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LightPath Technologies(LPTH) - 2024 Q1 - Quarterly Report

Revenue Performance - Revenue for the three months ended September 30, 2023, was $8,077,248, an increase of 9.6% compared to $7,366,901 for the same period in 2022[16] - Revenue from infrared components was $3,834,602, up from $3,189,551 in the previous year, reflecting a growth of 20.2%[42] - Revenues for the three months ended September 30, 2023, totaled $8,077,248, an increase from $7,366,901 in the same period of 2022, with U.S. revenues rising to $4,293,394 from $2,965,295[93] - Revenue for Q1 fiscal 2024 was approximately $8.1 million, an increase of 10% compared to $7.4 million in the same period last year[131] - Revenue from infrared components was approximately $3.8 million, a 20% increase from $3.2 million in the prior year, driven by shipments for an international military program[132] - Revenue from visible components decreased by 18% to $2.7 million, primarily due to reduced sales in the telecommunications industry in China and through distribution channels in the U.S. and Europe[132] - Revenue from assemblies and modules increased by 45%, with one-third of this increase attributed to Visimid product sales and the rest from defense industry customers[132] - Revenue from engineering services increased by $253,000, mainly due to Visimid sales and a space-related funded research contract[132] Financial Results - Gross margin for the quarter was $2,331,706, resulting in a gross margin percentage of approximately 28.9%[16] - Operating loss for the quarter was $(1,250,622), slightly higher than the operating loss of $(1,235,413) in the same quarter of the previous year[16] - Net loss for the quarter was $(1,342,376), compared to a net loss of $(1,380,700) for the same period in 2022, indicating a 2.8% improvement[16] - Net loss for Q1 fiscal 2024 was approximately $1.3 million, a decrease of approximately $38,000 from the prior year, with basic and diluted loss per share of $0.04[139] - EBITDA for the quarter ended September 30, 2023, was a loss of approximately $432,000, compared to a loss of $392,000 for the same period in the prior fiscal year[174] Assets and Liabilities - Total assets increased to $55,312,749 as of September 30, 2023, up from $53,536,184 as of June 30, 2023[14] - Total liabilities rose to $20,418,014, compared to $17,583,659 at the end of the previous quarter, reflecting an increase of 10.5%[14] - Cash and cash equivalents decreased to $4,316,965 from $4,687,004 at the end of the previous quarter, a decline of 7.9%[13] - Cash and cash equivalents at the end of the period were $6,859,958, compared to $4,298,869 at the end of the same period last year, representing a year-over-year increase of 59.5%[21] - The company had working capital of approximately $11.4 million and total cash and cash equivalents of approximately $6.9 million as of September 30, 2023[143] Acquisitions and Investments - The company acquired Visimid Technologies for a total purchase price of approximately $2.9 million, which includes $1 million in cash and $1,550,000 in restricted stock[33] - Goodwill increased to $8,915,637 as of September 30, 2023, primarily due to the acquisition of Visimid, which added $3,060,732 in goodwill[45] - The company incurred approximately $83,000 in acquisition costs related to Visimid during the quarter, in addition to $140,000 incurred in the previous quarter[35] - Approximately $955,000 was expended on capital equipment investments in Q1 fiscal 2024, significantly higher than the $243,000 spent in the same period last year[153] Taxation - The effective income tax rate for the three months ended September 30, 2023 was -3%, compared to -8% for the same period in 2022[48] - The statutory income tax rates for the company's Chinese subsidiaries were 25% for LightPath Optical Instrumentation (Shanghai) Co., Ltd. and 15% for LightPath Optical Instrumentation (Zhenjiang) Co., Ltd. as of September 30, 2023[52] - The company has no additional tax expense or benefit expected to be recorded on pre-tax income or losses generated in the U.S. based on the current assessment of the valuation allowance position[51] Operational Changes - The company reorganized its product groups into four categories: infrared components, visible components, assemblies and modules, and engineering services, to align with its strategic focus on value-added solutions[42] - The company is focusing on transitioning to more value-added solutions and reorganized its products into four groups: infrared components, visible components, assemblies and modules, and engineering services[164] - The company has experienced some short-term adverse impacts on domestic sales in China due to management transitions but does not anticipate material long-term effects[100] - The ongoing COVID-19 pandemic continues to affect economic conditions in China, impacting demand and financial performance, although no significant direct financial impact has been reported to date[102] Debt and Financing - The BankUnited Term Loan amount is $5,813,500, with a maturity date extended to December 31, 2024[81] - The interest rate on the Term Loan is 8.5% as of September 30, 2023, following adjustments in the loan agreement[82] - The company has a total loan payment obligation of $2,505,973, with $716,301 due in the remaining nine months of fiscal year ending June 30, 2024[91] - The company is in discussions for refinancing its BankUnited Term Loan due on December 31, 2024, with no assurance of success[22] Stock and Compensation - The number of shares used in the basic loss per share calculation increased to 37,431,748 from 27,070,949 year-over-year[16] - Total stock-based compensation expense for the three months ended September 30, 2023 was $240,075, down from $284,598 in the same period of 2022[58] - The weighted-average number of basic shares outstanding for the three months ended September 30, 2023 was 37,431,748, an increase from 27,070,949 in 2022[66] - The company has approximately $535,000 of total unrecognized compensation cost related to non-vested share-based compensation arrangements as of September 30, 2023[65] Future Outlook - The company anticipates renewal of existing annual and multi-year contracts in future quarters[161] - The company aims to convert more business to a design win and annuity revenue model to leverage engineering capabilities and production capacity[157] - Total backlog as of September 30, 2023, was approximately $21.3 million, a decrease of 7% compared to $23.0 million as of September 30, 2022[161] - Demand for infrared products continues to grow, driven by interest in proprietary materials and alternatives to germanium[162]