LightPath Technologies(US:LPTH)2025-05-20 20:03Part I - Financial Information This section presents the company's financial performance and position, including statements, notes, and management's analysis Financial Statements The company's financial statements for the period ended March 31, 2025, reflect significant changes primarily due to the acquisition of G5 Infrared, impacting assets, liabilities, and net loss Unaudited Condensed Consolidated Balance Sheets As of March 31, 2025, total assets increased to $81.4 million, primarily driven by the G5 Infrared acquisition, while total liabilities and preferred stock also rose significantly Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | June 30, 2024 | Change | | :--- | :--- | :--- | :--- | | Assets | | | | | Total current assets | $28,081 | $15,537 | +80.7% | | Intangible assets, net | $21,476 | $3,651 | +488.2% | | Goodwill | $9,741 | $6,764 | +44.0% | | Total assets | $81,421 | $48,087 | +69.3% | | Liabilities & Equity | | | | | Total current liabilities | $12,231 | $8,036 | +52.2% | | Warrant liability | $3,961 | $0 | N/A | | Total liabilities | $31,297 | $17,887 | +75.0% | | Series G Convertible Preferred Stock | $34,400 | $0 | N/A | | Total stockholders' equity | $15,724 | $30,200 | -47.9% | Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) For Q3 FY2025, revenue increased 19% year-over-year to $9.2 million, but the net loss widened to $3.6 million due to higher operating expenses despite improved gross profit Statement of Comprehensive Income (Loss) Highlights (in thousands, except per share data) | Metric | Q3 2025 | Q3 2024 | 9 Months 2025 | 9 Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenue, net | $9,168 | $7,699 | $24,993 | $23,092 | | Gross Profit | $2,664 | $1,606 | $7,439 | $6,106 | | Operating Loss | $(3,323) | $(2,583) | $(7,184) | $(5,617) | | Net Loss | $(3,582) | $(2,598) | $(7,817) | $(5,654) | | Loss per share (basic & diluted) | $(0.09) | $(0.07) | $(0.19) | $(0.15) | Unaudited Condensed Statements of Cash Flows For the nine months ended March 31, 2025, cash flow from operations shifted to a $5.7 million use, while financing activities provided $29.6 million, primarily for the G5 Infrared acquisition Cash Flow Summary (Nine Months Ended March 31) | Cash Flow Activity | 2025 (in thousands) | 2024 (in thousands) | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(5,681) | $456 | | Net cash used in investing activities | $(20,820) | $(2,375) | | Net cash provided by (used in) financing activities | $29,572 | $(2,070) | | Change in cash and cash equivalents | $2,999 | $(3,986) | Notes to Unaudited Condensed Consolidated Financial Statements The notes detail the February 2025 acquisition of G5 Infrared for approximately $27.6 million, its financing, revenue growth drivers, and risks from China's Germanium export restrictions - In February 2025, the Company acquired G5 Infrared for aggregate consideration of approximately $27.6 million, consisting of $20.25 million in cash, 1,972,501 shares of common stock, and potential earnout payments4347 - The G5 acquisition was funded in part by issuing approximately 24,956 shares of Series G Convertible Preferred Stock, warrants to purchase 4.35 million shares of Class A Common Stock, and $5.2 million in senior secured promissory notes57 Revenue by Product Group (Nine Months Ended March 31) | Product Group | 2025 (in thousands) | 2024 (in thousands) | % Change | | :--- | :--- | :--- | :--- | | Infrared components | $9,363 | $11,046 | -15% | | Visible components | $8,901 | $8,056 | +10% | | Assemblies and modules | $3,803 | $3,078 | +24% | | Engineering services | $2,925 | $912 | +221% | | Total revenue | $24,993 | $23,092 | +8% | - The company highlights significant risks from China's export restrictions on Germanium, a key raw material, which has disrupted supply and increased costs, prompting redesign efforts with proprietary BlackDiamond materials133134135 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's strategic shift to imaging subsystems, Q3 FY2025 financial performance, liquidity, operational strategy, and non-GAAP measures, highlighting acquisition impacts and Germanium export risks Results of Operations In Q3 FY2025, revenue increased 19% year-over-year to $9.2 million, driven by acquisitions and higher-margin services, but the net loss widened to $3.6 million due to increased operating expenses - Q3 FY2025 revenue increased 19% YoY to $9.2 million, driven by a 123% increase in Assemblies & Modules revenue (including $0.9 million from G5 Infrared) and a 54% increase in Engineering Services revenue162165166 - Gross margin for Q3 FY2025 improved to 29% from 21% in the prior-year quarter, attributed to a more favorable product mix with higher-margin assemblies and engineering services172 - SG&A costs for Q3 FY2025 increased by 40% YoY, primarily due to $0.7 million in due diligence and other costs related to the G5 Infrared acquisition175 - Net loss for Q3 FY2025 was $3.6 million, an increase from $2.6 million in Q3 FY2024, mainly due to higher SG&A, interest expense, and amortization, despite higher gross profit184 Liquidity and Capital Resources As of March 31, 2025, the company had $15.9 million in working capital and $6.5 million in cash, significantly bolstered by $29.3 million in financing activities for the G5 Infrared acquisition - As of March 31, 2025, the company had working capital of approximately $15.9 million and cash and cash equivalents of $6.5 million192 - For the nine months ended March 31, 2025, net cash provided by financing activities was $29.3 million, primarily from the strategic financing for the G5 acquisition, which included proceeds from preferred stock and loans202 - Cash used in operations for the first nine months of fiscal 2025 was $5.4 million, compared to cash provided by operations of $0.5 million in the prior year period200 How We Operate The company's operational strategy focuses on securing long-term 'design wins' and 'engineered solutions' to create stable revenue, with the total sales backlog growing 25% year-over-year to $27.4 million - The company's strategy is to create an annuity revenue stream by securing 'design wins' through customer product development and providing 'engineered solutions'204 Total Sales Backlog Trend | Quarter | Total Backlog ($ thousands) | Change From Prior Year End | Change From Prior Quarter End | | :--- | :--- | :--- | :--- | | Q3 2024 | $21,967 | 1% | 4% | | Q4 2024 | $19,268 | (11)% | (12)% | | Q1 2025 | $20,542 | 7% | 7% | | Q2 2025 | $19,767 | 3% | (4)% | | Q3 2025 | $27,423 | 42% | 39% | - The acquisition of G5 Infrared added $5.6 million to the backlog, with the backlog for G5 Infrared products reaching $9.9 million as of March 31, 2025210 Non-GAAP Financial Measures The company uses non-GAAP measures like Adjusted EBITDA to evaluate core operating performance, with Adjusted EBITDA for Q3 FY2025 showing a loss of $2.0 million, primarily due to acquisition-related expenses Reconciliation of Net Loss to Adjusted EBITDA (in thousands) | Metric | Q3 2025 | Q3 2024 | 9 Months 2025 | 9 Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Net loss | $(3,582) | $(2,598) | $(7,817) | $(5,654) | | EBITDA | $(1,532) | $(1,511) | $(3,495) | $(2,397) | | Adjusted EBITDA | $(1,984) | $(1,511) | $(3,947) | $(2,397) | - The decrease in Adjusted EBITDA in Q3 FY2025 was primarily attributable to increased SG&A, which included $0.7 million of non-recurring expenses related to the G5 Infrared acquisition229 Quantitative and Qualitative Disclosures about Market Risk As a 'smaller reporting company,' the registrant is not required to provide the information for this item - As a 'smaller reporting company,' the registrant is not required to provide the information required by this Item231 Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2025, with no significant changes in internal control over financial reporting during the quarter - Based on an evaluation as of March 31, 2025, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective232 - There have not been any significant changes in internal control over financial reporting during the three months ended March 31, 2025, that have materially affected, or are reasonably likely to materially affect, internal controls233 Part II - Other Information This section covers legal proceedings, updated risk factors, unregistered sales of equity securities, defaults, and other disclosures Legal Proceedings The company is not involved in any pending legal proceedings expected to have a material adverse effect on its financial condition or results of operations - The Company is not involved in any pending legal proceeding that it believes would reasonably be expected to have a material adverse effect on its financial condition or results of operations234 Risk Factors The company highlights elevated risks from geopolitical tensions and international trade policies, including China's Germanium export restrictions, which could impact its supply chain and costs - A key updated risk factor is the material adverse impact from elevated geopolitical tensions and volatile international trade policies, including tariffs and export controls236 - China's export limitations on rare earth minerals like Germanium are specifically cited as a risk that could impair manufacturing, increase costs, and disadvantage the company in international markets236 Unregistered Sales of Equity Securities and Use of Proceeds There were no unregistered sales of equity securities during the period - None237 Defaults Upon Senior Securities There were no defaults upon senior securities during the period - None238 Other Information During the third quarter of fiscal 2025, no director or officer of the company adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement - During the three months ended March 31, 2025, no director or officer of the Company adopted or terminated a 'Rule 10b5-1 trading arrangement' or 'non-Rule 10b5-1 trading arrangement'239 Exhibits This section lists the exhibits filed with the report, including agreements related to the G5 Infrared acquisition and financing, as well as CEO and CFO certifications