of non-recurring expenses related to the acquisition of G5 Infrared, and new product development costs.
Our adjusted EBITDA for the nine months ended March 31, 2025 was a loss of approximately $3.9 million, compared to $2.4 million for the same period of the prior fiscal year. The decrease in adjusted EBITDA in the first nine months of fiscal 2025 was primarily attributable to the increased SG&A costs, including $1.3 million of non-recurring expenses related to the acquisition of G5 Infrared.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Because we are allowed to comply with the disclosure obligations applicable to a “smaller reporting company,” as defined by Rule 12b-2 of the Exchange Act, with respect to this Quarterly Report on Form 10-Q, we are not required to provide the information required by this Item.
Item 4. Controls and Procedures
Under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of March 31, 2025, the end of the period covered by this Quarterly Report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of March 31, 2025 in reporting on a timely basis information required to be disclosed by us in the reports we file or submit under the Exchange Act.
There have not been any significant changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during the three months ended March 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
| 38 |
| Table of Contents |
PART II OTHER INFORMATION
Item 1. Legal Proceedings
The Company is subject, from time to time, to various legal proceedings that are incidental to the conduct of its business. The Company is not involved in any pending legal proceeding that it believes would reasonably be expected to have a material adverse effect on its financial condition or results of operations.
Item 1A. Risk Factors
Our business, operations, and financial condition are subject to various risks and uncertainties. The risk factors described in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K, for the year ended June 30, 2024, should be carefully considered, together with the other information contained or incorporated by reference in this Quarterly Report on Form 10-Q and in our other filings with the SEC in connection with evaluating us, our business, and the forward-looking statements contained in this Quarterly Report on Form 10-Q. During the nine months ended March 31, 2025, there have been no material changes from the risk factors previously disclosed under Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K, for the year ended June 30, 2024, except as follows:
Recently elevated geopolitical tensions, volatility and uncertainty with respect to international trade policies, including tariffs and export controls, may have a material adverse impact on our business, the markets in which we compete and the world economy.
In recent months, markets, businesses and consumers have reacted adversely to geopolitical tensions, volatility and uncertainty in international trade policies. Among other things, significant new and expanded tariffs, reciprocal tariffs, and other trade restrictions, have been imposed and modified, and selective tariff exemptions granted, often suddenly and with little notice, impacting a broad range of raw materials and goods, and global trade more generally. In particular, tariffs and other trade restrictions between the U.S. and China have escalated dramatically and included high tariff and reciprocal tariff rates and limitations by China on the export of rare earth minerals, such as Germanium, which are critical to the functioning of a range of technology products and processes and where China is the primary source of global supply. For the nine months ended March 31, 2025, consolidated net revenue from sales (based on shipping location of the customer) to China was 8%. We have been and may continue to be disadvantaged in or lose access to such international markets as a result of tariffs, export controls, or other trade policies, and the mitigation measures we have taken or may take in the future, including potential re-balancing of our manufacturing between regions, may not be effective or able to be effectuated in a timely manner, or at all. To the extent our customers, including multinational companies, assemble products in China and other foreign markets and sell them into the U.S. end market, the imposition of tariffs in the US could adversely affect demand for their products, which could in turn adversely affect demand for our optics. Further, our supply chain depends on globally sourced components and raw materials, including various rare earth minerals, including Germanium, that may become increasingly difficult or more costly to obtain, which may impair our ability to manufacture our products and increase our costs. We may be unable to fully or even partially pass along any increased costs to our customers, especially where we may be disproportionately impacted as compared to our competitors or where demand for semiconductor products is adversely impacted. The continuation, increase or expansion of tariffs and other trade restrictions, as well as continued or increased geopolitical tensions, volatility and uncertainty with respect to trade and other policies, particularly between the U.S. and China, both directly and through their impacts on business and consumer sentiment and spending, currency exchange and interest rates, debt, equity and commodity prices, inflation, financing markets, international relations, and economic conditions globally, could have a material adverse impact on our revenue, operations, financial position, including cash flows and access to financing, cost structure, competitiveness, supply chain logistics, product demand and pricing, and profitability, and may increase the likelihood, or amplify the impacts, of other risks, including those highlighted in the Risk Factors section of our Annual Report on Form 10-K, for the year ended June 30, 2024.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None
Item 4. Mine Safety Disclosures
Not applicable
Item 5. Other Information
During the three months ended March 31, 2025, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.
| 39 |
| Table of Contents |
Item 6. Exhibits
The following exhibits are filed herewith as a part of this report.
Exhibit Number |
| Description | |
|
|
| |
| |||
|
|
| |
| |||
|
|
| |
| |||
|
|
| |
| |||
|
|
| |
| |||
|
|
| |
| |||
|
|
| |
| |||
|
|
| |
| |||
|
|
| |
| |||
|
|
| |
| |||
|
|
| |
| |||
|
|
| |
| |||
101.INS |
| Inline XBRL Instance Document | * |
|
|
|
|
101.SCH |
| Inline XBRL Taxonomy Extension Schema Document | * |
|
|
|
|
101.CAL |
| Inline XBRL Taxonomy Extension Calculation Linkbase Document | * |
|
|
|
|
101.DEF |
| Inline XBRL Taxonomy Extension Definition Linkbase Document | * |
|
|
|
|
101.LAB |
| Inline XBRL Taxonomy Extension Label Linkbase Document | * |
|
|
|
|
101.PRE |
| Inline XBRL Taxonomy Presentation Linkbase Document | * |
|
|
|
|
104 |
| Cover Page Interactive Data File – formatted in Inline XBRL and contained in Exhibit 101 | * |
*filed herewith
**furnished, not filed
| 40 |
| Table of Contents |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| LIGHTPATH TECHNOLOGIES, INC. | |||
| Date: May 20, 2025 | By: | /s/ Shmuel Rubin | |
|
| Shmuel Rubin | |
| President and Chief Executive Officer | |||
Date: May 20, 2025 | By: | /s/ Albert Miranda |
|
|
| Albert Miranda |
|
|
| Chief Financial Officer |
|
| 41 |
EXHIBIT 31.1
Certification of Chief Executive Officer
Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934
I, Shmuel Rubin, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of LightPath Technologies, Inc.; |
|
|
|
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
|
|
|
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
|
|
|
| 4. | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
|
| a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
|
|
|
|
|
| b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
|
|
|
|
|
| c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
|
|
|
|
|
| d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
| 5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
|
| a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
|
|
|
|
|
| b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
| Date: May 20, 2025 | /s/ Shmuel Rubin |
|
|
| Shmuel Rubin |
|
|
| President and Chief Executive Officer |
|
EXHIBIT 31.2
Certification of Chief Financial Officer
Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934
I, Albert Miranda, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of LightPath Technologies, Inc.; |
|
|
|
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
|
|
|
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
|
|
|
| 4. | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
|
| a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
|
|
|
|
|
| b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
|
|
|
|
|
| c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
|
|
|
|
|
| d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
| 5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
|
| a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
|
|
|
|
|
| b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
| Date: May 20, 2025 | /s/ Albert Miranda |
|
|
| Albert Miranda |
|
|
| Chief Financial Officer |
|
EXHIBIT 32.1
Certification of Chief Executive Officer
Pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code
Pursuant to U.S.C. Section 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned Chief Executive Officer of LightPath Technologies, Inc. (the "Company") does hereby certify, to the best of such officer's knowledge, that:
|
| 1. | The Quarterly Report on Form 10-Q of the Company for the quarterly period ended March 31, 2025 (the "Report") fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and |
|
|
|
|
|
| 2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Dated: May 20, 2025 | /s/ Shmuel Rubin |
|
|
| Shmuel Rubin |
|
|
| President and Chief Executive Officer |
|
The certifications set forth above are being furnished as an exhibit solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and shall not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended.
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to LightPath Technologies, Inc. and will be retained by LightPath Technologies, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.
EXHIBIT 32.2
Certification of Chief Financial Officer
Pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code
Pursuant to U.S.C. Section 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned Chief Financial Officer of LightPath Technologies, Inc. (the "Company") does hereby certify, to the best of such officer's knowledge, that:
|
| 1. | The Quarterly Report on Form 10-Q of the Company for the quarterly period ended March 31, 2025 (the "Report") fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and |
|
|
|
|
|
| 2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Dated: May 20, 2025 | /s/ Albert Miranda |
|
|
| Albert Miranda |
|
|
| Chief Financial Officer |
|
The certifications set forth above are being furnished as an exhibit solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and shall not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended.
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to LightPath Technologies, Inc. and will be retained by LightPath Technologies, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.