Core Insights - Two stocks in the information technology sector are showing signs of being overbought, which may concern momentum-focused investors [1][2]. Company Summaries - **Diginex Ltd (DGNX)**: - Recently completed an eight-to-one stock split, resulting in a significant stock price increase of approximately 88% over the past month [7]. - The stock reached a 52-week high of $19.38, with a current RSI value of 85.5, indicating it is overbought [7]. - On the latest trading day, shares gained 20.6%, closing at $13.60 [7]. - **Vuzix Corp (VUZI)**: - Announced a strategic collaboration with Saphlux to enhance optical solutions for AI/AR glasses, which is expected to advance the AR industry [7]. - The stock has increased by around 21% over the past month, with a 52-week high of $5.79 and an RSI value of 70.4 [7]. - On the latest trading day, shares rose by 4.9%, closing at $2.57 [7].

Core Insights - Saphlux, Inc. and Vuzix Corporation have announced a strategic collaboration aimed at delivering high-performance optical solutions for next-generation AI/AR glasses [1] Company Overview - Saphlux is recognized as a leader in quantum dot MicroLED displays, indicating a strong position in advanced display technologies [1] - Vuzix Corporation is a prominent supplier of AI-powered smart glasses and Augmented Reality technologies, showcasing its expertise in the AR sector [1] Industry Implications - The collaboration is expected to accelerate the adoption of next-generation AI/AR glasses, highlighting a growing trend in the integration of advanced optical solutions within the augmented reality market [1]

Core Insights - Vuzix Corporation is participating in Vision Expo West 2025, showcasing its AI-powered smart glasses and AR technologies [1][5] - The company has over 25 years of experience in augmented reality and has shipped multiple generations of waveguide-enabled AR eyewear since 2018 [1][3] - Vuzix is collaborating with industry leaders to integrate design, lens integration, and processing requirements for mass adoption of smart glasses [1] Company Overview - Vuzix is a designer, manufacturer, and marketer of AI-powered smart glasses, waveguides, and AR technologies for various markets including enterprise, medical, defense, and consumer [3] - The company holds more than 450 patents and has received numerous awards for innovation, including CES awards from 2005 to 2024 [3] - Founded in 1997, Vuzix is publicly traded on NASDAQ under the ticker VUZI, with offices in Rochester, NY, and Japan [3]

Company Overview - Vuzix Corporation (NASDAQ:VUZI) designs, manufactures, and markets AI-powered smart glasses, waveguides, and AR technologies across North America, Europe, the Asia Pacific, and internationally [4] Leadership Change - On September 8, Vuzix announced the appointment of Dr. Chris Parkinson as President of Enterprise Solutions, who is a co-founder of RealWear, a key competitor [1][3] - Dr. Parkinson brings nearly three decades of experience in AR, AI, SaaS, and speech-driven interfaces, having previously guided RealWear through fundraising, international expansion, and strategic acquisitions [2] Strategic Goals - Dr. Parkinson's role will focus on overseeing Vuzix's enterprise product portfolio and go-to-market strategy, which includes sales, strategic partnerships, customer adoption, and global channel expansion [3]

Core Insights - Vuzix Corporation is participating in two major trade shows in September 2025, showcasing its AI-powered smart glasses and AR technologies [1][3]. Group 1: Trade Show Participation - Vuzix will display its LX1 smart glasses at the ASCM CHAINge event, which is focused on supply chain innovations [1]. - The company will also participate in the 26th China International Optoelectronic Exposition (CIOE), demonstrating its latest waveguide technology and microLED projection systems [3]. Group 2: Product Offerings - Vuzix specializes in AI-powered smart glasses, waveguides, and AR technologies, catering to various markets including enterprise, medical, defense, and consumer sectors [5]. - The company holds over 450 patents and has received multiple awards for innovation in consumer electronics from 2005 to 2024 [5].

Core Insights - Vuzix Corporation has appointed Dr. Chris Parkinson as President of Enterprise Solutions, indicating a strategic move to enhance its leadership in the enterprise sector of AI-powered smart glasses and augmented reality technologies [1] Company Developments - The appointment of Dr. Chris Parkinson is aimed at strengthening Vuzix's position in providing advanced waveguides and AR technologies specifically for defense and enterprise applications [1]

Group 1 - The article emphasizes that investors often overlook a company's current weaknesses if it shows a clear trajectory towards scale and operational leverage, which can justify a premium valuation [1] - The author specializes in analyzing individual stocks, with a strong educational background in finance and economics, and a focus on market trends, particularly in the tech sector [1] - The investment philosophy highlighted is centered on simplicity, suggesting that fundamental financial ratios and metrics provide the clearest insights into investment opportunities [1] Group 2 - The article is published on Seeking Alpha, which serves as a platform for connecting with a global community of investors, allowing for the sharing of ideas and gaining exposure [1]

[Q2 2025 Earnings Overview](index=1&type=section&id=Q2%202025%20Earnings%20Overview) Vuzix's Q2 2025 performance overview, including CEO's strategic highlights and key financial metrics [CEO's Strategic and Operational Highlights](index=1&type=section&id=CEO%27s%20Strategic%20and%20Operational%20Highlights) Vuzix CEO Paul Travers highlighted key achievements in Q2 2025, including receiving the second $5 million Quanta tranche, achieving volume shipments of waveguides to a tier-1 OEM customer, introducing the LX1 enterprise smart glasses for warehousing and logistics, and growing revenue by 19% year-over-year while decreasing cash operating expenses by 26% - Received the second **$5 million** Quanta investment tranche, bringing Quanta's total investment to **$15 million** out of a planned **$20 million**[3](index=3&type=chunk) - Achieved an important OEM business milestone by shipping waveguides in volume to the first tier-1 OEM waveguide customer[3](index=3&type=chunk) - Finalized and introduced the LX1 enterprise smart glasses, with initial customer sampling underway and production rollout scheduled before year-end, targeting the warehousing and logistics industry[3](index=3&type=chunk) Q2 2025 vs Q2 2024 Performance Metrics | Metric | Q2 2025 vs Q2 2024 | | :----------------------- | :----------------- | | Revenue Growth | +19% YoY | | Cash Operating Expense | -26% YoY | [Second Quarter 2025 Financial Results](index=1&type=section&id=Second%20Quarter%202025%20Financial%20Results) Detailed financial results for Q2 2025, including condensed statements of operations and performance analysis [Condensed Consolidated Statements of Operations](index=1&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Vuzix reported its condensed unaudited Consolidated Statements of Operations for Q2 2025, showing a 19% increase in total sales year-over-year, but also a larger gross loss. Net loss significantly improved from $40.6 million in Q2 2024 to $7.7 million in Q2 2025, largely due to the absence of a significant impairment charge and reduced operating expenses Condensed Consolidated Statements of Operations ($000s except per share amounts) | Metric ($000s except per share amounts) | Q2 2025 | Q2 2024 | Change ($000s) | | :------------------------------------- | :------ | :------ | :------------- | | Sales of Products | 1,045 | 601 | +444 | | Sales of Engineering Services | 250 | 491 | -241 | | **Total Sales** | **1,296** | **1,093** | **+203** | | Total Cost of Sales | 2,057 | 1,426 | +631 | | **Gross Profit (Loss)** | **(761)** | **(333)** | **-428** | | Research and Development | 2,571 | 2,359 | +212 | | Selling and Marketing | 1,353 | 2,238 | -885 | | General and Administrative | 2,757 | 4,492 | -1,735 | | Depreciation and Amortization | 413 | 1,188 | -775 | | Impairment of Licenses, Patents & Trademarks | - | 30,120 | -30,120 | | **Loss from Operations** | **(7,855)** | **(40,730)** | **+32,875** | | Total Other Income (Expense) | 189 | 118 | +71 | | **Net Loss** | **(7,666)** | **(40,612)** | **+32,946** | | Loss per Common Share | (0.10) | (0.62) | +0.52 | [Detailed Financial Performance Analysis](index=2&type=section&id=Detailed%20Financial%20Performance%20Analysis) Vuzix's Q2 2025 financial performance showed a 19% revenue increase driven by product sales, particularly M400 smart glasses. However, gross loss widened due to inventory obsolescence and manufacturing overhead. Operating expenses significantly decreased, primarily from reduced S&M and G&A costs, leading to a substantial reduction in net loss and improved cash flow from operations - Total revenues increased by **19% to $1.3 million** in Q2 2025, up from **$1.1 million** in Q2 2024, primarily due to higher product sales, specifically increased unit sales of M400 smart glasses[5](index=5&type=chunk) - Gross loss increased to **$0.8 million** in Q2 2025 from **$0.3 million** in Q2 2024, attributed to further reserves for inventory obsolescence and increased unapplied manufacturing overhead costs[6](index=6&type=chunk) - Research and Development (R&D) expense increased by approximately **9% to $2.6 million**, mainly due to a **$0.3 million** increase in external development costs for new products[7](index=7&type=chunk) - Selling and Marketing (S&M) expense decreased by approximately **40% to $1.4 million**, driven by a **$0.5 million** decline in salary and benefits (due to headcount reductions) and a **$0.3 million** decrease in bad debt expense[8](index=8&type=chunk) - General and Administrative (G&A) expense decreased by approximately **39% to $2.8 million**, largely due to a **$2.0 million** decline in non-cash stock-based compensation related to the 2024 cash salary reduction program, which ended on April 30, 2025[9](index=9&type=chunk) - Net loss significantly improved to **$7.7 million** (**$0.10 per share**) in Q2 2025, compared to a net loss of **$40.6 million** (**$0.62 per share**) in Q2 2024[10](index=10&type=chunk) - Net cash flows used in operating activities improved to **$4.7 million** in Q2 2025 from **$5.6 million** in Q2 2024. The company maintained **$17.5 million** in cash and cash equivalents and a positive working capital of **$20.3 million** as of June 30, 2025[10](index=10&type=chunk) [Management Outlook and Strategic Initiatives](index=2&type=section&id=Management%20Outlook%20and%20Strategic%20Initiatives) Vuzix's strategic vision, market opportunities, and operational priorities for future growth and product development [Strategic Vision and Market Opportunities](index=2&type=section&id=Strategic%20Vision%20and%20Market%20Opportunities) Vuzix sees growing market momentum for AI-enhanced wearable solutions, believing it is uniquely positioned to capitalize on the convergence of AI and AR technologies. The company anticipates securing additional design wins for ODM/OEM products in consumer and enterprise AI smart glasses markets, aiming for long-term recurring revenue streams - The market is gaining momentum for AI-enhanced wearable solutions, and Vuzix is uniquely positioned to capitalize as AI and AR technologies converge[11](index=11&type=chunk) - Confident in securing additional design wins for new ODM/OEM products targeting both consumer and enterprise AI smart glasses markets[12](index=12&type=chunk) - These design wins are expected to evolve into long-term recurring revenue streams, either through supplying optical waveguides and display engines or creating co-branded AI smart glasses[12](index=12&type=chunk) [Operational Priorities and Product Roadmap](index=3&type=section&id=Operational%20Priorities%20and%20Product%20Roadmap) Vuzix ended Q2 2025 with sufficient capital and expects to receive the final $5 million Quanta investment. The company plans to expand its work in the defense sector, drive enterprise customer engagements with measurable productivity gains, and anticipates follow-on smart glasses orders to reduce inventory before the LX1 product rollout for warehousing and logistics by year-end - Ended June 2025 with the necessary capital resources to execute the current operating plan and anticipates receiving the final **$5 million** Quanta investment after meeting all manufacturing and performance milestones[12](index=12&type=chunk) - Goal to expand work in the defense sector with existing and new prime contractors, leading to additional custom design-ins and accelerating scaled production orders[12](index=12&type=chunk) - Seeing growing enterprise customer engagements and measurable successes, supported by substantial usage data demonstrating significant productivity gains, driven by leading enterprise ISV applications and the Vuzix Solutions platform[12](index=12&type=chunk) - Anticipated follow-on orders for smart glasses this year are expected to further reduce existing inventory levels and convert finished goods into cash, paving the way for a smooth rollout of the next-generation LX1 product for warehousing and logistics before year-end[12](index=12&type=chunk) [Additional Corporate Information](index=3&type=section&id=Additional%20Corporate%20Information) Supplementary corporate details including conference call information, company overview, forward-looking statements, and investor contacts [Conference Call Information](index=3&type=section&id=Conference%20Call%20Information) Vuzix scheduled a conference call for August 14, 2025, at 4:30 p.m. ET to discuss Q2 2025 operational and financial highlights, with CEO Paul Travers and CFO Grant Russell participating. Details for live access and a 30-day telephonic replay are provided - Conference call held on Thursday, August 14, 2025, at 4:30 p.m. Eastern Time (ET)[13](index=13&type=chunk) - Participating on the call are Vuzix' Chief Executive Officer and President Paul Travers and Chief Financial Officer Grant Russell[13](index=13&type=chunk) - A telephonic replay will be available for 30 days, starting on August 14, 2025, at approximately 5:30 p.m. (ET)[14](index=14&type=chunk) [About Vuzix Corporation](index=4&type=section&id=About%20Vuzix%20Corporation) Vuzix Corporation is a leading designer, manufacturer, and marketer of AI-powered Smart Glasses, Waveguides, and Augmented Reality (AR) technologies for enterprise, medical, defense, and consumer markets. The company holds over 450 patents and has received numerous innovation awards since its founding in 1997 - Vuzix is a leading designer, manufacturer, and marketer of AI-powered Smart Glasses, Waveguides, and Augmented Reality (AR) technologies, components, and products[15](index=15&type=chunk) - Products serve enterprise, medical, defense, and consumer markets, including head-mounted smart personal displays, wearable computing devices, and OEM waveguide optical components and display engines[15](index=15&type=chunk) - The Company holds more than **450 patents** and patents pending and numerous IP licenses in relevant fields[15](index=15&type=chunk) - Founded in 1997, Vuzix is a public company (NASDAQ: VUZI) with offices in Rochester, NY, and Kyoto and Okayama, Japan[15](index=15&type=chunk) [Forward-Looking Statements Disclaimer](index=4&type=section&id=Forward-Looking%20Statements%20Disclaimer) This section advises readers that the news release contains forward-looking statements regarding future product releases, market opportunities, R&D success, revenue, operating results, and industry leadership. It cautions against undue reliance on these statements, which are based on beliefs and assumptions as of the release date and subject to risks detailed in SEC filings, and disclaims any obligation to update them - The news release contains "forward-looking statements" as defined by the Securities Litigation Reform Act of 1995 and applicable Canadian securities laws[16](index=16&type=chunk) - These statements relate to, among other things, new product releases, market opportunities, R&D project successes, smart glasses pilot to roll-out conversion rates, OEM programs, future revenue and operating results, and the Company's leadership in the Smart Glasses and AR display industry[16](index=16&type=chunk) - Readers should not place undue reliance on such statements, which are based on the Company's beliefs and assumptions as of the release date and subject to risk factors detailed in SEC filings[16](index=16&type=chunk) [Investor Relations Contact](index=4&type=section&id=Investor%20Relations%20Contact) Contact information for investor relations is provided, including the name, title, email, and phone number of the Director of Investor Relations, Ed McGregor, along with the company's address and general investor email - Investor Relations Contact: Ed McGregor, Director of Investor Relations, Vuzix Corporation[17](index=17&type=chunk) - Contact details: ed_mcgregor@vuzix.com, Tel: (585) 359-5985[17](index=17&type=chunk) - Company address: Vuzix Corporation, 25 Hendrix Road, West Henrietta, NY 14586 USA. Investor Information email: IR@vuzix.com[17](index=17&type=chunk)

Financial Data and Key Metrics Changes - Vuzix reported Q2 2025 revenue of $1.3 million, a 19% increase year-over-year, driven by increased sales of smart glasses, particularly the M400 model [28] - The gross loss for Q2 2025 was $800,000, compared to a gross loss of $300,000 in Q2 2024, attributed to inventory obsolescence reserves and increased manufacturing overhead costs [29] - The net loss for Q2 2025 was $7.7 million or $0.10 per share, significantly improved from a net loss of $40.6 million or $0.62 per share in the same period last year [30] Business Line Data and Key Metrics Changes - Engineering services sales were $300,000 in Q2 2025, down from $500,000 in the prior year's period [28] - Research and development expenses increased to $2.6 million in Q2 2025 from $2.4 million in Q2 2024, reflecting higher external development costs [29] - Sales and marketing expenses decreased by approximately 40% to $1.4 million in Q2 2025, primarily due to reduced salary and benefits expenses [29] Market Data and Key Metrics Changes - The LX1 enterprise smart glasses, aimed at warehousing and logistics, are expected to see strong initial demand, with production rollout scheduled for Q4 2025 [6][22] - The warehousing and logistics market for voice picking solutions is projected to grow from approximately $6 billion in 2024 to $25 billion by 2034, indicating a significant opportunity for Vuzix [21] Company Strategy and Development Direction - Vuzix aims to monetize the enterprise market and scale OEM waveguide optics for AR and AI-driven smart glasses across broader consumer markets [7][9] - The company is engaged with multiple prime defense contractors to support the next generation of wearable technologies, indicating a strategic focus on defense applications [8][27] - Vuzix's partnership with Quanta is central to its go-to-market strategy, enabling efficient commercialization and production scaling [15][27] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the structural inflection point for Vuzix and the industry, positioning the company for significant growth [27] - The integration of AI in smart glasses is seen as a transformative opportunity for enhancing productivity in various sectors, including logistics and manufacturing [17][20] - Management anticipates receiving the final tranche of $5 million from Quanta, reinforcing the financial outlook [48] Other Important Information - The company has no current or long-term debt obligations and reported cash and cash equivalents of $17.5 million as of June 30, 2025 [31] - Vuzix is focused on reducing inventory levels, aiming to decrease excess inventory while meeting customer demand efficiently [39][43] Q&A Session Summary Question: Clarification on Tier one OEM shipments - The Tier one OEM shipment is not with Quanta but with another large supplier, and the business is expected to ramp up through 2026 [36][37] Question: Update on defense contractor opportunities - Production orders from defense contractors are expected in the latter half of 2025, with multiple programs in progress [38] Question: Inventory management and levels - The company aims to reduce inventory by $2 million, with plans to manage inventory more effectively through partnerships [39][43] Question: Timeline for Quanta's $5 million funding - The funding is expected to be received before the end of 2025, pending paperwork [48] Question: Focus on LX1 and other market verticals - The LX1 is primarily designed for warehousing but can also support other applications, with a focus on customer feedback and needs [50][56] Question: Technological hurdles for smart glasses adoption - Weight and design are significant hurdles for mass market adoption of smart glasses, with Vuzix positioned to address these challenges [58][59]

Part I – Financial Information [Item 1. Consolidated Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Consolidated%20Financial%20Statements%20%28Unaudited%29) This section presents the company's unaudited consolidated financial statements, including balance sheets, equity, operations, cash flows, and detailed accounting notes [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) Total assets and stockholders' equity decreased from December 2024 to June 2025, while current liabilities and mezzanine equity rose | Metric | June 30, 2025 ($) | December 31, 2024 ($) | | :----------------------------------- | :-------------- | :---------------- | | Total Assets | $36,902,452 | $39,405,258 | | Total Current Assets | $23,321,417 | $26,722,490 | | Total Current Liabilities | $3,037,976 | $2,112,273 | | Mezzanine Equity (Convertible Preferred Stock) | $5,000,000 | — | | Total Stockholders' Equity | $28,864,476 | $37,292,985 | [Consolidated Statements of Changes in Mezzanine Equity and Stockholders' Equity](index=5&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Mezzanine%20Equity%20and%20Stockholders%27%20Equity) Equity statements detail changes from Series B Preferred Stock issuance, stock compensation, ATM program proceeds, and net loss | Item | Three Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2025 ($) | | :--------------------------------- | :------------------------------- | :----------------------------- | | Preferred Stock Issued (Quanta SPA) | $5,000,000 | $5,000,000 | | Proceeds from ATM Program, Net | $2,835,408 | $4,089,850 | | Stock-Based Compensation Expense | $786,552 | $3,708,785 | | Net Loss | $(7,666,254) | $(16,303,881) | [Consolidated Statements of Operations](index=7&type=section&id=Consolidated%20Statements%20of%20Operations) Net loss significantly reduced for both three and six months ended June 30, 2025, primarily due to the absence of a prior year's large impairment charge | Metric | Three Months Ended June 30, 2025 ($) | Three Months Ended June 30, 2024 ($) | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total Sales | $1,295,709 | $1,092,571 | $2,876,650 | $3,096,438 | | Gross Loss | $(761,370) | $(333,145) | $(1,026,488) | $(386,398) | | Loss From Operations | $(7,855,304) | $(40,730,278) | $(16,629,723) | $(50,822,672) | | Net Loss | $(7,666,254) | $(40,612,193) | $(16,303,881) | $(50,659,775) | | Basic and Diluted Net Loss per Common Share | $(0.10) | $(0.62) | $(0.21) | $(0.77) | - Impairment on Intangible Asset and Equity Investment was **$0** for both three and six months ended June 30, 2025, compared to **$30,119,679** in the comparable 2024 periods, significantly reducing the net loss[12](index=12&type=chunk) [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash and cash equivalents decreased due to operating and investing activities, partially offset by significant financing from preferred stock and ATM program | Cash Flow Activity | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | | :--------------------------------- | :------------------------------- | :------------------------------- | | Net Cash Flows Used In Operating Activities | $(8,241,812) | $(14,440,335) | | Net Cash Flows Used In Investing Activities | $(1,631,941) | $(2,234,041) | | Net Cash Flows Provided by Financing Activities | $9,141,832 | — | | Net Decrease in Cash and Cash Equivalents | $(731,921) | $(16,674,376) | | Cash and Cash Equivalents - End of Period | $17,454,585 | $9,881,216 | - Financing activities in H1 2025 included **$5,000,000** from the sale of Series B Preferred Stock and **$4,089,850** net proceeds from the ATM program[13](index=13&type=chunk) [Notes to the Unaudited Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20the%20Unaudited%20Consolidated%20Financial%20Statements) These notes provide detailed explanations and disclosures for the unaudited consolidated financial statements, covering accounting policies, revenue, equity, and asset valuations [Note 1 – Basis of Presentation](index=10&type=section&id=Note%201%20%E2%80%93%20Basis%20of%20Presentation) Financial statements are GAAP-compliant; management alleviated going concern doubt through capital raising and operational improvements - Management initially concluded that substantial doubt may exist regarding the Company's ability to meet its obligations within **one year** due to historical net losses and cash outflows from operations[23](index=23&type=chunk)[24](index=24&type=chunk)[26](index=26&type=chunk) - Plans to alleviate going concern doubt include raising further capital (**ATM program**, **Quanta SPA**), implementing operational improvements, and curtailing certain development programs[26](index=26&type=chunk)[27](index=27&type=chunk)[28](index=28&type=chunk) - As a result of management's plans, current cash on hand, and historical ability to raise capital, substantial doubt about the Company's ability to continue as a going concern has been alleviated[31](index=31&type=chunk) [Note 2 – Revenue Recognition and Contracts with Customers](index=16&type=section&id=Note%202%20%E2%80%93%20Revenue%20Recognition%20and%20Contracts%20with%20Customers) Revenue is disaggregated into product sales (point-in-time) and engineering services (over time), with point-in-time recognition significantly increasing in Q2 2025 Revenue by Major Product Line (Three Months Ended June 30) | Revenue Type | 2025 ($) | 2024 ($) | Change ($) | % Change | | :------------------- | :----------- | :----------- | :----------- | :--------- | | Products Sales | $1,045,310 | $601,263 | $444,047 | 74% | | Engineering Services | $250,399 | $491,308 | $(240,909) | (49)% | | Total Revenue | $1,295,709 | $1,092,571 | $203,138 | 19% | Revenue by Major Product Line (Six Months Ended June 30) | Revenue Type | 2025 ($) | 2024 ($) | Change ($) | % Change | | :------------------- | :----------- | :----------- | :----------- | :--------- | | Products Sales | $2,369,383 | $2,430,336 | $(60,953) | (3)% | | Engineering Services | $507,267 | $666,102 | $(158,835) | (24)% | | Total Revenue | $2,876,650 | $3,096,438 | $(219,788) | (7)% | - Point-in-Time revenue recognition increased to **81%** of total sales for the three months ended June 30, 2025, up from **55%** in the comparable 2024 period[45](index=45&type=chunk) [Note 3 – Loss Per Share](index=17&type=section&id=Note%203%20%E2%80%93%20Loss%20Per%20Share) Basic and diluted loss per share are identical due to the company's net loss, rendering common stock equivalents anti-dilutive Basic and Diluted Net Loss per Common Share | Period | 2025 ($) | 2024 ($) | | :--------------------------------- | :----- | :----- | | Three Months Ended June 30 | $(0.10) | $(0.62) | | Six Months Ended June 30 | $(0.21) | $(0.77) | - As of June 30, 2025, there were **7,724,513** common stock share equivalents potentially issuable, compared to **10,744,477** as of June 30, 2024[48](index=48&type=chunk) [Note 4 – Inventories, Net](index=17&type=section&id=Note%204%20%E2%80%93%20Inventories%2C%20Net) Net inventories decreased from December 2024 to June 2025, primarily due to reduced purchased parts and disposal of obsoleted inventory Inventories, Net | Category | June 30, 2025 ($) | December 31, 2024 ($) | | :-------------------------- | :-------------- | :---------------- | | Purchased Parts and Components | $6,485,702 | $8,615,537 | | Work-in-Process | $262,427 | $264,715 | | Finished Goods | $3,350,940 | $3,877,549 | | Less: Reserve for Obsolescence | $(6,792,759) | $(7,944,575) | | **Inventories, Net** | **$3,306,310** | **$4,813,226** | - During the six months ended June 30, 2025, the Company physically disposed of **$1,125,711** of inventory that was fully provisioned for as obsolete in the previous year[49](index=49&type=chunk) [Note 5 – Fixed Assets](index=19&type=section&id=Note%205%20%E2%80%93%20Fixed%20Assets) Net fixed assets increased due to investments in tooling and manufacturing equipment, with some assets not yet depreciated Fixed Assets, Net | Category | June 30, 2025 ($) | December 31, 2024 ($) | | :-------------------------- | :-------------- | :---------------- | | Tooling and Manufacturing Equipment | $10,721,559 | $8,313,749 | | Less: Accumulated Depreciation | $(7,834,708) | $(6,727,668) | | **Fixed Assets, Net** | **$8,739,592** | **$7,584,284** | - As of June 30, 2025, **$1,893,500** of manufacturing fixed assets were not yet placed into service, down from **$4,913,005** at December 31, 2024[50](index=50&type=chunk) - Total depreciation expense for fixed assets for the six months ended June 30, 2025, was **$723,840**, an increase from **$522,042** in the comparable 2024 period[51](index=51&type=chunk) [Note 6 – Patents and Trademarks](index=19&type=section&id=Note%206%20%E2%80%93%20Patents%20and%20Trademarks) Net patents and trademarks increased slightly, reflecting ongoing intellectual property investments and amortization Patents and Trademarks, Net | Category | June 30, 2025 ($) | December 31, 2024 ($) | | :-------------------------- | :-------------- | :---------------- | | Patents and Trademarks | $4,527,812 | $4,286,743 | | Less: Accumulated Amortization | $(1,382,638) | $(1,287,983) | | **Patents and Trademarks, Net** | **$3,145,174** | **$2,998,760** | - Total amortization expense for patents and trademarks for the six months ended June 30, 2025, was **$94,654**, up from **$83,340** in the comparable 2024 period[52](index=52&type=chunk) [Note 7 – Technology Licenses, Net](index=19&type=section&id=Note%207%20%E2%80%93%20Technology%20Licenses%2C%20Net) Net technology licenses significantly decreased due to the termination of the Atomistic license agreement and subsequent asset impairment in 2024 Technology Licenses, Net | Category | June 30, 2025 ($) | December 31, 2024 ($) | | :-------------------------- | :-------------- | :---------------- | | Licenses | $2,443,356 | $32,443,356 | | Write-Offs | — | $(30,000,000) | | Less: Accumulated Amortization | $(1,782,848) | $(1,682,313) | | **Licenses, Net** | **$660,508** | **$761,043** | - The company ceased further funding of development activities with **Atomistic SAS**, leading to the termination of the license agreement and an impairment of the technology license asset of **$24,335,554** (net book value) as of June 30, 2024[54](index=54&type=chunk) - Total amortization expense related to technology licenses for the six months ended June 30, 2025, was **$100,534**, a significant decrease from **$1,653,876** in the comparable 2024 period due to the write-off[53](index=53&type=chunk) [Note 8 - Other Assets](index=20&type=section&id=Note%208%20-%20Other%20Assets) Other assets, net, slightly decreased, with an additional investment in a private corporation involved in display or software markets Other Assets, Net | Category | June 30, 2025 ($) | December 31, 2024 ($) | | :-------------------------- | :-------------- | :---------------- | | Total Investments (at cost) | $700,000 | $650,000 | | Software Development Costs, Net | $111,111 | $194,445 | | **Total Other Assets** | **$811,111** | **$844,445** | - The company invested an additional **$50,000** in one of its private corporate investments during the six months ended June 30, 2025[56](index=56&type=chunk) [Note 9 – Accrued Expenses](index=20&type=section&id=Note%209%20%E2%80%93%20Accrued%20Expenses) Total accrued expenses significantly increased, driven by 'Other Accrued Expenses' including new product development costs and tooling, with slight rise in warranty obligations Accrued Expenses | Category | June 30, 2025 ($) | December 31, 2024 ($) | | :-------------------------- | :-------------- | :---------------- | | Accrued Wages and Related Costs | $251,055 | $417,266 | | Accrued Professional Services | $127,625 | $240,000 | | Accrued Warranty Obligations | $50,837 | $46,078 | | Other Accrued Expenses | $1,136,138 | $242,408 | | **Total** | **$1,565,655** | **$945,752** | - Other Accrued Expenses include **$1,118,491** of new product development costs and tooling as of June 30, 2025[59](index=59&type=chunk) [Note 10 – Income Taxes](index=21&type=section&id=Note%2010%20%E2%80%93%20Income%20Taxes) Effective income tax rate differs from U.S. statutory rate due to a valuation allowance against deferred tax assets, resulting in no income tax provision - There was **no provision for income taxes** for the three and six months ended June 30, 2025 and 2024[12](index=12&type=chunk) - The effective income tax rate differs from the U.S. statutory rate primarily due to the **valuation allowance** recorded against deferred tax assets[62](index=62&type=chunk) [Note 11 – Mezzanine Equity and Stockholders' Equity](index=21&type=section&id=Note%2011%20%E2%80%93%20Mezzanine%20Equity%20and%20Stockholders%27%20Equity) The company increased authorized common stock, issued Series B Preferred Stock to Quanta Computer Inc., and raised capital through an ATM offering - Authorized common stock increased from **100,000,000 shares** to **200,000,000 shares**, approved by shareholders on June 17, 2025[68](index=68&type=chunk) - Issued **189,717 shares** of Series B Preferred Stock for **$5,000,000** to **Quanta Computer Inc.** on June 13, 2025, following achievement of milestones under the SPA[70](index=70&type=chunk) - The Series B Preferred Stock is classified as **mezzanine equity** due to redemption features not solely within the company's control[67](index=67&type=chunk) - Raised **$4,089,850** in net proceeds from the **ATM program** during the six months ended June 30, 2025, by selling **1,303,735 shares** of common stock[74](index=74&type=chunk) [Note 12 – Stock-Based Compensation](index=24&type=section&id=Note%2012%20%E2%80%93%20Stock-Based%20Compensation) Stock-based compensation expense was recorded for stock options, RSUs, and PSUs, with new grants vesting upon revenue and EBITDA targets Total Stock-Based Compensation Expense (excluding LTIP options) | Period | 2025 ($) | 2024 ($) | | :--------------------------------- | :----------- | :----------- | | Three Months Ended June 30 | $842,596 | $1,470,793 | | Six Months Ended June 30 | $2,545,398 | $2,454,444 | - Granted **806,598 Restricted Stock Units (RSUs)** and **504,431 Performance Stock Units (PSUs)** during the six months ended June 30, 2025[80](index=80&type=chunk) - As of June 30, 2025, **$3,852,200** of unrecognized stock compensation expense remains, to be recognized over a weighted average period of **2.0 years**[81](index=81&type=chunk) [Note 13 – Long-Term Incentive Plan](index=25&type=section&id=Note%2013%20%E2%80%93%20Long-Term%20Incentive%20Plan) The company cancelled **5,359,500** unvested LTIP stock options, replacing them with new RSUs and PSUs, accounted for as a modification with remaining fair market value to be recognized - **5,359,500** unvested stock options from the **2021 LTIP** were cancelled and replaced with new **RSUs** and **PSUs** after stockholder approval on June 17, 2025[82](index=82&type=chunk) - The award exchange was accounted for as a **modification**, resulting in a remaining fair market value of **$1,871,276** to be recognized over **30.5 months**[83](index=83&type=chunk) Non-Cash Stock-Based Compensation Expense for LTIP Options | Period | 2025 ($) | 2024 ($) | | :--------------------------------- | :----------- | :----------- | | Three Months Ended June 30 | $(45,797) | $1,409,294 | | Six Months Ended June 30 | $1,180,356 | $2,818,584 | [Note 14 – Litigation](index=27&type=section&id=Note%2014%20%E2%80%93%20Litigation) The company is involved in ordinary course litigation but believes any possible loss will not materially adversely affect its financial position or operations - The Company is not currently party to, nor is its property subject to any **material legal proceedings**[87](index=87&type=chunk) - Management assesses the probability and range of possible loss for legal matters and records liabilities when probable and estimable[86](index=86&type=chunk) [Note 15 – Right-of-Use Assets and Liabilities](index=27&type=section&id=Note%2015%20%E2%80%93%20Right-of-Use%20Assets%20and%20Liabilities) The company holds operating lease right-of-use assets and liabilities, with a weighted average remaining lease term of **0.4 years** as of June 30, 2025 Operating Lease Right-of-Use Assets and Liabilities | Category | June 30, 2025 ($) | December 31, 2024 ($) | | :--------------------------------- | :-------------- | :---------------- | | Operating Lease Right-of-Use Assets | $224,650 | $494,236 | | Operating Lease Right-of-Use Liabilities | $224,650 | $494,236 | - As of June 30, 2025, the weighted average remaining lease term was **0.4 years** and the weighted average discount rate was **7.1%**[89](index=89&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on financial condition, operations, and liquidity, discussing critical accounting policies, business matters, and performance comparisons [Critical Accounting Policies and Significant Developments and Estimates](index=28&type=section&id=Critical%20Accounting%20Policies%20and%20Significant%20Developments%20and%20Estimates) Management's discussion relies on unaudited financial statements and estimates for revenue, inventory, long-lived assets, and stock compensation, with no significant policy changes - Critical accounting policies and estimates include 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[96](index=96&type=chunk) - No significant changes in accounting policies for the three months ended June 30, 2025[94](index=94&type=chunk) [Business Matters](index=29&type=section&id=Business%20Matters) Vuzix designs, manufactures, and sells augmented reality wearable display devices for enterprise, defense, industrial, medical, and commercial markets, leveraging micro-display and advanced optics - The company is engaged in the design, manufacture, marketing, and sale of augmented reality wearable display devices, including **Smart Glasses**, **AI powered Smart Glasses**, **Waveguides**, and **AR technologies**[97](index=97&type=chunk) - Vuzix focuses on the **enterprise, defense, industrial, medical, and commercial markets** for its Smart Glasses and AI/AR products[98](index=98&type=chunk) - The company believes its technology, intellectual property portfolio, and market position provide a leadership position in **AI/AR** and **Smart Glasses** products, **waveguide optics**, and **display engine technology**[98](index=98&type=chunk) [Results of Operations](index=30&type=section&id=Results%20of%20Operations) Results show mixed performance with increased Q2 2025 sales but overall six-month decrease; gross loss widened, but net loss significantly improved due to absence of prior impairment and reduced operating expenses [Comparison of Three Months Ended June 30, 2025 and 2024](index=30&type=section&id=Comparison%20of%20Three%20Months%20Ended%20June%2030%2C%202025%20and%202024) Total sales increased by **19%** due to **74%** rise in product sales, but gross loss widened; operating expenses decreased substantially due to absence of prior impairment, leading to **81%** net loss reduction Key Financials (Three Months Ended June 30) | Metric | 2025 ($) | 2024 ($) | Dollar Change ($) | % Change | | :----------------------------------- | :----------- | :----------- | :------------ | :--------- | | Total Sales | $1,295,709 | $1,092,571 | $203,138 | 19% | | Sales of Products | $1,045,310 | $601,263 | $444,047 | 74% | | Sales of Engineering Services | $250,399 | $491,308 | $(240,909) | (49)% | | Gross Loss | $(761,370) | $(333,145) | $(428,225) | 129% | | Total Operating Expenses | $7,093,934 | $40,397,133 | $(33,303,199) | (83)% | | Net Loss | $(7,666,254) | $(40,612,193) | $32,945,939 | (81)% | - The increase in product sales was primarily driven by increased unit sales of the **M400 product**[103](index=103&type=chunk) - Gross loss widened due to a **$265,000 inventory reserve** for obsolescence and increased product cost of sales[104](index=104&type=chunk) [Comparison of Six Months Ended June 30, 2025 and 2024](index=36&type=section&id=Comparison%20of%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024) Total sales decreased by **7%**, with product sales down **3%** and engineering services down **24%**; gross loss widened, but net loss reduced by **68%** due to absence of prior impairment Key Financials (Six Months Ended June 30) | Metric | 2025 ($) | 2024 ($) | Dollar Change ($) | % Change | | :----------------------------------- | :----------- | :----------- | :------------ | :--------- | | Total Sales | $2,876,650 | $3,096,438 | $(219,788) | (7)% | | Sales of Products | $2,369,383 | $2,430,336 | $(60,953) | (3)% | | Sales of Engineering Services | $507,267 | $666,102 | $(158,835) | (24)% | | Gross Loss | $(1,026,488) | $(386,398) | $(640,090) | 166% | | Total Operating Expenses | $15,603,235 | $50,436,274 | $(34,833,039) | (69)% | | Net Loss | $(16,303,881) | $(50,659,775) | $34,355,894 | (68)% | - The gross loss widened due to a **$265,000 inventory reserve** for obsolescence and increased unapplied manufacturing overhead costs, which rose by **15%** due to lower actual production levels[122](index=122&type=chunk)[123](index=123&type=chunk) - Selling and Marketing expenses decreased by **35%** due to headcount reductions, cash salary decreases in exchange for equity compensation, and lower bad debt expense[128](index=128&type=chunk) [Liquidity and Capital Resources](index=40&type=section&id=Liquidity%20and%20Capital%20Resources) Cash and cash equivalents slightly decreased; operating activities used cash, but financing provided significant capital through preferred stock and ATM program, alleviating going concern doubt Cash and Working Capital | Metric | June 30, 2025 ($) | December 31, 2024 ($) | | :-------------------------- | :-------------- | :---------------- | | Cash and Cash Equivalents | $17,454,585 | $18,186,506 | | Working Capital | $20,283,441 | $24,610,217 | Summary of Cash Flows (Six Months Ended June 30) | Cash Flow Activity | 2025 ($) | 2024 ($) | | :--------------------------------- | :----------- | :----------- | | Net Cash Provided by (used in) Operating Activities | $(8,241,812) | $(14,440,335) | | Net Cash Provided by (used in) Investing Activities | $(1,631,941) | $(2,234,041) | | Net Cash Provided by (used in) Financing Activities | $9,141,832 | — | - Financing activities in H1 2025 included **$5,000,000** from the sale of **Series B Convertible Preferred Stock** to **Quanta Computer Inc.** and **$4,089,850** in net proceeds from the **ATM program**[140](index=140&type=chunk) - Management has concluded that substantial doubt about the Company's ability to continue as a going concern has been alleviated due to its capital raising plans and current cash position[144](index=144&type=chunk)[148](index=148&type=chunk) [Forward-Looking Statements](index=45&type=section&id=Forward-Looking%20Statements) This section outlines forward-looking statements regarding future performance, product development, market acceptance, financial trends, and liquidity, noting actual results may differ due to risks - Forward-looking statements cover trends in operating expenses, market acceptance of Smart Glasses, ability to develop new products, technological advances, customer attraction and retention, inventory management, brand awareness, product defects, reliance on third-party suppliers, revenue/cost/gross margin trends, employee retention, foreign currency exchange rates, future regulations, and liquidity[153](index=153&type=chunk) - Key risk factors include business and economic conditions, rapid technological changes, competitive pressures, dependence on key customers, supply chain limitations, protection of proprietary technology, dependence on key personnel, and liquidity issues[154](index=154&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=47&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Primary market risks relate to interest rate changes on short-term investments and foreign currency exchange rates, but management estimates no material adverse effect - The company invests its excess cash in **high-quality short-term corporate debt instruments**[156](index=156&type=chunk) - Exposure to foreign currency exchange rates primarily arises from non-U.S. dollar denominated cash flows in **Asia-Pacific** and **Europe**; the company does not currently hedge this risk[156](index=156&type=chunk) - Management believes that any market risk associated with its international operations is unlikely to have a **material adverse effect** on its business, financial condition, or results of operation[156](index=156&type=chunk) [Item 4. Controls and Procedures](index=47&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including CEO and CFO, concluded disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control over financial reporting - Disclosure controls and procedures were evaluated and concluded to be **effective** as of June 30, 2025[157](index=157&type=chunk) - There have been **no material changes** in the company's internal control over financial reporting during the most recent fiscal quarter[158](index=158&type=chunk) Part II – Other Information [Item 1. Legal Proceedings](index=48&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently involved in any material legal proceedings - The Company is not currently party to, nor is its property subject to any **material legal proceedings**[160](index=160&type=chunk) [Item 1A. Risk Factors](index=48&type=page&id=Item%201A.%20Risk%20Factors) This section refers to risk factors from the 2024 Annual Report on Form 10-K, with an additional note on evolving trade policies' potential adverse effects on costs and demand - Refers to risk factors discussed in Part I, Item 1A of the Annual Report on Form 10-K for the year ended December 31, 2024[161](index=161&type=chunk) - A new risk factor highlights that the ongoing evolution of trade policies (including tariffs) could **materially adversely affect** the costs of raw and finished components and demand for products[162](index=162&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=48&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) There were no unregistered sales of equity securities or purchases of equity securities during the period - No unregistered sales of equity securities occurred[163](index=163&type=chunk) - No purchases of equity securities were made[163](index=163&type=chunk) [Item 3. Defaults Upon Senior Securities](index=48&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities during the period - No defaults upon senior securities occurred[163](index=163&type=chunk) [Item 4. Mine Safety Disclosure](index=48&type=section&id=Item%204.%20Mine%20Safety%20Disclosure) This item is not applicable to the company - This disclosure item is not applicable to the registrant[163](index=163&type=chunk) [Item 5. Other Information](index=48&type=section&id=Item%205.%20Other%20Information) No Section 16 director or officer adopted, modified, or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the fiscal quarter - No Section 16 director or officer adopted, modified, or terminated a "**Rule 10b5-1 trading arrangement**" during the fiscal quarter ended June 30, 2025[163](index=163&type=chunk) - No "**non-Rule 10b5-1 trading arrangements**" were adopted, modified, or terminated by directors and Section 16 officers during the fiscal quarter ended June 30, 2025[164](index=164&type=chunk) [Item 6. Exhibits](index=49&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with Form 10-Q, including CEO and CFO certifications and Inline XBRL documents - Exhibits include certifications of the **Chief Executive Officer** and **Chief Financial Officer** pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002[166](index=166&type=chunk) - The filing includes **Inline XBRL Document set** for the financial statements and accompanying notes, and a **Cover Page Interactive Data File**[166](index=166&type=chunk) Signatures [Signatures](index=50&type=section&id=Signatures) The report is signed by Paul Travers, President and CEO, and Grant Russell, EVP and CFO, on behalf of Vuzix Corporation on August 14, 2025 - The report was signed by **Paul Travers**, President and Chief Executive Officer, and **Grant Russell**, Executive Vice President and Chief Financial Officer[171](index=171&type=chunk) - The signing date for the report was **August 14, 2025**[171](index=171&type=chunk)