Vuzix - Are dreams of a short squeeze realistic?

SHORT SQUEEZE COMING!!!

You hear it all the time on social media, especially with money losing companies that rely on dilution to fund operations.  There are always bulls talking about a pending squeeze, how bears are gonna cry.   With it comes exhortations to buy even more shares, to "stick to those short sellers".

And I have no doubt it works, it did on me when I first started playing the market.  

Ultimately the only fundamental that really matters with public companies is the levels of supply and demand for shares.  If more people are buying than selling, then the PPS will climb.  If there are more shares being sold than there are buyers, then the PPS drops.  Economics 101, you don't need a university degree to know the basics of supply and demand.

So is a short squeeze possible with Vuzix?  

First it helps to understand the mechanics of short selling which I will explain.  I know a lot of retail shareholders only understand shorting as a "bet" that a stock is going to go down in price, without really knowing what's involved.  

According to Nasdaq the level of short interest in VUZI was 5,108,228 shares up to March 15th 2018.  The next update is due to be published on April 10th which will give the short number current up to March 31st 2018.  

What this means that on top of the 27,301,201 shares that were issued and outstanding (as per the 10K) up to March 16th 2018, there are another 5+ million that were shorted.  I call it a form of artificial dilution.  Vuzix has issued 27.3 million shares, and shorts have added another 5+ million to that.

How?

Let's say you bought 10,000 shares of Vuzix in January at $10 because you thought it was going to $15 or 20.  At the same time a "bear" who thought the PPS was going to fall wanted to take out a short position.  That "bear" can borrow the shares from a shareholders account, at a cost of course.  The shareholder doesn't even know the shares have been loaned out, when you check your brokerage account you'll still see a  holding of 10K shares of Vuzix.  You don't actually have physical possession of a share certificate, your shares are held "in street name".

So you still own those 10,000 shares, and someone else owns them as well, hence why I call it artificial dilution.

The short seller has borrowed your 10,000 shares and sells them into the market in Janaury and gets a price of $10 per.  That nets Mr Bear $100,000 but he owes you 10,000 shares.  The short is betting on the prospect that he'll be able to buy them back for less than the $100,000 he got for selling them.  The best case scenario for a short seller is that the stock he's short on goes to $0.00 and gets delisted, then in this example he gets to keep the entire $100,000 less fees.

So where does a squeeze come into play?

We know that VUZI is now trading for a little over $5 right now, but back in January when it was around $10 nobody could say with 100% certainity which way the PPS would go.  If an analyst with CNBC had come out with a strong buy reccomendation at $10 its conceivable the PPS could have shot up to $15, $20....who knows, supply and demand.

The short seller who got $100,000 by selling the shares he borrowed doesn't get to take that money and buy a new Jaguar, it has to stay in a margin account to protect his short position, along with additional money to secure the position, typically 50%.  That means that the short seller needs another $50,000 on top of the $100,000 garnered from the short sale.

If the PPS started climbing the short seller would be required to further fund his margin account.  If VUZI had gone to $20, then the short seller would need $300,000 in his margin account.  $20 multiplied by the 10,000 shares for $200,000 plus another 50% or $100,000 to cover the cost of covering at $20+.

And here is where the squeeze can come into effect.  If the short seller is unwilling or unable to meet the margin requirments then he can be forced to cover.  The broker he borrowed the shares from will simply take the money from the margin account and buy the shares back, that's the reason for the 50% extra.  

Do note that I wrote, "can come into effect", I put it that way because while its possible I wouldn't count on it.  And in point of fact if your entire long thesis is built on the possibility of a short squeeze, then you might want to re-consider.

Going short is incredibly risky, and the players who work the short side....they have a lot more risk than longs.  Someone who's short 10,000 shares of Vuzix, having taken out a position at $10, the most he can make is $100,000 less fees.  But on the flip side there is theoretically no limit to how much he can lose, it all depends on how much money he has.  While a stock cannot fall below $0.00 per share, there's no limit (theoretically) to how high it can go.

If you decide to bet against the bears know that you're going up against players with huge bankrolls, I'm talking hedge fund types who often have more than $1 billion under management.  I would submit that this is the reason that there wasn't a short squeeze back in January when VUZI was topping out at $11.40 per share despite 3+ million shares being shorted already at that time.  

The players behind those short sales were not forced to cover and drive the PPS higher with their buying because I assume they have a big enough bank roll to ride out any pump the PPS sees.

If shorts weren't forced to cover at $11.40 what would make anyone think they'd be squeezed at just over $5?

And remember Vuzix isn't making any money, they just reported a net loss of $19.7 million for the year 2017, up from a loss of $19.3 million in 2016 and $13.4 million in 2015.   The accumulated deficit was over $96 million at the end of 2017, and is probably close to if not over $100 million by now.  

Yes they had revenue of $5.5 million in 2017, but that's revenue not profit.  This isn't virtual or artificial reality, in the business world a company eventually needs revenues to exceed expenses.  Last year in March of 2016 they put out a PR that talked about moving toward profitability, they went in the other direction.  

Good luck in any case, I doubt this miserable and pathetic blog will convince any longs to reconsider, nothing beats real world experience, even if the lesson is an expensive one.  I myself am not short any shares, instead I own put options, they're a less risky way of betting on a stock's price falling.

Vuzix - How bad is it?

Shares of VUZI have fallen precipitously since the company announced raising $30,000,000 via a share offering in January.  After trading as high as $11.40 inter-day on January 24th (as per Yahoo Finance) the PPS has tumbled all the way down to $5.90 as of this writing, a loss of $5.50 per share or 48% from that peak.  

Here's the chart:

The company filed its 10K on March 16th and the results, while probably expected, were far from stellar.  The loss attributable to common stockholders came in at $21,348,436 for the year ended December 31st 2017.  That was worse than 2016 when the loss was reported at $20,870,130 or in 2015 when it was $14,941,559 or 2014 at $7,868,858  

Readers can verify those numbers at the following link, page 31 or just do a CTRL+F search "loss attributable to common stockholders".  

http://secfilings.nasdaq.com/filingFrameset.asp?FilingID=12631582&RcvdDate=3/16/2018&CoName=VUZIX%20CORP&FormType=10-K&View=html

Back last year in a release dated March 23rd 2017 the company wrote about a move "towards profiability".  Its the last bullet point, you can check the linked PR.

https://ir.vuzix.com/press-releases/detail/1547/vuzix-provides-business-outlook-for-2017

I don't think you require an MBA to realize that losing more money than the previous year, over and over and over again, that is not moving toward profitability.  Quite the opposite in fact.  

Compounding the dilution and losses was a bearish write up that came from a site called "Mox Reports" on March 16th, about the same time as the 10K.  It forecast an expected PPS of $0.50 and eventual delisting.  

Also included were allegations that Vuzix engaged in an undisclosed stock promotion to inflate the share price and raise $30 million.  You can read that report here.  

https://moxreports.com/wp-content/uploads/2018/03/b324-Vuzix-Fraud-Short-version-toned-done-2.pdf

And that wasn't the end.  Next was a number of law firms issuing PRs about investigations into the claims made in the Mox Report and inviting those who've purchased shares to contact them.  Here are links to some of those PRs

https://ca.finance.yahoo.com/news/equity-alert-rosen-law-firm-151400562.html

https://ca.finance.yahoo.com/news/shareholder-alert-bronstein-gewirtz-grossman-165600073.html

https://ca.finance.yahoo.com/news/important-shareholder-alert-schall-law-183500505.html

https://ca.finance.yahoo.com/news/glancy-prongay-murray-llp-announces-191900942.html

That's a lot of bad news to absorb in a short period of time.  Dilution, losses and lawyers....OH MY!

On March 21st the company responded by issuing a business activity update:  

https://ca.finance.yahoo.com/news/vuzix-issues-business-activities-191400764.html

  

On top of that bullish sounding news bulls were buoyed by some insider buying:  

https://www.nasdaq.com/symbol/vuzi/insider-trades

Three purchases by insiders totaling 11,252 shares between February 6th and March 26th.  

The purchases totaled over $73,000 according to my calculator.  As per Morningstar the CEO and CFO each earned in excess of $500,000 in 2016, down from the over $800,000 they earned in 2015.  Numbers are not yet available enumerating executive compensation for 2017.  The 10K filing says those numbers will be forthcoming within 120 days of Dec 31st 2017.  

Given that Vuzix is not a profitable company, having relied on the selling of shares to finance operations, the buys were a good move in my opinion.  

Salaries are not paid out of profits because there are none.  If Vuzix continues losing money, and the 10K discloses that they may not achieve profitability in the future, then continuing as a going concern will require the raising of more capital.

I know that many bulls are dreaming of a short squeeze, however longs should realize that if the company never achieves profitability and eventually gets delisted, then shorts would not be required to cover the shares they borrowed.  

It wouldn't be the first time that a company with what seemed like great potential failed to succeed, back in the dot bomb tech era it happened all the time, and many shareholders rode stocks all the way down to nothing.  

How bad is it?  Pretty bad to my eyes, which is why I own put options.  

Vuzix slammed with allegations of fraud as 10K shows more big losses

Website Moxreports.com has published a report calling Vuzix a fraud, you can read it here:  

https://moxreports.com/wp-content/uploads/2018/03/b324-Vuzix-Fraud-Short-version-toned-done.pdf

The biography on the website is of one Richard Pearson which says he has a degree in finance from USC.  The allegations are that Vuzix engaged in a stock promotion scheme involving dozens of mainstream media outlets to artificially pump the PPS which allowed the company to raise $30 million via a dilutive share offering in January of 2018.

As of this writing it does not appear that Vuzix has responded in any way to the allegations.  

This isn't the first time a publicly traded firm has been accused of being engaged in fraudulent activity. Just off the top of my head I can recall numerous claims being made over the past 20 odd years:  Enron, Nortel, Sino Forest Cynk Communications...its a long list, Warning Model Management, Adzone Research, Worldcom....I'm sure loyal fans of this miserable and pathetic little blog, (both of them) can think of a few dozen others.   

I will leave readers to go over the Mox Report article themselves and instead focus on the bottom line results as reported in the company's just released 10K for the year 2017.  I have written before that while the AR/VR space is certainly exciting, in the real world a company needs to  have revenues eventually exceed expenses in order to be viable.  

Vuzix has been around for over 20 years now, so let's see how they did.  Here's the link to the filing: 

http://secfilings.nasdaq.com/filingFrameset.asp?FilingID=12631582&RcvdDate=3/16/2018&CoName=VUZIX%20CORP&FormType=10-K&View=html

For the year ended Dec. 31st 2017 the loss attributable to common shareholders came in at over $21.3 million.  That compares to the previous year when the loss was over $20.8 million.  

There will be a conference call on Monday, and just like last year I expect there will be talk about this being a pivotal year with all the usual forward looking and safe harbor protected hyperbole.  

There's not much more to say here obviously, the business is performing as it has in the past, losing money by the bucket full.  At the end of 2017 the accumulated deficit was at $96.4 million, assuming they've continued losing about $2 million per month that number is already over $100 million.  

If it weren't for the money generated from printing and selling shares into the market.....

Good luck in any case, maybe some more media outlets will write some nice things and help pump the price up again.  

Disclosure.  As mentioned in previous posts, I own VUZI put options.

Vuzix - The reason for my fixation on this money losing and constantly diluting company

A question I'm frequently asked on social media sites like Stock Twits where I post with the user name growacet, is why I'm so fixated on a company like Vuzix when I have such a negative opinion.

Its a fair question certainly, and one I will attempt to explain.

Firstly let me deal with the subject line wherein I describe Vuzix as a company that is losing money and constantly diluting.  Is that factual?  There can be no question that Vuzix is a money losing company, all you have to do is read their filings.  Their last released 10Q quarterly report came out on the 9th of November 2017 covering third quarter results up to Sept 30th 2017.  Here's the link:

http://secfilings.nasdaq.com/filingFrameset.asp?FilingID=12372885&RcvdDate=11/9/2017&CoName=VUZIX%20CORP&FormType=10-Q&View=html

Just The Facts

All you have to do is a Ctrl F search for the "loss attributable to common stock holders" and you'll see that for the three months ending Sept 30th 2017 the company reported losses of over $5.9 million.  For the 9 months ending September 30th the losses come in at over $15 million.  

So depicting Vuzix as a money losing company is certainly accurate.  But what about constantly diluting?  

That will depend on one's definition of "constantly".  Obviously Vuzix isn't printing shares every single day of the week.  You might have a friend who is "constantly borrowing money" from you.  For some that might mean getting hit up every week, for others being asked 3 or 4 times a year for cash to "tide me over" would qualify as constant.  

So how often is Vuzix hitting up investors to raise much needed cash?

Dilution Dilution Dilution

-On August 9th 2017 the company announced raising a little over $8.6 million less fees and commissions by issuing 1,500,000 shares.  

-Then on December 14th 2017 they raised another $12.5 million, again less fees and commissions, by issuing another 2,066,116 shares.  That raise included issuing 1,033,058 warrants priced at $7 per share which can be converted 6 month after being issued.  This is significant because if Vuzix can manage to keep its share price above $7 into the summer then those warrants would be "in the money" which could result in further dilution.  Of course if VUZI falls back below $7, then they're basically worthless.

-The most recent raise was announced Jan 24th of 2018.  This one was for $30 million, and again that's less fees and commissions, by issuing 3,000,000 shares.  They also issued 1.2 million warrants with an exercise price of $10, but given the drop in the PPS those warrants are obviously well out of the money.  

So in less than 6 months Vuzix did three raises, issuing 6,566,116 shares raising a little over $51,000,000 less fees and commissions.  I don't know if everyone would qualify that as "constantly diluting", but its close enough in my books.  Especially considering there are warrants still outstanding.  

Then of course there's Intel's position, back in November of 2016 they ended their headset partnership and disclosed that they were looking for alternatives for their investment in the company.  If they liquidate you can add another 5,000,000 shares to the pile on conversion.  If that happens there won't be a cash infusion coming, Intel's $25 million from 2013 must be long gone or the company would not have needed to keep printing more and more shares.  After all, the accumulated deficit up to Sept 30th 2017 was already over $90.5 million.

Alright, I hear what you're saying.  I still haven't explained my fixation on this company.  All I've done is present some simple factual data which anyone with the time and inclination can research and verify.  

And that's what it comes down to.  Simple facts.  I love the capital markets the same way some people love politics.  When it comes to political arguments you see people fixated on an issue or a personality all the time.  Maybe never more so than with the battle between supporters of Hillary Clinton and Donald Trump in the most recent U.S. presidential election.

Why do people get fixated on Donald and Hillary?  I put it down to ego engagement, they want to express their opinion.  And personally I don't have an issue with someone supporting Clinton or Trump, but I do get my shorts in a bit of a knot when people misrepresent simple facts.  

Imagine a Hillary supporter saying:  "The fact is Hillary Clinton has never reversed herself on any position and has never accepted money from big business interests".  The Trump supporter's head would probably explode, mine too.  Or if a Donald fan said:  "The fact is Donald Trump holds women in the highest regard and has never used sexist language to describe any woman". You'd have to be living under a rock to not know how out to lunch that statement is. 

Support Clinton or Trump, I don't care because I thought (and still think) that they both suck. But for God's sake don't distort or simply ignore basic facts just to get people to agree with your point of view. 

The same thing holds true with a company like Vuzix, don't distort or ignore factual reality just to get people to risk money on the stock. That's what I see every day on stock forums and social media sites like Stock Twits.  

Of late I've been crossing swords with a user who posts with the name cthompson.  This individual loves to post about things like a "buyout" like there's an actual deal on the table, instead of just a mindless pump pulled out of his nether regions. Others tout Vuzix as having "solid fundamentals".  How you can describe a company that does three cash raises totalling over $50 million in roughly 6 month as being fundamentally solid is beyond my comprehension.

So put it down to ego engagement, that's why I fixate on a company like Vuzix.  My opinion is that this company is using promotional IR firms to get investors excited about a business that ultimately is not viable.  And when the PPS climbs big, there are individuals who think that a rising PPS confirms that the company's prospects must be good.

What does viable mean?  For me it means a business that is able to generate sufficient revenues to cover expenses with profits left over, if not now at least sometime in the next few years.  Others may view viable as meaning having an idea or a product capable of exciting investors enough for them to finance huge losses year after year, by this definition Vuzix is very viable in my opinion.

Dislcosure

Its always nice to have some skin in the game of course.  Shorting though is an incredibly risky proposition.  

Some people caught onto the fact that Nortel was a disaster waiting to happen when it was trading under $100 per share.  Another example would be Cynk Communications when that company was trading for $5 or even $10 per share.  Followers of the tech space know neither of those two stories ended well for those who bought and held on until the bitter end.  

But those who decided to sell short, even though their opinions were ultimately right....if they shorted Nortel when it first climbed to $80 or CYNK when it first went to $5 or even $10, they faced huge losses.  

Rather than going short by borrowing and then dumping shares back into the market, and exposing myself to potentially big losses as happened to Nortel and CYNK bears when those stocks got pumped to high heaven, instead I own put options.  With futures contracts like puts the risks are far less, and there's an absolute floor in terms of the potential for losses.  Short sellers on the other hand, theoretically at least the potential for losses is limitless.

I know that, even if I'm ultimately right in my opinion that Vuzix will never realize significant enough revenue to be earnings positive, that doesn't mean the stock still can't get pumped sky high.  All it would take is for a media personality with a big following to tout an investment in Vuzix as rock solid.  

I remember back in 2005 and 2006 when some sharp minds saw what was coming to the US housing market.  Still there were media "experts" out there telling people that buying a house was the best investment they could make, and as housing prices continued to climb the naysayers were trashed.

So go ahead Vuzix pumpers, trash me all you like.....but in the end I don't see this ending well.  With stocks its a zero sum game, some people will end up with shares, others will end up with money.  

Good luck, here's hoping my readers put cash in the bank.

Vuzix - Shareholders should be thrilled (VUZI)

On Wednesday January 24th 2018 Vuzix announced a share offering that raised $30 million for the company after the market had closed.  If you missed it here is a link to the news:

https://finance.yahoo.com/news/vuzix-announces-30-000-000-231500081.html

Buyers had pushed shares of VUZI markedly higher before the news came out, paying as much as $11.40 per before the PPS settled at $10.80 at the closing bell on Wednesday.  One day later the PPS traded as low as $9.45 before recovering a bit to close at $9.75 for a one day drop of almost 10%.

The perplexing question is obvious....Why?  Why did the stock sell off causing the drop?  I can only assume that a significant number of shareholders were unhappy with the dilution.  

That suggests to me that a lot of investors failed to do adequate research before buying their shares.  In my opinion those who've done their research and due diligence before investing in Vuzix were not surprised by the dilution.  In fact they should have expected it.

Obviously researching a potential long term investment involves a lot more than simply reading over recent press releases.  Due Diligence isn't just scanning a company profile put out by some IR outfit that's being paid to promote a company. 

A bullish sounding PR may bring a company to an investor's attention.  A sharp looking video presentation might spur some interest.  Experienced investors know that PRs often talk up the potential for the future, but forward looking statements are not material representations of fact and cannot be relied upon.  Companies hired to attract investors will punctuate the positives, while either glossing over or completely ignoring any of the negatives.

Real research for me involves looking at a company's SEC filings, perhaps even researching the business background of key executives like the CEO.  Knowledge of the industry or space is obviously helpful.  If a brewing company is planning a big expansion into some place like Saudi Arabia, it might help to know that the Saudi kingdom has a ban on alcohol.

One quick note before I continue.  

I am writing this blog posting from the perspective of an investor who is looking for long term success in a company.  I'm not approaching this from the point of view of traders simply looking to scalp shares at a profit.  For those who play momentum, or who like to swing back and forth between long and short positions....you should probably stop reading right now.

Frankly in depth research is likely a waste of time for those simply looking to buy the dips and sell the rips.

Those looking at Vuzix as a buy and hold long term investment should already be aware of the fundamental realities.  The last 10Q came out November 9th just passed and reported the results of the 3rd quarter up to September 30th 2017.  Here's the link:  

http://secfilings.nasdaq.com/filingFrameset.asp?FilingID=12372885&RcvdDate=11/9/2017&CoName=VUZIX%20CORP&FormType=10-Q&View=html

Simple factual data from that filing is there for anyone who takes the time to look.

• Shares totalled 22,203,911 as of Sept 30/17 up from the 20,674,742 issued as of June 30/17
• Up to Sept 30/17 the accumulated deficit was $90,592,988
• Loss attributable to common stockholders came in at ($5,937,563) for the quarter
• Cash and cash equivalents totalled $8,677,341 as of Sept 30/17

Basically this paints a pretty clear picture for me.  Vuzix is a cash poor company with insufficient revenues to cover operating expenses.   This isn't a Google or Apple with billions of dollars on the balance sheet to spend on product development.  

Those who've done their homework on Vuzix already know that as of May 15th 2013, in the first 10Q after a 1:75 share consolidation, the company reported only 3,536,586 shares outstanding.  So its clear how the company funds operations, by share offerings.  

From Sept 30th 2017 to present I haven't seen any news about actual sales.  Yes there's been lots of reports about hopes of building relationships and about deals that "may" happen.  But anything that "may" happen...its reasonable to think they also "may not".  

Given that the company burned through almost $6 million in the three months leading up to Sept 30th, I think its reasonable to assume they've burned through at least that much in the 3+ months since Sept 30th, and probably more.  That would have meant that without further dilution the cash available would have been getting very low.  

Now they've raised $30 million with this most recent offering, on top of the $12.5 million they just raised in December 2017.  I don't have a PHD in advanced mathematics, but I make that to be a total of $42.5 million raised in a little over 1 month.  

That is pretty impressive in my books.  Even if they start losing $10 million every 3 months going forward they now have enough money raised to last another 12 months.  Shareholders with a long term view who are willing to take on the obvious risks should not have been surprised.   

Disclosure

I own put contracts, which is a way of playing the short side.  Obviously that means my overall opinion is bearish.  With that being said with all the money they've been able to raise Vuzix is going to be around for a while yet, and if they actually do start realizing signficant sales they could even become profitable. 

If they don't?  Eventually I expect the pool of investors willing to risk money on forward looking promise to shrink.  

Will Vuzix hold its gains this time? (VUZI)

I first wrote about Vuzix back in September of 2016 when it first popped onto my radar thanks to a lot of chatter on stock social media site Stock Twits where I participate with the name "growacet".

Vuzix - Time machine back to the tech bubble?

Back in September of 2016 shares were trading in and around the $9 area.  Now?  It looks like VUZI will be trading somewhere around $10 today (Wednesday Jan. 24th 2018). In between its been quite the roller coaster as evidenced by the chart below covering that period.

That's quite the roller coaster.  From up around $9 in September of 2016, then like a yo-yo on a downward escalator all the way below $5 by early November of 2017.  However while it took over a year for the PPS to fall so steadily, its only taken a couple of months to erase those losses, with VUZI now making new highs.

The big question though....Will it hold this time?

More importantly, especially for those who might be considering paying $10 or so per share at current levels.....Could the PPS climb even higher?  In fairness I have to allow that VUZI could very well not just maintain its current valuation, but that it could climb substantially higher.  

Do I think it will?  I do not know for certain, my time machine still isn't working, but I do consider it a very risky proposition.  Why risky?  Because of Vuzix's long history of wild price moves and poor bottom line performance.  

I know that some will look at the PPS more than doubling in less than 3 months as "PROOF" that the future must be bright, because for them, the PPS confirms it.  That was the same attitude that led many to buy, hold and to keep buying all manner of dot com disasters and money losing tech stocks in the late 1990's.  People saw their shares going up, Up, UP and thought the party would never end.  

The saddest cases rode companies like Pets.com, Digiscents and hundreds of others all the way to nothing.

Pumpers and promoters love to point to the Amazons, the Googles and Netflixes while conveniently leaving out the Gameflixes, Virtual Keyboards, Nortels, Worldcoms and countless others.  I would submit that for every Amazon and Microsoft that were huge winners, that there were hundreds of others that crashed and burned.  

I think it might be instructive to take a look at what has perhaps caused this sudden and rapid increase in Vuzix's valuation.  It doesn't seem to me it has anything to do with their last reported quarterly performance when they badly missed both revenue and earnings targets.  In that 10Q the compay reported losses of about $5.9 million for the three months ending September 30th 2017.

http://secfilings.nasdaq.com/filingFrameset.asp?FilingID=12372885&RcvdDate=11/9/2017&CoName=VUZIX%20CORP&FormType=10-Q&View=html

That is of course old information, over 3 months old now.  

As I've written many times on this blog before, with speculative stocks fundamentals often don't matter.  What does matter is the expectations of investors going forward.  If stocks were valued strictly on bottom line performance then Tesla's stock wouldn't be trading around $350 per share.  Tesla shareholders are betting that the electronic car maker will be an automotive giant.  If they're wrong, and Elon Musk's great adventure crashes and burns, oh well.  

So what's happened to cause investors to be bullish about Vuzix's future?  While I haven't seen any news with hard numbers attached there's been no shortage of Press Releases eminating from the company.   Since reporting the 3rd quarter numbers I count 24 releases on the company's website.

That's 24 PRs in less than 3 months, which comes to 2 or 3 per week.  Shareholderss who want or need constant communication are obviously happy.  That's far too many to disect each and every one, so I'll try to hit the highlights.

A day after reporting their 3rd quarter numbers Vuzix announced that they'd won CES 4 awards for their newest Blade product.  That might seem impressive, however its the same number of awards that the company won in 2017 and still their revenues were insufficient to forestall further dilution.

https://ir.vuzix.com/press-releases/detail/1524/vuzix-awarded-four-ces-2017-innovation-awards-for-its

After a number of releases about vairious shows, new hires and development deals news came out that seems to have had a big impact, a 3 year supply agreement with Toshiba.  

https://ir.vuzix.com/press-releases/detail/1597/vuzix-signs-3-year-supply-agreement-with-toshiba-for-custom

I find this PR to be very "cloudy" and replete with language that is....at best fuzzy.  Here's an example:

Any such sales will be made pursuant to purchase orders which Toshiba may submit in its discretion. (* denotes my emphasis)

What the PR lacks is what I consider definitive language.  After reading it, its hard to determine if this agreement will result in any meaningful revenue for Vuzix at all.  If Toshiba "may" submit purchase orders, then it stands to reason that they also "may not".  Later it says this:

Pursuant to the supply agreement, the Company agreed to sell such product exclusively to Toshiba for a period of up to 12 months, *subject to Toshiba's submitting a minimum of $5,000,000 of purchase orders. (* denotes my emphasis)

So does that mean Toshiba will be submitting orders for at least $5 million?  Not to me it doesn't.  To these eyes it suggests that this deal is contingent upon Toshiba submitting a minimum of $5 million in purchase orders.  If they fail to order $5 million in product over the ensuing 12 months, what then?

The latest news, and what is likely the catalyst for the current price surge over $10 came out yesterday, January 23rd.  It concerns an apparently successful pilot program with H-E-B.  

https://ir.vuzix.com/press-releases/detail/1524/vuzix-awarded-four-ces-2017-innovation-awards-for-its

Why do I say "apparently successful"?  Different people will obviously have differing views on what constitutes success.  Sometimes a professional sports team will lose a game, but the coach will declare the game a success regardless because he percieves some important objectives as having being met.  

For me success in business is about sales, and this PR says nothing about any orders.  The PR does end with Vuzix's COO saying he's looking forward to expanding the relationship between Vuzix and H-E-B.  But that is of course forward looking and safe harbor protected.  That's not to say there won't be large orders coming from this company, but if there aren't....oh well.  

So What's the Bottom Line - Full Disclosure

Okay, so I've just gone over a lot of old news, but investing is about the future as everyone knows.  Will shares of VUZI hold their current valuation?  Will they climb even higher?  Will it be a repeat of September 2016 all over again with the PPS crashing downward?  

It could be any of the above quite frankly.  I have a position on the short side, but I'm doing my best to not let that cloud my judgement and turn a blind eye to the potential for the PPS to climb.  

My ultimate opinion hasn't changed.  It is my view that Vuzix's buisness is not sustainable for the long term.  But in the short to medium term, anything is possible because the company has been very successful at attracting investors in spite of an ever increasing accumulated deficit and regular dilution to raise much needed cash.  

With the next filing I expect that bottom line performance will continue to show the company struggling with the bottom line, with more losses and an increase to that accumulated deficit.  But that may not matter.  Investors in the company may shrug it off as they did when the company reported losing almost $6 million for the 3 months ending September 30th.  

Vuzix employs a lot of IR promotional firms and they've been very successful at building a following for this company.  And if investors don't care about bottom line performance, then things can go nuts.  Many Nortel investors made a killing by selling when buyers were falling over each other, paying over $100 per share for that networking giant.  Those who held on right to the bitter end though watched big paper gains turn into large capital losses.

A final note on my playing the short side.  I'm not actually short any shares, I do not engage in borrowing shares and dumping them back into the market in hopes of buying them back cheaper for a profit.  I use the less risky form of playing the short side by buying put options.  Puts are a futures contract, and if the PPS for a stock falls before the contracts expire, then a buyer of Puts can make profits.  

Right now I am underwater, and that's okay....I only risked money that I could afford to lose.  They expire in April, and while I'm obviously hopeful that the PPS erodes before then, I know that there's every possibility the PPS could hold where it is or climb. 

I'll say one thing for Vuzix, its never dull.  Comments of course are welcome, just no profanity.  My ultimate wish is for retail investors to make money, whether long or short or with puts or calls.  But its a zero sum game, you can't have shares and the gains they've made too...the buyer gets shares, the seller gets cold hard cash.  I hope readers make bank, and remember....nobody ever went broke from taking profits.

Cheers. 

Vuzix - Losses and accumulated deficit continue to grow...

Despite being around for 20 years, thus now entering its third decade of existence, you could be forgiven for thinking that Vuzix is a start up company.  The financial performance is more reflective of a company that recently underwent an IPO in my view, not one that ascended to the Nasdaq from the OTC penny world after a 1:75 share consolidation in early 2013.

With bottom line performance like what they just reported, they may be headed back to trading over the counter.

Here's a link to the 10Q filing that just came out for the quarter ended September 30th 2017:  

http://secfilings.nasdaq.com/filingFrameset.asp?FilingID=12372885&RcvdDate=11/9/2017&CoName=VUZIX%20CORP&FormType=10-Q&View=html

I know the rainbow and unicorn crowd will all want this to be ignored, and for the focus to be on what might happen next year.  I'll deal with that later, by looking at what was expected for 2017 when the company reported third quarter results in 2016.  Spoiler alert, in 2016 things looked fantastic going forward into 2017.  

But back to the 3rd quarter just completed.  If there's one area where Vuzix exceeds expectations, its in their ability to lose more money than forecasted.  As per Yahoo Finance, analysts were estimating losses per share of (-$0.17).  They blew that number out of the water, but not in a good way. with losses reported at ($-0.28) per share, off by 11 cents.  

https://finance.yahoo.com/quote/VUZI/analysts?p=VUZI

More numbers that were just reported for the three months ended Sept. 30th 2017. The loss attributable to common shareholders came in at over $5.9 million.  On the revenue side analysts were forecasting $2.14 million while the result was only $1.41 million.  Less revenue and higher losses than expected.  Anyone who thinks that a winning formula probably works for the accounting firm of Dewey, Cheatham and Howe, (say it fast).

And the accumulated deficit?  Up to September 30th the number grew to over $90.5 million.  But as we all know, the rainbow and unicorn types love deficits.  Meanwhile the share count just keeps going higher and higher.  Up to Aug 9th 2017 the number was 20,674,742 shares, as of November 9th that had grown to 22,203,911 shares.  

I don't expect it will too long before shareholders experience even more dilution.  The last raise was for $8.6 million after issuing another 1.5 million shares.  Given the just reported loss of $5.9 million over just 3 months, I would suspect that cash in going to be running seriously low before the end of the year.  

Alright....now onto expectations for 2018.  There are lots of social media types posting all over stock message boards about this "great" (sic) earnings report.  That's not surprising, Vuzix is no stranger to stock promoters with reports saying over 20 have been engaged over the years.  

Obviously even a brain dead pumper can't put lipstick on the ugly losses and the missed expectations.  But they can try to build expectations for next year.  With another dilutive share issue likely in the cards it would make sense.  If the PPS can be held up by enticing shareholders to hang tight and buy more, that means less shares have to be printed.

Here's what was being said in 2016 about what to expect in 2017.

"The Company currently has pending orders from hundreds of unique VAR customers for the M300, each of whom is building a business around Vuzix Smart Glasses for the enterprise markets. Pre-orders for these new M300, including migration packages, are included in primarily as deferred revenues and will not be recognized as revenues until they ship to the customer..."

That was after reporting losses of 32 cents per share, which might seem better than the just reported loss of 28 cents per share. But note that back then there were only 17,560,686 shares reported as outstanding, not the 22,903,911 that were just reported.  Last year's 3rd quarter loss was reported at over $5.4 million, less than the just reported loss of over $5.9 million.....

Anyway here's some of what's being released about expectations going forward, emphasis on forward looking language is my own:

"....hundreds of active M300 pilot programs across a variety of industries and continues to see a fundamental shift occurring in the enterprise space from pilot programs moving to commercial volume multi-site rollouts.  Our M300 gross margins continue to improve and with our various manufacturing processes and quality improvements in China, we are back on track to produce and deliver higher volumes to support our expectations of further growth in revenue in the fourth quarter of 2017 and beyond.  The stage is set for another record year in 2018 for Vuzix driven by commercial enterprise smart glasses deployments and higher adoption rates

We shall see.  It sounds good but its very short on specifics.  Higher volumes?  How much higher?  10 more units, 100, 1000.....or just 1 unit higher?  It all sounds like more rainbows and unicorns to me, reminiscient of the tech bubble Digi-Scents, Pets.com days.  

Will they make money in 2018?  In my opinion, no....not even close.  Happy trading, the PPS moved above the 50DMA with Thursday's trading.  We shall see if these results and expectations for 2018 can keep it there or if it will be yet another short lived blip on the road down.  

I still have no position long or short, so no skin in the game.  Happy trading.

Peace

Vuzix - Expecting more bad results (VUZI)

I have been writing about Vuzix since last September when it was brought to my attention by a wave of social media hype.  My first post was on Sept 3rd 2016 when the PPS was trading in the $9 area.  In that entry I explained the reasons why I decided to open a position on the short side.  Here's the link to that entry:

Vuzix - Time machine back to the tech bubble? Why I'm playing the short side

I offered up the view that I do believe that the AR/VR space will be viable.  In point of fact I expect Augmented/Virtual reality to be huge in the coming decade, both in the consumer and commercial/industrial markets.  However I'll be very surprised if Vuzix is anything more than a bit player, that's if they're even still around in another 10 years.

Why did I have, (and continue to have) that opinion?  

There's a lot of reasons, but primarily its because of something really simple, bottom line performance.  Virtual reality is all well and good, but when it comes to business reality  its basic economics that matters in my world.  And that means a business needs to bring in more revenue than it is spending.  Its a pretty common sense concept.

Of course September of 2016 was a long time ago.  I was told repeatedly on social media sites like Stock Twits that "next year" was going to be huge.  Well, 2017 is almost over and the results have hardly been inspiring, quite the opposite.  In the quarterly 10Q filing for the 3 months ending June 30th 2017 the company reported loss attributable to common stockholders of just under $4.5 million.  You can verify the numbers here:

http://secfilings.nasdaq.com/filingFrameset.asp?FilingID=12221774&RcvdDate=8/9/2017&CoName=VUZIX%20CORP&FormType=10-Q&View=html

Of course that was over 4 months ago.  More current results will be out shortly for the quarter ended September 30th 2017 and we'll see if there's been any improvement.  Realistically I think its prudent to expect more of the same.  

In the lead up to the release of 3rd quarter results there has been a flurry of bullish sounding news however.  Its because of this positive sounding news that I'm expecting more bad results in fact.  I see it as being market sleight of hand, like a magician who uses misdirection to get his audience to avert their attention while he plants a playing card so as to fool watchers into thinking it moved by magic.  

If the bottom line results continue to show the company losing millions of dollars, with the need for more dilution to fund operations, then it makes a lot of sense.  

Start up companies and other businesses in the public sphere with shares available to individual investors, those shares represent capital.  And ultimately its investor sentiment that rules the day.  

As I noted back over 12 months ago, in the days of the Tech Bubble there were countless companies losing millions of dollars every month that still had market capitalizations of $100 million and more.  Why?  Because investors were willing to ignore bottom line results, instead dreaming of boundless riches at some time in the future.  Rainbows and unicorns in other words.

So what's the news been of late?  On Tuesday November 7th the company put out news touting that it now has over 100 patents and patents pending:

https://ca.finance.yahoo.com/news/vuzix-patent-portfolio-increases-53-202300905.html

Patents are wonderful.  But do they actually contribute any revenue to the company?  In our fast moving technological world I have to wonder about how long technological patents will have any value at all.  With people replacing items like smartphones practically every year or two I don't believe intellectual property in the technology field is as valuable as it once was.  The patents on rotary phone technology were probably worth a lot of money at one point, today I'm guessing they'd be worthless.  

The news of Wednesday November 8th was about M300 programs topping 350:

https://ca.finance.yahoo.com/news/vuzix-m300-programs-top-350-201700959.html

Its full of things that sound good, but its long on hyperbole and short on specifics.  Here's some of the text, I will bold sections and comment.

• "...along with the many pilots that have already moved to volume production, the company has more than 350 M300 pilots across a broad customer base that includes numerous large global companies.  In addition to multi-site customer footprint expansions, Vuzix continues to see more complex and different use cases for the M300 that are now being successfully migrated beyond pilot programs in industries like pharma, logistics, field inspection and others.  The Vuzix M300 has an extensive distribution channel and is currently being shipped into 45 countries across the globe with plans underway to expand distribution to a further 55 countries worldwide".

Okay..this all sounds wonderful.  Doesn't it.  Volume production, numerous large global companies, expansions, extensive distribution.  But how much money is it bringing in and is that cash flow sufficient to sustain operations?  Or is the company going to continue to bleed red ink?  Are the units being shipped around the world costing the company money or earning profits?

The PR ends with rosy predictions about Vuzix being a big player in 2018 foretasted adoption of hundreds of thousands of smart glasses.  Will that prediction come true and if it does how big a slice will Vuzix get?  Once again, its "next year".  Back in November of 2017 the company was putting out news about volume shipments as well:  

https://ir.vuzix.com/press-releases/detail/1521/vuzix-next-generation-m300-smart-glasses-nears-final

Add in the fact that Apple is reported to be entering AR market, well....I think the writing is on the wall.  The window for competitors to establish a viable footprint is closing fast in my opinion.  You can read Apple's news here:  

https://www.theverge.com/2017/11/8/16622802/apple-ar-headset-augmented-reality-plans-rumors-2019

I fully expect the VUZI pumpers, shills and touts to tell me I'm out to lunch, they've been doing that since last September.  But while pumpers will lie, the chart doesn't.  

For those who use technicals I think the chart can prove instructive.  While the overall macro trend of the past year is unquestionably down, there have been significant spikes upwards and the current move up may not be over.  

Starting in July the 50DMA (blue line) has been acting as a resistance point, so perhaps VUZI can get back to that level again for those who are looking to get off the VUZI train.  But I know selling isn't easy, fear of missing out on something big is real, and besides...those who do sell, they need others to be bullish and buying.

I currently have no position in VUZI either long or short, so I don't have any skin in the game.  These are my genuine opinions, I have been following VUZI for more than a year now and I want to see how things ultimately play out, and I have to acknowledge (as I always do) that my opinions could be wrong.  So far my track record is pretty bang on, we'll see if that continues.

Peace.

Vuzix - From Mega Deal to Mega Disappointment?

I believe in giving credit where credit is due, so credit for this posting has to go to SeekingAlpha writer Mark Gomes.  Back on August 16th 2017 Mark published an article on Seeking Alpha:  "Did Vuzix Just Announce a Mega Deal".  I'm assuming most VUZI watchers read it, and probably near 100% of VUZI investors.  

You might have missed the follow up post he did a little over one month later on September 16th however.  A post in which he writes about why he closed his VUZI position.  The title tells it all:  "Is Vuzix a Wounded Warrior". 

It was easy to miss because, while the first bullish article was published on the main site as an article, the second was an "instablog" which doesn't even show up if you search out VUZI on the Seeking Alpha site.  The only way you might see it is if you follow Mr. Gomes on Seeking Alpha and then choose to peruse his instablog.

Included in his reasons for closing his VUZI position was a video review done of the Cyber Timez software using Vuzix glasses. I've watched the video a couple of times, and while the gentleman doing the review never mentions Vuzix by name (a small blessing perhaps), when he holds up the box with the glasses it clearly says Vuzix (check at 00:49).  I don't think you ever see the Cyber Timez logo. 

If you read the comments below the video you'll notice a couple of people suggesting OrCam.  OrCam is another company which supplies glasses to aid the visually impaired, and they have partnered with the Wounded Warrior Project.  You can read about OrCam and WWP here:

https://www.prnewswire.com/news-releases/wounded-warrior-project-partners-with-orcam-congressman-to-help-blind-veteran-300459998.html

As I noted in an earlier blog post, the above referenced Wounded Warrior Project is not to be confused with the Wounded Warrior Program that Vuzix partner Cyber Timez is affiliated with.  While the WW Project is a large and well known charitable registered orginization.  The WW Program that Cyber Timez is affiliated with is not a registered charity.  It is supplied by a company called Minton-Jones, a provider of office supplies, furniture and printing headquartered in Norcross Georgia.  

I know the Wounded Warrior news was hyped and touted over and over on social media.  I guess its small wonder that nobody shared the above video.  Here's an earlier video showing the host of the Blind Spot talking with the Sean of Cyber Timez demonstrating the glasses, and they're working. 

Personally I find the voice to be incredibly annoying, but then maybe that's just me, I can't stand the voice prompts on my GPS.  Still, I think it would be easier to simply ask someone what color shirt they're wearing, or what kind of room I'm in.  

Comments always welcome....but no profanity.  If you leave a comment like Robert did on the first video where he said:  "I will never buy this product it sounds like it's a real piece of s***" It won't be published.

Peace out.

Vuzix - What the hell happened on Thursday?

If you're holding or watching Vuzix, which trades under the symbol VUZI, then you no doubt saw the wild trading that took place on Thursday September 28th.

The stock opened down at $5.60, but that was nothing compared to what was coming.  The stock crashed and traded as low as $4.10 inter-day, but by the close it recovered to the opening price of $5.60 for a 5 cent drop from the Wednesday close.  

Quite the roller coaster, or more like that drop zone amusement ride maybe...or better yet a bungee jump.  

Social media sites like StockTwits were rife with speculation as to the cause.  Some thought it was a bear attack, others put the blame on manipulation dropping the price so that accumulators could take out stop losses.  There were all manner of theories, and I can imagine it was probably a bit nerve wracking for some shareholders.  I figure there had to be some big players involved, the volume of almost 1.5 million is almost ten times more than the daily average for the preceding three months.

Of course assuming there were some big players working their magic, I don't expect they'll be announcing anything.  Don't expect to see some Hedge Fund type issuing a PR saying:

********************

Fake News Wire (FNW) September 30th 2017:

We at Bogus Hedge Fund were responsible for the increased volume and volatility in the trading of VUZI shares on Thursday Sept 28th.  We engaged in what is commonly called a "Bear Raid" by borrowing as many shares as we were able and dumping them back into the market.  

This had the desired effect of having the share price fall significantly and we were then able to cover our short by taking out stop loss orders and other sell orders from nervous shareholders scared by the rapid fall we engineered, thus covering our short and realizing a nice return on our little gambit.

********************

Mind you, if a PR like that does in fact come out...just remember, you read it here first at Avoid The Bag.  

Vuzix may have been the target of such a bear raid, there's no way to know.  It is after all an incredibly risky stock given the amount of money they're burning through as evidenced by their 20 year history and accumulated deficit of over $85 million up to June 30th of this year.  

http://ir.vuzix.com/financials

Dilution is continually happening, after effecting a 1:75 reverse split share consolidation in February 2013 the number of issued shares was reduced to roughly 3.5 million as of May 15, 2013. But as of the most recent 10Q filing for the period up to June 30th the total outstanding shares had grown to over 20.6 million.  That was before yet another share offering for 1.5 million more shares.  

And then of course there is Intel which holds 49,626 shares of Series A Preferred Stock.  Each of those Series A Preferred shares is convertible into 100 common shares, meaning if Intel opts to convert and sell them, then there would be even more dilution to the tune of 4,962,600 more shares.  At this rate it might not be long before yet another reverse split is needed if they want to stay listed on the Nasdaq rather than going back to the OTCBB and Vancouver Exchange where they started.

Those who've already read the filings know the Pro Forma Book Value as of June 30th was only $0.71 per share of common stock, and just $0.44 cents on an as converted basis with the Series A convertible shares.  If you've missed that information you can get it from the filing here:

http://secfilings.nasdaq.com/filingFrameset.asp?FilingID=12224119&RcvdDate=8/10/2017&CoName=VUZIX%20CORP&FormType=424B5&View=html

So what happened Thursday?  Was it hedge fund type games, or maybe Intel converting and disposing of its shares, or something else all together?  Who knows...but the fundamental picture remains scary to my eyes.  

I am aware that there are a lot of people seeing Rainbows and Unicorns in the future.  All I will say is wake me when the dream becomes reality, or maybe the Rainbow and Unicorn types are the ones who are asleep and dreaming.  

Comments always welcome, but no profanity...the word "hell" in the subject line of this posting is about as far as I will allow.  

Vuzix - Mega deal or just mega hype?

On August 14th just passed Vuzix, in tandem with Cyber Timez, announced a purchase authorisation from the Wounded Warrior Program to assist veterans with low vision and blindness.

It sounded great, and on the surface it looked great.  Who doesn't want to see wounded veterans getting the help they need, be it due to reduced vision or for any other reason.  And being a well known orginization like Wounded Warriors, it certainly seemed like a big deal.

For those unfamiliar the Wounded Warrior Project is very well known, with over a dozen programs to help veterans in need.  You can check out their website here:

https://www.woundedwarriorproject.org/

Back in May of 2017 the Wounded Warrior Project announced a partnership with OrCam to provide smart glasses to a blind veteran, here's that article:

http://newsroom.woundedwarriorproject.org/2017-05-18-Wounded-Warrior-Project-Partners-With-OrCam-Congressman-to-Help-Blind-Veteran

That's pretty damn awesome.  Vuzix should be proud to be part of this program.  But wait....uhm, this isn't the Wounded Warrior organisation referenced in Vuzix's news.  It seems there's more than one. In fact there's quite a list:

http://www.military.com/education/timesaving-programs/wounded-warrior-programs.html

Looking through those programs I can't seem to find the one Vuzix and Cyber Timez are involved with.

Okay here we go.  It seems the U.S. Army has its own official program, the "Army Wounded Warrior Program" or AW2 for short.  There are over 20,000 severely wounded, ill, and injured soldiers enrolled in the Army's official program.  You can read about it on Wiki:

https://en.wikipedia.org/wiki/Army_Wounded_Warrior_Program

That's still pretty damn awesome, and great news that Vuzix and Cyber Timez would be involved with this orginization.  Uhm....wait again.  This isn't the Wounded Warrior Program Vuzix is involved with either.  Turns out there's at least one more.

Okay...here we go, found it at last.  Wounded Warrior Program, here's the link....this is the one, it has to be because its linked in the PR Vuzix put out:

https://www.wounded-warrior-programs.com/

Alrightee, I finally found the right charity they're teamed up with.  Some readers might want to make a charitable contribution.  Oh wait....my bad, its not a charity.  

Well, its all good....if they can outfit some wounded veterans with glasses that improve their quality of life, its all to the good.  Whether this is a mega deal or just mega hype, time will only tell.  Do note that Vuzix in their PR put out a "target" for the number of veterans that might be furnished with their smart glasses.  However as any long time Vuzix investor or watcher knows, targets are frequently not met.

Best of luck.

Vuzix - Does fundamental performance even matter? (VUZI)

Over on stocktwits where I post with the username "growacet" I made a comment about $VUZI and was asked by another participant:  "Where's the pump"??

I should probably thank "wallstpirate" because he provided me with some fodder for something to write about.  I've been posting less than usual here at ATB after all, and inspiration is always welcomed.

So...where's the pump with Vuzix?  Where do I begin?

Let's start with smallcapnation.com which discloses an expectation of $15,000 from a third party for increasing awareness of VUZI.  Here's the link disclaiming the compensation:

http://www.smallcapnation.com/vuzix-corporation-vuzi-disclaimer/

Then there's Tailwindsresearch.com which has published 20 bullish articles distributed both on their site and at SeekingAlpha.com  If you're looking for several hours of bullish sounding material on Vuzix, fill your boots:  http://tailwindsresearch.com/vuzix/

Their disclaiming statement says they "may have been compensated" with the usual boiler plate language about their write ups being for informational purposes only etc.  You can read it all here:

http://tailwindsresearch.com/disclaimer/

I could go on and on of course, ceolive.com, integraconsulting.com and more but I think readers get the point.  Bearish short side website thestreetsweeper.org asserts that at least 21 professional campaigns have been used to promote Vuzix.

http://www.thestreetsweeper.org/undersurveillance/Vuzix_Corp___VUZI___Let_The_Caterwauling_Begin

All the promotion, pump and hype is fine of course, but the important question is....What does it all mean?  What it means is that Vuzix is showing up on a lot of radar screens, investors who might otherwise have never heard about this company have been introduced to it.

Nowhere on any of these sites however do I see the writers advising potential investors to read over the company's SEC filings, except perhaps buried in the disclaiming statements, typically using a nice small font.  

But then, do the fundamentals even matter when a company is relying on pump and promotion to attract investors?  Promoters always talk about the future, that's what investing is ultimately all about of course.  I have little doubt that the AR space is going to be big, just like there was little doubt that web based commerce was going to be big back in 2000.  

There were some heavily pumped and promoted stocks back then too, Pets.Com springs to mind and others like Digiscents might ring a few bells for those who are older.  For every amazon and netflix that made it big there were hundreds that simply rode the wave of excitement, their stocks were hyped up and the printing press churned out shares as buyers couldn't get enough tech.

Is Vuzix using a printing press?  Are they constantly printing more and more shares?  Judge for yourself.  Back in February of 2013 the company did a 1 for 75 share consolidation.  Simply put, shareholders got one share for every 75 they owned.  Someone who owned 75,000 before the reverse took place had 1,000 afterwards.

You can read about it here:  http://ir.vuzix.com/press-releases/detail/584/vuzix-announces-reverse-stock-split

Of course that was over 4 years ago now.  What has happened since?  If you check the 10Q filing for the period ending March 31st 2013 you'll see that the number of shares outstanding was 3,536,856 as of May 15 2013.  If you don't want to be bothered looking up the filing yourself here's the link so you can verify the numbers: 

http://secfilings.nasdaq.com/filingFrameset.asp?FilingID=9299013&RcvdDate=5/15/2013&CoName=VUZIX%20CORP&FormType=10-Q&View=html

Fast forward to the most recently available filing, the 10Q for the period ending March 31st 2017 and you'll see that the number of outstanding shares has ballooned to almost 20.5 million, 20,408,926 to be precise as of May 10th 2017.

Here's the link to that filing:   

http://secfilings.nasdaq.com/filingFrameset.asp?FilingID=12056450&RcvdDate=5/10/2017&CoName=VUZIX%20CORP&FormType=10-Q&View=html

That's an increase of 16,872,070 shares in four years.  That would have been over 1.2 billion more shares if not for the 1:75 reverse split and represents and increase of  477%.  If Vuzix keeps it up, at this rate they'll be pushing 100 million shares within the next 4 years.  100 million is a bit problematic, because according to their filings that's the amount they're authorized to issue.  But if they ring the bell again they could always do another big reverse split I assume.

But in the near to medium term it might not matter.  There are lots of companies that get pumped and promoted.  CYNK communications is one of my favorites, it went from a nickel to over $20 despite $0 revenues and having only one employee.  CYNK billed themselves as a social media company, in spite of not even having a website.  It didn't matter though, and it proves that no matter how bad a company is, if the promotion is good...there are always fools around willing to pay an inflated price.

That's it for now.....I might get a few comments, so I'll remind haters that profanity is verboten here. And I'll also disclose the fact that I have no position in VUZI long or short, so no skin in the game whatsoever.  If I do take out a position however I can state with near 100% certainty that it will be on the short side.

The next quarterly filing should be out soon, and we'll know how much more money was lost and how much higher the accumulated deficit has climbed.  And of course how many more shares were printed.  

Peace out.