SYNTEC OPTICS HOLDINGS, INC.

Previous wording

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. The Company generated 53% of revenues for the nine months ended September 30, 2024 from three customers and 41% of revenues for the nine months ended September 30, 2023 from two customers. 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.

Current wording

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.

Previous wording

General and administrative costs include personnel-related expenses attributable to our executive, finance, human resources, and information technology organizations, certain facility costs, and fees for professional services.

Current wording

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.

Previous wording

Comparisons for the three months ended September 30, 2024 and 2023

Current wording

Comparisons for the Three Months Ended and Six Months Ended June 30, 2025 and 2024

Previous wording

Net sales increased by $1.3 million, or 19.2%, to $7.9 million for the three months ended September 30, 2024, as compared to $6.6 million for the three months ended September 30, 2023. This increase was primarily due to a increase of $2.0 million spread across the communication, defense and medical end markets offset by a decrease of $0.7 million in the consumer end market.

Current wording

Net sales increased by $0.4 million, or 2.8%, to $13.6 million for the six months ended June 30, 2025, as compared to $13.3 million for the six months ended June 30, 2024. This increase was primarily due to an increase of $1.4 million spread across the defense, medical and communication end markets, offset by a decrease in the consumer market of $1.0 million.

Previous wording

Cost of revenue increased by $1.3 million, or 26.8%, to $6.0 million for the three months ended September 30, 2024, as compared to $4.8 million for the three months ended September 30, 2023. This decrease was primarily due to an increase of $0.4 million in payroll costs and $0.9 million in material and subcontractor costs.

Current wording

Cost of revenue increased by $0.2 million, to $5.0 million for the three months ended June 30, 2025, as compared to $4.8 million for the three months ended June 30, 2024. This increase was primarily due to an increase of in material costs. For six months ending June 30, 2025 the cost of revenue decreased by $0.7 million driven by decreases in manufacturing overhead costs partially offset by an increase in material costs.

Previous wording

Gross profit decreased by $1.2 million, or 20.5%, to $4.7 million for the nine months ended September 30, 2024, as compared to $5.9 million for the nine months ended September 30, 2023. This decrease was primarily due to the decrease in revenue and the increase in cost of goods sold.

Current wording

Gross profit decreased by $0.6 million, or 26.5%, to $1.6 million for the three months ended June 30, 2025, as compared to $2.2 million for the three months ended June 30, 2024. This decrease was primarily due to the decrease in revenue and the increase in costs of goods sold. For the six months ending June 30, 2025 gross profit increased by $1.0 million driven by both the volume increase and the reductions in manufacturing overhead costs.

Previous wording

Income tax expense decreased by $0.09 million, or 808.3%, to ($0.08) million for the three months ended September 30, 2024, as compared to $0.01 million for the three months ended September 30, 2023. This decrease was primarily due to the decrease in net income.

Current wording

Income tax expense decreased by $0.03 million, to zero for the three months ended June 30, 2025, as compared to $0.03 million for the three months ended June 30, 2024. This decrease was primarily due to the decrease in net income. For the six months ended June 30, 2025 income tax expense of $0.09 million compared to an income tax benefit of $0.3 million in 2024. The increase in income tax expense was driven by the increased profitability.

Previous wording

Net income decreased by $1.9 million, or 196.5%, to ($0.9) million for the nine months ended September 30, 2024, as compared to $1.0 million for the nine months ended September 30, 2023. This decrease was primarily due to an increase in cost of goods sold of $1.3 million and an increase in general and administrative expenses of $1.5 million, offset by a decrease in other income (expense) of $0.2 million and a decrease in provision for income tax of $0.5 million.

Current wording

Net loss decreased by $0.6 million, or 222%, to $0.3 million for the three months ended June 30, 2025, as compared to a $0.3 million net income for the three months ended June 30, 2024. This decrease was primarily due to a decline in sales of $0.4 million, an increase in cost of goods sold of $0.1 million, an increase in interest expense of $0.42 million and a reduction of other income of $0.3 million, offset by a decrease in general and administrative expenses of $0.2 million and an increase in other income (expense) of $0.03 million.

Previous wording

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. Notably, several projects were concluded during the three months ended September 30, 2024, while some expenses were incurred in prior periods. The company evaluated these projects and retroactively adjusted prior periods to account for these expenses. This retroactive adjustment is reflected in the nine months ended September 30, 2024, below.

Current wording

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.

Previous wording

The table below presents our adjusted EBITDA, reconciled to net income for the three and nine months ended September 30, 2024 and 2023.

Current wording

The table below presents our adjusted EBITDA, reconciled to net income for the three and six months ended June 30, 2025 and 2024.

Previous wording

Liquidity describes the ability of a company to generate sufficient cash flows to meet the cash requirements of its business operations, including working capital needs, debt service, acquisitions, contractual obligations and other commitments. We assess liquidity in terms of our cash flows from operations and their sufficiency to fund our operating and investing activities. As of September 30, 2024, our principal sources of liquidity were cash totaling $0.5 million and a line of credit with $3.9 million available.

Current wording

Liquidity describes the ability of a company to generate sufficient cash flows to meet the cash requirements of its business operations, including working capital needs, debt service, acquisitions, contractual obligations and other commitments. We assess liquidity in terms of our cash flows from operations and their sufficiency to fund our operating and investing activities. As of June 30, 2025, our principal sources of liquidity were cash totaling $0.3 million and a line of credit with $1.7 million available.

Previous wording

Net cash used in investing activities was $0.3 million for the nine months ended September 30, 2024, as compared to net cash used in investing activities of $1.0 million for the nine months ended September 30, 2023. The net cash used in investing activities decreased primarily due to a decrease in capital expenditures of $0.4 million and an increase in proceeds from sale of equipment of $0.3 million.

Current wording

Net cash used by investing activities was $0.6 million for the six months ended June 30, 2025, as compared to net cash provided by investing activities of $0.5 million for the six months ended June 30, 2024. The net cash used in investing activities increased due to decrease in payment of capital expenditures of $0.3 million and a sale of equipment in 2024 of $0.3 million.