EX-99.1 2 v043003_ex99-1.htm
EXHIBIT 99.1
 
PRECISION OPTICS CORPORATION
22 EAST BROADWAY
GARDNER, MASSACHUSETTS 01440-3338
Telephone 978 / 630-1800
Telefax 978 / 630-1487
NEWS RELEASE
Page 1 of 4
FOR IMMEDIATE RELEASE
May 11, 2006

PRECISION OPTICS CORPORATION ANNOUNCES Q3 RESULTS -
CONTINUED QUARTERLY SALES GROWTH WITH 116%
YEAR-OVER-YEAR INCREASE

GARDNER, Massachusetts - Precision Optics Corporation, Inc. (OTC Bulletin Board: POCI) today announced operating results on an unaudited basis for the third quarter of fiscal year 2006 ended March 31, 2006.
 
Over the last few years, POC has developed new patented or patent pending, proprietary products and technologies including micro-precision™ technologies, for use in fabricating cost effective micro-optics — lenses, prisms, and optical assemblies smaller than 1 mm, as well as Lenslock™ technology, for the production of endoscopes with significant advantages over the current industry standards. The recent introduction of these and other new products has resulted in continuous quarter-over-quarter sales growth for the last four quarters, with sales in Q3 surpassing $700,000 for the first time in 12 quarters.

Third Quarter Operating Results
 
Revenues - For the quarter ended March 31, 2006, revenues were $704,010 compared to $529,195 for the preceding quarter and $326,272 for the same period last year, representing increases of 33% and 116%, respectively. For the nine months ended March 31, 2006 revenues improved 67% over the same period in the previous year.

Net Loss - For the quarter ended March 31, 2006, net loss was $482,175 or $0.07 per share, an improvement of $337,741 from the net loss of $819,916 or $.12 per share, for the same period last year. The net loss in the quarter was an improvement of $154,217 from the net loss of $636,392 in the preceding quarter ended December 31, 2005. The weighted average common shares outstanding for each of the quarters ended March 31, 2006 and 2005 was 7,008,212.

Cash Flow and Expenditures - For the quarter ended March 31, 2006, cash and cash equivalents decreased by $416,437 compared to a decrease of $722,866 for the previous quarter ended December 31, 2005.

For the quarter ended March 31, 2006, research and development expenses were $130,267 down 61% from $330,743 a year earlier. The level of future quarterly R&D expenses will ultimately depend on the Company’s assessment of new product opportunities and available cash resources.

Expense Reduction - Selling, general and administrative expenses of $382,284 decreased by $77,000 or 17% for the quarter ended March 31, 2006 compared to the same period last year. The achieved savings are from actions the Company initiated in the quarters ending June 30, 2005 and September 30, 2005, reducing professional fees, changing the CFO role to part-time, and through reduced premiums from changing the Company’s general insurance provider, partially offset by an increase in consulting fees.

Customer Relationships
 
The Company has continued development of its new line of endoscopes based on unique, patent pending Lenslock™ technology. Having completed the prototype development effort, and delivery of initial production orders, the Company is in discussions with a number of endoscopy market leaders who could provide significant new sales opportunities.

Precision Optics Corporation—3rd Quarter Results
Page 2 of 4
 
The Company is actively pursuing opportunities in the area of micro-precision™ optics and continues to manufacture ultra-small lenses, prisms, and assemblies with sizes ranging from 0.2 mm to 1 mm. In addition to ongoing customers, the Company received a number of new orders for these micro-optics in Q3 and is also in discussions with several other customers regarding manufacturing of prototypes of similar products. These optical components and instruments utilize a variety of innovative techniques including the Company’s patent-pending micro-precisionTM lens technology.

The Company has recently completed a partnership effort for the proprietary development of a new class of night vision lenses including a new patent-pending eyepiece lens. With prototypes completed, the product incorporating the Company’s new night vision lenses is currently being evaluated for need and use, including field testing. The Company cannot control the timing of current evaluations and cannot therefore predict when, if ever, its developed prototypes in night vision lenses might begin to generate revenue. Should the Company’s customer secure orders for its night vision system, the partnership agreement ensures the Company will either be contracted to manufacture the new lenses, or will receive royalties on lenses manufactured elsewhere.

Outlook
 
In the coming months the Company will continue to focus its efforts on marketing products recently introduced. Development expenses may thus be reduced in several areas, allowing the Company to realize improved margins.

Subsequent Event
 
On April 13, 2006 the Company completed a private placement of its common stock, raising proceeds of $2,112,500 less customary transaction expenses, including professional fees associated with the private placement and the subsequent registration of the common stock under the Securities Act of 1933, as amended.
 
About Precision Optics

Precision Optics Corporation, a leading developer and manufacturer of advanced optical instruments since 1982, designs and produces high-quality medical instruments, optical thin film coatings, and other advanced optical systems. The Company’s medical instrumentation line includes laparoscopes, arthroscopes and endocouplers and a world-class product line of 3-D endoscopes for use in minimally invasive surgical procedures.

The Company continues to advance products through technical innovation, including development of: the next generation (patent pending) of 3-D endoscopes; the extension of Lenslock™ technology (patent pending) to its entire line of endoscopes; instrumentation utilizing the Company’s micro-precision™ lens technology (patent pending) for optical components; assemblies and endoscopes under 1 mm.

Precision Optics Corporation is registered to ISO 9001:2000, ISO 13485:2003, and CMDCAS Quality Standards, and complies with the FDA Good Manufacturing Practices and the European Union Medical Device Directive for CE Marking of its medical products. The Company’s Internet Website is www.poci.com.  

Precision Optics Corporation—3rd Quarter Results
Page 3 of 4
 
PRECISION OPTICS CORPORATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED
MARCH 31, 2006 AND 2005
(UNAUDITED)

   
Three Months
Ended March 31,
  
Nine Months
Ended March 31,
  
   
2006
  
2005
  
2006
  
2005
  
                   
REVENUES
  
$
704,010
  
$
326,272
  
$
1,652,788
  
$
987,604
  
                   
COST OF GOODS SOLD
    
677,896
    
369,232
    
1,686,520
    
1,298,187
  
                   
Gross Profit / (Loss)
   
26,114
   
(42,960
)
  
(33,732
)
  
(310,583
)
                   
RESEARCH and DEVELOPMENT
    
130,267
    
330,743
    
607,537
    
910,218
  
SELLING, GENERAL and
                  
ADMINISTRATIVE EXPENSES
    
382,284
    
459,284
    
1,222,542
    
1,393,450
  
                   
GAIN ON SALE OF ASSETS
    
-
    
-
    
165,700
    
-
  
                   
Total Operating Expenses
    
512,551
    
790,027
    
1,664,379
    
2,303,668
  
                   
Operating Loss
    
(486,437
)
  
(832,987
)
  
(1,698,111
)
  
(2,614,251
)
                   
INTEREST INCOME
    
4,262
    
13,071
    
19,673
    
39,998
  
                   
Net Loss
    
($482,175
)
  
($819,916
)
  
($1,678,438
)
  
($2,574,253
)
                   
Basic and Diluted Loss Per Share
    
($0.07
)
  
($0.12
)
  
($0.24
)
  
($0.39
)
                   
Weighted Average Common Shares
Outstanding Basic and Diluted
   
7,008,212
    
7,008,212
    
7,008,212
    
6,662,916
  

Precision Optics Corporation—3rd Quarter Results
Page 4 of 4

PRECISION OPTICS CORPORATION, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
 
ASSETS
         
           
CURRENT ASSETS
  
March 31, 2006
  
June 30, 2005
  
Cash and Cash Equivalents
  
$
493,015
  
$
2,171,693
  
Accounts Receivable, net
    
434,144
    
177,031
  
Inventories, net
    
552,090
    
599,619
  
Prepaid Expenses
    
64,849
    
62,422
  
Total Current Assets
    
1,544,098
    
3,010,765
  
               
PROPERTY AND EQUIPMENT
   
4,192,156
    
4,231,975
  
Less: Accumulated Depreciation
    
(4,129,290
)
  
(4,092,202
)
Net Property and Equipment
    
62,866
    
139,773
  
               
OTHER ASSETS
             
Total Other Assets
    
223,708
    
218,067
  
TOTAL ASSETS
  
$
1,830,672
  
$
3,368,605
  
               
 
LIABILITIES AND STOCKHOLDERS' EQUITY
  
           
CURRENT LIABILITIES
 
$
659,515
  
$
519,010
  
               
STOCKHOLDERS' EQUITY
              
Common Stock, $.01 par value-
              
Authorized -- 20,000,000 shares
              
Issued and Outstanding - 7,008,212 shares
              
at December 31, 2005 and at June 30, 2005
    
70,082
    
70,082
  
Additional Paid-in Capital
    
32,751,597
    
32,751,597
  
Accumulated Deficit
    
(31,650,522
)
  
(29,972,084
)
Total Stockholders' Equity
    
1,171,157
    
2,849,595
  
               
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY
  
$
1,830,672
  
$
3,368,605
  
 
Forward-looking statements contained in this news release, including those related to the future success of Company’s newly released products and products under development are made under "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995 and involve a number of risks and uncertainties that could materially affect future results. These risks and uncertainties, many of which are not within the Company’s control, include, but are not limited to, the uncertainty and timing of the successful development of the Company’s new products; decisions by customers to place orders for the Company’s products; the risks associated with reliance on a few key customers; the Company’s ability to attract and retain personnel with the necessary scientific and technical skills; the timing and completion of significant orders; the timing and amount of the Company’s research and development expenditures; the timing and level of market acceptance of customers’ products for which the Company supplies components; performance of the Company’s vendors; the ability of the Company to control costs associated with performance under fixed price contracts; the continued availability to the Company of essential supplies, materials and services; and the other risk factors and cautionary statements listed from time to time in the Company's periodic reports filed with the Securities and Exchange Commission, including but not limited to, the Company's Annual Report on Form 10-KSB for the year ended June 30, 2005.
 
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