UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934

PRECISION OPTICS CORPORATION, INC.
22 East Broadway
Gardner, Massachusetts 01440

ToDear Stockholder:

You are cordially invited to attend the Stockholders:

The Board2009 Annual Meeting of Directors and officersStockholders of Precision Optics Corporation, Inc. invite you to attend the 2008 Annual Meeting of Stockholders toThe meeting will be held Tuesday, November 25, 2008,24, 2009, at 10:00 a.m. at The Colonial Hotel, 625 Betty Spring Road, Gardner, Massachusetts 01440.

A copy ofWhether or not you attend the Annual Meeting, it is important that your shares be represented and voted at the Annual Meeting. After reading the Proxy Statement, please promptly vote and submit your proxy by dating, signing and returning the enclosed proxy card in the enclosed envelope.

We have also enclosed a copy of our 2009 Annual Report to Stockholders.

Important Notice Regarding the Company's 2008Availability of Proxy Materials for the Stockholder Meeting to be Held on November 24, 2009 — Precision Optics Corporation, Inc.'s Proxy Statement and 2009 Annual Report to Stockholders are enclosed.available at www.materials.proxyvote.com/740294.

IfThe Board of Directors and Management look forward to seeing you cannot be present at the meeting, please mark, date, and sign the enclosed proxy card and return it as soon as possible in the enclosed envelope.meeting.

		Very truly yours,
		/s/ Richard E. Forkey
		Richard E. Forkey President

PRECISION OPTICS CORPORATION, INC.
22 East Broadway
Gardner, Massachusetts 01440

NOTICE OF 20082009 ANNUAL MEETING OF STOCKHOLDERS

To be Held on Tuesday, November 25, 200824, 2009

Notice is hereby given that the 2008To our Stockholders:

Precision Optics Corporation, Inc. will hold its 2009 Annual Meeting of Stockholders of Precision Optics Corporation, Inc. (the "Company") will be held on Tuesday, November 25, 2008,24, 2009, at 10:00 a.m. at The Colonial Hotel, 625 Betty Spring Road, Gardner, Massachusetts 01440, for the following purposes:01440.

We are holding this Annual Meeting to:

1.

To consider and approve an amendment to the Company's Articles of Organization, as amended, to be filed at the discretion of the Board of Directors, to effect a reverse stock split of the Company's common stock in the range of 1:2 to 1:30.

2.

To elect twoone Class III directorsI director to hold office for a three-year term and until theirhis respective successorssuccessor shall have been duly elected and qualified.qualified; and

3.2.

To transact any and allsuch other business thatas may properly come before the meetingAnnual Meeting and any adjournments or any adjournment thereof.postponements of the Annual Meeting.

All stockholders of record at the close of business on Wednesday,Thursday, October 1, 2008,2009, are entitled to notice of and to vote at the meetingAnnual Meeting and any adjournments or any and all adjournments thereof. Information concerningpostponements of the mattersAnnual Meeting.

Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to be acted uponHeld on November 24, 2009 — Precision Optics Corporation, Inc.'s Proxy Statement and 2009 Annual Report to Stockholders are available at www. materials.proxyvote.com/740294.

It is important that your shares be represented at this meeting. Even if you attend the meeting, is set forth inwe hope that you will promptly vote and submit your proxy by dating, signing and returning the accompanyingenclosed proxy statement. All stockholders are cordially invitedcard. This will not limit your right to attend the meeting in person.meeting.

By Order of the Board of Directors

/s/ Jack P. Dreimiller

Jack P. Dreimiller
Clerk

Gardner, MA
October 31, 200830, 2009

WHETHER OR NOT YOU PLAN TO BE PRESENT AT THE MEETING, PLEASE COMPLETE, SIGN AND PROMPTLY MAIL THE ENCLOSED PROXY. A RETURN ENVELOPE THAT REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES IS ENCLOSED FOR THAT PURPOSE.

PRECISION OPTICS CORPORATION, INC.

Annual Meeting of Stockholders
November 25, 200824, 2009

PROXY STATEMENT

INFORMATION CONCERNING SOLICITATION AND VOTING

General

This proxy statementProxy Statement and form of proxy are furnished in connection with the solicitation of proxies by the Board of Directors of Precision Optics Corporation, Inc., a Massachusetts corporation (the "Company"), for use at the 20082009 Annual Meeting of Stockholders of the Company to be held on November 25, 2008,24, 2009, at 10:00 a.m. at The Colonial Hotel, 625 Betty Spring Road, Gardner, Massachusetts 01440, and any and all adjournments thereof,or postponements of the Annual Meeting, for the purposes set forth herein and in the accompanying Notice of 20082009 Annual Meeting of Stockholders. The Company was incorporated in 1982, and its principal executive offices are located at 22 East Broadway, Gardner, Massachusetts 01440 (telephone 978-630-1800). This proxy statementProxy Statement and form of proxy are first being distributed to stockholders on or about October 31, 2008.30, 2009.

Stockholders Entitled to Vote

As of October 1, 2008,2009, the Company had outstanding 25,458,2121,018,411 shares of common stock, $0.01 par value per share (the "Common Stock").share. Each share of Common Stockcommon stock entitles the holder of record thereof at the close of business on October 1, 20082009 (the "Record Date") to one vote, in person or by proxy, on the matters to be voted upon at the meeting.

Voting Procedures

Consistent with Massachusetts law and the Company's by-laws,By-laws, the holders of a majority of the shares entitled to be cast on a particular matter, present in person or represented by proxy, constitutes a quorum as to such matter. Votes cast by proxy or in person at the annual meetingAnnual Meeting will be counted by persons appointed by the Company to act as election inspectors for the meeting.

If the enclosed form of proxy is properly signed and returned and not revoked, the shares represented thereby will be voted at the annual meeting.Annual Meeting. If the stockholder specifies in the proxy how the shares are to be voted, they will be voted as specified. If the stockholder does not specify how the shares are to be voted, such shares will be voted in favor of Proposal 1 below and for the election of the nomineesnominee for director as set forth in Proposal 2.1.

Any stockholder has the right to revoke his or her proxy at any time before it is voted by: (1) attending the meeting and voting in person,person; (2) by filing with the Clerk of the Company a written instrument revoking the proxyproxy; or (3) delivering to the Clerk another newly executed proxy bearing a later date.

Required Vote

The approval to grant the Board of Directors the authority to file an amendmentWith regard to the Articleselection of Organizationdirectors, votes may be cast "FOR" or "WITHHOLD." Provided that a quorum is present, the affirmative vote by the holders of a plurality of the shares of common stock present

and voting at the Annual Meeting is required to effect a reverse stock split aselect the Class I director nominee described in Proposal 1 requires the affirmative1. For purposes of this vote, of a majority of all shares outstanding.

The election of the Class III directors described in Proposal 2 requires a plurality of votes cast.

Abstentionsabstentions and broker "non-votes" are counted as present and entitled to vote for purposes of determining a quorum, but will not be counted as votes properly cast for purposes of determining the outcome of voting on any matter.quorum. A broker non-vote occurs when a nominee holding shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power for the particular item and has not received instructions from the beneficial owner.

Voting on Other Matters

At the date hereof, the Company has no knowledge of any business other than that described in the noticeNotice for the annual meetingAnnual Meeting which will be presented for consideration at the annual meeting.Annual Meeting. If any other business should come before such meeting, the persons appointed by the enclosed form of proxy may, in their discretion, vote all such proxies in accordance with their own judgment. The persons appointed by the enclosed form of proxy also may, in their discretion, vote all proxies with respect to matters incident to the conduct of the meeting.

Costs of Proxy Solicitation

The Company will bear all the costs of the solicitation of proxies. The Board of Directors (the "Board") may arrange with brokerage houses and other custodians, nominees, and fiduciaries to forward solicitation materials to the beneficial owners of the stock held of record by such persons, and the Company may reimburse them for the reasonable out-of-pocket expenses incurred in so doing. In addition to the solicitation of proxies by use of the mail, the Company may use the services of some of its directors, officers, and regular employees (who will receive no compensation therefrom in addition to their regular salaries) to solicit proxies personally or by mail or telephone.

PROPOSAL 1: REVERSE STOCK SPLIT

TO CONSIDER AND APPROVE AN AMENDMENT TO THE COMPANY'S ARTICLES OF ORGANIZATION, AS AMENDED, TO BE FILED AT THE DISCRETION OF THE BOARD OF DIRECTORS, TO EFFECT A REVERSE STOCK SPLIT OF THE COMPANY'S COMMON STOCK IN THE RANGE OF 1:2 TO 1:30.

SUMMARY

In October 2008, the Board approved and recommended that the stockholders approve, a proposed amendment (the "Reverse Stock Split Amendment") to the Company's Articles of Organization, as amended, to be filed at the discretion of the Board to effect or, alternatively, to abandon a reverse split of the Company's Common Stock (the "Reverse Stock Split"). The form of the proposed Reverse Stock Split Amendment is attached hereto as Appendix A. The stockholders are being asked to approve a reverse stock split of the Company's outstanding Common Stock at a ratio in the range of 1:2 to 1:30, as determined in the sole discretion of the Board. If the proposed Reverse Stock Split is approved, the Board would have the discretion to elect, as it determines to be in the best interests of the Company and its stockholders, to effect the Reverse Stock Split at any time before the Company's 2009 annual meeting of stockholders. The Board may also elect not to implement the approved Reverse Stock Split. The Board believes that approval of a proposal granting this discretion to the Board provides the Board with appropriate flexibility to achieve the purposes of the Reverse Stock Split, if implemented, and to act in the best interests of the Company and its stockholders. The Reverse Stock Split would become effective on such date as the amendment to the Articles of Organization, as amended, is filed with the Massachusetts Secretary of State (the "Effective Date").

On the Effective Date, the Reverse Stock Split will cause the number of issued and outstanding shares of the Company's Common Stock to automatically be reduced in accordance with the selected exchange ratio for the Reverse Stock Split. Fractional shares of Common Stock will not be issued as a result of the Reverse Stock Split, but instead, the Company will round up each fractional share to the next whole post-split share. Except for adjustments that may result from the treatment of fractional shares, each stockholder will hold the same percentage of Common Stock outstanding immediately following the Reverse Stock Split as such stockholder held immediately prior to the Reverse Stock Split. The Reverse Stock Split Amendment will not alter the par value of the Common Stock or the number of shares of Common Stock authorized for issuance. The number of authorized shares of the Common Stock would remain unchanged.

REASONS FOR THIS PROPOSAL

On June 25, 2008, the Company entered into a Purchase Agreement with institutional and other accredited investors pursuant to which it sold an aggregate of $600,000 of 10% Senior Secured Convertible Notes, that are convertible into an aggregate of 12,000,000 shares of the Company's Common Stock at a conversion price of $0.05 per share, and warrants to purchase an aggregate of 7,920,000 shares of Common Stock at an exercise price of $0.07 per share. Interest accrues on the Notes at a rate of 10% per annum and is payable upon the earlier of conversion or maturity of the Notes. The Notes mature on June 25, 2010, and the warrants expire on June 25, 2015. The Notes and warrants are not convertible or exercisable until the Company implements a reverse stock split, which requires the approval of its stockholders and the effectiveness of an amendment to its Articles of Organization to effect the reverse stock split. The closing of the sale of the Notes and warrants occurred on June 25, 2008.

Pursuant to the Purchase Agreement, the Company agreed to take all action necessary to seek the approval of its stockholders to effect a reverse stock split in the ratio of 1:6, with the number of authorized shares of the Company's Common Stock to remain at 50,000,000. However, given recent stock market volatility and uncertainty in the economy, the Board believes it is necessary to preserve flexibility in the ratio of the reverse stock split so the Board may attempt to renegotiate the Purchase Agreement if the Board believes another range is in the best interests of the Company and its stockholders. There is no guarantee that the Purchase Agreement will be amended, however the Company believes the investors that are parties to the Purchase Agreement will be amenable to a revision of the 1:6 ratio currently in place if it would benefit the Company and its stockholders. The Board believes that stockholder approval of a range of potential exchange ratios, rather than a single exchange ratio, provides the Board greater flexibility to achieve the desired results of the Reverse Stock Split and that a range of ratios from 1:2 to 1:30 for a Reverse Stock Split is in the best interests of the Company and its stockholders.

POTENTIAL EFFECTS OF THIS PROPOSAL

If the Board implements the Reverse Stock Split, the immediate effect would be to reduce the number of shares of the Company's outstanding Common Stock and to increase the trading price of such Common Stock. However, the effect of a Reverse Stock Split upon the market price of the Common Stock cannot be predicted, and the history of reverse stock splits for companies in similar circumstances sometimes improves stock performance, but in many cases does not. There can be no assurance that the trading price of the Company's Common Stock after the Reverse Stock Split will rise in proportion to the reduction in the number of shares of Common Stock outstanding as a result of the Reverse Stock Split or remain at an increased level for any period. The Reverse Stock Split could eventually lead to a decrease in the trading price of the Common Stock. The trading price of the Common Stock may also change due to a variety of other factors, including operating results, other factors related to the Company's business and general market conditions.

The actual timing of the filing to effect the Reverse Split, if any, will be determined by the Board based upon its evaluation as to when such action is most advantageous to the Company and its stockholders and upon possible further negotiations with investors to the Purchase Agreement. Further, even if this proposal is approved by the Company's stockholders, the Board may elect not to file the Reverse Stock Split Amendment at all if it believes it is in the best interests of the Company and its stockholders not to do so. However, the Company believes this outcome is unlikely due to its obligation to effect a Reverse Split pursuant to the Purchase Agreement.

After the Effective Date of the Reverse Stock Split, the number of shares of Common Stock held by each stockholder will be reduced by multiplying the number of shares held immediately before the Reverse Stock Split by the selected exchange ratio, and then rounding up to the nearest whole share. Therefore, each stockholder will own a reduced number of shares of Common Stock but will hold the same percentage of the outstanding shares, subject to adjustments for fractional interests resulting from the Reverse Stock Split, as the stockholder held prior to the Effective Date. The number of shares of Common Stock that may be purchased upon the exercise of outstanding options, warrants, and other securities convertible into, or exercisable or exchangeable for, shares of Common Stock, and the per share exercise or conversion prices thereof, will be adjusted appropriately for the Reverse Stock Split in accordance with their terms as of the Effective Date.

Each fractional share of Common Stock that results from the Reverse Stock Split will be rounded up to a whole share. Because no beneficial owners will be cashed out in the Reverse Stock Split, the Company does not believe that the Reverse Stock Split will lead to a reduction in the number of beneficial owners.

The Reverse Stock Split may also result in some stockholders owning "odd lots" of less than 100 shares of Common Stock received as a result of the Reverse Stock Split. Brokerage commissions and other costs of transactions in odd lots may be higher, particularly on a per-share basis, than the cost of transactions in even multiples of 100 shares.

The Reverse Stock Split will affect all stockholders equally and will not affect any stockholder's proportionate equity interest in the Company except with respect to adjustments for fractional interests. None of the rights currently accruing to holders of the Common Stock, options or warrants to purchase Common Stock will be affected by the Reverse Stock Split. Following the Reverse Stock Split, each share of the Common Stock resulting from the Reverse Stock Split will entitle the holder thereof to one vote per share and will otherwise be identical to the outstanding Common Stock immediately prior to the Effective Date.

EXCHANGE OF STOCK CERTIFICATES

The combination and reclassification of shares of Common Stock pursuant to the Reverse Stock Split will occur automatically on the Effective Date without any action on the part of stockholders of the Company and without regard to the date on which certificates evidencing shares of Common Stock prior to the Reverse Stock Split are physically surrendered for new certificates. As of the Effective Date, the number of shares of Common Stock held by each stockholder will be converted and reclassified into the number of shares that each stockholder will be entitled to receive as a result of the Reverse Stock Split proportional to the ratio selected by the Board.

As soon as practicable after the Effective Date, transmittal forms will be mailed to each holder of record of shares of Common Stock, to be used in forwarding such holder's stock certificates for surrender and exchange for certificates evidencing the number of shares of Common Stock such stockholder is entitled to receive as a consequence of the Reverse Stock Split. The transmittal forms will be accompanied by instructions specifying other details of the exchange. Upon receipt of such transmittal form, each stockholder should surrender the certificates evidencing shares of Common Stock prior to the Reverse Stock Split in accordance with the applicable instructions. Each holder who surrenders certificates will receive new certificates evidencing the whole number of shares of Common Stock that such stockholder holds as a result of the Reverse Stock Split. Stockholders will not be required to pay any transfer fee or other fee in connection with the exchange of certificates.

The Company estimates that its aggregate expenses relating to the Reverse Stock Split will not be material.

STOCKHOLDERS SHOULD NOT SUBMIT THEIR STOCK CERTIFICATES FOR EXCHANGE UNTIL THEY RECEIVE A TRANSMITTAL FORM FROM THE COMPANY

As of the Effective Date, each certificate representing shares of Common Stock outstanding prior to the Effective Date will be deemed canceled and, for all corporate purposes, will be deemed only to evidence the right to receive the number of shares of Common Stock into which the shares of Common Stock evidenced by such certificate have been converted as a result of the Reverse Stock Split.

FEDERAL INCOME TAX CONSEQUENCES

The following discussion generally describes certain United States federal income tax consequences of the proposed Reverse Stock Split to stockholders of the Company. This discussion is limited to United States persons who hold their Common Stock as capital stock. The following does not address any foreign, state, local tax or alternative minimum income, or other federal tax consequences of the proposed Reverse Stock Split. The actual consequences for each stockholder will be governed by the specific facts and circumstances pertaining to such stockholder's acquisition and ownership of the Common Stock. Thus, the Company makes no representations concerning the tax consequences for any of its stockholders and recommends that each stockholder consult with such stockholder's own tax advisor concerning the tax consequences of the Reverse Stock Split, including federal, state and local, or other income tax.

The Company has not sought and will not seek an opinion of counsel or a ruling from the Internal Revenue Service regarding the federal income tax consequences of the proposed Reverse Stock Split. However, the Company believes that, because the Reverse Stock Split is not part of a plan to periodically increase a stockholder's proportionate interest in the assets or earnings and profits of the Company, the proposed Reverse Stock Split will have the following income tax effects:

1.

A stockholder will not recognize taxable gain or loss as a result of the Reverse Stock Split.

2.

In the aggregate, a stockholder's basis in post-split Common Stock will equal such stockholder's basis in the shares of pre-split Common Stock exchanged therefor, and such stockholder's holding period for post-split Common Stock will include the holding period for pre-split Common Stock exchanged therefor.

3.

The proposed Reverse Stock Split will constitute a reorganization within the meaning of Section 368(a)(1)(E) of the Internal Revenue Code of 1986, as amended, and the Company will not recognize any gain or loss as a result of the Reverse Stock Split.

The Board of Directors recommends that the stockholders vote FOR the proposal to amend the Company's Articles of Organization, as amended, to be filed at the discretion of the Board of Directors, to effect a Reverse Stock Split of the Company's Common Stock in the range of 1:2 to 1:30. Proxies will be voted in favor thereof unless a stockholder has indicated otherwise in the proxy.

PROPOSAL NUMBER 2: ELECTION OF DIRECTORSDIRECTOR

TO CONSIDER AND APPROVE THE RE-ELECTION OF JOSEPH N.RICHARD E. FORKEY AND RICHARD MILES TO THE COMPANY'SOUR BOARD OF DIRECTORS.

The Company'sOur Board of Directors is divided into three classes that are as nearly equal in number as possible, with staggered terms of office. Only one class is elected each year. Each director serves a three year term and until his or her successor has been duly elected and qualified. The Company's directorBoard of Directors has fixed the number of directors at six. The directors in Class I,III, Joseph N. Forkey and Richard E. Forkey,Miles, will hold office until the annual meeting of stockholders in 20092011 and until his successor hastheir successors have been duly elected and qualified. The Company's Class II directors, Joel R. Pitlor and Donald A. Major, will hold office until the annual meeting of stockholders in 2010 and until their respective successors have been duly elected and qualified. The directorsdirector in Class III, Joseph N.I, Richard E. Forkey, and Richard Miles, will hold office until the annual meeting of stockholders in 20082009 and areis standing for re-election.

The names, ages, business experience for at least the last five years, and certain other information regarding the current directors, are as follows:

(1)

Directors whose terms do not expire this year.

(2)

Richard E. Forkey is the father of Joseph N. Forkey.

Director Independence

During the fiscal year ended June 30, 2008,2009, the individuals named in the table above served as members of the Company'sour Board of Directors. Of those individuals, Messrs. Pitlor, Major and Miles are "independent" as defined in Rule 4200(a)(15)5605 of the Nasdaq Marketplace Rules. The Company's Common StockOur common stock is traded on the Over-The-Counter Bulletin Board, referred to herein as the OTCBB. The OTCBB does not have a requirement that the Companywe have a majority of independent directors on itsour Board.

Board of Directors

During the fiscal year ended June 30, 2008, the Company's2009, our Board of Directors held sixteentwo meetings and acted by unanimous written consent on fivetwo occasions. Each director attended at least 75% of the meetings of the Board of Directors.

While the Company haswe have no formal policy in place regarding board members' attendance at annual meetings of stockholders, the Company encourageswe encourage their attendance at such annual meetings. There were three members of the Board of Directors in attendance at the Company's 2007our 2008 Annual Meeting of Stockholders.

Information as to ownership of the Company'sour securities by the nominee for director is included under the heading "Security Ownership of Certain Beneficial Owners and Management."

While the Board does not have a standing nominating committee, it does have a standing Audit Committee and a standing Compensation Committee.

Audit Committee

The Audit Committee of the Board of Directors is currently composed of Messrs. Major and Miles. The Audit Committee has adopted a charter which wasis included as Exhibit CAppendix A to the Company's proxy statement for the 2006 Annual Meeting of Stockholders.this Proxy Statement. The Audit Committee's primary function is to assist the Board of Directors in monitoring the integrity of theour Company's financial statements, systems of internal control and the independence and performance of the independent registered public accounting firm. The Audit Committee's specifically enumerated powers and responsibilities include hiring and terminating the independent registered public accounting firm and pre-approving any engagements of the independent registered public accounting firm for audit and all permitted non-audit services. The Audit Committee held fivefour meetings during the fiscal year ended June 30, 2008.2009. Each of the Audit Committee members attended 100% of the meetings of the Audit Committee held during the fiscal year ended June 30, 2008.2009.

The Board of Directors has made a determination that Donald A.Mr. Major, Chair of the Audit Committee, qualifies as an audit committee financial expert meeting the criteria set forth in Item 407(d)(5) of Regulation S-K. We have determined that Mr. Major is "independent" as independence for audit committee members is defined in Rule 5605 of the Nasdaq Marketplace Rules and Rule 10A-3 of the Securities Exchange Act of 1934. Mr. Major has an understanding of generally accepted accounting principles and financial statements and has the ability to assess the general application of such principles in connection with the accounting for estimates, accruals and reserves. He also has over seven years of experience, including five years in a supervisory capacity, auditing, analyzing and evaluating financial statements that had a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of issues that can reasonably be expected to be raised by theour Company's financial statements. Additionally, Mr. Major served as the Chief Financial Officer to several public and private companies over a span of 18 years where he was responsible for preparing financial statements. He has an understanding of internal controls over financial reporting and an understanding of audit committee functions. Mr. Major earned his BA in Accounting in 1984 from Michigan State University.

Compensation Committee

The Board of Directors formed a compensation committee in April 2006. The Compensation Committee of the Board of Directors is currently composed of Messrs. Major and Miles, with Mr. Major serving as Chair of the committee. The Compensation Committee does not have a charter. The Compensation Committee's primary functions are to provide a general review of theour Company's compensation and benefit arrangements and to review and establish compensation practices and policies for the officers of the Company.our officers. The Compensation Committee held one meetingno meetings during the fiscal year ended June 30, 2008.2009.

Director Nomination Procedures

The Company believesWe believe that it is appropriate not to have a standing nominating committee because of the small size of the Board of Directors. The Board of Directors as a whole identifies and evaluates nominees for election to the Board of Directors. By having the Board of Directors as a whole consider and evaluate nominees, the Board of Directors weighs the input of all directors.

The process by which the Board of Directors considers nominees for membership on the Board of Directors is flexible and based, generally, on the directors' assessment of the needs of theour Company and the extent to which existing directors meet those needs. Factors considered by the Board of Directors in evaluating the suitability of a potential nominee may include, but not be limited to: business and management experience, familiarity with theour Company's industry and products, the ability to integrate with existing directors and management and the extent to which a potential nominee may satisfy applicable requirements such as independence or expertise requirements under the securities laws.

The Board of Directors will consider director nominees recommended by stockholders and will assess the qualities of the candidate and needs of theour Company as described above. Such recommendations should include the name, age, address, telephone number, principal occupation, background and qualifications of the nominee and the name, address, telephone number of and number of shares of Common Stockcommon stock beneficially owned by the stockholder making the recommendation and should be sent to theour Clerk of the Company at 22 East Broadway, Gardner, Massachusetts 01440. Such recommendations should be submitted to theour Clerk of the Company prior to June 15 of the respective year in order to give the Companyus adequate time in order to consider the recommendations.

All of the stockholders holding shares of the Company's Common Stockour common stock are entitled to cast one vote in person or by proxy for each share standing in their names and are entitled to elect twoone Class III directorsI director at

the 20082009 Annual Meeting. If a nominee is not available as a candidate when the election occurs, the persons named in the proxy may, in their discretion, vote for the election of such other person as the Board of Directors may designate or reduce the number of directors correspondingly. The Company hasWe have no reason to believe the nomineesnominee will not be available for election.

The Board recommends that the stockholders vote FOR all nomineesthe nominee for election to the Board. Proxies will be voted in favor of all nomineesthe nominee unless a stockholder has indicated otherwise in the proxy.

OTHER MATTERS

The Board of Directors does not know of any other matters that will be presented or acted upon at the 2009 Annual Meeting. If any other matter is properly presented at the 2009 Annual Meeting on which a vote may properly be taken, the shares represented by proxies will be voted in accordance with the judgment of the person or persons voting those shares.

EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES

The Company'sfollowing table below identifies our executive officers and significant employees as of June 30, 2008 were as follows:2009:

(1)

Resigned as of August 15, 2008.

Mr. Richard E. Forkey has been theserved as our President, Chief Executive Officer, Treasurer, and a director of the Company since he founded theour Company in 1982. He was theserved as our Clerk of the Company from May 1983 to June 1990.

Dr. Joseph N. Forkey, son of Richard E. Forkey, served has beenour Executive Vice President and Chief Scientific Officer of the Company since April 2006 and wasserved as our Chief Scientist of the Company from September 2003 to April 2006. Since joining theour Company, he has been involved in general technical and management activities, of the Company, as well as investigations of opportunities that leverage the Company'sour newly developed technologies. Dr. Forkey holds B.A. degrees in Mathematics and Physics from Cornell University, and a Ph.D. in Mechanical and Aerospace Engineering from Princeton University. Prior to joining theour Company, Dr. Forkey spent seven years at the University of Pennsylvania Medical School as a postdoctoral fellow and research staff member.

Mr. PieniazekJack P. Dreimiller has served as our Senior Vice President, Finance, Chief Financial Officer and Clerk of the Company since September 2006 until his resignation effective as of August 15, 2008. From January 2006 to November 2006, Mr. Pieniazek was2008 and also served as our Senior Vice President, Finance and Chief Financial Officer from April 1992 until June 2005 and our Clerk from January 1998 until June 2005. Since June 2005, he has served as an independent consultant serving various roles as financial/accounting executive, including interim Chief Financial Officer, for a number of MIP Solutions, Inc.companies. From September 2001June 2005 to December 2005, Mr. Pieniazekhe was President and Chief Financial Officer of Uromedical Diagnostic, Inc.an independent consultant to our Company.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The Company hasWe have an arrangement with Joel R.J.R. Pitlor, a company wholly-owned by Mr. Joel R. Pitlor, aour director, of the Company, under which Mr. Pitlor provides consulting services to theour Company for a fee currently not to exceed $5,000 aper month. These consulting services consist primarily of advice regarding marketing, strategic planning and other general business issues. Either party may terminate this arrangement at will. The CompanyWe paid or accrued to Joel R.J.R. Pitlor for consulting services aggregate fees of $60,000, or $5,000 per month, for each of the fiscal years 20082009 and 2007.2008. $85,000 of this amount has been deferred, and Mr. Pitlor has agreed that such fees may be paid in the form of our restricted common stock.

The Company leases itsWe lease our facility in Gardner, Massachusetts from Equity Assets, Inc., a company wholly-owned by Mr. Richard E. Forkey, the Company'sour President, Chief Executive Officer, Treasurer and director. The Company isWe are currently a tenant-at-will, paying rent of $9,000 per month, or an aggregate of $108,000 per year, for each of fiscal years 20082009 and 2007.2008.

In February 2007,It is our policy that all employees, officers and directors must avoid any activity that is or has the Company completedappearance of conflicting with the interests of our Company. This policy is included in our Corporate Code of Ethics and Conduct, and our Employee Manual. We conduct a private placement with institutionalreview of all related party transactions for potential conflicts of interest situations on an ongoing basis and other accredited investors pursuantall such transactions relating to which it sold an aggregate of 10,000,000 shares of common stock, at a price of $0.25officers and directors must be approved by the Audit Committee.

per share and warrants to purchase an aggregateA conflict of 10,000,000 shares of common stock at an exercise price of $0.32 per share. One of the Company's directors, Mr. Joel R. Pitlor, participated ininterest occurs when the private placement, which closed on February 1, 2007. Mr. Pitlor acquired 1,000,000 sharesinterest of common stockan employee or director (or an immediate family or household member) interferes, in any way — or even appears to interfere — with the duties performed by the employee or director or with the interests of our Company as a whole. A conflict situation can arise when an employee, officer or director takes actions or has interests that may make it difficult to perform his or her work objectively and effectively. Conflicts of interest also arise when an employee, officer or director, or a warrant to purchase 1,000,000 sharesmember of common stock in exchange for $250,000. Ashis or her family, receives improper personal benefits as a result of certain anti-dilution provisions being triggered on June 25, 2008,his or her position in our Company.

We require that all employees, officers and directors report to the numberChief Financial Officer and/or the Audit Committee any conduct that the individual believes to be a violation of commonlaw or business ethics or of any provision of the Code, including any transaction or relationship that reasonably could be expected to give rise to such a conflict. Violations, including failures to report potential violations by others, will be viewed as a severe disciplinary matter that may result in personnel action, including termination of employment.

To this end, our employees, officers or directors may not be employed by, act as a consultant to, or have an independent business relationship with any of our customers, competitors or suppliers. Nor may employees, officers or directors invest in any customer, supplier, or competitor (other than through mutual funds or through holdings of less than 2 percent of the outstanding shares underlying Mr. Pitlor's warrant increasedof publicly traded securities) unless they first obtain written permission from our Chief Executive Officer. Employees, officers or directors may not divulge or use our confidential information — such as financial data, customer information, and computer programs — for their own personal or business purposes.

Any personal or business activities by an employee, officer or director that may raise the foregoing concerns must be disclosed to 1,455,157 and approved in advance by our Chief Financial Officer. The Audit Committee will determine whether violations of the exercise price decreased from $0.32 per shareCode have occurred and, if so, will determine the disciplinary measures to $0.22 per share.be taken against any employee who has violated the Code. Disciplinary measures, which may be invoked at the discretion of the Audit Committee, include, but are not limited to, oral or written warnings, disciplinary probation, suspension, reductions in salary, demotion or termination of employment.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires the Company'sour directors, executive officers and persons who beneficially own more than 10% of a registered class of the Company'sour securities to file with the Securities Exchange Commission, or SEC, reports of ownership and changes in ownership of common stock and other equity securities of theour Company. Officers, directors and greater than 10% beneficial owners are required by SEC regulations to furnish the Companyus with copies of all Section 16(a) forms they file.

To the Company'sour knowledge, based solely upon a review of Forms 3 and 4 and amendments thereto furnished to the Companyus during the fiscal year ended June 30, 20082009 and Forms 5 and amendments thereto furnished to the Companyus with respect to such fiscal year, no person required to file reports under Section 16(a) of the Securities Exchange Act of 1934 failed to file such reports on a timely basis during such fiscal year.

EXECUTIVE AND DIRECTOR COMPENSATION

Summary Compensation

The following table sets forth all compensation for the last two completed fiscal years ended June 30, 20082009 and 20072008 awarded to, earned by, or paid to the Company'sour Principal Executive Officer, Vice President and Chief Scientific Officer and one of the Company'sour employees, referred to herein as the "Named Executive Officers." No other executive officer or employee earned over $100,000 in the last completed fiscal year.

Summary Compensation Table for the Fiscal Years Ended June 30, 20082009 and 20072008

(1)

Includes car expense of $2,100 for 20082009 and $2,100 for 2007.2008.

(2)

Includes premiums for a life insurance policy and a disability insurance policy of $18,162 for 2009 and $18,579 for 2008, and $20,394$1,968 for 2007.

(3)

Represents theour Company's matching contribution to the Profit Sharing &and 401(k) Plan for 2008.

(3)

Represents our Company's matching contribution to the Profit Sharing and 401(k) Plan.

(4)

Based on new compensation arrangements approved by the Board of Directors on April 15, 2008 for the President and for the Chief Scientific Officer, $66,883$163,848 and $923,$12,000, respectively, of these amounts were deferred in 2009 and $66,883 and $923, respectively, were deferred in 2008, and will be paid in the form of restricted stock that will be subject to future performance based vesting.

Narrative to Summary Compensation Table

Employment Contracts and Termination of Employment Arrangements

On April 15, 2008, the Board of Directors approved new compensation arrangements for Richard E. Forkey and Joseph N. Forkey. Pursuant to these arrangements, a portion of their base salary, as detailed in the Summary Compensation Table and related footnotes, would be deferred and paid in the form of shares of our restricted common stock. The Company hascommon stock will be subject to a vesting schedule based on certain performance criteria being met.

Except as described above, we have no employment contracts, agreements or arrangements in place with any Named Executive Officer. The Company hasWe have no compensatory plan or arrangement with respect to any Named Executive Officer where such plan or arrangement will result in payments to such Named Executive Officer upon or following his resignation, or other termination of employment with theour Company and its

subsidiaries, or as a result of a change-in-control of theour Company or a change in the Named Executive Officers' responsibilities following a change-in-control.

Outstanding Equity Awards Atat Fiscal Year-End

The following table shows grants of options outstanding on June 30, 2008,2009, the last day of the Company'sour fiscal year, to each of the Named Executive Officers named in the Summary Compensation Table.

Outstanding Equity Awards at Fiscal Year-End Table for the Fiscal Year Ended June 30, 20082009

Option awards

(1)

These options will become exercisable on May 9, 2009.

(2)

These options will become exercisable in equal installments on May 9, 2009, May 9, 2010 and May 9, 2011.

Narrative to Outstanding Equity Award Table

Option Grants in Last Fiscal Year

There were no individual grants ofWe did not grant stock options made by the Company during the fiscal year ended June 30, 20082009 to itsany of our Named Executive Officers.

Long Term Incentive Plans; Awards in Last Fiscal Year

The Company made noWe did not grant awards under anya long-term incentive plan in the fiscal year ended June 30, 2008.2009.

Profit Sharing and 401(k) Plan

The Company hasWe have a defined contribution 401(k) profit sharing plan.plan, referred to as the "Profit Sharing and 401(k) Plan" or the "Plan." Employer profit sharing and matching contributions to the planPlan are discretionary. No employer profit sharing contributions were made to the planPlan in fiscal years 2008 and 2007.year 2009 or 2008. Employer matching contributions to the plan amounted to $17,473$0 and $42,325$17,473 for fiscal years 2009 and 2008, and 2007, respectively.

Director Compensation

The following table sets forth all compensation paid to non-executive and non-employeeour directors during the fiscal year ended June 30, 2008:2009:

Director Compensation Table for the Fiscal Year Ended June 30, 20082009

(1)

The Company paysThis table does not include directors whose compensation is reflected in the Summary Compensation Table.

(2)

We pay each director, who is not also an employee of theour Company, $250 per Boardboard or committee meeting that the director attends and reimbursesreimburse the director for travel expenses.

(2)(3)

For his service to theour Company in his capacity as Chair of the Audit Committee, Mr. Major receives compensation of $500 per month, which is in addition to the standard compensation received by all members of the Board of Directors for their services.

(3)(4)

Each of Messrs. Major, Miles and Pitlor were issued 10,000options to purchase 400 shares of our common stock options of the Company's Common Stock at the Company'sour annual meeting held in November 2007,2008. These options were immediately exercisable at a price per share of $0.31,$0.05, which was the closing price of the Company's Common Stockour common stock on the OTCBBOver-the-Counter Bulletin Board on the date of grant. These options will remain exercisable following a director's departure from service and expire on November 27, 2017.25, 2018. The amounts shown reflect the dollar amounts computed for financial statement reporting purposes for fiscal 20082009 in accordance with the requirements of SFAS 123(R), excluding an estimate of forfeitures. Refer to Note 4, "Stockholders' Equity—StockEquity-Stock Options," in the Notes to the Consolidated Financial Statements included in our financial statements for the Company's Annual Report on Form 10-K filed on September 26, 2008fiscal year ended June 30, 2009, for the relevant assumptions used to determine the valuation of option awards.

(4)(5)

Mr. Pitlor is paid $60,000 per year, or $5,000 per month, for his services as a consultant to theour Company. $25,000$60,000 of this amount has been deferred, and Mr. Pitlor has agreed that such fees may be paid in the form of the Company'sour restricted common stock.

(5)

As of June 30, 2008, Mr. Pitlor held a total of 39,378 options to purchase the Company's Common Stock.

(6)

As of June 30, 2008,2009, Mr. MajorPitlor held a total of 40,0001,978 options to purchase the Company's Common Stock.shares of our common stock.

(7)

As of June 30, 2008,2009, Mr. Major held a total of 2,000 options to purchase shares of our common stock.

(8)

As of June 30, 2009, Mr. Miles held a total of 30,0001,600 options to purchase the Company's Common Stock.shares of our common stock.

2006

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS

Securities Authorized for Issuance under Equity Compensation Plans

As of June 30, 2009, our equity securities authorized for issuance, aggregated, are as follows:

Equity Compensation Plan Information

Equity Incentive PlanPlans

On November 28, 2006, theour stockholders of the Company approved the Company's 2006 Equity Incentive Plan, referred to as the 2006 Incentive Plan, which succeeds the Company'sour Amended and Restated 1997 Equity Incentive Plan, referred to as the 1997 Incentive Plan. No further awards have been or will be granted under the 1997 Incentive Plan. The Company'sOur Board of Directors had previously approved the 2006 Incentive Plan, subject to the approval of theour stockholders. The 2006 Incentive Plan allows for the grant of stock options to selected employees, directors and other persons who provide services to theour Company or its affiliates.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Security Ownership of Certain Beneficial Owners and Management

The following table sets forth information regarding the Company's Common Stockour common stock beneficially owned as of the close of business on October 1, 20082009 by the following persons: (i) each person who is known by the Companyus to own beneficially more than 5% of the Company's Common Stock,our common stock; (ii) each of the Company'sour directors and nominees for director who beneficially owns theown our Company's or its subsidiaries' Common Stock,common stock; (iii) each of the Company'sour Named Executive Officers who beneficially own theour Company's or its subsidiaries' Common Stockcommon stock; and (iv) all executive officers and directors, as a group, who beneficially own theour Company's or its subsidiaries' Common Stock. common stock.

The information on beneficial ownership in the table and footnotes thereto is based upon data furnished to the Companyus by, or on behalf of, the persons listed in the table.

INDEPENDENT PUBLIC ACCOUNTANTS

Dismissal of Vitale, Caturano & Company, Ltd. and appointment of Stowe and Degan

On April 15, 2008, and pursuant to a recommendation from its Audit Committee, the Company's Board of Directors dismissed Vitale, Caturano & Company, Ltd., referred to herein as Vitale, as the independent registered public accountants for the Company.

The audit reports of Vitale on the Company's consolidated financial statements as of and for the years ended June 30, 2006 and 2007 contained no adverse opinion or disclaimer of opinion, nor were such reports modified as to uncertainty, audit scope, or accounting principles except for a modification for a going concern uncertainty.

In connection with the audits of the two fiscal years ended June 30, 2007, and the subsequent interim periods through April 15, 2008, there were no disagreements with Vitale on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Vitale, would have caused Vitale to make reference to the subject matter of the disagreements in their opinions. There were no "reportable events" during the fiscal years ended June 30, 2006 and 2007 or the subsequent interim periods through April 15, 2008, except for a material weakness in internal control over the Company's accounting for stock-based compensation identified by Vitale, which the Company initially reported in "Item 3. Controls and Procedures," of its Quarterly Report on Form 10-QSB for the quarter ended September 30, 2006. The Audit Committee discussed such material weakness with Vitale. The Company has authorized Vitale Caturano to respond fully to any inquiries by its newly-appointed independent registered public accountant, Stowe & Degon, referred to herein as Stowe, regarding such material weakness.

On April 15, 2008, the Audit Committee recommended and the Board of Directors approved the engagement of Stowe as the Company's independent accountants for the quarter ended March 31, 2008 and for the fiscal year ending June 30, 2008, effective upon the final execution of an engagement letter. The Company's management and the members of the Audit Committee of the Company's Board of Directors believed that the engagement of Stowe would permit the Company to obtain similar audit services at a lower cost to the Company.

During the two most recent fiscal years and through April 15, 2008, the Company did not consult with Stowe regarding the application of accounting principles to a specific completed or contemplated transaction, or the type of audit opinion that might be rendered on the Company's financial statements, or any other matter that was either the subject of disagreement or identified in response to Item 304(a)(1)(iv) of Regulation S-K, including the material weakness identified above.

Independent Registered Public Accounting Firm Fees

Our principal and only independent registered public accountant for the fiscal year endingended June 30, 2009 is Stowe.Stowe & Degon LLC. The following table presents fees for professional audit services and other services rendered by

Stowe and VitaleCaturano & Company, Ltd. for the fiscal yearyears ended June 30, 20082009 and by Vitale for the fiscal year ended June 30, 2007:2008:

Annual Meeting

We expect that representatives from Stowe & Degon LLC will be present at the 20082009 Annual Meeting of Stockholders and will be available to respond to appropriate questions and have the opportunity to make a statement if they desire.

Audit Committee Pre-Approval Policies

The Audit Committee has established pre-approval policies and procedures that would prohibit engagement of accountants to render audit or non-audit services without prior approval of the Audit Committee. As a result, all engagements of the independent auditors to render any services, whether they would be deemed audit or non-audit services, require pre-approval of the Audit Committee. No audit, review or attest services were approved in accordance with Section 2-01(c)(7)(i)(C) of Regulation S-X during the fiscal year ended June 30, 2008.2009.

AUDIT COMMITTEE REPORT

The Audit Committee is composed of Messrs. Major and Miles, each of whom is "independent" as defined in Rule 4200(a)(15)5605 of the Nasdaq Marketplace Rules. The Board of Directors has adopted a written charter for the Audit Committee, which wasis filed with the Company's proxy statement on Schedule 14A for the 2006 Annual Meeting of Stockholders.this Proxy Statement as Appendix A.

The Audit Committee has submitted the following report:

The Audit Committee has reviewed and discussed with management the audited consolidated financial statements for the fiscal year ended June 30, 2008,2009, and has discussed with the Company's independent auditors the matters required to be discussed by Statement on Auditing Standards No. 61, as amended, as adopted by the Public Company Accounting Oversight Board in Rule 3200T (SAS 61). SAS 61 requires independent auditors to communicate to the Audit Committee various matters, including, if applicable: (1) methods used to account for certain unusual transactions; (2) the effect of certain accounting policies in controversial or emerging areas for which there is a lack of authoritative guidance or consensus; (3) the process used by management in formulating certain accounting estimates and the basis for the auditor's conclusions regarding the reasonableness of those estimatesestimates; and (4) disagreements with management over the application of accounting principles and certain other matters. The Audit Committee has received the written disclosures and the letter from the Company's independent accountants required by Independence Standards Board Standard No. 1 (requiring auditors to make written disclosures to, and to discuss with, the Audit Committee, various matters relating to the auditor's independence), has discussed with the accountants their independence and has considered whether the provision of non-audit services by the accountants is compatible with maintaining that independence. Based on the foregoing and further review and discussion, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 20082009 for filing with the Securities and Exchange Commission.

Donald A. Major
Richard Miles

October 20082009

CORPORATE CODE OF ETHICS AND CONDUCT

The Company'sOur Board of Directors has adopted a Corporate Code of Ethics and Conduct applicable to all of itsour employees, officers and directors.directors, including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. The Code was filed as an exhibit to the Company'sour Annual Report on Form 10-K for the year ended June 30, 2008.

STOCKHOLDER COMMUNICATIONS

Stockholders may send communications to the Board of Directors or to specified directors by mailing such communications to theour Clerk of the Company at 22 East Broadway, Gardner, Massachusetts 01440. All such correspondence should identify the author as a stockholder and clearly state whether the intended recipients are all members of the Board or only specified directors. Any stockholder communication sent to the Board of Directors will be forwarded to the Board without screening.

STOCKHOLDER PROPOSALS

Stockholders may present proposals for inclusion in the 20092010 proxy statement and form of proxy relating to that meeting provided they are received by theour Clerk of the Company no later than July 8, 20094, 2010 and are otherwise in compliance with applicable Securities and Exchange Commission regulations.

If a stockholder who wishes to present a proposal at the Company's 2009our 2010 annual meeting that will not be included in the Company'sour proxy statement for such annual meeting fails to notify the Companyus of his or her desire to do so by September 21, 2009,16, 2010, then the proxies that the Board of Directors solicits for the 20092010 annual meeting will include discretionary authority to vote on the stockholder's proposal, if such proposal is properly brought before the meeting.

APPENDIX A

Charter of the Audit Committee
FORM OF REVERSE STOCK SPLIT AMENDMENTof the
Board of Directors
of
Precision Optics Corporation, Inc.

        1.    Purpose.    The purpose of the Audit Committee (the "Committee") shall be to (a) appoint, oversee and replace, if necessary, the independent auditor, (b) assist the Board of Director's oversight of (i) the preparation of the Company's financial statements, (ii) the Company's compliance with legal and regulatory requirements, (iii) the independent auditor's qualifications and independence, and (iv) the performance of the Company's internal audit function and independent auditor; and (c) prepare the report the SEC rules require be included in the Company's annual proxy statement.

        2.    Composition of the Audit Committee.    The Committee shall consist of not less than three board members appointed by the Board of Directors of the Company. Committee members may be removed by the Board of Directors in its discretion. Each member of the Committee shall satisfy the independence requirements of the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act") and The Nasdaq Stock Market, Inc. ("Nasdaq") as such requirements are interpreted by the Board of Directors in its business judgment, and the Board of Directors shall annually review the Committee's compliance with such requirements. Members of the Committee shall be versed in reading and understanding financial statements.

        3.    Meetings of the Audit Committee.    The Committee shall hold regularly scheduled meetings and such special meetings as circumstances dictate. It shall meet separately, at least quarterly, with management, with the internal auditors (or other personnel responsible for the internal audit function), and with the independent auditor to discuss results of examinations, or discuss any matters that the Committee or any of these persons or firms believe should be discussed privately. The Committee shall report regularly to the Board of Directors.

        4.    Responsibilities of the Audit Committee.    The function of the Committee is oversight. While the Committee has the responsibilities set forth in this charter, it is not the responsibility of the Committee to plan or conduct audits, to determine that the Company's financial statements are complete and accurate and are in accordance with generally accepted accounting principles, or to assure compliance with laws, regulations or any internal rules or policies of the Company. This is the responsibility of management. The independent auditor is responsible for performing independent audits of the Company's consolidated financial statements in accordance with generally accepted auditing standards and for issuing reports thereon. The Committee has direct and sole responsibility for the appointment, compensation, oversight and replacement, if necessary, of the independent auditor, including the resolution of disagreements between management and the auditor regarding financial reporting. Each member of the Committee shall be entitled to rely on (i) the integrity of those persons and organizations within and outside the Company that it receives information from and (ii) the accuracy of the financial and other information provided to the Committee by such persons or organizations absent actual knowledge to the contrary (which shall be promptly reported to the Board of Directors).

        5.    Duties and Proceedings of the Audit Committee.    The Committee shall assist the Board of Directors in fulfilling its oversight responsibilities by accomplishing the following:

        5.1.    Oversight of Independent Auditor.

        (a)   Annually evaluate, determine the selection of, and if necessary, determine the replacement of or rotation of, the independent auditor.

        (b)   Approve or pre-approve all auditing services (including comfort letters and statutory audits) and all permitted non-audit services by the auditor.

        (c)   Review, evaluate and discuss formal reports, at least annually, from the independent auditor regarding the auditor's independence, including a delineation of all relationships between the auditor and the Company; and recommend to the Board of Directors actions to satisfy the Board of the independence of the auditor.

        5.2.    Oversight of Audit Process and Company's Legal Compliance Program.

        (a)   Review and discuss with management, internal auditors and independent auditor the Company's system of internal control, its financial and critical accounting practices, and policies relating to risk assessment and management.

        (b)   Receive and review reports of the independent auditor discussing 1) all critical accounting policies and practices used in the preparation of the Company's financial statements, 2) all alternative treatments of financial information within generally accepted accounting principles ("GAAP") that have been discussed with management, ramifications of the use of such alternative disclosures and treatments, and the treatment preferred by the independent auditor, and 3) other material written communications between the independent auditor and management, such as any management letter or schedule of unadjusted differences.

        (c)   Review material pending legal proceedings involving the Company and other contingent liabilities.

        (d)   Receive from the CEO and CFO a report of all significant deficiencies and material weaknesses in the design or operation of internal controls, and any fraud that involves management or other employees who have a significant role in the company's internal controls.

        (e)   Discuss with independent auditor the matters required to be communicated to audit committees in accordance with Statement on Auditing Standards No. 61.

        (f)    Establish procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters, and the confidential, anonymous submissions by employees of concerns regarding questionable accounting or accounting matters.

        5.3.    Other Responsibilities.

        (a)   Review the adequacy of this audit committee charter annually and submit charter to Board of Directors for approval.

        (b)   Prepare report for inclusion in the Company's annual proxy statement as required by the rules of the Securities and Exchange Commission.

        (c)   Put in place an appropriate control process for reviewing and approving Company's internal transactions and accounting.

        (d)   Report to the Board on a regular basis.

        (e)   Annually perform, or participate in, an evaluation of the performance of the Committee, the results of which shall be presented to the Board.

        (f)    Perform any other activities consistent with the Charter, By-laws and governing law as the Board of Directors or the Audit Committee shall deem appropriate, including holding meetings with the Company's investment bankers and financial analysts.

        6.    Authority and Resources of the Audit Committee.    The Committee has the authority to retain legal, accounting or other experts that it determines to be necessary to carry out its duties. It also has authority to determine compensation for such advisors as well as for the independent auditor. The Committee may determine appropriate funding needs for its own ordinary administrative expenses that are necessary and appropriate to carrying out its duties.

APPENDIX B

That, the Corporation's Articles of Organization, as amended, be further amended by inserting the following in Article III:PRECISION OPTICS CORPORATION, INC.
22 EAST BROADWAY
GARDNER, MA 01440-3338

"Upon the filing of these Articles of Amendment with the Massachusetts Secretary of the Commonwealth (the "Effective Time"), each(                        ) issued and outstanding shares of authorized Common Stock of the Corporation, $0.01 par value per share, shall be reclassified and combined into one (1) share of Common Stock. There shall be no fractional shares issued. Each resulting fractional share shall be rounded up to a whole share. The total number of authorized shares of Common Stock immediately after the Effective Time shall continue to be 50,000,000."