What changed in this filing

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Item 1A. Risk Factors

2025-09-29 compared with 2024-09-30 · 237 added, 217 removed, 266 unchanged (63% of the section changed)

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sufficient to sustain operations and meet our obligations.

We depend on the availability of certain key

supplies and services that are available from only a few sources, and we may experience difficulty with certain suppliers due to national

and global economic supply-chain factors and we may have difficulty finding alternative sources of these supplies or services.

We source certain key supplies to develop and manufacture

our products, particularly our precision grade optical glass components and CMOS image sensors, which are available from only a few sources,

some of which are located in China.

Our business could be affected if we become unable to procure these essential materials and services

in adequate quantities and at acceptable prices.

We continuously evaluate our suppliers and alternative sources.

If we experience a shortage

of certain supplies and are unable to find an alternative source, our financial condition and results of operations could be adversely

We rely on a small number of customers who may

not consistently purchase our products in the future and if we lose any one of these customers, our revenues may decline.

We rely on a small number of customers who

may not consistently purchase our products in the future and if we lose any one of these customers, our revenues may decline.

A small number of customers may continue to represent

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A loss of any of these customers could adversely affect our revenues.

We could suffer unrecoverable losses on our

customers’ accounts receivable, which would adversely affect our financial results.

While we believe we have a varied customer base and

have experienced strong collections in the past, we may experience changes in our customer base, including reductions in purchasing commitments,

which could also have a material adverse effect on our revenues and liquidity.

Additionally, our customers could become unable or unwilling

to pay amounts owed to us.

Over the past three years, we have not had significant accounts receivable write-offs or significant additions

to our accounts receivable reserve and.

We could suffer unrecoverable losses on

our customers’ accounts receivable, which would adversely affect our financial results.

While we believe we have a varied customer base

and have experienced strong collections in the past, we may experience changes in our customer base, including reductions in purchasing

commitments, which could also have a material adverse effect on our revenues and liquidity.

Additionally, our customers could become unable

or unwilling to pay amounts owed to us.

Over the past three years, we have not had significant accounts receivable write-offs or significant

additions to our accounts receivable reserve and.

we have not purchased insurance on our accounts receivable balances.

Nonetheless, large uncollectible

accounts receivable balances could arise in the future and could have a material adverse effect on our financial condition.

We rely heavily upon the talents of our Chief

Executive Officer and other senior officers, the loss of whom could damage our business.

Our performance depends on a small number of key scientific,

technical, managerial and manufacturing personnel.

In particular, we believe our success is highly dependent upon the services and reputation

of our Chief Executive Officer, Dr.

Nonetheless, large

uncollectible accounts receivable balances could arise in the future and could have a material adverse effect on our financial condition.

We rely heavily upon the talents of our

Chief Executive Officer and other senior officers, the loss of whom could damage our business.

Our performance depends on a small number of key

scientific, technical, managerial and manufacturing personnel.

In particular, we believe our success is highly dependent upon the services

and reputation of our Chief Executive Officer, Dr.

The loss of Dr.

Forkey’s services could damage our business.

Forkey provides

highly valuable contributions to our capabilities in optical instrument development, in management of new technology and in potentially

significant longer-term Company initiatives.

We must continue to be able to attract and retain

employees with the scientific and technical skills that our business requires and if we are unable to attract and retain such individuals,

Forkey provides highly valuable contributions to our capabilities in optical instrument development, in management of new technology

and in potentially significant longer-term Company initiatives.

We must continue to be able to attract and

retain employees with the scientific and technical skills that our business requires and if we are unable to attract and retain such individuals,

our business could be severely damaged.

Our ability to attract and retain employees with a

high degree of scientific and technical talent is crucial to the success of our business.

Our ability to attract and retain employees with

a high degree of scientific and technical talent is crucial to the success of our business.

There is intense competition for the services

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and production under fixed-price purchase orders and these purchase orders may not be profitable over time.

A portion of our business has been devoted to research,

development and production under fixed-price purchase orders.

For our purposes, a fixed-price purchase order is any purchase order under

which we will provide products or services for a fixed-price over an extended period of time, usually six months or longer.

that revenues from fixed-price purchase orders will continue to represent a significant portion of our total revenues in future fiscal

Because they involve performance over time, we cannot

predict with certainty the expenses involved in meeting our obligations under fixed-price purchase orders.

Therefore, we can never be

sure at the time we enter into any single fixed-price purchase order that such purchase order will continue to be profitable for us throughout

the fixed-price period.

We perform engineering and manufacturing services

for our customers who could decide to use another vendor for these services in the future.

A portion of our business has been devoted to

research, development and production under fixed-price purchase orders.

For our purposes, a fixed-price purchase order is any purchase

order under which we will provide products or services for a fixed-price over an extended period of time, usually six months or longer.

We expect that revenues from fixed-price purchase orders will continue to represent a significant portion of our total revenues in future

fiscal years.

Because they involve performance over time, we

cannot predict with certainty the expenses involved in meeting our obligations under fixed-price purchase orders.

Therefore, we can never

be sure at the time we enter into any single fixed-price purchase order that such purchase order will continue to be profitable for us

throughout the fixed-price period.

We perform engineering and manufacturing

services for our customers who could decide to use another vendor for these services in the future.

A significant portion of our revenues are derived

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basis from period to period.

We resell products we purchase from third parties

and our customers could decide to use another supplier to acquire those products.

We resell products we purchase from third

parties and our customers could decide to use another supplier to acquire those products.

Our division Ross Optical primarily acquires specialized

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operating results.

We depend on the availability of certain key

supplies and services that are available from only a few sources and if we experience difficulty with a supplier, we may have difficulty

We depend on the availability of certain

key supplies and services that are available from only a few sources and if we experience difficulty with a supplier, we may have difficulty

finding alternative sources of these supplies or services.

We require certain key supplies to develop and manufacture

our products, particularly our precision grade optical glass, which is available from only a few sources, most which are located outside

of the United States.

We require certain key supplies to develop and

manufacture our products, particularly our precision grade optical glass, which is available from only a few sources, most which are located

outside of the United States.

Additionally, we rely on outside vendors to grind and polish certain of our lenses and other optical components,

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in adequate quantities and at acceptable prices.

From time to time, subcontractors may produce some

of our products for us, and our business is subject to the risk that these subcontractors fail to make timely delivery.

Our products and

services are also used as components of the products and services of other manufacturers.

We are therefore subject to the risk that manufacturers

who integrate our products or services into their own products or services are unable to acquire essential supplies and services from

third parties in a timely fashion.

If this occurs, we may not be able to deliver our products on a timely basis and our revenues may decline.

Our customers may claim that the products we

sold them were defective and if our insurance is not sufficient to cover such a claim, we would be liable for the excess.

Like any manufacturer, we are and always have been

exposed to liability claims resulting from the use of products we assist in developing, manufacture and supply to our customers.

Additionally,

the products we supply could be used in conjunction with other products in medical device applications, such as certain endoscope products

claimed to be associated with surgical suite contamination resulting from their intended re-use and re-sterilization.

We maintain product

liability insurance to cover us in the event of liability claims, and no such claims have been asserted or threatened against us to date.

However, our insurance may not be sufficient to cover all possible future product claims, costs and any resulting liabilities.

From time to time, subcontractors may produce

some of our products for us, and our business is subject to the risk that these subcontractors fail to make timely delivery.

and services are also used as components of the products and services of other manufacturers.

We are therefore subject to the risk that

manufacturers who integrate our products or services into their own products or services are unable to acquire essential supplies and

services from third parties in a timely fashion.

If this occurs, we may not be able to deliver our products on a timely basis and our

revenues may decline.

Our customers may claim that the products

we sold them were defective and if our insurance is not sufficient to cover such a claim, we would be liable for the excess.

Like any manufacturer, we are and always have

been exposed to liability claims resulting from the use of products we assist in developing, manufacture and supply to our customers.

Additionally, the products we supply could be used in conjunction with other products in medical device applications, such as certain

endoscope products claimed to be associated with surgical suite contamination resulting from their intended re-use and re-sterilization.

We maintain product liability insurance to cover us in the event of liability claims, and no such claims have been asserted or threatened

against us to date.

However, our insurance may not be sufficient to cover all possible future product claims, costs and any resulting

We would be liable if our business operations

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our business could be severely damaged by any failure to maintain such compliance.

of our competitors are large, well-financed companies who have research and marketing capabilities

that are superior to ours.

The industries in which we operate are highly competitive.

Many of our existing and potential competitors have greater financial resources and manufacturing capabilities, more established and larger

marketing and sales organizations and larger technical staffs than we have.

Other companies, some with greater experience in the optics,

semiconductor or medical products industries, are seeking to produce products and services that compete with our products and services.

Ross Optical is subject to tariffs and regulatory

scrutiny, and it faces the risk of changes to this regulatory environment and business in the future.

Many of our competitors are large, well-financed

companies who have research and marketing capabilities that are superior to ours.

The industries in which we operate are highly

Many of our existing and potential competitors have greater financial resources and manufacturing capabilities, more established

and larger marketing and sales organizations and larger technical staffs than we have.

Other companies, some with greater experience in

the optics, semiconductor or medical products industries, are seeking to produce products and services that compete with our products

and services.

Ross Optical is subject to tariffs and

regulatory scrutiny, and it faces the risk of changes to this regulatory environment and business in the future.

Ross Optical is ISO and ITAR registered and currently

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s international business.

Our business and financial

performance may be adversely affected by cyber-attacks on information technology infrastructure and products, as well as changes in cybersecurity

and if our information technology security systems were infiltrated and confidential and/or proprietary information were taken, we could

be subject to fines, lawsuits and loss of customers.

We rely on information technology

(IT) systems, including third-party “cloud based” service providers and rely on our electronic information systems to perform

routine transactions to run our business.

We transact business over the Internet with customers and suppliers and have implemented security

measures to protect against unauthorized access to this information.

We have also implemented security policies that limit access via

the Internet to the Company’s systems through geofencing.

We routinely receive security patches from software providers for the

software we use.

Our primary concerns are inappropriate access to personnel information, information covered under the International Traffic

in Arms Regulation, product designs and manufacturing information, financial information and our intellectual property, trade secrets

and know-how.

Our business may be impacted by disruptions to our own or third-party information technology infrastructure, which could

result from, among other causes, cyberattacks on or failures of such infrastructure or compromises to its physical security.

Our business and

financial performance may be adversely affected by cyber-attacks on information technology infrastructure and products, as well as changes

in cybersecurity and if our information technology security systems were infiltrated and confidential and/or proprietary information were

taken, we could be subject to fines, lawsuits and loss of customers.

We rely on information

technology (IT) systems, including third-party “cloud based” service providers and rely on our electronic information systems

to perform routine transactions to run our business.

We transact business over the Internet with customers and suppliers and have implemented

security measures to protect against unauthorized access to this information.

We have also implemented security policies that limit access

via the Internet to the Company’s systems through geofencing.

We routinely receive security patches from software providers for

the software we use.

Our primary concerns are inappropriate access to personnel information, information covered under the International

Traffic in Arms Regulation, product designs and manufacturing information, financial information and our intellectual property, trade

secrets and know-how.

Our business may be impacted by disruptions to our own or third-party information technology infrastructure, which

could result from, among other causes, cyberattacks on or failures of such infrastructure or compromises to its physical security.

Cybersecurity

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property and, as a result, we could incur significant expense in protecting our patents or not have sufficient resources to protect them.

We utilize numerous licensed patents that are important

to our business.

Although we are not currently aware of any past or present infringements of these patents, we would expect to protect

these patents from infringement.

We utilize numerous licensed patents that are

important to our business.

Although we are not currently aware of any past or present infringements of these patents, we would expect

to protect these patents from infringement.

Protecting and obtaining patents, however, is both time consuming and expensive.

We therefore may not

have the resources necessary to assert all potential patent infringement claims or pursue all patents that might be available to us.

our competitors or other third parties infringe on our patents, our business may be harmed.

Third parties may claim that we have infringed on their patents and,

as a result, we could be prohibited from using all or part of any technology used in our products.

Should third parties claim a proprietary right to

all or part of any technology that we use in our products, such a claim, regardless of its merit, could involve us in costly litigation.

may not have the resources necessary to assert all potential patent infringement claims or pursue all patents that might be available

If our competitors or other third parties infringe on our patents, our business may be harmed.

Third parties may claim that we have infringed on their patents

and, as a result, we could be prohibited from using all or part of any technology used in our products.

Should third parties claim a proprietary right

to all or part of any technology that we use in our products, such a claim, regardless of its merit, could involve us in costly litigation.

If successful, such a claim could also result in us being unable to freely use the technology that was the subject of the claim or sell

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from using a particular technology in our products, our revenues may decline, and our business may be harmed.

We may be subject to

claims that our employees have wrongfully used or disclosed alleged trade secrets of their former employers.

We may be subject

to claims that our employees have wrongfully used or disclosed alleged trade secrets of their former employers.

As is common in the technology

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adversely affect our competitive business position.

We will not be able

to protect our intellectual property rights throughout the world.

Our business relies on our

Filing, prosecuting and defending patents in all countries throughout the world would be prohibitively expensive, and we do not

have patent protection outside of the United States.

In addition, the laws of some foreign countries do not protect intellectual property

rights to the same extent as federal and state laws in the United States.

Consequently, we may not be able to prevent third parties from

practicing our inventions in all countries outside the United States or from selling or importing products made using our inventions in

and into the United States or other jurisdictions.

Competitors may use our technologies in jurisdictions where we have not obtained patent

protection to develop their own products and, further, may export otherwise infringing products to territories where we have patent protection,

but enforcement is not as strong as that in the United States.

These infringing products may compete with the product we develop, without

any available recourse.

The laws of some other countries

do not protect intellectual property rights to the same extent as the laws of the United States.

Patent protection must ultimately be

sought on a country-by-country basis, which is an expensive and time-consuming process with uncertain outcomes.

Accordingly, we may choose

not to seek patent protection in certain countries, and we will not have the benefit of patent protection in such countries.

the legal systems of some countries, particularly developing countries, do not favor the enforcement of patents and other intellectual

We will not be

able to protect our intellectual property rights throughout the world.

Our business relies on

Filing, prosecuting and defending patents in all countries throughout the world would be prohibitively expensive, and we

do not have patent protection outside of the United States.

In addition, the laws of some foreign countries do not protect intellectual

property rights to the same extent as federal and state laws in the United States.

Consequently, we may not be able to prevent third parties

from practicing our inventions in all countries outside the United States or from selling or importing products made using our inventions

in and into the United States or other jurisdictions.

Competitors may use our technologies in jurisdictions where we have not obtained

patent protection to develop their own products and, further, may export otherwise infringing products to territories where we have patent

protection, but enforcement is not as strong as that in the United States.

These infringing products may compete with the product we develop,

without any available recourse.

The laws of some other

countries do not protect intellectual property rights to the same extent as the laws of the United States.

Patent protection must ultimately

be sought on a country-by-country basis, which is an expensive and time-consuming process with uncertain outcomes.

Accordingly, we may

choose not to seek patent protection in certain countries, and we will not have the benefit of patent protection in such countries.

addition, the legal systems of some countries, particularly developing countries, do not favor the enforcement of patents and other intellectual

property protection.

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Risks Related to our Stock

Trading in our common stock may be subject to

substantial volatility.

Our common stock is quoted on the Nasdaq Stock Market

under the symbol POCI.

The price of our common stock may be volatile as a result of a number of factors, including, but not limited to,

the following:

Trading in our common stock may be subject

to substantial volatility.

Our common stock is quoted on the Nasdaq Stock

Market under the symbol POCI.

The price of our common stock may be volatile as a result of a number of factors, including, but not limited

to, the following:

our ability to successfully conceive and to develop new products and services to enhance the performance characteristics and methods of manufacture of existing products;

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competitive pricing pressures.

We may not be able to grow or sustain revenues or

achieve or maintain profitability on a quarterly or annual basis and levels of revenue and/or profitability may vary from one such period

We are contractually obligated to issue shares

in the future, diluting your percentage interest in us.

We may not be able to grow or sustain revenues

or achieve or maintain profitability on a quarterly or annual basis and levels of revenue and/or profitability may vary from one such

period to another.

We are contractually obligated to issue

shares in the future, diluting your percentage interest in us.

We have reserved shares for future issuance under

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of diluting the percentage interests of other holders of our common stock.

Failure to remediate and then maintain our internal control over

our financial reporting could cause our financial reports to be inaccurate.

Failure to maintain our internal control over our financial reporting

could cause our financial reports to be inaccurate.

We are required to maintain

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Our management concluded that

our internal control over financial reporting was ineffective as of June 30, 2024, and identified certain material weaknesses in our internal

While management is working to remediate the material weaknesses, there is no assurance that such changes will remediate the

identified material weaknesses or that the controls will prevent or detect future material weaknesses.

If we are not able to maintain

effective internal control over financial reporting, our financial statements, including related disclosures, may be inaccurate, which

could have a material adverse effect on our business

our internal control over financial reporting was effective as of June 30, 2025, however, if we are not able to maintain effective internal

control over financial reporting, our financial statements, including related disclosures, may be inaccurate, which could have a material

adverse effect on our business

Failure to maintain

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costs to expand our accounting and finance functions and that we expend significant management efforts.

As of June 30, 2024, we discovered weaknesses

in our system of internal financial and accounting controls and procedures that could result in a material misstatement of our financial

Our internal control over financial reporting will not prevent or detect all errors and all fraud.

A control system, no matter

how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be

Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements

due to error or fraud will not occur or that all control issues and instances of fraud will be detected.

Our internal control over financial reporting

will not prevent or detect all errors and all fraud.

A control system, no matter how well designed and operated, can provide only reasonable,

not absolute, assurance that the control system’s objectives will be met.

Because of the inherent limitations in all control systems,

no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues

and instances of fraud will be detected.

If we are not able to

comply with the requirements of Section 404 of the Sarbanes-Oxley Act, or if we are unable to remediate or maintain proper and effective

internal controls, we may not be able to produce timely and accurate financial statements.

If we cannot provide reliable financial reports

or prevent fraud, our business and results of operations could be harmed, and investors could lose confidence in our reported financial

Certain provisions in our organizational documents

could enable our board of directors to prevent or delay a change of control .

Our organizational documents contain provisions that

may have the effect of discouraging, delaying or preventing a change of control of, or unsolicited acquisition proposals, that a stockholder

might consider favorable.

comply with the requirements of Section 404 of the Sarbanes-Oxley Act, or if we are unable to maintain proper and effective internal controls,

we may not be able to produce timely and accurate financial statements.

If we cannot provide reliable financial reports or prevent fraud,

our business and results of operations could be harmed, and investors could lose confidence in our reported financial information.

Certain provisions in our organizational

documents could enable our board of directors to prevent or delay a change of control .

Our organizational documents contain provisions

that may have the effect of discouraging, delaying or preventing a change of control of, or unsolicited acquisition proposals, that a

stockholder might consider favorable.

These include provisions:

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limiting the persons who may call special stockholders’ meetings.

In addition, we are subject to the provisions of Chapter

110F of the MBCA.

In general, Chapter 110F prohibits a publicly held Massachusetts corporation from engaging in a “business combination”

with an “interested stockholder” for a three-year period following the time that the stockholder becomes an interested stockholder,

unless the business combination is approved in a prescribed manner.

A “business combination” includes, among other things,

a merger, asset or stock sale or other transaction resulting in a financial benefit to the interested stockholder.

An “interested

stockholder” is a person who, together with affiliates and associates, owns, or did own within three years prior to the determination

of interested stockholder status, five percent or more of the corporation’s voting stock.

In addition, we are subject to the provisions

of Chapter 110F of the MBCA.

In general, Chapter 110F prohibits a publicly held Massachusetts corporation from engaging in a “business

combination” with an “interested stockholder” for a three-year period following the time that the stockholder becomes

an interested stockholder, unless the business combination is approved in a prescribed manner.

A “business combination” includes,

among other things, a merger, asset or stock sale or other transaction resulting in a financial benefit to the interested stockholder.

An “interested stockholder” is a person who, together with affiliates and associates, owns, or did own within three years

prior to the determination of interested stockholder status, five percent or more of the corporation’s voting stock.

A Massachusetts corporation may “opt out”

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trading volume or our stock price to decline.

The trading market for our common stock depends in

part on the research and reports that analysts and journalists publish about us or our business.

If analysts or journalists publish inaccurate

or unfavorable research about our business, our stock price would likely decline.

If we fail to meet the expectations of analysts for

our operating results, or if the analysts who covers us downgrade our stock, our stock price would likely decline.

If one or more of these

analysts ceases coverage of us or fails to publish reports on us regularly, demand for our stock could decrease, which could cause our

stock price and trading volume to decline.

The trading market for our common stock depends

in part on the research and reports that analysts and journalists publish about us or our business.

If analysts or journalists publish

inaccurate or unfavorable research about our business, our stock price would likely decline.

If we fail to meet the expectations of analysts

for our operating results, or if the analysts who covers us downgrade our stock, our stock price would likely decline.

If one or more

of these analysts ceases coverage of us or fails to publish reports on us regularly, demand for our stock could decrease, which could

cause our stock price and trading volume to decline.

Claims for indemnification by our directors

and officers may reduce our available funds to satisfy successful third-party claims against us and may reduce the amount of money available

Our bylaws contain provisions that eliminate, to the

maximum extent permitted by the MBCA, the personal liability of our directors and executive officers for monetary damages for breach of

their fiduciary duties as a director or officer.

Our bylaws also provide that we will indemnify our directors and executive officers and

may indemnify our employees and other agents to the fullest extent permitted by the MBCA.

Any claims for indemnification made by our directors

or officers could impact our cash resources and our ability to fund the business.

Our bylaws contain provisions that eliminate,

to the maximum extent permitted by the MBCA, the personal liability of our directors and executive officers for monetary damages for breach

of their fiduciary duties as a director or officer.

Our bylaws also provide that we will indemnify our directors and executive officers

and may indemnify our employees and other agents to the fullest extent permitted by the MBCA.

Any claims for indemnification made by our

directors or officers could impact our cash resources and our ability to fund the business.

We have no intention of declaring dividends

in the foreseeable future.

The decision to pay cash dividends on our common stock

rests with our board of directors and will depend on our earnings, unencumbered cash, capital requirements and financial condition.

do not anticipate declaring any dividends in the foreseeable future, as we intend to use any excess cash to fund our operations.

The decision to pay cash dividends on our common

stock rests with our board of directors and will depend on our earnings, unencumbered cash, capital requirements and financial condition.

We do not anticipate declaring any dividends in the foreseeable future, as we intend to use any excess cash to fund our operations.

in our common stock should not expect to receive dividend income on their investment, and investors will be dependent on the appreciation

of our common stock to earn a return on their investment.

Artificial intelligence presents risks and challenges

that can impact our business, including by posing security risks to our confidential information, proprietary information and personal

Issues in the development and use of artificial intelligence,

combined with an uncertain regulatory environment, may result in reputational harm, liability, or other adverse consequences to our business

As with many technological innovations, artificial intelligence presents risks and challenges that could impact our business.

We may adopt and integrate generative artificial intelligence tools into our systems for specific use cases reviewed by legal and information

Our vendors may incorporate generative artificial intelligence tools into their offerings without disclosing this use to us,

and the providers of these generative artificial intelligence tools may not meet existing or rapidly evolving regulatory or industry standards

with respect to privacy and data protection and may inhibit our or our vendors’ ability to maintain an adequate level of service

and experience.

If we, our vendors, or our third-party partners experience an actual or perceived breach or privacy or security incident

because of the use of generative artificial intelligence, we may lose valuable intellectual property and confidential information and

our reputation and the public perception of the effectiveness of our security measures could be harmed.

Further, bad actors around the

world use increasingly sophisticated methods, including the use of artificial intelligence, to engage in illegal activities involving

the theft and misuse of personal information, confidential information, and intellectual property.

Any of these outcomes could damage

our reputation, result in the loss of valuable property and information, and adversely impact our business.

Artificial intelligence presents risks and

challenges that can impact our business, including by posing security risks to our confidential information, proprietary information and

personal data.

Issues in the development and use of artificial

intelligence, combined with an uncertain regulatory environment, may result in reputational harm, liability, or other adverse consequences

to our business operations.

As with many technological innovations, artificial intelligence presents risks and challenges that could

impact our business.

We may adopt and integrate generative artificial intelligence tools into our systems for specific use cases reviewed

by legal and information security.

Our vendors may incorporate generative artificial intelligence tools into their offerings without

disclosing this use to us, and the providers of these generative artificial intelligence tools may not meet existing or rapidly evolving

regulatory or industry standards with respect to privacy and data protection and may inhibit our or our vendors’ ability to maintain

an adequate level of service and experience.

If we, our vendors, or our third-party partners experience an actual or perceived breach

or privacy or security incident because of the use of generative artificial intelligence, we may lose valuable intellectual property

and confidential information and our reputation and the public perception of the effectiveness of our security measures could be harmed.

Further, bad actors around the world use increasingly sophisticated methods, including the use of artificial intelligence, to engage

in illegal activities involving the theft and misuse of personal information, confidential information, and intellectual property.

of these outcomes could damage our reputation, result in the loss of valuable property and information, and adversely impact our business.

Changes in U.S.

Tariff Policy and Related

Trade Actions Could Adversely Affect Our International Supply Chain, Costs, and Competitive Position

Our business is subject to risks associated with

changes in U.S.

tariff policy and related trade actions, which could materially and adversely affect our operations, financial condition,

and results of operations.

We rely on a global supply chain for the procurement of specialized optical components and assemblies, many

of which are sourced from overseas suppliers.

The imposition of new tariffs increases in existing tariffs, or other trade restrictions

by the United States government on goods imported from certain countries—including, but not limited to, China and other key trading

partners—could increase our cost of goods sold and disrupt the availability of critical components necessary for our products.

In response to evolving U.S.

trade policy, affected

countries may implement retaliatory tariffs or other trade barriers on U.S.

goods, which could further impact our ability to source materials

at competitive prices or to sell our products in certain international markets.

These developments may also result in increased volatility

in global markets, supply chain disruptions, and reduced demand for our products due to higher prices or decreased competitiveness relative

to foreign and domestic competitors not subject to similar tariffs.

While we seek to mitigate the impact of tariffs

through supply chain diversification and price negotiations, such measures may not be successful or may result in increased costs, delays,

or operational inefficiencies.

Sustained or additional tariffs could require us to raise prices, which may reduce customer demand and

adversely affect our revenues and market share.

Furthermore, uncertainty regarding future U.S.

trade policy and the potential for further

changes in tariffs or trade agreements may make it more difficult for us to plan and conduct our business effectively.

Any significant increase in tariffs, expansion

of trade restrictions, or prolonged uncertainty regarding U.S.

trade policy could materially adversely affect our ability to source components,

manage costs, and compete effectively in our markets, which could have a material adverse effect on our business, financial condition,

and results of operations.

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 1A. Risk Factors