Syntec Optics swings to $247K profit in Q3 2026
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Syntec Optics Holdings, Inc. (OPTX) reported third-quarter 2026 net sales of $8,542,554, up 23% year over year, and net income of $246,574 versus a $1,429,133 loss. For the nine months ended September 30, 2026, net sales were $23,329,778 compared with $20,578,717, while the net loss narrowed to $395,046 from $1,449,389. Third-quarter gross profit was $1,942,962, compared with $854,359, with sales growth primarily in Defense Tech and Space Tech.
The company reported $14,357,869 in cash as of September 30, 2026. It completed a public offering of 3,285,713 shares in April and May, receiving approximately $21.4 million net, and repaid its $6.8 million line of credit before voluntarily canceling it on June 10, 2026. Management concluded disclosure controls were not effective as of September 30 because of identified material weaknesses; remediation initiatives had begun, but were not all implemented.
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Positive
- Moderate pointThird-quarter net sales rose 23% to $8,542,554 year over year.
- Moderate pointThird-quarter net income was $246,574, versus a $1,429,133 loss.
- Moderate pointNine-month operating cash flow increased to $1,290,712 from $676,529.
Negative
- Major pointDisclosure controls were not effective as of September 30, 2026.
- Moderate pointNine-month adjusted EBITDA fell to $1,710,710 from $2,053,143.
Filing Explained
A significant engineering program was recognized over time using estimated cost-to-cost progress, so reported revenue depended in part on completion-cost estimates.
As of
During the nine months ended
Key Figures
Key Terms
non-recurring engineering (NRE) financial
cost-to-cost input method financial
variable interest entity financial
valuation allowance financial
material weaknesses technical
Adjusted EBITDA financial
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
What were OPTX's third-quarter 2026 revenue and earnings?
How much did OPTX receive from its 2026 public offering?
What internal control weaknesses did OPTX report?
How concentrated was OPTX's nine-month revenue among customers?
AI-generated analysis. How Rhea-AI works. Not financial advice.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(MARK ONE)
For
the quarter ended
OR
For the transition period from to
Commission
file number:
(Exact Name of Registrant as Specified in Its Charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
(Address of principal executive offices and zip code)
(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 | ||
| The
| ||||
| The
|
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.
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).
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 | ☐ |
| ☒ | 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 November 06, 2026, there were
SYNTEC OPTICS HOLDINGS, INC.
FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2026
TABLE OF CONTENTS
| Page | ||
| Part I. FINANCIAL INFORMATION | 1 | |
| Item 1. Interim Unaudited Condensed Consolidated Financial Statements | 1 | |
| Condensed Consolidated Balance Sheets as of September 30, 2026 (Unaudited) and December 31, 2025 | 1 | |
| Condensed Consolidated Statements of Operations for the Three and Nine Months ended September 30, 2026 and 2025 (Unaudited) | 2 | |
| Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three and Nine Months Ended September 30, 2026 and 2025 (Unaudited) | 3 | |
| Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2026 and 2025 (Unaudited) | 5 | |
| Notes to Condensed Consolidated Financial Statements (Unaudited) | 6 | |
| Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations | 12 | |
| Item 3. Quantitative and Qualitative Disclosures Regarding Market Risk | 20 | |
| Item 4. Controls and Procedures | 20 | |
| Part II. OTHER INFORMATION | 22 | |
| Item 1. Legal Proceedings | 22 | |
| Item 1A. Risk Factors | 22 | |
| Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | 22 | |
| Item 3. Defaults Upon Senior Securities | 22 | |
| Item 4. Mine Safety Disclosures | 22 | |
| Item 5. Other Information | 22 | |
| Item 6. Exhibits | 23 | |
| SIGNATURES | 24 |
PART I - FINANCIAL INFORMATION
Item 1. Interim Unaudited Condensed Consolidated Financial Statements
SYNTEC OPTICS HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2026 AND DECEMBER 31, 2025
| 2026 (unaudited) | 2025 | |||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash | $ | $ | ||||||
| Accounts Receivable, net of allowance for expected credit losses of $ | ||||||||
| Inventory, net | ||||||||
| Prepaid Expenses and Other Assets | ||||||||
| Total Current Assets | ||||||||
| Property and Equipment, Net | ||||||||
| Total Assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current Liabilities | ||||||||
| Accounts Payable | $ | $ | ||||||
| Accrued Expenses | ||||||||
| Federal Income Tax Payable | ||||||||
| Deferred Revenue | ||||||||
| Line of Credit | - | |||||||
| Current Maturities of Debt Obligations | ||||||||
| Current Maturities of Debt Obligations - Related Party | ||||||||
| Current Maturities of Debt Obligations | ||||||||
| Current Maturities of Finance Lease Obligations | ||||||||
| Total Current Liabilities | ||||||||
| Long-Term Liabilities | ||||||||
| Long-Term Debt Obligations | ||||||||
| Long-Term Debt Obligations - Related Party | ||||||||
| Long-Term Debt Obligations | ||||||||
| Long-Term Finance Lease Obligations | ||||||||
| Total Long-Term Liabilities | ||||||||
| Total Liabilities | ||||||||
| Commitments and Contingencies | - | - | ||||||
| Stockholders’ Equity | ||||||||
| CL A Common Stock, Par value $ | ||||||||
| Additional Paid-In Capital | ||||||||
| Retained Earnings | ||||||||
| Total Stockholders’ Equity | ||||||||
| Total Liabilities and Stockholders’ Equity | $ | $ | ||||||
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 AND NINE MONTHS ENDED SEPTEMBER 30, 2026 AND 2025
| September 30, 2026 | September 30, 2025 | September 30, 2026 | September 30, 2025 | |||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, 2026 | September 30, 2025 | September 30, 2026 | September 30, 2025 | |||||||||||||
| Net Sales | $ | $ | $ | $ | ||||||||||||
| Cost of Goods Sold | ||||||||||||||||
| Gross Profit | ||||||||||||||||
| General and Administrative Expenses | ||||||||||||||||
| Income (Loss) from Operations | ( | ) | ( | ) | ( | ) | ||||||||||
| Other (Expense) Income | ||||||||||||||||
| Other Income (Expense) | ( | ) | ||||||||||||||
| Interest Income | ||||||||||||||||
| Interest Expense, Including Amortization of Debt Issuance Costs | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total Other Income (Expense) | ( | ) | ( | ) | ( | ) | ||||||||||
| Income (Loss) Before Provision for (Benefit From) Income Taxes | ( | ) | ( | ) | ( | ) | ||||||||||
| Provision for Income Taxes | - | - | - | |||||||||||||
| Net Income (Loss) | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| Net Income (Loss) per Common Share | ||||||||||||||||
| Basic and diluted | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| Weighted Average Number of Common Shares Outstanding | ||||||||||||||||
| Basic and diluted | ||||||||||||||||
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 AND NINE MONTHS ENDED SEPTEMBER 30, 2026
| Shares | Amount | Capital | Earnings | Total | ||||||||||||||||
| Additional | ||||||||||||||||||||
| Common Stock | Paid-In | Retained | ||||||||||||||||||
| Shares | Amount | Capital | Earnings | Total | ||||||||||||||||
| Balances, December 31, 2025 | $ | $ | $ | $ | ||||||||||||||||
| Net Loss | - | - | - | ( | ) | ( | ) | |||||||||||||
| Stock-Based Compensation | - | |||||||||||||||||||
| Balances, March 31, 2026 | $ | $ | $ | $ | ||||||||||||||||
| Net Income | - | - | - | |||||||||||||||||
| Proceeds from Issuance of Common Stock | - | |||||||||||||||||||
| Warrants Exercised for Cash | - | - | ||||||||||||||||||
| Stock-Based Compensation | - | - | - | |||||||||||||||||
| Balances, June 30, 2026 | ||||||||||||||||||||
| Net Income | - | - | - | |||||||||||||||||
| Stock-Based Compensation | - | - | - | |||||||||||||||||
| Balances, September 30, 2026 | $ | $ | $ | $ | ||||||||||||||||
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 AND NINE MONTHS ENDED SEPTEMBER 30, 2025
| Additional | ||||||||||||||||||||
| Common Stock | Paid-In | Retained | ||||||||||||||||||
| Shares | Amount | Capital | Earnings | Total | ||||||||||||||||
| Balances, January 1, 2025 | $ | $ | $ | $ | ||||||||||||||||
| Net Income | - | - | - | |||||||||||||||||
| Stock-Based Compensation | ( | ) | - | - | ||||||||||||||||
| Balances, March 31, 2025 | ||||||||||||||||||||
| Net Loss | - | - | - | ( | ) | ( | ) | |||||||||||||
| Balances, June 30, 2025 | ||||||||||||||||||||
| Net Loss | - | - | - | ( | ) | ( | ) | |||||||||||||
| Net Income (Loss) | - | - | - | ( | ) | ( | ) | |||||||||||||
| Stock-Based Compensation | - | - | - | |||||||||||||||||
| Balances, September 30, 2025 | $ | $ | $ | $ | ||||||||||||||||
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 NINE MONTHS ENDED SEPTEMBER 30, 2026 AND 2025
| 2026 | 2025 | |||||||
| Cash Flows From Operating Activities | ||||||||
| Net Loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to Reconcile Net Loss to Net Cash Provided By Operating Activities: | ||||||||
| Depreciation | ||||||||
| Amortization of Debt Issuance Costs | ||||||||
| Stock-Based Compensation | ||||||||
| Change in Allowance for Expected Credit Losses | ||||||||
| Change in Reserve for Obsolescence | ( | ) | ( | ) | ||||
| Changes in Operating Assets and Liabilities: | ||||||||
| Accounts Receivable | ( | ) | ( | ) | ||||
| Inventory | ( | ) | ||||||
| Prepaid Expenses and Other Assets | ||||||||
| Accounts Payable and Accrued Expenses | ( | ) | ||||||
| Federal Income Tax Receivable | - | |||||||
| Deferred Revenue | ( | ) | ||||||
| Net Cash Provided By Operating Activities | ||||||||
| Cash Flows From Investing Activities | ||||||||
| Purchases of Property and Equipment | ( | ) | ( | ) | ||||
| Net Cash Used in Investing Activities | ( | ) | ( | ) | ||||
| Cash Flows From Financing Activities | ||||||||
| Repayments on Line of Credit | ( | ) | - | |||||
| Borrowing on Line of Credit | - | |||||||
| Repayments on Debt Obligations - Related Parties | ( | ) | - | |||||
| Borrowing on Debt Obligations - Related Parties | - | |||||||
| Repayments on Debt Obligations | ( | ) | ( | ) | ||||
| Repayments on Finance Lease Obligations | ( | ) | ( | ) | ||||
| Proceeds from Warrants Exercised | - | |||||||
| Gross Proceeds from Issuance of Common Stock | - | |||||||
| Payment of Common Stock Issuance Costs | ( | ) | - | |||||
| Net Cash Provided (Used) By Financing Activities | ( | ) | ||||||
| Net Increase (Decrease) in Cash | ( | ) | ||||||
| Cash - Beginning | ||||||||
| Cash - Ending | $ | $ | ||||||
| Supplemental Cash Flow Disclosures: | ||||||||
| Cash Paid for Interest | $ | $ | ||||||
| Cash Paid for Taxes | $ | - | $ | - | ||||
| Supplemental Disclosures of Non-Cash Investing Activities: | ||||||||
| Assets Acquired and Included in Accounts Payable | $ | $ | ||||||
| Issuance of Common Stock for Stock-Based Compensation | $ | $ | ||||||
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., together with its subsidiaries and its consolidated variable interest entity, ELR Associates, LLC (“ELR”), is referred to collectively as the “Company” or “Syntec Optics.”
The
Company is a vertically integrated manufacturer of optics and photonics components and subsystems. Its products and capabilities
include opto-mechanical components, optical elements of various geometries, prototype and production diamond-turned optics, and
optical systems, including optical and electro-optical assembly, design, and coating. The Company sells to customers in the United
States and Europe across the Space Tech, Defense Tech, Life Sciences, AI Data Center / Power, and Other including Scientific
Instruments. The Company has
Principles of Consolidation
The consolidated financial statements include the accounts of Syntec Optics Holdings, Inc. and its wholly owned subsidiary, Syntec Optics, as well as ELR, a variable interest entity (“VIE”) for which the Company is the primary beneficiary. The Company’s variable interest in ELR arises from its guarantee of payment of ELR’s mortgage on the manufacturing facility used exclusively by Syntec Optics. All significant intercompany accounts and transactions have been eliminated in consolidation.
ELR Associates, LLC
ELR’s total assets, consisting principally of cash and cash equivalents,
other assets, and property and equipment, were $
All significant intercompany accounts and transactions have been eliminated in consolidation.
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. Other than the Non-Recurring Engineering Services and Tooling topic reported below, 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.
Non-Recurring Engineering Services and Tooling
The Company enters into contracts with customers to provide non-recurring engineering and tooling (“NRE”) services related to the design, development, qualification, and customization of optical and photonic products. NRE activities may represent a distinct performance obligation or may be combined with other promised goods and services depending on the facts and circumstances of the arrangement and the application of ASC 606.
Revenue from NRE arrangements is recognized either at a point in time or over time, depending on the nature of the performance obligation and the transfer of control to the customer. For certain NRE projects, revenue is recognized upon completion and delivery of the contracted deliverable, customer acceptance, or other transfer of control criteria. For other NRE projects, revenue is recognized over time when the applicable criteria under ASC 606 are met, including situations in which the Company’s performance does not create an asset with an alternative use to the Company and the Company has an enforceable right to payment for performance completed to date.
For NRE arrangements recognized over time, the Company measures progress toward satisfaction of the performance obligation using an input method based on costs incurred relative to total estimated costs expected to complete the project. Management believes this method faithfully depicts the transfer of control of services to the customer because costs incurred are directly correlated with the Company’s efforts in satisfying its contractual obligations and the value transferred to the customer. Estimated project costs are reassessed periodically, and changes in estimates are recognized on a cumulative catch-up basis in the period in which such changes are identified.
During the nine months ended September 30, 2026, a significant NRE program met the criteria for over-time revenue recognition, resulting in a greater proportion of NRE revenue being recognized using the cost-to-cost method than in prior periods.
Recent Accounting Pronouncements
Accounting Standard Adopted:
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 arising from transactions accounted for under ASC 606, 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 the amendments applied on a prospective basis. The Company adopted ASU 2025-05 effective January 1, 2026, on a prospective basis and elected the practical expedient described above. Adoption did not have a material impact on the Company’s condensed consolidated financial statements.
Accounting Standards Not Yet Adopted:
The Company continues to evaluate the impact of adopting ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, issued November 2024, as clarified by ASU 2025-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date, issued January 2025, which will require additional footnote disclosures breaking down certain income statement expenses, including cost of goods sold and general and administrative expenses, into categories such as inventory purchases, employee compensation, depreciation, and intangible asset amortization, as applicable. The guidance also requires disclosure of total selling expenses. The Company anticipates adoption for the year ending December 31, 2027, and for quarterly reporting beginning in 2028. Adoption is expected to expand disclosures without changing the recognition or measurement of expenses.
In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements. The guidance clarifies existing interim financial reporting requirements, consolidates required interim disclosures, and establishes a principle requiring disclosure of events since the most recent annual reporting period that have a material impact on the Company. The amendments are effective for public business entities for interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted, and the amendments may be applied prospectively or retrospectively. The Company continues to evaluate the impact on its quarterly financial statement disclosures and anticipates adoption when required under the transition provisions applicable to the Company.
In December 2025, the FASB issued ASU 2025-12, Codification Improvements, which clarifies existing accounting guidance, corrects errors, and makes minor improvements across various accounting topics. The amendments are effective for all entities for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual periods. Early adoption is permitted, and transition requirements vary by amendment. The Company anticipates adopting the guidance effective January 1, 2027, and continues to evaluate the applicable amendments. Consistent with its preliminary assessment, the Company does not expect adoption to have a material impact on its consolidated financial statements.
| 6 |
SYNTEC OPTICS HOLDINGS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 3 — Disaggregated Revenues
The following table disaggregates revenue by revenue stream for the three and nine months ended September 30:
Schedule of Disaggregated Revenues
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Product | $ | $ | $ | $ | ||||||||||||
| NRE | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
Syntec Optics’ management periodically reviews revenue by end market to evaluate its revenue mix and identify trends. Beginning with the quarter ended September 30, 2026, the Company revised its end-market categories from Communication, Consumer, Defense and Medical to Space Tech, Defense Tech, Life Sciences, AI Data Center / Power, and other including Scientific Instruments. The revised categories provide greater visibility into the applications served by the Company’s products and the demand drivers affecting its revenue, including separately identifying space-related applications previously included within broader markets.
This change affects only the classification of revenue by end market and does not affect total revenue, the timing of revenue recognition, or the separate presentation of revenue by revenue stream. Comparative end-market amounts have been reclassified to conform to the current presentation.
Space Tech: Products supporting space technology, including space-related communications and defense applications.
Defense Tech: Products used in non-space-related defense applications. This also includes related items that can be sold into the civilian consumer market.
Life Sciences: Products used in medical devices, diagnostics, laboratory equipment and related applications.
AI Data Center / Power: Products used in artificial intelligence or data center infrastructure.
Other including Scientific Instruments: Primarily optical products sold into the scientific instrument market, together with products serving applications outside the other defined end markets.
Revenue is classified based on the end-use application of the related product or customer program. Space-related applications, including defense applications, are included in Space Tech and excluded from the other categories.
The following table disaggregates revenue as outlined above for the three and nine months ended September 30:
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Space Tech | $ | $ | $ | $ | ||||||||||||
| Defense Tech | ||||||||||||||||
| Life Sciences | ||||||||||||||||
| AI Data Center / Power | ||||||||||||||||
| Other Including Scientific Instruments | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
| 7 |
SYNTEC OPTICS HOLDINGS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 4 — Inventory
Inventory consists of the following at September 30, 2026 and December 31, 2025:
Schedule of Inventory
| 2026 | 2025 | |||||||
| Raw Materials | $ | $ | ||||||
| Work-in-Process | ||||||||
| Finished Goods | ||||||||
| Inventory gross | ||||||||
| Less: Reserve for Obsolescence | ||||||||
| Inventory | $ | $ | ||||||
Note 5 — Property and Equipment
Property and equipment consists of the following at September 30, 2026 and December 31, 2025:
Schedule of Property and Equipment
| 2026 | 2025 | |||||||
| Machinery and Equipment | $ | $ | ||||||
| Building and Leasehold Improvements | ||||||||
| Land | ||||||||
| Office Furniture and Equipment | ||||||||
| Tooling | ||||||||
| Vehicles | ||||||||
| Property and Equipment, Gross | ||||||||
| Less: Accumulated Depreciation | ||||||||
| Property and Equipment, Net | $ | $ | ||||||
Depreciation
expenses were $
Finance lease right-of-use (“ROU”) assets are included in machinery
and equipment in the table above, and the related accumulated amortization is included in accumulated depreciation. The net carrying amounts
of these assets were $
| 8 |
SYNTEC OPTICS HOLDINGS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 6 — Line of Credit
During the second quarter of 2026, the Company repaid
the outstanding $
Note 7 — Long-Term Debt
Long-term debt consists of the following at September 30, 2026 and December 31, 2025:
Schedule of Long Term Debt Maturities
| 2026 | 2025 | |||||||
| ELR Associates, LLC, a fully consolidated variable interest entity of the Company, entered
into a $ | $ | $ | ||||||
| ELR Associates, LLC, entered into a $ | ||||||||
| On November 13, 2025, the Company entered into a $ | ||||||||
| Total Debt | ||||||||
| Less: Unamortized Debt Issuance Costs | ||||||||
| Debt, Less Unamortized Debt Issuance Costs | ||||||||
| Less: Current Maturities | ||||||||
| Total Debt | $ | $ | ||||||
At September 30, 2026, the future debt maturities are as follows:
Schedule of Long Term Future Debt Maturities
| December 31, 2026 | $ | |||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| Thereafter | ||||
| Total | $ |
| 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.
Total
contributions for the Company for the three months ended September 30, 2026 and 2025 amounted to $
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
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 and nine months ended September 30 :
Schedule of Operating Lease and Finance Lease Costs
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Operating lease cost | $ | - | $ | - | $ | - | $ | - | ||||||||
| Finance Lease Cost: | ||||||||||||||||
| Amortization of assets | ||||||||||||||||
| Interest on liabilities | ||||||||||||||||
| Total lease cost | $ | $ | $ | $ | ||||||||||||
Supplemental cash flow information related to leases is as follows for the three and nine months ended September 30:
Schedule of Cash Flow Information Related To Leases
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Cash paid for amounts included in measurement of lease obligations: | ||||||||||||||||
| Operating cash flows from operating leases | $ | - | $ | - | $ | - | $ | - | ||||||||
| Operating cash flows from finance leases | ||||||||||||||||
| Financing cash flows from finance leases | $ | $ | $ | $ | ||||||||||||
The following table summarizes weighted average remaining lease term and discount rates as of September 30, 2026, and December 31, 2025:
Schedule of Weighted Average Remaining Lease Term
| 30-Sep-26 | 31-Dec-25 | |||||||
| Weighted average remaining lease term (years) | ||||||||
| Operating leases | n/a | n/a | ||||||
| Finance leases | ||||||||
| Weighted average discount rate | ||||||||
| Operating leases | n/a | n/a | ||||||
| Finance leases | % | % | ||||||
Future maturities of our lease liabilities are as follows as of September 30, 2026:
Schedule of Future Maturities of Lease Liabilities
| 2026 remainder of year | $ | |||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| Thereafter | - | |||
| Total Undiscounted Lease Obligations | ||||
| Less: Imputed Interest | ( | ) | ||
| Present Value of Lease Obligations | $ |
| 10 |
SYNTEC OPTICS HOLDINGS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 11 — Stockholders’ Equity
In
April and May 2026, the Company completed a public offering of
Note 12 — Warrants
The following table presents a roll-forward of the Company’s equity classified warrants from December 31, 2025 to September 30, 2026:
Schedule of Warrant
| Common Stock Warrants | ||||
| Warrants outstanding, December 31, 2025 | ||||
| Warrants exercised | - | |||
| Warrants outstanding, March 31, 2026 | ||||
| Warrants exercised | ||||
| Warrants outstanding, June 30, 2026 | ||||
| Warrants exercised | - | |||
| Warrants outstanding, September 30, 2026 | ||||
Note 13 — Income (Loss) Per Share
The following table sets forth the information needed to compute basic and diluted income (loss) per share for the three and nine months ended September 30, 2026 and 2025:
Schedule of Basic And Diluted (Loss) Income Per Share
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30 | September 30 | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Basic and diluted net income (loss) per share: | ||||||||||||||||
| Numerator: | ||||||||||||||||
| Net income (loss) | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| Basic and diluted net income (loss) per share | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| Denominator | ||||||||||||||||
| Weighted-average shares outstanding | ||||||||||||||||
| Diluted Shares | ||||||||||||||||
For the three and nine months ended September 30, 2026 and 2025, certain common shares issuable were excluded from the computation of diluted shares, as their inclusion would have been anti-dilutive.
Schedule Of Computation Antidilutive Shares
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Shares excluded from net (loss) earnings per share | ||||||||||||||||
| Warrants Outstanding *1 | ||||||||||||||||
| Contingent Earnout Shares *2 | ||||||||||||||||
| Performance Based Management Earnout *3 | - | - | ||||||||||||||
| Total shares excluded from net (loss) earnings per share | ||||||||||||||||
| *1 |
| *2 | ||
| *3 |
Note 14 — Significant Customers
For the three months ended September 30, 2026, the
Company generated
For the three months ended September 30, 2025, the
Company generated
Note 15 — Segment Reporting
The
Company operates as
Significant expenses within income (loss) from operations, as well as within net income (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.
| 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 expressed 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 the 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 a 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 provides us with 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 the end markets of Space Tech, Defense Tech, Life Sciences, AI Data Center / Power, and others including Scientific Instruments. 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 Tech end market. More recently, in the same market, we have entered the AI-driven military augmented reality (AR) wearables field, enhancing situational awareness for warfighters.
Syntec Optics also announced biomedical mirrors for sensing in the Life Sciences end market. Rounding out new product launches, in the Space Tech end market, Syntec Optics launched microlens arrays and low earth satellite optics. This includes incorporating its high-precision photonics into critical orbital safety components, enhancing collision avoidance in space, a growing concern as space traffic continues to increase.
| 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. Syntec Optics entered the Space Tech 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 Space Tech 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 Life Sciences end-market includes 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, have 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.
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 take 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.
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.
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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 income earned, interest expense, and amortization of debt issuance costs.
Results of Operations
Comparisons for the Three and Nine Months Ended September 30, 2026 and 2025
The following tables set forth our results of operations for the three and nine months ended September 30, 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.
| Three Months Ended | ||||||||||||||||
| September 30, 2026 | % of Net Sales | September 30, 2025 | % of Net Sales | |||||||||||||
| Net Sales | $ | 8,542,554 | 100 | % | $ | 6,950,220 | 100 | % | ||||||||
| Cost of Goods Sold | 6,599,592 | 77 | % | 6,095,861 | 88 | % | ||||||||||
| Gross Profit | 1,942,962 | 23 | % | 854,359 | 12 | % | ||||||||||
| General and Administrative Expenses | 1,730,807 | 20 | % | 2,072,962 | 30 | % | ||||||||||
| (Loss) Income from Operations | 212,155 | 2 | % | (1,218,603 | ) | -18 | % | |||||||||
| Other (Expense) Income | ||||||||||||||||
| Other Income (Expense) | (18,500 | ) | 0 | % | 1,162 | 0 | % | |||||||||
| Interest Income | 124,008 | 1 | % | 2,733 | 0 | % | ||||||||||
| Interest Expense, Including Amortization of Debt Issuance Costs | (71,089 | ) | -1 | % | (214,425 | ) | -3 | % | ||||||||
| Total Other Expense | 34,419 | 0 | % | (210,530 | ) | -3 | % | |||||||||
| (Loss) Income Before Provision for (Benefit From) Income Taxes | 246,574 | 3 | % | (1,429,133 | ) | -21 | % | |||||||||
| Provision for (Benefit From) Income Taxes | - | 0 | % | - | 0 | % | ||||||||||
| Net (Loss) Income | $ | 246,574 | 3 | % | $ | (1,429,133 | ) | -21 | % | |||||||
| Nine Months Ended | ||||||||||||||||
| September 30, 2026 | % of Net Sales | September 30, 2025 | % of Net Sales | |||||||||||||
| Net Sales | $ | 23,329,778 | 100 | % | $ | 20,578,717 | 100 | % | ||||||||
| Cost of Goods Sold | 18,282,960 | 78 | % | 15,817,774 | 77 | % | ||||||||||
| Gross Profit | 5,046,818 | 22 | % | 4,760,943 | 23 | % | ||||||||||
| General and Administrative Expenses | 5,289,322 | 23 | % | 5,597,344 | 27 | % | ||||||||||
| (Loss) Income from Operations | (242,504 | ) | -1 | % | (836,401 | ) | -4 | % | ||||||||
| Other (Expense) Income | ||||||||||||||||
| Other Income (Expense) | 49,248 | 0 | % | 9,124 | 0 | % | ||||||||||
| Interest Income | 203,742 | 1 | % | 11,766 | 0 | % | ||||||||||
| Interest Expense, Including Amortization of Debt Issuance Costs | (405,532 | ) | -2 | % | (624,290 | ) | -3 | % | ||||||||
| Total Other Expense | (152,542 | ) | -1 | % | (603,400 | ) | -3 | % | ||||||||
| (Loss) Income Before Provision for (Benefit From) Income Taxes | (395,046 | ) | -2 | % | (1,439,801 | ) | -7 | % | ||||||||
| Provision for (Benefit From) Income Taxes | - | 0 | % | 9,588 | 0 | % | ||||||||||
| Net (Loss) Income | $ | (395,046 | ) | -2 | % | $ | (1,449,389 | ) | -7 | % | ||||||
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Net Sales
Net sales increased by $1.6 million, or 23%, to $8.5 million for the three months ended September 30, 2026, as compared to $6.9 million for the three months ended September 30, 2025. This increase was primarily due to increases in the areas of Defense Tech and Space Tech, as detailed in Note 3 to the financial statements. This included approximately $1.0M of tooling revenue for Defense Tech as we have made significant progress towards commercialization of several new product arrays. For the nine months ended September 30, 2026, as compared to the nine months ended September 30, 2025, sales increased from $20.6 million in 2025 to $23.3 million in 2026. Sales increased significantly in the same two areas of Defense Tech and Space Tech, while down somewhat in the areas of AI Data Center and Life Sciences. This decrease in Life Sciences was due to a shipping hold to one particular customer in the first quarter, as described in our first quarter 10-Q. Shipments to that customer were back to normal in the second quarter. Sales into AI/Data Center were down as shown in Note 3 as a result of product line transition timing with our major customer’s business line. This area is expected to rebound with new product launches in early 2027. Sales in the others including Scientific Instruments category dropped slightly over the comparison periods, but did not have a significant impact.
Cost of Goods Sold
Cost of goods sold increased by $0.5 million, to $6.6 million for the three months ended September 30, 2026, as compared to $6.1 million, for the three months ended September 30, 2025. This increase was lower than the increase in sales, due to the revenue mix for the third quarter containing a high percentage of highly profitable Tooling revenue. Cost of goods sold increased by $2.5 million, to $18.3 million for the nine months ended September 30, 2026, as compared to $15.8 million for the nine months ended September 30, 2025. This increase was primarily due to an increase in material costs, particularly for aluminum.
Gross Profit
Gross profit increased by 127%, to $1.9 million for the three months ended September 30, 2026, as compared to $0.9 million, for the three months ended September 30, 2025. This increase was directly related to the significant increase in revenue combined with a minimal increase in cost of goods sold for the comparison periods. For the nine months ended September 30, 2026 compared to the same nine-month period in 2025, gross profits increased $0.2 million from $4.8 million in 2025 to $5.0 million in 2026. The increase was helped by the highly profitable tooling revenue in the third quarter of 2026, but somewhat offset by the increasing material cost for aluminum.
General and Administrative Expenses
General and administrative expenses decreased $0.3 million for the quarter ended September 30, 2026, as compared to the same period for 2025. For the nine months ended September 30, 2026 as compared to the same nine month period in 2025, the same decrease of $0.3 million was experienced, indicating most of the year to date reduction occurred in the third quarter. This was primarily due to reduced accounting fees, as well as timing of the recognition of certain expenses.
Total Other Income (Expense)
This category improved by $0.2 million for the three months ended September 30, from an expense of $0.2 million for the three months ended September 30, 2025, to a nominal amount of income just over zero for the three months ended September 30, 2026. For the nine months ended September 30, expenses decreased from $0.6 million in 2025 to $0.2 million in 2026. In both comparison periods, the improvement was primarily due to the debt reductions and the increase in interest earned on our larger cash balance.
Income Tax Expense (Benefit)
Income tax expense (benefit) remained flat, with no material change when comparing the three and nine months ended September 30, 2026 and 2025.
Net Income (Loss)
We experienced income of $0.2 million for the three months ended September 30, 2026, as compared to a loss of $1.4 million for the same three-month period ended in 2025. This turnaround from a loss to positive income was primarily due to the improvement in gross profit as detailed above, and in particular improved revenue. For the nine-month period ended September 30, 2026, we experienced a loss of $0.4 million, as compared to a loss of $1.4 million for the same period in 2025. This improvement in year-to-date earnings in 2026 was attributable to the items mentioned above, in particular improved revenue coupled with a reduction in General and Administrative expenses.
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 |
Revenue Recognition
The Company recognizes revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers. Substantially all of the Company’s revenue is generated from the manufacture and sale of precision optics and photonics products and is recognized at a point in time when control of the product transfers to the customer, which is generally upon shipment based on the applicable contractual terms.
Management is required to exercise judgment in evaluating customer contracts to determine the appropriate timing of revenue recognition, including the identification of performance obligations, assessment of transfer of control, and evaluation of contract modifications or other customer-specific arrangements. While most product sales involve a single performance obligation satisfied upon shipment, certain non-recurring engineering (“NRE”), tooling, and development arrangements may require additional analysis under ASC 606 to determine the appropriate performance obligations and timing of revenue recognition.
For certain NRE arrangements, management must determine whether revenue should be recognized at a point in time or over time. When the applicable criteria under ASC 606 are met, including situations where the Company’s performance does not create an asset with an alternative use and the Company has an enforceable right to payment for performance completed to date, revenue is recognized over time using a cost-to-cost input method based on costs incurred relative to total estimated project costs. This methodology requires significant judgment regarding estimated costs to complete, and changes in such estimates may result in cumulative catch-up adjustments to revenue.
These judgments and estimates are based on contract terms, historical experience, and other factors that management believes are reasonable under the circumstances. Changes in facts, circumstances, or assumptions could affect the amount and timing of revenue recognized and may have a material impact on the Company’s results of operations and financial condition.
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 that, 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-GAAP financial measure that we use to supplement our results presented in accordance with accounting principles generally accepted in the United States (“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 income (loss) before interest income, interest expense, net of income tax expense, depreciation and amortization, and stock-based compensation expense 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 allows 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 and nine months ended September 30, 2026 and 2025.
NON-GAAP RECONCILIATION OF EBITDA
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2026 AND 2025
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, 2026 | September 30, 2025 | September 30, 2026 | September 30, 2025 | |||||||||||||
| Net Income (Loss) | $ | 246,574 | $ | (1,429,133 | ) | $ | (395,046 | ) | $ | (1,449,389 | ) | |||||
| Stock-Based Compensation Expense BOD (1) | 75,000 | 225,000 | 225,000 | 225,000 | ||||||||||||
| Depreciation | 548,191 | 646,508 | 1,620,355 | 2,033,935 | ||||||||||||
| Amortization of Debt Issuance Costs | - | 2,416 | 12,416 | 7,250 | ||||||||||||
| Interest Income | (124,008 | ) | (2,733 | ) | (203,742 | ) | (11,766 | ) | ||||||||
| Interest Expense | 71,089 | 212,009 | 393,116 | 617,040 | ||||||||||||
| Taxes | - | - | - | 9,588 | ||||||||||||
| Non-Recurring Items | - | - | ||||||||||||||
| Executive Transition (2) | - | 329,972 | - | 579,161 | ||||||||||||
| One-time Contract exit costs | - | - | - | 21,063 | ||||||||||||
| Non-recurring property damage | - | - | 23,211 | 21,261 | ||||||||||||
| Incremental auditor transition costs | 35,400 | - | 35,400 | - | ||||||||||||
| Adjusted EBITDA | $ | 852,246 | $ | (15,961 | ) | $ | 1,710,710 | $ | 2,053,143 | |||||||
In the quarters ended September 30, 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 continues to generate positive cash flows from operations.
During the second quarter of 2026, the Company generated approximately $21 million in net proceeds from a public stock offering. The Company used a portion of the proceeds generated, approximately $7 million, to repay some of its indebtedness. The Company has approximately $14 million of cash as of September 30, 2026.
The ongoing positive generation of cash from operations, combined with the invested funds, is expected to support ongoing operations, growth initiatives, and strategic investments.
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Capital Requirements
The Company expects that cash generated from operations, together with the proceeds received from the public stock offering in the second quarter, will be sufficient to fund operations, working capital needs, and contractual obligations for at least the next twelve months.
Cash Flow — Nine Months Ended September 30, 2026 and 2025
SYNTEC OPTICS HOLDINGS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2026 AND 2025
| 2026 | 2025 | |||||||
| Net Cash Provided By Operating Activities | $ | 1,290,712 | $ | 676,529 | ||||
| Net Cash Used in Investing Activities | (1,643,914 | ) | (643,808 | ) | ||||
| Net Cash Provided (Used) By Financing Activities | 14,352,204 | (53,584 | ) | |||||
| Net Increase (Decrease) in Cash | 13,999,002 | (20,863 | ) | |||||
| Cash - Beginning | 358,867 | 598,787 | ||||||
| Cash - Ending | $ | 14,357,869 | $ | 577,924 | ||||
| Supplemental Cash Flow Disclosures: | ||||||||
| Cash Paid for Interest | $ | 370,586 | $ | 622,197 | ||||
| Cash Paid for Taxes | $ | - | $ | - | ||||
| Supplemental Disclosures of Non-Cash Investing Activities: | ||||||||
| Assets Acquired and Included in Accounts Payable and Accrued Expenses | $ | 233,062 | $ | 2,050 | ||||
| Issuance of finance lease for acquisition of equipment | $ | 7 | $ | 23 | ||||
Operating Activities
Net cash provided by operating activities was $1.3 million for the nine months ended September 30, 2026, as compared to net cash provided by operating activities of $0.7 million for the nine months ended September 30, 2025. The primary drivers of operating cash flows for the nine months ended September 30, 2026 included depreciation of $1.6 million, partially offset by a decrease in accounts payable of $0.9 million, a decrease in inventory of $0.5 million, and a decrease in prepaids balance of $0.3 million.
Investing Activities
Net cash used in investing activities was $1.6 million for the nine months ended September 30, 2026, as compared to net cash used in investing activities of $0.6 million for the nine months ended September 30, 2025. The net cash used in investing activities increased primarily due to the purchase or downpayments on several large machines; one for approximately $0.7 million, two for approximately $0.3 million each, and several smaller but significant purchases.
Financing Activities
Net cash provided by financing activities was $14.3 million for the nine months ended September 30, 2026, as compared to net cash used by financing activities of $0.1 million for the nine months ended September 30, 2025. The primary driver of this change was the aforementioned public stock offering, generating $21.4 million net, partially offset by the line of credit paydown of $6.8 million, and other debt related activity totaling $0.3 million.
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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 interest rate exposure on debt is minimal, as we have four loans with a fixed rate. We have a significant amount of cash which is earning interest in a money market savings account, at rates comparable to short term T-bills. At present investment levels, a 100 basis point decrease in interest rates would decrease our annual pre-tax interest earned by approximately $130,000.
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 September 30, 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 processes and controls, including controls over the 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 an inadequate IT risk assessment process. Additionally, we lack controls over the review of SOC-1 reports and lack of cyber security related controls. |
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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). |
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.
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 September 30, 2026 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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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
There have been no material changes to the risk factors disclosed in Part I, Item 1A, “Risk Factors,” included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, except for the additional risk factor set forth below. The risks described in our Annual Report on Form 10-K and the additional risk factor described below 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 condition, results of operations, and cash flows. 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.
Our business may be adversely affected by geopolitical tensions and military conflicts.
Geopolitical tensions, armed conflicts, and related global instability may adversely affect our operations, customers, suppliers, and overall market conditions. Such events may result in supply chain disruptions, increased material and transportation costs, delays in obtaining critical components and equipment, inflationary pressures, capital market volatility, cybersecurity threats, and changes in governmental spending priorities.
While geopolitical conflicts may create certain market opportunities, including increased defense spending, they may also create uncertainty regarding customer procurement schedules, contract funding, availability of critical materials, and timing of program awards. The extent and duration of current and future geopolitical conflicts remain uncertain, and any significant escalation could have a material adverse effect on our business, financial condition, results of operations, and cash flows.
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
During the fiscal quarter ended
September 30, 2026, no director or officer of the Company
The Company’s Board of Directors approved amendments to the Company’s Insider Trading Policy during the quarter ended September 30, 2026. A copy of the amended Insider Trading Policy is filed as Exhibit 19.1 to this Quarterly Report on Form 10-Q.
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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 | |
| 19.1* | Amended Insider Trading Policy | |
| 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: November 13, 2026 | By: | /s/ Al Kapoor |
| Name: | Al Kapoor | |
| Title: | Chairman and Chief Executive Officer | |
| (Principal Executive Officer) | ||
| Date: November 13, 2026 | By: | /s/ Dean Rudy |
| Name: | Dean Rudy | |
| Title: | Chief Financial Officer | |
| (Principal Accounting Officer and Financial Officer) | ||
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