UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Quarterly Period Ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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(Exact name of registrant as specified in its charter)
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Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
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| Capital Market |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.
☒ | Accelerated filer | ☐ | Non-accelerated filer | ☐ | |
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Smaller reporting company | Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in rule 12b-2 of the Exchange Act). Yes
As of August 9, 2022, there were
Vuzix Corporation
INDEX
2
Part 1: FINANCIAL INFORMATION
Item 1: Consolidated Financial Statements
VUZIX CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited) |
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June 30, | December 31, | |||||
| 2022 |
| 2021 | |||
ASSETS |
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Current Assets |
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Cash and Cash Equivalents | $ | | $ | | ||
Accounts Receivable |
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Accrued Revenues in Excess of Billings |
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Inventories, Net |
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Manufacturing Vendor Prepayments |
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Prepaid Expenses and Other Assets |
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Total Current Assets |
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Long-Term Assets |
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Fixed Assets, Net |
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Operating Lease Right-of-Use Asset | | | ||||
Patents and Trademarks, Net |
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Technology Licenses, Net |
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Intangible Asset, Net |
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Other Assets, Net |
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Total Assets | $ | | $ | | ||
LIABILITIES AND STOCKHOLDERS' EQUITY |
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Current Liabilities |
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Accounts Payable | $ | | $ | | ||
Unearned Revenue |
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Accrued Expenses |
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Licensing Fees Commitment |
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Income and Other Taxes Payable |
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Operating Lease Right-of-Use Liability | | | ||||
Total Current Liabilities |
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Long-Term Liabilities | ||||||
Operating Lease Right-of-Use Liability | | | ||||
Licensing Fees Commitment | | — | ||||
Total Long-Term Liabilities | | | ||||
Total Liabilities |
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Stockholders' Equity |
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Common Stock - $ |
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Additional Paid-in Capital |
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Accumulated Deficit |
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Treasury Stock, at cost, |
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Total Stockholders' Equity |
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Total Liabilities and Stockholders' Equity | $ | | $ | |
The accompanying notes are an integral part of these consolidated financial statements.
3
VUZIX CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(Unaudited)
Preferred Stock | Common Stock | Additional | Accumulated | Treasury Stock | ||||||||||||||||||||
| Shares |
| Amount |
| Shares |
| Amount |
| Paid-In Capital |
| Deficit |
| Shares |
| Amount |
| Total | |||||||
Balance - January 1, 2022 | — | $ | — |
| | $ | | $ | | $ | ( | — | $ | — | $ | | ||||||||
Stock-Based Compensation Expense |
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Stock Option Exercises |
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Purchases of Treasury Stock |
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Net Loss |
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Balance - June 30, 2022 |
| — | $ | — |
| | $ | | $ | | $ | ( |
| ( | $ | ( | $ | |
Preferred Stock | Common Stock | Additional | Accumulated | Treasury Stock | ||||||||||||||||||||
| Shares |
| Amount |
| Shares |
| Amount |
| Paid-In Capital |
| Deficit |
| Shares |
| Amount |
| Total | |||||||
Balance - April 1, 2022 | — | $ | — |
| | $ | | $ | | $ | ( | ( | $ | ( | $ | | ||||||||
Stock-Based Compensation Expense |
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Stock Option Exercises |
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Net Loss |
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Balance - June 30, 2022 |
| — | $ | — |
| | $ | | $ | | $ | ( |
| ( | $ | ( | $ | |
Preferred Stock | Common Stock | Additional | Accumulated | Treasury Stock | ||||||||||||||||||||
| Shares |
| Amount |
| Shares |
| Amount |
| Paid-In Capital |
| Deficit |
| Shares |
| Amount |
| Total | |||||||
Balance - January 1, 2021 | | $ | |
| | $ | | $ | | $ | ( | — | $ | — | $ | | ||||||||
Stock-Based Compensation Expense (as Restated) |
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Stock Option Exercises |
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Stock Warrant Exercises |
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Proceeds from Common Stock Offering |
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Direct Costs of Common Stock Offering |
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Shares Redeemed to Cover Employee Tax Withholdings |
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Stock Issued for Technology License Purchase |
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Preferred Stock Converted & Preferred Dividend Settlement | ( | ( | | | ( | — | — | — | ( | |||||||||||||||
Net Loss (as Restated) |
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Balance - June 30, 2021 (as Restated) |
| — | $ | — |
| | $ | | $ | | $ | ( |
| — | $ | — | $ | |
Preferred Stock | Common Stock | Additional | Accumulated | Treasury Stock | ||||||||||||||||||||
| Shares |
| Amount |
| Shares |
| Amount |
| Paid-In Capital |
| Deficit |
| Shares |
| Amount |
| Total | |||||||
Balance - April 1, 2021 | — | $ | — |
| | $ | | $ | | $ | ( | — | $ | — | $ | | ||||||||
Stock-Based Compensation Expense (as Restated) |
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Stock Option Exercises |
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Stock Warrant Exercises |
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Proceeds from Common Stock Offerings |
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Direct Costs of Common Stock Offerings |
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Stock Issued for Technology License Purchase | — | — | | | | — | — | — | | |||||||||||||||
Net Loss (as Restated) |
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Balance - June 30, 2021 (as Restated) |
| — | $ | — |
| | $ | | $ | | $ | ( |
| — | $ | — | $ | |
The accompanying notes are an integral part of these consolidated financial statements.
4
VUZIX CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
(as Restated) | (as Restated) | |||||||||||
| 2022 |
| 2021 |
| 2022 |
| 2021 | |||||
Sales: |
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Sales of Products | $ | | $ | | $ | | $ | | ||||
Sales of Engineering Services |
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Total Sales |
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Cost of Sales: |
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Cost of Sales - Products Sold |
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Cost of Sales - Engineering Services |
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Total Cost of Sales |
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Gross Profit (exclusive of depreciation shown separately below) |
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Operating Expenses: |
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Research and Development |
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Selling and Marketing |
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General and Administrative |
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Depreciation and Amortization |
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Loss on Fixed Asset Disposal |
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Impairment of Patents and Trademarks |
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Total Operating Expenses |
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Loss From Operations |
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Other Income (Expense): |
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Investment Income |
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Income and Other Taxes |
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Foreign Exchange Loss |
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Total Other Expense, Net |
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Loss Before Provision for Income Taxes |
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Provision for Income Taxes |
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Net Loss |
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Basic and Diluted Loss per Common Share | ( | ( | ( | ( | ||||||||
Weighted-average Shares Outstanding - Basic and Diluted |
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The accompanying notes are an integral part of these consolidated financial statements.
5
VUZIX CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended June 30, | ||||||
(as Restated) | ||||||
| 2022 |
| 2021 | |||
Cash Flows from Operating Activities |
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Net Loss | $ | ( | $ | ( | ||
Non-Cash Adjustments |
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Depreciation and Amortization |
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Amortization of Software Development Costs and Prepaid Licenses in Cost of Sales - Products |
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Stock-Based Compensation |
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Impairment of Patents and Trademarks |
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Loss on Fixed Asset Disposal |
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(Increase) Decrease in Operating Assets |
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Accounts Receivable |
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Accrued Revenues in Excess of Billings | ( | — | ||||
Inventories |
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Manufacturing Vendor Prepayments |
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Prepaid Expenses and Other Assets |
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Increase (Decrease) in Operating Liabilities |
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Accounts Payable |
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Accrued Expenses |
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Unearned Revenue |
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Income and Other Taxes |
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Net Cash Flows Used in Operating Activities |
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Cash Flows from Investing Activities |
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Purchases of Fixed Assets |
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Investments in Patents and Trademarks |
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Investments in Licenses, Intangible and Other Assets |
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Net Cash Flows Used in Investing Activities |
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Cash Flows from Financing Activities |
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Proceeds from Exercise of Warrants |
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Proceeds from Exercise of Stock Options |
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Proceeds from Common Stock Offering, Net | — | | ||||
Purchases of Treasury Stock | ( | — | ||||
Preferred Dividend Settlement Payment |
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Employee Tax Withholdings Payment |
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Net Cash Flows (Used in) Provided from Financing Activities |
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Net (Decrease) Increase in Cash and Cash Equivalents |
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Cash and Cash Equivalents - Beginning of Period |
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Cash and Cash Equivalents - End of Period | $ | | $ | | ||
Supplemental Disclosures |
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Unamortized Common Stock Expense included in Prepaid Expenses and Other Assets | $ | | $ | | ||
Non-Cash Investment in Licenses | | | ||||
Stock-Based Compensation Expense - Expensed less Previously Issued | ( | |
The accompanying notes are an integral part of these consolidated financial statements.
6
VUZIX CORPORATION
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Note 1 – Basis of Presentation
The accompanying unaudited consolidated financial statements of Vuzix Corporation (“the Company” or “Vuzix”) have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Regulation S-X of the Securities and Exchange Commission (the “SEC”). Accordingly, the unaudited consolidated financial statements do not include all information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Certain re-classifications may have been made to prior periods to conform with current reporting. The results of the Company’s operations for the three and six months ended June 30, 2022 are not necessarily indicative of the results of the Company’s operations for the full fiscal year or any other period.
The accompanying interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto of the Company as of and for the year ended December 31, 2021, as reported in the Company’s Annual Report on Form 10-K filed with the SEC on March 2, 2022.
Restatement
As described in additional detail in Note 14 to the financial statements included in its 2021 Form 10-K, the Company restated its previous unaudited quarterly results in the Form 10-K for the year ended December 31, 2021. Previously filed 2021 quarterly reports on Form 10-Q for the periods affected by the restatement were not amended. See Note 14, Long-Term Incentive Plan and Note 19, Quarterly Financial Information (Unaudited) of the Notes to the consolidated financial statements in the 2021 Form 10-K for the impact of these adjustments on each of the quarterly periods in fiscal year 2021.
The effect of these changes on non-cash stock-based compensation expense included in 2021 unaudited quarterly operating results was as follows:
| Three Months Ended |
| Six Months Ended | |
Additional Paid-in Capital | Increase of $ | Increase of $ | ||
Research and Development Expense | Increase of $ | Increase of $ | ||
Sales and Marketing | Increase of $ | Increase of $ | ||
General and Administrative | Increase of $ | Increase of $ | ||
Net Loss | Increase of $ | Increase of $ | ||
Loss per Share | Increase of $ | Increase of $ |
Customer Concentrations
For the three months ended June 30, 2022,
For the six months ended June 30, 2022,
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As of June 30, 2022,
Treasury Stock
Treasury stock purchases are accounted for under the cost method whereby the entire cost of the acquired stock is recorded as treasury stock. Gains and losses on the subsequent reissuance of shares will be credited or charged to paid-in capital in excess of par value using the average-cost method.
Recent Accounting Pronouncements
In June 2016, the Financial Accounting Standards Board (the “FASB”) issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326). ASU 2016-13 provides for a new impairment model which requires measurement and recognition of expected credit losses for most financial assets and certain other instruments, including but not limited to accounts receivable. ASU 2016-13 will become effective for the Company on January 1, 2023 and early adoption is permitted. The Company does not anticipate that the adoption of this standard will have a material impact on our consolidated financial statements.
Note 2 – Revenue Recognition and Contracts with Customers
Disaggregated Revenue
The Company’s total revenue was comprised of
Three Months Ended | Six Months Ended | |||||||||||
June 30, | June 30, | |||||||||||
| 2022 |
| 2021 |
| 2022 |
| 2021 | |||||
Revenues |
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Smart Glasses Sales | $ | | $ | | $ | | $ | | ||||
Engineering Services |
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Total Revenue | $ | | $ | | $ | | $ | |
Significant Judgments
Under Topic 606 “Revenue from Contracts with Customers”, we use judgments that could potentially impact both the timing of our satisfaction of performance obligations and our determination of transaction prices used in determining revenue recognized by major product line. Such judgments include considerations in determining our transaction prices and when our performance obligations are satisfied for our standard product sales that include an end-user 30-day right to return if not satisfied with product and general payment terms that are between Net 30 and 60 days. For our engineering services, performance obligations are recognized over time using the input method and the estimated costs to complete each project are considered significant judgments.
Performance Obligations
Revenues from our performance obligations are typically satisfied at a point in time for Smart Glasses, Waveguides and Display Engines, and our OEM Products, which are recognized when the customer obtains control and ownership, which is generally upon shipment. The Company also records revenue for performance obligations relating to our engineering services over time by using the input method to measure the progress toward satisfying the performance obligations. Satisfaction of our performance obligations related to our engineering services is measured by the Company’s costs incurred as a percentage of total expected costs to project completion as the inputs of actual costs incurred by the Company are directly correlated with progress toward completing the contract. As such, the Company
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believes that our methodologies for recognizing revenue over time for our engineering services correlate directly with the transfer of control of the underlying assets to our customers.
Our standard product sales include a
The following table presents a summary of the Company’s sales by revenue recognition method as a percentage of total net sales for the six months ended June 30, 2022:
| % of Total Net Sales | ||||
2022 |
| 2021 |
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Point-in-Time |
| | % | | % |
Over Time – Input Method |
| | % | | % |
Total |
| | % | | % |
Remaining Performance Obligations
As of June 30, 2022, the Company had $
The Company had no material outstanding performance obligations related to product sales, other than its standard product warranty.
Note 3 – Loss Per Share
Basic loss per share is computed by dividing the loss attributable to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution from the assumed exercise of stock options and warrants, and the conversion of convertible preferred shares. During periods of net loss, all common stock equivalents are excluded from the diluted EPS calculation because they are anti-dilutive. Since the Company reported a net loss for the three and six months ended June 30, 2022 and 2021, the calculation for basic and diluted earnings per share is considered to be the same, as the impact of potential common shares is anti-dilutive. At June 30, 2022 and 2021, there were
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Note 4 – Inventories, Net
Inventories are stated at the lower of cost and net realizable value, and consisted of the following:
June 30, | December 31, | |||||
| 2022 |
| 2021 | |||
Purchased Parts and Components | $ | | $ | | ||
Work-in-Process |
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Finished Goods |
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Less: Reserve for Obsolescence |
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Inventories, Net | $ | | $ | |
Note 5 – Fixed Assets
Fixed Assets consisted of the following:
June 30, | December 31, | |||||
| 2022 |
| 2021 | |||
Tooling and Manufacturing Equipment | $ | | $ | | ||
Leaseholds |
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Computers and Purchased Software |
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