LightPath Technologies, Inc. (LPTH) Earnings Call Transcript & Summary

Okay. Thank you, everyone, and appreciate everyone coming here physically, and everyone online listening in. We'll give a presentation of about an hour, I think, give or take, we have Q&A and a bit more -- obviously, a bit more detailed than the usual 15-minute presentation, considerable focus will be on the exciting news of the G5 acquisition and what G5 brings in. With me, we have Al Miranda, our CFO; Jason Messerschmidt, VP Sales; Natalie King, Vice President of Finance, Jason Liebert from Visimid, our older acquisitions, 1.5 years ago; Todd Croteau, Business Development; and Michael [indiscernible] joining us from G5. Okay. Yes. So I'll talk a bit about the landscape and about infrared imaging. So oftentimes, we talk about infrared imaging. We talk about thermal imaging. Actually, those on the webcast can probably see our video feed from a LightPath camera coming from a Mantis camera here in the room and you can see me standing here and people seated. But we use it interchangeably; infrared imaging, thermal imaging. So I'll just explain a little bit about this without making all us experts. Infrared being the part of the spectrum that we don't see by eye, so it is the longer part of the spectrum as opposed to ultraviolet and such. When we start going down the path of the spectrum from UV to RGB, meaning is visible into the infrared. The infrared gets divided conceptually into 4 sections there. Now the naming convention is by engineered -- so it's not that sophisticated, let's say. And the first part is a near infrared. Oftentimes, near infrared, all of us know it from things like night vision or low-level imaging. That is a type of imaging where it's actually very, very similar to the visible in a lot of ways. It's the same cameras, the same silicon CCDs and CMOS and so on. Image in the Infrared often times, which is why my iPhone camera can image in a very dark condition. It's not -- even though it's an infrared part, it's not really a thermal imaging, if you would. After that comes short wave, short wave is also not exactly a thermal imaging although by technologies, the type of detector and the way the image needs to be processed is much more similar to thermal imaging. Short wave, however, is another way of seeing better than visible, specifically short wave have advantages in seeing through cloud, through fog, adverse conditions. So many times, short wave gets used in maritime, so on ships or in the harbor or things like that to be able to see in those kind of conditions. And oftentimes, short wave gets used together with one of the thermal bands. Which brings us into thermal wave where we play mostly, and that is midway, thermal and long wave thermal. And those are 2 separate thermal bands and each of them has an advantage and disadvantage. The long wave where LightPath has been playing until now, are uncooled detectors, which means a much cheaper, more compact longer lifetime. However, they can only image up to a certain distance, usually fairly short-range imaging, and they can only image low-temperature objects like people, things that are in the temperature range of, say, up to 100 degrees Celsius sometimes a bit more. Mid-wave on the other hand, are typically, not always, but typically cooled detectors, which makes them far more sensitive and is a window in the spectrum in which you can typically image for a much longer range. That's why G5 cameras choose a Mid-wave as the spectrums are used because they can image up to tens of miles in that spectrum. And it can also image high-temperature things happening, for example, engine of a jet or inside the furnace like we do. So what we're doing today is we're really starting to cover more and more of both parts of the spectrum; the long-wave, we have uncooled cameras coming from Visimid and LightPath, the mid-wave we've cooled cameras from G5 for long-range imaging for the more cutting edge defense use where cooled sensors with very low noise are needed as well as some mid-wave imaging using our Mantis uncooled cameras, which can image in the mid-wave for very high temperature events like in furnaces and so on. Any questions on -- I promise this is most technical, I get. Okay. Why are we -- why did LightPath even go into uncooled long-wave or imaging? And why is there even an opportunity here to begin with? I mean, going from being a component company to being more of a system company is obviously something everyone would want to do, but it's not an easy feat to do, both technically and from a market point of view. For us, we are at the interesting point that really allows us to do this because of something that happened and continue to happen in the market. Historically, up until around 2014, 2015, infrared imaging, thermal imaging of the infrared imaging was really almost only for defense use. Those were cooled cameras, those were -- if they were uncooled cameras, they would be very low resolution cameras. It would be extremely expensive. Around 2014, 2015, a change happened started from flare with microbolometer devices. Microbolometers are the detector really for the uncooled cameras. We've got a whole market started opening up. As is often the case, when cost comes down, supply/demand meet and suddenly there is much more demand in the market, the addressable market is much bigger. And with that, a very gradual and nice slope of growth came to the market of uncooled imaging up until around 2019. A second step of drastic change happened as a result of COVID. During COVID, temperature -- contactless temperature measurement was a key technology that was identified and needed for measuring people's fever without obviously touching, ideally, but also in mass without a thermometer under the tongue or so on. And so thermal imaging found a really sweet application there that for a moment, during 2020, was an enormous boom. I mean a considerable growth there. But what it also did, it accelerated the -- how would I call it, economies of scale or the cost structure of the market. And so by needing to make millions and millions of thermal devices for measuring temperature, all around the world a lot of the different cost drivers for it, in particular in the detectors have gone down drastically. And so China that before that never made really thermal detectors, started making thermal detectors at volume during 2020 because of COVID. And as a result, drove prices of detectors down even more, which again opened up more and more markets. And so we're seeing today detectors going into more and more places simply because the cost is coming down and down. Something like automotive using a camera for emergency braking system is something for example, the flare demonstrated with Raytheon maybe as far back as even 10 years ago, but the cost was insane. It looks like the cost of a car pretty much. Now getting to the point where these cameras -- full camera system for emergency braking system might reach the hundreds of dollars or even $100 for the whole thing is -- opens up an entire new market. And so change drives opportunity. And for us, the 2 changes of bolometers to begin with uncooled sensors 10 years ago starting to hit as the technology and the acceleration of many different aspects around 2020 because of the volumes there creates a great opportunity for us to enter into a market. A market that now is already touching into more and more places. So firefighting, for example, is something that before COVID, some firefighters might have had one what they call TIC, a Thermal Imaging Camera and would have for a fire engine, 1 camera like that, that the chief would hold. Today, every firefighter is getting a camera, installing them on like a Dashcam. Automotive, as I mentioned, smart city applications, which we'll talk a little bit about. Commercial uses and sporting, a gun site for hunting thermal gunsight used to be $10,000, and you can get today for $1,000, $2,000 a gunsight. And so on. All of that is great for us. It expands the TAM. It drives other places down, and it helps us create an opportunity for us again to step into this world. A bit of market data. This comes from Yole Intelligence, a well-known market research. I would not look at the absolute numbers because obviously, those are very subjective and difficult to tell us what exactly they are. But from a trend point of view, defense continues to be a very significant part of the market but Industrial Imaging is expected to become as high as $0.5 billion just for the microbolometers alone. Just to explain a bit on the image here, we see a pie chart for each one of those segments. The part that is grade out in the chart is for detectors that are non-imaging, just measuring the temperature at 1 point alone, whereas a colorful part of the non-grade part is the microbolometers, what we call our uncooled cameras. And so very growing market there, good growth. Very significant in the industrial, even in the consumer part growing and defense continues to grow, which is often driven more by geopolitics than anything else. So harder to predict exactly. So all that creates us with an opportunity really. The opportunity is that we have a changing market. The changing market is changing technologies, is changing cost structures. It's expanding TAM. It's a lot of great opportunities for us. And again, the idea being is we do want to grow out of the components business. We're doing that because being a pure component company, a pure play is under a lot of price pressure and is being commoditized and we needed to find new directions for us. In addition, with opportunity, another opportunity came up besides the technology evolving and growing, and that is more around the materials. Germanium, a key material, as everyone knows today already, comes mostly from China. Prior to the Ukraine conflict, it was China and Russia, then Russia got shut out. So it's China and is a key material for all the optics in infrared. Mid-wave, long-wave; any of those, they need Germanium in one way or another. We have a material that is an alternative to germanium, and we have an exclusive license that we obtained for more materials that not only provide further alternatives, but actually outperform germanium that I'll explain a bit more. So the market is growing. When the market grows, a few things happen. Obviously, the prices go down, the TAM goes up. But the other thing is the characteristic of the player changes. And so if 10, 20 years ago, LightPath would make optics, the optics it would make would go to a customer that designs a complete system, needed LightPath, or someone like LightPath to make the individual lenses and then build and did the assemblies. In other words, our customers knew more about optics than we did. They were experts in optics. They just needed someone to make the lenses. The more the technology gets adopted into new markets, into new segments, new verticals, the less subject matter experts that customers are. Today, we are seeing customers that they know they need thermal imaging, but they definitely are nowhere near wanting designs their own system. In fact, they don't even want or care to know too much about the system as long as they get the pixels, if you would. And just like in the world of electronics, prior to FPGAs as an equivalent, the only way to get an efficient integrated circuit would be to design your own silicon. And therefore, anyone that was doing that level of electronics was an expert in silicon, FPGA came in and democratized the silicon, if you would, to all the electronic companies. Suddenly, you could customize your own electronics without spending millions and millions of dollars of tapering LTL on silicon and so on. Not that we are an FPGA, but there's an equivalent to that, there's opportunity for us here of democratizing the access to thermal imaging to infrared imaging altogether, because it is still a very complicated technology. It is not a CCD from sunny that you buy and you plug in and just -- and you get to build the camera. These are unique devices, you need to understand a lot about their physics, how they are used, you need to understand a lot about optics, optical coating, system design, thermodynamics of it and so on. So all of that create opportunity here. All these new players coming in, want to work with infrared imaging, want to do all of this, but don't want to invest $10 million just to set up the most basic lab for test and measurement of optical component if you would. And so the solution is really taking our domain expertise in optics and in particular, in infrared imaging that we have leveraging additional differentiators like our material, like our coating, continue to build more and more differentiated because that's always a protection for such a strategy. And becoming really the partner, if you would, for those companies to adopt thermal imaging and infrared imaging altogether into their system. And so with that, let's talk a little bit about some of the changes still happening in infrared imaging, right? So the more the material gets available, the more of the components, the technology is available the more use cases open up. So for example, fugitive gas imaging detecting gas leaks out of methane pipeline. Jason will talk a little bit about that. That's all the way from upstream, midstream, downstream, inside out, its gas imaging, not only on methane, it's also ammonia, it's also SF6 and other gases like that. Smart City applications that Todd will talk about and automotive such as emergency braking system in the car. Some people even talking about automotive using thermal imaging to see the number of passengers so make sure no one got forbid left a child in the car that might be a bit further down the road. Supply chain changes. Germanium and supply from China, not only Germanium, I mentioned 2020, multiple Chinese companies suddenly became experts in making detectors and making microbolometers -- focal planarrays, those detectors, heavily subsidized by the Chinese government to run those fabs and learn quickly how to make good devices like that. As a result, after 2020 after COVID, all of us have an influx of bolometers and detectors and even assemblies like the ones we make, coming out of China, that has learned and developed that as a result of COVID. We're seeing that today doing 2 things. One, to begin with, we drove new markets and new demand, again, prices going down, more applications, more users. But secondly, we're seeing, as a result of geopolitics, most of our customers now wanting to move away from those. So another opportunity for us. New markets opened, really that drive and costs expanded all of that. But really now opens the door to us because now everyone wants made in the U.S. or made in Europe. So further opportunities. And then continued advancement in technology, edge processing altogether, not only AI, we do some AI. G5 does some processing at the edge of image enhancement. Multispectral imaging, for example, as a result of advancement in detectors and in materials. So I bring all of those up simply because change is opportunity. And for us, every change is an opportunity to come in and take a bit more market share from the 800-pound gorilla in room, which is FLIR, the biggest player in thermal imaging. So for that, we need to create differentiators, and we need to continue to develop differentiators. Some came inherently. Materials, we had BD6. We went out and proactively licensed from NRL the portfolio of material. Some come from development. We acquired Visimid Technologies, Visimid developed shutterless imaging, multisensor imaging, some of it we went and just seeked partners to do it with. Our AI hardware was done together with Maris-Technology in Israel simply because we saw an opportunity, again, a change and opportunity to do something else and to create more differentiators. And some of them are just more related to process. Visimid, for example, has a very agile development process, allowing them to develop very quickly customized solutions for customers. What might take 2 years to develop a new thermal camera can be done in agile small cycles in months now. Okay. Another differentiator that sort of came our way but also a bit proactively is the material. And there are 2 aspects there. One is the supply chain. I don't think I need to talk too much about Germanium. Everyone by now already understands and see that. And the second is the properties of the material. So to begin with Germanium, obviously, it comes from China, we make a glass that is an alternative for it. We're not the only ones, there are other companies that make chalcogenide glass, our BD6 glass is an exact same as the material from the shot called IRG 26 and from Umicore and maybe another company. But we have the other materials and -- materials are exclusive to us and that only we make them and only we have the license to make them. Now this isn't to mean that we're going to convert all their customers to use those 9 exclusive materials, not at all. In fact, BD6 is still going to be the workhorse and what most customers use. But having that portfolio of additional materials, it's kind of like the corvettes in like corners, if you would, in the showroom example. It is positioning us as a leading company in materials, positioning us as the most cutting-edge infrared material. And even if only 10% of the customers end up using the NRL materials, which will probably be way more than 10%, but even if it's 10%, the other 90% actually are there partially because they know of the NRL materials and our positioning in the market. And so some of this is technical, some of it is also pure psychology and marketing to through it. I mentioned the materials and advantages compared to Germanium. And given we have a bit more time than the usual 15-minute presentation, I'll use that to explain a bit more about this. There are 2 things that these materials bring to the table. The first is they offer for optical engineers and designers more options. If you go to design a camera that works in a visible light today, like our cellphone camera, you have over 200 different types of glass to work with. And they're very slightly different from one another, okay? They're different in what's called refractive coefficient or Abbe Number or dispersion, all of those parameters that are valuable when you're designing a system. And so when you go to design a camera, if you have 200 types of glass to choose from, it doesn't -- you don't need to be an optical designer to understand that you have a pretty wide selection and you can really choose the optimal ones, hence come out with cameras like in our cellphones that have 7 lenses, each of them, some of them 9 with pretty much every lens is made from a different material because the designer made them work together to come out with the most optimal design. In the infrared imaging, specifically in the mid-wave and long-wave, it is nowhere near that, no less than 10 materials altogether to work with. And so if you're a designer, and all you have is 10 tools in your tool chest, you come up with lenses like you see on the left side here, I can point out, what's got the baseline design. This is a zoom lens that has 21 individual lenses in that, okay? There's a lot of disadvantages to having that many lenses. One is, obviously, is the cost, right? 21 lens need to be fabricated. Second is the weight. It weighs much more than if you could do it with much less lenses. But also the optical transmission. Every one of those surfaces, every one of those lenses loses a fraction of percent. Maybe 1% of the light doesn't go through, gets lost every time. 21 lens elements and 42 surfaces. That means if every one of those surfaces loses even 1%, and that's a great result, they lose only 1%, you're talking about already nearly half the light gone by the time it reaches a detector. Instead, with the new materials and we introduced 9 -- new materials. This is a paper that was written actually by a customer demonstrated, taking the same 3x zoom lens, redesigning it to have 12 elements. Simply because there's more tools now in the optical designers' tool chest. And so our argument and what our customers and optical designers understand oftentimes, once they dig into it, is you don't need to completely replace germanium. You don't need to completely replace all materials with BD6. What we're giving you is a far, far better tool set that allows you to have twice the number of materials, if you would now, and design far better systems. So that is one aspect of why is that it. If you're curious on why that is important, what is the different materials that we circled here and read a few examples. Some of the are the fact that the thermal optical efficient, the way the material behaves and the temperature changes, is different. Like this one's negative 18. Here, it is 1.2, which is nearly 0. To just to put it into perspective, a material like germanium has a thermal optical efficiency of 700, it is highly sensitive to temperature changes. So having those variables, having been able to choose materials with a thermal optical coefficient or with the refractive index that is the optical power of the material. To those levels, those are the kind of flexibilities and tools, the optical designers need. Another really interesting one is CTE, Coefficient of Thermal Expansion. NRL were able to develop 1 material that has a Coefficient of Thermal Expansion that is identical to that of aluminum. That means that most of the lenses are held in aluminum tubes, aluminum holders to have materials that expands and shrinks through temperature, the same way aluminum does is a great advantage for the mechanical designers, which brings us now to the other advantage of those materials. As I mentioned before, germanium is often used but not only germanium, materials like silicon are used because germanium is very good for imaging in the long-wave, sometimes in the mid-wave a little bit, but it can't image in the short wave. Silicon can image in the short wave, can image in the mid-wave, cannot image in a long wave. And so yes, there are 10 materials of our fleets, they're very limited in their range. Cameras are able to image in more than 1 wave band. It wasn't always the case. It's been developing in the last few years. But today, you can get a detector that can image both in the short wave and mid-wave. But that's useless if the material you're using the glass, the germanium or the silicon and so on cannot transmit all these wavelengths. NRL's prime reason for developing these materials was this, wants to develop true multispectral material -- sorry, materials that can be used to collect light, shape it and focus it at the detector for all infrared bands. In fact, when you look at some of the materials, some of them go down to the visible light, 0.57 micrometers or 570-nanometer is what we know as greenlight. 61, 610-nanometers is red-light already. So these materials not only image short wave, long wave and mid-wave but some of them even image near infrared, the same night vision goggles or even a little bit of visible light. What does it mean? That means that a payload like this on a drone or a tank or anywhere might not need 3 separate cameras here down the road because you're seeing here probably a short wave camera, a mid-wave camera and the visible cam, maybe even sometimes a long wave camera also. But if you can now combine those, again, the same analogy is here, the weight, the total size, needing just one detector. The power consumption goes down. All of those things are made possible with those materials. Our Mantis cameras that is streaming this video feed here in the corner actually is already imaging in both mid-wave and long wave simultaneously and is made possible because of those materials. You could not design the Mantis camera without the material we call BDNL-4. We tried and you just couldn't get that designed done. Okay. And just to talk a little bit about those materials. We licensed 9 materials. We have the right for additional materials. One material is in full production already, BDNL-4, two materials really ready for production. We're just gradually transitioning them as we're building manufacturing capacity. The announcement from China in December threw a bit of a curveball to this plan in terms of a lot of the capacity had to go towards making BD6 glass and existing BDNL-4. So it slowed things down a bit. We're addressing that by referring more resources into it. So BDNL-8, BDNL-6 will be available soon. In fact, BDNL-8 is already used in 2 DoD programs, where we gave them a sort of initial taste of that and to develop around it. But we haven't, again, publicly announced it just because we don't want to disappoint customers, we have limited capacity on that. We're now ordering more equipment. We are adding more people. We're increasing the capacity that should get sold. BDNL-7 and 9 or type of there are in qualification process. That is a qualification process we're doing in conjunction. We have Department of Defense, defense logistics agency where they are actually bankrolling the process to qualify those materials by out of the need that the market has for them. Those 2 materials BDNL-7 and BDNL-9 were chosen a bit earlier than the others because the army had the specific programs that needed one of those materials. So we put them ahead of the others, but we're very shortly going to get to the West and then consider whether to license raw materials from NRL or not on that. Another type of differentiator that I mentioned, so materials was one the ability to customize the camera quickly is another one. With the acquisition of Visimid, we added in the capability not only to customize design and customize optical assemblies but also the video engine of the whole camera core, if you would, behind that. And so together with Visimid we're now able to make complete thermal uncooled cameras beginning to end where we can customize all aspects of this. This means that the process of development of a camera for a customer means this agile process, multiple iterations where together between the Visimid and Orlando teams, we're able to optimize the form factors, a choice of processor, software, the optics, system integration and a complete customization. One example of that is obviously our Lockheed Martin project Visimid is doing, and we'll talk about as well as other programs that we have, where we're developing custom cameras. Okay. That's, I think, it on the sort of strategy level and differentiators behind that. Any questions on that part first? Or do we do all the questions at the end. But then, okay. Jason?

Thanks, Sam. So Jason Messerschmidt, VP, Global Sales and Marketing. So kind of looking at the engineering of a new LightPath, as Sam was talking about a strategy which actually is kind of evolving the company up, what I would refer to as up the food chain, right? So when Sam and LightPath as a whole, you came about, we were talking and selling lenses for a $1, $2, very commercialized market that has increased in price pressure and just all kinds of global competition, right? So as we look at the progress, as we go into LightPath 3.0 state, you're talking difference in ASPs, which is kind of a leading indicator of the complexity of the product, the value you're supplying to a customer, how much of that overall product program and solution are you actually owning in conjunction with that particular customer. So are you going from just doing lenses, ASPs and the dollars up to maybe $50 or $60. And then you're kind of moving into the second step, the LightPath 2.0 part of it is creating assembly, right? So maybe multiple lenses, creating a semifinished product to supply to a customer for them to put into their own particular system. As you get beyond that, that increases the ASPs, pretty significantly when you're talking compared to $1, right? So that's a nice jump. And then you move into where you're doing more of what I would refer to as like a subsystem where you're capable of supplying the overall electronics package, customize their specific means, the optical assembly, giving them the right communication ports, the customization from Visimid, all the core optics from the legacy LightPath and giving them a full-blown imaging system that now when we're talking like our furnace cameras, you're talking ASPs up to $30,000. So I have to sell a lot less $30,000 cameras to get to a market that I want to get to, then compared to trying to sell dollar lenses that are just getting competed with everywhere. So those differentiating factors. And then at the very end, kind of -- we'll talk about this a little more -- much more in depth later. Now you're talking about the addition of G5 infrared. That brings a whole another layer of capabilities because these 2 capabilities here are very married together in a lot of the applications we'll talk about where there is a definitive need for both cooled and uncooled products. Maybe it's a cooled camera for something specific, and there's 4, 5 uncooled cameras within that same application. So us being able to serve that entire market now with the acquisition of G5 infrared is an extremely exciting time for all of us. Al?

Well, I am Al. So now I wanted to talk in a quick minute about the path, LightPath 1.0 to 3.0. It's not just about product, development, although we focused on a technology and product development. The entire organization had to be transformed and is still in the process of transforming to just support that vision, that product, the sales force and everything else. This is just a few things. It does definitely start with a strategy. But over the last 4 years, we had to rightsize the company. So we had 5 locations, 6 locations that are now rationalized down to 3, although we just added 1 and 2. So now we're back to 5, I guess, as of Tuesday -- but there is good reason. We deemphasized our investments in China 4 years ago, right? So that was part of our strategy from the beginning. Geopolitics then took hold. We had issues in China that were related to all the usual China problems, bad management team, fraud and everything else that had to be done to the global footprint, the rationalization and then reorganizing everything for the strategy -- around that strategy. So you have to have a strategy, you have an idea where you're going. And then actually, everything else has to go with. We even had to downsize the Board of Directors and even make some changes there, which is not always an easy thing to do, but your bird has to be supportive just like we support them and the investment community, right? We sunsetted unrelated products. We just sunsetted, I think, the last of them last week, 2 weeks ago. We eliminated fraud in China. We've in-sourced some things and outsourced other things. That should be both ways. And from the tour today, you saw some other opportunity that Sam discussed about. We're going to outsource going forward. Obviously, the acquisition of Visimid, and now the acquisition for G5, all on that path to 3.0 as technology-driven as LightPath was in the 1.0 version, we had accelerated our ability to get to 3.0. Manufacturing back in the U.S., anybody who's watching, I encourage you to come visit us, you'll understand what manufacturing in the United States looks like. Of course, the NRL technology licenses, the patents that were around that and the expansion that to the EU is a big part of overall plan, and had started before there was a product, before we tested anything before DLA gave us a dime, right? So you have to follow the strategy there. And of course, now it enables us to do some more of the EU defense work. I did touch on the facilities over the last 5 years or so, we've invested somewhere north of about $8 million or $9 million, most of it in the United States and in Latvia. Latvian market or the European market is very favorable and Latvia is a great footprint to be there with. And of course, the expansion here and reinvesting in the United States, very popular today, but we started that journey about 3 years ago. The China facility is half -- actually, we had 3 different sites in China. We're down to 1, it is the smallest manufacturing location of all the locations. So that I want to give you an idea of where we are with that. Texas is the smallest in the moment where Jason is, but they're very specific, very focused and rapid R&D, rapid prototyping, which then can be launched either to Orlando, Latvia or in the future G5 for manufacturing and of course, there's the facility here, which is now finished and no need to expand it any further. We have plenty of capacity and plenty of ...

Thank you Al. So we'll talk -- we'll expand a little bit more on where we're focusing, what we believe are our pillars of growth as we change the company, going from that component manufacturing to the assemblies to uncooled cameras to cooled camera applications. We want to target certain areas where we know we have differentiating factors. We can go in and we can actually take a problem that a customer has and provide them a solution for it, that they're going to find value in. Not just making things to make things, making things for an actual purpose based on the industry and based on where we feel we can be extremely successful. So optical and camera assemblies is kind of the ground work that got us to LightPath 3.0, right? Taking multiple lenses, putting it in an assembly, selling it to customers, moving our way up that particular food chain from a $50 lens to a $500 assembly to multiple thousand dollar assemblies, depending on the complexity of that particular product. So we are totally customizable. What you see in the picture is also or what I would refer to as an assembly that includes an electronics package, a lens, specifically in this case, designed to be able to visualize gas. So this would go out to an integrator, somebody that's going to put it in their own system and probably an ATEX type enclosure and take it out to an oil and gas site and put it into a video management system to detect methane leaks. And that's an uncooled camera with Visimid-based electronics and especially coated lens LightPath. So I mean, you're getting all the different worlds within that particular product to solve a problem and be able to go out and capture that market share. Government & Defense and Aerospace, a lot of this revolves around the cutting-edge materials, the alternatives to germanium. The materials Sam talked about when you're getting into some of these really complex stuff where you can take a 21 element assembly and turn it into a 12 element assembly, putting tools in their tool box to be able to do more than you can in any of the other commercial or industrial spaces. And we're looking for and continue to look at what I would refer to as new commercial applications, oil and glass plant emissions monitoring. Typically, that has been served by cooled cameras, so cost prohibitive for mass deployment. All these old oil pads that need to be monitored and other areas, you could do that with an uncooled sensor from us with the right electronics and the right lenses coated the proper way to be able to visualize it. You can put 4 on a site for half the cost of 1 cooled camera. But then you also go back to the conversation from a couple of minutes ago, coupling a cooled camera due to the sensitivity due to the length of being able to visualize and add that to an uncooled camera and we can provide an overall solution. Smart City applications, which I'll have Todd talk about in a little bit, security applications, the G5 infrared camera, being able to turn around and visualize things from a very long distance. The uncooled product lineup, our Mantis, which is streaming in the back and when you rewatch a web version, our high-sensitivity camera, less than 15 milli kelvin sensitivity, allows us to visualize gas better than any other uncooled camera on the market. Furnace cameras being able to inspect inside large industrial-type furnaces at extremely high temperatures, 1,500, 2,000 degrees Celsius. EdgeIR, which is our relationship with Meris-Technologies, being able to integrate on the EdgeAI algorithms and our compact suite thermal imaging cameras, our solo, which is over on the table that you can also see. Mr. Liebert is going to talk to the group about our Lockheed program that Mr. Liebert and his team in Plano is really heading up.

Thanks. I'm Jason Liebert, GM for Visimid. We happily have joined LightPath in July of '23. So we're glad to be part of the team and contribute here. I think the big part about this to really talk about it, we're excited about this program. That it has huge upside for production. And right now, we're currently building units that are [indiscernible] they're going into flight test. They're going into qualifications. We just had a design review with them yesterday that went really well with our Lockheed customer. So really excited about that program. But I think what's interesting to talk about is kind of back to Sam's point earlier about our customization and being a partner to our customers, and that's really how we got to this point. The whole thing started in 2017, 2018, when Lockheed was looking for a solution and they went to the usual suspects to try and get somebody to build something for them. And they just couldn't get the partnership. They couldn't get the response back from those guys to help them get there. So they ended up coming to us and came to us with the challenge of, "Hey, do you think you could make a sensor that could do these types of things in a package small enough to fit into something the size of a roll of nickels?" And we started off with the PowerPoint and I was like well, "I don' know if we can do it or not." But working with them over several years, we actually developed, built prototype to deliver to them a solution that they were actually very excited about that they started testing. And in that, in the delivery of those prototypes, another division of Lockheed that was pursuing this particular contract saw that, said, "hey, this looks like a really good application, something that would work for this other application" and then actually took that and used it to integrate, which is really kind of Lockheed's kind of setting up their differentiator for their solution on how we think we're going to beat Raytheon in this endeavor. And it all centers around something that started several years ago. And then we still have the original prototypes that we built that hopefully will be something that we get into production later so.

Thank you, sir. We have other existing programs of record, we have multiple areas of program of record that were -- some of which may even been in production while you were out touring the production floor. Different programs that have been in place for quite a while and also different programs that have come about in the recent past with changes in some of those particular applications, especially the in-space communication is one of the, I believe, one of the coolest ones in where a lot of our products are being utilized. So some key applications in industries. We talked a little bit about the optical gas imaging camera. You got -- you got a federal mandate through the EPA to regulate the amount of methane that has leaked into the environment. So plus a lot of these what I would refer to as super majors are just good corporate citizens and plus it's just -- it's money that's flying out. They want to save that, right? So there's -- they can very easily literally visualize the return on investment when they're deploying cameras that can help them keep their leaks under control, not just from a corporate citizen standpoint or an EPA standpoint, but money back into their pockets that they can utilize and reinvest in other things. Again, typically, this has been done with cooled cameras and it's kind of limited the amount of resources that are capable of putting at it, but with an uncooled camera that can visualize methane and other VOCs very easily. This is going to be really good for us, and it's definitely an industry and a vertical that we're paying a lot of attention to and moving forward with. So also in the utility market, they have a gas called SF6 and when one of these goes bad, it will leak out and it's extremely bad for the environment. Not as much of regulation surrounding it. But it's really bad for the environment, and these companies know it. So they spend a lot of money trying to minimalize the effect that it puts into the environment. So they're -- right now, they're doing it all by handheld devices. They got to send the guy out in a truck. And as we get into this fixed autonomous-type monitoring of multiple different kinds of applications, this is where these particular devices become critical. Our furnace applications. You'll see in the back corner there, there's a furnace scope that goes into a big large industrial furnace, 1,800 degree, 2,000 degree celsius-type environment, be able to visualize the inside of the furnace to be able to see slag buildup. They don't want to shut these things down. These things are 10 storeys tall, huge, huge environment. They don't want to shut them down if they don't have to because it's a loss of money, right when they do that, but they also don't want something bad to happen to them, so they have to monitor them internally. And our technology with the uncooled mid-wave camera, it provides them the ability to put it in multiple different places and be able to see everything they need to see to be able to know that they either need to turn it down for service or further inspect something down the road. Mr. Todd Croteau, is going to come up and talk a little bit about our automotive and Smart Cities.

Todd Croteau, Business Development for LightPath. So 2 opportunities that LightPath has looked into over the last year since I've joined. One is automotive. The other is Smart City. If you're familiar with Smart City, we'll talk about that in a few minutes. So automotive, NHTSA released the FMVSS Federal Motor Vehicle Safety Standard, No. 127 April -- March, April of last year. What is that? It has given the directive to OEMs that they have to stop going forward, 65 miles an hour in a certain distance. As well as a certain distance at a certain miles per hour, I believe it's 45 in reverse. So how do they do that? They look at the sensor suite that the cars, the manufacturers are using now and say you have to do that. I've spoken to lobbyists, I've spoken to the OEMs. I've spoken to LiDAR manufacturers who have LiDAR on the cars now, they seem to think that they can do it with software and the sensors that they have now. Others seem to think that we could use an infrared sensor, to help with that, there's a positive and negative. OEMs say, please don't make me put another sensor on the car. It's just going to add another cost. Others say it's a good idea. It is just untested. So we're talking to everybody in that vertical to see if there is a play. We have a camera with a specific lens that can meet the needs for that. It is just unfounded and untested yet. So we are going up into that direction. Smart City is another vertical that's very promising. There are a lot of smart city companies that are working with municipalities, states and countries in regards to gathering technology to help make -- I will say they're city smarter and more efficient. We are under contract with a specific Smart City manufacturer where we are manufacturing our CST Solo infrared camera to go in a box with 2 other sensors. They have a deployment that's scheduled in Q3 of this year. And what they do is they take that data stream that comes out of the whole box, either sell it back to the municipality or city or they parse it out depending on what they're looking for. So this will be a first for this company and first for the city that is being deployed. It's really amazing. So we have our first delivery, I believe, at the end of this week and then following contract after. So if we take a look at the 2 opportunities, Automotive is , I want to use the term, scary one because it's automotive. Smart City is the exciting one as far as I'm concerned. So we are seeing some promise. Thank you very much.

Thank you Todd. When you're on your way to -- when you're on your way to the cool event that we're going to do tonight, take a look at every intersection that you go to and look up on the poles, you'll see cameras, multiple cameras, sometimes multiple sensors, even some radar. And then look at the corner of the intersection, there's always going to be a silver box there. You would be utterly shocked at the amount of technology that goes into every intersection that you drive through. It's quite shocking to be perfectly honest. So I'm going to turn it back over to Sam to talk about our exciting G5 acquisition.

Thank you Okay. Great. So yes, definitely a very, very important incremental step for us and the group, we're excited to have with us and be working together. So lots of great things here. I mean they fit into what we call our LightPath 3.0, should be obvious by now in terms of technology, in terms of product, those here physically, you can see a demonstration of it. We have a camera setup outside and streaming on the large monitor here. We can see it. Tomorrow, I think we're going to even try and catch some video of a SpaceX launch happening from here with these long-range cameras. G5 located in Hudson, New Hampshire. The location is actually pretty important since a keen New Hampshire area, for reasons I'm not sure why, is a center of infrared optics per se. And so it's basically how much of the infrared optics that we make here actually ends up shipping to that area to different customer. So besides G5 being a great company and an incredible team with strong products on an amazing growth trajectory, it also gives us a physical presence in an area that is pretty important in this part of our industry. So we've talked a number of times by now, and you all set up for hearing on our growth and transition. But if we just look at ASPs as the indicator for the complexity of the product we do, to the value we create, to therefore the value we can capture. ASP is a very good indicator, lead indicator to that. And going from those notorious lenses that have been dropping and dropping in price to the assemblies to uncooled cameras to now adding cool cameras is a very natural progression in the complexity of the product, the value we're creating and soon to be shown in the financial results, the value we are capturing also long term. The transaction is the upfront payment of $27 million, a 25% of it taken in equity by the owner of G5, so is staying on board and part of a sort of vote of confidence in what we're doing and direction we're going. Earn-outs structured over 12 and 24 months, simply because G5 is on a great growth trajectory, we think, and the G5 team thinks there's a lot more growth for them to deliver on, and we want them to enjoy some of that. And so if and when they will deliver on those growth rates, and we're talking here of growth rates of 40%, 50% a year. There will be an additional earnout there, which 1/3 of the earnout is paid in stock as well. We closed the transaction already. So I don't need to talk about all of that part. It's a great strategic fit for us. We immediately get the nearly 60% jump in our top line. Highly profitable, highly complementary product. We share a lot of the same customers. It's actually most of the customers either side e-mailed to tell them about the acquisition already worked, as I have one in any case. So some great synergies there. Many of the customers of G5 that buys the cooled cameras and integrate them in a large pen tilt, you will see those customers also have smaller pen tilt systems that have uncooled cameras inbuilt. And so a really great synergies there of that culture, as those here present can tell from all the jokes flying around. We already know each other pretty well. And the 2 companies fit very well to give -- and the company is at the growth trajectory. I mean, we'll share in a minute a contract that we literally just won and are about to announce publicly that is one of those. So very exciting times. The combination of the 2 really positions us in a very unique place in the industry. In fact, other than FLIR, there's almost no companies out there today that have a combination of offering complete ready-to-use final products of cooled and uncooled cameras. The sensor companies like Lynred in France, it would make both. There are some companies that make modules for cooled and uncooled, but there are very, very few that have that range. And as you can imagine, the market we're going after is such that we're building this vertically integrated company to become an industry leader in infrared imaging altogether period. There's a lot of markets there to take and we are very well positioned now both in products, in key technologies like our AI, like G5 Adcom image processing and the programs of record like our NGSLI, single-replacement like that pouchy program and like 2 big programs of records that G5 already had. And so we're positioning ourselves to become a at least $55 million in revenue in the next 12 months in terms of top line revenue and growing margins, growing EBITDA numbers that Al will talk about. A range of products all the way from the -- what they call short range, which for uncooled cameras is still long range. But when you talk about ranges, you talk in optics world about DRI, which is the ability to detect a person, meaning you see a little bit of a signal there, if there is someone there, recognize a person that looks like a person to identify, "Oh, I can actually see the exact person." And the ranges get calculated by a function of optics of evolution and so on. And you're talking about this industry leader, and this is by far the leader here, can detect a human, a person by as far as 37 kilometers away. That's just crazy number. And to show what that actually means that we are live, this is an airport 7.5 miles away taken with this camera since 785 -- in theory, the 785 should be able to identify, again, identification as this image on device, identify a person from 8 kilometers away, roughly. And here you see a person in this image. We cut it out here at 7.5 miles clearly identified. So these cameras really do deliver up to the cutting edge, the theoretical limit of detecting and identifying people of vehicles, ships or drones or you name it, everyone has a calculation to it from extreme ranges. As a result, G5 has installations that are in border patrol, now we're in Navy, in counter UAS in key facility protections, prison systems -- power plants and more and more and that list is just growing and growing. Another technology G5 has similar to our AI tech embedded in the camera, G5 embeds what calls an Adcom image enhancement technology. You can see it here in this image where the Adcom is applied to the square in the middle and you can see just how sharp this image at 6 miles away is compared to the edges of the image. If you look at the vehicle on the top right corner here, blurred versus vehicles here inside with the stabilization, motion compensation and late -- and some of it is also turbulence mitigation. When you're imaging something that's that far out, even smaller wind and gust and change in temperature of in the air causes turbulence and impact the image. Currently, G5 focuses on 3 main areas or has been until now and that is a long-range detection as in border, naval as the programs that we just got awarded and surveillance in general. But together with our sales team and Jason here that came from FLIR and has been bringing his collaborators from FLIR slowly over. We believe there's much more for us to grow into. And counter U.S. is a big one, critical infrastructure, gas sensing LightPath already has 1 camera there. There's a G5 camera being developed that will be complementary to it, multispectral imaging that could be done with our unique materials, integrating our AI and so on and so on. Lots and lots of synergies there. So strong synergies on the sales and marketing, strong synergies on growth, operational also in-sourcing as a component, the G5 currently outsources, making them at LightPath using our materials instead of germanium, some redundancy and operational support and such, but not huge. G5 is a very lean organization. And then lots of technology synergies in the different differentiators that both companies have developed over the years, and now we'll work together on both platforms of cooled and uncooled. As an example, this is a cross-section of a G5 camera. All these lenses in here, all these parts will be able to be sourced now internally with LightPath -- terms of one. We're not pushing on doing some day 1 because again, the main driver for this acquisition is the growth of both companies. It's the portfolio with material, but there are also cost saving synergies in terms of vote. Lots of great customers for G5. I mean, pretty much who's who in anyone that uses these type of cameras. And 2 programs, maybe, Mike, if I can put you on the spot quickly talk about it.

Yes, [ Mike Morelli ] from G5. So the slide up on the screen and your viewing right now is -- which one is the CTS -- okay. So this is a DHS Border Patrol program. It's gone through several name changes and iterations over the years, but it has whittled down to 3 primes that are have received IDIQ contracts to deliver hardware for the border on this program, and we are partnered with albeit North America, who is the incumbent in the -- for fielded systems prior to the CTS program that was called IFT. They delivered back in 2012, they were awarded a contract for 50 tower systems that were the most technologically advanced border security systems ever deployed by DHS. And the CTS program is basically a follow-on to that. They've combined technologies from several different programs into the CTSE program. And one of the biggest differentiators for this program is intended to be autonomous. They're trying to take the man out of the loop. So IOIs objects of -- they try to identify people targets, vehicle targets all with software and then decisions made whether to engage DHS folks as well at that point. So right now, we have just finished -- we are finishing delivering our first LRIP units into the field for deployment. And they are planning DHS is trying to catch up on a delivery schedule that they're a little bit behind on, and we hope to see more awards later in Q3. Pretty much sums it up there. Okay. Yes. So this next slide here is a Navy program called SPEAR, shipboard panoramic electrooptic infrared system. It is an L3 product that is going to be eventually deployed on all of the large vessels in the Navy. We were originally awarded design $1 million design contract to take one of our standard products, optimize it for the application. And we just received the first order for 7 units to be used for qualification and testing and initial deployments. And this is a program of record. It has a light going out into the future. And this is definitely one of those products that is on the high end of the ASP skill that you've seen. So it's great to be on a product like this that's going to have a long life. And considering I didn't have any planning, that's it.

Yes, the SPEAR program is a flagship program for the Navy in terms of protection of vessels against UAVs, against small vessels, small marine vessels against cruise -- so it's a pretty big deal. And in fact, the talk already on the next generation of spare by the Navy, which is already designing using our NOL materials. So even before the acquisition, we were already sort of in the same boat, no pun intended. But now this really puts us -- combines our key technologies together in a way, I know the Navy is extremely excited about. It's not the only thing, and G5 has other programs of records, which are continuous. For example, the Urban Warfare Training Centers -- system on aircraft carriers with FAA ongoing repairs and replacements of cameras or NVFS towers and multiple prison security systems around the world. And those are just a taste of it. But each one of those are ongoing programs and each 1 of them is alone in the 1 million to 2 million a year for G5. Okay. Now the numbers.

All right. So I guess first comments about a large bulk of the financing was done through conventional preferred. Northland is the lead investor on that. They really are fundamental long-term investor, right? Sam and I were very skittish about this entire convertible approach. But I think we found the right partner. [ North on lab ] will have a board seat. Well, they'll be on the board for up to 5 years. They really are a participant. This is a seasoned group who have sort of decided to use their own money, great on their own investment firm and do it sort of the way they've only wanted to do without being beholden to individual investors, so they can take a long-term view. We're only the third public company that they've done this way, right? So they have been very selective over the last 3 years. Literally, one a year very pointed, very selective. So we did get a feedback about whether or not it's toxic. It's not -- can be in today's environment. And for those of you who've been around a few years, it's how they used to be before they became toxic. So it took a while to sort of negotiating the -- rest to get it where it is. So just the features of it. So I'm not going to read it to you. The next one is an eye chart, so I will read it. So around the deal structure, the convertible preferred is $25.5 million. The unit conversion price is $2.20, right? So the per share is $2.15 plus $0.05 on the warrant. There's 37.5% warrant coverage struck at $2.58 million, right? 6.5% interest. We have a PIK option on the interest. We could pay it in cash or obviously, shares. There's a mandatory conversion provision after 3 years and then redemption provision after 5 years. All right. Those were 2 things we were very strong for -- and the ability to get -- yes. The promissory note is $5.3 million. If you recall, we had a note for $3 million. So we took that note out and that note had been rolled into this whole entire transaction. That's why we're saying $4 million of it is new money, $1.3 million is a rollover from the old $3 million note. It's 10% interest as long as we maintain our covenants. If we break the covenant up to 12%, and it's pretty standard bank covenant type stuff, nothing unusual in there. It's a 2-year term, so it's not intended to be permanent, but it is intended to bridge it. And then we did a small piece of equity, $1.5 million $0.5 million is new money at $2.15, no warrants, $1 million rolled in from the existing note. So it's the promissory note that we had $3 million in place with the same terms as the convertible preferred. As you said, North on capital cost to existing -- already existing investors are the contributors to the entire thing. In total, we brought in $29 million in cash, walk away after a transaction of $6.7 million. So we don't have to invest CapEx. If you're on a tour today, you heard me say that 50 times. But some of these programs, particularly spears and some others are going to start kicking off we do need working capital for those, right? The lead time between ordering materials and actually delivering quite why don't we -- there is a mandatory conversion price is a little repetitive here, optional redemption period from LightPath or North run after 5 years. North was on the board. And while North and is on the board, they've also agreed to a no short provision, which makes sense. In terms of shares, that's the actual share count, how all of this converts. So it's $600,000 in equity, $1.9 million, almost $2 million to the sellers, $11 million in preferred and it's hard to read that, $4.5 million in preferred warrants. Talking a little bit, this is not guidance -- not guidance, all right? Talk a little bit about what were -- what our expectations are. So we have pretty robust models that we built, sort of worst case, best case, better case, fantastic case, right? And we modeled it out here. But the base case is built, the base case is sort of this little blue bar here, that's built on what we think the 2 companies would do in normal organic year-over-year growth, being a little aggressive in the market, bringing some new products to market, but nothing over the top, right? So we call that the base case. And it has high probability opportunities that are not $10 million and $15 million per year, not those kinds of things, right? That's what the business case is built on. That's what the price around G5 was built on as well. The next little category is high probability opportunities. This is something like the base case plus Apache. We know we're on Apache. We know it's going to happen. High probability, it will happen, so we build it into that. That top band is when we started seeing things where the Lockheed Martin program win, and you've got a $10 million a year event. The SPEAR's program, when and you've got a $10 million a year of it. It's not $2, it's $10 million, right, those kind of things. So it's entirely possible that we could hit those large opportunities in the long run, but we build everything around basically this in this point, we're right there, all the economic models to warrant it. The earn-out for the sellers is based on, of course, doing much better than that. All right. Last numbers on G5 itself. At the end of 2024, still unaudited, we'll have it any day now. They did $15.1 million in sales. They had $5.7 million in gross profit, 37.8% gross margin. $5.6 million in expenses, G&A expenses and an adjusted EBITDA number of $1.2 million or 7.9%. We are targeting a 20% growth for them. However, the earnout is at 21%, start of 21%, and Mike is one of the -- folks. They have a high level of confidence they'll do that 21%, which is obviously a lot more than 20% year-over-year growth for that. The cost of goods have no synergies in the assumptions. Sam just did the 3D cross section of what the camera looked like. We do think we can reduce cost of raw materials cost of components and even maybe simplify some of the optical designs. But it's not at the top of the list of things to do. That's a 1-, 2-year time plan, but there are opportunities there. The gross margin expectation is 35% to 45%. And this is pretty important. They're going to have to be somewhere in the center of that range to make the EBITDA target of 20%. So the earn-out is gated on 20% EBITDA. It doesn't matter what the revenue number is, right? But the first stage is $21 million. So at $21 million and 20% EBITDA, they earned at $21 million and 18% EBITDA, no earn-out. So in order to get there, they're going to have to do 40% margins at least. G&A expenses, there is an opportunity for some cost reduction there. But as Sam said, they run so lean, I don't imagine that it's going to be a significant amount of money. And it's certainly not our focus at all. In fact, we're hoping Mike and the team grow real big and the cost of sales and the G&A expenses are a lot higher here, but to the positive, not to the negative, right? So this is really not a cost down play. It's one of those unique situations where it's really not. And at the same time, it doesn't require heavy lifting and heavy investment other than working capital for us. Their footprint is good, their CapEx is set, and they're good. The EBITDA target is 17% to 22% for the next fiscal year. Obviously, we've talked about the earn-out being a $20 million. It's entirely possible that they could earn their earnout and then so it's not -- they pick the numbers. So your confidence level is high. It's a good acquisition. It's accretive in every element, and we financed it as carefully as we can in this scenario that we're in.

Thanks. Okay, very quickly before we break to Q&A. We often get asked how to measure success in 2025, I translate that into what to look out for? What should one pay attention to in order to see if we are on plan or not on plan, how we're doing versus that. So of course, we're expecting an accelerated revenue growth, cross-selling of G5 products, putting Jason and his team on the spot, but there's a lot of expectations there that the 2 teams can help each other quite a bit in cost setting. ASPs will naturally grow as we go down that path and anyone that monitors those in our queues, we'll be able to see it. We cannot guarantee if Lockheed will win or not win, but we will have progress with Lockheed. Now just as a reminder, in addition to the large NGSRI program with Lockheed, we already know that they're integrating our camera solution into at least 2 more platforms. So we will have some announcements around some level of progress. It could be test results. It could be new programs, it would be shipments and flight units and so on. But we'll try within reason, without tipping the hand for the competition, provide updates about how we're doing with that program. Of course, it's a competitive bid, so we have to be very cautious there. We absolutely expect more defense contract wins and specifically also more wins around Black Diamond. We'll be trying to share them even if they're not significant to the level of material, even if it's only a $0.5 million contract and so on. But if it's a design win where we switch a customer over from Germania to Black Diamond, we will try and share those as much as we can. Our EBITDA turning positive already. We expected within 2025 to grow to a point of 10-plus percent, and we know our alternate goals were also. And then keep an eye out on new camera products, both uncalled cameras and cold cameras. We'll be sharing cement's announcement. Again, keep in mind, many of the press releases we issue are designed towards our customers first. So they might not have the information, financial investors want in them because of -- sometimes they're just to drive sales. But reach out, and we are happy to discuss with investors as possible, whatever we can. Okay. And I think with that, we can do Q&A.

It's very informative and [indiscernible]. As you look ahead to the year ahead, -- is there any -- if you don't put the acquisition have a does that have anything to do with the growth in the workforce? Is it going to be more and more hands on deck? What do those numbers look like and how do you feel that those must be rolled out in terms of new jobs, new [indiscernible]?

Yes, absolutely. Thank you. And the question was for those online of repeated was, with the growth we're seeing, what are our expectations on growth in the workforce hands on deck, recruiting and so on. And I'd say the answer is, in general, absolutely, yes. I'd say in all of the free locations. I'm actually pretty excited be able to talk about that were -- U.S. side now as being the largest part of the business after the G5 acquisition, very, very different. So what the company was on a few years ago. But all 3 locations have open positions -- need for technical people. Orlando specifically was the heavier manufacturing part is done. We have multiple positions for assemblers, technicians, operators -- poses engineers, you name it. We have some great partnerships with Valencia College here in Orlando. We've tied in with them. They have an incredible program they put together, what, 2, 3 years ago -- even right, yes. For workforce development sponsored by Americom, with money coming out of the DoD, IBAS for workforce development and we're seeing the results. We're already hiring out of there. We are right next door to UCF, so we tap that as much as we can and do was have a few interns floating around from UCF and positions for that. So absolutely expect the growth. It's a bit better now to recruit than it was a couple of years ago, 2 years ago, it was pretty much a nightmare. But sort of I'm happy that the unemployment rate is low, but I rather see more candidates and more employees, if possible.

Yes, given the complementary nature of the product sets, are you already out there doing marketing together? Or is that a process that takes 3 months, 6 months to kind of put together?

Okay. So the question for those online was given the complementary product sets that we out there marketing together. The answer is yes. We're already there. In fact, the day after we announced acquisition before we even closed. We already had our oil and gas camera sales guy on the phone with G5 learning about the gas cameras that they're developing and helping to accelerate some of the testing there and some of the qualification of it because we're going through that with our uncooled gas camera. I can tell you, these guys are stopping at a bit to go up and start selling these products. Jason came to the due diligence of G5, I think, on your second week at LightPath. And you could see the spark in his eye like to be able to sell those kind of products, we couldn't wait for it. So the team is out there already. We're creating marketing material. We're doing websites, but we're already combining forces in trade shows in customers, our office of the board and so on.

[indiscernible].

Yes, very detailed.

[indiscernible] 6 months 12 months and even 24 months. Sales and marketing coming together is 30- to 90-day type stuff. Day 1 activity test [indiscernible]?

Yes. So all of those already awarded, the ones that we talked about, the Border Patrol was awarded last month in January, right? And the first camera shipped out -- December. Okay. Yes. And the naval SPEAR program is today, actually. So it's fresh news. We need to issue a press release on that. And that came already with a purchase order of what $2 million roughly or just over $2 million -- $2.8 million roughly. We'll have that in the press release. The other programs, things like [ Avis, ICE Solco ] those are ongoing. They've been in there for 2, 3 years at least, and for them, right? Yes. Yes. Yes. Okay. I thought that was full already. So maybe one more needs to be sold still. Yes. Yes. Okay.

[indiscernible].

The only thing we've seen until now the question was given the turmoil in Washington budget cuts and so on are we seeing any impact. So far, the only impact we saw was as of yesterday, Commerce Department put a pause on any export licenses and said we're not -- no export licenses are being issued right now. I'm assuming that's more of an alignment thing in a policy, we see shooting ourselves in the foot if we no longer export anything. Other than that, we have not seen anything. We actually welcome some of those things. In many cases, we fund that we move much faster than the DoD administration or acquisition processes can move and it frustrates us a lot of time. So new players like [ Andrel ] and companies like that, we love working with them. They move at our pace. And we can finally do things quickly and not on measure brings in months and not years. But other than that, we haven't done a direct impact to us.

[indiscernible]. Yes. Okay. So the question for those online was, given the new administration is warming up towards Russia ending the conflict in Ukraine, would that affect the germanium situation and all our investment? I think the germanium was a wake-up call to everyone. I mean tomorrow morning, germanium is available, some people will breathe a sigh of relief, we'll take it, but the damage is there sort of in terms of people understanding the vulnerability and the risks related to that. Now the U.S. and others are working on developing Germania supply chain, and we welcome that because I want materials I'm not a 100% alternative. You need -- again, back to the example of the optical designers that has in his toolkit, 20 glass now instead of 10, those are needed. I mean, and those are the things. What we want is to reduce the dependency and not be at the point where it can be shut down completely. So I'm not worried about that. I think maybe there will be some that we'll go back to it. But for most people, it was a big wake-up call. We did a lot of germanium optics before as much as 30% of our infrared optics was Germania optics. And it was not the most profitable business, but it's good business because we know how to handle Germania. We cut that down drastically to 10%. But we have the capacity. So if germanium is available, we also might take some germanium work on a game. But ultimately, our goal is to leverage this to get our customers to understand the advantages of switching over.

[indiscernible]. Let me get a perspective and maybe more so from Jason in his long history. What are the strategies to make LightPath the premier and only alternative -- are there any structural obstacles to any sort of rapid -- if the merges into that market to the alternative to hear in any way. What is this -- apply us like that?

So I think some of it -- I'll repeat the question just so the people online. Is there strategic road mapping. Is there hindrances to us going out and garnishing a certain portion of the available market from some of the larger industry leaders and how do we kind of portray that. First of all, I think it's, don't bite off more than we can chew, right? Pick 3 or 4 verticals that are meaningful to us, where we have differentiated product. A lot of the larger manufacturers, one I'm just managing volume. They're going to pump out 1,000 or something. They don't necessarily care about the guy that needs a couple of hundred because back end needs it, tweaked or with a certain coated lens or a -- certain type of communication port that we could do through our Visimid. We're not trying to solve every problem, right? Because that would be -- we just don't have the resources for it. And that's not a way to ingrain ourselves into the market. One of it is built on relationships that I and my sales team have relationships that are long in the industry of trust of being able to produce them that really solves their problem, and they want somebody to deal with. They want somebody to come in and shake their hand, go out to the end customer with them, understand the end customers' problem. And not just be a very transactional type environment. They want to do something that's meaningful for them, meaningful for their customers, differentiates them, differentiates us. So we -- that's why we kind of showed those pillars, right? We're going after 2 or 3 or 4 areas where we want to get really, really good at and then expand on those with those particular customers because in the commercial and industrial spaces. A lot of those are the same customer, right? A lot of those are the same integrator that we're going after that may service an optical gas imaging environment also may do flare stack monitoring they may do some type of automation for industrial high-process temperature monitoring and those types of things. So you get it on the ground, you help them differentiate themselves, making them be able to be competitive against their competitors, solve a problem for the end user and then just continue to build on that with our product stack. Being able to be nimble is a huge part of that, being able to just go to our Plano office, sit down with our engineers, and say, "This is what the industry needs. This is what they're looking for. This will help solve their problems." And then be the guy that has that and actually to listen to their input puts us in a great position.

[indiscernible].

You're not going to buy our product on Amazon.com. Like that's not -- that's certainly not the -- that's not the product offering that we're going after today. We're going after what I believe is an underserved portion of the market -- underserved portion of the market where they're not getting everything they need to solve the problem, they're attempting to deal with it the best they can with an off-the-shelf solution. That's an end point for sure. Absolutely. Yes for sure. That's later down the road. That's part of longer-term strategy. Building the company where there is a much -- a whole bunch more commons on the screen that me, Al and Sam can talk about. But we're starting where we know we can get that really good growth and our practice is down properly, make a great name for ourselves and deliver value to our customers.

I guess you define some broader strategy you're sort of moving up market in that the mid-tier systems and agree like a player like [indiscernible] you're able to impair the thermal [indiscernible] AI should be onboard processing.

Yes, yes. To repeat that -- we're moving into sort of mid-market where we're pairing the optics with the camera and the AI and that's exactly it. And to supplement the previous question, which ties into that. There is no need immediately for a me-too customer company. There is no need for someone to come out with another cameras that's identical to the FLIR camera and just have another vendor. Yes, there might be some of that. But the entry point is really coming in into where the gaps were in is missing. A market of furnace cameras to be able to offer these furnace cameras at $30,000 instead of $120,000, you're creating value to the customer because with the same budget, he can buy 4 dose and as Jason showed, look at 3 different places in the same power plant simultaneously. So it's finding those areas where we create real value there. That opened the door. It sounds a lot sure. We are going to have the bread and butter cameras and the ones that will be just repeating in volume, but it's the one starting.

Okay. Any questions from online? Or is that not an option? Okay. So I think we're at that. Thank you, everyone.

That concludes today's webcast. You may now disconnect. Goodbye.