Michael Knowles
ONE STOP SYSTEMSAbout Michael Knowles
Michael Knowles, 58, has served as OSS President and CEO since June 5, 2023 and as a director since September 2023, bringing three decades of leadership across defense and aerospace computing, including leading a $700 million business with 2,000 employees at Cubic Corporation; he holds a BS in Aerospace Engineering (US Naval Academy), MS in Aerospace Engineering (Naval Postgraduate School), is a graduate of the US Naval Test Pilot School, and has an MBA from George Mason University . Under his tenure, OSS reported FY2024 consolidated revenue of $54.7 million versus $60.9 million in FY2023, with a net loss of $13.6 million and adjusted EBITDA loss of $10.3 million (inclusive of inventory and contract charges); management guided to FY2025 consolidated revenue of $59–$61 million and EBITDA break-even, highlighting expected >20% OSS segment growth .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Curtiss-Wright Defense Solutions | VP & GM, C5ISR Systems | Oct 2022–Jun 2023 | Led C5ISR portfolio in rugged enterprise-class compute and systems |
| Cubic Corporation (Mission & Performance Solutions) | SVP; President of M&PS BU | May 2014–Oct 2022 | Ran $700M global BU with 2,000 employees; portfolios in rugged edge networking/computing, secure comms, intelligence processing, EW/space RF components, and LVC training systems |
| Rockwell Collins | Various leadership roles | 2004–2014 | Defense electronics and systems experience |
| Lockheed Martin | Various leadership roles | 1998–2003 | Defense systems and programs exposure |
| United States Navy | Naval Flight Officer; Aerospace Engineering Duty Officer (Commander) | 20 years (10 active, 10 reserve) | Operational test and aerospace engineering credentials |
External Roles
| Organization | Role | Years | Committee Roles |
|---|---|---|---|
| One Stop Systems (OSS) | Director | Sep 2023–Present | Not listed on audit, compensation, or nominating committees; committees comprised of independent directors |
Fixed Compensation
| Metric | FY 2023 | FY 2024 |
|---|---|---|
| Base Salary Paid ($) | $256,539 | $473,446 |
| Target Bonus % of Base | 75% | 75% |
| Actual Bonus Paid ($) | $0 | $50,000 |
| Contract Base Salary ($) | $460,000 (effective 2023) | $478,000 (2024) |
Performance Compensation
Annual Bonus Structure
- Discretionary, based on board’s assessment of corporate performance; Knowles received $50,000 in 2024 and $0 in 2023 .
Equity Awards and Options
| Grant Date | Award Type | Shares/Units | Strike ($) | Expiration | Vesting | Fair Value (Accounting) |
|---|---|---|---|---|---|---|
| Jun 5, 2023 | RSUs (Inducement) | 400,000 | — | Jun 4, 2027 | 25% on 1-year anniversary (Jun 5, 2024); remaining 75% in six equal semiannual installments starting Dec 5, 2024 until fully vested (derived from proxy schedule) | Included in FY2023 Stock Awards $1,180,000 |
| Jun 5, 2023 | Options (Inducement) | 400,000 | 2.95 | Jun 5, 2033 | Same schedule as RSUs above | FY2023 Option Awards $796,000 |
| Jul 1, 2024 | RSUs | 131,450 | — | — | Three-year vesting; equal semiannual installments beginning one year after grant (starting Jul 1, 2025) | Included in FY2024 Stock Awards $287,875 |
Detailed Vesting Schedule (selected awards)
| Award | Key Dates | Vesting Detail |
|---|---|---|
| Jun 5, 2023 RSUs (400,000) | First vest: Jun 5, 2024; then semiannual | 100,000 on Jun 5, 2024; then six installments of 50,000 every six months to full vest by Jun 5, 2027 (derived from 25%+6 equal installments schedule) |
| Jun 5, 2023 Options (400,000; $2.95 strike) | Same as RSUs | Mirror RSU schedule; expire Jun 5, 2033 |
| Jul 1, 2024 RSUs (131,450) | Start: Jul 1, 2025 | Equal semiannual installments over three years |
Equity Ownership & Alignment
Beneficial Ownership (as of Mar 21, 2025)
| Holder | Shares Beneficially Owned | % of Outstanding | Breakdown |
|---|---|---|---|
| Michael Knowles | 273,096 | 1.2% (21,539,412 shares outstanding) | 123,096 common + 150,000 options exercisable within 60 days |
Outstanding Equity Awards (as of Dec 31, 2024)
| Award | Exercisable | Unexercisable | Strike ($) | Expiration | Unvested RSUs | Market Value ($) |
|---|---|---|---|---|---|---|
| Options (Jun 5, 2023) | 150,000 | 250,000 | 2.95 | Jun 5, 2033 | — | — |
| RSUs (Jun 5, 2023) | — | — | — | Jun 4, 2027 | 250,000 | $837,500 |
| RSUs (Jul 1, 2024) | — | — | — | — | 131,450 | $440,358 |
- Ownership guidelines and pledging/hedging policies were not disclosed in the cited sections; no specific pledging by Knowles was identified in the proxy excerpts above .
Employment Terms
| Term | Detail |
|---|---|
| Start Date & Roles | Employment agreement dated May 16, 2023; effective Jun 5, 2023; CEO & President |
| Initial Term | Three years from effective date; auto-renews annually thereafter |
| Base Salary | $460,000 in 2023; increased to ~$478,000 in 2024 (committee-approved) |
| Target Bonus | 75% of then-current base salary; discretionary based on board assessment vs corporate/individual objectives |
| Inducement Equity | 400,000 RSUs + 400,000 options (10-year term, FMV strike) with four-year vest schedule; granted under Nasdaq inducement exemption outside 2017 Plan |
| Severance (No Cause/Good Reason) | 12 months base salary; 12 months company-paid COBRA; RSU acceleration for 12 months of additional vesting (subject to release) |
| Change-in-Control | Accelerated vesting of outstanding equity awards for named executive officers |
Board Governance
- Board Service: Director since September 2023; CEO and director dual-role; OSS’s committees (audit & risk, compensation, nominating & corporate governance) are staffed by independent directors; Knowles is not listed as a committee member .
- Compensation Committee (2025): Herbets (Chair), Potashner, Matz, Messinger—all independent; committee oversees CEO compensation policies and equity awards .
- 2025 Board Slate: Director nominees included Knowles (58) among others; Chairman Kenneth Potashner did not stand for re-election in May 2025 per 8-K .
Say-On-Pay & Shareholder Feedback
| Meeting Date | Proposal | Votes For | Votes Against | Abstentions | Broker Non-Votes |
|---|---|---|---|---|---|
| May 14, 2025 | Advisory vote on NEO compensation | 6,844,763 | 3,360,203 | 415,134 | 3,475,391 |
Performance & Track Record
- FY2024 Results and Actions: Consolidated revenue $54.7M; inventory-related charges ($7.1M) and $1.2M contract loss; gross margin 14.1% (29.3% excluding one-time charges); net loss $13.6M; adjusted EBITDA loss $10.3M .
- Q4 2024 Momentum: Revenue up 15.1% YoY to $15.1M; OSS segment revenue up 10% YoY; sequential revenue increases throughout 2024 .
- 2025 Outlook: Guidance for consolidated revenue $59–$61M; expected OSS segment revenue ≈$30M (>20% YoY); EBITDA break-even; stronger 2H expected .
- Capital and Growth: Closed $12.5M registered direct offering at $5.00/share in Oct 2025 to support growth strategy, working capital, and M&A .
- Business Wins: Announced orders including $5M U.S. Navy contract (Jul 1, 2025) and prior record $6.5M contract (Apr 30, 2025) supporting edge compute platforms .
Compensation Structure Analysis
- Mix Shift: FY2023 was equity-heavy (RSUs $1.18M; options $796k); FY2024 shifted to cash salary and RSUs ($287,875) with no option awards, reflecting lower-risk RSU emphasis relative to options .
- Bonus Design: Lacks disclosed quantitative metrics/weightings; payouts determined at board discretion, limiting clear pay-for-performance linkage (Knowles: $50k in 2024; $0 in 2023) .
- Equity Plan Capacity: 2017 Plan share reserve increased to 5,000,000 in May 2024, enabling continued equity incentives across leadership and directors .
Risk Indicators & Red Flags
- One-Time Charges: Significant FY2024 inventory and specific program charges reduced reported profitability and adjusted EBITDA, indicating execution risk during transformation .
- Dual-Role Governance: CEO also serves on the board; however, committee oversight remains independent, partially mitigating independence concerns .
- Dilution/Capital Raise: 2025 registered direct offering increases share count and potential supply, although proceeds targeted to growth acceleration .
Equity Ownership & Insider Selling Pressure
- Scheduled RSU Vests: Significant semiannual RSU vesting from the 6/5/2023 grant through 6/5/2027 and from the 7/1/2024 grant beginning 7/1/2025 could introduce periodic share supply; no Form 4 sale disclosures for Knowles were identified in the period reviewed .
- Current Beneficial Ownership: 273,096 shares (1.2%); includes 150,000 options exercisable within 60 days—moderate “skin-in-the-game” with additional unvested equity alignment .
Investment Implications
- Pay-for-performance alignment is moderated by discretionary bonuses without disclosed quantitative targets; equity awards provide multi-year retention hooks via semiannual vesting and severance-linked RSU acceleration, reducing near-term attrition risk .
- Large unvested RSU schedules and option tranches suggest periodic potential supply over 2024–2027; monitor vest dates and any 10b5-1 plans or Form 4s for selling pressure signals .
- Governance: CEO-director dual role is common in small-cap tech; independent committees and evolving board composition (chair turnover) mitigate independence concerns; maintain oversight focus on compensation committee practices and pay-versus-performance disclosures .
- Execution: FY2024 reset (charges) and 2025 growth guidance create a pivotal year; capital raise in Oct 2025 funds strategy and M&A, but also adds dilution—track revenue conversion, margin recovery, and adjusted EBITDA trajectory to validate incentive design and payout integrity .