Video eyewear maker Vuzix, which has a history of losses, is considering licensing its intellectual property and taking on more debt to stay in business.

The Rochester, New York-based company makes smart glasses, which operate as an Android-based wearable computer, and video glasses, which show video from mobile phones, Blu-ray players and other devices.

The company's accountant raised substantial doubt about the company's ability to continue as a going concern, or without the threat of liquidation, because of a history of losses and an operating deficit, Vuzix says in a filing with the U.S. Securities and Exchange Commission from Nov. 14.

As of Sept 30, Vuzix had an accumulated deficit of about $37.8 million. The company has been consistently operating at a loss – in 2013 Vuzix had more than $10 million in net losses, and in 2012, had about $4.7 million in net losses.

The company needs more for funding operating losses, working capital, research, principal and interest payments on debt obligations and capital expenditures. Vuzix has previously paid for these expenses with borrowings under notes, sales of convertible debt and equity securities and asset sales.

In 2014, the company entered into a securities purchase agreement that brought in $3 million, which is how Vuzix has sustained operations this year.

Vuzix's management team has plans to consider licensing the company's intellectual property and taking on more debt in order to make sure the company stays in business. Management also plans to: better optimize inventory levels; sell higher gross margin products; introduce see-through binocular waveguide and high-resolution video eyewear; reduce costs; minimize capital expenditures; defer some research and development; and explore new equity financings.

The company will first try to increase product sales, but if that doesn't work, Vuzix will need to sell additional shares of stock, the company says in SEC filings.

For last week's edition of Turnaround Tuesday, see Owner of Troubled Las Vegas Hard Rock Hotel & Casino in Talks with Lender

For more struggling companies, see Mergers & Acquisitions Distressed Company Watch List.  

 

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