Good day. And welcome to the Kopin Corporation's Fourth Quarter and Fiscal Year 2014 Financial Results Conference Call. Today's call is being recorded for internet replay. You may access an archived version of the call on Kopin website at www.kopin.com. With us today from the company are Chairman and Chief Executive Officer, Dr. John C.C. Fan and Chief Financial Officer, Mr. Richard Sneider. Please go ahead, sir.

Thank you, operator. Welcome, everyone. And thank you for joining us this afternoon. John will begin today's call with a business update. I will go through fourth quarter and full year 2014 results at a high level, and then we'll be happy to take your questions. I would like to remind everyone that during today's call taking place on Tuesday, March 10, 2014; we will be making forward-looking statement 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 and market conditions and other factors described 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. And with that I will turn the call over to John.

Thank you, Rich. And thank you all for joining us today. 2014 was an important year for Kopin and we are extremely pleased with the progress we've made towards position ourselves as the leading provider of technologies and solutions for the coming wearable world. We have exceeded our all metrics, we established at the beginning of 2014. In revenue, in cash preservation, in technical advances, in IP filings, in partnership and customer acquisition and in product development. The overall strategy that we've discussed all along is right on track. As a reminder, our overall strategy has been in 2013 was our reorienting and reinventing year. 2014 was for product development and customer acquisition. This year 2015 will be focused on product introduction. And 2016 will be our revenue-ramping year. As I discussed in January, we have now completed construction of new product line capabilities at our Westborough site, providing additional production capability and capacity. We have also made significant progress with some of world's leading player in a growing wearable space. And we look forward for those partnerships to begin bearing fruit to later on this year. We now expect during this year, two tier-one global corporations will introduce exciting product into the enterprise world with substantial Kopin content in their devices. Of course, companies such as Vuzix and Recon have already announced product with Kopin's content inside. Additionally, we have been focusing on consumer wearable applications and believe the first explosive consumer market may well be in Asia. We've already noticed early signs of this. Wearable smart assets are challenging to be designed well, requiring various hardware and software advances. We believe we are very well positioned to provide a market with all the necessary technologies for a design of smart headset for enterprise and for consumers. We are…

Thank you, John. Beginning with the results for the quarter, total revenues for the fourth quarter of 2014 were $10.6 million compared with $5.5 million for the fourth quarter of 2013. The increase in Q4 revenue year-over-year was primarily driven by military revenues which were $6 million in Q4 of 2014 as compared to $1.1 million in Q4 of 2013. Before we go into operating expenses, it is important to remember that our expense structure is not tied to the current quarterly revenues or fiscal revenue projections, but to our longer-term goals. Cost of goods sold for the fourth quarter was 69.1% of product revenues compared with 85.7% for the fourth quarter of last year. R&D expenses in the fourth quarter of 2014 were $5.7 million compared with $4 million in the fourth quarter of 2013. Increase reflects continued investment in wearable technology. SG&A expenses were $5 million in fourth quarter of 2014 compared with $3.5 million in the fourth quarter of 2013. The increase was primarily driven by an increase in stock compensation expense. Other income expense was income of $635,000 million for the fourth quarter of 2014 as compared with expense of $2.3 million for the fourth quarter of 2013. The fourth quarter of 2013 includes a $2.5 million non cash write-down of an investment. Turning to the bottom-line, our net loss for the quarter was $5.3 million or $0.08 per fully diluted share compared with a net loss of $9.7 million or $0.16 per share in the fourth quarter of 2013. Now turning to the result for the full year, total revenues for 2014 were $31.8 million, compared with $22.9 million for 2013. Cost of good sold for the full year was approximately 72.9% of revenues compared with approximately 100% for the prior year. The increase is…

[Operator Instructions] Our first question comes from Matt Robison from Wunderlich Securities.

Hey, thanks for taking the question, John and Rich. First, I'll bore people with housekeeping items. Rich, can you tell me how much for the other income was interest income and what are the other major features of that category were?

It was almost all interest income. For the year, there was roughly $95,000 of foreign currency gain.

Okay .What was cash flow from operations in the fourth quarter?

I don't have that in front of me.

All right. May be you can follow up later in the call or --

Yes.

I heard 285 patents and patents applied for. Did I hear that right? And how many were in the fourth quarter?

I don't have a breakdown in the fourth quarter, for the year we have 25 new ones granted and 74 new patents applied. So which is about that 2014

I just wondered what the total was.

Yes. Total you can added it, so obviously with two patent our timing right now so we are probably over 300 now, yes.

Okay. You had a pretty good year for R&D revenue. Do you have any kind of visibility for that component in 2015?

At this point in time I think we would expect it to decrease, a lot of that came from customers who were looking to launch wearable products and so I think we passed the R&D stage.

You have pretty fourth quarter was a good too, so is that what the case was in the fourth quarter?

Yes.

And do you -- is there any kind of way we can bracket the potential for the military outcome?

The military for R&D contract or military in total?

Total.

The government really honestly isn't doing a lot of funding in R&D anymore so we have seen a significant decline in R&D contract funding by the US military, it's all part of sequestration, as far as the military revenues, we would expect, we aren't in about the same position we were last year, but we just haven't seen what's going to happen in the second half of the year. And that's what holding up our guidance.

Does the precision acquisition targeting system coming this year with anything?

No. This year will be partnership. And then we had some discussion and they think the product size will probably take it by the year and then we will start seeing revenues thereafter.

Now you had -- you talked about this production capacity build that -- is there -- when do you start seeing revenue from that?

This year.

Can you be more specific about that?

Second half of this year.

Okay. So you are not -- you ramped up capacity in the fourth quarter and the first quarter, you don't expect actually the lead time are going to be longer than a quarter to build the stuff?

Yes. Our lead time is coming out of foundry these days like 16 weeks.

Okay. And so we will have initial build then we have to see how the consumer acceptance goes after that. Is that correct?

Correct. That's exactly right, Matt.

What kind of protection do you have for your investments if the sale through or the consumer response is not what your customers predict?

It is typical in almost all our --whether it is military or commercial, if they place orders and they understand our lead times, our raw materials and stuff. So to the extent that they decrease their order, there are no hope for it.

Now both of these tier-ones for enterprise type application?

Yes.

Okay. And did you have any 10% customers in the quarter or year?

For the year we had two, Raytheon at 26% and Google at 11%. The third one is just barely missed it.

Okay. And there was the second one you mentioned was that all R&D?

Yes. There were units; you go through an EBT or DBT

Run that that by me again may be without the abbreviation.

Yes. The answer is yes.

And so that sounds like a military and enterprise setup occasion.

I am not sure I understand your question.

Raytheon is military right so and Google is more enterprise.

Yes. Well, I think there was a Rich said that we had just three who almost reached at 10% so the second one and that is the one that still one argue miss a little bit, both second and third are for wearable

Great. Now can you tell us what's the third one was?

No. Because it is below 10%

Okay, all right. I'll digest some of this, maybe come back with another question, if there's another caller.

Thank you. Our next question comes from Raji Gill from Needham & Company

Hi, congrats on a good quarter. And thank you for taking my question .This is Josh in for Raji. Could you maybe give us more details on the enterprise? Like what kind of product, is that's falling into the wearable applications or is industrial. Thank you.

Yes, the question Raji is that how you pick up is where enterprise world, I think you know the Google glass is not going to -- they I think probably go to the enterprise world, how they are going to use it obviously where they stay put and see how big announcement, for us, in the case of recon they are using for sports, in case of music they are using for maintenance and repair and we have I think most of the enterprise were the beginning will be for medical and repair, sports and maintenance, and we are very well situated on that, I think we are basically in almost every major enterprise application headset.

Okay. And then that in your revenue segment that shows up in wearable or industrial?

It is wearable

Okay, thank you. And then I know you haven't touched on military but can you give us any color on gross margins, it is been lumpy so just trying to figure out how to model it.

I would let Rich to talk about model but our basic situation military; it is margin always very good north of 50%, for military.

Okay. So military is above the other one. Then is the Westborough is ever focused on anything in particular and just any segment? Thanks.

Westborough has a couple of things they do, it is the manufacturing site for our display which are of course go to wearable as well as for military. Now they are offering as new assembly facilities we just finished in Westborough and that would assemble mostly for wearable consumer enterprise applications.

[Operator Instructions] Our next question is a follow from Matt Robison from Wunderlich Securities.

Thanks. On the industrial, so we can look at that is mostly fourth dimension?

Yes. Hopefully with 3G metrology

Yes, okay. In terms of your first -- your two largest customers would be -- is it theory kind of look at them as being similarly positioned as per two largest customers in the fourth quarter or the second half of the year?

Yes.

And are your two tier-ones; are they different than your second and third largest customers for 2014?

Yes.

That's all I have got.

Hey, Matt, fourth quarter cash using operating activities was $2.2 million.

[Operator Instructions] And there are no further questions. I'll turn the call back over to our speakers for closing comments.

Well, in conclusion, we are delighted with our progress in 2014. And look forward to an exciting 2015 when wearable products will be introduced into the marketplace. Thank you for joining us today.

Thank you. This does conclude today's teleconference. You may disconnect your line at this time. Thank you for your participation.