What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-11-14 compared with 2022-05-16 · 121 added, 216 removed, 248 unchanged (58% of the section changed)

3 unchanged sentences

CONSOLIDATED BALANCE SHEETS

September 30,

Current Assets:

Cash and cash equivalents

Accounts receivable, net of allowance for doubtful accounts of $ 253,633 at March 31, 2022 and $ 251,383 at June 30, 2021

Accounts receivable, net of allowance for doubtful accounts of $ 50,114 at September 30, 2022 and $ 44,135 at June 30, 2022

Prepaid expenses

5 unchanged sentences

Total Fixed Assets

Accumulated depreciation and amortization

Less—Accumulated depreciation and amortization

Net fixed assets

11 unchanged sentences

Capital lease obligation, net of current portion

Long-term debt, net of current maturities

Long-term debt, net of current maturities and debt issuance costs

Acquisition earn out liability, net of current portion

3 unchanged sentences

50,000,000 shares authorized;

issued and outstanding 16,887,840 shares at March 31, 2022 and 13,282,476 at June 30, 2021

issued and outstanding – 16,915,089 shares at September 30, 2022 and June 30, 2022

Additional paid-in capital

8 unchanged sentences

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE AND NINE MONTHS ENDED

March 31, 2022 AND 2021

Ended March 31,

FOR THE THREE MONTHS ENDED

SEPTEMBER 30, 2022 AND 2021

Ended September 30,

Cost of Goods Sold

1 unchanged sentence

Selling, General and Administrative Expenses

acquisition expenses

Business acquisition expenses

Total Operating Expenses

Operating Loss

( 1,093,423 )

Other income (expense)

Interest Expense

Gain on forgiveness of bank

Net income (loss)

$ ( 576,801 )

$ ( 1,197,713 )

Income (loss) per share:

Fully diluted

Loss Per Share:

Basic and Fully Diluted

Weighted Average Common Shares Outstanding:

5 unchanged sentences

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’

FOR THE NINE MONTHS ENDED

FOR THE THREE MONTHS ENDED

30 , 2022 AND 2021

Nine Month Period Ended March 31, 2022

Three Month Period Ended September 30, 2022

Stockholders’

2 unchanged sentences

Stock-based compensation

Proceeds from private placement of common stock subscribed, net of estimated

issuance costs of $ 10,000

Balance, September 30, 2022

$ ( 48,167,905 )

Stock-based compensation

Proceeds from private placement of common stock

( 1,030,000 )

Issuance of common stock in business acquisition

Proceeds from exercise of stock option

Exercise of stock options net of 1,435 shares withheld

Issuance of common stock for employee services

Balance, December 31, 2021

( 48,249,792 )

Correction of error in valuation of stock issued in business acquisition

Stock-based compensation

Proceeds from exercise of stock options

Exercise of stock options net of 96,056 shares withheld

Balance, March 31, 2022

$ ( 48,363,691 )

Nine Month Period Ended March 31, 2021

Three Month Period Ended September 30, 2021

Stockholders’

2 unchanged sentences

Stock-based compensation

Proceeds from private placement of common stock subscribed, net of estimated issuance costs of $ 10,000

Balance, September 30, 2021

$ ( 47,742,779 )

Stock-based compensation

Balance, December 31, 2020

( 47,275,804 )

Stock-based compensation

Proceeds from exercise of stock options

Balance, March 31, 2021

$ ( 46,723,526 )

The accompanying notes are an integral part

3 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED

FOR THE THREE MONTHS ENDED

30 , 2022 AND 2021

Nine Months Ended

Ended September 30,

Cash Flows from Operating Activities:

Net income (loss)

$ ( 576,801 )

Adjustments to Reconcile Net Loss to Net Cash Used In Operating Activities -

Adjustments to reconcile net loss to net cash used in by operating activities -

Depreciation and amortization

Stock-based compensation expense

Gain on forgiveness of bank note

Changes in Operating Assets and Liabilities, net of effects of business acquisition -

Non-cash interest expense

Changes in operating assets and liabilities -

Accounts receivable, net

Inventories, net

Due from related party

Prepaid expenses

2 unchanged sentences

Accrued compensation and other

Net Cash Used In Operating Activities

Net cash provided by (used in) operating activities

Cash Flows from Investing Activities:

Purchases of fixed assets

Additional patent costs

Purchases of property and equipment

Acquisition of businesses

Net cash used in investing activities

Cash Flows from Financing Activities:

Payment of capital lease obligations

Payment of capital lease obligation

Payments of long-term debt

Payment of debt issuance costs

Gross proceeds from private placement of common stock

Gross proceeds from exercise of stock options

Net Cash Provided By (Used in) Financing Activities

NET DECREASE IN CASH AND CASH EQUIVALENTS

Gross Proceeds from private placement of common stock subscribed

Net cash (used in) provided by financing activities

Net increase in cash and cash equivalents

Cash and cash equivalents, beginning of period

2 unchanged sentences

Offering costs included in accrued compensation and other

Acquisition of business financed with long-term debt

Acquisition of Manufacturing Equipment Under Capital Lease

The accompanying notes are an integral part

7 unchanged sentences

and its wholly-owned subsidiaries (the “Company”).

All significant intercompany

accounts and transactions have been eliminated in consolidation.

All significant

intercompany accounts and transactions have been eliminated in consolidation.

These consolidated financial statements have been

prepared by the Company, without audit, and reflect normal recurring adjustments which, in the opinion of management, are necessary for

a fair statement of the results of the third quarter and nine months of the Company’s fiscal year 2022.

These consolidated financial

statements do not include all disclosures associated with annual consolidated financial statements and, accordingly, should be read in

conjunction with footnotes contained in the Company’s consolidated financial statements for the year ended June 30, 2021, together

with the Report of Independent Registered Public Accounting Firm filed under cover of the Company’s 2021 Annual Report on Form 10-K,

a fair statement of the results of the first quarter of the Company’s fiscal year 2023.

These consolidated financial statements

do not include all disclosures associated with annual consolidated financial statements and, accordingly, should be read in conjunction

with footnotes contained in the Company’s consolidated financial statements for the year ended June 30, 2022, together with

the Report of Independent Registered Public Accounting Firm filed under cover of the Company’s 2022 Annual Report on Form 10-K,

filed with the Securities and Exchange Commission on September 27, 2022.

6 unchanged sentences

Actual results may differ from these estimates.

Revision of the Second Quarter 2022 Unaudited

Consolidated Financial Statements

The Company identified an error in the valuation

of 2,500,000 shares of common stock issued on October 4, 2021 in the business acquisition described in Note 2 resulting in an $825,000

overstatement of Additional Paid-In Capital and Goodwill in the December 31, 2021 balance sheet presented in the quarterly report on Form

10-Q for the quarter ended December 31, 2021.

This change does not impact the number of shares issued as part of the transaction;

changes the imputed value of the common stock issued.

The financial statements for the prior interim fiscal quarter ended December 31,

2021 have been revised by an $825,000 adjustment to the opening balance of Additional Paid-In Capital in the accompanying Statement of

Stockholders Equity for the quarter ended March 31, 2022, and by an adjustment of Goodwill at the acquisition date as described in Note

No profit and loss accounts in the current or prior interim periods are affected by this revision.

Income (Loss) Per Share

4 unchanged sentences

plus the number of potentially dilutive securities outstanding during the period such as stock options.

For the three and nine months

ended March 31, 2022, the effect of such securities was antidilutive and not included in the fully diluted calculation because of the

net loss generated during those periods.

For the three months ended September

30, 2022, the effect of such securities was antidilutive and not included in the fully diluted calculation because of the net loss generated

during those periods.

The following is the calculation of income (loss) per share for the

three and nine months ended March 31, 2022 and 2021:

three months ended September 30, 2022 and 2021:

Schedule of earnings per share

Ended March 31,

Net Income (Loss) - Basic and Diluted

$ ( 113,899 )

Ended September 30,

Net Income (Loss) Basic and Fully Diluted

$ ( 576,801 )

Weighted Average Shares Outstanding

Fully Diluted

Income (Loss) Per Share

Fully Diluted

Basic and Fully Diluted

Loss Per Share - Basic and Fully Diluted

The number of shares issuable upon the exercise

of outstanding stock options that were excluded from the computation as their effect was antidilutive was 2,817,500 for the three and

nine months ended March 31, 2022, and 15,000 and 260,000 for the three and nine months ended March 31, 2021, respectively.

of outstanding stock options that were excluded from the computation as their effect was antidilutive was approximately 2,714,000 and

2,563,200 for the three months ended September 30, 2022 and 2021, respectively.

Income taxes are accounted for under the asset

19 unchanged sentences

Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.

No such impairments of goodwill or patents have been estimated by management as of March 31, 2022.

No such impairments of goodwill or patents have been estimated by management as of September 30, 2022.

BUSINESS ACQUISITION

On October 4, 2021, the Company entered into an

asset purchase agreement to acquire substantially all of the assets of Lighthouse Imaging, LLC, a medical optics and digital imaging business,

as described in Forms 8-K and 8-K/A that the Company filed with the Securities and Exchange Commission on October 8, 2021 and December

20, 2021, respectively.

The aggregate cash purchase price consisted of $ 2,855,063 in cash at closing, $ 1,500,000 as earn-out consideration

over the subsequent two year period, and 2,500,000 unregistered shares of common stock issued to the seller at closing.

The effective

date of the acquisition was October 4, 2021, and the actual results of operations of the Lighthouse division since that date are included

in the accompanying consolidated financial statements as of, and for the three and nine months ended, March 31, 2022.

The Company financed the cash portion of the acquisition

by securing a $ 2,600,000 term loan from Main Street Bank on October 4, 2021, and by selling 937,500 shares of its common stock for $ 1,500,000

of gross proceeds in a private placement closed on October 1, 2021.

The earn-out consideration will be paid at a rate

of $750,000 per annum from October 1, 2021 to September 30, 2023 if certain levels of gross profit are earned by the Lighthouse division.

Purchase Price Allocation and Goodwill

The total purchase price of $ 8,990,670

as previously disclosed in the quarterly report on Form 10-Q for the quarter ended December 31, 2021 has been restated for a revision

of the valuation of the common stock issued to the sellers as described in Note 1.

Revision of the Second Quarter 2022 Unaudited Consolidated

Financial Statements.

The allocation of the revised purchase price is preliminary and subject to change based on future payments

made for the earn-out contingent liability.

Any unearned portions of the earn-out liability will be recognized in earnings.

assets including the revised Goodwill, contingent consideration and assumed liabilities at the effective date of acquisition include

the following:

Schedule of acquired assets, contingent consideration and assumed liabilities

At Acquisition Effective Date October 4, 2021

Trade accounts receivable, net

Other current assets

Total Assets Acquired

Accounts payable

Customer advances

Accrued compensation and other

Total Liabilities Assumed

Net assets acquired

Total Purchase Price-Initial and Contingent Consideration

Consolidated Pro Forma Results

On October 4, 2021, the Company acquired substantially

all of the assets of Lighthouse Imaging, LLC, of Windham, Maine, a medical optics and digital imaging business operating as a designer

and manufacturer of advanced optical imaging systems and accessories with a strong expertise in electrical engineering and development

of end-to-end medical visualization devices.

The actual results of operations of the Lighthouse division are included in the accompanying

consolidated financial statements as of, and for the three months ended, September 30, 2022.

The purchase price for Lighthouse Imaging included

$ 1,500,000 as potential earn-out consideration over the subsequent two year period, contingent on the Lighthouse division meeting specified

annual gross profit targets.

The Lighthouse division did not meet the target for the first $ 750,000 portion of the earn-out, and the contingent

liability associated with that portion was reversed and recognized as other income in the fiscal quarter ended June 30, 2022.

$ 750,000 portion of the earn-out contingent liability will be paid if the target level of gross profit is earned by the Lighthouse division

for the period from October 1, 2022 through September 30, 2023.

Consolidated unaudited pro forma results of operations

for the Company are presented below assuming that the acquisition of the Lighthouse division had occurred on July 1, 2021.

Pro forma operating

results include net adjustments resulting from the acquisition transaction during the three and nine months ended March 31, 2022 and 2021.

operating results include net adjustments resulting from the acquisition transaction during the three months ended September 30, 2021.

Schedule of consolidated pro forma results

Ended March 31,

Net income (loss)

Ended September 30,

$ ( 519,506 )

Net income (loss) per share

Fully diluted

Loss per Share

Basic and diluted

Pro forma financial information is not necessarily

6 unchanged sentences

Schedule of inventory

September 30,

Raw Materials

6 unchanged sentences

Loan Agreement with Main Street Bank of Marlborough, Massachusetts, which provided for a $ 2,600,000 Term Loan and a $ 250,000 Revolving

Line of Credit Loan Facility.

The $250,000 line of credit is due on demand and had zero borrowings outstanding at March 31, 2022.

under the line of credit bear interest payable monthly at the prime lending rate plus 1.5% per annum and shall not be less than 4.75%

Borrowings under the line of credit are limited to the borrowing base comprised of a percentage of accounts receivable and

inventory and are secured by all the assets of the Company.

Line of Credit Loan Facility, which was increased to $500,000 effective May 17, 2022.

The $ 500,000 line of credit is due on demand and

had no borrowings outstanding at September 30, 2022.

Borrowings under the line of credit bear interest payable monthly at the prime lending

rate plus 1.5% per annum, or 7.75 % as of September 30, 2022, and shall not be less than 4.75% per annum.

Borrowings under the line of

credit are limited to the borrowing base comprised of a percentage of accounts receivable and inventory and are secured by all the assets

of the Company.

Long-Term Debt

Long-term debt consists of the following at March

Long-term debt consists of the following at September

Schedule of long-term debt

Term Loan Note payable to Main Street Bank with monthly principal payments of $ 30,952 .38 plus interest at the prime lending rate plus 1.5 % per annum.

Secured by all assets of the Company, and subject to certain periodic reporting to the bank, an annual minimum debt service coverage ratio of 1.20:1, and other conditions.

Term Loan Note payable to Main Street Bank with monthly principal payments of $ 30,952 .38 plus interest at the rate of 7.00 % as of September 30, 2022.

Secured by all assets of the Company, and subject to certain periodic reporting to the bank, an annual minimum EBITDA plus stock based compensation to debt service coverage ratio of 1.20:1 commencing with the fiscal year ending June 30, 2023, and other conditions.

The Term Loan Note matures on October 15, 2028 .

2 unchanged sentences

Long-term debt, net of current portion of debt issuance costs

At March 31, 2022 principal payments

due on the Term Loan Note payable are as follows:

Schedule of future minimum note payable

At September 30, 2022 principal payments due on the Term Loan Note

payable are as follows:

Schedule of principal payments due term loan note payable

Fiscal Year Ending June 30:

Total long term debt

LEASE OBLIGATIONS

2 unchanged sentences

In January 2020, the Company entered into a five-year capital lease

in the amount of $ 47,750 for manufacturing equipment.

The net book value of fixed assets under capital lease obligations as of March 31,

2022 is $ 156,640 .

for $ 47,750 for manufacturing equipment.

The net book value of fixed assets under capital lease obligations as of September 30, 2022 is

On July 1, 2019 the Company entered into a three-year

1 unchanged sentence

three years through June 2025.

Remaining minimum lease payments at March 31, 2022 total $ 150,504 .

Total rent expense including base rent

and common area expenses was $ 15,705 and $ 21,438 during the three months ended March 31, 2022 and 2021, respectively.

Included in the

accompanying balance sheet at March 31, 2022 is a right-of-use asset of $ 140,607 and current and long-term right-of-use operating lease

liabilities of $ 45,405 and $ 95,202 , respectively.

At March 31, 2022 future minimum lease payments

Remaining minimum lease payments at September 30, 2022 total $ 123,842 .

Total rent expense including base

rent and common area expenses was $ 11,630 and $ 13,997 during the fiscal quarters ended September 30, 2022 and 2021, respectively.

4, 2021 the Company assumed the remaining term of the Windham, Maine lease as part of the Lighthouse acquisition.

The lease expires on

July 31, 2025.

Remaining minimum lease payments at September 30, 2022 total $ 390,229 .

Total rent expense including base rent and common

area expenses was $ 35,017 during the fiscal quarter ended September 30, 2022.

Included in the accompanying balance sheet at September

30, 2022 is a right-of-use asset of $ 478,645 and current and long-term right-of-use operating lease liabilities of $ 160,924 and $ 317,722 ,

respectively.

At September 30, 2022 future minimum lease payments

under the capital lease and operating lease obligations are as follows:

8 unchanged sentences

The Company’s operating leases for its Gardner,

Massachusetts office, production and storage spaces plus an equipment lease as well as the Windham, Maine office and production space

have expired and are continuing on a month-to-month tenant at will basis.

Rent expense on these operating leases was $ 222,112 and $ 124,848

for the nine months ended March 31, 2022 and 2021, respectively.

Massachusetts office, production and storage spaces plus an equipment lease have expired and are continuing on a month-to-month tenant

at will basis.

Rent expense on these operating leases was $ 50,826 and $ 51,277 for the fiscal quarter ended September 30, 2022 and 2021,

respectively.

STOCK-BASED COMPENSATION

1 unchanged sentence

The following table summarizes stock-based compensation

expense for the three and nine months ended March 31, 2022 and 2021:

expense for the three months ended September 30, 2022 and 2021:

The share amounts and prices shown below do not reflect adjustment for

a 1-for-3 reverse stock split that took effect after the close of business on November 1, 2022.

Schedule of stock-based compensation expense

Ended March 31,

Ended September 30,

Cost of Goods Sold

Research and Development

Selling, General and Administrative

Stock Based Compensation Expense

Research and Development Expenses

Selling, General and Administrative Expenses

No compensation has been capitalized because such

1 unchanged sentence

The following tables summarize stock option activity

for the nine months ended March 31, 2022:

for the three months ended September 30 2022:

Schedule of stock option activity

4 unchanged sentences

Contractual Life

Outstanding at July 1, 2021

Outstanding at March 31, 2022

Outstanding at June 30, 2022

Exercised, Granted and Cancelled

Outstanding at September 30, 2022

Information related to the stock options outstanding

as of March 31, 2022 is as follows:

as of September 30, 2022 is as follows:

Schedule of stock options outstanding by exercise price range

4 unchanged sentences

The aggregate intrinsic value of the Company’s

in-the-money outstanding and exercisable options as of March 31, 2022 was $ 1,913,350 and $ 1,689,898 , respectively.

SALE OF STOCK IN OCTOBER 2021

On October 1, 2021, the Company entered into agreements

with accredited investors for the sale and purchase of 937,500 unregistered shares of its common stock, $0.01 par value at a purchase

price of $1.60 per share.

The Company used the net proceeds from this placement to partially fund the October 4, 2021, acquisition of

the operating assets of Lighthouse Imaging, LLC with an effective date of October 4, 2021.

In conjunction with the placement, the Company also entered into a registration rights agreement with the investors, whereby it is obligated

to file a registration statement with the Securities and Exchange Commission on or before 120 calendar days after October 4, 2021 to register

the resale by the investors of 937,500 shares of its common stock purchased in the placement.

The registration statement was filed on

January 31, 2022 and became effective on February 11, 2022.

ISSUANCE OF COMMON STOCK IN BUSINESS ACQUISITION

On October 4, 2021, the Company issued 2,500,000

unregistered shares of its common stock to the sellers of Lighthouse Imaging, LLC, valued on that date at $ 1.60 per share or $ 4,000,000 ,

as shown in the accompanying statement of stockholders’ equity for the nine months ended March 31, 2022.

In conjunction with the issuance, the Company

agreed to use reasonable efforts to effectuate within a reasonable period after the October 4, 2021 business acquisition date a registration

statement with the Securities and Exchange Commission to register the resale by the sellers of 2,500,000 shares of its common stock issued

in the business acquisition.

in-the-money outstanding and exercisable options as of September 30, 2022 was $ 1,982,850 and $ 1,951,825 , respectively.

REVENUE RECOGNITION

3 unchanged sentences

Most of the Company’s products and services are marketed to medical device

companies almost exclusively in the United States.

Products and services are primarily transferred to customers at a point in time based

upon when services are performed or product is shipped.

Revenues represent the amount of consideration

the Company expects to receive from customers in exchange for transferring products and services.

Other selling costs to obtain and fulfill

contracts are expensed as incurred due to the short-term nature of a majority of its revenues.

The Company extends terms of payment to

its customers based on commercially reasonable terms for the markets of its customers, while also considering their credit quality.

and handling costs charged to customers are included in revenues.

companies with approximately 85% of sales to customers in the United States.

Products and services are primarily transferred to customers

at a point in time based upon when services are performed or product is shipped.

Other selling costs to obtain and fulfill contracts are

expensed as incurred due to the short-term nature of a majority of its contracts.

The Company extends terms of payment to its customers

based on commercially reasonable terms for the markets of its customers, while also considering their credit quality.

Shipping and handling

costs charged to customers are included in revenues.

The Company disaggregates revenues by product

1 unchanged sentence

by economic factors.

Revenues are comprised of the following for the three and nine months ended March 2022 and 2021:

Revenues are comprised of the following for the three months ended September 30, 2022 and 2021:

Schedule of disaggregation of revenues

Ended March 31,

Ended September 30,

Engineering Design Services

Optical Components

Medical Device Products and Assemblies

Total Revenues

Medical Device Products & Assemblies

Contract Assets and Liabilities

6 unchanged sentences

These costs have been recorded in selling, general and administrative expenses.

As of March 31,

As of September

30, 2022, there were no contract assets recorded in the Company’s Consolidated Balance Sheets.

6 unchanged sentences

Schedule of contract liabilities

Ended March 31,

Ended September 30,

Contract liabilities, beginning of period

Assumed in Business Acquisition

Unearned revenue received from customers

Revenue recognized

( 1,647,188 )

Contract liabilities, end of period

5 unchanged sentences

overall financial condition.

Given the uncertainty surrounding the continuation of economic impacts both domestically and abroad, the

Company 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 its up-coming quarterly fiscal operating results.

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-Q

Item 1. Financial Statements