Kopin Provides Business Update and Third Quarter 2017 Operating Results

 
11/07/2017
  • Strong Military Growth in Third Quarter; Expected to Continue into Q4
  • On track for 70% Revenue Growth in Second Half of 2017
  • Five New AR/VR Headsets with Key Kopin Components to be Introduced at CES

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 30, 2017.

“We continued making rapid progress in the third quarter on many fronts,” said Dr. John C. C. Fan, CEO of Kopin Corporation. “With regard to our Lightning™ OLED displays and related optics, we have drawn strong interest from many tier-one global companies and the military, and we have already received development orders. Even as we continue to further enhance our Lightning OLED performance, we have made significant progress in establishing production readiness for our OLED microdisplays and we expect to have production in the first quarter of 2018. At the same time, our joint venture with BOE and Olightek is on schedule, and we expect to break ground shortly on the world’s largest OLED on Si factory, located in Kunming, China.

”We took another step to expand our microdisplay leadership with the recent introduction of the Brillian LCD microdisplay product line. This new generation of liquid crystal display (LCDs) incorporates advanced designs and processing techniques which dramatically increase performance over current LCDs. The Brillian offers brightness levels only possible with our LCD which is critical for many AR applications, especially in military and enterprise.

”Our military business was strong in the third quarter of 2017, more than doubling over the period year. The increase was primarily driven by revenues for our VR optical system for simulation and training headsets along with shipments for the F-35 Strike fighter program.

“In our consumer business, Solos is in final preparation phase with our manufacturing partner Goertek, and we expect to launch it at CES in January and begin shipping in the first quarter of 2018. This second generation of Solos will showcase much of Kopin’s most exciting new technology, including WhisperTM audio technology and our PupilTM optics, along with many other new features. We have made great progress with our Whisper technology and will be demonstrating its mid-field and far-field capabilities at CES 2018.

“In summary, our military business is ramping with enterprise and consumer headsets scheduled for release shortly. Our product plans are in place and we have $77 million to fund our strategy,” concluded Dr. Fan.

Third Quarter Financial Results

Total revenues for the third quarter ended September 30, 2017 were $6.1 million, compared with $5.8 million for the third quarter ended September 24, 2016.

Research and development (R&D) expenses for the third quarter of 2017 were $5.3 million compared to $4.1 million for the third quarter of 2016.

Selling, general and administrative (SG&A) expenses were $5.3 million for the third quarter of 2017 compared to $4.0 million for the third quarter of 2016, reflecting incremental SG&A expense of $0.5 million from the Company’s acquisition of NVIS, which was completed in the first quarter of 2017 and an increase in stock compensation. The incremental SG&A from NVIS for the three months ended September 30, 2017 primarily relates to the amortization of intangibles resulting from the acquisition.

Net loss attributable to controlling interest for the third quarter of 2017 was $8.2 million, or $0.11 per share, compared with net loss of $8.1 million, or $0.13 per share, for the third quarter of 2016.

During the third quarter of 2017 we had 7 patents granted and filed for 2 new applications. Overall we have over 300 patents and patents pending, almost all of which are related to wearable applications.

As of September 30, 2017 Kopin had approximately $77.3 million in cash equivalents and marketable securities, and no long term debt.

All amounts above are estimates and readers should refer to our Form 10-Q for the quarter ended September 30, 2017, for final disposition.

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 expected military revenue strength in the fourth quarter; that revenue in the second half of 2017 is on track to increase 70% as compared to the first half of 2017; we plan to have OLED production in the first quarter of 2018; our expectation to launch Solos 2 at CES in January and begin shipping in the first quarter of 2018our expectation that we will be demonstrating our Whisper technology’s mid-field and far-field capabilities at CES 2018; and our belief that our military business is ramping with enterprise and consumer headsets scheduled for release shortly.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: Our military revenues may not be strong in the fourth quarter; our revenues may not grow in the second half of 2017;we may not be able to demonstrate any products at CES for a variety of reasons; our Solos 2 may not be introduced; the Solos 2 may not gain market acceptance; our Brillian LCD technology may not be introduced; the Brillian LCD may not gain market acceptance; our military programs may not continue to ramp and they may be delayed, cancelled or not funded; our revenue momentum may stop; our revenues may decline for a variety of reasons including, but not limited to, lack of market acceptance, production issues, material supply issues and pricing issues; our Whisper Chip may not work for far field applications; our Whisper Chip may not achieve market acceptance; we may have insufficient funds to monetize and/or commercialize our investment; we may not be well positioned as the VR and AR markets begin to accelerate; our progress may not lead to the growth of the AR and VR markets; the AR and VR markets may take longer to develop than we anticipate; there may be no demand for our AR and VR products; 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

Supplemental Information

(Unaudited)

 
   

Three Months Ended

  Nine Months Ended
                 
   

September 30, 2017

 

September 24, 2016

 

September 30, 2017

 

September 24, 2016

Display Revenues by Category (in millions)

               
Consumer Applications   $ 1.3   $ 1.5   $ 2.8   $ 5.9
Military Applications     2.9     1.2     6.1     3.6
Industrial Applications     1.1     2.4     4.3     4.6
Other Applications     0.3     0.4     1.3     1.5
Research and Development     0.5     0.3     1.9     0.7
Total   $ 6.1   $ 5.8   $ 16.4   $ 16.3
 
 

Stock-Based Compensation Expense

               
Cost of component revenues   $ 143,000   $ 136,000   $ 406,000   $ 426,000
Research and development     203,000     129,000     616,000     378,000
Selling, general and administrative     676,000     263,000     1,968,000     675,000
    $ 1,022,000   $ 528,000   $ 2,990,000   $ 1,479,000
 
 
Other Financial Information                
Depreciation and amortization   $ 736,000   $ 298,000   $ 1,878,000   $

950,000

 
 
Kopin Corporation
Condensed Consolidated Statements of Operations
(Unaudited)
 
    Three Months Ended   Nine Months Ended
   

September 30, 2017

 

September 24, 2016

 

September 30, 2017

 

September 24, 2016

Revenues:                
Net product revenues   $ 5,589,402     $ 5,522,584     $ 14,501,945     $ 15,597,247  
Research and development revenues     549,765       272,222       1,942,819       671,972  
      6,139,167       5,794,806       16,444,764       16,269,219  
Expenses:                
Cost of product revenues     4,144,884       4,573,581       11,379,467       13,856,469  
Research and development     5,253,860       4,123,268       14,213,950       12,282,620  
Selling, general and administrative     5,344,999       3,980,605       16,186,946       12,023,717  
Gain on sale of property and plant                       (7,700,522 )
      14,743,743       12,677,454       41,780,363       30,462,284  
 
Loss from operations     (8,604,576 )     (6,882,648 )     (25,335,599 )     (14,193,065 )
 
Other income (expense), net     306,437       (1,190,438 )     691,042       (1,465,535 )
 
Loss before (provision) benefit for income taxes and net loss     (8,298,139 )     (8,073,086 )     (24,644,557 )     (15,658,600 )
(income) from noncontrolling interest                
 
(Provision) benefit for income taxes     (4,500 )     (114,000 )     1,141,500       (2,218,000 )
 
Net loss     (8,302,639 )     (8,187,086 )     (23,503,057 )     (17,876,600 )
 
Net loss (income) attributable to noncontrolling interest     55,217       69,782       65,223       (367,640 )
 
Net loss attributable to the controlling interest   $ (8,247,422 )   $ (8,117,304 )   $ (23,437,834 )   $ (18,244,240 )
 
Net loss per share:                
Basic and diluted   $ (0.11 )   $ (0.13 )   $ (0.34 )   $ (0.29 )
 
Weighted average number of common shares outstanding:            
Basic and diluted     72,187,688       64,047,852       69,117,640       64,012,490  
 
 
Kopin Corporation
Condensed Consolidated Balance Sheets
(Unaudited)
 
   

September 30, 2017

 

December 31, 2016

ASSETS        
Current assets:        
Cash and marketable securities   $ 77,337,464   $ 77,197,896
Accounts receivable, net     2,147,686     1,699,195
Inventory     5,949,010     3,302,112
Prepaid and other current assets     1,256,409     1,194,901
 
Total current assets     86,690,569     83,394,104
         
Land, equipment and improvements, net     3,660,925     2,976,006
Goodwill and intangible assets     3,733,123     844,023
Other assets     968,083     618,139
 
Total assets   $ 95,052,700   $ 87,832,272
 
LIABILITIES AND STOCKHOLDERS’ EQUITY        
Current liabilities:        
Accounts payable   $ 3,965,760   $ 4,355,462
Accrued expenses     8,857,185     5,457,484
Deferred income taxes     2,606,312     2,571,000
Billings in excess of revenue earned     728,281     981,761
 
Total current liabilities     16,157,538     13,365,707
 
Lease commitments     268,068     246,922
 
Total Kopin Corporation stockholders’ equity     78,564,797     74,077,686
Noncontrolling interest     62,297     141,957
Total stockholders’ equity     78,627,094     74,219,643
Total liabilities and stockholders’ equity   $ 95,052,700   $ 87,832,272
 

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

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KOPIN Corporate Headquarters 
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WESTBOROUGH, MA 01581
Tel: 508-870-5959