What changed in this filing

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Item 1. Financial Statements

2025-11-13 compared with 2025-05-15 · 173 added, 230 removed, 265 unchanged (60% of the section changed)

1 unchanged sentence

PRECISION OPTICS CORPORATION, INC.

CONSOLIDATED BALANCE SHEETS

BALANCE SHEETS

September 30,

Current Assets:

Cash and cash equivalents

Accounts receivable, net of allowance for credit losses of $ 66,833 at March 31, 2025 and $ 118,872 at June 30, 2024

Accounts receivable, net of allowance for credit losses of $ 63,804 at September 30, 2025 and $ 80,192 at June 30, 2025

Inventories, net

12 unchanged sentences

Current Liabilities:

Revolving line of credit

Current portion of capital lease obligation

5 unchanged sentences

Total current liabilities

Capital lease obligation, net of current portion

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

Long-term debt, net of current maturities

Operating lease liability, net of current portion

3 unchanged sentences

50,000,000 shares authorized;

issued and outstanding – 7,666,247 shares at March 31, 2025 and 6,073,939 at June 30, 2024

issued and outstanding – 7,714,701 shares at September 30, 2025 and June 30, 2025

Additional paid-in capital

5 unchanged sentences

The accompanying notes are an integral part

of these consolidated interim financial statements.

of these interim financial statements.

PRECISION OPTICS CORPORATION, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE NINE MONTHS ENDED

MARCH 31, 2025 AND 2024

Ended March 31,

STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED

SEPTEMBER 30, 2025 AND 2024

Ended September 30,

Cost of Goods Sold

2 unchanged sentences

Total Operating Expenses

Operating Income (Loss)

Operating Loss

( 1,595,255 )

( 1,246,941 )

Interest Expense

Net Income (Loss)

Income (Loss) Per Share:

Basic and Fully Diluted

$ ( 1,637,030 )

$ ( 1,311,247 )

Loss Per Share:

Basic & Fully Diluted

Weighted Average Common Shares Outstanding:

Basic and Fully Diluted

Basic & Fully Diluted

The accompanying notes are an integral part

of these consolidated interim financial statements.

of these interim financial statements.

PRECISION OPTICS CORPORATION, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’

FOR THE NINE MONTHS ENDED

STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED

30, 2025 AND 2024

Nine Month Period Ended March 31, 2025

Three Month Period Ended September 30, 2025

Stockholders’

1 unchanged sentence

$ ( 56,970,630 )

Issuance of common stock in registered direct offering

Proceeds from exercise of stock option

Stock-based compensation

3 unchanged sentences

$ ( 58,607,660 )

Stock-based compensation

Issuance of common stock for consulting services

Balance, December 31, 2024

Three Month Period Ended September 30, 2024

Stockholders’

Balance, July 1, 2024

$ ( 51,190,384 )

2 unchanged sentences

Stock-based compensation

Issuance of common stock for consulting services and employees

( 1,311,247 )

Balance, March 31, 2025

$ ( 55,568,073 )

Nine Month Period Ended March 31, 2024

Stockholders’

Balance, July 1, 2023

$ ( 48,239,007 )

Stock-based compensation

Balance, September 30, 2024

$ ( 52,501,631 )

Stock-based compensation

Proceeds from the exercise of stock options

Balance, December 31, 2023

( 49,462,224 )

Stock-based compensation

Proceeds from the exercise of stock options

Balance, March 31, 2024

$ ( 49,779,279 )

The accompanying notes are an integral part

of these consolidated interim financial statements.

of these interim financial statements.

PRECISION OPTICS CORPORATION, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED

STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED

30, 2025 AND 2024

Ended March 31,

Ended September 30,

Cash Flows from Operating Activities:

Net Income (Loss)

$ ( 1,637,030 )

$ ( 1,311,247 )

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

Non-cash operating lease expense

Loss on disposal of fixed assets

Changes in operating assets and liabilities -

5 unchanged sentences

Accrued compensation and other

Net cash used in operating activities

( 2,978,165 )

( 1,706,998 )

Net cash provided by (used in) operating activities

Cash Flows from Investing Activities:

Purchases of fixed assets

Reclassification/additional patent costs

Proceeds from sale of fixed assets

Additional patent costs

Net cash used in investing activities

2 unchanged sentences

Payments of long-term debt

Payments of debt issuance costs

Payments/Borrowings on line of credit

( 1,000,000 )

Gross proceeds from registered direct offerings of common stock

Stock issued for services

Payment of debt modification costs

Payment on revolving line of credit

Proceeds from registered direct sale of common stock, net

Gross proceeds from the exercise of stock options

1 unchanged sentence

Net increase(decrease) in cash and cash equivalents

( 2,000,785 )

Cash and cash equivalents, beginning of period

Cash and cash equivalents, end of period

Supplemental disclosure of cash flow information:

Operating right-of-use assets obtained in exchange for operating lease liabilities

Lease improvements financed by landlord

The accompanying notes are an integral part

of these consolidated interim financial statements.

of these interim financial statements.

PRECISION OPTICS CORPORATION, INC.

NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS

NOTES TO INTERIM FINANCIAL STATEMENTS (UNAUDITED)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation and Operations

The accompanying consolidated financial statements

include the accounts of Precision Optics Corporation, Inc.

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

All significant

intercompany accounts and transactions have been eliminated in consolidation.

These consolidated financial statements have been

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

a fair statement of the results of the first nine months of the Company’s fiscal year 2025.

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, 2024, together with

the Report of Independent Registered Public Accounting Firm filed under cover of the Company’s 2024 Annual Report on Form 10-K,

filed with the Securities and Exchange Commission on September 30, 2024, as amended by that certain Amendment No.

1 on Form 10-K/A filed

with the Securities and Exchange Commission on October 28, 2024.

These financial statements have been prepared

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

statement of the results of the first three months of the Company’s fiscal year 2026.

These financial statements do not include

all disclosures associated with annual financial statements and, accordingly, should be read in conjunction with footnotes contained in

the Company’s financial statements for the year ended June 30, 2025, together with the Report of Independent Registered Public

Accounting Firm filed under cover of the Company’s 2025 Annual Report on Form 10-K, filed with the Securities and Exchange

Commission on September 29, 2025, as amended by Amendment No.

1 on Form 10-K/A filed with the Securities and Exchange Commission on

October 28, 2025 .

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 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 nine

months ended March 31, 2025, 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 1,308,988 for the three and nine months ended March 31, 2025.

For the three months ended September

30, 2025 and 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 1,623,576 for the three months ended September 30, 2025 and 1,329,236 for the three months ended September 30, 2024.

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

three months and nine months ended March 31, 2025 and 2024:

three months ended September 30, 2025 and 2024:

Schedule of income (loss) per share

Ended March 31,

Ended September 30,

Net Income (Loss) Basic and Fully Diluted

1 unchanged sentence

$ ( 1,311,247 )

$ ( 4,377,690 )

$ ( 1,540,272 )

Weighted Average Shares Outstanding

Basic and Fully Diluted

Income (Loss) Per Share – Basic and Fully Diluted

Basic & Fully Diluted

Loss Per Share – Basic & Fully Diluted

Significant Customers and Concentration of Credit Risk

5 unchanged sentences

The allowance for credit losses was $ 63,804 at

March 31, 2025, and $ 826,434 at March 31, 2024.

Schedule of allowance;

for credit losses

Nine Months Ended March 31,

September 30, 2025, and $ 103,224 at September 30, 2024.

Schedule of allowance for credit losses

Three Months Ended September 30,

Allowance for credit losses, beginning of period

1 unchanged sentence

Allowance for credit losses, end of period

During the nine months ended March 31, 2024, the

Company increased the credit loss reserve to cover potential losses due to the non-payment of one engineering customer and subsequently

wrote off the receivable against the reserve during the year ended June 30, 2024.

The Company generally does not require collateral or

other security as a condition of sale, rather it relies on credit approval, balance limitation and monitoring procedures to control credit

risk in trade account financial instruments.

During the three months ended September 30, 2025,

the Company decreased the credit loss reserve.

Management believes the allowance for credit losses, which is established based upon review

of specific account balances and historical experience, is adequate at March 31, 2025.

of specific account balances and historical experience, is adequate at September 30, 2025.

Income taxes are accounted for under the asset

10 unchanged sentences

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

Segment Reporting

Operating segments are identified as components of an enterprise about

which separate discrete financial information is available for evaluation by the chief operating decision maker, or decision-making group,

in making decisions about how to allocate resources and assess performance.

The Company’s chief decision-maker is its Chief Executive

To date, the Company has viewed its operations and manages its business as principally one segment.

The chief operating decision

maker assesses performance for the single reporting segment and decides how to allocate resources based on revenues, gross profit, and

net income (loss) that also is reported on the income statement as revenues, gross profit, and net income (loss).

The measure of segment

assets is reported on the balance sheet as total assets.

Goodwill and Patents

7 unchanged sentences

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

No such impairments of goodwill or patents have been estimated by management as of March 31, 2025.

No such impairments of goodwill or patents have been estimated by management as of September 30, 2025.

Amortization expense for the three

months ended September 30, 2025 and 2024 was $ 6,292 and $ 0 , respectively.

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

first-out) or market and consist of the following:

first-out) or market and consisted of the following:

Schedule of inventories

September 30,

Raw Materials

1 unchanged sentence

Finished Goods

Total Inventories (Net)

The inventory reserve was $ 431,259 and $ 266,843 at March 31, 2025 and

June 2024, respectively.

Total Inventories

BANK FINANCING ACTIVITIES

6 unchanged sentences

of accounts receivable and inventory and secured by all assets of the Company.

Borrowings under the Revolver will bear interest payable

monthly at the prime lending rate plus 1.5 % per annum and shall not be less than 4.75% per annum.

Borrowings under the Revolver are due

There were no borrowings under the Revolver at March 31, 2025.

Borrowings under the Revolver bear interest payable monthly

at the prime lending rate plus 1.5% per annum and shall not be less than 4.75% per annum.

Borrowings under the Revolver are due upon demand.

There were no borrowings under the Revolver at September 30, 2025.

The Company’s Loan Agreement with the Lender

15 unchanged sentences

Any future advances are contingent on the Company achieving a minimum Debt Service Coverage ratio of 1.20x based

on quarterly testing.

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

on quarterly testing, which the Company was not in compliance with as of September 30, 2025.

There were no other changes to or modifications

to the Loan Agreement or the Notes.

Long-Term Debt

Long-term debt consists of the following at March

Long-term debt consists of the following at September

Schedule of long-term debt

8 unchanged sentences

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

At March 31, 2025 principal payments due on the Term Loan Notes payable

are as follows:

At September 30, 2025 principal payments due on the Term Loan Note

payable are as follows:

Schedule of principal payments due on term loan note payable

3 unchanged sentences

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 March 31, 2025 is $ 36,225 .

capital lease in the amount of $ 161,977 and in January 2020, the Company entered into a five-year capital lease for $ 47,750 , both for

manufacturing equipment.

The net book value of fixed assets under capital lease obligations as of September 30, 2025 is $ 18,383 .

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

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, 2025 total $ 11,512 .

Total rent expense including base rent and common area expenses was $ 49,808 and $ 52,534 during

the nine months ended March 31, 2025 and 2024, 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, 2025 total $ 45,435 .

Total rent expense including base rent and common area expenses was $ 103,296 and $ 91,819 during the nine

months ended March 31, 2025 and 2024, respectively.

Included in the accompanying balance sheet at March 31, 2025 is a right-of-use asset

of $ 57,088 and current right-of-use operating lease liabilities of $ 57,088 .

At March 31, 2025 future minimum lease payments

under capital lease and operating lease obligations are as follows:

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.

In May 2025, this lease was extended for an additional three years through May 2028.

Remaining minimum

lease payments at September 30, 2025 total $ 135,724 .

Total lease costs including base rent and common area expenses was $ 20,052 and $ 16,340

during the three months ending September 30, 2025 and 2024, respectively.

Included in the accompanying balance sheet at September 30,

2025 is a right-of-use asset of $ 123,817 and current and long-term operating lease liabilities of $ 40,410 and $ 83,779 , respectively.

On May 15, 2025 the Company entered into a eight-year

lease in South Portland, Maine with two five-year extension options.

Remaining minimum lease payments at September 30, 2025 total $ 1,112,387 .

Total lease costs including base rent and common area expenses was $ 32,661 during the three months ending September 30, 2025.

of variable lease payments is immaterial.

Included in the accompanying balance sheet at September 30, 2025 is a right-of-use asset of

$ 554,786 and current and long-term operating lease liabilities of $ 31,402 and $ 760,751 , respectively.

The applicable discount rate utilized

for this lease at commencement was 9.0 %.

On June 2, 2025 the Company entered into a seven-year

operating lease in Littleton, Massachusetts with two five-year extension options.

Remaining minimum lease payments at September

30, 2025 total $ 2,588,721 .

Total lease costs including base rent and common area expenses was $ 30,456 during the three months ending September

The amount of variable lease payments is immaterial.

Included in the accompanying balance sheet at September 30, 2025 is a right-of-use

asset of $ 1,835,004 and current and long-term operating lease liabilities of $ 10,529 and $ 1,854,932 , respectively.

The applicable discount

rate utilized for this lease at commencement was 9.0 %.

At September 30, 2025 future minimum lease payments

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

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

1 unchanged sentence

Capital Leases

Operating Lease

Operating Leases

2031 and thereafter

Total Minimum Payments

2 unchanged sentences

current portion

Lease Obligation, net of current portion

Future minimum long-term lease liability

The Company’s four facilities in Gardner,

Massachusetts which are used for offices, production and storage spaces are leased primarily on a tenant-at-will basis.

on these operating leases was $ 156,143 and $ 147,544 for the nine months ended March 31, 2025, and 2024, respectively.

CAPITAL STOCK

On August 14, 2024 we entered into securities

purchase agreements with institutional and accredited investors in addition to certain directors and officers of the Company for the purchase

and sale of 265,868 shares of the Company’s common stock resulting in gross proceeds of approximately $1.4 million before deducting

placement agent commissions and other estimated offering expenses.

Net proceeds were $ 1,204,542 .

On February 19, 2025, the Company entered into

securities purchase agreements with institutional and accredited investors for the sale of 1,272,500 shares of the Company’s common

stock in a registered direct offering at a purchase price of $ 4.00 per share.

The offering closed on February 21, 2025 with net proceeds

after transaction costs of $ 5,053,000 .

Rent expense on

these operating leases was $ 57,884 and $ 51,797 for the three months ended September 30, 2025 and 2024, respectively.

STOCK-BASED COMPENSATION

1 unchanged sentence

The following table summarizes stock-based compensation

expense for the three months and nine months ended March 31, 2025 and 2024.

The following table summarizes stock-based compensation

expense for the three and nine months ended March 31, 2025 and 2024:

expense for the three months ended September 30, 2025 and 2024.

Schedule of stock-based compensation expense

Ended March 31,

Ended September 30,

Cost of Goods Sold

4 unchanged sentences

The following tables summarize stock option activity

for the nine months ended March 31, 2025:

for the three months ended September 30, 2025:

Schedule of stock option activity

6 unchanged sentences

Cancelled, forfeited, or expired

Outstanding at March 31, 2025

Outstanding at September 30, 2025

The aggregate intrinsic value of the Company’s

in-the-money outstanding and exercisable options as of March 31, 2025 were $ 668,778 and $ 618,634 , respectively.

in-the-money outstanding and exercisable options as of September 30, 2025 were $ 544,793 and $ 544,793 , respectively.

REVENUE RECOGNITION

11 unchanged sentences

the contract is determined to be within the scope of ASC 606, the Company assesses the goods or services promised within the contract

and determines those that are performance obligations and assesses 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 nine months ended March 31, 2025 and 2024:

and determine those that are performance obligations and assesses 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.

Revenues are comprised of the following for the three months ended September 30, 2025 and 2024:

Schedule of disaggregation of revenues

Ended March 31,

Ended September 30,

Engineering Design Services

Optical Components

Medical Device Products and Assemblies

Systems Manufacturing

Micro Optics Lab

Ross Optical Industries

Total Revenues

8 unchanged sentences

Engineering Design Services

The Company enters into contractual agreements

with its 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 the Company has 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 Company enters into contractual

agreements with its 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 the Company has 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.

5 unchanged sentences

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

Optical Components, Finished Products and Assemblies

The Company provides fixed price quotations to

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

Revenue is recognized

at the time title passes to the Company’s customers based on its review of the customer contract, generally at the time of shipment

from its facilities.

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

by its customers while goods are stored at our facilities for their convenience.

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

Systems Manufacturing, Micro Optics Laboratory,

Ross Optical Industries

The Company provides fixed

price quotations to its customers and requires purchase orders for items manufactured and distributed through the Systems Manufacturing,

Micro Optics Laboratory and Ross Optical Industries business units.

Revenue is recognized at the time title passes to the customer based

on the Company’s review of the customer contract, generally at the time of shipment from the Company’s facilities.

the Company may enter into “bill and hold” contractual arrangements where title is held by its customers while goods are stored

at the Company’s facilities for the customer’s convenience.

Contract Assets and Liabilities

6 unchanged sentences

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

As of March 31,

2025, there were no contract assets recorded in the Company’s Consolidated Balance Sheets.

As of September

30, 2025, there were no contract assets recorded in the Company’s Balance Sheets.

The Company’s contract liabilities arise

3 unchanged sentences

Contract liabilities, which are recorded in the

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

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

Schedule of contract liabilities

Ended March 31,

Ended September 30,

Contract liabilities, beginning of period

1 unchanged sentence

Revenue recognized

( 1,041,369 )

Contract liabilities, end of period

SUBSEQUENT EVENTS

On May 13, 2025, the Company entered into a First Lease Extension Agreement

(the “Extension”) with Texzona Industries, Inc., pursuant to which the Company will continue to lease approximately 9,375

square feet of commercial space located at 1410 Gail Borden, El Paso, Texas.

The term of Extension is for a period of 36 months commencing

on June 1, 2025 and shall end on May 31, 2028.

Base rent for each year of the term is $49,219,

$50,695 and $52,216.

In addition to base rent, the Company is responsible for taxes, insurance and common area maintenance (“CAM”).

Beginning June 1, 2025, the total estimated monthly rental payment including CAM is $5,773.

On May 14, 2025, the Company entered into a Lease

Agreement (the “Southborough Lease”) with 500 Southborough, LLC (the “Southborough Landlord”), pursuant to which

the Company will lease approximately 8,750 square feet of commercial space located at 500 Southborough Drive, City of South Portland,

County of Cumberland, Maine (the “Southborough Premises”).

The Lease provides for an initial term commencing on the date the

Southborough Landlord obtains a certificate of occupancy for the Southborough Premises and all Southborough Landlord work is substantially

complete and expiring on the last day of the calendar month during which the eighth anniversary of the commencement date occurs.

The commencement

date is anticipated to be August 1, 2025, subject to Southborough Landlord’s review of floor plans and associated estimated construction

The Southborough Lease provides the Company with

two options to extend the term for additional five-year periods, exercisable with at least nine months’ prior written notice.

rent for the initial term is abated for the first five months following the commencement date, after which annual base rent payable is

$131,250 (or $10,937.50 per month), with annual increases of 3%.

Base rent for any extension term will be as agreed by the parties or,

if not agreed, at 95% of the then-current fair market base rental rate for similar space in South Portland, as determined by appraisal,

with annual increases of 3% during each extension term.

In addition to base rent, the Company is responsible

for its proportionate share (19.34%) of operating expenses, as defined in the Southborough Lease.

The Southborough Lease is structured

as a triple net lease.

The Company is entitled to a tenant improvement allowance of $25 per rentable square foot for fit-up costs and

$0.15 per rentable square foot for architectural costs, to be disbursed as costs are incurred.

The Southborough Landlord is responsible

for completing certain improvements to the Southborough Premises prior to occupancy, including interior wall construction, loading area,

and separate utility metering.

If delivery of the Southborough Premises is delayed beyond September 1, 2025, for reasons within the Southborough

Landlord’s control, the Company is entitled to one day of abated rent for each day of delay.

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