Production Update

I apologize for the delay in getting more information to you. About 14 days ago I was made aware there would be yet another short delay, and I wanted to speak with all the engineers and thoroughly understand the issue in order to provide a realistic time frame for getting the Vu1 R30 shipped.

Like everyone else, I’m frustrated with this process. I’m embarrassed by my faulty projections and have come to realize how difficult it is to speculate on anything when it comes to manufacturing in China

Over a year ago, when I spoke with our many investors, everyone wanted Vu1 to remain transparent, sharing both the good news and the bad. We have attempted to do this. I prefer to communicate as often as possible, even when the news is difficult to share or embarrassing to Vu1. The alternative, simply going “dark” until we ship, fans the rumor fire and puts our company in a position where we would never be able to respond. Obviously, this is not where we want to be.

So, where are we today with production? Two weeks ago, Cameron isolated an issue with the red phosphor in our phosphor mixture during the final burn in before shipment. The “color” of the light was too red. After examining the issue, we found that our manufacturing partner never used the proper red phosphor when our relationship commenced. Only on this last PO, when brand new red phosphor was sourced properly, did we realize that our partners previously had been using materials that were not aligned with our orders. This was clearly a violation of our trust and, more important, another violation of our agreement. I mentioned late last year that these issues are being addressed aggressively while we are working with our current partners and I believe our solution will be positive for Vu1 and our shareholders.

Once the issue was identified, Cameron was able to halt production relatively quickly. He immediately came back to the USA while the Chinese were on yet another vacation and we have fixed the issue. Cameron and the engineers are headed back to China today to implement the changes and commence production.

Though I’m completely disgusted with the situation, I promised to get bulbs out the door that deliver on our promise of better light and I will make this happen. I believe that we will be able to deliver bulbs in mid-to-late June. Again, I am working with the information I have today and we believe this is a conservative time estimate. Trust me when I say, I would prefer not to be writing another apology. I look forward to being able to report some positive news.

William B Smith
Chairman and CEO
Vu1 Corporation

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