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Precision Optics Corporation, Inc. Announces Operating Results for the Second Quarter and Six Months of Fiscal Year 2017

GARDNER, Mass., Feb. 14, 2017 (GLOBE NEWSWIRE) -- Precision Optics Corporation, Inc. (OTCQB:PEYE) (the “Company”) today announced operating results on an unaudited basis for its second quarter and six months ended December 31, 2016, of fiscal year 2017.

Second quarter highlights include:

  • Completion of an $800,000 private placement offering;
  • $353,182 decrease in revenues during quarter ended December 31, 2016 compared to the same quarter of the prior year;
  • Gross margin improvements during the quarter and six months ended December 31, 2016 to 24.7% and 21.7%, respectively, compared to 22.7% in the quarter ended December 31, 2015 and 19.3% in the six months ended December 31, 2015;
  • Reductions in SG&A expenses of $64,601 and $85,845 in the quarter and six month periods ended December 31, 2016, respectively, when compared to SG&A expenses in the same periods of the prior year;
  • Increasing market demand for small sized and disposable micro cameras;
  • Development of smaller CMOS camera module using low cost, high performance proprietary technology.

Commenting on the results, Company CEO, Joseph Forkey, said, “In spite of the recent progress Precision Optics has made with margins, cost containment and increasing product and engineering service activities, we experienced a 37% decline in revenues during the three months ended December 31, 2016 compared to the previous year. The decline occurred in both the engineering service and production categories. With the exception of one product that we no longer manufacture, the declines resulted principally from timing delays related to engineering project development and release to production schedules and from the cyclical purchasing patterns of some traditional products by our customers. We continue to see robust activity in existing and prospective customer demand for our unique design, engineering and production capabilities, and believe this quarter’s revenue decline will be temporary.”

Dr. Forkey continued, “We are pleased with the margin improvements even at this lower level of revenue, which represents our improving operational performance in engineering and production services relating to our core technologies. Margins increased to 24.7% and 21.7% during the three and six months ended December 31, 2016, principally as a result of efficient production of three traditional products comprising 43% of production revenue during the six months, and from cost containment efforts, including the elimination of our internal thin film coating operation.”

Dr. Forkey concluded, “We are seeing accelerating demand in the medical device market for small sized, disposable micro cameras used in many different endoscope configurations and applications. Precision Optics has once again lead the market with the recent introduction of a smaller CMOS camera module utilizing its proprietary techniques to accomplish a low cost, high performance product with a diameter of less than 1mm. I would like to thank our recent investors for their support in participating in the $800,000 round of financing completed in November 2016. This financing allows us to continue our efforts to cultivate our unique technologies and related product pipeline opportunities.”

Quarterly Conference Call Details
The Company has scheduled a conference call to discuss the fiscal second quarter 2017 financial results for Tuesday, February 14, 2017 at 5:00 PM Eastern. To participate in the conference call, please dial 1-844-826-3042 toll free from the U.S., or 1-412-317-5187 for international callers, and ask to be connected to the Precision Optics conference call.

An audio replay of the conference call will be available approximately one hour after the conclusion of the call and will be made available until February 28, 2017. The audio replay can be accessed by dialing 1-877-344-7529 toll free from the U.S., or 1-412-317-0088 for international callers, and entering Replay Access Code 10101395.

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

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

Company Contact:
PRECISION OPTICS CORPORATION
22 EAST BROADWAY
GARDNER, MASSACHUSETTS 01440-3338
Telephone: 978-630-1800

Investor Contact:
Kirin M. Smith, Chief Operating Officer
PCG Advisory Group
Telephone: 646-863-6519
Email: Ksmith@PCGAdvisory.com
www.pcgadvisory.com

Following are the Company’s consolidated balance sheets as of December 31, 2016 and June 30, 2015, and statements of operations for the three months and six months ended December 31, 2016 and December 31, 2015 and statements of cash flows for the six months ended December 31, 2016 and December 31, 2015 (unaudited):

PRECISION OPTICS CORPORATION, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
December 31,
2016
June 30,
2016
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents $516,578 $50,059
Accounts Receivable, net 442,087 750,380
Inventories, net 1,097,891 1,133,451
Prepaid Expenses 94,044 88,129
Total Current Assets 2,150,600 2,022,019
PROPERTY AND EQUIPMENT
Machinery and Equipment 2,505,314 2,479,471
Leasehold Improvements 553,596 553,596
Furniture and Fixtures 148,303 148,303
Vehicles 19,674
3,207,213 3,201,044
Less: Accumulated Depreciation and Amortization (3,119,194) (3,122,849)
Net Fixed Assets 88,019 78,195
Patents, net 28,722 22,874
TOTAL ASSETS $2,267,341 $2,123,088
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Current Portion of Capital Lease Obligation $8,120 $7,857
Accounts Payable 983,128 1,151,561
Customer Advances 37,100 -
Accrued Employee Compensation 194,451 238,381
Accrued Professional Services 66,600 65,550
Accrued Warranty Expense 25,000 25,000
Other Accrued Liabilities 63,012 15,612
Total Current Liabilities 1,377,411 1,503,961
Capital lease obligation, net of current portion 27,828 31,955
STOCKHOLDERS’ EQUITY
Common Stock, $0.01 par value - Authorized - 50,000,000 shares; Issued and Outstanding – 8,872,916 shares at December 31, 2016 and 7,539,582 shares at June 30, 2016 88,729 75,396
Additional Paid-in Capital 45,043,151 44,176,051
Accumulated Deficit (44,269,778) (43,664,275)
Total Stockholders’ Equity 862,102 587,172
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $2,267,341 $2,123,088


PRECISION OPTICS CORPORATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED
DECEMBER 31, 2016 AND 2015
(UNAUDITED)
Three Months
Ended December 31,
Six Months
Ended December 31,
2016 2015 2016 2015
Revenues $601,590 $954,772 $1,451,138 $1,813,199
Cost of Goods Sold 453,183 737,750 1,135,680 1,463,839
Gross Profit 148,407 217,022 315,458 349,360
Research and Development Expenses, net 119,215 108,146 236,207 258,914
Selling, General and Administrative Expenses 342,487 407,088 686,269 772,114
Gain on Sale of Assets (1,200) (16,902) (1,515) (18,468)
Total Operating Expenses 460,502 498,332 920,961 1,012,560
Net Loss (312,095) (281,310) (605,503) (663,200)
Loss Per Share:
Basic $(0.04) $(0.04) $(0.08) $(0.10)
Diluted $(0.04) $(0.04) $(0.08) $(0.10)
Weighted Average Common Shares Outstanding:
Basic 8,104,800 7,230,169 7,822,191 6,809,988
Diluted 8,104,800 7,230,169 7,822,191 6,809,988


PRECISION OPTICS CORPORATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED
DECEMBER 31, 2016 AND 2015
(UNAUDITED)
Six Months
Ended December 31,
2016 2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $(605,503) $(663,200)
Adjustments to Reconcile Net Loss to Net Cash Used In Operating Activities -
Depreciation and Amortization 16,019 10,847
Gain on Sale of Assets (1,515) (18,468)
Stock-based Compensation Expense 110,433 142,428
Non-cash Consulting Expense 17,400 47,850
Changes in Operating Assets and Liabilities -
Accounts Receivable, net 308,293 162,309
Inventories 35,560 (20,500)
Prepaid Expenses (5,915) (24,030)
Accounts Payable (168,433) (59,369)
Customer Advances 37,100 (70,830)
Accrued Expenses (42,880) (31,968)
Net Cash Used In Operating Activities (299,441) (524,931)
CASH FLOWS FROM INVESTING ACTIVITIES:
Additional Patent Costs (5,848) (2,871)
Purchases of Property and Equipment (25,843) (4,372)
Proceeds from Sale of Assets 1,515 18,468
Net Cash Provided By (Used In) Investing Activities (30,176) 11,225
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of Capital Lease Obligation (3,864) -
Gross Proceeds from Private Placement of Common Stock 800,000 700,000
Private Placement Expenses Incurred as of December 31 - (16,452)
Net Cash Provided by Financing Activities 796,136 683,548
NET INCREASE IN CASH AND CASH EQUIVALENTS 466,519 169,842
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 50,059 241,051
CASH AND CASH EQUIVALENTS, END OF PERIOD $516,578 $410,893
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash Paid for Income Taxes $- $912


Source:Precision Optics Corporation