Q4 2024 Vuzix Corp Earnings Call and Business Update

March 13, 2025

Difference call.

At this time all participants are in a listen only mode.

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.

Speaker Change: Now I would like to turn the call over to Ed Mcgregor Director of Investor Relations at Vuzix. Mr. Mcgregor you may begin.

Speaker Change: Thank you operator, and good afternoon, everyone.

Speaker Change: Welcome to the Vuzix fourth quarter and 2020 for full year, ending December 31 financial results and business update conference call.

Speaker Change: With us today are Vuzix, CEO, Paul Travers and our CFO Grant Russell.

Speaker Change: 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.

Speaker Change: 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.

Speaker Change: Actual results could differ materially from those contemplated by any forward looking statements as.

Speaker Change: 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.

Speaker Change: As well as changes in legal and regulatory requirements.

Speaker Change: In addition, any projections as to the Companys future performance represent managements estimates as of today March 13th 2025.

Speaker Change: <unk> assumes no obligation to update these projections in the future as market conditions change.

This afternoon, the company issued a press release announcing its financial 'twenty 'twenty four 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.

[music].

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.

Speaker Change: Which is also available at Www Vuzix dotcom.

Speaker Change: 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.

Speaker Change: 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 financial results.

Speaker Change: After which we'll move onto the question and answer session.

Speaker Change: Thank you and welcome to the Vuzix Q4, and full year 2024 conference call in recent years, the wearable computer in a our industry has seen significant changes progressing immaturity and acceptance external factors such as COVID-19 has shown the role of these enterprise smart glasses and.

Speaker Change: Moving workplace efficiency as the industry has developed Vuzix has continued to invest in adjusted strategy to align with the future direction of the market.

Operator: Greetings and welcome to the Vuzix 4th quarter and full year ending December 31st, 2024 Financial Results and Business Update conference call. At this time, all participants are in a listen-only mode.

Greetings and welcome to the Vuzix fourth quarter and full year, ending December 31st 2024 financial results and business update conference call.

Speaker Change: On the technology front Vuzix has been discussing ours and the industry's progress on wave guides and the micro displays that drive them for years, and we're now approaching a pivotal moment, which should increase adoption greatly.

At this time all participants are in a listen only mode.

Operator: 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.

Speaker Change: Innovation in these technologies has finally enabled the development of all day wearable smart glasses with high performance displays an industry first.

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.

Speaker Change: We've long emphasized our waveguide optics work seamlessly with a variety of third parties supporting enterprise medical and our OEM business, including military and defense centers and now with the broader consumer markets following on.

As a reminder, this call is being recorded.

Ed McGregor: Now I would like to turn the call over to Ed McGregor, Director of Investor Relations at Vuzix. Mr. McGregor, you may begin.

Now I would like to turn the call over to Ed Mcgregor Director of Investor Relations at Vuzix. Mr. Mcgregor you may begin.

Ed McGregor: Thank you, Operator, and good afternoon, everyone. Welcome to the Vuzix fourth quarter and 2024 full year ending December 31st financial results and business update conference.

Thank you operator, and good afternoon, everyone.

Speaker Change: Despite the noise and pace of change in the industry Vuzix remains focused on its pursuit to develop the best mousetrap to solve and support the enterprise in other markets. We address as they unfold. We continued to enhance the performance. The features that matter and of course, the cost competitiveness of our wave guys arguably.

Welcome to the Vuzix fourth quarter and 2020 for full year ending December 31st the financial results and business update conference call.

Ed McGregor: 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. claims the protection of the safe harbor for forward-looking statements that are contained in the Private Securities Litigation Reform Act of 1995. Results could differ materially from those contemplated by any forward-looking statement. as a result of certain factors including, but not limited to, general economic and business conditions.

US today are Vuzix CEO, Paul Travers CFO Grant Russell.

Speaker Change: Really the most critical component of AI, and AR smart glasses, and other wearables or.

Speaker Change: Our commitment to investing in and advancing our core waveguide technology has led to one of the most significant developments and Vuzix recent history. The establishment of a strategic partnership with leading ODM supplier Quanta computer.

Speaker Change: 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.

Speaker Change: Actual results could differ materially from those contemplated by any forward looking statements.

Speaker Change: This collaboration besides highlighting the credibility of what Vuzix has created over the years has facilitated the development of multiple smart glasses reference designs based on our waveguide technology and is proven to help open up the market in general for us.

Ed McGregor: Competitive Factors, Changes in Business Strategy or Development Plans Unknown Executive, Ed McGregor, Vuzix In addition, any projections as to the company's future performance represent management's estimates as of today, March 13, 2025.

Speaker Change: As well as changes in legal and regulatory requirements.

Speaker Change: Our partnership with Quanta reinforced by their $20 million multiphase investment underscores our shared vision of revolutionizing.

Speaker Change: In addition, any projections as to the Companys future performance represent managements estimates as of today March 13 2025.

Speaker Change: The E R and AI industry through this collaboration Vuzix is poised to supply millions of cutting edge and cost competitive wave guides for a or an E. R. I driven smart glasses to Qantas extensive OEM client base. The first 10 million tranche of this investment was received in September of 2024.

Ed McGregor: assumes no obligation to update these projections in the future as market conditions This afternoon the company issued a press release announcing its financial 2024 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.

Speaker Change: You said it assumes no obligation to update these projections in the future as market conditions change.

And we remain on track to meet the milestones required to unlock the remaining two 5 million tranches as anticipated.

Speaker Change: 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.

Speaker Change: At CES 2025, we introduced our ultra light pro AR smart glasses platform designed for specific enterprise verticals and market use cases these.

Speaker Change: These binocular full color see-through glasses powered by Qualcomm's <unk> processor fill a critical gap in the current market. The response has been overwhelmingly positive and we are already receiving inbound interest from Oems and White label partners.

Ed McGregor: is also available at www.vuzix.com.

Speaker Change: Which is also available at Www Vuzix dotcom.

Paul Travers: 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.

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.

Ed McGregor: 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 financial results, after which we'll move on to the question and answer. Thank you, Ed.

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 financial results after which we'll move onto the question and answer session.

Speaker Change: Ultra light pro a our smart glasses platform was also awarded best in show by wearable the authority on wearable technology.

Speaker Change: Well, thank you and welcome to the Vuzix Q4, and full year 2024 conference call in recent years, the wearable computer in a our industry has seen significant changes progressing immaturity and acceptance external factors such as COVID-19 has shown the role of these enterprise smart glasses and.

Paul Travers: Welcome to the Vuzix Q4 and full year 2024 conference. In recent years, the wearable computer and AR industry has seen significant changes, progressing in maturity in a External factors such as COVID-19 have shown the role of these enterprise smart glasses in improving workplace efficiency. As the industry has developed, Vuzix has continued to invest and adjust its strategy to align with the future direction of the market. On the technology front, Vuzix has been discussing ours and the industry's progress on waveguides and the micro displays that drive them for years. We're now approaching a pivotal moment which should increase adoption rate.

Speaker Change: Further at CES 2025, we introduced the ultra light audio smart glasses platform, a new upgrade to the base ultralight platform, which integrates dual speakers and noise canceling microphone for enhanced audio and voice interaction and.

And more recently at mobile World Congress in Barcelona, Micro OLED a grenoble.

Speaker Change: Moving workplace efficiency as the industry has developed Vuzix has continued to invest in adjusted strategy to align with the future direction of the market.

Speaker Change: Based maker of our smart glasses in their active look software platform along with the semiconductor company S. T Microelectronics announced a reference design for our smart glasses based on the ultra light audio smart glasses platform from Vuzix featuring.

Speaker Change: On the technology front Vuzix has been discussing ours and the industry's progress on wave guides and the micro displays that driving them for years, and we're now approaching a pivotal moment, which should increase adoption greatly.

Speaker Change: Micro OLED active look software. This reference design supporting the active look ecosystem will enable third party eyewear manufacturers to create diverse smart glasses models for sport and outdoor applications that require mission critical information in real time and on the move.

Paul Travers: Innovation in these technologies has finally enabled the development of all-day wearable smart glasses with high-performance displays and industry-first. As we've long emphasized, our waveguide optics work seamlessly with a variety of third parties supporting enterprise, medical, and our OEM business, including military and defense. And now, with the broader consumer markets following on. Despite the noise and pace of change in the industry, Vuzix remains focused on its pursuit to develop the best mousetrap to solve and support the enterprise and other markets we address as they unfold. We continue to enhance the performance, the features that matter, and of course the cost competitiveness of our waveguides, arguably the most critical component of AI and AR smart glasses and other wearables.

Innovation in these technologies is finally enabled the development of holiday wearable smart glasses with high performance displays an industry first.

As we've long emphasized our waveguide optics work seamlessly with a variety of third parties supporting enterprise medical and our OEM business, including military and defense sectors and now with the broader consumer markets following on.

Speaker Change: C 100, Ultra light AR smart glasses platform launched at CES 2024 is aimed at building an ecosystem attracting early adopters and laying the foundation for our OEM and White label business in November we strategically reduced the price of the Z 100 to accelerate adoption among ecosystem partners effective.

Despite the noise in pace of change in the industry Vuzix remains focused on its pursuit to develop the best mousetrap to solve and support the enterprise in other markets. We address as they unfold. We continued to enhance the performance. The features that matter and of course, the cost competitiveness of our wave guide arguably.

Speaker Change: <unk> Oems and early adopters.

This move has led to increased demand and follow on orders for this AI powered smart glasses. The G. 100 is being selected for its all day wearability seamless heads up display integration and competitive pricing, which supports high volume sales. The vuzix Mone hundred smart glasses are being focused on white label and OEM customers.

Speaker Change: The most critical component of AI, and AR smart glasses, and other wearables or.

Paul Travers: Our commitment to investing in and advancing our core waveguide technology has led to one of the most significant developments in Vuzix research.

Our commitment to investing in and advancing our core waveguide technology has led to one of the most significant developments and Vuzix recent history.

<unk> and we are actively building multiple or a few opportunities based on this platform.

Paul Travers: The Establishment of a Strategic Partnership with Leading ODM Supplier Quanta Computers. This collaboration, besides highlighting the credibility of what Vuzix has created over the years, has facilitated the development of multiple smart glasses reference designs based on our WaveGuide technology and is proving to help open up the markets in general. Our partnership with Quanta, reinforced by their $20 million multi-phase investment, underscores our shared vision of revolutionizing... AR and AI. Through this collaboration, Vuzix is poised to supply millions of cutting edge and cost competitive wave. or AR and AR-driven smart glasses to Qantas' extensive OEM The first $10 million tranche of this investment was received in September of 2024, and we remain on track to meet the milestones required to unlock the remaining two $5 million trenches as needed.

Speaker Change: The establishment of a strategic partnership with leading ODM supplier Quanta computer.

As we have previously indicated we have been steadily pivoting towards the ODM slash OEM side of our business forging strong development and supply partnerships throughout the industry. We have strengthened our presence in the defense and industrial sectors, where our differentiated solutions are meeting mission critical demands.

Speaker Change: Our partnership with Quanta reinforced either 20 million dollar multi phase investment underscores our shared vision of revolutionizing.

Our partnership with Talus Garmin L. Three Harrison others, yet to be named demonstrate our ability to deliver differentiated higher margin solutions that align well with both our customers' needs and vuzix long term growth strategy and.

Speaker Change: In the enterprise software ecosystem, our acquisition of moment in November of 'twenty, 'twenty, two is allowing us to expand our offerings within the logistics vertical with end to end solutions. We expect these new solutions will be white labeled and or Oems and in some cases carry the vuzix brand, we have multiple customers that.

Speaker Change: And we remain on track to meet the milestones required to unlock the remaining two 5 million dollar tranches as anticipated.

Our employing mobilia them by moving into software and have moved from the proof of concept stage two formal rollout.

Paul Travers: At TES 2025, we introduced our Ultralight Pro AR smart glasses. Designed for specific enterprise verticals and market use. These binocular, full-color, see-through glasses, powered by Qualcomm's AR1 processor.

Speaker Change: CES 2025, we introduced our ultra light pro a our smart glasses platform designed for specific enterprise verticals and market use cases these.

Speaker Change: We are listening to our growing customer base and evolving our mobileme software beyond picking and packing workflows to deliver end to end enterprise solutions that extend beyond warehousing and logistics as well.

Speaker Change: These binocular full color see-through glasses powered by Qualcomm's a R. One processor fill a critical gap in the current market. The response has been overwhelmingly positive and we are already receiving inbound interest from Oems and White label partners.

Paul Travers: fill a critical gap in the current. Response has been overwhelmingly positive, and we are already receiving inbound interests from OEMs and white-label companies.

Speaker Change: In parallel we continue to engage with our stable of I S V partners to drive broader adoption of smart glasses in the enterprise sector. We've been working with these Isps for some time now as you all know and they are seeing the business opportunities finally coming to fruition on also together, we aim to deliver intelligent all day wearables.

Paul Travers: Ultralight Pro AR Smart Glasses Platform was also awarded Best in Show by Wearable, the authority on wearable technology.

Speaker Change: Ultralight pro a our smart glasses platform was also awarded best in show by wearable the authority on wearable technology.

Paul Travers: Further at CES 2025, we introduce the ultralight audio smart A new upgrade to the bass ultralight platform, which integrates dual speakers and noise-canceling microphone for enhanced audio and voice interaction.

Speaker Change: Further at CES 2025, we introduced the ultra line audio smart glasses platform, a new upgrade to the base ultralight platform, which integrates dual speakers and noise canceling microphone for enhanced audio and voice interaction and.

Speaker Change: Solutions, integrating hardware and software to drive tangible business outcomes and productivity.

Paul Travers: and more recently at Mobile World Congress in Barcelona, Micro OLED, a Grenoble. maker of ARsmart in their Active Look software platform, along with the semiconductor company STMicroelectronics, announced a reference design for AR smart glasses based on the Ultralight Audio Smart Glasses platform from Vuzix.

Speaker Change: And more recently at mobile World Congress in Barcelona, Micro OLED a grenoble.

Speaker Change: As we have repeatedly stated the primary differentiator for Vuzix is our ability to make a quality wave guide and volume at an affordable cost.

Speaker Change: Based maker of our smart glasses in their active look software platform, along with a semiconductor company S. T Microelectronics announced a reference design for our smart glasses based on the ultra light audio smart glasses platform from Vuzix featuring.

Speaker Change: With our proprietary technologies, we can process in a timely fashion hundreds of wave guides per single run while the bulk of our competitors are capped at a dozen wave guides or so on an industry standard 300 millimeter wafer requiring a much more time consuming process. This advantage comes from our custom design.

Paul Travers: Featuring... Micro-OLEDGE Active Look This reference design, supporting the Active Look ecosystem, will enable third-party eyewear manufacturers to create diverse smart glasses models for sports and outdoor applications that require mission-critical information in real time and on the move.

Speaker Change: Featuring.

Speaker Change: Yes, and equipment extensive experience and developed IP, enabling us to quickly design and manufacture smart glasses and add new features to bolster this edge our patent portfolio has grown by 50% in the past two years to over 425 patents and pending patents covering a wide range of.

Paul Travers: Our Z100 Ultralight AR smart glasses platform, launched at CES 2024, is aimed at building an ecosystem attracting early adopters and laying the foundation for our OEM and white label business. In November, we strategically reduced the price of the Z100 to accelerate adoption among ecosystem partners, effectively OEMs and early adopters. This move has led to increased demand and follow-on orders for this AI-powered system. Z100 is being selected for its all-day wearability, seamless heads-up display integration, and competitive pricing. Supports High-Volume C100 smart glasses are being focused on white label and OEM customers, and we are actively fielding multiple RFQ opportunities based on that.

Speaker Change: Our C 100, Ultra light AR smart glasses platform launched at CES 2024 is aimed at building an ecosystem attracting early adopters and laying the foundation for our OEM and White label business in November we strategically reduced the price of the Z 100 to accelerate adoption among ecosystem partners.

Speaker Change: Optical wave guide and wearable computing technologies solidifying our industry leadership.

Speaker Change: Our ODM slash OEM business has the potential to start ramping up meaningfully with quanta as our partner and with our major computing firms scaling production our own D. M Flash OEM business will grow we anticipate an increase in our reference designs and OEM customer count and are actively involved in multiple projects with.

Speaker Change: Effectively Oems and early adopters.

Speaker Change: This move has led to increased demand and follow on orders for this AI powered smart glasses. The Z 100 is being selected for its all day wearability seamless heads up display integration and competitive pricing, which supports high volume sales. The vuzix Mone hundred smart glasses are being focused on a white label and OEM customers.

Speaker Change: Quanta that have potential to create significant business opportunities for both entities.

Speaker Change: <unk> and we are actively building multiple or a few opportunities based on this platform.

Speaker Change: Montes extensive scale and expertise in electronic product manufacturing combined with Vuzix proprietary wave guides and smart glasses technology form a powerful alliance. We foresee that this collaboration will result in high volume production of our wave guides and AAR components, ultimately, reaching millions of units and driving substantial.

Paul Travers: As we have previously indicated, we have been steadily pivoting towards the ODM slash OEM side of our business. Forging strong development and supply partnerships throughout the industry. We have strengthened our presence in the defense and industrial where our differentiated solutions are meeting mission-critical demands. Our partnership with Thales, Garmin, L3Harris, and others yet to be named demonstrate our ability to deliver differentiated, higher-margin solutions that align well with both our customers' needs and Vuzix's long-term growth.

Speaker Change: As we have previously indicated we have been steadily pivoting towards the ODM slash OEM side of our business forging strong development and supply partnerships throughout the industry. We have strengthened our presence in the defense and industrial sectors, where our differentiated solutions are meeting mission critical demands.

Speaker Change: Revenue growth for Vuzix.

Speaker Change: Moreover, we are engaging in various stages of discussions with several other odm's and we're already designing or interested in designing and manufacturing a.

Slash AAR smart glasses for widespread consumer use.

Speaker Change: In 2025, Vuzix anticipate significant growth in customer wins across our OEM and enterprise businesses as the industry stabilizes and expands we expect multiple design wins for both consumer and enterprise OEM products reviews will supply optical waveguides and display engines.

Paul Travers: The Enterprise Software Ecosystem, our acquisition of Mobient in November of 2022, is allowing us to expand our offerings within the logistics vertical with end-to-end solutions. We expect these new solutions will be white-labeled and or OEM, and in some cases, carry the Vuzix We have multiple customers that are employing Mobilium by Movient Software and have moved from the proof of concept stage to formal role. are listening to our growing customer base and evolving our Mobilium software beyond picking and packing. Deliver end-to-end enterprise solutions that extend beyond warehousing and logistics as well. In parallel, we continue to engage with our stable of ISV partners to drive broader adoption of smart glasses in the enterprise.

Speaker Change: In the enterprise software ecosystem, our acquisition of moment in November of 2022 is allowing us to expand our offerings within the logistics vertical with end to end solutions. We expect these new solutions will be white labeled and or Oems and in some cases carry the vuzix brand, we have multiple customers that.

In the defense and security markets, we foresee multiple programs with current Oems and defense contractors, leading to production engagements and orders for customized designs and enterprise. We are nurturing numerous customer wins that are being supported by measured success that exceed customer benchmarks by an order of magnitude in PAH.

We are listening to our growing customer base and evolving our mobile William software beyond picking and packing workflows to deliver end to end enterprise solutions that extend beyond warehousing and logistics as well and.

Speaker Change: Arcelor processing for example movements newly introduced mobile M application running on Vuzix Smart glasses is seeing partial scanning to been placements DS clocked at a fraction of the current methods for frontline workers.

Speaker Change: In parallel we continue to engage with our stable of Isd partners to drive broader adoption of smart glasses in the enterprise sector. We've been working with these Isps for some time now as you all know and they are seeing the business opportunities finally coming to fruition also together, we aim to deliver intelligent all day wearables.

Paul Travers: been working with these ISVs for some time now, as you all know, and they are seeing the business opportunities finally coming to fruition on all of them. Together, we aim to deliver intelligent, all-day wearable solutions integrating hardware and software to drive tangible business outcomes and profitability. As we have repeatedly stated, the primary differentiator for Vuzix is our ability to make a quality waveguide and volume at an affordable price. With our proprietary technologies, we can process in a timely fashion hundreds of waveguides per single run, while the bulk of our competitors are capped at a dozen waveguides or so on an industry standard 300mm wafer, requiring a much more time-consuming process.

Speaker Change: For new workers, where turnover is high we are seeing scans have been placement improvements of upwards of 250% in some instances in.

Speaker Change: Solutions, integrating hardware and software to drive tangible business outcomes and productivity.

Speaker Change: In a typical warehouse with 80 pickers, each picking 300 items per day from pallet, a 15% to 20% improvement inefficiency would enable the same workforce to pick an additional 3600 to 4800 items per day significantly increasing daily throughput without adding staff.

Speaker Change: As we have repeatedly stated the primary differentiator for Vuzix is our ability to make a quality wave guide and volume at an affordable cost.

Summarize as a result of these fully demonstrated kpis key performance indicators.

Speaker Change: Which stand up on their own we expect these customers will be placing follow on orders that have the potential to effectively consume all of our existing M 400 inventories and as a result of our anticipated conversion of our existing M series inventory into cash Vuzix is well on its way to introducing next generation purpose.

Paul Travers: This advantage comes from a custom design process. extensive experience, and developed IP, enabling us to quickly design and manufacture smart glasses and add new features. Bolster this edge, our patent portfolio has grown by 50% in the past two years to over 425 patents and patents. covering a wide range of optical, waveguide, and wearable computing technologies, solidifying our AR industry. Our ODM slash OEM business has the potential to start ramping up meaningfully. Qanta is our partner and with our major computing firms scaling production our ODM slash OEM business will grow. We anticipate an increase in our reference designs and OEM customer count and are actively involved in multiple projects with Qanta that have potential to create significant business opportunities for both.

Yes, and equipment extensive experience and developed IP, enabling us to quickly design and manufacture smart glasses and add new features to bolster this edge our patent portfolio has grown by 50% in the past two years to over 425 patents and pending patents covering a wide range of <unk>.

Speaker Change: Belt products based directly on the customer feedback in the field and our network of Isd partners and resellers. We have also recently received a commercial order for Vuzix shield, which consumes our remaining inventory and planned production of this first generation model and we are currently responding to RF queues that will effectively consume our remaining.

Speaker Change: Tickle wave guide and wearable computing technologies solidifying our industry leadership.

Speaker Change: Our ODM slash OEM business has the potential to start ramping up meaningfully with quanta as our partner and with our major computing firms scaling production our old D. M. Sasha OEM business will grow we anticipate an increase in our reference designs and OEM customer count and are actively involved in multiple projects.

Speaker Change: And 4000 inventory.

Speaker Change: Yes.

Speaker Change: Let me add Vuzix enters 2025 with a strong financial foundation.

As of year end 2024, we had approximately $18 million in cash and cash equivalents, reflecting our disciplined cost management and capital raising efforts.

Speaker Change: Quanta that have potential to create significant business opportunities for both entities.

Speaker Change: This includes $8 2 million raised through our at the market facility in Q4, providing additional flexibility to support our growth initiatives. Additionally, we are making strong progress towards meeting milestones required for the remaining $10 million of investment from Quanta computer, which will further reinforce our liquidity position.

Speaker Change: Montes extensive scale and expertise in electronic product manufacturing combined with Vuzix proprietary wave guides and smart glasses technology form a powerful alliance. We foresee that this collaboration will result in high volume production of our wave guides and a our components ultimately reaching millions of units and driving substantial.

Paul Travers: scale and expertise in electronic product manufacturing, combined with Vuzix proprietary waveguides and smart glasses technology, form a powerful alliance. We foresee that this collaboration will result in high-volume production of our waveguides and AR components, ultimately reaching millions of units and driving substantial revenue growth. Moreover, we are engaging in various stages of discussions with several other ODMs who are already designing or interested in designing and manufacturing.

Speaker Change: Really as the aforementioned business unfolds, we expect a large portion of our finished inventories to be converted to cash.

Speaker Change: Revenue growth for Vuzix.

Speaker Change: Moreover, we are engaging in various stages of discussions with several other odm's and we're already designing or interested in designing and manufacturing a.

Grant Russell: Grant will now take you through our financial numbers.

Speaker Change: Rand.

Speaker Change: Yeah.

Thank you Paul as Ed mentioned the 10-K, we felt this afternoon with the SEC offers a detailed explanation of our annual financial goals.

Paul Travers: AI, AR smart glasses for widespread consumer. In 2025, Vuzix anticipates significant growth in customer wins across our OEM and enterprise businesses as the industry stabilizes and expands. We expect multiple design wins for both consumer and enterprise OEM products, where Vuzix will supply optical waveguides and display...

Slash, a our smart glasses for widespread consumer use.

Speaker Change: So I'm just going to provide you with a better color on some of the full year as well as quarterly numbers.

Speaker Change: And 'twenty twenty-five vuzix and anticipate significant growth in customer wins across our OEM and enterprise businesses as the industry stabilizes and expands we expect multiple design wins for both consumer and enterprise OEM products were views will supply optical waveguides and display engines.

Speaker Change: For the three months ended December 31, 2024, we reported $1 3 million in total revenues as compared to $1 1 million in the prior years comparable fourth quarter revenue increase was primarily due to higher unit sales of our M 400, smart glasses for the full year ended December 31 2024.

Paul Travers: Defense & Security Markets. We foresee multiple programs with current OEMs and defense contractors leading to production engagements and orders for customized We are nurturing numerous customer wins that are being supported by measured success that exceed customer benchmarks by an order of magnitude. Partial Processing, for example, Movient's newly introduced Mobilium application running on Vuzix smart glasses is seeing partial scanning to bin placement speeds clocked at a fraction of the current methods from frontline workers. New York, Ed McGregor, Vuzix, Ed McGregor, Vuzix, Vuzix, Vuzix, Vuzix, Vuzix, Vuzix, Typical Warehouse with 80 pickers, each picking 300 items per day from pallet.

Speaker Change: In the defense and security markets, we foresee multiple programs with current Oems and defense contractors, leading to production engagements and orders for customized designs and enterprise. We are nurturing numerous customer wins that are being supported by measured success that exceed customer benchmarks by an order of magnitude in <unk>.

<unk> reported $5 8 million in total revenues as compared to $12 1 million for the prior year product sales decreased by 58% year over year as unit sales of our <unk> hundred product decline compared to the previous year when two major distributors placed significant stocking orders in the <unk>.

Speaker Change: So processing for example movement newly introduced mobility application running on Vuzix Smart glasses is seeing partial scanning to been placement speeds clocked at a fraction of the current methods from frontline workers.

Speaker Change: First half of 2023, representing 54% of our total product sales in 2023.

Sales of engineering services for the year ended December 31, 2024 were $1 3 million as compared to $1 4 million in 2023, a decrease of 7%. Please note as disclosed in our 10-K, we have 2.1 million, whereas the remaining performance obligations over.

For new workers, where turnover is high we are seeing scan to been placement improvements of upwards of 250% in some instances.

Paul Travers: 15 to 20 percent improvement in efficiency would enable the same workforce to pick an additional 3,600 to 4,800 items. Significantly increasing daily throughput without adding. Summarized, as a result of these fully demonstrated KPIs, key performance indicators. which stand up on their own. We expect these customers will be placing follow-on orders that have the potential to effectively consume all of our existing M400 inventories. And as a result of our anticipated conversion of our existing M-series inventory into cash, Vuzix is well on its way to introducing next generation purpose-built products based directly on the customer feedback in the field and our network of ISV partners.

Speaker Change: Revenue was already recognized.

Speaker Change: There are current waveguide development project.

For the full year ended December 31, 2024, there was an overall gross loss of $5 6 million as compared to a loss of $2 6 million for 'twenty to 'twenty three the larger gross loss for 2024 was primarily driven by further inventory obsolescence reserves included in cost of sales and.

Summarized as a result of these fully demonstrated kpis key performance indicators.

Speaker Change: Increased unemployed manufacturing overhead cost of 2.1 million due to reduce further builds a b M 400 finished.

Speaker Change: Finished goods in the second half of 2024.

The larger additional inventory reserve amounts were related to the expected surplus components and obsolescence provision.

Speaker Change: Built products based directly on the customer feedback in the field and our network of Isd partners and resellers. We have also recently received a commercial order for Vuzix shield, which consumes our remaining inventory and planned production of this first generation model and we are currently responding to RF queues that will effectively consume a remains.

Paul Travers: We have also recently received a commercial order for Vuzix Shields, which consumes our remaining inventory and planned production of this first generation model, and we are currently responding to RFQs that will effectively consume our remaining M4000 inventory.

It makes us a currently planned listing future product builds in 'twenty to 'twenty five in early 2026.

Speaker Change: And all part of our planned transition to expected new smart glasses models now being developed no finished goods everything being included in these inventory reserves and as the ultimate.

Speaker Change: <unk> and 4000 inventory.

Paul Travers: Let me add Vuzix enters 2025 with a strong financial foundation. As of year end 2024, we had approximately 18 million in cash and cash equivalents reflecting our disciplined cost management and capital raising. This includes $8.2 million raised through our at-the-market facility in Q4, providing additional flexibility to support our growth. Additionally, we are making strong progress towards meeting milestones required for the remaining $10 million investment. Computer, which will further reinforce our liquidity. Finally, as the aforementioned business unfolds, we expect a large portion of our finished inventories to be converted...

Speaker Change: Let me add Vuzix interest 2025, with a strong financial foundation.

Speaker Change: Realize the value of these excess components may that may not be used in future product build is unknown at this time, 100% obsolescence provision was accrued.

As of year end 2024, we had approximately $18 million in cash and cash equivalents, reflecting our disciplined cost management and capital raising efforts.

Speaker Change: Research and development expenses for 2024 fell 22% to $9 6 million as compared to $12 3 million for the 2023 period. The decrease was primarily due to a $1 $6 million reduction in salary and benefits.

Speaker Change: Related expenses due to head count decreases and a 1 million dollar drop in external development cost for the fourth quarter of December 31st 2020 for research and development expenses were $2 2 million as compared to $3 5 million in the 2023 fourth quarter. The decrease again was driven by head count reductions.

Speaker Change: As the aforementioned business unfolds, we expect a large portion of our finished inventories to be converted to cash.

Grant Russell: Grant will now take you through our financial.

Grant Russell: Grant will now take you through our financial numbers.

Speaker Change: Rand.

Speaker Change: Sales and marketing costs for all of 2024 fell to $8 2 million from $12 7 million in 2023, a reduction of $4 5 million or 36%. The most significant factors for these expense reductions include a $1.6 million decrease in advertising and trade show expenses and a one point.

Grant Russell: Thank you, Paul. As Ed mentioned, the 10K we filed this afternoon with the SEC offers a detailed explanation of our annual financial We're just going to provide you with a bit of color on some of the full year as well as quarterly. We reported 1.3 million in total revenues as compared to 1.1 million in the prior year's comparable fourth quarter. Revenue increase was primarily due to higher unit sales of our M400 Smart For the full year ended December 31, 2024, Vuzix reported $5.8 million in total revenues as compared to $12.1 million for the prior year.

Rand: Thank you Paul as Ed mentioned the 10-K, we felt this afternoon with the SEC offers a detailed explanation of our annual financial.

So I'm just going to provide you with a bit of color on some of the full year as well as quarterly numbers.

For the three months ended December 31, 2024, we reported $1 3 million in total revenues as compared to $1 1 million in the prior year comparable fourth quarter revenue increase was primarily due to higher unit sales of our <unk> hundred smart glasses for the full year ended December 31 2024.

Speaker Change: $6 million reduction in salary and benefits expenses driven by head count decreases.

For the fourth quarter of December.

Speaker Change: 31, 2024 sales and marketing expenses were $2 million as compared to four 8 million in the 'twenty to 'twenty three fourth quarter. The decrease again was driven by reductions in head count and advertise them expenses changes in bad debt provisions and severance accruals booked in Q4 of 2023.

Rand: <unk> reported $5 8 million in total revenues as compared to $12 1 million for the prior year product sales decreased by 58% year over year as unit sales of our <unk> hundred product decline compared to the previous year.

Grant Russell: Product sales decreased by 58% year-over-year as unit sales of our M400 product declined compared to the previous year.

Speaker Change: General and administrative expenses for 'twenty to 'twenty, four decreased 7% to $17 2 million as compared to $18 6 million for the 'twenty to 'twenty three period. The decrease was largely due to a 1.4 millionaire dollar decline in noncash stock based compensation and a $1 1 million dollar decline in salary.

Grant Russell: when two major distributors Unknown Executive, Ed McGregor, Vuzix Unknown Executive, Ed McGregor, Vuzix Unknown Executive, Ed McGregor, Vuzix Sales of engineering services for the year ended December 31st, 2024 were 1.3 million as compared to 1.4 million in 2023, a decrease of 7%. Please note as disclosed in our 10k, we have 2.1 million worth of remaining performance obligations. Under a current waveguide development project. The full year ended December 31st, 2024.

Rand: Two major distributors placed significant stocking orders in the first half of 2023, representing 54% of our total product sales in 2023.

Rand: Sales of engineering services for the year ended December 31, 2024 were $1 3 million as compared to $1 4 million in 2023, a decrease of 7%. Please note as disclosed in our 10-K, we have 2.1 million, whereas the remaining performance obligations over revenue.

Speaker Change: And benefits related expenses due to head count reductions, partially offset by a $1 million increase in Investor Relations.

Speaker Change: For the fourth quarter.

Speaker Change: Ending December 31, 2020 for general and administrative expenses were $4 3 million as compared to $4 7 million in the 2023 for Florida decrease again was driven by head count reductions.

He has already recognized.

Under our current waveguide development project for.

Rand: For the full year ended December 31, 2024, there was an overall gross loss of $5 6 million as compared to a loss of $2 6 million for 2023. The larger gross loss for 2024 was primarily driven by further inventory obsolescence reserves included in cost of sales and.

Speaker Change: For the fourth quarter ended December 31, 2024, the net loss was $13 7 million or 16 cents per share as compared to a net loss of $19 9 million or <unk> 32 per share for the fourth quarter of 2023.

Grant Russell: There was an overall gross loss of $5.6 million as compared to a loss of $2.6 million for 2023. The larger gross loss for 2024 was primarily driven by further inventory obsolescent reserves included in cost of sales. Increased Unapplied Manufacturing Overhead Cost Unknown Executive, Ed McGregor, Vuzix Unknown Executive, Ed McGregor, Vuzix Goods in the second half. The larger additional inventory reserve amounts were related to the affected surplus components and obsolescent provisions.

Speaker Change: For the full year ended December 31, 2024, the net loss was $73 5 million or $1 eight per share as compared to a net loss of $50 1 million or 79% for the full year of 2023. The increased net loss was mostly attributable to the write off of our technology license and investment in atomistic.

Rand: Increased on applied manufacturing overhead cost of 2.1 million due to reduce further builds a b M 400.

Rand: Finished goods in the second half of 2024.

Rand: The larger additional inventory reserve amounts were related to the expected surplus components and obsolescence provision.

Speaker Change: Which was recorded in the second quarter of 2024.

Grant Russell: Unknown Executive, Ed McGregor, Vuzix Unknown Executive, Ed McGregor, Vuzix Unknown Executive, Ed McGregor, Vuzix and all part of our planned transition to expected new smart glasses models now being developed. No finished goods have been included in these inventory releases. Realizable Value of These Excess Components. that may not.

Speaker Change: Excluding this write off the net loss for 2024 was $6 9 million less than the 2023 net loss.

It makes us have currently plans listing future product builds in 2025 in early 2026.

And all part of our planned transition to expected new smart glasses models now being developed no finished goods that'd be ring being included in these inventory reserves and as the ultimate.

Speaker Change: Now for some balance balance sheet and cash flow highlights our cash position as of December 31, 2024 was $18 2 million a decrease of $8 4 million.

Realize the value of these excess components may definitely.

Speaker Change: From <unk>.

Speaker Change: December 31, 2023 and.

Rand: That may not be used in future product build is unknown at this time, 100% obsolescence provision was accrued.

Grant Russell: Product field is unknown at this time. 100% obsolescence provision was Research and Development Expenses for 2024 fell 22% to $9.6 million as compared to $12.3 million. Decreased with primarily due to a $1.6 million reduction in salary and benefits. related expenses due to headcount decrease. $1 million drop in external The fourth quarter of December 31st. for Research and Development. $2.2 million as compared to $3.5 million in the 2023. again was driven by headcount.

And we had a net working capital position of $24 6 million net cash flows used in operating activities was $23 7 million for the year ended December 31, 2024, as compared to $26 3 million for the 2023 year a decrease of.

Rand: Research and development expenses for 2024 fell 22% to $9 6 million as compared to $12 3 million for the 2023 period. The decrease was primarily due to a $1.6 million reduction in salary and benefits.

Speaker Change: $2 6 million.

Were all up.

Speaker Change: 2024.

Rand: Related expenses due to head count decreases and a 1 million dollar drop in external development cost for the fourth quarter of December 31st 2020 for research and development expenses were $2 2 million as compared to $3 5 million in the 2023 fourth quarter. The decrease again was driven by head count reduction.

We raised $18 3 million in the financing activities that consists of a $10 million investment by Quanta computer and September $8 2 million of net proceeds received from equity sales under our ATM offering in the fourth quarter of 2024.

Speaker Change: Cash used in investing activities in 2024 was $2 9 million down significantly from $19 3 million in 2023, primarily due to reductions in investment amounts in licensing fees paid to our domestic manufacturing equipment and tooling investments for our new waveguide manufacturing facility in 2023.

Grant Russell: Sales and marketing costs for all of 2024 fell to $8.2 million from $12.7 million in 2023, a reduction of $4.5 million, or $36 million. All significant factors for these expense reductions include a $1.6 million decrease in advertising and trade show expenses. $1.6 million dollar reduction. Salary and Benefits. driven by head. The fourth quarter of December. Sales and marketing expenses were $2 million Again, was driven by reductions in headcount and advertising.

Sales and marketing costs for all of 2024 fell to $8 2 million from $12 7 million in 2023, a reduction of $4 5 million or 36%. The most significant factors for these expense reductions include a $1.6 million decrease in advertising and trade show expenses and.

We are presently envisioning spending significantly less on Capex investments in 2025, as we feel our waveguide manufacturing capacity is now adequate for expected demand in the near term.

Rand: $1 6 million dollar reduction in salary and benefits expenses driven by head count decreases.

Rand: For the fourth quarter of December.

Speaker Change: I'm pleased to report that after a year of expense reductions when we look at our major operating expense groupings.

Rand: 31, 2024 sales and marketing expenses were $2 million as compared to four 8 million in the 'twenty to 'twenty three fourth quarter. The decrease again was driven by reductions in head count and advertise them expenses changes in bad debt provisions and severance accruals booked in Q4 of 2023.

The sales and marketing and G&A and our Q4 2024 versus Q4 of 2023, we reduced our recurring cash operating costs and that's after adding back noncash compensation and bad debt provisions and the severance accruals, we made at the end of.

Grant Russell: Severance accruals booked in Q4 of General and Administrative expenses for 2024 decreased 7% to $17.2 million as compared to $18.6 million for the 2020 budget. The increase was largely due to a $1.4 million decline in Nuncash stock-based compensation and a $1.1 million decline in salary. Benefits-related expenses due to headcount. partially offset by a $1 million increase in investment. for the fourth quarter. December 31st, 2024, General and Administrative. 4.3 million as compared to 4.7 million. again was driven by headcount The fourth quarter ended December 31st, 2024.

Rand: General and administrative expenses for 'twenty 'twenty, four decreased 7% to $17 2 million as compared to $18 6 million for the 'twenty to 'twenty three period. The decrease was largely due to a 1.4 millionaire dollar decline in noncash stock based compensation and a $1 1 million dollar decline in salary.

Speaker Change: 2023.

We saw a $2 7 million dollar reduction per quarter or 36% year over year, we expect to keep these.

That's savings in place and intend to look for further at all our spending of 20 to 25, as we move forward and expand our business.

Rand: And benefits related expenses due to head count reductions, partially offset by a $1 million increase in Investor Relations.

Speaker Change: Looking forward in 2025, we are confident that management's plans and expected further funding of the second and third tranches from quanta, which would bring in another $10 million in new cash along with potential further equity sales under ATM program.

Rand: For the fourth quarter.

Rand: Ending December 31, 2020 for general and administrative expenses were $4 3 million as compared to $4 7 million in the 2023 fourth quarter decrease again was driven by head count reductions.

Speaker Change: And of note, we raised $1 3 million to date in 2025 that the company has more than adequate resources to move forward with its operating plan well into 2026.

Rand: For the fourth quarter ended December 31, 2024, the net loss was $13 7 million or <unk> 16 per share as compared to a net loss of $19 9 million or <unk> 32 per share for the fourth quarter of 2023.

Grant Russell: The net loss was $13.7 million or $0.16 per share as compared to a net loss of $19.9 million or $0.32 per share for the fourth quarter of 2020. The full year ended December 31st, 2024. The net loss was $73.5 million, or $1.08 per share as compared to a net loss of $1.08 per share.

Speaker Change: And with that I would like to turn the call back over to the operator for Q&A.

Speaker Change: Thank you and at this time, we'll conduct a question and answer session. If you'd like to ask a question press star one on your telephone keypad.

For the full year ended December 31, 2024, the net loss was $73 5 million or $1 eight per share as compared to a net loss of $50 1 million or 79% for the full year of 2023. The increased net loss was mostly attributable to the write off of our technology license and investment atomistic.

A confirmation tone will indicate your line is in the question queue you.

Grant Russell: Unknown Executive, Ed McGregor, Vuzix Unknown Executive, Ed McGregor, Vuzix recorded in the second quarter of 2020. Excluding this write-off, the net loss...

You May press Star two if you would like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys.

Rand: Which was recorded in the second quarter of 2024.

Speaker Change: Please while we poll for questions.

Rand: Excluding this write off the net loss for 2024, it was $6 9 million less than the 2023 net loss.

Okay.

Grant Russell: Unknown Executive, Ed McGregor, Vuzix Unknown Executive, Ed McGregor, Vuzix Now for some balance sheet and cash flow highlights. Our cash position as of December 31, 2024 was $18.2 million, a decrease of $8.4 million. December 31st, 2020. We had a net working capital position of $24.6 million.

Speaker Change: Our first question comes from Christian Schwab with Craig Hallum. Please state your question.

Christian Schwab: Great Hey, guys. So just for clarity.

Now for some balance balance sheet and cash flow highlights our cash position as of December 31, 2024 was $18 2 million a decrease of $8 4 million.

Christian Schwab: <unk> talked about the 400, you know clearing out the inventory that you have in in 2025 can you just let us know how much inventory you have them 400 that you plan on selling.

For.

Rand: December 31, 2023 and.

Rand: We had a net working capital position of $24 6 million net cash flows used in operating activities was $23 7 million for the year ended December 31, 2024, as compared to $26 3 million for the 2023 year a decrease of.

There's as much as $9 million worth of cash I think sitting in that bucket right now Christian.

Grant Russell: Net cash flows used in operating activities was Paul Travers, Unknown Executive, Ed McGregor, Vuzix 24. , Unknown executive, Ed McGregor, Vuzix, Unknown Executive, Ed McGregor, Vuzix, Equity Sales under our ATM offering in the fourth quarter.

Christian Schwab: The cost of inventory right.

Christian Schwab: As we.

Stated in her.

Christian Schwab: There isn't anything that wasn't finish.

Rand: $2 6 million.

Christian Schwab: Finished goods got 100% provided for so <unk> and others, we have an ability to build more units. If we so desire, but where we're not going to invest further in the M. 400 until we moved this existing stock but that could.

Were all up.

Rand: 2024.

Rand: We raised $18 3 million in the financing activities that consisted of a $10 million investment by Quanta computer and September $8 2 million of net proceeds received from equity sales under our ATM offering in the fourth quarter of 2024.

Easily generated both at $9 million to $10 million plus any margin, we made showing it and we certainly still expect to make some margin.

Grant Russell: Cash Use and Investing Activities in 2024 was $2.9 million, down significantly from $19.3 million in 2020. primarily due to reductions in investment amounts and licensing fees paid to Adam S.

Rand: Cash used in investing activities in 2024 was $2 9 million down significantly from $19 3 million in 2023, primarily due to reductions in investment amounts in licensing fees paid to our domestic.

Kristen: And Kristen.

The interesting change in life these days.

Grant Russell: Manufacturing Equipment and Tooling Investments for a New Playground Manufacturing Facility. are presently envisioning spending significantly less on CapEx investments. as we feel our waveguide manufacturing capacity is at an all-time high. Now adequate for expected demand.

Kristen: For music as we have.

In manufacturing equipment, and tooling investments for our new waveguide manufacturing facility in 2023.

Kristen: A nice list of companies in our pipeline that have gone past.

Rand: We are presently envisioning spending significantly less on Capex investments in 2025, as we feel our waveguide manufacturing capacity is now adequate for expected demand in the near term.

Kristen: Proof of concepts. These guys are now rolling out.

Kristen: We're starting to get orders for larger volumes and some of these accounts could take many thousands of units.

Grant Russell: And please report that after a year of expense reductions, when we look at our major operating expense group. Q4 2024 versus Q4 2023, we reduced our recurring cash operating costs, and that's after adding back non-cash compensation, bad debt prevention. Severance accruals we made. saw a $2.7 million reduction per quarter, or 36% year over year.

Rand: Yeah.

Rand: I'm pleased to report that after a year of expense reductions when we look at our major operating expense groupings.

Kristen: So as much as we're preparing for a next generation product, which we talked about a little bit in the call.

R&D sales and marketing and G&A.

Kristen: It very well could be needing to make more of an finishing inventories that we currently have around the 400 that are partial work in process.

Rand: Q4, 2024 versus Q4 of 2023, we reduced our recurring cash operating costs and that's after adding back noncash compensation and bad debt provisions and the severance accruals, we made at the end of.

Kristen: Great. Thank you for that clarity and then.

Paul You mentioned a few different times that you believe.

Rand: 2023.

Rand: We saw a $2 7 million dollar reduction per quarter or 36% year over year, we expect to keep these.

Speaker Change: That quanta can drive you know millions of units for you can you give us an idea of when a ramp like that is logically going to start and and what your asps are would be on that.

Grant Russell: We expect. and intend to look for further at all our spending in 2025 as we move forward and expand our Looking forward in 2025, we are confident that management plans and the expected further funding of the second and third tranches from Kiwana, which will bring in another $10 million in new along with potential further equity sales under ATM program. And of note, we raised $1.3 million to date in 2020. that the company has more than adequate resources to move forward with its operating plan well into 2020.

Rand: That's savings in place and intend to look for further at all our spending of 20 to 25, as we move forward and expand our business.

Speaker Change: It's interesting because we've got several things that are going on with quanta right now some of it our reference designs and their tools that are being used to bring on third party OEM companies.

Rand: Looking forward in 2025, we are confident that management's plans and expected further funding of the second and third conscious from quanta, which would bring in another $10 million in new cash along with potential further equity sales under ATM program.

Speaker Change: That will want to put their name on the product and in those cases, vuzix will ultimately be selling wave guides.

Rand: And of note, we raised $1 3 million to date in 2025 that the company has more than adequate resources to move forward with its operating plan well into 2026.

And to that process and we sell a color wave guide.

Speaker Change: Get into a whole lot of numbers, because theyre, not really public, but you might imagine competitor selling them in volume, let's say 100000 piece marni.

Ed McGregor: And with that, I would like to turn the call back over to the operator. Thank you.

Rand: And with that I would like to turn the call back over to the operator for Q&A.

Operator: And at this time, we'll conduct our question and answer session. If you'd like to ask a question, press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we pull for questions.

Rand: Thank you and at this time, we'll conduct a question and answer session. If you'd like to ask a question press star one on your telephone keypad.

Speaker Change: Hundreds of dollars per and yet music can do in those kinds of quantities sub 50 kind of numbers. So it is significant.

Rand: Confirmation tone will indicate your line is in the question queue you.

Speaker Change: Price reduction and the higher volume markets and the user can bring to the table. The size of this market opportunity as that broader market starts to move it's going to replace the phone ultimately that's why exactly are bearing is spending billions and I will tell you that we've got that piece of the business going on and then.

Rand: You May press Star two if you would like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys, one moment, please while we poll for questions.

Rand: Okay.

Christian Schwab: Our first question comes from Christian Schwab with Craig Hallam. Please state your question. Great. Hey, guys. So just for clarity, we talked about the M400, you know, clearing out the inventory that you have in 2025. Can you just let us know how much inventory you have of the M400 that you plan on selling? There's as much as $9 million worth of cash, I think, sitting in that bucket right now, Christian? Yeah, that's the cost of inventory. stated in our narrative, anything that wasn't finished goods got 100% provided for. So there's, you know, there's, we have an ability to build more units if we so desire, but we're, we're not gonna invest further in the M400 until we move this existing stock.

Speaker Change: Our first question comes from Christian Schwab with Craig Hallum. Please state your question.

Speaker Change: At the same time, we are building products that will be white labeled and in some cases carrying the vuzix brand and you should knock on wood expect to see production programs happening before the end of this year in those cases in those cases.

Great Hey, guys. So just for clarity.

<unk> talked about the 400, you know clearing out the inventory that you have in in 2025 can you just let us know how much inventory you have the 400 that you plan on selling.

Speaker Change: White labeled it.

Speaker Change: Coming partially a big part of it comes from Vuzix and what we bring to the table in that case many of the white labels for those first products are in the enterprise space and it's a significantly higher margin and it's a significantly higher selling price, but it will just get started towards the fall going into the winter season.

There's as much as $9 million worth of cash I think sitting in that bucket right now Christian yes, that's the cost of inventory right.

Speaker Change: As we.

Speaker Change: Stated in our.

Speaker Change: There isn't anything that wasn't finished.

And then rolling into next year, it should be pretty exciting times.

Speaker Change: Finished goods, 100% provided for so there's in others, we have an ability to build more units. If we so desire, but where we're not going to invest further in the M. 400 until we moved this existing stock but that could.

Speaker Change: Okay Fantastic no. Other question. Thank you.

Christian Schwab: Youre welcome Christian.

Speaker Change: Thank you that's all I will hand, the floor back to Paul Travers. Thank you.

Paul Travers: Thank you.

Grant Russell: But that could easily generate, as Paul said, $9 to $10 million, plus any margin we make selling it. And we certainly still expect to make some margin.

Speaker Change: So we actually got.

Speaker Change: A handful of questions from other of our shareholders.

Easily generated both at $9 million to $10 million plus any margin we made so in it and we certainly still expect to make some margin.

Speaker Change: Before the conference call and I thought I could at least answer a few of these.

Paul Travers: And Kristen, the interesting change in life these days. for Vuzix is we have. A nice list of companies in our pipeline that have gone past proof-of-concepts. These guys are now rolling out. We're starting to get orders for larger volumes, and some of these accounts could take many thousands of units. So as much as we're preparing for a next generation product, which we talked about a little bit in the call, we very well could be needing to make more of and finishing inventories that we currently have around the M400 that are just partial work in process.

And Kristen.

Speaker Change: I can't answer Theres, a few of them that I can't answer just because I can't answer them as much as I would love to.

The interesting change in life these days.

Speaker Change: For Vuzix is we have.

Speaker Change: They they they go to point to that are they are not public at this point in time, but let me start with a few.

Speaker Change: A nice list of companies in our pipeline that have gone past.

Speaker Change: Number one here you've expanded your waveguide manufacturing capabilities, what production capacity do you expect to achieve by the end of 2025 and how will this support your goal of supplying millions of units to Oems.

Speaker Change: Proof of concepts. These guys are now rolling out west.

We're starting to get orders for larger volumes and some of these accounts could take many thousands of units.

Speaker Change: So as much as we're preparing for a next generation product, which we talked about a little bit in the call, we very well could be needing to make more of an finishing inventories that we currently have around the M. 400 that are partial work in process.

Speaker Change: So let me give you guys a feel for how this works the quanta investment.

Speaker Change: Is $20 million investment $10 million was upfront.

Speaker Change: And there's two tranches coming for another five and five.

Speaker Change: The bulk of that is all about production getting into high volume capacity and we're very close to meeting both tranche two and tranche three which are the two $5 million eight and those are like I said related significantly the volume and the volume is half.

Paul Travers: Great, thank you for that clarity. And then, Paul, you mentioned a few different times that you believe that Quanta can drive, you know, millions of units for you. Can you give us an idea when a ramp like that is logically going to start? And and what's your ASP would be on that? It's interesting because we've got several things that are going on with Quanta right now. Some of it are reference designs and they're tools that are being used to bring on third-party OEM companies that will want to put their name on the product. And in those cases, Vuzix will ultimately be selling waveguides into that process.

Speaker Change: Great. Thank you for that clarity and then.

Speaker Change: And Paul you mentioned, a few different times that you believe.

Speaker Change: That quanta can drive you know millions of units for you can you give us an idea of when a ramp like that is logically going to start and end. What's your E. S. P. A would be on that.

Speaker Change: <unk>, plus and then 1 million plus on an annual basis kinds of numbers and so we'll be there.

Okay interesting because we've got several things that are going on with quanta right now some of it our reference designs.

Speaker Change: For half of this year is that knock on wood, we're practically there right now.

Speaker Change: So the the volume capacity is.

Speaker Change: And there are tools that are being used to bring on third party OEM companies.

Speaker Change: No.

Speaker Change: Alright, there for what the short term need areas for us to take the Rochester facility and crank that up to double let's say does not cost us everything that it caused us for the first time, it's an incremental cost to be able to turn that production facility into something that would double those numbers. So that's not significant.

We want to put their name on the product and in those cases, vuzix will ultimately be selling wave guides.

Paul Travers: And you sell a color waveguide, not to get into a whole lot of numbers because they're not really public, but you might imagine competitors selling them in volume, let's say 100,000-piece quantities, of hundreds of dollars per, and yet Vuzix can do in those kind of quantities, sub-50 kind of numbers. So it's a significant... price reduction in the higher volume markets that Vuzix can bring to the table. The size of this market opportunity, as that broader market starts to move, it's going to replace the phone ultimately. That's why Zuckerberg is spending billions.

Speaker Change: Into that process and you sell a color wave guide not to get into a whole lot of numbers, because theyre not really public but you might imagine.

Speaker Change: <unk> or selling them in volume, let's say 100000 piece quantities of hundreds of dollars per end, yet vuzix can do in those kind of quantity sub 50 kind of numbers. So it is significant.

Speaker Change: Ultimate goal.

Speaker Change: Is not a million or two wave guide on an annual basis. This is going to be like the smartwatch smartwatch is sell 300 million smartwatch is a year.

Speaker Change: This reduction and the higher volume markets and the user can bring to the table. The size of this market opportunity as that broader market starts to move it's going to replace the phone ultimately that's why zuckerberg is spending billions and I will tell you that we've got that piece of the business going on and then it.

It does not doing this for 20% to 50 to 100000 pieces a year. There drive here is a multibillion dollar industry. That's the kind of company they are.

Paul Travers: And I will tell you that we've got that piece of the business going on, and then at the same time, we are building products that will be white-labeled, and in some cases carry the Vuzix brand, and you should, knock on wood, expect to see production programs happening before the end of this year in those cases. In those cases, it's white-labeled, it's coming partially, a big part of it comes from Vuzix and what we bring to the table in that case. Many of the white labels for those first products are in the enterprise space, and it's a significantly higher margin, and it's a significantly higher selling price.

Speaker Change: Many of the companies that we're talking with today because of what we can make and the price points. We can hit there in that boat if they want to move the needle and so you will see a phase two effort from where we're going that should help us get into the much higher volumes and the outbound years here.

Speaker Change: The same time, we are building products that will be white labeled and in some cases carrying the vuzix brand and you should knock on wood expect to see production programs happening before the end of this year in those cases in those cases.

Speaker Change: So.

Speaker Change: White labeled it.

Speaker Change: Our next question.

Speaker Change: The $10 million received from Quanta and two additional 5 million tranches.

In 2025, how are you planning to allocate this capital towards R&D production or market expansion and what impact do you foresee on the cash burn rates.

Paul Travers: But it will just get started towards the fall, going into the winter season, and then rolling into next year, it should be pretty exciting times.

Speaker Change: First of all let me say that the quantity of investment and Vuzix is walk step with where we are taking our company.

Speaker Change: And then rolling into next year, it should be pretty exciting times.

Christian Schwab: Okay, fantastic. No other questions. Thank you. You're welcome, Christian. Thank you. That's all.

Speaker Change: Okay Fantastic no. Other question. Thank you.

Speaker Change: The synergy.

Speaker Change: What they want is what vuzix want and so if you think about the cash burns there are 100% aligned.

Youre welcome Christian.

Paul Travers: I'll hand it to the floor back to Paul Travers. Thank you. So we actually got a handful of questions from other of our shareholders before the conference call, and I thought I could at least answer a few of these. I can't answer, there's a few of them that I can't answer just because I can't answer them as much as I would love to. They go to points that are, they're not public at this point in time.

Speaker Change: Thank you that's all I will hand, the floor back to Paul Travers. Thank you.

Speaker Change: For the most part with what Vuzix wants and needs to do so this isn't all of a sudden we have to take these dollars and putting them into something that feels like it's a sidetrack now there is a portion of the money is also here that are dedicated to product development efforts to generate business on the back side that Theres also launched.

Speaker Change: Thank you so.

Speaker Change: So we actually got.

A handful of questions from other of our shareholders.

Speaker Change: For the conference call and I thought I could at least answer a few of these.

Speaker Change: I can't answer Theres, a few of them that I can't answer just because I can't answer them as much as I would love to.

Speaker Change: And vuzix interests. So these dollars are going into R&D.

Speaker Change: They they they go to points that are they are not public at this point in time, but let me start with a few.

Paul Travers: But let me start with a few. Number one here, you've expanded your waveguide manufacturing capabilities. What production capacity do you expect to achieve by the end of 2025? And how will this support your goal of supplying millions of units to OEM? So let me give you guys a feel for how this works. The quanta investment. is a $20 million investment, $10 million was up front, and there's two tranches coming for another five and five. The bulk of that is all about production getting into high volume capacity, and we're very close to meeting both Tronch 2 and Tronch 3, which are the two $5 million gates.

Speaker Change: R&D next generation gizmos around wave guides that we build and cranking up production, which I think is what everybody on this call wants to hear about.

Speaker Change: The next question.

Speaker Change: How do you assess the competitive threat from larger players entering the AAR smart glasses market in 2025, and beyond and what differentiates vuzix offerings to maintain their edge.

Speaker Change: So let me give you guys a feel for how this works.

Speaker Change: Quanta investment.

Speaker Change: Is $20 million investment $10 million was upfront.

Speaker Change:

Speaker Change: First of all the competitive threat.

Speaker Change: And there's two tranches coming for another five and five.

Speaker Change: There will be more than one company.

Speaker Change: The bulk of that is all about production getting into high volume capacity and.

That brings smart glasses to market everybody in this room should realize that.

Speaker Change: If there's another company that comes out with a product.

Speaker Change: We're very close to meeting both tranche, two and tranche three which are the two $5 million eight and those are like I said related significantly the volume and the volume is.

Speaker Change: It's not a need to panic, there's there's BMW for Tesla.

Paul Travers: And those are, like I said, related significantly to volume, and the volume is half a million plus, and then a million plus on an annual basis kinds of numbers. And so we'll be there before half of this year is up, knock on wood, we're practically there right now. So the volume capacity is. You know, right there for what the short term need is for us to take the Rochester facility and crank that up to double, let's say, does not cost us everything that it costs us the first time. It's an incremental cost to be able to turn that production facility into something that would double those numbers.

This is going to be a multi multibillion dollar industry. So there'll be other players like said, we bring a lot of competitive advantages.

Speaker Change: <unk>, plus and then a million plus on an annual basis kinds of numbers and so we'll be there.

Speaker Change: One is price it's great to know that we have a good price that we compete with but we also bring great performance. We've been at this longer than any other company out there. So when you when you lean towards the enterprise side of this business, which is also going to be in the billions, we bring stuff to the table that nobody else can bring when it comes to the high volume <unk>.

Speaker Change: For half of this year is that knock on wood, we're practically there right now.

Speaker Change: So the the volume capacity is.

Right there for what the short term need areas for us to take the Rochester facility and crank that up to double let's say does not cost us everything that it cost us. The first time, it's an incremental cost to be able to turn that production facility into something that would double those numbers. So that's not.

Speaker Change: Side of the business our price points are nobody else can do what we can do today in this regard so we're in front there so yes, there's going to be competitors.

Paul Travers: So that's not significant. But the ultimate goal is to be able to turn that facility into something that would double those numbers. is not a million or two waveguides on an annual basis. This is going to be like the smartwatch. Smartwatches sell 300 million smartwatches a year. Quanta's not doing this for 20,000 to 50,000 to 100,000 pieces a year, then their drive here is a multi-billion dollar industry. That's the kind of company they are. That's many of the companies that we're talking with today because of what we can make and the vice points we can hit.

Speaker Change: We welcome that rising tide floats all boats, but we believe we with the partnerships that we're building with companies like quanta and others.

Speaker Change: Significant but the ultimate goal.

Is not a million or two wave guides on an annual basis. This is going to be like the smartwatch smartwatch itself 300 million smartwatch is a year.

Great chance to get a very nice and sizeable part of this market opportunity.

Speaker Change: Like I said there was some other questions in here.

Speaker Change: Qantas not doing this for 20% to 50 to 100000 pieces a year. There drive here is a multibillion dollar industry thats the kind of company they are.

Speaker Change: Dealt with closer to tier one companies and when it rolls out and I just cannot talk about.

Speaker Change: Those companies and where they are in their processes.

Speaker Change: I can tell you. This though generally speaking you will see more and more design wins and partner wins and starting rollout happened throughout this year.

Paul Travers: They're in that boat. They want to move the needle.

Paul Travers: And so you will see a phase two effort from where we're going that should help us get into the much higher volumes in the outbound years here.

Speaker Change: If you go back in World War, two days when the airplanes would fly and they would be taken them to kill and they've put a marker on the front of the airplane.

So.

Paul Travers: Next question, with the $10 million received from Quanta and two additional $5 million tranches expected in 2025, how do you plan to allocate this capital towards R&D, production, or market expansion? And what impact do you foresee on the cash burn rate? First of all, let me say that the quanta investment in Vuzix is lockstep with where we are taking our company. The synergy, what they want is what Vuzix wants and so if you think about the cash burns, they're 100% aligned. for the most part with what Vuzix wants and needs to do. So this isn't all of a sudden we have to take these dollars and put them into something that feels like it's a sidetrack.

Speaker Change: Our next question.

Speaker Change: The $10 million received from Quanta and two additional 5 million tranches.

Speaker Change: Another notch on the on.

Speaker Change: The pistol handle youre going to see a lot of that start to enroll at Vuzix. This year that will roll into knock on wood significant volumes through 2026. So.

Speaker Change: <unk> in 2025, how do you plan to allocate this capital towards R&D production or market expansion and what impact do you foresee on the cash burn rates.

Speaker Change: And will some of those be tier ones I, certainly believe we have tier one partners, 100% that are working with Vuzix right now there are timing for when they rollout their requirements for market acceptance.

Speaker Change: First of all let me say that the quantity of investment and Vuzix is lock step with where we are taking our company.

Speaker Change: The synergy.

Speaker Change: I mean, if you think about companies like like Luxottica, They don't want to put their name on something that doesn't look fashion forward and 1%, 100% inline with what their brand looks like so far what are you striving for that same answer and Vuzix is a company that can help bring that to them.

What they want is what vuzix want and so if you think about the cash burns there are 100% aligned.

Paul Travers: Now there is a portion of the monies also here that are dedicated to product development efforts to generate business on the backside. That is also lockstep in Vuzix's interest. So these dollars are going into R&D, that's generation gizmos around waveguides that we cranking up production, which I think is what everybody on this call wants to hear about.

Speaker Change: So in broad strokes I hope that answered the bulk of everybody's questions I want to thank everybody for spending the time again with US This afternoon and I really do look forward to seeing the rest of this year unfold and us having our future conference calls with a whole lot more to talk about with significant real programs in companies and <unk>.

Speaker Change: And vuzix interests. So these dollars are going into.

Speaker Change: R&D next generation gizmos around wave guides that we build and cranking up production, which I think is what everybody on this call wants to hear about.

Speaker Change: <unk> ships that we've been able to announce along the way. Thank you everybody have a wonderful evening.

Paul Travers: The next question, how do you assess the competitive threat from larger players entering the AR smart glasses market in 2025 and beyond? And what differentiates Vuzix offerings to maintain their edge? First of all, the competitive threat. There will be more than one company. that brings Smart Glass to market. Everybody in this room should realize that. If there's another company that comes out with a product... It's not a need to panic. There's BMW, there's Ford, there's Tesla. This is going to be a multi-multi-billion dollar industry. So there'll be other players. As I said, we bring a lot of competitive advantages.

Speaker Change: The next question.

Speaker Change: Thank you. This concludes today's call all parties may disconnect.

Speaker Change: First of all the competitive threat there.

Speaker Change: There will be more than one company.

That brings smart glasses to market everybody in this room should realize that.

Speaker Change: If there's another company that comes out with a product.

It's not a need to panic.

Speaker Change: BMW theirs for Tesla.

Speaker Change: This is going to be a multi multibillion dollar industry. So there'll be other players I've said, we bring a lot of competitive advantages.

Paul Travers: Yes, one is price. It's great to know that we have a good price that we compete with, but we also bring great performance. We've been at this longer than any other company out there. So when you lean towards the enterprise side of this business, which is also going to be in the billions, we bring stuff to the table that nobody else can bring. When it comes to the high volume waveguide side of the business, our price points are nobody else can do what we can do today in this regard. So we're in front there. So yes, there's going to be competitors.

Speaker Change: One is price it's great to know that we have a good price that we compete with but we also bring great performance. We've been at this longer than any other company out there. So when you when you lean towards the enterprise side of this business, which is also going to be in the billions, we bring stuff that the tables that nobody else can bring when it comes to the high volume waived.

Speaker Change: Side of the business our price points are nobody else can do what we can do today in this regard so we're in front there so yes, there's going to be competitors.

Paul Travers: We welcome that, rising tide floats all boats, but we believe we, with the partnerships that we're building with companies like Quanta and others, have a great chance to get a very nice and sizable part of this market opportunity.

Speaker Change: We welcome that rising tide floats all boats, but we believe we with the partnerships that we're building with companies like quanta and others.

Great chance to get a very nice and sizeable part of this market opportunity.

Paul Travers: Like I said, there was some other questions in here that dealt with close to tier one companies and when and rolls out and I just cannot talk about those companies and where they are in their processes. I can tell you this though, generally speaking, you will see more and more design wins and partner wins and starting rollouts happen throughout this year. Back in the World War II days when the airplanes would fly and they would take another kill and they put a marker on the front of their airplane as another notch on the pistol handle, you're going to see a lot of that start to unroll at Vuzix this year.

Like I said there was some other questions in here.

Speaker Change: Dealt with closer to tier one companies and when it rolls out and I just cannot talk about.

Those companies and where they are in their processes.

Speaker Change: Can tell you. This though generally speaking you will see more and more design wins and partner wins and starting rollout happened throughout this year.

Speaker Change: Yes.

Speaker Change: Back in World War, two days when the airplanes would fly and they would take another kill and they put a marker on the front of the airplane.

Speaker Change: As another notch on the on.

Speaker Change: The pistol handle youre going to see a lot of that start to enroll at Vuzix. This year that will roll into knock on wood significant volumes through 2026. So.

Paul Travers: That will roll into, knock on wood, significant volumes through 2026. Will some of those be tier ones? I certainly believe we have tier one partners, 100%, that are working with Vuzix right now. Their timing for when they roll out, their requirements for market acceptance, I mean if you think about companies like Luxottica, they don't want to put their name on something that doesn't look fashion forward and run 100% in line with what their brand looks like. So everybody's striving for that same answer and Vuzix is a company that can help bring that to them.

Speaker Change: And will some of those be tier ones.

Speaker Change: Certainly believe we have tier one partners, 100% that are working with Vuzix right now there are timing for when they rollout their requirements for market acceptance I mean, if you think about companies like like Luxottica.

Speaker Change: To put their name on something that doesn't look fashion forward and 1%, 100% inline with what their brand looks like so far what are you striving for that same answer and Vuzix is a company that can help bring that to them.

Paul Travers: So, in broad strokes, I hope that answered the bulk of everybody's questions. I want to thank everybody for spending the time again with us this afternoon, and I really do look forward to seeing the rest of this year unfold and us having our future conference calls with a whole lot more to talk about with significant real programs and companies and partnerships that we've been able to announce along the way. Thank you, everybody. Have a wonderful evening. Thank you.

Speaker Change: Partnerships that we've been able to announce along the way thank.

Thank you everybody have a wonderful evening.

Operator: This concludes today's call. All parties may disconnect.

Thank you. This concludes today's call all parties may disconnect.

Q4 2024 Vuzix Corp Earnings Call and Business Update

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