LightPath Technologies, Inc. Class A Stock

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Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to LightPath Technologies' fiscal fourth quarter and full year 2026 earnings conference call. This conference is being recorded today, September 10, 2026, and the earnings press release accompanying this conference call was issued after the market closed today. I'd like 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, various risks and uncertainties, and discussed in its periodic SEC filings. Although the company believes that the assumptions underlying these statements are reasonable, any of them could be proven to be inaccurate, and there can be no assurances that the projected results will be realized. 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 as non-GAAP financial measures. Please refer to our SEC reports in certain areas of our press releases, which include reconciliations of non-GAAP financial measures and associated disclaimers. CEO Sam Rubin will begin today's call with a strategic overview of the business and recent developments for the company, while CFO Albert Miranda will then review financial results for the quarter and the fiscal year. Following the prepared remarks, there will be a formal question and answer session. I'd like to now turn the conference over to CEO Sam Rubin. Sam, the floor is yours.

Thank you, operator. Good afternoon to everyone, and welcome to LightPath Technologies' fiscal fourth quarter and full year 2026 financial results conference call. The last few calls I typically opened by talking about the strategy and how the strategy is working and where it's taking us. Tonight instead, I will let the numbers talk and let the fiscal year results do the talking. Fiscal 2026 is the first year in which the transformation we have been describing shows up cleanly in every line of the financial statements, not just the backlog.

Four numbers frames a year. Revenue grew 93% from $37 million to nearly $72 million. Gross margin expanded from 27% to 36%. Adjusted EBITDA moved from a $5.1 million loss to a $4.2 million profit, a swing of more than $9 million. And backlog finished at $110.9 million, up 197% from where we started the year. The fourth quarter was our best quarter in every one of those categories. Revenue of $21.2 million was a company record, our fourth consecutive quarter of sequential growth. Growth margin was 39.4%. Adjusted EBITDA was $2.1 million, or 10% of revenue, which was our fourth straight profitable quarter on that measure. Great results, which we expect will continue to grow and improve.

Now, I'd like to spend a moment on the quality of that margin, because it is the part that I am most pleased with. The 39.4% margin did not come from a one-time favorable contract or from raising prices. It did come from two things we did. First is the mix of products. Assemblies, modules, and cameras were 43% of the fourth quarter revenue and 44% of the full year, compared to 23% of the revenue in fiscal 2023. These products, which our strategy has really taken us towards, have both higher prices and higher margins, as a result of the significant value add compared to our legacy component business. Second is execution. The yield and throughput problems that dragged our component margins in the past are, well, in the past. And every one of our four product groups improved its margin year over year. The mixed improvement is a result of strategy. The margin improvement is the results of operation. We needed both, and this year we got both.

And while the backlog has not grown sequentially, shortly after we closed the quarter, we reported two large orders totaling $24 million and have been continuing to book and grow our backlog. So the backlog you will see for the quarter ending in about three weeks' time will show already some more growth. While we continue securing new customers, both by converting them to Black Diamond and by providing them with assemblies and systems, much of the orders coming now, like the two large orders I just mentioned from July, are for production. As many of the programs we have been working on move from qualification to production. We have said in the past that a design and qualification of a new program, whether it's a redesign to use Black Diamond or a new program altogether, can take up to two years. Much of the growth in our backlog and bookings recently that we are seeing is the result of such new programs beginning to move into production.

Two years ago, in late 2022, China imposed the first restrictions on export of germanium and gallium, and we began to see a growth in demand to Black Diamond and systems using Black Diamond glass. Now we are beginning to see the transition of some of those into production. A trend I expect will intensify, as most customers did not start their redesign and substitution effort until much after the initial export ban on germanium. To that end, I will provide now an update on some of our key programs we have in the pipeline and their status. As mentioned in recent calls, due to the good problem of experiencing exponential growth in all our sales fronts, I can't really cover all the large programs, so instead I will focus on ones where we had some changes or recent developments.

NGSRI, our three-year-old interceptor program with Lockheed Martin. As many have heard, the Army has pushed out the timeline by a few months in an effort to potentially explore other options. We do not see this as a risk to us, only a delay. We have seen this happen in multiple other programs where the Army wants to foster a truly competitive environment. Our confidence continues to be very high. And given that our Seeker is being designed and evaluated into multiple platforms now, we have little concern here. In the last few months, we have relocated the groups that works on that Seeker into a new building and have began investing in increasing capacity for building Seekers, knowing that any program that moves into production will need to scale very quickly. More broadly about seekers and missiles, our camera systems are now being designed into or actively evaluated in seven different platforms, three of which are with Lockheed Martin. The remainder are with primes, or as they're sometimes referred to recently, Neo Prime. times, newer companies entering the defense market. The full qualification of our low-cost seeker that was completed as a result of the NGSFI flight test, as expected, opened the door to many other opportunities. The same manufacturing facility in Texas will support all of those opportunities.

In Border Patrol or Border Tower, we have seen funding being released from DHS to the Primes. However, that has not yet translated into orders for cameras. What we have seen is a growth in demand for similar towers and cameras that end up installed outside the U.S., primarily in the Middle East. A few other programs. We have an unnamed airborne program which has completed qualification and we await the production order for LREP. The Apache program is looking like it might make a comeback soon with a renewed interest in that system. Drones, and in particular drone dominance programs, are generating significant demand, which we are addressing by starting to add automation to some of our processes for high-volume assemblies. And counter UAS programs continue to move along well, with two of the programs now transitioning to a cadence of deliveries of tens of systems a month.

In parallel to more design wins of our existing products, the teams have been working on designs and redesigns of additional products, all of which leverage our Black Diamond glass and make use of our supply chain resilience and having alternative materials instead of depending on germanium. On the camera front, we have been redesigning the last of the G5 cooled cameras to use Black Diamond instead of germanium. That program is progressing well technically, though behind schedule. However, all the results we have seen so far indicated the cameras will work at least as well as the germanium-based cameras. We have also been working on zoom lenses and zoom cameras in what is called long-wave infrared, often referred to as uncooled cameras. Here, too, we identified an area of the market in which we can leverage our position to provide products without supply chain constraints. An effort that has been ongoing for the last year is now coming to fruition. Our first orders for zoom lenses and complete uncooled zoom cameras to be delivered soon. Once those are fully production ready, we expect to see the need in the market translate into orders fairly quickly.

Let me now turn to the structural changes we have completed after year-end, which is the divestiture of our China operation. In July, we signed a definitive agreement to sell our China subsidiary to an entity owned by the local management team that has run the facility for us, for $4.5 million, payable in installments over five years. And that transaction is expected to close later this month. Financially it is a modest event. Roughly $4.5 million of annual third party revenue leaves our consolidated results. And the buyer continues to supply us a third party to supply us as a third-party vendor for our commercial customers in the U.S. and Europe. There is no disruption to those customers. Strategically, it is not modest at all. Six years ago, most of our manufacturing footprint was in China, and more than a third of our revenue came from China. As of this fall, LightPath now does everything, melts glass, coats optics, builds cameras and assembly exclusively outside of China, in Orlando, in Plano, Texas, in Hudson, New Hampshire, and in Riga, Latvia. We have no ownership, no facility, and no commercial activity in China. For a customer base that is now dominated by the defense primes and public safety agencies, that is no longer a nice-to-have talking point, but something that will now open up significant bid opportunities where that is a condition for participation. That connects directly to our regulatory backdrop.

Defense programs are required to move off optical glass and optical components sourced from covered nations before the end of the decade. What has changed over the last year is not the rule, it is the timing. Qualification cycles for an optical system run two to three years. So the sourcing decisions that determine who supplies those programs in 2029 and 2030 are being made now, in this fiscal year and in the next one. However, several executive orders around waivers for germanium and classification of material as critical and specific tariffs applied would likely pull that timeline even closer.

Now, to address that, let me talk about capacity a bit, because capacity is our single biggest operational theme going into fiscal 2027. When we acquired amorphous materials in January, we increased our Black Diamond melting capacity. Just as importantly, we unlocked large diameter melting, up to 10 inches and beyond, versus the 5 inches we could produce before. In optics, the further you need to see, the larger the optics need to be. Large diameter is what opens up long-range camera systems, large assemblies, and space-based missile detection and tracking. I told you in May that doubling the glass capacity was nowhere near enough. That is still true. Demand for glass is running ahead of supply even after the acquisition. So we are adding melting capacity in Orlando and Texas. We are moving the AML, the office operation, into a larger building near our Vizimim camera business in the Dallas area, and we're expanding downstream capacity in optical fabrication, coating, and assembly across the U.S. and Latvian sites, including adding shifts in all locations.

Al will talk about what that means for capital spending. The short version is that fiscal 2027 CapEx will be higher than fiscal 2026, and that is a deliberate choice made against a visible order book and pipeline. Before I hand it to Al, I'd like to discuss the balance sheet. In June, we raised $50 million in a primary offering alongside a secondary sale by North Fund Capital, who funded our acquisition of G5. We ended the fiscal year with $93.2 million of cash and effectively no debt. Some of that capital will be used to fund the capacity and working capital required to convert our growing backlog that has now grown over five consecutive quarters and continues to grow, and some will be to pursue accretive capability-adding acquisitions, such as the one similar to G5 and AML that have proven we can execute and integrate. With that now, I will turn the call over to Albert Miranda, CFO, to walk through the fourth quarter and full fiscal year 2026 financial results. Albert.

Go ahead. Thank you, Sam. As always, I'll keep my review to a succinct highlight of the financials. Much of what we're discussing was also included in our press release issued earlier today, and will be included in the 10-K for the period. I encourage you to visit our Investor Relations webpage to access both documents.

In the fourth quarter, revenue increased 73% to $21.2 million, as compared to $12.2 million the same year ago. Sales of infrared components were $7.1 million, 34% of consolidated revenue. Visible components were $4.2 million, or 20% of consolidated revenue. Assemblies and modules were $9.1 million, or 43% of consolidated revenue. Engineering services were $0.8 million, or 4% of consolidated revenue. Gross profit increased 210% to $8.3 million, or 39.4% of revenue in the fourth quarter, as compared to $2.7 million, or 22% of revenue in the same year-ago quarter. Sam mentioned the reasons for our gross margin increase, in addition to better absorption and higher production volume, and we also had a quarter carried through a $0.5 million inventory reserve charge last year that didn't recur this year.

Operating expenses for the fourth quarter of fiscal 2026 were $12.6 million as compared to $7.2 million in the prior year period. Of the $5.4 million increase, $2 million relates to non-cash fair value adjustment to the acquisition earn-out liabilities, which are remeasured through operating expenses until fully settled. The increase is primarily related to G5 infrared, reflecting its strong performance against the earn-out targets. The final earn out amount was agreed to and accrued in the fourth quarter of fiscal 2026 to be paid in January 2027. The operating expense increase of $3.4 million is primarily comprised of increased selling, general and administrative expenses where the fourth quarter of fiscal 2026 included the addition of AML operations, incentive compensation accruals, additions to the senior leadership team, higher sales and marketing investments, and continued information technology spend to meet customer security requirements. Net loss for the fourth quarter was $4.1 million, or $0.06 per basic and diluted share, compared to a net loss of $7.1 million, or $0.16 per share in the same year ago quarter. Adjusted EBITDA for the fourth quarter was $2.1 million, or 10% of revenue, compared to an adjusted EBITDA loss of $2 million in the year ago quarter. This is our fourth consecutive quarter of positive adjusted EBITDA. As I've said before, adjusted EBITDA is non-GAAP and not a perfect measure, but it is a better indicator of core operating performance, because it strips out the non-cash acquisition accounting that otherwise dominates our reported results.

For the fiscal year, revenue for 2026 increased 93% to $71.7 million as compared to $37.2 million in the fiscal 2025. Sales of infrared components were $21.2 million, or 30%, an increase of 52% year over year. Visible components were $15.5 million, or 22% of consolidated revenue, an increase of 32%. Assemblies and modules were $31.9 million, or 44% of consolidated revenue, an increase of 281%. Engineering services were $3.1 million, or 4% of consolidated revenue, roughly flat with the prior year. Operating expenses for fiscal 2026 were $45.5 million as compared to $22 million in the prior year. Of the $23.5 million increase, $14.1 million relates to the non-cash fair value adjustment to acquisition earn out liabilities, which I will discuss further in a minute. The remaining operating expense increase of $9.4 million reflects a full year of G5 infrared operating costs, the addition of AML operating costs, higher sales and marketing spend, information technology investments to meet heightened customer security standards, and increased personnel costs associated with filling executive roles and accruing for incentive compensation plans. In addition, new product development costs also increased, which management views as an important part of execution of our strategy, employing us to continue to grow our investments in new product developments.

I want to be direct about the earn-out accounting because it is the largest single line in our income statement this year and the least reflective of our operating performance. The $15.6 million charge in fiscal year '26 is a remeasurement of what G5's sellers earned. And it moved because G5 is outperforming the amount estimated at the time of acquisition, which per GAAP was largely weighted based on the stock's historical financials. It is not an ongoing operating cost, and the majority of it is behind us, as we've now accrued for the final G5 earn out to be paid in January 2027. There may be small adjustments in future quarters related to AML and VisiMed still to come. Adjusted EBITDA for fiscal 2026 was a profit of $4.2 million compared to a loss of $5.1 million in fiscal 2025. As Sam said, a swing of $9.3 million. A good indicator of where we're heading.

Backlog at June 30th was $110.9 million, up 197% from $37.4 million a year ago. Approximately $85.6 million of that is requested by customers for delivery within 12 months. And then I'll touch on CapEx, as Sam mentioned. It is an indicator of how we are managing growth. In fiscal year '26, we spent $6.3 million in CapEx, $4.4 million in Q4 alone. The last time we spent at that level was in calendar year 2023 when we expanded the Orlando facility and doubled the size of the manufacturing and the clean room. The fiscal '27 plan is larger and more ambitious. We will expand all of our locations to meet the backlog we have and the demand we foresee through fiscal '27 and into fiscal year '28. The plan is to get ahead of demand in some key areas like the production of Black Diamond glass.

With that in mind, let me close with the frame I would use if I were on your side of the call. Two years ago, this was a $32 million per year revenue business with negative adjusted EBITDA, $3.5 million of cash. This fiscal year, it is a $72 million revenue business with positive adjusted EBITDA, $93 million cash, no debt, and $111 million order book that continues to grow. The work in fiscal 2027 is to add capacity fast enough, hold the margin gains, convert the book. That is a straightforward execution mandate and it is fully funded. With that, I'll turn the call back to Sam for some closing remarks.

Thank you, Al, and thank you to everyone for joining us today. Fiscal 2026 was the year the pieces came together. A full year of G5, the addition of AML, a fortified balance sheet, a Western-aligned manufacturing base, and a set of programs that are moving from qualification into production. The upcoming fiscal 2027 will be a different kind of year. It is less about proving the thesis and more about scaling against it. Doubling a manufacturing business in 12 months is hard. Doing it twice in a row is harder, and it will require capacity we are still building and people we are still hiring. We are clear-eyed about it, but we are doing it with $93 million of cash, no debt, two domestic glass, and a lot of money. plants, the broadest portfolio of infrared materials available, and a customer base that increasingly cannot source what they or what they make from anyone else in acceptable terms.

With that in mind, I want to close, before we open for Q&A, by thanking the LightPath team. You, my team, delivered a record year while integrating two acquisitions, migrating infrastructure, and building capacity underneath a backlog that tripled. That is a great deal to ask of an organization our size, and you delivered it. With that in mind, I'll turn it back to the operator for Q&A. Operator.

Thank you, Sam. [Operator Instructions] And we'll take our first question from Clarke Jeffries with Piper Sandler. Please go ahead. Your line is open.

Hello, thank you for taking the question. First question, just looking out to 2027, that $86 million that's sort of primed for delivery in 2027, wondering if we could get a sense of the major programs that are embedded there and those two large contracts in July, are they yet set for 2027 delivery. One follow-up.

Sure. So I'll answer the second part first. Yes, they're for 2027 delivery, the two large contracts that were in July. What's also nice about them or really encouraging about them, they're already production and both of them are a cadence of deliveries spread over months and therefore we expect them to be renewed in the years to come as kind of programs of record typically do. Secondly, in terms of the breakout of it, Al, I don't know if you have it by product group, but application-wise, counter UAS is still probably one of the biggest parts in there. Optics for drones and assemblies for drone dominance is a growing part in there. We don't have a lot of Border Patrol in there yet because the funding that has flown through to the pipe has not come its way to us. So I'd say primarily counting UAS right now is a very big driver.

Perfect. And then just wondering if, Sam, you could give a little bit of additional context for G5 and the redesign timeline. Just any reasons for the delay and maybe just a right setting on, you know, the earliest contribution you'd expect from those redesigned products. Thank you.

Supply chains are stretched everywhere. And the redesign, while it doesn't require redesigning the entire camera, there's still mechanics and stuff. Some other lenses that need to be redesigned, and some changes. We're starting to feel the supply chain, especially on the detector side, impacting us across the board. Um so it really impacted that part is one. Um the second is um while amorphous are able to melt the glass in that size, it is the first time or, you know, one of the first times amorphous was melting that glass. And melting those kind of glass is not a plug and play recipe. I mean, even for us, from the moment we light and NRL materials, it took us three years until we started producing them. So there's quite a bit of fine-tuning that once you start melting it. We're lucky to have an incredible team as we do at Amorphis that is able to do that at a really record time. But there's still more effort than just saying, okay, we'll melt it, and that's it. Perfect. Really appreciate it. Thank you.

Thank you. [Operator Instructions] Next question will come from Austin Moeller with Canaccord. Please go ahead. Your line is open.

Hi, good afternoon, Sam and Al. So just my first question on the Border Patrol cameras or the equivalent overseas. Are the overseas camera opportunities, are those foreign military sales to Middle East allies? Or is that the U.S. Air Force and the Army deploying those on bases? And what could the TAM look like compared to Border Patrol?

Those are mostly foreign military sales to allies. The Air Force and so on, those are mainly counter UAS systems, the different C-UAS systems. So I was talking about Border Patrol and towers along the borders of different Middle East or North African countries. Um, the term is a bit difficult to tell because I don't know that market well enough. We're one down, we're sub-prime there. But I would say that every deal like that that comes in usually is in the $tens of millions for us.

Okay. And I understand you've shipped spear cameras, at least initial prototypes to the Navy, and they installed them immediately. How many more spear cameras can be made available to the Navy in the next 12 months and installed remotely in Southeast Asia, just given this tanker war they're getting pulled?

By drones every day? Well, I can't speak for the Navy and uh about the um installation process or timelines. We did ship, I believe, the first camera, or maybe two, and I think we have another five cameras in dispatch before we get another order. Um and those. Those five are expected to ship really in the next few weeks. But beyond that, I really have no visibility into the process once we ship them until they make it onto the ship.

Okay, awesome. That's super helpful. Thank you. Thank you. We'll take our next question from Richard Shannon with Craig Hallum. Please go ahead. Your line is open.

Well, great. Thanks, Sam and Al. Let me ask a couple questions. Apologies for any ambient noise here in the loud area. Um, Sam, I wanted to follow up on NGSRI. You made some prepared remarks here about not seeing any risk in the contracting proposal, I think is the term used by the government to the Army for this. A little more detail as to why you don't think that's a risk here. I think that anyone who read this as I do the first time, it made it sound like they were dissatisfied in some manner with the current options here and you've expressed a lot of confidence in the solution you're supporting there. So, I would love to get a sense of why you think that's very low risk here, please.

Yes, so I'll refer here to an article that was published earlier this week. I can't remember the name of it. The person there described, I think, pretty accurately that there are tens of thousands of launchers deployed in the field of the old Stinger missile. These new missiles need to be reverse compatible with those launches. I'm not going to go into details of what the effort it takes to do that and what either Lockheed or Raytheon had to go through to do it. I will point out that this program has been in the works for three years already, or even more. This isn't something where even if you have a great missile, you can show up with it tomorrow morning and it will meet all the requirements and get in there. I view this more like the, you know, if you take an analogy the XM-30 or MX-30 tanks, sorry, I forget which the order of the letters are. Just a couple of weeks ago, the Army said, okay, there are two main targets, one is the military, on this. Same thing exactly, right? And we're going to open it up to see if by any chance anyone has someone else, something else to do our due diligence, probably. I think that the military organization as a whole, it seems that some of the neo-primes and new primes go off and often develop some solutions on their own dime, sort of if we build it, they will come. And it's doing their work properly, and I applaud them for that by saying, hey, before we stick to the same way we've been doing this for years, let's just check if someone happened to have developed something that fits the bill here and can do it. So I don't think this has come necessarily from being dissatisfied as much as it has come from the landscape is changing. Is on most systems out there that you see, even if there are two primes, it gets opened up again to an industry day or call for RFIs, to see if there's something else that anyone else developed. I just think that it's highly unlikely that someone has something that was developed here and that can fit the bill exactly in this short timeframe.

I mean, somebody would have to be well down the road in developing something right now if they were going to hit that April timeframe next year, right? And I mean, the community for building these sorts of things is pretty small. I imagine this is probably well known if it exists. So does that mean you don't think there's anyone out there that has that? Well, I wouldn't quite say that. I don't know all the players.

Out there and never say never, but I would say that both Lockheed and Raytheon are very, very experienced and really know what they're doing, and they've been working on this for three years. Everyone is welcome to reach their own conclusions. I don't want to jump to conclusions for other people.

Okay, that's fair enough. Thanks for that uh that perspective, Sam. Appreciate that. My second question is uh in your prepared remarks, you also talked about some um issues missile programs here, so I took good notes here about seven different platforms you're being evaluated for through with Lockheed Martin and some other ones. Maybe you could talk about some of these programs if you're able to, and maybe if you can convey either, average platform size or total TAM or something just to give us a sense here. It seems like missile programs can be pretty sizable like the NGSRI that you're already on. Maybe talk about the opportunity and kind of timeframe to when those might be decided. Thank you.

So, yes, definitely. I have to be a bit careful here. First of all, some of them, we don't know enough about the end program to relay that. We know what we're told, but we don't know enough about it. Others might be very early or in a stage where they really don't want us talking about them. But let's just say that there was a talk by one of the generals recently from the Army talking specifically about air defense being a very layered approach, where you have short-range interceptors, mid-range, long-range, and even recently there was a call for space-based interceptors. So the Army and the Department of War as a whole need an entire range of products and not one. And there isn't one fits it all. So there is a very big push right now on building up capacity and refilling the inventory of FAD and PAC-3, Patriot PAC-3. But, you know, there's probably an even bigger push at the next generation of all these interceptors. I would say we're in almost all different types of interceptors or or precision munition. When I say missiles, it's not only interceptors. Some of them are precision munition also. But I unfortunately don't have numbers really I can share at this point.

Okay. Yes, sir. Appreciate all that detail. Thank you, Tim.

Thank you. We'll take our next question from Jon R. Hickman with Ladenburg-Thalmann. Please go ahead. Your line is open.

Hi, thanks for taking my question. I probably should know the answer to this, but could you explain to me what's a Zoom camera?

Yes, zoom camera means it can change its field of view. So like in your iPhone, you can zoom in and out of the picture, right, magnify it, as opposed to a fixed focus camera. So cameras and optics we make for the small drone, those usually cannot zoom. They have a fixed field of view, you see one area because you're really trying to trade off weight and size. But the larger platforms all have the ability to zoom in and out.

Okay. Okay. Um, and then I have one more question. In the past, you've indicated that you thought you had a multi-year kind of runway before there might be other solutions for germanium, you know, to replace germanium other than your Black Diamond glass. Um, how do you feel about that now?

I feel like we actually have more time than I thought. I recently um took a look at some of the announcements about germanium capacity. So you have on one hand, Umicore, the Belgium company that is considered the most promising in increasing capacity, and having a mine in Congo, they recently announced that what they're producing now is really only three to four tons of germanium a year, And what they expect to produce in a few years, and they're talking about four to five years, is, you know, it's more, but it's not definitely nowhere near solving all the problem. And then you look at some of the awards to companies in the U.S. that are either on the mining or refining, and each one of them is talking about single digits, tons of germanium. So I think we might have more time tonight for it.

Okay. And then just so my math is correct, reported a backlog of $110 million and then you reported these two big contracts for another $21 or $22 million. So, if you add that to your backlog and then subtract whatever our estimates are for Q1, That should be close to a backlog for Q1.

Well, except that we also ship product out and we're continuing to grow. So I wouldn't quite say it's guaranteed that that is a backlog. But, you know, it's definitely the backlog has been growing quite a bit since $110 million. So I think at the end of this quarter, we will have a very healthy backlog to report. Okay. Thank you. Appreciate that. Nice quarter. Thank you. Thank you, John.

Thank you. We do have a follow-up from Richard Shannon with Craig Hallum. Please go ahead. Your line is open.

Thanks, Sam and Al. Let me ask one more here. Sam, to follow up on the supply chain comments here, I'd love to get a sense of what are going to long pole in the tent here or the most difficult hurdles to overcome here for adding capacity across all the the elements of what you're trying to do here. It's kind of holistic or qualitatively and over what timeframe do we expect to see this capacity increase completely? Thank you.

Yeah, that's a great question. Adding capacity in a vertically integrated company is kind of like a whack-a-mole game, if you would, because you solve one problem and it pops up elsewhere. However, right now, by far, glass is our biggest capacity constraint. We're adding a lot. That's where spending on CapEx is coming from. A lot of it is around the glass. We will probably need to add even more. And we're adding it mainly for our systems, but also for some other customers or for subsystems. After the glass, the detectors are the long pole in the tent, which we don't have much control over. And the lead time on them has been growing from, I think, six months to 10 months, even more now. So you see that in our inventory where we are building up and preparing parts ahead of time and ordering them knowing that our vendors can't really react fast enough. After that, it really breaks down pretty quickly into many, many small things, mechanics. Motors have become a really big deal because of the in the components now it's the same pain everyone is feeling everywhere I think of making an integrated system. Great. Thank you, Shane.

This concludes our question and answer session and today's event. Thank you for joining LightPath Technologies' fiscal fourth quarter and full year 2026 earnings conference call.

This live transcript is auto-generated without human intervention or review.

Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to LightPath Technologies Third Quarter 2026 Earnings Conference Call. [Operator Instructions] This conference is being recorded today, May 7, 2026, and the earnings press release accompanying this conference call was issued after the market closed today.

I'd like 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 and involve various 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 could be no assurances of the projected results would be realized. In addition, references may be made to certain financial measures that are not in accordance with generally accepted accounting principles, or GAAP. We register to these non-GAAP financial measures. Please refer to our SEC reports in certain areas of our press releases, which include reconciliations of non-GAAP financial measures and associated disclaimers.

CEO, Sam Rubin, will begin today's call with a strategic overview of the businesses and recent developments for the company, while CFO, Al Miranda, will then review financial results for the quarter. Following the prepared remarks, there will be a formal question-and-answer session.

I would now like to turn the conference over to CEO, Sam Rubin. Sam, the floor is yours.

Thank you, operator. Good afternoon to everyone, and welcome to LightPath Technologies Fiscal Third Quarter 2026 Financial Results Conference Call. We report today our latest quarterly results with continued momentum of strong top line growth, continued buildup of our backlog with a strong book-to-bill ratio and improvements in our EBITDA and overall financial performance.

All of this is a result of a strategic shift we put in place and have been working to execute on over the last few years. A strategy that leverages our core technologies, coupled with carefully curated acquisitions that allowed us to shift to a vertically integrated provider of high-value infrared optics and camera systems, a shift built around higher revenue and higher gross margins. The third quarter carried that momentum with record revenue, broader customer adoption, a deeper system backlog and just as importantly, stronger margins and cash flow. The LightPath of today looks very little like the component supplier we were a few years ago. We now cover the full stack, proprietary materials, optical assemblies and complete imaging systems.

In a moment, I'll touch on that shift, then walk through the programs driving the backlog, the Amorphous acquisition and where growth goes from here. First, BlackDiamond, our proprietary chalcogenide glasses, including those licensed from U.S. Naval Research Laboratories. Those anchor the platform as a domestic supply chain secured infrared glass that is both an alternative to germanium and offer significant advantages in overall system performance. This aligns with the fiscal 2026 NDAA, National Defense Authorization Act, which requires U.S. defense programs to move off of glass and optical components sourced from China, Russia and other covered nations no later than January 1, 2030. Since acquisition cycles starting now, many of our assemblies, cameras and imaging systems are already engineered to those requirements, positioning us as a natural supplier of choice and well ahead of the rest of the market that is just starting to plan their alternatives to Chinese-made materials and optics.

It has been roughly a year since we acquired G5 Infrared, the maker of the industry's leading long-range infrared cameras for surveillance and Counter-UAS. G5 is a clear example of what our model can offer. Pair a strong stand-alone business with one of our unique differentiators, in this case, the in-house produced germanium alternative glass and a secured vertically integrated supply chain and the acquired company can execute at a level competitors simply cannot match.

In the last year, G5 has booked more than $100 million of new orders, helped by border patrol and Counter-UAS tailwinds. We've publicly announced we are redesigning the cameras to use our BlackDiamond glass. And even before we have completed those redesigns, we already saw an influx of orders for those redesigned cameras. In fact, we are at a point that before we started any real production of the new redesigned cameras, we already know we will need to add more capacity to serve an even stronger demand in the near future. The capacity theme is something we're seeing across the entire business, and I will expand on that some more.

It is actually a good segue into other parts of the business. So before I get back into the camera products and then other programs, I will talk about the acquisition we did that we announced last quarter of Amorphous Materials in Texas. Amorphous is a 50-plus year-old manufacturer with complementary technology for glass smelting of chalcogenide, particularly for large diameter optics. Amorphous was founded by one of the pioneers of commercializing this kind of material. I've mentioned it during the last call, but just to reiterate the importance of the technology, I will remind everyone that in optics, the further you want to see the larger the optics needs to be. Until now, with our existing or prior glass melting technology, we've been able to provide BlackDiamond optics up to 5 inches in diameter.

Amorphous now unlocks the ability to do larger sizes up to as much as 10 inches and more later on. This has opened the market to large diameter systems, which we need for G5, but also critical in other long-range imaging systems and in particular, satellites for missile detection and tracking. But back to capacity. Acquiring Amorphous gave us an immediate boost to glass production capacity. So between what we have been doing internally and the Amorphous acquisition, we pretty much doubled our glass capacity, and it is nowhere near enough.

As we will discuss again and again here, we are investing in capacity in critical areas, and glass is definitely one of those. Having now 2 separate locations to make glass in, one in Orlando and one in Dallas, Texas, definitely affords more flexibility and expansion as well as good contingency planning. To that extent, we plan to move Amorphous into a larger building nearby our Visimid uncooled camera operation in the coming months. This is important because not only is demand for glass outstripping supply right now, even after doubling the capacity, but indicators are that this growth trend will continue, and we will need to continue to add capacity in the next few years.

To that extent, in Orlando, too, we have been adding more glass melting capacity as well as capacity and capabilities in other parts of the process downstream, that is after the glass melting. This capacity and those capabilities updates is happening across the entire organization in manufacturing locations in the U.S. and Latvia. And then, of course, the cameras and assemblies business. This quarter that we're reporting in, they represent 44% of the revenue. But more importantly, they represent more than $75 million of our backlog. The assemblies and cameras are actually internal customers for our vertical integration, hence, driving much, if not most, of this explosive growth in demand for glass and optics. But this is just the case for the products that use BlackDiamond.

As of today, while all of our assemblies use BlackDiamond, only 2 of the G5 cameras are based on BlackDiamond glass. The remaining G5 cameras were still using germanium. The acquisition of Amorphous was a missing piece in order to complete the redesign of those G5 cameras. Amorphous technology of melting our glass in larger size was needed in order to use BlackDiamond in G5's bigger cameras, which is really the majority of their revenue by dollars. The same applies for larger assemblies. Our optical assemblies business, which has been growing like crazy for the last few quarters, just like the G5 was limited by the size of the glass we could make. Amorphous' large diameter melting now is unlocking a significant business growth in both those areas of the business, assemblies and complete camera systems.

How does this tie into the capacity discussion? When we look at our current cameras and assemblies business, and we say it is around $75 million of new orders booked, that is all before we completed the redesign and the new products that are now utilizing the large diameter BlackDiamond. So with the risk of stating the obvious, we expect that over the next few months, we will see another step function in growth in demand for our cameras and assemblies as we redesign them or design new ones utilizing this new capability of large diameter. This will, therefore, require us to prepare more capacity, which is what we're doing now. This includes not only additional capacity in glass and downstream process, but also growing our assemblies capacity, adding shifts and in some places, adding space to be ready for that additional growth. All of that is happening now across all of our facilities in the U.S. and Europe.

Additionally, to support this growth and better position LightPath, we recently announced 2 senior additions to the leadership team. Doug Schoen joined us as Senior Vice President of Global Sales; and Ryan Workman joined us as Vice President of Business Development and Product Management, both effective in early April. Doug is a retired U.S. Navy captain with over 25 years in aerospace and defense, having led global sales organization at Elbit Systems of America, Honeywell and Collins Aerospace, managing portfolios north of $1 billion. His background in international defense sales and foreign military sales programs is exactly what we need as we scale globally.

Ryan brings with him over 15 years in the defense and federal law enforcement sectors and has a particularly relevant track record at Silent Sentinel, which was later acquired by Motorola Solutions, our largest customer. Ryan is the one that grew the U.S. business of this customer of G5 Infrared to what it is today, including securing significant Counter-UAS and DHS border surveillance contracts. That direct experience in our end markets, combined with Doug's enterprise-level relationships gives us commercial horsepower to convert our growing backlog and strong technology position into sustained scalable revenue growth.

Okay. Before I move on to financials, I will give a quick overview on the major programs, but also point out that on many of those, there are specific line items in the U.S. defense budget, which was released a couple of weeks ago and is available to the public to research online. Starting with the NGSRI that as you will see in the budget, is fully financed and even accelerated some of the program. We are very pleased with our progress so far and continue to deliver everything according to plan and even better. However, as I described earlier in previous few times, the only updates we can share in detail about the programs or any updates that are shared by our customer, Lockheed Martin or their customer, the U.S. Army, which as of now has not had any major updates, so we can't really update too much.

Navy SPEIR is on schedule, and we expect some new orders with the new federal budget now being released. Border tower, we were expecting already some significant orders to be released, but it seems DHS has not released the funding yet. So that is not an indication in any way of anything changing to the worse or to the better in any way, simply has not moved forward. Some of the smaller programs, such as them that I haven't really indicated by name, so Counter-UAS, this is primarily the Air Force C-UAS programs for which we received multiple new orders. Currently, around $30 million of our backlog is Counter-UAS, again, primarily Air Force SUADS programs. A new airborne system that we previously mentioned and that uses our BlackDiamond material to replace an existing system with far better performance now. This program continues to move quickly. We completed the qualification, an extremely important step and are now preparing for an award towards the end of the summer or early autumn.

Space programs, we have a few of those in the work. Most of them are early stages in design and unfortunately, very confidential, so very limited in what we can share. And lastly is the Apache program, which we do not have any new developments there, and there is some uncertainty around it as we're waiting for to see the funding allocated to it. Okay. So specific programs. Of course, as we continue to grow, just like with our press releases, it will become fairly noisy and overly detailed if we go into details about every multimillion dollar program. So we're likely going to focus on the large ones going forward with some updates on others as we can.

To close Phase 1 of the transformation, we've moved from components to systems and from commoditized supply to strategic technology leadership. We continue to swap constrained China-linked materials for domestic scalable proprietary alternatives, and we are converting that edge into program wins, large contracts and long-term relationships with top-tier defense and industrial customers. The next phase, rapid scaling over the next 3 years, backed by our strong war chest of cash is now beginning and is aimed at capturing meaningful market share.

Now I'd like to turn the call over to our CFO, Al Miranda, to talk about the actual numbers. Al Miranda?

Thank you, Sam. I will keep my review to a succinct highlight 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-Q for the period. I encourage you to visit our Investor Relations webpage to access these documents.

Revenue for the third quarter of fiscal 2026 increased 109% to $19.1 million as compared to $9.2 million in the same year ago quarter. Sales of infrared components were $6.1 million, or 32% of the company consolidated revenue. Revenue from visible components was $4 million, or 21% of the consolidated revenue. Revenue from assemblies and modules were $8.4 million or 44% of the consolidated revenue. Revenue from engineering services was $0.6 million, or 3% of consolidated revenue. Gross profit increased 161% to $7 million, or 36% of total revenues in the third quarter of 2026, as compared to $2.7 million, or 29% of total revenues in the same year ago quarter. The increase in gross margin as a percentage of revenue is primarily driven by the increase in revenue from assemblies and modules, which generally have a higher margin.

In addition, gross margins for infrared components have improved due to a more favorable mix and the resolution of certain manufacturing yield issues that negatively impacted the prior fiscal year. Operating expenses for the third quarter of fiscal 2026 included a fair value adjustment of $3.4 million related to the G5 earn-out liability, which will continue to be adjusted through the operating expenses until it is fully paid out. Excluding this amount, operating expenses increased $1.8 million, or 30% to $7.8 million for the third quarter of fiscal 2026 as compared to $6 million in the same year ago quarter. The increase was primarily driven by the integration of G5 Infrared and AML, increased sales and marketing spend, higher information technology spend to meet customer security requirements and increased SG&A personnel costs associated with filling executive roles, as Sam mentioned, our salespeople and incentive compensation accruals.

Net loss in the third quarter of fiscal 2026 totaled $4.1 million, or $0.07 per basic and diluted share, as compared to a net loss of $3.6 million, or $0.09 per basic and diluted share in the year ago quarter. The year-over-year change in net loss was primarily attributed to the change in fair value of acquisition liabilities for the earn-out related to the acquisition of G5 Infrared.

Adjusted EBITDA for the third quarter of fiscal 2026 was $1.1 million positive, compared to an adjusted EBITDA loss of $1.6 million for the same year ago quarter. This represents our third consecutive quarter of positive adjusted EBITDA and was primarily attributable to the increase in gross profit driven by higher sales, partially offset by increased SG&A and new product development costs. Although not perfect, we believe that adjusted EBITDA is a better indicator of core operating performance by excluding noncore and noncash items. Cash and cash equivalents as of March 31, 2026, totaled $55.2 million as compared to $4.9 million as of June 30, 2025. Since the raise in December, we used $7 million for AML acquisition and $7.3 million went toward the year 1 earnout for the G5 acquisition.

I want to point out that a portion of this earnout payment was required to be recorded in operating cash flows in accordance with GAAP. The operating cash flow looks noisier than reality because of G5 outperforming the earnouts, which GAAP requires to be classified as operating cash activity. If you set aside the GAAP reporting quirk related to the earnout, then operating cash outflow year-to-date would have been $1.3 million. That modest outflow is attributed to working capital, specifically prepaying suppliers for long lead materials to support that growing backlog that Sam spoke of and that's partially offset by customer prepayments. The $55 million cash balance on hand gives us plenty of runway to keep executing on our growth strategy and fund the CapEx and working capital needed to deliver to the growing backlog. Total backlog as of March 31, 2026, was approximately $110.6 million, an increase of 196%, compared to $37.4 million as of June 30, 2025.

I'd like to take a step back and give some perspective. Since Q3 last year, on a year-to-date basis, we doubled our revenue from $25 million year-to-date last year to $50 million year-to-date this year. Our backlog is $110 million and continues to grow. This is a substantial amount of growth for a company our size, and I'd like to thank everyone in the organization for a great effort on delivering more and more to our customers every day. To our investors, we are well positioned to continue to grow substantially. We have the resources and cash in place to deliver. Our internal efforts are all about execution to the plan of delivering on the backlog and the growth in the backlog.

Our focus for fiscal year 2026 and beyond supports the business opportunities that Sam described. We have a detailed go-to-market strategy that we are funding to target key high-growth areas. Our prior year, current year and future investments in manufacturing are and will continue to bear fruit in terms of quality and on-time delivery. And as a result, in the coming quarters, I expect we'll see margin expansion.

With that, I will turn the call back to Sam.

Thank you. Thank you, everyone, for joining us today. From here, the work shifts to execution. We've built a vertically integrated platform around our own materials technology, one that sits squarely where the defense procurement is heading. The numbers make the point. Over the last 12 months, our revenue has more than doubled and backlog indicates a continued trend. The doubling the size of our manufacturing business in 12 months is a big task and undertaking. Doing it again, continuing to grow at such rate is a monumental task. So with that in mind, I would like to echo what Al just said and take a moment to acknowledge the hard work, dedication and commitment of the entire LightPath team. You, my team, have been doing an incredible job getting us here and are continuing to do a great job preparing us for this continued growth. Thank you for everyone involved in this.

With that, I'll turn the call over to the operator to begin Q&A. Operator?

[Operator Instructions] We'll take our first question from Jaeson Schmidt with Lake Street.

Sam, I just want to start with your comments on the expectation for the step function in demand over the next few months here. Do you envision that being pretty broad-based? Or is that really coming from -- or concentrated in a couple of programs?

What I see is that right now, areas where -- I'll talk first about cameras and about assemblies. The cameras where we've been having this enormous backlog is mostly existing customers. So these are customers that have integrated our cameras already a while ago into their pan tilt systems or gimbals such and are growing with the orders from them have been growing as those customers grow, in particular, Motorola, which we very much value the relationship and the business there. But it's really existing business that is growing linearly.

As we now start switching over to the BlackDiamond and unlocking both more types of camera, but more specifically, really unlocking our availability and our capacity to -- I'm not even sure what the next limit will be, but it's not going to be limited by material as everyone else is. I expect many other customers to switch over to our cameras. And the step function there will be from taking a larger market share of the same type of product we've been doing until now, but simply that we are positioned in a way that we're the only ones that really can produce as many cameras as anyone wants.

In the assemblies, it's a bit different. In the assemblies, we've been focused on a subset of the whole assemblies industry, if you would, or assembly available market because we were limited by the size of glass we could do. So we could not make long-range assemblies or zoom lenses, if you would, that get bought by some of our competitors and many of our customers. With this now capability and with some of the new materials we've been already commercializing over the last few months and haven't talked really about too much, we can now design and are designing a lot more new assemblies that are going to take market share of areas we haven't played. So 2 step functions, both enabled by the same thing, but for different reasons.

Okay. That makes sense. And then I know it's still early, like you noted, but thinking about sort of in space communication or the space programs in general. How many engagements or conversations are you having these days with customers?

We have 2 that we are fully engaged in, meaning they're already fully designing our product delivering -- sorry, 3 of those, 3 customers that are designing. I'm not sure what programs we have that are much earlier than that. I usually know of them when it comes to the point that they're actually engaged on technical dialogue or want to talk numbers. And those are not free space communication, just to be clear, those are all camera systems on satellites pointed down to look for missile launches and detection.

Got it. And final one for me, and I'll jump back in the queue. With these capacity expansion plans, how should we think about CapEx over the next 12 months?

So good question, Jaeson. We we're still -- the CapEx we're spending right now is capacity driven. It's -- so as the backlog grows, we're constantly reevaluating. That said, there are long lead times in the CapEx process. So we have to get some things moving quicker than others. I don't want to say exactly what we're going to spend in the near term. But to put it in perspective, in Q3, Sam and I approved $6 million in CapEx to be spent in order to not only meet the current backlog, but what we think is going to be beyond that.

[Operator Instructions] We'll take our next question from Austin Moeller with Canaccord.

So do you expect like you would receive more funding through the $54.6 billion for the Drone Autonomous Working Group or from the DHS budget dollars that were appropriate in the reconciliation bill? And would the DAWG funding shift revenue mix further into assemblies and modules and raise gross margin further for drones?

Okay. I'll start by answering the other way around. First of all, it will be mostly assemblies and cameras, definitely. By far, we're actually -- the more assemblies and cameras business we are, the less we're taking business in optical components because we would rather use that same capacity to make assemblies and cameras, which are much, much higher margins, which answers really your second part of the question. In terms of the funding, I'd say it's all over. So drone -- from the drone dominance, we are receiving already orders. We have a few million dollars of orders of optical assemblies that go into drones. I'll try next time to break that out and give a bit more color to it, but we're starting to receive volume orders of optical assemblies that get coupled to cameras that go into drones, and we're probably the lead supplier in the U.S. for that by far, I'd say.

From other areas from the NDAA and such or which part of funding, I think it depends. existing programs, they all come the programs of record, they come from the NDAA funding and such. DHS comes from the Big Beautiful Bill mostly and so on. But in addition to all of that, what we're also working on and is a different type of funding that is funding to support expansion of capacity. And we are working -- it is very early stage, but we're working with different parts of the government, Office of Strategic Capital and so on to secure some of that. It will not be in the near future, but it's definitely something we're looking at for next fiscal year to support some of the expansion.

Okay. And in some of our conversations with primes, it sounds like there's already an active effort where they're replacing smaller diameter lenses with BlackDiamond glass. So what factors might keep them from swapping out larger diameter germanium lenses with BlackDiamond? Is it just a matter of time? Or is there technical considerations?

So first of all, not everyone knows that it's possible. This is completely new. And even last week, I met a customer at the trade show that still didn't know about that, even though we've been shouting it from the top of our lungs. So there's quite a bit of education to be done. However, chalcogenide glass, BlackDiamond altogether is a softer material. So design aspects of it are different. It's not that it cannot be used for larger diameter lenses or larger diameter optics. You need to take different mechanics assumptions into account when you're doing that design, which is why we work very, very closely with the customers on those designs. We leverage our experience with the material to help educate them to make sure that their design is sustainable mechanically afterwards. Simply, it's a different strength of material compared to germanium.

That said, there's nothing inherently that prevents it from completely replacing or using it in all these same dimensions and uses. And in many of them, it's actually much better because the coefficient of thermal expansion of our glass is very, very similar to that of aluminum or aluminum depends which country you're in and makes it much, much easier to mount it in terms of gluing it and hard mounting it into systems. So it's mostly education of the customers is the short answer.

We'll take our next question from Richard Shannon with Craig-Hallum.

Congrats on another good quarter here. I guess one way I wanted to talk about the capacity limitations you were having and you're trying to relieve with more investment here. But how do we think about at a high level here, what your revenue ceiling is now? And where can this go in the next, I don't know, 2 to 4 to 6 quarters as you're adding more capacity?

Okay. I get this one. I would say that everything we have booked and we have in our backlog, we can deliver. There's no risk there that we can't deliver it. What we're planning towards is more the second half of the next fiscal year and increased expansion then. So our backlog is mostly for the next 12 months, the next fiscal year, but not completely. However, it's probably heavier towards the second half where we do need to add some capacity.

Okay. Fair enough. I want to ask about the space programs. I know, Sam, you mentioned that most of these are confidential, but just kind of at a high level here, especially some of the bigger ones that I think you're hunting here. When do you expect to have decisions on these? Will this happen this calendar year? Is it more of a next year? And any way to help us scale kind of the whole space opportunity relative to some of the other ones like Counter-UAS, border patrol, Navy programs, et cetera?

Yes. So time line, I have to admit, I am not completely confident on it because this is fairly new to us. We have not done anything of that type, meaning space programs and with the tight requirements on the assemblies and the cameras for that. So there's some learnings there. I would say that the time lines I'm seeing now on prototypes and on development are such that it would be at least a year before anything meaningful in terms of knowing where the wind is blowing even is available to us. In terms of -- sorry, what was the second half of the question?

Just scaling the size of the opportunity in space versus all the other bigger buckets you talked about in your potential.

Yes. So I think actually, I don't have the numbers in front of me, but during the Investor Day that we had in February, I gave some numbers there. And I explained that typically a satellite like that is about $40 million, $50 million in total cost. 1/3 of that is the entire optical system payload. And of that, we are just doing the telescope. We're not trying to do the complete camera system or anything like that, just the optical assembly, which is in the millions per satellite, but let's say, below $5 million per satellite kind of thing. And the numbers are fairly well published.

Okay. Great. Last question is for Al on the gross margins here. So obviously, adding capacity has a little depreciation and some other fixed costs here. Just wanted to know if as you're adding capacity, is there any different view kind of longer term what you think of the gross margin? I mean, you talked about getting to 40% to maybe even higher. Wanted to know how that has changed here with kind of the new scale that you're targeting.

Yes. Great question. We still expect margins to grow. However, we are scaling fast. And there are some costs in the short-term associated with that. So it will slow down our ramp from where we are today, 36% to 40%, but not much. We're talking a quarter or 2 slip in terms of that overall plan. So from the investors' perspective, they'll just see improvement, but not enough for what we would want internally. But externally, it will walk up to -- we'll continue to walk up the margin chain.

This concludes our question-and-answer session. I'd now like to turn the call back over to Mr. Sam Rubin for his closing remarks.

Thank you. So before I leave, I'll just frame it one more time to give the complete picture. LightPath is really no longer a component supplier it used to be. We're a vertically integrated systems company, a record backlog, well-capitalized balance sheet and a technology position that's aligned with the most pressing supply chain mandates of the defense industrial base. The NDAA deadline is real. Demand for germanium alternative in infrared systems is real. At this point, so is our ability to deliver. From here, our job over the next several quarters is simple to describe execution to execute, ship on time, move backlog into profit and loss into the P&L and let margins expand as volumes built.

With that, I'll conclude, and I'll thank everybody for their time today and look forward to speaking to you again next time.

This concludes today's program. Thank you for your participation, and you may disconnect at any time.

Good afternoon. Welcome, everyone, present physically and virtually via the webcast. Hopefully, I can be heard nice and clear and you can see my presentation. Excited to have everyone here. Second time we do an Investor Day, [Indiscernible] quite a bit for the first one. And as the company, our revenue and our backlog, and we'll talk about all of that today.

So I'll be speaking as well as Al Miranda, our CFO. And we also have with us here Dr. Steve Mielke, our VP of Engineering; Israel Piergiovanni, our VP of Manufacturing; and Natalie King, VP, Finance, which will take part in mostly the Q&A. For those that were here present physically, we did a facility to have lunch, and now we'll go ahead with this and have Q&A at the end of the presentation.

Okay. I think it's good. [Indiscernible] So I'm assuming they can see us all. So a bit of a history of LightPath and where we've come from. So LightPath has been around for a while. We're a 40-year-old company, maybe 41-year-old company. For many, many years, 35 out of the 40 really, we were an optical component company. I mean, to give a perspective to this, these tiny lenses that we see here on the left, were most of what LightPath did, and it's claimed the same for many, many years. Now the company really was a pioneer in the technology of molded optics and developed that and as we've seen here, developed even the technology to do that, including the machines and instrumentation needed.

And the hope was, the plan was that this technology, these molded lenses will get adopted in very high volumes. And to put it into perspective, back in 2000 or so, the volume of molded lenses was miniscule compared to what we did today, and the price was much higher. And the plan of the company was the expectation that adoption in volume will drive significant revenue. What was missing in that part was that also drives the cost down and the price down. And so lenses maybe 25 years ago were selling for $100 per lens, now sell for single digit dollars. And so the strategy behind that wasn't working out well.

Company started pivoting towards infrared optics a bit in 2016, 2017 through the acquisition of ISP Optics, a company that produces individual lenses by grind and polish, pretty conventional technologies. And the thought there was that we could adopt the same molding technology used to make lenses in high volume into infrared optics chalcogenide glass back then was very, very new and people are only starting to adopt it. The company back then had 2 types of BlackDiamond glass, BD6 and BD2, which are really generic forms of a glass made by other companies like SCHOTT that calls it IRG26 or Vitron that calls it IG6, pretty generic.

Fast forward to the year 2020, except for COVID, which was a big event there, there was also a change in management here. And we firstly started changing direction of the company. Strategically, we understood that we cannot live in the component area. We want to do far more than that. That's not new. So many, many companies that go through that and many companies try to do that, but we had some 2 other things that were playing in our favor.

One was the market, the adoption of optics or photonics in the wider market that was going on over the last 10 years or so changed the dynamics of the supply chain or started to change the dynamics of the supply chain.

And so while we were making components sort of a vertical supply chain where we would sell the components, someone that would build the system and so on, now our customers are changing, and we started seeing customers that are less experts in optics and more solution integrators altogether. And so they wanted a complete solution and that created an opportunity for us to move away from the pure components into more a solutions company. We were able to do that not only because the opportunity existed, but because of capabilities we had already in [Indiscernible].

So to begin with, we are an optics company, but we had a lot of internal discipline of engineering related to building our own instrumentation and technology that was needed. So we have here or have here already electronic engineering, mechanical engineering, things you typically don't find in a company like that. We also had some unique technologies that we understood could be real differentiators when going upstream into subassembly, subsystems and so on.

Primarily a chief among them was the BlackDiamond technology. There were a handful of companies that were making glass of that type, but they were all sort of making the same generic glasses and the adoption of them was very, very limited. We came across a portfolio of materials that Naval Research Laboratory developed under the mandate to develop new technologies for the Navy, and we're looking to license it.

We were lucky to be able to secure an exclusive license for those and understanding that those technologies, those materials could drastically change the landscape of infrared imaging. And so with that, we decided to leverage that to no longer just be a supplier of components and parts but actually go upstream.

And so 2 things in our favor. One, the market wanted it. They wanted more companies making complete subsystems and so on. And secondly, we could offer subsystems that were better than others out there because of these unique materials that we licensed because we were leveraging our molding technology to reduce the cost of making [Indiscernible]. Then they move to geopolitics, which in the past used to have hurt us every time, the U.S. and China will go into a war. And it used to hurt LightPath badly because LightPath was very, very dependent on China.

When 5 years ago, 6 years ago, when I joined the company, 55% of our business was in China, manufacturing and sales. Now it's nothing more, less than 5%. But back then, every time tariffs or anything like that would happen, it would have a very negative impact to the company. This time, because of the way we were positioned, all the geopolitics actually plays in our favor. And obviously, everyone is very, very familiar now with the story around Germanium and Germanium alternatives and our BlackDiamond being the Germanium alternative. I would love to say that I saw that coming exactly the way it is.

There's some element of luck here as well. Sometimes we get lucky. Okay. Are we still going, so we decided to go on that path. We started, it's easier said than done sometimes. We had to take baby steps. And so we started from just doing assembly.

So going from the individual lenses into assemblies, selling them pretty much the same customer base, sometimes a bit more, but saying to a customer instead of buying lenses and designing an assembly, let us design the assembly. Assembly can be something really simple like 2 lenses in a valve like this or a complex 8 lens telescope or a much larger one.

But it's got our feet wet, it got people used to it. And so down the road, this was for a couple of years, we were doing just that. People were starting to get used to the idea of LightPath doing more than that, started to get used to the idea of the BlackDiamond materials and we're seeing we can actually make assemblies for them that are very cost effective, very high volume and so on.

And then we started dabbling into the more higher value added, which is where we were targeting all along really, and that is the cameras. Before any acquisitions, we started already with our own first camera, the Mantis, which was a Broadband or Dual-Band someone wants to call it a Multispectral many terms to it, one camera that can see sort of in more than one spectral band, didn't really exist before that. It's still making its way into being adopted and so on, but it was more of a statement than it was a massive, best sell was more of a statement of like, 'hey, we're now making cameras also.'

And these cameras can be way better than anything else there or very different than anything else there because with our unique BlackDiamond materials, you could make this camera multispectral. Without BlackDiamond, it would be you'd have to sacrifice quite a bit of specifications or performance and would not be able to do it. That was our first statement of, 'hey, this is what BlackDiamond can do.'

And if you pay close attention, we are planning to leverage that to go way up and become a system company. From there, we started supplementing with acquisitions, Visimid being the first one. Okay, forgot this timeline, but that's fine. Visimid being first one and that added capabilities in making those cameras. 

In fact, that first camera, the Mantis was developed together with Visimid before we acquired it and the reason for that is actually besides the fact that we wanted to develop a camera, we also wanted to work with Visimid. Acquisitions are an important tool for us. We said that before. We talked about it some more. 

We strongly believe that we're able to identify, attract and integrate acquisitions in a very suitable way to our new business model, our new direction. But integration of an acquisition sometimes [indiscernible] everything. It can kill the best plans ever if culture doesn't work, if the integration doesn't work, if the teams don't work. And so any company we acquired and plan to acquire, we do some work to get to know each other. 

And these deals we walked away from because the culture it just clearly wasn't there. And so Visimid was really Mantis was really a first attempt to go into cameras but also get to know the Visimid team. We got along so well halfway through the development, it just became natural of like, okay, let's just merge the 2 companies. 

And that was the first acquisition. Down the road from there, the G5 and most recently, Amorphous Materials. And I'll just go in a different order but going into the acquisitions and talking about them, very important to us, very important for them to be highly accretive. So, we sort of started talking about the story, how we went from components and to end up in subsystems. We haven't finished that journey yet, by the way. We're quite along there but haven't finished it yet. 

But there are some technologies we could develop in-house. There were some we really needed to bring in. We needed to bring in because sometimes it's just cheaper to acquire in a portfolio of products, a group of engineers and to develop it from scratch. It's also obviously a different transaction, balance sheet versus income statement and such. 

But sometimes it's a matter of time also. We realized that we have a very unique rhythm of opportunity because of the geopolitics and situation with Germanium, a time frame in which we can really shine, and we can grab significant market share of that system subsystem level. And so sometimes you need to use acquisitions to do that. And so, what we're seeing here is really all of those acquisitions have brought us some specific technologies, which is most of the time, the first thing we aim at. We are a technology company after all. 

But every one of them for them to be accretive have also brought with it an existing backlog or programs that we were about to get to be won or be awarded. Sometimes, like in the case of G5, we knew most of those programs are coming. We knew we're able to come in at the right time at the right place there. 

But we also knew that we are really needed in order to deliver on those programs. So G5, we knew it's going to struggle with the situation with Germanium just like everything else struggles. And we can come in and we can really enable G5 to deliver on these big programs, some of them much bigger than what we even thought of, but definitely something we can enable them to deliver. We have real synergies there. 

Sometimes like with Visimid, the NGSRI program, our probably flagship program in heat-seeking missiles or in that platform or that range was really in part awarded because of the acquisition. Visimid was a small engineering team that was developing the technology, but it's always the technology that was developing was mostly handed over to the customer or sold as a customer for production. 

Lucky was betting on Visamid for the NGSRI program, but Visamid was not in a place to really be able to take that into the next level. And so, the acquisition came at the right time at the right place, even though, again, we didn't plan on it because of NGSRI, but sometimes we get really lucky. And this one happened to be that halfway through the acquisition, the NGSRI program popped up and it was, it made sense all about it. 

And then, of course, the markets, right? Everything we do is almost everything, probably others and heat-seeking missiles, but almost everything else is dual use. And so, approaching other markets, security markets, industrial imaging and so on is also important for us and something that we'll continue to do and sometimes expand through acquisitions. 

Going back to the order of slides we had, we talked through this, some major events just during this time. I'm not going to talk too much about the first few years. It was ugly. There was a lot of cleanup was a lot going on. There was theft in China. There was an operation that was really extremely inefficient and not set up the right way. There were too many buildings, there were too many companies, there were too much of a lot of things. 

Anyway, once 2024 came about or 2023, the Mantis cameras, the Visimid acquisition, that was really starting to be the turning point. G5 acquisition pretty much a year ago from today happens to be, a major one, but really what is really coming now is the number of large programs and orders that we are winning and getting into because over those 4 years, we set up the foundation for all of that. 

So whether it's G5 winning more business because they can supply cameras when other people cannot supply cameras or whether it's G5 winning business because they're part of a larger company, and so some people feel more comfortable buying from them and small or it's because of technologies that we put together. Visimid's uncooled cameras turned into heat-seekers, BlackDiamond can actually make something really, really unique there. 

And Amorphous Materials, the company has been around forever, probably as old as I am, to be honest. That has been sort of captivated and doing one specific thing and doing only that, we're able to take them, combine them with our BlackDiamond technology and achieve something much bigger, so to speak, I mean, physically bigger in terms of optics and lenses. 

And so that's the strategy behind us. Now as we went along, we started talking about pillars of growth. It's a concept that introduced sort of maybe 3 years ago, we started talking about it. It's not really a formal concept in business school or anything like that, but it's something that stuck and we found it useful to frame things. Very useful to frame things externally, but also internally for the team. We're going through a transition. 

One day, we're making components, we're saying, hey, guys, in 3 years' time, we're going to be a completely different company. You need to explain to people what that's going to be.

To us, we chose to say, okay, everything we're doing falls under those three pillars, sort of independent activities that have independent opportunities underneath them. So, we're very diversified. We're not betting on one thing alone because sometimes things fall through, not because of you. For example here, of those three pillars of growth, two of them were highly successful and really got us to where we are, and the third one didn't. And that's okay. That's the whole idea of diversification, and that's why we have multiple different things we're doing.

In our example, we said three years ago or so, we want to go into more assemblies and cameras. Well, we took that from 2020, when assemblies were maybe $0.5 million a quarter, to now more than $7 million, actually, that's just a bit outdated; it's probably much more like $10 million.

So, we said we wanted to go into government and defense. We identified that because of BlackDiamond, because of the alternatives to Germanium, because we realized that's a big market, infrared optics. And you can't be an infrared company if you are doing only 8% of your revenue is in defense. So, we changed that. And that's part of our move away from China back to the U.S. and Europe and the direction we're going. So now government and defense are more than 70% of our revenue.

The third pillar that we identified was new applications. At first, we thought it would be automotive. It was clear very quickly that that wasn't going to happen. We pivoted a bit to oil and gas and utilities, areas where we thought we could really have an impact in terms of growth of thermal imaging. Some successes there, mainly in the furnace camera part, some less. But again, that is fine.

All of those, when we introduced all of those three years ago, we were at about $30 million in revenue, we talked about, in three to five years, we want to get to $100 million to $150 million revenue. Well, that's happening. We are well on track to achieve that soon. So that is a bit of old news, and we need a new goal and we need a new direction on that. Not a completely new direction, we're still going upstream, systems and cameras, but to frame where the growth will come from, we're looking the same way as three pillars, we are taking something a bit different now.

We're saying, okay, for the next few years, if we are to again lock or separate the business into three blocks and say, they are based on the same prevailing technologies, BlackDiamond, imaging, assemblies, optics that we make, fabrication, coating, and so on. All of our technologies serve all three of those, but those three are somewhat independent of each other and can have underneath them independent large opportunities that could be significant to us. Significant used to be, we used to say a significant opportunity would be in the millions, now that's in the noise a bit. Currently, we say a big opportunity, we call something that could be $10 million or more a year. We have probably eight to ten of those right now. But we have changed the direction, we're going, that threshold will grow even higher.

So, let's talk a bit about what those are, those three pillars of growth. The first one on the left is the assembly's business. We've tapped into that a little bit through fixed-focus assemblies, what we see here on the screen, and a few barrels. That's a very nice market. We're taking a very good portion of that market already because we can do those with BlackDiamond, and they perform great. We can deliver them; they're made here in the U.S. We can also now produce them now also in Latvia, so we serve them in the European market and Ukraine. We might even be selling even more assemblies right now in Europe than we are here in the short term.

But there's much more than that. There are much more complex assemblies where someone would come and say, I don't want to buy a complete camera system from you. I want to build my own camera for whatever reason, and I want to buy just an optical assembly. That business of just optical assemblies that has already players in it, like MKS Ophir in Israel and such, that's a business that we estimated, both top-down and bottom-up analysis, and we got independent market research done.

Yes, Al agreed to spend money on the market research. The addressable market for us is between $500 million to $1 billion at that level. Optics as a whole, or infrared imaging as a whole, to remind you, is currently, according to independent market research, at $10 billion to $11 billion a year. So, it's a portion of that.

Where do those go to? They can go to someone who wants to build their own gimbal let's say, that goes into an aircraft and that someone buys a sensor from someone else. We use certain sensors from certain companies because we chose to use their detectors, but there are others and different preferences or different uses. This could be a camera that's used in space. We don't know how to build space cameras right now, that's not something we could do as an entire payload, but we have built a telescope optical assembly. This could also go to some of our direct competitors, so companies that make their own detector and want to sell a complete camera, like we are talking about we are selling complete camera, but they want to buy the assembly from us. That's fine. I would talk to anyone where they can make money. So that's the first pillar, an opportunity of $500 million to $1 billion, studied in different ways.

The second pillar is infrared camera systems. To put it simply, think about FLIR, they are now part of Teledyne. The numbers were public up until a few years ago before they got acquired; you can even look them up. But again, market research supports this. This is taking G5 and building on that, taking Visimid and building on that. So, standard cameras that can go into pods [Indiscernible], into gimbals, like the camera we see here from G5, that can be on a border tower, on a truck, in a stadium, or for counter-UAS.

G5 already has a really good standing in the market on those large fixed ones. But there's a whole market of smaller compact ones or other wavelengths. G5 does only one wavelength, but there are other wavelengths to do, some multispectral cameras that we're starting to develop, and so on. So, cameras as standard products, then cameras as complete cameras, have an addressable market between $1 billion to $1.5 billion.

The third one is a bit harder to explain but easier to demonstrate, large defense programs. Think about programs we have today that are $10-plus million, NGSRI as an example, Navy SPIER is another one, and others we announced a year ago. These are programs where we do some development work paid for by the customer, some NRE to it, but the real money would be made in production. We're not an engineering company. We don't do all this for engineering revenue. That's nice but small. It's really for the production.

These are opportunities like Apache, NGSRI, SPIER, where we build on existing technologies that we already have. We're not developing from scratch. We're not a research organization. We're not developing a completely new technology, but taking something and modifying it, which last year in the investor meeting, we talked about and now is public information because of the press release also out, is a program in which we took the high-end camera of G5, so 1,000-millimeter camera, upgraded it to some performance specifications that may be wanted in a nearly 2-year engineering project. And now it's going to get installed on every naval service vessel for counter-UAS and detecting low-flying cruise vessels, okay? 

So, that's a program of record. It's a public program. You can go and see it. L3 talks about it. It is based on an existing technology. We didn't develop a camera from scratch. So, we believe we can do more of those. What is the TAM here? I can't even tell because the TAM is really more gated by how much can we take of those. So, we assume we did some internal study, and we said, okay, G5, we can do X programs like that before it becomes like really about us and distracts us from other work in that we can do that. 

So, we believe this is large enough that it can be as big as those pillars in terms of revenue it would bring. And again, you can just look at what you know. We have NGSRI programs that we hope, and we're looking for Lockheed to win. If they do, it could be anywhere from $50 million to $100 million a year for one program. So, these are kind of what we're talking about in that pillar of growth.  

Now talking a bit about what we have so far in product portfolio. How are we doing? Okay. So, what have we developed until now? No, I'm not talking about the optical components. I'm not talking about materials. I'm talking more about the subsystems and the base technologies that enable a lot of this. 

So, our Mantis, we talked about that specific cameras for applications like Gas Imaging, like furnace inspection, of course, the range of G5 cooled long-range detection cameras, CST-Solo, a new camera we're coming out with, which is really a very compact, if you want, heat-seeker, but it could be a heat-seeking drone could use it or because that very past that some of the drones are going or for some industrial applications. And so sometimes we make some bets, we try. 

And again, diversification is the key to everything. We have to have a few different things. We can't depend on one. And we try something like EdgeIR was actually attempted something to integrate AI into the camera, that was not that successful. And I bring it up even though I should be hiding things that aren't successful. But just mentality-wise, from a concept, diversification in everything we do is extremely important to it. It's something we drive through as a team. Never bet on one thing. Don't bet on one program, don't bet on one technology. Keep trying. Something will stick. And sometimes they don't stick. 

Our BlackDiamond Glass, obviously, our pride and joy and a huge enabler to a lot of what we do. So, I mentioned there used to be 2 materials that were more generic. One of them we discontinued, one of them we still do quite a bit of BD6, but there's really a whole portfolio of materials.

To put it into perspective, the next company after us, has probably 5 types of glass that they make. Between LightPath and the Amorphous Materials, we have now something that is close to 20. So, we are by far, the largest selection of infrared materials anywhere, period. And we're probably now by far the largest producer of infrared materials between Amorphous and LightPath. 

And those of you that were here saw on the tour, we have some very grand plans of expansion because we have to actually have way more orders than we can make glass for right now. But what is unique about this glass? Well, first of all, geopolitically, it's an alternative to Germanium, right? It's not a one-to-one replacement to Germanium, nothing ever is. But in the world of optics, you can design your systems now without Germanium or without Gallium by using Chalcogenide. 

Optics accounts for 25% of the Germanium the U.S. needs. It's a public market research actually done for the U.S. Congress some years ago and it's public information. 25% or so, however many tons the U.S. needs are for optics. We solve that problem for the optics part. We don't solve it for the other 75%.

So germanium is very, very critical in solar cells, okay? If you don't have Germanium for solar cells for satellite, the size of the solar cells will be 3x bigger as much as they are today. So, it is much more important to direct the Germanium there where you don't have an alternative than to optics where we provide an alternative. And that has always been part of our picture of the government. That's something DLA Defense Logistics Agency understood very, very well and why they've been financing part of this and so on to free up Germanium to places where you don't have right now an alternative. 

So, besides alternative to Germanium, it's made here in the U.S. Germanium, Gallium, those are crystals. They are grown by taking raw material and feeder and growing it to crystal and you're getting a pure metal out of it, which then you can do a little bit and turn it into optics. Ours is a glass. The glass is not grown as a crystal glass, it is melted. That means we can scale it much better in terms of production. You've seen here. That means we can also change the properties of it. And that's why we have maybe 20 types of [indiscernible] where Germanium we have just one. 

Germanium properties are whatever Germanium is, you cannot change them. So, Germanium transmits mid-waves and long waves. It cannot transmit short-wave infrared. No matter what you'll do to it, it will not transmit. Silicon can transmit short wave and mid-wave, no matter what you're going to do, it's not going to transmit long wave. And so those materials that we used until now, in selenium, zinc sulfide, Germanium, silicon, all listed whatever properties they have, they're all crystalline materials. 

Glass on the other hand, or synthetic glass, if you would, a chemistry. You can change it. I can add a little bit of that, a bit more selenium, a bit less gallium or whatever materials are in there. We actually don't use gallium. And I can get a different composition. I can fine-tune it. That is what Naval Research Laboratory did for years. But that's also the guys in Texas, Amorphous Materials also know how to do very, very well. 

So, Amorphous other than Naval Research Laboratories, Amorphous Materials was probably the only group in the U.S. that can come up with new compositions of glass or has been coming up with new. The acquisition of Amorphous was also a bit defense that way. It's like, okay, we have an exclusive with [Indiscernible]; let's also get whoever else might be playing in this. And so lots of properties, lots of things we can play with. And so with them, we can get to some really unique advantages, which I'll explain in a second or give some demonstration. 

But just to summarize those, we reduced supply chain risk. We have a lot of advantages on properties because they are chemistry and not crystal. They're manufactured in-house. You've seen them here. We acquired Amorphous Materials for a number of reasons. But one of the reasons we acquired Amorphous Materials was because we like to jokingly say, I joke about it, I'm not sure everyone else finds it funny. We were one chain away from losing capacity. I mean we're in Orlando. We make, everything we do in the company pretty much we do in more than one location, except glass. 

Glass was done only here in Orlando. So it's actually, the company did have a time where it shut down because of the hurricane and the flooding and that impacted the glass manufacturing. We couldn't do that. So having another location now in Texas that makes glass, is a backup as well as many, many other things that [Technical Difficulty] acquisition. 

Okay. And then other advantages that it has, glass can be molded. You can melt it and reshape it. Crystal cannot be. Crystal, once it's grown the way it is, the only way to make a lens for it is to remove material until you polish it into the shape you want. Glass can be molded. You've seen it here on the tool. Light is known for molding. We keep extending that technology more and more. For the very large cameras, it makes less of a difference there. But for the small ones, if you're talking about lens assemblies that go to the small ones, like we see here in the image. 

All of those lenses in this picture are molded, which means we can make 4 million a year of them with the molding machines that we have. We needed to make 4 million Germanium lenses a year, we would need to have this entire building filled with diamond turning and polishing machines. So it's a scalable technology, and you can do that. And then the coatings we developed for it, a lot of qualification, we talked about that, and so on. 

Advantages, since I'm a technologist or a failed engineer, as I say sometimes, I like to talk about the technology. What are the advantages of BlackDiamond? Replacing Germanium, everyone gets clear. There's much, much more to it than that. You look at the gimbal like you see here a payload, and you see multiple windows in different colors. Why? 

Well, one of them is a laser, and that needs its own window. Okay. But all of the 3 large ones are the cameras. But why do you need multiple cameras? You need them because they're looking at a different wave. One is a visible camera, maybe a black and white, maybe a color camera. 

Another one is probably a short-wave infrared camera because that can see through fog, through haze, sometimes through clouds very well. And the third one is a thermal camera because it can see at a very long distance, and probably a mid-wave camera. But what if you could combine them into one camera that does all 3?

You would save tremendous space and weight, not to mention the cost, but also power consumption, right? All these drones that consume power, you want as much power for the motors as you can for distance and time upfront. And so different branches of the government with different data and so on, have been working at developing sensors that can image multiple wave bands at the same time. 

So these are the programs you can go and you can find some public information about them, some are not public, but there's enough there that you can find it. What wasn't available was the material, the glass, as I mentioned earlier, Germanium transmits mid-wave, and it cannot transmit short wave. Silicon can transmit short wave and mid-wave, and cannot transmit visible nor long wave, or near infrared, which is what is called night vision. 

These materials, because they're Chalcogenide, because they're not a crystal, and they're fine-tuned, that is why NRL developed 20 materials like that. Because they give you lots of different properties, let's say, carefully fine-tuned to be able to see what we are showing here on the left, one system that can actually image, maybe on wavelength, [Indiscernible]. And that's the Mantis. If you recall, we talked about the Mantis, the camera that does 2 wavelengths. That's why it's so important. That's why BlackDiamond can make it happen. You couldn't do that without those materials. 

It also comes into play in reducing the overall size and weight of systems. In visible light applications like cameras that were used to like the big Sony SLR and so on, these big lenses and so there are 300-something types of glass that can be used to make those cameras. You can choose the most perfect glass for your application. In infrared, there were maybe 10 materials until recently. The Germanium, the silicon, zinc selenide, zinc sulfide, maybe 5 Chalcogenide glasses that were made by Schott, Vitron, and LightPath. 

Now we're adding 20. So, we're adding much more variables for engineers to play with, and what do engineers like to do, they design stuff. And so when they design a Zoom lens like this is an example from a paper published with the Army, I believe, the Army Night vision Lab of a Zoom lens, and tends to make a zoom lens that would do both mid-wave and long wave simultaneously, okay, systems that already are starting to exist with existing materials would require 21 individual lens, okay? 

Huge weight, cost and a lot of optical loss because every time the light goes in and out of the lens, you lose a bit of light, even though the coatings help. With our materials, because they add so many valuable capabilities, you can take this down to 12 elements. It's hidden down here, but it says 12 elements. You gain a significant weight advantage, you gain higher throughput of light, you gain a cheaper system, and the weight translates again to longer range for the drone. So, these are some of the examples. 

People keep asking. Well, why do you need 20 materials? I mean, there isn't one enough to replace Germanium. This isn't about replacing Germanium only. Replacing Germanium as I would weigh in. That created the need for everyone to take a look at what's out there and what I can do. But once they look at it and see what it is, they realize, oh my God, I can do much more with these materials than I can do with Germanium. 

Okay. One area I want to talk about specifically is the next frontier, so to speak, from Captain [indiscernible] words, large diameter optics, and specifically for space applications. We were making glass in a 5-inch diameter. We could slump it a process that would allow us to get sometimes to 7 inches in diameter. That was okay for like the camera we see here, what's called the midrange camera of G5, where the front lens is about 140 millimeters. 

We could probably make this. We couldn't make it for the large cameras of G5, which is really where the big revenue is, and most of it. And we definitely couldn't do it for the space applications, which are a very fast-growing area. And so, in space to do multispectral imaging because materials like BlackDiamond did which did not exist before, you use mirrors. You use some very, very large mirrors to build the telescope that can image in both short wave and mid-wave, long wave, and visible. So, what you see here, this satellite, the reason they were the size of a bus is they had, like, think of a classic telescope with a Newtonian reflective telescope with massive mirrors on an axis and non-axles. 

Think about, but James Web, what was it? It's a massive [indiscernible], just they have to unfold them, and there are so many of them. But with BlackDiamond, you can do it in a refractive way instead of reflective. The gig that means you pass the light through the lens instead of reflecting it in order to shape it. But you need a large diameter. These are the longer you are away from what you want to image, the larger the optic needs to be. For basic geometrical optics, you need to get to at least 10 inches in diameter, sometimes as much as 15 inches. We can do that with our technology. 

Amorphous can be. And so, the acquisition of Amorphous materials enables us to make up to 17 inches in diameter, as a second manufacturing location adds to our technical capabilities big time, or more importantly, takes away from competitors' technical capabilities to develop others, and gives us another set of materials that they develop. So, this acquisition is significant in many ways. 

I get asked what's the size of the market, what is it? So pretty easy way to calculate public information, SDA Space Development Agency last month, I think, 2 months ago, awarded 4 companies to build 72 missile tracking satellites. Infrared by far. There's no other way on that, $3.5 billion, $48 million per satellite.

Rule of thumb is the entire optical payload with the sensor and with all of that is about 1/3 of the value. okay? And of that, there is a telescope, optical telescope. Again, we're not going to go and do 1/3 of the $48 million. We are not going to do $16 million per satellite. We're not there yet, maybe one time down to go. But we are going to do a very big chunk of that $16 million, which is the optical telescope that again is enabled by our materials. 

So a pretty significant capability for us that I think will play very nicely. Okay. Counter-UAS, we talked a bit about it. I just have to keep emphasizing because it's like every major order we announced like the $9-something million only a week or 2 ago, $20 million before the thing. Most of them are heavy on the counter-UAS. It's a very, very fast-growing market for us. It's an incredible market and cameras from G5 fit perfectly in. Every one of those systems that you've seen a laser system here, a remote weapon system or just an interdiction system, all of them pretty much are using those same cameras, those same technology. 

So that's very fast growing for us. G5 is best-in-class by far. I mean you can go and we have some information published. You can go and you can see the, what's called the DRI, the Detection and Recognition Identification ranges. We published them on our last week material. You can take a look at, for example, last week, FLIR announced a new 1,000-millimeter lens or 1,000-millimeter camera for similar applications. And you can see the DRI, what the Detection Recognition Identification ranges are compared to the G5. I'm not going to spell it out for you, but it's easy to find that the numbers are staggering how much better we are. 

So to put it into perspective, for those of you that know the D.C. metro area, if we were to put our 1,000-millimeter camera on a pole in Washington, D.C., we would detect a tiny drone like this like the DJI flying over Silver Spring or Bethesda. That's the kind of range we are talking.

Okay. A bit about commercial applications really quick. Not a huge part of our revenue now, but always is there because pretty much everything we do or those things we do are on mute. So cameras can be used for, same cameras that can be used for detecting a drone, can be used for detecting someone at seat, for example, or things like that. So some security applications and some pure industrial applications. 

We talked about Gas Imaging up and down. In Europe, it's up. In the U.S., it's a bit down with the current administration. So I'm not sure about that one. But if we look at furnace cameras, something we've talked a bit about in the past, our Mantis camera offers the ability to image inside a furnace running at thousands of degrees, 2,000 degrees Celsius in this case.

So, this is what a power plant furnace would look like and you have the burners and you heat up the water and the pipes goes there and the ash goes down. That's about as much as I understand of that. But you want to all the time monitor what's going on. You want to monitor what's going on, because ash can build up on the pipes like you see here at the top or it could clog in the burner or it could fall down in one big heap and cause a massive dent down here that can impact your performance or the worst of everything, a water pipe convert and start leaking and you wouldn't know it without imaging inside. 

Every single furnace like this, whether it's a power plant, a paper mill, a steel mill has multiple of those. In this case, 3 cameras. Those are kind of the images you see in there. We sell those for $20,000 to $30,000 a piece. So that's one example of a nice application that we're really enjoying and managed to make a dent there.

Okay. Talking quickly about program. I do not have any news about NGSRI. I will only be sharing whatever has not been shared publicly. We're at a very critical point of the program right now, and we have to be extremely sensitive, both in terms of competition and that we're under very strict directions there. But everyone knows the potential there for us is per missile $5,000 to $10,000 and the volume of missiles could be up to 10,000 missiles a year at full rate production. You can do your own homework and estimates of how many missiles the Army is going to want, when and how, that's roughly the numbers we share. 

The SPIER program, the Shipboard Panoramic Electro-Optic Infrared is the full name of it, is a program in which we install on every Navy surface vessel at least 2 ultra-long-range cameras, sometimes 4. U.S. has some hundreds of vessels, you can find the numbers publicly again. I'm not going to go into those. But we expect it to be up to $20 million a year. We are right now this month actually shipping first units for that and are expecting the LRIP. LRIP stands for Low Rate Initial Production any day. And the border patrol, where we went into this knowing that G5 went into the acquisition, knowing G5 provides Elbit of America, the cameras and bit of big players there. We are now providing the cameras to at least 2 players. We might be providing 2 players. 

The number of towers went up significantly. They were talking about 300 towers. Now it's like 1,200 towers, adding towers along the northern border because apparently Canadians want to infiltrate as well. I would make a joke about hockey and lots of other programs, I'm not going to go into all of them, we don't have enough time. But just some looking ahead, this is over to you Al. [Technical Difficulty]

You've got slide after this. [indiscernible]

So what you really want to know is what's going to happen next, I think. So backlog at the end of December, $97 million, a little spoiler alert, it's $103 million as of yesterday afternoon. So we're tracking pretty well against our overall revenue goals there. We look at the backlog a little bit. It's 85% of the backlog is defense, surveillance, security and public safety. And I call out those 4 things because, as Sam said, our products are dual use. So some of them are not really purely defense, public safety, for example, is not purely defense. But it's the same system. This could be for public safety or it could be used for defense. 

13% of the backlog is commercial. However, caution you, commercial orders tend to be shorter in duration, 3 months, 6 months. So the backlog doesn't reflect like defense would. Defense tends to be long term, 12 and even 18 months of orders that you don't normally get that from the commercial side. So I don't think the revenue split will be 8% in defense and 15%.

The interesting part here, though, is 70% of that backlog is scheduled to be shipped in the calendar year 2026. So Sam will give you an idea of we're up to what we're up to these days.

Okay. Some of the near-term pipeline opportunities, I'll emphasize opportunities. I'm not saying we necessarily want those gives you a sort of where we're doubling about what we're playing with. So, counter-UAS, I mentioned a few times. Just to mention 3 programs as an example.

The FIFA World Cup, very big ones actually started awarding some. Every stadium has to be protected for counter-UAS. This is now being well over the FIFA, where we know of NFL teams that are looking at our systems and testing them for drone detection and such. Again, we don't shoot down the drone, right?

It's more of a knowing that is there and being able to take different actions. But an optical system or eyes on the target are a must for any drone detection system. So there are many other technologies there. There's radar, there is acoustic detection and things. There will always in every system be at least one camera there. You have to have a visual. All these other things can never get you guaranteed to know that's a drone and not a bird or a plane or things. And we've seen images where it looks even in the visible camera as a drone and you realize it's actually a plane just way further out. So you need a lot of those technologies working together, integrated, there's a lot of software behind that. 

Department of Homeland Security, DHS has a few programs. One is for border patrol, one along the border. So, I guess that ties into everyone knows now about the lasers that was used or tried there. And some are internal in the U.S.

Then you have the Defense on National Capital region's another one. And then you have the Air Force sUAS system, SUADS, which I talked about, 3 different systems there. We are the camera of choice in every one of them. They're being deployed already around every Air Force space, at least in Europe and later maybe was that. Other things, we have additional future opportunities. I would say that to some degree, Visimid has turned into a sort of heat-seeking expert, if you would, the NGSRI has driven quite a bit of interest and quite a bit going on there that we have quite some there.

Space programs, we talked about optical assemblies for FPV drones, we do a lot of this. I mean we just do a tremendous amount of assemblies like we saw in that image tiny 1 lens, 2 lens assemblies. We produce them now also in retail because they produce them to some country they buy, Europe in very large volumes. And the different programs here, drone dominant or whatever the name it is, pretty much all of them have this in some pipe.

We are not playing on the camera side in that, that is more driven by the sensor companies like FLIR, DRS and such, but we are providing the optical assemblies for most of them. And then we have existing missile programs. Some of them have been going on for years. LightPath for example, has publicly talked about making optics that go into the A9 side window. You might have seen images of it here. We're very proud of it. It's been ongoing for many, many years. Those are scaling up. Like every missile program we are in existing program is pretty much tripling in size and production throughput. So we're enjoying that too.

New products.

Yes. So what's coming up is the pipeline, just to give some taste there. So obviously, on G5 side, quite a bit, the redesign of the cameras by end of the autumn, we plan to have all the cameras using BlackDiamond instead of Germania. Performance is the same or improved. So you wouldn't even be able to know it's a different camera design when you look at it, even when you take it apart, to be honest, you wouldn't probably know that.

It's the same size, identical size, weight interface, nothing changes in that. Optical performance is at least the same. In some cases, it's even a bit better. So we're redesigning the 1,000-millimeter camera. With the BlackDiamond, we actually might be able to push it to be 1,030 millimeter. Sounds small, but it's actually every bit [Indiscernible]. So that's a very big effort inside the company.

On the optics side, we continue to expand offering by adding more and more of those fixed focus assemblies. They work with camera detectors such as FLIR's Boson, S1M and so on. Sometimes we provide them to customers that buy from the detector and assemble it. Sometimes we provide them to the companies that make the detectors. For example, Seek Thermal is one of those companies out in Santa Barbara. We provide them pretty much with all their optics that goes into the cameras, and it's been talked about publicly. 

Driving the TRL level, Technology Readiness Level for more of the NRL compositions, that's now with effort by Steve Milky and the team in Amorphous helping a lot there. All the time, more and more design wins for BlackDiamond in defense programs. And the Amorphous Materials that we acquired, I mentioned Amorphous had a portfolio of 8 materials as their own.

Amorphous never offered them as optics, only as raw material for others to make lenses. So of course, we can immediately offer lenses if anyone wants. But more importantly is between the 14 coating chambers that we have in Riga in G5 in New Hampshire and here in Orlando, we can also, are developing coatings for all those materials. So we'll be able to offer much more that. Amorphous' revenue is probably about $3 million a year, $2 million, $3 million a year, give or take, only of selling the materials, we'll expand on that because we can offer much more now. Over to you Al. [Indiscernible]

Our approach to M&A, Sam actually said a lot of this already. So it's a little bit of a repeat. Obviously, it's accretive. We do not want to buy a fixer upper. We want something that we can plug and play into our organization. Obviously, technology, product, we're looking for something in a fast-growing market segment.

Culture. We're looking for strong cultural fit. I'll come back to that. Growth. But so far, we've identified companies that are pre-late stage. Visimid, G5 and dare I say, of Amorphous are $3 billion, a year from now, I'm hoping we'll tell you something completely different there. Not so easy to find. You really have to spend a lot of time upfront in pre-due diligence just to get to know the part, so we're definitely looking for companies that fit that profile and vertical integration. So anything that helps us in our strategy of vertical integration. 

Why I want to jump back to culture is because the culture eats strategy for lunch, I can make that up. You guys know that. So culture is very, very important in terms of the post-merger integration process so that what we buy fits, right? And we don't have that hurdle. We have every other hurdle in integration, but not that one.

Pathway to profitability. This is now just a summary of everything set up till now, right? We're in a multibillion-dollar infrared imaging market. BlackDiamond is a differentiator. It's an alternative to Germanium, of course, but it's also technologically superior, right, in a bunch of different ways. Strategically or directionally, we're a solutions provider. That doesn't change.

We have $90 million, sorry for that, $103 million as of today in backlog, and it is predominantly government. New commercial applications, Sam went through. We didn't talk a lot about this. I did have some side conversations with a few of you about efficiency within the design team, taking design to manufacturing and manufacturing itself. Having this level of backlog, we have to be very efficient on the back end. But ultimately, our pathway to profitability comes through revenue growth, but it's not like we're not doing the blocking and tackling to get things right as well. We do both of that. And we're sizing the company, the production, the new product introduction path for capabilities to try in excess of $300 million in 5 years. Sam mentioned...

$150 million is just no longer a chat.

5 years ago, I said $150 million, even 3 years ago, I said $150 million. Sam believes in being ambitious. So we are literally building an organization to do that.

All right. We talked a little bit about the facilities. Sam did mention that the one place where we didn't have backup was Glass and in Orlando. In the next well, the acquisition solves that problem, but certainly within the next 3 to 6 months, we'll have sufficient redundancies in both areas. These are great locations, by the way. If you're in the defense and commercial business, these are great footprints for manufacturing and being sort of the right place at the right time for engineers and competency in the markets that we play in. 

Yes. Well, everybody always wants to know about cash, right, because we're small companies, how much cash you guys going to need not going to give you an exact answer. But we had $73.5 million in cash on hand as of 12/31. We also paid off $5.4 million note for as part of the G5 acquisition. So that was done before December 31 as well. 

For fiscal year '26, we obviously just already did the AMI acquisition. We have the G5 earn-out that actually is 3 days from now. We started the CapEx expansion for those of you here physically, you start saw some of the work that's being done, certainly not all. And most of that will be here in Texas. And for the fiscal year, we'll be operating cash positive at the operating level. 

And fiscal '27, G5 earnout, these are major cash events, we call it G5 earn-out #2, continue the CapEx expansion. More related to growth and capability. If you imagine that chart to the right, we definitely have our work out for us. But we'll finish fiscal year 2027 well positioned on cash. $65 million raise does put us in a different position, and we'll have dry powder for acquisitions even if you allow me. So that's true. It's not just me, everyone else we'll be positioned pretty well even then, right? 

So we're in a good spot. Question I do get asked often is sort of where we are in terms of shares and dilution. The common shares are $55 million out there, and that's the basis for the EPS. You saw that in the filing in December. We come out with sort of the all-in comment. 

If you convert the Series G and PIK preferred, which is for the G5 acquisition, there's no warrants outstanding, so that's great. Those are gone. G5 is and just do general stock incentives for the directors and our ESOP program and everything else. We're sort of fully diluted at about $73 million. That opens it up for questions.

We're taking questions.

Austin Moeller, Canaccord Genuity Corp. So, I cover a lot of satellite companies on the electro-optical and infrared side, Maxar, BlackSky, [Indiscernible], et cetera. And so, I was just wondering where you think you would your products would be strategically positioned in the telescope sector. I know like Raytheon is at the very high end and then there's like DRS that's becoming involved as well. And so I guess just based on like 17-inch diameter versus some of the other really very high-resolution exquisite telescopes where your products might be.

Yes. So I'd say from a supply point of view, some players like L3Harris, for example, that have extensive design capabilities in-house. They're not going to design in production. So they would probably want us to make the optics, but maybe not [Indiscernible] some of the newer players that as new entrants tend to be, they're focusing on their strengths and not trying to do everything themselves. 

And so in those cases, we could be supplying a fully assembled telescope for all that. In terms of size and such, it's very dependent on functionality and distance of the satellite. So lower orbit geosynchronous such can be very different ones. The SDA has been talking about what they call a neighborhood satellite. I guess sort of in the sense of satellites that are so specific to an area, they almost like cover a neighborhood or a very small portion. 

Historically, because the satellite is so expensive, launch so expensive, everything, you would have 1, 2, 3 mega satellites sitting in geosynchronous and imaging the entire half of the plan they can see. Now with lower orbit and with constellations, it talks about hundreds of satellites, thousands of them, almost disposable like. 

So one degree on one hand, short lifespan of 2 years. On the other hand, launch is already becoming so readily available as programs talking about having an inventory of satellites ready to launch at 24-hour notice so that they can launch and cover specific areas when they need it. So I'm not sure if that answers the question in full, that's how I see it.

Yes. I would assume the replacement cycle there on LEO and LEO is obviously very favorable to your operation.

Yes, 2 years, tranches pretty much. So the commercial go much faster, and we work with quite a few of the commercial ones. The planning of SDA and those guys are tranches.

Maybe a question for both of you on M&A. You had a slide there and talked a little bit about it. I'd love to get your sense of a few different things here. I guess the first thing is about where any other so the ones you've done so far, which obviously has been successful other than Amorphous, which seems like it can be very successful, been companies you've known very well and even worked with. 

And I would also imagine another avenue to identifying these companies is through defense primes who might see Visimid is doing some great work but isn't big enough. Are you seeing that as another avenue to find these companies? And then ultimately, what's the appetite for doing something in the next year of any real size like G5?

So appetite definitely so. We're actually seeing it sometimes the other way around. We're seeing a small company. We love the potential and we validate within defense prime that they are really going to be a major part of it or the defense prime is thinking of them for specific program or so on. So kind of similar to Visimid in a way, Visimid, we didn't come across them because of NGS. 

Made it very clear during the due diligence when you contact that they would be filled by that and it worked out very well, right? Amorphous is 8% of their revenue or so goes to one very large defense prime and the defense prime was ecstatic by the fact that we picked them up and they're part of our family now. 

So we definitely see that as a possibility. We try to keep in touch with defense primes to make it clear that that is something we are open to discussing when they have that, not always know who are the right people to talk to, but we try to do that. 

In terms of appetite, answer would be very different here. So I have an appetite all the time. But the team is very, very stretched, right? [Audio Gap] Size pretty much. We're on track to continue at a break that speed. We have a lot of different things we need to execute on. And even though the size of our bench has increased 3 years ago through an acquisition, it was the 2 of us. 

We did the entire due diligence and everything and pretty much or with Natalie actually doing most of it. But now we have a bigger bench, and we have with acquisitions, came more people, very, very talented people, and we recruit more seniors, so we can do a bit more. 

But the more we moved very, very quickly. I mean it was like less than 2 months from concept from contacting them to closing the acquisition. So I think the team needs to signal to me when they are ready but we definitely have the opportunities. We have an interesting pipeline. And the nice thing about having cash in the bank and about showing that you've done 3 successful acquisitions is people stop calling you.

You know anybody [Indiscernible].

In terms of capacity expansion, you're talking pretty aggressively. When we think about CapEx for that, is it pretty linear? Or are there any sort of long lead time big step function capacity that has to be added? Or is this a pretty linear process?

The next 12 to 18 months will probably be a bit heavier because we need to catch up on some CapEx that we were sort of not doing when we were on cash and couldn't do them. And we're launching some very significant product lines. And after that, spitting it out. It is again, the higher value items that we go to we go up chains and less CapEx intensive, right? So we're starting to benefit from that. I mean the old would need very significant CapEx as a percent of revenue compared to what we need.

Yes. Just you've mentioned sort of this 3- to 5-year window. Is that just based on kind of other competitors that will catch up from a product standpoint or just given the number of programs you were.

Yes. It's based on the assumption that no one is sitting back and just letting us eat their cake and take their lunch. People are working on alternatives to on other alternatives to Germanium. U.S. government and other governments are working on getting production of Germanium. But it's also remind, we've shown our materials are offered a lot more than just alternative to Germanium. So it's more of we have a golden opportunity right now to be a bit more aggressive and capture more significantly market share.

[Indiscernible] from Piper Sandler. I was just curious about the implication of the cost structure as you decontent G5. Is this a place where there's immediate cost benefit? Or will you have to scale into those new products of BlackDiamond?

Redesign Okay. Let me put it this way. When Germanium was $1,000 a kilo, we were struggling to be competitive with BlackDiamond. But Germanium was $1,000 a kilo because China was subsidizing it heavily to drive all other players out in the market. When Germanium went up to $2,000 a kilo, which happened after the first announcement of China, BlackDiamond became competitive easily. Germanium is now at $6,800 a kilo, and we're not planning to change the pricing of the cameras of G5 when we take them with BlackDiamond. So we'll benefit.

Any other questions?

Yes, Richard, please. Kind of looking at the technology and product development, or as more of a technology question here, but the Amorphous Materials acquisition gave you bigger geometries. BlackDiamond is a different material composition and then you talked about coatings. Is there any other major elements to today's differentiation or where you may be going? Like are there other angles of differentiation you can add in the future?

Yes. But I'm not sure at the point of sharing them too much. In times into the 3 to 5 years, we never rest and say this is what we have and that is it. The things we can develop and do now with Amorphous with people like Steve Milky here and capabilities of the different teams that will keep creating differentiators. I don't want to share too much about what they are because it's a public broadcast. I don't know who is everyone listening. But we're investing some of our money in our part of R&D to continue to develop differentiate.

And then just a quick follow-up on 2 of these angles here. So obviously, Amorphous gives you the bigger diameter lenses up to 17 inches. Is there a need and interest in going much bigger than that?

I'm not familiar with any need right now.

You said you have 20 material systems in the BlackDiamond portfolio, maybe not just BlackDiamond in total, like how many more could there need? What are some ways that you.

There are some other types of materials we might look at doing down the road. So for example, the BlackDiamond, which as I mentioned, cover long wave, mid-wave, short wave, some of them cover the near infrared. None of them covers the visible. 

We've been focusing on infrared, not because we want to do just infrared, but because when we decided to do the shift, it was clear that the visible was much more crowded in terms of technology and established technology where infrared was changing and it was an opportunity for us to enter. 

Our technologies of making the materials, whether they are an Amorphous type of material or other types of glass or fabricating from them and building systems could apply to visible light, apply to ultraviolet light, apply to [indiscernible]. So we could see going down that path.

So obviously, there's a lot of opportunity right now on the military side with like the drone dance program and the initiative to procure 2 million drones in the next 2 to 3 years. How does on the commercial side, the ban the FCC ban on Chinese drones open up the opportunity for LightPath and how might you think about optics for commercial drones in the U.S. in your revenue mix?

So I think it still is still out a bit in how exactly the FCC ban is going to roll out it's been on one hand, it was for those who don't know, the FCC ban was supposed to be the DJI ban called correctly. And it turned out when they published it that the FCC is banning any new drones or critical drone components from any country outside the U.S. 

But in fine print, unless DoD or DoE now and Department of Homeland Security provide an exemption to those companies. So I don't know yet what the level of that exemption is going to be, how it's going to play out in the cameras. I do know that there are companies looking at doing final assemblies of cameras here in the U.S., so not necessarily building the entire camera, but doing final assembly. 

And in that case, they will need our thermal imaging assembly. So those same fixed focus small assembly that we were showing we provide a lot of drone companies. We were not looking at providing them. We're not thinking that would be necessarily an opportunity for the U.S. part that much because we thought the cameras would be coming from Taiwan, where they produce those lenses, similar lenses in volume. 

Now that it looks like they will need to be assembled here, it is very likely that those assemblies we're going to need to produce here. And Israel Piergiovanni, where VP Manufacturing is tasked with scaling up that production here in all. So it's a good opportunity there. 

We're probably not going to go into the complete camera part of the smaller drones. That is driven and dominated by whoever makes the sensor. So we're less positioned to be able to have a dominant position there; so to speak, but the larger drones where let's say, payload and more than just a tiny camera, there we can start providing with our newer compact cameras and Zoom and so on.

Richard?

Quick question for Al. You mentioned being operating cash flow positive in fiscal '26 and '27. Do those include or exclude the G5 earn-outs?

Exclude G5 [earn-outs or investment]. So just at the operating rate.

Okay. All right. Thanks. This concludes today's webcast. Thank you for attending. You may now disconnect.

Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to LightPath Technologies Second Quarter 2026 Earnings Conference Call. [Operator Instructions] This conference is being recorded today, February 11, 2026, and the earnings press release accompanying this conference call was issued after the market closed today.

I would like 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 and involve various risks and uncertainties as discussed in 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 that the projected results would be realized.

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 as non-GAAP financial measures. Please refer to our SEC reports, and certain of our press releases, which include reconciliations of non-GAAP financial measures and associated disclaimers.

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 their prepared remarks, there will be a question-and-answer session.

I would now like to turn the conference over to CEO, Sam Rubin. Sam, the floor is yours.

Thank you, operator. Good afternoon to everyone and welcome to LightPath Technologies' fiscal second quarter 2026 financial results conference call.

We entered calendar year 2026 having completed the first part of our transition to a vertically integrated provider of high-value infrared optics and camera systems, geared towards driving higher revenue and gross margins. The second quarter demonstrates this transition with measurable commercial success, record revenue and margin improvement. The progress we have made is reflected in record orders, a growing systems backlog and increasing customer adoption of our technologies, as well as, and maybe more importantly, improvements in our margins and cash flow.

Today, LightPath is a fundamentally different company. Over the past several years, we have transformed from a precision optical component supplier into a vertically integrated provider of high-value infrared optics and camera systems. And offerings that range from proprietary materials all the way through complete imaging solutions. I'll share some context on this transformation, discuss some of our programs driving the growth, and the acquisition of AMI, Amorphous Materials.

At the core of our platform is Black Diamond, our proprietary chalcogenide glass licensed exclusively from U.S. Naval Research Laboratories as a domestic, supply chain secure alternative to germanium for infrared imaging. This positions us securely within the fiscal year 2026 National Defense Authorization Act, NDAA, which mandates elimination of U.S. defense reliance on optical glass, components and systems sourced from Russia, China, and other covered nations no later than January 1, 2030.

With defense acquisition time lines already requiring action in the near-term, our optical assemblies, infrared cameras and thermal imaging systems are designed, manufactured and delivered in full alignment with these requirements. We believe we are positioned as a supplier of choice for mission-critical defense and aerospace applications.

It has been about a year since our acquisition of G5 Infrared, the producer of the industry's leading long-range infrared cameras for surveillance and counter-UAS. The G5 acquisition is a prime example for us leveraging a unique differentiator, in this case our germanium alternatives, to enable the acquired company to do more than they could do alone. Far more, in this case. Since we acquired G5 a year ago, G5 has booked more than $80 million of new orders for their products, compared to $15 million of revenue the prior year. Some of it is because they were at the right place at the right time, such as border patrol spending, counter-UAS solutions, and more.

And part of it is because under LightPath, using the Black Diamond materials, we enable G5 to be able to execute far better than anyone else out there because we have a secured, vertically integrated supply chain. To date, we have publicly announced the redesign of only 2 of their cameras, but with the acquisition of Amorphous Materials, we can now complete the remaining redesigns and soon make all of G5 cameras using Black Diamond.

So let's talk a bit about the acquisition of Amorphous Materials, an industrial manufacturer of complementary chalcogenide glass melting technologies. In particular, for large diameter optics. Amorphous is a more than 50-year-old company with a strong industry reputation, founded by Dr. Ray Hilton Sr., who was considered one of the pioneers in the commercialization of chalcogenide glass. He also wrote the leading book about chalcogenide glass.

The significance of large diameter Black Diamond lenses is significant. In the world of optics, the further distance you want to detect an object, the larger the optics needs to be. Cameras or devices for relatively short distances, such as hundreds of meters, have optics that are between 1 inch to 5 inches in diameter. That is plenty of size for applications such as close-range security, firefighting cameras, gun sights and so on.

If now one wants to detect objects that are kilometers or miles away, the size of the optics grows. For example, G5 long-range cameras, the most long-range ones, have lenses that are as much as 250 millimeters, or 10 inches in diameter. If now you want to detect from space, say, a missile launch, the size of the optics needs to grow even larger. This is partially why some of the larger detection satellites can be the size of a small bus.

Until this acquisition, LightPath was melting its glass in the shape of a cylinder, 5 inches in diameter. Using some additional techniques, we've been able to turn that glass into 6 inches of optics. But not the sizes needed for most of our G5 most higher-end cameras, and definitely not the size needed for satellite cameras. Amorphous Materials, which we just acquired, melts the glass using a somewhat different technology. That technology, which we can easily and are easily adapting for use in our Black Diamond glass, can melt the glass at sizes of 10 inches, and with some additional processing can reach sizes of 17 inches.

Why is this a big deal? Well, first of all, our own G5 cameras, a significant part of our growth driver. The most, most higher-end cameras, or the longest range cameras if you would, used primarily for drone detection, have lenses that are as much as 10 inches in diameter. Until now, we could redesign only the smaller cameras to use Black Diamond. Now, we're full steam ahead at redesigning all of their cameras. And by the autumn time, we expect to have G5 cameras to be using Black Diamond instead of germanium, all of their cameras. We expect to be able to make as many long-range cameras as the market can take. So while our competitors are still struggling to find a solution for germanium situation, we will be able to make as many cameras as we want.

Second, this ability to make large diameter Black Diamond now opens the door to any application of long-range imaging. Think about airborne gimbals and pods. Think ground-based imaging systems and so on. And most importantly, space. The U.S. government, through different agencies and programs, primarily the Golden Dome program, is going to launch dozens, if not hundreds of satellites for missile tracking and detection.

Let's take one example of such recent award, all public information, to demonstrate the potential magnitude of this. SDA, Space Development Agency, awarded in December $3.5 billion to build 72 tracking layer satellites. Those are all based on infrared cameras. Public information, which one can easily look up. That is $48 million per satellite. While we see the satellites as primarily a camera, they do more than that. And so the infrared camera system typically is about a 1/3 of the overall cost of the satellite. So that is $16 million per satellite. This includes a complex sensor system, as well as other things. But from our point of view, most importantly, is an optical system. That optical system, oftentimes referred to as a telescope, is a pretty complex system that includes, well, you guessed it, large diameter optics. So until now, Black Diamond was not even considered for use in those applications. And even though it has incredible properties suited just for that use case in terms of thermal behavior and such.

So we had a couple of space-related programs in our category of potential $10-plus million programs. But those were small. Definitely small compared to what we're facing now. Now we get to play a major role in this. So couple that with SDA's very recent announcement, I think last week, for a constellation of 300 to 500 satellites in low Earth orbit, and satellites in low Earth orbit have a fairly short lifespan, and this is, as they say, a whole new ballgame for us.

However, a word of caution. Satellite development takes time. The government works in 2-year tranches. Which means the next designs, the ones we plan to be part of, are not going to go out for at least another 2 years. So this is a huge potential for us, but it's not immediate.

Now I would be remiss if I told you that this is the only reason for the acquisition. There is more. Until 3 weeks ago, before we did the acquisition, LightPath was producing glass only in one location, in Orlando, Florida. And we were potentially one hurricane away from a significant downtime in glass production. Now we have 2 manufacturing locations for Black Diamond. We're going to duplicate between Orlando and Amorphous facility in Texas all operations.

Also until 3 weeks ago, we kept adding and adding capacity in Orlando. With this acquisition, we get another 50% boost to capacity. And ability to add more in a more cost-effective manner. And last, until 3 weeks ago, we might have been worried about significant competition popping up. But now, we acquired and own some of the most innovative and best teams capable for glass technologies in the U.S. And so while the acquisition as a stand-alone might only look like $3 million in annual revenue, this is a significant acquisition in more ways than meets the eyes.

Okay. Other things in the quarter. Prior to the acquisition, and a few weeks before the quarter ended, we completed a secondary raise in the market. We went out to raise $40 million. We received offers that were significantly, significantly more than that. And so we ended up increasing the size to $60 million, which together with the greenshoe option that the banks immediately exercised, ended up with approximately $65 million in net proceeds.

The purpose of the raise is for investments in our future. LightPath is not burning cash in operation. And we do not raise money to burn it in the operation. This quarter we're reporting on is in fact the second consecutive quarter of positive adjusted EBITDA. And with a net cash flow from operations being positive again. So the raise is really about growth and investments.

As we have outlined before, we have a very specific strategy when it comes to decisions on investments and acquisitions. The bottom line is that we have a very unique technology, set of technologies, and we believe that we are well positioned to leverage those to capture some significant market share on the subsystem and system level. However, that window of opportunity is not infinite. And while we always continue to develop more differentiators, competition keeps working, and they will catch up on our older differentiators at some point, while we add new differentiators, and so on and so on.

So we have a window of approximately, we think, 3 years, maybe 3 to 4 years, in which we can grab a significant market share and position the company as a dominant player in our field. Given the compressed time frame, we cannot do this purely through organic growth and through investing only the cash we generate, as much as I would prefer it that way. We need to accelerate some of those activities to make a real dent in that time frame. Hence the war chest of cash, and the plans to use it. I will emphasize again, this is not about operations, or burning cash in operations, or anything like that. But rather a very calculated set of investments and M&A opportunities in the near future.

So now strategy and direction. In the short-term, we have some very large programs we're working on. We have the Lockheed Martin missile programs that is moving along well. And Lockheed Martin, our customer for the subsystems we make, has announced earlier, or last month actually, a successful flight test. While I would love to be able to share more information, we are at this point, as we recently mentioned, confined to sharing only what our customers share publicly. So nothing else on this, other than us continuing to be pleased with the progress.

Multiple other programs such as border towers, Navy SPEIR, and others are progressing. Some might be slower than we want, some might be faster. But pretty much on track. Overall, we're doing pretty well there. We continue to work also on our second tier of programs, the ones we said have $10 million potential or more a year. Those continue -- we continue to add to those. Just last month, we had another program become join that club, and now a ninth program that has a potential of $10 million or more.

Other developments that we had last quarter include Congress passing the National Defense Authorization Act, NDAA, which included this year a requirement for Department of War to stop using any optics, components, or even glass originating from certain nations, including China. This of course plays very well to our position as the largest manufacturer of infrared glass in the U.S. As well as our realignment of the organization over the last few years away from China and back to manufacturing in the U.S. So together with our Black Diamond, and now also the AMTIR portfolio of glasses from Amorphous Materials, all of which are produced in the U.S. and therefore NDAA compliant. So we actually don't need to do anything new to comply with this, other than continue investing in glass production.

Also last quarter, the FCC, Federal Communication Commission, issued a new ruling that everyone expected. But everyone expected that to be a ban about drones made by DJI, actually commonly referred to as the DJI ban. Or at most it to be in general about Chinese drones. The FCC however took this a few steps further. And added to the FCC covered list all drones and critical components used in any country outside the U.S., ally or not. Critical components is defined by Defense Contract Management Agency. And it includes, as you guessed, cameras and sensors.

So this was a surprise to us. A very positive surprise, but yet a surprise. So in terms of how this impacts us, there are two aspects. The first is the simplest one. And that is optical assemblies. We already produce optical assemblies here in the U.S., NDAA compliant and now FCC compliant, and many of those are already used on drones. So for that part we're well aligned and prepared. Check.

Second part is cameras. To that extent, we're still evaluating what role we want or can play in the drone side of cameras. Other than the optics of course. There are clearly some opportunities in providing cameras for the larger drones. But we also need to evaluate whether, or what, we want to do in the area of FPV drones, those are the one-directional cheaper drones. The price targets there are very aggressive, and it's not entirely certain what the direction will be there. But we're looking into that, so stay tuned to some news there.

So in summary, first step of our transformation I can say is now complete, and very well. We have moved from components to systems. And from commoditized supply to strategic technology leadership. We're replacing constraint, China-linked materials with a domestic, scalable and proprietary alternative. And we're 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.

Our next phase, which includes now rapid scaling over the next 3 years, is beginning. And will be aided by our war chest of capital, and will build on what we have done so far, to win significant market share. I will be discussing that, and more during our virtual Investor Day webcast in a couple of weeks.

Now, I'd like to turn the call over to our CFO, Al Miranda, to talk about second quarter fiscal 2026 financial results. All yours, Al.

Thank you, Sam. I'll keep my review to succinct highlights 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-Q for the period. I encourage you to visit our Investor Relations webpage to access these documents.

Revenue for this second quarter of fiscal 2026 increased 120% to $16.4 million, as compared to $7.4 million in the same year-ago quarter. Sales of infrared components were $5 million or 31%. Revenue from visible components was $3.4 million or 21%. Revenue from assemblies and modules were $7.2 million or 44% of consolidated revenue. Revenue from engineering services was $0.7 million or 4%. Although G5 was the largest contributor to the revenue increase, our revenue from legacy LightPath business also grew substantially quarter-over-quarter.

Gross profit increased 212% to $6 million, or 37% of total revenues in the second quarter of 2026, as compared to $1.9 million or 26% of total revenues in the same year-ago quarter. The increase in gross margin as a percentage of revenue is primarily driven by the increase in revenue from assemblies and modules, cameras, which generally have higher margins. Gross margin on engineering services was also much more favorable in the second quarter due to a non-recurring engineering project for a defense contractor. In addition, gross margins for infrared components have improved due to a more favorable mix and the resolution of certain manufacturing issues that negatively impacted the second quarter of the prior fiscal 2025.

Operating expenses for the second quarter of fiscal 2026 was $14.6 million, up from $4.4 million in Q2 of fiscal 2025. An increase of $10.2 million. Of that $10.2 million increase, $7.6 million relates to the quarterly fair value adjustment of the G5 earn-out liability. The quarterly adjustment will continue through Q3 of fiscal 2027 when the earn-out period ends.

Excluding the $7.6 million earn-out revaluation, the underlying operating expense increase was $2.6 million, or 60% compared to last year's second quarter. This results in a normalized operating expense of $7.1 million for Q2 fiscal 2026 versus $4.4 million in the prior year period. The $2.6 million year-over-year increase primarily reflects the integration of G5 following its acquisition, G5's operating expenses, M&A costs related to Amorphous, higher sales and marketing spending, additional corporate expenses, and increased personnel costs driven by key executive vacancies that are now being filled.

Net loss in the second quarter of fiscal 2026 totaled $9.4 million, or $0.20 per basic and diluted share, as compared to $2.6 million, or $0.07 per basic and diluted share in the same year-ago quarter. The year-over-year increase in net loss for the second quarter of fiscal 2026 was primarily attributable to the change in fair value of the acquisition liabilities of $7.6 million for the earn-out related to the acquisition of G5. Excluding the earn-out adjustment, the net loss for Q2 fiscal year '26 would have been $1.8 million, an improvement from the prior fiscal year Q2.

Adjusted EBITDA for the second quarter of fiscal 2026 was $0.6 million positive, compared to an adjusted EBITDA loss of $1.3 million for the same year-ago quarter. Although not perfect, we believe that the adjusted EBITDA is a better indicator of core operating performance by excluding noncore, noncash items. With all of the interesting accounting around acquisitions, we will continue to report adjusted EBITDA in fiscal year 2026 and in 2027 as a helpful measure of financial success.

Cash and cash equivalents as of December 31, 2025 totaled $73.6 million, as compared to $4.9 million as of June 30, 2025, reflecting our successful capital raise in the second quarter.

Sam mentioned that the use of cash is very calculated and strategic. We've established plans, time lines, milestones, and returns on cash for the initiatives Sam mentions and others. These planned investments are focused on revenue generating activities in the short- and mid-term, while still maintaining a war chest for future opportunities.

In Q2, we also paid the acquisition notes of $5.4 million in full. And as of December 31, 2025, total debt stood at $0.8 million. Backlog totaled $97.8 million.

We are pleased with the progress of the financials this quarter. We don't give guidance, but we do set targets for ourselves, and we've given indications to the investment community that the financials are and will improve gradually in the near-term. Q2 is a good moment to share a little more. Internally, we planned on gross margin at or above 35% by Q4, EBITDA positive by Q2, and operating cash flow positive by Q3. We achieved those targets one or 2 quarters earlier than planned. So it's a good moment to reflect on where we are and our progress.

That said, we are by no means done. Looking forward, we have a detailed operating growth plan that is segregated into three components. These components support the strategy that Sam mentioned. First, continued support of our existing business. Second, invest on our already known and identified growth opportunities, much of which you already know from these earnings calls and from our investor presentation. And in three, investments in new business. These are things that are not yet known.

The operating growth plan is an 18-to-24-month plan for resource allocation to meet current backlog deliveries and be prepared for the expected new revenue growth. The vast majority of cash, CapEx, and human resources are pointed at the substantial growth opportunities while smaller amounts of resources are allocated for our existing business growth. The approach allows us to match resources to opportunities that are close in time and have better returns. This may mean investing now for revenue in future quarters, but the return on the investment in the mid-term justifies the business initiatives.

In all, we are well positioned to execute on our growth plan. With that, turn the call back to Sam for some closing remarks.

Thanks. A few short closing remarks and then Q&A. So thanks again for everyone to join us. We are now in an execution mode. The deepest transformation is largely behind us. We've moved from component to system, leveraging our proprietary material and other technologies, and have built a vertically integrated platform aligned with where the defense procurement is heading. The results this quarter reflects that shift. Revenue up 120%, gross margins at 37%, backlog around $100 million, 2/3 of which is higher margin systems and subsystems.

Our near-term priorities are clear. Deliver on schedule at quality. Expand our germanium alternative product variants across the G5 portfolio. And convert backlog to revenue while protecting margins. Capital raise gives us the resources to add capacity and personnel as needed, as well as evaluate potential strategic M&A. Between border surveillance, Counter UAS, Naval programs like SPEIR, and the missile programs we have with Lockheed or plural missiles programs, we have multiple paths to material revenue growth over the next several years. All supported by a technology and supply chain position that competitors cannot easily replicate.

With that, I'll turn the call over to begin the Q&A. Operator?

[Operator Instructions] Our first question is from Austin Moeller with Canaccord Genuity.

Great quarter. So just my first question here. I was just looking at the 10-Q and sales to Europe were significantly greater this quarter. Is that due to one specific customer? Is that due to NATO spending in your facility in Latvia and is that specifically camera products like the G5?

So it's the latter. It's NATO spending in defense in Europe and Israel, by the way, which we couple under Europe here. These are not yet camera systems. So we currently are not selling the camera systems out of Europe. Or unless, Al, this does include G5 shipments to Europe? Sorry.

Yes, so some of it does come back to the U.S. We lose trail of it. So it does go to the U.K. It does go through the European market, but some of it comes back to the U.S. and unfortunately, we don't have that see-through data for the cameras that are coming back into the U.S.

Okay. And just as a follow-up. So you talked a little bit about the opportunity to make up to 17-inch diameter Black Diamond lenses and going after Golden Dome and military ISR. Are you also looking at building the lenses for optical inter-satellite links?

Yes, we do that already. We have quite a good business of free space optical communication between satellites. I think a pretty dominant position in that market. And that actually continues to grow. It's -- I think we're right in discussion with the customer about increasing capacity for that quite a bit. It's a different type of lenses. Those are much smaller lenses and it's more our classical molded optics business.

Our next question is from Richard Shannon with Craig-Hallum.

Congratulations on your great progress here recently. Apologies here, I am on the road today and got onto the call late. But Sam, the first question is really what I heard part of as I was jumping in the line here and you're talking about a 3-year window. I'm going to have to ask you to repeat that. I want to hear the whole story and I'm sure I'll have a follow-on to this. But seems like a fairly important dynamic of what you're building towards here. So if you can go into that, that'd be great, please.

Yes. I mean, one needs to assume that differentiators hardly ever last forever. And so in my view, differentiators is something we need to continue to add on and innovate and acquire or develop. But the current differentiator, we have a window of opportunity where everyone is struggling with germanium. We have our solutions and right now puts us at an incredible place. I am sure no one -- people aren't sitting back and just accepting it. And there's some work elsewhere to either develop other materials or develop other supply chains for germanium. And while our materials still outperform germanium in many of the cases, there are going to be some customers that will be more competitive with us once they have supply of Germanium. And I expect that to be no earlier than 3 years, probably 5 years. So to be on the cautious side, I'm saying a 3-year window in which we really have the runway to go out and capture significant market.

Now the beautiful thing about defense is once you're in, you're in. So in this 3 years programs we win, we're going to be in them for the lifetime of programs. And once people start using and seeing the differentiation and the quality of our material, they're not going to go back to germanium as easily. But no advantage is forever. So we need to be aware of that and just prepare accordingly.

Okay. Well, that's a very helpful way to understand and couch that. Maybe taking that understanding here and also using some wording that Al used about directing your resources here. Obviously, you have -- that's creating a level of urgency, which I'm sure was already there anyway, but trying to make sure that you capture all these opportunities while you have the advantage. Where are you pointing these resources? Where do you have most constraints, both in materials systems in terms of manufacturing capacity, partnerships, head count, whatever. Where are you most worried? What's your greatest focus? What's your longest term, your longest poles in the tent you're working rapidly towards solving?

I would say capacity and product development. So product development is a certain type of investment that obviously is a bit more impactful on the P&L than it is on the balance sheet and such. And is more of a acceleration to try and capture as much as we can in terms of products. So G5 has a great position in the long-range imaging. We want to capture more than that. It's probably down the road.

And in terms of capacity, it's pretty much across the board. But glass has been a constraint and we've been adding a lot as we've been saying. And through the acquisition, it lets us add more. And will continue to add. And then assembly and fabrication, different areas, but those, it's more of a one-time sort of catch up I think rather than big spending over the years.

Al, anything to add to that?

I would just say we knew this was coming and we're as prepared as we can be for it.

Okay. Fair enough. Maybe my last question, I'll jump out of line here. And I don't know if you addressed this before I got on the call here, but obviously you've been moving towards converting all of your relevant cameras and subsystems and whatever to Black Diamond. And I know you talked about your first camera in the G5 portfolio last quarter here. You have any more conversions you've talked about and what's kind of the plan here or kind of the time frame by which you can convert all of the relevant cameras over to this -- over to Black Diamond? How long is that going to take you to do that?

I think within this calendar year for sure. We're targeting much sooner than that, but let's say by the autumn is our goal or end of the autumn.

Our next question is from Jaeson Schmidt with Lake Street Capital Markets.

Looking at the Amorphous acquisition, just curious if you could discuss some of the programs they were in and then how you're thinking about the ability to kind of scale that $3 million run rate that they had?

Yes. So Amorphous has really one main customer, a large defense prime that accounts to, I can't remember exactly, probably 80% of their revenue give or take. And that is with 2 major airborne platforms that they're on. I don't want to speak out of line, but I think that on the Amorphous website, which is still up and running, there's some references to which programs so someone can go there and just find it so, I don't give away information I'm not supposed to give.

But Amorphous has always only provided material. Brilliant people, incredible team which we love and enjoy working with, and incredible capabilities in the material science, but it sort of stops there. So you take those and you add the -- all the value adds that LightPath have. So we can fabricate components from it. We can mold lenses. So chalcogenide, one of the advantages of these materials is they can be molded. But no one has been molding the Amorphous AMTIR materials. So we can mold them. We can coat them. We can use them in assemblies. So we're sort of opening up the range of offerings by Amorphous to their customers significantly more. And there will also be some situation in which we might use some Amorphous materials in our systems, but that is less likely. We -- the Black Diamond tends to be a better fit for us.

Okay. That's helpful. And then just looking at gross margin, understanding the dynamics on the strength in December, how should we be thinking about the March quarter here?

So we had some favorable events. The engineering contract was a very high margin contract and so that was favorable and unusual. I look at it this way, Jaeson. On a year-to-date basis, we're at 33%. We've been signaling and I even said it that 35% is our goal. So I think if we stay there, we're pretty safe.

Okay. That's helpful. And then the last one for me and I'll jump back in the queue. Obviously really impressive top line in December. Were you at all impacted by the government shutdown though?

No. No. Yes. I don't think so. No.

Our next question is from Jon Hickman with Ladenburg Thalmann.

My question's basically been answered, except I was wondering if you could give us some kind of sense of what the cost difference is to a customer of a 5 millimeter Black Diamond lens versus a 15. So if I'm a customer...

So a cost difference to the...

Yes, for the lens what do I have to -- what's the cost differential to that?

I don't know the numbers off the top of my head, but it's sort of, obviously there's a material difference cost. But what comes into play when you go from something like 5 to 15 in diameter is how many lenses can fit in a coating chamber. So a coating chamber is a fixed cost and it costs, say, $5,000 to run a coating. And so if you have 5 millimeter lenses, you have a boatload of them inside the chamber. If you have 15 millimeter lenses, you have far less, a 1/3 of the amount. And so you have the cost of the coating go up.

Okay. That's helpful. Congratulations on the quarter.

This concludes our question-and-answer session. I'd now like to turn the call back over to Mr. Sam Rubin for his closing remarks.

Okay. I guess my second closing remarks. Yes, so to summarize where we stand, we have completed transformation from component to vertically integrated system companies. Yet another record backlog and a record revenue quarter, keep breaking the records, which is nice. We have a well-capitalized balance sheet now, strong technology position, very good positioning in terms of the NDAA deadline and the FCC ruling. And really now it's about execution. So shipping products on time, converting backlog to revenue, expanding margin and improving bottom line.

So thank you everybody, looking forward to speaking to you next quarter or for those that will be joining us on our virtual investor day call in 2 weeks' time. Thank you and good night.

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

Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to LightPath Technologies Fiscal First Quarter 2026 Earnings Conference Call. [Operator Instructions] This conference is being recorded today, November 11, 2025, and the earnings press release accompanying this conference call was issued after the market close today. I'd like 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 could be no assurances that the projected results will be realized.

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 of our press releases, which include reconciliations of non-GAAP financial measures and associated disclaimers. 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 will be a formal question-and-answer session.

I would now like to turn the conference over to CEO, Sam Rubin. Sam, the floor is yours.

Thank you, operator. Good afternoon to everyone, and welcome to another exciting quarterly update from LightPath Technology (sic) [ Technologies ] for our fiscal first quarter 2026 financial results. LightPath 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.

The progress we have made is reflected in record orders, a growing systems backlog and increased customer adoption of our technologies. Since we likely have a growing base of shareholders and with them likely more new listeners on this call, I will take some time to describe where we have come from, which will help put in context the recent developments. Then I will talk about specific programs that are driving our record backlog, the strategic investment from Ondas and Unusual Machines and upcoming growth drivers. For decades, LightPath was known primarily for its precision optical components. As 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, 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 more of the value we create.

At the center of this strategy is our proprietary BlackDiamond chalcogenide glass, which we licensed exclusively from the U.S. Naval Research Laboratory as a domestic alternative for germanium for use in infrared imaging. BlackDiamond 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. By pairing this material leadership with the advanced infrared camera technologies gained through acquisitions of G5 Infrared and Visimid Technologies, LightPath has become the only pure-play company offering fully integrated infrared systems designed and manufactured in the West. LightPath has a sweet spot of going into subsystems or small systems, which we often call engineered solutions.

Those do not require a large infrastructure of service and support as full systems do, but still allow us to capture much more value. The combination of LightPath's materials and optics with our recently acquired subsidiary of G5 Infrared is an -- which is an industry-leading in cameras is a case in point. G5 is known as the industry leader for long-range infrared cameras. That was the case before we acquired them, not something we created. But like all of their competitors, G5 was facing supply chain challenges due to global geopolitics and primarily germanium and gallium, which are critical materials in their systems. After acquiring G5 in conjunction with their team, we begun an effort to redesign those systems to use our proprietary BlackDiamond materials.

By doing so, we are positioning ourselves now not only as offering the best cameras, but as the most reliable provider of cameras with supply chain resiliency that no one else can offer. And in August, we introduced the first germanium-free G5 camera variant, utilizing our BlackDiamond glass. These redesigned systems 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. Around the same time, we announced 2 significant orders from our -- for our advanced infrared cameras, an $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.

Combined, these represent more than $40 million in contracted revenue, reflecting both the strength of the underlying demand and the growing confidence in our ability to deliver. G5 is a prime example of the value that we can derive from thoughtful acquisitions being on track to double in size since the acquisition with several strategic benefits such as the implementation of BlackDiamond and their cameras. Visimid was another fantastic example, bringing us the NGSRI 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 in our arsenal going forward. And when we acquire a company, the resulting value is often far, far more than the sum of the past.

Last quarter, we also announced a strategic $8 million equity investment from Ondas Holdings and Unusual Machines during the quarter, 2 key partners driving the domestic drone ecosystem. Their investments are intended to help accelerate our commercialization road map, particularly focusing around uncooled infrared solutions for drone applications. 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. Altogether, these developments have driven our backlog to approximately $90 million, more than 4x 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. Mix shift towards systems not only expands our margins, but also deepens our relationship with customers who rely on LightPath for critical capabilities and supply assurance.

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. Several programs continue to anchor our short term -- our near-term growth. Border surveillance and counter-UAS applications, our long-range zoom cameras are being deployed -- where our long-range zoom cameras are being deployed across a wide variety of platforms, including mobile and stationary systems, and stationary systems designed to detect, classify and track threats. In fact, more than $15 million of our current backlog is for counter-UAS applications.

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. With prices of $150,000 to $250,000 per camera, one camera goes on each border tower and LightPath servicing 2 of the 3 border tower vendors, this could be an extremely material business for us in the coming 2 to 3 years. In the naval domain, the U.S. Navy's SPEIR program for which we supply key infrared cameras to L3Harris is advancing towards low rate initial production, positioning us for long-term revenue streams as the system is installed across surface vessels.

Also, our collaboration with Lockheed Martin on the next-generation Stinger replacement initiative 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 million to $100 million of annual revenue while in full rate production. Beyond those 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 in thermal cameras and drone payloads. 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, also based on our BlackDiamond glass technology.

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 holds. Looking at our Texas 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 NGSRI program, which we continue to be very bullish about. In parallel, in Orlando, we are adding capacity for additional BlackDiamond glass manufacturing as well as for the first time, building, integrating and testing complete G5 cameras in Orlando, supporting the robust demand growth G5 is realizing. To oversee this, we've appointed Israel Piergiovanni as Vice President of Manufacturing, a former Luminar manufacturing veteran, who will oversee the production scale-up across our global footprint. We also recently strengthened our corporate governance with the appointment of Mark Caylor 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.

He recently retired as President of Northrop Grumman Mission Systems sector, a supplier of advanced sensing, processing and communication technologies for defense and intelligent customers with operations in U.S. and Europe. His guidance, leveraging an extensive background across government, military, private and public sectors and the relationships on the side of the defense primes will help guide our vision forward.

In summary, the transformation of LightPath is now well underway. We are moving from components to systems and from commoditized supply to strategic technology leadership. We are replacing constrained China-linked materials with domestic scalable and proprietary alternatives. And we are converting that differentiation into multiyear contracts, strategic investments and long-term relationships with some of the most sophisticated defense and industrial customers in the world. 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 expanding profitability. The strategic work over the past several years is now delivering tangible assets, and we expect it to continue momentum through fiscal 2026 and beyond.

Now I'd like to turn the call over to our CFO, Al Miranda, to talk about our first quarter fiscal 2026 financial results. Al, please go ahead.

Thank you, Sam. I'll keep my review to a succinct highlight 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-Q for the period. I encourage you to visit our Investor Relations web page to access these documents.

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. 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. 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 as compared to $2.8 million or 34% of total revenues in the same year ago quarter.

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 that had 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. 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. Net loss in the first quarter of fiscal 2026 totaled $2.9 million or $0.07 per basic and diluted share as compared to $1.6 million or $0.04 per basic and diluted share in the same quarter of the prior fiscal year.

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 noncore noncash items. Cash and cash equivalents as of September 30, 2025, totaled $11.5 million as compared to $4.9 million as of June 30, 2025. As of September 30, 2025, total debt stood at $5.6 million and backlog totaled $86 million.

Looking forward, our focus for fiscal year 2026 supports the business opportunities that Sam described. We have a detailed go-to-market strategy that we are funding to target key high-growth areas. Our prior year investments in manufacturing are bearing fruit in terms of quality and on-time delivery. And in the coming quarters, I expect we'll 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 as a helpful measure of financial success.

Also, as Sam noted, we recently secured an $8 million strategic investment from Ondas Holdings and Unusual Machines at $5 per share. We are truly fortunate with the quality of investors in the company and Ondas and Unusual Machines are not only a continuation of quality investors, but in addition, they are a great strategic fit.

With that, I will turn the call back to Sam.

Thank you. Thank you, everyone, for joining us today. Before we move on to Q&A, just some closing remarks. We're entering the next phase of execution and growth. The G5 integration is progressing. Our record backlog provides visibility, and we're scaling production to meet demand across defense, public safety and industrial end markets. Our BlackDiamond glass strategy is moving customers off germanium, improving supply assurance and total system value. The strategic investment we received from Ondas and Unusual Machines supports increased capacity, focused hiring and the tools we need to deliver reliability at scale.

We see a real inflection point ahead as our mix continues to shift from components to higher-value systems and subsystems. The priorities are clear for the coming quarters, ship on time at quality, expand germanium-free product variants, harden the supply chain and convert the backlog into revenue at a healthy margin profile. With the team additions we have made in various manufacturing and engineering, we're set up to execute against a robust multiyear opportunity set. With a differentiated technology position and strong customer engagement, we're 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 questions -- session. Operator?

[Operator Instructions] Our first question is from Richard Shannon with Craig-Hallum.

Congrats on a very nice quarter. Audio on my end here is a little tight or a little dicey. So hopefully, it's okay for you there. With that said, I'll start with my first question here. I wanted to ask about germanium and BlackDiamond glass. It seems some reports that maybe China is opening up the window for acquisition of germanium outside the country. I wanted to see if you're seeing that and whether there's any different reaction or approach to germanium given that? And then also maybe as a follow-on here, maybe you can talk to us about how fast you're converting your portfolio of cameras and subassemblies to BlackDiamond and how fast you expect the customers to transition there?

Yes. Thank you. So the germanium 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 germanium to our BlackDiamond or is in the process too, including a key customer that was just visiting here yesterday, mentioned that from their point of view, the disruption in supply chain was so big that they will not take a chance to gain with that.

And so we believe that people burnt once, so obviously, far more careful. And even if China makes the material available now, everyone understands that the faucet could close at any point in time, at any moment, notice. And so people are already very, very careful. Additionally, I'll just emphasize again that our materials perform far better than germanium in many, many use cases. And so our struggle has always been convincing customers, getting them to the point of redesigning to use our materials instead of germanium because once they did, the performance is much better, lighter, smaller systems, better throughput, you name it, lots of different reasons.

So absolutely, germanium is still needed in many places. And there's a room for both materials to coexist. But from what we can tell, most customers that have been switching over to BlackDiamond will remain in BlackDiamond even if the material is freely available [ there ]. 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 backlogs we have comes also some engineering work and some modifications and so on, which oftentimes happen to overlap with the same resources that would redesign cameras.

So I think our team is nearly done with one more redesign and working on some others. But 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.

Okay. That is helpful to hear. Maybe just addressing the supply chain resiliency and capacity. You mentioned a couple of dynamics specifically 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?

Yes, 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 was sort of what LightPath used to do until a few years ago. Everywhere else, we need to add capacity. So 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 are making the focal plane arrays that go into cameras. Some of them depend on germanium. And we work towards them to either replace the germanium or solve some of their problems. 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 our vendors for the focal plane array when needed. But other than the focal plane array, pretty much everything else is vertically integrated and we control internally [ for every key element ].

Okay. Perfect. Good to hear. Maybe 1 or 2 quick numbers questions, and I'll jump out of line here. I guess September quarter results your 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 in the December quarter would be a great help here. And then how do we think about the EBITDA follow-through on that as well?

So 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. 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.

Okay, perfect. Guys, I will jump out of line. Congratulations. Keep up the good work.

Our next question is from Glenn Mattson with Ladenburg Thalmann.

Sam, I think in the past, you said that NGSRI would be like potentially a fall of 2025 award or maybe first Q calendar '26. Is that still your expectation? And I guess in the second quarter that you talked about the 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 would be helpful as well.

Sure. So nothing has changed other than the government shutdown continues. So any time line related to anything government is up into the air. There was hopes that early fall or in fall 2025, there will be a down selection. However, quoting just what is said publicly in different publications, Lockheed has been ready for flight tests and Raytheon was saying that it would be in late November or December that their units will be ready for flight tests. So this was said publicly and by both companies. So clearly, a down selection cannot happen if both units aren't ready for full testing yet. We are making that investment in conjunction with our customer with Lockheed Martin for a few reasons.

One, they're very, very bullish about this and so are we. Secondly, these systems or what we'll be building there can be and is used in more programs other than just NGSRI. And actually, in Lockheed, we're already in a few -- a couple of other programs that are needed. 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 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 the award.

Yes. Makes sense. On the gross margin, Al, 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 just perhaps maybe it could have been even stronger this quarter or with the 2/3 backlog in systems and modules, maybe just directionally, can you remind us of where you think that's going medium and long term?

Yes. So 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. 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. So 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 pretty satisfied where we are at Q1.

Okay. And the last thing for me is a couple of times in the call, you mentioned scaling operations and I just wonder what that means in terms of OpEx. If you're trying to signal some increased investment there.

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 '26. 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 it's not -- we don't 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, systems, subsystems, those workstations and work lines are 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. And we are going to rationalize the footprint in the United States. We're going to move things around a little bit to maximize the entire footprint on the assembly modules and systems.

[Operator Instructions] Our next question is from Jaeson Schmidt with Lake Street Capital Markets.

Sam, I just want to follow up on your comment on these $10 million-plus annual revenue opportunities. Curious how many of these sort of 8-figure deals you have in the pipeline?

That's a great question. I need my fingers now to count them. But I'd say probably about 7 now. 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. The counter-UAS, I expect that to grow quite a bit. And we are at least in 2 different counter-UAS programs. Only one of them is currently in the backlog. So I'd say 7 or 8 programs like that.

Okay. That's helpful. And then 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?

I don't think so. I don't think so. The way we modeled it out, it should not be. We should still see -- we should see improvement in margins.

And then just the last one for me, and I'll jump back into queue. Looking at that backlog number, obviously, really impressive. I think at one point, G5 was about 2/3 of that backlog. Is that still the case?

Pretty much, I think. I mean there's ebbs and flows and it comes up and down. And I think G5 [ partners ] pushing product out much more aggressively now. So -- but still about 2/3, yes.

Our next question is from Orin Hirschman with AIGH Investment.

Congratulations on another quarter of tremendous progress.

Thank you.

[ Let's see ]. Going back to the question on those other potential awards of decent size awards. Can you just go back and just what's -- go through what's really driving it? Is it the long-range infrared cameras? What are behind most of those deals if there is -- if there are 1 or 2 trends that are noticeable?

Yes. Most of them are around the BlackDiamond glass. So whether it's [ patchy ] program or whether it's additional defense airborne program that we recently talked about, all of them are around the uniqueness of the BlackDiamond glass, not even replacing germanium, but just improving -- drastically improving the performance of existing systems. 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 we're seeing that come to fruition now.

Others that are a bit earlier stage -- 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. And then 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.

In terms of the long-range cameras for spotting drones and UAS, is there any other technology that's crept up that could spot them from the same distance or without -- without using -- without having to use frequency -- radio frequency?

So even if you can use radio frequency, you still need the visual part for validation. So 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. So a visual validation has -- is becoming a must 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'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 the thermal cameras 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.

The question I never asked you as a 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 it down?

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 optical assembly side, but not on cameras. Cameras currently all go to integrators. They could be defense primes like Lockheed Martin, Raytheon, Booz and Co -- Booz Allen. They could be much smaller companies that are integrating. It 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.

Just 2 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 it actually has to do the calculations and help in terms of the countermeasure that's being done?

Yes, absolutely. Systems are integrated into pan-tilts or moving controls that are then tracking the drone. And oftentimes, from the data you collect from the camera, there's quite a bit of calculations you can do. Simplest is 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. And our customers, the integrators do exactly that.

Okay. And 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?

Yes. We have 2 more missile programs that our technology is being integrated into.

Are those actually clear that those programs are going to go into production? Have you talked about those programs?

No, it's a bit -- they're much earlier on than the NGSRI program. But on the other hand, we don't -- the last 2 years in which we spent developing a product that passes all environmental and [ G-Force ] acceleration and all of that, that's behind us. So now we come to every -- 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.

One last question, if I may, just a housekeeping question. Is there -- do you happen to have handy a non-GAAP OpEx number pulling out the acquisition-related charges?

No, we don't. We don't.

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.