Form 10-Q PRECISION OPTICS CORPORA For: Mar 31
Tweet
Share
E-mail
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period ended
or
For the transition period from to
Commission File Number:
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
(Address of principal executive offices) (Zip Code)
(Registrants telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None.
Securities registered pursuant to Section 12(g) of the Act:
| Title of each class | Trading symbol(s) | Name of each exchange on which registered |
| OTCQB |
Indicate by check mark whether
the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Indicate by check mark whether
the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405
of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required
to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of large accelerated filer, accelerated filer, smaller reporting company, and emerging growth company in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ | |
| ☒ | Smaller reporting company | |||
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether
the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes ☐
The number of shares outstanding of the issuers common stock, par value $0.01 per share, at May 16, 2022 was shares.
PRECISION OPTICS CORPORATION, INC.
Table of Contents
| 2 |
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
PRECISION OPTICS CORPORATION, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
| March 31, 2022 | June 30, 2021 | |||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable, net of allowance for doubtful accounts of $ | ||||||||
| Inventories | ||||||||
| Prepaid expenses | ||||||||
| Total current assets | ||||||||
| Fixed Assets: | ||||||||
| Machinery and equipment | ||||||||
| Leasehold improvements | ||||||||
| Furniture and fixtures | ||||||||
| Total Fixed Assets | ||||||||
| Less: Accumulated depreciation and amortization | ||||||||
| Net fixed assets | ||||||||
| Operating lease right-to-use asset | ||||||||
| Patents, net | ||||||||
| Goodwill | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current Liabilities: | ||||||||
| Current portion of capital lease obligation | $ | $ | ||||||
| Current maturities of long-term debt | ||||||||
| Current portion of acquisition earn out liability | ||||||||
| Accounts payable | ||||||||
| Customer advances | ||||||||
| Accrued compensation and other | ||||||||
| Operating lease liability | ||||||||
| Total current liabilities | ||||||||
| Capital lease obligation, net of current portion | ||||||||
| Long-term debt, net of current maturities | ||||||||
| Acquisition earn out liability, net of current portion | ||||||||
| Operating lease liability, net of current portion | ||||||||
| Stockholders’ Equity: | ||||||||
| Common stock, $ par value: shares authorized; issued and outstanding shares at March 31, 2022 and at June 30, 2021 | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated interim financial statements.
| 3 |
PRECISION OPTICS CORPORATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED
March 31, 2022 AND 2021
(UNAUDITED)
| Three Months Ended March 31, | Nine Months Ended March 31, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Revenues | $ | $ | $ | $ | ||||||||||||
| Cost of goods sold | ||||||||||||||||
| Gross profit | ||||||||||||||||
| Research and development expenses, net | ||||||||||||||||
| Selling, general and administrative expenses | ||||||||||||||||
| Business acquisition expenses | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Operating loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expense) | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Gain on forgiveness of bank note | ||||||||||||||||
| Net income (loss) | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||
| Income (loss) per share: | ||||||||||||||||
| Basic | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||
| Fully diluted | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||
| Weighted average common shares outstanding: | ||||||||||||||||
| Basic | ||||||||||||||||
| Fully diluted | ||||||||||||||||
The accompanying notes are an integral part of these consolidated interim financial statements.
| 4 |
PRECISION OPTICS CORPORATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
FOR THE NINE MONTHS ENDED
MaRCH 31, 2022 AND 2021
(UNAUDITED)
| Nine Month Period Ended March 31, 2022 | ||||||||||||||||||||||||
| Number
of Shares | Common Stock | Additional Paid-in Capital | Common Stock Subscribed | Accumulated Deficit | Total Stockholders’ Equity | |||||||||||||||||||
| Balance, July 1, 2021 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
| Stock-based compensation | – | |||||||||||||||||||||||
| Proceeds from private placement of common stock subscribed, net of estimated
issuance costs of $ | – | ( | ) | |||||||||||||||||||||
| Net loss | – | ( | ) | ( | ) | |||||||||||||||||||
| Balance, September 30, 2021 | ( | ) | ||||||||||||||||||||||
| Stock-based compensation | – | |||||||||||||||||||||||
| Proceeds from private placement of common stock | ( | ) | ||||||||||||||||||||||
| Issuance of common stock in business acquisition | ||||||||||||||||||||||||
| Proceeds from exercise of stock option | ||||||||||||||||||||||||
| Exercise of stock options net of 1,435 shares withheld | ( | ) | ||||||||||||||||||||||
| Issuance of common stock for employee services | ||||||||||||||||||||||||
| Net loss | – | ( | ) | ( | ) | |||||||||||||||||||
| Balance, December 31, 2021 | ( | ) | ||||||||||||||||||||||
| Correction of error in valuation of stock issued in business acquisition | – | ( | ) | ( | ) | |||||||||||||||||||
| Stock-based compensation | – | |||||||||||||||||||||||
| Proceeds from exercise of stock options | ||||||||||||||||||||||||
| Exercise of stock options net of 96,056 shares withheld | ( | ) | ||||||||||||||||||||||
| Net loss | – | ( | ) | ( | ) | |||||||||||||||||||
| Balance, March 31, 2022 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
| Nine Month Period Ended March 31, 2021 | ||||||||||||||||||||||||
| Number
of Shares | Common Stock | Additional Paid-in Capital | Common Stock Subscribed | Accumulated Deficit | Total Stockholders’ Equity | |||||||||||||||||||
| Balance, July 1, 2020 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
| Stock-based compensation | – | |||||||||||||||||||||||
| Net income | – | |||||||||||||||||||||||
| Balance, September 30, 2020 | ( | ) | ||||||||||||||||||||||
| Stock-based compensation | – | |||||||||||||||||||||||
| Net loss | – | ( | ) | ( | ) | |||||||||||||||||||
| Balance, December 31, 2020 | ( | ) | ||||||||||||||||||||||
| Stock-based compensation | – | |||||||||||||||||||||||
| Proceeds from exercise of stock options | ||||||||||||||||||||||||
| Net income | – | |||||||||||||||||||||||
| Balance, March 31, 2021 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
The accompanying notes are an integral part of these consolidated interim financial statements.
| 5 |
PRECISION OPTICS CORPORATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED
MARCH 31, 2022 AND 2021
(UNAUDITED)
| Nine Months Ended March 31, | ||||||||
| 2022 | 2021 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net income (loss) | $ | ( | ) | $ | ||||
| Adjustments to Reconcile Net Loss to Net Cash Used In Operating Activities - | ||||||||
| Depreciation and amortization | ||||||||
| Stock-based compensation expense | ||||||||
| Gain on forgiveness of bank note | ( | ) | ||||||
| Changes in Operating Assets and Liabilities, net of effects of business acquisition - | ||||||||
| Non-cash interest expense | ||||||||
| Accounts receivable, net | ( | ) | ( | ) | ||||
| Inventories, net | ( | ) | ||||||
| Due from related party | ||||||||
| Prepaid expenses | ( | ) | ||||||
| Accounts payable | ( | ) | ||||||
| Customer advances | ( | ) | ( | ) | ||||
| Accrued compensation and other | ( | ) | ||||||
| Net Cash Used In Operating Activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Additional patent costs | ( | ) | ( | ) | ||||
| Purchases of property and equipment | ( | ) | ( | ) | ||||
| Acquisition of businesses | ( | ) | ( | ) | ||||
| Net Cash Used In Investing Activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Payment of capital lease obligations | ( | ) | ( | ) | ||||
| Payments of long-term debt | ( | ) | ||||||
| Payment of debt issuance costs | ( | ) | ||||||
| Gross proceeds from private placement of common stock | ||||||||
| Gross proceeds from exercise of stock options | ||||||||
| Net Cash Provided By (Used in) Financing Activities | ( | ) | ||||||
| NET DECREASE IN CASH AND CASH EQUIVALENTS | ( | ) | ( | ) | ||||
| CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | ||||||||
| CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | $ | ||||||
| SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES: | ||||||||
| Offering costs included in accrued compensation and other | $ | $ | ||||||
| Acquisition of business financed with long-term debt | $ | $ | ||||||
| Acquisition of Manufacturing Equipment Under Capital Lease | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated interim financial statements.
| 6 |
PRECISION OPTICS CORPORATION, INC.
NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)
| 1. | 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 third quarter and nine months of the Company’s fiscal year 2022. 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, 2021, together with the Report of Independent Registered Public Accounting Firm filed under cover of the Company’s 2021 Annual Report on Form 10-K, filed with the Securities and Exchange Commission on September 28, 2021.
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 expenses. 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. Actual results may differ from these estimates.
Revision of the Second Quarter 2022 Unaudited Consolidated Financial Statements
The Company identified an error in the valuation of 2,500,000 shares of common stock issued on October 4, 2021 in the business acquisition described in Note 2 resulting in an $825,000 overstatement of Additional Paid-In Capital and Goodwill in the December 31, 2021 balance sheet presented in the quarterly report on Form 10-Q for the quarter ended December 31, 2021. This change does not impact the number of shares issued as part of the transaction; it only changes the imputed value of the common stock issued. The financial statements for the prior interim fiscal quarter ended December 31, 2021 have been revised by an $825,000 adjustment to the opening balance of Additional Paid-In Capital in the accompanying Statement of Stockholders Equity for the quarter ended March 31, 2022, and by an adjustment of Goodwill at the acquisition date as described in Note 2. No profit and loss accounts in the current or prior interim periods are affected by this revision.
Basic income (loss) per share is computed by dividing net income or net loss by the weighted average number of shares of common stock outstanding during the period. Diluted income (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period, plus the number of potentially dilutive securities outstanding during the period such as stock options. For the three and nine months ended March 31, 2022, the effect of such securities was antidilutive and not included in the fully diluted calculation because of the net loss generated during those periods.
| 7 |
The following is the calculation of income (loss) per share for the three and nine months ended March 31, 2022 and 2021:
| Three Months Ended March 31, | Nine Months Ended March 31, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Net Income (Loss) - Basic and Diluted | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||
| Weighted Average Shares Outstanding | ||||||||||||||||
| Basic | ||||||||||||||||
| Fully Diluted | ||||||||||||||||
| Income (Loss) Per Share | ||||||||||||||||
| Basic | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||
| Fully Diluted | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||
The number of shares issuable upon the exercise of outstanding stock options that were excluded from the computation as their effect was antidilutive was for the three and nine months ended March 31, 2022, and and for the three and nine months ended March 31, 2021, respectively.
Income Taxes
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 the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities 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. 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. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.
| 2. | BUSINESS ACQUISITION |
On October 4, 2021, the Company entered into an
asset purchase agreement to acquire substantially all of the assets of Lighthouse Imaging, LLC, a medical optics and digital imaging business,
as described in Forms 8-K and 8-K/A that the Company filed with the Securities and Exchange Commission on October 8, 2021 and December
20, 2021, respectively. The aggregate cash purchase price consisted of $
| 8 |
The Company financed the cash portion of the acquisition
by securing a $
The earn-out consideration will be paid at a rate
of
| Purchase Price Allocation and Goodwill |
The total purchase price of $
| At Acquisition Effective Date October 4, 2021 | Amount | |||
| Trade accounts receivable, net | $ | |||
| Inventories | ||||
| Other current assets | ||||
| Fixed assets | ||||
| Patents | ||||
| Total Assets Acquired | ||||
| Accounts payable | ||||
| Customer advances | ||||
| Accrued compensation and other | ||||
| Total Liabilities Assumed | ||||
| Net assets acquired | ||||
| Goodwill | ||||
| Total Purchase Price-Initial and Contingent Consideration | $ | |||
Consolidated Pro Forma Results
Consolidated unaudited pro forma results of operations for the Company are presented below assuming that the acquisition of the Lighthouse division had occurred on July 1, 2020. Pro forma operating results include net adjustments resulting from the acquisition transaction during the three and nine months ended March 31, 2022 and 2021.
| Three Months Ended March 31, | Nine Months Ended March 31, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| (Actual) | (Pro Forma) | (Pro Forma) | (Pro Forma) | |||||||||||||
| Revenues | $ | $ | $ | $ | ||||||||||||
| Net income (loss) | ( | ) | ( | ) | ||||||||||||
| Net income (loss) per share | ||||||||||||||||
| Basic | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Fully diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
Pro forma financial information is not necessarily indicative of the Company’s actual results of operations if the acquisition had been completed at the date indicated, nor is it necessarily an indication of future operating results. Amounts do not include any operating efficiencies or cost saving that the Company believes may be achievable.
| 9 |
| 3. | INVENTORIES |
Inventories are stated at the lower of cost (first-in, first-out) or market and consisted of the following:
| March 31, 2022 | June 30, 2021 | |||||||
| Raw Materials | $ | $ | ||||||
| Work-In-Progress | ||||||||
| Finished Goods | ||||||||
| Total Inventories | $ | $ | ||||||
| 4. | BANK FINANCING ACTIVITIES |
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 $
Long-Term Debt
Long-term debt consists of the following at March 31, 2022:
| Amount | ||||
| Term Loan Note payable to Main Street Bank with | $ | |||
| Less current maturities | ( | ) | ||
| Less debt issuance costs, net of accumulated amortization of $ | ( | ) | ||
| Long-term debt, net of current portion of debt issuance costs | $ | |||
At March 31, 2022 principal payments due on the Term Loan Note payable are as follows:
| Fiscal Year Ending June 30: | ||||
| 2022 | $ | |||
| 2023 | ||||
| 2024 | ||||
| 2025 | ||||
| 2026 | ||||
| Thereafter | ||||
| $ | 2,445,238 | |||
| 10 |
| 5. |
LEASE OBLIGATIONS |
In March 2021, the Company entered into a five-year
capital lease in the amount of $
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 March 31, 2022 total $
At March 31, 2022 future minimum lease payments under the capital lease and operating lease obligations are as follows:
| Fiscal Year Ending June 30: | Capital Leases | Operating Lease | ||||||
| 2022 | $ | $ | ||||||
| 2023 | ||||||||
| 2024 | ||||||||
| 2025 | ||||||||
| 2026 | ||||||||
| Total Minimum Payments | $ | |||||||
| Less: amount representing interest | ||||||||
| Present value of minimum lease payments | ||||||||
| Less: current portion | ||||||||
| $ | ||||||||
The Company’s operating leases for its Gardner,
Massachusetts office, production and storage spaces plus an equipment lease as well as the Windham, Maine office and production space
have expired and are continuing on a month-to-month tenant at will basis. Rent expense on these operating leases was $
| 6. | STOCK-BASED COMPENSATION |
Stock Options
The following table summarizes stock-based compensation expense for the three and nine months ended March 31, 2022 and 2021:
| Three Months Ended March 31, | Nine Months Ended March 31, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Cost of Goods Sold | $ | $ | $ | $ | ||||||||||||
| Research and Development | ||||||||||||||||
| Selling, General and Administrative | ||||||||||||||||
| Stock Based Compensation Expense | $ | $ | $ | $ | ||||||||||||
No compensation has been capitalized because such amounts would have been immaterial.
| 11 |
The following tables summarize stock option activity for the nine months ended March 31, 2022:
| Options Outstanding | ||||||||||||
| Number of Shares | Weighted Average Exercise Price | Weighted Average Contractual Life | ||||||||||
| Outstanding at July 1, 2021 | $ | years | ||||||||||
| Exercised | ( | ) | $ | |||||||||
| Granted | $ | |||||||||||
| Cancelled | ( | ) | $ | |||||||||
| Outstanding at March 31, 2022 | $ | years | ||||||||||
Information related to the stock options outstanding as of March 31, 2022 is as follows:
| Range of Exercise Prices | Number of Shares | Weighted- Average Remaining Contractual Life (years) | Weighted- Average Exercise Price | Exercisable Number of Shares | Exercisable Weighted- Average Exercise Price | |||||||||||||||||
| $ | $ | $ | ||||||||||||||||||||
| $ | $ | $ | ||||||||||||||||||||
| $ | $ | $ | ||||||||||||||||||||
| $ | $ | $ | ||||||||||||||||||||
| $ | $ | $ | ||||||||||||||||||||
| $ | $ | $ | ||||||||||||||||||||
| $ | $ | $ | ||||||||||||||||||||
| $ | $ | $ | ||||||||||||||||||||
| $ | $ | $ | ||||||||||||||||||||
| $ | $ | $ | ||||||||||||||||||||
| $ | $ | $ | ||||||||||||||||||||
| $ | $ | $ | ||||||||||||||||||||
| $ | $ | $ | ||||||||||||||||||||
| $ | $ | $ | ||||||||||||||||||||
| $ | $ | $ | ||||||||||||||||||||
| $ | $ | $ | ||||||||||||||||||||
| $ | $ | $ | ||||||||||||||||||||
| $ | $ | $ | ||||||||||||||||||||
The aggregate intrinsic value of the Company’s in-the-money outstanding and exercisable options as of March 31, 2022 was $ and $, respectively.
| 7. | SALE OF STOCK IN OCTOBER 2021 |
On October 1, 2021, the Company entered into agreements with accredited investors for the sale and purchase of unregistered shares of its common stock, $0.01 par value at a purchase price of $1.60 per share. The Company used the net proceeds from this placement to partially fund the October 4, 2021, acquisition of the operating assets of Lighthouse Imaging, LLC with an effective date of October 4, 2021.
In conjunction with the placement, the Company also entered into a registration rights agreement with the investors, whereby it is obligated
to file a registration statement with the Securities and Exchange Commission on or before 120 calendar days after October 4, 2021 to register
the resale by the investors of 937,500 shares of its common stock purchased in the placement. The registration statement was filed on
January 31, 2022 and became effective on February 11, 2022.
| 12 |
| 8. | ISSUANCE OF COMMON STOCK IN BUSINESS ACQUISITION |
On October 4, 2021, the Company issued
unregistered shares of its common stock to the sellers of Lighthouse Imaging, LLC, valued on that date at $ per share or $
In conjunction with the issuance, the Company agreed to use reasonable efforts to effectuate within a reasonable period after the October 4, 2021 business acquisition date a registration statement with the Securities and Exchange Commission to register the resale by the sellers of 2,500,000 shares of its common stock issued in the business acquisition.
| 9. | REVENUE RECOGNITION |
Revenues are recognized as the performance obligations to deliver products or services are satisfied and are recorded based on the amount of consideration the Company expects to receive in exchange for satisfying the performance obligations. Most of the Company’s products and services are marketed to medical device companies almost exclusively in the United States. Products and services are primarily transferred to customers at a point in time based upon when services are performed or product is shipped.
Revenues represent the amount of consideration the Company expects to receive from customers in exchange for transferring products and services. Other selling costs to obtain and fulfill contracts are expensed as incurred due to the short-term nature of a majority of its revenues. 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 revenues.
The Company disaggregates revenues by product and service types as it believes it 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 and nine months ended March 2022 and 2021:
| Three Months Ended March 31, | Nine Months Ended March 31, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Engineering Design Services | $ | $ | $ | $ | ||||||||||||
| Optical Components | ||||||||||||||||
| Medical Device Products and Assemblies | ||||||||||||||||
| Total Revenues | $ | $ | $ | $ | ||||||||||||
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 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 March 31, 2022, 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 inception date.
| 13 |
Contract liabilities, which were recorded as customer advances in the Company’s Consolidated Balance Sheets, and unearned revenue are comprised of the following:
| Three Months Ended March 31, | Nine Months Ended March 31, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Contract Liabilities, Beginning of Period | $ | $ | $ | $ | ||||||||||||
| Assumed in Business Acquisition | ||||||||||||||||
| Unearned Revenue Received from Customers | ||||||||||||||||
| Revenue Recognized | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Contract Liabilities, End of Period | $ | $ | $ | $ | ||||||||||||
| 10. | COVID-19 PANDEMIC |
The COVID-19 world-wide pandemic that began during the quarter ended March 31, 2020 and the domestic and international impact of policy decisions being made in major countries around the world has had, and could continue to have, an adverse impact on the Company’s sources of supply, current and future orders from its customers, collection of amounts owed to the Company from its customers, its internal operating procedures, and the Company’s overall financial condition. Given the uncertainty surrounding the continuation of economic impacts both domestically and abroad, the Company cannot predict with certainty at this time what the future impact of COVID-19 and resulting business and economic policies in the US and abroad will be on its up-coming quarterly fiscal operating results.
| 14 |
Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion of our financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and notes to those statements included elsewhere in this Quarterly Report on Form 10-Q for the quarter ended March 31, 2022 and with our audited consolidated financial statements for the year ended June 30, 2021 included in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission on September 28, 2021.
This Quarterly Report on Form 10-Q contains forward-looking statements. When used in this report, the words anticipate, suggest, estimate, plan, project, continue, ongoing, potential, expect, predict, believe, intend, may, will, should, could, would and similar expressions are intended to identify forward-looking statements. You should not place undue reliance on these forward-looking statements. Our actual results could differ materially from those anticipated in the forward-looking statements for many reasons, including the risks described in this report, the risks described in our Annual Report on Form 10-K for the year ended June 30, 2021 and other reports we file with the Securities and Exchange Commission. Although we believe the expectations reflected in the forward-looking statements are reasonable, they relate only to events as of the date on which the statements are made. We do not intend to update any of the forward-looking statements after the date of this report to conform these statements to actual results or to changes in our expectations, except as required by law.
Overview
We have been a developer and manufacturer of advanced optical instruments since 1982. Our medical instrumentation line includes traditional endoscopes and endocouplers as well as other custom imaging and illumination products for use in minimally invasive surgical procedures. Much of our recent development efforts have been targeted at the development of next generation endoscopes. We selectively execute internal research and development programs to develop next generation capabilities for designing and manufacturing 3D endoscopes and very small Microprecision lenses, anticipating future requirements as the surgical community continues to demand smaller and more enhanced imaging systems for minimally invasive surgery.
As Ross Optical Industries of El Paso, Texas we also operate as a supplier of custom optical components and assemblies for military and defense, medical and various other industrial applications. All products sold by us under the Ross Optical name include a custom or catalog optic, which is sourced through our extensive domestic and worldwide network of optical fabrication companies. Most systems make use of optical lenses, prisms, mirrors and windows and range from individual optical components to complex mechano-optical assemblies. Products often include thin film optical coatings that are applied using our in-house coating department.
As Lighthouse Imaging of Windham, Maine we also operate as a manufacturer of advanced optical imaging systems and accessories. We have a strong expertise in electrical engineering and development of end-to-end medical visualization devices. Product development competencies at Lighthouse Imaging include Systems, Optical, Mechanical, Electrical and Process Development Engineering. Our product development team has extensive experience developing visualization systems that are used in a variety of clinical applications. Lighthouse Imaging is an industry leader in chip on tip visualization systems.
Approximately 34% our business during the nine months ended March 31, 2022 is from engineering services primarily relating to the design of medical device optical assemblies, 45% from the sale of both internally manufactured and purchased optical components, and 21% from the manufacture of optical assemblies and sub-assemblies primarily for medical device instrument applications. Our proprietary medical instrumentation line, unique custom design and manufacturing capabilities, and expert electrical engineering and development has generated traditional proprietary endoscopes and endocouplers as well as other custom imaging and illumination products for our customers’ use in minimally invasive surgical procedures. We design and manufacture 3D endoscopes and very small Microprecision lenses, assemblies and complete medical devices to meet the surgical community’s continuing demand for smaller, disposable, and more enhanced imaging systems for minimally invasive surgery.
| 15 |
We are registered to the ISO 9001:2015 and ISO 13485:2016 Quality Standards and comply with the FDA Good Manufacturing Practices and the European Union Medical Device Directive for CE marking of our medical products.
Our internet websites are www.poci.com, www.rossoptical.com, and www.lighthouseoptics.com. Information on our websites is not intended to be integrated into this report. Investors and others should note that we announce material financial information using our company websites (www.poci.com; www.rossoptical.com; www.lighthouseoptics.com), our investor relations website, SEC filings, press releases, public conference calls and webcasts. Information about Precision Optics, our business, and our results of operations may also be announced by social media posts on our Ross Optical and Lighthouse LinkedIn pages (www.linkedin.com/company/ross-optical-industries/) (https://www.linkedin.com/company/lighthouse-imaging-corporation/) and Twitter feed (http://twitter.com/rossoptical) and on our Lighthouse Facebook page (https://www.facebook.com/lighthouseoptics/).
The information that we post on these social media channels could be deemed to be material information. Therefore, we encourage investors, the media, and others interested in Precision Optics to review the information that we post on these social media channels. These social media channels may be updated from time to time on Precision Optics investor relations website. The information on, or accessible through, our websites and social media channels is not incorporated by reference in this Quarterly Report on Form 10-Q.
The markets in which we do business are highly competitive and include both foreign and domestic competitors. Many of our competitors are larger and have substantially greater resources than we do. Furthermore, other domestic or foreign companies, some with greater financial resources than we have, may seek to produce products or services that compete with ours. We routinely outsource specialized production efforts as required to obtain the most cost-effective production. Over the years we have developed extensive experience collaborating with other optical specialists worldwide.
We believe that our future success depends to a large degree on our ability to develop new optical products and services to enhance the performance characteristics and methods of manufacture of existing products. Accordingly, we expect to continue to seek and obtain product-related design and development contracts with customers and to selectively invest our own funds on research and development, particularly in the areas of Microprecision optics, micro medical cameras, illumination, single-use endoscopes and 3D endoscopes.
Current sales and marketing activities are intended to broaden awareness of the benefits of our new technology platforms and our successful application of these new technologies to medical device projects requiring surgery-grade visualization from sub-millimeter sized devices and 3D endoscopy, including single-use products and assemblies. We market directly to established medical device companies primarily in the United States that we believe could benefit from our advanced endoscopy visualization systems. Through this direct marketing, referrals, attendance at trade shows and a presence in online professional association websites, we have expanded our on-going pipeline of projects to significant medical device companies as well as well-funded emerging technology companies. We expect our customer pipeline to continue to expand as development projects transition to production orders and new customer projects enter the development phase. Our Ross Optical division markets through existing customers and trade shows, in addition to proactive online marketing strategies executed primarily through its website.
General
This management’s discussion and analysis of financial condition and results of operations is based upon our unaudited consolidated financial statements, which have been prepared without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. We base our 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.
There have been no significant changes in our critical accounting policies as disclosed in the Notes to our Financial Statements contained in our Annual Report on Form 10-K for the year ended June 30, 2021 filed with the Securities and Exchange Commission on September 28, 2021.
| 16 |
Results of Operations
Our total revenues for the quarter ended March 31, 2022, were $4,651,352, as compared to $2,458,290 for the same period in the prior year, an increase of $2,193,062, or 89.2%, primarily due to inclusion of the Lighthouse division since its acquisition on October 4, 2021 and an increase in medical devise manufacturing revenue. Excluding the effect of the Lighthouse acquisition, engineering revenue experienced a slight quarter-over-quarter decrease while production revenue was up 106% and component revenue increased 32% from the quarter ended March 31, 2021 to 2022.
Our total revenues for the nine months ended March 31, 2022 were $10,884,737, as compared to $8,001,641 for the same period in the prior year, an increase of $2,883,096, or 36.0% primarily due to inclusion of the Lighthouse division since its acquisition on October 4, 2021. Excluding the effect of the Lighthouse acquisition, engineering revenue during the nine months ended March 31, 2022 decreased approximately $287,000 compared to the same period of the prior year due primarily to a change in mix of engineering projects. Component revenues increased approximately $543,000 during the nine months ended March 31, 2022 compared to the same period of the prior year, and production revenue increased approximately $161,000 over the same period as production on some products began to return to pre-pandemic levels.
Our largest customer during the three and nine months ended March 31, 2022 accounted for 10.9% and 9.0%, respectively, of our revenue and represented manufacturing assembly revenues for a medical diagnostic system. We generated revenues from 193 unique customers during the nine months ended March 31, 2022, and one single customer accounted for slightly more than 10% or more of our revenue for the quarter and no single customer accounted for 10% or more of our revenue for the nine months ended March 31, 2022 or the fiscal year ended June 30, 2021.
The COVID-19 world-wide pandemic that began during the quarter ended March 31, 2020 and the domestic and international impact of policy decisions being made in major countries around the world has had, and could continue to have, an adverse impact on our sources of supply, current and future orders from our customers, collection of amounts owed to us from our customers, our internal operating procedures, and our overall financial condition. Given the uncertainty surrounding the continuation of economic impacts both domestically and abroad, we cannot predict with certainty at this time what the future impact of COVID-19 and resulting business and economic policies in the US and abroad will be on our up-coming quarterly fiscal operating results.
Gross profit for the quarter ended March 31, 2022 was $1,728,209, compared to $818,024 for the same period in the prior year, an increase of $910,185, or 111.3%. Gross profit for the quarter ended March 31, 2022 as a percentage of our revenues was 37.2%, an increase from the gross profit percentage of 33.3% for the same period in the prior year. Gross profit for the nine months ended March 31, 2022 was $3,486,823, as compared to $2,647,642 for the same period in the prior year, an increase of $839,181 or 31.7%. Gross profit for the nine months ended March 31, 2022 as a percentage of our revenues was 32.0%, a decrease from the gross profit percentage of 33.1% for the same period in the prior year. Quarterly gross profit and gross profit percentage depend on a number of factors, including overall sales volume, facility utilization, product sales mix, the costs of engineering services, and production start-up costs and challenges in connection with new products, the effects of COVID-19 pandemic policy decisions on various economies and our suppliers and customers, as well as the effects on production efficiencies due to the augmented policies we have incorporated into our operations as a result of the COVID-19 pandemic.
Our gross margin on individual engineering projects is dependent on a number of factors and is expected to fluctuate from quarter to quarter based on the nature and status of engineering projects, unanticipated cost over-runs, design challenges and changes, start-up production activities or other customer-imposed project changes or delays. Our increase in gross margin dollars during the quarter ended March 31, 2022 was due to inclusion of the Lighthouse division since its acquisition on October 4, 2021, an increase in medical devise manufacturing revenue, and improved efficiencies in engineering projects, which is partially offset by inclusion of the Lighthouse division engineering and production revenues at overall margins lower than the Ross Optical division revenues. The remainder of our production, engineering and component revenues resulted in margins within our targeted range with reasonably expected fluctuations.
| 17 |
Research and development expenses were $214,898 for the quarter ended March 31, 2022, compared to $146,063 for the same period in the prior year, an increase of $68,835, or 47.1%. Research and development expenses were $433,248 for the nine months ended March 31, 2022, compared to $443,609 for the same period in the prior year, a decrease of $10,361, or 2.3%. In-house research and development and certain internal functions not directly related to customer engagements are classified as research and development expenses with the majority of our engineering, research and development activities being consumed in revenue generating engagements with our customers for the development of their products. During the quarter and nine months ended March 31, 2022 we had an increase in research and development costs due to the inclusion of the Lighthouse division offset by a greater amount of our engineering personnel time consumed in customer focused compared to the same periods of the prior fiscal year.
Selling, general and administrative expenses were $1,574,432 for the quarter ended March 31, 2022, compared to $927,979 for the same period in the prior year, an increase of $646,453, or 69.7%. Selling, general and administrative expenses were $3,974,824 for the nine months ended March 31, 2022, compared to $2,671,176 for the same period in the prior year, an increase of $1,303,648, or 48.8%. The increase in selling, general and administrative expenses in the three and nine months ended March 31, 2022 compared to the same periods of the prior fiscal year was primarily due to inclusion of the Lighthouse division since its acquisition on October 4, 2021, plus increased stock-based compensation and marketing related expenses.
Liquidity and Capital Resources
We have sustained recurring net losses from operations for several years. During the nine months ended March 31, 2022, we had a net loss of $1,197,713 and used cash in operating activities of $879,967. At March 31, 2022, cash was $831,585, accounts receivables were $3,347,692 and current liabilities were $5,770,887, including $1,018,275 of customer advances received for future order deliveries.
Although our revenue and gross margin have increased due to the acquisition of the Lighthouse division, our operating expenses have also increased, and we continue to experience pricing pressure from our customers and challenges in engineering projects and production orders that can result in cost over-runs and depressed gross margins. We also experience added uncertainty related to our vendors ability to supply materials and our customers future order levels as a result of the economic impact the COVID-19 world-wide pandemic and related jurisdictional policies and regulations and lingering supply-chain issues. Consequently, critical to our ability to maintain our financial condition is achieving and maintaining a level of quarterly revenues that generate break even or better financial performance as well as timely collection of accounts receivable from our customers. We believe profitable operating results can be achieved through a combination of revenue levels, realized gross margins and controlling operating expense increases, all of which are subject to periodic fluctuations resulting from sales mix and the stage of completion of varying engineering service projects as they progress towards and into production level revenues.
We have traditionally funded working capital needs through product sales, management of working capital components of our business, cash received from public and private offerings of our common stock, warrants to purchase shares of our common stock or convertible notes, manufacturing equipment leases, and by customer advances paid against purchase orders by our customers and recorded in the current liabilities section of the accompanying financial statements. We have incurred year to year and quarter to quarter operating losses during our efforts to develop current products including Microprecision optical elements, micro medical camera assemblies and 3D endoscopes. Our management believes that the opportunities represented by these technical capabilities and related products have the potential to generate sales increases to achieve breakeven and profitable results.
On October 4, 2021 we acquired the assets of Lighthouse Imaging, LLC as described in note 2. Business Acquisition to the accompanying financial statements in this Form 10-Q. To finance the cash portion of the acquisition price we entered into a $2,600,000 bank term loan, sold shares of our common stock for gross proceeds of $1,500,000. We also secured a $250,000 bank line of credit from the same bank on October 4, 2021 for working capital needs, upon which no borrowings are outstanding as of December 31, 2021.
| 18 |
Capital equipment expenditures and additional patent costs during the nine months ended March 31, 2022 were $82,660. Future capital equipment and patent expenditures will be dependent upon future sales and success of on-going research and development efforts.
Contractual cash commitments for the fiscal periods subsequent to March 31, 2022, are summarized as follows:
| Fiscal 2022 | Thereafter | Total | ||||||||||
| Capital lease for equipment, including interest | $ | 12,155 | $ | 171,161 | $ | 183,316 | ||||||
| Minimum operating lease payments - Ross Optical division | $ | 15,705 | $ | 134,799 | $ | 150,504 | ||||||
We have contractual cash commitments related to open purchase orders as of March 31, 2022 of approximately $1,263,003.
Off-Balance Sheet Arrangements
We currently have no off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
As a smaller reporting company, as defined by Rule 12b-2 of the Exchange Act and in Item 10(f)(1) of Regulation S-K, we are electing scaled disclosure reporting obligations and therefore are not required to provide the information requested by this Item.
Item 4. Controls and Procedures.
Managements Evaluation of Disclosure Controls and Procedures
Our Chief Executive Officer and our Chief Financial Officer evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on this evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that our disclosure controls and procedures, including internal control over financial reporting, were effective as of March 31, 2022, to ensure the information we are required to disclose in reports that we file or submit under the Securities Exchange Act of 1934, as amended (i) is recorded, processed, summarized, and reported within the time periods specified in Securities and Exchange Commission rules and forms, and (ii) is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Our disclosure controls and procedures are intended to be designed to provide reasonable assurance that such information is accumulated and communicated to our management. Based on this evaluation, our management concluded that our internal control over financial reporting was effective as of March 31, 2022.
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting that occurred during the second quarter of our fiscal year covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
| 19 |
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
Our Company, on occasion, may be involved in legal matters arising in the ordinary course of our business. While management believes that such matters are currently insignificant, matters arising in the ordinary course of business for which we are or could become involved in litigation may have a material adverse effect on our business, financial condition or results of operations. We are not aware of any pending or threatened litigation against us or our officers and directors in their capacity as such that could have a material impact on our operations or finances.
Item 1A. Risk Factors.
There have been no material changes from the risk factors previously disclosed in our annual report on Form 10-K for the fiscal year ended June 30, 2021, as filed with the Securities and Exchange Commission on September 28, 2021.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
We did not issue unregistered securities during the quarter ended March 31, 2022.
Item 3. Defaults Upon Senior Securities.
Not applicable.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
Frequency of Say on Pay
As previously reported on Form 8-K, in a non-binding advisory vote on the frequency of future say on pay votes held at the 2022 annual meeting on April 8, 2022, 7,877,182 shares voted for one year, 84,778 shares voted for two years, 41 shares voted for three years, and 5,045 shares abstained. On May 13, 2022, our board of directors has considered the outcome of this advisory vote and has determined, as was recommended with respect to this proposal by our board of directors in the proxy statement for the 2022 annual meeting, that we will hold future say on pay votes on an annual basis until the occurrence of the next advisory vote on the frequency of say on pay votes. The next advisory vote regarding the frequency of say on pay votes is required to occur no later than our 2028 annual meeting of stockholders.
Election to Waive Application of Mandatory Staggered Board Provision in Massachusetts General Laws Section 8.06(b)
On May 13, 2022, our board elected to be exempt from the provisions of Section 8.06(b) of the Massachusetts General Laws and to declassify the current board. Section 8.06(b) of the Massachusetts General Laws provides that the board of every public Massachusetts corporation shall be staggered by dividing the number of directors into three groups, as nearly equal in number as possible; the term of office of those of the first group, ''Class I Directors'', to continue until the first annual meeting following the date such public corporation becomes subject to this subsection and until their successors are elected and qualified; the term of office of those of the second group, ''Class II Directors'', to continue until the second annual meeting following the date the public corporation becomes subject to this subsection and until their successors are elected and qualified; and the term of office of those of the third group, ''Class III Directors'', to continue until the third annual meeting following the date such public corporation becomes subject to this subsection and until their successors are elected and qualified. Accordingly, and in accordance with our bylaws, prior to the waiver our board was staggered into three classes of directors.
| 20 |
Amendments of the Bylaws
On May 13, 2022, our board adopted an amendment to our amended and restated bylaws. Previously, our bylaws had not been amended since 2014.
The material changes to our bylaws comprise the following:
| - | Annual meeting of stockholders |
We made several clarifying changes, such as specifying that a majority of the board can call special meetings of stockholders and that such meetings can be postponed or rescheduled by the board.
Under the new bylaws, notice of meetings of stockholders must now be given at least ten days nor more than 60 days before the meeting, instead of at least seven days before the meeting. The notice may now also explicitly be given by electronic means. If the stockholders meeting is rescheduled or adjourned, the new bylaws clarify that no new notice need be given, unless the adjournment is for more than 30 days, or if after the adjournment a new record date is fixed for the adjourned meeting. The new bylaws state, that if a quorum initially is present at any meeting of stockholders, the stockholders may continue to transact business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum, but if quorum is not present at least initially, no business other than the adjournment may be transacted.
We added a provision that a stockholder may revoke any proxy that is not irrevocable by attending the meeting and voting in person, by filing with the secretary an instrument in writing revoking the proxy or by granting another duly executed proxy bearing a later date.
We also added a new provision giving the board or the presiding officer at the meeting the power to appoint an inspector of election.
Further, we added a new provision regarding stockholder proposals and nominations, specifically who can make such proposals, what information must be submitted, when and where to direct such proposals.
| - | Board of Directors |
Regarding the composition of the board, we dropped the maximum number of seats on the board leaving the decision up to the board. Further, the power to decrease or increase the board and to fill vacancies now rests solely with the board and not with the shareholders or the board alternatively. We further decided to declassify the board and have all directors stand for election at each annual meeting of stockholders. Notices for board meeting can now be transmitted electronically instead of by telegram. In addition, we added a provision to clarify that the board has the power to fix its remuneration, which may include reimbursement of expenses, salaries or attendance fees and can comprise cash or equity. The new bylaws also explicitly authorize us to purchase and maintain D&O insurance.
| - | Officers |
We updated the outdated terms of clerk and assistant clerk to secretary and assistant secretary, respectively. Further, we specified that the board has the power to elect the officers from time to time and deleted the dated reference to the incorporators or an election after each annual meeting. Thus, the tenure of each officers extends until the board has chosen, elected and qualified a successor.
| - | Shares |
Regarding stock certificates, the new bylaws state that shares may be uncertificated or represented by certificate, as before, and removed the entitlement for stockholders to request certificates. Further, in order to replace lost, destroyed or stolen certificates, the bylaws specify that we may now request documentation, indemnification or security to protect against claims.
| - | Amendments of the Bylaws |
The new bylaws removed the prohibition that the directors may not provide for indemnification of the board or amend the section on amendments to the bylaws.
| 21 |
Item 6. Exhibits.
| 22 |
| 23 |
| 31.1* | Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
| 31.2* | Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
| 32.1* | Certification of Officers pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
| 101.INS | Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104 | Cover Page Interactive Data File (formatted in iXBRL, and included in exhibit 101). |
| * | Filed herewith. |
| Certain portions of the agreement have been omitted to preserve the confidentiality of such information. The Company will furnish copies of any such information to the SEC upon request. |
| + | The schedules to agreement have been omitted from this filing pursuant to Item 601(a)(5) of Regulation S-K. The Company will furnish copies of any such schedules to the SEC upon request. |
Copies of above exhibits not contained herein are available to any stockholder, upon written request to: Chief Financial Officer, Precision Optics Corporation, Inc., 22 East Broadway, Gardner, MA 01440.
| 24 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| PRECISION OPTICS CORPORATION, INC. | ||
| Date: May 16, 2022 | By: | /s/ Joseph N. Forkey |
| Joseph N. Forkey | ||
|
Chief Executive Officer (Principal Executive Officer) | ||
| Date: May 16, 2022 | By: | /s/ Daniel S. Habhegger |
| Daniel S. Habhegger | ||
|
Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) | ||
| 25 |
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- ARTHEx Biotech Announces Oral Presentation on ATX-01 at the Oligonucleotide & Peptide Therapeutics (TIDES) Conference 2024
- Nykredit Realkredit A/S – New final terms for Euro Medium Term Note Programme
- Form 8.5 (EPT/RI) - musicMagpie Plc
Create E-mail Alert Related Categories
SEC FilingsSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
