Back to Business as Production Resumed

We were excited to resume production last week after the Chinese holiday. We are implementing communications with our initial channel partners to arrange deliveries and I expect my next post will be to announce the long-awaited channel relationships and availability. This will only be disrupted if we have any issues with final production or final testing. We thank everyone again for your patience.

William B. smith
Chairman and CEO
Vu1 Corporation

First-Hand Report

The lamps featured in last week’s blog post have arrived in the United States and were delivered directly to me for inspection. I am pleased. The aesthetic adjustments to the sleeves and end caps that we requested have been implemented and the lamps look great.

There will be no other updates this week as China is on vacation. We expect to provide another update late next week.

William B. smith
Chairman and CEO
Vu1 Corporation

Solutions Implemented

As mentioned last week, Vu1 staff caught some small aesthetic issues on our product’s end caps. Since then, solutions have been implemented and new and improved quality control practices have been put in place. The result is consistently cleaner sleeves and aluminum coating.

With each new bump, we are finding solutions that allow us to continue on our path and make solid progress. The good news is the issues we are experiencing are becoming more and more minor and easy to fix.

Our progress continues and we are moving forward as planned.

photo 4

photo 2

photo 1

William B. smith
Chairman and CEO
Vu1 Corporation

Chinese Holiday Shuts Down VU1 Plant for One Week

Vu1 has (literally) just been informed that China is celebrating a holiday that mandates our plant be closed October 1 to October 7. The closing will push all manufacturing/assembly/testing and shipping out by one week.

I am frustrated by these seemingly never ending China holidays, but the good news is the product remains on target and production should resume seamlessly after the holiday is over.

As always my goal is to be transparent so you, our investors, understand our challenges when it comes to delays such as this.

William B. smith
Chairman and CEO
Vu1 Corporation

Forward Progress

Welcome back and thank you for checking in. We have good news and only a few minor snags to report. Production is moving well. We have picked up on some small aesthetic issues that we are fixing. You can see the issues in the picture below—these are end caps that, while still functional, are not aesthetically pleasing and do not meet the high caliber of product we want to be known for producing.

Acceptable

Acceptable

Not acceptable

Not acceptable

We also uncovered a few lamps where the line workers allowed compound to leak from the sleeve. Again, not a functional issue, just aesthetics.

Our new glass jug manufacturer is moving a bit slower than expected but we are happy with progress. We will continue to address issues as they arise and look forward to providing you with future updates.

William B Smith
Chairman and CEO
Vu1 Corporation

Progressing As Expected

Though we have no breaking news to report, I wanted to touch base and inform that all our production efforts are progressing as expected. We will report back next week with any updates.

William B Smith
Chairman and CEO
Vu1 Corporation

Continued Progress in Preparation for Launch

As mentioned in our blog post last week, our team was running a final test of 400 lamps, which we planned to test and qualify early this week. I’m very pleased to report there we no testing deficiencies identified and we’ll continue to ship lamps to the USA for distribution to our potential partners in the electrical distributor channel.

We’ve recently purchased additional line and testing equipment that has given us the ability to double the original production capabilities immediately. This equipment was delivered this week and is being assembled as we speak.

We are currently working with our manufacturing partner to source components and develop better relationships with our supply chain for our next purchase order, which we feel will provide major cost savings.

We continue to provide exhaustive training for line workers, as well as our quality control workers, in an attempt to eliminate as much human error as possible.

Our goal is to commence full production on September 15 and not shut down again. We hope to begin shipping fully tested and qualified R30 lamps in relatively small quantities for sale in our retail channel during the first few weeks of October and build our volume daily as the line becomes more and more comfortable.

I will provide another update next week. We thank everyone for their patience and look forward to delivering great light bulbs in the near term.

William B Smith
Chairman and CEO
Vu1 Corporation

Follow Up From This Week’s Blog

We are pleased to report the final test run of 400 lamps is going well. We expect to have all assembly completed this weekend and remain on schedule to test and qualify beginning next week.

We’ve had a few follow up questions related to why we have experienced some recent delays and I’d like to address these. As anyone in business knows, no project will ever run seamlessly. Although we made every effort to account for unexpected delays, we experienced more than our fair share of “seams,” each one unpredictable.

Let me provide a recent example. When we moved from our former manufacturer, the inventory from the last purchase order was transferred. Upon arrival at our new facility, and after doing an extensive inventory analysis, we realized that many of the electronic components had been swapped for “similar” components that were less expensive. So, although our directive was to buy #9 Blue Diode, the manufacturer purchased #8.9 Light Blue Diode, assuming it was comparable. But “close” is not good enough, even at half the cost. We also found, during the same inspection, that the potting compound they planned to use was unauthorized. So, in order to meet our specs, we were forced to reorder components and the proper potting compound. Even if components are “off the shelf,” it takes time for them to come in and this resulted in one of our delays. We have learned from these delays and have put processes in place that will result in less opportunity for delays to occur in the future. For example, in this instance we have mandated a Vu1 employee work in concert with our new partner to ensure proper components are ordered and at the proper prices.

So much for the past; I’d like to share our thoughts for the future. Assuming our tests are successful next week, we are hoping to fill two separate purchase orders and complete them by year end. Investors should consider these to be to be in the “tens of thousands” of units. In December 2014, for manufacture in January 2015, we hope to initiate a third purchase order with our new electronics package that I referenced in a blog a few months ago. Assuming everything is running smoothly, this purchase order will be in the 100,000-unit range. There is a premeditated reason for the jump in volume and the introduction of the second-generation electronics package. With this strategy, we will be radically reducing component costs. So we will crawl, then walk, then run. We expect to continue ramping from that point. Of course all dates are projections that are not guaranteed, but we wanted to share our goals.

Our engineers are working with great ease with our new partners and the collective team is excited about our future. We hope to post an update next week.

William B Smith
Chairman and CEO
Vu1 Corporation

Good News From China

I am pleased to announce that today I received the first shipment of bulbs from Shenzhen Jinyi Display. The bulbs are all tested, qualified and look great. There are no issues with which we need to contend.

We are now finishing 400 additional bulbs for testing and qualification. So long as this next batch meets expectations, we will commence mass production. To guarantee work is done expeditiously, we are currently working out the details of the next purchase order to Shenzhen Jinyi. Every effort is being made to guarantee components are available and ensure no time is lost.

I wish to repeat, there are no issues with the bulbs. They are fully functional, have perfect color and are fully dimmable. There were also no issues with the shipping. Provided the next batch tests the same—and we have every reason to expect they will—we will be ready to move forward.

Our team of engineers and the senior management at Shenzhen Jinyi deserve great credit for propelling us this much closer to the finish line. We expect to cross that line soon (in the next week or so) and commence manufacturing. Again, we wish to thank our shareholders, channel partners and potential channel partners for your confidence and patience.

William B Smith
Chairman and CEO
Vu1 Corporation

Vu1 Business Update Call Recording Posted

I invite our consumers, channel partners and investors to listen to a recording of our Business Update Call conducted Tuesday, July 29 at 4:30 pm EST. This recording will be available for playback through Friday, August 1, 2014, 12:00 pm EST.

We do apologize for some technical difficulties with the call. You can download the recording below.

Vu1 Business Call 7-29-14

Thank you,

William B Smith

Chairman and CEO

Vu1 Corporation