What changed in this filing

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Item 1A. Risk Factors

2025-12-17 compared with 2024-12-19 · 113 added, 73 removed, 403 unchanged (32% of the section changed)

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Related to our Business

results of operations could be adversely affected by economic and political conditions globally and the effects of these conditions on

our customers’ businesses and levels of business activity.

and political events in the past few years have altered the landscape in which we and other U.S.

companies operate in a variety of ways.

In response to inflationary pressures, between January 2022 and July 2023, the U.S.

Federal Reserve incrementally raised interest rates,

resulting in an increase in the cost of borrowing for us, our customers, our suppliers, and other companies relying on debt financing.

World events, such as the Russian invasion of Ukraine and the resulting economic sanctions, have impacted the global economy, including

by exacerbating inflationary and other pressures linked to COVID-related supply chain disruptions.

In addition, the threat of a larger

war in the Middle East after the Hamas terrorist attacks on Israel could affect oil prices and have other, potentially recessionary,

effects on the global economy.

Prolonged inflationary conditions and prolonged periods of high interest rates could further negatively

and international commerce and exacerbate or prolong the period of high energy prices and supply chain constraints.

time, the extent and duration of these economic and political events and their effects on the economy and the Company are impossible

historical operations depend on government contracts and subcontracts.

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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.

We currently have eight customer awards, representing $1.1 million

of our current backlog, which are associated with two government prime contracts pending termination.

We are currently in negotiation

with the customer regarding the final termination claim amount, but expect to recover all of our incurred cost 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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defense spending.

we fail to scale our operations appropriately in response to changes in demand, we may be unable to meet competitive challenges or

exploit potential market opportunities, and our business could be materially and adversely affected.

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.

funding of U.S.

government programs is subject to an annual congressional budget authorization and appropriations process.

In years when

government does not complete its appropriations before the beginning of the new fiscal year on October 1, government operations

are typically funded pursuant to a CR, which allows federal government agencies to operate at spending levels approved in the previous

appropriations cycle, but does not authorize new spending initiatives.

When the U.S.

government operates under a CR, delays can occur

in the procurement of the products, services and solutions that we provide and may result in new initiatives being canceled.

on occasion experienced delays in contract awards which affect our future revenues as a result of this annual appropriations cycle, and

we could experience similar declines in revenues from future delays in the appropriations process.

When the U.S.

government fails to

complete its appropriations process or to provide for a CR, a full or partial federal government shutdown may result.

A federal government

shutdown could result in delays or cancellations of key programs and during extended government shutdown periods, the delay of contract

payments, which could have a negative effect on our cash flows and adversely affect our future results.

We refer also to “Item

Business – Market Opportunity:

Military” of this Annual Report on Form 10-K for a description of current trends in

government military spending and its potential impact on the Company.

results of operations could be adversely affected by economic and political conditions globally and the effects of these conditions on

our customers’ businesses and levels of business activity.

volatile global economic and political environment has created market uncertainty.

A slowdown in the financial markets or other economic

conditions, including but not limited to global supply chain issues, inflation, fuel and energy costs, freight costs, lack of available

credit, sovereign debt crises, interest rates, and tax rates, may adversely affect the Company’s growth and profitability.

to inflationary pressures, between January 2022 and July 2023, the U.S.

Federal Reserve incrementally raised interest rates, resulting

in an increase in the cost of borrowing for us, our customers, our suppliers, and other companies relying on debt financing.

Federal Reserve lowered interest rates slightly during 2025, future increases in interest rates may again result in an increase

in the cost of borrowing for us, our customers, our suppliers and other companies relying on debt finance.

Prolonged inflationary conditions

and prolonged periods of high interest rates could further negatively affect U.S.

and international commerce and exacerbate or prolong

the period of high energy prices and supply chain constraints.

In addition, the continuing conflict in the Middle East could affect oil

prices and have other, potentially recessionary, effects on the global economy.

At this time, the extent and duration of global economic

and political events and their effects on the economy and the Company are impossible to predict.

we fail to scale our operations appropriately in response to changes in demand, we may be unable to meet competitive challenges or exploit

potential market opportunities, and our business could be materially and adversely affected.

fluctuations in customer demand place a significant strain on our management personnel, infrastructure and resources.

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that we can effectively manage our backlog.

do not have employment agreements with our key personnel, other than our Chief Executive Officer and Chief Financial Officer, and our

management has minimal unencumbered equity ownership in us.

If we are not able to retain our key personnel or attract additional key

personnel as required, we may not be able to implement our business plan and our results of operations could be materially and adversely

do not have employment agreements with our key personnel, other than our Chief Executive Officer, Chief Financial Officer, and President

and our management has minimal unencumbered equity ownership in us.

If we are not able to retain our key personnel or attract additional

key personnel as required, we may not be able to implement our business plan and our results of operations could be materially and adversely

depend to a large extent on the abilities and continued participation of our executive officers and other key employees.

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and extended supplier delivery lead times, affecting their ability to sustain operations.

Further, a dockworker strike on the east coast

which has been suspended until January 15, 2025, pending negotiations, could have a negative impact on our ability to obtain key manufacturing

materials such as adhesives and epoxies should the strike ensue and continue for a sustained period of time beyond our safety stock levels.

We have experienced market wide material shortages for paint and resin products as well as critical epoxies and chemicals used in our

manufacturing process.

In addition, we have seen substantial increases in the costs of aluminum, steel and acrylic commodities and experienced

supplier schedule delays for other key components which were driven by supplier labor and material shortages.

In several cases, spotty

supply and material shortages have resulted in stocking higher inventory “safety stock” levels to ensure adequate lead time

to replenish critical supplies.

We have experienced market wide material shortages

for paint and resin products as well as critical epoxies and chemicals used in our manufacturing process.

In addition, we have seen substantial

increases in the costs of aluminum, steel and acrylic commodities and experienced supplier schedule delays for other key components which

were driven by supplier labor and material shortages.

In several cases, spotty supply and material shortages have resulted in stocking

higher inventory “safety stock” levels to ensure adequate lead time to replenish critical supplies.

have selectively single-sourced some of our material components in order to mitigate excess procurement costs associated with significant

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a single supplier and in other cases, the volume might be split between several suppliers.

If a contract has a single source supplier

and that supplier fails to meet their obligations (e.g., quality, delivery), then we would seek to find an alternate supplier and bring

this information back to the final customer.

Contractual deliverables would then generally be re-negotiated (e.g., specifications, delivery,

As of September 29, 2024, approximately 7% of our material requirements were single-sourced across 10 suppliers representing

approximately 15% of our active supplier order value.

Single-sourced component requirements span across all of our major product lines.

a contract has a single source supplier and that supplier fails to meet their obligations (e.g., quality, delivery), then we would seek

to find an alternate supplier and bring this information back to the final customer.

Contractual deliverables would then generally be

re-negotiated (e.g., specifications, delivery, price).

As of September 28, 2025, approximately 83% of our material requirements were single-sourced

across 104 suppliers representing approximately 96% of our active supplier order values.

Single-sourced component requirements span across

all of our major product lines.

consider it a material financial or schedule risk if we believe it will take us at least three months to identify and qualify a suitable

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firm fixed price & quantity purchase orders are in place with the supplier to meet all contractual requirements.

die cast tooling is consolidated at this supplier.

It would take approximately six months to move tooling and re-qualify a new supplier.

firm fixed price & quantity purchase orders are in place with the supplier to meet all contractual requirements.

supplier source would take six months to qualify.

Several suppliers qualified and vetted.

Risk is overloading current supplier capacity.

firm fixed price & quantity purchase orders are in place with the supplier to meet all contractual requirements.

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take approximately 8-10 months to re-qualify a new supplier source.

working with current vendor to keep supply of these parts

working with single source for purchasing material on a forecast projection basis.

Large/Small/Customs

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Castings for Housing

take approximately 8-12 months to re-qualify a new supplier source.

Would take approximately six months to re-qualify a new supplier source and cost/time for new tooling.

Looking at investment

castings (3D printing) as mitigation.

ordering for a single source, new casting tool and FAT will be required to qualify a new source.

castings for big eye binocular parts

take approximately 4-6 months to re-qualify a new supplier source

Would take approximately six months to re-qualify a new supplier source and cost/time for new tooling.

Looking at investment

castings (3D printing) as mitigation.

firm fixed price & quantity purchase orders are in place with the supplier to meet all contractual requirements.

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Optics Center

approved source due to proprietary rights.

source provider.

Only approved source due to proprietary rights.

Alternate source cannot be developed.

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LFU Assemblies

Anti-Reflective Device

one approved government source of supply at this time

Anti-Reflective

source provider.

Only one approved government source of supply at this time

firm fixed price and quantity purchase orders are in place with the supplier to meet all contractual requirements.

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rely on information technology systems to process, transmit, and store electronic information in our day-to-day operations.

other companies, the size and complexity of our information technology systems makes them vulnerable to a cyber-attack, malicious intrusion,

other companies, the size and complexity of our information technology systems make them vulnerable to a cyber-attack, malicious intrusion,

breakdown, destruction, loss of data privacy, or other significant disruption.

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July 13, 2021, we experienced a ransomware attack.

While that attack did not have material adverse consequences, similar

attacks, if not caught and effectively addressed in a timely manner, could have a material adverse effect on our business, financial

condition and results of operations.

While that attack did not have material adverse consequences, similar attacks, if

not caught and effectively addressed in a timely manner, could have a material adverse effect on our business, financial condition and

results of operations.

failure by us to maintain or protect our information technology systems and data integrity, including from cyber-attacks, intrusions

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government agencies (29%), four major

defense contractors (25%, 7%, 6% and 6%), one major commercial customer (13%) and all other customers (23%).

Approximately 94% of

total Company revenue is generated from domestic customers and 6% is derived from foreign customers.

In particular, a decision by one

of our major defense contract customers, U.S.

government agencies or other major customers to cease issuing contracts to us could have

a significant material impact on our business and results of operations given that they represent over 77% of our gross business revenue.

There can be no assurance that we could replace these customers on a timely basis or at all.

defense contractors (19%, 10%, 6% and 6%) and all other customers (30%).

Approximately 95% of total Company revenue is generated

from domestic customers and 5% is derived from foreign customers.

In particular, a decision by one of our major defense contract customers,

government agencies or other major customers to cease issuing contracts to us could have a significant material impact on our business

and results of operations given that they represent over 70% of our gross business revenue.

There can be no assurance that we could replace

these customers on a timely basis or at all.

have approximately 120 discrete contracts with major defense contractors, the U.S.

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costs and reasonable profits incurred up to or as a result of the terminated contract.

possess only six patents and rely primarily on trade secrets to protect our intellectual property.

possess only eight patents and rely primarily on trade secrets to protect our intellectual property.

utilize several highly specialized and unique processes in the manufacture of our products, for which we rely solely on trade secrets

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attention and resources from our business and adversely affect our business.

are a “ smaller reporting company ” as defined in SEC regulations, and the reduced disclosure requirements

applicable to smaller reporting companies may make our common stock less attractive to investors.

are a “ smaller reporting company ” as defined in SEC regulations, and a “baby shelf” issuer based on our public float, which may make our common stock less attractive to investors

due to the reduced disclosure requirements of smaller reporting companies and certain limitations on our ability to raise capital as a

“baby shelf” issuer.

are a “smaller reporting company” as defined under SEC regulations and we may, and do, take advantage of certain exemptions

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deem our stock less attractive and, as a result, there may be less active trading of our common stock, and our stock price may be more

We have a public float of less than $75 million, which

classifies us a “baby shelf” issuer.

Our status as a “baby shelf” issuer limits our ability to raise significant

equity capital under a shelf registration statement in a public offering and may restrict our financing options and flexibility.

constraints could lead to higher costs and potential delays in accessing additional capital.

in current economic conditions may adversely affect our ability to continue operations.

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Cybersecurity

is an important part of our risk management processes and an area of focus for our Board and management.

Our Board is responsible for

oversight of our cybersecurity risk, including the effectiveness of cybersecurity risk management policies and protocols, while our Facilities

Security Officer (“FSO”), and IT Manager are responsible for assessing and managing cybersecurity risk.

is an important part of our risk management processes and an area of focus for our Board

and management .

Our Board is responsible for oversight of our cybersecurity risk, including the effectiveness of cybersecurity risk management

policies and protocols, while our FSO and IT Manager are responsible for assessing and managing cybersecurity risk.

We use a third-party

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in a timely manner.

IT Manager provides timely reports on cyber security incidents to the FSO, Danny Schoening, who also serves as the CEO and as Chairman

of the board of directors.

These reports may in turn be presented to the full board depending on the severity of the incident.

event of a major incident, the Company’s Incident Response policy will be executed and the appropriate parties notified.

Our IT Manager has over 30 years of IT and cybersecurity experience.

IT Manager provides timely reports on cyber security incidents to the FSO, Danny Schoening, who also serves as the Chief Executive Officer

and as Chairman of the board of directors.

These reports may in turn be presented to the full board depending on the severity of the

In the event of a major incident, the Company’s Incident Response policy will be executed and the appropriate parties

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 1A. Risk Factors