SYNTEC OPTICS HOLDINGS, INC.

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.

Note 2 —Summary of Significant Accounting Policies

The Company has provided a discussion of significant accounting policies, estimates and judgements in its 2024 Annual Report. There have been no changes to the Company’s significant accounting policies since December 31, 2024.

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 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, 2024. 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.

Note 3 Segment reporting

The Company operates asone 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 4 —Disaggregated Revenues

The following table disaggregates revenue by revenue recognition methodologies as outlined above for the three months ended March 31:

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:

Note 5 —Inventory

Inventory consists of the following at March 31, 2025 and December 31, 2024:

Note 6 —Property and Equipment

Property and equipment consists of the following at March 31, 2025 and December 31, 2024:

Depreciation expenses were approximately $710,804 and $695,826 for the three months ended March 31, 2025 and 2024, respectively.

Note 7 —Line of Credit

The Company has a line of credit available in the amount of $8,000,000 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, 2025 was 7.31%. As of March 31, 2025 and December 31, 2024, the Company had $6,263,863 outstanding under the line of credit facility.

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. At March 31, 2025, the Company was in compliance with the minimum fixed charge coverage ratio, maximum total leverage ratio, and the minimum EBITDA requirement as defined in the Credit Agreement.

Note 8 —Long-Term Debt

Long-term debt consists of the following at March 31, 2025 and December 31, 2024:

At March 31, 2025, the future debt maturities are as follows:

Note 9 —Retirement Plan

The Company maintains a 401(k) retirement plan covering eligible employees of the Company and its affiliate. Under the plan, participants may defer a percentage of their annual compensation, with Syntec Optics matching 50% of employee contributions not to exceed 6% of annual compensation. Total contributions for the Company for the three months ended March 31, 2025 and 2024 amounted to $49,000 and $45,000, respectively.

Note 10 —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 20.28% and 21.9% for the three months ended March 31, 2025 and 2024, respectively.

Note 11 —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:

Supplemental cash flow information related to leases are as follows for the three months ended March 31:

The following table summarizes weighted average remaining lease term and discount rates as of March 31, 2025, and December 31, 2024:

Future maturities of our lease liabilities are as follows as of March 31, 2025:

Note 12 —Warrants

The following tables presents a roll-forward of the Company’s warrants from December 31, 2024 to March 31, 2025:

Note 13 —Income (Loss) Per Share

The following table sets forth the information needed to compute basic and diluted earnings (loss) per share for the three months ended March 31, 2025 and 2024:

Note that there wereno potentially dilutive shares that were excluded from the weighted-average share calculation as of March 31, 2025 and 2024.

Note 14 —Significant Customers

For the three months ended March 31, 2025, the Company generated 46% 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 $3.3 million as of March 31, 2025.

For the three months ended March 31, 2024, 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 $3.1 million as of March 31, 2024.