- Fourth Quarter Revenues Increase 79% over Fourth Quarter 2016,
Primarily Driven by Military Sales - Second Half Revenues Increase 70% Over the First Half, Achieving
Guidance - Company Showcased Four New AR/VR Headsets with Key Kopin
Components at CES - Full Year 2018 Revenue Guidance of $35-40 million
- Company Anticipates Achieving Break Even Profitability by Year
End 2019
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 fourth quarter and full year ended
December 30, 2017.
“We are very pleased with such a strong finish to the year, with 79%
revenue growth in the fourth quarter as compared to the fourth quarter
of 2016 allowing us to achieve our stated goal of second half revenues
increasing 70% over the first half of the year,” said Dr. John C.C. Fan,
CEO of Kopin Corporation. “Our military revenue primarily drove our
results, with increasing demand for our displays from a number of new
programs. We begin 2018 with both the F-35 and FWS-I programs tracking
to plan, along with a new display development program for armored
vehicles. We expect these programs to ramp over the coming years as they
enter full production.
“We are also starting 2018 with very strong demand from enterprise
augmented reality (AR) customers for our displays and optics. At an
event we hosted at CES 2018 our key customers forecasted a significant
increase in volume this year, with some pointing to 2018 as the ‘tipping
point’ for enterprise adoption of AR.”
Dr. Fan continued, “All of our leading technologies were on display at
CES. We demonstrated our latest development in organic light emitting
diode (OLED) displays. We first introduced our LightningTM
OLED display at CES 2017 and in just a year’s time we increased the
brightness by a multiple of 10, an amazing improvement in performance.
“We also introduced our next generation SOLOS smartglasses. This new
version enables cyclists and runners to get real-time updates, such as
speed, power and pace, and use the SOLOS software platform to measure
their progress. The new version also has a group chat feature which
allows cyclists wearing SOLOS to talk with each other. SOLOS was the
focus of my presentation in January at the AR in Action Summit at MIT
Media labs. In my talk I explained five rules which we believe are
critical for the success of an AR product. SOLOS was developed under
these design rules and we believe it is the best example of form and
function for an AR product. In anticipation of the production launch of
SOLOS, we have added key team members to build out our marketing and
sales strategy and we are very excited about the opportunity ahead.
“Along with partners at CES we also introduced two new products which
utilize Lightning OLED displays and related optics. The ELF VR headset,
which won a CES Innovation Award, is the most compact and lightweight
virtual reality headset available today. The ELF delivers a picture-like
image with two 2k x 2k displays (1″ diagonal size) and eliminates
potential dizziness with a 120 Hz refresh rate. We believe this is the
first VR headset that meets the size, weight and performance necessary
to drive adoption of VR technology. With our partner Pico we introduced
Eagle, a lightweight mobile headset that creates a home theatre
experience on the go. Eagle, another CES award winning product,
incorporates two 720p Lighting OLED displays (1280×720 resolution in a
0.49 inch diagonal size). In effect the user gets the experience of an
80” HD screen viewed from 10 feet away, while maintaining situational
awareness. We expect Eagle to begin shipping in 2018.
“Both the Elf and Eagle will benefit from our partnership with Yunnan
OLiGHTEK Opto-electronics Technology Co. Ltd. (OliGHTEK) to enhance OLED
production capacity. Kopin expects to begin production of the Lightning
OLED displays later this year using a new state-of-the-art OLED
deposition system, which was co-funded by both companies. In addition,
our partner BOE is on schedule in building the world’s largest OLED on
silicon fabrication facility. BOE announced at CES that the fab is
expected to be at mass production levels by late 2019.
“We enter 2018 with strong military and industrial programs in place,
along with the initial AR and VR consumer and enterprise products from
both Kopin and our customers. We are very excited about both the short
and long term opportunities for Kopin,” concluded Dr. Fan.
Fourth Quarter Financial Results
Total revenues for the fourth quarter ended December 30, 2017 were $11.4
million, compared with $6.4 million for the fourth quarter ended
December 31, 2016.
Research and development (R&D) expenses for the fourth quarter of 2017
were $4.7 million compared to $3.8 million for the fourth quarter of
2016.
Selling, general and administrative (SG&A) expenses were $4.4 million
for the fourth quarter of 2017 compared to $4.9 million for the fourth
quarter of 2016.
Net loss attributable to controlling interest for the fourth quarter of
2017 was $2.9 million, or $0.04 per share, compared with net loss of
$5.2 million, or $0.08 per share, for the fourth quarter of 2016. The
fourth quarter of 2017 included an impairment charge to goodwill of $0.6
million and a gain of $1.7 million from the mark to market of a warrant
received from a company that licensed Kopin’s intellectual property. The
fourth quarter of 2016 included a $1.0 million gain from the sale of an
investment.
During the fourth quarter of 2017 Kopin had 12 patents granted and filed
for 5 new applications. Kopin has over 300 patents and patents pending,
almost all of which are related to wearable applications.
Full Year Results
Total revenue for the twelve months ended December 30, 2017 were $27.8
million, compared to $22.6 million for 2016.
Research and development expenses for 2017 were $18.9 million compared
with $16.0 million in 2016.
Selling, general and administrative expenses were $20.5 million in 2017,
compared with $17.0 million in 2016.
The net loss from controlling interest for the 12 months ended December
30, 2017 was $26.3 million or $0.38 per share, versus a net loss of
$23.4 million or $0.37 per share for 2016. The full year 2017 included
an impairment charge to goodwill of $0.6 million and a gain of $2.0
million from the mark to market of a warrant we received form a company
that licensed intellectual property from us. The full year of 2016
included a $1.0 million gain from the sale of an investment and a $7.7
million gain from the sale of a facility.
Kopin has maintained a strong financial position. Net cash used in
operating activities for the twelve months ended December 30, 2017 was
approximately $27.2 million. Kopin’s cash and equivalents and marketable
securities were approximately $68.8 million at December 30, 2017 as
compared to $77.2 million at December 30, 2016, with no long-term debt.
“We expect revenues for the fiscal year 2018 to be in the range of $35
to $40 million,” said Richard Sneider, Chief Financial Officer of Kopin
Corporation. “We would expect the revenue growth to be stronger in the
second half of the year as new products enter the market. Looking
farther out our goal is to achieve break even on profitability by the
end of 2019.”
All amounts above are estimates and readers should refer to our Form
10-K for the year ended December 30, 2017, for final disposition as well
as important risk factors.
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 belief that we expectation that the F-35 and
FWS-I programs will ramp over the coming years as they enter full
production; our belief that we are starting 2018 with very strong demand
from enterprise augmented reality (AR) customers for our displays and
optics; the expectation that some of our customer believe 2018 to be the
‘tipping point’ for enterprise adoption of AR; our belief that Elf is
the first VR headset that meets the size, weight and performance
necessary to drive adoption of VR technology; our expectation that Eagle
will begin shipping in 2018; our expectation that we will begin
production of the Lightning OLED displays later this year; our
expectation that our revenues for the fiscal year 2018 will be in the
range of $35 to $40 million; and our goal is to achieve break even on
profitability by the end of 2019. 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
either or both the F-35 and FWS-I programs could be cancelled; we may
not receive additional orders for our components for the F-35 and FWS-I
programs; we may be designed out of the F-35 and FWS-I programs; demand
for our display and optics for 2018 may not be strong; our customer
forecasts that we base our expectations on may be wrong;2018 may not be
the tipping point for the enterprise adoption of AR; there may be
technical, production or similar issues which may prevent Elf from being
sold; there may be no demand for Elf; technical, production or similar
issues may prevent the Lightening OLED display from going into
production in 2018 or ever; our expectation of revenues in the range of
$35 to $40 million may be wrong; we may not achieve breakeven by 2018;
and other risk factors and cautionary statements listed in Kopin’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 31, 2016, and Kopin’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 Kopin and only as of the date on
which they are made. We undertake 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 Statements of Operations | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| Three Months Ended | Year Ended | |||||||||||||||
|
December 30, 2017 |
December 31, 2016 |
December 30, 2017 |
December 31, 2016 |
|||||||||||||
| Revenues: | ||||||||||||||||
| Net product revenues | $ | 10,392,860 | $ | 5,517,878 | $ | 24,894,805 | $ | 21,115,125 | ||||||||
| Research and development revenues | 1,003,866 | 855,469 | 2,946,685 | 1,527,441 | ||||||||||||
| 11,396,726 | 6,373,347 | 27,841,490 | 22,642,566 | |||||||||||||
| Expenses: | ||||||||||||||||
| Cost of product revenues | 6,738,951 | 3,957,802 | 18,118,418 | 17,814,271 | ||||||||||||
| Research and development | 4,665,764 | 3,757,041 | 18,879,715 | 16,039,661 | ||||||||||||
| Selling, general and administrative | 4,354,173 | 4,938,056 | 20,541,119 | 16,961,773 | ||||||||||||
| Impairment of Goodwill | 600,086 | – | 600,086 | – | ||||||||||||
| Gain on sale of property and plant | – | – | – | (7,700,522 | ) | |||||||||||
| 16,358,974 | 12,652,899 | 58,139,338 | 43,115,183 | |||||||||||||
| Loss from operations | (4,962,248 | ) | (6,279,552 | ) | (30,297,848 | ) | (20,472,617 | ) | ||||||||
| Other income (expense), net | 1,332,189 | 2,037,008 | 2,023,231 | 571,472 | ||||||||||||
| Loss before benefit (provision) for income taxes and | (3,630,059 | ) | (4,242,544 | ) | (28,274,617 | ) | (19,901,145 | ) | ||||||||
| net loss (income) from noncontrolling interest | ||||||||||||||||
| Benefit (provision) for income taxes | 643,500 | (912,000 | ) | 1,785,000 | (3,130,000 | ) | ||||||||||
| Loss before net loss (income) from noncontrolling interest | (2,986,559 | ) | (5,154,544 | ) | (26,489,617 | ) | (23,031,145 | ) | ||||||||
| Net loss (income) attributable to noncontrolling interest | 75,894 | (35,331 | ) | 141,117 | (402,971 | ) | ||||||||||
| Net loss | $ | (2,910,665 | ) | $ | (5,189,875 | ) | $ | (26,348,500 | ) | $ | (23,434,116 | ) | ||||
| Net loss per share: | ||||||||||||||||
| Basic | $ | (0.04 | ) | $ | (0.08 | ) | $ | (0.38 | ) | $ | (0.37 | ) | ||||
| Diluted | $ | (0.04 | ) | $ | (0.08 | ) | $ | (0.38 | ) | $ | (0.37 | ) | ||||
| Weighted average number of common shares outstanding: | ||||||||||||||||
| Basic | 72,349,294 | 64,138,117 | 69,914,956 | 64,045,675 | ||||||||||||
| Diluted | 72,349,294 | 64,138,117 | 69,914,956 | 64,045,675 | ||||||||||||
| Kopin Corporation | |||||||
| Condensed Consolidated Balance Sheets | |||||||
| (Unaudited) | |||||||
|
December 30, 2017 |
December 31, 2016 |
||||||
| ASSETS | |||||||
| Current assets: | |||||||
| Cash and marketable securities | $ | 68,755,684 | $ | 77,197,896 | |||
| Accounts receivable, net | 4,918,429 | 1,699,195 | |||||
| Inventory | 5,080,797 | 3,302,112 | |||||
| Prepaid and other current assets | 1,243,029 | 1,194,901 | |||||
| Total current assets | 79,997,939 | 83,394,104 | |||||
| Land, equipment and improvements, net | 5,077,043 | 2,976,006 | |||||
| Goodwill and intangible assets | 2,663,883 | 844,023 | |||||
| Other assets | 2,808,345 | 618,139 | |||||
| Total assets | $ | 90,547,210 | $ | 87,832,272 | |||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
| Current liabilities: | |||||||
| Accounts payable | $ | 4,918,605 | $ | 4,355,462 | |||
| Accrued expenses | 4,609,980 | 4,522,120 | |||||
| Income taxes payable | 2,173,298 | 935,364 | |||||
| Deferred income taxes | 812,506 | 2,571,000 | |||||
| Billings in excess of revenue earned | 896,479 | 981,761 | |||||
| Total current liabilities | 13,410,868 | 13,365,707 | |||||
| Other long term liabilities | 326,341 | – | |||||
| Lease and other commitments | 644,048 | 246,922 | |||||
| Total Kopin Corporation stockholders’ equity | 76,893,686 | 74,077,686 | |||||
| Noncontrolling interest | (727,733 | ) | 141,957 | ||||
| Total stockholders’ equity | 76,165,953 | 74,219,643 | |||||
| Total liabilities and stockholders’ equity | $ | 90,547,210 | $ | 87,832,272 | |||
| Kopin Corporation | |||||||||||||
| Supplemental Information | |||||||||||||
| (Unaudited) | |||||||||||||
| Three Months Ended | Year Ended | ||||||||||||
|
December 30, 2017 |
December 31, 2016 |
December 30, 2017 |
December 31, 2016 |
||||||||||
| Display Revenues by Category (in millions) | |||||||||||||
| Military Applications | $ | 7.1 | $ | 1.8 | $ | 13.4 | $ | 5.3 | |||||
| Industrial Applications | 1.4 | 1.7 | 5.4 | 6.3 | |||||||||
| Consumer | 1.6 | 1.5 | 4.4 | 7.4 | |||||||||
| Other | 0.3 | 0.5 | 1.6 | 2.1 | |||||||||
| Research and Development | 1.0 | 0.9 | 3.0 | 1.5 | |||||||||
| Total | $ | 11.4 | $ | 6.4 | $ | 27.8 | $ | 22.6 | |||||
| Stock-Based Compensation Expense | |||||||||||||
| Continuing Operations | |||||||||||||
| Cost of component revenues | $ | 85,000 | $ | 135,000 | $ | 491,000 | $ | 562,000 | |||||
| Research and development | 183,000 | 149,000 | 799,000 | 527,000 | |||||||||
| Selling, general and administrative | (962,000 | ) | 661,000 | 1,006,000 | 1,336,000 | ||||||||
| $ | (694,000 | ) | $ | 945,000 | $ | 2,296,000 | $ | 2,425,000 | |||||
| Other Financial Information | |||||||||||||
| Depreciation and amortization | $ | 623,000 | $ | 44,000 | $ | 2,502,000 | $ | 994,000 | |||||
View source version on businesswire.com: http://www.businesswire.com/news/home/20180308005453/en/
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