PRECISION OPTICS CORPORATION, INC.
For the period ended Dec 31, 2025. Filed Feb 17, 2026.
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, 2025 · Filed Feb 17, 2026
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 2025-09-30; filed 2025-11-13.
0001683168-25-008330
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-12-31; filed 2026-02-17.
0001683168-26-001109
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 41 previous paragraphs and 46 current paragraphs.
24 unchanged; 15 reworded; 7 added; 2 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 2 previous and 9 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 (7)
Current report
Total revenues for the quarter ending December 31, 2025 were $7,367,837, as compared to $4,526,907 for the same period in the prior year, an increase of $2,840,930 or 62.8% and for the six months ended December 31, 2025 was $14,048,660 as compared to $8,723,960 for the same period in the prior year, an increase of $5,324,700, or 61.0%.
Current report
Gross margin decreased to 2.8% during the quarter ending December 31, 2025, compared to 23.6% for the quarter ending December 31, 2024. Gross profit decreased to $204,660 during the three months ending December 31, 2025, compared to $1,069,942 for the three months ended December 31, 2024. Within Systems Manufacturing, low gross margins were primarily driven by yield losses within our cystoscope single-use manufacturing line, startup yield issues for a second customer’s single-use manufacturing line, and under-absorption of manufacturing overhead. 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 negative margins for the period. Similarly, the MicroOptics Lab workforce requires specialized training, and we have also experienced negative margins resulting from the reorder delays discussed above but have chosen to keep the workforce in place.
Current report
Gross margin decreased to 8.2% during the six months ending December 31, 2025, compared to 25.1% for the six months ending December 31, 2024. Gross profit decreased to $1,151,018 during the six months ending December 31, 2025, compared to $2,187,272 for the six months ending December 31, 2024.
Current report
These financial statements have been prepared on a going concern basis, which assumes the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The continuation of the Company as a going concern is dependent upon the ability of the Company to obtain necessary equity financing to continue operations and the attainment of profitable operations. Management anticipates that its cash on hand of $0.9 million as of December 31, 2025 is insufficient to fund its planned operations for a period of at least one year from when these financial statements are issued. These factors raise substantial doubt regarding the Company's ability to continue as a going concern. These unaudited condensed consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
Current report
During fiscal 2026 through the date of the filing of this Quarterly Report on Form 10-Q, we have taken the following actions, and implemented the following plans, to improve our operational and financial performance and enhance our liquidity and financial condition:
Current report
Our ability to meet future anticipated liquidity needs over the next year beyond the date of this Quarterly Report on Form 10-Q will largely depend on our ability to execute our operational strategy, generate positive cash inflows from operations, maximize our borrowing capacity and secure additional capital.
Current report
The Company intends to seek in the near term additional funding through one or more of the following: equity offerings, debt financings, government funding, and delay of planned cash outlays. However, our ability to do so, and on favorable terms, may be affected by general economic, financial and other factors which are beyond our control. There can be no assurance that any such additional capital raises, management of planned cash outlays, or a combination thereof can be achieved or achieved on favorable terms.** **
Removed paragraphs (2)
Previous report
Gross margin decreased to 14.2% during the quarter ending September 30, 2025, compared to 26.6% for the quarter ending September 30, 2024. Gross profit decreased to $946,358 during the three months ending September 30, 2025, compared to $1,117,330 for the three months ending September 30, 2024. The primary factors for the decrease in gross profit include lower utilization of engineering resources for customer-paid engineering, low yields for manufacturing lines producing single-use medical devices, and delays in the reorder for the MicroOptics Lab.
Previous report
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. However, our cash on hand and cash generated solely from operations may be insufficient to meet working capital needs for such period and we may be required to raise external financing in the short-term.
Reworded paragraphs (15)
Previous wording
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 September 30, 2025 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.
Current wording
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 December 31, 2025 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”) .
Previous wording
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 filed with the Securities and Exchange Commission on October 28, 2025, 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.
Current wording
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.
Previous wording
Our website is www.poci.com. The information contained on our websites does not constitute part of this report.
Current wording
Our website is www.poci.com. The information contained on our website does not constitute part of this report.
Previous wording
Total revenues for the quarter ending September 30, 2025 were $6,680,823, as compared to $4,197,053 for the same period in the prior year, an increase of $2,483,770. Revenue from Engineering Design Services decreased 59.3% during the quarter ending September 30, 2025 from the prior year period ending September 30, 2024. During the quarter ending September 30, 2025 revenue decreases in the engineering category resulted from decreased demand for services, primarily from the transfer of our single-use cystoscope program from Engineering Design Services to Systems Manufacturing. Engineering revenue was lower due to the completion of product development engagements in the prior year and delayed revenue opportunities within the product development pipeline for the current quarter.
Current wording
Revenue from Engineering Design Services decreased 31.2% and 46.3% during the three and six-month periods ending December 31, 2025 from the same periods in the prior fiscal year. During the quarter ending December 31, 2025 revenue decreases in the engineering category resulted from decreased demand for services. Engineering revenue was lower due to the completion of product development engagements in the prior year and delayed revenue opportunities within the product development pipeline for the current quarter.
Previous wording
Revenue from Systems Manufacturing increased nearly 300% during the quarter ending September 30, 2025 from the same period in the prior year, due primarily to significant increases in customer demand and the resultant scaling of manufacturing capabilities.
Current wording
Revenue from Systems Manufacturing increased 213.2% and 248.9% during the three and six-month periods ending December 31, 2025 from the same periods in the prior fiscal year, due primarily to significant increases in customer demand and the resultant scaling of manufacturing capabilities.
Previous wording
Revenue from the MicroOptics Lab decreased 76.5% during the quarter ending September 30, 2025 from the same period in the prior year, primarily due to delays in receiving new production orders from our defense customer.
Current wording
Revenue from the MicroOptics Lab decreased 60.1% and 68.3% during the three and six-month periods ending December 31, 2025 from the same periods in the prior fiscal year, primarily due to delays in receiving new production orders from our defense customer.
Previous wording
Revenue from Ross Optical Industries increased 13.7% during the quarter ending September 30, 2025 from the same period in the prior 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.
Current wording
Revenue from Ross Optical Industries increased 0.5% and 6.8% during the three and six-month periods ending December 31, 2025 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.
Previous wording
R&D expenses decreased $88,819 to $311,840 during the quarter ending September 30, 2025, compared to $400,659 during the quarter ending September 30, 2024. 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 decreased $68,173 to $249,574 during the quarter ending December 31, 2025, compared to $317,747 during the quarter ending December 31, 2024. R&D expenses decreased $156,992 to $561,414 during the six months ending December 31, 2025, compared to $718,406 during the six months ended December 31, 2024. 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.
Previous wording
SG&A expenses increased $266,161, or 13.6% to $2,229,773 during the three months ended September 30, 2025, compared to $1,963,612 during the three months ended September 30, 2024. The increase in SG&A for the three-month period was primarily due to increased stock compensation, severance, and consulting expenses.
Current wording
SG&A expenses increased $35,199, or 2.1% to $1,697,415 during the three months ending December 31, 2025, compared to $1,662,216 during the three months ending December 31, 2024. SG&A expenses increased $301,360, or 8.3% to $3,927,188 during the six months ending December 31, 2025, compared to $3,625,828 during the six months ended December 31, 2024. The increase in SG&A for the six-month period was primarily due to increased stock compensation, executive severance, and consulting expenses.
Previous wording
During the three months ending September 30, 2025, net cash provided by operating activities totaled $78,227 as compared to $318,622 net cash used in operating activities during the three months ending September 30, 2024. The increase in net cash provided by operating activities was primarily due to the increase in accounts payable, stock compensation and inventory during the three months ending September 30, 2025, partially offset by the decrease in accounts receivable and net losses during such period.
Current wording
During the six months ending December 31, 2025, net cash used in operating activities totaled $177,852 as compared to $1,105,431 during the six months ending December 31, 2024. The decrease in net cash used in operating activities was primarily due to increased accounts payable and accrued expenses during the six months ending December 31, 2025, partially offset by the increase in net loss during such period.
Previous wording
During the three months ending September 30, 2025, net cash used in investing activities was $301,789, consisting of purchases of property and equipment and patent costs. During the three months ended September 30, 2024, net cash used in investing activities was $28,099, consisting of purchases of property and equipment and patent costs.
Current wording
During the six months ending December 31, 2025, net cash used in investing activities was $398,131, consisting of purchases of property and equipment and patent costs. 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.
Previous wording
During the three months ending September 30, 2025, we made payments of $158,068 on term notes and capital leases. During the three months ending September 30, 2024, we made payments of $139,527 on term notes and capital leases, repaid $500,000 on our revolving line of credit and raised a net of $1,204,542 through the issuance of new shares in a registered direct common stock offering.
Current wording
During the six months ending December 31, 2025, we made payments of $316,266 on term notes and capital leases. 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.
Previous wording
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 had 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 September 30, 2025. There were no other changes to or modifications to the Loan Agreement or the Notes.
Current wording
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 December 31, 2025. 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, 2025 and in the same period in the prior year were $523,539 and $28,099, respectively.
Current wording
Capital equipment expenditures and additional patent costs during the six months ended December 31, 2025 and in the same period in the prior year were $401,131 and $60,085, respectively.
Previous wording
We have contractual cash commitments related to open purchase orders as of September 30, 2025 of approximately $7,402,000.
Current wording
We have contractual cash commitments related to open purchase orders as of December 31, 2025 of approximately $7,070,000.