POCI.NASDAQPrecision Optics Corporation, INC
10-K/A: Precision Optics Amends 10-K, Details Governance & Pay
Sentiment:
Annual Report Amendment
Precision Optics Corporation, Inc. filed an amended annual report to provide detailed information on executive compensation, corporate governance, and security ownership for the fiscal year ended June 30, 2025.
Delay expectedThe company is filing this Amendment No. 1 to its Annual Report on Form 10-K because it will not file a definitive proxy statement containing the required Part III information within 120 days after the fiscal year-end.The Chief Financial Officer, Wayne M. Coll, had delinquent Section 16(a) reports (Form 4s) due on July 2, 2024, October 2, 2024, and January 3, 2025, which were subsequently filed on February 11, 2025.
Capital raiseThe 2022 Equity Incentive Plan, which allows for the granting of stock options and other equity incentive instruments, has been amended multiple times to increase the number of shares available for issuance.The Board of Directors approved increases of 300,000 shares on September 20, 2023, 300,000 shares on February 7, 2025, and 385,000 shares on August 12, 2025, under the 2022 Plan.The company has filed registration statements on Form S-8 covering these shares and expects to file an additional S-8 for the most recently approved 385,000 shares, indicating ongoing equity issuance for compensation purposes.
Summary
- The company filed an Amendment No. 1 to its Annual Report on Form 10-K for the fiscal year ended June 30, 2025, to include information for Items 10 through 14 of Part III, which was previously omitted.
- The amendment was necessary because the company will not file a definitive proxy statement containing this information within 120 days after its fiscal year-end.
- Joseph N. Forkey, CEO, President, and Treasurer, received a total compensation of $1,106,559 for fiscal year 2025, including a $94,200 performance bonus in shares and $742,000 in option awards.
- Wayne M. Coll, Chief Financial Officer, received a total compensation of $487,084 for fiscal year 2025, including $185,500 in option awards.
- Mahesh Lawande, Chief Operating Officer, received a total compensation of $423,952 for fiscal year 2025, including $148,400 in option awards; however, his employment will terminate on October 31, 2025, leading to the forfeiture of 40,000 unvested options.
- The Board of Directors appointed Buell G. Duncan on February 28, 2025, and Joseph P. Pellegrino, Jr. on March 19, 2025, to fill vacancies created by retirements.
- The company's non-affiliate common stock market value was approximately $23,911,000 on December 31, 2024, based on 4,960,885 shares at $4.82 per share.
- As of June 30, 2025, there were 7,714,701 shares of common stock outstanding.
- The 2022 Equity Incentive Plan has been amended multiple times, increasing the number of shares available for issuance by 300,000 shares (September 20, 2023), 300,000 shares (February 7, 2025), and 385,000 shares (August 12, 2025).
Sentiment
Score: 6
Explanation: The filing is primarily a compliance update, providing necessary disclosures. Positive aspects include strengthened board composition and robust governance policies. Negative aspects include the COO's departure and the CFO's delinquent filings, but these are largely administrative or personnel-related rather than indicative of fundamental operational issues.
Positives
- The Board of Directors maintains a majority of independent directors, enhancing corporate governance.
- Two new directors, Buell G. Duncan and Joseph P. Pellegrino, Jr., bring extensive executive leadership, strategic, operational, and financial experience to the Board.
- The company has adopted a Clawback Policy, effective October 2, 2023, reinforcing integrity and accountability in executive compensation.
- The CEO's base salary was increased to $325,000 per year effective March 20, 2025, reflecting continued performance and retention efforts.
- The Audit Committee and Compensation Committee are well-established with independent and financially expert members.
Negatives
- The Chief Operating Officer, Mahesh Lawande, will terminate employment effective October 31, 2025, resulting in the forfeiture of 40,000 unvested stock options.
- The Chief Financial Officer, Wayne M. Coll, had delinquent Section 16(a) reports for stock payments in lieu of cash, which were due on July 2, 2024, October 2, 2024, and January 3, 2025, but were filed on February 11, 2025.
- No employer profit sharing or matching contributions were made to the 401(k) plan in fiscal years 2025 and 2024.
Future Outlook
This amendment focuses on historical governance, compensation, and ownership disclosures and does not contain new forward-looking statements or guidance. The company explicitly states that disclosures have not been updated to reflect events subsequent to the original 10-K filing date.
Management Comments
- Joseph N. Forkey, President and Chief Executive Officer, certified that the Annual Report on Form 10-K/A for the fiscal year ended June 30, 2025, does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made not misleading.
- Wayne M. Coll, Chief Financial Officer, certified that the Annual Report on Form 10-K/A for the fiscal year ended June 30, 2025, does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made not misleading.
Industry Context
The company operates within the medical device industry, as evidenced by the professional backgrounds of its Chief Financial Officer, Chief Operating Officer, and new director Joseph P. Pellegrino, Jr., who have extensive experience in medical technology and device-based businesses.
Management Changes
| Role | Previous Person | New Person | Effective Date | Reason |
|---|---|---|---|---|
| Chief Operating Officer | Mahesh Lawande | NA | October 31, 2025 | Mutually agreed termination of employment; transitioned to Advisor to the President until termination date. |
| Director | Dr. Richard B. Miles | Buell G. Duncan | February 28, 2025 | Filled vacancy created by Dr. Miles' retirement. |
| Director | Peter Anania | Joseph P. Pellegrino, Jr. | March 19, 2025 | Filled vacancy created by Mr. Anania's retirement. |
Corporate Governance
| Change Type | Description | Effective Date | Impact Assessment |
|---|---|---|---|
| Board Composition | Appointment of Buell G. Duncan and Joseph P. Pellegrino, Jr. as independent directors, replacing retiring members, strengthening the board's expertise in executive leadership, strategy, operations, and finance. | February 28, 2025 (Duncan), March 19, 2025 (Pellegrino) | Enhances board diversity of experience and maintains a majority of independent directors, aligning with Nasdaq Rules. |
| Audit Committee Leadership | Joseph P. Pellegrino, Jr. appointed as Chair of the Audit Committee, with Peter H. Woodward and Mr. Pellegrino qualifying as audit committee financial experts. | March 19, 2025 | Ensures strong oversight of financial reporting and disclosure processes with qualified, independent leadership. |
| Compensation Committee Composition | Buell G. Duncan joined the Compensation Committee, which is chaired by Andrew J. Miclot. | February 28, 2025 | Adds new perspective to executive compensation oversight, aligning programs with business strategy and shareholder value creation. |
| Director Compensation Plan | Non-employee director compensation plan updated for fiscal 2025, increasing annual cash awards and introducing an annual stock option grant of 30,000 shares. | Fiscal Year 2025 | Aims to attract and retain qualified independent directors by providing competitive compensation. |
| Clawback Policy | Adoption of the Precision Optics Corporation, Inc. Clawback Policy, requiring reimbursement or forfeiture of excess incentive compensation in the event of an accounting restatement. | October 2, 2023 | Promotes integrity and accountability, reinforcing performance-based compensation principles and mitigating risks associated with financial misstatements. |
Related Party Transactions
- The Board of Directors reviews all related party transactions for potential conflicts of interest and has determined that there are no related party transactions.
Stakeholder Impact
- Shareholders: Impacted by the transparency of executive compensation and governance practices, potential dilution from increased equity incentive plan shares, and the departure of a key executive.
- Employees: Affected by the Chief Operating Officer's departure and the availability of equity awards through the expanded 2022 Equity Incentive Plan.
- Management: Subject to updated compensation structures, increased governance oversight, and the Clawback Policy, promoting accountability.
Next Steps
- The company expects to file an additional registration statement on Form S-8 covering the 385,000 shares of Common Stock recently approved by the Board under the 2022 Equity Incentive Plan.
Key Dates
| Date | Description |
|---|---|
| July 9, 2014 | Peter H. Woodward appointed to the Board of Directors and as Chairman. |
| November 3, 2015 | Schedule 13D/A filed by MHW Partners, L.P., MHW Capital, LLC, MHW Capital Management, LLC. |
| March 2, 2016 | Andrew J. Miclot appointed to the Board of Directors. |
| July 27, 2018 | Board approved new compensation agreement with Dr. Joseph Forkey, effective August 2, 2018. |
| October 1, 2019 | Dr. Forkey's base salary increased to $250,000 per year. |
| May 10, 2021 | The 2021 Equity Incentive Plan adopted by the Board of Directors. |
| July 2021 | Wayne M. Coll served as CFO for Flowonix Medical Incorporated until June 2023. |
| February 10, 2022 | The 2022 Equity Incentive Plan adopted by the Board of Directors. |
| April 8, 2022 | The 2022 Equity Incentive Plan approved by stockholders. |
| May 2022 | Compensation Committee of the Board of Directors established. |
| July 2022 | Audit Committee of the Board of Directors established. |
| April 24, 2023 | Mahesh Lawande elected as Chief Operating Officer and employment agreement entered. |
| June 12, 2023 | Wayne M. Coll elected as Chief Financial Officer and Secretary and employment agreement entered. |
| September 20, 2023 | Board of Directors approved an amendment increasing shares under the 2022 Plan by 300,000 shares. |
| October 2, 2023 | Precision Optics Corporation, Inc. Clawback Policy became effective. |
| July 2, 2024 | Due date for Wayne M. Coll's Form 4 filing (delinquent). |
| October 2, 2024 | Due date for Wayne M. Coll's Form 4 filing (delinquent). |
| November 18, 2024 | Options to purchase common stock granted to directors Miclot, Miles, Anania, and Woodward. |
| December 31, 2024 | Aggregate market value of voting and non-voting common stock held by non-affiliates was approximately $23,911,000. |
| January 3, 2025 | Due date for Wayne M. Coll's Form 4 filing (delinquent). |
| February 7, 2025 | Board of Directors approved an amendment increasing shares under the 2022 Plan by 300,000 shares. |
| February 11, 2025 | Wayne M. Coll's delinquent Form 4s for July 2, 2024, October 2, 2024, and January 3, 2025, were filed. |
| February 24, 2025 | Schedule 13D/A filed by Sandra F. Pessin, Brian L. Pessin and Norman H. Pessin. |
| February 25, 2025 | Form 4 filed by Mr. Woodward. |
| February 28, 2025 | Buell G. Duncan appointed to the Board of Directors, filling the vacancy created by Dr. Richard B. Miles' retirement. |
| March 7, 2025 | Joseph P. Pellegrino, Jr. retired as CFO of LeMaitre Vascular, Inc. |
| March 14, 2025 | Peter V. Anania resigned from the Board of Directors. |
| March 19, 2025 | Joseph P. Pellegrino, Jr. appointed to the Board of Directors, filling the vacancy created by Peter Anania's retirement. |
| March 19, 2025 | Dr. Forkey issued 20,000 shares of common stock as a performance bonus and granted 200,000 stock options. |
| March 19, 2025 | Mr. Coll granted 50,000 stock options. |
| March 19, 2025 | Mr. Lawande granted 40,000 stock options. |
| March 19, 2025 | Board awarded stock options to new directors Mr. Duncan and Mr. Pellegrino. |
| March 20, 2025 | Dr. Forkey's base salary increased to $325,000 per year. |
| May 14, 2025 | Schedule 13G filed by Needham Investment Management L.L.C. and affiliates. |
| June 30, 2025 | End of the fiscal year covered by the Annual Report on Form 10-K/A. |
| August 12, 2025 | Board of Directors approved an amendment increasing shares under the 2022 Plan by 385,000 shares. |
| September 20, 2025 | Number of shares of common stock outstanding was 7,714,701. |
| September 29, 2025 | Original 10-K filed with the U.S. Securities and Exchange Commission. |
| October 2, 2025 | Company and Mr. Mahesh Lawande mutually agreed to terminate his employment. |
| October 28, 2025 | Date of certification by Chief Financial Officer and Chief Executive Officer for the 10-K/A filing. |
| October 31, 2025 | Mahesh Lawande's last day of employment with the company as Chief Operating Officer. |
Recommendation
holdThis filing is an amendment primarily focused on compliance, corporate governance, and executive compensation disclosures, rather than operational performance or strategic shifts. While there are positive governance updates and some personnel changes, the information provided does not fundamentally alter the investment thesis or provide new insights into the company's financial health or future prospects that would warrant a change from a 'hold' position. The departure of the COO and the CFO's delinquent filings are noted but do not appear to be material enough to significantly impact the company's long-term value based solely on this filing.
Keywords
Precision Optics, POCI, SEC filing, 10-K/A, corporate governance, executive compensation, stock options, board of directors, financial reporting, medical device, equity incentive plan
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