UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

Form 10-K/A
(Amendment No. 1)

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended December 31, 2009

Commission file number 0-8828

OPTELECOM-NKF, INC.

(Exact name of registrant as specified in its charter)

Registrant's telephone number, including area code:
(301) 444-2200.

Securities registered pursuant to Section 12(b) of the Act:
None.

Securities registered pursuant to Section 12(g) of the Act:
Common Stock $0.03 Par Value.

         Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o    No ý

         Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o    No ý

         Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý    No o

         Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o    No o

         Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulations S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

         Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of "large accelerated filer", "accelerated filer", and "smaller reporting company" in Rule 12b-2 of the Exchange Act: (Check one):

         Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o    No ý

         At June 30, 2009, shares of the registrant's Common Stock, $0.03 Par Value, held by persons other than "affiliates" of the registrant had an aggregate market value of $14,034,239 based on the average closing bid and asked prices as reported by the National Association of Securities Dealers Automated Quotation System for such date.

         At March 12, 2010, the registrant had outstanding 3,676,006 shares of Common Stock, $.03 Par Value.

DOCUMENTS INCORPORATED BY REFERENCE

         Portions of the Proxy Statement for the 2010 Annual Meeting of Shareholders are incorporated by reference into Part III.

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         Unless the context indicates otherwise, references in this Amendment No. 1 on Form 10-K/A to the "Company," the "registrant," "we," "our" and "us" mean Optelecom-NKF, Inc.

EXPLANATORY NOTE

         This Amendment No. 1 on Form 10-K/A amends the Company's Annual Report on Form 10-K for the year ended December 31, 2009 (the "10-K"), filed with the Securities and Exchange Commission on March 30, 2010. This Amendment is being filed solely to correct the date of the report of Grant Thornton, LLP, our former independent registered public accounting firm, included in Item 7 of Part II of the 10-K. Item 7 has been included in this filing as it contains the financial statements and related footnotes that have been opined on by Grant Thornton.

         In addition, as required by Rule 12b-15 under the Securities Exchange Act of 1934, as amended, new certifications by our principal executive officer and principal financial officer are filed as exhibits to this Form 10-K/A under Item 15 of Part IV hereof.

         This Amendment No. 1 does not reflect events occurring after the original filing date of the 10-K or otherwise modify or update the disclosures set forth in the 10-K, including the financial statements and notes to financial statements set forth in the 10-K.

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PART IV

Item 14.    EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

Exhibits.    The exhibits that are filed with this Amendment No. 1 are set forth in the Index to Exhibits.

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Item 7.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Index to the Consolidated Financial Statements

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders
Optelecom-NKF, Inc.:

        We have audited the accompanying consolidated balance sheet of Optelecom-NKF, Inc. and subsidiaries as of December 31, 2009, and the related consolidated statements of operations and comprehensive income (loss), stockholders' equity, and cash flows for the year ended December 31, 2009. In connection with our audit of the consolidated financial statements, we have also audited financial statement Schedule II for the year ended December 31, 2009. These consolidated financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedule based on our audit.

        We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

        In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Optelecom-NKF, Inc. and subsidiaries as of December 31, 2009, and the results of their operations and their cash flows for the year ended December 31, 2009, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule for the year ended December 31, 2009, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

        The accompanying consolidated financial statements and financial statement schedule have been prepared assuming that the Company will continue as a going concern. As discussed in note 13 to the consolidated financial statements, the Company has suffered losses from operations, has substantial debt maturing, and its viability is dependent on the success of its future operations and ability to obtain future financing. These factors raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in note 13. The consolidated financial statements and financial statement schedule do not include any adjustments that might result from the outcome of this uncertainty.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and
Stockholders of Optelecom-NKF, Inc.

        We have audited the accompanying consolidated balance sheet of Optelecom-NKF, Inc. and subsidiaries (the Company) as of December 31, 2008, and the related consolidated statement of operations and comprehensive income (loss), stockholders' equity and cash flows for the year ended December 31, 2008. Our audit of the basic financial statements included the financial schedule listed in the index appearing under Item 8. These financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on the financial statements and financial statement schedule based on our audit.

        We conducted our audit in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

        In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Optelecom-NKF, Inc. as of December 31, 2008, and the results of their operations and their cash flows for the year ended December 31, 2008 in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

/s/ GRANT THORNTON, LLP

McLean, Virginia
March 27, 2009

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OPTELECOM-NKF, INC.

CONSOLIDATED BALANCE SHEETS

AS OF DECEMBER 31, 2009 AND DECEMBER 31, 2008

(Dollars in Thousands, Except Share Amounts)

The accompanying notes are an integral part of these consolidated financial statements.

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OPTELECOM-NKF, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

FOR THE YEARS ENDED DECEMBER 31,

(Dollars in Thousands, Except Share and Per Share Amounts)

The accompanying notes are an integral part of these consolidated financial statements.

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OPTELECOM-NKF, INC

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008

(Dollars in Thousands, Except Share Amounts)

The accompanying notes are an integral part of these consolidated financial statements.

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OPTELECOM-NKF, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31,

(Dollars in Thousands)

The accompanying notes are an integral part of these consolidated financial statements.

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OPTELECOM-NKF, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008

(Dollars in Thousands, Except Share Amounts)

1. Nature of Business and Summary of Significant Accounting Policies

        Nature of Business—Optelecom-NKF, Inc. (the Company) is a Delaware corporation that was organized in 1972. The Company, developer of Siqura® advanced video network solutions, is a global supplier of advanced video surveillance solutions, including IP cameras, video servers/codecs, network video recorders, fiber transmission equipment, video management and video analytics software. We deliver complete solutions for traffic monitoring and security of airports, seaports, casinos, prisons, utilities, public transit, city centers, hospitals, and corporate campuses. The Optelecom-NKF corporate headquarters is in Germantown, Maryland, USA, with European corporate offices in Gouda, the Netherlands, and sales or support offices covering the Americas, France, Spain, the UK, Germany, Italy, Dubai, and Singapore.

        Principles of Consolidation—The consolidated financial statements include the accounts of the Company and its subsidiaries. All significant inter-company transactions and balances have been eliminated.

        Use of Estimates—The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

        Accounts Receivable—Accounts receivable potentially subjects the Company to concentrations of credit risk. Credit is extended based on evaluation of a customer's financial condition and, generally, collateral is not required. Accounts receivable are generally due within 30 days and are stated at amounts due from the customers net of an allowance for doubtful accounts. Accounts outstanding longer than the contractual payment terms are considered past due. The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of customers to make required payments. The Company regularly monitors and assesses its risk of not collecting amounts owed by its customers. This evaluation is based upon an analysis of amounts current and past due along with relevant history and facts such as collection history, the results of credit inquiries and the impact of credit insurance maintained by the Company. The Company believes that its allowance for doubtful accounts is adequate to cover any potential losses on its credit risk exposure. The Company writes off accounts receivable when they become uncollectible, and payments subsequently received on such receivables are credited to the allowance for doubtful accounts.

        Revenue Recognition—Revenue from commercial sales is recognized when products are shipped and/or title passes pursuant to the terms of the agreement with the customer, the amount from the customer is fixed, and collectability is reasonably assured.

        Product Warranty—In the ordinary course of business, the Company warrants its products against defect in design, materials, and workmanship over various time periods generally ranging from one to five years. Warranty reserves and allowances for product returns are established based upon management's best estimates of amounts necessary to settle future and existing claims on products sold

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OPTELECOM-NKF, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008

(Dollars in Thousands, Except Share Amounts)

1. Nature of Business and Summary of Significant Accounting Policies (Continued)

through the balance sheet date. The following is a summary of the Company's warranty obligation for the years ended December 31:

        Inventories—Production materials are valued at the lower of cost or market applied on an actual cost basis. Work-in-process and finished goods inventory includes direct labor, materials and overhead and are valued at the lower of cost or market, cost being determined using actual costs on a specific identification basis. The Company writes down its inventory for estimated obsolescence or unmarketable inventory based upon assumptions about future demand and market conditions as well as historical inventory turnover. If actual market conditions are less favorable than those projected by management, additional inventory write-downs may be required. At December 31, 2009 and 2008, the reserve for inventory obsolescence was $942 thousand and $679 thousand, respectively.

        Property, Equipment, and Depreciation—Property and equipment are recorded at cost and are depreciated using the straight-line method over the estimated useful lives of the assets, which range from 3 to 10 years. Leasehold improvements are amortized over the terms of the respective leases or the service lives of the assets, whichever is shorter. Expenditures for maintenance and repairs are expensed as incurred.

        Goodwill—Goodwill acquired in connection with business acquisitions is stated at fair value on the date of purchase. Goodwill is not amortized, but it, as well as other intangible assets with indeterminate lives, are subject to an annual impairment test. The primary assumptions underlying the impairment test are current and forecasted profitability and cash flow of the related business. There have been no adjustments to the carrying values of goodwill or intangible assets resulting from these impairment tests during 2009 as the fair value of the reporting unit is in excess of its carrying value. Goodwill increased from $14.6 million at December 31, 2008, to $14.8 million at December 31, 2009. This increase is the result of prevailing foreign exchange rates at the respective balance sheet dates.

        Intangibles—Intangibles acquired in connection with business combinations are stated at their fair value on the date of purchase. The costs of intangibles which are subject to amortization are amortized on a straight-line basis over their expected lives of three to eleven years. The recoverability of carrying values of amortizable intangible assets is evaluated on a recurring basis whenever events or changes in circumstances indicate that the carrying amount of assets may not be recoverable. Recovery of assets to be held and used is measured by comparing the carrying value of these assets with the expected future cash flows generated by the assets. If the assets are considered to be impaired, the impairment is recognized by the amount which the carrying amount of the assets exceeds their fair value. The changes in intangibles carrying value are the result of foreign exchange fluctuations and amortization.

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OPTELECOM-NKF, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008

(Dollars in Thousands, Except Share Amounts)

1. Nature of Business and Summary of Significant Accounting Policies (Continued)

        As of December 31, 2009, intangible assets are comprised of the following (in thousands).

        The aggregate amortization expense of intangible assets was $672 thousand and $739 thousand for the years ended December 31, 2009, and 2008, respectively. It is anticipated that amortization expense for these intangibles will be approximately $3.4 million over the next five years.

        Research and Development Costs—Research and development costs are expensed as incurred and included as a component of engineering expense in the consolidated statements of operations. The Company incurred research and development costs of $4.1 million and $5.5 million for the years ended December 31, 2009 and 2008 respectively.

        Income Taxes—The Company accounts for income taxes in accordance with the FASB's guidance which requires that deferred tax assets and liabilities be recognized using enacted tax rates for the effect of temporary differences between the book and tax bases of recorded assets and liabilities. The FASB's guidance also requires that deferred tax assets be reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred tax asset will not be realized.

        It is the Company's policy to classify interest and penalties related to uncertain tax positions as a component of income tax expense. For the years ended December 31, 2009 and 2008, there were no interest and penalties associated with uncertain tax provisions.

        Stock-Based Compensation—The Company accounts for stock based compensation under FASB Codification 718-10 Compensation—Stock Compensation which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors using a fair value based option pricing model. Compensation expense is recognized for awards that were granted, modified, repurchased or cancelled on or after January 1, 2006. Share-based tax-affected compensation expense recognized under this method for the years ended December 31, 2009 and 2008 was $769 thousand and $670 thousand, respectively. As of December 31, 2009, total unamortized compensation expense related to non-vested share-based compensation was $392 thousand and is expected to be recognized over a period of 0.83 years.

        Foreign Currency Translation/Transactions—The functional currency of the Company's international operations is the local currency. The Company translates the assets and liabilities of its foreign subsidiaries into U.S. dollars at the exchange rates in effect at the end of the year and revenue and

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OPTELECOM-NKF, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008

(Dollars in Thousands, Except Share Amounts)

1. Nature of Business and Summary of Significant Accounting Policies (Continued)

expense accounts are translated into U.S. dollars using the average exchange rate for the period. The related translation adjustments are reported as foreign currency translation in the statement of stockholders' equity. Transaction gains and losses arising from transactions denominated in a currency other than the functional currency of the entity involved are included in the results of operations.

        Cash and Cash Equivalents—The Company considers all liquid investments with original maturities of three months or less at the time of purchase to be cash equivalents. The Company is exposed to a concentration of credit risk as the majority of the Company's cash resides in European banks. Government insurance affords coverage only up to 100 thousand Euros per account holder per bank. On December 14, 2009, we entered into an amended financing agreement with our bank. Pursuant to the Amendment, we agreed to a reduction in our revolving credit facilities and also agreed to restrict $1.9 million of cash as collateral for the term loan and revolving credit facilities. The cash collateral is restricted pursuant to a deposit account security agreement.

        Fair Value of Financial Instruments—The carrying amounts approximate fair value of the Company's cash and short-term financial instruments. The carrying value of the senior note approximates fair value. It is not practicable to estimate the fair value of the subordinated note, which had a carrying value of $12.8 million, including accrued interest at December 31, 2009. At December 31, 2009, interest on this note was at 6%, but this was amended to 10% on March 5, 2010, in accordance with the extension of the due date to March 8, 2011. We are unable to estimate the fair value of the note due to lack of available financing and because the debt is not traded.

        Advertising and Promotion Expenses—Costs of advertising are expensed as incurred. Advertising and promotion expenses for the years ended December 31, 2009 and 2008 were $924 thousand and $949 thousand, respectively.

        Sales Tax—The Company presents all non-income government-assessed taxes (sales, use, and value added taxes) collected from its customers and remitted to governmental agencies on a net basis (excluded from revenue) in its financial statements.

        Concentration of Customers—For the twelve months ended December 31, 2009, approximately 20% of our revenues were accounted for by sales to five commercial customers. In 2008 five commercial customers represented 29% of our revenues.

        Earnings Per Share—Basic earnings per share are computed using the weighted average number of common shares outstanding. Diluted earnings per share are computed using the weighted average number of shares outstanding plus the impact of stock options using the treasury stock method, provided the options are not anti-dilutive. Options to purchase 469 thousand and 517 thousand weighted average shares of common stock were outstanding during the years ended December 31, 2009 and 2008, respectively, but were not included in the computation of diluted earnings per share because their inclusion would be anti-dilutive.

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OPTELECOM-NKF, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008

(Dollars in Thousands, Except Share Amounts)

1. Nature of Business and Summary of Significant Accounting Policies (Continued)

        The computation of basic and diluted loss per share for the years ended December 31, 2009 and 2008, is as follows:

        Subsequent Event Policy—We have evaluated material events and transactions that have occurred after December 31, 2009, and concluded that no subsequent events, other than those disclosed herein, have occurred that require adjustment to or disclosure in this Form 10-K.

2. Accounts and Contracts Receivable

        Accounts and contracts receivable consisted of the following at December 31:

3. Inventories

        Inventories consisted of the following at December 31:

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OPTELECOM-NKF, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008

(Dollars in Thousands, Except Share Amounts)