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v3.25.4

Income Taxes | 12 Months Ended
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Dec. 31, 2025
Income Taxes |
Income Taxes | Note 10 — Income Taxes The Company files U.S. federal and various state and foreign tax returns. Pre-tax earnings consisted of the following for the years ended: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | December 31, | ​ | December 31, | ​ | December 31,
​ | ​ ​ ​ | 2025 | ​ ​ ​ | 2024 | ​ ​ ​ | 2023
Pre-Tax Income (Loss) |  | ​ | ​ |  | ​ | ​ |  | ​ | ​
U.S. | ​ | $ | (31,501,564) | ​ | $ | (72,864,232) | ​ | $ | (49,035,562)
Outside the U.S. | ​ |  | (771,564) | ​ |  | (673,925) | ​ |  | (1,113,515)
Total Pre-Tax Income (Loss) | ​ | $ | (32,273,128) | ​ | $ | (73,538,157) | ​ | $ | (50,149,077)
​ The provision expense/(benefit) for income taxes for the years ended December 31, 2025, 2024, and 2023 was as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ ​ ​ | 2025 | ​ ​ ​ | 2024 | ​ ​ ​ | 2023
U.S. Income Taxes: |  | ​ | ​ |  | ​ | ​ |  | ​ | ​
Current Provision | ​ | $ | — | ​ | $ | — | ​ | $ | —
Deferred Provision | ​ |  | (6,002,161) | ​ |  | (13,257,284) | ​ |  | (7,207,958)
Valuation Allowance | ​ |  | 6,002,161 | ​ |  | 13,257,284 | ​ |  | 7,207,958
Income Taxes Outside the U.S.: | ​ |  | ​ | ​ |  | ​ | ​ |  | ​
Current Provision | ​ |  | — | ​ |  | — | ​ |  | —
Deferred Provision | ​ |  | (306,745) | ​ |  | (82,211) | ​ |  | 297,343
Valuation Allowance | ​ |  | 306,745 | ​ |  | 82,211 | ​ |  | (297,343)
State Income Taxes: | ​ |  | ​ | ​ |  | ​ | ​ |  | ​
Current Provision | ​ |  | — | ​ |  | — | ​ |  | —
Deferred Provision | ​ |  | (417,044) | ​ |  | (552,573) | ​ |  | (634,503)
Valuation Allowance | ​ |  | 417,044 | ​ |  | 552,573 | ​ |  | 634,503
Total Provision | ​ | $ | — | ​ | $ | — | ​ | $ | —
​ A reconciliation of the statutory U.S. federal income tax rate to the effective rates for the years ended December 31, 2025, 2024, and 2023 is as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ ​ ​ | ​ | 2025 | ​ ​ ​ | ​ | 2024 | ​ ​ ​ | ​ | 2023
​ | ​ ​ ​ | ​ | Amount | % | ​ | ​ | Amount | % | ​ | ​ | Amount | %
U.S. Federal statutory tax rate |  | $ | (6,777,357) | 21.0 |  | $ | (15,443,013) | 21.0 |  | $ | (10,531,306) | 21.0
State and local income taxes, net of federal |  | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
income tax effect |  | ​ | — | 0.0 |  | ​ | — | 0.0 |  | ​ | — | 0.0
Foreign tax effects: |  | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Germany | ​ | ​ | 17,506 | (0.1) | ​ | ​ | (17,414) | 0.0 | ​ | ​ | 241,597 | (0.5)
Japan: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
NOL expiration |  | ​ | — | 0.0 |  | ​ | — | ​ |  | ​ | 1,053,211 | (2.1)
Change in valuation allowance |  | ​ | 234,992 | (0.7) |  | ​ | 175,589 | (0.2) |  | ​ | (676,708) | 1.3
Other |  | ​ | (90,469) | 0.3 |  | ​ | (16,651) | 0.0 |  | ​ | (384,262) | 0.8
Effect of changes in tax laws or rates enacted in |  | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
the current period |  | ​ | — | 0.0 |  | ​ | — | 0.0 |  | ​ | — | 0.0
Effect of cross-border tax laws |  | ​ | — | 0.0 |  | ​ | — | 0.0 |  | ​ | 265,769 | (0.5)
Tax credits | ​ | ​ | (209,472) | 0.6 | ​ | ​ | — | 0.0 | ​ | ​ | (36,666) | 0.1
Changes in valuation allowance |  | ​ | 6,002,161 | (18.6) |  | ​ | 13,257,284 | (18.0) |  | ​ | 7,207,958 | (14.4)
Nontaxable or nondeductible items: |  | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Incentive stock options | ​ | ​ | 280,906 | (0.9) | ​ | ​ | 700,490 | (1.0) | ​ | ​ | 595,925 | (1.2)
Stock-based compensation (windfalls) shortfalls | ​ | ​ | (190,318) | 0.6 | ​ | ​ | 103,096 | (0.1) | ​ | ​ | 109,839 | (0.2)
Other | ​ | ​ | 8,694 | 0.0 | ​ | ​ | 7,106 | 0.0 | ​ | ​ | 349,123 | (0.7)
Changes in unrecognized tax benefits | ​ | ​ | — | 0.0 | ​ | ​ | — | 0.0 | ​ | ​ | — | 0.0
Other adjustments: |  | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Stock-based compensation adjustments for: |  | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Executive compensation limitation |  | ​ | (166,112) | 0.5 |  | ​ | 1,048,277 | (1.4) |  | ​ | 1,730,628 | (3.5)
Expirations, forfeitures, and cancellations |  | ​ | 693,946 | (2.2) |  | ​ | 113,056 | (0.2) |  | ​ | 21,098 | 0.0
Other |  | ​ | 195,522 | (0.5) |  | ​ | 72,180 | (0.1) |  | ​ | 53,793 | (0.1)
Net Effective Tax Rate |  | $ | — | 0.0 |  | $ | — | 0.0 |  | $ | — | 0.0
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​
​
​
​ Significant components of the Company’s deferred tax assets and liabilities at year end are as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | December 31, | ​ | December 31, | ​ | December 31,
​ | ​ ​ ​ | 2025 | ​ ​ ​ | 2024 | ​ ​ ​ | 2023
Deferred Tax Assets: |  | ​ | ​ |  | ​ | ​ |  | ​ | ​
Net Operating Loss Carryforwards | ​ | $ | 54,622,812 | ​ | $ | 48,639,974 | ​ | $ | 42,538,219
Tax Credit Carryforwards | ​ |  | 4,462,038 | ​ |  | 4,186,788 | ​ |  | 4,191,198
Inventory Valuation Adjustment | ​ |  | 1,367,276 | ​ |  | 1,839,907 | ​ |  | 1,316,114
Stock-based Compensation | ​ |  | 1,244,391 | ​ |  | 1,476,671 | ​ |  | 1,098,240
Lease Obligation Liability | ​ |  | 221,167 | ​ |  | 107,546 | ​ |  | 65,628
Capitalized R&D | ​ |  | 6,287,828 | ​ |  | 4,972,383 | ​ |  | 4,172,773
Intangible Assets | ​ | ​ | 5,428,929 | ​ | ​ | 5,740,760 | ​ | ​ | 510,539
Investment in Atomistic | ​ |  | 1,315,459 | ​ |  | 1,298,158 | ​ |  | —
Other | ​ |  | 343,898 | ​ |  | 192,038 | ​ |  | 627,529
Total Deferred Tax Assets | ​ |  | 75,293,798 | ​ |  | 68,454,225 | ​ |  | 54,520,240
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Deferred Tax Liabilities: | ​ |  | ​ | ​ |  | ​ | ​ |  | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Lease Right of Use Asset | ​ | ​ | 221,167 | ​ | ​ | 107,546 | ​ | ​ | 65,628
Total Deferred Tax Liabilities | ​ |  | 221,167 | ​ |  | 107,546 | ​ |  | 65,628
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Net Deferred Tax Assets Before Valuation Allowance | ​ | ​ | 75,072,631 | ​ | ​ | 68,346,679 | ​ | ​ | 54,454,612
Valuation Allowance | ​ |  | (75,072,631) | ​ |  | (68,346,679) | ​ |  | (54,454,612)
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Net Deferred Tax Assets | ​ | $ | — | ​ | $ | — | ​ | $ | —
​ As of December 31, 2025, the Company has approximately $250 million in U.S. Federal net operating loss (NOL) carry-forwards. Some of these NOL carryforwards will expire beginning in 2026 and others are not subject to expiration. Specifically, $74.3 million of the NOL carryforward will begin to expire in 2026 and as a result of the Tax Cuts and Jobs Act, the remaining NOL carryforwards have no expiration. In addition to the U.S. Federal NOL carryforward, the Company has state NOL carryforwards of approximately $15.8 million in various jurisdictions in which it files that will begin to expire in 2034. The Company also has approximately $4.5 million of U.S. Federal and state credit carryforwards. The credit carryforwards will begin to expire in 2026 and will be fully expired by 2045 if not utilized. Utilization of the NOL carry-forwards may be subject to an annual limitation in the case of sufficient equity ownership changes under Section 382 of the U.S. Federal tax law or the NOL's may expire unutilized. In addition to the U.S. Federal and state attributes noted above, Vuzix Europe GmbH, a wholly owned subsidiary incorporated in Germany, has NOLs as of December 31, 2025 of $1.1 million that have no expiration. Vuzix Japan KK, a KK corporate entity wholly owned by the Company in Japan, has NOLs as of December 31, 2025 of $1.8 million that will expire in 2034. As the result of the assessment of the FASB ASC 740-10 (“Prior Authoritative Literature: FASB Interpretation No. 48 (“FIN 48”), Accounting for Uncertainty in Income Taxes — An Interpretation of FASB Statement No. 109”), the Company has no unrecognized tax benefits. ​ The Company’s U.S. Federal and state tax matters for the years 2021 through 2024 remain subject to examination by the respective tax authorities. ​ FASB ASC 740 (“Prior Authoritative Literature: SFAS No. 109, Accounting for Income Taxes”), requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on differing treatment of items for financial reporting and income tax reporting purposes. The deferred tax balances are adjusted to reflect tax rates by tax jurisdiction, based on currently enacted tax laws, which will be in effect in the years in which the temporary differences are expected to reverse. In light of the historic losses of the Company, a 100% valuation allowance has been recorded to fully offset any benefit associated with the net deferred tax assets, for which realization is not considered more likely than not to occur. ​ The One Big Beautiful Bill Act ("OBBB") was signed into law on July 4, 2025. The OBBB makes changes to U.S. corporate income tax, including immediate expensing of domestic research and development costs, with retroactive application beginning January 1, 2025; reinstating the option to claim 100% accelerated depreciation deductions on qualified property, with retroactive application beginning January 20, 2025; and international tax provisions modifying global intangible low-taxed income ("GILTI"), foreign-derived intangible income ("FDII"), and base erosion and anti-abuse tax ("BEAT"). There is no significant impact from the OBBB on the Company.

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