AsTable a result of these resignations, the Company’s Board of Directors reduced the size of the Company’s board of directors from six to four. Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~November~~May 3031, ~~2012~~2013

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 0-22183

MEADE INSTRUMENTS CORP.

(Exact name of registrant as specified in its charter)

Delaware

95-2988062

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification Number)

27 Hubble

Irvine, California

92618

(Address of principal executive offices)

(Zip Code)

(949) 451-1450

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class		Name of each exchange on which registered
Common Stock, $0.01 par value		NASDAQ Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act:

None

Indicate by check mark if the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Securities Exchange Act of 1934.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

As of ~~January~~July 1112, 2013, there were 1,~~306~~305,~~017~~148 outstanding shares of the Registrant’s common stock issued, par value $0.01 per share.

Table of Contents

TABLE OF CONTENTS

		Page No.
	PART I — FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Balance Sheets (Unaudited) — November 30, 2012 and February 29, 2012		2
	Consolidated Balance Sheets (Unaudited) — May 31, 2013 and February 28, 2013		2
	Consolidated Statements of Operations (Unaudited) — Three and Nine Months Ended November 30, 2012 and 2011		3
	Consolidated Statements of Operations (Unaudited) — Three Months Ended May 31, 2013 and 2012		3
	Consolidated Statements of Cash Flows (Unaudited) — Nine Months Ended November 30, 2012 and 2011		4
	Consolidated Statements of Cash Flows (Unaudited) — Three Months Ended May 31, 2013 and 2012		4
	Notes to Consolidated Financial Statements (Unaudited)		5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		1211
Item 3.	Quantitative and Qualitative Disclosure About Market Risk		1614
Item 4.	Controls and Procedures		1614
	PART II — OTHER INFORMATION
Item 1.	Legal Proceedings		1815
Item 1A.	Risk Factors		1815
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		1815
Item 3.	Defaults Upon Senior Securities		1815
Item 4.	Mine Safety Disclosure		1815
Item 5.	Other Information		1815
Item 6.	Exhibits		1816
	Signatures		1917

ITEM 1. FINANCIAL STATEMENTS.

MEADE INSTRUMENTS CORP.

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)

(Unaudited)

	November 30,			February 29,
	May 31,2013			February 28,2012
	2012			2012
ASSETS
Current assets:
Cash	$	~~282~~249		$	~~3,904~~320
Accounts receivable, less allowance for doubtful accounts of $65 at November 30, 2012 and $139 at February 29, 2012		3,347			1,668
Accounts receivable, less allowance for doubtful accounts of $97 at May 31, 2013 and $22 at February 28, 2013		1,335			1,896
Inventories		86,~~361~~338			67,~~633~~140
Prepaid expenses and other current assets		~~419~~187			~~208~~154
Total current assets		128,~~409~~109			129,~~413~~510
Property and equipment, net		~~223~~158			~~170~~196
Intangible assets, net		~~576~~491			~~705~~534
Other assets, net		~~105~~162			~~105~~166
	$	138,~~313~~920		$	1310,~~393~~406
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Credit facility	$	702		$	—
Credit Facility	$	708		$	371
Accounts payable		31,~~340~~324			12,~~498~~155
Accrued liabilities		1,~~749~~176			1,~~686~~273
Total current liabilities		53,~~791~~208			3,~~184~~799
Deferred rent		1913			2517
Commitments and contingencies
Stockholders’ equity:
Common Stock; $0.01 par value; 2,500 shares authorized; 1,173 shares issued and outstanding at November 30, 2012 and 1,167 shares issued and outstanding at February 29, 2012		12			12
Common Stock; $0.01 par value; 2,500 shares authorized; 1,173 shares issued and outstanding at May 31, 2013 and February 28, 2013		12			12
Additional paid-in capital		52,~~722~~773			52,~~670~~743
Accumulated deficit		(4547,~~231~~086	)		(4246,~~498~~165	)
Total Stockholders’ equity		75,~~503~~699			106,~~184~~590
	$	138,~~313~~920		$	1310,~~393~~406

See accompanying notes to consolidated financial statements

MEADE INSTRUMENTS CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, expect per share data)

(Unaudited)

	Three Months Ended						Nine Months Ended
	Three Months EndedMay 31,
	November 30,						November 30,
	2013			2012
	2012			2011			2012			2011
Net sales	$	2,795		$	4,104
Net sales	$	5,692		$	7,240		$	13,780		$	17,553
Cost of sales		2,163			3,237
Cost of sales		5,338			5,682			12,015			13,256
Gross profit		632			867
Gross profit		354			1,558			1,765			4,297
Selling expenses		405			415
Selling expenses		568			730			1,344			1,773
General and administrative expenses		985			904
General and administrative expenses		864			846			2,663			2,611
Research and development expenses		150			272
Research and development expenses		237			218			770			635
Release of warranty liability		—			(293	)
Release of warranty liability		—			—			(294	)		—
Operating loss		(908	)		(431	)
Operating loss		(1,315	)		(236	)		(2,718	)		(722	)
Interest expense		13			—
Interest expense (income)		15			(1	)		15			(3	)
Loss before income taxes		(921	)		(431	)
Loss before income taxes		(1,330	)		(235	)		(2,733	)		(719	)
Income tax expense (benefit)		—			—
Income tax expense (benefit)		—			14			—			29
Net loss	$	(921	)	$	(431	)
Net loss	$	(1,330	)	$	(249	)	$	(2,733	)	$	(748	)
Net loss per share—basic and diluted	$	(0.79	)	$	(0.37	)
Net loss per share—basic and diluted	$	(1.13	)	$	(0.21	)	$	(2.34	)	$	(0.64	)
Weighted average common shares outstanding—basic and diluted		1,173			1,167
Weighted average common shares outstanding—basic and diluted		1,173			1,167			1,170			1,167

See accompanying notes to consolidated financial statements

MEADE INSTRUMENTS CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Nine Months Ended
	Three Months EndedMay 31,
	November 30,
	2013			2012
	2012			2011
Cash flows from operating activities:
Net loss	$	(~~2,733~~921	)	$	(~~748~~431	)
Adjustments to reconcile loss from continuing operations to net cash used in operating activities:
Adjustments to reconcile net loss to net cash used in operating activities:
Release of warranty liability		~~(294~~—	)		—(293	)
Depreciation and amortization		~~203~~84			~~254~~77
Bad debt (recovery) expense		(75	)		66
Bad debt expense		75			(28	)
Stock-based compensation		5230			899
Deferred rent amortization		(64	)		—(2	)
Gain on sale of fixed assets		(52	)		—(5	)
Changes in assets and liabilities:
Accounts receivable		~~(1,604~~486	)		(~~2,879~~193	)
Inventories		~~(1,728~~802	)		~~(1,363~~37	)
Prepaid expenses and other current assets		(~~219~~32	)		13(99	)
Accounts payable		~~1,842~~(831	)		~~1,093~~(222	)
Accrued liabilities		~~361~~(97	)		~~(323~~24	)
Net cash used in operating activities		(~~4,206~~410	)		(31,~~798~~126	)
Cash flows from investing activities:
Capital expenditures		~~(123~~—	)		(3182	)
Proceeds from sale of fixed assets		52			—5
Net cash used in investing activities		~~(118~~2	)		(3177	)
Cash flows from financing activities
Net advances on credit facility		~~702~~337			—
Net cash provided by financing activities		~~702~~337			—
Net decrease in cash		(~~3,622~~71	)		(31,~~829~~203	)
Cash at beginning of period		~~3,904~~320			53,~~076~~904
Cash at end of period	$	~~282~~249		$	12,~~247~~701
Supplemental Cash Flow Information:
Cash paid for interest on bank borrowings		15			—
Cash paid for income tax		45			35

See accompanying notes to consolidated financial statements

MEADE INSTRUMENTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

A.	The Consolidated Financial Statements Have Been Prepared by the Company and are Unaudited.

Meade Instruments Corp. (the “Company”) is engaged in the design, manufacture, marketing and sale of consumer products, primarily telescopes, telescope accessories and binoculars. The Company designs its products in-house or with the assistance of external consultants. Most of the entry level products are manufactured overseas by contract manufacturers in Asia, while the high-end telescopes are manufactured and assembled at the Company’s Mexico facility. Sales of the Company’s products are driven by an in-house sales force as well as a network of sales representatives throughout the U.S. and through distributors internationally. The Company currently operates out of two primary locations: Irvine, California and Tijuana, Mexico. The California facility serves as the Company’s corporate headquarters, research and development facility; the Mexico facility contains the Company’s manufacturing, assembly, repair, packaging, distribution and other general and administrative functions. The Company’s business is seasonal and the financial results have historically varied on a quarter-by-quarter basis throughout each year. See footnote C—Merger and Subsequent Events.

In addition, the Company’s ~~opinion~~independent ofauditors ~~the~~stated ~~management~~that of the Company,’s ~~the~~recurring ~~information~~losses and ~~amounts~~declining ~~furnished~~revenues inraise ~~this~~substantial ~~report~~doubt ~~reflect~~about ~~all~~its ~~adjustments~~ability ~~(consisting~~to ofcontinue ~~normal~~as ~~recurring~~a ~~adjustments)~~going ~~considered~~concern ~~necessary~~in ~~for~~their ~~the~~report ~~fair statement~~disclosed ~~of the financial position and results of operations for the interim periods presented. These financial statements should be read~~ in ~~conjunction with~~ the Company’s ~~Annual Report on~~ Form 10-K for the fiscal year ended February 2928, ~~2012~~ 2013.

The Company has experienced, and expects to continue to experience, substantial fluctuations in its sales, gross margins and results from operations from quarter to quarter. Factors that influence these fluctuations include the volume and timing of orders received, changes in the mix of products sold, market acceptance of the Company’s products, competitive pricing pressures, the Company’s ability to meet fluctuating demand and delivery schedules, the timing and extent of research and development expenses, the timing and extent of product development costs and the timing and extent of advertising expenditures.

The Company’s financial statements have been prepared under the assumption that the Company will continue as a going concern. However, Management believes that substantial doubt exists about the Company’s ability to continue as a going concern due to the Company’s recurring losses and its weakened financial position and reduced liquidity, and management is considering various measures as described in Note B. below.

B.	Liquidity

The Company ~~has~~ incurred ~~significant recurring losses and negative cash flows from operations which have resulted in reduced liquidity and~~ a ~~weakened~~net ~~financial~~loss ~~position as~~ of ~~November 30, 2012~~$0.9 ~~The~~million ~~Company also has endured working capital problems caused by product development delays~~ during the ~~past~~three ~~twelve~~ months. Inended ~~addition~~May 31, in2013. ~~January~~Cash ~~2013,~~used ~~the~~in ~~Company’s~~operating ~~largest~~activities ~~customer~~was $0.4 million, ~~and~~compared ~~one~~to ~~additional~~$1.1 ~~customer,~~million ~~notified~~during the ~~Company~~three ~~that~~months ~~they~~ended ~~had unilaterally~~May 31, ~~and without prior notice~~2012, ~~decided~~due to ~~indefinitely hold payment of~~ approximately $0.68 million in ~~accounts~~inventory ~~receivable,~~reductions ~~which~~resulting ~~will~~from ~~further reduce~~ the ~~Company’s~~ ~~already limited liquidity. Due to these issues, the~~ Company’s ~~management~~completing ~~now~~development ~~believes~~of ~~substantial~~its ~~doubt~~new ~~exists~~LX800/850 ~~about~~and ~~the~~LX600 telescopes ~~Company’s~~in ~~ability~~February to2013 ~~continue~~and asApril a2013 ~~going concern~~ and ~~that~~being itable ~~must~~to ~~modify~~convert ~~the~~raw ~~Company’s~~materials ~~business model~~ and ~~operations~~work toin ~~reduce~~process ~~spending~~inventories tointo asaleable ~~sustainable level~~product. ~~Such~~The ~~actions could cause the~~ Company toincreased beinventory ~~unable~~by toapproximately ~~execute~~$2.6 ~~its~~million ~~business~~during ~~plan,~~the ~~take~~six ~~advantage~~months ofended ~~future opportunities~~August 31, ~~respond~~2012 due primarily to ~~competitive~~product ~~pressures~~development orproblems ~~customer~~associated ~~requirements.~~with ~~It may also cause~~ the ~~Company~~LX800/850 toand ~~delay,~~LX600 ~~scale~~telescope ~~back~~products orwhich ~~eliminate~~caused ~~some~~delays orin ~~all~~shipments of ~~its~~those ~~research~~products. ~~and~~The ~~development~~Company ~~programs,~~must ~~seek~~continue ~~opportunities~~to inreduce aits ~~strategic~~inventories ~~relationship~~in ororder ~~business~~to ~~combination,~~have orsufficient liquidity to continue ~~reduce~~its ~~or cease~~ operations.

AtDuring ~~November~~the three months ended May 3031, ~~2012~~2013, the Company ~~had~~obtained ~~cash of~~ $0.3 million in cash from net advances on its credit facility. However, ~~compared~~the Company has limited working capital and access to $3credit.9 ~~million~~The Company had $91 thousand of remaining availability on its credit facility at ~~February~~May 2931, ~~2012~~2013. In addition, while the Company’s financing agreement with its lender does not contain explicit financial covenants, the agreement allows the Company’s lender significant latitude to restrict, reduce or eliminate the Company’s access to credit or require the Company to repay any and $1all amounts outstanding under the agreement.2 ~~million~~If atits lender restricts, reduces or eliminates the Company’s access to credit, or requires immediate repayment of the amounts outstanding under the agreement, the Company would be ~~November~~required to pursue additional or alternative sources of liquidity such as equity financings, a new debt agreement with other creditors, or liquidate assets. 30However, ~~2011~~the Company cannot assure that any such additional sources of liquidity would be available on reasonable terms, if at all.

~~Net~~The ~~cash~~Company’s ~~used~~financial instatements ~~operating~~for ~~activities was approximately $4.2 million during~~ the ~~nine~~quarterly ~~months~~period ended ~~November~~May 3031, ~~2012~~2013 ~~and~~were ~~$3.8~~prepared ~~million~~assuming ~~during~~ the ~~nine~~Company ~~months~~would ~~ended~~continue ~~November 30,~~as ~~2011,~~a angoing ~~increase~~concern; inhowever, ~~net~~the ~~cash~~Company’s ~~used~~declining ofrevenues, ~~approximately~~recurring ~~$0.4~~losses, ~~million~~weakened ~~compared~~financial toposition ~~the~~and ~~prior~~reduced ~~year.~~liquidity ~~This~~raise ~~increase~~substantial indoubt ~~net~~about ~~cash~~its ~~used~~ability into continue ~~operating~~as ~~activities~~a ~~was~~going ~~attributed to~~concern, ~~the~~as ~~increase~~disclosed in the Company’s ~~net~~Form ~~loss~~10-K offor ~~approximately~~its ~~$2.0~~fiscal ~~million~~year ~~from a loss of approximately $0.7 million during the nine months~~ ended ~~November~~February 3028, ~~2011~~2013. ~~compared~~The toCompany’s aboard ~~loss~~ of ~~approximately~~directors ~~$2.7~~decided ~~million during the nine months ended November 30, 2012, offset by favorable net fluctuations~~ in ~~working~~January ~~capital.~~2013 ~~Approximately~~that ~~$1.1 million or 65% of~~ the ~~net~~Company ~~increase~~should inconsider ~~inventories~~its ofstrategic ~~approximately~~alternatives ~~$1.7~~to preserve ~~million~~and ~~during~~maximize ~~the~~shareholder ~~nine months ended November 30~~value, ~~2012~~which ~~was~~ultimately ~~due~~culminated ~~to an increase~~ in ~~inventories relating to~~ the ~~Company’s~~execution ~~new~~of ~~LX800~~a ~~and~~merger ~~LX600~~agreement. ~~products~~See ~~which~~footnote ~~have~~C—Merger ~~taken longer to develop than expected~~ and ~~are~~Subsequent ~~not yet ready to be shipped~~Events.

The Company typically experiences increases in accounts receivable and inventories and a corresponding decrease in cash beginning with the end of its first fiscal quarter and culminating with the end of its third fiscal quarter. Receivables and inventories then typically decrease, and cash increases, at the end of the Company’s fiscal year. The Company began making advances on its credit facility in September 2012 in order to meet its working capital requirements and continued to do so through the filing of this Form 10-Q. In addition, the Company has incurred substantial operating losses during the nine months ended November 30, 2012.

MEADE INSTRUMENTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

AtDue ~~November 30,~~to ~~2012,~~ the Company’s ~~had~~declining ~~in place a secured credit facility with FCC~~revenues, ~~LLC~~ ~~d/b/a~~recurring ~~First Capital Western Region~~losses, ~~LLC~~limited ~~(“First~~liquidity ~~Capital”)~~ and ~~owed approximately $0.7 million as of November 30, 2012 on that facility. Availability of funds under that credit facility was based on a percentage of eligible~~ ~~accounts~~weakened ~~receivable~~financial ~~and inventory and amounted to approximately $0.3 million as of November 30~~position, ~~2012, in addition to~~ the ~~$0.7 million owed, and was based solely on accounts receivable as substantially all the~~ Company’s ~~inventory~~may ~~was~~not ~~deemed ineligible~~be ~~due~~able to ~~most~~operate oflong itenough ~~being~~to ~~located~~execute inthe ~~Mexico~~planned merger.

In December 2012, the Company repaid the balance owed to First Capital, then amended and terminated its credit facility with First Capital and subsequently replaced it with a new financing agreement (“the Agreement”) with Rosenthal & Rosenthal, IncC. ~~(“Rosenthal”).~~Merger ~~At the time the First Capital credit facility was replaced, both the Rosenthal~~ and ~~First~~Subsequent Capital credit facilities allowed for a maximum of $3 million and were based solely upon advances on accounts receivable. As of the closing date of the financing arrangement, December 28, 2012, availability under the new credit facility was approximately $1.6 million. Rosenthal advanced to the Company the $1.6 million maximum available under the new credit facility subsequent to the closing of the Agreement. Events

~~While~~On ~~the Company’s agreement with Rosenthal does not contain explicit financial covenants~~May 17, ~~the Agreement allows the Company’s lender significant latitude to restrict~~2013, ~~reduce or eliminate~~ the Company’s ~~access~~entered tointo ~~credit~~an orAgreement ~~require the Company to repay any~~ and ~~all~~Plan ~~amounts~~of ~~outstanding~~Merger under ~~the Agreement. If its lender restricts~~which, ~~reduces~~subject ~~or eliminates the Company’s access~~ to ~~credit~~stockholder approval, ora ~~requires~~wholly-owned ~~immediate~~subsidiary ~~repayment~~ of ~~the~~JOC ~~amounts~~North ~~outstanding~~America ~~under~~LLC ~~the agreement~~(“JOCNA”, ~~the~~a ~~Company~~subsidiary ~~would be required to pursue additional or alternative sources~~ of ~~liquidity~~Jinghua ~~such~~Optics & asElectronics ~~equity financings~~Co., aLtd.) ~~new~~would ~~debt~~merge ~~agreement with~~into ~~other~~the ~~creditors,~~Company ~~seek~~and ~~strategic~~each ~~alternatives~~outstanding orshare ~~liquidate~~of ~~assets. However,~~ the Company’s ~~cannot~~common ~~assure~~stock ~~that~~would ~~any~~be converted ~~such~~into ~~additional~~the ~~sources~~right ofto ~~liquidity~~receive ~~would~~$3.45 be(or ~~available~~approximately on$4.5 ~~reasonable~~million ~~terms,~~for ~~if at~~ all shares).

~~The~~On ~~initial~~July ~~term~~16, of2013, the ~~credit~~Company executed ~~facility~~an ~~with~~Agreement ~~Rosenthal~~and isPlan ~~through~~of ~~November 30,~~Merger ~~2015~~with ~~and~~Sunny ~~can~~Optics, ~~be renewed thereafter~~Inc. ~~The~~(“SOI”) ~~credit facility~~and ~~can~~Sunny beOptics ~~terminated~~Merger bySub, ~~the~~Inc. ~~Company~~(“Merger orSub”), ~~Rosenthal~~a ~~with~~wholly-owned atsubsidiary ~~least~~of 60SOI, ~~days~~which, ~~but~~subject ~~not~~to ~~more~~stockholder ~~than~~approval, ~~120~~Merger ~~days~~Sub, ~~notice~~would ~~except~~merge ininto ~~case~~the Company ofand aeach ~~default,~~outstanding inshare ~~which~~of ~~case~~ the Company’s ~~lender~~common ~~can~~stock ~~terminate~~would be converted into the ~~Agreement~~right atto ~~any~~receive ~~time~~$4.21 (or approximately $5.5 million for all shares). Merger Sub and SOI are both affiliates of Ningbo Sunny Electronic Co., Ltd.

CIn conjunction with the execution of the merger agreement with Sunny, the Company terminated its merger agreement with JOCNA and paid a $250,000 termination fee to JOCNA as required by that agreement. ~~Stock~~In ~~Based~~connection ~~Compensation~~with its execution of the merger agreement with SOI and Merger Sub, the Company borrowed $250,000 from SOI to pay the termination fee to JOCNA.

~~The Company accounts for stock-based compensation in accordance with the provisions of Accounting Standards Codification No~~D. ~~ASC~~Stock ~~718-10, Share-~~Based Payment (“ASC 718-10”), which establishes accounting for equity instruments exchanged for employee services. Under the provisions of ASC 718-10, share-based compensation cost is measured at the grant date, based on the calculated fair value of the award, and is recognized as an expense over the employee’s requisite service period (generally the vesting period of the equity grant). Share-based compensation expenses, included in general and administrative expenses in the Company’s consolidated statement of operations for the nine months ended November 30, 2012 and 2011, were approximately $52 thousand and $89 thousand, respectively. Due to deferred tax valuation allowances provided, no net benefit was recorded against the share-based compensation charged. Compensation

The Company ~~estimates~~accounts ~~the~~for ~~fair value~~stock-based ofcompensation ~~restricted~~in ~~stock~~accordance ~~awards~~with ~~using~~ the ~~closing~~provisions ~~price~~of onAccounting ~~the~~Standards Codification ~~grant date~~No. ~~The~~ASC ~~Company~~718-10, ~~estimates~~Share-Based ~~the~~Payment ~~fair~~(“ASC ~~value~~718-10”), ofwhich ~~stock~~establishes ~~options~~accounting ~~using~~for ~~the~~equity ~~Black-Scholes~~instruments ~~valuation~~exchanged ~~model.~~for ~~Key~~employee ~~input~~services. ~~assumptions~~Under ~~used~~the toprovisions ~~estimate~~of ~~the~~ASC ~~fair~~718-10, ~~value~~share-based ofcompensation ~~stock~~cost ~~options~~is ~~include~~measured at the ~~expected~~grant ~~option term~~date, ~~forfeiture~~based ~~rate,~~on the ~~expected~~calculated ~~volatility~~fair value of the ~~Company’s~~award, ~~stock~~and ~~over~~is ~~the~~recognized ~~option’s~~as ~~expected~~an ~~term,~~expense ~~the risk-free interest rate~~ over the ~~option~~employee’s ~~expected~~requisite ~~term,~~service ~~and~~period (generally the ~~Company’s~~vesting ~~expected~~period ~~annual~~of ~~dividend yield.~~the ~~The~~equity ~~Company~~grant). ~~believes~~Share-based ~~that~~compensation ~~the~~expenses, ~~valuation~~included ~~technique~~in general and ~~the~~administrative ~~approach~~expenses ~~utilized~~in tothe ~~develop~~Company’s ~~underlying~~consolidated ~~assumptions~~statement ~~are~~of ~~appropriate~~operations infor ~~calculating~~ the ~~fair~~three ~~values~~months ofended ~~the~~May 31, ~~Company’s~~2013 ~~stock~~and ~~options.~~2012, ~~Estimates~~were ofapproximately ~~fair~~$30 ~~value~~thousand ~~are~~and ~~not~~$9 ~~intended~~thousand, respectively. Due to ~~predict~~ ~~actual~~deferred ~~future~~tax ~~events~~valuation allowances orprovided, ~~the~~no ~~value~~net ~~ultimately~~benefit ~~realized~~was byrecorded ~~persons~~against ~~who~~the ~~receive~~share-based ~~equity~~compensation ~~awards~~charged.

The Company estimates the fair value of stock options using the Black-Scholes valuation model. Key input assumptions used to estimate the fair value of stock options include the expected option term, forfeiture rate, the expected volatility of the Company’s stock over the option’s expected term, the risk-free interest rate over the option’s expected term, and the Company’s expected annual dividend yield. The Company believes that the valuation technique and the approach utilized to develop underlying assumptions are appropriate in calculating the fair values of the Company’s stock options. Estimates of fair value are not intended to predict actual future events or the value ultimately realized by persons who receive equity awards.

The Company did not grant stock options during either of the three month periods ended May 31, 2013 and 2012. As of May 31, 2013, the Company had approximately $4 thousand of unrecognized compensation cost related to unvested stock options. This cost is expected to be recognized over a weighted average period of approximately 25 months.

On June 29, 2011, each of the Executive Officers was granted a restricted stock award (an “Award”) pursuant to the Company’s form of Restricted Stock Agreement under the Company’s 2008 Stock Incentive Plan. The Awards to Mr. Murdock and Mr. Elwood were in the amounts of 37,500 shares of Common Stock and 25,000 shares of Common Stock, respectively. Each Award vests in ten equal installments with the first installment vesting on June 29, 2012 and the remainder vesting on each of the next nine consecutive anniversaries; provided, however, if the Company subsequently achieves net income for any fiscal year of the Company (but excluding the Company’s fiscal years 2019, 2020 and 2021), as shown on the Company’s audited consolidated financial statements for such fiscal year, the vesting of the Award shall accelerate such that the number of shares of the Award which are unvested at the end of such fiscal year shall vest in three substantially equal installments over the then next three consecutive anniversaries of the date of the Award.

On August 10, 2012, each of the Company’s U.S. employees, including the Executive Officers, was granted restricted stock awards (the “Awards”) pursuant to the Company’s form of Restricted Stock Agreement under the Company’s 2008 Stock Incentive Plan. The Awards were in an aggregate amount of 76,250 shares of Common Stock. Each award vests in three equal installments with the first installment vesting on August 10, 2013 and the remainder vesting on each of the two succeeding anniversaries.

MEADE INSTRUMENTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

~~The~~E. ~~fair~~Composition ~~value~~ of ~~the~~Certain ~~Company’s stock~~Balance ~~options~~Sheet ~~granted in the nine months ended November 30, 2012 and 2011, respectively, was estimated on the grant date using the Black-Scholes option-pricing model with the following assumptions:~~ Accounts

	November 30,2012			November 30,2011
Expected life (1)		6.0			5.8
Expected volatility (2)		165	%		168	%
Risk-free interest rate (3)		0.8	%		1.1	%
Expected dividends		None			None

The composition of inventories is as follows:

(1) The option term is expressed in years and was determined using the simplified method for estimating expected option life.


	May 31, 2013		February 28, 2013
	(In thousands)
Raw materials	$	2,488	$	2,560
Work in process		2,172		2,294
Finished goods		1,678		2,286

	$	6,338	$	7,140

~~(2)~~Intangible ~~The~~assets ~~stock~~were ~~volatility~~a ~~for~~result ~~each~~of ~~grant~~an isacquisition ~~measured using the weighted average~~ of ~~historical~~substantially all ~~daily price changes~~ of the ~~Company’s~~assets ~~common~~and ~~stock~~assumption ~~over~~of ~~the~~substantially ~~most~~all ~~recent~~of ~~period equal to~~ the ~~expected~~liabilities ~~option life~~ of ~~the~~Coronado ~~grant~~Technology Group, ~~adjusted~~LLC ~~for~~that ~~activity~~occurred ~~which~~on isDecember 1, ~~not~~2004 ~~expected~~and toincluded ~~occur~~the infollowing ~~the~~assets: ~~future.~~

(3) The risk-free interest rate for periods equal to the expected term of the share option is based on the U.S. Treasury yield curve in effect at the time of grant.


			May 31, 2013							February 28, 2013
	Amortization Periods (In Years)		Gross Carrying Amount		Accumulated Amortization			Net Book Value		Gross Carrying Amount		Accumulated Amortization			Net book Value
	(In thousands)
Trademarks		7-15	$	424	$	(406	)	$	18	$	424	$	(397	)	$	27
Completed technologies		12		1,620		(1,147	)		473		1,620		(1,113	)		507

Total			$	2,044	$	(1,553	)	$	491	$	2,044	$	(1,510	)	$	534

On June 29, 2011, each of the Company’s executive officers, Steven Murdock and John Elwood, (the “Executive Officers”) was granted a restricted stock award (an “Award”) pursuant to the Company’s form of Restricted Stock Agreement under the Company’s 2008 Stock Incentive Plan. The ~~Awards~~changes ~~to Mr. Murdock and Mr. Elwood were~~ in the ~~amounts~~carrying ofamount ~~37,500 shares~~ of ~~Common Stock and 25,000 shares of Common Stock, respectively. Each Award vests in ten equal installments with the first installment vesting on June 29, 2012 and the remainder~~ ~~vesting~~acquisition-related onintangible ~~each~~assets ~~of the next nine consecutive anniversaries; provided, however, if the Company subsequently achieves net income~~ for ~~any fiscal year of~~ the ~~Company~~three ~~(but~~months ~~excluding~~ended ~~the Company’s fiscal years 2019~~May 31, ~~2020 and 2021)~~2013, ~~as shown on the Company’s audited consolidated financial statements for such fiscal year, the vesting of the Award shall accelerate such that the number of shares of the Award which~~ are ~~unvested~~as atfollows: ~~the end of such fiscal year shall vest in three substantially equal installments over the then next three consecutive anniversaries of the date of the Award.~~

On August 10, 2012, each of the Company’s U.S. employees, including the Executive Officers, were granted restricted stock awards (the “Awards”) pursuant to the Company’s form of Restricted Stock Agreement under the Company’s 2008 Stock Incentive Plan. The Awards were in the aggregate amount of 76,250 shares of Common Stock. Each award vests in three equal installments with the first installment vesting on August 10, 2013 and the remainder vesting on each of the two succeeding anniversaries.


	Amortizing Intangible Assets
	(In thousands)
Balance, net, February 28, 2013	$	534
Amortization		(43	)

Balance, net, May 31, 2013	$	491

D.Amortization ~~Composition~~ of ~~Certain~~acquisition-related intangible ~~Balance~~assets ~~Sheet~~over ~~Accounts~~the next four fiscal years is estimated as follows:

The composition of accounts receivable, net of reserves, is as follows:


Fiscal Year	(In thousands)
2014	$	119
2015		135
2016		135
2017		102

Total	$	491

	November 30,2012		February 29,2012
	(In thousands)
Due from factor	$	3,163	$	1,183
Accounts receivable, other		184		485
	$	3,347	$	1,668

Substantially all of the credit risk associated with the assigned invoices remained with the Company as of November 30, 2012. Accounts receivable, other includes reserves for subsequent sales return and allowances for bad debt—including reserves associated with certain invoices assigned to the factor. Approximately $0.7 million was outstanding on the Company’s credit facility, and therefore owed to the Company’s factor, as of November 30, 2012; no amount was owed at February 29, 2012.

MEADE INSTRUMENTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

The composition of ~~inventories~~property and equipment is as follows:

	November 30,2012			February 29,2012
	May 31,2013			February 28,2013
	(In thousands)
Raw materials	$	2,750		$	1,419
Molds and dies	$	1,317		$	1,317
Work in process		2,805			2,424
Machinery and equipment		4,531			4,531
Finished goods		2,806			2,790
Furniture and fixtures		251			251
	$	8,361		$	6,633
Autos and trucks		127			127
Leasehold improvements		138			138
		6,364			6,364
Less accumulated depreciation and amortization		(6,206	)		(6,168	)
	$	158		$	196

~~Intangible~~Since ~~assets~~certain ~~were a result~~ of anthe ~~acquisition~~Company’s ofmachinery ~~substantially all~~and ofequipment ~~the~~is ~~assets~~old and ~~assumption~~fully ofdepreciated, ~~substantially~~it ~~all~~is ofpossible ~~the~~that ~~liabilities~~ certain of ~~Coronado~~the ~~Technology~~Company’s ~~Group,~~machinery ~~LLC~~and ~~that~~equipment ~~occurred~~could onrequire ~~December 1,~~replacement ~~2004~~in ~~and~~the ~~are~~near asfuture. ~~follows:~~

			November 30, 2012							February 29, 2012
	AmortizationPeriods(In Years)		GrossCarryingAmount		AccumulatedAmortization			Net BookValue		GrossCarryingAmount		AccumulatedAmortization			Net bookValue
								(In thousands)
Trademarks		7-15	$	424	$	(388	)	$	36	$	424	$	(361	)	$	63
Completed technologies		12		1,620		(1,080	)		540		1,620		(978	)		642
Total			$	2,044	$	(1,468	)	$	576	$	2,044	$	(1,339	)	$	705

F.	Credit Facility

~~The~~On ~~changes~~December 28, in2012, the ~~carrying~~Company ~~amount~~entered ~~of acquisition-related~~into ~~intangible~~a ~~assets~~Financing ~~for~~Agreement (the ~~three~~“Rosenthal ~~months~~Agreement” ~~ended~~or “Agreement”) ~~November~~with Rosenthal ~~30,~~& ~~2012~~Rosenthal, ~~are~~Inc. as(“Rosenthal”). ~~follows:~~

	Amortizing
	Intangible Assets
	(In thousands)
Balance, net, February 29, 2012	$	705
Amortization		(129	)
Balance, net, November 30, 2012	$	576

The Rosenthal Agreement provides for advances of up to (i) seventy percent (70.0%) of the Net Amount of Eligible Receivables arising from sales made to customers located in the United States of America and Canada and (ii) 50% of the Net Amount of Eligible Receivables arising from sales made to customers outside the United States of America and Canada, provided that in the case of such sales are subject to a credit insurance policy, less any reserves as Rosenthal may deem, in its sole discretion, to be necessary from time to time.

~~Amortization~~Advances ofunder ~~acquisition-related~~the Rosenthal Agreement incur interest at the prime rate publicly announced in New York ~~intangible~~City ~~assets~~by ~~over~~JPMorgan Chase Bank plus four percent. A minimum of $3,000 per month in interest will be paid according to the ~~next~~Agreement. ~~five~~A ~~fiscal~~facility ~~years~~fee in the amount of 1% was paid to Rosenthal on the closing date and will be paid on each anniversary thereof. An administration fee of $1,000 per month is ~~estimated~~also aspayable ~~follows:~~during the Agreement.

Fiscal Year	(In thousands)
2013 (remaining three months)	$	42
2014		162
2015		135
2016		135
2017		102
Total	$	576

The Rosenthal Agreement continues through November 30, 2015 and from year to year thereafter unless terminated by either party. The Company or Rosenthal can terminate the Agreement with at least 60 days, and not more than 120 days, written notice except in cases of a Default, at which time Rosenthal can terminate the Agreement at any time and the Company will pay to Rosenthal an amount equal to (a) three percent of the Maximum Credit Facility then in effect, if such termination occurs prior to the first anniversary of the Closing Date; (b) two percent of the Maximum Credit Facility then in effect, if such termination occurs on or after the first anniversary of the Closing Date but prior to the second anniversary of the Closing Date; and (c) one percent of the Maximum Credit Facility then in effect if such termination occurs on or after the second anniversary of the Closing Date.

Rosenthal advanced approximately $1.6 million to the Company subsequent to entering into the Agreement, which constituted the full amount of availability under the Agreement at that time.

At May 31, 2013 and February 28, 2013, the Company had approximately $91 thousand and $40 thousand of remaining availability on its credit facility, respectively.

MEADE INSTRUMENTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

~~The~~G. ~~composition~~Commitments ~~of property~~ and ~~equipment is as follows:~~ Contingencies

	November 30,			February 29,
	2012			2012
	(In thousands)
Molds and dies	$	1,317		$	1,234
Machinery and equipment		4,520			4,507
Furniture and fixtures		251			251
Autos and trucks		126			199
Leasehold improvements		138			138
		6,352			6,329
Less accumulated depreciation and amortization		(6,129	)		(6,159	)
	$	223		$	170

Lease Commitments

~~Since~~The ~~certain of the~~ Company’s ~~machinery~~lease ~~and~~of ~~equipment~~its iscorporate ~~old~~office ~~and~~in ~~fully depreciated~~Irvine, itCalifornia isexpires ~~possible~~on ~~that~~February 28, ~~certain of~~2014. On August 24, 2012, the Company’s ~~machinery~~entered ~~and~~into ~~equipment~~a ~~could~~Sublease ~~require~~Agreement, ~~replacement~~with inWet Products, Inc. (the ~~near future~~“Sublessee”). ~~Given~~The ~~the~~Sublessee ~~Company’s~~has ~~weakened~~nonexclusive ~~financial~~rights ~~position~~to ~~and~~the ~~limited~~warehouse ~~liquidity~~premises through September 30, ~~the~~2013. The Company’s ~~may~~lease ~~not~~of beits ~~able~~manufacturing tofacility ~~pay~~in ~~for~~Tijuana, orMexico ~~finance~~expires aon ~~replacement~~December 31, ~~for~~2013. ~~such~~For the ~~equipment~~quarterly ~~and~~period ~~therefore~~ended ~~may~~May 31, be2013 ~~forced~~and to2012, ~~reduce~~the orCompany ~~cease~~incurred ~~operations~~rent ~~until~~expense itof is$78 ~~able~~thousand toand ~~replace~~$74 ~~any~~thousand, ~~necessary equipment~~respectively.

E.Customer ~~Commitments~~Concentration ~~and~~Contingency ~~Contingencies~~

~~The~~Approximately 12% and 5% of the Company’s isnet ~~involved~~sales were from ~~time~~one tocustomer ~~time~~during the three months ended May 31, 2013 and 2012, respectively. Included in accounts ~~litigation~~receivable were ~~incidental~~approximately to$0.3 ~~its~~million ~~business~~and $0.3 ~~Management~~million due ~~believes~~from ~~that~~this customer at May 31, 2013 and February 28, 2013, respectively. This customer is Meade Instruments Europe GmbH & Co. KG, the Company’s former subsidiary and ~~outcome~~current European distributor which was sold in January 2009 to Jinghua Optics & Electronics Co., LTD (“Jinghua”). Jinghua is the parent company of ~~such~~JOC ~~litigation~~North ~~will~~America ~~not~~LLC ~~have~~(“JOCNA”) awhich ~~material~~signed ~~adverse~~a ~~effect~~merger onagreement with the Company ~~financial~~on ~~position~~May 17, ~~results~~2013 ofas ~~operations~~disclosed orin ~~cash~~footnote ~~flows~~C—Merger ofand ~~the~~Subsequent ~~Company~~Events.

F.Litigation ~~Loss~~Contingencies ~~Per Share~~

Although the Company is involved from time to time in litigation incidental to its business, management believes that the Company currently is not involved in any litigation which would have a material adverse effect on the financial position, results of operations or cash flows of the Company; however, class action lawsuits may be filed by third parties challenging our contemplated merger with JOC North America LLC. If not ultimately dismissed, these lawsuits could adversely affect our business, financial position and results of operations and divert management’s attention and resources from other matters.

H.	Loss Per Share

Basic loss per share amounts excludes the dilutive effect of potential shares of common stock. Basic loss per share is based upon the weighted-average number of shares of common stock outstanding. Diluted loss per share is based upon the weighted-average number of shares of common stock and dilutive potential shares of common stock outstanding for each period presented. Potential shares of common stock include outstanding stock options and restricted stock, which may be included in the weighted average number of shares of common stock under the treasury stock method.

The total number of options and restricted shares outstanding were as follows:

	November 30,2012		February 29,2012
	May 31,2013		February 28,2013
	(In thousands)
Stock options outstanding		7770		7771
Restricted shares outstanding		~~133~~132		63132

These amounts were excluded from the weighted-average number of shares of common stock outstanding, as including these items would be anti-dilutive due to the Company’s net loss.

GI. Product Warranties

The Company provides reserves for the estimated cost of product warranty-related claims at the time of sale, and periodically adjusts the provision to reflect actual experience related to its standard product warranty programs and its extended warranty programs. The amount of warranty liability accrued reflects management’s best estimate of the expected future cost of honoring Company obligations under its warranty plans. Additionally, from time to time, specific warranty accruals may be made if unforeseen technical problems arise. Meade^® brand products, principally telescopes and binoculars, are generally covered by a one-year limited warranty. Most of the Coronado^® products have limited five-year warranties.

MEADE INSTRUMENTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

Included in the warranty accrual as of May 31, 2013 and February 2928, ~~2012~~2013, is $0.52 million related to the Company’s former Simmons sport optics ~~brands~~brand that ~~were~~was sold in 2008 and for which the Company agreed to retain certain warranty liabilities. In June 2012, the Company entered into an agreement with the owner of ~~one of~~ the Company’s former Weaver sport optics brands which eliminated the Company’s remaining liability of approximately $0.3 million for any future product warranty claims associated with that brand. ~~The Company reduced its warranty accrual as of May 31, 2012 by $0.3 million accordingly.~~

Changes in the warranty liability, which is included as a component of accrued liabilities on the accompanying Consolidated Balance Sheets, were as follows:

	Three Months EndedNovember 30,						Nine Months EndedNovember 30,
	Three Months EndedMay 31,
	2012			2011			2012			2011
	2013			2012
	(In thousands)
Beginning balance	$	~~411~~395		$	~~763~~736		$	~~736~~		$	~~810~~
Release of warranty liability		—			—(293	)		~~(293~~	)		—
Warranty accrual		5011			9142			~~161~~			~~190~~
Labor and material		(4542	)		(4658	)		~~(188~~	)		~~(192~~	)
Ending balance	$	~~416~~364		$	~~808~~427		$	~~416~~		$	~~808~~

HJ. Income Taxes

In accordance with ASC 740, Accounting for Income Taxes, the Company has determined that there was sufficient uncertainty surrounding the future realization of its deferred tax assets to warrant the recording of a full valuation allowance. The valuation allowance was recorded based upon the Company’s determination that there was insufficient objective evidence, at this time, to recognize those assets for financial reporting purposes. For the period ended ~~November~~May 3031, ~~2012~~2013, the Company has not changed its assessment regarding the recoverability of its deferred tax assets. Ultimate realization of of the benefit of the deferred tax assets is dependent upon the Company generating sufficient taxable income in future periods, including periods prior to the expiration of certain underlying tax credits.

No provision for income taxes was recorded in the current or prior period presented due to the significance of the Company’s net loss.

The tax years 2008 through ~~2011~~2012 remain open to examination by the major taxing jurisdictions to which the Company is subject. However, the amount of a net operating loss carryforward can be adjusted for federal tax purposes for the three years (four years for the major state jurisdictions in which the Company operates) after the net operating loss is utilized.

Unrecognized Tax Benefits

The Company is subject to income taxes in the United States and Mexico. Significant judgment is required in evaluating the Company’s tax positions and determining its provision for income taxes. During the ordinary course of business, there are many transactions and calculations for which the ultimate tax determination is uncertain. The Company establishes reserves for tax-related uncertainties based on estimates of whether, and the extent to which, additional taxes will be due. These reserves are established when the Company believes that certain positions might be challenged despite a belief that its tax return positions are fully supportable. The Company adjusts these reserves in light of changing facts and circumstances, such as the outcome of income tax audits. The provision for income taxes includes the impact of reserve provisions and changes to reserves that are considered appropriate. Accruals for unrecognized tax benefits are provided for in accordance with the requirements of the prescribed authoritative guidance. At ~~November~~May 3031, ~~2012~~2013 and February 2928, ~~2012~~2013, there were no unrecognized tax benefits. Management does not anticipate that there will be a a material change in the balance of unrecognized tax benefits within the next 12 months.

The Company recognizes accrued interest and penalties related to uncertain tax positions in income tax expense. At May 31, 2013 and February 28, 2013, there were no accrued interest and penalties related to uncertain tax positions.

MEADE INSTRUMENTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

The Company recognizes accrued interest and penalties related to uncertain tax positions in income tax expense. At November 30, 2012 and February 29, 2012, there were no accrued interest and penalties related to uncertain tax positions.

I. Subsequent Event

On December 28, 2012 (the “Closing Date”), the Company terminated its Amended and Restated Factoring and Security Agreement (the “First Capital Agreement”) with FCC, LLC d/b/a First Capital Western Region, LLC (“First Capital”), and entered into a Financing Agreement (the “Rosenthal Agreement” or “Agreement”) with Rosenthal and Rosenthal, Inc. (“Rosenthal”).

Similar to the First Capital Agreement, the Rosenthal Agreement provides for a maximum credit facility of $3 million (the “Maximum Credit Facility”).

The Agreement provides for advances of up to (i) seventy percent (70.0%) of the Net Amount of Eligible Receivables arising from sales made to customers located in the United States of America and Canada and (ii) 50% of the Net Amount of Eligible Receivables arising from sales made to customers outside the United States of America and Canada, provided that sales described in clause (ii) are subject to a credit insurance policy. In addition, any advances are reduced by reserves as Rosenthal may deem, in its sole discretion, to be necessary from time to time.

Advances under the Agreement incur interest at the greater of (i) the prime rate publicly announced in New York City by JPMorgan Chase Bank plus four percent and (ii) eight percent. A minimum of $3,000 per month in interest will be paid according to the Agreement.

A facility fee in the amount of 1% of the Maximum Credit Facility was paid to Rosenthal on the Closing Date and will be paid on each anniversary thereof. An administration fee of $1,000 per month is also payable during the Agreement.

The Agreement continues through November 30, 2015 and from year to year thereafter unless terminated by either party. The Company or Rosenthal can terminate the Agreement with at least 60 days, and not more than 120 days, written notice except in cases of a Default, at which time Rosenthal can terminate the Agreement at any time and the Company will pay to Rosenthal an amount equal to (a) three percent of the Maximum Credit Facility then in effect, if such termination occurs prior to the first anniversary of the Closing Date; (b) two percent of the Maximum Credit Facility then in effect, if such termination occurs on or after the first anniversary of the Closing Date but prior to the second anniversary of the Closing Date; and (c) one percent of the Maximum Credit Facility then in effect if such termination occurs on or after the second anniversary of the Closing Date.

No amount was owed to First Capital when the First Capital Agreement was terminated, and no termination fees were incurred as a result of the termination of the First Capital Agreement. Rosenthal advanced approximately $1.6 million to the Company subsequent to entering into the Agreement, which constituted the full amount of availability under the Agreement at that time.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes included in this Form 10-Q. This discussion may contain forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements due to known and unknown risks, uncertainties and other factors, including those risks discussed in “Risk Factors” in the Company’s annual report on Form 10-K. Those risk factors expressly qualify all subsequent oral and written forward-looking statements attributable to us or persons acting on our behalf. We do not have any intention or obligation to update forward-looking statements included in this Form 10-Q after the date of this Form 10-Q, except as required by law.

Overview of the Company

Meade Instruments Corp. is engaged in the design, manufacture, marketing and sale of consumer optics products, primarily telescopes, telescope accessories and binoculars. We design our products in-house or with the assistance of external consultants. Most of our entry level products are manufactured overseas by contract manufacturers in Asia, while our high-end telescopes are manufactured and assembled at our Mexico facility. Sales of our products are driven by an in-house sales force as well as a network of sales representatives throughout the U.S. and through distributors internationally. We currently operate out of two primary locations: Irvine, California and Tijuana, Mexico. Our California facility serves as the Company’s corporate headquarters, research and development facility and U.S. distribution center; our Mexico facility contains our manufacturing, assembly, repair, packaging, and other general and administrative functions. Our business is ~~highly~~ seasonal and our financial results have historically varied ~~significantly~~ on a quarter-by-quarter basis each year.

We believe that the Company holds valuable brand names and intellectual property that provide us with a competitive advantage in the marketplace. The Meade^® brand name is ubiquitous in the consumer telescope market, while the Coronado^® brand name represents a unique niche in the area of solar astronomy.

Critical Accounting Policies and Estimates

The preparation of financial statements and related disclosures in conformity with U.S. GAAP requires us to make judgments, assumptions and estimates that affect the amounts reported in the Condensed Consolidated Financial Statements and accompanying notes. Note 1 to our Consolidated Financial Statements in our Annual Report on Form 10-K for the fiscal year ended February 2928, ~~2012~~2013 describes the significant accounting policies and methods used in the preparation of our Condensed Consolidated Financial Statements. Our critical accounting estimates, discussed in the Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended February 2928, ~~2012~~2013, include revenue recognition, estimates for allowances for doubtful accounts, inventories, property and equipment, intangible assets, accounting for income taxes, shipping and handling costs, advertising, research and development, loss per share, concentration of credit risk, fair value of financial instruments, use of estimates in preparation of consolidated financial statements, product warranties, and stock-based compensation. Such accounting policies and estimates require significant judgments and assumptions to be used in the preparation of our Consolidated Financial Statements and actual results could differ materially from the amounts reported based on variability in factors affecting these estimates.

Our management discusses the development and selection of our critical accounting policies and estimates with the Audit Committee of our Board of Directors at least annually. Our management also internally discusses the adoption of new accounting policies or changes to existing policies at interim dates, as it deems necessary or appropriate.

New Accounting Pronouncements

From time to time, the Financial Accounting Standards Board or other standards setting bodies issue new accounting pronouncements. Updates to the FASB Accounting Standards Codification are communicated through issuance of an Accounting Standards Update. Unless otherwise discussed, we believe that the impact of recently issued guidance, whether adopted or to be adopted in the future, is not expected to have a material impact on our Consolidated Financial Statements upon adoption.

1211

Results of Operations

~~The~~Three ~~Company’s~~Months ~~business~~Ended ~~is seasonal. Historically, sales in the third quarter ending November~~May ~~30th each year have been higher than sales achieved in each of the other three fiscal quarters. Thus~~31, ~~expenses~~2013 ~~and,~~Compared to aThree ~~greater~~Months ~~extent,~~Ended ~~results from operations vary significantly by quarter. Therefore~~May 31, ~~caution~~2012 ~~is advised when appraising results for a period shorter than a full year, or when comparing any period other than to the same period of the previous year.~~

~~Three~~The ~~Months~~Company ~~Ended~~reported ~~November~~net sales of $2.8 million for the quarter ended May 3031, ~~2012~~2013, ~~Compared~~a decrease of $1.3 million or 32% from net sales of $4.1 million in the same period in the prior year. This decrease in net sales was across all product categories of the Company. Approximately 26% or $0.3 million of this decrease in net sales was attributed to ~~Three~~a ~~Months~~decrease ~~Ended~~in ~~November 30~~net sales of accessories, which was attributed to the decrease of sales across all product ~~2011~~categories and increased competition. Approximately 23% or $0.3 million of this decrease in net sales was attributed to a decrease in net sales of solar telescopes due to a high amount of these products having been sold in the prior year due to new product introductions and promotions. Approximately 22% or $0.3 million of the decrease in net sales was attributed to a decrease in net sales of intermediate telescopes due to reduced sales of the Company’s LS and LT line of intermediate telescopes. Approximately $0.2 million or 17% of the decrease in net sales was attributable to a net decrease in sales of high end telescopes due to a reduction in sales of the Company’s LX200 telescopes offset partially by sales of the Company’s new LX850 and LX600 telescopes.

~~The~~Gross ~~Company~~profit ~~reported net sales~~ of $50.76 million ~~for~~during the ~~quarter~~three months ended ~~November~~May 3031, ~~2012,~~2013 decreased ~~a decrease of~~ $10.5 3 million or 2127% compared to ~~net sales of~~ $70.29 million induring the ~~same~~three ~~period~~months inended ~~the~~May 31, ~~prior year~~2012. ~~This~~The decrease in ~~net~~gross ~~sales~~profit was ~~generally~~primarily attributable to athe ~~reduction~~decline in net sales ~~of low-end telescopes~~, ~~spotting~~offset ~~scopes~~slightly ~~and~~by ~~microscopes~~reductions ~~which was due to increased competition from the Company’s Chinese-owned competitors and a reduction~~ in ~~the~~indirect ~~amount~~costs of ~~demand for the products by consumers~~sales.

~~Gross~~Selling ~~profit~~expenses ~~during~~for the ~~three~~first ~~months~~quarter ended ~~November 30~~May 31, ~~2012~~2013 ~~was~~were $0.34 million, orwhich ~~6.2%~~was ofequal ~~net~~to ~~sales,~~the afirst ~~decrease~~quarter ofended May 31, ~~$1.2~~2012, ~~million~~but orwhich ~~78%~~amounted ~~compared~~ to ~~gross~~15% ~~profit~~ of ~~$1.6~~net ~~million~~sales orcompared ~~21.5~~to 10% of net sales during the ~~three~~same ~~months~~quarter ~~ended~~in ~~November~~the ~~30,~~prior ~~2011~~year. The ~~decrease~~increase in ~~gross~~selling ~~profit~~expenses ~~was~~as ~~principally~~a ~~due~~percentage toof ~~the~~net ~~decrease~~sales inwas ~~net~~due ~~sales~~an ~~and~~increase ~~the~~in ~~fact~~bad ~~that~~debt ~~relatively~~expense ~~fixed~~of ~~manufacturing~~$0.1 ~~overhead~~million, which ~~costs~~offset ~~represented~~reductions ain ~~larger~~other ~~percentage~~selling ofexpenses due to reduced net sales and cost reduction efforts.

~~Selling~~General and administrative expenses for the ~~third~~three ~~quarter~~months ended ~~November~~May 3031, ~~2012~~2013 were $01.60 million, or 35% of net sales compared to $0.79 million or 22% of net sales during the ~~same~~three ~~quarter in~~months ~~the~~ended ~~prior~~May 31, ~~year~~2012. ~~Selling~~The ~~expenses~~increase ~~were~~in ~~consistent,~~general atand ~~10%,~~administrative expenses aswas amainly ~~percentage~~due ofto ~~net~~approximately ~~sales~~$0.1 ~~during~~million ~~each~~ of ~~the~~legal ~~fiscal~~fees ~~quarters~~associated ~~ended~~with ~~November 30,~~the ~~2012~~Company’s merger and ~~2011~~acquisition activities.

~~General~~Research and ~~administrative~~development expenses ~~for~~during the ~~third~~three ~~quarter~~months ended ~~November~~May 3031, ~~2012~~2013 were ~~$0.9~~lower ~~million~~by ~~or 15% of net sales compared to~~ $0.81 million or 1245% ofdue ~~net~~to ~~sales in~~ the ~~same~~fact ~~quarter~~that in the ~~prior year.~~Company ~~The~~completed ~~increase~~development inof ~~general~~its ~~and~~LX800/850 ~~administrative expenses relative to the prior year was mainly due to higher professional fees. The Company’s general~~ and ~~administrative expenses are more fixed than selling expenses; as a result, such expenses~~LX600 dotelescopes ~~not~~in ~~typically~~February ~~decrease as much as selling expenses do when net sales decline~~ and ~~are~~April ~~therefore~~2013, ~~higher as a percentage of net sales than the prior year~~respectively.

~~Research~~Release ~~and~~of ~~development~~warranty ~~expenses~~liability inof ~~the~~$0.3 ~~third~~million ~~quarter~~during the three months ended ~~November~~May 3031, 2012 pertained ~~increased~~to ~~$19~~a ~~thousand~~reduction orin 9%the ~~compared~~Company’s towarranty ~~the~~accrual which ~~same~~was ~~period~~recorded inbased ~~the~~upon ~~prior~~an agreement ~~year~~which ~~due~~released tothe ~~increased~~Company ~~efforts~~of atits ~~new~~remaining warranty ~~product~~liability associated with those ~~development~~products. No such adjustment applied to the current year.

NoInterest ~~provision~~expense ~~for~~of ~~income~~$13 ~~taxes~~thousand was ~~recorded~~incurred induring the ~~current~~three months ~~period~~ended ~~presented~~May 31, 2013 due to ~~the~~advances ~~significance~~on of the Company’s ~~net~~credit ~~loss~~facility. ~~and~~No ~~expected~~interest ~~net~~was ~~loss~~incurred ~~for~~in ~~its~~the ~~fiscal~~prior year ~~ending~~because ~~February 28,~~the ~~2013.~~Company Awas ~~provision~~not ~~for~~advancing ~~income~~on ~~taxes~~its ofcredit ~~approximately~~facility ~~$14 thousand was recorded~~ in the prior year.

~~Nine~~No ~~Months~~provision ~~Ended~~for ~~November 30,~~income ~~2012~~taxes ~~Compared~~was recorded in the current or prior period presented due to ~~Nine~~the ~~Months~~significance ~~Ended~~of ~~November 30,~~the ~~2011~~Company’s net loss.

The Company reported net sales of $13.8 million for the nine months ended November 30, 2012, a decrease of $3.8 million or 22% from net sales of $17.6 million in the same period in the prior year. Approximately $2.9 million or 77% of this decrease was attributable to reduced net sales of low-end telescopes, spotting scopes and microscopes to mass retail customers due to increased competition from the Company’s Chinese-owned competitors and reduced demand for these products by consumers. Approximately $0.4 million or 10% of the decrease in net sales was attributable to a reduction in net sales of high-end telescopes due to delays in shipments of the Company’s new LX800 and LX600 products, which are still under development, and the impact that delay has had on net sales of other high-end telescope products, offset partially by increased demand for solar telescopes. Approximately $0.5 million or 13% of the decrease in net sales was due to a reduction in sales of other products due to decreased demand for those products.

Gross profit of $1.8 million during the nine months ended November 30, 2012 decreased $2.5 million or 59% compared to the same period in the prior year. Approximately $2.0 million or 80% of this decrease in gross profit was attributable to a reduction in net sales and approximately $0.5 million or 20% was attributed to lower fixed cost absorption and unfavorable fluctuations in indirect manufacturing costs, such as labor and material variances, compared to the prior year.

Selling expenses for the nine months ended November 30, 2012 and 2011 were approximately $1.3 million and $1.8 million, respectively, and were consistent at 10% of net sales during each of those periods. The decline in selling expenses was attributable to lower variable selling expenses.

General and administrative expenses for the nine months ended November 30, 2012 and 2011 were $2.7 million or 19% of net sales and $2.6 million or 15% of net sales, respectively. General and administrative expenses are comprised mostly of fixed costs and generally do not vary with net sales as much as selling expenses.

Research and development expenses for the nine months ended November 30, 2012 of $0.8 million increased $0.2 million or 21% compared to $0.6 million during the same period in the prior year due to increased efforts to complete product development of the LX800 and LX600 products.

Release of warranty liability of $0.3 million during the nine months ended November 30, 2012 pertained to a reduction in the Company’s warranty accrual which was recorded based upon an agreement which released the Company of its remaining warranty liability associated with those products. No such adjustment applied to the prior year.

No provision for income taxes was recorded during the nine months ended November 30, 2012 due to the significance of the Company’s net loss and expected net loss for its fiscal year ending February 28, 2013. A provision of approximately $29 thousand was recorded in the prior year.

Seasonality

The Company has experienced, and expects to continue to experience, substantial fluctuations in its sales, gross margins, working capital requirements and results from operations from quarter to quarter. Factors that influence these fluctuations include the volume and timing of orders received, changes in the mix of products sold, market acceptance of the Company’s products, competitive pricing pressures, the Company’s ability to meet fluctuating demand and delivery schedules, the timing and extent of research and development expenses, the timing and extent of product development activities and the timing and extent of advertising expenditures. Historically, a substantial portion of the Company’s net sales and results from operations typically occurred in the second and third quarter of the Company’s fiscal year primarily due to the ~~higher~~ higher customer demand for less-expensive telescopes during the holiday season. Mass merchandisers, along with specialty retailers, purchase a considerable amount of their inventories to satisfy seasonal customer demand. These purchasing patterns ~~have~~ have caused the Company to increase its level of inventory during its second and third quarters in response to such demand or anticipated demand. As a result, the Company’s working capital requirements have correspondingly increased at such times. The Company continues to experience ~~significant~~ sales to mass merchandisers. Accordingly, the Company’s net sales, working capital requirements and results from operations ~~are~~may ~~expected to~~ be higher in its ~~second and~~ third ~~quarters~~quarter than in the ~~first~~ ~~and~~other ~~fourth~~ quarters of its fiscal year.

~~Liquidity~~12 ~~and Capital Resources~~

The Company has incurred significant recurring losses and negative cash flows from operations which have resulted in reduced liquidity and a weakened financial position as of November 30, 2012. The Company also has endured working capital problems caused by product development delays during the past twelve months. In addition, in January 2013, the Company’s largest customer, and one additional customer, notified the Company that they had unilaterally, and without prior notice, decided to indefinitely hold payment of approximately $0.6 million in accounts receivable, which will further reduce the Company’s already limited liquidity. Due to these issues, the Company’s management now believes substantial doubt exists about the Company’s ability to continue as a going concern and that it must modify the Company’s business model and operations to reduce spending to a sustainable level. Such actions could cause the Company to be unable to execute its business plan, take advantage of future opportunities, respond to competitive pressures or customer requirements. It may also cause the Company to delay, scale back or eliminate some or all of its research and development programs, seek opportunities in a strategic relationship or business combination, or to reduce or cease operations.

At November 30, 2012, the Company had cash of $0.3 million, compared to $3.9 million at February 29, 2012 and $1.2 million at November 30, 2011.

Net cash used in operating activities was approximately $4.2 million during the nine months ended November 30, 2012 and $3.8 million during the nine months ended November 30, 2011, an increase in net cash used of approximately $0.4 million compared to the prior year. This increase in net cash used in operating activities was attributed to the increase in the Company’s net loss of approximately $2.0 million from a loss of approximately $0.7 million during the nine months ended November 30, 2011 compared to a loss of approximately $2.7 million during the nine months ended November 30, 2012, offset by favorable net fluctuations in working capital. Approximately $1.1 million or 65% of the net increase in inventories of approximately $1.7 million during the nine months ended November 30, 2012 was due to an increase in inventories relating to the Company’s new LX800 and LX600 products which have taken longer to develop than expected and are not yet ready to be shipped.

~~The~~Liquidity ~~Company typically experiences increases in accounts receivable~~ and ~~inventories~~Capital ~~and~~Resources a corresponding decrease in cash beginning with the end of its first fiscal quarter and culminating with the end of its third fiscal quarter. Receivables and inventories then typically decrease, and cash increases, at the end of the Company’s fiscal year. The Company began making advances on its credit facility in September 2012 in order to meet its working capital requirements and continued to do so through the filing of this Form 10-Q. In addition, the Company has incurred substantial operating losses during the nine months ended November 30, 2012.

AtThe ~~November 30,~~Company ~~2012,~~incurred ~~the~~a ~~Company~~net ~~had~~loss inof ~~place~~$0.9 ~~a secured~~million ~~credit~~during ~~facility~~the ~~with~~three ~~FCC,~~months ~~LLC~~ended ~~d/b/a~~May 31, ~~First~~2013. ~~Capital~~Cash ~~Western~~used ~~Region,~~in ~~LLC~~operating ~~(“First~~activities ~~Capital”)~~was $0.4 ~~and~~million, ~~owed~~compared ~~approximately~~to $01.71 million asduring ofthe ~~November~~three months ended May 3031, 2012, ondue ~~that~~to ~~facility~~approximately $0.8 ~~Availability~~million ofin ~~funds~~inventory ~~under~~reductions ~~that~~resulting ~~credit~~from ~~facility~~the ~~was~~Company ~~based on~~completing adevelopment ~~percentage~~ of ~~eligible~~its ~~accounts~~new ~~receivable~~LX800/850 and ~~inventory~~LX600 telescopes in February 2013 and ~~amounted~~April 2013, respectively, and being able to convert raw materials and work in process inventories into saleable product. The Company increased inventory by approximately $02.36 million asduring ofthe ~~November 30~~six months ended August 31, 2012, indue ~~addition~~ primarily to ~~the~~product ~~$0.7~~development ~~million~~problems ~~owed,~~associated with the LX800/850 and ~~was~~LX600 ~~based~~telescope ~~solely~~products onwhich ~~accounts~~caused ~~receivable~~delays asin ~~substantially~~shipments ~~all~~of ~~the Company’s~~those ~~inventory~~products. ~~was~~The ~~deemed~~Company ~~ineligible~~must ~~due~~continue to ~~most~~reduce ofits itinventories ~~being~~in ~~located~~order into ~~Mexico~~have sufficient liquidity to continue its operations.

InDuring ~~December~~the ~~2012~~three months ended may 31, 2013, the Company obtained $0.3 million in cash from net advances on its ~~repaid~~credit facility. However, the ~~balance~~Company ~~owed~~has limited working capital and access to ~~First~~credit. ~~Capital,~~The ~~then~~Company ~~amended~~had ~~and~~only ~~terminated~~$91 thousand of remaining availability on its credit facility ~~with~~at ~~First~~May 31, ~~Capital~~2013. ~~and~~In ~~subsequently~~addition, ~~replaced~~while itthe Company’s financing agreement with aits ~~new~~lender ~~financing~~does ~~agreement~~not (“contain explicit financial covenants, the Agreement”) ~~with~~allows ~~Rosenthal &~~the ~~Rosenthal,~~Company’s ~~Inc. (“Rosenthal”).~~lender Atsignificant ~~the~~latitude ~~time~~to restrict, reduce or eliminate the ~~First~~Company’s ~~Capital~~access to credit ~~facility~~or ~~was~~require ~~replaced,~~the ~~both~~Company ~~the~~to ~~Rosenthal~~repay any and all ~~First~~amounts ~~Capital~~outstanding ~~credit~~under ~~facilities~~the ~~allowed~~Agreement. ~~for~~If aits ~~maximum~~lender ofrestricts, $3reduces ~~million~~or ~~and~~eliminates ~~were~~the ~~based~~Company’s ~~solely~~access ~~upon~~to ~~advances~~credit, onor ~~accounts~~requires ~~receivable.~~immediate Asrepayment of the ~~closing~~ ~~date~~amounts ofoutstanding under the ~~financing arrangement~~agreement, ~~December 28,~~the ~~2012,~~Company ~~availability~~would ~~under~~be ~~the~~required ~~new~~to ~~credit~~pursue additional ~~facility~~or ~~was~~alternative ~~approximately~~sources ~~$1.6~~of ~~million.~~liquidity ~~Rosenthal~~such ~~advanced~~as toequity ~~the~~financings, ~~Company~~a ~~the~~new ~~$1.6~~debt ~~million~~agreement ~~maximum~~with ~~available~~other ~~under~~creditors, or liquidate assets. However, the ~~new~~Company ~~credit~~cannot ~~facility subsequent~~assure tothat ~~the~~any ~~closing~~such additional sources of ~~the~~liquidity ~~Agreement~~would be available on reasonable terms, if at all.

~~While~~The ~~the~~ Company’s ~~agreement~~financial ~~with~~statements ~~Rosenthal~~for ~~does~~the ~~not~~quarterly ~~contain~~period ~~explicit financial~~ended ~~covenants~~May 31, ~~the~~2013 ~~Agreement~~were prepared ~~allows~~assuming the Company’s ~~lender~~would ~~significant~~continue ~~latitude~~as toa ~~restrict,~~going ~~reduce~~concern; orhowever, ~~eliminate~~ the Company’s ~~access~~declining torevenues, ~~credit~~recurring orlosses, ~~require~~weakened ~~the~~financial ~~Company~~position toand ~~repay~~reduced ~~any~~liquidity ~~and~~raise ~~all~~substantial ~~amounts~~doubt ~~outstanding~~about ~~under~~its ~~the~~ability ~~Agreement.~~to Ifcontinue ~~its lender~~as ~~restricts~~a going concern, ~~reduces~~as ordisclosed ~~eliminates~~in the Company’s ~~access~~Form to10-K ~~credit,~~for orits ~~requires~~fiscal ~~immediate~~year ~~repayment~~ended ofFebruary 28, ~~the~~2013. ~~amounts~~The ~~outstanding~~consolidated ~~under~~financial ~~the~~statements ~~agreement,~~do ~~the~~not ~~Company~~include ~~would~~any beadjustments ~~required~~that tomight ~~pursue~~result ~~additional~~from orthe ~~alternative~~outcome ~~sources~~ of ~~liquidity~~this ~~such~~uncertainty. The Company’s asboard ~~equity~~of ~~financings,~~directors adecided ~~new~~in ~~debt~~January ~~agreement~~2013 ~~with~~that ~~other~~the ~~creditors,~~Company ~~seek~~should consider its strategic alternatives orto ~~liquidate~~preserve ~~assets. However,~~and ~~the~~maximize ~~Company~~shareholder ~~cannot~~value, ~~assure~~which ~~that~~ultimately ~~any~~culminated ~~such~~in ~~additional~~the ~~sources~~execution of ~~liquidity~~a ~~would~~merger ~~be available on reasonable terms, if at all~~agreement.

~~The~~Due ~~initial~~to ~~term of~~ the ~~credit~~Company’s ~~facility~~declining ~~with~~revenues, ~~Rosenthal~~recurring ~~is through November 30~~losses, ~~2015~~limited liquidity and ~~can~~weakened befinancial ~~renewed~~position, ~~thereafter. The credit facility can be terminated by~~ the Company ormay ~~Rosenthal with at least 60 days, but~~ not ~~more~~be able ~~than~~to ~~120~~operate ~~days,~~long ~~notice~~enough ~~except~~to inexecute ~~case of a default, in which case~~ the ~~Company’s~~planned ~~lender can terminate the Agreement at any time~~merger.

Capital expenditures were approximately $~~123~~82 thousand ~~and~~during ~~$31 thousand for~~ the three ~~nine~~ months ended ~~November~~May 3031, 2012 ~~and 2011, respectively. The increase in capital expenditures~~ related ~~primarily~~ to purchases of tools, molds and dies associated with new ~~product development~~products. The Company had no capital expenditures during the three months ended May 31, 2013 and no material capital expenditure commitments as atof ~~November 30,~~that ~~2012~~date. However, certain of the Company’s machinery and equipment is old and fully depreciated. Itand it is possible that certain of the Company’s machinery and equipment could require replacement in the near future. Given the Company’s weakened financial position and limited liquidity, the Company may not be able to pay for or finance a replacement for such equipment and therefore may be forced to reduce or cease operations until it is able to replace any necessary equipment.

Inflation

The Company does not believe that inflation has had a material effect on the results of operations during the past two years. However, there can be no assurance that the Company’s business will not be affected by inflation in the remainder of fiscal ~~2013~~2014 and beyond.

Forward-Looking Information

The preceding “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section contains various “forward looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended, which represent the Company’s reasonable judgment concerning the future and are subject to risks and uncertainties that could cause the Company’s actual operating results and financial position to differ materially, including the following: the company’s costs and expenses incurred in connection with the merger with JOC North America, LLC, including potential class actions from third parties; the Company being able to ~~see~~close ~~continued~~the ~~progress~~merger in a timely manner; the Company’s expectation that it will continue to experience fluctuations in its sales, gross margins and profitability from quarter to quarter consistent with prior periods; the Company’s expectation that contingent liabilities will not have a material effect on the Company’s financial position or results of operations.

1513

its restructuring efforts, the timing of such restructuring efforts, and the fact that the restructuring efforts will result in positive financial results in the future; the Company’s expectation that it will continue to experience fluctuations in its sales, gross margins and profitability from quarter to quarter consistent with prior periods; the Company’s expectation that contingent liabilities will not have a material effect on the Company’s financial position or results of operations.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

As a smaller reporting company, as defined in Rule 12b-2 of the Securities Exchange Act of 1934, the Company is not required to provide the information required by this item.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures.

AsThe ~~of November 30, 2012, the~~ Company’s ~~carried~~management ~~out an evaluation, under the supervision and~~ (with the participation of ~~the Company’s~~our ~~management, including the Company’s~~ Chief Executive Officer and Chief Financial Officer,) ofevaluated the effectiveness of the ~~design and operation of the~~ Company’s disclosure controls and procedures, (as defined in ~~Rule~~ Rules 13a-15(e) and 15d-15(e) under of the Securities Exchange Act of 1934., ~~Based~~as onamended (the ~~evaluation~~“Exchange Act”)), ~~the~~as ~~Company’s~~of ~~Chief~~the ~~Executive~~quarter ~~Officer~~ended ~~and~~May 31, ~~Chief~~2013. ~~Financial~~Disclosure ~~Officer have concluded that the Company’s disclosure~~ controls and procedures are ~~effective~~designed to ensure that information required to be disclosed by the Company in the reports it files or submits under the ~~Securities~~ Exchange Act ~~of 1934~~ is recorded, processed, summarized and reported ~~within~~on ~~the~~a ~~time~~timely ~~periods~~basis ~~specified in Securities~~ and ~~Exchange~~that ~~Commission rules~~such ~~and~~information ~~forms and~~ is accumulated and communicated to ~~our~~ management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been or will be detected. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives.

~~Previously~~The ~~Reported~~Company’s ~~Material~~Chief ~~Weakness~~Executive inOfficer ~~Internal~~and ~~Control~~Chief ~~over~~ Financial ~~Reporting~~Officer concluded, based on their evaluation, that the Company’s disclosure controls and procedures are effective for the Company as of the end of the period covered by this report.

InChanges ~~connection with management’s assessment of our internal control over financial reporting for the August 31, 2012 reporting period, we identified a material weakness~~ in ~~our~~Internal ~~internal~~Control ~~control~~ over ~~financial~~Financial ~~reporting~~Reporting as of May 31, 2012 as described below. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.

WeThere ~~did~~have ~~not~~been ~~effectively~~no ~~maintain~~changes ain ~~sufficient~~our ~~level~~internal ofcontrol ~~resources~~over ~~within~~financial ~~our~~reporting ~~accounting~~(as ~~department,~~defined ~~which resulted~~ in aRule 13a-15(f) under ~~lack~~the ~~of separation~~Exchange ofAct) ~~duties~~that ~~between~~occurred during the ~~preparation~~quarter ~~and~~ended ~~review of adjustments necessary to properly state inventory as of~~ May 31, ~~2012.~~2013 Wethat ~~have~~materially ~~subsequently~~affected, ~~modified~~or ~~the~~are ~~preparation~~reasonably ~~and~~likely ~~review procedures relative~~ to ~~inventory~~materially ~~adjustments~~affect, ~~to address this deficiency in~~ our internal control ~~procedures,~~over ~~which~~financial ~~is how the error was identified by management~~reporting. We verified that the preparation and review of inventory adjustments were separated during each of the two fiscal quarters ended August 31, 2012 and November 30, 2012 and concluded that the material weakness was remediated.

As14 a result of the material weakness in internal control over financial reporting described above, we amended and restated our financial statements contained in our Quarterly Report on Form 10-Q for the three months ended May 31, 2012.

For additional information regarding the restatements of these financial results and the material weakness identified by management, see “Item 4. Controls and Procedures” in the Company’s Quarterly Report on Form 10-Q/A for the three months ended May 31, 2012, filed on October 4, 2012 with the Securities and Exchange Commission.

Changes in Internal Control Over Financial Reporting

Except for the remediation steps to address the material weakness in its internal control over financial reporting described above, there has been no change in the Company’s internal control over financial reporting that occurred during the Company’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting. Specifically, the preparation and review of the adjustment to record capitalized overhead and variances from standard costs has been separated to two different members of the Company’s accounting staff.

Under the direction of the Audit Committee, management verified that the preparation and review of inventory adjustments pertaining to capitalized overhead and variances from standard costs was separated and will continue to review and make any changes it deems necessary to the overall design of the Company’s internal control over financial reporting, including implementing improvements in policies and procedures.

PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Not applicable.

ITEM 1A. RISK FACTORS

Not applicable.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Not applicable.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. MINE SAFETY DISCLOSURE

Not applicable.

ITEM 5. OTHER INFORMATION

OnNot ~~January~~applicable ~~11, 2013, Paul D. Sonkin and Michael R. Haynes resigned as directors of the Company.~~

~~Mr.~~15 Sonkin informed us that he has accepted a position as a portfolio manager and as a result has decided that he should resign from the Board. Mr. Haynes resigned as well and has informed us that his resignation was a result of a request by his employer.

Large Accelerated Filer

Accelerated Filer

Non-Accelerated Filer

¨ (Do not check if a smaller reporting company)

Smaller reporting company

ITEM 6. EXHIBITS

Exhibit		Exhibit Title or Description
2.1		Agreement and Plan of Merger, dated May 17, 2013, by and among JOC North America LLC, JOCNA Inc. and Meade Instruments Corp. (incorporated by reference to Exhibit 2.1 of the Company’s Current Report on Form 8-K, as filed with the Securities and Exchange Commission on May 17, 2013
31.1		Rule 13a-14(a)/15d-14(a) Certification — Principal Executive Officer
31.2		Rule 13a-14(a)/15d-14(a) Certification — Principal Financial Officer
32.1		Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002 — Chief Executive Officer
32.2		Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002 — Chief Financial Officer
101.INS*		XBRL Instance Document
101.SCH*		XBRL Taxonomy Extension Schema Document
101.CAL*		XBRL Taxonomy Calculation Linkbase Document
101.DEF*		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*		XBRL Taxonomy Label Linkbase Document
101.PRE*		XBRL Taxonomy Presentation Linkbase Document

* As provided in Rule 406T of Regulation S-T, this information is deemed furnished and not filed for purposes of Sections 11 and 12 of the Securities Act of 1933, as amended, and Section 18 of the Securities Exchange Act of 1934, as amended.

1816

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	~~MEADE INSTRUMENTS CORP.~~	MEADE INSTRUMENTS CORP.
Dated: January 14, 2013	By:	/s/ STEVEN G. MURDOCK
Dated: July 16, 2013		By:	/s/ STEVEN G. MURDOCK
		~~Steven G. Murdock~~	Steven G. Murdock
		~~Chief Executive Officer~~	Chief Executive Officer
	~~By:~~	~~/s/ JOHN A. ELWOOD~~By:	/s/ JOHN A. ELWOOD
		~~John A. Elwood~~	John A. Elwood
		~~Senior Vice President – Finance and Administration~~	Senior Vice President – Finance and Administration
		~~Chief Financial Officer and Secretary~~	Chief Financial Officer and Secretary

1917

EXHIBIT INDEX

Exhibit		Exhibit Title or Description
2.1		Agreement and Plan of Merger, dated May 17, 2013, by and among JOC North America LLC, JOCNA Inc. and Meade Instruments Corp. (incorporated by reference to Exhibit 2.1 of the Company’s Current Report on Form 8-K, as filed with the Securities and Exchange Commission on May 17, 2013
31.1		Rule 13a-14(a)/15d-14(a) Certification — Principal Executive Officer
31.2		Rule 13a-14(a)/15d-14(a) Certification — Principal Financial Officer
32.1		Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002 — Chief Executive Officer
32.2		Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002 — Chief Financial Officer
101.INS*		XBRL Instance Document
101.SCH*		XBRL Taxonomy Extension Schema Document
101.CAL*		XBRL Taxonomy Calculation Linkbase Document
101.DEF*		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*		XBRL Taxonomy Label Linkbase Document
101.PRE*		XBRL Taxonomy Presentation Linkbase Document

2018

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