What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2023-09-14 compared with 2022-09-15 · 263 added, 158 removed, 934 unchanged (31% of the section changed)

1 unchanged sentence

Evaluation of Disclosure Controls and Procedures

As of the end of the fiscal year ended June 30, 2022, we carried out an evaluation, under the supervision and with the participation of members of our management, including our Chief Executive Officer (“CEO”) and our Chief Financial Officer (“CFO”), of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15(b) of the Exchange Act.

As of the end of the fiscal year ended June 30, 2023, we carried out an evaluation, under the supervision and with the participation of members of our management, including our CEO and our Chief Financial Officer (“CFO”), of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15(b) of the Exchange Act.

Our CEO and our CFO have concluded, based on their evaluation, that as of June 30, 2023, our disclosure controls and procedures were effective at the end of the fiscal year to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit with the SEC under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to our management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.

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Other Information.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

Directors, Executive Officers and Corporate Governance .

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(b) The following exhibits are filed herewith as a part of this report

Exhibit Number

Certificate of Incorporation of LightPath Technologies, Inc., filed June 15, 1992 with the Secretary of State of Delaware, which was filed as Exhibit 3.1.1 to our Annual Report on Form 10-K (File No.

105 unchanged sentences

000-27548) filed with the Securities and Exchange Commission on May 12, 2022, and is incorporated herein by reference thereto.

Form of Securities Purchase Agreement, dated as of January 12, 2023, between the Company and each purchaser named in the signature pages thereto, which was filed as Exhibit 10.1 to our Current Report on Form 8-K (File No:

000-27548) filed with the Securities and Exchange Commission on January 12, 2023, and is incorporated herein by reference thereto.

Fourth Amendment to Loan Agreement, dated February 7, 2023, by and between LightPath Technologies, Inc.

and BankUnited, N.A., filed as Exhibit 10.2 to our Quarterly Report on Form 10-Q, (File No:

000-27548) filed with the Securities and Exchange Commission on February 9, 2023, and is incorporated herein by reference thereto.

Fifth Amendment to Loan Agreement, dated May 9, 2023, by and between LightPath Technologies, Inc.

and BankUnited, N.A., filed as Exhibit 10.2 to our Quarterly Report on Form 10-Q, (File No:

000-27548) filed with the Securities and Exchange Commission on May 11, 2023, and is incorporated herein by reference thereto.

Code of Business Conduct and Ethics, which was filed as Exhibit 14.1 to our Current Report on Form 8-K (File No.:

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Cash and cash equivalents

Restricted cash

Trade accounts receivable, net of allowance of $ 18,502 and $ 36,313

Inventories, net

Other receivables

Prepaid expenses and other assets

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New product development

Amortization of intangible assets

Loss on disposal of property and equipment

Amortization of intangibles

(Gain) loss on disposal of property and equipment

Total operating expenses

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( 1,181,027 )

Balances at June 30, 2021

( 3,542,181 )

Balances at June 30, 2022

( 203,789,358 )

Issuance of common stock for:

Employee Stock Purchase Plan

Exercise of Stock Options & RSUs, net

Stock-based compensation on stock options & RSUs

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 unchanged sentence

( 4,046,871 )

( 3,542,181 )

Balances at June 30, 2023

4 unchanged sentences

Consolidated Statements of Cash Flows

Year Ended June 30,

Cash flows from operating activities:

1 unchanged sentence

$ ( 3,542,181 )

Adjustments to reconcile net loss to net cash provided by 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

Stock-based compensation on stock options & RSUs, net

(Gain) loss on disposal of property and equipment

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

Provision for doubtful accounts receivable

4 unchanged sentences

Trade accounts receivable

( 1,431,440 )

Other receivables

2 unchanged sentences

( 1,087,746 )

Net cash provided by operating activities

Net cash (used in) provided by operating activities

( 2,809,523 )

Cash flows from investing activities:

2 unchanged sentences

( 1,626,614 )

Proceeds from sale of equipment

Net cash used in investing activities

2 unchanged sentences

Cash flows from financing activities:

Proceeds from exercise of stock options

Proceeds from sale of common stock from Employee Stock Purchase Plan

Proceeds from issuance of common stock under public equity placement

Borrowings on loans payable

2 unchanged sentences

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

Change in cash and cash equivalents

Change in cash, cash equivalents and restricted cash

( 1,266,803 )

Cash and cash equivalents, beginning of period

Cash and cash equivalents, end of period

Cash, cash equivalents and restricted cash, end of period

Supplemental disclosure of cash flow information:

1 unchanged sentence

Income taxes paid

Supplemental disclosure of non-cash investing & financing activities:

Purchase of equipment through finance lease arrangements

Equipment deposit paid in restricted stock

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

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In December 2016, we acquired ISP Optics Corporation, a New York corporation (“ISP”), and its wholly-owned subsidiary, ISP Optics Latvia, SIA, a limited liability company founded in 1998 under the Laws of the Republic of Latvia (“ISP Latvia”).

LightPath is a manufacturer of optical components and higher-level assemblies, including precision molded glass aspheric optics, molded and diamond-turned infrared aspheric lenses, and other optical components used to produce products that manipulate light.

LightPath designs, develops, manufactures, and distributes optical components and assemblies utilizing advanced optical manufacturing processes.

LightPath is a manufacturer of optical components and higher-level assemblies, including precision molded glass aspheric optics, infrared optics, both molded and diamond-turned, thermal imaging assemblies, and other optical components used in products that manipulate light.

LightPath designs, develops, manufactures, and distributes optical components and sub-system level lens assemblies utilizing advanced optical manufacturing processes.

LightPath products are incorporated into a variety of applications by customers in many industries, including defense products, medical devices, laser aided industrial tools, automotive safety applications, barcode scanners, optical data storage, hybrid fiber coax datacom, telecommunications, machine vision and sensors, among others.

Many of our optical assemblies consist of several products that we manufacture.

As used herein, the terms “LightPath,” the “Company,” “we,” “us” or “our,” refer to LightPath individually or, as the context requires, collectively with its subsidiaries on a consolidated basis.

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The Company’s foreign cash accounts are not insured.

The Company did not have any restricted cash as of June 30, 2022 or 2021.

Restricted cash consists of amounts held in a restricted account as collateral for a loan agreement.

See Note 13, Loans Payable , to these Consolidated Financial Statements for additional information.

Our restricted cash is invested in a money market account.

Cash and cash equivalents and restricted cash presented in the Consolidated Balance Sheet as of June 30, 2023 are combined in the Consolidated Statement of Cash Flows for the year ended June 30, 2023.

The Company did not have any restricted cash as of June 30, 2022.

Allowance for accounts receivable is calculated by taking 100% of the total of invoices that are over 90 days past due from the due date and 10% of the total of invoices that are over 60 days past due from the due date for U.S.- and Latvia-based accounts and 100% of invoices that are over 120 days past due for Chinese-based accounts.

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After all attempts to collect a receivable have failed, the receivable is written off against the allowance.

LIGHTPATH TECHNOLOGIES, INC.

Notes to Consolidated Financial Statements (continued)

Inventories , which consist principally of raw materials, tooling, work-in-process and finished lenses, collimators and assemblies are stated at the lower of cost or net realizable value, on a first-in, first-out basis.

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Leasehold improvements are amortized over the shorter of the lease term or the estimated useful lives of the related assets using the straight-line method.

Construction in process represents the accumulated costs of assets not yet placed in service and primarily relates to manufacturing equipment.

Construction in process represents the accumulated costs of assets not yet placed in service.

As of June 30, 2023, the balance of construction in progress was primarily related to the expansion of our facility in Orlando, Florida.

Long-lived assets , such as property, plant, and equipment and purchased intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

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Any excess of the goodwill carrying amount over the implied fair value is recognized as an impairment loss, and the carrying value of goodwill is written down to fair value.

The Company did not record any goodwill impairment during the fiscal years ended June 30, 2022 or 2021.

The Company did not record any impairment of goodwill or definite-lived intangible assets during the fiscal years ended June 30, 2023 or 2022.

The Company determines if an arrangement is a lease at inception.

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Lease expense for minimum operating lease payments is recognized on a straight-line basis over the lease term.

LIGHTPATH TECHNOLOGIES, INC.

Notes to Consolidated Financial Statements (continued)

Income taxes are accounted for under the asset and liability method.

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The Company files United States (“U.S.”) Federal income tax returns, as well as tax returns in various states and foreign jurisdictions.

Open tax years subject to examination by the Internal Revenue Service generally remain open for three years from the filing date.

Open tax years subject to examination by the Internal Revenue Service (“IRS”) generally remain open for three years from the filing date.

Tax years subject to examination by the state jurisdictions generally remain open for up to four years from the filing date.

In Latvia, tax years subject to examination remain open for up to five years from the filing date and, in China, tax years subject to examination remain open for up to ten years from the filing date.

Our cash, cash equivalents totaled approximately $ 5.5 million at June 30, 2022.

Our cash, cash equivalents and restricted cash totaled approximately $ 7.1 million at June 30, 2023.

Of this amount, greater than 25% was held by our foreign subsidiaries in China and Latvia.

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

During fiscal 2022 and 2021, we repatriated approximately $ 2.8 million and $ 4 million, respectively, from LPOIZ.

During fiscal years 2023 and 2022, we repatriated approximately $ 1.9 million and $ 2.8 million, respectively, from LPOIZ.

As of June 30, 2023, LPOIZ had approximately $ 2.9 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 June 30, 2023.

During fiscal year 2020 we began to accrue for the applicable Chinese withholding taxes on the portion of earnings that we intend to repatriate.

As of June 30, 2022 and 2021, accrued and unpaid withholding taxes were $ 40,000 and $ 100,000 , respectively.

Beginning in fiscal year 2019, earnings from the Company’s non-U.S.

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If it is determined that meeting the targets is probable, then the compensation expense will be amortized over the remaining vesting period.

LIGHTPATH TECHNOLOGIES, INC.

Notes to Consolidated Financial Statements (continued)

Fair value of financial instruments.

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Revenue is presented net of sales taxes and any similar assessments.

LIGHTPATH TECHNOLOGIES, INC.

Notes to Consolidated Financial Statements (continued)

Customary payment terms are granted to customers, based on credit evaluations.

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The Company’s revenue by product group for the years ended June 30, 2023 and 2022 was as follows:

Year Ended June 30,

Infrared Products

3 unchanged sentences

The components of inventories include the following:

June 30, 2023

June 30, 2022

Raw materials

4 unchanged sentences

( 1,329,637 )

During fiscal 2022 and 2021, the Company evaluated all allowed items and disposed of approximately $ 457,000 and $ 157,000 , respectively, of inventory parts and wrote them off against the allowance for obsolescence.

During fiscal years 2023 and 2022, the Company evaluated all allowed items and disposed of approximately $ 316,000 and $ 457,000 , respectively, of inventory parts and wrote them off against the allowance for obsolescence.

The value of tooling in raw materials, net of the related allowance for obsolescence, was approximately $ 1.5 million and $ 1.6 million at June 30, 2023 and 2022, respectively.

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Total property and equipment, net

During fiscal 2015, the Company extended the term of its Orlando lease and received a tenant improvement allowance from the landlord of $ 420,014 .

During fiscal 2019, the Company received a tenant improvement allowance from the landlord related to the new portion of the Orlando facility in the amount of $ 309,450 .

These allowances were used to construct improvements and were initially recorded as leasehold improvements and deferred rent liability.

The balances are being amortized over the corresponding lease terms, and are included in leasehold improvements and operating lease liabilities as of June 30, 2022 and 2021.

LIGHTPATH TECHNOLOGIES, INC.

Notes to Consolidated Financial Statements (continued)

Goodwill and Intangible Assets

1 unchanged sentence

The excess purchase price over the fair values of all identified assets and liabilities was recorded as goodwill, attributable primarily to expected synergies and the assembled workforce of ISP.

There were no changes in the net carrying value of goodwill during the years ended June 30, 2022 and 2021, and there have been no events or changes in circumstances that indicate the carrying value of goodwill may not be recoverable.

There were no changes in the net carrying value of goodwill during the years ended June 30, 2023 and 2022, and there have been no events or changes in circumstances that indicate the carrying value of goodwill or definite-lived intangible assets may not be recoverable.

Identifiable intangible assets were comprised of:

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The remaining 5,500,000 shares of authorized common stock were designated as Class E-1 common stock, Class E-2 common stock, or Class E-3 common stock, all previously outstanding shares of which have been previously redeemed or converted into shares of Class A common stock.

LIGHTPATH TECHNOLOGIES, INC.

Notes to Consolidated Financial Statements (continued)

For financial reporting purposes, income (loss) before income taxes includes the following components:

29 unchanged sentences

Other permanent differences

LIGHTPATH TECHNOLOGIES, INC.

Notes to Consolidated Financial Statements (continued)

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was signed into law, which, among other things, is intended to provide emergency assistance to qualifying businesses and individuals.

The CARES Act also suspends the limitation on the deduction of NOLs arising in taxable years beginning before January 1, 2021, permits a five-year carryback of NOLs arising in taxable years beginning after December 31, 2017 and before January 1, 2021, and generally modifies the limitation on the deduction for net interest expense to 50% of adjusted taxable income for taxable years beginning in 2019 and 2020.

During fiscal 2020, as a result of the CARES Act, the Company was able to accelerate the recovery of an income tax receivable related to previously paid alternative minimum tax.

The receivable amount of approximately $ 107,000 as of June 30, 2020 was collected in July 2020.

In addition, the Company elected to utilize the payroll tax deferral under the CARES Act, resulting in cash savings of approximately $ 325,000 , accrued as of June 30, 2021.

Half of this amount was remitted on December 31, 2021, with the remainder deferred until December 31, 2022.

The Company elected to utilize the payroll tax deferral under the CARES Act, resulting in cash savings of approximately $ 325,000 , accrued as of June 30, 2021.

Half of this amount was remitted on December 31, 2021, with the remainder remitted on December 31, 2022.

Income Tax Law of the People’s Republic of China

1 unchanged sentence

For both the years ended June 30, 2023 and 2022, the tax rate for LPOIZ was 15 %, in accordance with an incentive program for technology companies.

Historically, no deferred tax provision was recorded for LPOIZ.

Prior to fiscal year 2022, no deferred tax provision was recorded for LPOIZ.

However, during the year ended June 30, 2022, as a result of audits performed by the Chinese taxing authorities, and the Chinese subsidiaries’ statutory audits, it was determined that a net deferred tax liability was required.

Accordingly, an approximately $ 541,000 net deferred tax liability related to LPOIZ was recorded in the Company’s Consolidated Financial Statements as of and for the year ended June 30, 2022.

Accordingly, a net deferred tax liability of approximately $ 541,000 , related to LPOIZ, was recorded in the Company’s Consolidated Financial Statements as of and for the year ended June 30, 2022.

As of June 30, 2023, the net deferred tax liability for LPOIZ is approximately $ 465,000 .

Historically, the Company considered unremitted earnings held by its foreign subsidiaries to be permanently reinvested.

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Accordingly, the Company paid Chinese withholding taxes of $ 210,000 and $ 280,000 associated with these dividends during fiscal years 2023 and 2022, respectively.

Income tax expense associated with these dividends was $ 208,000 and $ 500,000 for fiscal year 2022 and 2021, respectively.

As of June 30, 2022 and 2021, accrued and unpaid withholding taxes were $ 40,000 and $ 100,000 , respectively.

Income tax expense associated with these dividends was $ 210,000 and $ 208,000 for fiscal years 2023 and 2022, respectively.

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

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

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If, in the future, the Company changes such intention, distribution taxes, if any, will be accrued as profits are generated.

LIGHTPATH TECHNOLOGIES, INC.

Notes to Consolidated Financial Statements (continued)

The tax effects of temporary differences that give rise to significant portions of deferred tax assets and deferred tax liabilities are as follows at June 30:

15 unchanged sentences

( 1,160,000 )

( 1,443,000 )

Total deferred tax liabilities

3 unchanged sentences

$ ( 325,000 )

$ ( 398,015 )

In assessing the potential future recognition of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.

4 unchanged sentences

The decrease in the valuation allowance for deferred tax assets as compared to the prior year is primarily the result of the various movements in the current year deferred items.

The net deferred tax asset of $ 143,000 results from federal and state tax credits with indefinite carryover periods.

net deferred tax asset of $ 140,000 results from federal and state tax credits with indefinite carryover periods.

State income tax expense disclosed on the effective tax rate reconciliation above includes state deferred taxes that are offset by a full valuation allowance.

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This discount of approximately $ 4,000 and $ 5,000 for fiscal years 2023 and 2022, respectively, is included in the selling, general and administrative expense in the accompanying Consolidated Statements Comprehensive Income (Loss), which represents the value of the 10% discount given to the employees purchasing stock under the 2014 ESPP.

LIGHTPATH TECHNOLOGIES, INC.

Notes to Consolidated Financial Statements (continued)

These plans are summarized below:

Equity Compensation Arrangement

Award Shares Authorized

Outstanding at

June 30, 2023

Available for

June 30, 2023

SICP (or Omnibus Plan)

3 unchanged sentences

The 2014 ESPP fair value is the amount of the discount the employee obtains at the date of the purchase transaction.

For stock options and RSUs granted in the years ended June 30, 2022 and 2021, the Company estimated the fair value of each stock award as of the date of grant using the following assumptions:

Year Ended June 30,

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 years ended June 30, 2023 and 2022.

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

The interest rate used is the U.S.

Treasury interest rate for constant maturities.

No stock options were granted during the year ended June 30, 2023.

For stock options granted in the year ended June 30, 2022, the Company estimated the fair value of each stock award as of the date of grant using the following assumptions:

June 30, 2022

Weighted-average expected volatility

2 unchanged sentences

Weighted-average expected term, in years

The assumed forfeiture rates used in calculating the fair value of options and restricted stock unit grants with both performance and service conditions were 20% for each of the years ended June 30, 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.

The interest rate used is the U.S.

Treasury interest rate for constant maturities.

Restricted Stock Awards

RSAs are granted primarily to our executive officers, employees and consultants, and typically vest over a one to three year period from the date of grant, although some may vest immediately upon grant.

The stock underlying RSAs is issued upon vesting.

Restricted Stock Units

RSUs are granted primarily to our directors, although RSU awards may also be made to executive officers, employees and consultants.

RSUs typically vest over a one to four year period from the date of grant, although some may vest immediately upon grant.

LIGHTPATH TECHNOLOGIES, INC.

Notes to Consolidated Financial Statements (continued)

Information Regarding Current Share-Based Payment Awards — A summary of the activity for share-based payment awards in the years ended June 30, 2023 and 2022 is presented below:

1 unchanged sentence

Restricted Stock Units (RSUs)

Restricted Stock Awards (RSAs)

June 30, 2021

1 unchanged sentence

June 30, 2022

( 1,068,291 )

Cancelled/Forfeited

5 unchanged sentences

June 30, 2023

No stock options were exercised during the year ended June 30, 2022.

The total intrinsic value of stock options exercised for the year ended June 30, 2021was approximately $ 344,000 .

The total intrinsic value of stock options outstanding and exercisable at June 30, 2022 and 2021 was approximately $ 42,000 and $ 285,000 , respectively.

The total fair value of stock options vested during the years ended June 30, 2022 and 2021 was approximately $ 24,000 and $ 142,000 , respectively.

The total intrinsic value of RSUs exercised during the years ended June 30, 2022 and 2021 was approximately $ 77,000 and $ 2.8 million, respectively.

The total intrinsic value of RSUs outstanding and exercisable at June 30, 2022 and 2021 was approximately $ 1.6 million and $ 3.0 million, respectively.

The total fair value of RSUs vested during the years ended June 30, 2022 and 2021 was approximately $ 395,000 and $ 1.1 million, respectively.

As of June 30, 2022, there was approximately $1.1 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements, including share options and RSUs, granted under the Omnibus Plan, through October 2018 and after that date, the SICP.

The intrinsic and fair values for share-based payment awards exercised and vested in the years ended June 30, 2023 and 2022 are presented below:

Year Ended June 30,

Intrinsic Value - Exercised

Fair Value - Vested

Stock Options

No stock options were exercised during the years ended June 30, 2023 and 2022.

LIGHTPATH TECHNOLOGIES, INC.

Notes to Consolidated Financial Statements (continued)

The intrinsic values of share-based payment awards outstanding and exercisable as of June 30, 2023 and 2022 are presented below:

As of June 30,

Stock options

None of the outstanding RSAs were exercisable as of June 30, 2023, and there were no outstanding RSAs as of June 30, 2022.

As of June 30, 2023, there was approximately $776,000 of total unrecognized compensation cost related to non-vested share-based compensation arrangements, including share options and RSUs, granted under the Omnibus Plan, through October 2018 and after that date, the SICP.

The expected compensation cost to be recognized is as follows:

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The table above does not include shares under the Company’s 2014 ESPP, which has purchase settlement dates in the second and fourth fiscal quarters.

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

The Company issues new shares of Class A common stock upon the exercise of stock options.

The Company issues new shares of Class A common stock upon the exercise of stock options and upon vesting of RSUs and RSAs, unless the recipient has elected to defer receipt of shares under the applicable IRS rules.

The following table is a summary of the number and weighted-average grant date fair values, estimated using the Black-Scholes-Merton pricing model, regarding the Company’s unexercisable/unvested awards as of June 30, 2023 and 2022 and changes during the two years then ended:

1 unchanged sentence

Stock Options

Weighted-Average

Grant Date Fair Values

Weighted-Average Grant Date Fair Values

June 30, 2021

3 unchanged sentences

June 30, 2023

Acceleration of Vesting — The Company does not generally accelerate the vesting of any stock options or RSUs, however in the case of retirements, the Board of Directors may accelerate vesting.

Acceleration of Vesting — The Company does not generally accelerate the vesting of any stock options, RSUs or RSAs, however in the case of retirements, the Board of Directors may accelerate vesting.

Financial Statement Effects and Presentation — The following table shows total stock-based compensation expense for the years ended June 30, 2023 and 2022, which is included in selling, general and administrative expenses in the accompanying Consolidated Statements of Comprehensive Income (Loss):

1 unchanged sentence

Stock options

LIGHTPATH TECHNOLOGIES, INC.

Notes to Consolidated Financial Statements (continued)

Earnings (Loss) Per Share

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Options to purchase common stock

RSUs and RSAs

Diluted number of shares

3 unchanged sentences

Options to purchase common stock

RSUs and RSAs

Defined Contribution Plan

The Company provides retirement benefits to its U.S.-based employees through a defined contribution retirement plan.

These benefits are offered under the Insperity 401(k) plan (the “Insperity Plan”).

The Insperity Plan is a defined 401(k) contribution plan that all employees, over the age of 21, are eligible to participate in after three months of employment.

Under the Insperity Plan, the Company matches 100% of the first 2% of employee contributions.

Until February 24, 2023, these benefits were offered under the Insperity 401(k) plan (the “Insperity Plan”).

The Insperity Plan was a defined 401(k) contribution plan that all U.S.

employees, over the age of 21, are eligible to participate in after three months of employment.

Under the Insperity Plan, the Company matched 100% of the first 2% of employee contributions.

Effective February 24, 2023, all plan assets were transferred to the LightPath Technologies Inc.

401(k) plan (the “LightPath Plan”).

The LightPath Plan is adefined 401(k) contribution plan, administered by a third party, that all U.S.

employees, over the age of 21, are eligible to participate in after three months of employment.

Under the LightPath Plan, the Company matches 100% of the first 2% of employee contributions.

As of June 30, 2023, there were 57 employees enrolled in this plan .

The Company made matching contributions of approximately $ 121,000 and $ 123,000 during the years ended June 30, 2023 and 2022, respectively.

LIGHTPATH TECHNOLOGIES, INC.

Notes to Consolidated Financial Statements (continued)

The Company has operating leases for its manufacturing and office space.

2 unchanged sentences

The lease term was extended from April 30, 2022 , to that certain date that is one hundred twenty-seven ( 127 ) months after the date the landlord completes certain work to be done at the leased premises.

The commencement date is expected to be November 1, 2022, subject to completion of the build-out.

The landlord's work was completed in August 2023, and accordingly the lease expires on March 31, 2034.

Minimum rental rates for the extension term were established based on annual increases of approximately three percent ( 3 %).

1 unchanged sentence

The minimum rental rates for such additional extension option will be determined at the time an option is exercised and will be based on a “fair market rental rate,” as determined in accordance with the Orlando Lease, as amended.

The second lease was entered into in April 2018 for 12,378 square feet in Orlando, Florida (the “Orlando Lease II”), which provides additional manufacturing and office space near the Company’s corporate headquarters.

The commencement date of the Orlando Lease II was December 1, 2018, and it has a four-year original term with one renewal option for an additional five-year term.

In October 2021, this lease was amended to reduce the square footage to approximately 3,700.

This lease will expire in November 2022 and will not be renewed, as this manufacturing and office space will be relocated to the expanded space included in the Orlando Lease, as amended.

The second lease was entered into in April 2018 for 12,378 square feet in Orlando, Florida (the “Orlando Lease II”), which provided additional manufacturing and office space near the Company’s corporate headquarters.

The commencement date of the Orlando Lease II was December 1, 2018, and it had a four-year original term with one renewal option for an additional five-year term.

In October 2021, the Company assigned such lease to a third-party and agreed that the premises would be vacated, subject to the assigned lease, on November 30, 2022.

In December 2022, the Company entered into an agreement with the assignee of such lease that extended its 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, the space was vacated and the Company has no further obligations related to this lease.

As of June 30, 2022, the Company, through its wholly-owned subsidiary, LPOI, had a lease agreement for an office facility in Shanghai, China (the “Shanghai Lease”) for 1,900 square feet.

The Shanghai Lease commenced in October 2015.

During fiscal 2020, the Shanghai Lease was renewed for an additional three-year term, and now expires in October 2022.

We do not expect to renew this lease.

As of June 30, 2021, the Company, through its wholly-owned subsidiary, LPOIZ, had three lease agreements for manufacturing and office facilities in Zhenjiang, China for an aggregate of 55,000 square feet.

The initial lease (the “Zhenjiang Lease I”) is for approximately 26,000 square feet, and had a five-year original term with renewal options.

In fiscal year 2019, the Company renewed the Zhenjiang Lease I and was set to expire in June 2022.

During fiscal year 2018, another lease was executed for 13,000 additional square feet in this same facility (the “Zhenjiang Lease II”).

In January 2022, these leases were combined and extended to December 31, 2024 .

At June 30, 2021, the Company, through ISP’s wholly-owned subsidiary ISP Latvia, had two lease agreements for a manufacturing and office facility in Riga, Latvia for an aggregate of 29,000 square feet.

The first lease (“Riga Lease I”) was amended in August 2020, to expand the space to approximately 24,000 square feet.

The lease term was extended from December 31, 2022 to December 31, 2025 .

The second lease (“Riga Lease II”), for approximately 5,000 square feet, had a five-year original term with renewal options, and was set to expire in December 2019.

In January 2022, these leases were extended to December 31, 2030 .

The Company’s facility leases are classified as operating leases, and the Company also has finance leases related to certain equipment located in Orlando, Florida.

The operating leases for facilities are non-cancelable, expiring through 2024 to 2032 .

During fiscal 2020, the Shanghai Lease was renewed for an additional three-year term, which expired in October 2022 and was not renewed.

As of June 30, 2023, the Company, through its wholly-owned subsidiary, LPOIZ, has a lease agreement for a manufacturing and office facility in Zhenjiang, China for an aggregate of 55,000 square feet (the “Zhenjiang Lease”), which expires December 31, 2024 .

At June 30, 2023, the Company, through ISP’s wholly-owned subsidiary ISP Latvia, had two lease agreements for a manufacturing and office facility in Riga, Latvia for an aggregate of 29,000 square feet, which leases expire December 31, 2030 .

The Company’s facility leases are classified as operating leases, and the Company also has finance leases related to certain equipment located in Orlando, Florida and Riga, Latvia.

The operating leases for facilities are non-cancelable, expiring in 2024 to 2034 .

The Company includes options to renew (or terminate) in the lease term, and as part of the ROU assets and lease liabilities, when it is reasonably certain that the Company will exercise that option.

The Company currently has obligations under two finance lease agreements, entered into during fiscal year 2019, with terms ranging from three to five years.

At June 30, 2023, the Company also has obligations under five finance lease agreements, entered into during fiscal years 2019 and 2023, with terms ranging from three to five years.

The leases are for computer and manufacturing equipment.

The finance leases for equipment on Riga, Latvia include financial covenants specific to ISP Latvia.

The Company’s operating lease ROU assets and the related lease liabilities are initially measured at the present value of future lease payments over the lease term.

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These allowances were used to construct improvements and are included in leasehold improvements and operating lease liabilities.

The balances are being amortized over the corresponding lease terms.

The balances were amortized over the corresponding lease terms, and were fully amortized as of June 30, 2023.

LIGHTPATH TECHNOLOGIES, INC.

Notes to Consolidated Financial Statements (continued)

The components of lease expense were as follows:

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Classification

June 30, 2023

June 30, 2022

Operating lease assets

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Lease Term and Discount Rate

June 30, 2023

Weighted Average Remaining Lease Term (in years)

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Financing cash used for finance leases

LIGHTPATH TECHNOLOGIES, INC.

Notes to Consolidated Financial Statements (continued)

Future maturities of lease liabilities were as follows as of June 30, 2023:

Fiscal year ending:

Finance Leases

Operating Leases

June 30, 2024

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BankUnited Loans

On February 26, 2019, the Company entered into a Loan Agreement (the “Loan Agreement”) with BankUnited for (i) a revolving line of credit up to maximum amount of $ 2,000,000 (the “BankUnited Revolving Line”), (ii) a term loan in the amount of up to $ 5,813,500 (“BankUnited Term Loan”), and (iii) a non-revolving guidance line of credit up to a maximum amount of $ 10,000,000 (the “Guidance Line” and, together with the BankUnited Revolving Line and BankUnited Term Loan, the “BankUnited Loans”).

Each of the BankUnited Loans is evidenced by a promissory note in favor of BankUnited (the “BankUnited Notes”).

On February 26, 2019, the Company entered into a Loan Agreement (the “Loan Agreement”) with BankUnited for (i) a revolving line of credit up to maximum amount of $ 2,000,000 (the “Revolving Line”), (ii) a term loan in the amount of up to $ 5,813,500 (“Term Loan”), and (iii) a non-revolving guidance line of credit up to a maximum amount of $ 10,000,000 (the “Guidance Line” and, together with the Revolving Line and Term Loan, the “BankUnited Loans”), as evidenced by promissory notes the Company executed in favor of BankUnited (the “BankUnited Notes”).

On May 6, 2019, the Company entered into that certain First Amendment to Loan Agreement, effective February 26, 2019, with BankUnited (the “Amendment” and, together with the Loan Agreement, the “Amended Loan Agreement”).

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

The Letter Agreement:

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

(ii) modifies 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 events at LPOI and LPOIZ, which expenses must be approved by BankUnited;

(iii) terminates 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.

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

Based on the waiver, the Company was no longer in default of the Amended Loan Agreement.

Finally, in connection with the Letter Agreement, the Company paid BankUnited a fee equal to $ 10,000 .

In accordance with the Letter Agreement, the parties agreed to the following terms, among others:

(i) the Company was granted a waiver of default for its failure to comply with the fixed charge coverage ratio measured on June 30, 2021;

(ii) certain financial covenant requirements were modified;

and (iii) the Guidance Line was terminated.

On November 5, 2021, the Company entered into a letter agreement with BankUnited (the “Second Letter Agreement”).

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(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 ( 4.25 % as of June 30, 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);

(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) the Term Loan would 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 would still be outstanding on such date and had not been refinanced with another lender);

and (vi) a fee of $ 50,000 payable upon execution of the Second Amendment.

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.

Based on the waiver, the Company was no longer in default of the Amended Loan Agreement.

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

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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).

LIGHTPATH TECHNOLOGIES, INC.

Notes to Consolidated Financial Statements (continued)

On February 7, 2023, the Company entered into the Fourth Amendment to the Loan Agreement dated February 26, 2019 (the “Fourth Amendment” and, together with the First Amendment, the Letter Agreement and the Second Letter Agreement, the Second Amendment, and the Third Amendment, the “Amended Loan Agreement”), which further amended the Loan Agreement with BankUnited.

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

(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 (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, and (vi) BankUnited has waived compliance with certain financial covenants until December 31, 2023.

On May 9, 2023, the Company 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 approximately $ 2,457,000 , 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.

The cash collateral is reflected as Restricted Cash in the accompanying balance sheet as of June 30, 2023.

BankUnited Revolving Line

Pursuant to the Amended Loan Agreement, BankUnited agreed to make loan advances to the Company under the BankUnited Revolving Line 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.

The BankUnited Revolving Line expired on February 26, 2022.

No amounts were outstanding under the BankUnited Revolving Line as of June 30, 2021 or February 26, 2022.

Pursuant to the Amended Loan Agreement, BankUnited agreed to make loan advances to the Company under the Revolving Line 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.

The Revolving Line expired on February 26, 2022.

No amounts were outstanding under the BankUnited Revolving Line upon its expiration.

BankUnited Term Loan

Pursuant to the Amended Loan Agreement, BankUnited advanced the Company $ 5,813,500 to satisfy in full the amounts owed to Avidbank and to pay the fees and expenses incurred in connection with closing of the BankUnited Loans.

The BankUnited Term Loan is 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.

Management expects the BankUnited Revolving Line to be renewed.

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

Pursuant to the Fourth Amendment, the maturity date of the Term Loan is December 31, 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 ( 4.25 % as of June 30, 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.

Pursuant to the Second Amendment, the monthly payment, including principal and interest, will increase to $100,000, commencing November 1, 2022.

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

Pursuant to the Fourth Amendment, commencing on March 1, 2023, each facility bears interest at BankUnited’s then prime rate of interest, as adjusted from time to time (8.25% as of June 30, 2023).

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 payment, including principal and interest, increased to $ 100,000 , commencing November 1, 2022.

Pursuant to the Fourth Amendment, commencing on March 1, 2023 and continuing on the first day of each month thereafter until December 31, 2023, monthly payments were reduced to $ 75,000 , and commencing on January 1, 2024 and continuing on the first day of each month thereafter until the maturity date, monthly payments will increase to $ 100,000 , with each such payment applied first to interest, costs and expenses and then to principal.

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

As of June 30, 2022, the applicable interest rate on the BankUnited Term Loan was 4.25%.

Guidance Line

The Amended Loan Agreement provided BankUnited, in its sole discretion, could make loan advances to the Company under the Guidance Line up to a maximum aggregate principal amount outstanding not to exceed $10,000,000, which proceeds could have been used for capital expenditures and approved business acquisitions.

The Guidance Line terminated on September 9, 2022 in accordance with the Letter Agreement.

There were no amounts outstanding under the Guidance Line at June 30, 2021 or on September 9, 2022.

LIGHTPATH TECHNOLOGIES, INC.

Notes to Consolidated Financial Statements (continued)

Security and Guarantees

The Company’s obligations under the Amended Loan Agreement are collateralized by a first priority security interest (subject to permitted liens) in all of its assets and the assets of the Company’s U.S.

The Company’s obligations under the Amended Loan Agreement were previously collateralized by a first priority security interest (subject to permitted liens) in all of its assets and the assets of the Company’s U.S.

subsidiaries, GelTech, and ISP, pursuant to a Security Agreement granted by GelTech, ISP, and the Company in favor of BankUnited.

The Company’s equity interests in, and the assets of, its foreign subsidiaries are excluded from the security interest.

The Company’s equity interests in, and the assets of, its foreign subsidiaries were excluded from the security interest.

Pursuant to the Fifth Amendment, the security interest in the certain of the collateral then securing the BankUnited Loans terminated and was replaced by a security interest in a cash collateral account maintained at BankUnited, initially in the amount of approximately $ 2,457,000 , 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.

In addition, all of the Company’s subsidiaries have guaranteed the Company’s obligations under the Amended Loan Agreement and related documents, pursuant to Guaranty Agreements executed by the Company and its subsidiaries in favor of BankUnited.

General Terms

The Amended Loan Agreement contains customary covenants, including, but not limited to:

The Amended Loan Agreement initially contained customary covenants, including, but not limited to:

(i) limitations on the disposition of property;

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The Letter Agreement granted the Company a waiver of default arising prior to the Letter Agreement from its failure to comply with the fixed charge coverage ratio measured on June 30, 2021.

The Second Amendment to the Amended Loan Agreement granted us a waiver of compliance for the Financial Covenants (as set forth in the Amended Loan Agreement) through June 30, 2022.

Based on the waivers, the Company is no longer in default of the Amended Loan Agreement.

As of June 30, 2022, the Company was in compliance with all other covenants.

The Second Amendment to the Amended Loan Agreement granted the Company a waiver of compliance for the Financial Covenants (as set forth in the Amended Loan Agreement) through June 30, 2022.

Based on the waivers, the Company was no longer in default of the Amended Loan Agreement.

Pursuant to the Fifth Amendment, 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.

As of June 30, 2023, the Company was in compliance with all required covenants.

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.

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Amortization of approximately $ 59,000 and $ 52,000 for each the years ended June 30, 2023 and 2022, respectively, is included in interest expense.

Equipment Loan

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.

Equipment Loans

In December 2020, ISP Latvia entered into an equipment loan with a third party (the “2020 Equipment Loan”), which is also a significant customer.

The 2020 Equipment Loan is subordinate to the BankUnited Loans, and collateralized by certain equipment.

The initial advance under the 2020 Equipment Loan was 225,000 EUR (or USD $ 275,000 ), payable in equal installments over 60 months, the proceeds of which were used to make a prepayment to a vendor for equipment to be delivered at a future date.

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An additional 225,000 EUR (or USD $ 267,000 ) was drawn in September 2021, which proceeds were paid to the vendor for the equipment, payable in equal installments over 52 months.

In May 2023, ISP Latvia entered into an equipment loan with a third party (the “2023 Equipment Loan”).

The 2023 Equipment Loan is collateralized by certain equipment.

The initial advance under the 2023 Equipment Loan was 128,815 EUR (or USD $ 141,245 ), the proceeds of which were used to make a prepayment to a vendor for equipment to be delivered at a future date.

The 2023 Equipment Loan will be payable over 48 months, with monthly installments beginning January 1, 2024.

The 2023 Equipment Loan bears interest at the six-month EURIBOR rate, plus 2.84 % ( 6.75 % as of June 30, 2023).

LIGHTPATH TECHNOLOGIES, INC.

Notes to Consolidated Financial Statements (continued)

Future maturities of loans payable are as follows:

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Less current portion

( 1,023,814 )

Non-current portion

The Company generally relies on cash from operations and equity offerings, and commercial debt, to the extent available, to satisfy its liquidity needs and to meet its payment obligations, including payments due under the BankUnited Term Loan.

The Company has commenced discussions with other lenders, and anticipates refinancing its debt obligations with a new lender prior to the maturity date of the Term Loan, of which there can be no assurances.

If the Company is unable to refinance the credit facility with other commercial lenders prior to maturity, it may need to raise additional equity financing, source financing through non-commercial lenders or further reduce certain operating expenses and capital expenditures in order to repay the credit facility and all charges related thereto upon its maturity on April 14, 2024.

The Company has commenced discussions with prospective lenders regarding the refinancing of its debt obligations prior to the maturity date of the Term Loan on December 31, 2024.

There can be no assurance that we will be successful in such refinancing or that such refinancing will be available under reasonable commercial terms.

If the Company is unable to refinance the credit facility with other commercial lenders prior to maturity, it may need to raise additional equity financing, source financing through non-commercial lenders or reduce operating expenses and capital expenditures in order to repay the credit facility and all charges related thereto upon its maturity on December 31, 2024.

In February 2022, the Company filed a shelf registration statement to facilitate the issuance of its Class A common stock, warrants exercisable for shares of its Class A common stock, and/or units up to an aggregate offering price of $ 75.8 million from time to time.

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The Company has not issued any shares of its Class A common stock pursuant to the at-the-market equity program.

There are a number of factors that could result in the need to raise additional funds, including a decline in revenue or a lack of anticipated sales growth, increased material costs, increased labor costs, planned production efficiency improvements not being realized, increases in property, casualty, benefit and liability insurance premiums, and increases in other costs.

In addition, greater than 50 % of the Company’s cash and cash equivalents is held by its foreign subsidiaries and, although the Company regularly repatriates cash, it may not be readily available to repay its liabilities in the U.S.

On January 12, 2023, the Company entered into a securities purchase agreement (“Purchase Agreement”), pursuant to which the Company agreed to issue and sell in a public offering under the shelf registration statement an aggregate of 9,090,910 shares of the Company’s Class A common stock, par value $ 0.01 per share for a purchase price of $ 1.10 per share and filed a prospectus supplement with the SEC related thereto.

The sale of shares pursuant to the Purchase Agreement closed on January 17, 2023, and resulted in net proceeds of approximately $ 9.2 million after payment of placement agent fees, and certain other costs and expenses of the offering.

Based on the capital raise that was completed in January 2023, the Company does not expect to need additional equity capital for the foreseeable future.

However, there are a number of factors that could result in the need to raise additional funds, including a decline in revenue or a lack of anticipated sales growth, increased material costs, increased labor costs, planned production efficiency improvements not being realized, increases in property, casualty, benefit and liability insurance premiums, and increases in other costs.

In addition, greater than 25 % of the Company’s cash, cash equivalents and restricted cash is held by its foreign subsidiaries and, although the Company regularly repatriates cash, it may not be readily available to repay its liabilities in the U.S.

The Company will also continue efforts to keep costs under control as it seeks renewed sales growth.

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Should capital not be available to the Company at reasonable terms, other actions may become necessary in addition to cost control measures and continued efforts to increase sales.

These actions may include exploring strategic options for the sale of the Company, the sale of certain product lines, the creation of joint ventures or strategic alliances under which we will pursue business opportunities, the creation of licensing arrangements with respect to our technology, or other alternatives.

These actions may include the sale of certain product lines, the creation of joint ventures or strategic alliances under which we will pursue business opportunities, the creation of licensing arrangements with respect to our technology, or other alternatives.

LIGHTPATH TECHNOLOGIES, INC.

Notes to Consolidated Financial Statements (continued)

Contingencies

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

During fiscal 2022 it was determined that LPOIZ would not be responsible for this amount, and the accrual was reversed with the benefit included in “Other income (expense), net” in the accompanying Consolidated Statement of Comprehensive Income (Loss) for the year ended June 30, 2022.

During fiscal year 2022 it was determined that LPOIZ would not be responsible for this amount, and the accrual was reversed with the benefit included in “Other income (expense), net” in the accompanying Consolidated Statement of Comprehensive Income (Loss) for the year ended June 30, 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, the Company chose to enter into severance agreements with certain of the employees at the time of termination.

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Such expenses were recorded as “Selling, general and administrative” expenses in the accompanying Consolidated Statement of Comprehensive Income (Loss) for the year ended June 30, 2021.

As of June 30, 2022, approximately $ 430,000 remains accrued;

legal action is ongoing and our obligation to pay these amounts has been awarded to the former employees by the Chinese Labor Court.

We continue to seek legal options.

As of June 30, 2022, approximately $430,000 was accrued.

The Chinese Labor Court ruled in favor of the former employees, as expected, and these severance payments were paid out during the first half of fiscal year 2023.

The Company continues to have litigation pending in the Chinese court system related to these matters, but there has been little activity during fiscal year 2023.

The Company has 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.

Management does not expect any material adverse impact to the business operations of LPOI or LPOIZ as a result of the transition.

Management has not experienced any material adverse impact to the business operations of LPOI or LPOIZ as a result of the transition.

The Company expects to incur additional legal fees and consulting expenses in future periods as all legal options and remedies are pursued;

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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.

The Company’s business, results of operations financial condition, cash flows, and the stock price of its Class A common stock can be adversely affected by pandemics, epidemics, or other public health emergencies, such as the recent outbreak of the coronavirus (“COVID-19”), which has spread from China to many other countries across the world, including the United States.

In March 2020, the World Health Organization (the “WHO”) declared COVID-19 as a pandemic.

The COVID-19 pandemic has resulted in governments around the world implementing increasingly stringent measures to help control the spread of the virus, including “stay at home” orders, travel restrictions, business curtailments, school closures, and other measures.

LIGHTPATH TECHNOLOGIES, INC.

Notes to Consolidated Financial Statements (continued)

To date, the Company has not experienced any significant direct financial impact of COVID-19 to its 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 the Company’s results of operations, cash flows, and financial position in the future.

Management is actively monitoring this situation and any impact on our financial condition, liquidity, and results of operations.

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 in fiscal year 2023 or beyond.

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

Even though China’s travel restrictions are no longer in place, those outside of China 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 fiscal 2024 and beyond.

Impact of Russian-Ukraine Conflict

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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 $ 935,000 and $ 2.1 million as of June 30, 2022 and 2021, respectively.

dollar, are reflected as a separate component of equity, which was a cumulative gain of approximately $ 607,000 and $ 935,000 as of June 30, 2023 and 2022, respectively.

During the years ended June 30, 2023 and 2022, we also recognized net foreign currency transaction losses of approximately $ 37,000 and $ 3,000 , respectively, included in the Consolidated Statements of Comprehensive Income (Loss) in the line item entitled “Other income (expense), net.”

Assets and net assets in foreign countries are as follows:

$ 19.6 million

$ 20.1 million

$ 12.7 million

$ 11.3 million

$ 15.7 million

$ 16.6 million

$ 10.0 million

$ 9.0 million

Revenues from and long-lived assets located in foreign countries are as follows:

Year Ended June 30,

United States

Other European countries

Other Asian countries

Rest of world

Long-lived assets:

United States

LIGHTPATH TECHNOLOGIES, INC.

Notes to Consolidated Financial Statements (continued)

Supplier and Customer Concentrations

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Sales to these customers as a percentage of our fiscal year 2023 revenue include one customer at 11 %, another customer at 7 %, and the third customer at 6 %.

One of these customers comprised 7 % of accounts receivable, a second customer comprised 6 % of accounts receivable and the other customer had no accounts receivable balance as of June 30, 2022.

One of these customers comprised 12 % of accounts receivable, a second customer comprised 9 % of accounts receivable and a third customer comprised 5 % of the accounts receivable balance as of June 30, 2023.

In fiscal year 2022, the Company had sales to three customers that comprised an aggregate of approximately 35 % of its annual revenue, and 13 % of its June 30, 2022 accounts receivable.

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In fiscal year 2022, 61 % of the Company’s net revenue was derived from sales outside of the U.S., with 95 % of foreign sales derived from customers in Europe and Asia.

Subsequent Event

In July 2023, the Company acquired Liebert Consulting LLC, dba Visimid Technologies (“Visimid”), pursuant to the Membership Interest Purchase Agreement dated as of July 25, 2023 (the “Acquisition Date”).

Part of the Company’s growth strategy is to identify appropriate opportunities that would enhance our profitable growth through acquisition.

Visimid is an engineering and design firm specializing in thermal imaging, night vision and internet of things (“IOT”) applications.

Visimid provides design and consulting services for Department of Defense (“DoD”) contractors, commercial and industrial customers, and OEMs for original new products.

Visimid’s core competency is developing and producing custom thermal and night vision cores.

The Company believes that Visimid’s capabilities are aligned with our strategy to focus on engineered solutions.

The Company’s consolidated financial statements will reflect the financial results of Visimid beginning on the Acquisition Date.

The purchase price includes $ 1 million in cash, $ 1,550,000 of restricted stock, $ 150,000 of assumed bank debt, and an earnout which is contingent upon the award and completion of a specific customer contract.

Of the restricted stock payable as part of the purchase price, $150,000 (81,610 shares) was issued at closing, with the balance to be issued on four equal installments of $350,000 each on January 1, 2024, July 1, 2024, January 1, 2025 and July 1, 2025 .

The number of shares is based on the average closing price of the Company’s Class a common stock, as reported by Bloomberg, for the five trading days prior to each stock issuance.

For the year ended June 30, 2023, the Company incurred approximately $ 140,000 in acquisition costs which are included in the consolidated statements of comprehensive income in the line item entitled “Selling, general and administrative.”

End of Consolidated Financial Statements

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September 14, 2023

President & Chief Executive Officer

(Principal Executive Officer)

Albert Miranda

President & Chief Executive Officer

Chief Financial Officer

(Principal Executive Officer)

(Principal Financial Officer)

/s/ LOUIS LEEBURG

September 14, 2023

/s/ SOHAIL KHAN

September 11, 2022

Louis Leeburg

Director (Chairman of the Board)

September 14, 2022

/s/ JOSEPH MENAKER

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Joseph Menaker

/s/ CRAIG DUNHAM

Director (Chairman of the Board)

/s/ LOUIS LEEBURG

September 14, 2023

1 unchanged sentence

September 14, 2023

Louis Leeburg

ERIC CREVISTON

2 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 9A. Controls and Procedures