8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(D) OF THE

THE SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported):

May 15, 2007

PRECISION OPTICS CORPORATION, INC.

(Exact name of registrant as specified in its charter)

Massachusetts	001-10647	04-2795294
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(I.R.S. Employer Identification No.)

22 East Broadway, Gardner, Massachusetts 01440

(Address of Principal Executive Offices) (Zip Code)

Registrant’s telephone number, including area code:(978) 630-1800

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

oWritten communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

oSoliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

oPre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

oPre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition.

On May 15, 2007, the Registrant issued the press release attached as Exhibit 99.1 announcing operating results on an unaudited basis for the third quarter of fiscal year 2007 ended March 31, 2007. The information in this Form 8-K and the Exhibit attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.

Item 9.01. Financial Statements and Exhibits.

(c) Exhibit Number Title

99.1 Press Release issued by Precision Optics Corporation, Inc. on May 15, 2007.

SIGNATURE

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 hereunto duly authorized.

	PRECISION OPTICS CORPORATION, INC.
Date: May 16, 2007	By:	/s/ Richard E. Forkey
		Name: Richard E. Forkey
		Title:Chief Executive Officer, President and Treasurer

EXHIBIT INDEX

Exhibit Number	Description
99.1	Press Release issued by Precision Optics Corporation, Inc. on May 15, 2007.

EX-99.1

Exhibit 99.1

PRECISION OPTICS CORPORATION 22 EAST BROADWAY GARDNER, MASSACHUSETTS 01440-3338 Telephone 978 / 630-1800 Telefax 978 / 630-1487

POC: 27-0169

Page 1 of 4     

NEWS RELEASE
FOR IMMEDIATE RELEASE	Tuesday, May 15, 2007

PRECISION OPTICS CORPORATION ANNOUNCES

THIRD QUARTER RESULTS

GARDNER, Massachusetts - Precision Optics Corporation, Inc. (OTC Bulletin Board: POCI.OB), (the “Company”) today announced operating results on an unaudited basis for the third quarter of fiscal year 2007 ended March 31, 2007.

Third Quarter Operating Results

Revenues - For the quarter ended March 31, 2007, revenues were $467,199 compared to $646,077 for the quarter ended March 31, 2006, a decrease of 28%. The decrease was primarily the result of lower sales of the Company’s traditional medical products which was due, in part, to start-up efforts associated with the initial production and shipment of an advanced surgical visualization system for a significant new customer. Small initial shipments were made to the new customer in the third quarter of fiscal year 2007, with the balance of the order expected to be delivered over the next 2 fiscal quarters.

Net Loss - For the quarter ended March 31, 2007, net loss was $843,911, or $0.04 per share, an increase of $361,738 from the net loss of $482,173 or $0.07 per share, for the quarter ended March 31, 2006. The increase is primarily a result of start-up efforts associated with the initial production of an advanced surgical visualization system, lower sales volumes of the Company’s traditional products, a non-cash charge of $42,789 related to stock-based compensation expense following the adoption of Statement of Financial Accounting Standards No. 123 revised (SFAS No. 123(R)) on July 1, 2006, along with increased R&D expenses, sales and marketing activities and higher professional fees. The weighted average common shares outstanding for the quarters ended March 31, 2007 and 2006 were 22,124,879 and 7,008,212, respectively.

Cash Flow and Expenditures- For the quarter ended March 31, 2007, cash and cash equivalents increased by $1,558,869 compared to a decrease of $416,437 for the same period last year. The increase in cash and cash equivalents was due primarily from the receipt of net proceeds of $2,391,676 from a private placement of the Company’s common stock and warrants in February 2007, offset by cash used in operating activities.

For the quarter ended March 31, 2007, research and development expenses were $323,410, increasing $103,736 from the quarter ended March 31, 2006. These expenses include a shift from previous activities aimed at the development of new technologies to applications of these technologies for customer-driven product development. The level of future quarterly R&D expenses will ultimately depend on the Company’s assessment of new product opportunities and available cash resources.

Selling, general and administrative expenses increased by $195,411, or 50%, for the quarter ended March 31, 2007 compared to the quarter ended March 31, 2006. This increase was primarily a result of a non-cash charge of $42,789 related to stock-based compensation expense following the adoption of SFAS No. 123(R) on July 1, 2006, along with enhanced sales and marketing activities focused on increasing sales of recently developed products and higher professional fees.

Precision Optics Corporation—Third Quarter Results Page 2 of 4

Outlook

The Company expects its recent pattern of quarter-to-quarter revenue fluctuations to continue, due to the uncertain timing of orders from customers and their size in relation to total revenues. The Company continues to move forward with new products and technical innovations. The Company believes that the recent introduction of several new products, along with new and ongoing customer relationships, will generate additional revenues, which are required in order for the Company to achieve profitability. In the coming months the Company will continue to focus its efforts on marketing products recently introduced or redesigned. The Company believes that these marketing activities, if successful, may result in the overall growth of sales.

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—Third 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, 2007 AND 2006

(UNAUDITED)

	Three Months Ended March 31,						Nine Months Ended March 31,
	2007			2006			2007			2006
REVENUES	$	467,199		$	646,077		$	1,365,636		$	1,576,459
COST OF GOODS SOLD		419,849			527,027			1,119,749			1,364,054
Gross Profit		47,350			119,050			245,887			212,405
RESEARCH and DEVELOPMENT EXPENSES ,net		323,410			219,674			966,887			853,672
SELLING, GENERAL and ADMINISTRATIVE EXPENSES		581,222			385,811			1,610,238			1,222,543
GAIN ON SALE OF FIXED ASSETS		-			-			-			(165,700	)
Total Operating Expenses		904,632			605,485			2,577,125			1,910,515
Operating Loss		(857,282	)		(486,435	)		(2,331,238	)		(1,698,110	)
INTEREST INCOME		13,371			4,262			35,965			19,672
Net Loss	$	(843,911	)	$	(482,173	)	$	(2,295,273	)	$	(1,678,438	)
Basic and Diluted Loss Per Share	$	(0.04	)	$	(0.07	)	$	(0.13	)	$	(0.24	)
Weighted Average Common Shares Outstanding - Basic and Diluted		22,124,879			7,008,212			17,680,434			7,008,212

Precision Optics Corporation—Third Quarter Results Page 4 of 4

PRECISION OPTICS CORPORATION, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

ASSETS
	March 31, 2007			June 30, 2006
CURRENT ASSETS
Cash and Cash Equivalents	$	2,111,159		$	2,030,428
Accounts Receivable, net		207,647			381,097
Inventories, net		996,991			445,802
Prepaid Expenses		80,601			45,912
Total Current Assets		3,396,398			2,903,239
PROPERTY AND EQUIPMENT
Machinery and Equipment		3,552,820			3,513,736
Leasehold Improvements		553,596			553,596
Furniture and Fixtures		138,842			93,545
Vehicles		42,343			42,343
		4,287,601			4,203,220
Less: Accumulated Depreciation		(4,131,457	)		(4,127,287	)
Net Property and Equipment		156,144			75,933
OTHER ASSETS
Cash surrender value of life insurance policies		4,438			13,246
Patents, net		273,890			236,115
Total Other Assets		278,328			249,361
TOTAL ASSETS	$	3,830,870		$	3,228,533
LIABILITIES AND STOCKHOLDERS' EQUITY
TOTAL CURRENT LIABILITIES		957,982			588,636
STOCKHOLDERS' EQUITY
Common Stock, $.01 par value-
Authorized -- 50,000,000 shares
Issued and Outstanding -25,458,212 shares
at March 31, 2007 and 15,458,212 shares
at June 30, 2006		254,582			154,582
Additional Paid-in Capital		37,158,136			34,729,873
Accumulated Deficit		(34,539,830	)		(32,244,558	)
Total Stockholders' Equity		2,872,888			2,639,897
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY	$	3,830,870		$	3,228,533

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, 2006.

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