What changed in this filing

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Item 1. Financial Statements

2022-05-12 compared with 2022-02-10 · 121 added, 82 removed, 490 unchanged (29% of the section changed)

35 unchanged sentences

44,500,000 shares authorized;

27,021,875 and 26,985,913

shares issued and outstanding

27,034,266 and 26,985,913 shares issued and outstanding

Additional paid-in capital

5 unchanged sentences

Total liabilities and stockholders’ equity

The accompanying notes are an integral part of these condensed consolidated financial statements.

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

LIGHTPATH TECHNOLOGIES, INC.

1 unchanged sentence

Three Months Ended

Six Months Ended

Nine Months Ended

Cost of sales

3 unchanged sentences

Amortization of intangibles

Gain on disposal of property and equipment

Loss on disposal of property and equipment

Total operating expenses

7 unchanged sentences

( 1,854,063 )

( 1,522,119 )

Income tax provision

2 unchanged sentences

$ ( 2,182,391 )

$ ( 272,041 )

Foreign currency translation adjustment

2 unchanged sentences

$ ( 595,678 )

$ ( 2,345,019 )

Loss per common share (basic)

2 unchanged sentences

Number of shares used in per share calculation (diluted)

The accompanying notes are an integral part of these condensed consolidated financial statements.

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

LIGHTPATH TECHNOLOGIES, INC.

21 unchanged sentences

$ ( 201,934,565 )

Issuance of common stock for:

Employee Stock Purchase Plan

Stock-based compensation on stock options & RSUs

Foreign currency translation adjustment

Balances at March 31, 2022

$ 232,031,350

$ ( 202,429,568 )

Balances at June 30, 2020

16 unchanged sentences

$ ( 197,111,403 )

The accompanying notes are an integral part of these condensed consolidated financial statements.

Issuance of common stock for:

Employee Stock Purchase Plan

Exercise of stock options & RSUs, net

Stock-based compensation on stock options & RSUs

Foreign currency translation adjustment

Balances at March 31, 2021

$ 231,243,062

$ ( 197,333,967 )

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

LIGHTPATH TECHNOLOGIES, INC.

Condensed Consolidated Statements of Cash Flows

Six Months Ended December 31,

Nine Months Ended March 31,

Cash flows from operating activities:

$ ( 2,182,391 )

Adjustments to reconcile net loss to net cash (used in) provided by operating activities:

$ ( 272,041 )

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization

Interest from amortization of debt costs

Gain on disposal of property and equipment

Loss on disposal of property and equipment

Stock-based compensation on stock options & RSUs, net

8 unchanged sentences

( 1,483,281 )

Net cash (used in) provided by operating activities

Net cash provided by operating activities

Cash flows from investing activities:

35 unchanged sentences

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, 2021.

There have been no material changes to our significant accounting policies during the six months ended December 31, 2021, from those disclosed in our Annual Report on Form 10-K for the fiscal year ended June 30, 2021.

There have been no material changes to our significant accounting policies during the nine months ended March 31, 2022, from those disclosed in our Annual Report on Form 10-K for the fiscal year ended June 30, 2021.

Use of Estimates

14 unchanged sentences

We record deferred revenue when cash payments are received or due in advance of our performance.

Deferred revenue was not significant as of June 30, 2021 and December 31, 2021.

Deferred revenue was not significant as of June 30, 2021 and March 31, 2022.

Nature of Products

5 unchanged sentences

Revenues from product development agreements are included in specialty products.

Revenue by product group for the three and six months ended December 31, 2021 and 2020 was as follows:

Revenue by product group for the three and nine months ended March 31, 2022 and 2021 was as follows:

Three Months Ended

Six Months Ended

Nine Months Ended

Infrared Products

2 unchanged sentences

The components of inventories include the following:

March 31, 2022

June 30, 2021

Raw materials

4 unchanged sentences

( 1,189,218 )

The value of tooling in raw materials, net of the related allowance for obsolescence, was approximately $ 1.9 million and $ 2.0 million as of December 31, 2021 and June 30, 2021, respectively.

The value of tooling in raw materials, net of the related allowance for obsolescence, was approximately $ 1.7 million and $ 2.0 million as of March 31, 2022 and June 30, 2021, respectively.

Property and Equipment

12 unchanged sentences

Goodwill and Intangible Assets

There were no changes in the net carrying value of goodwill during the six months ended December 31, 2021.

There were no changes in the net carrying value of goodwill during the nine months ended March 31, 2022.

Identifiable intangible assets were comprised of:

Useful Lives (Years)

Customer relationships

7 unchanged sentences

Fiscal year ending:

June 30, 2022 (remaining six months)

June 30, 2022 (remaining three months)

June 30, 2023

2 unchanged sentences

After June 30, 2025

A summary of our total income tax expense and effective income tax rate for the three and six months ended December 31, 2021 and 2020 is as follows:

A summary of our total income tax expense and effective income tax rate for the three and nine months ended March 31, 2022 and 2021 is as follows:

Three Months Ended

Six Months Ended

Nine Months Ended

(Loss) income before income taxes

4 unchanged sentences

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.

For the three and six months ended December 31, 2021 and 2020, income tax expense was primarily related to income taxes from our operations in China, including accruals for withholding taxes on intercompany dividends declared by LightPath Optical Instrumentation (Zhenjiang) Co., Ltd.

For the three and nine months ended March 31, 2022 and 2021, income tax expense was primarily related to income taxes from our operations in China, including accruals for withholding taxes on intercompany dividends declared by LightPath Optical Instrumentation (Zhenjiang) Co., Ltd.

(“LPOIZ”), which dividend will be paid to us, as its parent company.

2 unchanged sentences

We consider the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment.

As of December 31, 2021 and June 30, 2021, we have provided for a valuation allowance against our net deferred tax assets to reduce the net deferred tax assets to the amount we estimate is more-likely-than-not to be realized.

As of March 31, 2022 and June 30, 2021, we have provided for a valuation allowance against our net deferred tax assets to reduce the net deferred tax assets to the amount we estimate is more-likely-than-not to be realized.

Our net deferred tax asset consists primarily of federal and state tax credits with indefinite carryover periods.

5 unchanged sentences

(“LPOI”) and LPOIZ, are governed by the Income Tax Law of the People’s Republic of China.

As of December 31, 2021, LPOI and LPOIZ were subject to statutory income tax rates of 25 % and 15 %, respectively.

As of March 31, 2022, LPOI and LPOIZ were subject to statutory income tax rates of 25 % and 15 %, respectively.

During fiscal 2020, the Company began declaring intercompany dividends to remit a portion of the historical earnings of its foreign subsidiaries to the U.S.

parent company.

The Company intends to reinvest a portion of the more recent earnings generated by its foreign subsidiaries, however the Company also plans to repatriate a portion of the historical earnings of its subsidiaries.

The Company intends to reinvest a portion of the more recent earnings generated by its foreign subsidiaries;

however, the Company also plans to repatriate a portion of the historical earnings of its subsidiaries.

During fiscal 2020, the Company began to accrue for these taxes on the portion of historical earnings that it intends to repatriate.

13 unchanged sentences

The 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 six months ended December 31, 2021 and 2020 included in selling, general and administrative (“SG&A”) expenses in the accompanying unaudited Condensed Consolidated Statements of Comprehensive Income:

Three Months Ended December 31,

Six Months Ended December 31,

The following table shows total stock-based compensation expense for the three and nine months ended March 31, 2022 and 2021 included in selling, general and administrative (“SG&A”) expenses in the accompanying unaudited Condensed Consolidated Statements of Comprehensive Income:

Three Months Ended March 31,

Nine Months Ended March 31,

Stock options

2 unchanged sentences

The 2014 ESPP permits employees to purchase Class A common stock through payroll deductions, subject to certain limitations.

A discount of $ 2,155 and $ 1,091 for the six months ended December 31, 2021 and 2020, respectively, is included in SG&A expenses in the accompanying unaudited Condensed Consolidated Statements of Comprehensive Income, which represents the value of the 10 % discount given to the employees purchasing stock under the 2014 ESPP.

A discount of $ 5,129 and $ 2,978 for the nine months ended March 31, 2022 and 2021, respectively, is included in SG&A expenses in the accompanying unaudited Condensed Consolidated Statements of Comprehensive Income, which represents the value of the 10 % discount given to the employees purchasing stock under the 2014 ESPP.

Grant Date Fair Values and Underlying Assumptions;

3 unchanged sentences

Most stock options granted vest ratably over two to four years and are generally exercisable for ten years.

The assumed forfeiture rates used in calculating the fair value of RSU grants was 0%, and the assumed forfeiture rates used in calculating the fair value of options for performance and service conditions were 20% for each of the six months ended December 31, 2021 and 2020.

The volatility rate and expected term are based on seven-year historical trends in Class A common stock closing prices and actual forfeitures.

1 unchanged sentence

Treasury interest rate for constant maturities.

No stock options were granted during the six months ended December 31, 2021.

For stock options granted in the six-month period ended December 31, 2020, we estimated the fair value of each stock option as of the date of grant using the following assumptions:

No stock options were granted during the nine months ended March 31, 2022.

For stock options granted in the nine-month period ended March 31, 2021, we estimated the fair value of each stock option as of the date of grant using the following assumptions:

Weighted-average expected volatility

3 unchanged sentences

Information Regarding Current Share-Based Compensation Awards

A summary of the activity for share-based compensation awards in the six months ended December 31, 2021 is presented below:

A summary of the activity for share-based compensation awards in the nine months ended March 31, 2022 is presented below:

Stock Options

2 unchanged sentences

Cancelled/Forfeited

December 31, 2021

March 31, 2022

Awards exercisable/

December 31, 2021

March 31, 2022

Awards unexercisable/

unvested as of

December 31, 2021

March 31, 2022

RSU awards vest immediately or from one to four years from the date of grant.

As of December 31, 2021, there was approximately $1.4 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements (including stock options and RSUs) granted.

As of March 31, 2022, there was approximately $ 1.3 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements (including stock options and RSUs) granted.

We expect to recognize the compensation cost as follows:

1 unchanged sentence

Stock Options

June 30, 2022 (remaining six months)

June 30, 2022 (remaining three months)

June 30, 2023

6 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

$ ( 495,003 )

1 unchanged sentence

$ ( 2,182,391 )

$ ( 272,041 )

Weighted-average common shares outstanding:

6 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

Options to purchase common stock

10 unchanged sentences

One such lease ends in November 2022 and we do not plan to renew, and the second such lease was amended in April 2021, and subsequently amended in September 2021, to extend the term to 2032 and increase the leased space from 26,000 square feet to approximately 58,500 square feet.

Effective in January 2022, our leases in Zhenjiang, China and Riga, Latvia were extended to December 31, 2024 and 2030, respectively.

As most of our leases do not provide an implicit rate, we use our collateralized incremental borrowing rate based on the information available at the commencement date in determining the present value of future payments.

10 unchanged sentences

The components of lease expense were as follows:

Three Months Ended December 31,

Six Months Ended December 31,

Three Months Ended March 31,

Nine Months Ended March 31,

Operating lease cost

6 unchanged sentences

Classification

March 31, 2022

June 30, 2021

Operating lease assets

12 unchanged sentences

Total lease liabilities

Finance lease assets were recorded net of accumulated depreciation of approximately $ 398,000 and $ 1.2 million as of December 31, 2021 and June 30, 2021, respectively.

During the three months ended December 31, 2021, we executed a purchase option at the end of one of our finance leases, therefore the related asset and accumulated depreciation were reclassified from finance lease assets.

Finance lease assets were recorded net of accumulated depreciation of approximately $ 435,000 and $ 1.2 million as of March 31, 2022 and June 30, 2021, respectively.

In December 2021, we executed a purchase option at the end of one of our finance leases, therefore the related asset and accumulated depreciation were reclassified from finance lease assets.

Lease term and discount rate information related to leases was as follows:

Lease Term and Discount Rate

March 31, 2022

Weighted Average Remaining Lease Term (in years)

5 unchanged sentences

Supplemental cash flow information:

Six Months Ended December 31,

Nine Months Ended March 31,

Cash paid for amounts included in the measurement of lease liabilities:

2 unchanged sentences

Financing cash used for finance leases

Future maturities of lease liabilities were as follows as of December 31, 2021:

Future maturities of lease liabilities were as follows as of March 31, 2022:

Fiscal year ending:

June 30, 2022 (remaining six months)

Finance Leases

Operating Leases

June 30, 2022 (remaining three months)

June 30, 2023

4 unchanged sentences

Less imputed interest

( 2,017,344 )

Present value of lease liabilities

Loans Payable

As of December 31, 2021 and June 30, 2021, loans payable primarily consisted of the BankUnited Term Loan (as defined below) payable to BankUnited N.A.

As of March 31, 2022 and June 30, 2021, loans payable primarily consisted of the BankUnited Term Loan (as defined below) payable to BankUnited N.A.

(“BankUnited”).

9 unchanged sentences

(iii) terminated the Guidance Line;

and (iv) requires approval from BankUnited prior to our being able to draw upon the Revolving Line, subject to our compliance with the fixed charge coverage ratio for the quarters ending September 30, 2021 and December 31, 2021.

and (iv) required approval from BankUnited prior to our being able to draw upon the Revolving Line, subject to our compliance with the fixed charge coverage ratio for the quarters ending September 30, 2021 and December 31, 2021.

The Letter Agreement also granted us a waiver of default arising prior to the Letter Agreement for our failure to comply with the fixed charge coverage ratio measured on June 30, 2021.

3 unchanged sentences

In accordance with the Second Letter Agreement, the parties agreed to initiate discussions regarding a possible modification, forebearance, or other resolution of the Amended Loan Agreement (as defined below), which resolution would occur on or before December 31, 2021.

On December 20, 2021, we entered into the Second Amendment to the Loan Agreement dated February 26, 2019 (the “Second Amendment”;

and, together with the First Amendment, the Letter Agreement and the Second Letter Agreement, the “Amended Loan Agreement”), which further amended that certain Loan Agreement, dated February 26, 2019, with BankUnited.

On December 20, 2021, we entered into the Second Amendment to the Loan Agreement dated February 26, 2019 (the “Second Amendment”), which further amended the Loan Agreement with BankUnited.

In accordance with the Second Amendment, the parties agreed to the following terms, among others:

1 unchanged sentence

(ii) an increased monthly payment amount of $ 100,000 commencing on November 1, 2022;

(iii) beginning on December 20, 2021, each facility will bear interest at BankUnited’s then-prime rate of interest minus fifty (50) basis points ( 2.75 % as of December 31, 2021), as adjusted from time to time, (iv) the Term Loan will bear a higher interest rate commencing on August 1, 2022;

(iii) beginning on December 20, 2021, each facility will bear interest at BankUnited’s then-prime rate of interest minus fifty (50) basis points ( 3 .0% as of March 31, 2022), as adjusted from time to time, (iv) the Term Loan will bear a higher interest rate commencing on August 1, 2022;

(v) an exit fee equal to 4 % of the outstanding principal balance of the Term Loan on April 15, 2023 (to the extent the Term Loan is still outstanding on such date and has not been refinanced with another lender);

1 unchanged sentence

The Second Amendment also granted us a waiver of compliance for the Financial Covenants (as set forth in the Amended Loan Agreement) for the periods ended December 31, 2021, March 31, 2022 and June 30, 2022.

On May 11, 2022, we entered into the Third Amendment to the Loan Agreement dated February 26, 2019 (the “Third Amendment”;

and, together with the First Amendment, the Letter Agreement and the Second Letter Agreement, the “Amended Loan Agreement”), which further amended the Loan Agreement with BankUnited.

In accordance with the Third Amendment, the parties agreed to the following terms, among others:

(i) an amended maturity date of April 15, 2024 with respect to the Term Loan (as defined in the Amended Loan Agreement);

and (ii) an amended exit fee equal to (a) 2% of the outstanding principal balance of the Term Loan on September 30, 2022, (b) 1% of the outstanding principal balance on December 31, 2022, (c) 1% of the outstanding principal balance on March 31, 2023, and (d) 4% of the outstanding principal balance on April 15, 2024 (to the extent the Term Loan is still outstanding on the respective dates and has not been refinanced with another lender).

We have commenced discussions with other lenders, with the intent of refinancing our credit facility prior to maturity with reasonable commercial terms, of which there can be no assurance.

2 unchanged sentences

BankUnited Revolving Line

Pursuant to the Amended Loan Agreement, BankUnited will make loan advances under the BankUnited Revolving Line to us up to a maximum aggregate principal amount outstanding not to exceed $ 2,000,000 , which proceeds will be used for working capital and general corporate purposes.

Amounts borrowed under the BankUnited Revolving Line may be repaid and re-borrowed at any time prior to February 26, 2022, at which time all amounts will be immediately due and payable.

The advances under the BankUnited Revolving Line bear interest, on the outstanding daily balance, at a per annum rate equal to 2.75 % above the 30-day LIBOR.

Interest payments are due and payable, in arrears, on the first day of each month.

There were no borrowings under the BankUnited Revolving Line as of December 31, 2021.

Pursuant to the Amended Loan Agreement, BankUnited agreed to make loan advances under the BankUnited Revolving Line to us up to a maximum aggregate principal amount outstanding not to exceed $ 2,000,000 , which proceeds could have been used for working capital and general corporate purposes.

There were no amounts outstanding on the BankUnited Revolving Line as of June 30, 2021 and no amounts were due upon its expiration on February 26, 2022.

BankUnited Term Loan

Pursuant to the Amended Loan Agreement, BankUnited advanced us $ 5,813,500 to satisfy in full the amounts owed to Avidbank, including the outstanding principal amount and all accrued interest under the acquisition term loan and to pay the fees and expenses incurred in connection with closing of the BankUnited Loans.

The BankUnited Term Loan was for a 5 -year term, but co-terminus with the BankUnited Revolving Line should the BankUnited Revolving Line not be renewed beyond February 26, 2022.

Pursuant to the Second Amendment, the maturity date of the Term Loan is April 15, 2023.

The BankUnited Term Loan initially bore interest at a per annum rate equal to 2.75% above the 30-day LIBOR.

However, pursuant to the Second Amendment, beginning on December 20, 2021, each facility bears interest at BankUnited’s then-prime rate of interest minus fifty (50) basis points (2.75% as of December 31, 2021), as adjusted from time to time.

The Term Loan was for a 5 -year term, but co-terminus with the BankUnited Revolving Line should the BankUnited Revolving Line not be renewed beyond February 26, 2022.

Pursuant to the Second Amendment, the maturity date of the Term Loan was April 15, 2023, and pursuant to the Third Amendment, the maturity date of the Term Loan is April 15, 2024.

The Term Loan initially bore interest at a per annum rate equal to 2.75 % above the 30-day LIBOR.

However, pursuant to the Second Amendment, beginning on December 20, 2021, each facility bears interest at BankUnited’s then-prime rate of interest minus fifty (50) basis points ( 3.0 % as of March 31, 2022), as adjusted from time to time.

Equal monthly principal payments of approximately $ 48,446 , plus accrued interest, are due and payable, in arrears, on the first day of each month during the term.

1 unchanged sentence

Upon maturity, all principal and interest shall be immediately due and payable.

For additional information, see Note 14, Liquidity .

Security and Guarantees

12 unchanged sentences

The Amended Loan Agreement also contains certain financial covenants, including obligations to maintain a fixed charge coverage ratio of 1.25 to 1.00 and a total leverage ratio of 4.00 to 1.00.

Pursuant to the Second Amendment, compliance for both the fixed charge coverage ratio and total leverage ratio was waived for the quarter ended December 31, 2021 , and we were in compliance with all other required covenants, as amended.

Pursuant to the Second Amendment, compliance for both the fixed charge coverage ratio and total leverage ratio was waived for the quarter ended March 31, 2022 , and we were in compliance with all other required covenants, as amended.

We may prepay any or all of the BankUnited Loans in whole or in part at any time, without penalty or premium.

Late payments are subject to a late fee equal to five percent ( 5 %) of the unpaid amount.

Amounts outstanding during an event of default accrue interest at a rate of five percent ( 5 %) above the 30-day LIBOR applicable immediately prior to the occurrence of the event of default.

Amounts outstanding during an event of default were to accrue interest at a rate of five percent ( 5 %) above the 30-day LIBOR applicable immediately prior to the occurrence of the event of default.

Pursuant to the Second Amendment, beginning on December 20, 2021, the default rate was converted to five percent (5%) above BankUnited’s then-prime rate of interest minus fifty (50) basis points, as adjusted from time to time.

1 unchanged sentence

Financing costs incurred related to the BankUnited Loans were recorded as a discount on debt and will be amortized over the term.

Amortization of approximately $14,900 and $9,300 is included in interest expense for the six-month periods ended December 31, 2021 and 2020, respectively.

Amortization of approximately $ 33,400 and $ 13,900 is included in interest expense for the nine-month periods ended March 31, 2022 and 2021, respectively.

In December 2020, ISP Latvia entered into an equipment loan with a third party (the “Equipment Loan”), which party is also a significant customer, and which the Equipment Loan is subordinate to the BankUnited Loans, and collateralized by certain equipment.

4 unchanged sentences

Fiscal year ending:

June 30, 2022 (remaining six months)

June 30, 2022 (remaining three months)

June 30, 2023

10 unchanged sentences

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 $ 2 .0 million and $2.1 million as of December 31, 2021 and June 30, 2021, respectively.

We also recognized net foreign currency transaction losses of $ 14,000 and net foreign currency transaction gains of $ 77,000 during the three months ended December 31, 2021 and 2020, respectively.

During the six months ended December 31, 2021 and 2020, we recognized net foreign currency transaction losses of approximately $ 40,000 and $ 21,000 , respectively, included in the unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) in the line item entitled “Other income (expense), net.”

Our cash and cash equivalents totaled approximately $ 5.1 million at December 31, 2021.

dollar, are reflected as a separate component of equity, which was a cumulative gain of approximately $ 2.0 million and $ 2.1 million as of March 31, 2022 and June 30, 2021, respectively.

We also recognized net foreign currency transaction losses of $ 67,000 and $ 17,000 during the three months ended March 31, 2022 and 2021, respectively.

During the nine months ended March 31, 2022 and 2021, we recognized net foreign currency transaction losses of approximately $ 107,000 and $ 38,000 , respectively, included in the unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) in the line item entitled “Other income (expense), net.”

Our cash and cash equivalents totaled approximately $ 5.2 million at March 31, 2022.

Of this amount, greater than 50% was held by our foreign subsidiaries in China and Latvia.

1 unchanged sentence

With respect to the funds generated by our foreign subsidiaries in China, the retained earnings of the respective subsidiary must equal at least 50% of its registered capital before any funds can be repatriated through dividends.

As of December 31, 2021, LPOIZ had approximately $ 5.2 million in retained earnings that can be used for repatriation, and LPOI did not have any earnings available for repatriation, based on earnings accumulated through December 31, 2021, the end of the most recent statutory tax year, that remained undistributed as of December 31, 2021.

As of March 31, 2022, LPOIZ had approximately $ 4.8 million in retained earnings available for repatriation, and LPOI did not have any earnings available for repatriation, based on earnings accumulated through December 31, 2021, the end of the most recent statutory tax year, that remained undistributed as of March 31, 2022.

Assets and net assets in foreign countries are as follows:

$ 19.6 million

$ 20.1 million

March 31, 2022

June 30, 2021

March 31, 2022

June 30, 2021

Assets $ 20.5 million

$ 20.1 million

1 unchanged sentence

$ 11.3 million

Net assets $ 16.4 million

$ 16.6 million

8 unchanged sentences

These expenses, which included legal, consulting and other transitional management fees, totaled $ 718,000 during the year ended June 30, 2021.

During the three and six months ended December 31, 2021, we incurred an additional $ 153,000 and $ 481,000 , respectively.

During the three and nine months ended March 31, 2022, we incurred an additional $ 45,000 and $ 526,000 , respectively.

Such expenses were recorded as SG&A expenses in the accompanying unaudited Condensed Consolidated Statement of Comprehensive Income (Loss).

We also identified a further liability in the amount of $ 210,000 , which may be incurred in the future due to the actions of these employees.

We also identified a further liability in the amount of $ 210,000 , which could have been incurred in the future due to the actions of these employees.

This amount was accrued as of June 30, 2021, pending further investigation, and was included in “Other Expense, net” in the Consolidated Statement of Comprehensive Income (Loss) for the year ended June 30, 2021.

This amount remains accrued as of December 31, 2021.

During the third quarter of fiscal 2022, it was determined that our Chinese subsidiary would not be responsible for this amount.

As such, this accrual was reversed and is included in the accompanying unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) in the line item entitled “Other income (expense), net” for the three and nine months ended March 31, 2022.

Knowing that employee transitions in international subsidiaries can lead to lengthy legal proceedings that can interrupt the subsidiary’s ability to operate, compounded by the fact that our officers could not travel to China to oversee the transitions because of the travel restrictions imposed by COVID-19, we chose to enter into severance agreements with certain of the employees at the time of termination.

4 unchanged sentences

Such expenses were recorded as SG&A expenses in the Consolidated Statement of Comprehensive Income (Loss) for the year ended June 30, 2021.

This amount remains accrued as of December 31, 2021.

This amount remains accrued as of March 31, 2022.

We have transitioned the management of LPOI and LPOIZ to a new management team without any significant detrimental effects on the ability of those subsidiaries to operate.

2 unchanged sentences

however, such future fees are expected to be at lower levels than have been incurred to date.

Although we have taken steps to minimize the business impacts from the termination of the management employees and transition to new management personnel, we have experienced some short-term adverse impacts on LPOIZ’s and LPOI’s domestic sales in China and results of operations in the three-month period ended June 30, 2021 and the six-month period ended December 31, 2021, which management anticipates may continue for the next few quarters.

Although we have taken steps to minimize the business impacts from the termination of the management employees and transition to new management personnel, we have experienced some short-term adverse impacts on LPOIZ’s and LPOI’s domestic sales in China and results of operations in the three-month period ended June 30, 2021 and the nine-month period ended March 31, 2022, which management anticipates may continue for the next few quarters.

The Company has not experienced, nor does management anticipate, any material adverse impact on LPOIZ’s or LPOI’s production and supply of products to its other subsidiaries for their customers.

Our business, results of operations financial condition, cash flows, and the stock price of our Class A common stock can be adversely affected by pandemics, epidemics, or other public health emergencies, such as the recent outbreak of COVID-19, which spread from China to countries across the world, including the United States.

To date, we have not experienced any significant direct financial impact of COVID-19 to our business.

However, the COVID-19 pandemic continues to impact economic conditions, which could impact the short-term and long-term demand from customers and, therefore, has the potential to negatively impact our results of operations, cash flows, and financial position in the future.

The duration of the COVID-19 pandemic continues to impact global economic conditions, even as restrictions have lifted in many places throughout the world.

Currently, China continues to experience rolling COVID-19 lockdowns in efforts to mitigate the spread of COVID-19.

These lockdowns are resulting in global supply chain issues.

To date, our facilities have not been directly impacted by these lockdowns;

however, many of our customers located in China have delayed receipt of orders while the customers are closed for business.

Even though these customers have not cancelled any orders with us, the delayed receipt of orders has impacted our revenue and we expect it to continue to impact our revenue in future periods while China has these rolling lockdowns.

Additionally, some areas have imposed travel restrictions, which may impact some aspects of our operations that depend on travel, such as recruitment of senior positions, and travel of service providers to maintain our production equipment.

1 unchanged sentence

However, given the daily evolution of the COVID-19 pandemic and the global responses to curb its spread, we are not presently able to estimate the effects of the COVID-19 pandemic on our future results of operations, financial, or liquidity for the remainder of fiscal year 2022 or beyond.

Impact of Russian-Ukraine Conflict

In February 2022, Russian military forces invaded Ukraine.

This conflict has resulted in significant economic disruption and continues to adversely impact the broader global economy, including certain of our customers and suppliers.

Given the dynamic nature of this situation, we cannot reasonably estimate the impact of the Russian-Ukraine conflict on our financial condition, results of operations or cash flows into the foreseeable future.

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 the BankUnited Term Loan.

1 unchanged sentence

If we are unable to refinance the credit facility with other commercial lenders prior to maturity, we may need to raise additional equity financing, source financing through non-commercial lenders or further reduce certain operating expenses and capital expenditures.

Our plans may include potentially filing a shelf registration statement to be available for equity offerings.

We filed a shelf registration statement, effective March 1, 2022, which is available for equity offerings.

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.

6 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-Q

Item 1. Financial Statements