Financial Analysis

"3. Acquisitions On January 20, 2026, the Company entered into an Asset Purchase Agreement (the Asset Purchase Agreement), by and among the Company, AML, a Delaware limited liability company and wholly-owned subsidiary of the Company (Buyer), Amorphous Materials, Inc., a Texas corporation (Seller) and other parties thereto, pursuant to which, subject to the terms and conditions set forth in the Asset Purchase Agreement, Buyer agreed to acquire substantially all of the assets (collectively, the Assets) and assume and acquire certain of the rights and liabilities of Seller (collectively, the Liabilities and such acquisition of Assets and assumption of the Liabilities together, the Transaction) relating to Sellers business of compounding and melting a broad range of Chalcogenide glasses for third -party manufacturers. The Transaction closed on January 21, 2026 ( the AML Acquisition Date). Aggregate consideration payable by the Company to Seller under the Asset Purchase Agreement in connection with the Transaction will not exceed $10.0 million and consists of (i) a cash payment of $7.0 million that was paid at closing (the Cash Consideration) and (ii) contingent consideration that will not exceed $3.0 million (the Contingent Consideration). The Contingent Consideration, if earned, is payable in shares of the Company's Class A common stock, $0.01 par value, (""Common Stock""), to be issued in up to six tranches of $500,000 each divided by the LPTH Stock Price (as calculated pursua …

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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 Companys financial position or results of operations. 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. Chinas 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 Chinas 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 Chinas 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. I …

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14. Loans Payable As of June 30, 2026 , loans payable consisted of one third -party equipment loan. During the year ended June 30, 2026 , the Acquisition Notes were redeemed and the 2020 Equipment Loan (as defined below) was paid in full. The Bridge Note (as defined below) was extinguished during the year ended June 30, 2025. Acquisition Notes On February 18, 2025, in connection with the closing of the Securities Purchase Agreement (see Note 3, Acquisition of G5 Infrared ), we issued the Acquisition Notes. The Acquisition Notes accrue interest at the rate between 10-12% per annum (12% as of June 30, 2026 ), based on the ratio of indebtedness to EBITDA 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 June 30, 2025, the net carrying value of the convertible promissory notes is $4.6 million, including unamortized debt discount and issuance costs of $0.6 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 June 30, 2025. The Acquisition Notes would have matured on February 18, 2027, the second anniversary of the issuance date, …

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Year Ended June 30, 2026 2025 Infrared components $ 21,196,156 $ 13,905,784 Visible components 15,492,707 11,736,549 Assemblies and modules 31,879,418 8,373,101 Engineering services 3,153,818 3,187,196 Total revenue $ 71,722,099 $ 37,202,630

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10. Compensatory Equity Incentive Plan and Other Equity Incentives Share-based payment arrangements The Companys directors, officers, and key employees were granted stock-based compensation under 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. To date, our stockholders approved an aggregate of 13,715,625 shares of our Class A Common Stock for issuance pursuant to awards granted thereunder. As of June 30, 2026 , 2,302,750 shares of Class A Common Stock were authorized and available for issuance pursuant to awards granted under the SICP. The Companys executive officers are eligible to earn incentive compensation consisting of equity-based awards, as well as cash bonuses, based on the achievement of certain individual and/or Company performance goals set by the Compensation Committee. The LightPath Technologies, Inc. Employee Stock Purchase Plan ( 2014 ESPP) was adopted by the Companys Board of Directors on October 30, 2014 and approved by the Companys stockholders on January 29, 2015. The 2014 ESPP expired on January 29, 2025. A new Employee Stock Purchase Plan ( 2025 ESPP) was approved by the stockholders on June 16, 2025 with the first offering period beginning July 1, 2025. The 2025 ESPP permi …

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7. Goodwill and Intangible Assets In connection with various acquisitions, 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 the respective companies. See Note 3, Acquisitions , to these consolidated financial statements, for more information. Changes in the carrying amount of goodwill were as follows: Balance as of June 30, 2024 $ 6,764,127 Goodwill acquired during the year 6,989,794 Balance as of June 30, 2025 13,753,921 Goodwill acquired during the year 5,561,256 Balance as of June 30, 2026 $ 19,315,177 We assess goodwill for impairment annually during the fourth quarter or under certain circumstances more frequently, such as when events or circumstances indicate there may be impairment. The Company performed a qualitative assessment during its fourth quarter in 2026 and determined it was not more likely than not that goodwill was impaired. The Company did not record any impairment of goodwill or amortizable intangible assets during the fiscal years ended June 30, 2026 or 2025. Intangible assets were comprised of the following: Useful Lives June 30, 2026 June 30, 2025 (Years) Gross Accumulated Amortization Net Gross Accumulated Amortization Net Customer relationships 10 - 15 $ 10,422,300 …

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9. Income Taxes For financial reporting purposes, income (loss) before income taxes includes the following components: Year Ended June 30, 2026 2025 Pretax income (loss): United States $ (24,582,719 ) $ (14,118,076 ) Foreign 4,351,869 (717,316 ) Loss before income taxes $ (20,230,850 ) $ (14,835,392 ) The components of the provision for income taxes are as follows: Year Ended June 30, 2026 2025 Current: Federal tax $ $ State 51,246 22,168 Foreign 231,756 224,743 Total current 283,002 246,911 Deferred: Federal tax (30,752 ) State (63,330 ) (5,798 ) Foreign 95,041 (172,571 ) Total deferred 31,711 (209,121 ) Total income tax provision $ 314,713 $ 37,790 The table below provides the updated requirements of ASU 2023 - 09 for the year ended June 30, 2026. See section Recent Accounting Pronouncements for additional details on the adoption of ASU 2023 - 09. 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, 2026 Amount Percent Current tax at U.S. statutory rate $ (4,248,479 ) 21.0 % State income taxes, net of federal benefit (1) (13,657 ) 0.1 % Foreign tax effects Latvia - statutory rate differences (598,961 ) 3.0 % Other foreign tax effects 11,865 (0.1 )% Effect of cross-border tax law GILTI 848,864 (4.2 )% Tax credits Federal research and development credit expiration 103,598 (0.5 )% Changes in valuation allowance 3,256,056 (16.1 )% Nondeductible/nontaxable items 173,242 (0.9 )% NOL expi …

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13. Leases The Company has operating leases for its manufacturing and office space. The Company has a lease agreement for its corporate headquarters and manufacturing facility in Orlando, Florida (the Orlando Lease). The Orlando 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. As of June 30, 2026 , the Company, through its wholly-owned subsidiary, G5 Infrared, has a lease agreement for a manufacturing and office facility in Hudson, New Hampshire, which expires December 31, 2031. The Companys wholly-owned subsidiary, Visimid, has a lease agreement for a manufacturing and office facility in Plano, Texas, which commenced September 1, 2025 for a five -year term. The prior facility was relocated to this larger facility, and the lease of the prior facility, which was set to expire October 31, 2026, was terminated in March 2026 pursuant to a mutual agreement with the lessor. The Companys wholly-owned subsidiary, LPOIZ, has a lease agreement for a manufacturing and office facility in Zhenjiang, China, which expires December 31, 2027. The Company, through ISPs wholly-owned …

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Recent accounting pronouncements In November 2024, the FASB issued ASU 2024 - 03, Income StatementReporting Comprehensive IncomeExpense Disaggregation Disclosures (Subtopic 220 - 40 ): Disaggregation of Income Statement Expenses (ASU 2024 - 03 ) which requires disclosure, in the notes to financial statements, of specified information about certain costs and expenses included in each expense caption on the face of the income statement at interim and annual reporting periods. ASU 2024 - 03 is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, and should be applied either prospectively to financial statements issued for reporting periods after the effective date of this ASU or retrospectively to any or all prior periods presented in the financial statements. We are evaluating the impact of ASU 2024 - 03 and expect the standard will only impact our disclosures with no material impact on our operating results, financial position, or cash flows. There are no other new accounting pronouncements issued by the FASB that are not yet effective for the Company for the year ended June 30, 2026 that are expected to have a material impact on the Consolidated Financial Statements. Recently Adopted Accounting Pronouncements In December 2023, the FASB issued ASU 2023 - 09, Income Taxes (Topic 740 ): Improvements to Income Tax Disclosures (ASU 2023 - 09 ) which requires disaggregated income tax disclosures o …

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4. Revenue Product Revenue The Company manufactures infrared imaging cameras, optical assemblies, optical components and infrared materials. Optical components include precision molded glass aspheric optics, molded and diamond-turned infrared aspheric lenses, and other optical elements produced using other fabrication techniques. The Company designs, develops, manufactures, and distributes optical systems, assemblies and components utilizing advanced optical manufacturing processes, multidisciplinary engineering and manufacturing technologies, and assembly and integration services. The Company also provides engineering services and performs research and development for optical solutions for a wide range of optics markets. 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 …

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17. Segment Reporting The Company has one reportable operating segment, the optics segment that is managed on a consolidated basis. The optics segment designs and manufactures products at locations in the U.S., Europe and Asia and manages the business activities on a consolidated basis. Our Chief Operating Decision Maker (CODM) is the chief executive officer. The chief operating decision maker assesses performance for the optics segment and decides how to allocate resources based on consolidated net loss that also is reported on the consolidated statements of comprehensive income (loss) as consolidated net loss. The types of products and services from which the optics segments derives its revenues is described in Note 4, Revenue . The accounting policies of the optics segment are the same as those described in Note 2, Significant Accounting Policies , to these Consolidated Financial Statements. The measure of segment assets is reported on the consolidated balance sheet as total assets. See Note 4, Revenue for detail about revenue by product and service group, and Note 16, Foreign Operations , for geographic information. See Note 18, Supplier and Customer Concentrations , for information about major customers. The CODM uses consolidated net loss to evaluate income generated from segment assets, and to determine whether to invest in new capabilities related to this segment. The CODM monitors budget to actual results for revenue, gross profit, operating expenses and net loss on …

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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 Companys 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 Companys domestic cash accounts are maintained in several financial institutions, and balances may exceed Federal insured limits at times. The Companys foreign cash accounts are not insured. 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. …

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"8. Stockholders Equity Effective January 31, 2024, the Companys authorized capital stock increased from 55,000,000 to 105,000,000 shares, comprised of 100,000,000 shares of Class A 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; 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; and 35,111 shares of our preferred stock as Series G Convertible Preferred Stock. Of the 100,000,000 shares of common stock authorized, the Board of Directors has pr …

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19. Subsequent Event On July 23, 2026, the Company and LPOIZ entered into an equity transfer agreement (the ETA) with Hengtu Optical Technology Co., Ltd. (the Purchaser), and Mr. Leo Zheng (the Purchaser Representative). The Purchaser is owned by the Purchaser Representative and certain members of the Companys current management team. Pursuant to the ETA, and subject to the terms and conditions set forth therein, the Company agreed to sell and transfer one hundred percent (100%) of its interest in LPOIZ to the Purchaser (the LPOIZ Transaction) for payment of cash consideration of $4,500,000 (the Purchase Price). The Purchase Price is payable in full no later than the fifth anniversary of the closing of the LPOIZ Transaction, with the Purchaser required to pay at least $500,000 per year, together with financing interest in an amount equal to four percent (4%) of the principal amount of each Purchase Price installment, all in accordance with the ETA. In addition, if the Purchaser fails to pay any amount due under the Agreement when due, the Purchaser shall pay damages on the overdue amount at an annual rate of seven percent (7%). The ETA further provides that during the period commencing on the closing date of the LPOIZ Transaction and ending of the later of (i) the date on which the Purchase Price has been paid in full and (ii) the fifth anniversary of the closing date of the LPOIZ Transaction (such period, the Restricted Period), the Company shall have the right to designate …

SubsequentEventsTextBlock · excerpt; the full note is in the filing