Kopin Corp (KOPN) 2022 Q2 法說會逐字稿

Thank you for standing by. This is the conference operator. Welcome to the Kopin Second Quarter 2022 Earnings Conference Call. (Operator Instructions) The conference is being recorded. (Operator Instructions)

謝謝你的支持。這是會議接線員。歡迎參加 Kopin 2022 年第二季度收益電話會議。 （操作員說明）正在錄製會議。 （操作員說明）

I would now like to turn the conference over to Rich Sneider, Chief Financial Officer.

我現在想將會議轉交給首席財務官 Rich Sneider。

Thank you, operator. Welcome, everyone, and thank you for joining us this morning. John will begin today's call with a discussion of our progress in executing our strategy, and then I will go through the second quarter of 2022 results at a high level. John will conclude our prepared remarks and we'll be happy to take your questions.

謝謝你，接線員。歡迎大家，感謝您今天早上加入我們。約翰將在今天的電話會議開始時討論我們在執行戰略方面取得的進展，然後我將簡要介紹 2022 年第二季度的業績。約翰將結束我們準備好的發言，我們很樂意回答您的問題。

I'd like to remind everyone that during today's call taking place on Tuesday, August 2, 2022, 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 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. The company undertakes no obligation to update the forward-looking statements made during today's call.

我想提醒大家，在今天於 2022 年 8 月 2 日星期二舉行的電話會議上，我們將根據 1995 年《私人證券訴訟改革法案》的定義做出前瞻性陳述。這些陳述基於公司目前的預期、預測、信念和估計，並受到許多風險和不確定性的影響，這些風險和不確定性可能導致實際結果與這些前瞻性陳述存在重大差異。潛在風險包括但不限於對我們產品的需求、我們子公司的經營業績、市場狀況和我們最近提交給證券交易委員會的 10-K 表格年度報告和其他文件中討論的其他因素。公司不承擔更新今天電話會議期間所作的前瞻性陳述的義務。

And with that, I'll turn the call over to John.

有了這個，我會把電話轉給約翰。

Thank you, Rich. Good morning, and thank you all for joining us to discuss our second quarter 2022 operating results. We are very pleased with the results of the second quarter of 2022. Total revenues were up 20% year-over-year, driven by about 30% growth of our product revenues. In addition, our customer-funded research and development revenues remain strong, which we view as a indicator of our future growth opportunities as we expect most of these development programs will transition to production in time.

謝謝你，里奇。早上好，感謝大家加入我們討論我們 2022 年第二季度的經營業績。我們對 2022 年第二季度的業績感到非常滿意。在我們產品收入增長約 30% 的推動下，總收入同比增長 20%。此外，我們由客戶資助的研發收入仍然強勁，我們認為這是我們未來增長機會的指標，因為我們預計這些開發項目中的大部分將及時過渡到生產階段。

Our revenue from defense products were particularly strong, growing 87% year-over-year in the second quarter. During the second quarter of 2022, we announced additional orders for our displays for F-35 pilot helmets, imaging systems for armored vehicles. In July, we announced a production order for a Brillian high-brightness color displays for helicopter pilot helmets.

我們來自國防產品的收入特別強勁，第二季度同比增長 87%。在 2022 年第二季度，我們宣布了 F-35 飛行員頭盔顯示器和裝甲車輛成像系統的額外訂單。 7 月，我們宣布了一份用於直升機飛行員頭盔的 Brillian 高亮度彩色顯示器的生產訂單。

During the second quarter, we also announced the expansion of our industrial customer base, adding a new Korean 3D Automated Optical Inspection system customer. They use our spatial light modulator or SLM as a critical component in their system. With this particular win, we are now supplying a high-speed high-performance SLM, which are based on proprietary ferroelectric liquid crystal display to the all the 3 leading Korean 3D AOI equipment manufacturers in addition to other market leading manufacturers in China, Japan and Germany.

在第二季度，我們還宣布擴大我們的工業客戶群，增加了一個新的韓國 3D 自動光學檢測系統客戶。他們使用我們的空間光調製器或 SLM 作為其係統中的關鍵組件。憑藉這次特別的勝利，我們現在向所有 3 家領先的韓國 3D AOI 設備製造商以及中國、日本和日本的其他市場領先製造商提供基於專有鐵電液晶顯示器的高速高性能 SLM。德國。

These announcements are very important in several ways. To add to our already strong dialogue of orders. But equally important, those progress represent the variety of microdisplay technology Kopin offers. We believe we are the only company in the world to offer active metrics liquid crystal display, ferroelectric liquid crystal display and organic light-emitting diode or OLED display.

這些公告在幾個方面都非常重要。為了增加我們已經很強大的訂單對話。但同樣重要的是，這些進展代表了 Kopin 提供的微顯示技術的多樣性。我們相信我們是世界上唯一一家提供有源指標液晶顯示器、鐵電液晶顯示器和有機發光二極管或 OLED 顯示器的公司。

And we are working with partners to develop inorganic light emitting diodes -- displays or commonly named micro LEDs. All our microdisplays as a reminder are displays built on silicon.

我們正在與合作夥伴合作開發無機發光二極管——顯示器或俗稱的微型 LED。提醒一下，我們所有的微型顯示器都是基於矽的顯示器。

This is important as our breadth of display technologies to meet customer needs. It's a variety of advanced specialized optics, which we offered and which provides our customers with a integrated turnkey solution. This allows our customers to offer high-quality visual solutions to meet the variety of needs in the market. For example, our new (inaudible) all-plastic Pancake optics enables smaller, much lighter weight VR headsets and also metaverse headsets compared to the optics used in the headsets today.

這對於我們滿足客戶需求的廣泛顯示技術非常重要。這是我們提供的各種先進的專業光學器件，它為我們的客戶提供集成的交鑰匙解決方案。這使我們的客戶能夠提供高質量的視覺解決方案，以滿足市場上的各種需求。例如，與當今頭戴式耳機中使用的光學器件相比，我們新的（聽不見的）全塑料 Pancake 光學器件可實現更小、更輕的 VR 頭顯和 Metaverse 頭顯。

We believe our all-plastic Pancake optics are the first in the world, providing critical components for metaverse headsets, they are thinner, lighter, comfortable and easy to use has been one of our critical objectives. Our all-plastic Pancake optics provide not only the clear advantages mentioned before, but most importantly, they provide a very sharp image with good high relief. We believe combining our all-plastic Pancake optics with our 2.6 OLED microdisplays, representing a perfect match, providing magnification of 30,000 to 50,000x while maintaining a very sharp image.

我們相信我們的全塑料 Pancake 光學元件是世界上第一款，為 Metaverse 耳機提供關鍵組件，它們更薄、更輕、舒適且易於使用一直是我們的關鍵目標之一。我們的全塑料 Pancake 光學元件不僅具有前面提到的明顯優勢，而且最重要的是，它們提供了非常清晰的圖像和良好的高浮雕。我們相信將我們的全塑料 Pancake 光學元件與我們的 2.6 OLED 微型顯示器相結合，代表了完美的匹配，提供 30,000 到 50,000 倍的放大率，同時保持非常清晰的圖像。

Our goal has always remained the same, which is to lead in these 2 critical technologies area. They are essential for great VR/AR experiences. This is a good place to put the importance of microdisplays and Pancakes in the proper context. These 2 technologies are analogous in importance as leasing battery technologies to the electric vehicle industry.

我們的目標始終如一，即在這兩個關鍵技術領域處於領先地位。它們對於出色的 VR/AR 體驗至關重要。這是將微型顯示器和煎餅的重要性放在適當的上下文中的好地方。這兩種技術的重要性與向電動汽車行業租賃電池技術的重要性相似。

Our second quarter growth occurred. I will start with global supply chain issues. While we are pleased with that growth, it becomes a cost. As our press release indicates, we've incurred more costs to keep our customers running and operations running than we will normally expect. Typically, a defense product design has a lifecycle of about 5 to 7 years.

我們的第二季度出現了增長。我將從全球供應鏈問題開始。雖然我們對這種增長感到滿意，但它變成了成本。正如我們的新聞稿所表明的那樣，我們為保持客戶的運營和運營付出了比我們通常預期的更多的成本。通常，國防產品設計的生命週期約為 5 到 7 年。

But given the supply chain issues, our limited visibility as to when the supply chain issues will get resolved, as a contingency, we redesigned several products will alternate semiconductor components so we will have flexibility and a backup plan. This has increased our engineering and part costs. And we also incurred those automotive semiconductor components as we also occurred those semiconductor components.

但鑑於供應鏈問題，我們對供應鏈問題何時得到解決的可見性有限，作為應急措施，我們重新設計了幾種產品將替代半導體組件，因此我們將擁有靈活性和備用計劃。這增加了我們的工程和零件成本。我們還發生了那些汽車半導體組件，因為我們也發生了那些半導體組件。

The positive news is based on discussion with our vendors now. It appears the supply chain issues are improving. And we believe our operation in the second half of 2022 will run closer to normal. Furthermore, we expect our second half revenue will be higher than our first half revenue as our defense business expects to be stronger.

好消息是基於現在與我們的供應商的討論。供應鏈問題似乎正在改善。我們相信我們在 2022 年下半年的運營將更接近正常。此外，我們預計下半年收入將高於上半年收入，因為我們的國防業務預計會更強勁。

Now let me provide an update on the progress in developing our micro OLED product line. We're currently designing multiple backplanes for partners and customers. And we are also in discussion with partners for more advanced other designs for use in virtual reality and augment reality systems. Bringing strong customers to us is a unique industry-leading 2.6K OLED display and deep knowledge of the display and optics as a system.

現在讓我提供有關開發我們的微型 OLED 產品線的最新進展。我們目前正在為合作夥伴和客戶設計多個背板。我們還在與合作夥伴討論用於虛擬現實和增強現實係統的更先進的其他設計。為我們帶來強大的客戶是獨特的行業領先的 2.6K OLED 顯示器以及對顯示器和光學系統的深入了解。

Customers, of course, like high resolutions, but they also value is 1.3 inch size because it enables better optics. The 2.6 display is really a display on a chip. We name it DoC. It has embedded MIPI circuits and digital processing circuits which met the interface with standard video signal simpler and much less power-consuming. One additional technical advantage and amounts we have is that folks are now beginning to understand the value of [voltage] drive in OLED displays as opposed the current drive. Kopin designed our 2.6 OLED display using voltage drive, but most others use current drive. Voltage with current drive are now hotly debated in the industry. An analysis indicate the voltage drive results significantly in lower power consumption, especially as microdisplay resolution increased.

客戶當然喜歡高分辨率，但他們也看重 1.3 英寸尺寸，因為它可以提供更好的光學效果。 2.6顯示器真的是芯片上的顯示器。我們將其命名為 DoC。它具有嵌入式MIPI電路和數字處理電路，滿足標準視頻信號的接口更簡單，功耗更低。我們擁有的另一個技術優勢和數量是人們現在開始了解 OLED 顯示器中 [電壓] 驅動的價值，而不是電流驅動。 Kopin 使用電壓驅動設計了我們的 2.6 OLED 顯示器，但大多數其他顯示器使用電流驅動。電流驅動電壓現在在業界引起了激烈的爭論。一項分析表明，電壓驅動顯著降低了功耗，尤其是隨著微顯示器分辨率的提高。

Kopin micro OLED displays have been sure to be using significantly lower power than OLEDs by other customers -- other suppliers. We are now in discussion with folks to put the advantage of our 2.6 display design to higher resolutions such as 4K HDR displays. As we have previously discussed, our OLED product line is based on a fabless business model. Using our model, we either sell finished OLED microdisplay to our customer by working with our OLED foundry partners or we sell our highly advanced proprietary backplane wafers to all OLED OEM partners who complete the microdisplay for sale to their own customer base. This business model provides us more flexibility to meet customer demand.

Kopin 微型 OLED 顯示器使用的功率肯定比其他客戶（其他供應商）的 OLED 低得多。我們現在正在與人們討論將我們的 2.6 顯示器設計的優勢用於更高的分辨率，例如 4K HDR 顯示器。正如我們之前所討論的，我們的 OLED 產品線基於無晶圓廠的商業模式。使用我們的模式，我們要么通過與我們的 OLED 代工合作夥伴合作向我們的客戶銷售成品 OLED 微型顯示器，要么我們向所有完成微型顯示器的 OLED OEM 合作夥伴銷售我們高度先進的專有背板晶圓，以出售給他們自己的客戶群。這種商業模式為我們提供了更大的靈活性來滿足客戶的需求。

Turning to our research and development activities. We continue to make excellent progress in developing a microLED display. This is a customer-funded project. There is many partners. This consortium of partners working on different elements of displays is how we create a current LCD in the early 1990s with a $50 million funding from DARPA to us. To be clear, this is a long-term development project, but if successful the display opens us tremendous opportunities.

轉向我們的研發活動。我們在開發 microLED 顯示器方面繼續取得出色進展。這是一個客戶資助的項目。有很多合作夥伴。這個致力於不同顯示器元素的合作夥伴聯盟是我們在 1990 年代初期利用 DARPA 向我們提供的 5000 萬美元資金創建當前 LCD 的方式。需要明確的是，這是一個長期的發展項目，但如果成功展示給我們帶來了巨大的機會。

In summary, customers demand strong in our core product lines, especially in our defense sector and we are aggressively managing our supply chain challenge. We'll continue our momentum on innovating and advancing our technology for metaverse applications. We continue to see strong interest in developing products targeted for metaverse. And we feel we're very well-positioned to capitalize the opportunities it presents. We're very excited for the growth of Kopin as we see a way for rapidly growing interest of our microdisplays and optics across AR/VR/MR products and applications. First in defense, then enterprise and now starting in consumer sectors.

總之，客戶對我們的核心產品線有著強烈的需求，尤其是在我們的國防領域，我們正在積極應對供應鏈挑戰。我們將繼續保持創新和推進我們的 Metaverse 應用技術的勢頭。我們繼續看到對開發針對 Metaverse 的產品的濃厚興趣。我們認為我們已經做好充分準備利用它所帶來的機會。我們對 Kopin 的增長感到非常興奮，因為我們看到了一種方法，可以讓我們的微型顯示器和光學器件在 AR/VR/MR 產品和應用中的興趣迅速增長。首先是國防，然後是企業，現在開始是消費領域。

Our technology advances, our current market conditions are very favorable, and we believe Kopin is well-positioned to capitalize.

我們的技術進步，我們目前的市場條件非常有利，我們相信 Kopin 已做好充分利用資本的準備。

Now I'll turn the call to Rich to discuss the financial aspect of this quarter and the full year.

現在我將致電 Rich 討論本季度和全年的財務方面。

Thank you, John. Turning to our financial results. Product revenues for the second quarter ended June 25, 2022, were $9 million compared with $6.9 million for the second quarter ended June 26, 2021, a 30% increase year-over-year. Funded research and development revenues were $2.8 million for the second quarter ended June 25, 2022, compared with $2.7 million for the second quarter ended June 26, 2021, essentially flat. Total revenues for Q2 2022 were $11.9 million versus $9.9 million on the prior year, an overall 20% increase year-over-year.

謝謝你，約翰。轉向我們的財務業績。截至 2022 年 6 月 25 日的第二季度產品收入為 900 萬美元，而截至 2021 年 6 月 26 日的第二季度為 690 萬美元，同比增長 30%。截至 2022 年 6 月 25 日的第二季度，資助的研發收入為 280 萬美元，而截至 2021 年 6 月 26 日的第二季度為 270 萬美元，基本持平。 2022 年第二季度的總收入為 1190 萬美元，而去年同期為 990 萬美元，總體同比增長 20%。

Cost of goods sold for the second quarter of 2022 was $7.9 million or 88% of product revenues compared with $6 million or 87% for the second quarter of last year. The slight increase in costs for the product revenues as a percent of net product revenues for the 3 months ended June 25, 2022, as compared to the primary year was primarily due to manufacturing inefficiencies caused by supply chain disruptions.

2022 年第二季度的商品銷售成本為 790 萬美元，佔產品收入的 88%，而去年第二季度為 600 萬美元，佔產品收入的 87%。截至 2022 年 6 月 25 日的 3 個月，產品收入成本占淨產品收入的百分比與第一年相比略有增加，主要是由於供應鏈中斷導致製造效率低下。

R&D expenses in the second quarter of 2022 were $5.1 million compared with $3.7 million for the second quarter of '21. The increase in the '22 second quarter R&D expense as compared to the prior year was equally split between R&D -- internal R&D expense and customer-funded R&D activities. The increase in internal R&D was primarily due to an increase in OLED development costs and the redesign of certain products to incorporate alternative semiconductor components as a result of the shortage of legacy semiconductor components. The increase in funded R&D was in support of customer-funded activities related to defense programs.

2022 年第二季度的研發費用為 510 萬美元，而 21 年第二季度為 370 萬美元。與上一年相比，22 年第二季度研發費用的增長平均分配給研發——內部研發費用和客戶資助的研發活動。內部研發的增加主要是由於 OLED 開發成本的增加以及由於傳統半導體組件短缺而重新設計某些產品以納入替代半導體組件。研發資助的增加是為了支持與國防項目相關的客戶資助活動。

SG&A was $4.3 million in the second quarter of 2022 compared to $4 million in the second quarter of '21. SG&A increase with 3 months ended June 25, 2022, as compared to 3 months ended 26, 2021, primarily due to an increase in compensation, information technology and travel costs, which were partially offset by lower bad debt expense and stock-based compensation expense.

2022 年第二季度的 SG&A 為 430 萬美元，而 21 年第二季度為 400 萬美元。與截至 2021 年 6 月 25 日止 3 個月相比，截至 2022 年 6 月 25 日止 3 個月的 SG&A 增加，主要是由於薪酬、信息技術和差旅成本增加，這部分被壞賬費用和基於股票的薪酬費用減少所抵消.

Other income expense was expense of approximately $141,000 for the second quarter of 2022 compared with $104,000 of income for the second quarter of '21. During the 3 months ended June 25, 2022, we recorded $150,000 of foreign currency losses as compared to $101,000 of foreign currency gains for the 3 months ended June 26, 2021.

2022 年第二季度的其他收入支出約為 141,000 美元，而 21 年第二季度的收入為 104,000 美元。在截至 2022 年 6 月 25 日的 3 個月內，我們錄得 150,000 美元的外匯損失，而在截至 2021 年 6 月 26 日的 3 個月內，我們錄得 101,000 美元的外匯收益。

Turning to the bottom line. Our net loss attributable to controlling interest for the quarter was approximately $5.6 million or $0.06 per share compared with a net loss of $3.8 million or $0.04 per share in the second quarter of 2021. Net cash used in operating activities for the 6 months ended June 25, 2022, was approximately $11.4 million. As John and my discussions indicated, supply chain issues affected our manufacturing efficiencies, which increased cost and negatively affected working capital flow in the first half of the year.

轉向底線。我們在本季度歸屬於控股權益的淨虧損約為 560 萬美元或每股 0.06 美元，而 2021 年第二季度的淨虧損為 380 萬美元或每股 0.04 美元。截至 6 月 25 日的 6 個月用於經營活動的現金淨額，2022年，約為1140萬美元。正如約翰和我的討論所表明的那樣，供應鏈問題影響了我們的製造效率，這增加了成本並對上半年的營運資金流動產生了負面影響。

In addition, as we discussed, we received a production order for our Brillian displays for rotary wing aircraft, and we expect another program to transition into production in the second half of 2022, and these may require additional working capital. Accordingly, management deemed to prove to partially fund our working capital needs through the use of our at-the-market equity offering program or ATM. And so during the second quarter of 2022, we sold 1.7 million shares of common stock with gross proceeds of $2.1 million before deducting broker expenses of less than $1 million -- $100,000, excuse me, pursuant to the company's ATM.

此外，正如我們所討論的，我們收到了一份用於旋轉翼飛機的 Brillian 顯示器的生產訂單，我們預計另一個項目將在 2022 年下半年過渡到生產，這可能需要額外的營運資金。因此，管理層被視為通過使用我們的市場股票發行計劃或 ATM 來證明部分滿足我們的營運資金需求。因此，在 2022 年第二季度，我們出售了 170 萬股普通股，總收益為 210 萬美元，但根據公司的 ATM，扣除經紀人費用不到 100 萬美元——對不起，為 10 萬美元。

Going forward, we are reviewing other funding alternatives. Kopin's cash and equivalents and marketable securities were approximately $18.6 million at June 25, 2022, as compared to $29.3 million at December 25, 2021. We have no long-term debt.

展望未來，我們正在審查其他資金替代方案。截至 2022 年 6 月 25 日，Kopin 的現金及等價物和有價證券約為 1860 萬美元，而截至 2021 年 12 月 25 日為 2930 萬美元。我們沒有長期債務。

Second quarter amounts for depreciation and stock comp expense are attached in a table to the Q2 press release. The amounts discussed above are based on current estimates, and listeners should review our Form 10-Q for the second quarter 2022 for any possible changes and additional disclosures.

第二季度的折舊和庫存補償費用金額附在第二季度新聞稿的表格中。上述金額基於當前估計，聽眾應查看我們 2022 年第二季度的 10-Q 表格，了解任何可能的變化和額外披露。

And with that, operator, we'll be happy to take questions.

有了這個，接線員，我們很樂意回答問題。

(Operator Instructions) The first question comes from Glenn Mattson with Ladenburg Thalmann.

（操作員說明）第一個問題來自 Glenn Mattson 和 Ladenburg Thalmann。

First, Richard, you just touched on it. I would be curious about -- a little bit about the -- about kind of the cash burn and where you sit today. So I guess you expect a stronger second half, some of these new orders coming through and continued strong defense. Do you expect -- but then you also commented kind of like also having to build working capital. So is your expectation that you'll be continuing to burn at a rate at this level? Or that it would be a burn, but not as bad, or that flip to positive in terms of the cash flow from operations? Just what's your sense in the second half?

首先，理查德，你剛剛提到了它。我會很好奇 - 有點關於 - 關於現金消耗的種類以及你今天坐在哪裡。所以我猜你預計下半年會更強勁，其中一些新訂單會通過並繼續強大的防守。您是否期望-但隨後您還評論說，還必須建立營運資金。那麼您是否期望您將繼續以這個水平的速度燃燒？或者這會是一場燒錢，但沒有那麼糟糕，或者就運營現金流而言會轉為正數？只是你在下半場的感覺是什麼？

Yes. The first half, we look at it as an anomaly. We had supply chain disruptions in the end of the first quarter that carried into the second quarter. And so what happened was the receivables got collected during the second quarter, but then had to get rebuilt at the end of the second quarter. So there was this -- so if you actually -- when you see the cash flow statement coming out, what you'll see is the change in the receivables is really what caused the issue.

是的。上半場，我們將其視為反常現象。我們在第一季度末出現供應鏈中斷，並持續到第二季度。所以發生的事情是，應收賬款在第二季度被收回，但在第二季度末不得不重建。所以有這個 - 所以如果你真的 - 當你看到現金流量表出來時，你會看到應收賬款的變化確實是導致問題的原因。

So we expect that to moderate. And we've rebuilt the receivables. So our working capital is more normalized to what it should be. So you're not going to have those working capital fluctuations, we don't expect in the second half. And so with improving operations and the fact that we're not going to have this anomaly of the receivables getting burned down, we expect the cash flow to be better in the second half.

因此，我們預計這種情況會有所緩和。我們已經重建了應收賬款。因此，我們的營運資金更加正常化。所以你不會有那些營運資金波動，我們預計下半年不會。因此，隨著運營的改善以及我們不會讓這種應收賬款被燒毀的異常情況，我們預計下半年的現金流會更好。

Okay. And I'm curious about the decision to do stock sales at that level and what this kind of signal sends and I understand that the issue just to grow more comfortable around preparing for these bigger orders, but also on top of that, could you maybe elaborate? Have you done any more sales since the quarter ended? And -- or you also kind of mentioned that there's other options for capital raising activity if need be. So can you just kind of elaborate on that?

好的。我很好奇在那個水平上進行股票銷售的決定以及這種信號發出的信號，我理解這個問題只是為了更好地準備這些更大的訂單，但最重要的是，你能不能精心製作的？自本季度結束以來，您是否進行了更多銷售？而且 - 或者您還提到，如果需要，還有其他籌資活動的選擇。那麼你能詳細說明一下嗎？

Sure. Yes. I mean nobody was really particularly happy exercising at that price the ATM that we had at the end of the quarter. But we did think it was prudent. There was a lot of talk about recession. We really weren't sure what the supply chain was going to go. As John said in his prepared remarks, the good news is it looks like from what we're hearing, the supply chain issues for us at least seem to have been, for the most part, sorted out for the rest of the year.

當然。是的。我的意思是沒有人真的特別樂意以這個價格行使我們在本季度末擁有的 ATM。但我們確實認為這是謹慎的。有很多關於衰退的討論。我們真的不確定供應鏈會走向何方。正如約翰在他準備好的講話中所說，好消息是，從我們聽到的情況來看，對我們來說，供應鏈問題至少在今年餘下時間的大部分時間裡似乎都得到了解決。

So we took a lot of actions just in case. We redesigned some of the boards that we use in the products. So this was incremental development costs we hadn't anticipated. We bought alternative semiconductor materials, which now looks like we probably won't use at least in the short term. So there was just expenses associated to making sure that we could fulfill our contractual obligations. But we don't see any of that in the second half of the year.

所以我們採取了很多措施以防萬一。我們重新設計了我們在產品中使用的一些電路板。所以這是我們沒有預料到的增量開發成本。我們購買了替代半導體材料，現在看來至少在短期內我們可能不會使用。因此，只有與確保我們能夠履行合同義務相關的費用。但我們在下半年看不到任何這種情況。

We have in the past when we had sufficient time to do other types of funding usually around getting prepayments on long-term contracts from customers. And so we'll continue to explore those opportunities. And I think the other important factor is that sitting here today, we have 2 programs, F-35 and FWS-I which are in solid production and we have 3 emerging production programs and we are sole sourced to all those programs. And so maintaining a very strong balance sheet is very important so that those programs continue. And so for those reasons, we thought it was the right move to go out and exercise the ATM.

我們過去有足夠的時間進行其他類型的融資，通常是從客戶那裡獲得長期合同的預付款。因此，我們將繼續探索這些機會。我認為另一個重要因素是，今天坐在這裡，我們有兩個項目，F-35 和 FWS-I，它們正在穩定生產，我們有 3 個新興生產項目，我們是所有這些項目的唯一來源。因此，保持非常強勁的資產負債表非常重要，這樣這些計劃才能繼續下去。因此，出於這些原因，我們認為走出去鍛煉 ATM 是正確的舉措。

Yes, clearly, and...

是的，很明顯，而且...

I think Glenn -- to give you more things, I think, yes, we are looking other way. But our customers, because we are so sought to them, they also are -- some of them are actually helping us to alleviate some of those part procurements and all that stuff. So we'll be heading much better -- will have better performance next half.

我認為格倫 - 給你更多的東西，我想，是的，我們正在尋找其他方式。但是我們的客戶，因為我們很受他們的追捧，他們也是——他們中的一些人實際上正在幫助我們減輕一些零件採購和所有這些事情。所以我們會走得更好——下半場會有更好的表現。

Great. That's it from me. The defense business seems to be going really well. And so it'd be exciting to watch that continue.

偉大的。這就是我的。國防業務似乎進展順利。因此，看到這種情況繼續下去會很令人興奮。

Yes. We are winning. I mean, we have a lot more orders coming in. And this is certainly the most important thing. The technology and orders, we do have them. Yes. And we sole source almost all of them.

是的。我們正在獲勝。我的意思是，我們有更多的訂單進來。這當然是最重要的事情。技術和訂單，我們確實有。是的。我們幾乎所有這些都是唯一來源。

The next question comes from Kevin Dede with H.C. Wainwright.

下一個問題來自 H.C. 的 Kevin Dede。溫賴特。

A couple of things. I guess one is tied to inventory. I understand the supply chain issue and sourcing. Inventories seem to be up, right, sequentially, where they were probably depressed in the March quarter. I know, Rich, you just said that you probably acquired material you won't sell. What do you suspect happens with inventory and the tie to margin just through the balance of the year?

有幾件事。我猜一個與庫存有關。我了解供應鏈問題和採購。庫存似乎在上升，對，順序，他們可能在三月季度低迷。我知道，Rich，你剛才說你可能獲得了不會出售的材料。您懷疑庫存和與今年餘下的利潤之間的關係會發生什麼？

So we expect improving gross margin and the inventory level, we would expect to maintain where it is. We don't see any major fluctuations in inventory levels at this time.

因此，我們預計毛利率和庫存水平將提高，我們預計將保持現狀。我們目前沒有看到庫存水平有任何重大波動。

Okay. The defense product or projects that aside from the FWS-I and F-35, can you talk to the 3 that you mentioned, Rich, and I guess where you see them in terms of their development cycle and perhaps going to full production?

好的。除了 FWS-I 和 F-35 之外的國防產品或項目，你能和你提到的 3 人談談嗎，Rich，我猜你在開發週期和全面生產方面看到它們的位置？

Yes, we would expect all in full production in the first half of next year. As we mentioned, one is the Brillian display for rotary aircraft. Another is an international weapon site similar to, in some respects, the FWS-I that we currently sell. And as we said in the press release, the recent results, the chaos in Europe right now is actually sparking demand for those types of products. And so we're getting positive feedback from customers of future orders on those. And the other one is kind of a unique targeting system that we sell that I really can't get into a lot of details about what it does.

是的，我們預計明年上半年將全面投產。正如我們所提到的，其中之一是用於旋翼飛機的 Brillian 顯示器。另一個是國際武器站點，在某些方麵類似於我們目前銷售的 FWS-I。正如我們在新聞稿中所說，最近的結果，歐洲現在的混亂實際上正在引發對這些類型產品的需求。因此，我們從客戶那裡獲得了對未來訂單的積極反饋。另一個是我們銷售的一種獨特的定位系統，我真的無法詳細了解它的作用。

Okay. Fair enough. Has the chaos in Europe spurred development? It's interesting when you look at the sequential change in research and development down a couple of million. I left the March quarter call thinking that military development might increase. I guess I just was hoping you could help me understand that.

好的。很公平。歐洲的混亂是否刺激了發展？有趣的是，研究和開發的連續變化減少了幾百萬。我離開了三月季度的電話會議，認為軍事發展可能會增加。我想我只是希望你能幫助我理解這一點。

Well, again, it's the -- we recognize revenue based upon percent completion. And as John mentioned, for instance, the microLED program is a consortium of companies that are developing that display. And so in some respects, our revenues are tied to how well they complete their tasks. So to the extent that they get stuff done and we move further down the road, we recognize more revenue. So it's really -- that's why it's always difficult to project that funded R&D line because as I said, particularly in the microLED, we're relying on a number of other subcontractors to perform.

好吧，再一次，這是 - 我們根據完成百分比確認收入。例如，正如約翰所提到的，microLED 計劃是一個正在開發該顯示器的公司聯盟。所以在某些方面，我們的收入與他們完成任務的能力有關。因此，在他們完成工作並且我們繼續前進的範圍內，我們確認了更多收入。所以真的 - 這就是為什麼總是難以計劃資助的研發線，因為正如我所說，特別是在 microLED 方面，我們依賴許多其他分包商來執行。

So is that the lion's share then, Rich, of that line?

那麼，那是那條線的最大份額嗎，Rich？

Well, it's a good piece of it. And then part of it is the fact that the Brillian displays that go into production was winding down.

嗯，這是一個很好的部分。然後部分原因是投入生產的 Brillian 顯示器正在逐漸減少。

Okay. All right. That helps. John, can you talk a little bit about microLED development, understand partners in Japan and China. I'm wondering if you'll be able to transition that technology and its development into defense-related products, given a lot of the development or at least it seems to me at this from outside, a lot of that development is happening outside the U.S.?

好的。好的。這有幫助。 John，您能談談 microLED 的發展，了解日本和中國的合作夥伴嗎？我想知道您是否能夠將該技術及其開發轉變為與國防相關的產品，考慮到很多開發，或者至少在我看來，從外部來看，很多開發都發生在我們。？

Yes. This is a consortium. This is a technology and early demonstration of microLEDs. This, of course, is run from here, but they are also running in the U.K. Consortium has a lot of activities in the U.K., which is our -- actually through our subsidiary in U.K. and then in Japan and partially also in China, but almost all the activities are really resides in U.S. and U.K. right now and Japan.

是的。這是一個財團。這是 microLED 的一項技術和早期演示。當然，這是從這裡開始的，但他們也在英國運行。財團在英國有很多活動，這是我們的 - 實際上是通過我們在英國的子公司，然後是在日本，部分也在中國，但是現在幾乎所有的活動都在美國和英國以及日本進行。

Okay. I know you said it's long-term development. Over the past year or so you've added some interesting tidbits on it. Could you maybe hone in on the time line a little bit better where you think it might get to commercialization?

好的。我知道你說這是長期發展。在過去一年左右的時間裡，您添加了一些有趣的花絮。您能否在您認為可能實現商業化的時間線上稍加磨練？

Yes. It is targeted to -- at this point, this is actually the product in mind, targeted to defense and enterprise applications. The first, and eventual call consumer. And it's a very, very aggressive target. If we succeed, and I can't say that we would definitely succeed, it will be the most advanced microLED built in the world.

是的。它的目標是——在這一點上，這實際上是針對國防和企業應用程序的產品。第一個，也是最終的呼叫消費者。這是一個非常非常激進的目標。如果我們成功了，我不能說我們一定會成功，它將是世界上最先進的 microLED。

Okay. But it's -- is it too early to offer some type of time line?

好的。但現在提供某種時間線是否為時過早？

I think we are optimistic, of course, but we have a bunch of very good people working on it. I think if anybody could succeed, we probably has a good chance.

我認為我們當然是樂觀的，但我們有一群非常優秀的人在做這件事。我想如果有人能成功，我們可能會有很好的機會。

Okay. The balance of DoD stuff that you folks haven't spoken to, I understand the issues in Europe, but is there any way to sort of quantify how projects sort of in the wings and then developed might be moving forward more rapidly?

好的。你們還沒有談過國防部的平衡，我理解歐洲的問題，但有沒有辦法量化項目在發展中的發展可能會更快地向前發展？

Yes. Well, Kevin, this is Kevin, right? Yes, it's Kevin. I think we did announce not too long ago about some activities that our imaging system for armored vehicles. And that's very, very critical. I really think all that you would -- political tensions happening is everybody need new imaging systems for using armored vehicles. And again, we're so sourced there. And that activity is actually going full steam. As well know, I mean our working capital obviously has increased because a lot of productions, new progress go to productions, a lot of activities in R&D, some of them are internally funded. But that's normal when we think we're actually in the winning cycle right now. And yes, we know either way. ATM is just one of our options of raising more money. And I think we'll continue to do so.

是的。好吧，凱文，這是凱文，對吧？是的，是凱文。我想我們不久前確實宣布了我們的裝甲車輛成像系統的一些活動。這是非常非常關鍵的。我真的認為你會 - 正在發生的政治緊張局勢是每個人都需要新的成像系統來使用裝甲車。再說一次，我們的資源很豐富。而這項活動實際上正在全力以赴。眾所周知，我的意思是我們的營運資金明顯增加了，因為大量的生產、新的生產進展、大量的研發活動，其中一些是內部資助的。但是當我們認為我們現在實際上處於獲勝週期時，這很正常。是的，我們都知道。 ATM只是我們籌集更多資金的選擇之一。我認為我們將繼續這樣做。

Okay. The -- there was a $2 million development order for the in-vehicle imaging. Is that the one you're referring to, John? Appears that it was the -- the second custom development order.

好的。 - 有一個 200 萬美元的車載成像開發訂單。是你指的那個嗎，約翰？看來這是——第二個定制開發訂單。

Yes, that's exactly, Kevin, you're right. And that program, I -- to me, I'm very excited by that program because I really believe there will be a major, major pipeline of revenue for us as we are sole-sourced, and we're working with a huge customer.

是的，沒錯，凱文，你是對的。那個項目，我——對我來說，我對這個項目感到非常興奮，因為我真的相信我們將有一個主要的、主要的收入渠道，因為我們是單一來源的，我們正在與一個巨大的客戶合作.

Right. So just to kind of get back to timing, John, I mean, apologies for harping on this, but do you -- would you suppose or is it fair to assume that the second order came in faster than it would have had there not been issues in Europe? And if so how much more or how much faster do you think it came in?

正確的。所以只是為了回到時間上，約翰，我的意思是，為反復強調這一點而道歉，但是你會 - 你會假設還是公平地假設第二個訂單來得比沒有時更快歐洲的問題？如果是這樣，您認為它會增加多少或快多少？

I can't speak to that because there are a lot of activities going on. I can't comment on them.

我不能這麼說，因為有很多活動正在進行。我無法評論他們。

Okay. All right. Can you talk a little bit about the metrology market, John? I mean, I know you mentioned that there were -- that you have 3 -- all 3 customers I guess in South Korea. But I'd love to hear your perspective on fab development in the U.S. I know that's a highly controversial topic right now and it would be really interesting to hear your vision on how foundries and semi manufacturing might expand in the U.S. and how that could benefit Kopin?

好的。好的。約翰，你能談談計量市場嗎？我的意思是，我知道你提到有 - 你有 3 - 我猜在韓國的所有 3 個客戶。但我很想听聽您對美國晶圓廠發展的看法。我知道這是一個極具爭議性的話題，聽聽您對鑄造廠和半製造業如何在美國擴張以及這將如何受益的看法真的很有趣高平？

Yes. This is a very interesting cycle question. As you will know, everybody is -- every country is trying to build up a new fab in the semiconductor fab. And you probably read even this weekend, I think there was a -- past weekend, there's an article that semiconductor chips are getting 3-dimensional. It's stacking a chip together on top of each other. So we are seeing a situation where people no longer look at who think chips in 2D format, in the 3D format. So this is what we call 3D metrology.

是的。這是一個非常有趣的循環問題。如您所知，每個國家都在嘗試在半導體工廠中建立新的工廠。你甚至可能在這個週末讀到，我想有一個 - 過去的周末，有一篇文章說半導體芯片正在變得 3 維。它是將芯片堆疊在一起。因此，我們看到人們不再關注那些認為芯片是 2D 格式、3D 格式的人。這就是我們所說的 3D 計量。

Currently it's still a vague emerging business. The market now is divided to 3 parts. Kopin through our successfully-owned subsidiary, FDD, we own about 40% of world market. TI using a DLP owns 40% of world market. And the rest of the (inaudible) are the stuff that's small ones. So we have about 40% of the market share of our emerging business return everything from 2D to 3D. And if you can guess everything is going to go to 3D. It will take some time. People don't like to change their factories, but that will happen and a new factory definitely needs it, yes.

目前它仍然是一個模糊的新興業務。現在市場分為三個部分。 Kopin 通過我們成功擁有的子公司 FDD，我們擁有約 40% 的全球市場。使用 DLP 的 TI 擁有 40% 的全球市場。其餘的（聽不清）是小東西。因此，我們有大約 40% 的新興業務市場份額返回從 2D 到 3D 的所有內容。如果你能猜到一切都會變成3D。這需要一些時間。人們不喜歡改變他們的工廠，但這會發生，新工廠肯定需要它，是的。

That is all the time that we have for questions. And I would like to turn the conference call back over to Dr. Fan for any closing remarks.

這就是我們提出問題的所有時間。我想將電話會議轉回范博士的任何閉幕詞。

Thank you for joining us today, and I hope you hear about it till next time.

感謝您今天加入我們，希望您下次聽到。

This concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.

今天的電話會議到此結束。你可以斷開你的線路。感謝您的參與，祝您有愉快的一天。