What changed in this filing

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Item 1A. Risk Factors

2026-09-11 compared with 2025-09-26 · 30 added, 63 removed, 230 unchanged (29% of the section changed)

12 unchanged sentences

We may be affected by political and other risks as a result of our sales to international customers and/or our sourcing of materials from international suppliers.

In fiscal year 2025, 38% of our net revenue was derived from sales outside of the U.S., with 91% of our foreign sales derived from customers in Europe and Asia.

In fiscal year 2024, 39% of our net revenue was derived from sales outside of the U.S., with 94% of our foreign sales derived from customers in Europe and Asia.

In fiscal year 2026, 48% of our net revenue was derived from sales outside of the U.S., compared to 38% in fiscal 2025, with customers in Europe and Asia accounting for 97% and 91% of our foreign sales in fiscal 2026 and 2025, respectively.

However, those percentages are based on ship-to location, and one of our largest customers integrates products in Europe and ships to their customers in the U.S., so our international sales is actually less than this indicates.

Our international sales will be limited, and may even decline, if we cannot establish relationships with new international distributors, maintain relationships with our existing international distributions, maintain and expand our foreign operations, expand international sales, and develop relationships with international service providers.

For example, following the sale of LPOIZ and the Zhenjiang Facility, which is expected to close in September 2026, we expect to become more dependent on third-party suppliers, including LPOIZ’s new owners, for the manufacture and supply of certain materials and products.

While the transaction documents contemplate an ongoing supply relationship, any disruption in the new owners' operations, changes in their business priorities, financial condition, or ability to perform under our agreements could adversely affect our supply chain, operations, and financial results.

Additionally, our international sales may be adversely affected if international economies weaken.

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At the start of the Russia\Ukraine conflict we had ceased all purchases of Germanium from vendors in Russia and instead have been purchasing Germanium from vendors in China.

On July 4, 2023 China announced its intentions to impose some export restrictions on Germanium, requiring all international customers to provide an end user statement for approval before receiving an export license.

In July 2023 China announced its intentions to impose some export restrictions on Germanium, requiring all international customers to provide an end user statement for approval before receiving an export license.

Since that announcement, supply of Germanium has been disrupted, though not completely stopped.

On December 3, 2024 China further announced an immediate export ban on Germanium, Gallium and antimony to the United States and for any dual use or military use applications.

In December 2024, China further announced an immediate export ban on Germanium, Gallium and antimony to the United States and for any dual use or military use applications.

We have taken proactive steps to minimize the orders we accept for Germanium products and therefore minimize our exposure to this risk.

10 unchanged sentences

Additionally, financial difficulties could impair our ability to recover advances made to these suppliers.

Any interruption or delay in the supply of any of these materials or services, or the inability to obtain these materials or services from alternate sources at acceptable prices and within a reasonable amount of time, would impair our ability to meet scheduled product deliveries to our customers and could cause customers to cancel orders, thereby negatively affecting our business, financial condition, and results of operation.

International tariffs, including tariffs applied to goods traded between the U.S.

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trading partners, including China.

Additionally, President Trump has directed various federal agencies to further evaluate key aspects of U.S.

trade policy and there has been ongoing discussion, commentary and actions regarding potential significant changes to U.S.

trade policies, treaties and tariffs.

In 2025, the Trump administration indicated that the United States would impose retaliatory measures with respect to jurisdictions that have or are likely to put in place tax rules that are extraterritorial or disproportionately affect U.S.

The likelihood of these changes being enacted or implemented is unclear.

We are currently unable to predict whether such changes will occur and, if so, the ultimate impact on our business.

While certain tariffs have subsequently been suspended, modified or temporarily reduced, we cannot predict the results of the U.S.

government’s trade negotiations or the outcome of ongoing legal challenges to specific tariff policies.

The unpredictable nature of these trade policies and the potential for further escalation may increase uncertainty and volatility in our industry, which could negatively impact our financial performance

The institution of trade tariffs both globally and between the U.S.

20 unchanged sentences

Accordingly, we experience the risks of fluctuating currencies and corresponding exchange rates.

In fiscal years 2025 and 2024, we recognized net losses of approximately $0.1 million and gains of approximately $0.1 million on foreign currency transactions, respectively.

In each of fiscal years 2026 and 2025, we recognized net losses of approximately $0.1 million on foreign currency transactions.

Any such fluctuations that result in a less favorable exchange rate could adversely affect a portion of our revenues and expenses, which could negatively impact our results of operations and financial condition.

10 unchanged sentences

In fiscal year 2025, we had sales to three customers that comprised an aggregate of approximately 23% of our annual revenue, with one customer at 9% of our sales, another customer at 7% of our sales, and the third customer at 6% of our sales.

However, two of the three largest customers for fiscal year 2025 was not among the three largest for fiscal year 2026, which demonstrates that our customer concentration is not static.

We continue to diversify our business in order to minimize our sales concentration risk.

Our current strategy of providing the 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, without needing to develop subject matter expertise in optics.

1 unchanged sentence

However, the loss of any of these customers, or a significant reduction in sales to any such customer, would adversely affect our revenues.

A significant portion of our cash is generated and held outside of the U.S.

The risks of maintaining significant cash abroad could adversely affect our cash flows and financial results.

As of June 30, 2025, approximately 25% of our cash was held abroad.

Historically, we generally considered unremitted earnings of our subsidiaries operating outside of the U.S.

to be indefinitely reinvested.

During fiscal year 2020, we began declaring intercompany dividends to remit a portion of the earnings of our foreign subsidiaries to us.

Remaining cash held outside of the U.S.

is primarily used for the ongoing operations of the business in the locations in which the cash is held.

Certain countries, such as China, have monetary laws that limit our ability to utilize cash resources in China for operations in other countries.

Before any funds can be repatriated, the retained earnings of the legal entity must equal at least 50% of its registered capital.

As of June 30, 2025, LPOIZ had approximately $0.4 million in retained earnings 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 June 30, 2025.

This limitation may affect our ability to fully utilize our cash resources for needs in the U.S.

or other countries and may adversely affect our liquidity.

Further, since repatriation of such cash is subject to limitations and may be subject to significant taxation, we cannot be certain that we will be able to repatriate such cash on favorable terms or in a timely manner.

If we incur operating losses and/or require cash that is held in international accounts for use in our operations based in the U.S., a failure to repatriate such cash in a timely and cost-effective manner could adversely affect our business and financial results.

We will likely need additional capital to sustain our operations in the future and to repay indebtedness.

We have limited capital resources.

Our operations have historically been largely funded from the proceeds of equity financings and cash flow from operations along with a minimal level of debt financing.

On September 15, 2025, we announced a private placement pursuant to a securities purchase agreement, whereby we raised $8.0 million in gross proceeds to fund the working capital needs of our existing operations and for general corporate purposes.

We will likely need to raise additional financing to repay our outstanding indebtedness of approximately $5.6 million, as of June 30, 2025, and to fund our current level of operations as well as our strategic plan.

Additional financing will be required in order for us to take advantage of acquisition opportunities that we may identify.

Such financing, which is not in place at this time, may be from the sale of equity or convertible or other debt securities in a public or private offering, or from an additional credit facility.

We may be unable to raise sufficient additional capital on favorable terms, if at all, to supply the working capital needs of our existing operations or to expand our business.

Our stock price may fluctuate widely.

1 unchanged sentence

In addition, the Company’s stock price may fluctuate widely for reasons which may be unrelated to operating results.

Also, any information concerning the Company, including projections of future operating results could in the future contribute to volatility in the market price of the Company’s common stock.

Also, any information concerning the Company, including projections of future operating results could in the future contribute to volatility in the market price of the Company’s Class A Common Stock.

corporation with international operations, we are subject to the U.S.

15 unchanged sentences

or foreign authorities could also have an adverse impact on our reputation, business, financial condition, and results of operations.

If the custodians or authorized users of our controlling non-tangible assets, including corporate chops and seals of our Chinese subsidiaries, fail to fulfill their responsibilities or misappropriate or misuse those assets, our business and operations could be materially and adversely affected.

In China, a company chop or seal serves as the legal representation of the company towards third parties even when unaccompanied by a signature.

Under law of the People’s Republic of China, legal documents for corporate transactions, including contracts and leases that our business relies upon, are executed using “corporate chops,” which are instruments that contain either the official seal of the signing entity or the signature of a legal representative whose designation is registered and filed with the State Administration for Industry and Commerce, or SAIC.

Our Chinese subsidiary, LPOIZ (and formerly LPOI), generally executes legal documents with corporate chops.

One or more of our corporate chops may be used to, among other things, execute commercial sales or purchase contracts, procurement contracts and office leases, open bank accounts, issue checks and to issue invoices.

We have controls in place over access to and use of the chops.

However, we cannot assure you that unauthorized access to or use of those chops can be prevented.

Our designated employees who hold the corporate chops could abuse their authority by, for example, binding us to contracts against our interests or intentions, which could result in economic harm, disruption or our operations or other damages to them as a result of any contractual obligations, or resulting disputes, that might arise.

If the party contracting with us asserted that we did not act in good faith under such circumstances, then we could incur costs to nullify such contracts.

Such corporate or legal action could involve significant time and resources, while distracting management from our operations.

In addition, we may not be able to recover corporate assets that are sold or transferred out of our control in the event of such a misappropriation if a transferee relies on the apparent authority of the representative and acts in good faith.

If a designated employee uses a chop in an effort to obtain control over our Chinese subsidiary, we would need to take legal action to seek the return of the applicable chop(s), apply for a new chop(s) with the relevant authorities, or otherwise seek legal redress for the violation of their duties.

During any period where we lose effective control of the corporate activities of our Chinese subsidiary as a result of such misuse or misappropriation, the business activities of the affected entity could be disrupted, and we could lose the economic benefits of that aspect of our business.

To the extent those chops are stolen or are used by unauthorized persons or for unauthorized purposes, the corporate governance of this entity could be severely and adversely compromised, and the operations of this entity could be significantly and adversely impacted.

Uncertainties related to the use of artificial intelligence ( “ AI ” ) in our business may result in harm to our business and reputation.

To remain competitive, we have made and will continue to make investments in AI technologies, infrastructure, talent, and training.

Our use of AI technologies is at an early stage, and these investments may not yield anticipated benefits or may become obsolete more quickly than expected.

The use of AI tools to assist in the preparation of our work product or our corporate operations may expose us to new forms of liability.

Ineffective, inadequate or premature use of AI could result in unintended consequences, including competitive harm, regulatory penalties, legal liability, loss or misuse of intellectual property, disclosure of confidential or proprietary information, data privacy or cybersecurity incidents, or brand or reputational harm.

In addition, if we fail to successfully deploy AI in our business activities, products, or services, or fail to keep pace with technological advancements and competitors that may more effectively adopt AI, our competitiveness, growth prospects and financial performance could be adversely affected.

We may also incur significant costs in evaluating or implementing AI technologies, and such investments may not result in anticipated benefits or returns.

We rely, in large part, on key business and sales relationships for the successful commercialization of our products, which, if not developed or maintained, will have an adverse impact on achieving market awareness and acceptance and will result in a loss of business opportunities.

2 unchanged sentences

The failure of these business relationships will limit the commercialization of our products and technologies, which will have an adverse impact on our business development and our ability to generate revenues.

If we do not expand our sales and marketing organization, our revenues may not increase.

The sale of our products requires prolonged sales and marketing efforts targeted at several key departments within our prospective customers’ organizations and often involves our executives, personnel, and specialized systems and applications engineers working together.

Currently, our direct sales and marketing organization is somewhat limited.

We believe we will need to continue to strengthen our sales and marketing organization in order to increase market awareness and sales of our products.

There is significant competition for qualified personnel, and we might not be able to hire the kind and number of sales and marketing personnel and applications engineers we need.

If we are unable to continue to expand our sales operations globally, we may not be able to continue to increase market awareness or sales of our products, which would adversely affect our revenues, results of operations, and financial condition.

If we are unable to effectively compete, our business and operating results could be negatively affected.

18 unchanged sentences

infrared components, visible components, assemblies and modules, and engineering services.

The addition of G5 Infrared in February 2025 further expands our product offerings.

The addition of G5 Infrared in February 2025 and AML in January 2026 further expands our product offerings and proprietary infrared materials.

In fiscal year 2026, sales of infrared components represented approximately 30% of our net revenues, sales of visible components represented approximately 22% of our net revenues, sales of assemblies and modules represented 44% of our revenues, and engineering services represented 4% of our revenues.

In the future, we expect growth primarily from our assemblies and modules and engineering services product groups, the vertical integration of which will be supported by the infrared components product group.

In the future, we expect growth primarily from our assemblies and modules product group, the vertical integration of which will be supported by the infrared components product group.

Continued and expanding market acceptance of these products, particularly infrared products based on our proprietary chalcogenide materials (Germanium alternatives), is critical to our future success.

42 unchanged sentences

Hudson, New Hampshire;

Riga, Latvia;

and Zhenjiang, China.

Plano, Texas;

and Riga, Latvia.

Up until completing the sale of LPOIZ, we also manufactured our products in a manufacturing facility in Zhenjiang, China.

Our revenues are dependent upon the continued operation of these facilities.

The Orlando Facility is subject to a lease that expires March 31, 2034.

The Hudson, New Hampshire facility lease expires in November 2026.

The Riga Facility is subject to two leases which expire in December 2030, and the Zhenjiang Facility is subject to one lease that expires in December 2027.

The Orlando Facility lease expires March 31, 2034.

The Hudson, New Hampshire facility lease expires in December 2031.

The Plano, Texas lease expires in August 2030.

The Riga Facility is subject to two leases which expire in December 2030.

Our operations are vulnerable to interruption by fire, hurricane winds and rain, earthquakes, electric power loss, telecommunications failure, and other events beyond our control.

47 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors