10QSB

FORM 10-QSB

UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 2003

Commission file number 001-10647

PRECISION OPTICS CORPORATION, INC.(Exact name of small business issuer as specified in its charter)

Massachusetts (State or other jurisdiction of incorporation or organization)	04-2795294 (IRS Employer Identification No.)
22 East Broadway, Gardner, Massachusetts (Address of principal executive offices)	01440-3338 (Zip Code)
(978) 630-1800 (Issuer's telephone number, including area code)

        Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x    No o

        The number of shares outstanding of issuer's common stock, par value $.01 per share, at September 30, 2003 was 1,752,052 shares.

        Transitional Small Business Disclosure Format (check one): Yes o    No x

PRECISION OPTICS CORPORATION, INC. AND SUBSIDIARIES

INDEX

	Page
PART I. FINANCIAL INFORMATION:
Item 1 Consolidated Financial Statements (Unaudited)
Consolidated Balance Sheets - September 30, 2003 and June 30, 2003		3
Consolidated Statements of Operations - Three Months Ended
September 30, 2003 and September 30, 2002		4
Consolidated Statements of Cash Flows - Three Months Ended
September 30, 2003 and September 30, 2002		5
Notes to Consolidated Financial Statements		6-	7
Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations		8-13
Item 3 Controls and Procedures		13
PART II. OTHER INFORMATION		14
Items 1-5 Not Applicable
Item 6 Exhibits and Reports on Form 8-K
(a) Exhibits (b) Reports on Form 8-K

PRECISION OPTICS CORPORATION, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
ASSETS

CURRENT ASSETS	September 30, 2003			June 30, 2003
Cash and Cash Equivalents	$	2,750,369		$	3,504,414
Accounts Receivable, Net		372,705			191,669
Inventories		1,257,983			1,257,288
Prepaid Expenses and Other Current Assets		247,969			91,213
Assets Held for Sale		152,550			152,550
Total Current Assets		4,781,576			5,197,134
PROPERTY AND EQUIPMENT		4,039,063			4,013,680
Less: Accumulated Depreciation		(3,762,850	)		(3,723,350	)
Net Property and Equipment		276,213			290,330
OTHER ASSETS		241,377			236,156
TOTAL ASSETS	$	5,299,166		$	5,723,620
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current Portion of Capital Lease Obligation	$	473		$	3,826
Accounts Payable		367,317			141,398
Accrued Employee Compensation		258,296			213,543
Accrued Professional Services		63,834			118,284
Accrued Warranty Expense		50,000			50,000
Other Accrued Liabilities		7,647			6,966
Total Current Liabilities		747,567			534,017
CAPITAL LEASE OBLIGATION, Net of Current
Portion, AND OTHER		--			1,555
STOCKHOLDERS' EQUITY
Common Stock, $.01 par value-
Authorized -- 20,000,000 shares
Issued and Outstanding - 1,752,052 shares
at September 30, 2003 and
June 30, 2003		17,521			17,521
Additional Paid-in Capital		27,770,175			27,770,175
Accumulated Deficit		(23,236,097	)		(22,599,648	)
Total Stockholders' Equity		4,551,599			5,188,048
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	5,299,166		$	5,723,620

3

PRECISION OPTICS CORPORATION, INC. AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED
SEPTEMBER 30, 2003 AND SEPTEMBER 30, 2002
(UNAUDITED)

	2003			2002
REVENUES	$	638,806		$	542,443
COST OF GOODS SOLD		586,263			531,738
Gross Profit		52,543			10,705
RESEARCH and DEVELOPMENT EXPENSES		267,070			310,056
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES		429,330			502,229
LOSS ON SALE OF ASSETS HELD FOR SALE		--			5,439
Total Operating Expenses		696,400			817,724
Operating Loss		(643,857	)		(807,019	)
INTEREST INCOME		7,454			21,366
INTEREST EXPENSE		(46	)		(6,238	)
Net Loss	$	(636,449	)	$	(791,891	)
Basic and Diluted Loss Per Share	$	(0.36	)	$	(0.45	)
Weighted Average Common Shares Outstanding		1,752,052			1,752,052

4

PRECISION OPTICS CORPORATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED
SEPTEMBER 30, 2003 AND 2002
(UNAUDITED)

	2003			2002
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss	$	(636,449	)	$	(791,891	)
Adjustments to Reconcile Net Loss to Net Cash
Used In Operating Activities -
Depreciation and Amortization		49,927			64,502
Loss on Sale of Assets Held for Sale		--			5,439
Other		--			(6,872	)
Changes in Operating Assets and Liabilities-
Accounts Receivable, Net		(181,036	)		70,300
Inventories		(695	)		(72,592	)
Prepaid Expenses		(156,756	)		(205,158	)
Accounts Payable		225,919			282,786
Accrued Restructuring Expense		--			(167,971	)
Customer Advances		--			43,500
Other Accrued Expenses		(10,571	)		65,753
Net Cash Used In Operating Activities		(709,661	)		(712,204	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of Property and Equipment		(25,383	)		(15,619	)
Net Proceeds from Sale of Assets Held for Sale		--			5,000
Increase in Other Assets		(15,648	)		--
Net Cash Used In Investing Activities		(41,031	)		(10,619	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of Capital Lease Obligation		(3,353	)		(13,292	)
Net Cash Used In Financing Activities		(3,353	)		(13,292	)
NET DECREASE IN CASH AND CASH EQUIVALENTS		(754,045	)		(736,115	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		3,504,414			5,825,601
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	2,750,369		$	5,089,486
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash Paid for-
Interest	$	46		$	6,238
Income Taxes	$	--		$	1,824

5

PRECISION OPTICS CORPORATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying consolidated financial statements include the accounts of Precision Optics Corporation, Inc. and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. All shares and per share data reflect the effects of a 1-for-6 reverse stock split that became effective on January 29, 2003.

These consolidated financial statements have been prepared by the Company, without audit, and reflect normal recurring adjustments which, in the opinion of management, are necessary for a fair statement of the results of the first quarter of the Company’s fiscal year 2004. These consolidated financial statements do not include all disclosures associated with annual consolidated financial statements and, accordingly, should be read in conjunction with footnotes contained in the Company’s consolidated financial statements for the year ended June 30, 2003 together with the auditors’ report filed under cover of the Company’s 2003 Annual Report on Form 10-KSB.

The preparation of these consolidated financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Basic loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. For the three months ended September 30, 2003 and 2002, the effect of stock options and warrants was antidilutive; therefore, they were not included in the computation of diluted loss per share. The number of shares issuable upon the exercise of outstanding stock options and warrants that were excluded from the computation as their effect would be antidilutive were approximately 217,914 and 201,533 for the three months ended September 30, 2003 and 2002, respectively.

2. INVENTORIES

        Inventories are stated at the lower of cost (first-in, first-out) or market and consist of the following:

	September 30, 2003		June 30, 2003
Raw Materials	$	745,492	$	679,647
Work-In-Progress		339,538		379,636
Finished Goods		172,953		198,005
Total Inventories	$	1,257,983	$	1,257,288

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3. STOCK-BASED COMPENSATION

The Company accounts for its stock-based compensation using the intrinsic value method provided for under Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees and related interpretations. Under APB No. 25 and related interpretations, compensation cost is recognized based on the difference, if any, on the date of grant between the fair value of the Company’s stock and the amount an employee must pay to acquire the stock. Statement of Financial Accounting Standards (“SFAS”) No. 123, Accounting for Stock-Based Compensation, establishes a fair-value-based method of accounting for stock-based compensation plans. The Company has adopted the disclosure-only alternative under SFAS No. 123, which requires the disclosure of the pro forma effects on net loss and net loss per share as if the fair value accounting prescribed by SFAS No. 123 had been adopted.

No stock-based employee compensation cost is reflected in net loss, as all options granted had an exercise price equal to the market value of the underlying common stock on the date of grant. The following table illustrates the effect on net loss and net loss per share if the Company had applied the fair value recognition provisions of SFAS No. 123 to stock-based employee compensation:

	3 Months Ended September 30
	2003			2002
Net loss, as reported	$	(636,449	)	$	(791,891	)
Add: Total stock-based employee compensation
expense determined under fair value based
method for all awards		(25,284	)		(20,137	)
Pro forma net loss	$	(661,733	)	$	(812,028	)
Net loss per share:
As reported - basic and diluted	$	(.36	)	$	(.45	)
Pro forma - basic and diluted	$	(.38	)	$	(.46	)

7

PRECISION OPTICS CORPORATION, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis of Financial
Condition and Results of Operations

Important Factors Regarding Forward-Looking Statements

When used in this discussion, the words “believes”, “anticipates”, “intends to”, and similar expressions are intended to identify forward-looking statements. Such statements are subject to certain risks and uncertainties which could cause actual results to differ materially from those projected. These risks and uncertainties, many of which are not within the Company’s control, include, but are not limited to, uncertainty of future demand for the Company’s products; 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 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; the level of market acceptance of competitors’ products; the ability of the Company to control costs associated with performance under fixed price contracts; the performance and reliability of the Company’s vendors; and the continued availability to the Company of essential supplies, materials and services; which are described further in Exhibit 99.1 to the Company’s Annual Report on Form 10-KSB for the fiscal year ended June 30, 2003. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Company undertakes no obligation to publicly release the result of any revision to these forward-looking statements which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Critical Accounting Policies and Estimates

General

Management’s discussion and analysis of financial condition and results of operations are based upon the Company’s consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of these consolidated financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

The Company believes the following critical accounting policies affect its more significant judgments and estimates used in the preparation of its consolidated financial statements.

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Revenue Recognition

The Company recognizes revenue in accordance with U.S. GAAP and SEC Staff Accounting Bulletin (“SAB”) No. 101, Revenue Recognition in Financial Statements. SAB No. 101 requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services have been rendered; (3) the price to the buyer is fixed and determinable; and (4) collectibility is reasonably assured. Determination of criteria (3) and (4) are based on management’s judgments regarding the fixed nature of the price to the buyer charged for products delivered or services rendered and collectibility of the sales price. The Company assesses credit worthiness of customers based upon prior history with the customer and assessment of financial condition. The Company’s shipping terms are customarily FOB shipping point.

Bad Debt

The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. Allowances for doubtful accounts are established based upon review of specific account balances and historical experience. If the financial condition of the Company’s customers were to deteriorate, resulting in an impairment of their ability to make future payments, additional allowances may be required.

Inventories

The Company provides for estimated obsolescence on unmarketable inventory based upon assumptions about future demand and market conditions. If actual demand and market conditions are less favorable than those projected by management, additional inventory write downs may be required. Inventory, once written down, is not subsequently written back up, as these adjustments are considered permanent adjustments to the carrying value of the inventory.

Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed of

In accordance with Statement of Financial Accounting Standards (“SFAS”) No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, the Company assesses impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to undiscounted future net cash flows expected to be generated by the asset. Estimating the future cash flows expected to be generated by the asset is dependent upon significant judgments made by management. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. The Company classifies assets to be sold as held for sale in the period in which all of the following criteria are met:

a) Management, having the authority to approve the action, commits to a plan to sell the asset.
 

b) The asset is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets.
 

c) An active program to locate a buyer and other actions required to complete the plan to sell the asset have been initiated.

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d) The sale of the asset is probable, and transfer of the asset is expected to qualify for recognition as a completed sale, generally within one year.

e) The asset is being actively marketed for sale at a price that is reasonable in relation to its current fair value. 

f) Actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.

Assets classified as held for sale are carried at the lower of cost or fair value less cost to sell and the asset is no longer depreciated. When determining the fair value, management considers the condition of the assets and pertinent market conditions. When considered necessary, management will engage third party valuation experts to assist in the determination of fair value. At each balance sheet date, management makes an assessment of the assets’ fair value and whether the assets continue to meet the criteria to be classified as held for sale.

Results of Operations

        Total revenues for the quarter ended September 30, 2003 (the first quarter of fiscal year 2004) increased by approximately $96,000 or 17.8% from the same period in the prior year. The increase was due primarily to higher sales of medical products (up by approximately $100,000, or 20%), partially offset by lower sales of non-medical products (down by approximately $4,000, or 7%). Sales of medical products were higher due primarily to shipments to a new customer of specialty endoscopes used for cardiac surgical applications, partially offset by lower sales of stereo endoscope products.

        Revenues from the Company’s largest customers, as a percentage of total revenues for the three months ended September 30, 2003 and 2002, were as follows:

	2003		2002
Customer A	49		1
Customer B	14		16
Customer C	3		20
Customer D	--		22
All Others	34		41
	100	%	100	%

        No other customer accounted for more than 10% of the Company’s revenues during those periods.

        At September 30, 2003, receivables from the Company’s two largest customers were approximately 68% and 12%, respectively, of the total net accounts receivable. At June 30, 2003, receivables from the Company’s largest customer were approximately 55% of the total net accounts receivable. No other customer accounted for more than 10% of the Company’s receivables as of September 30, 2003 and June 30, 2003.

        Gross profit for the quarter ended September 30, 2003 increased by approximately $42,000 and as a percentage of revenues increased from 2.0% to 8.2% in the current quarter. The favorable change in gross profit was due primarily to higher sales volume and a lower manufacturing cost structure resulting from restructuring measures implemented in fiscal year 2003.

10

        Research and development expenses decreased by approximately $43,000, or 13.9%, for the quarter ended September 30, 2003, compared to the same period last year. The decrease was due to a lower level of resources being devoted to product development activities, as reflected in reductions in staff.

        Selling, general and administrative expenses decreased by approximately $73,000, or 14.5% for the quarter ended September 30, 2003 compared to the same period last year. The decrease was due primarily to lower professional services expenses.

        The loss on sale of assets of $5,439 in fiscal year 2003 represents the loss on the sale of a small portion of the property and equipment held for sale, which formerly was invested in the Company’s telecommunications product line.

        Interest expense consists of interest on capital lease obligations and (during fiscal year 2003) imputed interest on accrued restructuring costs related to the present value of future lease payments on idle space. Interest expense decreased by approximately $6,000, or 99.3% from fiscal year 2003 due primarily to the reduction in the imputed interest on restructuring costs and lower balance of capital lease obligations.

        Interest income decreased by approximately $14,000, or 65.1% for the quarter ended September 30, 2003 compared to the previous year. The decrease was due to the lower base of cash and cash equivalents and lower interest rates.

        No income tax provision was recorded in the first quarter of fiscal year 2004 or 2003 because of the losses generated in those periods.

Liquidity and Capital Resources

For the three months ended September 30, 2003, the Company’s cash and cash equivalents decreased by approximately $754,000 to $2,750,000. The decrease in cash and cash equivalents was due to cash used by operating activities of approximately $710,000, capital expenditures of approximately $25,000, repayment of debt of approximately $3,000, and an increase in patent costs of approximately $16,000. Cash used by operating activities consisted of the net loss of approximately $636,000 and an increase in accounts receivable of approximately $181,000, partially offset by other net changes in balance sheet items totaling approximately $107,000.

Contractual cash commitments for the fiscal years subsequent to September 30, 2003 are summarized as follows:

		2004		2005		Thereafter		Total
Capital leases		$	476	$	-	$	-	$	476
Operating leases			39,682		3,383		--		43,065
	Total	$	40,158	$	3,383	$	-	$	43,541

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The Company intends to continue devoting resources to internally funded research and development spending on both new products and the improvement of existing products. The Company also intends to devote resources to the marketing and product support of its medical instrument product line and medical instruments related optical thin films. These investments may temporarily result in negative cash flow, but the Company anticipates that the result of these efforts will translate into increased revenues.

The Company provides a standard one-year warranty on materials and workmanship to its customers. The Company provides for estimated warranty costs at the time product revenue is recognized. Warranty costs are included as a component of cost of goods sold in the accompanying consolidated statements of operations. For the three month periods ended September 30, 2003 and 2002, warranty costs were not significant.

The Company believes that its cash and cash equivalents are sufficient to support working capital and investment needs for at least the next twelve months.

Recent Accounting Pronouncements

In January 2003, the Financial Accounting Standards Board (“FASB”) issued Interpretation No. 46, Consolidation of Variable Interest Entities, an interpretation of ARB No. 51. This interpretation addresses the consolidation by business enterprises of variable interest entities as defined in the Interpretation. The Interpretation applies immediately to variable interests in variable interest entities created after January 31, 2003, and to variable interests in variable interest entities obtained after January 31, 2003. For public enterprises with a variable interest in a variable interest entity created before February 1, 2003, the Interpretation applies to that enterprise no later than the beginning of the first interim or annual reporting period beginning after June 15, 2003. The application of this Interpretation did not have a material impact on the Company’s consolidated results of operations or financial position.

In November, 2002, the Emerging Issues Task Force (“EITF”) reached a consensus on Issue No. 00-21, Revenue Arrangements with Multiple Deliverables. EITF Issue No. 00-21 addresses the accounting, by a vendor, for contractual arrangements in which multiple revenue-generating activities will be performed by the vendor. The Issue addresses when and, if so, how an arrangement involving multiple deliverables should be divided into separate units of accounting. The Issue also addresses how the arrangement consideration should be measured and allocated to the separate units of accounting in the arrangement. This Issue otherwise does not change applicable revenue recognition criteria. The Company adopted the provisions of EITF No. 00-21 to new arrangements initiated after July 1, 2003, without a material impact on the Company’s consolidated results of operations or financial position.

Trends and Uncertainties That May Affect Future Results

Cash and cash equivalents decreased by approximately $754,000 for the quarter ended September 30, 2003, compared to a decrease of approximately $284,000 for the quarter ended June 30, 2003. This increased cash usage is attributable primarily to reduced cash collections resulting from a reduction in business from a major endoscope customer in the preceding quarter. Receivables at September 30, 2003 were up by approximately $181,000 from June 30, 2003, due primarily to the higher sales volume in the quarter. Also contributing to the higher receivables at September 30, 2003, and thus the higher cash usage, was the pattern of shipments during the quarter, with more than 45% occurring during the last month.

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Capital equipment expenditures during the quarter ended September 30, 2003 were approximately $25,000, up 63% from the same period in 2002. Future capital expenditures will depend on future sales and the success of ongoing research and development efforts.

For the quarter ended September 30, 2003, research and development expenses were approximately $267,000, down 14% from $310,000 a year earlier. Quarterly R&D expenses are expected to remain at this lower level for the foreseeable future, but will ultimately depend on the Company’s assessment of new product opportunities.

The Company expects its recent pattern of quarter-to-quarter revenue fluctuations to continue, due to the uncertain timing of individual orders and their size in relation to total revenues. On a year-over-year basis, several measures of the Company’s financial health have shown significant improvement, including revenues, gross profit and operating expenses, which the Company attributes to a combination of cost control measures and improving conditions in some markets. The Company is confident in the value of its technology and expertise both in medical and surgical applications and elsewhere. The Company continues to move forward with new products and technical innovations, while maintaining strict controls on R&D spending.

Item 3 Controls and Procedures

The Company’s Chief Executive Officer and Chief Financial Officer have conducted an evaluation of the Company’s disclosure controls and procedures as of September 30, 2003. Based on their evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the applicable Securities and Exchange Commission rules and forms. There were no significant changes in the Company’s internal controls or in other factors that could significantly affect these controls subsequent to the date of the most recent evaluation of these controls by the Company’s Chief Executive Officer and Chief Financial Officer, including any corrective actions with regard to significant deficiencies and material weaknesses.

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PART II. OTHER INFORMATION

Items 1-5   Not Applicable.

Item 6        Exhibits and Reports on Form 8-K
 

(a) Exhibits -

Exhibit 10.1 - Precision Optics Corporation, Inc. 1997 Incentive Plan, Amended and Restated as of November 11, 2003

Exhibit 31.1 - Certification of the Company's Chief Executive Officer required by Rule 13a-14(a)/15d-14(a)

Exhibit 31.2 - Certification of the Company's Chief Financial Officer required by Rule 13a-14(a)/15d-14(a)

Exhibit 32.1 - Certifications of the Company's Chief Executive Officer and Chief Financial Officer required by Rule 13a-14(b) and 18 U.S.C.1350

(b) Reports on Form 8-K - The Company furnished one Current Report on Form 8-K during the quarter ended September 30, 2003 as follows: On September 2, 2003, the Company reported a press release issued on August 29, 2003 reporting its operating results for the quarter and year ended June 30, 2003.

        In accordance with 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 thereunto duly authorized.

	PRECISION OPTICS CORPORATION, INC.
DATE: November 13, 2003	By:	/s/  JACK P. DREIMILLER                  Jack P. Dreimiller Senior Vice President, Finance, Chief Financial Officer and Clerk

14

EX-10.1

                                                                    EXHIBIT 10.1

                       PRECISION OPTICS CORPORATION, INC.

                               1997 INCENTIVE PLAN

                  AMENDED AND RESTATED AS OF NOVEMBER 11, 2003

1.    DEFINED TERMS

      Exhibit A, which is incorporated by reference, defines the terms used in
the Plan and sets forth certain operational rules related to those terms.

2.    PURPOSE

      The Plan has been established to advance the interests of the Company by
giving selected Employees, directors and other persons (including both
individuals and entities) who provide services to the Company or its Affiliates
equity-based or cash incentives through the grant of Awards.

3.    ADMINISTRATION

      The Administrator has discretionary authority, subject only to the express
provisions of the Plan, to interpret the Plan; determine eligibility for and
grant Awards; determine, modify or waive the terms and conditions of any Award;
prescribe forms, rules and procedures (which it may modify or waive); and
otherwise do all things necessary to carry out the purposes of the Plan. In the
case of any Award intended to be eligible for the performance-based compensation
exception under Section 162(m), the Administrator shall exercise its discretion
consistent with qualifying the Award for such exception. The Administrator may
delegate to senior management the authority to grant Awards, other than Awards
to the President.

4.    LIMITS ON AWARDS UNDER THE PLAN

      a.    NUMBER OF SHARES. A maximum of 300,000 shares of Stock may be
delivered in satisfaction of Awards under the Plan.

      b.    TYPE OF SHARES. Stock delivered by the Company under the Plan may be
authorized but unissued Stock or previously issued Stock acquired by the Company
and held in treasury. No fractional shares of Stock will be delivered under the
Plan.

      c.    SECTION 162(M) LIMITS. The maximum number of shares of Stock for
which Stock Options may be granted to any person over the life of the Plan shall
be 100,000. The maximum number of shares of Stock subject to SARs granted to any
person over the life of the Plan shall be 100,000. For purposes of the preceding
two sentences, the repricing of a Stock Option or SAR shall be treated as a new
grant to the extent required under Section 162(m). The aggregate maximum number
of shares of Stock delivered to any person over the life of the Plan pursuant to
Awards that are not Stock Options or SARs shall also be 100,000. However, Stock
Options and SARs that are granted with an exercise price that is less than the
fair market value of the underlying shares on the date of the grant will also be
subject to the limits imposed by the preceding sentence. Subject to these
limitations, each person eligible to participate in the Plan shall be eligible
in any year to receive Awards covering up to the full number of shares of Stock
then available for Awards under the Plan. No more than $2,000,000 may be paid to
any individual with respect to any Cash Performance Award. In applying the
limitation of the preceding sentence: (A) multiple Cash Performance Awards to
the same individual that are determined by


                                       1


reference to performance periods of one year or less ending with or within the
same fiscal year of the Company shall be subject in the aggregate to one
$2,000,000 limit, and (B) multiple Cash Performance Awards to the same
individual that are determined by reference to one or more multi-year
performance periods ending in the same fiscal year of the Company shall be
subject in the aggregate to a separate limit of $2,000,000.

5.    ELIGIBILITY AND PARTICIPATION

      The Administrator will select Participants from among those key Employees,
directors and individuals or entities (other than Employees or directors)
providing services to the Company or its Affiliates who, in the opinion of the
Administrator, are in a position to make a significant contribution to the
success of the Company and its Affiliates. Eligibility for ISOs is limited to
Employees of the Company or of a "parent corporation" or "subsidiary
corporation" of the Company as those terms are defined in Section 424 of the
Code.

6.    RULES APPLICABLE TO AWARDS

      a.    ALL AWARDS

            (1)   AWARD PROVISIONS. The Administrator will determine the terms
      of all Awards, subject to the limitations provided herein.

            (2)   TRANSFERABILITY OF AWARDS. Neither ISOs nor, except as the
      Administrator otherwise expressly provides, other Awards may be
      transferred other than by will or by the laws of descent and distribution,
      and during a Participant's lifetime ISOs (and, except as the Administrator
      otherwise expressly provides, other non-transferable Awards requiring
      exercise) may be exercised only the Participant.

            (3)   VESTING, ETC. The Administrator may determine the time or
      times at which an Award will vest or become exercisable and the terms on
      which an Award requiring exercise will remain exercisable. Without
      limiting the foregoing, the Administrator may at any time accelerate the
      vesting or exercisability of an Award, regardless of any adverse or
      potentially adverse tax consequences resulting from such acceleration.
      Unless the Administrator expressly provides otherwise, immediately upon
      the cessation of the Participant's Employment, an Award requiring exercise
      will cease to be exercisable and will terminate, and all other Awards to
      the extent not already vested will be forfeited, except that:

                  (A)   subject to (B) and (C) below, all Stock Options and SARs
            held by the Participant or the Participant's permitted transferee,
            if any, immediately prior to the cessation of the Participant's
            Employment, to the extent then exercisable, will remain exercisable
            for the lesser of (i) a period of 30 days or (ii) the period ending
            on the latest date on which such Stock Option or SAR could have been
            exercised without regard to this Section 6.a.(3), and will thereupon
            terminate;

                  (B)   all Stock Options and SARs held by a Participant or the
            Participant's permitted transferee, if any, immediately prior to the
            Participant's death, to the extent then exercisable, will remain
            exercisable for the lesser of (i) the period ending 90 days after
            the Participant's death or (ii) the period ending on the latest date
            on which such Stock Option or SAR could have been exercised without
            regard to this Section 6.a.(3), and will thereupon terminate; and

                  (C)   all Stock Options and SARs held by a Participant or the
            Participant's permitted transferee, if any, immediately prior to the
            cessation of the Participant's Employment will immediately terminate


                                       2


            upon such cessation if the Administrator in its sole discretion
            determines that such cessation of Employment has resulted for
            reasons which cast such discredit on the Participant as to justify
            immediate termination of the Award.

            (4)   TAXES. The Administrator will make such provision for the
      withholding of taxes as it deems necessary. The Administrator may, but
      need not, hold back shares of Stock from an Award or permit a Participant
      to tender previously owned shares of Stock in satisfaction of tax
      withholding requirements (but not in excess of the minimum withholding
      required by law).

            (5)   DIVIDEND EQUIVALENTS, ETC. The Administrator may provide for
      the payment of amounts in lieu of cash dividends or other cash
      distributions with respect to Stock subject to an Award.

            (6)   RIGHTS LIMITED. Nothing in the Plan shall be construed as
      giving any person the right to continued Employment or service with the
      Company or its Affiliates, or any rights as a stockholder, except as to
      shares of Stock actually issued under the Plan. The loss of existing or
      potential profit in Awards will not constitute an element of damages in
      the event of termination of Employment or service for any reason, even if
      the termination is in violation of an obligation of the Company or
      Affiliate to the Participant.

            (7)   SECTION 162(M). This Section 6.a.(7) applies to any
      Performance Award intended to qualify as performance-based for the
      purposes of Section 162(m) other than a Stock Option or SAR with an
      exercise price at least equal to the fair market value of the underlying
      Stock on the date of grant. In the case of any Performance Award to which
      this Section 6.a.(7) applies, the Plan and such Award will be construed to
      the maximum extent permitted by law in a manner consistent with qualifying
      the Award for such exception. With respect to such Performance Awards, the
      Administrator will preestablish, in writing, one or more specific
      Performance Criteria no later than 90 days after the commencement of the
      period of service to which the performance relates (or at such earlier
      time as is required to qualify the Award as performance-based under
      Section 162(m)). The Performance Criteria so established shall serve as a
      condition to the grant, vesting or payment of the Performance Award, as
      determined by the Administrator. Prior to grant, vesting or payment of the
      Performance Award, as the case may be, the Administrator will certify
      whether the Performance Criteria have been attained and such determination
      will be final and conclusive. If the Performance Criteria with respect to
      the Award are not attained, no other Award will be provided in
      substitution of the Performance Award. No Performance Award to which this
      Section 6.a.(7) applies may be granted after the first meeting of the
      stockholders of the Company held in 2008 until the Performance Criteria
      (as originally approved or as subsequently amended) have been resubmitted
      to and reapproved by the stockholders of the Company in accordance with
      the requirements of Section 162(m) of the Code, unless such grant is made
      contingent upon such approval.

      b.    AWARDS REQUIRING EXERCISE

            (1)   TIME AND MANNER OF EXERCISE. Unless the Administrator
      expressly provides otherwise, (a) an Award requiring exercise by the
      holder will not be deemed to have been exercised until the Administrator
      receives a written notice of exercise (in form acceptable to the
      Administrator) signed by the appropriate person and accompanied by any
      payment required under the Award; and (b) if the Award is exercised by any
      person other than the Participant, the Administrator may require
      satisfactory evidence that the person exercising the Award has the right
      to do so.

            (2)   EXERCISE PRICE. The Administrator will determine the exercise
      price, if any, of each Award requiring exercise. Unless the Administrator
      determines otherwise, the  exercise price of  an Award requiring exercise

                                       3


      will not be less than the fair market value of the Stock subject to the
      Award, determined as of the date of grant. An ISO granted to an Employee
      described in Section 422(b)(6) of the Code will have an exercise price
      equal to 110% of such fair market value.

            (3)   PAYMENT OF EXERCISE PRICE. Where the exercise of an Award is
      to be accompanied by payment, the Administrator may determine the required
      or permitted forms of payment, subject to the following: (a) all payments
      will be by cash or check acceptable to the Administrator, or, if so
      permitted by the Administrator and if legally permissible, (i) through the
      delivery of shares of Stock that have been outstanding for at least six
      months (unless the Administrator approves a shorter period) and that have
      a fair market value equal to the exercise price, (ii) by delivery to the
      Company of a promissory note of the person exercising the Award, payable
      on such terms as are specified by the Administrator, (iii) through a
      broker-assisted exercise program acceptable to the Administrator, or (iv)
      by any combination of the foregoing permissible forms of payment; and (b)
      where shares of Stock issued under an Award are part of an original issue
      of shares, the Award will require that at least so much of the exercise
      price as equals the par value of such shares be paid other than by
      delivery of a promissory note or its equivalent. The delivery of shares in
      payment of the exercise price under clause (a)(i) above may be
      accomplished either by actual delivery or by constructive delivery through
      attestation of ownership, subject to such rules as the Administrator may
      prescribe.

            (4)   ISOs. No ISO may be granted under the Plan after September 15,
      2007, but ISOs previously granted may extend beyond that date.

      c.    AWARDS NOT REQUIRING EXERCISE

      Awards of Restricted Stock and Unrestricted Stock may be made in return
for either (i) services determined by the Administrator to have a value not less
than the par value of the awarded shares of Stock, or (ii) cash or other
property having a value not less than the par value of the awarded shares of
Stock plus such additional amounts (if any) as the Administrator may determine
payable in such combination and type of cash, other property (of any kind) or
services as the Administrator may determine.

7.    EFFECT OF CERTAIN TRANSACTIONS

      a.    MERGERS, ETC.

         In the event of (i) a consolidation or merger in which the Company is
not the surviving corporation or which results in the acquisition of a majority
of the Company's then outstanding voting common stock by a single person or
entity or by a group of persons and/or entities acting in concert, (ii) a sale
or transfer of all or substantially all the Company's assets, or (iii) a
dissolution or liquidation of the Company (any of the foregoing, a "covered
transaction"), all outstanding Awards requiring exercise will cease to be
exercisable, and all other Awards to the extent not fully vested (including
Awards subject to performance conditions not yet satisfied or determined) will
be forfeited, as of the effective time of the covered transaction; provided,
however, that immediately prior to the consummation of such covered transaction
the vesting or exercisability of Awards shall be accelerated unless, in the case
of any Award, the Administrator provides for one or more substitute or
replacement awards from, or the assumption of the existing Award by, the
acquiring entity (if any) or its affiliates.

         The Administrator may provide in the case of any Award that the
provisions of the preceding paragraph shall also apply to (i) mergers or
consolidations involving the Company that do not constitute a covered
transaction, or (ii) other transactions, not constituting a covered transaction,
that involve the acquisition of the Company's outstanding Stock.


                                       4


         b.       CHANGES IN AND DISTRIBUTIONS WITH RESPECT TO THE STOCK

            (1)   BASIC ADJUSTMENT PROVISIONS. In the event of a stock dividend,
      stock split or combination of shares, recapitalization or other change in
      the Company's capital structure, the Administrator will make appropriate
      adjustments to the maximum number of shares that may be delivered under
      the Plan under Section 4.a. and to the maximum share limits described in
      Section 4.c., and will also make appropriate adjustments to the number and
      kind of shares of stock or securities subject to Awards then outstanding
      or subsequently granted, any exercise prices relating to Awards and any
      other provision of Awards affected by such change.

            (2)   CERTAIN OTHER ADJUSTMENTS. To the extent consistent with
      qualification of ISOs under Section 422 of the Code and with the
      performance-based compensation rules of Section 162(m), where applicable,
      the Administrator may also make adjustments of the type described in
      paragraph (1) above to take into account distributions to stockholders
      other than those provided for in Section 7.a. and 7.b.(1), or any other
      event, if the Administrator determines that adjustments are appropriate to
      avoid distortion in the operation of the Plan and to preserve the value of
      Awards made hereunder.

            (3)   CONTINUING APPLICATION OF PLAN TERMS. References in the Plan
      to shares of Stock shall be construed to include any stock or securities
      resulting from an adjustment pursuant to this Section 7.

8.    CONDITIONS ON DELIVERY OF STOCK

      The Company will not be obligated to deliver any shares of Stock pursuant
to the Plan or to remove any restriction from shares of Stock previously
delivered under the Plan until: the Company's counsel has approved all legal
matters in connection with the issuance and delivery of such shares; if the
outstanding Stock is at the time of delivery listed on any stock exchange or
national market system, the shares to be delivered have been listed or
authorized to be listed on such exchange or system upon official notice of
issuance; and all conditions of the Award have been satisfied or waived. If the
sale of Stock has not been registered under the Securities Act of 1933, as
amended, the Company may require, as a condition to exercise of the Award, such
representations or agreements as counsel for the Company may consider
appropriate to avoid violation of such Act. The Company may require that
certificates evidencing Stock issued under the Plan bear an appropriate legend
reflecting any restriction on transfer applicable to such Stock, and the Company
may hold the certificates pending lapse of the applicable restrictions.

9.    AMENDMENT AND TERMINATION

      Subject to the last sentence of Section 3, the Administrator may at any
time or times amend the Plan or any outstanding Award for any purpose which may
at the time be permitted by law, or may at any time terminate the Plan as to any
further grants of Awards; provided, that (except to the extent expressly
required or permitted by the Plan) no such amendment will, without the approval
of the stockholders of the Company, effectuate a change for which stockholder
approval is required in order for the Plan to continue to qualify under Section
422 of the Code and for Awards to be eligible for the performance-based
exception under Section 162(m).

10.   NON-LIMITATION OF THE COMPANY'S RIGHTS

      The existence of the Plan or the grant of any Award shall not in any way
affect the Company's right to award a person bonuses or other compensation in
addition to Awards under the Plan.


                                       5


11.   GOVERNING LAW

      The Plan shall be construed in accordance with the laws of the
Commonwealth of Massachusetts.


                                       6


                                    EXHIBIT A

      DEFINITION OF TERMS

      The following terms, when used in the Plan, shall have the meanings and be
subject to the provisions set forth below:

      "ADMINISTRATOR": The Board or, if one or more has been appointed, the
Committee. The Administrator may delegate ministerial tasks to such persons as
it deems appropriate.

      "AFFILIATE": Any corporation or other entity owning, directly or
indirectly, 50% or more of the outstanding Stock of the Company, or in which the
Company or any such corporation or other entity owns, directly or indirectly,
50% of the outstanding capital stock (determined by aggregate voting rights) or
other voting interests.

      "AWARD": Any or a combination of the following:

            (i) Options ("Stock Options") entitling the recipient to acquire
      shares of Stock upon payment of the exercise price. Each Stock Option
      awarded under the Plan will be deemed to have been designated as a
      non-ISO, unless the Administrator expressly provides for ISO treatment.

            (ii) Rights ("SARs") entitling the holder upon exercise to receive
      cash or Stock, as the Administrator determines, equal to a function
      (determined by the Administrator using such factors as it deems
      appropriate) of the amount by which the Stock has appreciated in value
      since the date of the Award.

            (iii) Stock subject to restrictions ("Restricted Stock") under the
      Plan requiring that such Stock be redelivered to the Company if specified
      conditions are not satisfied. The conditions to be satisfied in connection
      with any Award of Restricted Stock, the terms on which such Stock must be
      redelivered to the Company, the purchase price of such Stock, and all
      other terms shall be determined by the Administrator.

            (iv) Stock not subject to any restrictions under the Plan
      ("Unrestricted Stock").

            (v) A promise to deliver Stock or other securities in the future on
      such terms and conditions as the Administrator determines.

            (vi) Securities (other than Stock Options) that are convertible into
      or exchangeable for Stock on such terms and conditions as the
      Administrator determines.

            (vii) Cash bonuses tied to Performance Criteria as described below
      ("Cash Performance Awards").

            (viii) Performance Awards

            (ix) Grants of cash, or loans, made in connection with other Awards
      in order to help defray in whole or in part the economic cost (including
      tax cost) of the Award to the Participant. The terms of any such grant or
      loan shall be determined by the Administrator.

      "BOARD": The Board of Directors of the Company.

      "CODE": The U.S. Internal Revenue Code of 1986 as from time to time
amended and in effect, or any successor statute as from time to time in effect.


                                       7


      "COMMITTEE": A committee of the Board comprised solely of two or more
outside directors within the meaning of Section 162(m). The Committee may
delegate ministerial tasks to such persons (including Employees) as it deems
appropriate.

      "COMPANY": Precision Optics Corporation, Inc.

      "EMPLOYEE": Any person who is employed by the Company or an Affiliate.

      "EMPLOYMENT": A Participant's employment or other service relationship
with the Company and its Affiliates. Employment will be deemed to continue,
unless the Administrator expressly provides otherwise, so long as the
Participant is employed by, or otherwise is providing services in a capacity
described in Section 5 to the Company or its Affiliates. If a Participant's
employment or other service relationship is with an Affiliate and that entity
ceases to be an Affiliate, the Participant's Employment will be deemed to have
terminated when the entity ceases to be an Affiliate unless the Participant
transfers Employment to the Company or its remaining Affiliates.

      "ISO": A Stock Option intended to be an "incentive stock option" within
the meaning of Section 422 of the Code.

      "PARTICIPANT": An Employee, director or other person providing services to
the Company or its Affiliates who is granted an Award under the Plan.

      "PERFORMANCE AWARD": An Award subject to Performance Criteria. The
Committee in its discretion may grant Performance Awards that are intended to
qualify for the performance-based compensation exception under Section 162(m)
and Performance Awards that are not intended so to qualify.

      "PERFORMANCE CRITERIA": Specified criteria, the satisfaction of which is a
condition for the grant, exercisability, vesting or full enjoyment of an Award.
For purposes of Awards that are intended to qualify for the performance-based
compensation exception under Section 162(m), a Performance Criterion will mean
an objectively determinable measure of performance relating to any or any
combination of the following (determined either on a consolidated basis or, as
the context permits, on a divisional, subsidiary, line of business, project or
geographical basis or in combinations thereof): (i) sales; revenues; assets;
expenses; earnings before or after deduction for all or any portion of interest,
taxes, depreciation or amortization, whether or not on a continuing operations
or an aggregate or per share basis; return on equity, investment, capital or
assets; gross margin; inventory level or turns; one or more operating ratios;
borrowing levels, leverage ratios or credit rating; market share; capital
expenditures; cash flow; stock price; stockholder return; or other objective
operating contributions; or (ii) acquisitions and divestitures (in whole or in
part); joint ventures and strategic alliances; spin-offs, split-ups and the
like; reorganizations; recapitalizations, restructurings, financings (issuance
of debt or equity) and refinancings; or other transactions that involve a change
in the equity ownership of the Company. A Performance Criterion measure and any
targets with respect thereto determined by the Administrator need not be based
upon an increase, a positive or improved result or avoidance of loss.

      "PLAN": Precision Optics Corporation, Inc. 1997 Incentive Plan as from
time to time amended and in effect.

      "SECTION 162(M)": Section 162(m) of the Code.

      "STOCK": Common stock of the Company, par value $.01 per share.


                                        8

EX-31

Exhibit 31.1

Certification of Chief Executive Officer Required by Rule 13a-14(a)/15d-14(a)

I, Richard E. Forkey, certify that:

1. I have reviewed this Quarterly Report on Form 10-QSB of Precision Optics Corporation, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;

4. The small business issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the small business issuer and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Evaluated the effectiveness of the small business issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c) Disclosed in this report any change in the small business issuer’s internal control over financial reporting that occurred during the small business issuer’s most recent fiscal quarter (the small business issuer’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer’s internal control over financial reporting; and

5. The small business issuer’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer’s auditors and the audit committee of the small business issuer’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer’s internal control over financial reporting.

Date: November 13, 2003
	/s/  RICHARD E. FORKEY                                     Richard E. Forkey Chief Executive Officer

EX-31

Exhibit 31.2

Certification of Chief Financial Officer Required by Rule 13a-14(a)/15d-14(a)

I, Jack P. Dreimiller, certify that:

1. I have reviewed this Quarterly Report on Form 10-QSB of Precision Optics Corporation, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;

4. The small business issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the small business issuer and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Evaluated the effectiveness of the small business issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c) Disclosed in this report any change in the small business issuer’s internal control over financial reporting that occurred during the small business issuer’s most recent fiscal quarter (the small business issuer’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer’s internal control over financial reporting; and

5. The small business issuer’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer’s auditors and the audit committee of the small business issuer’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer’s internal control over financial reporting.

Date: November 13, 2003
	/s/  JACK P. DREIMILLER                                     Jack P. Dreimiller Chief Financial Officer

EX-32

Exhibit 32.1

PRECISION OPTICS CORPORATION, INC.

CERTIFICATION PURSUANT TO
SECTION 1350, CHAPTER 63 OF TITLE 18, UNITED STATES CODE,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

We, Richard E. Forkey, Chief Executive Officer, and Jack P. Dreimiller, Chief Financial Officer, of Precision Optics Corporation, Inc. (the “Company”), certify, pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Quarterly Report on Form 10-QSB of the Company for the quarterly period ended September 30, 2003 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78 m or 78o(d)); and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 13, 2003
	/s/  RICHARD E. FORKEY                                     Richard E. Forkey, Chairman of the Board, Chief Executive Officer, President and Treasurer

/s/  JACK P. DREIMILLER                                    
Jack P. Dreimiller, Senior Vice President Finance,
Chief Financial Officer and Clerk