- Reaches Two Agreements Providing
Fab-less Manufacturing Capacity and Capability for New Lightning
OLED Display
- Goertek Completes $24.6 Million
Investment; Headsets From Partnerships Slated for Introduction Late
2017
- F-35 Fighter Jet Program Ramping on
Plan
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 first quarter of 2017 ended April 1,
2017.
“We continued to make strong progress in the first quarter as we
shift our focus from development to commercialization of our
optics, displays, and system technology for virtual reality (VR)
and augmented reality (AR),” said John C.C. Fan, President and CEO
of Kopin. “Goertek has completed its $24.6M investment in Kopin’s
common stock. Furthermore, our partnership with Goertek, the
leading manufacturer of wearable systems globally, is on track to
produce three headsets by year end 2017. These headsets will
include a combination of our Pupil™ optics, Pearl™ optics and
Whisper™ voice technology. Goertek is also working with us to
include our innovative components in other wearable systems as they
work with many global companies. In addition we are delighted that
our Solos™ cycling headset is shipping to our Kickstarter customers
and the preliminary response has been very positive. We are now
working with Goertek on the next generation of Solos to advance the
capabilities of the cycling version as well as adjusting the
configuration to target other fitness applications such as
running.
“The announcement of our new Lightning™ 2K by 2K OLED micro
displays at CES last January has created great excitement,
resulting in productive meetings with many global companies which
are interested in VR and AR. Our 2K by 2K OLED display is designed
to be the best in the world for VR applications, and with strong
interest and encouragement from the market, we have taken steps to
provide increased performance and manufacturing capacity for our
OLED displays. Kopin’s OLED display uses a fab-less business model
for both front-end Si backplane processing and back-end OLED
deposition. The Si backplane processing is readily available, while
the capacity for OLED deposition on Si has been limited. To address
the near term demand for our OLED micro displays we announced an
agreement with Yunnan Olightek Optoelectronics Technology Co. Ltd.
(Olightek), the largest OLED-on-Si manufacturer in China, to
jointly procure an advanced production OLED deposition machine.
This machine will be ready for volume production by early next
year, with Kopin entitled to 50% of the capacity. For even larger
volume capacity and product capabilities, we have partnered with
Olightek and BOE Technology Group Ltd. (BOE), a world leader in the
manufacture of liquid crystal and OLED on glass displays, to create
the world’s largest OLED-on-Silicon manufacturing center. This high
volume facility is expected to be on-line within two years, which
should match the ramp in demand expected from VR and AR
manufacturers around the world.
“The military business also continued on track in the first
quarter. The F-35 Joint Strike program, with Kopin providing
displays for the AR helmets used by the fighter pilots, is ramping
on schedule. The cadence for the Family of Weapon Sight programs is
also on track for Kopin to provide weapon sight eyepiece
assemblies. We are shipping under the low rate initial production
(LRIP) segment of the FWS-I and expect full production late this
year. Under the Crew Served award we will begin the development
phase later this year. Also we are optimistic that Kopin is
positioned to win additional awards that might develop under the
current budget with its increased military spend.
“During the first quarter we acquired a small company in
Virginia that develops and manufactures simulation and test
equipment for military and industrial applications. This company’s
products fit in nicely with our military and 3D test equipment
products.
“We have devoted the past four years to transform from an LCD
component company into a wearable components and systems supplier.
We are pleased with the progress and advances in our LCD and OLED
micro displays, in our innovative optics, in our unique wearable
systems know-how, and in our Whisper voice technology. Initially
designed for wearable headset systems, the Whisper technology is
being enhanced for far-field applications such as in-home IOT. We
believe our Whisper technology will be able to demonstrate benefits
for far-field applications by the end of the year. In addition, the
novel Simax lithium-ion batteries have passed all the certification
tests, and Hitachi Maxwell and Kopin are exploring volume
production alternatives.
“Finally, the approximately $25 million investment from Goertek
strengthened our financial position, and is helping fund the
investment to commercialize and market our technology. Either
through licensing system designs, selling our proprietary
components, or even providing the full systems such as Solos, Kopin
is well positioned as the VR and AR markets begin to accelerate,”
concluded Dr. Fan.
First Quarter Financial Results
Total revenues for the first quarter ended April 1, 2017, were
$4.4 million, compared with $6.1 million for the first quarter
ended March 26, 2016. Included in the first quarter of 2017
was approximately $400,000 of revenues from the acquired company.
Sales of products for Wearable applications were $0.7 million for
the first quarter of 2017 as compared to $2.6 million in the first
quarter of 2016. The decrease was primarily attributable to
customers who use our products for drone applications. The
customers are shifting into two of our higher resolution displays,
and the revenues are expected to recover, and increase beginning in
Q2.
Research and development (R&D) expenses for the first
quarter of 2017 were $4.3 million compared with $4.0 million for
the first quarter of 2016.
Selling, general and administrative (S,G&A) expenses were
$5.6 million for the first quarter of 2017 as compared with
approximately $3.8 million for the same period in 2016. Selling,
general and administrative expense increased for the three months
ended April 1, 2017 as compared to the same period in 2016,
reflecting an increase in legal and accounting cost incurred in the
investigation of the fraud at our Korean subsidiary and an increase
in stock-based compensation costs. Operating expenses are expected
to remain largely flat with full year 2016.
The Company recorded a tax benefit of approximately $1.1 million
for the three months ended April 1, 2017 as compared to a tax
provision of approximately $0.1 million for the same period in the
prior year. As a result of the acquisition the Company recorded net
deferred tax liabilities of approximately $1.0 million which
resulted in the Company reducing the valuation allowance on its net
deferred tax assets. The reduction in the valuation allowance was
recorded as a tax benefit in the tax provision.
Net loss for the first quarter of 2017 was $7.9 million, or
$0.12 per share, compared with net loss of $6.9 million, or $0.11
per share, for the first quarter of 2016. Included in the results
of the first quarter of 2017 was a $0.3 million gain from the mark
to market of a warrant that the company acquired as part of a
license of its technology.
We have maintained our strong financial position. Net cash used
in operating activities for the three months ended April 1, 2017
was approximately $6.6 million. Kopin’s cash and equivalents and
marketable securities were approximately $67.8
million at April 1, 2017 as compared to $77.2 million at
December 31, 2016 and we have no long-term debt. On April 20,
2017 we completed the sale of 7,589,000 shares of our common stock
to Goertek Inc. for approximately $24.6 million.
During the first quarter of 2017 we had 5 patents granted and
filed for 6 new applications. Overall we have over 300 patents and
patents pending, almost all of which are related to wearable
applications.
All amounts above are estimates and readers should refer to our
Form 10-Q for the quarter ended April 1, 2017, for final
disposition.
Financial Results Conference Call
In conjunction with its first quarter 2017 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, Lightning, Pearl, Pupil, Solos, and Whisper 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 belief that
we continued to make strong progress in the first quarter as we
shift our focus from development to commercialization of our
optics, displays, and system technology for virtual reality (VR)
and augmented reality (AR); our belief that our partnership with
Goertek is on track to produce three headsets by year end 2017; our
belief that these headsets will include a combination of our Pupil™
optics , Pearl™ optics and Whisper™ chip voice technology; our
belief that Goertek is also working with us to include our
innovative components into wearables systems as they are working
with many global companies; our belief that working with Goertek on
the next generation of Solos will advance the capabilities of the
cycling version as well as adjusting the configuration to create a
Solos targeted to other fitness applications, such as running; our
agreement with Olightek Yunnan that we will jointly procure an
advanced production OLED deposition machine; our expectation that
the machine we purchase with Olightek Yunnan will be ready for
volume production by early next year; our expectation that the
OLED-on-Silicon manufacturing center being built with Olightek and
BOE Technology Group LTD (BOE) will be on-line within two years;
our expectation that the OLED-on-Silicon manufacturing center
should match the expected growing demands for VR and AR
manufacturers around the world; our expectation that there will be
growing demands for VR and AR manufacturers around the world; our
expectation that the FWS-I will be full production late this year;
our expectation that the Crew Served program will begin the
development phase later this year; our belief that if the current
administration’s budget is passed, we are well positioned to
benefit from new awards; our belief that our Whisper technology
will be able to demonstrate benefits for far-field applications by
the end of the year; our belief that Kopin is well positioned as
the VR and AR markets begin to accelerate; and our expectation that
customers are shifting into two of our higher resolution displays,
and that revenues are expected to recover and grow starting Q2; our
expectation that our operating expenses are expected to remain
largely flat with 2016.. 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: We may not be able to commercialize our products for the
VR and AR markets; our partnership with Goertek may not produce
three headsets by year end 2017; if we do develop three headsets
they may not include a combination of or any of our Pupil optics ,
Pearl optics and Whisper chip voice technology; Goertek may not
include our innovative components into wearables systems; working
with Goertek on the next generation of Solos may not advance the
capabilities of the cycling version or adjust the configuration to
create a Solos targeted to other fitness applications, such as
running; we might not procure an advanced production OLED
deposition machine with Olightek Yunnan; if we are able to purchase
a machine with Olightek Yunnan, such machine may not be ready for
volume production by early next year; the OLED-on-Silicon
manufacturing center being built with Olightek and BOE Technology
Group LTD (BOE) may not be on-line within two years; the
OLED-on-Silicon manufacturing center may not be running in time for
the expected growing demands for VR and AR manufacturers around the
world; there may not be growing demands for VR and AR manufacturers
around the world; the FWS-I may not be in full production late this
year; we may designed our of the FWS-I; the Crew Served program may
not begin the development phase later this year; we may not be
awarded contracts under the FWS-I and Crew Served programs; the
current administration’s budget does not pass, or if it is passed,
we may not benefit from an increase to the military budget; we may
not be able to demonstrate Whisper technology benefits for
far-field applications by the end of the year; 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; our customers
may not shift into two of our higher resolution displays, and
revenues do not recover or grow starting in Q2; our operating
expenses do not remain largely flat with 2016 our R&D expense
is not lower; 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
April 1,
2017
March 26,
2016
Display Revenues by Category (in millions) Wearable
Applications $ 0.7 $ 2.6 Military Applications 0.9 1.5 Industrial
Applications 1.9 1.1 Consumer Electronics Applications 0.5 0.8
Research and Development
0.4
0.1
Total $ 4.4 $ 6.1
Stock-Based Compensation
Expense Continuing Operations Cost of component revenues
$ 130,000 $ 142,000 Research and development 199,000 117,000
Selling, general and administrative 963,000 (203,000
) $ 1,292,000 $ 56,000
Other Financial Information
Depreciation and amortization $ 431,000 $ 335,000
Kopin Corporation Condensed Consolidated Statements of
Operations (Unaudited) Three Months Ended
April 1,
2017
March 26,
2016
Revenues: Net product revenues $ 3,933,142 $ 5,978,134 Research and
development revenues
444,985
141,004 4,378,127 6,119,138 Expenses: Cost of
product revenues 3,111,448 4,636,041 Research and development
4,281,870 4,039,951 Selling, general and administrative
5,635,775 3,760,849
13,029,093 12,436,841 Loss from operations (8,650,966 )
(6,317,703 ) Other (expense), net
(423,095 ) (376,085
)
Loss before benefit (provision) for income
taxes and net loss (income) from noncontrolling interest
(9,074,061 ) (6,693,788 ) Benefit (provision) for income
taxes
1,066,000
(141,000 ) Net loss (8,008,061 )
(6,834,788 ) Net loss (income) attributable to
noncontrolling interest
81,438
(98,673 ) Net loss attributable to
the controlling interest
$ (7,926,623
) $ (6,933,461
) Net loss per share: Basic $ (0.12 ) $ (0.11 )
Diluted $ (0.12 ) $ (0.11 ) Weighted average number of
common shares outstanding: Basic
64,538,686
63,978,048 Diluted
64,538,686 63,978,048
Kopin Corporation Condensed Consolidated
Balance Sheets (Unaudited) April
1, 2017 December 31, 2016 ASSETS Current assets: Cash
and marketable securities $ 67,750,569 $ 77,197,896 Accounts
receivable, net 2,390,660 1,699,195 Inventory 4,194,821 3,302,112
Prepaid and other current assets 1,263,995 1,194,901 Note
receivable - - Total current assets 75,600,045
83,394,104 Land, equipment and improvements, net 2,999,590
2,976,006 Goodwill and intangible assets 4,130,130 844,023 Other
assets 823,746 618,139 Total assets $
83,553,511 $ 87,832,272 LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities: Accounts payable $ 3,878,123 $ 4,355,462
Accrued expenses 6,993,821 5,457,484 Deferred income taxes
2,686,000 2,571,000 Billings in excess of revenue earned
1,134,558 981,761 Total current liabilities
14,692,502 13,365,707 Lease commitments 251,186 246,922
Total Kopin Corporation stockholders' equity 68,525,900
74,077,686 Noncontrolling interest 83,923 141,957
Total stockholders' equity 68,609,823 74,219,643
Total liabilities and stockholders' equity $ 83,553,511 $
87,832,272
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170509005684/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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