Good day, and welcome to the Precision Optics Reports Second Quarter of Fiscal Year 2022 Financial Results. All participants will be in a listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Mr. Robert Blum with Lytham Partners. Please go ahead, sir.

All right. Thank you very much, Chuck. Thank you all for joining us today to discuss the financial results Precision Optics as Chuck mentioned for the second quarter of fiscal year 2022 ended on December 31, 2021 as well as the announcement that the company intends to uplist to the NASDAQ Capital Market. With us on the call representing the company today are Dr. Joe Forkey, Precision Optics Chief Executive Officer; and Dan Habhegger, the Company's Chief Financial Officer. At the conclusion of today's prepared remarks, we'll open the call for a question-and-answer session. Today's conference call is also being webcast with replay capabilities available both through the webcast, as well as through the dial-in instructions, the details of both were included in today's press release. Before we begin with prepared remarks, we submit for the record the following statements: Statements made by the management team of Precision Optics during the course of this conference call may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 as amended, and Section 21E of the Securities Exchange Act of 1934 as amended, and such forward-looking statements are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements describe future expectations, plans, results, or strategies, and are generally preceded by words such as may, future, plan or planned, will or should, expected, anticipates, draft, eventually or projected. Listeners are cautioned that such statements are subject to a multitude of risks and uncertainties that could cause future circumstances, events or results to differ materially from those projected in the forward-looking statements, including the risk that actual results may differ materially from those projected in the forward-looking statements as a result of various factors and other risks identified in the Company's filings with the Securities Exchange Commission. All forward-looking statements contained during this conference call speak only as of the date in which they were made and are based on management's assumptions and estimates as of such date. The Company does not undertake any obligation to publicly update any forward-looking statements, whether as a result of the receipt of new information, the occurrence of future events or otherwise. So with that said, let me turn the call over to Dr. Joe Forkey, Chief Executive Officer of Precision Optics. Joe, please proceed.

Thank you, Robert, and thank you all for joining our call today to discuss our second quarter fiscal year 2022 financial results. This is an exciting call for us as we report results of the first quarter, that includes Lighthouse Imaging, but also as we report and the growth in a number of key aspects of our business that should lead to strong performance in the back half of fiscal 2022 and beyond. We also announced today that we intend to uplist our stock on to the NASDAQ Capital Market. And so in addition to filing our 10-Q today, we also filed a preliminary proxy and anticipation of our annual meeting, which is scheduled for April 8. We are very excited about this milestone of our growth and development and the benefits this change should bring to our shareholders. So let me talk for a minute about our plans to uplist before we get into our second quarter financial results. With the recent acquisition of Lighthouse Imaging and the positive developments in many pipeline projects, some of which I'll talk about in a minute, we have decided it's the right time to pursue listing of our stock on the NASDAQ Capital Market. We believe that this move will make transactions in our stock easier for existing shareholders and will likely broaden significantly the population of prospective investors in our stock. Overall, this should improve the liquidity in the trading of our shares again, making them more attractive to investors. We believe this move is an important step in the growth and maturation of our company. There are several requirements for listing on the NASDAQ Capital Market, among them are the need for a minimum share trading price of $3 and the need to have recently had an annual meeting. We…

Thank you. We will now begin the question-and-answer session. The first question will come from Michael Potter with Monarch Capital Group. Please go ahead.

Hey, Joe. Congratulations on a very good quarter and obviously a lot going on in moving the company forward.

Yes. Thanks, Michael.

Just a couple of follow-up questions. On the single-use side, there's two projects, it sounds like that are moving forward?

Yes. So you caught that. So we have the project that I've been talking about for a number of quarters now, which is the project that came through POC, through historic POC, I would say. But it's true that now with the acquisition of Lighthouse, they have a project that they had been working on and that they're continuing to work on. That also is looking like it could go into production in the next 12 months. I will just add that beyond that we have a handful of additional single-use projects that we are engaged in discussions with customers on, which would represent additional pipeline projects. Some of these we've already done some very early preliminary prototypes, but I think there's a good chance that there will be a few more that'll come into the pipeline in the next three to six-month, I would say.

That's terrific. I know you've been working on that for a very, very long time. The 510(k) approval though that we – that our customer received recently, when do you anticipate that'll go into production that we'll actually get a production order from the customer?

Yes. So I'm actually scheduled to talk with him any anytime now. We tried to connect last week and we played a little phone tag. But I expect that after he and I talk about his detailed requirements, I would expect we'd see an order pretty quickly after that. So I would say it would be just a matter of weeks.

Terrific. And then on the big one, obviously there's a big announcement – the announcement that you made last week. Can you give us some more color on the use case for how the customer is using this product?

Unfortunately, I cannot give you any details because of the nature of the application and because of the nature of the customer and the request of us by the customer, which we're very specific and very strong. I'm not able to talk about any of the aspects of the end use. What I can – I can tell you a couple of things. I can tell you that the products that we make go into a larger product that our customer makes. I can tell you that we have – they have shared with us the forecast of the products that they're making into which our products go. And without going into details, I can say that the forecast that they have shared with us are consistent with some information that's available publicly that relates to the way these systems are being used. Beyond that, I guess the only other thing I would point out and we sort of said this here, but I don't want people to miss it. The orders that we've received are initial orders that are anticipated to turn into long-term, basically blanket orders. Now this customer's company policy is that they don't give blanket orders for these kinds of products. But they have given us certain levels of commitment, that if we're able to succeed with this first order for $1.5 million over six months, that they have every intention of giving us follow-on orders so that the production continues without any break in between. This is the reason why we've talked about this as a $1.5 million order, but if you look at the delivery schedule, which is over six months and the anticipation and commitments they've given us to give us follow-on orders, it really ends up being a $3 million a year run rate for these particular products. The other point I want to make is that the products we're making go into a larger product that our customer makes. There are other requirements for their larger product that they have also had us looking at. And some of these other products that we could provide for the same program, have – we've been working on for some time and so there's a reasonable chance that some of these other ones will go into production in the next 12 months. Beyond that, this customer is happy enough with the things that we've been doing because of the stuff that we've been working on is extremely difficult from a technical standpoint. And so they're happy enough with the things that we've already demonstrated and with the projects we have in process, that they've also told us that they plan to give us some request for “some entirely new products that they expect to get started with us in the next month or so.” So across the Board, the relationship is very strong and this customer could very quickly become the largest customer that we have.

Perfect. That's great, Joe. Keep up the good work. I'll get back in queue.

Thanks a lot, Mike.

Hey, Joe, I'll jump in here. It's Robert Blum, while we see if anyone else queues up. Just two items here, I guess first off, we've talked about a number of product, projects and programs going into production, any concerns relating to labor shortages, production capacity, et cetera?

Yes. Sure. So certainly we have concerns over the labor environment. Having said that, we've already been in the process of recruiting and hiring new people because the growth has already started and it sort of falls into two categories. There are folks that we hire as production projects come on. These are production technicians, many of whom we train ourselves sometimes supply chain folks, quality assurance, technicians and such. And while the market is tight, we've been successful in attracting people to these physicians. The other kinds of physicians that we've been looking for some time now are in the technical side and the engineering side. I would say the labor market there is even tighter particularly in the Northeast, where we're competing with lots of other technical companies in the Boston area. Again, the challenging news is that it's a challenging market for this kind of qualified employee. The good news is, again, we've been successful in recruiting people for the company. So all-in-all, I would say it's taking us longer. It's a bit harder than it's been in the past, but the good news is we've been successful. I think that's because we have a very good reputation with our existing employees. Employees typically come and stay for a long time. We have a great set of benefits and we're doing really interesting work. And I think that a lot of our employees, particularly the technical engineering folks, a lot of times are attracted to companies that are doing cutting edge development and cutting edge products. And so for all of those reasons, despite the fact that it's a little challenging, we've been successful in recruiting people, and I think we'll be able to as we go forward.

Okay, great. And then just one more item here. As it relates to the potential uplisting to NASDAQ or the intent to uplist here, we've talked about some of the facts about their stock price, which obviously can be remedied there. Are there any other significant issues or milestones that need to be accomplished in order to get the uplisting to the NASDAQ?

Yes. Sure. So the short answer is we don't see any roadblocks to getting uplisted to NASDAQ. Having said that, we've already been in touch with the folks at NASDAQ, they've been very helpful. We've submitted our initial application. They have responded with their initial comments. We certainly have some work to do. They ask lots of questions. We have to get through the annual meeting. But as I say, there were none of the questions nor any of the things that we have to do for the annual meeting that we see as particular impediment. So we're going to work diligently to get through all of the requirements and get uplisted as quickly as we can.

All right. Great. Chuck, I'll turn it back over to you if there's any questions that stand in the call here.

As there are no more questions, I would like to turn the call over to management for any closing remarks.

Thank you, operator. Thanks everyone for joining us on the call today. I look forward to speaking with all of you very soon. Have a good evening and stay safe. Bye-bye.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.