Item 2.05. Costs Associated with Exit or Disposal Activities.

On September 16, 2009, Optelecom-NKF, Inc. (the "Company") implemented a reduction in force in the U.S. and Europe as a result of a strategic review of its operations. This reduction in force was implemented in order to achieve cost savings and resulted in a reduction in force of 23 positions, including employees, contract employees and open positions. The Company expects to record pre-tax charges of approximately $127,000 during the third quarter of 2009 in connection with this reduction in force. These one-time pre-tax charges are comprised of accruals for severance expense, which will be recorded in the third quarter 2009. The severance will consist of cash payments to be made during the third and fourth quarter of 2009.

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