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Table of Contents

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 June 30, 2023

OR

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: (585359-5900

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 August 8, 2023, there were 63,319,217 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 June 30, 2023 and December 31, 2022

3

 

Consolidated Statements of Changes in Stockholders’ Equity for the Three and Six Months Ended June 30, 2023 and 2022

4

 

Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2023 and 2022

5

 

Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2023 and 2022

6

 

Notes to the Unaudited Consolidated Financial Statements

7

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

15

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

25

 

Item 4.

Controls and Procedures

25

 

Part II – Other Information

26

 

Item 1.

Legal Proceedings

26

 

Item 1A.

Risk Factors

26

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

26

 

Item 3.

Defaults Upon Senior Securities

26

 

Item 4.

Mine Safety Disclosure

26

 

Item 5.

Other Information

26

 

Item 6.

Exhibits

27

 

 

Signatures

28

2

Table of Contents

Part 1: FINANCIAL INFORMATION

Item 1: Consolidated Financial Statements

VUZIX CORPORATION

CONSOLIDATED BALANCE SHEETS

(Unaudited)

    

June 30, 

December 31, 

    

2023

    

2022

ASSETS

 

  

 

  

Current Assets

 

  

 

  

Cash and Cash Equivalents

$

48,582,005

$

72,563,943

Accounts Receivable, Net

 

6,545,608

 

3,558,971

Accrued Revenues in Excess of Billings

 

309,762

 

269,129

Employee Retention Credit Receivable

466,705

Inventories, Net

 

10,870,166

 

11,267,969

Manufacturing Vendor Prepayments

 

353,399

 

998,671

Prepaid Expenses and Other Assets

 

1,660,374

 

2,115,853

Total Current Assets

 

68,321,314

 

91,241,241

Long-Term Assets

 

  

 

  

Fixed Assets, Net

 

6,814,005

 

3,878,505

Operating Lease Right-of-Use Asset

628,131

956,165

Patents and Trademarks, Net

 

2,438,299

 

2,220,094

Technology Licenses, Net

 

28,504,870

 

30,158,689

Intangible Asset, Net

 

605,453

 

675,313

Goodwill

 

1,601,400

 

1,601,400

Other Assets, Net

 

1,649,132

 

1,581,143

Total Assets

$

110,562,604

$

132,312,550

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

  

Current Liabilities

 

  

 

  

Accounts Payable

$

1,620,490

$

1,211,747

Unearned Revenue

 

107,043

 

29,064

Accrued Expenses

 

1,029,177

 

1,670,539

Licensing Fees Commitment

 

3,500,000

 

11,500,000

Income and Other Taxes Payable

 

138,959

 

214,997

Operating Lease Right-of-Use Liability

429,421

651,011

Total Current Liabilities

 

6,825,090

 

15,277,358

Long-Term Liabilities

Operating Lease Right-of-Use Liability

198,710

305,154

Total Liabilities

 

7,023,800

 

15,582,512

Stockholders' Equity

 

  

 

  

Common Stock - $0.001 Par Value, 100,000,000 shares authorized; 63,898,889 shares issued and 63,319,217 shares outstanding as of June 30, 2023 and 63,783,779 shares issued and 63,319,107 shares outstanding as of December 31, 2022.

 

63,899

 

63,783

Additional Paid-in Capital

 

369,072,625

 

362,507,715

Accumulated Deficit

 

(263,121,219)

 

(243,835,716)

Treasury Stock, at cost, 579,672 shares as of June 30, 2023 and 464,672 shares as of December 31, 2022.

 

(2,476,501)

 

(2,005,744)

Total Stockholders' Equity

 

103,538,804

 

116,730,038

Total Liabilities and Stockholders' Equity

$

110,562,604

$

132,312,550

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

3

Table of Contents

VUZIX CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(Unaudited)

Common Stock

Additional

Accumulated

Treasury Stock

    

Shares

    

Amount

    

Paid-In Capital

    

Deficit

    

Shares

    

Amount

    

Total

Balance - April 1, 2023

 

63,787,858

$

63,787

$

365,868,487

$

(254,076,299)

(579,672)

$

(2,476,501)

$

109,379,474

Stock-Based Compensation Expense

 

96,525

 

97

 

3,189,606

 

 

 

 

3,189,703

Stock Option Exercises

 

14,506

 

15

 

14,532

 

 

 

 

14,547

Net Loss

 

 

 

 

(9,044,920)

 

 

 

(9,044,920)

Balance - June 30, 2023

 

63,898,889

$

63,899

$

369,072,625

$

(263,121,219)

 

(579,672)

$

(2,476,501)

$

103,538,804

Common Stock

Additional

Accumulated

Treasury Stock

    

Shares

    

Amount

    

Paid-In Capital

    

Deficit

    

Shares

    

Amount

    

Total

Balance - January 1, 2023

 

63,783,779

$

63,783

$

362,507,715

$

(243,835,716)

(464,672)

$

(2,005,744)

$

116,730,038

Stock-Based Compensation Expense

 

96,525

 

97

 

6,550,382

 

 

 

 

6,550,479

Stock Option Exercises

 

18,585

 

19

 

14,528

 

 

 

 

14,547

Purchases of Treasury Stock

 

 

 

 

 

(115,000)

 

(470,757)

 

(470,757)

Net Loss

 

 

 

 

(19,285,503)

 

 

 

(19,285,503)

Balance - June 30, 2023

 

63,898,889

$

63,899

$

369,072,625

$

(263,121,219)

 

(579,672)

$

(2,476,501)

$

103,538,804

Common Stock

Additional

Accumulated

Treasury Stock

    

Shares

    

Amount

    

Paid-In Capital

    

Deficit

    

Shares

    

Amount

    

Total

Balance - April 1, 2022

 

63,704,626

$

63,705

$

350,721,326

$

(213,578,143)

(36,685)

$

(251,057)

$

136,955,831

Stock-Based Compensation Expense

 

288,650

 

289

 

4,582,414

 

 

 

 

4,582,703

Stock Option Exercises

 

32,364

 

32

 

19,250

 

 

 

 

19,282

Net Loss

 

 

 

 

(10,021,668)

 

 

 

(10,021,668)

Balance - June 30, 2022

 

64,025,640

$

64,026

$

355,322,990

$

(223,599,811)

 

(36,685)

$

(251,057)

$

131,536,148

Common Stock

Additional

Accumulated

Treasury Stock

    

Shares

    

Amount

    

Paid-In Capital

    

Deficit

    

Shares

    

Amount

    

Total

Balance - January 1, 2022

 

63,672,268

$

63,672

$

346,736,397

$

(203,072,143)

$

$

143,727,926

Stock-Based Compensation Expense

 

288,650

 

289

 

8,538,153

 

 

 

 

8,538,442

Stock Option Exercises

 

64,722

 

65

 

48,440

 

 

 

 

48,505

Purchases of Treasury Stock

 

 

 

 

 

(36,685)

 

(251,057)

 

(251,057)

Net Loss

 

 

 

 

(20,527,668)

 

 

 

(20,527,668)

Balance - June 30, 2022

 

64,025,640

$

64,026

$

355,322,990

$

(223,599,811)

 

(36,685)

$

(251,057)

$

131,536,148

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

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VUZIX CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

Three Months Ended June 30, 

Six Months Ended June 30, 

    

2023

    

2022

    

2023

    

2022

Sales:

 

  

 

  

 

  

 

  

Sales of Products

$

4,425,162

$

2,898,892

$

8,616,523

$

5,401,944

Sales of Engineering Services

 

265,673

 

108,866

 

265,673

 

108,866

Total Sales

 

4,690,835

 

3,007,758

 

8,882,196

 

5,510,810

Cost of Sales:

 

  

 

  

 

  

 

  

Cost of Sales - Products Sold

 

3,303,979

 

2,451,890

 

6,386,418

 

4,255,488

Cost of Sales - Depreciation and Amortization

257,939

231,163

490,855

454,949

Cost of Sales - Engineering Services

 

156,531

 

59,296

 

156,531

 

59,296

Total Cost of Sales

 

3,718,449

 

2,742,349

 

7,033,804

 

4,769,733

Gross Profit

 

972,386

 

265,409

 

1,848,392

 

741,077

Operating Expenses:

 

  

 

  

 

  

 

  

Research and Development

 

2,836,552

 

2,996,144

 

5,906,349

 

6,099,588

Selling and Marketing

 

2,509,922

 

1,850,595

 

5,049,581

 

3,914,584

General and Administrative

 

4,260,322

 

5,039,949

 

9,392,146

 

10,453,228

Depreciation and Amortization

 

973,222

 

379,702

 

1,937,487

 

638,946

Impairment of Patents and Trademarks

 

 

 

17,666

 

49,602

Total Operating Expenses

 

10,580,018

 

10,266,390

 

22,303,229

 

21,155,948

Loss From Operations

 

(9,607,632)

 

(10,000,981)

 

(20,454,837)

 

(20,414,871)

Other Income (Expense):

 

  

 

  

 

  

 

  

Investment Income

 

628,923

 

111,027

 

1,324,706

 

117,307

Income and Other Taxes

 

(35,420)

 

(31,326)

 

(123,215)

 

(78,959)

Foreign Exchange Loss

 

(30,791)

 

(100,388)

 

(32,157)

 

(151,145)

Total Other Income (Expense), Net

 

562,712

 

(20,687)

 

1,169,334

 

(112,797)

Loss Before Provision for Income Taxes

 

(9,044,920)

 

(10,021,668)

 

(19,285,503)

 

(20,527,668)

Provision for Income Taxes

 

 

 

 

Net Loss

 

(9,044,920)

 

(10,021,668)

 

(19,285,503)

 

(20,527,668)

Basic and Diluted Loss per Common Share

$

(0.14)

$

(0.16)

$

(0.31)

$

(0.32)

Weighted-average Shares Outstanding - Basic and Diluted

 

63,230,859

 

63,739,863

 

63,223,768

 

63,717,618

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

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VUZIX CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Six Months Ended June 30, 

    

2023

    

2022

Cash Flows from Operating Activities

 

  

 

  

Net Loss

$

(19,285,503)

$

(20,527,668)

Non-Cash Adjustments

 

  

 

  

Depreciation and Amortization

 

2,428,342

 

1,093,895

Stock-Based Compensation

 

6,500,261

 

8,200,774

Impairment of Patents and Trademarks

 

17,666

 

49,602

Change in Inventory Reserve for Obsolescence

480,258

(Increase) Decrease in Operating Assets

 

  

 

  

Accounts Receivable

 

(2,986,637)

 

678,523

Accrued Revenues in Excess of Billings

 

(40,633)

 

(108,866)

Employee Retention Credit Receivable

466,705

Inventories

 

(82,454)

 

359,893

Manufacturing Vendor Prepayments

 

645,272

 

(654,569)

Prepaid Expenses and Other Assets

 

1,692

 

492,599

Increase (Decrease) in Operating Liabilities

 

  

 

  

Accounts Payable

 

408,743

 

(732,813)

Accrued Expenses

 

(641,362)

 

195,276

Unearned Revenue

 

77,980

 

12,829

Income and Other Taxes Payable

 

(76,037)

 

(76,384)

Net Cash Flows Used in Operating Activities

 

(12,085,707)

 

(11,016,909)

Cash Flows from Investing Activities

 

  

 

  

Purchases of Fixed Assets

 

(2,774,513)

 

(3,504,931)

Investments in Patents and Trademarks

 

(340,507)

 

(272,686)

Investments in Licenses, Intangibles and Other Assets

 

(8,000,000)

 

(4,625,000)

Investments in Software Development

(125,000)

Investments in Other Assets

 

(200,000)

 

Net Cash Flows Used in Investing Activities

 

(11,440,020)

 

(8,402,617)

Cash Flows from (used) Financing Activities

 

  

 

  

Proceeds from Exercise of Stock Options

 

14,546

 

48,505

Purchases of Treasury Stock

(470,757)

(251,057)

Net Cash Flows Used in Financing Activities

 

(456,211)

 

(202,552)

Net Decrease in Cash and Cash Equivalents

 

(23,981,938)

 

(19,622,078)

Cash and Cash Equivalents - Beginning of Period

 

72,563,943

 

120,203,873

Cash and Cash Equivalents - End of Period

$

48,582,005

$

100,581,795

Supplemental Disclosures

 

  

 

  

Unamortized Common Stock Expense included in Prepaid Expenses and Other Assets

$

1,335,307

$

1,223,691

Non-Cash Investment in Licenses

3,500,000

10,500,000

Stock-Based Compensation Expense - Expensed less Previously Issued

(50,218)

(337,379)

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 (the “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. Certain re-classifications have been made to prior comparable periods to conform with current reporting impacting Costs of Sales, Gross Profit and Depreciation and Amortization. The results of the Company’s operations for the three and six months ended June 30, 2023 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, 2022, as reported in the Company’s Annual Report on Form 10-K filed with the SEC on March 1, 2023.

Re-classification of Prior Year Presentation

Certain prior year amounts have been reclassified for consistency with the current year’s presentation. These reclassifications had no effect on the reported results of operations. An adjustment has been made to the Consolidated Statements of Operations for the three and six months ended June 30, 2022, to reclassify depreciation expense related to our manufacturing operations from the amounts of reported depreciation and amortization expenses originally included in Operating Expenses. This change in classification does not affect previously reported Net Loss or reported Cash Flows Used in Operating Activities in the Consolidated Statements of Cash Flows or Consolidated Balance Sheets. The below table is a summary of the impact of these re-classifications:

For the Three Months Ended June 30, 2022

For the Six Months Ended June, 2022

As Previously

As Previously

Condensed Statement of Operations

    

Presented

    

Re-classification

    

Revised

    

Presented

    

Re-classification

    

Revised

Total Sales

$

3,007,758

$

$

3,007,758

$

5,510,810

$

$

5,510,810

Cost of Sales - Products Sold

2,522,674

(70,784)

2,451,890

4,386,371

(130,883)

4,255,488

Cost of Sales - Depreciation and Amortization

231,163

231,163

454,949

454,949

Cost of Sales - Engineering Services

59,296

59,296

59,296

59,296

Gross Profit

425,788

160,379

265,409

1,065,143

324,066

741,077

Operating Expenses:

Research and Development

2,996,144

2,996,144

6,099,588

6,099,588

Selling and Marketing

1,850,595

1,850,595

3,914,584

3,914,584

General and Administrative

5,039,949

5,039,949

10,453,228

10,453,228

Depreciation and Amortization

540,081

(160,379)

379,702

963,012

(324,066)

638,946

Impairment of Patents and Trademarks

49,602

49,602

Total Operating Expenses

10,426,769

(160,379)

10,266,390

21,480,014

(324,066)

21,155,948

Loss From Operations

 

(10,000,981)

 

 

(10,000,981)

 

(20,414,871)

 

 

(20,414,871)

Total Other Expense, Net

(20,687)

(20,687)

(112,797)

(112,797)

Net Loss

$

(10,021,668)

$

$

(10,021,668)

$

(20,527,668)

$

$

(20,527,668)

Customer Concentrations

For the three months ended June 30, 2023, one customer represented 75% of total product revenue. For the three months ended June 30, 2022, one customer represented 45% of total product revenue.

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For the six months ended June 30, 2023, two customers represented 40% and 35% of total product revenue. For the six months ended June 30, 2022, one customer represented 24% of total product revenue.

As of June 30, 2023, two customers represented 58% and 23% of accounts receivable. As of December 31, 2022, one customer represented 26% of accounts receivable.

Treasury Stock

Treasury stock purchases are accounted for under the cost method whereby the entire cost of the acquired stock is recorded as treasury stock. Gains and losses on the subsequent re-issuance of shares will be credited or charged to paid-in capital in excess of par value using the average-cost method.

Recent Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (the “FASB”) issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326). ASU 2016-13 provides for a new impairment model which requires measurement and recognition of expected credit losses for most financial assets and certain other instruments, including but not limited to, accounts receivable. The Company adopted ASU 2016-13 effective on January 1, 2023. The adoption of this standard did not have a material impact on our consolidated financial statements.

Note 2 – Revenue Recognition and Contracts with Customers

Disaggregated Revenue

The Company’s total revenue was comprised of two major product lines: Smart Glasses Sales and Engineering Services. The following table summarizes the revenue recognized by major product line:

Three Months Ended

Six Months Ended

June 30, 

June 30, 

    

2023

    

2022

    

2023

    

2022

Revenues

 

  

 

  

 

  

 

  

Products Sales

$

4,425,162

$

2,898,892

$

8,616,523

$

5,401,944

Engineering Services

 

265,673

 

108,866

 

265,673

 

108,866

Total Revenue

$

4,690,835

$

3,007,758

$

8,882,196

$

5,510,810

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 that include an end-user 30-day right to return if not satisfied with product and general payment terms that are between Net 30 and 60 days. For our 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 Smart Glasses, Waveguides and Display Engines, and our OEM Products, 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 over time by using the input method measuring progress toward satisfying the performance obligations. Satisfaction of our performance obligations related to our engineering services is

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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 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 of our 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 extended warranties to customers, which extend 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.

The following table presents a summary of the Company’s sales by revenue recognition method as a percentage of total net sales for the six months ended June 30:

    

% of Total Net Sales

2023

 

2022

 

Point-in-Time

 

97%

%

98%

%

Over Time – Input Method

 

3%

%

2%

%

Total

 

100%

%

100%

%

Remaining Performance Obligations

As of June 30, 2023, the Company had approximately $80,000 of remaining performance obligations under a current waveguide development project, which represents the remainder of the total transaction price of approximately $800,000 under this development agreement, which commenced in 2022, less revenue recognized under percentage of completion to date. The Company expects to recognize the remaining revenue related to this project in the third quarter of 2023. Revenues earned less amounts invoiced at June 30, 2023 in the amount of $309,762 are reflected as Accrued Revenues in Excess of Billings in the accompanying Consolidated Balance Sheet.

The Company had no material outstanding performance obligations related to product sales, other than its standard product warranty.

Note 3 – Loss Per Share

Basic loss per share is computed by dividing the loss attributable to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution from the assumed exercise of stock options. During periods of net loss, all common stock equivalents are excluded from the diluted EPS calculation because they are anti-dilutive. Since the Company reported a net loss for the three and six months ended June 30, 2023 and 2022, the calculation for basic and diluted earnings per share is considered to be the same, as the impact of potential common shares is anti-dilutive. As of June 30, 2023 and 2022, there were 8,658,642 and 8,528,668 common stock share equivalents, respectively, potentially exercisable or issuable under conversion or exercise of stock options that could dilute basic earnings per share in the future.

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Note 4 – Inventories, Net

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

June 30, 

December 31, 

    

2023

    

2022

Purchased Parts and Components

$

9,780,977

$

10,399,527

Work-in-Process

 

518,460

 

344,242

Finished Goods

 

2,468,476

 

1,941,689

Less: Reserve for Obsolescence

 

(1,897,747)

 

(1,417,489)

Inventories, Net

$

10,870,166

$

11,267,969

Note 5 – Fixed Assets

Fixed Assets consisted of the following:

June 30, 

December 31, 

    

2023

    

2022

Tooling and Manufacturing Equipment

$

8,866,022

$

6,065,445

Leaseholds

 

1,472,898

 

826,329

Computers and Purchased Software

 

789,036

 

760,256

Furniture and Equipment

 

2,513,575

 

2,487,650

 

13,641,531

 

10,139,680

Less: Accumulated Depreciation

 

(6,827,526)

 

(6,261,175)

Fixed Assets, Net

$

6,814,005

$

3,878,505

During the six months ended June 30, 2023, the Company invested $2,774,513 in tooling and manufacturing equipment and leasehold improvements, mostly attributable to the Company’s new waveguide expansion project. Construction on the Company’s new facility began late in December 2022 and the Company expects the construction to be completed by the end of September 2023.

Total depreciation expense for fixed assets, not included in cost of sales, for the three months ended June 30, 2023, and 2022 was $111,934 and $111,943, respectively. Total depreciation expense for fixed assets, not included in cost of sales, for the six months ended June 30, 2023, and 2022 was $214,385 and $229,029, respectively.

Note 6 – Technology Licenses, Net