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Item 1. Financial Statements

2025-05-20 compared with 2025-02-13 · 322 added, 130 removed, 519 unchanged (47% of the section changed)

27 unchanged sentences

Loans payable, less current portion

Warrant liability

Total liabilities

Commitments and Contingencies

Series G Convertible Preferred Stock;

$ 0.01 par value;

44,000 shares authorized;

24,956 issued and outstanding

Stockholders equity:

13 unchanged sentences

Total stockholders equity

Total liabilities and stockholders’ equity

Total liabilities, convertible preferred stock and stockholders equity

The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.

2 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

Cost of sales

12 unchanged sentences

Interest expense, net

Other income, net

Total other expense, net

Loss on extinguishment of debt

Change in fair value of warrant liability

Other income (expense), net

Total other income (expense), net

Loss before income taxes

18 unchanged sentences

Number of shares used in per share calculation (diluted)

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

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

LIGHTPATH TECHNOLOGIES, INC.

Condensed Consolidated Statements of Changes in Stockholders' Equity

Temporary Equity

Series G Convertible

Preferred Stock

Comphrehensive

Stockholders’

Balances at June 30, 2024

22 unchanged sentences

$ ( 220,078,317 )

Issuance of preferred stock under private equity placement, net of fees

Issuance of common stock for:

Employee Stock Purchase Plan

Exercise of Stock Options, RSUs & RSAs, net

Issuance of common stock for acquisition of Visimid

Issuance of common stock for acquisition of G5

Issuance of common stock under private equity placement, net of fees

Issuance of warrants under private placement, net of fees

Preferred cumulative dividends plus accretion

( 14,751,134 )

Stock-based compensation on stock options, RSUs & RSAs

Foreign currency translation adjustment

( 3,582,460 )

Balances at March 31, 2025

$ 238,505,174

$ ( 223,660,777 )

Balances at June 30, 2023

21 unchanged sentences

$ ( 210,892,268 )

Issuance of common stock for:

Employee Stock Purchase Plan

Exercise of Stock Options, RSUs & RSAs, net

Issuance of common stock for acquisition of Visimid

Issuance of common stock under public equity placement

Stock-based compensation on stock options, RSUs & RSAs

Foreign currency translation adjustment

( 2,597,534 )

Balances at March 31, 2024

$ 244,188,153

$ ( 213,489,802 )

The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.

1 unchanged sentence

Condensed Consolidated Statements of Cash Flows

Six Months Ended December 31,

Nine Months Ended March 31,

Cash flows from operating activities:

4 unchanged sentences

Interest from amortization of loan issuance costs

Loss on extinguishment of debt

Change in fair value of warrant liability

Loss on disposal of property and equipment

4 unchanged sentences

Deferred taxes

Changes in operating assets and liabilities:

Changes in operating assets and liabilities, net of acquisitions:

Trade accounts receivable

Other current assets

( 1,206,340 )

Prepaid expenses and deposits

7 unchanged sentences

Proceeds from sale-leaseback of equipment

Acquisition of G5

( 20,250,011 )

Acquisition of Visimid, net of cash acquired

1 unchanged sentence

( 20,820,089 )

( 2,375,091 )

Cash flows from financing activities:

Proceeds from exercise of stock options

Proceeds from sale of common stock from Employee Stock Purchase Plan

Proceeds from issuance of common stock under public equity placement, net of fees

Proceeds from issuance of common stock under private equity placement, net of fees

Proceeds from issuance of preferred stock under private equity placement, net of fees

Proceeds from issuance of warrants under private equity placement

Deferred payment for acquisition of Visimid

Loan issuance costs

Borrowings on loans payable

Loan issuance costs

Payments on loans payable

( 2,262,798 )

Repayment of finance lease obligations

Net cash provided by (used in) financing activities

( 2,069,670 )

Effect of exchange rate on cash and cash equivalents

9 unchanged sentences

Issuance of common stock for acquisition of Visimid

Issuance of common stock for acquisition of G5

Accrual of earnout consideration for acquisition of G5

Extinguishment of debt in exchange for common stock, preferred stock warrants and a note

The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.

3 unchanged sentences

References in this document to the “Company,” “LightPath,” “we,” “us,” or “our” are intended to mean LightPath Technologies, Inc., individually, or as the context requires, collectively with its subsidiaries on a consolidated basis.

These unaudited Condensed Consolidated Financial Statements have been prepared in accordance with the requirements of Article 8 of Regulation S-X promulgated under the Exchange Act and, therefore, do not include all information and footnotes necessary for a fair presentation of financial position, results of operations, and cash flows in conformity with accounting principles generally accepted in the United States of America.

These unaudited Condensed Consolidated Financial Statements should be read in conjunction with our Consolidated Financial Statements and related notes, included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2024, filed with the SEC.

1 unchanged sentence

These Condensed Consolidated Financial Statements are unaudited, but include all adjustments, including normal recurring adjustments, which, in the opinion of management, are necessary to present fairly our financial position, results of operations and cash flows for the interim periods presented.

The Consolidated Balance Sheet as of June 30, 2024 has been derived from the audited financial statements at that date but does not include all of the information and notes required by generally accepted accounting principles for complete financial statements.

The Condensed Consolidated Balance Sheet as of June 30, 2024 has been derived from the audited financial statements at that date but does not include all of the information and notes required by generally accepted accounting principles for complete financial statements.

Results of operations for interim periods are not necessarily indicative of the results that may be expected for the year as a whole.

3 unchanged sentences

Our significant accounting policies are provided in Note 2, Summary of Significant Accounting Policies , in the Consolidated Financial Statements in our Annual Report on Form 10-K for the fiscal year ended June 30, 2024.

There have been no material changes to our significant accounting policies during the six months ended December 31, 2024, from those disclosed in our Annual Report on Form 10-K for the fiscal year ended June 30, 2024.

There have been no material changes to our significant accounting policies during the nine months ended March 31, 2025, from those disclosed in our Annual Report on Form 10-K for the fiscal year ended June 30, 2024.

Use of Estimates

1 unchanged sentence

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.

The Company accounts for warrants as equity or liability classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480, Distinguishing Liabilities from Equity and ASC 815, Derivatives and Hedging.

The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own common stock and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification.

This assessment is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.

If a warrant does not meet the conditions for equity classification, it is carried on the consolidated balance sheet as a warrant liability measured at fair value, with subsequent changes in the fair value of the warrant recorded in the condensed consolidated statement of comprehensive income (loss).

If a warrant meets both conditions for equity classification, the warrant is initially recorded in additional paid-in capital on the condensed consolidated balance sheets, and the amount initially recorded is not subsequently remeasured at fair value.

Fair Value of Financial Instruments

7 unchanged sentences

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.

The respective carrying value of financial instruments recorded on the Condensed 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 our finance lease obligations and loans payable approximate their carrying values, based upon current rates available to us.

The fair value of the finance lease obligations and loans payable approximate their carrying values, based upon current rates available to us.

See Note 12, Leases and Note 13, Loans Payable , to these unaudited Condensed Consolidated Financial Statements for additional information.

Management considers these fair value estimates to be Level 2 fair value measurements.

The fair value of the warrants currently classified as a liability is considered a Level 3 fair value measurement.

We do not have any other financial or non-financial assets or liabilities that would be characterized as Level 1, Level 2 or Level 3 instruments.

Acquisition of G5 Infrared

In February 2025, the Company acquired G5 Infrared LLC (“G5 Infrared”), pursuant to a Membership Interest Purchase Agreement (the “MIPA”) by and among the Company, G5 Infrared, the members of G5 Infrared (collectively, the “Sellers”), and Kenneth R.

Greenslade, solely in his capacity as Sellers’ Representative.

The Company has acquired from the Sellers all of the issued and outstanding membership interests of G5 Infrared, which transaction closed on February 18, 2025 (the “G5 Acquisition Date”).

G5 Infrared is a vertically-integrated manufacturer of infrared camera systems and imaging solutions, and also provides infrared coatings.

G5 Infrared operates from a manufacturing facility in Hudson, New Hampshire.

The Company acquired G5 Infrared to expand the Company’s portfolio to include cooled infrared cameras.

Net assets and results of operations of G5 Infrared are reflected in our financial results commencing on the G5 Acquisition Date.

Revenue generated by G5 Infrared is included in our infrared and assemblies and modules product groups.

We are in the process of further refining our product groups and evaluating our operating segments following the acquisition.

We accounted for the acquisition of G5 Infrared using the acquisition method of accounting, which required us to measure identifiable assets acquired and liabilities assumed in the acquiree at their fair values as of the G5 Acquisition Date, with the excess of the consideration transferred over those fair values recorded as goodwill.

The fair value of the aggregate consideration was approximately $ 27.6 million which consisted of (i) $ 20.25 million in cash, (ii) 1,972,501 shares of the Company’s Class A common stock, $ 0.01 par value (“Class A Common Stock”) (at a value of $ 2.47 per share, which was the closing price on the G5 Acquisition Date), and (iii) potential earnout consideration paid annually in fiscal years 2026 and 2027 subject to achievement of certain revenue and EBITDA targets set forth in the MIPA.

As of the G5 Acquisition Date, the preliminary estimate of fair value of consideration transferred consisted of the following:

Cash consideration

Equity portion of consideration

Earnout portion of consideration

Fair value of consideration transferred

The fair value of the equity portion of the consideration was determined by multiplying the number of shares issued, 1,972,501 , by the fair value of the Class A Common Stock on the G5 Acquisition Date, which was $ 2.47 .

Earnout payments of an aggregate of up to $ 23 million of additional consideration may be paid annually in fiscal years 2026 and 2027 subject to achievement of certain minimum EBITDA and revenue targets for the one and two-year periods beginning on the first full calendar month commencing after the G5 Acquisition Date, as set forth in the MIPA.

If the targets are achieved during the respective periods, LightPath will (i) issue an aggregate number of shares of Class A Common Stock equal to 30% of the earnout payment divided by the average close price for the ten trading days immediately prior to the first anniversary of the earnout commencement date, as defined in the MIPA, and (ii) pay additional cash consideration in an amount equal to 70% of the earnout payment.

The earnout is considered contingent consideration and is accounted for as a liability initially measured at fair value, with changes during each reporting period recognized in earnings.

The portion of the earnout that will be settled in stock will also be accounted for as a liability since the achievement of targets adjusts the number of shares to be issued at settlement based on a variable other than the Company’s Class A Common Stock, and therefore it does not meet the criteria in ASC 480, Distinguishing Liabilities from Equity .

The fair value of the earnout in the accompanying unaudited Condensed Consolidated Balance Sheet is calculated using a Monte Carlo simulation to determine the probability of achieving the earnout and its fair value.

The following table summarizes the preliminary allocation of the fair value of consideration transferred to assets acquired and liabilities assumed as of the G5 Acquisition Date:

Preliminary fair value of estimated purchase consideration

Accounts receivable

Prepaid expenses and other current assets

Property and equipment

Operating right-of-use asset

Intangible assets

Liabilities :

Accounts payable

Accrued liabilities

Operating lease liabilities, current

Deferred tax liabilities, noncurrent

Operating lease liabilities, noncurrent

Total Liabilities Assumed

Due to the timing of the acquisition of G5 Infrared, our accounting for the acquisition remains preliminary.

Amounts recorded associated with these assets and liabilities are based on preliminary calculations and estimates.

Our preliminary estimates and assumptions are subject to change as we obtain additional information during the measurement period (up to one year from the G5 Acquisition Date).

The allocation of the purchase price is determined by management and utilizes certain third-party valuations and other analyses that have not been completed as of the date of this Quarterly Report on Form 10-Q, including but not limited to working capital, certain tax matters, property and equipment, and intangible assets.

The final allocation could be materially different from the preliminary allocation used herein and may include (i) changes in fair values of property and equipment;

(ii) changes in allocations to intangibles assets as well as goodwill;

and (iii) other changes to certain assets and liabilities, including deferred taxes.

Any potential adjustments made could be material in relation to the preliminary values presented above.

Intangible assets – All intangible assets acquired in the acquisition of G5 Infrared are subject to amortization.

The preliminary fair value of identifiable intangible assets acquired as of the G5 Acquisition Date is as follows:

Intangible Asset

Useful Lives (Years)

Customer relationships

The fair value of intangible assets is estimated using the multi-period excess earnings approach for acquired customer relationships and the relief from royalty method for the acquired trade names and know-how.

All of these level 3 fair value methods are income-based valuation approaches, which require judgment to estimate appropriate discount rates, royalty rates related to the trade names intangible assets, revenue growth attributable to the intangible assets and remaining useful lives.

The acquired intangible assets are not expected to be deductible for New Hampshire state income taxpurposes, which resulted in a deferred tax liability of $ 1.1 million.

Goodwill – The $ 3.0 million of goodwill recognized is attributable to G5 Infrared’s market presence, the assembled workforce and established operating infrastructure.

The acquired goodwill is expected to be deductible for Federal income tax purposes.

See Note 8, Goodwill and Intangible Assets, in these Notes to these unaudited Condensed Consolidated Financial Statements for further information.

Financial Results

Revenue and loss before income taxes of G5 Infrared included in our Condensed Consolidated Statement of Operations for the G5 Acquisition Date through March 31, 2025 was $ 1.4 million and $ 0.6 million, respectively.

The following table presents unaudited pro forma financial results of the operations acquired with G5 Infrared.

The pro forma results for the three quarters ended March 31, 2025 were prepared as if the acquisition was completed on the first day of our fiscal 2025, July 1, 2024, and include adjustments to remove costs directly attributable to the acquisition, such as transaction-related costs and the loss on extinguishment of debt (as described below).

The pro forma results for the three quarters ended March 31, 2024 were prepared as if the acquisition was completed on the first day of our fiscal 2024, July 1, 2023, and include adjustments to remove transaction-related costs directly attributable to the acquisition.

The pro forma results do not include any integration synergies and are not necessarily indicative of our results of operations that actually would have been obtained had the acquisition of G5 Infrared been completed for the period presented, or which may be realized in the future.

Three Months Ended March 31,

Nine Months Ended March 31,

Income before taxes

$ ( 3,340,705 )

$ ( 3,043,300 )

$ ( 6,258,058 )

$ ( 2,888,463 )

Acquisition-related costs have been expensed as incurred.

In connection with the acquisition of G5 Infrared, we recorded transaction and integration costs of $ 0.4 million and $ 1.3 million for the three and nine months ended March 31, 2025, respectively, which were included in the “Selling, general and administrative expenses” line item in our unaudited Condensed Consolidated Statement of Operations.

Acquisition Financing

Concurrent with the entry into the MIPA on February 13, 2025, we entered into a Securities Purchase Agreement, a Class A Common Securities Purchase Agreement and two promissory notes for total proceeds of approximately $ 32.2 million, inclusive of the conversion of the Bridge Promissory Note (see Note 13, Loans Payable ), and before deducting estimated offering expenses of $2.0 million incurred by the Company, which was used to fund, in part, the cash consideration payable in connection with the acquisition of G5 Infrared.

Pursuant to the Securities Purchase Agreement (the “Securities Purchase Agreement”) with North Run Capital, AIGH Investment Partners, LP, WVP Emerging Manager Offshore Fund LLC, the Lytton-Kambara Foundation and Alice W.

Lytton Family LLC (collectively, the “Purchasers”), the Purchasers purchased from the Company (i) an aggregate of approximately 24,956 shares of Series G Convertible Preferred Stock (the Series G Convertible Preferred Stock is convertible into shares of Class A Common Stock), (ii) warrants to purchase an aggregate of 4,352,774 shares of Class A Common Stock, with an exercise price of $2.58 per share (the “Purchasers Warrants”), and (iii) two senior secured promissory notes in an aggregate principal amount of $5.2 million (the “Acquisition Notes”) , which are convertible into shares of Series G Convertible Preferred Stock upon the occurrence of certain events (see Note 13, Loans Payable).

The Securities Purchase Agreement closed on February 18, 2025.

At the closing of the Securities Purchase Agreement, the Company and the Purchasers entered into a registration rights agreement, pursuant to which the Company agreed to register the Class A Common Stock Issuable upon the conversion of the Series G Convertible Preferred Stock (including those shares of Series G Convertible Preferred Stock that are issuable upon the conversion of the Acquisition Notes) and the Purchasers Warrants (collectively, the “Registrable Securities”) under the Securities Act.

The Company filed a registration statement covering the resale of such Registrable Securities on May 2, 2025, which became effective on May 12, 2025.

The Company may not issue Class A Common Stock upon the conversion of the Series G Convertible Preferred Stock or the Purchasers Warrants to the extent such issuances would result in an aggregate number of shares of Class A Common Stock exceeding 19.99 % of the total shares of Class A Common Stock issued and outstanding as of the G5 Acquisition Date, in accordance with the rules and regulations of the Nasdaq Stock Market, LLC (“Nasdaq”) unless the Company first obtains stockholder approval (the “Stockholder Approval”).

Pursuant to the Securities Purchase Agreement and as required by Nasdaq, the Company agreed to file a proxy statement to obtain the Stockholder Approval and hold a special meeting of stockholders of the Company not later than 120 days after the G5 Acquisition Date.

On February 13, 2025, the Company also entered into a Securities Purchase Agreement (the “Class A Common Securities Purchase Agreement”) with Lytton-Kambara Foundation (the “Buyer”), pursuant to which Buyer purchased from the Company:

(i) 455,192 shares of Class A Common Stock at a purchase price of approximately $2.15 per share, and warrants to purchase 37.5% of the number of shares, or 170,697 shares of Class A Common Stock, with an exercise price of $2.58 per share (the “Buyer's Warrants”);

and (ii) 232,258 shares of Class A Common Stock at a purchase price of approximately $2.15 per share (the “Common Offering”).

The Buyer and its affiliate, Alice W.

Lytton Family LLC, (collectively, the “Lytton Buyers”) were also among the Purchasers in the Securities Purchase Agreement, and the Buyer was also the Lender of our Bridge Promissory Note (see Note 13, Loans Payable ).

In connection with the closing of Securities Purchase Agreement and the Class A Securities Purchase Agreement, the Company received $1.5 million in cash from the Lytton Buyers , and the remaining consideration was exchanged for the outstanding principal and accrued interest of the Bridge Promissory note as of February 18, 2025 (see Note 13, Loans Payable).

The Class A Common Securities Purchase Agreement closed on February 18, 2025.

The proceeds were allocated to the instruments as follows:

(i) to the Class A Common Stock, Buyer's Warrants, Purchaser Warrants, Series G Convertible Preferred Stock, and Acquisition Note issued to the Lytton Buyers at fair value, as the instruments were issued in exchange for the Bridge Promissory Note outstanding, which was accounted for as an extinguishment as further detailed in Note 13, Loans Payable , (ii) to the remaining Purchasers Warrants at fair value as the Purchasers Warrants are liabilities, and (iii) the remaining proceeds, to the remaining Series G Convertible Preferred Stock, and Acquisition Notes issued on a relative fair value basis, by investor.

Warrants – The Company issued 4,352,775 Purchasers Warrants in connection with the Securities Purchase Agreement and 170,697 Buyer's Warrants in connection with the Class A Securities Purchase Agreement (collectively, the “Warrants”).

The exercise price of the Warrants is $ 2.58 (the “Exercise Price”).

The Exercise Price and the number of underlying shares of Class A Common Stock is subject to proportional adjustment in the event of customary stock splits, stock dividends, combinations or similar events.

The Warrants became exercisable upon the issuance date and will expire on the six-year anniversary of issuance.

A holder may not exercise any portion of the Warrants, to the extent that after giving effect to such issuance exercise, either (i) the holder (together with the holder’s affiliates and any other persons acting as a group together with the holder or any of the holder’s affiliates would beneficially own in excess of 19.99%, or, if elected be such holder, a lesser percentage of the number of shares of the Class A Common Stock outstanding immediately after giving effect to the issuance of shares of Class A Common Stock issuable upon exercise of the Warrant, or (ii) the aggregate number of shares of Class A Common Stock issued upon exercise of the Warrant, the exercise of any other Warrants issued pursuant to the Securities Purchase Agreement, and upon conversion of Series G Convertible Preferred Stock, exceeds the Exchange Cap (6,055,606 shares, as adjusted to reflect any share splits, reverse share splits or similar recapitalizations that occur after the Issue Date).

The Purchasers Warrants are not indexed the Company’s own stock due to the Exchange Cap, as shareholder approval is not an input for determining the fair value of a fixed-for-fixed option on the Company’s Class A Common Stock.

As such, the Purchasers Warrants are classified as liabilities on the condensed consolidated balance sheets, with subsequent changes in the fair value of the warrant recorded in the change in fair value of warrant liability in other income (expense) on the condensed consolidated statements of comprehensive income (loss).

The Buyer's Warrants are indexed to the Company's own stock, and meet the criteria for equity classification.

The Warrants are valued using the Black-Scholes-Merton pricing model.

Series G Convertible Preferred Stock – Based on an analysis of the Series G Convertible Preferred Stock, it was concluded that they are more akin to an equity-type instrument.

Economic characteristics and risks of an equity-linked conversion option are clearly and closely related to an equity-type host;

thus, the conversion option embedded in the Series G Convertible Preferred Stock do not require bifurcation or liability classification under ASC 815, Derivatives and Hedging .

It also does not meet the definition of being mandatorily redeemable under ASC 480-10-20 because it does not embody an unconditional obligation to redeem the instrument.

The Series G Convertible Preferred Stock is redeemable at the option of the holder after the 5 year Guaranteed Term, thus, it should be classified as mezzanine equity, outside of permanent equity.

The Series G Convertible Preferred was valued using a Binomial Lattice Model which considers the ability of the Investor to convert the instrument into common stock at any time, and for the Company's call option and the Investor's put option which are available after 5 years.

The model incorporates transaction details such as stock price, contractual conversion price, dividend yield, risk-free rate, historical volatility, market credit spread, estimated yield and investor exercise behavior.

The Series G Convertible Preferred Stock bears dividends at a per annum rate of 6.5%.

The Company elected to recognize any redemption value changes immediately as they occur and adjust the carrying amount to equal the redemption value at each reporting period.

Promissory Notes – The Acquisition Notes were recorded at fair value based on several probability weighted Binomial Lattice Models which considered the following outcomes:

(i) the Company's EBITDA for the fiscal year ended December 31, 2025 would be less than $4,921,875 the ("EBITDA target") which would cause automatic conversion of the Notes into shares of Preferred Stock at a price of $1,000 per share;

(ii) the Company would chose to redeem the Notes at a premium of 102% prior to the two year maturity date, or (iii) the Notes will be repaid at maturity.

The models incorporate transaction details such as stock price, contractual conversion price, dividend yield, risk-free rate, historical volatility, market credit spread, estimated yield, and the probability the Company will meet the EBITDA target which was based on a simulation technique considering the Company's historical EBITDA.

Refer to Note 13, Loans Payable , for further information regarding the Acquisition Notes.

Offering costs – The $ 2.0 million of estimated direct and incremental offering costs in connection with the Acquisition Financing, allocated based on the relative fair values of the warrants, Class A Common Stock, Series G Convertible Preferred Stock and the Acquisition Notes that comprise the offering.

Issuance costs were allocated as follows:

(i) $ 1.4 million allocated to the Series G Convertible Preferred Stock and the Class A Common Stock issued in conjunction with the Acquisition Financing were recorded as a reduction to temporary equity;

(ii) $ 0.3 million allocated to the warrants were expensed, as the warrants were determined to be classified as a liability, initially;

and (iii) $ 0.3 million allocated to the Acquisition Notes, which are deferred and will be expensed over the term of the Acquisition Notes using the effective interest method.

Acquisition of Visimid Technologies

In July 2023, the Company acquired Liebert Consulting LLC, dba Visimid Technologies (“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.

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

The Company’s unaudited Condensed Consolidated Financial Statements reflect the financial results of Visimid beginning on the Visimid 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.

1 unchanged sentence

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, and for the July 1, 2024 installment, 279,553 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 , $ 125,000 and $ 125,000 were paid in October 2023, January 2024 and September 2024, respectively, per the terms of the purchase agreement, and the remaining cash and stock payments, including the balance of the estimated potential earnout, have been accrued and are included in Accrued liabilities and Accrued liabilities, noncurrent in the unaudited Condensed Consolidated Balance Sheet as of December 31, 2024.

The estimated fair values of the assets acquired and liabilities assumed were recorded as of the Acquisition Date.

For the January 1, 2024 installment, 267,176 shares were issued;

for the July 1, 2024 installment, 279,553 shares were issued;

and for the January 1, 2025 installment, 102,700 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 Visimid Acquisition Date.

Of this amount, $ 600,000 was paid at closing, cash installments of $ 150,000 , $ 125,000 and $ 125,000 were paid in October 2023, January 2024 and September 2024, respectively, per the terms of the purchase agreement, and the remaining cash and stock payments, including the balance of the estimated potential earnout, have been accrued and are included in Accrued liabilities in the unaudited Condensed Consolidated Balance Sheet as of March 31, 2024.

The estimated fair values of the assets acquired and liabilities assumed were recorded as of the Visimid Acquisition Date.

As part of the valuation analysis, the Company identified intangible assets, including customer relationships, customer backlog, trade secrets and trademarks.

2 unchanged sentences

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.

The Company incurred a total of approximately $ 238,000 , in acquisition costs, of which $ 97,000 was incurred during the six months ended December 31, 2023.

These costs are included in the unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) in the line item entitled “Selling, general and administrative.” No further acquisition costs were incurred during the six months ended December 31, 2024.

Prior to the Acquisition, the Company had a preexisting relationship with Visimid.

The goodwill is expected to be deductible for income taxpurposes.

The Company incurred a total of approximately $ 238,000 , in acquisition costs, of which $ 98,000 was incurred during the nine months ended March 31, 2024.

These costs are included in the unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) in the line item entitled “Selling, general and administrative.” No further Visimid acquisition costs were incurred during the nine months ended March 31, 2025.

Prior to the acquisition of Visimid, 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.

13 unchanged sentences

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

Deferred revenue was $ 335,000 and $ 725,000 as of December 31, 2024 and June 30, 2024, respectively, and is included in accrued liabilities in the condensed consolidated balance sheets.

Deferred revenue was $ 207,000 and $ 725,000 as of March 31, 2025 and June 30, 2024, respectively, and is included in accrued liabilities in the Condensed Consolidated Balance Sheets.

Nature of Products

5 unchanged sentences

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

Revenue by product group for the three and six months ended December 31, 2024 and 2023 was as follows:

Three Months Ended December 31,

Six Months Ended December 31,

Revenue by product group for the three and nine months ended March 31, 2025 and 2024 was as follows:

Three Months Ended

Nine Months Ended

Infrared components

10 unchanged sentences

( 1,224,896 )

The value of tooling in raw materials, net of the related allowance for obsolescence, was approximately $ 1.3 million and $ 1.4 million as of December 31, 2024 and June 30, 2024, respectively.

The value of tooling in raw materials, net of the related allowance for obsolescence, was approximately $ 1.3 million and $ 1.4 million as of March 31, 2025 and June 30, 2024, respectively.

Property and Equipment

Property and equipment are summarized as follows:

Estimated Lives (Years)

December 31, 2024

June 30, 2024

Estimated Lives

Manufacturing equipment

8 unchanged sentences

Total property and equipment, net

Depreciation expense was $ 1.2 million for both the six months ended December 31, 2024 and 2023.

Depreciation expense was $ 1.9 million and $ 1.8 million the nine-month periods ended March 31, 2025 and 2024, respectively.

Goodwill and Intangible Assets

There were no changes in the net carrying value of goodwill during the six months ended December 31, 2024.

The change in the net carrying amount of goodwill during the nine months ended March 31, 2025 was as follows:

Goodwill at June 30, 2024

Acquisition of G5

Goodwill at March 31, 2025

The increase in goodwill during the nine months ended March 31, 2025 was due to the acquisition of G5 Infrared.

The Company is in the process of finalizing third-party valuations of certain intangible assets;

thus, the provisional measurement of goodwill and intangible assets are subject to change.

See Note 3, Acquisition of G5 Infrared , to these unaudited Condensed Consolidated Financial Statements, for more information.

Amortizable intangible assets were comprised of:

Useful Lives (Years)

December 31, 2024

June 30, 2024

Customer relationships

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Total intangible assets, net

Future amortization of intangibles is as follows:

Future amortization of intangible assets is as follows:

Fiscal year ending:

June 30, 2025 (six months remaining)

June 30, 2025 (three months remaining)

June 30, 2026

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After June 30, 2029

A summary of our total income tax expense and effective income tax rate for the three and six months ended December 31, 2024 and 2023 is as follows:

Three Months Ended December 31,

Six Months Ended December 31,

A summary of our total income tax expense and effective income tax rate for the three and nine months ended March 31, 2025 and 2024 is as follows:

Three Months Ended

Nine Months Ended

Loss before income taxes

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(“LPOIZ”) were merged, with LPOIZ as the surviving company and the operations of the two companies were merged.

For the three and six months ended December 31, 2024 and 2023, income tax expense was primarily related to income taxes from our operations in China, including accruals for withholding taxes on intercompany dividends declared by LPOIZ, and paid or payable to LightPath, its parent company, as well as withholding taxes on payments from LPOIZ to LightPath for administrative services rendered.

For the three and nine months ended March 31, 2025 and 2024, income tax expense was primarily related to income taxes from our operations in China, including accruals for withholding taxes on intercompany dividends declared by LPOIZ, and paid or payable to LightPath, its parent company, as well as withholding taxes on payments from LPOIZ to LightPath for administrative services rendered.

We record net deferred tax assets to the extent we believe it is more likely than not that some portion or all of these assets will be realized.

1 unchanged sentence

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

As of December 31, 2024 and June 30, 2024, our net deferred tax assets are related to the U.S.

As of March 31, 2025 and June 30, 2024, our net deferred tax assets are related to the U.S.

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

Our net deferred tax assets as of December 31, 2024 and June 30, 2024 consist primarily of federal and state tax credits with indefinite carryover periods.

Our net deferred tax assets as of March 31, 2025 and June 30, 2024 consist primarily of federal and state tax credits with indefinite carryover periods.

Federal and State Income Taxes

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Our Chinese subsidiary, LPOIZ, is governed by the Income Tax Law of the People’s Republic of China.

As of December 31, 2024, LPOIZ was subject to a statutory income tax rate of 15 %.

The net deferred tax liabilities included in these unaudited Condensed Consolidated Balance Sheets as of December 31, 2024 and June 30, 2024 are related to LPOIZ, and primarily consist of timing differences related to depreciation.

As of March 31, 2025, LPOIZ was subject to a statutory income tax rate of 15 %.

The net deferred tax liabilities included in these unaudited Condensed Consolidated Balance Sheets as of March 31, 2025 and June 30, 2024 are related to LPOIZ, and primarily consist of timing differences related to depreciation.

The Company routinely declares intercompany dividends to remit a portion of the earnings of its foreign subsidiaries to the U.S.

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

Accrued and unpaid withholding taxes were approximately $ 32,000 as of both December 31, 2024 and June 30, 2024.

Accrued and unpaid withholding taxes were approximately $ 32,000 as of both March 31, 2025 and June 30, 2024.

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

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To date, our stockholders approved an aggregate of 7,215,625 shares of our Class A Common Stock for issuance pursuant to awards granted under the Omnibus Plan or SICP.

As of December 31, 2024, 775,126 shares of Class A common stock were authorized and available for issuance pursuant to awards granted under the SICP.

As of March 31, 2025, 614,538 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.

Stock-based compensation expense is based primarily on the fair value of the award as of the grant date and is recognized as an expense over the requisite service period.

The following table shows total stock-based compensation expense for the three and six months ended December 31, 2024 and 2023, the majority of which is included in selling, general and administrative (“SG&A”) expenses in these unaudited Condensed Consolidated Statements of Comprehensive Income (Loss):

Three Months Ended

Six Months Ended

The following table shows total stock-based compensation expense for the three and nine months ended March 31, 2025 and 2024, the majority of which is included in selling, general and administrative (“SG&A”) expenses in these unaudited Condensed Consolidated Statements of Comprehensive Income (Loss):

Three Months Ended March 31,

Nine Months Ended March 31,

Stock options

2 unchanged sentences

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

A discount of approximately $ 1,100 and $ 2,000 for the six months ended December 31, 2024 and 2023, respectively, is included in SG&A expenses in these unaudited Condensed Consolidated Statements of Comprehensive Income (Loss), which represents the value of the 10% discount given to the employees purchasing stock under the 2014 ESPP.

A discount of approximately $ 1,500 and $ 4,000 for the nine months ended March 31, 2025 and 2024, respectively, is included in SG&A expenses in these unaudited Condensed Consolidated Statements of Comprehensive Income (Loss), which represents the value of the 10% discount given to the employees purchasing stock under the 2014 ESPP.

The 2014 ESPP expired in January 2025.

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

1 unchanged sentence

Treasury interest rate for constant maturities.

No stock options were granted during either of the six-month periods ended December 31, 2024 or 2023.

No stock options were granted during the nine months ended March 31, 2025.

Restricted Stock Awards

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Information Regarding Current Share-Based Compensation Awards

A summary of the activity for share-based compensation awards in the six months ended December 31, 2024 is presented below:

A summary of the activity for share-based compensation awards in the nine months ended March 31, 2025 is presented below:

Stock Options

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Cancelled/Forfeited

December 31, 2024

March 31, 2025

Awards exercisable/

December 31, 2024

March 31, 2025

Awards unexercisable/

unvested as of

December 31, 2024

As of December 31, 2024, there was approximately $ 1.1 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements (including stock options, RSAs and RSUs) granted.

March 31, 2025

As of March 31, 2025, there was approximately $ 1.7 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements (including stock options, RSAs and RSUs) granted.

We expect to recognize the compensation cost as follows:

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Stock Options

June 30, 2025 (remaining six months)

June 30, 2025 (remaining three months)

June 30, 2026

June 30, 2027

June 30, 2028

Earnings (Loss) Per Share

Basic earnings (loss) per share is computed by dividing net income or 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 computation of diluted earnings (loss) per share further assumes the potential dilutive effect of potential Class A Common Stock using the treasury-stock method and if-converted method, as applicable.

During periods in which the average market price of the Company's common stock is above the applicable conversion price of the Company's convertible notes, the impact of conversion would be dilutive and such dilutive effect is reflected in diluted EPS.

As a result, in periods where the average market price of the Company's common stock is above the conversion price, under the if-converted method, the Company calculates the number of shares issuable under the terms of the convertible notes based on the average market price of the stock during the period, and includes that number in the total diluted shares outstanding for the period.

The Warrants and the Series G Convertible Preferred Stock are participating securities as the holders of such instruments participate in the event a dividend is paid on common stock, however the holders do not have a contractual obligation to share in the Company’s losses.

As such, losses are attributed entirely to common stockholders.

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

Three Months Ended

Six Months Ended

Nine Months Ended

$ ( 3,582,460 )

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$ ( 5,653,573 )

Accretion of dividends on Series G preferred

( 14,751,134 )

Net loss attributable to stockholders

$ ( 18,333,594 )

$ ( 2,597,534 )

$ ( 22,568,336 )

$ ( 5,653,573 )

Weighted-average common shares outstanding:

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The following potential dilutive shares were not included in the computation of diluted earnings (loss) per share of Class A Common Stock, as their effects would be anti-dilutive.

Three Months Ended December 31,

Six Months Ended December 31,

Potential dilutive shares for the Series G convertible preferred, warrants and convertible notes were calculated based on the Exchange Cap in effect for the respective periods:

Three Months Ended

Nine Months Ended

Options to purchase common stock

RSUs and RSAs

Series G convertible preferred, warrants & convertible notes

Our leases primarily consist of operating leases related to our facilities located in Orlando, Florida;

Plano, Texas;

Hudson, New Hampshire;

Riga, Latvia;

Shanghai, China;

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

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It is our intention to renew the lease on the reduced space in Zhenjiang for at least a one-year term .

The operating lease for G5 Infrared’s facility in New Hampshire expires in December 2026.

We received tenant improvement allowances for the lease of our Orlando Facility.

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We funded the balance of the tenant improvement costs of approximately $ 3.7 million.

The components of lease expense for the three and six months ended December 31, 2024 and 2023 were as follows:

Three Months Ended

Six Months Ended

The components of lease expense for the three and nine months ended March 31, 2025 and 2024 were as follows:

Three Months Ended March 31,

Nine Months Ended March 31,

Operating lease cost

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Total lease cost

Supplemental balance sheet information related to the leases as of December 31, 2024 and June 30, 2024 was as follows:

Supplemental balance sheet information related to the leases as of March 31, 2025 and June 30, 2024 was as follows:

Classification

December 31, 2024

March 31, 2025

June 30, 2024

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Total lease liabilities

Finance lease assets were recorded net of accumulated depreciation of approximately $ 190,000 and $ 109,000 as of December 31, 2024 and June 30, 2024, respectively.

Finance lease assets were recorded net of accumulated depreciation of approximately $ 236,000 and $ 109,000 as of March 31, 2025 and June 30, 2024, respectively.

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

Lease Term and Discount Rate

December 31, 2024

March 31, 2025

Weighted Average Remaining Lease Term (in years)

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Finance leases

Supplemental cash flow information was as follows for the six months ended December 31, 2024 and 2023:

Six Months Ended December 31,

Supplemental cash flow information was as follows for the nine months ended March 31, 2025 and 2024:

Nine Months Ended March 31,

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

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Financing cash used for finance leases

Future maturities of lease liabilities were as follows as of December 31, 2024:

Future maturities of lease liabilities were as follows as of March 31, 2025:

Fiscal year ending:

1 unchanged sentence

Operating Leases

June 30, 2025 (remaining six months)

June 30, 2025 (remaining three months)

June 30, 2026

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Loans Payable

As of December 31, 2024, loans payable consisted of two equipment loans and a bridge promissory note (as described below).

Acquisition Notes

On February 18, 2025 we entered into the Securities Purchase Agreement (see Note 3, Acquisition of G5 Infrared ), and in connection with the closing of the Securities Purchase Agreement, we issued senior secured promissory notes in an aggregate principal amount of $5.2 million (the “Acquisition Notes”).

The Acquisition Notes accrue interest at the rate between 10 - 12 % per annum (12% as of March 31, 2025), based on the ratio of indebtedness to EBIDTA of the Company, unless an event of default (as defined in the Acquisition Notes) occurs, at which time the Acquisition Notes would accrue interest at 15% per annum.

The Company determined the embedded features related to the payment of variable interest and upon an event of default are clearly and closely related to the Acquisition Notes, and are therefore not bifurcated from the Acquisition Notes.

At March 31, 2025, the net carrying value of the convertible promissory notes is $ 4.5 million, including unamortized debt discount and issuance costs of $ 0.7 million, and had an effective interest rate of 5.7 %.

The estimated fair value (level 3) of the convertible promissory notes approximates its book value as of March 31, 2025.

The Acquisition Notes will mature on February 18, 2027, the second anniversary of the issuance date.

The Acquisition Notes will convert into shares of Series G Convertible Preferred Stock if the EBIDTA reported by the Company for the calendar year ending December 31, 2025 is less than $ 4,921,875 , which are in turn convertible into Conversion Shares (the “Conversion Option”).

The Series G Convertible Preferred Stock is convertible into Class A Common Stock.

The Company determined that the Conversion Option did not require bifurcation from the Acquisition Notes as the Conversion Option (i) is indexed to the Company’s own stock, (ii) is settled in shares, not cash, and (iii) is only exercisable into a fixed number of shares at a fixed exercise price of $1,000 per share once it is triggered to convert and the conversion price can only be adjusted for standard antidilution provisions.

All or part of the Acquisition Notes may be redeemed by the Company prior to the maturity date at a redemption price equal to the portion of principal so redeemed plus all accrued and unpaid interest thereon, provided that if the funds used for redemption were not generated internally by Company operations, the redemption amount will be multiplied by 102%.

In addition, following an event of default or upon a change of control, the Purchaser may require the Company to redeem all or any portion of the Acquisition Notes.

Notwithstanding anything to contrary, upon any bankruptcy event of default, the Company will immediately pay the holder an amount in cash representing all outstanding principal and accrued and unpaid interest.

The Company determined that these redemption features did not require bifurcation from the Acquisition Notes as these are clearly and closely related to the Acquisition Notes.

The Acquisition Notes include customary affirmative and negative covenants and events of default.

Additionally, the Acquisition Notes include financial covenants requiring the Company to maintain a Total Leverage Ratio (as defined in the Acquisition Notes) of not greater than 4.00:1:00 and a Fixed Charge Covered Ratio (as defined in the Acquisition Notes) of greater than 1.20:1.00 for each fiscal quarter beginning with the fiscal quarter ending December 31, 2025.

Bridge Promissory Note

On August 6, 2024, we entered into a bridge promissory note (the “Bridge 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”).

On August 6, 2024, we entered into a bridge promissory note (the “Bridge Note”) with Lytton-Kambara Foundation (the “Lender”, previously defined as the “Buyer”) 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 our placement agent, and certain expenses, the Company received net proceeds of $ 2,700,000 .

The Bridge Note is unsecured, 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 Bridge Note and all accrued but unpaid interest is due and payable in full.

We may prepay the principal outstanding under the Bridge 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 Bridge Note) we are required to repay the holder of the Bridge Note in cash an amount equal to 105% of the outstanding principal balance of the Bridge Note plus unpaid accrued interest on the original principal .

The Bridge 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 Bridge Note’s interest rate shall increase to 18 % per annum and the Bridge Note holder may, at its option, accelerate the Bridge Note whereupon the entire principal amount thereof and all accrued but unpaid interest shall be due and payable in full.

The Bridge Note was unsecured, bore interest at the rate of 12.5 % per annum and had a 1 -year term, maturing on August 6, 2025 (the “Maturity Date”), at which time the entire principal amount of the Bridge Note and all accrued but unpaid interest would have been due and payable in full.

The Bridge Note and related accrued interest were settled on February 18, 2025, in conjunction with financing for the acquisition of G5 Infrared and the closing of the Securities Purchase Agreement and Class A Common Securities Purchase Agreement (see Note 3, Acquisition of G5 Infrared ) with the Lytton Buyers.

The Bridge Note and $1.5 million of cash was exchanged for:

(i) 687,750 shares of Class A Common Stock at a purchase price of approximately $2.15 per share issued in connection with the Class A Common Securities Purchase Agreement;

(ii) approximately 1,957 shares of Series G Convertible Preferred Stock issued in connection with the Securities Purchase Agreement;

(iii) warrants to purchase 512,091 shares of Class A Common Stock, with an exercise price of $2.58 per share, of which 170,697 were issued in connection with the Class A Common Securities Purchase Agreement and 341,394 were issued in connection with the Securities Purchase Agreement and (iii) an Acquisition Note in an aggregate principal amount of approximately $1.2 million issued in connection with the Securities Purchase Agreement .

The exchange of the Bridge Note was accounted for as a debt extinguishment as the Conversion Option on the Acquisition Notes is substantive, the warrants, preferred stock, and common stock are equity classified and an exchange of debt for equity other than through an existing conversion feature is accounted for as an extinguishment.

The loss on extinguishment of $0.4 million was computed as the difference between (i) the carrying value of the new instruments issued, including the Acquisition Note, the Series G Convertible Preferred Stock, Class A Common Stock, and Warrants.

Prior to closing of the Securities Purchase Agreement and Class A Securities Purchase Agreement, the Lytton Buyers owned a de minimis amount the Company’s equity and therefore the loss was not an in-substance capital transaction and was recognized in the loss on extinguishment of debt on the condensed consolidated statements of comprehensive income (loss).

Third-party costs totaling $0.3 million were recorded as issuance costs and are being amortized using the effective interest method over the term of the Acquisition Note.

Equipment Loans

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The 2023 Equipment Loan is payable over 48 months, with monthly installments that began on January 1, 2024.

The 2023 Equipment Loan bears interest at the six-month EURIBOR rate, plus 2.84% ( 5.63 % as of December 31, 2024).

The 2023 Equipment Loan bears interest at the six-month EURIBOR rate, plus 2.84% ( 4.85 % as of March 31, 2025).

Future maturities of loans payable are as follows:

Promissory Note

Acquisition Notes

Equipment Loans

Fiscal year ending:

June 30, 2025 (remaining six months)

June 30, 2025 (remaining three months)

June 30, 2026

2 unchanged sentences

Total payments

Unamortized discount to fair value

Unamortized loan issuance costs

1 unchanged sentence

Less current portion

( 3,017,443 )

Non-current portion

4 unchanged sentences

operation, where the functional currency is other than the U.S.

dollar, are reflected as a separate component of equity, which was a cumulative gain of approximately $ 330,000 and $ 510,000 as of December 31, 2024 and June 30, 2024, respectively.

We also recognized net foreign currency transaction gains of $ 40,000 and $ 4,000 during the three months ended December 31, 2024 and 2023, respectively.

During the six months ended December 31, 2024 and 2023, we recognized net foreign currency transaction gains of $ 4,000 and $ 29,000 , respectively, included in the unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) in the line item entitled “Other income (expense), net.”

Our cash, cash equivalents and restricted cash totaled approximately $ 3.2 million at December 31, 2024.

dollar, are reflected as a separate component of equity, which was a cumulative gain of approximately $ 451,000 and $ 510,000 as of March 31, 2025 and June 30, 2024, respectively.

We also recognized net foreign currency transaction gains of $ 8,000 and $ 12,000 during the three months ended March 31, 2025 and 2024, respectively.

During the nine months ended March 31, 2025 and 2024, we recognized net foreign currency transaction gains of $ 12,000 and $ 41,000 , respectively, included in the unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) in the line item entitled “Other income (expense), net.”

Our cash, cash equivalents and restricted cash totaled approximately $ 6.5 million at March 31, 2025.

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

1 unchanged sentence

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

As of December 31, 2024, LPOIZ had approximately $ 1.2 million in retained earnings available for repatriation, based on earnings accumulated through December 31, 2024, the end of the most recent statutory tax year, that remained undistributed as of December 31, 2024.

Revenues from foreign countries for the six months ended December 31, 2024 and 2023 are as follows:

Six Months Ended

As of March 31, 2025, LPOIZ had approximately $ 0.8 million in retained earnings available for repatriation, based on earnings accumulated through December 31, 2024, the end of the most recent statutory tax year, that remained undistributed as of March 31, 2025.

Revenues from foreign countries for the nine months ended March 31, 2025 and 2024 are as follows:

Nine Months Ended March 31,

United States

1 unchanged sentence

Rest of world

Long-lived assets located in foreign countries as of December 31, 2024 and June 30, 2024 are as follows:

Long-lived assets located in foreign countries as of March 31, 2025 and June 30, 2024 are as follows:

Long-lived assets:

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

In December 2023, we recovered approximately $ 190,000 in funds that had been recovered by the Chinese authorities.

In December 2023, we recovered approximately $ 190,000 in funds that had been recovered by the Chinese authorities, which is included in Other Income for the nine months ended March 31, 2024.

We expect to incur minimal additional legal fees and consulting expenses in future periods as we have exhausted nearly all of our legal options and remedies.

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by imposing more stringent export restrictions on critical minerals, including Germanium.

The Chinese Ministry of Commerce cited national security concerns as the rationale for these measures, which effectively banned shipments of these minerals to the U.S.

and significantly limited shipments of those minerals for dual-use applications in many other countries.

The Chinese Ministry of Commerce cited national security concerns as the rationale for these measures, which effectively banned shipments of these minerals to the U.S., and significantly limited shipments of those minerals for dual-use applications in many other countries.

As a purchaser of Germanium, we cannot provide any assurance that we will be able to obtain adequate supplies of Germanium, or that the timing or costs of obtaining such raw materials will be acceptable to us.

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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.

This war has led to ongoing sanctions on Russia, which have had continuing impacts on our supply chain of raw materials, particularly Germanium.

Separately, Israel declared war on Hamas in October 2023.

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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.

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.

3 unchanged sentences

As of June 30, 2024, we issued 585,483 shares of our Class A Common Stock pursuant to the at-the-market equity program.

No shares were issued under this program during fiscal year 2025 before the shelf registration expired on March 1, 2025.

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 .

On February 13, 2025, we announced a strategic acquisition and the related financing, including the issuance of a new series of preferred shares.

For additional information, refer to Note 16, Subseqent Event .

On February 13, 2025, we announced a strategic acquisition and the related financing, including the issuance of shares of Series G Convertible Preferred Stock.

For additional information, refer to Note 3, Acquisition of G5 Infrared .

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 additional 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.

Subsequent Event

On February 13, 2025, we entered into a Membership Interest Purchase Agreement (the “Membership Interest Purchase Agreement”) by and among the Company, G5 Infrared, LLC, a New Hampshire limited liability company (“G5 Infrared”), the members of G5 Infrared (the “Sellers”), and Kenneth R.

Greenslade, solely in his capacity as Sellers’ Representative, pursuant to which the Company has agreed to acquire from the Sellers all of the issued and outstanding membership interests of G5 Infrared.

The aggregate consideration is approximately $ 27 million which consists of (i) $ 20.25 million in cash, (ii) 1,972,531 shares of Class A Common Stock, and (iii) and up to an additional $ 23 million in earnout consideration paid annually in fiscal years 2026 and 2027 subject to achievement of certain revenue and EBITDA targets set forth in the Membership Interest Purchase Agreement.

G5 Infrared is an infrared camera solutions provider for Department of Defense (“DoD”) contractors, commercial and industrial customers, and OEMs.

The closing of the transaction is expected to occur on or before February 19, 2025.

Concurrent with the entry into the Membership Interest Purchase Agreement on February 13, 2025 , we entered into Securities Purchase Agreements (the “Securities Purchase Agreement”) with North Run Capital, AIGH Capital Management LLC and the Lytton-Kambara Foundation (the “Purchasers”) pursuant to which the Purchasers have agreed to purchase from the Company (i) an aggregate of approximately 24,956 shares (the “Preferred Shares”) of a newly created series of preferred stock, with a stated value of $ 1,000 per share (the “Preferred Stock”), designated Series G Convertible Preferred Stock, which shall be convertible into shares of Common Stock (the shares of Common Stock issuable upon conversion of the Preferred Shares being referred to as the “Conversion Shares”), in accordance with the terms of the Company’s Certificate of Designations, Preferences and Rights of the Series G Convertible Preferred Stock to be filed with the Delaware Secretary of State (the “Certificate of Designations”), (ii) warrants to purchase an aggregate of 4,352,774 shares of Common Stock, with an exercise price of $ 2.58 per share (the “Warrants;

the shares of Common Stock issuable upon exercise of the Warrants being referred to as the “Warrant Shares”), and (iii) senior secured promissory notes (the “Notes”) in an aggregate principal amount of $ 5.2 million, which are convertible into shares of Preferred Stock upon the occurrence of the event specified in the Notes (the “Preferred Conversion Shares”), which are in turn convertible into Conversion Shares (the transactions contemplated by the Securities Purchase Agreement, the “Private Placement”).

The Private Placement is expected to close immediately prior to the closing of the G5 Infrared acquisition.

At the closing of the Securities Purchase Agreement, the Company and the Purchasers will enter into a registration rights agreement (the “Registration Rights Agreement”), pursuant to which the Company has agreed to register all Conversion Shares and Warrant Shares (the “Registrable Securities”) under the Securities Act.

The Company agreed to file a registration statement covering the resale of such Registrable Securities within 75 days of the date of closing.

The Company may not issue Conversion Shares and/or Warrant Shares to the extent such issuances would result in an aggregate number of shares of Common Stock exceeding 19.99% of the total shares of Common Stock issued and outstanding as of the G5 acquisition closing date, in accordance with the rules and regulations of Nasdaq unless the Company first obtains stockholder approval (the “Stockholder Approval”).

Pursuant to the Securities Purchase Agreement and as required by Nasdaq, the Company agreed to file a proxy statement to obtain the Stockholder Approval and hold such meeting of stockholders of the Company not later than 120 days after the closing.

On February 13, 2025, the Company entered into a Securities Purchase Agreement (the “Class A Common Securities Purchase Agreement”) with Lytton-Kambara Foundation (the “Buyer”), pursuant to which Buyer has agreed to purchase from the Company:

(i) 455,192 shares of Class A common stock at a purchase price of approximately $ 2.15 per share, plus warrants to purchase 37.5 % of the number of shares, or 170,697 shares of Class A common stock, with an exercise price of $ 2.58 per share;

and (ii) 232,558 shares of Class A common stock at a purchase price of approximately $2.15 per share (the “Common Offering”).

The consideration aggregate of $1.5 million to be paid consists of:

1) $ 500,000 cash;

and 2) the remaining $ 1,000,000 by exchange of an equal amount of principal and accrued and unpaid interest outstanding under that certain existing indebtedness of the Company held by the Buyer as evidenced by that certain Bridge Note in the original principal amount of $ 3,000,000 dated August 6, 2024, by the Company in favor of the Buyer (the “Existing Note”).

Upon such exchange under the Class A Common Securities Purchase Agreement, and a like exchange for the remaining balance of the Existing Note in connection with the Buyer purchasing Preferred Stocks and Notes in the Private Placement, all of the Company’s obligations under the Existing Note shall be deemed satisfied in full, waived or terminated and the Existing Note will be deemed cancelled and of no force or effect.

The Common Offering is expected to close immediately prior to the closing of the G5 Infrared acquisition.

The Company expects to receive aggregate proceeds from the Private Placement and the Common Offering of approximately $32.2 million, inclusive of the conversion of existing indebtedness, before deducting estimated offering expenses payable by the Company, which will be used to fund, in part, the cash consideration payable in connection with the G5 acquisition.

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

What changed 10-Q

Item 1. Financial Statements