Hello, everyone. Welcome to the Lytham Partners Consumer and Technology Summit. I'm Robert Blum, a Managing Partner here at Lytham and your host for today's event. We're excited to showcase a number of innovative companies in the consumer and technology space. Throughout the day, they'll be sitting down with our team to share insights into their businesses and what's ahead for the rest of 2025. We're also bringing in special guests for our Analyst Insights series, offering deeper perspectives on the trends and developments shaping the sectors. Our webcast will run throughout the day, so be sure to visit lythampartners.com/cts2025 or click the link in the box to the right for the full schedule and details on our participating companies. All right, let's get started. My colleague Ben Shamsian will kick things off with Mark Palmer at The Benchmark Company for analyst insights in the technology sector. I'll be back for a fireside chat with Precision Optics. Thank you. Hello, everyone, and thank you all for joining us during the Lytham Partners Consumer and Technology Summit. My name is Ben Shamsian, Vice President at Lytham Partners. Before we begin, for those not familiar with Lytham Partners, we are the country's leading investor relations firm. With more than two decades of corporate access experience, we've built one of the industry's most diverse and effective platforms for connecting small-cap companies with high-quality and focused institutional investors. While creating a framework of best practices and policies in all aspects of investor relations, today's presentation is hopefully yet another example of where we bring value to multiple constituents. For our current presentation, I want to welcome Mark Palmer, Fintech and Digital Assets Equity Research Analyst at The Benchmark Company. His 25-year career in financial services includes 13 years with BTIG and Berenberg Capital on the sell side, again focused on financials and Fintech and digital assets. Previously, Mark was on the buy side as an analyst and portfolio manager with firms such as BlackRock and Highbridge Capital. Mark, welcome. Great to have you here, and the floor is yours. Thank you, and thanks very much for having me. The topic that I wanted to discuss today is one that we get a lot of questions about, which is, given everything that we're seeing going on right now in crypto digital assets writ large, how do I actually make money in this space? How do I evaluate these companies when the metrics, the KPIs, all of these different tools for measurement that I'm used to using may not be applicable to framing up these digital asset companies? I think the important thing to look at here is context. Where are we right now? What has changed? What is different than may have been a year ago? Of course, one of the biggest changes that we've seen as it pertains to crypto digital assets is the change in the government in D.C., and in particular, the change at the SEC. For those who may be less familiar with the space, during the past four years, or the four years between 2021 and 2024, we saw Gary Gensler as the Chair of the SEC cracking down on the crypto space in a manner that was almost the worst-case scenario because his approach was effectively regulation by enforcement for institutional investors to get involved in the space in any scale. What we see now is a completely different stance from the government toward the crypto space, much more conducive to not only the growth of the space, but importantly, more certainty. What many institutions have said with regard to crypto is it doesn't matter as much about what the ultimate rules are as long as those rules are in place so they understand where they can invest, how the government is ultimately going to oversee this space. What we have seen more recently is the Congress began to take up the legislative frameworks associated with crypto writ large. The first approach has had to do with stablecoins. We saw the enactment of the Genius Act. It was signed into law by President Trump. Those companies that have exposure to stablecoins, the one that was front and center, certainly from a timing perspective, was Circle with its IPO, which really couldn't have been timed any better given that the company went public just as the U.S. established a framework which not only favored USDC, which is Circle's stablecoin developed in partnership with Coinbase, but also laid down rules which were effectively taking Tether, which is its biggest competitor, out of the U.S., at least in its current iteration. Tether has said that it's going to be coming to the U.S. with the so-called Tether 2.0, which is going to be a version of that stablecoin that is compliant with the new framework in the U.S. One of the companies that benefited from the enactment of the Genius Act was Coinbase itself because it shares in the economics of the float underlying USDC in the form of interest income. At the same time, Coinbase owns a significant stake in Circle, and it was really a significant catalyst for Coinbase when the Genius Act was signed into law and also when the Circle IPO occurred. That really is a game changer for Coinbase. It now is in a position to have a regular cash flow stream from USDC. If, as we suspect, the adoption of stablecoins increases materially, Coinbase is going to be one of the names at the forefront in terms of beneficiaries from that development. With that said, we are now looking at the next big piece of crypto-related legislation, which is the so-called Clarity Act. This is much bigger in our view in terms of the potential growth of the crypto space and, importantly, the institutional adoption of crypto because the absence of any sort of regulatory framework in the U.S., understanding what determines which cryptocurrencies are securities, which ones are not, and hence which regulatory body, be that the SEC or the CFTC, is going to be regulating a particular cryptocurrency. The absence of any sort of framework along these lines has meant that institutions have not known what the rules of the road are. They've stayed away up to this point, crypto being that odd asset class where retail investors have led the way really since crypto came into being in about 2009. The potential to have institutions come into the space in size is enormous in terms of what that could mean not only for the existing public entities in the space, but the potential launch of many new entities along those lines, something we're already seeing partially in anticipation of the enactment of the Clarity Act. The Clarity Act has passed the House of Representatives. It now moves on to the Senate. The thinking is that the Senate will be taking that up in September. President Trump has already said that he wants that bill on his desk so he can sign it into law. We have a potentially huge catalyst with the Clarity Act. Who would benefit from this? Look at the companies that are set up particularly to serve institutions in the space. This is where we focus on a name like Galaxy Digital. Galaxy Digital is effectively a platform designed to accommodate the needs of institutions in the crypto space. It has, for years, been waiting for the point at which we saw significant institutional adoption, and its timing appears to be now. The company had been listed on the Toronto Stock Exchange for years. It recently uplisted to the NASDAQ in the U.S. and also re-domiciled to the U.S. It is in a position where it is not only going to be able to benefit from increased trading volumes, lending volumes, use of derivatives by institutions, but is going to be accessible by investors, including institutions, because of that NASDAQ uplisting. What is also interesting about Galaxy in particular is that it's not just a play on crypto. It is also a play on one of the biggest drivers that we're seeing in the equity markets, which is the development of AI. Galaxy, by virtue of an acquisition that it made toward the end of 2022, when it looked very much like all things crypto were dead, was able to scoop up a Bitcoin mining resource in West Texas known as Helios, basically a Bitcoin mining farm that it was able to pick up for a sum, I believe it was $60 million, that they were able to acquire this. Now, as it turns out, Bitcoin mining farms can be converted into AI data centers that are going to be powering the growth of AI. We're already seeing deals struck along these lines. Galaxy has entered into an agreement with CoreWeave, the cloud computing platform, and has contracted for the first 800 MW of power for data centers at Helios. Another name we just talked about that is a potential beneficiary of this big institutional push into crypto is Coinbase because it also, for years, has been preparing for the point at which it would be able to serve institutional investors when they got to the point that they were very interested in entering the space in size. A big part of that is derivatives. Coinbase, a few months ago, entered into an agreement to acquire Deribit, which is a global crypto options exchange. This would be the largest crypto deal in history at $2.9 billion in cash and stock. Importantly, it would position Coinbase to offer institutions the means through which globally we have seen more involvement, whether that be by hedge funds, other institutions, expressing their ideas on crypto via derivatives, options, futures, more sophisticated trades that institutional investors are more likely to put on. These are trades that globally have represented about 80% of all crypto transactions over the last few years. They have really not been front and center in the U.S., largely because, again, there's been a hostile regulatory environment toward crypto up until very recently. Coinbase is definitely another name that falls into that category. One name that we have pointed to as representing kind of a bank shot trade on the institutional adoption of crypto is a smaller company called Exodus Movement, ticker EXOD. This is a firm that years ago, we're talking 2015, 2016, which in crypto terms is practically the Stone Age, the company developed a self-custodial crypto wallet. The reason why self-custodial matters in the crypto space is that crypto and Bitcoin in particular is a bearer asset, meaning that if you have the private keys that give you access to that crypto, then you own the crypto. If you lose the private keys, someone else has them. That person owns the crypto. When you have a bearer asset along those lines, it is particularly important to be able to protect those private keys. If someone were to buy crypto from Coinbase, for example, Coinbase is the entity that's going to be protecting those private keys. Coinbase has had a breach in the last number of months. There were not significant losses associated with that. The company did compensate those who were impacted by it. We have seen some huge breaches in the crypto space writ large, which have resulted in billions of dollars of customer funds that were compromised. It is this fear, as well as the ethos within the crypto space, which says, "If it's not my keys, not my crypto. If I'm not holding my own private keys, then it really is not my cryptocurrency," that led to the development of self-custodial wallets. Exodus Movement recognized that there was really no way that they could monetize what is effectively a software-based self-custodial wallet. What we have seen typically is hardware-based self-custodial wallets where someone actually has the unit, the physical unit that enables them to hold their crypto. Companies such as Ledger are the ones that issue these. What Exodus was able to figure out was that they could offer services to the holders of their software crypto wallets, starting with exchange services. It created an API that exchanges, both centralized and decentralized, could plug into so that they could provide the software wallet holders with crypto trading capabilities. Really put in a position where it had something unique as it pertained to the crypto space and where it could offer a lot of value to wallet holders by giving them access to altcoins in a way that was much more efficient than they could find elsewhere. Now, what does this have to do with institutional adoption, especially because Exodus Movement is focused on retail software wallet holders? In our view, one of the things that is likely to occur after the Clarity Act is signed into law, assuming that it will be at some point in September or October, is that institutions coming into the space, while they may be focused to a certain extent on Bitcoin or Ether or Solana, are also going to be looking at the so-called altcoins. A lot of these protocols that were really under fire during the Gary Gensler years as Chairman of the SEC, he was really going after a lot of the platforms that were out there, example Uniswap, where he would claim that Uniswap was effectively facilitating the trading of securities in an illegal manner. Now, we have a head of the SEC who has said that virtually every cryptocurrency out there is not a security. Once we have that codified through the Clarity Act, that's really going to be the green light for institutions to come into the space. It's not enough to simply have the SEC supporting the space now in that regard because, of course, a few years out, we could see another change in the government, another change in the SEC, and we could be right back to where we were when Gary Gensler was the one making and enforcing the rules. That's where it's really important to have Congress act to pass the Clarity Act to make it law because it would be a lot more difficult for any future administration, Congress, or SEC to change things under those circumstances. If we do see institutions flood into the space, get involved in altcoins, as a result, we're likely to see altcoin prices pushed up significantly. What we have seen with Exodus Movement historically is that when prices rise, that's when retail investors get involved. They are not value investors in this space. They are momentum investors, and so rising prices, in the case of Exodus, has historically translated into more monthly transacting users, more trading volumes, and ultimately more revenues and earnings. This is why I describe Exodus Movement as being a bank shot play on institutional adoption because even though it is not serving institutions, we believe that by extension, it will benefit from the institutional adoption of crypto by virtue of rising altcoin prices and hence better metrics for the company across the board. Now, shifting gears a little bit in terms of what we're seeing out there right now, one of the biggest trends in the crypto space has been the launch of many crypto treasury companies, starting with Bitcoin treasury companies. Going back, I was the first equity research analyst to cover MicroStrategy back in 2021 when the idea of a company converting its business model so that its sole focus, or close to sole focus, was to issue securities and take the proceeds and buy Bitcoin was considered crazy. We actually believed that MicroStrategy had a really unique means of creating value. The blowback from institutional investors, many institutional investors, was actually even surprising to me. I've been in this space for a long time and seen a lot of blowback one way or the other. When MicroStrategy, now known as Strategy, had over the next four and a half years the best performing equity in the market, significantly outperforming Bitcoin, significantly outperforming the S&P 500, significantly outperforming the next best equity in terms of performance with NVIDIA, it became a lot more polarizing rather than one-sided in terms of the way that many institutional investors were looking at things. You still have the detractors, but you have many proponents as well, with some of those coming from very large institutional platforms, some of the biggest mutual fund complexes as well. What we began to see starting last year was copycats of Strategy and of Michael Saylor with what he was doing. These other platforms had somewhat different approaches to the acquisition of Bitcoin, how they went about raising capital than Strategy and Saylor did. The first of these was Semler Scientific. Then we saw Metaplanet out of Japan. Metaplanet in particular was something of a phenomenon among retail investors, in particular in Japan. The reality in that country is that you have few avenues through which investors can gain access to any kind of yield. The Japanese central bank keeping interest rates at effectively zero, and so there is a tremendous amount of savings that is basically sitting in banks earning virtually nothing. Metaplanet, by packaging Bitcoin in an equity wrapper, has changed things significantly in that regard, giving equity investors the option of buying Bitcoin through their platform and doing so in a leveraged manner. Japan was really, again, close to an ideal setting to be launching this kind of strategy. Not only do you have the zero interest rate environment, but you also have a circumstance where the Japanese government has punitive taxation rates for those who are holding Bitcoin. Capital gains on Bitcoin are taxed in some cases as high as 55%, whereas the capital gains on equities such as Metaplanet are in the 20% context. Metaplanet was in a circumstance where they could deliver Bitcoin to Japanese investors in a manner that not only gave them levered exposure to Bitcoin, but also did so in a tax-effective manner. Hence, Metaplanet was the best performing equity on the planet in 2024. Since then, we have seen a breakout in terms of the number of Bitcoin strategy companies that are out there, companies such as 21, Nakamoto, and a long list of others beyond that. What we are seeing really is, as I would describe it, a kind of a checkerboard, where on one side of that checkerboard is a list of all of the different countries in the world where it's feasible to raise capital to buy cryptocurrencies. The other side of the checkerboard is various cryptocurrencies, starting with Bitcoin. With that, those are my thoughts writ large with regard to crypto. We appreciate this. This was great and quite informative. Thank you for your insightful presentation. Looking forward to having you at our upcoming events. Everybody, thank you for listening and have a great rest of the day. Thank you. All right, hello and welcome to the Precision Optics fireside chat. My name is Robert Blum, Managing Partner here at Lytham Partners. Today I'll be moderating a Q&A discussion with Joe Forkey, the Chief Executive Officer at Precision Optics. As a reminder, Precision Optics trades under the ticker POCI on the NASDAQ. All right, Joe, welcome. Thanks, Robert. Nice to be here. All right, a couple of things. I just want to point out at the beginning here, I know you're right in the middle of preparing your year-end financials, so I don't want to get into any specificity as it relates to Q4 or the year-end. Let's use today's time to really focus on technology markets, high-level overview of the company, maybe some year-end markets there in particular. Just a disclaimer up front here. Again, for those maybe new to the company, give us a little bit of an overview on the company's mission and maybe how things have evolved over the history of the company here. Sure. Yeah. From a high level, the company is, as the name implies, an optics company. We're a technology company. Everything we do has something to do with optics. We've been in business for over 40 years. We were founded in 1982. Recently, over the last five or six years, we made two acquisitions, one of a company called Ross Optical, another of a company called Lighthouse Imaging. They also fit into the same category of working in the optics industry and in technology. Both of those companies were also founded in the 1980s. We have a long history in this company of being involved in the marketplace and developing next-generation technological solutions to challenges in a number of different fields. Over the years, we worked in a number of different areas. We worked in defense, we worked in aerospace, we worked in consumer a bit, telecommunications. Through our entire history, we've worked in medical device, and that's really the main area we focus on. Today, about 60% of our revenue comes from the medical device market, 60%- 70%. Most of the rest of it, the other 30%- 40%, is in defense aerospace. We're seeing some of those things adjust a little bit depending on where we see the near-term demand for the kinds of technology we have. Very briefly, as I say, we're an optics company, a technology company. Optics is a very broad field. We focus on three specific areas from a technology standpoint. One is microoptics. We make some of the very smallest optics in the world. The second is in ultra-precision optics. We make some of the highest resolution imaging systems for small sizes. The third area is a little bit broader. It's digital imaging. This is an area that really piggybacks on top of all the developments that have been developed for consumer electronics to make the cameras and cell phones and laptops and such. We take that technology, combine it with our own, and are able to make digital imaging systems for medical devices and, to some extent, defense aerospace. Our business model is relatively straightforward. We have this core technology that we own. We show this technology to the customers of ours, places where we think this technology could have use, could enable the next generation of products. If our customers and we agree that our technology could be useful, we contract with them generally on a time and materials basis to do the engineering work that's required to take our technology and turn it into a product design and to set up the manufacturing line. Importantly, we maintain ownership and control of the IP as we go through that process, even though we get paid to do the engineering work. Once the product is developed and goes into production, we're the manufacturer of that product for our customer. The company will grow and has started to grow through the movement of more and more of these programs through the engineering pipeline, the product development pipeline, and into production. We have two major programs that went into production in the last 12 months or so. One's in the defense aerospace area. The other is in medical device. It's a single-use endoscope. Both of those are growing very quickly and helping to boost the top line revenue of the company. We expect to have two to three programs move from the engineering pipeline into production every year. That's our goal. With that kind of throughput, we expect the company to grow quite substantially over the next few years. I want to come back to a word you just said here, core technology. We leverage our core technology to showcase, I think was maybe the word that you utilized, to your customers. Talk about what it is that the core technology you believe of Precision Optics is. What is it that you do better than anyone else or very few people in the world? Yeah. So there's really those three areas: the microoptics, the ultra precision, and the digital imaging. Let me talk about them each just briefly, and then we can go into some of them more specifically with some of the products we're making today. Micro precision optics are very, very small optics and complete imaging system designs or sometimes laser communication system designs that rely on our ability to make very, very small optics and design with those small optics into entire systems. When I say small, we're talking about lenses that can get us as small as under a millimeter. We've made what we believe is the smallest right-angle prism in the world, which is about 50 microns. That's 5-0 microns. Just to give people a sense of that, that's about the width of a human hair. We're talking about making very small optics that are as small as the width of a human hair. These can be built up into entire designs that have a lot of application in medical endoscopy. One of the endoscopes that we make with these very small optics is about half a millimeter in diameter, and it can go through the blood vessels in the body. We make a particular product that goes through blood vessels and goes up into the beating heart in order for the surgeon to be able to look at the inside wall of the beating heart. This is a great example of the kinds of enabling technology that we have. You can't make an endoscope like that unless you can manufacture and design with these very small optics. You can't do the procedure that relies on going through the blood vessel unless you have an endoscope that's small enough. There are some endoscopic procedures taking out gallbladders and such where those are done with 5 mm or 10 mm endoscopes. Making those endoscopes smaller will give you a smaller scar so that your bikini line looks better, right? We're talking about places where the small size, the really extreme micro size of what we're doing really enables procedures that just couldn't be done before, like going through a blood vessel with an endoscope. On the ultra precision side of things, this is a technology that grew out of our work that we did some 20 years ago with Intuitive Surgical, developing the 3D endoscope that they needed for their robotic system at the time. We did the very first one for them. This has continued. We've continued to develop this technology. We've broadened it a little bit to go beyond 3D endoscopes to ultra high precision endoscopes. Basically, what we're talking about here is making systems predominantly in the medical device imaging space with endoscopes, although there are some other places in defense where we can use this. Basically, it's designing systems that are diffraction limited. We combine this a little bit with the microoptics. We're not only making imaging systems that have very, very good resolution, we're making those systems in a very small package. When you combine those two things together, that makes us very unique to be able to make diffraction limited imaging systems in a package that's very, very small. The third area is in the area of digital imaging. This is really coming out of, as I said before, the imaging sensor, the digital imaging sensors that were developed for consumer electronics. We're taking those and using those and encapsulating them and designing them into systems that can be used for medical devices. While the core sort of silicon technology may be the same, the way you package that into a system and combine that with all the other elements to make it viable for a medical device is very unique. One of the acquisitions that we made of Lighthouse Imaging was really to combine the technology they had in the digital image signal processing for medical devices with the technology that Precision Optics Corporation already had on the front-end optics of designing great imaging optical lenses and working with fiber optics to be able to bring light into the body. At the end of the day, the kinds of endoscopes we can make with these digital imaging systems are pushing the envelope in terms of what's possible with next-generation endoscopes. There's a lot of interest in single use, where the price point comes down dramatically because we're using these silicon chips. What we do that's unique is we do the entire imaging system. Through this acquisition, we now have the full complement of technical requirements in-house in order to be able to design the entire video chain from the wall plug that goes into the wall to the LEDs and the fiber optics that bring the light into the body to the optical objective and then the CMOS sensor and then the wires that come out the back and the circuit boards that process those images all the way to the HDMI cable that goes into the screen in the OR. That's very unique to have one company that can manage all the optical pieces, the electrical pieces, the mechanical pieces, the optoelectronics, the optomechanics, the systems engineering, and doing it all in a way that satisfies the regulatory requirements for the FDA. As you're developing these new products, talk about the process by which you start at the very early stage, right? I mean, medical devices are one, aerospace defense is another. Maybe we'll get to that here shortly. You're working at the very early stages, the design. How do you take the design and turn it into actually a functioning product, which I know is always a challenge? Talk about the length of time it takes, how you're approached by customers, what those conversations sort of look like, the back and forth. I think you've got more than half a dozen programs that are sort of in production right now on the medical device side. Just talk about that entire process, the length of time. You mentioned wanting to have, I think it was two to three new products in production each year. Help us understand that whole process there. Yeah, sure. Our ideal customer comes to us when they're in what we call the conception phase, right? They know they need an imaging system. They know what they want the imaging system to do. Typically, our customers don't have an in-house optics capability. This is true of most medical device companies and also most defense aerospace companies. Optics is a very specific niche with folks who have very specific training and experience. Our ideal customer comes to us right at the beginning of their development phase. Sometimes customers will come to us because they were unhappy with another supplier, and we'll take what they've already done. Oftentimes, we have to back up a little bit to get a design that will be practical. They'll come to us, they'll show us what they need. We'll be at a trade show, and we'll show them some demos, and that may generate some thoughts about how they could use a very small endoscope in a particular place. They come to us at the very early stage. We put together a proposal for the various stages that we need to go through in order to get the design done. Those stages from a very high level are starting with what we call a minimum viable prototype. This is really defining the specifications, taking what our customer says they need, and turning it into hard optical and mechanical and electrical interface specifications, and then building some very quick and simple demo system that they can use to validate on the bench or maybe in an animal lab whether what they're trying to do will actually work the way they think it will. That's the first stage. The second stage is putting together what we call an alpha prototype. This is a prototype that we can build relatively quickly that will have all of the critical functionally relevant specifications. Again, our customer can go and confirm that it's going to work the way they want it to. They'll come back, they'll sometimes modify things a little bit. We want to change this spec, that spec. We go into the beta phase prototype. The beta phase prototype is intended to be exactly like the actual product will be. That's the third phase. We go from there through a transfer phase where we, assuming everything goes well with the beta prototype, then we will design and build the tools and fixtures. We're sort of doing that all the way through because a big part of our IP is around the way that we build the product once we get into production. There's always design for manufacture. For the microoptics, it's really design for feasibility because some of these things are so small, a lot of companies wouldn't even know how to handle them. After the beta phase, we go through the transfer phase where we actually fabricate, build, validate the tools and fixtures, and prove out the manufacturing process. We go into full-blown manufacturing. This whole process historically would take somewhere around two to three years. It depends a little bit on the complexity of the product. Our customers always want us to do it faster. We always want to do it faster, right? Because we do it on a time and materials basis, we'll give them a quote right at the beginning for what we think the whole thing will cost. Typically, our customer will give us orders as we go for each one of these different phases, and we'll update the quote and the expected total cost as we go through that. We have introduced into the marketplace just six or seven months ago a new approach that we've been working on for over a year. This is a product approach that we call our Unity Platform. Basically, the idea here is that we've taken everything that we've learned over the last 10 years, designing and building many. This is really for very small endoscopes, digital imaging endoscopes. For that part of the market, what we've found is that as we design new products for our customers, every product is going to be different because they're going to a different place in the body. They have different requirements for video speed or video size or the image they're going for. What we found is that 80% or 90% of the inside of the products are very similar for all of the products that we're making in the digital imaging space. What we've done is we've designed, we've taken all the best pieces from all the products that we've made over the last 10 years or so, and we've rolled them into what we call this platform, the Unity Platform. We have a couple of different platforms that are targeted towards different size endoscopes. What we can do now is we can start with that platform design. Now when a customer comes to us and says they need a product that does all these different things, we can set up the different specifications. Many of those will be satisfied by this core design. We'll always have to change the interface specs for the size of the endoscope, the diameter of the endoscope, the length of the cables, and maybe the way that the image needs to present on the screen with their logo or other interface pieces. 80% or 90% of it can be the same as what we've done before. What this means is that we can accelerate the development time. We estimate that we can accelerate the development time by anywhere from 6-1 2 months, and we can reduce the cost for our customer by a few hundred thousand, maybe $500,000. Most importantly, we can get to market faster. We're also, in that case, using design elements that have already been proven out in other products. They've already gone through the regulatory testing that's required for the FDA. That gives us a much higher confidence and reduces the risk that we're going to have to go back and iterate on some of the designs. This is the process that we go through to get the product into development. As I say, we just introduced this Unity Platform about six or seven months ago. We're talking to some customers about our first products that will be based on that. We're pretty excited about that. Even still, it takes a couple of years to go through, which is why we like to have a very robust product development pipeline to get to this two or three going into production every year. Clearly, the pros and cons here are the development timeline is incredibly lengthy, right? It's a couple of two to three years, as you mentioned. Maybe Unity accelerates that, but it's still in the multiple years. On the flip side, it's very difficult for customers to switch out your technology once it has gone through an FDA process, been approved, out there in the market. It creates a very long tail. I think it was clearly mentioned, but to reconfirm, you are the manufacturer of the product. Once it goes into production, you receive a production revenue going forward. Sort of talk about the stickiness, if you will, of customers, the length of time. Once you get them out there, how sticky these customers become. Yeah, sure. There are a number of reasons why it's difficult for our customers to go somewhere else for manufacturing. Part of that comes from the fact that our IP is embedded in the product. There are some cases where we will negotiate licenses. Under certain circumstances, we haven't had to invoke those in any cases. Of course, our customers, after they invest a couple of two, three years into the development process, need to know that whatever happens if POC decides we don't want to build it anymore, they need to have some mechanism to be able to continue building it. The fact that our IP is embedded in the product is the first sort of barrier to our customers switching out. The second piece is that our IP is heavily embedded in the manufacturing process. That's a place where we never give licenses to our customers. That's the second place. They would have to find someone that's able to sort of reverse engineer the IP in the design, but then also the IP that's in the manufacturing. Beyond that, in the medical field and in the defense field, there's a very high aversion to risk. Whenever you change manufacturing partners, there's always risk that comes along with that. There are a number of reasons why our customers, even if there was an issue, would need to stay with us. On top of that, we're very customer-centric. We're very customer-focused. We have great relationships with all of our customers. As I say, I can't remember the last time a customer has left us to go elsewhere. We do have a couple of products that have been around for a long time, just to sort of give some specific examples. Both of these are with very large medical device companies whose names people would know, the top 10 or 20 medical OEMs in the world. In one case, we've been making the same product for coming up on 30 years, I think. For the other one, we've been making the same product for 20 years. Once these products get into production, they stick with us. Part of the growth that's happening right now is because we're seeing significant growth on these two products that have just gone into production and are moving forward. All right, very good. We've talked a lot about medical devices. One final point I want to bring up here before we go on to aerospace defense is the end markets, where you're seeing trends specifically within single-use applications. Talk about where the market is heading and how you guys are hopefully poised to benefit from that. Yeah, sure. The minimally invasive surgery market, the endoscope market, if you like, in general, we find numbers anywhere from 5%- 10% annual growth rates for the endoscope market in general. Even before we get to digital imaging and single use, the places where we're working on very small endoscopes tend to be an area that there tends to be more growth in because these are the places where new procedures are being developed and where the next generation procedures are being considered. Those are areas where there's a lot of growth because people are interested in going to places in the body that they can't go before, right? There's a lot that we're doing in places where the incision size is really critical. We always talk about ear, nose, and throat for sure, sinus, otoscopy. We do a lot with the eye, with ophthalmology, neurology, the brain, spine. There's a lot with urology and cystoscopy. These tend to be the places where the medical device community is innovating to begin with. Beyond that, single use is growing much faster than the general market. Without taking too much time, single use really means we take the endoscope, we build it. We can build it at a low enough price point, in large part because of these digital imagers that I talked about. The price point is low enough that the surgeons can use it once and then discard it. This reduces the requirement to do sterilization of an endoscope between one patient and another. There's a huge safety benefit because you don't have to worry if the sterilization is not 100% effective. That's been an issue for the FDA for many, many, many years. It turns out it's easier for the hospital to track endoscopes. It's better for the surgeons because they get a brand new image every time they open a new scope. We find numbers out there showing that the single-use market, which we're heavily involved in, is growing at two to three times the rate of the endoscope market as a whole. It's up around 20% or even higher than 20% year-o ver- year. We're seeing that in the mix of endoscope customers who are coming to us and in some of the products that are coming out. One of the big products that we just launched in the last year that's growing substantially is a single-use product for cystoscopy and urology. We have another one right behind it that just went into production a couple of months ago for ophthalmology for use on the eye. We see big growth in the single-use side of things. All right, very good. Let's run short on time here. Let's go through the defense aerospace. You mentioned about 40% of your revenues. A little bit different approach here, right? You're not dealing with the FDA. Development timelines, I think, are a little bit shorter. Talk through sort of what the applications are that your technology is going into on the aerospace and defense side. Sure. In many cases, we don't know what the final system is that our product's going into. There are a couple of general areas, though, that we believe our products are going into and that are sort of sub-areas within defense as a whole that we've targeted. Basically, it's any place where the small size can be important. The defense industry has an acronym, SWAP, which stands for Size, Weight, and Power. The size and weight are things that we can help with on any system that uses optics. There are imaging systems on drones and things like that, which have to be lifted off the ground, so smaller size can be better. We're seeing a lot of interest in our microoptics technology in the satellite industry. There's a lot of work that's happening these days. Everyone's heard about Starlink. There are a number of groups and customers in the aerospace industry, in the defense industry that are looking at communications in space. It turns out if you're trying to communicate between one satellite and another satellite, you have to be very precise in the directionality of the systems that you're working at because the satellites are so far apart if you're misdirected at all. It turns out some of the technology we developed for our microoptics technology to align these really small optics can be used in that area. We're seeing a lot of opportunity in the satellite communication area. In the drones, they're lifting off the ground, so smaller size is critically important. It also turns out that laser weapons, which is an area that there's a lot of interest in because that's one of the countermeasures against drones, which, of course, everyone is seeing in the Ukraine and Israeli wars, are being used more and more. There's more interest in laser weapons, and it turns out there are some microoptical elements that have to go into those. Those are some of the target areas that we're focused on for defense. All right, very good. We could probably talk for hours here. One thing I do want to touch on quickly is increases in manufacturing capabilities. An announcement went out here a couple of months ago talking about needing to meet the needs of the growth that you're seeing. Maybe just talk a little bit about the expansion on manufacturing. Yeah, sure. There are really two motivators for some facility updates that we've talked about over the last few months we've been working on for a year or so. One of the acquisitions we made was in Maine, and that's the group that we sort of combined the technical capability. There was a little bit of manufacturing in Maine. We've now consolidated that into Massachusetts. All of our manufacturing of the systems is happening in Massachusetts. We still have the other acquisition, Ross Optical, which continues in El Paso, Texas, and continues with their sort of small subassembly manufacturing. Most of the couple of programs that have gone into production and the big ones that are moving into production that will require more space are all manufacturing in our Gardner facility in Massachusetts, which is sort of mid-state, about an hour and a half, hour and 20 minutes outside of Boston. We need more space in order to do that. At the same time, what we've found is that both in our Maine location and in our Massachusetts locations, for historical reasons, we were pretty far outside of the sort of nexus of the technical talent. In Maine, that's in Portland; in Massachusetts, that's in Boston. There are a lot of professional roles, both in accounting and finance sales, but also on the technical side where we've been challenged a little bit in recruiting people. Now that we're growing as much as we are, we need to recruit more people into those functions as well. To solve both the recruiting issue for professional folks and the manufacturing issue where we need more space, we've made the decision to move our headquarters out of the Gardner facility in Massachusetts, move about half an hour farther east to a new facility, which will be in Littleton, Mass. That move will happen in the next month or so. We also moved the Maine facility, which is now purely technical, to a location in South Portland. That happened a couple of weeks ago. All of these changes in the facilities are to support the increasing in manufacturing and the ability to get closer to the talent pools in Boston and in Portland. All right, very good. We're up against the clock. Joe, thank you so much for the time. Thank you to everyone for watching here. If you have any interest in connecting with Joe, speaking to management here, shoot me an email. Our email address is blum@lythampartners.com. We have additional fireside chats coming up, so please stick around for more. Joe, thanks so much for your time today. Greatly appreciate it. Thank you, Robert. Thanks, everyone, for tuning in. Thank you, Joe, for that discussion on Precision Optics. Don't go anywhere just yet because up next, we have a company webcast with Valens Semiconductor. My name is Ben Shamsian, Vice President at Lytham Partners. And today, Guy Nathanszon at Valens will be taking us through their slide presentation. Valens trades under ticker VLN. With that, let's get started. Guy, welcome, and the floor is yours. Hello, my name is Guy Nathanzon, and I'm the CFO of Valens Semiconductor. It is a pleasure to be here today. Valens is the high-performance connectivity company. We are a fabless semiconductor company, and we know how to deliver video in a high quality, low latency over a long reach of cables. We have the highest bandwidth, the longest reach, and the lowest LOA. We've been established about 20 years ago. We are publicly traded in the New York Stock Exchange since 2021. We are 260 employees. We sold to date more than 40 million chipsets. Revenue of the last quarter, Q2 of 2025, were $17.1 million. We are part of two global industry standards. We have 125 patents, accumulated R&D expenses, half a billion dollars, hundreds of customers, and we address a $5 billion market opportunity. What are the pain points of right connectivity? There are too many cables, distance limitation, video resolution that require a higher capacity, rough environment like electromagnetic interference, high cost of infrastructure, and installation complexity. We act in two main segments. The first one is the cross-industry business that includes two main verticals. The first one is the professional audio video, mainly around video conferencing and education. We work with companies like Crestron and Extron that develop video conferencing systems, companies like Epson, Panasonic, NEC that provide projectors, companies like Logitech that provide video bars and cameras. We work also in digital signage and in entertainment with companies like Sony on video walls, companies like Samsung and LG Electronics on touch screens for a McDonald's of the world display. In addition, we work in another vertical, which is the industrial and machine vision, companies like B&R and Siemens, when we connect industrial PCs to screens that are located remotely, and also in the medical sector, companies like Medtronic or like Siemens Sennheiser, connecting MRIs to screens that are located remotely in the other room. Another segment is automotive. We currently work only with Mercedes, but we already announced on design wins with Mobileye as well. Our core competency is around the DSP. This is the heart of our technology. Invested to date, half a billion dollars accumulated R&D expenses, 125 patents. We have one of the best semiconductor design teams in the world. Our advantage is our ability to handle electromagnetic interference. We do it with a unique algorithm that, by definition, assumes that in every channel there is a noise, and we know how to eliminate this noise with advanced algorithms. The first market is under the professional audio video, and the main market is video conferencing that represents for the company an opportunity of $350 million by the year 2029. What we've recently seen in this market is growth due to the hybrid education and hybrid work. We see. Companies like Microsoft Teams or Zoom invest in certification programs for hardware devices for video conferencing because it is very important for them, the quality of the video conferencing in the room, not just outside of the room. In addition, we've seen AI-based applications, for example, cameras spread around the room that know how to concentrate on the one that is now talking. We are part of this opportunity, partnering in the companies called iCatch, and this is one example out of many for this trend. In 2024, we've released to the market a new chip, the VS6320, with USB Type-C connectivity. This is becoming like a universal standard and will allow us to penetrate into smaller video conferencing rooms. If until today we used to concentrate on the high end of the market, with this chip we can go also to the smaller and to the mid-size. For example, in my own office, I can connect my laptop with one cable, USB Type-C, to a docking station, and from the docking station with HDMI cable through the wall to the screen in the other side of the room. This kind of room is a room that until today we did not have a real solution. This could be a significant growth driver for the company starting from 2026 and beyond. We are part of a standard called HDBaseT, partnering with companies like HD and Sony and Samsung. If you want to be HDBaseT compliant, you need to work with Valens. The other market is the automotive, which will present for the company a $4.5 billion market opportunity by the year 2029. Our main focus is around ADAS, Autonomous Driving System. Here is the use case. Imagine a child crossing the street. The camera in the front of the car will capture a video picture of the child, will deliver the video picture over cables to a centralized computing system in the car that knows how to analyze the video picture and in a few milliseconds stop the car automatically. This is exactly where we have relative advantage. We know how to deliver high-quality video over a long reach of cables, and we know how to do it in a low latency. What is most important, we know how to handle electromagnetic interference in the car very well. There are a lot of them due to the solar towers in the side of the roads, due to the electricity in the car, due to the engine in the car, and so on. This is a key advantage where we can play. Mobileye, which is considered to be a leading company in this industry, after a long evaluation process, has chosen Valens Semiconductor for specific three design wins with a leading OEM from Europe. We cannot disclose the name at this stage, but I can tell that we have a strategic partner with Mobileye, and we are very excited about it. This is evidence to our advanced technology because Mobileye is considered to be a leader in this world, a technology leader in this world. We expect Mobileye to take us to other opportunities with other OEMs in the future. The expectation is that these specific design wins will start ramping up from late 2026 and beyond, with full ramp-up in 2028, 2029. We currently have a more evaluation process in ADAS systems with different OEMs. We currently believe that we expect to be a very significant player in this market. Once there would be a full deployment of ADAS in the world beyond the year 2030, we might have even hundreds of million dollars revenue from this vertical. The other opportunity that we're currently addressing in the market in the automotive, which is currently 100% of the revenue in the market, is from Mercedes. We have been able to secure a design win with Mercedes with respect to infotainment opportunity. It was a very specific opportunity that we were able to address in 2019. The system was commercialized in 2021. In 2024, this opportunity generated for the company $20 million for the year. Mercedes is with us. We expect this opportunity will continue to generate revenue for the next few years. In automotive, it is very hard to get in, but the cycle once you're in is very long. We expect a few more years of revenue generating from this opportunity with Mercedes. Another opportunity that we have in automotive is driven by a company called Stoneridge. It's related to long vehicle with respect to a specific application of video camera that knows how to capture the video from the back of the truck and deliver it over the electricity cables in the truck to the front. This, with another application of SurroundView, could represent an interesting opportunity for the company in long vehicle, which is expected to be commercialized from the year 2026 and beyond. In the ADAS, we are part of a standard called MIPI A-PHY, partnering with other companies, for example, like MediaTek, Qualcomm, and others. The main competition is coming from giants like Texas Instruments and Analog Devices. It's a very challenging competition because it is very hard to convince OEMs to replace these products with ours. When we were able to achieve this, it was with knockout, with significant advantage. For example, our ability to handle electromagnetic interference, our ability to achieve high resolution, to support in high-resolution cameras. This kind of advantages is where we can win these companies. There is a whole ecosystem around MIPI A-PHY with different companies providing different types of products either in the system or in the module or in the silicon side. The third vertical that we started to address mainly in late 2024 is the machine vision or the industrial machine vision. This vertical represents for the company almost $500 million market opportunity by the year 2029. In the industrial, we already have a few design wins that are already in mass production when we connect industrial PC to a screen that is located remotely. Companies like Beckhoff, B&R, Siemens, and others. The new vertical is the machine vision. I would like to explain and illustrate our opportunity with the following example. Imagine a manufacturing machine of small parts. In the end of the line, there are two cameras for visual inspection purposes. They need to capture video pictures of the parts over the line and deliver the video picture in high quality, low latency over a long reach of cables because you cannot use wireless in an industrial environment to a PC that is located remotely in the other side of the industrial hall. There are AI-based applications that know how to analyze this video picture and instruct the machine which parts should be eliminated for quality purposes. This whole process should take only a few milliseconds and should be very accurate. We know how to provide the infrastructure for these AI-based applications. We know, on top of the other things, how to handle electromagnetic interference that are very common in an industrial environment. We started our first activities in this market late 2024 with existing products that we have. For example, the chip that was developed for automotive is very much relevant here because it has a small form factor, low power consumption, and the interface, which is called CSI2, which is very much relevant for the industrial world. We've already been able to announce on a few design wins, modules, cameras, and other related products. We expect initial revenues from late 2026, 2027, and beyond. Another vertical that is still for the long term, but becomes more relevant recently, is around the medical space. In the medical, we already have a few applications connecting MRIs, for example, to screens that are located remotely on the other side of the room with companies like Siemens Sennheise r and companies like Medtronic. These are relatively small in terms of revenue. The new and interesting potential opportunity that will present more than $600 million opportunity here in the long term is related to single-use endoscopy. Recently, we've seen a trend coming from the FDA asking for the medical companies to go into and replace from multi-use to single-use in order to eliminate the risk for infection. If they will adopt this solution, that means a significant increase of the volume in this market. Today, there are 250 procedures of endoscopy every year in the world. We have a product, which is the same chip for the automotive, which has a very good product-market fit for this market. Small form factor, low power consumption, ability to handle electromagnetic interference, there are a lot of them in the surgery room, and ability to provide high-quality video in low latency to the doctor. We've recently had initiated discussions with different types of customers in this industry and received very good feedback, which is a good indication from our perspective that this could be an interesting opportunity for the future. We would not expect revenue before the year 2028 and beyond, but still, it could be a potential upside for the company in the future. We have the same core technology that can serve different verticals, and most of the products of the chips are already out there in mass production. Some of them can serve different markets, different verticals under the same core technology. Getting to the financials. In the year 2019 and 2020, the company generated revenue mainly from the professional audio video market. It was around $60 million a year. In 2021, the professional audio video continued to generate around $60 million a year, but it was the first year of commercialization of the automotive of the Mercedes design win, and the revenue grew to $71 million. In the year 2022, we had a significant upside to $91 million when the professional audio video increased to $74.5 million. It was related to the post-COVID effect of the supply chain issues, and our customers were afraid to be left without inventory. Basically, they ordered more than they did. In 2023, the revenue from the professional audio video got back to the normal level of around $60 million. Automotive grew to $27 million. The overall revenue of the company decreased from $91 million in 2022 to $84 million in the year 2023. 2024 was a rebound year for 2022. The professional audio video market declined significantly to $36 million revenue because of two reasons. First of all, in the beginning of the year, our customers had a high level of inventory because of the stock in 2022. The interest rate was very high, so they basically did not want to order new inventory and wanted to consume the existing inventory. In addition, their customers, the video conferencing providers, also suffered from declining revenue, about 30% in 2024, because many companies invested a lot of money in building new video conferencing rooms after the COVID, and 2024 was kind of a relief year for them. The revenue in 2024 declined to $58 million. In 2025, we see a nice increase. Revenue in the first quarter was $16.10 million, and the second, $17.1 million, above the guidance. The guidance for the year is anywhere between $66 million to $71 million. If we take the midpoint of this guidance versus the revenue of 2024, we expect an increase of about 0.18% year- over- year. Gross margin in Q2 was 63.5%. The CAB is around a 70% gross margin, and the automotive is above the 50% gross margin. We did some optimization in the cost structure of the chips that are being sold to Mercedes, and we had an EBITDA loss of $4 million. For the third quarter, we see some decrease in the revenue, $15.1 million- $15.6 million, due to the effect of the tariff. Gross margin is expected to be anywhere between 58%- 60%, and EBITDA loss anywhere between $6.8 million- $7.4 million. Q4 should be increased again. For the year, we expect anywhere between $66 million- $71 million of revenue for the year. Balance sheet. We have a cash balance of around $102 million end of the quarter. We started the year with $131 million. We had a buyback program during the start that we started late 2024. During 2025, we consumed $20 million out of the overall $25 million of the two buyback programs, which means in July, we ended the second buyback program. Inventory level was $11.5 million end of the quarter. This is about the balance sheet. In November of 2024, we presented a strategic plan for the company and set the goal for the year 2029. We said that our goal is that by the year 2029, the company will be able to generate revenue of anywhere between $200 million- $300 million and above the 50% gross margin and above the 15.5% EBITDA margin for the company. The company can be EBITDA positive at an annual run rate of revenue of around $120 million. We did not say when we expect this to happen. In the short term, we expect growth coming from the professional audio video market with the recovery. On top of it, increase our footprint into the smaller size video conferencing rooms. Our goal for 2029 from this vertical is $90 million- $100 million revenue with a gross margin of anywhere between 65%- 75%. In the midterm, industrial machine vision should start to generate revenue from 2026 and beyond. We expect revenue from this vertical to be anywhere between $35 million- $50 million by the year 2029, with a gross margin target of anywhere between 55%- 65%. We expect automotive to start ramping up early initial revenue from 2027 with ADAS beyond the Mercedes revenue and ramp up in 2028, 2029, and beyond. Our goal for 2029 from the automotive is anywhere between $65 million- $110 million of revenue with a target gross margin of anywhere between 35%- 45%. We expect additional ramp-up in the revenue and potential upside beyond the year 2029 when there is a full deployment of ADAS in the world and the adoption of our solutions into the medical and single-use endoscopy. Our goals for this year, the revenue guidance, $66 million- $71 million. Professional audio video would like to see recovery and adoption of the VS6320 solution, industrial machine vision more design wins, and the same for automotive. To summarize, Valens Semiconductor represents an opportunity for 30%-4 0% average annual gross revenue year over year, diversified customer base, design win cycle that creates predictability of the revenue and stickiness of our customers, long-term profitable business model, and strong cash balance. Thank you. OK, Guy, thank you for your time today. We appreciate you presenting to us. Thank you, everyone, for watching. If you have any questions and would like to schedule a meeting with Valens Semiconductor, please send me an email at shamsian@lythampartners.com. That's S-H-A-M-S-I-A-N at lythampartners.com. We have additional presentations and fireside chats coming up next. Please stay tuned for the rest. Thank you, everyone, and have a.