Annual General Meeting Transcript - VUZI 2026-06-16

Paul Travers, CEO

Good morning, and thank you again for joining us for the Annual Shareholders Meeting. Today, I want to keep the update focused and practical. Over the last year, we have put more of our energy into execution and into building the capabilities that differentiate us. The central message is straightforward. Fuzix is evolving from primarily a smart glasses company into a company built around OEM products and advanced optical manufacturing. Branded enterprise smartglasses remain important, but they now sit inside a broader strategy anchored by three growth pillars. Enterprise smartglasses, OEM programs, and waveguide design and manufacturing. Before I begin, please note that today's comments include forward-looking statements, including comments about potential business opportunities, activities, expected development programs, customer activity, production pathways, capacity expansion, financial discipline, and market opportunities. Actual results may vary materially from what we discussed today. Please review our SEC filings including the risk factors in our most recent Form 10K and subsequent filings. We do not undertake any obligation to update forward looking statements except as required by law. This is the foundation for the rest of the presentation. We're not abandoning smart glasses. In fact, our experience building and supporting smart glasses is one of the reasons customers come to us. But the way we create value is evolving. Enterprise products give us customer access, real-world use cases, and credibility. OEM programs take that learning and apply it to larger customer-led product opportunities, often with customer-funded development. Waveguide Design and Manufacturing is the strategic core that can scale across multiple customers and product architectures. So the company we are building is broader than a branded device company. It is a company that combines product know-how, OEM execution, optical design, and U.S.-based manufacturing. Our focus is simple, execution, scale, and discipline. One important point before we go into the business area, our focus right now is on turning technical advantages into qualified processes, customer programs, and production wins. We're working in markets that can generate a lot of enthusiasm, and our responsibility is to build value through execution. That means prioritizing customer-funded development where possible, strengthening manufacturing readiness, and moving customer programs from development and evaluation towards production. We also have inbound interest in waveguide technology from markets beyond smart glasses, and each of these steps builds towards larger OEM, defense, and waveguide opportunities as customer commitments take shape. We believe this is the right way to build durable value and to run the company. Enterprise smart glasses remain an important pillar because they keep us close to real customers and real operational problems. Products such as M400 and LX1 help customers address AI-enabled, hands-free work in logistics, manufacturing, field service, and support. Our enterprise kits make deployment easier, and Mobilium gives us a workflow software angle, especially around warehouse productivity. The point is that enterprise products validate use cases and build credibility. They show us what customers need in the field. Ergonomics, battery life, connectivity, scanning, work instructions, remote support, software integration, and service. Those learnings make us a stronger OEM partner and a more practical waveguide supplier. So when I talk about enterprise, I'm not saying the future is only branded devices. I am saying branded devices give us market access and proof that can feed larger opportunities. OEM programs are the bridge between what we have learned in enterprise and where we believe larger scale opportunities can develop. Customers increasingly want a partner that understands optics, electronics, software integration, deployment, and support. It's a hard combination to find and it is where Vuzix can be differentiated. We have initial EVT-based OEM orders for our Ultralight Pro platform-based smart glasses program moving into shipping deliveries. Amazon's RME team also continues to expand use of the M400 to support fulfillment center operations. Separately, and another good example, a leading automaker is evaluating a custom-designed waveguide-based smart glasses solution for factory floor workflows. The key point is not simply that we can customize hardware. The key point is that customer-funded engineering can create a more disciplined, capital-efficient path towards production, while allowing us to reuse platform learning across multiple programs. Defense and security are becoming more important for us because the applications increasingly match our strengths. Wearable displays, advanced optics, drone-related visualization, situational awareness, and secure information delivery. We have a Collins Aerospace program already in production for waveguide-based AR display systems supporting drone-related applications. We also announced a six-figure development order from a Tier 1 defense supplier for a next-generation waveguide-based head-mounted display system for in-field situational awareness applications. In addition, we expect a U.S.-based waveguide design and manufacturing program funded by the Department of Defense to kick off shortly. The strategic fit is not just a device. It's secure U.S.-based manufacturing, custom optics, process control, and the ability to support customers where supply chain provenance matters. Defense opportunities can be uneven in timing, but they are strategically important, can validate our capabilities, and demanding use cases, and can grow to become significant revenue contributors over time. Waveguides are at our core and are one of the hardest parts of building lightweight, transparent, bright wearable displays. They influence image quality, brightness, efficiency, eye box, form factor, prescription support, privacy characteristics, and ultimately, manufacturability. Our opportunity is not to bet on only one display technology. We can support multiple display architectures, including L-COS, laser-based displays, OLED, and micro-LED, depending on customer needs. We also have standard and custom designs, prescription-integrated approaches, and incognito, no-eye-glow technology for use cases where privacy matters. We're also seeing inbound interest in waveguides from adjacent non-display optical markets beyond smart glasses. We're not going to make that a major part of today's story. We'll talk more about those opportunities when they are tied to announced commitments. For shareholders, the near-term takeaway is that waveguides are where technology, manufacturing, and long-term scale come together for Vuzix. The reason we emphasize manufacturing is that waveguides are difficult. A strong demonstration simply isn't enough. Customers need performance, repeatability, yield, cost, and supply reliability. Our advantage is the level of process control we have built across the stack. Optical design, tooling, imprinting, assembly, metrology, inspection, and process refinement. If you control the steps, you can learn faster, improve yield faster, and respond to customer-specific requirements faster. This is also why U.S.-based manufacturing matters. For enterprise, defense, and some OEM customers, provenance and trust are becoming part of the buying criteria. The combination of waveguide IP, process learning, custom equipment, and Rochester manufacturing gives us a platform we believe can support higher-scale opportunities. The Rochester expansion work is important for Vuzix because it turns our waveguide capability into a more scalable platform. We're not expanding simply for the sake of more capacity. The work is targeted at throughput, changeovers, inspection, and running more programs in parallel. There are four key work streams. First, the plant floor. We've reallocated non-essential equipment and prepped for the custom equipment being installed in the main cleanroom. Second, new imprint capacity. We have a second high-speed imprinter toolset with install planned through July and qualification targeted for late summer. Third is automation. We've ordered parts for further semi-automation with build-out and testing to follow. And fourth is quality. Color waveguide outgoing quality control is moving into the cleanroom and we're finalizing a new edge black qualification protocol. To put this in commercial terms, the reason changeover speed and inspection matter is that they determine how many customer programs we can run at once without retooling the line for each one. Faster Changeovers mean a defense program and a commercial waveguide program can move through the same facility in parallel, rather than waiting in line. Tighter inspection means we catch yield issues earlier, which is what lets us quote credible cost and delivery to customers who need to trust the supply. That combination, parallel programs, and predictable quality is what converts a development facility into a manufacturing platform. the result we want is a tighter loop between development and production as more oem defense and waveguide programs move through the company rochester has to become a disciplined manufacturing platform not just a development facility quanta is important because it connects our waveguide and smart glasses capabilities to a global odm commercialization path the strategic investment created alignment, but the more important point is the business structure. Vuzix can design and supply optical modules, while an ODM partner like Quanta can help reach broader customer programs. We also continue to work across the display ecosystems. Different customers may choose different display technologies. Our job is to make waveguides work well with those architectures and to be useful to multiple potential winners. That is why I do not want shareholders to think about Vuzix as a single branded consumer device bet. The more compelling opportunity is to be an enabling supplier across OEM programs, ODM channels, display partners, and ultimately high volume products where waveguides matter. Execution has to be funded responsibly. At the end of the first quarter, we had approximately $20 million of cash and cash equivalents, with no current or long-term debt outstanding. We have also communicated that our liquidity, along with a disciplined cost structure and business expansion, supports our current operating plan well into 2027. The operating philosophy is clear. Prioritize customer-funded development where possible. Invest in the manufacturing and engineering capabilities that differentiate us and keep moving customer programs forward. We're not trying to fund every idea ourselves. We are building the company in a way that gives shareholders exposure to larger opportunities while preserving operating flexibility. Let me close the business section by pointing to where we are putting our energy and where you should expect to see progress show up over time. In enterprise, that is growing kit deployments and partner-led vertical rollouts. In OEM, it is moving customer-specific platforms from development and evaluation towards production. In defense and security, it is advancing our HMD drone display and secure optics programs. In waveguides, it is turning custom designs into supply relationships and qualified processes. In Rochester, it is qualifying new tools and improving inspection and cycle time. And across the company, it is maintaining a steady execution-led approach. I want to be clear that these are the key areas of focus at Vuzix. And what matters is whether we are converting our technology, customer relationships, and manufacturing investments into programs that can scale. To close, the Vuzix story is becoming clearer and more disciplined. We began as a smart glasses pioneer, and that experience still matters. But the company we are building today is broader, OEM products, waveguide design, and optical manufacturing, with enterprise products continuing to validate use cases and customer needs. The next phase is about execution, moving customer programs forward, qualifying manufacturing capacity, strengthening Rochester, and communicating when milestones are concrete. We believe that is the right path to create long-term shareholder value. Thank you again for your continued support and engagement. I'm happy to now take questions, and Eric, would you please help to moderate the Q&A session?