ROCHESTER, N.Y., March 15, 2019 /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 fourth quarter and full year financial results
for the period ended December 31,
2018.
4Q2018 Highlights and Developments
- Total revenue for the fourth quarter ending December 31, 2018 increased 24%
year-over-year.
- Smart Glasses revenue for Q4-18, including Toshiba Smart
Glasses, increased 33% year-over-year.
- Gross profit of $0.3 million
versus a prior period loss of $0.3
million
- M300XL enterprise smart glasses announced and commenced
shipping across key accounts.
- Non-Compete agreement amended with Six15 Technologies, allowing
the Company to make sales directly to the first responder, security
organization, third-party defense supplier and military
markets.
- M300 follow-on order received from SATS to rollout and outfit
ramp handling operations with smart glasses at Changi Airport.
- Partnered with AccuWeather and Yelp, among others, to bring
popular apps to Blade.
- Delivered a commercial avionics waveguide-based head-mounted
display (HMD) system to a global Tier-1 aerospace firm; currently
negotiating a follow-on development project with this customer with
an expected commencement in 2019.
Recent Developments
- Entered into a 3-year master reseller agreement with Verizon;
Verizon to resell Vuzix Smart Glasses products including Vuzix
M300XL Smart Glasses and M-Series related accessories, Vuzix Blade
Smart Glasses and Vuzix Basics Video; the Company expects to start
receiving purchase orders under the master reseller agreement with
Verizon as early as the second quarter of 2019.
- Qualcomm XR1-powered M400 enterprise smart glasses introduced
at MWC in late February; Running Android 8.1, offering USB-C
connectivity and having a host of hardware improvements covering
nearly every major feature, the M400 will be the most innovative
and powerful set of enterprise smart glasses on the market.
- "Prosumer" version of Blade launched and commenced shipping;
regulatory market access expanded to 35 countries worldwide
including Japan.
- Toshiba Client Solutions placed follow-on OEM order of
approximately $1.0 million for M300C
enterprise smart glasses; product delivery is anticipated to occur
in the second quarter of 2019.
The following table compares condensed elements of the Company's
summarized Consolidated Statements of Operations data for the
quarters and years ended December 31,
2018 and 2017, respectively:
|
|
Three Months
Ended
December 31,
|
|
|
Twelve Months
Ended
December 31,
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales of
Products
|
|
$
|
1,838,640
|
|
|
$
|
1,545,946
|
|
|
$
|
7,692,102
|
|
|
$
|
4,548,689
|
|
Sales of Engineering
Services
|
|
|
140,850
|
|
|
|
50,783
|
|
|
|
402,266
|
|
|
|
989,064
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Sales
|
|
|
1,979,490
|
|
|
|
1,596,729
|
|
|
|
8,094,368
|
|
|
|
5,537,753
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Cost of
Sales
|
|
|
1,679,426
|
|
|
|
1,900,599
|
|
|
|
6,326,086
|
|
|
|
6,214,351
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Profit
(Loss)
|
|
|
300,064
|
|
|
|
(303,870)
|
|
|
|
1,768,282
|
|
|
|
(676,598)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and
Development
|
|
|
3,290,369
|
|
|
|
2,332,487
|
|
|
|
10,378,728
|
|
|
|
6,706,690
|
|
Selling and
Marketing
|
|
|
777,087
|
|
|
|
954,788
|
|
|
|
4,822,639
|
|
|
|
3,694,913
|
|
General and
Administrative
|
|
|
1,321,261
|
|
|
|
1,970,376
|
|
|
|
6,973,238
|
|
|
|
6,126,335
|
|
Depreciation and
Amortization
|
|
|
523,330
|
|
|
|
264,000
|
|
|
|
1,469,664
|
|
|
|
998,528
|
|
Impairment of
Software Development Costs
|
|
|
-
|
|
|
|
-
|
|
|
|
196,223
|
|
|
|
-
|
|
Gain (Loss) on
Inventory Revaluation and
Product
Discontinuance
|
|
|
-
|
|
|
|
-
|
|
|
|
(211,416)
|
|
|
|
1,151,482
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from
Operations
|
|
|
(5,611,983)
|
|
|
|
(5,825,521)
|
|
|
|
(21,860,794)
|
|
|
|
(19,354,546)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Other Income
(Expense)
|
|
|
48,124
|
|
|
|
(53,475)
|
|
|
|
(14,919)
|
|
|
|
(278,956)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Loss
|
|
$
|
(5,563,859)
|
|
|
$
|
(5,878,996)
|
|
|
$
|
(21,875,713)
|
|
|
$
|
(19,633,502)
|
|
Loss per Share
after accrued Preferred
Dividends
|
|
$
|
(0.22)
|
|
|
$
|
(0.29)
|
|
|
$
|
(0.87)
|
|
|
$
|
(1.02)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Management Commentary
"2018 was a year of continued product development and customer
engagement for Vuzix," said Paul
Travers, President and CEO of Vuzix. "On the product side,
we introduced an improved version of our M300 Smart Glasses with
the M300XL in November and advanced the development and production
of our Blade Smart Glasses and ecosystem to meet emerging
enterprise and consumer demand. As for customer engagements, we
experienced continuing growth over the past year and issued our
first quotations in the ten million plus dollar range. The
long-anticipated industry ramp of AR glasses finally seems to be at
hand and Vuzix is as well-positioned as any in the industry to
capitalize on it. Operationally, we continued to steadily grow our
top-line in our fourth quarter of 2018, achieving Q4 year-over-year
revenue growth of 24% on increased sales of our AR smart glasses,
and continued our ongoing evaluation of operating expenses to
ensure the most rapid path to profitability possible."
Fourth Quarter 2018 Financial Results
For the three months ended December 31,
2018, total revenues were $2.0
million, an increase of 24% over the comparable period in
2017, primarily the result of strong Smart Glasses sales, including
Toshiba Smart Glasses, which increased 33% over the comparative
period.
There was an overall gross profit of $0.3
million for the three months ended December 31, 2018 as compared to a gross loss of
$0.3 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 our Smart Glasses, lower inventory write-offs, and higher
total overall revenues on which to absorb the generally fixed
manufacturing overhead costs.
Research and Development (R&D) expense was $3.3 million for the three months ended
December 31, 2018 compared to
$2.3 million for the comparable 2017
period. The increase in R&D expense was primarily driven by
additional R&D staff hiring, development costs for the M400
Smart Glasses and an increase in external software development
costs for the Blade.
Selling and Marketing expense was $0.8
million for the three months ended December 31, 2018 compared to $1.0 million for the comparable 2017 period, a
reduction of approximately $0.2
million.
General and administrative expense for the three months ended
December 31, 2018 was $1.3 million versus $2.0
million in the prior year's period, a reduction of
approximately $0.7 million.
The net loss attributable to common stockholders after accrued
preferred share dividends for the three months ending December 31, 2018 was $6.0
million or $0.22 cents per
share versus a net loss of $6.3
million or $0.29 for the same
period in 2017.
Net cash operating loss after adding back non-cash adjustments
for the fourth quarter of 2018 was $4.5
million, generally consistent with the average quarterly
losses for the first three quarters of 2018. As of December 31, 2018, the Company maintained cash
and cash equivalents of $17.3 million
and an overall net working capital position of $22.7 million.
Full Year 2018 Financial Results
For the full year ended December 31,
2018 total revenues were $8.1
million, an increase of 46% over the comparable period in
2017. The increase in revenues for the year was primarily the
result of higher M-Series and Blade Smart Glasses sales, which
increased 55% over the comparative period, and secondarily to sales
of OEM Smart Glasses products, which added $1.0 million versus none in the prior year.
There was an overall gross profit of $1.8
million for the full year ended December 31, 2018 as compared to a gross loss of
$0.7 million for the same period in
2017. The $2.5 million
improvement in product gross profit for 2018 over 2017 reflects an
improved average selling price of Smart Glasses, elimination of the
iWear product line, lower inventory write-offs and higher total
overall revenues on which to absorb the generally fixed
manufacturing overhead costs.
Research and Development (R&D) expense was $10.4 million for the full year ended
December 31, 2018 compared to
$6.7 million for the comparable 2017
period. The increase in R&D expense was primarily driven
by additional R&D staff hiring, primarily for internal software
development, M400 and Blade product development costs and increased
external software development costs for the Blade Smart
Glasses.
Selling and Marketing expense was $4.8
million for the full year ended December 31, 2018 compared to $3.7 million for the comparable 2017 period.
General and administrative expense for the full year ended
December 31, 2018 was $7.0 million versus $6.1
million in the prior year's period.
The net loss attributable to common stockholders after accrued
preferred share dividends for the full year ending December 31, 2018 was $23.7 million or $0.87
cents per share versus a net loss of $21.3 million or $1.02 for the same period in 2017.
Net cash operating loss after adding back non-cash adjustments
for the full year of 2018 was $18.0
million as compared to the prior year's total of
$15.3 million.
Management Outlook
"We are well-positioned to achieve significant top line growth
in 2019, and, with planned operating expense reductions that are
being put in place, we expect to see a substantive reduction in our
cash burn for the year," said Paul
Travers, President and CEO of Vuzix. "While our quarterly
results will always be somewhat dependent on the timing of certain
customer orders, we are confident that the nature and magnitude of
our business is poised to change significantly. Clearly, overall
industry momentum is building in reality rather than theory as
potential customers recognize the payback of AR glasses and
increasingly gravitate toward the most wearable and functional
products. In this regard, we expect strong growth for
enterprise sales of our M-series Smart Glasses in 2019, with the
potential to close and deliver against a number of much larger
deployment orders that have been in the works for quite some time.
Additionally, we expect to continue to ramp production of the
Blade, grow the application and partner ecosystem and sell
significantly more units in 2019 than we did in 2018. And lastly,
we expect to expand both new and existing OEM relationships as the
year progresses, ultimately leading to new and growing sources of
revenue."
Conference Call Information
Date: Friday, March 15, 2019
Time: 9:00 a.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
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
fourth quarter and full year ended December
31, 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 March 15, 2019, at approximately 10:00 a.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 13688551.
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 augmented reality. Vuzix holds 144 patents
and 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 2019 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.
Investor Relations Contact
Ed McGregor, Director of 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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SOURCE Vuzix Corporation