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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended March 31, 2026


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 001-35955

VUZIX CORPORATION

(Exact name of registrant as specified in its charter)


Delaware		04-3392453
State or other jurisdiction of incorporation or organization		(I.R.S. Employer Identification No.)


25 Hendrix Road, Suite A West Henrietta, New York		14586
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (585) 359-5900

Securities registered pursuant to Section 12(b) of the Act:


Title of each class:	Trading Symbol(s)	Name of each exchange on which registered:
Common Stock, par value $0.001	VUZI	Nasdaq Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐	Non-accelerated filer	☒

Smaller reporting company	☒	Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of May 14, 2026, there were 83,158,258 shares of the registrant’s common stock outstanding.

Table of Contents

Vuzix Corporation

INDEX

		Page No.

Part I – Financial Information		3

Item 1.	Consolidated Financial Statements (Unaudited):	3

	Consolidated Balance Sheets as of March 31, 2026 and December 31, 2025	3

	Consolidated Statements of Changes in Mezzanine Equity and Stockholders’ Equity for the Three Months Ended March 31, 2026 and 2025	4

	Consolidated Statements of Operations for the Three Months Ended March 31, 2026 and 2025	5

	Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2026 and 2025	6

	Notes to the Unaudited Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	28

Item 4.	Controls and Procedures	28

Part II – Other Information		29

Item 1.	Legal Proceedings	29

Item 1A.	Risk Factors	29

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	29

Item 3.	Defaults Upon Senior Securities	29

Item 4.	Mine Safety Disclosure	29

Item 5.	Other Information	29

Item 6.	Exhibits	30

Signatures		31

Table of Contents

Part 1: FINANCIAL INFORMATION

Item 1: Consolidated Financial Statements

VUZIX CORPORATION

CONSOLIDATED BALANCE SHEETS


		(Unaudited)
		March 31,			December 31,
		2026			2025
ASSETS
Current Assets
Cash and Cash Equivalents		$	20,167,137		$	21,150,213
Accounts Receivable, net of allowance for credit losses of $46,000 at March 31, 2026 and December 31, 2025.			874,743			1,627,635
Accrued Revenues in Excess of Billings			501,845			533,665
Other Receivables			95,794			379,615
Inventories, Net			1,796,116			2,188,750
Manufacturing Vendor Prepayments			348,717			256,090
Prepaid Expenses and Other Assets			996,474			1,059,759

Total Current Assets			24,780,826			27,195,727

Long-Term Assets
Fixed Assets, Net			8,424,168			7,626,238
Operating Lease Right-of-Use Assets, Net			872,177			1,003,025
Patents and Trademarks, Net			3,484,839			3,359,066
Technology Licenses, Net			509,705			559,973
Other Assets, Net			300,000			327,778

Total Assets		$	38,371,715		$	40,071,807

LIABILITIES, MEZZANINE EQUITY, AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable		$	1,498,992		$	685,010
Unearned Revenue			45,669			62,361
Accrued Expenses			1,911,948			3,590,407
Other Taxes Payable			47,767			49,513
Operating Lease Right-of-Use Liabilities			500,911			500,911

Total Current Liabilities			4,005,287			4,888,202

Long-Term Liabilities
Operating Lease Right-of-Use Liability			371,266			502,114

Total Liabilities			4,376,553			5,390,316

Mezzanine Equity
Preferred Stock - $0.001 Par Value, 5,000,000 Shares Authorized; 419,959 Shares of Series B Preferred Stock Issued and Outstanding as of March 31, 2026 and December 31, 2025			10,000,000			10,000,000

Stockholders' Equity
Common Stock - $0.001 Par Value, 200,000,000 shares authorized; 83,737,930 shares issued and 83,158,258 shares outstanding as of March 31, 2026 and 81,679,367 shares issued and 81,099,695 shares outstanding as of December 31, 2025			83,739			81,680
Additional Paid-in Capital			433,355,158			426,934,722
Accumulated Deficit			(406,967,234)			(399,858,410)
Treasury Stock, at cost, 579,672 shares as of March 31, 2026 and December 31, 2025			(2,476,501)			(2,476,501)

Total Stockholders' Equity			23,995,162			24,681,491

Total Liabilities, Mezzanine Equity, and Stockholders' Equity		$	38,371,715		$	40,071,807

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

VUZIX CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY

(Unaudited)


	Mezzanine Equity			Stockholders' Equity
	Series B Preferred Stock			Common Stock			Additional		Accumulated		Treasury Stock
	Shares	Amount		Shares	Amount		Paid-In Capital		Deficit		Shares	Amount		Total
Balance - January 1, 2026	419,959	$	10,000,000	81,679,367	$	81,680	$	426,934,722	$	(399,858,410)	(579,672)	$	(2,476,501)	$	24,681,491
Stock-Based Compensation Expense	—		—	58,563		59		638,243		—	—		—		638,302
Preferred Stock Dividends	—		—	—		—		—		(37,500)	—		—		(37,500)
Proceeds from ATM Program, Net	—		—	2,000,000		2,000		5,782,193		—	—		—		5,784,193
Net Loss	—		—	—		—		—		(7,071,324)	—		—		(7,071,324)
Balance - March 31, 2026	419,959	$	10,000,000	83,737,930	$	83,739	$	433,355,158	$	(406,967,234)	(579,672)	$	(2,476,501)	$	23,995,162


	Mezzanine Equity			Stockholders' Equity
	Series B Preferred Stock			Common Stock			Additional		Accumulated		Treasury Stock
	Shares	Amount		Shares	Amount		Paid-In Capital		Deficit		Shares	Amount		Total
Balance - January 1, 2025	—	$	—	76,553,694	$	76,553	$	407,215,883	$	(367,522,950)	(579,672)	$	(2,476,501)	$	37,292,985
Stock-Based Compensation Expense	—		—	—		—		2,927,227		—	—		—		2,927,227
Stock Option Exercises	—		—	24,852		25		1,772		—	—		—		1,797
Proceeds from ATM Program, Net	—		—	243,541		244		1,262,006		—	—		—		1,262,250
Net Loss	—		—	—		—		—		(8,637,626)	—		—		(8,637,626)
Balance - March 31, 2025	—	$	—	76,822,087	$	76,822	$	411,406,888	$	(376,160,576)	(579,672)	$	(2,476,501)	$	32,846,633

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

VUZIX CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


	Three Months Ended March 31,

	2026		2025
Sales:
Sales of Products	$	1,042,388	$	1,324,073
Sales of Engineering Services		348,936		256,868

Total Sales		1,391,324		1,580,941

Cost of Sales:
Cost of Sales - Products Sold		1,472,172		1,610,730
Cost of Sales - Depreciation and Amortization		82,741		176,869
Cost of Sales - Engineering Services		214,322		58,460

Total Cost of Sales		1,769,235		1,846,059

Gross Loss		(377,911)		(265,118)

Operating Expenses:
Research and Development		3,028,355		2,605,840
Selling and Marketing		1,550,866		1,537,466
General and Administrative		2,133,942		3,960,984
Depreciation and Amortization		115,017		405,011

Total Operating Expenses		6,828,180		8,509,301

Loss From Operations		(7,206,091)		(8,774,419)

Other Income (Expense):
Investment Income		168,401		168,480
Other Taxes		(16,133)		(18,400)
Foreign Exchange Loss		(17,501)		(13,287)

Total Other Income, Net		134,767		136,793

Loss Before Provision for Income Taxes		(7,071,324)		(8,637,626)
Provision for Income Taxes		—		—

Net Loss		(7,071,324)		(8,637,626)
Preferred Stock Dividends		(37,500)		—
Loss Attributable to Common Shareholders	$	(7,108,824)	$	(8,637,626)

Basic and Diluted Net Loss per Common Share	$	(0.09)	$	(0.11)
Weighted-average Shares Outstanding - Basic and Diluted		81,873,827		76,218,256

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

VUZIX CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Three Months Ended March 31,
	2026		2025

Cash Flows Used In Operating Activities
Net Loss	$	(7,071,324)	$	(8,637,626)
Non-Cash Adjustments
Depreciation and Amortization		492,628		632,148
Stock-Based Compensation		638,302		2,929,001
(Increase) Decrease in Operating Assets
Accounts Receivable		752,892		175,483
Accrued Revenues in Excess of Billings		31,820		364,932
Other Receivables		283,821		—
Inventories		392,634		537,103
Manufacturing Vendor Prepayments		(92,627)		144,505
Prepaid Expenses and Other Assets		63,285		159,696
Increase (Decrease) in Operating Liabilities
Accounts Payable		813,982		982,980
Accrued Expenses		(1,842,220)		(779,057)
Unearned Revenue		(16,692)		(17,199)
Income and Other Taxes Payable		(1,746)		54,411

Net Cash Flows Used in Operating Activities		(5,555,245)		(3,453,623)

Cash Flows Used in Investing Activities
Purchases of Fixed Assets		(996,385)		(613,397)
Investments in Patents and Trademarks		(175,716)		(100,735)
Investments in Other Equity Assets		—		(50,000)

Net Cash Flows Used in Investing Activities		(1,172,101)		(764,132)

Cash Flows Provided by (Used in) Financing Activities
Proceeds from ATM Program, Net		5,784,193		1,262,250
Preferred Dividends Paid		(39,923)		—

Net Cash Flows Provided by (Used in) Financing Activities		5,744,270		1,262,250

Net Increase (Decrease) in Cash and Cash Equivalents		(983,076)		(2,955,505)
Cash and Cash Equivalents - Beginning of Period		21,150,213		18,186,506

Cash and Cash Equivalents - End of Period	$	20,167,137	$	15,231,001

Supplemental Disclosures
Accrued Preferred Dividends included in Accrued Expenses		37,500		—
Depreciation and Amortization included in Research and Development Expense		294,870		50,268
Purchases of Fixed Assets included in Accrued Expenses		163,761		696,913

The accompanying notes are an integral part of these consolidated financial statements.

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VUZIX CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Note 1 – Basis of Presentation

The accompanying unaudited consolidated financial statements of Vuzix Corporation (the “Company” or “Vuzix”) have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Regulation S-X of the Securities and Exchange Commission (“SEC”). Accordingly, the unaudited consolidated financial statements do not include all information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. The results of the Company’s operations for the three months ended March 31, 2026 are not necessarily indicative of the results of the Company’s operations for the full fiscal year or any other period.

The accompanying interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto of the Company as of and for the year ended December 31, 2025, as reported in the Company’s Annual Report on Form 10-K filed with the SEC on March 12, 2026.

Customer Concentrations

For the three months ended March 31, 2026, two customers represented 16% and 15%, of total product revenue and two customers represented 72% and 15%, of engineering services revenue. For the three months ended March 31, 2025, one customer represented 42% of total product revenue and three customers represented 43%, 36%, and 15% of engineering services revenue.

As of March 31, 2026, four customers represented 22%, 21%, 13%, and 11% of accounts receivable. As of December 31, 2025, two customers represented 55% and 35%, respectively, of accounts receivable.

Fair Value of Financial Instruments

The Company’s financial instruments primarily consist of cash and cash equivalents, accounts receivable, accounts payable, unearned revenue, accrued expenses, and income and other taxes payable. As of the consolidated balance sheet dates, the estimated fair values of the financial instruments were not materially different from their carrying values as presented due to the short maturities of these instruments.

Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. This basis of accounting contemplates the recovery of our assets and the satisfaction of liabilities in the normal course of business. These consolidated financial statements do not include any adjustments to the specific amounts and classifications of assets and liabilities, which might be necessary should we be unable to continue as a going concern.

In accordance with ASC Subtopic 205-40, Presentation of Financial Statements — Going Concern, management is required to evaluate whether conditions or events, considered in the aggregate, raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. The going concern assumption underlies all GAAP financial reporting and presumes that the Company will continue normal business operations into the foreseeable future, unless such conditions or events raise substantial doubt about the Company’s ability to continue as a going concern.

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Additional disclosure is required when there is substantial doubt about business continuity or substantial doubt that has not been alleviated by management’s mitigation plans. As required under applicable accounting standards, management has concluded that doubt may exist surrounding the Company's ability to meet its obligations within one year of the release of the financial statements.

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

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, research and development costs, 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 doubt about the Company’s ability to continue as a going concern. Management intends to take actions necessary to continue as a going concern, as discussed herein. Management’s plans to alleviate the conditions that raise doubt include raising further capital and 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:

●

Delaying or curtailing discretionary and non-essential operating expenses and capital expenditures not related to near-term product and manufacturing needs and reducing other investing activities for the remainder of our 2026 and 2027 fiscal years;

●

The expected profit margin contribution upon the future commencement of volume manufacturing and sales of waveguides from our new waveguide manufacturing plant, particularly to ODM/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 from time to time under a sales agreement with an investment bank in an “at the market” offering. Since May 2024, the Company has raised $28,250,484, net of broker expenses, including $5,784,193 to date in 2026, 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’s actual results are less than projected or the Company needs to raise capital for additional liquidity, the Company may be required to pursue additional equity financing, 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 doubt of our ability to continue as a going concern has been alleviated.

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Use of Estimates

The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at year-end and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Segment Data, Geographic Information and Significant Customers

Operating segments are defined as components of an entity for which separate financial information is available and regularly reviewed by the chief operating decision maker (“CODM”). The Company’s CODM is its Chief Executive Officer. The Company is not organized by market and is managed and operated as one business. A single management team that reports to the CODM comprehensively manages the entire business. The Company does not operate any material separate lines of business or separate business entities and therefore manages its operations as a single operating segment and, therefore, a single reportable segment. Our CODM evaluates performance and makes operating decisions about allocating resources based on financial data presented on a consolidated basis, accompanied by information about revenue disaggregated by geographic region. Because our CODM evaluates financial performance on a consolidated basis, we have determined that we have a single operating segment composed of the consolidated financial results of Vuzix Corporation.

The CODM reviews financial information, presented on a consolidated basis, focusing on significant expenses and net loss/income for purposes of making operating decisions, allocating resources, and evaluating financial performance. The measure used by our CODM to assess performance and make operating decisions is net loss as reported on our consolidated statements of operations. Net loss is used by our CODM to identify underlying trends in the performance of our business and make comparisons with the financial performance of our competitors. The measure of segment assets is reported on the balance sheet as total consolidated assets. Our CODM also reviews total assets, as reported on our consolidated balance sheets, and purchases of fixed assets, as reported on our consolidated statements of cash flows.

Significant expenses regularly provided to and reviewed by the CODM are Cost of Sales, Research and Development, Total Compensation, General and Administrative, and Intangible Asset and Equity Investment Impairment. These segment items for the three months ended March 31, 2026 and 2025 are:



		2026			2025

Sales		$	1,391,324		$	1,580,941

Less expenses:
Cost of Sales, excluding compensation			(1,339,761)			(1,406,346)
Research and Development, excluding compensation			(1,450,396)			(1,244,349)
General and Administrative, excluding compensation			(982,033)			(1,312,089)
Total Compensation			(4,111,788)			(5,411,308)
Other Segment Items			(578,670)			(844,475)
			(8,462,648)			(10,218,567)

Net Loss		$	(7,071,324)		$	(8,637,626)

Other Segment Items:

Selling and Marketing, excluding compensation expense;

Depreciation and Amortization, not included in Cost of Sales; and

Other Income.

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Geographic Information


	Three Months Ended March 31,
	2026					2025
	Revenue		% of Total			Revenue		% of Total
U.S.	$	937,211	67	%	U.S.	$	554,705	35	%
Switzerland		160,684	12	%	Netherlands		538,560	34	%
Japan		115,965	8	%	Singapore		101,334	6	%
Others		177,464	13	%	Others		386,342	25	%
Total Revenues	$	1,391,324	100	%	Total Revenues	$	1,580,941	100	%

All long-lived assets are located in the U.S.

Recently Adopted Accounting Pronouncements

In July 2024, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. The Company adopted ASU 2025-05 as of January 1, 2026. The guidance provides a practical expedient for estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under ASC 606. The Company elected to apply the practical expedient in estimating expected credit losses on its applicable financial assets. The adoption of ASU 2025-05 did not have a material impact on the Company’s consolidated financial statements or related disclosures.

Recent Accounting Pronouncements

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income (Topic 220): Disaggregation of Income Statement Expenses (“ASU 2024-03”), which requires public entities to provide disaggregated disclosures of certain expense captions presented on the face of the income statement into specific categories within the notes to the consolidated financial statements. ASU 2024-03 is effective for the Company’s annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The ASU may be applied either on a prospective or retrospective basis. The Company is currently evaluating the impact of adoption of ASU 2024-03 on its financial statements and related disclosures.

Note 2 – Revenue Recognition and Contracts with Customers

Disaggregated Revenue

The Company’s total revenue was comprised of two major product lines: Products Sales (which include smart glasses, software, and accessories) and Engineering Services (which include engineering services fees and related ODM/OEM services and product sales, as well as waveguide and display engine component sales).

The following table summarizes the revenue recognized by major product line:


	Three Months Ended
	March 31,
	2026		2025
Revenues
Products Sales	$	1,042,388	$	1,324,073
Engineering Services		348,936		256,868

Total Revenue	$	1,391,324	$	1,580,941

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Significant Judgments

Under Topic 606 “Revenue from Contracts with Customers”, we use judgments that could potentially impact both the timing of our satisfaction of performance obligations and our determination of transaction prices used in determining revenue recognized by major product line. Such judgments include considerations in determining our transaction prices and when our performance obligations are satisfied for our standard product sales. For Engineering Services, performance obligations are recognized over time using the input method, and the estimated costs to complete each project are considered significant judgments.

Performance Obligations

Revenues from our performance obligations are typically satisfied at a point-in-time for Product Sales, which are recognized when the customer obtains control and ownership, which is generally upon shipment. The Company considers shipping and handling activities performed to be fulfillment activities and not a separate performance obligation. The Company also records revenue for performance obligations relating to our Engineering Services both at a point-in-time and over time. For those performance obligations recognized over time, the input method is utilized for measuring progress toward satisfying the performance obligations. Satisfaction of these performance obligations is measured by the Company’s costs incurred as a percentage of total expected costs to project completion, as the inputs of actual costs incurred by the Company are directly correlated with progress toward completing the contract. As such, the Company believes that our methodologies for recognizing revenue both at a point-in-time and over time for our Engineering Services correlate directly with the transfer of control of the underlying assets to our customers.

Our standard product sales include a twelve (12) month assurance-type product warranty. In the case of certain ODM/OEM products and waveguide sales, some include a standard product warranty of up to eighteen (18) months to allow distribution channels to offer the end customer a full twelve (12) months of coverage. We offer an extended warranty to customers that extends the standard product warranty on product sales for an additional twelve (12) month period. All revenue related to extended product warranty sales is deferred and recognized over the extended warranty period. Our Engineering Services contracts vary from contract to contract but typically include payment terms of Net 30 days from the date of billing, subject to an agreed upon customer acceptance period.

As of March 31, 2026 and December 31, 2025, there were $31,350 and $47,025, respectively, in outstanding performance obligations remaining for extended warranties.

The following table presents a summary of the Company’s sales by revenue recognition method as a percentage of total net sales for the three months ended March 31, 2026 and 2025:


		Three Months Ended March 31,
		2026		2025
Point-in-Time		92	%	84	%
Over Time – Input Method		8	%	16	%

Total		100	%	100	%

Remaining Performance Obligations

As of March 31, 2026, the Company had $1,898,155 of remaining performance obligations under current waveguide and other development projects, including initial product production, which represents the remainder of transaction prices totaling $3,650,000 under these development projects, which commenced in 2023 and 2025, less revenue recognized under percentage of completion to date. The Company expects to recognize the remaining revenue related to these projects, based upon the following expected due dates: 34% in 2026 and 66% in 2027. Revenues earned less amounts invoiced at March 31, 2026, in the amount of $501,845 are reflected as Accrued Revenues in Excess of Billings in the accompanying Consolidated Balance Sheet.

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As of December 31, 2025, the Company had $1,836,670 of remaining performance obligations under current waveguide and other development projects, which represented the remainder of transaction prices totaling $3,737,168 under this development project less revenue recognized under percentage of completion to date.

As of March 31, 2026, the Company had no material outstanding performance obligations related to product sales, other than its standard and extended product warranties.

Note 3 – Loss Per Share

Basic earnings per share is computed by dividing net income (loss) less preferred dividends, whether paid or accrued, on any outstanding preferred stock by the weighted average number of common shares outstanding for the period. Diluted earnings per share calculations reflect the assumed exercise of all dilutive employee stock options, vesting of Restricted Stock Units (“RSUs”), and Performance Stock Units (“PSUs”) applying the treasury stock method promulgated by FASB ASC Topic 260, “Earnings Per Share” and the conversion of any outstanding convertible preferred shares or notes payable that are in-the-money, applying the as-if-converted method. However, if the assumed exercise of stock options, RSUs, PSUs, and the conversion of any preferred shares are anti-dilutive, basic and diluted earnings per share are the same for all periods. As a result of the net losses for the three months ended March 31, 2026 and 2025, all outstanding instruments would be anti-dilutive. As of March 31, 2026 and 2025, there were 10,243,218 and 10,318,176 common stock share equivalents, respectively, potentially issuable from the exercise of stock options, vesting of RSUs and PSUs, and the conversion of preferred stock that could dilute basic earnings per share in the future.

Note 4 – Inventories, Net

Inventories are stated at the lower of cost and net realizable value, and consisted of the following:


		March 31,			December 31,
		2026			2025

Purchased Parts and Components		$	6,341,694		$	5,369,273
Work-in-Process			198,694			198,207
Finished Goods			1,341,208			2,689,458
Less: Reserve for Obsolescence			(6,085,480)			(6,068,188)

Inventories, Net		$	1,796,116		$	2,188,750

During the three months ended March 31, 2026 and 2025, the Company disposed of nil and $1,125,711, respectively, of inventory that was fully provisioned for as obsolete in the previous year.

Note 5 – Fixed Assets

Fixed Assets consisted of the following:


		March 31,			December 31,
		2026			2025
Tooling and Manufacturing Equipment		$	11,194,881		$	10,348,958
Leasehold Improvements			2,939,899			2,809,745
Computers and Purchased Software			639,890			612,524
Furniture and Equipment			2,661,411			2,502,286
			17,436,081			16,273,513
Less: Accumulated Depreciation			(9,011,913)			(8,647,275)
Fixed Assets, Net		$	8,424,168		$	7,626,238

Total depreciation expense for fixed assets for the three months ended March 31, 2026 and 2025, was $364,639 and $496,020, respectively.

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As of March 31, 2026 and December 31, 2025, there were $3,711,754 and $2,602,784, respectively, of manufacturing fixed assets that are not yet placed into service and, therefore, are not currently being depreciated.

Note 6 – Patents and Trademarks

Patents and Trademarks consisted of the following:


		March 31,			December 31,
		2026			2025
Patents and Trademarks		$	5,017,275		$	4,841,560
Less: Accumulated Amortization			(1,532,436)			(1,482,494)
Patents and Trademarks, Net		$	3,484,839		$	3,359,066

Total amortization expense for patents and trademarks for the three months ended March 31, 2026 and 2025 was $49,943 and $44,193, respectively.

Note 7 – Technology Licenses, Net

Technology Licenses consisted of the following:


		March 31,			December 31,
		2026			2025

Licenses		$	2,443,356		$	2,443,356
Write-Offs			—			—
Less: Accumulated Amortization			(1,933,651)			(1,883,383)
Licenses, Net		$	509,705		$	559,973

Total amortization expense related to technology licenses for the three months ended March 31, 2026 and 2025 was $50,268 and $50,268, respectively.

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Note 8 - Other Assets

The Company’s Other Assets were as follows:


		March 31,			December 31,
		2026			2025
Investments (fair value not readily determinable)		$	300,000		$	650,000
Additions			—			50,000
Write-offs			—			(400,000)
Total Investments (at cost)			300,000			300,000

Software Development Costs			1,000,000			1,000,000
Additions			—			—
Less: Accumulated Amortization			(1,000,000)			(972,222)
Software Development Costs, Net			—			27,778

Total Other Assets		$	300,000		$	327,778

Total amortization expense related to all software updates, included in cost of sales in 2025 and now fully amortized, for the three months ended March 31, 2026 and 2025 was $27,778 and $41,668, respectively.

Note 9 – Accrued Expenses

Accrued expenses consisted of the following:


		March 31,			December 31,
		2026			2025

Accrued Product Development and Tooling Costs		$	1,125,257		$	2,416,910
Accrued Wages and Related Costs			430,984			756,933
Accrued Professional Services			170,000			213,712
Accrued Warranty Obligations			80,388			55,637
Other Accrued Expenses			105,319			147,215

Total		$	1,911,948		$	3,590,407

The Product Development and Tooling Costs of $1,125,257 at March 31,2026 have been expensed as research and development expense or were capitalized as manufacturing assets. The capitalized tooling costs portion will be amortized and the deferred development expense portion will be paid to the vendor over the related product’s future production of a specified number of units.

The Company has warranty obligations in connection with the sale of certain of its products. The warranty period for its products is generally twelve (12) months, unless the customer purchases an extended warranty for an additional twelve (12) months. The costs incurred to provide for these warranty obligations are estimated and recorded as an accrued liability at the time of sale. The Company estimates its future warranty costs based upon product-based historical performance rates and related costs to repair.

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The changes in the Company’s accrued warranty obligations for the three months ended March 31, 2026, were as follows:


Accrued Warranty Obligations at December 31, 2025	$	55,637
Reductions for Settling Warranties		(6,521)
Warranties Issued During Year		31,272

Accrued Warranty Obligations at March 31, 2026	$	80,388

Note 10 – Income Taxes

The Company’s effective income tax rate differs from the U.S. statutory rate primarily due to the valuation allowance recorded against deferred tax assets.

Note 11 – Mezzanine Equity and Stockholders’ Equity

Preferred Stock

The Board of Directors is authorized to establish and designate different series of preferred stock and to fix and determine their voting powers and other rights and terms. The Company has 5,000,000 authorized shares of preferred stock with a par value of $0.001 as of March 31, 2026 and December 31, 2025. Of this total, 49,626 shares are designated as Series A Preferred Stock and 800,000 shares are designated as Series B Convertible Preferred Stock (“Series B Preferred Stock”). There were nil shares of Series A Preferred Stock issued and outstanding on March 31, 2026 and December 31, 2025, and there were 419,959 shares of Series B Preferred Stock issued and outstanding as of March 31, 2026 and December 31, 2025.

Each share of Series B Preferred Stock is convertible, at the option of the holder, into ten shares of common stock, subject to adjustment for stock splits, stock dividends, and similar transactions. The Company may, at its option at any time after notice, redeem the Series B Preferred Stock that is outstanding, subject to conversion rights of the holder. The Series B Preferred Stock does not entitle the holders to voting rights, except with respect to certain actions which will require the consent of the holders of 66 2/3% of the outstanding shares of Series B Preferred Stock, or as required by law.

A summary of the Series B Preferred Stock issued through March 31, 2026 is as follows:


Quanta Computer Investments		Series B Preferred Stock - Shares Issued		Series B Preferred Stock - Paid-in Capital		Series B Preferred Stock - Conversion Price		Common Stock to be issued upon Conversion
Tranche 2 or Second Closing		189,717	$	5,000,000	$	26.35		1,897,170
Tranche 3 or Third Closing		230,242	$	5,000,000	$	21.72		2,302,420
Totals		419,959	$	10,000,000				4,199,590

The Series B Preferred Stock entitles the holders to cumulative dividends at the annual rate of 1.5% of the original issuance price, payable quarterly in cash. During the three months ended March 31, 2026 and the year ended December 31, 2025, there were $39,923 and $22,409 of preferred dividends paid, respectively. As of March 31, 2026 and December 31, 2025, total accumulated and unpaid preferred dividends were $37,500 and $39,923, respectively.

Holders of the Series B Preferred Stock will have the right upon the occurrence of certain triggering events that are not all solely within the control of the Company, as defined in the certificate of designation, to require the Company to redeem all or part of their Series B Preferred Stock for cash at a price equal to 100% of the liquidation preference plus accrued but unpaid dividends.

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Because the Series B Preferred Stock contains redemption features that are not solely within the control of the Company and may be triggered by events outside the Company’s control, the Series B Preferred Stock is classified outside of permanent equity, in accordance with ASC 480-10-S99-3A (SEC guidance on redeemable securities).

Common Stock

As of March 31, 2026, the Company’s authorized common stock consists of 200,000,000 shares, par value of $0.001. There were 83,737,930 shares issued and 83,158,258 shares outstanding as of March 31, 2026 and 81,679,367 shares issued and 81,099,695 shares outstanding as of December 31, 2025.

On June 13, 2025 and September 19, 2025, upon the second and third closings of the SPA with Quanta, 189,717 and 230,242 shares of Series B Preferred Stock were issued, respectively. The 419,959 shares of Series B Preferred Stock outstanding as of March 31, 2026 are convertible into 4,199,590 shares of common stock.

ATM Program

The Company filed a Registration Statement on Form S-3 with the SEC that became effective in May 2024, which includes a sales agreement prospectus for the issuance and sale of up to $50,000,000 of our common stock from time to time under a sales agreement with an investment bank in an “at the market” (“ATM”) offering.

During the three months ended March 31, 2026, the Company sold 2,000,000 shares of common stock for gross proceeds of $6,000,200 (average of $3.00 per share) under the ATM before deducting broker expenses paid by the Company of $216,007.

During the three months ended March 31, 2025, the Company sold 243,541 shares of common stock for gross proceeds of $1,301,288 (average of $5.34 per share) under the ATM before deducting broker expenses paid by the Company of $39,039.

The Company is using the net proceeds from these sales for general corporate purposes, including working capital.

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Note 12 – Stock-Based Compensation

A summary of stock option activity related to the Company’s standard employee incentive plan for the three months ended March 31, 2026, is as follows:


				Weighted			Average
		Number of		Average			Remaining Life
		Options		Exercise Price			(years)
Outstanding at December 31, 2025		3,988,858		$	3.86		7.04
Granted		—			—
Exercised		—			—
Expired or Forfeited		(50,729)			3.10

Outstanding at March 31, 2026		3,938,129		$	3.87		6.74

The weighted average remaining contractual term for all options as of March 31, 2026 and December 31, 2025, was 6.74 years and 7.04 years, respectively.

As of March 31, 2026, there were 3,762,490 options that were fully vested and exercisable at a weighted average exercise price of $3.92 per share. The weighted average remaining contractual term of the vested options is 6.64 years.

As of March 31, 2026, there were 175,639 unvested options exercisable at a weighted average exercise price of $2.90 per share. The weighted average remaining contractual term of the unvested options is 8.65 years.

A summary of RSA, RSU, and PSU activity related to the Company’s standard employee incentive plan and long-term incentive plan, excluding bonus awards, for the three months ended March 31, 2026, is as follows:


				Weighted Average
Restricted Stock Awards and Restricted Stock Units		Number of		Grant Date
		Shares/Units		Fair Value Per Share/Unit
Unvested at December 31, 2025		772,438		$	2.61
Granted		12,987			3.85
Vested		(37,500)			2.15
Forfeited		—			—

Unvested at March 31, 2026		747,925		$	2.66


				Weighted Average
Performance Stock Units		Number of		Grant Date
		Units		Fair Value Per Unit
Unvested at December 31, 2025		1,504,431		$	2.37
Granted		—			—
Vested		—			—
Forfeited		—			—

Unvested at March 31, 2026		1,504,431		$	2.37

For the three months ended March 31, 2026 and 2025, the Company recorded total stock-based compensation expense, including stock awards but excluding stock option awards under the Company’s former LTIP, of $638,302 and $1,702,802, respectively.

As of March 31, 2026, the Company had $2,577,130 of unrecognized stock-based compensation expense related to stock options, RSAs, RSUs, and PSUs considered probable, which will be recognized over a weighted average period of 1.5 years.

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For the three months ended March 31, 2025, the Company recorded non-cash stock-based compensation expense of $1,226,154 for the former LTIP options that vested or were probable to vest, prior to their cancellation effective June 16, 2025.

These expenses are presented in the same financial statement line items in the Statements of Operations as the cash-based compensation expenses for the same employees.

Note 13 – Right-of-Use Assets and Liabilities

Future lease payments under operating leases as of March 31, 2026, were as follows:


2026	$	425,388
2027		519,919
Total Future Lease Payments		945,307
Less: Imputed Interest		(73,130)
Total Lease Liability Balance	$	872,177

Operating lease costs under the operating leases totaled $290,591 and $208,766 for the three months ended March 31, 2026 and 2025, respectively.

As of March 31, 2026, the weighted average discount rate was 7.1% and the weighted average remaining lease term was 1.7 years.

Note 14 – Litigation

We are involved in various lawsuits and claims arising in the ordinary course of business, including actions with respect to intellectual property, employment, and contractual matters. In connection with these matters, we assess, on a regular basis, the probability and range of possible loss based upon the developments in these matters. A liability is recorded in the consolidated financial statements if the Company believes it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. Because litigation is inherently unpredictable and unfavorable resolutions could occur, assessing contingencies is highly subjective and requires judgments about future events. We regularly review outstanding legal matters to determine the adequacy of the liabilities accrued and related disclosures in consideration of many factors, which include, but are not limited to, past history, scientific and other evidence, and the specifics and status of each matter. We may change our estimates if our assessment of the various factors changes and the amount of ultimate loss may differ from our estimates, resulting in a material effect on our business, financial condition, results of operations, and/or cash flows. With respect to these matters, based upon management’s current knowledge, the Company believes that the amount or range of any reasonably possible loss, if any, will not, either individually or in the aggregate, have a material adverse effect on the Company’s financial position, results of operations or cash flows.

The Company is not currently party to, nor is its property subject to any material legal proceedings.

Note 15 – Subsequent Events

On April 24, 2026, the Company issued 593,797 RSUs and 302,727 PSUs to all non-executive employees of the Company. The fair market value on the date of award of the RSUs and PSUs was $2.39 per unit. The RSUs will vest over time at a rate of one-third annually on each December 15, 2026, 2027, and 2028. The PSUs will vest upon the achievement of certain revenue and EBITDA targets before December 31, 2028.

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On April 29, 2026, the Company issued 335,218 RSUs and 335,218 PSUs to its CEO and CFO. The fair market value on the date of award of the RSUs and PSUs was $2.41 per unit. The RSUs will vest over time at a rate of one-third annually on each December 15, 2026, 2027, and 2028. The PSUs will vest upon the achievement of certain revenue and EBITDA targets before December 31, 2028.

Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

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, 2025.

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;

●

Going concern;

●

Evaluation of liabilities to equity and derivatives;

●

Variable interest entities;

●

Investments in equity securities;

●

Carrying value of long-lived assets, goodwill and other intangible assets;

●

Software development costs;

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●

Revenue recognition;

●

Product warranty;

●

Stock-based compensation; and

●

Income taxes.

Our accounting policies are more fully described in the notes to our consolidated financial statements included in this quarterly report and in our Annual Report on Form 10-K for the year ended December 31, 2025. There have been no significant changes in our accounting policies for the three months ended March 31, 2026.

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 microdisplay technology with our advanced optics to produce compact high-resolution display engines, less than half an inch diagonally, which when viewed through our Smart Glasses products create virtual images that appear comparable in size to that of a computer monitor or a large-screen television.

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

Recent Accounting Pronouncements

See Note 1 to the Unaudited Consolidated Financial Statements.

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Results of Operations

Comparison of Three Months Ended March 31, 2026 and 2025

The following table compares the Company’s consolidated statements of operations data for the three months ended March 31, 2026 and 2025:


		Three Months Ended March 31,
								Dollar			% Increase
		2026			2025			Change			(Decrease)

Sales:
Sales of Products		$	1,042,388		$	1,324,073		$	(281,685)		(21)	%
Sales of Engineering Services			348,936			256,868			92,068		36	%

Total Sales			1,391,324			1,580,941			(189,617)		(12)	%

Cost of Sales:
Cost of Sales - Products Sold			1,472,172			1,610,730			(138,558)		(9)	%
Cost of Sales - Depreciation and Amortization			82,741			176,869			(94,128)		(53)	%
Cost of Sales - Engineering Services			214,322			58,460			155,862		267	%

Total Cost of Sales			1,769,235			1,846,059			(76,824)		(4)	%

Gross Loss			(377,911)			(265,118)			(112,793)		43	%
Gross Loss %			(27)	%		(17)	%

Operating Expenses:
Research and Development			3,028,355			2,605,840			422,515		16	%
Selling and Marketing			1,550,866			1,537,466			13,400		1	%
General and Administrative			2,133,942			3,960,984			(1,827,042)		(46)	%
Depreciation and Amortization			115,017			405,011			(289,994)		(72)	%

Loss from Operations			(7,206,091)			(8,774,419)			1,568,328		(18)	%

Other Income (Expense):
Investment Income			168,401			168,480			(79)		(0)	%
Other Taxes			(16,133)			(18,400)			2,267		(12)	%
Foreign Exchange Loss			(17,501)			(13,287)			(4,214)		32	%

Total Other Income, Net			134,767			136,793			(2,026)		(1)	%

Net Loss		$	(7,071,324)		$	(8,637,626)		$	1,566,302		(18)	%

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


		Three Months Ended			% of		Three Months Ended			% of		Dollar			% Increase
		March 31, 2026			Total Sales		March 31, 2025			Total Sales		Change			(Decrease)
Sales of Products		$	1,042,388		75	%	$	1,324,073		84	%	$	(281,685)		(21)	%
Sales of Engineering Services			348,936		25	%		256,868		16	%		92,068		36	%
Total Sales		$	1,391,324		100	%	$	1,580,941		100	%	$	(189,617)		(12)	%

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

Sales of engineering services and OEM products for the three months ended March 31, 2026, were $348,936 compared to $256,868 in the comparable 2025 period, an increase of 36%.

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


		Three Months Ended			% of		Three Months Ended			% of		Dollar			% Increase
		March 31, 2026			Total Sales		March 31, 2025			Total Sales		Change			(Decrease)
Product Cost of Sales		$	859,444		62	%	$	1,026,615		65	%	$	(167,171)		(16)	%
Manufacturing Overhead - Unapplied			612,728		44	%		584,115		37	%		28,613		5	%
Depreciation and Amortization			82,741		6	%		176,869		11	%		(94,128)		(53)	%
Engineering Services Cost of Sales			214,322		15	%		58,460		4	%		155,862		267	%

Total Cost of Sales			1,769,235		127	%		1,846,059		117	%		(76,824)		(4)	%

Gross Loss		$	(377,911)		(27)	%	$	(265,118)		(17)	%	$	(112,793)		43	%

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

Unapplied manufacturing overhead costs, not already added into product cost of sales, increased by $28,613, or 5% for the three months ended March 31, 2026 compared to the 2025 comparable period. As a percentage of total sales, such costs increased to 44% compared to 37% in 2025 due to lower product revenue and lower production levels of new product, as the Company has sufficient finished goods on hand to meet currently expected demand for current Smart Glasses models for the foreseeable future.

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

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			% of		Three Months Ended			% of		Dollar			% Increase
		March 31, 2026			Total Sales		March 31, 2025			Total Sales		Change			(Decrease)
Research and Development Expenses		$	2,905,860		209	%	$	2,266,112		143	%	$	639,748		28	%
Related Stock-based Compensation (non-cash)			122,495		9	%		339,728		21	%		(217,233)		(64)	%
Total Research and Development Costs		$	3,028,355		218	%	$	2,605,840		165	%	$	422,515		16	%

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

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			% of		Three Months Ended			% of		Dollar			% Increase
		March 31, 2026			Total Sales		March 31, 2025			Total Sales		Change			(Decrease)
Selling and Marketing Expenses		$	1,482,191		107	%	$	1,176,764		74	%	$	305,427		26	%
Related Stock-based Compensation (non-cash)			68,675		4	%		360,702		22	%		(292,027)		(81)	%
Total Selling and Marketing		$	1,550,866		111	%	$	1,537,466		97	%	$	13,400		1	%

Total selling and marketing expenses for the three months ended March 31, 2026 increased by $13,400, or 1% compared to the comparable period in 2025. This increase was due to a $254,426 increase in cash salary and benefits related expenses due to headcount increases; and a $47,663 increase in travel related expenses; offset by a $292,027 decrease in non-cash stock-based compensation expense; and a decrease of $21,572 in advertising and tradeshow expenses.

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



		Three Months Ended			% of		Three Months Ended			% of		Dollar			% Increase
		March 31, 2026			Total Sales		March 31, 2025			Total Sales		Change			(Decrease)
General and Administrative Expenses		$	1,729,842		124	%	$	1,826,989		116	%	$	(97,147)		(5)	%
Related Stock-based Compensation (non-cash)			404,100		29	%		2,133,995		135	%		(1,729,895)		(81)	%
Total General and Administrative		$	2,133,942		153	%	$	3,960,984		251	%	$	(1,827,042)		(46)	%

Total general and administrative expenses for the three months ended March 31, 2026, decreased by $1,827,042, or 46%, compared to the comparable period in 2025. The decrease was largely due to a $1,729,895 decrease in non-cash stock-based compensation expense related to our 2024 cash salary reduction program in exchange for equity, which ended on April 30, 2025, and the termination of the Company’s original LTIP, which was cancelled on June 16, 2025; a $304,376 decrease in IR and shareholder related expenses; a $63,259 decrease in legal expenses; and a $35,763 decrease in consulting fees; partially offset by a $232,908 increase in cash salary and benefits; a $30,263 increase in travel related expenses; and a $25,087 increase in accounting and auditing fees.

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

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

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

Liquidity and Capital Resources

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

As of March 31, 2026, we had current assets of $24,780,826 compared to current liabilities of $4,005,287 which resulted in a positive working capital position of $20,775,539. As of December 31, 2025, we had a positive working capital position of $22,307,525. Our current liabilities are comprised principally of accounts payable, accrued expenses, and operating lease right-of-use liabilities.

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Summary of Cash Flows:

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


		March 31,			March 31,
		2026			2024
Net Cash Provided by (used in)
Operating Activities		$	(5,555,245)			$ (3,453,623)
Investing Activities			(1,172,101)			(764,132)
Financing Activities			5,744,270			1,262,250

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

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

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

As of March 31, 2026, the Company does not have any current or long-term debt obligations outstanding.

In February 2026, the U.S. Supreme Court issued a ruling invalidating tariffs previously imposed under the International Emergency Economic Powers Act ("IEEPA"). Through March 31, 2026, the Company has paid approximately $190,000 related to IEEPA tariffs for the purchase of fixed assets and components included in the costs of sales. However, significant uncertainty remains regarding the ultimate availability, timing, and magnitude of potential refunds due to a phased administrative process, ongoing litigation, and potential appeals. Consequently, as of March 31, 2026, the Company has not recorded a receivable, asset, or gain because recovery is not considered "probable" or "reasonably estimable" under the loss recovery model of ASC 410-30 and ASC 450, with potential refunds currently treated as unrecognized gain contingencies.

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.

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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, and 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:

●

The expected profit margin contribution upon the future commencement of volume manufacturing and sales of waveguides from our new waveguide manufacturing plant, particularly to ODM/OEM customers; and

●

The Company has historically raised capital through the sale of equity securities. The Company filed a Registration Statement on Form S-3 that became effective in May 2024, which includes a sales agreement prospectus for the issuance and sale of up to $50,000,000 of our common stock from time to time under a sales agreement with an investment bank in an ATM offering. Since commencement of the ATM offering in May 2024, the Company has raised $28,250,484, net of broker expenses, including $5,784,193 in the three months ended March 31, 2026, under this sales agreement.

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.

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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.

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

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.

Item 3.Quantitative and Qualitative Disclosures about Market Risk

Not Applicable

Item 4.Controls and Procedures

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 March 31, 2026.

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.

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Part II. OTHER INFORMATION

Item 1.Legal Proceedings

We are involved in various lawsuits and claims arising in the ordinary course of business, including actions with respect to intellectual property, employment, and contractual matters. In connection with these matters, we assess, on a regular basis, the probability and range of possible loss based upon the developments in these matters. A liability is recorded in the consolidated financial statements if the Company believes it to be probable that a loss has been incurred and the amount of the loss can be reasonably estimated. Because litigation is inherently unpredictable and unfavorable resolutions could occur, assessing contingencies is highly subjective and requires judgments about future events. We regularly review outstanding legal matters to determine the adequacy of the liabilities accrued and related disclosures in consideration of many factors, which include, but are not limited to, past history, scientific and other evidence, and the specifics and status of each matter. We may change our estimates if our assessment of the various factors changes and the amount of ultimate loss may differ from our estimates, resulting in a material effect on our business, financial condition, results of operations, and/or cash flows. With respect to these matters, based upon management’s current knowledge, the Company believes that the amount or range of any reasonably possible loss, if any, will not, either individually or in the aggregate, have a material adverse effect on the Company’s financial position, results of operations or cash flows.

The Company is not currently party to, nor is its property subject to any material legal proceedings.

Item 1A.Risk Factors

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, 2025. There have been no material changes from those risk factors, except as set forth below. The risks discussed in our 2025 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.

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds

Sale of Unregistered Securities - none

Purchase of Equity Securities: - none

Item 3.Defaults Upon Senior Securities

None

Item 4.Mine Safety Disclosures

Not Applicable

Item 5.Other Information

During the fiscal quarter ended March 31, 2026, no Section 16 director or officer adopted, modified, or terminated a “Rule 10b5-1 trading arrangement” (as defined in Item 408 of Regulation S-K of the Exchange Act).

There were no “non-Rule 10b5-1 trading arrangements” (as defined in Item 408 of Regulation S-K of the Exchange Act) adopted, modified or terminated during the fiscal quarter ended March 31, 2026 by our directors and Section 16 officers.

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Item 6.Exhibits

Exhibit No.		Description

31.1		Certification of the Chief Executive Officer of the Registrant pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

31.2		Certification of the Chief Financial Officer of the Registrant pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

32.1		Certification of the Chief Executive Officer of the Registrant pursuant to 18 U.S.C. Section 1350 adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**

32.2		Certification of the Chief Financial Officer of the Registrant pursuant to 18 U.S.C. Section 1350 adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**

101		Inline XBRL Document set for the financial statements and accompanying notes in Part I, Item 1, of this Quarterly Report on Form 10-Q.

104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)*

* Filed herewith.

** Furnished herewith

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	VUZIX CORPORATION

Date: May 14, 2026	By:	/s/ Paul Travers
		Paul Travers
		President, Chief Executive Officer
		(Principal Executive Officer)

Date: May 14, 2026	By:	/s/ Grant Russell
		Grant Russell
		Executive Vice President and Chief Financial
		Officer
		(Principal Financial and Accounting Officer)

Vuzix Corp 10-Q