LIGHTPATH TECHNOLOGIES INC 10-K

Item 9A. Controls and Procedures. Evaluation of Disclosure Controls and Procedures As of the end of the fiscal year ended June 30, 2024, 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, 2024, 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. Management’s Annual Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Internal control over financial reporting is a process, including policies and procedures, designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with U.S. generally accepted accounting principles. Our management assessed our internal control over financial reporting based on the Internal Control—Integrated Framework (2013 Framework) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on the results of this assessment, our management concluded that our internal control over financial reporting was effective as of June 30, 2024 based on such criteria. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met under all potential conditions, regardless of how remote, and may not prevent or detect all errors and all fraud. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within LightPath have been prevented or detected. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Auditor’s Report on Internal Control over Financial Reporting This Annual Report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our independent registered public accounting firm pursuant to rules of the SEC that permit us to provide only management’s report in this Annual Report. 37 Table of Contents Changes in Internal Controls over Financial Reporting In connection with our continued monitoring and maintenance of our controls procedures as part of the implementation of Section 404 of the Sarbanes-Oxley Act, we continue to review, test, and improve the effectiveness of our internal controls. In connection with the events that occurred at our Chinese subsidiaries, we adopted additional policies and procedures designed to improve our internal controls, including, without limitation, revising the reporting structure for our foreign-based finance directors, adopting Codes of Conduct applicable to our subsidiaries’ foreign-based employees, adopting an internal authority approval matrix, and hiring additional staff for our accounting department at LPOIZ to improve segregation of duties, among other items. Other than these modifications, there have not been any significant changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fourth quarter and since the year ended June 30, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Item 9B. Other Information. None. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections Not applicable. 38 Table of Contents PART III Item 10. Directors, Executive Officers and Corporate Governance . Currently, we have six directors with each director serving until his or her successor is elected and qualified. Our Board is divided into three classes, denoted as Class I, Class II, and Class III, serving staggered three-year terms with one class elected at the annual meeting of stockholders. The Class II Directors' term expires at the annual meeting of stockholders proposed to be held in fiscal year 2025. The Class I Directors’ term expires at the annual meeting of stockholders proposed to be held in fiscal year 2026. The Class III Directors’ term expires at the annual meeting of stockholders proposed to be held in fiscal year 2027. The table below lists each current director, each such director’s committee memberships as of June 30, 2024, the Chair of each Board committee, and each such director’s class. Name Class Audit Compensation Finance Nominating & Corporate Governance Dr. Joseph Menaker I ☑ ☑ Darcie Peck I ☑ ☑ ☑ M. Scott Faris, Chair II ☑ ☑ ☑ S. Eric Creviston II ☑ ☑ ☑ Kim Crider III ☑ Shmuel Rubin III Committee Chair: Peck Faris Creviston Faris 39 Table of Contents Biographical and Related Information – Directors and Executive Officers The following is an overview of the biographical information for each of our directors and executive officers, including their age, the year they became directors or officers, their principal occupations or employment for at least the past five years, and certain of their other directorships. Class II Directors M. Scott Faris, 59 Chair Mr. Faris has served as a director of the Company since December 2011, and was appointed Chair, effective December 20, 2022. Mr. Faris is an experienced entrepreneur with almost two decades of operating, venture-financing, and commercialization experience, involving more than 20 start-up and emerging-growth technology companies. In April 2024 Mr. Faris founded Eqlipse Quantum, a commercialization accelerator focused on launching and financing transformational dual-use quantum enabled companies for critical defense and intelligence requirements.. From October 2021 to April 2024, Mr. Faris served as Chief Executive Officer of Infleqtion (formerly Cold Quanta, Inc.). Since September 2016, he had served as Chief Business Officer of Luminar Technologies, Inc., a leading developer of autonomous vehicle systems technologies including Lidar sensor suites. In June 2013, Mr. Faris founded Aerosonix, Inc. (formerly MicroVapor Devices, LLC), a privately held developer and manufacturer of advanced medical devices, and served as its Chief Executive Officer until August 2016 and has served as Chairman of the board of directors since June 2013. In 2002, Mr. Faris also founded the Astralis Group, a strategy advisor that provides consulting to start-up companies and, since 2004, Mr. Faris has served as its Chief Executive Officer. In August 2007, Mr. Faris founded Planar Energy, a company that developed transformational ceramic solid-state battery technology and products and served as its Chief Executive Officer until June 2013. Planar Energy is a spin-out of the U.S. Department of Energy’s National Renewable Energy Laboratory. From October 2004 to June 2007, Mr. Faris was a partner with Corporate IP Ventures (formerly known as MetaTech Ventures), an early-stage venture fund specializing in defense technologies. Mr. Faris also previously served as the Chairman and Chief Executive Officer of Waveguide Solutions, a developer of planar optical light wave circuit and micro system products, and as a director and Chief Operating Officer of Ocean Optics, Inc., a precision-optical-component and fiber-optic-instrument spin-out of the University of South Florida. Mr. Faris was also the founder and Chief Executive Officer of Enterprise Corporation, a technology accelerator, served as a director of the Florida Seed Capital Fund and Technology Commercialization at the Center for Microelectronics Research, and the Chairman of the Metro Orlando EDC. Mr. Faris received a Bachelor of Science degree in Management Information Systems from Penn State University in 1988. Mr. Faris’s significant experience in executive management positions at various optical component companies, his experience in the commercialization of optical and opto-electronic component technology, and his background in optics, technology, and venture capital qualify him for service as one of our directors. S. Eric Creviston, 60 Director Mr. Creviston has served as one of our directors since March 2021. He has served as Corporate Vice President and President of Connectivity and Sensors Group for Qorvo, Inc. (“Qorvo”) since June 2022. Prior to that, he served as Corporate Vice President and President of Mobile Products for Qorvo since January 2015. Prior to that, he served as the Corporate Vice President and President of Cellular Products Group for RF Micro Devices, Inc. (“RFMD”) from August 2007 to January 2015. From May 2002 to August 2007, he served as Corporate Vice President of Cellular Products Group (previously known as Wireless Products until 2004), for RFMD. Mr. Creviston received a Master’s degree in Electrical and Electronics Engineering from the University of Illinois. Mr. Creviston’s previous experience in various leadership roles in Qorvo and RFMD adds invaluable knowledge to our Board with respect to assessing our business strategies, evaluating operating performance, assessing risks, and evaluating potential merger and acquisition opportunities, all of which qualify him for service as one of our directors. 40 Table of Contents Dr. Joseph Menaker, 67 Director Dr. Menaker was appointed to the Board in November 2018, and prior to that was a consultant to the Board beginning in March 2018, and prior to that was a consultant to us beginning in December 2016. From 1998 to 2016, he served as President of ISP, and as a director of its wholly owned subsidiary, ISP Latvia, until we acquired ISP in December 2016. Dr. Menaker is a graduate of Latvian State University, where he received his Bachelor and Master of Science degrees in Economics. In 1985, Dr. Menaker received a Doctor of Philosophy degree in Economics from Leningrad Institute of Finance and Economics. He co-founded UAV Factory Ltd. (“UAVF”) in Latvia in 2009 and served as its CEO from January 2017 to January 2021. Dr. Menaker continues to serve as a member of the Board of Directors for UAVF, which became part of Edge Autonomy Holdings. Edge Autonomy Holdings is a leading manufacturer of unmanned aerial vehicles. Dr. Menaker is also a Board Member of Alpha Unmanned Systems, Spanish Company specializing in the unmanned rotary systems. He also serves as a board member for Tsal Kaplun Foundation, a non-profit organization. Dr. Menaker’s expertise gained in various roles in financial management, international operations, and manufacturing high tech products and their applications for over thirty years, coupled with his knowledge gained as a researcher and analyst in economics provide invaluable knowledge to our Board and qualify him for service as one of our directors. Darcie Peck, 66 Director Ms. Peck has served as one of our directors since November 2019. Ms. Peck served as a consultant to the Board beginning in April 2019. Prior to that she served as a Managing Partner of a start-up employee engagement consultancy firm from June 2017 through February 2019 and she currently works with and advises private companies in short and long term cash, capital planning and strategies. From May 2013 until February 2016, Ms. Peck served as the Vice President Finance, Global Services for IMS Health Inc. (“IMS Health,” now IQVIA Holdings Inc.), a technology and analytics company serving life sciences companies near Danbury, Connecticut. From November 2009 until May 2013, Ms. Peck was Vice President Financial Planning and Analysis for IMS Health. From May 2002 through November 2009, Ms. Peck was Vice President Finance and Investor Relations for IMS Health. Prior to that, Ms. Peck was Vice President Finance, IBM Software Group (a division of International Business Machines Corp., or “IBM”) in Somers, New York from March 2001 to May 2002. From 1982 through to 2001, she held progressively increasing leadership responsibilities at IBM in finance, including Chief Financial Officer and General Manager of several acquired companies in technology, manufacturing, and computer leasing. Ms. Peck earned a Bachelor of Arts degree in Biology at the University of Rochester and a Master’s degree in Business Administration from New York University Stern Graduate School of Business Administration. Ms. Peck’s expertise in executive leadership, financial and strategic planning, investor relations, international business, general management, business and pricing acumen, and high technology manufacturing process knowledge, uniquely qualifies her for service as one of our directors. 41 Table of Contents Class III Directors Kim Crider, 59 Director Ms. Crider is a highly experienced executive and has served as a director on boards for both private and public companies. She has held executive leadership positions in several multi-billion-dollar enterprises over the past 10 years, with deep expertise in aerospace, cybersecurity, data/AI and information technology. Ms. Crider presently has served as a member of the Board of Directors for the National Cybersecurity Center since July 2021, and for the Catalyst Campus for Technology & Innovation since January 2022. She also serves as a Board Advisor for Aalyria Technologies, Inc. a position she has held since January 2022. Ms. Crider served as a member of the Board of Directors of Virgin Orbit National Systems, LLC from April 2022 to August 2023. Ms. Crider is a founding partner and since its inception in May 2023, has served as the Co-Chief Executive Officer of Elara Nova Space Consultancy, LLC, a premier global advisory firm focused on the space sector. From 2016 to 2021, she was President of Kim Crider & Associates, LLC and Leadership Matters, LLC, specialized consulting firms providing executive consulting and coaching services to CEOs, CIOs, CTOs and other C-Suite leaders across industry sectors. A retired Major General in the United States Air Force, after serving in progressive leadership roles from 1986-2019, she also served as the first Chief Technology and Innovation Officer for the United States Space Force, Pentagon Washington D.C. from 2019 to 2021. Ms. Crider earned a Bachelor of Science degree in Electrical Engineering from Duke University in North Carolina, a Master of Business Administration degree from Western New England College in Massachusetts, a Master of Science in Military Studies from Air Command and Staff College in Alabama, a Master of Science in National Resource Strategy from National Defense University in Washington, D.C., and a Graduate Certificate in Organizational Behavior from Harvard University in Massachusetts. Ms. Crider’s expertise in corporate accountability, compliance, special security agreements, CEO transition/succession planning, cybersecurity risk management and oversight, uniquely qualifies her for service as one of our directors. Shmuel Rubin, 50 President & Chief Executive Officer, Director Mr. Rubin has served as our President, Chief Executive Officer, and as a Director since March 2020. Mr. Rubin is also Chief Executive Officer and a director of LightPath Optical Instrumentation (Shanghai) Co., Ltd. (“LPOI”), our wholly-owned subsidiary located in Jiading, People’s Republic of China, LightPath Optical Instrumentation (Zhenjiang) Co., Ltd. (“LPOIZ”), our wholly-owned subsidiary located in the New City District, of the Jiangsu province of the People’s Republic of China, ISP Optics Corporation (“ISP”), our wholly-owned subsidiary, located in Orlando, Florida, and ISP Optics Latvia SIA (“ISP Latvia”), our wholly-owned subsidiary located in Riga, Latvia. Prior to joining us, Mr. Rubin was formerly the General Manager at Thorlabs Inc. (“Thorlabs”). In Mr. Rubin’s prior senior executive role at Thorlabs, he was responsible for Thorlabs’ Imaging Systems Division, a standalone organization with its own sales and marketing, as well as global responsibility for all of Thorlabs’ Life Science activities. Among the positions he held at Thorlabs, Mr. Rubin founded and grew Thorlabs’s fast growing operation in China, and spearheaded Thorlabs’ entry and significant growth in the Life Sciences market. As a member of the senior executive team, Mr. Rubin led new strategic initiatives for Thorlabs, including new product lines, acquisitions and growth into new markets. Prior to joining Thorlabs, Mr. Rubin co-founded Xlight Photonics, an optical communication startup, which was later sold to a telecommunications private equity firm. Mr. Rubin holds a Bachelor of Science degree in Electronic Engineering from Ben Gurion University, a Master of Business Administration degree from New York University, Stern School of Business, and is a graduate of the Executive Education, Program for Leadership Development at Harvard Business School. Mr. Rubin’s significant management experience in the optical industry qualifies him to lead us and our business and serve as one of our directors. 42 Table of Contents Executive Officers Who Do Not Serve as Directors Albert Miranda, 57 Chief Financial Officer Mr. Miranda joined the Company in April 2021 and was appointed as our Chief Financial Officer on May 7, 2021. Mr. Miranda was previously employed with Jenoptik North America, Inc. (“Jenoptik”) for twelve years and held the positions of President and Chief Financial Officer. Prior to his employment with Jenoptik, he held senior level finance and operational positions in optical products groups within Carl Zeiss AG and served in the finance department for a division of BASF SE. Mr. Miranda received an undergraduate degree in Public Accounting from Pace University in New York. He attained significant professional experience and management expertise through key functional areas encompassing finance, operations, business development, sales, marketing, human resources, and information technology across a broad group of products and services in demanding and diverse industries including healthcare, defense and security, consumer electronics, automotive, and semiconductors. Family Relationships There are no family relationships among our executive officers and directors. Corporate Codes and Policies The Board approved an Amended and Restated Code of Business Conduct and Ethics (the “Code”) on April 28, 2016. The Code applies to all of our employees, officers, and directors, including our principal executive officer, principal financial officer, and principal accounting officer or controller, or persons performing similar functions. The Board also approved an Amended and Restated Code of Business Conduct and Ethics for Senior Financial Officers (the “Senior Financial Officer Code”), which applies to our Chief Executive Officer, Chief Financial Officer, principal accounting officer, controller, accounting manager, and persons performing similar functions. Copies of the Code and the Senior Financial Officer Code are available on our website at www.lightpath.com , under the “Investors” tab, or may be obtained free of charge by writing to: Corporate Secretary, LightPath Technologies, Inc., 2603 Challenger Tech Court, Suite 100, Orlando, Florida 32826. Insider Trading Policy Our written Guide for Trading in Securities governs trading activity by directors, officers and employees, was adopted by the Board in 2018. Employees and directors are prohibited from selling or buying publicly traded options on LightPath stock, or trading in any LightPath stock derivatives. Additionally, these individuals may not engage in transactions in which they may profit from short-term speculative swings in the value of LightPath stock utilizing “short sales” or “put” or “call” options, and they are prohibited from holding LightPath stock in a margin account or pledging Company securities as collateral for a loan. Independent Committees In accordance with the The Nasdaq Capital Market (the “NCM”) and SEC rules, the Board affirmatively determines the independence of each director and director nominee in accordance with guidelines it has adopted, which include all elements of independence set forth in the NCM listing standards. Based on these standards, the Board has determined that as of the end of fiscal year 2024, each of the following non-employee directors was independent and has no relationship with us, except as one of our directors and stockholders: M. Scott Faris Kim Crider Darcie Peck S. Eric Creviston Joseph Menaker Based on these standards, the Board determined Shmuel Rubin, currently a Class III Director, is not independent. All of the members of the Audit, Nominating, and Compensation Committees are independent. 43 Table of Contents Board Committees The Board has an Audit Committee (the “Audit Committee”), a Compensation Committee (the “Compensation Committee”), a Nominating and Corporate Governance Committee (the “Nominating Committee”), and a Finance Committee (the “Finance Committee”). Audit Committee. The Audit Committee, which as of June 30, 2024, consisted of Darcie Peck (Chair), Dr. Joseph Menaker, and Kim Crider, met four times during fiscal year 2024. The meetings included discussions with management and with our independent registered public accounting firm to discuss our interim and annual consolidated financial statements and our annual report, and the effectiveness of our financial and accounting functions and organization. The Audit Committee acts pursuant to a written charter adopted by the Board, a copy of which is available on our website at www.lightpath.com under the “Investors” and “Governance” tabs. The Audit Committee’s responsibilities include, among others, engaging and terminating our independent registered public accounting firm, oversight of the independent registered public accounting firm, and determining the compensation for their engagement(s). The Board has determined that the Audit Committee is comprised entirely of independent members as defined under applicable listing standards set out by the SEC and NCM. The Board has also determined that all three members of the Audit Committee are “audit committee financial experts” as defined by SEC rules and qualify as independent in accordance with the NCM rules. Their respective business experience that qualifies each director to be determined as “audit committee financial expert” is described above. Compensation Committee. The Compensation Committee, which as of June 30, 2024, consisted of M. Scott Faris (Chair), Darcie Peck, and S. Eric Creviston, met once during fiscal year 2024. The Compensation Committee acts pursuant to a written charter adopted by the Board, a copy of which is available on our website at www.lightpath.com under the “Investors” and “Governance” tabs. The Compensation Committee is responsible for establishing, implementing, and continually monitoring our compensation policies and philosophy, including administering our 2018 Omnibus Incentive Plan (the “SICP”), pursuant to which incentive awards, including restricted stock units and stock options, are granted to our directors, executive officers, and key employees. The Compensation Committee is responsible for determining executive compensation, including approving recommendations regarding equity awards to all of our executive officers. However, the Compensation Committee does rely on the annual reviews made by the Chief Executive Officer with respect to the performance of each of our other executive officers. The conclusions reached, and recommendations made based on these reviews, including with respect to salary adjustments and annual award amounts, are presented to the Compensation Committee. The Compensation Committee can exercise its discretion in modifying any recommended adjustments or awards to executive officers. In the case of the Chief Executive Officer, compensation is determined solely based on the review conducted by the Compensation Committee. The Compensation Committee also annually reviews director compensation to ensure non-employee directors are adequately compensated for the time expended in fulfilling their duties to us, as well as the skill-level required by us of members of the Board. After the Compensation Committee completes their annual review, they make recommendations to the Board regarding director compensation. The Compensation Committee regularly engages compensation consultants to assist with the Compensation Committee’s responsibilities related to our executive compensation program and the director compensation program. The Compensation Committee plans to engage a consultant every two years to review and make recommendations on the Company’s executive compensation plans. Finance Committee. The Finance Committee, which as of June 30, 2024, consisted of S. Eric Creviston (Chair), Dr. Joseph Menaker, and M. Scott Faris met once during fiscal year 2024. The Finance Committee acts pursuant to a written charter adopted by the Board, a copy of which is available on our website at www.lightpath.com under the “Investors” and “Governance” tabs. The Finance Committee oversees our financial management, including overseeing our strategic and transactional planning and activities, global financing, capital structure objectives and plans, insurance programs, tax structure, and investment program and policies. Nominating and Corporate Governance Committee. The Nominating Committee, which as of June 30, 2024, consisted of M. Scott Faris (Chair), S. Eric Creviston, and Darcie Peck, met once during fiscal year 2024. The Nominating Committee acts pursuant to a written charter adopted by the Board, a copy of which is available on our website at www.lightpath.com under the “Investors” and “Governance” tabs. The Nominating Committee carries out the responsibilities delegated by the Board relating to our director nominations process and procedures, and developing, maintaining, and monitoring compliance with the Company’s corporate governance policies, guidelines, and activities. The Nominating Committee determines the qualifications, qualities, skills, and other expertise required to be a director and to develop, and recommend to the Board for its approval, criteria to be considered in selecting nominees for director. Further, the gender, racial, experience, and skills diversity of the Board is also a factor in our director recruitment process. However, the Nominating Committee and the Board believe that at this time, it is unnecessary to adopt criteria for the selection of directors. Instead, the Nominating Committee and the Board believes that the desirable background of a new individual member of the Board may change over time and that a thoughtful, thorough selection process is more important than adopting criteria for directors. 44 Table of Contents They will also identify, recruit, and screen candidates for the Board, consistent with criteria approved by the Board. The Nominating Committee and Board is fully open to utilizing whatever methodology is efficient in identifying new, qualified directors when needed, including industry contacts of our directors or professional search firms. The Nominating Committee also considers any director candidates recommended by our stockholders and any nominations of director candidates validly made by stockholders in accordance with applicable laws, rules, and regulations, and the provisions of our charter documents. Delinquent Section 16(a) Reports Section 16(a) of the Exchange Act requires our directors, executive officers, and any person beneficially owning more than 10% of our common stock to file reports concerning their ownership of our equity securities with the SEC. Based solely on a review of the forms filed electronically with the SEC during Fiscal 2024 and on written representations that no Form 5 was required to be filed, we believe that, during Fiscal 2024, all of our directors, executive officers, and persons who beneficially owned more than 10% of our common stock timely complied with the Section 16(a) filing requirements. Item 11. Executive Compensation. Named Executive Officers During fiscal year 2024, our named executive officers were as follows: · Shmuel Rubin, our current President and Chief Executive Officer, and a director; · Albert Miranda, our current Chief Financial Officer. Compensation Philosophy and Objectives Our compensation policy is designed to attract and retain qualified key executive officers critical to our achievement of reaching and maintaining profitability and positive cash flow, and subsequently our growth and long-term success. To attract, retain, and motivate the executive officers to accomplish our business strategy, the Compensation Committee establishes our executive compensation policies and oversees our executive compensation practices. The Compensation Committee believes that the most effective executive compensation program is one that is designed to recognize the achievement of our specific short-term and long-term goals, and which aligns executives’ interests with those of the stockholders by rewarding performance that meets or exceeds established goals, with the ultimate objective of improving stockholder value. It is the objective of the Compensation Committee to have a portion of each named executive officer’s compensation contingent upon our performance as well as upon the individual’s personal performance. Accordingly, each named executive officer’s compensation package is comprised of two elements: (i) base salary, which reflects individual performance and expertise and (ii) short-term and long-term incentive awards, which are tied to the achievement of certain performance goals that the Compensation Committee establishes from time to time. The Compensation Committee has structured compensation of our named executive officers to incentivize achievement of our business goals and reward our named executive officers for achieving such goals. The Compensation Committee also evaluates our compensation program to ensure that we maintain the ability to attract and retain superior employees in key positions and that compensation provided to key employees remains competitive relative to the compensation paid to similarly situated executive officers. In accordance with the advisory “say-on-frequency” vote of our stockholders at the fiscal year 2017 annual meeting of stockholders, held in January 2017, and as approved by the Board, we will include an annual advisory “say-on-pay” vote in our proxy statement, including the Proxy Statement for the fiscal year 2024 annual meeting of stockholders. Our next required stockholder advisory “say-on-frequency” vote will occur at our fiscal year 2030 annual meeting of stockholders. The most recent “say-on-pay” advisory vote occurred at the fiscal year 2023 annual meeting of stockholders, at which our stockholders approved, on an advisory basis, the compensation of our named executive officers. 45 Table of Contents Setting Executive Compensation In making compensation decisions, the Compensation Committee relies on the following: · the annual reviews made by the Chief Executive Officer with respect to the performance of each of our other named executive officers; · the annual review conducted by the Compensation Committee with respect to the performance of the Chief Executive Officer; · compensation paid to executive officers of other manufacturing companies similar in size and scope as us and our competitors; and · our annual performance with respect to our short-term and long-term strategic plan. There is no pre-established policy or target for the allocation between either cash and non-cash or short-term and long-term incentive compensation. Rather, the Compensation Committee annually reviews information to determine the appropriate level and mix of incentive compensation when determining our executive compensation plan. Based on these factors, the Compensation Committee makes compensation decisions, including salary adjustments, annual short-term cash incentive awards, and long-term equity incentive awards for our named executive officers. Retirement Benefits We offer a qualified 401(k) defined contribution plan. The ability of named executive officers to participate fully in this plan is limited under the requirements of the Internal Revenue Code of 1986, as amended, and the Employment Retirement Income Security Act of 1974, as amended. We currently match 100% of the first 2% of employee contributions. Executive Compensation and Risk Although a substantial portion of the compensation paid to our named executive officers is performance-based, we believe our executive compensation programs do not encourage excessive and unnecessary risk-taking by our named executive officers because these programs are designed to encourage our named executive officers to remain focused on both our short-term and long-term operation and financial goals. We achieve this balance through a combination of elements in our overall compensation plans, including: (i) elements that reward different aspects of short-term and long-term performance; (ii) incentive compensation that rewards performance on a variety of different measures; and (iii) cash awards and stock option awards, to encourage alignment with the interests of stockholders. Clawback Policy The Compensation Committee of the Board has adopted a formal Compensation Clawback Policy, as required by the NASDAQ Listing Standards. The Clawback Policy provides for the recovery of incentive-based compensation erroneously received by current or former executive officers during the three fiscal years immediately preceding the year in which the company is required to prepare an accounting restatement due to material noncompliance with financial reporting requirements. The requirements under the Clawback Policy are separate from any recoupment required by the Sarbanes-Oxley Act of 2002. The Committee also has discretion to seek recovery of any amount that it determines was received otherwise inappropriately by such individuals. 2024 Incentive Program Our fiscal year 2024 incentive program has two key components: (i) the Short-Term Incentive (“STI”) program, and (ii) the Long-Term Incentive (“LTI”) program. The STI program is comprised of awards based on our achievement of specific fiscal year 2024 financial objectives (the “2024 STI Award”). The LTI program is comprised of (i) an individual RSU award, based on total shareholder return (the “2024 TSR Award”), which is calculated based on the overall change in LPTH stock price per share, as compared to the Russell MicroCap Index, and (ii) retention RSUs that will vest in three equal annual installments (the “2024 Retention RSU Award” and, together with the 2024 LTI TSR Award, the “2024 LTI Awards”). Our incentive program includes different levels of bonus opportunity based on a participant’s position with the Company. For fiscal year 2024, Mr. Rubin was the only “level one” participant, and Mr. Miranda was a “level two” participant. Bonus opportunities for Mr. Rubin and Mr. Miranda for fiscal year 2024 were calculated by applying designated portions of their respective bonus pool amounts, which were set by the Compensation Committee, to formulas for each of the components of the STI and LTI programs, as applicable. STI Program For both the level one and level two participant, the 2024 STI Award was based on the achievement of corporate financial objectives and personalized goals, with a minimum of 60% of the EBITDA target required to earn any bonus. The corporate financial objectives are as follows: (i) EBITDA (which is earnings before income, taxes, depreciation, and amortization) (the “EBITDA Component”); and (ii) revenue growth over that of the prior fiscal year (the “Revenue Component”). The EBITDA Component was weighted at 60%, the Revenue Component was weighted at 20%, and the personalized goals were weighted at 20%. For fiscal year 2024, the bonus pool amounts for the 2024 STI Award for Mr. Rubin and Mr. Miranda were set at $193,832 and $98,280, respectively. The Compensation Committee determined that achievement of the 2024 STI Award would be paid in cash and stock options, with the percentage split of the payout to be determined at the discretion of the Board. 46 Table of Contents EBITDA Component In order for the participants to earn a bonus with respect to the EBITDA Component, we had to meet or exceed a minimum EBITDA target established by the Compensation Committee for fiscal year 2024. Further, we had to meet or exceed at least 60% of that EBITDA target in order to earn any portion of the 2024 STI Award. For fiscal year 2024, EBITDA was a loss of approximately $3.7 million, which was below the target amount. The achieved EBITDA also did not meet 60% of the EBITDA target. Accordingly, Mr. Rubin and Mr. Miranda did not earn any portion of the 2024 STI Award. LTI Program The 2024 LTI Awards are comprised of two components: (i) the 2024 Retention RSU Award and (ii) the 2024 TSR Award. For fiscal year 2024, the bonus pool amounts for the 2024 LTI Award for Mr. Rubin and Mr. Miranda were set at $164,980 and $71,626, respectively. The bonus pool amounts for the 2024 Retention RSU Award and the 2024 TSR Award would each be 50% of the respective bonus pool amount for the 2024 LTI Award. 2024 Retention RSU Award The 2024 Retention RSU Award was calculated to be $82,490 and $35,813 for Mr. Rubin and Mr. Miranda, respectively. The RSUs were granted on January 31, 2024, based on the closing bid price of $1.37 on that day, with one-third of the RSUs to vest on each of the first, second and third anniversaries of the grant date. 2024 TSR Award In order to earn the 2024 TSR Award, the TSR calculated for LPTH stock was measured against the Russell MicroCap Index. TSR is calculated as the overall change in LPTH’s stock price per share from the beginning of fiscal year 2024 to the end of fiscal year 2024, divided by the stock price per share at the beginning of the fiscal year. The calculated TSR for fiscal year 2024 was less favorable than the change in the Russell MicroCap Index, therefore the 2024 TSR Award was not earned. 2023 Incentive Program Our fiscal year 2023 incentive program has two key components: (i) the Short-Term Incentive (“STI”) program, and (ii) the Long-Term Incentive (“LTI”) program. The STI program is comprised of awards based on our achievement of specific fiscal year 2023 financial objectives (the “2023 STI Award”). The LTI program is comprised of (i) an individual RSU award, based on total shareholder return (the “2023 TSR Award”), which is calculated based on the overall change in LPTH stock price per share, as compared to the Russell MicroCap Index, and (ii) retention RSUs that will vest in three equal annual installments (the “2023 Retention RSU Award” and, together with the 2023 LTI TSR Award, the “2023 LTI Awards”). Our incentive program includes different levels of bonus opportunity based on a participant’s position with the Company. For fiscal year 2023, Mr. Rubin was the only “level one” participant, and Mr. Miranda was a “level two” participant. Bonus opportunities for Mr. Rubin and Mr. Miranda for fiscal year 2023 were calculated by applying designated portions of their respective bonus pool amounts, which were set by the Compensation Committee, to formulas for each of the components of the STI and LTI programs, as applicable. STI Program For both the level one and level two participant, the 2023 STI Award was based on the achievement of corporate financial objectives and personalized goals, with a minimum of 60% of the EBITDA target required to earn any bonus. The corporate financial objectives are as follows: (i) EBITDA (which is earnings before income, taxes, depreciation, and amortization) (the “EBITDA Component”); and (ii) revenue growth over that of the prior fiscal year (the “Revenue Component”). The EBITDA Component was weighted at 60%, the Revenue Component was weighted at 20%, and the personalized goals were weighted at 20%. For fiscal year 2023, the bonus pool amounts for the 2023 STI Award for Mr. Rubin and Mr. Miranda were set at $186,377 and $94,500, respectively. The Compensation Committee determined that achievement of the 2023 STI Award would be paid in cash and stock options, with the percentage split of the payout to be determined at the discretion of the Board. 47 Table of Contents EBITDA Component In order for the participants to earn a bonus with respect to the EBITDA Component, we had to meet or exceed a minimum EBITDA target established by the Compensation Committee for fiscal year 2023. Further, we had to meet or exceed at least 60% of that EBITDA target in order to earn any portion of the 2023 STI Award. For fiscal year 2023, EBITDA was a loss of approximately $355,000, which was below the target amount. The achieved EBITDA also did not meet 60% of the EBITDA target. Accordingly, Mr. Rubin and Mr. Miranda did not earn any portion of the 2023 STI Award. LTI Program The 2023 LTI Awards are comprised of two components: (i) the 2023 Retention RSU Award and (ii) the 2023 TSR Award. For fiscal year 2023, the bonus pool amounts for the 2023 LTI Award for Mr. Rubin and Mr. Miranda were set at $158,635 and $68,871, respectively. The bonus pool amounts for the 2023 Retention RSU Award and the 2023 TSR Award would each be 50% of the respective bonus pool amount for the 2023 LTI Award. 2023 Retention RSU Award The 2023 Retention RSU Award was calculated to be $79,318 and $34,436 for Mr. Rubin and Mr. Miranda, respectively. The RSUs were granted on November 17, 2022, based on the closing bid price of $1.18 on that day, with one-third of the RSUs to vest on each of the first, second and third anniversaries of the grant date. 2023 TSR Award In order to earn the 2023 TSR Award, the TSR calculated for LPTH stock was measured against the Russell MicroCap Index. TSR is calculated as the overall change in LPTH’s stock price per share from the beginning of fiscal year 2023 to the end of fiscal year 2023, divided by the stock price per share at the beginning of the fiscal year. The calculated TSR for fiscal year 2023 was more favorable than the change in the Russell MicroCap Index, therefore the 2023 TSR Award was earned. The 2023 TSR Award was calculated to be $79,318 and $34,436 for Mr. Rubin and Mr. Miranda, respectively. The RSUs were granted on January 31, 2024, following the annual stockholder meeting, based on the closing bid price on that day, with one-third of the RSUs to vest on each of the first, second and third anniversaries of the grant date. 2021 Incentive Program The 2021 incentive program included a multi-year award with performance targets for fiscal years 2021, 2022 and 2023. Mr. Rubin was eligible for this award, however no points were earned toward this award. Summary Compensation Table The following table sets forth certain compensation awarded to, earned by or paid to (i) any individuals serving as our Chief Executive Officer during fiscal year 2024 and (ii) our two other most highly compensated executive officers serving as executive officers at the end of fiscal year 2024 Mr. Miranda was the only other individual serving as an executive officer at the end of fiscal year 2024. Stock Option Non-Equity Incentive Plan All Other Total Name and Position Fiscal Salary Awards Awards Compensation Compensation ($) Year ($) ($) (1) ($) (2) ($) ($) (3) (a) (b) (c) (e) (f) (g) (i) (j) Shmuel Rubin 2024 $ 378,092 (4) $ 82,490 (4) — — $ 17,460 $ 478,042 President & Chief Executive Officer 2023 $ 360,500 (4) $ 171,765 (4) — — $ 21,457 $ 553,722 Albert Miranda 2024 $ 243,059 (5) $ 35,813 (5) — — $ 13,665 $ 292,537 Chief Financial Officer 2023 $ 231,750 (5) $ 78,959 (5) — — $ 19,445 $ 330,154 Notes: (1) For valuation assumptions on stock awards refer to Note 10 to the Consolidated Financial Statements of our Annual Report on Form 10-K for fiscal year 2024. The disclosed amounts reflect the fair value of the RSU awards that were earned during the fiscal years ended June 30, 2024 and 2023 in accordance with FASB ASC Topic 718. (2) No stock option awards were granted to Mr. Rubin or Mr. Miranda during the fiscal years ended June 30, 2024 and 2023. (3) “All Other Compensation,” as defined by SEC rules does not include the amounts that qualify under the applicable de minimis rule for all periods presented. The de minimis rules does not require reporting of perquisites and other compensation that totals less than $10,000 in the aggregate. For fiscal year 2024 and 2023, the nature of these compensatory items includes our contribution toward the premium costs for employee and dependent medical, life, and disability income insurances, benefits generally available to our employees, vacation buyout, and the Company’s match on contributions under the 401k plan. (4) Mr. Rubin’s base salary was 79% and 65% of his total compensation for fiscal years 2024 and 2023, respectively. For fiscal year 2024, Mr. Rubin was granted an RSU award in connection with the 2024 Retention RSU Award. For fiscal year 2023, Mr. Rubin was granted an RSU award in connection with the 2023 Retention RSU Award and was also granted an RSA Award in lieu of an adjustment to his cash compensation. The amounts in the table reflect the fair value of these awards in accordance with FASB ASC Topic 718. For additional information with respect to this grant, including the vesting schedules, please see “Discussion of Summary Compensation Table of Named Executive Officers” below. (5) Mr. Miranda’s base salary was 83% and 70% of his total compensation for fiscal years 2024 and 2023, respectively. For fiscal year 2024 Mr. Miranda was granted an RSU award in connection with the 2024 Retention RSU Award. For fiscal year 2023, Mr. Miranda was granted an RSU award in connection with the 2023 Retention RSU Award and was also granted an RSA Award in lieu of an adjustment to his cash compensation. The amount in the table reflects the fair value of this award in accordance with FASB ASC Topic 718. For additional information with respect to these grants, including the vesting schedules, please see “Discussion of Summary Compensation Table of Named Executive Officers” below. 48 Table of Contents Narrative Discussion of Summary Compensation Table of Named Executive Officers The following is a narrative discussion of the material information that we believe is necessary to understand the information disclosed in the foregoing Summary Compensation Table. With respect to fiscal year 2024, each named executive officer received a base salary and certain named executive officers were eligible for a 2024 STI Award, a 2024 Retention RSU Award, and a 2024 TSR Award. Information on the specific components of executive compensation for fiscal year 2024 can be found above under the heading “2024 Incentive Program.” With respect to fiscal year 2023, each named executive officer received a base salary and certain named executive officers were eligible for a 2023 STI Award, a 2023 Retention RSU Award, and a 2023 TSR Award. Information on the specific components of executive compensation for fiscal year 2023 can be found above under the heading “2023 Incentive Program.” Employment Agreements Shmuel Rubin In connection with Mr. Rubin’s appointment, the Company entered into an employment agreement with Mr. Rubin on February 24, 2020 (the “Rubin Employment Agreement”). The Company and Mr. Rubin orally agreed that Mr. Rubin’s appointment as the President and CEO of the Company would be effective on March 9, 2020. The Agreement does not provide for a specified term of employment and Mr. Rubin’s employment is on an at-will basis. Mr. Rubin receives an annual base salary of $390,000, payable in equal bi-weekly installments, and is eligible to participate in all of the Company’s bonus, incentive compensation, and performance based compensation plans, including, but not limited to the “SICP”, under which the Company’s executive officers are eligible to earn incentive compensation consisting of cash and/or equity awards based upon the achievement of certain individual and/or Company performance goals set by the Compensation Committee. The Company’s incentive bonus program includes different levels of bonus opportunity based on a participant’s position with the Company. For this purpose, Mr. Rubin is considered a “level one” participant. Mr. Rubin is eligible to participate in the Company’s employee benefit, welfare, and other plans, as may be maintained by the Company from time to time. The Company also agreed to provide a relocation allowance of up to $50,000 payable by the Company on receipt of relocation expense receipts. The total period for relocation reimbursement concluded on August 1, 2020. The Company will provide up to $15,000 in addition to the reimbursed relocation expenses to account for federal income taxes incurred by Mr. Rubin as a result of the relocation reimbursement. Mr. Rubin was required to reimburse the Company a prorated portion of all expenses paid by the Company if he left the Company for any reason other than death, disability, or discharge without cause within twelve (12) months of his relocation. Pursuant to the Rubin Employment Agreement, Mr. Rubin was granted, on a one-time basis, a restricted stock award consisting of 100,000 shares of the Company’s Class A common Stock, par value $0.01 per share, with 50% of the shares of the Class A common stock vesting on the third anniversary of the grant date, and the remaining 50% vesting on the fourth anniversary of the grant date. The restricted stock award will be in all respects subject to the SICP and any amendments thereto, and conditioned upon Mr. Rubin’s execution of a restricted stock award agreement evidencing the grant. Also pursuant to the Rubin Employment Agreement, Mr. Rubin was granted option to purchase 225,000 shares of the Company’s Class A common stock, having an exercise price per share equal to the greater of (i) $1.37 per share or (ii) 115% of the closing bid price of the Class A common stock as reported on the NCM on the grant date, or February 24, 2020. Fifty-thousand shares of the Common Stock underlying the stock option will vest on each of the first, second, and third, anniversaries of the grant date, with the remaining seventy-five thousand shares of the Common Stock vesting on the fourth anniversary of the grant date. The option award will have a ten-year term, subject to earlier expiration as provided in the SICP or the option agreement. The option award will be in all respects subject to the SICP and any amendments thereto, and conditioned upon Mr. Rubin’s execution of a stock option agreement evidencing the grant of the option award. Albert Miranda In connection with Mr. Miranda’s appointment, we entered into an employment agreement with Mr. Miranda on April 19, 2021 (the “Miranda Employment Agreement”). Pursuant to the Miranda Employment Agreement, Mr. Miranda served as Vice President of Finance beginning on April 19, 2021 until May 7, 2021, at which time, Mr. Miranda transitioned into the role of Chief Financial Officer. The Miranda Employment Agreement does not provide for a specified term of employment and Mr. Miranda’s employment is on an at-will basis. Mr. Miranda receives an annual base salary of $251,000, payable in equal bi-weekly installments, and is eligible to participate in all of our bonus, incentive compensation, and performance based compensation plans, including, but not limited to, the SICP, under which our executive officers are eligible to earn incentive compensation consisting of cash and/or equity awards based upon the achievement of certain individual and/or performance goals set by the Compensation Committee. Mr. Miranda is eligible to participate in our employee benefit, welfare, and other plans, as may be maintained by us from time to time. We agreed to provide a relocation allowance of up to $10,000 payable by us on receipt of relocation expense receipts. The total period for relocation reimbursement concluded six months from the effective date of the Miranda Employment Agreement; however, exceptions may be granted by the Compensation Committee. Mr. Miranda must reimburse the Company a prorated portion of all expenses paid by us if he leaves us for any reason other than death, disability, or discharge without cause within twelve (12) months of his relocation. Pursuant to the Miranda Employment Agreement, we granted Mr. Miranda an option to purchase up to 75,000 shares of Class A common stock, having an exercise price per share equal to the greater of (i) our book value per share on that date or (ii) 115% of the closing bid price of the Class A common stock as reported on the NCM on the grant date. The stock options will have a four-year vesting period with 25% vesting each year. The option award will have a ten-year term, subject to earlier expiration as provided in the SICP or the option agreement, as defined below. The option award will be in all respects subject to the SICP and any amendments thereto, and the option award. Potential Payments Upon Termination or Change-of-Control Neither Mr. Rubin nor Mr. Miranda are entitled to any payments upon termination or change-of-control. 49 Table of Contents Outstanding Equity Awards at Fiscal Year-End Option Awards RSU Awards (a) Name (b) Number of Securities Underlying Unexercised Options (#) Exercisable (c) Number of Securities Underlying Unexercised Options (#) Unexercisable (e) Option Exercise Price ($) (f) Option Expiration Date (g) Number of Shares or Units of Stock That Have Not Vested (h) Market Value of Shares or Units of Stock That Have Not Vested Vesting Schedule Shmuel Rubin 225,000 -- $ 1.58 50,000 shares/yr for 3 yrs; 75,000 shares on 4th anniversary 11/11/2031 14,138 $ 17,674 3 years, 1/3 per year 11/17/2032 44,813 $ 56,016 3 years, 1/3 per year 1/31/2034 118,108 $ 147,635 3 years, 1/3 per year Albert Miranda 56,250 18,750 $ 3.02 4/19/2031 25%/yr for 4 yrs 11/11/2031 6,139 $ 7,673 3 years, 1/3 per year 11/17/2032 19,455 $ 24,319 3 years, 1/3 per year 1/31/2034 51,277 $ 64,096 3 years, 1/3 per year The stock options were issued pursuant to the SICP and have a ten-year life. The options will terminate 90 days after termination of employment, or in the case of termination due to death or permanent disability, the options will terminate one year after the date of termination. Director Compensation The table below summarizes the compensation paid by us to non-employee directors for fiscal year 2024: Fees Earned or Stock All Other Total Name (1) Paid in Cash Awards Compensation ($) ($)(2) ($)(4) ($) (a) (b) (c) (g) (h) M. Scott Faris, Chair $ 55,000 $ 60,000 $ - $ 115,000 Louis Leeburg $ 22,000 (3) $ - $ - $ 22,000 Dr. Joseph Menaker $ 36,000 $ 60,000 $ - $ 96,000 Darcie Peck $ 40,000 $ 60,000 $ - $ 100,000 S. Eric Creviston $ 40,000 $ 60,000 $ - $ 100,000 Kim Crider $ 18,000 $ 60,000 $ - $ 78,000 (1) Shmuel Rubin, our President and Chief Executive Officer during fiscal year 2024, is not included in this table as he was an employee and, thus, received no compensation for his services as a director. The compensation received by Mr. Rubin as an employee is disclosed in the Summary Compensation Table on page 48. 50 Table of Contents (2) Total fees earned for fiscal year 2024 includes all fees earned, including earned but unpaid fees. The amounts of unpaid fees for each director as of June 30, 2024, were as follows: Mr. Faris - $41,250, Mr. Leeburg - $11,000, Ms. Crider - $18,000, Dr. Menaker - $27,000, Ms. Peck - $31,000 and Mr. Creviston - $30,000. (3) Mr. Leeburg retired during fiscal 2024, and was compensated through the last quarter he served as a director. (4) The table reflects the fair value amount for RSUs granted for the fiscal year ended June 30, 2024, in accordance with ASC Topic 718. The directors were entitled to a restricted stock award equal to $60,000. The Company has a policy of granting performance-related stock options and RSUs at the greater of the closing bid price of our Class A common stock on the grant date or the book value per share of our Class A common stock as of the end of the most recent fiscal quarter. The fiscal year 2024 director award of 43,796 RSUs was based on the closing bid price of our Class A common stock on the grant date, or $1.37. Discussion of the Summary Compensation Table of Directors The following is a discussion of the material information that we believe is necessary to understand the information disclosed in the Summary Compensation Table. We use a combination of cash and stock-based incentive compensation to attract and retain qualified candidates to serve on our Board. In setting director compensation, we consider the significant amount of time that directors expend in fulfilling their duties as a director as well as the skill-level required by us of members of our Board. For fiscal year 2024, the cash and stock-based incentive compensation awarded to directors remained essentially at the same levels set in fiscal year 2023. For fiscal year 2025, the cash and stock-based incentive compensation awarded to directors is expected to remain at the same levels set in fiscal 2024. Cash Compensation Paid to Board Members During fiscal year 2024, directors received a monthly retainer of $3,000 per month. There are no meeting attendance fees paid unless, by action of the Board, such fees are deemed advisable due to a special project or other effort requiring extra-normal commitment of time and effort. Additionally, fees are paid to the Chair of the Board and Committee Chairs for their additional responsibilities in overseeing their respective functions. Due to mid-year director appointments and committee changes, certain fees were pro-rated for fiscal year 2024. The following table sets forth the annual fees paid to each director for fiscal year 2024: Board Fee Chair Fee Committee Chair Fee Total Fees Earned for Fiscal Year 2024 M. Scott Faris $ 36,000 $ 15,000 $ 4,000 $ 55,000 Louis Leeburg $ 18,000 $ 4,000 $ 22,000 Dr. Joseph Menaker $ 36,000 $ 36,000 Darcie Peck $ 36,000 $ 4,000 $ 40,000 S. Eric Creviston $ 36,000 $ 4,000 $ 40,000 Kim Crider $ 18,000 $ 18,000 Shmuel Rubin (1) $ - $ - (1) Mr. Rubin did not receive any compensation for his service as a director because he is also an employee. 51 Table of Contents Stock Option/Restricted Stock Program All directors are eligible to receive equity incentives under the SICP, including stock options, restricted stock awards, or RSUs. In fiscal year 2024, the following directors received grants under the SICP: Name of Director (1) Restricted Stock Units Number of Units Granted Grant Date Fair Value Per Share M. Scott Faris, Chair 43,796 1/31/2024 $ 1.37 Dr. Joseph Menaker 43,796 1/31/2024 $ 1.37 Darcie Peck 43,796 1/31/2024 $ 1.37 S. Eric Creviston 43,796 1/31/2024 $ 1.37 Kim Crider 43,796 1/31/2024 $ 1.37 218,980 (1) Mr. Rubin did not receive any compensation for his service as a director because he is also an employee. Item 12. Security Ownership of Certain Beneficial Owners and Management. The following table sets forth, as of September 6, 2024, the number and percentage of outstanding shares of our Class A common stock, owned by: (i) each of our directors (which includes all nominees), (ii) each of the named executive officers, (iii) our directors and executive officers as a group, and (iv) each person known by us to be the beneficial owner of more than 5% of our outstanding Class A common stock. The number of shares of Class A common stock outstanding as of September 6, 2024 was 39,254,643. The number of shares beneficially owned by each director, named executive officer, and greater than 5% beneficial owner is determined under SEC rules, and the information is not necessarily indicative of the beneficial ownership for any other purpose. Under such rules, beneficial ownership includes any shares to which the individual has the sole or shared voting power or investment power and also any shares which the individual has the right to acquire within 60 days of September 6, 2024, through the exercise of any stock option or other right to purchase, such as a warrant. Unless otherwise indicated, each person has sole investment and voting power (or shares such power with his or her spouse) with respect to the shares set forth in the following table. In certain instances, the number of shares listed may include, in addition to shares owned directly, shares held by the spouse or children of the person, or by a trust or estate of which the person is a trustee or an executor or in which the person may have a beneficial interest. The table that follows is based upon information supplied in a questionnaire completed by each named executive officer and director and stockholders beneficially owning greater than 5% of our Class A common stock. 52 Table of Contents Securities Class A Common Stock Name and Address (1) Restricted (2) Common Stock Stock Options Amount of Shares of Class A Common Stock Beneficially Owned Percent Owned (%) M. Scott Faris, Chair 445,205 3,940 449,145 1.1 % Dr. Joseph Menaker, Director 229,738 229,738 * Darcie Peck, Director 43,796 159,655 203,451 (3) * S. Eric Creviston, Director 43,796 108,261 152,057 * Kim Crider, Director 43,796 43,796 * Shmuel Rubin, CEO 177,059 170,378 225,000 572,437 1.4 % Albert Miranda, CFO 76,871 31,205 56,250 164,326 * All directors and executive officers currently holding office as a group (7 persons) 1,060,261 473,439 281,250 1,814,950 4.5 % Greater than 5% beneficial owners: AIGH Capital Management, LLC 3,723,932 3,723,932 9.5 % AMH Equity, LLC / Leviticus Partners, L.P. 2,959,230 2,959,230 7.5 % Marathon Micro Fund, LP 2,075,000 2,075,000 5.3 % Archon Capital Management LLC 2,045,534 2,045,534 5.2 % *Less than 1% Notes: (1) Except as otherwise noted, each of the parties listed above has sole voting and investment power over the securities listed. The address for all directors and officers is “in care of” LightPath Technologies, Inc., 2603 Challenger Tech Court, Suite 100, Orlando, Florida 32826. The address for AIGH Capital Management, LLC, as filed on a Schedule 13G/A filed on February 7, 2024, is 6006 Berkeley Ave, Baltimore, MD 21209. The address for AMH Equity LLC / Leviticus Partners, L.P., as jointly filed on a Schedule 13G/A filed on February 13, 2024, is 32 Old Mill Road, Great Neck, NY 11023. The address for Marathon Micro Fund, L.P., as filed on Schedule 13G/A filed on February 3, 2023, is 4 North Park Drive, Suite 106, Hunt Valley, MD 21030. The address for Archon Capital Management LLC, as filed on Schedule 13G filed on February 13, 2024, is 1100 19th Avenue E, Seattle, Washington 98112. (2) Historically, restricted stock units (“RSUs”) awarded to our directors vest over three years. Beginning with the November 2021 grants, RSUs awarded to our directors now vest over one year, to more accurately reflect the period of service. Except for Darcie Peck and Eric Creviston, all of our directors have elected to defer receipt of the vested shares until after they leave the Board, either by reason of resignation, termination, or otherwise. For the directors who have elected to defer, the vested shares remain unissued. All of the directors’ unvested RSUs will vest upon such director’s resignation or termination from the Board. The amounts of restricted stock set forth above reflects both vested and unvested shares included in the RSU awards. As of September 6, 2024, the amounts of vested and unissued shares for each director, other than Mr. Rubin, are as follows: Mr. Faris – 445,205, and Dr. Menaker – 229,738; Ms. Peck, Mr. Creviston and Ms. Crider do not have any vested and unissued shares. (3) Includes 22,500 shares of Class A common stock, which are held by Ms. Peck’s husband. 53 Table of Contents Securities Authorized for Issuance Under Equity Compensation Plans. The following table sets forth information with respect to compensation plans under which our equity securities are authorized for issuance as of the end of fiscal year 2024: Plan category Number of securities to be issued upon exercise of outstanding options, warrants and rights (1) Weighted average exercise and grant price of outstanding options, warrants and rights (2) Number of securities remaining available for future issuance Equity compensation plans approved by security holders 1,965,361 $ 1.59 863,305 Equity compensation plans not approved by security holders - - - (1) Represents the number of underlying shares of Class A common stock associated with outstanding stock options and outstanding RSUs and RSAs that have been granted, but not yet issued, pursuant to either the Omnibus Plan or the SICP, as applicable. (2) Represents weighted-average exercise price of stock options outstanding under the Omnibus Plan or the SICP, as applicable. The weighted-average exercise price includes the RSU and RSA awards at the issue date stock price. Item 13. Certain Relationships and Related Transactions, and Director Independence. Director Independence In accordance with the NCM and SEC rules, the Board affirmatively determines the independence of each director and director nominee in accordance with guidelines it has adopted, which include all elements of independence set forth in the NCM listing standards. Based on these standards, the Board has determined that as of the end of fiscal year 2024, each of the following non-employee directors was independent and has no relationship with us, except as one of our directors and stockholders: M. Scott Faris Kim Crider Darcie Peck S. Eric Creviston Joseph Menaker Based on these standards, the Board determined Shmuel Rubin, currently a Class III Director, is not independent. All of the members of the Audit, Nominating, and Compensation Committees are independent. The Board approved an Amended and Restated Code of Business Conduct and Ethics (the “Code”) on April 28, 2016. The Code applies to all of our employees, officers, and directors, including our principal executive officer, principal financial officer, and principal accounting officer or controller, or persons performing similar functions. The Board also approved an Amended and Restated Code of Business Conduct and Ethics for Senior Financial Officers (the “Senior Financial Officer Code”), which applies to our Chief Executive Officer, Chief Financial Officer, principal accounting officer, controller, accounting manager, and persons performing similar functions. Copies of the Code and the Senior Financial Officer Code are available on our website at www.lightpath.com , under the “Investors” tab, or may be obtained free of charge by writing to: Corporate Secretary, LightPath Technologies, Inc., 2603 Challenger Tech Court, Suite 100, Orlando, Florida 32826. Related Party Transactions When we are contemplating entering into any transaction in which any executive officer, director, director nominee, or any family member of the foregoing would have any direct or indirect interest, regardless of the amount involved, the terms of such transaction have to be presented to the Audit Committee (other than any interested director) for approval or disapproval. Neither the Audit Committee nor the Board have adopted a written policy for reviewing related party transactions but when presented with such transaction, the transaction is discussed by the Audit Committee and documented in its meeting minutes. The Code also requires our employees, officers, and directors to provide prompt and full disclosure of all potential conflicts of interest to the appropriate person. These conflicts of interest may be specific to the individual or may extend to his or her family members. Any officer who has a conflict of interest with respect to any matter is required to disclose the matter to our Chief Executive Officer or, in the case of the Chief Executive Officer, to the Chair of the Audit Committee. All other employees are required to make prompt and full disclosure of any conflict of interest to his or her immediate supervisor, who will then make prompt and full disclosure to our Chief Executive Officer. Directors are required to disclose any conflict of interests to the Chair of the Audit Committee and are prohibited from voting on any matter(s) in which they have a conflict of interest. In addition, directors and executive officers are required to disclose in an annual questionnaire, any current or proposed conflict of interests (including related party transactions). 54 Table of Contents From the period beginning July 1, 2023 and ending September 16, 2024, there were no current or proposed material related party transactions. Item 14. Principal Accountant Fees and Services. The following table presents fees paid or to be paid for professional audit services rendered by MSL for the audit of our annual financial statements during the years ended June 30, 2024 and 2023, review of financial statements included in our quarterly reports during the years ended June 30, 2024 and 2023, and fees billed for other services rendered: Fiscal Year 2024 Fiscal Year 2023 Audit Fees (1) $ 185,200 $ 177,850 Tax Fees (2) - 28,000 All Other Fees (3) 19,900 25,910 Total All Fees (4) $ 205,100 $ 231,760 (1) Audit Fees consisted of fees billed for professional services rendered for the audit of our annual financial statements and review of the interim financial statements included in quarterly reports, and review of other documents filed with the SEC within those fiscal years. (2) Tax fees consisted of fees billed for professional services rendered for the preparation and filing of our annual tax returns for fiscal year 2022. We did not engage MSL to prepare and file our annual tax returns for fiscal year 2023. (3) All other fees for fiscal year 2024 primarily consist of fees billed for professional services related to the at-the-market equity program. All Other Fees for fiscal year 2023 consist of fees billed for professional services related to the Prospectus filed on January 12, 2023, and due diligence procedures in connection with an acquisition. (4) There were no audit-related fees during fiscal year 2024 or fiscal year 2023. The Audit Committee has adopted policies and procedures to oversee the external audit process including engagement letters, estimated fees and solely pre-approving all permitted audit and non-audit work performed by MSL, as applicable. The Audit Committee has pre-approved all fees for audit, audit-related and non-audit work performed. 55 Table of Contents PART IV Item 15. Exhibits, Financial Statement Schedules. (a) The following documents are filed as part of this Annual Report on Form 10-K: (1) Financial Statements – See Index on page F-1 of this report (2) Financial Statement Schedules – None (b) The following exhibits are filed herewith as a part of this report Exhibit Number Description 3.1.1 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. 000-25748) filed with the Securities and Exchange Commission on September 10, 2020, and is incorporated herein by reference thereto. 3.1.2 Certificate of Amendment to Certificate of Incorporation of LightPath Technologies, Inc., filed October 2, 1995 with the Secretary of State of Delaware, which was filed as exhibit 3.1.2 to our Annual Report on Form 10-K (File No. 000-25748) filed with the Securities and Exchange Commission on September 10, 2020, and is incorporated herein by reference thereto. 3.1.3 Certificate of Designations of Class A common stock and Class E-1 common stock, Class E-2 common stock, and Class E-3 common stock of LightPath Technologies, Inc., filed November 9, 1995 with the Secretary of State of Delaware, which was filed as Exhibit 3.1.3 to our Annual Report on Form 10-K (File No. 000-25748) filed with the Securities and Exchange Commission on September 10, 2020, and is incorporated herein by reference thereto. 3.1.4 Certificate of Designation of Series A Preferred Stock of LightPath Technologies, Inc., filed July 9, 1997 with the Secretary of State of Delaware, which was filed as Exhibit 3.4 to our Annual Report on Form 10-KSB40 filed with the Securities and Exchange Commission on September 11, 1997, and is incorporated herein by reference thereto. 3.1.5 Certificate of Designation of Series B Stock of LightPath Technologies, Inc., filed October 2, 1997 with the Secretary of State of Delaware, which was filed as Exhibit 3.2 to our Quarterly Report on Form 10-QSB (File No. 000-27548) filed with the Securities and Exchange Commission on November 14, 1997, and is incorporated herein by reference thereto. 3.1.6 Certificate of Amendment of Certificate of Incorporation of LightPath Technologies, Inc., filed November 12, 1997 with the Secretary of State of Delaware, which was filed as Exhibit 3.1 to our Quarterly Report on Form 10-QSB (File No. 000-27548) filed with the Securities and Exchange Commission on November 14, 1997, and is incorporated herein by reference thereto. 3.1.7 Certificate of Designation of Series C Preferred Stock of LightPath Technologies, Inc., filed February 6, 1998 with the Secretary of State of Delaware, which was filed as Exhibit 3.2 to our Registration Statement on Form S-3 (File No. 333-47905) filed with the Securities and Exchange Commission on March 13, 1998, and is incorporated herein by reference thereto. 3.1.8 Certificate of Designation, Preferences and Rights of Series D Participating Preferred Stock of LightPath Technologies, Inc. filed April 29, 1998 with the Secretary of State of Delaware, which was filed as Exhibit 1 to our Registration Statement on Form 8-A (File No. 000-27548) filed with the Securities and Exchange Commission on April 28, 1998, and is incorporated herein by reference thereto. 56 Table of Contents 3.1.9 Certificate of Designation of Series F Preferred Stock of LightPath Technologies, Inc., filed November 2, 1999 with the Secretary of State of Delaware, which was filed as Exhibit 3.2 to our Registration Statement on Form S-3 (File No: 333-94303) filed with the Securities and Exchange Commission on January 10, 2000, and is incorporated herein by reference thereto. 3.1.10 Certificate of Amendment of Certificate of Incorporation of LightPath Technologies, Inc., filed February 28, 2003 with the Secretary of State of Delaware, which was filed as Appendix A to our Proxy Statement (File No. 000-27548) filed with the Securities and Exchange Commission on January 24, 2003, and is incorporated herein by reference thereto. 3.1.11 Certificate of Amendment of Certificate of Incorporation of LightPath Technologies, Inc., filed March 1, 2016 with the Secretary of State of Delaware, which was filed as Exhibit 3.1.11 to our Quarterly Report on Form 10-Q (File No: 000-27548) filed with the Securities and Exchange Commission on November 14, 2016, and is incorporated herein by reference thereto. 3.1.12 Certificate of Amendment of Certificate of Incorporation of LightPath Technologies, Inc., filed October 30, 2017 with the Secretary of State of Delaware, which was filed as Exhibit 3.1 to our Current Report on Form 8-K (File No: 000-27548) filed with the Securities and Exchange Commission on October 31, 2017, and is incorporated herein by reference thereto. 3.1.13 Certificate of Amendment of Certificate of Designations of Class A Common Stock and Class E-1 Common Stock, Class E-2 Common Stock, and Class E-3 Common Stock of LightPath Technologies, Inc., filed October 30, 2017 with the Secretary of State of Delaware, which was filed as Exhibit 3.2 to our Current Report on Form 8-K (File No: 000-27548) filed with the Securities and Exchange Commission on October 31, 2017, and is incorporated herein by reference thereto. 3.1.14 Certificate of Amendment of Certificate of Designation, Preferences and Rights of Series D Participating Preferred Stock of LightPath Technologies, Inc., filed January 30, 2018 with the Secretary of State of Delaware, which was filed as Exhibit 3.1 to our Current Report on Form 8-K (File No: 000-27548) filed with the Securities and Exchange Commission on February 1, 2018, and is incorporated herein by references thereto. 3.1.15 Certificate of Amendment of Certificate of Incorporation of LightPath Technologies, Inc., filed January 31, 2024 with the Secretary of State of Delaware, which was filed as Exhibit 3.1 to our Current Report on Form 8-K (File No: 000-27548) filed with the Securities and Exchange Commission on February 6, 2024, and is incorporated herein by references thereto. 3.2.1 Second Amended and Restated Bylaws of LightPath Technologies, Inc., which was filed as Exhibit 3.1 to our Current Report on Form 8-K (File No: 000-27548) filed with the Securities and Exchange Commission on February 2, 2021, and is incorporated herein by reference thereto. 4.1 Description of Securities Registered under Section 12 of the Securities Exchange Act of 1934, as amended.* 10.1 Amended and Restated Omnibus Incentive Plan dated October 15, 2002, as amended, 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 October 31, 2017, and is incorporated herein by reference thereto. 10.2 LightPath Technologies, Inc. Employee Stock Purchase Plan effective January 30, 2015, which was filed as Appendix A to our Definitive Proxy Statement on Schedule 14A (File No.: 000-27548) filed with the Securities and Exchange Commission on December 19, 2014, and is incorporated herein by reference thereto. 10.3 Sixth Amendment to Lease dated as of July 2, 2014 between LightPath Technologies, Inc. and Challenger Discovery LLC, 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 July 8, 2014, and is incorporated herein by reference thereto. 10.4 Amendment No. 8 to the Amended and Restated LightPath Technologies, Inc. Omnibus Incentive Plan dated February 8, 2018, which was filed as Exhibit 10.7 to our Quarterly Report on Form 10-Q (File No.: 000-27548) filed with the Securities and Exchange Commission on February 13, 2018, and is incorporated herein by reference thereto. 10.5 Lease dated April 20, 2018, by and between LightPath Technologies, Inc. and CIO University Tech, LLC, 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 April 26, 2018, and is incorporated herein by reference thereto. 10.6 First Amendment to Lease, dated January 9, 2019, by and between LightPath Technologies, Inc. and CIO University Tech, LLC, which was filed as Exhibit 10.3 to our Quarterly Report on Form 10-Q (File No.: 000-27548) filed with the Securities and Exchange Commission on February 7, 2019, and is incorporated herein by reference thereto. 57 Table of Contents 10.7 Loan Agreement dated February 26, 2019 by and between LightPath Technologies, Inc. and BankUnited, N.A., 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 March 1, 2019, and is incorporated herein by reference thereto. 10.8 Term Loan Note dated February 26, 2019 by LightPath Technologies, Inc. in favor of BankUnited, N.A., which was filed as Exhibit 10.2 to our Current Report on Form 8-K (File No.: 000-27548) filed with the Securities and Exchange Commission on March 1, 2019, and is incorporated herein by reference thereto. 10.9 Revolving Credit Note dated February 26, 2019 by LightPath Technologies, Inc. in favor of BankUnited, N.A., which was filed as Exhibit 10.3 to our Current Report on Form 8-K (File No.: 000-27548) filed with the Securities and Exchange Commission on March 1, 2019, and is incorporated herein by reference thereto. 10.10 Guidance Line Note dated February 26, 2019 by LightPath Technologies, Inc. in favor of BankUnited, N.A., which was filed as Exhibit 10.4 to our Current Report on Form 8-K (File No.: 000-27548) filed with the Securities and Exchange Commission on March 21, 2019, and is incorporated herein by reference thereto. 10.11 Security Agreement dated February 26, 2019 by LightPath Technologies, Inc. in favor of BankUnited, N.A., and joined by GelTech, Inc. and ISP Optics Corporation, which was filed as Exhibit 10.5 to our Current Report on Form 8-K (File No.: 000-27548) filed with the Securities and Exchange Commission on March 1, 2019, and is incorporated herein by reference thereto. 10.12 Guaranty Agreement (Term Loan) dated February 26, 2019 by GelTech Inc., ISP Optics Corporation, LightPath Optical Instrumentation (Shanghai) Co., Ltd., LightPath Optical Instrumentation (Zhenjiang) Co., Ltd., and ISP Optics Latvia, SIA in favor of BankUnited, N.A., which was filed as Exhibit 10.6 to our Current Report on Form 8-K (File No.: 000-27548) filed with the Securities and Exchange Commission on March 1, 2019, and is incorporated herein by reference thereto. 10.13 Guaranty Agreement (Revolving Credit) dated February 26, 2019 by GelTech Inc., ISP Optics Corporation, LightPath Optical Instrumentation (Shanghai) Co., Ltd., LightPath Optical Instrumentation (Zhenjiang) Co., Ltd., and ISP Optics Latvia, SIA in favor of BankUnited, N.A., which was filed as Exhibit 10.7 to our Current Report on Form 8-K (File No.: 000-27548) filed with the Securities and Exchange Commission on March 1, 2019, and is incorporated herein by reference thereto. 10.14 Guaranty Agreement (Guidance Line) dated February 26, 2019 by GelTech Inc., ISP Optics Corporation, LightPath Optical Instrumentation (Shanghai) Co., Ltd., LightPath Optical Instrumentation (Zhenjiang) Co., Ltd., and ISP Optics Latvia, SIA in favor of BankUnited, N.A., which was filed as Exhibit 10.8 to our Current Report on Form 8-K (File No.: 000-27548) filed with the Securities and Exchange Commission on March 1, 2019, and is incorporated herein by reference thereto. 10.15 First Amendment to Loan Agreement dated May 6, 2019, and effective February 26, 2019, by and between LightPath Technologies, Inc. and BankUnited, N.A., which was filed as Exhibit 10.10 to our Quarterly Report on Form 10-Q (File No.: 000-27548) filed with the Securities and Exchange Commission on May 9, 2019, and is incorporated herein by reference thereto. 10.16 LightPath Technologies, Inc. 2018 Stock and Incentive Compensation Plan, 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 November 8, 2018, and is incorporated herein by reference thereto. 10.17 Employment Agreement between LightPath Technologies, Inc. and Mr. Sam Rubin, 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 February 26, 2020, and is incorporated herein by reference thereto. 10.18 Letter Agreement, dated November 13, 2020, by and between the Company and J. James Gaynor which was filed as Exhibit 10.1 to our Quarterly Report on Form 10-Q (File No.: 000-27548) filed with the Securities and Exchange Commission on February 3, 2021, and is incorporated herein by reference thereto. 10.19 Employment Agreement between LightPath Technologies, Inc. and Mr. Albert Miranda, 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 April 22, 2021, and is incorporated herein by reference thereto. 58 Table of Contents 10.20 Eighth Amendment to Lease Agreement between LightPath Technologies, Inc. and Challenger-Discovery, LLC 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 May 17, 2021, and is incorporated herein by reference thereto. 10.21 Ninth Amendment to Lease dated as of September 21, 2021, between LightPath Technologies, Inc. and Challenger Discovery LLC, 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 September 27, 2021, and is incorporated herein by reference thereto. 10.22 Notice of Default and Waiver dated November 8, 2021 between LightPath Technologies, Inc. and BankUnited, N.A., which was filed as Exhibit 10.3 to our Quarterly Report on Form 10-Q (File No: 000-27548) filed with the Securities and Exchange Commission on November 9, 2021, and is incorporated herein by reference thereto. 10.23 Second Amendment to Loan Agreement dated as of December 20, 2021, between LightPath Technologies, Inc. and BankUnited N.A., 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 December 23, 2021, and is incorporated herein by reference thereto. 10.24 Sales Agreement, dated February 15, 2022, by and between LightPath Technologies, Inc. and A.G.P./Alliance Global Partners, 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 February 16, 222, and is incorporated herein by reference thereto. 10.25 Investor Relations Consulting Agreement, dated April 11, 2022, by and between LightPath Technologies, Inc. and MZHCI, LLC, which was 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 12, 2022, and is incorporated herein by reference thereto. 10.26 Third Amendment to Loan Agreement, dated May 11, 2022, by and between LightPath Technologies, Inc. and BankUnited, N.A., which was filed as Exhibit 10.3 to our Quarterly Report on Form 10-Q (File No: 000-27548) filed with the Securities and Exchange Commission on May 12, 2022, and is incorporated herein by reference thereto. 10.27 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. 10.28 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. 10.29 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. 10.30 Bridge Note dated August 6, 2024 by LightPath Technologies, Inc. in favor of Lytton-Kambara Foundation 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 August 12, 2024, and is incorporated herein by reference thereto. 14.1 Code of Business Conduct and Ethics, which was filed as Exhibit 14.1 to our Current Report on Form 8-K (File No.: 000-27548) filed with the Securities and Exchange Commission on May 3, 2016, and is incorporated herein by reference thereto. 14.2 Code of Business Conduct and Ethics for Senior Financial Officers, which was filed as Exhibit 14.2 to our Current Report on Form 8-K (File No.: 000-27548) filed with the Securities and Exchange Commission on May 3, 2016, and is incorporated herein by reference thereto. 19.1 Guide for Trading in Securities* 21.1 Subsidiaries of the Registrant.* 23.1 Consent of MSL, P.A.* 24 Power of Attorney.* 31.1 Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934.* 31.2 Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934.* 32.1 Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 of Chapter 63 of Title 18 of the United States Code.* 32.2 Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 of Chapter 63 of Title 18 of the United States Code.* 97.1 Clawback Policy.* 101.INS XBRL Instance Document* 101.SCH XBRL Taxonomy Extension Schema Document* 101.CAL XBRL Taxonomy Extension Calculation Linkbase Document* 101.DEF XBRL Taxonomy Extension Definition Linkbase Document* 101.LAB XBRL Taxonomy Extension Label Linkbase Document* 101.PRE XBRL Taxonomy Presentation Linkbase Document* 104 The cover page from the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2024, formatted in iXBRL. *filed herewith Item 16. Form 10-K Summary. None. 59 Table of Contents LightPath Technologies, Inc. Index to Consolidated Financial Statements Report of Independent Registered Public Accounting Firm – MSL, P.A. (MSL PCAOB # 569 ) F-2 Consolidated Financial Statements: Consolidated Balance Sheets as of June 30, 2024 and 2023 F-3 Consolidated Statements of Comprehensive Income (Loss) for the years ended June 30, 2024 and 2023 F-4 Consolidated Statements of Changes in Stockholders’ Equity for the years ended June 30, 2024 and 2023 F-5 Consolidated Statements of Cash Flows for the years ended June 30, 2024 and 2023 F-6 Notes to Consolidated Financial Statements F-7 F-1 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of LightPath Technologies, Inc. Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of LightPath Technologies, Inc. (the “Company”) as of June 30, 2024 and 2023, and the related consolidated statements of comprehensive income (loss), changes in stockholders’ equity, and cash flows for each of the years ended June 30, 2024 and 2023, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2024 and 2023, and the results of its operations and its cash flows for each of the years ended June 30, 2024 and 2023, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. Federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consoli-dated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall pre-sentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which they relate. Inventory Allowance As disclosed in Notes 2 and 5 of the notes to the consolidated financial statements, the Company records an estimated inventory allowance to state the Company’s inventories at the lower of cost or net realizable value. The Company relies on, among other things, past usage, sales experience, recent order and quote activity, future sales forecasts, and its strategic business plan to develop the estimate. As a result of management’s assessment, the Company recorded an inventory allowance of approxi-mately $1,225,000 as of June 30, 2024. Auditing management’s estimate of the inventory allowance involved subjective evaluation and high degree of auditor judgement due to significant assumptions involved in estimating future inventory turnover and sales. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. We obtained an under-standing and evaluated the design of internal controls that address the risks of material misstatement relating to recording inventory at the lower of cost or net realizable value. We tested the accuracy and completeness of the underlying data used in calculating the inventory allowance, including testing of a sample of inventory usage transactions, and recomputed the allowance calculation. We also evaluated the Company’s ability to accurately estimate the assumptions used to develop the estimate by comparing historical allowance amounts to the history of actual inventory write-offs. Furthermore, we considered management’s business plan and forecasts of future sales. We have served as the Company’s auditor since 2017. /s/ MSL, P.A. Orlando, Florida September 19, 2024 F-2 Table of Contents LIGHTPATH TECHNOLOGIES, INC. Consolidated Balance Sheets June 30, June 30, Assets 2024 2023 Current assets: Cash and cash equivalents $ 3,480,268 $ 4,687,004 Restricted cash — 2,457,486 Trade accounts receivable, net of allowance of $ 25,676 and $ 18,502 4,928,931 6,634,574 Inventories, net 6,551,059 7,410,734 Prepaid expenses and deposits 445,900 570,293 Other current assets 131,177 — Total current assets 15,537,335 21,760,091 Property and equipment, net 15,210,612 12,810,930 Operating lease right-of-use assets 6,741,549 9,571,604 Intangible assets, net 3,650,739 3,332,715 Goodwill 6,764,127 5,854,905 Deferred tax assets, net 123,000 140,000 Other assets 59,602 65,939 Total assets $ 48,086,964 $ 53,536,184 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 3,231,713 $ 2,574,135 Accrued liabilities 1,911,867 662,242 Accrued payroll and benefits 1,446,452 1,499,896 Operating lease liabilities, current 1,059,998 969,890 Loans payable, current portion 209,170 1,023,814 Finance lease obligation, current portion 177,148 103,646 Total current liabilities 8,036,348 6,833,623 Deferred tax liabilities, net 326,197 465,000 Accrued liabilities, noncurrent 611,619 — Finance lease obligation, less current portion 528,753 341,201 Operating lease liabilities, noncurrent 8,058,502 8,393,248 Loans payable, less current portion 325,880 1,550,587 Total liabilities 17,887,299 17,583,659 Commitments and Contingencies Stockholders’ equity: Preferred stock: Series D, $ 0.01 par value, voting; 500,000 shares authorized; none issued and outstanding — — Common stock: Class A, $ 0.01 par value, voting; 94,500,000 and 44,500,000 shares authorized; 39,254,643 and 37,344,739 shares issued and outstanding 392,546 373,447 Additional paid-in capital 245,140,758 242,808,771 Accumulated other comprehensive income 509,936 606,536 Accumulated deficit ( 215,843,575 ) ( 207,836,229 ) Total stockholders’ equity 30,199,665 35,952,525 Total liabilities and stockholders’ equity $ 48,086,964 $ 53,536,184 The accompanying notes are an integral part of these consolidated financial statements. F-3 Table of Contents LIGHTPATH TECHNOLOGIES, INC. Consolidated Statements of Comprehensive Income (Loss) Year Ended June 30, 2024 2023 Revenue, net $ 31,726,192 $ 32,933,949 Cost of sales 23,094,946 21,859,126 Gross margin 8,631,246 11,074,823 Operating expenses: Selling, general and administrative 12,297,383 11,437,241 New product development 2,400,420 2,145,413 Amortization of intangible assets 1,635,523 1,125,083 Loss (gain) on disposal of property and equipment 124,584 ( 78,373 ) Total operating expenses 16,457,910 14,629,364 Operating loss ( 7,826,664 ) ( 3,554,541 ) Other income (expense): Interest expense, net ( 191,862 ) ( 283,266 ) Other income, net 78,670 24,970 Total other expense, net ( 113,192 ) ( 258,296 ) Loss before income taxes ( 7,939,856 ) ( 3,812,837 ) Income tax provision 67,490 234,034 Net loss $ ( 8,007,346 ) $ ( 4,046,871 ) Foreign currency translation adjustment ( 96,600 ) ( 328,589 ) Comprehensive loss $ ( 8,103,946 ) $ ( 4,375,460 ) Loss per common share (basic) $ ( 0.21 ) $ ( 0.13 ) Number of shares used in per share calculation (basic) 37,944,935 31,637,445 Loss per common share (diluted) $ ( 0.21 ) $ ( 0.13 ) Number of shares used in per share calculation (diluted) 37,944,935 31,637,445 The accompanying notes are an integral part of these consolidated financial statements. F-4 Table of Contents LIGHTPATH TECHNOLOGIES, INC. Consolidated Statements of Changes in Stockholders' Equity Accumulated Class A Additional Other Total Common Stock Paid-in Comphrehensive Accumulated Stockholders’ Shares Amount Capital Income Deficit Equity Balances at June 30, 2022 27,046,790 $ 270,468 $ 232,315,003 $ 935,125 $ ( 203,789,358 ) $ 29,731,238 Issuance of common stock for: Employee Stock Purchase Plan 33,523 335 40,045 — — 40,380 Exercise of Stock Options, RSUs & RSAs, net 1,173,516 11,735 34,165 — — 45,900 Issuance of common stock under public equity placement 9,090,910 90,909 9,108,601 — — 9,199,510 Stock-based compensation on stock options, RSAs & RSUs — — 1,310,957 — — 1,310,957 Foreign currency translation adjustment — — — ( 328,589 ) — ( 328,589 ) Net loss — — — — ( 4,046,871 ) ( 4,046,871 ) Balances at June 30, 2023 37,344,739 373,447 242,808,771 606,536 ( 207,836,229 ) 35,952,525 Issuance of common stock for: Employee Stock Purchase Plan 30,447 304 39,373 — — 39,677 Exercise of Stock Options, RSUs & RSAs, net 945,188 9,452 ( 9,452 ) — — — Issuance of common stock under public equity placement 585,483 5,855 800,477 — — 806,332 Issuance of common stock for acquisition of Visimid 348,786 3,488 482,566 — — 486,054 Stock-based compensation on stock options, RSUs & RSAs — — 1,019,023 — — 1,019,023 Foreign currency translation adjustment — — — ( 96,600 ) — ( 96,600 ) Net loss — — — — ( 8,007,346 ) ( 8,007,346 ) Balances at June 30, 2024 39,254,643 $ 392,546 $ 245,140,758 $ 509,936 $ ( 215,843,575 ) $ 30,199,665 The accompanying notes are an integral part of these consolidated financial statements. F-5 Table of Contents LIGHTPATH TECHNOLOGIES, INC. Consolidated Statements of Cash Flows Year Ended June 30, 2024 2023 Cash flows from operating activities: Net loss $ ( 8,007,346 ) $ ( 4,046,871 ) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization 4,048,409 3,174,569 Interest from amortization of debt costs — 58,774 Loss (gain) on disposal of property and equipment 124,584 ( 78,373 ) Stock-based compensation on stock options, RSUs & RSAs, net 1,019,023 1,310,957 Provision for credit losses ( 4,426 ) 8,158 Change in operating lease assets and liabilities 183,393 ( 231,561 ) Inventory write-offs to allowance 136,676 316,297 Deferred taxes ( 121,803 ) ( 73,015 ) Changes in operating assets and liabilities: Trade accounts receivable 1,498,698 ( 1,431,440 ) Other current assets ( 131,177 ) — Inventories 960,739 ( 741,604 ) Prepaid expenses and deposits 133,810 ( 97,792 ) Accounts payable and accrued liabilities 680,457 ( 977,622 ) Net cash provided by (used in) operating activities 521,037 ( 2,809,523 ) Cash flows from investing activities: Purchase of property and equipment ( 2,182,805 ) ( 3,077,154 ) Proceeds from sale of equipment — 209,169 Proceeds from sale-leaseback of equipment 364,710 — Acquisition of Visimid Technologies, net of cash acquired ( 847,141 ) — Net cash used in investing activities ( 2,665,236 ) ( 2,867,985 ) Cash flows from financing activities: Proceeds from sale of common stock from Employee Stock Purchase Plan 39,677 40,380 Proceeds from issuance of common stock under public equity placement 806,332 9,199,510 Borrowings on loans payable 278,926 141,245 Payments on loans payable ( 2,459,474 ) ( 1,852,256 ) Repayment of finance lease obligations ( 131,901 ) ( 73,003 ) Net cash (used in) provided by financing activities ( 1,466,440 ) 7,455,876 Effect of exchange rate on cash and cash equivalents ( 53,583 ) ( 141,769 ) Change in cash, cash equivalents and restricted cash ( 3,664,222 ) 1,636,599 Cash, cash equivalents and restricted cash, beginning of period 7,144,490 5,507,891 Cash, cash equivalents and restricted cash, end of period $ 3,480,268 $ 7,144,490 Supplemental disclosure of cash flow information: Interest paid in cash $ 196,541 $ 221,773 Income taxes paid $ 166,858 $ 428,914 Supplemental disclosure of non-cash investing & financing activities: Purchase of equipment through finance lease arrangements $ 396,058 $ 451,058 Equipment deposit paid in restricted stock — $ 45,900 Operating right-of-use assets acquired in exchange for operating lease liabilities $ 92,136 — The accompanying notes are an integral part of these consolidated financial statements. F-6 Table of Contents LIGHTPATH TECHNOLOGIES, INC. Notes to Consolidated Financial Statements (continued) 1. Organization and History LightPath Technologies, Inc. (“LightPath”, the “Company”, “we”, “us” or “our”) was incorporated in Delaware in 1992. It was the successor to LightPath Technologies Limited Partnership formed in 1989, and its predecessor, Integrated Solar Technologies Corporation formed in 1985. The Company completed its initial public offering during fiscal year 1996. On April 14, 2000, the Company acquired Horizon Photonics, Inc. (“Horizon”). On September 20, 2000, the Company acquired Geltech, Inc. (“Geltech”). In November 2005, we formed LightPath Optical Instrumentation (Shanghai) Co., Ltd (“LPOI”), a wholly-owned subsidiary located in Jiading, People’s Republic of China. In December 2013, we formed LightPath Optical Instrumentation (Zhenjiang) Co., Ltd (“LPOIZ”), a wholly-owned subsidiary located in Zhenjiang, Jiangsu Province, People’s Republic of China. Effective February 28, 2023, the legal entities of LPOI and LPOIZ were merged, with LPOIZ as the surviving company. 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”). In July 2023, we acquired Liebert Consulting LLC, dba Visimid Technologies (“Visimid”). Visimid is an engineering and design firm specializing in thermal imaging, night vision and IOT applications. Visimid provides design and consulting services for DoD contractors, commercial and industrial customers, and OEMs for original new products. Visimid’s core competency is developing and producing custom thermal and night vision cores. We believe that Visimid’s capabilities are aligned with our strategy to focus on engineered solutions. Visimid’s facility is located in Plano, TX. LightPath is a manufacturer of optical components, assemblies and sub-systems, including precision molded glass aspheric optics, infrared optics, thermal imaging assemblies and cores, and other optical components used in products that manipulate light. LightPath designs, develops and manufactures 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, night vision systems, medical devices, laser aided industrial tools, automotive safety applications, telecommunications, machine vision and sensors, among others. Many of our optical assemblies and sub-systems 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. 2. Significant Accounting Policies Consolidated Financial Statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. Management estimates. Management makes estimates and assumptions during the preparation of the Company’s Consolidated Financial Statements that affect amounts reported in the Consolidated Financial Statements and accompanying notes. Such estimates and assumptions could change in the future as more information becomes available, which, in turn, could impact the amounts reported and disclosed herein. Cash and cash equivalents consist of cash in the bank and cash equivalents with maturities of 90 days or less when purchased. The Company maintains its cash accounts in various institutions, generally with high credit ratings. The Company’s domestic cash accounts are maintained in one financial institution, and balances may exceed Federal insured limits at times. The Company’s foreign cash accounts are not insured. Restricted cash is presented in the Consolidated Balance Sheet as of June 30, 2023, and consists of amounts held in a restricted account as collateral for a loan agreement. See Note 14, Loans Payable , to these Consolidated Financial Statements for additional information. Our restricted cash was held 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 Statements of Cash Flows for the years ended June 30, 2024 and 2023. The Company did not have any restricted cash as of June 30, 2024. Allowance for credit losses is based on the best estimate of the amount of probable credit losses in existing accounts receivable. The Company determines the allowance based on historical write-off experience and expected future default probabilities based on our ongoing evaluations of our customers’ financial condition. The allowance consists of an amount identified for specific customers and an amount based on overall estimated exposure. Accounts receivable are customer obligations due under normal trade terms, which are generally net 30 days. If the Company’s actual collection experience changes, revisions to its allowance may be required. After all attempts to collect a receivable have failed, the receivable is written off against the allowance. F-7 Table of Contents 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. Inventory costs include materials, labor and manufacturing overhead. Acquisition of goods from our vendors has a purchase burden added to cover customs, shipping and handling costs. Fixed costs related to excess manufacturing capacity are expensed when incurred. The Company looks at the following criteria for parts to consider for the inventory allowance: (i) items that have not been sold in two years and (ii) items that have not been purchased in two years. These items, as identified, are allowed for at 100%, as well as allowing 50% for other items deemed to be slow moving within the last twelve months and allowing 25% for items deemed to have low material usage within the last six months. Items of which we have greater than a two-year supply are also reserved at 25% to 100% , depending on usage rates. The parts identified are adjusted for recent order and quote activity to determine the final inventory allowance. Property and equipment are stated at cost and depreciated using the straight-line method over the estimated useful lives of the related assets ranging from one to ten years. 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. Long-lived assets , such as property, plant, and equipment and purchased intangible assets 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. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to its estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized in the amount by which the carrying amount of the asset exceeds the fair value of the asset. The Company did not record any impairment of long-lived assets during the fiscal years ended June 30, 2024 and 2023. Assets to be disposed of would be separately presented in the Consolidated Balance Sheet and reported at the lower of the carrying amount or fair value less costs to sell, and would no longer be depreciated. The assets and liabilities of a disposed group classified as held for sale would be presented separately in the appropriate asset and liability sections of the Consolidated Balance Sheet. Goodwill and amortizable intangible assets acquired in a business combination are recognized at fair value using generally accepted valuation methods. Purchased intangible assets other than goodwill are amortized over their useful lives unless these lives are determined to be indefinite. Purchased intangible assets are carried at cost, less accumulated amortization. Amortization is computed over the estimated useful lives of the respective assets, generally two to fifteen years. The Company periodically reassesses the useful lives of its intangible assets when events or circumstances indicate that useful lives have significantly changed from the previous estimate. Amortizable intangible assets consist primarily of customer relationships, know-how/trade secrets and trademarks. They are generally valued as the present value of estimated cash flows expected to be generated from the asset using a risk-adjusted discount rate. When determining the fair value of our intangible assets, estimates and assumptions about future expected revenue and remaining useful lives are used. Goodwill and intangible assets are tested for impairment on an annual basis and during the period between annual tests if events or changes in circumstances indicate that the carrying value of goodwill or amortizable intangible assets may not be recoverable. The Company will assess the qualitative factors to determine whether it is more likely than not that the fair value of its reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the goodwill impairment analysis. If the Company determines that it is more likely than not that its fair value is less than its carrying amount, then the goodwill impairment test is performed. The first step, identifying a potential impairment, compares the fair value of the reporting unit with its carrying amount. If the carrying amount exceeds its fair value, the second step would need to be performed; otherwise, no further steps are required. The second step, measuring the impairment loss, compares the implied fair value of the goodwill with the carrying amount of the goodwill. 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 impairment of goodwill or amortizable intangible assets during the fiscal years ended June 30, 2024 or 2023. Leases. The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, other current liabilities and operating lease liabilities on the Company’s consolidated balance sheet. Finance leases are included in property, plant and equipment, current portion of long-term debt and long-term debt, net of current portion on the consolidated balance sheets. Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most of our leases do not provide an implicit rate, the Company uses an estimate of its incremental borrowing rate based on observed market data and other information available at the lease commencement date. The operating lease ROU assets also include any lease payments made and exclude lease incentives. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise such options. The Company does not record leases on the consolidated balance sheet with an intial term of one year or less. The Company does not separate lease and non-lease components but rather accounts for each separate component as a single lease component for all underlying classes of assets. Variable lease payments are expensed as incurred and are not included within the operating lease ROU asset and lease liability calculation. Variable lease payments primarily include reimbursements of costs incurred by lessors for common area maintenance and utilities. Lease expense for minimum operating lease payments is recognized on a straight-line basis over the lease term. F-8 Table of Contents LIGHTPATH TECHNOLOGIES, INC. Notes to Consolidated Financial Statements (continued) Income taxes are accounted for under the asset and liability method. Deferred income tax assets and liabilities are computed on the basis of differences between the financial statement and tax basis of assets and liabilities that will result in taxable or deductible amounts in the future based upon enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances have been established to reduce deferred tax assets to the amount expected to be realized. The Company has not recognized a liability for uncertain tax positions. A reconciliation of the beginning and ending amount of unrecognized tax benefits or penalties has not been provided since there has been no unrecognized benefit or penalty. If there were an unrecognized tax benefit or penalty, the Company would recognize interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. 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 (“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 and restricted cash totaled approximately $ 3.5 million at June 30, 2024. Of this amount, less than 50% was held by our foreign subsidiaries in China and Latvia. These foreign funds were generated in China and Latvia as a result of foreign earnings. Historically, we considered unremitted earnings held by our foreign subsidiaries to be permanently reinvested. However, during fiscal 2020, we began declaring intercompany dividends to remit a portion of the earnings of our foreign subsidiaries to the U.S. parent company. During fiscal year 2020, we began to accrue for the applicable Chinese withholding taxes on the portion of earnings that we intend to repatriate. It is still our intent to reinvest a significant portion of earnings generated by our foreign subsidiaries, however we also plan to repatriate a portion of their earnings. 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 years 2024 and 2023, we repatriated approximately $ 1.4 million and $ 1.9 million, respectively, from LPOIZ. As of June 30, 2024, LPOIZ had approximately $ 1.6 million in retained earnings available for repatriation, based on earnings accumulated through December 31, 2023, the end of the most recent statutory tax year, that remained undistributed as of June 30, 2024. LPOI did not have any earnings available for repatriation as of the date of merger with LPOIZ. Beginning in fiscal year 2019, earnings from the Company’s non-U.S. subsidiaries were subject to the global intangible low-taxed income (“GILTI”) inclusion pursuant to U.S. income tax rules. See Note 9, Income Taxes , to these Consolidated Financial Statements for additional information. Revenue recognition – See Note 4, Revenue , to these Consolidated Financial Statements for additional information. VAT is computed on the gross sales price on all sales of the Company’s products sold in the People’s Republic of China and Latvia. The VAT rates range up to 21%, depending on the type of products sold. The VAT may be offset by VAT paid by the Company on raw materials and other materials included in the cost of producing or acquiring its finished products. The Company recorded VAT receivables and payables on a net basis in the accompanying Consolidated Financial Statements. These amounts were not significant as of June 30, 2024 and 2023. New product development costs are expensed as incurred. Stock-based compensation is measured at grant date, based on the fair value of the award, and is recognized as an expense over the employee’s requisite service period. We estimate the fair value of each restricted stock unit or stock option as of the date of grant using the Black-Scholes-Merton pricing model. Our directors, officers, and key employees were granted stock-based compensation through our Amended and Restated Omnibus Incentive Plan, as amended (the “Omnibus Plan”), through October 2018 and after that date, the 2018 Stock and Incentive Compensation Plan (the “SICP”). Most options granted under the Omnibus Plan and the SICP vest ratably over two to four years and generally have four to ten-year contract lives. The volatility rate is based on historical trends in common stock closing prices and the expected term was determined based primarily on historical experience of previously outstanding awards. The interest rate used is the U.S. Treasury interest rate for constant maturities. The likelihood of meeting targets for option grants that are performance based are evaluated each quarter. If it is determined that meeting the targets is probable, then the compensation expense will be amortized over the remaining vesting period. F-9 Table of Contents LIGHTPATH TECHNOLOGIES, INC. Notes to Consolidated Financial Statements (continued) Fair value of financial instruments. The Company accounts for financial instruments in accordance with the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification Topic 820, “Fair Value Measurements and Disclosures” (“ASC 820”), which provides a framework for measuring fair value and expands required disclosure about fair value measurements of assets and liabilities. ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value: Level 1 - Quoted prices in active markets for identical assets or liabilities. Level 2 - Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable. Level 3 - Unobservable inputs that are supported by little or no market activity, therefore requiring an entity to develop its own assumptions about the assumptions that market participants would use in pricing. Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management. The respective carrying value of financial instruments recorded on the consolidated balance sheets approximated their fair values. These financial instruments include accounts receivable, accounts payable and accrued liabilities. Fair values were assumed to approximate carrying values for these financial instruments since they are short term in nature and their carrying amounts approximate fair values or they are receivable or payable on demand. The fair value of the Company’s finance lease obligations and loans payable approximate their carrying values, based upon current rates available to us. See Note 13, Leases and Note 14, Loans Payable , to these Consolidated Financial Statements for additional information. Management considers these fair value estimates to be level 2 fair value measurements. The Company does not have any other financial or non-financial assets or liabilities that would be characterized as Level 1, Level 2 or Level 3 instruments. Debt issuance costs are recorded as a reduction to the carrying value of the related notes payable, by the same amount, and are amortized ratably over the term of the related note. Comprehensive income (loss) is defined as the change in equity (net assets) of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. It includes all changes in equity during a period, except those resulting from investments by owners and distributions to owners. Comprehensive income (loss) has two components, net income, and other comprehensive income (loss), and is included on the Consolidated Statements of Comprehensive Income (Loss). Our other comprehensive income consists of foreign currency translation adjustments made for financial reporting purposes. Business segments. As the Company only operates in principally one reportable business segment, no additional reporting is required. Recent accounting pronouncements. There are no new accounting pronouncements issued by the FASB that are not yet effective for the Company for the year ended June 30, 2024 that are expected to have a material impact on the Consolidated Financial Statements. 3. Acquisition of Visimid Technologies In July 2023, the Company acquired Visimid, pursuant to a 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 original equipment manufacturers (“OEMs”) for original new products. Visimid’s core competency is developing and producing custom thermal and night vision cores. We believe that Visimid’s capabilities are aligned with our strategy to focus on engineered solutions. F-10 Table of Contents LIGHTPATH TECHNOLOGIES, INC. Notes to Consolidated Financial Statements (continued) The Company’s consolidated financial statements reflect the financial results of Visimid beginning on the Acquisition Date. The purchase price included $ 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 in 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 January 1, 2024 installment, 267,176 shares were issued. The total purchase price, net of cash acquired and including the estimated potential earnout, is approximately $ 2.7 million, based on present values as of the Acquisition Date. Of this amount, $ 600,000 was paid at closing, cash installments of $ 150,000 and $ 125,000 were paid in October 2023 and January 2024, respectively, per the terms of the purchase agreement, and the remaining cash and stock payments, including the estimated potential earnout, have been accrued and are included in Accrued liabilities and Accrued liabilities, noncurrent in the accompanying consolidated balance sheet as of June 30, 2024. The estimated fair values of the assets acquired and liabilities assumed were recorded as of the Acquisition Date. As part of the valuation analysis, the Company identified intangible assets, including customer relationships, customer backlog, trade secrets and trademarks. The customer backlog, customer relationships, trade secrets and trademarks were determined to have estimated values of approximately $ 464,000 , $ 122,000 , $ 925,000 and $ 442,000 , respectively, and estimated useful lives of 1 year for customer backlog, and 10 years for customer relationships, trade secrets and trademarks. The estimated fair value of identifiable intangible assets is determined primarily using the “income approach”, which requires a forecast of all future cash flows. The goodwill recognized is attributable primarily to expected synergies and the assembled workforce of Visimid. The goodwill is expected to be deductible for income tax purposes. For the fiscal year ended June 30, 2024, the Company incurred approximately $ 98,000 , in acquisition costs. These costs are included in the consolidated statements of comprehensive income (loss) in the line item entitled “Selling, general and administrative.” This is in addition to the previously disclosed $ 140,000 in acquisition costs which were recorded during the fiscal year ended June 30, 2023. Prior to the Acquisition, the Company had a preexisting relationship with Visimid. The Company contracted Visimid for engineering services and purchased infrared camera cores from Visimid on an arms’ length basis. The Company had also partnered with Visimid for the development of the Mantis camera. 4. Revenue Product Revenue The Company manufactures optical components and higher-level assemblies, including precision molded glass aspheric optics, molded and diamond-turned infrared aspheric lenses, and other optical materials used to produce products that manipulate light. The Company designs, develops, manufactures, and distributes optical components and assemblies utilizing advanced optical manufacturing processes. The Company also provide engineering services and perform research and development for optical solutions for a wide range of optics markets. Revenue is derived primarily from the sale of optical components and assemblies. Revenue Recognition Revenue is generally recognized upon transfer of control, including the risks and rewards of ownership, of products or services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or services. The Company generally bears all costs, risk of loss, or damage and retains title to the goods up to the point of transfer of control of products to customers. Shipping and handling costs are included in the cost of goods sold. Revenue is presented net of sales taxes and any similar assessments. Customary payment terms are granted to customers, based on credit evaluations. The Company does not have any contracts where revenue is recognized, but the customer payment is contingent on a future event. Deferred revenue is recorded when cash payments are received or due in advance of the Company’s performance. Deferred revenue was $ 725,000 and $ 314,000 as of June 30, 2024 and 2023, respectively, and is included in accrued liabilities in the accompanying consolidated balance sheets. Nature of Products Revenue from the sale of optical components and assemblies is recognized upon transfer of control, including the risks and rewards of ownership, to the customer. The performance obligations for the sale of optical components and assemblies are satisfied at a point in time. Product development agreements for engineering services are generally short-term in nature, with revenue recognized upon satisfaction of the performance obligation, and transfer of control of the agreed-upon deliverable. Visimid has one longer-term order with a defense customer which includes both product development and hardware deliverables where similar revenue recognition criteria will be applied. F-11 Table of Contents LIGHTPATH TECHNOLOGIES, INC. Notes to Consolidated Financial Statements (continued) The Company previously organized its products in three groups: precision molded optics (“PMO”), infrared, and specialty products. Revenues from product development agreements for engineering services were included in specialty products. With our strategic transition into more value-added solutions, and the addition of Visimid in July 2023, we reorganized our products into four product groups: infrared components, visible components, assemblies and modules, and engineering services. Assemblies and modules were previously included in PMO, infrared or specialty products, depending on the lens type. Revenue by product group for the fiscal years ended June 30, 2024 and 2023 was as follows, with fiscal year 2023 amounts reclassified from those previously reported to conform to current classification: Year Ended June 30, 2024 2023 Infrared components $ 14,089,277 $ 14,392,960 Visible components 11,233,737 13,438,814 Assemblies and modules 4,451,165 4,680,354 Engineering services 1,952,013 421,821 Total revenue $ 31,726,192 $ 32,933,949 5. Inventories, net The components of inventories include the following: June 30, 2024 June 30, 2023 Raw materials $ 3,112,428 $ 2,999,879 Work in process 2,333,240 2,909,439 Finished goods 2,330,287 2,626,106 Allowance for obsolescence ( 1,224,896 ) ( 1,124,690 ) $ 6,551,059 $ 7,410,734 During fiscal years 2024 and 2023, the Company evaluated all allowed items and disposed of approximately $ 137,000 and $ 316,000 , 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 $ 1.4 million and $ 1.5 million at June 30, 2024 and 2023, respectively. 6. Property and Equipment, net Property and equipment consist of the following: Estimated Lives (Years) June 30, 2024 June 30, 2023 Manufacturing equipment 5 - 10 $ 22,582,429 $ 22,296,320 Computer equipment and software 3 - 5 970,494 973,549 Furniture and fixtures 5 349,932 350,289 Leasehold improvements 5 - 10 8,964,714 2,742,344 Construction in progress 646,217 3,067,896 Total property and equipment 33,513,786 29,430,398 Less accumulated depreciation and amortization ( 18,303,174 ) ( 16,619,468 ) Total property and equipment, net $ 15,210,612 $ 12,810,930 F-12 Table of Contents LIGHTPATH TECHNOLOGIES, INC. Notes to Consolidated Financial Statements (continued) 7. Goodwill and Intangible Assets In connection with the December 2016 acquisition of ISP, the Company identified intangible assets, which were recorded at fair value and are being amortized on a straight-line basis over their useful lives. 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. The increase in goodwill during the year ended June 30, 2024 was due to the acquisition of Visimid. See Note 3, Acquisition of Visimid Technologies , to these consolidated financial statements, for more information. There have been no events or changes in circumstances that indicate the carrying value of goodwill may not be recoverable. Identifiable intangible assets were comprised of: Useful Lives (Years) June 30, 2024 June 30, 2023 Customer relationships 10 - 15 $ 3,712,300 $ 3,590,000 Trade secrets 8 - 10 4,197,304 3,272,000 Trademarks 8 - 10 4,256,418 3,814,000 Backlog 1 463,525 — Total intangible assets 12,629,547 10,676,000 Less accumulated amortization ( 8,978,808 ) ( 7,343,285 ) Total intangible assets, net $ 3,650,739 $ 3,332,715 Future amortization of identifiable intangible assets is as follows: Fiscal year ending: June 30, 2025 $ 884,654 June 30, 2026 388,336 June 30, 2027 388,336 June 30, 2028 388,336 June 30, 2029 388,336 After June 30, 2029 1,212,741 $ 3,650,739 8. Stockholders’ Equity Effective January 31, 2024, the Company’s authorized capital stock increased from 55,000,000 to 105,000,000 shares, comprised of 100,000,000 shares of common stock, par value $ 0.01 per share, and 5,000,000 shares of preferred stock, par value $ 0.01 per share. Of the 5,000,000 shares of preferred stock authorized, the Board of Directors has previously designated: · 250 shares of preferred stock as Series A Preferred Stock, all previously outstanding shares of which have been previously redeemed or converted into shares of our Class A common stock and may not be reissued; · 300 shares of preferred stock as Series B Preferred Stock, all previously outstanding shares of which have been previously redeemed or converted into shares of our Class A common stock and may not be reissued; · 500 shares of preferred stock as Series C Preferred Stock, all previously outstanding shares of which have been previously redeemed or converted into shares of our Class A common stock and may not be reissued; · 500,000 shares of preferred stock as Series D Preferred Stock, none of which have been issued; and · 500 shares of our preferred stock as Series F Preferred Stock, all previously outstanding shares of which have been previously redeemed or converted into shares of our Class A common stock and may not be reissued. Of the 100,000,000 shares of common stock authorized, the Board of Directors has previously designated 94,500,000 shares authorized as Class A common stock. The stockholders of Class A common stock are entitled to one vote for each share held. 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. F-13 Table of Contents LIGHTPATH TECHNOLOGIES, INC. Notes to Consolidated Financial Statements (continued) 9. Income Taxes For financial reporting purposes, income (loss) before income taxes includes the following components: Year Ended June 30, 2024 2023 Pretax income (loss): United States $ ( 8,562,920 ) $ ( 5,697,853 ) Foreign 623,064 1,885,016 Loss before income taxes $ ( 7,939,856 ) $ ( 3,812,837 ) The components of the provision for income taxes are as follows: Year Ended June 30, 2024 2023 Current: Federal tax $ - $ - State 3,800 3,799 Foreign 185,493 303,235 Total current 189,293 307,034 Deferred: Federal tax 17,000 3,000 State - - Foreign ( 138,803 ) ( 76,000 ) Total deferred ( 121,803 ) ( 73,000 ) Total income tax provision $ 67,490 $ 234,034 The reconciliation of income tax computed at the U.S. federal statutory rates to the total income tax provision is as follows: Year Ended June 30, 2024 2023 U.S. federal statutory tax rate 21.0 % 21.0 % Income tax provision reconciliation: Tax at statutory rate: $ ( 1,667,370 ) $ ( 800,696 ) Net foreign income subject to lower tax rate ( 99,300 ) ( 396,742 ) State income taxes, net of federal benefit ( 299,233 ) ( 303,366 ) Valuation allowance 1,026,000 ( 3,331,277 ) NOL expiration and adjustments 1,325,111 4,015,752 GILTI - 192,452 Federal research and development and other credits ( 150,873 ) 491,112 Stock-based compensation ( 4,134 ) ( 34,976 ) Other permanent differences ( 64,794 ) ( 57,762 ) Other, net 2,083 459,537 $ 67,490 $ 234,034 F-14 Table of Contents 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 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 and no balance due as of June 30, 2023. Income Tax Law of the People’s Republic of China The Company’s Chinese subsidiaries, LPOI and LPOIZ, are governed by the Income Tax Law of the People’s Republic of China concerning the privately run and foreign invested enterprises, which are generally subject to tax at a statutory rate of 25 % on income reported in the statutory financial statements after appropriate tax adjustments. For both the years ended June 30, 2024 and 2023, the tax rate for LPOIZ was 15 %, in accordance with an incentive program for technology companies. The net deferred tax liability for LPOIZ is approximately $ 415,000 and $ 465,000 as of June 30, 2024 and 2023, respectively, primarily related to timing differences related to accelerated depreciation on fixed assets. Historically, the Company considered unremitted earnings held by its foreign subsidiaries to be permanently reinvested. However, during fiscal year 2020, the Company began declaring intercompany dividends to remit a portion of the historical earnings of its foreign subsidiaries to the U.S. parent company. It is still the Company’s intent to reinvest a significant portion of the more recent earnings generated by its foreign subsidiaries, however the Company also plans to repatriate a portion of the historical earnings of its subsidiaries. Based on its previous intent, the Company had not historically provided for future Chinese withholding taxes on the related earnings. However, during fiscal year 2020 the Company began to accrue for these taxes on the portion of historical earnings that it intends to repatriate. During the years ended June 30, 2024 and 2023, the Company declared and paid intercompany dividends of $ 1.4 million and $ 1.9 million, respectively, from LPOIZ, payable to the Company as its parent company. Accordingly, the Company paid Chinese withholding taxes of $ 152,000 and $ 210,000 associated with these dividends during fiscal years 2024 and 2023, respectively. Income tax expense associated with these dividends was $ 152,000 and $ 210,000 for fiscal years 2024 and 2023, respectively. Accrued and unpaid withholding taxes were approximately $ 40,000 as of both June 30, 2024 and 2023. Other than these withholding taxes, these intercompany dividends have no impact on the Consolidated Financial Statements. Law of Corporate Income Tax of Latvia The Company’s Latvian subsidiary, ISP Latvia, is governed by the Law of Corporate Income Tax of Latvia. Until December 31, 2017, ISP Latvia was subject to a statutory income tax rate of 15 %. Effective January 1, 2018, the Republic of Latvia enacted tax reform with the following key provisions: (i) corporations are no longer subject to income tax, but are instead subject to a distribution tax on distributed profits (or deemed distributions, as defined), and (ii) the tax rate was changed to 20 %; however, distribution amounts are first divided by 0.8 to arrive at the taxable amount of profit, resulting in an effective tax rate of 25 %. As a transitional measure, distributions made from earnings prior to January 1, 2018, distributed prior to December 31, 2019, are not subject to tax if declared prior to December 31, 2019. ISP Latvia has declared an intercompany dividend to be paid to ISP, its U.S. parent company, for the full amount of earnings accumulated prior to January 1, 2018. Distributions of this dividend will be from earnings prior to January 1, 2018 and, therefore, will not be subject to tax. The Company currently does not intend to distribute any current earnings generated after January 1, 2018. If, in the future, the Company changes such intention, distribution taxes, if any, will be accrued as profits are generated. F-15 Table of Contents 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: Year Ended June 30, 2024 2023 Deferred tax assets: Net operating loss carryforwards $ 9,544,000 $ 9,243,000 Stock-based compensation 275,000 340,000 R&D and other credits 1,935,000 1,787,000 Capitalized R&D expenses 887,000 763,000 Inventories 200,698 200,000 Accrued expenses and other 150,000 15,000 Gross deferred tax assets 12,991,698 12,348,000 Valuation allowance for deferred tax assets ( 12,083,000 ) ( 11,057,000 ) Total deferred tax assets 908,698 1,291,000 Deferred tax liabilities: Depreciation and other ( 602,895 ) ( 740,000 ) Intangible assets ( 509,000 ) ( 876,000 ) Total deferred tax liabilities ( 1,111,895 ) ( 1,616,000 ) Net deferred tax assets (liabilities) $ ( 203,197 ) $ ( 325,000 ) 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. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. The Company’s largest deferred tax asset is related to its U.S. federal NOL carryforwards. In order to fully realize this deferred tax asset, the Company would need to generate future taxable income of approximately $ 39 million prior to the expiration of the carry-forwards, of which $ 21 million expire from 2025 through 2034 and $ 18 million do not expire. Based on the level of historical taxable income (loss), management has provided for a valuation adjustment against the deferred tax assets of approximately $ 12.1 million at June 30, 2024, an increase of approximately $ 1.0 million as compared to June 30, 2023. The increase 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 U.S. net deferred tax asset of $ 123,000 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. At June 30, 2024, in addition to net operating loss carry forwards, the Company also has research and development and other credit carry forwards of approximately $ 1.5 million, which will expire from 2025 through 2044 . A portion of the NOL carry forwards may be subject to certain limitations of the Internal Revenue Code Sections 382 and 383, which would restrict the annual utilization in future periods due principally to changes in ownership in prior periods. 10. Compensatory Equity Incentive Plan and Other Equity Incentives Share-based payment arrangements — The Company’s directors, officers, and key employees were granted stock-based compensation through the Omnibus Plan, through October 2018 and after that date, the SICP. Such stock-based compensation may include, among other things, incentive stock options, non-qualified stock options, restricted stock awards (“RSAs”) and restricted stock units (“RSUs”). The SICP is administered by the Compensation Committee of the Board of Directors. At the Company’s 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. At the Company’s 2022 Annual Stockholders Meeting, our stockholders authorized an additional 2,100,000 shares of our Class A common stock for issuance pursuant to awards granted thereunder. As of June 30, 2024, 863,305 shares of Class A common stock were 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. F-16 Table of Contents LIGHTPATH TECHNOLOGIES, INC. Notes to Consolidated Financial Statements (continued) The LightPath Technologies, Inc. Employee Stock Purchase Plan (“2014 ESPP”) was adopted by the Company’s Board of Directors on October 30, 2014 and approved by the Company’s stockholders on January 29, 2015. The 2014 ESPP permits employees to purchase Class A common stock through payroll deductions, which may not exceed 15% of an employee’s compensation, at a price not less than 85% of the market value of the Class A common stock on specified dates (June 30 and December 31) . In no event can any participant purchase more than $ 25,000 worth of shares of Class A common stock in any calendar year and an employee cannot purchase more than 8,000 shares on any purchase date within an offering period of 12 months and 4,000 shares on any purchase date within an offering period of six months. This discount of approximately $ 4,000 for each of the fiscal years ended June 30, 2024 and 2023, 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. These plans are summarized below: Equity Compensation Arrangement Award Shares Authorized Outstanding at June 30, 2024 Available for Issuance at June 30, 2024 SICP (or Omnibus Plan) 7,215,625 1,965,361 863,305 2014 ESPP 400,000 - 213,473 7,615,625 1,965,361 1,076,778 Grant Date Fair Values and Underlying Assumptions; Contractual Terms — The Company estimates the fair value of each equity option as of the date of grant. The Company uses the Black-Scholes-Merton pricing model. The 2014 ESPP fair value is the amount of the discount the employee obtains at the date of the purchase transaction. 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, 2024 and 2023. 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, 2024, the Company estimated the fair value of each stock award as of the date of grant using the following assumptions: Year Ended June 30, 2024 Weighted-average expected volatility 74.0 % Dividend yields 0 % Weighted-average risk-free interest rate 3.98 % Weighted-average expected term, in years 7.49 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. F-17 Table of Contents 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, 2024 and 2023 is presented below: Stock Options Restricted Stock Units (RSUs) Restricted Stock Awards (RSAs) Weighted- Weighted- Weighted- Weighted- Average Average Average Average Exercise Remaining Remaining Remaining Shares Price Contract Shares Contract Shares Contract June 30, 2022 534,462 $ 2.03 7.0 2,079,669 0.9 - Granted - $ - 611,386 246,942 Exercised - $ - ( 1,068,291 ) ( 145,209 ) Cancelled/Forfeited - $ - ( 26,542 ) - June 30, 2023 534,462 $ 2.03 6.1 1,596,222 1.1 101,733 0.7 Granted 28,736 $ 1.74 543,305 270,070 Exercised ( 3,000 ) $ 1.38 ( 843,246 ) ( 191,007 ) Cancelled/Forfeited ( 6,509 ) $ 1.45 ( 46,149 ) ( 19,256 ) June 30, 2024 553,689 $ 2.02 5.4 1,250,132 0.8 161,540 1.5 Awards exercisable/ vested as of June 30, 2024 506,203 $ 2.00 5.1 587,351 - - Awards unexercisable/ unvested as of June 30, 2024 47,486 $ 2.25 8.6 662,781 0.8 161,540 1.5 553,689 1,250,132 161,540 F-18 Table of Contents LIGHTPATH TECHNOLOGIES, INC. Notes to Consolidated Financial Statements (continued) The intrinsic and fair values for share-based payment awards exercised and vested in the years ended June 30, 2024 and 2023 are presented below: Year Ended June 30, 2024 2023 Intrinsic Value - Exercised Stock Options $ 720 $ - RSUs 1,051,976 1,648,874 RSAs 243,231 190,720 Fair Value - Vested Stock Options $ 124,744 $ 6,500 RSUs 660,449 793,880 RSAs 243,223 189,473 The intrinsic values of share-based payment awards outstanding and exercisable as of June 30, 2024 and 2023 are presented below: As of June 30, 2024 2023 Stock Options $ - $ 2,430 RSUs 740,062 1,267,403 None of the outstanding RSAs were exercisable as of June 30, 2024 and 2023. As of June 30, 2024, there was approximately $ 863,000 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: Fiscal Year Ending: Stock Options RSAs RSUs Total June 30, 2025 $ 36,437 $ 99,745 $ 405,007 $ 541,189 June 30, 2026 10,201 46,409 163,413 220,023 June 30, 2027 6,903 8,155 87,084 102,142 $ 53,541 $ 154,309 $ 655,504 $ 863,354 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. 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, 2024 and 2023 and changes during the two years then ended: Unexercisable/Unvested Awards Stock Options Shares RSU Shares RSA Shares Total Shares Weighted-Average Grant Date Fair Values (per share) June 30, 2022 319,321 744,691 - 1,064,012 $ 1.71 Granted - 611,386 246,942 858,328 $ 1.24 Vested ( 181,061 ) ( 672,130 ) ( 145,209 ) ( 998,400 ) $ 1.52 Cancelled/Forfeited - ( 26,542 ) - ( 26,542 ) $ - June 30, 2023 138,260 657,405 101,733 897,398 $ 1.40 Granted 28,736 543,305 270,070 842,111 $ 1.40 Vested ( 100,760 ) ( 509,579 ) ( 196,070 ) ( 806,409 ) $ 1.57 Cancelled/Forfeited ( 18,750 ) ( 28,350 ) ( 14,193 ) ( 61,293 ) $ 1.43 June 30, 2024 47,486 662,781 161,540 871,807 $ 1.42 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. F-19 Table of Contents LIGHTPATH TECHNOLOGIES, INC. Notes to Consolidated Financial Statements (continued) Financial Statement Effects and Presentation — The following table shows total stock-based compensation expense for the years ended June 30, 2024 and 2023, which is included in selling, general and administrative expenses in the accompanying Consolidated Statements of Comprehensive Income (Loss): Year Ended June 30, 2024 2023 Stock options $ 94,124 $ 200,854 RSAs 260,322 168,673 RSUs 664,577 941,430 Total $ 1,019,023 $ 1,310,957 11. Earnings (Loss) Per Share Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted-average number of shares of Class A common stock outstanding during each period presented. Diluted earnings (loss) per share is computed similarly to basic earnings (loss) per share except that it reflects the potential dilution that could occur if dilutive securities or other obligations to issue shares of Class A common stock were exercised or converted into shares of Class A common stock. The computations for basic and diluted earnings (loss) per share are described in the following table: Year Ended June 30, 2024 2023 Net loss $ ( 8,007,346 ) $ ( 4,046,871 ) Weighted-average common shares outstanding: Basic number of shares 37,944,935 31,637,445 Effect of dilutive securities: Options to purchase common stock - - RSUs and RSAs - - Diluted number of shares 37,944,935 31,637,445 Loss per common share: Basic $ ( 0.21 ) $ ( 0.13 ) Diluted $ ( 0.21 ) $ ( 0.13 ) The following weighted-average potential dilutive shares were not included in the computation of diluted earnings per share, as their effects would be anti-dilutive: Year Ended June 30, 2024 2023 Options to purchase common stock 540,604 534,462 RSUs and RSAs 1,249,336 2,013,276 1,789,940 2,547,738 12. Defined Contribution Plan The Company provides retirement benefits to its U.S.-based employees through a defined contribution retirement plan. 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 a defined 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, 2024, there were 50 employees enrolled in this plan . The Company made matching contributions of approximately $ 108,000 and $ 121,000 during the years ended June 30, 2024 and 2023, respectively. F-20 Table of Contents LIGHTPATH TECHNOLOGIES, INC. Notes to Consolidated Financial Statements (continued) 13. Leases The Company has operating leases for its manufacturing and office space. Through February 2023, the Company had two lease agreements for its corporate headquarters and manufacturing facilities in Orlando, Florida. The first lease (the “Orlando Lease”) was amended effective April 30, 2021 to expand the space from approximately 26,000 square feet to approximately 58,500 square feet. 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 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%). Additionally, there is one five-year extension option exercisable by the Company. 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 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, 2024, 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. Effective June 1, 2024, LPOIZ reduced its facility to 39,500 square feet. It is management’s intention to renew the lease on the reduced space for at least a one-year term. At June 30, 2024, 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. At June 30, 2024, the Company also has obligations under twelve finance lease agreements, entered into during fiscal years 2019 thru 2024, 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. 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. As most of the Company’s leases do not provide an implicit rate, the Company used its collateralized incremental borrowing rate based on the information available at the commencement date in determining the present value of future payments. Currently, none of the Company’s leases include variable lease payments that are dependent on an index or rate. The Company is responsible for payment of certain real estate taxes, insurance and other expenses on certain of its leases. These amounts are generally considered to be variable and are not included in the measurement of the ROU asset and lease liability. The Company generally accounts for non-lease components, such as maintenance, separately from lease components. The Company’s lease agreements do not contain any material residual value guarantees or material restricted covenants. Leases with a term of 12 months or less are not recorded on the Consolidated Balance Sheet; the Company recognizes lease expense for these leases on a straight-line basis over the lease term. F-21 Table of Contents LIGHTPATH TECHNOLOGIES, INC. Notes to Consolidated Financial Statements (continued) The Company received tenant improvement allowances for each of the two leases with respect to its Orlando Facility. These allowances were used to construct improvements and are included in leasehold improvements and operating lease liabilities and is being amortized over the corresponding lease term. In August 2023, we completed the construction of additional tenant improvements within the premises subject to our continuing lease for our Orlando Facility, of which the landlord provided $ 2.4 million in tenant improvement allowances. We funded the balance of the tenant improvement costs of approximately $ 3.7 million. The components of lease expense were as follows: Year Ended June 30, 2024 2023 Operating lease cost $ 947,154 $ 875,454 Finance lease cost: Depreciation of lease assets 95,546 71,326 Interest on lease liabilities 39,972 7,590 Total finance lease cost 135,518 78,916 Total lease cost $ 1,082,672 $ 954,370 Supplemental balance sheet information related to leases was as follows: Classification June 30, 2024 June 30, 2023 Operating lease assets $ 6,741,549 $ 9,571,604 Property and equipment, net (1) 1,063,768 542,105 $ 7,805,317 $ 10,113,709 Operating lease liabilities, current $ 1,059,998 $ 969,890 Finance lease liabilities, current 177,148 103,646 Operating lease liabilities, less current portion 8,058,502 8,393,248 Finance lease liabilities, less current portion 528,753 341,201 $ 9,824,401 $ 9,807,985 (1) Finance lease assets are recorded net of accumulated depreciation of approximately $ 109,000 and $ 72,000 as of June 30, 2024 and 2023, respectively. Lease term and discount rate information related to leases was as follows: Lease Term and Discount Rate June 30, 2024 Weighted Average Remaining Lease Term (in years) Operating leases 9.4 Finance leases 4.0 Weighted Average Discount Rate Operating leases 2.9 % Finance leases 8.1 % Supplemental cash flow information: Year Ended June 30, 2024 2023 Cash paid for amounts included in the measurement of lease liabilities: Operating cash used for operating leases $ 932,122 $ 1,020,992 Operating cash used for finance leases $ 39,972 $ 7,590 Financing cash used for finance leases $ 131,901 $ 73,003 F-22 Table of Contents LIGHTPATH TECHNOLOGIES, INC. Notes to Consolidated Financial Statements (continued) Future maturities of lease liabilities were as follows as of June 30, 2024: Fiscal year ending: Finance Leases Operating Leases June 30, 2025 $ 228,515 $ 1,158,942 June 30, 2026 206,200 1,130,756 June 30, 2027 179,552 1,137,989 June 30, 2028 161,011 1,156,405 June 30, 2029 57,642 1,186,646 Thereafter - 5,569,120 Total future minimum payments 832,920 11,339,858 Less imputed interest ( 127,019 ) ( 2,221,358 ) Present value of lease liabilities $ 705,901 $ 9,118,500 14. Loans Payable As of June 30, 2024, loans payable consisted of two equipment loans (as defined below). As of June 30, 2023, loans payable primarily consisted of the BankUnited Term Loan (as defined below) payable to BankUnited N.A. (“BankUnited”). This loan was paid in full in February 2024 and is no longer outstanding as of June 30, 2024. Equipment Loans In December 2020, ISP Latvia entered into an equipment loan with a third party (the “2020 Equipment Loan”), which is also a 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. The 2020 Equipment Loan bears interest at a fixed rate of 3.3 %. 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 financial institution (the “2023 Equipment Loan”). The 2023 Equipment Loan is collateralized by certain equipment. The initial advance under the 2023 Equipment Loan was 128,815 EUR (or USD $ 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 final advance for the final payment to the equipment vendor was 132,674 EUR (or USD $ 141,815 ). The 2023 Equipment Loan is 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% ( 6.39 % as of June 30, 2024). BankUnited Term Loan 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”). Since then, we entered into several amendments to the Loan Agreement and pursuant to those amendments and the associated waivers of compliance with certain financial covenants, we have maintained our compliance with all financial and non-financial covenants under the Loan Agreement. The Guidance Line was terminated on May 6, 2019. The Revolving Line expired on February 26, 2022 and was not renewed. On May 9, 2023, the Company entered into the Fifth Amendment to the Loan Agreement dated February 26, 2019 (the “Fifth Amendment”). 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. The Term Loan was paid in full in February 2024, the cash collateral was released, and the Company has no further obligations to BankUnited as of June 30, 2024. F-23 Table of Contents LIGHTPATH TECHNOLOGIES, INC. Notes to Consolidated Financial Statements (continued) Financing costs related to the BankUnited Loans were recorded as a discount on debt and are being amortized over the term. Amortization of approximately $ 59,000 for the year ended June 30, 2023 is included in interest expense. There was no amortization for the year ended June 30, 2024, as all costs were fully amortized in prior periods. Future maturities of loans payable are as follows: Equipment Loans Fiscal year ending: June 30, 2025 $ 210,260 June 30, 2026 149,100 June 30, 2027 105,414 June 30, 2028 70,276 Total payments $ 535,050 Less current portion ( 209,170 ) Non-current portion $ 325,880 15. Contingencies Legal The Company from time to time is involved in various legal actions arising in the normal course of business. Management, after reviewing with legal counsel all of these actions and proceedings, believes that the aggregate losses, if any, will not have a material adverse effect on the Company’s financial position or results of operations. In April 2021, the Company terminated several employees of its China subsidiaries, LPOIZ and LPOI, including the General Manager, the Sales Manager, and the Engineering Manager, after determining that they had engaged in malfeasance and conduct adverse to our interests, including efforts to misappropriate certain of our proprietary technology, diverting sales to entities owned or controlled by these former employees and other suspected acts of fraud, theft and embezzlement. In connection with such terminations, the Company’s China subsidiaries engaged in certain legal proceedings with the terminated employees. The Company 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 years ended June 30, 2024 and 2023, expenses incurred related to the legal proceedings were immaterial. In December 2023, the Company recovered approximately $ 190,000 in funds that had been recovered by the Chinese authorities, which is included in other income, net in the accompanying consolidated statements of comprehensive income (loss) for the year ended June 30, 2024. We do not expect to incur additional legal fees or consulting expenses in future periods as we have exhausted nearly all of our legal options and remedies. Knowing that employee transitions in international subsidiaries can lead to lengthy legal proceedings that can interrupt the subsidiary’s ability to operate, the Company chose to enter into severance agreements with certain of the employees at the time of termination. Pursuant to the severance agreements, LPOIZ and LPOI agreed to pay such employees severance of approximately $ 485,000 in the aggregate, to be paid over a six-month period. After the execution of the severance agreements, we discovered additional wrongdoing by the terminated employees. As a result, LPOIZ and LPOI did not immediately pay the severance payments and disputed the employees’ rights to such payments. However, based on the likelihood that the courts in China would determine that the Company’s subsidiaries would ultimately be obligated to pay these amounts, we accrued for these payments as of June 30, 2021. Such expenses were recorded as “Selling, general and administrative” expenses in the Consolidated Statement of Comprehensive Income (Loss) for the year ended June 30, 2021. As of June 30, 2022, approximately $ 430,000 remained accrued. The Chinese Labor Court subsequently 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 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 has not experienced any material adverse impact to the business operations of LPOI or LPOIZ as a result of the transition. F-24 Table of Contents LIGHTPATH TECHNOLOGIES, INC. Notes to Consolidated Financial Statements (continued) Potential Impact of Economic Conditions in China Due to our operations in China, our business, results of operations, financial condition and prospects may be influenced to a significant degree by economic, political, legal and social conditions in China. China’s economy differs from the economies of other countries in many respects, including with respect to the level of development, growth rate, amount of government involvement, control of foreign exchange and allocation of resources. While China’s economy has experienced significant growth over the past several decades, its growth rate has declined in recent years and may continue to decline. Deteriorating economic conditions in China generally have led to lower demand for our products in China and thus lower revenues and net income for our subsidiaries in China and the Company overall. A continuation of China’s current economic conditions or a further slowdown in the economic growth, an economic downturn, a recession, or other adverse economic conditions in China is likely to have a material adverse effect on our business and results of operations in future quarters. Impact of Ongoing Wars In February 2022, Russian military forces invaded Ukraine. This war has led to sanctions on Russia, which have had some impacts, though temporary, on our supply chain of raw materials. Separately, Israel declared war on Hamas in October 2023. Initially, this resulted in a temporary increase in our sales, as Israel worked to replace electro-optical systems that in some cases use our materials. However, it is possible that this war will also have a negative impact on our business at some point as a result of the economic impact in Israel. In addition to the significant defense related market in Israel, we also serve many commercial related applications and work with commercial companies in Israel, and the business of those customers may be negatively impacted by the war over time. Given the dynamic nature of this situation, we cannot reasonably estimate the impact of either the Russian-Ukraine conflict or the Israel-Hamas war on our financial condition, results of operations or cash flows into the foreseeable future. 16. Foreign Operations Assets and liabilities denominated in non-U.S. currencies are translated at rates of exchange prevailing on the balance sheet date, and revenues and expenses are translated at average rates of exchange for the period. Gains or losses on the translation of the financial statements of a non-U.S. operation, where the functional currency is other than the U.S. dollar, are reflected as a separate component of equity, which was a cumulative gain of approximately $ 510,000 and $ 607,000 as of June 30, 2024 and 2023, respectively. During the years ended June 30, 2024 and 2023, we also recognized net foreign currency transaction gains of approximately $ 73,000 and losses of approximately $ 37,000 , respectively, included in the Consolidated Statements of Comprehensive Income (Loss) in the line item entitled “Other income, net.” Revenues from and long-lived assets located in foreign countries are as follows: Year Ended June 30, 2024 2023 Revenues: United States $ 19,289,711 $ 16,327,295 Latvia 128,039 2,667,113 China 2,513,781 2,629,684 Other European countries 7,859,096 8,664,338 Other Asian countries 1,190,410 1,463,343 Rest of world 745,155 1,172,176 $ 31,726,192 $ 32,933,949 June 30, 2024 June 30, 2023 Long-lived assets: United States $ 24,989,477 $ 23,336,063 Latvia 4,961,741 5,282,596 China 2,615,410 3,157,434 $ 32,566,628 $ 31,776,093 F-25 Table of Contents LIGHTPATH TECHNOLOGIES, INC. Notes to Consolidated Financial Statements (continued) 17. Supplier and Customer Concentrations The Company utilizes a number of glass compositions in manufacturing its molded glass aspheres and lens array products. These glasses or equivalents are available from a large number of suppliers, including CDGM Glass Company Ltd., Ohara Corporation, and Sumita Optical Glass, Inc. Base optical materials, used in certain of the Company’s products, are manufactured and supplied by a number of optical and glass manufacturers. The Company also utilizes major infrared material suppliers located around the globe for a broad spectrum of infrared crystal and glass. Historically, the Company has sourced Germanium from suppliers located in Russia and China. At the start of the war in Ukraine, all purchases of Germanium from vendors in Russia ceased and the Company has been purchasing Germanium only from vendors in China. On July 4, 2023, China announced its intentions to impose some export restrictions on Germanium, requiring all international customers to provide an end user statement for approval before receiving an export license. Since that announcement, supply of Germanium has been disrupted, though not completely stopped. To date, the Company has mostly been able to purchase the Germanium that has been needed, however the availability, lead time and ability to receive export licenses varies between vendors. The Company has strategically reduced the level of Germanium-based orders that it accepts, and continues to work with its customers to design in alternative materials such as its BlackDiamond glasses. The Company believes that a satisfactory supply of such production materials will continue to be available, however, with longer lead times and higher prices for Germanium in particular, although there can be no assurance in this regard. In fiscal year 2024, the Company had sales to three customers that comprised an aggregate of approximately 25 % of its annual revenue, and 16 % of its June 30, 2024 accounts receivable. Sales to these customers as a percentage of our fiscal year 2024 revenue include one customer at 12 %, another customer at 7 %, and the third customer at 6 %. One of these customers comprised 11 % of accounts receivable, a second customer comprised 3 % of accounts receivable and a third customer comprised 1 % of the accounts receivable balance as of June 30, 2024. In fiscal year 2023, the Company had sales to three customers that comprised an aggregate of approximately 24 % of its annual revenue, and 25 % of its June 30, 2023 accounts receivable. 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 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. The loss of any of these customers, or a significant reduction in sales to any such customer, would adversely affect the Company’s revenues. In fiscal year 2024, 39 % of the Company’s net revenue was derived from sales outside of the U.S., with 94 % of foreign sales derived from customers in Europe and Asia. In fiscal year 2023, 50 % of the Company’s net revenue was derived from sales outside of the U.S., with 93 % of foreign sales derived from customers in Europe and Asia. 18. Liquidity We generally rely on cash from operations and equity and debt offerings, to the extent available, to satisfy our liquidity needs and to maintain our ability to repay our debt. On February 16, 2022, we filed a shelf registration statement to facilitate the issuance of our Class A common stock, warrants exercisable for shares of our Class A common stock, and/or units up to an aggregate offering price of $ 75.8 million from time to time. In connection with the filing of the shelf registration statement, we also included a prospectus supplement relating to an at-the-market equity program under which we may issue and sell shares of our Class A common stock up to an aggregate offering price of $ 25.2 million from time to time, decreasing the aggregate offering price available under the shelf registration statement to $ 50.6 million. The shelf registration statement was declared effective by the SEC on March 1, 2022. During the year ended June 30, 2024, we issued 585,483 shares of our Class A common stock pursuant to the at-the-market equity program. 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 . There are a number of factors that could result in the need to raise additional funds, including a decline in revenue or a lack of anticipated sales growth, increased material costs, increased labor costs, planned production efficiency improvements not being realized, increases in property, casualty, benefit and liability insurance premiums, and increases in other costs. In addition, we may identify opportunities for acquisitions and other strategic transactions to expand and further enhance our business that may require that we raise additional capital should we elect to pursue any of such transactions. F-26 Table of Contents LIGHTPATH TECHNOLOGIES, INC. Notes to Consolidated Financial Statements (continued) 19. Subsequent Events Bridge Promissory Note On August 6, 2024, the Company entered into a bridge promissory note (the “Note”) with Lytton-Kambara Foundation (the “Lender”) pursuant to which the Lender extended a loan to the Company in the principal amount of $ 3,000,000 (the “Loan”). The Loan is subject to an original issue discount of 7 %. After deducting the original issue discount, fees paid to the Company’s placement agent, and certain expenses, the Company received net proceeds of $ 2,700,000 . The Loan bears interest at the rate of 12.5 % per annum and has a 1 -year term, maturing on August 6, 2025 (the “Maturity Date”), at which time the entire principal amount of the Loan and all accrued but unpaid interest is due and payable in full. The Company may prepay the principal outstanding under the Note at any time prior to the Maturity Date at 105% of the prepaid principal amount plus any unpaid accrued interest. Upon the consummation of a transaction resulting in a Change of Control (as defined in the Note) the Company is required to repay the holder of the Note in cash an amount equal to 105% of the outstanding principal balance of the Note plus unpaid accrued interest on the original principal . The Note contains customary representations, warranties and covenants for agreements of this type and provides for customary events of default, including among other things, failure to make payments when due, breaches of representations and warranties, and certain bankruptcy and insolvency events. Upon an event of default, the Note’s interest rate shall increase to 18% per annum and the Note holder may, at its option, accelerate the Note whereupon the entire principal amount thereof and all accrued but unpaid interest shall be due and payable in full. The foregoing descriptions of the Note do not purport to be complete and are qualified in their entirety by reference to the Note, a copy of which is filed as an Exhibit to this Annual Report on Form 10-K and is incorporated herein by reference. End of Consolidated Financial Statements F-27 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized. LIGHTPATH TECHNOLOGIES, INC. Date: September 19, 2024 By: /s/ Shmuel Rubin Shmuel Rubin President & Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. /s/ SHMUEL RUBIN September 19, 2024 /s/ ALBERT MIRANDA September 19, 2024 Shmuel Rubin President & Chief Executive Officer (Principal Executive Officer) Albert Miranda Chief Financial Officer (Principal Financial Officer) /s/ M. SCOTT FARIS September 19, 2024 /s/ JOSEPH MENAKER September 19, 2024 M. Scott Faris Director (Chairman of the Board) Joseph Menaker Director /s/ S. ERIC CREVISTON September 19, 2024 /s/ DARCIE PECK September 19, 2024 S. Eric Creviston Director Darcie Peck Director /s/ KIMBERLY CRIDER September 19, 2024 Kimberly Crider Director S-1 Table of Contents