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Precision Optics Corporation, Inc. Announces Operating Results for the Third Quarter and Nine Months of Fiscal Year 2018

May 15, 2018

GARDNER, Mass., May 15, 2018 (GLOBE NEWSWIRE) -- Precision Optics Corporation, Inc. (OTCQB:PEYE) (the “Company”) today announced operating results on an unaudited basis for its fiscal year 2018 third quarter and nine months ended March 31, 2018.

Financial highlights include:

-- 6% increase in nine month revenues: $2,577,000 nine month fiscal 2018 revenues compared to nine month 2017 revenues of $2,434,000; -- 25% decrease in three month revenues: $736,000 third quarter fiscal 2018 revenues compared to $983,000 in the third quarter of fiscal 2017; -- Two production orders: Prepared to start deliveries against two production orders totaling approximately $2 million with deliveries beginning in fiscal 2018 fourth quarter; -- Increased gross margins in Fiscal 2018: 32% and 36% gross margins in fiscal 2018 third quarter and nine months, respectively, compared to 28% and 24% in the same periods of fiscal 2017.

Commenting on the third quarter results, Joseph Forkey, Company CEO said, “The decrease in third quarter fiscal 2018 revenues resulted from a reduction in engineering services revenues, while production revenues in the third quarter were up by 9% over the prior year. Overall, engineering service activity was strong in the third quarter with a similar number and size of engineering projects in process as compared to recent quarters. The reduction in revenue was due in part to timing of revenue recognition tied to specific phases of long-term projects. Improved gross margins throughout fiscal year 2018 compared to fiscal 2017 continued to demonstrate the efficiency of our operations and the optimized utilization of our production and engineering resources. Unfortunately, our operating expenses and net loss in the third quarter of fiscal year 2018 included $88,750 of bad debt expense resulting from one slow-paying customer for engineering services. Collection issues with this customer also contributed to the reduction in engineering revenues recognized in the quarter.”

Dr. Forkey continued, “The long-range objective of our engineering projects is to assist our customers in their efforts to develop and market their medical devices and to ultimately provide us with long-term, ongoing production orders to manufacture those products. In the third quarter, we made good progress in our preparations to start shipping against manufacturing orders from two medical device customers totaling over $2 million and spanning the next twelve to eighteen months, depending on the rate of success of their product introductions to the market. We have now begun, in the fiscal 2018 fourth quarter, regular, scheduled deliveries against both of these orders. Also, we recently began shipments to another customer, of a highly complex optical assembly, used in a defense application, against a new purchase order that represents the first production pilot build for this project, which has been in development for the last couple years. We believe that the success of these three projects in moving from development into production, combined with an ongoing robust engineering pipeline will result in increased revenues and improved financial performance in coming quarters.”

Quarterly Conference Call Details

The Company has scheduled a conference call to discuss the fiscal third quarter 2018 financial results for Tuesday, May 15, 2018 at 5:00 PM Eastern Time. 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, Corp. 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 May 22, 2018. 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 10120255.

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 Corporation22 East BroadwayGardner, Massachusetts, 01440-3338Telephone: 978-630-1800

Investor Contact:PCG Advisory GroupKirin M. SmithChief Operating OfficerTelephone: 646-863-6519Email: Ksmith@PCGAdvisory.comWebsite: www.PCGAdvisory.com

Following are the Company’s consolidated balance sheets as of March 31, 2018 and June 30, 2017, and statements of operations for the three and nine months ended March 31, 2018 and 2017 and statements of cash flows for the nine months ended March 31, 2018 and 2017 (unaudited):

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

March 31, June 30, 2018 2017 ------------- ------------- ASSETS CURRENT ASSETS Cash and Cash Equivalents $ 201,897 $ 118,405 Accounts Receivable, net 579,165 468,548 Inventories, net 1,124,420 1,055,447 Prepaid Expenses 88,630 55,985 - ----------- - ----------- Total Current Assets 1,994,112 1,698,385 - ----------- - ----------- PROPERTY AND EQUIPMENT Machinery and Equipment 2,507,190 2,507,190 Leasehold Improvements 553,596 553,596 Furniture and Fixtures 148,303 148,303 - ----------- - ----------- 3,209,089 3,209,089 Less: Accumulated Depreciation and Amortization (3,158,563 ) (3,136,835 ) - ----------- - ----------- Net Fixed Assets 50,526 72,254 - ----------- - ----------- Patents, net 47,275 30,086 - ----------- - ----------- TOTAL ASSETS $ 2,091,913 $ 1,800,725 - ----------- - ----------- LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES Current Portion of Capital Lease Obligation $ 8,816 $ 8,391 Accounts Payable 642,579 694,958 Customer Advances 621,341 180,137 Accrued Employee Compensation 159,975 189,783 Accrued Professional Services 75,500 71,000 Accrued Warranty Expense 25,000 25,000 Other Accrued Liabilities 56,100 49,512 - ----------- - ----------- Total Current Liabilities 1,589,311 1,218,781 - ----------- - ----------- Capital Lease Obligation, net of current portion 16,897 23,564 - ----------- - ----------- STOCKHOLDERS’ EQUITY Common Stock, $0.01 par value - Authorized - 50,000,000 shares; Issued and Outstanding – 10,095,139 shares at March 31, 2018 and 8,872,916 shares at 100,952 88,729 June 30, 2017 Additional Paid-in Capital 45,423,867 45,140,383 Accumulated Deficit (45,039,114 ) (44,670,732 ) - ----------- - ----------- Total Stockholders’ Equity 485,705 558,380 - ----------- - ----------- TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 2,091,913 $ 1,800,725 - ----------- - -----------

PRECISION OPTICS CORPORATION, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONSFOR THE THREE AND NINE MONTHS ENDEDMARCH 31, 2018 AND 2017(UNAUDITED)

Three Months Nine Months Ended March 31, Ended March 31, --------------------------- -------------------------- 2018 2017 2018 2017 ------------ ----------- ----------- ----------- Revenues $ 735,597 $ 983,186 $ 2,577,116 $ 2,434,324 Cost of Goods Sold 499,444 705,062 1,653,999 1,840,742 - ---------- - --------- - --------- - --------- Gross Profit 236,153 278,124 923,117 593,582 - ---------- - --------- - --------- - --------- Research and Development Expenses, net 126,365 122,313 334,823 358,520 Selling, General and Administrative Expenses 388,611 318,581 955,230 1,003,590 Gain on Sale of Assets – – – (1,515 ) - ---------- - --------- - --------- - --------- Total Operating Expenses 514,976 440,894 1,290,053 1,360,595 - ---------- - --------- - --------- - --------- Operating Loss (278,823 ) (162,770 ) (366,936 ) (767,013 ) Interest Expense (448 ) (583 ) (1,446 ) (1,843 ) - ---------- - --------- - --------- - --------- Net Loss (279,271 ) (163,353 ) (368,382 ) (768,856 ) - ---------- - --------- - --------- - --------- Loss Per Share: Basic $ (0.03 ) $ (0.02 ) $ (0.04 ) $ (0.09 ) - ---------- - --------- - --------- - --------- Diluted $ (0.03 ) $ (0.02 ) $ (0.04 ) $ (0.09 ) - ---------- - --------- - --------- - --------- Weighted Average Common Shares Outstanding: Basic 10,095,139 8,872,916 9,724,904 8,167,320 - ---------- - --------- - --------- - --------- Diluted 10,095,139 8,872,916 9,724,904 8,167,320 - ---------- - --------- - --------- - ---------

PRECISION OPTICS CORPORATION, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWSFOR THE NINE MONTHS ENDEDMARCH 31, 2018 AND 2017(UNAUDITED)

Nine Months Ended March 31, ------------------------ 2018 2017 ---------- ---------- CASH FLOWS FROM OPERATING ACTIVITIES: Net Loss $ (368,382 ) $ (768,856 ) Adjustments to Reconcile Net Loss to Net Cash Used In Operating Activities - Depreciation and Amortization 21,728 24,909 Gain on Sale of Assets – (1,515 ) Stock-based Compensation Expense 42,002 154,743 Non-cash Consulting Expense 6,588 13,500 Bad Debt Expense 113,750 (18,377 ) Changes in Operating Assets and Liabilities - Accounts Receivable, net (224,367 ) 234,835 Inventories, net (68,973 ) 10,229 Prepaid Expenses (32,645 ) (14,225 ) Accounts Payable (12,379 ) (229,445 ) Customer Advances 441,204 69,421 Accrued Liabilities (25,308 ) (107,143 ) - -------- - -------- Net Cash Used In Operating Activities (106,782 ) (631,924 ) - -------- - -------- CASH FLOWS FROM INVESTING ACTIVITIES: Additional Patent Costs (17,189 ) (5,848 ) Purchases of Property and Equipment – (27,719 ) Proceeds from Sale of Assets – 1,515 - -------- - -------- Net Cash Used In Investing Activities (17,189 ) (32,052 ) - -------- - -------- CASH FLOWS FROM FINANCING ACTIVITIES: Payment of Capital Lease Obligation (6,242 ) (5,844 ) Gross Proceeds from Private Placement of Common Stock 210,001 780,000 Gross Proceeds from Exercise of Stock Purchase Warrants 6,667 – Private Placement Expense Paid (2,963 ) (1,650 ) - -------- - -------- Net Cash Provided From Financing Activities 207,463 772,506 - -------- - -------- NET INCREASE IN CASH AND CASH EQUIVALENTS 83,492 108,530 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 118,405 50,059 - -------- - -------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 201,897 $ 158,589 - -------- - -------- SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash Paid for Income Taxes $ 912 $ 912 - -------- - -------- SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING AND INVESTING ACTIVITIES: Issuance of Common Stock in Settlement of Accounts Payable $ 40,000 $ – - -------- - -------- Offering Costs Included in Accounts Payable $ – $ 22,296 - -------- - --------

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