OREANDA-NEWS. September 29, 2016. 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, 2016.

Fourth quarter highlights include:

  • Revenues of \\$963 thousand in the fourth quarters of fiscal 2016 and 2015;
  • 87% year-over-year increase in quarterly engineering service revenue;
  • 51% year-over-year increase in quarterly gross profit, with gross margin of 33.2% compared to 21.9%;
  • Continued progress toward conversion of engineering projects to production orders.

Fiscal year highlights include:

  • Continuation of revenues at their highest levels over the last eleven years at \\$3.9 million for each of fiscal years 2016 and 2015;
  • 124% year-over-year increase in annual engineering service revenue in fiscal 2016 versus 2015;
  • 18% year-over-year increase in annual gross profit, with gross margin of 24.1% in fiscal 2016 compared to 20.4% in 2015;
  • 12% year-over-year decrease in annual net loss in fiscal 2016 versus 2015 with similar revenue.

Precision Optics CEO, Joseph Forkey, commented, While revenues for the fourth fiscal quarter and for the fiscal year were flat when compared to fiscal 2015, we are excited about the product mix of our revenues in fiscal 2016 and the change that it represents. Revenue generated from our engineering services increased nearly eight hundred thousand dollars during fiscal 2016. We believe we are seeing the growing acceptance of and demand for our unique technologies and products. We are excited about the impact our products and services are having on our customers medical device initiatives, and the effects that success can have on the expansion of our business and financial performance in the near and long term."

Dr. Forkey continued, We are also pleased to see improvements in our operational efficiency and financial performance, as reflected in improved gross margin and lower net losses. These improvements are driven, in part, by the change in product mix to include more engineering service work.  However, it is also indicative of the progress we have made in transitioning our Microprecision technologies from use in small volume prototype applications to larger volume production.  While this transition does not happen quickly, we are clearly seeing the effects of greater efficiency as we gain more and more experience with these new technologies in a production environment.  We expect some variation in margins as we continue to bring new products into production but expect, over time, gross margins and overall profits as a percent of revenue to increase as these efficiencies continue to grow, and as we continue to absorb fixed expenses across a higher revenue base.

The following table summarizes the fourth quarter and year results for the periods ended June 30, 2016 and 2015 (unaudited):

  Three Months
Ended June 30, 
 Year
Ended June 30, 
 
  2016  2015  2016  2015 
Revenues \\$962,678  \\$962,906  \\$3,916,702  \\$3,912,060 
                 
Gross Profit  319,128   210,692   942,021   798,271 
                 
Operating Expenses  467,684   568,977   1,997,455   2,011,324 
                 
Operating Loss  (148,556)  (358,285)  (1,055,434)  (1,213,053)
                 
Net Loss  (149,468)  (363,247)  (1,034,765)  (1,178,793)
                 
Loss Per Share:                
 Basic \\$(0.02) \\$(0.06) \\$(0.15 \\$(0.19)
 Diluted \\$(0.02) \\$(0.06) \\$(0.15 \\$(0.19)
                 
Weighted Average Common Shares Outstanding:                
 Basic and Diluted  7,539,582   6,355,142   7,157,978   6,272,264 
 

Quarterly Conference Call Details
The Company has scheduled a conference call to discuss the fiscal fourth quarter 2016 financial results for Thursday, September 29, 2016 at 9:00 AM Eastern. To participate in the conference call, please dial 1-866-652-5200 toll free from the U.S., or 1-412-317-6060 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 13, 2016. 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, and entering Replay Access Code 10093345.

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 Companys 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 Companys 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 Companys intentions, beliefs, expectations, strategies, predictions or any other statements related to the Companys future activities or future events or conditions. These statements are based on current expectations, estimates and projections about the Companys business based, in part, on assumptions made by the Companys 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 Companys 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.

Following are the Companys Consolidated Balance Sheets at June 30, 2016 and June 30, 2015, and Statements of Operations for the years ended June 30, 2016 and 2015 and Statements of Cash Flows for the years ended June 30, 2016 and 2015:

PRECISION OPTICS CORPORATION, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AT JUNE 30,
 
  2016  2015 
ASSETS        
Current Assets:        
Cash and cash equivalents \\$50,059  \\$241,051 
Accounts receivable (net of allowance for doubtful accounts of \\$23,377 in 2016 and 2015)  750,380   588,042 
Inventories  1,133,451   1,073,256 
Prepaid expenses  88,129   65,182 
Total current assets  2,022,019   1,967,531 
Fixed Assets:        
Machinery and equipment  2,479,471   2,431,127 
Leasehold improvements  553,596   553,596 
Furniture and fixtures  148,303   148,303 
Vehicles  19,674   19,674 
   3,201,044   3,152,700 
LessAccumulated depreciation and amortization  3,122,849   3,096,993 
Net fixed assets  78,195   55,707 
Patents, net  22,874   18,644 
  \\$2,123,088  \\$2,041,882 
LIABILITIES AND STOCKHOLDERS EQUITY        
Current Liabilities:        
Current portion of capital lease obligation \\$7,857  \\$ 
Accounts payable  1,151,561   912,150 
Customer advances     118,800 
Accrued employee compensation  238,381   222,222 
Accrued professional services  65,550   60,735 
Accrued warranty expense  25,000   25,000 
Other accrued liabilities  15,612   36,087 
Total current liabilities  1,503,961   1,374,994 
         
Capital lease obligation, net of current portion  31,955    
Commitments (Note 2)        
         
Stockholders Equity:        
Common stock, \\$0.01 par value: 50,000,000 shares authorized; issued and outstanding
        
  7,539,582 shares at June 30, 2016 and 6,389,806 shares at June 30, 2015  75,396   63,898 
Additional paid-in capital  44,176,051   43,232,500 
Accumulated deficit  (43,664,275)  (42,629,510)
         
Total stockholders equity  587,172   666,888 
  \\$2,123,088  \\$2,041,882 
PRECISION OPTICS CORPORATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED JUNE 30,
 
  2016  2015 
Revenues \\$  3,916,702    \\$3,912,060 
Cost of goods sold    2,974,681     3,113,789 
           
Gross profit    942,021     798,271 
           
Research and development expenses, net    478,267     492,937 
Selling, general and administrative expenses    1,551,895     1,545,462 
Gain on sale of assets    (32,707)    (27,075)
Total operating expenses    1,997,455     2,011,324 
           
Operating loss    (1,055,434    (1,213,053)
           
Interest expense    (469)     
Other income    22,050     35,172 
           
Loss before provision for income taxes    (1,033,853)    (1,177,881)
           
Provision for income taxes    912     912 
  
Net loss \\$  (1,034,765)   \\$(1,178,793)
         
Loss per share:        
Basic \\$  (0.15)   \\$(0.19)
Diluted \\$  (0.15)   \\$(0.19)
         
Weighted average common shares outstanding:        
Basic    7,157,978     6,272,264 
Diluted    7,157,978     6,272,264 
PRECISION OPTICS CORPORATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JUNE 30,
 
  2016  2015 
Cash Flows from Operating Activities:        
Net loss \\$ (1,034,765  \\$(1,178,793)
Adjustments to reconcile net loss to net cash used in operating activities-        
Depreciation and amortization   25,856    21,271 
Gain on sale of assets   (32,707)   (27,075)
Stock-based compensation expense   241,388    125,675 
Non-cash consulting expense   63,000    66,750 
Non-cash gain on settlement of liabilities by issuing common stock   (22,050)   (35,172
Changes in operating assets and liabilities-        
Accounts receivable, net   (162,338)   (56,993)
Inventories   (60,195)   (84,378)
Prepaid expenses   (22,947)   26,740 
Accounts payable   261,461    210,958 
Customer advances   (118,800)   92,600 
Accrued expenses   (14,201)   64,624 
Net cash used in operating activities   (876,298)   (773,793)
         
Cash Flows from Investing Activities:        
Proceeds from sale of assets   32,707    27,075 
Additional patent costs   (4,230   (10,972)
Purchases of fixed assets   (4,372)   (62,418)
Net cash provided by (used in) investing activities   24,105    (46,315
         
Cash Flows from Financing Activities:        
Payment of capital lease obligation   (4,160)   - 
Proceeds from private placements of common stock   700,000    980,291 
Private placement expenses incurred and paid as of June 30, 2016 and 2015   (34,639)   (121,512
Net cash provided by financing activities   661,201    858,779 
         
Net (decrease) increase in cash and cash equivalents   (190,992   38,671 
Cash and cash equivalents, beginning of year   241,051    202,380 
Cash and cash equivalents, end of year \\$ 50,059   \\$241,051 
         
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 105,000 and 217,520 shares of common stock for services rendered to
the company in fiscal year 2016 and 2015, respectively
 \\$ 48,300   \\$126,643 
  
Private placement expenses incurred but not yet paid \\$ 37,781   \\$6,000 
  
Capital expenditures funded by capital lease borrowings \\$ 43,972   \\$-