Financial Data and Key Metrics Changes - Total revenues for Q3 2025 were $12 million, down from $13.3 million in the prior year [19] - Product revenues decreased to $10.7 million from $10.9 million in Q3 2024, primarily due to a decline in revenues from pilot helmets and training products [20] - Net income for Q3 2025 was $4.1 million, or $0.02 per share, compared to a net loss of $3.5 million, or $0.03 per share for Q3 2024 [21] Business Line Data and Key Metrics Changes - Funded research and development revenues decreased to $1.2 million from $2.3 million in Q3 2024, mainly due to project completion timing [20] - Cost of product revenue was $8.4 million, or 79% of net product revenues, compared to $8.3 million, or 76% of net product revenues in the previous year [20] - R&D expenses for Q3 2025 were $2.5 million, a slight decrease from the same quarter last year [21] Market Data and Key Metrics Changes - The U.S. Army aims to purchase at least 1 million drones in the next two to three years, significantly increasing from approximately 50,000 annually [9] - The first-person drone market is projected to grow from under $300 million last year to as much as $1.2 billion by 2030, representing a compound annual growth rate of around 31% [9] Company Strategy and Development Direction - The company has entered strategic partnerships with organizations like Ondas Holdings and Theon International, enhancing its market position [5] - Kopin is focusing on defense and medical applications, with a strong emphasis on microdisplay technologies for military and healthcare sectors [10][24] - The company aims to leverage increased defense budgets and modernization efforts globally, particularly in Europe and NATO countries [7][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving revenue and profitability goals for 2027 and 2028, supported by a strong opportunity pipeline exceeding $1 billion [10][14] - The geopolitical landscape is expected to drive continued growth in defense spending, with a focus on advanced vision technologies [15][24] - Management highlighted a transformation within the company, emphasizing improved quality, customer relationships, and a solid capital structure [16][17] Other Important Information - The company has successfully addressed quality issues in manufacturing, achieving high-quality scores and strong customer relationships [16] - A recent $15.4 million contract for color micro-LED technology development was awarded, enhancing the company's capabilities in defense applications [12][73] - The company ended Q3 with $26.5 million in cash, bolstered by recent funding efforts [22] Q&A Session Summary Question: Any developments on neural display? - Management confirmed the demonstration of a bidirectional microdisplay for drone control using eye movement, indicating ongoing investment in this technology [29] Question: What should be expected regarding quarterly OpEx? - Management indicated that OpEx spending will remain consistent, with plans to grow into it over time [31] Question: Can you size the near-term pipeline or backlog? - Management stated that approximately 80% of the backlog required to meet 2026 plans is already secured, with strong visibility on major programs [35] Question: Update on Kopin One initiatives and automation? - Management confirmed that Kopin One is fully integrated, with ongoing automation efforts expected to enhance efficiency and throughput [40][42] Question: Clarification on pilot aviation heads-up display issue? - Management clarified that the decrease in military revenues was due to a timing issue in manufacturing demand, not a significant problem [51] Question: Insights on the medical partnership and growth? - Management highlighted the growth of the HMDMD partnership and potential new medical products in development [55] Question: Revenue expectations from European markets? - Management projected initial revenues from Europe in the single high millions for the next year, with significant growth expected in 2027 and 2028 [63]

Summary of Conference Call on the Acquisition of Sobek Group Company and Industry Overview - **Company**: Deuts - **Acquired Company**: Sobek Group - **Industry**: Defense, specifically focusing on Unmanned Aerial Vehicles (UAVs) Key Points and Arguments 1. **Acquisition Purpose**: The acquisition of Sobek is aimed at strengthening Deuts' defense business, particularly in the UAV sector, which is experiencing significant growth due to geopolitical changes since 2022 [3][4][5] 2. **Market Growth**: The European NATO defense budgets are expected to grow significantly, with a compound annual growth rate (CAGR) projected to continue, driven by the need for defense sovereignty and local production [6][7] 3. **Shift in Defense Spending**: There is a notable shift from traditional defense companies to tech-focused defense companies, particularly in the UAV sector, with drones becoming a top priority for military operations [7][8][9] 4. **UAV Market Growth**: The European UAV market is projected to grow at a CAGR of 23% until 2030, with a focus on small and mid-sized UAVs that are essential for modern defense strategies [10][11] 5. **Sobek's Profile**: Sobek is an established and profitable company specializing in high-performance electric drive and hydraulic systems for drones, with a history dating back to 1975 [12][13][14] 6. **Financial Performance**: Sobek generates annual revenues in the low to mid double-digit million euro range, with an EBITDA of approximately €10 million to €12 million [15][16] 7. **Defense Market Share**: Currently, around 50% of Sobek's business is related to military drones, with expectations for further growth in this area [52][66] 8. **Strategic Fit**: The acquisition aligns with Deuts' dual-plus strategy, transitioning from a focus on internal combustion engines to a more diversified business model that includes defense and technology integration [28][30] 9. **Transaction Details**: The acquisition was negotiated at an EBITDA multiple of 11x, which is considered favorable for the defense sector [31][74] 10. **Future Growth Potential**: Deuts expects to leverage Sobek's technology and market position to expand into new defense ecosystems and enhance its product offerings [27][28] Additional Important Information - **Local Supply Chains**: Sobek's operations in Germany provide a resilient supply chain, which is critical for military applications [24][25] - **Market Positioning**: Sobek is already a trusted partner to leading European defense tech companies, positioning Deuts to capitalize on emerging defense opportunities [23] - **Employee Structure**: The defense business unit consists of a small, specialized team of less than 50 employees, focusing on both military and civil applications [41][42] - **Long-term Vision**: Deuts aims to grow its defense business significantly over the next few years, contributing to its overall revenue target of €4 billion by the end of the decade [69] This summary encapsulates the key insights from the conference call regarding the acquisition of Sobek Group and the strategic direction of Deuts in the defense industry.