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What changed in PRECISION OPTICS CORPORATION, INC.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of PRECISION OPTICS CORPORATION, INC.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+126 added−109 removedSource: 10-K (2025-09-29) vs 10-K (2024-09-30)

Top changes in PRECISION OPTICS CORPORATION, INC.'s 2025 10-K

126 paragraphs added · 109 removed · 78 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeGenerally, 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.
Biggest changeWe 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. 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.
Our success will depend, in part, on our ability to maintain a technological advantage over our competitors and to effectively incorporate that technology into our custom designs. To this end, we intend to continue to aggressively support and augment our internal engineering, research and development resources and to aggressively pursue patent protection for existing and new technology.
Our success will depend, in part, on our ability to maintain a technological advantage over our competitors and to effectively incorporate that technology into our custom designs. To this end, we intend to continue to aggressively support and augment our internal engineering, research and development resources and to pursue patent protection for existing and new technology.
Conformity with ISO 13485 conveys our commitment to maintaining a robust QMS specifically for medical device manufacturing, and consistent quality and regulatory compliance, which is essential helping our customers achieve compliance with the EU MDR and other international regulatory standards.
Conformity with ISO 13485 conveys our commitment to maintaining a robust QMS specifically for medical device manufacturing, and consistent quality and regulatory compliance, which is essential to helping our customers achieve compliance with the EU MDR and other international regulatory standards.
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.
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 and manufacture of endoscope products for our customers from various suppliers such as OmniVision Technologies, Inc.
We obtained this FDA permission without the need to undergo a lengthy and expensive approval process due to the FDA’s determination that such devices met the regulatory standard of being substantially equivalent to existing FDA-approved devices. In the future, we plan to market additional medical devices that may require the FDA’s permission to market such products.
We obtained this FDA permission without the need to undergo a lengthy and expensive approval process due to the FDA’s determination that such devices met the regulatory standard of being substantially equivalent to existing FDA-approved devices. In the future, we may market additional medical devices that may require the FDA’s permission to market such products.
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. 6
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.
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.
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/aerospace products. The patents contained in our current patent portfolio have various expiration dates through March 2043.
Our failure to comply with ISO 13485 or other applicable regulatory requirements would jeopardize our ability to sell our products to certain customers who place their product on the EU and other international markets. Available Information Our website is www.poci.com.
Our failure to comply with ISO 13485 or other applicable regulatory requirements would jeopardize our ability to sell our products to certain customers who place their product on the EU and other international markets. 5 Available Information Our website is www.poci.com.
Microprecision™ Lenses and Micro Medical Cameras: While the size of endoscopes has gradually decreased over time, we believe the widespread use of very small endoscopes, with diameters of one millimeter or smaller, has been limited due in part to the limitations of traditional lens fabrication methods to combine smaller sizes with acceptable image quality at reasonable manufacturing costs.
Microprecision™ Lenses and Micro Medical Cameras. While the size of endoscopes has gradually decreased over time, we believe the widespread use of very small endoscopes, with diameters of a couple millimeters or smaller, has been limited due in part to the limitations of traditional lens fabrication methods to combine smaller sizes with acceptable image quality at reasonable manufacturing costs.
Market Opportunities Microprecision™ Lenses and Micro Medical Cameras: We design custom camera module assemblies with the combined objectives of low cost, small size, range of optical specifications and high image quality required by our customer’s precise medical device specifications.
Market Opportunities We design custom camera module assemblies with the combined objectives of low cost, small size, range of optical specifications and high image quality required by our customer’s precise medical device specifications.
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.
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 Ultra HD Precision systems, including single-use products and assemblies.
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.
The competitive advantage of our Ross Optical division is its ability to quickly provide design-for-manufacturability feedback and 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.
We believe that we currently comply with all applicable environmental laws and regulations. We use limited amounts of hazardous materials in our operations, and as such, compliance does not entail significant expense to us. Government Regulations Domestic Regulation .
We believe that we currently comply with all applicable environmental laws and regulations. We use limited amounts of hazardous materials in our operations, and as such, compliance does not entail significant expense to us. We do not believe the costs associated with our compliance with environmental laws are material. Government Regulations Domestic Regulation .
We expect our revenues and customer base to continue to expand as development projects transition to production orders and new customer projects enter the development phase. 3 International Business We acquire various optical components from overseas as necessary to meet the needs of custom device designs.
Due to our expertise and growing OEM trends of outsourcing complex projects, we expect our revenues and customer base to continue to expand as development projects transition to production orders and new customer projects enter the development phase. International Business We acquire various optical components from overseas as necessary to meet the needs of custom device designs.
We believe that our unique technical capabilities in the areas of Microprecision™ optics, micro medical cameras and illumination, as well as 3D endoscopes, currently represent competitive advantages for us in the minimally invasive surgical device market.
We believe that our unique technical capabilities in the areas of Microprecision™ optics, micro medical cameras, digital imaging, and illumination represent competitive advantages for us in the minimally invasive surgical device market.
Two customer accounts receivable balances accounted for 14.0% and 13.7% of total receivables on June 30, 2023. 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.
Two customer accounts receivable balances accounted for 15.4% and 12.1% of total receivables on June 30, 2024. 4 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.
Although development work on behalf of customers is performed under revenue generating contracts and customer purchase orders, research and development expenses are incurred on our own proprietary products and technology, such as Microprecision™ optics, micro medical cameras and 3D endoscopes.
Although development work on behalf of customers is performed under revenue generating contracts and customer purchase orders, research and development expenses are incurred on our own proprietary products and technology, such as Microprecision™ optics and the Unity platform.
There were 41 employees in manufacturing, 22 in engineering/research and development, 9 in sales and marketing, 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 51 employees in manufacturing, 18 in engineering/research and development, 8 in sales and marketing, and 13 in finance and administration. We are not a party to any collective bargaining agreements. We believe our relations with our employees are very good.
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 established medical device companies as well as to emerging medical device companies, and to a growing number of major defense / aerospace companies.
Through direct marketing, referrals, attendance at trade shows and an online presence with our corporate websites as well as professional association websites, we continually seek to expand our on-going pipeline of projects to established medical device companies as well as to emerging medical device companies, and to a growing number of major defense / aerospace companies.
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.
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, particularly those required for satellite network communications. The Unity Platform .
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.
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.
Principal Products and Services We have been manufacturing medical products such as endoscopes and endocouplers since our formation in 1982. In 1985 we introduced a proprietary product line of endocouplers.
History We incorporated in Massachusetts in December 1982, have been publicly held since November 1990, and have no subsidiaries. Principal Products and Services We have been manufacturing medical products such as endoscopes and endocouplers since our formation in 1982. In 1985 we introduced a proprietary product line of endocouplers.
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.
We believe that while the number of sources of supply is limited for the precision-grade optical glass and CMOS sensors with the specifications used in the products we produce, the manufacturing capacities of those suppliers are adequate to meet our demand in the next twelve months.
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, 2024, we had 84 employees, 83 of which were full-time employees.
We intend to continue to innovate and extend our technological capabilities in the areas of Microprecision™ optics, digital imaging, micro medical cameras, related illumination techniques, and associated design and manufacturing technology and to aggressively pursue patent protection for such developments. Employees As of June 30, 2025, we had 90 employees, all of which were full-time employees.
Combined with recent advances by our supply chain partners 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 previously unobtainable prices with sizes on the order of one millimeter or less, characteristics that make them perfectly suited for medical applications.
Combined with recent advances by our supply chain partners in complementary metal-oxide-semiconductor, or CMOS, image sensor fabrication techniques, our Microprecision™ lens technology and proprietary design and manufacturing techniques enable the manufacture of micro medical cameras and digital endoscopes at previously unobtainable prices, with sizes on the order of a couple millimeters or less and image quality superior to most previously available endoscopes, characteristics that make them perfectly suited for medical imaging applications, particularly single-use or disposable endoscopes.
By enabling the production of millimeter sized and smaller cameras with low manufacturing costs, we believe our Microprecision™ technology opens the possibility to replace existing re-sterilizable endoscopes with a single-use alternative.
By enabling the production of millimeter sized cameras with low manufacturing costs and high image quality, we believe our Microprecision™ and digital imaging technologies open the possibility to replace existing re-sterilizable endoscopes with single-use alternatives.
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.
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.
C ustomers During the fiscal year ended June 30, 2024, we sold product and services to 325 customers with one product development customer accounting for 19.1% of total revenues and with one optical components customer accounting for 13.8% of our total revenues. The loss of these customers would have a material impact on our business.
C ustomers During the fiscal year ending June 30, 2025, we sold products and services to 278 customers with one customer accounting for approximately 22% of total revenues and another customer accounting for 20% of our total revenues. The loss of these customers would have a material impact on our business.
For the fiscal year ended June 30, 2023, we sold products and services to 361 customers and one customer accounted for 11.4% of our total revenues for that year. Two customer accounts receivable balances accounted for 15.4% and 12.1% of total receivables on June 30, 2024.
For the fiscal year ended June 30, 2024, we sold products and services to 325 customers with one product development customer accounting for approximately 19% of total revenues and another customer accounting for approximately 14% of our total revenues for that year. Two customer accounts receivable balances accounted for 32.1% and 17.9% of total receivables on June 30, 2025.
The small size of our Microprecision™ lenses and micro medical cameras combined with our proprietary illumination techniques can provide visualization for existing procedures that are currently performed blind or with sub-optimal imaging, and we believe can facilitate the development of new surgical procedures that are currently impractical without sub-millimeter visualization instrumentation. 3D Endoscopes and Robotic Surgery Systems : 3D endoscopes have been used for many years as part of robotic surgery systems partly because the market price of robotic surgery systems is high enough to support the cost of a high-quality custom 3D display.
The small size of our Microprecision™ lenses and micro medical cameras combined with our proprietary illumination techniques can provide visualization for existing procedures that are currently performed blind or with sub-optimal imaging, and we believe can facilitate the development of new surgical procedures that are currently impractical without millimeter-sized visualization instrumentation.
Research and Development We believe that our future success depends, to a large degree, on our ability to continue to conceive and develop new optical products and technologies to enhance the performance characteristics and methods of manufacture of existing and new products.
We have an expanded network of domestic and 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. 3 Research and Development We believe that our future success depends, to a large degree, on our ability to continue to conceive and develop new optical products and technologies to enhance the performance characteristics and methods of manufacture of existing and new products.
During the fiscal year ended June 30, 2024, approximately 44% our business was from engineering services primarily relating to the design of medical device optical assemblies, 44% from the sale of both internally manufactured and purchased optical components, and 12% from the manufacture of optical assemblies and sub-assemblies.
During the fiscal year ended June 30, 2024, approximately 45% of our business was from engineering services primarily relating to the design of medical device optical assemblies, 19% from systems manufacturing, 22% from Ross Optical, and 14% from our micro-optics laboratory.
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 applied using our in-house coating department. Effective October 1, 2021, we acquired the operating assets of Lighthouse Imaging, LLC of Windham, Maine.
Products often include thin film optical coatings applied using our in-house coating department. Effective October 1, 2021, we acquired the operating assets of Lighthouse Imaging, LLC of Windham, Maine,which expanded our electrical engineering capabilities in the development of end-to-end medical visualization devices.
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.
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. Most systems make use of optical lenses, prisms, mirrors and windows and range from individual optical components to complex mechano-optical assemblies.
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.
Within our proprietary optical and imaging technology, our unique custom designs, expert manufacturing capabilities, and advanced engineering and development capabilities have generated traditional endoscopes and endocouplers, digital imaging endoscopes using CMOS sensor technology, some designed and manufactured for single-use, as well as other, more advanced, custom imaging and illumination products for our customers’ use in minimally invasive surgical procedures.
We generally expect revenue increases over time as the engineering design phase is completed and products transition to the commercial phase, leveraging our unique manufacturing capabilities.
We generally expect revenue to increase over time as the engineering design phase of new product programs is completed and products transition to the commercial phase, leveraging our unique manufacturing capabilities. Much of the technology we have developed for making smaller medical devices is also used in defense and aerospace systems where smaller size and weight is crucial.
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.
We design and manufacture ultra-high precision 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 also apply our unique technologies to applications in the Defense / Aerospace markets including applications supporting satellite network communications.
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.
Unity is the embodiment of our on-going improvements to the evolution and acceptance of our Microprecision™ and digital imaging technology platforms. 2 Competition and Markets We sell our products in highly competitive markets, and we compete for business with both foreign and domestic manufacturers.
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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.
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ITEM 1. BUSINESS. Overview We have been a developer and manufacturer of advanced optical instruments since 1982, and we operate primarily in two key market segments: medical devices and advanced defense/aerospace products.
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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.
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To support these two critical market categories, our business operations are conducted in four areas: systems manufacturing, engineering and product development, Ross Optical components and assemblies, and our micro-optics laboratory.
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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 applications.
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Our systems manufacturing operations assemble and manufacture components and systems for both medical device and advanced aerospace customers who choose to outsource these services based on our ability to handle high complexity components, specific optical technologies, micro-optical assemblies and other advanced manufacturing challenges.
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Much of the technology we have developed for making smaller medical devices is also used in defense and aerospace systems where smaller size and weight is crucial. 1 History We incorporated in Massachusetts in December 1982, have been publicly held since November 1990, and have no subsidiaries.
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Our engineering and product development team assesses specific customer product needs, designs devices to solve those needs, and creates manufacturing processes that enable higher volume production of these devices and assemblies that can then be executed by our manufacturing operations group. Effective June 1, 2019, we acquired the operating assets of Ross Optical Industries, Inc. of El Paso, Texas.
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The acquisition of the assets of Ross Optical Industries in 2019 expanded our optics components and assemblies business. All products supplied by Ross Optical include a custom or catalog optic, sourced through Ross Opticals’ extensive domestic and worldwide network of optical fabrication suppliers.
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This acquisition expanded our optics components and assemblies’ business. As Ross Optical Industries we operate as a supplier of custom optical components and assemblies for military and defense, medical and various other industrial applications.
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 by the Ross Optical division’s in-house coating department.
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The operations of Lighthouse Imaging have been integrated with other operations of the company, which continue under the POC brand, so that the company now operates with single systems manufacturing and engineering departments, each of which includes historical POC and Lighthouse Imaging resources. 1 During the fiscal year ended June 30, 2025, approximately 43% of our business was from systems manufacturing, 26% was from engineering services primarily relating to the design of medical device optical assemblies, 20% was from Ross Optical, and 11% from our micro-optics laboratory.
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The acquisition of the assets of Lighthouse Imaging LLC in 2021 expanded our electrical engineering capabilities in the development of end-to-end medical visualization devices. Product development competencies acquired include systems, optical, mechanical, electrical and process development engineering.
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In January 2025, we launched our Unity Imaging Platform (“Unity”), comprising a standard baseline CMOS endoscopic system with customization options based on existing or newly designed modular sub-components. Unity represents the culmination of many years of research, development, and collaboration with key industry players.
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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.
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By leveraging insights from many previous projects, Unity incorporates proven design architectures to meet the unique needs of today’s medical imaging devices. Customers benefit from a modular, adaptable solution that simplifies every stage of the development process, from prototyping to production using the latest technologies.
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We have now completed and are currently designing, disposable versions of our camera modules and assemblies designed for single use, reducing the risk of contamination from repeated use.
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The consolidation of common design elements offers flexible, modular architecture, appropriate for both re-usable and single-use endoscopic systems. Unity provides customers with a functional video pipeline early in the development process. This accelerates their system integration efforts and allows them to gather feedback from stakeholders much sooner, ultimately shortening the time to market and enhancing overall project efficiency.
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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.
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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.
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Competition amongst medical device companies in 3D robotic surgery systems has increased. Various companies are now pursuing less expensive, procedure specific robotic systems. We believe our experience and expertise in 3D endoscopes for medical applications will benefit companies in this area.
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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.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeBecause Ross Optical does not manufacture the optical components and assemblies and does not own the intellectual property rights to the products, its customers could choose to obtain those products and services from other sources or could apply pressure to Ross Optical to lower its prices resulting in reduced future gross margins and operating results.
Biggest changeBecause Ross Optical does not manufacture the optical components and assemblies and does not own the intellectual property rights to the products, its customers could choose to obtain those products and services from other sources or could apply pressure to Ross Optical to lower its prices resulting in reduced future gross margins and operating results. 7 We depend on the availability of certain key supplies and services that are available from only a few sources and if we experience difficulty with a supplier, we may have difficulty finding alternative sources of these supplies or services.
Thus, revenues from our customers and the products and services we provide them are subject to significant fluctuation on a product-to-product basis from period to period. 8 We resell products we purchase from third parties and our customers could decide to use another supplier to acquire those products.
Thus, revenues from our customers and the products and services we provide them are subject to significant fluctuation on a product-to-product basis from period to period. We resell products we purchase from third parties and our customers could decide to use another supplier to acquire those products.
If we are not able to comply with the requirements of Section 404 of the Sarbanes-Oxley Act, or if we are unable to remediate or maintain proper and effective internal controls, we may not be able to produce timely and accurate financial statements.
If we are not able to comply with the requirements of Section 404 of the Sarbanes-Oxley Act, or if we are unable to maintain proper and effective internal controls, we may not be able to produce timely and accurate financial statements.
These infringing products may compete with the product we develop, without any available recourse. 11 The laws of some other countries do not protect intellectual property rights to the same extent as the laws of the United States. Patent protection must ultimately be sought on a country-by-country basis, which is an expensive and time-consuming process with uncertain outcomes.
These infringing products may compete with the product we develop, without any available recourse. 10 The laws of some other countries do not protect intellectual property rights to the same extent as the laws of the United States. Patent protection must ultimately be sought on a country-by-country basis, which is an expensive and time-consuming process with uncertain outcomes.
Forkey provides highly valuable contributions to our capabilities in optical instrument development, in management of new technology and in potentially significant longer-term Company initiatives. 7 We must continue to be able to attract and retain employees with the scientific and technical skills that our business requires and if we are unable to attract and retain such individuals, our business could be severely damaged.
Forkey provides highly valuable contributions to our capabilities in optical instrument development, in management of new technology and in potentially significant longer-term Company initiatives. 6 We must continue to be able to attract and retain employees with the scientific and technical skills that our business requires and if we are unable to attract and retain such individuals, our business could be severely damaged.
Due to the evolving nature of such risks, the impact of any potential incident cannot be predicted. 10 Risks Related to Our Intellectual Property Third parties may infringe on our intellectual property and, as a result, we could incur significant expense in protecting our patents or not have sufficient resources to protect them.
Due to the evolving nature of such risks, the impact of any potential incident cannot be predicted. 9 Risks Related to Our Intellectual Property Third parties may infringe on our intellectual property and, as a result, we could incur significant expense in protecting our patents or not have sufficient resources to protect them.
These include provisions: · requiring advance notice of director nominations and of business to be brought before a meeting of stockholders; · requiring a majority vote of the outstanding shares of common stock to amend the bylaws; and · limiting the persons who may call special stockholders’ meetings. 13 In addition, we are subject to the provisions of Chapter 110F of the MBCA.
These include provisions: · requiring advance notice of director nominations and of business to be brought before a meeting of stockholders; · requiring a majority vote of the outstanding shares of common stock to amend the bylaws; and · limiting the persons who may call special stockholders’ meetings. 12 In addition, we are subject to the provisions of Chapter 110F of the MBCA.
Investors in our common stock should not expect to receive dividend income on their investment, and investors will be dependent on the appreciation of our common stock to earn a return on their investment. 14 Artificial intelligence presents risks and challenges that can impact our business, including by posing security risks to our confidential information, proprietary information and personal data.
Investors in our common stock should not expect to receive dividend income on their investment, and investors will be dependent on the appreciation of our common stock to earn a return on their investment. 13 Artificial intelligence presents risks and challenges that can impact our business, including by posing security risks to our confidential information, proprietary information and personal data.
Other companies, some with greater experience in the optics, semiconductor or medical products industries, are seeking to produce products and services that compete with our products and services. 9 Ross Optical is subject to tariffs and regulatory scrutiny, and it faces the risk of changes to this regulatory environment and business in the future.
Other companies, some with greater experience in the optics, semiconductor or medical products industries, are seeking to produce products and services that compete with our products and services. 8 Ross Optical is subject to tariffs and regulatory scrutiny, and it faces the risk of changes to this regulatory environment and business in the future.
Further, bad actors around the world use increasingly sophisticated methods, including the use of artificial intelligence, to engage in illegal activities involving the theft and misuse of personal information, confidential information, and intellectual property. Any of these outcomes could damage our reputation, result in the loss of valuable property and information, and adversely impact our business. ITEM 1B.
Further, bad actors around the world use increasingly sophisticated methods, including the use of artificial intelligence, to engage in illegal activities involving the theft and misuse of personal information, confidential information, and intellectual property. Any of these outcomes could damage our reputation, result in the loss of valuable property and information, and adversely impact our business. Changes in U.S.
The restrictions contained in Chapter 110F are also not applicable, among other certain exclusions, if the corporation does not have two hundred or more stockholders of record. As of September 20, 2024, we had 118 stockholders of record.
The restrictions contained in Chapter 110F are also not applicable, among other certain exclusions, if the corporation does not have two hundred or more stockholders of record. As of September 25, 2025, we had 121 stockholders of record.
If we are not able to maintain effective internal control over financial reporting, our financial statements, including related disclosures, may be inaccurate, which could have a material adverse effect on our business Failure to maintain our accounting systems and controls could impair our ability to comply with the financial reporting and internal controls requirements for publicly traded companies.
Our management concluded that our internal control over financial reporting was effective as of June 30, 2025, however, if we are not able to maintain effective internal control over financial reporting, our financial statements, including related disclosures, may be inaccurate, which could have a material adverse effect on our business Failure to maintain our accounting systems and controls could impair our ability to comply with the financial reporting and internal controls requirements for publicly traded companies.
We have reserved shares for future issuance under all currently outstanding stock options, we expect to issue additional shares and stock options from time to time to compensate employees, consultants and directors, and we may in the future issue additional shares to raise capital.
We are contractually obligated to issue shares in the future, diluting your percentage interest in us. We have reserved shares for future issuance under all currently outstanding stock options, we expect to issue additional shares and stock options from time to time to compensate employees, consultants and directors, and we may in the future issue additional shares to raise capital.
Our quarterly operating results may vary significantly depending upon factors such as: · the timing of completion of significant customer orders; · the timing and amount of our research and development expenditures; · the costs of initial product production in connection with new products; · the timing of new product introductions—both by us and by our competitors; · the timing and level of market acceptance of new products or enhanced versions of our existing products; · our ability to retain existing customers and customers’ continued demand for our products and services; · our customers’ inventory levels, and levels of demand for our customers’ products and services; and · competitive pricing pressures.
Our quarterly operating results may vary significantly depending upon factors such as: · the timing of completion of significant customer orders; · the timing and amount of our research and development expenditures; · the costs of initial product production in connection with new products; · the timing of new product introductions—both by us and by our competitors; · the timing and level of market acceptance of new products or enhanced versions of our existing products; · our ability to retain existing customers and customers’ continued demand for our products and services; · our customers’ inventory levels, and levels of demand for our customers’ products and services; and · competitive pricing pressures. 11 We may not be able to grow or sustain revenues or achieve or maintain profitability on a quarterly or annual basis and levels of revenue and/or profitability may vary from one such period to another.
Any such issuances will have the effect of diluting the percentage interests of other holders of our common stock. Failure to remediate and then maintain our internal control over our financial reporting could cause our financial reports to be inaccurate.
Any such issuances will have the effect of diluting the percentage interests of other holders of our common stock. Failure to maintain our internal control over our financial reporting could cause our financial reports to be inaccurate. We are required to maintain internal control over financial reporting and to assess and report on the effectiveness of those controls.
Our internal control over financial reporting will not prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met.
A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met.
We are required to maintain internal control over financial reporting and to assess and report on the effectiveness of those controls. This assessment includes disclosure of any material weaknesses identified by our management in our internal control over financial reporting.
This assessment includes disclosure of any material weaknesses identified by our management in our internal control over financial reporting.
This requires that we incur substantial additional professional fees and internal costs to expand our accounting and finance functions and that we expend significant management efforts. As of June 30, 2024, we discovered weaknesses in our system of internal financial and accounting controls and procedures that could result in a material misstatement of our financial statements.
This requires that we incur substantial additional professional fees and internal costs to expand our accounting and finance functions and that we expend significant management efforts. Our internal control over financial reporting will not prevent or detect all errors and all fraud.
Removed
We depend on the availability of certain key supplies and services that are available from only a few sources, and we may experience difficulty with certain suppliers due to national and global economic supply-chain factors and we may have difficulty finding alternative sources of these supplies or services.
Added
Tariff Policy and Related Trade Actions Could Adversely Affect Our International Supply Chain, Costs, and Competitive Position Our business is subject to risks associated with changes in U.S. tariff policy and related trade actions, which could materially and adversely affect our operations, financial condition, and results of operations.
Removed
We source certain key supplies to develop and manufacture our products, particularly our precision grade optical glass components and CMOS image sensors, which are available from only a few sources, some of which are located in China. Our business could be affected if we become unable to procure these essential materials and services in adequate quantities and at acceptable prices.
Added
We rely on a global supply chain for the procurement of specialized optical components and assemblies, many of which are sourced from overseas suppliers.
Removed
We continuously evaluate our suppliers and alternative sources. If we experience a shortage of certain supplies and are unable to find an alternative source, our financial condition and results of operations could be adversely affected.
Added
The imposition of new tariffs increases in existing tariffs, or other trade restrictions by the United States government on goods imported from certain countries—including, but not limited to, China and other key trading partners—could increase our cost of goods sold and disrupt the availability of critical components necessary for our products.
Removed
We depend on the availability of certain key supplies and services that are available from only a few sources and if we experience difficulty with a supplier, we may have difficulty finding alternative sources of these supplies or services.
Added
In response to evolving U.S. trade policy, affected countries may implement retaliatory tariffs or other trade barriers on U.S. goods, which could further impact our ability to source materials at competitive prices or to sell our products in certain international markets.
Removed
We may not be able to grow or sustain revenues or achieve or maintain profitability on a quarterly or annual basis and levels of revenue and/or profitability may vary from one such period to another. 12 We are contractually obligated to issue shares in the future, diluting your percentage interest in us.
Added
These developments may also result in increased volatility in global markets, supply chain disruptions, and reduced demand for our products due to higher prices or decreased competitiveness relative to foreign and domestic competitors not subject to similar tariffs.
Removed
Our management concluded that our internal control over financial reporting was ineffective as of June 30, 2024, and identified certain material weaknesses in our internal controls. While management is working to remediate the material weaknesses, there is no assurance that such changes will remediate the identified material weaknesses or that the controls will prevent or detect future material weaknesses.
Added
While we seek to mitigate the impact of tariffs through supply chain diversification and price negotiations, such measures may not be successful or may result in increased costs, delays, or operational inefficiencies. Sustained or additional tariffs could require us to raise prices, which may reduce customer demand and adversely affect our revenues and market share.
Added
Furthermore, uncertainty regarding future U.S. trade policy and the potential for further changes in tariffs or trade agreements may make it more difficult for us to plan and conduct our business effectively.
Added
Any significant increase in tariffs, expansion of trade restrictions, or prolonged uncertainty regarding U.S. trade policy could materially adversely affect our ability to source components, manage costs, and compete effectively in our markets, which could have a material adverse effect on our business, financial condition, and results of operations.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

4 edited+0 added−0 removed12 unchanged
Biggest changeWe, or third parties we contract with, monitor and conduct regular testing of these controls and systems, including vulnerability management through active discovery and testing to regularly assess patching and configuration status. In addition, we require our employees to complete data security training, and we regularly conduct simulated phishing and cyber-related communications. 15 Incident Response.
Biggest changeWe, or contracted third parties, monitor and conduct regular testing of these controls and systems, including vulnerability management through active discovery and testing to regularly assess patching and configuration status. In addition, we require our employees to complete data security training, and we regularly conduct simulated phishing and cyber-related communications. Incident Response.
We use these assessments to supplement our own evaluation of the overall health of our program and target improvement areas. Board Oversight and Management’s Role Our Board of Directors has primary oversight responsibility for enterprise cybersecurity risks. The Audit Committee also considers enterprise cybersecurity risks in connection with its financial and compliance risk oversight role.
We use these assessments to supplement our own evaluation of the overall health of our program and target improvement areas. 15 Board Oversight and Management’s Role Our Board of Directors has primary oversight responsibility for enterprise cybersecurity risks. The Audit Committee also considers enterprise cybersecurity risks in connection with its financial and compliance risk oversight role .
The Chief Financial Officer regularly reports to the Board of Directors on the status of the Company’s cybersecurity program and provides the Board with the annual assessment by a third party on the Company’s cybersecurity program. For more information on risks related to cybersecurity, see Item IA. “Risk Factors” of this Form 10-K. 16
The Chief Financial Officer regularly reports to the Board of Directors on the status of the Company’s cybersecurity program and provides the Board with the annual assessment by a third party on the Company’s cybersecurity program. For more information on risks related to cybersecurity, see Item IA. “Risk Factors” of this Form 10-K.
ITEM 1C. CYBERSECURITY. As a company selling products, including those for defense applications, we may be the target of cyber-attacks from a variety of threat actors.
ITEM 1C. CYBERSECURITY. Risk Management and Strategy As a company selling products, including those for defense applications, we may be the target of cyber-attacks from a variety of threat actors.

Item 2. Properties

Properties — owned and leased real estate

1 edited+14 added−1 removed4 unchanged
Biggest changeForkey 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. We believe these facilities in Gardner, El Paso and Windham are adequate for our current operations and are adequately covered by insurance.
Biggest changeForkey 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.
Removed
Significant increases in production or the addition of significant equipment additions or manufacturing capabilities in connection with manufacturing, however, require improvements to existing facilities or the acquisition or lease of additional facilities.
Added
On May 13, 2025, the Company entered into a First Lease Extension Agreement (the “Extension”) with Texzona Industries, Inc., pursuant to which the Company will continue to lease approximately 9,375 square feet of commercial space located at 1410 Gail Borden, El Paso, Texas.
Added
The term of Extension is for a period of 36 months commencing on June 1, 2025 and shall end on May 31, 2028. Base rent for each year of the term is $49,219, $50,695 and $52,216. In addition to base rent, the Company is responsible for taxes, insurance and common area maintenance (“CAM”).
Added
Beginning June 1, 2025, the total estimated monthly rental payment including CAM is $5,773. On May 14, 2025, the Company entered into a Lease Agreement (the “Southborough Lease”) with 500 Southborough, LLC, pursuant to which the Company has leased approximately 8,750 square feet of commercial space located at 500 Southborough Drive, City of South Portland, County of Cumberland, Maine.
Added
The commencement date was August 1, 2025. The Southborough Lease provides the Company with two options to extend the term for additional five-year periods, exercisable with at least nine months’ prior written notice.
Added
Base rent for the initial term is abated for the first five months following the commencement date, after which annual base rent payable is $131,250 (or $10,937.50 per month), with annual increases of 3%.
Added
Base rent for any extension term will be as agreed by the parties or, if not agreed, at 95% of the then-current fair market base rental rate for similar space in South Portland, as determined by appraisal, with annual increases of 3% during each extension term.
Added
In addition to base rent, the Company is responsible for its proportionate share (19.34%) of Operating Expenses, as defined in the Lease. The Lease is structured as a triple net lease.
Added
The Company was entitled to a tenant improvement allowance of $25 per rentable square foot for fit-up costs and $0.15 per rentable square foot for architectural costs, to be disbursed as costs are incurred. The Landlord was responsible for completing certain improvements to the Premises prior to occupancy, including interior wall construction, loading area, and separate utility metering.
Added
The lease commencement date of the Southborough Lease was August 1, 2025. On June 2, 2025, the Company entered into a Lease Agreement (the “Lease”) with 550 King Street, LLC (the “Landlord”), pursuant to which the Company has leased approximately 19,590 rentable square feet of commercial space located at 550 King Street, Building A, Suite 100, Littleton, Massachusetts (the “Premises”).
Added
The Lease provides for an initial term of seven and one half (7.5) years, commencing upon substantial completion of tenant improvements and receipt of a certificate of occupancy (the “Term Commencement Date”).
Added
The Term Commencement Date was September 10, 2025. 16 The Lease includes two options to extend the term for additional five-year periods, exercisable with at least nine months’ prior written notice.
Added
Base rent for the initial term is abated for the first six months following the Term Commencement Date, after which base rent is payable as follows: The annual base rent for the first year of the lease is $361,435.50 (or $30,119.63 per month), and such annual base rent increases by three percent (3%) each lease year over the previous year’s annual base rent.
Added
In addition to base rent, the Company is responsible for its pro-rata share (7.22%) of real estate taxes and operating expenses, as further defined in the Lease. The Lease provides for the permitted use of the Premises for general office, laboratory, manufacturing, warehousing, showroom, and related legal uses.
Added
The Lease grants the Company a right of first offer on contiguous space that becomes available in the building during the lease term or any extension. The extensions associated with the leases discussed above have been accounted for with the assumption that they will not be extended.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

2 edited+0 added−0 removed2 unchanged
Biggest changePurchases of Equity Securities by the Issuer and Affiliated Purchasers We did not repurchase any of our equity securities during the year ended June 30, 2024.
Biggest changePurchases of Equity Securities by the Issuer and Affiliated Purchasers We did not repurchase any of our equity securities during the year ended June 30, 2025. ITEM 6. [RESERVED]
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 20, 2024, we had approximately 118 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 25, 2025, we had approximately 121 holders of record of our common stock.

Item 7. Management's Discussion & Analysis

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

14 edited+16 added−12 removed7 unchanged
Biggest changeR&D expenses for the period primarily represent employee-related expenses to support product improvements and the development of new technologies. 20 Selling, General and Administrative Expenses SG&A expenses increased $160,020, or 2.2% to $7,540,329 during the year ended June 30, 2024, compared to $7,380,909 during the year ended June 30, 2023.
Biggest changeResearch & Development R&D expenses increased $176,182 to $1,157,963 during the year ended June 30, 2025, compared to $981,781 during the year ended June 30, 2024. R&D expenses for the period primarily represent employee-related expenses to support product improvements, the development of new technologies and standardized approaches to address the opportunities for an evolving single-use medical device environment.
In addition, we enter into binding supplier commitments which are based on forecasted customer demand. If our customers reduce their forecasts, we may incur additional costs. An increase in the calculation of the reserve for excess and obsolete inventory equivalent to 1% of gross inventory value would increase our costs by approximately $35,000.
In addition, we enter into binding supplier commitments which are based on forecasted customer demand. If our customers reduce their forecasts, we may incur additional costs. An increase in the calculation of the reserve for excess and obsolete inventory equivalent to 1% of gross inventory value would increase our costs by approximately $39,000.
Material Trends and Uncertainties We currently have no material trends or uncertainties 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. 21 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.
Reserve for Excess and Obsolete Inventory Inventories, consisting of raw materials, work in process and finished goods, are primarily accounted for using the first-in first-out method, and are valued at the lower of cost and net realizable value.
We recognized bad debt expenses of $38,000 and $202,000 for the years ending June 30, 2025, and June 30, 2024, respectively. 18 Reserve for Excess and Obsolete Inventory Inventories, consisting of raw materials, work in process and finished goods, are primarily accounted for using the first-in first-out method, and are valued at the lower of cost and net realizable value.
Contractual cash commitments for the fiscal periods subsequent to June 30, 2024, are summarized as follows: Fiscal 2025 Thereafter Total Capital lease for equipment, including interest $ 43,919 $ 28,004 $ 71,923 Minimum operating lease payments $ 178,450 $ 11,549 $ 189,999 We have contractual cash commitments related to open purchase orders as of June 30, 2024, of approximately $6,250,000.
Contractual cash commitments for the fiscal periods subsequent to June 30, 2025, are summarized as follows: Fiscal Year 2026 Thereafter Total Capital lease for equipment, including interest $ 28,004 $ – $ 28,004 Minimum operating lease payments $ 60,619 $ 98,687 $ 159,306 We have contractual cash commitments related to open purchase orders as of June 30, 2025, of approximately $6,260,000.
We will begin to pay principal and interest under the Notes beginning with the payments due on March 15, 2025, with a new amortization schedule for the remaining term for such Notes through their maturity date. There were no other changes to or modifications to the Loan Agreement or the Notes.
The Company commenced payments of principal and interest under the Notes beginning with the payments due on April 15, 2025, with a new amortization schedule for the remaining term for such Notes through their maturity date.
We also made payments of $556,468 on our term notes and capital leases and borrowed $1,000,000 on our revolving line of credit.
During the year ended June 30, 2024, we made payments of $556,468 on term notes and capital leases offset by borrowings on the line of credit of $1,000,000.
Revenue from Finished Products and Assemblies decreased 36.8% for the year ending June 30, 2024 from the prior year ending June 30, 2023.
Revenue from Ross Optical Industries decreased 9.8% for the year ending June 30, 2025 from the prior year ending June 30, 2024.
Gross profit decreased to $5,797,777 during the year ended June 30, 2024, compared to $7,734,136 for the year ended June 30, 2023, primarily driven by changes in the product sales mix and underutilization of fixed cost resources due to the decreases in revenue discussed above.
Gross profit decreased to $3,404,433 during the year ended June 30, 2025, compared to $5,797,777 for the year ended June 30, 2024, primarily driven by yield issues associated with new manufacturing lines, lower utilization of billable engineering resources, and the decreases in revenue discussed above.
In October 2021 we entered a $2,600,000 term loan with a commercial bank. In June 2023 we added a second term loan in the amount of $750,000. We secured a $250,000 line of credit from the same bank in October 2021 for working capital needs, which was increased to $500,000 in May 2022 and to $1,250,000 in June 2023.
On October 4, 2021, the Company entered into a Loan Agreement with Main Street Bank of Marlborough, Massachusetts (the “Lender”), which provided for a $2,600,000 Term Loan and a $250,000 Revolving Line of Credit Loan Facility (the “Revolver”), which was increased to $500,000 effective May 17, 2022, and $1,250,000 effective June 2, 2023.
Our lender has agreed to waive compliance with the debt service ratio covenant for the period ending June 30, 2024. In addition to the waiver, we have entered into amendments dated September 30, 2024 with our lender to both term loans which provide for a six month period of interest only payments from September 15, 2024 through February 15, 2025.
In addition to such waiver, the Lender and the Company entered into an amendment dated September 30, 2024 to that certain Term Loan dated October 4, 2021, as amended and that certain Promissory Note dated June 2, 2023 (collectively, the “Notes”) which amendments provide for a six month period of interest only payments from October 15, 2024 through March 15, 2025 for the Notes.
A 1% increase in the accounts receivable reserve would increase our costs by approximately $37,000. We recognized bad debt expense of $202,000 and $488,000 for the years ending June 30, 2024, and June 30, 2023, respectively.
A 1% increase in the accounts receivable reserve would increase our costs by approximately $44,000.
There were $1,000,000 in borrowings outstanding on the line of credit on June 30, 2024, and additional availability in the amount of $250,000. Our loan agreement contains a minimum annual debt service coverage ratio covenant of 1.2x, for the period ending June 30, 2024. We did not meet this annual debt service coverage ratio as of June 30, 2024.
Borrowings under the Revolver are due upon demand. There were no borrowings under the Revolver at June 30, 2025. 20 The Company’s Loan Agreement with the Lender contains a minimum annual debt service coverage ratio covenant of 1.2x.
Liquidity and Capital Resources During the year ended June 30, 2024, cash on hand funded a net decrease in accounts payable and accrued expenses of $1,139,314 and an increase in inventory of $91,884, partially offset by a decrease of accounts receivable of $361,916.
The increase in net cash used in operating activities was primarily due to the increase in net loss, accounts receivable and inventory during the year ended June 30, 2025, partially offset by the increase in accounts payable and customer advances during such period.
Removed
Other significant accounting policies are included in the Notes to our Financial Statements contained elsewhere in this Annual Report on Form 10-K. 19 Results of Operations for the Fiscal Year Ended June 30, 2024 as Compared to the Fiscal Year Ended June 30, 2023 Revenue Year Ended June 30, 2024 Percent of Sales 2023 Percent of Sales Increase (Decrease) Percent Change Engineering Design Services 8,323,433 43.6 6,728,867 32.0 1,594,566 23.7 Optical Components 8,384,140 43.9 10,523,806 50.0 (2,139,666 ) (20.3 ) Finished Products and Assemblies 2,396,777 12.5 3,791,794 18.0 (1,395,017 ) (36.8 ) Total Revenues 19,104,350 100.0 21,044,467 100.0 (1,940,117 ) (9.2 ) Total revenues for the fiscal year ended June 30, 2024 were $19,104,350, as compared to $21,044,467 for the same period in the prior year, a decrease of $1,940,117, or 9.2%.
Added
Other significant accounting policies are included in the Notes to our Financial Statements contained elsewhere in this Annual Report on Form 10-K.
Removed
Of this decrease, $600,000 was attributable to the sale of one-time technology rights sold in December 2022 with the remaining decrease of 6.6% attributable to the factors discussed below. Revenue from Engineering Design Services increased 23.7% during the year ending June 30, 2024 from the prior year ending June 30, 2023.
Added
Results of Operations for the Fiscal Year Ended June 30, 2025 as Compared to the Fiscal Year Ended June 30, 2024 Revenue Year Ended June 30, 2025 Percent of Sales 2024 Percent of Sales Increase (Decrease) Percent Change Engineering Design Services 4,938,158 25.9 8,519,130 44.6 (3,580,972 ) (42.0 ) Systems Manufacturing 8,290,225 43.4 3,731,754 19.5 4,558,471 122.2 MicroOptics Lab 2,135,562 11.2 2,720,925 14.3 (585,363 ) (21.5 ) Ross Optical Industries 3,727,324 19.5 4,132,541 21.6 (405,217 ) (9.8 ) Total Revenues 19,091,269 100.0 19,104,350 100.0 (13,081 ) (0.1 ) Total revenues for the fiscal year ended June 30, 2025 were $19,091,269, as compared to $19,104,350 for the same period in the prior year, a decrease of $13,081, or 0.1%.
Removed
Revenue increases in the engineering design services resulted from increasing demand for services and continued expansion of engineering capacity. Engineering sales were driven by customer design engagements that will be transitioning into the later manufacture of new Finished Products and Assemblies.
Added
Revenue from Engineering Design Services decreased 42.0% during the year ending June 30, 2025 from the prior year ending June 30, 2024. Revenue decreases in the engineering category resulted from decreased demand for services, primarily from the transfer of our single-use cystoscope program from development (Engineering Design Services) to production (Systems Manufacturing), and increases in internal research and development.
Removed
Revenue from Optical Components decreased 20.3% during the year ending June 30, 2024 from the prior year ending June 30, 2023, due in large part to reduced industry demand, which we believe to be temporary.
Added
Engineering revenue in the year was reduced due to unplanned increases in non-billable sustaining engineering activity to support manufacturing scale up along with delayed revenue opportunities within the product development pipeline. Revenue from Systems Manufacturing increased 122.2% during the year ending June 30, 2025 from the prior year ending June 30, 2024.
Removed
We believe the decreases in optical components were driven by lower order volumes and delayed deliveries as customers rebalance their inventories, which had grown beyond sustainable levels due to increased ordering in response to concerns about supply chain disruptions initially driven by the Covid 19 pandemic.
Added
Revenue increases in this category resulted from increased demand for manufacturing services as design services engagements concluded and progressed to manufacturing. Revenue from the MicroOptics Lab decreased 21.5% during the year ending June 30, 2025 from the prior year ending June 30, 2024, primarily due to reorder timing.
Removed
The decreases in Finished Products and Assemblies were primarily attributable to timing differences between the exit of certain mature customer programs and reorders for ongoing products and the introduction of new customer programs, primarily single-use medical devices and new defense / aerospace opportunities.
Added
We believe the decrease continues to be attributable to a general, industry-wide slowdown, coupled with uncertainty driven by evolving tariff costs, which has led customers to postpone deliveries. 19 Gross Profit Gross margin decreased to 17.8% during the year ended June 30, 2025, compared to 30.3% for the year ended June 30, 2024.
Removed
Gross Profit Gross margin decreased to 30.3% during the year ended June 30, 2024, compared to 36.8% for the year ended June 30, 2023.
Added
Selling, General and Administrative Expenses SG&A expenses increased $257,432, or 3.4% to $7,797,761 during the year ended June 30, 2025, compared to $7,540,329 during the year ended June 30, 2024. The increase in SG&A for the year was primarily due to increased personnel costs, most related to stock-based compensation and recruiting expense.
Removed
The $600,000 one-time technology rights revenue in December 2022 of the prior year had a significant impact on gross margin as it did not have any cost of sales associated with it. Excluding that revenue from both sales and gross profit for comparison purposes, the gross margin would have been 34.9% for the year ending June 30, 2023.
Added
Liquidity and Capital Resources Based on our current plans and business conditions, management believes that the Company’s available cash and cash equivalents, the cash generated from operations, availability on our line of credit, and our ability to raise funds in the capital markets will be sufficient to provide for the Company’s working capital and capital expenditure requirements for at least 12 months from the date of this filing.
Removed
Research & Development R&D expenses decreased $10,594 to $981,781 during the year ended June 30, 2024, compared to $992,375 during the year ended June 30, 2023.
Added
However, our cash on hand and cash generated solely from operations may be insufficient to meet working capital needs for such period and we may be required to raise external financing in the short-term.
Removed
The increase in SG&A for the year was primarily due to increased salaries and benefits, increased travel and marketing-related expenses and increased insurance expense, partially offset by decreases in our reserve for doubtful accounts.
Added
Net Cash Used in Operating Activities During the year ended June 30, 2025, net cash used in operating activities totaled $3,547,400 as compared to $2,683,012 during the year ended June 30, 2024.
Removed
Capital equipment expenditures and additional patent costs during the year ended June 30, 2024, and in the same period in the prior year were $272,435 and $21,448, respectively. The increase was primarily attributable to the implementation of new computer-based ERP and IT systems.
Added
Net Cash Used in Investing Activities During the year ended June 30, 2025, net cash used in investing activities was $233,473, consisting of purchases of property and equipment net of adjustments in patent costs. During the year ended June 30, 2024, net cash used in investing activities was $293,883, consisting of purchases of property and equipment and patent costs.
Removed
These items, in addition to the impact of the net loss, net of depreciation, amortization, stock-based compensation and other non-cash items, resulted in a decrease of $2,520,574 in our cash and cash equivalents at June 30, 2024, from $2,925,852 at June 30, 2023, to $405,278 at June 30, 2024.
Added
Net Cash Provided by Financing Activities During the year ended June 30, 2025, we made payments of $321,554 on term notes and capital leases and repaid $1,000,000 on our revolving line of credit. We raised a net of $6,270,136 from two registered direct offerings made in August 2024 and February 2025 pursuant to our shelf registration statement.
Added
Borrowings under the Revolver are limited by the borrowing base comprised of a percentage of accounts receivable and inventory and secured by all assets of the Company. Borrowings under the Revolver will bear interest payable monthly at the prime lending rate plus 1.5% per annum and shall not be less than 4.75% per annum.
Added
As the Company did not meet this annual debt service coverage ratio for the fiscal year ended June 30, 2024, the Company’s Lender had agreed to waive compliance with such debt service ratio covenant for the period ending June 30, 2024.
Added
On February 14, 2025, the lender agreed to waive compliance with the annual debt service coverage ratio covenant for the fiscal year ending June 30, 2025, subject to a $30,000 waiver fee and the completion of an equity raise of at least $4,500,000 by February 24, 2025, which the Company satisfied on February 21, 2025.
Added
Any future advances are contingent on the Company achieving a minimum Debt Service Coverage ratio of 1.20x based on quarterly testing which the company was not in compliance with as of June 30, 2025. There were no other changes to or modifications to the Loan Agreement or the Notes.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

1 edited+0 added−0 removed0 unchanged
Biggest changeITEM 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 not required to provide the information requested by this Item.
Biggest changeITEM 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 not required to provide the information requested by this Item. 21

Other POCI 10-K year-over-year comparisons