Vuzix Corp

Previous wording

Our accounting policies are more fully described in the notes to our consolidated financial statements included in this quarterly report and in our Annual Report on Form 10-K for the year ended December 31, 2024. There have been no significant changes in our accounting policies for the three months ended June 30, 2025.

Current wording

Our accounting policies are more fully described in the notes to our consolidated financial statements included in this quarterly report and in our Annual Report on Form 10-K for the year ended December 31, 2024. There have been no significant changes in our accounting policies for the nine months ended September 30, 2025.

Previous wording

We are engaged in the design, manufacture, marketing and sale of augmented reality wearable display devices also referred to as head mounted displays (or “HMDs”, but also known as near-eye displays), in the form of Smart Glasses, AI powered Smart Glasses, Waveguides, and Augmented Reality (“AR”) technologies. Our wearable display devices are worn like eyeglasses or attach to a head worn mount. These devices typically include cameras, sensors, and a computer that enable the user to view, record and interact with video and digital content, such as computer data, the Internet, social media or entertainment applications. Our wearable display products integrate micro-display technology with our advanced optics to produce compact high-resolution display engines, less than half an inch diagonally, which when viewed through our Smart Glasses products create virtual images that appear comparable in size to that of a computer monitor or a large-screen television. We design and manufacture waveguide optics and related coupling optics combined for use with compact display engines from third parties to form a see-through display module needed for AI/AR Smart Glasses.

Current wording

We are engaged in the design, manufacture, marketing and sale of augmented reality wearable display devices also referred to as head mounted displays (or “HMDs”, but also known as near-eye displays), in the form of Smart Glasses, AI-powered Smart Glasses, Waveguides, and Augmented Reality (“AR”) technologies. Our wearable display devices are worn like eyeglasses or attach to a head worn mount. These devices typically include cameras, sensors, and a computer that enables the user to view, record and interact with video and digital content, such as computer data, the Internet, social media or entertainment applications. Our wearable display products integrate micro-display technology with our advanced optics to produce compact high-resolution display engines, less than half an inch diagonally, which when viewed through our Smart Glasses products create virtual images that appear comparable in size to that of a computer monitor or a large-screen television. We design and manufacture waveguide optics and related coupling optics combined for use with compact display engines from third parties to form a see-through display module needed for AI/AR Smart Glasses.

Previous wording

Sales. There was a decrease in total sales for the six months ended June 30, 2025, compared to the same period in 2024 of $219,788, or 7%. The following table reflects the major components of our sales:

Current wording

Sales. There was a decrease in total sales for the three months ended September 30, 2025, compared to the same period in 2024 of $224,767, or 16%. The following table reflects the major components of our sales:

Previous wording

Sales of products increased by 74% for the three months ended June 30, 2025, compared to the same period in 2024. Increased Smart Glasses revenue was the primary driver of this increase as unit sales of our M400 product increased compared to the previous year’s comparable period.

Current wording

Sales of products decreased by 9% for the three months ended September 30, 2025, compared to the same period in 2024. Decreased Smart Glasses revenue was the primary driver of this decrease as unit sales of our M400 product decreased compared to the previous year’s comparable period.

Previous wording

Sales of engineering services for the three months ended June 30, 2025, was $250,399 compared to $491,308 in the comparable 2024 period.

Current wording

Sales of engineering services for the three months ended September 30, 2025, was $264,673 compared to $397,386 in the comparable 2024 period.

Previous wording

For the three months ended June 30, 2025, there was a gross loss from total sales of $761,370, or 59% compared to a gross loss of $333,145, or 31% in the comparable period in 2024. For the three months ended June 30, 2025, there was a gross loss of $21,985 on engineering services due to additional costs being recognized that were not originally part of the overall project budget.

Current wording

For the three months ended September 30, 2025, there was a gross loss from total sales of $411,307, or 35% compared to a gross loss of $259,848, or 19% in the comparable period in 2024. For the three months ended September 30, 2025, there was a gross profit of $113,656 on engineering services, or 43% compared to a gross profit of $329,570, or 83% compared to the comparable period in 2024.

Previous wording

Unapplied manufacturing overhead costs, not already added into product cost of sales, increased by $49,337, or 11% for the three months ended June 30, 2025 as compared to the 2024 comparable period. The increase in the net dollar amount of these unapplied overhead costs in the current period versus the prior period was primarily driven by a further decrease in actual production levels during the 2025 period compared to the same period in 2024, as the Company has sufficient finished goods on hand to meet currently expected demand for current Smart Glasses models for the foreseeable future.

Current wording

Unapplied manufacturing overhead costs, not already added into product cost of sales, decreased by $36,734, or 7% for the three months ended September 30, 2025 compared to the 2024 comparable period. The decrease in the net dollar amount of these unapplied overhead costs in the current period versus the prior period was primarily driven by a further decrease in manufacturing headcount.

Previous wording

Depreciation and Amortization included in cost of sales decreased by $14,700, or 8% for the three months ended June 30, 2025 versus the 2024 comparable period.

Current wording

Depreciation and Amortization included in cost of sales was relatively flat for the three months ended September 30, 2025 versus the 2024 comparable period.

Previous wording

Total research and development expenses for the three months ended June 30, 2025 increased by $212,147, or 9% compared to the comparable period in 2024. This increase was largely due to a $276,211 increase in external development costs for our new products; a $145,962 increase in depreciation related to under-utilized new manufacturing equipment; a $105,200 increase in rent utilities expenses; and a $25,677 increase in travel expenses; partially offset by a $373,418 decrease in salary and benefits related expenses.

Current wording

Total research and development expenses for the three months ended September 30, 2025 increased by $602,173, or 26% compared to the comparable period in 2024. This increase was largely due to a $284,814 increase in external development costs for our new products; a $277,742 increase in depreciation related to under-utilized new

Previous wording

Total selling and marketing expenses for the three months ended June 30, 2025 decreased by $885,231, or 40% compared to the comparable period in 2024. This decrease was largely due to a $472,510 decrease in salary and benefits related expenses driven by headcount decreases and cash salary decreases in exchange for equity compensation; a $290,000 decrease in bad debt expense; a decrease of $57,915 in advertising and tradeshow expenses; a $48,365 decrease in computer hardware and software expenses; and a $41,255 decrease in external contractor expenses.

Current wording

Total selling and marketing expenses for the three months ended September 30, 2025 decreased by $619,052, or 35% compared to the comparable period in 2024. This decrease was largely due to a $250,000 decrease in bad debt expense and a $199,323 recovery of previously written-off bad debt; a $239,401 decrease in non-cash stock-based compensation expense; and a $40,465 decrease in computer hardware and software expenses: partially offset by a $33,638 increase in salary and benefits related expenses; and a $47,630 increase in advertising and trade show expenses.

Previous wording

Total general and administrative expenses for the three months ended June 30, 2025, decreased by $1,735,580, or 39% compared to the comparable period in 2024. The decrease was largely due to a $122,029 decrease in cash salary and benefits; a $1,983,267 decrease in non-cash stock-based compensation expense related to our 2024 cash salary reduction program in exchange for equity, which ended on April 30, 2025; and a $261,645 decrease in accounting and auditing fees; partially offset by a $488,413 increase in IR and shareholder related expenses.

Current wording

Total general and administrative expenses for the three months ended September 30, 2025, decreased by $1,771,926, or 41% compared to the comparable period in 2024. The decrease was largely due to a $1,788,006 decrease in non-cash stock-based compensation expense related to our 2024 cash salary reduction program in exchange for equity, which ended on April 30, 2025, and the termination of the Company’s original LTIP, which was cancelled on June 16, 2025; partially offset by a $294,195 increase in IR and shareholder related expenses; and a $26,000 increase in IT consulting fees.

Previous wording

Other Income, Net. Total other income was $189,050 for the three months ended June 30, 2025, compared to total other income of $118,085 in the comparable period in 2024, an increase of $70,965. The overall increase in other income was primarily the result of a decrease of $82,699 in foreign exchange losses; a decrease of $58,331 in other taxes; partially offset by a decrease of $70,065 in investment income on excess cash on hand.

Current wording

Other Income, Net. Total other income was $139,669 for the three months ended September 30, 2025, compared to total other income of $76,999 in the comparable period in 2024, an increase of $62,670. The overall increase in other income was primarily the result of an increase of $61,526 in investment income earned on excess cash on hand; a decrease of $44,706 in other taxes; partially offset by an increase of $43,562 in foreign exchange losses.

Previous wording

The following table compares the Company’s consolidated statements of operations data for the six months ended June 30, 2025 and 2024:

Current wording

The following table compares the Company’s consolidated statements of operations data for the nine months ended September 30, 2025 and 2024:

Previous wording

Sales. There was an increase in total sales for the three months ended June 30, 2025, compared to the same period in 2024 of $203,138, or 19%. The following table reflects the major components of our sales:

Current wording

Sales. There was a decrease in total sales for the nine months ended September 30, 2025, compared to the same period in 2024 of $444,555, or 10%. The following table reflects the major components of our sales:

Previous wording

Sales of products decreased by 3% for the six months ended June 30, 2025, compared to the same period in 2024.

Current wording

Sales of products decreased by 4% for the nine months ended September 30, 2025, compared to the same period in 2024.

Previous wording

Sales of engineering services for the six months ended June 30, 2025 was $507,267 compared to $666,102 in the comparable 2024 period.

Current wording

Sales of engineering services for the nine months ended September 30, 2025 was $771,941 compared to $1,063,488 in the comparable 2024 period.

Previous wording

For the six months ended June 30, 2025, there was a gross loss from total sales of $1,026,488, or 36% compared to a gross loss of $386,398, or 12% in the comparable period in 2024.

Current wording

For the nine months ended September 30, 2025, there was a gross loss from total sales of $1,437,792, or 36% compared to a gross loss of $646,245, or 14% in the comparable period in 2024.

Previous wording

Unapplied manufacturing overhead costs, not already added into product cost of sales, increased by $143,204, or 15% for the six months ended June 30, 2025 as compared to the 2024 comparable period. As a percentage of total sales, such costs increased to 38% compared to 31% in 2024 due to lower product revenue. The increase in the net dollar amount of these unapplied overhead costs in the current period versus the prior period was primarily driven by a further decrease in actual production levels during the 2025 period compared to the same period in 2024, as the Company has sufficient finished goods on hand to meet currently expected demand for current Smart Glasses models for the foreseeable future.

Current wording

Unapplied manufacturing overhead costs, not already added into product cost of sales, increased by $106,470, or 7% for the nine months ended September 30, 2025 compared to the 2024 comparable period. As a percentage of total sales, such costs increased to 40% compared to 33% in 2024 due to lower product revenue. The increase in the net dollar amount of these unapplied overhead costs in the current period versus the prior period was primarily driven by a further decrease in actual production levels during the 2025 period compared to the same period in 2024, as the Company has sufficient finished goods on hand to meet currently expected demand for current Smart Glasses models for the foreseeable future.

Previous wording

Depreciation and Amortization included in cost of sales decreased by $19,397, or 5% for the six months ended June 30, 2025 versus the 2024 period.

Current wording

Depreciation and Amortization included in cost of sales decreased by $20,278, or 4% for the nine months ended September 30, 2025 versus the 2024 period.

Previous wording

Total research and development expenses for the six months ended June 30, 2025 increased by $103,598, or 2% compared to the comparable period in 2024. This increase was largely due to a $593,129 increase in external development costs on our new products; a $145,962 increase of depreciation related to under-utilized new manufacturing equipment; a $136,098 increase in rent utilities expenses; and a $60,878 increase in travel expenses; partially offset by a $835,060 decrease in salary and benefits related expenses.

Current wording

Total research and development expenses for the nine months ended September 30, 2025 increased by $705,711, or 10% compared to the comparable period in 2024. This increase was largely due to a $877,943 increase in external development costs on our new smart glasses and waveguide products; a $423,704 increase of depreciation related to under-utilized new manufacturing equipment still being optimized, which were still being built in the comparable period; a $246,222 increase in rent utilities expenses related to our new California-based waveguide research and development facility; and a $68,385 increase in travel expenses; partially offset by a $624,726 decrease in non-cash stock-based compensation expense; and a $391,156 decrease in cash salary and benefits related expenses driven by headcount decreases and reduction in severance payments.

Previous wording

Total selling and marketing expenses for the six months ended June 30, 2025 decreased by $1,588,709, or 35% compared to the comparable period in 2024. This decrease was largely due to a $831,331 decrease in salary and benefits related expenses driven by headcount decreases and cash salary decreases in exchange for equity compensation; a $290,000 decrease in bad debt expense; a decrease of $215,487 in advertising and tradeshow expenses; a $168,621 decrease in external contractor expenses; and a $83,708 decrease in computer hardware and software expenses.

Current wording

Total selling and marketing expenses for the nine months ended September 30, 2025 decreased by $2,207,762, or 35% compared to the comparable period in 2024. This decrease was largely due to a $859,602 decrease in cash salary and benefits related expenses driven by headcount decreases; $540,000 decrease in bad debt expense and a $199,323 recovery of previously written-off bad debt; a $177,492 decrease in non-cash stock-based compensation expense; a decrease of $167,857 in advertising and tradeshow expenses; a $165,635 decrease in external contractor expenses; and a $124,174 decrease in computer software subscriptions expenses.

Previous wording

General and Administrative. General and administrative expenses include professional fees, investor relations costs, salaries and related non-cash stock-based compensation, travel costs, and office and rental costs.

Current wording

General and Administrative. General and administrative expenses include professional fees, IR costs, salaries and related non-cash stock-based compensation, travel costs, and office and rental costs.

Previous wording

Total general and administrative expenses for the six months ended June 30, 2025, decreased by $1,876,750, or 22%, as compared to the comparable period in 2024. The decrease was largely due to a $506,250 decrease in cash salary and benefits; a $1,412,363 decrease in non-cash stock-based compensation expense related to our 2024 cash salary reduction program in exchange for equity, which ended on April 30, 2025; a $280,982 decrease in legal expenses; a $263,931 decrease in accounting and auditing fees; and a $93,509 decrease in insurance premiums; partially offset by a $818,586 increase in IR and shareholder related expenses.

Current wording

Total general and administrative expenses for the nine months ended September 30, 2025, decreased by $3,648,677, or 28%, compared to the comparable period in 2024. The decrease was largely due to a $3,200,368 decrease in non-cash stock-based compensation expense related to our 2024 cash salary reduction program in exchange for equity, which ended on April 30, 2025, and the termination of the Company’s original LTIP, which was cancelled on June 16, 2025; a $297,473 decrease in legal expenses; a $264,251 decrease in accounting and auditing fees; a $122,623 decrease in cash salary and benefits; and a $92,508 decrease in insurance premiums; partially offset by a $524,391 increase in IR and shareholder related expenses.

Previous wording

Depreciation and Amortization. Depreciation and amortization expense, not included in cost of sales, for the three months ended June 30, 2025, was $413,483, compared to $1,188,339 in the comparable period in 2024, or a decrease of $774,856. This decrease was due to a significant decrease in amortization expense related to our Atomistic technology license, which was written off as of June 30, 2024.

Current wording

Depreciation and Amortization. Depreciation and amortization expense, not included in cost of sales or research and development expenses, for the nine months ended September 30, 2025, was $1,242,828, compared to $2,569,413 in the comparable period in 2024, or a decrease of $1,326,585. This decrease was due to a significant decrease in amortization expense related to our Atomistic technology license, which was written-off as of June 30, 2024.

Previous wording

Other Income, Net. Total other income was $325,842 for the six months ended June 30, 2025 compared to other income of $162,897 in the comparable period in 2024, an increase of $162,945. The overall increase in other income was primarily the result of a decrease of $176,917 in foreign exchange losses; and a decrease of $40,212 in other taxes; partially offset by a decrease of $54,184 in investment income on excess cash on hand.

Current wording

Other Income, Net. Total other income was $465,506 for the nine months ended September 30, 2025 compared to other income of $239,896 in the comparable period in 2024, an increase of $225,610. The overall increase in other income was primarily the result of a decrease of $133,350 in foreign exchange losses; a decrease of $84,919 in other taxes; and a modest increase of $7,341 in investment income earned on excess cash on hand.

Previous wording

Provision for Income Taxes. There was no provision for income taxes in the respective six-month periods ending June 30, 2025 and 2024.

Current wording

Provision for Income Taxes. There was no provision for income taxes in the respective nine-month periods ending September 30, 2025 and 2024.

Previous wording

Capital Resources: As of June 30, 2025, we had cash and cash equivalents of $17,454,585, a decrease of $731,921 from $18,186,506 as of December 31, 2024.

Current wording

Capital Resources: As of September 30, 2025, we had cash and cash equivalents of $22,608,529, an increase of $4,422,023 from $18,186,506 as of December 31, 2024.

Previous wording

As of June 30, 2025, we had current assets of $23,321,417 compared to current liabilities of $3,037,976 which resulted in a positive working capital position of $20,283,441. As of December 31, 2024, we had a positive working capital position of $24,610,217. Our current liabilities are comprised principally of accounts payable, accrued expenses, and operating lease right-of-use liabilities.

Current wording

As of September 30, 2025, we had current assets of $28,230,117 compared to current liabilities of $3,954,671 which resulted in a positive working capital position of $24,275,446. As of December 31, 2024, we had a positive working capital position of $24,610,217. Our current liabilities are comprised principally of accounts payable, accrued expenses, and operating lease right-of-use liabilities.

Previous wording

The following table summarizes our select cash flows for the six months ended:

Current wording

The following table summarizes our select cash flows for the nine months ended:

Previous wording

During the six months ended June 30, 2025, we used $8,241,812 of cash for operating activities, a reduction of $6,198,523 from the comparable 2024 period. Net changes in working capital items were $2,927,104 for the six months ended June 30, 2025, with the largest factors resulting from a $1,666,629 decrease in inventory and vendor prepayments; a $251,584 increase in trade accounts payables and accrued expenses; and a $684,432 decrease in trade accounts and other receivables. For the six months ended June 30, 2024, we used a total of $14,440,335 in cash for operating activities.

Current wording

During the nine months ended September 30, 2025, we used $13,234,835 of cash for operating activities, a reduction of $6,482,362 from the comparable 2024 period. Net changes in working capital items were $3,584,700 for the nine months ended September 30, 2025, with the largest factors resulting from a $2,134,085 decrease in inventory and vendor prepayments; a $651,529 increase in trade accounts payables and accrued expenses; and a $827,593 decrease in trade accounts and other receivables. For the nine months ended September 30, 2024, we used a total of $19,717,197 in cash for operating activities.

Previous wording

During the six months ended June 30, 2025, we used $1,631,941 of cash for investing activities, which included: $1,340,873 in manufacturing equipment and tooling for our new waveguide manufacturing facility; $241,068 in patent and trademark expenditures, and $50,000 of additional investment in a private corporation (see Note 8 for further details). For the six months ended June 30, 2024, we used a total of $2,234,041 in cash for investing activities.

Current wording

During the nine months ended September 30, 2025, we used $2,090,434 of cash for investing activities, which included: $1,658,820 in manufacturing equipment and tooling for our new waveguide manufacturing facility; $381,614 in patent and trademark expenditures, and $50,000 of additional investment in a private corporation (see Note 8 for further details). For the nine months ended September 30, 2024, we used a total of $2,566,729 in cash for investing activities.

Previous wording

During the six months ending June 30, 2025, we received $9,141,832 from financing activities, which included: $5,000,000 in proceeds from the sale of our Series B Convertible Preferred Stock to Quanta Computer Inc., under our SPA; $4,089,850 in net proceeds from sales of common stock under our ATM program; and $51,982 of proceeds from stock option exercises. For the six months ended June 30, 2024, no cash was provided by financing activities.

Current wording

During the nine months ended September 30, 2025, we received $19,747,292 from financing activities, which included: $10,000,000 in proceeds from the sale of our Series B Convertible Preferred Stock to Quanta, under our SPA; $9,640,449 in net proceeds from sales of common stock under our ATM program; and $106,843 of proceeds from stock option exercises. For the nine months ended September 30, 2024, we received $10,000,000 from financing activities.

Previous wording

The Company incurred net losses for the six months ended June 30, 2025 of $16,303,881; $73,538,157 for the year ended December 31, 2024; and $50,149,077 for the year ended December 31, 2023. The Company had net cash outflows from operations of $8,241,812 for the six months ended June 30, 2025; $23,739,372 for the year ended December 31, 2024; and $26,277,824 for the year ended December 31, 2023. As of June 30, 2025, the Company had an accumulated deficit of $383,826,831. The Company’s cash outflows for investing activities were $1,631,941 for the six months ended June 30, 2025; $2,919,949 for the year ended December 31, 2024; and $19,280,966 for the year ended December 31, 2023.

Current wording

The Company incurred net losses for the nine months ended September 30, 2025 of $23,658,106; $73,538,157 for the year ended December 31, 2024; and $50,149,077 for the year ended December 31, 2023. The Company had net cash outflows from operations of $13,234,835 for the nine months ended September 30, 2025; $23,739,372 for the year ended December 31, 2024; and $26,277,824 for the year ended December 31, 2023. As of September 30, 2025, the Company had an accumulated deficit of $391,181,056. The Company’s cash outflows for investing activities were $2,090,434 for the nine months ended September 30, 2025; $2,919,949 for the year ended December 31, 2024; and $19,280,966 for the year ended December 31, 2023.

Previous wording

These historical financial factors initially raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s management intends to take actions necessary to continue as a going concern, as discussed herein. Management’s plans to alleviate the conditions that raise substantial doubt include raising further capital, the implementation of operational improvements and the curtailment of certain development programs, both of which the Company expects will preserve cash.

Current wording

These historical financial factors initially raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s management intends to take actions necessary to continue as a going concern, as discussed herein. Management’s plans to alleviate the conditions that raise substantial doubt include raising further capital, and the implementation of operational improvements and the curtailment of certain development programs, both of which the Company expects will preserve cash.

Previous wording

The Company has historically raised capital through the sale of equity securities. The Company filed a Registration Statement on Form S-3 that became effective in May 2024, which includes a sales agreement prospectus for the issuance and sale of up to $50,000,000 of our common stock that may be issued and sold from time to time under a sales agreement with an investment bank in an “at the market” (“ATM”) offering. Since commencement of the ATM offering in May 2024, the Company has raised $12,221,011, including $2,835,408 and $4,089,850, respectively, in the three and six months ended June 30, 2025, under this sales agreement. Management monitors the capital markets on an ongoing basis and may consider raising capital if favorable market conditions develop. If the Company needs to raise capital for additional liquidity, the Company may pursue additional equity financings, further curtail expenses, or enter into one or more strategic

Current wording

The Company has historically raised capital through the sale of equity securities. The Company filed a Registration Statement on Form S-3 that became effective in May 2024, which includes a sales agreement prospectus for the issuance and sale of up to $50,000,000 of our common stock that may be issued and sold from time to time under a sales agreement with an investment bank in an ATM offering. Since commencement of the ATM offering in May 2024, the Company has raised $20,363,120, net of broker expenses, including $5,550,599 and $9,640,449, respectively, in the three and nine months ended September 30, 2025, under this sales agreement. Management monitors the capital markets on an ongoing basis and may consider raising capital if favorable market conditions develop. If the Company needs to raise capital for additional liquidity, the Company may pursue additional equity financings, further curtail expenses, or enter into one or more strategic transactions. However, management can make no assurance that the Company will be able to successfully complete any of the forementioned pursuits on terms acceptable to the Company, or at all.