Vuzix Corporation

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

Thank you, Operator, and good afternoon, everyone. Welcome to the Vuzix 2025 fourth quarter and full year ending December 31st Financial Results and Business Update Conference Call. With us today are Vuzix CEO Paul Travers and 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 retrain 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, March 12, 2026. The U.S. assumes no obligation to update these projections in the future as market conditions change. This afternoon, the company issued a press release announcing its final 2025 results and filed its 10-K with 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 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 measure calculated and presented in accordance with GAAP can be found in the company's Form 10-K Annual Filing at sec.gov, which is also available at vuzix.com. I'll now turn the call over to Vuzix CEO Paul Travers. give an overview of the company's operating results and business outlook paul will then turn the call over to grant russell music cfo will provide an overview of the company's fourth quarter and full year financial results after which we will move on to the q a session paul thank you ed and thanks to everyone for joining us today 2025 was an important year for musics as we strengthened our financial discipline

improve the balance sheet, and sharpen the company's focus around our OEM and waveguide businesses. As we enter 2026, Vuzix is moving forward with a clear strategy focused on the areas where we can create the greatest long-term value. Our strategy is built directly on the core technologies, products, and capabilities we have developed over many years. Vuzix established its position through two closely connected strengths. advanced wave guides, and enterprise smart glasses products. Together those capabilities helped us develop deep technical know-how, real customer experience, and market credibility while also opening doors with larger organizations seeking a partner that understands not just optics but the full product deployment and support equation. That foundation remains highly valuable and we are now building on it in a more focused and strategic way. Going forward, our branded enterprise smart glasses products business remains important and has room for lots of growth over the next five years. It gives us credibility. It gives us real-world customer insight. It helps validate use cases and open doors. But increasingly, we see it more as a strategic enabler for the larger opportunities ahead. Our long-term growth strategy is centered around our engineering services, which has expanded into two growth engines for the company, OEM products and waveguides, including the engineering services needed to support them both. The first leg of this strategy is growing our OEM products business across enterprise defense and security agencies, and over time, the broader consumer markets where Vuzix can deliver complete smart glasses solutions as well as key optical components. The second leg of this strategy is capitalizing on our waveguide technology or scalable, cost-effective production of advanced waveguide positions Vuzix to play a central role in the next generation of AI and AR-enabled smart glasses. These two growth engines are closely linked. Our OEM business is built on our core waveguide design and manufacturing technology, as well as the credibility we have earned over many years in enterprise smart glasses. Companies do not simply see Vuzix as an optics company with interesting IP. More and more, they see us as a partner that understands how these products need to work in the real operating environments, how customers use them and how they get deployed and what it takes to support them successfully once they are. We believe that credibility is helping create pull for our OEM opportunities that develop around customized solutions for large-scale enterprises. And once we are in those discussions, we quickly see what differentiates Vuzix is our waveguide design know-how, high volume manufacturing capabilities, and of course, our decades of making smart glasses products that we have developed and offered. This strategic shift also affects how we think about our own branded products. Historically, Vuzix has designed, built, and sold branded enterprise smart glasses. Going forward, we expect to be more selective in how we invest in that business. Rather than broadly funding entirely new enterprise product lines based primarily on our own market assumptions, we expect a greater portion of future product activity to be driven and funded by OEM customer demand. This demand for specialized AI smart glasses solutions in some cases will result in Vuzix branded offerings where appropriate. We believe our OEM business will become significant and will result in a more efficient and higher probability path to growth as smart glasses technology continues to rapidly evolve. We expect our award-winning Ultralight platform, especially the Ultralight Pro, to be an important driver of that effort. The enterprise, along with the defense and security agency segments, are already taking shape. with active customer programs underway and visible demand emerging. In the enterprise OEM area, for instance, we are currently under contract with multiple large brands to develop custom smart glasses devices. One example is with a leading auto manufacturer to design a wave guide based smart glasses solution for widespread use on their factory floors. We expect a derivative of this solution could carry the Vuzix brand to ultimately be sold into other enterprise market opportunities. Another good example of our expanding enterprise OEM business is Amazon. What began around maintenance use cases in distribution centers using off-the-shelf smart glasses is expanding with a purpose-built pair of AI-driven smart glasses into additional areas that include server farms, warehousing, and robotics-related applications. We believe this kind of expansion in use cases is important because it shows how a single customer deployment can broaden into multiple operational areas over time, creating a deeper and more strategic relationship. On the defense and security agencies' OEM side, we continue to see engagement growth, both in the number of active programs and in the maturity of those discussions. Importantly, this is no longer just early stage outreach. We now have a mix of activity that includes active deliveries, contracted programs, proposal stage opportunities, and additional programs that should expand over time. Collins Aerospace is a good example of that progress. We have started receiving production orders giving us a solid proof point that our defense related efforts with wave guides and projection engines are translating into real business. Beyond Collins, we are now actively engaged in opportunities with multiple government agencies, traditional defense contractors, and emerging new defense players. Overall, we believe our position in defense and government is substantially stronger today than it was a year ago, with a broader opportunity set and clearer paths to opportunities that should ultimately result in production programs. We also believe geopolitics is beginning to change how defense and security agencies think about wearable technology. For example, the battlefield and the broader security environments are evolving quickly. Drones have rapidly become a critical operational tool, and smart glasses are becoming an increasingly useful interface for helping operators see, control, coordinate, and respond in real time. More broadly, secure information access Situational awareness and AI delivered through wearable displays are becoming increasingly relevant across defense, homeland security, and public safety use cases. We believe this shift in thinking will become an important driver of long-term demand for smart glasses and related head-worn systems. And that brings me to WaveGuides. During 2025, we completed the second and third tranches of Qantas investment, bringing their total strategic investment in Musics to $20 million. That was important not only because of capital for our growth, but because it provided meaningful third-party validation of our WaveGuide roadmap, manufacturing capabilities, and our ability to support future smart glasses programs at scale. It is very clear that the main reason Quanta invested in Vuzix is to gain access to our high-volume waveguide manufacturing and design capabilities. That said, Quanta is also interested in Vuzix's smart glasses industry expertise. That is another key strategic prize they gained access to with their investments. We also continue to strengthen our display ecosystem relationships. These relationships matter because the more third-party display partners we can support, the more ways we have to embed our waveguides into wearable products. Our recent collaborations with TCL, CSOT, Saflex, Hymax, Avigant, and others matter because the industry increasingly recognizes that success in AI glasses and AR glasses will require the right combination of waveguides display performance, manufacturability, and cost. Those pieces have to work together. We believe Uzix is one of the few companies that can not only supply waveguides that are not only uniquely optimized for a given display, but also help design, develop, and build full smart glasses products and system solutions from the ground up. We believe our waveguide business represents the largest long-term opportunity for Vuzix. As display-based smart glasses become a true mass-market computing platform over time, advanced waveguides will become one of the key enabling technologies. In that scenario, the ultimate unit opportunity for waveguides could potentially be enormous. That is why scale matters. That is why manufacturability matters. And that is why quanta matters. The waveguide market will not be won by having a good lab prototype. It will be won by having technology that performs, can be produced reliably, and can be cost competitively priced now and more so in the future as volumes ramp. Vuzix has spent years building toward exactly that value proposition. We believe the broader consumer smart glasses market is now entering an important new phase. Much of the recent growth in attention has been driven by meta, and that has been positive for the industry because it has helped to validate demand and increase awareness. But we're also starting to see the early signs of a broader market forming with additional technology and eyewear players intending to bring products, platforms, and ecosystem support into the category. On the Vuzix branded enterprise side, the enterprise markets are becoming more mature and more ROI driven. Customers are increasingly focused on implementing beneficial solutions that improve workflow efficiency, enable AI-driven hands-free operation, enhance safety, and produce measurable business value. Our enterprise products continue to demonstrate that Fuzix understands real workflows, real customers, and their real deployment challenges in maintenance, logistics, warehousing, inspection, and other industrial settings. We will continue to support and monetize the M400 platform and the recently introduced LX1 to the market. To be clear, though, the maturity of the enterprise space is providing revenue, but more importantly, opening doors for Vuzix OEM solutions. Going forward, to support our business, we are allocating a majority of our planned resources and R&D spend toward waveguides, quanta-related programs, DOD efforts, and funded OEM programs. This is intentional. We are putting our time, money, and talent behind the areas where we believe Vuzix has its strongest leverage and clearest strategic advantage. I would like to remind everyone that Vuzix has stayed in this market and continued building when many others, including better funded players, have stepped back, stumbled, or disappeared Over that time, we have continued innovating, serving customers, advancing our waveguides and manufacturing capabilities, and building what we believe is a very meaningful intellectual property position. With more than 500 patents and patents pending worldwide, that investment in innovation represents a significant asset for the company. The smart glasses market is now moving in a direction that we believe increasingly values exactly those kinds of capabilities. AI is making smart glasses more practical. Customers are becoming more specific about what they need, and waveguide manufacturability and protected enabling technologies are becoming more central to success, not less. We believe that the perseverance Vuzix has shown over these many years has positioned the company to create meaningful, long-term value for our shareholders. With that, I'll turn the call over to Grant for the financial overview.