LightPath Technologies, Inc., a leading provider of next-generation optics and imaging systems for both defense and commercial applications, today announced the accretive acquisition of G5 Infrared, LLC ("G5"), a leading high-end infrared camera systems manufacturer, purchased for a combination of cash and stock – creating a global, vertically integrated optics leader.

Key Transaction Highlights

• Acquisition accelerates execution of strategic vision to become a leading vertically integrated infrared imaging solutions provider in the $9B infrared imaging market
• G5 Infrared adds complementary high-end cooled infrared camera product family with numerous programs of record to significantly enhance near-term growth
• Accretive acquisition adding significant scale
• Combined company is at a revenue growth infliction point, and expected to achieve at least $55 million in revenue in the 12 months following the acquisition
• Transaction accelerates LightPath's momentum towards achieving long-term 20%+ revenue growth with EBITDA margins in excess of 15%
• Acquisition financing secured from new and existing institutional investors
• Significant opportunity to integrate BlackDiamond™ glass with G5's high-end product portfolio

Acquisition Summary and Strategic Rationale

Founded in 2011, G5 is a leading vertically integrated manufacturer of high-performance infrared camera systems and imaging solutions, specializing in advanced thermal imaging technology.  The company specializes in long-range mission-critical detection solutions, focusing on defense, border security, and CUAS/Counter-Drone markets.  G5's existing revenue and future growth pipeline are driven by established multi-year contracts and multiple programs of record in shipboard long-range surveillance, border security, and counter UAS systems, as well as recurring federal, naval, and law enforcement programs. Additionally, G5 is an industry leading provider of cutting-edge advanced infrared coatings, including for materials such as LightPath's BlackDiamond glass. G5 operates from a state-of-the-art manufacturing facility in Hudson, NH.

This acquisition strengthens LightPath's position as a leader in infrared imaging by expanding the Company's portfolio to include high average selling price ($50-500K) cooled infrared cameras. The combination of LightPath and G5 creates a more robust, vertically integrated solutions provider through the addition of a company that generated at least $15 million in preliminary, unaudited revenue in CY 2024. In addition to G5's existing strong customer base, the company is awarded, or expected to be awarded multiple new programs of record, which will substantially increase the already strong growth trajectory of its revenue. With the potential for strong growth trajectory of both G5 and LightPath's existing business, the combined company is expected to achieve at least $55 million in revenue in the 12 months following the acquisition, and increased EBITDA margins.

Over the last few years LightPath has been transitioning from a pure component provider to a vertically integrated provider of subsystems and solutions for infrared imaging. The in-house produced BlackDiamond glass, replacing Germanium, as well as the successful acquisition and integration of Visimid technologies in 2023 has positioned LightPath on a path to become a global leader in infrared imaging through the development of a product portfolio of optical assemblies and cameras.

Integrating G5's advanced mid-wave infrared cooled camera products with LightPath's uncooled long-wave infrared cameras will create a portfolio of complimentary infrared imaging solutions covering a wide range of applications including both long-range and short-range imaging applications, mobile and stationary solutions, as well as application specific solutions such as optical gas imaging (OGI), intruder detection, and more. Combining LightPath's vertically integrated manufacturing, and in particular LightPath's proprietary BlackDiamond™ glass, the combined company is well-positioned to capitalize on growing demand for high-performance infrared imaging solutions across defense and commercial markets, as well as co-develop advanced multispectral imaging systems that combines the advantages of the BlackDiamond glass, with the cooled imaging technology of G5.

Acquisition Consideration and Financing Terms

The aggregate consideration payable to the G5 members is $27.0 million, consisting of $20.25 million in cash and $6.75 million in common shares, with the potential for additional performance-based consideration, gated by revenue and EBITDA thresholds, payable in cash and common shares.

The Company has entered into definitive agreements to finance the cash consideration payable to the G5 members through private placements of $25.5 million of a newly-created series of 6.5% fixed price convertible preferred equity and related warrants, common shares totaling $1.5 million, and senior secured promissory notes totaling $5.2 million. As part of the financing, the Bridge Promissory Note LightPath entered into in August 2024 will be fully converted into the newly-created 6.5% preferred equity and related warrants, common shares and related warrants as part of the aforementioned private placement, and the senior secured promissory note noted above, and shall no longer be outstanding following the closing. As a result, the Company expects to be in a stronger cash position following the transaction, and a portion of the cash proceeds will be available to further invest in growth opportunities for both LightPath and G5. The closing of the acquisition and related financing is expected to occur on or before February 19, 2025.

Management Commentary

"The acquisition of G5 Infrared is a transformative step in our strategy to become a leading vertically integrated provider of infrared imaging solutions," said Sam Rubin, President and CEO of LightPath. "G5 brings deep expertise in high-end cooled infrared camera systems and is considered the market leader in long range imaging, which perfectly complement our existing uncooled camera technology. By integrating G5's capabilities with our proprietary BlackDiamond™ glass and in-house optics manufacturing, we are enhancing our ability to deliver high-performance imaging solutions for defense, government, and commercial applications, and positioning the combined company to take a leading position in next generation imaging systems whether those be uncooled, cooled, or a combination of both. G5 also brings established programs with naval, federal, and law enforcement agencies, combined with its robust sales pipeline, provide us with clear visibility into robust near-term revenue growth.

"This accretive acquisition immediately strengthens our financial profile, creating a combined company that we believe will achieve revenue of at least $55 million in the twelve months following the acquisition and increased EBITDA margins. It also represents the next step in our broader M&A strategy to expand our capabilities and market reach, as we seek to build a comprehensive IR imaging platform. With most critical optical components and materials now produced internally, we expect to accelerate both growth and new product innovation. We remain committed to delivering value for our shareholders through continued innovation, operational excellence, and strategic expansion," concluded Rubin.

Lou Fantozzi, Chief Executive Officer of G5, added: "We are eager to join the LightPath family, bringing what we believe is a highly incremental and complementary product offering to the robust product suite offered by LightPath today. Together, we believe we can significantly ramp sales, bring new products to market and ultimately drive enhanced profitability for shareholders. I look forward to working closely with Sam and the LightPath team in the months ahead."

 

Source: prnewswire.com

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