NASDAQ: KOPN $ 2.12 -0.04( -1.85%) Volume: 100 October 19, 2018 20 min delay

Kopin Provides Business Update and Third Quarter 2016 Operating Results

10/27/2016
  • Technology and Design-in Progress on Track
  • Significant Revenue Growth Expected in 2017
  • Major Announcements Expected at CES and Mobile World Congress
  • Strong Financial Position Maintained

WESTBOROUGH, Mass.--(BUSINESS WIRE)-- Kopin Corporation (NASDAQ: KOPN), a leading developer of innovative wearable computing technologies and solutions, today provided an update on its business initiatives and reported financial results for the third quarter ended September 24, 2016.

“The enthusiasm and excitement around wearables continues to grow and Kopin made further progress in the third quarter testing and evaluating opportunities with potential partners,” said Dr. John C.C. Fan, Kopin’s President and CEO. “We are confident our displays, optics and Whisper™ Chip technology will be key components in many upcoming products from global technology companies. On my recent trip to Asia to further many of these opportunities, it became clear that Asian companies are ahead in monetizing augmented reality (AR) and virtual reality (VR), and many are close to commercial manufacturing. It also confirmed that the Asian view around these emerging technologies is more closely aligned with Kopin’s thoughts: AR/VR should be used for mobile applications, with interface to a smart phone and not a stationary PC; the headsets should be small, light weight and comfortable to wear but still provide an immersive experience; and the devices should be voice centric and not touch centric. With this similar outlook and the technology to power it, Kopin is a highly respected partner in Asia and would place Kopin products across different verticals and companies throughout Asia.

“In fact, we are already seeing this view played out by Softbank, which has recently exhibited our Solos™ wearables in Japan. Solos, our headset targeted to the elite cycling community, features Kopin’s unique Pupil Optics and micro display. Solos uses our world’s smallest heads-up display module and pairs it with our best in class performance tracking, precision training tools and other useful features. The response from our Kickstarter campaign was very strong, and we are exploring refinements to target Solos at other markets such as runners.

“Even without these developments utilizing our new technologies, our core business is on track for significant revenue growth next year. Production is under way for the displays Kopin provides to the world’s most advanced augmented reality pilot helmet used in the Joint Strike Fighter (F-35). The program is progressing in line with typical new programs, and we look for revenues from this opportunity to increase in 2017. We received additional orders for shipments under the Family of Weapon Sight – I (FWS-I) program, which is an integrated night vision targeting solution. These shipments are part of the Low Rate Initial Production (LRIP) phase of the program. We also expect to receive development contracts by year end for the companion program to the FWS-I, the Family of Weapon Sight – C (FWS-C) and we look for revenues to grow throughout 2017 from both programs.

“Another opportunity is the new Scott Sight for firefighters introduced by Scott Safety, a division of Tyco. Kopin is providing the display module for the world’s first in-mask thermal imaging camera system that provides firefighters improved visibility in smoke-filled environments. Currently firefighters carry a thermal imaging camera in their hands which impedes their ability to perform. Popular Science just awarded the Scott Sight a “Best of What’s New” award due to the ‘situational intelligence’ the headset provides to firefighters. We look for strong revenue growth in this segment in 2017. One can expect new applications for Kopin’s technology in the health and safety fields, where the use of AR can enhance situational awareness and productivity. VR is also helping to drive our sport drone business, primarily out of China, and we are on track for that business to grow 30-40% this year, increasing again next year.

“In the third quarter of 2016 we had 11 new patents granted and 11 new applications. Our portfolio of over 300 patents and patent pendings covers various wearables technologies and designs and helps ensure Kopin will be a leading provider for mobile AR/VR markets. With over $84 million in cash and equivalents and marketable securities at the end of the third quarter of 2016 we have the financial resources to fund our current plans and the opportunities ahead with partners. We are very encouraged by our progress this year and are very excited to see these achievements monetized in 2017,” concluded Dr. Fan.

We expect exciting developments in the next six to nine months, with major announcements in the coming CES in January, 2017 and Mobile World Congress in March, 2017 and we hope you will have an opportunity to visit us at these major shows.

Third Quarter Financial Results

Total revenues for the third quarter ended September 24, 2016 were $5.8 million, compared with $8.0 million for the third quarter ended September 26, 2015. Sales of products for wearable applications were $1.5 million for the third quarter of 2016 as compared to $3.5 million in the third quarter of 2015. Included in the third quarter of 2015 revenues was $1.8 million related to renegotiated contract terms due to the customer’s lowered forecasted program volumes.

Research and development (R&D) expenses for the third quarter of 2016 were $4.1 million compared with $4.0 million for the third quarter of 2015.

Selling, general and administrative (SG&A) expenses were $4.0 million for the third quarter of 2016 as compared with approximately $4.6 million for the same period in 2015.

Net loss attributable to the controlling interest for the third quarter of 2016 was $7.8 million, or $0.12 per share, compared with net loss of $4.7 million, or $0.07 per share, for the third quarter of 2015.

We have maintained our strong financial position. Net cash used in operating activities for the nine months ended September 24, 2016 was approximately $19.4 million. Kopin’s cash and equivalents and marketable securities were approximately $84.3 million at September 24, 2016 as compared to $80.7 million at December 26, 2015 and we have no long-term debt.

All amounts above are estimates and readers should refer to our Form 10-Q for the quarter ended September 24, 2016 for final disposition.

Financial Results Conference Call

In conjunction with its third quarter 2016 financial results, Kopin will host a teleconference call for investors and analysts at 8:30 a.m. ET today. To participate, please dial (877) 709-8150 (U.S. and Canada) or (201) 689-8354 (International). The call will also be available as a live and archived audio webcast on the “Investors” section of the Kopin website, www.kopin.com.

About Kopin

Kopin Corporation is a leading developer and provider of innovative wearable technologies and solutions for integration into head-worn computing and display systems to military, industrial and consumer customers. Kopin’s technology portfolio includes ultra-small displays, optics, speech enhancement technology, system and hands-free control software, low-power ASICs, and ergonomically designed smart headset reference systems. Kopin’s proprietary components and technology are protected by more than 300 global patents and patents pending. For more information, please visit Kopin’s website at www.kopin.com.

Kopin, Whisper, and Solos are trademarks of Kopin Corporation.

Forward-Looking Statements

Statements in this press release may be considered “forward-looking” statements under the “Safe Harbor” provisions of the Private Securities Litigation Reform Act of 1995. These include, without limitation, statements relating to our expectation that we are confident our displays, optics and Whisper Chip technology will be key components in many upcoming products from global technology companies; our core business is on track for significant revenue growth next year; the F-35 program is progressing in line with typical new programs, and we look for revenues from this opportunity to increase in 2017; we also expect to receive development contracts by year end for the companion program to the FWS-I, the Family of Weapon Sight – C (FWS-C) and we look for revenues to grow throughout 2017 from both programs; we look for strong revenue growth in the public safety segment in 2017; for new applications for Kopin’s technology in the health and safety fields; we are on track for our sport drone business to grow 30-40% this year, increasing again next year; with over $84 million in cash at the end of the third quarter of 2016 we have the financial resources to fund our current plans and the opportunities ahead with partners; and our expectation of exciting developments in the next six to nine months, with major announcements in the coming CES in January, 2017 and Mobile World Congress in March, 2017. These statements involve a number of risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements. These risks and uncertainties include, but are not limited to, the following: there may not be demand for our products and therefore they may not be key components in products from global technology companies; our core business may not grow next year; revenues from the F-35 program may not increase in 2017; the F-35 program may be postponed or cancelled; we may not receive development contracts for the FWS-C program; our revenue from the FWS-I and FWS-C program may not increase in 2017; our sports drone business may not increase 30-40% this year and may not increase next year; our $84 million in cash and marketable securities might not be sufficient financial resources to fund our current plans and the opportunities ahead with partners; the final amounts in the Company’s Form 10-Q for the period ended September 24, 2016 may differ from the amounts included in the release above; it may take longer than the Company estimates to develop products; the Company’s products may not be accepted by the market place; there may be issues that prevent the adoption or further development of the Company’s wearable computing technologies; manufacturing, marketing or other issues may prevent either the adoption or acceptance of products; the Company might be adversely affected by competitive products and pricing; new product initiatives and other research and development efforts may be unsuccessful; the Company could experience the loss of significant customers; costs to produce the Company’s products might increase significantly, or yields could decline; the Company’s customers might be unable to ramp production volumes of their products, or the Company’s product forecasts could turn out to be wrong; manufacturing delays, technical issues, economic conditions or external factors may prevent the Company from achieving its goals; we are dependent upon certain sole source providers of some components of our products and if such providers are not able to provide us such components for any reason, including, without limitation, U.S. regulatory issues such as compliance with EPA regulations, we could be delayed in shipping some of our products; and other risk factors and cautionary statements listed in the Company’s periodic reports and registration statements filed with the Securities and Exchange Commission, including the Annual Report on Form 10-K for the 12 months ended December 26, 2015, and the Company’s subsequent filings with the Securities and Exchange Commission. You should not place undue reliance on any forward-looking statements, which are based only on information currently available to the Company and only as of the date on which they are made. The Company undertakes no obligation to update any of these forward-looking statements to reflect events or circumstances occurring after the date of this release.

   
Kopin Corporation
Condensed Consolidated Balance Sheets
 
 

September 24, 2016

December 26, 2015

(Unaudited)

ASSETS
Current assets:
Cash and marketable securities $ 84,305,386 80,710,780
Accounts receivable, net 1,761,276 1,574,973
Inventory 3,197,984 2,512,473
Prepaid and other current assets 1,088,921 1,357,996
Note receivable     15,000,000  
Total current assets 90,353,567 101,156,222
 
Equipment and improvements, net 2,442,943 2,677,103
Goodwill 869,984 946,082
Property and plant, held for sale - 819,263
Other assets   618,563   461,416  
 
Total assets $ 94,285,057 $ 106,060,086  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 3,904,476 3,959,704
Accrued expenses 5,243,478 4,702,574
Deferred income taxes 2,570,000 1,207,000
Billings in excess of revenue earned   1,274,826   1,407,566  
 
Total current liabilities 12,992,780 11,276,844
 
Lease commitments 259,404 298,463
 
Total Kopin Corporation stockholders' equity 80,794,444 94,740,875
Noncontrolling interest   238,429   (256,096 )
Total stockholders' equity   81,032,873   94,484,779  
Total liabilities and stockholders' equity $ 94,285,057 $ 106,060,086  
 

               

Kopin Corporation

Condensed Consolidated Statements of Operations

(Unaudited)

 

Three Months Ended

   

Nine Months Ended

September 24, 2016

September 26, 2015

September 24, 2016

September 26, 2015

Revenues:
Component revenues $ 5,522,584 $ 7,119,145 $ 15,597,247 $ 23,734,238
Research and development revenues   272,222     881,781     671,972     3,708,286  
5,794,806 8,000,926 16,269,219 27,442,524
Expenses:
Cost of component revenues 4,577,960 5,357,217 13,907,848 17,000,729
Research and development 4,123,268 4,008,391 12,282,620 13,752,593
Selling, general and administrative 3,961,135 4,558,609 12,004,249 14,053,050
Gain on sale of property and plant   -     -     (7,700,522 )   -  
12,662,363 13,924,217 30,494,195 44,806,372
 
Loss from operations (6,867,557 ) (5,923,291 ) (14,224,976 ) (17,363,848 )
 
Other (expense) income, net   (1,016,761 )   1,199,141     (1,158,859 )   9,605,338  
 

Loss before (provision) benefit for income taxes, equity loss in unconsolidated affiliate and net loss (income) from noncontrolling interest

(7,884,318 ) (4,724,150 ) (15,383,835 ) (7,758,510 )
 
(Provision) benefit for income taxes   18,427     62,500     (2,085,573 )   37,500  
 

Loss before equity loss in unconsolidated affiliate and net loss (income) from noncontrolling interest

(7,865,891 ) (4,661,650 ) (17,469,408 ) (7,721,010 )
 
Equity loss in unconsolidated affiliate   -     -     -     (47,443 )
 
Net loss (7,865,891 ) (4,661,650 ) (17,469,408 ) (7,768,453 )
 
Net loss (income) attributable to noncontrolling interest   42,737     (13,690 )   (400,310 )   36,094  
 
Net loss attributable to controlling interest $ (7,823,154 ) $ (4,675,340 ) $ (17,869,718 ) $ (7,732,359 )
 
Net loss per share:
Basic $ (0.12 ) $ (0.07 ) $ (0.28 ) $ (0.12 )
Diluted $ (0.12 ) $ (0.07 ) $ (0.28 ) $ (0.12 )
 
Weighted average number of common shares outstanding:
Basic   64,047,852     63,068,321     64,012,490     63,072,668  
Diluted   64,047,852     63,068,321     64,012,490     63,072,668  
 

       

Kopin Corporation

Supplemental Information
(Unaudited)
 
Three Months Ended Nine Months Ended
 

September 24, 2016

September 26, 2015

September 24, 2016

September 26, 2015

Display Revenues by Category (in millions)
Wearable Applications

$

1.5

$

3.5

$

5.9

$

10.6

Military Applications

1.2

1.9

3.6

8.9

Industrial Applications 2.4 1.2 4.6 2.9
Consumer Electronics Applications 0.4 0.5 1.5 1.3
Research and Development   0.3   0.9   0.7   3.7
Total $ 5.8 $ 8.0 $ 16.3 $ 27.4
 
 
Stock-Based Compensation Expense
Continuing Operations
Cost of component revenues $ 136,000 $ 159,000 $ 426,000 $ 620,000
Research and development 129,000 166,000 378,000 670,000
Selling, general and administrative   263,000   439,000   675,000   1,496,000
$ 528,000 $ 764,000 $ 1,479,000 $ 2,786,000
 
 
Other Financial Information
Depreciation and amortization $ 310,000 $ 670,000 $ 962,000 $ 1,860,000
Capital expenditures $ 12,000 $ 114,000 $ 317,000 $ 765,000
 

Source: Kopin Corporation

Kopin Corporation

Richard Sneider, 508-870-5959

Treasurer and Chief Financial Officer

Richard_Sneider@kopin.com

or

Market Street Partners

Joann Horne, 415-445-3233

JHorne@marketstreetpartners.com