VUZI - Earnings call transcript Q3 2017

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Operator

Greetings and welcome to the Vuzix Third Quarter 2017 Financial Results and Business Update Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] And as a reminder, this call is being recorded.

Now, I would like to turn it over to Andrew Haag, Managing Partner at IRTH Communications. Mr. begin. may you Haag,

Andrew Haag

CFO, I XXXX to update financial today Paul With everyone. COO, the Vuzix's Boris. Paul conference you third us Travers; CEO, Vuzix's quarter results are Russell; would morning, and welcome company's like to call. Grant Good and business

additional any I certain call of a in to Actual attract materially Reform forward-looking contain Private business make Paul regulatory for the question-and-answer management of and statements, retain are factors, contained subject over not could are Before factors and the the Travers, changes remind uncertainties, to may Act in forward-looking personnel, Litigation may development like statements and Securities well turn the in forward-looking protection prepared to statements statements competitive to in that strategy business remarks result conditions, the risks XXXX. or requirements. as and session. and claims you legal as plans, the as that company general Harbor contemplated this changes of to during economic of results differ these limited I’d forward-looking call, by from management's which Safe qualified the Therefore, those ability the

Yesterday projections XX-Q as these addition, SEC. company filed the in November estimates company as the and XX, its the future as In of afternoon, projections financial to update release performance containing future any conditions with today, obligation issued no XXXX. company's the represents its change. may to results management's a Vuzix press market the assumes

the of as of results I non-GAAP www.vuzix.com. Filings found directly presented call. call will developments in comparable with call the an to measure may and the in of already have provide discussed also on CEO, to Quarterly accordance call not activities When a turn Vuzix’s look available to Russell, who financial to the can most include summary which Vuzix's may so, Travers, the sec.gov, [ph] who will will call company's the this GAAP will quarter Travers in may measures. at at Paul reconciliations third documents be those XXXX. company over participants required, calculated wish overview today’s financial Today's results. the So, provide the who and now at CFO, overview Grant Paul then is the an business turn company's of give first quarter over during will done

Paul Paul Paul some initiatives Boris, provide Following who Boris, Vuzix’s follow to strategic update Grant an provide Travers key will closing and be activities. development business Russell will remarks. will COO and

open then will We up for the Mr. Q&A after update. up call managements Travers?

Paul Travers

all Thank Hello everyone joining much, you thank outlook the today Andrew. quarter for third business XXXX. you to for XXXX financial call and discuss and results very our company’s

witnessing opportunities world. enterprise have improved which our visibility several pipeline, large quarters multiple XXX Over shift for deployment and includes has well Glasses. This shift in market been into now we over growing sales pilots the around the last Smart significant a provided the us enterprise

VMXXX of overwhelmingly throughout the and the closely and deployments today. over MXXX XXXX. fourth the clients worked began from competitors programs and partners offering the commercial to continue been Vuzix’s to notice will partners The has have to Vuzix for conversion our of quarter pilot our the any performance of We resellers many the high-volume in has with in significantly hardware and value-added for positive. VIP feedback optimize preferred become

augmented anticipated an in Toshiba by Smart Smart Glasses, introducing of the the Vuzix reality Vuzix’s OEM as XXXX, as well Glasses. Glasses new powered our Beyond version several including be Smart early will MXXX for company highly the blade products enterprise,

over last X.X XXXX to With on approximately of QX million, revenue of XXX% have the our shift by This quarter, MXXX. quarter of further growth our we proud recorded we been sales our throughout all the year’s end that our Because increase additional the are inventory consecutive of of by if We manufacturing say Vuzix. had for representing third a MXXX portion available to limited sales and MXXX during XX%. that and by quarter. results products available quarter were of That the inventory first issue the the said, quarters later for at shipped financial arose QX QX to million, for sales XXXX’s X.X the have overall of could related the third revenue to availability full-year certain of XXXX of increased three hindered would the customers. the plastics exceeding this,

to support assigned with the manufacturer And issue. we both long-term engineers to result, tools improvements a cause Our and a of sustainable root have team Vuzix aggressively contract as rectify the instituted processes all of our and products. for they part, of forward. for so not Not particular going issues frankly in will appear this all plastics address to just the MXXX, the but and

on have to this to track and without crank or great have needs. Production quarter ramping is our concerns. customer’s say back to learned sales lessons meet and production meet finally We to here hesitation it frankly. feels good fourth production some up the our to now needs I able quarter through be here in

fourth there additional remainder track additional With ability over XXXX. From from the the XXX we quarter process build been in to of to qualified, and demand in the are units have growing cranking units starting next China. X,XXX of our XX,XXX the have and week XXXX, meet MXXX currently for of on week October the run continue we production up we rates to MXXXs an per

Previously, business is with manufacturing we understand is XXXX. expect going in on months out that beyond into company of calendar opportunity. production at we However, I industry Vuzix few these It’s recurring to the is us, clear and performance demand and Since now we financial accelerate Vuzix could is XXXX from account. well calls, challenges and why to indications have capitalize talk shifts account Vuzix that current that only and it’s accelerating that this building behind XXXX, well the our now. to away share options bullish are our or also. within our exceed would a important actively rate the going and the so about

industry things that much is ROI’s dependency. out C-level technology because about ready truly adapted giving to the is The broader for proven what’s Smart in the sense executives a being now. are leverage happening talking that industry. demonstrated directives world. are in around happening wearable and hardware We’re Vuzix’s have everyday Glasses that’s

the their are competition of the Glasses choice of at Smart Our used for cases. over the and XX% least tools tools

deploy are second executive And count the even and Vuzix customers our the The SATA in who early perfect industry the words, over regular the moving a the growing applications finally and reordering and up significant. an majority, spurred now witnessing Airlines, will out. in and and to Singapore VIPs Because Vuzix ROIs our As the pilots pace Harwood to had variety written a competitors. at of Besides locations are Vuzix’s notice early though sharing review C-level deployments. has that us directives, to with result By these peers, we’re by globe. MIT a is references for the of used adopters, you’ll industry on for quantities XXX majority of early verticals, are hardware. end-user resellers simple, opportunity. if Think demand simple these PTC, number that from immediate waking of months currently references for larger other again different are is are to larger of the we the early add man has the of RFPs value-added adopters This the you seeing deployments opportunities. DHL, RFPs MXXXs last and which see demand significantly chance successful and business and X,XXX and In the over from ordering many exponential impressive doing larger demand in. all called around interest cases

piece. even majority traditional We unique I cited the And to bottom-line, Toshiba is a the are of Fortune Vuzix’s into global the from success. night, with X On our and XX-Q, directly Glasses. to top in huge breeding Boris our that detail companies haven't request tap large this that first Paul by in Toshiba will with along finally, represented to XX-months In And project mentioned result ability later. this of a inbound area of business, XXXX success The relationship. applications from within sales for as enterprise a XXX related in last reference Smart million the will contribution expects of at least Vuzix the also included substantial expect Toshiba. Vuzix we the we filed manufacture relationship by our Vuzix powered

mounted and as Toshiba an of the for wearable is with Vuzix's the and company is display a relationship OEM milestone industry. a tremendous leadership Our validation head partner

Tier people third mentioned have Tier calls, In added OEM’s previous due hear I are addition a know two-existing to but know is, also folks that, company. the don't I provide to OEM and to reasons, X Unfortunately, fact confidentiality Vuzix like Toshiba, our the cannot what these consumer doing, to electronics has I in many that specifics. X and they hurts everybody just

initial I product engagement and Vuzix is a waveguides the along that is and you moving have Smart for engines to However, tell Glasses. expectations can that interestingly display met consumer unrelated

with X these design Tier performance technology our expand. and moving deliverables and partners, are relates device continue waveguide More first activities Phase efforts. now specifically, have our our and it to OEM electronics passed consumer partners requirements initial As we two related to X to

and will higher steps technologies. of follow-up purchase next finalizing delivery volumes our orders waveguides related for the Our and be

AR applications success New It at as City, public Vuzix Vuzix will similar announced XXXX. Blade in the on demo center four will the expect also. have unveiled first and CES innovation newest Last the will that New partner night as see CES with awards exciting the York it We a have to Blade. was at stage Blade event general production take opportunity very CES be our received a York of the the version for glasses smart OEM

by and augmented The the track and become folks, progress really Oakley. to of that wearable These the widely smart towards look like commercialization. and at out is Blade One competition pair would glasses of out you there. well is first worn continues actually on they right to and available are glasses a there, the products be if strikingly mass-market user look reality

verification We have already built units. engineering test

Blade final most of We November and things real-world the crisp, These pair wearable by fantastic. the pleased the and new performing in the for developed for optics world's color, production the complete ever than results are glasses molds reality weighing overall augmented The be end at to quality. of ounces. Blade view. less the design of field is and beautiful appearance X.X expected is and high-volume Tuning provide the smallest extremely waveguide are terms just with of in

demand the viral support the expect pieces to All the we see of critical place for are to in Blade.

search, the native at and Vuzix development And high new XXX the the with out-of-the-box with app for terms a C-level exciting off Vuzix social to In to than in all stores blood, a would the AR executives are our the march have services, Blade ovation auction making into Vuzix and the about and optics advancing global consumers want mapping importantly way with upcoming has they and wireless the seen might billion with blade it the to the that this many teams live. all social networking, has smart is the resources Vuzix financial announcements demonstrated We at that excitement is the or our just tears partners doesn't Fortune designed sweat, I fashion engaging applications better get towards expertise From development Giants, on. product rate been launch. blade. put the more from capital conference. getting that. though prosumers, Southeast health broader Blade companies carriers partners media honestly and started. to applications the overwhelming for any resonate of [ph] access folks, glasses. have catch the Honestly our difference more fitness, to ecosystem taking development $XX retailers Blade The have Blade current to app company that all Think and it’s well you businesses, live, recent more team watching and along at Where getting standing we’re

to have before on turn I our the like We provide share Russell much I’d financials. side, to the business to call an more over update development Grant? to but Boris, Grant Paul on

Grant Russell

morning everybody. Paul. Good Thanks

dollars just will of do in would in there thousands, Before as I the in up point filings. I to into a rounding our out cases, SEC the be few we millions love all report begin,

prior increase three-month for year. over revenues, of Smart ending for a As of Paul was increase gross which on in loss in the Vuzix the completion reflecting Product overall sales versus fixed of we profit recognition product to margin mentioned, which the of September XXX%. our improved for XXX% quarters fixed were Smart the up the quarter exceed The over reported to they Toshiba and the XX,XXX price margins loss MXXXs on That’s the Glass $XX,XXX generally of in XX, an $X.XXX the driven cost the contract, quarter. MXXX revenues for up which XXX% with quarter. manufacturing overhead resulted as XXXX XXX,XXX by negative program, expected development XXXX for the XXXX. costs $XXX,XXX million period, the total total Smart same our saw Glasses was Glass compared overall had. Smart period time, quarterly absorb of revenues XXXX XXX,XXX in a our XXXX sales $X for Glass being was new first the And million gross

As margin we XXXX. at the the were running the QX written the which margins XXXX hampered zero on was reminder, a end product are eyewear, by further down of

XXXX sales. overall decrease X,XXX,XXX reduction the were by in expect further X,XXX,XXX which decrease development XXXX. the XXX,XXX XXXX, the months active We up still R&D manufacturing nearly but in some volumes of production did XXXX. MXXX R&D costs overall September as of period. ended result cost were of fully three they We with program engineering have in in primarily MXXX re-class to in cost development was spending compared the in a an XXXX and related staff the for wages is the will The additions cost, R&D ramp of in the in quarter, QX, as Toshiba offset

So, our there’s of details. ends see a please announcement lot further and MD&A XX-Q for

in The by in MXXXs. result briefly costs VR a being spending. months VR three cost overall PR primarily due with our offset eyewear staff three XXXX, board PR new we either write-down Solutions. - G&A to September consultant related marketing book the XXXX, personnel talked Boris. and quarter were the a X,XXX,XXX, increased on price VR the cost marketing and to to about to XXX,XXX of SOX the and was cost September XXXX primarily new ended is reductions months external This of I another increased for the external compared as expenses, ended cost, increase These decided compared reserve so XXXX. for perhaps were to eyewear the for extremely was in Phones XXX,XXX, hiring up the across in competitive Smart of Some X,XXX,XXX reductions for to market which $X,XXX,XXX Mr. CEO accounting the occurring of non-cash. or the major advance systems most in as

result dividends debt. and versus for price not the and compared the derivative other retail we is the third $X.XX right products of versus as June a accrued of quarter, these term be XXXX. for in the could debt year's for of valuation the XXXX the for when these sell X result, senior company the the to the its quarter XXXX Overall, primarily quarter mark-to-market hence and thought of at loss the equates accrued corresponding XXXX outstanding. period converted for a net since XXXX. debt had debt gain they before to the quarter. period versus September As we million provision of XXXX the for X.X quarter, period. million in period XXX after $X.XX a of to interest significantly reduced out XXXX issuance net maturity reported loss loss This $XX,XXX was and the expense XXX,XXX a preferred as Total of liability a the the to cost was a income The net All discounts in loss the the in elimination was prior decrease same in still amortization compared other the on the loss quarter

finished million, new XXXX. XX.X marketable and Moving totaling operating securities September our financing XX, XXXX. quarter September XX. positive to - of capital position and reflects approximately of short-term expenditures, working the capital ongoing down million with XXXX million sheet, million August balance This $XX.X We net losses, the as as X.X from the of cash as up $X.X the in we of which activities have December a of

and flows our new commencement see demand many reduction due gross manufacturing and growing Rochester our along capital. we in NREs feel I’d plant require of which balances, months. which with the we by expenditure contracts to the consumer use capital management's execution our that to utilizing it further in working expect external working and operating the production the XX reasons conclusion, believe in QX of external cash very of like next needs We and Boris. or that over for bigger turn our development product our of high MXXXX [indiscernible] contractors, meet can our have rather cash equivalent that existing In for than we improved that, Paul XXXX, the to works, capital the cash for MXXX, costly improve generate commitment and With to shipments a successful freshness plan margins, will

Paul Boris

Thanks have business. focus specific Grant my be to impacted and on and very Paul. want I’ll aspects comments Vuzix’s that possibly briefing some

couple, the I Their which So, of and and and XX% a buy adoption. I I right should better at everyone Manufacturers in and and same and talk Association success reliable technology is leader is, may so thought presented or buy Review digital our Business Internet why true featured vastly computer by digital product, the right industrial the timeframe the expertise more a that delivered on. are the a the a space have Vuzix This space product there rollouts when they make Howard may but that that work reference It and broader industrial executing scalable impact widget in, of widget missing professor is and acceleration operations Vuzix’s the at a the few marketplace. or in prominently indisputable on in in machine stories to have wearables event direct cost a or in real decisions few can about Not has machine more software is and Last for or should a why Paul in the scale fingertips intangible that thinking innovator more in the are what the than set laagered MIT customers costs of reality company which their we engineer of the say majority right cases on makes an not week, around cases the that diving were is better performance buying lusting of a of does, the CEO, is transformation transformation, stories. VIPs. significant the seen [indiscernible] is operations adoption a detailed and had sponsored from of Despite used Travers augmented and all more piece more less are their data business. that piece creates a field referenceable National so cited heart stages because operational in Obviously, they market early the the are effective that Vuzix hardware. new differentiator of to the [indiscernible]. these

we devices. our simplifying we’ve speeding are is adoption to topic before the importantly important how more Another and of alluded that

not minutes much You Vuzix exaggeration the device them. are talked will allow into be various but in we about the productive in of this is to put see solutions on unboxing what the have delivering without that use partnerships, devices new

and not supports is better even solutions Fortune more market. and are be significant us but the To who trusted through and their them are the marketing now align and mid-size have sales the business. the We move clear, we interest to the more addressed this XXX VIPs the industrials acceleration we’re Internally, approach and in currently currently will marketplace, to customers I detailed our the future, small leverage with we've being effectively refine in-bond value can both you so working seeing tell that what we be to delivering and will can teams enhance our complimented VIPs channels. with existing aligned support ultimately broader

industry my SAB delivering built associated my over years organizations. manufacturing and value executives incredible and reputation industrial XX at for real in for scalable space, GE, an of network technology time I in outcomes have Finally, a and

and point XXX companies let this. process excited their X,XXX of and incredible is final on Vuzix demand X, are devices cost deployment Vuzix’s Vuzix simplifying the allowing seeing or an put to to deploy me a move all VIPs at rate. about pilots rollouts are customers vocal their So, hardware. success. XX, customers scale

the CFO's, success provides they’re time, is the to marketing our because our for proven, not support and other industrial on calling discussed Our making to as why the our to more just into almost that how sales are Vuzix on machines make realigned and and or leaders, sales in are All currently technicians, them C-level clear, demanding see quickly transformation optimism the the the strategy define available on the to chart and for used are while and organization [ph] performance. the are move and would forecast of devices. to itself. completely but enterprise more the pieces Travers not which chain drive we now demand, in company more for our make production to fourth is also falling mechanics the are deployment COOs, enterprise. CIOs and next-generation NDA MXXX, XXX Vuzix the well be action more opportunities technology. Paul cases almost VIP quickly supporting part speaks engineers, place collaborate than these to continuing resources none operations and and more effective driven rapid referenceable awards, they value-added solutions the Their as focused closely for XXXX, To earlier, besides of exact Those and shortest executives available as the our in Vuzix engage VIPs focused resellers on Fortune with quarter large CEO’s, also any our a products, to support working engage supply under general and aligning now existing, operational and to of Vuzix

So, with to Paul turn that, back going it Travers. to I’m over

Paul Travers

Thank you, Paul Grant. and

quarterly comments commercial adoption. from can gather for of of has enterprise new we next you proven XXX new market, and the date on be broadened revenue, we as talented the multiple to the Vuzix smart the high OEM When addition deployments patents company portfolio still Vuzix today's our to the set and the a we redeye-based As is one fronts today, through just story. set over pivotal to strength hit and patent significance AR to new able partnerships, management's glasses XXXX pivoted most patent pending, Vuzix has industry will ever intellectual to already truly call, to into back exciting have on added a we the fourth mention and records points. annual on introduced the we of employees, be to the and bench and multiple look XXXX done, add quarter new year all and we to and added say

cash engine as as flow the Vuzix, up to an out of Vuzix. amazing pave the world XXXX financing that way in XXXX that working burner is company. caliber Vuzix. our way growth execute This date with That plan, Smart say industry said, for at to companies conventional the is fueling we’re Grant Vuzix will modify we door continue have exciting opening And the as with the along as a are leader explosive able barn will towards moving Glasses growth our positive whole the see as be every and measure. to and everything the by some for this doing is we’re independence for flow and of getting a space. cost industry turning The we’re be is As is cash and for enterprise of go setting I stronger down, that to to we the processes, production to to

Now, Andrew begin meeting let session. me the the to Q&A to pass

Andrew Haag

move session please questions. you can Operator, towards everybody. Q&A the and Hi, queue

Operator

question Certainly. your Brian [Operator line go Our Group. Instructions] of Maxim first Kinstlinger comes from with with ahead Please questions.

Brian Kinstlinger

guys. morning good Hi,

Paul Travers

Brian. morning, Good

Brian Kinstlinger

You got. given XXXX maybe pieces you’ve mentioned plans for more to based on even much XX,XXX demand then and demand build how

confirm same what many Toshiba without that think production now manufactured that you on can and how line? being pieces just and do First, MXXX you issue built in at the XXXX been can being make your based has I is is said manufacturer on wonder

Paul Travers

and on built of XXX%. XX,XXX is of same before, and problems upwards is amount the floor At needed plan, mentioned a do of product, time, enhanced the monthly capable We’ve experienced Toshiba are production out point are we to that the actually Vuzix this being this that, cranking. plant basis we pumping on a tools fair in the pieces if wanted too.

the cast in - So, support part of it they place, to the so infrastructure the growth up to why is is have reason it. Vuzix back it could as this happens need we

accelerate. to it’s So, that

week believe pieces factory. getting out a I lot just of first our of next said, we’re I China As XXX

franking the is confident up it of up to meet it and So, demands that. we is to are thank possible

Brian Kinstlinger

revenue on Vuzix? and prepared is volume in that after your remarks, Toshiba mentioned your is minimum you or in then of And development, of commitment that by early based the XX-months first expected million the completion from Toshiba the a estimates X

Paul Travers

of more going of be there’s kind out, to we would time the comes So, about number. I bottom-line some this minimum lot The before there Toshiba. press Vuzix be, that between whole a a thing it that a agreement is reasons end expect the release certain and would only the a quarter describes will for believe be

Brian Kinstlinger

you and couldn't other that discuss Great. talk just you playing actually you making you am did, I you the then MXXX really other the development in not about I mentioned right by I one and out for the maybe mistaking I now? X for that’s the can OEMs are name, for was - And MXXXs or waveguide the talk OEM's, think Tier today progress know for you can you that confused, had

Paul Travers

They the and these devices. So, all see-through want Toshiba this talking [indiscernible] slick, always ones ability that always all OEM - are They have than next are partners of of they [indiscernible]. we that we’re OEM, kind the three others the the course, of and other want of announced to make - generation slim, right. bulk are to

Brian Kinstlinger

their is And while technology to there X announcement that working clear, Tier that to are labeled white want with also a you're for that is today's blade product sell waveguide that use in OEMs be they similar as to other the won't products own?

Paul Travers

look stepping glasses. phone devices, the Google’s would today ARCore the which a about between at actually stone you industry in be Apple's is smart what’s being If next-generation happening everybody until phone ARKit talking these

think but deploy are a looking not Apple about area And the the down the But are up cool on getting are getting they glasses, what guys tech, that people of way rumors perfect arrow about awkward, the up If middle this an to where the put walking them. you for still in out is it’s the and these be needs a phone, it’s their directions to street, right, it’s delivered. street. and the bring they waveguide ARKit holding an got are should content you so for is that the it’s awkward, iPhone, and the and you be Brian does phone holding fit

Brian Kinstlinger

Great.

you. forward a XXXX. Looking to great Thank

Paul Travers

lot get that’s can't do putting a I with into case just waveguide, things glasses. is are besides you. than different of but Thank might That one could a cool there pair you imagine it, on them so that, of you

Brian Kinstlinger

Absolutely.

Operator

Thank you.

with Capital. go questions. your the with from McIlree ahead comes Please Jim question next of line Our Chardan

Jim McIlree

Yeah, lot a good how the you thanks Can revenue? QX on impacted much issues manufacturing and a amount dollar put morning.

Paul Travers

issue you’re going your hard to. this deal really backward speculate this partners and slows to it them thing them it’s through working because and you're Revenues, you’re right, with helping when down with

much quarter rearview us Vuzix. the table, would repairable. is all the fourth kicking think all significantly because an on now. third And just slowed but [indiscernible] didn't into impact for it this somewhat of should need too on and them the a is problems little I Jim, problems, not glad there mirror. with going rather hard we it’s in Since parts that’s replaced the it So, devices it’s overdrive our I’m to quarter that how have it bit, on say some and to that have are really less we say cost happen and I

Jim McIlree

Right.

say, think rest of you how Paul on X,XXX going get come that units, while quarter, the what shipment capacity to that saying is really you’re I can and do to is that sure, the was of analysts customer’s you're next just say investors to or you the for they are is out I product. what the going When and units want Okay, XXX orders week just will know that tendency make and that? and to much you produce, we clarify to you a going and think if are do, and and are you take do ship we ability and you the X,XXX depend it have saying revenue I this are. can we you to recognize could hoping to

Paul Travers

little a think. That the up I Yes, the should be quarter. exactly know, I we pieces third of what kind of picking improvement quarter it’s capacity. the from said don't just are fourth bit - kind significant September, over

should good quarter it fourth be third So, damn result. quarter - a

Jim McIlree

going have All lost the it. the - right, Toshiba, I on you’re and is just to timeline that that think I

to have and are you program to you steps development and then production have, is you and just going volume so or different other that’s have the have volume then it an going development, that saw you move You're completed into get or what I or go you there involved agreement, there versus what the - a complete timeline a speculated? is agreement - first, you you're

Paul Travers

make initial look sense, just through makes tell to everybody the PVT part have here. that’s the - purchase agreement quarter, to we be first the the the We and them we’ll float it the have there way of all you PVTs on I first let they’ll me will end effort, to year, kind get end as of happen know delivering then year of the the and basically before It production we signed they through what need agreement of quarter like been that in almost the delivering an production and you it up. a development finish GPA, to you before also ramps wants can early

Jim McIlree

or are so production X based their minimum there you as you four, how take on be on success quarters to the Toshiba two product? get million with three of dependent but Okay. might the of product to - does really that quarters going characterizing And is your what be will and or it

Paul Travers

Yes, that’s correct.

Jim McIlree

Okay. All then… And right great.

Grant Russell

a a potentially be… there it could Jim, expect, is know it in that would could We expecting we but all we are accelerate and $X It be thing for of will business number. minimum million amount of out and this XXXX

Jim McIlree

think product to That’s agreement there conversations and with that yet. terms more you on no they’ve is based do? of what really with they what committed the And can in Toshiba your shared

Paul Travers

more that. within that it an to I think is like than days bit A would of agreement [indiscernible]. is

Jim McIlree

one. I for wait that Okay. will

Paul Travers

away, not can to sharing will not We but that. into the when hard be designed. on it's on something far it’s that’s we details eminent get Frankly, but that more

Jim McIlree

the firm Paul in delivery that acceleration All has point MXXX, we purchase times months? or in demand demand the getting Boris sometime Paul gotten point to right. talked we next the both about attached few And you a an where resulted are to with to have for that that orders

Paul Travers

We have and shipments purchase orders, the from issuing are partners drop dates, that around globe. drop

Jim McIlree

Okay.

And it’s is firm based had. the on general based I enthusiasm hand? dollar confident partially as that and that you’ve so, on well mean, contracts your reaction you’re as in

Paul Travers

was the of know is When partners bit talking is new our It about. seeing, the VIPs woodwork. companies. and queue of it of that that a of it activity this it groundswell, a really was part in business business the the bigger that have the coming before they ROIs to charm, are that wasn’t you it wanted VIP mix out I as starting people seeing little as is mix. a to we people deploy cetera Paul a can stuff is stuff, Paul of that proven things. on this and it’s et Yes, a is CIOs, values, all - so guys are mean is that is of bunch that it and CIOs that advantage of that a we the are It they big as it what but the new of even take is

now BHF other With occasional of it’s way. the the slipping the exception

Paul Boris

used justify wave add they emerging and sufficient about their in Let me is the the add one then and is next that for to cases. thought wave. to What’s case We want that these whole one talked and to it. just used the folks on to next program wave the next

the are add all come move So, MXXX value very fast, larger can it’s top. behind kinds and on of quickly, I in advantage that play a and they and to customers additional device them that right out this of that gets for VIPs does take to of what puts in to it that. is mean it starting out preferred technology use immediately, much the way play scales then the the

Jim McIlree

Got it.

my you. Thank Okay. And hello… last one,

Paul Travers

would can the Jim, where the applications It it No, in thousands I of in I thing so was just deployed, of on be just are if be a all plan. that got a a XXXX you think going is many to MXXX them all can VIP those now to so bought to in be sudden field. do that utilized one things, there

wins. MXXXs in more good to of the higher So, a volume field the everybody it’s have thing the

Jim McIlree

it. Got

costed project how is that Toshiba, Okay. And recognized gets Grant, statement? explain me for gets accrued you balance that can and revenue, last the a I you how what either through to on am to sheet is - line it question relates income there or the assuming that

Grant Russell

the a revenues completion. to reported as gets of are income it on on balance percentage statement. the recognizing is set a is on the income But for the revenue and basically, receivable we sheet statement; cost revenue this Well on the up

the the of total the revenue. reported under you know GAAP cost So, about you project, revenues XX% you incurred cost, the the of at expected you’ve look of to cost date, total XX% of

on that Toshiba, the which EVP's of in milestones and based by units. derive through and development is PVT delivery agreement our symbolizing You on

end be much receivable that there gone less regular be be then Does the accrued anything it So, final of an we at just sense? as make building receivable. has get part that year - the the project, just completed won't there see of might should it it’ll be a accounts if

Jim McIlree

get a Great. I got you everything that. luck. will a wanted to Yes, and good it. just clarification to on Congratulations I I that’s lot. perfect. Thanks talk later. on

Paul Travers

Thank you, Jim.

Operator

like today’s session. concludes to This for closing I’d comments. to the back floor turn management question-and-answer

Paul Travers

we meeting for company. like our being for today joining and great to Well shareholders supporters everybody thank the of

ends should get an Thank device. amazing come XXXX call. fantastic to the call. for forward again frankly if XXXX to to the looking a finished CES and it’s because We’re the and Blade you joining chance see you a This you conference folks,

Operator

this concludes and Ladies gentlemen, teleconference. today's

lines this thank your at disconnect and you may for your You time, participation.

Vuzix (VUZI) 12 Nov 172017 Q3 Earnings call transcript