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 a 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 VUZIC's 2025 fourth quarter and full year ending December 31st financial results and business update conference call. With us today are VUZIC 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. Music 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 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 annual filing at sec.gov, which is also available at vuzix.com. I will 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 fourth quarter and full year of 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 Vuzix as we strengthened our financial discipline, improved the balance sheet, and sharpened 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 waveguides 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, where scalable, cost-effective production of advanced waveguides 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 views expanded offerings where appropriate. We believe our OEM business will become significant and will result in a more efficient and higher probability path to grow 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 waveguide-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 Agency's 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 waveguides 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 Vuzix 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, SAFLIX, HIMAX, Avogant, 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 Vuzix 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 quantum 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 Fusix 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 Vuzik's 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.

Grant? Thank you, Paul. As Ed mentioned, the 10K we filed this afternoon with the SEC offers a detailed explanation of our annual financials so we're just going to provide you with a bit of color on some of the full year as well as quarterly numbers for the fourth quarter ended december 31st 2025 we reported 2.2 million in total revenues as compared to 1.3 million for the fourth quarter of 2024 an increase of 76 percent the revenue increase was primarily due to higher unit sales of our m400 smart glasses as well as significantly higher engineering services sales for the full year ended december 31st 2025 usage reported 6.3 million in total revenues as compared to 5.8 million for the prior year an increase of nine percent product sales increased by four percent year over year on greater unit sales of our m400 products sales of engineering erring services for the year ended December 31st, 2025 were 1.6 million as compared to 1.3 million in 2024, an increase of 27%. For the full year ended December 31st, 2025, there was an overall gross loss of 1.1 million as compared to a loss of 5.6 million in 2024. The reduced gross loss for 2025 was primarily a function of significantly lower inventory obsolescent reserves that were included in cost of sales in 2024. Research and development expenses for 2025 rose 31 percent to 12.6 million as compared to 9.6 million in 2024. The increase was primarily due to a 2.6 million increase in external development costs on our new LX1 smart glasses which did not begin shipping until early 2026 and our wave guide products and a 0.7 million dollar increase of depreciation expense related to underutilized new manufacturing equipment still being optimized before they're placed into full service partially offset by a 0.9 million dollar decline in non-cash stock-based compensation expense due to the completion of the 2024 voluntary salary reduction program for for the fourth quarter ended december 31st 2025 research and development expenses for 4.5 million as compared to 2.2 million in the fourth quarter of 2024 the increase again was largely driven by higher new product development costs related to the completion of the lx1 sales and marketing costs for all of 2025 fell to 5.5 million from 8.2 million in 2024 a reduction of 2.7 million or 33 The most significant factors for these expense reductions included a $1.2 million net decrease in bad debt expense, a $0.8 million decrease in cash, salary, and benefits-related expenses driven by headcount decreases, and a $0.5 million decrease in non-cash stock-based compensation expense permanently due to the completion of the 2024 Voluntary Salary Reduction Program for Equity. For the fourth quarter of December 31st, 2025, sales and marketing expenses were $1.4 million as compared to $2 million in the fourth quarter of 2024. The decrease were primarily driven by a $0.4 million reduction in bad debt expense and a $0.2 million decrease in stock-based compensation expense. Dental and administrative expenses for the full year of 2025 decreased 32% to $11.6 million as compared to $17.2 million in 2024. The bulk of this decrease was due to a $4.9 million decline in non-cash stock-based compensation expense related to our 2024 cash salary reduction program in exchange for equity, which ended on April 30, 2025, and the termination of the company's original LTIP, which was cancelled on June 16 after shareholder approval. For the fourth quarter, ended December 31st, 2025. General and administrative expenses were $2.3 million as compared to $4.3 million in the 2024 fourth quarter. The decrease were primarily driven by a decline in non-cash stock-based compensation expense. For the fourth quarter ended December 31st, 2025, the net loss attributable to common shareholders was $8.7 million or $0.12 per share as compared to a net loss of $13.7 million or $0.16 per share for the fourth quarter of 2024. For the full year ended December 31st, 2025, the net loss attributable to common shareholders was $32.3 million or $0.42 per share as compared to a net loss of $73.5 million or $1.08 per share for the full year of 2024. Decreased net loss was in large part attributable to a $30.1 million impairment loss that was recorded in 2024. Excluding this impairment right off, the overall net loss for 2025 still improved by over $11 million versus the 2024 year. We also ended the year with a stronger balance sheet our cash position as of december 31st 2025 was 21.2 million versus 18.2 million as of december 31st 2024 and we ended 2025 with a net working capital position of 22.3 million and no current or long-term debt outstanding inventory levels improved with our net inventory declining to 2.2 million as of December 31st 2025 as compared to 4.8 million at the end of 2024. Net cash flows used in operating activities declined to 18.8 million for the year into December 31st 2025 as compared to 23.7 million for the 2024 year a decrease of 4.9 million. For all of 2025 we raised 24.4 million from financing activities that consisted of the $10 million of additional investments by Kiwana Computer and $14.3 million of net proceeds received from equity sales under our ATM program during the year. Cash used for investing activities in 2025 was $2.6 million, down modestly from $2.9 million in 2024. Overall, we continue to control and reduce our operating expenses where possible, following a 36% reduction in our cash expenses in 2024 resulting primarily from headcount reductions we held our cash expense growth to just four percent in 2025 despite new product development spending and better positioning ourselves for general business growth in 2026. we look forward and remain confident that management's plans along with potential further equity sales under atm atm program of note we raised an additional $6 million to date thus far in 2026, that the company has more than adequate resources to move forward with its operating plan well through into 2027. With that, I would like to turn the call back over to the operator for Q&A.

Thank you, and I'll be conducting a question and answer session. If you'd like to be placed in the question queue, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. One moment, please, while we poll for questions. Our first question today is coming from Christian Schwab from Craig Hallam. Your line is now live.

Great. Thank you. Hey, Paul, can you just give us an idea of what you expect for 2026? I know we've got this movement in Amazon for purpose-built glasses. It sounds like numerous different opportunities within the defense industry and hopefully eventually Quanta bringing a more meaningful program to the business. Can you give us an idea of what the range of outcomes for 26 revenue would be and where you think the most significant portion of that revenue will come from?

I hate saying it this way, but I'll spitball a little bit here for you, Christian. You should see the OEM in particular and alongside it, the waveguide business, start to climb quarter after quarter throughout the year. And you should see it surpass the revenues on the enterprise, the pure views expanded enterprise side of our business before the year is up. So it's an exciting piece of our business right now. It's pretty amazing how the rate of new programs that we're bidding on and that we're winning are coming in the front door. So, you know, from that side, exciting stuff. Amazon is multiple different areas, and it's a custom-built OEM-style device. This large car company we expect should be rolling in through to production by the end of this year also. You guys know we put press releases out about Collins, and they are in production with Musix right now. And there's more than a handful of others that are in the queue. Some of these guys could represent some really significant business for Musix, well beyond what 2025's numbers were in the entire enterprise space. But it's going to grow through the year, we expect. Yeah, you should see us stepping forward each and every quarter. but it's bumpy, the business, as you guys all know. So it's hard for us to predict exactly, other than to say that it's impossible to miss the fact that there's a wave of OEM business that's coming for Vuzix.

And following up upon that, you know, when is, you know, when can we see, you know, additional orders, whether they, you know, start, you know, small in 26 and meaningfully expand in 27? Would you anticipate throughout the course of the year that, you know, we could have, you know, three to six, you know, announcements regarding, you know, orders and go to market with production in 2026, or is that yet to be?

I think you would see something like that, Christian, and I think you'll also see some press releases announcing some great business partnerships that have developed that won't yet be product revenue generating but will be the beginnings of it through the engineering services and work that needs to get done to get it to that point. There's a lot. It should be an exciting year from the perspective of new business opening up for VUSIX.

No other questions. Thank you. You're welcome, Christian.

Thank you.

I believe so.

We've actually reached into our question answer session. I'd like to turn the floor back over for any further closing comments.

Thank you very much, Kevin, and thank you, everyone, for joining us today. We believe that Vuzix is entering 2026 with a very clear path to value creation through our OEM programs, defense and government opportunities, and advanced waveguide technologies, supported by the Enterprise Smart Glasses Foundation that we have built over many years. We strive to invest where our advantages are the strongest. We have strengthened strategic relationships. We have improved the structure of the business, and we believe the value we have built is becoming clearer both operationally and strategically. There's still work to do, clearly, but we are encouraged by where we stand and by the direction we're heading. Thank you again for your continued support, and we look forward to updating you again next quarter and as 2026 unfolds.

That does conclude today's teleconferencing webcast. May disconnect your line at this time and have a wonderful day.

We thank you for your participation today.