10-Q 1 poci_10q-033119.htm FORM 10-Q

 

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

x   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31, 2019

 

or

 

o   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from                      to                     

 

Commission File Number: 001-10647

 

PRECISION OPTICS CORPORATION, INC.

(Exact name of registrant as specified in its charter)

 

Massachusetts 04-2795294
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)

 

22 East Broadway, Gardner, Massachusetts 01440-3338

(Address of principal executive offices) (Zip Code)

 

(978) 630-1800

(Registrant’s telephone number, including area code)

 

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. Yes x No o

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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). Yes x No o

   

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 o   Accelerated filer o
         
Non-accelerated filer x   Smaller reporting company x
         
      Emerging growth company o

 

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. o

 

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes o No x

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class Trading symbol(s) Name of each exchange on which registered
None.    

 

The number of shares outstanding of the issuer’s common stock, par value $0.01 per share, at May 15, 2019 was 12,038,139 shares.

 

 

   

 

 

PRECISION OPTICS CORPORATION, INC.

 

Table of Contents

 

  Page
PART I — FINANCIAL INFORMATION 3
Item 1. Financial Statements 3
Consolidated Balance Sheets at March 31, 2019 and June 30, 2018 3
Consolidated Statements of Operations for the Three and Nine Months Ended March 31, 2019 and 2018 4
Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended March 31, 2019 and 2018 5
Consolidated Statements of Cash Flows for the Nine Months Ended March 31, 2019 and 2018 6
Notes to Consolidated Financial Statements 7
   
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 11
Item 3. Quantitative and Qualitative Disclosures About Market Risk 15
Item 4. Controls and Procedures 15
   
PART II — OTHER INFORMATION 17
Item 1. Legal Proceedings 17
Item 1A. Risk Factors 17
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 17
Item 3. Defaults Upon Senior Securities 17
Item 4. Mine Safety Disclosures (Not applicable.) 17
Item 5. Other Information 17
Item 6. Exhibits 18

 

 

 

 

 2 

 

 

PART I. FINANCIAL INFORMATION

  

Item 1. Financial Statements.

   

PRECISION OPTICS CORPORATION, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

 

   March 31,
2019		   June 30,
2018		 
ASSETS          
CURRENT ASSETS          
Cash and Cash Equivalents  $1,352,767   $402,738 
Accounts Receivable, net   826,828    796,923 
Inventories, net   1,129,846    1,144,068 
Prepaid Expenses   139,438    70,991 
Total Current Assets   3,448,879    2,414,720 
           
PROPERTY AND EQUIPMENT          
Machinery and Equipment   2,586,359    2,511,638 
Leasehold Improvements   590,641    553,596 
Furniture and Fixtures   148,303    148,303 
    3,325,303    3,213,537 
           
Less: Accumulated Depreciation and Amortization   (3,187,533)   (3,164,051)
Net Fixed Assets   137,770    49,486 
           
Patents, net   49,807    47,275 
           
TOTAL ASSETS  $3,636,456   $2,511,481 
           
LIABILITIES AND STOCKHOLDERS’ EQUITY          
CURRENT LIABILITIES          
Current Portion of Capital Lease Obligation  $9,416   $8,962 
Accounts Payable   644,729    704,450 
Customer Advances   258,928    857,842 
Accrued Employee Compensation   194,354    238,590 
Accrued Professional Services   65,000    98,000 
Accrued Warranty Expense   25,000    25,000 
Total Current Liabilities   1,197,427    1,932,844 
           
Capital Lease Obligation, net of current portion   7,481    14,601 
           
STOCKHOLDERS’ EQUITY          
Common Stock, $0.01 par value - Authorized - 50,000,000 shares; Issued and Outstanding – 12,038,139 shares at March 31, 2019 and 10,197,139 shares at June 30, 2018   120,382    101,972 
Additional Paid-in Capital   47,839,004    45,484,186 
Accumulated Deficit   (45,527,838)   (45,022,122)
Total Stockholders’ Equity   2,431,548    564,036 
           
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY  $3,636,456   $2,511,481 

 

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, 2019 AND 2018

(UNAUDITED)

 

 

   Three Months
Ended March 31,		   Nine Months
Ended March 31,		 
   2019   2018   2019   2018 
Revenues  $1,386,454   $735,597   $4,423,763   $2,577,116 
                     
Cost of Goods Sold   930,518    499,444    3,149,598    1,653,999 
Gross Profit   455,936    236,153    1,274,165    923,117 
                     
Research and Development Expenses, net   121,640    126,365    347,851    334,823 
Selling, General and Administrative Expenses   414,475    388,611    1,430,880    955,230 
Total Operating Expenses   536,115    514,976    1,778,731    1,290,053 
                     
Operating Loss   (80,179)   (278,823)   (504,566)   (366,936)
                     
Interest Expense   (304)   (448)   (1,150)   (1,446)
                     
Net Loss  $(80,483)  $(279,271)  $(505,716)  $(368,382)
                     
Loss Per Share:                    
Basic and Diluted  $(0.01)  $(0.03)  $(0.04)  $(0.04)
                     
Weighted Average Common Shares Outstanding:                    
Basic and Diluted   12,020,328    10,095,139    11,294,902    9,724,904 

 

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 THREE AND NINE MONTHS ENDED

March 31, 2019 AND 2018

(UNAUDITED)

 

 

   Nine Month Period Ended March 31, 2019 
   Number of
Shares		   Common
Stock		   Additional
Paid-in
Capital		   Accumulated
Deficit		   Total
Stockholders’
Equity		 
                     
Balance, July 1, 2018   10,197,139   $101,972   $45,484,186   $(45,022,122)  $564,036 
Issuance of common stock for services   100,000    1,000    (1,000)   –    – 
Stock-based compensation   –    –    342,984    –    342,984 
Net loss   –    –    –    (299,285)   (299,285)
Balance, September 30, 2018   10,297,139    102,972    45,826,170    (45,321,407)   607,735 
                          
Private placement of common stock, net of issuance costs of $23,000   1,600,000    16,000    1,961,000    –    1,977,000 
Stock-based compensation   –    –    10,228    –    10,228 
Net loss   –    –    –    (125,948)   (125,948)
Balance, December 31, 2018   11,897,139    118,972    47,797,398    (45,447,355)   2,469,015 
                          
Issuance of common stock for services   100,000    1,000    (1,000)   –    – 
Exercise of stock options   41,000    410    28,965    –    29,375 
Adjust common stock issuance costs to actual   –    –    10,750    –    10,750 
Stock-based compensation   –    –    2,891    –    2,891 
Net loss   –    –    –    (80,483)   (80,483)
Balance, March 31, 2019   12,038,139   $120,382   $47,839,004   $(45,527,838)  $2,431,548 

 

 

 

   Nine Month Period Ended March 31, 2018 
   Number of
Shares		   Common
Stock		   Additional
Paid-in
Capital		   Accumulated
Deficit		   Total
Stockholders’
Equity		 
                     
Balance, July 1, 2017   8,872,916   $88,729   $45,140,383   $(44,670,732)  $558,380 
Private placement of common stock, net of issuance costs of $2,963   555,556    5,556    241,482    –    247,038 
Stock-based compensation   –    –    26,057    –    26,057 
Net loss   –    –    –    (28,785)   (28,785)
Balance, September 30, 2017   9,428,472    94,285    45,407,922    (44,699,517)   802,690 
                          
Exercise of stock purchase warrants   666,667    6,667    –    –    6,667 
Stock-based compensation   –    –    6,971    –    6,971 
Net loss   –    –    –    (60,326)   (60,326)
Balance, December 31 , 2017   10,095,139    100,952    45,414,893    (44,759,843)   756,002 
                          
Stock-based compensation   –    –    8,974    –    8,974 
Net loss   –    –    –    (279,271)   (279,271)
Balance, March 31, 2018   10,095,139   $100,952   $45,423,867   $(45,039,114)  $485,705 

 

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, 2019 AND 2018

(UNAUDITED)

 

 

   Nine Months
Ended March 31,		 
   2019   2018 
CASH FLOWS FROM OPERATING ACTIVITIES:          
Net Loss  $(505,716)  $(368,382)
Adjustments to Reconcile Net Loss to Net Used In Operating Activities -          
Depreciation and Amortization   23,482    21,728 
Stock-based Compensation Expense   356,103    42,002 
Non-cash Consulting Expense   –    6,588 
Bad Debt Expense   –    113,750 
Changes in Operating Assets and Liabilities -          
Accounts Receivable, net   (29,905)   (224,367)
Inventories, net   14,222    (68,973)
Prepaid Expenses   (68,447)   (32,645)
Accounts Payable   (59,721)   (12,379)
Customer Advances   (598,914)   441,204 
Accrued Liabilities   (85,236)   (25,308)
Net Cash Used In Operating Activities   (954,132)   (106,782)
           
CASH FLOWS FROM INVESTING ACTIVITIES:          
Additional Patent Costs   (2,532)   (17,189)
Purchases of Property and Equipment   (111,766)   – 
Net Cash Used In Investing Activities   (114,298)   (17,189)
           
CASH FLOWS FROM FINANCING ACTIVITIES:          
Payment of Capital Lease Obligation   (6,666)   (6,242)
Gross Proceeds from Private Placement of Common Stock   2,000,000    210,001 
Proceeds from Exercise of Stock Purchase Warrants   –    6,667 
Proceeds from Exercise of Stock Options   29,375    – 
Private Placement Expense Paid   (4,250)   (2,963)
Net Cash Provided From Financing Activities   2,018,459    207,463 
           
NET INCREASE IN CASH AND CASH EQUIVALENTS   950,029    83,492 
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD   402,738    118,405 
           
CASH AND CASH EQUIVALENTS, END OF PERIOD  $1,352,767   $201,897 
           
           
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash Paid for Income Taxes		  $912   $912 
           
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING AND INVESTING ACTIVITIES:          
Issuance of Common Stock in Settlement of Accounts Payable  $–   $40,000 
Offering Costs Included in Accrued Liabilities  $8,000   $– 

 

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 2019. 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, 2018, together with the Report of Independent Registered Public Accounting Firm filed under cover of the Company’s 2018 Annual Report on Form 10-K, filed with the Securities and Exchange Commission on September 27, 2018.

 

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 under different assumptions or conditions.

 

Reclassification

 

A certain balance sheet item in the prior period financial statements has been reclassified to conform to the presentation of the current period financial statements. This reclassification had no effect on the previously reported net loss.

 

Revenue Recognition

 

On July 1, 2018, the Company adopted ASU 2014-09 Revenue from Contracts with Customers (ASC 606) using the modified retrospective method for contracts that were not completed as of July 1, 2018, whereby 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.

 

   Three Months
Ended March 31,		   Nine Months
Ended March 31,		 
   2019   2018   2019   2018 
Engineering Design Services  $61,833   $225,433   $892,472   $988,212 
Optical Components   250,405    161,670    774,429    830,855 
Medical Device Products and Assemblies   1,074,216    348,494    2,756,862    758,049 
Total Revenues  $1,386,454   $735,597   $4,423,763   $2,577,116 

 

 

 

 7 

 

 

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, 2019, there were no contract assets recorded in the Company’s Consolidated Balance Sheets.

 

The Company’s contract liabilities arise as a result of unearned revenue received from customers at inception of contracts or where the timing of billing for services precedes satisfaction of the Company’s performance obligations. The Company generally satisfies performance obligations within one year from the contract inception date. As of July 1, 2018, contract liabilities were $857,842, which were recorded as customer advances in the Company’s Consolidated Balance Sheets, $97,650 and $680,598 of which was recognized in sales during the three and nine months ended March 31, 2019, respectively. As of March 31, 2019, contract liabilities recorded as customer advances were $258,928. 

 

Income (Loss) Per Share

 

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 or net 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 and warrants. For the three and nine months ended March 31, 2019 and 2018, the effect of such securities was antidilutive and not included in the diluted calculation because of the net loss generated in these periods.

 

The following is the calculation of loss per share for the three and nine months ended March 31, 2019 and 2018:

 

   Three Months
Ended March 31,		   Nine Months
Ended March 31,		 
   2019   2018   2019   2018 
Net Income (Loss) - Basic and Diluted  $(80,483)  $(279,271)  $(505,716)  $(368,382)
                     
Basic and Dilutive Weighted Average Shares Outstanding   12,020,328    10,095,139    11,294,902    9,724,904 
                     
Loss Per Share - Basic and Diluted  $(0.01)  $(0.03)  $(0.04)  $(0.04)

 

The number of shares issuable upon the exercise of outstanding stock options and warrants that were excluded from the computation as their effect was antidilutive was approximately 1,492,000 and 1,042,200 for the three months ended March 31, 2019 and 2018, respectively, and approximately 1,493,200 and 4,739,960 for the nine months ended March 31, 2019 and 2018, 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 carry forwards. 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.

 

 

 

 8 

 

  

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.

  

2. INVENTORIES

 

Inventories are stated at the lower of cost (first-in, first-out) and net realizable value and consisted of the following:

 

   March 31,
2019		   June 30,
2018		 
Raw Materials  $483,090   $500,908 
Work-In-Progress   443,341    434,536 
Finished Goods   203,415    208,624 
Total Inventories  $1,129,846   $1,144,068 

 

3. CAPITAL LEASE OBLIGATION

 

The Company entered into a five-year capital lease obligation in January 2016 for the acquisition of manufacturing equipment totaling $51,252. At March 31, 2019, future minimum lease payments under the capital lease obligation are as follows:

 

Fiscal Year Ending June 30:  Amount 
2019  $2,563 
2020   10,250 
2021   5,126 
Total minimum payments   17,939 
Less: amount representing interest   1,042 
Present value of minimum lease payments   16,897 
Less: current portion   9,416 
   $7,481 

 

4. STOCK-BASED COMPENSATION

 

The following table summarizes stock-based compensation expense for the three and nine months ended March 31, 2019 and 2018:

 

   Three Months
Ended March 31,		   Nine Months
Ended March 31,		 
   2019   2018   2019   2018 
Cost of Goods Sold  $–   $–   $–   $8,669 
Research and Development   2,411    2,323    7,233    9,335 
Selling, General and Administrative   480    6,651    348,870    23,998 
Stock Based Compensation Expense  $2,891   $8,974   $356,103   $42,002 

  

No compensation has been capitalized because such amounts would have been immaterial.

   

The following tables summarize stock option activity for the nine months ended March 31, 2019:

 

   Options Outstanding 
   Number of
Shares		   Weighted Average
Exercise Price		   Weighted Average
Contractual Life		 
Outstanding at June 30, 2018   1,055,700   $0.76    6.13 years 
Granted   465,500           
Exercised   (41,000)          
Expired or Cancelled   (18,200)          
Outstanding at March 31, 2019   1,462,000   $0.75    6.59 years 

 

 

 

 9 

 

  

Information related to the stock options outstanding as of March 31, 2019 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		  
$ 0.27       40,000       2.29     $ 0.27       40,000     $ 0.27  
$ 0.40       15,000       8.08     $ 0.40       10,000     $ 0.40  
$ 0.48       60,000       7.00     $ 0.48       60,000     $ 0.48  
$ 0.50       100,000       6.23     $ 0.50       100,000     $ 0.50  
$ 0.55       41,500       5.09     $ 0.55       36,500     $ 0.55  
$ 0.64       25,000       8.62     $ 0.64       15,000     $ 0.64  
$ 0.70       100,000       9.35     $ 0.70       33,333     $ 0.70  
$ 0.73       826,500       7.49     $ 0.73       631,500     $ 0.73  
$ 0.85       7,500       3.76     $ 0.85       7,500     $ 0.85  
$ 0.90       7,500       4.76     $ 0.90       7,500     $ 0.90  
$ 0.95       30,000       5.28     $ 0.95       30,000     $ 0.95  
$ 1.20       207,800       2.92     $ 1.20       207,800     $ 1.20  
$ 1.35       1,200       0.65     $ 1.35       1,200     $ 1.35  
$ 0.27–$1.35       1,462,000       6.60     $ 0.75       1,180,333     $ 0.76  

 

The aggregate intrinsic value of the Company’s “in-the-money” outstanding and exercisable options as of March 31, 2019 was $705,812 and $556,712, respectively.

 

Common Stock Award

 

On August 2, 2018, the Company awarded its Chief Executive Officer 300,000 shares of common stock for services performed through June 30, 2018. The fair market value of the 300,000 shares on the award date equal to $210,000 has been recorded as general and administrative stock-based compensation expense in the quarter ended September 30, 2018. As of March 31, 2019, 200,000 shares have been issued, and the remaining 100,000 shares will be issued on January 1, 2020.

   

 

 

 

 

 

 

 10 

 

 

Item 2. Management’s 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 and nine months ended March 31, 2019 and with our audited consolidated financial statements for the year ended June 30, 2018 included in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission on September 27, 2018.

 

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, 2018 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 developing and manufacturing advanced optical instruments since 1982. Today, the majority of our business is the design and manufacture of high-quality medical devices and 10% to 20% of our business is the design and manufacture of military and industrial products. 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. During the last ten to fifteen years, we funded internal research and development programs to develop next generation capabilities for designing and manufacturing 3D endoscopes and very small Microprecision™ lenses, anticipating the surgical community’s future demand for smaller and more enhanced imaging systems for minimally invasive surgery. Over the last few years demand for these products has increased, and our engineering personnel resources and capabilities are now mostly consumed in revenue generating optical design and development projects for our customers.

 

Our unique proprietary technology in the areas of micro optical lenses and prisms, micro medical fiber and CMOS based cameras, and custom design of medical grade instruments, combined with recent developments in the areas of 3D displays, has allowed us to begin commercialization of related product and service offerings to a widening group of customers addressing various medical device, defense and aerospace applications. Thus, a portion of our revenues are now derived from engineering and design services we performed for our customers to incorporate our technologies and capabilities into their medical device products. We believe that new products based on these technologies provide enhanced imaging for existing surgical procedures and can enable development of many new medical device products and related medical procedures.

 

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 website is www.poci.com. Information on our website is not intended to be integrated into this report.

 

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 materials and production efforts as required to obtain the most cost effective production.

 

We believe that competition for sales of our medical products and services, which have been principally sold to original equipment manufacturers, or OEM, customers, is based on our ability to design and produce technical features, performance, engineering service and production scheduling, on-time delivery, quality control and product reliability, and competitive pricing.

 

 

 

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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 and 3D endoscopes.

   

For the nine months ended March 31, 2019, approximately 77% of our sales were made to seven customers. Of these, three were medium to large, international, medical device companies and one was a large defense contractor. Each of these customers has been our customer for numerous years. The other three customers were early-stage companies developing endoscopic products that incorporate our unique design capabilities. Sales to these seven customers included both products we developed over five years ago, engineering services, and products we are currently developing which rely heavily on our unique, proprietary Microprecision™ lens technology and optical visualization system expertise.

 

Current sales and marketing activities are intended to broaden awareness of the benefits of our new technology platforms, which we believe are ready for general application to medical device projects requiring surgery-grade visualization from sub-millimeter sized devices and 3D endoscopy. Successful engineering projects for us eventually transition to manufacturing orders as our customers bring their products to market. 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 including Medical Design and Manufacturing (MD&M) West and MD&M East, our objective is to maintain our pipeline of engineering projects with the potential for future growth from manufacturing orders, thereby increasing our overall revenues from a growing number of manufacturing medical device customers.

 

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 under different assumptions or conditions.

 

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, 2018 filed with the Securities and Exchange Commission on September 27, 2018.

 

Results of Operations

 

Our total revenues for the quarter ended March 31, 2019, were $1,386,454, as compared to $735,597 for the same period in the prior year, an increase of $650,857, or 89%. Combined optical components and engineering service revenues were $312,238 in the quarter ended March 31, 2019, representing a 19.3% decrease from the same quarter of the prior year, which is considered normal fluctuation for these revenue categories. Medical device assembly or production revenues increased to $1,074,216 during the quarter ended March 31, 2019 from $348,494 during the same quarter of the prior year, an increase of $725,722 or 208%. The majority of our revenues originate from engineering design services that then lead to production manufacturing revenues for products marketed or under development by our OEM customers. Therefore, our revenues are subject to fluctuations on a product by product basis from period to period.

 

Engineering projects continue to range in type and include CMOS, Microprecision™, 3D and robotic visualization and illumination systems. While the number of revenue generating engineering projects decreased during the quarter ended March 31, 2019 compared to the prior year, our engineering personnel operated at near full capacity during the most recent quarter. One large 3D instrument project remains in process as of March 31, 2019 with completion and related revenues expected in coming quarters.

 

 

 

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The $725,722 or 208% increase in production revenue during the quarter ended March 31, 2019 compared to the same quarter of the prior year resulted primarily from a $381,162 increase in sales from two projects transitioned from engineering to production, plus a $301,546 increase in revenue from a traditional spine product sold to a long-standing customer. The new production products represent a cardiovascular fiberscope incorporating our Microprecision™ technology and an ENT scanning device incorporating CMOS and Microprecision™ technologies.

 

Our total revenues for the nine months ended March 31, 2019 were $4,423,763, as compared to $2,577,116 for the same period in the prior year, an increase of $1,846,647, or 72%. Engineering design service revenues decreased by $95,740 or 10% in the nine months ended March 31, 2019 compared to the same quarter of the prior year, due primarily from the transition of two engineering projects to production offset by an increase of revenue from a 3D robotic engineering project during the nine months ended March 31, 2019. Optical component revenues decreased $56,426 or 7% during the nine months ended March 31, 2019 compared to the same period of the prior year primarily due to customary periodic increases and decreases in the revenues from the same three largest customers making up that category of revenues during nine months ended March 31, 2019 and 2018.

 

Production revenues increased during the nine months ended March 31, 2019 compared to the same period of the prior year by $1,998,813 or 264%. As in the quarter ended March 31, 2019, the increase in production revenue during the nine month period ended March 31, 2019 compared to the same nine month period of the prior year resulted primarily from a $1,291,329 increase in sales to three customers relating to two projects transitioned from engineering to production, plus a $431,694 increase in revenue from a traditional spine product sold to a long-standing customer. The new production products represent a cardiovascular fiberscope incorporating our Microprecision™ technology and an ENT scanning device incorporating CMOS and Microprecision™ technologies.

 

Gross profit for the quarter ended March 31, 2019 was $455,936, compared to $236,153 for the same period in the prior year, reflecting an increase of $219,783, or 93%. Gross profit for the quarter ended March 31, 2019 as a percentage of our revenues was 32.9%, an increase from the gross profit percentage of 32.1% for the same period in the prior year. Gross profit for the nine months ended March 31, 2019 was $1,274,165, as compared to $923,117 for the same period in the prior year, which reflects an increase of $351,048 or 38%. Gross profit for the nine months ended March 31, 2019 as a percentage of our revenues was 28.8%, a decrease from the gross profit percentage of 35.8% 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 process development in connection with custom products entering the production phase.

 

Although the higher level of revenues during the quarter and nine month periods ended March 31, 2019 when compared to the same quarter and nine month periods of the prior year absorbed a greater amount of fixed manufacturing costs thereby increasing realized gross margins, two projects encountered cost over-runs that were the primary cause of the decreased gross margins as a percentage of sales during the quarter and nine months periods ended March 31, 2019. The two projects represent 22%-25% of total revenues for the quarter and nine months ended March 31, 2019, one being a production project impacting the gross margin percentage by 1% and 3% in the quarter and nine months ended March 31, 2019, respectively, and the other being an engineering service project impacting the gross margin percentage by 4% and 5% in the quarter and nine months ended March 31, 2019, respectively. The cost over-runs in each of these cases resulted from design challenges and manufacturing issues we are correcting, which is reflected in the improved gross margin in the quarter ended March 31, 2019 compared to the immediately preceding quarter. We believe the remaining issues in these projects will be corrected thereby minimizing their detrimental effects on total gross margins. The remainder of our production and engineering jobs resulted in margins within our targeted range with reasonably expected fluctuations.

 

Research and development expenses were $121,640 for the quarter ended March 31, 2019, compared to $126,365 for the same period in the prior year, a decrease of $4,725, or 3.7%. Research and development expenses were $347,851 for the nine months ended March 31, 2019, compared to $334,823 for the same period in the prior year, an increase of $13,028, or 3.9%. 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. Engineering personnel are nearly fully utilized in revenue generating projects, and while additional engineering personnel have been added internal research and development expenses are relatively unchanged between the current and prior year periods.

 

 

 

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Selling, general and administrative expenses were $1,430,880 for the nine months ended March 31, 2019, compared to $955,230 for the same period in the prior year, an increase of $475,650, or 50%. The increase in the nine months ended March 31, 2019, compared to the same period of the prior year was primarily due to increased non-cash stock-based compensation expense of $324,872 relating to stock option and common stock awards. Selling, general and administrative expenses were further increased during the quarter ended March 31, 2019 when compared to the same quarter of the prior fiscal year by increased compensation costs for existing personnel, sales commissions, and shipping costs for increased production materials purchased from overseas, all of which were partially offset by a $113,750 reduction in bad debt expense related to one isolated customer in the prior year and a $23,037 decrease in fees paid to an investor relations firm.

 

Selling, general and administrative expenses were $414,475 for the quarter ended March 31, 2019, compared to $388,611 for the same period in the prior year, an increase of $25,864, or 6.7%, resulting from increases in compensation costs for existing personnel, sales commissions, trade show costs, and shipping costs for increased production materials purchased from overseas, which were partially offset by an $88,750 reduction in bad debt expense related to one isolated customer in the prior year.

 

No income tax provision was recorded in the quarter and nine month periods ended March 31, 2019 and 2018 because of the losses generated in those periods.

 

Liquidity and Capital Resources

 

We have sustained recurring net losses for several years, although during the last four fiscal quarters our financial performance has improved. During the quarter and nine month periods ended March 31, 2019, we incurred net losses of $80,483 and $505,716, respectively. We also incurred net losses of $351,390 and $1,006,457 during the fiscal years ended June 30, 2018 and 2017, respectively. Revenues during the quarters ended June 30, September 30, December 31, 2018 and March 31, 2019 have increased to $1,460,932, $1,559,458, 1,477,851, and 1,386,454, respectively. Excluding expenses relating to non-cash stock-based compensation and non-recurring bad debts, non-GAAP net income was the following during the last four fiscal quarters:

 

   Fiscal Quarter Ended 
   June 30,
2018		   September 30,
2018		   December 31,
2018		   March 31,
2019		 
Net income (loss)  $16,992   $(299,285)  $(125,948)  $(80,483)
Non-cash stock-based compensation   10,339    342,948    10,228    2,891 
Non-recurring bad debt expense   113,750    –    –    – 
Non-GAAP net income (loss)  $141,081   $43,663   $(115,720)  $(77,592)

 

Non-GAAP net income (loss) is a non-GAAP financial measure as defined in Regulation G of the Securities and Exchange Act of 1934, as amended. We report our financial results in compliance with GAAP, but we believe that also discussing non-GAAP measures provides investors with financial measures we use in the management of our business. We define non-GAAP net income (loss) as net income (loss) plus non-cash stock-based compensation and non-recurring bad debt expense. This measure may not be comparable to similarly titled measures reported by other companies. We use non-GAAP net income (loss) as indicator of our operating performance. We believe non-GAAP net income (loss) is helpful to investors in evaluating our operating performance because non-cash items are included to present a more inclusive picture of our operations. Non-GAAP net income (loss) is a supplemental non-GAAP measure, which has limitations as an analytical tool. Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. Non-GAAP financial measures do not reflect a comprehensive system of accounting, may differ from GAAP measures with the same names, and may differ from non-GAAP financial measures with the same or similar names that are used by other companies.

 

As of March 31, 2019, cash and cash equivalents were $1,352,767, accounts receivable were $826,828, and current liabilities were $1,197,427. Our working capital was $2,251,452 and $481,876 at March 31, 2019 and June 30, 2018, respectively, with the increase at March 31, 2019 resulting primarily from the sale of our common stock in October 2018. As reported on Form 8-K filed with the Securities and Exchange Commission on October 18, 2018, we received $2,000,000 from the sale of 1,600,000 shares of our common stock at $1.25 per share, which we are using for general working capital purposes. Proceeds from this stock offering, combined with our recently improved financial performance, significantly enhances our working capital position and financial condition. Critical to our ability to maintain our financial condition is achieving a level of quarterly revenues at or greater than the levels achieved during the most recent four fiscal quarters as well as meeting targeted gross margins while limiting the growth of other operating expenses. A combination of lower revenue levels than experienced in recent quarters, decreasing gross margins, or increasing operating expenses could result in the use of our cash and working capital and an overall decline in our current financial condition.

 

 

 

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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, and by customer advances paid against purchase orders by our customers and recorded in the current liabilities section of the accompanying financial statements. Our management believes that the opportunities represented by our current production projects and engineering pipeline of Microprecision™ optical elements, micro medical camera assemblies and 3D endoscope projects have the potential to generate increasing revenues and profitable financial results.

 

Capital equipment expenditures during the nine months ended March 31, 2019 and 2018 were $117,766 and $0, respectively. Future capital equipment expenditures will be dependent upon the type and amount of future sales revenue and the needs of on-going research and development efforts.

 

We have contractual cash commitments related to open purchase orders as of March 31, 2019 of approximately $1,059,114, plus a $16,897 commitment remaining under a five-year capital lease obligation for the acquisition of equipment (see Note 3. Capital Lease Obligation). We have no other contractual cash commitments since leased facilities are currently on a month-to-month basis.

   

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.

 

Management’s 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 not effective, as of March 31, 2019, 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 not effective as of March 31, 2019.

  

The following is a description of two material weaknesses in our internal control over financial reporting:

 

Segregation of Duties: As previously disclosed in our Annual Reports on Form 10-K for the fiscal years ended June 30, 2008-2018, our management identified a control deficiency during the 2008 fiscal year because we lacked sufficient staff to segregate accounting duties. We believe the control deficiency resulted primarily because we have the equivalent of one and one-half persons performing all accounting-related on-site duties. As a result, we did not maintain adequate segregation of duties within our critical financial reporting applications, the related modules and financial reporting processes. This control deficiency could result in a misstatement of balance sheet and income statement accounts in our interim or annual consolidated financial statements that would not be detected. Accordingly, management has determined that this control deficiency constitutes a material weakness. During the period beginning with fiscal year 2008 through June 30, 2018, no audit adjustments resulting from this condition were required.

 

 

 

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To address and remediate the material weakness in internal control over financial reporting described above, beginning with the quarter ended September 30, 2008, we instituted a procedure whereby our Chief Executive Officer, our Chief Financial Officer and other members of our Board of Directors perform a higher level review of the quarterly and annual reports on Form 10-Q and Form 10-K prior to filing.

 

We believe that the step outlined above strengthens our internal control over financial reporting and mitigates the material weakness described above. As part of our assessment of internal control over financial reporting for the fiscal year ended June 30, 2018, our management has evaluated this additional control and has determined that it is operating effectively.

 

Inventory Valuation: As previously disclosed in our Annual Report on Form 10-K for the fiscal year ended June 30, 2018, we reported a material weakness with respect to the valuation of our inventories. Specifically, the amounts used to value our inventory at June 30, 2009 with respect to overhead rates and purchased items were often inconsistent with the supporting documentation, due to year-to-year changes in overhead rates and costs of purchased items that were not properly reflected in inventory valuation. Accordingly, management had determined that this control deficiency constituted a material weakness as of June 30, 2009. Audit adjustments of approximately $58,000 and $41,000 to our audited financial statements as of June 30, 2011 and June 30, 2017, respectively, were necessary as a result of this condition.

   

Changes in Internal Control over Financial Reporting

 

There was no change in our internal control over financial reporting that occurred during the first 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.

 

To address and remediate the material weakness in internal control over financial reporting described above, beginning in the quarter ended September 30, 2009 and continuing through the quarter ended March 31, 2019, we implemented processes to improve our inventory controls and documentation surrounding inventory valuation for overhead rates, and performed procedures to ensure that the pricing of inventory items was consistent with the supporting documentation. We believe that the step outlined above strengthens our internal control over financial reporting and mitigates the material weakness described above.

 

We intend to continue to remediate material weaknesses and enhance our internal controls but cannot guarantee that our efforts will result in remediation of our material weaknesses or that new issues will not be exposed in this process.

  

 

 

 

 

 

 

 

 

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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, 2018, as filed with the Securities and Exchange Commission on September 27, 2018; and our quarterly report for the quarter ended December 31, 2018, as filed with the Securities and Exchange Commission on February 12, 2019.

   

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

 

We did not issue unregistered securities during the quarter ended March 31, 2019.

 

Item 3. Defaults Upon Senior Securities.

 

Not applicable.

 

Item 4. Mine Safety Disclosures.

 

Not applicable.

 

Item 5. Other Information.

 

On May 10, 2019, our Board of Directors approved the immediately effective acceleration of vesting of all unvested stock option grants held by our Chief Financial Officer, Donald A. Major. In addition, in accordance with the terms of our 2006 and 2011 Equity Incentive Plans, the Board approved an extension of the exercise period of all outstanding stock options held by Mr. Major beyond the original termination date following any future change in Mr. Major’s employment status with the Company. All options held by Mr. Major will now continue to be exerciseable until the stated option expiration date regardless of any future employment termination or other change in status, except in case of death of Mr. Major, in which case such stock options shall expire one year after the date of death.

 

Previously, on November 8, 2018, our Board of Directors approved a similar amendment of all existing stock options granted for board service and held by the members of our Board of Directors. Therefore, all such stock options held by our directors will now continue to be exerciseable until the stated option expiration date regardless of a termination of directorship or other change in status, except in case of death of a member of the Board of Directors, in which case such stock options shall expire one year after the date of death.

 

  

 

 

 

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Item 6. Exhibits.

 

Exhibit   Description
     
2.1   Asset Purchase Agreement between the Company and Optometrics Corporation, dated January 18, 2008 (included as Exhibit 2.1 to the Form 8-K filed January 25, 2008, and incorporated herein by reference).
     
3.1   Articles of Organization of Precision Optics Corporation, Inc., as amended (included as Exhibit 3.1 to the Form SB-2 filed March 16, 2007, and incorporated herein by reference).
     
3.2   Bylaws of Precision Optics Corporation, Inc. (included as Exhibit 3.2 to the Form S-1 filed December 18, 2008, and incorporated herein by reference).
     
3.3   Articles of Amendment to the Articles of Organization of Precision Optics Corporation, Inc., dated November 25, 2008 and effective December 11, 2008 (included as Exhibit 3.1 to the Form 8-K filed December 11, 2008, and incorporated herein by reference).
     
3.4   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).
     
10.1   Precision Optics Corporation, Inc. 2011 Equity Incentive Plan, dated October 13, 2011 (included as Exhibit 10.2 to Form S-8 filed October 14, 2011, and incorporated herein by reference.)
     
10.2   Precision Optics Corporation, Inc. Amended 2011 Equity Incentive Plan, dated October 14, 2011, as amended on April 16, 2015 (included as Exhibit 10.1 to the Company’s Registration Statement on Form S-8 filed April 20, 2015, and incorporated herein by reference).
     
10.3   Consulting Agreement by and between the Company and Donald A. Major, dated June 15, 2016 (included as Exhibit 10.1 to the Form 8-K filed on June 23, 2016, and incorporated herein by reference).
     
10.4   Form of Securities Purchase Agreement, by and among the Company and the Investors, dated November 22, 2016 (included as Exhibit 10.1 to the Form 8-K filed November 29, 2016, and incorporated herein by reference).
     
10.5   Form of Registration Rights Agreement, by and among the Company and the Investors, dated November 22, 2016 (included as Exhibit 10.2 to the Form 8-K filed on November 29, 2016, and incorporated herein by reference).
     
10.6   Form of Securities Purchase Agreement, by and the Company and the Investors, dated August 22, 2017 (included as Exhibit 10.1 to the Form 8-K filed on August 25, 2017, and incorporated herein by reference).
     
10.7   Form of Registration Rights Agreement, by and among the Company and the Investors, dated August 22, 2017 (included as Exhibit 10.2 to the Form 8-K filed on August 25, 2017, and incorporated herein by reference).
     
10.8   Compensation Agreement, by and between the Company and Joseph N. Forkey, dated August 2, 2018 (included as Exhibit 10.1 to the Form 8-K filed on August 3, 2018, and incorporated herein by reference).
     
10.9   Offer letter by and between the Company and Donald A. Major, dated August 2, 2018 (included as Exhibit 10.9 to the Form 10-K filed on September 27, 2018, and incorporated herein by reference).
     
10.10   Form of Securities Purchase Agreement by and among the Company and the Investors, dated October 16, 2018 (included as Exhibit 10.1 to the Form 8-K filed on October 18, 2018, and incorporated herein by reference).

 

 

 

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10.11   Form of Registration Rights Agreement by and among the Company and the Investors, dated October 16, 2018 (included as Exhibit 10.2 to the Form 8-K filed on October 18, 2018, and incorporated herein by reference).
     
14.1   Precision 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).
     
     
     
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*   XBRL Instance Document
     
101.SCH*   XBRL Taxonomy Extension Schema Document
     
101.CAL*   XBRL Taxonomy Extension Calculation Linkbase Document
     
101.DEF*   XBRL Taxonomy Extension Definition Linkbase Document
     
101.LAB*   XBRL Taxonomy Extension Label Linkbase Document
     
101.PRE*   XBRL Taxonomy Extension Presentation Linkbase Document

  

* Filed herewith.

 

 

 

 

 

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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 15, 2019 By: /s/ Joseph N. Forkey
    Joseph N. Forkey
   

Chief Executive Officer

(Principal Executive Officer)

     
     
Date: May 15, 2019 By: /s/ Donald A. Major
    Donald A. Major
   

Chief Financial Officer 

(Principal Financial Officer and Principal Accounting Officer)

 

 

 

 

 

 

 

 

 

 

 

 

 

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