Jeffrey Lucas – Chief Financial Officer Andrew Sculley – Chief Executive Officer

Dennis Van Zelfden – Brazos Research

Good afternoon, everyone, and welcome to the eMagin Fourth Quarter and Full-Year 2015 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please also note that today’s event is being recorded. At this time, I’d like to turn the conference call over to Mr. Jeffrey Lucas, Chief Financial Officer. Sir, please go ahead.

Thanks. Welcome everyone. We’re glad to have you join us this afternoon for our fourth quarter and full-year 2015 earnings conference call. As always, before we begin, please note that we will be referring to the numbers that are part of our quarterly Form 10-K for the full-year ended December 31, 2015. During today’s call, we may make forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on the company’s current expectations, projections and beliefs and are subject to a number of risks and uncertainties. Such statements include references to projections of future revenues, plans for product development and production, the company’s ability to ramp up production, future contracts, product benefits, operations, liquidity and capital resources as well as statements containing words like believe, expect, plan, target, et cetera. Our risk factors are included in the company’s Form 10-K for 2015 on file with the Securities and Exchange Commission. Except where required by federal securities laws, we undertake no obligation to publicly update or revise any forward-looking statements for any reason. With that, I’d like to turn the call over to eMagin’s Chief Executive Officer, Andrew Sculley. Andrew?

Thanks, Jeff, and thank you everyone for joining us on the conference call. Let me start by saying that 2016 will be an important year for us. In 2015, we advanced our market leading technology by continuing to produce brighter OLED microdisplays with higher efficiency and actually the highest resolution in the market today for microdisplays that we have a 2000 x 2000 resolution microsdisplay. For 2016 our strategic focus will be on advancing our technology, continuing to support our military business, and making in-roads into the consumer market, all while maintaining a solid balance sheet. Let me start by talking about our military business, which is core to the company’s success and provides funding for the advancement of our superior technology. We currently develop and design displays for international companies and numerous agencies within the U.S. government. Our work on military projects helps us to better manage our fixed cost while providing us the R&D funding to supplement our expenditures. This is important to us and will remain a key part of our corporate strategy. We had a number of major wins in 2015. During the fourth quarter, we booked customer orders for 23 new projects, including a major design win with the European customer with display orders now for over $800,000, a new international order for our digital SVGA display for a new handheld night-vision system. And in fact if you look at the top 10 bookings in 2015 for these new projects, six of them were – I should say six of the bookings, largest bookings were for new projects. So that bodes well for the future. In 2015, we had over 30 customers sample our new displays for new products and projects that those new displays are the digital SVGA, the SXGA096 that’s a SXGA with a small pixel pitch of 9.6 microns and the VGA display. Six customers went into production with these new displays in 2015 and that’s fast for military, we’re mostly military and those six customers had a total booking exceeding 1.4 million. Now as you know that a military product runs for many years and switching to different displays requires a new qualification. So for new projects or products that use our displays, this is very good for the future. So, we’ve seen a high level of interest on our new displays and this speaks to the strength of our displays within the military market. During 2015, we also set the stage for opportunities in this year. We have been working diligently on displays for using avionic applications. In 2015, we shift display samples to government customers as well as seven other customers and they included our very high brightness monochrome XLT, we call it Green OLED displays, which are capable of 24,000 nits, now to ground you [ph] maybe all know this by now but your cellphone is if it’s an Apple, maybe I shouldn’t say that, but it’s ready that 500 nits. And I should mention that we haven’t seen this brightness from other OLED microdisplays. We’ve seen 10,000 nits from monochrome green in Europe and China versus our 24,000. And the contrast of these other displays at the very high brightness is also not as good as ours. For example at a military tradeshow, the European display was 5000 to 1 contrast at 10,000 nits. Our Green XLT display is 50,000 to 1 at 24,000 nits. So 10 times higher contrast at 2.5 times higher brightness. And its important year to remember that the reason we were asked to develop these high brightness technology in the first place by the military was the navy pilots complained about the contrast when they’re landing their planes. So it’s very important. It’s also important for other things like consumer displays. We also supplied color ultra-high brightness prototype displays using our direct patterning technology. Here we’ve done both full color with direct pattern red, green, and blue sub-pixels in our WUXGA and that’s 1920x1200, and the two color direct pattern 2000x2000 display for avionics. The customers are excited about this technology. Now several versions of our displays have completed military flight testing all with excellent results, additional flight testing is ongoing and we have received positive indications that our OLED displays will be selected for production during this calendar year and obviously then the production ramp in the future. We have number of other programs that are progressing nicely. In 2015, we qualified the SXGA096 with an XLS stack, OLED stack, which is 1280x1024 resolution display with a 9.6 micron pixel pitch and the XLS OLED structure is rated at 750 nits. So better than your cell phone and much better than our normal displays and anybody else’s normal display for that matter. This is interesting to number of customers for new programs in the military. We finalize design requirements for a new full color 2Kx2K, so 2000x2000 displays to support a new government program, very unique and very exciting for us. The silicon wafer design began the first part of 2016. And in parallel, we’re trying to be efficient for both. In parallel, we’re designing a new 2Kx2K for virtual reality use. And we’re also doing a new version of the company’s WUXGA microdisplay silicon backplane and this was released for fabrication in November. Initial samples are expected in this quarter – first quarter of 2016. The improvements were implemented to improve manufacturability as well as some performance characteristics. So we’re moving on all fronts here for these displays. We’ve – while funding for new programs had been under pressure for the last few years and you just have to look at our R&D funding for example over the last few years. We’re now seeing an encouraging signs of new programs moving forward. And this is also evidenced by the increase in the Department of Defense budget for both 2016 and the proposal for 2017. So, we’re excited about this. We continue to deliver OLED microdisplays in support of the enhanced night-vision goggle three program. You’ll recall we’re on the version two program and that’s winding down. Now, we’re supplying displays for the qualification of ENVG III as it’s called, but also we’re supplying displays for Family of Weapons Sight that’s FWS, it’s referred to, for the individual program. And this is in production qualification testing and low rate initial production. So, we’re in that. We propose display solutions to multiple defense contractors for the Family of Weapons Sight Crew Served program and Sniper program. So we proposed for two and we’re certainly in the first one. The combined estimates for ENVG III and the three Family of Weapons Sight variance through 2020 equates to a potential of subcontract awards to – for displays in excess of 100,000 displays over five years. Now, we believe we’re in a good position on all of these subcontracts. Now, even if we don’t get it all, it’s a very positive future for us. We’re also submitted proposals in support of joint effects targeting system and that was easy to remember jets as well as laser targeting locator module. And the estimate for award for these programs is greater than 2,700 and 10,000 systems respectively. So, again, we’re feeling pretty good about these military programs. Now, the military programs are very demanding for us with higher standards for performance and reliability, i.e., zero tolerance for failure than what is typical in the commercial marketplace. We also have this huge temperature range and that’s the work over and work-well over that temperature range. We have made great strides in making this technology and developing it for our military customers and it is effectively raising the bar for microdisplay technology. Technology advantage that we pioneered for our military work really sets a standard and expectation also in the consumer marketplace. The features in today’s consumer VR and AR applications will not satisfy the user for a long time. I can give you many examples of the issues. As a novelty of these new devices begins who were off [ph] as you know the consumer will start looking for higher quality experience and the manufacturers of the headsets will look for better displays. The features that we have in our OLED technology will enable the next generation of VR and AR products to satisfy these requirements for superior and satisfying experience. If I look at the OLED technology, it is superior to anything on the market today and I mean that for microdisplays as well as larger displays. And we have the ability to advance applications of this technology for many end markets as we have shown in the military markets. Recall, we have gone from simple applications like situation awareness in the military and training and simulation to although that last one is it really simple at times to advance devices for the foot solider and finally to aviation. This has been a steady progression of technological advancement leading to the design wins. And frankly I have to guess that we have the largest worldwide military market share today and we didn't always have that. It's important to realize that the connection between the consumer requirements and direct patterning for aviation. There are number of consumer companies with whom we've discussed our roadmap and their requirements although many consumer companies don't ask for military brightness for full color, they do want higher brightness for the augmented reality applications. And the brightness they want is higher than any other OLED manufacturer can make today. The level of brightness can be met by our direct patterning technology. The military wants over 10,000 nits in full color. However most consumer companies are below 5,000 nits is good for them and we've demonstrated over 5,000 nits. So where are we on this direct patterning technology? The government funded program for R&D effort will bring us to manufacturing readiness in 2017. We have made new designs for some of the equipments and we’ve actually designed equipment and put it in and made direct pattern displays. And now we've taken a look at how it performs and made new designs and we're having new tools fabricated right now in this – beginning in this quarter of 2016. This is important to get the brightness goals. It would be efficient displays and high throughput capability and that's what these designs were meant to do. Now, the government is funding the R&D effort, but we, eMagin, are funding the equipment costs, government doesn't usually do that. So that's why we have to have a good balance sheet. All of this equipment incorporates higher designed effort with the tooling manufacturers, which results in an additional new valuable IP for eMagin. Remember no other company has demonstrated direct patterning at microdisplay pixel sizes, no one. So what application needs this brightness? And I think it's important to give you an example and I know this is a real example, but I thought it would be good to give it to you. So, it's a mixed reality example. Now, mixed reality is really an augmented reality device, but the term is used to give the reader the impression that’s not just that data glass. You remember the Google was a data glass or some of the sports goggles are data glasses, just your speed, how far you’ve gone et cetera. So the headset or HMD must be small for comfort like a pair of glasses. Hence it really had to have a microdisplay. The possible used example I want you to imagine you're sitting in a meeting room with some of your colleagues and chairs around the table and a number of empty spaces, all of which you can see through the pair of glasses you're wearing, which is the headset. Imagine that some of your colleagues aren't in the room, but they have a video camera taking their video and sending it to your headset, so the people not in the room actually appear to you as if they’re in chairs around the table. Now in a still image, you call this is a photoshopped image, but this is a video of what the person is doing at that moment. And when you add sound, you have some virtual attendees at your meeting. So what do you need for something like this? And there are a whole bunch of other examples of this technology, but I thought this was an easy one for everyone to get. So what is needed for this is you really have to have the image look real, so you need a high resolution with minimal spacing between the sub-pixels. So no OLED cell phone display will work here because one is too big for that simple pair of glasses and also you get the screen door effect. An OLED cell phone display today has under 600 pixels per inch and as an example our WUXGA has over 2600 pixels per inch. They 2kx2k is even higher than that, 3,000. You need fast speed because you want the video image still look real and keep up with the voice. Therefore, OLEDs needed, LCD will do. Finely, you need brightness to combat the light in the room and also – and the inefficiency in the optic. It tends if you have a very small glass like device on your head, something like a Waveguide optic is needed and that tends to make it inefficient. So I believe there's only one display company that can meet these requirements and that's us. So we're very excited about this and we're very excited when we show our roadmap. And the guy on the other side of the table says, yes, I need samples. So I've attempted to show that we have the military as our base business and by virtue of that the best product and process technology in the market today, now how are we capitalizing on the superior technology in the consumer market. Well, we're gaining traction in the marketplace as we sell companies our displays for their development programs, they all – everybody whom we talked to will have cell phone display. We’ll tell you that there is an issue with the screen door effect that’s why they ask for our samples. So we’re establishing these beachheads in a number of fronts. And as we increased our penetration into this market by supplying displays, we're really raising the bar by showing the superior features of our displays and capabilities that micro displays offer versus the lesser products with whom we compete. We have ongoing discussions with a number of very significant interested parties and we’ve had them already. And in December, we completed a strategic licensing deal in the commercial sector with a display supply as part of the IP agreement. Now IP is for this headset we’ve designed and are displayed – our display supply is part of that. And we also have other discussions. Examples are we have supplied displays to seven tier-1 companies for testing in their next generation DR or AR headsets. We’re supplying samples of our ultra-high brightness WUXGA prototypes for customer to use and design of the next generation HMD. And we’re working on a radically new display design for a particular companies HMD effort. We’re actively discussing volume manufacturing with a number of companies and that is companies that could help us with this volume manufacturing and that would be taking our technology through a very high volume manufacturing with a partner company. We expect a number of these efforts to make significant progress during this year. Some require our ultra-high brightness technology, which will not be production ready until 2017 and you’ll recall the Mantech program or manufacturing technology program. The goal was to bring us to this technology that we invented to manufacturing readiness by 2017. As mentioned above, we’re talking to potential partners for high volume manufacturing of our displays. Again to reach the consumer marketplace, we need very high volume. We recognize that as AR and VR become more mainstream, we'll need manufacturing partners to help us meet demand for our microdisplays as we do not have the resources for high volume production today. Our expertise in the development and design of OLED microdisplay technology and OLED technology in general makes us a desirable partner for our mass production. We are well positioned to pursue our objectives for 2016 including advancing our technology through our funding and our government programs, partnering for high volume manufacturing and potentially supplying for the consumer market. We have had no debt over $9 million in cash on the balance sheet. We're comfortable that in 2016 we will finally begin commercializing our market leading technology. With that I'll turn the call over to Jeff to discuss 2015 financial results in more detail.

Thank you, Andrew. Turning to the company's financial performance, I'll start with the fourth quarter income statement. Revenues for the fourth quarter were $6.7 million, flat year-over-year and up 24% sequentially from the third quarter of this year. Quarterly product revenue of $5.8 million was up 1% over last year and 17% higher than in the third quarter. Unit volumes for the fourth quarter in comparison to the prior year’s quarter were 5% lower offset by unit pricing about 4% higher. And this is reflecting the shift to a more advanced higher price digital FPGA or DFPGA, SXGA096 and WUXGA microdisplays. Quarterly R&D revenue of $965,000 was down 8% from last year, and up 25% from the third quarter. Last year's fourth quarter R&D contract revenue reflected a high level of activity on the Mantech contract and it continues to be the largest contributor to quarterly contract revenues. During the fourth quarter, the company worked in a number of contracts including six major contracts of which one of them was new. Turning to gross margin, gross margin for the fourth quarter was 13% on gross profit of $900,000 compared to 23% on gross profit of $1.5 million in Q4 of last year. Excluding $1.2 million one-time inventory write-down, the gross margin in the fourth quarter of 2015 would have been 32% on gross profit of $2.1 million. Absent this inventory write-down, this represents an improvement over the third quarter gross margins of 20%. The higher margin in the fourth quarter, excluding the write-down, reflects the absorption of overhead costs over a higher number of units produced along with greater corporate utilization and slightly improved manufacturing yield. And I noted at the end of 2015, we elected to write-down $1.2 million of inventory in connection with a previous contract in which the stop order was placed in 2014 and subsequently canceled. In accordance with generally accepted accounting principles, we wrote-down the value of the inventory to its realizable value based on projected consumption of the product over the next few years. When or if new programs materialize, this inventory can be utilized. And I do want to underscore here that we did not scrap the inventory we wrote it down – wrote-down the value of it. Now turning to expenses; R&D expenses for the quarter increased by 29% to $1.1 million versus $800,000 in the fourth quarter of 2014, and down sequentially by about $60,000 from the third quarter. The higher expense in comparison to the prior year’s quarter reflects the company's continued investment in our leading technology. The decrease from the third quarter is due to the higher level of R&D contract activity during the quarter and accordingly the greater proportion of R&D costs committed to these customer funded projects. SG&A expenses for the fourth quarter were $1.9 million. That's a 15% decrease from $2.3 million in the fourth quarter of last year and a 12% decrease sequentially from the third quarter, the year-over-year comparison benefit from a charge in the prior year for doubtful accounts in connection with a slow paying customer. The favorable comparison with the third quarter was driven largely by non-recurring severance and litigation related charges that were incurred in that prior quarter. Overall, total operating expenses for the fourth quarter saw a slight decrease to $3 million from $3.1 million a year ago and were down approximately $300,000 sequentially from the third quarter. EBITDA for the quarter excluding non-cash stock compensation charges and non re-occurring items was a negative $1.6 million in comparison to a negative $1.1 million in the prior year and $1.2 million in the third quarter. By the way the EBITDA for the quarter includes the $1.2 million non-cash charge for the inventory write-downs. Operating loss for the fourth quarter increased 31% to $2.1 million from $1.6 million in the fourth quarter last year, driven largely by the $1.2 million inventory write-down. Now briefly turning to full-year 2015 results. Full-year 2015 revenues of $25.1 million were approximately $570,000 or 2% lower than 2014. Product revenues of about $21 million were approximately $3.1 million or 13% lower than 2014. R&D contact revenues however of $4.2 million were approximately $2.6 million higher than 2014. Total revenues for 2015 exceeded the guidance we provided during the third quarter by over $1.1 million. Full-year gross margins were 28% on $7 million. Gross profit compared to 29% on $7.4 million gross profit in 2014. Exclusive of the fourth quarter inventory write-down to 2015 gross margin would have been 32%. The gross margin in product sales was held by the increase in manufacturing overhead absorption over the prior year. R&D expense for the full-year 2015 decreased by approximately $400,000 or about 10% to $4.1 million. Overall R&D spend was higher in 2015 than 2014 as the company continues to invest and maintain the technology lead. However more of the R&D spending was absorbed by the higher volume of contract R&D activity during the year. Full-year SG&A expenses decreased by approximately 14% reflecting lowering administrative costs particularly salaries and benefits offset by higher non-recurring charges for severance and litigation. The favorable year-over-year comparisons also benefit from the reversal of an allowance for bad debts, which have been established in the fourth quarter of 2014. Overall, full-year 2015 operating expenses decreased 13% to $11 million from $12.6 million in 2014. EBITDA for 2015 was a negative $1.5 million, an improvement of $1.4 million over the 2014 EBITDA of negative $2.9 million. Excluding the non-cash charge for the inventory write-down inventory for the year would be about negative $300,000. Finally, the 2015 operating loss of $4.1 million, which includes the inventory write-down, represents $1.2 million improvement over the $5.3 million operating loss in 2014. Now taking a look at the balance sheet; at December 31, 2015, we had cash and cash equivalents of $9.3 million compared to $6 million at the end of 2014 and we continue to have no outstanding debt. Our quarterly cash level was boosted by the equity raise we completed in December. Additionally, we ended 2015 with significantly higher accounts receivable and unbilled revenue from Q3 driven by the timing of customer shipments and invoicing further boosting our working capital from the prior quarter. And finally regarding our thoughts for 2016; our base business continues to be sound and our military business continues to be solid. And entering 2016 we are strategically focused on supporting our military business and advancing our presence in the consumer marketplace. As we look ahead, we are encouraged by several factors, including growth in the Department of Defense budget for 2016 and 2017 after several years of flat to down spending. In our commercial business we are encouraged by the level of interest from well-recognized entities with whom we are in conversation. Additionally we are actively meeting with potential partners for high volume manufacturing to help us meet expected demand for commercial applications of our displays. In 2016, to speak to what Andrew mentioned before, we are looking to achieve several key milestones to drive sustainable shareholder value, including keeping the momentum going on in the partner front and remaining focused on our path back to profitability from existing product and services business. We expect to make progress in the business development efforts while achieving stable revenue performance over the short-term. Overall, we are very excited about the year ahead as we look to build on the momentum we have established to drive shareholder value in 2016. Finally, we are working steadily to advance technology and anticipate a large and new consumer military product this year. With that, I’ll turn it back over to Andrew for any additional comment.

Well, thank you very much, again everyone. What I will do now is open the call up for questions and after that may be I will add few more comments as well. So operator can we have the list of questions.

Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] And our first question today comes from Dennis Van Zelfden of Brazos Research. Please go ahead with your question.

Good afternoon, gentlemen.

Hi, Dennis.

Hi, Dennis.

Hi, I was – a couple clarifications to start off here, regarding your IP licensing agreement, does that cover the current 2K×2K product. I mean is the product finished, being developed?

Yes, thank you very much. Just to make sure that the license actually is – the IP is the headset IP. So we’re not licensing a consumer company for a – for the display technology that’s ours. And the display that they want is a full color, of course that has that high-resolution and has the size that our 2K×2K does. Now what we’re doing, remember I mentioned in my part of the talk, that we’re designing a new 2K×2K for our military program, but we’re also in parallel doing the same thing for the consumer. And we had two choices here we did produce 2K×2K with a PenTile type architecture and that just sorted by in the phone nodes that’s what Samsung does for their cell phones. Its one pixel is green and blue, the next one is green red, next one is green and blue and we could do that with the original 2K×2K. But we thought it much better to let’s move ahead and design the full three color. So every pixel is red, green and blue. So that’s what we’re doing. And the timeframe for this design meets the timeframe of the need of the company. Remember the company with our headset IP would have to design whatever headset they’re doing. That’s you’re using our IP to do that. So they’re not…

And again they were – they’re using your IP for the headset and your current 2K×2K display will go in that headset?

No, the actually the new one will.

The new one…

Yes. That’s much better I’d rather have, I don’t want to copy Samsung cell phone or that red green, red blue that’s really not as good only the green is. It would be 2K×2K the others would be 1K×2K. That’s not as good. So the headset part of the IP deal says they will supply them displays and they want to – they would rather have a full color as well, three color.

Okay, so any potential revenue from the displays that would go into the headset IP or even a new headset IP is quite a ways away, like not this year, correct?

Well, that’s not quite true. In terms of that they’re designing a headset right and we’re designing the new displays. We’ll have displays out at the end of the year. So they can put it in their headset then. I would hazard a guess that will be as fast designing with display as they will be their headset.

Okay. So you’re basically saying that the new, improved, enhanced 2K×2K full color everything will be in production, could be in production by the end of this year?

Yes, what would be more accurate is we’ll have the samples at the end of this year. And…

Okay.

Then we’ll supply companies and they tell us they would like production and we’ll go into production.

Okay, one last quick question here.

Please go ahead, no problem.

I think it was a goal of yours is to build inventory of products in order to be able to have much longer production runs going forward. One, is that correct? And two, has that initiative been started yet?

Yes, actually yes it is correct. And just so everybody on the phone knows because Jeff over here might not want to build the inventory. But the idea here is that when you – it doesn’t matter which OLED tool we’re talking about when you stop and change something the one tool takes two days, the old one. The new one takes really a shift to changing the masks is easy now but then when you get the tool up and running with the new since you shut it down for a moment. Cool down the sources it takes a while to get it running. It may take the rest of the day. So we wanted to stop that and actually we have done very nicely in this first quarter on building the inventory, getting the yields were helping us pretty well. And part of our goal here was to spend the capital to replace some equipment. And we’re doing that some of them are small costs $50,000 and there’s one larger cost but nowhere near a new OLED tool. And that’s going forward quickly we’re also hiring a few more engineers so that we can get the yield to hit our goal by through this year and the next year.

Let me just add a comment there just a clarification. Just when you look at our 10-K you’re actually going to see that our inventory went down by about $650,000 in the fourth quarter. That’s not including the write-down of the inventory because our intent was actually to carry down our inventory. But to what Andrew is speaking to as we sort of optimize the formula between longer production runs and better yields in one hand, versus higher working capital on the other, those benefits you likely start seeing in the first and second quarters.

Yes, that’s right, better. What I’m talking about it right now.

Okay. Thanks guys. Good luck.

And good memory. Thank you.

[Operator Instructions] Our next question comes from [indiscernible]. Please go ahead with your question.

Hi, Andrew and Jeff. How you guys doing?

Hi, Tom.

Good.

So just one more clarification on the licensing deal the $1 million was that – did that flow through the P&L in the quarter?

No, no it had not.

Okay.

So actually I mean, it hasn’t I mean if you’re going to see we’re going to start seeing the impact of that actually this year, but no it didn’t have any bearing on the fourth quarter.

Okay. So that recognized ratably somehow?

That’s correct we’re still working that out right now in terms with our accounts, [indiscernible] way to recognize that revenue.

Okay, yes, all right thank you for that. And then I guess you obviously didn’t give revenue guidance for the year which you, as a practice you did in the past under the former CFO. So I’m just wondering can you qualitatively give us some idea, if we will see sequential revenue growth as we move through the quarters of 2016?

Yes, let me add – let me speak to that. And Andrew you can add to it certainly, Tom. Yes, I’m the guy to blame for that probably. But I first of all it’s important that we underscore here that our revenues are solid and we’re entering a year with good momentum. So I want to put you at ease there. Our top line is stable and as you’re seeing opportunity in the military business that could even boost our revenues for this year. But I do want to just point out why we actually changed the position here, there’s change of philosophy. And our goal here, just to be clear, sort of move away from revenue numbers, and change the focus of our discussion to what we are doing really drive shareholder value. Now clearly revenue is one of these. But you know the other initiatives in which Andrew, I and the other members of the management team are working are the key elements of that shareholder value and quite frankly these are drivers they automatically impact revenue in the first year. So that’s kind of the thinking that we had. But I will point out again our revenues are solid and stable and I think we could be looking at a good year. Anything you want to add to that Andrew.

Again, there are some uncertainties to the upside so we don’t want to overstep our bound so that’s one shutter thing so in this consumer marketplace.

Okay. Thank you.

Sure.

Then I guess I was hoping that, I mean, you’ve mentioned a couple of design wins in your press release, is there any additional color that you can give us on any of those design wins? You mentioned several military wins in 2015 and then a new may be design win with the European customer, and so forth. Can you give us color on those?

Well, in that case the – in the press release I think we’ve talked about two design wins. One was a handheld night vision device. So most likely that’s military and one there’s another Asian one. So that these are military programs, two big ones that are moving forward and it’s good that they are international. I mentioned earlier that the French soldier monetization program is winding down. So that it's good to get the other international companies going up. And the other ones that we – I did mention is the aviation. Now that doesn't mean that the aviation will be a big number in 2016, but certainly for the future we’re on – we've actually again flight tested in a few of these – are only a few companies that do this sort of thing and we're getting good feedback. So that plus the new direct pattern displays with very high brightness that we’ve sampled to military for aviation. And frankly there is another company interested in commercial aviation, as well. I think they’re all very excited about that. So we should see that in the future as well. That's not to say that again it will be a big thing in 2016 but I think it will be a big deal for us in the coming years, maybe at the end of this year and going out into 2017, 2018. These are long-term programs.

Okay, great. And then one more from me then I'll turn it over. You talked about new equipment and tooling that you're installing, that sounded like during the current quarter. When do you expect to have that up and running the way you need it to be?

We actually have a roadmap for this that goes out into 2017. And that roadmap is what we've done as we sat down and we said we need a little money so we raised a little money. And what we’ve done is that here are issues with both up time in the equipment and yield and here is the things we have to fix. Some of them are rather long-term but some of them are immediate. And what we've done is and I can give you an example. We have the highest tool on the list. Probably the highest is about $1 million little over that $1.2 million. And when that goes down it's very old, when it goes down we end up having to substitute a tool for dual use. And that that does two things: one is it takes our throughput way down, cuts it in half and it also – every time we do this it affects the yield and makes the yield terrible. So the tool has been going down in 2015, enough is enough, so we have to replace it. But that tool is a little big not in another SNU type size tool. And it’s going to take us awhile, we've got the design, we've got the vendor, we have the roadmap to put it in, but it’s going to take us many months to get the tool built and put it in and then get it up and running. The other ones are smaller and faster. And there’s one other one that I don’t want to talk about because I don’t want to give any listeners in France or China any ideas, but the other one will take a little longer.

So are these inter-dependent or can you each one be installed independently of the others.

Yes, they’re independent, they really are.

Okay. All right, so you anticipate any disruption of your production that you’re looking on this.

Well the only one would be that longer term one that I wanted to talk about that that we got it planned very nicely. So that we don’t interrupt production, but it’s a longer term thing so you have to worry about that in 2017 not this year.

Okay. All right. Thanks, I’ll turn it over to another questioner. Thanks Andrew.

Thank you. Thanks, Bob.

[Operator Instructions] And ladies and gentlemen at this time, I’m showing no additional questions. I’d like to turn the conference call back over to management for any closing remarks.

I’d like to again thank everyone on the call. Thank you for your questions. This is an exciting time. And I know that many of you, who have been with us a long time have been waiting for this time for a long time as well. But VR and AR market is heating up. There was recently a report put out by Goldman Sachs that is very exciting and that is a good firm. So I encourage you all to take a look at that. And that’s the kind of thinking that goes into our capacity planning that’s why we’re talking to potential partners to make sure we can gear up on time. We looked good in production we are in the first quarter of this year. We are building the inventory like we said we should. And therefore we’re ahead of the curve. And therefore we’re not switching products. So rapidly within we’re not switching products within a week. That was our goal and that we’re doing. The other thing just to thank everybody we all have so much to do with in this company with working on the consumer potential consumer – consumer companies keeping the military programs on track making our new technology work. So everybody in the production, in the R&D, in the people working on the yield, in business development working with customers and the team of management here working on the potential partners has been an outstanding effort by everyone. So I want to thank everybody and the people in the Administrative group keeping our number straight. They’ve done an absolutely outstanding job as well. I want to thank Jeff, in particular here for coming on board and really cranking up what it is we need in terms of the financial management and the plan going forward. So I appreciate it.

I had a very exciting time.

It is. So we’re looking forward to great news in the close of this current quarter and talking about how the performance is going and where the really exciting things are. So thank you very much. And thank you all of the eMagin team an outstanding effort. This is going on in this board. Okay, thank you all.

Ladies and gentlemen, thank you for attending today’s conference. It is now concluded. We do thank you for joining. You may now disconnect your telephone lines.