Start Time: 17:00 January 1, 0000 5:33 PM ET Precision Optics Corporation, Inc. Q3 2024 Earnings Conference Call May 15, 2024, 17:00 PM ET Company Participants Joe Forkey - President and CEO Wayne Coll - CFO Robert Blum - Lytham Partners, IR Conference Call Participants Operator Good afternoon, everyone, and welcome to the Precision Optics Reports Third Quarter Fiscal Year 2024 Financial Results Conference Call. All participants will be in a listen-only mode. [Operator Instructions]. After today's presentat ...

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 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, 2024 PRECISION OPTICS CORPORATION, INC. (Exact name of registrant as specified in its charter) (State or other jurisdic ...

Precision Optics Corporation, Inc. (NASDAQ:POCI) Q2 2024 Earnings Conference Call February 14, 2024 5:00 PM ET Company Participants Robert Blum - IR, Lytham Partners Joe Forkey - President & CEO Wayne Coll - Chief Financial Officer Conference Call Participants Chris Vichovski - Private Investor Operator Good afternoon, and welcome to the Precision Optics Second Quarter Fiscal Year 2024 Financial Results conference call. All participants will be in listen-only mode. [Operator Instructions]. Please note, this ...

[PART I FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The company's financial statements for the period ended December 31, 2023, show a decrease in total assets and net losses, driven by lower revenues and reduced gross margins, leading to a significant decrease in cash and cash equivalents [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) As of December 31, 2023, total assets decreased to $17.70 million from $19.74 million, primarily due to a reduction in cash and cash equivalents, while total liabilities and stockholders' equity also declined Consolidated Balance Sheet Highlights (Unaudited) | Account | Dec 31, 2023 ($) | June 30, 2023 ($) | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | 987,044 | 2,925,852 | | Total current assets | 7,832,695 | 9,859,156 | | Total Assets | 17,697,376 | 19,740,434 | | **Liabilities & Equity** | | | | Total current liabilities | 4,313,058 | 5,259,620 | | Total Liabilities | 6,380,124 | 7,693,842 | | Total stockholders' equity | 11,317,252 | 12,046,592 | | Total Liabilities & Equity | 17,697,376 | 19,740,434 | [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) For the three and six months ended December 31, 2023, the company reported net losses of $758,802 and $1,223,217 respectively, a significant reversal from prior-year net incomes, driven by decreased revenue and gross profit Statement of Operations Summary (Unaudited) | Metric | Three Months Ended Dec 31, 2023 ($) | Three Months Ended Dec 31, 2022 ($) | Six Months Ended Dec 31, 2023 ($) | Six Months Ended Dec 31, 2022 ($) | | :--- | :--- | :--- | :--- | :--- | | Revenues | 4,824,289 | 5,886,961 | 9,145,544 | 10,972,262 | | Gross Profit | 1,450,976 | 2,599,472 | 2,914,587 | 4,238,913 | | Operating Income (Loss) | (704,162) | 571,065 | (1,109,455) | 469,263 | | Net Income (Loss) | (758,802) | 508,668 | (1,223,217) | 349,944 | | Diluted EPS | (0.13) | 0.09 | (0.20) | 0.06 | [Consolidated Statements of Stockholders' Equity](index=5&type=section&id=Consolidated%20Statements%20of%20Stockholders%27%20Equity) Stockholders' equity decreased from $12.05 million to $11.32 million, primarily due to a net loss of $1.22 million, partially offset by stock-based compensation - For the six months ended December 31, 2023, total stockholders' equity decreased by **$729,340**, from **$12,046,592** to **$11,317,252**[15](index=15&type=chunk) - The primary drivers of the change in equity were a net loss of **$1,223,217** (reported in two tranches of **$464,415** and **$758,802**) and stock-based compensation totaling **$491,177**[15](index=15&type=chunk) [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities for the six months ended December 31, 2023, was $1.49 million, leading to a $1.94 million decrease in cash and cash equivalents, ending the period at $987,044 Cash Flow Summary (Unaudited) | Cash Flow Activity | Six Months Ended Dec 31, 2023 ($) | Six Months Ended Dec 31, 2022 ($) | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | (1,492,824) | 17,110 | | Net cash used in investing activities | (170,772) | (37,637) | | Net cash used in financing activities | (275,212) | (203,904) | | **Net (decrease) increase in cash** | **(1,938,808)** | **(224,431)** | | **Cash and cash equivalents, end of period** | **987,044** | **381,318** | [Notes to Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Key notes detail accounting policies, inventory composition, debt structure, lease obligations, stock-based compensation, and revenue breakdown, showing increased inventories and available credit amidst declining optical and medical device revenues Inventories Breakdown | Category | Dec 31, 2023 ($) | June 30, 2023 ($) | | :--- | :--- | :--- | | Raw Materials | 1,532,752 | 1,142,816 | | Work-In-Progress | 483,960 | 322,538 | | Finished Goods | 1,083,274 | 1,310,862 | | **Total Inventories** | **3,099,986** | **2,776,216** | - As of December 31, 2023, the company had long-term debt, net of current maturities, of **$1,919,350**. A revolving line of credit for **$1,250,000** was unutilized and fully available[29](index=29&type=chunk)[30](index=30&type=chunk) Disaggregated Revenues (Six Months Ended Dec 31) | Revenue Type | 2023 ($) | 2022 ($) | | :--- | :--- | :--- | | Engineering Design Services | 4,166,216 | 3,344,578 | | Optical Components | 3,883,186 | 5,232,821 | | Medical Device Products and Assemblies | 1,096,142 | 1,794,863 | | Technology Rights | – | 600,000 | | **Total Revenues** | **9,145,544** | **10,972,262** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=13&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the 16.6% decrease in six-month revenue to lower demand and a non-recurring technology rights sale, impacting gross margin and increasing operating expenses, while the company's cash position decreased significantly despite available credit [Overview](index=14&type=section&id=Overview) Precision Optics develops and manufactures advanced optical instruments, including endoscopes and custom imaging systems, expanding capabilities through acquisitions to focus on micro-precision optics and single-use devices for minimally invasive surgery - The company designs and manufactures 3D endoscopes, Microprecision lenses, and complete medical devices for minimally invasive surgery[48](index=48&type=chunk) - Acquisitions of Ross Optical Industries (2019) and Lighthouse Imaging (2021) added capabilities in custom optical components and end-to-end medical visualization, including chip-on-tip systems[49](index=49&type=chunk)[50](index=50&type=chunk) - Strategic focus is on developing new optical products, particularly in Microprecision™ optics, micro medical cameras, single-use endoscopes, and 3D endoscopes to penetrate a market segment growing at **2-3 times** the rate of the overall market[54](index=54&type=chunk) [Results of Operations](index=16&type=section&id=Results%20of%20Operations) Total revenue for the six months ended December 31, 2023, decreased by 16.6% to $9.1 million, primarily due to declines in Optical Components and Finished Products, and the absence of a prior-year technology rights sale, leading to a gross margin reduction to 31.9% Revenue by Segment (Six Months Ended Dec 31) | Segment | 2023 ($) | 2022 ($) | % Change | | :--- | :--- | :--- | :--- | | Engineering Design Services | 4,166,216 | 3,344,578 | +24.6% | | Optical Components | 3,883,186 | 5,232,821 | -25.8% | | Finished Products and Assemblies | 1,096,142 | 1,794,863 | -38.9% | | Technology Rights | – | 600,000 | -100.0% | | **Total Revenues** | **9,145,544** | **10,972,262** | **-16.6%** | - The decrease in Optical Components revenue was attributed to customers rebalancing inventories that had grown due to supply chain concerns[61](index=61&type=chunk) - Gross margin for the six months ended Dec 31, 2023, decreased to **31.9%** from **38.6%** in the prior year, primarily due to changes in product sales mix and the non-recurrence of a **$600,000** technology rights sale which had no associated cost of sales[64](index=64&type=chunk) - For the six months ended Dec 31, 2023, R&D expenses increased by **$68,595** and SG&A expenses increased by **$185,797**, primarily due to higher personnel-related costs[65](index=65&type=chunk)[66](index=66&type=chunk) [Liquidity and Capital Resources](index=17&type=section&id=Liquidity%20and%20Capital%20Resources) The company's cash and cash equivalents decreased by $1.94 million to $0.99 million, driven by net loss, increased inventory, and decreased accounts payable, though a $1.25 million line of credit remains fully available - Cash and cash equivalents decreased from **$2,925,852** at June 30, 2023, to **$987,044** at December 31, 2023, a decrease of **$1,938,808**[67](index=67&type=chunk) - The company has a **$1,250,000** line of credit which was fully available with no borrowings outstanding as of December 31, 2023[68](index=68&type=chunk) - As of December 31, 2023, the company had contractual cash commitments of approximately **$3,163,000** related to open purchase orders[71](index=71&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=17&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Precision Optics is not required to provide information for this item - The company is electing scaled disclosure reporting obligations as a smaller reporting company and is not required to provide the information requested by this Item[73](index=73&type=chunk) [Controls and Procedures](index=17&type=section&id=Item%204.%20Controls%20and%20Procedures) The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of December 31, 2023, with no material changes to internal control over financial reporting during the quarter - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of December 31, 2023[74](index=74&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, these controls[75](index=75&type=chunk) [PART II OTHER INFORMATION](index=18&type=section&id=PART%20II%20OTHER%20INFORMATION) [Legal Proceedings](index=18&type=section&id=Item%201.%20Legal%20Proceedings) The company is not aware of any pending or threatened litigation that could materially impact its operations or finances, occasionally engaging in insignificant legal matters in the ordinary course of business - The company is not aware of any pending or threatened litigation that could have a material impact on its operations or finances[78](index=78&type=chunk) [Risk Factors](index=18&type=section&id=Item%201A.%20Risk%20Factors) As a smaller reporting company, Precision Optics is not required to provide the information for this item - Smaller reporting companies are not required to provide the information required by this item[79](index=79&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=18&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) There were no unregistered sales of equity securities during the period - None[80](index=80&type=chunk) [Defaults Upon Senior Securities](index=18&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) Not applicable - Not applicable[80](index=80&type=chunk) [Mine Safety Disclosures](index=18&type=section&id=Item%204.%20Mine%20Safety%20Disclosures%20%28Not%20applicable%2E%29) Not applicable - Not applicable[81](index=81&type=chunk) [Other Information](index=18&type=section&id=Item%205.%20Other%20Information) The company disclosed its process for director nominations, relying on independent director recommendations, and reported no director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the quarter - The company's policy is for the Board to seek recommendations from independent directors for director nominations[83](index=83&type=chunk) - During the quarter, no director or officer adopted or terminated a Rule 10b5-1 trading arrangement[84](index=84&type=chunk) [Exhibits](index=19&type=section&id=Item%206.%20Exhibits) The report lists several exhibits, including the company's Restated Articles of Organization, Amended and Restated Bylaws, and certifications from the CEO and CFO as required by the Sarbanes-Oxley Act of 2002, along with Inline XBRL documents - Key exhibits filed include CEO and CFO certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act[86](index=86&type=chunk)

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 September 30, 2023 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 Identific ...

Financial Data and Key Metrics Changes - Total revenue for Q1 2024 was $4.3 million, a decrease of 15% compared to $5.1 million in Q1 2023 [38] - Production revenue decreased by $1 million to $2.4 million, while engineering revenue increased by $300,000 to $1.9 million [38] - Adjusted EBITDA was negative $245,000 for Q1 2024, compared to positive $26,000 in the same quarter last year [43] Business Line Data and Key Metrics Changes - Ross Optical operations saw a decrease in order volumes, contributing approximately $500,000 to the decline in production revenue [39] - Engineering revenue was up 16% compared to the same quarter a year ago, indicating strong demand and utilization [24] Market Data and Key Metrics Changes - The medical device market continues to show strong growth, driven by advancements in technology such as robotics and digital imaging [19] - Single-use devices are gaining market share, with growth rates of 2x to 3x that of the overall medical device market [19][32] Company Strategy and Development Direction - The company is focused on transitioning new customer programs into production while managing existing mature programs [17] - There is a strong emphasis on expanding the engineering pipeline to ensure sustainable growth in fiscal 2024 and beyond [36] - The company is optimistic about new production orders in defense/aerospace and robotic systems, which are expected to contribute significantly to revenue [22][34] Management's Comments on Operating Environment and Future Outlook - Management believes Q1 revenue levels represent the low point of the fiscal year, with expectations for recovery in Q2 and beyond [18][45] - The company is confident in the robustness of its engineering pipeline and anticipates a return to quarterly revenue levels above $5 million [45] Other Important Information - The company has implemented new tools to manage project costs and is progressing with a new ERP system expected to be completed in early 2024 [27] - A new Chief Operating Officer and CFO have been added to the team, enhancing management capabilities [26] Q&A Session Summary Question: Can you elaborate on the nuances of the Ross Optical operations this quarter? - Management explained that the decrease in orders was due to customers rebalancing inventories after previous increases driven by supply chain concerns [49][50] Question: What is the outlook for EBITDA recovery in Q2? - Management confirmed expectations for EBITDA recovery in Q2, with stable working capital needs and ongoing debt repayments [54][55]

Precision Optics Corporation, Inc. (NASDAQ:POCI) Q4 2023 Earnings Conference Call September 28, 2023 5:00 PM ET Company Participants Robert Blum - Lytham Partners, LLC Joseph Forkey - President and Chief Executive Officer Wayne Coll - Chief Financial Officer Conference Call Participants Operator Good afternoon, and welcome to the Precision Optics Fourth Quarter and Fiscal Year 2023 Financial Results Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presen ...

Part I [Business](index=4&type=section&id=Item%201.%20Business) Precision Optics Corporation develops and manufactures advanced optical instruments, specializing in medical devices and custom optical components, expanded through strategic acquisitions - The company operates as a developer and manufacturer of advanced optical instruments, with a focus on medical devices for minimally invasive surgery, including 3D endoscopes and Microprecision™ lenses[12](index=12&type=chunk) - Strategic acquisitions have expanded the company's capabilities: Ross Optical Industries (acquired June 2019) for custom optical components and defense applications, and Lighthouse Imaging (acquired October 2021) for end-to-end medical visualization systems[13](index=13&type=chunk)[14](index=14&type=chunk) Revenue Breakdown by Business Segment (FY 2023 vs. FY 2022) | Business Segment | FY 2023 Revenue % | FY 2022 Revenue % | | :--- | :--- | :--- | | Engineering Services | 32% | 34% | | Optical Components | 50% | 41% | | Medical Device Manufacturing | 18% | 25% | - The company holds various U.S. patents and has pending applications covering medical devices, 3D endoscopes, Microprecision™ lenses, and defense products, with expiration dates through March 2043[33](index=33&type=chunk) - In fiscal year 2023, the company served 361 customers, with one customer accounting for **11.4% of total revenues**; in fiscal year 2022, it served 377 customers with no single customer exceeding **10% of revenues**[35](index=35&type=chunk) [Risk Factors](index=9&type=section&id=Item%201A.%20Risk%20Factors) The company is exempt from providing detailed risk factor information due to its status as a smaller reporting company - The company is not required to provide risk factor information as it qualifies as a smaller reporting company[46](index=46&type=chunk) [Properties](index=9&type=section&id=Item%202.%20Properties) The company operates from five facilities across Massachusetts, Texas, and Maine, with its primary Gardner facility leased from an entity partially owned by its CEO - The company conducts operations at three facilities in Gardner, MA, one in El Paso, TX, and one in Windham, ME[47](index=47&type=chunk) - The primary facility in Gardner, MA is leased from Equity Assets, Inc. (EAI) on a tenant-at-will basis, and the company's CEO, Joseph N. Forkey, holds a **20% interest in EAI**[47](index=47&type=chunk) [Legal Proceedings](index=10&type=section&id=Item%203.%20Legal%20Proceedings) No material pending or threatened legal proceedings are currently known to impact the company's operations or finances - There are no current legal proceedings that are expected to have a material adverse effect on the company's business or financial condition[51](index=51&type=chunk) [Mine Safety Disclosures](index=10&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This disclosure item is not applicable to the company's operations - Not applicable[52](index=52&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=11&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on Nasdaq (POCI), with no dividends declared recently, and a June 2023 private placement raised **$2.52 million** - The company's common stock is listed on the Nasdaq Stock Market under the symbol **POCI**[55](index=55&type=chunk) - No dividends have been declared in the last two fiscal years, with earnings intended for reinvestment into the business[57](index=57&type=chunk) - On June 20, 2023, the company closed a stock issuance of **420,000 shares at $6.00 per share**, generating **$2.52 million** in gross proceeds[58](index=58&type=chunk) [Selected Financial Data](index=11&type=section&id=Item%206.%20Selected%20Financial%20Data) This section is reserved, and no selected financial data is provided - This section is marked as [RESERVED], indicating no data is provided[59](index=59&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=12&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) FY2023 saw a **34.2%** revenue increase to **$21.0 million**, improved gross profit and narrowed operating loss, supported by enhanced liquidity from a private placement and credit line increase [Results of Operations](index=12&type=section&id=Results%20of%20Operations) FY2023 revenues grew **34.2%** to **$21.0 million**, driven by optical component and engineering sales, with gross profit up **56.9%** to **$7.7 million**, partly from a one-time technology rights sale Comparison of Operations (FY 2023 vs. FY 2022) | Metric | FY 2023 | FY 2022 | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenues | $21,044,467 | $15,678,248 | +34.2% | | Gross Profit | $7,734,136 | $4,928,187 | +56.9% | | Gross Margin | 36.8% | 31.4% | +5.4 pts | | R&D Expenses | $809,877 | $666,479 | +21.5% | | SG&A Expenses | $7,740,562 | $5,613,473 | +37.9% | - The increase in revenue was largely driven by large orders from defense/aerospace customers for optical components[62](index=62&type=chunk) - Gross profit was benefited by a one-time sale of technology rights amounting to **$600,000**[63](index=63&type=chunk) [Liquidity and Capital Resources](index=13&type=section&id=Liquidity%20and%20Capital%20Resources) Cash and equivalents significantly increased to **$2.9 million** by June 30, 2023, bolstered by a **$2.29 million** private placement and new debt facilities, despite ongoing net losses Key Liquidity Metrics (as of June 30, 2023) | Metric | Amount | | :--- | :--- | | Cash and cash equivalents | $2,925,852 | | Accounts receivable | $3,907,407 | | Current liabilities | $5,259,620 | | Operating Loss (FY 2023) | ($638,548) | - In June 2023, the company raised **$2,288,000** net through a private placement of **420,000** common shares[69](index=69&type=chunk) - The company secured a new **$750,000** term loan and increased its line of credit to **$1,250,000** in June 2023, with no outstanding balance on the line of credit at June 30, 2023[69](index=69&type=chunk) Contractual Cash Commitments (Post June 30, 2023) | Commitment | Fiscal 2024 | Thereafter | Total | | :--- | :--- | :--- | :--- | | Capital lease for equipment | $48,619 | $71,923 | $120,542 | | Minimum operating lease payments | $182,652 | $195,252 | $377,904 | | Open purchase orders | $1,981,592 | - | $1,981,592 | [Quantitative and Qualitative Disclosures About Market Risk](index=14&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is not required to provide market risk disclosures due to its status as a smaller reporting company - The company is electing scaled disclosure reporting obligations and is not required to provide this information[74](index=74&type=chunk) [Financial Statements and Supplementary Data](index=14&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents audited consolidated financial statements for FY2023 and FY22, with an unqualified auditor opinion, detailing revenue growth and a narrowed net loss [Report of Independent Registered Public Accounting Firm](index=15&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) The independent auditor issued an unqualified opinion on the consolidated financial statements, identifying revenue recognition as a critical audit matter due to its complexity - The auditor issued an unqualified (clean) opinion on the consolidated financial statements[79](index=79&type=chunk) - Revenue Recognition was identified as a Critical Audit Matter due to the complexity and significant judgment involved in interpreting customer contracts[84](index=84&type=chunk)[85](index=85&type=chunk) [Consolidated Financial Statements](index=17&type=section&id=Consolidated%20Financial%20Statements) Consolidated financial statements show asset growth to **$19.7 million**, increased stockholders' equity to **$12.0 million**, and a narrowed net loss of **$144,613** for FY2023 Consolidated Balance Sheet Highlights (at June 30) | Account | 2023 | 2022 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $2,925,852 | $605,749 | | Total current assets | $9,859,156 | $6,505,216 | | Goodwill | $8,824,210 | $8,824,210 | | Total Assets | $19,740,434 | $16,704,020 | | **Liabilities & Equity** | | | | Total current liabilities | $5,259,620 | $4,586,641 | | Long-term debt, net | $2,175,980 | $1,961,141 | | Total Stockholders' Equity | $12,046,592 | $8,971,495 | Consolidated Statement of Operations Highlights (for the Year Ended June 30) | Account | 2023 | 2022 | | :--- | :--- | :--- | | Revenues | $21,044,467 | $15,678,248 | | Gross Profit | $7,734,136 | $4,928,187 | | Operating Loss | ($638,548) | ($1,513,890) | | Net Loss | ($144,613) | ($928,416) | | Loss per Share (Basic & Diluted) | ($0.03) | ($0.18) | Consolidated Statement of Cash Flows Highlights (for the Year Ended June 30) | Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | ($81,090) | ($933,371) | | Net cash used in investing activities | ($52,497) | ($407,802) | | Net cash provided by financing activities | $2,453,690 | $1,085,272 | | Net increase (decrease) in cash | $2,320,103 | ($255,901) | [Notes to Consolidated Financial Statements](index=21&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes detail accounting policies, including a 1-for-3 reverse stock split, revenue growth by segment, the Lighthouse acquisition, new financing, and significant NOL carryforwards with a full valuation allowance - A **1-for-3 reverse stock split** was effected on November 1, 2022, and all share and per-share amounts have been retroactively adjusted[99](index=99&type=chunk)[100](index=100&type=chunk) Revenue by Type (for the Year Ended June 30) | Revenue Type | 2023 | 2022 | | :--- | :--- | :--- | | Engineering Design Services | $6,728,867 | $5,371,483 | | Optical Components | $10,523,806 | $6,481,896 | | Medical Device Products and Assemblies | $3,791,794 | $3,824,869 | | **Total Revenues** | **$21,044,467** | **$15,678,248** | - The **$1,500,000** earn-out liability associated with the Lighthouse acquisition was written off to other income as the division did not achieve the required gross margin targets[133](index=133&type=chunk) - As of June 30, 2023, the company had federal and state net operating loss (NOL) carryforwards of approximately **$12.5 million** and **$6.1 million**, respectively, which begin to expire in fiscal year 2024[164](index=164&type=chunk) - A full valuation allowance of **$3,271,000** has been provided against the company's net deferred tax assets, as realization is not considered 'more likely than not'[163](index=163&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=35&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reported no changes in or disagreements with its accountants regarding accounting principles or financial disclosure - None reported[167](index=167&type=chunk) [Controls and Procedures](index=35&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were ineffective as of June 30, 2023, due to a material weakness in internal control over financial reporting - Management concluded that disclosure controls and procedures were not effective as of June 30, 2023[168](index=168&type=chunk) - The ineffectiveness was attributed to a material weakness in internal controls over financial reporting[168](index=168&type=chunk)[171](index=171&type=chunk) [Other Information](index=35&type=section&id=Item%209B.%20Other%20Information) No other information is reported for this item - None[173](index=173&type=chunk) Part III [Items 10-14](index=36&type=section&id=Item%2010-14) Information for Items 10 through 14 is incorporated by reference from the company's 2023 Annual Meeting of Stockholders Proxy Statement - Information for Items 10, 11, 12, 13, and 14 is incorporated by reference from the Proxy Statement for the 2023 Annual Meeting of Stockholders[175](index=175&type=chunk)[176](index=176&type=chunk)[177](index=177&type=chunk)[178](index=178&type=chunk)[179](index=179&type=chunk) Part IV [Exhibits, Financial Statement Schedules](index=37&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists documents filed as part of the Form 10-K, including financial statements and a comprehensive list of exhibits, with all financial statement schedules omitted - Lists the financial statements filed under Part II, Item 8[182](index=182&type=chunk) - All financial statement schedules have been omitted because they are not required, not applicable, or the information is included elsewhere[183](index=183&type=chunk) - A detailed list of exhibits, including asset purchase agreements, equity incentive plans, loan agreements, and officer certifications, is provided[184](index=184&type=chunk)[185](index=185&type=chunk)[186](index=186&type=chunk)[187](index=187&type=chunk) [Form 10-K Summary](index=40&type=section&id=Item%2016.%20Form%2010-K%20Summary) No information is reported for this item - None[190](index=190&type=chunk)

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 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.) 22 East Broadway, Gardner, Massachusetts 01440-3338 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly per ...

Financial Data and Key Metrics Changes - Revenue for Q2 2023 was a record $5.9 million, up 51% from $3.9 million in the same quarter a year ago. Excluding a one-time $600,000 technology rights revenue, total revenue would have been $5.3 million, corresponding to a 38% year-over-year increase [31][34] - Gross margin reached 46% for Q2 2023 compared to 29% in the same quarter last year. Excluding the technology rights revenue, gross margin was 40%, marking an 11% improvement year-over-year [27][31] - Net income was $634,000, a significant improvement from a loss of $507,000 in the same quarter a year ago. Adjusted EBITDA was positive at $993,000 compared to a loss of $72,000 in the same quarter last year [28][34] Business Line Data and Key Metrics Changes - Production revenue for Q2 2023 was $3.6 million, a 59% increase from $2.3 million in Q2 2022, driven by increased orders for spinal products and a new defense aerospace contract [16][18] - Engineering revenue was $1.7 million for Q2 2023, a 4% increase compared to the same quarter of the previous fiscal year [24] Market Data and Key Metrics Changes - The total addressable market for single-use medical imaging devices is estimated at $500 million per year, growing at a rate of 15% to 20% annually [5] - The company has seen increased customer interest in single-use products, indicating a shift in market demand towards single-use medical devices [12] Company Strategy and Development Direction - The company completed its uplisting to NASDAQ, which has increased investor interest and trading volume [10] - A technology licensing and royalty agreement was finalized, aimed at enhancing access to the single-use medical device market and supporting long-term growth [11][14] - The company is focusing on transitioning products from reusable to single-use designs, which requires adjustments in the supply chain and production processes [12][51] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, citing a robust development pipeline with several programs poised to enter production within the next 12 to 18 months [42] - The company expects solid revenue growth in the range of 20% for the fiscal year overall, despite some anticipated fluctuations in individual production programs [35][36] Other Important Information - The company achieved operating profitability for the first time in many years, with a focus on maintaining a high level of utilization of engineering resources [28][34] - The company is actively searching for a new permanent CFO following the resignation of the previous CFO [29][30] Q&A Session Summary Question: Can you provide more color on accounts receivable? - Management indicated that accounts receivable is broad, with a few long-term customers being slow-paying, but the majority is spread across many customers due to heavy deliveries at the end of the quarter [40] Question: What guidance can you provide going forward? - Management did not provide specific guidance beyond mentioning a strong pipeline of opportunities [41] Question: Can you elaborate on the pipeline and expected commercial launches? - Management noted that there are 7 to 8 programs ready to go into production in the next 12 to 18 months, with several poised for imminent launch pending customer funding and FDA approvals [42][43] Question: Why choose the royalty route for the licensing agreement? - The royalty arrangement allows the company to benefit from the growth in the single-use market without fully utilizing its production resources, providing a steady income stream [44][51] Question: Are there plans for more acquisitions? - Management confirmed that they are looking at acquisitions on an opportunistic basis, given the fragmented nature of the optics industry [52] Question: How does the company view its performance compared to three years ago? - Management believes the company is performing as well or better than expected [53] Question: Does the single-use program bring relationships with larger customers? - Management confirmed that they are seeing larger opportunities, with many current programs involving established medical device companies [67] Question: Are these programs replacing existing devices? - Yes, larger companies are moving from reusable to single-use devices, which lowers the risk of program success due to established markets [72]