Precision Optics (POCI) risk factors, FY2026 10-K

Risks Related to Our Business

1. 01We have a history of losses; we may continue to incur losses and not achieve profitability in the near term; and we may need to raise additional funds
2. 02We rely on a small number of customers who may not consistently purchase our products in the future and if we lose any one of these customers, our revenues may decline64% rewritten
3. 03We could suffer unrecoverable losses on our customers’ accounts receivable, which would adversely affect our financial results29% rewritten
4. 04We rely heavily upon the talents of our Chief Executive Officer and other senior officers, the loss of whom could damage our business
5. 05We must continue to be able to attract and retain employees with the scientific and technical skills that our business requires and if we are unable to attract and retain such individuals, our business could be severely damaged
6. 06We are subject to a high degree of regulatory oversight and, if we do not continue to receive the necessary regulatory approvals, our revenues may decline
7. 07We face risks inherent in product development and production under fixed-price purchase orders and these purchase orders may not be profitable over time
8. 08We perform engineering and manufacturing services for our customers who could decide to use another vendor for these services in the future
9. 09We resell products we purchase from third parties and our customers could decide to use another supplier to acquire those products
10. 10We depend on the availability of certain key supplies and services that are available from only a few sources and if we experience difficulty with a supplier, we may have difficulty finding alternative sources of these supplies or services
11. 11Our customers may claim that the products we sold them were defective and if our insurance is not sufficient to cover such a claim, we would be liable for the excess
12. 12We would be liable if our business operations harmed the environment and a failure to maintain compliance with environmental laws could severely damage our business
13. 13Many of our competitors are large, well-financed companies who have research and marketing capabilities that are superior to ours
14. 14Ross Optical is subject to tariffs and regulatory scrutiny, and it faces the risk of changes to this regulatory environment and business in the future

Risks Related to Our Intellectual Property

1. 15Third parties may infringe on our intellectual property and, as a result, we could incur significant expense in protecting our patents or not have sufficient resources to protect them
2. 16Third parties may claim that we have infringed on their patents and, as a result, we could be prohibited from using all or part of any technology used in our products
3. 17We may be subject to claims that our employees have wrongfully used or disclosed alleged trade secrets of their former employers
4. 18If we are not able to adequately prevent disclosure of trade secrets and other proprietary information, the value of our technology and products could be significantly diminished
5. 19We will not be able to protect our intellectual property rights throughout the world

Risks Related to our Stock

1. 20Trading in our common stock may be subject to substantial volatility
2. 21Our quarterly financial results vary quarter to quarter and depend on many factors. As a result, we cannot predict with a high degree of certainty our operating results in any particular fiscal quarter
3. 22We are contractually obligated to issue shares in the future, diluting your percentage interest in us
4. 23Failure to maintain our internal control over our financial reporting could cause our financial reports to be inaccurate
5. 24Failure to maintain our accounting systems and controls could impair our ability to comply with the financial reporting and internal controls requirements for publicly traded companies
6. 25Certain provisions in our organizational documents could enable our board of directors to prevent or delay a change of control

General Risk Factors

1. 26Your ownership may be diluted if additional capital stock is issued to raise capital, to finance acquisitions or in connection with strategic transactions
2. 27Negative research about our business published by analysts or journalists could cause our stock price to decline. A lack of regularly published research about our business could cause trading volume or our stock price to decline
3. 28Claims for indemnification by our directors and officers may reduce our available funds to satisfy successful third-party claims against us and may reduce the amount of money available to us
4. 29We have no intention of declaring dividends in the foreseeable future
5. 30Artificial intelligence presents risks and challenges that can impact our business, including by posing security risks to our confidential information, proprietary information and personal data