What changed in this filing

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Item 1. Business

2025-12-17 compared with 2024-12-19 · 402 added, 375 removed, 432 unchanged (64% of the section changed)

Lines of Business

We manufacture optical sighting systems and assemblies for the U.S.

of Defense, foreign military applications, commercial markets, and consumer markets with the recent acquisition of the Speedtracker Mach

product line.

manufacture optical sighting systems and assemblies for the U.S.

Department of Defense (“DoD”), foreign military applications,

commercial markets, and consumer markets.

Our products are installed on a variety of U.S.

military land vehicles, such as the Abrams and Bradley fighting vehicles,

light armored and advanced security vehicles and the Stryker family of vehicles.

We also manufacture and deliver numerous periscope configurations,

rifle and surveillance sights and night vision optical assemblies.

Our products consist primarily of build-to-customer print products

that are delivered both directly to the armed services and to other defense prime contractors.

Less than 1% of our revenue is related

to the resale of products substantially manufactured by others.

In this case, the product would likely be a simple replacement part of

a larger system previously produced by us.

military land vehicles, such as the Abrams

and Bradley fighting vehicles, light armored and advanced security vehicles and the Stryker family of vehicles.

We also manufacture and

deliver numerous periscope configurations, rifle and surveillance sights and night vision optical assemblies.

Our products consist primarily

of build-to-customer print products that are delivered both directly to the armed services and to other defense prime contractors.

than 1% of our revenue is related to the resale of products substantially manufactured by others.

In this case, the product would likely

be a simple replacement part of a larger system previously produced by us.

continue to field new product opportunities from both domestic and international customers.

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multiple global “hot spots”, the need for precision optics continues to increase.

Most of these requirements are for observation and situational

awareness applications;

however, we continue to see requests for higher magnification and custom reticles in various product modifications.

The basic need to protect the soldier while providing information about the mission environment continues to be the primary driver for

these requirements.

2024 Asset Acquisition

January 18, 2024, we entered into an asset purchase agreement and a contract

manufacturing agreement with RUB Aluminium s.r.o.

Under the agreements, the Company acquired certain intellectual

property and technical and marketing information relating to the Speedtracker Mach product line, which is primarily used for firearm projectile

speed detection, measuring and tracking.

The Company acquired the assets using $1 million cash on hand, with potential additional future

cash payments based on successful completion of defined milestones.

After the acquisition, the Company determined it would be more economical

to move the manufacturing operations in house and is no longer ordering assembled units under the original contract manufacturing agreement.

RUB will continue to provide the Company with purchased kit parts for the manufacture of the Speedtracker Mach products.

acquisition included transaction costs of $30 thousand for legal fees and a contingent liability for payment against an earnout

based on meeting certain revenue milestones.

As of September 29, 2024, the fair value of the contingent liability was zero.

to the asset purchase agreement, the total earnout payment will be $238 thousand only if the earnout revenue milestone is achieved

during the earnout period, otherwise the earnout will be zero.

As of September 29, 2024, the Company determined the likelihood of

achieving the revenue milestone during the earnout period was highly unlikely.

The intangible asset will be amortized on a

straight-line basis over a seven-year period.

December 11, 2024, the Company announced it had been awarded a three-year, Indefinite Delivery Indefinite Quantity (IDIQ) contract

for Optically Improved Periscopes from DLA Land and Marine with a maximum potential value of $6.5 million and two additional option

Production will be completed at our Optex Division of Optex Systems, Inc.

in Richardson.

December 10, 2024, the Company announced it had been awarded a new contract for Laser Filter Units and Window Assemblies supporting

Night Vision devices utilized by the U.S.

Most of these requirements are for observation

and situational awareness applications;

however, we continue to see requests for higher magnification and custom reticles in various

product modifications.

The basic need to protect the soldier while providing information about the mission environment continues to be

the primary driver for these requirements.

of Chief Executive Officer

response to the notification by Danny Schoening that he intends to resign from the position of Chief Executive Officer of the Company,

effective as of December 20, 2025 (the “Effective Date”), on December 5, 2025, the Board of Directors of the Company (the

“Board”) appointed Chad George, the Company’s President, to assume the additional role of Chief Executive Officer to

fill the vacancy left by Mr.

Schoening, effective as of the Effective Date.

George, 48, has served as President of the Company since August 11, 2025.

Previously, he spent 20 years in senior operations and supply

chain roles in the defense sector.

Between January 2022 and August 2025, he served as Vice President of Operations and Supply Chain at

Leonardo DRS, where he played a key role in streamlining production processes and enhancing strategic sourcing capabilities.

worked as Factory Manager and Operations Leader at Raytheon from April 2009 through March 2021.

He holds a Bachelor’s Degree in

Industrial Engineering from Oklahoma State University and a Master of Business Administration from the University of Texas at Dallas.

connection with the appointment, the Company entered into a new employment agreement with Mr.

George as of the Effective Date (the “New

Employment Agreement”).

Pursuant to the agreement, Mr.

George will serve as the Company’s President and Chief Executive Officer

through December 31, 2028.

Thereafter, the term of the agreement will automatically extend for successive additional 12-month periods

George or the Company provides written notice of termination at least 90 days prior to the end of the term then in effect.

George’s initial annual base salary under the new agreement is $300,000, which may be increased by the Compensation Committee and/or

by the Board in their sole discretion but may not be decreased without Mr.

George’s consent.

George’s base salary will

increase at 3.5% annually in accordance with the then-current Company policy.

George will be eligible for a performance bonus based

upon a one-year operating plan adopted by the Company’s Board.

The bonus will be based on financial and/or operating metrics decided

annually by the Board or the Compensation Committee and tied to such one-year plan.

The target bonus will equate to 30% of Mr.

The Board will have discretion in good faith to alter the performance bonus upward or downward by 20%.

George is entitled

to 200 hours paid vacation and paid time off (PTO) each year and all other benefits accorded to our other senior executives.

employment agreement may be terminated by either party upon written notice.

Other events of termination consist of:

(i) death or permanent

disability of Mr.

(ii) termination by the Company for cause (including in connection with the conviction of a felony, commission

of fraudulent, illegal or dishonest acts, certain willful misconduct or gross negligence, continued failure to perform material duties

or cure material breach after written notice, violation of securities laws and material breach of the employment agreement), (iii) termination

by the Company without cause and (iv) termination by Mr.

George for good reason (including continued breach by the Company of its material

obligations under the agreement after written notice, the requirement for Mr.

George to move more than 100 miles away for his employment

without consent, and merger or consolidation that results in more than 66% of the combined voting power of the Company’s then outstanding

securities or those of its successor changing ownership or the sale of all or substantially all of its assets, without the surviving

entity assuming the obligations under the agreement).

For a termination by the Company for cause or upon death or permanent disability

George will be paid accrued and unpaid salary and any bonus earned through the date of termination.

For a termination

by the Company without cause or by Mr.

George with good reason, Mr.

George will also be paid six months’ base salary in effect.

in Board Size and Election of New Director

George’s appointment as Chief Executive Officer, the Board elected Mr.

George to serve as a director of the Board, effective

as of the Effective Date, until the Company’s 2026 annual meeting of shareholders and until his successor has been elected and

In connection with Mr.

George’s election as a director of the Board, the Board increased the total number of Board seats

from four to five.

New Employment Agreement requires Mr.

George to fulfill his duties as a director without additional compensation.

of Chief Executive Officer

December 4, 2025, Mr.

Schoening notified the Company that he intends to resign, effective as of the Effective Date, from the position

of Chief Executive Officer of the Company.

Schoening will remain on the Board, will continue to serve in the position of Chairman

of the Board, and will continue to serve as the Company’s Facilities Security Officer (“FSO”).

of New President

August 11, 2025, the Board appointed Mr.

George as the Company’s new President.

connection with Mr.

George’s appointment as President, the Board granted him 10,000 shares of restricted stock under an exemption

from registration effective August 11, 2025, which will vest on January 1, 2026.

August 10, 2025, the Board amended the Company’s Bylaws to, among other things, (i) create a new Chief Executive Officer position,

allowing for the offices of Chief Executive Officer and President to be held by different individuals, with the Chief Executive Officer

being the principal executive officer of the Company, (ii) add deadlines and procedural requirements for shareholders to follow in making

(A) proposals for consideration at an annual meeting, (B) nominations for directors to be elected at an annual meeting, and (C) nominations

for directors to be elected at a special meeting, (iii) add a new article to provide for indemnification of directors and officers to

the fullest extent permitted by Delaware law, and (iv) add a forum selection clause.

December 15, 2025, the Company announced it was awarded a new contract for optical sub-assemblies.

The order value is $2.3 million

with deliveries from April 2026 through December 2026.

The units will be manufactured at the Applied Optics Center segment

(“Applied Optics Center” or “AOC”) location in Dallas, Texas.

August 5, 2025, the Company announced it was awarded a firm fixed price purchase order from General Dynamics Land Systems - Canada.

This $1.6 million award for laser protected periscopes will be delivered in fiscal year 2026.

The periscopes will be manufactured

at the Optex Systems – Richardson segment (“Optex Richardson”) location in Richardson, Texas.

July 22, 2025 the Company announced it was awarded an up to $10.2 million, five-year requirement-type contract by the Army Contracting

Command - Detroit Arsenal for Abrams-based optical sighting systems.

The contract estimates the first-year order amount to exceed

$4.3 million with deliveries scheduled to begin in fiscal year 2026.

The units will be manufactured at the Optex Richardson location.

July 7, 2025 the Company announced it was awarded a $2.8 million purchase order from a major U.S.

prime contractor in support of

the XM30 Combat Vehicle.

This contract will provide 13 sighting systems in support of the next milestone with deliveries in fiscal

The units will be manufactured at the Optex Richardson location.

April 9, 2025 the Company announced it was awarded a new contract for laser filter units associated with the XM157 Next Generation

Fire Control Scope.

The order value is $5.7 million with deliveries between August 2025 through December 2026.

The units will be

manufactured at the Applied Optics Center location.

March 19, 2025 the Company announced it was awarded a $4.2 million firm fixed price purchase order from BAE Systems in support of

the Bradley A4 Follow-On Production award for laser protected periscopes and optical sighting systems.

This order will be manufactured

at the Optex Richardson location and delivered over 28 months.

December 11, 2024 the Company announced it was awarded a three-year, Indefinite Delivery Indefinite Quantity (IDIQ) contract for

Optically Improved Periscopes from DLA Land and Marine with a maximum value of $6.5 million and two additional option years.

units will be manufactured at the Optex Richardson location.

December 10, 2024 the Company announced it was awarded a new contract for Laser Filter Units and Window Assemblies supporting Night

Vision devices utilized by the U.S.

Armed Forces.

The order value is $2.0 million with deliveries covering March

2025 through February 2026.

Production will be completed at the Applied Optics Center Division of Optex Systems, Inc.

September 23, 2024, the Company announced it had been awarded contracts from two domestic customers for laser protected periscopes

in support of ongoing armored vehicle production.

The total value is $2.1 million with expected deliveries covering May 2025 through

Production will be completed at our Optex Division of Optex Systems, Inc.

in Richardson.

July 8, 2024, the Company announced an award for a new contract for laser filter units supporting the XM-157 NGWS Scope.

value is $2.5 million with deliveries covering August 2024 through July 2025.

The products for this contract will be manufactured

at the Applied Optics Center Division of Optex Systems, Inc.

May 6, 2024, the Company announced it had been awarded a new contract from a U.S.

government prime contractor, for laser protected

periscopes in support of the Armored Multi-Purpose Vehicle (AMPV).

The order value is $3.8 million with deliveries covering November 2024 through March 2026.

Production will be completed at our Optex Division of Optex Systems, Inc.

in Richardson.

May 1, 2024, the Company announced a new contract from a U.S.

government prime contractor, in support of a Night Vision Goggle

Binocular program.

The order value is $1.5 million with deliveries covering most of fiscal 2025.

The products for this contract will be

manufactured at the Applied Optics Center Division of Optex Systems, Inc.

April 16, 2024, the Company announced it had received an initial purchase order of $0.2 million for Laser Filter Assemblies

supporting the new U.S.

Military IVAS Program.

The products for this contract will be manufactured at the Applied Optics Center Division of Optex Systems, Inc.

with deliveries from April through October of 2024.

February 5, 2024, the Company announced a new five-year Indefinite Delivery Indefinite Quantity (IDIQ) contract from the United States

Defense Logistics Agency Land and Maritime for Sighting Systems for laser protected periscopes and vision blocks.

The maximum value

for the five-year IDIQ is estimated at $2.8 million.

The award includes three base year, and two option years and will be completed

at our Optex Division of Optex Systems, Inc.

in Richardson.

November 14, 2023, the Company announced the award of a new contract from a U.S.

Government Prime Contractor for Sighting Systems

for $2.9 million.

The Sighting Systems are critical in protecting armored vehicles fielded by the U.S.

These units will

be manufactured at our Optex Division of Optex Systems, Inc.

in Richardson.

November 13, 2023, the Company announced it was awarded a new laser filter unit contract from a U.S.

Government Prime Contractor,

in support of a visible sighting system.

The order value is $1.3 million and the products for this contract will be manufactured

at the Applied Optics Center Division of Optex Systems, Inc.

October 18, 2023, the Company announced it was awarded a new laser filter unit contract from

Government Prime Contractor, in support of a visible sighting system.

The order value

is $1.1 million and the products for this contract will be manufactured at the Applied Optics Center Division of Optex Systems, Inc.

The order value is $2.0 million with deliveries covering March 2025 through February

The units will be manufactured at the Applied Optics Center location.

products are installed on various types of U.S.

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applications in both the military and commercial markets.

These coatings are manufactured at the Applied Optics Center (“AOC”) Division

of the Company in Dallas, Texas.

These coatings are manufactured at the Applied Optics Center in Dallas, Texas.

deliver high volume products, under multi-year contracts, to large defense contractors and government customers.

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the past several years has been on new opportunities to promote and deliver our products in foreign military sales, where U.S.-manufactured

combat and wheeled vehicles are supplied (and upgraded) in cooperation with the U.S.

Department of Defense.

We have a reputation for

quality and credibility with our customers as a strategic supplier.

We also anticipate the opportunity to integrate some of our night

vision and optical sights products into commercial applications.

combat and wheeled vehicles are supplied (and upgraded) in cooperation with the DoD.

We have a reputation for quality and credibility

with our customers as a strategic supplier.

We also anticipate the opportunity to integrate some of our night vision and optical sights

products into commercial applications.

product categories by product line include:

& Non-Laser Protected Plastic & Glass Periscopes, Electronic M17 Day/Thermal Periscopes, Vision Blocks

Up Sights, Digital Day and Night Sighting Systems (“DDAN”), M36 Thermal Periscope, Unity Mirrors, Optical Weapon System Support and

Maintenance (“OWSS”), Commander Weapon Station Sight (“CWSS”), Sight Assembly Refurbishment (“GOI MOD/Aquila”)

& Non-Laser Protected Plastic & Glass Periscopes (“ICWS”), Electronic M17 Day/Thermal Periscopes, Digital Periscopes,

Vision Blocks

Up Sights, Digital Day and Night Sighting Systems (“DDAN”), M36 Thermal Periscope, Unity Mirrors, Optical Weapon System

Support and Maintenance (“OWSS”), Commander Weapon Station Sight (“CWSS”), Sight Assembly Refurbishment (“GOI

MOD/Aquila”), XM30 Driver Periscope Assembly

Telescope, M187 Mount, M119 Aiming Device, XM10 Aiming Circle

Reference Systems (“MRS”), Binoculars, Collimators, Speedtracker, Optical Lenses & Elements, Windows

Reference Systems (“MRS”), Binoculars, Collimators, Speedtracker, Optical Lenses & Elements, Windows and Optex Outdoors

Optics Center

Interference Filter (“LIF”), Optical Assemblies, Laser Filter Units (“LFU”), Reticles, Day Windows, Binoculars, Specialty Thin

Film Coatings.

of our contracts may allow for government contract financing in the form of contract progress payments pursuant to Federal

Acquisition Regulation (“FAR”) 52.232-16, “Progress Payments”.

Subject to certain limitations, this clause

provides for government payment of up to 90% of incurred program costs prior to product delivery for small businesses like us.

the extent any contracts allow for progress payments and the respective contracts would result in significant preproduction cash

requirements for design, process development, tooling, material or other resources which could exceed our current working capital or

line of credit availability, we intend to utilize this benefit to minimize any potential negative impact on working capital prior to

receipt of payment for the associated contract deliveries.

government contracts allow for FAR 52.243-1 which entitles the contractor to an “equitable adjustment”

for contract or statement of work changes affecting cost or time of performance.

In essence, an equitable price adjustment request is

a request for a contract price modification (generally an increase) that allows for the contractor to be “made whole” for

additional costs incurred which were necessitated by some modification of the contract effort.

This modification may come from an overt

change in U.S.

Government requirements or scope, or it may come from a change in the conditions surrounding the contract (e.g., differing

site conditions or late delivery of U.S.

Government-furnished property) which result in statement of work additions, deletions, part

substitutions, schedule or other changes to the contract which impact the contractor’s overall cost to complete.

Interference Filter (“LIF”), Optical Assemblies, Laser Filter Units (“LFU”), Reticles, Day Windows, Binoculars,

Specialty Thin Film Coatings.

government contracts allow for Federal Acquisition Regulation (“FAR”) 52.243-1 which entitles the contractor to an “equitable adjustment” for contract or statement

of work changes affecting cost or time of performance.

In essence, an equitable price adjustment request is a request for a contract

price modification (generally an increase) that allows for the contractor to be “made whole” for additional costs incurred

which were necessitated by some modification of the contract effort.

This modification may come from an overt change in U.S.

requirements or scope, or it may come from a change in the conditions surrounding the contract (e.g., differing site conditions or late

delivery of U.S.

government-furnished property) which result in statement of work additions, deletions, part substitutions, schedule

or other changes to the contract which impact the contractor’s overall cost to complete.

contract with our customers has specific quantities of material that need to be purchased, assembled, and then shipped.

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99% of our contracts contain termination clauses for convenience.

In the event these clauses should be invoked by our customer, future

revenues against these contracts could be affected.

However, these clauses allow for a full recovery of any incurred contract costs plus

a reasonable fee up through and as a result of the contract termination.

We are currently unaware of any pending terminations on our

existing contracts.

In the event these clauses should be invoked by our customer,

future revenues against these contracts could be affected.

However, these clauses allow for a full recovery of any incurred contract

costs plus a reasonable fee up through and as a result of the contract termination.

We currently have eight subcontract customer

awards, representing $1.1 million of our current backlog, which are associated with two government prime contracts pending

We are currently in negotiation with the customer regarding the final termination claim amount, but expect to recover

all of our incurred costs to date, plus a reasonable fee, against these contracts.

some cases, contract awards may be issued that are subject to renegotiation at a date (up to 180 days) subsequent to the initial award

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contracts which are below the threshold.

are responsible for full compliance with the Federal Acquisition Regulation (FAR).

are responsible for full compliance with the FAR.

Upon award, the contract may identify certain regulations

46 unchanged sentences

A summary of our active ITAR licenses is presented below

(updated as of November 15, 2024):

ITAR Licenses

(updated as of December 3, 2025):

Total Contract Value of

Active ITAR Licenses

of Expiration

Issued 2023 (none issued)

DSP-5 Licenses

Total DSP-5 Licenses

DSP-6 (no active licenses)

DSP-73 (no active licenses)

Issued 2020 (expires December 31, 2024)

BIS-711 Licenses

Total BIS-711 Licenses

Total All Licenses

licenses are subject to termination if a licensee is found to be in violation of the Arms Export Control Act or the ITAR requirements.

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Additionally, as

a result of this requirement, contract price negotiations may span from two to six months and can result in undefinitized or not to exceed

ceiling priced contracts subject to future downward negotiations and price adjustments.

Currently, we do not have any undefinitized contracts

subject to further price negotiation.

a result of this requirement, contract price negotiations may span from two to six months and can result in un-definitized or not to

exceed ceiling priced contracts subject to future downward negotiations and price adjustments.

Currently, we do not have any un-definitized

contracts subject to further price negotiation.

failure to comply with applicable regulations, rules and approvals or misconduct by any of our employees could result in the imposition

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terms of our significant contracts with a total award value of more than $1.0 million as of December 4, 2025, are as follows:

Prime Contractor (1)

Sighting Systems

Dec 2024 - Mar 2027

DLA Land and Maritime (2)

SPE7LX19D0089

Dec 2024 - Nov 2025

Prime Contractor (3)

XM10 Aiming Circles

Estimated 2026

Delivery Period

DLA Land and Maritime (1)

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Dec 2024 - Jun 2025

Government of Israel MOD (5)

Refurbish Night Vision Equipment

DLA Land and Maritime (6)

SPE7LX23D0092

Dec 2024 - Oct 2025

Prime Contractor (7)

Dec 2024 - Nov 2025

Prime Contractor (8)

Jul 2025 - Mar 2027

Prime Contractor (9)

Dec 2024 - Mar 2026

General Dynamics Land Systems - Canada (2)

Oct 2025 - Sept 2026

W912CH-25-D-0066

Jul 2025 - Jul 2030

Prime Contractor (4)

Jul 2025 - Apr 2026

Prime Contractor (5)

Dec 2024 - Nov 2025

DLA Land at Aberdeen (12)

SPRBL123D0001

Light Interference Filters

Laser Filter Units

Aug 2025 - Dec 2026

BAE Systems (6)

Periscopes & Optical Sighting Systems

Mar 2025 - Jul 2027

DLA Land and Maritime (7)

SPE7LX25D0023

Dec 2024 - Dec 2027

Prime Contractor (8)

PO 4500045346

Laser Filter Units

Dec 2024 - June 2025

Light Interference Filters

Mar 2025 - Feb 2026

DLA Land and Maritime (9)

SPE7LX24D0030

Jan 2024 - Jan 2029

Prime Contractor (10)

Light Interference Filters

Dec 2024 - Sept 2025

Jun 2025 - Apr 2026

Prime Contractor (11)

Laser Filter Units

Dec 2024 - Jul 2025

The original three-year

subcontract was awarded on September 11, 2017 to provide LAV 6.0 optimized weapon system support for Optex’s Commander Sighting

The contract includes option years to extend the period of performance through 2035 if awarded.

The current contract option

extends the in-service support through March 2027 for their existing fleet of Light Armored Vehicles.

Prime contract awarded

March 4, 2019.

This is a long-term, Indefinite Delivery Indefinite Quantity (IDIQ) Contract with firm fixed pricing for the duration

of a base period of three (3) years plus two (2) firm fixed priced option years for a potential total of (5) five years.

27, 2023, the customer exercised the second of two option years extending the ordering period of the contract through March 3, 2024.

Subcontract purchase order

prime contractor in support of government contract W15QKN-16-D-0055 for Aiming Circle optical subassemblies.

order was awarded on July 30, 2020 for $2 million and amended to $2.3 million on September 14, 2020 and includes non-recurring engineering,

first article testing and production deliveries.

Contract has been delayed pending receipt of customer furnished material and is pending

changes to the contract delivery schedule.

Prime contract awarded

on January 6, 2021.

This is a long-term, Indefinite Delivery Indefinite Quantity (IDIQ) Contract with firm fixed pricing for the duration

of a base period of three (3) years plus two (2) firm fixed priced option years for a potential total of (5) five years for periscopes

Jun 2026 - Oct 2026

Prime contract awarded on January 6, 2021.

This is a long-term, IDIQ contract with firm fixed pricing for the duration

of the contract with a base period of three years plus two firm fixed priced option years for a potential total of five years for periscopes

valued up to $14.4 million.

On October 7, 2024, option two was exercised by DLA, extending the ordering period from January 6,

2025 through January 5, 2026.

Foreign Military Sales

purchase orders awarded October 27, 2022 to repair and refurbish night vision equipment for the Government of Israel which includes

an option for an additional quantity up to 100%.

Deliveries began December 2023 and are expected to continue through 2026 pending receipt

of customer units for refurbishment.

Prime contract awarded

on June 27, 2023.

This is a long-term, Indefinite Delivery Indefinite Quantity (IDIQ) Contract with firm fixed pricing for the duration

of a base period of three (3) years plus two (2) firm fixed priced option years for a potential total of (5) five years for periscopes.

On October 7, 2024, second option was exercised by DLA Land and Maritime, extending the ordering period from

January 6, 2025 through January 5, 2026.

Subcontract awarded on August 5, 2025 for periscope assemblies with firm fixed pricing for the duration of the contract.

The award has a maximum order value of $1.7 million.

Subcontract purchase order

awarded on November 10, 2023 by a U.S.

prime contractor in support of U.S.

government contracts.

Subcontract purchase order

awarded on November 6, 2023 by a U.S.

prime contractor in support of U.S.

government contracts.

Subcontract purchase order

awarded on April 24, 2024 by a U.S.

prime contractor in support of U.S.

government contracts.

Subcontract purchase order

awarded on September 20, 2024 by a U.S.

Prime contract with direct solicitation for W56HZV-23-R-0159 for Collimators awarded on July 22, 2025.

long-term IDIQ contract with firm fixed pricing for the duration of the contract with potential revenue up to $10.2 million.

awarded on July 7, 2025 for periscope assemblies supporting XM30 Combat Vehicles with firm fixed pricing for the duration of the

The award has a maximum order value of $2.6 million.

purchase order awarded on April 9, 2025 by a U.S.

prime contractor in support of U.S.

government contracts.

Subcontract purchase order

originally awarded August 29, 2021 with multiple revisions and additions through November 15, 2024.

Prime contract awarded

on November 2, 2022 for spare Light Interference Filters associated with various Night Vision Goggle systems.

This is a five-year Indefinite

Delivery Indefinite Quantity (IDIQ) Contract with firm fixed pricing for the duration of the contract.

The award has a maximum order

value of $7.5 million.

Subcontract purchase order

awarded on October 16, 2023 by a U.S.

Subcontract with BAE Systems in support of government contract W56HZV-22-D-0083 & W912CH25F0096 for periscopes

& optical subassemblies.

The purchase order was awarded on March 19, 2025 for $4.3 million with final revision dated November 5, 2025.

Subcontract awarded on December 11, 2024.

This is a long-term IDIQ contract with firm fixed pricing for the duration

of the contract with a base period of three years plus two firm fixed priced option years for a potential total of five years for periscopes

valued up to $6.5 million.

purchase order awarded on December 10, 2024 by a U.S.

prime contractor in support of U.S.

government contracts.

Subcontract purchase order

awarded on April 30, 2024 by a U.S.

Subcontract awarded on January 31, 2024 for periscopes and direct vision blocks.

This is a three-year IDIQ contract

with two option years and firm fixed pricing for the duration of the contract.

The award has a maximum order value of $2.8 million.

purchase order awarded on February 14, 2025 by a U.S.

prime contractor in support of U.S.

government contracts.

Subcontract purchase order

awarded on July 8, 2024 by a U.S.

purchase order awarded on November 19, 2025 by a U.S.

prime contractor in support of U.S.

3 unchanged sentences

military products.

The chart below

was derived from public government spending sources and depicts total U.S.

military spending from 2020 through 2023 and estimated spending

through 2029.

The purpose of including this chart is to provide the reader with historical trend data and projected U.S.

military defense

and procurement spending over time.

However, the Company cannot provide any assurances that the historical trend data is predictive of

future spending.

fiscal year 2025, the Government Publishing Office (GPO) projects total military spending at $878.5 billion, an overall increase of 2.2%

over estimated 2024 spending.

The chart below also depicts the GPO’s projection of increased spending through 2029 of 6.4% from

the 2025 plan level, reflecting an average increase of 1.6% per year for years 2026 through 2029.

For military procurement spending,

a subset of total military spending, the GPO projects an overall increase of $18.6 billion, or 12.6%, in fiscal year 2025 as compared

to the estimated spending in fiscal year 2024.

National Defense Authorization Act (“NDAA”) for Fiscal Year 2025 current request of $895 billion has not yet been enacted by Congress

The 2025 fiscal year request represents an increase of $11.3 billion, or 1.3% over the prior year NDAA of $883.7 billion.

The chart below depicts the original estimated funding levels from the U.S.

Department of Defense based on the Fiscal Year 2025

budget request.

Government Publishing Office, U.S.

Budget Historical Tables, FY 2025, Table 3.2 Outlays by function and sub function, 1962-2029.

table below depicts the U.S.

Department of Defense (“DoD”) budget request for fiscal year 2025 for major ground system

The last five years have experienced a significant reduction in spending for U.S ground system military programs, and more

specifically on the Abrams Tank Modifications/Upgrades, which has a direct impact on the Optex Systems Richardson segment revenue.

The total fiscal year 2025 budget request for major ground system programs decreased by 4.7% from the fiscal year 2024 levels and by

27.2% from the fiscal year 2023 levels.

Although it is difficult to directly tie the budget request to specific components provided

by Optex Systems, we provide periscopes, collimator assemblies, vision blocks and laser interface filters to the U.S.

on almost all of the ground system platforms categorized below.

The purpose of including the chart below is to provide the reader with historical trend data and projected U.S.

defense and procurement spending over time.

However, the Company cannot provide any assurances that the historical trend data is predictive

of future spending.

the chart below, for fiscal year 2026, the Government Publishing Office (“GPO”) projects total DoD spending at $961.7

billion, an overall increase of 11.6% over estimated fiscal year 2025 spending.

For defense procurement spending, a subset of total

defense spending, the GPO projects an overall increase of $30.8 billion, or 17.7%, in fiscal year 2026 as compared to the estimated

spending in fiscal year 2025.

Office of the Under Secretary of Defense (Comptroller)/Chief Financial Officer, “Program Acquisition Cost by Weapon System, United

States Department of Defense, Fiscal Year 2026 Budget Request”, July 2025.

table below depicts the DoD budget request for fiscal year 2026 for major ground system programs.

The last two years have

experienced a significant reduction in spending for U.S.

ground system military programs.

The total fiscal year 2026 budget request

for major ground system programs decreased by 10.8% from the fiscal year 2025 levels and by 16.5% from the fiscal year 2024 levels.

Although it is difficult to directly tie the budget request to specific components provided by Optex Richardson, we provide

periscopes, collimator assemblies, vision blocks and laser interface filters to the U.S.

armed forces on almost all of the ground

system platforms categorized below and budget requests for at least two of the major platforms (AMPV and M1) are showing growth of

39.2% and 43.6% respectively in fiscal year 2026.

Office of the Under Secretary of Defense (Comptroller)/Chief Financial Officer, “Program Acquisition Cost by Weapon System, United

States Department of Defense, Fiscal Year 2026 Budget Request”, July 2025.

table below depicts the DoD budget request for fiscal year 2026 for major ground system programs.

The last three years have experienced

a significant reduction in spending for U.S.

ground system military programs.

The total fiscal year 2026 budget request for major ground

system programs decreased by 27% from the fiscal year 2025 levels and by 36% from the fiscal year 2024 levels.

Although it is difficult

to directly tie the budget request to specific components provided by Optex Richardson, we provide periscopes, collimator assemblies,

vision blocks and laser interface filters to the U.S.

armed forces on almost all of the ground system platforms categorized below.

($ in Millions)

Joint Light Tactical Vehicle

Abrams Tank Modification/Upgrade

Armored Multi-Purpose Vehicle

Paladin Integrated Management

Family of Medium Tactical Vehicles

Family Of Heavy Tactical Vehicles

Next Generation Squad Weapon

Abrams Tank Modification/Upgrade (M-1)

Armored Multi-Purpose Vehicle (AMPV)

Paladin Integrated Management (PIM)

Family of Medium Tactical Vehicles (PIM)

Family Of Heavy Tactical Vehicles (FHTV)

Next Generation Squad Weapon (NGSW)

XM30 Combat Vehicle

M10 Booker (Mobile Protected Firepower)

Amphibious Combat Vehicle

Ground Systems Vehicles (millions)

Amphibious Combat Vehicle (ACV)

Total Ground Systems Vehicles (millions)

Office of the Under Secretary of Defense (Comptroller)/Chief Financial Officer, “Program Acquisition Cost by Weapon System, United

States Department of Defense, Fiscal Year 2026 Budget Request”, July 2025, “Program Acquisition Cost by Weapon System, United

States Department of Defense, Fiscal Year 2025 Budget Request”, March 2024 and “Program Acquisition Cost by Weapon System,

United States Department of Defense, Fiscal Year 2024 Budget Request”, April 2023 and “Program Acquisition Cost by Weapon

System, United States Department of Defense, Fiscal Year 2023 Budget Request”, May 2022.

2025 Department of Defense Budget indicates an overall decrease in ground system vehicle program spending in the fiscal year 2024 and

2025 appropriation budget years from fiscal year 2023.

United States Department of Defense, Fiscal Year 2024 Budget Request”, April 2023.

The proposed 2026 Department of Defense Budget indicates an overall decrease in ground system vehicle program spending

(or requests therefor) since fiscal year 2023.

There is generally a six- to eighteen-month delay between U.S.

defense budget

requests and program delivery orders related to our products from government agencies and our prime defense customers.

In addition, DoD

budget requests are often changed throughout the congressional NDAA Budgeting and Budget appropriations process.

budget requests and program delivery orders related to our products from government agencies and our prime defense customers.

DoD budget requests are often changed throughout the congressional National Defense Authorization Act (“NDAA”) Budgeting and Budget appropriations process.

The DoD budget requests

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the global recession and changes in political climate to ascertain any potential impact to the Company’s future revenue.

substantial portion of our revenue is derived from U.S.

government contracts, which are subject to annual congressional

appropriations.

Failure to pass the annual appropriations by October 1, the start of the new fiscal year, often results in a

continuing resolution (“CR”) which can delay new contract awards, exercising of contract options, and starting of new

program initiatives, which could materially and adversely affect our future revenues.

From October 1, 2025 to November 12, 2025, the

federal government of the United States was in a shutdown as Congress failed to pass appropriations legislation for the 2026 fiscal

On November 10, 2025, Congress passed a CR, which funds the government at existing spending levels through January 30, 2026,

by which time the legislature must approve the annual appropriations bill or an additional CR to avoid another government shutdown.

As a result of the 2025 government shutdown and CR through January 2026, the Company has experienced a slow-down of contract awards.

While we are unable to predict the outcome past January 2026, we anticipate the funding delays may affect our revenue during the

second through fourth quarters of fiscal year 2026.

See “ Item 1.A.

Risk Factors – Risks Relating to Our Business

– A delay in the completion of the U.S.

government’s budget and appropriation process could delay procurement of our

products and services and have an adverse effect on our future revenues.”

Applied Optics Center supports numerous other military platforms outside of the ground system vehicles budget, such as infantry rifle

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to foreign military representatives and domestic defense contractors supporting the FMS initiatives.

were successful with the Israeli Ministry of Defense (“IMOD”) in refurbishing a small quantity of their Night Vision Rifle Scopes.

Given this success, in November 2022, the IMOD awarded us a $3.4 million follow on contract to continue this activity through 2026.

deliveries against the contract during the first quarter of fiscal year 2024.

If we successfully execute this contract, we would

expect another contract award of similar size and duration.

were successful with the Israeli Ministry of Defense (“IMOD”) in refurbishing a small quantity of their Night Vision

Rifle Scopes.

Given this success, in November 2022, the IMOD awarded us a $3.4 million follow on contract to continue this activity

through fiscal year 2026.

We began deliveries against the contract during the first quarter of fiscal year 2024.

If we successfully

execute this contract, we would expect another contract award of similar size and duration in fiscal year 2026 or 2027.

are also exploring possibilities to adapt some of our products for commercial use in those markets that demonstrate potential for solid

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and glass technology.

These large fixed mount binoculars could be sold to cruise ships, personal yachts and cities/municipalities.

The binoculars are also applicable to fixed, land-based outposts for private commercial security as well as border patrols and regional

law enforcement.

Film Coatings — The acquisition of the Applied Optics Center also creates a new

sector of opportunity for commercial products for us.

Globally, commercial optical products

use thin film coatings to create product differentiation.

These coatings can be used for

redirecting light (mirrors), blocking light (laser protection), absorbing select light (desired

wavelengths), and many other combinations.

They are used in telescopes, rifle scopes, binoculars,

microscopes, range finders, protective eyewear, photography, etc.

Given this broad potential,

the commercial applications are a key opportunity going forward.

Assemblies – Through the Applied Optics Center, we are utilizing our experience in

military sighting systems to pursue commercial opportunities associated with products that

incorporate multi-lens optical cell assemblies, bonded optical elements and mechanical assemblies.

There are a wide variety of products in the medical, machine vision, automotive and outdoor

recreation fields that can benefit from our capabilities.

Support to domestic customers for

these type products has driven significant increases in Applied Optics Segment sales during

the last five years.

Outdoors – This launch brings military-grade optical technology directly to civilian

marksmen and extreme long-range competitors, expanding Optex’s reach beyond its

traditional military market.

The big eye binocular technology is potentially applicable to other commercial

uses where high magnification and resolution is required.

Film Coatings — The acquisition of the Applied Optics Center also creates a new sector of opportunity for commercial products

Globally, commercial optical products use thin film coatings to create product differentiation.

These coatings can be used

for redirecting light (mirrors), blocking light (laser protection), absorbing select light (desired wavelengths), and many other

combinations.

They are used in telescopes, rifle scopes, binoculars, microscopes, range finders, protective eyewear, photography,

Given this broad potential, the commercial applications are a key opportunity going forward.

Assemblies – Through the Applied Optics Center, we are utilizing our experience in military sighting systems to pursue commercial

opportunities associated with products that incorporate multi-lens optical cell assemblies, bonded optical elements and mechanical

There are a wide variety of products in the medical, machine vision, automotive and outdoor recreation fields that can

benefit from our capabilities.

Support to domestic customers for these type products has driven significant increases in Applied

Optics Segment sales during the last five years.

Outdoors – This launch brings military-grade optical technology directly to civilian marksmen and extreme long-range competitors,

expanding Optex’s reach beyond its traditional military market.

The Optex Outdoors webstore offers a curated selection of advanced

optical products, including riflescope prisms, chronographs, and stabilized viewing products—designed

specifically for the needs of elite shooters and outdoor enthusiasts.

Each product is engineered

and built in Richardson, Texas.

optical products, including riflescope prisms, chronographs, and stabilized viewing products—designed specifically for the

needs of elite shooters and outdoor enthusiasts.

Each product is engineered and built in Richardson, Texas.

serve customers in four primary categories:

as prime defense contractor (Defense Logistics Agency (“DLA”) Land and Maritime, DLA Warren,

DLA Aviation, U.S.

Army, Navy and Marine Corps), as defense subcontractor (General Dynamics, L-3 Communications, Elbit Systems, BAE,

Sig Sauer, Enterprise Cabling and Vortex Optics), as a military supplier to foreign governments (Israel, Australia, South America and

Canada) and as a commercial optical assembly supplier (Nightforce Optics, Gables Engineering).

During the twelve months ended

September 29, 2024, we derived approximately 77% of our gross business revenue from six major customers:

government agencies (20%),

defense contractors (25%, 7%, 6% and 6%) and one major commercial customer (13%).

We have approximately 150 discrete contracts

for items that are utilized in vehicles, optical product lines and as spare parts.

Due to the high percentage of prime and subcontracted

defense revenues, large customer size and the fact that there are multiple contracts with each entity, which are not interdependent,

we are of the opinion that this provides us with a fairly well diversified revenue pool.

as prime defense contractor (Defense Logistics Agency (“DLA”) Land and Maritime,

DLA Land at Aberdeen, DLA Aviation, U.S.

Army, Navy and Marine Corps), as defense subcontractor (General Dynamics, L-3 Communications,

Elbit Systems, BAE, Sig Sauer, Vortex Optics, Trijicon Inc.

and Ducommun Aerostructures), as a military supplier to foreign governments

(Israel, Australia, South America and Canada) and as a commercial optical assembly supplier (Nightforce Optics, Lightforce USA, Inc.

and Gables Engineering).

During the twelve months ended September 28, 2025, we derived approximately 70% of our gross business revenue

from five major customers:

government agencies (29%) and four U.S.

defense contractors (19%, 10%, 6% and 6%).

We have approximately

120 discrete contracts for items that are utilized in vehicles, optical product lines and as spare parts.

Due to the high percentage

of prime and subcontracted U.S.

defense revenues, large customer size and the fact that there are multiple contracts with each entity,

which are not interdependent, we are of the opinion that this provides us with a fairly well diversified revenue pool.

believe we are well positioned to service both U.S.

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Combat Vehicle, formerly known as the Optionally Manned Combat Vehicle, is the U.S.

Army’s sixth attempt to replace

the Bradley fighting vehicle.

The latest Army “light tank” is the M10 Booker Combat Vehicle, formerly known as the Mobile

Protected Firepower System, and is much smaller than the Abrams main battle tank.

The Abrams, XM30, M10 Booker and Stryker vehicles are

the only tanks currently in production by the government.

Optex Systems provides periscopes and optical sighting systems in support of

all four vehicle platforms.

We expect that these tanks will

continue to be used through approximately 2040.

— Low to Medium Risk to Optex Systems Holdings.

The suppliers of standard processes (e.g., casting, machining and plating) need

to be very competitive to gain and/or maintain contracts.

Those suppliers of products that use top secret clearance processes have a

slight advantage;

however, there continues to be multiple avenues of supply and therefore only moderate power.

Army’s sixth attempt to replace the Bradley

fighting vehicle.

The latest Army “light tank” is the M10 Booker Combat Vehicle, formerly known as the Mobile Protected Firepower

System, and is much smaller than the Abrams main battle tank.

The Abrams, XM30, M10 Booker and Stryker vehicles are the only tanks currently

in production by the government.

Optex Richardson provides periscopes and optical sighting systems in support of all four vehicle platforms.

We expect that these tanks will continue to be used through approximately 2040.

— Low to Medium Risk to us.

The suppliers of standard processes (e.g., casting, machining and plating) need to be very competitive

to gain and/or maintain contracts.

Those suppliers of products that use top secret clearance processes have a slight advantage;

there continues to be multiple avenues of supply and therefore only moderate power.

with our marketing plan and business model, the AOC acquisition strengthened our overall position by decreasing the bargaining power

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following matrix reflects the current focus of our four basic approaches for sales and development:

Sell existing products to

existing customers.

Sell existing products to

new customers.

Develop new products to meet

the needs of our existing customers.

Develop new products to meet

the needs of new customers.

existing products to existing customers.

existing products to new customers.

new products to meet the needs of our existing customers.

new products to meet the needs of new customers.

Army Central Command - Binoculars

- DDAN, OWSS, XM30

- GOI MOD/Aquila

Prime Contractor - XM10 Aiming Circle

- Optical Lens

- Optical Lens, Reticles,

coatings, IR Opto-Mechanical Assembly, Micro Optical Systems

- Optical Lens, Spotting Scopes, Monocular Lens, Chronographs, Optical Wedges

Prime Contractor – Aerospace and Space

Prime Contractor – Drone Technology

Army Central Command - Periscopes, Back Up Sights,

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production volumes change, as the associated workforce is generally less specialized and can be ramped quickly as headcounts shift.

complex thin laser filter coatings, Howitzer and thermal day/night programs are more significantly impacted by volume changes as they

require a highly specialized workforce and ramp time is longer as the training is more complex.

We continually monitor customer demand

over a rolling twelve-month window and in order to anticipate any changes in necessary manpower and material which allows us to capitalize

on any benefits associated with increased volume and minimize any negative impact associated with potential declines in product quantities.

more complex thin laser filter coatings, Howitzer and thermal day/night programs are more significantly impacted by volume changes as

they require a highly specialized workforce and ramp time is longer as the training is more complex.

We continually monitor customer

demand over a rolling twelve-month window and in order to anticipate any changes in necessary manpower and material which allows us to

capitalize on any benefits associated with increased volume and minimize any negative impact associated with potential declines in product

and Availability of Raw Materials

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might otherwise become known or be independently discovered by others.

possess three utility patents and three design patents.

We have filed two new patent applications which are currently under review at

Patent and Trademark Office.

These are for an Improved Next Shot Compensation System for Weapons (patent application number

18651580) and a Laser Filter Antenna (patent application number 18809740).

possess five utility patents and three design patents.

Two new patents have been reviewed by the U.S.

Patent and Trademark Office and approved in fiscal year 2025.

These are for U.S.

12,352,533 titled “Improved Next Shot Compensation System for Weapons”

and for our Laser Filter Antenna, which is awaiting a U.S.

Patent number.

following patents generally expire 20 years after issuance.

November 6, 2025, we received a notice of allowance for our U.S.

Patent Application No.

18/809,740 filed on August 20, 2024 on the Laser

Filter Antenna.

Patent number is pending receipt of our payment of the Issue Fee which is due by January 9, 2026.

July 8, 2025, we were issued U.S.

12,352,533 titled “Next Shot Compensation System for Weapons” which is a filtered

unit to prevent light having a threshold wavelength from passing through the filter unit;

and one or more radar antennae deposited on

a surface of the filter unit, wherein the one or more radar antennae are configured to capture a velocity of a projectile fired from

April 4, 2023, we were issued U.S.

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D791,852 S, for our Red Tail Digital Spotting Scope.

We have a retail sales relationship

with Cabela’s Inc.

We have a retail sales

relationship with Cabela’s Inc.

and Amazon, to distribute these scopes.

They are currently the only digital spotting scope offered by Cabela’s.

They are currently the only digital spotting scope

offered by Cabela’s Inc.

Our Red Tail Digital Spotting Scopes also received a favorable review from Trigger Magazine in

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This invention improves

previously accepted levels of periscope performance that, in turn, improve soldier’s safety.

previously accepted levels of periscope performance that, in turn, improves soldier’s safety.

December 2013, Optex Systems, Inc.

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Light Armored Vehicles, the Armored Security Vehicle, the Amphibious Assault Vehicle, and the M60 Main Battle Tank.

technology has advanced the capabilities of these installed weapon systems and is the first in a series of patents we have applied for

to protect our Intellectual Property portfolio in support of the warfighters who use these systems.

DDAN technology has

advanced the capabilities of these installed weapon systems and is the first in a series of patents we have applied for to protect our

Intellectual Property portfolio in support of the warfighters who use these systems.

May 2012, we purchased a perpetual, non-exclusive license, with a single up-front license fee of $200,000 to use Patent 7,880,792 “Optical

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We continue to prototype these products and demonstrate them to potential customers.

June 29, 2023, the “Effective Date”, we executed a License agreement LA12342 with Pratt & Whitney Division (“P&W”)

of Raytheon Technologies Corporation for a six-year term from the Effective date.

The agreement allows the Company the use of P&W’s

proprietary technology to perform the application and inspection of proprietary coatings on a selection of vane part numbers for the

upturned exhaust system (UESII) utilized on Sikorsky’s Blackhawk aircraft variants.

The license grant is exclusive to the Applied

Optics Center for the application and inspection of coatings for the end customer, provided that AOC is able to sufficiently meet the

end customer volume demand for the licensed items during the term.

In consideration of the license rights, AOC agrees to pay P&W

a royalty of $200 per vain, or $2000 per shipset of 10 vanes to which the coating is applied.

On the 2 nd anniversary of the

Effective date, and every two years thereafter during the term of the agreement, the royalty rate shall be increased by 3%.

payments are to be paid within 15 days of June 30 th and December 31 st throughout the duration of the agreement.

competitors, many of which have substantially greater resources, may have applied for or obtained, or may in the future apply for and

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are a limited number of competitors in each of the markets for the various types of products that we design, manufacture and sell.

this time, we consider our primary competitors for the Optex Systems Richardson site to be Gus Periscopes.

The Applied Optics Center

thin film and laser coatings products compete primarily with Materion-Barr, Artemis and Alluxa.

this time, we consider our primary competitor for the Optex Richardson site to be Gus Periscopes.

The Applied Optics Center thin film

and laser coatings products compete primarily with Materion-Barr, G&H Artemis and Alluxa.

competitors are often well entrenched, particularly in the defense markets.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business