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Precision Optics Corporation, Inc. Announces Operating Results for the Fourth Quarter and Fiscal Year Ended June 30, 2018

September 27, 2018

GARDNER, Mass., Sept. 27, 2018 (GLOBE NEWSWIRE) -- Precision Optics Corporation, Inc. (OTCQB: PEYE) (the “Company”) today announced operating results on an unaudited basis for its fourth quarter and fiscal year ended June 30, 2018.

Fourth quarter 2018 highlights include:

-- Fourth quarter revenues of $1,460,932 compared to $720,223 in the fourth quarter of fiscal 2017; -- 38% gross margin compared to 25% in the fourth quarter of fiscal 2017; -- Net income of $16,992, or $130,742 before a non-recurring charge for an uncollectible receivable from one customer.

Fiscal year 2018 highlights include:

-- Fiscal year revenues of $4,038,048, compared to $3,154,547 in fiscal 2017, representing a 28% year-over-year increase; -- 37% gross margin compared to 25% in fiscal year 2017; -- Level operating expenses in fiscal 2018 on higher revenues contributed to a significantly reduced operating loss compared to fiscal 2017; -- Efficient conversion of development projects into production.

Precision Optics’ CEO, Joseph Forkey, commented, “We are very pleased to report increased revenues, strong margins, and stable operating costs resulting in a significantly reduced operating loss for fiscal year 2018, and an operating profit for the fourth quarter. This represents our strongest overall results in many years, and the realization of a successful business model that we have been pursuing for some time. During the last few years, we have balanced use of our resources on both engineering and production projects, anticipating that overall revenue increases would result from maintenance of existing, ongoing, production orders combined with new projects moving from engineering development to production. As anticipated, revenues in the fourth quarter of fiscal 2018 of $1,460,932 were bolstered by a 129% increase in production revenues as compared to production revenues in the third quarter of fiscal 2018 and a 174% increase compared to production revenues in the fourth quarter of fiscal 2017. This was due in large part to the conversion of three engineering projects into production. Despite a $113,750 expense charge in the fourth quarter for an uncollectible receivable from a single customer, we generated net income of $16,992, or $130,742 before the non-recurring expense item. Overall, we are encouraged with the financial performance in fiscal 2018, and particularly in the fourth quarter.”

Dr. Forkey continued, “Looking forward, engineering projects continue to be our pipeline to long-term increases in production and overall revenues. Although engineering revenues were down by 6.7% in fiscal 2018 compared to fiscal 2017, we consider this to be a normal fluctuation due to timing of various phases of development work. More importantly, the number and quality of our engineering projects remain strong with a robust pipeline of products in development that we believe will help to fuel future revenue increases. Overall, we see an ongoing increase in demand for optical components and devices incorporating our proprietary technologies for designing and producing 3D endoscopes as well as micro-optics and micro imaging and illumination systems. In particular, demand continues to increase for devices that combine our Microprecision™ technology with advanced CMOS technology to achieve very small endoscopic devices, and for devices that use our 3D endoscope technology in combination with robotic surgery applications. We believe that our established capability to efficiently support multiple engineering and production projects simultaneously, and importantly, our ability to successfully convert engineering projects into production products, will enable us to increase revenues and further enhance financial performance in the future.”

The following table summarizes the fourth quarter and year results for the periods ended June 30, 2018 and 2017 (unaudited):

Three Months Year Ended June 30, Ended June 30, -------------------------- --------------------------- 2018 2017 2018 2017 ------------ ----------- ----------- ------------ Revenues $ 1,460,932 $ 720,223 $ 4,038,048 $ 3,154,547 Gross Profit 558,801 180,142 1,481,918 773,724 Operating Expenses 540,484 415,530 1,830,537 1,776,125 Operating Income (Loss) 18,317 (235,388 ) (348,619 ) (1,002,401 ) Net Income (Loss) 16,992 (237,601 ) (351,390 ) (1,006,457 ) Income (Loss) Per Share: Basic $ 0.00 $ (0.03 ) $ (0.04 ) $ (0.12 ) - ---------- - --------- - --------- - ---------- Diluted $ 0.00 $ (0.03 ) $ (0.04 ) $ (0.12 ) - ---------- - --------- - --------- - ---------- Weighted Average Common Shares Outstanding: Basic and Diluted 10,131,007 8,872,916 9,826,151 8,343,235 - ---------- - --------- - --------- - ----------

Quarterly Conference Call Details

The Company has scheduled a conference call to discuss the fiscal year end and fourth quarter 2018 financial results for Thursday, September 27, 2018 at 5:00 p.m. EDT. To participate in the conference call, please dial 1-844-826-3042 toll free from the U.S., or 1-412-317-5187 from outside the U.S., and ask to be connected to the Precision Optics, Corp. 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 October 05, 2018. The audio replay can be accessed toll free by dialing 1-877-344-7529 from the U.S., or 1-412-317-0088 from outside the U.S., or 1-855-669-9658 from Canada using Access Code 10124294.

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, Inc.22 East BroadwayGardner, Massachusetts 01440-3338Telephone: 978-630-1800

Investor Contact:Mr. Kirin M. Smith, Chief Operating OfficerPCG Advisory GroupTelephone: 646-863-6519Email: Ksmith@PCGAdvisory.comwww.pcgadvisory.com

Following are the Company’s Consolidated Balance Sheets at June 30, 2018 and June 30, 2017, and Statements of Operations for the years ended June 30, 2018 and 2017 and Statements of Cash Flows for the years ended June 30, 2018 and 2017:

PRECISION OPTICS CORPORATION, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETSAT JUNE 30,

2018 2017 ------------- ------------- ASSETS Current Assets: Cash and cash equivalents $ 402,738 $ 118,405 Accounts receivable (net of allowance for doubtful accounts of $232,500 at 796,923 468,548 June 30, 2018 and $5,000 at June 30, 2017) Inventories 1,144,068 1,055,447 Prepaid expenses 70,991 55,985 - ----------- - ----------- Total current assets 2,414,720 1,698,385 - ----------- - ----------- Fixed Assets: Machinery and equipment 2,511,638 2,507,190 Leasehold improvements 553,596 553,596 Furniture and fixtures 148,303 148,303 - ----------- - ----------- 3,213,537 3,209,089 Less—Accumulated depreciation and amortization 3,164,051 3,136,835 - ----------- - ----------- Net fixed assets 49,486 72,254 - ----------- - ----------- Patents, net 47,275 30,086 - ----------- - ----------- $ 2,511,481 $ 1,800,725 - ----------- - ----------- LIABILITIES AND STOCKHOLDERS’ EQUITY Current Liabilities: Current portion of capital lease obligation $ 8,962 $ 8,391 Accounts payable 703,538 694,958 Customer advances 857,842 180,137 Accrued employee compensation 238,590 189,783 Accrued professional services 98,000 71,000 Accrued warranty expense 25,000 25,000 Other accrued liabilities 912 49,512 - ----------- - ----------- Total current liabilities 1,932,844 1,218,781 - ----------- - ----------- Capital lease obligation, net of current portion 14,601 23,564 Commitments (Note 2) – – Stockholders’ Equity: Common stock, $0.01 par value: 50,000,000 shares authorized; issued and outstanding – 10,197,139 shares at June 30, 2018 and 8,872,916 shares at 101,972 88,729 June 30, 2017 Additional paid-in capital 45,484,186 45,140,383 Accumulated deficit (45,022,122 ) (44,670,732 ) - ----------- - ----------- Total stockholders’ equity 564,036 558,380 - ----------- - ----------- $ 2,511,481 $ 1,800,725 - ----------- - -----------

PRECISION OPTICS CORPORATION, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONSFOR THE YEARS ENDED JUNE 30,

2018 2017 ----------- ------------ Revenues $ 4,038,048 $ 3,154,547 Cost of goods sold 2,556,130 2,380,823 - --------- - ---------- Gross profit 1,481,918 773,724 Research and development expenses, net 456,377 464,162 Selling, general and administrative expenses 1,374,160 1,313,478 Gain on sale of assets – (1,515 ) - --------- - ---------- Total operating expenses 1,830,537 1,776,125 - --------- - ---------- Operating loss (348,619 ) (1,002,401 ) Interest expense (1,859 ) (3,144 ) - --------- - ---------- Loss before provision for income taxes (350,478 ) (1,005,545 ) Provision for income taxes 912 912 - --------- - ---------- Net loss $ (351,390 ) $ (1,006,457 ) - --------- - ---------- Loss per share: Basic and fully diluted $ (0.04 ) $ (0.12 ) - --------- - ---------- Weighted average common shares outstanding: Basic and fully diluted 9,826,151 8,343,235 - --------- - ----------

PRECISION OPTICS CORPORATION, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWSFOR THE YEARS ENDED JUNE 30,

2018 2017 ---------- ------------ Cash Flows from Operating Activities: Net loss $ (351,390 ) $ (1,006,457 ) Adjustments to reconcile net loss to net cash provided by (used in) operating activities- Depreciation and amortization 27,216 33,660 Provision for doubtful accounts receivable 227,500 (18,377 ) Gain on sale of assets – (1,515 ) Stock-based compensation expense 52,341 201,612 Non-cash consulting expense 2,400 33,900 Changes in operating assets and liabilities- Accounts receivable (555,875 ) 300,209 Inventories (88,621 ) 78,004 Prepaid expenses (15,006 ) 32,144 Accounts payable 48,580 (457,603 ) Customer advances 677,705 180,137 Accrued expenses 75,807 (43,148 ) - -------- - ---------- Net cash provided by (used in) operating activities 100,657 (667,434 ) - -------- - ---------- Cash Flows from Investing Activities: Proceeds from sale of assets – 1,515 Additional patent costs (17,189 ) (7,212 ) Purchases of fixed assets (4,448 ) (27,719 ) - -------- - ---------- Net cash used in investing activities (21,637 ) (33,416 ) - -------- - ---------- Cash Flows from Financing Activities: Payment of capital lease obligation (8,392 ) (7,857 ) Gross proceeds from private placements of common stock 210,001 780,000 Gross proceeds from exercise of stock purchase warrants 6,667 – Private placement expenses paid (2,963 ) (2,947 ) - -------- - ---------- Net cash provided by financing activities 205,313 769,196 - -------- - ---------- Net increase in cash and cash equivalents 284,333 68,346 Cash and cash equivalents, beginning of year 118,405 50,059 - -------- - ---------- Cash and cash equivalents, end of year $ 402,738 $ 118,405 - -------- - ---------- Supplemental disclosure of cash flow information: Cash paid during the year for income taxes $ 912 $ 912 - -------- - ---------- Supplemental disclosure of non-cash financing activities: Issuance of common stock to consultant $ 51,000 $ – - -------- - ---------- Private placement expenses incurred but not yet paid $ – $ 21,000 - -------- - ---------- Issuance of common stock in settlement of accounts payable $ 40,000 $ 20,000 - -------- - ----------

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