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PRECISION OPTICS CORPORATION, INC.

PRECISION OPTICS CORPORATION, INC.POCIEarnings & Financial Report

Nasdaq · Industrials · Electromedical & Electrotherapeutic Apparatus

Century Precision Optics is an American lens manufacturing firm. It was founded in 1948 in North Hollywood, California as Century Photo Optics. Steven Manios Sr. purchased the company in 1973 and created many of the optics. Century Optics makes a variety of digital, broadcast, projection, and industrial lenses. They have offices in Hauppauge, New York and Van Nuys, California.

What changed in PRECISION OPTICS CORPORATION, INC.'s 10-K — 2022 vs 2023

Top changes in PRECISION OPTICS CORPORATION, INC.'s 2023 10-K

75 paragraphs added · 125 removed · 55 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

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The competitive advantage of our Ross Optical division is its ability to provide difficult-to-find optics, and, increasingly, to provide a broader range of services based on its ability to source optics worldwide and augmented by its ability to provide thin-film coatings and assembly.
The competitive advantage of our Ross Optical division is its ability to provide difficult-to-find optics, and, increasingly, to provide a broader range of services based on its ability to source optics worldwide, augmented by its ability to provide thin-film coatings and assembly.
Raw Materials and Principal Suppliers A key raw material component for our products is precision grade optical glass, which we obtain from a few suppliers, principally SCHOTT North America, Inc. and Ohara Corporation. We obtain CMOS sensors used in our development of endoscope products for our customers from various suppliers such as OmniVision Technologies, Inc.
Raw Materials and Principal Suppliers A key raw material component for our products is precision grade optical glass, which we obtain from a few suppliers, principally SCHOTT North America, Inc. and Ohara Corporation. We obtain CMOS sensors used in the development of endoscope products for our customers from various suppliers such as OmniVision Technologies, Inc.
We may also develop additional products or seek to sell some of our current or future medical products in a manner that requires us to obtain the permission of the FDA to market such products, as well as the regulatory approval or license of other federal, state and local agencies or similar agencies in other countries.
We may also develop additional products or seek to sell some of our current or future medical products in a manner that requires us or our customers to obtain the permission of the FDA to market such products, as well as the regulatory approval or license of other federal, state and local agencies or similar agencies in other countries.
Utilizing our proprietary technology to provide independent images to right and left eyes, surgeons can view the operative field with 3D perception. Competition and Markets We sell our products in highly competitive markets and we compete for business with both foreign and domestic manufacturers.
Utilizing our proprietary technology to provide independent images to right and left eyes, surgeons can view the operative field with 3D perception. 2 Competition and Markets We sell our products in highly competitive markets and we compete for business with both foreign and domestic manufacturers.
All products supplied by Ross Optical include a custom or catalog optic, which is sourced through Ross Optical’s extensive domestic and worldwide network of optical fabrication companies. Most systems make use of optical lenses, prisms, mirrors and windows and range from individual optical components to complex mechano-optical assemblies.
All products supplied by Ross Optical include a custom or catalog optic, which is sourced through Ross Optical’s extensive domestic and worldwide network of optical fabrication suppliers. Most systems make use of optical lenses, prisms, mirrors and windows and range from individual optical components to complex mechano-optical assemblies.
While our resources are substantially more limited than those of some of our competitors, we believe that we can compete successfully in this market on the basis of product quality, price, delivery and innovation tailored to our customers’ specifications.
While our resources are substantially more limited than those of some of our competitors, we believe that we can compete successfully in this market based on product quality, price, delivery and innovation tailored to our customers’ specifications.
Products often include thin film optical coatings that are applied by the Ross Optical division in-house coating department. The acquisition of the assets of Lighthouse Imaging LLC effective October 1, 2021 expanded our electrical engineering and development of end-to-end medical visualization devices. Product development competencies at Lighthouse Imaging include systems, optical, mechanical, electrical and process development engineering.
Products often include thin film optical coatings that are applied by the Ross Optical division in-house coating department. The acquisition of the assets of Lighthouse Imaging LLC expanded our electrical engineering and development of end-to-end medical visualization devices. Product development competencies at Lighthouse Imaging include systems, optical, mechanical, electrical and process development engineering.
Our current patent portfolio includes patents, rights to patents and patent applications that cover various aspects of our technology in the following areas: — Medical devices; — 3-D endoscopes; — Microprecision™ lenses and micro medical cameras; — Defense products. The patents contained in our current patent portfolio have various expiration dates through May 2036.
Our current patent portfolio includes patents, rights to patents and patent applications that cover various aspects of our technology in the following areas: — Medical devices; — 3-D endoscopes; — Microprecision™ lenses and micro medical cameras; — Defense products. The patents contained in our current patent portfolio have various expiration dates through March 2043.
As Ross Optical Industries of El Paso, Texas we also operate as a supplier of custom optical components and assemblies for military and defense, medical and various other industrial applications. All products sold by us under the Ross Optical name include a custom or catalog optic, which is sourced through our extensive domestic and worldwide network of optical fabrication companies.
As Ross Optical Industries we also operate as a supplier of custom optical components and assemblies for military and defense, medical and various other industrial applications. All products sold by us under the Ross Optical name include a custom or catalog optic, which is sourced through our extensive domestic and worldwide network of optical fabrication suppliers.
In addition to medical devices, we also manufacture and sell components and assemblies specially designed for industrial and military use. The acquisition of the assets of Ross Optical Industries effective June 1, 2019 expanded our optics components and assemblies business.
In addition to medical devices, we also manufacture and sell components and assemblies specially designed for industrial and military use. The acquisition of the assets of Ross Optical Industries expanded our optics components and assemblies business.
Ross Optical has an expanded network of overseas suppliers of various types and sizes of optical components and assemblies that enhance our ability to meet the material demands of our customers’ unique optical and medical device designs.
We have an expanded network of overseas suppliers of various types and sizes of optical components and assemblies that enhance our ability to meet the material demands of our customers’ unique optical and medical device designs.
We intend to continue to innovate and extend our technological capabilities in the areas of 3-D endoscopy Microprecision™ optics, micro medical cameras, and related illumination techniques, and to aggressively pursue patent protection for such developments. Employees As of June 30, 2022, we had 77 employees, 76 of which were full-time employees.
We intend to continue to innovate and extend our technological capabilities in the areas of 3-D endoscopy Microprecision™ optics, micro medical cameras, and related illumination techniques, and to aggressively pursue patent protection for such developments. 4 Employees As of June 30, 2023, we had 85 employees, 84 of which were full-time employees.
Maintenance of the system is ensured through annual on-site audits by the notified body and a post-market surveillance system requiring the manufacturer to submit serious complaints to the appropriate governmental authority. All of our medical products are manufactured in conformity with the CE mark requirements. 6
Maintenance of the system is ensured through annual on-site audits by the notified body and a post-market surveillance system requiring the manufacturer to submit serious complaints to the appropriate governmental authority. All of our medical products are manufactured in conformity with the CE mark requirements. Available Information Our website is www.poci.com.
We continue to acquire various optical components from overseas to meet the needs of custom device designs.
We acquire various optical components from overseas as necessary to meet the needs of custom device designs.
There were 36 employees in manufacturing, 21in engineering/research and development, 8 in sales, and 12 in finance and administration. We are not a party to any collective bargaining agreements. We believe our relations with our employees are very good.
There were 43 employees in manufacturing, 20 in engineering/research and development, 8 in sales and marketing, and 14 in finance and administration. We are not a party to any collective bargaining agreements. We believe our relations with our employees are very good.
We believe that we currently comply with all applicable environmental laws and regulations and intend to do our best efforts to remain in compliance. Such compliance does not entail significant expense to us. 5 Government Regulations Domestic Regulation .
From time to time, we use a small amount of hazardous materials in our operations. We believe that we currently comply with all applicable environmental laws and regulations and intend to do our best efforts to remain in compliance. Such compliance does not entail significant expense to us. Government Regulations Domestic Regulation .
The FDA has authority to conduct detailed inspections of manufacturing plants in order to assure that “good manufacturing practices” are being followed in the manufacture of medical devices including medical devices or components of medical devices manufactured for other medical device companies, to require periodic reporting of product defects to the FDA, and to prohibit the sale of devices which do not comply with law.
The FDA has authority to conduct detailed inspections of manufacturing plants in order to assure that “good manufacturing practices” are being followed in the manufacture of medical devices including medical devices or components of medical devices manufactured for other medical device companies, to require periodic reporting of product defects to the FDA, and to prohibit the sale of devices which do not comply with law. 5 We design and manufacture components for the defense industry, and import, export and manufacture optical products for the defense industry, some of which is controlled by U.S. regulations.
Lighthouse Imaging is an industry leader in chip on tip visualization systems. 1 Approximately 34% our business during the fiscal year ended June 30, 2022 is from engineering services primarily relating to the design of medical device optical assemblies, 41% from the sale of both internally manufactured and purchased optical components, and 25% from the manufacture of optical assemblies and sub-assemblies primarily for medical device instrument applications.
During the fiscal year ended June 30, 2022, approximately 34% our business was from engineering services primarily relating to the design of medical device optical assemblies, 41% from the sale of both internally manufactured and purchased optical components, and 25% from the manufacture of optical assemblies and sub-assemblies primarily for medical device instrument applications.
Principal Products and Services Our Current Core Business: Since 1982, we have manufactured medical products such as endoscopes and endocouplers. We have developed and sold endoscopes incorporating various optical technologies including our proprietary Lenslock™ technology, for use in a variety of minimally invasive surgical and diagnostic procedures.
Information contained on our websites does not constitute part of this report. Principal Products and Services Our Current Core Business: Since 1982, we have manufactured medical products such as endoscopes and endocouplers. We have developed and sold endoscopes incorporating various optical technologies, for use in a variety of minimally invasive surgical and diagnostic procedures.
Most systems make use of optical lenses, prisms, mirrors and windows and range from individual optical components to complex mechano-optical assemblies. Products often include thin film optical coatings that are applied using our in-house coating department.
Most systems make use of optical lenses, prisms, mirrors and windows and range from individual optical components to complex mechano-optical assemblies. Products often include thin film optical coatings that are applied using our in-house coating department. Effective October 1, 2021 we acquired the operating assets of Lighthouse Imaging, LLC of Windham, Maine.
Accordingly, we treat engineering expenses not consumed in customer contracted development and our investment of funds and resources in internal product and intellectual property development as research and development expense in the accompanying statement of operations. For the years ended June 30, 2022 and 2021, research and development expenses were $666,479 and $624,253, respectively.
Accordingly, we treat engineering expenses not consumed in customer contracted development and our investment of funds and resources in internal product and intellectual property development as research and development expense in the accompanying statement of operations.
Our product development team has extensive experience developing visualization systems that are used in a variety of clinical applications.
Our product development team has extensive experience developing visualization systems that are used in a variety of clinical applications. Lighthouse Imaging is an industry leader in chip-on-tip visualization systems.
We design and manufacture 3D endoscopes and very small Microprecision lenses, assemblies and complete medical devices to meet the surgical community’s continuing demand for smaller, disposable, and more enhanced imaging systems for minimally invasive surgery.
We design and manufacture 3D endoscopes and very small Microprecision lenses, assemblies and complete medical devices to meet the surgical community’s continuing demand for smaller, disposable, and more enhanced imaging systems for minimally invasive surgery. Effective June 1, 2019 we acquired the operating assets of Ross Optical Industries, Inc. of El Paso, Texas.
ITEM 1. BUSINESS. Overview We have been a developer and manufacturer of advanced optical instruments since 1982. Our medical instrumentation line includes traditional endoscopes and endocouplers as well as other custom imaging and illumination products for use in minimally invasive surgical procedures. Our core efforts are targeted at the development of next generation endoscopes.
ITEM 1. BUSINESS. Overview We have been a developer and manufacturer of advanced optical instruments since 1982. Our proprietary medical instrumentation line, unique custom design and manufacturing capabilities, and expert engineering and development has generated traditional proprietary endoscopes and endocouplers as well as other custom imaging and illumination products for our customers’ use in minimally invasive surgical procedures.
As Lighthouse Imaging of Windham, Maine we also operate as a manufacturer of advanced optical imaging systems and accessories. We have a strong expertise in electrical engineering and development of end to end medical visualization devices. Product development competencies at Lighthouse Imaging include Systems, Optical, Mechanical, Electrical and Process Development Engineering.
Our Lighthouse Imaging division supplements our operations as a manufacturer of advanced optical imaging systems and accessories and has provided further expertise in electrical engineering and development of end-to-end medical visualization devices. Product development competencies at Lighthouse Imaging include Systems, Optical, Mechanical, Electrical and Process Development Engineering.
Combined with recent advances by other companies in complementary metal-oxide-semiconductor, or CMOS, image sensor fabrication techniques, our Microprecision™ lenses and proprietary manufacturing techniques enable the manufacture of micro medical cameras at low prices and with sizes on the order of one millimeter or less, characteristics that make them well suited to medical applications. 2 We are currently engaged in development projects with numerous customers to design and produce even smaller CMOS based camera modules together with customized illumination using various technologies to match the needs of the medical device endoscopes.
Combined with recent advances by other companies in complementary metal-oxide-semiconductor, or CMOS, image sensor fabrication techniques, our Microprecision™ lenses and proprietary manufacturing techniques enable the manufacture of micro medical cameras at low prices and with sizes on the order of one millimeter or less, characteristics that make them well suited to medical applications.
We believe our experience and expertise in 3D endoscopes for medical applications could be a benefit to various companies in this area that could provide us with new product development and manufacturing opportunities. 3 Sales and Marketing Current sales and marketing activities are intended to broaden awareness of the benefits of our new technology platforms and our successful application of these new technologies to medical device projects requiring surgery-grade visualization, as well as defense and other industrial applications, from sub-millimeter sized devices and 3D endoscopy, including single-use products and assemblies.
Sales and Marketing Current sales and marketing activities are intended to broaden awareness of the benefits of our new technology platforms and our successful application of these new technologies to medical device projects requiring surgery-grade visualization, as well as defense, aerospace and other industrial applications, from sub-millimeter sized devices and 3D endoscopy, including single-use products and assemblies.
However, our medical products have received the CE mark certification, which permits sales into the European Economic Area and which benefits our customers as they market their products manufactured by us or containing our sub-assemblies into markets outside the United States.
We expect our customer pipeline to continue to expand as development projects transition to production orders and new customer projects enter the development phase. 3 International Business Our medical products have received the CE mark certification, which permits sales into the European Economic Area and which benefits our customers as they market their products manufactured by us or containing our sub-assemblies into markets outside the United States.
We believe that while the number of sources of supply is limited for the CMOS sensors with the specifications used in medical device endoscopes we develop; the manufacturing capacities of those suppliers is adequate to meet our demand in the next twelve months. 4 We have experienced supply disruptions and customer delays from certain vendors and customers that we believe were the result of the COVID-19 pandemic and related economic slow-down.
We believe that while the number of sources of supply is limited for the CMOS sensors with the specifications used in medical device endoscopes we develop; the manufacturing capacities of those suppliers is adequate to meet our demand in the next twelve months.
Medical devices sold in the European Economic Area must bear the Conformité Européenne, or CE mark. Devices are classified by manufacturers according to the risks they represent, with a classification of Class III representing the highest risk devices and Class I representing the lowest risk devices.
Devices are classified by manufacturers according to the risks they represent, with a classification of Class III representing the highest risk devices and Class I representing the lowest risk devices.
We market directly to established medical device companies primarily in the United States that we believe could benefit from our advanced endoscopy visualization systems. Through this direct marketing, referrals, attendance at trade shows and a presence in online professional association websites, we have expanded our on-going pipeline of projects to significant medical device companies and to well-funded emerging technology companies.
Through this direct marketing, referrals, attendance at trade shows and a presence in online professional association websites, we have expanded our on-going pipeline of projects to significant medical device companies and to well-funded emerging medical device companies, and to a number of major defense / aerospace companies..
Our failure to comply with foreign regulatory requirements would jeopardize our ability to market and sell our products in foreign jurisdictions. The regulatory environment in the European Union member countries of the European Economic Area for medical device products differs from that in the United States.
Sales of medical device products outside the United States are subject to foreign regulatory requirements that may vary from country to country. Our failure to comply with foreign regulatory requirements would jeopardize our ability to market and sell our products in foreign jurisdictions.
We believe we will receive additional production orders from other customers currently in our engineering and design pipeline. 3D Endoscopes: Our 3D endoscopes provide next generation optical imaging for minimally invasive surgical procedures that utilize hand-held rigid endoscopes by using the brain’s natural ability to perceive depth, which is the third dimension, by viewing one’s environment through two eyes.
We believe these on-going improvements are significant to the continued evolution and acceptance of our Microprecision™ technology platform. 3D Endoscopes: Our 3D endoscopes provide next generation optical imaging for minimally invasive surgical procedures that utilize hand-held rigid endoscopes by using the brain’s natural ability to perceive depth, which is the third dimension, by viewing one’s environment through two eyes.
Environmental Matters Our operations are subject to a variety of federal, state and local laws and regulations relating to the discharge of materials into the environment or otherwise relative to the protection of the environment. From time to time, we use a small amount of hazardous materials in our operations.
No customer accounts receivable balance accounted for more than 10% of accounts receivable on June 30, 2022. Environmental Matters Our operations are subject to a variety of federal, state and local laws and regulations relating to the discharge of materials into the environment or otherwise relative to the protection of the environment.
C ustomers During fiscal year 2022 we sold product and services to over 377 customers and no customer accounted for 10% or more of our total revenues during the fiscal years ended June 30, 2022, and 2021. Our largest customer account receivable balance at June 30, 2022, was 8% of total accounts receivable.
For the fiscal year ended June 30, 2022, we sold products and services to 377 customers and no customer accounted for more than 10% of our total revenues for that year. Two customer accounts receivable balances accounted for 14.0% and 13.7% of total receivables on June 30, 2023.
Non-compliance with applicable requirements can result in U.S. actions that may result in withdrawal or suspension of approvals, suspension of company imports, exports or production, or the imposition of fines or various other penalties. Foreign Requirements . Sales of medical device products outside the United States are subject to foreign regulatory requirements that may vary from country to country.
State Department and we maintain a number of technology assistance agreements with overseas suppliers that have been approved by the U.S. State Department. Non-compliance with applicable requirements can result in U.S. actions that may result in withdrawal or suspension of approvals, suspension of company imports, exports or production, or the imposition of fines or various other penalties. Foreign Requirements .
We design and manufacture components for the defense industry, and our Ross Optical division imports, exports and manufactures optical products for the defense industry, some of which is controlled by U.S. regulations. Generally, these regulations require strict control over technical data in documented form and as embodied in products, both within our company and as part of exported shipments.
Generally, these regulations require strict control over technical data in documented form and as embodied in products, both within our company and as part of exported shipments. In particular, we maintain a technology control plan, we are ISO certified and ITAR (International Traffic in Arms Regulations) registered with the U.S.
We are also currently designing disposable versions of our camera modules and assemblies designed for single-use and reduced risk of contamination from repeated use. We believe these on-going improvements are significant to the continued evolution and acceptance of our Microprecision™ technology platform.
We are currently engaged in development projects to design and produce even smaller CMOS based camera modules together with customized illumination using various technologies to match the needs of the medical device endoscopes. We are also currently designing disposable versions of our camera modules and assemblies designed for single-use and reduced risk of contamination from repeated use.
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Through internal research and development and working in partnership with our customers, we continuously develop next generation capabilities for designing and manufacturing 3D endoscopes and very small Microprecision™ lenses, anticipating future requirements as the surgical community continues to demand smaller and more enhanced imaging systems for minimally invasive surgery.
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During the fiscal year ended June 30, 2023, approximately 32% our business was from engineering services primarily relating to the design of medical device optical assemblies, 50% from the sale of both internally manufactured and purchased optical components, and 18% from the manufacture of optical assemblies and sub-assemblies primarily for medical device instrument.
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The COVID-19 world-wide pandemic and the domestic and international impact of policy decisions being made in major countries around the world has had, and is expected to continue to have, an adverse impact on various aspects of our business.
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We expect sales revenue increases to result from assembly and manufacturing orders received from our customers for the products we assist them in designing using our unique optical product design and manufacturing capabilities.
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While we and many of our medical device and defense contracting customers continue to operate as essential businesses, we have taken various actions to augment our operating and human resource policies and procedures to guard against the potential health hazards of COVID-19. These augmented procedures can have a negative impact on our operational efficiencies.
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Much of the technology we have developed for making smaller medical devices can also be used in defense and aerospace systems where smaller size and weight can be beneficial. 1 History We incorporated in Massachusetts in December 1982 and have been publicly-owned since November 1990 and have no subsidiaries. Our websites are www.poci.com, www.rossoptical.com, and www.lighthouseoptics.com.
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Given the uncertainty surrounding the continuation of economic slow-downs domestically and abroad, we cannot predict with certainty at this time what the future impact of COVID-19 and resulting business and economic policies in the US and abroad will be on our up-coming financial operating results.
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We believe the technology developed to support the design, fabrication and manufacturing of Microprecision™ lenses and associated assemblies can also be used to satisfy the needs of defense and aerospace systems that require small size and weight.
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Over 70% of the Ross Optical division sales are in the United States, with the majority being specialized optical components for industrial applications and the remainder being assemblies. The balance of sales is split between military and medical device products.
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We believe our experience and expertise in 3D endoscopes for medical applications could be a benefit to various companies in this area that could provide us with new product development and manufacturing opportunities.
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On October 4, 2021, we closed on an asset purchase agreement with an effective date of October 1, 2021 with Lighthouse Imaging, LLC and Anania & Associates Investment Company, LLC for substantially all of the assets of Lighthouse Imaging, LLC, a Maine limited liability company operating a medical optics and digital imaging business.
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We market directly to established medical device companies primarily in the United States that we believe could benefit from our advanced endoscopy visualization systems.
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Our proprietary medical instrumentation line, unique custom design and manufacturing capabilities, and expert electrical engineering and development has generated traditional proprietary endoscopes and endocouplers as well as other custom imaging and illumination products for our customers’ use in minimally invasive surgical procedures.
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C ustomers During fiscal year ended June 30, 2023 we sold product and services to 361 customers and one customer accounted for 11.4% of our total revenues for that year. The loss of this customer would not have a material impact on our business.
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We are registered to the ISO 9001:2015 and ISO 13485:2016 Quality Standards and comply with the FDA Good Manufacturing Practices and the European Union Medical Device Directive for CE marking of our medical products. History We incorporated in Massachusetts in December 1982 and have been publicly-owned since November 1990.
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The regulatory environment in the European Union member countries of the European Economic Area for medical device products differs from that in the United States. Medical devices sold in the European Economic Area must bear the Conformité Européenne, or CE mark.
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References to our Company contained herein include our two wholly-owned subsidiaries, Precise Medical, Inc. and Wood’s Precision Optics Corporation, Limited, except where the context otherwise requires. Our websites are www.poci.com, www.rossoptical.com, and www.lighthouseoptics.com. Information contained on our websites does not constitute part of this report.
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We make available on our website, free of charge, copies of our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports, as soon as reasonably practicable after we electronically file or furnish such materials to the U.S. Securities and Exchange Commission (SEC).
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We have been engaged by various customers for an increasing amount of development work relating to the design of endoscopes and camera assemblies that utilize our Microprecision™ technology. We previously received production orders each exceeding $1M and follow-on orders from multiple customers for their custom designed products fulfillment of which is ongoing.
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Our website and the information contained therein or connected thereto are not intended to be incorporated into this report. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at http://www.sec.gov.
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We expect our customer pipeline to continue to expand as development projects transition to production orders and new customer projects enter the development phase. Our Ross Optical and Lighthouse divisions market through existing customers and trade shows, in addition to proactive online marketing strategies executed primarily through their websites.
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Through the gradual integration of the sales, marketing and operating resources of the three operations we have expect to realize both expanded sales opportunities from the coupling of Ross’ worldwide vendor relationships for optical components with our micro optics engineering services now expanded and strengthened by the addition of the Lighthouse electrical engineering expertise.
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International Business Other than the Ross Optical division international sales described below, we have had negligible direct export sales to date.
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In the future, we may establish or use additional production facilities overseas to produce key components for our business, such as lenses. From the 1990s through approximately 2014, we maintained a physical presence in Asia to support business and quality control activities throughout the region as needed.
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During fiscal year 2022, 23% of the Ross Optical division sales were to customers outside of the United States and Canada, with the balance of sales primarily split between Western Europe and Singapore.
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Although we are not currently experiencing vendor supply issues as a result of COVID-19, we cannot predict with certainty at this time what the future impact of COVID-19 and resulting business and economic policies in the US and abroad will be on our vendors and principal suppliers.
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In July 2011, we entered into an asset purchase agreement with Intuitive Surgical Operations, Inc., in which we assigned to Intuitive Surgical all of the issued and non-expired patents and pending patent applications that we held at that time, and in return, Intuitive Surgical granted us a royalty-free, worldwide license to these patents in fields outside of medical robotics.
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At June 30, 2021, our largest customer account receivable balance was 16% of total accounts receivable. No other accounts accounted for more than 10% of accounts receivable at June 30, 2022, or 2021.
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In particular, we maintain a technology control plan, we are ISO certified and ITAR (International Traffic in Arms Regulations) registered with the U.S. State Department and we maintain a number of technology assistance agreements with overseas suppliers that have been approved by the U.S. State Department.

Item 2. Properties

Properties — owned and leased real estate

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ITEM 2. PROPERTIES. We conduct our domestic operations at three facilities in Gardner, Massachusetts, one facility in El Paso, Texas, and one facility in Windham, Maine. We are currently a tenant-at-will, paying rent of $9,000 per month for our main Gardner facility. We rent three other smaller Gardner facilities on a month-to-month basis.
ITEM 2. PROPERTIES. We conduct our domestic operations at three facilities in Gardner, Massachusetts, one facility in El Paso, Texas, and one facility in Windham, Maine. The facilities in El Paso and Windham are leased from unrelated parties. The Company leases its primary facility in Gardner, Massachusetts from Equity Assets, Inc.
Our Lighthouse division rents a facility in Windham, Maine from an unrelated party pursuant to an operating lease through July 31, 2025, at a monthly base rate of $11,477 for the remainder of the lease. We believe these facilities are adequate for our current operations and are adequately covered by insurance.
We believe these facilities in Gardner, El Paso and Windham are adequate for our current operations and are adequately covered by insurance.
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Our Ross Optical division rents a facility in El Paso, Texas from an unrelated party pursuant to an operating lease through June 2025 at monthly base rates beginning at $3,652 and increasing to $3,837 per month during the term of the lease.
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(“EAI”), an entity formerly owned by the Company’s founder Richard E. Forkey and then later owned by a trust controlled by his step-daughter, established for the benefit of the step-daughter and four siblings (including Joseph N. Forkey, who is Chief Executive Officer, President, Treasurer and a Director of the Company).
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We may establish production facilities domestically or overseas to produce key assemblies or components, such as lenses, for our products. Overseas facilities may subject us to the political and economic risks associated with overseas operations. The loss of or inability to establish or maintain such additional domestic or overseas facilities could materially adversely affect our competitive position and profitability.
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The original lease for the principal facility in Gardner expired in 1999, and the Company has since been a tenant-at-will, paying rent to EAI of $9,000 per month for that facility. On July 19, 2023, the trust distributed the EAI shares equally among the five beneficiaries (20% each).
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Those shareholders then entered into a shareholder agreement under which all five were elected as directors and under which Joseph N. Forkey has been elected as president. The shareholder agreement provides that Dr. Forkey will be recused from any matters involving negotiations with the Company, including without limitation any lease negotiations. Dr.
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Forkey is not compensated by EAI for his services as president or a director, and his present 20% interest in rents being received from the Company is $21,600 per year. 6 The Company for many years has also been a tenant-at-will at the other two Gardner facilities, paying rent to unrelated parties.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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We are currently not aware of any pending or threatened litigation against us or our officers and directors in their capacity as such that could have a material impact on our operations or finances. ITEM 4. MINE SAFETY DISCLOSURES. Not applicable. 13 PART II
We are not currently aware of any pending or threatened litigation against us or our officers and directors in their capacity as such that could have a material impact on our operations or finances.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. Market Information Our common stock is quoted on OTCQB, the OTC market tier for companies that report to the SEC, under the symbol PEYE. Holders As of September 23, 2022, we had approximately 1,142 holders of record of our common stock.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. Market Information Our common stock is quoted on the Nasdaq Stock Market under the symbol POCI. Holders As of September 26, 2023, we had approximately 144 holders of record of our common stock.
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Recent Sales of Unregistered Securities We have not issued any unregistered securities since October 4, 2021. Securities Authorized for Issuance under Equity Compensation Plans The following table summarizes information about our equity compensation plans as of June 30, 2022.
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Recent Sales of Unregistered Securities On June 15, 2023, the Company entered into agreements, including a Stock Purchase Agreement and other related agreements (collectively, the “Purchase Agreements”), with certain institutional and accredited investors calling for the purchase and sale of 420,000 shares of common stock at a purchase price of $6.00 per share.
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Plan category Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted- average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) Equity compensation plans approved by security holders 44,698 $ 0.77 – Equity compensation plans not approved by security holders 2,669,302 $ 1.34 1,206,403 Total 2,714,000 $ 1.33 1,206,403 2006 Equity Incentive Plan On November 28, 2006, our stockholders approved the Precision Optics Corporation, Inc. 2006 Equity Incentive Plan, referred to as the 2006 Plan, which succeeded the Precision Optics Corporation, Inc.
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The stock issuance closed on June 20, 2023, resulting in $2.52 million of gross proceeds to the Company. The Purchase Agreements oblige the Company to register the purchased shares for resale by those investors.
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Amended and Restated 1997 Equity Incentive Plan, referred to as the 1997 Plan. No further awards have been or will be granted under the 1997 Plan. The 2006 Plan allowed for the granting of stock options to selected employees, directors and other persons who provide services to us or our affiliates.
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No further awards will be granted under the 2006 Plan. 14 2011 Equity Incentive Plan The Precision Optics Corporation, Inc. 2011 Equity Incentive Plan, referred to as the 2011 Plan, was adopted by our Board of Directors on October 13, 2011.
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The 2011 Plan allows for the granting of stock options to selected employees, directors and other persons who provide services to us or our affiliates.
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On April 16, 2015, the Board of Directors approved an amendment to the 2011 Equity Incentive Plan which increased the maximum number of shares of our common stock that may be awarded under the Plan from 325,000 to 1,825,000, an increase of 1,500,000 shares.
Removed
In connection therewith, on April 20, 2015, we filed a registration statement on Form S-8 to register the 1,500,000 shares of common stock.
Removed
On May 1, 2019, the Board of Directors approved an amendment to the 2011 Equity Incentive Plan to update the Plan for the latest changes to the tax laws and increase the maximum number of shares of our common stock that may be awarded under the Plan from 1,825,000 to 2,825,000, an increase of 1,000,000 shares.
Removed
In connection therewith, on September 6, 2019, we filed a registration statement on Form S-8 to register the 1,000,000 shares of common stock. 2021 Equity Incentive Plan The Precision Optics Corporation, Inc. 2021 Equity Incentive Plan, referred to as the 2021 Plan, was adopted by our Board of Directors on May 10, 2021.
Removed
The 2021 Plan allows for the granting of stock options to selected employees, directors and other persons who provide services to us or our affiliates for up to a total of 1,000,000 shares of the Company’s common stock.
Removed
In connection therewith, we filed a registration statement on Form S-8 to register the 1,000,000 shares of common stock. 2022 Equity Incentive Plan The Precision Optics Corporation, Inc. 2022 Equity Incentive Plan, referred to as the 2022 Plan, was adopted by our Board on February 7, 2022 and approved by our Shareholders on April 8, 2022.
Removed
The 2022 Plan allows for the granting of stock options to selected employees, directors and other persons who provide services to us or our affiliates for up to a total of 1,000,000 shares of the Company’s common stock. We plan to file a registration statement on Form S-8 to register the shares authorized under the 2022 Plan.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Off-Balance Sheet Arrangements We currently have no off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
Off-Balance Sheet Arrangements We currently have no off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources. 10
Critical Accounting Policies and Estimates Our critical accounting policies are included in the Notes to our Financial Statements contained in this Annual Report on Form 10-K.
Critical Accounting Policies and Estimates Our critical accounting policies are included in the Notes to our Financial Statements contained elsewhere in this Annual Report on Form 10-K.
The income tax provisions in fiscal years 2022 and 2021 represent the minimum statutory state income tax liability. Liquidity and Capital Resources We have sustained recurring net losses for several years. During the years ended June 30, 2022 and 2021 we incurred operating losses of $1,513,890 and $905,583, respectively.
The income tax provisions in fiscal years 2023 and 2022 represent the minimum statutory state income tax liability. 9 Liquidity and Capital Resources We have sustained recurring net losses for several years. During the years ended June 30, 2023 and 2022 we incurred operating losses of $638,548 and $1,513,890, respectively.
This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains descriptions of our expectations regarding future trends affecting our business. The following discussion sets forth certain factors we believe could cause actual results to differ materially from those contemplated by the forward-looking statements. Overview We have been a developer and manufacturer of advanced optical instruments since 1982.
This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains descriptions of our expectations regarding future trends affecting our business. The following discussion sets forth certain factors we believe could cause actual results to differ materially from those contemplated by the forward-looking statements.
Contractual cash commitments for the fiscal years subsequent to June 30, 2022, are summarized as follows: Fiscal 2023 Thereafter Total Capital lease for equipment, including interest $ 48,619 $ 120,542 $ 169,161 Minimum operating lease payments $ 181,556 $ 377,904 $ 559,460 We have contractual cash commitments related to open purchase orders as of June 30, 2022 of approximately $1,557,582.
Contractual cash commitments for the fiscal years subsequent to June 30, 2023, are summarized as follows: Fiscal 2024 Thereafter Total Capital lease for equipment, including interest $ 48,619 $ 71,923 $ 120,542 Minimum operating lease payments $ 182,652 $ 195,252 $ 377,904 We have contractual cash commitments related to open purchase orders as of June 30, 2023 of approximately $1,981,592.
The increase in selling, general and administrative expenses in the year ended June 30, 2022 was primarily due to inclusion of the Lighthouse division since its acquisition in October 2021, plus increased stock based compensation and marketing related expenses as well as additions to our administrative team due to the growth of the overall organization.
The increase in selling, general and administrative expenses in the year ended June 30, 2023 was primarily due to increased marketing related expenses, additions to our sales and administrative teams due to the growth of the overall organization and higher bad debt expense.
Results of Operations for the Fiscal Year Ended June 30, 2022 as Compared to the Fiscal Year Ended June 30, 2021 Total revenues for the fiscal year ended June 30, 2022 were $15,678,248, as compared to $10,674,907 for the same period in the prior year, an increase of $5,003,341, or 46.9%, primarily due to inclusion of the Lighthouse division since its acquisition on October 4, 2021.
Results of Operations for the Fiscal Year Ended June 30, 2023 as Compared to the Fiscal Year Ended June 30, 2022 Total revenues for the fiscal year ended June 30, 2023 were $21,044,467, as compared to $15,678,248 for the same period in the prior year, an increase of $5,366,219, or 34.2%.
Gross profit, as a percentage of revenues for fiscal year 2022, was 31.4% as compared to gross profit, as a percentage of revenues for fiscal year 2021, of 32.2%.
Gross profit, as a percentage of revenues for fiscal year 2023, was 36.8% as compared to gross profit, as a percentage of revenues for fiscal year 2022, of 31.4%, due in part to improved utilization of our engineering and manufacturing resources.
Decreases in the engineering revenue year over year are primarily due to timing of certain programs while the pipeline for these revenue sources remains strong. Our largest customer during the fiscal year ended June 30, 2022 accounted for 9.4% of our revenue and represented manufacturing assembly revenues for a medical diagnostic system.
Increases in the engineering revenue year over year are primarily due to improved timing of certain programs while the pipeline for these revenue sources remains strong.
Excluding the effect of the Lighthouse acquisition, assembly production revenue increased approximately $801,000 in fiscal year 2021 compared to fiscal year 2020, optical component revenue increased approximately $731,000 while engineering revenue decreased approximately $404,000, and optical component revenues were virtually unchanged during the same period.
Optical component revenue increased approximately $4,042,000 in fiscal year 2023 compared to fiscal year 2022, while engineering revenue increased approximately $1,357,000, and assembly production revenues were virtually unchanged during the same period. The increases in optical components were largely driven by large orders from defense/aerospace customers.
To finance the cash portion of the acquisition price we entered into a $2,600,000 bank term loan, sold shares of our common stock for gross proceeds of $1,500,000. We also secured a $250,000 bank line of credit from the same bank for working capital needs, upon which no borrowings were outstanding as of June 30, 2022.
We also secured a $250,000 bank line of credit from the same bank in October 2021 for working capital needs, which was increased to $500,000 in May 2022. In June 2023 we added a second term loan in the amount of $750,000 and increased our line of credit to $1,250,000.
We believe research and development activities enhance our technology platform of capabilities and our overall competitiveness in providing unique optical and illumination solutions for medical device endoscopes. Selling, general and administrative expenses were $5,613,473 for the fiscal year ended June 30, 2022, compared to $3,714,915 for the same period in the prior year, an increase of $1,898,558, or 51.1%.
Selling, general and administrative expenses were $7,740,562 for the fiscal year ended June 30, 2023, compared to $5,613,473 for the same period in the prior year, an increase of $2,127,089, or 37.9%.
Removed
Our medical instrumentation line includes traditional endoscopes and endocouplers as well as other custom imaging and illumination products for use in minimally invasive surgical procedures. Much of our recent development efforts have been targeted at the development of next generation endoscopes.
Added
Gross profit for fiscal year ended June 30, 2023 of $7,734,136, reflected an increase of $2,805,949, or 56.9%, as compared to gross profit for fiscal year 2022 of $4,928,187, and was benefited from a one-time sale of technology rights in the amount of $600,000 as well as overall increased revenue.
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We selectively execute internal research and development programs to develop next generation capabilities for designing and manufacturing 3D endoscopes and very small Microprecision™ lenses, anticipating future requirements as the surgical community continues to demand smaller and more enhanced imaging systems for minimally invasive surgery.
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Research and development expenses were $809,877, or 3.8% of revenue for fiscal year 2023 as compared to $666,479, or 4.3% of revenue for fiscal year 2022, and increase of $143,398, or 21.5%.
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As Ross Optical Industries of El Paso, Texas we also operate as a supplier of custom optical components and assemblies for military and defense, medical and various other industrial applications. All products sold by us under the Ross Optical name include a custom or catalog optic, which is sourced through our extensive domestic and worldwide network of optical fabrication companies.
Added
At June 30, 2023, our cash and cash equivalents were $2,925,852, accounts receivable were $3,907,407, and current liabilities were $5,259,620, including $1,174,690 of customer advances received for future order deliveries. In connection with our October 2021 acquisition of Lighthouse Imaging, we entered into a $2,600,000 bank term loan, and sold shares of our common stock for gross proceeds of $1,500,000.
Removed
Most systems make use of optical lenses, prisms, mirrors and windows and range from individual optical components to complex mechano-optical assemblies. Products often include thin film optical coatings that are applied using our in-house coating department. As Lighthouse Imaging of Windham, Maine we also operate as a manufacturer of advanced optical imaging systems and accessories.
Added
There were no borrowings outstanding on the line of credit on June 30, 2023. On June 20, 2023, we raised $2,288,000 net of expenses through a private placement of 420,000 shares of our common stock. Capital equipment expenditures and additional patent costs during fiscal year 2023 and fiscal year 2022 were $52,497 and $152,740, respectively.
Removed
We have a strong expertise in electrical engineering and development of end-to-end medical visualization devices. Product development competencies at Lighthouse Imaging include Systems, Optical, Mechanical, Electrical and Process Development Engineering. Our product development team has extensive experience developing visualization systems that are used in a variety of clinical applications.
Removed
Lighthouse Imaging is an industry leader in chip on tip visualization systems.
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Approximately 34% of our business during the fiscal year ended June 30, 2022 is from engineering services primarily relating to the design of medical device optical assemblies, 41% from the sale of both internally manufactured and purchased optical components, and 25% from the manufacture of optical assemblies and sub-assemblies primarily for medical device instrument applications.
Removed
Our proprietary medical instrumentation line, unique custom design and manufacturing capabilities, and expert electrical engineering and development has generated traditional proprietary endoscopes and endocouplers as well as other custom imaging and illumination products for our customers’ use in minimally invasive surgical procedures.
Removed
We design and manufacture 3D endoscopes and very small Microprecision lenses, assemblies and complete medical devices to meet the surgical community’s continuing demand for smaller, disposable, and more enhanced imaging systems for minimally invasive surgery.
Removed
We are registered to the ISO 9001:2015 and ISO 13485:2016 Quality Standards and comply with the FDA Good Manufacturing Practices and the European Union Medical Device Directive for CE marking of our medical products. Our internet websites are www.poci.com, www.rossoptical.com, and www.lighthouseoptics.com. Information on our websites is not intended to be integrated into this report.
Removed
Investors and others should note that we announce material financial information using our company websites (www.poci.com; www.rossoptical.com; www.lighthouseoptics.com), our investor relations website, SEC filings, press releases, public conference calls and webcasts.
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Information about Precision Optics, our business, and our results of operations may also be announced by social media posts on our Ross Optical and Lighthouse LinkedIn pages (www.linkedin.com/company/ross-optical-industries/) (https://www.linkedin.com/company/lighthouse-imaging-corporation/) and Twitter feed (http://twitter.com/rossoptical) and on our Lighthouse Facebook page (https://www.facebook.com/lighthouseoptics/). The information that we post on these social media channels could be deemed to be material information.
Removed
Therefore, we encourage investors, the media, and others interested in Precision Optics to review the information that we post on these social media channels. These social media channels may be updated from time to time on Precision Optics investor relations website.
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The information on, or accessible through, our websites and social media channels is not incorporated by reference in this Annual Report on Form 10-K. 16 The markets in which we do business are highly competitive and include both foreign and domestic competitors. Many of our competitors are larger and have substantially greater resources than we do.
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Furthermore, other domestic or foreign companies, some with greater financial resources than we have, may seek to produce products or services that compete with ours. We routinely outsource specialized production efforts as required to obtain the most cost-effective production. Over the years we have achieved extensive experience collaborating with other optical specialists worldwide.
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We believe that our future success depends to a large degree on our ability to develop new optical products and services to enhance the performance characteristics and methods of manufacture of existing products.
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Accordingly, we expect to continue to seek and obtain product-related design and development contracts with customers and to selectively invest our own funds on research and development, particularly in the areas of Microprecision optics, micro medical cameras, illumination, single-use endoscopes and 3D endoscopes.
Removed
Current sales and marketing activities are intended to broaden awareness of the benefits of our new technology platforms and our successful application of these new technologies to medical device projects requiring surgery-grade visualization from sub-millimeter sized devices and 3D endoscopy, including single-use products and assemblies.
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We market directly to established medical device companies primarily in the United States that we believe could benefit from our advanced endoscopy visualization systems.
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Through this direct marketing, referrals, attendance at trade shows and a presence in online professional association websites, we have expanded our on-going pipeline of projects to significant medical device companies as well as well-funded emerging technology companies.
Removed
We expect our customer pipeline to continue to expand as development projects transition to production orders and new customer projects enter the development phase. Our Ross Optical division markets through existing customers and trade shows, in addition to proactive online marketing strategies executed primarily through its website.
Removed
The increases in assembly production revenue were driven primarily by a large reorder from a large medical device company for a spinal surgery application, while the increases in optical components were largely driven by a large order from a large defense/aerospace customer.
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We generated revenues from 377 unique customers during the year ended June 30, 2022, and no single customer accounted for 10% or more of our revenue for the fiscal years ended June 30, 2022, or 2021.
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The COVID-19 world-wide pandemic that began during the quarter ended March 31, 2020 and the domestic and international impact of policy decisions being made in major countries around the world has had, and could continue to have, an adverse impact on our sources of supply, current and future orders from our customers, collection of amounts owed to us from our customers, our internal operating procedures, and our overall financial condition.
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Given the uncertainty surrounding the continuation of economic impacts both domestically and abroad, we cannot predict with certainty at this time what the future impact of COVID-19 and resulting business and economic policies in the US and abroad will be on our up-coming quarterly fiscal operating results. 17 Gross profit for fiscal year ended June 30, 2022 of $4,928,187, reflected an increase of $1,494,602, or 43.5%, as compared to gross profit for fiscal year 2021 of $3,433,585, and was principally the result of inclusion of the Lighthouse division since its acquisition in October 2021.
Removed
Our decrease in gross margin from 32.2% to 31.4% during the fiscal year ended June 30, 2022 compared to 2021 was primarily the result of a gross margin decrease in one engineering project due to cost over-runs, lower than target margins on manufacturing programs at our Lighthouse division due to slower than expected transfer of projects from engineering to production and a lower realized margin on a large volume recurring component product produced for a catalog reselling customer.
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The remainder of our production, engineering and component revenues resulted in margins within our targeted range with reasonably expected fluctuations. Research and development expenses were $666,479 for fiscal year 2022 as compared to $624,253 for fiscal year 2021.
Removed
The increase of $42,226, or 6.8%, in fiscal year 2022 compared to fiscal year 2021 is considered to be a customary change resulting from the normal course of business and reflects a similar level of engineering related development projects in fiscal year 2022 compared to 2021.
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At June 30, 2022, our cash and cash equivalents were $605,749, accounts receivable were $2,663,872, and current liabilities were $4,586,641, including $905,113 of advances paid against open purchase orders by our customers.
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Although our revenue and gross margin have increased due to new business from our acquisition of Lighthouse Imaging, our operating expenses have also increased, and we continue to experience pricing pressure from our customers and challenges in engineering projects and production orders that can result in cost over-runs and depressed gross margins.
Removed
We also continue to experience added uncertainty related to our vendors ability to supply materials and our customers future order levels as a result of the economic impact the COVID-19 world-wide pandemic and related jurisdictional policies and regulations and lingering supply-chain issues.
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Consequently, critical to our ability to maintain our financial condition is achieving and maintaining a level of quarterly revenues that generate break even or better financial performance as well as timely collection of accounts receivable from our customers.
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We believe profitable operating results can be achieved through a combination of sales growth, realized gross margins and controlling operating expense increases, all of which are subject to periodic fluctuations resulting from sales mix and the stage of completion of varying engineering service projects as they progress towards and into production level revenues.
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We have traditionally funded working capital needs through product sales, management of working capital components of our business, cash received from public and private offerings of our common stock, warrants to purchase shares of our common stock or convertible notes, manufacturing equipment leases, and by customer advances paid against purchase orders by our customers and recorded in the current liabilities section of the accompanying financial statements.
Removed
We have incurred year to year and quarter to quarter operating losses during our efforts to develop current products including Microprecision optical elements, micro medical camera assemblies and 3D endoscopes.
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Our management believes that the opportunities represented by these technical capabilities and related products have the potential to generate sales increases to achieve breakeven and profitable results. 18 On October 4, 2021 we acquired the assets of Lighthouse Imaging, LLC as described in note 2. Business Acquisition to the accompanying financial statements in this Form 10-K.
Removed
Capital equipment expenditures during fiscal year 2022 and fiscal year 2021 were $113,197 and $237,900, respectively, $161,976 of which in fiscal year 2021, was funded by leasing agreements with monthly payment obligations. Patent application expenditures during fiscal year 2022 and fiscal year 2021 were $39,543 and $46,473, respectively.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. As a smaller reporting company, as defined by Rule 12b-2 of the Exchange Act and in Item 10(f)(1) of Regulation S-K, we are electing scaled disclosure reporting obligations and therefore are not required to provide the information requested by this Item. 19
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. As a smaller reporting company, as defined by Rule 12b-2 of the Exchange Act and in Item 10(f)(1) of Regulation S-K, we are electing scaled disclosure reporting obligations and therefore are not required to provide the information requested by this Item.

Other POCI 10-K year-over-year comparisons