What changed in this filing

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Item 1. Financial Statements

2023-02-14 compared with 2022-11-14 · 150 added, 95 removed, 274 unchanged (47% 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 $ 50,114 at September 30, 2022 and $ 44,135 at June 30, 2022

Accounts receivable, net of allowance for doubtful accounts of $ 72,343 at December 31, 2022 and $ 44,135 at June 30, 2022

Prepaid expenses

10 unchanged sentences

Current Liabilities:

Current portion of capital lease obligation

Current portion of financing lease obligation

Current maturities of long-term debt

Current portion of acquisition earn out liability

Current portion of acquisition earn out liabilities

Accounts payable

Customer advances

Contract liabilities

Accrued compensation and other

1 unchanged sentence

Total current liabilities

Capital lease obligation, net of current portion

Financing lease obligation, net of current portion

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

4 unchanged sentences

50,000,000 shares authorized;

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

issued and outstanding – 5,638,302 shares at December 31, 2022 and June 30, 2022

Additional paid-in capital

7 unchanged sentences

PRECISION OPTICS CORPORATION, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED

SEPTEMBER 30, 2022 AND 2021

Ended September 30,

FOR THE THREE AND SIX MONTHS ENDED

DECEMBER 31, 2022 AND 2021

Ended December 31,

Cost of goods sold

Research and Development Expenses, net

Research and Development Expenses

Selling, General and Administrative Expenses

1 unchanged sentence

Total Operating Expenses

Operating Loss

Interest Expense

Operating Income (Loss)

( 1,032,302 )

Loss Per Share:

Basic and Fully Diluted

Interest (Expense) Income, net

Net Income (Loss)

$ ( 507,013 )

$ ( 1,083,814 )

Income (Loss) Per Share:

Fully Diluted

Weighted Average Common Shares Outstanding:

5 unchanged sentences

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’

FOR THE THREE MONTHS ENDED

FOR THE SIX MONTHS ENDED

31 , 2022 AND 2021

Three Month Period Ended September 30, 2022

Month Period Ended December 31, 2022

Stockholders’

4 unchanged sentences

( 48,167,905 )

Three Month Period Ended September 30, 2021

Stock-based compensation

Balance, December 31, 2022

$ ( 47,533,485 )

Month Period Ended December 31, 2021

Stockholders’

2 unchanged sentences

Stock-based compensation

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

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

Proceeds from private placement

of common stock

( 1,030,000 )

Issuance of common stock in business

Proceeds from exercise of stock

Exercise of stock options net of

478 shares withheld

Issuance of common stock for employee

Balance, December 31, 2021

$ ( 48,249,792 )

The accompanying notes are an integral part

3 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED

FOR THE SIX MONTHS ENDED

31 , 2022 AND 2021

Ended September 30,

Six Months Ended

CASH FLOWS FROM OPERATING ACTIVITIES:

Net Income (Loss)

$ ( 1,083,814 )

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

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

Depreciation and amortization

1 unchanged sentence

Non-cash interest expense

Changes in operating assets and liabilities -

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

Accounts receivable, net

( 1,368,650 )

Inventories, net

5 unchanged sentences

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of fixed assets

Additional patent costs

Purchases of fixed assets

Acquisition of business

Net Cash Used In Investing Activities

CASH FLOWS FROM FINANCING ACTIVITIES:

Payment of capital lease obligation

Payment of financing lease obligation

Payments of long-term debt

Gross Proceeds from private placement of common stock subscribed

Payment of debt issuance costs

Gross proceeds from private placement of common stock

Gross proceeds from exercise of stock options

Net Cash (Used In) Provided By Financing Activities

Net increase in cash and cash equivalents

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

2 unchanged sentences

Offering costs included in accrued compensation and other

Issuance of common stock for services

Acquisition of business financed with long-term debt

The accompanying notes are an integral part

11 unchanged sentences

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 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,

a fair statement of the results of the second quarter and six months 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.

Reclassifications

Certain reclassifications have been made to conform

the prior period consolidated financial statements to the current period.

Reverse Stock Split

The Company’s Board of Directors authorized

a reverse split of the Company’s outstanding shares of common stock within a stated range of 1:1.5 to 1:3, which was subsequently

approved by stockholders holding more than a majority of the outstanding shares of Common Stock at the Company’s Annual Meeting

on April 8, 2022.

The Company effected the reverse stock split on a one-for-three basis on November 1, 2022 as reported by the Company

on Form 8-K filed with the Securities and Exchange Commission on November 2, 2022.

of the reverse stock split, every three shares of issued and outstanding common stock were automatically combined into one issued and

outstanding share of common stock, without any change in the par value per share or the number of the Company’s authorized shares.

The reverse stock split reduced the number of shares of common stock outstanding from 16,915,089 on November 1, 2022 to approximately

5,638,302 shares, after reduction for the elimination of fractional shares.

Unless otherwise noted, all prior year share amounts

and per share calculations throughout this Form 10-Q have been restated to reflect the impact of this 1:3 reverse stock split and to provide

data on a comparable basis.

Such restatements include calculations regarding the Company’s weighted-average shares, and earnings

per share, as well as disclosures regarding the Company’s stock-based compensation plans.

Use of Estimates

11 unchanged sentences

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

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.

For the three and six months ended

December 31, 2021, 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 months ended September 30, 2022 and 2021:

three and six months ended December 31, 2022 and 2021:

Schedule of earnings per share

Ended September 30,

Net Income (Loss) Basic and Fully Diluted

Ended December 31,

Net Income (Loss)

$ ( 507,013 )

Weighted Average Shares Outstanding

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 approximately 2,714,000 and

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

$ ( 1,083,814 )

Basic Weighted Average Shares Outstanding

Fully Diluted Weighted Average Shares Outstanding

Income (Loss) Per Share

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 266,981 for the three and six months ended December

31, 2022, respectively, and 889,900 for the three and six months ended December 31, 2021.

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 September 30, 2022.

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

BUSINESS ACQUISITION

4 unchanged sentences

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.

consolidated financial statements as of, and for the three and six months ended, December 31, 2022, and for the three months ended December

The purchase price for Lighthouse Imaging included

5 unchanged sentences

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.

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

Consolidated unaudited actual and 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 months ended September

Schedule of consolidated pro forma results

Ended September 30,

Ended December 31,

Net income (loss)

( 1,026,519 )

Loss per Share

Basic and diluted

Net income (loss) per share:

Fully diluted

Pro forma financial information is not necessarily

6 unchanged sentences

Schedule of inventory

September 30,

Raw Materials

8 unchanged sentences

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

had no borrowings outstanding at September 30, 2022.

had no borrowings outstanding at December 31, 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

rate plus 1.5% per annum, or 9.00 % as of December 31, 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 eligible 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 September

Long-term debt consists of the following at December

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 rate of 7.00 % as of September 30, 2022.

Term Loan Note payable to Main Street Bank with monthly principal payments of $ 30,952 .38 plus interest at the rate of 9.00 % as of December 31, 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.

3 unchanged sentences

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

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

payable are as follows:

At December 31, 2022 principal payments due on the Term Loan Note payable

are as follows:

Schedule of principal payments due term loan note payable

2 unchanged sentences

LEASE OBLIGATIONS

In March 2021 the Company entered into a five-year

capital lease in the amount of $ 161,977 for manufacturing equipment.

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

for $ 47,750 for manufacturing equipment.

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

In March 2021 the Company entered into a

five-year financing lease in the amount of $ 161,977

for manufacturing equipment.

In January 2020, the Company entered into a five-year financing lease for $ 47,750

for manufacturing equipment.

The net book value of fixed assets under financing lease obligations as of December 31, 2022 is $ 125,181 .

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

1 unchanged sentence

three years through June 2025.

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

Remaining minimum lease payments at December 31, 2022 total $ 112,885 .

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.

rent and common area expenses was $ 7,986 and $ 15,705 during the three months ended December 31, 2022 and 2021, respectively.

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

1 unchanged sentence

July 31, 2025.

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

Remaining minimum lease payments at December 31, 2022 total $ 355,797 .

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

area expenses was $ 35,017 during the three months ended December 31, 2022.

Included in the accompanying balance sheet at December 31,

2022 is a right-of-use asset of $ 439,074 and current and long-term right-of-use operating lease liabilities of $ 163,984 and $ 275,090 ,

respectively.

At September 30, 2022 future minimum lease payments

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

At December 31, 2022 future minimum lease payments

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

Future minimum lease payments

Fiscal Year Ending June 30:

Capital Leases

Operating Lease

6 unchanged sentences

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.

Rent expense on these operating leases was $ 101,156 and $ 101,727 for the six months ended December 31, 2022 and 2021, respectively.

STOCK-BASED COMPENSATION

1 unchanged sentence

The following table summarizes stock-based compensation

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.

expense for the three and six months ended December 31, 2022 and 2021:

Schedule of stock-based compensation expense

Ended September 30,

Ended December 31,

Cost of Goods Sold

Research and Development Expenses

Selling, General and Administrative Expenses

Research and Development

Selling, General and Administrative

Stock Based Compensation Expense

No compensation has been capitalized because such

1 unchanged sentence

The following tables summarize stock option activity

for the three months ended September 30 2022:

for the six months ended December 31, 2022:

Schedule of stock option activity

5 unchanged sentences

Outstanding at June 30, 2022

Exercised, Granted and Cancelled

Outstanding at September 30, 2022

Outstanding at December 31, 2022

Information related to the stock options outstanding

as of September 30, 2022 is as follows:

as of December 31, 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 September 30, 2022 was $ 1,982,850 and $ 1,951,825 , respectively.

in-the-money outstanding and exercisable options as of December 31, 2022 was $ 1,546,353 and $ 1,537,253 , respectively.

REVENUE RECOGNITION

3 unchanged sentences

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

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

companies with over 90% of all revenues to customers in the United States.

Products and services are primarily transferred to customers

9 unchanged sentences

by economic factors.

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

Technology rights revenue represent amounts paid by customers for rights to use the Company’s intellectual

property including product designs, patents, and know-how to manufacture and commercialize their products under specified contractual

Revenues are comprised of the following for the three and six months ended December 31, 2022 and 2021:

Schedule of disaggregation of revenues

Ended September 30,

Ended December 31,

Engineering Design Services

Optical Components

Medical Device Products & Assemblies

Medical Device Products and Assemblies

Technology Rights

Total Revenues

Contract Assets and Liabilities

6 unchanged sentences

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

As of September

As of December 31,

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

3 unchanged sentences

The Company generally satisfies performance obligations within one year from the contract inception date.

Contract liabilities, which were recorded as

customer advances in the Company’s Consolidated Balance Sheets, and unearned revenue are comprised of the following:

Contract liabilities, which were recorded as customer

advances in the Company’s Consolidated Balance Sheets, and unearned revenue are comprised of the following:

Schedule of contract liabilities

Ended September 30,

Ended December 31,

Contract liabilities, beginning of period

Assumed in business acquisition

Unearned revenue received from customers

Revenue recognized

( 1,007,238 )

Contract liabilities, end of period

6 unchanged sentences

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