- Solos™ Smart Eyewear on Track
- F-35 Production Starting
- Design-in Activities Ongoing for Whisper Chip
- Q2 Completes Sale of Korean Facility for $8.1 million
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 second quarter ended June 25, 2016.
“During the quarter we continued to make progress on the
commercialization of our technologies,” said Dr. John C.C. Fan, Kopin’s
President and CEO. “We successfully launched the initial phase of our
Solos™ commercialization strategy. We are an official sponsor of USA
Cycling, and we are proud to support their team members that will
represent the USA in Brazil. The Solos headset program is on track and
we expect to commence commercial shipping in the October 2016 time
frame. One key differentiation of Solos headsets is our innovative and
patented Pupil™ Optics, which has the unique performance feature of a
sunlight readable, transparent image in a tiny and energy efficient form
factor, which is perfect for Mobile Augmented Reality (AR) headsets.
Solos will be the world’s first headset utilizing this Pupil Optics.
Another critical technology for the success of wearables is the voice
user interface. We have stressed for several years that the voice would
be the next touch. Our Whisper™ Technology is based on Artificial
Intelligence. It identifies and differentiates voice and noise in the
acoustic environment using neural network processing. It is not a
traditional noise cancellation approach. The Whisper technology is
protected by ten issued and allowed patents and eighteen pending
patents. The technology has been used in industrial and military
headsets for several years, and now we have incorporated the Whisper
Technology into a Whisper Chip for commercialization in consumer
applications. We expect our Whisper Chip to have very broad
applications, while our current market focus ranges from public safety
to communications. In the second quarter we embarked on active design-in
activities with various tier-one global companies for consumer voice
applications, and the early response is very positive. We will continue
our push for integration of our Whisper Chip into the products from
these companies, as well as other tier one companies.
“In the second quarter we increased our activities on executing on
existing programs and getting qualified on future military programs. We
started low-rate production for the world’s most advanced pilot helmet
mounted display (HMD) used in Joint Strike Fighter (F-35). This advanced
visor projected HMD is a true mixed reality display system that works
both in the daytime under extremely bright conditions, as well as at
night. It provides a 360 degree view of the fighter jet’s surroundings
using video provided from aircraft-mounted thermal sensors, together
with computer generated symbology. During night operations an integrated
digital night vision camera sensing system provides all-around night
vision imagery in the helmet display system. Our display is the only one
qualified for this military program and we are the sole display
supplier. This is a very important program for us and we expect revenue
growth starting in 2017. This program is projected to go to 2037, and
has the revenue potential similar to our previous military programs that
provided us several hundreds of millions in revenue. In addition, as we
previously announced, we have been chosen by one of the prime
contractors to provide display products for the Family of Weapon Sight
-Individual (FWS-I) program (the follow on program after our very
successful Thermal Weapon Sight program) and this represents a
significant opportunity for us. As a result of these programs we expect
strong revenue growth in 2017.
During the second quarter we completed the sale of our Korean property
and plant for approximately $8.1 million,” continued Dr. Fan. “Our
Korean facility produced display products that went into camcorders and
digital still cameras, markets we have been exiting over the last
several years. With the receipt of the $8.1 million and the $15 million
from the final installment from the sale of our III-V product line and
investment in Kopin Taiwan Corporation in the first quarter of 2016, we
ended the second quarter of 2016 with $91.5 million in cash and
marketable securities, a net increase of approximately $10.8 million
since last year end.
In the second quarter we also added a General Manager and Vice President
of Business Development, Asia. This continues our transition to greater
emphasis on business development and sales, as we have now a stream of
products in the pipeline. We are also delighted that we had 17 new
patents issued and two new applications filed in the second quarter. We
have more than 300 patents issued and pending, with the vast majority
related to wearables.
With the coming launch of Solos, the ramping of F-35 and FWS-I
shipments, the feedback from our design win projects with our Whisper
technology, and strong financial and IP position, we are very well
positioned and optimistic about our revenue growth prospects in 2017 and
beyond,” concluded Dr. Fan.
Second Quarter Financial Results
Total revenues for the second quarter ended June 25, 2016, were $4.4
million, compared with $10.9 million for the second quarter ended June
27, 2015. Sales of products for Wearable applications were $1.8 million
for the second quarter of 2016 as compared to $6.0 million in the second
quarter of 2015. Included in the second quarter of 2015 revenues was
$3.8 million related to renegotiated contract terms due to the
customer’s lowered forecasted program volumes.
Research and development (R&D) expenses for the second quarter of 2016
were $4.1 million compared with $4.9 million for the second quarter of
2015.
Selling, general and administrative (S,G&A) expenses were $4.3 million
for the second quarter of 2016 as compared with approximately $5.1
million for the same period in 2015.
Net loss attributable to the controlling interest for the second quarter
of 2016 was $3.1 million, or $0.05 per share, compared with net income
of $781,000, or $0.01 per share, for the second quarter of 2015.
Included in the results of the second quarter of 2016 was a gain on the
sale of our Korean property and plant of $7.7 million and the comparable
period of 2015 included a $5.5 million gain from the sale of investments.
We have maintained our strong financial position. Net cash used in
operating activities for the six months ended June 25, 2016 was
approximately $12.2 million. Kopin’s cash and equivalents and marketable
securities were approximately $91.5 million at June 25, 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 June 25, 2016, for final disposition.
Financial Results Conference Call
In conjunction with its second quarter 2016 financial
results, Kopin will host a teleconference call for investors and
analysts at 9:00 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 the Solos headset program is
on track and our expectation to commence commercial shipping in October
2016; our expectation that Solos will be the world’s first headset
utilizing Pupil Optics; our belief that voice will be the next touch;
our expectation that our Whisper Chip will have very broad applications;
our expectation that the F-35 program is expected to have revenue growth
starting in 2017; our expectation that the F-35 program is projected to
go to 2037, and has the revenue potential similar to our previous
military programs that provided us several hundreds of millions in
revenue; that we have been chosen by one of the prime contractors for
the FWS-I program and our expectation that this represents a significant
opportunity for us; our expectation that as a result of the military
programs we expect strong revenue growth in 2017; and our expectation
that with the coming launch of Solos, the feedback from our design win
projectswith our Whisper technology, and strong financial and IP
position, we are very well positioned and optimistic about our revenue
growth prospects in 2017 and beyond. 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:
the Solos headset won’t be on track and we will not be able to commence
commercial shipping in October 2016; Solos is not the world’s first
headset utilizing Pupil Optics; that voice user interface is not as
successful as touch interface; our Whisper Chip may not have very broad
applications; the F-35 program may not have revenue growth starting in
2017; the F-35 program may not go to 2037, and may not have revenue
similar to our previous military programs that provided us several
hundreds of millions in revenue; the F-35 program may not be a
significant opportunity for us; the military programs may not have
strong revenue growth in 2017; and even with the launch of Solos and our
financial and IP position, we may not be well positioned for revenue
growth in 2017 and beyond; and the final amounts in the Company’s Form
10-Q for the period ended June 25, 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 | |||||||
| June 26, 2016 | December 26, 2015 | ||||||
| (Unaudited) | |||||||
| ASSETS | |||||||
| Current assets: | |||||||
| Cash and marketable securities | $ | 91,522,025 | 80,710,780 | ||||
| Accounts receivable, net | 1,408,876 | 1,574,973 | |||||
| Inventory | 2,935,699 | 2,512,473 | |||||
| Prepaid and other current assets | 1,015,284 | 1,357,996 | |||||
| Note receivable | 15,000,000 | ||||||
| Total current assets | 96,881,884 | 101,156,222 | |||||
| Equipment and improvements, net | 2,728,951 | 2,677,103 | |||||
| Goodwill | 887,512 | 946,082 | |||||
| Property and plant, held for sale | 819,263 | ||||||
| Other assets | 716,679 | 461,416 | |||||
| Total assets | $ | 101,215,026 | $ | 106,060,086 | |||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
| Current liabilities: | |||||||
| Accounts payable | $ | 4,327,008 | 3,959,704 | ||||
| Accrued expenses | 5,691,603 | 4,702,574 | |||||
| Deferred income taxes | 2,570,000 | 1,207,000 | |||||
| Billings in excess of revenue earned | 1,254,694 | 1,407,566 | |||||
| Total current liabilities | 13,843,305 | 11,276,844 | |||||
| Lease commitments | 274,034 | 298,463 | |||||
| Total Kopin Corporation stockholders’ equity | 86,885,294 | 94,740,875 | |||||
| Noncontrolling interest | 212,393 | (256,096 | ) | ||||
| Total stockholders’ equity | 87,097,687 | 94,484,779 | |||||
| Total liabilities and stockholders’ equity | $ | 101,215,026 | $ | 106,060,086 | |||
| Kopin Corporation | ||||||||||||||||
| Condensed Consolidated Statements of Operations | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 26, 2016 | June 27, 2015 | June 26, 2016 | June 27, 2015 | |||||||||||||
| Revenues: | ||||||||||||||||
| Component revenues | $ | 4,096,529 | $ | 9,486,723 | $ | 10,074,663 | $ | 16,615,093 | ||||||||
| Research and development revenues | 258,746 | 1,369,883 | 399,750 | 2,826,505 | ||||||||||||
| 4,355,275 | 10,856,606 | 10,474,413 | 19,441,598 | |||||||||||||
| Expenses: | ||||||||||||||||
| Cost of component revenues | 4,682,846 | 6,359,780 | 9,329,888 | 11,643,513 | ||||||||||||
| Research and development | 4,119,401 | 4,884,010 | 8,159,352 | 9,744,202 | ||||||||||||
| Selling, general and administrative | 4,282,264 | 5,108,229 | 8,043,113 | 9,494,442 | ||||||||||||
| Gain on sale of property and plant | (7,700,522 | ) | – | (7,700,522 | ) | – | ||||||||||
| 5,383,990 | 16,352,019 | 17,831,831 | 30,882,157 | |||||||||||||
| Loss from operations | (1,028,715 | ) | (5,495,413 | ) | (7,357,418 | ) | (11,440,559 | ) | ||||||||
| Other income (expense), net | 206,987 | 6,214,193 | (142,098 | ) | 8,406,199 | |||||||||||
|
(Loss) income before provision for income taxes, equity loss in |
(821,728 | ) | 718,780 | (7,499,516 | ) | (3,034,360 | ) | |||||||||
| Provision for income taxes | (1,963,000 | ) | (12,500 | ) | (2,104,000 | ) | (25,000 | ) | ||||||||
|
(Loss) income before equity loss in unconsolidated affiliate and |
(2,784,728 | ) | 706,280 | (9,603,516 | ) | (3,059,360 | ) | |||||||||
| Equity loss in unconsolidated affiliate | – | – | – | (47,443 | ) | |||||||||||
| Net (loss) income | (2,784,728 | ) | 706,280 | (9,603,516 | ) | (3,106,803 | ) | |||||||||
| Net (income) loss attributable to noncontrolling interest | (344,374 | ) | 74,690 | (443,047 | ) | 49,784 | ||||||||||
| Net (loss) income | $ | (3,129,102 | ) | $ | 780,970 | $ | (10,046,563 | ) | $ | (3,057,019 | ) | |||||
| Net (loss) income per share: | ||||||||||||||||
| Basic | $ | (0.05 | ) | $ | 0.01 | $ | (0.16 | ) | $ | (0.05 | ) | |||||
| Diluted | $ | (0.05 | ) | $ | 0.01 | $ | (0.16 | ) | $ | (0.05 | ) | |||||
| Weighted average number of common shares outstanding: | ||||||||||||||||
| Basic | 64,011,571 | 63,066,031 | 63,994,809 | 63,074,842 | ||||||||||||
| Diluted | 64,011,571 | 63,300,781 | 63,994,809 | 63,074,842 | ||||||||||||
| Kopin Corporation | ||||||||||||
| Supplemental Information | ||||||||||||
| (Unaudited) | ||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||
| June 26, 2016 | June 27, 2015 | June 26, 2016 | June 27, 2015 | |||||||||
| Display Revenues by Category (in millions) | ||||||||||||
| Military Applications | $ | 0.9 | $ | 2.4 | $ | 2.4 | $ | 7.0 | ||||
| Industrial Applications | 1.0 | 0.7 | 2.2 | 1.7 | ||||||||
| Wearable Applications | 1.8 | 6.0 | 4.4 | 7.1 | ||||||||
| Consumer Electronics Applications | 0.4 | 0.4 | 1.1 | 0.8 | ||||||||
| Research and Development | 0.3 | 1.4 | 0.4 | 2.8 | ||||||||
| Total | $ | 4.4 | $ | 10.9 | $ | 10.5 | $ | 19.4 | ||||
| Stock-Based Compensation Expense | ||||||||||||
| Continuing Operations | ||||||||||||
| Cost of component revenues | $ | 148,000 | $ | 262,000 | $ | 290,000 | $ | 461,000 | ||||
| Research and development | 132,000 | 269,000 | 249,000 | 504,000 | ||||||||
| Selling, general and administrative | 615,000 | 494,000 | 412,000 | 1,057,000 | ||||||||
| $ | 895,000 | $ | 1,025,000 | $ | 951,000 | $ | 2,022,000 | |||||
| Other Financial Information | ||||||||||||
| Depreciation and amortization | $ | 316,000 | $ | 509,000 | $ | 652,000 | $ | 1,190,000 | ||||
| Capital expenditures | $ | 82,000 | $ | 337,000 | $ | 305,000 | $ | 652,000 | ||||
View source version on businesswire.com: http://www.businesswire.com/news/home/20160802006053/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