LIGHTPATH TECHNOLOGIES INC

As of March 31, 2024, we had working capital of approximately $7.8 million and total cash, cash equivalents and restricted cash of approximately $3.2 million, of which, greater than 50% of our cash and cash equivalents was held by our foreign subsidiaries.

Cash and cash equivalents held by our foreign subsidiaries in China and Latvia were generated in-country as a result of foreign earnings. We routinely declare 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 significant portion of earnings generated by our foreign subsidiaries, however, we also plan to repatriate a portion of their earnings, and we accrue for these taxes on the portion of earnings that we intend to repatriate.

In China, before any funds can be repatriated, the retained earnings of the legal entity must equal at least 50% of the registered capital. As of March 31, 2024, LPOIZ had approximately $2.0 million available for repatriation and LPOI did not have any earnings available for repatriation, based on earnings accumulated through December 31, 2023, the end of the most recent statutory tax year, that remained undistributed as of March 31, 2024.

Loans payable consists of two third-party equipment loans and the ANBTX Note. The BankUnited Term Loan was paid in full as of March 31, 2024. As of March 31, 2024, the outstanding balance on the equipment loans was approximately $449,000, and the outstanding balance on the ANBTX Note was $150,000. The ANBTX Note was repaid in full on May 2, 2024.

On February 16, 2022, we filed a shelf registration statement to facilitate the issuance of our Class A common stock, warrants exercisable for shares of our Class A common stock, and/or units up to an aggregate offering price of $75.8 million from time to time. In connection with the filing of the shelf registration statement, we also included a prospectus supplement relating to an at-the-market equity program under which we may issue and sell shares of our Class A common stock up to an aggregate offering price of $25.2 million from time to time, decreasing the aggregate offering price available under the shelf registration statement to $50.6 million. The shelf registration statement was declared effective by the SEC on March 1, 2022. As of March 31, 2024, we issued 68,041 shares of our Class A common stock pursuant to the at-the-market equity program.

On January 12, 2023, the Company entered into a securities purchase agreement (“Purchase Agreement”), pursuant to which the Company agreed to issue and sell in a public offering under the shelf registration statement an aggregate of 9,090,910 shares of the Company’s Class A common stock, par value $0.01 per share for a purchase price of $1.10 per share and filed a prospectus supplement with the SEC related thereto. The sale of shares pursuant to the Purchase Agreement closed on January 17, 2023, and resulted in net proceeds of approximately $9.2 million after payment of placement agent fees, and certain other costs and expenses of the offering.

There are a number of factors that could result in the need to raise additional funds, including a decline in revenue or a lack of anticipated sales growth, increased material costs, increased labor costs, planned production efficiency improvements not being realized, increases in property, casualty, benefit and liability insurance premiums, and increases in other costs. In addition, we may identify opportunities for 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 provided by operations was approximately $456,000 for the first nine months of fiscal 2024, compared to cash used in operations of approximately $920,000 for the same period of the prior fiscal year.Cash provided by operations for the first nine months of fiscal 2024 was largely driven by decrease in accounts receivable, as sales were higher in the fourth quarter of fiscal 2023 than in each of the first three quarters of fiscal 2024. Cash used in operations in the first nine months of fiscal 2023 reflects a decrease in accounts payable and accrued liabilities during such period resulting from the payment of certain expenses related to previously disclosed events that occurred at our Chinese subsidiaries, which were accrued in prior periods.

Cash Flows – Investing:

During the first nine months of fiscal 2024, we expended approximately $1.9 million in investments in capital equipment, compared to approximately $2.3 million in the same period of the prior fiscal year. We also expended approximately $847,000, net of cash acquired, to acquire Visimid during the first nine months of fiscal 2024, as disclosed in Note 3,Acquisition of Visimid Technologies, in the unaudited Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q. The first nine months of fiscal 2024 also reflects proceeds of approximately $365,000 from sale-leasebacks of equipment. The spending in the first nine months of fiscal 2024 is largely driven by the Orlando Facility expansion. As disclosed in Note 11,Leases, in the unaudited Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q, we constructed additional tenant improvements in our Orlando Facility subject to our continuing lease, of which the landlord agreed to provide $2.4 million in tenant improvement allowances. The balance of the tenant improvement costs was $3.7 million. During fiscal 2023, we expended approximately $2.3 million toward this project, and during the first nine months of fiscal 2024, we expended $1.3 million, with the remaining $0.1 million to be expended during the fourth quarter of fiscal 2024. For the first nine months of fiscal 2023, the majority of our capital expenditures were related to the expansion of our infrared coating and lens diamond turning capacity.

Cash Flows – Financings:

Net cash used in financing activities was approximately $2.1 million for the first nine months of fiscal 2024, compared to cash provided by financing activities of approximately $7.5 million in the same period of the prior fiscal year. Cash used in financing activities for the first nine months of fiscal 2024 reflects approximately $2.4 million in principal payments on our loans and finance leases, offset by $143,000 in proceeds from the 2023 Equipment Loan, $98,000 in proceeds from the sale of Class A common stock pursuant to the at-the-market equity program and $40,000 in proceeds from the sale of Class A common stock under the 2014 ESPP. Cash provided by financing activities for the first nine months of fiscal 2023 reflects equity proceeds of $9.2 million from a public offering of Class A common stock, which closed in January 2023, and $40,000 in proceeds from the sale of Class A common stock under the 2014 ESPP, offset by approximately $1.7 million in principal payments on our loans and finance leases.