What changed in this filing

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Item 1. Business

2022-09-27 compared with 2021-09-28 · 104 added, 120 removed, 228 unchanged (50% of the section changed)

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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

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.

Our unique proprietary technology in these areas, combined with recent developments in the areas of 3D displays and millimeter sized CMOS

image sensors, has allowed us to begin commercialization of these technologies.

The products we design and build based on these technologies

are providing enhanced imaging for existing surgical procedures and oftentimes represent critical imaging products, components and technology

which enable the development of new medical device products and related medical procedures.

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 may continue to have, an adverse

impact on various aspects of our business.

We have taken various actions to augment our operating and human resource policies and procedures

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.

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.

Some of those augmented procedures can have a negative impact on our operational

efficiencies.

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.

Effective June 1, 2019 we acquired the operating

assets of Ross Optical Industries, Inc.

of El Paso, Texas, which we began operating as a division of our Company beginning on that date.

The accompanying financial statements include the results of operations of the Ross Optical division for fiscal years ended June 30, 2021

and 2020, and the assets and liabilities of the division as of June 30, 2021 and 2020.

The Ross Optical division expands our optics components

and assemblies’

business to include custom and catalog optics, which are 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.

Products often include thin film optical coatings that are applied

using the in-house coating department.

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.

Approximately 54% of our total revenues in fiscal

year 2021 were derived from optical components we design, manufacture and assemble as well as custom components we source, qualify and

resell to our customers.

Approximately 26% of our revenues in fiscal year 2021 were derived from optical engineering and design services,

and the remaining 20% from the assembly and manufacture of endoscopic medical devises, sub-assemblies and optical components ordered by

our customers and typically developed from the engineering and design services we perform for them.

During fiscal year 2021, approximately

60% of our revenues were medical products related, 33% industrial, and 7% related to military and defense.

The allocation of sales revenues

between service offerings and industries was similar in fiscal year 2020 to those allocations in fiscal year 2021 described above.

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.

By combining the unique capabilities of our company

with the Ross Optical division we are experiencing opportunities for expanded sales of each division products and services throughout

the combined customer base.

Additionally, Ross’

expanded worldwide vendor relationships are benefiting our traditional efforts to

source materials at competitive prices for our development projects and manufacturing activities.

These augmented procedures can have a negative impact on our operational efficiencies.

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.

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.

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.

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.

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

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 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.

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.

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.

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 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.

We incorporated in Massachusetts in December 1982

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Precise Medical, Inc.

and Wood’s Precision Optics Corporation, Limited, except where the context otherwise requires.

June 1, 2019 we acquired the operating assets of Ross Optical Industries, Inc.

of El Paso, Texas, which we began operating as a division

of our Company beginning on that date.

The accompanying financial statements include the results of operations of the Ross division for

the fiscal years ended June 30, 2021 and 2020 and its assets and liabilities as of June 30, 2021 and 2020.

Our websites are www.poci.com and www.rossoptical.com.

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 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

optical technologies including our proprietary Lenslock™ technology, for use in a variety of minimally invasive surgical and diagnostic

Today, we produce endoscopes for various applications, which are CE marked and therefore certified for sale throughout the

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We also design

and manufacture custom optical medical devices to satisfy our customers’

specific requirements.

and manufacture custom optical medical devices to satisfy our customers’ specific requirements.

In addition to medical devices,

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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

Most systems make use of optical lenses, prisms, mirrors and windows and range from individual optical components to complex

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Products often include thin film optical coatings that are applied by the Ross Optical division in-house coating

Microprecision™

Lenses and Micro Medical

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.

development competencies at Lighthouse Imaging include systems, optical, mechanical, electrical and process development engineering.

Lighthouse product development team has extensive experience developing visualization systems that are used in a variety of clinical applications

representing a vertical integration of our established product development capabilities we believe will provide our customers with value-added

product development service and product offerings.

Microprecision™ Lenses and Micro Medical

While the size of endoscopes has gradually decreased over time, the widespread use of very small endoscopes, with diameters

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these smaller sizes with good image quality and acceptable manufacturing costs.

We believe our Microprecision™

optics technology

We believe our Microprecision™ optics technology

provides a solution to this problem.

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

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

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We believe these on-going improvements are

significant to the continued evolution and acceptance of our Microprecision™

technology platform.

significant to the continued evolution and acceptance of our Microprecision™ technology platform.

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™

We previously received production orders each exceeding $1M and follow-on orders from multiple customers for their custom

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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.

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.

Utilizing our proprietary

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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.

delivery and innovation tailored to our customers’ specifications.

Our success will depend, in part, on our ability to maintain

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pursue patent protection for existing and new technology.

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 recently augmented and extended these capabilities with the acquisition of Lighthouse Imaging which

brings to the Company extensive experience with design and manufacture of minimally invasive optical imaging surgical devices, particularly

those utilizing CMOS sensor and associated electronics technologies.

The competitive advantage of our Ross Optical

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Market Opportunities

Microprecision™

Lenses and Micro Medical

Microprecision™ Lenses and Micro Medical

While other approaches exist for the manufacture of camera lenses, 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.

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.

the small size of our Microprecision™

lenses and micro medical cameras combined with our proprietary illumination techniques can

Microprecision™ technology opens the possibility to replace existing re-sterilizable endoscopes with a single-use alternative.

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

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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.

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.

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.

Through the gradual integration

of the sales and marketing resources of the two operations we have begun to realize both expanded sales opportunities of the Ross component

products and our micro optics engineering services, as well as benefits from utilizing Ross’

worldwide vendor relationships for

optical components.

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.

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.

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.

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

International Business

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to compete on a price basis in the medical products area particularly and to our profitability generally.

The addition of Ross Optical adds an expanded

network of overseas suppliers of various types and sizes of optical components and assemblies that will enhance our ability to meet the

material demands of our customers’

unique optical and medical device designs.

During fiscal year 2021, 13% 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.

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.

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.

Research and Development

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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.

products and technology, such as Microprecision™ optics, micro medical cameras and 3D endoscopes.

Accordingly, we treat engineering

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3-D endoscopes;

Microprecision™

lenses and micro medical cameras;

Microprecision™ lenses and micro medical cameras;

Defense products.

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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

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.

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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

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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 may also develop additional products or seek to sell some

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well as the regulatory approval or license of other federal, state and local agencies or similar agencies in other countries.

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

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that in the United States.

Medical devices sold in the European Economic Area must bear the Conformité

Européenne, or CE

Medical devices sold in the European Economic Area must bear the Conformité Européenne, or CE

Devices are classified by manufacturers according to the risks they represent, with a classification of Class III representing the

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Once a device has been classified, the manufacturer can follow

one of a series of conformity assessment routes, typically through a registered quality system, and demonstrate compliance to a “European

Notified Body.”

The CE mark may then be applied to the device.

one of a series of conformity assessment routes, typically through a registered quality system, and demonstrate compliance to a “European

Notified Body.” The CE mark may then be applied to the device.

Maintenance of the system is ensured through annual on-site audits

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business