SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): November 1, 2002
PRECISION OPTICS CORPORATION, INC.
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(Exact name of registrant as specified in its charter)
Massachusetts 001-10647 04-2795294
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(State or other jurisdiction of (Commission (I.R.S. Employer
of incorporation or organization) File Number) Identification No.)
22 East Broadway, Gardner, Massachusetts 01440
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (978) 630-1800
Item 5. Other Events.
On November 1, 2002, the Registrant issued the following press release
announcing operating results on an unaudited basis for the first quarter of
fiscal year 2003 ended September 30, 2002:
FOR IMMEDIATE RELEASE FRIDAY, NOVEMBER 1, 2002
PRECISION OPTICS CORPORATION ANNOUNCES
FIRST QUARTER RESULTS
GARDNER, Massachusetts - Precision Optics Corporation, Inc. (Nasdaq: POCI) today
announced operating results on an unaudited basis for the first quarter of
fiscal year 2003 ended September 30, 2002.
FIRST QUARTER OPERATING RESULTS
Revenues for the quarter were $542,443 compared to $491,096 for the same
period in fiscal year 2002, an increase of 10.5%. Revenues for the quarter
decreased 9.7% sequentially from the preceding quarter. Net loss was $791,891
compared to $5,505,929 last year. Last year's net loss included provisions
for asset impairment and inventory writedown totaling approximately $3.98
million. Basic and diluted loss per share was $0.08 in the current quarter
ended September 30, 2002, versus $0.52 per share for the comparable period
last year. The weighted average common shares outstanding were 10,503,908
during both periods. In the preceding quarter ended June 30, 2002, net loss,
which included a non-cash charge for asset impairment and restructuring of
$332,393, was $1,331,262, or $0.13 per share.
The increase in revenues was due primarily to higher sales of medical products
(up by approximately $204,000, or 69%), partially offset by lower sales of
non-medical products (down by approximately $153,000, or 79%). Sales of medical
products were higher due primarily to higher shipments of stereo endoscopes and
cameras. Non-medical sales were lower due primarily to the discontinuation of
sales of Dense Wavelength Division Multiplexer (DWDM) filters.
WORKFORCE REDUCTION
The Company has taken additional measures to realign its cost structure with
current revenue expectations. In October 2002, the Company reduced its full-time
workforce by approximately 16%, or six employees. As a result of this action,
the Company expects to record a non-recurring pretax charge to earnings of
approximately $53,000 for employee severance benefits in the quarter ending
December 31, 2002. In addition, the Company is in the process of reviewing other
expense areas to determine where additional reductions in discretionary spending
can be achieved.
OUTLOOK
For the quarter ended September 30, 2002, cash and cash equivalents decreased by
approximately $736,000, including non-recurring payments of approximately
$168,000 related to idle space and terminating the lease on the Optical Thin
Film Technology Center (which relieved the Company of an estimated $460,000
lease obligation). Excluding the non-recurring payments, cash usage during the
quarter was $568,000, a 37% sequential decrease in cash usage from the previous
quarter ended June 30, 2002.
During the quarter ending December 31, 2002, the Company anticipates receiving
net proceeds of approximately $550,000 related to the sale of a portion of its
assets held for sale (property and equipment
previously used in the Company's telecommunications product line). The remaining
assets in this category are anticipated to be sold by June 30, 2003.
Capital equipment expenditures during the quarter ended September 30, 2002 were
approximately $16,000, down 51% from the quarter ended September 30, 2001.
Future capital expenditures will be dependent upon future sales and success of
on-going research and development efforts.
For the quarter ended September 30, 2002, research and development expenses were
approximately $310,000, down 54% from the $676,000 in the quarter ended
September 30, 2001. It is anticipated that the quarterly level of R&D expenses
for the foreseeable future will remain in this lower range, but is ultimately
dependent upon the Company's assessment of new product opportunities.
The Company's recently introduced new medical products and certain non-medical
applications of its optical technology have been well received by the
marketplace. These new products include:
- Stereo endoscope systems (used in cardiac surgery and a growing
number of other minimally invasive surgical procedures).
- 30 degree line of sight version of the successful 5 mm
autoclavable laparoscope.
- 4 mm short endoscope (used in carpal tunnel surgery).
- Longer version of the 10 mm laparoscope (used in bariatric
surgery for treatment of morbid obesity).
- 5 mm 30 degree endoscope (used in vessel transplant for cardiac
bypass surgery).
- Relay lens system (for use in medical digital photo microscopy).
- Episcope (for use in examination of the epidermis).
These initiatives alone have already generated orders from new and existing
customers totaling approximately $1,170,000, of which approximately $83,000 was
shipped in fiscal year 2002, approximately $181,000 was shipped in the quarter
ended September 30, 2002, and approximately $274,000 and $384,000, respectively,
is scheduled to be shipped during the quarters ending December 31, 2002 and
March 31, 2003. The timing of the remaining shipments on these orders of
approximately $248,000 is dependent upon customer delivery instructions. The
Company anticipates additional follow-on orders for these products.
ABOUT PRECISION OPTICS
Precision Optics Corporation, a leading manufacturer of optical thin films and
optical instruments since 1984, designs and manufactures high-quality optical
thin film coatings, medical instruments, and other advanced optical systems. The
Company's medical instrumentation line includes laparoscopes, arthroscopes and
endocouplers and a world-class 3-D endoscope for use in minimally invasive
surgical procedures. Precision Optics Corporation is certified to the ISO 9001
Quality Standard, and complies with the FDA Good Manufacturing Practices and the
European Union Medical Device Directive for CE Marking of its medical products.
The Company's Internet Website is www.info@poci.com.
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PRECISION OPTICS CORPORATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED
SEPTEMBER 30, 2002 AND SEPTEMBER 30, 2001
(UNAUDITED)
2002 2001
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REVENUES $ 542,443 $ 491,096
COST OF GOODS SOLD 531,738 1,496,184
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Gross Profit (Loss) 10,705 (1,005,088)
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RESEARCH and DEVELOPMENT EXPENSES 310,056 675,710
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 502,229 469,109
PROVISION FOR ASSET IMPAIRMENT -- 3,444,378
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Total Operating Expenses 812,285 4,589,197
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Operating Loss (801,580) (5,594,285)
INTEREST INCOME 21,366 90,284
INTEREST EXPENSE (6,238) (1,928)
Loss on Sale of Assets Held For Sale (5,439) --
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Loss Before Provision for Income Taxes (791,891) (5,505,929)
PROVISION FOR INCOME TAXES -- --
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Net Loss $ (791,891) $ (5,505,929)
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Basic and Diluted Loss Per Share $ (0.08) $ (0.52)
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Weighted Average Common Shares Outstanding 10,503,908 10,503,908
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PRECISION OPTICS CORPORATION, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
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September 30, 2002
(Unaudited) June 30, 2002
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CURRENT ASSETS
Cash and Cash Equivalents $ 5,089,486 $ 5,825,601
Accounts Receivable, Net 304,199 374,499
Inventories 1,081,601 1,009,009
Refundable Income Taxes 13,849 13,849
Prepaid Expenses 298,732 93,574
Assets Held for Sale 839,810 847,696
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Total Current Assets 7,627,677 8,164,228
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PROPERTY AND EQUIPMENT 3,995,563 3,983,698
Less: Accumulated Depreciation (3,547,213) (3,492,403)
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Net Property and Equipment 448,350 491,295
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OTHER ASSETS 216,024 224,516
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TOTAL ASSETS $ 8,292,051 $ 8,880,039
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LIABILITIES AND STOCKHOLDERS' EQUITY
TOTAL CURRENT LIABILITIES $ 959,104 $746,524
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CAPITAL LEASE OBLIGATION AND OTHER 9,028 17,705
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STOCKHOLDERS' EQUITY
Common Stock, $.01 par value-
Authorized -- 20,000,000 shares
Issued and Outstanding - 10,503,908 shares
at September 30, 2002 and
June 30, 2002 105,039 105,039
Additional Paid-in Capital 27,682,657 27,682,657
Accumulated Deficit (20,463,777) (19,671,886)
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Total Stockholders' Equity 7,323,919 8,115,810
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 8,292,051 $ 8,880,039
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Forward-looking statements contained in this news release, including
those related to the Company's products under development and revenue estimates,
are made under "safe harbor" provisions of the Private Securities Litigation
Reform Act of 1995 and involve a number of risks and uncertainties that could
materially affect future results. These risks and uncertainties, many of which
are not within the Company's control, include, but are not limited to, the
uncertainty and timing of the successful development of the Company's new
products, the risks associated with reliance on a few key customers; the
Company's ability to regain and maintain compliance with requirements for
continued listing on the NASDAQ SmallCap Market; the Company's ability to
attract and retain personnel with the necessary scientific and technical skills,
the timing and completion of significant orders; the timing and amount of the
Company's research and development expenditures; the timing and level of market
acceptance of customers' products for which the Company supplies components;
performance of the Company's vendors; the ability of the Company to
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control costs associated with performance under fixed price contracts; and the
continued availability to the Company of essential supplies, materials and
services; and the other risk factors and cautionary statements listed from time
to time in the Company's periodic reports filed with the Securities and Exchange
Commission, including but not limited to, the Company's Annual Report on Form
10-KSB for the year ended June 30, 2002.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PRECISION OPTICS CORPORATION, INC.
Date: November 1, 2002 By: /s/ Jack P. Dreimiller
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Name: Jack P. Dreimiller
Title: Senior Vice President, Finance and
Chief Financial Officer