Kopin Corp (KOPN) 2023 Q1 法說會逐字稿

Good morning, everyone, and welcome to the Kopin Corporation First Quarter 2023 Earnings Call. Please note that this event is being recorded.

大家早上好，歡迎來到 Kopin Corporation 2023 年第一季度財報電話會議。請注意，此事件正在記錄中。

At this time, I'd like to turn the conference call over to Brian Prenoveau, Investor Relations for Kopin. Please go ahead.

此時，我想將電話會議轉交給 Kopin 投資者關係部的 Brian Prenoveau。請繼續。

Thank you, operator, and good morning, everyone. Before we get started, I'd like to remind everyone that during today's call, taking place on Thursday, May 11, 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, 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.

謝謝接線員，大家早上好。在我們開始之前，我想提醒大家，在今天 2023 年 5 月 11 日星期四舉行的電話會議上，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。這些陳述是基於公司當前的預期、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。

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. 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.

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、市場狀況以及我們最近向美國證券交易委員會提交的 10-K 表格年度報告和其他文件中討論的其他因素。儘管公司認為這些陳述所依據的假設是合理的，但其中任何一個都可能被證明是不准確的，並且無法保證結果一定會實現。

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 reconciliations in the company's SEC filings and press releases.

公司不承擔更新今天電話會議中所作的前瞻性陳述的義務。此外，可能會提及某些非普遍接受的會計原則或非 GAAP 措施，您應參考公司向美國證券交易委員會提交的文件和新聞稿中的適當免責聲明和對賬。

Kopin Corporation's Chief Executive Officer, Michael Murray, will begin today's call with an overview of Kopin's progress within the company's strategy. Following Michael, Kopin's CFO, Rich Sneider, will review the company's first quarter returns.

Kopin Corporation 的首席執行官 Michael Murray 將在今天的電話會議開始時概述 Kopin 在公司戰略中的進展。繼 Michael 之後，Kopin 的首席財務官 Rich Sneider 將審查公司第一季度的回報。

I would now like to turn the conference over to Michael Murray. Michael?

我現在想將會議轉交給 Michael Murray。邁克爾？

Thank you, Brian. Good morning to everyone, and welcome to our first earnings call, which is the first earnings call under the new management organization transformation plan and my first quarter with both hands on the wheel as CEO.

謝謝你，布萊恩。大家早上好，歡迎來到我們的第一次財報電話會議，這是新管理組織轉型計劃下的第一次財報電話會議，也是我作為 CEO 雙手掌舵的第一個季度。

It's good practice for anyone less familiar with Kopin to explain who we are, what we do and who we sell to. After the brief overview, I will update everyone on some of our strategic initiatives and discuss the last quarter and some opportunities on the horizon before turning the call over to Rich.

對於不太熟悉 Kopin 的人來說，解釋我們是誰、我們做什麼以及我們賣給誰是一個很好的做法。在簡要概述之後，我將向大家介紹我們的一些戰略舉措，並在將電話轉交給 Rich 之前討論上個季度和即將出現的一些機會。

Kopin designs and manufactures several different types of microdisplays. Our proprietary AMLCD technology, our broad portfolio of OLED displays, our FLCoS displays and our soon to be released microLED technology. What makes Kopin unique and valued by our customers is our ability to couple the right display technology and advanced optics, drive electronics and housings to solve our customers' needs in defense, commercial, and consumer applications. Our products are the overlay of critical digital information on the analog world.

Kopin 設計並製造了多種不同類型的微型顯示器。我們專有的 AMLCD 技術、我們廣泛的 OLED 顯示器產品組合、我們的 FLCoS 顯示器以及我們即將發布的 microLED 技術。讓 Kopin 與眾不同並受到客戶重視的是我們能夠將正確的顯示技術與先進的光學、驅動電子設備和外殼相結合，以滿足客戶在國防、商業和消費應用中的需求。我們的產品是模擬世界上關鍵數字信息的疊加層。

Every day, the application of optics continues to broaden and new industries are discovering ways to use these technologies. Kopin is at the forefront of optical advancements, creating innovative technologies and we've enhanced how people see, hear, and communicate.

每一天，光學的應用都在不斷擴大，新的行業也在探索使用這些技術的方法。 Kopin 處於光學進步的前沿，創造創新技術，我們改善了人們的視覺、聽覺和交流方式。

Today Kopin applies much of its expertise as a critical supplier for many of the world's largest defense contractors. But we also look to capitalize on commercial and industrial opportunities wherever and whenever they arise. The global microdisplay market is estimated to grow at over 20% per year for the next 5 to 7 years. As microdisplay technologies continue to improve, more and more industries are finding ways to apply the technology to their end applications and businesses.

如今，Kopin 將其大部分專業知識應用為許多世界上最大的國防承包商的關鍵供應商。但我們也希望隨時隨地利用商業和工業機會。在未來 5 到 7 年內，全球微型顯示器市場預計將以每年 20% 以上的速度增長。隨著微顯示技術的不斷改進，越來越多的行業正在尋找將該技術應用於其終端應用和業務的方法。

Beyond aerospace and defense, health care, automotive and consumer electronics are adopting the practical applications of microdisplays. The growing adoption means a growing demand for high-resolution displays with low power consumption and a compact size for wearable devices. We believe our technology puts Kopin at the forefront of companies that take advantage of this growing market.

除了航空航天和國防，醫療保健、汽車和消費電子產品也在採用微型顯示器的實際應用。越來越多的採用意味著可穿戴設備對具有低功耗和緊湊尺寸的高分辨率顯示器的需求不斷增長。我們相信我們的技術使 Kopin 處於利用這個不斷增長的市場的公司的最前沿。

Now touching on some of our strategic priorities. I have often commented on the need for Kopin to improve our quality, which we refer to as On-Time In-Full or OTIF. OTIF is a measure of how often we deliver products to a customer on time in total with full quality and without the customer identifying any quality issues. This singular focus on quality ultimately leads to a more profitable Kopin by improving margins and higher customer satisfaction. We began to see some dividends from this focus in the first quarter of this year as our product costs in the first quarter were lower than the first quarter of 2022.

現在談談我們的一些戰略重點。我經常評論 Kopin 需要提高我們的質量，我們稱之為 On-Time In-Full 或 OTIF。 OTIF 衡量的是我們按時向客戶交付完整質量產品且客戶沒有發現任何質量問題的頻率。通過提高利潤率和更高的客戶滿意度，這種對質量的單一關注最終會帶來更有利可圖的 Kopin。由於我們第一季度的產品成本低於 2022 年第一季度，因此我們在今年第一季度開始看到這一重點帶來的一些紅利。

To give you an idea of our progress of On-Time In-Full in September of last year, we were around approximately 60%, meaning of every 100 products delivered at that time, approximately 40% or 40 were late. I'm happy to report that we are achieving rates in the high 80s to low 90 percentile as we are continuing to improve. We believe these rates will remain consistently above 90% after the first phase of our new equipment is installed this quarter.

為了讓您了解我們去年 9 月的 On-Time In-Full 進度，我們大約有 60%，這意味著當時交付的每 100 件產品中，大約有 40% 或 40 件延遲。我很高興地報告說，隨著我們不斷改進，我們正在實現從 80% 到 90% 的百分比。我們相信，在本季度安裝第一階段新設備後，這些比率將始終保持在 90% 以上。

Our improved quality and efficiency also means that we can produce the same amount with less labor resources, which resulted in a reduction in force in the first quarter of 2023. In addition to our efforts to improve profitability through improvements in quality, rationalization and R&D is also a strategic initiative.

我們提高的質量和效率也意味著我們可以用更少的勞動力資源生產相同數量的產品，這導致 2023 年第一季度的人員減少。除了我們通過提高質量、合理化和研發來提高盈利能力的努力之外，也是一項戰略舉措。

Kopin's R&D spend for the quarter declined by more than half. This occurred because certain activities are moving from R&D into production. And we introduced higher hurdles for assuming new R&D projects. Regarding internal R&D spend, our philosophy has changed as we are now investigating in projects which have a higher probability of success, are less speculative and offer more value than just a great display.

Kopin 本季度的研發支出下降了一半以上。這是因為某些活動正在從研發轉向生產。我們為承擔新的研發項目設置了更高的門檻。關於內部研發支出，我們的理念發生了變化，因為我們現在正在研究成功概率更高、投機性更小、價值更高的項目，而不僅僅是一個偉大的展示。

Now I'll discuss some of the developments since the last time we spoke and some opportunities we see on the horizon. In April, we announced a $1.1 million follow-on production order for a long-range version of an international weapon site, a fantastic program that gives soldiers critical information with clear bright symbols overlaid directly on the real world.

現在我將討論自我們上次談話以來的一些發展以及我們即將看到的一些機會。 4 月，我們宣布了一項價值 110 萬美元的後續生產訂單，用於生產一個遠程版本的國際武器基地，這是一個很棒的項目，可以通過直接覆蓋現實世界的清晰明亮的符號為士兵提供關鍵信息。

Also in April, we announced a $4.4 million PPAP award for an armored vehicle program. For those of you that don't know, PPAP stands for Production Part Approval Process. It's normally the process before going into production, which we can expect to happen at the end of this year. The program represents a significant opportunity for Kopin that could exceed total lifetime revenue of over $100 million due to the significance of the design integration, the number of Kopin systems per vehicle and the volume demand projections.

同樣在 4 月，我們宣佈為裝甲車項目提供 440 萬美元的 PPAP 獎勵。對於那些不知道的人，PPAP 代表生產零件批准程序。這通常是投入生產之前的過程，我們預計這將在今年年底發生。由於設計集成的重要性、每輛車的 Kopin 系統數量和需求量預測，該計劃對 Kopin 來說是一個重要的機會，其生命週期總收入可能超過 1 億美元。

The PPAP certification also provides the pedigree necessary for Kopin to compete in other armored and mainstream consumer automotive applications and solutions. We have previously discussed that Kopin is a leader in providing display and optical subassemblies and head-mounted industrial wearables and 3D automated optical inspection markets. The semiconductor demand cycle is signaling that demand has reached its lowest point, which is cyclically when 3D AOI markets tend to increase spend. We are starting to see those signals now.

PPAP 認證還提供了 Kopin 在其他裝甲和主流消費汽車應用和解決方案中競爭所必需的血統。我們之前討論過，Kopin 是提供顯示器和光學子組件以及頭戴式工業可穿戴設備和 3D 自動光學檢測市場的領導者。半導體需求週期表明需求已達到最低點，這是周期性的，此時 3D AOI 市場往往會增加支出。我們現在開始看到這些信號。

Now a market that we have not discussed much that Kopin supports currently is the military training and simulation market, which is served by our NVIS division. We are seeing strong demand signals as training precedes deployment and are working with several repeat and new customers, who look to support the issues in Europe. And I previously mentioned that we are entering the medical field.

現在我們沒有討論太多的市場是 Kopin 目前支持的軍事訓練和模擬市場，這是由我們的 NVIS 部門服務的。我們看到了強烈的需求信號，因為培訓先於部署，並且正在與一些希望支持歐洲問題的老客戶和新客戶合作。我之前提到我們正在進入醫療領域。

As an update, we have begun recently demonstrating a head-mounted display system used by surgeons so they can zoom into a specific area while performing a surgery. The initial feedback has been very strong, and the final production of this product is brilliantly designed.

作為更新，我們最近開始展示外科醫生使用的頭戴式顯示系統，以便他們在進行手術時可以放大特定區域。最初的反饋非常強烈，該產品的最終產品設計精良。

Turning to another strategic initiative, the Integrated Visual Augmentation System, otherwise known as IVAS, is the United States DOD program to provide soldiers with an augmented reality headset, which provides a wide variety of capabilities to soldiers. The current IVAS program funding is $2.5 billion with long-term plans for $21 billion. There have been several delays in the program, which provides a real opportunity for Kopin to intersect this program.

轉向另一個戰略計劃，集成視覺增強系統，也稱為 IVAS，是美國國防部為士兵提供增強現實耳機的計劃，它為士兵提供了多種功能。目前的 IVAS 計劃資金為 25 億美元，長期計劃為 210 億美元。該計劃有幾次延期，這為 Kopin 提供了一個真正的機會來交叉這個計劃。

If you look at the IVAS head-mounted display, in essence and essentially, it's a head-mounted display weapon sight where we have the significant expertise and pedigree to serve this market. The IVAS opportunity is significant in this program, so success here would be monumental for the company.

如果你看一下 IVAS 頭戴式顯示器，從本質上講，它是一種頭戴式顯示武器瞄準器，我們擁有豐富的專業知識和血統來服務這個市場。 IVAS 機會在這個項目中意義重大，因此這裡的成功對公司來說將是巨大的。

Now I have discussed on recent contract wins. Our strong existing -- our positive book-to-bill in Q1, the indications of a positive book-to-bill in Q2 and our expense rationalization, all of which are providing our positive momentum, but to meet our strategic goal of exiting 2023, at cash flow breakeven and become operating income profitable in 2022. We need an organization structure that can execute.

現在我已經討論了最近贏得的合同。我們強大的現有實力——我們在第一季度的正面訂單出貨比、第二季度正面訂單出貨比的跡像以及我們的費用合理化，所有這些都為我們提供了積極的勢頭，但要實現我們 2023 年退出的戰略目標，現金流量盈虧平衡，並在 2022 年實現營業收入盈利。我們需要一個可以執行的組織結構。

Now to this end, we continue to invest in our people. We've implemented outreach programs to our existing employees to understand impediments to them being productive. And we have established teams to solve specific issues and these teams are comprised of all levels of the organization rather than a solution from above.

現在為此，我們繼續投資於我們的員工。我們對現有員工實施了外展計劃，以了解阻礙他們提高工作效率的障礙。我們已經建立了解決特定問題的團隊，這些團隊由組織的各個級別組成，而不是來自上面的解決方案。

We've also recruited top professionals in program management, quality control and business development. We've instituted a quality and action program, which allows everyone to suggest and be rewarded for quality, cost and efficiency improvements. We feel very good about our team, our products and our customer base.

我們還招聘了項目管理、質量控制和業務開發方面的頂尖專業人員。我們制定了質量和行動計劃，讓每個人都可以提出建議並因質量、成本和效率改進而獲得獎勵。我們對我們的團隊、我們的產品和我們的客戶群感覺非常好。

With our recent equity offering, we believe we have sufficient cash to make the necessary quality and personnel investments required for our transformation and execute on our strategic initiatives.

通過我們最近的股權發行，我們相信我們有足夠的現金來進行轉型和執行我們的戰略計劃所需的必要質量和人員投資。

I'll now turn the call over to our CFO, Rich Sneider, to review our results in further detail. Rich, over to you.

我現在將電話轉給我們的首席財務官 Rich Sneider，以進一步詳細審查我們的結果。有錢，交給你了。

Thank you, Michael. Turning to our financial results. Product revenues for the first quarter ended April 1, 2023, were $7.7 million compared with $6.5 million for the first quarter ended March 26, 2022, a 17.6% increase year-over-year. The increase in product revenue was driven by a $1.7 million or 35% increase in defense revenues over the prior year, which was partially offset by a $605,000 or a 39% decrease in industrial revenues over the prior year.

謝謝你，邁克爾。轉向我們的財務業績。截至 2023 年 4 月 1 日的第一季度產品收入為 770 萬美元，而截至 2022 年 3 月 26 日的第一季度為 650 萬美元，同比增長 17.6%。產品收入的增長是由國防收入比上一年增加 170 萬美元或 35% 推動的，這被工業收入比上一年減少 605,000 美元或 39% 部分抵消。

Funded research and development revenues were $2.9 million for the first quarter of '23 compared with $4.9 million for the first quarter of 2022, a 41% decline. Included in the funded R&D revenues for the first quarter of 2023 is $400,000 of R&D revenue related to an OLED development program.

23 年第一季度的資助研發收入為 290 萬美元，而 2022 年第一季度為 490 萬美元，下降了 41%。 2023 年第一季度的資助研發收入中包括與 OLED 開發計劃相關的 400,000 美元研發收入。

Any future work on this program will be done by Lightning Silicon. The decline in funded research development revenues is primarily due to certain defense programs moving into production.

該計劃的任何未來工作都將由 Lightning Silicon 完成。受資助的研究開發收入下降主要是由於某些國防項目投入生產。

Total revenues for Q1 '23 were $10.8 million versus $11.6 million for the prior year, a 7% decline year-over-year. Cost of goods sold for the first quarter of 23 was $6.6 million or 87% of product revenues compared with $7.8 million or 120% for the first quarter of last year. The decrease in cost of product revenues as a percent of net product revenues as compared to prior years was primarily due to reduced material costs for warranty issues as well as the usage of material that was previously written off.

23 年第一季度的總收入為 1080 萬美元，而去年同期為 1160 萬美元，同比下降 7%。 23 年第一季度的商品銷售成本為 660 萬美元，佔產品收入的 87%，而去年第一季度為 780 萬美元，佔產品收入的 120%。與前幾年相比，產品收入成本佔產品淨收入百分比的下降主要是由於保修問題的材料成本降低以及之前註銷的材料的使用。

R&D expenses in the first quarter of '23 were $2.3 million compared with $5.4 million during the first quarter of 2022. Funded R&D expense for Q1 '23 was $1.6 million as compared to $3.4 million for Q1 2022. The decrease in expense was a result of certain programs moving into production. Internal R&D expense for Q1 '23 was $672,000 as compared to $2 million for the first quarter of 2022.

23 年第一季度的研發費用為 230 萬美元，而 2022 年第一季度為 540 萬美元。23 年第一季度的資助研發費用為 160 萬美元，而 2022 年第一季度為 340 萬美元。費用減少的原因是某些程序正在投入生產。 23 年第一季度的內部研發費用為 672,000 美元，而 2022 年第一季度為 200 萬美元。

As we previously announced, our former CFO, excuse me, our former CEO and approximately 20 employees started a new company to develop high-resolution displays with Asian partners. These individuals were primarily involved with R&D projects and the termination of these products is the primary reason for the decrease in internal R&D. Included in internal R&D in Q1 of '23 was $195,000 related to the development of activities these folks are now working on.

正如我們之前宣布的那樣，我們的前任首席財務官，打擾一下，我們的前任首席執行官和大約 20 名員工成立了一家新公司，與亞洲合作夥伴一起開發高分辨率顯示器。這些人主要參與研發項目，這些產品的終止是內部研發減少的主要原因。在 23 年第一季度的內部研發中，有 195,000 美元與這些人目前正在進行的活動的開發相關。

SG&A expenses were $4.6 million in the first quarter of 2023 compared to $4.5 million in the first quarter of 2022. SG&A increased for the 3 months ended April '23 as compared to 3 months ended March 26, '22, primarily due to an increase in professional fees, which were partially offset by lower compensation, employee benefits and stock-based compensation. Included in this quarter's SG&A is $495,000 of reserves for receivables from terminated R&D projects.

2023 年第一季度的 SG&A 費用為 460 萬美元，而 2022 年第一季度為 450 萬美元。截至 2023 年 4 月的 3 個月，與截至 22 年 3 月 26 日的 3 個月相比，SG&A 有所增加，這主要是由於專業費用，這部分被較低的薪酬、員工福利和股票薪酬所抵消。本季度的 SG&A 中包括 495,000 美元的準備金，用於終止研發項目的應收賬款。

Other expense was approximately $237,000 in the first quarter of 2023 compared with income of $4.7 million in the first quarter of 2022. In the first quarter of 2023, we recorded foreign currency gains of less than $100,000. During the 3 months ended March 26, 2022, we recorded a $4.7 million gain on an equity investment due to an observable price movement.

2023 年第一季度的其他費用約為 237,000 美元，而 2022 年第一季度的收入為 470 萬美元。2023 年第一季度，我們錄得的外匯收益不到 100,000 美元。在截至 2022 年 3 月 26 日的 3 個月內，由於可觀察到的價格變動，我們在股權投資中獲得了 470 萬美元的收益。

Turning to the bottom line. The net loss attributed to Kopin during the first quarter was approximately $2.6 million or $0.03 per share compared with $1.4 million or $0.02 per share for the first quarter of 2022. Net cash used in operating activities for the 3 months ended April 21 was approximately $4.2 million. Kopin's cash and marketable securities was approximately $29.6 million at April 1, 2023 as compared to $26.3 million at March 26, 2022.

轉向底線。第一季度歸因於 Kopin 的淨虧損約為 260 萬美元或每股 0.03 美元，而 2022 年第一季度為 140 萬美元或每股 0.02 美元。截至 4 月 21 日的三個月，用於經營活動的淨現金約為 420 萬美元.截至 2023 年 4 月 1 日，Kopin 的現金和有價證券約為 2960 萬美元，而 2022 年 3 月 26 日為 2630 萬美元。

During the first 3 months of the year, we had a capital raise where we sold 17 million shares of common stock and issued prefunded warrants for another 6 million shares. The net proceeds were approximately $21.5 million. We have no long-term debt. The amounts discussed above are based on our current estimates and listeners should review our Form 10-Q for the quarter ended April 1, 2023, for any possible changes and of course, any additional filings and disclosures.

今年前 3 個月，我們進行了一次融資，出售了 1700 萬股普通股，並發行了另外 600 萬股預注資認股權證。所得款項淨額約為 2150 萬美元。我們沒有長期債務。上面討論的金額是基於我們目前的估計，聽眾應該查看我們截至 2023 年 4 月 1 日的季度的 10-Q 表格，了解任何可能的變化，當然還有任何額外的備案和披露。

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

有了這個，我會把電話轉回邁克爾。

Thanks a lot, Rich. Our focus continues to be strengthening the order book, achieving higher on-time and full cost controls and making the strategic investments in products and people, which, in the aggregate, will improve our cash flow and get us to profitability.

非常感謝，里奇。我們的重點仍然是加強訂單，實現更高的準時率和全面的成本控制，並對產品和人員進行戰略投資，總的來說，這將改善我們的現金流並使我們實現盈利。

Now lastly, and yet most importantly, we are fortunate to have world-leading and market-making customers who are supporting Kopin during this transformation. Doing our quality improvements over the past several quarters, additional executive management focus on strategic customer relationships and additional experienced business development and program managers, we're now being invited into larger design opportunities that will allow Kopin to move up the value chain within our customers' applications, solving more of their technical challenges and increasing Kopin's content in these designs.

現在最後但也是最重要的是，我們很幸運擁有世界領先的做市商客戶，他們在這一轉型過程中支持 Kopin。通過過去幾個季度的質量改進、更多的執行管理人員專注於戰略客戶關係以及更多經驗豐富的業務開發和項目經理，我們現在被邀請參與更大的設計機會，這將使 Kopin 在我們的客戶中提升價值鏈' 應用程序，解決了他們更多的技術挑戰，並增加了 Kopin 在這些設計中的內容。

I'd like to thank you and everyone today for your time and for showing interest in Kopin, I'd like to thank our employees and stakeholders for their hard work this past quarter and their dedication. With this continued work of our team at Kopin, I think we can achieve great things and grow the business to new heights.

我要感謝你和今天的每一個人抽出時間對 Kopin 表現出興趣，我要感謝我們的員工和利益相關者在過去一個季度的辛勤工作和奉獻精神。通過我們在 Kopin 的團隊的持續努力，我認為我們可以取得偉大的成就並將業務發展到新的高度。

And with that, operator, we'd like to take a few questions, and we'll turn it over to you.

有了這個，接線員，我們想問幾個問題，我們會把它交給你。

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

（操作員說明）我們的第一個問題來自 Ladenburg Thalmann 的 Glenn Mattson。

Congrats on the results. Curious, Michael, you talked about -- congratulations also on the armored vehicle order that you referenced in the call and that was announced about a couple of weeks ago. You talked about that being a potential $100 million opportunity. Can you just kind of help everyone get around -- get their hands around, how you get to that number and just to get a sense of like how that would ramp and also what hurdles still need to be cleared before that goes into kind of full production?

祝賀結果。好奇，邁克爾，你談到了——也祝賀你在電話中提到的裝甲車訂單，這是大約幾週前宣布的。你談到這是一個潛在的 1 億美元的機會。你能不能幫助每個人四處走動——讓他們動手，你是如何達到這個數字的，只是想了解一下這將如何增加，以及在進入全面發展之前仍然需要清除哪些障礙生產？

Sure. Great question. So that program is a pivotal one for us. First things first, we need to go through the PPAP process, which is a quality audit of our design. We feel very confident in that. We're working with our customer in that process today that will last the vast majority of this year.

當然。很好的問題。所以這個項目對我們來說是一個關鍵的項目。首先，我們需要通過 PPAP 流程，這是對我們設計的質量審核。我們對此非常有信心。我們今天正在與我們的客戶合作，這個過程將持續今年的大部分時間。

Now the second part or the first part of your question is how do we get our heads around the volume and the resales. So I have to be a bit careful because some of this is what I would consider a controlled, unclassified information or even classified. But in terms of our content of that design, it's fairly significant. And in terms of the resale of that device that we're selling into the program, it's in the tens of thousands of dollars because of the level of integration.

現在，您問題的第二部分或第一部分是我們如何了解銷量和轉售。所以我必須要小心一點，因為其中一些是我認為受控的、未分類的信息，甚至是分類信息。但就我們設計的內容而言，它相當重要。就我們在該計劃中銷售的設備的轉售而言，由於集成水平，它的價格為數万美元。

There are several products that go into each vehicle and also a training module that also gets sold with each vehicle or each upgrade. So there are several of these products that go into each vehicle. We believe that there's going to be roughly a few thousand vehicles that get upgraded as well as new vehicle production.

每輛車都有幾種產品，還有一個培訓模塊也隨每輛車或每次升級一起出售。因此，每輛車都有幾種這樣的產品。我們相信大約會有幾千輛汽車得到升級以及新車的生產。

So if you do those maths, it breaks out to the period of performance coming in over $100 million in revenue over the course of a 5- to 7-year program. So that's the math behind it. I know I'm being a little bit cautious in my wording, but that's trying to give you the best clarity I can around a very sensitive program, right now.

因此，如果您進行這些計算，就會發現在 5 到 7 年的項目過程中，績效收入超過 1 億美元。這就是它背後的數學原理。我知道我的措辭有點謹慎，但我現在正努力讓你盡可能清楚地了解一個非常敏感的計劃。

Yes. And next topic is the -- you talked about the soon-to-be released microLED. Can you give us a sense of the timing or just some color around that? And then also how significant that could be over the medium and longer term, I guess.

是的。下一個主題是——您談到了即將發布的 microLED。你能給我們一個時間感或只是一些顏色嗎？我猜，從中長期來看，這還有多重要。

You bet. So our lead customer is testing it now. We're seeing tremendous technical achievements out of this product. So I would say we'll be announcing the technicals very shortly. I would expect either in this quarter or next in terms of our performance levels of that product outside of our customer, obviously, their program is classified. So we'll be making sure that we work with them so that they're comfortable with it.

你打賭。所以我們的主要客戶現在正在測試它。我們看到該產品取得了巨大的技術成就。所以我想說我們很快就會公佈技術。我希望在本季度或下一個季度，就我們客戶以外的產品的性能水平而言，顯然，他們的程序是機密的。因此，我們將確保與他們合作，讓他們對此感到滿意。

Secondly, that program in microLED is very sought after, mainly from consumer applications. We're seeing a significant amount of demand pull for new or old designs to be redesigned for either the AR/VR consumer metaverse and/or medical applications where brightness along with waveguides is required. Even at the best OLED brightness, it's just not bright enough to use what we think is a decent wave guide or light guide.

其次，microLED 中的程序非常受追捧，主要來自消費應用。我們看到對新舊設計的大量需求拉動，需要重新設計以用於需要亮度和波導的 AR/VR 消費者元宇宙和/或醫療應用。即使在最好的 OLED 亮度下，它也不夠亮，無法使用我們認為合適的波導或光導。

So we're seeing a lot of demand pull for that product line in microLED because of the brightness performance and contrast performance that it operates in. So we have high expectations for that product line in 2024 for new design activity and certainly, I would say, decent revenue and beyond that. So it's a great product for us. We're seeing sustainable and absolutely fantastic performance results out of it currently.

因此，由於 microLED 的亮度性能和對比度性能，我們看到對該產品線的大量需求拉動。因此，我們對該產品線在 2024 年的新設計活動寄予厚望，當然，我會說，可觀的收入等等。所以這對我們來說是一個很棒的產品。我們目前看到了可持續且絕對出色的性能結果。

Great. That's helpful. Also, and just one for me on the model. So the solid gross margin in the quarter but you still have, from what I understand, kind of retooling the facility in Massachusetts. So is there -- can you give us maybe -- I don't know if Rich is but if you get a sense of once that facility has been completed and retooled or whatever, is this level sustainable? Should we expect a little better? Just kind of some framework around that.

偉大的。這很有幫助。此外，只有一個給我的模型。因此，本季度的毛利率很高，但據我所知，你仍然需要對馬薩諸塞州的工廠進行重組。那麼有沒有——你能不能給我們——我不知道 Rich 是否是，但如果你對設施完成和重組或其他什麼有所了解，這個水平是否可持續？我們應該期待好一點嗎？只是圍繞它的一些框架。

Yes. So I'll give you my answer and then Rich can give you his and see what's the same. I'm very optimistic. I think we know now where the issues are and how to improve our quality in the fab. And I think the tools that we're receiving very shortly here and will implement in the fab are definitely going to help. We've been working with 2 of our best customers who have actually been tremendous to work with. We've been working with them to make sure that we learn from them, and they help us, guide us in developing the next-generation technologies in a fab that is going to be able to support it.

是的。所以我會給你我的答案，然後 Rich 可以給你他的答案，看看有什麼相同之處。我很樂觀。我想我們現在知道問題出在哪里以及如何提高工廠的質量。而且我認為我們很快就會在這裡收到並將在晶圓廠實施的工具肯定會有所幫助。我們一直在與 2 位最好的客戶合作，他們的合作非常愉快。我們一直在與他們合作，以確保我們向他們學習，他們幫助我們，指導我們在能夠支持它的工廠中開發下一代技術。

So Glenn, there's 2 parts to that question. One is doing better work than we are currently on the products that we have, right? The second part is doing better and being able to support the new products that we're bringing in. So that's the second part or the other side of the coin. And I do believe that new equipment that we're installing this quarter is going to pay dividends. So I believe our margin improvements will continue. I think there's another 5 to 10 basis points of improvement that I'm targeting this year, and I think that's very achievable.

格倫，這個問題分為兩個部分。一個是比我們目前在我們擁有的產品上做得更好，對吧？第二部分是做得更好，能夠支持我們推出的新產品。所以這是第二部分或硬幣的另一面。我確實相信我們本季度安裝的新設備將會帶來回報。所以我相信我們的利潤率會繼續提高。我認為我今年的目標是再提高 5 到 10 個基點，而且我認為這是可以實現的。

(Operator Instructions)

（操作員說明）

Just one other comment to Glenn's question. I think it's important to note, and I don't think I mentioned it is that in the quarter, we did see some professional fees continue to fall. I think they'll continue to fall in terms of SG&A as well as some of the runoff on severances that we have in the quarter as well as some of the costs that we were still incurring in Q1 for the spin-out of Lightning Silicon. So I do believe you'll see other cost improvements in Q2 that were not in Q1. There were some residuals in Q1, Glenn. So I would expect to see those wash through and out of Q2.

只是對格倫問題的另一條評論。我認為值得注意的是，我認為我沒有提到，在本季度，我們確實看到一些專業費用繼續下降。我認為他們將繼續下降 SG&A 以及我們在本季度的一些遣散費以及我們在第一季度為 Lightning Silicon 的分拆而產生的一些成本。所以我相信你會在第二季度看到第一季度沒有的其他成本改進。 Q1 中有一些殘差，格倫。所以我希望看到那些在第二季度徹底消失。

And a question now comes from Kevin Dede from H.C. Wainwright.

現在來自 H.C. 的 Kevin Dede 提出了一個問題。溫賴特。

This is actually [Michael Donovan] calling on behalf of Kevin Dede. And Michael, you kind of touched upon these, but can you talk a bit more about emerging market opportunities such as health care applications and how we should think about Lightning Silicon going forward for 2023?

這實際上是 [Michael Donovan] 代表 Kevin Dede 打電話。邁克爾，你有點談到了這些，但你能多談談新興市場機會，比如醫療保健應用，以及我們應該如何考慮 Lightning Silicon 在 2023 年的發展嗎？

Sure. It's exciting times. Yes. Today, I get the question right. Could you repeat it one more time, actually. There was some interference.

當然。這是激動人心的時刻。是的。今天，我答對了這個問題。實際上，你能再重複一遍嗎？有一些干擾。

No problem. Can you talk a bit more about emerging market opportunities such as health care applications. And also, about Lightning Silicon and how we should think about these for the remainder of 2023?

沒問題。您能否多談談新興市場機會，例如醫療保健應用。還有，關於 Lightning Silicon 以及在 2023 年剩餘時間內我們應該如何考慮這些？

Sure. So first part, we're very excited about the demonstration that we provided recently. We're going to have, I think, a customer success story around -- it's a firm called HMDmd. We've been working with them for well over a year on developing a surgical apparatus of visualization, a 3D visualization of a surgery. I just received the new mockup of the final product, and it's brilliant. It's absolutely spectacular.

當然。所以第一部分，我們對最近提供的演示感到非常興奮。我認為，我們將有一個客戶成功案例——這是一家名為 HMDmd 的公司。一年多來，我們一直在與他們合作開發可視化手術設備，一種手術的 3D 可視化。我剛剛收到最終產品的新模型，非常棒。這絕對是壯觀的。

So we're very excited about that market. The customer is seeing tremendous demand pull for that technology, and it's now emerging out of R&D. And our team down at [Envis] actually was the one that designed it, so kudos to them. They did a fantastic job and we see a good runway of opportunity in 2024. It's going to take a solid 9 to 12 months for them to generate revenue, but we think the revenue is going to be exciting because, again, Kopin doesn't just provide the displays. We provide the entire assembly, including the molded assembly, the optics, the LCDs and displays as well as the overall assembly.

所以我們對這個市場感到非常興奮。客戶看到對該技術的巨大需求拉動，並且它現在正在從研發中脫穎而出。我們在 [Envis] 的團隊實際上是設計它的團隊，所以對他們表示敬意。他們做得非常出色，我們在 2024 年看到了一個很好的機會跑道。他們需要 9 到 12 個月的時間才能產生收入，但我們認為收入會令人興奮，因為 Kopin 不會只需提供顯示器。我們提供整個組件，包括模製組件、光學器件、LCD 和顯示器以及整體組件。

So instead of selling one display at a few hundreds of dollars, we're selling the entire module to HMDmd for thousands. So that's the business model moving forward that we're excited about, and it seems to be affirmed in the medical market, and that's just one of our customers that we think will be going to market in 2023 and 2024.

因此，我們不是以幾百美元的價格出售一個顯示器，而是以數千美元的價格將整個模塊出售給 HMDmd。這就是我們感到興奮的向前發展的商業模式，它似乎在醫療市場得到了肯定，這只是我們認為將在 2023 年和 2024 年上市的客戶之一。

So great market, it's emerging, still somewhat nascent because the demand is there, but the products aren't and we're racing to get those products to market. So that's number one. Number two, in terms of legging silicon, our relationship with the foundries, and I mentioned this, I think, in Q3, my first call with you folks is that we're developing a fab-light strategy here. My view is that we need to have a consumer fab strategy, and that would be our friends at Lightning Silicon, who are there to invest in taking OLED devices from 8-inch wafers to 12-inch wafers.

如此巨大的市場，它正在興起，仍然有些新生，因為需求在那裡，但產品卻沒有，我們正在競相將這些產品推向市場。所以這是第一。第二，就腿部矽而言，我們與代工廠的關係，我提到過這一點，我想，在第三季度，我與你們的第一個電話是我們正在這裡制定一個 fab-light 戰略。我的觀點是，我們需要有一個消費者晶圓廠戰略，這將是我們在 Lightning Silicon 的朋友，他們在那裡投資將 OLED 設備從 8 英寸晶圓轉移到 12 英寸晶圓。

The reason that's important is cost and also volume. Right now, the market is gated by cost and volume at an 8-inch wafer foundry perspective. Lightning Silicon is there to invest in those 12-inch wafer designs. They are complete redesigns of 8-inch material, and that's going to unlock the AR/VR Metaverse consumer type of marketplace. So we'll still have access to that, they're our partner for consumer.

重要的原因是成本和體積。目前，從 8 英寸晶圓代工廠的角度來看，市場受到成本和數量的限制。 Lightning Silicon 在那裡投資於那些 12 英寸晶圓設計。它們是對 8 英寸材料的完全重新設計，這將開啟 AR/VR Metaverse 消費者類型的市場。所以我們仍然可以訪問它，他們是我們的消費者合作夥伴。

Now that begs the question around defense and industrial. We have a strategy for that. I'm not ready to announce that strategy today, but look for more from us on a U.S. Pacific DOD NATO strategy for our defense customers moving forward. So it's a two-pronged strategy, one for consumer, which is Lightning Silicon and the 12-inch wafer foundry, that they're going to be developing on their own nickel, and we own 20% of that company.

現在這就引出了圍繞國防和工業的問題。我們有一個戰略。我今天還沒有準備好宣布該戰略，但希望我們能為我們的國防客戶提供更多關於美國太平洋國防部北約戰略的信息。所以這是一個雙管齊下的戰略，一個針對消費者，即 Lightning Silicon 和 12 英寸晶圓代工廠，他們將使用自己的鎳進行開發，我們擁有該公司 20% 的股份。

We also will receive royalties for anything that they sell into their markets that use our technology and will receive royalties back and also IP back from Lightning Silicon as they develop on 12-inch wafers, which is a tremendous opportunity for us to not incur the research and development dollars, which will be significant, but still reap the rewards of having access to a 12-inch foundry in China. So great strategy move for us. And then we have our U.S. DOD NATO defense strategy, which we'll be sharing with you folks in the coming weeks to months.

我們還將從他們銷售到他們市場的任何使用我們技術的產品中收取版稅，並將在他們開發 12 英寸晶圓時從 Lightning Silicon 收回版稅和知識產權，這對我們來說是一個巨大的機會，可以不進行研究和開發資金，這將是重要的，但仍然可以獲得在中國使用 12 英寸晶圓代工廠的回報。對我們來說如此偉大的戰略舉措。然後我們有我們的美國國防部北約防禦戰略，我們將在未來幾周到幾個月內與大家分享。

And this concludes our question-and-answer session. I would like to turn the conference back over to Michael Murray, CEO, for any closing remarks.

我們的問答環節到此結束。我想將會議轉回給首席執行官邁克爾默里，聽取任何閉幕詞。

Thank you very much, operator. I think this quarter is and will become a trend. I think we have a great order book moving forward into Q2, which will be sequential for the company. I see that trend continuing for the remainder of the year. We have tremendous customers that are partnering with Kopin and want us to succeed with them, and they're preparing us for future success.

非常感謝你，接線員。我認為本季度已經並將成為一種趨勢。我認為我們有一個很好的訂單進入第二季度，這對公司來說是連續的。我認為這種趨勢將在今年餘下的時間裡持續下去。我們有大量的客戶與 Kopin 合作，希望我們與他們一起取得成功，他們正在為我們未來的成功做好準備。

We look forward to working with our customers, our stakeholders, our investors and the family that we're building here at Kopin. Thank you very much for attending. I appreciate it, and we'll talk to you in Q2. Thank you very much.

我們期待與我們的客戶、我們的利益相關者、我們的投資者以及我們在 Kopin 建立的家庭合作。非常感謝您的出席。我很感激，我們將在第二季度與您交談。非常感謝。

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

會議現已結束。感謝您參加今天的演講。您現在可以斷開連接。