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Precision Optics Reports Second Quarter Fiscal Year 2020 Financial Results

Conference Call Scheduled for today, February 13, 2020 at 5:00pm ET

GARDNER, Mass., Feb. 13, 2020 /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 second quarter fiscal year ended December 31, 2019.

Second quarter fiscal 2020 highlights:

  • Revenue for the quarter ended December 31, 2019 was $2.8 million compared to $1.5 million in the same quarter of the previous fiscal year, an increase of 89% driven primarily by Ross Optical operating as a division of Precision Optics. Revenues for both Precision Optics and Ross Optical increased quarter-over-quarter and year-over-year.
  • Gross margins for the quarter ended December 31, 2019 of 33% compared to 24% in the same quarter of the prior year driven primarily by Ross Optical operating as a division of Precision Optics.
  • Net loss of $550,825 during the quarter included $274,706 of stock-based compensation.

Precision Optics' CEO, Joseph Forkey, commented, "I am pleased with the strong top line performance during the second quarter which highlighted the continued traction we are achieving in our Precision Optics operations, as well as our recently acquired Ross Optical division, with both reporting growth in revenues on a quarter-over-quarter, and year-over-year basis. We continued to deliver against our three commercial level production projects and momentum continues to build in our product pipeline with two products anticipated to be launched this year. As previously discussed, the investments we continue to make in certain products advancing through their complex engineering phases negatively impacted our gross margins again this quarter.  However, as these new products come to market, we believe they will contribute to a higher level of top line revenue as well as a return to higher blended gross margins."

Dr. Forkey continued, "We also continue to make disciplined investments in the areas of engineering, sales and marketing, and technology advancement. Recently, we announced the appointment of Jon Everett as our new VP of Engineering to increase our product development pipeline and move existing development projects towards commercialization. The joint Precision Optics and Ross Optical sales teams continue to work well together as we take advantage of the anticipated synergies between the operations, including our joint participation at two highly attended west coast industry conferences over the last two weeks. Finally, we are maintaining our leadership position in micro optics and 3D imaging, with a new patent issued recently for single-use devices, and the submission of two additional patent applications last week. I am pleased with the balanced approach we are taking to invest in the future of Precision Optics, while maintaining a focus on achieving consistent positive cash flows."

The following table summarizes the second quarter (unaudited) results for the periods ended December 31, 2019 and 2018:



Three Months Ended
December 31,



2019



2018

Revenues


$

2,796,762



$

1,477,851









Gross Profit



917,939




355,722









Operating Expenses:








      Stock based compensation



263,473




10,228

      Ross Optical division



325,987




-

      Other operating expenses



880,077




471,101




1,469,537




481,329









Net Loss



(550,825)




(125,948)









Loss Per Share:








 Basic and Diluted


$

(0.04)



$

(0.01)









Weighted Average Common Shares Outstanding:








 Basic and Diluted



12,873,971




11,618,878










Conference Call Details
The Company has scheduled a conference call to discuss the second quarter 2020 financial results for Thursday, February 13, 2020 at 5:00 p.m. ET.

Call-in Information: Interested parties can access the conference call by dialing (844) 735-3662 or (412) 317-5705.

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/2109/33075.

Replay: A teleconference replay of the call will be available until February 20, 2020 at (877) 344-7529 or (412) 317-0088 confirmation #10139141. A webcast replay will be available at https://www.webcaster4.com/Webcast/Page/2109/33075.   

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, Microprecision™ 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, 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 as of December 31, 2019 and June 30, 2019, and statements of operations for the three and six months ended December 31, 2019 and 2018 and statements of cash flows for the six months ended December 31, 2019 and 2018:

PRECISION OPTICS CORPORATION, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)




December 31,
2019



June 30,
2019


ASSETS









Current Assets:









Cash and cash equivalents


$

347,858



$

2,288,426


Accounts receivable (net of allowance for doubtful accounts of $246,953 and $246,953 at December 31, 2019 and June 30, 2019, respectively)



2,000,048




2,165,107


Inventories



2,019,195




1,734,604


Prepaid expenses



133,278




180,336


Total current assets



4,500,379




6,368,473











Fixed Assets:









Machinery and equipment



2,764,154




2,748,715


Leasehold improvements



695,981




668,446


Furniture and fixtures



171,548




168,450





3,631,683




3,585,611


Less—Accumulated depreciation and amortization



3,248,525




3,202,605


Net fixed assets



383,158




383,006











Operating lease right-to-use asset



145,428





Patents, net



64,929




54,087


Goodwill



687,664




687,664











TOTAL ASSETS


$

5,781,558



$

7,493,230











LIABILITIES AND STOCKHOLDERS' EQUITY









Current Liabilities:









Current portion of capital lease obligation


$

9,894



$

9,572


Accounts payable



1,162,457




1,174,263


Customer advances



388,506




450,192


Accrued compensation and other



405,431




533,944


Amount due for business acquisition






1,443,341


Operating lease liability



55,247





Total current liabilities



2,021,535




3,611,312











Capital lease obligation, net of current portion






5,027


Acquisition earn out liability



500,000




500,000


Operating lease liability



90,181














Stockholders' Equity:









Common stock, $0.01 par value: 50,000,000 shares authorized; issued and outstanding – 12,880,047 shares at December 31, 2019 and 12,071,139 shares at June 30, 2019



128,801




120,712


Additional paid-in capital



49,314,969




48,893,172


Accumulated deficit



(46,273,928)




(45,636,993)


Total stockholders' equity



3,169,842




3,376,891











TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY


$

5,781,558



$

7,493,230


 

PRECISION OPTICS CORPORATION, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE AND SIX MONTHS ENDED

DECEMBER 31, 2019 AND 2018
(UNAUDITED)






Three Months
Ended December 31,



Six Months
Ended December 31,




2019



2018



2019



2018


Revenues


$

2,796,762



$

1,477,851



$

5,311,746



$

3,037,309



















Cost of Goods Sold



1,878,823




1,122,129




3,419,690




2,219,080


Gross Profit



917,939




355,722




1,892,056




818,229



















Research and Development Expenses, net



228,576




125,413




380,730




226,211


Selling, General and Administrative Expenses



1,240,961




355,916




2,148,806




1,016,405


Total Operating Expenses



1,469,537




481,329




2,529,536




1,242,616



















Operating Loss



(551,598)




(125,607)




(637,480)




(424,387)



















Interest Income (Expense)



773




(341)




545




(846)



















Net Loss


$

(550,825)



$

(125,948)



$

(636,935)



$

(425,233)



















Loss Per Share:

















Basic and Diluted


$

(0.04)



$

(0.01)



$

(0.05)



$

(0.04)



















Weighted Average Common Shares Outstanding:

















Basic and Diluted



12,873,971




11,618,878




12,856,218




10,940,074


 

PRECISION OPTICS CORPORATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE THREE AND SIX MONTHS ENDED
DECEMBER 31, 2019 AND 2018
(UNAUDITED)




Six Month Period Ended December 31, 2019




Number of
Shares



Common
Stock



Additional
Paid-in
Capital



Accumulated
Deficit



Total
Stockholders'
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























Exercise of stock options net of 3,592 shares withheld



11,408




114




(114)








Stock-based compensation









274,706







274,706


Net loss












(550,825)




(550,825)


Balance, December 31, 2019



12,880,047



$

128,801



$

49,314,969



$

(46,273,928)



$

3,169,842






Six Month Period Ended December 31, 2018




Number of
Shares



Common
Stock



Additional
Paid-in
Capital



Accumulated
Deficit



Total
Stockholders'
Equity


















Balance, July 1, 2018



10,197,139



$

101,972



$

45,484,186



$

(45,022,122)



$

564,036


Stock-based compensation









342,984







342,984


Issuance of common stock for services



100,000




1,000




(1,000)








Net loss












(299,285)




(299,285)


Balance, September 30, 2018



10,297,139




102,972




45,826,170




(45,321,407)




607,735























Proceeds from private placement of common stock, net of issuance costs of $23,000



1,600,000




16,000




1,961,000







1,977,000


Stock-based compensation









10,228







10,228


Net loss












(125,948)




(125,948)


Balance, December 31, 2018



11,897,139



$

118,972



$

47,797,398



$

(45,447,355)



$

2,469,015


 

PRECISION OPTICS CORPORATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED
DECEMBER 31, 2019 AND 2018
(UNAUDITED)



Six Months
Ended December 31,


2019


2018

CASH FLOWS FROM OPERATING ACTIVITIES:






Net Loss

$

(636,935)


$

(425,233)

Adjustments to Reconcile Net Loss to Net Cash Provided From (Used In) Operating Activities -






Depreciation and Amortization



45,920



15,862

Stock-based Compensation Expense



351,211



353,212

Non-cash Consulting Expense



45,000



Changes in Operating Assets and Liabilities -






Accounts Receivable, net



165,059



68,287

Inventories, net



(284,591)



48,543

Prepaid Expenses



47,058



(65,526)

Accounts Payable



(11,806)



48,482

Customer Advances



(61,686)



(563,192)

Accrued Liabilities



(128,513)



(57,938)

Net Cash Used In Operating Activities



(469,283)



(577,503)







CASH FLOWS FROM INVESTING ACTIVITIES:






Cash Paid for Business Acquisition



(1,443,341)



Additional Patent Costs



(10,842)



Purchases of Property and Equipment



(46,072)



(76,184)

Net Cash Used In Investing Activities



(1,500,255)



(76,184)







CASH FLOWS FROM FINANCING ACTIVITIES:






Payment of Capital Lease Obligation



(4,705)



(4,407)

Gross Proceeds from Private Placement of Common Stock



25,000



2,000,000

Gross Proceeds from Exercise of Stock Options



8,675



-

Net Cash Provided From Financing Activities


28,970



1,995,593







NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS


(1,940,568)



1,341,906

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD


2,288,426



402,738







CASH AND CASH EQUIVALENTS, END OF PERIOD

$

347,858


$

1,744,644







SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING AND INVESTING ACTIVITIES:






Offering Costs Included in Current Liabilities

$

23,000


$

23,000







 

Cision

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SOURCE Precision Optics Corporation