SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14 OF
THE SECURITIES EXCHANGE ACT OF 1934
FILED BY THE REGISTRANT /X/
FILED BY A PARTY OTHER THAN THE REGISTRANT / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
/ / Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
PRECISION OPTICS CORPORATION, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
1) Title of each class of securities to which transaction
applies:
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2) Aggregate number of securities to which transaction
applies:
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3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how
it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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PRECISION OPTICS CORPORATION, INC.
22 EAST BROADWAY
GARDNER, MASSACHUSETTS 01440
October 15, 2001
To the Shareholders:
The Board of Directors and Officers of Precision Optics Corporation, Inc.
invite you to attend the 2001 Annual Meeting of Shareholders to be held Tuesday,
November 13, 2001, at 10:00 a.m. at the Four Points Sheraton Hotel, 99 Erdman
Way, Leominster, Massachusetts.
A copy of the Proxy Statement and the Company's 2001 Annual Report to
Shareholders are enclosed.
If you cannot be present at the meeting, please mark, date, and sign the
enclosed proxy and return it as soon as possible in the enclosed envelope.
Very truly yours,
RICHARD E. FORKEY
PRESIDENT
PRECISION OPTICS CORPORATION, INC.
22 EAST BROADWAY
GARDNER, MASSACHUSETTS 01440
NOTICE OF 2001 ANNUAL MEETING OF SHAREHOLDERS
NOVEMBER 13, 2001
The 2001 Annual Meeting of Shareholders of Precision Optics
Corporation, Inc. (the "Company") will be held on Tuesday, November 13, 2001, at
10:00 a.m. at the Four Points Sheraton Hotel, 99 Erdman Way, Leominster,
Massachusetts, for the following purposes:
1. To elect two directors to hold office for a three-year term and until
their successors shall have been duly elected and qualified.
2. To transact any and all other business that may properly come before the
meeting or any adjournment thereof.
All shareholders of record at the close of business on Friday,
September 28, 2001, are entitled to notice of and to vote at the meeting.
Shareholders are requested to sign and date the enclosed proxy and return it
in the enclosed envelope. The envelope requires no postage if mailed in the
United States.
By Order of the Board of Directors
JACK P. DREIMILLER
CLERK
October 15, 2001
PRECISION OPTICS CORPORATION, INC.
PROXY STATEMENT
------------------------
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
This Proxy 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 the 2001
annual meeting of shareholders of the Company to be held November 13, 2001, at
10:00 a.m. at the Four Points Sheraton Hotel, 99 Erdman Way, Leominster,
Massachusetts, and any adjournments thereof, for the purposes set forth in the
notice of meeting. The Company was incorporated in 1982, and its principal
executive offices are at 22 East Broadway, Gardner, Massachusetts 01440
(telephone 978-630-1800). This Proxy Statement and form of proxy are first being
distributed to shareholders on or about October 15, 2001.
VOTING RIGHTS AND OUTSTANDING SHARES
As of September 28, 2001, the Company had outstanding 10,503,908 shares of
Common Stock, $0.01 par value (the "Common Stock"). Each share of Common Stock
entitles the holder of record thereof at the close of business on September 28,
2001 to one vote in person or by proxy on the matters to be voted upon at the
meeting.
The Company will bear all the costs of the solicitation of proxies. The
Board of Directors 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 mails, the Company may
use the services of some of its directors, officers and regular employees (who
will receive no compensation therefor in addition to their regular salaries) to
solicit proxies personally or by mail or telephone.
Consistent with Massachusetts law and the Company's 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 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. If
the shareholder specifies in the proxy how the shares are to be voted, they will
be voted as specified. If the shareholder does not specify how the shares are to
be voted, such shares will be voted in favor of the proposal described in Item 1
below. Shares represented by proxies that indicate an abstention or a "broker
non-vote" (that is, shares represented at the Meeting held by brokers or
nominees as to which (i) instructions have not been received from the beneficial
owners or persons entitled to vote and (ii) the broker or nominee does not have
the discretionary voting power on a particular matter) will be counted as shares
that are present and entitled to vote on the matter for purposes of determining
the presence of a quorum. Shares indicating an abstention will be treated as
votes against the proposal; shares indicating a broker non-vote, however, will
not constitute votes cast at the meeting and thus will have no effect on the
outcome. The election of directors described in Item 1 requires a plurality of
votes cast. Should either of the persons so named below as nominees for the
Board of Directors be unable or unwilling to serve as director, the persons
named in the form of proxy for the annual meeting may, in their discretion, vote
for such other person or may vote to fix the number of directors at such number
less than six, as the Board of Directors may recommend.
Any shareholder 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, (2) by filing
with the Clerk of the Company a written instrument revoking the proxy or
(3) delivering to the Clerk another newly executed proxy bearing a later date.
At the date hereof, the Company's management has no knowledge of any
business other than that described in the notice for the annual meeting which
will be presented for consideration at such 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 the manner which the
Board of Directors may recommend. 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.
ITEM 1. ELECTION OF DIRECTORS
The Company's Board of Directors is divided into three classes that are
equal in number, with staggered terms of office. Only one class is elected each
year, and each director serves a three year term and until his or her successor
has been duly elected and qualified. The Board of Directors has fixed the number
of directors at six. At the annual meeting it is intended that the Company's
Class II Directors (Messrs. Marxe and Pitlor) be elected to hold office until
the annual meeting of shareholders in 2004 and until their respective successors
have been duly elected and qualified. The nominees are currently directors of
the Company. The directors in Class I (Messrs. Forkey and Benjamin) will hold
office until the annual meeting of shareholders in 2003, and the directors in
Class III (Dr. Macleod and Mr. Shannon) will hold office until the annual
meeting of shareholders in 2002 (and in each case, until their respective
successors have been duly elected and qualified). The names, ages, principal
occupations for at least the last five years, and certain other information with
regard to the directors, including the nominees, are as follows:
NAME AND YEAR
FIRST ELECTED DIRECTOR AGE PRINCIPAL OCCUPATION; DIRECTORSHIPS OF OTHER PUBLIC COMPANIES
---------------------- --- -------------------------------------------------------------
Richard E. Forkey (1982)*................. 61 President, Chief Executive Officer, Treasurer and a director
of the Company since founding the Company in 1982; Clerk of
the Company from May 1983 to June 1990.
Edward A. Benjamin (1990)*................ 63 Clerk of the Company from June 1990 to January 1998. Mr.
Benjamin has been a Trustee of the Board of Trustees of New
England Zenith Fund and a Member of the Board of Managers of
New England Variable Annuity Fund I since October 1999. Mr.
Benjamin was a partner in the law firm of Ropes & Gray,
Boston, Massachusetts, from 1969 to 1998.
H. Angus Macleod (1997)*.................. 68 Dr. Macleod has been President of the Thin Film Center, Inc.
of Tucson, Arizona, since 1992, a firm which provides
software consulting and courses for design and analysis of
thin film optical coating and filters. Dr. Macleod was a
professor at the University of Arizona between 1979 and 1995.
2
NAME AND YEAR
FIRST ELECTED DIRECTOR AGE PRINCIPAL OCCUPATION; DIRECTORSHIPS OF OTHER PUBLIC COMPANIES
---------------------- --- -------------------------------------------------------------
Austin W. Marxe (1998).................... 61 Mr. Marxe has been the Managing Director of Special
Situations Fund III, L.P., a registered investment company
based in New York City, and several other affiliated and
predecessor investment funds, since 1990.
Joel R. Pitlor (1990)..................... 62 Since 1979, President of J.R. Pitlor, a management consulting
firm that provides strategic business planning, which Mr.
Pitlor founded. Mr. Pitlor has provided business planning
consultation to the Company since 1983. Mr. Pitlor has been a
director of Uroplasty, Inc., a Minnesota-based medical
products supplier, since 1992.
Robert R. Shannon (1990)*................. 69 Since 1969, professor at the Optical Sciences Center of the
University of Arizona and Director of the Center from 1983 to
July 1992.
------------------------
* Directors whose terms do not expire this year.
All of the shareholders holding shares of the Company's 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 two Class II directors at the 2001 annual
meeting. If the nominees are not available as candidates when the election
occurs, the persons named in the proxy may, in their discretion, vote for the
election of such other persons as the Board of Directors may designate or to
reduce the number of directors correspondingly. The Company has no reason to
believe that the nominees will not be available for election.
BOARD OF DIRECTORS
During the fiscal year ended June 30, 2001, the Company's Board of Directors
held one meeting and acted by unanimous written consent on six occasions. The
Board of Directors has a standing Audit Committee composed of Messrs. Benjamin,
Pitlor and Shannon. The function of the Audit Committee is to provide assistance
to the Board of Directors in fulfilling its responsibility to the shareholders,
potential shareholders and the investment community in respect of corporate
accounting, reporting practices of the Company, and the quality and integrity of
the financial reports of the Company. The Audit Committee held five meetings
during the fiscal year ended June 30, 2001. The Board does not have standing
nominating or compensation committees.
Information as to ownership of the Company's securities by the nominees for
director is included under the heading "Security Ownership of Certain Beneficial
Owners and Management."
3
EXECUTIVE OFFICERS
The Company's executive officers as of June 30, 2001 were as follows:
NAME AGE POSITION
---- -------- --------
Richard E. Forkey................. 61 President, Chief Executive Officer, Treasurer
Jack P. Dreimiller................ 53 Senior Vice President, Finance, Chief Financial Officer and
Clerk
James D. Rancourt................. 60 Senior Vice President, Optical Thin Films Technology
Mr. Forkey has been the President, Chief Executive Officer, Treasurer, and a
director of the Company since he founded the Company in 1982. He was the Clerk
of the Company from May 1983 to June 1990.
Mr. Dreimiller has been Senior Vice President, Finance and Chief Financial
Officer since April 1992 and Clerk since January 1998.
Dr. Rancourt has been Senior Vice President, Optical Thin Films Technology,
since January 2000. From 1997 to January 2000, he was Director of Product
Development at Guardian Industries, Inc. From 1995 to 1997, he was Chief
Scientist at Optical Coating Laboratory, Inc.
4
COMPENSATION AND OTHER MATERIAL TRANSACTIONS
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth all compensation for the last three completed
fiscal years awarded to, earned by, or paid to the Company's Chief Executive
Officer at June 30, 2001 and the executive officers during the fiscal year ended
June 30, 2001 whose total annual salary and bonuses for the fiscal year ended
June 30, 2001 exceeded $100,000 for all services rendered in all capacities to
the Company and its subsidiaries (the "Named Executive Officers").
ANNUAL COMPENSATION LONG TERM COMPENSATION
------------------------------------------------- ----------------------------
AWARDS PAYOUTS
---------- ---------------
SECURITIES
UNDERLYING
NAME AND PRINCIPAL POSITION OTHER ANNUAL OPTIONS ALL OTHER
AT FISCAL YEAR END YEAR SALARY($) BONUS($) COMPENSATION($) (NUMBER) COMPENSATION($)
--------------------------- -------- --------- -------- --------------- ---------- ---------------
Richard E. Forkey................... 2001 195,000 -0- 11,750(1) -0- 6,692(2)
President, Chief Executive Officer 2000 174,232 -0- 10,312(1) -0- 6,692(2)
1999 155,002 -0- 5,484(1) -0- 6,692(2)
Jack P. Dreimiller.................. 2001 150,710 -0- 2,705(3) -0- 2,025(4)
Senior Vice President Finance, Chief 2000 141,252 -0- 2,708(3) 10,000 2,025(4)
Financial Officer and Clerk 1999 128,257 2,000 2,551(3) -0- 2,025(4)
James D. Rancourt(5)................ 2001 180,003 -0- 1,442(3) -0- -0-
Senior Vice President, Optical Thin 2000 78,232 18,000 -0- 150,000 49,874(6)
Films Technology
------------------------
(1) Includes $9,250, $7,812, and $2,384 for car expense for 2001, 2000 and 1999,
respectively.
(2) Represents premiums for a life insurance policy and a disability insurance
policy.
(3) Represents Company's matching contribution to Profit Sharing Plan.
(4) Represents premiums for a life insurance policy.
(5) Dr. Rancourt joined the Company in January 2000 as Senior Vice President,
Optical Thin Films Technology.
(6) Represents reimbursement for relocation expenses.
OPTION GRANTS IN LAST FISCAL YEAR
No grants of stock options were made by the Company during the fiscal year
ended June 30, 2001 to its Named Executive Officers.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table summarizes for each of the Named Executive Officers
(i) the total number of shares received upon exercise of stock options during
the fiscal year ended June 30, 2001, (ii) the aggregate dollar value realized
upon such exercise, (iii) the total number of unexercised options, if any, held
at June 30, 2001 and (iv) the value of unexercised in-the-money options, if any,
held at June 30, 2001.
5
In-the-money options are options where the fair market value of the underlying
securities exceeds the exercise or base price of the option. The aggregate value
realized upon exercise of a stock option is the difference between the aggregate
exercise price of the option and the fair market value of the underlying stock
on the date of exercise. The value of unexercised, in-the-money options at
fiscal year-end is the difference between the exercise price of the option and
the fair market value of the underlying stock on June 30, 2001, which was $1.55
per share. With respect to unexercised, in-the-money options, the underlying
options have not been exercised, and actual gains, if any, on exercise will
depend on the value of the Company's Common Stock on the date of exercise.
FISCAL-YEAR-END OPTION VALUES
VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT FISCAL-YEAR END AT FISCAL YEAR-END ($)
--------------------------- ---------------------------
SHARES ACQUIRED ON VALUE EXERCISABLE UNEXERCISABLE
NAME EXERCISE (NUMBER) REALIZED($) (NUMBER) (NUMBER) EXERCISABLE UNEXERCISABLE
---- ------------------ ----------- ----------- ------------- ----------- -------------
Richard E. Forkey.......... -0- -0- -0- -0- -0- -0-
Jack P. Dreimiller......... -0- -0- 95,000 5,000 9,750 2,750
James D. Rancourt.......... -0- -0- 60,000 90,000 -0- -0-
LONG TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR
The Company made no awards under a long term incentive plan in the fiscal
year ended June 30, 2001.
DIRECTOR COMPENSATION
The Company pays each director who is not also an employee of the Company
$250 per Board or committee meeting which the director attends and reimburses
the director for travel expenses.
In addition, during the fiscal year ended June 30, 2001, the Company issued
pursuant to its 1997 Incentive Plan stock options exercisable for a total of
5,000 shares of the Company's Common Stock to each of Messrs. Benjamin, Pitlor,
Marxe, Shannon and Dr. Macleod. Each of these options is immediately exercisable
at a price per share of $5.50.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT ARRANGEMENTS
The Company has no employment contracts in place with any Named Executive
Officers. The Company also has 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,
retirement, or other termination of employment with the Company and its
subsidiaries, or as a result of a change-in-control of the Company or a change
in the Named Executive Officers' responsibilities following a change-in-control.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
To the Company's knowledge, based solely upon a review of Forms 3 and 4 and
amendments thereto furnished to the Company during the fiscal year ended
June 30, 2001 and Forms 5 and amendments thereto furnished to the Company 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 or with respect to such fiscal year.
6
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company has an arrangement with J.R. Pitlor ("J.R. Pitlor"), a company
wholly owned by Mr. Pitlor, a Director of the Company, under which Mr. Pitlor
provides consulting services to the Company for a fee currently not to exceed
$2,000 a 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 Company paid J.R. Pitlor for
consulting services aggregate fees of approximately $45,000 for fiscal year 2000
and $24,000 for fiscal year 2001.
The Company leases its facility in Gardner, Massachusetts from Equity
Assets, Inc. ("Equity"), a company wholly owned by Mr. Forkey, the President and
Treasurer and a Director of the Company, under a Lease Agreement dated
January 2, 1989, at an annual base rent of $108,000. The lease expired on
December 31, 1999. The Company is currently a tenant-at-will paying rent of
$9,000 per month.
In a private placement completed in August 1999, the Company issued to
investment funds affiliated with Mr. Marxe, a Director of the Company, 1,000,000
shares of its Common Stock and warrants exercisable for an additional 1,000,000
shares.
The Company has paid software and consulting fees of $66,638 for fiscal year
2000 and $20,000 for fiscal year 2001 to Thin Film Center, Inc., a company
wholly owned by Dr. Macleod, a Director of the Company, together with his wife.
The Company has paid legal fees to Ropes & Gray, a law firm of which
Mr. Benjamin, a Director of the Company, is a retired partner, of approximately
$252,611 for fiscal year 2000, and $320,000 for fiscal year 2001.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the Company's Common
Stock owned as of the close of business on September 28, 2001, the record date
for the 2001 Annual Meeting, by the following persons: (i) each person who is
known by the Company to own beneficially more than 5% of the Company's Common
Stock, (ii) each of the Company's directors and nominees for director who
beneficially owns the Company's or its subsidiaries' Common Stock, other than
directors' qualifying shares, (iii) each of the Company's Named Executive
Officers who beneficially own the Company's or its subsidiaries' Common Stock,
and (iv) all executive officers and directors, as a group, who beneficially own
the Company's or its subsidiaries' Common Stock. The information on beneficial
ownership in the table and footnotes thereto is based upon data furnished to the
Company by, or on behalf of, the persons listed in the table.
NAME AND ADDRESS AMOUNT AND NATURE OF
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) PERCENT(2)
------------------- ----------------------- ----------
David M. Greenhouse ........................................ 851,600(3) 8.11%
c/o Special Situations Fund III, L.P.
153 East 53rd Street
New York, NY 10022
7
NAME AND ADDRESS AMOUNT AND NATURE OF
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) PERCENT(2)
------------------- ----------------------- ----------
DIRECTORS AND OFFICERS
Edward A. Benjamin* ........................................ 57,000(4) **
c/o Ropes & Gray
One International Place
Boston, MA 02110
Richard E. Forkey* ......................................... 1,772,267 16.87%
c/o Precision Optics Corporation, Inc.
22 East Broadway
Gardner, MA 01440
H. Angus Macleod* .......................................... 40,000(5) **
c/o Thin Film Center, Inc.
2745 East Via Rotonda
Tucson, AZ 85716
Austin W. Marxe* ........................................... 866,600(6) 8.24%
c/o Special Situations Funds
153 East 53rd Street
New York, NY 10022
Joel R. Pitlor* ............................................ 51,250(7) **
19 Chalk Street
Cambridge, MA 02139
Robert R. Shannon* ......................................... 60,000(4) **
7040 E. Taos Place
Tucson, AZ 85715
Jack P. Dreimiller ......................................... 97,500(5) **
c/o Precision Optics Corporation, Inc.
22 East Broadway
Gardner, MA 01440
James D. Rancourt .......................................... 85,000(8) **
c/o Precision Optics Corporation, Inc.
22 East Broadway
Gardner, MA 01440
All officers and directors as a group, including those named
above (8 persons)......................................... 3,029,617(9) 27.95%
------------------------
* Director
** The percentage of shares beneficially owned by such person does not exceed
one percent of the Company's Common Stock.
8
(1) Represents shares with respect to which each beneficial owner listed has or
will have, upon acquisition of such shares upon exercise or conversion of
options, warrants, conversion privileges or other rights exercisable within
sixty days, sole voting and investment power.
(2) Percentages are calculated on the basis of the amount of outstanding Common
Stock plus, for each person or group, any securities that such person or
group has the right to acquire within sixty days pursuant to options,
warrants, conversion privileges or other rights.
(3) Represents (i) 210,800 shares owned of record by Special Situations Private
Equity Fund, L.P. ("SSPEF"); (ii) 374,300 shares owned of record by Special
Situations Fund III, L.P. ("SSF III"); (iii) 149,000 shares owned of record
by Special Situations Technology Fund, L.P. ("SSTF"); and (iv) 117,500
shares owned of record by Special Situations Cayman Fund, L.P. ("SSCF").
SSPEF, SSF III, SSTF and SSCF are affiliated investment funds. David
Greenhouse and Austin Marxe, a director of the Company, are principals of
the investment funds and their respective investment advisers, M.G.
Advisers, L.L.C., SST Advisers, L.L.C. AWM Investment Company, Inc.
(4) Includes 55,000 shares which may be acquired within sixty days upon the
exercise of outstanding stock options.
(5) Represents shares which may be acquired within sixty days upon the exercise
of outstanding stock options.
(6) Includes (i) 851,600 shares owned by certain affiliated investment funds of
which Mr. Marxe is a principal (see footnote (3) above) and (ii) 15,000
shares which may be acquired within sixty days upon exercise of outstanding
stock options awarded to Mr. Marxe personally in his capacity as a Director
of the Company.
(7) Includes 11,250 shares which may be acquired within sixty days upon the
exercise of outstanding stock options.
(8) Includes 60,000 shares which may be acquired within sixty days upon the
exercise of outstanding stock options.
(9) Includes 333,750 shares which may be acquired within sixty days upon the
exercise of outstanding stock options.
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP has been selected to serve as independent auditors of
the Company for the fiscal year ending June 30, 2002, and also served as the
principal accountants of the Company for the fiscal year ended June 30, 2001. A
representative of such firm is expected to be present at the annual meeting to
respond to appropriate questions.
AUDIT FEES
The aggregate fees billed or estimated to be billed for professional
services rendered by the Company's independent auditors for the audit of the
Company's annual financial statements for the fiscal year ended June 30, 2001
and for the reviews of the financial statements included in the Company's
quarterly reports on Form 10-QSB for that fiscal year were approximately
$58,000.
9
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
The Company's independent auditors did not perform any financial information
systems design or implementation work for the Company during the fiscal year
ended June 30, 2001.
ALL OTHER FEES
The aggregate fees billed for all other professional services rendered by
the Company's independent auditors for the fiscal year ended June 30, 2001 were
approximately $18,000.
AUDIT COMMITTEE REPORT
The Audit Committee is composed of Messrs. Benjamin, Pitlor and Shannon,
each of whom is "independent" as defined in Rule 4200(a)(15) of the National
Association of Securities Dealers' listing standards. The Board of Directors has
adopted a written charter for the Audit Committee, a copy of which is attached
to 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
financial statements for the fiscal year ended June 30, 2001, and has discussed
with the Company's independent auditors the matters required to be discussed by
Statements on Auditing Standard No. 61 (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
estimates 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 has recommended to the Board of Directors that
the audited financial statements be included in the Company's Annual Report on
Form 10-KSB for the fiscal year ended June 30, 2001 for filing with the
Securities and Exchange Commission.
Edward A. Benjamin
Joel R. Pitlor
Robert R. Shannon
SHAREHOLDER PROPOSALS
Shareholders may present proposals for inclusion in the 2002 Proxy Statement
and form of proxy relating to that meeting provided they are received by the
Clerk of the Company no later than June 17, 2002 and are otherwise in compliance
with applicable Securities and Exchange Commission regulations.
If a Shareholder who wishes to present a proposal at the Company's 2002
Annual Meeting that will not be included in the Company's proxy statement for
such Annual Meeting fails to notify the Company of his or her desire to do so by
August 31, 2002, then the proxies that the Board of Directors solicits for the
2002 Annual Meeting will include discretionary authority to vote on the
Shareholder's proposal, if such proposal is properly brought before the meeting.
10
APPENDIX A
PRECISION OPTICS CORPORATION, INC.
AUDIT COMMITTEE
CHARTER
ORGANIZATION
There shall be a committee of the Board of Directors to be known as the
Audit Committee.
During any period in which the company qualifies as a small business issuer
within the meaning of Item 10(a) of SEC Regulation S-B, the Audit Committee
shall be composed of at least two members, a majority of whom are independent
directors within the meaning of Nasdaq Marketplace Rule 4200(a)(15)
("Independent Directors").
During any period in which the company does not qualify as a small business
issuer, the Audit Committee shall be composed of at least three Independent
Directors and the composition of the Audit Committee shall meet the requirements
of Nasdaq Marketplace Rule 4460(d)(2). Specifically, each member of the Audit
Committee shall be able to read and understand fundamental financial statements,
including a company's balance sheet, income statement and cash flow statement.
In addition, at least one member must have had past employment experience in
finance or accounting or any other comparable experience that has resulted in
such member's financial sophistication.
Members of the Audit Committee shall be elected by the Board of Directors.
STATEMENT OF POLICY
The Audit Committee shall provide assistance to the Board of Directors in
fulfilling its responsibility to the shareholders, potential shareholders and
the investment community in respect of corporate accounting, reporting practices
of the company, and the quality and integrity of the financial reports of the
company. In so doing, it is the responsibility of the Audit Committee to
maintain free and open means of communication between the directors, the
independent auditors, and the financial management of the company. The company's
independent auditors are ultimately responsible to the Board of Directors and
the Audit Committee, as representatives of the company's shareholders.
RESPONSIBILITIES
In carrying out its responsibilities, the policies and procedures of the
Audit Committee should remain flexible in order to best react to changing
conditions and to ensure that the corporate accounting, control and reporting
practices of the company are prudent, sound and in accordance with all
applicable requirements.
In carrying out these responsibilities, the Audit Committee will:
- Elect a member of the Audit Committee to serve as Chairman of the Audit
Committee.
- Meet as a Committee in person or by conference telephone at least four
times per year to carry out the responsibilities outlined in this Charter.
The Committee shall also meet at least once per year in executive session
with the independent auditors, and the Chief Executive Officer and Chief
A-1
Financial Officer of the company. The Chairman of the Audit Committee
shall call all meetings of the Audit Committee.
- The attendance, in person or by conference telephone, of at least a
majority of the members of the Audit Committee shall be required in order
to constitute a quorum at any meeting. Action by the Audit Committee at a
meeting shall be taken by the affirmative vote of a majority of the
members present. Any action of the Audit Committee may be taken without a
meeting if all members of the Audit Committee consent thereto in writing.
- Review and reassess the adequacy of this Charter annually and recommend
any proposed changes to the Board for approval.
- Review, evaluate and recommend to the directors the independent auditors
to be selected to audit the financial statements of the company and, where
appropriate, replace the independent auditors.
- Take or recommend that the Board of Directors take appropriate action to
oversee the independence of the company's independent auditors, including
the following:
- Receive from the independent auditors each year a formal written
statement delineating all relationships between the auditors and the
company consistent with Independent Standards Board Standard 1; and
- Actively engage in a dialogue with the independent auditors regarding any
disclosed relationships or services that may impact the objectivity and
independence of the auditor.
- Discuss with the independent auditors the matters required to be discussed
by Statement on Auditing Standards No. 61.
- Meet with the independent auditors and financial management of the company
annually to review the scope of the proposed audit for each fiscal year
and the audit procedures to be utilized, and at the conclusion thereof,
review such audit, including any comments or recommendations of the
independent auditors.
- In consultation with the independent auditors, review the integrity of the
company's financial reporting process and consider the independent
auditor's judgments about the quality and appropriateness of the
corporation's accounting principles.
- Review any proposed major changes to the company's auditing and accounting
principles and practices as suggested by the independent accountants or
the financial management of the company.
- Review with the independent auditors and the company's financial and
accounting personnel the adequacy and effectiveness of the accounting and
financial controls of the company, and elicit any recommendations for the
improvement of such internal control procedures or particular areas where
new or more detailed controls or procedures are desirable.
- Review the company's audited financial statements with management and the
independent auditors and, as appropriate, recommend to the Board that the
audited financial statements be included in the company's annual report on
Form 10-KSB to be filed with the Securities and Exchange Commission.
A-2
- Review with management and the independent auditors the company's interim
financial statements prior to including them in any quarterly report on
Form 10-QSB filed with the Securities and Exchange Commission.
- Review the financial statements contained in the annual report to
shareholders with management and the independent auditors to determine
that the independent auditors are satisfied with the disclosure and
content of the financial statements to be presented to the shareholders.
- Prepare a report for inclusion in the company's annual proxy statement
that describes the Audit Committee's composition and responsibilities and
how they were discharged.
- Provide sufficient opportunity for the independent auditors to meet with
the members of the Audit Committee without members of management present.
Among the items to be discussed in these meetings are the independent
auditors' evaluation of the company's financial, accounting, and auditing
personnel, and the level of cooperation that the independent auditors
received during the course of the audit.
- Review the performance of the company's accounting and financial
personnel.
- Promptly bring to the attention of the Board of Directors any matter that,
in the its judgment, bears significantly on the quality of the company's
accounting, control and reporting procedures and practices.
- Investigate any matter brought to its attention within the scope of its
duties, with the power to retain outside counsel at the company's expense
for such purpose if, in its judgment, that is appropriate.
While the Audit Committee has the responsibilities and powers set forth in
this charter, it is not the duty of the Audit Committee to plan or conduct
audits or to determine that the company's financial statements are complete and
accurate and are in accordance with generally accepted accounting principles.
Such responsibility rests with the company's management and independent auditor.
Nor is it the duty of the Audit Committee to resolve disagreements, if any,
between management and the outside auditor, or to assure compliance with laws,
regulations or any internal rules of the company.
A-3
POPCM-PS-01
PRECISION OPTICS CORPORATION
C/O EQUISERVE
P.O. BOX 9398
BOSTON, MA 02205-9398
PRECISION OPTICS CORPORATION, INC.
Dear Shareholder,
Please take note of the important information enclosed with this Proxy Ballot.
The Proposals which are discussed in detail in the enclosed proxy materials
require your immediate attention and approval.
Your vote counts, and you are strongly encouraged to exercise your right to vote
your shares.
Please mark the boxes on this proxy card to indicate how your shares will be
voted. Then sign the card, detach it and return your proxy vote in the enclosed
postage paid envelope.
Your vote must be received prior to the Annual Meeting of Shareholders on
November 13, 2001.
Thank you in advance for your prompt consideration of these matters.
Very truly yours,
Precision Optics Corporation, Inc.
DETACH HERE ZPOPC1
PLEASE MARK
/X/ VOTES AS IN
THIS EXAMPLE.
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PRECISION OPTICS CORPORATION, INC.
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1. Election of two Class II Directors. The nominees for the Board of
Directors to serve for a three-year term as Class II Directors:
NOMINEES: (01) Austin W. Marxe
(02) Joel R. Pitlor
FOR WITHHELD
ALL / / / / FROM ALL
NOMINEES NOMINEES
/ /
-------------------------------------------
For all nominees except as noted above
Mark box at right if an address change or comment has / /
been noted on the reverse side of this card.
Please sign this proxy exactly as name appears hereon. When
shares are held by joint tenants, both should sign. When
signing as attorney, administrator, trustee or guardian,
please give full title as such.
Signature: _________________________________________ Date: ____________________
Signature: _________________________________________ Date: ____________________
DETACH HERE ZPOPC2
PRECISION OPTICS CORPORATION, INC.
COMMON STOCK PROXY
The undersigned, revoking any previous instructions, hereby acknowledges receipt
of the Notice and Proxy Statement dated October 15, 2001. In connection with the
Annual Meeting mentioned below, the undersigned hereby appoint(s) Richard E.
Forkey and Jack P. Dreimiller as attorneys of the undersigned, each with power
to act alone and with full power of substitution, to act and to vote all shares
of stock which the undersigned is entitled to vote at the Annual Meeting of
Shareholders of Precision Optics Corporation, Inc. to be held on November 13,
2001, at 10:00 A.M. at the Four Points Sheraton Hotel, 99 Erdman Way,
Leominster, Massachusetts, and at any adjournment or postponement thereof, upon
the matters set forth in the proxy statement for such Annual Meeting. The
foregoing attorneys are authorized to vote, in their discretion, upon such other
business as may properly come before the meeting or any adjournments or
postponements thereof.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS. WHEN THIS PROXY IS PROPERLY
EXECUTED, THE SHARES REPRESENTED HEREBY WILL BE VOTED AS SPECIFIED BY THE
SHAREHOLDER(S) ON THE REVERSE SIDE HEREOF OR, WHERE NO DIRECTION IS GIVEN, WILL
BE VOTED FOR THE ELECTION OF THE CLASS II DIRECTOR NOMINEES.
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PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN THE
ENCLOSED ENVELOPE.
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Please sign exactly as your name appears on the books of the Company. Joint
owners should each sign personally. Trustees and other fiduciaries should
indicate the capacity in which they sign, and where more than one name appears,
a majority must sign. If a corporation, this signature should be that of an
authorized officer who should state his or her title.
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HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
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