Table of Contents

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

☒  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31, 2026

 

or

 

☐  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from                      to                     

 

Commission File Number: 001-10647

 

PRECISION OPTICS CORPORATION, INC.

(Exact name of registrant as specified in its charter)

 

Massachusetts	04-2795294
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

 

550 King Street, Bldg. A, Ste. 100, Littleton, Massachusetts 01460-6245

(Address of principal executive offices) (Zip Code)

 

(978) 630-1800

(Registrants telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	POCI	Nasdaq

 

Securities registered pursuant to Section 12(g) of the Act: None.

  

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

   

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of large accelerated filer, accelerated filer, smaller reporting company, and emerging growth company in Rule 12b-2 of the Exchange Act.

 

	Large accelerated filer	☐	Accelerated filer	☐
	Non-accelerated filer	☒	Smaller reporting company	☒
			Emerging growth company	☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

 

The number of shares outstanding of the issuer’s common stock, par value $0.01 per share, at May 12, 2026 was 10,944,869 shares.

 

 

 

PRECISION OPTICS CORPORATION, INC.

 

Table of Contents

 

	Page
PART I FINANCIAL INFORMATION	3
Item 1.  Financial Statements	3
Balance Sheets at March 31, 2026 and June 30, 2025	3
Statements of Operations for the Three and Nine Months Ended March 31, 2026 and 2025	4
Statements of Stockholders’ Equity for the Three and Nine Months Ended March 31, 2026 and 2025	5
Statements of Cash Flows for the Nine Months Ended March 31, 2026 and 2025	6
Notes to Financial Statements	7
Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3.  Quantitative and Qualitative Disclosures About Market Risk	21
Item 4.  Controls and Procedures	21
PART II OTHER INFORMATION	22
Item 1.  Legal Proceedings	22
Item 1A. Risk Factors	22
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds	22
Item 3.  Defaults Upon Senior Securities	22
Item 4.  Mine Safety Disclosures	22
Item 5.  Other Information	22
Item 6.  Exhibits	23

 

 

 

 

 

 

PART I. FINANCIAL INFORMATION

 

Item 1. Financial Statements.

 

PRECISION OPTICS CORPORATION, INC.

BALANCE SHEETS

(UNAUDITED)

		March 31,				June 30,
		2026				2025
ASSETS
Current Assets:
Cash and cash equivalents		$	10,680,046			$	1,773,735
Accounts receivable, net of allowance for credit losses of $134,313 at March 31, 2026 and $80,192 at June 30, 2025			6,577,866				4,336,730
Inventories, net			3,702,461				3,562,112
Prepaid expenses			446,313				385,390
Total current assets			21,406,686				10,057,967
Fixed Assets:
Machinery and equipment			3,415,589				3,385,958
Leasehold improvements			1,225,401				871,356
Furniture and fixtures			615,723				538,428
Total fixed assets			5,256,713				4,795,742
Less—accumulated depreciation and amortization			4,388,000				4,261,950
Net fixed assets			868,713				533,792
Operating lease right-to-use asset			2,371,091				141,825
Patents, net			215,507				232,493
Goodwill			8,824,210				8,824,210
Total other assets			11,410,808				9,198,528
TOTAL ASSETS		$	33,686,207			$	19,790,287
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Current portion of capital lease obligation		$	–			$	27,368
Current maturities of long-term debt			577,898				577,898
Accounts payable			6,239,450				2,909,100
Contract liabilities			2,224,660				1,821,929
Accrued compensation and other			836,582				764,004
Current portion of operating lease liability			314,329				50,995
Total current liabilities			10,192,919				6,151,294
Long-term debt, net of current maturities			855,780				1,289,205
Operating lease liability, net of current portion			2,531,601				90,954
Total liabilities			13,580,300				7,531,453
Stockholders’ Equity:
Common stock, $0.01 par value: 50,000,000 shares authorized; issued and outstanding – 10,929,869 shares at March 31, 2026 and 7,714,701 at June 30, 2025			109,298				77,147
Additional paid-in capital			80,493,343				69,152,317
Accumulated deficit			(60,496,734	)			(56,970,630	)
Total stockholders’ equity			20,105,907				12,258,834
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$	33,686,207			$	19,790,287

 

The accompanying notes are an integral part of these interim financial statements.

 

 

PRECISION OPTICS CORPORATION, INC.

STATEMENTS OF OPERATIONS

FOR THE THREE AND NINE MONTHS ENDED

MARCH 31, 2026 AND 2025

(UNAUDITED)

		Three Months Ended March 31,								Nine Months Ended March 31,
		2026				2025				2026				2025
Revenues		$	8,708,631			$	4,185,968			$	22,757,291			$	12,909,928
Cost of Goods Sold			6,652,097				3,767,993				19,549,739				10,304,681
Gross Profit			2,056,534				417,975				3,207,552				2,605,247
Research and Development Expenses			267,319				211,242				828,733				929,648
Selling, General and Administrative Expenses			1,853,677				2,245,018				5,780,865				5,870,846
Total Operating Expenses			2,120,996				2,456,260				6,609,598				6,800,494
Operating Income			(64,462	)			(2,038,285	)			(3,402,046	)			(4,195,247	)
Interest Expense			(35,116	)			(58,476	)			(115,353	)			(182,442	)
Income before provision for income taxes			(99,578	)			(2,096,761	)			(3,517,399	)			(4,377,689	)
Provision for income taxes			8,705				–				8,705				–
Net Income		$	(108,283	)		$	(2,096,761	)		$	(3,526,104	)		$	(4,377,689	)
Loss Per Share:
Basic and Fully Diluted		$	(0.01	)		$	(0.30	)		$	(0.46	)		$	(0.67	)
Weighted Average Common Shares Outstanding:
Basic and Fully Diluted			7,794,263				6,917,281				7,740,834				6,491,687

 

The accompanying notes are an integral part of these interim financial statements.

 

 

 

 

PRECISION OPTICS CORPORATION, INC.

STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE THREE AND NINE MONTHS ENDED

MARCH 31, 2026 AND 2025

(UNAUDITED)

		Nine Month Period Ended March 31, 2026
		Number of Shares				Common Stock				Additional Paid-in Capital				Accumulated Deficit				Total Stockholders’ Equity
Balance, July 1, 2025			7,714,701			$	77,147			$	69,152,317			$	(56,970,630	)		$	12,258,834
Stock-based compensation			–				–				301,639				–				301,639
Net loss			–				–				–				(1,637,030	)			(1,637,030	)
Balance, September 30, 2025			7,714,701				77,147				69,453,956				(58,607,660	)			10,923,443
Stock-based compensation			–				–				162,082				–				162,082
Issuance of common stock for employee services			5,528				55				24,945				–				25,000
Net loss			–				–				–				(1,780,791	)			(1,780,791	)
Balance, December 31, 2025			7,720,229				77,202				69,640,983				(60,388,451	)			9,329,734
Issuance of common stock in public offering			3,194,444				31,944				10,598,734				–				10,630,678
Proceeds from exercise of stock option			13,628				136				(136	)			–				–
Stock-based compensation			–				–				247,528				–				247,528
Issuance of common stock for employee services			1,568				16				6,234				–				6,250
Net loss			–				–				–				(108,283	)			(108,283	)
Balance, March 31, 2026			10,929,869			$	109,298			$	80,493,343			$	(60,496,734	)		$	20,105,907

 

		Nine Month Period Ended March 31, 2025
		Number of Shares				Common Stock				Additional Paid-in Capital				Accumulated Deficit				Total Stockholders’ Equity
Balance, July 1, 2024			6,073,939			$	60,739			$	61,197,433			$	(51,190,384	)		$	10,067,788
Issuance of common stock in registered direct offering			265,868				2,659				1,201,883				–				1,204,542
Proceeds from exercise of stock option			10,363				104				26,896				–				27,000
Stock-based compensation			–				–				149,364				–				149,364
Net loss			–				–				–				(1,311,247	)			(1,311,247	)
Balance, September 30, 2024			6,350,170				63,502				62,575,576				(52,501,631	)			10,137,447
Stock-based compensation			–				–				278,206				–				278,206
Issuance of common stock for consulting services			5,364				53				29,947				–				30,000
Net loss			–				–				–				(969,681	)			(969,681	)
Balance, December 31, 2024			6,355,534				63,555				62,883,729				(53,471,312	)			9,475,972
Issuance of common stock in registered direct offering			1,272,500				12,725				5,052,869				–				5,065,594
Proceeds from exercise of stock option			13,162				132				18,118				–				18,250
Stock-based compensation			–				–				592,964				–				592,964
Issuance of common stock for consulting services and employees			25,051				250				121,448				–				121,698
Net loss			–				–				–				(2,096,761	)			(2,096,761	)
Balance, March 31, 2025			7,666,247			$	76,662			$	68,669,128			$	(55,568,073	)		$	13,177,717

 

The accompanying notes are an integral part of these interim financial statements.

 

 

 

 

PRECISION OPTICS CORPORATION, INC.

STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED

MARCH 31, 2026 AND 2025

(UNAUDITED)

		Nine Months Ended March 31,
		2026				2025
Cash Flows from Operating Activities:
Net Loss		$	(3,526,104	)		$	(4,377,689	)
Adjustments to reconcile net loss to net cash used in operating activities -
Depreciation and amortization			214,948				159,844
Stock-based compensation expense			742,499				1,020,534
Non-cash interest expense			13,825				8,918
Non-cash operating lease expense			255,965				–
Loss on disposal of fixed assets			34,506				–
Changes in operating assets and liabilities -
Accounts receivable, net			(2,241,136	)			120,438
Inventories, net			(140,349	)			(803,301	)
Prepaid expenses			(60,923	)			(27,160	)
Accounts payable			3,330,350				476,259
Contract liabilities			402,731				493,201
Accrued compensation and other			72,578				(49,209	)
Net cash used in operating activities			(901,110	)			(2,978,165	)
Cash Flows from Investing Activities:
Purchases of fixed assets			(349,750	)			(180,985	)
Proceeds from sale of fixed assets			3,000				–
Additional/reclassification patent costs			(1,889	)			31,148
Net cash used in investing activities			(348,639	)			(149,837	)
Cash Flows from Financing Activities:
Payments of capital lease obligations			(27,368	)			(32,257	)
Payments of long-term debt			(447,250	)			(149,230	)
Payment of debt modification costs			–				(15,000	)
Payment on revolving line of credit			–				(1,000,000	)
Proceeds from registered direct sale of common stock, net			–				6,270,136
Proceeds from public offering of common stock, net			10,630,678				–
Stock issued for services			–				151,698
Gross proceeds from the exercise of stock options			–				45,250
Net cash provided by (used in) financing activities			10,156,060				5,270,597
Net increase in cash and cash equivalents			8,906,311				2,142,595
Cash and cash equivalents, beginning of period			1,773,735				405,278
Cash and cash equivalents, end of period		$	10,680,046			$	2,547,873
Supplemental disclosure of cash flow information:
Operating right-of-use assets obtained in exchange for operating lease liabilities		$	2,632,584			$	–
Lease improvements financed by landlord		$	218,750			$	–
Issuance of common stock for employee services		$	31,250			$	–

 

The accompanying notes are an integral part of these interim financial statements.

 

 

 

 

PRECISION OPTICS CORPORATION, INC.

NOTES TO INTERIM FINANCIAL STATEMENTS (UNAUDITED)

 

 

1.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Principles of Consolidation and Operations

 

These financial statements have been prepared by the Company, without audit, and reflect normal recurring adjustments which, in the opinion of management, are necessary for a fair statement of the results of the first nine months of the Company’s fiscal year 2026. These financial statements do not include all disclosures associated with annual financial statements and, accordingly, should be read in conjunction with footnotes contained in the Company’s financial statements for the fiscal year ended June 30, 2025, together with the Report of Independent Registered Public Accounting Firm filed under cover of the Company’s 2025 Annual Report on Form 10-K, filed with the Securities and Exchange Commission on September 29, 2025, as amended by Amendment No. 1 on Form 10-K/A filed with the Securities and Exchange Commission on October 28, 2025.

 

Use of Estimates

 

The preparation of these financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

 

Income (Loss) Per Share

 

Basic income (loss) per share is computed by dividing net income or net loss by the weighted average number of shares of common stock outstanding during the period. Diluted income (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period, plus the number of potentially dilutive securities outstanding during the period such as stock options. For the three months and nine months ended March 31, 2026, potentially dilutive securities outstanding have been excluded from the computations of weighted-average shares outstanding because such securities have an antidilutive impact due to the net loss reported during those periods. The number of shares issuable upon the exercise of outstanding stock options and warrants that were excluded from the computation of fully dilutive weighted average shares outstanding was approximately 1,826,791 for the three and nine months ended March 31, 2026.

 

The following is the calculation of income (loss) per share for the three months and nine months ended March 31, 2026 and 2025:

Schedule of income (loss) per share
		Three Months Ended March 31,								Nine Months Ended March 31,
		2026				2025				2026				2025
Net Loss Basic and Fully Diluted		$	(108,283	)		$	(2,096,761	)		$	(3,526,104	)		$	(4,377,689	)
Weighted Average Shares Outstanding
Basic and Fully Diluted			7,794,263				6,917,281				7,740,834				6,491,687
Income (Loss) Per Share – Basic and Fully Diluted		$	(0.01	)		$	(0.30	)		$	(0.46	)		$	(0.67	)

 

 

 

 

Significant Customers and Concentration of Credit Risk

 

Financial instruments that subject the Company to credit risk consist primarily of cash equivalents and trade accounts receivable. The Company places its investments with highly rated financial institutions. The Company has not experienced any losses on these investments to date.

 

The allowance for credit losses was $134,313 at March 31, 2026, and $66,833 at March 31, 2025.

Schedule of allowance for credit losses
		Nine Months Ended March 31,
		2026				2025
Allowance for credit losses, beginning of period		$	80,192			$	118,872
Change in the provision for expected credit losses			61,199				(52,039	)
Write-offs charged against the allowance			(7,078	)			–
Allowance for credit losses, end of period		$	134,313			$	66,833

 

During the nine months ended March 31, 2026, the Company increased the credit loss reserve by approximately $54,000. Management believes the allowance for credit losses, which is established based upon review of specific account balances and historical experience, is adequate at March 31, 2026.

 

Income Taxes

 

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

  

In assessing the likelihood of utilization of existing deferred tax assets, management has considered the historical results of operations and the current operating environment. Based on this evaluation, a full valuation reserve has been provided for the deferred tax assets.

 

Segment Reporting

 

Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, or decision-making group, in making decisions about how to allocate resources and assess performance. The Company’s chief decision-maker is its Chief Executive Officer. To date, the Company has viewed its operations and manages its business as principally one segment. The chief operating decision maker assesses performance for the single reporting segment and decides how to allocate resources based on revenues, gross profit, and net income (loss) that also is reported on the income statement as revenues, gross profit, and net income (loss). The measure of segment assets is reported on the balance sheet as total assets.

 

Recent Accounting Pronouncements

 

In December 2025, the FASB issued ASU 2025-10, Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities (“ASU 2025-10”). ASU 2025-10 adds guidance on the recognition, measurement and presentation of government grants. ASU 2025-10 is effective for fiscal years beginning after December 15, 2028, including interim periods within those fiscal years, and permits modified prospective, modified retrospective, or full retrospective adoption. The Company has elected to early adopt the guidance effective for the fiscal year ended June 30, 2026.

 

 

 

 

Government Grants

 

The Company recognizes grants or subsidies from governments and other organizations as a receivable when it is probable that the Company will comply with any conditions associated with the grant arrangement and the grant will be received. The Company evaluates the conditions of each grant as of each reporting period to determine whether it is probable that the Company has met the conditions of each grant arrangement. Grants are recognized in the statements of operations on a systematic basis over the periods in which the Company recognized the related costs for which the grant is intended to compensate. The Company records grant receivables in the balance sheets in accounts receivable or other non-current assets, depending on when the amounts are expected to be received from the government agency.

 

During the quarter ended March 31, 2026, the Company recognized a reduction to expense of $224,544 related to grants within the statements of operations, all in cost of goods sold. As of March 31, 2026, the Company has $224,544 recorded as a government receivable, included in accounts receivable, which relates to personnel, direct costs and operating expenses to be reimbursed and received as cash. As of March 31, 2025, the Company had no government receivable.

 

Derivative Financial Instruments

 

The Company evaluates warrants and other financial instruments to determine whether such instruments or embedded features qualify as derivatives to be accounted for separately in accordance with ASC 480, Distinguishing Liabilities from Equity, and ASC 815, Derivatives and Hedging. Warrants that do not meet the criteria for equity classification are recorded as liabilities at fair value and are remeasured at each reporting date until exercised, expired, modified, or otherwise settled. Changes in the fair value of warrant liabilities are recognized in other income (expense), net in the statements of operations.

 

Warrants that meet the criteria for equity classification, including the scope exception under ASC 815-10-15-74(a), are classified within stockholders’ equity and are not subsequently remeasured as long as the conditions for equity classification continue to be met.

 

The Company reassesses the classification of warrants at each reporting date. As of March 31, 2026, the Company determined that all outstanding warrants qualified for equity classification.

 

Goodwill and Patents

 

Long-lived assets such as goodwill and patents are capitalized when acquired and reviewed for impairment whenever events or changes in circumstances indicate that the book value of the asset may not be recoverable. Impairment of the carrying value of long-lived assets such as goodwill and patents would be indicated if the best estimate of future undiscounted cash flows expected to be generated by the asset grouping is less than its carrying value. If an impairment is indicated, any loss is measured as the difference between estimated fair value and carrying value and is recognized in operating income or loss. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. No such impairments of goodwill or patents have been estimated by management as of March 31, 2026. Amortization expense for the nine months ended March 31, 2026 and 2025 was $18,875 and $0, respectively.

 

 

 

 

 

 

2.	INVENTORIES

 

Inventories are stated at the lower of cost (first-in, first-out) or market and consist of the following:

Schedule of inventories
		March 31, 2026				June 30, 2025
Raw Materials		$	1,879,736			$	1,799,624
Work-In-Progress			579,589				598,720
Finished Goods			1,243,136				1,163,768
Total Inventories (Net)		$	3,702,461			$	3,562,112

 

The inventory reserve was $409,999 and $272,894 at March 31, 2026 and June 30, 2025, respectively.

 

 

3.	BANK FINANCING ACTIVITIES

 

Bank Line of Credit

 

On October 4, 2021, the Company entered into a Loan Agreement with Main Street Bank of Marlborough, Massachusetts (the “Lender”), which provided for a $2,600,000 Term Loan and a $250,000 Revolving Line of Credit Loan Facility (the “Revolver”), which was increased to $500,000 effective May 17, 2022, and $1,250,000 effective June 2, 2023. Borrowings under the Revolver are limited by the borrowing base comprised of a percentage of accounts receivable and inventory and secured by all assets of the Company. Borrowings under the Revolver bear interest payable monthly at the prime lending rate plus 1.5% per annum and shall not be less than 4.75% per annum. Borrowings under the Revolver are due upon demand. There were no borrowings under the Revolver at March 31, 2026.

  

The Company’s Loan Agreement with the Lender contains a minimum annual debt service coverage ratio covenant of 1.2x. The Company did not meet this annual debt service coverage ratio for the fiscal year ended June 30, 2024. The Company’s Lender agreed to waive compliance with such debt service ratio covenant for the period ending June 30, 2024. In addition to such waiver, the Lender and the Company entered into an amendment dated September 30, 2024 to that certain Term Loan dated October 4, 2021, as amended and that certain Promissory Note dated June 2, 2023 (collectively, the “Notes”) which amendments provided for a six-month period of interest only payments from October 15, 2024 through March 15, 2025 for the Notes. The Company commenced payments of principal and interest under the Notes beginning with the payments due on April 15, 2025, with a new amortization schedule for the remaining term for such Notes through their maturity date. On February 14, 2025, the Lender agreed to waive compliance with the annual debt service coverage ratio covenant for the fiscal year ending June 30, 2025, subject to a $30,000 waiver fee and the completion of an equity raise of at least $4,500,000 by February 24, 2025, which the Company satisfied on February 21, 2025. Any future advances are contingent on the Company achieving a minimum Debt Service Coverage ratio of 1.20x based on quarterly testing, which the Company was not in compliance with as of March 31, 2026.

 

There were no other changes to or modifications to the Loan Agreement or the Notes.

 

 

 

 

 

Long-Term Debt

 

Long-term debt consists of the following at March 31, 2026:

Schedule of long-term debt
		Amount
Term Loan Note payable to Main Street Bank with monthly principal payments of $35,271, excluding six months in Fiscal 2025, plus interest at a fixed rate of 7.0% per annum. Secured by all assets of the Company, and subject to certain periodic reporting to the bank and other conditions including an annual minimum EBITDA plus stock-based compensation to debt service coverage ratio of 1.20:1 commencing with the fiscal year ending June 30, 2023. The Term Loan Note matures on October 15, 2028.		$	1,093,411
Permanent Working Capital Loan payable to Main Street Bank with monthly principal payments of $14,423, excluding six months in Fiscal 2025, plus interest at a fixed rate of 8.625% per annum. Secured by all assets of the Company, and subject to certain periodic reporting to the bank and other conditions including an annual minimum EBITDA plus stock-based compensation to debt service coverage ratio of 1.20:1 commencing with the fiscal year ending June 30, 2023. The Permanent Working Capital Loan matures on June 15, 2028.			389,423
Less current maturities			(577,898	)
Less debt issuance and modification costs, net of accumulated amortization of $43,581			(49,156	)
Long-term debt, net of current maturities and debt issuance costs		$	855,780

 

At March 31, 2026 principal payments due on the Term Loan Notes payable are as follows:

Schedule of principal payments due on term loan note payable
Fiscal Year Ending June 30:
2026		$	149,083
2027			596,333
2028			596,333
2029			141,085
Total long-term debt		$	1,482,834

 

 

4.	LEASE OBLIGATIONS

 

In March 2021 the Company entered into a five-year capital lease in the amount of $161,977 and in January 2020, the Company entered into a five-year capital lease for $47,750, both for manufacturing equipment. The fixed assets under capital lease obligations have been fully paid as of March 31, 2026.

 

On July 1, 2019 the Company entered into a three-year operating lease for its facility in El Paso, Texas, and in February 2022 the Company entered into an extension of the lease for an additional three years through June 2025. In May 2025, this lease was extended for an additional three years through May 2028. Remaining minimum lease payments at March 31, 2026 total $111,115. Total lease costs including base rent and common area expenses was $59,506 and $49,808 during the nine months ending March 31, 2026 and 2025, respectively. Included in the accompanying balance sheet at March 31, 2026 is a right-of-use asset of $100,030 and current and long-term operating lease liabilities of $43,468 and $57,805, respectively.

 

On May 15, 2025 the Company entered into an eight-year lease in South Portland, Maine with two five-year extension options. Remaining minimum lease payments at March 31, 2026 total $1,079,575. Total lease costs including base rent and common area expenses was $130,645 during the nine months ending March 31, 2026. The amount of variable lease payments is immaterial. Included in the accompanying balance sheet at March 31, 2026 is a right-of-use asset of $533,254 and current and long-term operating lease liabilities of $68,798 and $724,863, respectively. The applicable discount rate utilized for this lease at commencement was 9.0%.

 

 

 

 

On June 2, 2025 the Company entered into a seven-year operating lease in Littleton, Massachusetts with two five-year extension options.

 

Remaining minimum lease payments at March 31, 2026 total $2,588,721. Total lease costs including base rent and common area expenses was $213,189 during the nine months ending March 31, 2026. The amount of variable lease payments is immaterial. Included in the accompanying balance sheet at March 31, 2026 is a right-of-use asset of $1,737,807 and current and long-term operating lease liabilities of $202,063 and $1,748,933, respectively. The applicable discount rate utilized for this lease at commencement was 9.0%.

 

At March 31, 2026 future minimum lease payments under operating lease obligations are as follows:

Schedule of future minimum lease payments under operating lease obligations
Fiscal Year Ending June 30:		Amounts
2026		$	135,599
2027			555,198
2028			567,327
2029			535,107
2030			551,240
2031 and thereafter			1,434,940
Total minimum payments			3,779,411
Less: amount representing interest			933,481
Present value of minimum lease payments			2,845,930
Less: current portion			314,329
Future minimum long-term lease liability		$	2,531,601

 

The Company’s four facilities in Gardner, Massachusetts, which are used for offices, production and storage spaces are leased primarily on a tenant-at-will basis. Rent expense on these operating leases was $158,270 and $156,143 for the nine months ended March 31, 2026, and 2025, respectively.

 

 

5.	STOCK-BASED COMPENSATION

 

Stock Options

 

The following table summarizes stock-based compensation expense for the three and nine months ended March 31, 2026 and 2025:

Schedule of stock-based compensation expense
		Three Months Ended March 31,								Nine Months Ended March 31,
		2026				2025				2026				2025
Cost of Goods Sold		$	34,874			$	36,333			$	95,273			$	114,785
Selling, General and Administrative			212,654				526,631				615,976				905,749
Stock Based Compensation Expense		$	247,528			$	562,964			$	711,249			$	1,020,534

 

No compensation has been capitalized because such amounts would have been immaterial. There was $6,250 in common stock issued for employee services for the three months ended March 31, 2026 and $31,250 for the nine months ended March 31, 2026, respectively.

 

 

 

 

The following tables summarize stock option activity for the nine months ended March 31, 2026:

Schedule of stock option activity
		Options Outstanding
		Number of Shares				Weighted Average Exercise Price				Weighted Average Contractual Life
Outstanding at June 30, 2025			1,623,576			$	4.85			7.15 years
Granted			187,096				4.17			–
Cancelled, forfeited, or expired			(143,603	)			4.80			–
Outstanding at March 31, 2026			1,667,069			$	4.78			6.75 years

  

The aggregate intrinsic value of the Company’s in-the-money outstanding and exercisable options as of March 31, 2026 were both $509,147.

 

 

6.	CAPITAL STOCK

  

On March 27, 2026, the Company entered into an underwriting agreement for a public offering of 2,777,777 shares of common stock at a price of $3.60 per share. The underwriter exercised its over-allotment option in full at closing, resulting in 3,194,444 total shares issued. The offering closed on March 30, 2026. Net proceeds after underwriting discounts, commissions, and offering expenses were $10,630,678. The Company intends to use the net proceeds for working capital and general corporate purposes.

 

 

7.	STOCK WARRANTS

 

In connection with the public offering that closed on March 30, 2026, the Company issued to the underwriter warrants to purchase 159,722 shares of common stock at an exercise price of $4.21 per share. The warrants are immediately exercisable and expire on March 27, 2031. Each warrant is exercisable for one share of common stock.

 

The warrants were classified as equity instruments under ASC 815-40, as the warrants are indexed to the Company's own common stock and may be settled in shares at the Company's option without any obligation to net cash settle under any circumstances.

 

The fair value of the warrants on the issuance date of March 30, 2026 was approximately $342,687, determined using a Black-Scholes option pricing model with the following assumptions: stock price $4.20, exercise price $4.21, expected term of approximately 5 years, expected volatility of 54.8%, risk-free interest rate of 3.9%, and dividend yield of 0%. The fair value was recorded as an additional issuance cost and recognized as a reduction to additional paid-in capital, with an offsetting credit to additional paid-in capital — warrants outstanding. The net impact on total stockholders' equity was zero.

 

As of March 31, 2026, all 159,722 warrants remain outstanding and unexercised.

 

 

 

 

 

8.	REVENUE RECOGNITION

 

The Company determines revenue recognition for arrangements that we determine are within the scope of Accounting Standards Codification Topic 606, “Revenue from Contracts with Customers,” or ASC 606, by performing the following five steps: (i) identify the contract with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when, or as, the Company satisfies the performance obligations. At contract inception, once the contract is determined to be within the scope of ASC 606, the Company assesses the goods or services promised within the contract and determine those that are performance obligations and assesses whether each promised good or service is distinct based on the contract.

 

The Company disaggregates revenues by product and service types as it believes this best depicts how the nature, amount, timing and uncertainty of revenues and cash flows are affected by economic factors. Revenues are comprised of the following for the three and nine months ended March 31, 2026 and 2025:

Schedule of disaggregation of revenues
		Three Months Ended March 31,								Nine Months Ended March 31,
		2026				2025				2026				2025
Engineering Design Services		$	1,059,671			$	868,924			$	2,678,211			$	3,882,088
Systems Manufacturing			6,188,594				2,019,596				16,242,332				4,900,911
Micro Optics Lab			137,500				497,779				409,204				1,355,710
Ross Optical Industries			1,322,866				799,669				3,427,544				2,771,219
Total Revenues		$	8,708,631			$	4,185,968			$	22,757,291			$	12,909,928

 

Other selling costs to obtain and fulfill contracts are expensed as incurred due to the short-term nature of a majority of contracts. The Company extends terms of payment to its customers based on commercially reasonable terms for the markets of its customers, while also considering their credit quality. Shipping and handling costs charged to customers are included in revenue.

 

Revenue recognition policies for each of the four product and service types appear below.

 

Engineering Design Services

 

The Company enters into contractual agreements with its customers, including design services agreements, statements of work and receive purchase orders for development projects. These agreements provide costs on an estimated basis for the services the Company has agreed to provide. Engineering Design Services are rendered on a time and materials basis. The Company recognizes revenue as customers are invoiced for the actual engineering services provided in the period. Revenue is also recognized on materials purchased for development projects at the time of receipt. Engineering Design Services are provided on a best-efforts basis; no warranty is provided as there is no guarantee that the work will result in the attainment of the customer’s project objectives. The Company may obtain customer deposits in advance of rendering engineering design services. Customer deposits are treated as contractual liabilities until the terms of customer agreements are satisfied and are not a component of revenue.

 

 

 

 

Systems Manufacturing, Micro Optics Laboratory, Ross Optical Industries

 

The Company provides fixed price quotations to its customers and requires purchase orders for items manufactured and distributed through the Systems Manufacturing, Micro Optics Laboratory and Ross Optical Industries business units. Revenue is recognized at the time title passes to the customer based on the Company’s review of the customer contract, generally at the time of shipment from the Company’s facilities. Occasionally the Company may enter into “bill and hold” contractual arrangements where title is held by its customers while goods are stored at the Company’s facilities for the customer’s convenience.

 

Contract Assets and Liabilities

 

The nature of the Company’s products and services does not generally give rise to contract assets as it typically does not incur costs to fulfill a contract before a product or service is provided to a customer. The Company’s costs to obtain contracts are typically in the form of sales commissions paid to employees. The Company has elected to expense sales commissions associated with obtaining a contract as incurred as the amortization period is generally less than one year. These costs have been recorded in selling, general and administrative expenses. As of March 31, 2026, there were no contract assets recorded in the Company’s Balance Sheets.

  

The Company’s contract liabilities arise from unearned revenue received from customers at inception of contracts or where the timing of billing for services precedes satisfaction of our performance obligations. The Company generally satisfies performance obligations within one year from the contract’s inception date.

  

Contract liabilities, which are recorded in the Company’s Balance Sheets, and unearned revenue are comprised of the following:

Schedule of contract liabilities
		Three Months Ended March 31,								Nine Months Ended March 31,
		2026				2025				2026				2025
Contract liabilities, beginning of period		$	1,976,816			$	1,417,933			$	1,821,929			$	1,172,350
Unearned revenue received from customers			347,273				305,246				1,747,521				1,138,574
Revenue recognized			(99,429	)			(57,628	)			(1,344,790	)			(645,373	)
Contract liabilities, end of period		$	2,224,660			$	1,665,551			$	2,224,660			$	1,665,551

 

 

 

 

 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

The following discussion of our financial condition and results of operations should be read in conjunction with the unaudited condensed financial statements and notes to those statements included elsewhere in this Quarterly Report on Form 10-Q for the quarter ended March 31, 2026 and with our audited financial statements for the year ended June 30, 2025 included in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission on September 29, 2025, as amended by Amendment No. 1 on Form 10-K/A filed with the Securities and Exchange Commission on October 28, 2025 (our “Annual Report on Form 10-K”) .

 

This Quarterly Report on Form 10-Q contains forward-looking statements. When used in this report, the words anticipate, suggest, estimate, plan, project, continue, ongoing, potential, expect, predict, believe, intend, may, will, should, could, would and similar expressions are intended to identify forward-looking statements. You should not place undue reliance on these forward-looking statements. Our actual results could differ materially from those anticipated in the forward-looking statements for many reasons, including the risks described in this report, the risks described in our Annual Report on Form 10-K for the year ended June 30, 2025, as amended by Amendment No. 1 on Form 10-K/A and other reports we file with the Securities and Exchange Commission. Although we believe the expectations reflected in the forward-looking statements are reasonable, they relate only to events as of the date on which the statements are made. We do not intend to update any of the forward-looking statements after the date of this report to conform these statements to actual results or to changes in our expectations, except as required by law.

 

Overview

 

We have been a developer and manufacturer of advanced optical instruments since 1982, and we operate primarily in two key market segments: medical devices and advanced defense/aerospace products. Within our proprietary optical and imaging technology, our unique custom designs, expert manufacturing capabilities, and advanced engineering and development capabilities have generated traditional endoscopes and endocouplers, digital imaging endoscopes using CMOS sensor technology, some designed and manufactured for single-use, as well as other, more advanced, custom imaging and illumination products for our customers’ use in minimally invasive surgical procedures. We design and manufacture ultra-high precision endoscopes and very small Microprecision lenses, assemblies and complete medical devices to meet the surgical community’s continuing demand for smaller, disposable, and more enhanced imaging systems for minimally invasive surgery. We also apply our unique technologies to applications in the Defense / Aerospace markets including applications supporting satellite network communications.

 

To support these two critical market categories, our business operations are conducted in four areas: systems manufacturing, engineering and product development, Ross Optical components and assemblies, and our micro-optics laboratory. Our systems manufacturing operations assemble and manufacture components and systems for both medical device and advanced aerospace customers who choose to outsource these services based on our ability to handle high complexity components, specific optical technologies, micro-optical assemblies and other advanced manufacturing challenges. Our engineering and product development team assesses specific customer product needs, designs devices to solve those needs, and creates manufacturing processes that enable higher volume production of these devices and assemblies that can then be executed by our manufacturing operations group.

 

Effective June 1, 2019, we acquired the operating assets of Ross Optical Industries, Inc. of El Paso, Texas. This acquisition expanded our optics components and assemblies’ business. As Ross Optical Industries we operate as a supplier of custom optical components and assemblies for military and defense, medical and various other industrial applications. All products sold by us under the Ross Optical name include a custom or catalog optic, which is sourced through our extensive domestic and worldwide network of optical fabrication suppliers. Most systems make use of optical lenses, prisms, mirrors and windows and range from individual optical components to complex mechano-optical assemblies. Products often include thin film optical coatings applied using our in-house coating department.

 

 

 

 

Effective October 1, 2021, we acquired the operating assets of Lighthouse Imaging, LLC of Windham, Maine, which expanded our electrical engineering capabilities in the development of end-to-end medical visualization devices. The acquisition represented a vertical integration of our established product development capabilities with a team with extensive experience developing visualization systems that we believe provides our customers with single-source value-added development services and product offerings. The operations of Lighthouse Imaging have been integrated with other operations of the company, which continue under the POC brand, so that the company now operates with single systems manufacturing and engineering departments, each of which includes historical POC and Lighthouse Imaging resources.

 

Our website is www.poci.com. The information contained on our website does not constitute part of this report.

 

General

 

This management’s discussion and analysis of financial condition and results of operations is based upon our unaudited financial statements, which have been prepared without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions and any such differences may be material.

 

Critical Accounting Policies and Estimates

 

There have been no significant changes in our critical accounting policies as disclosed in the Notes to our Financial Statements contained in our Annual Report on Form 10-K for the year ended June 30, 2025 filed with the Securities and Exchange Commission on September 29, 2025, as amended by Amendment No. 1 on Form 10-K/A filed with the Securities and Exchange Commission on October 28, 2025.

 

Results of Operations

 

Revenue

 

		Three Months Ended March 31,
		2026				Percent of Sales				2025				Percent of Sales				Increase (Decrease)				Percent Change
Engineering Design Services		$	1,059,671				12.2			$	868,924				20.8			$	190,747				22.0
Systems Manufacturing			6,188,594				71.0				2,019,596				48.2				4,168,998				206.4
MicroOptics Lab			137,500				1.6				497,779				11.9				(360,279	)			(72.4	)
Ross Optical Industries			1,322,866				15.2				799,669				19.1				523,197				65.4
Total Revenues		$	8,708,631				100.0			$	4,185,968				100.0			$	4,522,663				108.0

 

		Nine Months Ended March 31,
		2026				Percent of Sales				2025				Percent of Sales				Increase (Decrease)				Percent Change
Engineering Design Services		$	2,678,211				11.8			$	3,882,088				30.0			$	(1,203,877	)			(31.0	)
Systems Manufacturing			16,242,332				71.3				4,900,911				38.0				11,341,421				231.4
MicroOptics Lab			409,204				1.8				1,355,710				10.5				(946,506	)			(69.8	)
Ross Optical Industries			3,427,544				15.1				2,771,219				21.5				656,325				23.7
Total Revenues		$	22,757,291				100.0			$	12,909,928				100.0			$	9,847,363				76.3

 

 

 

 

Total revenues for the quarter ending March 31, 2026 were $8,708,631, as compared to $4,185,968 for the same period in the prior year, an increase of $4,522,663 or 108.0% and for the nine months ended March 31, 2026 was $22,757,291 as compared to $12,909,928 for the same period in the prior year, an increase of $9,847,363, or 76.3%.

 

Revenue from Engineering Design Services increased 22.0% and decreased 31.0% during the three and nine-month periods ending March 31, 2026 from the same periods in the prior fiscal year. During the quarter ending March 31, 2026 revenue increases in the engineering category resulted from new project revenues. Engineering revenue for the nine-month period ending March 31, 2026 was lower due to the completion of product development engagements in the prior year and delayed revenue opportunities within the product development pipeline.

 

Revenue from Systems Manufacturing increased 206.4% and 231.4% during the three and nine-month periods ending March 31, 2026 from the same periods in the prior fiscal year, due primarily to significant increases in customer demand and the resultant scaling of manufacturing capabilities.

 

Revenue from the MicroOptics Lab decreased 72.4% and 69.8% during the three and nine-month periods ending March 31, 2026 from the same periods in the prior fiscal year, primarily due to delays in receiving new production orders from our defense customer.

 

Revenue from Ross Optical Industries increased 65.4% and 23.7% during the three and nine-month periods ending March 31, 2026 from the same periods in the prior fiscal year. We believe the increase is attributable to the inability of our customers to continue to postpone deliveries that had previously been delayed due to the introduction of new tariffs and the resultant uncertainty.

 

Gross Profit

 

Gross margin increased to 23.6% during the quarter ending March 31, 2026, compared to 10.0% for the quarter ending March 31, 2025. Gross profit increased to $2,056,534 during the three months ending March 31, 2026, compared to $417,975 for the three months ended March 31, 2025. Within Systems Manufacturing, gross margins improved with greater sales volume and improving yield performance across all manufacturing lines, and the recognition of $224,544 of grant income. Conversely, costs associated with Engineering Design Services are primarily attributed to our engineering workforce, which we have chosen to keep in place as we focus on increasing revenue, leading to low margins for the period. Similarly, the MicroOptics Lab workforce requires specialized training, and we have also experienced negative margins from this segment resulting from the reorder delays discussed above but have chosen to keep the workforce in place.

 

Gross margin decreased to 14.1% during the nine months ending March 31, 2026, compared to 20.2% for the nine months ending March 31, 2025. Gross profit increased to $3,207,552 during the nine months ending March 31, 2026, compared to $2,605,247 for the nine months ending March 31, 2025.

 

Research & Development

 

R&D expenses increased $56,077 to $267,319 during the quarter ending March 31, 2026, compared to $211,242 during the quarter ending March 31, 2025. R&D expenses decreased $100,915 to $828,733 during the nine months ending March 31, 2026, compared to $929,648 during the nine months ended March 31, 2025. R&D expenses for the applicable periods represent employee-related expenses to support product improvements, the development of new technologies and standardized approaches to address the opportunities for an evolving single-use medical device environment.

 

 

 

 

 

Selling, General and Administrative Expenses

 

SG&A expenses decreased $373,931, or 16.7% to $1,853,677 during the three months ending March 31, 2026, compared to $2,245,018 during the three months ending March 31, 2025. The decrease in SG&A for the three-month period was primarily due to decreases in stock-based compensation and recruiting costs partially offset by consulting, bonuses, and bad debt expense.

 

SG&A expenses decreased $72,571, or 1.2% to $5,780,865 during the nine months ending March 31, 2026, compared to $5,870,846 during the nine months ended March 31, 2025. The decrease in SG&A for the nine-month period was primarily due to decreases in stock-based compensation and recruiting partially offset by severance, bonuses, and bad debt expense.

 

Liquidity and Capital Resources

 

Based on our current plans and business conditions, management believes that the Company’s available cash and cash equivalents, the cash generated from operations, the eventual availability of our line of credit, and our ability to raise funds in the capital markets will be sufficient to provide for the Company’s working capital and capital expenditure requirements for at least 12 months from the date of this filing.

 

Net Cash Used in Operating Activities

 

During the nine months ending March 31, 2026, net cash used in operating activities totaled $901,110 as compared to $2,978,165 during the nine months ending March 31, 2025. The decrease in net cash used in operating activities was primarily due to increased accounts payable and decreased net loss and inventory during the nine months ending March 31, 2026, partially offset by the increase in accounts receivable during such period.

 

Net Cash Used in Investing Activities

 

During the nine months ending March 31, 2026, net cash used in investing activities was $348,639, consisting of purchases of property and equipment and patent costs. During the nine months ending March 31, 2025, net cash used in investing activities was $149,837 consisting of purchases of property and equipment and patent costs.

 

Net Cash Provided by Financing Activities

 

During the nine months ending March 31, 2026, we made payments of $474,618 on term notes and capital leases and raised a net of $10,630,678 from an underwritten offering made in March 2026. During the nine months ending March 31, 2025, we made payments of $196,487 on term notes and capital leases and repaid $1,000,000 on our revolving line of credit. We raised a net of $6,270,136 from two registered direct offerings made in August 2024 and February 2025 pursuant to our shelf registration statement.

 

 

 

 

 

Indebtedness

 

On October 4, 2021, the Company entered into a Loan Agreement with Main Street Bank of Marlborough, Massachusetts (the “Lender”), which provided for a $2,600,000 Term Loan and a $250,000 Revolving Line of Credit Loan Facility (the “Revolver”), which was increased to $500,000 effective May 17, 2022, and $1,250,000 effective June 2, 2023. Borrowings under the Revolver are limited by the borrowing base comprised of a percentage of accounts receivable and inventory and secured by all assets of the Company. Borrowings under the Revolver will bear interest payable monthly at the prime lending rate plus 1.5% per annum and shall not be less than 4.75% per annum. Borrowings under the Revolver are due upon demand. There were no borrowings under the Revolver at March 31, 2026.

 

The Company’s Loan Agreement with the Lender contains a minimum annual debt service coverage ratio covenant of 1.2x. As the Company did not meet this annual debt service coverage ratio for the fiscal year ended June 30, 2024, the Company’s Lender agreed to waive compliance with such debt service ratio covenant for the period ending June 30, 2024. In addition to such waiver, the Lender and the Company entered into an amendment dated September 30, 2024 to that certain Term Loan dated October 4, 2021, as amended and that certain Promissory Note dated June 2, 2023 (collectively, the “Notes”) which amendments provided for a six-month period of interest only payments from October 15, 2024 through March 15, 2025 for the Notes. The Company commenced payments of principal and interest under the Notes beginning with the payments due on April 15, 2025, with a new amortization schedule for the remaining term for such Notes through their maturity date. On February 14, 2025, the lender agreed to waive compliance with the annual debt service coverage ratio covenant for the fiscal year ending June 30, 2025, subject to a $30,000 waiver fee and the completion of an equity raise of at least $4,500,000 by February 24, 2025, which the Company satisfied on February 21, 2025. Any future advances are contingent on the Company achieving a minimum Debt Service Coverage ratio of 1.20x based on quarterly testing which the company was not in compliance with as of March 31, 2026. Under our current projections, we don’t expect to meet this covenant for fiscal 2026. We are currently in discussion with the Lender to grant a waiver or a longer-term solution. If the Lender seeks repayment, currently we have sufficient liquidity to repay our loans. There were no other changes to or modifications to the Loan Agreement or the Notes.

 

Capital equipment expenditures and additional patent costs during the nine months ended March 31, 2026 and during the same period in the prior year were $351,639 and $149,837, respectively.

 

Contractual cash commitments for the fiscal periods subsequent to March 31, 2026, are summarized as follows:

 

		Fiscal 2026				Thereafter				Total
Minimum operating lease payments		$	135,599			$	3,643,812			$	3,779,411

 

We have contractual cash commitments related to open purchase orders as of March 31, 2026 of approximately $6,200,000.

  

Off-Balance Sheet Arrangements

 

We currently have no off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

 

 

 

 

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

 

As a smaller reporting company, as defined by Rule 12b-2 of the Exchange Act and in Item 10(f)(1) of Regulation S-K, we are electing scaled disclosure reporting obligations and therefore are not required to provide the information requested by this Item.

 

Item 4. Controls and Procedures.

 

Management’s Evaluation of Disclosure Controls and Procedures

 

Our Chief Executive Officer, who is our principal executive officer, and our Chief Financial Officer, who is our principal financial officer, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on this evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that our disclosure controls and procedures, including internal control over financial reporting, were effective as of March 31, 2026, to ensure the information we are required to disclose in reports that we file or submit under the Securities Exchange Act of 1934, as amended (i) is recorded, processed, summarized, and reported within the time periods specified in Securities and Exchange Commission rules and forms, and (ii) is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Our disclosure controls and procedures are intended to be designed to provide reasonable assurance that such information is accumulated and communicated to our management.

 

Changes in Internal Control over Financial Reporting

 

There has been no change in our internal control over financial reporting that occurred during the period covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

 

 

 

 

 

 

 

 

 

PART II. OTHER INFORMATION

 

Item 1. Legal Proceedings.

 

Our Company, on occasion, may be involved in legal matters arising in the ordinary course of our business. While management believes that such matters are currently insignificant, matters arising in the ordinary course of business for which we are or could become involved in litigation may have a material adverse effect on our business, financial condition or results of operations. We are not aware of any pending or threatened litigation against us or our officers and directors in their capacity as such that could have a material impact on our operations or finances.

 

Item 1A. Risk Factors.

 

For information regarding factors that could affect our results of operations, financial condition and liquidity, refer to the section entitled “Risk Factors” in Part I, Item 1A in our annual report on Form 10-K for the year ended June 30, 2025, as amended on Form 10-K/A. There have been no material changes from the risk factors previously disclosed in our annual report on Form 10-K for the year ended June 30, 2025 as filed with the SEC on September 29, 2025, as amended by Amendment No. 1 on Form 10-K/A filed with the Securities and Exchange Commission on October 28, 2025.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

 

Other than as previously disclosed in our Current Report on Form 8-K on March 30, 2026, we did not sell any unregistered equity securities during the fiscal quarter ended March 31, 2026.

 

Item 3. Defaults Upon Senior Securities.

 

Not applicable.

 

Item 4. Mine Safety Disclosures.

 

Not applicable.

 

Item 5. Other Information.

 

During the period covered by this Quarterly Report on Form 10-Q, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

 

 

 

 

 

Item 6. Exhibits.

 

Exhibit		Description
10.1		Underwriting Agreement, dated March 27, 2026, between Precision Optics Corporation, Inc. and Lucid Capital Markets, LLC. (included as Exhibit 1.1 to the current report on Form 8-K filed on March 30, 2026, and incorporated herein by reference).
10.2		Form of Representative’s Warrant (included as Exhibit 4.1 to the current report on Form 8-K filed on March 30, 2026, and incorporated herein by reference).
31.1*		Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*		Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*		Certification of Officers pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*		Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)
101.SCH*		Inline XBRL Taxonomy Extension Schema Document
101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104*		Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

 

 

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

	PRECISION OPTICS CORPORATION, INC.
Date: May 13, 2026	By:	/s/ Joseph N. Forkey
		Joseph N. Forkey
		Chief Executive Officer (Principal Executive Officer)
Date: May 13, 2026	By:	/s/ Wayne M. Coll
		Wayne M. Coll
		Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)