PRECISION OPTICS CORPORATION INC
For the period ended Dec 31, 2024. Filed Feb 13, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Dec 31, 2024 · Filed Feb 13, 2025
POCI$4.89-1.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-11-14.
0001683168-24-008113
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-12-31; filed 2025-02-13.
0001683168-25-000995
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 47 previous paragraphs and 48 current paragraphs.
33 unchanged; 9 reworded; 6 added; 5 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 2 previous and 3 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (6)
Current report
Total revenues for the quarter ended December 31, 2024 were $4,526,907, as compared to $4,824,289 for the same period in the prior year, a decrease of $297,382 or 6.2% and for the six months ended December 31, 2024 was $8,723,960 as compared to $9,145,544 for the same period in the prior year, a decrease of $421,584, or 4.6%.
Current report
Revenue from Engineering Design Services decreased 46.8% and 26.7% during the three- and six-month periods ending December 31, 2024 from the same periods in the prior fiscal year. Revenue decreases in the engineering category resulted from decreased demand for services, increases in internal research and development, and delays related to milestone completion. Engineering demand was reduced in the quarter by customer design engagements completing the transition into the manufacture of new Finished Products and Assemblies.
Current report
Revenue from Optical Components increased 50.8% and 30.4% during the three- and six-month periods ending December 31, 2024 from the same periods in the prior fiscal year due to the introduction of new defense/aerospace and medical device programs.
Current report
Revenue from Finished Products and Assemblies decreased 41.7% and 45.0% during the three- and six-month periods ending December 31, 2024 from the same periods in the prior fiscal year. The decreases in Finished Products and Assemblies were attributable to lower demand for certain production programs and the timing of order fulfillment.
Current report
Gross margin decreased to 25.1% during the six months ending December 31, 2024, compared to 31.9% for the six months ending December 31, 2023. Gross profit decreased to $2,187,272 during the six months ending December 31, 2024, compared to $,2,914,587 for the six months ending December 31, 2023.
Current report
During the six months ending December 31, 2024, net cash used in operating activities totaled $1,105,431 as compared to $1,492,824 during the six months ending December 31, 2023. The decrease in net cash used in operating activities was primarily due to increased accounts payable and customer advances during the six months ending December 31, 2024, partially offset by the increase in net loss and inventory during such period.
Removed paragraphs (5)
Previous report
Total revenues for the quarter ending September 30, 2024 were $4,197,053, as compared to $4,321,255 for the same period in the prior year, a decrease of $124,202. Revenue from Engineering Design Services decreased 2.6% during the quarter ending September 30, 2024 from the prior year period ending September 30, 2023. During the quarter ending September 30, 2024 engineering capacity, and therefore billable revenues, was reduced as a result of increased research and development activities.
Previous report
Revenue from Optical Components increased 9.3% during the three-month period ending September 30, 2024 from the prior year period ending September 30, 2023. The market for Optical Components was impacted beginning in the period ending September 30, 2023, as we noted lower order volumes as customers sought to rebalance their inventories, and we believe a recovery is now underway.
Previous report
Revenue from Finished Products and Assemblies decreased 48.6% during the quarter ending September 30, 2024 from the prior year quarter ending September 30, 2023. The decrease in revenue from Finished Products and Assemblies was primarily attributable to a manufacturing pause for a defense/aerospace customer that was occasioned by a change in specification finalized late in the quarter ending September 30, 2024.
Previous report
During the three months ending September 30, 2024, net cash used in operating activities totaled $318,622 and included a net loss of $1,311,247, increases in inventory of $592,521, offset by increases in accounts payable and accrued expenses of $1,016,135, decreases in accounts receivable net of decreased customer deposit liabilities of $356,092, and non-cash items totaling $202,030.
Previous report
During the three months ending September 30, 2023, net cash used in operating activities totaled $1,372,989 and included a net loss of $464,515, increases in inventory of $194,995, increases in accounts receivable net of increased customer deposit liabilities of $375,426, decreases in accounts payable and accrued expenses of $390,719, and non-cash items totaling $164,886.
Reworded paragraphs (9)
Previous wording
Gross margin decreased to 26.6% during the quarter ending September 30, 2024, compared to 33.9% for the quarter ending September 30, 2023. Gross profit decreased to $1,117,330 during the three months ended September 30, 2024, compared to $1,463,611 for the three months ended September 30, 2023, primarily driven by changes in the product sales mix and the decreases in revenue discussed above.
Current wording
Gross margin decreased to 23.6% during the quarter ending December 31, 2024, compared to 30.1% for the quarter ending December 31, 2023. Gross profit decreased to $1,069,942 during the three months ending December 31, 2024, compared to $1,450,976 for the three months ended December 31, 2023, primarily driven by changes in the product sales mix and the decreases in revenue discussed above.
Previous wording
R&D expenses increased $187,901 to $400,659 during the quarter ending September 30, 2024, compared to $212,758 during the quarter ending September 30, 2023. R&D expenses for the period 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.
Current wording
R&D expenses increased $96,019 to $317,747 during the quarter ending December 31, 2024, compared to $221,728 during the quarter ending December 31, 2023. R&D expenses increased $283,920 to $718,406 during the six months ending December 31, 2024, compared to $434,486 during the six months end December 31, 2023. R&D expenses for the period 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.
Previous wording
SG&A expenses increased $307,466, or 18.6% to $1,963,612 during the three months ended September 30, 2024, compared to $1,656,146 during the three months ended September 30, 2023. The increase in SG&A for the three-month period was primarily due to increased recruitment costs, bad debt expense, consulting expenses and information technology expenses.
Current wording
SG&A expenses decreased $271,194, or 14.0% to $1,662,216 during the three months ending December 31, 2024, compared to $1,933,411 during the three months ending December 31, 2023. The decrease in SG&A for the three-month period was primarily due to lower bad debt expense and lower stock-based compensation. SG&A expenses increased $36,272, or 1.0% to $3,625,828 during the six months ending December 31, 2024, compared to $3,589,556 during the six months ended December 31, 2023.
Previous wording
During the three months ending September 30, 2024, net cash used in investing activities was $28,099, consisting of purchases of property and equipment and patent costs. During the three months ended September 30, 2023, net cash used in investing activities was $43,517, consisting of purchases of property and equipment and patent costs.
Current wording
During the six months ending December 31, 2024, net cash used in investing activities was $60,085, consisting of purchases of property and equipment and patent costs. During the six months ending December 31, 2023, net cash used in investing activities was $170,772, consisting of purchases of property and equipment and patent costs.
Previous wording
During the three months ending September 30, 2024, we made payments of $139,527 on term notes and capital leases and repaid $500,000 on our revolving line of credit. We raised a net of $1,204,542 through the issuance of new shares in a registered direct common stock offering. During the three months ending September 30, 2023, we made payments of $138,876 on term notes and capital leases.
Current wording
During the six months ending December 31, 2024, we made payments of $158,863 on term notes and capital leases and repaid $100,000 on our revolving line of credit. We raised a net of $1,204,542 through the issuance of new shares in a registered direct common stock offering and $27,000 in proceeds from stock option exercises. During the six months ending December 31, 2023, we made payments of $277,912 on term notes and capital leases offset by proceeds on stock exercises of $2,700.
Previous wording
In October 2021 we entered a $2,600,000 term loan with a commercial bank. In June 2023 we added a second term loan in the amount of $750,000. We secured a $250,000 line of credit from the same bank in October 2021 for working capital needs, which was increased to $500,000 in May 2022 and to $1,250,000 in June 2023. There were $500,000 in borrowings outstanding on the line of credit on September 30, 2024 and additional availability in the amount of $750,000.
Current wording
In October 2021 we entered a $2,600,000 term loan with a commercial bank. In June 2023 we added a second term loan in the amount of $750,000. We secured a $250,000 line of credit from the same bank in October 2021 for working capital needs, which was increased to $500,000 in May 2022 and to $1,250,000 in June 2023. There were $900,000 in borrowings outstanding on the line of credit on December 31, 2024 and additional availability in the amount of $350,000.
Previous wording
Our loan agreement contains a minimum annual debt service coverage ratio covenant of 1.2x, for the period ending June 30, 2024. We did not meet this annual debt service coverage ratio as of June 30, 2024. Our lender has agreed to waive compliance with the debt service ratio covenant for the period ending June 30, 2024. In addition to the waiver, we have entered into amendments dated September 30, 2024 with our lender to both term loans which provide for a six month period of interest only payments from October 15, 2024 through March 15, 2025. We will begin to pay 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. There were no other changes to or modifications to the Loan Agreement or the Notes.
Current wording
Our loan agreement contains a minimum annual debt service coverage ratio covenant of 1.2x. We did not meet this annual debt service coverage ratio as of June 30, 2024. Our lender has agreed to waive compliance with the debt service ratio covenant for the period ending June 30, 2024. In addition to the waiver, we have entered into amendments dated September 30, 2024 with our lender to both term loans which provide for a six-month period of interest only payments from October 15, 2024 through March 15, 2025. We will begin to pay 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. There were no other changes to or modifications to the Loan Agreement or the Notes.
Previous wording
Capital equipment expenditures and additional patent costs during the three months ended September 30, 2024 and in the same period in the prior year were $28,099 and $43,517, respectively.
Current wording
Capital equipment expenditures and additional patent costs during the six months ended December 31, 2024 and in the same period in the prior year were $60,085 and $170,772, respectively.
Previous wording
We have contractual cash commitments related to open purchase orders as of September 30, 2024 of approximately $4,549,000.
Current wording
We have contractual cash commitments related to open purchase orders as of December 31, 2024 of approximately $5,807,000.