LIGHTPATH TECHNOLOGIES INC

**1. **Basis of Presentation

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

These unaudited Condensed Consolidated Financial Statements have been prepared in accordance with the requirements of Article8 of Regulation S-X promulgated under the Exchange Act and, therefore, donot include all information and footnotes necessary for a fair presentation of financial position, results of operations, and cash flows in conformity with accounting principles generally accepted in the United States of America (“GAAP”). These unaudited Condensed Consolidated Financial Statements should be read in conjunction with our Consolidated Financial Statements and related notes, included in our Annual Report on Form10-K for the fiscal year ended* June 30, 2026*, filed with the SEC. Unless otherwise stated, references to particular years or quarters refer to our fiscal years ended* June 30*and the associated quarters of those fiscal years.

These Condensed Consolidated Financial Statements are unaudited, but include all adjustments, including normal recurring adjustments, which, in the opinion of management, are necessary to present fairly our financial position, results of operations and cash flows for the interim periods presented. The Condensed Consolidated Balance Sheet as of* June 30, 2026* has been derived from the audited financial statements at that date but doesnot include all of the information and notes required by generally accepted accounting principles for complete financial statements. Results of operations for interim periods arenot necessarily indicative of the results that* may*be expected for the year as a whole. The unaudited Condensed Consolidated Financial Statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

**2. **Significant Accounting Policies

Our significant accounting policies are provided in Note2, Summary of Significant Accounting Policies, in the Consolidated Financial Statements in our Annual Report on Form10-K for the fiscal year ended* June 30, 2026*. There have beenno material changes to our significant accounting policies during thethree months ended* September 30, 2026*, from those disclosed in our Annual Report on Form10-K for the fiscal year ended* June 30, 2026*.

Use of Estimates

Management makes estimates and assumptions during the preparation of our unaudited Condensed Consolidated Financial Statements that affect amounts reported in the unaudited Condensed Consolidated Financial Statements and accompanying notes. Such estimates and assumptions could change in the future as more information becomes available, which, in turn, could impact the amounts reported and disclosed herein.

Fair Value of Financial Instruments

We account for financial instruments in accordance with the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification Topic820, “Fair Value Measurements and Disclosures” (“ASC820”), which provides a framework for measuring fair value and disclosure requirements for fair value measurements of assets and liabilities. ASC820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describesthree levels of inputs that* may*be used to measure fair value:

Level1 - Quoted prices in active markets for identical assets or liabilities.

Level2 - Inputs other than quoted prices included within Level1 that are either directly or indirectly observable.

Level3 - Unobservable inputs that are supported by little orno market activity, therefore requiring an entity to develop its own assumptions about the assumptions that market participants would use in pricing.

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Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management.

We valued certain financial instruments issued in connection with the acquisition ofG5 Infrared (as defined below) using Level3 fair value measurements, including warrants, Series G Convertible Preferred Stock (as defined below) and the Acquisition Notes (as defined below). As of* June 30, 2026and September 30, 2026,*only the Series G Convertible Preferred Stock remained outstanding.

In connection with the acquisitions of AML (as defined below) andG5 Infrared, the Company also valued the earnout liabilities and the intangible assets acquired using Level3 fair value methods. See Note3, Acquisition of Amorphous Materials, and Note4, Acquisition ofG5* Infrared*, to these unaudited Condensed Consolidated Financial Statements for additional information.

Other than as disclosed above, the Company doesnot have any other financial or non-financial assets or liabilities that would be characterized as Level1, Level2 or Level3 instruments.

**3. **Acquisition of Amorphous Materials

On* January 20, 2026,we entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”), by and among the Company, Amorphous Materials, LLC (“AML”), a Delaware limited liability company and wholly-owned subsidiary of the Company, Amorphous Materials, Inc., a Texas corporation (“Seller”) and other parties thereto, pursuant to which, subject to the terms and conditions set forth in the Asset Purchase Agreement, AML agreed to acquire substantially all of the assets (collectively, the “Assets”) and assume and acquire certain of the rights and liabilities of Seller (collectively, the “Liabilities” and such acquisition of Assets and assumption of the Liabilities together, the “AML Transaction”) relating to Seller’s business of compounding and melting a broad range of Chalcogenide glasses forthird*-party manufacturers. The AML Transaction closed on* January 21, 2026 (*the "AML Acquisition Date").

Aggregate consideration payable by the Company to Seller under the Asset Purchase Agreement in connection with the AML Transaction willnot exceed $10.0 million and consists of (i) a cash payment of $7.0 million that was paid at closing (the “Cash Consideration”) and (ii) contingent consideration that willnot exceed $3.0 million (the “Contingent Consideration”). The Contingent Consideration, if earned, is payable in shares of the Company's Class A common stock, $0.01 par value, ("Class A Common Stock"), to be issued in up tosix tranches of $500,000 each divided by the LPTH Stock Price (as calculated pursuant to the Asset Purchase Agreement) upon the achievement of certain milestones set forth in the Asset Purchase Agreement (each, a "Contingent Consideration Payment").

We accounted for the acquisition of AML using the acquisition method of accounting, which required us to measure identifiable assets acquired and liabilities assumed in the acquiree at their fair values as of the AML Acquisition Date, with the excess of the consideration transferred over those fair values recorded as goodwill. The remaining estimated potential earnout was accrued based on athird-party valuation and was recorded in Accrued liabilities based on its fair value as of the AML Acquisition Date. Additional milestones were achieved on* March 10, 2026,** June 4, 2026,** July 1, 2026 (two milestones) and September 25, 2026;accordingly, an additional 43,621,30,838,69,833 and 51,426 shares of Class A Common Stock were issued, respectively, (or approximately $483,000, $543,000, $1,110,000 and $513,000 at fair value as of the issuance dates, respectively) as Contingent Consideration Payments. Fair value adjustments of $0.2 million for thethree* months ended* September 30, 2026are included in “Change in fair value of acquisition liabilities” in the accompanying Consolidated Statement of Comprehensive Income (Loss). There wasno remaining earnout as of September 30, 2026.*

As of the AML Acquisition Date, the preliminary fair value of the aggregate consideration was approximately $9.2 million which consisted of (i) the Cash Consideration, (ii)39,897 shares of Class A Common Stock (or approximately $544,000 at fair value, determined by multiplying the number of shares issued by $13.64 per share, which was the closing price on the AML Acquisition Date), and (iii) potential earnout consideration subject to achievement offive additional technical milestones, as defined in the Asset Purchase Agreement. As of the AML Acquisition Date, the fair value of consideration transferred consisted of the following:

We determined the fair value of assets acquired and liabilities assumed by using available market information and various valuation methods that require judgement related to estimates. The following table summarizes the allocation of the fair value of consideration transferred to assets acquired and liabilities assumed as of the AML Acquisition Date:

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Intangible assets – All intangible assets acquired in the acquisition of AML are subject to amortization. The fair value of identifiable intangible assets acquired as of the AML Acquisition Date is as follows:

Goodwill– The $5.6 million of goodwill recognized is attributable to AML’s assembled workforce and expected synergies related to the expansion of our infrared glass portfolio and manufacturing capabilities. The acquired goodwill is expected to be deductible for Federal income tax purposes. See Note9, Goodwill and Intangible Assets, in these Notes to these unaudited Condensed Consolidated Financial Statements for further information.

The Company’s unaudited Condensed Consolidated Financial Statements reflect the financial results of AML beginning on the AML Acquisition Date. Revenue generated by AML is included in our infrared components product group.

The following table presents unaudited pro forma financial results of the operations acquired from AML. The pro forma results were prepared as if the acquisition of AML was completed on thefirst day of our fiscal year2026, * July 1, 2025.The pro forma results donot* include any integration synergies and arenot necessarily indicative of our results of operations that actually would have been obtained had the acquisition of AML been completed for the period presented, or which** may**be realized in the future.

**4. Acquisition ofG5 Infrared

In* February 2025,the Company acquiredG5* Infrared LLC, a New Hampshire limited liability company (“G5 Infrared”), pursuant to a Membership Interest Purchase Agreement (the*“G5* MIPA”) by and among the Company,G5 Infrared, the members ofG5 Infrared (collectively, the*“G5* Sellers”), and Kenneth R. Greenslade, solely in his capacity asG5 Sellers’ Representative. The Company has acquired from theG5 Sellers all of the issued and outstanding membership interests ofG5 Infrared, which closed on* February 18, 2025 (the“G5* Acquisition Date”).

Net assets and results of operations ofG5 Infrared are reflected in our financial results commencing on theG5 Acquisition Date. Revenue generated byG5 Infrared is included in our infrared components and assemblies and modules product groups.

We accounted for the acquisition ofG5 Infrared using the acquisition method of accounting, which required us to measure identifiable assets acquired and liabilities assumed in the acquiree at their fair values as of theG5 Acquisition Date, with the excess of the consideration transferred over those fair values recorded as goodwill.

The fair value of the aggregate consideration was approximately $27.1 million which consisted of (i) $20.3 million in cash, (ii)1,972,501 shares of Class A Common Stock (at a value of $2.47 per share, which was the closing price on theG5 Acquisition Date), and (iii) potential earnout consideration paid annually in fiscal years2026 and2027 subject to achievement of certain revenue and EBITDA targets set forth in theG5 MIPA.

Earnout payments of an aggregate of up to $23.0 million of additional consideration* maybe paid annually in fiscal years2026* and2027 subject to achievement of certain minimum EBITDA and revenue targets for theone andtwo-year periods beginning on thefirst full calendar month commencing after theG5 Acquisition Date, as set forth in theG5 MIPA. The earnout liability is remeasured each reporting period, which adjustments are included in the “Change in fair value of acquisition liabilities” in the accompanying unaudited Condensed Consolidated Statement of Comprehensive Income (Loss). Thefirst earnout period ended on* February 28, 2026,and, based on the targets achieved, thefirst* earnout payment was made to theG5 Sellers for $7.3 million in cash and $3.2 million in shares of Class A Common Stock (297,445 shares). Subsequently, on* April 16, 2026,we executed a side letter agreement with theG5* Sellers which set the yeartwo earnout payment amount and accelerated the payment timeline. Pursuant to the agreement, the earnout amount will be $9 million, comprised of $6.3 million in cash and $2.7 million in shares of Class A Common Stock, to be paid after* January 1, 2027and on or before January 15, 2027.The remaining earnout liability balance in the accompanying unaudited Condensed Consolidated Balance Sheets as of June 30, 2026and September 30, 2026*includes the agreed-upon earnout amount.

5. Acquisition of Visimid Technologies

In* July 2023,the Company acquired Liebert Consulting LLC, dba Visimid Technologies (“Visimid”), pursuant to a Membership Interest Purchase Agreement dated as of July 25, 2023.The purchase price included certain installment payments of restricted stock, of which 112,323 were issued during thethree* months ended* September 30, 2025.The purchase price also included an earnout which is contingent upon the award and completion of a specific customer contract. The balance of the estimated potential earnout isnot* material and is included in Accrued liabilities in the accompanying unaudited Condensed Consolidated Balance Sheet as of* September 30, 2026and June 30, 2026.*

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**6. **Revenue

Product Revenue

We are a manufacturer of infrared imaging cameras, optical assemblies, optical components and infrared materials. Optical components include precision molded glass aspheric optics, molded and diamond-turned infrared aspheric lenses, and other optical elements produced using other fabrication techniques. We design, develop, manufacture, and distribute optical systems, assemblies and components utilizing advanced optical manufacturing processes, multidisciplinary engineering and manufacturing technologies, and assembly and integration services. We also provide engineering services and perform research and development for optical solutions for a wide range of optics markets.

Revenue Recognition

Revenue is generally recognized upon transfer of control, including the risks and rewards of ownership, of products or services to customers in an amount that reflects the consideration we expect to receive in exchange for those products or services. 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. We present revenue net of sales taxes and any similar assessments.

Customary payment terms are granted to customers, based on credit evaluations. We currently donot have any contracts where revenue is recognized, but the customer payment is contingent on a future event. We record deferred revenue when cash payments are received or due in advance of revenue recognition. Deferred revenue was $1.9 million and $1.1 million as of* September 30, 2026* and* June 30, 2026*, respectively, and is included in accrued liabilities in the unaudited Condensed Consolidated Balance Sheets.

Nature of Products

Revenue from the sale of infrared cameras, optical components and assemblies is recognized upon transfer of control, including the risks and rewards of ownership, to the customer. The performance obligations for the sale of optical components and assemblies are satisfied at a point in time, generally upon shipment. Product development agreements for engineering services are generally short-term in nature, with revenue recognized upon satisfaction of the performance obligation, and transfer of control of the agreed-upon deliverable. Visimid hasone longer-term order with a defense customer which includes both product development and hardware deliverables where similar revenue recognition criteria are applied.

We categorize our products intofour product groups: (i) infrared components, (ii) visible components, (iii) assemblies and modules, and (iv) engineering services.

Revenue by product group for thethree months ended* September 30, 2026and2025* was as follows, with certain fiscal year2026 amounts reclassified from infrared components to assemblies and modules to conform to current classification:

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**7. **Inventories

The components of inventories include the following:

During thethree months ended* September 30, 2026*, the Company evaluated all allowed items and disposed of approximately $0.05 million of inventory items and wrote them off against the allowance for obsolescence.

The value of tooling in raw materials, net of the related allowance for obsolescence, was approximately $0.8 million as of both* September 30, 2026* and* June 30, 2026*.

**8. **Property and Equipment

Property and equipment are summarized as follows:

Depreciation expense was $1.0 million and $0.8 million for thethree-month periods ended* September 30, 2026and2025*, respectively.

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**9. **Goodwill and Intangible Assets

There wereno changes in the goodwill balance of $19.3 million during thethree months ended* September 30, 2026*. We assess goodwill for impairment annually during thefourth quarter or under certain circumstances more frequently, such as when events or circumstances indicate there* maybe impairment. There have beenno* events or changes in circumstances that indicate the carrying value of goodwill* may**not* be recoverable.

Amortizable intangible assets were comprised of:

Future amortization of intangible assets is as follows:

**10. **Income Taxes

A summary of our total income tax expense and effective income tax rate for thethree months ended* September 30, 2026and2025* is as follows:

The difference between our effective tax rates in the periods presented above and the federal statutory rate is due to the mix of taxable income and losses generated in our various tax jurisdictions, which include the United States (the “U.S.”), the People’s Republic of China, and the Republic of Latvia. For thethree months ended* September 30, 2026and2025*, income tax expense was primarily related to income taxes from our operations in China and Chinese withholding taxes on payments from our wholly-owned subsidiary, LightPath Optical Instrumentation (Zhenjiang) Co., Ltd. (“LPOIZ”), to LightPath for administrative services rendered.

We record net deferred tax assets to the extent we believe it is more likely thannot that some portion or all of these assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income. We consider the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. As of* September 30, 2026* and* June 30, 2026,our net deferred tax assets are related to the U.S. jurisdiction and we have provided a valuation allowance to reduce the deferred tax assets to the net amount we estimate is more-likely-than-not to be realized. Our net deferred tax assets as of September 30, 2026* and* June 30, 2026* consist primarily of federal and state tax credits with indefinite carryover periods. The net deferred tax liabilities as of* September 30, 2026* and* June 30, 2026* are related to LPOIZ, primarily resulting from timing differences related to accelerated depreciation on fixed assets.

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U.S. Federal and State Income Taxes

Our U.S. federal and state statutory income tax rate is estimated to be 25.5%. Based on our current assessment of the valuation allowance position on our net deferred tax assets, no additional tax expense or benefit is expected to be recorded on pre-tax income or losses generated in the U.S.

On* July 4, 2025,the One Big Beautiful Bill Act was enacted (“OBBBA”), introducing significant and wide-ranging changes to the U.S. federal tax system. Significant components include restoration of100%* accelerated tax depreciation on qualifying property including expansion to cover qualified production property. Another major aspect includes the return to immediate expensing of domestic research and experimental expenditures (“R&E”) which in some cases* mayinclude retroactive application back to2021* for businesses with gross receipts of less than*$31* million or accelerated tax deductions of R&E that was previously capitalized for larger businesses. The legislation also reinstates EBITDA-based interest deductions for tax purposes and makes several business tax incentives permanent. Less favorable business provisions include limitations on tax deductions for charitable contributions.

The OBBBA modified the U.S. International Tax provisions for Global Intangible Low-Taxed Income (“GILTI”), Foreign-Derived Intangible Income (“FDII”), and the Base-erosion Anti-abuse Tax (“BEAT”) effective for tax years starting after* December 31, 2025.The tax rate on GILTI, now renamed to Net CFC Tested Income (“NCTI”), is now12.6%.* The FDII rules, now renamed to Foreign Derived Deduction Eligible Income (“FDDEI”), now carry a14% tax rate on FDDEI eligible income. The OBBBA increases the BEAT rate from10% to10.5%.

The Company continues to assess the potential impact of this legislation on its future financial position, results of operations, and cash flows. In accordance with GAAP, the effects will be recognized in the period of enactment. While we donot currently anticipate that the provisions of OBBBA will have a material impact, we are currently evaluating any such impacts on a go-forward basis.

Income Tax Law of the People’s Republic of China

Our Chinese subsidiary, LPOIZ, is governed by the Income Tax Law of the People’s Republic of China. As of* September 30, 2026*, LPOIZ was subject to a statutory income tax rate of 15%. The net deferred tax liabilities included in these unaudited Condensed Consolidated Balance Sheets as of* September 30, 2026* and* June 30, 2026* are related to LPOIZ, primarily related to timing differences related to accelerated depreciation on fixed assets.

In* July 2026,we announced that we entered into an equity transfer 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 closed on October 30, 2026.As a condition to the sale, LPOIZ agreed to continue to supply products to LightPath as athird*-party vendor. The Company routinely declares intercompany dividends to remit a portion of the earnings of its foreign subsidiaries to the U.S. parent company. Accrued and unpaid withholding taxes were approximately $32,000 as of* June 30, 2026*. The final dividend payment pursuant to the equity transfer agreement was made during the quarter ended* September 30, 2026,and there areno* accrued or unpaid withholding taxes as of* September 30, 2026.Other than these withholding taxes, these intercompany dividends haveno* impact on the unaudited Condensed Consolidated Financial Statements.

Law of Corporate Income Tax of Latvia

Our Latvian subsidiary, ISP Optics Latvia, SIA (“ISP Latvia”), is governed by the Law of Corporate Income Tax of Latvia. Effective* January 1, 2018,the Republic of Latvia enacted tax reform with the following key provisions: (i) corporations arenot* subject to income tax, but are instead subject to a distribution tax on distributed profits (or deemed distributions, as defined) and (ii) the rate of tax was changed to 20%; however, distribution amounts arefirst divided by0.8 to arrive at the profit before tax amount, resulting in an effective tax rate of 25%. As a transitional measure, distributions of earnings prior to* January 1, 2018werenot* subject to tax if declared prior to* December 31, 2019.ISP Latvia declared an intercompany dividend to be paid to ISP Optics Corporation (“ISP”), its U.S. parent company, for the full amount of earnings accumulated prior to January 1, 2018.Distributions of this dividend have been fully settled and we currently donot* intend to distribute any earnings generated after* January 1, 2018.*If, in the future, we change such intention, we will accrue distribution taxes, if any, as profits are generated.

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**11. **Stock-Based Compensation

Our directors, officers, and key employees are granted stock-based compensation through our2002 Amended and Restated Omnibus Incentive Plan, as amended (the*“2002* Omnibus Plan”), through* October 2018and after that date, through our2018* Stock and Incentive Compensation Plan (the*“2018* SICP”). Such stock-based compensation* mayinclude, among other things, incentive stock options, non-qualified stock options, restricted stock awards (“RSAs”) and restricted stock units (“RSUs”). The2018* SICP is administered by the Compensation Committee of the Company's Board of Directors. To date, our stockholders approved an aggregate of 13,715,625 shares of our Class A Common Stock for issuance pursuant to awards granted under the2002 Omnibus Plan or SICP. As of* September 30, 2026*,2,033,188 shares of Class A Common Stock were authorized and available for issuance pursuant to awards granted under the2018 SICP. The Company’s executive officers are eligible to earn incentive compensation consisting of equity-based awards, as well as cash bonuses, based on the achievement of certain individual and/or Company performance goals set by the Compensation Committee.

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

The following table shows total stock-based compensation expense for thethree months ended* September 30, 2026and2025*, which is included in selling, general and administrative (“SG&A”) expenses in these unaudited Condensed Consolidated Statements of Comprehensive Income (Loss):

The LightPath Technologies, Inc. Employee Stock Purchase Plan (the*“2014* ESPP”) was adopted by the Company’s Board of Directors on* October 30, 2014and approved by the Company’s stockholders on January 29, 2015.The2014* ESPP expired on* January 29, 2025.A new Employee Stock Purchase Plan (the“2025* ESPP”) was approved by the stockholders on* June 16, 2025with thefirst* offering period beginning* July 1, 2025.The2025* ESPP permits employees to purchase Class A Common Stock through payroll deductions, which* may**not* exceed 15% of an employee’s compensation, at a pricenot less than 85% of the market value of the Class A Common Stock on specified dates (* June 30and December 31).Inno* event can any participant purchase more than $25,000 worth of shares of Class A Common Stock in any calendar year and an employee cannot purchase more than 8,000 shares on any purchase date within an offering period of12 months and 4,000 shares on any purchase date within an offering period ofsix months. This discount of approximately $6,600 for thethree months ended* September 30, 2026,is included in the selling, general and administrative expense in the accompanying Consolidated Statements of Comprehensive Income (Loss), which represents the value of the 15% discount given to the employees purchasing stock under the2025* ESPP.

Grant Date Fair Values and Underlying Assumptions; Contractual Terms

We estimate the fair value of each stock option as of the date of grant, using the Black-Scholes-Merton pricing model. The fair value of2025 ESPP shares is the amount of the discount the employee obtains at the date of the purchase transaction.

Most stock options granted vest ratably overtwo tofour years and are generally exercisable forten years. The assumed forfeiture rates used in calculating the fair value of RSA and RSU grants was 0%, and the assumed forfeiture rates used in calculating the fair value of options for performance and service conditions were 20% for each of thethree months ended* September 30, 2026and2025*. The volatility rate and expected term are based onseven-year historical trends in Class A Common Stock closing prices and actual forfeitures. The interest rate used is the U.S. Treasury interest rate for constant maturities.

The Company estimated the fair value of each stock option award as of the date of grant using the following assumptions:

Beginning in* March 2026,*we granted stock options to certain executives with vesting criteria linked to the Company's financial performance. The stock compensation expense related to these grants reflects the application of estimated probability assumptions related to the achievement of those financial targets. These assumptions will be evaluated for adjustment each fiscal quarter.

Restricted Stock Awards

RSAs are granted primarily to our executive officers, employees and consultants, and typically vest over aone tothree year period from the date of grant, although some* may*vest immediately upon grant. The stock underlying RSAs is issued upon vesting.

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Restricted Stock Units

RSUs are granted primarily to our directors, although RSU awards* mayalso be made to executive officers, employees and consultants. RSUs typically vest over aone tofour year period from the date of grant, although some may*vest immediately upon grant.

The Company issues new shares of Class A Common Stock upon the exercise of stock options and upon vesting of RSUs and RSAs, unless the recipient has elected to defer receipt of shares under the applicable Internal Revenue Service rules.

Information Regarding Current Share-Based Compensation Awards

A summary of the activity for share-based compensation awards in thethree months ended* September 30, 2026* is presented below:

As of* September 30, 2026*, there was approximately $21.4 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements, including stock options, RSAs and RSUs granted under the SICP. The expected compensation cost to be recognized is as follows:

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**12. **Earnings (Loss) Per Share

Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted-average number of shares of Class A Common Stock outstanding during each period presented. The computation of diluted earnings (loss) per share further assumes the potential dilutive effect of potential Class A Common Stock using the treasury-stock method and if-converted method, as applicable. During periods in which the average market price of the Class A Common Stock is above the applicable conversion price of the Company's convertible notes, the impact of conversion would be dilutive and such dilutive effect is reflected in diluted EPS. As a result, in periods where the average market price of the Class A Common Stock is above the conversion price, under the if-converted method, the Company calculates the number of shares issuable under the terms of the convertible notes based on the average market price of the stock during the period, and includes that number in the total diluted shares outstanding for the period. The Series G Convertible Preferred Stock are participating securities as the holders of such instruments participate in the event a dividend is paid on the Class A Common Stock, however the holders donot have a contractual obligation to share in the Company’s losses. As such, losses are attributed entirely to common stockholders. The computations for basic and diluted earnings (loss) per share of Class A Common Stock are described in the following table:

The following weighted-average potential dilutive shares werenot included in the computation of diluted earnings (loss) per share of Class A Common Stock, as their effects would be anti-dilutive:

We also accrued for certain acquisition liabilities related to theG5 Infrared and AML acquisitions during the periods presented, a portion of which is expected to be settled in shares of Class A Common Stock, however the number of shares to be issued is dependent upon the stock price at or near the date of settlement. As the number of shares isnot known, they havenot been included in the above potential dilutive shares. See Note3, Acquisition of Amorphous Materials and Note4,** Acquisition ofG5* Infrared,*to these unaudited Condensed Consolidated Financial Statements, for more information.

During the fiscal year ended* June 30, 2026,the remaining warrants issued in conjunction with the acquisition ofG5* Infrared were exercised by means of "cashless exercise" as defined in the respective warrant agreements.

During the fiscal year ended* June 30, 2026,certain holders of Series G Convertible Preferred Stock elected "optional conversion," as defined in the certificate of designations. Following the conversions,6,492 shares of Series G Convertible Preferred Stock remained issued and outstanding as of both June 30, 2026and September 30, 2026.*

**13. **Leases

Our leases primarily consist of operating leases related to our facilities located in Orlando, Florida; Plano, Texas; Hudson, New Hampshire; Riga, Latvia; and Zhenjiang, China, and finance leases related to certain equipment located in Orlando, Florida and Riga, Latvia. The operating leases for facilities are non-cancelable operating leases, with terms ending at various times through2034. We typically include options to renew (or terminate) in our lease term, and as part of our right-of-use (“ROU”) assets and lease liabilities, when it is reasonably certain that we will exercise such options. We currently haveeighteen finance lease agreements entered into during fiscal years2024 thru2027 with terms ranging from three tofive years. The finance leases are for computer and manufacturing equipment.

Our operating lease ROU assets and the related lease liabilities are initially measured at the present value of future lease payments over the lease term. One of our operating leases includes renewal options, which werenot included in the measurement of the operating lease ROU assets and related lease liabilities. The Orlando Facility lease was amended in* April 2021,and again in September 2021,to expand the space. The lease term was extended and will expire on March 31, 2034.*

Our wholly-owned subsidiary,G5 Infrared, has a lease agreement for a manufacturing and office facility in Hudson, New Hampshire, which expires* December 31, 2031.The Company’s wholly-owned subsidiary, Visimid, has a lease agreement for a manufacturing and office facility in Plano, Texas, which commenced September 1, 2025for afive-year term. The prior facility was relocated to this larger facility, and the lease of the prior facility, which was set to expire October 31, 2026,was terminated in March 2026*pursuant to a mutual agreement with the lessor.

Our wholly-owned subsidiary, LPOIZ, the sale of which occurred as of* October 30, 2026,hasa lease agreement for a manufacturing and office facility in Zhenjiang, China, which expires December 31, 2027.ISP’s wholly-owned subsidiary, ISP Latvia, hastwo lease agreements for a manufacturing and office facility in Riga, Latvia, which leases expire December 31, 2030.*

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The components of lease expense for thethree months ended* September 30, 2026and2025* were as follows:

Supplemental balance sheet information related to the leases as of* September 30, 2026* and* June 30, 2026* was as follows:

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

Supplemental cash flow information was as follows for thethree months ended* September 30, 2026and2025*:

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Future maturities of lease liabilities were as follows as of* September 30, 2026*:

**14. **Loans Payable

As of* September 30, 2026*, loans payable consisted ofone equipment loan. The Acquisition Notes (as defined below) were redeemed during the year ended* June 30, 2026.*

Acquisition Notes

On* February 18, 2025,in connection with the acquisition ofG5* Infrared, we executed and deliveredtwo senior secured promissory notes in an aggregate principal amount of $5.2 million (the “Acquisition Notes”), effective as of theG5 Acquisition Date. The Acquisition Notes accrued interest at the rate between 10-12% per annum (12% as of the date of extinguishment,* December 31, 2025),based on the ratio of indebtedness to EBITDA of the Company. We determined the embedded features related to the payment of variable interest and upon an event of default are clearly and closely related to the Acquisition Notes, and are thereforenot* bifurcated from the Acquisition Notes. The Acquisition Notes would have matured on* February 18, 2027,thesecond* anniversary of the issuance date, but were redeemed by the Company on* December 31, 2025,prior to the maturity date, at a redemption price equal to the portion of principal so redeemed plus all accrued and unpaid interest thereon. Pursuant to the terms of the Acquisition Notes, since the funds used for redemption werenot* generated internally by Company operations, the redemption amount was multiplied by 102%. We recorded a loss on extinguishment of debt of $0.5 million during thethree months ended* December 31, 2025,*based on the difference between the carrying value of the debt being extinguished and the redemption amount.

The Acquisition Notes were automatically convertible into shares of Series G Convertible Preferred Stock, which were in turn convertible into shares of Class A Common Stock, if the EBITDA reported by the Company for the calendar year ending* December 31, 2025,was less than approximately $4.9 million (the “Automatic Note Conversion”). We determined that the Automatic Note Conversion didnot* require bifurcation from the Acquisition Notes as the Automatic Note Conversion is (i) indexed to the Company’s own stock, (ii) settled in shares instead of cash, and (iii) only exercisable into a fixed number of shares at a fixed exercise price of $1,000 per share once it is triggered to convert and the conversion price can only be adjusted for standard antidilution provisions. The Acquisition Notes contained other redemption features which the Company determined didnot require bifurcation from the Acquisition Notes as these are clearly and closely related to the Acquisition Notes.

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Equipment Loans

In* December 2020,ISP Latvia received an equipment loan from athird* party (the*“2020* Equipment Loan”), which party is also a significant customer. The2020 Equipment Loan was collateralized by certain equipment. The initial advance under the2020 Equipment Loan was 225,000 EUR (or approximately USD $0.3 million), payable in equal installments over 60 months, the proceeds of which were used to make a prepayment to a vendor for equipment to be delivered at a future date. An additional 225,000 EUR (or approximately USD $0.3 million) was drawn in* September 2021,which proceeds were paid to the vendor for the equipment, payable in equal installments over 52 months. The2020* Equipment Loan was paid in full as of* December 31, 2025.*

In* May 2023,ISP Latvia entered into an equipment loan with athird* party financial institution (the*“2023* Equipment Loan”). The2023 Equipment Loan is collateralized by certain equipment. The initial advances under the2023 Equipment Loan was 260,258 EUR (or approximately USD $0.3 million), the proceeds of which were used to make a prepayment 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). The2023 Equipment Loan is payable over 48 months, with monthly installments that began on* January 1, 2024.The2023* Equipment Loan bears interest at thesix-month EURIBOR rate, plus 2.84% (4.94% as of* September 30, 2026).*

Future maturities of loans payable are as follows:

**15. **Foreign Operations

Assets and liabilities denominated in non-U.S. currencies 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 period. Gains or losses on the translation of the financial statements of a non-U.S. operation, where the functional currency is other than the U.S. dollar, are reflected as a separate component of equity, which was a cumulative gain of approximately $1.4 million and $1.3 million as of* September 30, 2026* and* June 30, 2026*, respectively. We recognized net foreign currency transaction losses of $0.04 million for both thethree months ended* September 30, 2026and2025*, included in the unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) in the line item entitled “Other income (expense), net.”

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Our cash and cash equivalents totaled approximately $82.9 million at* September 30, 2026*. Of this amount, approximately 6% was held by our foreign subsidiaries in China and Latvia. These foreign funds were generated in China and Latvia as a result of foreign earnings. We intend to reinvest earnings generated by our foreign subsidiary in Latvia. With respect to the funds generated by our foreign subsidiary in China, in* July 2026,we announced that we had entered into an equity transfer agreement to divest LPOIZ, which closed on October 30, 2026.We previously declared intercompany dividends to remit a portion of the earnings of LPOIZ to the U.S. parent company. During the quarter ended September 30, 2026,*the final dividend payment was remitted, pursuant to the equity transfer agreement.

Revenues from foreign countries for thethree months ended* September 30, 2026and2025* are as follows:

(1) The majority of shipments to the United Kingdom are for a customer that integrates products in the United Kingdom and returns them to their customers in the U.S.

Long-lived assets located in foreign countries as of* September 30, 2026* and* June 30, 2026* are as follows:

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**16. **Segment Reporting

The Company hasone reportable operating segment, the optics segment that is managed on a consolidated basis. The optics segment designs and manufactures products at locations in the U.S., Europe and Asia and manages the business activities on a consolidated basis. Our Chief Operating Decision Maker (“CODM”) is the chief executive officer. The CODM assesses performance for the optics segment and decides how to allocate resources based on consolidated net loss that also is reported on the consolidated statements of comprehensive income (loss) as consolidated net loss. The types of products and services from which the optics segment derives its revenues is described in Note6, Revenue. The accounting policies of the optics segment are the same as those described in Note2, Significant Accounting Policies, to these unaudited Condensed Consolidated Financial Statements. The measure of segment assets is reported on the consolidated balance sheet as total assets. See Note6, Revenue, for detail about revenue by product and service group, and Note15, Foreign Operations, for geographic information.

The CODM uses consolidated net loss to evaluate income generated from segment assets, and to determine whether to invest in new capabilities related to this segment. The CODM monitors budget to actual results for revenue, gross profit, operating expenses and net loss on a consolidated basis. The CODM reporting package includes non-operating items to reconcile to net income. The following table represents the financial information regularly reviewed by the CODM, in addition to the Consolidated Financial Statements. Interest expense is reported on consolidated statements of comprehensive income (loss) as interest expense, net; depreciation and amortization expense, stock-based compensation expense, and total expenditures for long-lived assets are reported on the consolidated statement of cash flows.

**17. **Contingencies

Legal

The Company, from time to time, is involved in various legal actions arising in the normal course of business. Management, after reviewing with legal counsel all of these actions and proceedings, believes that the aggregate losses, if any, willnot have a material adverse effect on the Company’s financial position or results of operations.

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Potential Impact of Economic Conditions in and Trade Relations with China

Prior to divesting our subsidiary in China effective* October 30, 2026,a portion of our business, results of operations, financial condition and prospects could have been influenced to a significant degree by economic, political, legal and social conditions in China. China’s economy differs from the economies of other countries in many respects, including with respect to the level of development, growth rate, amount of government involvement, control of foreign exchange and allocation of resources. Deteriorating economic conditions in China generally have led to lower demand for our products in China and thus lower revenues and net income for our subsidiary in China and the Company overall. A continuation of China’s current economic conditions or a further slowdown in the economic growth, an economic downturn, a recession, or other adverse economic conditions in China could impact our ongoing supply agreement with our former subsidiary, but isnot* expected to have a material adverse effect on our business and results of operations in future quarters.

In addition, China’s export limitations on Germanium and Gallium,two materials that are commonly used in infrared optical components, are becoming increasingly disruptive to our business with adverse impacts. The initial restrictions imposed in* July 2023required all international customers to provide an end user statement for approval before receiving an export license. Following that announcement, supply of Germanium was disrupted, thoughnot* completely stopped. This also resulted in significant price increases in the cost of Germanium material. Following these restrictions we proactively canceled a number of customer orders for Germanium, to reduce our exposure in case of a supply disruption.

Then, in* December 2024,China imposed additional restrictions applicable to exports to the United States, including a prohibition on exports of dual-use items to U.S. military users or for military uses and a policy under which exports of specified gallium- and germanium-related dual-use items to the United States would generallynot* be licensed. In* November 2025,China suspended the latter U.S.-specific restriction through November 27, 2026.However, the underlying export-license requirements remain in effect, the restrictions applicable to U.S. military users and military end uses remain in place, and China may*reinstate, extend, or modify its U.S.-specific restrictions.

As a purchaser of Germanium, we cannot provide any assurance that we will be able to obtain adequate supplies of Germanium, or that the timing or costs of obtaining such raw materials will be acceptable to us. We have taken proactive steps to minimize the orders we accept for Germanium products and therefore minimize our exposure to this risk, and are actively working with our customers to redesign their systems to use our BlackDiamond materials instead of Germanium-based materials. Additionally, we are actively collaborating with our customers to ensure those redesigned systems are tested and qualified as replacements for legacy Germanium-based systems. In some cases, such as complex defense and airborne systems, the re-qualification of such redesigned systems is a lengthy process that can take up totwo years. In other systems such as commercial systems and also some specific defense systems, this is a faster process, that takes several months.

Beginning in* February 2025,the U.S. imposed additional tariffs on imports from China, and China imposed retaliatory tariffs and other measures on certain goods imported from the U.S. Since that time, the United States and China have increased, reduced, suspended, replaced, and otherwise modified various tariff and non-tariff measures, including through bilateral negotiations. We utilize a number of strategies intended to mitigate the impact of tariffs and other trade restrictions. 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 provideno* 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.

Impact of Ongoing Wars

In* February 2022,Russian military forces invaded Ukraine. This war has led to ongoing sanctions on Russia, which have had continuing impacts on our supply chain of raw materials, particularly Germanium. Separately, Israel declared war on Hamas in October 2023.Initially, this resulted in a temporary increase in our sales, as Israel worked to replace electro-optical systems that in some cases use our materials. Our sales to customers in this region have since stabilized, however, it is still possible that this war could have a negative impact on our business as a result of the overall economic impact in Israel. In addition to the significant defense related market in Israel, we also serve many commercial related applications and work with commercial companies in Israel, and the business of those customers may*be negatively impacted by the war over time. Given the dynamic nature of this situation, we cannot reasonably estimate the impact of either the Russian-Ukraine conflict or the Israel-Hamas war on our financial condition, results of operations or cash flows into the foreseeable future.

In* February 2026,the U.S. and Israel launched coordinated military strikes against Iran, which retaliated with missile attacks across the region. Although we donot* have material operations in the Middle East, the ongoing conflict and any further escalation, including additional military actions, retaliatory measures, sanctions, disruptions to trade or transportation routes, cyberattacks, or other governmental or market responses, could lead to significant disruption of global energy supplies and increases in global energy prices, heighten inflationary pressures on our input costs and supply chain, adversely affect global supply chains, energy markets, commodity prices, currency exchange rates, financial markets and overall macroeconomic conditions, and adversely impact customer spending patterns in markets in which we operate. While we donot expect the impacts of conflict between the United States, Israel, and Iran to have a significant effect on our business, financial condition and results of operations, we are unable to predict the extent or nature of potential future impacts at this time.

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18. Offerings of Common Stock

On* September 15, 2025,the Company entered into a Securities Purchase Agreement (the “Private Placement SPA”) with Unusual Machines, Inc., a Nevada corporation (“Unusual Machines”), and Ondas Holdings Inc., a Nevada corporation (“Ondas,” together with Unusual Machines, the "Private Placement Buyers”), pursuant to which the Private Placement Buyers agreed to purchase from the Company an aggregate of 1,600,000 shares of Class A Common Stock (the “Private Placement Securities”) at a purchase price of $5.00 per share (the “Private Placement”). The Private Placement closed on September 16, 2025*and the Company received aggregate proceeds from the Private Placement of $8.0 million, before deducting offering expenses of approximately $0.1 million paid by the Company. The Company intends to use the proceeds from the Private Placement to fund working capital and other general corporate purposes. The Private Placement SPA contains customary representations, warranties, covenants, conditions and indemnification obligations of the parties.

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 “DecemberOffering”) of 7,750,000 shares of Class A Common Stock, at a public offering price of $7.75 per share. Pursuant to the terms of the Underwriting Agreement, the Company granted to the Underwriters a30*-day option to purchase up to an additional 1,162,500 shares of Class A Common Stock in the* DecemberOffering at the public offering price. The DecemberOffering closed on December 15, 2025,for a total of 8,912,500 shares of Class A Common Stock (including the 1,162,500 shares issuable pursuant to the Underwriter’s30*-day option), with net proceeds of $65.2 million after deducting underwriting discounts and commissions and other offering expenses paid by the Company.

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 "JuneOffering"), resulting in gross proceeds to us of approximately $50.0 million. The JuneOffering closed on June 3, 2026,*with net proceeds of $47.1 million after deducting underwriting discounts and commissions and other offering expenses paid by the Company.

19. Subsequent Event

Effective on* October 30, 2026,we closed the previously announced transaction under which LightPath sold and transferredone hundred* percent (100%) of its interest in its wholly owned subsidiary, LPOIZ, to Hengtu Optical Technology Co., Ltd. (“Hengtu”). Hengtu is owned by members of LPOIZ’s incumbent management team. As a condition to the sale, LPOIZ agreed to continue to supply products to LightPath as athird-party vendor.

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