Precision Optics Corporation, Inc. (PEYE) Q1 2022 Earnings Conference Call November 15, 2021 5:00 PM ET Company Participants Robert Blum - Investor Relations, Lytham Partners Joe Forkey - Chief Executive Officer Conference Call Participants Operator Good day and welcome to the Precision Optics Reports First Quarter of Fiscal Year 2022 Financial Results Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask ques ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2021 Commission File Number: 001-10647 PRECISION OPTICS CORPORATION, INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 22 East Broadway, Gardner, Massachusetts 01440-3 ...

Precision Optics Corporation, Inc. (PEYE) Q4 2021 Earnings Conference Call September 28, 2021 5:00 PM ET Company Participants Robert Blum - IR, Lytham Partners Joe Forkey - Chief Executive Officer Dan Habhegger - CFO Operator Good afternoon and welcome to the Precision Optics Fourth Quarter and Fiscal Year 2021 Financial Results Conference Call. All participants will be in listen-only mode. [Operator Instructions]. After today's presentation, there will be an opportunity to ask questions. [Operator Instruct ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended June 30, 2021 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to __________ Commission File Number 001-10647 PRECISION OPTICS CORPORATION, INC. (Exact name of registrant as specified in its charter) M ...

Financial Data and Key Metrics Changes - In Q3, total revenue was $2.5 million, a slight increase from the same quarter last year, but down slightly sequentially [29] - Production revenue was $1.9 million, flat compared to the previous quarter and down from $2.2 million in Q3 of the previous year, primarily due to decreased orders in the otoscopy and defense programs [10][29] - Engineering services revenue was $550,000, representing a 162% increase year-over-year but down $300,000 from the second quarter due to timing of revenue recognition [30] - Gross margin was 33%, compared to 31% in the previous quarter and 34% in the same quarter last year, with potential gross margins estimated at approximately 38% without additional costs related to single-use engineering programs [30][31] - Net income for Q3 was $552,000, but excluding PPP loan forgiveness, it would have been a loss of $257,000 [32] Business Line Data and Key Metrics Changes - The cardiac program saw an uptick in production volumes, while the otoscopy program experienced a decline [10][14] - Engineering revenue increased significantly year-over-year, driven by strategic investments in sales and technical capabilities [11][24] - The company reported stable volumes in traditional products, including complex endo-couplers and specialized endoscopes [18] Market Data and Key Metrics Changes - The single-use endoscope market is expanding, driven by increased demand and advancements in technology [20][21] - The defense and aerospace markets are also seeing a demand for smaller optics, which aligns with the company's capabilities [43][46] Company Strategy and Development Direction - The company is focused on growing sales capabilities, investing in technical resources, updating production capabilities for single-use products, and exploring strategic partnerships or acquisitions [34][35] - The engineering pipeline is robust, with numerous projects in various stages of development, indicating strong future growth potential [27][35] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery of the market and the company's positioning to capitalize on growth opportunities in the medical device and defense sectors [13][35] - The company is well-prepared to manage through ongoing challenges and is focused on transitioning projects into long-term production contracts [36] Other Important Information - The company has made significant investments in its engineering pipeline, which is expected to yield long-term benefits [26][27] - The company has three new patents pending related to innovations in single-use endoscopes, which could enhance its competitive position [40][41] Q&A Session Summary Question: Additional details on intellectual property related to single-use applications - Management discussed two categories of intellectual property: patentable innovations and trade secrets, emphasizing the importance of both in the single-use market [39][42] Question: Insights on aerospace and defense markets - Management highlighted the demand for smaller optics in defense and aerospace, driven by cost and efficiency considerations, aligning with the company's core competencies [43][46]

PART I — FINANCIAL INFORMATION [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) The financial statements for the period ended March 31, 2021, reflect decreased assets, reduced liabilities due to loan forgiveness, and a shift to net income from prior losses [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) As of March 31, 2021, total assets decreased to $5.91 million, while total liabilities significantly reduced to $2.45 million, increasing equity Consolidated Balance Sheet Highlights (Unaudited) | Account | March 31, 2021 ($) | June 30, 2020 ($) | | :--- | :--- | :--- | | **Total Assets** | **5,905,975** | **6,351,531** | | Cash and cash equivalents | 781,845 | 1,134,697 | | Total current assets | 4,397,063 | 4,947,085 | | **Total Liabilities** | **2,452,074** | **3,579,770** | | Note payable to bank | – | 808,962 | | Total current liabilities | 2,107,535 | 3,149,380 | | **Total Stockholders' Equity** | **3,453,901** | **2,771,761** | [Consolidated Statements of Operations](index=6&type=section&id=Consolidated%20Statements%20of%20Operations) Net income for Q3 2021 was $552,278, a turnaround from prior-year losses, primarily driven by a significant gain on loan forgiveness Statement of Operations Summary (Unaudited) | Metric | Three Months Ended Mar 31, 2021 ($) | Three Months Ended Mar 31, 2020 ($) | Nine Months Ended Mar 31, 2021 ($) | Nine Months Ended Mar 31, 2020 ($) | | :--- | :--- | :--- | :--- | :--- | | **Revenues** | **2,458,290** | **2,374,584** | **8,001,641** | **7,686,330** | | Gross Profit | 818,024 | 817,019 | 2,647,642 | 2,709,075 | | Operating Loss | (256,018) | (465,447) | (467,143) | (1,102,927) | | **Net Income (Loss)** | **552,278** | **(466,130)** | **339,617** | **(1,103,065)** | | Basic EPS | 0.04 | (0.04) | 0.03 | (0.09) | - A gain of **$808,962** from the forgiveness of a bank note was recognized in the three and nine months ended March 31, 2021, significantly impacting net income[13](index=13&type=chunk) [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities was $75,420 for the nine months ended March 31, 2021, resulting in a net decrease in cash to $781,845 Cash Flow Summary for Nine Months Ended March 31 (Unaudited) | Cash Flow Activity | 2021 ($) | 2020 ($) | | :--- | :--- | :--- | | Net Cash Used In Operating Activities | (75,420) | (84,421) | | Net Cash Used In Investing Activities | (256,134) | (1,586,174) | | Net Cash (Used In) Provided From Financing Activities | (21,298) | 14,300 | | **Net Decrease in Cash** | **(352,852)** | **(1,656,295)** | | **Cash at End of Period** | **781,845** | **632,131** | [Notes to Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes detail accounting policies, revenue recognition, and inventory, highlighting the **$808,962** PPP loan forgiveness and COVID-19 impact - On March 30, 2021, the Small Business Administration forgave the company's **$808,962** Promissory Note from the Paycheck Protection Program (PPP) in full, including accrued interest, recorded as other income[29](index=29&type=chunk) Revenue by Type for Nine Months Ended March 31 | Revenue Type | 2021 ($) | 2020 ($) | | :--- | :--- | :--- | | Engineering Design Services | 1,986,856 | 1,098,234 | | Optical Components | 4,330,511 | 4,428,409 | | Medical Device Products and Assemblies | 1,684,274 | 2,159,687 | | **Total Revenues** | **8,001,641** | **7,686,330** | - The company acknowledges that the COVID-19 pandemic has had, and could continue to have, an adverse impact on its supply chain, customer orders, and overall financial condition, but the future impact remains uncertain[41](index=41&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=14&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's medical device focus, revenue growth driven by engineering services, slight gross margin decrease, and improved profitability aided by PPP loan forgiveness [Overview](index=14&type=section&id=Overview) The company develops optical instruments, primarily for medical devices (**60%** of business), with additional revenue from military/defense and industrial applications - The company's business is segmented with approximately **60%** from medical devices, **8%** from military and defense, and **32%** from other industrial products for the nine months ended March 31, 2021[47](index=47&type=chunk) - Development efforts are focused on next-generation technologies like 3D endoscopes and very small Microprecision™ lenses for minimally invasive surgery[45](index=45&type=chunk)[52](index=52&type=chunk) [Results of Operations](index=15&type=section&id=Results%20of%20Operations) Q3 2021 revenues increased **3.5%** to **$2.46 million**, driven by engineering services, while gross margins slightly decreased due to project costs Revenue Comparison | Period | FY 2021 ($) | FY 2020 ($) | Change ($) | % Change | | :--- | :--- | :--- | :--- | :--- | | **Q3 Revenue** | **2,458,290** | **2,374,584** | **83,706** | **3.5%** | | **9-Month Revenue** | **8,001,641** | **7,686,330** | **315,311** | **4.1%** | - Revenue growth was primarily due to an increase in engineering revenue from new projects, which was partially offset by decreases in production revenue due to COVID-19 related slowdowns experienced by customers[57](index=57&type=chunk)[58](index=58&type=chunk) - Gross margin decreased in Q3 and the nine-month period due to cost over-runs on an engineering project and a decrease in higher-margin production revenues[60](index=60&type=chunk) [Liquidity and Capital Resources](index=16&type=section&id=Liquidity%20and%20Capital%20Resources) The company reported a net operating loss of **$467,143** and held **$781,845** in cash, with liquidity significantly boosted by **$808,962** PPP loan forgiveness - As of March 31, 2021, the company had **$781,845** in cash, **$1,533,781** in accounts receivable, and **$2,107,535** in current liabilities[64](index=64&type=chunk) - The company's ability to maintain its financial condition is critically dependent on achieving and maintaining profitable quarterly revenues and timely collection of receivables[65](index=65&type=chunk) - A PPP loan of **$808,962** was forgiven on March 30, 2021, and the gain was recorded as other income, significantly improving the company's financial results for the period[67](index=67&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=17&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, the company is not required to provide quantitative and qualitative disclosures about market risk - The company is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk[71](index=71&type=chunk) [Controls and Procedures](index=18&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls were ineffective as of March 31, 2021, due to material weaknesses in segregation of duties and inventory valuation - Management concluded that the company's disclosure controls and procedures were not effective as of March 31, 2021[73](index=73&type=chunk) - A material weakness exists due to a lack of sufficient staff to properly segregate accounting duties, an issue disclosed since fiscal year 2008[74](index=74&type=chunk) - A second material weakness relates to inventory valuation, specifically inconsistencies in applying overhead rates and costs of purchased items, with remediation ongoing since September 2009[77](index=77&type=chunk)[79](index=79&type=chunk) PART II — OTHER INFORMATION [Legal Proceedings](index=19&type=section&id=Item%201.%20Legal%20Proceedings) The company is not aware of any pending or threatened litigation that could materially impact its operations or finances - The company reports no significant legal matters and is not aware of any pending or threatened litigation that would have a material adverse effect[82](index=82&type=chunk) [Risk Factors](index=19&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors have occurred since the last Annual Report on Form 10-K filing - No material changes to risk factors have occurred since the last Annual Report on Form 10-K was filed[83](index=83&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=19&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) There were no unregistered sales of equity securities or use of proceeds during the reporting period - There were no unregistered sales of equity securities during the period[84](index=84&type=chunk) [Other Information](index=19&type=section&id=Item%205.%20Other%20Information) No other information is required to be reported for this item - There is no other information to report for this item[87](index=87&type=chunk) [Exhibits](index=20&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including agreements, corporate governance documents, and certifications - The report includes a list of exhibits, such as asset purchase agreements, bylaws, equity incentive plans, and Sarbanes-Oxley certifications[89](index=89&type=chunk)[90](index=90&type=chunk)

Precision Optics Corporation, Inc. (PEYE) Q2 2021 Earnings Conference Call February 16, 2021 5:00 PM ET Company Participants Robert Blum - Lytham Partners Joe Forkey - Chief Executive Officer Dan Habhegger - Chief Financial Officer Conference Call Participants David Smith - Berkeley Street Partners Operator Good day and welcome to the Precision Optics Reports Second Quarter of Fiscal Year 2021 Financial Results. All participants will be in a listen-only mode. [Operator Instructions] After today's presentati ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 2020 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-10647 PRECISION OPTICS CORPORATION, INC. (Exact name of registrant as specified in its charter) Massachusetts 04-2795 ...

Financial Data and Key Metrics Changes - The company reported revenue of $2.8 million for Q1 fiscal 2021, representing a 23% sequential increase and a 10% year-over-year increase [27] - Gross margin improved to 35% from 29% in the previous quarter, although it decreased from 39% in the same quarter a year ago [30] - The company achieved a slight net profit with adjusted EBITDA exceeding $100,000, compared to a loss of $208,000 in the previous quarter [32] Business Line Data and Key Metrics Changes - Production revenue was $2.2 million in Q1 fiscal 2021, up 12% sequentially and 3% year-over-year, primarily driven by the otoscopy product [28] - Engineering Services revenue reached $589,000, a 102% increase from the previous quarter and a 44% increase year-over-year, indicating higher demand for engineering services [29] Market Data and Key Metrics Changes - The company noted a recovery in business activity compared to the early part of the year when inquiries had significantly decreased due to COVID-19 [20] - The market for small CMOS-based endoscopes is expanding rapidly, with increased demand for custom lenses and new endoscope designs [21][22] Company Strategy and Development Direction - The company is focusing on vertical integration of capabilities to enhance customization and meet customer needs, which is seen as a key differentiator in the industry [26] - There is an ongoing effort to expand sales and marketing in the defense and aerospace market, leveraging existing relationships and product offerings [24][25] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery from COVID-19 impacts, noting that customers believe they will work through excess inventory and return to pre-pandemic levels [42] - The company anticipates that commercialized programs will rebound, and new projects in the pipeline will contribute to growth in the coming quarters [44] Other Important Information - The company has approximately $900,000 in cash and an improved net working capital position, positioning it well for future operations [11][33] - The company continues to manage operating expenses carefully, with a reported $974,000 in operating expenses for the quarter, down from $1.1 million year-over-year [31] Q&A Session Summary Question: Can you summarize the current and anticipated impacts of COVID-19 on the business? - Management indicated that while the acute impacts of COVID-19 have lessened, there are still long-term effects as customers work through excess inventory, but they remain optimistic about future growth [41][43]

Financial Data and Key Metrics Changes - For Q4 2020, overall revenue was $2.24 million, a decrease of 6% compared to $2.38 million in Q4 2019 and $2.37 million in Q3 2020 [21] - Adjusted EBITDA improved by more than $150,000 from Q3 2020 due to a decrease in operating expenses [11] - Gross margin for Q4 was 29%, down from 36% in Q4 2019 and 34% in Q3 2020 [26] - The fiscal year ended with a net loss of $1.4 million compared to a loss of $615,000 in fiscal 2019 [39] Business Line Data and Key Metrics Changes - Ross Optical operations generated revenue of $1.13 million in Q4, contributing to a total of $9.9 million for the fiscal year, an increase of $3.1 million compared to fiscal 2019 [24] - The otoscopy product faced a revenue impact of approximately $100,000 due to supply chain issues, while the cardiac program saw a $200,000 revenue reduction due to decreased deliveries [13][14] - Operating expenses for Q4 were $973,000, down from $1.28 million in Q3 2020 [29] Market Data and Key Metrics Changes - The medical devices and defense/aerospace industries are viewed as resilient markets, with expectations for revenue recovery in the first quarter of fiscal 2021 [18][19] - Discussions about new development projects have rebounded to pre-COVID levels, indicating a recovery in market activity [17] Company Strategy and Development Direction - The company is focusing on expanding sales and marketing efforts, investing in proprietary technology, and exploring merger and acquisition opportunities [31] - Strategic investments have been made to enhance customer engagement and develop proprietary intellectual property [33] - The integration of Ross Optical is seen as successful, with plans to leverage combined operations rather than report Ross Optical as a separate unit [43][44] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about returning to normalized operations and improving revenue and gross margins in Q1 2021 [19] - The company is prepared to take steps to reduce expenses if necessary but aims to align revenues from existing and new products quickly [42] - The balance sheet is strong, with a cash balance of $1.1 million at the end of Q4, positioning the company well for growth [40] Other Important Information - The company reported a GAAP net loss of $323,000 in Q4, with adjusted EBITDA showing a loss of $207,000 [38] - The company is exploring high-volume product opportunities and has seen interest in single-use products [34] Q&A Session Summary Question: Opportunities to increase gross margins through acquisitions - Management is confident there are small optics companies with profitable margins but is not currently engaged with any [72] - The focus has been on integrating Ross Optical successfully before pursuing further acquisitions [73] - Management believes that investments made prior to COVID would have led to breakeven without the pandemic's impact [75] Question: Future profitability and acquisition strategy - Management sees growth opportunities even without acquisitions, but acknowledges the optics industry is fragmented and will look for potential candidates [77]