Vuzix Corporation (NASDAQ: VUZI) Signs $0.5 Million Deal

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Vuzix Corporation (NASDAQ: VUZI) recently inked an initial deal worth $0.5 million with an undisclosed global consumer electronics company. The customer intends to use Vuzix’s optic technology in the production of augmented reality (AR) devices. The initial deal primarily involves the supply of samples and custom optic engines to enable the customer to produce functional prototypes.

Vuzix Corporation (NASDAQ: VUZI)’s announcement of the deal makes it clear that it will pave way for more business between it and the global consumer electronics partner. However, the company also clarified that they have not discussed anything to do with the transfer of rights to licenses or technologies.

Nevertheless, Vuzix’s CEO, Paul Travers, highlighted the significance of their selection to supply components for the global electronics company. Travers said the development further validates the value in the display technology and solutions they render.

Commercial production at Vuzix Corporation (NASDAQ: VUZI)

If the developing of the prototypes turns out to be a success, Vuzix Corporation (NASDAQ:VUZI) and its partners will embark on volume production for commercialization by mid-2017. However, it appears the parties haven’t discussed the fine details of a volume deal and Vuzix said in a statement they have agreed to negotiate on the issue of volume production amicably.

The deal with the unnamed global consumer electronics company marks the latest move by Vuzix to take advantage of the anticipated growth of the virtual reality (VR) and augmented reality (AR) markets.

A $117.4 billion market

It is estimated that AR market will be worth $117.4 billion by 2022, significantly up from $2.35 billion in 2015, which indicates a CAGR expansion of 75.72%. On the other hand, VR market is expected to be worth $33.9 billion by 2022, up from $1.37 billion in 2015, thus indicating a CAGR expansion of 57.84%.

Vuzix Corporation (NASDAQ: VUZI)’s near-eye display technologies can be used in both VR and AR devices.

What happened in the 1Q?

Vuzix Corporation (NASDAQ: VUZI) generated revenue of slightly more than $0.36 million in 1Q2016, down from revenue of about $0.81 million in the corresponding quarter in 2015. The management said that the pullback in revenue was caused by soft demand for a certain product as customers held back orders to wait for the launch of an updated version of the product.

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