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Positive News Flow from Vuzix over Last 30 Days

08/08/2017


NASDAQ:VUZI
NYSE:DE

Summary

• Vuzix Corp (NASDAQ:VUZI), a leading supplier of smart glasses (wearable display devices) incorporating AR and VR technologies, is favorably positioned to benefit from the promising future pervasive use of wearable displays, especially in the enterprise, industrial and medical markets. 
• Recently, the company has had considerable positive news flow (7 press releases in the last 4 weeks). 
• Vuzix has partnered with Ubimax, a leading supplier of Wearable Augmented Reality products for enterprise solutions, to contribute to Ubimax’s Frontline software suite (xPick, xMake, xInspect, and xAssist). 
• DHL just announced the successful completion of its global Visual Picking pilot programs with average of productivity improvement of 15%. Vuzix has supplied smart glasses to all three pilot programs and is expected to benefit from DHL’s continued implementation of AR throughout its operations, along with the adoption of AR solutions by other logistics companies.
• Also just announced, Vuzix’s M300 smart glasses will be supported by VistaFinder Mx, a remote operations support system that allows the visual transmission of hands-free operational instructions and confirmation via AR technology. 
• Two weeks ago, Vuzix announced it had teamed up with Ubimax to continue to deliver smart glasses solutions to WS Kunststoff-Service. 
• Also, two weeks ago, Vuzix announced it had teamed up with Ubimax a smart-glasses vision picking solution for John Deere’s (NYSE:DE) machinery plant assembly line located in Mannheim Germany
• Three weeks ago, the company announced the transition of volume production of the M300 from a US-based contract manufacturer to China, reducing costs by 33%. 
• Also, three weeks ago, Vuzix released a major OS upgrade (OS 1.2) and a new SDK (Software Developer Kit) for the M300.

Headquartered in Rochester NY, Vuzix Corp (NASDAQ:VUZI) is a leading supplier of smart glasses to the enterprise space (e.g. industrial, construction, medical, retail, supply chain, etc.) and also to the consumer, media and entertainment markets. The company’s wearable display devices provide high-quality hardware platforms for deploying AR/VR (Augmented Reality/ Virtual Reality) technology for enterprise/industrial applications and for enabling consumer digital content viewing. 

The company was founded in 1997 (initially targeting on the defense industry, a division that sold in 2012) and today has 51 patents (U.S. and foreign) and 39 patents pending and is focused primarily on the enterprise space with M300 Augmented Reality smart glasses. The company utilizes Value Added Resellers (VARs) and system integrators to provide complete "turn-key" solutions to enterprise and commercial companies. The company’s consumer products generally are sold directly and through distributors, resellers and online stores, particularly internationally. 

Augmented Reality (AR) 

Wearable AR technology is disruptive innovation that empowers businesses to improve the productivity of certain employees by allowing them to complete their tasks faster with fewer errors and greater safety. By superimposing computer-generated digital information onto live real-world views, AR smart glasses have the potential to transform the existing ways of performing many enterprise functions and, as a result, to increase productivity significantly and meaningfully reduce operating expenses, especially in the areas of vision picking, assembly line output, employee training and communications.  

The enterprise space appears to be poised for the mass adoption of smart glasses as businesses perceive and adopt the benefits of AR technology for enhancing productivity and operational quality. Prospectively, this nascent industry could to become the next platform for communications, which, in part, may explain the market valuations for companies in the AR/VR space.

In early 2014, Vuzix launched the M100 AR (Augmented Reality) glasses into the enterprise market and in 2016 launched its next generation M300. Some of the M300’s technical features include Intel Atom processor running Android 6.0 Marshmallow, Bluetooth 4.1 connectivity, on-frame batteries, integrated GPS, 2-axis touch pad, 4 Android control buttons, 24-bit color monocular display, 13 megapixel still camera, noise canceling microphone, head-tracking sensors, among others. The recent OS 1.2 firmware update provides new features, along with optimizing several applications. Additional accessories are available, such as hot-swappable batteries, safety frame kit, headband, safety helmet mounts, to name a few.

Partners

Vuzix benefits from strategic partnerships with application developers (which add functionality to the company’s products and expands the potential customer base) and value-added resellers (which provide access to their existing customer bases and usually also supply support, maintenance and warranty services to end-users). Recent announcements confirm that the relationships with Ubimax and KDDI have deepened.

Ubimax Partnership

Though Vuzix has been working with Ubimax GmbH for years, on August 3rd, Vuzix announced that the company has teamed with Ubimax to contribute to Frontline, Ubimax’s suite of AR solutions, namely xPick, xMake, xInspect and xAssist.  Ubimax is a global market leader for AR solutions in the enterprise space with a substantial customer base. Frontline has already been deployed at many of Ubimax's 150+ customers, including some with Vuzix smart glasses (BMW, DHL, Daimler, Deere and WS Kunststoff-Service). Ubimax has been a VAR of Vuzix’s smart glasses for the European market since 2014 and now the relationship appears to have expanded dramatically.

KDDI Partnership

On July 25th, Vuzix announced that KDDI would support the Vuzix M300 with its remote operations support application (VistaFinder Mx aka Vist@Finder) that permits direct sound and video communications between support centers and the field.  VistaFinder Mx delivers AR images that overlay onto the real-time view from video transmissions of smart glasses. VistaFinder Mx also issues operational instructions through live audio and video streaming. The quality of video and audio network is particularly robust and stable. 

KDDI is one of Asia's largest telecommunications and information and communications technology (ICT) solution providers with annual revenues of approximately US$40 billion. The application is available in English, Japanese, Chinese and Korean enabling enhanced operational support at Far East subsidiaries. KDDI is also a VAR of Vuzix’s smart glasses. 

Successful Implementation of AR Solutions with M300s

DHL - Vision Picking

Having successfully completed three Vision Picking pilot test projects with AR smart glasses (2015 in the Netherlands, 2016 and 2017 across different industries in the United States, Continental Europe and the United Kingdom), DHL announced that Vision Picking is now “business-as-usual in warehouses around the globe” at DHL.  

All three reality pilot projects, which were conducted in live warehouse conditions, utilized Ubimax’s xPick software on Vuzix’s smart glasses (M100 and M300) or Google’s Glass Enterprise Edition units. The smart glasses provided visual displays of order picking instructions information on location of the items and where to place the items on a cart. Pickers were able work faster, more efficiently and comfortably with their hands free to handle items rather than paper instructions. The pilot trials achieved an average productivity of 15% with higher accuracy rates and lower training times.

Deere - Vision Picking 

On July 20th, Vuzix announced that John Deere (NYSE:DE) will utilize Vuzix’s M300 with Ubimax’s xPick in the vision picking solution implemented at its machinery plant assembly line located in Mannheim Germany. In a pilot program at Deere’s mixed-model tractor assembly line, productivity and quality targets were met after only two weeks as workers reduced the error rate to near zero. The AR solution was implemented in just three months and allowed workers free their hands in order to handle heavy tractor components. 

WS Kunststoff-Service – Vision Making & Visual Assist

On July 24th, Vuzix announced that WS Kunststoff-Service will further utilize Vuzix’s M300 and Ubimax’s xMake and xAssist in their multifaceted manufacturing operations. WS Kunststoff has been in the process of implementing AR smart glass solutions (xMake running on Vuzix smart glasses) beginning in 2014 across two their electrical component assembly lines. Since then, WS Kunststoff-Service has continued to employ additional wearable display devices for assembly and quality assurance in order to improve processes, boost production, reduce errors and simplify training. In addition, WS Kunststoff added xAssist for maintenance and inspection tasks, which allows for real-time consultation support at production line positions through a call and visual inspection through Vuzix M300 smart glasses. WS Kunststoff-Service continues to extend hands-free AR technology across its warehousing and assembly operations. 

Expanded Lower-cost Manufacturing Capability

On July 18th, Vuzix announced the completion of the transition of M300 volume manufacturing capability to operations in China from the existing US-based contract manufacturer. Initial production challenges have been overcome, and M300 production units have arrived from China and have been thoroughly tested. The company is on track to achieve a 33% reduction in manufacturing costs for the M300. A press release in February announced an agreement with Toshiba concerning a $1.1 million program for anticipated production deliveries of customized smart glasses beginning in the 4th quarter of 2017. Hopefully, Vuzix will take advantage of the lower-cost manufacturing capability when fulfilling the Toshiba agreement.

Vuzix

Vuzix has a decent balance sheet with positive working capital of $11.0 million and a current ratio of 4.46 as of March 31, 2017. Though Vuzix has the usual risks associated with many small-cap companies, such as a history of operating losses and the need for additional capital, management states that existing cash balances and cash flow are sufficient to operate for the next two quarters.  The company has wearable products that not only have been generating revenue, but appear to be leading edge smart glasses for the enterprise space. 

Management is executing its strategy to be the HMD (Head Mounted Device) leader in the enterprise space. If management successfully executes on this focused strategy, the company’s stock offers upside for investors. Currently, Vuzix has a market capitalization of approximately $119 million with 20.41 million shares outstanding.

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