PRECISION OPTICS CORPORATION, INC.
For the period ended Mar 31, 2026. Filed May 13, 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.
Mar 31, 2026 · Filed May 13, 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 2025-12-31; filed 2026-02-17.
0001683168-26-001109
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-03-31; filed 2026-05-13.
0001683168-26-003818
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 46 previous paragraphs and 44 current paragraphs.
27 unchanged; 14 reworded; 3 added; 5 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 9 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 (3)
Current report
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.
Current report
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.
Current 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.
Removed paragraphs (5)
Previous report
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 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.
Previous 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:
Previous 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.
Previous 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.** **
Reworded paragraphs (14)
Previous wording
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 wording
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%.
Previous 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.
Current wording
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.
Previous 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.
Current wording
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.
Previous 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.
Current wording
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.
Previous 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.
Current wording
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.
Previous wording
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 wording
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.
Previous wording
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 wording
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.
Previous 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.
Current wording
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.
Previous 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.
Current wording
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.
Previous 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.
Current wording
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.
Previous 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.
Current wording
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.
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 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.
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 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.
Previous 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.
Current wording
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.
Previous wording
We have contractual cash commitments related to open purchase orders as of December 31, 2025 of approximately $7,070,000.
Current wording
We have contractual cash commitments related to open purchase orders as of March 31, 2026 of approximately $6,200,000.