PRECISION OPTICS CORPORATION, INC.

PRECISION OPTICS CORPORATION, INC. Annual Report - Plain English Investor Summary

Let’s break down how Precision Optics (Nasdaq: POCI) performed this year, like we’re chatting over coffee. No jargon—just what matters to your wallet.

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What They Do

They make tiny, high-precision lenses and camera systems for medical tools (like surgical scopes) and defense tech. Key moves:

• Shifted from design work to full-scale manufacturing (43% of sales now vs. 19% last year).
• Hold patents through 2043 and are pushing into single-use medical cameras (a $2B+ market opportunity).

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Financial Health Check

The Good:

• 💰 Cash jumped to $1.77M (from $405K last year) after raising $1.4M by selling shares.
• 🔬 R&D spending up 18% to $1.16M—all self-funded, showing confidence in their tech.
• 🚨 Insiders bought shares at $5.79 (higher than outside investors paid), signaling belief in growth.

The Not-So-Good:

• 📉 Revenue flat at $19.1M, but production costs soared 18%, slashing gross profit by 41%.
• 🔴 Losses doubled to $5.55M as they bet big on scaling production and R&D.
• ⏳ $11.7M in tax credits start expiring in 2026—they need profits soon to use them.

Other Notes:

• Employees hold $833K+ in “in-the-money” stock options—cashing out could dilute shares slightly.
• Reduced customer payment worries: allowance for doubtful accounts cut by 32%.

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The Big Picture

Reasons to Be Optimistic:

1. Pivot to manufacturing is working (43% of sales).
2. Single-use medical cameras could disrupt a massive market.
3. Auditors gave clean books—no funny business in financial reporting.

Risks to Watch:

1. Rising costs are eating profits despite flat sales.
2. Losses are growing as they spend to scale—need a payoff fast.
3. Relies on two big unnamed customers (common in niche industries, but risky).

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Should You Invest?

🟢 Green Lights:

• Insider buying and patent moat suggest long-term confidence.
• Transition to manufacturing adds revenue stability.
• Huge upside if single-use cameras take off.

🔴 Red Flags:

• No profit in sight—losses doubled this year.
• High customer concentration and R&D costs could strain cash.

The Bottom Line:
This is a high-risk, high-reward play. If their medical camera bet succeeds, today’s losses could look cheap. But if adoption lags or costs keep rising, the stock could struggle. Not for the faint of heart—best suited for investors comfortable with volatility and a 3-5 year timeline.

Always do your own research or consult a financial advisor before investing. 🧐