# Vuzix Corp: Form 10-Q for the period ended Sep 30, 2024

- Company: [Vuzix Corp](/companies/vuzi.md) (CIK 1463972)
- Form: 10-Q
- Filed: 2024-11-14
- Accepted by EDGAR: Nov 14, 2024, 16:01 ET
- Period: 2024-09-30
- Accession: 0001558370-24-015704
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1463972/000155837024015704/vuzi-20240930x10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1463972/000155837024015704/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2024-07-01 to 2024-09-30 | $1.4m | us-gaap:Revenues |
| Revenue | 9 months, 2024-01-01 to 2024-09-30 | $4.5m | us-gaap:Revenues |
| Cost of revenue | 3 months, 2024-07-01 to 2024-09-30 | $1.6m | us-gaap:CostOfRevenue |
| Cost of revenue | 9 months, 2024-01-01 to 2024-09-30 | $5.1m | us-gaap:CostOfRevenue |
| Gross profit | 3 months, 2024-07-01 to 2024-09-30 | −$259.8k | us-gaap:GrossProfit |
| Gross profit | 9 months, 2024-01-01 to 2024-09-30 | −$646.2k | us-gaap:GrossProfit |
| Research and development | 3 months, 2024-07-01 to 2024-09-30 | $2.3m | us-gaap:ResearchAndDevelopmentExpense |
| Research and development | 9 months, 2024-01-01 to 2024-09-30 | $7.4m | us-gaap:ResearchAndDevelopmentExpense |
| Operating income | 3 months, 2024-07-01 to 2024-09-30 | −$9.3m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2024-01-01 to 2024-09-30 | −$60.1m | us-gaap:OperatingIncomeLoss |
| Net income | 3 months, 2024-07-01 to 2024-09-30 | −$9.2m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2024-01-01 to 2024-09-30 | −$59.9m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2024-07-01 to 2024-09-30 | −$0.14 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2024-01-01 to 2024-09-30 | −$0.90 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2024-07-01 to 2024-09-30 | −$0.14 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2024-01-01 to 2024-09-30 | −$0.90 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2024-07-01 to 2024-09-30 | 67,842,379 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2024-01-01 to 2024-09-30 | 66,325,723 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2024-01-01 to 2024-09-30 | −$19.7m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months, 2024-01-01 to 2024-09-30 | $1.1m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2024-09-30 | $14.3m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2024-09-30 | $28.7m | us-gaap:AssetsCurrent |
| Total assets | at 2024-09-30 | $41.8m | us-gaap:Assets |
| Current liabilities | at 2024-09-30 | $2.2m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2024-09-30 | $2.3m | us-gaap:Liabilities |
| Shareholders' equity | at 2024-09-30 | $39.6m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 46,031 characters.

*You should read the following discussion and analysis of financial condition and results of operations in conjunction with the financial statements and related notes appearing elsewhere in this quarterly report and in our Annual Report on Form 10-K for the year ended December 31, 2023.*

*As used in this report, unless otherwise indicated, the terms “Company,” “Vuzix”, “management,” “we,” “our,” and “us” refer to Vuzix Corporation.*

### Critical Accounting Policies and Significant Developments and Estimates

The discussion and analysis of our financial condition and results of operations is based upon our unaudited consolidated financial statements and related notes appearing elsewhere in this quarterly report. The preparation of these statements in conformity with GAAP requires the appropriate application of certain accounting policies, many of which require us to make estimates and assumptions about future events and their impact on amounts reported in our consolidated financial statements, including the statement of operations, balance sheet, cash flow and related notes. We continually evaluate our estimates used in the preparation of our financial statements, including those related to revenue recognition, allowance for credit losses, inventories, warranty reserves, product warranty, carrying value of long-lived assets, fair value measurement of financial instruments, valuation of stock compensation awards, achievement of equity market capitalization and probability of operational milestones being achieved under our LTIP, and income taxes. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about carrying values of assets and liabilities that are not apparent from other sources. Since future events and their impact cannot be determined with certainty, the actual results will inevitably differ from our estimates. Such differences could be material to the consolidated financial statements.

We believe that our application of accounting policies, and the estimates inherently required therein, are reasonable. We periodically re-evaluate these accounting policies and estimates and make adjustments when facts and circumstances dictate. Historically, we have found our application of accounting policies to be appropriate, and actual results have not differed materially from those determined using such necessary estimates.

Management believes certain factors and trends are important in understanding our financial performance. The critical accounting policies, judgments and estimates we believe have the most significant effect on our consolidated financial statements are:

- Valuation of inventories;
- Going concern;
- Variable Interest Entities;
- Business combinations;
- Carrying value of long-lived assets;
- Software development costs;
- Revenue recognition;
- Product warranty;
- Stock-based compensation; and
- Income taxes.

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, 2023. There have been no significant changes in our accounting policies for the three months ended September 30, 2024.

### Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have, or are reasonably likely to have, an effect on our financial condition, financial statements, revenues or expenses.

### Business Matters

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.

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 property portfolio and position in the marketplace give us a leadership position in AR and Smart Glasses products, waveguide optics and display engine technology.

All of the mobile displays and wearable and mobile electronics markets in which we compete, including mobile and wearable displays and electronics, have been and continue to be subject to consistent and rapid technological change, with ever greater capabilities and performance, including mobile devices with larger screen sizes and improved display resolutions as well as, in many cases, reductions in pricing for mobile devices. As a result, we must continue to improve our products’ performance and lower our costs. We believe our intellectual property portfolio gives us a leadership position in the design and manufacturing of micro-display projection engines, waveguides, mechanical packaging, ergonomics, and optical systems.

### Recent Accounting Pronouncements

See Note 1 to the Unaudited Consolidated Financial Statements.

### Results of Operations

### Comparison of Three Months Ended September 30, 2024 and 2023

The following table compares the Company’s consolidated statements of operations data for the three months ended September 30, 2024 and 2023:

| ​ ​ ​ ​ ​ Sales: | ​ ​ ​ ​ | ​ ​ ​ Three Months Ended September 30, ​ ​ 2024 ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ 2023 ​ ​ ​ ​ ​ | ​ ​ Dollar Change ​ ​ ​ | ​ ​ ​ % Increase ​ (Decrease) ​ ​ ​ ​ |
| --- | --- | ---: | --- | --- | ---: |
| Sales of Products | ​ | $988,328 | $1,371,851 | $(383,523) | (28)% |
| Sales of Engineering Services | ​ | 397,386 | ​ 808,156 | ​ (410,770) | (51)% |
| ​ | ​ |  | ​ | ​ | ​ |
| **Total Sales** | ​ | 1,385,714 | ​ 2,180,007 | ​ (794,293) | (36)% |
| ​ | ​ |  | ​ | ​ | ​ |
| **Cost of Sales:** | ​ |  | ​ | ​ | ​ |
| Cost of Sales - Products | ​ | 1,395,939 | ​ 1,884,239 | ​ (488,300) | (26)% |
| Cost of Sales - Depreciation and Amortization | ​ | 181,807 | ​ 232,891 | ​ (51,084) | (22)% |
| Cost of Sales - Engineering Services | ​ | 67,816 | ​ 300,421 | ​ (232,605) | (77)% |
| ​ | ​ |  | ​ | ​ | ​ |
| **Total Cost of Sales** | ​ | 1,645,562 | ​ 2,417,551 | ​ (771,989) | (32)% |
| ​ | ​ |  | ​ | ​ | ​ |
| **Gross Loss** | ​ | (259,848) | ​ (237,544) | ​ (22,304) | 9% |
| Gross Loss% | ​ | (19)% | ​ (11)% | ​ | ​ |
| ​ | ​ |  | ​ | ​ | ​ |
| **Operating Expenses:** | ​ |  | ​ | ​ | ​ |
| Research and Development | ​ | 2,333,798 | ​ 2,912,562 | ​ (578,764) | (20)% |
| Selling and Marketing | ​ | 1,766,246 | ​ 2,832,031 | ​ (1,065,785) | (38)% |
| General and Administrative | ​ | 4,347,013 | ​ 4,466,850 | ​ (119,837) | (3)% |
| Depreciation and Amortization | ​ | 410,697 | ​ 959,353 | ​ (548,656) | (57)% |
| Impairment on Intangible Asset and Equity Investment | ​ | 181,676 | ​ — | ​ 181,676 | NM ​ |
| Impairment of Patents and Trademarks | ​ | — | ​ 24,204 | ​ (24,204) | (100)% |
| ​ | ​ |  | ​ | ​ | ​ |
| **Loss from Operations** | ​ | (9,299,278) | ​ (11,432,544) | ​ 2,133,266 | (19)% |
| ​ | ​ |  | ​ | ​ | ​ ​ |
| **Other Income (Expense):** | ​ |  | ​ | ​ | ​ |
| Investment Income | ​ | 95,234 | ​ 500,067 | ​ (404,833) | (81)% |
| Income and Other Taxes | ​ | (44,706) | ​ (21,715) | ​ (22,991) | 106% |
| Foreign Exchange Gain (Loss) | ​ | 26,471 | ​ (28,816) | ​ 55,287 | (192)% |
| ​ | ​ |  | ​ | ​ | ​ |
| **Total Other Income, Net** | ​ | 76,999 | ​ 449,536 | ​ (372,537) | (83)% |
| ​ | ​ |  | ​ | ​ | ​ |
| **Loss Before Provision for Income Taxes** | ​ | (9,222,279) | ​ (10,983,008) | ​ 1,760,729 | (16)% |
| Provision for Income Taxes | ​ | — | ​ — | ​ — | —% |
| ​ | ​ |  | ​ | ​ | ​ |
| **Net Loss** | ​ | $(9,222,279) ​ | $(10,983,008) ​ | $1,760,729 | (16)% |

*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:

| ​ ​ ​ | ​ ​ | ​ ​ Three Months Ended September 30, 2024 | ​ ​ ​ % of ​ Total Sales ​ | ​ ​ Three Months Ended September 30, 2023 | ​ ​ ​ % of ​ Total Sales ​ | ​ ​ Dollar Change | ​ ​ ​ % Increase ​ (Decrease) ​ |
| --- | --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Sales of Products | ​ | $988,328 | 71% | $1,371,851 | 63% | $(383,523) | (28)% |
| Sales of Engineering Services | ​ | 397,386 | 29% | 808,156 | 37% | (410,770) | (51)% |
| Total Sales | ​ | $1,385,714 | 100% | $2,180,007 | 100% | $(794,293) | (36)% |

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.

Sales of engineering services for the three months ended September 30, 2024, was $397,386, compared to $808,156 in the comparable 2023 period.

*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:

| ​ ​ ​ | ​ ​ | ​ ​ Three Months Ended September 30, 2024 | ​ ​ | ​ ​ As % Related Total Sales ​ | ​ ​ Three Months Ended September 30, 2023 | ​ ​ | ​ ​ As % Related Total Sales ​ | ​ ​ Dollar Change | ​ ​ | ​ ​ % Increase ​ (Decrease) ​ |
| --- | --- | --- | --- | ---: | --- | --- | ---: | --- | --- | ---: |
| Product Cost of Sales | ​ | $846,211 | ​ | 61% | $1,558,813 | ​ | 72% | $(712,602) | ​ | (46)% |
| Manufacturing Overhead - Unapplied |  | ​ 549,728 |  | 40% | ​ 325,426 |  | 15% | ​ 224,302 |  | 69% |
| Depreciation and Amortization | ​ | ​ 181,807 | ​ | 13% | ​ 232,891 | ​ | 11% | ​ (51,084) | ​ | (22)% |
| Engineering Services Cost of Sales |  | ​ 67,816 |  | 5% | ​ 300,421 |  | 14% | ​ (232,605) |  | (77)% |
| ​ |  | ​ |  |  | ​ |  |  | ​ |  | ​ |
| **Total Cost of Sales** | ​ | $1,645,562 |  | 119% | $2,417,551 |  | 111% | $(771,989) |  | (32)% |
| ​ | ​ |  |  | ​ |  |  | ​ |  |  | ​ |
| **Gross Profit (Loss)** | ​ | $(259,848) |  | (19)% | $(237,544) |  | (11)% | $(22,304) |  | 9% |

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.

Unapplied manufacturing overhead costs, not already added in product cost of sales, increased by $224,302 or 69% for the three months ended September 30, 2024, over the 2023 comparable period and increased as a percentage of total sales to 40% as compared to 15% 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 in preparation for the temporary cessation of smart glasses production in the second half of 2024 at our Rochester, New York plant.

Depreciation and Amortization included in cost of sales was 22% less than the comparable period in the 2023 period, due to the full amortization and depreciation of certain manufacturing assets.

*Research and Development.* Our research and development expenses consist primarily of compensation costs for personnel, including non-cash stock-based compensation expenses, third-party services, purchase of research supplies and materials, and consulting fees related to research and development. Software development expenses to determine technical feasibility before final development and ongoing maintenance are not capitalized and are included in research and development expenses.

| ​ ​ | ​ | Three Months Ended September 30, 2024 | ​ % of ​ Total Sales | Three Months Ended September 30, 2023 | ​ % of ​ Total Sales | Dollar Change | ​ % Increase ​ (Decrease) ​ |
| --- | --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Research and Development Costs | ​ | $1,813,993 | 131% | $2,504,307 | 115% | $(690,314) | (28)% |
| Related Stock-based Compensation (non-cash) | ​ | ​ 519,805 | 38% | ​ 408,255 | 19% | ​ 111,550 | 27% |
| Total Research and Development | ​ | $2,333,798 | 168% | $2,912,562 | 134% | $(578,764) | (20)% |

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.

*Selling and Marketing.* Selling and marketing expenses consist of trade show costs, advertising, sales samples, travel costs, sales staff compensation costs including non-cash stock-based compensation expense, consulting fees, public relations agency fees, website costs, and sales commissions paid to full-time staff and outside consultants.

| ​ ​ ​ | ​ ​ | ​ ​ Three Months Ended September 30, 2024 | ​ ​ | ​ ​ % of ​ Total Sales | ​ Three Months Ended September 30, 2023 | ​ ​ | ​ ​ % of ​ Total Sales | ​ ​ Dollar Change | ​ ​ | ​ ​ % Increase ​ (Decrease) ​ |
| --- | --- | ---: | --- | ---: | ---: | --- | ---: | ---: | --- | ---: |
| Selling and Marketing Costs | ​ | $1,407,913 | ​ | 102% | $2,531,866 | ​ | 116% | $(1,123,953) | ​ | (44)% |
| Related Stock-based Compensation (non-cash) | ​ | ​ 358,333 | ​ | 26% | ​ 300,165 | ​ | 14% | ​ 58,168 | ​ | 19% |
| Total Selling and Marketing | ​ | $1,766,246 | ​ | 127% | $2,832,031 | ​ | 130% | $(1,065,785) | ​ | (38)% |

Total selling and marketing expenses for the three months ended September 30, 2024 decreased by $1,065,785, or 38%, compared to the comparable period in 2023. This overall decrease was largely due to a decrease of $532,919 in advertising and tradeshow expenses; a $427,062 decrease in salary and benefits related expenses driven by headcount decreases; a decrease of $224,916 in travel related expenses; a decrease of $124,645 in external consulting expenses; and a $37,792 decrease in computer hardware and supplies expense; partially offset by a $250,000 increase to our allowance for credit losses; and a $58,168 increase in non-cash stock-based compensation primarily driven by the voluntary salary reduction program.

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

| ​ ​ | ​ | Three Months Ended September 30, 2024 | ​ % of ​ Total Sales | Three Months Ended September 30, 2023 | ​ % of ​ Total Sales | Dollar Change | ​ % Increase ​ (Decrease) ​ |
| --- | --- | ---: | ---: | ---: | ---: | ---: | ---: |
| General and Administrative Costs | ​ | $2,111,283 | 152% | $1,889,709 | 87% | $221,574 | 12% |
| Related Stock-based Compensation (non-cash) | ​ | ​ 2,235,730 | 161% | ​ 2,577,141 | 118% | ​ (341,411) | (13)% |
| Total General and Administrative | ​ | $4,347,013 | 314% | $4,466,850 | 205% | $(119,837) | (3)% |

Total general and administrative expenses for the three months ended September 30, 2024, decreased by $119,837, or 3%, compared to the comparable period in 2023. This decrease was largely due to a decrease of $390,724 in salary and benefits related expenses; a $341,411 decrease in non-cash stock-based compensation; a decrease of $101,166 in insurance premiums; a $47,170 decrease in recruiting and hiring expenses; and a decrease of $41,706 in external consulting expenses; partially offset by an increase of $602,414 in investor relations expenses; a $133,326 increase in legal expense; an increase of $57,269 in additional accounting and auditing fees; and an increase of $42,747 in supplies expense.

*Depreciation and Amortization.* Depreciation and amortization expense, not included in cost of sales, for the three months ended September 30, 2024, was $410,697, compared to $959,353 in the comparable period in 2023, or a decrease of $548,656. This decrease was due to the write-off of our Atomistic technology license intangible asset at June 30, 2024. This intangible asset was previously being amortized over a ten-year period.

*Other Income, Net*. Total other income was $76,999 for the three months ended September 30, 2024, compared to other income of $449,536 in the comparable period in 2023, a decrease of $372,537. The overall decrease in other income was primarily the result of a decrease of $404,833 in investment income due to lower excess cash on-hand to invest; a foreign exchange gain of $26,471 versus a loss of $28,816 in the comparable period in 2023; partially offset by an increase of $22,991 in income and other taxes.

*Provision for Income Taxes.* There was not a provision for income taxes in the respective three-month periods ending September 30, 2024, and 2023.

### Comparison of Nine Months Ended September 30, 2024 and 2023

The following table compares the Company’s consolidated statements of operations data for the nine months ended September 30, 2024 and 2023:

| ​ ​ ​ ​ ​ Sales: | ​ ​ ​ ​ | ​ ​ ​ Nine Months Ended September 30, ​ ​ 2024 ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ 2023 ​ ​ ​ ​ ​ | ​ ​ Dollar Change ​ ​ ​ | ​ ​ ​ | ​ ​ ​ % Increase (Decrease) ​ ​ ​ |
| --- | --- | ---: | ---: | ---: | --- | ---: |
| Sales of Products | ​ | $3,418,665 ​ | $9,988,374 ​ | $(6,569,709) |  | (66)% |
| Sales of Engineering Services | ​ | 1,063,488 ​ | 1,073,829 ​ | (10,341) |  | (1)% |
| ​ | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ | ​ | ​ ​ |
| **Total Sales** | ​ | 4,482,153 ​ | 11,062,203 ​ | (6,580,050) |  | (59)% |
| ​ | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ | ​ | ​ ​ |
| **Cost of Sales:** | ​ | ​ | ​ |  |  | ​ |
| Cost of Sales - Products Sold | ​ | 4,270,983 ​ | 8,270,658 ​ | (3,999,675) |  | (48)% |
| Cost of Sales - Depreciation and Amortization | ​ | 545,422 ​ | 723,745 ​ | (178,323) |  | (25)% |
| Cost of Sales - Engineering Services | ​ | 311,993 ​ | 456,953 ​ | (144,960) |  | (32)% |
| ​ | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ | ​ | ​ ​ |
| **Total Cost of Sales** | ​ | 5,128,398 ​ | 9,451,356 ​ | (4,322,958) |  | (46)% |
| ​ | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ | ​ | ​ ​ |
| **Gross Profit (Loss)** | ​ | (646,245) ​ | 1,610,847 ​ | (2,257,092) |  | (140)% |
| Gross Profit (Loss) % | ​ | (14)% | 15% |  |  | ​ |
| ​ | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ | ​ | ​ ​ |
| **Operating Expenses:** | ​ | ​ | ​ |  |  | ​ |
| Research and Development | ​ | 7,406,913 ​ | 8,818,911 ​ | (1,411,998) |  | (16)% |
| Selling and Marketing | ​ | 6,245,411 ​ | 7,881,612 ​ | (1,636,201) |  | (21)% |
| General and Administrative | ​ | 12,941,336 ​ | 13,858,996 ​ | (917,660) |  | (7)% |
| Depreciation and Amortization | ​ | 2,569,413 ​ | 2,896,840 ​ | (327,427) |  | (11)% |
| Loss on Fixed Asset Disposal | ​ | 11,277 ​ | — ​ | 11,277 |  | NM ​ |
| Impairment on Intangible Asset and Equity Investment | ​ | 30,301,355 ​ | — ​ | 30,301,355 |  | NM ​ |
| Impairment of Patents and Trademarks | ​ | — ​ | 41,869 ​ | (41,869) |  | (100)% |
| ​ | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ | ​ | ​ ​ |
| **Loss from Operations** | ​ | (60,121,950) ​ | (31,887,381) ​ | (28,234,569) |  | 89% |
| ​ | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ | ​ | ​ ​ |
| **Other Income (Expense):** | ​ | ​ | ​ |  |  | ​ |
| Investment Income | ​ | 453,657 ​ | 1,824,773 ​ | (1,371,116) |  | (75)% |
| Income and Other Taxes | ​ | (62,547) ​ | (144,930) ​ | 82,383 |  | (57)% |
| Foreign Exchange Loss | ​ | (151,214) ​ | (60,973) ​ | (90,241) |  | 148% |
| ​ | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ | ​ | ​ ​ |
| **Total Other Income, Net** | ​ | 239,896 ​ | 1,618,870 ​ | (1,378,974) |  | (85)% |
| **​** | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ | ​ | ​ ​ |
| **Net Loss** | ​ | $(59,882,054) ​ | $(30,268,511) ​ | $(29,613,543) |  | 98% |

*Sales.* There was a decrease in total sales for the nine months ended September 30, 2024, compared to the same period in 2023 of $6,580,050, or 59%. The following table reflects the major components of our sales:

| ​ ​ ​ | ​ ​ | ​ ​ Nine Months Ended September 30, 2024 | ​ ​ ​ % of ​ Total Sales ​ | ​ ​ Nine Months Ended September 30, 2023 | ​ ​ ​ % of ​ Total Sales ​ | ​ ​ Dollar Change | ​ ​ ​ % Increase ​ ​ (Decrease) ​ |
| --- | --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Sales of Products | ​ | $3,418,665 | 76% | $9,988,374 | 90% | $(6,569,709) | (66)% |
| Sales of Engineering Services | ​ | 1,063,488 | 24% | 1,073,829 | 10% | (10,341) | (1)% |
| Total Sales | ​ | $4,482,153 | 100% | $11,062,203 | 100% | $(6,580,050) | (59)% |

Sales of products decreased by 66% for the nine months ended September 30, 2024, compared to the same period in 2023. Reduced smart glasses revenue was the primary driver of this decrease as unit sales of our M400 product decreased substantially compared to the previous year’s comparable period, when two major distributors placed significant stocking orders in the first half of 2023.

Sales of engineering services for the nine months ended September 30, 2024, was $1,063,488 as compared to $1,073,829 in the comparable 2023 period.

*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:

| ​ ​ ​ | ​ ​ | ​ ​ Nine Months Ended September 30, 2024 | ​ ​ | ​ ​ % of ​ Total Sales | ​ ​ Nine Months Ended September 30, 2023 | ​ ​ | ​ ​ % of ​ Total Sales | ​ ​ Dollar Change | ​ ​ | ​ ​ % Increase ​ (Decrease) ​ |
| --- | --- | ---: | --- | ---: | ---: | --- | ---: | ---: | --- | ---: |
| Product Cost of Sales | ​ | $2,772,109 |  | 62% | $7,046,018 |  | 64% | $(4,273,909) |  | (61)% |
| Manufacturing Overhead - Unapplied | ​ | 1,498,874 |  | 33% | 1,224,640 |  | 11% | 274,234 |  | 22% |
| Depreciation and Amortization | ​ | 545,422 |  | 12% | 723,745 |  | 7% | (178,323) |  | (25)% |
| Engineering Services Cost of Sales | ​ | 311,993 |  | 7% | 456,953 |  | 4% | (144,960) |  | (32)% |
| ​ | ​ | ​ ​ | ​ | ​ ​ | ​ ​ | ​ | ​ ​ | ​ ​ | ​ | ​ ​ |
| **Total Cost of Sales** | ​ | ​ 5,128,398 |  | 114% | ​ 9,451,356 |  | 85% | ​ (4,322,958) |  | (46)% |
| ​ | ​ | ​ ​ | ​ | ​ ​ | ​ ​ | ​ | ​ ​ | ​ ​ | ​ | ​ ​ |
| **Gross Profit (Loss)** | ​ | $(646,245) | ​ | (14)% | $1,610,847 |  | 15% | $(2,257,092) |  | (140)% |

For the nine months ended September 30, 2024, there was a gross loss from total sales of $646,245, or 14% as compared to a gross profit of $1,610,847, or 15% in the comparable period in 2023.

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.

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.

*Research and Development.* Our research and development expenses consist primarily of compensation costs for personnel, including non-cash stock-based compensation expenses, third-party services, purchase of research supplies and materials, and consulting fees related to research and development. Software development expenses to determine technical feasibility before final development and ongoing maintenance are not capitalized and are included in research and development expenses.

| ​ ​ ​ ​ | ​ ​ ​ | ​ ​ ​ ​ Nine Months Ended September 30, 2024 | ​ ​ ​ ​ ​ ​ ​ % of ​ Total Sales | ​ ​ ​ Nine Months Ended September 30, 2023 | ​ ​ ​ ​ ​ ​ ​ % of ​ Total Sales | ​ ​ ​ ​ Dollar Change | ​ ​ ​ ​ ​ ​ ​ % Increase ​ (Decrease) ​ |
| --- | --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Research and Development Costs | ​ | $6,090,095 | 136% | $7,591,388 | 69% | $(1,501,293) | (20)% |
| Related Stock-based Compensation (non-cash) | ​ | ​ 1,316,818 | 29% | ​ 1,227,523 | 11% | ​ 89,295 | 7% |
| Total Research and Development Costs | ​ | $7,406,913 | 165% | $8,818,911 | 80% | $(1,411,998) | (16)% |

Total research and development expenses for the nine months ended September 30, 2024 decreased by $1,411,998, or 16% compared to the comparable period in 2023. This decrease was largely due to a $713,285 decrease in external development costs; a $630,246 decrease in salary and benefits related expenses; and a $62,444 decrease in supplies expenses; partially offset by a $89,295 increase in non-cash stock-based compensation primarily driven by the voluntary salary reduction program.

*Selling and Marketing.* Selling and marketing expenses consist of trade show costs, advertising, sales samples, travel costs, sales staff compensation costs including non-cash stock-based compensation expense, consulting fees, public relations agency fees, website costs, and sales commissions paid to full-time staff and outside consultants.

| ​ ​ ​ ​ | ​ ​ ​ | ​ ​ ​ ​ Nine Months Ended September 30, 2024 | ​ ​ ​ ​ ​ ​ ​ % of ​ Total Sales | ​ ​ ​ Nine Months Ended September 30, 2023 | ​ ​ ​ ​ ​ ​ ​ % of ​ Total Sales | ​ ​ ​ ​ Dollar Change | ​ ​ ​ ​ ​ ​ ​ % Increase ​ (Decrease) ​ |
| --- | --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Selling and Marketing Costs | ​ | $5,365,165 | 120% | $7,100,002 | 64% | $(1,734,837) | (24)% |
| Related Stock-based Compensation (non-cash) | ​ | ​ 880,246 | 20% | ​ 781,610 | 7% | ​ 98,636 | 13% |
| Total Selling and Marketing | ​ | $6,245,411 | 139% | $7,881,612 | 71% | $(1,636,201) | (21)% |

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.

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

| ​ ​ ​ ​ | ​ ​ ​ | ​ ​ ​ ​ Nine Months Ended September 30, 2024 | ​ ​ ​ ​ ​ ​ ​ % of ​ Total Sales | ​ ​ ​ Nine Months Ended September 30, 2023 | ​ ​ ​ ​ ​ ​ ​ % of ​ Total Sales | ​ ​ ​ ​ Dollar Change | ​ ​ ​ ​ ​ ​ ​ % Increase ​ (Decrease) ​ |
| --- | --- | ---: | ---: | ---: | ---: | ---: | ---: |
| General and Administrative Costs | ​ | $6,840,739 | 153% | $6,200,467 | 56% | $640,272 | 10% |
| Related Stock-based Compensation (non-cash) | ​ | ​ 6,100,597 | 136% | ​ 7,658,529 | 69% | ​ (1,557,932) | (20)% |
| Total General and Administrative | ​ | $12,941,336 | 289% | $13,858,996 | 125% | $(917,660) | (7)% |

Total general and administrative expenses for the nine months ended September 30, 2024, decreased by $917,660, or 7% compared to the comparable period in 2023. This decrease was largely due to a decrease of $315,518 in salary and benefits related expenses; a $1,557,932 decrease in non-cash stock-based compensation; a decrease of $160,697 in insurance premiums; a decrease of $141,054 in external consulting expenses; a decrease of $47,796 in recruitment and hiring expenses; and a decrease of $46,257 in travel expenses; partially offset by an increase of $568,938 in legal expenses; an increase of $418,895 in investor relations expenses; and an increase of $342,459 in additional accounting and auditing fees related to the finalization of the 2023 audit.

*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.

*Impairment on Intangible Asset and Equity Investment.* For the nine months ended September 30, 2024 there was a total impairment charge on an intangible and an equity investment of $30,301,355. On July 1, 2024, Atomistic exercised its option to terminate its previously granted license related to certain microLED technologies it was developing, and as a result of the termination of the granted license, which was effective June 30, 2024, the Company determined that the technology license asset of $24,335,554, net book value as of June 30, 2024, was impaired as the Company no longer has exclusive licensing rights to the technology. The Company had a related equity interest in Atomistic, a private French company, and determined that at this point in time, the Company is unable to reasonably estimate a value to its future value and therefore recorded a full impairment of its investment in Atomistic resulting in a write-down charge of $5,664,446 for the period ended June 30, 2024.

The Company retains an equity interest in Atomistic, the right to appoint a member to the Atomistic board of directors and certain other rights as an equity owner pursuant to the stock purchase agreement and shareholders’ agreement entered into in connection with the License Agreement. The Company’s equity interest in Atomistic entitles it to a preferential allocation to 49% of the distributable amounts in the event of a liquidation event, such as an acquisition of Atomistic or its assets. A share of any future royalties it receives from the technology based on the license and the 49% liquidation preferred allocation value, if any, are considered gain contingencies and will not be recorded until any specific events materialize.

*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.

*Provision for Income Taxes.* There was not a provision for income taxes in the respective nine-month periods ending September 30, 2024, and 2023.

### Liquidity and Capital Resources

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.

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.

Summary of Cash Flows:

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

| ​ ​ Net Cash Provided by (used in) | ​ | September 30, 2024 ​ | ​ ​ | ​ September 30, 2023 |
| --- | --- | ---: | --- | ---: |
| Operating Activities | ​ | $(19,717,197) | ​ | $ (20,133,643) |
| Investing Activities | ​ | (2,566,729) | ​ | (13,931,702) |
| Financing Activities | ​ | 10,000,000 | ​ | (449,561) |

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.

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.

During the nine months ending September 30, 2024, $10,000,000 was provided by financing activities related to the Company’s SPA executed with Quanta Computer Inc. on September 3, 2024 (see Note 10 for further details). For the nine months ended September 30, 2023, we used $449,561 in net cash for financing activities.

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.

The Company’s cash requirements going forward are primarily for funding operating losses, research and development, working capital and capital expenditures. The higher cash outflows totaling $32,500,000 for investments in the years ending December 31, 2023 and 2022 were mainly for the Company’s exclusive technology license and equity investment in microLED technology via Atomistic (see Notes 6 and 10). The Company’s license was terminated on July 1, 2024. As a result, the Company will not be paying further licensing development fees to Atomistic.

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.

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 operational improvements and the curtailment of certain development programs, both of which the Company expects will preserve cash.

Management’s plans concerning these matters and managing our liquidity include, among other things:

- On September 13, 2024, the Company received $10,000,000 under the closing of the first tranche under a securities purchase agreement for the sale of up to $20,000,000 in common stock and Series B Preferred Stock with Quanta Computer Inc. Under the first closing, the Company sold $10,000,000 of common stock. The second and third tranches, which are tied to specific milestones that can be satisfied anytime or waived, will each be for the sale of $5,000,000 of Series B Preferred Stock. The Company expects that these milestones will be achieved by March 2026;
- Reductions in our cash annual operating expenses across all operating areas, representing a reduction of at least 20% as compared to 2023 levels, including in the areas of Research and Development, Sales and Marketing and General and Administrative;
- Right-sizing of operations across all areas of the Company, including headcount reductions and personnel hiring freezes;
- Implementation of a voluntary Company-wide payroll reduction program of 10% to 50% in exchange for stock options or stock awards, depending upon the respective base salary level for the period running from May 1, 2024 to April 30, 2025. The achieved cash savings in wages will be approximately $2,100,000;
- The Company implemented two major rounds of staff reductions in January and June 2024. As a result, the Company’s current weekly gross cash salary costs are now approximately $162,000 versus $263,000 at the beginning of 2024, a decrease of $101,000 per week or 38.4% (or a total of $5,252,000 on an annual basis);
- Further reductions in the rate of research and development spending on new technologies, particularly the use of external contractors;
- Reduction in the rate of new product introductions and further leveraging of existing platforms to reduce new product development and engineering costs;
- Delaying or curtailing discretionary and non-essential capital expenditures not related to near-term product and manufacturing needs and reducing other investing activities for our 2024 fiscal year as compared to 2023 and 2022, now that our waveguide manufacturing plant expansion has substantially been completed and the license fees payments under the Atomistic License have been completed;
- The expected margin contribution upon the commencement of volume manufacturing and sales of waveguides from our new waveguide manufacturing plant, particularly to OEM customers;
- Continued pursuit of licensing and strategic opportunities around our waveguide technologies with potential OEMs, which would include the receipt of upfront licensing fees and on-going supply agreements; and
- Reduction in our existing products’ selling prices and higher volume discount levels to turn as much of our inventory of finished products into cash and pursue external manufacturers for Vuzix non-waveguide production needs.

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.

### Forward-Looking Statements

This quarterly report includes forward-looking statements within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on management’s beliefs and assumptions and on information currently available to our management. Forward-looking statements include, but are not limited to, statements concerning:

- trends in our operating expenses, including personnel costs, research and development expense, sales and marketing expense, and general and administrative expense;
- the effect of competitors and competition in our markets;
- our wearable smart glasses products and their market acceptance and future potential;
- our ability to develop, timely introduce, and effectively manage the introduction of new products and services or improve our existing products and services;
- expected technological advances by us or by third parties and our ability to leverage them;
- our ability to attract and retain customers;
- our ability to accurately forecast consumer demand and adequately manage our inventory;
- our ability to deliver an adequate supply of product to meet demand;
- our ability to maintain and promote our brand and expand brand awareness;
- our ability to detect, prevent, or fix defects in our products;
- our reliance on third-party suppliers, contract manufacturers and logistics providers and our limited control over such parties;
- trends in revenue, costs of revenue, and gross margin and our possible or assumed future results of operations;
- our ability to attract and retain highly skilled employees;
- the impact of foreign currency exchange rates;
- the effect of future regulations;
- the sufficiency of our existing cash and cash equivalent balances and cash flow from operations to meet our working capital and capital expenditure needs for at least the next twelve (12) months; and
- general market, political, economic, business and public health conditions.

All statements in this quarterly report that are not historical facts are forward-looking statements. We may, in some cases, use terms such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “will,” “would” or similar expressions that convey uncertainty of future events or outcomes to identify forward-looking statements.

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 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.

We caution readers to carefully consider such factors. Many of these factors are beyond our control. In addition, any forward-looking statements represent our estimates only as of the date they are made and should not be relied upon as representing our estimates as of any subsequent date. While we may elect to update forward-looking statements at some point in the future, except as may be required under applicable securities laws, we specifically disclaim any obligation to do so.

## Market risk

As filed, 930 characters.

We invest our excess cash in high-quality short-term corporate debt instruments, which bear lower levels of relative risk. We believe that the effect, if any, of possible near-term changes in interest rates on our financial position, results of operations, and cash flows should not be material to our cash flows or income. It is possible that interest rate movements would increase our unrealized gain or loss on interest rate securities purchased at a discount. We are exposed to changes in foreign currency exchange rates primarily through transaction gains and losses as a result of non-U.S. dollar denominated cash flows related to business activities in Japan and Europe. We do not currently hedge our foreign currency exchange rate risk. We estimate that any market risk associated with our international operations is unlikely to have a material adverse effect on our business, financial condition or results of operation.

## Controls and procedures

As filed, 1,655 characters.

Evaluation of Disclosure Controls and Procedures

Management, with the participation of the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), has performed an evaluation of the effectiveness of our disclosure controls and procedures that are defined in Rule 13a-15 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as of the end of the period covered by this report. This evaluation included consideration of the controls, processes, and procedures that are designed to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is properly recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the SEC and that such information is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure. Based on this evaluation, our management, including our CEO and CFO, concluded that our disclosure controls and procedures were effective at September 30, 2024.

Changes in Internal Control over Financial Reporting

There have not been any changes in the Company’s internal control over financial reporting (as defined in 13a-15(f) and 15d-15(f) promulgated under the Exchange Act) that occurred during the Company’s most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting, except for the remediation of the material weakness disclosed in the Company’s Form 10-K for the year ending December 31, 2023 filed on April 15, 2024.

## Risk factors

As filed, 405 characters.

In addition to the other information set forth in this report you should carefully consider the factors discussed in Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023. There have been no material changes from those risk factors. The risks discussed in our 2023 Annual Report could materially affect our business, financial condition and future results.

Filed Nov 14, 2024.
Source: SEC EDGAR, the filing index for accession 0001558370-24-015704. Last ingested by Listed: Oct 24, 2026, 15:08 ET. No prices; not investment advice.