Operator: Greetings, and welcome to the Vuzix Corporation's Second Quarter 26 Financial Results Conference Call. At this time, participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. As a reminder, this call is being recorded. 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 thank you, everyone, for joining us today. Welcome to the Vuzix Corporation Second Quarter 26 Financial Results Conference Call. With us today are Vuzix CEO, Paul J. Travers and our CFO, Grant Neil Russell. Before I turn the call over to Paul, I would like to remind you management's prepared remarks may contain forward-looking statements, which are subject to risks and uncertainties, management may make additional forward-looking statements during the question and answer session. Company claims the protection of the Safe Harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 2 thousand. Actual results could differ materially from those contemplated by any forward-looking statements due to factors including general economic, and business conditions, competition, changes in business strategy or development plans, our ability to attract and retain qualified personnel, changes in legal and regulatory requirements, and other risks described in our SEC filings. Any projections represent management's estimates as of today, 08/13/2020 Vuzix assumes no obligation to update them except as required by law. This afternoon, the company issued a press release announcing its 2Q 26 financial results and filed its 10 q with the SEC. Participants may wish to review those documents as we will provide a summary of the results on today's call. Today's call may include certain non GAAP financial measures. When required, reconciliation to the most directly comparable GAAP measures can be found in the company's SEC filings. I will now turn the call over to Vuzix CEO, Paul J. Travers, who will give an overview of the company's operating results and business outlook, Paul will then turn the call over to Grant Neil Russell, Vuzix CFO who will provide an overview of the company's financial results. After that, we will move on to the Q&A session. Paul?

Paul J. Travers: Thank you, Ed. and thanks to everyone for joining us today. With the first half of 2026 behind us, Vuzix is focused around our 3 core growth pillars. Enterprise smart glasses, OEM products and solutions, and waveguides. They are connected by the technology manufacturing capabilities, intellectual property, and customer relationships we have built over many years. The business opportunities in front of us look very different from a year ago. Across all 3 pillars, we are seeing expansion in both the number and quality of opportunities involving major enterprise customers. Defense organizations, OEM partners, and technology companies. AI is a game changing driver as enterprises look for practical ways to bring AI powered intelligence to their frontline workforce and into the physical workplace. These are not early stage discussions. A growing number of programs have cleared development and validation and are heading toward commercialization. As that work converts into production volumes, it has the potential to change both the size and the mix of Vuzix revenue. 2 things in particular have changed to get us here. Customer requirements have converged around optically see through self contained glasses and the software work required to deploy a solution is getting easier as AI takes on much of the integration. I will come back to both of these. Let me begin with enterprise smart glasses. AI is profoundly changing the relationship between people and computers. And that is game changing for wearable smart glasses. AI will automate many tasks, but skilled trades people, technicians, and frontline workers operating in the physical world are not going away. The opportunity is to dramatically augment those workers by connecting them directly to the intelligence and capabilities of AI. Put simply, AI does not eliminate the frontline worker. It makes connecting that worker to the digital world far more important and valuable. During COVID, remote support drove significant interest and sales in smart glasses, but it addressed a relatively narrow need created by temporary circumstances. AI enterprise smart glasses are fundamentally different from a basic remote support application, and we believe AI represents a lasting change in how people interact with computers and how work gets done. The opportunities we are seeing today are tied to ongoing productivity, operational efficiency and augmenting the frontline workforce. Needs that will persist and grow as AI becomes more deeply embedded across the enterprise. All day wearable smart glasses are a natural interface for making that connection. With AI that can see what the worker sees, understand what they are asking, and access relevant enterprise knowledge, the glasses can understand the task and provide real time information or guidance while leaving the workers hands free. Unlike a phone, tablet, or laptop, they stay with the worker and task at hand throughout the day, turning smart glasses from primarily a communications tool into an always available AI enabled productivity platform. it is worth a brief discussion on what customers are asking for. In nearly every new program we are engaged in today, the customer wants optically see through smart glasses. The worker sees the real world directly with information presented within their natural field of view rather than through a camera or on a screen off to the side. And a growing number want that in a self contained pair of glasses with no tethered compute unit. That is a demanding combination. The display has to be bright enough for real work environments, efficient enough to run a full shift on a battery, light enough to wear on your face, yet small enough that the product still looks and feels like eyewear. Those are exactly the constraints waveguide optics exist to solve. And they are a large part of why our optical and wearable systems capabilities are being pulled into so many customer conversations at once. There is 1 more change worth calling out. For years, the practical barrier to enterprise smart glasses was not mainly the hardware. It was the software. Every deployment needed custom integration into a customer's existing systems, and that work was slow, expensive, and scarce. AI is changing that. A great deal of the integration work that used to require a dedicated development team can now be done with AI doing much of the coding. We use AI this way in our own development, and we think it should meaningfully lower what it takes for an independent software vendor or even an end customer's own team to stand up a deployable solution. That matters because the software effort has historically been 1 of the barriers sitting between customer interest and customer deployment. And as AI enabled smart glasses can understand what the worker saw, said, and accomplished during the job, it can easily help automate much of the administrative work that follows. Documenting the work performed, preparing service reports, identifying and ordering replacement parts, scheduling follow-up visits, updating enterprise systems, and even identifying additional work that may be required. For frontline workers this is transformative and allows the worker to focus on the physical work while AI handles the digital work around it. Amazon is a good example of an innovation leader in this space. Its reliability and maintenance engineering teams have been using Vuzix m 400 smart glasses to support robotics, conveyors, and automation equipment within fulfillment centers for several years now. More recently, Amazon expanded its usage of Vuzix smart glasses to our next generation ultralight pro smart glasses. Amazon has developed their own AI driven applications to support maintenance and other operational activities inside its AI data center infrastructure. We are seeing similar AI driven interest across logistics, warehousing, manufacturing and other frontline environments from other Fortune 500 companies looking to use AI both to assist workers while they perform their jobs and to automate the digital workflows surrounding that work. Our second pillar is OEM products and solutions. Vuzix brings together optics, electronics, wearable product design, manufacturing experience and real world enterprise deployment knowledge. Our OEM products and solutions business is designed to take customers from product concept through design engineering qualification, and ultimately production. 1 example is the waveguide based smart glass platform we have been developing with a leading global automotive manufacturer. We have delivered the initial systems and worked through adjustments from there. Feedback has been very positive, and discussions are proceeding around formal factory floor rollouts. These Smart Glasses were designed around a live manufacturing requirement. Combining our enterprise wearable experience with our waveguide display technology. At the same time, development of Vuzix next generation ultralight Pro smart glasses continues. They were designed from the outset for enterprise and industrial users looking to bring AI into the hands free workplace. it is lightweight, standalone, waveguide based design combines with a wide field of view camera that can provide AI with visual context. The high performance audio with noise cancelling microphones and integrated speakers provide for natural voice interaction. The all day wearability safety certification prescription support, enterprise grade performance all combined for the ultimate AI user experience. We continue to work with a growing list of prospective customers and partners around validating the platform before we complete the tooling. Our approach to new products has also become more disciplined. Our development decisions are tied to identifiable customers validated use cases, and commercial opportunities. Customer driven OEM programs can take longer than launching a Vuzix branded product ourselves, but they carry lower commercial risk because development is anchored to a defined customer requirement and real world use case. This lets us invest behind demonstrated customer needs rather than anticipated demand while retaining the opportunity to turn successful programs into broader Vuzix platforms. Our objective is to move more of these OEM programs into production programs while maintaining discipline around the capital we commit. Defense and security agency activity spans all 3 growth pillars. And continues to build. With more substantive engagements and clearer pathways from development towards production. Drones and unmanned systems have become core operational tools while wearable displays and HUD's provide a natural interface for situational awareness, coordination, maintenance, medical information, and secure data delivery. U. S.-based design and manufacturing of critical optical technologies is also becoming more relevant to defense customers and primes. Our Collins Aerospace program has moved from development into initial production for waveguide based AR display systems supporting drone applications. In parallel, we are putting the required systems in place for the launch of a U. S. Government funded next generation waveguide development effort including work aimed at larger fields of view and other performance improvements for future defense requirements. Additionally, we are engaged with the U. S. Government securities agencies around custom wearable solutions. 1 of these customer opportunities has progressed through the proposal stage with the customer currently targeting a contracting decision later this year. Across these programs, customers care about manufacturability supply chain security and where critical technologies are produced. Vuzix's ability to design and manufacture advanced waveguides in The United States while also supporting complete wearable systems, is an important differentiator. Our third pillar is waveguides. which we continue to believe represents 1 of Vuzix's largest long term opportunities. In many respects, it is also the technology foundation underlying our other 2 pillars. Enterprise smart glasses and OEM products and solutions. The rapid evolution of AI has created a new level of interest and investment in AI-enabled smart glasses. As AI has become more capable of seeing, understanding and interacting with the world around us. The value of an all day wearable interface has become much more compelling. This is driving new investments across the industry including from companies that had previously set smart glasses aside and at the same time is increasing the need for high performance waveguide based displays. And as I mentioned a moment ago, customers are converging on optically see through displays in self contained eyewear. That requirement leads directly to waveguides because waveguide optics are the only practical approach we know of that delivers a true see through image within the size weight and power budget of all day glasses. But optical performance alone is not enough. These waveguides must also be manufactured reliably at scale at costs that make high volume products possible. During the first half of 26, we continued investing in Vuzix Rochester, New York based manufacturing and R&D facility to support more waveguide programs simultaneously. reduce changeover time, and increase throughput as programs move from development towards production. We invested approximately $1.2 million in fixed assets during the first 6 months, primarily for new waveguide manufacturing equipment, Most of this investment is intended to create a more flexible environment where 1 line can support development, while another supports production or both can support production as volumes increase. On the materials side, our chemistry capabilities are focused on advanced high index materials and replication processes intended to improve optical performance while preserving the scalability and cost advantage of nano imprint manufacturing. As you all know, Quanta is an important partner of Vuzix. Quanta brings high volume end product manufacturing capability and access to a broad customer ecosystem, while Vuzix brings waveguide design, optical engineering, manufacturing know how, intellectual property. Together, Quanta and Vuzix are working to become turnkey system solution providers technology companies, eyewear brands and platform providers of display enabled AI smart glasses. Ultimately, the waveguide market will not be won by the laboratory hero samples. It will be won by companies that can combine optical performance with repeatability yield scale and cost, while supporting very large volume customers That is the position Vuzix has spent years building towards. This industry has taken longer to arrive than any of us expected. That said, the pieces needed for long term sustainable growth are now falling into place. Customers are converging on optically see through self contained glasses and that is what we build. We have the engine to manufacture the waveguides behind them, a base that takes years to stand up, and ours is running. And customers are now paying for OEM versions of what we have created in commercial programs as well as defense. Very few companies have stayed with this long enough to have all 3. Our confidence today is not based on hope about the market. It is based on what customers are asking us for now. What is new is the pace AI has given enterprise smart glasses a much broader purpose. And the software barrier that used to slow deployment is now coming down. OEM programs are moving from validation into commercialization defense programs are moving towards production, and our waveguide line is scaling to support both. This is happening across all 3 pillars at once, with programs involving some of the world's largest and most sophisticated organizations. Waveguide design and manufacturing is clearly a cornerstone pillar of the Vuzix business, and we are investing in it accordingly, expanding our imprint capacity, reconfiguring our plant floor, adding metrology, and continuing to advance our materials and process capabilities. We believe that progression has the potential to change Vuzix's financial performance as these programs convert. Not only through higher revenue, but through better utilization of the manufacturing and technology we have already built. In other words, the opportunity is not simply to grow the top line, it is to begin demonstrating the operating leverage these 3 pillars are capable of delivering. Our focus is straightforward. Execute and convert these customer programs into production. At our annual meeting, we noted that our waveguide capabilities have potential applications beyond smart glasses. Today, we can be more specific that 1 of those areas is optical interconnect in AI data centers. We have received inbound interest in our planar waveguides as a way to move data up within AI systems with greater bandwidth and lower energy per bit. This inbound interest has come from multiple corners of the AI data center ecosystem. The underlying requirement is closely related to what we already do. Moving light with precision through passive glass manufactured repeatably and at scale. We have been actively exploring this area and we are encouraged by the possibilities for Vuzix in this new space. With that, I will turn the call over to Grant for the financial overview.

Grant Neil Russell: Thank you, Paul. As Ed mentioned, the 10 q we filed this afternoon provide a detailed explanation of our quarterly and year to date financials. I will provide you with just some color on the key numbers for our second quarter ending June 30, 2026 only. Total revenues for the second quarter ending June 30, 2026 were $1.1 million versus $1.3 million in 2025, a decrease of 14%. Product sales were $900 thousand for Q2 26 $1 million for Q2 25. With the reduction primarily due to decreased unit sales of our m 400 product and the lack of current period sales of smart glasses that were discontinued at the end of 2025. Engineering services and OEM product sales were $200 thousand versus $300 thousand a decrease of 8%. The gross loss for Q2 26 was $600 thousand as compared to a gross loss of $800 thousand in the prior year's quarter. An overall 15% improvement. R&D expense was $3.1 million for Q2 26 versus 2.6 million in Q2 25, up 20% primarily due to higher external new product development costs and increased personnel costs. Sales and marketing expense was $1.2 million versus $1.4 million in Q2 2025, a decrease of 11% primarily due to lower noncash stock based compensation. Total G&A expenses for the second quarter ending June 30, 2026 were $2.7 million versus $2.8 million in Q2 25, a decrease of 3%. The net loss attributable to common shareholders for our second quarter of 26 was $7.7 million or $0.09 per share as compared to $7.7 million or $0.10 per share for Q2 of 25. Now for some balance sheet and cash flow highlights. As of June 30, 2026, cash and cash equivalents were $17.3 million, and our net working capital position was approximately $18 million. The company continues to have no current or long term debt obligations outstanding. For the 3 months ending June 30, 2026, net cash used in operating activities was $6.6 million as compared to $4.8 million in the prior year's period, an increase of $1.8 million year-over-year. The 3 months ended June 30, 2026, cash used for investing activities on fixed assets and patents was $400 thousand versus $900 thousand in the comparable 2025 period. For the 3 months ending June 30, 2026, cash provided by financing activities was $4.1 million versus $7.9 million in the comparable 2025 period. Driven by ATM net proceeds in both periods.

Operator: With that, I would like to turn the call back over to the operator. We will now be conducting a question and answer session. Thank you. Our first question comes from the line of Christian Schwab with Craig-Hallum. Please proceed.

Ben: Hey guys, thanks for taking my question. it is Ben on for Christian. Here. My first question is on this expanded opportunity with optical interconnects. Can you give us a little bit more detail regarding the types of customers you guys have talked to and also any initial thoughts on the size of the opportunity?

Paul J. Travers: Hey, Ben. Thanks for the question. And it is a really good 1. I am just sorry I mean, it is not difficult to take a look at who those players are these days. I can say a lot of it has been inbound to Vuzix. We have done some of our own outreach. But I really cannot get into specifics on this call. What I can say is the interest is real it is significantly engaged us on our part. We are spending a fair amount of time with it and we are going to have a whole lot more to update for you on shortly. Sorry, I just cannot get further into it at this point.

Ben: No. No. that is that is alright. I get it. My second question here is can you talk a little bit more about the relationship with Quanta and any more updates you can share there?

Paul J. Travers: Yes. Actually, we had some inbound questions, and that was actually 1 of the questions that was on the list. So this will be great, 2 birds with 1 stone. As everybody knows, we have a great working relationship with Quanta. And at this point in time, we are working on. We built some early generation smart glasses, waveguides for smart glasses with them. We have some next generation waveguides that we are working on with them right now. We fully expect that at the CES show, which is where they do a lot of announcing and showing of some of their latest stuff, They will be shown. These things are designed for the high volume marketplace and they are focused on price points that the mass market and the broader markets could afford to play and pay on. So we are moving forward. The relationship is as strong as it is ever been and we are looking forward to sharing a whole lot more as these next generation systems come out.

Ben: Great. And then just my last question. This will be on defense. You talked about, you know, Collins going into initial production. Can you help us kind of gauge that opportunity over the next year and anything we should expect or any news we should be looking for there?

Paul J. Travers: In the second half here, we are fully expecting more production orders I can tell you we have also gotten a follow-on design development work, which we will share more on here also in the second quarter. The production side of the house, these guys have built this product for a very large segment of The U. S. Defense space and it is for drones and remote flying of drones and situational awareness at the same time because they are optically see through. And so they share with us some very compelling numbers but it is early in the game. 2027 should be a really good year for production as it rolls out with those guys. And you will see more than 1 device coming from them. I wish I had more granular and better tighter answers for you on that. But quite frankly, they probably would not be happy if I was sharing some of the inside stuff they shared with us.

Ben: No. I understand. that is all I got. I will go back in the queue. Thanks, guys.

Paul J. Travers: Yeah. Thanks, Ben.

Operator: Thank you. That concludes today's Q and A session. I would like to pass the call back over to Paul J. Travers for closing remarks.

Paul J. Travers: We have actually gotten a few other inbound Q&A stuff. So I thought, Ed, if he could read the questions back, I can take a shot at giving some answers.

Ed McGregor: Sure, Paul. We have a few. First question, why has enterprise revenue been flat and what changes that?

Paul J. Travers: Yes. So the enterprise demand for Vuzix these days is really splitting into 2 paths. Where people need a glanceable monocular display the right tool is the M400 and our newest LX1. They serve applications that are well defined today. We have an installed base that are working with those products and we see people that were using M400s upgrading to LX1s So we should see some nice momentum knock on wood with our LX1. As in acceptance, it rolls into the market and with AI we are seeing AI wrapped around the use in particular around the LX1 for applications that are giving it really new markets and new opportunities that it is going to play in. So that is 1 of the paths. And at this point in time are our major products that we are offering into the marketplace. The other path, which I think I hope you guys have all heard is where applications need information in the workers' natural field of view. Customers are waiting for and designing apps around optically see through systems that Vuzix is making that are in the EBT side of the business right now. They need self contained products with the processors built in. And those products are inherently AI driven. They are designed for the AI user and users that enterprise today is trying to give capabilities to make their jobs happen faster and easier. The Ultralight Pro addresses that. As well another device that we are developing for 1 of our key OEM customers. Both of these tracks are moving forward towards different products and different timelines But with the momentum that is building around those, we expect that the flat nature of the transition that we are going through is going to start cranking up and showing growth here over the coming quarters.

Ed McGregor: Okay, Paul. And the second question we have is can you identify the automotive OEM you are working with and maybe discuss their rollout time frame? We kind of included this question because we get it so often from folks. So we thought we would try to address it.

Paul J. Travers: First. We cannot name who this customer is. I can tell you they are a Tier 1 automotive manufacturer you do not know who this company is when you hear it, you have been living in a hole. So it is very obvious. There are a leading global manufacturer. We have delivered initial systems We have gone back and forth with those systems, working with people on their plant floors, working with people in the actual applications. These are live real applications that they are testing them on their plant floors with and the feedback has been really positive. And discussions now have moved from well, can you do this and can you change that to how are we going to get these things deployed and how do we get them into production program. So the factory floor seems to like the product at the same time, the users seem to like them. I cannot put a timeframe though on the customers deployment discussions other than to say it is continuing to progress in a timely fashion. Especially when you consider how large of a project this could be, but also the size of the company that we are working with. Sorry, that is I know a bit vague, but it should be getting clearer here later in the second half of this year. And that is it folks. I would like to thank everybody again for following Vuzix. And I really look forward here to the second half and going into next year, all of the great things that Vuzix has in the queue. And sharing with everybody the progress that we are making, exciting times. Thank you very much, everybody.

Operator: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.