Q1 2026 LightPath Technologies Inc Earnings Call
It only mode. Following the presentation. The conference will be opened for questions. This conference is being recorded today November 11th 2025 in the earnings press release accompanying this conference call was issued after the market closed today.
To remind you that during the course of this conference call. The company will be making a number of forward looking statements that are based on current expectations involve risks and uncertainties.
As discussed in its periodic SEC filings, although the company believes that the assumptions underlying these statements are reasonable any of them can be proven to be inaccurate and there can be no assurances as projected results will be realized.
Sam Rubin: In terms of our transition of our own cameras, it is more a question of resources. We have many, many projects going on. As you can imagine, with the $90-something million backlogs that we have, comes also some engineering work and some modifications, which oftentimes happen to overlap with the same resources that would redesign cameras. I think our team is nearly done with one more redesign and working on some others. Until we hire more people for that, and we have quite a number of open positions that we're planning to fill for those kind of areas, until we fill those positions, the priority is, first of all, on the short-term revenue, delivering what we have now here and now before we put more resources into converting the cameras over.
In addition references may be made to certain financial measures that are not in accordance with generally accepted accounting principles or GAAP, we refer to these non-GAAP financial measures.
Please refer to our SEC reports and certain.
In certain of our Prosper press releases, which include reconciliations of non-GAAP financial measures and associated Disclaimers D.
CEO, Sam Rubin will begin today's call with a strategic overview of the business and recent developments for the company while CFO Al Miranda will then review financial results for the quarter. Following the prepared remarks there'll be a formal question and answer session I would now like to turn the conference over to CEO, Sam or Tam.
Ma'am the floor is yours.
Thank you operator, good afternoon, everyone and welcome to another exciting quarterly updates from like profit technology for our fiscal first quarter 2026 financial results.
Richard Shannon: Okay, that is helpful to hear. Thanks for that, Sam. Maybe just addressing the supply chain resiliency and capacity, you mentioned a couple of dynamics, especially regarding VISIMID. If you can describe where else you're having to work to improve capacity, either from an internal capability or equipment point of view, or with external suppliers, and over what time frame do you expect that to be improved or resolved?
Lifestyle is entering a clear inflection point after several years of disciplined execution to transform our business from a component supplier.
Into a vertically integrated provider of high value infrared optics and camera systems.
We are now seeing that strategy translate into measurable commercial success.
Sam Rubin: Yeah, pretty much across the board. I mean, the growth we're seeing is in almost every aspect, other than the old technology of molded optics that we have a lot of capacity for, and sort of what LightPath used to do until a few years ago. Everywhere else, we need to add capacity. We need to add capacity of fabrication in our Latvia operation and in Orlando. We're putting an enormous investment into glass capacity, and even the investment we're making, I feel sometimes is not enough. We're already getting booked as soon as we add capacity. We have seen some constraints on some of our vendors, primarily the detector companies that are making the focal plane arrays that go into cameras. Some of them depend on germanium, and we worked with them to either replace the germanium or solve some of their problems.
The progress we have made is reflected in our record orders a growing systems backlog.
And increased customer adoption of our technology.
Yeah.
Since we likely have a growing base of shareholders and wisdom likely more new new listeners on this call I will take some time to describe where we have come fall, which will help put into context. The recent developments.
So I don't want to talk about specific programs that are driving our record backlog and the strategic investments from <unk> and unusual machines and upcoming growth choices.
[laughter].
For decades lifestyle loans, primarily flips precision optical components.
The photonics industry matured the dynamics shifted margins compressed competition intensified and values migrated up.
And value migrated up the food chain towards engineered subsystems and full systems.
Sam Rubin: Some of them are just seeing a very high growth in some of their new products, which are what we're using oftentimes. We work with our vendors for the focal plane array when needed. Other than the focal plane array, pretty much everything else is vertically integrated, and we control internally or every key around it.
Particularly in infrared imaging.
Recognizing this we realigned our strategy beginning in late 2020 to move up the value chain integrating our proprietary materials and design expertise into complete imaging systems, where we could capture capture more of the value we create.
Richard Shannon: Okay. Perfect. Good to hear. Maybe one or two quick numbers questions, and I'll jump out of line here. I guess September quarter results here, sales are very nice, well above what we had in our model. Obviously, you didn't give any guidance there. Any thoughts as to how you'd like us to think about sales progression into the December quarter would be a great help here. How do we think about the EBITDA follow-through on that as well?
At the center of this strategy is our proprietary black Diamond Chalcogenide glass, which we license exclusively from the U S Naval Research Laboratory.
I think domestic alternative for germanium for use in infrared imaging black.
Black Diamond enables us to produce infrared optics that are lighter more affordable and important and most importantly secure from supply chain disruptions following China's restrictions on germanium export earlier this year.
Albert Miranda: Richard, obviously, we're not going to give any guidance. We're happy to see where we came in this quarter. We would like to see that number again. That's what we're shooting for in Q2. I think from an EBITDA perspective, we were positive this quarter. It's a good sign, and that will continue.
By pairing this material leadership with the advanced infrared camera technology gained through <unk>.
Acquisition of <unk> infrared technologies like Bob has become the only pure play company offering fully integrated in fluid systems designed and manufactured in the west.
Lifestyle has a sweet spot of going into sub systems, or small systems, which we often call engineered solutions.
Richard Shannon: Okay. Perfect. You know, guys, I will jump out of line. Congratulations. Keep up the good work.
Albert Miranda: Thank you.
<unk> do not require a large infrastructure of service and support as full systems do but still allow us to capture much more value.
Jason Schmidt: Thank you.
Operator: Our next question is from Glen Mattson with Ladenburg Thalmann.
But the combination of like pumps materials and optics with our recently acquired subsidiary of cheap failure infrared.
Richard Shannon: Yeah. Hi. Thanks for taking the questions. Sam, I think in the past you said that NGSRI would be like essentially a fall of 2025 award or maybe first Q calendar 2026. Is that still your expectation? I guess second quarter you talked about the upgraded Texas facility that services that contract. I don't know if you're trying to signal high confidence there or if you can clarify that, that'd be helpful as well.
Which is an industry, leading and cameras is a case in point.
<unk> is known as the industry leader for long range and so its cameras.
That was the case before we acquired them not something we created.
But like all the all of the competitors cheap five foot spacing supply chain challenges due to global geopolitics, and primarily germanium gallium, which are critical materials and the systems.
Sam Rubin: Sure. Nothing has changed other than the government shutdown continues. Any timeline related to anything government is up in the air. There was hope that early fall or in fall 2025, there will be a down selection. However, quoting just what is said publicly in different publications, Lockheed Martin has been ready for flight tests. Raytheon was saying that it would be in late November or December that their units will be ready for flight tests. This was said publicly and by both companies. Clearly, a down selection cannot happen if both units are not ready for full testing yet. We are making that investment in conjunction with our customer, with Lockheed Martin, for a few reasons. One, they are very, very bullish about this, and so are we.
After acquiring <unk> five in conjunction with that team we've begun an effort to redesign systems to use our proprietary black diamond materials.
By doing so we are positioning ourselves now not only offerings the best cameras, but as the most reliable provider of cameras, we have supply chain resiliency that no one else kind of kind of <unk>.
Yes.
And in August we introduced the first germanium for EG five camera variance utilizing utilizing our black diamond glass.
These have been designed systems represented the first wave of a broader transition across our <unk> camera portfolio and addresses a critical need among defense and industrial customers to eliminate reliant on Chinese controlled materials.
Sam Rubin: Secondly, these systems or what we'll be building there can be and is used in more programs other than just NGSRI. Actually, in Lockheed, we're already in a couple of other programs that are needed. Thirdly, most importantly, if or hopefully when Lockheed Martin wins, everyone is going to want to scale up as quickly as possible. Making a small bet now, and the bet is both by Lockheed and us, shared costs there, making a small bet now could pay off big time later on if we're awarded. If we don't do that, then we'll be at a pretty stressful point comes our award.
However, at the same time, we announced two significant orders from our advanced for our advanced infrared cameras and $18 2 million dollar order for deliveries in calendar 2026, and shortly after a follow on order for $22 1 million.
For deliveries in calendar 2027.
Combined these represent more than $40 million and contracted revenue, reflecting both the strength of the underlining demand and it's a growing confidence in our ability to deliver.
<unk> is a prime example of the value that we can divide from fruitful acquisitions being on track to double in size since the acquisition with several strategic benefits such as the implementation of Black Diamond and <unk> cameras.
Richard Shannon: Yeah. Makes sense. On the gross margin, Al, you talked about it being impacted year over year. Also, just given the growth in systems and modules and that being a higher margin business, can you say just perhaps maybe it could have been even stronger this quarter or with the two-thirds backlog in systems and modules, maybe just directionally, can you remind us of where you think that's going medium and long term?
With them. It was another Fantastic example, bringing up the <unk> missile program with Lockheed I continue to believe that leveraging our strong industry knowledge and expertise for strategic M&A will continue to be an important tool.
Needs to be designed systems to represent the first wave of a broader transition across our G5 camera portfolio and addresses, a critical need among defense and Industrial customers to eliminate. Reliance on Chinese, controlled materials.
Arsenal going forward.
And when we acquire a company the resulting value is often far far more than the sum of the parts.
Around the same time we announced 2 significant orders from our Advanced 4-Hour, Advanced infrared, cameras and 18.2 million order for deliveries in calendar, 2026 and shortly after a follow-on order for 22.1 million for deliveries in calendar 2027.
Albert Miranda: Yeah. I mean, we want to step up from here, Glenn, to 35 by the end of the fiscal year, march up that ladder. This quarter, we sold a lot of IR components. It was a high sales number, which is typically lower margin, so we had a sales mix that sort of brought down what would have been a higher than 30% gross profit. When that kind of event happens, I'm not terribly worried in terms of the percentage.
Last quarter, we also announced a strategic 8 million equity investment from <unk> holding an unusual machines during the quarter.
Two key partners driving the domestic Joe in the ecosystem.
Combined these represent more than 40 million dollars in contracted Revenue, reflecting both the strength of the underlying demand and the growing confidence in our ability to deliver.
<unk> investments are intended to help accelerate our commercialization of <unk>, particularly focusing around uncalled in fluid solutions for drilling applications.
Beyond the financial contribution. This partnership also underscores lightfast strategic relevance and sort of ensuring of advanced optical and imaging technologies to the U S and Europe.
G5 is a prime example of the value that we can divide from fourth full Acquisitions, being on track, to doubled in size, since the acquisition with several strategic benefits, such as the implementation of black diamond in their campus,
Albert Miranda: I flip back and I look at the dollar and I think, okay, we did well because we exceeded where we thought we were going to be from a revenue perspective on the IR side. I'm like, all right, that works for us. We budget sort of a mix, and then the mix changed a little bit compared to budget, but I'm pretty satisfied at where we are at Q1.
Altogether. These developments have driven our backlog to approximately $90 million more than four times the level of just a few short quarters ago.
Visit was another fantastic example, bringing us the NGS of I missile program with Loheit. I continue to believe that leveraging our strong industry knowledge and expertise for strategic M&A will continue to be an important tool in our arsenal going forward.
Importantly, more than two thirds of this backlog is now in systems and subsystems validating the success of our move up the value chain.
And when we acquire a company, the resulting value is often far far more than the sum of the parts.
Richard Shannon: Okay. Thanks. The last thing for me is a couple of times in the call, you mentioned scaling operations, and just wonder what that means in terms of OpEx, if you're trying to signal some increased investment there.
The mix shift towards systems, not only expands our margins, but also deepens our relationship with customers, who rely on <unk> for critical capabilities and supply assurance.
Last quarter. We also announced a Strategic Equity investment from on holding and unusual machines during the quarter.
2 key partners driving the domestic drone ecosystem.
With this background behind us I would like to dive into some of the most recent wins and add some color on and background on the announcements we have recently made.
Albert Miranda: No, I don't think we're going to have a major impact to OpEx. We'll continue more or less like we thought for fiscal year 2026. The OpEx is basically for moving things around. The capacity in some areas, like Sam mentioned in glass, for example, that's more CapEx, right? We already have the space, so we don't have to do a buildout or anything like that. We have the room, but we just have to buy more furnaces, for example, to produce more glass. We already have molding capacity, so we don't have to spend a tremendous amount there. When we talk about cameras, systems, subsystems, those workstations and work lines to expand them are relatively inexpensive. It doesn't cost millions of dollars for capital equipment. It's tens of thousands of dollars for assembly stations. We are going to rationalize the footprint in the United States.
Their investments are intended to help accelerate our commercialization development, particularly focusing on uncaptured, info-ed solutions for drone applications.
Several programs continues to anchor our short term, our near term growth border surveillance and counter UAS applications. Our long range soon cameras are being deployed.
Beyond the financial contribution, this partnership also underscores Lightpath's strategic relevance in the reshoring of advanced optical and imaging technologies to the U.S. and Europe.
Our long range, then cameras are being deployed across a wide variety of platforms, including mobile and stationary systems.
Stationary systems designed to detect classifying on truck fleets in fact more than $15 million of that will come into backlog is for counter UAS applications.
Altogether, these developments have driven our backlog to approximately $90 million, more than four times the levels of just a few short quarters ago.
importantly, more than 2/3 of this backlog is now in systems and subsystems validating the success of our move up the value chain.
Turning to border surveillance, we now expect that it will be over 1000, new border surveillance towers installed and we ultimately expect to win placement and the majority of votes.
The mixed shift towards systems not only expands our margins but also deepens our relationship with customers who rely on light for critical capabilities and supply assurance.
With prices of 150000 to 250000 per camera, one camera goes on each quarter tower.
With this background behind us, I would like to dive into some of the most recent wins and add some color on the announcements we have recently made.
Albert Miranda: We're going to move things around a little bit to maximize the entire footprint on the assembly modules and systems.
And like five servicing two of the three border towers offenders as this could be an extremely material business for us in the coming two to three years.
Richard Shannon: Okay. Great. Thanks for all that color.
Okay.
In the naval domain for the U S. Navy's spear program, so, which we supply key infrared cameras to Elfa Harris is advancing towards low rate initial production.
Operator: As a reminder, if you'd like to ask a question, please press star one on your telephone keypad. Our next question is from Jason Schmidt with Lake Street Capital Markets.
Several programs continue to anchor our short-term and near-term growth border, surveillance, and counter-UAS applications. Our long-range zoom cameras are being deployed, with our long-range in-canvas being deployed across a wide variety of platforms, including mobile and stationary systems.
<unk> for long term revenue streams as the system is.
And stationary systems designed to detect classify and track effects.
Installed across surface vessels.
Jason Schmidt: Hey, guys. Thanks for taking my questions. Sam, just want to follow up on your comment on these $10 million-plus annual revenue opportunities. Curious how many of these sort of eight-figure deals you have in the pipeline.
Also our collaboration with Lockheed Martin on the next generation single replacement initiative.
In fact, more than $15 million of our current backlog is for counter UAS applications.
<unk> also remains an important future opportunity and I'll talk a bit more about this in a second.
Sam Rubin: That's a great question. I need my fingers now to count them, but I'd say probably about seven now. We've been at a steady six for a while, but I think we have one or two being added, maybe a bit early stage on some of them. The counter-UAS expects that to grow quite a bit, and we are at least in two different counter-UAS programs. Only one of them is currently in the backlog. I'd say seven or eight programs like that.
This program is currently in testing in their selected could represent as much as $50 million to $100 million of annual revenue while in full rate production.
Turning to border surveillance, we now expect that there will be over 1,000 new border surveillance towers installed, and we ultimately expect to win placement in the majority of those.
Yes.
Beyond the specific programs, we have a number of additional programs with potential for over $10 million in annual revenue from each and we of course continue to see growing demand for our engineered lens assemblies designed to replace legacy germanium optics and thermal cameras and drone payloads.
With voices of 150,000 to 250,000 per camera, one camera goes on each border tower.
And like, for our servicing, 2 of the 3 Border Towers vendors. This could be an extremely material business for us in the coming 2 to 3 years.
Well, that's part of the business cannot point to one specific program like we have what is the long range cameras, though in <unk>.
Jason Schmidt: Okay. That's helpful. Just going back to gross margin, I mean, would we expect any sort of noise in the gross margin line with these capacity expansion plans here in the December quarter?
Constitute of customers and programs that are continuing to drive very strong growth for the assemblies and optics as part of the business.
Enabled domains, the U.S. Navy's SPEAR program, for which we supply key infrared cameras to L3 Harris, is advancing towards low-weight initial production, positioning us for long-term revenue streams. As a system is installed across surface vessels,
Also based on our Black Diamond glass technology.
Albert Miranda: I don't think so. I don't think so. The way we modeled it out, it should not be. We should still see improvement in margins.
Also, our collaboration with Loki Martin on the Next Generation Stinger replacement initiative.
Yes.
With this rapidly scaling backlog and prospective customer list scaling production will prove to be paramount to that end, we're taking several strategic measures to position ourselves better for the robust growth that we believe our future hopes.
Jason Schmidt: Gotcha. That's helpful. Just the last one for me, I'll jump back into Q. Looking at that backlog number, obviously really impressive. I think at one point G5 was about two-thirds of that backlog. Is that still the case?
Also remains an important future opportunity, and I'll talk a bit more about this in a second. That program is currently in testing, and if selected, could represent as much as $50 to $100 million of annual revenue while in full-rate production.
Looking at our Texas facility.
Just next week will be moving our team and to a much larger facility intended to support the immense production volumes needed for the Lockheed Engie, a survey program, which.
Sam Rubin: Pretty much, I think. I mean, there's ebbs and flows, comes up and down. I think G5, they're pushing product out much more aggressively now, but still about two-thirds, yeah.
Which we continue to be very bullish about.
Manual revenue from each. And we, of course, continue to see growing demand for our engineered lens assemblies, designed to replace legacy domain optics in thermal cameras and drone payloads.
In parallel in Orlando, we are adding capacity for additional black Diamond glass manufacturing as well as for the first time building integrating and testing complete G. Five cameras in Orlando.
Jason Schmidt: Okay. Perfect. Thanks a lot, guys.
Sam Rubin: Thank you.
<unk>, a robust demand growth Q five years realizing.
While that part of the business cannot point to one specific program, like we have with the long-range cameras, there are a multitude of customers and programs that are continuing to drive very strong growth for the Assemblies and Optics part of the business.
Albert Miranda: Technically, it's like 50.
Operator: Our next question is from Oren Hirschman with AIGH Investment.
To oversee this we've appointed Israel.
also based on our Black Diamond, Glass, Technology,
Oren Hirschman: Hi. Congratulations on another quarter of tremendous progress.
Yeah.
<unk> as vice President of manufacturing, a former luminal manufacturing veteran who will oversee the production scale up across our global footprint.
Sam Rubin: Thank you.
With this rapidly scaling backlog and prospective customer list, scaling production will prove to be paramount.
Oren Hirschman: Let's see. Going back to the question on those other potential awards, those decent-sized awards, can you just go back and just go through what's really driving it? Is it the long-range infrared cameras? What are behind most of those deals if there are one or two trends that are noticeable?
We also recently strengthened our corporate governance with the appointment of Mark Halo to the board of Directors Mark is a veteran defense industry executive with over 35 years of experience driving profitable growth and leading large organizations.
To that end, we're taking several strategic measures to position ourselves better for the robust growth that we believe our future holds.
Sam Rubin: Yeah. Most of them are around the Black Diamond glass. Whether it's an Apache program or an additional defense airborne program that we recently talked about, all of them are around the uniqueness of the Black Diamond glass. Not even replacing germanium, but just drastically improving the performance of existing systems. This has always been the major selling point of those materials, as you can improve performance even of existing systems. We're seeing that come to fruition now. Others that are a bit earlier stage are—no, sorry. The counter-UAS is also at a fairly advanced stage, and those are pretty big ones. They come in big numbers because they are the long-range cameras most times, mid and long-range cameras.
He recently retired as president of Northrop Grumman mission systems sector, a supply of advanced sensing processing and communications technologies for defense and intelligence customers with operations in U S and Europe.
looking at our taxes facility just next week, we'll be moving our team into a much larger facility intended to support the immense production volumes needed for the Lockheed NGS Surrey program, which we continue to be very bullish about
His guidance leveraging an extensive background across government military private and public sectors and the relationships on the sides of the defense fines will help guide our vision forward.
Pin parallel in Orlando, we are adding capacity for additional Black Diamond, the glass manufacturing, as well as for the first time building, integrating, and testing complete G5 cameras in Orlando.
Supporting is a robust, demand growth. G5 is realizing
To oversee this, we've appointed Israel.
In summary, the transformation of light profit is now well underway.
We are moving from components to systems and from Commoditized supply two strategic technology leadership.
Plavo, as Vice President of Manufacturing, a former Lumineux Manufacturing veteran, will oversee the production scale-up across our global footprint.
We're replacing constraint, China linked materials with domestic scalable and proprietary alternatives.
And we are converting that differentiation into multi year contracts strategic investments and long term relationships with some of the most sophisticated defense and industrial customers in the world.
Sam Rubin: Earlier stage ones are much bigger system programs, like related to Golden Dome or satellite programs or things like that, that will take a long time but have very, very large numbers tied to them.
We also recently strengthened our corporate governance with the appointment of Mark Kaylor to the board of directors. Mark is a veteran defense industry executive with over 35 years of experience driving profitable growth and leading large organizations.
With a record backlog rolling portfolio of germanium free systems, and a recent strategic investment to help scale production, we believe like buffett positioned to sustained growth and expanding profitability.
Oren Hirschman: In terms of the long-range cameras for spotting drones and UASes, is there any other technology that's crept up that could spot them from the same distance or without using radio frequency?
He recently retired as president of Northrop. Graman mission systems sector a supply of advanced sensing processing and communication Technologies for defense and intelligent customers with operations in us and Europe.
Our strategic work over the past several years is now delivering tangible assets and we're expected to continue momentum through physical 2026 and beyond.
His guidance, leveraging an extensive background across government, military, and private and public sectors, and the relationships on the side of the defense files will help guide our vision forward.
Now I'd like to turn the call over to our CFO and Miranda to talk about our first quarter fiscal 2026 financial results. Alan. Please go ahead. Thank you Sam I'll keep my review to ascent.
In summary, the transformation of the light bulb is now well underway.
Sam Rubin: Even if you can use radio frequency, you still need the visual part for validation. The key here is you're about to shoot something down. You have to be a million percent sure that you're shooting the right thing down and not just something because it's flying there. Visual validation is becoming a must for any system that needs to kinetically or otherwise take down something. Even when you can use the radar and you would have no problem turning it on because you're in your own territory or whatever, you still have to have that visual validation. Visible cameras are very limited in range, but also, of course, can't work at night, can't work in certain weather conditions, and so on.
We are moving from components to systems and from commoditized Supply to strategic technology leadership.
Why of the financials this quarter as a reminder, much of the information. We're discussing during this call was also included in our press release issued earlier today and won't be included in our 10-Q for the period.
We're replacing constraints linked to China with domestic, scalable, and proprietary alternatives.
And we are converting the differentiation into multi-year contracts.
I encourage you to visit our Investor relations webpage to access these documents.
Strategic investments and long-term relationships with some of the most sophisticated defense and industrial customers in the world.
Revenue for the first quarter of fiscal 2026 increased 79% to $15 1 million as compared to $8 4 million in the same year ago quarter.
Sales of infrared components were $4 3 million or 28% of the company consolidated revenue.
With a record backlog growing portfolio of germanium-free systems and a recent strategic investment to help scale production, we believe LightPath is positioned to sustain growth and expand profitability.
Revenue from visible components was $3 8 million or 25% of consolidated revenue.
This strategic work of the past several years is now delivering tangible assets.
Sam Rubin: I don't know of anything other than a thermal camera that can give you that absolute validation when you see something using any other system, whether it's radar, acoustic, electronic signals, and so on, to validate that you're going to shoot down the right thing.
Revenue from assemblies modules were $5 9 million or 39% of consolidated revenue.
And then we're expected to continue momentum through physical 2026 and beyond.
Revenue from Engineering services was $1 1 million or 7% of consolidated revenue.
Gross profit increased 58% to $4 5 million or 30% of total revenues in the first quarter of 2026.
Oren Hirschman: The question I never asked you or the company, the systems that are being shipped, are they primarily just to the military directly, or are they actually to customers that are integrating them into systems that actually do the defense and try and take them down?
As compared to $2 8 million or 34% of total revenues in the same year ago quarter.
Now, I'd like to turn the call over to our CFO and Miranda to talk about our first quarter, fiscal 2026 Financial results. How please go ahead. Thank you Sam I'll keep my review to a succinct how way of the financials this quarter as a reminder much of the information we're discussing during this call was also included in our press release issued earlier today and will be included in the 10 C queue for the period.
Sam Rubin: Always to integrators. I don't think we've shipped systems directly to military. Definitely not on the long-range cameras. We have some direct military programs on optical assembly side, but not on cameras. Cameras currently all go to integrators. They could be defense primes like Lockheed Martin, Raytheon, Booz Allen. They could be much smaller companies that are integrating. They could be remote weapon systems where it's sort of automated systems to shoot drones down, but there's always some level of integration after us.
The difference in the gross margin as a percentage of revenue was primarily due to certain nonrecurring or end of life orders in the prior year period.
I encourage you to visit our Investor Relations web page to access these documents.
Higher margins.
Operating expenses increased 66% to $7 million for the first quarter of fiscal 2026 as compared to $4 2 million in the same quarter of the prior fiscal year.
Revenue for the first quarter of fiscal 2026 increased 79% to $15.1 million as compared to $8.4 million in the same year-ago quarter.
Sales of infrared components were $4.3 million, or 28% of the company's consolidated revenue.
The increase was primarily due to the integration of <unk> five following its acquisition earlier this year as well as increased sales and marketing spending to promote new products.
Revenue from visible components was $3.8 million, or 25% of consolidated revenue.
Revenue from assemblies modules were 5.9 million or 39% of Consolidated Revenue.
Net loss in the first quarter of fiscal 2026 totaled $2 9 million or <unk> <unk> per basic and diluted share as compared to $1 6 million or <unk> <unk> per basic and diluted share in the same quarter of the prior fiscal year.
Revenue from engineering services was $1.1 million, or 7% of consolidated revenue.
Oren Hirschman: Just two more questions, if I may. Those systems that do the integration, do they actually integrate in such a way that the drone is kept under surveillance from your system and that it actually has to do the calculations and help in terms of the countermeasure that's being done?
Growth profit, increased 58% to 4.5 million or 30% of total revenues in the first quarter of 2026.
Adjusted EBITDA for the first quarter of fiscal 2026 was <unk> 4 million positive compared to an adjusted EBITDA loss of $2 million for the same period of the prior fiscal year.
Total revenues and the same year ago quarter.
Sam Rubin: Yes, absolutely. Systems are integrated into pan-tilt or moving controls that are then tracking the drone. Oftentimes, from the data you collect from the cameras, there's quite a bit of calculations you can do, simplest at the azimuth and even distance. In other extremes, you can calculate some atmospheric conditions, including even wind speed in some cases, using the information from the camera. Our customers, the integrators, do exactly that.
Although not perfect. We believe that adjusted EBITDA is a better indicator of core operating performance by excluding noncore noncash items.
The difference in the gross margin as a percentage of revenue was primarily due to certain non-recurring or end-of-life orders in the prior year period that had higher margins.
Cash and cash equivalents as of September 32025 totaled $11 5 million as compared to $4 9 million as of June 32025.
Operating expenses increased by 66% to $7 million for the first quarter of fiscal 2026, compared to $4.2 million in the same quarter of the prior fiscal year.
Oren Hirschman: Okay. The last question is on the missile program. Are there other missile programs that need the same level of sophistication that are in any stage of discussion or anything moving along through the pipeline?
As of September 32025, total debt stood at $5 6 million and backlog totaled $86 million.
The increase was primarily due to the integration of G5 following its acquisition earlier this year, as well as increased sales and marketing spending to promote new products.
Looking forward our focus for fiscal year 2026 supports the business opportunities that Sam.
Sam Rubin: Yes. We have two more missile programs that our technology is being integrated into.
Net loss in the first quarter of fiscal 2026 totaled $2.9 million, or $0.07 per basic and diluted share, compared to a net loss of $1.6 million, or $0.04 per basic and diluted share, in the same quarter of the prior fiscal year.
Scribed.
We have a detailed go to market strategy that we are funding to target key high growth areas.
Oren Hirschman: Are those actually clear that those programs are going to go into production? Have you talked about those programs?
Our prior year investments in manufacturing are bearing fruit in terms of quality and on time delivery and.
Sam Rubin: No, it's a bit much earlier on than the NGSRI program. On the other hand, we don't have the last two years in which we spent developing a product that passes all environmental and G force acceleration and all of that, that's behind us. Now we come to every new program like that with the credibility already of having developed something that passes all of that. The earlier stage, but our time in those programs will be much faster.
And in the coming quarters, I expect we will see margin expansion as a result.
With all of the interesting accounting around acquisitions, we will continue to report adjusted EBITDA in fiscal year 2026 is a helpful measure of financial success.
Adjusted EBITDA for the first quarter of fiscal 2026 was $0.4 million positive compared to an adjusted EBITDA loss of $0.2 million for the same period of the prior fiscal year. Although not perfect, we believe that adjusted EBITDA is a better indicator of core operating performance by excluding non-core, non-cash items.
Also as Sam noted, we recently secured an $8 million strategic investment from Atlantis holdings and unusual machines at $5 per share.
Cash and cash equivalents as of September 30, 2025, totaled $11.5 million, compared to $4.9 million as of June 30, 2025.
We are truly fortunate.
Quality of investors in the company and on Das and unusual machines are not only continuation quality investors, but in addition, they are a great strategic fit.
Oren Hirschman: One last question, if I may, just a housekeeping question. Do you happen to have handy a non-GAAP OpEx number pulling out the acquisition-related charges?
As of September 30, 2025, total debt stood at $5.6 million, and backlog totaled $86 million.
Sam Rubin: No, we don't. We don't.
With that I will turn the call back to Sam.
Looking forward, our focus for fiscal year 2026 supports the business opportunity that Sam just described.
Oren Hirschman: Okay. We'll do that offline.
Thank you. Thank you everyone for joining us today before we move on to Q&A, just some closing remarks.
Sam Rubin: Okay, thank you all then.
We have a detailed go-to-market strategy that we are funding to target key, high-growth areas.
Operator: Thank you. There are no further questions at this time. This does conclude today's conference. We thank you again for your participation. You may now disconnect your lines.
We're entering the next phase of execution and growth.
Our prior year investments in manufacturing are bearing fruit in terms of quality and on-time delivery.
<unk> integration is progressing our record backlog provide visibility and we're scaling production to meet demand across defense public safety and industrial market, our black Diamond glass strategy is moving customers of germanium, improving supply assurance and total system value.
And in the coming quarters, I expect we'll see margin expansion as a result.
But with all the interesting accounting around acquisitions, we will continue to report adjusted EBITDA in fiscal year 2026 as a helpful measure of financial success.
The strategic investment we received from August and unusual machine supports increased capacity focused hiring and the tools, we need to deliver reliability at scale.
Also, as Sam noted, we recently secured an $8 million strategic investment from Honda's Holdings and Unusual Machines at $5 per share.
We see a real inflection point ahead of <unk>.
As our mix continues to shift from components to higher value systems and subsystems.
We are truly fortunate that the quality of investors in the company and us, and Unusual Machines, are not only a continuation of quality investors, but in addition, there is a great strategic fit.
Priorities are clear for the coming quarters ship on time at quality.
With that, I will turn the call back to Sam.
Expand germanium free product variant.
Thank you. Thank you, everyone, for joining us today. Before we move on to Q&A, just some closing remarks.
<unk> the supply chain and convert the backlog into revenue with healthy margin profile.
We're entering the next phase of execution and growth.
The team additions, we have made and various manufacturing and engineering, we're set up to execute against a robust multi year opportunity set.
We have a differentiated technology position and strong customer engagement, we're confident in our path to durable growth and increased profitability.
The G5 integration is progressing. Our record backlog provides visibility, and we are scaling production to meet demand across Defense, Public Safety, and Industrial markets.
Our Black Diamond Glass strategy is moving customers off, Germania is improving supply assurance and total system value.
With that I'll now hand, the call over to the operator to begin the Q&A questions session.
Session operator.
Thank you well now be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue you may.
The strategic investment we received from Mas and Unusual Machines supports increased capacity, focused hiring, and the tools we need to deliver reliability at scale.
Press Star two to remove your question from the queue for participants using speaker equipment may be necessary to pick up the handset before president Obama.
We see a real inflection point ahead as our mix continues to shift from components to higher value systems and subsystems.
My mom and Playboy poll for questions.
The priorities are clear for the coming quarters: ship on time at quality.
Thank you. Our first question is from Richard Shannon with Craig Hallum.
Expand Geranium. Free product variants, harden the supply chain, and convert the backlog into revenue at a healthy margin profile.
Yeah.
Well Hi, Salmonella.
For taking my questions Congrats on a very nice quarter.
With the team additions we have made in the areas of manufacturing and engineering, we're set up to execute against a robust multi-year opportunity set.
Leo on my end here is a little tight.
Dicey, so hopefully it's okay for you there that said I'll start with my my first question here I wanted to ask about germanium and Black Diamond glass I'm seeing some reports that maybe China is opening up the window for acquisition of germanium outside the country wanted to see if you're seeing that and whether theres any different reaction.
With a differentiated technology position and strong customer engagement, we are confident in our path to durable growth and increased profitability.
With that, I'll now hand the call over to the operator to begin the Q&A session.
Session operator.
Our approach to germanium given that and then also maybe as a follow on here maybe you can talk to us about how fast you are converting your portfolio of cameras and sub assemblies to black Diamond and how fast do you expect the customers to transition that.
Yeah. Thank you. So you know, it's a germanium situation changes, but today its definitely very interesting and we're following it.
Thank you. We'll now be conducting a question-and-answer session. If you'd like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up the handset. Before pressing the star keys, please hold on while I call for questions.
As far as we can tell China is making it very clear that they will put a lot of effort to make sure. It will not end up in defense applications.
Thank you. Our first question is from Richard Shannon with Craig Hallum.
So we don't think it will be very freely available.
I can say this.
Pretty much every customer that has switched over from germanium to our black Diamond is in deposits too.
Including a key customer that was just visiting here yesterday.
Mentioned that from that point of view is the disruption in supply chain was so big that they will not take a chance again website and.
And so we believe that people burnt one so obviously far more careful and even if China makes the material available now everyone understands that.
Well, hi Samuel. Um, thanks for taking my questions, congrats on a very nice quarter. Um, audio on my end, here's a little tight, or a little little the dicey. So hopefully, it's okay for you there. With that said, I'll start with my, uh, my first question here wanted to ask, um, about geranium and Black Diamond Glass. Um, seeing some reports that that maybe China is opening up the window for, for acquisition of geranium outside. The country want to see if you're seeing that and and whether there's any different reaction or approach to geranium, given that, uh, and then also, maybe as a, as a follow on here, maybe you can talk to us about how fast you're converting your portfolio of cameras and sub assemblies to Black Diamond, and how fast you expect the customers to transition their
Firstly could close at any point in time with any moment notice.
So people already very very careful Additionally, I'll just emphasize again that our.
Our materials performed far better than germanium in many many use cases.
So our struggle has always been convincing customers getting to the point of redesigning to use our materials instead of germanium because once the did the performance is much better lighter smaller systems better throughput your maintenance lots of different reasons.
Yeah, thank you. So, as a geranium, the situation changes by the day. It's definitely very interesting, and we're following it as far as we can tell. China is making it very clear that they will put a lot of effort to make sure it will not end up in defense applications, and so we don't think it will be very freely available. I can say this.
Pretty much every customer that has switched over from Geranium to our Black Diamond or is in the process too.
Including a key customer that was just visiting here yesterday.
<unk>.
Absolutely germanium is still needed in many places and there's room for both materials to coexist, but from what we can tell most customers that have been switching over to black Diamond will remain in black diamond even if the material is freely available.
They mentioned that from their point of view, there is a disruption in the supply chain that was so significant that they will not take that chance again.
In terms of our transition of our cameras. It is more a question of resources. So we have many many projects going on and as you can imagine with the 90 something million dollars backlog. We have comes also some engineering work and some modifications, which often time.
And so we believe that, you know, people who have been burnt once are obviously far more careful. Even if China makes the material available, you want to understand that the faucet could close at any point in time, at any moment, with no notice. And so people are already very, very careful. Additionally, I'll just emphasize again that our materials perform far better than Germania in many, many use cases.
Happen to overlap with the same resources that would redesign cameras.
I think our team is nearly done with one <unk> design and working on some others.
But until we hire more people towards that and we have a quite a number of open positions that we're planning to to fill for those kind of areas until we fill those positions.
And so our struggle has always been convincing customers to get them to the point of redesigning to use our materials instead of geranium. Because once they did, the performance is much better. Lighter, smaller systems, better throughput, you name it. Lots of different reasons.
so,
<unk> first of all in the short term revenue delivering what we have now <unk> now before we put more resources into converting that cameras over.
Absolutely geranium is still needed in many places and there's a room for both, you know, materials to coexist. But from what we can tell, most customers that have been switching over to Black Diamond, will remain in Black Diamond even if the material is freely available and so
Okay that is helpful to hear it thanks, thanks for that Sam maybe.
Maybe just addressing the supply chain resiliency and capacity.
You mentioned, a couple dynamics, whereas fiscal regarding visit mid if.
If you can describe where else you're having to work to improve capacity either from an internal capability or or equipment point of view or with external suppliers and over what timeframe do you expect that to be improved our result.
Yes pretty much across the board I mean, the growth. We're seeing is in almost every aspect other than other than the old technology of molded optics.
We have a lot of capacity for and we'll sort of.
Like Bob used to do until a few years ago.
The wells, we need to add capacity, so we need to add capacity of fabrication and our lottery operation and in Orlando, We are putting an enormous investment into glass capacity and even as the investments, we're making I feel sometimes is not enough we already.
In terms of our transition of our own cameras, it is more a question of resources. So we have many, many projects going on and as you can imagine with the 90 something million dollar backlogs, we have comes. Also some engineering work and some modifications. And so on which often times happen to overlap with the same resources that would redesign cameras. So I think I would team is nearly done with 1 more redesign and working on some others. Um but until we hire more people for that and we have a quite a number of open positions that we're planning to to fill for those kind of areas. And until we fill those positions, the priority is first of all, on the short-term Revenue, delivering what we have now here. And now, before we put more resources into converting the cameras over
Getting.
Booked as soon as we add capacity.
We have seen some constraint on the some of our vendors primarily as a detector confidence of making the focal plane of ace that go into cameras some of them depend on germanium and.
And we worked with them to Evo replacement germanium will solve some problems.
Okay, so that is helpful to hear. Thanks, thanks for that Sam. Uh, maybe just addressing the supply chain resiliency and and capacity. Um, you mentioned a couple, uh, Dynamics um, or a specific regarding vismed. Um, if you can describe where else you're having to work to improve capacity, either from an internal capability, or, or equipment point of view, or with external suppliers and over what time frame, do you expect that to be, uh, improved or resolved?
And some of them are just seeing a very high growth in some of their new products, which are what we're using oftentimes.
So we work with vendors with a focal plane array when needed but other than the poker playing a very pretty much everything else is vertically integrated.
And we control internally.
What are the key of it.
Okay perfect good to hear.
Maybe one or two quick numbers questions and I'll jump out of line here.
I guess.
September quarter results here sales are very nice well above what we had in our model. Obviously, you didn't give any guidance there, but any thoughts as to how you'd like us to think about the sales progression into the December quarter would be a great help here and then how do we think about the EBIT a follow through on that as well.
So Richard obviously, we're not going to give any guidance.
We had capacity. Um, we have seen some constraints on the sum of our vendors. Primarily, the detector companies are making the focal plane of AIDs that go into cameras; some of them depend on germanium.
We're happy to see where we came in this quarter.
We would like to see that number again.
So that's what we're shooting for in Q2.
But I think from an EBITDA perspective, we were positive this quarter, it's a good sign and that will continue.
and we worked with them to either replace the geranium or solve some of their problems. Uh, and some of them are just seeing a, a very high growth in some of their new products, which or what we're using often times. Um, so we work with our vendors for the focal plane of a, when needed, but other than the focal, plane are very pretty much. Everything else is vertically integrated and, and we controlled internally.
Or every key element.
Okay, perfect guys I will jump out of line congratulations keep up the good work.
Thank you.
Our next question is from Glenn Mattson with Ladenburg Thalmann.
Yeah, Hi, thanks for taking the questions Sam I think in the past you said that <unk> would be like.
That would be a fall of 2025 orders or maybe per SKU calendar 'twenty six is that still your expectation.
Perfect, good to hear. Um, maybe 1 or 2 quick numbers questions, and I'll I'll jump out of line here. Um, I guess uh, September quarter results. Here sales are very nice. Well above what? We, what we had in our model. Obviously you didn't give any guidance there, but any thoughts is as to how you'd like us to think about sales progression in the December quarter, will be be a great help here and then well, how do we think about the ebit of follow through on that as well?
I guess.
Yeah.
You talked about the.
Upgraded the Texas facility that services that contract. So I don't know if you're if you're trying to signal high confidence there or if you can clarify that that'd be helpful as well.
So Richard obviously we're not going to give any guidance. Um, we're happy to see where we came in this quarter. Um we would like to see that number again. Uh so uh, that's where we're shooting for in Q2. Um,
Sure so.
Nothing has changed other than the government shutdown continued saw any timeline related to anything government is up into the air.
I think from an Eva perspective, uh, we were positive this quarter, it's a good sign.
And uh, and that will continue.
Let's hope that early fall or fall 2025, there will be a down selection.
Okay, perfect. You know, guys, I will jump on the line. Congratulations; keep up the good work.
<unk>.
Quoting just what <unk> said publicly.
Thank you. Thank you.
In different publications Lockheed has been ready for flight tests, and Raytheon with things that it would be in late November or December the units will be ready for flight test.
Our next question is from Glenn Matteson with Ladenburg Thalmann.
So discipline said publicly and by both companies. So clearly a down selection cannot happen if both units aren't ready for a full testing yet.
Yeah. Hi, thanks for taking the questions. Uh, Sam, I think in the past you said that NGS would be like, potentially a fall of 2025 award, or maybe first quarter calendar 2026. Is that still your expectation? And I guess you mentioned second quarter.
We are making less investment in conjunction with our customer with Lockheed Martin for.
So a few reasons one they are very very bullish about this in several ways.
That that you talked about the, uh, upgraded Texas facility that services that contract. So, I don't know if you're trying to signal high confidence there, or if you can clarify that. That'll be helpful as well.
Secondly DS.
Systems, So what will be buildings, there can be an insert used in more programs other than just <unk> and actually in Lockheed will already and a few a couple of other programs that are needed.
And thirdly, most importantly, if or hopefully win Lockheed Martin when.
Everyone is going to want to scale up as quickly as possible so making a small bets now the bet is both by Lockheed under us shared costs Theyre, making a small bets now could pay off big time later on if if we're awarded if we don't do that then we'll be at the pretty stressful point.
Sure, so, um, nothing has changed other than the government shutdown continuing. So, any timeline related to anything government is, yeah, up in the air. Um, we once hoped that early fall or in fall 2025 there would be a down selection. However, quoting just what it said publicly in different publications, Loki has been ready for flight tests, and Raon would say that it would be in late November or December that the units will be ready for flight tests.
Comes the awards.
So, this was said publicly by both companies. Clearly, a down selection cannot happen if both units aren't ready for full testing yet.
Yes makes sense.
On the gross margin you talked about it being.
Impacted year over year, but also just given the growth in systems and modules and that being a higher margin business can you say.
Um, we are making that investment in conjunction with our customer, Loki. Martin, for a few reasons: 1, they're very, very, very bullish about this. And so what we...
Just perhaps.
Maybe it could have been even stronger this quarter or with the two thirds backlog and systems and modules.
Maybe just directionally.
Could you remind us of where you think that's going.
Secondly, these systems, so what we will be building, can be and is used in more programs other than just NGS, Surrey, and actually in Loki. We are already in a couple of other programs that are needed.
Medium and long term.
Yes.
I mean, we want to step up from here Glenn too.
<unk> 35 by the end of the fiscal year March up that ladder.
This quarter we.
We sold a lot of.
IR components.
High sales number which is typically lower margin.
So we had a sales mix has sort of brought down what would have been higher than 30%.
And thirdly, most importantly, if or hopefully when Lockheed Martin wins, everyone is going to want to scale up as quickly as possible. So making a small bet now, and the bet is both by Lloyd and U.S. shared costs, they're making a small bet now could pay off big time later on. If we're awarded, if we don't do that, then we'll be at a pretty stressful point when their award.
Uh, yeah makes sense. Um,
Most profit.
When when that kind of event happens I am not terribly worried in terms of the percentage I flip back and I look at the dollar and I think okay. We did well because we exceeded where we thought we were going to be.
On the gross margin. Now, you talked about it being, um,
From a revenue perspective on the IR side, So Mike Alright that works for us.
uh, impacted year-over-year. But, uh, also just given the growth in systems and modules and that being a higher margin of business. Can you say, uh, you know, just perhaps, um,
No.
We budget sort of mix and then there's the mix changed a little bit compared to budget, but.
maybe it could have been even stronger this quarter or or you know, with the 2/3 backlog in systems and modules, uh, maybe just directionally
You know, can you remind us of where you think that's going?
Pretty satisfied where we are in Q1.
Medium and long term.
Okay. Thanks, and then last one for me is a couple of times in the call you mentioned.
Scaling operations.
I just wonder what.
What that means in terms of Opex.
If you're trying to signal some some increased investment there.
Hold a lot of, uh, IR components.
No.
I don't think we're going to have a major impact to Opex will continue.
It was a high sales number, which is typically lower margin.
More or less like we thought for fiscal year 'twenty six.
The Opex is basically for moving things around.
The capacity in some areas like Sam mentioned and glass for example, that's more capex right, we already have the space.
So we had a sales mix that sort of brought down what would have been, you know, a higher than 30% gross profit. When that kind of event happens, I'm not terribly worried in terms of the percentage. You know, I flip back and I look at the dollar and I think, okay, you know, we did well because we exceeded where we thought we were going to be.
So.
From a revenue perspective on the IR side, I thought, "Alright, that works for us."
It's not we have to do a build out or anything like that so we have the room, but we just have to buy more furnaces. For example to produce more glass, we already have molding capacity. So we don't have to spend a tremendous amount there and then when we talk about cameras.
You know, um, we budgeted sort of a mix, and then, you know, this mix changed a little bit compared to budget, but um, I'm pretty satisfied with where we are at Q1.
Systems sub systems.
Okay, thanks. Uh, and the last thing for me is a couple of times, you called me mentioned.
Those workstations and work lines or to expand them are relatively inexpensive.
It doesn't cost millions of dollars for capital equipment is tens of thousands of dollars for for.
Uh, scaling operations and, uh, just wonder what, uh, what that means in terms of Opex, uh, if you're trying to signal some increased investment there.
no, I I I
For Assembly stations, and we are going to rationalize the footprint in the United States, we're going to move things around a little bit.
I don't think we're going to have a major impact to Opex.
Maximize the entire footprint on the assembly of modules.
Systems.
Okay, great. Thanks for all that color.
As a reminder, if you'd like to ask a question. Please press star one on your telephone keypad.
We'll continue, you know, more or less like we thought for fiscal year 2026. The Opex is basically for moving things around, the capacity in some areas. Like Sam mentioned, in glass, for example, that's more CapEx, right? We already have the space.
Our next question is from Jason Smith with Lake Street capital markets.
Hey, guys. Thanks for taking my questions. Sam just wanted to follow up on your comment on these $10 million plus annual revenue opportunity just curious how many of the sort of eight figure deals you have in the pipeline.
You know, so it's it's not we don't have to do a build out or or anything like that so we have the room but we just have to buy, you know, more furnaces. For example, to produce more glass, we already have molding capacity so we don't have to spend a tremendous amount there. And then when we talk about cameras, uh, systems, subsystems,
That's a great question need my fingers now to count them.
Those workstations and work lines are to expand them or relatively inexpensive.
I'd say.
Probably about seven now.
<unk> seen a steady six for a while but I think we have one or two being get it may be a bit early stage on some of them.
It doesn't cost millions of dollars for a Capital Equipment. It's tens of thousands of dollars for uh for assembly stations and we are going to rationalize the footprint in the United States. We're going to move things around a little bit.
The counter UAS I expect that to grow quite a bit and we are at least in two different counter UAS programs only one of them is currently in the backlog.
to maximize the entire footprint on the assembly modules and systems.
Okay, great. Thanks for all that color.
So I would say seven or eight programs like fund.
At the reminder, if you'd like to ask a question, please press *1 on your telephone keypad.
Okay. That's helpful and then just going back to gross margin.
Our next question is from Jason Schmidt with Lake Street Capital Markets.
We expect any sort of noise in the gross margin line with these capacity expansion plans here in the December quarter.
I don't think so I don't think so the way we modeled it out it should not be.
Hey guys, thanks for taking my questions. I just want to follow up on your comment about these $10 million plus annual revenue opportunities. I'm curious how many of these sort of eight-figure deals you have in the pipeline?
We should still see we should see improvement in margins.
Absolutely, great question. Uh, I need my fingers now to count them, but uh,
Yes.
Got you that's helpful. And then just the last one from me and ill jump back into queue looking at that backlog number obviously really impressive I think at one point or <unk> five was about two thirds of that backlog is that still the case.
I'd say probably about 7 now. So we've been at a steady 6 for a while, but I think we have 1 or 2 being added, maybe a bit early-stage on some of them.
Pretty much I think.
The ebbs and flows and.
Um, the counter UAS is expected to grow quite a bit, and we are involved in at least two different County UAS programs. Only one of them is currently in the back line.
And it comes up and down in different <unk>, five part and fish.
Um, so, so I'd say 7 or 8 programs like that.
Pushing product out much more <unk>.
Aggressively now so but still about two thirds.
Okay perfect. Thanks, a lot guys.
Thank you.
Technically <unk>. Our next question from Orin Hirschman with <unk> investment.
Okay, that's helpful. And then just, uh, going back to gross margin. I mean, we expect these sort of noise in the gross margin line with these capacity expansion plans here in the December quarter.
I don’t think so. I don’t think so.
Hi, congratulations on that.
Another quarter of tremendous progress.
The way we modeled it out, it should not be.
Thank you.
Let's see.
We should still see improvement in margins.
Going back to the question on those other potential awards.
Decent sized awards can you just go back and just go through what's really driving it is it.
Is it the belongings infrared cameras wanted it behind most of those deals. If there is if there are warning.
Gotcha. That's helpful. And then just the last one for me, and I'll jump back into the queue looking at that backlog. The number, obviously, early impressive. I think at one point, G5 was about 23% of that backlog. Is that still the case?
Noticeable yes.
Yes, most of them are evidence of black Diamond glass with the Apache program delivered.
Pretty much, I think, um, I mean, that's absences and flows and, uh,
Additional defense.
And it comes up and down, and I think the G5 part.
Airborne program.
Says pushing product out much more.
<unk> recently talked about all of them are around the uniqueness of the black Diamond glass, not even replacing germanium, but just improving drastically improving.
Aggressively now, so, but still about 2/3. Yeah.
Okay, perfect. Thanks a lot, guys.
Thank you.
The performance of existing systems.
Technically, it's like 50. Our next question is from Orin Hersman with AI GH Investment.
So this is sort of has always been a major selling point of those materials as you can.
Hi, Mr. License. On another quarter of tremendous progress.
Improved performance even of existing system, so with things that come to fruition now.
Thank you.
Others that are a bit earlier stage or so is the counter UAS is also fairly advanced stage.
And there was a pretty big one as they come in big numbers, because sales are long range cameras storms mid and long range cameras.
And then earlier.
Earlier stage ones, all much bigger system programs like related to Golden dome or satellite programs or things like that.
Awards. Can you just go back and just what? What's go through? What's really driving? It is it the is it the the long range? Infrared cameras what what are behind most of those deals if there is, if there are 1 or 2 trends that are noticeable,
We will take a long time, but have very very large numbers tied to them.
In terms of <unk>.
The long range cameras for spawning Jones.
UAS is yep.
Is there is there any other technology thats crept up.
Yeah, most of them are around the Black Diamond glass. So, whether it's a patchy program or whether it's an additional defense Airborne program that we recently talked about, all of them are around the uniqueness of the Black Diamond. The glass is not even replacing Germania, but just drastically improving.
<unk>.
The performance of existing systems.
Then on the same distance or with al So the Vale <unk>.
Are you seeing.
Having to use frequency radio frequency.
So even if you can use radiofrequency still needs a visual pumped for validation. So the key here is about.
Belt shoot something down you have to be a million percent sure that youre shooting for the right thing down and not just something because it's flying set so with visual validation has is becoming a must for any system that needs to connecticut or otherwise take down something.
So this is sort of the has always been the major selling point of those materials is, you can improve performance even of existing systems, so with things that come to fruition. Now others that are a bit earlier stage of, you know, sorry the counter uas is also at a fairly Advanced stage, um, and those are pretty big ones. They come in in big numbers because they are the long range canvas, most times mid and long range cameras.
And so even when you can use of Adolph Andy would have no problem turn and gets on because.
And then, um, earlier stage ones of much bigger systems—programs related to the Golden Dome or satellite programs or things like that—that, uh, will take a long time but have very, very large numbers tied to them.
And your own territory or whatever you still have to have that visual validation visible camera is very limited in range, but also of course can't work its night comparable certain weather conditions and so on so I don't know of anything other than a thermal cameras that can give you is that absolute validation when you've seen.
In terms of, you know, the long range cameras for starting Jones and uas is. Yeah, is is there is there any other technology that's crept up that could spot?
Them from the same distance or without using.
Using any of the system with a $3 could stick electronic signals and so on.
Without having to use, you know, frequency, radio frequency.
To validate since youre going to shutdowns of Mitek.
The question I never ask you as a company.
The systems that are being shipped today, primarily just to the military directly or are they actually two two.
<unk> customers that are integrating them into the system. So they actually do the defense and try and take all the way all the ways to integrate it. So I don't think we've shipped systems directly to military definitely not on the long range camera was we have some direct military programs on.
So so even if you can use radio frequency, you still need the visual part for validation. So, the key here is, you know, you you're about to shoot something down, you have to be a million percent sure that you're shooting at the right thing down, and not just something because it's flying there. So we're visual validation has is becoming a must
Optical assembly side, but thoughts on the cameras cameras currently all go to integrators, they could be defense volumes like Lockheed Martin and Raytheon Boonton Booz Allen.
They could be much smaller companies that are integrating that could favor both weapons systems well.
Volker maintenance systems to shoot Jonestown.
There's always some level of integration after.
Okay, just two more questions if I may.
For any system that needs to kinetically or otherwise take down something, and so even when you can use the radar and you would have no problem turning it on because you know you're in your own territory or whatever, you still have to have that visual validation. Visible cameras are very limited in range, but also, of course, can't work at night, can't work in certain weather conditions, and so on. So, I don't know of anything other than thermal cameras that can give you that absolute validation when you see something using any other system with its radar, acoustic, electronic signals, and so on, to validate that you're going to shoot down the right thing.
Those systems to do the integration did they actually integrate in such a way that the.
The drone is kept under surveillance from your system and that actually has to do the calculations and help in terms of the counter measure that's being done.
The question I've never asked you or the company is: are the systems that are being shipped primarily just to the military directly, or to the... Are they actually...?
Yes, absolutely system integrated into Pan tilt so moving.
Trolls is that'll then tracking the drone and often times from the data you collect from the Cameron says quite a bit of calculations you can do simplistic as it move in even less than an hour.
You can you can calculate from atmospheric conditions, including even wind speed at some cases using the information from the camera and that customer the same integrated do exactly that.
Okay. The last question is on the missile program.
To to customers that are integrating them into systems that actually do the defense and try and take all the way always always to integrate it. So I don't think we've shipped systems directly to military. Definitely not on the long range cameras. We have some direct military programs on um Optical assembly side but not on a cameras cameras. Currently all go to integrators. They could be defense primes like uh Lockheed Martin Raffia and Bulls and Co Bulls Island. Um they could be much smaller companies that don't integrating. It could be remote weapon systems where um you know it's sort of automated systems to shoot drones down. But uh but there's always some level of integration after us.
Other.
But there are other missile programs that need the same level of sophistication that or any stage of discussion or anything moving along through the pipeline.
Yes, we have two more missile programs.
<unk> technology is being integrated into.
Just two more questions, if I may. Those systems that do the integration, do they actually integrate in such a way that the drone is kept under surveillance from your system, and then it actually has to do the calculations and help in terms of the countermeasure that's being done?
So those actually.
Clear that those programs are going to go into production have you talked about those.
So much earlier.
Then the <unk> program.
But on the other hand, we done the last two years in which we spend developing a product clipped possible environmental and GE for acceleration in dollars that's behind us.
Now we come to every program every new program like that whereas the credibility already of having developed something that passes all of that so the earlier stage, but our time and those programs will be much faster.
Yes, absolutely systems or integrated into pan tilts or moving, uh, controls that will then tracking the Drone. And often times from the data, you collect from the cameras is quite a bit of calculations. You can do, simplest is the aim of and even distance in other extremes. You can cut. You can calculate some atmospheric conditions, including even wind speed, in some cases using this information from the camera and our customers integrators do exactly that.
Okay, um, the last question is on the missile program. Are there others?
And one last question if I may just a housekeeping question do you happen to have handy a non-GAAP opex number.
Pulling out the acquisition related charges.
No we don't we don't.
Okay, I will do that offline.
Any stage of discussion or anything moving along through the pipeline? Yes, we have two more missile programs that our, um, technology is being integrated into.
Okay. Thank you all.
Yes.
Thank you there are no further questions at this time. This does conclude today's conference. We thank you again for your participation you may now disconnect your lines.
Those those actually clear that those programs are going to go into production, have you talked about those programs know? It's a bit a bit much earlier on than than the NGS survive program. Um but on the other hand we don't you know, the last 2 years in which we spend developing a product that passes all environmental and and g46 elevation and all of that that's behind us.
So, now we come to every program—every new program like that—with the credibility already of having developed something that passes all of that. So, the earlier stage, but our time in those programs will be much faster.
1 last question. If I may just ask a housekeeping question regarding the zero, do you happen to have handy the RX number on 9 Gap?
Pulling out the acquisition simulated charges.
no, we don't, we don't
Okay, we'll do that offline.
Okay, thank you. Alan.
Thank you. There are no further questions at this time. This does conclude today's conference. We thank you again for your participation. You may now disconnect your lines.