EX-99.1 2 v026466_ex99-1.htm

 
PRECISION OPTICS CORPORATION
22 EAST BROADWAY
GARDNER, MASSACHUSETTS 01440-3338
Telephone 978 / 630-1800
Telefax 978 / 630-1487
 
POC:25-0331     
Page 1 of 4     
   
NEWS RELEASE  
   
FOR IMMEDIATE RELEASE
September 28, 2005
 
PRECISION OPTICS CORPORATION ANNOUNCES
FOURTH QUARTER AND YEAR END RESULTS

GARDNER, Massachusetts - Precision Optics Corporation, Inc. (Nasdaq: POCI) today announced operating results on an unaudited basis for the fourth quarter of fiscal year 2005 ended June 30, 2005.

Fourth Quarter Operating Results
 
Revenues - For the quarter ended June 30, 2005, revenues were $362,215 compared to $292,620 for the same period last year, an increase of 23.7%. Revenues in the quarter increased 9.1% from the preceding quarter ended March 31, 2005.

Net Loss - For the quarter ended June 30, 2005, net loss was $1,114,108, or $0.16 per share, an increase of $102,583, from the net loss of $1,011,525, or $0.58 per share, for the same period last year. The weighted average common shares outstanding for the quarter ended June 30, 2005 and 2004 were 7,008,212 and 1,752,053, respectively.

Special Charges - Net loss for the quarter ended June 30, 2005 included provisions for restructuring and obsolete and slow moving inventories totaling $303,762. Net loss for the quarter ended June 30, 2004 included provisions for obsolete and slow moving inventories of $191,200.

Fiscal Year 2005 Operating Results
 
Revenues - For the year ended June 30, 2005, revenues were $1,349,819 compared to $1,472,008 for the same period last year, a decrease of 8.3%.

Net Loss - For the year ended June 30, 2005, net loss was $3,688,361, or $0.55 per share, an increase of $4,285 compared to the net loss of $3,684,076, or $2.10 per share, for the year ended June 30, 2004. The weighted average common shares outstanding were for the years ended June 30, 2005 and 2004 were 6,749,003 and 1,752,053, respectively.

Special Charges - Net loss for the years ended June 30, 2005 and 2004 included provisions for restructuring and obsolete and slow moving inventories totaling $491,412 and $552,208, respectively.

Cash Flow and Expenditures
 
For the quarter ended June 30, 2005, cash and cash equivalents decreased by $866,229 compared to a decrease of $859,110 for the previous quarter ended March 31, 2005. Cash disbursements during the quarter ended June 30, 2005 included $84,501 paid for employee severance costs.

Capital equipment expenditures during the year ended June 30, 2005 were $32,140, down 4.4% 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 June 30, 2005, research and development expenses were $233,194, down 31.1% from $338,651 for the quarter ended June 30, 2004. Quarterly research and development expenses depend on the Company’s assessment of new product opportunities.

 
 
 
Precision Optics Corporation—Fourth Quarter and Year End Results
Page 2 of 4

Customer Relationships
 
The Company is now manufacturing ultra-small lenses, prisms, assemblies and advanced endoscopes with sizes ranging from 0.2 mm to 1 mm, for a number of customers. The Company is also in discussions with several 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.

Expense Reduction
 
The Company has taken additional measures to realign its cost structure with current revenue expectations. In June 2005, the Company reduced its annual labor cost by approximately $151,000, a 6.9% reduction. As a result of this action, the Company recorded a non-recurring pretax charge to earnings of $89,512 for employee severance benefits in the quarter ended June 30, 2005. In addition, the Company is in the process of reviewing other expense areas to determine where additional reductions in discretionary spending can be achieved.

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 generation (patent pending) of its world-class product line of 3-D endoscopes, the development of a new prototype 2.7 mm endoscope, and new instruments utilizing the Company’s new micro-precisionTM lens technology (patent pending) for endoscopes under 1 mm. The Company continues to explore potential applications of single-molecule technology and nanotechnology.

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 LENSLOCKTM technology which ensures lower cost, easier repairability and enhanced durability. The Company is aggressively pursuing ultra-small instruments (some with lenses less than one millimeter in diameter) utilizing patent pending micro-precisionTM 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 www.poci.com.

 
 
 
Precision Optics Corporation—Fourth Quarter and Year End Results
Page 3 of 4

PRECISION OPTICS CORPORATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND TWELVE MONTHS ENDED
June 30, 2005 AND 2004
(UNAUDITED)
 
   
-- THREE MONTHS --
  
--TWELVE MONTHS--
  
                   
   
2005
  
2004
  
2005
  
2004
  
                   
REVENUES
  
$
362,215
  
$
292,620
  
$
1,349,819
  
$
1,472,008
  
                           
COST OF GOODS SOLD
    
699,399
    
547,936
    
1,997,586
    
2,062,902
  
                           
Gross Profit (Loss)
    
(337,184
)
  
(255,316
)
  
( 647,767
)
  
(590,894
)
                           
RESEARCH and DEVELOPMENT
    
233,194
    
338,651
    
1,143,412
   
1,319,345
  
                           
SELLING, GENERAL and
ADMINISTRATIVE EXPENSES
   
463,882
    
418,433
    
1,857,332
    
1,738,757
  
                           
PROVISION FOR IMPAIRMENT AND RESTRUCTURING
   
89,512
    
-
    
89,512
    
52,208
  
                           
Total Operating Expenses
    
786,588
    
757,084
    
3,090,256
    
3,110,310
  
                           
Operating Loss
    
(1,123,772
)
  
(1,012,400
)
  
(3,738,023
)
  
(3,701,204
)
                           
INTEREST INCOME
    
10,576
    
1,787
    
50,574
    
18,089
  
                           
INTEREST EXPENSE
    
-
    
-
    
-
    
(49
)
                           
LOSS BEFORE PROVISION FOR
INCOME TAXES
 
$
(1,113,196
)
$
(1,010,613
)
$
(3,687,449
)
$
(3,683,164
)
                           
PROVISION FOR INCOME TAXES
    
912
    
912
    
912
    
912
  
                           
NET LOSS
  
$
(1,114,108
)
$
(1,011,525
)
$
(3,688,361
)
$
_(_3,684,076
)
                           
Basic and Diluted Loss Per Share
 
$
(0.16
)
$
(0.58
)
$
( 0.55
)
$
(2.10
)
                           
Weighted Average Common Shares
Outstanding
   
7,008,212
   
1,752,053
    
6,749,003
    
1,752,053
  

 
 
 
Precision Optics Corporation—Fourth Quarter and Year End Results
Page 4 of 4

PRECISION OPTICS CORPORATION, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

ASSETS
 
          
 
  
June 30, 2005
 
June 30, 2004
  
CURRENT ASSETS
              
Cash and Cash Equivalents
  
$
2,171,693
  
$
343,260
  
Accounts Receivable, Net
    
177,031
    
80,195
  
Inventories
    
599,619
    
917,998
  
Prepaid Expenses
    
62,422
    
80,646
  
Deferred Financing Costs
    
-
    
171,885
  
Total Current Assets
    
3,010,765
    
1,593,984
  
               
PROPERTY AND EQUIPMENT
    
4,231,975
    
4,199,835
  
Less: Accumulated Depreciation
    
(4,092,202
)
  
(3,920,593
)
Net Property and Equipment
    
139,773
    
279,242
 
               
OTHER ASSETS
    
218,067
    
224,088
  
               
TOTAL ASSETS
  
$
3,368,605
  
$
2,097,314
  
               
LIABILITIES AND STOCKHOLDERS' EQUITY
               
TOTAL CURRENT LIABILITIES
  
$
519,010
  
$
593,342
  
               
STOCKHOLDERS' EQUITY
              
Common Stock, $.01 par value-
              
Authorized -- 20,000,000 shares
             
Issued and Outstanding - 7,008,212 shares
              
at June 30, 2005 and 1,752,053 at
             
June 30, 2004
    
70,082
    
17,521
  
Additional Paid-in Capital
    
32,751,598
    
27,770,175
  
Accumulated Deficit
    
( 29,972,085
)
  
(26,283,724
)
Total Stockholders' Equity
    
2,849,595
    
1,503,972
  
               
TOTAL LIABILITIES AND STOCKHOLDERS'
             
EQUITY
  
$
3,368,605
  
$
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; and 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.
 
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