- 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
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
View source
version on businesswire.com: http://www.businesswire.com/news/home/20161027005569/en/
Kopin CorporationRichard
Sneider, 508-870-5959Treasurer and Chief Financial
OfficerRichard_Sneider@kopin.comorMarket Street PartnersJoann
Horne, 415-445-3233JHorne@marketstreetpartners.com
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