PRECISION OPTICS CORPORATION, INC.
For the period ended Jun 30, 2026. Filed Sep 28, 2026.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2026 · Filed Sep 28, 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-K
Period ended 2025-06-30; filed 2025-09-29.
0001683168-25-007305
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2026-06-30; filed 2026-09-28.
0001683168-26-007462
Item 7. 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 36 previous paragraphs and 38 current paragraphs.
19 unchanged; 15 reworded; 4 added; 2 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 2 previous and 2 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 (4)
Current report
IEEPA Tariff Refund Claims and Related Customer Refunds
Current report
In February 2026, the Supreme Court of the United States determined that certain tariffs imposed pursuant to the International Emergency Economic Powers Act (“IEEPA”) were not authorized by law. Subsequent rulings by the U.S. Court of International Trade have directed the U.S. Customs and Border Protection to establish processes to effect refunds of certain tariffs previously collected. Based on these judicial determinations, we concluded that the company has been legally released from the obligation underlying the invalidated tariffs in accordance with the legal release model within the scope of Accounting Standards Codification 405, Liabilities, and that we have a present right to repayment of amounts previously paid.
Current report
Accordingly, during the year ended June 30, 2026, the Company recorded a receivable of $880,598 within accounts receivable in the balance sheet, representing recovery of IEEPA tariffs previously paid, with a corresponding offset to cost of goods sold. In addition, the Company recorded a $558,266 liability within accrued compensation and other in the balance sheet as a result of its decision to refund IEEPA tariff surcharges collected from customers, with a corresponding reduction of revenue in the statement of operations. In the year ended June 30, 2026, we received $37,576 in IEEPA tariff refund proceeds, resulting in outstanding IEEPA tariff refund claims receivable of $843,022 within accounts receivable in the balance sheet, representing a recovery of IEEPA tariffs previously paid.
Current report
Revenue from Ross Optical Industries increased 31.7% for the year ending June 30, 2026 from the prior year ending June 30, 2025. We believe a portion of the increase is attributable to the inability of our customers to continue to postpone deliveries that had previously been delayed due to the uncertainty of new tariffs and the passthrough of these tariff costs which increased revenue.
Removed paragraphs (2)
Previous report
Revenue from Ross Optical Industries decreased 9.8% for the year ending June 30, 2025 from the prior year ending June 30, 2024. We believe the decrease continues to be attributable to a general, industry-wide slowdown, coupled with uncertainty driven by evolving tariff costs, which has led customers to postpone deliveries.
Previous report
On August 14. 2024 we entered into securities purchase agreements with institutional and accredited investors in addition to certain directors and officers of the Company for the purchase and sale of 265,868 shares of the Company’s common stock resulting in gross proceeds of approximately $1.4 million before deducting placement agent commissions and other estimated offering expenses. Net proceeds were approximately $1.2 million.
Reworded paragraphs (15)
Previous wording
We are subject to credit risk primarily in our trade accounts receivable. We generally do not require collateral or other security as a condition of sale, rather we rely on credit approval, balance limitation and monitoring procedures to control credit risk in trade account financial instruments. Our customer base includes many large medical device and defense/aerospace companies, as well as newly incorporated entities pursuing emerging technologies. In those cases when we cannot determine the creditworthiness of our customer, we obtain prepayments and deposits that we judge will be sufficient to mitigate the risk of a significant financial loss. We establish reserves against losses that include both a review of specific account balances and current payment characteristics which are monitored contemporaneously to determine the adequacy of our reserve. Nevertheless, our customers may be adversely impacted by economic factors beyond our understanding and control, and which are difficult to foresee or estimate. A 1% increase in the accounts receivable reserve would increase our costs by approximately $44,000. We recognized bad debt expenses of $38,000 and $202,000 for the years ending June 30, 2025, and June 30, 2024, respectively.
Current wording
We are subject to credit risk primarily in our trade accounts receivable. We generally do not require collateral or other security as a condition of sale, rather we rely on credit approval, balance limitation and monitoring procedures to control credit risk in trade account financial instruments. Our customer base includes many large medical device and defense/aerospace companies, as well as newly incorporated entities pursuing emerging technologies. In those cases when we cannot determine the creditworthiness of our customer, we obtain prepayments and deposits that we judge will be sufficient to mitigate the risk of a significant financial loss. We establish reserves against losses that include both a review of specific account balances and current payment characteristics which are monitored contemporaneously to determine the adequacy of our reserve. Nevertheless, our customers may be adversely impacted by economic factors beyond our understanding and control, and which are difficult to foresee or estimate. A 1% increase in the accounts receivable reserve would increase our costs by approximately $55,000. We recognized bad debt expenses of $38,000 for the years ending June 30, 2026, and June 30, 2025.
Previous wording
Inventories, consisting of raw materials, work in process and finished goods, are primarily accounted for using the first-in first-out method, and are valued at the lower of cost and net realizable value. This valuation requires us to make judgments, based on currently available information, regarding product demand and the potential for a future financial loss resulting from the liquidation and disposal of unusable or unsaleable inventory. These assumptions about the future disposition of inventory are inherently uncertain, and changes in our estimates and assumptions may require us to realize write-downs. In addition, we enter into binding supplier commitments which are based on forecasted customer demand. If our customers reduce their forecasts, we may incur additional costs. An increase in the calculation of the reserve for excess and obsolete inventory equivalent to 1% of gross inventory value would increase our costs by approximately $39,000.
Current wording
Inventories, consisting of raw materials, work in process and finished goods, are primarily accounted for using the first-in first-out method, and are valued at the lower of cost and net realizable value. This valuation requires us to make judgments, based on currently available information, regarding product demand and the potential for a future financial loss resulting from the liquidation and disposal of unusable or unsaleable inventory. These assumptions about the future disposition of inventory are inherently uncertain, and changes in our estimates and assumptions may require us to realize write-downs. In addition, we enter into binding supplier commitments which are based on forecasted customer demand. If our customers reduce their forecasts, we may incur additional costs. An increase in the calculation of the reserve for excess and obsolete inventory equivalent to 1% of gross inventory value would increase our costs by approximately $42,000.
Previous wording
Total revenues for the fiscal year ended June 30, 2025 were $19,091,269, as compared to $19,104,350 for the same period in the prior year, a decrease of $13,081, or 0.1%.
Current wording
Total revenues for the fiscal year ended June 30, 2026 were $31,531,765, as compared to $19,091,269 for the same period in the prior year, an increase of $12,440,496, or 65.2%.
Previous wording
Revenue from Engineering Design Services decreased 42.0% during the year ending June 30, 2025 from the prior year ending June 30, 2024. Revenue decreases in the engineering category resulted from decreased demand for services, primarily from the transfer of our single-use cystoscope program from development (Engineering Design Services) to production (Systems Manufacturing), and increases in internal research and development. Engineering revenue in the year was reduced due to unplanned increases in non-billable sustaining engineering activity to support manufacturing scale up along with delayed revenue opportunities within the product development pipeline.
Current wording
Revenue from Engineering Design Services decreased 29.7% during the year ending June 30, 2026 from the prior year ending June 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 development (Engineering Design Services) to production (Systems Manufacturing). Engineering revenue in the year was reduced due to increases in non-billable sustaining engineering activity to support manufacturing scale up along with insufficient product development engagements.
Previous wording
Revenue from Systems Manufacturing increased 122.2% during the year ending June 30, 2025 from the prior year ending June 30, 2024. Revenue increases in this category resulted from increased demand for manufacturing services as design services engagements concluded and progressed to manufacturing.
Current wording
Revenue from Systems Manufacturing increased 172.9% during the year ending June 30, 2026 from the prior year ending June 30, 2025. Revenue increases in this category resulted from significant increases in customer demand and the resultant scaling of manufacturing capabilities.
Previous wording
Revenue from the MicroOptics Lab decreased 21.5% during the year ending June 30, 2025 from the prior year ending June 30, 2024, primarily due to reorder timing.
Current wording
Revenue from the MicroOptics Lab decreased 75.7% during the year ending June 30, 2026 from the prior year ending June 30, 2025, primarily due to delays in receiving new production orders from a defense contractor, which is the primary customer for this line of business.
Previous wording
Gross margin decreased to 17.8% during the year ended June 30, 2025, compared to 30.3% for the year ended June 30, 2024. Gross profit decreased to $3,404,433 during the year ended June 30, 2025, compared to $5,797,777 for the year ended June 30, 2024, primarily driven by yield issues associated with new manufacturing lines, lower utilization of billable engineering resources, and the decreases in revenue discussed above.
Current wording
Gross margin decreased to 17.2% during the year ended June 30, 2026, compared to 17.8% for the year ended June 30, 2025. Gross profit increased to $5,431,220 during the year ended June 30, 2026, compared to $3,404,433 for the year ended June 30, 2025, primarily driven by increased volume in Systems Manufacturing.
Previous wording
R&D expenses increased $176,182 to $1,157,963 during the year ended June 30, 2025, compared to $981,781 during the year ended June 30, 2024. R&D expenses for the period primarily 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 $124,807 to $1,033,156 during the year ended June 30, 2026, compared to $1,157,963 during the year ended June 30, 2025. R&D expenses for the period primarily 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 $257,432, or 3.4% to $7,797,761 during the year ended June 30, 2025, compared to $7,540,329 during the year ended June 30, 2024. The increase in SG&A for the year was primarily due to increased personnel costs, most related to stock-based compensation and recruiting expense.
Current wording
SG&A expenses increased $108,911, or 1.4% to $7,906,672 during the year ended June 30, 2026, compared to $7,797,761 during the year ended June 30, 2025. The decrease in SG&A for the year was primarily due to decreased stock-based compensation and recruiting expenses, partially offset by consulting and bonus expense.
Previous wording
Based on our current plans and business conditions, management believes that the Company’s available cash and cash equivalents, the cash generated from operations, availability on 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.
Current wording
Based on our current plans and business conditions, management believes that the Company’s available cash and cash equivalents, the cash generated from operations, availability on 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.
Previous wording
During the year ended June 30, 2025, net cash used in operating activities totaled $3,547,400 as compared to $2,683,012 during the year ended June 30, 2024. The increase in net cash used in operating activities was primarily due to the increase in net loss, accounts receivable and inventory during the year ended June 30, 2025, partially offset by the increase in accounts payable and customer advances during such period.
Current wording
During the year ended June 30, 2026, net cash used in operating activities totaled $1,550,219 as compared to $3,395,702 during the year ended June 30, 2025. The decrease in net cash used in operating activities was primarily due to the decrease in net loss, inventory and accrued expense during the year ended June 30, 2026, partially offset by the increase in accounts payable and accounts receivable during such period.
Previous wording
During the year ended June 30, 2025, net cash used in investing activities was $233,473, consisting of purchases of property and equipment net of adjustments in patent costs. During the year ended June 30, 2024, net cash used in investing activities was $293,883, consisting of purchases of property and equipment and patent costs.
Current wording
During the year ended June 30, 2026, net cash used in investing activities was $429,350, consisting of purchases of property and equipment and additional patent costs. During the year ended June 30, 2025, net cash used in investing activities was $233,473, consisting of purchases of property and equipment net of adjustments in patent costs.
Previous wording
During the year ended June 30, 2025, we made payments of $321,554 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. During the year ended June 30, 2024, we made payments of $556,468 on term notes and capital leases offset by borrowings on the line of credit of $1,000,000.
Current wording
During the year ended June 30, 2026, we made payments of $623,701 on term notes and capital leases. We raised a net of $10,630,678 from a public offering of common stock made in March 2026 pursuant to our shelf registration statement. During the year ended June 30, 2025, we made payments of $321,554 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 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 provide 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 June 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 June 30, 2026. On September 25, 2026, the lender agreed to waive the Company’s minimum annual debt service coverage ratio covenant for the fiscal year ended June 30, 2026 and modified the Company’s credit arrangements to eliminate the debt service coverage ratio covenant and replace it with a minimum liquidity covenant of $2.0 million, retain the existing term note, and provide the Company access to $750,000 of availability under its revolving line of credit, subject to borrowing-base requirements and a $5,000 waiver fee. The lender further agreed to expand availability under the revolving line of credit to $1,250,000 upon attaining a DSCR of 1.2x. There were no other changes to or modifications to the Loan Agreement or the Notes.
Previous wording
We have contractual cash commitments related to open purchase orders as of June 30, 2025, of approximately $6,260,000.
Current wording
We have contractual cash commitments related to open purchase orders as of June 30, 2026, of approximately $5,050,000.