Electro Optic Systems Holdings (ASX:EOS) settled an Australian Securities and Investments Commission (ASIC) investigation with an agreed proposed penalty of AU$4 million and admitted to breaches of its continuous disclosure obligations, by failing to disclose a "materially significant" decline in its 2022 annual revenue forecasts to the Australian bourse, according to a Wednesday Australian bourse filing.

The firm issued earnings guidance to the ASX that it expected its 2022 revenue to equal or exceed AU$212.3 million, the regulator said in a separate statement. However, by July 25, 2022, the company became aware that its 2022 revenue was likely to be AU$164 million with the possibility of an additional AU$27 million, and it did not disclose this information until Oct. 31, 2022.

The penalty is subject to consideration and approval by the Federal Court. The regulator added that it will seek declarations of contravention.

The firm cooperated with ASIC throughout the course of the investigation, per the filing.

ASIC began separate proceedings against Ben Greene, the former Chief Executive and the current Chief Innovation Officer of EOS, regarding the same revenue guidance issues, and Greene was not a party to the settlement.

The firm's shares rose 7% in recent trading on Wednesday.