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. The Company hasone reporting segment as its operating segments meet the requirements for aggregation.

Note 2 —Summary of Significant Accounting Policies

The Company has provided a discussion of significant accounting policies, estimates and judgements in its 2025 Annual Report. There have been no changes to the Company’s significant accounting policies since December 31, 2025.

Basis of Presentation

The accompanying interim unaudited condensed consolidated financial statements have been prepared by the Company in United States (“U.S.”) dollars and pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”), the instructions to Form 10-Q and the provisions of Regulation S-X pertaining to interim unaudited condensed financial statements. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the U.S. have been condensed or omitted. The interim unaudited condensed consolidated financial statements and notes included in this report should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. In the opinion of management, these interim unaudited condensed consolidated financial statements include all adjustments and accruals of a normal and recurring nature necessary to fairly state the results of the interim periods presented. The results for interim periods are not necessarily indicative of results to be expected for the full year or for any future periods.

Recent Accounting Pronouncements

In July 2025, the FASB issued ASU 2025-05, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. The amendments in this ASU provide that in developing reasonable and supportable forecasts as part of estimating expected credit losses for current accounts receivable and current contract assets, all entities may elect a practical expedient that assumes that current conditions as of the balance sheet date do not change for the remaining life of the asset. The amendments in this ASU are effective for all entities for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods, with updates to be applied on a prospective basis. The Company adopted ASU 2025-05 as of January 1, 2026. The adoption of ASU 2025-05 did not have a material impact on the Company’s financial statements.

Revision to Previously Issued Financial Statements

During the preparation of the Company’s interim condensed consolidated financial statements as of and for the three months ended March 31, 2026, the Company identified an immaterial classification error related to the presentation of long-term debt obligations on the consolidated balance sheet as of December 31, 2025. Specifically, Long-Term Debt Obligations - Related Party, previously reported as $1,268,732 should have been $862,237, with the remaining $406,495 should have been classified within Long-Term Debt Obligations. Accordingly, the Company revised the December 31, 2025 presentation to reclassify $406,495 from Long-Term Debt Obligations - Related Party to Long-Term Debt Obligations, as noted on the condensed consolidated balance sheet herein. The revision had no effect on total liabilities, stockholders’ equity, results of operations, cash flows, or basic and diluted loss per share.

Note 3 —Disaggregated Revenues

The following table disaggregates revenue by revenue recognition methodologies 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 4 —Inventory

Inventory consists of the following at March 31, 2026 and December 31, 2025:

Note 5 —Property and Equipment

Property and equipment consists of the following at March 31, 2026 and December 31, 2025:

Depreciation expenses were $539,682 and $710,804 for the three months ended March 31, 2026 and 2025, respectively.

Note 6 —Line of Credit

The Company has a line of credit available in the amount of $7,500,000 with M&T Bank (the “Credit Agreement”). Borrowings may be made against the line of credit as Secured Overnight Financing Rate (“SOFR”) Loans. The weighted average rate on outstanding borrowings as of March 31, 2026 was 7.31%. As of March 31, 2026 and December 31, 2025, the Company had $6,763,863 outstanding under the line of credit facility, for both periods.

The Credit Agreement contains customary covenants and restrictions on the Company’s ability to engage in certain activities and financial covenants requiring the Company to maintain certain financial ratios. As of March 31, 2026, the Company was not in compliance with certain financial covenants under its Amended and Restated Credit Agreement with M&T Bank, including the minimum fixed charge coverage ratio of 1.10:1.00 and the maximum total leverage ratio of 4.75:1.00.

On May 5, 2026, the Company made a $2.0 million payment on the line of credit, reducing the balance to $4.8 million.

On May 13, 2026, the Company made a payment of approximately $4.8 million on the line of credit, reducing the balance tozero.

On May 13, 2026, the Company received a waiver letter with M&T Bank related to the Company’s noncompliance with certain financial covenants under its Amended and Restated Credit Agreement as of March 31, 2026, including the minimum Fixed Charge Coverage Ratio and maximum Total Leverage Ratio, as well as certain mandatory prepayment provisions related to the Company’s April 2026 equity offering. In connection with the waiver, the Company paid down the outstanding balance on its line of credit to zero as of May 13, 2026 and paid a waiver fee of $50,000.

Pursuant to the waiver letter, the Company is required to maintain a minimum of $7.5 million of liquidity invested with M&T Bank. In addition, the previous minimum Fixed Charge Coverage Ratio and maximum Total Leverage Ratio financial covenants were removed from the Credit Agreement, and the maturity date of the Company’s $7.5 million revolving credit facility was extended to June 30, 2027.

Note 7 —Long-Term Debt

Long-term debt consists of the following at March 31, 2026 and December 31, 2025:

At March 31, 2026, the future debt maturities are as follows:

Note 8 —Retirement Plan

The Company maintains a 401(k) retirement plan covering eligible employees of the Company and its affiliates. Under the plan, participants may defer up to 6% of their annual compensation, with Syntec Optics matching 50% of employee contributions. Total contributions for the Company for the three months ended March 31, 2026 and 2025 amounted to $42,000 and $49,000, respectively.

Note 9 — Income Taxes

The income tax provision for interim periods is determined using an estimate of the annual effective tax rate, adjusted for discrete items, if any, that are taken into account in the relevant period. Each quarter, the estimate of the annual effective tax rate is updated, and if the estimated effective tax rate changes, a cumulative adjustment is made.

The effective income tax rate was(32.5%) and 20.3% for the three months ended March 31, 2026 and 2025, respectively.

Note 10 —Leases

During 2024, the Company entered into finance lease agreements for equipment utilized in its manufacturing facility.

The components of operating and finance lease costs are as follows for the three months ended March 31:

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, 2026, and December 31, 2025:

Future maturities of our lease liabilities are as follows as of March 31, 2026:

Note 11 —Warrants

The following tables presents a roll-forward of the Company’s warrants from December 31, 2025 to March 31, 2026:

Note 12 —(Loss) Income Per Share

The following table sets forth the information needed to compute basic and diluted (loss) income per share for the three months ended March 31, 2026 and 2025:

Note 13 —Significant Customers

For the three months ended March 31, 2026, the Company generated 53% of revenues from three customers. These three customers are in different end-markets utilizing diverse manufacturing capabilities from the Company. The outstanding accounts receivable due from these customers were approximately $2.5 million as of March 31, 2026.

For the three months ended March 31, 2025, the Company generated 46% of revenues from three customers. The outstanding accounts receivable due from these customers were approximately $3.3 million as of March 31, 2025.

Note 14—Segment reporting

The Company operates 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 15 —Subsequent Events

On April 30, 2026, the Company completed an underwritten public offering of 2,857,142 shares of its common stock at a public offering price of $7.00 per share. The gross proceeds from the offering were approximately $20.0 million, before deducting underwriting discounts, commissions and other offering expenses. Net proceeds to the Company were approximately $18.6 million.

The offering was conducted pursuant to the Company’s Registration Statement on Form S-1 (File No. 333-295335), which was declared effective by the Securities and Exchange Commission on April 28, 2026.

The Company granted the underwriter a 30-day option to purchase up to an additional 428,571 shares of common stock at the public offering price, less underwriting discounts and commissions.

On May 1, 2026, the underwriter in the aforementioned April 30 transaction chose to exercise its option to purchase an additional 428,571 shares of common stock. Net proceeds to the Company were approximately $2.8 million.

On May 5, 2026, the Company made a $2.0 million payment on the line of credit, reducing the balance to $4,763,863.

On May 13, 2026, the Company made a payment of approximately $4.8 million on the line of credit, reducing the balance tozero.

On May 13, 2026, the Company received a waiver letter with M&T Bank related to the Company’s noncompliance with certain financial covenants under its Amended and Restated Credit Agreement as of March 31, 2026, including the minimum Fixed Charge Coverage Ratio and maximum Total Leverage Ratio, as well as certain mandatory prepayment provisions related to the Company’s April 2026 equity offering.

In connection with the waiver letter, the Company repaid the outstanding balance on its revolving line of credit tozero as of May 13, 2026, paid a waiver fee of $50,000, and agreed to maintain minimum liquidity of $7.5 million invested with M&T Bank. The Company’s revolving credit facility availability of $7.5 million remains in place and the maturity date was extended to June 30, 2027.