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Item 9A. Controls and Procedures

2025-09-29 compared with 2024-09-30 · 128 added, 121 removed, 111 unchanged (69% of the section changed)

5 unchanged sentences

Based on this evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that our disclosure

controls and procedures were not effective as of June 30, 2024 due to the existence of the material weaknesses described below.

controls and procedures were effective as of June 30, 2025.

Management’s Annual Report on Internal

Control Over Financial Reporting

Our disclosure controls and procedures include components

of our internal control over financial reporting.

In designing and evaluating our disclosure controls and procedures, management recognizes

that any controls, no matter how well designed and operated, can provide only reasonable, but not absolute, assurance that misstatements

due to error or fraud will not occur or that all control issues and instances of fraud, if any, with our Company have been detected.

A “material weakness” is defined as a

significant deficiency, or a combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement

of the annual or interim financial statements will not be prevented or detected.

A “significant deficiency” is a control deficiency,

or a combination of control deficiencies, that adversely affects a company’s ability to initiate, authorize, record, process or

report external financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote

likelihood that a misstatement of the annual or interim financial statements that is more than inconsequential will not be prevented or

Under the supervision and with the participation of

our management, including our Chief Executive Officer and our Chief Financial Officer, we conducted an assessment of the effectiveness

Our disclosure controls and procedures include

components of our internal control over financial reporting.

In designing and evaluating our disclosure controls and procedures, management

recognizes that any controls, no matter how well designed and operated, can provide only reasonable, but not absolute, assurance that

misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, with our Company have been

Under the supervision and with the participation

of our management, including our Chief Executive Officer and our Chief Financial Officer, we conducted an assessment of the effectiveness

of our internal control over financial reporting as of June 30, 2025.

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by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control — Integrated Framework

Based on our evaluation, our management concluded that our internal control over financial reporting was not effective as

of June 30, 2024.

The following is a description of a material weaknesses

in our internal control over financial reporting and planned and implemented remediation:

We did not properly value our

raw material and work-in-process inventory resulting in an overstatement of inventory and an understatement of cost of goods sold in the

amount of $320,000.

We used a manually updated spreadsheet to maintain our records of quantities and costs in inventory, prior to transitioning

to a new ERP system.

The new ERP system was not properly updated to reflect current costs, and proper units of measure for certain items

in inventory.

To address and remediate this material weakness, beginning with the quarter ending September 30, 2024, we will implement

compensating controls, including conducting a thorough review of inventory item costs, updating incorrect item costs and units of measure

in the new ERP system and establishing a methodology to continually monitor changes in costs through an analysis of purchase price variances

and customer margin analysis.

We did not properly expense certain research and development

costs totaling $147,000.

We erroneously believed certain research and development costs were allowed to be capitalized under GAAP.

result was understatement of research and development expense by $147,000.

The remediation of this material weakness has now been completed.

Changes in Internal Control over Financial Reporting

Except as described in the preceding section, there

has been no change in our internal control over financial reporting that occurred during the fiscal year covered by this Annual Report

on Form 10-K that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Based on our evaluation, our management concluded that our internal control over financial reporting was effective as of June

Changes in Internal Control over Financial

There has been no change in our internal control

over financial reporting that occurred during the fiscal year covered by this Annual Report on Form 10-K that has materially affected,

or is reasonably likely to materially affect, our internal control over financial reporting.

OTHER INFORMATION.

During the three months ended June 30, 2024, no director or officer of

the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,”

as each term is defined in Item 408(a) of Regulation S-K.

Our loan agreement contains a minimum annual debt service coverage ratio

covenant of 1.2x, for the period ending June 30, 2024.

We did not meet this annual debt service coverage ratio as of June 30, 2024.

lender has agreed to waive compliance with the debt service ratio covenant for the period ending June 30, 2024.

In addition to the waiver,

we have entered into amendments dated September 30, 2024 with our lender to both term loans which provide for a six month period of interest

only payments from September 15, 2024 through February 15, 2025.

We will begin to pay principal and interest under the Notes beginning

with the payments due on March 15, 2025, with a new amortization schedule for the remaining term for such Notes through their maturity

There were no other changes to or modifications to the Loan Agreement or the Notes.

DISCLOSURE REGARDING FOREIGN JURISDICTIONS

THAT PREVENT INSPECTIONS.

During the three months ended June 30, 2025, no

director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading

arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.

Not applicable.

DIRECTORS, EXECUTIVE

OFFICERS AND CORPORATE GOVERNANCE.

EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

The information required under this item is incorporated

by reference to the applicable information set forth in the Proxy Statement for the 2025 Annual Meeting of Stockholders.

Our Board of Directors has adopted a written Code of Business Conduct and

Ethics applicable to all officers, directors and employees, which has been filed as an exhibit to this Annual Report.

EXECUTIVE COMPENSATION.

Our Board of Directors has adopted a written Code

of Business Conduct and Ethics applicable to all officers, directors and employees, which has been filed as an exhibit to this Annual

COMPENSATION.

The information required under this item is incorporated

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by reference to the applicable information set forth in the Proxy Statement for the 2025 Annual Meeting of Stockholders.

PRINCIPAL ACCOUNTING

FEES AND SERVICES.

ACCOUNTING FEES AND SERVICES.

The information required under this item is incorporated

2 unchanged sentences

Documents filed as part of this report

The following documents are filed as part of this Annual Report on 10-K:

The following documents are filed as part of this Annual Report

FINANCIAL STATEMENTS

The following documents are filed in Part II, Item 8 of this

Annual Report on Form 10-K:

The following documents are filed in Part II, Item 8 of

this Annual Report on Form 10-K:

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets at June 30, 2024 and 2023

Consolidated Statements of Operations for the years ended June 30, 2024 and 2023

Consolidated Statements of Stockholders’ Equity for the years ended June 30, 2024 and 2023

Consolidated Statements of Cash Flows for the years ended June 30, 2024 and 2023

Notes to Consolidated Financial Statements

Balance Sheets at June 30, 2025 and 2024

Statements of Operations for the years ended June 30, 2025 and 2024

Statements of Stockholders’ Equity for the years

ended June 30, 2025 and 2024

Statements of Cash Flows for the years ended June 30,

2025 and 2024

Notes to Financial Statements

FINANCIAL STATEMENT SCHEDULES

All financial statement schedules have been omitted as they are not required,

not applicable, or the required information is otherwise included.

All financial statement schedules have been omitted

as they are not required, not applicable, or the required information is otherwise included.

The exhibits listed below are filed with or incorporated by reference

in this report.

Restated Articles of Organization of Precision Optics Corporation, Inc.

(included as Exhibit 3.1 to the Form 10-K filed September 28, 2023, and incorporated herein by reference).

Amended and Restated Bylaws of Precision Optics Corporation, Inc.

(included as Exhibit 3.1 to the Current Report on Form 8-K filed July 11, 2014, and incorporated herein by reference).

Amendment to the Amended and Restated Bylaws of Precision Optics Corporation, Inc.

effective May 13, 2022 (included as exhibit 3.5 to the Form 10-Q filed May 16, 2022, and incorporated herein by reference).

Articles of Amendment to the Amended Articles of Organization as filed with the Commonwealth of Massachusetts on October 24, 2022;

and Articles of Amendment as filed with the Commonwealth of Massachusetts on October 26, 2022, to override the earlier amendment (included as Exhibit 3.1 to the Current Report on Form 8-K filed November 2, 2022, and incorporated herein by reference).

Articles of Amendment to the Amended Articles of Organization as filed with the Commonwealth of Massachusetts on October 27, 2022, to set revised effective date of reverse stock split (included as Exhibit 3.2 to the Current Report on Form 8-K filed November 2, 2022, and incorporated herein by reference).

Form of Common Stock Certificate

Description of Securities

Articles of Organization of Precision Optics Corporation, Inc.

as Exhibit 3.1 to the Form 10-K filed September 28, 2023, and incorporated herein by reference).

and Restated Bylaws of Precision Optics Corporation, Inc.

as Exhibit 3.1 to the Current Report on Form 8-K filed July 11, 2014, and incorporated herein by reference).

to the Amended and Restated Bylaws of Precision Optics Corporation, Inc.

effective May 13, 2022 (included

as exhibit 3.5 to the Form 10-Q filed May 16, 2022, and incorporated herein by reference).

of Amendment to the Amended Articles of Organization as filed with the Commonwealth of Massachusetts on October 24, 2022;

of Amendment as filed with the Commonwealth of Massachusetts on October 26, 2022, to override the earlier amendment (included

as Exhibit 3.1 to the Current Report on Form 8-K filed November 2, 2022, and incorporated herein by reference).

of Amendment to the Amended Articles of Organization as filed with the Commonwealth of Massachusetts on October 27, 2022, to set

revised effective date of reverse stock split (included

as Exhibit 3.2 to the Current Report on Form 8-K filed November 2, 2022, and incorporated herein by reference).

Form of Common Stock Certificate (incorporated by

reference from Exhibit 4.1 to the annual report on Form 10-K filed on September 30, 2024).

Description of Securities (incorporated by reference from

Exhibit 4.2 to the annual report on Form 10-K filed on September 30, 2024)

Precision Optics Corporation, Inc.

27 unchanged sentences

and Main Street Bank (included as Exhibit 10.7 to the current report on Form 8-K filed on October 8, 2021, and incorporated herein by reference).

Director side letter agreement dated October 4, 2021 (included as Exhibit 10.8 to the current report on Form 8-K filed on October 8, 2021, and incorporated herein by reference).

Precision Optics Corporation, Inc.

2022 Equity Incentive Plan (included as Appendix B to the proxy statement on Form DEF14A filed on February 24, 2022, and incorporated herein by reference).

Second Amendment to Loan Agreement dated June 2, 2023, by and between Precision Optics Corporation, Inc.

and Main Street Bank (included as Exhibit 10.1 to the current report on Form 8-K filed on June 7, 2023, and incorporated herein by reference).

$750,000 Promissory Note dated June 2, 2023 (included as Exhibit 10.2 to the current report on Form 8-K filed on June 7, 2023, and incorporated herein by reference).

Second Amendment to Demand Revolving Line of Credit Note dated June 2, 2023, by and between Precision Optics Corporation, Inc.

and Main Street Bank (included as Exhibit 10.3 to the current report on Form 8-K filed on June 7, 2023, and incorporated herein by reference).

Form of Securities Purchase Agreement, by and among Precision Optics Corporation, Inc.

and several investors, dated June 15, 2023 (included as Exhibit 10.1 to the current report on Form 8-K filed on June 20, 2023, and incorporated herein by reference).

Form of Registration Rights Agreement, by and among Precision Optics Corporation, Inc.

and several investors, dated June 15, 2023 (included as Exhibit 10.2 to the current report on Form 8-K filed on June 20, 2023, and incorporated herein by reference).

Placement Agent Agreement, by and between Precision Optics Corporation, Inc.

and A.G.P./Alliance Global Partners, dated June 15, 2023 (included as Exhibit 10.3 to the current report on Form 8-K filed on June 20, 2023, and incorporated herein by reference).

Employment Agreement dated March 30, 2023 between Precision Optics Corporation, Inc.

and Mahesh Lawande (included as Exhibit 10.31 to the Form S-1 filed July 20, 2023, and incorporated herein by reference).

Employment Agreement dated June 7, 2023 between Precision Optics Corporation, Inc.

Coll (included as Exhibit 10.31 to the Form S-1 filed July 20, 2023, and incorporated herein by reference).

Modification to Employment Agreement by and between Precision Optics Corporation, Inc.

side letter agreement dated October 4, 2021 (included

as Exhibit 10.8 to the current report on Form 8-K filed on October 8, 2021, and incorporated herein by reference).

Optics Corporation, Inc.

2022 Equity Incentive Plan (included

as Appendix B to the proxy statement on Form DEF14A filed on February 24, 2022, and incorporated herein by reference).

Amendment to Loan Agreement dated June 2, 2023, by and between Precision Optics Corporation, Inc.

and Main Street Bank

(included as Exhibit 10.1 to the current report on Form

8-K filed on June 7, 2023, and incorporated herein by reference).

Promissory Note dated June 2, 2023 (included

as Exhibit 10.2 to the current report on Form 8-K filed on June 7, 2023, and incorporated herein by reference).

Amendment to Demand Revolving Line of Credit Note dated June 2, 2023, by and between Precision Optics Corporation, Inc.

Street Bank (included as Exhibit 10.3 to the

current report on Form 8-K filed on June 7, 2023, and incorporated herein by reference).

of Securities Purchase Agreement, by and among Precision Optics Corporation, Inc.

and several investors, dated June 15, 2023

(included as Exhibit 10.1 to the current report on Form

8-K filed on June 20, 2023, and incorporated herein by reference).

of Registration Rights Agreement, by and among Precision Optics Corporation, Inc.

and several investors, dated June 15, 2023

(included as Exhibit 10.2 to the current report on Form

8-K filed on June 20, 2023, and incorporated herein by reference).

Agent Agreement, by and between Precision Optics Corporation, Inc.

and A.G.P./Alliance Global Partners, dated June 15, 2023

(included as Exhibit 10.3 to the current report on Form

8-K filed on June 20, 2023, and incorporated herein by reference).

Agreement dated March 30, 2023 between Precision Optics Corporation, Inc.

and Mahesh Lawande (included

as Exhibit 10.31 to the Form S-1 filed July 20, 2023, and incorporated herein by reference).

Agreement dated June 7, 2023 between Precision Optics Corporation, Inc.

Coll (included

as Exhibit 10.31 to the Form S-1 filed July 20, 2023, and incorporated herein by reference).

to Employment Agreement by and between Precision Optics Corporation, Inc.

and Jeffrey L.

DiRubio dated June 29, 2024 (included as Exhibit 10.1 to the current report on Form 8-K filed on July 3, 2024, and incorporated herein by reference).

Consulting Agreement by and between Precision Optics Corporation, Inc.

DiRubio dated June 29, 2024 (included

as Exhibit 10.1 to the current report on Form 8-K filed on July 3, 2024, and incorporated herein by reference).

Agreement by and between Precision Optics Corporation, Inc.

and Jeffrey L.

DiRubio dated June 29, 2024 (included as Exhibit 10.2 to the current report on Form 8-K filed on July 3, 2024, and

incorporated herein by reference).

Form of Securities Purchase Agreement for August 13, 2024 securities offering (included as Exhibit 10.1 to the current report on Form 8-K filed on August 14, 2024, and incorporated herein by reference).

Placement Agency Agreement between Precision Optics Corporation, Inc and A.G.P./Alliance Global Partners (included as Exhibit 10.2 to the current report on Form 8-K filed on August 14, 2024, and incorporated herein by reference).

DiRubio dated June 29, 2024 (included

as Exhibit 10.2 to the current report on Form 8-K filed on July 3, 2024, and incorporated herein by reference).

of Securities Purchase Agreement for August 13, 2024 securities offering (included

as Exhibit 10.1 to the current report on Form 8-K filed on August 14, 2024, and incorporated herein by reference).

Agency Agreement between Precision Optics Corporation, Inc and A.G.P./Alliance Global Partners (included

as Exhibit 10.2 to the current report on Form 8-K filed on August 14, 2024, and incorporated herein by reference).

Modification and Amendment of Term Note dated September 30, 2024 by and between Precision Optics Corporation, Inc.

and Main Street Bank

(incorporated by reference from Exhibit 10.30 to the annual

report on Form 10-K filed on September 30, 2024)

Modification and Amendment of Promissory Note dated September 30, 2024 by and between Precision Optics Corporation, Inc.

and Main Street Bank

(incorporated by reference from Exhibit 10.31 to the annual

report on Form 10-K filed on September 30, 2024)

Form of Securities Purchase Agreement dated February 19, 2025 (incorporated by reference from Exhibit 10.1 to the current report on Form 8-K filed on February

Waiver Letter from Main Street Bank dated February 14, 2025 (incorporated by reference from Exhibit 10.2 to the current report on Form 8-K filed on February

First Lease Extension Agreement, dated May 13, 2025, by and between Texzona Industries, Inc and Precision Optics Corporation, Inc.

(incorporated by reference from

Exhibit 10.1 to the current report on Form 8-K filed on May 19, 2025)

Lease, dated May 14, 2025, by and between 400 Southborough, LLC and Precision Optics Corporation, Inc.

(incorporated by reference from Exhibit 10.1 to the current

report on Form 8-K filed on May 20, 2025)

Optics Corporation, Inc.

Corporate Code of Ethics and Conduct (included as Exhibit 14.1 to

the Form 10-K filed September 28, 2008, and incorporated herein by reference).

Insider Trading Policy

Corporate Code of Ethics and Conduct (included

as Exhibit 14.1 to the Form 10-K filed September 28, 2008, and incorporated herein by reference).

Insider Trading Policy (incorporated by reference from

Exhibit 19.1 to the annual report on Form 10-K filed on September 30, 2024)

Consent of Independent Registered Public Accounting Firm.

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Precision Optics, Corporation, Inc.

Restatement Recoupment Policy

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Restatement Recoupment Policy (incorporated

by reference from Exhibit 97.1 to the annual report on Form 10-K filed on September 30, 2024)

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