Q2 2021 Kopin Corp Earnings Call

You are currently on hold for the Cop and Corporation second quarter 2021 earnings call. At this time, we are gathering today's audience and we plan to be underway. Shortly we appreciate your patience and please remain on the line.

[music].

Okay.

Okay.

Good day, and welcome to the Cup and corporations 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.

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.

And then go through the first second quarter results at a high level, John will conclude our prepared remarks, and they'll be happy to take your questions.

And I'd like to remind everyone. During today's call taking place on Tuesday August <unk> 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 subsidiary and market conditions and other factors discussed and most recent annual report form 10-K, and other documents filed with Securities and Exchange Commission.

Coming out it takes no obligation to update the forward looking statements during the day during today's call.

And with that I'll turn it over to John.

Thank you rich.

Good morning.

And thank you for joining us to discuss our second quarter results.

I first wanted to start by expressing our hope that you and your families.

Did you you to stay safe.

We continue to see growing demand for our product.

Across our key businesses.

Scheme clothing.

Fans.

Industrial and customer.

And our defense business.

We remain on track.

Many development program.

2 new programs.

And tech low rate initial production during the second quarter.

And what to expect.

To enter low rate production in the fourth quarter.

Julian This is Claude.

When NAS and additional $1.6 million follow up order for our high brightness and pick up.

And do display.

For the F 35, John strike Fighter program.

With deliveries.

Schedule through the second quarter.

2022.

[laughter].

Additional orders I spent it.

Throughout the lifetime of these programs.

Okay.

But F. W. S I thermal weapon sight program.

Yeah customer requests.

We've reduced shipments of our product during the quarter.

Wow customers, making system and production enhancements.

We are working closely with that customer.

But I suspect the lowest shipment.

Right and the continued joined the third quarter.

We expect to increase the rate and make up some of the shortfall and the fourth quarter.

Despite this short term slowdown.

There is no change and the overall profile of the program.

And demand remains very strong.

I would like to stress that.

Yes, no change and the overall outlook and the profile of the program.

And in fact.

We expect soon to.

To receive a significant follow on order.

For this program.

And we're continuing delivery into 2000 and trying to do.

Okay.

Also.

We are pleased with strong demand flow.

Enterprise customers.

And Q2.

And their spectrum and maintain the continual.

As discussed with that previous call.

We have continued to increase.

Our R&D activities.

We see great opportunities.

In the coming <unk>.

Virtual reality space.

In fact.

Our customer funded R&D revenue.

Creased.

Possibly 60 per cent year over year.

As a result of growing interest.

And yes generation displays and display technologies.

We achieve.

Several very important display technology of the hazardous and.

And the court.

Including the world's first <unk>.

<unk> 5000 net.

H D, a green or that micro display.

Yeah.

This leading edge display 10 and pop rates.

You stack all debt structure.

And how to have high brightness and unique having P.

Pending.

And so its stretch of backplate architecture for Super High dynamic range operation.

This is a big milestone.

Not just for coping.

But for AI and.

And beyond applications across all sectors.

I knew each day are green all at my equity space is.

He is ideal for use and conditions ranging for big night.

Bright daylight.

And in addition.

We recently announced the successful development of all plastic pancake optics.

For VR AI and ml applications.

This is another aside and achievement for coping.

And is believed to be the first all plastic pancake optics in the world.

While the Pic optics and much seen a COVID-19.

Bench and optics.

It is important to note that previous pankey optics at.

At least 1 spherical glass lens.

To avoid image <unk>.

Caused by bio fringes of currently available to us and material.

Yeah.

And new patent pending all plastic pink optics.

<unk>.

Is sufficiently righted and pancake glass optics.

Well also provide a better image quality.

And much low cost.

Yeah.

Oh, yes.

Bulkier and heavier headset and hindered consumer adoption.

And VR glasses.

Our new plastic pancake optics and.

Enable entirely new Avenue for the industry.

The design.

And in fact, you and manufacturers dilation Super light.

Compaq, VR, AI and bot hypothalamus stock glasses and.

6.

And we believe caused somewhat as well.

We want to have.

We have received strong interest.

As part of the market.

As in Q2.

Also.

We announced a multi year development agreement with a leading global electronics company.

For a full color OLED micro displays on silicon.

And I expect to demonstrate a 1 inch diagonal.

Full color.

2 K by 2 K L E D micro display.

Within 24 months.

Is there a good night.

<unk> equity space.

A potential for Super high brightness.

Low power consumption high.

High contrast, and.

And why viewing angle.

Which are all important features for many applications.

Including seasonal arm and the reality and.

Mixed reality applications.

We're excited to collaborate with our partner.

Which already has achieved.

Some important milestones.

<unk> please.

It's also important to note that this collaboration with spend our micro display portfolio.

Making us the world's only provider of a complete suite of L. C D L cough.

Net and LCD equities and be able and silicon.

Our breadth of technology and product capability.

So copay anything unique position.

And being able to provide our customers solutions that best fit their product application needs.

Yes.

I would also like to stress my recent putting patients in the 3 pot webinar series.

Via <unk>.

The paradigm shifts to smart glasses and Donna.

Which drew over that 500 participants.

During the life event.

Maybe I actively involved in the next generation smart glasses and assets.

During the 3 part series.

We discussed the past covering the initial efforts.

They create <unk> solutions.

The present addressing the current state.

Of the art technologies.

And the future.

J dress and the future <unk> smart glasses.

Offering a roadmap.

To successful product development.

All 3 segments have active and engaged participation Sundance and <unk>.

Attendee.

And I available.

<unk> web site at Www coping dot com.

We are pleased and.

And committed to our strategy.

And we shot.

While we maintain our strong momentum.

You've got growing revenue generating businesses.

In defence and enterprise sectors.

We continue aggressively to innovate and advance our technology.

But what we see as a growing wave.

Consumer <unk>.

And about product applications.

Many of you may have followed day.

The increasing discussion.

Of the transformational arrival.

All of the metal.

With us.

Thank you Louis definition.

Still not too well defined.

However in my view.

As we discussed and my webinar.

It is composed of <unk> hardware smart glasses.

And platform and application software.

Providing a unique a siding user experience to consumers.

This radical transformation will happen.

And it is already happening in defense and enterprise.

And were soon arrive and the costs so much.

As with stress have stressed day.

And our VR hardware.

Yes.

The technology advances.

And market conditions I bear favorable.

And coping.

Very well positioned to capitalize.

Now ill turn the call over to rich to <unk>.

Discuss the financial details of the quarter.

Thank you John.

Turning to our financial results.

Total revenues for the second quarter ended June 26, 2021 were $9.9 million as compared with $8.8 million for the second quarter June 2007, 2020, a 12% increase year over year.

Product revenue for the second quarter ended June 26, $2021.9 million compared with $6.7 million for the second quarter June ended 2007.2020.

Our defense product revenue for the second quarter ended June 26, 2021, with $3.8 million compared with $4.5 million for the second quarter ended June 27.2020.

As John previously discussed during the 3 months ended June 'twenty, 6.2020, we reduced shipments of our thermal weapon sight systems to a customer who is making system and production enhancement, we expect a lower shipment rate to continue during the third fiscal quarter, and then increase and the fourth quarter of 2021 what.

Whether we can make up the revenue during the remainder of 2020.1 as it depends on how quickly the customer completed their process.

Our industrial product revenue for the second quarter ended June 26, 20 current with.

$2.6 million compared with $1.4 million for the second quarter ended June 27, 2020, and approximate 86% increase on the strength of the sale of products used for 3 D and metrology and headsets used for applications and manufacturing distribution and partly offset by a decline and public safety and 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 and funding for U S Defense program.

Cost of product sold for the second quarter ended June 26, 2020 was $6 million compared to $4.8 million for the second quarter ended June 27.2020.

The increase in product revenue as a percentage of net product revenues for the 3 months ended June 'twenty, 6.2020 as compared to 3 months ended June 27.20.

It was primarily to lower manufacturing and efficiencies driven by the lower FWS I volumes.

Regarding the global shortage of semiconductor components and production capacities affecting many industries, while we have and some cases had to find alternatives of sources, we have not experienced any shortage issues. During the first 6 months of 2021.

And some cases, we have seen some price increases.

And as a semiconductor components and a very dynamic situation and we continue to work the issue that does that.

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.

75% increase year over year.

R&D expenses for the 3 months ended 2020.

26.21 <unk>.

Increased as compared to 3 months ended June 27, 2020, primarily due to and 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 'twenty, 1 compared with $2.9 million for the second quarter of 2020, excluding.

Excluding the non cash stock based compensation costs.

SG&A expenses were $3.7 million for the second quarter of 'twenty, 1 compared with $2.8 million for the same quarter of 2020 or 30% increase the.

The increase in SG&A, excluding noncash stock compensation costs was due to an increase and other compensation costs and bad debt expense.

Other income expense.

Was income of approximately 249000 and for the second quarter of 2021, compared with $6000 of expense and the second quarter of 2020.

During the 3 months ended June 26, 2021, we recorded a $100000 of foreign currency gains as compared to $10000 and foreign currency gains for the 3 months ended June 27.2020.

Turning to the bottom line, our net loss attributable to controlling interest for the second quarter of 2021% to $3.8 million or <unk> <unk> per share compared with net loss to controlling interest of $1.1 million or <unk> <unk> per share for the second quarter of 2020.

Non-GAAP net loss attributable controlling interest for the second quarter 2021 was $3.6 million.

And again <unk> per share compared with non-GAAP net loss to the controlling interest of 1 million or 1 cents per share for the second quarter of 2020.

<unk> cash and marketable securities were approximately $30.7 million at June 26, 2021, as compared to $20.7 million at December 'twenty, 6.2020.

Net cash used in operating activities for the second quarter ended June 26, 2021 was approximately $5.4 million.

During the 3 months ended June 26, 2020, we sold 92000 and 335 shares of our stock and our ATM program for gross proceeds of approximately $80.832000 before deducting expenses of us paid by us of $24000.

For the 6 months ended June 26, 2020, we sold $2 million 496006 hundred 90 shares for gross proceeds of approximately $16.8 million before deducting broker expenses paid by us of approximately 500000.

Pursuant to our existing ATM and previous ATM agreement.

On June 28, 2021, the first day of our fiscal third quarter. We sold 600000 shares of common stock for gross proceeds of $4.8 million before deducting broker expenses paid by us of approximately 145000 per.

Pursuant to our existing ATM program.

Second quarter amounts for depreciation and stock comp.

Stock compensation expense are attached and the table into the Q2 press release.

And I have discussed above our current estimates and listeners 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.

Okay.

Thank you.

You would like to ask a question. Please signal by pressing star 1 on your telephone keypad.

If you're using a speaker phone. Please make sure your mute function is turned off to allow your signal to reach our equipment.

Hi, Ken.

Star 1 to ask a question.

We will now take our first question.

It comes from Glenn Mattson of Ladenburg Thalmann. Please go ahead.

Yeah, Hi, thanks for taking the questions.

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 and just customer had to make.

I guess trying to get at.

Okay.

How confident you are or what gives you the confidence that there is going to be a bounce back in the fourth quarter on that and and and just some color on.

The degree of bounce back whether or not.

You think you can make up a majority of the revenue lost or if you need to.

There'll be some further pushed out into 'twenty 2.

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 and they've made some number of full units and they're looking to improve yield.

Keep in mind, a lot of the government contracts that are firm fixed price and so to the extent that you can make yield improvements drive costs down and that all falls to the bottom line.

And we share and that.

And so.

They've come through with 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 us 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 and fix 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.

As we mentioned no downstream effects and then once that happens we hopefully can turn this thing on and then it will just be amount of how many weeks are left and how much volume we can get out of the facility over the rest of the quarter.

<unk>, we can put a pretty good dent in the fourth quarter. We can get this thing turned on soon.

Okay, great and as far as the new programs that have went into low rate initial production can you talk about.

Any specifics about what exactly programs as our and and.

And just get a sense of how it will ramp.

And the best assets and into next year.

Yes, so it's a weapon sight, it's and avionic product.

As soon as we get clearance from the customer maybe hopefully we can give you a little more color exactly who they are and what the programs are.

We did recognize product revenues initial product revenues and the quarter.

And hopefully it will just continue on.

And this is initial low rate production. So there is still engineering going on as these units are being shipped.

And so it hasnt gone to full rate production, which will happen next year.

Thanks, Rich and and so they are.

There was a gross margin was a little softer and I guess, that's a combination of those 2 factors and the.

Early stages, obviously day.

The initial production doesn't have the same margin as something and control.

Production so.

And obviously, the downtick and the weapons.

Sites so that.

And that will continue in Q3 should we expect kind of similar margins in Q3, and and perhaps starting to improve in Q4 and beyond is that a good way to think about the model.

Yes.

Great.

And then I just had a.

Question about the.

The new.

And that led micro display.

And it's about kind of a global leader there.

As the partner.

You know.

And maybe I don't know rich, John and the best person to talk about it but.

And just love to get more insight into it.

The exact could be down the road and just.

You know.

And any other color on the upside.

And that's the opportunity presents a great.

Yeah, Yeah, Glenn this is John fan.

And.

This is a very interesting probang and very very exciting program as you well know.

And we always see happy working on LCD that will cause and recently, we need to focus on my Colette.

Micro Leds and peculiar features can be very very bright and some way people with things that are out COVID-19 display you can.

And do the Microalgae D. Gander brightness is so high you can be so efficient <unk> go for 6 through a optics.

And as optical systems.

And as you well know the army and the reality optical see through systems and <unk>.

Any way is the ultimate dream for everybody. So this is Ed. This is the ultimate dream, but technology is very difficult we actually pay.

<unk> and it is process on silicon in 1991.

And with pop up top at you want it from day, 1 just coming back 1991, yeah.

Dad, we stop it because we the only thing you can do a cultivate well and now we're reactivating and the whole process and.

And well fund depth and customer and we have a big company.

We are disclosing for Japan, as a global consumer and consumer is enterprise consume above type of company and.

And we have ASI to having 2 years, we'll have that 1 each <unk> full color.

If we achieve that that.

That will be the world's leading display and no such ambitious program, yet and will be the first 1 we will provide data.

<unk> and design is a very unique designs that we patterning right now yeah.

Great. That's helpful. Okay. That's it for me thanks, guys.

Yeah.

Yes.

Yeah.

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

Good morning, gentlemen, and thank you. Thank you for taking my questions John.

John just to go back onto the looking at the Glen brought up the LCD display.

Mentioned can sum.

A consumer company help you develop that to your program.

And what exactly are the.

And the design requirements of full display do you have to include optics and Matt can you give us a little more insight on what your deliverables are.

At this vehicle crash and Kevin Hi, Thank you for asking the question for this particular project is a focus on just display full color 1 needs to keep <unk> flat.

Not the <unk>.

Yes.

As you well know.

And make a question.

Just to display alone as solve the problem of <unk> consumer application it is not true.

Just as important universe exhausted.

Display maybe 30000 times.

By our optics and give you a very clear image and desk <unk> optics.

Thank you and optics.

Is it <unk>, we actually use panga optics in the defense industry for quite a while.

Because it does make it and ops.

And as being high on.

The optics.

In those cases do usually has glass <unk> glass lens, which is kandi is okay for the soldiers.

Okay for consumers so that is.

Is a plastic.

Optics that go with the IV pump.

Right.

Together, we will provide <unk> with Stifel.

Yeah.

Okay.

The only we have individual a separate programs optics.

Okay. So.

That was going to be my next question, John Thanks for leading me and so.

The this optics development.

Is the plastic cast number 1 is the development, they're sponsored by consumer company or was this something that open endeavored to solve on its own.

And.

Could you give us a little insight on how you're pairing it with both this.

And <unk> led the development and the OLED development and a R and D R.

Yes.

Thank you for asking the question.

For <unk> system near display and Julia.

Optics <unk> Ah.

Well hi.

Well design package assemblies, and we learned is and we have been doing this for defense and <unk> and Fad, but defense well and therefore.

And all the leases avionic content side, we have delivered the hundreds and thousands of units to the defense industry is it's not just display but you need to optics and you need the packaging how do your packages so day of debt free.

Medically sealed and.

And with dose no house Copa has accumulated lot and definitely when we start looking at the consumer well recognized now and yet there lately.

Pro forma displays and <unk>.

<unk> seen that well imaged optics and tanker optics memory in the defense industry, we used to be a different title of the optics, we actually provide optics to our customers. So we can take the pancake day length of consumer.

And then we're also trying to try to work with and without with Avandia and materials.

Company and die.

And we've developed a special material day. It has no paraphrase Jessie fan and therefore, the whole plaque and optics is unique and we're paddling like crazy.

And our radio <unk> III patterns on it and we're finding more and I deal with this.

And the lightweight space highly.

And <unk> and schedules.

May likely now they're likely.

He is safe and okay.

And we saving is a way you mentioned it is significant and I think elyse.

Good morning, and 10 grams per eye so.

They are a significant savings.

Thank you.

Data and image.

Image quality <unk> III.

Yes.

Some of these sales people dreamed about it nobody can crack that nut and stuff that we did.

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

Yeah.

Hi.

Okay, and we never mentioned sales deferred day event.

And is also a safety advantage and FAA true the glad tireless piece strong and usually unless you have some strange and fat that but it is it.

It is really.

And meeting costs.

5.

Wait.

Image quality and now of course, yes. Thank you Kelly mentioned and it is certainly safer.

Okay. So just getting back to sort of my mouth.

And my thinking on this John was this something that you wanted to take your team to develop in addressing all of those things where did you get a do you have a company that's helping you develop it and help.

Sponsoring some of this development work.

Sure.

And does the path to optics is totally internally funded.

We will consider that pass the optics.

Neither with licenses, we will be co.

Coping product.

So.

Because our technology optics, so vas.

We decided due to herself now of course, we're partners with partners to develop the material.

And non chemical company.

So we designed it we have the whole software design and vans and we'd get people yielded.

Mode.

And our sleep deliver customer with the final product.

Okay.

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 you know maybe plastic hasnt worked so well before.

We did.

A very good question.

We are so.

And I have to say, we have a strong interest after we announce it.

It does range.

Enterprise, Florida weight to our consumers.

And I must say.

And the constantly.

And more.

And more extreme.

Everybody, who cannot consume that type of headsets.

We'd like to try and to drive this type of optics, because it seems on paper.

Hi.

It is the outcome and display.

Obviously the opposite.

Okay, Yeah, Yeah, that's good.

Yes.

So that's sort of getting each of the 2 another line of questioning John help me understand.

How cope and is looking at LCD versus OLED.

OLED <unk>.

I just want to understand and where you see I mean, obviously you mentioned that led becomes the ultimate and solving seed through a R. But I'm wondering how you see OLED embracing VR.

Maybe near term or maybe you could just help me.

And make sure that I that I understand the way that youre thinking about it.

Yeah, I think Oh, my webinar I try to outline and of course, nobody knows exactly how the future will hold.

And my feeling and our feeling is for for VR applications consumer be applications.

And it is great enough.

My colleague can give you the low cost high brightness.

<unk> brightness.

And and the resolution you need.

And now we will of course continues to try and improve the brightness.

And Michael outlet, so as you well know Alex you're 85, how within mix.

And as it will wrap that we're using to stack.

So that is 1 area, but we wont go any day over to a per 100000 nits.

We feel that my qualifier would not achieve a zone.

Non net next 5 and yet so thats why micro LCD comes in now.

And now you really need AI application weighted and you may be anywhere between 50000 to 100000 nits are higher.

Microalgae deals come in.

And the technology is still quite immature right now I think we're talking about 3 to 5 years away from microalgae need to begin to come into the market.

Right now at the next 5 years, Michael and therefore the ion.

And some AI applications.

And when they can progress there.

So a day and we can.

Opex was modest day impulse, we provide the optical solutions to modulate the optics play packaging for <unk>.

Ladies and did not make it and use of systems with licenses and so people, who make and use the system. The Alban towers. They actually do you see NAV I mean, now we have the big Mega fuse and.

Arrangement and are ready and we will continue to make arrangements licensing through people, who make and use the system.

But we do not sell and market and use the system and Colby.

Okay.

Okay.

The other question on <unk>, if you'll allow me John Please can you.

Categorize the IP that youre 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 and company in China and the development of micro OLED. So could you.

Could you just sort of frame those 2 deals force. Please.

Yes.

No.

We announced several times.

The initial work of <unk> silicon.

Actually with Pat and debate and myself and people and coping many years ago and Fortunately.

3 patents.

File and.

Issue to us.

2 years ago.

Yes.

And the fundamental Pettit 5.3 years this call so.

And so high and then we do have improved patents and.

And then to what we have achieved.

Richie designed get that plane.

Silica and no place after becoming display on kit.

And I see chip with LCD or led or maybe indicate the LGD on top of the silicon channel.

So to drive.

<unk> micro display Z a different part of the architecture damn micro on net.

So, we designed and with Pat and Deb and such architecture, and now used either for monochrome, which is the day, but in China.

Putting the CIL EEP.

Right.

And that planning.

So it's opex plays out Okay, and then the fee itself may come back to us is coping.

And now you assume similar pilot that play.

And you work with the Japanese.

Global company.

And DRA on that and why you would have.

Display.

And we did display and ship it so.

And we control the vaseline and with <unk>.

Good.

Thank you Denise is that and.

And we actually had the ATM as a product.

And.

And the display product.

Okay.

Okay. Okay. So it's fair to assume day or.

Okay.

And gateways on monochrome not co, okay, and monitoring right and as the Japanese ones color.

And yes.

Okay.

Okay, and then Youll.

And working with both of those companies, you'll preserve the IP and the design of the back and that wont be shared.

Yeah in many way display right now silica and the brain is in the silicon and Silicon is the brain and now youll put differ materially and make a different color.

And different case, LCD or led off by day manner.

And last the brain is in the Silicon and we believe silicon is the driving force low order dose displays.

And.

Okay. Thank you.

You gentleman mentioned avionics as sort of Ebro up for the 3 programs going well I guess tour and L. Rip now.

I just wanted to clarify are all 3 and avionics or.

Help me make sure that I have that and my little brain correctly.

You have and incorrectly.

So I said 1 of them is a scope.

And 1 is and avionics.

Of the 2 that are and <unk> now.

Okay.

And the third and Thats going to L Rip and expected in the December quarter.

Can you speak to that 1 rich or no.

We will discuss that in the fourth quarter.

And due course very well okay.

Can you.

Clarify how many customers are contributing to research and development revenue.

And with specific focus on a R and D R.

Well almost all our applications our VR.

Yeah, I'm, sorry, let me clarify.

With specific.

And intention to address the consumer market.

Hi.

As a hard question to answer Kevin because if you think about it I mean everything that we do particularly in the military we haven't and eye towards the consumer.

That's the whole idea is that you develop and the military moves to industrial and then ultimately ends up and the consumer.

No I understand and rich I understand.

As I I mean is as I tried 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 how many of those customers you had.

It's a very good question, maybe ill step back.

It's very difficult to answer to Michael asset by asset and this way.

No.

And that companies, who will make Google glass ethylene fan.

Supply and Google glass.

It could be and consumer insight was a constant and that.

Good day can turn into enterprise.

And that the consumer is.

In the case of <unk>.

Microsoft Holo lens, it was a consumer and equal to and defense and maybe go back to enterprise again.

So it's very hard I think this suite and blue which is right.

And our customers kind of.

And kind of moving from a to B to C. C to back to be again. So so we are having quite a few customers supporting us for applications, which eventually could be consumer and maybe east consumer game, but at the beginning at the beginning maybe they reported to the enterprise.

Okay.

So so weird.

Yes, we have a very active consumer and support right now and we're very glad to different product.

Okay, 1 more question and I'll turn the floor over I apologize gentlemen.

Thank you so much for indulging me.

What's the view on on the ATM understand if I understood.

If I understand correctly you did.

So 600.

<unk> thousand 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.

Yeah.

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

Yeah.

Okay.

Thank you gentlemen, I appreciate it.

Thank you and Kevin.

Yeah.

Once again, if you would like to ask a question. Please signal by pressing star 1.

We will now take our next question it comes from Jeff Bernstein of Cowen. Please go ahead.

Yeah, Hi, guys just a couple of quick questions.

I know you guys have a JV with Lenovo, but not sure exactly what's come out of that space. They have started to sort of pre advertise something called this think reality ace <unk> 3.

And I'm wondering if that's under that program or is that something else and with a different John.

That is a different program.

We are working with Dover.

Novo and the which is.

Uh Huh, John John venture of non logo with several other companies in Japan and.

China.

The 1 you mentioned is actually came and found and novo parent.

Gotcha, Okay and then.

There was strength and the industrial segment can.

Can you just differentiate for US what was that from the 3 D machine vision side.

And fourth dimension.

L costs piece or is that real wear.

So yes.

Yes price because it was majority was the FTB yeah. The <unk> trilogy, which is you are right the FTB.

That this is a well we have been working with for the last 4 or 5 years is really taking off right now.

The industry now recognize maybe because of the.

A pandemic and.

Not yet.

Many of the circuit boards and we can always 2 D now moving into <unk> and much higher packaging.

Densities and Sina and and.

And sweet hematology as per se for ease.

The manufacturing sector for <unk> and dialysis circuit box.

So that this has really taken off and we're very excited about ice's growth continue.

Factories start converting.

We have about $40 and market share.

Our.

Other competitors.

Ti Ti used and DLP, they also and we're about 40% market share.

That's great. Thank you.

Okay.

Our next question comes from Craig growth of Axiom asset management.

Hello, John I agree helps us understand.

Could you help us understand.

Well, we know real wear and solar are under your umbrella and anymore, but could you explain how we benefit from their success and maybe you could tell us.

Your perception of real worse market share and maybe in the marketplace.

Okay.

Answer.

Some of the some of some of the current content here is a vague question.

And I think Luca our live strategy.

And as well now.

And the early years.

We are <unk>.

And promote our.

Component or component is display optics and assembly. The module is the whole optical modules.

Johan and promote optical module and you create systems reference systems and in some ways very close to it.

Product systems and.

And during the process, we actually come out and all the technology and the whole asset.

And we decided to license those ideas and actually help those companies to make those handsets.

So real with 1 of the cases day the license the Holly headset, which is actually go out and I would call. It go to and I and we add GAAP equity on it and they also buy components and get paid royalties. So they have 3 components day royalties equity and bought components.

Components and is doing very well and you.

No.

I will say that really our.

Enterprise well for headsets.

I would say deal work, leading now and we grow with them. So we're very happy with that we will go to have 3 ways to make a return of.

Technology, we licensed and lots of them.

The second case was solar was the same way solo and again with license and.

<unk> technology to them the product is coming out it came out.

Our version 1 last June and the pandemic and.

And that day, so loud the first row. So the second round of the product coming out and fat and August this year.

So again, we have equity they and we have royalty there and.

And so so as the Vega and <unk>.

So <unk>, which we just announced <unk>.

6 months ago.

Designing and.

Helping them deal has set.

And for surgery <unk> is a company in San Diego.

And and that company is that true.

Starting to prove their cash funded by <unk>.

Medical device company.

And so and.

I think this this particular strategy will continue I think we will have low dose.

They interest the event because people want and it's not just wanting a optical modules day actually learned that we have so much knowhow building headsets for them for special use and Thats why we do we are we.

Equities.

<unk> get royalties.

And I think these are net of settlement of our business strategy, which is now well understood I think this columbia and lucrative and successful strategy.

Thank you John.

Okay.

Yeah.

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

I think as timing this quarter and.

With the forward the Ceos that next quarter. Thank you.

Yeah.

This concludes today's call. Thank you for your participation you may now disconnect.

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