Q2 2023 Kopin Corporation Earnings Call
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Please note this event is being recorded.
At this time and the countries did you couldn't coming in industrial Nations full company. Please go ahead.
Thank you.
Afternoon, everyone before we get started I'd like to remind everyone that during today's call taking place on Thursday August 10 2023.
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.
Leafs 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.
The 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 and Exchange Commission.
Although the company believes that the assumptions underlying these statements are reasonable any of them can be proven inaccurate and there can be no assurances that the results will be realized.
The company undertakes no obligation to update the forward looking statements made during today's call.
In addition references may be made to certain non generally accepted accounting principles or non-GAAP measures for which you should refer to the appropriate disclaimers and reconciliation in the company's SEC filings and press releases.
Hoping corporation's Chief Executive Officer, Michael Murray will begin today's call with an overview.
That's coppens progress within the company's strategy following Michael Cohen CFO , Richard Sneider will review the company's first quarter results.
I would now like to turn the conference over to Michael Murray.
Thank you Quinn good afternoon to everyone and welcome to our second quarter earnings call.
I'm proud to announce we turned in $10 5 million in revenue for the quarter, which was also our third consecutive positive book to Bill quarter.
And with our recent announcement of an approximate $12 8 million dollar order our third quarter book to Bill is off to a very good start.
Oh do you want to highlight the beyond revenue we were successful in our disciplined operations and managing the factors that were within our control and within our transformation plan.
I'd also like to briefly discuss two areas in the P&L. The first of which is elevated legal costs a portion of which is associated with our new patents and trademark development, but mostly due to a litigation which began in 'twenty 'twenty 16.
Details of the litigation are discussed in our recent 10, Ks and 10-Qs, but in summary, we are scheduled for trial in the first quarter of 2024, and we remain confident in our position there.
The second item was a 3.3 million noncash charge related to our equity investments, whose valuations we review quarterly.
These two items on the P&L had significant negative impact on earnings per share without these items.
Our loss would have been approximately $2 9 million or three cents a share for.
For reference this compares favorably to our second quarter of 2022 earnings per share loss of six cents.
This quarter is another data point that we are continuously improving the core operations significantly.
Again outside of these items, our operations showed significant improvement and we remain hyper focused on controlling what we can control with regards to our strategic initiatives.
Operational discipline and growth objectives.
Since we spoke last we have gained several new investors recently and for those who are unfamiliar with coping I'll briefly remind everyone who coping is what we do and who we sell to after that brief overview I'll touch on some strategic initiatives and discuss this last quarter and some opportunities on the horizon before.
Turning the call over to rich.
Now for those new to Copan, we design and manufacture several different types of micro displays, including our proprietary aim LCD technology, our broad portfolio of OLED displays are F. L costs displays and our recently announced micro led technology.
Now what makes coping unique and valued by our customers is our ability to couple of these types of display technologies with advanced optics drive electronics and housings to solve our customers' needs and defense commercial and consumer applications.
We believe we were the only company with the core capabilities and competencies in each of these display technologies, enabling us to objectively provide the right solutions for our customers are.
Our products are the overlay of critical digital information on the analog world and we continue to see the adoption and application of objects continue to broaden as new industries are discovering ways to use these technologies to improve their end customers' user experience.
Koeppen is at the forefront of optical advancements, creating innovative technologies that have enhanced how people interact in their environment, both real and virtual.
Today coping applies this expertise as a vital supplier for many of the world's largest defense contractors now still we also look to capitalize on consumer automotive medical and industrial opportunities as they adopt these technologies as well.
Touching on some of our strategic priorities, we saw tremendous improvement in our quality measurements last quarter, which we referred to as on time in full or <unk> for short.
If measures how often we deliver products to our customer on time in total and without any quality issues as judged by the customer.
This focus on quality ultimately leads to a more profitable coping by improving margins higher customer satisfaction and repeat in future business.
We continue to see dividends from the focus in the second quarter of this year as our product cost stayed low our incoming inspection improved and our supply chain continue to normalize.
We expect further improvements ahead, as we increase volumes automate manual processes and improve absorption rates and we continue to focus on total cost management.
Much of our manufacturing takes place within our class 100 clean room, the cleanliness of the air within our manufacturing facility greatly impacts our ability to keep product quality high.
During the quarter, we saw improvements in air quality as we installed several new pieces of equipment and implemented some further operational changes I'm happy to report that our on time in full rates are now in the 90% range on a consistent basis consistency in this area is greatly important and contributes to our customers' happiness and ultimately the amount of their business cope.
And receives.
Higher on time in full rates also allow koeppen to operate more efficiently requiring fewer touch points by our employees and less yield and quality losses.
No indeed.
We have more to improve upon and accomplish.
However, I am proud of our team our progress over the first six months of 2023 and I'm greatly encouraged by the positive comments received from our top customers that they are experiencing a much improved reliable and customer focused coping.
Cost discipline remains a priority as well beyond quality improvements.
We continue to scrutinize internal R&D projects and the profitability of any funded R&D, we take on.
We began to see returns on this new approach to funded R&D as a profitability in this area dramatically improved relative to 2022.
Internal R&D expenses remain low relative to past periods as we formalize the R&D investment criterion investing only in projects with a high probability of success sustainability and that offer more than just a great display, which we still make.
Reducing R&D spend doesn't imply that coping will not stay on the forefront of display and optical technology, but rather that our efforts are directed to those projects with the best chances of success value creation and capture.
An excellent example of our new approach is the partnership with the M. I T computer science and artificial intelligence laboratory or see sale for short we announced this in the second quarter.
The goal of this program is to integrate AI capabilities into our products to solve the problems, which had been limited to the success of AR and VR products.
This activity will augment current research and developments in these areas of displays optics software and algorithms by joining M. I T cell program coping becomes part of an elite group of members and noncompetitive markets that share information and capabilities for functional integration and deployment of application specific AI.
<unk> that bring additional value to the products, we design and manufacture.
We look forward to actively participating in this group and we will help improve our solutions and solve several of the human centric computing issues of today.
Joining the organization also brings coping full circle, having been spun out of M. I T almost 40 years ago.
Now I'll provide some updates on key programs since the last time, we spoke and some opportunities we see on the horizon.
That's part of our previous calls company is unique in that our OLED back plain technology does not require accustomed the deposition process.
This allows us to utilize multiple deposition fabrication strategies globally.
Within the quarter, we announced new agreements for OLED deposition, which utilize U S. D. O D approved vendors I highlight this announcement is this event has been misunderstood by some in the investment community so to clarify.
By adding these new vendors coping can support U S. D O D customers with our current and broad portfolio and future OLED devices at the same time for our non D. O D. OLED customers, we will continue to work with our existing OLED deposition partner in Asia. This.
This strategy enables us to provide the lowest possible cost to our cause customers in automotive consumer industrial and medical markets. While also supporting our U S. D O D sovereign supply chain requirements.
With recent shifts in competitive and competitive landscapes, we are seeing a dramatic uplift in both consumer and defense opportunities alike due to this strategy.
In early June Copa and introduce our first micro led display.
This is micro OLED is an ultra high definition monochrome version that provides millions of nits brightness, it's difficult to describe just how brighter display with several million nits brightness is and it's truly a wonder of engineering achievement by comparison, many of the new AR VR headsets that use OLED displays as an example, only offer.
5000 to 10000 nits brightness and these manufacturers have the devices recognize that to offer better brightness contrast, thinner and lighter weight designs a much stronger light engine and bespoke optics are required we believe micro Leds will enable these key requirements and bespoke optical solutions and they are the future.
A wearable display technology.
Hoping is undoubtedly the vanguard of micro OLED development as we continue to develop our color micro OLED display portfolio.
Earlier this week, we announced a follow on order for one of our IP sub assemblies to a department of defense Prime contractor that integrates our ip's into a sophisticated video a our module.
This $12 $8 million follow on order represents a significant increase in year over year volume and revenue from this strategic customer and we expect further additional follow on orders for the same product as well.
This order is the result of improved customer engagement program management focus and on time in full processes and a great customer who has been patient and supportive of coping and our transformation plan.
Recently <unk> has been informed of our success.
And being down selected for several new dismounted soldier projects.
We are now in the final stages of submitting formal proposals and we expect to receive feedback on those strategic pursuits in the next few quarters.
Turning to our general dynamics armored vehicle upgrade program to remind folks. This program is in the final quality review process, which is called production part approval process were key part for short.
And we expect this program to be significant revenue for coping.
The program continues to progress well and is a perfect example of the parenting advantage coping can bring to our customers. In this specific case, we were selected for the program because we were able to offer the right system technology for the application.
In this specific use case, the best display wasn't F. L costs display developed by our team at fourth dimension display in Scotland.
The drive electronics and optics were developed at coping in Westborough, Massachusetts, and the complete system prototypes were developed and designed by our talented team of invest in Virginia.
Final system will be built at coping in Westborough and this assembly sells for tens of thousands of dollars each and there are several assemblies per vehicle multiplied by several thousand vehicles, which we expect to be upgraded equates to well over $100 million in potential revenue for this program over the period of performance once in production.
Now turning from land systems to air systems.
Our low rate initial production or L. Rip rotary wing and fighter aircraft helmet OLED programs remain on track and we expect several successful milestones in the coming quarters. Furthermore.
You can see we are we're continuing to see strong demand in military training and simulation markets with both new and repeat orders for a variety of products serving this market.
Now training precedes deployment and the broader issues in Europe . Among other regions are driving increased demand for these products.
Turning to the three D. A Y market, we continued to experience weaker demand in the Chinese commodities semiconductor and industrial sectors. We expect this part of the market to remain weak through the remainder of the year.
There are modest demand signals from our high performance customers, though however in Europe and the Americas.
Lastly.
We continue to experience increased customer design and proposal demands in both defense and consumer markets.
With recent consumer announcements in AR, VR headsets and continued human centric issues slowing higher adoption rates in both markets customers are turning to coping to help them solve some of the most significant application specific human centric issues. Their end users are experiencing coping has decades of experience.
Solving these specific issues relating to optically induced nausea comfort and performance of head and helmet worn systems. We expect these efforts will result in new business with current and new customers as we introduce exciting new technologies in these areas in the very near future. So now I will turn the call over to our CFO rich Sneider to review.
Our results in further detail rich over to you.
Thank you Michael turning to our financial results total revenues from Q2, 2023 were $10 5 million versus $11 9 million for the prior year 12.
12% decrease year over year.
Product revenues for the first quarter ended July one 2023 were $6 million compared with $9 million in the second quarter ended June 22022.
<unk> 33 per cent decrease year over year.
Product revenue was driven by a $2 million or 28% decrease in defense revenue and 749000 or 43% decrease in industrial revenues over the prior year.
As we put in the house, we have an additional $12 8 million order for defense and we are reviewing lead times on materials to understand the potential positive impact on Q4 of 2023.
Regarding industrial products.
Revenues, we believe that lower.
Will be lower due to less demand from China.
Funded research and development revenues were $3 9 million for the second quarter of 2023 compared to $2 8 million for the second quarter of 2022 30.
39% increase.
The increase in funded R&D was largely due to an increase in funding for this places us initially used U S defense programs.
Cost of goods sold for the second quarter of 2023 was $5 7 million or 95% of product revenues compared with $7 9 million or 88% second quarter last year.
Increase in cost of product revenues as a percent of product revenues was the result of lower efficiencies from reduced product sales volume as well as year over year increase in non cash stock compensation of 415000.
Excluding the increase in stock compensation costs.
Cost of product revenues would have been 88% of net product revenue.
R&D expenses in the second quarter of 2023, with $3 1 million compared with $5 1 million during the second quarter of 2020 to.
39% decrease year over year.
Funded R&D expenses for Q2, 2023 it was $2 2 million as compared to $3 2 million for Q2 2022.
The decrease in expense as a result of certain U S defense programs moving to production and a reduction of some of the funded OLED development costs.
Due to the spin out in the first quarter of 2023.
I'll start and I'll, let activities to lightning silicon.
And so R&D expense for Q2, 2023, with 939000 as compared to $2 million in the first quarter of 2022.
The decrease in expenses is also decreasing OLED development activities and more stringent criteria for eye R&D programs that Michael spoke of earlier.
SG&A expenses were $6 5 million in the second quarter of 2020 compared to $4 3 million in the second quarter of 2022.
The SG&A increases for the three months ended July .
2023, as compared to three months ended June 22022.
Well its primarily due to legal expenses of approximately $2 4 million for the second quarter of 2023 as compared to approximately 200000 for the second quarter of 2022 and bad debt expense of approximately 300000.
For the second quarter of 2023 as compared to bad debt recoveries of approximately 200000 for the second quarter of 2022.
These increases were partially offset by lower information technology spending of approximately 100000 for the second quarter of 2023 as compared to 200000 for the second quarter of 2022.
And postretirement benefits, which was zero in the second quarter of 2023 as compared to 200000 in the second quarter of 2022.
Other expenses approximately $3 3 million for the second quarter of 2023, compared with 141000 for the second quarter of 2022.
In the second quarter of 2023, we recorded foreign currency losses of 236000.
And a noncash impairment loss on equity investments a $3.3 million.
Turning to the bottom line the net loss to the coping during the second quarter was approximately $8 2 million or seven cents per share compared with $5 6 million or six pence per share the second quarter of 2022.
Net cash used in operating activities for the three months ended July one 2023 was approximately $3 8 million.
Goldman's cash and marketable securities were approximately $25 7 million at July one 2023, as compared to $12 6 million at December 31 2022.
We have no long term debt.
The Masters golf above are based on our current estimates and listeners should review our final Form 10-Q for the quarter ended July one 2023 for any possible changes and of course, the additional disclosures.
And with that I'll turn it back over for Michael for closing remarks, and then we'll take questions.
Thanks Rich.
Our focus continues to be on strengthening the order book achieving higher on time in full rates cost controls.
And making the strategic investments in products and people, which in the aggregate will improve cash flow and provide long term sustainable profitability and growth.
Lastly, yet most importantly, we are fortunate to have world, leading in market, making customers who are supporting koeppen. During this transformational period.
What are quality improvements over the past several quarters additional executive management focus on strategic customer relationships.
And the addition of experienced business development program managers.
<unk> is now being invited into larger design opportunities that will allow us to move up the value chain within our customers' applications solving more of their technical challenges and increasing <unk> content in their designs.
I'd like to thank everyone for your time today and for showing interest in coping I'd like to thank our employees and our stakeholders for their hard work and dedication.
With the continued work of our team here at Copa and I think we can achieve great things and grow the business to new heights and with that operator, we will now offer some time to take some questions.
Thank you, Sir ladies and gentlemen, we will now be conducting the question and answer session.
Can you talk off the Christian piece, but it's all been one I need your telephone keypad.
A confirmation tone will indicate your question Kim.
Exactly.
<unk>.
To meet the Christian Kid.
All participants making itself may be necessary to pick up your handset before pressing the stock is.
Our first question comes from Matt Sheerin of Stifel.
Yes, Thank you and good afternoon.
A couple of questions Michael just on on the revenue side.
You talked about a lot of the opportunities. It sounds like those are your opportunities two or three quarters out, particularly that new truck when 8 million dollar program you talked about well how do we think about the next quarter.
Or two in terms of top line are you expecting sort of a similar revenue profile or would there be some recovery in the back half of the year.
Hi, Matt.
<unk> was.
How do we think about Q3, and Q4 with the $12 $8 million order as well as the market dynamics, So and our best estimates are Q3 looks about the same revenue profile. We're currently working the order that we just received to see what we can pull in because they do invite early deliveries. So we're working our supply.
Chain on that we do see potential uplift in our Q4 revenues from that order as well as some other Poland's that we're hearing from the training and simulation market.
Okay, great and.
You you talked about the revenue.
Breakdown R&D versus purchase product in R&D has been growing and the product has gone the other way and at what time do you at what point do you expect that the ships.
Somebody those R&D pilot programs go to full volume and is there any impact on gross margin or operating margin.
And it goes to sort of a full volume you know contract basis.
Indeed, so we have a number we have several projects going from funded research and development into L. Rip in the latter half of this year and the beginning of 'twenty 'twenty four we do believe that those programs as they transition through not only will they have revenue impact in terms of.
Increase, but we do expect some operational expenses are.
At the beginning of the first quarter to support those however, the margins of those programs should consume the operational expense just fine. So there will be a transition from funded research and development in Q4 and Q1 into production as those I'll Rip products actually hit production does that answer your question.
Yeah. That's helpful and then on below the line I'm just some questions on on the expense line.
That legal.
Those legal fees of $2 4 million.
Well, how should we think about them over the next couple of quarters. It sounded like you said, it's going to go to trial early next year. So I would expect expenses, maybe even go higher and if you go to trial and when can you recover those legal costs.
I think the the legal costs that we're seeing right now for this quarter were larger than than what we had expected I won't go into why but.
I think they will normalize back to the.
The previous type of expense that you've been seeing from us after Q1, but I think Q3 and Q4 I don't think the cost will go higher than what you saw in Q2.
We also had some trade, marking and patenting AR in the period and we'll have a little bit of that in Q3, as well, which did add to the expense, but we think we're in a good place with that with that lawsuit and were expecting to be victorious in that position in Q1.
Whether or not we can recoup.
Recoup our legal fees I don't know are hard to say at this point.
Okay. So.
So just to confirm then and then the Opex should be we should be thinking about a 6 million or above for the next couple of quarters, and then going down after that is that fair.
I think that's fair I think it will come down in Q3 anyway.
Is what are our census, currently but it won't be by much. So I think it's a figure.
Great and offsetting that.
<unk> margin was up significantly quarter on quarter and year over year is that also sustainable as we get through the next couple of quarters or with some of those programs ramping could there be some margin pressure there.
We have worked with several of our customers to increase our prices.
So I believe our gross margins will remain stable and increase over time. The reason why is we've gone back to some of our customers where there has been scope creep there's been no inflation increases or theres been acceptance criteria that we needed to charge for and for the most part we've been successful.
Where it made sense. So I believe our margins will continue to increase to a reasonable level and therefore civil or our profitability.
Okay, great alright, thanks very much.
Matt.
The next question comes from clean Netsuite.
Oh man.
Hi, Thanks for taking the questions.
So congrats on the $12 8 million dollar order that was nice to see but you know I don't want to talk about that a little bit.
Further, but before we get to that just a little more detail on that.
Product revenue and kind of.
You know it.
Although the total top line came in in line. It felt like the product revenue is a little lighter than I would've expected and you know.
I'm trying to think about.
Number of programs some of which have moved to del Webb.
Some of which are full production and just kind of get a sense of if any of those.
And I realize they can be lumpy from time to time, but it sounds like there's a quarter or two here, where its a little softer. So I'm just curious if that's it.
If if there's just some cadence of order flow in that front or some more color that'd be great.
Sure. So theres no change in demand, let me be clear on that our customers are not.
Not communicating any changes in demand there are from time to time material issues and or pushing is pushed out because of our customers customer requirements either through testing qualification quality issues down the line outside of coping. So we did see some of that in Q2, where some of our customers were asking.
It is to hold on well their end customer had either quality or timeliness issues. Because we're we're a small system and a sub system or a larger system. If that makes sense. So I think the main thing Glenn moving forward in Q3 and Q4, there's no changes in demand in fact demands moving in our favor into.
Our Q4 with this larger order I think it's important to note that early you know early.
Deliveries are requested in and supported so I think we can do better in the second half of the year and I think there was also in Q2, a mix change, where we were doing a little bit more of international business and focusing in on that versus that of more of the U S. D. O D type of a product line. So that's why you saw a bit of.
Change in the profitability as well as the overall revenue.
Rich anything you want to add to that.
Got it.
No I think that but the point is that it is somewhat counterintuitive that you know we saw defense revenues decline when in fact, our order book for Defense is probably the best it's been in several years, so as Michael indicated will not always be.
Captain of our own fate.
We do get comments from our customers.
Customers asking us to hold shipments or whatever have you oh varieties outside our control.
Great. Thanks for that color and then moving on to the <unk>.
The large order you announced yesterday that the.
A little more detail on maybe you can because it's maybe a program that you are not allowed to discuss that much but it and read the headlines in the thermal weapons.
So, but then you talked about is kind of a video a our pancake opex can you is it is it something you have seen revenue from before or is this a new program or just an offshoot of our existing can you just give us a little color there.
Sure existing program existing customer and they're seeing a what I believe is increased demand on their side and so therefore, we're seeing it as well that's about all I can say.
Okay.
Great. That's it for me thanks, guys.
Thank you next question comes from Kevin D D of H C Wainwright.
Afternoon, gentlemen, thanks for having me.
Might go back to Glenn's question on the this most recent thermal weapon sight order $12 8 million I think you'd noted as being the largest of three.
I was just wondering.
Actually no. The most recent of three but I'm wondering if it's the largest.
And.
I guess, how long you would expect it would take coping to work through it from a sales perspective.
Sure. Our view is that this is a significant year over year volume increase for us roughly speaking about 40% year over year increased volume therefore that equates to the same revenue.
Roughly speaking and we believe that that period of performance for this order will start. This pardon me Q4 of this year into 2024 and be concluded in 'twenty 'twenty. Four is what are the customers requesting of us.
The customers requested as many units as they can get as soon as they can get them. So.
That's great news for coping so we will be looking at how we can increase volumes and production in our facility here to support our customers' mission in that case.
Yeah.
Helpful. Thank you Michael I'm looking at the Abrams Pee Pap.
Can you offer a little more insight on the timeline there when do you think that goes to I I imagine. The next step is L. Rep and then from their full production.
And how we might address timing to that 100 million dollar total addressable contract market.
<unk>.
Sure. So we've hit our milestones thus far we expect to hit the milestones in front of us throughout this year will gain more clarity into our customers' plans now the Pee Pap is essentially what we would consider L. Rip it's the last stage of their quality review and.
It's more of an automotive standard which is good for us because that sets us up for other automotive business or other armored vehicle business, which is great, but we'll have more visibility I'd say in the next couple of quarters as to what their program management team is going to be requiring for implementation of the upgrades. So it's a little bit murky right now.
I don't have a clear answer for you other than to say, we're still hitting our marks in our milestones on that process on its it's going great.
And in that you're the exclusive supplier.
Indeed, we are.
Okay.
More of a 20000 foot perspective, but you alluded many times in your prepared remarks to this transitional period that coping.
That you're working with coping and your senior managers through I was wondering I know you don't have a crystal ball, but I think yours is certain clearer than mine mine looks more like a bowling ball.
I.
I was just wondering if you could offer.
What you might or how you might recommend we consider this transitional period to last.
My view and rich and I have talked about this along with the executive team and board coping 2023 is a positional year and a transformational year and there's a great deal of effort going on internally around our culture, our people and talent agenda our organization.
And our focus and we've taken this year to really be inward focused to make sure that we're ready for 2024 and 2025, because as we've talked about Kevin 'twenty 'twenty four is going to be a significant revenue year for coping and 2025 is going to be an even more significant revenue year for coping based.
On our current backlogs, we now have three quarters of positive book to Bill and with this recent order we're going to have a fantastic Q3 book to Bill.
Which would be four quarters in a row of positive book to Bill. So the order backlog is all there to have great revenue growth over the course of 'twenty 'twenty four and 'twenty five.
Focus has been and continues to be building on time in full and delivering that revenue at great gross profit and margins for our shareholders. That's what 2023 is about and I'm happy to report and I've said this before we're on track slightly ahead of some of our strategic initiatives around the path to profitability.
On time in full some of the strategic initiatives and pursuits that we have.
And also our development around our technology, so you're going to hear more about that in Q3 and Q4.
There's some announcements that we're excited to have to put out in the market when they're ready and I think we'll hit 2024 in full stride.
Oh.
Okay. Thank you for the additional perspective, Michael appreciate it and just a sort of a follow on in that thinking.
Rich alluded to with a reversal of a comp accrual wall the product margin would be in the 12% range, which I think is down a little sequentially from March.
Do you think I'm, just looking maybe at two <unk>.
Short a period to evaluate your transition from.
So that I think all last year your product margin was negative.
Well.
Kevin Let me just take that for a second if you look at it right. So we have and overhead.
Semiconductor overhead is a very significant piece of our overall cost and overhead has two places to go it's it's either going to end up in inventory or cost of sales via sales. If you look at our Q2 results.
These are the Q2 of last year in Q1 of this year. If you combine the inventory and sales you'll see that as those are the two places absorb overhead Q2 is down significantly and compare those but yet we maintained margin.
Which means that were greatly increasing efficiency.
To put it another way.
Has this been have you been working with the efficiencies of 2022 we probably would have had significant negative margin.
Oh, Okay, that's exactly where I was going rich. Thank you.
Alright last question for me I'm sure you're relieved just maybe a little more color on how.
Quickly you think you may be able to adopt <unk>.
He's assist on the AI side and addressing the nausea.
Problem that you alluded to Michael and.
Whether or not you think it transcends consumer and helps you in defense.
Great question Kevin.
Whether you're a war fighter a gamer a doctor.
Everyone using a quote unquote see through optic or AR VR glass has the same issue and that is the human brain interprets video information where site issue information differently.
You know, we all focus on building the great greatest display type.
Type technology, and we think that will solve the day and in reality.
What we're going to do is different than that we still are going to make fantastic displays for K AK 60, K through whatever it is but what we're going to do is match the technology to the human not the human to the technology and that I think is what youre going to hear from US in Q3 Q4 and in 2024 is we're going to take our technology.
To the human as opposed to the other way around so that's why we signed up with M. I T and the CCL program. We are sitting on the shoulders of Giants and that program. If you look at some of the contributors to that program. They are the best of the best in the industry and we will be working with them to solve these human centric human centric computer issues.
So that folks can use our technology more easily.
More readily and with much more comfort than they ever had before because that's what's gating the adoption rates of our VR glasses and consumer as well as military and medical so those are the problems that we're going to attempt to solve the great News is we have all the technology that we need the piece that we're missing is the AI algorithm.
Some development side of things and no greater place than in my T. C sale to work on that technology, and we continue to invest in a it's a program that I started the day that I started at coping.
We're very excited about it and we'll be sharing more with you in the coming quarters.
When you when you look at your modules Michael are they extensible and handling the computations.
Or will it require.
I I guess additional integration with a partner.
I think the letter I think it will require certainly more sophisticated compute <unk> computers that are.
Our computational algorithms that we currently cannot do in our in our back plain technology, but we do have a plan for that I think the the.
The technology is available.
We know how to use it.
I think what's missing for us is really the algorithm development and the ability to to trial and test our theories and and environment with others. That's useful in a noncompetitive and everyone and that program is working in the same direction to solve some of these human centric issues. So.
So I don't think it's a technology problem. So much that we can't we can't traverse I think it's more of an awareness problem and a use case and commissioning issue that we need to solve.
And over the next couple of quarters, you're going to see and hear how we're going to solve it is coping and I'm very impressed with the level of interest that we've gotten already on.
This new technology platform, which will introduce like I said in the next couple of quarters, we're working with a few select handful customers to bring this forward one of them is classified and the other one is a consumer company and we hope to have something signed with those folks very shortly.
Well I apologize for misleading you.
I was gonna, let you off the hook currently but I do I do I do appreciate I do appreciate the effort and Mike ball and rich. Thank you very much.
Thanks, Kevin good talking with you.
Thank you gentlemen, basketball is the final question I will now hand, it to Michael Mooney, who can't do them all.
Yes.
Thank you operator.
Well Q2 was a very interesting quarter for coping we've made significant progress as a team a company.
Our customers are enjoying a higher on time in full rate.
And we believe this trend will continue through Q3, and Q4 and we look forward to updating you on our progress in the next call. Thank you very much for joining we appreciate it take care and have a great day.
Thank you ladies and gentlemen. This concludes today's conference. Thank you for the T&D and you may now disconnect your lines.
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