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<SEC-DOCUMENT>0001047469-08-011036.txt : 20081017
<SEC-HEADER>0001047469-08-011036.hdr.sgml : 20081017
<ACCEPTANCE-DATETIME>20081017171731
ACCESSION NUMBER:		0001047469-08-011036
CONFORMED SUBMISSION TYPE:	PRE 14A
PUBLIC DOCUMENT COUNT:		1
CONFORMED PERIOD OF REPORT:	20081125
FILED AS OF DATE:		20081017
DATE AS OF CHANGE:		20081017

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			PRECISION OPTICS CORPORATION INC
		CENTRAL INDEX KEY:			0000867840
		STANDARD INDUSTRIAL CLASSIFICATION:	ELECTROMEDICAL & ELECTROTHERAPEUTIC APPARATUS [3845]
		IRS NUMBER:				042795294
		STATE OF INCORPORATION:			MA
		FISCAL YEAR END:			0630

	FILING VALUES:
		FORM TYPE:		PRE 14A
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-10647
		FILM NUMBER:		081130052

	BUSINESS ADDRESS:	
		STREET 1:		22 EAST BROADWAY
		CITY:			GARDNER
		STATE:			MA
		ZIP:			01440-3338
		BUSINESS PHONE:		9786301800

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	PRECISION OPTICS CORP INC
		DATE OF NAME CHANGE:	19600201
</SEC-HEADER>
<DOCUMENT>
<TYPE>PRE 14A
<SEQUENCE>1
<FILENAME>a2188540zpre14a.htm
<DESCRIPTION>PRE 14A
<TEXT>
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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B>UNITED STATES<BR>
SECURITIES AND EXCHANGE COMMISSION<BR>
Washington, D.C. 20549  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=4><B> SCHEDULE 14A INFORMATION</B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>Proxy
Statement Pursuant to Section 14(a) of<BR>
the Securities Exchange Act of 1934 </FONT></P>

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<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:times;"><FONT SIZE=2>Filed by the Registrant <FONT FACE="WINGDINGS">&#253;</FONT></FONT></TD>
</TR>
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<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:times;"><BR><FONT SIZE=2>Filed by a Party other than the Registrant <FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
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<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:times;"><FONT SIZE=2><BR>
Check the appropriate box:</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>
<FONT FACE="WINGDINGS">&#253;</FONT></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>
Preliminary Proxy Statement</FONT></TD>
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<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>
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<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2><B> Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))</B></FONT></TD>
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<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
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<FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>
Definitive Proxy Statement</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>
<FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>
Definitive Additional Materials</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>
<FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>
Soliciting Material Pursuant to &sect;240.14a-12<BR></FONT>
</TD>
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<TD WIDTH="410" style="font-family:times;"></TD>
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<TD COLSPAN=5 ALIGN="CENTER" style="font-family:times;"><BR><FONT SIZE=4><B> Precision Optics Corporation,&nbsp;Inc.</B></FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD COLSPAN=5 ALIGN="CENTER" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>


<HR NOSHADE SIZE="1.0pt" WIDTH="100%" COLOR="#000000">
(Name of Registrant as Specified In Its Charter)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=5 ALIGN="CENTER" style="font-family:times;"><BR><FONT SIZE=2><B>Not applicable.</B></FONT></TD>
</TR>
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<TD COLSPAN=5 ALIGN="CENTER" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>


<HR NOSHADE SIZE="1.0pt" WIDTH="100%" COLOR="#000000">
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)</FONT></TD>
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<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=5 style="font-family:times;"><FONT SIZE=2>Payment of Filing Fee (Check the appropriate box):</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2><BR>
<FONT FACE="WINGDINGS">&#253;</FONT></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:times;"><FONT SIZE=2><BR>
No fee required.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2><BR>
<FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:times;"><FONT SIZE=2><BR>
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and&nbsp;0-11.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>(1)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2>Title of each class of securities to which transaction applies:<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>&nbsp;</TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>(2)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2>Aggregate number of securities to which transaction applies:<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>&nbsp;</TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>(3)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2>Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>&nbsp;</TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>(4)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2>Proposed maximum aggregate value of transaction:<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>&nbsp;</TD>
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<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>(5)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2>Total fee paid:<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>&nbsp;</TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2><BR>
<FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:times;"><FONT SIZE=2><BR>
Fee paid previously with preliminary materials.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2><BR>
<FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:times;"><FONT SIZE=2><BR>
Check box if any part of the fee is offset as provided by Exchange Act Rule&nbsp;0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or
Schedule and the date of its filing.</FONT></TD>
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<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>
(1)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><BR>
Amount Previously Paid:<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>&nbsp;</TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>(2)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2>Form, Schedule or Registration Statement No.:<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>&nbsp;</TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>(3)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2>Filing Party:<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>&nbsp;</TD>
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<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>(4)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2>Date Filed:<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>&nbsp;</TD>
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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> PRECISION OPTICS CORPORATION,&nbsp;INC.<BR>
22 East Broadway<BR>
Gardner, Massachusetts 01440  </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>To
the Stockholders: </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>The
Board of Directors and officers of Precision Optics Corporation,&nbsp;Inc. invite you to attend the&nbsp;2008 Annual Meeting of Stockholders to be held Tuesday, November&nbsp;25, 2008, at
10:00&nbsp;a.m. at The&nbsp;Colonial Hotel, 625 Betty Spring Road, Gardner, Massachusetts 01440. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>A
copy of the Proxy Statement and a copy of the Company's 2008 Annual Report to Stockholders are enclosed. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>If
you cannot be present at the meeting, please mark, date, and sign the enclosed proxy card and return it as soon as possible in the enclosed envelope. </FONT></P>

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<TH ALIGN="CENTER" style="font-family:times;"><BR><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1><B><BR>&nbsp;</B></FONT></TH>
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1><B><BR>
&nbsp;</B></FONT><BR></TH>
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<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>Very truly yours,</FONT></TD>
</TR>
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<TD style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
</TR>
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<TD style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>
/s/ Richard E. Forkey</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>
Richard E. Forkey<BR></FONT> <FONT SIZE=2><I>President</I></FONT></TD>
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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> PRECISION OPTICS CORPORATION,&nbsp;INC.<BR>
22 East Broadway<BR>
Gardner, Massachusetts 01440  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="be40401_notice_of_2008_annual_meeting_of_stockholders"> </A>
<A NAME="toc_be40401_1"> </A></FONT> <FONT SIZE=2><B>  NOTICE OF&nbsp;2008 ANNUAL MEETING OF STOCKHOLDERS    <BR>    </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> November&nbsp;25, 2008  </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>Notice is hereby given that the 2008 Annual Meeting of Stockholders of Precision Optics Corporation,&nbsp;Inc. (the "Company") will be held on
Tuesday, November&nbsp;25, 2008, at 10:00&nbsp;a.m. at The Colonial Hotel, 625&nbsp;Betty Spring Road, Gardner, Massachusetts 01440, for the following purposes: </FONT></P>

<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>1.</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>To
consider and approve an amendment to the Company's Articles of Organization, as amended, to be filed at the discretion of the Board of Directors, to
effect a reverse stock split of the Company's common stock in the range of 1:2 to 1:30.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>2.</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>To
elect two Class&nbsp;III directors to hold office for a three-year term and until their respective successors shall have been duly elected
and qualified.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>3.</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>To
transact any and all other business that may properly come before the meeting or any adjournment thereof. </FONT></DD></DL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>All
stockholders of record at the close of business on Wednesday, October&nbsp;1, 2008, are entitled to notice of and to vote at the meeting or any and all adjournments thereof. Information
concerning the matters to be acted upon at the meeting is set forth in the accompanying proxy statement. All stockholders are cordially invited to attend the meeting in person. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>By
Order of the Board of Directors </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>/s/
Jack P. Dreimiller </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>Jack
P. Dreimiller<BR></FONT> <FONT SIZE=2><I>Clerk</I></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>October&nbsp;31,
2008 </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B>WHETHER OR NOT YOU PLAN TO BE PRESENT AT THE MEETING, PLEASE COMPLETE, SIGN AND PROMPTLY MAIL THE ENCLOSED PROXY. A RETURN ENVELOPE THAT REQUIRES NO POSTAGE IF MAILED IN THE
UNITED STATES IS ENCLOSED FOR THAT PURPOSE.</B></FONT></P>

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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> PRECISION OPTICS CORPORATION,&nbsp;INC.  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><I>


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 </I></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> Annual Meeting of Stockholders<BR>
November&nbsp;25, 2008  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="da40401_proxy_statement"> </A>
<A NAME="toc_da40401_1"> </A></FONT> <FONT SIZE=2><B>  PROXY STATEMENT    <BR>    </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><I>

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  </I></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="da40401_information_concerning_solicitation_and_voting"> </A>
<A NAME="toc_da40401_2"> </A>
<BR></FONT><FONT SIZE=2><B>  INFORMATION CONCERNING SOLICITATION AND VOTING    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B> General  </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>This proxy statement and form of proxy are furnished in connection with the solicitation of proxies by the Board of Directors of Precision Optics
Corporation,&nbsp;Inc., a Massachusetts corporation (the "Company"), for use at the 2008 Annual Meeting of Stockholders of the Company to be held on November&nbsp;25, 2008, at 10:00&nbsp;a.m. at
The Colonial Hotel, 625 Betty Spring Road, Gardner, Massachusetts&nbsp;01440, and any and all adjournments thereof, for the purposes set forth herein and in the accompanying Notice of 2008 Annual
Meeting of Stockholders. The Company was incorporated in 1982, and its principal executive offices are at 22&nbsp;East Broadway, Gardner, Massachusetts&nbsp;01440 (telephone
978-630-1800). This proxy statement and form of proxy are first being distributed to stockholders on or about October&nbsp;31, 2008. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B> Stockholders Entitled to Vote  </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>As of October&nbsp;1, 2008, the Company had outstanding 25,458,212&nbsp;shares of common stock, $0.01 par value per share (the "Common Stock").
Each share of Common Stock entitles the holder of record thereof at the close of business on October&nbsp;1, 2008 to one vote, in person or by proxy, on the matters to be voted upon at the meeting. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2><B> Voting Procedures  </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>Consistent with Massachusetts law and the Company's by-laws, the holders of a majority of the shares entitled to be cast on a particular
matter, present in person or represented by proxy, constitutes a quorum as to such matter. Votes cast by proxy or in person at the annual meeting will be counted by persons appointed by the Company to
act as election inspectors for the meeting. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>If
the enclosed form of proxy is properly signed and returned and not revoked, the shares represented thereby will be voted at the annual meeting. If the stockholder specifies in the proxy how the
shares are to be voted, they will be voted as specified. If the stockholder does not specify how the shares are to be voted, such shares will be voted in favor of Proposal&nbsp;1 below and for the
election of the nominees for director as set forth in Proposal&nbsp;2. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>Any
stockholder has the right to revoke his or her proxy at any time before it is voted by: (1)&nbsp;attending the meeting and voting in person, (2)&nbsp;by filing with the Clerk of the Company a
written instrument revoking the proxy or (3)&nbsp;delivering to the Clerk another newly executed proxy bearing a later date. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B> Required Vote  </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>The approval to grant the Board of Directors the authority to file an amendment to the Articles of Organization to effect a reverse stock split as
described in Proposal 1 requires the affirmative vote of a majority of all shares outstanding. </FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2>The
election of the Class&nbsp;III directors described in Proposal 2 requires a plurality of votes cast. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>Abstentions
and broker "non-votes" are counted as present and entitled to vote for purposes of determining a quorum, but will not be counted as votes properly cast for purposes of
determining the outcome of voting on any matter. A broker non-vote occurs when a nominee holding shares for a beneficial owner does not vote on a particular proposal because the nominee
does not have discretionary voting power for the particular item and has not received instructions from the beneficial owner. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B> Voting on Other Matters  </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>At the date hereof, the Company has no knowledge of any business other than that described in the notice for the annual meeting which will be
presented for consideration at the annual meeting. If any other business should come before such meeting, the persons appointed by the enclosed form of proxy may, in their discretion, vote all such
proxies in accordance with their own judgment. The persons appointed by the enclosed form of proxy also may, in their discretion, vote all proxies with respect to matters incident to the conduct of
the meeting. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B> Costs of Proxy Solicitation  </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>The Company will bear all the costs of the solicitation of proxies. The Board of Directors (the "Board") may arrange with brokerage houses and other
custodians, nominees, and fiduciaries to forward solicitation materials to the beneficial owners of the stock held of record by such persons, and the Company may reimburse them for the reasonable
out-of-pocket expenses incurred in so doing. In addition to the solicitation of proxies by use of the mail, the Company may use the services of some of its directors, officers,
and regular employees (who will receive no compensation therefrom in addition to their regular salaries) to solicit proxies personally or by mail or telephone. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>2</FONT></P>

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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="dc40401_proposal_1__reverse_stock_split"> </A>
<A NAME="toc_dc40401_1"> </A>
<BR></FONT><FONT SIZE=2><B>  PROPOSAL 1: REVERSE STOCK SPLIT    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>TO CONSIDER AND APPROVE AN AMENDMENT TO THE COMPANY'S ARTICLES OF ORGANIZATION, AS AMENDED, TO BE FILED AT THE DISCRETION OF THE BOARD OF DIRECTORS,
TO EFFECT A REVERSE STOCK SPLIT OF THE COMPANY'S COMMON STOCK IN THE RANGE OF&nbsp;1:2 TO 1:30. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B> SUMMARY  </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>In October 2008, the Board approved and recommended that the stockholders approve, a proposed amendment (the "Reverse Stock Split Amendment") to the
Company's Articles of Organization, as amended, to be filed at the discretion of the Board to effect or, alternatively, to abandon a reverse split of the Company's Common Stock (the "Reverse Stock
Split"). The form of the proposed Reverse Stock Split Amendment is attached hereto as Appendix&nbsp;A. The stockholders are being asked to approve a reverse stock split of the Company's outstanding
Common Stock at a ratio in the range of 1:2 to 1:30, as determined in the sole discretion of the Board. If the proposed Reverse Stock Split is approved, the Board would have the discretion to elect,
as it determines to be in the best interests of the Company and its stockholders, to effect the Reverse Stock Split at any time before the Company's 2009 annual meeting of stockholders. The Board may
also elect not to implement the approved Reverse Stock Split. The Board believes that approval of a proposal
granting this discretion to the Board provides the Board with appropriate flexibility to achieve the purposes of the Reverse Stock Split, if implemented, and to act in the best interests of the
Company and its stockholders. The Reverse Stock Split would become effective on such date as the amendment to the Articles of Organization, as amended, is filed with the Massachusetts Secretary of
State (the "Effective Date"). </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>On
the Effective Date, the Reverse Stock Split will cause the number of issued and outstanding shares of the Company's Common Stock to automatically be reduced in accordance with the selected exchange
ratio for the Reverse Stock Split. Fractional shares of Common Stock will not be issued as a result of the Reverse Stock Split, but instead, the Company will round up each fractional share to the next
whole post-split share. Except for adjustments that may result from the treatment of fractional shares, each stockholder will hold the same percentage of Common Stock outstanding
immediately following the Reverse Stock Split as such stockholder held immediately prior to the Reverse Stock Split. The Reverse Stock Split Amendment will not alter the par value of the Common Stock
or the number of shares of Common Stock authorized for issuance. The number of authorized shares of the Common Stock would remain unchanged. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2><B> REASONS FOR THIS PROPOSAL  </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>On June&nbsp;25, 2008, the Company entered into a Purchase Agreement with institutional and other accredited investors pursuant to which it sold an
aggregate of $600,000 of 10% Senior Secured Convertible Notes, that are convertible into an aggregate of 12,000,000 shares of the Company's Common Stock at a conversion price of $0.05 per share, and
warrants to purchase an aggregate of 7,920,000 shares of Common Stock at an exercise price of $0.07 per share. Interest accrues on the Notes at a rate of 10% per annum and is payable upon the earlier
of conversion or maturity of the Notes. The Notes mature on June&nbsp;25, 2010, and the warrants expire on June&nbsp;25, 2015. The Notes and warrants are not convertible or exercisable until the
Company implements a reverse stock split, which requires the approval of its stockholders and the effectiveness of an amendment to its Articles of Organization to effect the reverse stock split. The
closing of the sale of the Notes and warrants occurred on June&nbsp;25, 2008. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>3</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2>Pursuant
to the Purchase Agreement, the Company agreed to take all action necessary to seek the approval of its stockholders to effect a reverse stock split in the ratio of 1:6, with the number of
authorized shares of the Company's Common Stock to remain at 50,000,000. However, given recent stock market volatility and uncertainty in the economy, the Board believes it is necessary to preserve
flexibility in the ratio of the reverse stock split so the Board may attempt to renegotiate the Purchase Agreement if the Board believes another range is in the best interests of the Company and its
stockholders. There is no guarantee that the Purchase Agreement will be amended, however the Company believes the investors that are parties to the Purchase Agreement will be amenable to a revision of
the 1:6 ratio currently in place if it would benefit the Company and its stockholders. The Board believes that stockholder approval of a range of potential exchange ratios, rather than a single
exchange ratio, provides the Board greater flexibility to achieve the desired results of the Reverse Stock Split and that a range of ratios from 1:2 to 1:30 for a Reverse Stock Split is in the best
interests of the Company and its stockholders. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B> POTENTIAL EFFECTS OF THIS PROPOSAL  </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>If the Board implements the Reverse Stock Split, the immediate effect would be to reduce the number of shares of the Company's outstanding Common
Stock and to increase the trading price of such Common Stock. However, the effect of a Reverse Stock Split upon the market price of the Common Stock cannot be predicted, and the history of reverse
stock splits for companies in similar circumstances sometimes improves stock performance, but in many cases does not. There can be no assurance that the trading price of the Company's Common Stock
after the Reverse Stock Split will rise in proportion to the reduction in the number of shares of Common Stock outstanding as a result of the Reverse Stock Split or remain at an increased level for
any period. The Reverse Stock Split could eventually lead to a decrease in the trading price of the Common Stock. The trading price of the Common Stock may also change due to a variety of other
factors, including operating results, other factors related to the Company's business and general market conditions. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>The
actual timing of the filing to effect the Reverse Split, if any, will be determined by the Board based upon its evaluation as to when such action is most advantageous to the Company and its
stockholders and upon possible further negotiations with investors to the Purchase Agreement. Further, even if this proposal is approved by the Company's stockholders, the Board may elect not to file
the Reverse Stock Split Amendment at all if it believes it is in the best interests of the Company and its stockholders not to do so. However, the Company believes this outcome is unlikely due to its
obligation to effect a Reverse Split pursuant to the Purchase Agreement. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>After
the Effective Date of the Reverse Stock Split, the number of shares of Common Stock held by each stockholder will be reduced by multiplying the number of shares held immediately before the
Reverse Stock Split by the selected exchange ratio, and then rounding up to the nearest whole share.
Therefore, each stockholder will own a reduced number of shares of Common Stock but will hold the same percentage of the outstanding shares, subject to adjustments for fractional interests resulting
from the Reverse Stock Split, as the stockholder held prior to the Effective Date. The number of shares of Common Stock that may be purchased upon the exercise of outstanding options, warrants, and
other securities convertible into, or exercisable or exchangeable for, shares of Common Stock, and the per share exercise or conversion prices thereof, will be adjusted appropriately for the Reverse
Stock Split in accordance with their terms as of the Effective Date. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>4</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2>Each
fractional share of Common Stock that results from the Reverse Stock Split will be rounded up to a whole share. Because no beneficial owners will be cashed out in the Reverse Stock Split, the
Company does not believe that the Reverse Stock Split will lead to a reduction in the number of beneficial owners. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>The
Reverse Stock Split may also result in some stockholders owning "odd lots" of less than 100 shares of Common Stock received as a result of the Reverse Stock Split. Brokerage commissions and other
costs of transactions in odd lots may be higher, particularly on a per-share basis, than the cost of transactions in even multiples of 100 shares. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>The
Reverse Stock Split will affect all stockholders equally and will not affect any stockholder's proportionate equity interest in the Company except with respect to adjustments for fractional
interests. None of the rights currently accruing to holders of the Common Stock, options or warrants to purchase Common Stock will be affected by the Reverse Stock Split. Following the Reverse Stock
Split, each share of the Common Stock resulting from the Reverse Stock Split will entitle the holder thereof to one vote per share and will otherwise be identical to the outstanding Common Stock
immediately prior to the Effective Date. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B> EXCHANGE OF STOCK CERTIFICATES  </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>The combination and reclassification of shares of Common Stock pursuant to the Reverse Stock Split will occur automatically on the Effective Date
without any action on the part
of stockholders of the Company and without regard to the date on which certificates evidencing shares of Common Stock prior to the Reverse Stock Split are physically surrendered for new certificates.
As of the Effective Date, the number of shares of Common Stock held by each stockholder will be converted and reclassified into the number of shares that each stockholder will be entitled to receive
as a result of the Reverse Stock Split proportional to the ratio selected by the Board. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>As
soon as practicable after the Effective Date, transmittal forms will be mailed to each holder of record of shares of Common Stock, to be used in forwarding such holder's stock certificates for
surrender and exchange for certificates evidencing the number of shares of Common Stock such stockholder is entitled to receive as a consequence of the Reverse Stock Split. The transmittal forms will
be accompanied by instructions specifying other details of the exchange. Upon receipt of such transmittal form, each stockholder should surrender the certificates evidencing shares of Common Stock
prior to the Reverse Stock Split in accordance with the applicable instructions. Each holder who surrenders certificates will receive new certificates evidencing the whole number of shares of Common
Stock that such stockholder holds as a result of the Reverse Stock Split. Stockholders will not be required to pay any transfer fee or other fee in connection with the exchange of certificates. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>The
Company estimates that its aggregate expenses relating to the Reverse Stock Split will not be material. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B> STOCKHOLDERS SHOULD NOT SUBMIT THEIR STOCK CERTIFICATES FOR EXCHANGE UNTIL THEY RECEIVE A TRANSMITTAL FORM FROM THE COMPANY  </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>As of the Effective Date, each certificate representing shares of Common Stock outstanding prior to the Effective Date will be deemed canceled and,
for all corporate purposes, will be deemed only to evidence the right to receive the number of shares of Common Stock into which the shares of Common Stock evidenced by such certificate have been
converted as a result of the Reverse Stock Split. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>5</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2><B> FEDERAL INCOME TAX CONSEQUENCES  </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>The following discussion generally describes certain United States federal income tax consequences of the proposed Reverse Stock Split to
stockholders of the Company. This discussion is limited to United States persons who hold their Common Stock as capital stock. The following does not address any foreign, state, local tax or
alternative minimum income, or other federal tax consequences of the proposed Reverse Stock Split. The actual consequences for each stockholder will be governed by the specific facts and circumstances
pertaining to such stockholder's acquisition and ownership of the Common Stock. Thus, the Company makes no representations concerning the tax consequences for any of its stockholders and recommends
that each stockholder consult with such stockholder's own tax advisor concerning the tax consequences of the Reverse Stock Split, including federal, state and local, or other income tax. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>The
Company has not sought and will not seek an opinion of counsel or a ruling from the Internal Revenue Service regarding the federal income tax consequences of the proposed Reverse Stock Split.
However, the Company believes that, because the Reverse Stock Split is not part of a plan to periodically increase a stockholder's proportionate interest in the assets or earnings and profits of the
Company, the proposed Reverse Stock Split will have the following income tax effects: </FONT></P>

<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>1.</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>A
stockholder will not recognize taxable gain or loss as a result of the Reverse Stock Split.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>2.</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>In
the aggregate, a stockholder's basis in post-split Common Stock will equal such stockholder's basis in the shares of pre-split
Common Stock exchanged therefor, and such stockholder's holding period for post-split Common Stock will include the holding period for pre-split Common Stock exchanged
therefor.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>3.</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>The
proposed Reverse Stock Split will constitute a reorganization within the meaning of Section&nbsp;368(a)(1)(E) of the Internal Revenue Code of 1986, as
amended, and the Company will not recognize any gain or loss as a result of the Reverse Stock Split. </FONT></DD></DL>
<BR>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B>The Board of Directors recommends that the stockholders vote FOR the proposal to amend the Company's Articles of Organization, as amended, to be filed at the discretion of the
Board of Directors, to effect a Reverse Stock Split of the Company's Common Stock in the range of 1:2 to 1:30. Proxies will be voted in favor thereof unless a stockholder has indicated otherwise in
the proxy.</B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>6</FONT></P>

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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="de40401_proposal_number_2__election_of_directors"> </A>
<A NAME="toc_de40401_1"> </A>
<BR></FONT><FONT SIZE=2><B>  PROPOSAL NUMBER 2: ELECTION OF DIRECTORS    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>TO
CONSIDER AND APPROVE THE RE-ELECTION OF JOSEPH N. FORKEY AND RICHARD MILES TO THE COMPANY'S BOARD OF DIRECTORS. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>The
Company's Board of Directors is divided into three classes that are as nearly equal in number as possible, with staggered terms of office. Only one class is elected each year. Each director serves
a three year term and until his or her successor has been duly elected and qualified. The Company's director in Class&nbsp;I, Richard E.&nbsp;Forkey, will hold office until the annual meeting of
stockholders in 2009 and until his successor has been duly elected and qualified. The Company's Class&nbsp;II directors, Joel R.&nbsp;Pitlor and Donald A.&nbsp;Major, will hold office until the
annual meeting of stockholders in 2010 and until their respective successors have been duly elected and qualified. The directors in Class&nbsp;III, Joseph N.&nbsp;Forkey and Richard Miles, will
hold office until the annual meeting of stockholders in 2008 and are standing for re-election. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>The
names, ages, business experience for at least the last five years, and certain other information regarding the current directors, are as follows: </FONT></P>

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<TD WIDTH="223" style="font-family:times;"></TD>
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<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2><B>Name</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B>Age</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B>Director<BR>
Since</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2><B>Principal Occupation; Directorships of Other Public Companies</B></FONT><BR></TH>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> Richard E. Forkey<SUP>(1)(2)</SUP></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>68</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1982</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>President, Chief Executive Officer, Treasurer and a director of the Company since founding the Company in 1982; Clerk of the Company from May 1983 to June 1990.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><p style="font-family:times;margin-top:11pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> Joseph N. Forkey<SUP>(2)</SUP></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
40</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
2006</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p align=left style="font-family:times;margin-top:11pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> Executive Vice President and Chief Scientific Officer of the Company since April 2006; Chief Scientist of the Company from September 2003 to April
2006. Prior to joining the Company, Dr.&nbsp;Forkey spent seven years at the University of Pennsylvania Medical School as a postdoctoral fellow and research staff member.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><p style="font-family:times;margin-top:11pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> Joel R. Pitlor<SUP>(1)</SUP></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
70</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
1990</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p align=left style="font-family:times;margin-top:11pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> Since 1979, Mr.&nbsp;Pitlor has been President of Joel&nbsp;R.&nbsp;Pitlor, a management consulting firm that provides strategic business planning,
which Mr.&nbsp;Pitlor founded. Mr.&nbsp;Pitlor has provided business planning consultation to the Company since 1983.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><p style="font-family:times;margin-top:11pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> Donald A. Major<SUP>(1)</SUP></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
47</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
2005</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p align=left style="font-family:times;margin-top:11pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> Since 2002, Mr.&nbsp;Major has served as Vice President and Treasurer of Anderson Entertainment,&nbsp;LLC (formerly Digital Excellence&nbsp;LLC).
From October 2006 to May 2007, Mr.&nbsp;Major served as Vice President of Corporate Development of Advanced Duplication Services&nbsp;LLC. Since October 2007, Mr.&nbsp;Major's primary occupation has been as an independent consultant to a private
equity firm where he is engaged in identifying, evaluating and implementing corporate investment opportunities.</FONT></TD>
</TR>
</TABLE></DIV>
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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>7</FONT></P>

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<TR VALIGN="TOP">
<TD WIDTH="25%" style="font-family:times;"><p style="font-family:times;margin-top:11pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> Richard Miles</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
65</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
2005</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="46%" style="font-family:times;"><p align=left style="font-family:times;margin-top:11pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> Since 1972, Professor Miles has been a member of the faculty at Princeton University, and serves as the Director of the Applied Physics Group in
Princeton University's Mechanical and Aerospace Engineering Department.</FONT></TD>
</TR>
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<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Directors
whose terms do not expire this year.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Richard
E. Forkey is the father of Joseph N. Forkey. </FONT></DD></DL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B> Director Independence  </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>During the fiscal year ended June&nbsp;30, 2008, the individuals named in the table above served as members of the Company's Board of Directors. Of
those individuals, Messrs.&nbsp;Pitlor, Major and Miles are "independent" as defined in Rule&nbsp;4200(a)(15) of the Nasdaq
Marketplace Rules. The Company's Common Stock is traded on the Over-The-Counter Bulletin Board, referred to herein as the OTCBB. The OTCBB does not have a requirement that the
Company have a majority of independent directors on its Board. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B> Board of Directors  </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>During the fiscal year ended June&nbsp;30, 2008, the Company's Board of Directors held sixteen meetings and acted by unanimous written consent on
five occasions. Each director attended at least 75% of the meetings of the Board of Directors. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>While
the Company has no formal policy in place regarding board members' attendance at annual meetings of stockholders, the Company encourages their attendance at such annual meetings. There were
three members of the Board of Directors in attendance at the Company's 2007 Annual Meeting of Stockholders. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>Information
as to ownership of the Company's securities by the nominee for director is included under the heading "Security Ownership of Certain Beneficial Owners and Management." </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>While
the Board does not have a standing nominating committee, it does have a standing Audit Committee and a standing Compensation Committee. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2><B> Audit Committee  </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>The Audit Committee of the Board of Directors is currently composed of Messrs.&nbsp;Major and Miles. The Audit Committee has adopted a charter
which was included as Exhibit&nbsp;C to the Company's proxy statement for the 2006 Annual Meeting of Stockholders. The Audit Committee's primary function is to assist the Board of Directors in
monitoring the integrity of the Company's financial statements, systems of internal control and the independence and performance of the independent registered public accounting firm. The Audit
Committee's specifically enumerated powers and responsibilities include hiring and terminating the independent registered public accounting
firm and pre-approving any engagements of the independent registered public accounting firm for audit and all permitted non-audit services. The Audit Committee held five
meetings during the fiscal year ended June&nbsp;30, 2008. Each of the Audit Committee members attended 100% of the meetings of the Audit Committee held during the fiscal year ended June&nbsp;30,
2008. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>8</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2>The
Board of Directors has made a determination that Donald A. Major, Chair of the Audit Committee, qualifies as an audit committee financial expert meeting the criteria set forth in
Item&nbsp;407(d)(5) of Regulation&nbsp;S-K. Mr.&nbsp;Major has an understanding of generally accepted accounting principles and financial statements and has the ability to assess the
general application of such principles in connection with the accounting for estimates, accruals and reserves. He also has over seven&nbsp;years of experience, including five&nbsp;years in a
supervisory capacity, auditing, analyzing and evaluating financial statements that had a breadth and level of complexity of accounting issues that are generally comparable to the breadth and
complexity of issues that can reasonably be expected to be raised by the Company's financial statements. Additionally, Mr.&nbsp;Major served as the Chief Financial Officer to several public and
private companies over a span of 18&nbsp;years where he was responsible for preparing financial statements. He has an understanding of internal controls over financial reporting and an understanding
of audit committee functions. Mr.&nbsp;Major earned his BA in Accounting in 1984 from Michigan State University. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B> Compensation Committee  </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>The Board formed a compensation committee in April 2006. The Compensation Committee of the Board of Directors is currently composed of
Messrs.&nbsp;Major and Miles, with Mr.&nbsp;Major serving as Chair of the committee. The Compensation Committee does not have a charter. The Compensation Committee's primary functions are to
provide a general review of the Company's compensation and benefit arrangements and to review and establish compensation practices and policies for the officers of the Company. The Compensation
Committee held one meeting during the fiscal year ended June&nbsp;30, 2008. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B> Director Nomination Procedures  </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>The Company believes that it is appropriate not to have a standing nominating committee because of the small size of the Board of Directors. The
Board of Directors as a whole identifies and evaluates nominees for election to the Board of Directors. By having the Board of Directors as a whole consider and evaluate nominees, the Board of
Directors weighs the input of all directors. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>The
process by which the Board of Directors considers nominees for membership on the Board of Directors is flexible and based, generally, on the directors' assessment of the needs of the Company and
the extent to which existing directors meet those needs. Factors considered by the Board of Directors in evaluating the suitability of a potential nominee may include, but not be limited to: business
and management experience, familiarity with the Company's industry and products, the ability to integrate with existing directors and management and the extent to which a potential nominee may satisfy
applicable requirements such as independence or expertise requirements under the securities laws. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>The
Board of Directors will consider director nominees recommended by stockholders and will assess the qualities of the candidate and needs of the Company as described above. Such recommendations
should include the name, age, address, telephone number, principal occupation, background and qualifications of the nominee and the name, address, telephone number of and number of shares of Common
Stock beneficially owned by the stockholder making the recommendation and should be sent to the Clerk of the Company at 22 East Broadway, Gardner, Massachusetts 01440. Such recommendations should be
submitted to the Clerk of the Company prior to June&nbsp;15 of the respective year in order to give the Company adequate time to consider the recommendations. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>All
of the stockholders holding shares of the Company's Common Stock are entitled to cast one vote in person or by proxy for each share standing in their names and are entitled to elect two
Class&nbsp;III directors at </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>9</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2>the
2008 Annual Meeting. If a nominee is not available as a candidate when the election occurs, the persons named in the proxy may, in their discretion, vote for the election of such other person as
the Board of Directors may designate or reduce the number of directors correspondingly. The Company has no reason to believe the nominees will not be available for election. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B>The Board recommends that the stockholders vote FOR all nominees for election to the Board. Proxies will be voted in favor of all nominees unless a stockholder has indicated
otherwise in the proxy.</B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>10</FONT></P>

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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="dg40401_executive_officers_and_significant_employees"> </A>
<A NAME="toc_dg40401_1"> </A>
<BR></FONT><FONT SIZE=2><B>  EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>The Company's executive officers and significant employees as of June&nbsp;30, 2008 were as follows: </FONT></P>

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<TD WIDTH="145" style="font-family:times;"></TD>
<TD WIDTH="12" style="font-family:times;"></TD>
<TD WIDTH="5" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="12" style="font-family:times;"></TD>
<TD WIDTH="15" style="font-family:times;"></TD>
<TD WIDTH="25" style="font-family:times;"></TD>
<TD WIDTH="12" style="font-family:times;"></TD>
<TD WIDTH="237" style="font-family:times;"></TD>
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<TR VALIGN="BOTTOM">
<TH NOWRAP  ALIGN="LEFT" style="font-family:times;"><DIV style="border-bottom:solid #000000 1.0pt;margin-bottom:0pt;width:26pt;"><FONT SIZE=2><B>Name

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 </B></FONT></DIV></TH>
<TH style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>Age </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH NOWRAP  ALIGN="LEFT" style="font-family:times;"><DIV style="border-bottom:solid #000000 1.0pt;margin-bottom:0pt;width:31pt;"><FONT SIZE=2><B>Offices

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 </B></FONT></DIV></TH>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><I>Executive Officers</I></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> Richard E. Forkey</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
68</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p align=left style="font-family:times;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> President, Chief Executive Officer and Treasurer</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> Joseph N. Forkey</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
40</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p align=left style="font-family:times;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> Executive Vice President and Chief Scientific Officer</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> Michael T. Pieniazek<SUP>(1)</SUP></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
50</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p align=left style="font-family:times;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> Vice President, Chief Financial Officer and Clerk</FONT></TD>
</TR>
</TABLE></DIV>
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<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Resigned
as of August&nbsp;15, 2008. </FONT></DD></DL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>Mr.&nbsp;Richard
E. Forkey has been the President, Chief Executive Officer, Treasurer, and a director of the Company since he founded the Company in 1982. He was the Clerk of the Company from May
1983 to June 1990. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>Dr.&nbsp;Joseph
N. Forkey, son of Richard E. Forkey, has been Executive Vice President and Chief Scientific Officer of the Company since April 2006 and was Chief Scientist of the Company from
September 2003 to April 2006. Since joining the Company, he has been involved in general technical and management activities of the Company, as well as investigations of opportunities that leverage
the Company's newly developed technologies. Dr.&nbsp;Forkey holds B.A. degrees in Mathematics and Physics from Cornell University, and a Ph.D. in Mechanical and Aerospace Engineering from Princeton
University. Prior to joining the Company, Dr.&nbsp;Forkey spent seven years at the University of Pennsylvania Medical School as a postdoctoral fellow and research staff member. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>Mr.&nbsp;Pieniazek
has served as Vice President, Chief Financial Officer and Clerk of the Company since September 2006 until his resignation effective as of August&nbsp;15, 2008. From January 2006
to November 2006, Mr.&nbsp;Pieniazek was President and Chief Financial Officer of MIP Solutions,&nbsp;Inc. From September 2001 to December 2005, Mr.&nbsp;Pieniazek was President and Chief
Financial Officer of Uromedical Diagnostic,&nbsp;Inc. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="dg40401_certain_relationships_and_related_transactions"> </A>
<A NAME="toc_dg40401_2"> </A>
<BR></FONT><FONT SIZE=2><B>  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>The Company has an arrangement with Joel&nbsp;R. Pitlor, a company wholly-owned by Mr.&nbsp;Joel R. Pitlor, a director of the Company, under
which Mr.&nbsp;Pitlor provides consulting services to the Company for a fee currently not to exceed $5,000 a month. These consulting services consist primarily of advice regarding marketing,
strategic planning and other general business issues. Either party may terminate this arrangement at will. The Company paid or accrued to Joel&nbsp;R. Pitlor for consulting services aggregate fees
of $60,000, or $5,000 per month, for each of the fiscal years 2008 and 2007. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>The
Company leases its facility in Gardner, Massachusetts from Equity Assets,&nbsp;Inc., a company wholly-owned by Mr.&nbsp;Richard E. Forkey, the Company's President, Chief Executive Officer,
Treasurer and director. The Company is currently a tenant-at-will, paying rent of $9,000 per month, or an aggregate of $108,000 per year, for each of fiscal years 2008 and
2007. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>In
February 2007, the Company completed a private placement with institutional and other accredited investors pursuant to which it sold an aggregate of 10,000,000 shares of common stock, at a price of
$0.25 </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>11</FONT></P>

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<BR>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>per
share and warrants to purchase an aggregate of 10,000,000 shares of common stock at an exercise price of $0.32 per share. One of the Company's directors, Mr.&nbsp;Joel R. Pitlor, participated in
the private placement, which closed on February&nbsp;1, 2007. Mr.&nbsp;Pitlor acquired 1,000,000 shares of common stock and a warrant to purchase 1,000,000 shares of common stock in exchange for
$250,000. As a result of certain anti-dilution provisions being triggered on June&nbsp;25, 2008, the number of common shares underlying Mr.&nbsp;Pitlor's warrant increased to 1,455,157 and the
exercise price decreased from $0.32 per share to $0.22 per share. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="dg40401_section_16(a)_benefici__dg402019"> </A>
<A NAME="toc_dg40401_3"> </A>
<BR></FONT><FONT SIZE=2><B>  SECTION&nbsp;16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>Section&nbsp;16(a) of the Securities Exchange Act of 1934 requires the Company's directors, executive officers and persons who own more than 10% of
a registered class of the Company's securities to file with the Securities Exchange Commission, or SEC, reports of ownership and changes in ownership of common stock and other equity securities of the
Company. Officers, directors and greater than 10% beneficial owners are required by SEC regulations to furnish the Company with copies of all Section&nbsp;16(a) forms they file. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>To
the Company's knowledge, based solely upon a review of Forms&nbsp;3 and 4 and amendments thereto furnished to the Company during the fiscal year ended June&nbsp;30, 2008 and Forms&nbsp;5 and
amendments thereto furnished to the Company with respect to such fiscal year, no person required to file reports under Section&nbsp;16(a) of the Securities Exchange Act of 1934 failed to file such
reports on a timely basis during such fiscal year. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="dg40401_executive_and_director_compensation"> </A>
<A NAME="toc_dg40401_4"> </A>
<BR></FONT><FONT SIZE=2><B>  EXECUTIVE AND DIRECTOR COMPENSATION    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B> Summary Compensation  </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>The following table sets forth all compensation for the last two completed fiscal years ended June&nbsp;30, 2008 and 2007 awarded to, earned by, or
paid to the Company's Principal Executive Officer, Vice President and Chief Scientific Officer and one of the Company's employees, referred to herein as the "Named Executive Officers." No other
executive officer or employee earned over $100,000 in the last completed fiscal year. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> Summary Compensation Table for the Fiscal Years Ended June&nbsp;30, 2008 and 2007  </B></FONT></P>

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<TD WIDTH="82" style="font-family:times;"></TD>
<TD WIDTH="6" style="font-family:times;"></TD>
<TD WIDTH="31" style="font-family:times;"></TD>
<TD WIDTH="13" style="font-family:times;"></TD>
<TD WIDTH="31" style="font-family:times;"></TD>
<TD WIDTH="13" style="font-family:times;"></TD>
<TD WIDTH="23" style="font-family:times;"></TD>
<TD WIDTH="13" style="font-family:times;"></TD>
<TD WIDTH="26" style="font-family:times;"></TD>
<TD WIDTH="13" style="font-family:times;"></TD>
<TD WIDTH="26" style="font-family:times;"></TD>
<TD WIDTH="13" style="font-family:times;"></TD>
<TD WIDTH="49" style="font-family:times;"></TD>
<TD WIDTH="13" style="font-family:times;"></TD>
<TD WIDTH="49" style="font-family:times;"></TD>
<TD WIDTH="13" style="font-family:times;"></TD>
<TD WIDTH="49" style="font-family:times;"></TD>
<TD WIDTH="18" style="font-family:times;"></TD>
<TD WIDTH="31" style="font-family:times;"></TD>
<TD WIDTH="3" style="font-family:times;"></TD>
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<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1><B>Name and principal<BR>
position<BR>
(a)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Year<BR>
June&nbsp;30,<BR>
(b)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Salary<BR>
($)<BR>
(c)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Bonus<BR>
($)<BR>
(d)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Stock<BR>
awards<BR>
($)<BR>
(e)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Option<BR>
awards<BR>
($)<BR>
(f)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Non-equity<BR>
incentive<BR>
plan<BR>
compensation<BR>
($)<BR>
(g)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Non-qualified<BR>
deferred<BR>
compensation<BR>
earnings<BR>
($)<BR>
(h)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>All other<BR>
compensation<BR>
($)<BR>
(i)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Total<BR>
($)<BR>
(j)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=19 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>Richard E. Forkey<BR>
President, Principal Executive Officer&nbsp;&amp; Treasurer</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>2008<BR>
2007</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>$195,000<BR>
$195,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1><SUP>(4)</SUP><BR></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>-0-<BR>
- -0-</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>-0-<BR>
- -0-</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>-0-<BR>
- -0-</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>-0-<BR>
- -0-</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>-0-<BR>
- -0-</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>$23,984<BR>
$27,224</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1><SUP>(1)(2)</SUP><BR><SUP>(1)(2)</SUP></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>$218,984<BR>
$222.224</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1><BR>
Joseph N. Forkey<BR>
Executive Vice President and Chief Scientific Officer</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1><BR>
2008<BR>
2007</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1><BR>
$120,000<BR>
$120,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1><BR><SUP>(4)</SUP><BR></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1><BR>
- -0-<BR>
- -0-</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1><BR>
- -0-<BR>
- -0-</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1><BR>
- -0-<BR>
- -0-</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1><BR>
- -0-<BR>
- -0-</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1><BR>
- -0-<BR>
- -0-</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1><BR>
$1,200<BR>
$2,400</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1><BR><SUP>(3)</SUP><BR><SUP>(3)</SUP></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1><BR>
$121,200<BR>
$122,400</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1><BR>
Richard G. Cyr<BR>
Optical Shop Manager</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1><BR>
2008<BR>
2007</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1><BR>
$117,027<BR>
$117,430</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1><BR>
- -0-<BR>
- -0-</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1><BR>
- -0-<BR>
- -0-</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1><BR>
- -0-<BR>
- -0-</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1><BR>
- -0-<BR>
- -0-</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1><BR>
- -0-<BR>
- -0-</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1><BR>
$1,236<BR>
$2,348</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1><BR><SUP>(3)</SUP><BR><SUP>(3)</SUP></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1><BR>
$118,263<BR>
$119,778</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
</TR>
</TABLE></DIV>
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<DL compact>
<DT style='font-family:times;margin-bottom:-9pt;'><FONT SIZE=1>(1)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=1>Includes
car expense of $2,100 for 2008 and $2,100 for 2007.  </FONT></DD><DT style='font-family:times;margin-bottom:-9pt;'><FONT SIZE=1>(2)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=1>Includes
premiums for a life insurance policy and a disability insurance policy of $18,579 for 2008 and $20,394 for 2007.  </FONT></DD><DT style='font-family:times;margin-bottom:-9pt;'><FONT SIZE=1>(3)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=1>Represents
the Company's matching contribution to the Profit Sharing&nbsp;&amp; 401(k) Plan.  </FONT></DD><DT style='font-family:times;margin-bottom:-9pt;'><FONT SIZE=1>(4)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=1>Based
on new compensation arrangements approved by the Board of Directors on April&nbsp;15, 2008 for the President and for the Chief Scientific Officer,
$66,883 and $923, respectively, of these amounts were deferred, and will be paid in the form of restricted stock that will be subject to future performance based vesting. </FONT></DD></DL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>12</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2><B> Narrative to Summary Compensation Table  </B></FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Employment Contracts and Termination of Employment Arrangements  </I></B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>The Company has no employment contracts in place with any Named Executive Officer. The Company has no compensatory plan or arrangement with respect
to any Named Executive Officer where such plan or arrangement will result in payments to such Named Executive Officer upon or following his resignation, or other termination of employment with the
Company and its subsidiaries, or as a result of a change-in-control of the Company or a change in the Named Executive Officers' responsibilities following a
change-in-control. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2><B> Outstanding Equity Awards At Fiscal Year-End  </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>The following table shows grants of options outstanding on June&nbsp;30, 2008, the last day of the Company's fiscal year, to each of the Named
Executive Officers named in the Summary Compensation Table. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> Outstanding Equity Awards at Fiscal Year-End Table for the Fiscal Year Ended June&nbsp;30, 2008<BR>
Option awards  </B></FONT></P>

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<TD WIDTH="149" style="font-family:times;"></TD>
<TD WIDTH="12" style="font-family:times;"></TD>
<TD WIDTH="5" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="87" style="font-family:times;"></TD>
<TD WIDTH="15" style="font-family:times;"></TD>
<TD WIDTH="5" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="87" style="font-family:times;"></TD>
<TD WIDTH="15" style="font-family:times;"></TD>
<TD WIDTH="5" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="30" style="font-family:times;"></TD>
<TD WIDTH="15" style="font-family:times;"></TD>
<TD WIDTH="5" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="40" style="font-family:times;"></TD>
<TD WIDTH="3" style="font-family:times;"></TD>
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<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2><B>Name<BR>
(a)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B>Number of<BR>
securities underlying<BR>
unexercised options<BR>
(#)<BR>
exercisable<BR>
(b)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B>Number of<BR>
securities underlying<BR>
unexercised options<BR>
(#)<BR>
unexercisable<BR>
(c)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B>Option<BR>
exercise<BR>
price<BR>
($)<BR>
(e)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B>Option<BR>
expiration<BR>
date<BR>
(f)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=13 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"></TH>
<TH style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> Richard E. Forkey</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>280,200</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>93,400 <SUP>(1)</SUP></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>0.55</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>5/9/2016</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>373,600</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>-0-</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>0.55</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>6/13/2015</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> Joseph N. Forkey</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><p align=center style="font-family:times;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> 15,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><p align=center style="font-family:times;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> -0-</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2><BR>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
0.55</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
9/25/2013</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>210,150</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>70,050 <SUP>(1)</SUP></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>0.55</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>5/9/2016</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>560,400</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>-0-</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>0.55</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>6/13/2015</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> Richard G. Cyr</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><p align=center style="font-family:times;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> 155,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><p align=center style="font-family:times;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> 100,000 <SUP>(2)</SUP></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2><BR>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
0.55</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
5/9/2016</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE></DIV>
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<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>These
options will become exercisable on May&nbsp;9, 2009.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>These
options will become exercisable in equal installments on May&nbsp;9, 2009, May&nbsp;9, 2010 and May&nbsp;9, 2011. </FONT></DD></DL>


<P style="font-family:times;text-align:justify"><FONT SIZE=2><B> Narrative to Outstanding Equity Award Table  </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Option Grants in Last Fiscal Year  </I></B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>There were no individual grants of stock options made by the Company during the fiscal year ended June&nbsp;30, 2008 to its Named Executive
Officers. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Long Term Incentive Plans; Awards in Last Fiscal Year  </I></B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>The Company made no awards under any long-term incentive plan in the fiscal year ended June&nbsp;30, 2008. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>13</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Profit Sharing and 401(k) Plan  </I></B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>The Company has a defined contribution 401(k) profit sharing plan. Employer profit sharing and matching contributions to the plan are discretionary.
No employer profit sharing contributions were made to the plan in fiscal years 2008 and 2007. Employer matching contributions to the plan amounted to $17,473 and $42,325 for fiscal years 2008 and
2007, respectively. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B> Director Compensation  </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>The following table sets forth all compensation paid to non-executive and non-employee directors during the fiscal year ended
June&nbsp;30, 2008: </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> Director Compensation Table for the Fiscal Year Ended June&nbsp;30, 2008  </B></FONT></P>

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<TD WIDTH="12" style="font-family:times;"></TD>
<TD WIDTH="43" style="font-family:times;"></TD>
<TD WIDTH="18" style="font-family:times;"></TD>
<TD WIDTH="26" style="font-family:times;"></TD>
<TD WIDTH="13" style="font-family:times;"></TD>
<TD WIDTH="26" style="font-family:times;"></TD>
<TD WIDTH="18" style="font-family:times;"></TD>
<TD WIDTH="50" style="font-family:times;"></TD>
<TD WIDTH="13" style="font-family:times;"></TD>
<TD WIDTH="49" style="font-family:times;"></TD>
<TD WIDTH="13" style="font-family:times;"></TD>
<TD WIDTH="49" style="font-family:times;"></TD>
<TD WIDTH="13" style="font-family:times;"></TD>
<TD WIDTH="27" style="font-family:times;"></TD>
<TD WIDTH="3" style="font-family:times;"></TD>
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<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1><B>Name<BR>
(a)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Fees earned<BR>
or paid in<BR>
cash<BR>
($)<BR>
(b)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Stock<BR>
awards<BR>
($)<BR>
(c)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Option<BR>
awards<BR>
($)<BR>
(d)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Non-equity<BR>
incentive plan<BR>
compensation<BR>
($)<BR>
(e)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Non-qualified<BR>
deferred<BR>
compensation<BR>
earnings<BR>
($)<BR>
(f)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>All other<BR>
compensation<BR>
($)<BR>
(g)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Total<BR>
($)<BR>
(h)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=15 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> Joel R. Pitlor</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>$4,500</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1><SUP>(1)</SUP></FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>-0-</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>$2,852</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1><SUP>(3)(5)</SUP></FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>-0-</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>-0-</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>$60,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1><SUP>(4)</SUP></FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>$67,352</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> Donald A. Major</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>$11,750</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1><SUP>(1)(2)</SUP></FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>-0-</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>$2,852</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1><SUP>(3)(6)</SUP></FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>-0-</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>-0-</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>-0-</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>$14,602</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> Richard B. Miles</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>$4,750</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1><SUP>(1)</SUP></FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>-0-</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>$2,852</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1><SUP>(3)(7)</SUP></FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>-0-</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>-0-</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>-0-</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>$7,602</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
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<DL compact>
<DT style='font-family:times;margin-bottom:-9pt;'><FONT SIZE=1>(1)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=1>The
Company pays each director who is not also an employee of the Company $250 per Board or committee meeting that the director attends and reimburses the
director for travel expenses.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-9pt;'><FONT SIZE=1>(2)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=1>For
his service to the Company, in his capacity as Chair of the Audit Committee, Mr.&nbsp;Major receives compensation of $500 per month, which is in
addition to the standard compensation received by all members of the Board of Directors for their services.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-9pt;'><FONT SIZE=1>(3)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=1>Each
of Messrs.&nbsp;Major, Miles and Pitlor, were issued 10,000 stock options of the Company's Common Stock at the Company's annual meeting in November
2007, immediately exercisable at a price per share of $0.31, which was the closing price of the Company's Common Stock on the OTCBB on the date of grant. These options will remain exercisable
following a director's departure from service and expire on November&nbsp;27, 2017. The amounts shown reflect the dollar amounts computed for financial statement reporting purposes for fiscal 2008
in accordance with the requirements of SFAS&nbsp;123(R), excluding an estimate of forfeitures. Refer to Note&nbsp;4, "Stockholders' Equity&#151;Stock Options," in the Notes to the
Consolidated Financial Statements included in the Company's Annual Report on Form&nbsp;10-K filed on September&nbsp;26, 2008 for the relevant assumptions used to determine the
valuation of option awards.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-9pt;'><FONT SIZE=1>(4)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=1>Mr.&nbsp;Pitlor
is paid $60,000 per year, or $5,000 per month, for his services as a consultant to the Company. $25,000 of this amount has been deferred,
and Mr.&nbsp;Pitlor has agreed that such fees may be paid in the form of the Company's restricted stock.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-9pt;'><FONT SIZE=1>(5)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=1>As
of June&nbsp;30, 2008, Mr.&nbsp;Pitlor held a total of 39,378 options to purchase the Company's Common Stock.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-9pt;'><FONT SIZE=1>(6)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=1>As
of June&nbsp;30, 2008, Mr.&nbsp;Major held a total of 40,000 options to purchase the Company's Common Stock.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-9pt;'><FONT SIZE=1>(7)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=1>As
of June&nbsp;30, 2008, Mr.&nbsp;Miles held a total of 30,000 options to purchase the Company's Common Stock. </FONT></DD></DL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B> 2006 Equity Incentive Plan  </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>On November&nbsp;28, 2006, the stockholders of the Company approved the Company's 2006 Equity Incentive Plan, referred to as the 2006 Incentive
Plan, which succeeds the Company's Amended and Restated 1997 Equity Incentive Plan, referred to as the 1997 Incentive Plan. No further awards have been or will be granted under the 1997 Incentive
Plan. The Company's Board of Directors had previously approved the 2006 Incentive Plan, subject to the approval of the stockholders. The 2006 Incentive Plan allows for the grant of stock options to
selected employees, directors and other persons who provide services to the Company or its affiliates. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>14</FONT></P>

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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="di40401_security_ownership_of_certain___sec02525"> </A>
<A NAME="toc_di40401_1"> </A>
<BR></FONT><FONT SIZE=2><B>  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>The following table sets forth information regarding the Company's Common Stock owned as of the close of business on October&nbsp;1, 2008 by the
following persons: (i)&nbsp;each person who is known by the Company to own beneficially more than 5% of the Company's Common Stock, (ii)&nbsp;each of the Company's directors and nominees for
director who beneficially owns the Company's or its subsidiaries' Common Stock, (iii)&nbsp;each of the Company's Named Executive Officers who beneficially own the Company's or its subsidiaries'
Common Stock and (iv)&nbsp;all executive officers and directors, as a group, who beneficially own the Company's or its subsidiaries' Common Stock. The information on beneficial ownership in the
table and footnotes thereto is based upon data furnished to the Company by, or on behalf of, the persons listed in the table. </FONT></P>

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<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="260" style="font-family:times;"></TD>
<TD WIDTH="12" style="font-family:times;"></TD>
<TD WIDTH="4" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="94" style="font-family:times;"></TD>
<TD WIDTH="14" style="font-family:times;"></TD>
<TD WIDTH="4" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="73" style="font-family:times;"></TD>
<TD WIDTH="3" style="font-family:times;"></TD>
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<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>Name and Address of Beneficial Owner </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>Amount and Nature of<BR>
Beneficial Ownership<SUP>(1)</SUP> </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>Percent of Class<SUP>(2)</SUP> </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=2>AIGH Investment Partners,&nbsp;LLC<BR>
6006 Berkeley Avenue, Baltimore, MD 21209</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>4,755,200<SUP>(3)</SUP></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>18.7</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=2><BR>
Austin W. Marxe and David M. Greenhouse<BR>
c/o Special Situations Funds<BR>
527 Madison Avenue, Suite&nbsp;2600, New York, NY 10022</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
21,528,149<SUP>(4)</SUP></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
58.0</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>%</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=2><BR>
Arnold Schumsky<BR>
145 East 27th&nbsp;Street<BR>
New York, New York 10016</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
1,800,490<SUP>(5)</SUP></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
6.8</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>%</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;border-bottom:solid #000000 1.0pt;"><BR><FONT SIZE=2><B>Directors and Named Executive Officers</B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=2>Joseph N. Forkey*<BR>
c/o Precision Optics Corporation,&nbsp;Inc.<BR>
22 East Broadway, Gardner, MA 01440</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1,190,020<SUP>(6)</SUP></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>4.5</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=2><BR>
Richard E. Forkey*<BR>
c/o Precision Optics Corporation,&nbsp;Inc.<BR>
22 East Broadway, Gardner, MA 01440</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
1,230,698<SUP>(7)</SUP></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
4.7</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>%</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=2><BR>
Donald A. Major*<BR>
c/o Precision Optics Corporation,&nbsp;Inc.<BR>
22 East Broadway, Gardner, MA 01440</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
140,000<SUP>(8)</SUP></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
**</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=2><BR>
Richard Miles*<BR>
c/o Precision Optics Corporation,&nbsp;Inc.<BR>
22 East Broadway, Gardner, MA 01440</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
130,000<SUP>(9)</SUP></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
**</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=2><BR>
Joel R. Pitlor*<BR>
237 Moody Street, Waltham, MA 02453</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
4,708,954<SUP>(10)</SUP></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
17.5</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>%</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=2><BR>
Richard G. Cyr<BR>
c/o Precision Optics Corporation,&nbsp;Inc.<BR>
22 East Broadway, Gardner, MA 01440</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
155,000<SUP>(11)</SUP></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
**</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=2><BR>
All executive officers and directors as a group, including those named above (6&nbsp;persons)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD VALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><BR>
7,414,229<SUP>(12)</SUP></FONT></TD>
<TD VALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD VALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><BR>
25.5</FONT></TD>
<TD VALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><BR>%</FONT></TD>
</TR>
</TABLE></DIV>
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<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>*</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Director
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>**</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>The
percentage of shares beneficially owned by such person does not exceed one percent of the Company's Common Stock. </FONT></DD></DL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>15</FONT></P>

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<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Represents
shares with respect to which each beneficial owner listed has or will have, upon acquisition of such shares upon exercise or conversion of
options, warrants, conversion privileges or other rights exercisable within sixty days, sole voting and investment power.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>As
of October&nbsp;1, 2008, the Company had 25,458,212 shares of its Common Stock issued and outstanding. Percentages are calculated on the basis of the
amount of issued and outstanding Common Stock plus, for each person or group, any securities that such person or group has the right to acquire within sixty days pursuant to options, warrants,
conversion privileges or other rights.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(3)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Holdings
as of April&nbsp;13, 2006, as reported on Schedule&nbsp;13D filed with the SEC on May&nbsp;3, 2006 by Orin Hirschman.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(4)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Holdings
as of February&nbsp;28, 2007 as reported on Schedule&nbsp;13D filed with the SEC on March&nbsp;12, 2007 by Messrs.&nbsp;Marxe and
Greenhouse. Represents (i)&nbsp;27,415 shares of Common Stock owned of record by Special Situations Cayman Fund,&nbsp;L.P. ("SSCF"), (ii)&nbsp;104,522 shares of Common Stock owned of record by
Special Situations Fund&nbsp;III,&nbsp;L.P. ("SSF&nbsp;III"), (iii)&nbsp;5,192,456 shares of Common Stock owned of record by Special Situations Fund&nbsp;III QP,&nbsp;L.P. ("SSF&nbsp;III
QP"), (iv)&nbsp;5,820,631 shares that may be acquired under an outstanding warrant held by SSF&nbsp;III QP, which is immediately exercisable, (v)&nbsp;4,000,000 shares of Common Stock owned of
record by Special Situations Private Equity Fund,&nbsp;L.P. ("SSPEF"), (vi)&nbsp;5,820,631 shares that may be acquired under an outstanding warrant held by SSPEF, which is immediately exercisable,
and (vii)&nbsp;557,490 shares of Common Stock owned by Special Situations Technology Fund&nbsp;II,&nbsp;L.P. ("SSTF&nbsp;II"). SSCF, SSF&nbsp;III, SSF&nbsp;III QP, SSPEF and SSTF&nbsp;II
are affiliated funds. MGP is the general partner of the SSF&nbsp;III QP and the general partner of and investment adviser to SSF&nbsp;III. AWM is the general partner of MGP, the general partner of
and investment adviser to SSFCF and the investment adviser to SSF&nbsp;III QP, SSCF, SSFTF&nbsp;II and SSPEF. Messrs.&nbsp;Marxe and Greenhouse are the principal owners of MGP and AWM. Through
their control of MGP and AWM, Messrs.&nbsp;Marxe and Greenhouse share voting and investment control over the portfolio securities of each of the funds listed above. Also includes 5,004 shares that
may be acquired by Mr.&nbsp;Marxe within sixty days upon the exercise of outstanding stock options.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(5)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Includes
873,095 shares that may be acquired upon exercise of an outstanding warrant, which is immediately exercisable.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(6)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Represents
1,177,830 shares which may be acquired within sixty days upon the exercise of outstanding stock options and 12,190 shares owned by
Dr.&nbsp;Forkey and his wife, Heather C.&nbsp;Forkey, with whom he shares voting and investment power.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(7)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Includes
915,320 shares which may be acquired within sixty days upon the exercise of outstanding stock options.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(8)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Includes
40,000 shares which may be acquired within sixty days upon the exercise of outstanding stock options.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(9)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Includes
30,000 shares which may be acquired within sixty days upon the exercise of outstanding stock options.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(10)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Includes
39,378 shares which may be acquired within sixty days upon the exercise of outstanding stock options, and 1,455,157 shares that may be acquired
upon exercise of an outstanding warrant, which is immediately exercisable.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(11)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Represents
155,000 shares which may be acquired within sixty days upon the exercise of outstanding stock options.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(12)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Includes
2,202,528 shares which may be acquired within sixty days upon the exercise of outstanding stock options and 1,455,157 shares that may be acquired
upon exercise of an outstanding warrant, which is immediately exercisable. </FONT></DD></DL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>16</FONT></P>

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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="dk40401_independent_public_accountants"> </A>
<A NAME="toc_dk40401_1"> </A>
<BR></FONT><FONT SIZE=2><B>  INDEPENDENT PUBLIC ACCOUNTANTS    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><I> Dismissal of Vitale, Caturano&nbsp;&amp; Company,&nbsp;Ltd. and appointment of Stowe and Degan  </I></FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>On April&nbsp;15, 2008, and pursuant to a recommendation from its Audit Committee, the Company's Board of Directors dismissed Vitale,
Caturano&nbsp;&amp; Company,&nbsp;Ltd., referred to herein as Vitale, as the independent registered public accountants for the Company. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>The
audit reports of Vitale on the Company's consolidated financial statements as of and for the years ended June&nbsp;30, 2006 and 2007 contained no adverse opinion or disclaimer of opinion, nor
were such reports modified as to uncertainty, audit scope, or accounting principles except for a modification for a going concern uncertainty. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>In
connection with the audits of the two fiscal years ended June&nbsp;30, 2007, and the subsequent interim periods through April&nbsp;15, 2008, there were no disagreements with Vitale on any
matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Vitale, would have caused
Vitale to make reference to the subject matter of the disagreements in their opinions. There were no "reportable events" during the fiscal years ended June&nbsp;30, 2006 and 2007 or the subsequent
interim periods through April&nbsp;15, 2008, except for a material weakness in internal control over the Company's accounting for stock-based compensation identified by Vitale, which the Company
initially reported in "Item&nbsp;3. Controls and Procedures," of its Quarterly Report on Form&nbsp;10-QSB for the quarter ended September&nbsp;30, 2006. The Audit Committee discussed
such material weakness with Vitale. The Company has authorized Vitale Caturano to respond fully to any inquiries by its newly-appointed independent registered public accountant, Stowe&nbsp;&amp; Degon,
referred to herein as Stowe, regarding such material weakness. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>On
April&nbsp;15, 2008, the Audit Committee recommended and the Board of Directors approved the engagement of Stowe as the Company's independent accountants for the quarter ended March&nbsp;31,
2008 and for the fiscal year ending June&nbsp;30, 2008, effective upon the final execution of an engagement letter. The Company's management and the members of the Audit Committee of the Company's
Board of Directors believed that the engagement of Stowe would permit the Company to obtain similar audit services at a lower cost to the Company. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>During
the two most recent fiscal years and through April&nbsp;15, 2008, the Company did not consult with Stowe regarding the application of accounting principles to a specific completed or
contemplated transaction, or the type of audit opinion that might be rendered on the Company's financial statements, or any other matter that was either the subject of disagreement or identified in
response to Item&nbsp;304(a)(1)(iv) of Regulation&nbsp;S-K, including the material weakness identified above. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><I> Independent Registered Public Accounting Firm Fees  </I></FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>Our principal and only independent registered public accountant for the fiscal year ending June&nbsp;30, 2009 is Stowe. The following table
presents fees for professional audit services and other services rendered by </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>17</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2>Stowe
and Vitale for the fiscal year ended June&nbsp;30, 2008 and by Vitale for the fiscal year ended June&nbsp;30, 2007: </FONT></P>

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<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="363" style="font-family:times;"></TD>
<TD WIDTH="12" style="font-family:times;"></TD>
<TD WIDTH="5" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="29" style="font-family:times;"></TD>
<TD WIDTH="15" style="font-family:times;"></TD>
<TD WIDTH="5" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="34" style="font-family:times;"></TD>
<TD WIDTH="3" style="font-family:times;"></TD>
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<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>2008 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>2007 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> Audit Fees<SUP>(1)</SUP></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>88,265</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>111,288</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> Audit-Related Fees<SUP>(2)</SUP></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD style="font-family:times;">&nbsp;</TD>
<TD style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="font-family:times;">&nbsp;</TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> Total Audit and Audit-Related Fees</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>88,265</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>111,288</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> Tax Fees<SUP>(3)</SUP></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>7,500</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>9,500</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> All Other Fees<SUP>(4)</SUP></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD style="font-family:times;">&nbsp;</TD>
<TD style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="font-family:times;">&nbsp;</TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> Total Fees</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>95,765</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>120,788</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD style="font-family:times;">&nbsp;</TD>
<TD style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD style="font-family:times;">&nbsp;</TD>
</TR>
</TABLE></DIV>
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<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Audit
fees for fiscal 2007 are comprised of: (i)&nbsp;fees for professional services performed by Vitale for the audit of the Company's annual financial
statements and review of the Company's quarterly financial statements of $96,288, including direct out-of-pocket expenses in the amount of $2,658 and (ii)&nbsp;fees for
attestation services performed by Vitale in connection with the filing of the Company's registration statement on Form&nbsp;SB-2 of $15,000. </FONT></DD></DL>
<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>Audit
fees for fiscal 2008 are comprised of fees for professional services performed for the audit of the Company's annual financial statements (Stowe) and review of the Company's quarterly financial
statements (Stowe and Vitale) of $88,265, including direct out-of-pocket expenses in the amount of $1,078.  </FONT></P>

</UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Audit-related
fees are comprised of fees for assurance and related attestation services that are reasonably related to the performance of the audit of the
Company's annual financial statements or the review thereof and fees for due diligence services.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(3)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Tax
fees for fiscal 2008 and 2007 by Stowe and Vitale, respectively, are comprised of fees for professional services performed with respect to corporate tax
compliance, tax planning and tax advice.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(4)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>The
Company did not incur any other fees during fiscal 2008 or 2007 for products and services provided by Stowe or Vitale other than those disclosed above. </FONT></DD></DL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B> Annual Meeting  </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>We expect that representatives from Stowe will be present at the 2008 Annual Meeting of Stockholders and will be available to respond to appropriate
questions and have the opportunity to make a statement if they desire. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B> Audit Committee Pre-Approval Policies  </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>The Audit Committee has established pre-approval policies and procedures that would prohibit engagement of accountants to render audit or
non-audit services without prior approval of the Audit Committee. As a result, all engagements of the independent auditors to render any services, whether they would be deemed audit or
non-audit services, require pre-approval of the Audit Committee. No audit, review or attest services were approved in accordance with
Section&nbsp;2-01(c)(7)(i)(C) of Regulation&nbsp;S-X during the fiscal year ended June&nbsp;30, 2008. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>18</FONT></P>

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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="dm40401_audit_committee_report"> </A>
<A NAME="toc_dm40401_1"> </A>
<BR></FONT><FONT SIZE=2><B>  AUDIT COMMITTEE REPORT    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>The Audit Committee is composed of Messrs.&nbsp;Major and Miles, each of whom is "independent" as defined in Rule&nbsp;4200(a)(15) of the Nasdaq
Marketplace Rules. The Board of Directors has adopted a written charter for the Audit Committee, which was filed with the Company's proxy statement on Schedule&nbsp;14A for the 2006 Annual Meeting
of Stockholders. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>The
Audit Committee has submitted the following report: </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>The
Audit Committee has reviewed and discussed with management the audited consolidated financial statements for the fiscal year ended June&nbsp;30, 2008, and has discussed with the Company's
independent auditors the matters required to be discussed by Statement on Auditing Standards No.&nbsp;61 (SAS 61). SAS 61 requires independent auditors to communicate to the Audit Committee various
matters, including, if applicable: (1)&nbsp;methods used to account for certain unusual transactions; (2)&nbsp;the effect of certain accounting policies in controversial or emerging areas for
which there is a lack of authoritative guidance or consensus; (3)&nbsp;the process used by management in formulating certain accounting estimates and the basis for the auditor's conclusions
regarding the reasonableness of those estimates and (4)&nbsp;disagreements with management over the application of accounting principles and certain other matters. The Audit Committee has received
the written disclosures and the letter from the Company's independent accountants required by Independence Standards Board Standard No.&nbsp;1 (requiring auditors to make written disclosures to, and
to discuss with, the Audit Committee, various matters relating to the auditor's independence), has discussed with the accountants their independence and has considered
whether the provision of non-audit services by the accountants is compatible with maintaining that independence. Based on the foregoing and further review and discussion, the Audit
Committee recommended to the Board of Directors that the audited financial statements be included in the Company's Annual Report on Form&nbsp;10-K for the fiscal year ended
June&nbsp;30, 2008 for filing with the Securities and Exchange Commission. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>Donald
A. Major<BR>
Richard Miles </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>October
2008 </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>19</FONT></P>

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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="dp40401_corporate_code_of_ethics_and_conduct"> </A>
<A NAME="toc_dp40401_1"> </A>
<BR></FONT><FONT SIZE=2><B>  CORPORATE CODE OF ETHICS AND CONDUCT    <BR>    </B></FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>The Company's Board of Directors has adopted a Corporate Code of Ethics and Conduct applicable to all of its employees, officers and directors. The
Code was filed as an exhibit to the Company's Annual Report on Form&nbsp;10-K for the year ended June&nbsp;30, 2008. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="dp40401_stockholder_communications"> </A>
<A NAME="toc_dp40401_2"> </A>
<BR></FONT><FONT SIZE=2><B>  STOCKHOLDER COMMUNICATIONS    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>Stockholders may send communications to the Board of Directors or to specified directors by mailing such communications to the Clerk of the Company
at 22 East Broadway, Gardner, Massachusetts 01440. All such correspondence should identify the author as a stockholder and clearly state whether the intended recipients are all members of the Board or
only specified directors. Any stockholder communication sent to the Board of Directors will be forwarded to the Board without screening. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="dp40401_stockholder_proposals"> </A>
<A NAME="toc_dp40401_3"> </A>
<BR></FONT><FONT SIZE=2><B>  STOCKHOLDER PROPOSALS    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>Stockholders may present proposals for inclusion in the 2009 proxy statement and form of proxy relating to that meeting provided they are received by
the Clerk of the Company no later than July&nbsp;8, 2009 and are otherwise in compliance with applicable Securities and Exchange Commission regulations. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>If
a stockholder who wishes to present a proposal at the Company's 2009 annual meeting that will not be included in the Company's proxy statement for such annual meeting fails to notify the Company of
his or her desire to do so by September&nbsp;21, 2009, then the proxies that the Board of Directors solicits for the 2009 annual meeting will include discretionary authority to vote on the
stockholder's proposal, if such proposal is properly brought before the meeting. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>20</FONT></P>

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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="ea40401_appendix_a_form_of_reverse_stock_split_amendment"> </A>
<A NAME="toc_ea40401_1"> </A>
<BR></FONT><FONT SIZE=2><B>  APPENDIX A<BR>  <BR>    FORM OF REVERSE STOCK SPLIT AMENDMENT    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>That, the Corporation's Articles of Organization, as amended, be further amended by inserting the following in Article&nbsp;III: </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>"Upon
the filing of these Articles of Amendment with the Massachusetts Secretary of the Commonwealth (the "Effective Time"), each
<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>
(&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;) issued
and outstanding shares of authorized Common Stock of the Corporation, $0.01 par value per share, shall be reclassified and combined into one (1)&nbsp;share of Common Stock. There shall be no
fractional shares issued. Each resulting fractional share shall be rounded up to a whole share. The total number of authorized shares of Common Stock immediately after the Effective Time shall
continue to be 50,000,000." </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>A-1</FONT></P>

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<div style="font-family:Times New Roman;">

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p align="right" style="margin:0in 0in .0001pt;text-align:right;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">EXHIBIT A</font></b></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<table border="0" cellspacing="0" cellpadding="0" width="100%" style="border-collapse:collapse;width:100.0%;">
 <tr>
  <td width="49%" valign="top" style="padding:0in 0in 0in 0in;width:49.0%;">
  <p style="margin:0in 0in .0001pt;text-autospace:none;"><b><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;font-weight:bold;">PRECISION
  OPTICS CORPORATION, INC.</font></i></b></p>
  <p style="margin:0in 0in .0001pt;text-autospace:none;"><b><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;font-weight:bold;">&nbsp;</font></i></b></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.88%;">
  <p style="margin:0in 0in .0001pt;text-autospace:none;"><b><font size="2" face="Times New Roman" style="font-size:1.0pt;font-weight:bold;">&nbsp;</font></b></p>
  </td>
  <td width="49%" rowspan="2" valign="top" style="padding:0in 0in 0in 0in;width:49.12%;">
  <p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="49%" valign="top" style="padding:0in 0in 0in 0in;width:49.0%;">
  <p style="font-size:10.0pt;margin:0in 0in .0001pt;text-autospace:none;"><b><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;font-weight:bold;">22 EAST BROADWAY</font></i></b><br>
  <b><i style="font-weight:bold;">GARDNER, MA 01440-3338</i></b></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.88%;">
  <p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
</table>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-autospace:none;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">VOTE BY
MAIL</font></b>  </p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">&nbsp;</font></b></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt;">Mark, sign and date your
proxy card and return it in the</font>  </font>postage-paid envelope we have provided or return it to Vote Processing, c/o&nbsp;Broadridge, 51
Mercedes Way, Edgewood, NY
11717.</p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<table border="0" cellspacing="0" cellpadding="0" width="100%" style="border-collapse:collapse;width:100.0%;">
 <tr>
  <td width="63%" valign="top" style="padding:0in 0in 0in 0in;width:63.76%;">
  <p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">TO VOTE, MARK BLOCKS BELOW IN
  BLUE OR BLACK INK AS FOLLOWS:</font></p>
  </td>
  <td width="7%" valign="top" style="padding:0in 0in 0in 0in;width:7.5%;">
  <p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">PROPT1</font></p>
  </td>
  <td width="28%" valign="top" style="padding:0in 0in 0in 0in;width:28.76%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">KEEP
  THIS PORTION FOR YOUR RECORDS</font></p>
  </td>
 </tr>
</table>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;text-autospace:none;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">DETACH</font></b> <b>AND RETURN
THIS PORTION ONLY</b></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.</font></b></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">PRECISION
OPTICS CORPORATION, INC.</font></b></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Vote on
Directors</font></b></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<table border="0" cellspacing="0" cellpadding="0" width="100%" style="border-collapse:collapse;width:100.0%;">
 <tr>
  <td width="41%" colspan="3" valign="top" style="padding:0in 0in 0in 0in;width:41.66%;">
  <p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Election of two
  Class&nbsp;III Directors. The nominees for the Board of Directors to serve
  for a three-year term as Class&nbsp;III Directors:</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.16%;">
  <p style="margin:0in 0in .0001pt;text-autospace:none;"><b><font size="2" face="Times New Roman" style="font-size:1.0pt;font-weight:bold;">&nbsp;</font></b></p>
  </td>
  <td width="6%" valign="top" style="padding:0in 0in 0in 0in;width:6.44%;">
  <p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;text-autospace:none;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">For</font></b><br>
  <b>All</b></p>
  </td>
  <td width="10%" valign="top" style="padding:0in 0in 0in 0in;width:10.0%;">
  <p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;text-autospace:none;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Withhold</font></b><br>
  <b>All</b></p>
  </td>
  <td width="7%" valign="top" style="padding:0in 0in 0in 0in;width:7.84%;">
  <p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;text-autospace:none;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">For All</font></b><br>
  <b>Except</b></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.74%;">
  <p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="30%" valign="top" style="padding:0in 0in 0in 0in;width:30.16%;">
  <p style="font-size:10.0pt;margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">To withhold authority to
  vote for any individual nominee(s), mark &#147;For All&nbsp;Except&#148; and write the
  number of the nominee on the line</font> below.</p>
  </td>
 </tr>
 <tr>
  <td width="41%" colspan="3" valign="top" style="padding:0in 0in 0in 0in;width:41.66%;">
  <p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.16%;">
  <p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
  <td width="6%" valign="top" style="padding:0in 0in 0in 0in;width:6.44%;">
  <p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
  <td width="10%" valign="top" style="padding:0in 0in 0in 0in;width:10.0%;">
  <p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
  <td width="7%" valign="top" style="padding:0in 0in 0in 0in;width:7.84%;">
  <p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.74%;">
  <p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
  <td width="30%" valign="top" style="padding:0in 0in 0in 0in;width:30.16%;">
  <p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="23%" valign="top" style="padding:0in 0in 0in 0in;width:23.5%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-autospace:none;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Nominees:</font></b></p>
  </td>
  <td width="1%" valign="top" style="padding:0in 0in 0in 0in;width:1.76%;">
  <p style="margin:0in 0in .0001pt;text-autospace:none;"><b><font size="2" face="Times New Roman" style="font-size:1.0pt;font-weight:bold;">&nbsp;</font></b></p>
  </td>
  <td width="16%" valign="top" style="padding:0in 0in 0in 0in;width:16.4%;">
  <p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1) Joseph N. Forkey</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.16%;">
  <p style="margin:0in 0in .0001pt;text-autospace:none;"><b><font size="2" face="Times New Roman" style="font-size:1.0pt;font-weight:bold;">&nbsp;</font></b></p>
  </td>
  <td width="6%" valign="top" style="padding:0in 0in 0in 0in;width:6.44%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;"><font size="2" face="Wingdings" style="font-size:10.0pt;">o</font></p>
  </td>
  <td width="10%" valign="top" style="padding:0in 0in 0in 0in;width:10.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;"><font size="2" face="Wingdings" style="font-size:10.0pt;">o</font></p>
  </td>
  <td width="7%" valign="top" style="padding:0in 0in 0in 0in;width:7.84%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;"><font size="2" face="Wingdings" style="font-size:10.0pt;">o</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.74%;">
  <p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Wingdings" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="30%" valign="top" style="border:none;border-bottom:solid windowtext 1.0pt;padding:0in 0in 0in 0in;width:30.16%;">
  <p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Wingdings" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="23%" valign="top" style="padding:0in 0in 0in 0in;width:23.5%;">
  <p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
  <td width="1%" valign="top" style="padding:0in 0in 0in 0in;width:1.76%;">
  <p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
  <td width="16%" valign="top" style="padding:0in 0in 0in 0in;width:16.4%;">
  <p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.16%;">
  <p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
  <td width="6%" valign="top" style="padding:0in 0in 0in 0in;width:6.44%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
  <td width="10%" valign="top" style="padding:0in 0in 0in 0in;width:10.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
  <td width="7%" valign="top" style="padding:0in 0in 0in 0in;width:7.84%;">
  <p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.74%;">
  <p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
  <td width="30%" valign="top" style="border:none;padding:0in 0in 0in 0in;width:30.16%;">
  <p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="23%" valign="top" style="padding:0in 0in 0in 0in;width:23.5%;">
  <p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="1%" valign="top" style="padding:0in 0in 0in 0in;width:1.76%;">
  <p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="16%" valign="top" style="padding:0in 0in 0in 0in;width:16.4%;">
  <p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">2) Richard Miles</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.16%;">
  <p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="6%" valign="top" style="padding:0in 0in 0in 0in;width:6.44%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="10%" valign="top" style="padding:0in 0in 0in 0in;width:10.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="7%" valign="top" style="padding:0in 0in 0in 0in;width:7.84%;">
  <p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.74%;">
  <p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="30%" valign="top" style="padding:0in 0in 0in 0in;width:30.16%;">
  <p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
</table>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<table border="0" cellspacing="0" cellpadding="0" width="100%" style="border-collapse:collapse;width:100.0%;">
 <tr>
  <td width="67%" valign="top" style="padding:0in 0in 0in 0in;width:67.66%;">
  <p style="margin:0in 0in .0001pt;text-autospace:none;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Vote on
  Proposal Number 1</font></b></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.34%;">
  <p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Wingdings" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="10%" valign="top" style="padding:0in 0in 0in 0in;width:10.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">For</font></b></p>
  </td>
  <td width="10%" valign="top" style="padding:0in 0in 0in 0in;width:10.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Against</font></b></p>
  </td>
  <td width="10%" valign="top" style="padding:0in 0in 0in 0in;width:10.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Abstain</font></b></p>
  </td>
 </tr>
 <tr>
  <td width="67%" valign="top" style="padding:0in 0in 0in 0in;width:67.66%;">
  <p style="margin:0in 0in .0001pt;text-autospace:none;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">&nbsp;</font></b></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.34%;">
  <p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Wingdings" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
  <td width="10%" valign="top" style="padding:0in 0in 0in 0in;width:10.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">&nbsp;</font></b></p>
  </td>
  <td width="10%" valign="top" style="padding:0in 0in 0in 0in;width:10.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">&nbsp;</font></b></p>
  </td>
  <td width="10%" valign="top" style="padding:0in 0in 0in 0in;width:10.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">&nbsp;</font></b></p>
  </td>
 </tr>
 <tr>
  <td width="67%" valign="top" style="padding:0in 0in 0in 0in;width:67.66%;">
  <p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">To consider and approve an
  amendment to the Company&#146;s Articles of Organization, as amended, to be filed
  at the discretion of the Board of Directors, to effect a reverse stock split,
  as more fully described in the Proxy Statement.</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.34%;">
  <p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Wingdings" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="10%" style="padding:0in 0in 0in 0in;width:10.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;"><font size="2" face="Wingdings" style="font-size:10.0pt;">o</font></p>
  </td>
  <td width="10%" style="padding:0in 0in 0in 0in;width:10.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;"><font size="2" face="Wingdings" style="font-size:10.0pt;">o</font></p>
  </td>
  <td width="10%" style="padding:0in 0in 0in 0in;width:10.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;"><font size="2" face="Wingdings" style="font-size:10.0pt;">o</font></p>
  </td>
 </tr>
</table>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<table border="0" cellspacing="0" cellpadding="0" width="100%" style="border-collapse:collapse;width:100.0%;">
 <tr>
  <td width="94%" valign="top" style="padding:0in 0in 0in 0in;width:94.42%;">
  <p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">For address changes and/or
  comments, please check this box and write them on the back where indicated.</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="3%" style="padding:0in 0in 0in 0in;width:3.58%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-autospace:none;"><font size="2" face="Wingdings" style="font-size:10.0pt;">o</font></p>
  </td>
 </tr>
 <tr>
  <td width="94%" valign="top" style="padding:0in 0in 0in 0in;width:94.42%;">
  <p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
  <td width="3%" valign="top" style="padding:0in 0in 0in 0in;width:3.58%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="96%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:96.42%;">
  <p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Please sign this proxy
  exactly as name appears hereon. When shares are held by joint tenants, both
  should sign. When signing as attorney, administrator, trustee or guardian,
  please give full title as such.</font></p>
  </td>
  <td width="3%" valign="top" style="padding:0in 0in 0in 0in;width:3.58%;">
  <p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
</table>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<table border="0" cellspacing="0" cellpadding="0" width="100%" style="border-collapse:collapse;width:100.0%;">
 <tr>
  <td width="48%" colspan="2" valign="top" style="border:none;border-bottom:solid windowtext 1.0pt;padding:0in 0in 0in 0in;width:48.76%;">
  <p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.74%;">
  <p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
  <td width="48%" colspan="2" valign="top" style="border:none;border-bottom:solid windowtext 1.0pt;padding:0in 0in 0in 0in;width:48.5%;">
  <p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="39%" valign="top" style="border:none;padding:0in 0in 0in 0in;width:39.0%;">
  <p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Signature [PLEASE SIGN
  WITHIN BOX]</font></p>
  </td>
  <td width="9%" valign="top" style="border:none;padding:0in 0in 0in 0in;width:9.76%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Date</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.74%;">
  <p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="27%" valign="top" style="border:none;padding:0in 0in 0in 0in;width:27.0%;">
  <p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Signature (Joint Owners)</font></p>
  </td>
  <td width="21%" valign="top" style="border:none;border-top:solid windowtext 1.0pt;padding:0in 0in 0in 0in;width:21.5%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Date</font></p>
  </td>
 </tr>
 <tr height="0">
  <td width="292" style="border:none;"></td>
  <td width="73" style="border:none;"></td>
  <td width="20" style="border:none;"></td>
  <td width="202" style="border:none;"></td>
  <td width="161" style="border:none;"></td>
 </tr>
</table>

<p align="center" style="line-height:.05pt;margin:0in 0in .0001pt;text-align:center;text-autospace:none;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<div style="margin:0in 0in .0001pt;"><hr size="3" width="100%" noshade color="#010101" align="left"></div>

</div>
<!-- ZEQ.=1,SEQ=25,EFW="2188540",CP="PRECISION OPTICS CORPORATION,INC",DN="1",CHK=11788,FOLIO='',FILE="DISK134:[08ZDG2.08ZDG40402]26304-2-BC_ZDG40402.CHC",USER="LPALLES",CD='Oct 17 22:41 2008' -->


<br clear="all" style="page-break-before:always;">


<div>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">PRECISION OPTICS CORPORATION, INC.</font></b></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Dear Stockholder,</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Please take note of the
important information enclosed with this proxy card. The proposals which are
discussed in detail in the enclosed proxy materials require your immediate
attention.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Your vote counts, and you
are strongly encouraged to exercise your right to vote your shares.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Please mark the boxes on
this proxy card to indicate how your shares should be voted. Then sign the
card, detach it and return your proxy vote in the enclosed postage-paid
envelope.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Your vote must be received
prior to the Annual Meeting of Stockholders on November&nbsp;25, 2008.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Thank you in advance for
your prompt consideration of these matters.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Very truly yours,</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Precision Optics Corporation,&nbsp;Inc.</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<div style="margin:0in 0in .0001pt;"><hr size="3" width="100%" noshade color="#010101" align="left"></div>

</div>
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<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">PRECISION OPTICS CORPORATION, INC.</font></b></p>

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<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">COMMON STOCK PROXY</font></b></p>

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<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The undersigned, revoking
any previous instructions, hereby acknowledges receipt of the Notice and Proxy
Statement dated October&nbsp;31, 2008. In connection with the Annual Meeting
mentioned below, the undersigned hereby appoints Richard E. Forkey and Jack P.
Dreimiller as attorneys of the undersigned each with power to act alone and
with full power of substitution, to act and to vote all shares of stock which
the undersigned is entitled to vote at the Annual Meeting of Stockholders of
Precision Optics Corporation,&nbsp;Inc. to be held on November&nbsp;25, 2008 at
10:00&nbsp;A.M. at the Colonial Hotel, 625 Betty Spring Road, Gardner,
Massachusetts, 01440, and at any adjournments or postponements thereof, upon
the matters set forth in the proxy statement for such Annual Meeting. The
foregoing attorneys are authorized to vote, in their discretion, upon such
other business as may properly come before the meeting or any adjournments or
postponements thereof.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">This proxy
is solicited by the Board of Directors. When this proxy is properly executed,
the shares represented hereby will be voted as specified by the Stockholder(s).
If no direction is given, the shares will be voted FOR the amendment to the
Articles of Organization described in Proposal Number 1 and FOR the election of
the Class&nbsp;III director nominees as described in Proposal Number 2.</font></b></p>

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<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN
THE ENCLOSED ENVELOPE.</font></b></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Please sign exactly as your
name appears on the books of Precision Optics Corporation,&nbsp;Inc. Joint
owners should each sign personally. Trustees and other fiduciaries should
indicate the capacity in which they sign, and where more than one name appears,
a majority must sign. If a corporation, this signature should be that of an
authorized officer who should state his or her title.</font></p>

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  <p style="margin:0in 0in .0001pt;text-autospace:none;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Address</font></b></p>
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  <p style="margin:0in 0in .0001pt;text-autospace:none;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Changes/Comments:</font></b></p>
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  <p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
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<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(If
you noted any Address Changes/Comments above, please mark corresponding box on
the reverse side.)</font></p>

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<P><br><A NAME="08ZDG40401_1">QuickLinks</A><br></P><!-- TOC_BEGIN -->
<FONT SIZE=2 style="font-family:times;"><A HREF="#toc_be40401_1">NOTICE OF 2008 ANNUAL MEETING OF STOCKHOLDERS</A></FONT><BR>
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<FONT SIZE=2 style="font-family:times;"><A HREF="#toc_da40401_1">PROXY STATEMENT</A></FONT><BR>
<FONT SIZE=2 style="font-family:times;"><A HREF="#toc_da40401_2">INFORMATION CONCERNING SOLICITATION AND VOTING</A></FONT><BR>
<!-- TOC_BEGIN -->
<FONT SIZE=2 style="font-family:times;"><A HREF="#toc_dc40401_1">PROPOSAL 1: REVERSE STOCK SPLIT</A></FONT><BR>
<!-- TOC_BEGIN -->
<FONT SIZE=2 style="font-family:times;"><A HREF="#toc_de40401_1">PROPOSAL NUMBER 2: ELECTION OF DIRECTORS</A></FONT><BR>
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<FONT SIZE=2 style="font-family:times;"><A HREF="#toc_dg40401_1">EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES</A></FONT><BR>
<FONT SIZE=2 style="font-family:times;"><A HREF="#toc_dg40401_2">CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS</A></FONT><BR>
<FONT SIZE=2 style="font-family:times;"><A HREF="#toc_dg40401_3">SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE</A></FONT><BR>
<FONT SIZE=2 style="font-family:times;"><A HREF="#toc_dg40401_4">EXECUTIVE AND DIRECTOR COMPENSATION</A></FONT><BR>
<!-- TOC_BEGIN -->
<FONT SIZE=2 style="font-family:times;"><A HREF="#toc_di40401_1">SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT</A></FONT><BR>
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<FONT SIZE=2 style="font-family:times;"><A HREF="#toc_dk40401_1">INDEPENDENT PUBLIC ACCOUNTANTS</A></FONT><BR>
<!-- TOC_BEGIN -->
<FONT SIZE=2 style="font-family:times;"><A HREF="#toc_dm40401_1">AUDIT COMMITTEE REPORT</A></FONT><BR>
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<FONT SIZE=2 style="font-family:times;"><A HREF="#toc_dp40401_1">CORPORATE CODE OF ETHICS AND CONDUCT</A></FONT><BR>
<FONT SIZE=2 style="font-family:times;"><A HREF="#toc_dp40401_2">STOCKHOLDER COMMUNICATIONS</A></FONT><BR>
<FONT SIZE=2 style="font-family:times;"><A HREF="#toc_dp40401_3">STOCKHOLDER PROPOSALS</A></FONT><BR>
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<FONT SIZE=2 style="font-family:times;"><A HREF="#toc_ea40401_1">APPENDIX A FORM OF REVERSE STOCK SPLIT AMENDMENT</A></FONT><BR>
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