What changed in this filing

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Item 1. Financial Statements

2024-05-15 compared with 2024-02-14 · 165 added, 151 removed, 234 unchanged (57% of the section changed)

5 unchanged sentences

Cash and cash equivalents

Accounts receivable, net of allowance for doubtful accounts of $ 731,256 at December 31, 2023 and $ 606,715 at June 30, 2023

Accounts receivable, net of allowance for doubtful accounts of $ 826,434 at March 31, 2024 and $ 606,715 at June 30, 2023

Prepaid expenses

4 unchanged sentences

Furniture and fixtures

Construction in progress

Total fixed assets

4 unchanged sentences

Current Liabilities:

Revolving line of credit

Current portion of capital lease obligation

11 unchanged sentences

50,000,000 shares authorized;

issued and outstanding – 6,067,518 shares at December 31, 2023 and 6,066,518 at June 30, 2023

issued and outstanding – 6,068,518 shares at March 31, 2024 and 6,066,518 at June 30, 2023

Additional paid-in capital

4 unchanged sentences

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

The accompanying notes are an integral part

of these consolidated interim financial statements.

The accompanying notes are an integral part of these

consolidated interim financial statements.

PRECISION OPTICS CORPORATION, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE SIX MONTHS ENDED

DECEMBER 31, 2023 AND 2022

Ended December 31,

FOR THE THREE AND NINE MONTHS ENDED

MARCH 31, 2024 AND 2023

Ended March 31,

Cost of Goods Sold

2 unchanged sentences

Total Operating Expenses

Operating Income (Loss)

Operating Loss

( 1,367,982 )

Interest Expense

Net Income (Loss)

Gain on Revaluation of Contingent Liability

$ ( 317,055 )

$ ( 398,432 )

Income (Loss) Per Share:

Fully Diluted

$ ( 1,540,272 )

Loss Per Share:

Basic & Fully Diluted

Weighted Average Common Shares Outstanding:

Fully Diluted

The accompanying notes are an integral part

of these consolidated interim financial statements.

Basic & Fully Diluted

The accompanying notes are an integral part of these

consolidated interim financial statements.

PRECISION OPTICS CORPORATION, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’

FOR THE SIX MONTHS ENDED

DECEMBER 31 , 2023 AND 2022

Six Month Period Ended December 31, 2023

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE NINE MONTHS ENDED

2024 AND 2023

Month Period Ended March 31, 2024

Stockholders’

8 unchanged sentences

( 49,462,224 )

Six Month Period Ended December 31, 2022

Stock-based compensation

Proceeds from the exercise of stock options

Balance, March 31, 2024

$ ( 49,779,279 )

Month Period Ended March 31, 2023

Stockholders’

7 unchanged sentences

( 47,744,450 )

The accompanying notes are an integral part

of these consolidated interim financial statements.

Stock-based compensation

Proceeds from the exercise of stock options

Balance, March 31, 2023

$ ( 48,142,882 )

The accompanying notes are an integral part of these

consolidated interim financial statements.

PRECISION OPTICS CORPORATION, INC.

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED

FOR THE NINE MONTHS ENDED

2024 AND 2023

Ended December 31,

Ended March 31,

Cash Flows from Operating Activities:

Net Income (Loss)

$ ( 1,540,272 )

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

Gain on reevaluation of contingent earn-out liability

Depreciation and amortization

18 unchanged sentences

Payments of long-term debt

Payment of acquisition earn-out liability

Borrowings on revolving line of credit

Gross proceeds from the exercise of stock options

4 unchanged sentences

Cash and cash equivalents, end of period

The accompanying notes are an integral part

of these consolidated interim financial statements.

The accompanying notes are an integral part of these

consolidated interim financial statements.

PRECISION OPTICS CORPORATION, INC.

9 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 six months of the Company’s fiscal year 2024.

a fair statement of the results of the first nine months of the Company’s fiscal year 2024.

These consolidated financial statements

4 unchanged sentences

Use of Estimates

The preparation of these consolidated financial

statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and

The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable

under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities

that are not readily apparent from other sources.

The preparation of these consolidated financial statements

requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses.

Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances,

the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent

from other sources.

Actual results may differ from these estimates.

5 unchanged sentences

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

For the three months and six months

ended December 31, 2023, potentially dilutive securities outstanding have been excluded from the computations of weighted-average shares

outstanding because such securities have an antidilutive impact due to the net loss reported during those periods.

The number of shares

issuable upon the exercise of outstanding stock options that were excluded from the computation of fully dilutive weighted average shares

outstanding was approximately 1,256,141 for the three and six months ended December 31, 2023.

For the three months and nine

months ended March 31, 2024, potentially dilutive securities outstanding have been excluded from the computations of weighted-average

shares outstanding because such securities have an antidilutive impact due to the net loss reported during those periods.

The number of

shares issuable upon the exercise of outstanding stock options that were excluded from the computation of fully dilutive weighted average

shares outstanding was approximately 1,405,398 for the three and nine months ended March 31, 2024 and 1,058,630 for the three and nine

months ended March 31, 2023.

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

three months and six months ended December 31, 2023 and 2022:

three months and nine months ended March 31, 2024 and 2023:

Schedule of income (loss) per share

Ended December 31,

Ended March 31,

Net Income (Loss) Basic and Fully Diluted

1 unchanged sentence

$ ( 398,432 )

$ ( 1,540,272 )

Weighted Average Shares Outstanding

Fully Diluted

Income (Loss) Per Share – Basic

Income (Loss) Per Share - Fully Diluted

Income taxes are accounted for under the asset

and liability method.

Basic & Fully Diluted

Loss Per Share – Basic & Fully Diluted

Income taxes are accounted for under the asset and

liability method.

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between

5 unchanged sentences

of a change in tax rates is recognized in income in the period that includes the enactment date.

In assessing the likelihood of utilization of

existing deferred tax assets, management has considered historical results of operations and the current operating environment.

on this evaluation, a full valuation reserve has been provided for the deferred tax assets.

In assessing the likelihood of utilization of existing

deferred tax assets, management has considered historical results of operations and the current operating environment.

Based on this evaluation,

a full valuation reserve has been provided for the deferred tax assets.

Goodwill and Patents

Long-lived assets such as goodwill and patents

are capitalized when acquired and reviewed for impairment whenever events or changes in circumstances indicate that the book value of

the asset may not be recoverable.

Impairment of the carrying value of long-lived assets such as goodwill and patents would be indicated

if the best estimate of future undiscounted cash flows expected to be generated by the asset grouping is less than its carrying value.

If an impairment is indicated, any loss is measured as the difference between estimated fair value and carrying value and is recognized

in operating income or loss.

Long-lived assets such as goodwill and patents are

capitalized when acquired and reviewed for impairment whenever events or changes in circumstances indicate that the book value of the

asset may not be recoverable.

Impairment of the carrying value of long-lived assets such as goodwill and patents would be indicated if

the best estimate of future undiscounted cash flows expected to be generated by the asset grouping is less than its carrying value.

an impairment is indicated, any loss is measured as the difference between estimated fair value and carrying value and is recognized in

operating income or loss.

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 December 31, 2023.

No such impairments of goodwill or patents have been estimated by management as of March 31, 2024.

Inventories are stated at the lower of cost (first-in,

7 unchanged sentences

Bank Line of Credit

On October 4, 2021, the Company entered into a

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 “Revolver”), which was increased to $500,000 effective May 17, 2022 and $ 1,250,000 effective

On October 4, 2021, the Company entered into a 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 “Revolver”), which was increased to $500,000 effective May 17, 2022, and $ 1,250,000 effective

June 2, 2023.

4 unchanged sentences

Borrowings under the Revolver are due upon demand.

At December 31, 2023 the

Revolver was unutilized and fully available to the Company.

Borrowings under the Revolver

at March 31, 2024 were $ 400,000 , with $ 850,000 remaining available for use.

Long-Term Debt

Long-term debt consists of the following at December

Long-term debt consists of the following at March

Schedule of long-term debt

8 unchanged sentences

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

At December 31, 2023 principal payments due on the Term Loan Note payable

At March 31, 2024 principal payments due on the Term Loan Note payable

are as follows:

Schedule of principal payments due on the term loan note

Schedule of maturity of principal payments due

Fiscal Year Ending June 30:

1 unchanged sentence

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 December 31, 2023 is $ 83,535 .

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

The net book value of fixed assets under capital lease obligations as of March 31, 2024 is $ 44,103 .

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

operating lease for its facility in El Paso, Texas, and in February 2022 the Company entered into an extension of the lease for an additional

three years through June 2025.

Remaining minimum lease payments at December 31, 2023 total $ 66,087 .

Total rent expense including base

rent and common area expenses was $ 36,288 and $ 35,589 during the six months ended December 31, 2023 and 2022, 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 on December 31, 2023 total $ 209,242 .

Total rent expense including base rent and common

area expenses was $ 68,864 and 70,034 during the six months ended December 31, 2023 and 2022, respectively.

Included in the accompanying

balance sheet at December 31, 2023 is a right-of-use asset of $ 275,329 and current and long-term right-of-use operating lease liabilities

of $ 173,503 and $ 101,826 , respectively.

At December 31, 2023 future minimum lease payments

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

Schedule of future minimum lease payments

operating lease for its facility in El Paso, Texas, and in February 2022 extended the lease through June 2025.

Remaining minimum lease

payments at March 31, 2024 total $ 55,637 .

Total rent expense including base rent and common area expenses was $ 16,247 and $ 15,973 during

the three months ended March 31, 2024 and 2023, respectively.

On October 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

on March 31, 2024 total $ 177,293 .

Total rent expense including base rent and common area expenses was $ 34,432 and $ 36,495 during the three

months ended March 31, 2024 and 2023, respectively.

Included in the accompanying balance sheet at March 31, 2024 is a right-of-use asset

of $ 232,930 and current and long-term right-of-use operating lease liabilities of $ 175,961 and $ 56,969 , respectively.

At March 31, 2024 future minimum lease payments under

the capital lease and operating lease obligations are as follows:

Schedule of future minimum lease payments under the capital lease and operating lease obligations

Fiscal Year Ending June 30:

7 unchanged sentences

The Company’s operating leases for its Gardner,

Massachusetts office, production and storage spaces plus an equipment lease have expired and continue on a month-to-month tenant-at-will

Rent expense on these operating leases was $ 97,581 and $ 95,511 for the six months ended December 31, 2023 and 2022, respectively.

Massachusetts office, manufacturing and warehousing space and an equipment lease have expired and continue on a month-to-month tenant-at-will

Rent expense on these operating leases was $ 147,544 and $ 150,862 for the nine months ended March 31, 2024 and 2023, respectively.

STOCK-BASED COMPENSATION

1 unchanged sentence

The following table summarizes stock-based compensation

expense for the three months ended December 31, 2023 and 2022.

expense for the three months ended March 31, 2024 and 2023.

The share amounts and prices shown below reflect adjustment for a 1-for-3

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

The following table summarizes stock-based compensation

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

Schedule of stock-based compensation

Ended December 31,

Ended March 31,

Cost of Goods Sold

5 unchanged sentences

The following tables summarize stock option activity

for the three months ended December 31, 2023:

for the nine months ended March 31, 2024:

Schedule of stock option activity

6 unchanged sentences

Cancelled, forfeited, or expired

Outstanding at December 31, 2023

Information related to the stock options outstanding

as of December 31, 2023 is as follows:

Outstanding at March 31, 2024

The aggregate intrinsic value of the Company’s

in-the-money outstanding and exercisable options as of December 31, 2023 was $ 1,874,731 and $ 1,872,040 , respectively.

in-the-money outstanding and exercisable options as of March 31, 2024 were both $ 1,511,424 .

REVENUE RECOGNITION

The Company determines revenue recognition for arrangements that we

determine are within the scope of Accounting Standards Codification Topic 606, “Revenue from Contracts with Customers,” or

ASC 606, by performing the following five steps:

The Company determines revenue recognition for arrangements that

we determine are within the scope of Accounting Standards Codification Topic 606, “Revenue from Contracts with Customers,”

or ASC 606, by performing the following five steps:

(i) identify the contract with a customer;

7 unchanged sentences

obligations and assess whether each promised good or service is distinct based on the contract.

The Company disaggregates revenues by product and service types as

it believes best depicts how the nature, amount, timing and uncertainty of revenues and cash flows are affected by economic factors.

are comprised of the following for the three and six months ended December 31, 2023 and 2022:

Schedule of disaggregation revenues

Ended December 31,

The Company disaggregates revenues by product and service types as it believes

best depicts how the nature, amount, timing and uncertainty of revenues and cash flows are affected by economic factors.

comprised of the following for the three and nine months ended March 31, 2024 and 2023:

Schedule of disaggregation of revenues

Ended March 31,

Engineering Design Services

3 unchanged sentences

Total Revenues

Other selling costs to obtain and fulfill contracts are expensed as

incurred due to the short-term nature of a majority of 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 revenue.

Revenue recognition policies for each of the four product and service

types appear below.

Other selling costs to obtain and fulfill contracts are expensed as incurred

due to the short-term nature of a majority of 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 revenue.

Revenue recognition policies for each of the four product and service types

appear below.

Engineering Design Services

The Company enters into contractual agreements

with our customers, including design services agreements, statements of work and receive purchase orders for development projects.

agreements provide costs on an estimated basis for the services we have agreed to provide.

Engineering Design Services are rendered on

a time and materials basis.

The Company recognizes revenue as customers are invoiced for the actual engineering services provided in the

The Company enters into contractual agreements with

our customers, including design services agreements, statements of work and receive purchase orders for development projects.

These agreements

provide costs on an estimated basis for the services we have agreed to provide.

Engineering Design Services are rendered on a time and

materials basis.

The Company recognizes revenue as customers are invoiced for the actual engineering services provided in the period.

Revenue is also recognized on materials purchased for development projects at the time of receipt.

Engineering Design Services

are provided on a best-efforts basis;

no warranty is provided as there is no guarantee that the work will result in the attainment of

the customer’s project objectives.

Engineering Design Services are provided

on a best-efforts basis;

no warranty is provided as there is no guarantee that the work will result in the attainment of the customer’s

project objectives.

The Company may obtain customer deposits in advance of rendering engineering design services.

Customer deposits are treated as contractual liabilities until the terms of customer agreements are satisfied and are not a component

Customer deposits are

treated as contractual liabilities until the terms of customer agreements are satisfied and are not a component of revenue.

Optical Components, Finished Products and Assemblies

The Company provides fixed price quotations to

our customers and requires purchase orders for all purchased optical components, medical devices and assemblies.

Revenue is recognized

at the time title passes to our customer based on our review of the customer contract, generally at the time of shipment from our facilities.

The Company provides fixed price quotations to our

customers and requires purchase orders for all purchased optical components, finished devices and assemblies.

Revenue is recognized at

the time title passes to our customer based on our review of the customer contract, generally at the time of shipment from our facilities.

Occasionally the Company may enter into “bill and hold” contractual arrangements where title is held by our customers while

1 unchanged sentence

Technology Rights and Royalties

The Company may recognize

revenue for the sale of technology rights and through the receipt of royalties obtained under a license of our intellectual property.

These revenues are recognized in the period in which, in our judgment, they are earned and no longer contingent under the terms and conditions

of the relevant customer contract.

The Company may recognize revenue for the sale of technology

rights and through the receipt of royalties obtained under a license of our intellectual property.

These revenues are recognized in the

period in which, in our judgment, they are earned and no longer contingent under the terms and conditions of the relevant customer contract.

Contract Assets and Liabilities

The nature of the Company’s products and

services does not generally give rise to contract assets as it typically does not incur costs to fulfill a contract before a product or

service is provided to a customer.

The Company’s costs to obtain contracts are typically in the form of sales commissions paid to

The Company has elected to expense sales commissions associated with obtaining a contract as incurred as the amortization period

is generally less than one year.

The nature of the Company’s products and services

does not generally give rise to contract assets as it typically does not incur costs to fulfill a contract before a product or service

is provided to a customer.

The Company’s costs to obtain contracts are typically in the form of sales commissions paid to employees.

The Company has elected to expense sales commissions associated with obtaining a contract as incurred as the amortization period is generally

less than one year.

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

As of December 31,

2023, there were no contract assets recorded in the Company’s Consolidated Balance Sheets.

The Company’s contract liabilities arise

from unearned revenue received from customers at inception of contracts or where the timing of billing for services precedes satisfaction

of our performance obligations.

As of March 31, 2024, there were

no contract assets recorded in the Company’s Consolidated Balance Sheets.

The Company’s contract liabilities arise from

unearned revenue received from customers at inception of contracts or where the timing of billing for services precedes satisfaction of

our performance obligations.

The Company generally satisfies performance obligations within one year from the contract’s inception

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 December 31,

Ended March 31,

Contract liabilities, beginning of period

2 unchanged sentences

( 1,041,369 )

( 1,435,082 )

Contract liabilities, end of period

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