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| Statement |
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| And we are positioned to be one of the leading suppliers of the critical OEM components and a highly profitable one at that |
| We expect these transformation actions can produce many benefits, and our actions will include improving the economics of our smart glasses business, resulting in improved growth margins and reducing operating costs in absolute terms and as a percentage of revenue, implementing a headcount freeze throughout the organization after our last several years of additional operating cost investments |
| To quickly recap, we feel that Vuzix is one of the outstanding leaders in the AR industry today, and it is evident in multiple areas |
| Our recently opened state-of-the-art manufacturing plant for optical waveguides with significantly increased capacity is another solid foundation to further enable Vuzix to be the preeminent supplier of optical waveguides for our own internal production needs and our third-party OEM customers |
| We believe our enterprise has a long-term incredible value and IP and that we are in the throes of leveraging it to become the leading supplier in a market that is touted to equal or exceed the mobile phone market |
| Our OEM business continues gaining momentum |
| And these glasses work way better than hearing aids for people that have bad enough, severe enough hearing impairments |
| And in fact, we could even lower some of the infrastructure that we have right now, bring it more aligned and still deliver very, very well for the customer base |
| Quite frankly, Vuzix has got a great infrastructure to deliver way beyond even what the current run rates are |
| We expect these adjustments will not only better support our growing customer base in all parts of our business, but also extend our operational runway and improve enterprise product margins |
| We have a bullish stance on the future, and we're focused on realigning our company to become more efficient, lower our cost operating burn, and put ourselves on a faster and more visible path to profitability |
| The Vuzix patent portfolio continues to expand and currently includes 346 patents and patents pending, an impressive 50% increase over the last 24 months |
| Bottom line, we feel Vuzix has a strong intellectual property position which will be able to create a significant value for us across solutions including waveguides, micro display engines, full systems, white label products, and of course enterprise AR smart glasses |
| This state-of-the-art manufacturing plant is a one-of-a-kind facility that increases our waveguide unit capacity, lowers manufacturing costs, and allows us to utilize the more advanced processes needed for our latest waveguide designs |
| This should allow us to reallocate resources to focus on important investments in what we do uniquely and gives us a competitive advantage |
| But, you know, we think we got good opportunities to reduce costs and our future products are spending even more time to improve the gross margins going forward on future generations |
| Displays that have the potential to upend the entire micro-display industry with very compact full-color, exceptional brightness, and all-day battery performance that can be incorporated in a fashion-forward smart glasses form factor that everyone will want to wear |
| Suffice to say Atomistic's technology has great potential to create incredibly advanced full-color, high-efficiency micro LED displays |
| Most importantly, we feel we are positioned well to win and see significant growth, especially considering we are a company that is cornerstone to a market touted by industry experts to ultimately be greater than $1 trillion plus within a decade |
| The Atomistic team is making excellent progress against multiple key milestones |
| We believe our technology partnership with Atomistic that is developing new micro LED technology that will address these fundamental market requirements is much better than others |
| We believe our increased capacity, lower cost waveguide offerings, And our ongoing investments in next generation micro LED displays will fortify Vuzix's position to play a critical role in an industry that should ultimately represent many billions of dollars of revenue annually |
| Atomistic with its revolutionary applied material science and unique atomic structure approach with the focus on required fundamental material characteristics has been operating under stealth mode out of the public eye for the last 24 months and it is making great progress on many fronts |
| We now believe this longer-term strategy is the most cost-efficient path while allowing Vuzix to best address the growth we are confident is coming in the overall smart glasses enterprise space |
| So our Q4 still looks like it's a great, going to be a fine quarter for us |
| Despite the soft third quarter revenue, I am pleased to report that we have our largest pipeline of smart glasses sales opportunities in the company's history |
| The combination of AI and smart glasses have created a new value proposition and business opportunities for smart glasses |
| Vuzix fields a family of competitive solutions within the enterprise smart glasses space and expects to win and maintain a meaningful share of this market as it ramps and ultimately grows our annual revenues to the hundreds of millions and potentially up to in excess of $1 billion annually |
| We will strive to operate more efficiently and expect to create durable savings to fund investments in our key technologies and product capabilities |
| Vuzix INCOGNITO manages internal light reflection, minimizes and manages forward light leakage within a waveguide, enhances low light optical performance, significantly advances Vuzix already industry leading forward light ratio of 1 to 8 improves the contrast of virtual images in AR glasses, and interaction with the external environment |
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| The revenue decline was primarily the result of lower smart glass product sales, which fell 46% year-over-year |
| Expected third quarter revenue related to our OEM business was also negatively impacted by macroeconomic business conditions, specifically with a few large corporations having delayed their investments in new technology in favor of maximizing their current earnings and cash flows |
| During the quarter, we saw lower than planned smart glasses sales, primarily due to the order placement timing associated with several larger channel partner deals |
| It's just, you know, it's taking a little bit longer as usual, which is frustrating in that side of the space |
| Our third quarter total revenues for the three months ended September 30th, 2023, was $2.2 million as compared to $3.4 million for the prior period in 2022, an overall decrease of 36% |
| But the current market technology approach, primarily using GaN, gallium nitride, and gallium arsenide material systems has its challenges with cost, scalability, power efficiency, and spectral performance that is constraining existing micro LED cost, manufacturability and performance |
| At this time, we feel that several anticipated product orders from direct and channel partner customers were delayed a quarter or two as opposed to being cancelled |
| Just in the veterans of the world in America, there are 3.5 half million folks that have hearing impairment problems |
| 9 million for the three month ended September 30, 2023 versus $3.4 million for the comparable 2022 period, a decrease of approximately 15% |
| 9 million for the comparable 2022 period, a decrease of approximately 8% |
| The decline was due to lower sales volumes, resulting in higher overall cost of sales as a percentage of revenues due to lower absorption of fixed manufacturing overhead costs over a reduced sales base |
| There was an overall gross loss of 0.2 million for the three month end of September 30th, 2023, as compared to a gross profit of 0.9 million for the same period in 2022 |
| We're not seeing the business going away at all |
| Actual results could differ materially from those contemplated by any forward-looking statements as a result of certain factors, including, but not limited to, general economic and business conditions, competitive factors, changes in business strategy or development plans, the ability to attract and retain qualified personnel as well as changes in the legal and regulatory requirements |
| The net loss for the three months ended September 30th, 2023, was $11 million or $0.17 per share versus the net loss of $9.5 million or $0.15 per share for the same period in 2022 |
| But there is nobody in the warehousing and supply chain side of the business that is saying, we're not doing this |
| And as a result, we'll have a profound impact on the AR micro display market and beyond |
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