Kopin Provides Business Update and Second Quarter 2018 Operating Results
WESTBOROUGH, Mass.--(BUSINESS WIRE)--Aug 6, 2018--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- i TM 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.
Second Quarter 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):
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.
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 to 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 the FWS-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.
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