# Syntec Optics Holdings, Inc. (OPTX) 10-Q SEC filing - Q1 FY2026
- Filed: May 15, 2026, 4:31 PM EDT
- Fiscal quarter: Q1 FY2026
- Calendar quarter: Q1 2026
- Accession: 0001493152-26-023833
- OpenCapital page: https://www.opencapital.sh/filings/0001493152-26-023833
- Markdown URL: https://www.opencapital.sh/filings/0001493152-26-023833.md
- Official SEC filing index: https://www.sec.gov/Archives/edgar/data/1866816/000149315226023833/0001493152-26-023833-index.htm
## Filing documents
- [10-Q (form10-q.htm)](https://www.sec.gov/Archives/edgar/data/1866816/000149315226023833/form10-q.htm)
---
## 10-Q
SEC source: [form10-q.htm](https://www.sec.gov/Archives/edgar/data/1866816/000149315226023833/form10-q.htm)
**UNITED
STATES**
**SECURITIES
AND EXCHANGE COMMISSION**
**Washington,
D.C. 20549**
**FORM10-Q**
**(MARK
ONE)**
☒ **QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**
**For
the quarter ended March 31, 2026**
**OR**
☐ **TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**
**For
the transition period from to**
**Commission
file number: 001-41034**
**SYNTEC
OPTICS HOLDINGS, INC.**
(Exact
Name of Registrant as Specified in Its Charter)
**Delaware** **87-0816957**
(State or other jurisdiction of
incorporation or organization) (I.R.S. Employer
Identification No.)
**515
Lee Rd.**
**Rochester,NY 14606**
(Address
of principal executive offices and zip code)
**(585) 464-9336**
(Registrant’s
telephone number including area code)
Securities
registered pursuant to Section 12(b) of the Act:
**Title of each class** **Trading Symbol(s)** **Name of each exchange on which registered**
Common stock, par value $0.0001 per share OPTX The Nasdaq Capital Market
Redeemable warrants, exercisable for shares of common stock at an exercise price of $11.50 per share OPTXW The Nasdaq Capital Market
Check
whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or
for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes ☒ No ☐
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files). Yes ☒ No ☐
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company or an emerging growth company. See definitions of “large accelerated filer”, “accelerated filer”, “smaller
reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer ☒ Smaller reporting company ☒
Emerging growth company ☒
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As
of May 12, 2026, there were 40,279,878 shares of Class A common stock, par value $0.0001 per share, issued and outstanding.
**SYNTEC
OPTICS HOLDINGS, INC.**
**FORM
10-Q FOR THE QUARTER ENDED MARCH 31, 2026**
**TABLE
OF CONTENTS**
| | **Page** |
| --- | --- |
| [Part I. FINANCIAL INFORMATION](#sh_001) | 1 |
| [Item 1. Interim Unaudited Condensed Consolidated Financial Statements](#sh_002) | 1 |
| [Condensed Consolidated Balance Sheets as of March 31, 2026 (Unaudited) and December 31, 2025](#sh_003) | 1 |
| [Condensed Consolidated Statements of Operations for the Three Months ended March 31, 2026 and 2025 (Unaudited)](#sh_004) | 2 |
| [Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three Months Ended March 31, 2026 and 2025 (Unaudited)](#sh_005) | 3 |
| [Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2026 and 2025 (Unaudited)](#sh_006) | 5 |
| [Notes to Condensed Consolidated Financial Statements (Unaudited)](#sh_007) | 6 |
| [Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations](#sh_008) | 12 |
| [Item 3. Quantitative and Qualitative Disclosures Regarding Market Risk](#sh_009) | 19 |
| [Item 4. Controls and Procedures](#sh_010) | 20 |
| [Part II. OTHER INFORMATION](#sh_011) | 22 |
| [Item 1. Legal Proceedings](#sh_012) | 22 |
| [Item 1A. Risk Factors](#sh_013) | 22 |
| [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](#sh_014) | 22 |
| [Item 3. Defaults Upon Senior Securities](#sh_015) | 22 |
| [Item 4. Mine Safety Disclosures](#sh_016) | 22 |
| [Item 5. Other Information](#sh_017) | 22 |
| [Item 6. Exhibits](#sh_018) | 23 |
| [SIGNATURES](#sh_019) | 24 |
**PART
I - FINANCIAL INFORMATION**
**Item
1. Interim Unaudited Condensed Consolidated Financial Statements**
**SYNTEC
OPTICS HOLDINGS, INC.**
**CONDENSED
CONSOLIDATED BALANCE SHEETS**
**MARCH
31, 2026 AND DECEMBER 31, 2025**
| Line item | 2026 (unaudited) | 2025 |
| --- | --- | --- |
| ASSETS | | |
| Current Assets | | |
| Cash | $617,007 | $358,867 |
| Accounts Receivable, Net | 5,439,501 | 6,241,768 |
| Inventory | 7,798,397 | 7,884,943 |
| Prepaid Expenses and Other Assets | 509,110 | 655,827 |
| Total Current Assets | 14,364,015 | 15,141,405 |
| Property and Equipment, Net | 9,137,149 | 9,172,703 |
| Total Assets | $23,501,164 | $24,314,108 |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | | |
| Current Liabilities | | |
| Accounts Payable | $2,433,745 | $2,691,748 |
| Accrued Expenses | 855,915 | 683,397 |
| Federal Income Tax Payable | 169,582 | 169,582 |
| Deferred Revenue | 74,794 | 66,420 |
| Line of Credit | 6,763,863 | 6,763,863 |
| Current Maturities of Debt Obligations | 94,586 | 93,358 |
| Current Maturities of Debt Obligations - Related Party | 463,530 | 406,495 |
| Current Maturities of Debt Obligations | 463,530 | 406,495 |
| Current Maturities of Finance Lease Obligations | 361,717 | 354,499 |
| Total Current Liabilities | 11,217,732 | 11,229,362 |
| Long-Term Liabilities | | |
| Long-Term Debt Obligations | 1,246,936 | 1,267,043 |
| Long-Term Debt Obligations - Related Party | 1,005,203 | 862,237 |
| Long-Term Debt Obligations | 1,005,203 | 862,237 |
| Long-Term Finance Lease Obligations | 1,313,295 | 1,414,611 |
| Total Long-Term Liabilities | 3,565,434 | 3,543,891 |
| Total Liabilities | 14,783,166 | 14,773,253 |
| Stockholders’ Equity | | |
| CL A Common Stock, Par value $.0001 per share; 121,000,000 authorized; 36,994,164 issued and outstanding as of March 31, 2026; 36,920,226 issued and outstanding as of December 31, 2025; | 3,699 | 3,692 |
| Common stock, value | 3,699 | 3,692 |
| Additional Paid-In Capital | 2,752,174 | 2,677,181 |
| Retained Earnings | 5,962,125 | 6,859,982 |
| Total Stockholders’ Equity | 8,717,998 | 9,540,855 |
| Total Liabilities and Stockholders’ Equity | $23,501,164 | $24,314,108 |
*The
accompanying notes are an integral part of the unaudited condensed consolidated financial statements.*
1
**SYNTEC
OPTICS HOLDINGS, INC.**
**UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS**
**FOR
THE THREE MONTHS ENDED MARCH 31, 2026 AND 2025**
| Line item | 2026 | 2025 |
| --- | --- | --- |
| Net Sales | $6,513,366 | $7,069,042 |
| Cost of Goods Sold | 5,552,574 | 4,760,424 |
| Gross Profit | 960,792 | 2,308,618 |
| General and Administrative Expenses | 1,736,839 | 1,780,166 |
| (Loss) Income from Operations | (776,047) | 528,452 |
| Other (Expense) Income | | |
| Other Income | 69,300 | 5,697 |
| Interest Expense, Including Amortization of Debt Issuance Costs | (191,110) | (200,896) |
| Total Other Expense | (121,810) | (195,199) |
| (Loss) Income Before Provision for (Benefit) Income Taxes | (897,857) | 333,253 |
| Provision for Income Taxes | - | 9,588 |
| Net (Loss) Income | $(897,857) | $323,665 |
| Net (Loss) Income per Common Share | | |
| Basic and diluted | $(0.02) | $0.01 |
| Weighted Average Number of Common Shares Outstanding | | |
| Basic and diluted | 36,953,087 | 36,920,226 |
*The
accompanying notes are an integral part of the unaudited condensed consolidated financial statements.*
2
**SYNTEC
OPTICS HOLDINGS, INC.**
**UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY**
**FOR
THE THREE MONTHS ENDED MARCH 31, 2026**
| Line item | Common Stock / Shares | Common Stock / Amount | Additional / Paid-In / Capital | Retained / Earnings | Total |
| --- | --- | --- | --- | --- | --- |
| Balances, December 31, 2025 | 36,920,226 | $3,692 | $2,677,181 | $6,859,982 | $9,540,855 |
| Net Loss | - | - | - | (897,857) | (897,857) |
| Stock-Based Compensation | 73,938 | 7 | 74,993 | - | 75,000 |
| Balances, March 31, 2026 | 36,994,164 | $3,699 | $2,752,174 | $5,962,125 | $8,717,998 |
*The accompanying notes are an integral part of the
unaudited condensed consolidated financial statements.*
3
**SYNTEC
OPTICS HOLDINGS, INC.**
**UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY**
**FOR
THE THREE MONTHS ENDED MARCH 31, 2025**
| Line item | Common Stock / Shares | Common Stock / Amount | Additional / Paid-In / Capital | Retained / Earnings | Total |
| --- | --- | --- | --- | --- | --- |
| Balances, December 31, 2024 | 36,688,266 | $3,669 | $2,377,204 | $8,653,209 | $11,034,082 |
| Balances | 36,688,266 | $3,669 | $2,377,204 | $8,653,209 | 11,034,082 |
| Net Income | - | - | - | 323,665 | 323,665 |
| Net Income (Loss) | - | - | - | 323,665 | 323,665 |
| Stock-Based Compensation | 231,960 | 23 | (23) | - | - |
| Balances, March 31, 2025 | 36,920,226 | $3,692 | $2,377,181 | $8,976,874 | $11,357,747 |
| Balances | 36,920,226 | $3,692 | $2,377,181 | $8,976,874 | $11,357,747 |
*The
accompanying notes are an integral part of the unaudited condensed consolidated financial statements.*
4
**SYNTEC
OPTICS HOLDINGS, INC.**
**UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS**
**FOR
THE THREE MONTHS ENDED MARCH 31, 2026 AND 2025**
| Line item | 2026 | 2025 |
| --- | --- | --- |
| Cash Flows From Operating Activities | | |
| Net (Loss) Income | $(897,857) | $323,665 |
| Adjustments to Reconcile (Loss) Income to Net Cash | | |
| Provided By Operating Activities: | | |
| Adjustments to Reconcile Loss to Net Cash (Used In) Provided By Operating Activities: | | |
| Depreciation | 539,682 | 710,804 |
| Amortization of Debt Issuance Costs | 4,170 | 2,416 |
| Stock-Based Compensation | 75,000 | - |
| Change in Allowance for Expected Credit Losses | 105,195 | (15,244) |
| Change in Reserve for Obsolescence | 2,298 | 50,345 |
| (Increase) Decrease in: | | |
| Accounts Receivable | 697,072 | (568,310) |
| Inventory | 84,248 | (692,092) |
| Prepaid Expenses and Other Assets | 146,717 | 33,487 |
| Increase (Decrease) in: | | |
| Accounts Payables and Accrued Expenses | (295,288) | 279,142 |
| Federal Income Tax Payable | - | 179,376 |
| Deferred Revenue | 8,374 | (4,299) |
| Net Cash Provided By Operating Activities | 469,611 | 299,290 |
| Cash Flows From Investing Activities | | |
| Purchases of Property and Equipment | (294,325) | (214,731) |
| Net Cash Used in Investing Activities | (294,325) | (214,731) |
| Cash Flows From Financing Activities | | |
| Borrowing on Debt Obligations - Related Parties | 200,001 | - |
| Repayments on Debt Obligations | (23,049) | (114,277) |
| Repayments on Finance Lease Obligations | (94,098) | (28,165) |
| Net Cash Provided By (Used in) Financing Activities | 82,854 | (142,442) |
| Net Increase (Decrease) in Cash | 258,140 | (57,883) |
| Cash - Beginning | 358,867 | 598,787 |
| Cash - Ending | $617,007 | $540,904 |
| Supplemental Cash Flow Disclosures: | | |
| Cash Paid for Interest | $159,714 | $201,956 |
| Cash Paid for Taxes | - | - |
| Supplemental Disclosures of Non-Cash Investing Activities: | | |
| Assets Acquired and Included in Accounts Payable | $209,803 | $168,628 |
| Issuance of common stock for stock-based compensation | $7 | $23 |
*The
accompanying notes are an integral part of the unaudited condensed consolidated financial statements.*
5
**SYNTEC
OPTICS HOLDINGS, INC.**
**NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
### **Note 1 — Description of Organization and Business Operations**
*Nature
of Business*
Syntec
Optics Holdings, Inc. (the “Company” or “Syntec Optics”) is a vertically integrated manufacturer of optics and
photonics components and sub-systems – from opto-mechanicals to optical elements of various geometries, diamond turned optics –
both prototype and production, and optical systems including optics assembly, electro-optics assembly, design, and coating. Sales are
made to customers in the United States and Europe in defense, medical, and consumer end-markets. The Company has one reporting segment
as its operating segments meet the requirements for aggregation.
### **Note 2 — Summary of Significant Accounting Policies**
The
Company has provided a discussion of significant accounting policies, estimates and judgements in its 2025 Annual Report. There have
been no changes to the Company’s significant accounting policies since December 31, 2025.
*Basis
of Presentation*
The
accompanying interim unaudited condensed consolidated financial statements have been prepared by the Company in United States
(“U.S.”) dollars and pursuant to the rules and regulations of the United States Securities and Exchange Commission
(“SEC”), the instructions to Form 10-Q and the provisions of Regulation S-X pertaining to interim unaudited condensed
financial statements. Accordingly, certain information and footnote disclosures normally included in financial statements prepared
in accordance with accounting principles generally accepted in the U.S. have been condensed or omitted. The interim unaudited
condensed consolidated financial statements and notes included in this report should be read in conjunction with the consolidated
financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. In
the opinion of management, these interim unaudited condensed consolidated financial statements include all adjustments and accruals
of a normal and recurring nature necessary to fairly state the results of the interim periods presented. The results for interim
periods are not necessarily indicative of results to be expected for the full year or for any future periods.
*Recent Accounting Pronouncements*
In July 2025, the FASB issued ASU 2025-05, Financial
Instruments-Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. The amendments in this
ASU provide that in developing reasonable and supportable forecasts as part of estimating expected credit losses for current accounts
receivable and current contract assets, all entities may elect a practical expedient that assumes that current conditions as of the balance
sheet date do not change for the remaining life of the asset. The amendments in this ASU are effective for all entities for annual reporting
periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods, with updates to be applied
on a prospective basis. The Company adopted ASU 2025-05 as of January 1, 2026. The adoption of ASU 2025-05 did not have a material impact
on the Company’s financial statements.
*Revision to Previously Issued Financial Statements*
During the preparation of the Company’s interim
condensed consolidated financial statements as of and for the three months ended March 31, 2026, the Company identified an immaterial
classification error related to the presentation of long-term debt obligations on the consolidated balance sheet as of December 31, 2025.
Specifically, Long-Term Debt Obligations - Related Party, previously reported as $1,268,732 should have been $862,237, with the remaining
$406,495 should have been classified within Long-Term Debt Obligations. Accordingly, the Company revised the December 31, 2025 presentation
to reclassify $406,495 from Long-Term Debt Obligations - Related Party to Long-Term Debt Obligations, as noted on the condensed consolidated
balance sheet herein. The revision had no effect on total liabilities, stockholders’ equity, results of operations, cash flows,
or basic and diluted loss per share.
6
**SYNTEC
OPTICS HOLDINGS, INC.**
**NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
### **Note 3 — Disaggregated Revenues**
The
following table disaggregates revenue by revenue recognition methodologies for the three months ended March 31:
Schedule
of Disaggregated Revenues
| Line item | Three Months Ended March 31, 2026 | Three Months Ended March 31, 2025 |
| --- | --- | --- |
| Products | $6,460,593 | $6,920,222 |
| Custom Tooling | 23,889 | 118,820 |
| Non-Recurring Engineering | 28,884 | 30,000 |
| Total | $6,513,366 | $7,069,042 |
Syntec
Optics’ management periodically reviews its revenues by its consumer, communication, medical, and defense end-markets. The purpose
of this analysis is to determine its end market mix and identify trends. The following table disaggregates revenue as outlined above
for the three months ended March 31:
| Line item | Three Months Ended March 31, 2026 | Three Months Ended March 31, 2025 |
| --- | --- | --- |
| Communication | $1,844,262 | $1,861,378 |
| Consumer | 1,593,688 | 1,163,289 |
| Defense | 1,556,286 | 1,558,502 |
| Medical | 1,519,130 | 2,485,873 |
| Total | $6,513,366 | $7,069,042 |
7
**SYNTEC
OPTICS HOLDINGS, INC.**
**NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
### **Note 4 — Inventory**
Inventory
consists of the following at March 31, 2026 and December 31, 2025:
Schedule
of Inventory
| Line item | 2026 | 2025 |
| --- | --- | --- |
| Raw Materials | $364,404 | $360,280 |
| Work-in-Process | 7,823,916 | 7,956,924 |
| Finished Goods | 195,947 | 151,311 |
| Inventory gross | 8,384,267 | 8,468,515 |
| Less: Reserve for Obsolescence | 585,870 | 583,572 |
| Inventory | $7,798,397 | $7,884,943 |
### **Note 5 — Property and Equipment**
Property
and equipment consists of the following at March 31, 2026 and December 31, 2025:
Schedule
of Property and Equipment
| Line item | 2026 | 2025 |
| --- | --- | --- |
| Machinery and Equipment | $35,045,729 | $34,541,704 |
| Building and Leasehold Improvements | 5,483,617 | 5,483,616 |
| Land | 130,000 | 130,000 |
| Office Furniture and Equipment | 2,295,749 | 2,295,748 |
| Tooling | 169,408 | 169,307 |
| Vehicles | 24,059 | 24,059 |
| Property and Equipment Gross | 43,148,562 | 42,644,434 |
| Less: Accumulated Depreciation | 34,011,413 | 33,471,731 |
| Property and Equipment, Net | $9,137,149 | $9,172,703 |
Depreciation
expenses were $539,682 and $710,804 for the three months ended March 31, 2026 and 2025, respectively.
8
**SYNTEC
OPTICS HOLDINGS, INC.**
**NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
### **Note 6 — Line of Credit**
The
Company has a line of credit available in the amount of $7,500,000 with M&T Bank (the “Credit Agreement”). Borrowings
may be made against the line of credit as Secured Overnight Financing Rate (“SOFR”) Loans. The weighted average rate on outstanding
borrowings as of March 31, 2026 was 7.31%. As of March 31, 2026 and December 31, 2025, the Company had $6,763,863 outstanding under
the line of credit facility, for both periods.
The
Credit Agreement contains customary covenants and restrictions on the Company’s ability to engage in certain activities and financial
covenants requiring the Company to maintain certain financial ratios. As of March 31, 2026, the Company was not in compliance with certain
financial covenants under its Amended and Restated Credit Agreement with M&T Bank, including the minimum fixed charge coverage ratio
of 1.10:1.00 and the maximum total leverage ratio of 4.75:1.00.
On May 5, 2026, the Company made a $2.0 million payment on the line of credit, reducing the balance to $4.8 million.
On May 13, 2026, the Company made a payment of approximately $4.8 million
on the line of credit, reducing the balance to zero.
On May 13, 2026, the Company received a waiver
letter with M&T Bank related to the Company’s noncompliance with certain financial covenants under its Amended and Restated
Credit Agreement as of March 31, 2026, including the minimum Fixed Charge Coverage Ratio and maximum Total Leverage Ratio, as well as
certain mandatory prepayment provisions related to the Company’s April 2026 equity offering. In connection with the waiver, the
Company paid down the outstanding balance on its line of credit to zero as of May 13, 2026 and paid a waiver fee of $50,000.
Pursuant to the waiver letter, the Company is
required to maintain a minimum of $7.5 million of liquidity invested with M&T Bank. In addition, the previous minimum Fixed Charge
Coverage Ratio and maximum Total Leverage Ratio financial covenants were removed from the Credit Agreement, and the maturity date of the
Company’s $7.5 million revolving credit facility was extended to June 30, 2027.
### **Note 7 — Long-Term Debt**
Long-term
debt consists of the following at March 31, 2026 and December 31, 2025:
Schedule
of Long Term Debt Maturities
| Line item | 2026 | 2025 |
| --- | --- | --- |
| The Company entered into a $863,607 mortgage note payable, securitized by the Company’s real estate and cross-collateralized with all Company assets, with M&T Bank, requiring monthly installments of $7,389, including interest at a fixed rate of 6.13%. The note matures in February 2029. | $789,074 | $799,052 |
| The Company entered into a $1,064,000 term note payable with the U.S. Small Business Administration, requiring monthly installments of $6,652, including fees and interest at a fixed rate of 2.22%. The note matures in June 2036. The note is secured by certain assets of the Company and a personal guaranty of the Company’s stockholder. | 603,369 | 616,440 |
| On November 13, 2025, the Company entered into a $1,268,732 Stockholder Loan, the proceeds of which were applied to pay down the M&T term notes above. The note is subject to an M&T Bank subordination agreement which may limit any repayments. The note amortization calls for monthly payments of $40,031.03 at 6.95% effective annual rate and matures on October 31, 2028. On February 28, 2026, the Company borrowed an additional $200,000 from the same stockholder with identical terms, other than the second loan matures on January 31, 2029. | 1,468,733 | 1,268,732 |
| Total Long-Term Debt | 2,861,176 | 2,684,224 |
| Less: Unamortized Debt Issuance Costs | 50,921 | 55,091 |
| Long-Term Debt, Less Unamortized Debt Issuance Costs | 2,810,255 | 2,629,133 |
| Less: Current Maturities | 558,116 | 499,853 |
| Long-Term Debt | $2,252,139 | $2,129,280 |
At
March 31, 2026, the future debt maturities are as follows:
Schedule
of Long Term Future Debt Maturities
| | |
| --- | --- |
| December 31, 2026 | $413,981 |
| 2027 | 590,334 |
| 2028 | 733,808 |
| 2029 | 105,525 |
| 2030 | 109,886 |
| Thereafter | 907,642 |
| Total | $2,861,176 |
9
**SYNTEC
OPTICS HOLDINGS, INC.**
**NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
### **Note 8 — Retirement Plan**
The
Company maintains a 401(k) retirement plan covering eligible employees of the Company and its affiliates. Under the plan, participants
may defer up to 6% of their annual compensation, with Syntec Optics matching 50% of employee contributions. Total contributions for the
Company for the three months ended March 31, 2026 and 2025 amounted to $42,000 and $49,000, respectively.
### **Note 9 — Income Taxes**
The
income tax provision for interim periods is determined using an estimate of the annual effective tax rate, adjusted for discrete items,
if any, that are taken into account in the relevant period. Each quarter, the estimate of the annual effective tax rate is updated, and
if the estimated effective tax rate changes, a cumulative adjustment is made.
The
effective income tax rate was (32.5%) and 20.3%
for the three months ended March 31, 2026 and 2025, respectively.
### **Note 10 — Leases**
During
2024, the Company entered into finance lease agreements for equipment utilized in its manufacturing facility.
The
components of operating and finance lease costs are as follows for the three months ended March 31:
Schedule of Operating Lease and Finance Lease Costs
| Operating lease cost | Three Months Ended March 31, 2026 / - | Three Months Ended March 31, 2025 / - |
| --- | --- | --- |
| Finance Lease Cost: | | |
| Amortization of assets | 82,156 | 82,157 |
| Interest on liabilities | 34,514 | 41,764 |
| Total lease cost | $116,670 | $123,921 |
Supplemental
cash flow information related to leases are as follows for the three months ended March 31:
Schedule of Cash Flow Information Related To Leases
| Cash paid for amounts included in measurement of lease obligations: / Operating cash flows from operating leases | Three Months Ended March 31, 2026 / - | Three Months Ended March 31, 2025 / - |
| --- | --- | --- |
| Operating cash flows from finance leases | 34,514 | 41,764 |
| Financing cash flows from finance leases | $94,098 | $28,165 |
The
following table summarizes weighted average remaining lease term and discount rates as of March 31, 2026, and December 31, 2025:
Schedule of Weighted Average Remaining Lease Term
| Weighted average remaining lease term (years) / Operating leases | March 31, 2026 / N/A | December 31, 2025 / N/A |
| --- | --- | --- |
| Finance leases | 3.76 | 4.00 |
| Weighted average discount rate | | |
| Operating leases | N/A | N/A |
| Finance leases | 8.4% | 8.4% |
Future
maturities of our lease liabilities are as follows as of March 31, 2026:
Schedule of Future Maturities of Lease Liabilities
| | |
| --- | --- |
| $2026 remainder of year | $385,143 |
| 2027 | 513,525 |
| 2028 | 513,525 |
| 2029 | 513,524 |
| Thereafter | - |
| Total Undiscounted Lease Obligations | 1,925,717 |
| Less: Imputed Interest | (250,705) |
| Present Value of Lease Obligations | $1,675,012 |
10
**SYNTEC
OPTICS HOLDINGS, INC.**
**NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
### **Note 11 — Warrants**
The
following tables presents a roll-forward of the Company’s warrants from December 31, 2025 to March 31, 2026:
Schedule of Warrant
Common Stock Warrants
Warrants outstanding, December 31, 2025 14,107,989
Warrants exercised -
Warrants outstanding, March 31, 2026 14,107,989
### **Note 12 — (Loss) Income Per Share**
The
following table sets forth the information needed to compute basic and diluted (loss) income per share for the three months ended March 31, 2026
and 2025:
Schedule
of Basic And Diluted (Loss) Income Per Share
| Line item | 2026 / Three Months Ended March 31, | 2025 / Three Months Ended March 31, |
| --- | --- | --- |
| Basic and diluted net (loss) income per share: | | |
| Numerator: | | |
| Net (loss) income | $(897,857) | $323,665 |
| Basic and diluted net (loss) income per share | $(0.02) | $0.01 |
| Denominator | | |
| Weighted-average shares outstanding | 36,953,087 | 36,920,226 |
| Diluted Shares | 36,953,087 | 36,920,226 |
### **Note 13 — Significant Customers**
For
the three months ended March 31, 2026, the Company generated 53% of revenues from three customers. These three customers are in different
end-markets utilizing diverse manufacturing capabilities from the Company. The outstanding accounts receivable due from these customers
were approximately $2.5 million as of March 31, 2026.
For
the three months ended March 31, 2025, the Company generated 46% of revenues from three customers. The outstanding accounts receivable
due from these customers were approximately $3.3 million as of March 31, 2025.
### **Note 14 — Segment reporting**
The
Company operates as one operating segment. The Company’s chief operating decision maker (“CODM”) is its Chief Executive
Officer, who reviews the financial statements on a consolidated basis. The CODM uses the Company’s long-range plan to allocate
resources. The CODM makes decisions on resource allocation, assessments of performance, and monitors budget versus actual results using
consolidated loss from operations.
Significant
expenses within loss from operations, as well as within net loss, include general and administrative expenses, and other expenses which
are each separately presented on the Company’s Consolidated Statements of Operations and Comprehensive Loss.
### **Note 15 — Subsequent Events**
On April 30, 2026, the Company completed an underwritten
public offering of 2,857,142 shares of its common stock at a public offering price of $7.00 per share. The gross proceeds from the offering
were approximately $20.0 million, before deducting underwriting discounts, commissions and other offering expenses. Net proceeds to the
Company were approximately $18.6 million.
The offering was conducted pursuant to the Company’s
Registration Statement on Form S-1 (File No. 333-295335), which was declared effective by the Securities and Exchange Commission on April
28, 2026.
The Company granted the underwriter a 30-day option
to purchase up to an additional 428,571 shares of common stock at the public offering price, less underwriting discounts and commissions.
On May 1, 2026, the underwriter in the aforementioned
April 30 transaction chose to exercise its option to purchase an additional 428,571 shares of common stock. Net proceeds to the Company
were approximately $2.8 million.
On May 5, 2026, the Company made a $2.0 million payment on the line
of credit, reducing the balance to $4,763,863.
On May 13, 2026, the Company made a payment of approximately $4.8 million
on the line of credit, reducing the balance to zero.
On May 13, 2026, the Company received a
waiver letter with M&T Bank related to the Company’s noncompliance with certain financial covenants under its Amended and
Restated Credit Agreement as of March 31, 2026, including the minimum Fixed Charge Coverage Ratio and maximum Total Leverage Ratio,
as well as certain mandatory prepayment provisions related to the Company’s April 2026 equity offering.
In connection with the waiver letter, the Company
repaid the outstanding balance on its revolving line of credit to zero as of May 13, 2026, paid a waiver fee of $50,000, and agreed to
maintain minimum liquidity of $7.5 million invested with M&T Bank. The Company’s revolving credit facility availability of $7.5 million remains in place and the maturity date was extended to June 30, 2027.
11
**Item
2. Management’s Discussion and Analysis of Financial Condition and Results of Operations**
The
information in this Management’s Discussion and Analysis should be read in conjunction with the accompanying unaudited condensed
financial statements and notes.
**Cautionary
Note Regarding Forward-Looking Statements**
This
report includes forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), and the Private Securities Litigation Reform Act of 1995. The words “believe,” “may,”
“estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,”
“could,” “target,” “potential,” “is likely,” “will,” “expect”
and similar expressions are intended to identify forward-looking statements. All statements other than statements of historical facts
contained in this report, including among others, our strategy, future operations, future financial position, future revenue, projected
costs, prospects, plans, objectives of management and expected market growth are forward-looking statements. Our actual results and financial
condition may differ materially from those express or implied in such forward-looking statements. Therefore, you should not rely on any
of these forward-looking statements.
For
a further list and description of various risks, relevant factors and uncertainties that could cause future results or events to
differ materially from those expressed or implied in our forward-looking statements, see the “Risk Factors” and
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections in this report,
our Annual Report on Form 10-K and 10-K/A for the fiscal year ended December 31, 2025 and our other filings with the Securities and
Exchange Commission (the “SEC”). All forward-looking statements in this report are made only as of the date hereof or as
indicated and represent our views as of the date of this report. Factors or events that could cause our actual results to differ may
emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update or
revise any forward-looking statements, whether as the result of new information, future events or otherwise, except as required by
law.
**Overview**
Syntec
Optics is vertically integrated from design and component manufacturing for lens system assembly to imaging module integration for
system solutions. Making our own tools, molding, and nanomachining allows close interaction and recut ability, enabling special
techniques to hold tolerances up to sub-micron level. Syntec Optics has assembled a world class design for manufacturability team to
augment its production team with deep expertise to fully leverage our vertical integration from component making to optics and
electronics assembly. Syntec Optics has steadily developed variety of other complementary manufacturing techniques to provide a wide
suite of horizontal capabilities including thin films deposition coatings, glass molding, polymer molding, tool-making, mechanicals
manufacturing, and nanomachining.
Syntec
Optics became a leader in the industry by pioneering polymer-based optics and then subsequently adding glass optics and optics made
from other materials including crystals and metals. Polymer-based optics provide numerous advantages compared to incumbent
glass-based optics. Polymer-based optics are smaller, lower weight, lower cost, and offer very high-performance optical solutions.
For all these reasons, Syntec Optics is able to deliver products to our clients that are lighter, smaller, and suitable for cutting
edge technology products, including the newly evolving silicon photonics industry.
Our
designs and assembly processes are developed in-house in the United States. In 2016, Syntec Optics expanded its manufacturing facility
to nearly 90,000 square feet, allowing us to increase our production capacity and offer additional advanced manufacturing processes under
one roof which provide us the ability to increase sales to existing customers and increase penetration of our end-markets. Our facility
provides a streamlined, partially autonomous production process for our current customers, which comprises optical assembly, electro-optics
assembly, polymer optics molding, glass optics molding, opto-mechanical assembly, nanomachining and thin films coating. Our facility
also provides the ability to expand the number of advanced manufacturing processes to handle increased volumes of existing and new customer
orders.
Syntec
Optics focuses on four end markets of defense, medical, consumer, and communications all with several mission-critical applications with
strong tailwinds.
In
the last three years Syntec Optics launched low weight night vision optics and hybrid light-weight magnifiers and thermal clips in the
defense end market. Syntec Optics also announced biomedical mirrors for sensing in the medical end market. Rounding out new product launches,
in the communication end market, Syntec Optics launched microlens arrays and low earth satellite optics.
12
**Key
Factors Affecting Our Operating Results**
Our
financial position and results of operations depend to a significant extent on the following factors:
***End
Market Consumers***
The
demand for our products ultimately depends on demand from customers in our current end markets. We generate sales through (1) Tier 1
suppliers and (2) through OEMs.
An
increasing proportion of our sales has been and is expected to continue to be derived from sales to defense. biomedical and industrial/consumer
OEMs, driven by continued efforts to develop and expand sales to OEMs with whom we have longstanding relationships. Future OEM sales
will be subject to risks and uncertainties, including the number of defense, biomedical and industrial/consumer products these OEMs manufacture
and sell, which in turn may be driven by the expectations these OEMs have around end market demand.
Demand
from end markets is impacted by a number of factors, including travel restrictions (global pandemics or geo-political conflicts), fuel
costs and energy demands (including an increasing trend towards the use of green energy), as well as overall macro-economic conditions.
Sales of our optics and photonics enabled components and sub-components have also benefited from the increased global conflict, the United
States dynamic relationships with other world powers that may have a conflicting view with western-style democracy, the movement towards
reshoring of advanced manufacturing, biomedical components and sub-components needed to support physicians in their battle against global
pandemics, and the increased global demand for high-fidelity data communications on all corners of the globe.
Syntec
Optics plans to further consolidate and add bolt-on acquisitions for inorganic growth in the fragmented photonics industry by
expanding our portfolio of existing U.S.-based advanced manufacturing processes of making thin-film coated glass, crystal, and/or
polymer components and their housings, which are ultimately assembled into high performance hybrid electro-optics sub-systems. By
doing so, Syntec Optics plans to grow to the new end markets of communications and sensing. Syntec Optics entered the communications
end market in 2023. Syntec Optics is currently engaged as a supplier for a U.S. Department of Commerce’s National Institute of
Standards and Technology (“NIST”) funded research and development project for the sensing end market. The communication
end market is characterized by the use of optics and photonics for data transmittal and reception of information, including, for
example, satellite communications and other associated applications. The sensing end-market is characterized by the use of optics
and photonics to detect scattered light or light with an altered refractive index due to the presence of a medium within a wide
range of potential applications, including, for example, disease detection and other associated applications.
***Supply***
We
currently rely on strategically selected electronics, highly engineered polymers and aluminum manufacturers located in the United States
to manufacture our highly specialized optic and photonics enabled components and sub-components, and we intend to continue to rely on
these suppliers going forward. Our close working relationships with our Unites States based suppliers, reflected in our ability to (x)
increase our purchase order volumes (qualifying us for related volume-based discounts) and (y) order and receive delivery of raw materials
in anticipation of required demand, has helped us moderate increased supply-related costs associated with inflation and to avoid potential
shipment delays. To mitigate against potential adverse production events, we opted to build our inventory of key raw materials. In connection
with these stockpiling activities, we experienced an increase in prepaid inventory compared to prior periods as suppliers required upfront
deposits in response to supply chain disruptions.
As
a result of the active steps we have taken to manage our inventory levels, we have not been subject to the shortages or price impacts
that have been present for manufacturers of optic and photonic enabled components or sub-components.
13
***Product
and Customer Mix***
Our
sales consist of sales of highly specialized optic and photonic enabled components and sub-components. These products are sold to different
customer types (e.g., OEMs and Tier 1 manufacturers) and at different prices and involve varying levels of costs. In any particular period,
changes in the mix and volume of particular products sold and the prices of those products relative to other products will impact our
average selling price and our cost of goods sold. The price of our products may also increase as a result of increases in the cost of
components due to inflation, labor and raw materials. In addition, revenues from these larger customers may fluctuate from time to time
based on these customers’ business needs and customer experience, the timing of which may be affected by market conditions or other
factors outside of our control. These customers have a broad product purchase mix across various departments of Syntec Optics. Syntec
Optics supplies several mission critical components and sub-components to these customers that are not tied to a single application,
customer initiative, or purchase order. We expect sales to increase as we further advance our full-system design expertise and product
offerings and customers increasingly demand more sophisticated systems, rather than drop-in replacements. In addition to the impacts
attributable to the general sales mix across our products, our results of operations are impacted by the relative margins of products
sold. As we continue to introduce new products at varying price points, our overall gross margin may vary from period to period as a
result of changes in product and customer mix.
***Production
Capacity***
All
of our design, advanced manufacturing and assembly currently takes place at our nearly 90,000 square foot headquarters and manufacturing
facility located in Rochester, New York. We currently operate optical, opto-mechanical and electro-optical assembly lines in addition
to molding, nanomachining, testing and thin-film production lines. Consistent with our operating history, we plan to continue to automate
additional aspects of our advanced manufacturing operations. Our existing facility has the capacity to add additional production lines
and construct and operate pilot production lines for new components and sub-components, all designed to maximize the capacity of our
manufacturing facility. Although our automation efforts are expected to reduce our costs of goods, we may not fully recognize the anticipated
savings when planned and could experience additional costs or disruptions to our production activities.
***Competition***
We
compete with traditional glass optic manufacturers and electro-optic manufacturers, who primarily either import their products or components
or manufacture products under a private label. As we continue to expand into new markets, develop new products and move towards production
of our polymer based and glass-polymer based optic hybrids and photonics enabled components and sub-components, we will experience competition
with a wider range of companies. These competitors may have greater resources than we do and may be able to devote greater resources
to the development of their current and future technologies. Our competitors may be able to source materials and components at lower
costs, which may require us to evaluate measures to reduce our own costs, lower the price of our products or increase sales volumes in
order to maintain our expected levels of profitability.
***Research
and Development***
Our
research and development are primarily focused on the advanced manufacturing of polymer and glass-polymer based optic and photonics enabled
components and sub-components. The next stage in our technical development is to construct our products to optimize performance, lower
weight and increase longevity to meet and exceed industry standards for our target end markets. Ongoing testing and optimizing of more
complicated systems and sub-systems for our existing end markets will assist us in increasing penetration in our current end markets
and expanding into targeted end markets.
14
**Components
of Results of Operations**
***Net
Sales***
Net
sales are primarily generated from the sale of our optics and photonics enabled components and sub-components to OEMs.
***Cost
of Goods Sold***
Cost
of goods sold includes the cost of raw materials and other components of our optic and photonic enabled components and sub-components,
labor, overhead, utilities, and depreciation and amortization.
***Gross
Profit***
Gross
profit, calculated as net sales less cost of goods sold, may vary between periods and is primarily affected by various factors including
average selling prices, product costs, product mix, customer mix and production volumes.
***Operating
Expenses***
*General
and Administrative*
General
and administrative costs include personnel-related expenses attributable to our executive, finance, human resources, selling and marketing,
and information technology organizations, certain facility costs, office related depreciation, and fees for professional services.
***Total
Other Income (Expense)***
Other
income (expense) consists primarily of interest expense and debt issuance costs.
**Results
of Operations**
***Comparisons
for the Three Months Ended March 31, 2026 and 2025***
The
following table sets forth our results of operations for the three months ended March 31, 2026 and 2025, respectively. This data should
be read together with our financial statements and related notes included elsewhere in this Quarterly Report and is qualified in its
entirety by reference to such financial statements and related notes.
| Line item | Three Months Ended March 31,2026 | % of Net Sales | Three Months Ended March 31,2025 | % of Net Sales |
| --- | --- | --- | --- | --- |
| Net Sales | $6,513,366 | 100% | $7,069,042 | 100% |
| Cost of Goods Sold | 5,552,574 | 85% | 4,760,424 | 67% |
| Gross Profit | 960,792 | 15% | 2,308,618 | 33% |
| General and Administrative Expenses | 1,736,839 | 27% | 1,780,166 | 25% |
| (Loss) Income from Operations | (776,047) | -12% | 528,452 | 7% |
| Other (Expense) Income | | | | |
| Other (Expense) Income | 69,300 | 1% | 5,697 | 0% |
| Interest Expense, Including Amortization of Debt Issuance Costs | (191,110) | -3% | (200,896) | -3% |
| Total Other Expense | (121,810) | -2% | (195,199) | -3% |
| (Loss) Income Before Benefit From Provision for Income Taxes | (897,857) | -14% | 333,253 | 5% |
| Provision for (Benefit From) Income Taxes | - | 0% | 9,588 | 0% |
| Net (Loss) Income | $(897,857) | -14% | $323,665 | 5% |
15
***Net
Sales***
Net
sales decreased by $0.6 million, or 8%, to $6.5 million for the three months ended March 31, 2026, as compared to $7.1 million for the
three months ended March 31, 2025. This decrease was primarily due to decreases in medical markets of $1.0 million, partially offset
by an increase in the consumer market of $0.4 million.
***Cost
of Goods Sold***
Cost
of revenue increased by $0.8 million, to $5.6 million for the three months ended March 31, 2026, as compared to $4.8 million for the
three months ended March 31, 2025. This increase was primarily due to an increase in material costs, particularly for aluminum.
***Gross
Profit***
Gross
profit decreased by 58%, to $1.0 million for the three months ended March 31, 2026, as compared to $2.3 million for the three months
ended March 31, 2025. This decrease was primarily due to the decrease in revenue and the increase in costs of goods sold, as detailed above.
***General
and Administrative Expenses***
General
and administrative expenses remained flat, decreasing slightly by 2% for the quarter ended March 31, 2026, as compared to the same period
for 2025.
***Total
Other Expenses***
Other
expenses improved to an expense of $0.1 million for the three months ended March 31, 2026, from an expense of $0.2 million for the
three months ended March 31, 2025.
***Income
Tax Expense (Benefit)***
Income
tax expense (benefit) remained flat, with no material change when comparing the three months ended March 31, 2026 and 2025.
***Net
(loss) Income***
We
experienced a loss of $0.9 million for the three months ended March 31, 2026, as compared to income of $0.3 million for the same
three month period ended in 2025. This increase in net loss was primarily due to a decline in sales of $0.6 million, and an increase
in cost of goods sold of $0.8 million.
***Critical
Accounting Estimates***
Our
condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United
States. The preparation of these condensed consolidated financial statements requires us to make judgments and estimates that affect
the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities in our financial
statements. We base our estimates on historical experience, known trends and events and various other factors that we believe are reasonable
under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities
that are not readily apparent from other sources. Our actual results may differ from these estimates under different assumptions or conditions.
On a recurring basis, we evaluate our judgments and estimates in light of changes in circumstances, facts, and experience. The effects
of material revisions in an estimate, if any, will be reflected in the consolidated financial statements prospectively from the date
of the change in the estimate.
We
believe that the following accounting policies are those most critical to the judgments and estimates used in the preparation of our
unaudited condensed consolidated financial statements.
16
***Inventory
Valuation***
We
periodically review physical inventory for excess, obsolete, and potentially impaired items and reserves. Any such inventory is written
down to net realizable value. The reserve estimate for excess and obsolete inventory is dependent on expected future use and requires
management judgement.
***Income
Taxes***
We
account for income taxes using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized
for the future tax consequences of temporary differences between the carrying amounts and tax bases of assets and liabilities using enacted
rates. The effect of a change in tax rates on deferred taxes is recognized in income in the period that includes the enactment date.
We
recognize the financial statement effect of an uncertain income tax position when it is more likely than not, based on the technical
merits, that the position will be sustained upon examination. Recognized income tax positions are measured at the largest amount that
is greater than 50% likely to be realized. A valuation allowance is recorded to reduce deferred income tax assets to an amount, which
in the opinion of management is more likely than not to be realized.
Management
judgment is required in determining our provision for income taxes, our deferred tax assets and liabilities, and any valuation allowance
recorded against our deferred tax assets. We consider factors such as the cumulative income or loss in recent years; reversal of deferred
tax liabilities; projected future taxable income exclusive of temporary differences; the character of the income tax asset, including
income tax positions; tax planning strategies and the period over which we expect the deferred tax assets to be recovered in the determination
of the valuation allowance. In the event that actual results differ from these estimates, or we adjust our estimates in the future, we
may need to adjust our valuation allowance, which could materially impact our financial position and results of operations.
**Non-GAAP
Financial Measures**
This
Quarterly Report includes a non-generally accepted account principles within the United States (“U.S. GAAP”) measure that
we use to supplement our results presented in accordance with U.S. GAAP. EBITDA is defined as earnings before interest and other income,
tax and depreciation and amortization. Adjusted EBITDA is calculated as EBITDA adjusted for non-recurring items, and business combination
expenses. Adjusted EBITDA is a performance measure that we believe is useful to investors and analysts because it illustrates the underlying
financial and business trends relating to our core, recurring results of operations and enhances comparability between periods.
Adjusted
EBITDA is not a recognized measure under U.S. GAAP and is not intended to be a substitute for any U.S. GAAP financial measure and, as
calculated, may not be comparable to other similarly titled measures of performance of other companies in other industries or within
the same industry. Investors should exercise caution in comparing our non-GAAP measure to any similarly titled measure used by other
companies. This non-GAAP measure excludes certain items required by U.S. GAAP and should not be considered as an alternative to information
reported in accordance with U.S. GAAP.
*Adjusted
EBITDA*
We
define adjusted EBITDA, a non-GAAP financial measure, as net earnings (loss) before interest and other expenses, net, income tax expense,
depreciation and amortization, as adjusted to exclude non-recurring items. We utilize adjusted EBITDA as an internal performance measure
in the management of our operations because we believe the exclusion of these non-cash and non-recurring charges allow for a more relevant
comparison of our results of operations to other companies in our industry and is in accordance with the Non-GAAP Financial Measures
Compliance & Disclosure Interpretations (Reference Question 102.03).
17
The
Company has identified several non-recurring items included in our non-GAAP adjusted EBITDA financial measure. These items encompass
management fees, professional & transaction fees, technology start-up costs, optical molding evaluation expenses, glass molding evaluation
expenses, and executive transition expenses.
The
table below presents our adjusted EBITDA, reconciled to net income for the three months ended March 31, 2026 and 2025.
**NON-GAAP
RECONCILIATION OF EBITDA**
**FOR
THE THREE MONTHS ENDED MARCH 31, 2026 AND 2025**
| Line item | 2026 | 2025 |
| --- | --- | --- |
| Net (Loss) Income | $(897,857) | $323,665 |
| Stock-Based Compensation Expense BOD (1) | 75,000 | - |
| Depreciation | 539,682 | 710,804 |
| Amortization of Debt Issuance Costs | 4,170 | 2,416 |
| Interest Expenses | 159,714 | 201,956 |
| Taxes | - | 9,588 |
| Non-Recurring Items | | |
| Executive Transition (2) | - | 113,944 |
| One-time Contract exit costs | - | 4,675 |
| Non-recurring property damage | 23,211 | 21,261 |
| Adjusted EBITDA | $(96,080) | $1,388,309 |
In the quarters
ended March 31, 2026 and 2025:
(1) Stock-based compensation was issued to independent Board members.
(2) A succession plan was required for the transition of the CEO at 2024 year-end.
**Liquidity
and Capital Resources**
**Overview**
The
Company’s primary sources of liquidity are cash generated from operations and borrowings under its revolving credit facility with
M&T Bank. The Company uses cash to fund working capital requirements, capital expenditures, and debt service obligations.
As
of March 31, 2026, the Company had $6,763,863 outstanding under its $7.5 million revolving credit facility, providing approximately $736,137
of remaining availability, subject to borrowing base and covenant compliance requirements. The revolving credit facility matures
in November 2026.
On April 30, 2026, subsequent
to the end of the quarter, the Company completed an underwritten public offering of 2,857,142 shares of its common stock at a public offering
price of $7.00 per share, generating gross proceeds of approximately $20.0 million and net proceeds of approximately $18.6 million. The
Company intends to use the proceeds to support working capital, capital expenditures, and to optimize its capital structure, including
potential repayment of indebtedness.
On May 1, 2026, the underwriter
in the aforementioned April 30 transaction chose to exercise its option to purchase an additional 428,571 shares of common stock. Net
proceeds to the Company were approximately $2.8 million.
This financing significantly enhances the Company’s liquidity position and financial flexibility and is
expected to support ongoing operations, growth initiatives, and strategic investments.
18
**Capital
Requirements**
The
Company expects that cash generated from operations together with availability under its revolving credit facility and the proceeds
received from the public stock offering, will be sufficient to fund operations, working capital needs, and contractual obligations
for at least the next twelve months.
Subsequent to March 31, 2026, the Company completed a public equity
offering resulting in aggregate net proceeds of approximately $21.5 million, including the underwriter’s exercised over-allotment
option. The Company utilized a portion of the proceeds to repay the outstanding balance under its revolving line of credit with M&T
Bank to zero, which management expects will reduce future cash interest expense. The Company’s $7.5 million revolving credit facility
remains available through June 30, 2027, providing additional financial flexibility and available liquidity for working capital requirements,
capital expenditures, organic growth initiatives and potential strategic opportunities. In addition, management continues to implement
operational efficiency and cost reduction initiatives intended to improve gross profit and EBITDA in future periods.
***Cash
Flow — Three Months Ended March 31, 2026 and 2025***
**SYNTEC
OPTICS HOLDINGS, INC.**
**UNAUDITED CONDENSED** **CONSOLIDATED
STATEMENTS OF CASH FLOWS**
**FOR
THE THREE MONTHS ENDED MARCH 31, 2026 AND 2025**
| Line item | 2026 | 2025 |
| --- | --- | --- |
| Net Cash Provided By Operating Activities | $469,611 | $299,290 |
| Net Cash Used in Investing Activities | (294,325) | (214,731) |
| Net Cash Provided By (Used in) Financing Activities | 82,854 | (142,442) |
| Net Increase (Decrease) in Cash | 258,140 | (57,883) |
| Cash - Beginning | 358,867 | 598,787 |
| Cash - Ending | $617,007 | $540,904 |
***Operating
Activities***
Net cash provided by operating activities was $0.5 million for the three months ended March 31, 2026, as compared to net cash provided by operating activities of $0.3 million
for the three months ended March 31, 2025. The primary drivers of the changes for the three month period ended March
31, 2026 include net changes from operating assets of $0.6 million, changes from depreciation and amortization, stock-based compensation
and allowance of $0.7 million, offset by net loss of $0.9 million.
***Investing
Activities***
Net cash used in investing activities
was $0.3 million for the three months ended March 31, 2026, as compared to net cash used in investing activities of $0.2 million for
the three months ended March 31, 2025. The net cash used in investing activities increased primarily due to the purchase of a single
machine for approximately $0.4 million related to a new customer in 2026 that did not take place in 2025.
***Financing
Activities***
Net cash provided by financing
activities was $0.1 million for the three months ended March 31, 2026, as compared to net cash used in financing activities of $0.1 million
for the three months ended March 31, 2025. The primary driver of this change was the increase in debt borrowings from a related party
in the first quarter of 2026 of $0.2 million.
## Item 3. Quantitative and Qualitative Disclosures Regarding Market Risk Item
3. Quantitative and Qualitative Disclosures about Market Risk**
We
are exposed to market risks from changes in interest rates, which could affect our operating results, financial position and cash flows.
We manage our exposure to these market risks through our regular operating and financing activities.
*Interest
Rates*
Our
exposure to market risk associated with changes in interest rates relates primarily to our borrowings under our Senior Credit Facilities.
We had approximately $6.8 million of outstanding variable rate debt as of March 31, 2026. A 100 basis point increase in interest rates
at March 31, 2026 would increase our annual pre-tax interest expense by approximately $0.068 million.
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**Item
4. Controls and Procedures**
***Evaluation
of Disclosure Controls and Procedures***
As
required by Rule 13a-15 under the Exchange Act, we have carried out an evaluation of the effectiveness of our disclosure controls and
procedures as of the end of the period covered by this Report. This evaluation was carried out under the supervision and with the participation
of our management, including our Chief Executive Officer and Chief Financial Officer.
Disclosure
controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our
reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified
in the SEC’s rules and forms. Disclosure controls and procedures include controls and procedures designed to ensure that information
required to be disclosed in our company’s reports filed under the Exchange Act is accumulated and communicated to management, including
our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure. In designing and evaluating
the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated,
cannot provide absolute assurance that the objectives of the controls system are met, and no evaluation of controls can provide absolute
assurance that all control issues and instances of fraud, if any, within a company have been detected. Based on the evaluation of our
disclosure controls and procedures as of March 31, 2026, our Chief Executive Officer and our Chief Financial Officer concluded that,
as of such date, our disclosure controls and procedures were not effective due to the following identified material weaknesses:
| 1. | We lack documentation of formal internal control process and controls including lack of review of journal entries and segregation of duties. |
| --- | --- |
| 2. | We lack timely reconciliation controls in the areas of accounts payable, accrued legal expenses, and provision for income taxes. |
| 3. | We lack controls related to identification and disclosure of related party transactions. |
| 4. | We lack controls related to evaluation of non-routine transactions including financial instruments. |
| 5. | We lack the necessary information technology (“IT”) general controls infrastructure in the areas of user access and program change-management due to insufficient documentation and training, and inadequate IT risk assessment process. Additionally, we lack controls around the review of SOC-1 reports and lack of cyber security related controls. |
***Remediation
Plans and Status***
As
disclosed in the section titled “Evaluation of Internal Controls and Procedures,” we have identified certain control deficiencies.
To address these issues, we have designed and are in the process of implementing the following remediation initiatives, which are aligned
with the COSO framework:
- Enhance corporate governance through increased oversight by the Audit Committee, including additional reviews of internal control improvements and financial statements prior to publication (Control Environment; Monitoring Activities).
- Design and implement internal control flowcharts to strengthen segregation of duties (Control Activities; Risk Assessment).
- Increase staffing levels and competencies to enable appropriate separation of duties (Control Environment; Control Activities).
- Implement a formal checklist, review process, and controls over all journal entries and modifications to trial balances (Control Activities; Information & Communication).
- Hire additional experienced accounting and reporting professionals to prepare and approve consolidated financial statements and footnote disclosures in accordance with U.S. GAAP (Control Environment; Control Activities).
- Engage outside professional support to assist with SEC reporting requirements and special circumstances to ensure timely and accurate filings (Control Environment; Information & Communication).
- Establish a formal quarterly attestation process for managers and accounting staff to reinforce and monitor the use of control processes and workflows (Monitoring Activities; Information & Communication).
- Implement a formalized system for tracking control measures to reduce complexity and improve management’s review of control effectiveness (Monitoring Activities; Information & Communication).
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While
the Company has initiated these remediation efforts, not all measures have been fully implemented as of the date of this filing. We will
continue to enhance our internal control framework, employ additional procedures, and utilize appropriate tools and resources to ensure
that our consolidated financial statements are presented fairly, in all material respects.
The
Company believes these remediation measures will significantly strengthen its internal control environment and provide the foundation
to remediate the identified material weaknesses in future reporting periods.
***Management’s
Report on Internal Control over Financial Reporting***
This
Report does not include a report of management’s assessment regarding internal control over financial reporting or an attestation
report of the Company’s registered public accounting firm due to a transition period established by rules of the SEC for newly
public companies. Additionally, our auditors will not be required to formally opine on the effectiveness of our internal control over
financial reporting pursuant to Section 404 until we are no longer an “emerging growth company” as defined in the JOBS Act.
***Changes
in Internal Control over Financial Reporting***
Other
than the material weaknesses and remediation efforts mentioned above, there were no changes in our internal controls over financial reporting
that occurred during the quarter ended March 31, 2026 that materially affected, or are reasonably likely to materially affect, our internal
control over financial reporting.
21
**PART
II - OTHER INFORMATION**
**Item
1. Legal Proceedings**
We
may be subject to legal proceedings, investigations and claims incidental to the conduct of our business from time to time. We are not
currently a party to any material litigation or other legal proceedings brought against us. We are also not aware of any legal proceeding,
investigation or claim, or other legal exposure that has a more than remote possibility of having a material adverse effect on our business,
financial condition or results of operations.
**Item
1A. Risk Factors**
The
Company’s risk factors are described in Part I, Item 1A, “Risk Factors”, of the Company’s Annual Report on Form
10-K for the fiscal year ended December 31, 2025. The risks described in our Annual Report on Form 10-K for the fiscal year ended December
31, 2025 are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be
immaterial also may materially adversely affect our business, financial position, or future results of operations. The risk factors should
be read together with, the risk factors described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
**Item
2. Unregistered Sales of Equity Securities and Use of Proceeds**
None
**Item
3. Defaults Upon Senior Securities**
None
**Item
4. Mine Safety Disclosures**
Not
Applicable
**Item
5. Other Information**
None
22
**Item
6. Exhibits**
The
following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.
| No. | Description of Exhibit |
| --- | --- |
| 31.1* | Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rules 13a-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
| 31.2* | Certification of Principal Financial Officer Pursuant to Securities Exchange Act Rules 13a-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
| 32.1** | Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
| 32.2** | Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
| 101.INS | Inline XBRL Instance Document |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
\* Filed herewith.
\*\* Furnished.
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**SIGNATURES**
In
accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
**SYNTEC OPTICS HOLDINGS, INC**
Date: May 15, 2026 By: */s/ Al Kapoor*
Name: Al Kapoor
Title: Chairman and Chief Executive Officer
(Principal Executive Officer)
Date: May 15, 2026 By: */s/ Dean Rudy*
Name: Dean Rudy
Title: Chief Financial Officer
(Principal Accounting Officer and Financial Officer)
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