Monday

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FOR IMMEDIATE RELEASE Monday, May 9, 2005

PRECISION OPTICS CORPORATION ANNOUNCES

THIRD QUARTER RESULTS

GARDNER, Massachusetts - Precision Optics Corporation, Inc. (Nasdaq: POCI) today

announced operating results on an unaudited basis for the third quarter of

fiscal year 2005 ended March 31, 2005.

Third Quarter Operating Results

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Revenues - For the quarter ended March 31, 2005, revenues were $326,272 compared

to $313,698 for the same period last year, an increase of 4.0%. Revenues in the

quarter decreased 17.9% from the preceding quarter ended December 31, 2004.

Net Loss - For the quarter ended March 31, 2005, net loss was $819,916, or $0.12

per share, an improvement of $197,396 in spite of nearly flat revenues, from the

net loss of $1,017,312, or $0.58 per share, for the same period last year. Net

loss included provisions for obsolete and slow moving inventories of $38,650 and

$124,700 for the quarters ended March 31, 2005 and 2004, respectively. The

weighted average common shares outstanding for the quarters ended March 31, 2005

and 2004 were 7,008,212 and 1,752,053, respectively.

Nine Months Operating Results

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Revenues - For the nine months ended March 31, 2005, revenues were $987,604

compared to $1,179,388 for the same period last year, a decrease of 16.3%.

Net Loss - For the nine months ended March 31, 2005, net loss was $2,574,253, or

$0.39 per share, an improvement of $98,298 in spite of lower revenues, compared

to the net loss of $2,672,551, or $1.53 per share, for the nine months ended

March 31, 2004. Net loss included provisions for obsolete and slow-moving

inventories of $187,650 and $308,800 for the nine months ended March 31, 2005

and 2004, respectively. The weighted average common shares outstanding for the

nine months ended March 31, 2005 and 2004 were 6,662,916 and 1,752,053,

Cash Flow and Expenditures

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For the quarter ended March 31, 2005, the Company's cash used in operating

activities was $779,329, compared to $753,564 for the previous quarter ended

December 31, 2004. The increase was due primarily to the lower revenues in the

quarter ended March 31, 2005.

Capital equipment expenditures for the nine months ended March 31, 2005 were

$28,813, down 9.4% from the same period in 2004. Future capital expenditures

will depend on future sales and the success of ongoing research and development

For the quarter ended March 31, 2005, research and development expenses were

$330,743, down 12.9% from $379,518 a year earlier. The decrease reflects a shift

in certain resources to customer-sponsored development efforts in the quarter

(the costs of which are included in cost of goods sold), resulting in initial

shipments of new products to several customers. The level of future quarterly

R&D expenses will ultimately depend on the Company's assessment of new product

Customer Relationships

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During the quarter and nine months ended March 31, 2005, the Company's revenues

included initial shipments to several new customers of optical lenses and

instruments that utilize the Company's patent-pending micro-precision lensTM

technology for applications that encompass a variety of innovative techniques

involving minimally invasive surgery. The Company delivered prototypes to a new

customer of specialized lens systems for use in an advanced night vision

application and also provided thin film coatings to two other new customers for

use in environmental monitoring and advanced laser instrumentation applications.

These new initiatives accounted for approximately 15% of total Company revenues

in each of the quarter and nine months ended March 31, 2005.

The Company expects its recent pattern of quarter-to-quarter revenue

fluctuations to continue, due to the uncertain timing of orders from customers

and their size in relation to total revenues. The Company continues to move

forward with new products and technical innovations, in particular, the

development of a new prototype 2.7 mm endoscope, and new instruments utilizing

the Company's new micro-precisionTM lens technology (patent pending) for

endoscopes under 1 mm. The Company continues to explore potential applications

of single-molecule technology and nanotechnology, as well as potential near-term

applications of the Company's existing technologies in non-medical markets.

About Precision Optics

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Precision Optics Corporation, a leading developer and manufacturer of advanced

optical instruments since 1982, designs and produces 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 product line of 3-D endoscopes for use in

minimally invasive surgical procedures.

The Company is currently developing specialty instruments incorporating its

patent-pending LENSLOCKTM technology, which we believe may result in lower cost,

easier repairability and enhanced durability, as well as ultra-small instruments

(some with lenses less than one millimeter in diameter) utilizing patent-pending

micro-precisionTM lens technology. The Company is also exploring new initiatives

in single-molecule technology and nanotechnology for biomedical and other

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.poci.com.

PRECISION OPTICS CORPORATION, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE AND NINE MONTHS ENDED

MARCH 31, 2005 AND 2004

Three Months Nine Months

Ended March 31, Ended March 31,

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REVENUES $326,272 $313,698 $987,604 $1,179,388

COST OF GOODS SOLD 369,232 467,178 1,298,187 1,514,966

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Gross Profit (Loss) (42,960) (153,480) (310,583) (335,578)

DEVELOPMENT 330,743 379,518 910,218 980,694

SELLING, GENERAL and

EXPENSES 459,284 436,666 1,393,450 1,320,324

RESTRUCTURING - 52,208 - 52,208

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