Vuzix Corporation

Greetings and welcome to the VUSIC's first quarter ending March 31st, 2025 financial results and business update conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. For anyone to require operator assistance during the call, please press star zero on your telephone keypad. As a reminder, this call is being recorded. Now, I would like to turn the call over to Ed McGregor, Director of Investor Relations at Vuzix. Mr. McGregor, you may begin.

Thank you, Operator, and welcome to the Vuzix first quarter 2025 ending March 31st Financial Results and Business Update Conference Call. With us today are Vuzix CEO, Paul Travers, and our CFO, Grant Russell. Before I turn the call over to Paul, I would like to remind you that on this call, Management's prepared remarks may contain forward-looking statements which are subject to risks and uncertainties, and management may make additional forward-looking statements during the question and answer session. Therefore, the company claims the protection of the safe harbor for forward-looking statements that are contained in the Private Securities Litigation Reform Act of 1995. Actual results could differ materially from those contemplated by any forward-looking statements as a result of certain factors including, but not limited to, general economic and business conditions, competitive factors, changes in business strategy or development plans, the ability to attract and retain qualified personnel, as well as changes in legal and regulatory requirements. In addition, any projections as to the company's future performance represent management's estimates as of today, May 12, 2025. USICS assumes no obligation to update these projections in the future as market conditions change. This afternoon, the company issued a press release announcing its Q1 2025 financial results and filed its 10Q at the SEC. So participants in this call who may not have already done so may wish to look at those documents as the company will only provide a summary of the results discussed on today's call. Today's call may include certain non-GAAP financial measures. When required, reconciliation to the most directly comparable financial measures calculated and presented in accordance with GAAP can be found in the company's filings at sec.gov, which is also available at www.vuzix.com. I'll now turn the call over to Vuzix CEO, Paul Travers, who will give an overview of the company's operating results and business outlook. Paul will then turn the call over to Grant Russell, Vuzix CFO, who will provide an overview of the company's first quarter results, after which we'll move on to the Q&A session.

Paul? Thank you, Ed, and thank you to everyone joining us today. It has just been a couple of short months since our last formal update, but a lot continues to be happening at Vuzix and the smart glasses markets overall. Vuzix and the entire industry are gaining further commercial momentum as it begins to enter a new phase, driven by further OEM and enterprise smart glasses engagements. Our vision and investments are translating into further commercial traction and at the same time, the broader tech industry is amplifying its focus on developing and delivering AI-powered smart glasses, signaling that the race to bring these products at scale to the larger markets is very much underway. In our OEM business, we are actively engaged with a growing number of ODM and OEM partners spanning enterprise, defense, and consumer-oriented segments. Indeed, 2025 has thus far been marked by important developments for Vuzix that span relationships, technologies, and solutions, each of which I will touch upon. Collectively, we feel these developments and the large market opportunities they represent are putting the company on a path to significant and sustained revenue growth. From a broader industry perspective, We are witnessing announcements of large-scale strategic investments being made by leading ODMs and semiconductor firms in our country, which underscore a concerted effort to deepen economic ties with the United States, enhance supply chain resilience, and navigate the evolving global trade landscape. With Vuzix being a US-based manufacturer, we believe this shift within the supply chain may provide strategic opportunities for Vuzix to further bolster and expand our brand and global presence within the waveguide and AI-driven smart glasses market. On that note, our collaboration with Quanta continues to expand with ongoing development around previously announced smart glasses, OEM, and OEM reference platforms, along with several additional new programs that are also in motion. These joint efforts will combine Quanta's world-class manufacturing and global OEM reach with Vuzix Advanced Waveguides display engines, and smart glasses architecture. Together, we are building a strong foundation to enable and participate with our waveguides in the mass production of AR-enabled wearables at scale and at reasonable price points needed for mass adoption. Over the last eight months, the Vuzix team has been in lockstep with Quanta to drive strategic initiatives together, and we are aligned towards unlocking the much larger opportunities to support the broader markets. UGIS has made tremendous progress towards achieving the milestones required to receive the remaining two investment tranches from Quanta, which would provide a further $10 million in growth capital. Not surprisingly, our smart glasses market presence, design experience, and most importantly, our proprietary, low-cost, scalable waveguide manufacturing ability are being recognized by a growing number of leading ODMs. A major development late in Q1 was our acquisition of a state-of-the-art waveguide R&D and tooling facility in Milpitas, California. Previously operated by one of the largest global tech firms, this facility will serve as a new hub for waveguide and tool development and rapid prototyping. It can also handle highly custom small batch manufacturing needs if required by our customers. This This acquisition was highly strategic for its location, technological advancement, and financial efficiency. The facility is already in operation, which resulted in practically zero startup costs. The total cost of acquisition and expected incremental operational costs for the first year is in the low seven figures, a remarkable value given the equipment and capabilities we acquired. The facility anchors our presence in Silicon Valley and strengthens our ability to support customers there that need rapid, secure, high quality waveguide solutions to bring their smart glasses offerings into commercial production. A recent collaboration with Fraunhofer IPMS on a high performance CMOS micro LED backplane was engineered to meet the specialized needs of select Vuzix customers. Early working samples have confirmed the design's promise for next-generation display applications. Supporting 1080p plus resolution, the backplane accommodates both monochrome and full-color micron-sized microLED arrays. This effort has been co-developed by Vuzix, Fraunhofer, and a third party with specific use cases in mind. As a result, this cutting-edge backplane is tailored for high-end enterprise and defense applications where performance, precision, and customization are essential. It is also capable of driving our new large format waveguides, which can be used for a variety of specialized see-through display systems. Muzix offers an expanding family of smart glasses reference designs, including the Ultralight Pro and Ultralight Audio, introduced at CES 2025. And also, of course, our industry-leading Ultralight, weighing less than 38 grams, and having over two days of runtime on a single charge. These new AI-driven smart glass designs offer a range of features, from the lightest weight, lowest power smart glasses ever built, to advanced functionality such as voice activated commands, real-time photo and video capture, and the immersive AR experiences. And at the core of each is Vuzix's state-of-the-art waveguide technology. In behind closed doors, Vuzix remains methodical in our current spending and investment in the future with several new unannounced products slated for later release this year in 2025. Each designed to meet the evolving needs of select enterprise, defense, and OEM customers. These new offerings build on our core strengths in waveguide optics and AI-enhanced wearable computing while integrating customer feedback, performance breakthroughs, and platform flexibility. We are seeing continuing OEM interest and engagement from waveguide supply to full white-labeled solutions. Notably, we just announced a design win with a six-figure initial order for waveguides related to smart thermal AR glasses being developed by a European OEM customer. This product merges visible and infrared light through a see-through head-up display, offering transformative capabilities for firefighters, inspection, and search and rescue use cases. Vuzix is actively building our part of the deliverables, and the customer expects volume production of their smart glasses to begin in the fall of 2025, led by one of the world's largest contract ODM electronics manufacturers. To reiterate, we have been selling into this customer product for production. This is a design win for the company that is going into production. As a reminder, on the DoD front, we have multiple major programs in the works with prime contractors. The wave guide based solutions we have developed have gone through multiple iterations beyond proof of concept and are being actively shown to the select final defense customers they were intended for. To reiterate, we fully expect at least a couple of these programs to start production rollouts in 2025. We received our largest reorder to date from XanderGlasses, a private label product for captioning the spoken word in real time to assist the hearing impaired. Unlike other such wearables, XanderGlasses are 100% self-contained. designed for ease of use, operate with a simple on and off function, and do not require a smartphone or cloud connectivity. Our Z100 smart glasses platform is also actively supporting the hearing impaired space. Transcribe Glass, who is reselling our Z100 smart glasses, and been placing a monthly cadence of reorders with their transcription software and under their own brand name. Another white label partner, Mentra Labs, is supporting seeding Z100 to support developers and end users. Mentra's Augment OS smart glasses operating system brings a suite of critical smart glasses AI agents and apps to Vuzix's ultralight platform. Using Augment OS's SDK, developers can make apps like an AI tour guide, super memory tools, chess master helper, face recognition, name memory, Shazam, speech coach, live captioning, translation, and much more easily come to life. These are all tangible examples of how Vuzic smart glasses are beginning to deliver life-changing solution to smart glasses adopters on a daily basis. Solutions that are game-changing because of their non-invasive delivery of information and assistance through the use of Vuzix smart glasses, information that is practically impossible to deliver through most any other wearable or handheld device. Turning to the enterprise market in Mexico, NADRO, one of the country's largest pharmaceutical distributors, continues to scale and now has over 500 Vuzix M400 smart glasses deployed across 14 of its warehouses there. Through our partner, AcuraFlow, and TeamViewer's frontline software, Nagro is realizing over 30% improvements in order-picking efficiency and dramatic reductions in training time. These are real numbers that translate into bottom-line savings and faster workflows. Our enterprise customers are increasingly seeking smart glasses solutions help, and that's where Mobilium's software platform comes in. Movient has accelerated the expansion of our enterprise solutions beyond traditional logistics by enhancing its Mobilium software to deliver comprehensive workflow efficiencies. Initial implementations are already showing remarkable operational gains, with productivity improvements of up to 250% in certain warehouse applications, highlighting our leadership position in AI-enhanced enterprise solutions. One such moviant win recently announced was with Airbus Helicopters, who has committed to a broad rollout of their platform along with the Vuzix M400 smart glasses across its North American operations after a successful pilot over the last two years, using our devices hands-free on the assembly line and in logistics. We are also progressing with other notable moviant-driven engagements, which we look forward to announcing in due course, as well as working with software solution providers that can address specific customers' needs. Augmex, a one-stop-shop solutions provider for increasing productivity with smart glasses, recently placed a follow-on $500,000 reorder for M400s. Augmex bundles their robust software solutions with Vuzix smart glasses products for key supply chain customers in the United Kingdom and across Europe and expects its demand for our smart glasses to grow by an order of magnitude over the next several years. Indicative of our growing pipeline of opportunities, we expect our enterprise business will be more characterized by hardware and software solution bundles that are based on customer feedback and more tailored to meet specific cost, performance, and functionality needs. To wrap up, our OEM waveguide business is scaling. Our enterprise deployments are delivering results. Our strategic footprint is expanding. Our strategic relationship with Quanta is in great shape and growing. The AR smart glasses industry is realigning around practical AI driven use cases. And as mentioned earlier, we have several new unannounced products slated for release later in 2025, each designed to meet the evolving needs of select enterprise defense and OEM customers. And with that, I'll turn the call over to Grant for the financial overview. Grant?