- SOLOS® Smart Glasses Begin Shipping
- Launches Golden-i™ Infinity
- Received First Production Order for FWS-I Units
- Revises Full Year Revenue Guidance to $30 million to $35 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 30, 2018.
“The commercialization of SOLOS, our smart glasses for cyclists,
triathletes and runners, was a highlight of the second quarter,” said
Dr. John C.C. Fan, CEO of Kopin Corp. “SOLOS, which has been described
as the most advanced AR smart glasses available for sports and consumer
fitness, became available in May. SOLOS uses our Pupil®
display module and Whisper® voice extraction technology to
allow athletes to view data as if it is floating in front of them and
receive information through audio messages. SOLOS smart glasses are
currently available at www.solos-wearables.com
and we have started expanding distribution to select locations of sports
and technology retailers across the country. In addition to partnering
with USA Cycling, SOLOS was recently named the Official Smart Glasses
Partner of IRONMAN, which hosts endurance sporting events around the
globe. We continue to identify opportunities like the IRONMAN
partnership to raise the visibility of SOLOS with key audiences. It is
still early days for SOLOS but we are excited about the reception from
athletes around the world.
“We introduced a second revolutionary product in the quarter – the
Golden- iTM Infinity which is targeted to industrial workers.
The Golden-i Infinity smart screen is the first wearable device that
supports Android and Windows 10-based computing solutions. The Golden-i
Infinity utilizes our display and Whisper voice technology and it
connects to a worker’s smart phone or mini PC via a cable to make the
headset lighter and less costly. We have seen significant interest from
major industrial and enterprise companies. We expect to begin pilot
tests in September with Fortune 500 customers and the professional value
added reseller (VAR) channels.”
Dr. Fan continued, “We were pleased to see that the US Defense
Department and Lockheed Martin recently reached an agreement for a new
order of the F-35 fighter jets, where Kopin is the sole supplier of
displays for the pilots’ helmets. This order supports the F-35 program
as a $100 million long term revenue opportunity for Kopin. In the second
quarter, we were finally fully qualified for the FWS-I program and we
are delighted to have received the first production order which we
expect to begin shipping in October 2018. Although it is several months
later than originally estimated, we are excited that production has
started. We expect the FWS program, like our previous TWS program, to
last for many years and we believe it is also a $100 million revenue
opportunity for Kopin. In the second quarter of 2018 we commenced
development work on a display system for a recently awarded armored
vehicle program. Finally, we continue to see strong forecasted demand
from our customers manufacturing a variety of AR headsets targeting the
industrial wearable market. We believe their traction proves that AR is
close to an inflection point for enterprise and industrial customers.
“Overall, we are pleased with the progress of our efforts in moving our
development activities to products, production and commercialization.
However, some delays in our business ramp up, primarily in the military,
will impact our anticipated rapid revenue growth in the second half of
this year,” concluded Dr. Fan.
SecondQuarter Financial Results
Total revenues for the second quarter ended June 30, 2018 were $5.9
million, compared with $5.9 million for the second quarter ended June
30, 2017.
Research and development (R&D) expenses for the second quarter of 2018
were $4.5 million compared to $4.7 million for the second quarter of
2017.
Selling, general and administrative (SG&A) expenses were $6.9 million
for the second quarter of 2018 compared to $5.2 million for the second
quarter of 2017.
Net loss attributable to the controlling interest for the second quarter
of 2018 was $9.2 million, or $0.13 per share, compared with net loss of
$7.3 million, or $0.10 per share, for the second quarter of 2017.
During the second quarter of 2018 Kopin had 11 patents granted and filed
for 6 new applications. Kopin has over 300 patents and patents pending,
almost all of which are related to wearable applications.
Net cash used in operating activities for the second quarter ended June
30, 2018 was approximately $13.2 million. Kopin has maintained a strong
financial position with cash and equivalents and marketable securities
were approximately $53.4 million at June 30, 2018.
“We expect full year revenues will be $30 million to $35 million, below
the $35-40 million we originally expected,” said Richard Sneider,
Kopin’s CFO. “There is no change to our expectation of achieving
breakeven on profitability by the end of 2019.” Effective December 31,
2017, Kopin adopted ASC Topic 606 using the “modified retrospective”
approach, meaning the standard was applied only to the financial results
of fiscal year 2018 with a cumulative adjustment to retained earnings.
Under this transition method, Kopin applied the standard only to
contracts that were not complete at the initial adoption date.
The following tables shows the impact of adoption of Topic 606 on the
three and six months periods ended June 30, 2018 results of operations
(amount in millions):
|
Three Months Ended June 30, 2018 |
||||||||||||
|
Statement of Operations |
As Reported |
Balances Without |
Effect of |
|||||||||
| Net product revenues | $ | 4.5 | $ | 4.5 | $ | – | ||||||
| Research and development revenues | 1.5 | 1.6 |
(0.1 |
) |
||||||||
| Cost of product revenues | 3.5 | 3.5 | – | |||||||||
| Net loss attributable to the controlling interest | $ | (9.2 | ) | $ | (9.2 | ) | $ | (0.1 | ) | |||
| Six Months Ended June 30, 2018 | ||||||||||||
| Statement of Operations | As Reported |
Balances Without |
Effect of |
|||||||||
| Net product revenues | $ | 9.5 | $ | 11.0 | $ | (1.5 | ) | |||||
| Research and development revenues | 2.1 | 2.3 | (0.2 | ) | ||||||||
| Cost of product revenues | 7.6 | 8.6 | (1.0 | ) | ||||||||
| Net loss attributable to the controlling interest | $ | (14.8 | ) | $ | (14.1 | ) | $ | (0.7 | ) | |||
All amounts above are estimates and readers should refer to our Form
10-Q for the quarter ended June 30, 2018 for final disposition. To
participate on the conference call, please dial 201-689-8354 (U.S. and
Canada) or 877-709-8150 (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
SOLOS, Golden-i, Whisper and Kopin are registered 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 expectationto begin Golden-i Infinity
pilot tests in September with Fortune 500 customers and the professional
value added reseller (VAR) channels;our belief that the F-35
program is a $100 million opportunity for Kopin long term;we
expect to begin shipments of FWS-I units in October, 2018; our
expectation that the FWS program, like our previous TWS program, will
last for many years and we believe it is also a $100 million revenue
opportunity for Kopin; our belief that the good forecasted demand from
our customers proves that AR is close to an inflection; and our
expectation that our revenues for the fiscal year 2018 will be in the
range of $30 to $35 million. 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, delays in the development
or production issues with Golden-I Infinity units may prevent pilot
tests to begin in September to any customers; development or production
issues with the Golden-I Infinity products, lack of demand for the
Golden-i Infinity product or other issues may prevent the sale of
Golden-i Infinity;development or production issues may prevent
theFWS-I units being shipped in October, 2018; either or both
the F-35 or 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; our enterprise
customers expectations of demand may be wrong and not occur which would
negatively impact sales of our components to them; we may be unable to
roll out SOLOS through other distribution formats during 2018 due to a
lack of demand, cost, or our inexperience in selling a device like SOLOS
smart glasses; our revenues for the fiscal year 2018 may not be in the
range of $30 to $35 million; 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,
2017, 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 | Six Months Ended | |||||||||||||||
|
June 30, 2018 |
July 1, 2017 |
June 30, 2018 |
July 1, 2017 |
|||||||||||||
| Revenues: | ||||||||||||||||
| Net product revenues | $ | 4,472,079 | $ | 4,979,400 | $ | 9,516,888 | $ | 8,912,543 | ||||||||
| Research and development revenues | 1,471,819 | 948,069 | 2,080,630 | 1,393,054 | ||||||||||||
| 5,943,898 | 5,927,469 | 11,597,518 | 10,305,597 | |||||||||||||
| Expenses: | ||||||||||||||||
| Cost of product revenues | 3,497,750 | 4,117,226 | 7,559,941 | 7,234,583 | ||||||||||||
| Research and development | 4,526,156 | 4,678,221 | 8,977,809 | 8,960,090 | ||||||||||||
| Selling, general and administrative | 6,913,503 | 5,200,261 | 13,844,913 | 10,841,947 | ||||||||||||
| 14,937,409 | 13,995,708 | 30,382,663 | 27,036,620 | |||||||||||||
| Loss from operations | (8,993,511 | ) | (8,068,239 | ) | (18,785,145 | ) | (16,731,023 | ) | ||||||||
| Other (expense) income, net | (52,162 | ) | 807,699 | 4,267,368 | 384,606 | |||||||||||
|
Loss before (provision) benefit for income taxes and net loss |
(9,045,673 | ) | (7,260,540 | ) | (14,517,777 | ) | (16,346,417 | ) | ||||||||
| (Provision) benefit for income taxes | (201,000 | ) | – | (201,000 | ) | 1,146,000 | ||||||||||
| Net loss | (9,246,673 | ) | (7,260,540 | ) | (14,718,777 | ) | (15,200,417 | ) | ||||||||
|
Net loss (income) attributable to noncontrolling interest |
5,716 | (71,431 | ) | (58,458 | ) | 10,007 | ||||||||||
| Net loss attributable to the controlling interest | $ | (9,240,957 | ) | $ | (7,331,971 | ) | $ | (14,777,235 | ) | $ | (15,190,410 | ) | ||||
| Net loss per share: | ||||||||||||||||
| Basic and diluted | $ | (0.13 | ) | $ | (0.10 | ) | $ | (0.20 | ) | $ | (0.22 | ) | ||||
| Weighted average number of common shares outstanding: | ||||||||||||||||
| Basic and diluted | 73,916,548 | 70,626,542 | 73,497,446 | 67,582,615 | ||||||||||||
| Kopin Corporation | ||||||||
| Condensed Consolidated Balance Sheets | ||||||||
| (Unaudited) | ||||||||
|
June 30, 2018 |
December 30, 2017 |
|||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and marketable securities | $ | 53,423,704 | $ | 68,755,684 | ||||
| Accounts receivable, net | 2,785,081 | 4,659,986 | ||||||
| Inventory | 4,257,702 | 5,080,797 | ||||||
| Contract assets and unbilled receivables | 2,384,307 | – | ||||||
| Prepaid and other current assets | 1,274,005 | 1,243,029 | ||||||
| Total current assets | 64,124,799 | 79,739,496 | ||||||
| Land, equipment and improvements, net | 5,125,629 | 5,077,043 | ||||||
| Goodwill and intangible assets | 2,210,357 | 2,663,883 | ||||||
| Equity investment | 3,759,000 | – | ||||||
| Other assets | 4,123,244 | 3,842,068 | ||||||
| Total assets | $ | 79,343,029 | $ | 91,322,490 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 3,894,049 | $ | 4,918,605 | ||||
| Accrued expenses | 4,054,172 | 4,351,537 | ||||||
| Income tax payable | 161,620 | 1,416,892 | ||||||
| Deferred income taxes | 863,000 | 520,000 | ||||||
| Contract liabilities and billings in excess of revenue earned | 317,094 | 896,479 | ||||||
| Total current liabilities | 9,289,935 | 12,103,513 | ||||||
| Other long term liabilities | 1,939,618 | 1,569,253 | ||||||
| Lease commitments | 264,238 | 269,877 | ||||||
| Total Kopin Corporation stockholders’ equity | 68,539,215 | 78,099,269 | ||||||
| Noncontrolling interest | (689,977 | ) | (719,422 | ) | ||||
| Total stockholders’ equity | 67,849,238 | 77,379,847 | ||||||
| Total liabilities and stockholders’ equity | $ | 79,343,029 | $ | 91,322,490 | ||||
| Kopin Corporation | ||||||||||||
| Supplemental Information | ||||||||||||
| (Unaudited) | ||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||
|
June 30, 2018 |
July 1, 2017 |
June 30, 2018 |
July 1, 2017 |
|||||||||
| Display Revenues by Category (in millions) | ||||||||||||
| Military Applications | $ | 1.6 | $ | 2.2 | $ | 3.9 | $ | 3.6 | ||||
| Industrial Applications | 1.2 | 1.4 | 3.0 | 2.9 | ||||||||
| Consumer Electronics Applications | 1.5 | 0.9 | 2.4 | 1.5 | ||||||||
| Research and Development | 1.5 | 1.0 | 2.1 | 1.4 | ||||||||
| Other | 0.1 | 0.4 | 0.2 | 0.9 | ||||||||
| Total | $ | 5.9 | $ | 5.9 | $ | 11.6 | $ | 10.3 | ||||
| Stock-Based Compensation Expense | ||||||||||||
| Cost of component revenues | $ | 156,000 | $ | 159,000 | $ | 266,000 | $ | 263,000 | ||||
| Research and development | 194,000 | 195,000 | 468,000 | 413,000 | ||||||||
| Selling, general and administrative | 939,000 | 322,000 | 1,954,000 | 1,292,000 | ||||||||
| $ | 1,289,000 | $ | 676,000 | $ | 2,688,000 | $ | 1,968,000 | |||||
| Other Financial Information | ||||||||||||
| Depreciation and amortization | $ | 575,000 | $ | 699,000 | $ | 1,130,000 | $ | 1,143,000 | ||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20180806005219/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