Precision Optics Corporation, Inc. — FY2026 Form 10-K
Reporting period: Fiscal year ended June 30, 2026; comparisons are to the year ended June 30, 2025. The company designs and manufactures optical and imaging products, principally for medical devices and defense/aerospace customers. Its operations span systems manufacturing, engineering services, Ross Optical, and a micro-optics laboratory.
Financial performance
| Metric | FY2026 | FY2025 | Change or context |
|---|---|---|---|
| Revenue | $31.53 million | $19.09 million | Up 65.2% |
| Gross profit / margin | $5.43 million / 17.2% | $3.40 million / 17.8% | Profit rose with volume; margin fell 0.6 percentage points |
| Operating loss | $(3.51) million | $(5.55) million | Loss narrowed |
| Net loss / loss per share | $(3.63) million / $(0.43) | $(5.78) million / $(0.85) | Loss narrowed; weighted-average shares increased |
| Operating cash flow | $(1.55) million | $(3.40) million | Cash use decreased |
| Cash and cash equivalents | $9.84 million | $1.77 million | Increase primarily reflects equity financing |
| Long-term debt, including current portion | $1.33 million principal | $1.87 million principal | Term debt; no revolver borrowings at year-end |
| Current assets / current liabilities | $20.11 million / $8.83 million | $10.06 million / $6.15 million | Year-end liquidity strengthened, including from offering proceeds |
Systems manufacturing revenue climbed 172.9% to $22.63 million and represented 71.8% of revenue, as a single-use cystoscope program moved from development into production and customer demand increased. Engineering services fell 29.7% to $3.47 million, partly because of that transition and lower development engagements. Ross Optical revenue rose 31.7% to $4.91 million; MicroOptics Lab revenue declined 75.7% to $0.52 million, mainly due to delayed defense-customer production orders.
Liquidity, financing, and other material items
- The March 2026 public stock offering generated $10.63 million in net proceeds. Shares outstanding rose from 7,714,701 at June 30, 2025 to 10,972,792 at June 30, 2026, diluting existing holders.
- Management said cash, operating cash generation, credit availability, and potential capital-market access should cover working capital and capital spending for at least 12 months from the filing date. This assessment depends partly on access to financing and improved operations.
- The company did not meet its 1.2x debt-service coverage covenant for FY2026. On September 25, 2026, after year-end, the lender waived the covenant and amended the facility to replace it with a $2.0 million minimum-liquidity covenant. The amendment provides $750,000 of revolver availability, subject to borrowing-base requirements; availability may increase to $1.25 million upon achieving a 1.2x coverage ratio.
- Operating lease liabilities totaled $2.77 million at year-end; minimum operating lease payments total $3.64 million. The company also reported approximately $5.05 million of commitments under open purchase orders.
- Tariff-related accounting affected results: the company recorded an $880,598 receivable for previously paid IEEPA tariffs, a $558,266 liability to refund tariff surcharges collected from customers, and received $37,576 of tariff refunds during the year. Separately, $224,544 of government grants reduced cost of goods sold. Collection of the tariff receivable and payment of customer refunds remain relevant items to monitor.
Outlook, risks, and governance
The filing gives no numerical revenue, earnings, or margin guidance. Management expects revenue to grow over time as development programs transition to commercial production, but notes that this depends on customer demand and successful manufacturing scale-up. The Unity imaging platform, medical single-use devices, and compact satellite optical communications are described as opportunities, not quantified forecasts.
- Customer concentration increased sharply: two customers accounted for approximately 41% and 27% of FY2026 revenue, versus 22% and 20% in FY2025. Two customers represented 34.4% and 22.8% of year-end receivables.
- The company has a history of losses and used $1.55 million of operating cash in FY2026. It depends on external capital and may need to reduce spending or raise additional funds if cash needs exceed available resources.
- Other key risks include fixed-price order profitability, dependence on a limited number of suppliers for optical glass and sensors, medical-device and defense export regulation, tariffs and supply-chain disruption, product liability, cybersecurity, and competition from larger companies.
- The company began a self-funded employee health plan with stop-loss coverage in June 2026; accrued claims, including incurred-but-not-reported claims, were approximately $70,000 at year-end.
- Management reported effective disclosure controls and internal control over financial reporting as of June 30, 2026. The independent auditor gave an unqualified opinion on the financial statements and identified revenue recognition as a critical audit matter. No material pending or threatened litigation was reported.
Most important facts for investors to verify
- Whether the two largest customers sustain orders and whether concentration declines; confirm the timing and scale of production programs.
- Whether the $843,022 outstanding IEEPA tariff receivable is collected and the $558,266 customer-refund liability is settled as expected.
- Compliance with the new $2.0 million minimum-liquidity covenant, actual revolver availability, and the company’s cash runway given continuing operating losses and cash outflow.
- Whether gross margins recover as systems manufacturing scales, and whether delayed MicroOptics defense orders resume.
- How open purchase commitments, new facility leases, equity dilution, and potential future financing affect liquidity and shareholder value.