v3.26.3
Note 3 - Acquisition of Amorphous Materials
 3 Months Ended
Sep. 30, 2026
Amorphous Materials, LLC (“AML”) [Member]  
Notes to Financial Statements  
Business Combination [Text Block]

3. Acquisition of Amorphous Materials

 

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

 

Aggregate consideration payable by the Company to Seller under the Asset Purchase Agreement in connection with the AML Transaction will not exceed $10.0 million and consists of (i) a cash payment of $7.0 million that was paid at closing (the “Cash Consideration”) and (ii) contingent consideration that will not exceed $3.0 million (the “Contingent Consideration”). The Contingent Consideration, if earned, is payable in shares of the Company's Class A common stock, $0.01 par value, ("Class A Common Stock"), to be issued in up to six tranches of $500,000 each divided by the LPTH Stock Price (as calculated pursuant to the Asset Purchase Agreement) upon the achievement of certain milestones set forth in the Asset Purchase Agreement (each, a "Contingent Consideration  Payment").

 

We accounted for the acquisition of AML using the acquisition method of accounting, which required us to measure identifiable assets acquired and liabilities assumed in the acquiree at their fair values as of the AML Acquisition Date, with the excess of the consideration transferred over those fair values recorded as goodwill. The remaining estimated potential earnout was accrued based on a third-party valuation and was recorded in Accrued liabilities based on its fair value as of the AML Acquisition Date. Additional milestones were achieved on March 10, 2026, June 4, 2026, July 1, 2026 (two milestones) and September 25, 2026; accordingly, an additional 43,621, 30,838, 69,833 and 51,426 shares of Class A Common Stock were issued, respectively, (or approximately $483,000, $543,000, $1,110,000 and $513,000 at fair value as of the issuance dates, respectively) as Contingent Consideration Payments. Fair value adjustments of $0.2 million for the three months ended September 30, 2026 are included in “Change in fair value of acquisition liabilities” in the accompanying Consolidated Statement of Comprehensive Income (Loss). There was no remaining earnout as of September 30, 2026.

 

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

 

  

January 21,

 

Description

 

2026

 

Cash consideration

 $7,000,111 

Net working capital adjustment

  (76,874)

Equity portion of consideration

  544,195 

Earnout portion of consideration

  1,780,000 

Selling expense at closing

  2,000 

Fair value of consideration transferred

 $9,249,432 

 

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

 

  

Final as of

 
  

June 30,

 

Description

 

2026

 

Assets:

    

Accounts receivable

 $155,324 

Inventory

  455,399 

Property and equipment

  182,050 

Goodwill

  5,561,256 

Other intangible assets

  2,980,000 

Total assets acquired

 $9,334,029 

Liabilities:

    

Accounts payable

  27,994 

Accrued liabilities

  16,614 

Current deposits

  39,989 

Total liabilities assumed

 $84,597 

Net assets acquired

 $9,249,432 

 

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

 

      

Useful Lives

 

Intangible Asset

 

Total

  

(Years)

 

Backlog

 $90,000   1 

Know-how

  930,000   10 

Tradename

  390,000   10 

Customer relationships

  1,570,000   10 

Total

 $2,980,000     

 

Goodwill – The $5.6 million of goodwill recognized is attributable to AML’s assembled workforce and expected synergies related to the expansion of our infrared glass portfolio and manufacturing capabilities. The acquired goodwill is expected to be deductible for Federal income tax purposes. See Note 9, Goodwill and Intangible Assets, in these Notes to these unaudited Condensed Consolidated Financial Statements for further information.

 

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

 

The following table presents unaudited pro forma financial results of the operations acquired from AML. The pro forma results were prepared as if the acquisition of AML was completed on the first day of our fiscal year 2026, July 1, 2025. The pro forma results do not include any integration synergies and are not necessarily indicative of our results of operations that actually would have been obtained had the acquisition of AML been completed for the period presented, or which may be realized in the future.

 

  

Three Months Ended September 30,

 
  

2025

 

Revenue

 $15,831,281 
     

Net loss

 $(2,668,732)