Vuzix Corp

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 and Augmented Reality (AR) glasses. 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.

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 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 modules needed for AI/AR smart glasses.

Previous wording

With respect to our Smart Glasses and 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

Current 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, microLEDs and display engine technology.

Previous wording

Sales. There was a decrease in total sales for the three months ended September 30, 2024, compared to the same period in 2023 of $794,293, or 36%. 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, 2025, compared to the same period in 2024 of $422,926, or 21%. The following table reflects the major components of our sales:

Previous wording

Sales of products decreased by 28% for the three months ended September 30, 2024, compared to the same period in 2023. Reduced sales of smart glasses was the primary driver of this decrease as unit sales of our M400 product decreased compared to the previous year’s comparable period.

Current wording

Sales of products decreased by 28% for the three months ended March 31, 2025, compared to the same period in 2024. Reduced 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 September 30, 2024, was $397,386, compared to $808,156 in the comparable 2023 period.

Current wording

Sales of engineering services for the three months ended March 31, 2025, was $256,868 compared to $174,794 in the comparable 2024 period.

Previous wording

*Cost of Sales and Gross Profit (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 goods sold:

Previous wording

For the three months ended September 30, 2024, there was a gross loss from total sales of $259,848, or 19% as compared to a gross loss of $237,544, or 11% in the comparable period in 2023.

Current wording

For the three months ended March 31, 2025, there was a gross loss from total sales of $265,118, or 17% compared to a gross loss of $53,253, or 3% in the comparable period in 2024.

Previous wording

Unapplied manufacturing overhead costs, not already added in product cost of sales, increased by $274,234, or 22% for the nine months ended September 30, 2024 over the 2023 comparable period and increased as a percentage of total sales to 33% as compared to 11% in 2023 due to lower quarterly 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 decrease in actual versus originally planned production levels during the period and the temporary cessation of smart glasses production in the second half of 2024.

Current wording

Unapplied manufacturing overhead costs, not already added into product cost of sales, increased by $93,867, or 19% for the three months ended March 31, 2025 over the 2024 comparable period. As a percentage of total sales, such costs increased to 37% compared to 24% in 2024 due to lower quarterly 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 $178,323, or 25% for the nine months ended September 30, 2024 versus the 2023 period, due to the full amortization and depreciation of certain manufacturing assets.

Current wording

Depreciation and Amortization included in cost of sales decreased by $4,697, or 3% for the three months ended March 31, 2025 versus the 2024 period.

Previous wording

Total research and development expenses for the three months ended September 30, 2024 decreased by $578,764, or 20%, compared to the comparable period in 2023. This decrease was largely due to a $403,791 decrease in external development costs and a $222,899 decrease in salary and benefits related expenses; partially offset by a $111,550 increase in non-cash stock-based compensation primarily driven by the voluntary salary reduction program.

Current wording

Total research and development expenses for the three months ended March 31, 2025 decreased by $132,609, or 5% compared to the comparable period in 2024. This decrease was largely due to a $473,995 decrease in salary and benefits related expenses partially offset by a $316,918 increase in external development costs on our new products.

Previous wording

Total selling and marketing expenses for the nine months ended September 30, 2024 decreased by $1,636,201, or 21% compared to the comparable period in 2023. This decrease was largely due to a decrease of $1,016,185 in advertising and tradeshow expenses; a $730,290 decrease in salary and benefits related expenses driven by headcount decreases; a decrease of $348,656 in travel related expenses; and a $108,880 decrease in external consulting expenses; partially offset by a $540,000 increase to our allowance for credit losses; and a $98,636 increase in non-cash stock-based compensation primarily driven by the voluntary salary reduction program.

Current wording

Total selling and marketing expenses for the three months ended March 31, 2025 decreased by $683,316, or 31% compared to the comparable period in 2024. This decrease was largely due to a $365,207 decrease in salary and benefits related expenses driven by headcount decreases and cash salary decreases in exchange for equity compensation; a decrease of $157,571 in advertising and tradeshow expenses; and a $134,475 decrease in external contractor expenses.

Previous wording

Depreciation and Amortization. Depreciation and amortization expense, not included in cost of sales, for the nine months ended September 30, 2024, was $2,569,413, compared to $2,896,840 in the comparable period in 2023 or a decrease of $327,427. 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; partially offset by increases in depreciation related to leasehold improvements being put into service this year related to our new waveguide manufacturing facility.

Current wording

Depreciation and Amortization. Depreciation and amortization expense, not included in cost of sales, for the three months ended March 31,2025, was $405,011, compared to $970,377 in the comparable period in 2024, or a decrease of $565,366. 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 $239,896 for the nine months ended September 30, 2024, compared to other income of $1,618,870 in the comparable period in 2023, a decrease of $1,378,974. The overall decrease in other income was primarily the result of a decrease of $1,371,116 in investment income due to lower excess cash on-hand to invest; an increase of $90,241 in foreign exchange losses; partially offset by a decrease in income and other taxes of $82,383.

Current wording

Other Income, Net. Total other income was $136,793 for the three months ended March 31, 2025, compared to other income of $44,813 in the comparable period in 2024, an increase of $91,980. The overall increase in other income was primarily the result of a decrease of $94,217 in foreign exchange losses; an increase of $15,881 in investment income on excess cash on hand; partially offset by an increase in income and other taxes of $18,118.

Previous wording

Capital Resources: As of September 30, 2024, we had cash and cash equivalents of $14,271,666, a decrease of $12,283,926 from $26,555,592 as of December 31, 2023.

Current wording

Capital Resources: As of March 31, 2025, we had cash and cash equivalents of $15,231,001, a decrease of $2,955,505 from $18,186,506 as of December 31, 2024.

Previous wording

As of September 30, 2024, we had current assets of $28,711,290 compared to current liabilities of $2,181,398 which resulted in a positive working capital position of $26,529,892. As of December 31, 2023, we had a working capital position of $36,284,259. Our current liabilities are comprised principally of accounts payable, accrued expenses, and operating lease right-of-use liabilities.

Current wording

As of March 31, 2025, we had current assets of $22,385,266 compared to current liabilities of $2,915,505 which resulted in a positive working capital position of $19,469,761. As of December 31, 2024, we had a 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 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, 2024 we used $19,717,197 of cash for operating activities. Net changes in working capital items were $2,412,416 for the nine months ended September 30, 2024, with the largest factors resulting from a $2,611,906 decrease in trade accounts payables and accrued expenses; a $730,170 increase in inventory and vendor prepayments; a $496,022 decrease in trade accounts and other receivables; and a $199,343 decrease in other prepaid expenses. For the nine months ended September 30, 2023, we used a total of $20,133,643 in cash for operating activities.

Current wording

During the three months ended March 31, 2025, we used $3,453,623 of cash for operating activities, a reduction of $5,351,515 from the comparable 2024 period. Net changes in working capital items were $1,622,854 for the three months ended March 31, 2025, with the largest factors resulting from a $681,608 decrease in inventory and vendor prepayments; a $540,415 decrease in trade accounts and other receivables; and a $203,923 increase in trade accounts payables and accrued expenses. For the three months ended March 31, 2024, we used a total of $8,805,138 in cash for operating activities.

Previous wording

During the nine months ended September 30, 2024, we used $2,566,729 of cash for investing activities, which included: $1,129,120 in manufacturing equipment and tooling for our new waveguide manufacturing facility; $1,000,000 final payment made towards our technology license fee commitment with Atomistic; and $437,609 in patent and trademark expenditures. For the nine months ended September 30, 2023, we used a total of $13,931,702 in cash for investing activities.

Current wording

During the three months ended March 31, 2025, we used $764,132 of cash for investing activities, which included: $613,397 in manufacturing equipment and tooling for our new waveguide manufacturing facility; $100,735 in patent and trademark expenditures, and $50,000 of additional investment in a private corporation (see Note 8 for further details). For the three months ended March 31, 2024, we used a total of $1,249,053 in cash for investing activities.

Previous wording

The Company’s cash requirements are primarily for funding operating losses, working capital, research and development and capital expenditures. Our operations have historically been financed primarily through net proceeds from the sale of our equity securities. The Company incurred net losses for the nine months ended September 30, 2024 of $59,882,054; $50,149,077 for the year ended December 31, 2023; and $40,763,573 for the year ended December 31, 2022. The Company had net cash outflows from operations of $19,717,197 for the nine months ended September 30, 2024; $26,277,824 for the year ended December 31, 2023; and $24,521,082 for the year ended December 31, 2022. As of September 30, 2024, the Company had an accumulated deficit of $353,866,847. The Company’s cash outflows for investing activities were $2,566,729 for the nine months ended September 30, 2024; $19,280,966 for the year ended December 31, 2023; and $21,170,816 for the year ended December 31, 2022.

Current wording

The Company incurred net losses for the three months ended March 31, 2025 of $8,637,626; $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 $3,453,623 for the three months ended March 31, 2025; $23,739,372 for the year ended December 31, 2024; and $26,277,824 for the year ended December 31, 2023. As of March 31, 2025, the Company had an accumulated deficit of $376,160,576. The Company’s cash outflows for investing activities were $764,132 for the three months ended March 31, 2025; $2,919,949 for the year ended December 31, 2024; and $19,280,966 for the year ended December 31, 2023.

Previous wording

Our cash requirements related to funding operating losses depend upon numerous factors, including new product development activities, our ability to commercialize our products, our products’ timely market acceptance, selling prices and gross margins, and other factors. Historically, the Company has met its cash needs primarily through the sale of equity securities. The Company will need to grow its business significantly to become profitable and self-sustaining on a cash flow basis or it will be required to cut its operating costs significantly or raise new equity and/or debt capital.

Current wording

The Company’s cash requirements going forward are primarily for funding operating losses, research and development, working capital and capital expenditures. Our cash requirements related to funding operating losses depend upon numerous factors, including new product development activities, our ability to commercialize our products, our products’ timely market acceptance, selling prices and gross margins, and other factors. Historically, the Company has met its cash needs primarily through the sale of equity securities. The Company will need to grow its business significantly to become profitable and self-sustaining on a cash flow basis or it will be required to cut its operating costs significantly or raise new equity and/or debt capital.

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 the implementation of

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, 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 has 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 banking in an “at the market” offering. Management monitors the capital markets on an ongoing basis and may consider raising capital if favorable market conditions develop. If the Company’s actual results are less than projected or the Company needs to raise capital for additional liquidity, the Company may be required to 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 that may be issued and sold from time to time under a sales agreement with an investment bank in an “at the market” (or ATM) offering. Since commencement of the ATM offering in May 2024, the Company has raised $9,854,809, including $1,262,250 in the three months ended March 31, 2025 and $413,084 subsequent to March 31, 2025. 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.

Previous 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” in this report and under Item 1A and

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

Previous wording

elsewhere in our Annual Report on Form 10-K for the year ended December 31, 2023, 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, 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

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.