GARDNER, Mass., May 9 /PRNewswire-FirstCall/ -- Precision Optics Corporation, Inc. (Nasdaq: POCI) today announced operating results on an unaudited basis for the third quarter of fiscal year 2005 ended March 31, 2005. Third Quarter Operating Results Revenues - For the quarter ended March 31, 2005, revenues were $326,272 compared to $313,698 for the same period last year, an increase of 4.0%. Revenues in the quarter decreased 17.9% from the preceding quarter ended December 31, 2004. Net Loss - For the quarter ended March 31, 2005, net loss was $819,916, or $0.12 per share, an improvement of $197,396 in spite of nearly flat revenues, from the net loss of $1,017,312, or $0.58 per share, for the same period last year. Net loss included provisions for obsolete and slow moving inventories of $38,650 and $124,700 for the quarters ended March 31, 2005 and 2004, respectively. The weighted average common shares outstanding for the quarters ended March 31, 2005 and 2004 were 7,008,212 and 1,752,053, respectively. Nine Months Operating Results Revenues - For the nine months ended March 31, 2005, revenues were $987,604 compared to $1,179,388 for the same period last year, a decrease of 16.3%. Net Loss - For the nine months ended March 31, 2005, net loss was $2,574,253, or $0.39 per share, an improvement of $98,298 in spite of lower revenues, compared to the net loss of $2,672,551, or $1.53 per share, for the nine months ended March 31, 2004. Net loss included provisions for obsolete and slow-moving inventories of $187,650 and $308,800 for the nine months ended March 31, 2005 and 2004, respectively. The weighted average common shares outstanding for the nine months ended March 31, 2005 and 2004 were 6,662,916 and 1,752,053, respectively. Cash Flow and Expenditures For the quarter ended March 31, 2005, the Company's cash used in operating activities was $779,329, compared to $753,564 for the previous quarter ended December 31, 2004. The increase was due primarily to the lower revenues in the quarter ended March 31, 2005. Capital equipment expenditures for the nine months ended March 31, 2005 were $28,813, down 9.4% from the same period in 2004. Future capital expenditures will depend on future sales and the success of ongoing research and development efforts. For the quarter ended March 31, 2005, research and development expenses were $330,743, down 12.9% from $379,518 a year earlier. The decrease reflects a shift in certain resources to customer-sponsored development efforts in the quarter (the costs of which are included in cost of goods sold), resulting in initial shipments of new products to several customers. The level of future quarterly R&D expenses will ultimately depend on the Company's assessment of new product opportunities. Customer Relationships During the quarter and nine months ended March 31, 2005, the Company's revenues included initial shipments to several new customers of optical lenses and instruments that utilize the Company's patent-pending micro-precision lens(TM) technology for applications that encompass a variety of innovative techniques involving minimally invasive surgery. The Company delivered prototypes to a new customer of specialized lens systems for use in an advanced night vision application and also provided thin film coatings to two other new customers for use in environmental monitoring and advanced laser instrumentation applications. These new initiatives accounted for approximately 15% of total Company revenues in each of the quarter and nine months ended March 31, 2005. 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, 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. 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 we believe may result in 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 http://www.poci.com . PRECISION OPTICS CORPORATION, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2005 AND 2004 (UNAUDITED) Three Months Nine Months Ended March 31, Ended March 31, 2005 2004 2005 2004 REVENUES $326,272 $313,698 $987,604 $1,179,388 COST OF GOODS SOLD 369,232 467,178 1,298,187 1,514,966 Gross Profit (Loss) (42,960) (153,480) (310,583) (335,578) RESEARCH and DEVELOPMENT 330,743 379,518 910,218 980,694 SELLING, GENERAL and ADMINISTRATIVE EXPENSES 459,284 436,666 1,393,450 1,320,324 PROVISION FOR RESTRUCTURING - 52,208 - 52,208 Total Operating Expenses 790,027 868,392 2,303,668 2,353,226 Operating Loss (832,987) (1,021,872) (2,614,251) (2,688,804) INTEREST INCOME 13,071 4,560 39,998 16,302 INTEREST EXPENSE - - - (49) Net Loss $(819,916) $(1,017,312) $(2,574,253) $(2,672,551) Basic and Diluted Loss Per Share $(0.12) $(0.58) $(0.39) $(1.53) Weighted Average Common Shares Outstanding 7,008,212 1,752,053 6,662,916 1,752,053 PRECISION OPTICS CORPORATION, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED) ASSETS March 31, 2005 June 30, 2004 CURRENT ASSETS Cash and Cash Equivalents $3,037,921 $343,260 Accounts Receivable, Net 137,606 80,195 Inventories 798,228 917,998 Prepaid Expenses 101,975 80,646 Deferred Financing Costs - 171,885 Total Current Assets 4,075,730 1,593,984 PROPERTY AND EQUIPMENT 4,228,648 4,199,835 Less: Accumulated Depreciation (4,048,133) (3,920,593) Net Property and Equipment 180,515 279,242 OTHER ASSETS 222,472 224,088 TOTAL ASSETS $4,478,717 $2,097,314 LIABILITIES AND STOCKHOLDERS' EQUITY TOTAL CURRENT LIABILITIES $515,015 $593,342 STOCKHOLDERS' EQUITY Common Stock, $.01 par value- Authorized -- 20,000,000 shares Issued and Outstanding - 7,008,212 shares at March 31, 2005 and 1,752,053 shares at June 30, 2004 70,082 17,521 Additional Paid-in Capital 32,751,597 27,770,175 Accumulated Deficit (28,857,977) (26,283,724) Total Stockholders' Equity 3,963,702 1,503,972 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $4,478,717 $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 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.