Intel spends US$25m for a 30% stake in Vuzix Corp to expand the Google Glass rival
Rochester, NY, USA — Intel Corporation has made a US$24.8 million investment in the loss-making Vuzix® Corporation, a supplier of video eyewear and smart glasses products in the consumer, commercial and entertainment markets.
Vuzix’ wearable display technology is similar to Google Glass, reports Jeremy Cowan, and uses next generation optics and displays that have the potential to fit in fashion-based wearable glasses. In November 2014 Vuzix reported 96% year-on-year product sales growth for Q3 2014, but it made a net loss of $3.3 million in the same quarter (up from a Q3 2013 loss of $1.85 million). (See also: SAP launches two enterprise applications supporting Vuzix’ M100 smart glasses and Analysts find wearable tech market is held back by poor business models and need for fashion collaboration).
Intel’s investment will be used for general working capital to accelerate the introduction of Vuzix (OTCQB: VUZI) next generation fashion-based wearable display products into the consumer market. Intel has purchased 49,626 of Vuzix’ Series A Preferred Stock, which are convertible into 4,962,600 shares of Vuzix’ common stock at an initial conversion price of $5.00 per share, subject to adjustment in the event of stock splits, dividends or other combinations. The shares issuable upon conversion of the Series A Preferred Stock represent approximately 30% of Vuzix total outstanding stock, assuming full conversion of the Series A Preferred Stock. As holders of Series A Preferred Stock, Intel has the right to vote with the holders of Common Stock on an as-converted basis, and has the right to appoint two members to Vuzix’ Board of Directors, in addition to the Company’s current five members.
In connection with the sale of its Series A Preferred Stock, holders of all of the convertible notes issued by Vuzix in June 2014 and holders of approximately 86% of the warrants issued in connection with Vuzix’ July 2013 public offering and simultaneous debt conversion, agreed to irrevocably waive their rights to anti-dilution protection under their respective instruments, thereby eliminating approximately $10 million of derivative liability from Vuzix’ balance sheet.
Vuzix is a supplier of video eyewear and smart glasses products used in the consumer, commercial and entertainment markets. The company’s products include personal display and wearable computing devices designed to offer users portable high quality viewing, provide solutions for mobility, wearable displays and virtual and augmented reality.
The Vuzix M2000AR HMD (pictured above), for example, offers a wide field of view for the wearer. Waveguide optics use a 1.4 mm window with a small input pupil that expands using a hologram in front of the eye. The glasses are said to be lightweight, and have a small volume and mass compared to rival products.
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Sources: Vuzix Corporation. Intel Corp. PRNewswire.