PEYE Precision Optics Corp Inc New (QB)

Item 1.01 Entry into a Material Definitive Agreement.

As partial consideration for the October 2021 acquisition of Lighthouse Imaging, and as part of an Asset Purchase Agreement dated as of October 4, 2021, the Company agreed to pay up to $1,500,000 in two annual installments of up to $750,000, each contingent upon the Lighthouse Imaging division achieving stated levels of gross margin for the given twelve month earn-out period. As of June 30, 2022, the first annual earn-out liability of $750,000 for the period ending September 30, 2022 was written off to other income due to the Company’s determination that the Lighthouse Imaging division would not achieve the minimum gross margin requirement for that first earn-out installment. On March 28, 2023, the Company and holders of rights to participate in the remaining earn-out installment entered into an amendment (i) reducing the stated gross margin target and threshold for the second earn-out period but also (ii) reducing the maximum earn-out payment for such period, to $600,000. Under the amendment, the participating holders also confirmed the accuracy of prior calculations under the Asset Purchase Agreement and confirmed the absence of any prior disputes relating to the first annual earn-out payment.