Lightpath Technologies Inc: Form 10-K for the period ended Jun 30, 2026

General

Our Company

LightPath Technologies, Inc. (“LightPath”, the “Company”, “we”, “our”, or “us”) was incorporated under Delaware law in 1992 as the successor to LightPath Technologies Limited Partnership, a New Mexico limited partnership formed in 1989, and its predecessor, Integrated Solar Technologies Corporation, a New Mexico corporation formed in 1985. Today, LightPath is a global company with facilities in the United States and the Republic of Latvia. Our corporate headquarters is located in Orlando, Florida.

Historically, we operated with a focus on optical component manufacturing, and specifically on our leadership position as a precision molded lens manufacturer for visual light applications. We expanded our addressable market with the acquisition of ISP (as defined below), a manufacturer of infrared optical components, in December 2016. Since 2020, our strategy has been to move up the value chain by producing optical assemblies, modules and simple cameras. Through acquisitions, we have continued to enhance our abilities on cameras and sensors and speed our movement up the value chain in line with our strategy of value-add infrared systems.

Subsidiaries

ISP and ISP Latvia

In December 2016, we acquired ISP Optics Corporation, a New York corporation (“ISP”), and its wholly-owned subsidiary, ISP Optics Latvia, SIA, a limited liability company founded in 1998 under the Laws of the Republic of Latvia (“ISP Latvia”). ISP is a vertically integrated manufacturer offering a full range of infrared products from custom infrared optical elements to catalog and high-performance lens assemblies. ISP’s manufacturing operation is located at our corporate headquarters facility in Orlando, Florida (the “Orlando Facility”). ISP Latvia is a manufacturer of high precision optics and offers a full range of infrared products, including catalog and custom infrared optics. ISP Latvia’s manufacturing facility is located in Riga, Latvia (the “Riga Facility”).

Visimid

In July 2023, we acquired Liebert Consulting, LLC, dba Visimid Technologies (“Visimid”), an engineering and design firm, specializing in thermal imaging, night vision and internet of things (“IOT”) applications. Visimid provides design and consulting services for U.S. 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. Visimid’s facility is located in Plano, Texas.

G5 Infrared

In February 2025, we acquired G5 Infrared LLC (“G5 Infrared”), a New Hampshire limited liability company. G5 Infrared is a leading vertically-integrated manufacturer of high-performance infrared camera systems and imaging solutions, specializing in advanced thermal imaging technology and long-range mission-critical detection solutions. G5 Infrared’s existing revenue and future growth pipeline are driven by established multi-year contracts and multiple defense programs of record in shipboard long-range surveillance, border security, and counter unmanned aerial systems (“C-UAS”) systems, as well as recurring federal, naval, and law enforcement programs. Additionally, G5 Infrared is an industry-leading provider of cutting-edge advanced infrared coatings, including for materials such as LightPath’s BlackDiamondTM (“BlackDiamond”) glass. G5 Infrared operates from a state-of-the-art manufacturing facility in Hudson, New Hampshire. We believe that this acquisition strengthens LightPath’s position as a leader in infrared imaging by expanding the Company’s portfolio to include cooled infrared cameras. The combination of LightPath and G5 Infrared creates a more robust, vertically-integrated solutions provider.

Amorphous Materials

In January 2026, we acquired the assets of Amorphous Materials, Inc. through our newly-formed, wholly-owned subsidiary, Amorphous Materials, LLC, a Delaware limited liability company (“AML”). AML specializes in infrared glass fabrication, and operates from a manufacturing facility in Garland, Texas. We believe that this acquisition further strengthens LightPath's position as a leader in infrared imaging by expanding our materials portfolio and glass fabrication capabilities.

LPOIZ

In February 2023, we combined the operations of our two wholly owned China subsidiaries, LightPath Optical Instrumentation (Shanghai) Co., Ltd (“LPOI”) and LightPath Optical Instrumentation (Zhenjiang) Co., Ltd. (“LPOIZ”), with LPOIZ as the surviving company. LPOIZ’s manufacturing facility (the “Zhenjiang Facility”) provided a lower cost structure for production of larger volumes of optical components and assemblies. In July 2026, we announced that we had entered into a definitive agreement to sell and transfer 100% of our equity interest in LPOIZ, including the Zhenjiang Facility and its operations in China, to Hengtu Optical Technology Co., Ltd., which is owned by members of LPOIZ's incumbent management team. The transaction is expected to close in September 2026. As a condition to the sale, LPOIZ agreed to continue to supply products to LightPath as a third-party vendor.

Industry

We and our customers support a wide range of industries, including defense, public safety, industrial, commercial, telecom, medical and more. A commonality among these industries is the use of photonics as an enabling technology in their products.

Over the last ten years we have witnessed a pivotal shift in the adoption of infrared photonics in new applications. In the early days of the technology it was a specialty application, developed by and between optical engineers and required highly specialized technical knowledge. As applications have increased and costs have decreased, adaptation and knowledge has shifted from the customer to the supplier (LightPath). This is true for industrial and commercial applications and especially true in defense applications which is where we have seen the most growth in the past few years and into the future.

The accelerated rate of adoption and highly diversified industries and applications utilizing an expanding array of photonics technologies brought a change in both the needs of the customers and the supply chain, to support those needs. In the past, we and other component suppliers mostly served customers that specialized in photonics. The large OEMs focused on component companies as a significant supply source for optical parts and minor fabrication and assemblies. OEMs typically produced their own designs and relied on their suppliers to fulfill their needs without any strategic product planning, investment or collaboration. This supply chain was fragmented and consisted of a large number of small companies, many of which had particular specialties in the fabrication process. Often times these types of activities are referred to as build-to-print, as the OEM customer would design the lens down to the final manufacturing prints and the vendor would focus on producing according to those prints.

As the industry has evolved, and sensory, visualization, and imaging capabilities have become differentiators among suppliers, there are an increasing number of customers in a myriad of industries with specialized requirements for an expanding array of products that need to be addressed. As photonics technology continues to develop, leading to broader adaptation and application across more industries, and with customers now possessing expertise in different technologies, customers’ supply chain needs have evolved. In our case, the change has created opportunities to now serve OEM customers for which photonics is only one of several technologies they embed into their products. While in the past our typical customer viewed optics as their specialty and hence they designed all aspects of their systems and outsourced only the component fabrication, this is not the case with our newer customers. Many of our current and potential customers do not wish or do not have the capability to design and build the optical portion of their products in-house. As such, the fragmented supply chain that existed in our industry in order to serve customers on the component level, is not relevant for customers that view optics as only a part of their system, and not a core capability or function. For these customers, LightPath is well positioned to become their solutions partner for their optics needs. By tapping into the domain knowledge and design, assembly and testing capabilities of solutions providers like LightPath, the customer can avoid making the large investment needed for them to develop those capabilities in-house. We refer to this ecosystem as “optical engineered solutions,” and believe we are positioned to serve as a single source, global provider of optical solutions with leading engineering and manufacturing capabilities. This has led to our development of a new strategy and organizational alignment which is further discussed below.

Growth Strategy

Since our Chief Executive Officer, Mr. Sam Rubin, joined the Company in 2020, we have been developing a new strategy that will transition the Company from a pure component manufacturer to a supplier of imaging subsystems and systems. Our strategic direction, which is based on our core technological differentiators such as our BlackDiamond glass and proprietary molding technologies, significantly increases our value add to customers. Management believes this transition, which is occurring both organically and through acquisitions, such as the July 2023 acquisition of Visimid, the February 2025 acquisition of G5 Infrared and the January 2026 acquisition of AML, will position the Company for significant growth and higher profitability in coming years. These acquisitions have also added to our technological differentiators.

Understanding the shifts that are happening in the marketplace and the changes that come when a technology, like photonics, moves from being a specialty to being integrated into mainstream industries and applications, we redefined our strategic direction to provide our wide customer base with domain expertise in optics, and became their partner for the optical engine of their systems. In our view, as the use of photonics evolves, so do customer needs. The industry is transforming from a fragmented industry with a component oriented supply chain, into a solution-focused industry with the potential for partnerships for solution development and production. Over the last couple of years we have worked to align our organization to this strategy, and leverage our in-house domain expertise in photonics, knowledge and experience in advanced optical technologies, and the necessary manufacturing techniques and capabilities. We have been developing these partnerships by working closely with our customers throughout their design process, designing optical solutions that are tailored to their needs, often times using unique technologies that we own, and supplying the customer with a complete optical subsystem to be integrated into their product. Such an approach builds on our unique, value-added technologies that we currently own, such as infrared materials, optical molding, fabrication, system design, and proprietary manufacturing technologies, along with technologies that we acquired through the Visimid acquisition, such as video processing, and technologies from the G5 Infrared acquisition, such as long range imaging using cooled midwave cameras. The acquisition of AML further expanded our portfolio of infrared materials. Continually adding differentiating technologies is key to our strategy and we expect to continue to do so both organically and through acquisitions.

Examples of this strategic approach can be found in many of our recent new product lines. We refer to these as LightPath 2.0 and 3.0, as that symbolizes the evolution of the Company. LightPath 2.0 refers to our assemblies and LightPath 3.0 refers to our cameras and related subsystems and systems. Like any company, a successful implementation of a strategy depends heavily on differentiators. In our case, those differentiators mostly tend to be technologies and capabilities. Over the last few years we have worked to, and will continue to work to, add and evolve our differentiators. Some of our differentiators currently include our unique BlackDiamond materials, optical system design capabilities, glass molding technology, processing of thermal images, and long range imaging technologies. Examples of how those differentiators translate into revenue include our multispectral Mantis camera, our missile program with Lockheed Martin, our long range cameras for border patrol and C-UAS applications, and a number of other system and subsystem level products and programs that are enabled by these technologies. We continue to re-design products, including G5 Infrared cameras, to eliminate Germanium from the bill of materials, leveraging the advantages of our BlackDiamond materials as alternative to Germanium.

The shift in strategy and product offerings also shifts the price range of our product portfolio and indirectly drives growth in and of itself. Historically, as a pure component Company, the average selling prices (“ASPs”) of those products were measured in single dollars or tens of dollars, whereas with the development of our assemblies product line (i.e. LightPath 2.0), ASPs for those products are measured in hundreds of dollars. When we added cameras, subsystems and systems (LightPath 3.0), ASPs for those products are measured in tens of thousands, and sometimes hundreds of thousands of dollars.

Organizational Alignment

Along with the development of a new strategic direction, we are focused on the execution of a complementary strategic plan. To execute our new strategic plan, we also need, among other things, a strong manufacturing and technical organization that provides the domain expertise in photonics from the design of an optical engineered solution tailored for the customer’s needs through the manufacturing, assembly and testing of such a sub-system. Given the fast pace of advancements in photonics technologies, achieving a sustainable advantage will also depend on having unique capabilities and technologies that allow our team to design and deliver the tailored solutions demanded by customers.

LightPath today is very different than what we were five years ago, and LightPath five years from now will be very different than what we are today. An evolving organization also needs an evolving structure that is aligned with its strategy, growth and all other related changes. Additionally, we have used mergers and acquisitions as a tool to acquire technologies, teams and products, and expect to continue to do so with future acquisitions. Success of an acquisition happens not only because of a good plan, but more importantly because of a successful implementation of the plan and cultural alignment. This too leads to an ever-evolving organization and dynamic alignment of such organization.

In the first few years of our transformation our focus was on alignment of the core LightPath organization. Developing the appropriate engineering disciplines and aligning manufacturing capacity and capabilities globally, including the sunsetting of old product lines, among other changes. Once this was in place, we turned our focus to developing our differentiators. Starting from licensing from NRL, developing new BlackDiamond glasses through our first camera products in the form of Mantis, our multispectral camera, and more. Upon acquiring Visimid, we aligned the organization around the capabilities and products Visimid brought.

Acquiring G5 Infrared in February 2025 brought both new capabilities and products in the form of their long range cooled infrared cameras, and added capacity in the form of optical coating services. G5 Infrared’s operational integration with LightPath commenced soon after the acquisition. The complementary nature of the LightPath materials and optics capabilities and G5 Infrared’s system level camera quickly led the teams to start working together resulting in new products that have been announced already (such as the Germanium-free cameras) or that are in development.

The acquisition of AML in January 2026 further expanded our infrared materials portfolio and expanded our infrared glass manufacturing capabilities.

Today, the different teams across LightPath work well together and leverage each other’s capabilities in design and manufacturing. As we continue to evolve, both organically and through acquisitions, we plan to regularly review our array of capabilities and resources across the entire organization, and continuously align the organization to make best use of those.

In the longer term, we have identified capabilities and technologies that could be important differentiators, including, for example, optical detectors and active optical components such as lasers, motion systems, and more. The aggregation of such unique technologies is intended to allow us to differentiate our optical solutions and provide customers with products that are tailored exactly to their needs.

Technologies

We believe that to be the preferred partner to fulfill the photonics needs of our customers, domain expertise and differentiating technologies in photonics are key elements. Optics and photonics require multidisciplinary skills, including physics, mechanical engineering, material sciences, electrical engineering, and chemistry, among others. This is part of what makes using photonics so complicated, and at the same time part of what we see as the opportunity. Knowing what can and cannot be produced, designing the architecture and detailed design of the optical system, including electrical and mechanical interfaces, choosing and executing advanced manufacturing technologies, and delivering both the engineering prototypes that are needed, as well as producing a high volume of goods for the long-term, are all part of the domain expertise required. Additionally, to design the best solution for a customer, we not only need to know what can be produced and how to design it, we also must have unique capabilities that differentiate our solutions. Such technologies allow us to develop solutions and sub systems that outperform other solutions in size, weight, power, and cost.

Along those lines, we continue to focus on developing, acquiring and licensing new, innovative capabilities and technologies in all of our engineering and manufacturing groups, including systems design and testing, optical fabrication of components, material production, optical coatings, and electro mechanical design and production such as the following:

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• High precision molded lenses. Historically, precision molding of lenses is the key technology we have built upon. Precision molding of optics is a unique technology that is well suited for both high volume production of optical components, as well as production of optics with unique shapes, which otherwise would require a very lengthy and complex process to individually polish each lens to shape. Precision molded optics (“PMOs”) is a technology in which we continuously invest to pursue advancements in what materials can be molded and the shapes and sizes of the optics we can mold. Although there are several other competitors that can mold optical elements, we have an established leadership position in this area as the original developer of the technology, and we believe we are the preferred vendor for the most complex, high-end projects of many of our customers. Some recent advancements we have made in precision molded optics include molding of non-symmetric shapes such as freeform optical components, and qualifying new materials for availability as moldable materials.
• Traditional polishing and diamond turned optics. Our capabilities include a wide range of traditional fabrication processes. These include CNC (computer numerical control) grinding and polishing of optical elements, traditional grinding and polishing of lenses, and diamond turning of infrared materials.
• Optical coatings. Thin film coatings are designed to reduce losses and protect the optical material, which are a key part of any optical system. Through our recent investments, we have the ability to coat lenses in all of our facilities, providing efficient, high quality antireflective coatings, as well as reflective and protective coatings. Our coating facilities employ both physical vapor deposition techniques as well as chemical vapor deposition techniques. In addition to our library of dozens of standard coatings, our coating engineers often design coatings specific for an application, optimizing the performance of the system for a specific customer use. One of our most known advanced coatings is Diamond Like Carbon, which provides materials such as chalcogenide glass significant environmental protection. This coating is currently available only at a small number of vendors, and is an example of a capability that we believe gives us a competitive advantage by allowing us to design better optical solutions.

New Product Development

Consistent with our strategic plan, we have focused our development efforts in recent years on products, technologies and capabilities that allow us to provide better solutions using the most optimal technology for each customer and with alignment to customer product lifecycle. As much of our current and future growth is centered around thermal imaging, naturally our new product efforts are too. In fiscal year 2026, that included both enabling technologies such as our BlackDiamond glasses, as well as assemblies and cameras.

Our BlackDiamond glasses are an important enabling technology to much of our assemblies and camera systems. Besides offering an alternative to using Germanium as a lens material, optics made from our various BlackDiamond materials offer unique properties that can be very useful in system design. For example, some BlackDiamond materials have a negative, or even zero thermo-optic coefficient, making them very useful when designing a system that needs to operate across a wide range of temperatures. Other materials feature low dispersion, making them very useful for systems that need to work across a wide range of wavelengths.

We leverage those characteristics to develop advanced optical systems and cameras that we can offer as standard, or custom systems to our customers. Some of those systems are multispectral, meaning they operate in more than one part of the spectrum simultaneously. Mantis is an uncooled camera that images in both midwave and longwave parts of the spectrum, a capability made possible with the use of one of our BDNL materials. We also have been developing other multispectral assemblies such as ones that image in both the shortwave and midwave portion of the spectrum. We intend to continue to develop our multispectral portfolio, as we have a significant advantage in that area, and the detector technology is evolving, making multispectral imaging a possibility that did not exist easily before.

We also use BlackDiamond in some of our camera systems. In August 2025 we announced completing the redesign of two cooled midwave cameras made by G5 infrared, which we acquired in February of that year. Eliminating Germanium from those cameras was made possible by using a BlackDiamond glass as an alternative material. To the best of our knowledge, we are the first to offer a midwave uncooled camera that does not require any Germanium lenses. That too is an advantage we plan to continue to leverage.

Lastly, we have new product development ongoing in other imaging technologies, such as a shutterless operation of uncooled thermal cameras, image stabilization software and more.

We incurred expenditures for new product development of approximately $3.8 million and $3.1 million during fiscal years 2026 and 2025, respectively.

In some cases, our product and technology development is supported through billing of engineering services, such as non-recurring engineering (“NRE”) fees. In other cases, we receive external funding, such as our previously announced funding from Space Florida’s Space Foundation and Israel’s Ministry of Science, and the U.S. DoD (via the Defense Logistics Agency). Our efforts are self-funded in all other cases.

As part of our product development and research and development efforts, we have numerous employees with engineering and related advanced degrees located in our facilities in the U.S. and Latvia. Our facilities in Orlando, Florida, Plano, Texas, and Hudson, New Hampshire are located in or near industrial technology campuses with substantial access to optical industry constituencies, including a major university. This enables us and our staff to remain on the cutting edge of industry design trends and to enter into collaborative engagements.

Product Groups and Markets

Overview

We categorize our products into four product groups: (i) infrared components, (ii) visible components, (iii) assemblies and modules, and (iv) engineering services. G5 Infrared’s revenue is generally derived from infrared components (including coating services) and assemblies and modules.

Infrared Components Product Group. Our infrared product group is comprised of both molded and turned infrared lenses using a variety of infrared glass materials. This product group also includes revenue from sales of our BlackDiamond glass materials, AML's infrared glass materials, and G5 Infrared’s coating services. This product group includes both molded, conventional and CNC ground and polished lenses. Advances in chalcogenide materials have enabled compression molding for mid-wave (“MWIR”) and long-wave (“LWIR”) optics in a process similar to precision molded lenses. Our molded infrared optics technology enables high performance, cost-effective infrared aspheric lenses that do not rely on traditional diamond turning or lengthy polishing methods. Utilizing precision molded aspheric optics significantly reduces the number of lenses required for typical thermal imaging systems and the cost to manufacture these lenses. Molding is an excellent alternative to traditional lens processing methods particularly where volume and repeatability is required.

We offer Germanium, silicon or zinc selenide aspheres and spherical lenses, which are manufactured by diamond turning. This manufacturing technique allows us to offer larger lens sizes and the ability to use other optical materials that cannot be effectively molded. Our numerous manufacturing capabilities allow us to meet complex optical challenges that demand more exotic optical substrate materials that are non-moldable, as well as larger size optics.

We also manufacture chalcogenide glass from which we produce infrared lenses. We developed this glass and melt it internally to produce our BlackDiamond glass, which has been trademarked, and is marketed as BD6. Historically, the majority of our thermal imaging products have been germanium-based, which is subject to market pricing and availability. BD6 offers a lower-cost alternative to germanium, which is beneficial to the cost structure of some of our current infrared products and we expect it will allow us to continue to expand our product offerings in response to the markets’ increasing requirement for low-cost infrared optics applications. During fiscal year 2024, we also formally announced availability of BDNL-4, the first of our new materials licensed from the NRL. BDNL-4 is unique because it has a negative thermo-optic coefficient, an attribute that is key in a-thermalization of optical systems.

We have the capability to manufacture lenses from very small (with diameters of sub-millimeter) to over 300 millimeters, and with focal lengths from approximately 0.4 millimeters to over 2000 millimeters, utilizing our various manufacturing methods. In addition, we offer both catalog and custom designed infrared optics.

Overall, we anticipate moderate growth for our infrared components, particularly as our germanium alternatives continue to be adopted into new applications and designs. This product group also supports our assemblies and modules product group.

Visible Components Product Group. Aspheric lenses are known for their optimal performance. Aspheric lenses simplify and shrink optical systems by replacing several conventional lenses. However, aspheric lenses can be difficult and costly to machine. Our glass molding technology enables the production of both low and high volumes of aspheric optics, while still maintaining the highest quality at an affordable price. Molding is the most consistent and economical way to produce aspheres and we have perfected this method to offer the most precise molded aspheric lenses available.

Assemblies and Modules Product Group. Our assemblies and modules product group is comprised of both optical assemblies such as lens systems, and cameras, both in the form of camera modules and complete camera systems. Historically this product group also included optical fiber collimators and some visible lens assemblies, however those are now a very small part of our activity, making infrared cameras and assemblies the most dominant part of this group. Today, the majority of the revenue of this group is derived from cameras made in our Texas facility (uncooled camera systems and modules), cameras made in our New Hampshire facility (cooled cameras for long range surveillance and detection), and optical assemblies such as standard off the shelf lens assemblies, and custom lens assemblies. The latter are produced mainly in Orlando.

Engineering Services Product Group. We develop products pursuant to development agreements that we enter into with customers. Typically, customers approach us and request that we develop new products or applications utilizing our existing products to fit their particular needs or specifications. The purpose of those engineering services that we offer is not only to provide purely engineering services for a customer, but also to engineer new products which we later manufacture for the customer. The timing and extent of any such product development requests are unpredictable and outside of our control.

Sales and Marketing

Marketing. Because we offer raw optical materials, semi-finished components and finished assemblies, modules and cameras, we sell to customers positioned at different levels of the supply chain, and our marketing must address several distinct buying groups. In some cases we sell materials, optical components and assemblies to the same customer through separate programs and separate technical contacts. Our customers are principally defense prime contractors and system integrators that incorporate our materials, optical components, assemblies and cameras into their own systems, together with government agencies, industrial and laser equipment OEMs, industrial inspection and measurement equipment manufacturers, medical instrumentation manufacturers and research institutions. We sell primarily to integrators rather than to end users. Our marketing activities include digital advertising, our website, social media, direct marketing, and technical content directed to design engineers and program technical staff. As a greater portion of our revenue has come from customized solutions supplied to integrators rather than from standard catalog components, our marketing has placed less emphasis on individual component specifications and more on application requirements, system-level performance and end-user outcomes.

Sales Model and Structure. Our commercial organization comprises a sales function led by our Senior Vice President of Sales and a business development function, supported by product management and technical project management. The sales function is responsible for customer relationships, contract vehicles and channel partners. The business development function is responsible for identifying and qualifying new programs, and includes solutions architecture resources that work with customers on system requirements before a product is specified. Technical project management coordinates customer requirements with our engineering and manufacturing capacity and supports the development efforts through which we extend our portfolio of capabilities. Product management is part of our go-to-market organization and supports the positioning and growth of our infrared imaging portfolio.

Sales Team and Channel. We sell through a direct sales organization covering North America and Europe, supported by sales representatives in certain international territories and by distributors, through which we serve customers in Asia and other regions. Our products reach customers through several channels: direct sales to defense prime contractors and system integrators, sales under government contract vehicles, and catalog and stocking distribution for standard products. Our sales engineers are assigned by account and application. Because our products are generally designed into a customer’s system, our selling process is technical and consultative, beginning with the customer’s system requirements before a product is specified, and typically involves an extended qualification cycle. We maintain our website (www.lightpath.com (http://www.lightpath.com)), social media presence, and email communications as channels for technical content and customer engagement. Information on our website is not incorporated by reference into this report.

Trade Shows. We exhibit our products, introduce new offerings and meet with customers, end users and industry participants at defense, security and photonics conferences in North America and Europe. Events in which we participate on a recurring basis include SPIE Photonics West in San Francisco, California; SPIE Optifab in Rochester, New York; the SHOT Show in Las Vegas, Nevada; the Association of the United States Army (AUSA) Annual Meeting and Exposition in Washington, D.C.; SOF Week in Tampa, Florida; AUVSI Xponential; the Border Security Expo; and Homeland Security Week in National Harbor, Maryland. In Europe we participate in DSEI in London, United Kingdom, and Eurosatory in Paris, France, each of which is held biennially in alternating years. In September 2026 we participated for the first time in MSPO in Kielce, Poland, the largest defense exhibition in Central and Eastern Europe. We exhibit at certain of these events. At others we participate without an exhibit, meeting with customers, prime contractors and government program offices on the exhibit floor and attending technical and program briefings. The composition of the events in which we participate is weighted toward defense and security end markets, consistent with the composition of our revenue. Our participation supports brand awareness, business development relationships, and insight into customer requirements and technology trends in our target markets.

Competition

We are vertically integrated, with offerings ranging from raw optical materials to semi-finished components and finished assemblies, modules and cameras. We therefore compete at multiple levels of the optics supply chain, and our competitors vary by product group, end market and geography. In some cases, we are both a supplier to and a competitor of the same company — a customer that purchases optical components or materials from us may also produce infrared cameras that compete with ours. This is common in the defense industry, where companies routinely supply one another with materials, components and subsystems. As we broaden our product offerings, add services and expand into additional geographies, our competitive landscape continues to change and we encounter new competitors.

The global market for optical components and assemblies is fragmented and competitive. We compete principally on optical performance, size and weight, the ability to design or modify a product to a customer’s specific requirements, unit price, delivery lead time and the location of manufacture. Our manufacturing operations are located in the United States and Latvia. Our competitive position rests substantially on our precision molded optics technology and on our vertical integration in infrared, which allows us to control design and manufacturing from raw material through finished assembly, including in certain cases sensors and electronics. Our scale also allows us to pursue lower-volume, application-specific programs that certain larger competitors do not.

Raw material cost and availability are significant competitive factors in infrared. Germanium pricing has been volatile and supply is affected by export restrictions imposed by producing countries. Our BlackDiamond family of chalcogenide glasses is engineered to substitute for germanium in many applications, and we sell BlackDiamond materials and molded blanks both to customers and to certain competitors.

Infrared Components. We compete with suppliers of conventionally fabricated crystalline infrared optics, including single-point diamond-turned germanium, silicon and zinc selenide components, and with regional optical fabrication shops. Our molding process is intended to reduce cost at moderate volumes relative to diamond turning, though conventional fabrication remains competitive for prototype quantities and for certain apertures and geometries. In sales of BlackDiamond materials and molded blanks, we compete with germanium and with other engineered infrared glasses, as well as with crystalline materials. Because a change in optical material generally requires a customer to requalify an existing design, adoption cycles in this product group are long, and material selections tend to persist for the life of a program once qualified. Constrained germanium availability has increased customer interest in alternative infrared materials, and we believe our BlackDiamond glasses position us to serve applications previously served by germanium optics.

Visible Components. We compete with volume molders of aspheric lenses located in Asia and with the captive molding operations of larger optics manufacturers. Competition in this product group is driven substantially by unit price at volume, and we generally compete for applications in which tolerance, coating or qualification requirements exceed what commodity production supports.

Assemblies and Modules and Engineering Services. Our engineering services product group largely feeds our assemblies and modules product group, and the two share a competitive set. We encounter three types of competition in these product groups:

• Companies offering custom optical design through recurring production. Competitors in this category generally offer a narrower range of design and manufacturing capability than we do, particularly on programs requiring control of both the optical design and the manufacturing process, or requiring integration of optics with sensors and electronics.
• Standard catalog products sold without customization, available from vendors including Ophir Optronics Solutions Ltd. (a subsidiary of MKS Instruments, Inc.), Controp Precision Technologies Ltd., Teledyne FLIR and Clear Align LLC. Customers selecting a standard product generally accept trade-offs in size, weight, detection range or power consumption relative to an assembly designed to their system requirements. Standard products compete effectively where a customer’s requirements can be met without modification, and where program schedule or volume favors an off-the-shelf solution.
• Customer in-house engineering. Some customers, principally large defense prime contractors, design and build optical assemblies internally rather than sourcing them. Companies in this category are frequently both competitors and customers, and include Lockheed Martin Corporation, Anduril Industries, Inc., Teledyne FLIR, RTX Corporation and Elbit Systems Ltd.

Manufacturing

Facilities. Our manufacturing is largely performed in our combined 58,500 square feet of production facilities in Orlando, Florida, G5 Infrared’s 27,000 square feet of production facilities in Hudson, New Hampshire, ISP Latvia’s 29,000 square feet of production facilities in Riga, Latvia, and LPOIZ’s 39,500 square feet of production facilities in Zhenjiang, China. As discussed in further detail above, in July 2026 we announced a definitive agreement to divest our Chinese operations, including LPOIZ's Zhenjiang Facility. We expect this transaction to close in September 2026.

Our Orlando Facility and LPOIZ’s Zhenjiang Facility feature areas for each step of the manufacturing process, including coating work areas, diamond turning, manufacturing and a clean room for precision glass molding and integrated assembly. The Orlando and Zhenjiang Facilities include new product development laboratories and space that includes development and metrology equipment. The Orlando and Zhenjiang Facilities have anti-reflective and infrared coating equipment to coat our lenses in-house. ISP Latvia’s Riga Facility includes fully vertically integrated manufacturing processes to produce high precision infrared lenses and infrared lens assemblies, CNC grinding, conventional polishing, diamond turning, assemblies, state of the art metrology, and infrared coatings. G5 Infrared’s Hudson, New Hampshire facility features the manufacturing of infrared coatings and production scale ability to assemble lenses and cameras as well as modern measuring and automation alignment tools.

We add production equipment and space at our facilities as needed. In fiscal year 2024, we completed the build out of additional Orlando Facility space, and are currently in the process of further expanding our glass fabrication capacity in this facility. In July 2025, we entered into a lease agreement for a larger manufacturing and office facility in Plano, Texas, to expand Visimid’s engineering, development and low volume sensor alignment capabilities. In addition to adding equipment or space at our manufacturing facilities, we add work shifts, as needed, to increase capacity and meet forecasted demand. We intend to monitor the capacity at our facilities, and will increase such space as needed. We believe our facilities and planned expansions are adequate to accommodate our needs over the next year.

Production and Equipment. Our Orlando Facility contains glass melting capability for BD6 chalcogenide glass, a manufacturing area for our molded glass aspheres, multiple anti-reflective and wear resistant coating chambers, diamond turning machines and accompanying metrology equipment offering full scale diamond turning lens capability, a tooling and machine shop to support new product development, commercial production requirements for our machined parts, the fabrication of proprietary precision glass molding machines and mold equipment, and a clean room for our molding and assembly workstations and related metrology equipment.

ISP Latvia’s Riga Facility consists of grinding, polishing, diamond turning, quality control, infrared coating departments and a mechanical shop to provide the departments with the necessary tooling. The grind and polish department has modern CNC equipment, lens centering and conventional equipment to perform spindle, double sided and continuous polishing operations. The diamond turning department has numerous diamond-turning machines accompanied with the latest metrology tools. The infrared coating department is equipped with multiple anti-reflective and wear resistant coating chambers. The quality control department contains numerous inspection stations with various equipment to perform optical testing of finished optics.

LPOIZ’s Zhenjiang Facility features a precision glass molding manufacturing area, clean room, machine shop, dicing area, and thin film coating chambers for anti-reflective coatings on both visible and infrared optics and related metrology equipment. As discussed in further detail above, in July 2026, we announced that we had signed a definitive agreement to divest our Chinese operations, including LPOIZ's Zhenjiang Facility, and we expect to close this transaction in September 2026.

The Orlando, Zhenjiang, and Riga Facilities are ISO 9001:2015 certified. The Hudson, New Hampshire facility is ISO9001/AS9100 certified, which is tailored for aerospace, space and defense requirements. The Zhenjiang Facility is also ISO/TS 1649:2009 automotive certified for manufacturing of optical lenses and accessories. The Orlando Facility is International Traffic in Arms Regulations (“ITAR”) compliant and registered with the U.S. Department of State; included in this registration are the Plano, Texas and Hudson, New Hampshire facilities. The Riga Facility has a DSP-5 ITAR license and Technical Assistance Agreement in place that allows this facility to manufacture items with ITAR requirements.

For more information regarding our facilities, please see Item 2. Properties in this Annual Report on Form 10-K.

Subcontractors and Strategic Alliances. We believe that low-cost manufacturing is crucial to our long-term success. In that regard, we generally use subcontractors in our production process to accomplish certain processing steps requiring specialized capabilities. For example, we presently use a number of qualified subcontractors for fabricating, polishing, and coating certain lenses, as necessary. We have taken steps to protect our proprietary methods of high-quality manufacturing by patent disclosures and internal trade secret controls.

Suppliers. We utilize a number of glass compositions in manufacturing our molded glass aspheres and lens array products. These glasses or equivalents are available from a large number of suppliers, including CDGM Glass Company Ltd., Ohara Corporation, and Sumita Optical Glass, Inc. Base optical materials, used in both infrared glass and collimator products, are manufactured and supplied by a number of optical and glass manufacturers. We utilize major infrared material suppliers located around the globe for a broad spectrum of infrared crystal and glass. The development of our manufacturing capability for BD6 glass and other germanium alternatives provides a low-cost internal source for infrared glass. We believe that a satisfactory supply of such production materials will continue to be available, at reasonable or, in some cases, increased prices, although there can be no assurance in this regard.

We also rely on local and regional vendors for component materials and services such as housings, fixtures, chemicals and inert gases, specialty ceramics, UV and AR coatings, and other specialty coatings. In addition, certain products require external processing, such as anodizing and metallization. To date, we are not dependent on any of these manufacturers and have found a suitable number of qualified vendors and suppliers for these materials and services.

We currently purchase a few key materials from single or limited sources. We believe that a satisfactory supply of production materials will continue to be available at competitive prices, although we are experiencing inflationary pricing pressure in the short term, however there can be no assurances in this regard.

Intellectual Property

Our policy is to protect our technology by, among other things, trade secret protection, patents, trademarks, and copyrights. We primarily rely upon trade secrets and unpatented proprietary know-how to protect certain process inventions, lens designs, and innovations. We have taken reasonable security measures to protect our trade secrets and proprietary know-how.

We are pursuing patents for new products that provide new features, capabilities or other advantages to our customers. We have recently received a patent directed to using an uncooled broadband camera for flame detection coupled with detection of humans or other low temperature signals within the overall imaging area and have filed a continuation-in-part application to cover additional aspects a detection in the presence of a flame. We have received a Notice of Allowance is for an optical element formed from a moldable material, with a transparent layer of a different material applied to the optical surface for use in resistive heating of the element in an infrared camera to be used to provide heating on an optic for de-icing or de-fogging. A patent application directed shutterless calibration by using pulsed infrared sources that can illuminate all pixels in the focal plane array with short pulses of light, which can then be used for non-uniformity correction, has not yet received any action.

We own several registered and unregistered service marks and trademarks (collectively, “marks”) that are used in the marketing and sale of our products. The following table sets forth our registered and unregistered marks, and denotes whether each mark is registered, the country in which the mark is filed, and the renewal date for such mark.

Environmental and Governmental Regulation

Currently, emissions and waste from our manufacturing processes are at such low levels that no special environmental permits or licenses are required. In the future, we may need to obtain special permits for disposal of increased waste by-products. The glass materials we utilize contain some toxic elements in a stabilized molecular form. However, the high temperature diffusion process results in low-level emissions of such elements in gaseous form. If production reaches a certain level, we believe that we will be able to efficiently recycle certain of our raw material waste, thereby reducing disposal levels. We believe that we are presently in compliance with all material federal, state, and local laws and regulations governing our operations and have obtained all material licenses and permits necessary for the operation of our business.

We also utilize certain chemicals, solvents, and adhesives in our manufacturing process. We believe we maintain all necessary permits and are in full compliance with all applicable regulations.

To our knowledge, there are currently no U.S. federal, state, or local regulations that restrict the manufacturing and distribution of our products. Certain end-user applications require government approval of the complete optical system, such as U.S. Food and Drug Administration approval for use in endoscopy. In these cases, we will generally be involved on a secondary level and our OEM customer will be responsible for the license and approval process.

The Dodd-Frank Wall Street Reform and Consumer Protection Act imposes disclosure requirements regarding the use of “conflict minerals” mined from the Democratic Republic of Congo and adjoining countries in products, whether or not these products are manufactured by third parties. The conflict minerals include tin, tantalum, tungsten, and gold, and their derivatives. Pursuant to these requirements, we are required to report on Form SD the procedures we employ to determine the sourcing of such minerals and metals produced from those minerals. There are costs associated with complying with these disclosure requirements, including for diligence in regards to the sources of any conflict minerals used in our products, in addition to the cost of remediation and other changes to products, processes, or sources of supply as a consequence of such verification activities. In addition, the implementation of these rules could adversely affect the sourcing, supply, and pricing of materials used in our products. We strive to only use suppliers that source from conflict-free smelters and refiners; however, in the future, we may face difficulties in gathering information regarding our suppliers and the source of any such conflict minerals.

Major Customers

In fiscal year 2026, we had sales to three customers that comprised an aggregate of approximately 37% of our annual revenue with one customer at 24% of our sales, another customer at 7% of our sales, and the third customer at 6% of our sales. In fiscal year 2025, we had sales to three customers that comprised an aggregate of approximately 23% of our annual revenue with one customer at 9% of our sales, another customer at 7% of our sales, and the third customer at 6% of our sales. The loss of any of these customers, or a significant reduction in sales to any such customer, would adversely affect our revenues and profits. However, two of the three largest customers for fiscal year 2025 are still significant customers, however they were not among the three largest for fiscal year 2026. Our customer concentration is not static, and our growth is driven by a combination of new customers and growing programs with existing customers. We continue to diversify our business in order to minimize our sales concentration risk.

In fiscal year 2026, 48% of our net revenue was derived from sales outside of the U.S., with 97% of our foreign sales derived from customers in Europe and Asia. In fiscal year 2025, 38% of our net revenue was derived from sales outside of the U.S., with 91% of our foreign sales derived from customers in Europe and Asia. However, those percentages are based on ship-to location, and one of our largest customers integrates products in Europe and ships to their customers in the U.S., so our international sales is actually less than this indicates.

Employees

Our employees are critical to providing our customers with the most innovative optics products. We employ a diverse group of people with different backgrounds, cultures, education and experience to move the Company and our strategic plan forward. As of June 30, 2026, we had 425 employees globally, including 414 full-time and 11 part-time employees, with 214 employees in the U.S., 107 employees located in Riga, Latvia, and 104 employees located in Zhenjiang, China. We have used and will continue utilizing part-time support, including interns, temporary employment agencies, and outside consultants, as required from time to time. Any employee additions or terminations over the next twelve months will be dependent upon the actual sales levels realized during the fiscal year.

Compensation and Benefits

LightPath offers competitive compensation and benefit packages designed to meet the short-term and long-term needs of our employees and their families. These benefits include but are not limited to a 401(k) Plan with company match, flexible spending and health savings accounts, short-term incentive programs, healthcare benefits, and employee assistance program.

Recruitment

Sourcing and hiring top talent is part of our success. Using different sources and partnerships to connect with talent has been crucial. LightPath uses regional, industry and internal metrics to ensure we are staying competitive in the market.

Diversity and Inclusion Initiatives

LightPath is committed to being an equal opportunity employer and strives to create an inclusive workplace that celebrates diversity of experience. As a global company, we celebrate diversity. All employment decisions are based on business need, basis of qualifications, performance and merit.

Employee Training

Employees start training on the first day of employment. Depending on their new position, initial training can take up to six months. All employees are given basic safety training for fire, hazardous materials, first aid, physical lifting, and accident prevention. As changes are made to processes and new products are introduced, training is imperative. All electronic training programs are assigned through a labor management system and completion records are maintained within the same system.

Available Information

We maintain a website with the address www.lightpath.com (http://www.lightpath.com). We are not including the information contained on our website as part of, or incorporating it by reference into, this Form 10-K. Through our website, we make available free of charge our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and other reports and amendments to these reports that we file with or furnish to the Securities and Exchange Commission (“SEC”) in a timely manner after we provide them.

The following is a discussion of the primary factors that may affect the operations and/or financial performance of our business. Refer to the section entitled Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations of this Annual Report on Form 10-K for an additional discussion of these and other related factors that affect our operations and/or financial performance.

Risks Related to Our Business and Financial Results

We have a history of losses. We reported net losses for several consecutive fiscal years. As of June 30, 2026, we had an accumulated deficit of approximately $251.3 million. We may incur losses in the future if we do not achieve sufficient revenue to maintain profitability, or if we continue to incur unusual costs. We expect revenue to grow by generating additional sales through promotion of our infrared products, with a focus on engineered solutions, and continued cost reduction efforts across all product groups, but we cannot guarantee such improvement or growth.

Factors which could adversely affect our future profitability, include, but are not limited to, a decline in revenue either due to lower sales unit volumes or decreasing selling prices, or both, our ability to order supplies from vendors, which, in turn, affects our ability to manufacture our products, and slow payments from our customers on accounts receivable.

Any failure to maintain profitability would have a materially adverse effect on our ability to implement our business plan, our results and operations, and our financial condition, and could cause the value of our Class A common stock to decline.

We may be affected by political and other risks as a result of our sales to international customers and/or our sourcing of materials from international suppliers. In fiscal year 2026, 48% of our net revenue was derived from sales outside of the U.S., compared to 38% in fiscal 2025, with customers in Europe and Asia accounting for 97% and 91% of our foreign sales in fiscal 2026 and 2025, respectively. However, those percentages are based on ship-to location, and one of our largest customers integrates products in Europe and ships to their customers in the U.S., so our international sales is actually less than this indicates. Our international sales will be limited, and may even decline, if we cannot establish relationships with new international distributors, maintain relationships with our existing international distributions, maintain and expand our foreign operations, expand international sales, and develop relationships with international service providers. For example, following the sale of LPOIZ and the Zhenjiang Facility, which is expected to close in September 2026, we expect to become more dependent on third-party suppliers, including LPOIZ’s new owners, for the manufacture and supply of certain materials and products. While the transaction documents contemplate an ongoing supply relationship, any disruption in the new owners' operations, changes in their business priorities, financial condition, or ability to perform under our agreements could adversely affect our supply chain, operations, and financial results. Additionally, our international sales may be adversely affected if international economies weaken. We are subject to the following risks, among others:

• greater difficulty in accounts receivable collection and longer collection periods;
• potentially different pricing environments and longer sales cycles;
• the impact of recessions in economies outside the U.S.;
• the impact of high, sustained inflation;
• unexpected changes in foreign regulatory requirements;
• the burdens of complying with a wide variety of foreign laws and different legal standards;
• certification requirements;
• reduced protection for intellectual property rights in some countries;
• difficulties in managing the staffing of international operations, including labor unrest and current and changing regulatory environments;
• potentially adverse tax consequences, including the complexities of foreign value-added tax systems, restrictions on the repatriation of earnings, and changes in tax rates;
• price controls and exchange controls;
• government embargoes or foreign trade restrictions;
• imposition of duties and tariffs and other trade barriers;
• import and export controls;
• transportation delays and interruptions;
• terrorist attacks and security concerns in general; and
• political, social, economic instability and disruptions.

Russia’s ongoing conflict with Ukraine may continue to disrupt our supply chain. Our business, financial condition, and results of operations could be adversely affected by continued disruption and global consequences stemming from the conflict. Although we have no direct operations in Russia or Ukraine, the broader consequences of this conflict have negatively affected, and are expected to continue to negatively affect, the global economy, including the imposition of sanctions, cyber incidents or information technology failures, supply disruptions, increases in inflation rates, increase in energy costs, changes to foreign currency exchange rates, constraints, volatility, or disruption in financial markets, the availability of raw materials, supplies, freight, and labor, and uncertainty about economic and global stability. Historically, we have sourced Germanium from suppliers located in Russia and China. At the start of the Russia\Ukraine conflict we had ceased all purchases of Germanium from vendors in Russia and instead have been purchasing Germanium from vendors in China. In July 2023 China announced its intentions to impose some export restrictions on Germanium, requiring all international customers to provide an end user statement for approval before receiving an export license. Since that announcement, supply of Germanium has been disrupted, though not completely stopped. In December 2024, China further announced an immediate export ban on Germanium, Gallium and antimony to the United States and for any dual use or military use applications. We have taken proactive steps to minimize the orders we accept for Germanium products and therefore minimize our exposure to this risk. We cannot provide any assurances that we will be able to obtain adequate supplies in the future or, if adequate supplies are available, that the timing or costs of obtaining such raw materials will be acceptable to us. Further, some of our major customers in Europe may be directly impacted by the Russian-Ukraine conflict, which could impact the amount and frequency of orders they place with us, as well as impact the timing and ability to pay for products ordered from us. Any material impacts to our customers could have a material adverse effect on our business and operating results.

We depend on single or limited source suppliers for some of the key materials or process steps in our products, making us susceptible to supply shortages, poor performance, or price fluctuations. We currently purchase several key materials (including Germanium and sensors) or have outside vendors perform process steps, such as lens coatings, used in or during the manufacture of our products from single or limited source suppliers. We may fail to obtain required materials or services in a timely manner in the future, or we could experience delays as a result of evaluating and testing the products or services of potential alternative suppliers. The economic decline in China may have adversely impacted the financial condition of certain of our suppliers, some of whom have limited financial resources. We have in the past, and may in the future, be required to provide advance payments in order to secure key materials from financially limited suppliers. Financial or other difficulties faced by these suppliers could limit the availability of key components or materials. The economic decline in China has also increased the risk of bankruptcy for suppliers with operations in China and has led to higher manufacturing costs for us and the need to identify alternate suppliers. Additionally, financial difficulties could impair our ability to recover advances made to these suppliers. Any interruption or delay in the supply of any of these materials or services, or the inability to obtain these materials or services from alternate sources at acceptable prices and within a reasonable amount of time, would impair our ability to meet scheduled product deliveries to our customers and could cause customers to cancel orders, thereby negatively affecting our business, financial condition, and results of operations.

International tariffs, including tariffs applied to goods traded between the U.S. and China, could materially and adversely affect our business and results of operations. The United States has recently enacted and proposed to enact significant new tariffs affecting certain products exported by a number of U.S. trading partners, including China. While certain tariffs have subsequently been suspended, modified or temporarily reduced, we cannot predict the results of the U.S. government’s trade negotiations or the outcome of ongoing legal challenges to specific tariff policies. The unpredictable nature of these trade policies and the potential for further escalation may increase uncertainty and volatility in our industry, which could negatively impact our financial performance

The institution of trade tariffs both globally and between the U.S. and China specifically carries the risk of negatively impacting China’s overall economic condition, which could have negative repercussions for us. Furthermore, imposition of tariffs could cause a decrease in the sales of our products to customers located in China or other customers selling to Chinese end users, which would directly impact our business. In light of these events, there continues to exist significant uncertainty about the future relationship between the U.S. and other countries with respect to such trade policies, treaties and tariffs. These developments, or the perception that any of them could occur, may have a material adverse effect on global economic conditions and the stability of global financial markets, and may significantly reduce global trade and, in particular, trade between the impacted nations and the United States. Any of these factors could depress economic activity and restrict our access to suppliers or customers and have a material adverse effect on their business, financial condition and results of operations, which in turn would negatively impact us. We have operations, customers and suppliers in the U.S., China and other countries and regularly import and export goods and services to and from those countries. An increase in tariffs could have a material impact on our costs and on the demand for our products and services.

Discussions remain ongoing in respect of certain trade restrictions and tariffs on imports, as well as retaliatory actions by affected countries, which could impose restrictions tariffs enacted in response to such actions, which could prohibit, reduce, or discourage purchases of our products by foreign customers, leading to increased costs of products that contain our components, increased costs of manufacturing our products, and higher prices of our products in foreign markets. Changes in, and responses to, U.S. trade policy could reduce the competitiveness of our products and cause our sales and revenues to drop, which could materially and adversely impact our business and results of operations.

We utilize a number of strategies to mitigate the current and, hopefully, future impact of tariffs. However, given the uncertainty regarding the current tariffs, as well as the potential for additional trade actions by the U.S. or other countries in the future, any future impact on our operations and financial results is uncertain and these impacts could be more significant than those we have experienced in the past. Further, we can provide no assurance that the strategies we implemented to mitigate the impact of such tariffs or other trade actions will continue to be successful. To the extent that our supply chain, costs, sales, or profitability are negatively affected by the tariffs or other trade actions, our business, financial condition, and results of operations may be materially adversely affected.

We are exposed to fluctuations in currency exchange rates that could negatively impact our financial results and cash flows. We execute all foreign sales from our U.S.-based facilities and inter-company transactions in U.S. dollars in order to partially mitigate the impact of foreign currency fluctuations. However, a portion of our international revenues and expenses are denominated in foreign currencies. Accordingly, we experience the risks of fluctuating currencies and corresponding exchange rates. In each of fiscal years 2026 and 2025, we recognized net losses of approximately $0.1 million on foreign currency transactions. Any such fluctuations that result in a less favorable exchange rate could adversely affect a portion of our revenues and expenses, which could negatively impact our results of operations and financial condition.

We also source certain raw materials from outside the U.S. Some of those materials, priced in non-dollar currencies, fluctuate in price due to the value of the U.S. dollar against non-dollar-pegged currencies, especially the Euro and Renminbi. As the dollar strengthens, this increases our margins and helps with our ability to reach positive cash flow and profitability. If the strength of the U.S. dollar decreases, the cost of foreign sourced materials could increase, which would adversely affect our financial condition and results of operations. If the Euro or Renminbi currencies were to trend unfavorably against the U.S. dollar on a long-term basis, then we would seek to rebalance our strategic materials sourcing.

We are dependent on a few key customers, and the loss of any key customer could cause a significant decline in our revenues. In fiscal year 2026, we had sales to three customers that comprised an aggregate of approximately 37% of our annual revenue, with one customer at 24% of our sales, another customer at 7% of our sales, and the third customer at 6% of our sales. In fiscal year 2025, we had sales to three customers that comprised an aggregate of approximately 23% of our annual revenue, with one customer at 9% of our sales, another customer at 7% of our sales, and the third customer at 6% of our sales. However, two of the three largest customers for fiscal year 2025 was not among the three largest for fiscal year 2026, which demonstrates that our customer concentration is not static. We continue to diversify our business in order to minimize our sales concentration risk. Our current strategy of providing the domain expertise and the extensive “know how” in optical design, fabrication, production and testing technologies will allow our customers to focus on their own development efforts, without needing to develop subject matter expertise in optics. By providing the bridge into the optical solution world, we partner with our customers on a long-term basis, create value to our customers, and capture that value through the long-term supply relationships we develop. However, the loss of any of these customers, or a significant reduction in sales to any such customer, would adversely affect our revenues.

Our stock price may fluctuate widely. Many factors, including, but not limited to, future announcements concerning the Company, its competitors or customers, as well as quarterly variations in operating results, announcements of technological innovations, seasonal or other variations in anticipated or actual results of operations, changes in earnings estimates by analysts or reports regarding the Company’s industries in the financial press or investment advisory publications, could cause the market price of the Company’s stock to fluctuate substantially. In addition, the Company’s stock price may fluctuate widely for reasons which may be unrelated to operating results. Also, any information concerning the Company, including projections of future operating results could in the future contribute to volatility in the market price of the Company’s Class A Common Stock.

As a U.S. corporation with international operations, we are subject to the U.S. Foreign Corrupt Practices Act and other similar foreign anti-corruption laws, as well as other laws governing our operations. If we fail to comply with these laws, we could be subject to civil or criminal penalties, other remedial measures, and legal expenses, which could adversely affect our business, financial condition, and results of operations. Our operations are subject to anti-corruption laws, including the U.S. Foreign Corrupt Practices Act (“FCPA”), and other foreign anti-corruption laws that apply in countries where we do business. The FCPA and these other laws generally prohibit us and our employees and intermediaries from offering, promising, authorizing or making payments to government officials or other persons to obtain or retain business or gain some other business advantage. In addition, we cannot predict the nature, scope, or effect of future regulatory requirements to which our international operations might be subject or the manner in which existing laws might be administered or interpreted. Operations outside of the U.S. may be affected by changes in trade production laws, policies, and measures, and other regulatory requirements affecting trade and investment.

We are also subject to other laws and regulations governing our international operations, including regulations administered by the U.S. Department of Commerce’s Bureau of Industry and Security, the U.S. Department of Treasury’s Office of Foreign Asset Control, and various non-U.S. government entities, including applicable export control regulations, economic sanctions on countries and persons, customs, requirements, currency exchange regulations, and transfer pricing regulations (collectively, the “Trade Control Laws”).

Despite our compliance programs, there can be no assurance that we will be completely effective in ensuring our compliance with all applicable anti-corruption laws, including the FCPA or other legal requirements, or Trade Control Laws. If we are not in compliance with the FCPA and other foreign anti-corruption laws or Trade Control Laws, we may be subject to criminal and civil penalties, disgorgement, and other sanctions and remedial measures, and legal expenses, which could have an adverse impact on our business, financial condition, results of operations and liquidity. Likewise, any investigation of any potential violations of the FCPA, other anti-corruption laws, or Trade Control Laws by the U.S. or foreign authorities could also have an adverse impact on our reputation, business, financial condition, and results of operations.

Uncertainties related to the use of artificial intelligence (“AI”) in our business may result in harm to our business and reputation. To remain competitive, we have made and will continue to make investments in AI technologies, infrastructure, talent, and training. Our use of AI technologies is at an early stage, and these investments may not yield anticipated benefits or may become obsolete more quickly than expected. The use of AI tools to assist in the preparation of our work product or our corporate operations may expose us to new forms of liability. Ineffective, inadequate or premature use of AI could result in unintended consequences, including competitive harm, regulatory penalties, legal liability, loss or misuse of intellectual property, disclosure of confidential or proprietary information, data privacy or cybersecurity incidents, or brand or reputational harm. In addition, if we fail to successfully deploy AI in our business activities, products, or services, or fail to keep pace with technological advancements and competitors that may more effectively adopt AI, our competitiveness, growth prospects and financial performance could be adversely affected. We may also incur significant costs in evaluating or implementing AI technologies, and such investments may not result in anticipated benefits or returns.

We rely, in large part, on key business and sales relationships for the successful commercialization of our products, which, if not developed or maintained, will have an adverse impact on achieving market awareness and acceptance and will result in a loss of business opportunities. To achieve wide market awareness and acceptance of our products and technologies, as part of our business strategy, we will attempt to enter into a variety of business relationships with other companies that will incorporate our technologies into their products and/or market products based on our technologies. The successful commercialization of our products and technologies will depend in part on our ability to meet obligations under contracts with respect to the products and related development requirements. The failure of these business relationships will limit the commercialization of our products and technologies, which will have an adverse impact on our business development and our ability to generate revenues.

If we are unable to effectively compete, our business and operating results could be negatively affected. We face substantial competition in the optical markets in which we operate. Many of our competitors are large public and private companies that have longer operating histories and significantly greater financial, technical, marketing, and other resources than we have. As a result, these competitors are able to devote greater resources than we can to the development, promotion, sale, and support of their products. In addition, the market capitalization and cash reserves of several of our competitors are much larger than ours, and, as a result, these competitors are better positioned than we are to exploit markets, develop new technologies, and acquire other companies in order to gain new technologies or products. We also compete with manufacturers of conventional spherical lens products and aspherical lens products, producers of optical quality glass, and other developers of gradient lens technology, as well as telecommunications product manufacturers. In both the optical lens and communications markets, we are competing against, among others, established international companies, especially in Asia. Many of these companies also are primary customers for optical and communication components, and, therefore, have significant control over certain markets for our products. There can be no assurance that existing or new competitors will not develop technologies that are superior to or more commercially acceptable than our existing and planned technologies and products or that competition in our industry will not lead to reduced prices for our products. If we are unable to successfully compete with existing companies and new entrants to the markets we compete in, our business, results of operations, and financial condition could be adversely affected.

We anticipate further reductions in the average selling prices of some of our products over time, and, therefore, must increase our sales volumes, reduce our costs, and/or introduce higher margin products to reach and maintain consistent profitable results. We have experienced decreases in the average selling prices of some of our products over the last ten years, including most of our passive component products. We anticipate that as certain products in the optical component and module market become more commodity-like, the average selling prices of our products will decrease in response to competitive pricing pressures, new product introductions by us or our competitors, or other factors. We attempt to offset anticipated decreases in our average selling prices by increasing our sales volumes and/or changing our product mix. If we are unable to offset anticipated future decreases in our average selling prices by increasing our sales volumes or changing our product mix, our net revenues and gross margins will decline, increasing the projected cash needed to fund operations. To address these pricing pressures, we must develop and introduce new products and product enhancements that will generate higher margins, continue to reduce costs, and/or change our product mix in order to generate higher margins. If we cannot maintain or improve our gross margins, our financial position, and results of operations may be harmed.

Because of our limited product offerings, our ability to generate additional revenues may be limited without additional growth. With our strategic transition into more value-added solutions, and the addition of Visimid in July 2023, we reorganized our products into four product groups: infrared components, visible components, assemblies and modules, and engineering services. The addition of G5 Infrared in February 2025 and AML in January 2026 further expands our product offerings and proprietary infrared materials. In fiscal year 2026, sales of infrared components represented approximately 30% of our net revenues, sales of visible components represented approximately 22% of our net revenues, sales of assemblies and modules represented 44% of our revenues, and engineering services represented 4% of our revenues. In the future, we expect growth primarily from our assemblies and modules product group, the vertical integration of which will be supported by the infrared components product group. Continued and expanding market acceptance of these products, particularly infrared products based on our proprietary chalcogenide materials (Germanium alternatives), is critical to our future success. There can be no assurance that our current or new products will achieve market acceptance at the rate at which we expect, or at all, which could adversely affect our results of operations and financial condition.

Our failure to accurately forecast material requirements could cause us to incur additional costs, have excess inventories, or have insufficient materials to manufacture our products. Our material requirements forecasts are based on actual or anticipated product orders. It is very important that we accurately predict both the demand for our products and the lead times required to obtain the necessary materials. Lead times for materials that we order vary significantly and depend on factors, such as specific supplier requirements, the size of the order, contract terms, and the market demand for the materials at any given time. If we overestimate our material requirements, we may have excess inventory, which would increase our costs. If we underestimate our material requirements, we may have inadequate inventory, which could interrupt our manufacturing and delay delivery of our products to our customers. Any of these occurrences would negatively impact our results of operations. Additionally, in order to avoid excess material inventories, we may incur cancellation charges associated with modifying existing purchase orders with our vendors, which, depending on the magnitude of such cancellation charges, may adversely affect our results of operations.

If we do not achieve acceptable manufacturing yields our operating results could suffer. The manufacture of our products involves complex and precise processes. Our manufacturing costs for several products are relatively fixed, and, thus, manufacturing yields are critical to the success of our business and our results of operations. Changes in our manufacturing processes or those of our suppliers could significantly reduce our manufacturing yields. In addition, we may experience manufacturing delays and reduced manufacturing yields upon introducing new products to our manufacturing lines. The occurrence of unacceptable manufacturing yields or product yields could adversely affect our financial condition and results of operations.

If our customers do not qualify our manufacturing lines for volume shipments, our operating results could suffer. Our manufacturing lines have passed our qualification standards, as well as our technical standards. However, our customers may also require that our manufacturing lines pass their specific qualification standards, and that we be registered under international quality standards, beyond our ISO 9001:2015 certification. This customer qualification process determines whether our manufacturing lines meet the customers’ quality, performance, and reliability standards. Generally, customers do not purchase our products, other than limited numbers of evaluation units, prior to qualification of the manufacturing line for volume production. We may be unable to obtain customer qualification of our manufacturing lines or we may experience delays in obtaining customer qualification of our manufacturing lines. If there are delays in the qualification of our products or manufacturing lines, our customers may drop the product from a long-term supply program, which would result in significant lost revenue opportunity over the term of each such customer’s supply program, or our customers may purchase from other manufacturers. The inability to obtain customer qualification of our manufacturing lines, or the delay in obtaining such qualification, could adversely affect our financial condition and results of operations.

Our future success depends on our key executive officers and our ability to attract, retain, and motivate qualified personnel. Our future success largely depends upon the continued services of our key executive officers, management team, and other engineering, sales, marketing, manufacturing, and support personnel. If one or more of our key employees are unable or unwilling to continue in their present positions, we may not be able to replace them readily, if at all. Additionally, we may incur additional expenses to recruit and retain new key employees. If any of our key employees joins a competitor or forms a competing company, we may lose some or a significant portion of our customers. Because of these factors, the loss of the services of any of these key employees could adversely affect our business, financial condition, and results of operations.

Our continuing ability to attract and retain highly qualified personnel will also be critical to our success because we will need to hire and retain additional personnel to support our business strategy. We expect to continue to hire selectively in the manufacturing, engineering, sales and marketing, and administrative functions to the extent consistent with our business levels and to further our business strategy. We face significant competition for skilled personnel in our industry. This competition may make it more difficult and expensive to attract, hire, and retain qualified managers and employees. Because of these factors, we may not be able to effectively manage or grow our business, which could adversely affect our financial condition or business.

We face product liability risks, which could adversely affect our business. The sale of our optical products involves the inherent risk of product liability claims by others. We do not currently maintain product liability insurance coverage. Product liability insurance is expensive, subject to various coverage exclusions, and may not be obtainable on terms acceptable to us if we decide to procure such insurance in the future. Moreover, the amount and scope of any coverage may be inadequate to protect us in the event that a product liability claim is successfully asserted. If a claim is asserted and successfully litigated by an adverse party, our financial position and results of operations could be adversely affected.

Business interruptions could adversely affect our business. We manufacture our products at manufacturing facilities located in Orlando, Florida; Hudson, New Hampshire; Plano, Texas; and Riga, Latvia. Up until completing the sale of LPOIZ, we also manufactured our products in a manufacturing facility in Zhenjiang, China. Our revenues are dependent upon the continued operation of these facilities. The Orlando Facility lease expires March 31, 2034. The Hudson, New Hampshire facility lease expires in December 2031. The Plano, Texas lease expires in August 2030. The Riga Facility is subject to two leases which expire in December 2030. Our operations are vulnerable to interruption by fire, hurricane winds and rain, earthquakes, electric power loss, telecommunications failure, and other events beyond our control. We do have a business continuity and recovery plan for our facilities however, we do not have a backup facility, other than our other facilities, or contractual arrangements with any other manufacturers in the event of a casualty to or destruction of any facility or if any facility ceases to be available to us for any other reason. If we are required to rebuild or relocate either of our manufacturing facilities, a substantial investment in improvements and equipment would be necessary. We carry only a limited amount of business interruption insurance, which may not sufficiently compensate us for losses that may occur.

Our facilities may be subject to electrical blackouts as a consequence of a shortage of available electrical power. We currently do not have backup generators or alternate sources of power in the event of a blackout. If blackouts interrupt our power supply, we would be temporarily unable to continue operations at such facility.

Any losses or damages incurred by us as a result of blackouts, rebuilding, relocation, or other business interruptions, could result in a significant delay or reduction in manufacturing and production capabilities, impair our reputation, harm our ability to retain existing customers and to obtain new customers, and could result in reduced sales, lost revenue, increased costs and/or loss of market share, any of which could substantially harm our business and our results of operations.

Risks Related to Our Intellectual Property

If we are unable to protect and enforce our intellectual property rights, we may be unable to compete effectively. We believe that our intellectual property rights are important to our success and our competitive position, and we rely on a combination of patent, copyright, trademark, and trade secret laws and restrictions on disclosure to protect our intellectual property rights in the United States and internationally. Although we have devoted substantial resources to the establishment and protection of our intellectual property rights, the actions taken by us may be inadequate to prevent imitation or improper use of our products by others or to prevent others from claiming violations of their intellectual property rights by us. In addition, we cannot assure that, in the future, our patent applications will be approved, that any patents that may be issued will protect our intellectual property, or that third parties will not challenge any issued patents. Other parties may independently develop similar or competing technology or design around any patents that may be issued to us. We also rely on confidentiality procedures and contractual provisions with our employees, consultants, and corporate partners to protect our proprietary rights, but we cannot assure the compliance by such parties with their confidentiality obligations, which could be very time consuming, expensive, and difficult to enforce.

It may be necessary to litigate to enforce our patents, copyrights, and other intellectual property rights, to protect our trade secrets, to determine the validity of and scope of the proprietary rights of others, or to defend against claims of infringement or invalidity. Such litigation can be time consuming, distracting to management, expensive, and difficult to predict. Our failure to protect or enforce our intellectual property could have an adverse effect on our business, financial condition, prospects, and results of operation.

We do not have patent protection for our formulas and processes, and a loss of ownership of any of our formulas and processes would negatively impact our business. We believe that we own our formulas and processes. However, we have not sought, and do not intend to seek, patent protection for all of our formulas and processes. Instead, we rely on the complexity of our formulas and processes, trade secrecy laws, and employee confidentiality agreements. However, we cannot assure you that other companies will not acquire our confidential information or trade secrets or will not independently develop equivalent or superior products or technology and obtain patent or similar rights. Although we believe that our formulas and processes have been independently developed and do not infringe the patents or rights of others, a variety of components of our processes could infringe existing or future patents, in which event we may be required to modify our processes or obtain a license. We cannot assure you that we will be able to do so in a timely manner or upon acceptable terms and conditions and the failure to do either of the foregoing would negatively affect our business, results of operations, financial condition, and cash flows.

Data breach and breakdown of information and communication technologies. In the course of our business, we collect and store sensitive data, including intellectual property. We could be subject to service outages or breaches of security systems which may result in disruption, unauthorized access, misappropriation, or corruption of this information. We rely on our information technology systems to effectively manage our operational and financial functions. We increasingly rely on information technology systems to process, transmit, and store electronic information. In addition, a significant portion of internal communications, as well as communication with customers and suppliers, depends on information technology. We are exposed to the risk of cyber incidents in the normal course of business. Cyber incidents may be deliberate attacks for the theft of intellectual property, other sensitive information or cash or may be the result of unintentional events. Like most companies, our information technology systems may be vulnerable to interruption due to a variety of events beyond our control, including, but not limited to, physical or electronic break-ins, vendor service outages, terrorist attacks, telecommunications failures, computer viruses, hackers, foreign governments, and other security issues. We have technology security initiatives and data recovery plans in place to mitigate our risk to these vulnerabilities, but these measures may not be adequate, or implemented properly, or executed timely to ensure that our operations are not disrupted. We have insurance coverage for cyber liability, but there can be no assurances that the amount of coverage will be adequate or that insurance proceeds will be available for a particular claim.

Although we have not experienced an incident, potential consequences of a material cyber incident include damage to our reputation, litigation, system disruptions, shutdowns, unauthorized disclosure of confidential information, and increased cyber security protection and remediation costs. Such consequences could materially and adversely affect our results of operations.

We may become involved in intellectual property disputes and litigation, which could adversely affect our business. We anticipate, based on the size and sophistication of our competitors and the history of rapid technological advances in our industry that several competitors may have patent applications in progress in the U.S. or in foreign countries that, if issued, could relate to products similar to ours. If such patents were to be issued, the patent holders or licensees may assert infringement claims against us or claim that we have violated other intellectual property rights. These claims and any resulting lawsuits, if successful, could subject us to significant liability for damages and invalidate our proprietary rights. The lawsuits, regardless of their merits, could be time-consuming and expensive to resolve and would divert management time and attention. Any potential intellectual property litigation could also force us to do one or more of the following, any of which could harm our business and adversely affect our financial condition and results of operations:

• stop selling, incorporating or using our products that use the disputed intellectual property;
• obtain from third parties a license to sell or use the disputed technology, which license may not be available on reasonable terms, or at all; or
• redesign our products that use the disputed intellectual property.

22

Cybersecurity Risk Management and Strategy

We have established and implemented a comprehensive cybersecurity risk management program aimed at safeguarding the confidentiality, integrity, and availability of our critical information technology (“IT”) systems and sensitive information.

Our cybersecurity risk management program is fully integrated within our broader enterprise risk management framework, leveraging consistent methodologies, incident reporting channels, and governance processes. These approaches are used not only for cybersecurity risks but also for managing other areas of risk, including legal, compliance, strategic, operational, and financial. The program is continuously assessed and refined, using the National Institute of Standards and Technology Cybersecurity Framework (“NIST CSF”) as a guiding tool to identify, prioritize, and manage cybersecurity risks that could significantly affect our operations, financial performance, or business objectives.

Key components of our cybersecurity risk management program include:

• Cybersecurity Incident Response Plan (“CIRP”): Our CIRP ensures we are prepared to respond to, report, and remediate any cybersecurity incidents effectively. Led by the Chief Information Officer (“CIO”), our corporate compliance and risk management team manages all aspects of incident response. For significant incidents, additional third-party resources would be mobilized to mitigate impact on the business.
• Continuous Vulnerability Management: We continuously monitor our IT networks and legacy systems to identify threats that may adversely affect critical systems and information, ensuring that our broader IT environment remains secure.
• Third-Party Cybersecurity Consultants: We engage trusted third-party cybersecurity experts to enhance our security posture, perform assessments, and provide strategic guidance, ensuring continuous improvement in our cybersecurity approach.
• Cybersecurity Awareness Training: Employees, incident response teams, and senior management undergo regular training to ensure awareness of evolving cybersecurity threats and the appropriate responses.
• Risk Management for Third-Party Providers: We conduct due diligence when selecting and periodically reviewing third-party service providers, suppliers, and vendors to ensure they comply with necessary cybersecurity standards.

Cybersecurity Governance

Our executive team and Board of Directors are actively involved in overseeing cybersecurity risks. The executive team and the CIO oversee the Company's information security efforts and cybersecurity governance. This team regularly reviews our cybersecurity posture and any incidents that have occurred.

The management of our cybersecurity risks is led by the CIO and the executive team who bring over 35 years of combined experience in cybersecurity, IT, and risk management. This team is responsible for the overall cybersecurity risk management program, collaborating with internal teams, external consultants, and cross-functional divisions. Their efforts are supported by threat intelligence from various sources, and they regularly benchmark our security practices against the NIST CSF.

Our CIO reports regularly to the executive team, providing updates on cybersecurity strategies, current threats, and long-term planning. Additionally, the CIO provides an annual cybersecurity update, presenting an overview of significant cybersecurity risks and their potential impact on internal controls.

In the event of a significant cybersecurity incident that escalates to a corporate crisis, the executive team and the Board will be engaged in alignment with the corporate compliance and risk protocols.

While LightPath faces various cybersecurity threats as part of routine operations, no risks have been identified to date that could materially impact the company’s operations, strategy, financial condition, or overall business performance.

Our properties consist primarily of leased office and manufacturing facilities. Our corporate headquarters office and manufacturing facility is located in Orlando, Florida and our additional manufacturing and office facilities are located in Hudson, New Hampshire, Plano, Texas, Garland, Texas, Zhenjiang, China and Riga, Latvia. The following schedule presents the approximate square footage of our offices and facilities as of June 30, 2026:

*In July 2026, we announced the sale of LPOIZ, which includes the Zhenjiang Facility. We expect to close the transaction in September 2026, and the lease will be assigned to the purchasers as of the date of closing.

Our territorial sales personnel maintain an office from their homes to serve their geographical territories.

For additional information regarding our facilities, please see Item 1. Business in this Annual Report on Form 10-K. For additional information regarding leases, see Note 13, Leases, to the Notes to the Consolidated Financial Statements to this Annual Report on Form 10-K.

From time to time, we are involved in various legal actions arising in the normal course of business. We currently have no material legal proceeding to which we are a party to or to which our properties are subject to and, to the best of our knowledge, no material adverse legal activity is anticipated or threatened.

You should read the following discussion and analysis by our management of our financial condition and results of operations in conjunction with our consolidated financial statements and the accompanying notes.

The following discussion contains forward-looking statements that involve risks and uncertainties, such as statements of our plans, objectives, expectations and intentions. Our actual results could differ materially from those discussed in the forward-looking statements. Please also see the cautionary language at the beginning of this Annual Report on Form 10-K regarding forward-looking statements.

The following discussions also include use of non-GAAP measures discussed in more detail under the heading “Non-GAAP Financial Measures.”

Results of Operations

Operating Results for Fiscal Year Ended June 30, 2026 Compared to the Fiscal Year Ended June 30, 2025:

Revenue.

Revenue for fiscal year 2026 was approximately $71.7 million, an increase of 93%, as compared to $37.2 million in fiscal year 2025. We categorize our products into four product groups: (i) infrared components; (2) visible components; (3) assemblies and modules; and (iv) engineering services. Note that certain fiscal year 2025 amounts have been reclassified from infrared components to assemblies and modules to conform to current classification.

Revenue generated by the infrared components product group was approximately $21.2 million in fiscal year 2026, an increase of $7.3 million, or 52%, as compared to the prior fiscal year. Of this increase, approximately $1.3 million was attributable to increased sales by G5 Infrared of coating services, reflecting a full fiscal year, compared to less than half of fiscal 2025 due to the timing of the acquisition. AML, which was acquired in January 2026, contributed approximately $2.2 million to the increase in sales of infrared components. The remaining $3.8 million increase in revenue from infrared components is primarily due to increases in sales to defense and industrial customers in Europe.

Revenue generated by the visible components product group was approximately $15.5 million for fiscal year 2026, an increase of $3.8 million, or 32%, as compared to the prior fiscal year. The increase was primarily driven by increases in sales to industrial customers the U.S., Asia and Europe, including several new programs.

Revenue from the assemblies and modules product group was approximately $31.9 million in fiscal year 2026, an increase of $23.5 million, or 281%, as compared to fiscal year 2025. Of this increase, approximately $23.1 million is due to an increase in G5 Infrared sales of cameras and modules, including previously announced large defense and security programs.

Revenue from engineering services was nearly flat for fiscal 2026, as compared to the same period of the prior fiscal year. This includes Visimid’s contract with Lockheed Martin, as well as several other non-recurring engineering projects, the largest of which was for another defense customer. The timing and dollar value of deliverables is not always consistent, which causes revenue for the programs within this product group to fluctuate from period to period.

Cost of Sales and Gross Profit.

Gross profit for fiscal year 2026 was approximately $25.8 million, an increase of 155%, as compared to approximately $10.1 million in fiscal year 2025. Total cost of sales was approximately $45.9 million for fiscal year 2026, compared to $27.1 million for fiscal year 2025, an increase of 70%. Gross margin as a percentage of revenue was 36% for fiscal year 2026 as compared to 27% for fiscal year 2025. The increase in gross margin for fiscal year 2026 was driven by the increase in sales across nearly all product groups, as well as improved gross margins across each of the product groups. Fiscal year 2026 also includes a full year of G5 Infrared revenue and gross profit, particularly in the assemblies and modules product group. The assemblies and modules product group increased from 23% of revenue in fiscal year 2025, to 44% of revenue in fiscal year 2026, and these products typically have higher gross margins than the component product groups. Gross profit for fiscal year 2025 was also unusually low, partially due to the unfavorable impact of an approximately $0.5 million increase in inventory reserve charges primarily related to visible components where revenue had declined for the past several years.

Selling, General and Administrative.

For fiscal year 2026, Selling, General and Administrative (“SG&A”) costs were approximately $24.7 million, an increase of approximately $8.8 million, or 56%, as compared to the prior fiscal year. The increase in SG&A costs was partially attributable to including a full year of G5 Infrared SG&A costs for 2026, an increase of $2.3 million, as compared to fiscal 2025 due to the timing of the acquisition. The AML transaction also added $1.0 million in SG&A for fiscal 2026, including acquisition-related costs. In addition, we have increased our sales and marketing spend to promote new products, including personnel costs, travel and tradeshows. We have also increased our spend on information technology to meet heightened security standards as required by our customers, and for acquisition integration projects. Our SG&A personnel costs have also increased due to filling certain vacant executive roles and accruing for incentive compensation plans for employees.

New Product Development.

New product development costs were approximately $3.8 million in fiscal year 2026, an increase of approximately $0.7 million, or 24%, as compared to the prior fiscal year. New product development costs increased with the addition of G5 Infrared product development costs, and other additional engineering personnel. These increases were partially offset by a decrease in outside services and materials utilized for development projects, due to timing of such projects. Management views the investment in new product development as an important part of execution of our strategy, and plans to continue to grow our investment in new product development.

Amortization of Intangible Assets.

Amortization of intangible assets increased by $0.4 million for fiscal year 2026, as compared to the prior fiscal year due to the addition of amortization of intangible assets associated with the G5 Infrared and AML acquisitions. See Note 3, Acquisitions, in the Consolidated Financial Statements included in this Annual Report on Form 10-K, for further information.

Change in Fair Value of Acquisition Liabilities.

Change in fair value of acquisition liabilities increased by $14.1 million for fiscal year 2026, as compared to the prior fiscal year primarily related to the earnouts associated with the G5 Infrared acquisition, where the amounts earned were greater than the fair values estimated and recorded at the date of acquisition. See Note 3, Acquisitions, in the Consolidated Financial Statements included in this Annual Report on Form 10-K, for further information.

Other Expense.

Interest income, net, was approximately $0.01 million for fiscal year 2026, compared to interest expense, net, of approximately $1.1 million in the prior fiscal year. For fiscal 2026, we earned interest on our cash balance following the December Offering (as defined below) and the June Offering (as defined below), partially offset by interest expense on finance leases and interest and amortization of loan issuance costs on the Acquisition Notes (as defined below) until they were redeemed in December 2025. Interest expense for fiscal year 2025 includes financing costs associated with the warrant liability of approximately $0.3 million, and the interest and amortization of loan issuance costs associated with the Bridge Note (as defined below), executed in August 2024, which was subsequently replaced by the Acquisition Notes executed in February 2025. See Note 14, Loans Payable, in the Consolidated Financial Statements included in this Annual Report on Form 10-K, for definitions and further information.

We recorded a loss in extinguishment of debt of $0.5 million during fiscal year 2026, upon redemption of the Acquisition Notes, based on the difference between the carrying value of the debt being extinguished and the redemption amount. During fiscal year 2025, we recorded a loss on extinguishment of debt of $0.4 million related to the exchange of the Bridge Note for an Acquisition Note in connection with the financing of the acquisition of G5 Infrared. The loss is based on the difference between the carrying value of the debt being extinguished and the fair value of the new debt, plus any other payments exchanged (e.g. the aforementioned Class A Common Stock, Series G Convertible Preferred Stock and warrants).

In fiscal year 2025, we recorded an expense associated with the change in fair value of the warrant liability of $1.4 million. The fair value of the warrants was re-measured each reporting period from the date of issuance until the warrants were reclassified from liabilities to equity as a result of the action taken at a special meeting of the stockholders on June 16, 2025. See Note 8, Stockholders' Equity, in the Consolidated Financial Statements included in this Annual Report on Form 10-K, for definitions and further information.

Other expense, net, was approximately $0.1 million for fiscal year 2026, compared to $0.1 million for fiscal year 2025. Other expense, net, for fiscal years 2026 and 2025 primarily consists of net foreign exchange losses. We execute all foreign sales from our U.S. facilities and inter-company transactions in U.S. dollars, partially mitigating the impact of foreign currency fluctuations. Assets and liabilities denominated in non-United States currencies, primarily the Chinese Yuan and Euro, are translated at rates of exchange prevailing on the balance sheet date, and revenues and expenses are translated at average rates of exchange for the year.

Income Taxes.

During fiscal year 2026, we recorded income tax expense of approximately $0.3 million, compared to $0.04 million in fiscal year 2025, primarily related to our operations in China. Income taxes for fiscal years 2026 and 2025 include Chinese withholding tax expenses of $0.1 million and $0.2 million, respectively, the majority of which are associated with intercompany dividends declared by LPOIZ, payable to us as the parent company. While these repatriation transactions result in some additional Chinese withholding taxes, LPOIZ currently qualifies for a reduced Chinese income tax rate; therefore, the total tax on those earnings was still below the normal income tax rate. Income tax expense for fiscal years 2026 and 2025 are also offset by deferred income tax benefits from the turnaround of temporary differences, and increased by deferred income tax expense related to certain indefinite lived temporary differences. Please refer to Note 9, Income Taxes, in the Notes to the Consolidated Financial Statements in this Annual Report on Form 10-K for additional information related to each of our tax jurisdictions.

Net Income (Loss).

Net loss for fiscal year 2026 was approximately $20.5 million, or $0.38 basic and diluted loss per share, compared to approximately $14.9 million, or $0.36 basic and diluted loss per share, for fiscal year 2025. The increase in net loss for fiscal year 2026, as compared to fiscal year 2025, is primarily attributable to the approximately $14.1 million increase in the change in fair value of acquisition liabilities, which is included in operating expenses, as well as the increase in SG&A and new product development costs, which were largely offset by the increase in gross profit.

Weighted-average common stock shares outstanding were 53,374,275 for both basic and diluted in fiscal year 2026, compared to 40,874,068 for both basic and diluted in fiscal year 2025. The increase in weighted-average basic common shares was primarily due to the December Offering and the June Offering. The increase is also attributable to: (i) the 3,468,698 shares of Class A Common Stock issued upon the exercise of warrants; (ii) the 8,692,097 shares of Class A Common Stock issued upon conversion of Series G Convertible Preferred Stock; (iii) the 524,124 shares of Class A Common Stock issued in conjunction with the acquisitions of Visimid, G5 Infrared and AML, including earnouts; and (iv) the issuance of shares of Class A Common Stock under the 2015 ESPP and underlying vested RSUs and RSAs. Potential dilutive common stock equivalents were excluded from the calculation of diluted shares for all periods presented, as their effects would have been anti-dilutive due to net losses in those periods.

Liquidity and Capital Resources

At June 30, 2026, we had working capital of approximately $103.7 million and total cash and cash equivalents of approximately $93.2 million. Approximately 4% of our total cash and cash equivalents was held by our foreign subsidiaries in China and Latvia. Cash and cash equivalents held by our foreign subsidiaries in China and Latvia were generated in-country as a result of foreign earnings. Historically, we considered unremitted earnings held by our foreign subsidiaries to be permanently reinvested. However, during fiscal year 2020, we began declaring intercompany dividends to remit a portion of the earnings of our foreign subsidiaries to us, as the U.S. parent company. It is still our intent to reinvest a portion of earnings generated by our foreign subsidiaries, however we also plan to repatriate a portion of their earnings.

In China, before any funds can be repatriated, the retained earnings of the legal entity must equal at least 50% of the registered capital. During fiscal years 2026 and 2025, we repatriated approximately $0.2 million and $1.2 million, respectively, from LPOIZ. As of June 30, 2026, LPOIZ had approximately $0.7 million in retained earnings available for repatriation, based on earnings accumulated through December 31, 2025, the end of the most recent statutory tax year, that remained undistributed as of June 30, 2026. In July 2026, we repatriated $0.4 million, ahead of the closing of the divestiture of LPOIZ which is expected to occur in September 2026.

Loans payable as of June 30, 2026 consisted of the 2023 Equipment Loan (as defined below).

In May 2023, ISP Latvia entered into an equipment loan with a third party financial institution (the “2023 Equipment Loan”). The 2023 Equipment Loan is collateralized by certain equipment. The initial advances under the 2023 Equipment Loan totaled 260,258 EUR (or approximately USD $0.3 million), the proceeds of which were used to make prepayments to a vendor for equipment to be delivered at a future date. The final advance for the final payment to the equipment vendor was 132,674 EUR (or approximately USD $0.1 million). The 2023 Equipment Loan is payable over 48 months, with monthly installments beginning January 1, 2024. The 2023 Equipment Loan bears interest at the six-month EURIBOR rate, plus 2.84% (5.20% as of June 30, 2026). As of June 30, 2026, the outstanding balance on the 2023 Equipment Loan was approximately 164,000 EUR (or USD $0.2 million). For additional information regarding the 2023 Equipment Loan, see Note 14, Loans Payable, to the Notes to the Consolidated Financial Statements to this Annual Report on Form 10-K.

Equity Financing.

On June 1, 2026, we entered into a securities purchase agreement with a selling stockholder, North Run Strategic Opportunities Fund I, LP (“North Run”) and certain institutional investors for the purchase and sale of an aggregate of 7,142,800 shares of Class A Common Stock at an offering price of $14.00 per share, consisting of 3,571,400 shares of Class A Common Stock sold by the Company and 3,571,400 shares of Class A Common Stock sold by North Run (the "June Offering"), resulting in gross proceeds to us of approximately $50.0 million. The June Offering closed on June 3, 2026.

On December 12, 2025, we entered into an underwriting agreement (the “Underwriting Agreement”) with Canaccord Genuity LLC and Craig-Hallum Capital Group LLC, as representatives of the several underwriters named therein (the “Underwriters”), relating to an underwritten public offering (the “December Offering”) of 7,750,000 shares of the Company’s Class A Common Stock, at a public offering price of $7.75 per share. Pursuant to the terms of the Underwriting Agreement, we granted, and the Underwriters exercised, a 30-day option to purchase up to an additional 1,162,500 shares of Class A Common Stock in the December Offering at the public offering price. The December Offering closed on December 15, 2025.

On February 18, 2025, we announced the closing of the acquisition of G5 Infrared and the related financing, including the issuance of shares of Series G Convertible Preferred Stock. For additional information, refer to Note 3, Acquisitions and Note 8, Stockholders' Equity, to the Notes to the Consolidated Financial Statements to this Annual Report on Form 10-K.

In the short term, we have sufficient capital to fund the continued expansion of our operations. In the longer term, 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.

Cash Flows – Operating.

Cash used in operations was $10.2 million for fiscal 2026, compared to approximately $8.3 million for fiscal year 2025. The cash used in operations for fiscal 2026 was primarily due to the following: (i) payment of the first earnout payment for the acquisition of G5 Infrared, of which $3.8 million was classified in operating activities, representing the amount in excess of the contingent consideration liability recognized as of the acquisition date; and (ii) investments in working capital of $9.6 million, largely driven by accounts receivable and inventory due to the growth in revenue, as well as supplier prepayments for critical materials with long lead times. The cash used in operations during fiscal year 2025 was driven by the net loss, after considering non-cash items, which was partially driven by significant legal and consulting expenses related to the acquisition of G5 Infrared. In addition, inventory increased $1.4 million (net of inventory included in the acquisition of G5 Infrared), while the increase in accounts receivable was largely offset by increases in accounts payable and accrued liabilities.

We anticipate continued improvement in our cash flows provided by operations in future years and as we continue to focus on managing our receivables, payables and inventory, while continuing to grow our sales and improve gross margins, with moderate increases in general, administrative, sales and marketing and new product development costs.

Cash Flows – Investing.

During fiscal years 2026 and 2025, we expended approximately $7.0 million and $18.5 million, net, to acquire AML and G5 Infrared respectively, as disclosed in Note 3, Acquisitions, in the Consolidated Financial Statements in this Annual Report on Form 10-K. During fiscal 2026, we expended approximately $6.3 million for capital equipment, as compared to approximately $1.3 million during fiscal year 2025. During fiscal years 2026 and 2025 our capital expenditures were primarily related to expansion of our glass fabrication capacity, as well as metrology and infrared coating equipment.

We anticipate a higher level of capital expenditures during fiscal year 2027, to support the demand currently in backlog and to enhance our capacity and capabilities; however, the total amount expended will depend on sales growth opportunities and other circumstances.

Cash Flows – Financing.

Net cash provided by financing activities was approximately $111.0 million for fiscal year 2026, compared to approximately $29.3 million in fiscal year 2025. Cash provided by financing activities for fiscal year 2026 reflects approximately $120.2 million in net proceeds from public and private equity placements, offset by $5.7 million in principal payments on loans and finance leases. Cash provided by financing activities for fiscal year 2025 reflects approximately $29.8 million from financing related to the acquisition of G5 Infrared, offset by $0.4 million in principal payments on loans and finance leases.

How We Operate

We have continuing sales of two basic types: (i) sales of standard product configurations and (ii) sales of customized products or products developed specifically for a certain customer. In this latter type of business, we work with customers to help them determine optical specifications and then create certain optical designs for them, including complex multi-component, optical system or sub-system designs that we call “engineered solutions.” This is followed by “sampling” or prototyping small numbers of the product for the customers’ test and evaluation. Thereafter, should a customer conclude that our specification or design is the best solution to their product need; we negotiate and “win” a contract (sometimes called a “design win”) – whether of a “blanket purchase order” type or a supply agreement. The strategy is to create an annuity revenue stream that makes the best use of our production capacity and longer-term revenue planning, as compared to the turns business, which is unpredictable and uneven. A key business objective is to convert as much of our business to the design win and annuity model as is possible. We face several challenges in doing so:

• Maintaining the design and new product development capability, including a high-quality and responsive optical design engineering staff, opto-mechanical engineering, and all related disciplines;
• The fact that as our customers take products of this nature into higher volume, commercial production they begin to work seriously to reduce costs – which may lead them to turn to larger producers, domestic or overseas, even if sacrificing quality; and
• Our small business mass means that we can only offer a moderate amount of total productive capacity before we reach financial constraints imposed by the need to make additional capital expenditures – in other words, because of our limited cash resources and cash flow, we may not be able to service every opportunity that presents itself in our markets without arranging for such additional capital expenditures.

Despite these challenges to winning more “annuity” business, we nevertheless believe we can be successful in procuring this business because of our unique capabilities in optical design engineering that we make available on the market to our current and potential customers looking for specific solutions to their needs. Additionally, we believe that we offer value to some customers as a source of supply in the U.S. should they be unwilling to commit to purchase their supply of critical component(s) from foreign sources. For information regarding revenue recognition related to our various revenue streams, refer to Critical Accounting Policies and Estimates in this Annual Report on Form 10-K.

Our Key Performance Indicators

Usually on a weekly basis, management reviews several performance indicators. Some of these indicators are qualitative and others are quantitative. These indicators change from time to time as the opportunities and challenges in the business change. They are mostly non-financial indicators, such as units of shippable output by product line, production yield rates by major product line, and the output and yield data from significant intermediary manufacturing processes that support the production of the finished shippable product. These indicators can be used to calculate such other related indicators as fully yielded unit production per-shift, which varies by the product and our state of automation in production of that product at any given time. Higher unit production per shift means lower unit cost, and, therefore, improved margins or improved ability to compete, where desirable, for price sensitive customer applications. The data from these reports is used to determine tactical operating actions and changes. We believe that our non-financial production indicators, such as those noted, are proprietary information.

Financial indicators that are usually reviewed at the same time include the major elements of the micro-level business cycle:

• sales backlog;
• revenue by product group;
• inventory levels;
• accounts receivable levels and quality;
• EBITDA and Adjusted EBITDA; and
• other key indicators.

These indicators are similarly used to determine tactical operating actions and changes and are discussed in more detail below. Management will evaluate these key indicators as we transition to our new strategic plan to determine whether any changes or updates to our key indicators are warranted.

Sales Backlog.

We believe sales growth has been and continues to be a key indicator of success. Our best view into the efficacy of our sales efforts is in our “order book.” Our order book equates to sales “backlog.” It has a quantitative and a qualitative aspect: quantitatively, our backlog’s prospective dollar value and qualitatively, what percent of the backlog is scheduled by the customer for date-certain delivery. We monitor and evaluate our total backlog, which includes all firm orders requested by a customer that are reasonably believed to remain in the backlog and be converted into revenues. This includes customer purchase orders and may include amounts under supply contracts if they meet the aforementioned criteria.

Quarterly backlog levels for fiscal years 2026 and 2025 are as follows:

Of the total backlog of $110.9 million as of June 30, 2026, approximately $85.6 million is requested by the customer for delivery within one year, which is expected to be converted into revenues during fiscal year 2027.

The increase in total backlog from June 30, 2025 to June 30, 2026 of $73.6 million includes approximately $58.0 million in orders from a leading global technology customer for advanced infrared camera systems expected to ship in calendar year 2026 and 2027, as well as several other multi-million dollar orders from other customers. During fiscal 2026, we received a significant contract renewal for advanced infrared optics for a critical international military program. The acquisition of AML also added backlog of $1.1 million as of March 31, 2026. The timing of multi-year contract renewals are not always consistent and, thus, backlog levels may increase substantially when annual and multi-year orders are received, and decrease as shipments are made against these orders. We anticipate that our existing annual and multi-year contracts will be renewed in future quarters.

Markets continue to experience growing demand for infrared products used in the defense, security, industrial and first responder sectors. Demand for infrared products, including assemblies and cameras, continues to be fueled by interest in lenses made with our BD6 glass and our new BDNL materials. With the global supply of germanium concentrated in Russia and China, recent global events and increases in restrictions on the sourcing of these materials are generating high levels of interest in germanium alternatives such as our proprietary BlackDiamond materials, AML's AMTIR materials and other materials we are currently developing under an exclusive license with the Naval Research Lab.

Revenue by Product Group.

The following table sets forth revenue dollars by our four product groups for the three months and year ended June 30, 2026 and 2025, with certain fiscal year 2025 amounts reclassified from infrared components to assemblies and modules to conform to current classification:

(unaudited)

Three months ended June 30, 2026 compared to three months ended June 30, 2025.

Our revenue increased by $9.0 million in the fourth quarter of fiscal year 2026, as compared to the same quarter of the prior fiscal year, primarily driven by increases in infrared components and assemblies and modules.

Revenue generated by the infrared components product group for the fourth quarter of fiscal year 2026 was $7.1 million, an increase of 56%, as compared to the same quarter of the prior fiscal year. AML, which was acquired during the quarter of fiscal 2026, contributed $1.1 million in sales of infrared materials during the fourth quarter of fiscal 2026. The remaining $1.5 million increase in revenue is primarily due to increases in sales to defense and industrial customers in the U.S. and Europe.

Revenue from the visible components product group for the fourth quarter of fiscal year 2026 was $4.2 million, an increase of 49% as compared to the same quarter of the prior fiscal year. The increase was driven by sales to industrial customers in Asia and Europe, as well as U.S. defense customers and distributors. In July 2026, we announced the divestiture of LPOIZ, our Chinese subsidiary, which will reduce our revenue from visible components following the closing of the transaction, which is expected to occur in September 2026.

Revenue from assemblies and modules was $9.1 million, an increase of 98%, as compared to the same quarter of the prior fiscal year. This increase is primarily driven by sales of G5 Infrared sales of cameras and modules, including the previously announced program with a large global technology customer and other defense and security customers, primarily for border patrol and C-UAS systems.

Revenue from engineering services increased by $0.5 million for the fourth quarter of fiscal 2026, as compared to the same quarter of the prior fiscal year. This increase was primarily driven by Visimid’s contract with Lockheed Martin, where the timing and dollar value of deliverables is not always consistent, which causes revenue for this product group to fluctuate from period to period. For the fourth quarter of fiscal 2026, the revenue recognized against this contract was more than in the fourth quarter of fiscal 2025. Management expects that the engineering revenue from a current Lockheed Martin program will decline, as the program transitions from development into production, yet other new programs that are starting now will generate comparable or higher engineering services revenue.

Year ended June 30, 2026 compared to year ended June 30, 2025.

Our revenue increased by approximately 93%, for fiscal year 2026, as compared to the prior fiscal year, primarily driven by increases in infrared components and assemblies and modules. Note that fiscal 2026 includes G5 Infrared for a full year, whereas the prior year included less than five months. In addition, we acquired AML during fiscal 2026, which contributed to infrared components since acquisition in January.

Revenue generated by the infrared components product group for fiscal year 2026 was $21.2 million, an increase of approximately 52%, as compared to the prior fiscal year. Of this increase, approximately $1.3 million is due to an increase in G5 Infrared sales of coating services. AML contributed $2.2 million to the increase in sales of infrared components for fiscal year 2026. The remaining $3.8 million increase in revenue is primarily due to increases in sales to defense and industrial customers in the U.S. and Europe.

Revenue from the visible components product group for fiscal year 2026 was $15.5 million, an increase of 32%, as compared to the prior fiscal year. The increase was primarily driven by sales to industrial customers in Asia, as well as in the U.S. and Europe. In July 2026, we announced the divestiture of LPOIZ, which will reduce our revenue from visible components following the closing of the transaction, which is expected to occur in September 2026.

Revenue from assemblies and modules for fiscal year 2026 was $31.9 million, an increase of $23.5 million, or 281%, as compared to the prior fiscal year. Of this increase, approximately $23.1 million is due to an increase in G5 Infrared sales of cameras and modules, including the previously announced program with a large global technology customer as well as other defense and security customers.

Revenue from engineering services for fiscal year 2026 was nearly flat, as compared to the prior fiscal year. Revenue from Visimid’s contract with Lockheed Martin was less than in the prior fiscal year, due to timing, partially offset by a non-recurring engineering project for another defense customer. The timing and dollar value of deliverables is not always consistent, which causes revenue for this product group to fluctuate from period to period. Projects related to this product group are expected to drive sales growth in the other product groups over time, as these new products transition to from development and prototyping to production.

Inventory Levels.

We manage inventory levels to minimize investment in working capital but still have the flexibility to meet customer demand to a reasonable degree. We review our inventory for obsolete items quarterly. While the mix of inventory is an important factor, including adequate safety stocks of long lead-time materials, an important aggregate measure of inventory in all phases of production is the quarter’s ending inventory expressed as a number of days’ worth of the quarter’s cost of sales, also known as “days cost of sales in inventory,” or “DCSI.” It is calculated by dividing the quarter’s ending inventory by the quarter’s cost of goods sold, multiplied by 365 and divided by 4. Generally, a lower DCSI measure equates to a lesser investment in inventory, and, therefore, more efficient use of capital. The table below shows our DCSI for the immediately preceding eight fiscal quarters:

Our average DCSI for fiscal year 2026 was 115, compared to 130 for fiscal year 2025. The decrease in average DCSI is driven by the increase in sales, while managing inventory levels to support our growing backlog. We strive to maintain DCSI of 110 to 120 days.

Accounts Receivable Levels and Quality.

Similarly, we manage our accounts receivable to minimize investment in working capital. We measure the quality of receivables by the proportions of the total that are at various increments past due from our normally extended terms, which are generally 30 days. The most important aggregate measure of accounts receivable is the quarter’s ending balance of net accounts receivable expressed as a number of days’ worth of the quarter’s net revenues, also known as “days sales outstanding,” or “DSO.” It is calculated by dividing the quarter’s ending net accounts receivable by the quarter’s net revenues, multiplied by 365 and divided by 4. Generally, a lower DSO measure equates to a lesser investment in accounts receivable and, therefore, more efficient use of capital. The table below shows our DSO for the preceding eight fiscal quarters:

Our average DSO for fiscal year 2026 was 56, compared to 67 for fiscal year 2025. The decrease in average DSO for fiscal year 2026 is due to higher than normal DSO in fiscal year 2025. This was due to the addition of G5 Infrared revenue, which had a higher concentration of shipments in the third month of the third and fourth fiscal quarters of 2025 which drove the accounts receivable balance up disproportionately to sales. We strive to maintain a DSO of less than 60, which we achieved for fiscal year 2026.

Other Key Indicators.

Other key indicators include various operating metrics, some of which are qualitative and others are quantitative. These indicators change from time to time as the opportunities and challenges in the business change. They are mostly non-financial indicators, such as on time delivery trends, units of shippable output by major product line, production yield rates by major product line, and the output and yield data from significant intermediary manufacturing processes that support the production of the finished shippable product. These indicators can be used to calculate such other related indicators as fully-yielded unit production per-shift, which varies by the particular product and our state of automation in production of that product at any given time. Higher unit production per shift means lower unit cost, and, therefore, improved margins or improved ability to compete where desirable for price sensitive customer applications. The data from these reports is used to determine tactical operating actions and changes. Management also assesses business performance and makes business decisions regarding our operations using certain non-GAAP measures. These non-GAAP measures are described in more detail below under the heading “Non-GAAP Financial Measures”.

Non-GAAP Financial Measures

We report our historical results in accordance with GAAP; however, our management also assesses business performance and makes business decisions regarding our operations using certain non-GAAP financial measures. We believe these non-GAAP financial measures provide useful information to management and investors that is supplementary to our financial condition and results of operations computed in accordance with GAAP; however, we acknowledge that our non-GAAP financial measures have a number of limitations. As such, you should not view these disclosures as a substitute for results determined in accordance with GAAP, and they are not necessarily comparable to non-GAAP financial measures that other companies use.

EBITDA and Adjusted EBITDA.

EBITDA and Adjusted EBITDA are non-GAAP financial measures used by management, lenders, and certain investors as a supplemental measure in the evaluation of some aspects of a corporation’s financial position and core operating performance. Investors sometimes use EBITDA as it allows for some level of comparability of profitability trends between those businesses differing as to capital structure and capital intensity by removing the impacts of depreciation and amortization. EBITDA also does not include changes in major working capital items, such as receivables, inventory, and payables, which can also indicate a significant need for, or source of, cash. Since decisions regarding capital investment and financing and changes in working capital components can have a significant impact on cash flow, EBITDA is not a good indicator of a business’s cash flows. We use EBITDA for evaluating the relative underlying performance of our core operations and for planning purposes. We calculate EBITDA by adjusting net income to exclude net interest expense, income tax expense or benefit, depreciation, and amortization, thus the term “Earnings Before Interest, Taxes, Depreciation and Amortization” and the acronym “EBITDA.”

We also calculate an adjusted EBITDA, which excludes: (1) stock compensation expenses; (2) the loss on extinguishment of debt; (3) the effect of the non-cash income or expense associated with the mark-to-market adjustments, related to the warrants; (4) the effect of non-cash income or expenses associated with the fair value adjustments related to the acquisition earnout liabilities; (5) acquisition costs, including legal fees and due diligence; and (6) the effect of foreign exchange gains or losses. Management uses adjusted EBITDA to evaluate our underlying operating performance and for planning and forecasting future business operations.

The fair value of the warrants was re-measured each reporting period until the warrants were reclassified from liabilities to equity as a result of the action taken at a special meeting of the stockholders on June 16, 2025. The change in the fair value of the warrants was either recognized as a non-cash expense or non-cash income each reporting period from February 18, 2025, the date of issuance, through June 16, 2025, when the liability was reclassified to equity. The change in the fair value of the warrants was not impacted by our actual operations but was instead strongly tied to the change in the market value of our Class A Common Stock. Please refer to Note 8, Stockholders’ Equity, in the Notes to the Consolidated Financial Statements in this Annual Report on Form 10-K for additional information.

We believe EBITDA and Adjusted EBITDA are helpful for investors to better understand our underlying business operations. The following table adjusts net income to EBITDA and Adjusted EBITDA for the three months and year ended June 30, 2026 and 2025:

(unaudited)

Our adjusted EBITDA for the quarter ended June 30, 2026 was approximately $2.1 million, compared to a loss of $2.0 million for the same period of the prior fiscal year. The increase in adjusted EBITDA in the fourth quarter of fiscal year 2026 is primarily attributable to higher sales and gross margin, partially offset by higher SG&A costs.

Our adjusted EBITDA for fiscal year 2026 was approximately $4.2 million, compared to a loss of $5.1 million for fiscal year 2025. The increase in adjusted EBITDA for fiscal year 2026 is primarily attributable to higher sales and gross margin, partially offset by higher SG&A and new product development costs.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of income and expense during the reporting periods presented. Our critical estimates include the allowance for trade receivables, which is made up of allowances for credit losses, allowances for obsolete inventory, valuation of compensation expense on stock-based awards and accounting for income taxes. Although we believe that these estimates are reasonable, actual results could differ from those estimates given a change in conditions or assumptions that have been consistently applied. We also have other policies that we consider key accounting policies, such as our policy for revenue recognition, however, the application of these policies does not require us to make significant estimates or judgments that are difficult or subjective.

Management has discussed the selection of critical accounting policies and estimates with our Board, and the Board has reviewed our disclosure relating to critical accounting policies and estimates in this Annual Report on Form 10-K. The critical accounting policies used by management and the methodology for its estimates and assumptions are as follows:

Inventory obsolescence allowance is calculated by reserving 100% for items that have not been sold in two years or that have not been purchased in two years. These items, as identified, are allowed for at 100%, as well as allowing 50% for other items deemed to be slow moving within the last twelve months and allowing 25% for items deemed to have low material usage within the last six months. Items of which we have excess supply are also reserved at 25% to 100%, depending on usage rates. The parts identified are adjusted for recent order and quote activity to determine the final inventory allowance. To date, our actual results have been materially consistent with our estimates, and we expect such estimates to continue to be materially consistent in the future.

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 we expect to receive in exchange for those products or services. The performance obligations for the sale of optical components and assemblies are satisfied at a point in time. We generally bear all costs, risk of loss, or damage and retain 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. Revenues from product development agreements are recognized as performance obligations are met in accordance with the terms of the agreements and upon transfer of control of products, reports or designs to the customer. Product development agreements are generally short term in nature, with revenue recognized upon satisfaction of the performance obligation, and transfer of control of the agreed-upon deliverable. Invoiced amounts for VAT related to sales are posted to the balance sheet and are not included in revenue.

Stock-based compensation is measured at grant date, based on the fair value of the award, and is recognized as an expense over the employee’s requisite service period. We estimate the fair value of each stock option as of the date of grant using the Black-Scholes-Merton pricing model. Our directors, officers, and key employees were granted stock-based compensation through our Amended and Restated Omnibus Incentive Plan, as amended (the “Omnibus Plan”), through October 2018 and after that date, the 2018 Stock and Incentive Compensation Plan (the “SICP”). Most options granted under the Omnibus Plan and the SICP vest ratably over two to four years and generally have ten-year contract lives. The volatility rate is based on four-year historical trends in common stock closing prices and the expected term was determined based primarily on historical experience of previously outstanding options. The interest rate used is the U.S. Treasury interest rate for constant maturities. The likelihood of meeting targets for option grants that are performance based are evaluated each quarter. If it is determined that meeting the targets is probable, then the compensation expense will be amortized over the remaining vesting period.

Goodwill and amortizable intangible assets acquired in a business combination are recognized at fair value using generally accepted valuation methods. Purchased intangible assets other than goodwill are amortized over their useful lives unless these lives are determined to be indefinite. Purchased intangible assets are carried at cost, less accumulated amortization. Amortization is computed over the estimated useful lives of the respective assets, generally two to fifteen years. We periodically reassess the useful lives of intangible assets when events or circumstances indicate that useful lives have significantly changed from the previous estimate. Amortizable intangible assets consist primarily of customer relationships, developed technology and tradenames. They are generally valued as the present value of estimated cash flows expected to be generated from the asset using a risk-adjusted discount rate. When determining the fair value of our intangible assets, estimates and assumptions about future expected revenue and remaining useful lives are used. Goodwill and intangible assets are tested for impairment on an annual basis and during the period between annual tests if events or changes in circumstances indicate that the carrying value of goodwill may not be recoverable.

We assess the qualitative factors to determine whether it is more likely than not that the fair value of its reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the goodwill impairment analysis. If we determine that it is more likely than not that its fair value is less than its carrying amount, then the goodwill impairment test is performed. The fair value of the reporting unit is compared to its carrying amount, and if the carrying amount exceeds its fair value, then an impairment charge would be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value, up to the total amount of goodwill allocated to that reporting unit.

Accounting for income taxes requires estimates and judgments in determining income tax expense for financial statement purposes. These estimates and judgments occur in the calculation of tax credits, benefits, and deductions, and in the calculation of certain tax assets and liabilities, which arise from differences in the timing of the recognition of revenue and expense for tax and financial statement purposes. We assessed the likelihood of the realization of deferred tax assets and concluded that a valuation allowance is needed to reserve the amount of the deferred tax assets that may not be realized due to the uncertainty of the timing and amount of taxable income in certain jurisdictions. In reaching our conclusion, we evaluated certain relevant criteria, including the amount of pre-tax income generated during the current and prior two years, as adjusted for non-recurring items, the existence of deferred tax liabilities that can be used to realize deferred tax assets, the taxable income in prior carryback years in the impacted jurisdictions that can be used to absorb net operating losses and taxable income in future years. Our judgments regarding future profitability may change due to future market conditions, changes in U.S. or international tax laws and other factors. These changes, if any, may require material adjustments to these deferred tax assets, resulting in a reduction in net income or an increase in net loss in the period when such determinations are made, which, in turn, may result in an increase or decrease to our tax provision in a subsequent period.

In the ordinary course of global business, there are many transactions and calculations where the ultimate tax outcome is uncertain. Some of these uncertainties arise as a consequence of cost reimbursement and royalty arrangements among related entities, which could impact our income or loss in each jurisdiction in which we operate. Although we believe our estimates are reasonable, no assurance can be given that the final tax outcome of these matters will not be different than that which is reflected in our historical income tax provisions and accruals. In the event our assumptions are incorrect, the differences could have a material impact on our income tax provision and operating results in the period in which such determination is made. In addition to the factors described above, our current and expected effective tax rate is based on then-current tax law. Significant changes during the year in enacted tax law could affect these estimates.

Impact of recently issued accounting pronouncements that have recently been issued but have not yet been implemented by us are described in Note 2, Summary of Significant Accounting Policies, to the Notes to the Consolidated Financial Statements to this Annual Report on Form 10-K, which describes the potential impact that these pronouncements are expected to have on our financial condition, results of operations and cash flows.

As a Smaller Reporting Company as defined in Rule 12b-2 of the Exchange Act and in item 10(f)(1) of Regulation S-K, we are electing scaled disclosure reporting obligations with respect to this item and therefore are not required to provide the information requested by this Item 7A.

Evaluation of Disclosure Controls and Procedures

As of the end of the fiscal year ended June 30, 2026, we carried out an evaluation, under the supervision and with the participation of members of our management, including our CEO and our Chief Financial Officer (“CFO”), of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15(b) of the Exchange Act. Our CEO and our CFO have concluded, based on their evaluation, that as of June 30, 2026, our disclosure controls and procedures were effective at the end of the fiscal year to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit with the SEC under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to our management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.

Management’s Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Internal control over financial reporting is a process, including policies and procedures, designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with U.S. generally accepted accounting principles. Our management assessed our internal control over financial reporting based on the Internal Control—Integrated Framework (2013 Framework) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on the results of this assessment, our management concluded that our internal control over financial reporting was effective as of June 30, 2026 based on such criteria. In accordance with guidance issued by the Securities and Exchange Commission, companies are permitted to exclude acquisitions from their final assessment of internal control over financial reporting for the first fiscal year in which the acquisition occurred. Management’s assessment of the effectiveness of our internal control over financial reporting as of June 30, 2026, excludes the internal controls of Amorphous Materials, LLC, which was acquired on January 21, 2026. The acquired business represented approximately 1% of our total assets, excluding goodwill and intangible assets, 3% of our revenue, and 1% of our net loss as of and for the fiscal year ended June 30, 2026. Management is in the process of integrating and standardizing processes for G5 Infrared to conform to LightPath’s control framework.

A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met under all potential conditions, regardless of how remote, and may not prevent or detect all errors and all fraud. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within LightPath have been prevented or detected. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

Auditor’s Report on Internal Control over Financial Reporting

This Annual Report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our independent registered public accounting firm pursuant to rules of the SEC that permit us to provide only management’s report in this Annual Report.

Changes in Internal Controls over Financial Reporting

There have not been any significant changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fourth quarter ended June 30, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.