POCI

• Core Financial and Operational Milestones

  • Total Q3 revenue hit a new quarterly record of $8.7 million, more than doubling year-over-year revenue of $4.2 million (108% YoY growth) and increasing 17.6% sequentially from $7.4 million in Q2.
  • Achieved positive adjusted EBITDA of $300,000, a major milestone for the company, compared to negative $1.3 million YoY and negative $1.5 million sequentially.
  • Overall gross margin improved to 23.6% (24% rounded) from 10% YoY and 2.8% sequentially, driven by higher production volumes, improved throughput and higher yields.
  • Net loss narrowed significantly to $108,000 from $2.1 million in the year-ago quarter and $1.8 million in Q2.
  • The operational improvements are attributed to the new Chief Operating Officer hired in October 2025, who restructured the operations team and boosted efficiency.

• Balance Sheet and Capital Raise

  • Completed an oversubscribed $10 million public offering in March 2026 with participation from existing/new investors and directors/officers, strengthening cash position to $10.7 million at quarter-end (up from ~$900,000 at end-December 2025).
  • Bank debt totaled approximately $1.5 million at quarter-end, and the company is in active discussions to improve loan facilities aligned with growth plans.

• Strategic Growth Focus

  • The company now divides its served markets into three focused segments (previously grouped as two): medical device, defense and aerospace, and satellite communications, all of which have strong projected growth trajectories.
  • First strategic investment priority: Build out capabilities to become the leading micro-optics production firm, including investments in quality assurance, manufacturing engineering, supply chain management, and evaluating options to upgrade manufacturing facilities (current Gardner, MA campus can double in size if needed).
  • Second strategic investment priority: Expand market reach via go-to-market investments, and evaluate add-on capabilities to complement existing offerings, with disciplined investment approach focused on return.
  • New pipeline progress: 5-6 development programs are expected to transition to production in fiscal 2027, with three entering production over the next six months, and a newly announced $3.5 million follow-on production order for the single-use ophthalmic endoscope program.

• Fiscal 2026 revenue guidance was upwardly revised to a range of $29 million to $31 million, from the prior guidance range of $26 million to $28 million, representing 52% to 62% year-over-year growth over fiscal 2025 revenue of $19.1 million.
• Fiscal 2026 adjusted EBITDA guidance was also upwardly revised to a range of negative $2.5 million to negative $2.7 million, from the prior guidance range of negative $2.5 million to negative $3.0 million, implying roughly break-even adjusted EBITDA in Q4 fiscal 2026.
• Management expects core aerospace and Cystoscope programs to remain at Q3 levels in Q4, with a projected 15% to 20% pullback in aerospace revenue in Q1 and Q2 fiscal 2027 (customer-requested slowdown due to the customer's own deployment bottlenecks), which management expects new ramping programs will offset.

1. Aerospace Program: Q3 revenue was $3.6 million (a new quarterly record), accounting for 41.4% of total Q3 revenue of $8.7 million, with 44% sequential growth. Consistently production yields improved to 97%.
2. Single-use Cystoscope Program: Q3 revenue was $2.2 million (an all-time record), accounting for 25.3% of total Q3 revenue, with 10% sequential growth. Current production yields are above 90%, targeting 95% in Q4.
3. Ross Optical Division: Q3 revenue was approximately $1.3 million, accounting for 14.9% of total Q3 revenue, with 65% year-over-year growth compared to $0.8 million in the year-ago quarter, and 30% sequential growth compared to $1.0 million in Q2.
4. Production Revenue (aggregated): Total Q3 production revenue was $7.6 million, up from $3.3 million in the year-ago quarter and $6.4 million in the prior sequential quarter, accounting for 87.4% of total Q3 revenue.
5. Product Development/Engineering Revenue: Total Q3 revenue was $1.1 million, up from $900,000 in the year-ago quarter and $1 million in the prior quarter, accounting for 12.6% of total Q3 revenue.

• The aerospace program will face a temporary 15% to 20% revenue pullback in the first two quarters of fiscal 2027 due to the customer's downstream deployment bottlenecks and excess inventory.
• Transitioning new development programs to production carries inherent risks around timeline delays, production yield issues and efficiency shortfalls.
• Uncertainty remains around the sustainability of recent Ross Optical revenue growth, with potential contributions from delayed orders post-tariff policy stabilization and temporary inventory building due to supply chain concerns.
• The company is currently restricted from naming large customers for disclosure, which may limit investor and market recognition of its momentum.
• Current manufacturing facilities in Gardiner, MA are split across three buildings, with some outdated cleanroom and infrastructure that requires upgrades, creating long-term facility planning uncertainty.

Q: Can you comment on the customer-requested aerospace program slowdown, and what the impact would be if any program moves to a license model?

A: The slowdown stems from the aerospace customer's integration bottlenecks in satellite assembly, which has left them with excess inventory of Precision Optics' components. It is expected to be temporary, with production returning to prior levels after two quarters. For single-use medical programs, the licensing model allows the customer to build a duplicate production line at their facility, which Precision Optics views positively: it avoids licensing to a competitor, and Precision Optics collects royalties on units the customer produces, creating incremental ongoing revenue.

Q: Does the Unity modular imaging platform shorten the timeline for moving R&D projects to production, and what is the current adoption outlook?

A: Yes, shortening time-to-production is a core design goal of Unity, and the one active Unity program in the pipeline has already benefited from faster development. The company took time to refine its go-to-market messaging for the new platform model, and currently has four active prospect discussions for additional Unity projects, with growing traction expected moving forward. Most targeted Unity projects are projected to generate $1 million to $3 million in annual revenue once in production.

Q: Is the recent significant revenue growth at Ross Optical sustainable as a new run rate?

A: Some of the growth comes from delayed orders that customers held earlier in the year due to tariff uncertainty, which has now stabilized following a Supreme Court ruling. While some temporary inventory building from supply chain concerns is possible, the company is seeing new customer orders and increasing volume from existing smaller customers, so management believes the majority of the growth is sustainable and will continue.

Q: Have all planned yield and efficiency improvements for the Cystoscope line already been realized?

A: No. Yields improved to consistently over 90% in Q3 (up from the 80% range prior), which is significant progress, but the company is still targeting 95% (and potentially up to 97-98%) with additional ongoing process, tooling and fixture updates. Throughput improvements to reduce labor time per unit are also still being rolled out, with further gains expected in Q4 and into the first half of next fiscal year, with more improvements possible as volumes increase.