POCI Precision Optics Corporation Inc

Precision Optics Corporation, Inc. (NASDAQ: POCI), a leading designer and manufacturer of advanced optical instruments for the medical and defense industries, announced operating results on an unaudited basis for its third quarter fiscal year 2024 for the period ended March 31, 2024.

Q3 2024 Financial Highlights (3 Months Ended March 31, 2024):

• Revenue increased 4% to $5.2 million, compared to $5.0 million in the same quarter of the previous fiscal year, and up 9% compared to the most recent sequential quarter.
• Engineering revenue increased 62% to $2.3 million compared to $1.4 million in the same quarter of the previous fiscal year, representing record engineering revenue.
• Production revenue was $3.0 million compared to $3.6 million in the same quarter of the previous fiscal year, but up 15% compared to $2.6 million in the most recent sequential quarter.
• Gross margins were 35.5% compared to 34.4% in the same quarter of the previous year.
• Net loss for the quarter was ($317,055), compared to $(398,432) in the same quarter of the previous year.
• Adjusted EBITDA was $52,012 for the quarter compared to $9,456 in the same quarter of the previous year.

Recent Additional Highlights:

• In April 2024, the Company announced the receipt of a $720,000 follow on production order from a top tier defense/aerospace company addressing a commercial application that leverages the Company's proprietary manufacturing technology developed for high precision micro-optics systems.
• In April 2024, the Company announced the receipt of a follow-on production order totaling approximately $1.25 million from a major U.S. defense contractor, to meet continued demand for a highly complex optical assembly manufactured by Precision Optics.
• In May 2024, the Company announced the receipt of a $9 million production order for a high volume single-use cystoscopy surgery program.

Precision Optics' CEO, Joseph Forkey, commented, “The financial results of the third quarter highlight the sequential growth expectations we had for fiscal 2024, with the second half of the fiscal year outpacing the first half. The growth trends are being driven by the recent receipt of several new and follow-on production orders for a variety of applications leveraging our unique micro-optics and digital imaging capabilities for medical device and aerospace/defense applications, coupled with record levels of engineering revenue.”

“Building on this momentum, last week we announced the receipt of a $9 million landmark production order from a leading surgical company to supply a single-use endoscope assembly for use in their cystoscopy surgery system. The order is expected to be delivered over the next several quarters and highlights the success of our strategy to serve our customers from design to fully scaled manufacturing, and the broader opportunity that high-volume, single-use applications provide to the Company. The market for medical devices is robust with the single-use device segment growing two to three times more rapidly than the traditional market. We look forward to fulfilling this initial production order and the opportunity it provides to demonstrate our single-use engineering and production capabilities.”

“I believe Precision Optics is well positioned for future growth given the recent receipt of several new production orders, many of which extend out multiple years, and the strength of our engineering pipeline which continues to advance new programs into commercialization. With production deliveries for the $9 million single-use order set to commence in July 2024, we aim to accelerate revenue growth and drive incremental profitability as we complete fiscal 2024 and enter the new year,” Dr. Forkey concluded.

The following table summarizes the third quarter and fiscal year to date (unaudited) results for the periods ended March 31, 2024, and 2024:

	Three Months							Nine Months
	Ended March 31,							Ended March 31,
	2024			2023				2024			2023
Revenues	$	5,242,579		$	5,048,065			$	14,388,123		$	16,020,327
Gross Profit	1,858,737			1,736,098				4,773,324			5,975,011
Stock Compensation Expenses	258,214			450,014				749,391			769,790
Other	1,859,050			1,779,352				5,391,915			5,229,226
Total Operating Expenses	2,117,264			2,229,366				6,141,306			5,999,016
Operating Income (Loss)	(258,527		)	(493,268		)		(1,367,982		)	(24,005		)
Net Income (Loss)	(317,055		)	(398,432		)		(1,540,272		)	(48,488		)
Income (Loss) per Share
Basic & Fully Diluted	$	(0.05	)	$	(0.07	)		$	(0.25	)	$	(0.01	)
Weighted Average Common Shares Outstanding
Basic & Fully Diluted	6,068,419			5,640,473				6,067,165			5,639,015

Note: The Common Shares in this table reflect shares on a post reverse split basis for all periods presented.

Conference Call Details Date and Time: Wednesday, May 15, 2024, at 5:00pm 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 webcast, which is available at https://app.webinar.net/0e6QBboJvza.

Replay: A teleconference replay of the call will be available until May 22, 2024, at (877) 344-7529 or (412) 317-0088, replay access code 8743731. A webcast replay will be available at https://app.webinar.net/0e6QBboJvza.

About Precision Optics Corporation Founded in 1982, Precision Optics is a vertically integrated optics company primarily focused on leveraging its proprietary micro-optics and 3D imaging technologies to the healthcare and defense/aerospace industries by providing services ranging from new product concept through mass manufacture. Utilizing its leading-edge in-house design, prototype, regulatory and fabrication capabilities as well as its Lighthouse Imaging division's electronic imaging expertise and its Ross Optical division's high volume world-wide sourcing, inspecting and production resources, the Company designs and manufactures next-generation product solutions for the most challenging customer requirements. Within healthcare, Precision Optics enables next generation medical device companies around the world to meet the increasing demands of the surgical community who require more enhanced and smaller imaging systems for minimally invasive surgery, including single-use medical devices, as well as 3D endoscopy systems to support the rapid proliferation of surgical robotic systems. In addition to these next generation applications, Precision Optics has supplied top tier medical device companies with a wide variety of optical products for decades, including complex endocouplers and specialized endoscopes. The Company is also leveraging its technical proficiency in micro-optics to enable leading edge defense/aerospace applications which require the highest quality standards and the optimization of size, weight and power. For more information, please visit www.poci.com.

Non-GAAP Financial Measures

Precision Optics has provided in this press release financial information that has not been prepared in accordance with accounting principles generally accepted in the Unites States of America (“non-GAAP”). The non-GAAP financial measure is Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization). Adjusted EBITDA also excludes from Net Income (Loss) the effect of stock-based compensation, restructuring and other acquisition-related items.

This non-GAAP financial measure assists Precision Optics management in comparing its operating performance over time because certain items may obscure the underlying business trends and make comparisons of long-term performance difficult, as they are of a nature and/or size that occur with inconsistent frequency or relate to discrete acquisition or restructuring plans that are fundamentally different from the ongoing productivity of the Company. Precision Optics management also believes that presenting this measure allows investors to view its performance using the same measures that the Company uses in evaluating its financial and business performance and trends.

Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information calculated in accordance with GAAP. Investors are encouraged to review the reconciliation of non-GAAP measures to their most directly comparable GAAP financial measures. A reconciliation of the non-GAAP financial measure presented above to GAAP results has been provided in the financial tables included with this press release.

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 performance 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 risk factors. 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 Telephone: 602-889-9700 poci@lythampartners.com

PRECISION OPTICS CORPORATION, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED)
	March 31,				June 30,
	2024				2023
ASSETS
Current Assets:
Cash and cash equivalents	$	925,067			$	2,925,852
Accounts receivable, net of allowance for doubtful accounts of $826,434 at March 31, 2024 and $606,715 at June 30, 2023		4,223,769				3,907,407
Inventories		3,032,221				2,776,216
Prepaid expenses		209,505				249,681
Total current assets		8,390,562				9,859,156
Fixed Assets:
Machinery and equipment		3,255,789				3,227,481
Leasehold improvements		810,913				788,194
Furniture and fixtures		256,681				248,917
Construction in progress		233,519				31,506
		4,556,902				4,296,098
Less—Accumulated depreciation and amortization		4,019,164				3,862,578
Net fixed assets		537,738				433,520
Operating lease right-to-use asset		232,930				358,437
Patents, net		286,385				265,111
Goodwill		8,824,210				8,824,210
TOTAL ASSETS	$	18,271,825			$	19,740,434
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Revolving line of credit	$	400,000			$	-
Current portion of capital lease obligation		43,301				43,209
Current maturities of long-term debt		513,259				513,259
Accounts payable		1,695,178				2,432,264
Customer advances		1,464,925				1,174,690
Accrued compensation and other		833,860				927,521
Operating lease liability		175,961				168,677
Total current liabilities		5,126,484				5,259,620
Capital lease obligation, net of current portion		36,226				68,482
Long-term debt, net of current maturities and debt issuance costs		1,791,035				2,175,980
Operating lease liability, net of current portion		56,969				189,760
Stockholders’ Equity:
Common stock, $0.01 par value: 50,000,000 shares authorized; issued and outstanding – 6,068,518 shares at March 31, 2024 and 6,066,518 at June 30, 2023		60,685				60,665
Additional paid-in capital		60,979,705				60,224,934
Accumulated deficit		(49,779,279	)			(48,239,007	)
Total stockholders’ equity		11,261,111				12,046,592
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	18,271,825			$	19,740,434

PRECISION OPTICS CORPORATION, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2024 AND 2023 (UNAUDITED)
	Three Months Ended March 31,								Nine Months Ended March 31,
	2024				2023				2024				2023
Revenues	$	5,242,579			$	5,048,065			$	14,388,123			$	16,020,327
Cost of Goods Sold	3,383,842				3,311,967				9,614,799				10,045,316
Gross Profit	1,858,737				1,736,098				4,773,324				5,975,011
Research and Development Expenses	192,773				206,375				627,259				660,518
Selling, General and Administrative Expenses	1,924,491				2,022,991				5,514,047				5,338,498
													–
Total Operating Expenses	2,117,264				2,229,366				6,141,306				5,999,016
Operating Loss	(258,527		)		(493,268		)		(1,367,982		)		(24,005		)
Interest Expense	(58,528		)		(48,124		)		(172,290		)		(167,443		)
Gain on Revaluation of Contingent Liability					142,960								142,960
Net Loss	$	(317,055	)		$	(398,432	)		$	(1,540,272	)		$	(48,488	)
Loss Per Share:
Basic & Fully Diluted	(0.05		)		$	(0.07	)		(0.25		)		$	(0.01	)
Weighted Average Common Shares Outstanding:
Basic & Fully Diluted	6,068,419				5,640,473				6,067,165				5,639,015

PRECISION OPTICS CORPORATION, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED MARCH 31, 2024 AND 2023 (UNAUDITED)
	Nine Months Ended March 31,
	2024				2023
Cash Flows from Operating Activities:
Net Loss	$	(1,540,272	)		$	(48,488	)
Adjustments to reconcile net loss to net cash used in by operating activities -
Gain on reevaluation of contingent earn-out liability	–				(142,960		)
Depreciation and amortization	156,586				157,460
Stock-based compensation expense	749,391				769,790
Non-cash interest expense	13,128				8,906
Changes in operating assets and liabilities -
Accounts receivable, net	(316,362		)		(1,726,035		)
Inventories, net	(256,005		)		120,206
Prepaid expenses	40,176				(94,215		)
Accounts payable	(737,086		)		410,073
Customer advances	290,235				482,693
Accrued compensation and other	(106,789		)		588,976
Net cash (used in) provided by operating activities	(1,706,998		)		526,406
Cash Flows from Investing Activities:
Purchases of fixed assets	(260,804		)		(20,010		)
Additional patent costs	(21,274		)		(32,401		)
Net cash used in investing activities	(282,078		)		(52,411		)
Cash Flows from Financing Activities:
Payments of capital lease obligations	(32,164		)		(30,298		)
Payments of long-term debt	(384,945		)		(275,784		)
Payment of acquisition earn-out liability					(166,667		)
Borrowings on revolving line of credit	400,000
Gross proceeds from the exercise of stock options	5,400				5,100
Net cash used in financing activities	(11,709		)		(467,649		)
					–
Net (decrease) increase in cash and cash equivalents	(2,000,785		)		6,346
Cash and cash equivalents, beginning of period	2,925,852				605,749
Cash and cash equivalents, end of period	$	925,067			$	612,095

PRECISION OPTICS CORPORATION, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
ADJUSTED EBITDA
		Three Months								Nine Months
		Ended March 31,								Ended March 31,
		2024				2023				2024				2023
Net Income (loss) (GAAP)		$	(317,055	)		$	(398,432	)		$	(1,540,272.00	)		$	(48,488	)
Stock based compensation		258,214				450,014				749,391.00				769,790
Depreciation and amortization		52,325				52,710				156,586.00				157,460
Revaluation of earn-out liability						(142,960		)						(142,960		)
Interest expense		58,528				48,124				172,290.00				167,443
Adjusted EBITDA (non-GAAP)		$	52,012			$	9,456			$	(462,005	)		$	903,245