All right, hello, everyone, and thank you for joining us throughout the day here at the Lytham Partners Fall 2024 Investor Conference. My name is Robert Blum, Managing Partner at Lytham Partners, and during this presentation, we welcome Precision Optics Corporation, ticker symbol POCI on the Nasdaq, and joining us today from the company is the Chief Executive Officer, Dr. Joe Forkey. Before I turn it over to Joe, I want to remind everyone that management is available for one-on-one meetings throughout the conference here. I know we have a pretty full schedule, and if you haven't had a chance to get your one-on-one coordinated and would like to do so, happy to get something coordinated here in the sort of days to come as well.
Shoot me an email, that's Blum, B-L-U-M, @lythampartners.com, or visit the landing page for the conference. That's lythampartners.com/fall2024. From there, you can click on the Investor Registration button to make your one-on-one selection. So, Joe, thank you, as always, for your participation in the event. The floor is all yours.
Thank you, Robert, and thank you all for joining us today. I'm happy to be talking to all of you and looking forward to having some one-on-one conversations as well. As Robert said, I'm President and CEO of Precision Optics Corporation, and I'm happy to tell you a little about the company today. This is the lawyers' slide. Precision Optics Corporation, as the name implies, is an optics company, so everything we do has something to do with optics. We are vertically integrated, we're horizontally integrated. We do a lot with some very specific technologies. Most of our business today is in the medical device imaging sector, but we do have some programs in the defense aerospace segment of the market, and we believe that there are more opportunities there.
I'll talk about that as we move through the slide deck. We've been in business since 1982, so we've been around for quite a while. We've always been working in optics. From the very early stages of the company, we got involved in medical devices. We've been involved in defense aerospace over the years. We also got involved in telecom and a number of other places. As I already said, today, most of our business is in medical device with a couple of things working in the defense aerospace market as well. The key points here of our company are, number one, as a small company, we are very focused on some very specific technologies, and also very focused in the way that we market those technologies.
So, we have three main areas that we focus on from a technology standpoint within optics. Optics is very broad. We don't do everything for everyone, but we do work on a couple of very specific areas. First area is micro-optics. We make some of the very smallest optics anywhere in the world. We design with these very small optics, we fabricate these optics from raw blocks of glass, and then we put these optics together in order to make, as I say, many products for medical device, but also defense aerospace. We put these individual components together, in a way that allows us to build entire systems that have typical sizes of a millimeter or even under a millimeter. We have a second specialty area in 3D endoscopes.
This is a capability to allow surgeons to be able to see in 3D while they're using a minimally invasive endoscope. This is used primarily in the robotic surgical space, and I'll talk a little more about that in a minute. And then, finally, we have a specialty in the area of digital imaging. This really means that we can work with and design systems using so-called CMOS image sensors. These are image sensors that are made using computer processing technology, like the sensors that are in your cell phone or a laptop computer. And so we've taken the technology that was developed predominantly for consumer electronics, and we've married that with some of the optical capabilities we have.
We've developed and built an electrical engineering team as well, so we can build an entire system now that includes not only the optics, but also all of the electronics that are required to deal with the images once they're converted from photons to electrons. So we can do full digital imaging systems. Our business model, we updated a number of years ago, seven, eight, nine years ago, and this is a model that has been working very well. It's today, it's really starting to take hold, and we're starting to hit our stride, and I'll talk a little bit about that as we get further in the slides. But the main idea here is that we work very closely with our customers on the very front end of even the conception stage of their product.
And basically, we take these key technologies that we've developed, IP in, and we show our customers what we can do with these technologies. And then, if the capability of our technologies fits with their requirements for their product, then we engage in a program where we start by, with them, determining what the specifications are that they need, and then we go through a product development process. This is our product development pipeline, where we take our technologies and turn them into the size, shape, and color that our customer needs for their particular product. Importantly, while we do this, we get paid on a time and materials basis, but we continue to own the IP that we brought into the program and much of the IP that is developed during the program.
Sometimes we agree to licenses, but by and large, we continue to be able to use that IP for the programs that we work on in the future. Once the program for our customer goes through the engineering pipeline or the product development pipeline, we're in an ideal position to manufacture that product as it goes into production. And so the idea here is that we bring programs into the product development pipeline that is a revenue-generating profit center. But as we go through the development process and those programs are rolled into production, we continue to increase the number of programs in production. Typically, medical devices and defense aerospace programs will continue for many, many years, so as...
By backfilling the engineering pipeline with new programs, at the same time that we're putting some of the development programs into production, we continue to grow the business as the number of programs in production continues to grow, and I'll show you a slide on this, as we move forward. Okay, so as I already said, the company's been in business for over 40 years, and we've been involved in a number of different areas. But today, as I already said, we're mainly in medical device and product development, and we're just starting to hit our stride in terms of using this new business model that we put in place seven, eight years ago. This revenue ramp shows the growth of the revenue over the last seven or eight years.
You'll notice that there was nice, continuous, steady growth here. The growth was a little more limited during the pandemic year. Right up until this past year, these are the numbers that we're just announcing yesterday, I guess, where you see there's a slight dip in the overall revenue. Importantly, throughout this entire time, including this past year, our engineering revenue or our product development revenue has continued to grow. This is really important because it's the product development pipeline that's going to fuel the growth of the production part of our business into the future. So what happened here last year? Last year, when we came into fiscal 2024, exiting 2023, which was another record year, we had a number of programs that pulled back, a couple of programs that ended.
In one case, a customer redesigned their product and now uses a technology that's different than the ones that POC works on. And one customer, in one case, we had a customer, who had excess inventory, who said they would be back to us in a year or two. But we always have some customers that sort of come and go, but last year was a little unusual because we had four or five of these customers, all of whom, for various reasons, ended or suspended their production programs at the end of fiscal 2023. So in fact, we were entering fiscal 2024 with a reduction in sort of baseline programs of almost $7 million. You can see that we recovered most of that during fiscal 2024, and we were pleased to be able to do that.
We did that by bringing a number of programs out of the engineering pipeline into production, so this production number is lower than last year, but higher than it would have been had we not brought the programs out of the engineering pipeline into production. And then, importantly, we not only replaced those programs in the product development pipeline, but we grew our product development pipeline, so we brought in even more programs than we transitioned and transferred to production. The important thing here is that these programs that have gone into production have been ramping now for the last couple of quarters. So Q4 of the last fiscal year, which ended in July, and Q1, which is ending, actually ended yesterday, but we haven't officially reported on yet.
Those are gonna be weak quarters, because these new programs that were coming into production from the product development pipeline were still undergoing the initial ramp. We were still getting the initial production going. Yields weren't as high as we would like. We were tweaking some tools and fixtures. So it was sufficient to recover a fair amount of the production revenue that we had lost due to those programs that went away. But Q4 and Q1 were relatively weak. What we expect in Q2 of fiscal 2024, which begins today, October 1st, is that these production programs are going to grow quite substantially. So we expect a fairly significant increase in revenue going from Q1 to Q2, and by the end of fiscal 2025, we expect to be back on this growth curve and higher than any of the fiscal years that we've seen previously.
Importantly, this improvement in the product development pipeline here, we expect to continue, and we expect the product development pipeline to continue at record levels, going forward into the future. So all in all, we expect this general increase in revenue trend to continue, in fiscal 2025 and beyond. In this, overall approach, where we work with our customers on the product development side using our proprietary technologies and then move products into production, is well in hand and is going to continue into 2025 and beyond. Wrong way. Okay, let me talk a little bit about the technology. I talked about the micro-precision optics as one of our core areas. This is a capability where we're able to make individual components. So you see a little, a little flat window there.
We can make individual components that are as small as 50 microns, 50 microns, which is about the width of a human hair. We believe that those individual components are among the smallest, if not the smallest, individual components in the world that are made as separate individual components. Importantly, we have a group of design engineers who know how to design in ways that make use of our fabrication capabilities. And so we can then design entire systems, like this camera, that are on the order of a millimeter in size, a little bit larger, a little bit smaller. We make some endoscopes that use some of our micro-optics for a cardiac application, where the endoscope is just a few hundred microns in size.
And so at that very small size, it's small enough that the doctor can put this endoscope inside of a blood vessel, snake it through the blood vessel, up into the heart, and can watch the inside wall of the beating heart while they're performing cardiac ablation to cure atrial fibrillation. So these kinds of systems allow us to make endoscopes that allow the next generation medical devices to go places in the body that you just couldn't get to otherwise. And so the kinds of places that you might think of are places where the incision size is really critical. So brain surgery, there's a lot of things going on in ophthalmology or otoscopy for ear applications, urology, cardiology, spine.
These are all the areas where the size of the incision or the size of the imaging device are critical to the viability or the feasibility of the procedure. It doesn't make it a little bit nicer. It makes it feasible, whereas before it wasn't feasible at all. So all of this is based on the core capability of being able to design, fabricate, and then manufacture systems using these very, very small optics. The second area is the area of 3D endoscopes, and I already mentioned that these are used predominantly in robotic surgery systems, and that's really because when the surgeon is moved away from the patient and is working through the robot, you want the surgeon to be able to have as much situational awareness, if you like, of the operative site.
You'd like the surgeon to have as much additional information about where the endoscope is, where their tools are, where the organs are, and you can get additional information by being able to perceive in 3D. The technology that we've developed around 3D endoscopes, we started working on in the late 1990s, when we made the very first 3D endoscopes for Intuitive Surgical. The technology to build a 3D endoscope is much more difficult than the technology required for a standard rigid or flexible endoscope. There are many companies that can make standard rigid endoscopes. There are very few companies that can make a good, high-quality 3D endoscope, and that's really because a 3D endoscope actually is two endoscopes side by side, that are used, one for the right eye, one for the left eye.
And if these are not perfectly matched with specifications that are orders of magnitude tighter than the specifications for an individual endoscope, the surgeon will be able to use the endoscope, but if they're not, if the two endoscopes are not properly matched, you'll end up with a screaming headache after about ten minutes and never wanna use it again. So the challenge is to be able to design and to fabricate these endoscopes with very, very tight tolerances, so that you get very good imaging that will work to be able to perceive 3D without getting headaches and side effects because of images that are not well-aligned. So, as I say, we've been doing this for many years. We're one of the few companies in the world that can make 3D endoscopes.
With the increase in popularity of robotic surgery systems, there are great opportunities for us, in this area as well. The third area is the area of digital imaging. We made a big advancement here when we acquired a company called Lighthouse Imaging, which was one of our competitors, I call them a friendly competitor, about three years ago. We have essentially fully integrated the two technical teams from our companies, and essentially, we acquired Lighthouse Imaging because they had developed a great capability on the electronic side of imaging systems that make use of so-called CMOS sensors, the image sensors that are in cell phones and laptops, and those sorts of things.
So with this addition, we now have a strong capability, both on the front end of the endoscopic systems, where you're designing the imaging objective, you're designing the fiber optics to do the illumination, as well as the back end of the system, where you're looking at managing the image once it's in electronic form, so-called image signal processing, if you like. Where we can modify and accentuate various features in the image. We get color correction, all those sorts of things, and then, of course, converting the image into an image format that can go to the monitor so that the surgeon can see it. We also have a number of traditional applications that we've been supporting for many, many years.
We have one program that has been running for about 15 years. This is for a spine application. We have another application for ear, nose, and throat that's been running for some twenty-five years. These are base products that continue to run day in and day out. They're great examples of the longevity of many of the medical devices that we design and build, and that's an important part of our strategy. When we move programs from the product development phase into the production phase, we expect them to survive, on average, for many, many years, and some of these traditional applications bear that out. We've already talked a little bit about the markets that our products can be used in. The medical device, minimally invasive surgery market is growing at roughly 5%-10% per year.
There's an important part of our overall the overall market that we work in, which is single-use endoscopes. This is an area in minimally invasive surgery, where instead of making an endoscope that gets used once and then sterilized, and then used on another patient, we make an endoscope at lower cost that can be used once and then discarded. The main benefit of this, of course, is that you virtually eliminate any possibility of cross-contamination, and unfortunately, there are cases where someone will go into a hospital to be treated for one condition, and they will contract another disease because the endoscope that was used on a different patient previously was not 100% sterilized. This has been an issue on the top of the list of.
Critical areas for the FDA for many, many years. The market has now begun to use single-use endoscopes in a greater way, and POC has been working on a number of single-use endoscope projects for a number of years. We were very happy to be able to announce in May that the first of our single-use programs was going into production. That was an announcement for a record-setting $9 million production order that'll run over a few years. We started producing these single-use endoscopes and delivering them for clinical use in July of this year, so this is one of those programs that we'll be adding to the production revenue that I showed on the revenue slide, and I'm really pleased to report that this program is going quite well. It's ramping up nicely.
Our customers come back to us, said they want us to move even faster, and so we're looking at setting up a second line. So, this area of the market is growing at two to three times the rate of the minimally invasive endoscopic market in general. So it's clearly a place that we wanna be involved in. It's clearly a place that we have some expertise in. This new record-setting order gives us the opportunity to build our base. And almost more importantly, it demonstrates to the world that we can not only design these single-use endoscopes, but we can bring those designs to fruition. We can get them into production, all while meeting the really tight technical requirements, as well as the economic requirements for single-use programs.
So this is an area that we expect we'll see a lot of growth in moving forward. Today, we have two defense aerospace programs. We came to these programs. The first of these really was a program that really came to us. So as a small company for many years, we focused all of our marketing efforts on medical device because we were too small to go out and sell to everyone, everywhere. And some of the folks in the defense aerospace market saw what we were doing and asked us if we would build some products for them. And of course, we said, "We're happy to engage in a program, as long as it uses the same technologies." That was a very successful program that's been running for four or five years now.
And so we're starting to look more carefully and more deliberately as we grow, at opportunities in the defense aerospace market. Without going into a lot of detail, what we've discovered is that the defense aerospace market talks about this acronym, SWaP, which stands for size, weight, and power. And this is a desire in the defense industry and the aerospace industry to reduce the size, weight, and power of the systems that are being used. And this makes sense because for anything that's being launched into space, satellites and drones, anything that's being launched off the ground, I should say, there's a critical cost to every kilogram of weight that you're using on that system. So there's a big effort to try and reduce the size and weight.
Our micro-optics, in particular, are ideally suited to reducing size and weight because they're so small, and so we believe there are some applications in these two areas. We also have found that directed energy weapons, in particular laser weapons, because of the way that they're designed, have some critical use for some very, very small optics. And so this is another area where we believe there are more opportunities as we move into the future and look more carefully at defense aerospace. On the digital imaging side, with the acquisition of Lighthouse Imaging that I talked about already, we now are fully integrated in terms of the full complement of technologies that are required to design and to manufacture an entire digital imaging system. So we start on the front end with the optics that are doing the image forming.
We do a lot with illumination on the front end, where we take the light from now from an LED, and we can transmit it down the length of the endoscope with our fiber optics expertise. We can work with the image sensors that take the image that's formed from the op- by the optics, and converts it into electronics. We can do all the video signal processing, package it into a small endoscope. Then importantly, we can combine all of these with our systems engineering capability and program management capability, to be able to design the entire imaging system from the beginning to the end. We also are vertically integrated in the sense that we can take a program from the development stage all the way through to the mass manufacturing stage.
And so we have on-site our own engineering team, as we've talked about. We have our own fabrication group, so we have a machine shop that can fabricate mechanical components. We have an optics lab that can take a raw block of glass and turn that into optical components. And we have our own assembly areas with certified clean rooms and such, so that we can roll the programs into production. We have our own regulatory team that can help our customers as they're going to the FDA or to the other regulatory agencies around the world. So, putting all of these different pieces together makes us a one-stop shop for our customers, and so this is another added benefit that they have by coming to us.
They know right from the beginning, they know that they have a partner that will be able to support them all the way through to mass manufacture. We have made a couple of key acquisitions over the years. I already talked a little bit about Lighthouse Imaging, which we acquired about three years ago. This was really an acquisition that was targeted towards enhancing our technical capabilities, and that has been quite successful. We also made another acquisition about five years ago. We have a company called Ross Optical, which is a company that extends our capability. Most of what I've talked about is optical systems. Ross Optical works with optical components, sourcing and fabricating individual components and small subassemblies. And so they've extended our capability to the component side of the programs.
We use a lot of the capabilities they have when we get to production. They provide a lot of the components for the rest of the business, but they also have a whole market that they serve in the optical component business. It dovetails well with customers who oftentimes will go from ordering a component to ordering an entire system. So this acquisition has been quite successful as well. We've been pretty clear in our public comments that we believe there are other acquisition opportunities out there, but we're not simply a roll-up company. That's not our strategy. We will continue to look for opportunities, we believe they're out there to augment the things that we're doing within the company already.
We'll be looking for other small companies with similar cultures and with the financial proposition that will be accretive and will be beneficial to the company. So we believe there are other acquisitions out there, but we don't have any specific plans to be making acquisitions on any particular timeline. This slide, I think, is among the most important of the entire slide deck. This shows the business model of the company in action, and any of you who have been watching us for some time will know that there are some things that are changing on this pipeline, which is really quite exciting. So we have a number of programs up here, these mature products that we've been making. I mentioned before, one for 15 years, one for 25 years.
We've had three of these programs that have been in production since just before the pandemic. They were stalled during the pandemic. They've all come back after the pandemic. And then we have these three programs that have gone into production in just the last year or so. These two went into production in the last 12 months. This one, cystoscope number one, is the product associated with the record-setting $9 million order that I just mentioned, and that we announced in May. This one now is in production and is ramping very nicely. We have a second single-use program that we expect to go into production in just a matter of months. We have a number of programs here that we expect will go into production in the next 12 months.
Anyone who's been watching this will recognize that the number of programs in production now is really starting to grow. Again, as I said, Q4 and Q1 are a little bit weak because we were getting these things up and running, but we expect these will be running more smoothly by Q2 and will drive us to a record-setting fiscal 2025. Importantly, in all of this, not only do we see more programs going into production up here, but you'll also notice there are some other shorter arrows down here, which are critically important for the long-term success of the company, because these three programs came into the engineering pipeline, the product development pipeline, in the last 11 months.
So it's great that we're pushing programs up into the production phase, 'cause those will stay with us for a long time, but as they move out of the development pipeline, we have to repopulate the development pipeline so that two or three or four years ago, we have other programs that are making their way through the pipeline. If you remember the earlier slide on revenue, the product development pipeline grew every single year, including last year. Even though the top line was down a bit, we had record-setting product development pipeline revenue. So that means that the pipeline is very solid, very strong going into the future, along with these programs that are going into production. So the business model really is working here, and we're starting to see it start to take off.
Finally, to wrap up, let me just walk through the main priorities that we work on these days, so the first one, as I've mentioned a couple of times, we've got a number of programs that just got into production. We're gonna continue to ramp these aggressively, work out the bugs that happen when you first start into production, and get these running at higher and higher rates. The second is to continue to advance pipeline projects to commercialization. This is all part of the business model, and then simultaneously, as I just said, continue to move new programs into the engineering pipeline. Importantly, as we do all of this, we have to continue to maintain our competitive advantage in the technologies that we have developed.
We're also looking at ways to maintain and improve our competitive advantage by packaging these technologies in new and novel ways, and you'll be hearing us talk about the platform product, which is a way of that we can take the many years of experience that we have with these core technologies, take advantage of the next level of design elements beyond the core technology, and use those next level of design elements as platforms that we can use for the next-generation products that we're making for our next-generation customers. And so you'll hear more and more about this as we launch this new product idea in the next few months.
But basically, it's all about maintaining competitive advantage by continuing to improve our technology and to package that in new and novel ways that are beneficial to the customer. We will continue to invest in our sales and marketing, as well as our engineering capabilities, and I should point out the capabilities required to drive these production programs moving forward, some in facilities and such. And then finally, as I already mentioned, we will continue to look for strategic acquisitions and other opportunities to expand the company through acquisition and strategic partnerships. So, given where we are, we're quite optimistic for the future. The rest of the slide deck is a number of financials, which I'm happy to talk with people about on a one-on-one basis. So with that, I will wrap up.
I hope to talk with many of you, one-on-one. As Robert said, I guess there are one-on-ones today, but I'm happy to talk with folks on other days as well if the time slots fill up today, we're happy to set up times otherwise. So please, get in touch with Robert, and I look forward to talking with many of you soon. Thank you.
Fantastic, Joe. Thank you very much for a very detailed presentation, as always. As Joe just said, reach out to me, blum@lythampartners.com. Visit the landing page, lythampartners.com/fall2024. Click on the Investor Registration button. We'll look to get you all taken care of. So Joe, once again, as always, thank you for your participation, and talk to you again shortly.
Okay. Thank you, Robert. Thanks, everyone. Bye-bye.