Please ensure Javascript is enabled for purposes of website accessibility

Kopin (KOPN) Q2 2021 Earnings Call Transcript

By Motley Fool Transcribing – Aug 4, 2021 at 1:31AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

KOPN earnings call for the period ending June 30, 2021.

Logo of jester cap with thought bubble.

Image source: The Motley Fool.

Kopin (KOPN -5.42%)
Q2 2021 Earnings Call
Aug 03, 2021, 8:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Operator

Good day, and welcome to the Kopin Corporation's second-quarter 2021 earnings call. Today's conference is being recorded. At this time, I would like to turn the conference over to Richard Sneider. Please go ahead, sir.

Richard Sneider -- Chief Financial Officer

Thank you, operator. Good morning, and welcome, everyone and thank you for joining us this morning. John will begin today's call with a discussion of our strategy, technology and markets. I will then go through the first -- second-quarter results at a high level.

John will conclude our prepared remarks and then we'll be happy to take your questions. I would like to remind everyone during today's call taking place on Tuesday, August 3, 2021 we will be 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 from those forward-looking statements. Potential risks include, but are not limited to, demand for our progress, 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.

10 stocks we like better than Kopin
When our award-winning analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.* 

They just revealed what they believe are the ten best stocks for investors to buy right now... and Kopin wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks

*Stock Advisor returns as of June 7, 2021

The company undertakes no obligation to update the forward-looking statements during today's call. And with that, I'll turn it over to John.

John Fan -- Founder, Chairman, Chief Executive Officer, and President

Thank you, Rich. Good morning and thank you for joining us to discuss our second-quarter results. I first want to start by express our hope that you and your families continue to stay safe. We continue to see growing demand for our products across our key business segments, including defense, industrial and consumer.

In our defense business, we remain on track on many development programs, two new programs entered low-rate initial production during our second quarter and the third expect to enter low-rate production in the fourth quarter. During this quarter, we announced an additional $1.6 million follow-up order for our high brightness liquid crystal display for the F-35 Joint Strike Fighter program with delivery scheduled through the second quarter of 2022. Additional orders are expected throughout the lifetime of this program. For the FWSI thermal Weapon Sight Program, at our customer requests we reduced shipments of our product during the quarter, while our customers making system and production enhancements.

We are working closely with our customer but expect the lower shipment rate to continue during the third quarter. We expect to increase the rate and make up some of the shortfall in the fourth quarter. Despite this short-term slowdown, there's no change in the overall profile of the program and demand remains very strong. I would like to stress that there is no change in the overall outlook and the profile of the program and in fact, we expect soon to receive a significant follow-up order for this program and will continue to deliver into 2022.

Also, we are pleased with strong demand from our enterprise customers in Q2 and expect the momentum to continue. As discussed with our previous call, we have continued to increase our R&D activities as we see great opportunities in the coming augmented and virtual reality space. In fact, our customer fund R&D revenue increased approximately 60% year over year. As a result of growing interest is in our next-generation displays and display technologies.

We achieved several very important display technology advancements in the quarter, including the world's first 35,000-nit HDR green OLED microdisplay. This leading-edge display can incorporate our dual stack OLED structure for ultra-high brightness and unique patent pixel structure backplane architecture for super-high dynamic range operation. This is a big milestone, not just for coping, but for AR and VR applications across all sectors. Our new HDR green OLED microdisplays is ideal for use in conditions ranging for very dark night to very bright daylight.

In addition, we recently announced the successful development of all plastic Pancake optics for VR, AR and MR applications. This is another exciting achievement for coping and is believed to be the first all plastic Pancake optics in the world. While the Pancake optics are much thinner than conventional optics it is important to note that previous Pancake optics need at least one circle glass lens to avoid image eye defects caused by birefringence of currently available plastic material. Our new patent-pending of plastic Pancake optics with aspherical lens is sufficiently lighter than Pancake glass optics but also provide a better image quality at a much lower cost.

For years bulky and heavy headset that hindered consumer adoption AR and VR glasses. Our new plastic Pancake optics enable an entirely new revenue for the industry to design, manufacture and manufacture stylish, super light, compact, VR, AR and MR high-performance smart glasses and headsets that we believe consumers will, we want to have. We have received strong interest from the market. As in Q2, also, we announced a multiyear development agreement with a leading global electronics company for full color led microdisplays on silicon and expect to demonstrate a 1-inch diagonal full color, 2K by 2K LED microdisplay within 24 months.

As a reminder LED microdisplays have a potential for super high brightness, low power consumption, high contrast and wide viewing angle, which are all important features for many applications, including see through augmented reality and mixed reality applications. We're excited to collaborate with our partner, which already has achieved some important milestones in color led microdisplays. It's also important to note that this collaboration will expand our microdisplay portfolio, making us the world's only provider of a complete suite of LCD, LCOS, OLED and LED microdisplay on silicon. Our breadth of technology and product capability per coping in the unique position of being able to provide our customers solutions that best fit their product and application needs.

I would also like to stress my recent participation in the three part webinar series AR VR the paradigm shift to smart glasses start now, which grew over 500 participants during the live event. Many of them are actively involved in the next-generation smart glass and headsets. During the three part series we discussed the past, covering the initial efforts to create AR VR solutions. The present addressing the current stick of the arch technologies and the future, which address the future of AR VR smart glasses, offering a road map to successful product developments.

All three segments have active and engaged participation from the attendees and are available on Kopin's website at www.Kopin.com. We are pleased and committed to our strategy. In short, while we maintain our strong momentum in our growing revenue-generating businesses in defense and enterprise sectors. We continue aggressively to innovate and advance our technology for what we see as a growing wave of consumer AR VR and MR products and applications.

Many of you may have followed the increasing discussion of the transformational arrival of the Metallers. Metallers definition is still not too well defined. However, in my view, as we discussed in my webinar, it is composed of AR and VR hardware, smart glasses and platform and application software, providing a unique exciting user experience to consumers. This radical transformation will happen and is already happening in defense enterprise segment and will soon arrive in the consumer sector.

As we have stressed the AR and VR hardware would come first. The technology advances and market conditions are very favorable and Kopin is very well positioned to capitalize. Now I would turn the call over to Rich to discuss the financial detail of the quarter.

Richard Sneider -- Chief Financial Officer

Thank you, John. Turning to our financial results. Total revenues for the second quarter ended June 26, 2021, to $9.9 million compared with $8.8 million for the second quarter of June 27, 2020, a 12% increase year over year. Product revenue for the second quarter ended June 26, 2021 were $6.9 million compared with $6.7 million for the second quarter of June ended 27, 2020.

Our defense product revenues for the second quarter ended June 26, 2021, were $3.8 million compared with $4.5 million for the second quarter ended June 27, 2020. As John previously discussed, during the three months ended June 26, 2020, we reduced shipments of our thermal weapon site systems to a customer who is making system and production enhancement. We expect the lower shipment rate to continue during the third fiscal quarter and then increase in the fourth quarter of 2021. Whether we can make up the revenues during the remainder of 2021 is depending on how quickly the customer completes their process.

Our industrial product revenues for the second quarter ended June 26, 2020, were $2.6 million compared with $1.4 million for the second quarter ended June 27, 2020, and approximately 86% increase on the strength of the sale of products used for 3D metrology and headsets used for applications in manufacturing distribution, partly offset by a decline in public safety wearable headsets. Project research, development and other revenues were $3 million for the second quarter ended June 26, 2020, compared with $12.1 million for the second quarter ended June 27, 2020, primarily due to an increase in funding for U.S. defense programs. Cost of products sold for the second quarter ended June 26, 2020, were $6 million compared to $4.8 million for the second quarter ended June 27, 2020.

The increase in product revenues as a percentage of net product revenues for the three months ended June 26, 2020, as compared to three months ended June 27, 2020, was primarily to lower manufacturing efficiencies driven by the lower FWSI volumes. Regarding global shortage of semiconductor components and production capacities affecting many industries, while we have in some cases had to find alternative sources, we have not experienced any shortage issues during the first six months of 2021. In some cases, we have seen some price increases. The shortage of semiconductor components as a very dynamic situation, and we continue to work the issue it presents.

Research and development expenses for the second quarter of 2021 were $3.9 million compared to $2.2 million for the second quarter of 2020, a 75% increase year over year. R&D expenses for the three months ended 26, 2021 increased as compared to three months ended June 27, 2020, primarily due to an increased spending on U.S. funded development programs and internal R&D expenses for OLED development. Selling, general and administrative expenses were $4 million for the second quarter of '21 compared with $2.9 million for the second quarter of 2020.

Excluding the noncash stock-based compensation costs, SG&A expenses were $3.7 million for the second quarter of '21 compared with $2.8 million for the second quarter of 2020, a 30% increase. The increase in SG&A, excluding noncash stock compensation cost was due to an increase in other compensation costs and bad debt expense. Other income expense was income of approximately $249,000 for the second quarter of 2021 compared with $6,000 of expense in the second quarter of 2020. During the three months ended June 26, 2021, we recorded $100,000 of foreign currency gains as compared to $10,000 of foreign currency gains for the three months ended June 27, 2020.

Turning to the bottom line. Our net loss attributable to the controlling interest for the second quarter of 2021 was $3.8 million or $0.04 per share compared with a net loss to controlling interest of $1.1 million or $0.01 per share for the second quarter of 2020. Non-GAAP net loss attributable to controlling interest for the second quarter of 2021 was $3.6 million or again $0.04 per share compared with non-GAAP net loss attributable to controlling interest of $1 million or $0.01 per share for the second quarter of 2020. Kopin's cash and marketable securities were approximately $30.7 million at June 26, 2021, as compared to $20.7 million at December 26, 2020 net cash used and operating activities for the second quarter ended June 26, 2021, was approximately $5.4 million.

During the three months ended June 26, 2020, we sold 92,335 shares of our stock under our ATM program for gross proceeds of approximately $832,000 before deducting expenses of us paid by us of $24,000. For the six months ended June 26, 2020, we sold 2,496,690 shares for gross proceeds of approximately $16.8 million before deducting broker expenses paid by us of approximately $500,000 pursuant to our existing ATM and previous ATM agreement. On June 28, 2021, the first day of our fiscal third quarter, we sold 600,000 shares of common stock for gross proceeds of $4.8 million before deducting broker expenses paid by us of approximately $145,000 pursuant to our existing ATM program. Second-quarter amounts for depreciation and stock compensation expense are attached in the table into the Q2 press release.

The amounts discussed above are current estimates and listener should review our Form 10-Q for the second-quarter 2021 for any possible changes and of course additional disclosures and with that operator, we'll take questions.

Questions & Answers:


Operator

[Operator instructions] We'll now take our first question. It comes from Glenn Mattson of Ladenburg Thalmann. Please go ahead.

Glenn Mattson -- Ladenburg Thalmann -- Analyst

Yeah. Hi. Thanks for taking the question. So just as far as the delays go for this quarter and I guess, next, can you give us some sense, just a little more color on kind of what kind of changes your end customer had to make, I guess, trying to get at how confident you are or what gives you the confidence that there's going to be a bounce back in the fourth quarter on that? And just some color on the degree of bounce back, whether or not you think you can make up a majority of the revenue loss or if you need to -- or if there'll be some further push out in '22?

Richard Sneider -- Chief Financial Officer

Sure. So first of all, this is a very long-running program. This is going to go for multiple years, and this is not unusual that now they've made some number of full units, and they're looking to improve yield. Keep in mind, a lot of the government contracts today are firm fixed price and so to the extent that you can make yield improvements, drive costs down, that all falls to the bottom line and we share in that.

And so they've come through some ideas for yield improvement on the overall system. They slowed shipments down as they implemented those improvements. It requires us to do some engineering to work with them to make sure there's no downstream effects and that's what we're doing. And so how fast we can make it up we've talked to the customer, they are very eager to make it up themselves.

It affects their revenues, too. So our interest and their interests are aligned. So it's just a matter of going through and making sure all the testing gets done properly and that the -- as we mentioned, no downstream effects and then once that happens, we hopefully can turn this thing on and then it will just be a matter of how many weeks are left and how much volume we can get out of the facility over the rest of the quarter. We're optimistic we can put a pretty good dent in the fourth quarter if we can get this thing turned on soon.

Glenn Mattson -- Ladenburg Thalmann -- Analyst

OK, great. And as far as the new programs that went into low-rate initial production, can you talk about any specifics about what exactly programs as are and just get a sense of how it will ramp in the back half and into next year?

Richard Sneider -- Chief Financial Officer

Yes. So it's a weapon sight, it's an avionic product as soon as we get clearance from the customer, maybe hopefully we can give a little more color exactly who they are and what the programs are. So we did recognize product revenues, initial product revenues in the quarter. And hopefully, it will just continue on.

Again, this is initial low-rate production. So there is still engineering going on as these units are being shipped. So having gone to full-rate production, which will happen next year.

Glenn Mattson -- Ladenburg Thalmann -- Analyst

Thanks, Rich. And so the -- there's a gross margin was a little softer, and I guess that's a combination of those two factors. In the early stages, obviously, the initial production doesn't have the same margin as something in full production. So -- and obviously, the downtick in the weapons sites.

So being that, that will continue in Q3, should we expect kind of similar margins in Q3 and then perhaps started to improve in Q4 and beyond? Is that a good way to think about the model?

Richard Sneider -- Chief Financial Officer

Yes.

Glenn Mattson -- Ladenburg Thalmann -- Analyst

Great. And then I just had a question about the new LED microdisplay, you talked about kind of a global leader there as the partner. Maybe, I don't know, Rich or John the best person to talk about it, but just love to get more insight into how big that could be down the road and just any other color on the upside that, that opportunity presents would be great.

John Fan -- Founder, Chairman, Chief Executive Officer, and President

Yeah. Glenn, this is John. This is a very interesting program, very exciting progress. You will know we obviously have been working on LCDs and LCOS and recently really focused on micro-OLED.

But micro-LED has a peculiar feature. It can be very, very bright in some way people think it's an ultimate display. If you can do the micro-LED, then the brightness is so high it can be so efficient, they'd be very, very good for see through AR optics, optical systems. As you well know, the augmented reality optical see through systems in many ways is the ultimate dream for everybody.

So this is it, this is the ultimate dream, but technology is very difficult. We actually pioneered and invented this process on silicon in 1991 with Viper. Viper actually wanted from day 1. Just going back, 1991, they funded us to do that.

We stopped it because we don't think we can do the color very well and now we're reactivating the whole process as they will fund from customer and we have a very big company and we already disclosed it from Japan. As a global consumer and consumer -- as enterprise consumer both kind of company and we are excited having two years we will have that that one inch 2K by 2K full color. If we achieve that, that will be the world's leading display. There's no such ambitious program yet and will be the first one.

We will provide the backplane design. It's a very unique design that we are patenting right now, yeah.

Glenn Mattson -- Ladenburg Thalmann -- Analyst

Great. That's helpful. OK, that's it for me. Thanks guys.

Operator

Our next question comes from Kevin Dede of H.C. Wainwright. Please go ahead.

Kevin Dede -- H.C. Wainwright & Co. -- Analyst

Good morning, gentlemen. Thank you for taking my questions. John just to go back on to the -- looking at the -- Glenn brought up the LED display. You mentioned a consumer company helping you develop that two year program.

What exactly are the design requirements, the full display? Do you have to include optics in that? Can you give us a little more insight on what your deliverables are?

John Fan -- Founder, Chairman, Chief Executive Officer, and President

It's a very good question, Kevin. Thank you for asking the question. For this particular project is a focus on just display the full color 1-inch 2K x 2K display. Not the end user system.

As you well know, it's a very good question because just a display alone will not solve the problem of the AR VR consumer application. It is not true. Optics is just as important. [Inaudible] display, maybe 30,000 times by the optics and give you a very clear image and that's why the Pancake optic sell.

Pancake optics is a -- we actually use Pancake optics in the defense industry for quite a while because it does make it everything high-performance optics. But in those cases, they usually have glass in there, glass lens, which is heavy, it's OK for the soldiers, but it's not OK for consumers. So this all-plastic optics to go with a very high-performance display. Together, we will provide the whole unit to people.

For the product display only, we have individual separate programs on optics.

Kevin Dede -- H.C. Wainwright & Co. -- Analyst

OK. So that was going to be my next question, John. Thanks for leading in. So the -- this optics development is the plastic cast, number one, is the development there, sponsored by a consumer company or was this something that Kopin endeavored to solve on its own and could you give us a little insight on how you're pairing it with both this LED development and the OLED development in AR and VR?

John Fan -- Founder, Chairman, Chief Executive Officer, and President

Yes. Thank you for asking the question. I think for any AR VR systems, you need a display and you need optics, and you need a very, very well-designed package assembly and we learned this, and we have been doing this for defense and enterprise world. In fact, for defense world, therefore, for instance, Avionics or gunsight we have delivered hundreds of thousands of units to the defense industry.

This is not just display, but you need the optics and you need the packaging. How do you package so that you have dust free and dramatically filled. And with those know-hows, Kopin has accumulated a lot and therefore, when we start looking at the consumer world we recognized not only that they are very, very high-performance display. You need a very thin, very well imaged optics and Pancake optics remember in the defense industry, we use very different type of optics.

We actually provide optics to our customers. So we'll take Pancake as the one for consumer and then we'll also try to work with a vendor a mature company and we developed a special material there is no birefringence effect and therefore, the whole plate optics is unique. And we're patenting it I think we already filed three patents on it, and we're filing more and I think with this, a very light weight, very stylish VI headset is very likely now, very likely. It's safe.

The amount that we are saying is as we mentioned, it's significant. I think it's at least more than 10 grams per eye. So you have very significant savings as well that to make good and better -- actually better image quality to your eyes. This is something that people dream about it, nobody can crack the nut, except that we did.

Kevin Dede -- H.C. Wainwright & Co. -- Analyst

So John was it really a drive in trying to shave weight or is it also a safety factor?

John Fan -- Founder, Chairman, Chief Executive Officer, and President

OK. We never mentioned safety factor in fact it is also a safety factor. That's absolutely true. The glass however is pretty strong, usually, unless you have some strange event, but it is really -- it's actually everything, cost, size, weight, image quality and now, of course, thank you Kevin you mentioned it, it's certainly safer.

Kevin Dede -- H.C. Wainwright & Co. -- Analyst

OK. So just getting back to sort of my thinking on this, John was this something that you wanted to take your team to develop in addressing all of those things or did you get a -- do you have a company that's helping you develop it and help sponsoring some of this development work?

John Fan -- Founder, Chairman, Chief Executive Officer, and President

The plastic optics is totally internally funded. We consider that plastic optics either we license it or we will be coping the product. So because our technology optics is so advanced, we decided to do that ourselves. Now, of course, we have partners.

We have partners to develop the material. I mean, we're certainly not a chemical company. So we designed it. We have own software design lens and we get people to build it, to mode it and we deliver to our customer the final product.

Kevin Dede -- H.C. Wainwright & Co. -- Analyst

OK. Do you see it -- do you see this development, John transferring to some of the other programs that you have, like with the Scott, Fire Helmet and those types of environments where maybe plastic hasn't worked so well before?

John Fan -- Founder, Chairman, Chief Executive Officer, and President

We -- it is a very good question. We are so -- I have to say, we have a lot of strong interest after we announced it. And the range from enterprise all the way to consumers, I must say the consumers are more -- more extreme both -- everybody will work on consumer type headsets, we would like to try -- to drive these kind of optics because it seems on paper, it is the ultimate display. Actually opposite, I am sorry.

Kevin Dede -- H.C. Wainwright & Co. -- Analyst

OK. Good. Yes. Good.

So that sort of going to another line of questioning, John. Help me understand how Kopin is looking at LED versus OLED? I just want to understand where you see -- I mean, obviously, you've mentioned that led becomes the ultimate in solving see through AR. But I'm wondering how you see OLED embracing VR, maybe nearer term? or maybe you could just help me make sure that I understand the way that you're thinking about it.

John Fan -- Founder, Chairman, Chief Executive Officer, and President

Yeah. I think in my webinar, I tried to outline, of course, nobody knows exactly how the future will hold. My feeling -- our feeling is for VR application -- consumer VR applications, micro OLED is good enough. Micro OLED can give you the low-cost, high brightness, enough fitness and the resolution you need.

And we'll, of course, continue to try and improve the brightness of the micro OLED. So, as you well know, our 35,000 nits micro OLED is a world record. We're using duo-stack. So that is one area.

But we want to go anything over to about 100,000 nits. We feel that micro OLED will not achieve, certainly not in the next five to 10 years. So that's why micro LED comes in. Now if you need AI application where you need maybe anywhere between 50,000 to 100,000 nits or higher, I think micro LED will come in.

The technology is still quite immature right now. I think we are talking about three to five years away for micro LED to begin to come into the market. So, right now, the next five years, the micro OLED for VR and some AR applications. And we're making great progress there too.

So, at the end, we -- our business model is very simple. We provide the optical solutions, the modules, the optics, display, packaging for AR/VR, MR. We do not make the end user systems with licenses, so people who make end user systems. The often time get equities in there.

I mean, as you well know, we have made a few arrangement already and we're going to continue to make arrangements licensing to people who make end user systems, but we do not sell and market end user systems in Kopin.

Kevin Dede -- H.C. Wainwright & Co. -- Analyst

OK. Another question on LED, if you'll allow me, John, please. Can you categorize the IP that you're going to lend to the Japanese company and what you'll be able to control versus the IP that I still believe you're working with a company in China in the development of micro-LED. So could you just sort of frame those two deals for us, please?

John Fan -- Founder, Chairman, Chief Executive Officer, and President

Yes. As you all know, we announced several times, the initial work of LED out of silicon actually was patented by myself and people in Kopin many years ago. Unfortunately, the three patents that we filed and issued to us expired two years ago, OK? The one the fundamental patent expired three years ago. So, however, we do have improved patterns and then what we have is we actually design the backplane.

As you well know, displays are becoming display on chips. It's really an IC chip with LCD or OLED or maybe in the case LED on top of the silicon chip. So to drive the LED microdisplay, it will be a different type of architecture than micro OLED. So we designed that we patent that and such architecture are used either for monochrome, which is the Jabil in China is putting their LED array on our backplane.

So our backplane is ours, OK, and then the display itself when you come back to as Kopin. Now using similar tile of backplane, we actually work with the Japanese global company LED array and the line, we have display -- micro LED display, the shipset for us. So, we control the backplane. And we design it, especially unique design and we actually use the product.

We are in as a display product.

Kevin Dede -- H.C. Wainwright & Co. -- Analyst

OK. OK. So it's fair to assume or...

John Fan -- Founder, Chairman, Chief Executive Officer, and President

Jabil is on monochrome. Not...

Kevin Dede -- H.C. Wainwright & Co. -- Analyst

OK, monochrome. The Japanese ones color.

John Fan -- Founder, Chairman, Chief Executive Officer, and President

Color, yeah.

Kevin Dede -- H.C. Wainwright & Co. -- Analyst

OK. OK. And then you'll -- and working with both those companies, you'll preserve the IP in the design of the backplane, and that won't be shared.

John Fan -- Founder, Chairman, Chief Executive Officer, and President

Yes. In many ways, display right now silicon, the brain is in the silicon. Silicon is a brain and now you put different materials to make it emit different color -- a different case, LCD, OLED or for the matter LED, but the brain is in the silicon, and we believe silicon is a driving force for all of those displays.

Kevin Dede -- H.C. Wainwright & Co. -- Analyst

OK. Thank you, you gentleman mentioned avionics has sort of the umbrella for the three programs going -- well, I guess two or LRIP now. I just want to clarify, are all three in avionics or help me make sure that I have that in my little brain correctly.

Richard Sneider -- Chief Financial Officer

You have it incorrectly. So I said one of them is a scope and one is an avionics. Of the two that are in LRIP now.

Kevin Dede -- H.C. Wainwright & Co. -- Analyst

OK, and the third that's going to LRIP expected in the December quarter. Can you speak to that one, Rich, or no?

Richard Sneider -- Chief Financial Officer

No. We'll discuss that in the fourth quarter.

Kevin Dede -- H.C. Wainwright & Co. -- Analyst

In due course, very well. OK, can you clarify how many customers are contributing to research and development revenue, with specific focus on AR and VR?

Richard Sneider -- Chief Financial Officer

Well, almost all our applications are AR and VR.

Kevin Dede -- H.C. Wainwright & Co. -- Analyst

Yes, I'm sorry. Let me clarify, was specific intention to address the consumer market?

Richard Sneider -- Chief Financial Officer

Well, that's a hard question to answer, Kevin. Because if you think about it, I mean, everything that we do, particularly in the military, we have an eye toward the consumer. That's the whole idea that you develop with the military, moves to industrial and then ultimately ends up in the consumer.

Kevin Dede -- H.C. Wainwright & Co. -- Analyst

No, I understand, Rich, I understand. But you -- as I -- I mean, as I try to interpret what you've been saying, you do have particular customers from the consumer side, funding development and I was just wondering how many of those customers you had?

John Fan -- Founder, Chairman, Chief Executive Officer, and President

It's a very good question. Maybe we could step back. It's very difficult to answer, too. But I could answer it by answering this way.

As you will to know, there are companies who will make Google Glass and we are the supplier of Google Glass. It could be a consumer. In fact, it was a consumer, if they can turn it into enterprise it maybe going back to consumer gain. In the case of Microsoft HoloLens, it was the consumer and then it goes to defense and maybe go back to enterprise again.

So it's very high. I think Rich is right all our customers kind of moving from A to B to C, C to back to B to A again. So we are having quite a few customers supporting us for applications which eventually could be consumer and maybe its consumer game, but at the beginning maybe they will go through enterprise. So we have a lot of -- we have a very active consumer support right now, and we're very glad that they support us.

Kevin Dede -- H.C. Wainwright & Co. -- Analyst

OK. One more question. I'll turn the floor over. I apologize, gentlemen, but thank you so much for indulging me.

What's the view on the ATM? Understand if I understood -- if I understand correctly, you did sell 600,000 shares already this quarter. I'm just wondering what's the cash balance you're targeting and how you think we should think about that?

Richard Sneider -- Chief Financial Officer

We're not really going to disclose our capital raising plans on the phone OK.

Kevin Dede -- H.C. Wainwright & Co. -- Analyst

OK. Thank you, gentlemen. I appreciate it.

John Fan -- Founder, Chairman, Chief Executive Officer, and President

Thank you, Kevin.

Operator

[Operator instructions]. We will now take our next question. It comes from Jeff Bernstein of Cowen. Please go ahead.

Jeff Bernstein -- Cowen and Company -- Analyst

Yeah. Hi, guys. Just a couple of quick questions. I know you guys have a JV with Lenovo.

Not sure exactly what's come out of that, but they've started to sort of pre-advertise something called the Think Reality A3. And I'm wondering if that's under that program or if that's something else with a different vendor?

John Fan -- Founder, Chairman, Chief Executive Officer, and President

There's a different program. We are working with Lenovo NV, which is a joint venture of Lenovo with several other companies in China. The one you mentioned is actually came from Lenovo parent.

Jeff Bernstein -- Cowen and Company -- Analyst

Got you. OK. And then there was strength in the industrial segment. Can you just differentiate for us, was that from the 3D machine vision side, the fourth dimension LCOs piece or was that RealWare?

Richard Sneider -- Chief Financial Officer

Both it was majority was the FDD.

John Fan -- Founder, Chairman, Chief Executive Officer, and President

Yeah. The 3D metrology, which is you're right, the FDD, that business as -- well, we have been working with the last four, five years is really taking off right now. The industry now recognize maybe because of pandemic or not that many of the circuit boards, which are always 2D. Now moving to 3D, much higher packaging densities and Sina and 3D metrology is perfect in the manufacturing sector for 3D analysis of circuit boards.

So that business is really taking off. And we're very excited about it. I think it's going to continue as all the factories start converting. We have about 40% market share.

Our other competitors is TI, TI using DLP. They also own about 40% market share.

Jeff Bernstein -- Cowen and Company -- Analyst

That's great. Thank you.

Operator

Our next question comes from Craig Rose of Axiom Asset Management.

Craig Rose -- Axiom Asset Management -- Analyst

Hello, John. 

John Fan -- Founder, Chairman, Chief Executive Officer, and President

Hi, Craig.

Craig Rose -- Axiom Asset Management -- Analyst

Can you help us understand -- could you help us understand -- well, we know RealWear and Solos are under your umbrella anymore. But could you explain how we benefit from their success? And maybe you could tell us your perception of RealWear's market share maybe in the marketplace?

John Fan -- Founder, Chairman, Chief Executive Officer, and President

OK. I will answer some of the content here. This is a very good question. I think we got out our strategy.

As you well know, in the early years, we are -- in order to promote our component -- our components display optics and assembly, the modules, the whole optical modules. You all promote optical module, as you create systems, reference systems in some ways very close to product systems. And including the process, we actually come out with a lot of technology and wholly headsets. And we decided to license those ideas and actually help those companies to make those headsets.

So RealWear is one of the cases, they license our headset, which is actually golden eye, we call it golden eye. And we get equity on it, and they also buy components and they pay royalties. So there are thee components there: royalties, equities and our components. And RealWear doing very well.

As you well know, I will say they are really for enterprise world for headsets, I would say they're worth leading now, and we are growing with them. So, we're very happy with that. We're going to have three ways to make our return of technology, we license in large to them. The second case is Solos the same way.

Solos, again, we license and transfer the technology to them. The product is coming out, they came out once version 1 last year during the pandemic, and they saw out the first round. So the second round of the product coming out, in fact, in August this year, this month. So, again, we have equity there, we have royalty there.

And so, it's very good. And then we have a third one, which we just announced about six months ago where we are designing and helping them do a headset for surgery, right? It's a company in San Diego, and that company is actually starting to do pretty well. They're co-funded by a very big medical device company. And so -- and I think this particular strategy will continue.

I think we will have more those very interesting event, because what the people want is not just wanting our optical modules, they actually learned that we have so much know how building headsets for them, for special use. And that's what we do. We get equities, get products, get royalties. And I think this is another segment of our business strategy, which is not well understood.

I think this is going to be a very lucrative and successful strategy.

Craig Rose -- Axiom Asset Management -- Analyst

Thank you, John.

Operator

It appears we have no further questions at this time. I'd like to turn the call back to John Horne for any additional comments.

John Fan -- Founder, Chairman, Chief Executive Officer, and President

Thank you for joining us this quarter, and we look forward to see you the next quarter. Thank you.

Operator

[Operator signoff]

Duration: 52 minutes

Call participants:

Richard Sneider -- Chief Financial Officer

John Fan -- Founder, Chairman, Chief Executive Officer, and President

Glenn Mattson -- Ladenburg Thalmann -- Analyst

Kevin Dede -- H.C. Wainwright & Co. -- Analyst

Jeff Bernstein -- Cowen and Company -- Analyst

Craig Rose -- Axiom Asset Management -- Analyst

More KOPN analysis

All earnings call transcripts

This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability.

The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Kopin Stock Quote
Kopin
KOPN
$1.57 (-5.42%) $0.09

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
356%
 
S&P 500 Returns
118%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 11/29/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.