# Vuzix Corp: Form 10-Q for the period ended Jun 30, 2025

- Company: [Vuzix Corp](/companies/vuzi.md) (CIK 1463972)
- Form: 10-Q
- Filed: 2025-08-14
- Accepted by EDGAR: Aug 14, 2025, 16:02 ET
- Period: 2025-06-30
- Accession: 0001558370-25-011550
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1463972/000155837025011550/vuzi-20250630x10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1463972/000155837025011550/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2025-06-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2025-04-01 to 2025-06-30 | $1.3m | us-gaap:Revenues |
| Revenue | 6 months, 2025-01-01 to 2025-06-30 | $2.9m | us-gaap:Revenues |
| Cost of revenue | 3 months, 2025-04-01 to 2025-06-30 | $2.1m | us-gaap:CostOfRevenue |
| Cost of revenue | 6 months, 2025-01-01 to 2025-06-30 | $3.9m | us-gaap:CostOfRevenue |
| Gross profit | 3 months, 2025-04-01 to 2025-06-30 | −$761.4k | us-gaap:GrossProfit |
| Gross profit | 6 months, 2025-01-01 to 2025-06-30 | −$1.0m | us-gaap:GrossProfit |
| Research and development | 3 months, 2025-04-01 to 2025-06-30 | $2.6m | us-gaap:ResearchAndDevelopmentExpense |
| Research and development | 6 months, 2025-01-01 to 2025-06-30 | $5.2m | us-gaap:ResearchAndDevelopmentExpense |
| Operating income | 3 months, 2025-04-01 to 2025-06-30 | −$7.9m | us-gaap:OperatingIncomeLoss |
| Operating income | 6 months, 2025-01-01 to 2025-06-30 | −$16.6m | us-gaap:OperatingIncomeLoss |
| Net income | 3 months, 2025-04-01 to 2025-06-30 | −$7.7m | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2025-01-01 to 2025-06-30 | −$16.3m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2025-04-01 to 2025-06-30 | −$0.10 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 6 months, 2025-01-01 to 2025-06-30 | −$0.21 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2025-04-01 to 2025-06-30 | −$0.10 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months, 2025-01-01 to 2025-06-30 | −$0.21 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2025-04-01 to 2025-06-30 | 76,468,186 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 6 months, 2025-01-01 to 2025-06-30 | 76,343,911 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 6 months, 2025-01-01 to 2025-06-30 | −$8.2m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 6 months, 2025-01-01 to 2025-06-30 | $1.3m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2025-06-30 | $17.5m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2025-06-30 | $23.3m | us-gaap:AssetsCurrent |
| Total assets | at 2025-06-30 | $36.9m | us-gaap:Assets |
| Current liabilities | at 2025-06-30 | $3.0m | us-gaap:LiabilitiesCurrent |
| Shareholders' equity | at 2025-06-30 | $28.9m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 41,348 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, 2024.*

*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, 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;
- Convertible Series B Preferred Stock;
- Going concern;
- Investments in equity securities;
- Carrying value of long-lived assets and other intangible assets;
- Software development costs;
- Revenue recognition;
- Product warranties;
- Stock-based compensation and modification accounting; 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, 2024. There have been no significant changes in our accounting policies for the three months ended June 30, 2025.

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

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.

### Recent Accounting Pronouncements

See Note 1 to the Unaudited Consolidated Financial Statements.

### Results of Operations

### Comparison of Three Months Ended June 30, 2025 and 2024

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

| ​ ​ ​ ​ ​ Sales: | ​ ​ ​ ​ | ​ ​ ​ Three Months Ended June 30, ​ ​ 2025 ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ 2024 ​ ​ ​ ​ ​ | ​ ​ Dollar Change ​ ​ ​ | ​ ​ ​ % Increase ​ (Decrease) ​ ​ ​ ​ |
| --- | --- | ---: | --- | --- | ---: |
| Sales of Products | ​ | $1,045,310 | $601,263 | $444,047 | 74% |
| Sales of Engineering Services | ​ | 250,399 | ​ 491,308 | ​ (240,909) | (49)% |
| ​ | ​ |  | ​ | ​ | ​ |
| **Total Sales** | ​ | 1,295,709 | ​ 1,092,571 | ​ 203,138 | 19% |
| ​ | ​ |  | ​ | ​ | ​ |
| **Cost of Sales:** | ​ |  | ​ | ​ | ​ |
| Cost of Sales - Products | ​ | 1,617,346 | ​ 1,067,452 | ​ 549,894 | 52% |
| Cost of Sales - Depreciation and Amortization | ​ | 167,349 | ​ 182,049 | ​ (14,700) | (8)% |
| Cost of Sales - Engineering Services | ​ | 272,384 | ​ 176,215 | ​ 96,169 | 55% |
| ​ | ​ |  | ​ | ​ | ​ |
| **Total Cost of Sales** | ​ | 2,057,079 | ​ 1,425,716 | ​ 631,363 | 44% |
| ​ | ​ |  | ​ | ​ | ​ |
| **Gross Loss** | ​ | (761,370) | ​ (333,145) | ​ (428,225) | 129% |
| Gross Loss% | ​ | (59)% | ​ (30)% | ​ | ​ |
| ​ | ​ |  | ​ | ​ | ​ |
| **Operating Expenses:** | ​ |  | ​ | ​ | ​ |
| Research and Development | ​ | 2,570,873 | ​ 2,358,726 | ​ 212,147 | 9% |
| Selling and Marketing | ​ | 1,352,990 | ​ 2,238,221 | ​ (885,231) | (40)% |
| General and Administrative | ​ | 2,756,588 | ​ 4,492,168 | ​ (1,735,580) | (39)% |
| Depreciation and Amortization | ​ | 413,483 | ​ 1,188,339 | ​ (774,856) | (65)% |
| Impairment on Intangible Asset and Equity Investment | ​ | — | ​ 30,119,679 | ​ (30,119,679) | (100)% |
| ​ | ​ |  | ​ | ​ | ​ |
| **Loss from Operations** | ​ | (7,855,304) | ​ (40,730,278) | ​ 32,874,974 | (81)% |
| ​ | ​ |  | ​ | ​ | ​ ​ |
| **Other Income (Expense):** | ​ |  | ​ | ​ | ​ |
| Investment Income | ​ | 135,759 | ​ 205,824 | ​ (70,065) | (34)% |
| Other Taxes | ​ | 40,772 | ​ (17,559) | ​ 58,331 | (332)% |
| Foreign Exchange Gain (Loss) | ​ | 12,519 | ​ (70,180) | ​ 82,699 | (118)% |
| ​ | ​ |  | ​ | ​ | ​ |
| **Total Other Income, Net** | ​ | 189,050 | ​ 118,085 | ​ 70,965 | 60% |
| ​ | ​ |  | ​ | ​ | ​ |
| **Net Loss** | ​ | $(7,666,254) ​ | $(40,612,193) ​ | $32,945,939 | (81)% |

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

| ​ ​ ​ | ​ ​ | ​ ​ Three Months Ended June 30, 2025 | ​ ​ ​ % of ​ Total Sales ​ | ​ ​ Three Months Ended June 30, 2024 | ​ ​ ​ % of ​ Total Sales ​ | ​ ​ Dollar Change | ​ ​ ​ % Increase ​ (Decrease) ​ |
| --- | --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Sales of Products | ​ | $1,045,310 | 81% | $601,263 | 55% | $444,047 | 74% |
| Sales of Engineering Services | ​ | 250,399 | 19% | 491,308 | 45% | (240,909) | (49)% |
| Total Sales | ​ | $1,295,709 | 100% | $1,092,571 | 100% | $203,138 | 19% |

22

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

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

*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:

| ​ ​ ​ | ​ ​ | ​ ​ Three Months Ended June 30, 2025 | ​ ​ | ​ ​ % of Total Sales ​ | ​ ​ Three Months Ended June 30, 2024 | ​ ​ | ​ ​ % of Total Sales ​ | ​ ​ Dollar Change | ​ ​ | ​ ​ % Increase ​ (Decrease) ​ |
| --- | --- | --- | --- | ---: | --- | --- | ---: | --- | --- | ---: |
| Product Cost of Sales | ​ | $844,111 | ​ | 65% | $608,554 | ​ | 56% | $235,557 | ​ | 39% |
| Inventory Reserve for Obsolescence |  | ​ 265,000 |  | 20% | ​ — |  | —% | ​ 265,000 |  | NM% |
| Manufacturing Overhead - Unapplied |  | ​ 508,235 |  | 39% | ​ 458,898 |  | 42% | ​ 49,337 |  | 11% |
| Depreciation and Amortization | ​ | ​ 167,349 | ​ | 13% | ​ 182,049 | ​ | 17% | ​ (14,700) | ​ | (8)% |
| Engineering Services Cost of Sales |  | ​ 272,384 |  | 22% | ​ 176,215 |  | 16% | ​ 96,169 |  | 55% |
| ​ |  | ​ |  |  | ​ |  |  | ​ |  | ​ |
| **Total Cost of Sales** | ​ | $2,057,079 |  | 159% | $1,425,716 |  | 131% | $631,363 |  | 44% |
| ​ | ​ |  |  | ​ |  |  | ​ |  |  | ​ |
| **Gross Loss** | ​ | $(761,370) |  | (59)% | $(333,145) |  | (31)% | $(428,225) |  | 129% |

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

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

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

*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 June 30, 2025 | ​ ​ ​ ​ ​ % of Total Sales | ​ ​ ​ | ​ ​ ​ Three Months Ended June 30, 2024 | ​ ​ ​ ​ ​ % of Total Sales | ​ ​ ​ | ​ ​ ​ ​ Dollar Change | ​ ​ ​ ​ ​ ​ ​ % Increase ​ (Decrease) ​ |
| --- | --- | ---: | ---: | --- | ---: | ---: | --- | ---: | ---: |
| Research and Development Expenses | ​ | $2,385,645 | 184% | ​ | $1,905,847 | 174% | ​ | $479,798 | 25% |
| Related Stock-based Compensation (non-cash) | ​ | ​ 185,228 | 14% | ​ | ​ 452,879 | 41% | ​ | ​ (267,651) | (59)% |
| Total Research and Development | ​ | $2,570,873 | 198% | ​ | $2,358,726 | 216% | ​ | $212,147 | 9% |

23

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

*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 June 30, 2025 | ​ ​ ​ | ​ ​ % of Total Sales | ​ ​ ​ | ​ ​ ​ Three Months Ended June 30, 2024 | ​ ​ ​ | ​ ​ % of Total Sales | ​ ​ ​ | ​ ​ ​ ​ Dollar Change | ​ ​ ​ | ​ ​ ​ ​ % Increase ​ (Decrease) ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Selling and Marketing Expenses | ​ | $1,136,047 | ​ | 88% | ​ | $1,932,859 | ​ | 177% | ​ | $(796,812) | ​ | (41)% |
| Related Stock-based Compensation (non-cash) | ​ | ​ 216,943 | ​ | 17% | ​ | ​ 305,362 | ​ | 28% | ​ | ​ (88,419) | ​ | (29)% |
| Total Selling and Marketing | ​ | $1,352,990 | ​ | 104% | ​ | $2,238,221 | ​ | 205% | ​ | $(885,231) | ​ | (40)% |

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

*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 June 30, 2025 | ​ ​ ​ ​ ​ % of Total Sales | ​ ​ ​ | ​ ​ ​ Three Months Ended June 30, 2024 | ​ ​ ​ ​ ​ % of Total Sales | ​ ​ ​ | ​ ​ ​ ​ Dollar Change | ​ ​ ​ ​ ​ ​ ​ % Increase ​ (Decrease) ​ |
| --- | --- | ---: | ---: | --- | ---: | ---: | --- | ---: | ---: |
| General and Administrative Expenses | ​ | $2,664,669 | 206% | ​ | $2,416,982 | 221% | ​ | $247,687 | 10% |
| Related Stock-based Compensation (non-cash) | ​ | ​ 91,919 | 7% | ​ | ​ 2,075,186 | 190% | ​ | ​ (1,983,267) | (96)% |
| Total General and Administrative | ​ | $2,756,588 | 213% | ​ | $4,492,168 | 411% | ​ | $(1,735,580) | (39)% |

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

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

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

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

### Comparison of Six Months Ended June 30, 2025 and 2024

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

| ​ ​ ​ ​ ​ Sales: | ​ ​ ​ ​ | ​ ​ ​ Six Months Ended June 30, ​ ​ 2025 ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ 2024 ​ ​ ​ ​ ​ | ​ ​ Dollar Change ​ ​ ​ | ​ ​ ​ | ​ ​ ​ % Increase (Decrease) ​ ​ ​ |
| --- | --- | ---: | ---: | ---: | --- | ---: |
| Sales of Products | ​ | $2,369,383 ​ | $2,430,336 ​ | $(60,953) |  | (3)% |
| Sales of Engineering Services | ​ | 507,267 ​ | 666,102 ​ | (158,835) |  | (24)% |
| ​ | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ | ​ | ​ ​ |
| **Total Sales** | ​ | 2,876,650 ​ | 3,096,438 ​ | (219,788) |  | (7)% |
| ​ | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ | ​ | ​ ​ |
| **Cost of Sales:** | ​ | ​ | ​ |  |  | ​ |
| Cost of Sales - Products Sold | ​ | 3,228,076 ​ | 2,875,044 ​ | 353,032 |  | 12% |
| Cost of Sales - Depreciation and Amortization | ​ | 344,218 ​ | 363,615 ​ | (19,397) |  | (5)% |
| Cost of Sales - Engineering Services | ​ | 330,844 ​ | 244,177 ​ | 86,667 |  | 35% |
| ​ | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ | ​ | ​ ​ |
| **Total Cost of Sales** | ​ | 3,903,138 ​ | 3,482,836 ​ | 420,302 |  | 12% |
| ​ | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ | ​ | ​ ​ |
| **Gross Loss** | ​ | (1,026,488) ​ | (386,398) ​ | (640,090) |  | 166% |
| Gross Loss % | ​ | (36)% | (12)% |  |  | ​ |
| ​ | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ | ​ | ​ ​ |
| **Operating Expenses:** | ​ | ​ | ​ |  |  | ​ |
| Research and Development | ​ | 5,176,713 ​ | 5,073,115 ​ | 103,598 |  | 2% |
| Selling and Marketing | ​ | 2,890,456 ​ | 4,479,165 ​ | (1,588,709) |  | (35)% |
| General and Administrative | ​ | 6,717,572 ​ | 8,594,322 ​ | (1,876,750) |  | (22)% |
| Depreciation and Amortization | ​ | 818,494 ​ | 2,158,716 ​ | (1,340,222) |  | (62)% |
| Loss on Fixed Asset Disposal | ​ | — ​ | 11,277 ​ | (11,277) |  | (100)% |
| Impairment on Intangible Asset and Equity Investment | ​ | — ​ | 30,119,679 ​ | (30,119,679) |  | (100)% |
| ​ | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ | ​ | ​ ​ |
| **Loss from Operations** | ​ | (16,629,723) ​ | (50,822,672) ​ | 34,192,949 |  | (67)% |
| ​ | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ | ​ | ​ ​ |
| **Other Income (Expense):** | ​ | ​ | ​ |  |  | ​ |
| Investment Income | ​ | 304,239 ​ | 358,423 ​ | (54,184) |  | (15)% |
| Other Taxes | ​ | 22,371 ​ | (17,841) ​ | 40,212 |  | (225)% |
| Foreign Exchange Loss | ​ | (768) ​ | (177,685) ​ | 176,917 |  | (100)% |
| ​ | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ | ​ | ​ ​ |
| **Total Other Income, Net** | ​ | 325,842 ​ | 162,897 ​ | 162,945 |  | 100% |
| **​** | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ | ​ | ​ ​ |
| **Net Loss** | ​ | $(16,303,881) ​ | $(50,659,775) ​ | $34,355,894 |  | (68)% |

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

| ​ ​ ​ | ​ ​ | ​ ​ Six Months Ended June 30, 2025 | ​ ​ ​ % of ​ Total Sales ​ | ​ ​ Six Months Ended June 30, 2024 | ​ ​ ​ % of ​ Total Sales ​ | ​ ​ Dollar Change | ​ ​ ​ % Increase ​ ​ (Decrease) ​ |
| --- | --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Sales of Products | ​ | $2,369,383 | 82% | $2,430,336 | 78% | $(60,953) | (3)% |
| Sales of Engineering Services | ​ | 507,267 | 18% | 666,102 | 22% | (158,835) | (24)% |
| Total Sales | ​ | $2,876,650 | 100% | $3,096,438 | 100% | $(219,788) | (7)% |

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

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

*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:

| ​ ​ ​ | ​ ​ | ​ ​ Six Months Ended June 30, 2025 | ​ ​ | ​ ​ % of ​ Total Sales | ​ ​ Six Months Ended June 30, 2024 | ​ ​ | ​ ​ % of ​ Total Sales | ​ ​ Dollar Change | ​ ​ | ​ ​ % Increase ​ (Decrease) ​ |
| --- | --- | ---: | --- | ---: | ---: | --- | ---: | ---: | --- | ---: |
| Product Cost of Sales | ​ | $1,870,726 |  | 65% | $1,925,898 |  | 62% | $(55,172) |  | (3)% |
| Inventory Reserve for Obsolescence | ​ | 265,000 |  | 9% | - |  | —% | 265,000 |  | NM ​ |
| Manufacturing Overhead - Unapplied | ​ | 1,092,350 |  | 38% | 949,146 |  | 31% | 143,204 |  | 15% |
| Depreciation and Amortization | ​ | 344,218 |  | 12% | 363,615 |  | 12% | (19,397) |  | (5)% |
| Engineering Services Cost of Sales | ​ | 330,844 |  | 12% | 244,177 |  | 8% | 86,667 |  | 35% |
| ​ | ​ | ​ ​ | ​ | ​ ​ | ​ ​ | ​ | ​ ​ | ​ ​ | ​ | ​ ​ |
| **Total Cost of Sales** | ​ | ​ 3,903,138 |  | 136% | ​ 3,482,836 |  | 112% | ​ 420,302 |  | 12% |
| ​ | ​ | ​ ​ | ​ | ​ ​ | ​ ​ | ​ | ​ ​ | ​ ​ | ​ | ​ ​ |
| **Gross Loss** | ​ | $(1,026,488) | ​ | (36)% | $(386,398) |  | (12)% | $(640,090) |  | 166% |

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

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

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

*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.

| ​ ​ ​ ​ | ​ ​ ​ | ​ ​ ​ ​ Six Months Ended June 30, 2025 | ​ ​ ​ ​ ​ ​ ​ % of ​ Total Sales | ​ ​ ​ Six Months Ended June 30, 2024 | ​ ​ ​ ​ ​ ​ ​ % of ​ Total Sales | ​ ​ ​ ​ Dollar Change | ​ ​ ​ ​ ​ ​ ​ % Increase ​ (Decrease) ​ |
| --- | --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Research and Development Expenses | ​ | $4,639,401 | 161% | $4,276,102 | 138% | $363,299 | 8% |
| Related Stock-based Compensation (non-cash) | ​ | ​ 537,312 | 19% | ​ 797,013 | 26% | ​ (259,701) | (33)% |
| Total Research and Development Costs | ​ | $5,176,713 | 180% | $5,073,115 | 164% | $103,598 | 2% |

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

*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.

| ​ ​ ​ ​ | ​ ​ ​ | ​ ​ ​ ​ Six Months Ended June 30, 2025 | ​ ​ ​ ​ ​ ​ ​ % of ​ Total Sales | ​ ​ ​ Six Months Ended June 30, 2024 | ​ ​ ​ ​ ​ ​ ​ % of ​ Total Sales | ​ ​ ​ ​ Dollar Change | ​ ​ ​ ​ ​ ​ ​ % Increase ​ (Decrease) ​ |
| --- | --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Selling and Marketing Expenses | ​ | $2,306,634 | 80% | $3,957,252 | 128% | $(1,650,618) | (42)% |
| Related Stock-based Compensation (non-cash) | ​ | ​ 583,822 | 20% | ​ 521,913 | 17% | ​ 61,909 | 12% |
| Total Selling and Marketing | ​ | $2,890,456 | 100% | $4,479,165 | 145% | $(1,588,709) | (35)% |

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

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

| ​ ​ ​ ​ | ​ ​ ​ | ​ ​ ​ ​ Six Months Ended June 30, 2025 | ​ ​ ​ ​ ​ ​ ​ % of ​ Total Sales | ​ ​ ​ Six Months Ended June 30, 2024 | ​ ​ ​ ​ ​ ​ ​ % of ​ Total Sales | ​ ​ ​ ​ Dollar Change | ​ ​ ​ ​ ​ ​ ​ % Increase ​ (Decrease) ​ |
| --- | --- | ---: | ---: | ---: | ---: | ---: | ---: |
| General and Administrative Expenses | ​ | $4,265,067 | 148% | $4,729,454 | 153% | $(464,387) | (10)% |
| Related Stock-based Compensation (non-cash) | ​ | ​ 2,452,505 | 85% | ​ 3,864,868 | 125% | ​ (1,412,363) | (37)% |
| Total General and Administrative | ​ | $6,717,572 | 234% | $8,594,322 | 278% | $(1,876,750) | (22)% |

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

*Depreciation and Amortization.* Depreciation and amortization expense, not included in cost of sales, for the six months ended June 30,2025, was $818,494, compared to $2,158,716 in the comparable period in 2024, or a decrease of $1,340,222. 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.

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

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

### Liquidity and Capital Resources

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

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

Summary of Cash Flows:

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

| ​ ​ Net Cash Provided by (used in) | ​ | June 30, 2025 ​ | ​ ​ | ​ June 30, 2024 |
| --- | --- | ---: | --- | ---: |
| Operating Activities | ​ | $(8,241,812) | ​ | $ (14,440,335) |
| Investing Activities | ​ | (1,631,941) | ​ | (2,234,041) |
| Financing Activities | ​ | 9,141,832 | ​ | -- |

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

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

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

As of June 30, 2025, the Company does not have any current or long-term debt obligations outstanding.

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

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.

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.

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

- Under the terms of the Company’s Securities Purchase Agreement (“SPA”), dated September 13, 2024, with Quanta Computer Inc., the second and third closings were subject to the Company achieving certain milestones. In the second quarter of 2025, the Company demonstrated the achievement of milestones required to complete the second closing under the SPA resulting in the sale of $5,000,000 of Series B Preferred Stock, which was completed on June 13, 2025. The Company has recently met the remaining milestones required to complete the third closing under the SPA, for the additional sale of $5,000,000 in Series B Preferred Stock;
- Reductions in our cash annual operating expenses across all operating areas, including in the areas of Research and Development, Sales and Marketing and General and Administrative;
- 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 2025 fiscal year as compared to 2024 and 2023, 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; and
- 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.

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

As a result of management’s plan above, our current amount of cash on hand, and our historical ability to raise capital, management has concluded that substantial doubt of our ability to continue as a going concern has been alleviated.

### 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” under Item 1A and elsewhere in our Annual

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.

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, 937 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 Asia-Pacific 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, 1,498 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 June 30, 2025.

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.

## Risk factors

As filed, 751 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, 2024. There have been no material changes from those risk factors, except as set forth below. The risks discussed in our 2024 Annual Report and herein could materially affect our business, financial condition and future results.

A substantial amount of the Company’s components and related materials are imported from abroad. The ongoing evolution of trade policies (including tariffs) could materially adversely affect the (i) costs of raw and finished components for our products, and (ii) demand for our current and future products.

Filed Aug 14, 2025.
Source: SEC EDGAR, the filing index for accession 0001558370-25-011550. Last ingested by Listed: Oct 24, 2026, 15:08 ET. No prices; not investment advice.