POCI's liquidation recovery posture as of December 31, 2025 is materially negative and deteriorating quarter-over-quarter. Applying standard liquidation haircuts to the reported balance sheet: cash of $881K recovers at 100% ($881K); net AR of $4.87M at 90-95% yields roughly $4.4-4.6M; inventory of $4.26M at 60% yields $2.6M; PP&E net of $989K at 50-70% yields $495-692K; intangibles (goodwill $8.82M, finite-lived intangibles $220K, operating ROU assets $2.44M) recover at 0% in liquidation. Total estimated liquidation asset recovery: approximately $8.4-8.8M. Against this, total liabilities stand at $13.57M at face value — including current liabilities of $9.95M (AP $6.04M, contract liabilities $2.0M, accrued comp $1.1M, current LTD $578K, current operating lease $214K, capital lease $9K) and non-current liabilities of $3.62M (LTD net $1.0M, operating lease noncurrent $2.61M). Estimated liquidation recovery to equity is approximately negative $4.8M to negative $5.1M. This is consistent with the MFFAIS-reported cash liquidation value of negative $12.7M (which likely includes the operating lease liability undiscounted or other conservative assumptions) and operating liquidation value of negative $3.5M. The company's GAAP book equity of $9.3M is entirely consumed by intangible/goodwill write-offs in a liquidation scenario. Goodwill alone ($8.82M) is the single largest driver of the asset-liability gap under liquidation. Key deterioration from the prior quarter (September 30, 2025): total liabilities increased from approximately $7.5M (June 30, 2025 balance sheet per prior filing comparatives) to $13.57M — a $6M increase in a single half-year, driven overwhelmingly by AP doubling from $2.9M to $6.0M (consistent with $7.07M in open purchase order commitments disclosed in MD&A), and operating lease liability surging from $141K total to $2.83M total following execution of two new multi-year facility leases (Littleton, MA seven-year and South Portland, ME eight-year, both at 9% discount rate). The company has formally disclosed substantial doubt about its ability to continue as a going concern, citing $0.9M cash insufficient to fund planned operations for twelve months. The debt service coverage covenant on Main Street Bank notes was not met as of December 31, 2025 — the third consecutive testing period of non-compliance. Net loss for the six months ended December 31, 2025 was $3.42M, accelerating from $2.28M for the same prior-year period. Gross margin collapsed to 8.2% for the six-month period (25.1% prior year) and to 2.8% for the December quarter (23.6% prior year), driven by manufacturing yield losses and overhead under-absorption. Accumulated deficit stands at $60.39M. The $7.07M open purchase order commitment is disclosed in MD&A narrative but is not separately tagged in XBRL — this represents a significant contingent cash obligation that would likely survive a wind-down. No pension obligations, no off-balance sheet arrangements disclosed.
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