What changed in this filing

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Item 1. Financial Statements

2023-05-11 compared with 2023-02-09 · 128 added, 103 removed, 519 unchanged (31% of the section changed)

6 unchanged sentences

Inventories, net

Other receivables

Prepaid expenses and other assets

27 unchanged sentences

44,500,000 shares authorized;

27,275,515 and 27,046,790

shares issued and outstanding

37,231,396 and 27,046,790 shares issued and outstanding

Additional paid-in capital

9 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

Cost of sales

3 unchanged sentences

Amortization of intangibles

Loss on disposal of property and equipment

(Gain) loss on disposal of property and equipment

Total operating expenses

20 unchanged sentences

$ ( 3,196,128 )

$ ( 2,345,019 )

Loss per common share (basic)

22 unchanged sentences

Exercise of Stock Options, RSUs & RSAs, net

Stock-based compensation on stock options & RSUs

Stock-based compensation on stock options, RSAs & RSUs

Foreign currency translation adjustment

2 unchanged sentences

$ ( 205,864,119 )

Issuance of common stock for:

Employee Stock Purchase Plan

Exercise of Stock Options, RSUs & RSAs, net

Issuance of common stock under public equity placement

Stock-based compensation on stock options, RSAs & RSUs

Foreign currency translation adjustment

( 1,163,270 )

Balances at March 31, 2023

$ 242,529,230

$ ( 207,027,389 )

Balances at June 30, 2021

3 unchanged sentences

Employee Stock Purchase Plan

Exercise of Stock Options & RSUs, net

Stock-based compensation on stock options & RSUs

12 unchanged sentences

$ ( 201,934,565 )

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

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 )

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:

1 unchanged sentence

$ ( 2,182,391 )

Adjustments to reconcile net loss to net cash used in operating activities:

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

Depreciation and amortization

Interest from amortization of debt costs

Loss on disposal of property and equipment

(Gain) loss on disposal of property and equipment

Stock-based compensation on stock options, RSUs & RSAs, net

6 unchanged sentences

Other receivables

( 1,317,347 )

Prepaid expenses and other assets

1 unchanged sentence

( 1,483,281 )

( 1,473,498 )

Net cash used in operating activities

Net cash (used in) provided by operating activities

Cash flows from investing activities:

1 unchanged sentence

( 2,325,155 )

( 1,492,668 )

Proceeds from sale of equipment

Net cash used in investing activities

( 2,259,655 )

( 1,492,668 )

Cash flows from financing activities:

Proceeds from sale of common stock from Employee Stock Purchase Plan

Proceeds from issuance of common stock under public equity placement

Borrowings on loans payable

Payments on loans payable

( 1,648,899 )

Repayment of finance lease obligations

Net cash used in financing activities

Net cash provided by (used in) financing activities

Effect of exchange rate on cash and cash equivalents

1 unchanged sentence

( 1,533,748 )

( 1,721,939 )

Cash and cash equivalents, beginning of period

4 unchanged sentences

Supplemental disclosure of non-cash investing & financing activities:

Purchase of equipment through capital lease arrangements

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

Purchase of equipment through finance lease arrangements

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

LIGHTPATH TECHNOLOGIES, INC.

12 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, 2022.

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

There have been no material changes to our significant accounting policies during the nine months ended March 31, 2023, from those disclosed in our Annual Report on Form 10-K for the fiscal year ended June 30, 2022.

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, 2022 and December 31, 2022, respectively.

Deferred revenue was not significant as of June 30, 2022 and March 31, 2023, respectively.

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, 2022 and 2021 was as follows:

Three Months Ended

Six Months Ended

Revenue by product group for the three and nine months ended March 31, 2023 and 2022 was as follows:

Three Months Ended March 31,

Nine Months Ended March 31,

Infrared Products

2 unchanged sentences

The components of inventories include the following:

March 31, 2023

June 30, 2022

Raw materials

4 unchanged sentences

( 1,329,637 )

The value of tooling in raw materials, net of the related allowance for obsolescence, was approximately $ 1.5 million and $ 1.6 million as of December 31, 2022 and June 30, 2022, respectively.

The value of tooling in raw materials, net of the related allowance for obsolescence, was approximately $ 1.4 million and $ 1.6 million as of March 31, 2023 and June 30, 2022, respectively.

Property and Equipment

Property and equipment are summarized as follows:

Estimated Lives (Years)

Estimated Lives

Manufacturing equipment

9 unchanged sentences

Goodwill and Intangible Assets

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

There were no changes in the net carrying value of goodwill during the nine months ended March 31, 2023.

Identifiable intangible assets were comprised of:

8 unchanged sentences

Fiscal year ending:

June 30, 2023 (remaining six months)

June 30, 2023 (remaining three months)

June 30, 2024

2 unchanged sentences

After June 30, 2026

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

Three Months Ended

Six Months Ended

A summary of our total income tax expense and effective income tax rate for the three and nine months ended March 31, 2023 and 2022 is as follows:

Three Months Ended March 31,

Nine Months Ended March 31,

Loss before income taxes

6 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, 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.

For the three and nine months ended March 31, 2023 and 2022, 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”), and paid or payable to LightPath, 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, 2022 and June 30, 2022, our net deferred tax assets are related to the U.S.

As of March 31, 2023 and June 30, 2022, our net deferred tax assets are related to the U.S.

jurisdiction and we have provided for a valuation allowance to reduce the net deferred tax assets to the amount we estimate is more-likely-than-not to be realized.

6 unchanged sentences

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

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

The net deferred tax liabilities included in these unaudited Condensed Consolidated Balance Sheets as of December 31, 2022 and June 30, 2022 are related to LPOIZ, and primarily consist of timing differences related to depreciation.

As of March 31, 2023, LPOI and LPOIZ were subject to statutory income tax rates of 25 % and 15 %, respectively.

The net deferred tax liabilities included in these unaudited Condensed Consolidated Balance Sheets as of March 31, 2023 and June 30, 2022 are related to LPOIZ, and primarily consist of timing differences related to depreciation.

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.

3 unchanged sentences

The Company accrues withholding taxes on the portion of LPOIZ’s earnings that it intends to repatriate.

Accrued and unpaid withholding taxes were approximately $ 40,000 as of both December 31, 2022 and June 30, 2022.

Accrued and unpaid withholding taxes were approximately $ 40,000 as of both March 31, 2023 and June 30, 2022.

Other than these withholding taxes, these intercompany dividends have no impact on the Consolidated Financial Statements.

15 unchanged sentences

At our 2018 Annual Stockholders Meeting, our stockholders approved the SICP under which an aggregate of 1,650,870 shares of our Class A common stock were authorized for issuance pursuant to awards granted thereunder.

As of December 31, 2022, 1,882,094 shares of Class A common stock are authorized and available for issuance pursuant to awards granted under the SICP.

As of March 31, 2023, 1,754,718 shares of Class A common stock are authorized and available for issuance pursuant to awards granted under the SICP.

The Company’s executive officers are eligible to earn incentive compensation consisting of equity-based awards, as well as cash bonuses, based on the achievement of certain individual and/or Company performance goals set by the Compensation Committee.

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, 2022 and 2021 included in selling, general and administrative (“SG&A”) expenses in these 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, 2023 and 2022, the majority of which is included in selling, general and administrative (“SG&A”) expenses in these 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 $ 1,954 and $ 2,155 for the six months ended December 31, 2022 and 2021, respectively, is included in SG&A expenses in these 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 $ 4,023 and $ 5,129 for the nine months ended March 31, 2023 and 2022, respectively, is included in SG&A expenses in these 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, 2022 and 2021.

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, 2022 or during the six months ended December 31, 2021.

No stock options were granted during either of the nine months ended March 31, 2023 or March 31, 2023.

Restricted Stock Awards

5 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, 2022 is presented below:

A summary of the activity for share-based compensation awards in the nine months ended March 31, 2023 is presented below:

Stock Options

2 unchanged sentences

June 30, 2022

( 1,010,521 )

Cancelled/Forfeited

December 31, 2022

March 31, 2023

Awards exercisable/

December 31, 2022

Awards unexercisable/

unvested as of

December 31, 2022

As of December 31, 2022, there was approximately $ 1.1 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements (including stock options, RSAs and RSUs) granted.

March 31, 2023

Awards un exercisable/unvested as of

March 31, 2023

As of March 31, 2023, there was approximately $ 877,000 of total unrecognized compensation cost related to non-vested share-based compensation arrangements (including stock options, RSAs and RSUs) granted.

We expect to recognize the compensation cost as follows:

1 unchanged sentence

Stock Options

June 30, 2023 (remaining six months)

June 30, 2023 (remaining three months)

June 30, 2024

5 unchanged sentences

The computations for basic and diluted earnings (loss) per share of Class A common stock are described in the following table:

Three Months Ended

Six Months Ended

Three Months Ended March 31,

Nine Months Ended March 31,

$ ( 1,163,270 )

10 unchanged sentences

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:

Three Months Ended

Six Months Ended

Three Months Ended March 31,

Nine Months Ended March 31,

Options to purchase common stock

4 unchanged sentences

and Zhenjiang, China, and finance leases related to certain equipment located in Orlando, Florida.

The operating leases for facilities are non-cancelable operating leases, expiring through 2032 .

We 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 that option.

The operating leases for facilities are non-cancelable operating leases, with terms at various times through 2032 .

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 obligations under three finance lease agreements, entered into during fiscal 2019 and fiscal 2023, with terms ranging from three to five years.

2 unchanged sentences

Two of our operating leases include renewal options, which were not included in the measurement of the operating lease ROU assets and related lease liabilities.

We previously had two leases for premises comprising our primary facility in Orlando, Florida (the “Orlando Facility”).

We previously had two leases on the premises comprising our primary facility in Orlando, Florida (the “Orlando Facility”).

We assigned one of such leases to a third-party and agreed that we would vacate the premises subject to the assigned lease on November 30, 2022.

In December 2022, entered into an agreement with the assignee of such lease that extended our right to occupy the subject premises until February 28, 2023, in consideration of payments of rent through February 28, 2023, and other amounts to the assignee.

We amended the second lease for the premises comprising our Orlando Facility in April 2021, and again in September 2021, to extend the term of such lease to a date we anticipate to be in or around December 2032 and to increase the leased space from 26,000 square feet to approximately 58,500 square feet.

In December 2022, we entered into an agreement with the assignee of such lease that extended our right to occupy the subject premises until February 28, 2023, in consideration of payments of rent through February 28, 2023, and other amounts to the assignee.

In February 2023, we vacated this space and have no further obligations related to this lease.

We amended the second lease on the premises comprising our Orlando Facility in April 2021, and again in September 2021, to extend the term of such lease to a date we anticipate to be in or around December 2032 and to increase the leased space from 26,000 square feet to approximately 58,500 square feet.

In April 2023, we entered into a sublease for 11,156 square feet of this space, as we do not have a current need for the full 58,500 square feet.

The sublease is for an initial term of five years, ending in April 2029.

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

10 unchanged sentences

The balances are being amortized over the corresponding lease terms.

We are constructing additional tenant improvements in the premises subject to our continuing lease for our Orlando Facility, of which the landlord has agreed to provide $ 2.4 million in tenant improvement allowances.

We are constructing additional tenant improvements within the premises subject to our continuing lease for our Orlando Facility, of which the landlord has agreed to provide $ 2.4 million in tenant improvement allowances.

We will fund the balance of the tenant improvement costs, which we estimate will be approximately $ 2.5 million.

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

December 31, 2022

March 31, 2023

June 30, 2022

13 unchanged sentences

Total lease liabilities

Finance lease assets were recorded net of accumulated depreciation of approximately $ 55,000 and $ 418,000 as of December 31, 2022 and June 30, 2022, respectively.

(1) Finance lease assets were recorded net of accumulated depreciation of approximately $ 62,000 and $ 418,000 as of March 31, 2023 and June 30, 2022, respectively.

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

Lease Term and Discount Rate

December 31, 2022

March 31, 2023

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, 2022:

Future maturities of lease liabilities were as follows as of March 31, 2023:

Fiscal year ending:

1 unchanged sentence

Operating Leases

June 30, 2023 (remaining six months)

June 30, 2023 (remaining three months)

June 30, 2024

7 unchanged sentences

Loans Payable

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

As of March 31, 2023 and June 30, 2022, loans payable primarily consisted of the BankUnited Term Loan (as defined below) payable to BankUnited N.A.

(“BankUnited”).

4 unchanged sentences

On September 9, 2021, we entered into a letter agreement with BankUnited (the “Letter Agreement”).

The Letter Agreement:

(i) reduced the fixed charge coverage ratio to 1.0 for the quarter ended September 30, 2021 and to 1.1 for the quarter ended December 31, 2021 ;

(ii) modified the calculation for both the fixed charge coverage ratio and the total leverage ratio to provide for adjustments related to expenses incurred in connection with the employee matters that occurred during fiscal 2021 at LPOI and LPOIZ, which expenses must be approved by BankUnited;

(iii) terminated the Guidance Line;

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 ended 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.

The Letter Agreement adjusted certain financial covenants through December 31, 2021, terminated the Guidance Line, and 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.

Based on the waiver, we were no longer in default of the Amended Loan Agreement as of June 30, 2021.

4 unchanged sentences

(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 (7.0% as of December 31, 2022), as adjusted from time to time;

(iii) beginning on December 20, 2021, each facility would bear interest at BankUnited’s then-prime rate of interest minus fifty (50) basis points, as adjusted from time to time;

(iv) 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);

10 unchanged sentences

(i) an amended maturity date of December 31, 2024 with respect to the Term Loan (as defined in the Amended Loan Agreement);

and (ii) an amended exit fee equal to (a) 1 % of the outstanding principal balance on December 31, 2023 and (d) 4% of the outstanding principal balance on December 31, 2024 (to the extent the Term Loan is still outstanding on the respective dates and has not been refinanced with another lender), (iii) a principal reduction payment of $ 1,000,000 on or before February 28, 2023, (iv) commencing on March 1, 2023 and continuing on the first day of each month thereafter until December 31, 2023, monthly payments of $ 75,000 , and commencing on January 1, 2024 and continuing on the first day of each month thereafter until the maturity date, monthly payments of $ 100,000 , with each such payment applied first to interest, costs and expenses and then to principal, (v) commencing on March 1, 2023, each facility will bear interest at BankUnited’s then prime rate of interest ( 7.5 % as of December 31, 2022), and (vi) BankUnited has waived compliance with certain financial covenants until December 31, 2023.

and (ii) an amended exit fee equal to (a) 1% of the outstanding principal balance on December 31, 2023 and (b) 4% of the outstanding principal balance on December 31, 2024 (to the extent the Term Loan is still outstanding on the respective dates and has not been refinanced with another lender);

(iii) a principal reduction payment of $ 1,000,000 on or before February 28, 2023;

(iv) commencing on March 1, 2023 and continuing on the first day of each month thereafter until December 31, 2023, monthly payments of $ 75,000 , and commencing on January 1, 2024 and continuing on the first day of each month thereafter until the maturity date, monthly payments of $ 100,000 , with each such payment applied first to interest, costs and expenses and then to principal;

(v) commencing on March 1, 2023, each facility will bear interest at BankUnited’s then prime rate of interest ( 7.75 % as of March 31, 2023) and (vi) BankUnited has waived compliance with certain financial covenants until December 31, 2023.

On May 9, 2023, we entered into the Fifth Amendment to the Loan Agreement dated February 26, 2019 (the “Fifth Amendment”), which further amended the Loan Agreement with BankUnited.

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

(i) BankUnited agreed to release its security interest in the collateral securing the BankUnited Loans other than a cash collateral account maintained at BankUnited in the amount of $ 2,457,151 , with a portion of such cash collateral to be released on a quarterly basis equal to 110% of the principal reductions effected during that quarter, and (ii) certain other requirements and restrictions of the Loan Agreement were removed, including, among others, financial covenants, restrictions on acquisitions, and limitations on other financing sources.

BankUnited Revolving Line

Pursuant to the BankUnited 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.

No amounts were due upon its expiration on February 26, 2022.

BankUnited Term Loan

4 unchanged sentences

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 ( 7.0 % as of December 31, 2022), as adjusted from time to time and pursuant to the Fourth Amendment, beginning on March 1, 2023, each facility will bear interest at BankUnited’s then-prime rate of interest ( 7.5 % as of December 31, 2022).

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

provided that, pursuant to the Second Amendment, the monthly payments, including principal and interest, increased to $100,000 on November 1, 2022.

Pursuant to the Fourth Amendment, monthly payments, including principal and interest, shall decrease to $75,000, but shall increase to $100,000 on January 1, 2024 .

However, pursuant to the Fourth Amendment, beginning on March 1, 2023, each facility bears interest at BankUnited’s then-prime rate of interest (7.75% as of March 31, 2023).

Initially, equal monthly principal payments of approximately $ 48,446 , plus accrued interest, were due and payable, in arrears, on the first day of each month during the term;

pursuant to the Second Amendment, the monthly payments, including principal and interest, increased to $ 100,000 on November 1, 2022;

and pursuant to the Fourth Amendment, monthly payments, including principal and interest, decreased to $75,000 beginning March 1, 2023, but shall increase to $100,000 on January 1, 2024 .

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

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

Pursuant to the Fourth Amendment, the financial covenants are waived until December 31, 2023.

Pursuant to the Fourth Amendment, the financial covenants are waived until December 31, 2023, 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, other than the exit fees, as discussed above.

4 unchanged sentences

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 $ 37,100 and $ 14,900 is included in interest expense for the six-month periods ended December 31, 2022 and 2021, respectively.

Amortization of approximately $ 55,700 and $ 33,400 is included in interest expense for the nine-month periods ended March 31, 2023 and 2022, 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, 2023 (remaining six months)

June 30, 2023 (remaining three months)

June 30, 2024

4 unchanged sentences

Less current portion

( 1,085,103 )

Non-current portion

4 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 $ 688,000 and $ 935,000 as of December 31, 2022 and June 30, 2022, respectively.

We also recognized net foreign currency transaction losses of $ 29,000 and $ 14,000 during the three months ended December 31, 2022 and 2021, respectively.

During the six months ended December 31, 2022 and 2021, we recognized net foreign currency transaction losses of $ 7,000 and $ 40,000 , 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 $ 3.8 million at December 31, 2022.

dollar, are reflected as a separate component of equity, which was a cumulative gain of approximately $ 977,000 and $ 935,000 as of March 31, 2023 and June 30, 2022, respectively.

We also recognized net foreign currency transaction losses of $ 79,000 and $ 67,000 during the three months ended March 31, 2023 and 2022, respectively.

During the nine months ended March 31, 2023 and 2022, we recognized net foreign currency transaction losses of $ 85,000 and $ 107,000 , 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 $ 9.9 million at March 31, 2023.

Of this amount, greater than 25 % 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, 2022, LPOIZ had approximately $ 3.9 million in retained earnings available for repatriation, and LPOI did not have any earnings available for repatriation, based on earnings accumulated through December 31, 2022, the end of the most recent statutory tax year, that remained undistributed as of December 31, 2022.

As of March 31, 2023, LPOIZ had approximately $ 3.4 million in retained earnings available for repatriation, and LPOI did not have any earnings available for repatriation, based on earnings accumulated through December 31, 2022, the end of the most recent statutory tax year, that remained undistributed as of March 31, 2023.

Assets and net assets in foreign countries are as follows:

December 31, 2022

March 31, 2023

June 30, 2022

December 31, 2022

March 31, 2023

June 30, 2022

Assets $ 17.9 million

$ 17.8 million

1 unchanged sentence

$ 15.5 million

Net assets $ 13.9 million

$ 12.7 million

1 unchanged sentence

$ 15.7 million

$ 12.2 million

$ 10.0 million

Contingencies

3 unchanged sentences

In connection with such terminations, our China subsidiaries have engaged in certain legal proceedings with the terminated employees.

We have incurred various expenses associated with its investigation into these matters prior and subsequent to the termination of the employees and the associated legal proceedings.

These expenses, which included legal, consulting and other transitional management fees, totaled $ 718,000 and $ 400,000 during the years ended June 30, 2021 and 2022, respectively.

During the three and six months ended December 31, 2022, expenses incurred related to the legal proceedings were immaterial.

We have incurred various expenses associated with the investigation into these matters prior and subsequent to the termination of the employees and the associated legal proceedings.

These expenses, which include legal, consulting and other transitional management fees, totaled $ 718,000 and $ 400,000 during the years ended June 30, 2021 and 2022, respectively.

During the three and nine months ended March 31, 2023, expenses incurred related to the legal proceedings were immaterial.

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

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As a result, LPOIZ and LPOI have disputed the employees’ rights to such payments and did not immediately begin making the severance payments.

However, based on the likelihood that the courts in China would determine that our subsidiaries would ultimately be obligated to pay these amounts, we accrued for these payments as of June 30, 2021 and they remained accrued as of June 30, 2022.

However, based on the likelihood that the courts in China will determine that our subsidiaries would ultimately be obligated to pay these amounts, we accrued for these payments as of June 30, 2021 and they remained accrued as of June 30, 2022.

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

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

Additionally, some areas still have travel restrictions in place, which has impacted 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.

Additionally, some areas have had travel restrictions in place, including China until recently.

Even though China's travel restrictions are no longer in place, we are required to re-apply for travel visas and approvals which will continue to affect our ability to travel in China.

As a result, 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 have been, and will continue to be, adversely impacted.

Management is actively monitoring this situation and taking steps to mitigate the impact on our financial condition, liquidity, and results of operations globally.

However, we are not able to precisely estimate the effects of the continuing COVID-19 pandemic on our future results of operations, financial, or liquidity for the remainder of fiscal year 2023 or beyond.

However, we are not able to precisely estimate the effects of the continuing COVID-19 pandemic on our future results of operations, financial, or liquidity for the remainder of fiscal 2023 or beyond.

Impact of Russian-Ukraine Conflict

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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 generally and as a result of China’s zero-COVID strategy, 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.

Deteriorating economic conditions in China generally and as a remnant of China’s zero-COVID strategy, 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 material adverse effect on our business and results of operations in future quarters.

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The shelf registration statement was declared effective by the SEC on March 1, 2022.

As of December 31, 2022, we had not issued any shares of its Class A common stock pursuant to the at-the-market equity program.

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.

3 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