Precision Optics Corporation Announces First Quarter Results

Nov 10, 2004, 00:00 ET from Precision Optics Corporation, Inc.

    GARDNER, Mass., Nov. 10 /PRNewswire-FirstCall/ -- Precision Optics
 Corporation, Inc. (Nasdaq:   POCI) today announced operating results on an
 unaudited basis for the first quarter of fiscal year 2005 ended September 30,
     First Quarter Operating Results
     Revenues -- For the quarter ended September 30, 2004, revenues were
 $263,810 compared to $638,806 for the same period last year, a decrease of
 58.7%.  Revenues in the quarter decreased 7.6% sequentially from the preceding
 quarter.  The decrease in revenues is attributable to lower sales of
 endocouplers, endoscopes, and industrial lenses and couplers.
     Net Loss -- For the quarter ended September 30, 2004, net loss was
 $933,458 or $0.16 per basic and diluted share, including provisions for
 obsolete and slow moving inventories of $57,300. This was 46.7% more than the
 net loss of $636,449, or $0.36 per share, including provisions for obsolete
 and slow moving inventories of $62,900, for the same period last year. It was
 7.7% less than the net loss for the preceding quarter ended June 30, 2004,
 which was $1,011,525, or $0.58 per share, including provisions for obsolete
 and slow moving inventories of $191,200. The weighted average common shares
 outstanding in the quarters ended September 30, 2004 and 2003 were 5,979,832
 and 1,752,053, respectively.
     Cash Flow and Expenditures
     For the quarter ended September 30, 2004, the Company's cash used in
 operating activities was approximately $754,000, compared to approximately
 $592,000 for the previous quarter ended June 30, 2004.  The increased cash
 usage is attributable primarily to (1) lower cash collections in the quarter
 ended September 30, 2004, resulting from lower sales in that quarter and
 preceding quarters, and the timing of cash receipts from customers, and (2)
 the timing of payments to certain vendors, including approximately $104,000
 paid for expenses associated with the rights offering.
     Capital equipment expenditures during the quarter ended September 30, 2004
 were approximately $1,000, down 95% from the same period in 2003.  Future
 capital expenditures will depend on future sales and the success of ongoing
 research and development efforts.
     For the quarter ended September 30, 2004, research and development
 expenses were approximately $356,000, up 33% from $267,000 a year earlier.
 The level of future quarterly R&D expenses will ultimately depend on the
 Company's assessment of new product opportunities.
     The Company expects its recent pattern of quarter-to-quarter revenue
 fluctuations to continue, due to the uncertain timing of individual orders and
 their size in relation to total revenues. The Company continues to move
 forward with new products and technical innovations in particular, the
 development of a new prototype 2.7 mm endoscope, and new instruments utilizing
 the Company's new micro-precision(TM) lens technology (patent pending) for
 endoscopes under 1 mm.  The Company continues to explore potential
 applications of single-molecule technology and nanotechnology, as well as
 potential near-term applications of the Company's existing technologies in
 non-medical markets.
     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.  If these additional revenues are not achieved on a timely
 basis, the Company will be required and is prepared to implement further cost
 reduction measures, as necessary.
     About Precision Optics
     Precision Optics Corporation, a leading developer and manufacturer of
 advanced optical instruments since 1982, designs and produces high-quality
 optical thin film coatings, medical instruments, 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 is currently developing specialty instruments incorporating
 its patent-pending LENSLOCK(TM) technology which ensures lower cost, easier
 repairability and enhanced durability as well as ultra-small instruments (some
 with lenses less than one millimeter in diameter) utilizing patent-pending
 micro-precision(TM) lens technology. The Company is also exploring new
 initiatives in single-molecule technology and nanotechnology for biomedical
 and other applications.
     Precision Optics Corporation is certified to the ISO 9001 Quality
 Standard, 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 .
                           FOR THE THREE MONTHS ENDED
                   SEPTEMBER 30, 2004 AND SEPTEMBER 30, 2003
                                                          Three Months
                                                       Ended September 30,
                                                       2004           2003
     REVENUES                                        $263,810       $638,806
     COST OF GOODS SOLD                               356,015        586,263
       Gross Profit (Loss)                            (92,205)        52,543
     RESEARCH and DEVELOPMENT EXPENSES                356,406        267,070
       Total Operating Expenses                       853,845        696,400
       Operating Loss                                (946,050)      (643,857)
     INTEREST INCOME                                   12,592          7,454
     INTEREST EXPENSE                                       -            (46)
       Net Loss                                     $(933,458)     $(636,449)
     Basic and Diluted Loss Per Share                  $(0.16)        $(0.36)
     Weighted Average Common Shares Outstanding     5,979,832      1,752,053
                          CONSOLIDATED BALANCE SHEETS
     CURRENT ASSETS                      September 30, 2004      June 30, 2004
       Cash and Cash Equivalents              $4,733,474            $343,260
       Accounts Receivable, Net                  106,124              80,195
       Inventories, Net                          816,462             917,998
       Prepaid Expenses and Other Current Assets 125,268              80,646
       Deferred Financing Costs                        -             171,885
         Total Current Assets                  5,781,328           1,593,984
     PROPERTY AND EQUIPMENT                    4,201,147           4,199,835
       Less:  Accumulated Depreciation        (3,958,986)         (3,920,593)
              Net Property and Equipment         242,161             279,242
     OTHER ASSETS                                218,541             224,088
     TOTAL ASSETS                             $6,242,030          $2,097,314
     TOTAL CURRENT LIABILITIES                  $592,533            $593,342
       Common Stock, $.01 par value-
        Authorized -- 20,000,000 shares
        Issued and Outstanding - 7,008,212
        shares at September 30, 2004 and
        1,752,053 shares at June 30, 2004         70,082              17,521
       Additional Paid-in Capital             32,796,597          27,770,175
       Accumulated Deficit                   (27,217,182)        (26,283,724)
         Total Stockholders' Equity            5,649,497           1,503,972
      EQUITY                                  $6,242,030          $2,097,314
     Forward-looking statements contained in this news release, including those
 related to the Company's products under development and revenue estimates, 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; the risks associated with reliance on a few key customers; the
 Company's ability to regain and maintain compliance with requirements for
 continued listing on the NASDAQ SmallCap Market; 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, 2004.

SOURCE Precision Optics Corporation, Inc.