Precision Optics Reports First Quarter Fiscal Year 2020 Financial Results

GARDNER, Mass., Nov. 14, 2019 /PRNewswire/ -- Precision Optics Corporation, Inc. (OTCQB: PEYE), a leading designer and manufacturer of advanced optical instruments for the medical and defense industries, announced operating results on an unaudited basis for its first quarter fiscal year ended September 30, 2019.

First quarter fiscal 2020 highlights:

    --  Revenue for the quarter (ended September 30, 2019) was $2.5 million
        compared to $1.6 million in the same quarter of the previous fiscal
        year, an increase of 61% driven primarily by Ross Optical operating as a
        division of Precision Optics.
    --  Gross margins of 39% compared to 30% in the same quarter of the prior
        year, and sequentially improved for the third consecutive quarter.
    --  Net loss of $86,000 during the quarter included $122,000 of stock-based
        compensation and service fees.

Precision Optics' CEO, Joseph Forkey, commented, "The first quarter financial results highlight the positive impact of our evolving capabilities, which now include Ross Optical, resulting in a year-over-year revenue increase of 61% and positive operating cash flow. During the quarter, we continued deliveries of the three products that went into commercial level production last year and we expect our expanding pipeline of Precision Optics-enabled products to allow for ongoing growth. Our business strategy of enabling leading medical device companies around the world to meet the increasing demands of the surgical community, who are requiring more enhanced and smaller imaging systems for minimally invasive surgery, as well as the rapid proliferation of 3D endoscopes for surgical robotic systems, continues to gain traction."

Dr. Forkey continued, "As we look to the remainder of fiscal 2020, we expect growth from the production of currently commercialized products while continuing to advance our pipeline of engineering projects toward commercialization. Further, we look to build upon the improvements we achieved during the first quarter, where overall gross margins were 39% compared to 30% a year ago. We are working to improve gross margins on our base business and are benefitting from the higher margin profile of Ross Optical. Overall, we maintain a disciplined investment strategy in sales and marketing and engineering capabilities to fuel growth while generating positive cash flows."

The following table summarizes the first quarter (unaudited) results for the periods ended September 30, 2019 and 2018:


                      
          
       Three Months Ended

                        
          
        September 30,


                        2019                          2018



     Revenues                     $
            2,514,984      $
        1,559,458




     Gross Profit                             974,117              462,507




     Operating
      Expenses                              1,059,999              761,287




     Net Loss                                (86,110)           (299,285)




     Loss Per Share:


      Basic and
       Diluted                       $
            (0.01)        $
        (0.03)





     Weighted Average
      Common Shares
      Outstanding:


      Basic and
       Diluted                             12,832,389           10,261,269

Conference Call Details
The Company has scheduled a conference call to discuss the first quarter 2020 financial results for Thursday, November 14, 2019 at 5:00 p.m. EDT.

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

Live Webcast Information: Interested parties can access the conference call via a live Internet webcast, which is available at https://www.webcaster4.com/Webcast/Page/2109/32176.

Replay: A teleconference replay of the call will be available until November 21, 2019 at (877) 344-7529 or (412) 317-0088 confirmation #10136579. A webcast replay will be available at https://www.webcaster4.com/Webcast/Page/2109/32176.

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

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

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

Investor Contact:
LYTHAM PARTNERS, LLC
Robert Blum
Phoenix | New York
Telephone: 602-889-9700
peye@lythampartners.com

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


                                                                       
     
            PRECISION OPTICS CORPORATION, INC. AND SUBSIDIARIES


                                                                          
          
                CONSOLIDATED BALANCE SHEETS




                                                                            September 30,
                                                                                 2019                                                 June 30,
                                                                                                                                         2019



                                                 ASSETS

                               ---


     Current Assets:



     Cash and cash equivalents                                                                          $
              849,135                   $
            2,288,426


      Accounts receivable (net of allowance for
       doubtful accounts of $246,201 and
       $246,953 at September 30, 2019 and June
       30, 2019, respectively)                                                                                     1,645,765                             2,165,107



     Inventories                                                                                                  2,071,852                             1,734,604



     Prepaid expenses                                                                                               181,106                               180,336




     Total current assets                                                                                         4,747,858                             6,368,473






     Fixed Assets:



     Machinery and equipment                                                                                      2,755,076                             2,748,715



     Leasehold improvements                                                                                         683,970                               668,446



     Furniture and fixtures                                                                                         168,450                               168,450


                                                                                                                   3,607,496                             3,585,611


      Less-Accumulated depreciation and
       amortization                                                                                                3,225,525                             3,202,605




     Net fixed assets                                                                                               381,971                               383,006





      Operating lease right-to-use asset                                                                             158,690



     Patents, net                                                                                                    60,841                                54,087



     Goodwill                                                                                                       687,664                               687,664






     TOTAL ASSETS                                                                                     $
              6,037,024                   $
            7,493,230





                                  LIABILITIES AND STOCKHOLDERS' EQUITY

                               ---


     Current Liabilities:


      Current portion of capital lease
       obligation                                                                                          $
              9,731                      $
             9,572



     Accounts payable                                                                                             1,036,188                             1,174,263



     Customer advances                                                                                              513,623                               450,192



     Accrued compensation and other                                                                                 370,296                               533,944


      Amount due for business acquisition                                                                                                               1,443,341



        Operating lease liability                                                                                    54,310




     Total current liabilities                                                                                    1,984,148                             3,611,312





      Capital lease obligation, net of current
       portion                                                                                                         2,535                                 5,027



     Acquisition earn out liability                                                                                 500,000                               500,000



     Operating lease liability                                                                                      104,380





     Stockholders' Equity:


      Common stock, $0.01 par value: 50,000,000
       shares authorized; issued and outstanding
       - 12,868,639 shares at September 30, 2019
       and 12,071,139 shares at June 30, 2019                                                                        128,687                               120,712



     Additional paid-in capital                                                                                  49,040,377                            48,893,172



     Accumulated deficit                                                                                       (45,723,103)                         (45,636,993)




     Total stockholders' equity                                                                                   3,445,961                             3,376,891





      TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                                       $
              6,037,024                   $
            7,493,230


                       
            
          PRECISION OPTICS CORPORATION, INC. AND SUBSIDIARIES


                              
         
             CONSOLIDATED STATEMENTS OF OPERATIONS


                            
         
             FOR THE THREE MONTHS ENDED SEPTEMBER 30,




                                      
              
                Three Months
                                               Ended September 30,



                                         2019                                             2018




     Revenues                                  $
              2,514,984                           $
        1,559,458





     Cost of Goods Sold                                    1,540,867                                 1,096,951




     Gross Profit                                            974,117                                   462,507





      Research and Development
       Expenses, net                                          152,154                                   100,798




      Selling, General and
       Administrative Expenses                                907,845                                   660,489



      Total Operating Expenses                              1,059,999                                   761,287






     Operating Loss                                         (85,882)                                (298,780)





     Interest Expense                                          (228)                                    (505)






     Net Loss                                   $
              (86,110)                          $
        (299,285)






     Loss Per Share:



     Basic and Diluted                            $
              (0.01)                             $
        (0.03)





      Weighted Average Common
       Shares Outstanding:



     Basic and Diluted                                    12,832,389                                10,261,269


                                                                                             
              
                PRECISION OPTICS CORPORATION, INC. AND SUBSIDIARIES


                                                                                               
              
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY


                                                                                                  
              
                FOR THE THREE MONTHS ENDED SEPTEMBER 30,




                                                                 
           
            Three Month Period Ended September 30, 2019



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





      Balance, July 1, 2019                           12,071,139                                $
              120,712                                                       $
              48,893,172                     $
       (45,636,993) $
           3,376,891


      Issuance of common stock in
       private placement                                 760,000                                              7,600                                                                       17,400                          
              -             25,000


      Proceeds from exercise of
       stock options                                      12,500                                                125                                                                        8,550                          
              -              8,675


      Issuance of common stock for
       services                                           25,000                                                250                                                                       44,750                          
              -             45,000




      Stock-based compensation                      
              -                                      
              -                                                                      76,505                          
              -             76,505



     Net loss                                      
              -                                      
              -                                                                
              -                             (86,110)           (86,110)



      Balance, September 30, 2019                     12,868,639                                $
              128,687                                                       $
              49,040,377                     $
       (45,723,103) $
           3,445,961





                                                                 
           
            Three Month Period Ended September 30, 2018

                                                                                                                                                                         ---

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





      Balance, July 1, 2018                           10,197,139                                $
              101,972                                                       $
              45,484,186                     $
       (45,022,122)   $
           564,036


      Issuance of common stock for
       services                                          100,000                                              1,000                                                                      (1,000)                         
              -       
              -


      Stock-based compensation                      
              -                                      
              -                                                                     342,984                          
              -            342,984



     Net loss                                      
              -                                      
              -                                                                
              -                            (299,285)          (299,285)



      Balance, September 30, 2018                     10,297,139                                $
              102,972                                                       $
              45,826,170                     $
       (45,321,407)   $
           607,735


                                                  
         
              PRECISION OPTICS CORPORATION, INC. AND SUBSIDIARIES


                                                      
          
                CONSOLIDATED STATEMENTS OF CASH FLOWS


                                                    
          
                FOR THE THREE MONTHS ENDED SEPTEMBER 30,




                                                     
          
                Three Months
                                                          Ended September 30,



                                                                                 2019                                  2018



      Cash Flows from Operating Activities:



     Net Loss                                                                                    $
              (86,110)          $
           (299,285)


      Adjustments to reconcile net loss to net
       cash provided from (used in) operating
       activities -



     Depreciation and amortization                                                                             22,920                        6,956



     Stock-based compensation expense                                                                          76,505                      342,984



     Non-cash consulting expense                                                                               45,000                 
              -


      Changes in operating assets and liabilities
       -



     Accounts receivable, net                                                                                 519,342                      141,203



     Inventories, net                                                                                       (337,248)                      30,450



     Prepaid expenses                                                                                           (770)                      13,124



     Accounts payable                                                                                       (138,075)                     260,043



     Customer advances                                                                                         63,431                    (457,138)



     Accrued liabilities                                                                                    (163,648)                    (44,767)



      Net cash provided by (used in) operating
       activities                                                                                                1,347                      (6,430)





      Cash Flows from Investing Activities:


      Cash paid for business acquisition                                                                   (1,443,341)                
              -



     Purchases of fixed assets                                                                               (21,885)                    (42,809)



        Additional patent costs                                                                               (6,754)                
              -



      Net cash used in investing activities                                                                (1,471,980)                    (42,809)





      Cash Flows from Financing Activities:


      Payment of capital lease obligation                                                                      (2,333)                     (2,185)


      Gross proceeds from exercise of stock
       options                                                                                                   8,675                 
              -


      Gross Proceeds from private placement of
       common stock                                                                                             25,000                 
              -



      Net cash provided from (used in) financing
       activities                                                                                               31,342                      (2,185)





      Net decrease in cash and cash equivalents                                                            (1,439,291)                    (51,424)


      Cash and cash equivalents, beginning of
       period                                                                                                2,288,426                      402,738





      Cash and cash equivalents, end of period                                                     $
              849,135             $
           351,314





      Supplemental disclosure of non-cash
       financing activities:


      Offering costs included in accrued
       compensation and other                                                                       $
              12,250      
     $        
              -

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SOURCE Precision Optics Corporation