10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

[X]            

QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2020

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ____________

Commission file number 000-27548

LIGHTPATH TECHNOLOGIES, INC.

___________________________________________________

 (Exact name of registrant as specified in its charter)

DELAWARE	86-0708398
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

http://www.lightpath.com

2603 Challenger Tech Ct. Suite 100

Orlando, Florida 32826

_________________________________________

(Address of principal executive offices)

(ZIP Code)

(407) 382-4003

________________________________

(Registrant’s telephone number, including area code)

N/A

_______________________________________________________________________

(Former name, former address, and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, par value $0.01	LPTH	The Nasdaq Stock Market, LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES [X] NO [ ]

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or such shorter period that the registrant was required to submit such files).

 YES [ X ] NO [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer [ ]	Accelerated filer [ ]
	Smaller reporting company [ X ]
Non-accelerated filer [ X ]	Emerging growth company [  ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act [ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES [ ] NO [X]

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

26,138,292 shares of common stock, Class A, $0.01 par value, outstanding as of February 1, 2021.

LIGHTPATH TECHNOLOGIES, INC.

Form 10-Q

Index

Item		Page
Cautionary Note Concerning Forward-Looking Statements		3
Part I	Financial Information	4
Item 1	Financial Statements	4
	Unaudited Condensed Consolidated Balance Sheets	4
	Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss)	5
	Unaudited Condensed Consolidated Statement of Changes in Stockholders’ Equity	6
	Unaudited Condensed Consolidated Statements of Cash Flows	7
	Notes to Unaudited Condensed Consolidated Financial Statements	8
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
	Results of Operations	22
	Liquidity and Capital Resources	25
	Contractual Obligations and Commitments	26
	Off-Balance Sheet Arrangements	26
	Critical Accounting Policies and Estimates	26
	Non-GAAP Financial Measures	30
Item 4	Controls and Procedures	31
Part II	Other Information	32
Item 1	Legal Proceedings	32
Item 1A	Risk Factors	32
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	32
Item 3	Defaults Upon Senior Securities	32
Item 4	Mine Safety Disclosures	32
Item 5	Other Information	32
Item 6	Exhibits	33
Signatures		35

CAUTIONARY NOTE CONCERNING FORWARD-LOOKING STATEMENTS

Certain statements and information in this Quarterly Report on Form 10-Q for the quarter ended December 31, 2020 (the “Quarterly Report”) may constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, which address activities, events, or developments that we expect or anticipate will or may occur in the future, including such things as future capital expenditures, growth, product development, sales, business strategy, statements related to the expected effects on our business from the coronavirus (“COVID-19”) pandemic, and other similar matters are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” or “continue,” or other comparable terminology. These forward-looking statements are based largely on our current expectations and assumptions and are subject to a number of risks and uncertainties, many of which are beyond our control. These statements are subject to many risks, uncertainties, and other important factors that could cause actual future results to differ materially from those expressed in the forward-looking statements including, but not limited to, the duration and scope of the COVID-19 pandemic and impact on the demand for our products; our ability to obtain needed raw materials and components from our suppliers; actions governments, businesses, and individuals take in response to the pandemic, including mandatory business closures and restrictions on onsite commercial interactions; the impact of the pandemic and actions taken in response to the pandemic on global and regional economies and economic activity; the pace of recovery when the COVID-19 pandemic subsides; general economic uncertainty in key global markets and a worsening of global economic conditions or low levels of economic growth; the effects of steps that we could take to reduce operating costs; our inability to sustain profitable sales growth, convert inventory to cash, or reduce our costs to maintain competitive prices for our products; circumstances or developments that may make us unable to implement or realize the anticipated benefits, or that may increase the costs, of our current and planned business initiatives; and those factors detailed by us in our public filings with the Securities and Exchange Commission (the “SEC”), including in Item 1A, Risk Factors, in our Annual Report on Form 10-K for the year ended June 30, 2020. In light of these risks and uncertainties, all of the forward-looking statements made herein are qualified by these cautionary statements and there can be no assurance that the actual results or developments anticipated by us will be realized. We undertake no obligation to update or revise any of the forward-looking statements contained herein.

3

PART I FINANCIAL INFORMATION 

Item 1. Financial Statements

LIGHTPATH TECHNOLOGIES, INC.

Condensed Consolidated Balance Sheets

(unaudited)

	December 31,	June 30,
Assets	2020	2020
Current assets:
Cash and cash equivalents	$5,306,243	$5,387,388
Trade accounts receivable, net of allowance of $10,352 and $9,917	6,842,818	6,188,726
Inventories, net	9,693,277	8,984,482
Other receivables	—	132,051
Prepaid expenses and other assets	346,377	565,181
Total current assets	22,188,715	21,257,828
Property and equipment, net	13,631,399	11,799,061
Operating lease right-of-use assets	1,389,428	1,220,430
Intangible assets, net	6,145,423	6,707,964
Goodwill	5,854,905	5,854,905
Deferred tax assets, net	659,000	659,000
Other assets	27,737	75,730
Total assets	$49,896,607	$47,574,918
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$2,737,740	$2,558,638
Accrued liabilities	1,175,444	992,221
Accrued payroll and benefits	2,164,827	1,827,740
Operating lease liabilities, current	843,533	765,422
Loans payable, current portion	936,615	981,350
Finance lease obligation, current portion	274,112	278,040
Total current liabilities	8,132,271	7,403,411
Finance lease obligation, less current portion	147,031	279,435
Operating lease liabilities, noncurrent	891,849	887,766
Loans payable, less current portion	4,372,429	4,437,365
Total liabilities	13,543,580	13,007,977
Commitments and Contingencies
Stockholders’ equity:
Preferred stock: Series D, $.01 par value, voting;
500,000 shares authorized; none issued and outstanding	—	—
Common stock: Class A, $.01 par value, voting;
44,500,000 shares authorized; 26,127,361 and 25,891,885
shares issued and outstanding	261,274	258,919
Additional paid-in capital	231,014,560	230,634,056
Accumulated other comprehensive income	2,188,596	735,892
Accumulated deficit	(197,111,403)	(197,061,926)
Total stockholders’ equity	36,353,027	34,566,941
Total liabilities and stockholders’ equity	$49,896,607	$47,574,918

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

4

LIGHTPATH TECHNOLOGIES, INC.

Condensed Consolidated Statements of Comprehensive Income (Loss)

(unaudited)

	Three Months Ended		Six Months Ended
	December 31,		December 31,
	2020	2019	2020	2019
Revenue, net	$9,922,171	$9,599,912	$19,431,143	$17,151,842
Cost of sales	6,291,835	5,670,632	11,950,615	10,831,744
Gross margin	3,630,336	3,929,280	7,480,528	6,320,098
Operating expenses:
Selling, general and administrative	2,763,178	2,199,133	5,203,655	4,540,911
New product development	529,902	468,646	980,399	897,057
Amortization of intangibles	281,271	283,279	562,542	566,800
Gain on disposal of property and equipment	(477)	(79,224)	(522)	(129,224)
Total operating expenses	3,573,874	2,871,834	6,746,074	5,875,544
Operating income	56,462	1,057,446	734,454	444,554
Other income (expense):
Interest expense, net	(55,147)	(89,257)	(113,696)	(187,798)
Other income (expense), net	93,252	122,797	5,517	(392,609)
Total other income (expense), net	38,105	33,540	(108,179)	(580,407)
Income (loss) before income taxes	94,567	1,090,986	626,275	(135,853)
Income tax provision	241,112	321,869	675,752	470,187
Net income (loss)	$(146,545)	$769,117	$(49,477)	$(606,040)
Foreign currency translation adjustment	723,396	143,056	1,452,704	196,822
Comprehensive income (loss)	$576,851	$912,173	$1,403,227	$(409,218)
Earnings (loss) per common share (basic)	$(0.01)	$0.03	$(0.00)	$(0.02)
Number of shares used in per share calculation (basic)	26,117,239	25,837,903	26,049,750	25,832,337
Earnings (loss) per common share (diluted)	$(0.01)	$0.03	$(0.00)	$(0.02)
Number of shares used in per share calculation (diluted)	26,117,239	27,361,273	26,049,750	25,832,337

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

5

LIGHTPATH TECHNOLOGIES, INC.

Condensed Consolidated Statements of Changes in Stockholders' Equity

(unaudited)

				Accumulated
	Class A		Additional	Other		Total
	Common Stock		Paid-in	Comphrehensive	Accumulated	Stockholders’
	Shares	Amount	Capital	Income	Deficit	Equity
Balances at June 30, 2020	25,891,885	$258,919	$230,634,056	$735,892	$(197,061,926)	$34,566,941
Issuance of common stock for:
Employee Stock Purchase Plan	3,306	33	10,976	—	—	11,009
Exercise of stock options, net	207,640	2,076	124,024	—	—	126,100
Stock-based compensation on stock options & RSUs	—	—	136,849	—	—	136,849
Foreign currency translation adjustment	—	—	—	729,308	—	729,308
Net income	—	—	—	—	97,068	97,068
Balances at September 30, 2020	26,102,831	$261,028	$230,905,905	$1,465,200	$(196,964,858)	$35,667,275
Issuance of common stock for:
Exercise of stock options & RSU's, net	24,530	246	2,488	—	—	2,734
Stock-based compensation on stock options & RSUs	—	—	106,167	—	—	106,167
Foreign currency translation adjustment	—	—	—	723,396	—	723,396
Net loss	—	—	—	—	(146,545)	(146,545)
Balances at December 31, 2020	26,127,361	$261,274	$231,014,560	$2,188,596	$(197,111,403)	$36,353,027
Balances at June 30, 2019	25,813,895	$258,139	$230,321,324	$808,518	$(197,928,855)	$33,459,126
Issuance of common stock for:
Employee Stock Purchase Plan	13,370	134	12,033	—	—	12,167
Exercise of RSUs, net	4,394	44	(44)	—	—	—
Stock-based compensation on stock options & RSUs	—	—	98,459	—	—	98,459
Foreign currency translation adjustment	—	—	—	53,766	—	53,766
Net loss	—	—	—	—	(1,375,157)	(1,375,157)
Balances at September 30, 2019	25,831,659	$258,317	$230,431,772	$862,284	$(199,304,012)	$32,248,361
Issuance of common stock for:
Exercise of RSUs, net	8,703	87	(87)	—	—	—
Stock-based compensation on stock options & RSUs	—	—	95,441	—	—	95,441
Foreign currency translation adjustment	—	—	—	143,056	—	143,056
Net income	—	—	—	—	769,117	769,117
Balances at December 31, 2019	25,840,362	$258,404	$230,527,126	$1,005,340	$(198,534,895)	$33,255,975

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

6

LIGHTPATH TECHNOLOGIES, INC.

Condensed Consolidated Statements of Cash Flows

(unaudited)

	Six Months Ended December 31,
	2020	2019
Cash flows from operating activities:
Net loss	$(49,477)	$(606,040)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	1,691,163	1,760,220
Interest from amortization of debt costs	9,286	9,286
Gain on disposal of property and equipment	(522)	(129,224)
Stock-based compensation on stock options & RSUs, net	243,016	178,389
Provision for doubtful accounts receivable	—	9,147
Change in operating lease liabilities	(86,804)	(64,090)
Inventory write-offs to allowance	133,204	—
Changes in operating assets and liabilities:
Trade accounts receivable	(654,092)	(1,199,691)
Other receivables	132,051	353,695
Inventories	(841,999)	142,198
Prepaid expenses and other assets	266,797	338,034
Accounts payable and accrued liabilities	699,412	146,547
Net cash provided by operating activities	1,542,035	938,471
Cash flows from investing activities:
Purchase of property and equipment	(2,160,710)	(1,153,227)
Proceeds from sale of equipment	—	179,573
Net cash used in investing activities	(2,160,710)	(973,654)
Cash flows from financing activities:
Proceeds from exercise of stock options	128,834	—
Proceeds from sale of common stock from Employee Stock Purchase Plan	11,009	12,167
Borrowings on loan payable	275,377	—
Payments on loan payable	(395,257)	(290,675)
Repayment of finance lease obligations	(136,332)	(210,225)
Net cash used in financing activities	(116,369)	(488,733)
Effect of exchange rate on cash and cash equivalents	653,899	196,822
Change in cash and cash equivalents and restricted cash	(81,145)	(327,094)
Cash and cash equivalents, beginning of period	5,387,388	4,604,701
Cash and cash equivalents, end of period	$5,306,243	$4,277,607
Supplemental disclosure of cash flow information:
Interest paid in cash	$105,029	$182,241
Income taxes paid	$512,499	$249,777

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

7

LIGHTPATH TECHNOLOGIES, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

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.

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with the requirements of Article 8 of Regulation S-X promulgated under the Exchange Act and, therefore, do not 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. 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 Form 10-K for the fiscal year ended June 30, 2020, 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 Consolidated Balance Sheet as of June 30, 2020 has been derived from the audited financial statements at that date but does not include all of the information and notes required by generally accepted accounting principles for complete financial statements. Results of operations for interim periods are not 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 Note 2, Summary of Significant Accounting Policies, in the Consolidated Financial Statements in our Annual Report on Form 10-K for the fiscal year ended June 30, 2020. There have been no material changes to our significant accounting policies during the six months ended December 31, 2020, from those disclosed in our Annual Report on Form 10-K for the fiscal year ended June 30, 2020.

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.

3.            

Revenue

Product Revenue

We are a manufacturer of optical components and higher-level assemblies, including precision molded glass aspheric optics, molded and diamond-turned infrared optical components, and other optical materials used to produce products that manipulate light. We design, develop, manufacture, and distribute optical components and assemblies utilizing advanced optical manufacturing processes. We also perform research and development for optical solutions for a wide range of optics markets. Revenue is derived primarily from the sale of optical components and assemblies.

Revenue Recognition

Revenue is generally recognized upon transfer of control, including the risks and rewards of ownership, of promised 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 do not 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 our performance. Deferred revenue was immaterial as of June 30, 2020 and December 31, 2020.

8

Nature of Products

Revenue from the sale of 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. 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. We have organized our products in three groups: precision molded optics (“PMO”), infrared, and specialty products. Revenues from product development agreements are included in specialty products. Revenue by product group for the three and six months ended December 31, 2020 and 2019 was as follows:

	Three Months Ended December 31,		Six Months Ended December 31,
	2020	2019	2020	2019
PMO	$4,742,459	$3,710,549	$9,036,062	$6,895,007
Infrared Products	4,808,102	5,003,874	9,532,606	8,963,499
Specialty Products	371,610	885,489	862,475	1,293,336
Total revenue	$9,922,171	$9,599,912	$19,431,143	$17,151,842

4.            

Inventories

The components of inventories include the following:

	December 31, 2020	June 30, 2020
Raw materials	$4,094,767	$3,876,955
Work in process	3,390,968	2,989,070
Finished goods	3,302,822	3,134,800
Allowance for obsolescence	(1,095,280)	(1,016,343)
	$9,693,277	$8,984,482

The value of tooling in raw materials, net of the related allowance for obsolescence, was approximately $2.1 million and $2.3 million at December 31, 2020 and June 30, 2020, respectively.

9

5.            

Property and Equipment

Property and equipment are summarized as follows:

	Estimated	December 31,	June 30,
	Lives (Years)	2020	2020
Manufacturing equipment	5 - 10	$20,870,729	$18,444,448
Computer equipment and software	3 - 5	852,575	801,625
Furniture and fixtures	5	364,506	321,418
Leasehold improvements	5 - 7	2,697,248	2,171,388
Construction in progress		1,597,166	1,274,880
Total property and equipment		26,382,224	23,013,759
Less accumulated depreciation and amortization		(12,750,825)	(11,214,698)
Total property and equipment, net		$13,631,399	$11,799,061

6. Goodwill and Intangible Assets

There were no changes in the net carrying value of goodwill during the six months ended December 31, 2020.

Identifiable intangible assets were comprised of:

	Useful Lives (Years)	December 31, 2020	June 30, 2020
Customer relationships	15	$3,590,000	$3,590,000
Trade secrets	8	3,272,000	3,272,000
Trademarks	8	3,814,000	3,814,000
Total intangible assets		10,676,000	10,676,000
Less accumulated amortization		(4,530,577)	(3,968,036)
Total intangible assets, net		$6,145,423	$6,707,964

Future amortization of identifiable intangibles is as follows:

Fiscal year ending:
June 30, 2021 (remaining six months)	$562,542
June 30, 2022	1,125,083
June 30, 2023	1,125,083
June 30, 2024	1,125,083
June 30, 2025 and later	2,207,632
	$6,145,423

7.   Accounts Payable

The accounts payable balance as of December 31, 2020 and June 30, 2020 both include approximately $91,000 of earned but unpaid Board of Directors’ fees.

10

8.   Income Taxes

A summary of our total income tax expense and effective income tax rate for the three and six months ended December 31, 2020 and 2019 is as follows:

	Three Months Ended December 31,		Six Months Ended December 31,
	2020	2019	2020	2019
Income (loss) before income taxes	$94,567	$1,090,986	$626,275	$(135,853)
Income tax provision	$241,112	$321,869	$675,752	$470,187
Effective income tax rate	255%	30%	108%	-346%

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 the six months ended December 31, 2020 and 2019, income tax expense was primarily related to income taxes from our operations in China. Income tax expense for the six months ended December 31, 2020 also includes withholding taxes of $300,000 accrued on a $3 million intercompany dividend declared in July 2020 by LightPath Optical Instrumentation (Zhenjiang) Co., Ltd. (“LPOIZ”), which dividend will be paid to us, as its parent company.

We record net deferred tax assets to the extent we believe it is more likely than not 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 during the periods in which those temporary differences become deductible. We consider the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. As of December 31, 2020 and June 30, 2020, we have provided for a valuation allowance against our net deferred tax assets to reduce the net deferred tax assets to the amount we estimate is more-likely-than-not to be realized. Our net deferred tax asset consists primarily of U.S. net operating loss (“NOL”) carryforward benefits, and federal and state tax credits with indefinite carryover periods.

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 benefit is expected to be recorded on pre-tax losses generated in the U.S.

Income Tax Law of the People’s Republic of China

Our Chinese subsidiaries, LightPath Optical Instrumentation (Shanghai) Co., Ltd. (“LPOI”) and LightPath Optical Instrumentation (Zhenjiang) Co., Ltd. (“LPOIZ”), are governed by the Income Tax Law of the People’s Republic of China. As of December 31, 2020, LPOI and LPOIZ were subject to statutory income tax rates of 25% and 15%, respectively.

In July 2020, we declared an intercompany dividend of $3 million from LPOIZ, payable to us as its parent company. Accordingly, we accrued Chinese withholding taxes of $300,000 associated with the dividend. LPOIZ paid to us $900,000, after the withholding of $100,000 in taxes, during each of the quarters ended September 30, 2020 and December 31, 2020. The remaining $100,000 of withholding taxes are included in accrued liabilities in the accompanying unaudited Condensed Consolidated Balance Sheet as of December 31, 2020. Other than these withholding taxes, this intercompany dividend has no impact on our unaudited Condensed Consolidated Financial Statements.

Historically, the Company considered unremitted earnings held by its foreign subsidiaries to be permanently reinvested. However, during fiscal 2020, the Company began declaring intercompany dividends to remit a portion of the historical earnings of its foreign subsidiaries to the U.S. parent company. It is still the Company’s intent to reinvest a significant portion of the more recent earnings generated by its foreign subsidiaries, however the Company also plans to repatriate a portion of the historical earnings of its subsidiaries. Based on its previous intent, the Company had not historically provided for future Chinese withholding taxes on the related earnings. However, during fiscal 2020 the Company began to accrue for these taxes on the portion of historical earnings that it intends to repatriate.

11

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 are no longer 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 are first divided by 0.8 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, 2018 are not subject to tax if declared prior to December 31, 2019. ISP Latvia has declared an intercompany dividend to be paid to ISP, its U.S. parent company, for the full amount of earnings accumulated prior to January 1, 2018. Distributions of this dividend will be from earnings prior to January 1, 2018 and, therefore, will not be subject to tax. We currently do not 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.

9.   Stock-Based Compensation

Our directors, officers, and key employees are 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”), including incentive stock options, non-qualified stock options, and restricted stock unit (“RSU”) awards. The 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 the six months ended December 31, 2020 and 2019 included in the accompanying unaudited Condensed Consolidated Statements of Comprehensive Income:

	Six Months Ended December 31,
	2020	2019
Stock options	$34,241	$5,307
RSUs	208,775	173,082
Total	$243,016	$178,389
The amounts above were included in:
Selling, general & administrative	$243,016	$178,389
Cost of sales	-	-
New product development	-	-
	$243,016	$178,389

We also adopted the LightPath Technologies, Inc. Employee Stock Purchase Plan (the “2014 ESPP”). The 2014 ESPP permits employees to purchase Class A common stock through payroll deductions, subject to certain limitations. A discount of $1,091 and $1,203 for the six months ended December 31, 2020 and 2019, respectively, is included in the selling, general and administrative expense in the accompanying unaudited Condensed Consolidated Statements of Comprehensive Income, which represents the value of the 10% discount given to the employees purchasing stock under the 2014 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 of 2014 ESPP shares is the amount of the discount the employee obtains at the date of the purchase transaction.

Most stock options granted vest ratably over two to four years and are generally exercisable for ten years. The assumed forfeiture rates used in calculating the fair value of 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 the six months ended December 31, 2020 and 2019. The volatility rate and expected term are based on seven-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.

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For the six months ended December 31, 2020 and 2019, there were no stock options granted under the Omnibus Plan. For stock options granted under the SICP in the six-month periods ended December 31, 2020 and 2019, we estimated the fair value of each stock option as of the date of grant using the following assumptions:

	Six Months Ended December 31,
	2020	2019
Weighted-average expected volatility	71.2%	63.7%
Dividend yields	0%	0%
Weighted-average risk-free interest rate	0.74%	1.57%
Weighted-average expected term, in years	7.49	7.50

Information Regarding Current Share-Based Compensation Awards

A summary of the activity for share-based compensation awards in the six months ended December 31, 2020 is presented below:

	Stock Options			Restricted Stock Units (RSUs)
		Weighted-	Weighted-		Weighted-
		Average	Average		Average
		Exercise	Remaining		Remaining
	Shares	Price	Contract	Shares	Contract
June 30, 2020	942,575	$1.65	6.5	2,328,303	0.9
Granted	18,139	$2.80	9.8	177,776	2.9
Exercised	(209,776)	$1.47		(24,452)
Cancelled/Forfeited	(378,558)	$1.72		–
December 31, 2020	372,380	$1.73	8.8	2,481,627	0.9
Awards exercisable/
vested as of
December 31, 2020	90,095	$1.58	7.6	1,871,348	—
Awards unexercisable/
unvested as of
December 31, 2020	282,285	$1.77	9.1	610,279	0.9
	372,380			2,481,627

RSU awards vest immediately or from two to four years from the date of grant.

As of December 31, 2020, there was approximately $1.1 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements (including stock options and RSUs) granted. We expect to recognize the compensation cost as follows:

Fiscal Year Ending:	Stock Options	RSUs	Total
June 30, 2021 (remaining six months)	$33,884	$200,962	$234,846
June 30, 2022	65,160	308,534	373,694
June 30, 2023	72,024	228,716	300,740
June 30, 2024	49,425	93,848	143,273
	$220,493	$832,060	$1,052,553

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10.            

Earnings (Loss) Per Share

Basic earnings per share is computed by dividing net income or loss by the weighted-average number of shares of Class A common stock outstanding, during each period presented. Diluted earnings per share is computed similarly to basic earnings per share, except that it reflects the potential dilution that could occur if dilutive securities or other obligations to issue shares of Class A common stock were exercised or converted into shares of Class A common stock. The computations for basic and diluted earnings per share of Class A common stock are described in the following table:

	Three Months Ended December 31,		Six Months Ended December 31,
	2020	2019	2020	2019
Net income (loss)	$(146,545)	$769,117	$(49,477)	$(606,040)
Weighted-average common shares outstanding:
Basic number of shares	26,117,239	25,837,903	26,049,750	25,832,337
Effect of dilutive securities:
Options to purchase common stock	–	–	–	–
RSUs	–	1,523,370	–	–
Diluted number of shares	26,117,239	27,361,273	26,049,750	25,832,337
Earnings (loss) per common share:
Basic	$(0.01)	$0.03	$(0.00)	$(0.02)
Diluted	$(0.01)	$0.03	$(0.00)	$(0.02)

The following potential dilutive shares were not included in the computation of diluted earnings per share of Class A common stock, as their effects would be anti-dilutive:

	Three Months Ended December 31,		Six Months Ended December 31,
	2020	2019	2020	2019
Options to purchase common stock	372,776	1,013,743	589,892	996,834
RSUs	2,409,499	527,416	2,368,901	1,957,189
	2,782,275	1,541,159	2,958,793	2,954,023

11.            

Leases

Our leases primarily consist of operating leases related to our facilities located in Orlando, Florida; Latvia; Shanghai, China; and Zhenjiang, China, and finance leases related to certain equipment located in Orlando, Florida. The operating leases for facilities are non-cancelable operating leases, expiring through 2025. We 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 that option. We currently have obligations under four finance lease agreements, entered into during fiscal years 2018 and 2019, with terms ranging from three to five years. The 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. Two of our operating leases include renewal options, which were not included in the measurement of the operating lease ROU assets and related lease liabilities. As most of our leases do not provide an implicit rate, we use our collateralized incremental borrowing rate based on the information available at the commencement date in determining the present value of future payments. Currently, none of our leases include variable lease payments that are dependent on an index or rate. We are responsible for payment of certain real estate taxes, insurance and other expenses on certain of our leases. These amounts are generally considered to be variable and are not included in the measurement of the ROU asset and lease liability. We generally account for non-lease components, such as maintenance, separately from lease components. Our lease agreements do not contain any material residual value guarantees or material restricted covenants. Leases with a term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term.

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We received tenant improvement allowances for each of our two leases with respect to our facility located in Orlando, Florida (the “Orlando Facility”). These allowances were used to construct improvements and are included in leasehold improvements and operating lease liabilities. The balances are being amortized over the corresponding lease terms.

The components of lease expense were as follows:

	Three Months Ended December 31,		Six Months Ended December 31,
	2020	2019	2020	2019
Operating lease cost	$173,437	$172,102	$340,411	$336,973
Finance lease cost:
Depreciation of lease assets	47,354	86,063	113,223	172,126
Interest on lease liabilities	11,432	20,425	24,256	42,957
Total finance lease cost	58,786	106,488	137,479	215,083
Total lease cost	$232,223	$278,590	$477,890	$552,056

Supplemental balance sheet information related to leases was as follows:

	Classification	December 31, 2020	June 30, 2020
Assets:
Operating lease assets	Operating lease assets	$1,389,428	$1,220,430
Finance lease assets	Property and equipment, net(1)	571,811	666,519
Total lease assets		$1,961,239	$1,886,949
Liabilities:
Current:
Operating leases	Operating lease liabilities, current	$843,533	$765,422
Short-term leases	Accrued liabilities(2)	–	97,665
Finance leases	Finance lease liabilities, current	274,112	278,040
Noncurrent:
Operating leases	Operating lease liabilities, less current portion	891,849	887,766
Finance leases	Finance lease liabilities, less current portion	147,031	279,435
Total lease liabilities		$2,156,525	$2,308,328

(1)

Finance lease assets were recorded net of accumulated depreciation of approximately $1.1 million as of December 31, 2020, and $1.0 million as of June 30, 2020.

(2)

Represents accrual related to the lease of a manufacturing and office facility in Irvington, New York, which we ceased use of as of June 30, 2019 as the relocation of the operations formerly housed in this facility was complete. All remaining lease payments were accrued as of that date, through the lease expiration in August 2020.

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

Lease Term and Discount Rate	December 31, 2020
Weighted Average Remaining Lease Term (in years)
Operating leases	2.7
Finance leases	1.7
Weighted Average Discount Rate
Operating leases	4.5%
Finance leases	7.9%

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Supplemental cash flow information:

	Six Months Ended December 31,
	2020	2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash used for operating leases	$427,215	$386,661
Operating cash used for finance leases	$24,256	$42,970
Financing cash used for finance leases	$136,332	$210,225

Future maturities of lease liabilities were as follows as of December 31, 2020:

Fiscal year ending:	Finance Leases	Operating Leases
June 30, 2021 (remaining six months)	$160,648	$446,769
June 30, 2022	231,783	835,454
June 30, 2023	59,647	244,026
June 30, 2024	11,811	123,683
June 30, 2025	—	123,683
Total future minimum payments	463,889	1,773,615
Less imputed interest	(42,746)	(38,233)
Present value of lease liabilities	$421,143	$1,735,382

12.            

Loans Payable

As of December 31, 2020 and June 30, 2020, loans payable primarily consisted of the BankUnited Term Loan (as defined below) payable to BankUnited N.A. (“BankUnited”). On February 26, 2019, we entered into a Loan Agreement (the “Loan Agreement”) with BankUnited for (i) a revolving line of credit up to maximum amount of $2,000,000 (the “BankUnited Revolving Line”), (ii) a term loan in the amount of up to $5,813,500 (“BankUnited Term Loan”), and (iii) a non-revolving guidance line of credit up to a maximum amount of $10,000,000 (the “Guidance Line” and, together with the BankUnited Revolving Line and BankUnited Term Loan, the “BankUnited Loans”). Each of the BankUnited Loans is evidenced by a promissory note in favor of BankUnited (the “BankUnited Notes”). Simultaneously with the execution of the Loan Agreement, we used the proceeds from the BankUnited Term Loan to pay in full, all outstanding amounts owed to Avidbank Corporate Finance, a division of Avidbank (“Avidbank”) pursuant to an acquisition term loan. For additional information related to the Avidbank loans, please see Note 17, Loans Payable, to our audited Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended June 30, 2020.

On May 6, 2019, we entered into that certain First Amendment to Loan Agreement, effective February 26, 2019, with BankUnited (the “Amendment” and, together with the Loan Agreement, the “Amended Loan Agreement”). The Amendment amended the definition of the fixed charge coverage ratio to more accurately reflect the parties’ understandings at the time the Loan Agreement was executed.

BankUnited Revolving Line

Pursuant to the Amended Loan Agreement, BankUnited will make loan advances under the BankUnited Revolving Line to us up to a maximum aggregate principal amount outstanding not to exceed $2,000,000, which proceeds will be used for working capital and general corporate purposes. Amounts borrowed under the BankUnited Revolving Line may be repaid and re-borrowed at any time prior to February 26, 2022, at which time all amounts will be immediately due and payable. The advances under the BankUnited Revolving Line bear interest, on the outstanding daily balance, at a per annum rate equal to 2.75% above the 30-day LIBOR. Interest payments are due and payable, in arrears, on the first day of each month. As of December 31, 2020, the applicable interest rate was 2.90%.

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BankUnited Term Loan

Pursuant to the Amended Loan Agreement, BankUnited advanced us $5,813,500 to satisfy in full the amounts owed to Avidbank, including the outstanding principal amount and all accrued interest under the acquisition term loan and to pay the fees and expenses incurred in connection with closing of the BankUnited Loans. The BankUnited Term Loan is for a 5-year term, but co-terminus with the BankUnited Revolving Line should the BankUnited Revolving Line not be renewed beyond February 26, 2022. Management expects the BankUnited Revolving Line to be renewed. The BankUnited Term Loan bears interest at a per annum rate equal to 2.75% above the 30-day LIBOR. Equal monthly principal payments of $48,445.83, plus accrued interest, are due and payable, in arrears, on the first day of each month during the term. Upon maturity, all principal and interest shall be immediately due and payable. As of December 31, 2020, the applicable interest rate was 2.90%.

Guidance Line

Pursuant to the Amended Loan Agreement, BankUnited, in its sole discretion, may make loan advances to us under the Guidance Line up to a maximum aggregate principal amount outstanding not to exceed $10,000,000, which proceeds will be used for capital expenditures and approved business acquisitions. Such advances must be in minimum amounts of $1,000,000 for acquisitions and $500,000 for capital expenditures, and will be limited to 80% of cost or as otherwise determined by BankUnited. Amounts borrowed under the Guidance Line may not re-borrowed. The advances under the Guidance Line bear interest, on the outstanding daily balance, at a per annum rate equal to 2.75% above the 30-day LIBOR. Interest payments are due and payable, in arrears, on the first day of each month. On each anniversary of the Amended Loan Agreement, monthly principal payments become payable, amortized based on a ten-year term. There were no borrowings under the Guidance Line as of December 31, 2020.

Security and Guarantees

Our obligations under the Amended Loan Agreement are collateralized by a first priority security interest (subject to permitted liens) in all of our assets and the assets of our U.S. subsidiaries, GelTech, Inc. (“GelTech”), and ISP, pursuant to a Security Agreement granted by GelTech, ISP, and us in favor of BankUnited. Our equity interests in, and the assets of, our foreign subsidiaries are excluded from the security interest. In addition, all of our subsidiaries have guaranteed our obligations under the Amended Loan Agreement and related documents, pursuant to Guaranty Agreements executed by us and our subsidiaries in favor of BankUnited.

General Terms

The Amended Loan Agreement contains customary covenants, including, but not limited to: (i) limitations on the disposition of property; (ii) limitations on changing our business or permitting a change in control; (iii) limitations on additional indebtedness or encumbrances; (iv) restrictions on distributions; and (v) limitations on certain investments. The Amended Loan Agreement also contains certain financial covenants, including obligations to maintain a fixed charge coverage ratio of 1.25 to 1.00 and a total leverage ratio of 4.00 to 1.00. As of December 31, 2020, the Company was in compliance with all required covenants.

We may prepay any or all of the BankUnited Loans in whole or in part at any time, without penalty or premium. Late payments are subject to a late fee equal to five percent (5%) of the unpaid amount. Amounts outstanding during an event of default accrue interest at a rate of five percent (5%) above the 30-day LIBOR applicable immediately prior to the occurrence of the event of default. The Amended Loan Agreement contains other customary provisions with respect to events of default, expense reimbursement, and confidentiality.

Financing costs incurred related to the BankUnited Loans were recorded as a discount on debt and will be amortized over the term. Amortization of approximately $4,600 and $9,300 is included in interest expense for the three and six months ended December 31, 2020, respectively, and the same amounts are included in interest expense for the three and six months ended December 31, 2019, respectively.

In December 2020, ISP Latvia entered into an equipment loan with a third party (the “Equipment Loan”), which party is also a significant customer, and which Equipment Loan is subordinate to the BankUnited Loans, and collateralized by certain equipment. The initial advance under the Equipment Loan was 225,000 EUR (or USD $275,000), 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. The Equipment Loan bears interest at a fixed rate of 3.3%. An additional 225,000 EUR (or USD $275,000) is expected to be drawn when the final payment is due to the vendor for the equipment.

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Future maturities of loans payable are as follows:

	BankUnited Term Loan	BankUnited Revolver	Equipment Loan	Unamortized Debt Costs	Total
Fiscal year ending:
June 30, 2021 (remaining six months)	$290,676	$300,000	$27,172	$(9,286)	$608,562
June 30, 2022	581,350	-	54,343	(18,572)	617,121
June 30, 2023	581,350	-	54,343	(18,572)	617,121
June 30, 2024	3,342,762	-	54,343	(12,381)	3,384,724
After June 30, 2024	-	-	81,516	-	81,516
Total payments	$4,796,138	$300,000	$271,717	$(58,811)	5,309,044
Less current portion					(936,615)
Non-current portion					$4,372,429

13.            

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 $2.2 million and $1.0 million as of December 31, 2020 and 2019, respectively. We also recognized net foreign currency transaction gains of $77,000 and $119,000 during the three months ended December 31, 2020 and 2019, respectively. During the six months ended December 31, 2020 and 2019, we recognized net foreign currency transaction losses of approximately $21,000 and $376,000, respectively, included in the unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) in the line item entitled “Other income (expense), net.”

Our cash and cash equivalents totaled $5.3 million at December 31, 2020. Of this amount, greater than 50% 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. With respect to the funds generated by our foreign subsidiaries in China, the retained earnings of the respective subsidiary must equal at least 50% of its registered capital before any funds can be repatriated through dividends. As of December 31, 2020, the end of the most recent statutory tax year, LPOIZ had approximately $7.6 million available for repatriation and LPOI did not have any earnings available for repatriation.

Assets and net assets in foreign countries are as follows:

	China		Latvia
	December 31, 2020	June 30, 2020	December 31, 2020	June 30, 2020
Assets	$20.9 million	$19.0 million	$9.7 million	$9.8 million
Net assets	$17.8 million	$16.2 million	$8.7 million	$8.2 million

14.            

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, will not have a material adverse effect on the Company’s financial position or results of operations.

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COVID-19

The Company’s business, results of operations financial condition, cash flows, and the stock price of its Class A common stock can be adversely affected by pandemics, epidemics, or other public health emergencies, such as the recent outbreak of COVID-19, which has spread from China to many other countries across the world, including the United States.

To date, the Company has not experienced any significant direct negative impact of COVID-19 to its business. However, the COVID-19 pandemic continues to impact economic conditions, which could impact the short-term and long-term demand from customers and, therefore, has the potential to negatively impact the Company’s results of operations, cash flows, and financial position in the future.  Additionally, some areas may impose travel restrictions which may impact some aspects of our operations that depend on travel, such as recruitment of senior positions, and travel of service providers to maintain our production equipment.  Management is actively monitoring this situation and any impact on our financial condition, liquidity, and results of operations. However, given the daily evolution of the COVID-19 pandemic and the global responses to curb its spread, we are not presently able to estimate the effects of the COVID-19 pandemic on our future results of operations, financial, or liquidity for the remainder of fiscal year 2021 or beyond.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Management’s Discussion and Analysis of Financial Condition and Results of Operations is designed to provide a reader of the financial statements with a narrative report on our financial condition, results of operations, and liquidity. This discussion and analysis should be read in conjunction with the attached unaudited Condensed Consolidated Financial Statements and notes thereto and our Annual Report on Form 10-K for the year ended June 30, 2020, including the audited Consolidated Financial Statements and notes thereto. 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 Quarterly Report regarding forward-looking statements.

The discussions of our results as presented in this Quarterly Report include use of the non-GAAP term “gross margin,” as well as other non-GAAP measures discussed in more detail under the heading “Non-GAAP Financial Measures.” Gross margin is determined by deducting the cost of sales from operating revenue. Cost of sales includes manufacturing direct and indirect labor, materials, services, fixed costs for rent, utilities and depreciation, and variable overhead. Gross margin should not be considered an alternative to operating income or net income, which are determined in accordance with GAAP. We believe that gross margin, although a non-GAAP financial measure, is useful and meaningful to investors as a basis for making investment decisions. It provides investors with information that demonstrates our cost structure and provides funds for our total costs and expenses. We use gross margin in measuring the performance of our business and have historically analyzed and reported gross margin information publicly. Other companies may calculate gross margin in a different manner.

Potential Impact of COVID-19

In March 2020, the World Health Organization (“WHO”) declared the outbreak of COVID-19 as a pandemic based on the rapid increase in global exposure. COVID-19 continues to spread throughout world, including the United States. Throughout the COVID-19 pandemic, our manufacturing facilities in China, Latvia, and the United States have continued to operate as normal. Some of our United States- and Latvia-based non-manufacturing employees are continuing to work remotely, either on a full or partial basis. Where possible, we have staggered shifts to reduce contact within shifts and between different shifts, and have minimized interaction and physical proximity between employees working within the same building. Those measures are continuously adjusted in each of our locations, according to local conditions and guidelines. To date, we have not seen any significant direct negative impact of COVID-19 to our business. However, the COVID-19 pandemic continues to impact economic conditions, which could impact the short-term and long-term demand from our customers and, therefore, has the potential to negatively impact our results of operations, cash flows, and financial position in the future. In addition, we have seen some increased demand for thermal imaging assemblies for fever detection applications in response to the pandemic.  Additionally, some areas impose travel restrictions which may impact some aspects of our operations that depend on travel, such as recruitment of senior positions, and travel of service providers to maintain our production equipment.  Management is actively monitoring this situation and any impact on our financial condition, liquidity, and results of operations. However, given the daily evolution of the COVID-19 pandemic and the global responses to curb its spread, we are not presently able to estimate the effects of the COVID-19 pandemic on our future results of operations, financial, or liquidity for the remainder of fiscal year 2021 and, possibly, beyond.

Introduction

We were incorporated in Delaware 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 major facilities in the United States, the People’s Republic of China, and the Republic of Latvia.

Our capabilities include precision molded optics, thermal imaging optics, custom designed optics, and the design and manufacturing of optical assemblies and subsystems. These capabilities allow us to manufacture optical components and higher-level assemblies, including precision molded glass aspheric optics, molded and diamond-turned infrared aspheric lenses and other optical materials used to produce products that manipulate light. We design, develop, manufacture, and distribute optical components and assemblies utilizing advanced optical manufacturing processes. We serve a wide and diverse number of industries including defense and security, optical systems and components, datacom/telecom, information technology, life sciences, machine vision and production technology. Our products are incorporated into a variety of applications by our broad and diverse customer base. These applications include defense products, medical devices, laser aided industrial tools, automotive safety applications, barcode scanners, optical data storage, hybrid fiber coax datacom, telecommunication optical networks, machine vision and sensors, among others. All the products we produce enable lasers and imaging devices to function more effectively.

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Subsidiaries

InNovember 2005,we formedLPOI, a wholly-owned subsidiary, located in Jiading, People’s Republic of China. LPOI provides sales and support functions. In December 2013, we formed LPOIZ, a wholly-owned subsidiary located in the New City district, of the Jiangsu province, of the People’s Republic of China. LPOIZ’s 55,000 square foot manufacturing facility (the “Zhenjiang Facility”) serves as our primary manufacturing facility in China and provides a lower cost structure for production of larger volumes of optical components and assemblies.

In December 2016, we acquired ISP, and its wholly-owned subsidiary, 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. Historically, ISP’s facility located in Irvington, New York functioned as its global headquarters for operations, while also providing manufacturing capabilities, optical coatings, and optical and mechanical design, assembly, and testing. In June 2019, we completed the relocation of this facility to our existing Orlando Facility and our facility located in Riga, Latvia (the “Riga 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 Riga Facility functions as its manufacturing facility.

For additional information, please refer to our Annual Report on Form 10-K for the year ended June 30, 2020.

Growth Strategy

During the last three months of fiscal 2020, our leadership has worked to develop and re-define our strategic direction. We are a component company with deep roots in optics manufacturing technology, known for our innovative products and solutions, which technology we have leveraged over the years to focus on the delivery of “best in class” and cost leading optical components. Initially, we focused on standard glass PMO products, and later, through the acquisition of ISP, as well as through internal research and development, we began to shift our focus to products specific to the infrared market.

As is typical with a company with origins in component manufacturing, for years we focused on our products and technology, and as a result, have become a leader in molded optical glass components. We then leveraged that experience and know-how into infrared optics. However, during the 30 years since we began delivering our innovative molded optics, the uses of optical technology have grown exponentially, and, consequently, the optics industry has evolved.

With the expansion of optical applications into many industries, technologies, and products, our customers’ needs and expectations have changed. Customers now often seek a partner that can complement their capabilities and support their implementation of optics and integration of photonics technologies into their products. These partnerships are formed based on our offering of complete optical solutions, to be integrated into the system, rather than discrete optical components. We believe we are well positioned to become the partner of choice for OEM customers integrating optics into their products because of our optical technologies expertise, design of optical systems, and manufacturing of the individual components, as well as assemblies.

To execute on this strategic direction, we have been focusing on aligning the organization to this new strategic direction, in terms of resources and processes. Additionally, we are focused on identifying and developing any capabilities and infrastructure we need to support the execution of this strategy. Further information about our strategic direction can be found in our recent Annual Report on Form 10-K for the fiscal year ended June 30, 2020.

Product Groups and Markets

Our business is organized in three product groups: PMO, infrared products and specialty products. These product groups are supported by our major product capabilities: molded optics, thermal imaging optics, and custom designed optics. Beginning late in fiscal 2019, we implemented a product management function by designating a product manager for each of our major product capabilities. This function has begun to facilitate choosing investment priorities to help strategically align our competencies with revenue opportunities in strategic industries. Over the long-term, we believe this function will also help ensure successful product life cycle management.

Our PMO product group consists of visible precision molded optics with varying applications. Our infrared product group is comprised of infrared optics, both molded and diamond-turned, and thermal imaging assemblies. This product group also includes both conventional and CNC ground and polished lenses. Between these two product groups, 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 0.4mm to over 2000mm. In addition, both product groups offer both catalog and custom designed optics.

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Our specialty product group is comprised of value-added products, such as optical subsystems, assemblies, and collimators, and non-recurring engineering (“NRE”) products, consisting of those products we develop pursuant to product development agreements that we enter into with customers. Typically, customers approach us and request that we develop new products or applications for our existing products to fit their particular needs or specifications. The timing and extent of any such product development is outside of our control.

We have also aligned our marketing efforts by our capabilities (i.e., molded optics, thermal imaging optics, and custom optics), and then by industry. We currently serve the following major markets: defense and security, optical systems and components, datacom/telecom, information technology, life sciences, machine vision and production technology. Customers in each of these markets may select the best optical technologies that suit their needs from our entire suite of products, availing us to cross-selling opportunities, particularly where we can leverage our knowledge base against our expanding design library. Within our product groups, we have various applications that serve our major markets. For example, our infrared products can be used for gas sensing devices, temperature sensing and fever detection, spectrometers, night vision systems, advanced driver-assistance systems (“ADAS”), thermal weapon gun sights, and infrared counter measure systems, among others.

The photonics market drives our growth and is comprised of eight application areas: information and communication technology, display, lighting, photovoltaic, production technology, life sciences, and measurement and automated vision. In 2018, the market size for these applications at the system level was $556.4 billion. LightPath has product applications in six of the eight application areas, all except for displays and photovoltaic. According to the latest Markets and Markets survey, published in 2019, these six application areas had an estimated market value of $401 billion and are growing at a 7% compound annual growth rate. Within the larger overall markets, we believe there is a market of approximately $2.0 billion for our current products and capabilities. We continue to believe our products will provide significant growth opportunities over the next several years and, therefore, we will continue to target specific applications in each of these major markets. In addition to these major markets, a large percentage of our revenues are derived from sales to unaffiliated companies that purchase our products to fulfill their customers’ orders, as well as unaffiliated companies that offer our products for sale in their catalogs.

Our strategy is to capitalize on optics as an enabling technology across many industries and markets, by leveraging our key differentiators, including our deep design and manufacturing expertise, our technology, and our established low-cost vertically integrated manufacturing capabilities. In addition, we intend for our product managers and sales force to work together to focus on pursuing customer growth opportunities where our differential advantages coincide with key customer needs.

Results of Operations

Revenue

Three months ended December 31, 2020, compared to three months ended December 31, 2019

Revenue for the second quarter of fiscal 2021 was approximately $9.9 million, an increase of approximately $322,000, or 3%, as compared to $9.6 million in the same period of the prior fiscal year. Revenue generated by infrared products was approximately $4.8 million in the second quarter of fiscal 2021, a decrease of approximately $196,000, or 4%, as compared to approximately $5.0 million in the same period of the prior fiscal year. The decrease in revenue is attributed to decreases in sales to customers in the commercial and defense markets, largely due to the timing of orders, partially offset by an increase in sales to customers in the industrial market. Revenue generated by PMO products was approximately $4.7 million for the second quarter of fiscal 2021, as compared to $3.7 million in the same period of the prior fiscal year, an increase of approximately $1.0 million, or 28%. The increase in revenue is attributed to an increase in sales to customers in the telecommunications market, as well as the defense and industrial markets and sales through our catalog and distribution channels. Revenue generated by our specialty products was approximately $372,000 in the second quarter of fiscal 2021, a decrease of approximately $514,000, or 58%, compared to $885,000 in the same period of the prior fiscal year. This decrease is primarily related to NRE project revenue in the second quarter of fiscal 2020 that did not repeat in the second quarter of fiscal 2021.

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Six months ended December 31, 2020, compared to six months ended December 31, 2019

Revenue for the first half of fiscal 2021 was approximately $19.4 million, an increase of approximately $2.3 million, or 13%, as compared to $17.2 million in the same period of the prior fiscal year. Revenue generated by infrared products was approximately $9.5 million in the first half of fiscal 2021, an increase of approximately $569,000, or 6%, as compared to approximately $9.0 million in the same period of the prior fiscal year. Revenue growth for infrared products is attributed to an increase in sales of molded infrared products, including lenses made with our new BD6 material, to customers in the industrial market, while other markets remained fairly consistent compared to the same period of the prior fiscal year. The increased demand for molded infrared products continues to be driven in large part by fever detection products as a result of the ongoing COVID-19 pandemic. Demand for industrial applications, firefighting and other public safety applications also continues to be strong.  Revenue generated by PMO products was approximately $9.0 million for the first half of fiscal 2021, as compared to $6.9 million in the same period of the prior fiscal year, an increase of approximately $2.1 million, or 31%. The increase in revenue is primarily attributed to an increase in sales to customers in the telecommunications market, as well as the commercial and defense markets. Revenue generated by our specialty products was approximately $862,000 in the first half of fiscal 2021, a decrease of approximately $431,000, or 33%, compared to $1.3 million in the same period of the prior fiscal year. This decrease is primarily related to NRE project revenue in the first half of fiscal 2020 that did not repeat in the second half of fiscal 2021.

Cost of Sales and Gross Margin

Three months ended December 31, 2020, compared to three months ended December 31, 2019

Gross margin in the second quarter of fiscal 2021 was approximately $3.6 million, a decrease of 8%, as compared to approximately $3.9 million in the same period of the prior fiscal year. Total cost of sales was approximately $6.3 million for the second quarter of fiscal 2021, compared to $5.7 million for the same period of the prior fiscal year. Gross margin as a percentage of revenue was 37% for the second quarter of fiscal 2021, compared to 41% for the same period of the prior fiscal year. The decrease in gross margin as a percentage of revenue is due to both the mix of products sold in each respective period, as well as due to the initial volume deliveries of new products and sales contracts.  The acceleration of new lenses moving into the volume production stage, and alignments required for orders from the increasing number of new customers, resulted in traditional start-up inefficiencies, which negatively impacted margins but which issues are expected to be reduced as the respective programs mature. The mix of infrared product sales for the second quarter of fiscal 2021 was more heavily weighted toward volume production orders, some of which consisted of products we only recently started producing in mass, and for which we have experienced some yield issues in connection with BD6 coatings, which increased our costs. We are in the process of resolving these technical issues and expect to bring our manufacturing efficiencies to a level similar to our existing products. Additionally, in comparison, the second quarter of fiscal 2020 also included a larger mix of NRE project revenue, which naturally has a higher margin contribution than other products. Most of those NRE projects did not repeat in the second quarter of fiscal 2021.

Six months ended December 31, 2020, compared to six months ended December 31, 2019

Gross margin in the first half of fiscal 2021 was approximately $7.5 million, an increase of 18%, as compared to approximately $6.3 million in the same period of the prior fiscal year. Total cost of sales was approximately $12.0 million for the first half of fiscal 2021, compared to $10.8 million for the same period of the prior fiscal year. The increases in gross margin and cost of sales are primarily driven by the increase in sales. Gross margin as a percentage of revenue was 38% for the first half of fiscal 2021, compared to 37% for the same period of the prior fiscal year. The increase in gross margin as a percentage of revenue is primarily due to the increase in revenue and volumes for both our PMO and Infrared product groups. In addition, there were several factors that negatively impacted the first quarter of fiscal 2020, such as increased tariffs, the impacts of which have since been mitigated. During the first half of fiscal 2021 we began high-volume delivery of several key OEM projects, which orders consisted of products with both our molded as well as diamond turned BD6 material. As is typical of scaling new products into volume production, we experienced a number of technical challenges, both related to the fabrication of the components, as well as some of the value-added activities such as coating and assembly. While such early-stage problems are common, we expect to resolve the issues, improve production yields and elevate the products to their target margin levels.

Selling, General and Administrative

Three months ended December 31, 2020, compared to three months ended December 31, 2019

Selling, general and administrative (“SG&A”) costs were approximately $2.8 million for the second quarter of fiscal 2021, an increase of approximately $564,000, or 26%, as compared to approximately $2.2 million in the same period of the prior fiscal year. The increase is primarily due to approximately $400,000 of non-recurring additional compensation to our former Chief Executive Officer, as previously disclosed in the Current Report on Form 8-K filed with the SEC on November 18, 2020. The remaining increase in SG&A costs as compared to the same period of the prior fiscal year is due to increases in personnel-related costs associated with a moderate increase in headcount, as well as an increase in outside consulting services for projects related to operational improvements.

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Six months ended December 31, 2020, compared to six months ended December 31, 2019

SG&A costs were approximately $5.2 million for the first half of fiscal 2021, an increase of approximately $663,000, or 15%, as compared to approximately $4.5 million in the same period of the prior fiscal year. The increase is primarily due to approximately $400,000 of non-recurring additional compensation to our former Chief Executive Officer, as previously disclosed in the Current Report on Form 8-K filed with the SEC on November 18, 2020. The remaining increase in SG&A costs as compared to the same period of the prior fiscal year is due to increases in personnel-related costs associated with a moderate increase in headcount, as well as an increase in outside consulting services for projects related to operational improvements.

New Product Development

Three months ended December 31, 2020, compared to three months ended December 31, 2019

New product development costs were approximately $530,000 in the second quarter of fiscal 2021, an increase of approximately $61,000, or 13%, as compared to the same period of the prior fiscal year. This increase was primarily due to the addition of engineering employees in order to support the demand for optical design.

Six months ended December 31, 2020, compared to six months ended December 31, 2019

New product development costs were approximately $980,000 in the first half of fiscal 2021, an increase of approximately $83,000, or 9%, as compared to the same period of the prior fiscal year. This increase was primarily due to the addition of engineering employees in order to support the demand for optical design.

Other Income (Expense)

Interest expense was approximately $55,000 and $114,000 for the three and six months ended December 31, 2020, respectively, as compared to $89,000 and $188,000 for the three and six months ended December 31, 2019, respectively. The decrease in interest expense is due to lower interest rates and a 7% reduction in total debt from December 31, 2019 to December 31, 2020.

Other income, net, was approximately $93,000 and $6,000 for the three and six months ended December 31, 2020, respectively, as compared to other income of $123,000 and other expense of $393,000 for the three and six months ended December 31, 2019, respectively. Other income and expenses are primarily comprised of net gains losses on foreign exchange transactions. 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. During the second quarter of fiscal 2021, we incurred a net foreign currency transaction gain of approximately $77,000, compared to $119,000 for the same period of the prior fiscal year. During the first half of fiscal 2021, we incurred net foreign currency transaction losses of approximately $21,000, compared to $376,000 for the same period of the prior fiscal year.

Income Taxes

During the second quarter of fiscal 2021, income tax expense was approximately $241,000, compared to approximately $322,000 for the same period of the prior fiscal year, primarily related to income taxes from our operations in China. Income taxes for the second quarter of fiscal 2020 also included Chinese withholding taxes of $200,000 associated with intercompany dividend declared by LPOIZ in December 2019.

During the first half of fiscal 2021, income tax expense was approximately $676,000, compared to approximately $470,000 for the same period of the prior fiscal year. Income taxes for the first half of fiscal 2021 and the first half of fiscal 2020 also included Chinese withholding taxes of $300,000 and $200,000, respectively, associated with intercompany dividends declared by LPOIZ during the first quarter of fiscal 2021 and the second quarter of fiscal 2020. While these repatriation transactions resulted in some additional Chinese withholding taxes, LPOIZ currently qualifies for a reduced Chinese income tax rate; therefore, the total income tax on those earnings was still lower than it would have been using the normal income tax rate. Please refer to Note 8, Income Taxes, in the unaudited Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q for additional information.

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Net Income (Loss)

Net loss for the second quarter of fiscal 2021 was approximately $146,000, or $0.01 basic and diluted loss per share, compared to net income of $769,000, or $0.03 basic and diluted earnings per share, for the second quarter of fiscal 2020. The decrease in net income for the second quarter of fiscal 2021, as compared to the same period of the prior fiscal year, is primarily attributable to lower operating income, which was partially due to lower gross margin, as well as an increase in SG&A and new product development expenses. The increase in SG&A was largely due to approximately $400,000 of non-recurring additional compensation for our former Chief Executive Officer, as previously disclosed in the Current Report on Form 8-K filed with the SEC on November 18, 2020. These differences decreased operating income by approximately $1.0 million for the second quarter of fiscal 2021, as compared to the same period of the prior fiscal year. This decrease was partially offset by a favorable difference of approximately $81,000 in the provision for income taxes.

Net loss for the first half of fiscal 2021 was approximately $49,000, or $0.00 basic and diluted loss per share, compared to a net loss of $606,000, or $0.02 basic and diluted loss per share, for the first half of fiscal 2020. The decrease in net loss for the first half of fiscal 2021 is primarily attributable to the increase in sales, resulting in higher gross margin, partially offset by increases in SG&A and new product development costs, of which approximately $400,000 relates to non-recurring additional compensation to our former Chief Executive Officer, as previously disclosed in the Current Report on Form 8-K filed with the SEC on November 18, 2020. These differences increased operating income by approximately $290,000 for the first half of fiscal 2021, as compared to the same period of the prior fiscal year. In addition, there was a favorable difference in foreign exchange gains and losses of $355,000. These increases were partially offset by an unfavorable difference of approximately $206,000 in the provision for income taxes.

Weighted-average common shares outstanding were 26,117,239, basic and diluted, in the second quarter of fiscal 2021, compared to 25,837,903 and 27,361,273, basic and diluted, respectively in the second quarter of fiscal 2020. Weighted-average common shares outstanding were 26,049,750, basic and diluted, in the first half of fiscal 2021, compared to 25,832,337, basic and diluted, in the first half of fiscal 2020. The increase in the weighted-average basic common shares was due to the issuance of shares of Class A common stock under the 2014 ESPP and upon the exercises of stock options and RSUs.

Liquidity and Capital Resources

As of December 31, 2020, we had working capital of approximately $14.1 million and total cash and cash equivalents of approximately $5.3 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. Historically, we considered unremitted earnings held by our foreign subsidiaries to be permanently reinvested. However, during fiscal 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 significant 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 2020, we repatriated approximately $2 million from LPOIZ. Based on retained earnings as of December 31, 2020, the end of the prior statutory tax year, LPOIZ had an additional $7.6 million available and LPOI did not have any earnings available for repatriation. Historically, we did not provide for future Chinese withholding taxes on the related earnings based on our previous intent not to repatriate earnings. However, during fiscal 2020 we began to accrue for these taxes on the portion of earnings that we intend to repatriate.

Loans payable consists of the BankUnited Term Loan and the BankUnited Revolving Line, both pursuant to the Amended Loan Agreement, and the subordinated Equipment Loan. The Amended Loan Agreement also provides for a BankUnited Guidance Line. As of December 31, 2020, the outstanding balance on the BankUnited Term Loan was approximately $4.8 million, the outstanding balance on the BankUnited Revolving Line was $300,000, and there were no borrowings outstanding on the Guidance Line. The outstanding balance on the Equipment Loan was approximately $272,000 as of December 31, 2020.

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The Amended Loan Agreement includes certain customary covenants. As of December 31, 2020, we were in compliance with all covenants. For additional information, see Note 12, Loans Payable, to the unaudited Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q.

We generally rely on cash from operations and equity and debt offerings, to the extent available, to satisfy our liquidity needs and to maintain our ability to repay the BankUnited Term Loan. 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. We will also continue efforts to keep costs under control as we seek renewed sales growth. Our efforts are directed toward generating positive cash flow and profitability. If these efforts are not successful, we may need to raise additional capital. Should capital not be available to us at reasonable terms, other actions may become necessary in addition to cost control measures and continued efforts to increase sales. These actions may include exploring strategic options for the sale of the Company, the sale of certain product lines, the creation of joint ventures or strategic alliances under which we will pursue business opportunities, the creation of licensing arrangements with respect to our technology, or other alternatives.

Cash Flows – Financings:

Net cash used in financing activities was approximately $116,000 in the first half of fiscal 2021, compared to approximately $489,000 used in the same period of the prior fiscal year. Cash used in financing activities for the first half of fiscal 2021 reflects approximately $532,000 in principal payments on our loans and finance leases, offset by proceeds of $275,000 from the Equipment Loan, and approximately $140,000 in proceeds from the exercise of stock options, and from the sale of Class A common stock under the 2014 ESPP. Cash used in financing activities for the first half of fiscal 2020 reflects approximately $501,000 in principal payments on our loans and capital leases, net of approximately $12,000 in proceeds from the sale of Class A common stock under the 2014 ESPP.

Cash Flows – Operating:

Cash flow provided by operations was approximately $1.5 million for the first half of fiscal 2021, compared to approximately $938,000 for the same period of the prior fiscal year. The increase in cash flow from operations for the first half of fiscal 2021 is primarily due to the decrease in the net loss. We anticipate continued improvement in our cash flows provided by operations in future years, based on our forecasted sales growth and anticipated margin improvements, partially offset by marginal increases in sales and marketing, and new product development expenditures.

Cash Flows – Investing:

During the first half of fiscal 2021, we expended approximately $2.2 million in investments in capital equipment, compared to approximately $1.2 million in the first half of fiscal 2020. The majority of our capital expenditures during the first half of fiscal 2021 were related to the continued expansion of our infrared coating capacity as well as increasing our lens pressing and dicing capacity to meet current and forecasted demand. Overall, we anticipate that the level of capital expenditures during fiscal 2021 will be higher than in fiscal 2020, however, the total amount expended will depend on opportunities and circumstances.

Contractual Obligations and Commitments

As of December 31, 2020, our principal commitments consisted of obligations under operating and finance leases, and debt agreements. No material changes occurred during the first half of fiscal 2021 in our contractual cash obligations to repay debt or to make payments under operating and finance leases, or in our contingent liabilities as disclosed in our Annual Report on Form 10-K for the year ended June 30, 2020.

Off Balance Sheet Arrangements

We do not engage in any activities involving variable interest entities or off-balance sheet arrangements.

Critical Accounting Policies and Estimates

There have been no material changes to our critical accounting policies and estimates during the three months ended December 31, 2020 from those disclosed in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, of our Annual Report on Form 10-K for the year ended June 30, 2020.

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How We Operate

We have continuing sales of two basic types: sales via ad-hoc purchase orders of mostly standard product configurations (our “turns” business) and the more challenging and potentially more rewarding business of customer product development. In this latter type of business, we work with customers to help them determine optical specifications and even create certain optical designs for them, including complex multi-component designs that we call “engineered solutions.” This is followed by “sampling” 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, as compared to the turns business, which is unpredictable and uneven. This annuity revenue stream can also generate low-cost, high-volume type orders. 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:

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Maintaining an optical design and new product sampling capability, including a high-quality and responsive optical design engineering staff;

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The fact that as our customers take products of this nature into higher volume, commercial production (for example, in the case of molded optics, this may be volumes over one million pieces per year) they begin to focus on reducing costs – which often leads them to turn to larger or overseas producers, even if sacrificing quality; and

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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 merchant market, a market that we believe is underserved in this area of service offering. 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 a critical component from foreign merchant production sources. For information regarding revenue recognition related to our various revenue streams, refer to Critical Accounting Policies and Estimates in our Annual Report on Form 10-K dated June 30, 2020.

Our Key Performance Indicators:

Typically, on a weekly basis, management reviews a number of performance indicators, both qualitative and quantitative. These indicators change from time to time as the opportunities and challenges in the business change. These indicators are 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 considered key and reviewed regularly are as follows:

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Sales backlog;

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Revenue dollars and units by product group; and

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Other key indicators.

These indicators are also used to determine tactical operating actions and changes and are discussed in more detail below. Management is evaluating these key indicators as we transition to our new strategic plan, and is implementing certain changes and updates as further described below.

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Sales Backlog

We believe our sales growth has been and continues to be our best 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. Historically, we evaluated our backlog on a 12-month basis, which examined orders required by a customer for delivery within a one-year period . To better align with our strategic focus on longer-term customer orders and relationships, beginning in fiscal 2021, management began evaluating 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. Generally, a higher total backlog is better for us.

Our total backlog at December 31, 2020 was approximately $23.8 million, an increase of 6%, as compared to $22.6 million as of December 31, 2019. Compared to the end of fiscal 2020, our total backlog increased by 9% during the first half of fiscal 2021. Backlog growth rates for the last five fiscal quarters are:

Quarter	Total Backlog ($ 000)	Change From Prior Year End	Change From Prior Quarter End
Q2 2020	$ 22,559	24%	36%
Q3 2020	$ 22,772	26%	1%
Q4 2020	$ 21,908	21%	-4%
Q1 2021	$ 20,866	-5%	-5%
Q2 2021	$ 23,835	9%	14%

The majority of the increase in our backlog from the first quarter of fiscal 2021 to the second quarter of fiscal 2021 was largely due to the renewal of a large annual contract for infrared products during the second quarter, which we will begin shipping against in the third quarter of fiscal 2021, after shipments against the previous contract are completed. The timing of this renewal is similar to the prior fiscal year, however the value increased by 16% as compared to the prior annual contract renewal. Backlog levels may increase substantially at the time these orders are received, and the total backlog will subsequently be drawn down as shipments are made against these orders. These annual and multi-year contracts are expected to renew in future quarters.

We continue to experience strong demand for infrared products used in the industrial, defense and first responder sectors. Over the last several quarters, demand for medical applications, including fever detection, has driven some of the increased demand for infrared products. Demand for infrared products continues to be fueled by interest in lenses made with our new BD6 material. We expect to maintain moderate growth in our visible PMO product group by continuing to diversify and offer new applications, with a cost competitive structure. Over the past several years, we have broadened our capabilities to include additional glass types and the ability to make much larger lenses, providing long-term opportunities for our technology roadmap and market share expansion. Based on our backlog and recent quote activity, we expect increases in revenue from sales of both molded and turned infrared products and visible PMO products for the remainder of fiscal 2021.

Revenue Dollars and Units by Product Group

The following table sets forth revenue dollars and units for our three product groups for the three and six-month periods ended December 31, 2020 and 2019:

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	(unaudited)					Year-to-
	Three Months Ended		Six Months Ended		Quarter	date
	December 31,		December 31,		%	%
	2020	2019	2020	2019	Change	Change
Revenue
PMO	$4,742,459	$3,710,549	$9,036,062	$6,895,007	28%	31%
Infrared Products	4,808,102	5,003,874	9,532,606	8,963,499	-4%	6%
Specialty Products	371,610	885,489	862,475	1,293,336	-58%	-33%
Total revenue	$9,922,171	$9,599,912	$19,431,143	$17,151,842	3%	13%
Units
PMO	1,008,768	779,434	2,135,545	1,348,164	29%	58%
Infrared Products	103,703	74,597	282,625	139,654	39%	102%
Specialty Products	7,704	14,133	17,337	23,050	-45%	-25%
Total units	1,120,175	868,164	2,435,507	1,510,868	29%	61%

Three months ended December 31, 2020

Our revenue increased by approximately $322,000 for the second quarter of fiscal 2021, as compared to the same period of the prior fiscal year, driven by an increase in PMO product sales.

Revenue generated by the PMO product group during the second quarter of fiscal 2021 was $4.7 million, an increase of approximately $1.0 million, or 28%, as compared to the same period of the prior fiscal year. The increase in revenue is attributed to increases in sales to customers in the telecommunications market, as well as the defense and industrial markets and sales through our catalog and distribution channels. Sales of PMO units increased by 29%, as compared to the same period of the prior fiscal year, and average selling prices decreased 1%. Although the volume increase was largely driven by the increase in telecommunications products sales, which typically have lower average selling prices, the average selling price for telecommunications products was similar to the same period of the prior fiscal year, and the average selling price for products sold to several of our other end markets was higher than in the same period of the prior fiscal year. The unit volume for telecommunications products increased by approximately 61% for the second quarter of fiscal 2021, as compared to the same period of the prior fiscal year.

Revenue generated by the infrared product group during the second quarter of fiscal 2021 was $4.8 million, a decrease of approximately $196,000, or 4%, as compared to the same period of the prior fiscal year. The decrease in revenue is attributed to decreases in sales to customers in the commercial and defense markets, partially offset by an increase in sales to customers in the industrial market. During the second quarter of fiscal 2021, sales of infrared units increased by 39%, as compared to the prior year period, and average selling prices decreased 31%. The increase in units and decrease in average selling prices are driven by an increase in sales of molded infrared products, including products made with our new BD6 material, which are higher in volume and lower in prices than diamond-turned infrared products. Industrial applications, firefighting cameras, and other public safety applications continue to be the primary drivers of the increased demand for infrared products, including thermal imaging assemblies. More recently, we have seen an increase in demand for medical and temperature sensing applications, such as fever detection. Demand for temperature sensing applications have been accelerated by COVID-19, and although the demand has leveled off since the initial spike, it remains elevated.

In the second quarter of fiscal 2021, our specialty products revenue decreased by $514,000, or 58%, as compared to the same period of the prior fiscal year, primarily related to NRE project revenue in the second quarter of fiscal 2020 that did not repeat in the second quarter of fiscal 2021.

Six months ended December 31, 2020

Our revenue increased by approximately $2.3 million for the first half of fiscal 2021, as compared to the same period of the prior fiscal year, primarily driven increases in both PMO and infrared product sales.

Revenue generated by the PMO product group during the first half of fiscal 2021 was $9.0 million, an increase of approximately $2.1 million, or 31%, as compared to the same period of the prior fiscal year. The increase in revenue is attributed to increases in sales to customers in the telecommunications market related to 5G infrastructure equipment, as well as the commercial and defense markets. Sales of PMO units increased by 58%, as compared to the same period of the prior fiscal year, however, average selling prices decreased 17%, due to the significant increase in telecommunications products sales, which typically have higher volumes and lower average selling prices. The unit volume for telecommunications products increased by approximately 100% for the first half of fiscal 2021, as compared to the same period of the prior fiscal year.

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Revenue generated by the infrared product group during the first half of fiscal 2021 was $9.5 million, an increase of approximately $569,000, or 6%, as compared to the same period of the prior fiscal year. The increase in revenue is primarily attributed to an increase in sales to customers in the industrial market. During the first half of fiscal 2021, sales of infrared units increased by 102%, as compared to the prior year period, and average selling prices decreased 47%. The increase in units and decrease in average selling prices are driven by an increase in sales of molded infrared products, including products made with our new BD6 material, which are higher in volume and lower in prices than diamond-turned infrared products. Industrial applications, firefighting cameras, and other public safety applications continue to be the primary drivers of the increased demand for infrared products, including thermal imaging assemblies. More recently, we have seen an increase in demand for medical and temperature sensing applications, such as fever detection. Demand for temperature sensing applications have been accelerated by COVID-19, and although the demand has leveled off since the initial spike, it remains elevated.

In the first half of fiscal 2021, our specialty products revenue decreased by $431,000, or 33%, as compared to the same period of the prior fiscal year, primarily due to NRE project revenue in the first half of fiscal 2020 that did not repeat in the first half of fiscal 2021. The decrease in NRE project revenue was partially offset by increased sales of collimator assemblies to customers in the industrial and commercial markets.

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 evaluating the pipeline of sales opportunities, 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

EBITDA is a non-GAAP financial measure 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 necessarily 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.”

30

We believe EBITDA is helpful for investors to better understand our underlying business operations. The following table adjusts net income (loss) to EBITDA for the three and six months ended December 31, 2020 and 2019:

	(unaudited)
	Three Months Ended December 31,		Six Months Ended December 31,
	2020	2019	2020	2019
Net income (loss)	$(146,545)	$769,117	$(49,477)	$(606,040)
Depreciation and amortization	864,855	868,148	1,691,163	1,760,220
Income tax provision	241,112	321,869	675,752	470,187
Interest expense	55,147	89,257	113,696	187,798
EBITDA	$1,014,569	$2,048,391	$2,431,134	$1,812,165
% of revenue	10%	21%	13%	11%

Our EBITDA for the three months ended December 31, 2020 was approximately $1.0 million, compared to $2.0 million for the same period of the prior fiscal year. The decrease in EBITDA in the second quarter of fiscal 2021 was primarily due to lower operating income, as compared to the same period of the prior fiscal year. The decrease in operating income for the second quarter of fiscal 2021, as compared to the same period of the prior fiscal year, was partially due to lower gross margin, as well as an increase in SG&A and new product development expenses, of which approximately $400,000 was related to non-recurring additional compensation for our former Chief Executive Officer, as previously disclosed in the Current Report on Form 8-K filed with the SEC on November 18, 2020.

Our EBITDA for the six months ended December 31, 2020 was approximately $2.4 million, compared to $1.8 million for the same period of the prior fiscal year. The increase in EBITDA in the first half of fiscal 2021 was primarily due to higher operating income, as compared to the same period of the prior fiscal year. The increase in operating income for the second quarter of fiscal 2021, as compared to the same period of the prior fiscal year, was largely due to higher revenues and gross margin, partially offset by an increase in SG&A and new product development expenses, of which approximately $400,000 was related to non-recurring additional compensation for our former Chief Executive Officer, as previously disclosed in the Current Report on Form 8-K filed with the SEC on November 18, 2020.

Item 4. Controls and Procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of December 31, 2020, the end of the period covered by this Quarterly Report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of December 31, 2020 in reporting on a timely basis information required to be disclosed by us in the reports we file or submit under the Exchange Act.

During the fiscal quarter ended December 31, 2020, there was no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

31

PART II OTHER INFORMATION

Item 1. Legal Proceedings

None

Item 1A. Risk Factors

None.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None

Item 3. Defaults Upon Senior Securities

None

Item 4. Mine Safety Disclosures

None

Item 5. Other Information

None

32

Item 6.  Exhibits

The following exhibits are filed herewith as a part of this report.

Exhibit Number		Description
3.1.1	Certificate of Incorporation of LightPath Technologies, Inc., filed June 15, 1992 with the Secretary of State of Delaware, which was filed as Exhibit 3.1.1 to our Annual Report on Form 10-K (File No. 000-27548) filed with the Securities and Exchange Commission on September 10, 2020, and is incorporated herein by reference thereto.
3.1.2	Certificate of Amendment to Certificate of Incorporation of LightPath Technologies, Inc., filed October 2, 1995 with the Secretary of State of Delaware, which was filed as Exhibit 3.1.2 to our Annual Report on Form 10-K (File No. 000-27548) filed with the Securities and Exchange Commission on September 10, 2020, and is incorporated herein by reference thereto.
3.1.3	Certificate of Designations of Class A common stock and Class E-1 common stock, Class E-2 common stock, and Class E-3 common stock of LightPath Technologies, Inc., filed November 9, 1995 with the Secretary of State of Delaware, which was filed as Exhibit 3.1.3 to our Annual Report on Form 10-K (File No. 000-27548) filed with the Securities and Exchange Commission on September 10, 2020, and is incorporated herein by reference thereto.
3.1.4	Certificate of Designation of Series A Preferred Stock of LightPath Technologies, Inc., filed July 9, 1997 with the Secretary of State of Delaware, which was filed as Exhibit 3.4 to our Annual Report on Form 10-KSB40 filed with the Securities and Exchange Commission on September 11, 1997, and is incorporated herein by reference thereto.
3.1.5	Certificate of Designation of Series B Stock of LightPath Technologies, Inc., filed October 2, 1997 with the Secretary of State of Delaware, which was filed as Exhibit 3.2 to our Quarterly Report on Form 10-QSB (File No. 000-27548) filed with the Securities and Exchange Commission on November 14, 1997, and is incorporated herein by reference thereto.
3.1.6	Certificate of Amendment of Certificate of Incorporation of LightPath Technologies, Inc., filed November 12, 1997 with the Secretary of State of Delaware, which was filed as Exhibit 3.1 to our Quarterly Report on Form 10-QSB (File No. 000-27548) filed with the Securities and Exchange Commission on November 14, 1997, and is incorporated herein by reference thereto.
3.1.7	Certificate of Designation of Series C Preferred Stock of LightPath Technologies, Inc., filed February 6, 1998 with the Secretary of State of Delaware, which was filed as Exhibit 3.2 to our Registration Statement on Form S-3 (File No. 333-47905) filed with the Securities and Exchange Commission on March 13, 1998, and is incorporated herein by reference thereto.
3.1.8	Certificate of Designation, Preferences and Rights of Series D Participating Preferred Stock of LightPath Technologies, Inc. filed April 29, 1998 with the Secretary of State of Delaware, which was filed as Exhibit 1 to our Registration Statement on Form 8-A (File No. 000-27548) filed with the Securities and Exchange Commission on April 28, 1998, and is incorporated herein by reference thereto.
3.1.9	Certificate of Designation of Series F Preferred Stock of LightPath Technologies, Inc., filed November 2, 1999 with the Secretary of State of Delaware, which was filed as Exhibit 3.2 to our Registration Statement on Form S-3 (File No: 333-94303) filed with the Securities and Exchange Commission on January 10, 2000, and is incorporated herein by reference thereto.
3.1.10	Certificate of Amendment of Certificate of Incorporation of LightPath Technologies, Inc., filed February 28, 2003 with the Secretary of State of Delaware, which was filed as Appendix A to our Proxy Statement (File No. 000-27548) filed with the Securities and Exchange Commission on January 24, 2003, and is incorporated herein by reference thereto.
3.1.11	Certificate of Amendment of Certificate of Incorporation of LightPath Technologies, Inc., filed March 1, 2016 with the Secretary of State of Delaware, which was filed as Exhibit 3.1.11 to our Quarterly Report on Form 10-Q (File No: 000-27548) filed with the Securities and Exchange Commission on November 14, 2016, and is incorporated herein by reference thereto.

33

3.1.12	Certificate of Amendment of Certificate of Incorporation of LightPath Technologies, Inc., filed October 30, 2017 with the Secretary of State of Delaware, which was filed as Exhibit 3.1 to our Current Report on Form 8-K (File No: 000-27548) filed with the Securities and Exchange Commission on October 31, 2017, and is incorporated herein by reference thereto.
3.1.13	Certificate of Amendment of Certificate of Designations of Class A Common Stock and Class E-1 Common Stock, Class E-2 Common Stock, and Class E-3 Common Stock of LightPath Technologies, Inc., filed October 30, 2017 with the Secretary of State of Delaware, which was filed as Exhibit 3.2 to our Current Report on Form 8-K (File No: 000-27548) filed with the Securities and Exchange Commission on October 31, 2017, and is incorporated herein by reference thereto.
3.1.14	Certificate of Amendment of Certificate of Designation, Preferences and Rights of Series D Participating Preferred Stock of LightPath Technologies, Inc., filed January 30, 2018 with the Secretary of State of Delaware, which was filed as Exhibit 3.1 to our Current Report on Form 8-K (File No: 000-27548) filed with the Securities and Exchange Commission on February 1, 2018, and is incorporated herein by references thereto.
3.2.1	Second Amended and Restated Bylaws of LightPath Technologies, Inc., which was filed as Exhibit 3.1 to our Current Report on Form 8-K (File No: 000-27548) filed with the Securities and Exchange Commission on February 2, 2021, and is incorporated herein by reference thereto.
10.1	Letter Agreement, dated November 13, 2020, by and between the Company and J. James Gaynor.*
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934*
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934*
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 of Chapter 63 of Title 18 of the United States Code*
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 of Chapter 63 of Title 18 of the United States Code*

101.INS	XBRL Instance Document*
101.SCH	XBRL Taxonomy Extension Schema Document*
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document*
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document*
101.LAB	XBRL Taxonomy Extension Label Linkbase Document*
101.PRE	XBRL Taxonomy Presentation Linkbase Document*

*filed herewith

34

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	LIGHTPATH TECHNOLOGIES, INC.
Date: February 3, 2021	By:	/s/ Shmuel Rubin
		Shmuel Rubin
		President and Chief Executive Officer

Date: February 3, 2021	By:	/s/ Donald O. Retreage, Jr.
		Donald O. Retreage, Jr.
		Chief Financial Officer

35

EX-10.1

Exhibit 10.1

2603 Challenger Tech Ct., Suite 100, Orlando, FL 32826

407-382-4003 FAX 407-382-4007

November 12, 2020

Jim Gaynor

1284 W Langley Court

Lake Mary, FL 32746-5004

Dear Jim:

Based on our conversations, I understand that you did not exercise certain of your option awards prior to their expiration on September 30, 2020. In consideration for your service and contribution as LightPath Technologies, Inc.’s (“LightPath,” “we,” “our,” or “us”) Chief Executive Officer and a director of our Board of Directors for more than 13 years, and all of your hard work and efforts during that time, we have decided to pay you the gross sum of $400,000.00 to be paid in three equal payments on the following dates Monday, November 16, 2020, Friday, January 15, 2021, and Thursday, April 15, 2021 (the “Cash Award”). The Cash Award is intended to partially compensate you for the loss of your expired options. The payment of the Cash Award will be treated as employment compensation, subject to payroll taxes and regular individual income tax. The portion of the fiscal 2020 annual incentive bonus award that the Compensation Committee determined that you are entitled to, in the amount of $43,000, will also be paid on Monday, November 16, 2020.

The payment of the Cash Award and the portion of your fiscal 2020 annual incentive bonus award are the only remaining payments we owe to you. We also confirm that as of the date hereof, your option award granted on November 15, 2018, exercisable for up to 6,092 shares of our Class A common stock at an exercise price of $2.10 per share, remains outstanding.

Further, by signing below you are agreeing that in exchange for the Cash Award and your fiscal 2020 annual incentive bonus award, you are releasing and forever discharging LightPath, its subsidiaries, affiliated companies, predecessors, successors, and assigns, as well as its stockholders, directors, officers, administrators, agents, employee benefit plans, and current and former employees of all of the foregoing, personally and in their respective capacities, and any other person or entity representing or succeeding to any person or entity from any and all claims, demands, rights, charges, actions, interests, debts, liabilities, lost compensation, lost benefits, damages, costs, interest, attorneys’ fees and expenses, or causes of action of whatever type or nature, whether legal or equitable, whether in tort or in contract, whether known or unknown to you that you may now have against any of these parties, either individually, jointly, or severally, based upon actions that have occurred from the beginning of time to the date of this letter.

In addition, this letter, and the payment of the Cash Award, will not otherwise amend or modify the agreements set forth in the Amendment to Employment Letter dated March 13, 2020, and your Employment Letter dated June 10, 2008.

Please indicate your acceptance of this offer by signing below and returning one copy of the letter, with your signature, to me no later than November 15, 2020. This signed letter can be scanned as a PDF and emailed to me at bobripp7@gmail.com.

If you have any questions concerning any of the foregoing, please do not hesitate to contact me. In addition, if you have any questions regarding any of your already outstanding equity awards, please reach out to us so that we can be sure to provide you with any pertinent dates or other information. I hope you are enjoying your retirement.

Sincerely,

/s/ Robert Ripp

Robert Ripp

Chairman of the Board

LightPath Technologies, Inc.

ACCEPTED AND AGREED:

By:            

_/s/ J. James Gaynor_

Date:                       

_November 13, 2020_

EX-31.1

Exhibit 31.1

Certification of Chief Executive Officer

Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934

I, Shmuel Rubin, certify that:

1.            

I have reviewed this Quarterly Report on Form 10-Q of LightPath Technologies, Inc.;

2.            

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.            

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.            

The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)            Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)            Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

c)            Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)            Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.            

The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a)            All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b)            Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: February 3, 2021

/s/ Shmuel Rubin                                             

Shmuel Rubin

President and Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification of Chief Financial Officer

Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934

I, Donald O. Retreage, Jr., certify that:

1.            

I have reviewed this Quarterly Report on Form 10-Q of LightPath Technologies, Inc.;

2.            

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.            

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.            

The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)            Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)            Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

c)            Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)            Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.            

The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a)            All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b)            Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: February 3, 2021

/s/ Donald O. Retreage, Jr. 

Donald O. Retreage, Jr.

Chief Financial Officer

EX-32.1

Exhibit 32.1

Certification of Chief Executive Officer

Pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code

Pursuant to U.S.C. Section 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned Chief Executive Officer of LightPath Technologies, Inc. (the "Company") does hereby certify, to the best of such officer's knowledge, that:

1.        

The Quarterly Report on Form 10-Q of the Company for the quarterly period ended December 31, 2020 (the "Report") fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

2.        

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: February 3, 2021	By:	/s/ Shmuel Rubin
		Shmuel Rubin
		President and Chief Executive Officer

The certifications set forth above are being furnished as an exhibit solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and shall not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended.

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to LightPath Technologies, Inc. and will be retained by LightPath Technologies, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

Certification of Chief Financial Officer

Pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code

Pursuant to U.S.C. Section 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned Chief Financial Officer of LightPath Technologies, Inc. (the "Company") does hereby certify, to the best of such officer's knowledge, that:

1.        

The Quarterly Report on Form 10-Q of the Company for the quarterly period ended December 31, 2020 (the "Report") fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

2.        

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: February 3, 2021	By:	/s/  Donald O. Retreage, Jr.
		Donald O. Retreage, Jr.
		Chief Financial Officer

The certifications set forth above are being furnished as an exhibit solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and shall not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended.

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to LightPath Technologies, Inc. and will be retained by LightPath Technologies, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document and Entity Information - shares	6 Months Ended
	Dec. 31, 2020	Feb. 01, 2021
Cover [Abstract]
Entity Registrant Name	LIGHTPATH TECHNOLOGIES INC
Entity Central Index Key	0000889971
Document Type	10-Q
Document Period End Date	Dec. 31, 2020
Amendment Flag	false
Current Fiscal Year End Date	--06-30
Entity Interactive Data Current	Yes
Entity Incorporation, State or Country Code	DE
Entity File Number	000-27548
Entity's Reporting Status Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Emerging Growth Company	false
Entity Small Business	true
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		26,138,292
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2021

XML

Consolidated Balance Sheets (Unaudited) - USD ($)	Dec. 31, 2020	Jun. 30, 2020
Current assets:
Cash and cash equivalents	$ 5,306,243	$ 5,387,388
Trade accounts receivable, net of allowance of $10,352 and $9,917	6,842,818	6,188,726
Inventories, net	9,693,277	8,984,482
Other receivables	0	132,051
Prepaid expenses and other assets	346,377	565,181
Total current assets	22,188,715	21,257,828
Property and equipment, net	13,631,399	11,799,061
Operating lease right-of-use assets	1,389,428	1,220,430
Intangible assets, net	6,145,423	6,707,964
Goodwill	5,854,905	5,854,905
Deferred tax assets, net	659,000	659,000
Other assets	27,737	75,730
Total assets	49,896,607	47,574,918
Current liabilities:
Accounts payable	2,737,740	2,558,638
Accrued liabilities	1,175,444	992,221
Accrued payroll and benefits	2,164,827	1,827,740
Operating lease liabilities, current	843,533	765,422
Loans payable, current portion	936,615	981,350
Finance lease obligation, current portion	274,112	278,040
Total current liabilities	8,132,271	7,403,411
Finance lease obligation, less current portion	147,031	279,435
Operating lease liabilities, noncurrent	891,849	887,766
Loans payable, less current portion	4,372,429	4,437,365
Total liabilities	13,543,580	13,007,977
Commitments and contingencies
Stockholders' equity:
Preferred stock: Series D, $.01 par value, voting; 500,000 shares authorized; none issued and outstanding	0	0
Common stock: Class A, $.01 par value, voting; 44,500,000 shares authorized; 26,127,361 and 25,891,885 shares issued and outstanding	261,274	258,919
Additional paid-in capital	231,014,560	230,634,056
Accumulated other comprehensive income	2,188,596	735,892
Accumulated deficit	(197,111,403)	(197,061,926)
Total stockholders' equity	36,353,027	34,566,941
Total liabilities and stockholders' equity	$ 49,896,607	$ 47,574,918

XML

Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($)	Dec. 31, 2020	Jun. 30, 2020
Statement of Financial Position [Abstract]
Allowance for doubtful trade accounts receivable	$ 10,352	$ 9,917
Preferred stock: Series D, par value	$ .01	$ 0.01
Preferred stock: Series D, shares authorized	500,000	500,000
Preferred stock: Series D, shares issued	0	0
Preferred stock: Series D, shares outstanding	0	0
Common stock: Class A, par value	$ .01	$ 0.01
Common stock: Class A, shares authorized	44,500,000	44,500,000
Common stock: Class A, shares issued	26,127,361	25,891,885
Common stock: Class A, shares outstanding	26,127,361	25,891,885

XML

Consolidated Statements of Comprehensive Income (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2020	Dec. 31, 2019
Statement of Comprehensive Income [Abstract]
Revenues, net	$ 9,922,171	$ 9,599,912	$ 19,431,143	$ 17,151,842
Cost of sales	6,291,835	5,670,632	11,950,615	10,831,744
Gross margin	3,630,336	3,929,280	7,480,528	6,320,098
Operating expenses:
Selling, general and administrative	2,763,178	2,199,133	5,203,655	4,540,911
New product development	529,902	468,646	980,399	897,057
Amortization of intangibles	281,271	283,279	562,542	566,800
Gain on disposal of property and equipment	(477)	(79,224)	(522)	(129,224)
Total operating expenses	3,573,874	2,871,834	6,746,074	5,875,544
Operating income	56,462	1,057,446	734,454	444,554
Other income (expense):
Interest expense, net	(55,147)	(89,257)	(113,696)	(187,798)
Other income (expense), net	93,252	122,797	5,517	(392,609)
Total other income (expense), net	38,105	33,540	(108,179)	(580,407)
Income (loss) before income taxes	94,567	1,090,986	626,275	(135,853)
Income tax provision	241,112	321,869	675,752	470,187
Net income (loss)	(146,545)	769,117	(49,477)	(606,040)
Foreign currency translation adjustment	723,396	143,056	1,452,704	196,822
Comprehensive income (loss)	$ 576,851	$ 912,173	$ 1,403,227	$ (409,218)
Earnings (loss) per common share (basic)	$ (0.01)	$ 0.03	$ (0.00)	$ (0.02)
Number of shares used in per share calculation (basic)	26,117,239	25,837,903	26,049,750	25,832,337
Earnings (loss) per common share (diluted)	$ (0.01)	$ 0.03	$ (0.00)	$ (0.02)
Number of shares used in per share calculation (diluted)	26,117,239	27,361,273	26,049,750	25,832,337

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Consolidated Statement of Stockholders' Equity (Unaudited) - USD ($)	Class A Common Stock	Additional Paid-in Capital	Accumulated Other Comprehensive Income	Accumulated Deficit	Total
Balance, beginning, shares at Jun. 30, 2019	25,813,895
Balance, beginning at Jun. 30, 2019	$ 258,139	$ 230,321,324	$ 808,518	$ (197,928,855)	$ 33,459,126
Issuance of common stock for:
Employee Stock Purchase Plan, shares	13,370
Employee Stock Purchase Plan	$ 134	12,033			12,167
Exercise of stock options & RSUs, shares	4,394
Exercise of stock options & RSUs	$ 44	(44)			0
Stock-based compensation on stock options & RSUs		98,459			98,459
Foreign currency translation adjustment			53,766		53,766
Net income (loss)				(1,375,157)	(1,375,157)
Balance, ending, shares at Sep. 30, 2019	25,831,659
Balance, ending at Sep. 30, 2019	$ 258,317	230,431,772	862,284	(199,304,012)	32,248,361
Balance, beginning, shares at Jun. 30, 2019	25,813,895
Balance, beginning at Jun. 30, 2019	$ 258,139	230,321,324	808,518	(197,928,855)	33,459,126
Issuance of common stock for:
Foreign currency translation adjustment					196,822
Net income (loss)					(606,040)
Balance, ending, shares at Dec. 31, 2019	25,840,362
Balance, ending at Dec. 31, 2019	$ 258,404	230,527,126	1,005,340	(198,534,895)	33,255,975
Balance, beginning, shares at Sep. 30, 2019	25,831,659
Balance, beginning at Sep. 30, 2019	$ 258,317	230,431,772	862,284	(199,304,012)	32,248,361
Issuance of common stock for:
Exercise of stock options & RSUs, shares	8,703
Exercise of stock options & RSUs	$ 87	(87)			0
Stock-based compensation on stock options & RSUs		95,441			95,441
Foreign currency translation adjustment			143,056		143,056
Net income (loss)				769,117	769,117
Balance, ending, shares at Dec. 31, 2019	25,840,362
Balance, ending at Dec. 31, 2019	$ 258,404	230,527,126	1,005,340	(198,534,895)	33,255,975
Balance, beginning, shares at Jun. 30, 2020	25,891,885
Balance, beginning at Jun. 30, 2020	$ 258,919	230,634,056	735,892	(197,061,926)	34,566,941
Issuance of common stock for:
Employee Stock Purchase Plan, shares	3,306
Employee Stock Purchase Plan	$ 33	10,976			11,009
Exercise of stock options & RSUs, shares	207,640
Exercise of stock options & RSUs	$ 2,076	124,024			126,100
Stock-based compensation on stock options & RSUs		136,849			136,849
Foreign currency translation adjustment			729,308		729,308
Net income (loss)				97,068	97,068
Balance, ending, shares at Sep. 30, 2020	26,102,831
Balance, ending at Sep. 30, 2020	$ 261,028	230,905,905	1,465,200	(196,964,858)	35,667,275
Balance, beginning, shares at Jun. 30, 2020	25,891,885
Balance, beginning at Jun. 30, 2020	$ 258,919	230,634,056	735,892	(197,061,926)	34,566,941
Issuance of common stock for:
Foreign currency translation adjustment					1,452,704
Net income (loss)					(49,477)
Balance, ending, shares at Dec. 31, 2020	26,127,361
Balance, ending at Dec. 31, 2020	$ 261,274	231,014,560	2,188,596	(197,111,403)	36,353,027
Balance, beginning, shares at Sep. 30, 2020	26,102,831
Balance, beginning at Sep. 30, 2020	$ 261,028	230,905,905	1,465,200	(196,964,858)	35,667,275
Issuance of common stock for:
Exercise of stock options & RSUs, shares	24,530
Exercise of stock options & RSUs	$ 246	2,488			2,734
Stock-based compensation on stock options & RSUs		106,167			106,167
Foreign currency translation adjustment			723,396		723,396
Net income (loss)				(146,545)	(146,545)
Balance, ending, shares at Dec. 31, 2020	26,127,361
Balance, ending at Dec. 31, 2020	$ 261,274	$ 231,014,560	$ 2,188,596	$ (197,111,403)	$ 36,353,027

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Consolidated Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Cash flows from operating activities
Net income (loss)	$ (49,477)	$ (606,040)
Adjustments to reconcile net income (loss) to cash provided by operating activities
Depreciation and amortization	1,691,163	1,760,220
Interest from amortization of debt costs	9,286	9,286
Gain on disposal of property and equipment	(522)	(129,224)
Stock-based compensation on stock options & RSU, net	243,016	178,389
Provision for doubtful accounts receivable	0	9,147
Change in operating lease liabilities	(86,804)	(64,090)
Inventory write-offs to allowance	133,204	0
Changes in operating assets and liabilities:
Trade accounts receivables	(654,092)	(1,199,691)
Other receivables	132,051	353,695
Inventories	(841,999)	142,198
Prepaid expenses and other assets	266,797	338,034
Accounts payable and accrued liabilities	699,412	146,547
Net cash provided by operating activities	1,542,035	938,471
Cash flows from investing activities
Purchase of property and equipment	(2,160,710)	(1,153,227)
Proceeds from sale of equipment	0	179,573
Net cash used in investing activities	(2,160,710)	(973,654)
Cash flows from financing activities
Proceeds from exercise of stock options	128,834	0
Proceeds from sale of common stock from Employee Stock Purchase Plan	11,009	12,167
Borrowings on loan payable	275,377	0
Payments on loan payable	(395,257)	(290,675)
Repayment of finance lease obligations	(136,332)	(210,225)
Net cash used in financing activities	(116,369)	(488,733)
Effect of exchange rate on cash and cash equivalents	653,899	196,822
Change in cash and cash equivalents and restricted cash	(81,145)	(327,094)
Cash and cash equivalents and restricted cash, beginning of period	5,387,388	4,604,701
Cash and cash equivalents and restricted cash, end of period	5,306,243	4,277,607
Supplemental disclosure of cash flow information:
Interest paid in cash	105,029	182,241
Income taxes paid	$ 512,499	$ 249,777

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Basis of Presentation

6 Months Ended

Dec. 31, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

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.

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with the requirements of Article 8 of Regulation S-X promulgated under the Exchange Act and, therefore, do not 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. 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 Form 10-K for the fiscal year ended June 30, 2020, 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 Consolidated Balance Sheet as of June 30, 2020 has been derived from the audited financial statements at that date but does not include all of the information and notes required by generally accepted accounting principles for complete financial statements. Results of operations for interim periods are not 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.

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Significant Accounting Policies

6 Months Ended

Dec. 31, 2020

Accounting Policies [Abstract]

Significant Accounting Policies

Our significant accounting policies are provided in Note 2, Summary of Significant Accounting Policies, in the Consolidated Financial Statements in our Annual Report on Form 10-K for the fiscal year ended June 30, 2020. There have been no material changes to our significant accounting policies during the six months ended December 31, 2020, from those disclosed in our Annual Report on Form 10-K for the fiscal year ended June 30, 2020.

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.

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Revenue

6 Months Ended

Dec. 31, 2020

Disaggregation of Revenue [Abstract]

Revenue

Product Revenue

We are a manufacturer of optical components and higher-level assemblies, including precision molded glass aspheric optics, molded and diamond-turned infrared optical components, and other optical materials used to produce products that manipulate light. We design, develop, manufacture, and distribute optical components and assemblies utilizing advanced optical manufacturing processes. We also perform research and development for optical solutions for a wide range of optics markets. Revenue is derived primarily from the sale of optical components and assemblies.

Revenue Recognition

Revenue is generally recognized upon transfer of control, including the risks and rewards of ownership, of promised 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 do not 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 our performance. Deferred revenue was immaterial as of June 30, 2020 and December 31, 2020.

Nature of Products

Revenue from the sale of 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. 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. We have organized our products in three groups: precision molded optics (“PMO”), infrared, and specialty products. Revenues from product development agreements are included in specialty products. Revenue by product group for the three and six months ended December 31, 2020 and 2019 was as follows:

	Three Months Ended December 31,				Six Months Ended December 31,
	2020		2019		2020		2019
PMO	$	4,742,459	$	3,710,549	$	9,036,062	$	6,895,007
Infrared Products		4,808,102		5,003,874		9,532,606		8,963,499
Specialty Products		371,610		885,489		862,475		1,293,336
Total revenue	$	9,922,171	$	9,599,912	$	19,431,143	$	17,151,842

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Inventories

6 Months Ended

Dec. 31, 2020

Inventory Disclosure [Abstract]

Inventories

The components of inventories include the following:

	December 31, 2020			June 30, 2020
Raw materials	$	4,094,767		$	3,876,955
Work in process		3,390,968			2,989,070
Finished goods		3,302,822			3,134,800
Allowance for obsolescence		(1,095,280	)		(1,016,343	)
	$	9,693,277		$	8,984,482

The value of tooling in raw materials, net of the related allowance for obsolescence, was approximately $2.1 million and $2.3 million at December 31, 2020 and June 30, 2020, respectively.

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Property and Equipment

6 Months Ended

Dec. 31, 2020

Property, Plant and Equipment [Abstract]

Property and Equipment

Property and equipment are summarized as follows:

	Estimated		December 31,			June 30,
	Lives (Years)		2020			2020
Manufacturing equipment		5 - 10	$	20,870,729		$	18,444,448
Computer equipment and software		3 - 5		852,575			801,625
Furniture and fixtures		5		364,506			321,418
Leasehold improvements		5 - 7		2,697,248			2,171,388
Construction in progress				1,597,166			1,274,880
Total property and equipment				26,382,224			23,013,759
Less accumulated depreciation and amortization				(12,750,825	)		(11,214,698	)
Total property and equipment, net			$	13,631,399		$	11,799,061

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Goodwill and Intangible Assets

6 Months Ended

Dec. 31, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

There were no changes in the net carrying value of goodwill during the six months ended December 31, 2020.

Identifiable intangible assets were comprised of:

	Useful Lives (Years)		December 31, 2020			June 30, 2020
Customer relationships		15	$	3,590,000		$	3,590,000
Trade secrets		8		3,272,000			3,272,000
Trademarks		8		3,814,000			3,814,000
Total intangible assets				10,676,000			10,676,000
Less accumulated amortization				(4,530,577	)		(3,968,036	)
Total intangible assets, net			$	6,145,423		$	6,707,964

Future amortization of identifiable intangibles is as follows:

Fiscal year ending:
June 30, 2021 (remaining six months)	$	562,542
June 30, 2022		1,125,083
June 30, 2023		1,125,083
June 30, 2024		1,125,083
June 30, 2025 and later		2,207,632
	$	6,145,423

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Accounts Payable

6 Months Ended

Dec. 31, 2020

Payables and Accruals [Abstract]

Accounts Payable

The accounts payable balance as of December 31, 2020 and June 30, 2020 both include approximately $91,000 of earned but unpaid Board of Directors’ fees.

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Income Taxes

6 Months Ended

Dec. 31, 2020

Income Tax Disclosure [Abstract]

Income Taxes

A summary of our total income tax expense and effective income tax rate for the three and six months ended December 31, 2020 and 2019 is as follows:

	Three Months Ended December 31,						Six Months Ended December 31,
	2020			2019			2020			2019
Income (loss) before income taxes	$	94,567		$	1,090,986		$	626,275		$	(135,853	)
Income tax provision	$	241,112		$	321,869		$	675,752		$	470,187
Effective income tax rate		255	%		30	%		108	%		-346	%

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 the six months ended December 31, 2020 and 2019, income tax expense was primarily related to income taxes from our operations in China. Income tax expense for the six months ended December 31, 2020 also includes withholding taxes of $300,000 accrued on a $3 million intercompany dividend declared in July 2020 by LightPath Optical Instrumentation (Zhenjiang) Co., Ltd. (“LPOIZ”), which dividend will be paid to us, as its parent company.

We record net deferred tax assets to the extent we believe it is more likely than not 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 during the periods in which those temporary differences become deductible. We consider the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. As of December 31, 2020 and June 30, 2020, we have provided for a valuation allowance against our net deferred tax assets to reduce the net deferred tax assets to the amount we estimate is more-likely-than-not to be realized. Our net deferred tax asset consists primarily of U.S. net operating loss (“NOL”) carryforward benefits, and federal and state tax credits with indefinite carryover periods.

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 benefit is expected to be recorded on pre-tax losses generated in the U.S.

Income Tax Law of the People’s Republic of China

Our Chinese subsidiaries, LightPath Optical Instrumentation (Shanghai) Co., Ltd. (“LPOI”) and LightPath Optical Instrumentation (Zhenjiang) Co., Ltd. (“LPOIZ”), are governed by the Income Tax Law of the People’s Republic of China. As of December 31, 2020, LPOI and LPOIZ were subject to statutory income tax rates of 25% and 15%, respectively.

In July 2020, we declared an intercompany dividend of $3 million from LPOIZ, payable to us as its parent company. Accordingly, we accrued Chinese withholding taxes of $300,000 associated with the dividend. LPOIZ paid to us $900,000, after the withholding of $100,000 in taxes, during each of the quarters ended September 30, 2020 and December 31, 2020. The remaining $100,000 of withholding taxes are included in accrued liabilities in the accompanying unaudited Condensed Consolidated Balance Sheet as of December 31, 2020. Other than these withholding taxes, this intercompany dividend has no impact on our unaudited Condensed Consolidated Financial Statements.

Historically, the Company considered unremitted earnings held by its foreign subsidiaries to be permanently reinvested. However, during fiscal 2020, the Company began declaring intercompany dividends to remit a portion of the historical earnings of its foreign subsidiaries to the U.S. parent company. It is still the Company’s intent to reinvest a significant portion of the more recent earnings generated by its foreign subsidiaries, however the Company also plans to repatriate a portion of the historical earnings of its subsidiaries. Based on its previous intent, the Company had not historically provided for future Chinese withholding taxes on the related earnings. However, during fiscal 2020 the Company began to accrue for these taxes on the portion of historical earnings that it intends to repatriate.

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 are no longer 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 are first divided by 0.8 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, 2018 are not subject to tax if declared prior to December 31, 2019. ISP Latvia has declared an intercompany dividend to be paid to ISP, its U.S. parent company, for the full amount of earnings accumulated prior to January 1, 2018. Distributions of this dividend will be from earnings prior to January 1, 2018 and, therefore, will not be subject to tax. We currently do not 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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Stock-Based Compensation

6 Months Ended

Dec. 31, 2020

Share-based Payment Arrangement [Abstract]

Stock-Based Compensation

Our directors, officers, and key employees are 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”), including incentive stock options, non-qualified stock options, and restricted stock unit (“RSU”) awards. The 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 the six months ended December 31, 2020 and 2019 included in the accompanying unaudited Condensed Consolidated Statements of Comprehensive Income:

	Six Months Ended December 31,
	2020		2019
Stock options	$	34,241	$	5,307
RSUs		208,775		173,082
Total	$	243,016	$	178,389
The amounts above were included in:
Selling, general & administrative	$	243,016	$	178,389
Cost of sales		-		-
New product development		-		-
	$	243,016	$	178,389

We also adopted the LightPath Technologies, Inc. Employee Stock Purchase Plan (the “2014 ESPP”). The 2014 ESPP permits employees to purchase Class A common stock through payroll deductions, subject to certain limitations. A discount of $1,091 and $1,203 for the six months ended December 31, 2020 and 2019, respectively, is included in the selling, general and administrative expense in the accompanying unaudited Condensed Consolidated Statements of Comprehensive Income, which represents the value of the 10% discount given to the employees purchasing stock under the 2014 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 of 2014 ESPP shares is the amount of the discount the employee obtains at the date of the purchase transaction.

Most stock options granted vest ratably over two to four years and are generally exercisable for ten years. The assumed forfeiture rates used in calculating the fair value of 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 the six months ended December 31, 2020 and 2019. The volatility rate and expected term are based on seven-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.

For the six months ended December 31, 2020 and 2019, there were no stock options granted under the Omnibus Plan. For stock options granted under the SICP in the six-month periods ended December 31, 2020 and 2019, we estimated the fair value of each stock option as of the date of grant using the following assumptions:

	Six Months Ended December 31,
	2020		2019
Weighted-average expected volatility		71.2%		63.7%
Dividend yields		0%		0%
Weighted-average risk-free interest rate		0.74%		1.57%
Weighted-average expected term, in years		7.49		7.50

Information Regarding Current Share-Based Compensation Awards

A summary of the activity for share-based compensation awards in the six months ended December 31, 2020 is presented below:

	Stock Options							Restricted Stock Units (RSUs)
				Weighted-		Weighted-					Weighted-
				Average		Average					Average
				Exercise		Remaining					Remaining
	Shares			Price		Contract		Shares			Contract
June 30, 2020		942,575		$	1.65		6.5		2,328,303			0.9
Granted		18,139		$	2.80		9.8		177,776			2.9
Exercised		(209,776	)	$	1.47				(24,452	)
Cancelled/Forfeited		(378,558	)	$	1.72				-
December 31, 2020		372,380		$	1.73		8.8		2,481,627			0.9
Awards exercisable/
vested as of
December 31, 2020		90,095		$	1.58		7.6		1,871,348			-
Awards unexercisable/
unvested as of
December 31, 2020		282,285		$	1.77		9.1		610,279			0.9
		372,380							2,481,627

RSU awards vest immediately or from two to four years from the date of grant.

As of December 31, 2020, there was approximately $1.1 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements (including stock options and RSUs) granted. We expect to recognize the compensation cost as follows:

Fiscal Year Ending:	Stock Options		RSUs		Total
June 30, 2021 (remaining six months)	$	33,884	$	200,962	$	234,846
June 30, 2022		65,160		308,534		373,694
June 30, 2023		72,024		228,716		300,740
June 30, 2024		49,425		93,848		143,273
	$	220,493	$	832,060	$	1,052,553

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Earnings (Loss) Per Share

6 Months Ended

Dec. 31, 2020

Earnings Per Share [Abstract]

Earnings (Loss) Per Share

Basic earnings per share is computed by dividing net income or loss by the weighted-average number of shares of Class A common stock outstanding, during each period presented. Diluted earnings per share is computed similarly to basic earnings per share, except that it reflects the potential dilution that could occur if dilutive securities or other obligations to issue shares of Class A common stock were exercised or converted into shares of Class A common stock. The computations for basic and diluted earnings per share of Class A common stock are described in the following table:

	Three Months Ended December 31,					Six Months Ended December 31,
	2020			2019		2020			2019
Net income (loss)	$	(146,545	)	$	769,117	$	(49,477	)	$	(606,040	)
Weighted-average common shares outstanding:
Basic number of shares		26,117,239			25,837,903		26,049,750			25,832,337
Effect of dilutive securities:
Options to purchase common stock		-			-		-			-
RSUs		-			1,523,370		-			-
Diluted number of shares		26,117,239			27,361,273		26,049,750			25,832,337
Earnings (loss) per common share:
Basic	$	(0.01	)	$	0.03	$	(0.00	)	$	(0.02	)
Diluted	$	(0.01	)	$	0.03	$	(0.00	)	$	(0.02	)

The following potential dilutive shares were not included in the computation of diluted earnings per share of Class A common stock, as their effects would be anti-dilutive:

	Three Months Ended December 31,				Six Months Ended December 31,
	2020		2019		2020		2019
Options to purchase common stock		372,776		1,013,743		589,892		996,834
RSUs		2,409,499		527,416		2,368,901		1,957,189
		2,782,275		1,541,159		2,958,793		2,954,023

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Leases

6 Months Ended

Dec. 31, 2020

Leases [Abstract]

Leases

Our leases primarily consist of operating leases related to our facilities located in Orlando, Florida; Latvia; Shanghai, China; and Zhenjiang, China, and finance leases related to certain equipment located in Orlando, Florida. The operating leases for facilities are non-cancelable operating leases, expiring through 2025. We 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 that option. We currently have obligations under four finance lease agreements, entered into during fiscal years 2018 and 2019, with terms ranging from three to five years. The 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. Two of our operating leases include renewal options, which were not included in the measurement of the operating lease ROU assets and related lease liabilities. As most of our leases do not provide an implicit rate, we use our collateralized incremental borrowing rate based on the information available at the commencement date in determining the present value of future payments. Currently, none of our leases include variable lease payments that are dependent on an index or rate. We are responsible for payment of certain real estate taxes, insurance and other expenses on certain of our leases. These amounts are generally considered to be variable and are not included in the measurement of the ROU asset and lease liability. We generally account for non-lease components, such as maintenance, separately from lease components. Our lease agreements do not contain any material residual value guarantees or material restricted covenants. Leases with a term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term.

We received tenant improvement allowances for each of our two leases with respect to our facility located in Orlando, Florida (the “Orlando Facility”). These allowances were used to construct improvements and are included in leasehold improvements and operating lease liabilities. The balances are being amortized over the corresponding lease terms.

The components of lease expense were as follows:

	Three Months Ended December 31,				Six Months Ended December 31,
	2020		2019		2020		2019
Operating lease cost	$	173,437	$	172,102	$	340,411	$	336,973
Finance lease cost:
Depreciation of lease assets		47,354		86,063		113,223		172,126
Interest on lease liabilities		11,432		20,425		24,256		42,957
Total finance lease cost		58,786		106,488		137,479		215,083
Total lease cost	$	232,223	$	278,590	$	477,890	$	552,056

Supplemental balance sheet information related to leases was as follows:

	Classification	December 31, 2020		June 30, 2020
Assets:
Operating lease assets	Operating lease assets	$	1,389,428	$	1,220,430
Finance lease assets	Property and equipment, net(1)		571,811		666,519
Total lease assets		$	1,961,239	$	1,886,949
Liabilities:
Current:
Operating leases	Operating lease liabilities, current	$	843,533	$	765,422
Short-term leases	Accrued liabilities(2)		-		97,665
Finance leases	Finance lease liabilities, current		274,112		278,040
Noncurrent:
Operating leases	Operating lease liabilities, less current portion		891,849		887,766
Finance leases	Finance lease liabilities, less current portion		147,031		279,435
Total lease liabilities		$	2,156,525	$	2,308,328

(1) Finance lease assets were recorded net of accumulated depreciation of approximately $1.1 million as of December 31, 2020, and $1.0 million as of June 30, 2020.

(2) Represents accrual related to the lease of a manufacturing and office facility in Irvington, New York, which we ceased use of as of June 30, 2019 as the relocation of the operations formerly housed in this facility was complete. All remaining lease payments were accrued as of that date, through the lease expiration in August 2020.

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

Lease Term and Discount Rate	December 31, 2020
Weighted Average Remaining Lease Term (in years)
Operating leases	2.7
Finance leases	1.7
Weighted Average Discount Rate
Operating leases	4.5%
Finance leases	7.9%

Supplemental cash flow information:

	Six Months Ended December 31,
	2020		2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash used for operating leases	$	427,215	$	386,661
Operating cash used for finance leases	$	24,256	$	42,970
Financing cash used for finance leases	$	136,332	$	210,225

Future maturities of lease liabilities were as follows as of December 31, 2020:

Fiscal year ending:	Finance Leases			Operating Leases
June 30, 2021 (remaining six months)	$	160,648		$	446,769
June 30, 2022		231,783			835,454
June 30, 2023		59,647			244,026
June 30, 2024		11,811			123,683
June 30, 2025		—			123,683
Total future minimum payments		463,889			1,773,615
Less imputed interest		(42,746	)		(38,233	)
Present value of lease liabilities	$	421,143		$	1,735,382

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Loans Payable

6 Months Ended

Dec. 31, 2020

Debt Disclosure [Abstract]

Loans Payable

As of December 31, 2020 and June 30, 2020, loans payable primarily consisted of the BankUnited Term Loan (as defined below) payable to BankUnited N.A. (“BankUnited”). On February 26, 2019, we entered into a Loan Agreement (the “Loan Agreement”) with BankUnited for (i) a revolving line of credit up to maximum amount of $2,000,000 (the “BankUnited Revolving Line”), (ii) a term loan in the amount of up to $5,813,500 (“BankUnited Term Loan”), and (iii) a non-revolving guidance line of credit up to a maximum amount of $10,000,000 (the “Guidance Line” and, together with the BankUnited Revolving Line and BankUnited Term Loan, the “BankUnited Loans”). Each of the BankUnited Loans is evidenced by a promissory note in favor of BankUnited (the “BankUnited Notes”). Simultaneously with the execution of the Loan Agreement, we used the proceeds from the BankUnited Term Loan to pay in full, all outstanding amounts owed to Avidbank Corporate Finance, a division of Avidbank (“Avidbank”) pursuant to an acquisition term loan. For additional information related to the Avidbank loans, please see Note 17, Loans Payable, to our audited Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended June 30, 2020.

On May 6, 2019, we entered into that certain First Amendment to Loan Agreement, effective February 26, 2019, with BankUnited (the “Amendment” and, together with the Loan Agreement, the “Amended Loan Agreement”). The Amendment amended the definition of the fixed charge coverage ratio to more accurately reflect the parties’ understandings at the time the Loan Agreement was executed.

BankUnited Revolving Line

Pursuant to the Amended Loan Agreement, BankUnited will make loan advances under the BankUnited Revolving Line to us up to a maximum aggregate principal amount outstanding not to exceed $2,000,000, which proceeds will be used for working capital and general corporate purposes. Amounts borrowed under the BankUnited Revolving Line may be repaid and re-borrowed at any time prior to February 26, 2022, at which time all amounts will be immediately due and payable. The advances under the BankUnited Revolving Line bear interest, on the outstanding daily balance, at a per annum rate equal to 2.75% above the 30-day LIBOR. Interest payments are due and payable, in arrears, on the first day of each month. As of December 31, 2020, the applicable interest rate was 2.90%.

BankUnited Term Loan

Pursuant to the Amended Loan Agreement, BankUnited advanced us $5,813,500 to satisfy in full the amounts owed to Avidbank, including the outstanding principal amount and all accrued interest under the acquisition term loan and to pay the fees and expenses incurred in connection with closing of the BankUnited Loans. The BankUnited Term Loan is for a 5-year term, but co-terminus with the BankUnited Revolving Line should the BankUnited Revolving Line not be renewed beyond February 26, 2022. Management expects the BankUnited Revolving Line to be renewed. The BankUnited Term Loan bears interest at a per annum rate equal to 2.75% above the 30-day LIBOR. Equal monthly principal payments of $48,445.83, plus accrued interest, are due and payable, in arrears, on the first day of each month during the term. Upon maturity, all principal and interest shall be immediately due and payable. As of December 31, 2020, the applicable interest rate was 2.90%.

Guidance Line

Pursuant to the Amended Loan Agreement, BankUnited, in its sole discretion, may make loan advances to us under the Guidance Line up to a maximum aggregate principal amount outstanding not to exceed $10,000,000, which proceeds will be used for capital expenditures and approved business acquisitions. Such advances must be in minimum amounts of $1,000,000 for acquisitions and $500,000 for capital expenditures, and will be limited to 80% of cost or as otherwise determined by BankUnited. Amounts borrowed under the Guidance Line may not re-borrowed. The advances under the Guidance Line bear interest, on the outstanding daily balance, at a per annum rate equal to 2.75% above the 30-day LIBOR. Interest payments are due and payable, in arrears, on the first day of each month. On each anniversary of the Amended Loan Agreement, monthly principal payments become payable, amortized based on a ten-year term. There were no borrowings under the Guidance Line as of December 31, 2020.

Security and Guarantees

Our obligations under the Amended Loan Agreement are collateralized by a first priority security interest (subject to permitted liens) in all of our assets and the assets of our U.S. subsidiaries, GelTech, Inc. (“GelTech”), and ISP, pursuant to a Security Agreement granted by GelTech, ISP, and us in favor of BankUnited. Our equity interests in, and the assets of, our foreign subsidiaries are excluded from the security interest. In addition, all of our subsidiaries have guaranteed our obligations under the Amended Loan Agreement and related documents, pursuant to Guaranty Agreements executed by us and our subsidiaries in favor of BankUnited.

General Terms

The Amended Loan Agreement contains customary covenants, including, but not limited to: (i) limitations on the disposition of property; (ii) limitations on changing our business or permitting a change in control; (iii) limitations on additional indebtedness or encumbrances; (iv) restrictions on distributions; and (v) limitations on certain investments. The Amended Loan Agreement also contains certain financial covenants, including obligations to maintain a fixed charge coverage ratio of 1.25 to 1.00 and a total leverage ratio of 4.00 to 1.00. As of December 31, 2020, the Company was in compliance with all required covenants.

We may prepay any or all of the BankUnited Loans in whole or in part at any time, without penalty or premium. Late payments are subject to a late fee equal to five percent (5%) of the unpaid amount. Amounts outstanding during an event of default accrue interest at a rate of five percent (5%) above the 30-day LIBOR applicable immediately prior to the occurrence of the event of default. The Amended Loan Agreement contains other customary provisions with respect to events of default, expense reimbursement, and confidentiality.

Financing costs incurred related to the BankUnited Loans were recorded as a discount on debt and will be amortized over the term. Amortization of approximately $4,600 and $9,300 is included in interest expense for the three and six months ended December 31, 2020, respectively, and the same amounts are included in interest expense for the three and six months ended December 31, 2019, respectively.

In December 2020, ISP Latvia entered into an equipment loan with a third party (the “Equipment Loan”), which party is also a significant customer, and which Equipment Loan is subordinate to the BankUnited Loans, and collateralized by certain equipment. The initial advance under the Equipment Loan was 225,000 EUR (or USD $275,000), 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. The Equipment Loan bears interest at a fixed rate of 3.3%. An additional 225,000 EUR (or USD $275,000) is expected to be drawn when the final payment is due to the vendor for the equipment.

Future maturities of loans payable are as follows:

	BankUnited Term Loan		BankUnited Revolver		Equipment Loan		Unamortized Debt Costs			Total
Fiscal year ending:
June 30, 2021 (remaining six months)	$	290,676	$	300,000	$	27,172	$	(9,286	)	$	608,562
June 30, 2022		581,350		-		54,343		(18,572	)		617,121
June 30, 2023		581,350		-		54,343		(18,572	)		617,121
June 30, 2024		3,342,762		-		54,343		(12,381	)		3,384,724
After June 30, 2024		-		-		81,516		-			81,516
Total payments	$	4,796,138	$	300,000	$	271,717	$	(58,811	)		5,309,044
Less current portion											(936,615	)
Non-current portion										$	4,372,429

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Foreign Operations

6 Months Ended

Dec. 31, 2020

Foreign Currency [Abstract]

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 $2.2 million and $1.0 million as of December 31, 2020 and 2019, respectively. We also recognized net foreign currency transaction gains of $77,000 and of $119,000 during the three months ended December 31, 2020 and 2019, respectively. During the six months ended December 31, 2020 and 2019, we recognized net foreign currency transaction losses of approximately $21,000 and $376,000, respectively, included in the unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) in the line item entitled “Other income (expense), net.”

Our cash and cash equivalents totaled $5.3 million at December 31, 2020. Of this amount, greater than 50% 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. With respect to the funds generated by our foreign subsidiaries in China, the retained earnings of the respective subsidiary must equal at least 50% of its registered capital before any funds can be repatriated through dividends. As of December 31, 2020, the end of the most recent statutory tax year, LPOIZ had approximately $7.6 million available for repatriation and LPOI did not have any earnings available for repatriation.

Assets and net assets in foreign countries are as follows:

	China		Latvia
	December 31, 2020	June 30, 2020	December 31, 2020	June 30, 2020
Assets	$20.9 million	$19.0 million	$9.7 million	$9.8 million
Net assets	$17.8 million	$16.2 million	$8.7 million	$8.2 million

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Contingencies

6 Months Ended

Dec. 31, 2020

Commitments and Contingencies Disclosure [Abstract]

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, will not have a material adverse effect on the Company’s financial position or results of operations.

COVID-19

The Company’s business, results of operations financial condition, cash flows, and the stock price of its Class A common stock can be adversely affected by pandemics, epidemics, or other public health emergencies, such as the recent outbreak of COVID-19, which has spread from China to many other countries across the world, including the United States.

To date, the Company has not experienced any significant direct negative impact of COVID-19 to its business. However, the COVID-19 pandemic continues to impact economic conditions, which could impact the short-term and long-term demand from customers and, therefore, has the potential to negatively impact the Company’s results of operations, cash flows, and financial position in the future.  Additionally, as travel restrictions in some areas impose limitations, some aspects of our operation that depend on travel, such as recruitment of senior positions, and travel of service providers to maintain our production equipment, can be impacted by those restrictions.  Management is actively monitoring this situation and any impact on our financial condition, liquidity, and results of operations. However, given the daily evolution of the COVID-19 pandemic and the global responses to curb its spread, we are not presently able to estimate the effects of the COVID-19 pandemic on our future results of operations, financial, or liquidity for the remainder of fiscal year 2021 or beyond.

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Significant Accounting Policies (Policies)

6 Months Ended

Dec. 31, 2020

Accounting Policies [Abstract]

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.

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Revenue (Tables)

6 Months Ended

Dec. 31, 2020

Disaggregation of Revenue [Abstract]

Disaggregation of revenue

	Three Months Ended December 31,				Six Months Ended December 31,
	2020		2019		2020		2019
PMO	$	4,742,459	$	3,710,549	$	9,036,062	$	6,895,007
Infrared Products		4,808,102		5,003,874		9,532,606		8,963,499
Specialty Products		371,610		885,489		862,475		1,293,336
Total revenue	$	9,922,171	$	9,599,912	$	19,431,143	$	17,151,842

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Inventories (Tables)

6 Months Ended

Dec. 31, 2020

Inventory Disclosure [Abstract]

Inventory

	December 31, 2020			June 30, 2020
Raw materials	$	4,094,767		$	3,876,955
Work in process		3,390,968			2,989,070
Finished goods		3,302,822			3,134,800
Allowance for obsolescence		(1,095,280	)		(1,016,343	)
	$	9,693,277		$	8,984,482

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Property and Equipment (Tables)

6 Months Ended

Dec. 31, 2020

Property, Plant and Equipment [Abstract]

Property and equipment

	Estimated		December 31,			June 30,
	Lives (Years)		2020			2020
Manufacturing equipment		5 - 10	$	20,870,729		$	18,444,448
Computer equipment and software		3 - 5		852,575			801,625
Furniture and fixtures		5		364,506			321,418
Leasehold improvements		5 - 7		2,697,248			2,171,388
Construction in progress				1,597,166			1,274,880
Total property and equipment				26,382,224			23,013,759
Less accumulated depreciation and amortization				(12,750,825	)		(11,214,698	)
Total property and equipment, net			$	13,631,399		$	11,799,061

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Goodwill and Intangible Assets (Tables)

6 Months Ended

Dec. 31, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible assets

	Useful Lives (Years)		December 31, 2020			June 30, 2020
Customer relationships		15	$	3,590,000		$	3,590,000
Trade secrets		8		3,272,000			3,272,000
Trademarks		8		3,814,000			3,814,000
Total intangible assets				10,676,000			10,676,000
Less accumulated amortization				(4,530,577	)		(3,968,036	)
Total intangible assets, net			$	6,145,423		$	6,707,964

Future amortization of intangible assets

Fiscal year ending:
June 30, 2021 (remaining six months)	$	562,542
June 30, 2022		1,125,083
June 30, 2023		1,125,083
June 30, 2024		1,125,083
June 30, 2025 and later		2,207,632
	$	6,145,423

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Income Taxes (Tables)

6 Months Ended

Dec. 31, 2020

Income Tax Disclosure [Abstract]

Income tax expense and effective income tax rate

	Three Months Ended December 31,						Six Months Ended December 31,
	2020			2019			2020			2019
Income (loss) before income taxes	$	94,567		$	1,090,986		$	626,275		$	(135,853	)
Income tax provision	$	241,112		$	321,869		$	675,752		$	470,187
Effective income tax rate		255	%		30	%		108	%		-346	%

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Stock-Based Compensation (Tables)

6 Months Ended

Dec. 31, 2020

Share-based Payment Arrangement [Abstract]

Stock-based compensation expense

	Six Months Ended December 31,
	2020		2019
Stock options	$	34,241	$	5,307
RSUs		208,775		173,082
Total	$	243,016	$	178,389
The amounts above were included in:
Selling, general & administrative	$	243,016	$	178,389
Cost of sales		-		-
New product development		-		-
	$	243,016	$	178,389

Share-based payment assumptions

	Six Months Ended December 31,
	2020		2019
Weighted-average expected volatility		71.2%		63.7%
Dividend yields		0%		0%
Weighted-average risk-free interest rate		0.74%		1.57%
Weighted-average expected term, in years		7.49		7.50

Share-based payment awards activity

	Stock Options							Restricted Stock Units (RSUs)
				Weighted-		Weighted-					Weighted-
				Average		Average					Average
				Exercise		Remaining					Remaining
	Shares			Price		Contract		Shares			Contract
June 30, 2020		942,575		$	1.65		6.5		2,328,303			0.9
Granted		18,139		$	2.80		9.8		177,776			2.9
Exercised		(209,776	)	$	1.47				(24,452	)
Cancelled/Forfeited		(378,558	)	$	1.72				-
December 31, 2020		372,380		$	1.73		8.8		2,481,627			0.9
Awards exercisable/
vested as of
December 31, 2020		90,095		$	1.58		7.6		1,871,348			-
Awards unexercisable/
unvested as of
December 31, 2020		282,285		$	1.77		9.1		610,279			0.9
		372,380							2,481,627

Share-based compensation future cost to be recognized

Fiscal Year Ending:	Stock Options		RSUs		Total
June 30, 2021 (remaining six months)	$	33,884	$	200,962	$	234,846
June 30, 2022		65,160		308,534		373,694
June 30, 2023		72,024		228,716		300,740
June 30, 2024		49,425		93,848		143,273
	$	220,493	$	832,060	$	1,052,553

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Earnings (Loss) Per Share (Tables)

6 Months Ended

Dec. 31, 2020

Earnings Per Share [Abstract]

Computations for basic and diluted earnings (loss) per share

	Three Months Ended December 31,					Six Months Ended December 31,
	2020			2019		2020			2019
Net income (loss)	$	(146,545	)	$	769,117	$	(49,477	)	$	(606,040	)
Weighted-average common shares outstanding:
Basic number of shares		26,117,239			25,837,903		26,049,750			25,832,337
Effect of dilutive securities:
Options to purchase common stock		-			-		-			-
RSUs		-			1,523,370		-			-
Diluted number of shares		26,117,239			27,361,273		26,049,750			25,832,337
Earnings (loss) per common share:
Basic	$	(0.01	)	$	0.03	$	(0.00	)	$	(0.02	)
Diluted	$	(0.01	)	$	0.03	$	(0.00	)	$	(0.02	)

Potential dilutive shares

	Three Months Ended December 31,				Six Months Ended December 31,
	2020		2019		2020		2019
Options to purchase common stock		372,776		1,013,743		589,892		996,834
RSUs		2,409,499		527,416		2,368,901		1,957,189
		2,782,275		1,541,159		2,958,793		2,954,023

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Leases (Tables)

6 Months Ended

Dec. 31, 2020

Leases [Abstract]

Lease costs

	Three Months Ended December 31,				Six Months Ended December 31,
	2020		2019		2020		2019
Operating lease cost	$	173,437	$	172,102	$	340,411	$	336,973
Finance lease cost:
Depreciation of lease assets		47,354		86,063		113,223		172,126
Interest on lease liabilities		11,432		20,425		24,256		42,957
Total finance lease cost		58,786		106,488		137,479		215,083
Total lease cost	$	232,223	$	278,590	$	477,890	$	552,056

Supplemental lease information

	Classification	December 31, 2020		June 30, 2020
Assets:
Operating lease assets	Operating lease assets	$	1,389,428	$	1,220,430
Finance lease assets	Property and equipment, net(1)		571,811		666,519
Total lease assets		$	1,961,239	$	1,886,949
Liabilities:
Current:
Operating leases	Operating lease liabilities, current	$	843,533	$	765,422
Short-term leases	Accrued liabilities(2)		-		97,665
Finance leases	Finance lease liabilities, current		274,112		278,040
Noncurrent:
Operating leases	Operating lease liabilities, less current portion		891,849		887,766
Finance leases	Finance lease liabilities, less current portion		147,031		279,435
Total lease liabilities		$	2,156,525	$	2,308,328

(1) Finance lease assets were recorded net of accumulated depreciation of approximately $1.1 million as of December 31, 2020, and $1.0 million as of June 30, 2020.

(2) Represents accrual related to the lease of a manufacturing and office facility in Irvington, New York, which we ceased use of as of June 30, 2019 as the relocation of the operations formerly housed in this facility was complete. All remaining lease payments were accrued as of that date, through the lease expiration in August 2020.

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

Lease Term and Discount Rate	December 31, 2020
Weighted Average Remaining Lease Term (in years)
Operating leases	2.7
Finance leases	1.7
Weighted Average Discount Rate
Operating leases	4.5%
Finance leases	7.9%

Supplemental cash flow information:

	Six Months Ended December 31,
	2020		2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash used for operating leases	$	427,215	$	386,661
Operating cash used for finance leases	$	24,256	$	42,970
Financing cash used for finance leases	$	136,332	$	210,225

Future maturities of lease liabilities

Fiscal year ending:	Finance Leases			Operating Leases
June 30, 2021 (remaining six months)	$	160,648		$	446,769
June 30, 2022		231,783			835,454
June 30, 2023		59,647			244,026
June 30, 2024		11,811			123,683
June 30, 2025		—			123,683
Total future minimum payments		463,889			1,773,615
Less imputed interest		(42,746	)		(38,233	)
Present value of lease liabilities	$	421,143		$	1,735,382

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Loans Payable (Tables)

6 Months Ended

Dec. 31, 2020

Debt Disclosure [Abstract]

Future maturities of loans payable

	BankUnited Term Loan		BankUnited Revolver		Equipment Loan		Unamortized Debt Costs			Total
Fiscal year ending:
June 30, 2021 (remaining six months)	$	290,676	$	300,000	$	27,172	$	(9,286	)	$	608,562
June 30, 2022		581,350		-		54,343		(18,572	)		617,121
June 30, 2023		581,350		-		54,343		(18,572	)		617,121
June 30, 2024		3,342,762		-		54,343		(12,381	)		3,384,724
After June 30, 2024		-		-		81,516		-			81,516
Total payments	$	4,796,138	$	300,000	$	271,717	$	(58,811	)		5,309,044
Less current portion											(936,615	)
Non-current portion										$	4,372,429

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Foreign Operations (Tables)

6 Months Ended

Dec. 31, 2020

Foreign Currency [Abstract]

Foreign assets

	China		Latvia
	December 31, 2020	June 30, 2020	December 31, 2020	June 30, 2020
Assets	$20.9 million	$19.0 million	$9.7 million	$9.8 million
Net assets	$17.8 million	$16.2 million	$8.7 million	$8.2 million

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Revenue (Details) - USD ($)	3 Months Ended		6 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2020	Dec. 31, 2019
Revenues	$ 9,922,171	$ 9,599,912	$ 19,431,143	$ 17,151,842
PMO
Revenues	4,742,459	3,710,549	9,036,062	6,895,007
Infrared Products
Revenues	4,808,102	5,003,874	9,532,606	8,963,499
Specialty Products
Revenues	$ 371,610	$ 885,489	$ 862,475	$ 1,293,336

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Inventories (Details) - USD ($)	Dec. 31, 2020	Jun. 30, 2020
Inventory Disclosure [Abstract]
Raw materials	$ 4,094,767	$ 3,876,955
Work in process	3,390,968	2,989,070
Finished goods	3,302,822	3,134,800
Allowance for obsolescence	(1,095,280)	(1,016,343)
Inventories, net	$ 9,693,277	$ 8,984,482

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Inventories (Details Narrative) - USD ($)	Dec. 31, 2020	Jun. 30, 2020
Raw materials	$ 4,094,767	$ 3,876,955
Inventory - Tooling
Raw materials	$ 2,100,000	$ 2,300,000

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Property and Equipment (Details) - USD ($)	6 Months Ended
	Dec. 31, 2020	Jun. 30, 2020
Property and equipment, gross	$ 26,382,224	$ 23,013,759
Less accumulated depreciation and amortization	(12,750,825)	(11,214,698)
Property and equipment, net	13,631,399	11,799,061
Manufacturing Equipment
Property and equipment, gross	$ 20,870,729	18,444,448
Manufacturing Equipment | Lower Limit
Estimated life	5 years
Manufacturing Equipment | Upper Limit
Estimated life	10 years
Computer Equipment And Software
Property and equipment, gross	$ 852,575	801,625
Computer Equipment And Software | Lower Limit
Estimated life	3 years
Computer Equipment And Software | Upper Limit
Estimated life	5 years
Furniture and Fixtures
Property and equipment, gross	$ 364,506	321,418
Estimated life	5 years
Leasehold Improvements
Property and equipment, gross	$ 2,697,248	2,171,388
Leasehold Improvements | Lower Limit
Estimated life	5 years
Leasehold Improvements | Upper Limit
Estimated life	7 years
Construction in Progress
Property and equipment, gross	$ 1,597,166	$ 1,274,880

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Goodwill and Intangible Assets (Details) - USD ($)	6 Months Ended
	Dec. 31, 2020	Jun. 30, 2020
Acquired intangible assets	$ 10,676,000	$ 10,676,000
Amortization	(4,530,577)	(3,968,036)
Intangible assets net	6,145,423	6,707,964
Customer Relationships
Acquired intangible assets	$ 3,590,000	3,590,000
Useful life	15 years
Trade Secrets
Acquired intangible assets	$ 3,272,000	3,272,000
Useful life	8 years
Trademark
Acquired intangible assets	$ 3,814,000	$ 3,814,000
Useful life	8 years

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Goodwill and Intangible Assets (Details 1) - USD ($)	Dec. 31, 2020	Jun. 30, 2020
Fiscal year ended June 30,:
2021 (remaining six months)	$ 562,542
2022	1,125,083
2023	1,125,083
2024	1,125,083
2025 and later	2,207,632
Total	$ 6,145,423	$ 6,707,964

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Accounts Payable (Details Narrative) - USD ($)	Dec. 31, 2020	Jun. 30, 2020
Board of Directors
Accounts payable - related parties for directors' fees	$ 91,000	$ 91,000

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Income Taxes (Details) - USD ($)	3 Months Ended		6 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2020	Dec. 31, 2019
Income Tax Disclosure [Abstract]
Income (loss) before income taxes	$ 94,567	$ 1,090,986	$ 626,275	$ (135,853)
Income tax provision	$ 241,112	$ 321,869	$ 675,752	$ 470,187
Effective income tax rate	255.00%	30.00%	108.00%	(346.00%)

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Income Taxes (Details Narrative)	6 Months Ended
	Dec. 31, 2020
U.S. Federal and State
Statutory income tax rate	25.50%
LPOI | China
Statutory income tax rate	25.00%
LPOIZ | China
Statutory income tax rate	15.00%

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Stock-Based Compensation (Details) - USD ($)	6 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Stock-based compensation	$ 243,016	$ 178,389
Selling, General & Administrative
Stock-based compensation	243,016	178,389
Cost of Sales
Stock-based compensation	0	0
New Product Development
Stock-based compensation	0	0
Stock Options
Stock-based compensation	34,241	5,307
Restricted Stock Units
Stock-based compensation	$ 208,775	$ 173,082

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Stock-Based Compensation (Details 1)	6 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Share-based Payment Arrangement [Abstract]
Weighted-average expected volatility	71.20%	63.70%
Dividend yields	0.00%	0.00%
Weighted-average risk-free interest rate	0.74%	1.57%
Weighted-average expected term, in years	7 years 5 months 26 days	7 years 6 months

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Stock-Based Compensation (Details 2)	6 Months Ended
	Dec. 31, 2020 $ / shares shares
Stock options
Balance, beginning, shares	942,575
Granted, shares	18,139
Exercised, shares	(209,776)
Cancelled/forfeited, shares	(378,558)
Balance ending, shares	372,380
Exercisable and vested, shares	90,095
Unexercisable and unvested, shares	282,285
Weighted average exercise price - stock options
Balance beginning | $ / shares	$ 1.65
Granted | $ / shares	2.80
Exercised | $ / shares	1.47
Cancelled/forfeited | $ / shares	1.72
Balance ending | $ / shares	1.73
Exercisable and vested | $ / shares	1.58
Unexercisable/unvested | $ / shares	$ 1.77
Weighted average remaining contract life - stock options
Balance, beginning	6 years 6 months
Granted	9 years 9 months 18 days
Balance, ending	8 years 9 months 18 days
Exercisable/vested	7 years 7 months 6 days
Unexercisable/unvested	9 years 1 month 6 days
RSU shares
Balance, beginning, shares	2,328,303
Granted, shares	177,776
Exercised, shares	(24,452)
Cancelled/forfeited, shares	0
Balance, ending, shares	2,481,627
Exercisable and vested, shares	1,871,348
Unexercisable and unvested, shares	610,279
Weighted average remaining contract life - RSUs
Balance, beginning	10 months 24 days
Granted	2 years 10 months 24 days
Balance, ending	10 months 24 days
Unexercisable/unvested	10 months 24 days

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Stock-Based Compensation (Details 3)	Dec. 31, 2020 USD ($)
Stock options	$ 220,493
Restricted stock units	832,060
Total unrecognized compensation cost	1,052,553
2021
Stock options	33,884
Restricted stock units	200,962
Total unrecognized compensation cost	234,846
2022
Stock options	65,160
Restricted stock units	308,534
Total unrecognized compensation cost	373,694
2023
Stock options	72,024
Restricted stock units	228,716
Total unrecognized compensation cost	300,740
2024
Stock options	49,425
Restricted stock units	93,848
Total unrecognized compensation cost	$ 143,273

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Stock-Based Compensation (Details Narrative)	Dec. 31, 2020 USD ($)
Share-based Payment Arrangement [Abstract]
Unrecognized compensation costs	$ 1,052,553

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Earnings (Loss) Per Share (Details) - USD ($)	3 Months Ended				6 Months Ended
	Dec. 31, 2020	Sep. 30, 2020	Dec. 31, 2019	Sep. 30, 2019	Dec. 31, 2020	Dec. 31, 2019
Earnings Per Share [Abstract]
Net income (loss)	$ (146,545)	$ 97,068	$ 769,117	$ (1,375,157)	$ (49,477)	$ (606,040)
Basic number of shares	26,117,239		25,837,903		26,049,750	25,832,337
Effect of dilutive securities:
Options to purchase common stock	0		0		0	0
RSUs	0		1,523,370		0	0
Diluted number of shares	26,117,239		27,361,273		26,049,750	25,832,337
Earnings (loss) per common share:
Basic	$ (0.01)		$ 0.03		$ (0.00)	$ (0.02)
Diluted	$ (0.01)		$ 0.03		$ (0.00)	$ (0.02)

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Earnings (Loss) Per Share (Details 1) - shares	3 Months Ended		6 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2020	Dec. 31, 2019
Antidilutive securities	2,782,275	1,541,159	2,958,793	2,954,023
Stock Options
Antidilutive securities	372,776	1,013,743	589,892	996,834
Restricted Stock Units
Antidilutive securities	2,409,499	527,416
Restricted Stock Units
Antidilutive securities			2,368,901	1,957,189

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Leases (Details) - USD ($)	3 Months Ended		6 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2020	Dec. 31, 2019
Leases [Abstract]
Operating lease cost	$ 173,437	$ 172,102	$ 340,411	$ 336,973
Finance lease cost, depreciation of lease assets	47,354	86,063	113,223	172,126
Finance lease cost, interest on lease liabilities	11,432	20,425	24,256	42,957
Total finance lease cost	58,786	106,488	137,479	215,083
Total lease cost	$ 232,223	$ 278,590	$ 477,890	$ 552,056

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Leases (Details 1) - USD ($)		6 Months Ended
		Dec. 31, 2020	Dec. 31, 2019	Jun. 30, 2020
Assets
Operating lease assets		$ 1,389,428		$ 1,220,430
Finance lease assets	[1]	571,811		666,519
Total lease assets		1,961,239		1,886,949
Liabilities
Operating leases, current		843,533		765,422
Short-term leases, current	[2]	0		97,665
Finance leases, current		274,112		278,040
Operating leases, noncurrent		891,849		887,766
Finance leases, noncurrent		147,031		279,435
Total lease liabilities		$ 2,156,525		$ 2,308,328
Weighted average remaining lease term (in years), operating leases		2 years 8 months 12 days
Weighted average remaining lease term (in years), finance leases		1 year 8 months 12 days
Weighted average discount rate, operating leases		4.50%
Weighted average discount rate, finance leases		7.90%
Operating cash used for operating leases		$ 427,215	$ 386,661
Operating cash used for finance leases		24,256	42,970
Financing cash used for finance leases		$ 136,332	$ 210,225

[1] Finance lease assets were recorded net of accumulated depreciation of approximately $1.1 million as of December 31, 2020, and $1.0 million as of June 30, 2020.

[2] Represents accrual related to the lease of a manufacturing and office facility in Irvington, New York, which we ceased use of as of June 30, 2019 as the relocation of the operations formerly housed in this facility was complete. All remaining lease payments were accrued as of that date, through the lease expiration in August 2020.

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Leases (Details 2)	Dec. 31, 2020 USD ($)
Finance lease - fiscal year ending June 30,
2021 (remaining six months)	$ 160,648
2022	231,783
2023	59,647
2024	11,811
2025	0
Total minimum payments	463,889
Less imputed interest	(42,746)
Present value of lease liabilities	421,143
Operating lease - fiscal year ending June 30,
2021 (remaining six months)	446,769
2022	835,454
2023	244,026
2024	123,683
2025	123,683
Total minimum payments	1,773,615
Less imputed interest	(38,233)
Present value of lease liabilities	$ 1,735,382

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Loans Payable (Details) - USD ($)	Dec. 31, 2020	Jun. 30, 2020
Fiscal year ending June 30,
2021 (remaining six months)	$ 608,562
2022	617,121
2023	617,121
2024	3,384,724
After 2024	81,516
Total payments	5,309,044
Less current portion	(936,615)	$ (981,350)
Non-current portion	4,372,429	$ 4,437,365
Equipment Loan
Fiscal year ending June 30,
2021 (remaining six months)	27,172
2022	54,343
2023	54,343
2024	54,343
After 2024	81,516
Total payments	271,717
Unamortized Debt Costs
Fiscal year ending June 30,
2021 (remaining six months)	(9,286)
2022	(18,572)
2023	(18,572)
2024	(12,381)
After 2024	0
Total payments	(58,811)
BankUnited Term Loan
Fiscal year ending June 30,
2021 (remaining six months)	290,676
2022	581,350
2023	581,350
2024	3,342,762
After 2024	0
Total payments	4,796,138
BankUnited Revolver
Fiscal year ending June 30,
2021 (remaining six months)	300,000
2022	0
2023	0
2024	0
After 2024	0
Total payments	$ 300,000

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Loans Payable (Details Narrative) - USD ($)	6 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Debt Disclosure [Abstract]
Amortization of debt costs	$ 9,286	$ 9,286

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Foreign Operations (Details) - USD ($)	Dec. 31, 2020	Jun. 30, 2020
China
Assets	$ 20,900,000	$ 19,000,000
Net assets	17,800,000	16,200,000
Latvia
Assets	9,700,000	9,800,000
Net assets	$ 8,700,000	$ 8,200,000

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Foreign Operations (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2020	Dec. 31, 2019	Jun. 30, 2020
Foreign Currency [Abstract]
Gain on foreign currency			$ 2,200,000	$ 1,000,000
Gain (loss) on foreign currency	$ 77,000	$ 119,000	(21,000)	$ (376,000)
Cash and cash equivalents	$ 5,306,243		$ 5,306,243		$ 5,387,388