Kopin Corporation

Good day and welcome to the Corporation Fourth Quarter and Full Year 2020 Earnings Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Chief Financial Officer, Rich Schneider. Please go ahead, sir.

Thank you, Operator. Welcome, everyone, and thank you for joining us this morning. John will begin today's call with a discussion of the market environment that we see and our progress in executing our strategies for sales activity and technology development. I'll go through the fourth quarter results at a high level. John will conclude in prepared remarks, and they'll be happy to take your questions. I'd like to remind everyone that during today's call taking place on Tuesday, March 2nd, 2021, we were making forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These statements are based on the company's current expectations, projections, beliefs, and estimates, and are subject to a number of risks and uncertainties that could cause actual results to differ materially in those forward-looking statements. Potential risks include, but are not limited to, demand for our products, operating results of our subsidiaries, market conditions, and other factors discussed in our most recent annual report on Form 10-K and other documents filed with the Securities Exchange Commission. The company undertakes no obligation to update the forward-looking statements made during today's call. And with that, I'll turn the call over to John.

Good morning. Thank you for joining us to discuss our fourth quarter and 2020 results. I want to start by spreading our hope that you and your families continue to stay well and safe during this pandemic time. We are delighted to have finished 2020 with very strong results on both our top and bottom lines. The full-year revenue growth of 36% year-over-year and increased efficiencies in our operations. Our four-quarter 2020 revenue growth was particularly strong, going to 60% from a year ago to $13.9 million. We also made great progress. We are very proud of this achievement. While the company worked hard to achieve these wonderful results, Our focus is on the longer term. As demonstrated by a topic increase in R&D spending, which we believe will position the company well for the coming era of AR and VR. This could be one single decade of killing, a radical transformation from handheld devices to hand-free devices. Now let's back to a more detailed discussion of our business. Our business was strong across multiple segments and again led by our defense partner revenues which increased 112% in the fourth quarter of 2020 compared with the fourth quarter of 2019. This very significant increase was driven by our two production programs. The displays of assembly systems for the SWSI Civil Weapons Site System and display for F-35 fighter jet programs. As announced in September 2020, we were awarded a $22.9 million follow our contracts for the FWSI program with shipments scheduled through the third quarter of this year. We expect these two protection programs will continue to generate strong revenue in the coming years. We're also on track this year to transition three more products out of a dozen programs currently in development to initial low-rate production with revenues expected to begin ramping in the second half of this year. We believe these programs will provide accelerated growth momentum for 2022 and beyond. Our active pipeline of development programs includes in using our advanced spray products in armored vehicle targeting systems, rotary wing aircraft type helmets, automatic and semi-automatic rifles, base scopes, and targeting systems, among other applications. These programs are related to ARVR. and are all using our advanced micro-displays and also increasingly utilizing our sophisticated optical systems, electronics and dust-free assemblies. We believe we're the sole source supplier to most of these programs. In the fourth quarter, we saw solid growth in our industrial wearables that are sales to real wear located in Washington State, along with sales to 3D metrology applications. The ability to collaborate with remote experts is growing, and we're seeing increasing activities in December. For example, in Q4, we announced that everything and a European company has designed a micro-display optical module for this smart glass product. For 3D metrology applications, our unique ferroelectric L-course micro-displays are very suited for industrial 3D automatic optical inspection, which we call AOI equipment. Due to the increasing quality requirements of the complex electronic circuit boards used in the coming generation of electric vehicles and 5G phones, 2D AOR inspection machines are now being replaced by 3D inspection machines. This market is still in its early stages of growth. Our main competitor in this application is Texas Instruments, EMD, Digital Micro Mirror Device. We're two market leaders currently have similar market shares. We expect both industrial wearable revenue and 3D metrology will continue to grow in 2021 and beyond. However, revenues from sales of product for public safety applications were down in the fourth quarter of 2020, which we believe was attributable to the negative impact of COVID-19 on municipal budgets. We expect this segment will recover in the second half of this year. We also recently announced that HMDMD, located in San Diego, California. And Coping has entered an agreement to develop a specialized precision surgery headset for a major medical technology company. This is our initial entry into the expanding use of the AR headset for medical applications. In the fourth quarter, who received our production order, first production order, and began shipment of our 720p pattern-pending dual-step ColorMax OLED micro-displays with high brightness, good color fidelity, combined with low power consumption. High brightness and color fidelity are critical for high-performance AR displays. We also announced that Lightning 2.6K and 2.6K micro-OLED display on chips was incorporated in Panasonic VR glasses, which were shown at CES 2021. The Panasonic VR glasses are the worst are the first high dynamic range capable ultra high definition Viagra eyeglasses and offering stunning lifelike images. The glasses have a very small form factor thanks to our advanced 1.3 inch display and our proprietary thin pancake optics jointly developed by 3M and Cobain. making them much smaller and wider than the large bulky headsets traditionally and currently used for the app. The glasses also feature Panasonic integrated ultra high fidelity audio which combined with a super high resolution micro-ILED display create a truly amazing sensory experience for viewing sports, content, or games. We're very excited about our project and believe all this will be in defense, industrial, medical, and consumer AR, VR will fuel our growth in 2021 and beyond. Copeland has always been a very innovative innovation company. They are called. We continue to be a leader in the next generation of micro-display technology. An example of this is our recent announcement of a multi-year agreement with JPEG Display to develop super-bright monochrome LED micro-displays. JPEG Display, based in Shanghai, China, is a leader in micro-LED displays. Upon the collaboration, J-Bird Display will provide the LED wafers and hybrid volume surfaces on coping designs and supplied silicon backplane high-feed wafers, a monolithic 2K by 2K LED 1-inch diagonal micro-display. This will be the most advanced Micro OLED displays in the world. Micro LED displays provide the promise of super high brightness micro displays, especially useful for many AR applications. We expect our advanced color maps, OLED and micro OLED, micro LED displays now being developed will be the key enablers or we see as the coming wave of AR and VR products in defense, enterprise, and consumer applications. Coping offers the widest range of leading micro-display technology in the world for AR and VR. As expected, these systems are being adopted further in defense, followed by industrial, enterprise, medical, and then customer applications. Almost all of our development programs are related to AR VR applications. When we can make great progress in executing our strategy to improve the performance in all aspects of the company. Rich will cover the financial details of the quarter and the full year 2020. I want to end by sharing how pleased I am to have matched our strong revenue growth with significant bottom-line improvement by still significantly increasing our IND activities. In fact, in the fourth quarter, we achieved possibilities and generated cash while growing revenue by 60%. I want to convey, we will remain profitable. I do want to convey that we will remain profitable throughout 2021. As we are ramping up several new defense protection programs, and we continue aggressively to invest in our micro LED and micro OLED displays, as well as advanced optics and specialized electronics. It is very encouraging to see the progress we achieve across the board in our technology, in our operations, and in our financial strength. We look for this trend to continue. Now we'll turn the call off to Rich to reveal the financial details.