0001437749-26-003809
SEC filingRevenue surged 120% YoY to $16.4M, driven by G5 Infrared acquisition; gross margin improved to 37% but net loss widened on non-cash charges.
In Q2 FY2026, revenue surged 120% YoY to $16.4M, propelled by the G5 Infrared acquisition which contributed $6.4M in assemblies and modules and $1.2M in infrared components. Excluding G5, organic growth was solid, with visible components up 25% and infrared components up 61% on higher defense and industrial sales. Gross profit more than doubled to $6.0M, with gross margin expanding from 26% to 37%, driven by the favorable mix shift toward higher-margin assemblies and modules and improved infrared component margins due to resolution of prior yield issues. Net loss widened to $9.4M from $2.6M, primarily due to a $7.6M non-cash charge from the fair value adjustment of acquisition earnout liabilities and a $0.5M loss on debt extinguishment. Adjusted EBITDA turned positive to $0.6M (3% of revenue) from a loss of $1.3M, reflecting underlying operating improvement.
By product group, assemblies and modules became the largest segment at $7.2M (44% of revenue), up 741% YoY, driven almost entirely by G5 Infrared's camera sales. Infrared components revenue rose 61% to $5.0M, with G5 contributing $1.2M in coating services and components; the remaining growth came from defense and industrial customers. Visible components grew 25% to $3.4M, led by industrial demand in the U.S. and Asia. Engineering services declined slightly to $0.7M due to timing of the Lockheed Martin contract, partially offset by a non-recurring defense project. The backlog more than doubled sequentially to $97.8M, with G5 Infrared orders accounting for $70.8M, including a $40M order from a leading global technology customer.
Management emphasized the strategic shift from components to higher-value assemblies and systems (LightPath 2.0/3.0), which is expected to lift ASPs and profitability over time. The G5 Infrared acquisition positions the company in cooled infrared cameras for long-range surveillance and defense programs. The strong backlog—up 162% from June 2025—provides visibility into revenue growth. However, the company faces headwinds in China and slower visible component growth. No explicit financial guidance was provided, but the trajectory of adjusted EBITDA turning positive suggests improving operating leverage.
Cash and cash equivalents surged to $73.6 million at December 31, 2025, from $4.9 million at June 30, 2025, primarily driven by $65.3 million in net proceeds from a public equity offering of 8,912,500 shares of Class A common stock. Total assets rose to $148.6 million from $81.5 million. The company's total debt (loans payable) was reduced to $0.25 million, down from $5.0 million at June 30, 2025, after repaying the Acquisition Notes and Bridge Note in full. Shareholders' equity increased to $77.9 million from $15.6 million, reflecting the equity issuance and accumulated deficit of $243.0 million. Inventory net of obsolescence was $13.5 million, slightly up from $12.9 million. Deferred revenue (customer advances) increased to $2.7 million from $0.5 million.
The most significant commitment is the earnout liability related to the G5 Infrared acquisition, which was adjusted to $13.8 million at December 31, 2025, an increase of $8.8 million from June 30, 2025, recognized as a charge in operating expenses. The earnout is payable in cash and stock based on revenue and EBITDA targets for fiscal years 2026 and 2027. Operating lease liabilities totaled $9.5 million (present value), with future minimum payments of $10.7 million through 2034. Finance lease liabilities were $0.6 million. The company also has a $3.3 million noncurrent accrued liability (likely related to the Visimid earnout). No other material purchase commitments were disclosed.
No share buybacks or dividends were reported. The company raised $65.3 million net from a public equity offering in December 2025. Debt was significantly reduced: the Acquisition Notes ($5.2 million principal) were redeemed at 102% of principal, resulting in a $0.5 million loss on extinguishment. Capital expenditures were $0.9 million for the six months ended December 31, 2025, representing 3.0% of revenue. The company also issued 1,600,000 shares in a private placement for $7.9 million net.
The company operates as a single reportable segment (optics). Revenue by product group for the six months ended December 31, 2025: Infrared components $9.3M, Visible components $7.3M, Assemblies and modules $13.1M, Engineering services $1.8M. Geographically, U.S. revenue was $14.3M, Europe $13.8M, China $2.2M, Other Asia $0.7M, and Rest of world $0.5M. Long-lived assets were concentrated in the U.S. ($44.9M), Latvia ($4.5M), and China ($2.2M).
Operating cash flow (CFO) of $1.68 million for the six months ended December 31, 2025, represents a significant improvement from a use of $2.44 million in the prior-year period. The turnaround is primarily attributable to a large non-cash adjustment of $8.84 million for the change in fair value of acquisition earnout liabilities, which more than offset the net loss of $12.30 million. Excluding this non-cash item, CFO would have been negative, indicating underlying cash generation remains weak. Depreciation and amortization of $2.45 million and stock-based compensation of $0.70 million also contributed positively. Working capital provided a net inflow of $1.35 million, driven by a $1.26 million increase in accounts payable and accrued liabilities and a $0.88 million decrease in trade receivables, partially offset by a $0.78 million inventory build.
Capital expenditures (capex) rose to $0.94 million from $0.16 million, reflecting higher investment in property and equipment. Free cash flow (CFO minus capex) was approximately $0.74 million, but this is heavily influenced by the non-cash earnout adjustment; on a cash basis, free cash flow was deeply negative. No share repurchases or dividends were reported.
Financing activities provided $67.71 million, primarily from public and private equity placements ($73.23 million net of fees), which was partially offset by $5.41 million in loan repayments. This resulted in a cash balance of $73.57 million at period-end, up from $4.88 million at the start of the period. The company's cash position is now strong, but reliance on equity issuance for liquidity is notable.