Precision Optics Reports Fourth Quarter and Fiscal Year 2019 Financial Results

Conference Call Scheduled for today, September 26, 2019 at 5:00pm ET

News provided by

Sep 26, 2019, 16:30 ET

GARDNER, Mass., Sept. 26, 2019 /PRNewswire/ -- Precision Optics Corporation, Inc. (OTCQB: PEYE), a leading designer and manufacturer of advanced optical instruments for the medical and defense industries, announced operating results on an unaudited basis for its fourth quarter and fiscal year ended June 30, 2019.

Fourth quarter fiscal 2019 highlights:

Revenue for the quarter (ended June 30, 2019) was $2.4 million compared to $1.5 million in the same quarter of the previous fiscal year, an increase of 63% driven primarily by an increase in production revenue for medical devices that incorporate the Company's Microprecision™ technology, as well as one month of contribution from Ross Optical.
Ross Optical contributed $656,000 to Precision Optics' revenue during the month of June 2019.
Production revenue was $912,000 in the quarter, an increase of 18% compared to $770,000 in the same quarter of the previous fiscal year.
Gross margins of 36% in the quarter continued to improve sequentially for the second consecutive quarter.
Net loss of $109,000 during the quarter included $128,000 of business acquisition expenses and $117,000 of stock-based compensation.

Fiscal year 2019 highlights:

Revenue for the fiscal year (ended June 30, 2019) was $6.8 million compared to $4.0 million in the previous fiscal year, an increase of 69%.
Production revenue during the fiscal year increased 140% to $3.7 million compared to $1.5 million in the previous fiscal year.
Excluding the one-month contribution from Ross Optical, the fiscal year revenue was $6.1 million, an increase of 52% compared to the previous fiscal year.

Pro forma (assuming a full year of Ross Optical) financial highlight:

For the 12 months of fiscal year 2019 (ended June 30, 2019), pro forma financial results show a combined organization (Precision Optics and Ross Optical) with $10.5 million in sales and gross margin of approximately 36%.

Precision Optics' CEO, Joseph Forkey, commented, "Our financial results from the fourth quarter and from fiscal year 2019 overall, continue to demonstrate the success of our business model. By utilizing our proprietary optical technology to develop and manufacture state-of-the art custom medical imaging products, we enable the world's leading medical device companies to bring next generation, minimally invasive devices and 3D surgical robotic systems to market. The transition of a number of these Precision Optics enabled projects to commercialization by our customers drove a 140% increase in production revenues during fiscal 2019. Based on order visibility on currently commercialized products, as well as expected near-term commercialization of products currently in our pipeline, we believe fiscal 2020 should be another strong year for Precision Optics."

Dr. Forkey continued, "Fiscal 2019 was a milestone year for us also because of the acquisition of Ross Optical Industries. We completed this acquisition – the first ever for Precision Optics - on July 1^st. One of the benefits of the acquisition is that it expands our readily accessible customer base, particularly in the defense industry, where we believe there are opportunities for use of our Microprecision™ micro optics and imaging systems. The acquisition also extends our product offering to include a wider range of lens and optical system sizes, drives economies of scale within our organization, and allows the combined company to leverage our technical proficiency in offering end-to-end solutions to the expansive Ross Optical customer base. We look forward to the many opportunities we believe are available to drive further growth and efficiencies in 2020 and beyond."

The following table summarizes the fourth quarter (unaudited) and year results for the periods ended June 30, 2019 and 2018:

	Three Months Ended June 30,				Year Ended June 30,
	2019		2018		2019		2018
Revenues	$	2,380,406	$	1,460,932	$	6,804,169	$	4,038,048

Gross Profit		848,313		558,801		2,122,478		1,481,918

Stock Compensation Expenses		105,990		10,339		462,093		43,672
Business Acquisition Expenses		128,111		-		128,111		-
Other		722,189		530,145		2,144,817		1,786,865
Total Operating Expenses		956,290		540,484		2,735,021		1,830,537

Operating Income (Loss)		(107,977)		18,317		(612,543)		(348,619)

Net Income (Loss)		(109,155)		16,992		(614,871)		(351,390)

Income (Loss) Per Share:
Basic and Diluted	$	(0.01)	$	0.00	$	(0.05)	$	(0.04)

Weighted Average Common Shares Outstanding:
Basic and Diluted		12,061,710		10,131,007		11,486,079		9,826,151

Conference Call Details
The Company has scheduled a conference call to discuss the fiscal year end and fourth quarter 2019 financial results for Thursday, September 26, 2019 at 5:00 p.m. EDT.

Call-in Information: Interested parties can access the conference call by dialing (877) 317-6789 or (412) 317-6789.

Live Webcast Information: Interested parties can access the conference call via a live Internet webcast, which is available at https://www.webcaster4.com/Webcast/Page/2109/31676.

Replay: A teleconference replay of the call will be available until October 3, 2019 at (877) 344-7529 or (412) 317-0088, confirmation #10135010. A webcast replay will be available at https://www.webcaster4.com/Webcast/Page/2109/31676.

About Precision Optics Corporation
Precision Optics Corporation enables innovation in minimally invasive surgery, diagnostics and treatment through optics and photonics. Precision Optics Corporation has been a leading developer and manufacturer of advanced optical instruments since 1982. Using proprietary optical technologies, the Company designs and produces next generation medical instruments, Microprecision™ micro-optics with characteristic dimensions less than 1 millimeter, and other advanced optical systems for market-leading medical device companies. The Company's innovative medical instrumentation line includes state-of-the-art endoscopes and endocouplers as well as custom illumination and imaging products for use in minimally invasive surgical procedures. The Company believes that current advances in its proprietary micro-optics and 3D imaging technologies present significant opportunities for expanding applications to numerous potential medical products and procedures. The Company's website is www.poci.com. Investors can find Real-Time Quotes and market information for the Company on www.otcmarkets.com/stock/PEYE/quote.

About Forward-Looking Statements
This press release contains forward-looking statements. Forward-looking statements include, but are not limited to, statements that express the Company's intentions, beliefs, expectations, strategies, predictions or any other statements related to the Company's future activities or future events or conditions. These statements are based on current expectations, estimates and projections about the Company's business based, in part, on assumptions made by the Company's management. These statements are not guarantees of future performances and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in the forward-looking statements due to numerous factors, including those risks discussed in the Company's annual report on Form 10-K and in other documents that we file from time to time with the SEC. Any forward-looking statements speak only as of the date on which they are made, and the Company does not undertake any obligation to update any forward-looking statement, except as required by law.

Company Contact:
PRECISION OPTICS CORPORATION
22 East Broadway
Gardner, Massachusetts 01440-3338
Telephone: 978-630-1800

Investor Contact:
LYTHAM PARTNERS, LLC
Robert Blum
Phoenix | New York
Telephone: 602-889-9700
[email protected]

Following are the Company's Consolidated Balance Sheets at June 30, 2019 and June 30, 2018, and Statements of Operations, Stockholders' Equity and Cash Flows for the years ended June 30, 2019 and 2018:



PRECISION OPTICS CORPORATION, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AT JUNE 30,

	2019		2018
ASSETS
Current Assets:
Cash and cash equivalents	$	2,288,426	$	402,738
Accounts receivable (net of allowance for doubtful accounts of $246,953 at June 30, 2019 and $232,500 at June 30, 2018)		2,165,107		796,923
Inventories		1,734,604		1,144,068
Prepaid expenses		180,336		70,991
Total current assets		6,368,473		2,414,720

Fixed Assets:
Machinery and equipment		2,748,715		2,511,638
Leasehold improvements		668,446		553,596
Furniture and fixtures		168,450		148,303
		3,585,611		3,213,537
Less—Accumulated depreciation and amortization		3,202,605		3,164,051
Net fixed assets		383,006		49,486

Patents, net		54,087		47,275
Goodwill		687,664		–

TOTAL ASSETS	$	7,493,230	$	2,511,481

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of capital lease obligation	$	9,572	$	8,962
Accounts payable		1,174,263		703,538
Customer advances		450,192		857,842
Accrued compensation and other		533,944		362,502
Amount due for business acquisition		1,443,341		–
Total current liabilities		3,611,312		1,932,844

Capital lease obligation, net of current portion		5,027		14,601
Acquisition earn out liability		500,000		–

Stockholders' Equity:
Common stock, $0.01 par value: 50,000,000 shares authorized; issued and outstanding – 12,071,139 shares at June 30, 2019 and 10,197,139 shares at June 30, 2018		120,712		101,972
Additional paid-in capital		48,893,172		45,484,186
Accumulated deficit		(45,636,993)		(45,022,122)
Total stockholders' equity		3,376,891		564,036

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	7,493,230	$	2,511,481




PRECISION OPTICS CORPORATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED JUNE 30,

	2019		2018

Revenues	$	6,804,169	$	4,038,048
Cost of goods sold		4,681,691		2,556,130

Gross profit		2,122,478		1,481,918

Research and development expenses, net		505,300		456,377
Selling, general and administrative expenses		2,101,610		1,374,160
Business acquisition expenses		128,111		–
Total operating expenses		2,735,021		1,830,537

Operating loss		(612,543)		(348,619)

Interest expense		(1,416)		(1,859)

Loss before provision for income taxes		(613,959)		(350,478)

Provision for income taxes		912		912

Net loss	$	(614,871)	$	(351,390)

Loss per share:
Basic and fully diluted	$	(0.05)	$	(0.04)

Weighted average common shares outstanding:
Basic and fully diluted		11,486,079		9,826,151




PRECISION OPTICS CORPORATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED JUNE 30,

	Number of Shares		Common Stock		Additional Paid-in Capital		Accumulated Deficit		Total Stockholders' Equity

Balance, July 1, 2017		8,872,916	$	88,729	$	45,140,383	$	(44,670,732)	$	558,380
Proceeds from private placement of common stock, net of issuance costs of $2,963		555,556		5,556		241,482		–		247,038
Proceeds from exercise of stock purchase warrants		666,667		6,667		–		–		6,667
Issuance of common stock for consulting services		102,000		1,020		49,980		–		51,000
Stock-based compensation		–		–		52,341		–		52,341
Net loss		–		–		–		(351,390)		(351,390)
Balance, June 30, 2018		10,197,139	$	101,972	$	45,484,186	$	(45,022,122)	$	564,036

Proceeds from private placement of common stock, net of issuance costs of $12,250		1,600,000		16,000		1,971,750		–		1,987,750
Proceeds from exercise of stock options		74,000		740		53,160		–		53,900
Issuance of common stock for services		200,000		2,000		208,000		–		210,000
Proceeds from private placement of common stock subscribed, net of estimated issuance costs of $12,250		–		–		912,750		–		912,750
Stock-based compensation		–		–		263,326		–		263,326
Net loss		–		–		–		(614,871)		(614,871)
Balance, June 30, 2019		12,071,139	$	120,712	$	48,893,172	$	(45,636,993)	$	3,376,891




PRECISION OPTICS CORPORATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JUNE 30,

	2019		2018
Cash Flows from Operating Activities:
Net loss	$	(614,871)	$	(351,390)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities-
Depreciation and amortization		38,554		27,216
Provision for doubtful accounts receivable		8,083		227,500
Stock-based compensation expense		473,326		52,341
Non-cash consulting expense		–		2,400
Changes in operating assets and liabilities, net of effects of business acquisition-
Accounts receivable		(723,369)		(555,875)
Inventories		137,510		(88,621)
Prepaid expenses		(106,456)		(15,006)
Accounts payable		69,365		48,580
Customer advances		(432,000)		677,705
Accrued compensation and other		118,165		75,807
Net cash provided by (used in) operating activities		(1,031,693)		100,657

Cash Flows from Investing Activities:
Cash acquired in business acquisition, net of $56,659 paid at year end		106,545		–
Additional patent costs		(6,812)		(17,189)
Purchases of fixed assets		(140,038)		(4,448)
Net cash used in investing activities		(40,305)		(21,637)

Cash Flows from Financing Activities:
Payment of capital lease obligation		(8,964)		(8,392)
Gross proceeds from private placements of common stock		2,925,000		210,001
Gross proceeds from exercise of stock options and warrants		53,900		6,667
Private placement expenses paid		(12,250)		(2,963)
Net cash provided by financing activities		2,957,686		205,313

Net increase in cash and cash equivalents		1,885,688		284,333
Cash and cash equivalents, beginning of year		402,738		118,405

Cash and cash equivalents, end of year	$	2,288,426	$	402,738

Supplemental disclosure of cash flow information:
Cash paid during the year for income taxes	$	912	$	912

Supplemental disclosure of non-cash financing activities:
Issuance of common stock for services	$	210,000	$	51,000
Private placement expenses incurred but not yet paid	$	12,250	$	–
Issuance of common stock in settlement of accounts payable	$	–	$	40,000