Optex Systems Holdings, Inc

Optex Systems Holdings, Inc., (OTCBB:OPXS) through its wholly-owned subsidiary, Optex Systems, Inc. manufactures optical sighting systems and assemblies primarily for Department of Defense (DOD) applications. Its products are installed on a majority of types of U.S. military land vehicles, such as the Abrams and Bradley fighting vehicles, Light Armored and Armored Security Vehicles and have been selected for installation on the Future Combat Systems(FCS) Stryker vehicle. Optex also manufactures and delivers numerous periscope configurations, rifle and surveillance sights and night vision optical assemblies. Optex delivers its products both directly to the military services and to prime contractors.

Current customers include General Dynamics (NYSE: GD), Northrop Grumman Corporation (NYSE:NOC) and Raytheon Company (NYSE: RTN)

Symbol: OPXS

Exchange: OTCBB

Sector: Defense

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Website: www.optexsys.com

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The Opportunity

Optex Systems Holdings, Inc., (OTCBB:OPXS) through its wholly-owned subsidiary, Optex Systems, Inc is a well positioned defense company with an established history in the industry, a strong customer base and a backlog of contracts moving forward.

Optex Systems, Inc. was founded in 1987, as an ISO 9001:2000 certified concern that manufactures optical sighting systems and assemblies primarily for Department of Defense (DOD) applications.

The Company's marketing strategy moving forward is based on three areas of focus:

Take Existing Products into the applications of New Customers.
Take New Products into our Existing Customers.
Expand the Portfolio by developing New Products for New Customers.

Market Opportunity – U.S. Military

Optex products are currently marketed in the military and related government markets. Since 1998, American military spending has increased over 225% on an annual basis to over $600 billion per year. As the American presence overseas continues, this level of spending should continue to exist. Also, the market for replacement parts for existing military equipment is significant.

Optex meets the U.S. military requirements in its product lines:

Reliability – failure can cost lives
Cost effectiveness
Ability to deliver on schedule
Armed forces need to be able to see to perform
Mission critical products.

Market Opportunity – Commercial/Retail

Optex products are currently sold exclusively to military and related government markets. We believe we have significant potential retail opportunities to commercialize various products we presently manufacture. Our initial focus will be directed in three product areas.

Big Eye Binoculars – While the military application we produce is based on mature military designs, Optex owns all castings, tooling and glass technology. These large fixed mount binoculars could be sold to Cruise Ships, Personal Yachts and Cities/Municipalities.

Night Vision Goggles – Optex presently manufactures the Optical System for the NL-61 Night Vision Goggles for the Ministry of Defense of Israel. This technology is based on the IR Squared design and could be implemented for retail commercial applications.

Infrared Imaging Equipment – Optex manufactures and assembles Infrared Imaging Equipment for Textron and components for Raytheon’s Thermal Imaging M36 Mount product. This equipment and technology has potential to be assembled for border patrol, police and security agencies.

Products

Optex products are installed on a majority of types of U.S. military land vehicles, such as the Abrams and Bradley fighting vehicles, Light Armored and Advanced Security Vehicles and have been selected for installation on the Stryker family of 10 vehicles. Optex also manufactures and delivers numerous periscope configurations, rifle and surveillance sights and night vision optical assemblies. Optex delivers its products both directly to the military services and to prime contractors.

Specific product lines include:

Electronic sighting systems
Mechanical sighting systems
Laser protected glass periscopes
Laser protected plastic periscopes
Non-laser protected plastic periscopes
Howitzer sighting systems
Ship binoculars
Replacement optics (e.g. filters, mirrors)

Customer Base

Optex serves customers in three primary categories: as prime contractor (TACOM, U.S. Army, Navy and Marine Corps), as subcontractor (BAE (LSE: BA.L), General Dynamics (NYSE: GD), Northrop Grumman Corporation (NYSE:NOC) and Raytheon Company (NYSE: RTN) and also as a supplier to foreign governments (Israel, Australia and NAMSA).

Although Optex serves all three of these categories, at present, approximately 90% of the gross revenue from the business is derived from two customers, General Dynamics Land Systems (R20;GDLSR21;) and U.S. Army TACOM, with which Optex has approximately 50 discrete contracts which cover supply of all of vehicles, product lines and spare parts. Given the size of GDLS and TACOM as well as the fact that the contracts are not interdependent, we are of the opinion that this provides us with a well diversified customer pool.

This broad base enables Optex to mitigate its risk in this economic environment by not relying on a sole or few sources of revenue as well as providing a broad base from which to build its future business.

Executive Mangement Team

Danny Schoening.	Mr. Schoening serves the Company as its Chief Operating Officer. He has been instrumental in establishing the systems and infrastructure required to continue Optex System’s rapid growth. This activity was rewarded with Optex System’s recent ISO9001:2000 Certification. Prior to joining Optex Systems, Danny was the Vice President of Operations for The Finisar Corporation AOC Division. Prior to Finisar, Danny was the Director of Operations for multiple divisions of Honeywell International. Serving the Automotive, Medical, Aerospace, and Consumer Commercial Markets. During this 17 year period, Danny was recognized with Honeywell’s Lund Award, their highest award for developing employee resources. Danny received a Bachelors of Science in Manufacturing Engineering Technology from the University of Nebraska, an MBA from Southern Methodist University, and holds three United States Patents.

Stanley A. Hirschman.	Stan Hirschman serves the Company as its President, Secretary, Treasurer, and a Director. Mr. Hirschman is the President of CPointe Associates, Inc., a Plano, Texas executive management and retail operations consulting firm. He is an investment due diligence specialist and works regularly with public companies. He is a director of Axion Power International, South Texas Oil, Datascension, Inc. and former chairman of Mustang Software, Inc. While at Mustang Software, he was intricately involved in the successful acquisition of the company by Quintus Corporation. His has consulted for several large companies including GameStop, Nortel, SBC Wireless (now AT&T), Dalrada Financial Corp, Oxford Media, Earthlink Inc., Aiirmesh Communications, and Retail Highway. Stan is a member of the National Association of Corporate Directors, the KMPG Audit Committee Institute and is a graduate of the Harvard Business School Audit Committees in the New Era of Governance symposium. He is active in community affairs and serves on the Advisory Board of the Salvation Army Adult Rehabilitation Centers.

Merrick D. Okamoto.	Mr. Okamoto serves the Company as a Director. Mr. Okamoto is the President and Managing Member of Viking Asset Management, LLC and has been employed in the securities industry since 1983. From 1987 to 1990, he hosted the television program, The Income Report. He also has appeared on CNN and The MacNeil-Lehrer Report. Before co-founding Viking in 2002, Mr. Okamoto co-founded and was the President of TradePortal.com, Inc. in 1999. TradePortal.com, Inc. is a software development company. His negotiations were key in selling a minority stake in TradePortal.com Inc. to Thomson Financial, a US $6 billion revenue company. Prior to 1999, He held Vice President positions with Shearson Lehman Brothers, Prudential Securities and Paine Webber, and he was the founder of First Stage Capital, Inc. (1996 to 2002), which specialized in investment banking and consulting to public and private companies.

Ronald F. Richards.	Mr. Richards serves the Company as its Chairman of the Board. Mr. Richards is the founder and Managing Director of Gray Wolf Partners, LLC, a strategic and financial advisory firm. He previously served as a Managing Director of Viking Asset Management, LLC, Chief Financial Officer and Senior Vice President, Business Development of Biopure Corporation and as a Managing Director, Corporate Finance of Wells Fargo Van Kasper. Mr. Richards has 20 years of experience working with public and private companies in the areas of investment banking, corporate finance, law and accounting. He also co-authored PIPES: A CEO's Guide to Successful Private Placements in Public Equities. Mr. Richards holds JD, MBA and BA degrees from UCLA. He is a member of the State Bar of California and a retired Certified Public Accountant.

Karen Hawkins.	Ms. Hawkins serves the Company as its Vice President, Finance and Controller. Ms. Hawkins is a Certified Public Accountant since 1992 with over 22 years experience in Financial Accounting and Management, primarily focused in the Defense and Transportation Industries. Her past history also includes Program Management, Materials Management and Business Development. She brings over 14 years direct experience in Government Contracting with a strong knowledge of CAS/FAR . Her previous employment includes General Dynamics – Ordinance and Tactical Division, Garland (formerly known as Intercontinental Manufacturing) for over 13 years. During her tenure here she served in the roles of Controller (Accounting & IT), Program Manager over a $250M 3 year Army IDIQ contract. Prior to her employment at General Dynamics, Ms. Hawkins served in various finance and accounting positions at Luminator, a Mark IV Industries Co, and Johnson Controls, Battery Division - Garland.