ROCHESTER, N.Y., Nov. 8, 2018 /CNW/ -- Vuzix® Corporation (NASDAQ:
VUZI), ("Vuzix" or, the "Company"), a leading supplier of Smart
Glasses and Augmented Reality (AR) technologies and products, today
reported its third quarter financial results for the period ended
September 30, 2018.
Third Quarter 2018 Financial Results
For the three
months ended September 30, 2018 total
revenues were $1.9 million, an
increase of 37% over the comparable period in 2017. The increase in
revenues for the 2018 quarter was primarily the result of strong
M300 Smart Glasses sales, which increased 56% over the comparative
period.
There was an overall gross profit of $0.6
million for the three months ended September 30, 2018 as compared to a gross loss of
$0.1 million for the same period in
2017. The product gross profit improvement for the 2018 period
over the 2017 period reflects an improved average selling price of
Smart Glasses and higher total overall revenues on which to absorb
the generally fixed manufacturing overhead costs.
Research and Development (R&D) expense was $2.5 million for the three months ended
September 30, 2018 compared to
$1.5 million for the comparable 2017
period. The increase in R&D expense was primarily driven
by additional R&D staff hiring and an increase in software
development costs for the new Blade Smart Glasses.
Selling and Marketing expense was $1.0
million for the three months ended September 30, 2018 compared to $0.9 million for the comparable 2017 period.
General and administrative expense for the three months ended
September 30, 2018 was $1.7 million versus $1.6
million in the prior year's period.
The net loss attributable to common stockholders after accrued
preferred share dividends for the three months ending September 30, 2018 was $5.3 million or $0.19
cents per share versus a net loss of $5.9 million or $0.28 for the same period in 2017.
Net cash operating loss after adding back non-cash adjustments
for the third quarter of 2018 was $3.9
million as compared to first and second quarter 2018 cash
usage of $4.6 million and
$5.0 million, respectively. As of
September 30, 2018, the Company
maintained cash and cash equivalents of $23.5 million and an overall working capital
position of $29.8 million.
Recent Developments
- Vuzix, beginning this October, is now able to pursue product
sales to first responders, defense and security organizations, and
suppliers to military organizations through the amended non-compete
agreement with Six15 Technologies;
- Vuzix is already actively engaged and moving forward with
several large defense suppliers on opportunities related to first
responders and homeland defense, as well as for inclusion of the
Company's waveguide optics and related technologies into
waveguide-based HMD systems for ground vehicles and aircraft;
- Vuzix made an investment in WakingApp Ltd., a private company
that is in the augmented reality software tool market, and entered
into a commercial agreement with WakingApp such that WakingApp
would provide full support for the Company's AR products through
the WakingApp AR software tool and licenses, providing Vuzix
developers with access to the tool;
- Vuzix has been engaged in ongoing discussions with the Toshiba
Client Services and expects the remaining OEM product purchase
obligations of $228,000 to be
recognized as sales in the fourth quarter of 2018;
- Launched the Vuzix Blade Smart Glasses Commercial Edition
including the release of the Commercial Edge Software Suite and the
Vuzix Blade Companion App for Google Play (Android) and the App
Store (iOS) smart phone users;
- M300 Smart Glasses new customer pilot programs now exceed
1,000, almost triple the level reported in December 2017;
- M300 Smart Glasses follow-on order was placed to outfit further
ramp handling operations at Changi Airport; 400 units were shipped
in the third quarter and the remaining 200 units related to this
order are expected to ship in the fourth quarter; and
- Engineering services work with a global aerospace firm to
develop a customized commercial avionics waveguide-based HMD system
is progressing well; the waveguide-based head mounted display
system project is expected to be completed and delivered to our
customer in the fourth quarter, which will represent the balance of
$141,000 in engineering services upon
completion.
The following table compares condensed elements of the Company's
summarized Consolidated Statement of Operations data for the
quarters ended September 30, 2018 and
2017, respectively:
|
|
|
For 3
Months Ended September 30,
|
|
|
|
2018
|
|
|
2017
|
Sales:
|
|
|
|
|
|
|
Sales of
Products
|
|
|
$
|
1,842,500
|
|
|
$
|
1,138,413
|
Sales of Engineering
Services
|
|
|
|
80,900
|
|
|
|
266,687
|
|
|
|
|
|
|
|
|
|
Total
Sales
|
|
|
|
1,923,400
|
|
|
|
1,405,100
|
|
|
|
|
|
|
|
|
|
Total Cost of
Sales
|
|
|
|
1,302,480
|
|
|
|
1,497,101
|
|
|
|
|
|
|
|
|
|
Gross Profit
(Loss)
|
|
|
|
620,920
|
|
|
|
(92,001)
|
Operating
Expenses:
|
|
|
|
|
|
|
|
|
Research and
Development
|
|
|
|
2,468,449
|
|
|
|
1,506,307
|
Selling and
Marketing
|
|
|
|
966,294
|
|
|
|
908,797
|
General and
Administrative
|
|
|
|
1,666,596
|
|
|
|
1,612,542
|
Depreciation and
Amortization
|
|
|
|
377,724
|
|
|
|
251,366
|
Impairment of
Software Development Cost
|
|
|
|
196,223
|
|
|
|
-
|
(Gain) Loss on
Inventory Revaluation and Product Discontinuance
|
|
|
|
(211,416)
|
|
|
|
1,151,482
|
|
|
|
|
|
|
|
|
|
Loss from
Operations
|
|
|
|
(4,842,950)
|
|
|
|
(5,522,495)
|
|
|
|
|
|
|
|
|
|
Total Other Income
(Expense)
|
|
|
|
45,194
|
|
|
|
20,253
|
|
|
|
|
|
|
|
|
|
Net
Loss
|
|
|
|
(4,797,756)
|
|
|
|
(5,502,242)
|
Loss per Share
after accrued Preferred
Dividends
|
|
|
$
|
(0.19)
|
|
|
$
|
(0.28)
|
Management Commentary
"We achieved our third period of
year-over-year top-line growth this quarter and our nine-month
revenues for 2018 have already surpassed our total for all of
2017," said Paul Travers, President
and CEO of Vuzix. "Our M300 Smart Glasses new customer pilot count
has now expanded to over 1,000 and with more pilots converting into
deployments, leading to repeat orders, and we are now beginning to
see the realization of these primary growth drivers in our sales
results. The feedback we continue to receive from our Vuzix
Integration Partners (VIPs) and end customers for this product is
very positive and gives us increasing confidence that we are
building an industry-leading smart glasses franchise on the
enterprise side. We also continued to make solid progress with the
Vuzix Blade in the third quarter in terms of both software
development and growing Blade product shipments to our enterprise
customers and developer community. Just this week, we launched the
Blade Commercial Edge edition, which opens up a broader range of
features not previously available and effectively makes the Blade a
fully deployable enterprise product today. Regarding our waveguide
optics business, the Company continues to nurture its relationships
with numerous tier-1 OEM customers, the most notable last quarter
being the one we announced in September with a global aerospace
firm to develop a customized commercial avionics waveguide-based
HMD system."
Management Outlook
"Entering our final quarter of 2018
and looking forward to 2019 and beyond, we believe that our future
is both bright and exciting," said Paul
Travers, President and CEO of Vuzix. "First, we feel we are
well positioned to become a key supplier of AR smart glasses to the
enterprise community. Enterprise customers including VIPs continue
to place follow-on M300 orders and we have begun responding to
competitive RFPs for as much as 15K+ pieces. Second, we strongly
believe that the Vuzix Blade is poised to be a highly disruptive
force in the market. Production is steadily ramping in our
fourth quarter of 2018. The Vuzix Blade, with its planned new
levels of performance and functionality, should make it the product
of choice for a broad range of commercial enterprise applications,
and of course an ever-expanding base of potential consumers who see
the utility and have the desire to leave their phone in their
pocket. We remain very excited about the prospects for Vuzix and
believe that the fourth quarter will be one of our strongest to
date, and one that sets the stage for rapid acceleration of our
performance as AR industry growth finally begins to hit its next
inflection point in 2019 enabled by the broader ecosystem
development that we are seeing currently."
Conference Call Information
Date: Thursday, November 8, 2018
Time: 4:15 p.m. Eastern Time (ET)
Dial-in Number for U.S. & Canadian Callers: 877-709-8150
Dial-in Number for International Callers (Outside of the U.S. &
Canada): 201-689-8354
Conference ID: 13684859
Participating on the call will be Vuzix' Chief Executive Officer
and President Paul Travers and Chief
Financial Officer Grant Russell, who
together will discuss operational and financial highlights for the
third quarter ended September 30,
2018.
To join the live conference call, please dial into the above
referenced telephone numbers five to ten minutes prior to the
scheduled conference call time.
A replay will be available for 30 days, starting on November 8th, 2018, at approximately 5:30 p.m. (ET). To access the replay, please dial
877-660-6853 within the U.S. or Canada, or 201-612-7415 for international
callers. The conference ID# is 13684859.
About Vuzix Corporation
Vuzix is a leading supplier of
Smart-Glasses and Augmented Reality (AR) technologies and products
for the consumer and enterprise markets. The Company's products
include personal display and wearable computing devices that offer
users a portable high-quality viewing experience, provide solutions
for mobility, wearable displays and virtual and augmented reality.
Vuzix holds 62 patents and 71 additional patents pending and
numerous IP licenses in the Video Eyewear field. The Company has
won Consumer Electronics Show (or CES) awards for innovation for
the years 2005 to 2018 and several wireless technology innovation
awards among others. Founded in 1997, Vuzix is a public company
(NASDAQ: VUZI) with offices in Rochester,
NY, Oxford, UK,
Barcelona, Spain and Tokyo, Japan.
Forward-Looking Statements Disclaimer
Certain
statements contained in this news release are "forward-looking
statements" within the meaning of the Securities Litigation Reform
Act of 1995 and applicable Canadian securities laws.
Forward-looking statements contained in this release relate to,
among other things, the timing of new product releases, R&D
project successes, smart glass pilot to roll-out conversion rates,
future operating results, and the Company's leadership in the Smart
Glasses and AR display industry. They are generally identified by
words such as "believes," "may," "expects," "anticipates," "should"
and similar expressions. Readers should not place undue reliance on
such forward-looking statements, which are based upon the Company's
beliefs and assumptions as of the date of this release. The
Company's actual results could differ materially due to risk
factors and other items described in more detail in the Company's
Annual Reports and other filings with the United States Securities
and Exchange Commission and applicable Canadian securities
regulators (copies of which may be obtained at www.sedar.com or
www.sec.gov). Subsequent events and developments may cause these
forward-looking statements to change. The Company specifically
disclaims any obligation or intention to update or revise these
forward-looking statements as a result of changed events or
circumstances that occur after the date of this release, except as
required by applicable law.
Media and Investor Relations Contact:
Matt Margolis, Director of
Corporate Communications and Investor Relations, Vuzix Corporation
matt_margolis@vuzix.com Tel: (585) 359-5952
Ed McGregor, Director of
Institutional Investor Relations, Vuzix Corporation
ed_mcgregor@vuzix.com Tel: (585) 359-5985
Vuzix Corporation, 25 Hendrix Road, Suite A, West Henrietta, NY 14586 USA,
Investor Information – IR@vuzix.com www.vuzix.com
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