Kopin (NASDAQ:KOPN) Q3 2020 Earnings Call

0:00 Corporation Third Quarter 2020 Earnings Call. As a reminder, today's conference is being recorded. At this time, I would like to turn the conference over to Richard Schneider, Chief Financial Officer. Please go ahead. Thank you, Andrea. Welcome, everyone, and thank you for joining us this morning. John will begin today's call with a discussion about the market environment that we see and our progress in actually our strategy to improve our sales activity and technology development. I will go through the third quarter results at a high level. John will conclude our prepared remarks, and then we'll have to take your questions. I would like to remind everyone that during today's call taking place on Tuesday, November 3rd, 2020, we will be making forward-looking statements as defined in the Privacy and Security Litigation Reform Act of 1995. These statements are based on expectations, projections, beliefs, and estimates, and are subject to a number of risks and uncertainties that could cause actual results and a challenge different from those forward-looking statements.

1:02 Good morning. Thank you for joining us to discuss Oxford's Better Results. I want to start by expressing our hope that you and your families continue to stay well and safe during this unprecedented time. Looking into our third quarter, we are very pleased with many aspects of our business.

1:55 Our current product sales are incredible. Our funded development program, ELA, has never been stronger. But we continue to make major improvements in our product cost and use while maintaining concise and fair control. In addition, we're making great strides in our next-generation design and display development. Our total revenue increased 55% compared to the first quarter of 2019, which represents the fifth-strict quarter of the double-digit U.S.-on-U.S.

2:49 top-line growth, excluding a one-time asset fair in February 2019. It has been a very good year for us so far. And we look forward to continue strong momentum through the fall quarter and into 2021. Leading our third quarter revenue growth was our strength in defense quarter revenues, which grew 140% year over year. Our two primary production programs are the F-35 fighter jet helmet and the FWSI program.

3:42 In September, we announced that we will award a $22.9 million follow-up for the FWSI thermal weapons site program. The deliveries through the third quarter of 2021. Including this week's order, we have received total orders today of approximately 33 million for this program. As discussed in the news release announced, announcing that Contract Wing, The FWFR program is a clip-on thermal record site that provides users with the ability to identify targets in the most extreme circumstances.

4:41 Clipping is the sole source on that contract, as it is in F35. We expect both programs to continue for many years into the future. Our funded development program revenues grow over 100% year-over-year, which is a clear indication of the strength of our future growth potential. These programs qualify our customers, including both product-specific developments as well as new advanced micro-display technology developments. In fact, Much of the new funder R&D growth is for advanced model display development.

5:35 We expect these development programs will further build on our current production systems in the coming years. We currently have over 10 different programs in various stages of development, which is the strongest lineup in our history. These defense programs include the use of our products in our vehicles, parking systems, rotary winged aircraft helmets, soldier weapons day scopes, and other programs. Three of these defense development programs are expected to start their production next year, adding to our two current production programs.

6:29 We also were excited to see growth coming from our enterprise customers who have incorporated our displays and modules into their AR products. The fourth remote and socially distanced approach to work driven by COVID-19 has shown the power of wireless technology and we've seen accelerated adoption and roll out of AR devices to enterprise workforce. With the enterprise market AR to continue to gain traction and to equal system infrastructure elements necessary for the enterprise market, such as 5G, will help to accelerate the mass market for consumer AR and VR production.

7:25 are already benefiting from the defense and enterprise adoption. We are ideally positioned to meet those demands of those markets with our broad line-up of micro-display products and module solutions, including both LCD and OLED micro-displays. It is important to emphasize here the importance of our module solutions. For micro-display to be used in practice, it must be offered in duct-feed fluid modules which consist of sophisticated optics and electronics within a sealed housing.

8:17 Coopering has deep experience in this area, and just why many customers turn to coping for their micro-displacement solutions. We're also excited about the technical facets, you know, food stacks, organic, like making dyes, We had the opportunity to highlight these OLED technical advances in a recent webinar sponsored by Insight Media, where we shared the results of our patent efforts to achieve industry-leading high-brightness OLED micro-displays. Especially in the second quarter, achieving high-brightness with low power consumption while maintaining color fidelity as their obstacle to create ARVI assets than we see with the silicon.

9:20 In the webinar, we describe our color 720p audio microchips that use 7,000 nits of brightness using much lower power than was previously needed to achieve this level of brightness. who also outlined a technical path to achieve even greater brightness as high as 30,000 nits for color OLED micro-displays in the coming years. It is important to note that the use of OLED micro-displays normally results in poor color performance due to color mixing of the individual OLED subjects rendering du-stack structures not practical for color displays.

10:16 We took on this challenge and introduced our ColorMix technology, which controls the color mixing among the pixels in our du-stack architecture. and ColorMax technology now enables a much wider color gamut of up to 115% as RGB, which is recognized as a very significant breakthrough. We believe our innovative approach is more than refactorable and cost-compatible. This is a huge achievement for all that microdistrict is, as an important step in opening up the market for extended use of AR and VR.

11:14 Our view of the market is that the long awaited adoption of AR and VR systems is finally beginning to come. As we've said, these systems are being adopted first in defense. are the industrial enterprise and customer applications. Almost all our defense programs are related to AR, VR applications. As VR and AR continue to play and gain traction in this new remote world, we feel we're very well-precision to meet this growing demand. and others.

11:59 In short, we are making great progress in executing our strategy and ensuring our performance. The market conditions are favorable. and they were well-positioned to capitalize. We are too poor to do not. We are very tired of our future. Finally, I would like to once again thank all of Copen employees that continue working through this unprecedented time.

12:47 They are the reason of Copen's growing success. and I will send this call to Richard. Thank you, John. Turn to us and ask for results. The product revenues for the third quarter ended September 26, 2020 were $6.5 million compared with $5 million for the third quarter of September 28, 2019. A 31% increase year-over-year. Funded research, development, and all other types of revenue were $3 million for the third quarter of September 26, 2020 compared with $1.2 million for the third quarter ended September 28, 2019. An increase of over 100%. The total revenues for 2-3-2020 were $9.5 million versus $6.1 million the prior year.

13:37 Cost of goods sold for the third quarter of 2020 was $4.8 million with 74% of product revenues compared with $4.7 million or 95% for the third quarter of last year. The significant decrease in cost of product revenues as a percent of net product revenues for the three months ended September 26, 2020, as compared to the three months ended September 28, 2019, was primarily due to low material costs along with improved manufacturing yields and efficiency gained due to higher sales, which reduced fixed costs per unit at our U.S. plants. In addition, we are commencing production of certain products in which they are higher than normal straps for the person three and nine months of 2019 as compared to the same period of 2020.

14:29 Combined internal and externally funded R&D expenses in the third quarter of 2020 were $2.7 million compared with $2.4 million for the third quarter of 2019. The higher R&D costs in the third quarter of 2020 as compared to the prior year were the result of an increase in customer-funded R&D expense of approximately $500,000 in support of several development programs. SG&A expenses were $3.1 million in the third quarter of 2020 compared to $5.1 million in the third quarter of 2019. The decrease was primarily due to lower compensation expenses, including stock-based compensation, as well as professional fees, information technology, and travel expenses. Other income expense was income of approximately $168,000 for the third quarter of 2020 compared with a loss of $78,000 for the third quarter of 2019.

15:24 During the three months ended September 26, 2020, we recorded $184,000 of foreign currency gains as compared to $88,000 of foreign currency losses for the three months ended September 28, 2019. Concerned is the bottom line on net loss due to controlling interest for the quarter of approximately $1 million, or $0.01 per share, compared with a loss of $6.6 million, or $0.08 per share, in the third quarter of 2019, an 87% increase. Coleman's cash and market concerns were approximately $15.6 million at September 26, 2020, as compared to $21.8 million at December 28, 2019. NETCAP provided by Operating Activities for the third quarter ended September 26, 2020 was approximately $500,000, which was the result of improving operations and managing working capital.

16:21 During the third quarter, we had full patents granted. Third quarter amounts of depreciation of thought compensation are attached in the table to the Q3 press release. The amounts discussed above are based on current Thank you. If you would like to ask a question, please signal by pressing stair 1 on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, that's stair 1 to ask a question. We will now take our first question from Glen Mathen from Landenburg, London. Please go ahead, your line is now open.

17:16 Hi, thanks for taking the question and congrats on a great quarter. So, first on the military side, I'm curious, you talked about, John mentioned the potential for three products in production. three systems of production next year in addition to the two you have going now. So can you give us a sense of what you think, I recognize that these programs will build over time, but what do you think the revenue opportunity on the military side is next year kind of on a quarterly basis or annual basis when these things have begun to kick in a little bit? I'm not sure we want to give guidance today on 2021 revenues, but I can tell you over the next several years, we expect these to go into the $80 to $100 billion range of annual revenues.

18:08 Yeah, I think that's correct. This is Jonathan speaking. Those programs are all quite sizable programs, but you will know when these start ramping up. In the beginning, we used to go slow and then we ran, just like the other two programs we have now. But they are all nice little programs. Great, and being that it's election day, and obviously no one knows the outcome, but what's your confidence that under either administration, you know, that these programs would continue to advance the way they've been going? Well, I can tell you right now and for the next three, four months, everything we're doing is for the 2022 budget. 2021, for all intents and purposes, is locked. So not much is going to change.

19:00 And so literally by January, most of the 2022 budget is kind of locked. I think it gives us a very good question, Glenn. You know, the defense budget especially, I decided a long time before this election, okay? Secondly, our 10 programs for military defense systems are determined a long time ago, and we are so sore now. And this system got decided years ago. So there's brand new programs which may be coming to the line in 5-10 years from now. I think the program can be effective. But the reference systems are decided many, many years ago and we're so soft. We're going through a very elaborate selection process and testing process. So those programs are usually not effective.

19:55 Great. And so moving on to the enterprise side, the industrial side, you know, for a lot of reasons this pandemic ought to, you know, should accelerate demand there, right? Because, you know, people can't travel as much, so that's one of the key drivers. On the industrial side, it's kind of like that see what I see remote maintenance type thing. and then on the consumer side, you know, obviously consumers can no longer go to live events any longer so, you know, maybe there's a lot of brainstorming going on around how to bring a better experience into the home and things like that and obviously the ARVR application would do well for that. So maybe, John, can you just talk about the progress you're seeing if there's like a big period of innovation going on now that maybe will help spur that segment in the next 12 to 18 months? Yeah.

20:49 It's a very interesting phenomenon going on. All this remote learning and remote working from home, we see a lot of traffic. I think the increase to us has never been higher. It's come from all sectors, enterprise sectors. as well as the consumer sectors. But I must caution, when those things get designed and get a product, it will take at least a year. Even consumer products will take a year from today to go into products. So those are a little bit further out, but we have never seen as high traffic cars before. So this is very encouraging. I mean, all these things happen in defense. In a defense world, right, we talk about a defense area with more than 10 programs going on and a lot of funded programs coming in from all sectors. and a few other traffic.

21:50 And we're here because we provide displays, we provide the optics, we provide the electronics, we provide the assembly, we provide the whole solution. And people wanted right away because of the whole thing. They have no time to shop around. They went to the top guy, which is us. And on the industrial side in particular, you know, 2019 seemed to be like a big year where a lot of people adopted some products and tried to maybe work them into their workflow and things, but 2020 maybe has been a little quieter, so that period of digestion kind of played itself out, and do you expect that to pick back up a little bit in the medium term?

22:37 Yeah, I do like how you said, you still have to, whatever you do, you have to provide value and benefits to users. So there's a lot of software being built, and customers are testing fields. And I think... I mean, Rich probably mentioned it last time. Many of our customers are making testimonials, how well they're coming out. So the ROI is so much better than we expected. So I think those pull-ins is happening. And I think what Luis also mentioned, we're seeing actually significant increasing orders for our customers in the enterprise world. So this is all leading to the whole idea people are designing, people are using it, and people find the benefits are really significant.

23:33 Thanks for the call. Good last thing for me, Rich. On the gross margin, it's two quarters in a row where it's been better than I expected. So that perhaps is a function of the products getting a little more mature and the processes getting a little more advanced. So is that something we should expect on these high 40s or so in the total gross margin line? You know, that's, you know, 35% to 40%, that's our goal. And so we've, obviously, as we go through the experience curve, we're getting smarter. And then now that we've got, you know, one solid unit being built, we're now being able to welcome multiple vendors and qualify more vendors, which allows you more pricing power. So all those things are happening, which are driving growth, margin, and improvement.

24:20 So we expect that to continue on these programs all through next year. Yeah, I didn't do that, but I think it's actually important, I mean, we're trying to say it in the text today, but it's not as clear. But I would like to say one more thing is, as we go to productions, and the larger productions, we find out that, especially in the case like gun sites in the heart, that those assembly have to be really dust-free. and because you were taking a display and magnifier with the lens optics. So all those are know-hows that we learn now. Once we know how to do it, we can get a high yield and you see a very rapid improvement in yield and reduce in cost of goods.

25:10 It's better by first margin. So all those things are know-hows that we learned which become very useful for enterprise and consumer work too. Great. Okay, thanks. I'll pass it along. Thank you very much. Thank you. We'll now take our next question from Kevin Dede from HC Wainwright. Please go ahead. Your line is now open. Thanks. Hi, John, Rich. Thanks for taking my questions. Hi, Karen. Hi, Kamani. So I know that Glenn touched on a lot of these things, but I guess maybe I'd look for a little more color. The research and development, and obviously you both, or Rich has specifically talked about it as prepared remarks, but it was up pretty strongly sequentially.

26:07 And you talked about the 10 programs that you're working on next year. Are there any of them specifically that are key drivers of that? and how much of that can you say was on the commercial side versus defense? I assume you're talking about the funded R&D revenue, not expense. Correct. So any given quarter, who drives, you know, it changes by program. So some programs we do a lot of development, then we send it off to the customer, and we're kind of doing it for a while, and they run through their tests, and of course then we outsource it to another program.

26:57 So there's no one particular program that's a significant business Thank you very much. So, no, there's no one particular, one big guy driver. Yeah, I think that, I like to make it common, is that the fund R&D activities really increase now what usually is over 100%. In fact, it's continuing increasing right now. And a lot of them, a lot of this increase comes from activities from very different sectors to develop new advanced micro-device display technologies for AR and VR.

27:51 So those activities which in later years will be very useful for us for production. So these are very interesting activities. I already mentioned in the text For the defense part, I think they will say we have also funded activities, and those are usually trying to result into designing, which is already designing into production, better production, better use, and all these activities right now. Yeah. Okay. The enterprise industrial revenue was still about a third of the defense revenue, John? but your commentary speaks to growth there and I think it was up, I don't know, a couple hundred thousand dollars sequentially.

28:43 Can we just hear a little bit more about the specific products and their use? Is that true? Yeah, as you all know, Kevin, we've been waiting for this wearable, hands-free transformation for years. And what we notice is that actually, like we thought, but we never see the waves that way, that the first wave is actually in the defense world. And when you start it, you start one and not two. But all of a sudden, ten programs and more. So we begin to understand when the transformation occurs, it will be a lot of optimistic. In the enterprise world, we're seeing some, and we see especially one or two companies are doing very well.

29:39 I think their value and benefits are still to be fully recognized. And once they occur, I think it's going to be just like defense work for years. I'm still looking at it. I think the case for AI in the consumer world, I still think that people are still looking for the whole way the benefits are provided to the customers. Okay, so I guess I'm not a hockey stick yet, but... I guess it's a mix of wearables really I guess is what you're pointing to in terms of what you're seeing driving revenues now.

30:41 Well, I think it's very interesting. It's not like the very important defense would be very interesting indeed. It is very surprising to us. Okay. John, you referenced color match in your press release, and I was wondering if that references the dual stack or the fact that you're just able to, I guess, keep colors from mixing and decreasing that fidelity. What specifically does that refer to in your OLED design? Yes, in the OLEG situation, especially in AR applications, people would like to have the OLEG much brighter than what they have today.

31:39 So there are two ways to solve it. Well, of course, in the webinar we described it. One is using direct patterning, which is actually for very small display and very small pixels. It's very, very hard and difficult to manufacture. So what we did is, okay, why don't we do double stack? So if you have one junction, put two junctions on it. Now, we were not the first one to try that. We would try that if it all failed, because in a small micro display, the pixels are so small that we need to talk to each other and cross. and the color fade away. So what we did is we tuned our laser in the battery, some structures in there to control the spreading of, basically spreading of current between these cells.

32:30 So we did it, and voila, the color goes back in very good. But now it allows you to go double stacked. Once it's double stacked, it can get much brighter. And in fact, it's not like a set of two, like you say, oh, okay, double stacked. No, it's already over five times brighter than single stacked. And everything can even go better than that. So this is really a shocking thing, as I say. When we first released it, we were shocked. The world was shocked. And when we actually released it, I have to explain why it is. I came with lots of people to explain how it works. How can we get double stack instead of getting double? We've got more than five times better. So it's a very significant improvement, and it's true, and that's how we're explaining to people. It's not a fluke. We're explaining it, and people say, I understand it now.

33:23 Because again, we can go even higher. We can go to 30,000 nits. So the whole world, Michael, is different now. So, John, is your 30,000-nit brightness a target for year-end next year, or do you think it might take longer? Well, that's a development. We just say take a few years. It's not something that has ever been achieved. Two months ago, nobody would even say that. They'd even say that people would think you're crazy. So we're not saying something that is possible, but we're saying it would take a few years. Okay. I know you spoke a little bit, both gentlemen, to the 22.9 general weapons site individual follow-on order.

34:22 How much of that do you think you recognize the balance of this year and next? I don't think we're going to detail that particular program. Our production rates are increasing, but by the end of this year, we should probably reach a steady state and should be ratable for the remainder of the period. So we'll increase a little bit in Q4, and by the end of this year, we'll probably get a steady state run rate, and it'll be ratable over the previous three quarters, over the next three quarters. That's a contract that's held now, so a contract that's held now. Do you think there's more beyond that, or do you think the Army switches to something else?

35:16 Oh no, you know, the PWM program that this is replacing went 10 years. And so we think this has a long life to it. If I understand correctly... I'm sorry, John, go ahead. Go ahead and finish your question before I make a comment. Yeah, go ahead. Okay, okay. Yeah, so a 10-year life program, if you were to compete against what it's replacing, and if I remember correctly, it went into production about this time last year. Is that true? Yeah, I think the way... Okay, well of course we can learn what happened last time.

36:03 Last time TWS program, our total shipment to the customer is around 200,000 units. Okay, so these other, of course we will not say exactly how many units are, this is still a very small part of the 200,000 units that we shipped for TWS. Okay. Okay. Am I right in assuming that FWSI started about a year ago, I mean at production? Is that right? Yeah. Okay. I know Glenn asked about gross margin already, Rich, but I'm just...

36:51 I guess what I'm wondering is where do you think it can go if product revenues nudge a little bit higher, which is sort of where my estimates have it going, given your commentary, or do you start getting pushback from your customers? I'm wondering if they pretty much are stuck with their, you know, you see the yield improvement, and you'll be able to recognize that as production levels increase that you start getting some pushback from some of your customers at all. Well, you know, John said, what's the whole source of these programs?

37:36 These are competitively bid programs, and so, you know, we bid it, and neither the government, in most cases, neither the government nor the customer has any right to ask us about our costs or anything like that. So assuming that it's competitively bid, and the government agrees to the price, you know, what we can make on it, we can make on it. Well, in those programs, I mean, there's no truth that the Fed programs, and maybe in some cases enterprise programs, don't work. The customer knows that you're not making any money when you first start it, because you're really low, your learning curve is so great, so the investment, So as the investment goes, later on we turn into some harvesting. They actually wanted to be able to do some harvesting so they can support the next program. So they are able to understand, even now, at the beginning you lose money, and then later on your child will recover some of them.

38:34 So we're going through this harvesting period on this program right now. Okay, I answered a good way to look at it. Thank you for the color, John. I really appreciate it. Rich, last question for me. You mentioned currency gains. I'm just kind of wondering, I know it's inconsequential, but I'm just sort of wondering how that happened. Yeah, it's Europe. U.S. dollar against the British pound in our tort PD subsidiary. Oh, all right. Listen, you didn't speak too much about this, and I guess it would be interesting just to get my arms around how you're handling your employees. I mean, I know that you're really careful in manufacturing location in Massachusetts.

39:38 I'm just sort of wondering how you're handling safety for some of your other manufacturing sites. Yeah, in all our sites, you know, we've implemented CDC-required procedures, and we've also implemented our own common sense, and knock on wood, we've had no issues at all. In FDD in Scotland, you know, The government's a little bit more heavy-handed, so as we mentioned, Q2, they were shut down for some time, I believe it was in April, and then they were allowed to come back online. But otherwise, it really has not been an issue.

40:25 all the things the other folks have done You know, certain elevators are up, other elevators, excuse me, stairwells are up, other stairwells are down, so on and so forth. And then, of course, you can do our cleaning, and we have the benefit of the fact that we have a Class 100 cleaning that we run at Class 10. So we can put down gloves, masks, and the air has its positive pressure limits flow out of the floor through the ceiling and make a fan, so on and so forth. So our cleaning is a big benefit to most companies.

41:30 are you considering like taking employees temperatures kind of the way they do in restaurants here in San Francisco? No, we did look into it. You know, obviously, you know, we tell employees if they don't feel well, you know, if there's any issue, you know, don't come to work. You know, we had somewhat of a couple people that were nervous last week. We sent them off to get tested. They were fine. So, no, we haven't gone through the temperature-taking step. We've looked at it. And, again, even in the clean room, we separate workers. Okay. Well, thank you, gentlemen.

42:16 Congratulations on the results, and thanks again for being here. Thank you. We'll now take our next question in the queue. This comes from Jeff Bernstein from Cowden. Please go ahead. Your line is now open. Hi, good morning. Congratulations, first off, on the positive cash flow from operations. And it seems like you're on a positive track here. Do you think there will be some cash flow positives for 2021?

43:10 I don't want to say for the whole year right now. Okay, great. And I apologize, I don't have the best connection, so I think I might have missed a couple of things. I wanted to just make sure, you said the FWSI saw an order of 22.9 million. Was that on top of 33 million already awarded, or did that total 33 million was already awarded? This includes the total, includes the 22. Gotcha. Okay, that's it, that's it. Alright, and then I want to make sure, you were talking about the externally funded R&D and that it's not just military, so you have some commercial customers who are actually paying some money for you to do R&D.

44:03 Great. And then I wanted you to touch on First Dimension and what's going on with the 3D machine. The reason I think the Chinese economy seems to be down and that's the big end market. What are we looking forward to here in the next five months? So with 4DD, they're closely aligned with the capital equipment market, and that has been down. And so it's probably... Our portfolio of products is showing weakness, particularly until the automobile industry rebounds. The other issue is that the customers are being very tight on their forecast. Backlog is not as big as it normally is, because I think there were concerns about a possible second spike in COVID. So, sitting here today, our backlog is not as big as it was this time last year, and the The other place that there's some COVID impact is on public safety because of municipal budgets and where those are. But offsetting those are increases in the wearables and defense and some of the other programs.

45:31 Gotcha, okay. I mean, so can you just remind us who are the current customers for AR in the commercial space? So as you know, we're working with the three big Chinese companies. And so we really can't talk about who their customers are. Yeah, I think it's all too clear for the enterprise world. If you want to know, Google has definitely announced one. Google Cloud has announced one. So there's the usual suspense, and there's obviously a lot of traffic right now. So we're going to have to talk about that. So you're saying you have some additional customers that are customers of the Chinese founders?

46:26 The Chinese is a very interesting world, Richard Padgett talked about that. They definitely have a lot more than here and a lot of activities, but let's face it, we cannot go there. I'm not on there for more than a year. So a lot of things we're trying to not say too much about it because I don't have to be face-to-face. We are people that haven't been out there for a year. So they seem to recover. There's quite a lot of activity. And how they're going to sell through and everything, we're more cautious about until we go there and visit ourselves. Okay, and then ColorMax, is that in those soundings now? Is that being produced on a scale basis, or is it just a prototype, or where are we on that, the anode technology?

47:19 ColorMax is manufacturable. In fact, we are manufacturing them, and people are using it, and displays are coming out on them, and customers are sampling them right now. That's terrific. That's just great, guys. And then just to beat you up one more time in the gross margins. So the incremental gross margins have been crazy with 90% this quarter. So are you telling us that new military programs will come in with lower margins that kind of tamp that down? Or are there some reversals from some prior, you know, not humanitarian or something that's and so on and so forth.

48:22 and so now it's hitting its stride and we're continuing to make improvements both in how we manufacture it so our yields are going up and being able to get lower pricing for materials by having multiple vendors and so on. So knock on wood, F35 has been a nice move right now and doing well. F35 is in a nice steady state and we continue to make improvements on the yield. F35 is really just a display sale so it's really just manufacturing efficiency. And then next year, as John indicated, some of these new products will come on and then we'll have That's great. Okay. And then Did you say that for some of the new programs it was a total of $80 million of potential revenues or something next year? I understand.

49:37 I was talking 24 years out. Ah, okay. Okay. Great. Thanks so much, guys. Thank you. We're going to now take our next question from Patrick Metcalf from iBankers Direct. Please go ahead. Your line is now open. Good morning, guys. Congratulations, not only on a great quarter, cash flow positive, but the military contract you guys announced last quarter, that went unrecognized, unappreciated. Very thankful for that, and congratulations. I'm just very excited. Secondly, I want to ask you about double stack.

50:22 John, last quarter, you told, I believe, Jeffrey, last quarter on the conference call, that no one will be doing double stack in a year. That being said, I've always viewed you as a competitor to other red putters. To me today, after the white paper and the webinar teaching, you're almost agnostic to me where you can supply the wafers to as many fabs as you want. Is your architecture similar in nature to Sony, to BOE, to LG, to Samsung? Can you give me some color on how you see yourself being agnostic or someone as a comparator to these type of players in the market? I have a follow-up question after that.

51:09 I tried to understand all of what he said. I mean, obviously, I'm trying to understand the meaning of your call, that question. Our wafers, we have two business models. One is providing the bed plane. The silicon wafer, which O.A. has a lot of design inside, a lot of modules, and then we now put in the columnar structure of the wafer. and the way we do our waiver is such that we can provide to any foundry who does honor their position, they can be offered honor and with very little difficulty, they should be able to benefit from the ColorMax structure and get very good results on USAC.

52:04 are doing that. We're obviously working with Alessandri and if you say Sony and other people, if they use our Alamex paper, they will benefit if they do 2-Stack. Remember, nobody in the world right now really, really come out with 2-Stack yet. Except now, Alessandri and us are beginning to are samples now for designing. So actually, yeah, it is getting into early sampling right now, yeah, with Color Man. So I think people really want to find out, really a shocking result, actually, yeah. Okay, yeah, because the reason why I ask that is because COVID has come unexpectedly.

52:51 We've had AR, VR, tier one players in our hopper, in our pipeline. And I'm thinking if you haven't yet found double stack where numerous parties have not reached double stack at the failing after failing, maybe... These fabs will come to us quicker because the tier ones in COVID want to push these products up more faster. And Copen now has a display double stack, five times brighter, more power efficient. And I believe you should be able to win business that people don't even think that you could do. Is that possible? If possible, it's also what we wish for. Another thing that's very interesting, for the VR case, you might not need such a high brightness, but it doesn't matter, because you can really turn the power down, and people have much lower power consumption, and much longer lifetime. So, either way, when you make it display efficient, it's always good. So, yeah, people begin to recognize it, and then the level...

53:57 You don't want to carry too much battery on your body, so all these are all benefits, so we just eat. But remember, things take time to go to food production. People go and try it, and by the time you see a product out, it's a year later. So we're not going to see an immediate large revenue growth from these activities, so we somehow out. Right now, current growth, Okay, great. And lastly, John, let's go to Rich, I guess. You guys have four equity stakes in Lenovo, NuVision, RealWear. Solas, and HMDND, the way I see it.

54:49 And they all contain licensing agreements. I'd like to know, are there any new developments or updates on these investments? Because the analysts initiate coverage on us, but they never talk about our off-balance sheet assets for these things that I think represent a lot more value than some of our competitors. So I'd like to know if you guys can just add a little bit more color on these equity stakes, how you see them, anything you can add that could bring some value out in our stock because the equity, I think, doesn't represent these off-balance sheet assets very well. Yeah, just one correction. HMD and B, we do not have an equity stake in it. But we are working with them. You know, Lenovo continues to make progress.

55:37 You know, we get the financial statements and we mark the investment as needed. You know, Solos is a new company launching a new product. Obviously, they're dealing with COVID over in China. And I think, you know, you really have to talk to real web about how they're doing, but I think, you know, they put out enough press to indicate that they're having, they're being pretty bullish right now. Okay. All right. Thank you, guys. Good luck. Great quarter. Look forward to talking to you down the road. Thank you, Pat. No more questions in the queue at this time. I'd like to pass back to William.

56:25 Well, thank you very much for joining us this morning, and we look forward to talking to you again in the next quarter. Stay safe. Thank you. Ladies and gentlemen, this concludes today's call. Thank you for your participation. You may now disconnect.