A：The highlights of Lightpath's third quarter fiscal 2025 included the close of their acquisition of G5 Infrared, incremental product launches, progress on key defense contracts, and ongoing growth driven by geopolitical tensions.

A：Lightpath's current business portfolio includes optical assemblies, cooled and uncooled cameras, and other subsystems. These new categories of products have become roughly equal to half of the company's revenue, with the other half coming from optical components. The company expects this ratio to continue to grow.

A：Lightpath is involved in several large projects including the Ng Sri (Next Generation Short Range Interceptor) program with Lockheed Martin, the Spear (Shipboard Panoramic Electro-Optic Infrared System) program for L3 Harris, various large projects in border security and county UAS with G5 group, and multiple large programs related to their proprietary Black Diamond glass for which they have an exclusive license from NL.

A：Black diamond materials, a family of infrared glasses made in the USA, provide two primary advantages. Firstly, they are an alternative to the use of germanium and gallium, two materials heavily dependent on Chinese supply. Secondly, they offer significant technical advantages in system design, often enabling size and weight reduction in systems while improving overall performance.

A：Black diamond materials, particularly the BDN L materials, are being utilized in several programs of record. The strong demand for these materials has necessitated an expansion in manufacturing capacity. In anticipation of this demand and the new programs translating into shipments, the company has seen an increase in demand for BDN L 4 and BDN L 8 materials, requiring the addition of manufacturing capacity. The DoD Department of Defense has provided monetary support to increase capacity and processing capability in line with these demands.

A：In the last 60 days since the closing of the GFC deal, the company has booked over $600 million of new orders, which is a very strong indicator of future sales and growth. These numbers are not fully reflected in the backlog as of the last ounce days from before today. However, the significant bookings over such a short period suggest robust growth expectations for the near future.

A：Following the closure of the GFC acquisition, the company's manufacturing footprint has changed, with a shift in headcount and footprint from China to the US. As a result, the company is less exposed to risks associated with tariffs and economic downturns in China and international trade. Despite this, the company is not completely immune to such events. When tariffs arise, the company can minimize the direct impact by quickly adjusting internal supply chains, thanks to the diversification of manufacturing locations.

A：The company has diversified its manufacturing capabilities by having them performed in at least two locations in parallel, a strategy started during Covid and continued post-Covid. This allows for the shift of manufacturing between locations and countries as needed, reducing dependency on a single location.

A：Changes in tariffs, such as the reduction of a 25% tax to 5%, could potentially affect the company's business by influencing customer willingness to pay a premium for US or Europe-manufactured products. The more challenging scenario would be when tariffs are fully removed. The team is focused on optimizing internal supply chains, building alternatives, and determining the extent to which customers are willing to pay for supply chain resilience. Additionally, if germanium becomes freely available again after recent supply restrictions, the company may face challenges as it would have to compete with the lower costs of germanium. However, the materials' technical advantages have so far helped maintain customer interest in their products, and most lenses in redesigned systems can be made with black diamond materials, improving system performance.

A：The signs that China is tightening export restrictions include the cracking down on smuggling, surprise audits by customs to ensure proper accounting of germanium purchases and制造, and long-term strategies to plan and monopolize the processing of raw materials and acquire available material in the marketplace.

A：The company is expediting redesigns with customers so that if germanium becomes available again, they will already be designed in and remain in the system.

A：Revenue for the third quarter of fiscal 25 increased 19.4% to $9.2 million from $7.700 million in the same year ago quarter. Gross profit increased 66% to $2.7 million or 29.1% of total revenues from $1.6 million or 20.9% of total revenues in the same year ago quarter. Operating expenses increased 24% as compared to the prior fiscal year. Net loss in the third quarter of fiscal 2025 was $3.6 million or $0.09 per basic and diluted share, compared to $2.6 million or $0.07 per basic and diluted share in the same quarter of the prior fiscal year. EBITDA loss was $4 million compared to a loss of $1.5 million in the prior fiscal year.

A：The post-merger integration with G5 is going well and is on schedule with positive cultural alignment and efficient integration where it makes sense. The organizations are aligned on goals and moving quickly towards expertise leveraging.

A：The expectation is for the combined companies to generate $30 million in revenue in the next three months since G5's acquisition in February. Most new orders are scheduled to ship from June through December, making the financial impact visible in Q4 and predominant in Q3 and Q4.

A：Following the acquisition of G5, the focus is on how to maximize revenues and earnings, with a reliance on EBITDA and Adjusted EBITDA for analysis due to the complex accounting treatment related to financing and valuation of G5.

A：The acquisition of G5 is viewed as a robust tool to supercharge lightpath's near-term potential, particularly in the defense space with high margin products. It should contribute to achieving long-term goals of sustained growth, profitability, and market leadership.

A：The company remains focused on executing its strategy to transform lightpath into a next-generation optics and imaging solution provider, expanding its portfolio with new growth opportunities, and positioning to deliver meaningful progress across automotive, defense, and industrial markets.

A：The delays in the Apache product were due to the team not meeting the timeline committed, which is a combination of undertaking a challenging project with premium pricing and the heavy dependence on a new material, BDN L AI.

A：The delay was due to unexpected capacity issues while making glass for the project, which led to rescheduling and restarting processes for the lens-making and assembly.

A：The new project is considered to be in the company's 'big league,' meaning it has the potential to generate millions of dollars annually once in production.

A：The expected impact on gross margin is an improvement from the current quarter to the next due to a full quarter of assemblies, modules, and cameras contributing to revenue.

A：The backlog number ending March was 27.4 million.

A：The downshift in expected revenue is not really driven by the strong performance of the G5 business but more by the legacy business.

A：The company is close to achieving positive EBITDA in the June quarter, but there's a slight miss due to less camera revenue than expected in June.

A：Bookings from February 18 to the present are around 13 million, which is compared to the 13 million bookings mentioned in the last earnings call.

A：A potential decision regarding the missile program with Lockheed Martin is expected late this year or early next year, following the customer's testing phase this summer or early fall.

A：There is a good chance of an earlier decision on the missile program if the technology performs as promised, potentially influenced by customer feedback during the summer or early fall delivery phase.

A：The positive results include customers who previously only purchased the camera and built their own optics seeing that the company's complete system performs better than their own developed system. Sales of the complete system are starting to increase.

A：The progress in optical gas imaging is less encouraging because it requires formal qualification testing by the EPA, which has standardized the process and now mandates the technology. This has led to long等待 times for testing, with a backlog of about six months to a year, delaying the project timeline.

A：The company's capacity constraints are mainly related to the supply of certain components like detectors, which come from a single vendor, and optical components. While there is considerable capacity in assembly and a trained workforce, supply chain issues for detectors and variable lead times for optical components are concerns. The Orlando operation could potentially assist with the optics.

A：The resignation of sales team member Jason Messerschmidt due to personal family reasons is an unexpected development, but the company still has a strong sales team in place that is working closely with G5. Integration efforts are ongoing, and despite the loss, the team continues to engage with potential customers and open doors for G5.

A：Investors should expect substantial non-amortization expenses in the current and upcoming quarters, which will include ongoing legal fees, audit fees, and valuation and consulting fees related to filings and audits. The exact amount is not specified but is substantial, estimated to be around $300,000.

A：The company is not facing current yield issues or supply chain challenges. They have addressed past yield issues and resolved any supply chain disruptions. The problems experienced in China with customs and optical material exports have largely been resolved, and the company is reworking orders to suppliers outside of China where feasible.

A：The backlogs of items with supply issues are expected to be resolved within the current quarter, with most materials received by the end of May or beginning of June.

A：The border security contract opportunity for G5 is a sole source program that has been awarded and is moving towards initial production, which is expected to be a multi-million dollar annual deal.

A：The IDIQ (indefinite delivery, indefinite quantity) contract with Border Patrol has Elbit as the sole provider for L-bit America, with G5 being the sole provider for Elbit. While there is uncertainty due to annual decision-making by Border Patrol on which vendor gets what part of the contract, G5 is expected to receive a substantial portion of the purchases. G5 has received an order of a few million dollars in January and anticipates deliveries starting in the next few months, which could potentially be a large program for G5 if it performs well.

A：G5 has shipped roughly between $18 to $21 million worth of products since Q4 or through February 18, which is slightly below their projected revenue target for the trailing 12 months of $21 million but still on course to meet their expectations with potential upside opportunities.

A：G5 has to achieve a 20% margin total to reach their contingent payment. With five weeks of data, there are no red flags, and it is considered ambitious but doable.