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 nine months ended September 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, 2025. There have been no significant changes in our accounting policies for the three months ended March 31, 2026.

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 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.

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 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 microdisplay 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.

Previous wording

With respect to our Smart Glasses and AI/AR products, we are focused on the enterprise, defense, industrial, medical and commercial markets. All of the mobile display and mobile electronics markets in which we compete have been subject to rapid technological change over the last decade, including the rapid adoption of tablets, larger screen sizes and display resolutions, along with declining prices on mobile phones and other computing devices, and as a result we must continue to improve our products’ performance and lower our costs. We believe our technology, intellectual property portfolio and position in the marketplace give us a leadership position in AI/AR and Smart Glasses products, waveguide optics, and display engine technology.

Current wording

With respect to our Smart Glasses and AI/AR products, we are focused on the enterprise, defense, medical, security, and select consumer applications. All of the mobile display and mobile electronics markets in which we compete have been subject to rapid technological change over the last decade including the rapid adoption of tablets, larger screen sizes, and display resolutions, along with declining prices on mobile phones and other computing devices, and as a result we must continue to improve our products’ performance and lower our costs. We believe our technology, intellectual property portfolio and position in the marketplace give us a leadership position in AI/AR and Smart Glasses products, waveguide optics, microLEDs and display engine technology.

Previous 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:

Current wording

Sales. There was a decrease in total sales for the three months ended March 31, 2026, compared to the same period in 2025 of $189,617, or 12%. The following table reflects the major components of our sales:

Previous wording

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

Current wording

Sales of products decreased by 21% for the three months ended March 31, 2026, compared to the same period in 2025.

Previous wording

*Cost of Sales and Gross Loss.*Cost of product revenues and engineering services are comprised of materials, components, labor, warranty costs, freight costs, manufacturing overhead, software royalties, the depreciation for our tooling and manufacturing equipment, and amortization of software development costs related to the production of our products and rendering of engineering services. The following table reflects the components of our cost of goods sold:

Current wording

*Cost of Sales and Gross Loss.*Cost of product revenues and engineering services are comprised of materials, components, labor, warranty costs, freight costs, manufacturing overhead, software royalties, the depreciation for our tooling and manufacturing equipment, and amortization of software development costs related to the production of our products and rendering of engineering services. The following table reflects the components of our cost of sales:

Previous 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.

Current wording

For the three months ended March 31, 2026, there was a gross loss from total sales of $377,911, or 27%, compared to a gross loss of $265,118, or 17% in the comparable period in 2025. The increased gross loss was primarily due to lower total sales as compared to the comparable 2025 period.

Previous 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.

Current wording

Unapplied manufacturing overhead costs, not already added into product cost of sales, increased by $28,613, or 5% for the three months ended March 31, 2026 compared to the 2025 comparable period. As a percentage of total sales, such costs increased to 44% compared to 37% in 2025 due to lower product revenue and lower production levels of new product, 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 $20,278, or 4% for the nine months ended September 30, 2025 versus the 2024 period.

Current wording

Depreciation and Amortization included in cost of sales decreased by $94,128, or 53%, for the three months ended March 31, 2026 versus the comparable period 2025.

Previous 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.

Current wording

Total research and development expenses for the three months ended March 31, 2026 increased by $422,515, or 16%, compared to the comparable period in 2025. This increase was largely due to a $433,703 increase in cash salary and benefits related expenses due to headcount increases; a $244,601 increase in depreciation related to under-utilized new manufacturing equipment still being used primarily for R&D purposes, which were still being built in the comparable period; a $75,494 increase in rent and utilities expenses related to our new California-based waveguide research and development facility that we did not have in the first quarter of 2025; and a $37,932 increase in computer software subscription expenses; partially offset by a $217,233 decrease in non-cash stock-based compensation expenses and a $188,919 decrease in external development costs.

Previous 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.

Current wording

Total general and administrative expenses for the three months ended March 31, 2026, decreased by $1,827,042, or 46%, compared to the comparable period in 2025. The decrease was largely due to a $1,729,895 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 $304,376 decrease in IR and shareholder related expenses; a $63,259 decrease in legal expenses; and a $35,763 decrease in consulting fees; partially offset by a $232,908 increase in cash salary and benefits; a $30,263 increase in travel related expenses; and a $25,087 increase in accounting and auditing fees.

Previous 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.

Current wording

Depreciation and Amortization. Depreciation and amortization expense, not included in cost of sales or research and development expenses, for the three months ended March 31, 2026, was $115,017, compared to $405,011 in the comparable period in 2025, or a decrease of $289,994. This decrease was due to certain leasehold improvements becoming fully depreciated in November 2025.

Previous 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.

Current wording

Other Income, Net. Total other income was $134,767 for the three months ended March 31, 2026 compared to other income of $136,793 in the comparable period in 2025, a modest decrease of $2,026.

Previous wording

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

Current wording

Provision for Income Taxes. There was no provision for income taxes in the respective three month periods ended March 31, 2026 and 2025.

Previous 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.

Current wording

Capital Resources: As of March 31, 2026, we had cash and cash equivalents of $20,167,137, a decrease of $983,076 from $21,150,213 as of December 31, 2025.

Previous 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.

Current wording

As of March 31, 2026, we had current assets of $24,780,826 compared to current liabilities of $4,005,287 which resulted in a positive working capital position of $20,775,539. As of December 31, 2025, we had a positive working capital position of $22,307,525. 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 nine months ended:

Current wording

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

Previous 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.

Current wording

During the three months ended March 31, 2026, we used $5,555,245 of cash for operating activities, an increase of $2,101,622 from the comparable 2025 period. Net changes in working capital items were $385,149 for the three months ended March 31, 2026, with the largest factors resulting from a $1,068,533 decrease in trade accounts and other receivables; a $300,007 increase in inventory and vendor prepayments; partially offset by a $1,028,238 decrease in trade accounts payables and accrued expenses. For the three months ended March 31, 2025, we used a total of $3,453,623 in cash for operating activities.

Previous 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.

Current wording

During the three months ended March, 2026, we used $1,172,101 of cash for investing activities, which included: $996,385 in manufacturing equipment and tooling primarily for our new waveguide manufacturing facility and $175,716 in patent and trademark expenditures. For the three months ended March 31, 2025, we used a total of $764,132 in cash for investing activities.

Previous 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.

Current wording

During the three months ended March 31, 2026, we received $5,744,270 from financing activities, which included $5,784,193 in net proceeds from sales of common stock under our ATM program less $39,923 in Series B Preferred Stock dividend payments. For the three months ended March 31, 2025, we received $1,262,250 from financing activities.

Previous 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.

Current wording

The Company incurred net losses of $7,071,324 for the three months ended March 31, 2026; $32,273,128 for the year ended December 31, 2025; and $73,538,157 for the year ended December 31, 2024. The Company had net cash outflows from operations of $5,555,245 for the three months ended March 31, 2026; $18,789,272 for the year ended December 31, 2025; and $23,739,372 for the year ended December 31, 2024. As of March 31, 2026, the Company had an accumulated deficit of $406,967,234.

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 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.

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 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 $28,250,484, net of broker expenses, including $5,784,193 in the three months ended March 31, 2026, under this sales agreement.

Previous wording

Report on Form 10-K for the year ended December 31, 2024, and other filings we make with the Securities and Exchange Commission and the following: business and economic conditions, rapid technological changes accompanied by frequent new product introductions, competitive pressures, dependence on key customers, inability to gauge order flows from customers, fluctuations in quarterly and annual results, the reliance on a limited number of third-party suppliers, limitations of our manufacturing capacity and arrangements, the protection of our proprietary technology, the dependence on key personnel, changes in critical accounting estimates, potential impairments related to investments, foreign regulations, changes in trade policy in the United States and other countries, including changes in trade agreements and the imposition of tariffs, liquidity issues, and potential material weaknesses in internal control over financial reporting. Further, during weak or uncertain economic periods, customers may delay the placement of their orders. These factors often result in a substantial portion of our revenue being derived from orders placed within a quarter and shipped in the final month of the same quarter.

Current wording

All such forward-looking statements are subject to certain risks and uncertainties and should be evaluated in light of important risk factors that may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements. These risk factors include, but are not limited to, those described in “Risk Factors” under Item 1A and elsewhere in our Annual Report on Form 10-K for the year ended December 31, 2025, and other filings we make with the Securities and Exchange Commission and the following: business and economic conditions, rapid technological changes accompanied by frequent new product introductions, competitive pressures, dependence on key customers, inability to gauge order flows from customers, fluctuations in quarterly and annual results, the reliance on a limited number of third-party suppliers, limitations of our manufacturing capacity and arrangements, the protection of our proprietary technology, the dependence on key personnel, changes in critical accounting estimates, potential impairments related to investments, foreign regulations, changes in trade policy in the United States and other countries, including changes in trade agreements and the imposition of tariffs, liquidity issues, and potential material weaknesses in internal control over financial reporting. Further, during weak or uncertain economic periods, customers may delay the placement of their orders. These factors often result in a substantial portion of our revenue being derived from orders placed within a quarter and shipped in the final month of the same quarter.