LightPath Technologies, Inc. Price & Performance (LPTH)

Following the prepared remarks, there will be a formal question and answer session. I would now like to turn the conference over to CEO, Sam Rubin, Sam? The floor is all yours. Thank you, operator. Good afternoon to everyone and welcome to LightPath Technologies' Second Quarter Fiscal twenty twenty five Financial Results Conference Call. Given the important news we announced this morning, regarding the acquisition of G5 Infrared, I will be dedicating most of my remarks today to this topic. The acquisition of G5 Infrared is a key and transformative event for Lightpath. And is a natural continuum of the strategic transition the company has been undertaking for the last few years. As a reminder, up until about four years ago, LightPath was a pure play optical component The core technology for Lightpath up until this point precision glass molding, was an innovative technology in the early 2000s. Which gradually became commercialized and constantly commoditized. Over the last twenty years. What was a leading differentiator for the company years ago has become by 2020 a widely deployed technology with aggressive and ample competition. In late twenty twenty, shortly after I joined and consequent that leverages our differentiated into a more value added position.

With the goal to eventually become a solutions and [indiscernible] All of which it still ends up place, where we have strong domain expertise with the ultimate goal of becoming a system supplier. We started the journey by first offering optical assemblies based on our optical components. Then began to offer compact thermal cameras such as our Mantis Multispectral Camera. And later on, through the acquisition of Visamy Technologies, the summer of twenty twenty three, we added advanced capabilities in video engine and camera calls for called [indiscernible] The acquisition of Visimid also came at a critical pivotal point for the Vizimed team But shortly after the acquisition, Visimid and Lightfast were awarded a large development for a new missile program A contract that has the potential to translate to between $50,000,000 to $100,000,000 a year in revenue from that one program alone. Similarly, though not as large Vitamin and Lightpath have several other large programs in various stages. Many of which have the potential of bringing more than $10,000,000 a year in new revenue from each one of those programs. The addition of G5 infrared fits in naturally into what we have been building. And is the logical next step in our journey.

Not only do G5's product complement LightPath, products perfectly, But G5 is also at a pivoting point. About to be awarded some large lucrative defense programs that will be moving into ELOVIP, ELOVIP is low rate initial production. We'll be moving into ELEVIP very soon. And from there shortly into full scale production. So with this background now framing where we have come from and where we are, let's dive into the acquisition itself. G5 was established in 2011 by a seasoned team that this was the second or even third time around. The first time around, DIOK DIOP, was a household name in our industry. Establishing a big part of what was Axie's axis back in the mid-2000s. And later sold to General Dynamics for $643,000,000 in 02/2009. This highly accomplished team led by Lou Fantovi are well known in the industry as the ones that always delivers the highest quality, Effectively, gold standard cameras in long range imaging. These infrared cooled camera systems are used in places where extreme sensitivity of detection is needed. Such as detecting people from miles away, or vehicles or drones from tens of miles away. And I will talk more about that later. [indiscernible] And as is often the case in optics, just like Lightpath leverages its black diamond glass to make best in class optical systems and uncalled canvas, G5 also has its own optical coating services group.

Another element in the secret source of these high end cameras. These coatings are part of what makes our cameras perform the way they do. And this coating service offered to external customers also account for a highly possible service revenue. That makes up to 20% of G5's revenue. These coating capabilities also fit very well with LightPath's infrared components business, and will be a critical capacity to that will add a critical capacity to that of the LifePass business. So clearly, G5 is a successful and well aligned business to Lightpath. And by itself. This is also evident from their growth rates. Winning businesses solid financial performance delivering strong margins and EBITDA's of around or higher than 20% consistently. And while the financial profile is important, growth is too. So I'd like to dive in a bit into the products and technology and how they this translates to revenue. Lightbox transition to move from a pure play component to a subsystem or solution provider and from there to a system supply of can be characterized in many ways. That's probably one of the best indicators to where a company fits in the food are ASPs or average sales price of its product.

When I joined Lightbark in 2020, the company was, as we mentioned, a component company. And its product, Individual Lenses, had ASPs ranging from $1 for the really commoditized telecom lenses to up to say $100 for the more complex diamond turned lenses. In 2021 to 2022, we gradually transitioned into offering assemblies. A more complex engineered optical product. That resulted in assemblies in ASVs going from $100 to $500 already a more complex by itself. But while ASPs in and by themselves are not the goal per se, they're a good leading indicator to the complexity of the product. And the offering. Hence, there's a value created by that product. And as many strategy book will tell you, creating value followed by capturing value is how one creates a strategy that leads to sustainable profits and growth. And so we went from single digit ASPs to three digit ASPs. Next came our uncalled cameras, such as our MANT innovative multispectral uncooled camera, which was our ticket into the world of cameras. Those products of cameras had ASPs of $10,000 begin with. And through more complex canvas for oil and gas industries we're now selling cameras with ASPs of $30,000 which is really a leap into five digits SV secured.

Again, not the goal by itself, but an indicator. Now comes G5 with cooled, written, infrared cameras. ASPs of their product start from $50,000 for their entry level cameras short range detection cameras, up to $500,000 for the high end long range detection cameras. And when we say long range, we're talking about cameras that can detect the presence of a vehicle from as far as 68 kilometers away. [indiscernible] So very, very impressive product. So in the span of four years, we've gone from selling lenses at single dollar lenses and declining unfortunately. To assemblies at hundreds of dollars, to uncalled cabinets at thousands of dollars, and now to adding cooled cameras at tens or hundreds of thousands of dollars per day. G5 is also a fast growing with a significant pipeline of new business opportunities. With multiple programs of records expected to begin production for next two years. Driving strong growth far beyond their existing revenue base. Their long range cameras are used for detecting objects at, well, long ranges, if you would. The two main applications are around detection of drones also known as counter UAS or C UAS and Detection of People and Vehicle. The former Counter UAS is a fast growing application in which G5's cameras with their proprietary image stabilization software, ADCOM, are considered the best performer in terms of detection range.

One of the programs of record G5 has designed into includes plate those cameras on hundreds of naval vessels with passive detection of full passive detection of incoming threats such as drones, missiles and war, The word passive is actually pretty important in this. As we've all seen in the Ukraine conflict battlefield, if one uses an active system such as a radar to detect incoming drones and missiles, the radar of the mission immediately turns you into a target. And so passive detection of incoming threats is one of the fastest growing technologies And one that G5 systems are by far the leader in.

In this application, G5 sells cameras to integrators that place them into larger systems with pan tilt and motion control and build a complete system for detection and tracking A second leading application is perimeter and border security, Here the same camera technology is used on towers along the border and for perimeter security in critical infrastructure like stadiums, power plants, G5 has a long history with cameras for border security. And has already hundreds of cameras installed. Along the border. With the limited lifetime of cryogenic coolers in such systems, G5 also provides an ongoing service for repair of those hundreds of cameras. Which is a great revenue stream that we expect to grow significantly more. Incoming years. More specifically, G5 provides mail cameras that are used in the Customs and Border Patrol CTSE towers. And just last month received the first award and order for the new surveillance towers of customer and border patrol, That's part of Homeland Security Department. We expect to be able to announce soon more detail about those programs. Both the Naval and the Border Patrol one. So a highly accretive acquisition brings over $15,000,000 in preliminary unaudited revenue in 2024 and brings us to a point where we expect our combined revenue in the next twelve months to exceed $55,000,000 placing us a completely new place altogether.

And while we don't provide guidance for future quarters specifically, I would encourage everyone to study the future EARN ALPS, that are part of this acquisition as it gives a very clear picture of what G5 management expects the business to look like in the next twenty four months. I will give you a hint that the earnout for the first year includes projections of revenue between $21,000,000 to $27,000,000 from G5 alone.

Compared to $15,000,000 last year. And that gives I think a pretty good taste into the kind of growth rates we're looking at. I'd like to now with the time left to switch gears a minute and to talk about the last quarter the previous quarter? The previous quarter was impacted by two in two ways by one major event. That event was on December 5, China announced further restrictions on germanium export. Now completely banning sale of any germanium to any U. S. [indiscernible] [indiscernible] to The U. S. And to any dual use application. And while we have prepared for this moment both significant by significantly reducing our Germanium business, and by preparing Black Diamond our Black Diamond substitutes, did not escape completely on the heart. Out of that. Once China announced those restrictions, practically all shipments out of China suffered one way or another.

This means materials that are not related even to this span like linseed selenide and zinc sulfide were also completely stopped for a while. To us, this means that more than of revenue from last quarter could not ship the last few weeks of the quarter. I will emphasize that we haven't lost a single dollar of revenue There wasn't any cancellation we don't expect to lose any of that. It is simply a matter of timing. When all orders when all shipments out of China came to a halt, that impacted also non germanium business of ours. For a short period of time. We expect this to be covered very soon Although what we're seeing is that Chinese companies like Vital are completely stopping shipping any optics altogether, not only Jamaica. But we have many other suppliers and we're building into that and are recovering from that small hiccup. It's unfortunate because we report our numbers of course, on quarterly basis. And some things that happens in the last two or three weeks in a quarter is really just for us a matter of timing of revenue and not a business issue. But when reporting on quarterly numbers, it appears that way.

At the same time, we also supported the new restrictions of finally leaving our customers to make the move to our alternative materials. We are seeing an influx of interest in those materials. And are extremely encouraged by this. As a reminder, systems need to be redesigned to And so what we're seeing now is a very significant effort to start the redesign process. By pretty much all customers related to this. With some systems such as our customer for FB drone optics that we announced last quarter, the redesign was fairly straightforward. And allows us to get it done within weeks. But in other more complex systems, this takes months. And we're seeing quite a bit of this happening now. We're not only working with customers to help those redesigns, We are also taking a look at our manufacturing capacity. To prepare the needed capacity to make the glass needed for these programs, once the redesign and qualification is done. As a reminder, we spent nearly $6,000,000 our Orlando facility over the last few years, preparing the infrastructure needed for growth. We do not expect to meet to outlay any significant additional capital for this increase in capacity. We expect to be increasing our glass capacity significantly in coming months but with fairly modest investment in that.

Okay. Since we're running out of time, I can't really cover everything that happened last I will encourage everyone to review some of the recent press releases on new products such as gas detection camera, on new contracts such as our FBV drone optics and many other things that we reported over the last few months. And I will be also available as always to answer questions on those. But now I'd like to turn the call over to our CFO, Al Neranda, to talk about our second quarter fiscal twenty twenty five financial results. Al, please go ahead. Thank you, Sam. I'll keep my review to a succinct highlight of the fine [indiscernible] and will be included in the 10 Q for the period.

Encourage you to visit our Investor Relations webpage to access these documents. Revenue for the second quarter of fiscal twenty twenty five increased 1.5% to $7,400,000 as compared to $7,300,000 in the same year ago quarter. Sales of infrared components were $3,100,000 or 42% Revenue from visible components was $2,800,000 or 37%. Revenue from assemblies and modules were $900,000 or 12%. Revenue from engineering services was $700,000 or 9% Gross profit decreased 11% to $1,900,000 or 26% of total revenues in the second quarter of twenty twenty five, as compared to $2,200,000 or 30% of total revenues in the same year ago quarter The decrease in gross margin as a percentage of revenue was primarily driven by differences in the product mix coupled with minor and typical manufacturing yield issues, exasperated by a slowdown in supply chain, which Sam discussed, mostly attributable to China exports and impacting visible and infrared components. Operating expenses increased 12% to $4,400,000 for the second quarter of fiscal twenty twenty five as compared to $4,000,000 in the same quarter of the prior fiscal year. Increase was primarily due to higher legal and consulting fees, related to business development initiatives including $174,000 in expenses, associated with G5 acquisition announced today product development cost of about $200,000 higher than the comparative quarter as well as increased sales and marketing spend to promote new products.

Net loss in the second quarter of fiscal twenty twenty five totaled $2.62600000.0 dollars or $7 per basic and diluted share as compared to $1,700,000 or $0.05 per basic diluted share in the same quarter of the prior fiscal year. The increase in net loss was primarily coupled with the increased SG and A. And new product development costs as well as higher interest expense. EBITDA loss for the second quarter of dollars compared to a loss of $500,000 for the same period of the prior fiscal year The decrease in EBITDA in the second quarter of fiscal twenty twenty five was primarily attributable to lower gross profit coupled with increased SG and A including legal and consulting expenses related to business development initiatives, including acquisition costs and higher new product development costs. Cash and cash equivalents as of 12/31/2024 totaled 3,200,000.0 as compared to $3,500,000 as of 06/30/2024. As of 12/31/2024, total debt stood at $3,900,000 and backlog totaled 19,800,000.0 As Sam noted, today we announced the acquisition of G5, which had preliminary unaudited revenue of $15,000,000 in calendar year 2024. The expectation is for the combined companies to generate $55,000,000 in revenue in the twelve months following today's acquisition.

Subsequent to quarter end and to finance the G5 acquisition, for $27,000,000 of total consideration we issued $25,500,000 of 6.5% fixed convertible preferred equity as well as private placements totaling $1,500,000 and two senior secured promissory notes totaling $5,400,000 Following the close of the transaction, the August 2024 bridge promissory note of $3,000,000 will be fully converted and no longer outstanding. The $25,500,000 in preferred is mostly held by a fundamental investor that takes a concentrated position with a long term perspective in a few investments Terms and conditions are not toxic and are clean as possible. The investor will also become a Board member for a five year term to assist in our growth plans.

We consider this new investor as a partner to our business. In closing, I view the acquisition of G5 as a robust tool to supercharge the near term potential of LightPath particularly in the defense space with the introduction of high margin, high ASP incremental products. See this as providing an expedited path to achieving our long term goal of of 15% EBITDA margins. Defining LightPath is a platform company focused on disciplined strategy and deliver With that, I'll turn the call back to Sam for some closing remarks.

You, everyone, for taking the time today to attend our call. Looking ahead, we will continue to drive the future of imaging as seen through our proprietary Black Diamond Optics. Leveraging our clear advantage in our capabilities and supply chain security as compared to legacy uranium based solutions. We've defined catalysts in industrial, defense and camera solution market Taken in tandem with our acquisition of G5, providing an entrance into the cooled infrared camera space. We believe calendar twenty twenty five will build additional momentum towards our Lightpath three point zero vision, of becoming a leading next generation optics and imaging solutions With that, I will now turn the call over to the operator begin the questions and answer session. [indiscernible] Thank you. Ladies and gentlemen, we will now begin The first question comes from the line of Jason Schmidt from Lake Street Capital Markets. Please go ahead.

Hey guys. Thanks for taking my question. Just want to on the gross margin in December. You noted some kind of manufacturing yield issues. Just curious if those have been fully resolved?

Sorry, Jason. Sam and I are sitting together we usually [indiscernible] So our yield issues in this quarter were not particularly bad. I would say it was normal. There's you don't get 100% yield, particularly with coatings. They were minor. The problem was sort of exasperated by the fact that usually have more material. We can get extra materials. We plan for it. We have it. So when we have yield issues and not a fast and quick source to some of the materials coming out of China, it sort of delays our ability to deliver. So a normal yield issue becomes a not normal yield issue, if you will, Okay. That makes sense. And then obviously, it sounds like you guys are pretty familiar with G5. Just curious sort of the customer overlap between the two companies and relatedly the cross selling opportunities you guys are envisioning? And if if there are cross selling opportunities, are those sort of baked into the growth expectations reflected in the earn outs Yes. I'll take that one. There's definitely some great opportunities there and we're seeing a lot of excitement from the customers. [indiscernible] to begin with on just on the optics part, which is the easiest to hand since G5 has the very good and robust optical coating services they naturally service many of our customers already in that aspect.

So that part is sort of an easy, very natural part. When it comes to the camera part, which is really where a lot of our growth we expect will come from, Most times when you see today a system that has those cold infrared cameras, it will very, very often have a uncalled camera that goes with it. If you look at some of the companies like silent fentanyl, which is today part of Motorola. And you look at their products offering, those same pan tilt systems of Gimbal will have a short range camera, uncalled camera like our uncalled cameras and a long range camera from G5 next to it. So the selling opportunities there is tremendous. The same is also in optical gas imaging Oftentimes in the gas field, there will be many small uncooled cameras like our gas camera and then one large cooled camera, which obviously naturally is much more expensive and over $100,000 But that one is able to actually quantify exactly how much gas is leaking. It gets pointed at the places where the smaller cameras identified leaks to begin with. And so on. So There's some great opportunities that we feel. And as of now, those are not baked into the numbers.

Revenue numbers for G5 and their earn out is based on their projections and their own expectations of revenue. Without any synergies in that.

Okay. That's helpful. And then just last one for me and I'll jump back into queue. How should we [indiscernible] [indiscernible] gross margin profile for a bit G5 business? Okay. Al, do you want to take that?

So the camera business has Higher margins than the light path visible or infrared component business. So In terms of expectations, the margin will blend upwards. With the portfolio being added Perfect.

Thank you. Thank you.

The next question comes from the line of Glenn Matson from Ladenburg Thalmann.

Hi, guys and congrats on the [indiscernible] help but notice your comment on the We're talking about G5 a little bit about You said you mentioned something about about to be awarded several large programs and that you should be moving into LRIP. That's I'm just trying to understand that language because Normally, I guess, you wouldn't say about to be awarded unless you had the business pretty secure or is it can you just give us a color on that? One of them is a matter of deeds literally. I mean, it's in very final negotiations. And when I say ELEVIP, I mean, just to put it into perspective, the naval program, for example, or the prototype that we expect to order any day now, it could be several millions, let's say $2,000,000 to $3,000,000 for the prototype. When it goes into production, so Elvip is is just the beginning of low weight initial production and scaling We're expecting this could be $10,000,000 to $20,000,000 a year.

Okay. And you said the timeframe on that, remind me, you mentioned the [indiscernible] [indiscernible] now in the next six to eight months and then we expect LRIP towards the end of this calendar year.

Okay, thanks.

That's helpful. And yes, just on the synergies, I missed part of your the in the press release you talked about multiple programs of record for G5. Is there an opportunity to use those as a funding vehicle whereby you could cross sell better Exactly that. Exactly that. So when you look at many of those systems that are deployed, they would very often have a mix of both uncalled and cold cameras together. So the uncalled cameras, of course, can cannot detect the range of those cameras. So you use them for a short range detection. And but because they're so, so much cheaper than the long range ones and the cold ones, would sometimes deploy a few of them and have them look in different angle. And then you will use sort of the big cold, long range Canberra on a pan tilt where you would point it to where one of the uncalled cameras saw something maybe. So oftentimes they're combination of both. And I know our sales team is is extremely excited and can't wait to start cost selling on both Right, right. I guess that really makes it sound like a strategic fit like you mentioned.

And just lastly, the exposure to some of the issues with the Chinese, can you remind us how much Your business is still exposed to that As you move [indiscernible] Thanks.

Yes. Al, do you have a number on that? And how much do we still have sort of So we have $2,000,000 of sales in Germanium in The U. S. I would say is at risk Because of the restrictions right to bring germanium So we're sourcing that [indiscernible] Switching to local sourcing, which is a project that's been going on for several weeks. We have also a couple of million of germanium sales in Europe. [indiscernible] but at much less risk because Latvia and the end users for those are not on the Chinese no sell list. But nonetheless, we'd like to move all of that product out of germanium as well in Europe. But and we have similar plans to migrate But the urgency isn't there yet like it is now in The United States.

Right.

And just to add on that, $2,000,000 in The U. S, Al, So first of all, we're going to supply those by sourcing low [indiscernible] very, very limited. It's not really a long term strategy. So once we supply those 2,000,000 of Germanium Orders In The U. S. We will no longer be doing any Germanium. Business In The U. S. Okay.

Great. That's it for me. Thanks guys and congrats again.

Thank you.

Thanks. Thank you. The next question comes from the line of Olin Hirschman from AIGH Investment. Please go ahead. Hi. Congratulations on the acquisition.

Just going back to some of the earlier comments. So you mentioned on the acquisition, these are just random questions. You mentioned Motorola as an example. Is that a current customer? Are you using that as an actual customer example?

Yes.

Very large customer of G5s, yes. [indiscernible] To those that don't know, Motorola is one of the leading companies in perimeter security and safety equipment. So it's very major part of the business for us.

Okay. And I don't I'm not an expert in this space. My impression is there'll be very long range infrared cameras or a newer paper security way of doing things.

Is that true? Is this early on in the use of infrared particularly long range infrared for security where there's a big runway? Definitely Yes, definitely for counter UAS.

So counter UAS and perimeter security, they have not been really used too much until now. In Border Patrol, G5 actually has quite a in installed base there. Now in the past systems were not as long range because the technology advanced and especially the Atcom capabilities of G5 Hasnail, which they stabilization to significantly improve that. But also in Border Patrol, the cameras were not as widely spread as they are now. Now they're talking about putting these towers every couple of miles or so. So it's a much, much larger install base going to be. In perimeter security, I mean, this is now really growing. This is every data center when you look at it now, it's a data centers are like Fort Knox, They're secured with radars and with the most advanced systems. And so we expect that market to really take off considerably The relationship G5 has with Motorola is very significant for that. And our sales team of former FLIR people are also going to be pivotal at getting us into that. Then the whole world of counter UAS and detecting drones and as we all know from the news, that is only getting started.

I mean, so it's going to be huge.

Just finally, just in terms of those shipments that push out being in this quarter and just in general, are we seeing a that coming through? And how do you give any comments on the current [indiscernible] Yes. Al, do you want to talk about that?

So we shipped most of that already or In the first six weeks of this quarter, the stuff that pushed out My concern is that the supply chain is not speeding up out of China. We did get some good indications the releases that come are still small, too really too small to be honest. So on the one hand, we could close the gap So there's no rollover from This quarter, or we could end up at the end of Q3 coming up a bit short again because of the same sort of roll Got it. I mean, it really comes down to sort of like every day, checking with customs in the to see what comes through and what's approved and licensed and it's a day by day thing really.

And how is the rest of the business? Doing in terms of some of the newer programs ramping?

So the new business that we're ramping and particularly in the assemblies and chorus, I like this business. It doesn't take up as much space. It doesn't use as much capital equipment.

And with the ASPs the way they are and the margins high, historically high for anything else we do, I like it. So I keep encouraging Sam and the sales team to bring in more of the assemblies and core business. For sure.

I think we haven't also given any update on the Lockheed Martin project. So just shortly, it's going very well on track. We're built start shipping LightPath units for actual flight tests of the missiles, which extremely exciting for us personally. And we're moving along very well with Lockheed both from this program and the two other derivative programs in which Lockheed has already integrating our camera systems into two more programs.

Thanks so much. That's what I wanted to hear. Thank you.

The next question comes from the line of Scott Buck from H. C. Wainwright. Please go ahead.

Hi, good afternoon guys. Thanks for taking my questions and congrats on the transaction. [indiscernible] First thing guys, hopefully I didn't miss it, but could you give just a little bit of background on how the deal came together? Were they actively out looking for for a sooner or was this more, I guess, organic in the way it came about?

So like many of the acquisitions we contemplate G5 is a company we've had a ongoing relationship with. And this case, it goes back nearly thirty years. Well, before I even joined Lightpath, But ISP Optics has been a supplier and partner for G5 back when they were die op and later and General Dynamics and so was Lightpath. So So we've known each other already pretty well. We got the feeling that they're about to go out and possibly start shopping around. And we did a bit of a preemptive site, if you would. And just essentially picked it up before they went and formally engaged a bank. And to that extent, we've always been vague clear that we are on the lookout for acquisitions. I think we're being very clear that we could see acquisitions in two forms. One could be like Vizzomit, it's small technical groups that add specific technologies. And others would be larger like G5, which would be in the $15,000,000 to $20,000,000 of revenue profitable with strong margins. And those are the type of acquisitions. We We have at any given point in time multiple acquisition opportunities or ideas that we keep in touch with or keep an eye out for We always, always make sure that any acquisition we do with people that we know if we don't know them, then we proactively engage in some joint projects to get to know each other. [indiscernible] anyone that has done M and A would know, the number one reason for fail of acquisitions is [indiscernible] So a culture fit and getting to know each other if we don't know yet is very important for us.

In this case, we've simply known each other for a very long time. So it was very easy. So if I could add on to that, Glenn, So we mentioned that this is not the first time for this group to come together and create a company. They didn't have a good experience with the last time. Sort of the last time they sold it was General Dynamics. They basically picked it apart used the technology, moved it around planet Earth and the current ownerssellers didn't really like the outcome that came with that for the people that were working there and had been loyal to them. Them. So Sam is 100% right in terms of cultural fit, but also strategic fit and our plans for them is to grow that location in the way the original founders imagined it and continue along that path. That went a long way towards them feeling warm and fuzzy about the situation with us and not going to investment bankers to try and sell it outside They believe they left money on the table by not doing that.

We could argue that all day long, but that's their belief and yet another reason why the culture fit and everything else about WhitePath was attractive to them.

Great. I appreciate that, Simon. Now that was helpful.

And then second one, just a quick modeling question. Is there any seasonality the out quarters here?

Yes, there is seasonality. I'm not 100% confident yet in how it looks, but typically, if you using our fiscal year, [indiscernible] third quarter Q3 and Q4 is white on revenue. And then Q1 and Q2 is heavy on revenue. I don't have the exact mix, It's really something I want to confirm with the management team next week when we start going through the more detailed forecast versus the ones we used currently. And get a better handle on it And I'll help you guys try to understand what that looks like.

Great. I appreciate it guys. That's all I had. Thank you.

Thank you. The next question comes from the line of Brian Kingslinger from Alliance Global Partners.

Great. Thanks so much. With the $55,000,000 revenue target, it implies significant growth from G5 from the 15,000,000 I joined late hopefully, I'm not repeating. I just joined when Glenn was asking questions.

Have the few programs that you expect to drive this growth with G5 Are those awarded Have you started shipping against these contracts or subcontracts?

And at what point do you expect these shipments to meaningfully ramp in order in order to achieve this growth.

Yes.

So one of the programs, the Border Patrol, they received the first order last month and already began shipping towards that. So that one is already, I'd say, in the pocket. And confirmed.

The second one, the naval shipments, we expect any day now to purchase order for that. And those would be for the initial seven units. I'm not sure, something like that. Where towards the end of the year that will scale into low rate initial production. Other than that, the rest, many other programs in all in different security and defense. Some of them confirmed and some of them fairly confident.

But I'd say that in this case, the founders and the owners of G5 literally puts their money where the mouth is by putting a significant bet onto their earnout. That is for the next twelve months designed around them hitting revenues of between $21,000,000 to €27,000,000 And then given the commentary on seasonality, at least the modest knowing that the March in the June quarter are their weakest will LightPath LightPath a combined company be profitable assuming you close As expected and you have a full June quarter, will that be a profitable quarter? From an EBITDA perspective?

From an EBITDA perspective, we should be positive.

Great. [indiscernible] again, sorry, I missed the prepared remarks. Can you comment on whether you're beginning to see a ramp in the Mantis orders? I know last quarter you commented you expected several customers would begin ordering the second half and here we are So I'm curious, has that ramped as you expected?

Yes.

We've already been taking orders and shipping more and more of the furnace camera orders. The gas detection ones are not ramping as fast as we thought they would. I think for the gas detection, we still need to go through some quantification Test of measuring or giving the actual performance number of how much gas it can detect in parts per million. And that's something that we didn't realize we really can't begin significant sales before we have that. That's ongoing right now at a customer site in Salt Lake City.

So I'm hoping that the guest the optical gas imaging cameras are going to start scaling up very soon.

Great.

The last question I have don't know if you addressed this, Is there anything that keeps you up at night about [indiscernible] whether it's for your customers, whether it's for your suppliers, anything that you're carefully watching?

We started almost immediately Yes. We started almost immediately line item tariffs to our customers and we're passing it through. It's transparent. The customers see it. They know it. This includes purchase orders already in house. For The U. S. Market, our customer base seems to have accepted the fact that this is happening.

Yes. I would add Al, I don't stay up at night because of the tariffs. I don't think that will be that impact to us. I do worry about the supply chain of materials. I mean, the side effect of when China announced the ban on germanium and suddenly companies like Vital Materials stopped exporting any materials period That was took us completely by surprise and it isn't over yet. So companies like Vital still aren't selling materials. Altogether, not only germanium.

So I'd worry a bit more about that part. But there are many people, Lightpath is one of them, but many players working day and night to recreate the industrial base in The U. S. Thankfully. And they confident about that longer term, but I think we are we do still have a few months of transitory effect related to material supply. Then I have one follow-up. I mean, you clearly have been preparing for this for many years. There's no doubt about it.

My question would be, what percentage of your business relies on imports from [indiscernible] [indiscernible] I mean, when we say imports from China, it could be also like our regular glass lenses made in our China operation. From a From an overall perspective, sorry.

Maybe I'm just thinking about the material I mean you're talking about guessing germanium is having trouble.

Yes. Yes. So I'm guessing you're talking about germanium on the on the exports that were having trouble in the supply chain.

No, but So that's a funny thing. So material called zinc selenide and zinc sulfide that's available from other countries as well, but we were just buying it from a Chinese vendor, even supply of that material out of China. [indiscernible] From a revenue perspective, Brian, it's $8,000,000 Let's call it $8,000,000 into Europe and The U. S. Coming out of China The germanium risks are the ones that I mentioned earlier dollars 2,000,000 in The U. S. And dollars 2,000,000 in Europe. Obviously, The U. S. Has Europe is, I would say, moderate risk at this point. So that's kind of rough numbers, rough high level number. And Sam's right. So we knew what the germanium was and we knew what the risk was and have known for a while and we've been trying to get out of it for a while, right?

Switch customers. The surprise that came in in the quarter back in December is companies like Vital who just shut everything down. Nobody could have predicted that. We know nobody could have predicted it because our competitors and our customers are all in the same place as we are.

Great. Okay.

Thanks for taking all my questions. Congrats. Thank you, Glenn.

Thank you. The next question comes from the line of Richard Shannon from Craig Hallum Capital Group.

Well, hi, Sam and thanks for taking my questions and congratulations on someone. Looks like a really nice steel. Let me ask you a quick high level question following, Sam, your comments in your prepared remarks. About G5. You said they had a really big pipeline. Can you quantify or characterize that in any way by itself or relative to the pipeline that LifePath has itself?

Yes. I think the programs of record that we're seeing, the border patrol, the naval, those very in our what we expect them to be in full production from typically those programs are anywhere from $5,000,000 to $20,000,000 a year in what the potential joint production will be. And since those are all military or defense related programs of record and program of record means it's a line item in the different spudgets and converse budgets. So you can actually go and look it up formal congressional budget, Those programs are typically eight years of rollout followed by many years afterwards of spare parts and repairs, which are very, very lucrative. So we're looking at the business that could easily, easily be alone in the $50,000,000 to $60,000,000 in a matter of two, three years.

Okay. Perfect. That's a helpful way to think about it. You mentioned a number of applications for the product [indiscernible] obviously a key thing for in our current U. S. Administration. Data centers obviously resonate with everybody tracking AI, but the one that's really stood out to me I'm really interested in in is in drones or I think you see UAS or some acronym I don't really understand. Maybe you can talk about what's going on there. It sounds like a particularly useful and extremely important near term application for the defense community. Maybe you can talk about what's going on there how big of the pipeline are you expecting from that?

Yes, yes, definitely. So that's the largest program to begin with, the naval program. And that's also the largest customer, Motorola, I think a lot of the essentially, this is how do you detect drones or other small objects like that in movement in the best way without active measures necessarily. So course, a lot of those could be detectors detected with radar or active systems, but those will oftentimes give out too much information about your location and where those systems are as we've all seen in Ukraine. So you end up needing to have passive system to be able to detect drones and objects like that. And so a few technologies being looked at at. There's acoustic technologies of trying to detect the noise of the drone, There is different microwave trying to detect the transmission of the drone. If it is transmitting, and so on. But by far the best technology known there right now And it has to be an infrared camera and not a visible camera because you need to be able to see it tonight. Without the lights flashing and all of that, you need to be able to see it in many different conditions.

And so LightPath, those are mainly mid wave cameras and that's what is offering. But they'll also be expanding into shortwave cameras or even multi spec both shortwave and midwave together because shortwave cameras can see through clouds, for example, or could see through different adverse environmental conditions. So and this is where our Black Diamond materials really designed for multi spectral imaging will play a major role together with the G5 technology. So what we're seeing is these cameras getting in sold now multiple of them in important locations that are very sensitive on pan tilt systems that are rotating and looking around You're talking about cameras that can zoom 20 times as much. So they can start from a very wide field of view and zoom into small objects Again, they can do I mean, the performance is just insane to be able to detect a tiny drone from 10 miles away is optically is just very, very impressive technology.

Okay.

It's some great detail there, Sam. I think in the interest of time, I will get back in the queue. But thank you very much. Thank you, Richard.

Thank you.

As there are no further questions, I would now hand the conference over to Sam Rubin for his closing comments.

Okay. Thank you all for attending. Very, very exciting times for us. It wasn't apparent from our remarks We're extremely excited and happy to be able to be here at this point with this deal.

I look forward to meeting some of you in person in our Investor Day at February And I would also like to end the call by welcoming the G5 team to the Lightbar family. We very much look forward to working together and seeing what great things we can be doing together soon. Thank you, everyone, and good night.

Thank you. Ladies and gentlemen, the conference of LightPath Technologies has now concluded. Thank you for your participation. You may now disconnect your lines.