Material Impairments Form 8 K

Item 2.06 Material Impairments.

Vuzix Corporation (the "Company") made the decision to cease further funding its development activities with Atomistic SAS ("Atomistic") under the license agreement, dated December 16, 2022, among the Company, Atomistic, and Atomistic's two principals (the "License Agreement"). The Company is supportive of the technical path of the technologies that were subject to the License Agreement and the potential future of Atomistic. The Company's decision gave Atomistic the right under the License Agreement to terminate the Granted License (as defined under the License Agreement), which right Atomistic exercised on July 1, 2024. Notwithstanding the termination of the Granted License, the Company will be entitled to certain License Royalties (as defined under the License Agreement) from Atomistic if it licenses the technology that was the subject of the Granted License.

The Company will retain an equity interest in Atomistic, the right to appoint a member to the Atomistic board of directors and certain other rights as an equity owner pursuant to the stock purchase agreement and shareholders' agreement entered into in connection with the License Agreement. The Company's equity interest in Atomistic entitles it to a preferential allocation to 49% of the distributable amounts in the event of a liquidation event of Atomistic.

As a result of the termination of the Granted License, on July 1, 2024, the Company's chief financial officer concluded that the Company will be required to incur a material charge for impairment under generally accepted accounting principles, up to the aggregate amount of $32.2 million, including $26.5 million for technology licenses, and $5.7 million for the Company's investment in Atomistic. The Company anticipates that the impairment charge will not result in any future cash expenditures.