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SidotiConference2019
FORWARD LOOKING STATEMENTS AND RISK FACTORS
• This presentation includes forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995. These statements relate to our expected future financial and operating performance, growth in the markets in which our products are sold, our market share for our products, and our significant customers. We may use words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “could,” “seeks,” “estimates,” and variations of such words and similar expressions in identifying forward-looking statements. In addition, any statements that refer to expectations, projections, our stock value multiple, the value of head-worn computing or our products, or other characterizations of future events or circumstances, are forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict. Actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements, whether as a result of new information, future events or otherwise.
• The following factors, among others, could cause actual results to differ materially from those set forth in this presentation:
– Our ability to continue as a going concern, as noted in the report from our independent registered public accounting firm on our financial statements as of and for the fiscal year ended December 29, 2018
– The market segment for our Wearable products may not develop or may take longer to develop than we anticipate, which may impact our ability to grow revenues.
– Our revenues and cash flows could be negatively affected if sales of our Display products for military applications significantly decline.
– Our ability to manufacture and distribute our Display products would be severely limited if the foundries that we rely on to manufacture integrated circuits for our Display products fail to provide those services.
– We depend on third parties to provide integrated circuit chip sets and critical raw materials for use with our headset systems and components and we periodically receive “end of life” notices from suppliers that they will no longer be providing a raw material.
– The markets in which we operate are highly competitive and rapidly changing and we may be unable to compete successfully. There are a number of companies that develop or may develop products that compete in our targeted markets.
– Disruptions of our production of our Display products would adversely affect our operating results.
– A disruption to our information technology systems could significantly impact our operations revenue and profitability.
– Our headset systems are dependent on software that we have limited experience in developing, marketing or licensing.
– Our headset systems use software that we license from other companies ("Licensors") and require us to access the Licensor's data centers, and interruptions or delays in service from data center hosting facilities could impair our customer's products.
– We may not be successful in protecting our intellectual property and proprietary rights and we may incur substantial costs in defending our intellectual property.
– Our customers who purchase display products for military applications typically incorporate our products into their products that are sold to the U.S. government under contracts. U.S. government contracts generally are not fully funded at inception and may be terminated or modified prior to completion, which could adversely affect our business.
– Most of our military sales are on a fixed-price basis, which could subject us to losses if there are cost overruns.
– We generally do not have long-term contracts with our customers, which makes forecasting our revenues and operating results difficult.
– A decline in the U.S. government defense budget, changes in spending or budgetary priorities, prolonged U.S. government shutdown or delays in contract awards may significantly and adversely affect our future revenues, cash flow and financial results.
• A more complete description of these risks and uncertainties can be found in the filings of the Company with the U.S. Securities and Exchange Commission, including in the Company’s Annual Report on Form 10-K for the fiscal year ended December 29, 2018. We undertake no obligation to update any of these forward-looking statements to reflect actual results, new information or future events, changes in assumptions or changes in other factors affecting forward-looking statements, except to the extent required by applicable law. If we update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forwarding-looking statements.
2
INVESTMENT HIGHLIGHTS
3*Source: Gartner Research
Leading Provider of Wearable Technologies, Solutions and Components for
Consumer, Enterprise/Industrial and Military Markets
At Inflection point for growth in the Consumer and Enterprise Wearables
Market with Underlying Growth in the Military/Industrial Markets
Tier 1 Customers and Partnerships
Rich IP Portfolio
• Comprehensive portfolio of micro-display technologies (LCD, LCOS and OLED)
• Leading portfolio of complete wearable headset solutions
• Whisper® speech enhancement technology
• Differentiated, patented technologies available for broad commercialization
• No.1 micro-display player in Military and Industrial verticals with sustainable growth from strong balance of
R&D and production programs
• Wearables market is at a growth inflection point with over $24 billion TAM in 2017 and projected to grow to
over $84 billion in 2022*
• Customers: Google, Lenovo, Lockheed Martin, Raytheon, Rockwell Collins, 3M Scott
• Strategic Partnership: BOE, Goertek
• 300 patents and patent applications world wide with focus on wearable IP and critical components enabling
wearable solutions
MOBILE VR, AR AND WEARABLE HEADSET TECHNOLOGY : KOPIN’s 30 Year Quest
4
1990 1995 2000 2005 2010 2015
Kopin
Transmissive Display
Golden-i Headset
Computer
Video Eyewear
Electronic
Viewfinder
Mono SXGA
0.97”
Funding for
microdisplays
Mono QVGA
0.24”
Electronic
Viewfinder
Color VGA
0.44”Night Vision
Goggle
Thermal Weapon
Sights
Forte Virtual
Reality
Lightning OLED
Solos
Smart Glasses
Shipped over 35M Displays
Golden-I Infinity
2018
KOPIN TODAY - INTELLECTUAL PROPERTY PORTFOLIO
• More than 300 patents and pending
• Most of the patents are related to wearables
• Licensed IP to some companies• Royalties
• Component sales
• Equity stake
5
6
KOPIN TODAY- WEARABLE PRODUCT PORTFOLIO
Ultra-smallDisplays
Modules with Innovative Optics
Speech Enhancement
System Reference Designs
Consumer Military
PRODUCTS OVERVIEW: CUSTOMER PORTFOLIO
7
Enterprise
WEARABLES: GROWTH OPPORTUNITIES
Wearables TAM ($B)
$24.8
$84.8
2017 2022
CAGR: 28%
Head-Mounted ($B) Hearables ($B)
$3.8
$25.3
2018 2022
CAGR:46%
$3.7
$23.7
2017 2022
CAGR: 45%
Wearables Market: $24.8B (2017) and projected to grow to $84.8B in 2022*
• Head-Mounted Displays: $3.7B TAM in 2017 and estimated $23.7B in 2022*
• Hearables: $3.8B TAM in 2017 and estimated to grow to $25.3B in 2022*
*Source: Gartner Research
Note: Total Wearables Market also includes smart clothing, smartwatches and wristbands
Kopin Target Markets
8
REVENUE DRIVERS - MILITARY
9
F-35 Strike Fighter Program – In Production
• Projects all mission information on helmet’s visor
‒ Airspeed, heading, altitude, targeting information and warnings
• Potential $100M revenue opportunity over the next 10 years
U.S. Army FWS Program
• FWS Individual (FWS-I) Selected by one of two prime contractors to provide the
eyepiece assemblies for the next generation of thermal sights – In Production
• FWS Crew Served (FWS-CS) Engineering and Development Contract awarded in 2016,
Prototype Testing into 2019, then production scheduled in 2020
• Two FWS Programs potential $150M Kopin revenue opportunity over the next 10 years
• TWS-International development, production in early 2020 is potential $100M Kopin
revenue opportunity over the next 10 years
Armored Vehicle – In Development
• First design win in armored vehicles
• Rollout $80M to $100M revenue opportunity over the next 10 years
• In development through 2020, then volume production
REVENUE DRIVERS – INDUSTRIAL & ENTERPRISE
10
Vuzix M300 Golden-i® Infinity
Realwear hmt-1® 3M Scott Sight®
Industrial, Enterprise & Pro-sumer
• Vuzix, Realwear, Lenovo New Vision, Others
• Golden-i Infinity
• 3-D metrology
• Kopin shipped approximately 30,000 units in 2018
Safety
• 3M Scott Safety Firemen Helmets – in production
• In development with Chinese & European Helmet
Manufacturers
REVENUE DRIVERS IN CONSUMERSTRATEGIC ALLIANCES IN AR AND VR
11
OLED
Kopin
BOE/Other
Goertek
Tier 1 Global Tech
Co.
• BOE is a China-based company engaged
in research, development, manufacture of
display products and components.
• We are currently working with a 2nd China-
based OLED technology developer and
display manufacturer.
• Goertek is a China-based global
technology company that designs and
manufactures a range of customer
electronic products.
• We are working with a Tier 1 Global
Technology Company who manufacturers
and sells a range of consumer electronic
products.
Friend/FOE
875m
230.63° 37 23.516 122 02.625
WHY DO CUSTOMERS CHOOSE KOPIN – WE SOLVE PROBLEMS LIKE THIS
Generic
Display Engine
Retrofit
Revised
Optics
+
GPS & Compass
=
Maintain fixed reticle
High Resolution
DVO always available
DVO stays on weapon
Retains boresight
Visual and Sensor Fusion
SWIR, Thermal, I2
Target ID
Rapid Targeting
> First shot accuracy
Active Target reticleWind & Range
12
AUGMENTED & VIRTUAL REALITY DISPLAY MODULES
13
Augmented Reality (AR)
• Transmissive AMLCDs for AR
‒ 0.20” – .97” diagonal
‒ QVGA – SXGA
• Backlights: Super-high brightness to compete with the sun, low power for
inside and outside use
• Optics: Compact designs -- everyone wants small and good looking
device – even in enterprise use
• Driver ASICs: small size, low power
Virtual Reality (VR)
• 2k by 2K OLED (Lightning™) for VR
‒ 1” diagonal
‒ 2048 x 2048 resolution (4 million pixels)
‒ 120 Hz with low power consumption,
‒ Pancake™ optics (< 20 mm thick) allows much smaller and thinner
mobile VR systems
KOPIN LCD (CYBERDISPLAY) FOR AR
Si IC LCD
LCD High Brightness for Out Door Applications
CyberDisplay
LensCyber Display
Virtual Image
14
KOPIN OLED (LIGHTNING™ 2K) FOR VR
15
• CES Innovation Award in January 2017
• OLED on Silicon Lightning™ Architecture provides the highest resolution, fastest speed, and lowest power
• Kopin has a unique, patented architecture (10 patents pending)
• Fabless manufacturing model for rapid volume ramp
• 3X pixels versus existing Mobile VR OLEDs for natural, smooth images without the screen door effect
Resolution 2048 x RGB x 2048
Color Dot Pitch 2.88 x 8.64 um
Image Diagonal 0.99 in
Pixel Density 2,940 pixels per inch
Frame Rate Up to 120 Hz
Video Input 25-pair mini-LVDS
Process 1.2V / 5V, 0.11 um
KOPIN OLED FOR VR
3X pixels versus
existing Mobile VR
OLEDs for natural,
smooth images without
the screen door effect
16
120 Hz Frame
Rate To Help
Avoid Motion
Artifacts That
Can Cause
Dizziness or
Nausea
60 Hz VR = Motion Blur Artifacts
120 Hz frame rate = No Motion Blur
17
LIGHTNING 2K OLED
18
Kopin, one that’s not only interesting but potentially
extremely pertinent to next generation VR hardware.
Seeing is believing here, and I quite literally could not see
anything resembling aliasing on the display even with a 10x
loupe to try and look more closely at the display
The Technology That May Drive The Next Generation of
Phones and Mobile Devices…the most advanced display I
saw came from Kopin, which showed a 1-inch OLED panel with
a 2048 by 2048 resolution and a 120 Hz frame rate
2048×2048 and a fast 120 Hz frame rate - firsts for the VR
industry and will raise the bar on performance… Latency is
also an astoundingly low 10 microseconds
Kopin Debuts Lightning OLED Microdisplay With 2k x 2k
Resolution for Mobile VR New High-Speed 4 Million Pixel
Display Wins CES Innovation Award for Mobile Virtual
Reality.
19
40
VR AND AR OPTICAL MODULES
60
Distance to Eye (MM)
20
Field of View
PRISM
PEARL
Augmented Reality and Virtual Reality – Matching Display and Optics
PUPIL
Virtual RealityPANCAKE
PANTILE80
100
19
KOPIN WHISPER CHIP: A DIFFERENT APPROACHTO AUDIO
Specifically designed for Wearables
• No distortion to voice signal – natural voice
• Adaptive voice detection – “listening” adjusts
to environmental noise level
• Lowest power – less than 12 mW
• Only 16MHz clock frequency
• Replaces CODEC – All digital
• “Configurable” for your device
• Digital microphone in (up to 4)
• Digital speaker out (2)
• Compact size (4x4 mm)
BU
S
I2S
to
external
audio to host
ARM
Cortex-M0
I2C UART
DSP
Co-Processor
4
Digital
MEMS Mic
Clock
Manager
GPIOPDM PWM
ROM RAM
Main clock
SPI
22
PLL
20
VOICE INTERFACE:– Kopin has developed the Whisper Chip™ that provides up to almost 2X
improvement in human-to-machine (H2M) automatic speech recognition (ASR) rates.
21
FINANCIAL HIGHLIGHTS
BALANCE SHEET HIGHLIGHTS
23
December 31, 2018
Cash and marketable securities 37.2(1)
A/R and inventory 7.9
Contract assets and unbilled AR 3.1
Other current assets 1.2
PP&E 2.9
Goodwill & intangibles 0.3
Other assets 7.2
Total assets 59.9
Current liabilities 10.4
Other 1.5
Equity 48.0 (1)
Total liabilities and equity 59.9
($ in millions)
(1) Does not reflect the equity raise of 7.2 million shares for net proceeds of $7.5 million
INCOME STATEMENT HIGHLIGHTS
24
2016 2017 2018
Revenue $22.6 $27.8 $24.5
Gross profit 3.3 6.8 3.4
R&D 16.0 18.9 17.4
SG&A 17.0 20.5 27.2
Other operating expense (income) (7.7) 0.6 3.6
Operating loss (20.5) (30.3) (39.7)
Non-operating income 0.5 2.0 4.2
Net loss (23.0) (25.4) (35.5)
Net loss per share (basic & diluted) $(0.37) $(0.36) $(0.49)
($ in millions, except per share amounts)
RECENT HIGHLIGHTS
• Endopodium to Develop High Resolution Wearable Displays for Medical and Surgical
Applications: develop and commercialize next generation of head mounted display
system (HMD) designed for advanced medical and surgical applications
• TrainingPeaks: Kopin teaming up with TrainingPeaks LLC., to support TrainingPeaks'
Structured Workouts.
• Agreement with JUTZE Intelligence Technology Co., Ltd. (JUTZE) : Kopin subsidiary
Forth Dimension Displays to provide displays for JUTZE Mirage series of 3D SPI
(Solder Paste Inspection) equipment.
• Agreement with Skully Technologies: SKULLY will incorporated Kopin’s WQVGA
Microdisplay and A230 driver IC in the SKULLY FENIX AR motorcycle helmet.
• 5,000 Units Shipment to Tier One Customer: The shipment of 5,000 display modules to
a Tier One US internet company for its soon-to-launch next generation augmented
reality (AR) smart glasses
• Kopin’s Golden-i Infinity Wearable Evaluation Program Commences: Approximately 100
Organizations Have Signed up to Pilot Test the Unique Smart Glass Platform that
combines Kopin’s industry leading display and Whisper® voice extraction technologies
to provide a smart screen that clips on to safety glasses, bump caps or hardhat.
25
INVESTMENT HIGHLIGHTS
26*Source: Gartner Research
Leading Provider of Wearable Technologies, Solutions and Components for
Consumer, Enterprise/Industrial and Military Markets
At Inflection point for growth in the Consumer and Enterprise Wearables
Market with Underlying Growth in the Military/Industrial Markets
Tier 1 Customers and Partnerships
Rich IP Portfolio
• Comprehensive portfolio of micro-display technologies (LCD, LCOS and OLED)
• Leading portfolio of complete wearable headset solutions
• Whisper® speech enhancement technology
• Differentiated, patented technologies available for broad commercialization
• No.1 micro-display player in Military and Industrial verticals with sustainable growth from strong balance of
R&D and production programs
• Wearables market is at a growth inflection point with over $24 billion TAM in 2017 and projected to grow to
over $84 billion in 2022*
• Customers: Google, Lenovo, Lockheed Martin, Raytheon, Rockwell Collins, 3M Scott
• Strategic Partnership: BOE, Goertek
• 300 patents and patent applications world wide with focus on wearable IP and critical components enabling
wearable solutions
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