KOPN 10-Q
Kopin Corp (KOPN)
UNITED STATES of AMERICA
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the quarterly period ended
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _____ to _____
Commission
file number
(Exact name of registrant as specified in its charter)
State or other jurisdiction of incorporation or organization |
(I.R.S. Employer Identification No.) | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s
telephone number, including area code:
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
| Class | Outstanding as of August 11, 2026 | |
| Common Stock, par value $ |
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to filing requirements for the past 90 days.
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ | |
| ☒ | Smaller reporting company | |||
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ☐ No
Kopin Corporation
INDEX
| 2 |
Part 1. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements (Unaudited)
KOPIN CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
| June 27, 2026 | December 27, 2025 | |||||||
| (unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash and cash equivalents | ||||||||
| Accounts receivable, net of allowance of $ | ||||||||
| Contract assets | ||||||||
| Grant income receivable | ||||||||
| Inventory | ||||||||
| Other receivable, at fair value | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Property, plant and equipment, net | ||||||||
| Operating lease right-of-use assets | ||||||||
| Other assets | ||||||||
| Equity method investment, at fair value | ||||||||
| Equity investments | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK, AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued payroll and expenses | ||||||||
| Accrued warranty | ||||||||
| Contract liabilities | ||||||||
| Deferred grant income | ||||||||
| Operating lease liabilities | ||||||||
| Accrued post-retirement benefits | ||||||||
| Other accrued liabilities | ||||||||
| Deferred tax liabilities | ||||||||
| Accrued litigation damages | ||||||||
| Total current liabilities | ||||||||
| Non-current contract liabilities, and asset retirement obligations | ||||||||
| Operating lease liabilities, net of current portion | ||||||||
| Accrued post-retirement benefits, net of current portion | ||||||||
| Other long-term liabilities, net of current portion | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Note 16) and Litigation (Note 17) | ||||||||
| Series A redeemable convertible preferred stock, par value $, stated value $ | ||||||||
| Stockholders’ equity: | ||||||||
| Common stock, par value $; shares authorized as of June 27, 2026 and December 27, 2025, issued as of December 27, 2025, and outstanding at June 27, 2026 and at December 27, 2025 | ||||||||
| Additional paid-in capital | ||||||||
| Treasury stock shares at June 27, 2026 and shares at December 27, 2025, at cost | ( | ) | ( | ) | ||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ||||||||
| Total liabilities, redeemable convertible preferred stock, and stockholders’ equity | $ | $ | ||||||
See notes to unaudited condensed consolidated financial statements
| 3 |
KOPIN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| Three Months Ended June 27, 2026 | Three Months Ended June 28, 2025 | Six Months Ended June 27, 2026 | Six Months Ended June 28, 2025 | |||||||||||||
| Revenues: | ||||||||||||||||
| Net product revenues | $ | $ | $ | $ | ||||||||||||
| Research and development revenues | ||||||||||||||||
| Grant income | ||||||||||||||||
| Collaboration arrangement income | ||||||||||||||||
| License and other revenues | ||||||||||||||||
| Total revenues | ||||||||||||||||
| Expenses: | ||||||||||||||||
| Cost of product revenues | ||||||||||||||||
| Research and development – Funded | ||||||||||||||||
| Research and development – Internal | ||||||||||||||||
| Selling, general and administrative | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Non-operating income (expense), net: | ||||||||||||||||
| Interest income | ||||||||||||||||
| Other (expense) income, net | ( | ) | ( | ) | ( | ) | ||||||||||
| Foreign currency transaction gains | ||||||||||||||||
| Loss on impairment of investments, net | ( | ) | ( | ) | ||||||||||||
| Gain on investments | ||||||||||||||||
| Total non-operating income | ||||||||||||||||
| Loss before provision for income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Benefit (provision) for income taxes | ( | ) | ( | ) | ||||||||||||
| Net income (loss) | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| Net income (loss) per share attributable to common stockholders: | ||||||||||||||||
| Basic | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| Diluted | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| Weighted average number of common shares outstanding: | ||||||||||||||||
| Basic | ||||||||||||||||
| Diluted | ||||||||||||||||
See notes to unaudited condensed consolidated financial statements
| 4 |
KOPIN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF comprehensive loss
(Unaudited)
| Three Months Ended | Three Months Ended | Six Months Ended | Six Months Ended | |||||||||||||
| June 27, 2026 | June 28, 2025 | June 27, 2026 | June 28, 2025 | |||||||||||||
| Net income (loss) | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| Other comprehensive income, net of tax: | ||||||||||||||||
| Foreign currency translation adjustments | ( | ) | ( | ) | ||||||||||||
| Unrealized holding (loss) gain on marketable securities | ( | ) | ( | ) | ||||||||||||
| Other comprehensive income, net of tax | ( | ) | ( | ) | ||||||||||||
| Comprehensive income (loss) | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
See notes to unaudited condensed consolidated financial statements
| 5 |
KOPIN CORPORATION
Condensed Consolidated Statements of REDEEMABLE CONVERTIBLE PREFERRED STOCK and Stockholders’ Equity
(Unaudited)
| Redeemable Convertible Preferred Stock | Common Stock | Additional Paid-in | Treasury | Accumulated Other Comprehensive | Accumulated | Total Stockholders’ | ||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Stock | Income | Deficit | Equity | ||||||||||||||||||||||||||||
| Balance, December 27, 2025 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||||||
| Stock-based compensation expense | — | — | ||||||||||||||||||||||||||||||||||
| Dividend on Series A Redeemable Convertible Preferred Stock | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Balance, March 28, 2026 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||||||
| Prefunded warrant exercise | — | |||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | — | — | ||||||||||||||||||||||||||||||||||
| Conversion of preferred stock into common stock | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Vesting of restricted stock | — | ( | ) | |||||||||||||||||||||||||||||||||
| Restricted stock for withholding obligations | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Net income | — | — | ||||||||||||||||||||||||||||||||||
| Balance, June 27, 2026 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||||||
| Balance, December 28, 2024 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||
| Stock-based compensation expense | — | — | ||||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Balance, March 29, 2025 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||
| Vesting of restricted stock | — | ( | ) | |||||||||||||||||||||||||||||||||
| Stock-based compensation expense | — | — | ||||||||||||||||||||||||||||||||||
| Other comprehensive Income (loss) | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Restricted stock for withholding obligations | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Balance, June 28, 2025 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||
See notes to unaudited condensed consolidated financial statements
| 6 |
KOPIN CORPORATION
Condensed Consolidated Statements of Cash Flows
(UNAUDITED)
| Six Months Ended | Six Months Ended | |||||||
| June 27, 2026 | June 28, 2025 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Stock-based compensation | ||||||||
| Loss on sale of property and equipment | ||||||||
| Non-cash (gain) loss on equity investments | ( | ) | ||||||
| Gain on sale of equity investment | ( | ) | ||||||
| Income taxes | ( | ) | ||||||
| Foreign currency gains | ( | ) | ( | ) | ||||
| Provision for bad debt | ||||||||
| Noncash provision for excess inventory | ||||||||
| Changes in assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Contract assets | ||||||||
| Grant Income Receivable | ( | ) | ||||||
| Inventory | ( | ) | ||||||
| Prepaid expenses and other current assets | ( | ) | ( | ) | ||||
| Other receivable | ||||||||
| Accounts payable and accrued expenses | ( | ) | ||||||
| Accrued warranty | ( | ) | ( | ) | ||||
| Contract liabilities | ||||||||
| Deferred collaboration arrangement income | ||||||||
| Deferred grant income | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities: | ||||||||
| Proceeds from sale of marketable securities | ||||||||
| Proceeds from sale of equity investment | ||||||||
| Capital expenditures | ( | ) | ( | ) | ||||
| Purchases of marketable securities | ( | ) | ||||||
| Other assets | ( | ) | ||||||
| Net cash provided by (used in) investing activities | ( | ) | ||||||
| Cash flows from financing activities: | ||||||||
| Settlements of restricted stock for tax withholding obligations | ( | ) | ( | ) | ||||
| Conversion of preferred stock | ( | ) | ||||||
| Exercise of prefunded warrant | ||||||||
| Net cash provided by financing activities | ( | ) | ( | ) | ||||
| Effect of exchange rate changes on cash | ||||||||
| Net change in cash, cash equivalents and restricted cash | ( | ) | ||||||
| Cash, cash equivalents and restricted cash at beginning of year | ||||||||
| Cash, cash equivalents and restricted cash at end of year | $ | $ | ||||||
See notes to unaudited condensed consolidated financial statements
| 7 |
KOPIN CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Kopin Corporation is a leading developer and provider of innovative display, and application-specific optical solutions sold as critical components and subassemblies for defense, enterprise, medical, professional and consumer products. Kopin’s portfolio includes microdisplays, display modules, eyepiece assemblies, image projection modules, and vehicle mounted and head-mounted display systems that incorporate ultra-small high-resolution Active Matrix Liquid Crystal displays (“AMLCD”), Ferroelectric Liquid Crystal on Silicon (“FLCoS”) displays, MicroLED displays (“µLED”) and Organic Light Emitting Diode (“OLED”) displays, a variety of optics, and low-power ASICs.
1. BASIS OF PRESENTATION
The condensed consolidated financial statements of Kopin Corporation as of June 27, 2026 and for the three and six month periods ended June 27, 2026 and June 28, 2025 are unaudited and include all normal recurring adjustments that, in the opinion of management, are necessary to present fairly the results of operations for the periods then ended. These condensed consolidated financial statements should be read in conjunction with the Company’s financial statements and notes thereto, included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 27, 2025, as amended. The results of the Company’s operations for any interim period are not necessarily indicative of the results of the Company’s operations for any other interim period or for a full fiscal year. As used in this report, the terms “we”, “us”, “our”, “Kopin” and the “Company” mean Kopin Corporation and its subsidiaries, unless the context indicates another meaning.
Principles of Consolidation
The condensed consolidated financial statements for the three and six month periods ended June 27, 2026 and June 28, 2025 include the accounts of Kopin Corporation and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated.
As of October 16, 2025, the Company no longer has a controlling financial interest in Kopin Europe Ltd. and the assets and liabilities and operations of Kopin Europe Ltd. were deconsolidated (“Deconsolidation”). The assets and liabilities of Kopin Europe Ltd. are no longer included within the Company’s December 27, 2025 consolidated balance sheet. Any discussions related to results, operations, and accounting policies associated with Kopin Europe Ltd. are referring to the periods prior to Deconsolidation. Subsequent to Deconsolidation, the Company accounted for our equity ownership interest in Kopin Europe Ltd. under the equity method of accounting using the fair value option under ASC 825, Financial Instruments (“ASC 825”), (See Note 3, “Strategic Investment from Theon”).
Liquidity
The
accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization
of assets and the satisfaction of liabilities in the normal course of business. The Company incurred a net loss of $
As
of December 28, 2024, the Company had $
While
the Company has appealed the verdict, the bond is available to satisfy the payment of the judgment, interest, and fees should the Company’s
appeal be unsuccessful. Moreover, the Company raised approximately $
| 8 |
Revenue Recognition
Substantially all the Company’s product and license and other revenues are derived from the sales of components and subassemblies and the license of intellectual property for use in defense and industrial applications. The Company also has development contracts for the design, manufacture and or modification of products for the U.S. Government or prime contractors for the U.S. Government and for customers that expect to sell into the defense markets. The Company may offer technologies developed under these defense research and development contracts in products sold to industrial, medical and consumer markets. The Company’s contracts with the U.S. Government are typically subject to the Federal Acquisition Regulations (“FAR”) and are priced based on estimated or actual costs of producing goods. The FAR provides guidance on the types of costs that are allowable in establishing prices for goods provided under U.S. Government contracts. The pricing for non-U.S. Government contracts is based on the specific negotiations with each customer.
In accordance with ASC 606 Revenue from Contracts with Customers (“ASC 606”), revenue is recognized when a customer obtains control of promised products, and the amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for these products and excludes taxes collected from customers which are subsequently remitted to government authorities. Pursuant to the contract terms, shipping and handling activities occur prior to the transfer of control of the Company’s products to customers and are therefore accounted for as fulfillment costs rather than as a separate performance obligation.
The Company applies the following five steps to guide revenue recognition:
| 1) | Identify the contract(s) with a customer—A contract with a customer exists when (i) the Company enters into an enforceable contract with a customer that defines each party’s rights regarding the products to be transferred and identifies the payment terms related to those products, (ii) the contract has commercial substance and (iii) the Company determines that collection of substantially all consideration for products that are transferred is probable based on the customer’s intent and ability to pay the promised consideration. The Company’s contracts are typically in the form of a purchase order. For certain large customers, the Company may also enter into master service agreements that define general terms but are not customer commitments to purchase until coupled with a purchase order. The Company applies judgment in determining the customer’s ability and intention to pay, which is based on a variety of factors including the customer’s historical payment experience or published credit and financial information pertaining to the customer. | |
| 2) | Identify the performance obligations in the contract—Performance obligations promised in a contract are identified based on the products and services that will be transferred. A product or service is distinct if both a) the customer can benefit from the product or service either on its own or together with other resources that are readily available from third parties or from the Company, and b) is separately identifiable from other promises in the contract. To the extent a contract includes multiple promised products or services, the Company must apply judgment to determine whether the products or services meet the criteria to be distinct. If these criteria are not met the promised products or services are accounted for as a combined performance obligation. |
| 9 |
| 3) | Determine the transaction price—The transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring products to the customer. The Company historically does not have contracts with variable consideration but to the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price utilizing either the expected value method or the most likely amount method depending on the nature of the variable consideration. Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. | |
| 4) | Allocate the transaction price to the performance obligations in the contract—If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. The Company’s contracts do not typically contain multiple performance obligations that require an allocation of the transaction price to each performance obligation on a relative Stand-alone Sales Price (“SSP”). | |
| 5) | Recognize revenue when (or as) the Company satisfies a performance obligation—The Company satisfies performance obligations either over time or at a point in time as discussed in further detail below. Revenue is recognized at the time the related performance obligation is satisfied by transferring a promised product or service to a customer. |
Product Revenues
For certain contracts with prime contractors for the U.S. Government, the Company recognizes product revenue over time as the Company performs because of continuous transfer of control to the customer and the lack of an alternative use for the product. The continuous transfer of control to the customer is supported by liability clauses in the contract that allow the U.S. Government to unilaterally terminate the contract for convenience, pay the Company for costs incurred plus a reasonable profit and take control of any work in process and finished goods.
In situations where control transfers over time, product revenue is recognized based on the extent of progress towards completion of the performance obligation. The Company uses the cost-to-cost input method to measure the extent of progress towards completion of the performance obligation for its contracts because the Company believes it best depicts the transfer of assets to the customer. Under the cost-to-cost input method, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation which includes the expected yield which is a significant judgment. Revenues are recorded proportionally as costs are incurred.
For certain contracts with prime contractors for the U.S. Government and commercial customers, while the contract may have a similar liability clause, the Company’s products historically have an alternative use and thus, revenue is recognized at a point in time upon transfer of control. Provisions for product returns and allowances are reductions in the transaction price and are recorded in the same period as the related revenues. The Company analyzes historical returns, current economic trends and changes in customer demand when evaluating the adequacy of sales returns and other allowances.
Research & Development Contracts
For most of the Company’s development contracts and contracts with the U.S. Government, the customer contracts with the Company to provide a significant service of integrating a set of components into a single unit. Since these components are not capable of being distinct or distinct within the context of the contract, the entire contract is accounted for as one performance obligation. If there is a follow-on production contract it is assessed whether it is a contract modification or a new contract.
In situations where control transfers over time, revenue is recognized based on the extent of progress towards completion of the performance obligation. The Company generally uses an input method using the cost-to-cost approach to measure the extent of progress towards completion of the performance obligation for its contracts because the Company believes it best depicts the transfer of assets to the customer. Under the cost-to-cost measure approach, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs, including material, labor and overhead. at completion of the performance obligation which requires management to use significant assumptions and judgements. Revenues are recorded proportionally as costs are incurred. The Company recognizes revenue at a point in time for certain contracts because the related performance obligations are satisfied upon delivery and transfer of control to the customer.
| 10 |
The Company’s fixed-price contracts with the U.S. Government or other customers may result in revenue recognized in excess of amounts currently billed. The Company discloses the excess of revenues over amounts actually billed as Contract assets and unbilled receivables on the consolidated balance sheets. Amounts billed and due from the Company’s customers are classified as Accounts receivable on the consolidated balance sheets. In some instances, the U.S. Government may retain a small portion of the contract price until completion of the contract. For contracts with the U.S. Government and some commercial customers, the Company typically receives payments either as work progresses or by achieving certain milestones or based on a schedule in the contract. The Company recognizes a liability for these advance payments in excess of revenue recognized and present it as Contract liabilities and billings in excess of revenue earned on the consolidated balance sheets. Advanced payments typically are not considered a significant financing component because it is used to meet working capital demands that can be higher in the early stages of a contract and to protect the Company from the other party failing to adequately complete some or all of its obligations under the contract. For industrial and consumer purchase orders, the Company typically receives payments within 30 to 60 days of shipment of the product, although for some purchase orders, the Company may require an advanced payment prior to shipment of the product.
License and other revenues
The rights and benefits to the Company’s intellectual property are conveyed to certain customers through royalty-bearing technology license agreements. These sales-based royalties are recognized when they are earned. Revenues from sales-based royalties under license agreements are shown under License and other revenues on the Company’s consolidated statements of operations.
Contract Assets
Contract assets include unbilled amounts typically resulting from sales under contracts when the cost-to-cost method of revenue recognition is utilized and revenue recognized from customer arrangements, including licensing, exceeds the amount billed to the customer, and right to payment is not just subject to the passage of time. Amounts may not exceed their net realizable value. Contract assets are generally classified as current. The Company classifies the noncurrent portion of contract assets under Other assets in its consolidated balance sheets.
Contract Liabilities
Contract liabilities consist of advance payments and billings in excess of revenue recognized for the contract.
Performance Obligations
The Company’s revenue recognition related to performance obligations that were satisfied at a point in time and over time for our contracts accounted for in accordance with ASC 606 were as follows:
| Three Months Ended | Three Months Ended | Six Months Ended | Six Months Ended | |||||||||||||
| Fiscal year ended | June 27, 2026 | June 28, 2025 | June 27, 2026 | June 28, 2025 | ||||||||||||
| Point in time | % | % | % | % | ||||||||||||
| Over time | % | % | % | % | ||||||||||||
| 11 |
The
value of remaining performance obligations represents the transaction price of orders for which work has not been performed and excludes
unexercised contract options and potential orders under ordering-type contracts. As of June 27, 2026, the aggregate amount of the transaction
price allocated to remaining performance obligations was $
Government Grants
The Company accounts for government grants which are not considered exchange transactions in accordance with ASC 832, Government Assistance (“ASC 832”). These grants generally provide the Company with payments for certain types of expenditures in return for research and development activities. The Company recognizes the government grant as grant revenue in the consolidated statement of operations, as the grants relate to improving the design of an already existing product that the Company regularly sells to other customers. Such amounts are recognized on a systematic basis in proportion with the related qualifying costs incurred, applying judgment to determine when grant conditions are met and when grant proceeds are no longer subject to clawback or performance uncertainty. Proceeds received before recognition of the related grant revenues are recorded as deferred grant income within Other current liabilities in the consolidated balance sheet. Grant contract assets include unbilled amounts resulting from recognized grant revenues in excess of billings. Grant contract assets are generally classified as current assets in the consolidated balance sheet. Costs associated with such grants are recorded as a component of funded research and development expenses in the consolidated statements of operations.
Collaborative Arrangements
At the inception of an agreement, the Company evaluates if an agreement is a collaborative arrangement within the scope of ASC 808, Collaborative Arrangements (“ASC 808”). For collaborative arrangements that fall within the scope of ASC 808, the Company first determines which elements of the collaboration are deemed to be a performance obligation with a customer within the scope of ASC 606. For elements of collaboration arrangements that are accounted for pursuant to ASC 808 and are subject to the guidance in ASC 606, the Company applies the revenue recognition model under ASC 606 or other guidance, as deemed appropriate. The Company generally recognizes proceeds under collaborative arrangements within the scope of ASC 808 using a cost-to-cost methodology consistent with the underlying project economics within Collaboration revenues in the consolidated statements of operations. Proceeds received before recognition of the related collaboration revenues are recorded as deferred collaboration income within Other current liabilities in the consolidated balance sheet. Costs associated with such arrangements are recorded as a component of funded research and development expenses in the consolidated statements of operations.
2. ACCOUNTING STANDARDS
Recently Issued Accounting Pronouncements
In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (“ASU 2024-03”), which requires disaggregated disclosure of income statement expenses for public business entities (“PBEs”). The ASU does not change the expense captions an entity presents on the face of the income statement; rather, it requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial statements. ASU 2024-03 is effective for all PBEs for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact that this guidance will have on the presentation of its consolidated financial statements and accompanying notes.
In September 2025, the FASB issued ASU No. 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software (“ASU 2025-6”). ASU 2025-06 changes the accounting for internal-use software under Accounting Standards Codification (“ASC”) 350-40. ASU 2025-06 clarifies when to begin capitalizing costs. ASU 2025-06 is effective for interim and annual periods beginning after December 15, 2027, with early adoption permitted. Based on management’s assessment, ASU 2025-6 is not expected to have a material impact on its consolidated financial statements and accompanying notes.
| 12 |
3. STRATEGIC INVESTMENT FROM THEON
On
August 8, 2025, the Company announced certain strategic agreements (collectively, the “Agreements”) for an aggregate
of $
| (i) | Theon acquired a |
| (ii) | the parties entered into a licensing and collaboration agreement dated October 16, 2025 (the “License and Collaboration Agreement” or “LCA”) relating to the joint development of military products; and |
| (iii) | Theon purchased for $ |
As a result of the sale of equity interests in Kopin Europe Ltd. and the existence of certain substantive participating rights provided to Theon, it was deemed that Kopin Corporation lost its controlling financial interest in Kopin Europe Ltd., a variable interest entity, as of October 16, 2025. Accordingly, it was determined that for accounting purposes the Company is not the primary beneficiary and elected to account for its equity method investment in Kopin Europe at fair value (Refer to Note 5 for further information).
The
License and Collaboration Agreement between Kopin Corporation, Kopin Europe, and Theon, together with associated side letters, established
a framework for joint development and commercialization of multiple product categories, including the DarkWave module, DarkWave subsystem,
Theon End Product, certain MicroLED displays, and OLED displays. As of June 27, 2026 total committed funding received by Kopin Corporation
from Theon under the LCA was $
4. JOINT DEVELOPMENT AND LICENSE AGREEMENT WITH FABRIC.AI
On
April 27, 2026, the Company entered into a Joint Development & License Agreement (“JDLA”) with Fabric.AI, Inc.
(formerly StableX Technologies, Inc.) (“Fabric AI”), under which the parties agreed to jointly develop and commercialize
certain Graphics Processing Unit to Graphics Processing Unit “ GPU to GPU” connectivity technologies. Fabric.AI is obligated to fund up to $
On the same date, the Company also executed a commercial supply agreement with Fabric.AI. Under this agreement, Kopin will manufacture and supply products incorporating the jointly developed project technology, and Fabric.AI will act as the exclusive commercial market seller for certain markets, not including certain government and military markets. The agreement outlines exclusivity terms, supply obligations, and a process for establishing manufacturing ramp up plans, pricing, and forecasting.
As
of June 27, 2026, total committed funding received by Kopin Corporation from Fabric.AI under the JDLA was $
| 13 |
5. FINANCIAL INSTRUMENTS
Fair Value Measurements
Financial instruments are categorized as Level 1, Level 2 or Level 3 based upon the method by which their fair value is computed. An investment is categorized as Level 1 when its fair value is based on unadjusted quoted prices in active markets for identical assets that the Company has the ability to access at the measurement date. An investment is categorized as Level 2 if its fair market value is based on quoted market prices for similar assets in active markets, quoted prices for identical or similar assets in markets that are not active, based on observable inputs such as interest rates, yield curves, or derived from or corroborated by observable market data by correlation or other means. The Company’s Level 2 investments are based on a yield to maturity models and market interest rates. An investment is categorized as Level 3 if its fair value is based on unobservable inputs for the asset.
The following table details the recurring fair value measurements of the Company’s financial assets:
| Fair Value Measurement at June 27, 2026 Using: | ||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | |||||||||||||
| Money market fund holdings in cash equivalents | $ | |||||||||||||||
| Certificates of deposit | ||||||||||||||||
| Equity Investments | ||||||||||||||||
| Other receivable | ||||||||||||||||
| Financial instruments, owned, at fair value | $ | |||||||||||||||
The following table summarizes the changes in financial assets measured at fair value on a recurring basis and categorized as Level 3 under the fair value hierarchy for the three months ended June 27, 2026:
| Total | Equity Investments | Other Receivable | ||||||||||
| Beginning balance | $ | $ | $ | |||||||||
| Additions | ||||||||||||
| Gain (Loss) from changes in fair value | ( | ) | ||||||||||
| Ending balance | $ | $ | $ | |||||||||
| Fair Value Measurement at December 27, 2025 Using: | ||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | |||||||||||||
| Money market fund holdings included in cash equivalents | $ | $ | $ | $ | ||||||||||||
| Certificates of deposit | ||||||||||||||||
| Equity Investments | ||||||||||||||||
| Other receivable | ||||||||||||||||
| Financial instruments, owned, at fair value | $ | $ | $ | $ | ||||||||||||
The
carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate fair value
because of their short-term nature. There was $
| 14 |
Marketable Securities
The Company validates the fair market values of the financial instruments below by using a model that incorporates current interest rates and remaining term. The restricted cash balance at June 27, 2026 and December 27, 2025 with the exception of the bonded restricted cash, is invested in a certificate of deposit and money market funds. Investments in available-for-sale marketable securities are as follows at June 27, 2026 and December 27, 2025:
| Amortized Cost | Unrealized Gain | Fair Value | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Certificates of deposit | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
The contractual maturity of the Company’s marketable debt securities were less than three months as of June 27, 2026 and less than one year as of December 27, 2025.
Equity Investments
The Company’s equity investments consisted of the following at June 27, 2026 and December 27, 2025:
| June 27, 2026 | December 27, 2025 | |||||||
| Equity investments – measurement alternative | $ | $ | ||||||
| Equity investments – equity-method accounting, at fair value | ||||||||
| Equity investments – at fair value | ||||||||
| Equity investments | $ | $ | ||||||
Equity Investments- Measurement Alternative
Equity
investments rarely traded or not quoted will generally have less (or no) pricing observability and a higher degree of judgment utilized
in measuring fair value. Initial measurement of equity investments occurs when an observable price for the equity investment is available.
The Company adopted the measurement alternative for equity investments without readily determinable fair values, which is often referred
to as cost method investments, adjusted for changes in observable market transaction. As a result, these investments are revalued upon
occurrence of an observable price change for similar investments and for impairments. As of June 27, 2026 and December 27, 2025, the
carrying value of these equity investments was $
The
Company has an equity investment in RealWear Inc. In the first quarter of 2025, the Company reviewed the financial condition and as a
result, the Company recorded an impairment charge of less than $
The
Company has an equity investment in Solos Incorporation (“Solos Inc.”). The carrying value of this equity investment was
$
The
Company has an equity investment in HMDmd, a medical device company. The carrying value of this equity investment was $
The
Company has an equity interest in a Lenovo New Vision which it acquired through purchasing capital and contributing certain intellectual
property. As of June 27, 2026, the Company owned an approximate
Equity Investments – At Fair Value
The
Company owns a minority interest in Global Communication Semiconductors, Inc. which is traded on the Taipei Exchange. The carrying value
of this investment was $
| 15 |
On
April 27, 2026, the Company entered into the JDLA with Fabric AI, under which the parties agreed to jointly develop and commercialize certain GPU
to GPU connectivity technologies. The agreement provides for joint ownership of Project Technology and includes the issuance of Convertible
Preferred Stock to Kopin designed to give Kopin approximately 19.99% of Fabric.AI’s outstanding common stock. The accounting
for the equity interest in Fabric.AI is established in accordance with ASC 321. As a result, changes in fair value are recognized as
other income (expense) within gain (loss) on investments in the consolidated statements of operations. The fair value of this investment
was measured using level 3 methodologies in the fair value hierarchy in accordance with ASC 820. As of April 27, 2026 and June 27, 2026, the level 3 methodologies included a binomial model with a estimated
Equity-Method Investment, At Fair Value
On
October 16, 2025, the Company completed a $
Other Receivables
Historically,
the Company has provided Kopin Europe Ltd. with a loan to fund operations. Following the Deconsolidation of Kopin Europe, Ltd. on
October 16, 2025, the loan is no longer eliminated in consolidation. The loan has no stated repayment terms, bears interest at an
annual rate of
6. ACCOUNTS RECEIVABLE, NET
Accounts receivable consisted of the following:
| June 27, 2026 | December 27, 2025 | |||||||
| Accounts receivable | $ | $ | ||||||
| Less — allowance for credit losses | ( | ) | ( | ) | ||||
| Total | $ | $ | ||||||
Changes to the allowance for credit losses for the three months ended June 27, 2026 were as follows:
| Balance, December 27, 2025 | $ | |||
| Write-offs | $ | ( | ) | |
| Additions charged to operations | $ | |||
| Balance, June 27, 2026 | $ |
| 16 |
7. INVENTORY
Inventories are stated at standard cost adjusted to approximate the lower of cost (first-in, first-out method) or net realizable value and consist of the following at June 27, 2026 and December 27, 2025:
| June 27, 2026 | December 27, 2025 | |||||||
| Raw materials | $ | $ | ||||||
| Work-in-process | ||||||||
| Finished goods | ||||||||
| Total | $ | $ | ||||||
Basic net income or loss per share attributable to common stockholders is computed using the weighted-average number of shares of common stock outstanding during the period including the pre-funded warrants, less any nonvested restricted shares. The Company adjusts net income or loss attributable to common stockholders for dividends and deemed dividends on convertible preferred stock.
Diluted net income or loss per share is calculated using the treasury-stock method or the if-converted method, as applicable, for potentially dilutive instruments but such instruments are excluded from the calculation of diluted net loss per share, when their effect would be anti-dilutive for the periods presented.
| Three Months Ended | Three Months Ended | Six Months Ended | Six Months Ended | |||||||||||||
| June 27, 2026 | June 28, 2025 | June 27, 2026 | June 28, 2025 | |||||||||||||
| Weighted average common shares outstanding-basic | ||||||||||||||||
| Stock options and non-vested restricted common stock | ||||||||||||||||
| Weighted average common shares outstanding-diluted | ||||||||||||||||
| Three Months Ended | Three Months Ended | Six Months Ended | Six Months Ended | |||||||||||||
| June 27, 2026 | June 28, 2025 | June 27, 2026 | June 28, 2025 | |||||||||||||
| Nonvested restricted common stock | ||||||||||||||||
| Stock options | ||||||||||||||||
| Total | ||||||||||||||||
| 17 |
9. SERIES A CONVERTIBLE PREFERRED STOCK
As of June 27, 2026 and December 27, 2025, the authorized capital stock of the Company included shares of $ par value preferred stock, of which shares have been designated as Series A convertible preferred stock. No shares of Series A Convertible Preferred Stock were issued or outstanding as of June 27, 2026.
On
May 28, 2026 Theon exercised its conversion right under the Certificate of Designation to convert all outstanding shares of Series
A Convertible Preferred stock into shares of Common Stock. The conversion was effected at a conversion price of $
As of December 27, 2025, the authorized capital stock of the Company included shares of $ par value preferred stock, of which shares had been designated as Series A convertible preferred stock, of which shares were issued and outstanding.
On October 16, 2025, the Company issued and sold shares of Series A convertible preferred stock at a price of $ per share. The Series A convertible preferred stock was recorded based on its fair value at issuance. The Company assessed the convertible preferred stock for any embedded derivatives that would require bifurcation on the date of each issuance and concluded that there were no such features with more than a de minimis fair value.
Registered sale of equity securities
On
September 29, 2025, the Company entered into a securities purchase agreement (the “Purchase Agreement”) for a private investment
in public equity financing (the “PIPE”) for shares of its common stock, par value $ per share (the “Shares”).
The net proceeds to the Company from the offering were approximately $
| 18 |
Non-Vested Restricted Common Stock
Restricted stock activity for the six-month period ended June 27, 2026 was as follows:
| Shares | Weighted Average Grant-Date Fair Value | Grant-Date Fair Value | ||||||||||
| Non-vested at December 27, 2025 | $ | $ | ||||||||||
| Granted | $ | |||||||||||
| Forfeited | ( | ) | $ | ( | ) | |||||||
| Vested | ( | ) | $ | ( | ) | |||||||
| Non-vested at June 27, 2026 | $ | |||||||||||
| Expected to vest | $ | $ | ||||||||||
Stock-Based Compensation
| Three Months Ended | Three Months Ended | Six Months Ended | Six Months Ended | |||||||||||||
| June 27, 2026 | June 28, 2025 | June 27, 2026 | June 28, 2025 | |||||||||||||
| Cost of product revenues | $ | $ | $ | $ | ||||||||||||
| Research and development | ||||||||||||||||
| Selling, general and administrative | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
Unrecognized compensation expense for non-vested restricted common stock as of June 27, 2026 totaled $ million and is expected to be recognized over a weighted average period of approximately years.
Stock Options
During the six months ended June 27, 2026, an option award for shares of the Company’s common stock was granted to the Chief Executive Officer. These options have a strike price of $ and vest over a year period. During the six months ended June 27, 2026, the Company recorded incremental stock-based compensation of less than $ million as a result of the granting of stock option awards. As of June 27, 2026, there was approximately $ million of unrecognized compensation cost related to unvested options. The cost is expected to be recognized over a weighted average period of years.
| 19 |
| Three Months Ended | Six Months Ended | |||||||
| June 27, 2026 | June 27, 2026 | |||||||
| Average risk-free interest rate | % | % | ||||||
| Expected dividend yield | ||||||||
| Expected life (average, in years) | ||||||||
| Expected volatility | % | % | ||||||
| Weighted average exercise price | $ | $ | ||||||
| Weighted average fair value | $ | $ | ||||||
The Company’s 2026 average expected volatility and average expected life is based on the average of the Company’s historical information. The risk-free rate is based on the rate of U.S. Treasury zero-coupon issues with a remaining term equal to the expected life of option grants. The Company has paid no dividends on its common stock in the past and does not anticipate paying any dividends in the future.
| Number of Options | Weighted Average Exercise Price | Intrinsic Value | ||||||||||
| Outstanding as of December 27, 2025 | $ | $ | ||||||||||
| Granted | $ | — | ||||||||||
| Outstanding as of June 27, 2026 | $ | $ | ||||||||||
| Options exercisable as of June 27, 2026 | $ | $ | ||||||||||
11. ACCRUED WARRANTY
The
Company typically warrants its products against defect for
| Balance, December 27, 2025 | $ | |||
| Additions | ||||
| Claims | ( | ) | ||
| Balance, June 27, 2026 | $ |
12. INCOME TAXES
The
Company recorded an income tax benefit of $
| 20 |
13. CONTRACT ASSETS AND LIABILITIES
Contract assets include unbilled amounts typically resulting from sales under contracts when the cost-to-cost method of revenue recognition is utilized and revenue recognized from customer arrangements, including licensing, exceeds the amount billed to the customer, and right to payment is not just subject to the passage of time. Amounts may not exceed their net realizable value. Contract assets are generally classified as current. The Company classifies the noncurrent portion of contract assets under Other assets in its condensed consolidated balance sheets.
Contract liabilities consist of advance payments and billings in excess of revenue recognized for the contract.
Net contract assets (liabilities) consisted of the following:
| June 27, 2026 | December 27, 2025 | |||||||
| ASC 606 Contract assets | $ | $ | ||||||
| ASC 606 Current contract liabilities and billings in excess of revenue earned | ( | ) | ( | ) | ||||
| ASC 606 Noncurrent contract liabilities | ( | ) | ( | ) | ||||
| Grant income receivable | ||||||||
| Collaboration contract assets (recorded in Prepaid expenses and other current assets) | ||||||||
| Deferred grant income | ( | ) | ||||||
The
$
The
$
The Company records ASC 606 contract assets or contract liabilities on a contract-by-contract basis. The Company records a contract asset for unbilled revenue when the Company’s performance exceeds amounts billed. The Company classifies the contract asset as either current or non-current based on the expected timing of the Company’s right to bill under the terms of the contract, which the Company expects to be able to bill for within one year.
Contract liabilities consist of payments received in advance of product shipment. The liability is removed with shipment of the product.
In
the three and six months ended June 27, 2026, the Company recognized revenue of $
The Company did not recognize impairment losses on its contract assets in the three and six months ended June 27, 2026, or the years ended December 27, 2025 or December 28, 2024.
The
$
The
$
| 21 |
14. LEASES
The Company enters into operating leases primarily for: real estate, including for manufacturing, engineering, research, administration and sales facilities, and information technology (“IT”) equipment. At June 27, 2026 and December 27, 2025, the Company did not have any finance leases. Approximately all of its future lease commitments, and related lease liability, relate to the Company’s real estate leases. Some of the Company’s leases include options to extend or terminate the lease.
The components of lease expense were as follows:
| Three Months Ended | Three Months Ended | Six Months Ended | Six Months Ended | |||||||||||||
| June 27, 2026 | June 28, 2025 | June 27, 2026 | June 28, 2025 | |||||||||||||
| Operating lease cost | $ | $ | $ | $ | ||||||||||||
At June 27, 2026, the Company’s future lease payments under non-cancellable leases were as follows:
| 2026 (excluding the six months ended June 27,2026) | $ | |||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| Total future lease payments | ||||
| Less effects of discounting | ( | ) | ||
| Total | $ |
The Company’s lease liabilities recognized in the Company’s condensed consolidated balance sheet at June 27, 2026 were as follows:
| June 27, 2026 | ||||
| Operating lease liabilities–current | $ | |||
| Operating lease liabilities–noncurrent | ||||
| Total lease liabilities | $ | |||
Supplemental cash flow information related to leases was as follows:
| Six Months Ended | Six Months Ended | |||||||
| June 27, 2026 | June 28, 2025 | |||||||
| Cash paid for amounts included in the measurement of operating lease liabilities | $ | $ | ||||||
| 22 |
Other information related to leases was as follows:
| June 27, 2026 | June 28, 2025 | |||||||
| Weighted Average Discount Rate–Operating Leases | % | % | ||||||
| Weighted Average Remaining Lease Term–Operating Leases (in years) | ||||||||
15. SEGMENTS AND DISAGGREGATION OF REVENUE
Operating
segments are defined as components of an entity for which separate financial information is available and that is regularly reviewed
by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources to an individual segment and in assessing
performance. The Company’s CODM is its President and Chief Executive Officer. The Company has determined that it operates in
The CODM assesses performance and decides how to allocate resources and make operating decisions based on revenues, loss from operations, and net loss that are reported on the Consolidated Statements of Operations. These metrics are also used to monitor budget versus actual results. The measure of segment assets is reported on the Consolidated Balance Sheets as total assets. Revenues, expenses, and assets requiring disclosure in accordance with ASC 280, Segment Reporting, are also included in the accompanying Condensed Consolidated Financial Statements. See the Condensed Consolidated Statements of Operations for the three and six months ended June 27, 2026 and June 28, 2025 and the Consolidated Balance Sheets as of June 27, 2026 and December 27, 2025, for details.
Total long-lived assets by country at June 27, 2026 and December 27, 2025 were:
| Total Long-lived Assets | June 27, 2026 | December 27, 2025 | ||||||
| United States | $ | $ | ||||||
| Long lived assets | $ | $ | ||||||
The Company disaggregates its revenue from contracts with customers by geographic location and by display application, as it believes this best depicts how the nature, amount, timing and uncertainty of its revenue and cash flows are affected by economic factors.
During the three and six months ended June 27, 2026 and June 28, 2025, the Company derived its sales from the following geographies:
| Three Months Ended | Three Months Ended | Six Months Ended | Six Months Ended | |||||||||||||||||||||||||||||
| June 27, 2026 | June 28, 2025 | June 27, 2026 | June 28, 2025 | |||||||||||||||||||||||||||||
| Revenue | % of Total | Revenue | % of Total | Revenue | % of Total | Revenue | % of Total | |||||||||||||||||||||||||
| United States | $ | % | $ | % | $ | % | $ | % | ||||||||||||||||||||||||
| Other Americas | ||||||||||||||||||||||||||||||||
| Total Americas | ||||||||||||||||||||||||||||||||
| Asia – Pacific | ||||||||||||||||||||||||||||||||
| Europe | ||||||||||||||||||||||||||||||||
| Total Revenues | $ | % | $ | % | $ | % | $ | % | ||||||||||||||||||||||||
| 23 |
During the three and six months ended June 27, 2026 and June 28, 2025, the Company derived its sales from the following display applications:
| Three Months Ended | Three Months Ended | Six Months Ended | Six Months Ended | |||||||||||||
| June 27, 2026 | June 28, 2025 | June 27, 2026 | June 28, 2025 | |||||||||||||
| Defense | $ | $ | $ | $ | ||||||||||||
| Industrial | ||||||||||||||||
| Medical | ||||||||||||||||
| Consumer and other product | ||||||||||||||||
| Net product revenues | ||||||||||||||||
| R&D | ||||||||||||||||
| License and royalties | ||||||||||||||||
| ASC 606 revenues | ||||||||||||||||
| Grant | ||||||||||||||||
| Collaboration | ||||||||||||||||
| Non ASC 606 revenues | ||||||||||||||||
| Total Revenues | $ | $ | $ | $ | ||||||||||||
16. COMMITMENTS AND CONTINGENCIES
The Company is subject to the possibility of loss contingencies arising in the ordinary course of business. Management considers the likelihood of loss related to an asset, or the incurrence of a liability, as well as its ability to reasonably estimate the amount of the loss, in determining loss contingencies. An estimated loss contingency is accrued when it is probable that an asset has been impaired, or a liability has been incurred and the amount of loss can be reasonably estimated. The Company regularly evaluates current information available to determine whether such accruals should be adjusted and whether new accruals are required.
17. LITIGATION
The Company may engage in legal proceedings arising in the ordinary course of business. Claims, suits, investigations and proceedings are inherently uncertain, and it is not possible to predict the ultimate outcome of such matters and the Company’s business, financial condition, results of operations or cash flows could be affected in any particular period. In accordance with applicable accounting guidance, an accrual will be established for legal proceedings if and when those matters present loss contingencies that are both probable and estimable.
BlueRadios, Inc. v. Kopin Corporation, Civil Action No. 16-02052-JLK (D. Col.):
On August 12, 2016, BlueRadios, Inc. (“BlueRadios”) filed a complaint in the U.S. District Court for the District of Colorado, alleging that the Company breached a contract between it and BlueRadios concerning the design, development and commercialization micro-display products with embedded wireless technology referred to as “Golden-i,” breached the covenant of good faith and fair dealing associated with that contract, breached its fiduciary duty to BlueRadios, and misappropriated trade secrets owned by BlueRadios in violation of Colorado law (C.R.S. § 7-74-104(4)) and the Defend Trade Secrets Act (18 U.S.C. § 1836(b)(1)). BlueRadios further alleged that the Company was unjustly enriched by its alleged misconduct, BlueRadios is entitled to an accounting to determine the amount of profits obtained by the Company as a result of its alleged misconduct, and the inventorship on at least ten patents or patent applications owned by the Company need to be corrected to list BlueRadios’ employees as inventors and thereby list BlueRadios as co-assignees of the patents. BlueRadios seeks monetary, declaratory, and injunctive relief, including for alleged non-payment of engineering retainer fees.
| 24 |
On
September 5, 2025, a post-trial order was entered in the U.S. District Court for the District of Colorado in the matter of BlueRadios,
Inc. v. Kopin Corporation, Inc. finding for the plaintiff, BlueRadios, Inc. and awarding approximately $
On
September 26, 2025, the Company and its lawyers entered into a Mutual Release agreement (the “Release”) in which accrued
legal expenses in connection with the BlueRadios litigation were resolved. The release reduced unpaid accrued legal expenses by $
On
October 2, 2025, the Company posted a supersedeas bond for the amount of $
On
October 7, 2025, the Company filed an appeal of the $
18. RELATED PARTY TRANSACTIONS
The Company may from time to time enter into agreements with shareholders, affiliates and other companies engaged in certain aspects of the display, electronics, optical and software industries as part of the Company’s business strategy. In addition, the wearable computing product market is relatively new and there may be other technologies the Company needs to purchase from affiliates in order to enhance its product offering.
The
Company and RealWear have entered into agreements where the Company have agreed to supply display modules to RealWear, and license certain
intellectual property to RealWear. In conjunction with these agreements the Company received an equity interest in RealWear, one-time
$
The
Company has warrants to purchase shares of Preferred Stock of HMDmd. The fair value of the investment was determined to be $
On
October 16, 2025, Theon became a related party of the Company following its equity investment in Kopin Europe Limited (“Kopin Europe”),
the Company’s majority-owned subsidiary, pursuant to a Subscription Agreement under which Theon subscribed for ordinary
shares of Kopin Europe for $
| 25 |
Concurrent with the Subscription Agreement, Kopin, Kopin Europe, and Theon entered into a License and Collaboration Agreement (“LCA”), together with associated side letters, establishing a framework for joint development and commercialization of multiple product categories, including the DarkWave module, DarkWave subsystem, Theon End Product, certain MicroLED displays, and OLED displays.
The Company and Fabric.AI, Inc entered in a JDLA on April 27, 2026. The parties agreed to jointly develop and commercialize certain GPU to GPU connectivity technologies. The agreement provides for joint ownership of Project Technology. The Company also maintains an 19.99% benefical ownership through its equity investment in Fabric.AI Series J Preferred Stock. Fabric.AI became a related party of the Company following its equity investment in Fabric.AI and the operational involvement contemplated in the JDLA.
During the three and six months ended June 27, 2026 and June 28, 2025, the Company had the following transactions with related parties:
| Three Months Ended | Three Months Ended | |||||||||||||||
| June 27, 2026 | June 28, 2025 | |||||||||||||||
| Revenue | Purchases | Revenue | Purchases | |||||||||||||
| RealWear, Inc. | $ | $ | $ | $ | ||||||||||||
| HMDmd, Inc. | ||||||||||||||||
| Lightning Silicon Technology, Inc. | ||||||||||||||||
| Theon International PlC | ||||||||||||||||
| Fabric.AI | ||||||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Six Months Ended | Six Months Ended | |||||||||||||||
| June 27, 2026 | June 28, 2025 | |||||||||||||||
| Revenue | Purchases | Revenue | Purchases | |||||||||||||
| RealWear, Inc. | $ | $ | $ | $ | ||||||||||||
| HMDmd, Inc. | ||||||||||||||||
| Lightning Silicon Technology, Inc. | ||||||||||||||||
| Theon International PlC | ||||||||||||||||
| Fabric.AI | ||||||||||||||||
| $ | $ | $ | $ | |||||||||||||
At June 27, 2026 and December 27, 2025, the Company had the following receivables and payables with related parties:
| June 27, 2026 | December 27, 2025 | |||||||||||||||
| Receivables | Payables | Receivables | Payables | |||||||||||||
| RealWear, Inc. | $ | $ | $ | $ | ||||||||||||
| HMDmd, Inc. | ||||||||||||||||
| Kopin Europe Ltd. | ||||||||||||||||
| Theon International PlC | ||||||||||||||||
| $ | $ | $ | $ | |||||||||||||
On June 10, 2026, Kopin entered into a Share Repurchase Agreement with Lightning Silicon Technology, Inc. (“LST”) and LS Assets, Inc. (“LSA”). Under the Share Repurchase Agreement, LST repurchased shares of its Series Seed-1 Preferred Stock from Kopin for $, and LSA repurchased shares of its common stock from Kopin for $. All such shares were cancelled and retired as of June 10, 2026. The Parties exchanged mutual releases of all claims relating to Kopin’s prior shareholdings in LST and LSA. As a result of the repurchases, Kopin no longer holds any equity interest in either LST or LSA.
| 26 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which are subject to the safe harbor created by such sections. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “could,” “would,” “seeks,” “estimates,” and variations of such words and similar expressions, and the negatives thereof, are intended to identify such forward-looking statements. We caution readers not to place undue reliance on any such “forward-looking statements,” which speak only as of the date made, and advise readers that these forward-looking statements are not guarantees of future performance and involve certain risks, uncertainties, estimates, and assumptions by us that are difficult to predict. Various factors, some of which are beyond our control, could cause actual results to differ materially from those expressed in, or implied by, such forward-looking statements. All such forward-looking statements, whether written or oral, and whether made by us or on our behalf, are expressly qualified by these cautionary statements and any other cautionary statements which may accompany the forward-looking statements. In addition, we disclaim any obligation to update any forward-looking statements to reflect events or circumstances after the date of this report, except as may otherwise be required by the federal securities laws.
We have identified the following important factors that could cause actual results to differ materially from those discussed in our forward-looking statements. Such factors may be in addition to the risks described in Part I, Item 1A. “Risk Factors;” Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations;” and other parts of our Annual Report on Form 10-K for the fiscal year ended December 27, 2025, as amended. These factors include: our ability to source semiconductor components and other raw materials used in the manufacturing of our products amidst continued intermittent shortages, including from new and alternative suppliers; our ability to prosecute and defend our proprietary technology aggressively or successfully; our ability to recruit and retain personnel with experience and expertise relevant to our business; our ability to invest in research and development to achieve profitability even during periods when we are not profitable; any disruptions or delays in our supply chains, particularly with respect to semiconductor components, whether resulting from regional or global geopolitical developments, changes imposed by the new U.S. presidential administration, or otherwise; costs and outcomes relating to any disputes, governmental inquiries or investigations, regulatory proceedings, legal proceedings or litigation; our ability to continue to introduce new products in our target markets; our ability to generate revenue growth and positive cash flow, and reach profitability; the strengthening of the U.S. dollar and its effects on the price of our products in foreign markets; the impact of new regulations and customer demands relating to conflict minerals; our ability to obtain a competitive advantage in the wearable technologies market through our extensive portfolio of patents, trade secrets and non-patented know-how; our ability to grow within our targeted markets; the importance of small form factor displays in the development of defense, consumer, and industrial products such as thermal weapon sights, safety equipment, virtual and augmented reality gaming, training and simulation products and metrology tools; the suitability of our properties for our needs for the foreseeable future; and our need to achieve and maintain positive cash flow and profitability.
Overview
We are a leading developer, manufacturer and seller of miniature displays and optical lenses (our “components”) for sale as individual displays, components, modules or higher-level subassemblies. We also license our intellectual property through technology license agreements. Our component products are used in highly demanding high-resolution portable defense, enterprise and consumer electronic applications, training and simulation equipment and 3D metrology equipment. Our products enable our customers to develop and market an improved generation of products for these target applications.
The following discussion should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended December 27, 2025, as amended and our unaudited condensed consolidated financial statements included in this Form 10-Q.
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Results of Operations
Our interim period results of operations and period-to-period comparisons of such results may not be indicative of our future operating results. Additionally, we use a fiscal calendar that may result in differences in the number of workdays in the current and comparable prior interim periods and could affect period-to-period comparisons. The following discussion of comparative results of operations among periods should be viewed in this context.
Revenues. For the three and six months ended June 27, 2026 and June 28, 2025, our revenues by display application, which include product sales and amounts earned from research and development contracts (“R&D”), were as follows:
| Three Months Ended | Three Months Ended | Six Months Ended | Six Months Ended | |||||||||||||
| (In thousands) | June 27, 2026 | June 28, 2025 | June 27, 2026 | June 28, 2025 | ||||||||||||
| Defense | $ | 7,311 | $ | 6,222 | $ | 12,621 | $ | 14,683 | ||||||||
| Industrial | 20 | 1,031 | 68 | 1,423 | ||||||||||||
| Medical | 309 | 213 | 326 | 572 | ||||||||||||
| Consumer and other product | 0 | 32 | 50 | 50 | ||||||||||||
| Net product revenues | 7,640 | 7,498 | 13,065 | 16,728 | ||||||||||||
| R&D | 2,168 | 908 | 3,459 | 2,145 | ||||||||||||
| License and royalties | 56 | 49 | 121 | 120 | ||||||||||||
| ASC 606 revenues | 9,864 | 8,455 | 16,645 | 18,993 | ||||||||||||
| Grant | 2,599 | — | 6,040 | — | ||||||||||||
| Collaboration | 271 | — | 601 | — | ||||||||||||
| Non ASC 606 revenues | 2,870 | — | 6,641 | — | ||||||||||||
| Total Revenues | $ | 12,734 | $ | 8,455 | $ | 23,286 | $ | 18,993 | ||||||||
Sales of our products for Defense applications include systems used by the military both in the field and for training and simulation. Sales of our products for Defense applications may be for a one-time purchase or for programs that run for several years. Revenues from product sales to defense customers increased in the three months ended June 27, 2026 as compared to the three months ended June 28, 2025, primarily due to higher production volumes of our products for thermal weapon sight applications and liquid crystal displays. The decrease in Defense applications revenues in the six months ended June 27, 2026 as compared to the six months ended June 28, 2025 was primarily related to a decrease in revenue from products used in thermal weapon sights and liquid crystal displays.
Industrial applications revenues represent customers who purchase our display products for use in headsets used for manufacturing, distribution, public safety, 3D metrology equipment and other industrial applications. Our 3D metrology customers are primarily located in Asia, and they sell to Asia-based contract manufacturers who use the 3D metrology machines for quality control purposes. The industrial applications market has seen new entrants over the last few years, which has led to increased price competition. We have introduced lower priced products to compete with our competitors, but we expect this trend will continue and hence we are focusing our product and selling efforts on other more attractive market segments.
Sales of our displays for Consumer applications are primarily for use in thermal imaging products, recreational rifle and hand-held scopes.
R&D revenues increased in the three and six months ended June 27, 2026 as compared to the three and six months ended June 28, 2025 primarily due to the Company’s progress on the Phase 2 Off-the-Visor Heads-Up Display program with the U.S. Army and due to the start of the development program with Fabric.AI entered into on April 27, 2026 to develop and commercialize certain GPU to GPU connectivity technologies. These contracts typically reimburse us for direct costs and allocated overhead and selling, general and administrative costs and in some cases profit.
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The slight increase in license and royalty revenue in the three months ended June 27, 2026 as compared to the three months ended June 28, 2025 is due to a increase in royalties earned under IP license agreements for industrial wearable headsets.
Grant revenues increased in the three and six months ended June 27, 2026 as compared to the three and six months ended June 28, 2025 in connection with the Company’s government grant, awarded in the fourth quarter of 2025, for the development of ultra-bright, full color MicroLED displays optimized for ground soldier augmented reality applications.
Collaboration revenues increased in the three and six months ended June 27, 2026 as compared to the three and six months ended June 28, 2025 as a result of the Company’s strategic partnership, initiated in the fourth quarter of 2025, to develop the next generation clip on with augmented reality and thermal integration capabilities based on the Company’s micro-display technology.
Cost of Product Revenues. Cost of product revenues, which is comprised of materials, labor and manufacturing overhead related to the production of our products for the three and six months ended June 27, 2026 and June 28, 2025 were as follows:
| Three Months Ended | Three Months Ended | Six Months Ended | Six Months Ended | |||||||||||||
| (In thousands, except for percentages) | June 27, 2026 | June 28, 2025 | June 27, 2026 | June 28, 2025 | ||||||||||||
| Cost of product revenues | $ | 6,587 | $ | 7,072 | $ | 12,197 | $ | 14,701 | ||||||||
| Cost of product revenues as a % of net product revenues | 86 | % | 94 | % | 93 | % | 88 | % | ||||||||
The decrease in cost of product revenues as a percentage of net product revenues for the three months ended June 27, 2026, compared to the three months ended June 28, 2025, was primarily attributable to product mix. Cost of product revenues as a percentage of net product revenues increased during the six months ended June 27, 2026 as compared to the six months ended June 28, 2025 primarily attributable to reduced production efficiency during the first three months of 2026.
Research and Development. R&D expenses are incurred in support of internal display development programs and programs funded by agencies or prime contractors of the U.S. Government and commercial partners. R&D costs include staffing, purchases of materials and laboratory supplies, circuit design costs, fabrication and packaging of display products, and overhead. In fiscal year 2026, we expect our R&D expenditures to be related to our display products, overlay weapon sights and OLED display technologies. R&D expenses for the three and six months ended June 27, 2026 and June 28, 2025 were as follows:
| Three Months Ended | Three Months Ended | Six Months Ended | Six Months Ended | |||||||||||||
| (In thousands) | June 27, 2026 | June 28, 2025 | June 27, 2026 | June 28, 2025 | ||||||||||||
| Funded | $ | 3,327 | $ | 464 | $ | 7,133 | $ | 1,103 | ||||||||
| Internal | 1,197 | 1,481 | 2,303 | 2,959 | ||||||||||||
| Total research and development expense | $ | 4,524 | $ | 1,945 | $ | 9,436 | $ | 4,062 | ||||||||
Funded R&D expense for the three and six months ended June 27, 2026 increased as compared to the three and six months ended June 28, 2025 primarily due to the Company’s government grant for the development of ultra-bright, full color MicroLED displays optimized for ground soldier augmented reality applications. Funded R&D expense includes costs related to grant and collaboration income. Internal R&D expense decreased for the three and six month ended June 27, 2026 as compared to the three and six months ended June 28, 2025 primarily due to lower labor hours spent on internal research and development activities.
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Selling, General and Administrative. Selling, general and administrative (“SG&A”) expenses consist of the expenses incurred by our sales and marketing personnel and related expenses, and administrative and general corporate expenses. SG&A expenses for the three and six months ended June 27, 2026 and June 28, 2025 were as follows:
| Three Months Ended | Three Months Ended | Six Months Ended | Six Months Ended | |||||||||||||
| (In thousands, except for percentages) | June 27, 2026 | June 28, 2025 | June 27, 2026 | June 28, 2025 | ||||||||||||
| Selling, general and administration expense | $ | 5,127 | $ | 4,899 | $ | 11,144 | $ | 9,600 | ||||||||
| Selling, general and administration expense as a % of revenues | 40 | % | 58 | % | 48 | % | 51 | % | ||||||||
SG&A increased for the three and six months ended June 27, 2026 as compared to the three and six months ended June 28, 2025 primarily due to increases in professional fees and accrued performance-based compensation.
Other Income, net. Other income, net, is primarily composed of interest income, foreign currency transactions, gains on fair value recording of investments and other non-operating income items. Other income, net, for the three and six months ended June 27, 2026 and June 28, 2025 were as follows:
| Three Months Ended | Three Months Ended | Six Months Ended | Six Months Ended | |||||||||||||
| (In thousands) | June 27, 2026 | June 28, 2025 | June 27, 2026 | June 28, 2025 | ||||||||||||
| Other income, net | $ | 2,245 | $ | 347 | $ | 4,536 | $ | 1,193 | ||||||||
During the three and six months ended June 27, 2026, we had gains on investments of approximately $2.3 million and $4.6 million, respectively. During the three months ended June 27, 2026, interest income decreased approximately $0.2 million compared to the three months ended June 27, 2025.
Tax Provision. We recorded a benefit for income taxes of approximately $2.1 million in the three months ended June 27, 2026 due to the expiration of the statute of limitation of an uncertain tax position. We recorded a provision for income taxes of approximately $0.1 million for the three and six months ended June 28, 2025.
Net Income (Loss). We had a net income of $0.8 million and a net loss of $2.9 million during the three and six months ended June 27, 2026, respectively compared to net losses of $5.2 million and $8.3 million during the three and six months ended June 28, 2025. The decrease in the net loss during the three months ended June 27, 2026 compared to the three months ended June 28, 2025 was due to gains on investments of $2.3 million, a $2.1 million tax credit, and increase in total revenues. The decrease in the net loss during the six months ended June 27, 2026 compared to the six months ended June 28, 2025 was primarily due to a gain on investments.
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Liquidity and Capital Resources
On June 27, 2026 and December 27, 2025, we had cash and cash equivalents, including restricted cash, and marketable securities of $50.3 million and working capital, excluding restricted cash, of $17.5 million compared to $61.6 million and $33.6 million, respectively.
| Six Months Ended | Six Months Ended | |||||||
| June 27, 2026 | June 28, 2025 | |||||||
| Net cash used for operating activities | $ | (5,142,502 | ) | $ | (7,572,770 | ) | ||
| Net cash (used in) provided by investing activities | (5,111,818 | ) | 17,867,407 | |||||
| Net cash used in by financing activities | (1,095,112 | ) | (89,657 | ) | ||||
| Effect of exchange rate changes on cash | 1,055 | 4,210 | ||||||
| (Decrease) increase in cash and equivalents | $ | (11,348,377 | ) | $ | 10,209,190 | |||
For the six months ended June 27, 2026 and June 28, 2025, cash used in operating activities consisted primarily of a net losses from operations of $2.9 million and $8.3 million respectively. For the six months ended June 27, 2026, net cash used in investing activities in the amount of $5.1 million consisted of capital expenditures. For the six months ended June 28, 2025 cash provided by investing activities was primarily related to net proceeds from the sale of marketable securities. We expect that net cash used for or provided by operating activities to fluctuate in future periods as a result of a number of factors, including fluctuations in our operating results and changes in components of working capital. Our cash and cash equivalents and liquidity could be adversely affected by any amounts that become payable in connection with any adverse results from any litigation we are, or may become, involved in. The change in financing activities was the settlements of restricted stock for tax witholding obligations for $1.1 million.
Equity offerings
On September 29, 2025, the Company entered into a securities purchase agreement (the “Purchase Agreement”) for a private investment in public equity financing (the “PIPE”) for 19,545,950 shares of its common stock, par value $0.01 per share (the “Shares”). The net proceeds to the Company from the offering were approximately $38.1 million, after deducting placement agent fees and commissions and estimated offering expenses payable by the Company. The transaction was consummated on September 30, 2025.
On October 16, 2025, the Company completed a $15 million strategic investment with Theon Under the terms of the Agreements, Theon acquired a 49% interest in Kopin’s subsidiary, Kopin Europe Ltd. for $8.0 million and the parties entered into a licensing and development agreement and funding agreements relating to the joint development of military products. In addition, Theon purchased $7.0 million worth of shares of Series A Convertible Preferred Stock, par value $0.01 per share, of the Company (the “Preferred Stock”). Each share of the Preferred Stock was convertible into shares of common stock, par value $0.01 per share, of the Company (the “Common Stock”) at an initial fixed conversion price of $3.00 per share, pursuant to the terms of the Certificate of Designation for Series A Convertible Preferred Stock of the Company (the “Certificate of Designations”). The Company had the ability to force the conversion of the preferred stock into common stock once the Company’s common stock trades at $5.50 per share or higher for 10 Trading Days (as defined in the Certificate of Designation) within a 30 consecutive Trading Day period. The Preferred Stock will carried an annual dividend of at the base rate dividend rate of 4%, 2% payable in cash and 2% payable in stock. With the close of this transaction, Kopin Europe Ltd. was deconsolidated from the Company’s consolidated financial statements. The consolidated statement of operations therefore includes nine months and sixteen days of activity related to Kopin Europe Ltd. The assets and liabilities of Kopin Europe Ltd. are no longer included within the Company’s consolidated balance sheets. Any discussions related to results, operations, and accounting policies associated with Kopin Europe Ltd. are referring to the current period through this transaction and prior periods as consolidated.
On May 28, 2026 Theon exercised its conversion right under the Certificate of Designation to convert all 1,000 outstanding shares of Series A Convertible Preferred stock into shares of Common Stock. The conversion was effected at a conversion price of $3.00 per share resulting in the issuance of 2,380,973 shares of the Company’s common stock to Theon. The Company’s Series A Convertible Preferred stock has been retired and no shares of Series A Convertible Preferred Stock are outstanding.
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The domestic locations balance of $50.3 million and $61.6 million for the period ended June 27, 2026 and fiscal year ended 2025 includes $25.4 million and $25.3 million of restricted cash as of June 27, 2026 and December 27, 2025 respectively, that is not available for current operating use.
The manufacturing operations at our Korean facility, Kowon, have ceased and Kowon was liquidated at fiscal year ended 2018. As of December 27, 2025 we had recorded deferred tax liabilities for any additional withholding tax that may be due to the Korean government upon Kowon’s final tax return acceptance. The statue of limitations expired during the three months ended June 27, 2026 and reversed the deferred tax liability of $2.1 million as of June 27, 2026.
We expect to expend between $5.0 million and $6.5 million on capital expenditures in the second half of 2026.
We had net income of $0.8 million and a net loss of $2.9 million for the three and six months ended June 27, 2026 and a net loss of $2.6 million in fiscal year 2025, and net cash outflows used in operations of $5.1 million and $15.5 million for the six months ended June 27, 2026 and for the fiscal year ended 2025, respectively. Moreover, the Company has posted a bond to satisfy the court’s verdict of $19.7 million in damages and anticipated accrued interest in the matter of BlueRadios vs. Kopin Corporation, Inc. should the Company’s appeal be unsuccessful (refer to Note 17 of our consolidated financial statements for more information). As of June 27, 2026, the Company had $24.9 million of cash and cash equivalents (excluding restricted cash), which the Company believes is sufficient to support its operations and satisfy its obligations for at least the next twelve months from the issuance of these financial statements. We estimate we will have sufficient liquidity to fund operations into the fourth quarter of 2027. Nonetheless, we monitor the capital markets on an ongoing basis and may consider raising capital if favorable market conditions develop. If our actual results are less than projected or we need to raise capital for additional liquidity, we may be required to do additional equity financing, reduce expenses or enter into a strategic transaction. However, we can make no assurance that we will be able to raise additional capital, reduce expenses sufficiently, or enter into a strategic transaction on terms acceptable to us, or at all.
Critical Accounting Estimates
Our critical accounting estimates are described in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition” of our Annual Report on Form 10-K for the fiscal year ended December 27, 2025.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
We invest our excess cash in high-quality U.S. Government, government-backed (e.g., Fannie Mae, FDIC guaranteed bonds and certificates of deposit) and corporate debt instruments, which bear lower levels of relative risk. We believe that the effect, if any, of reasonably possible near-term changes in interest rates on our financial position, results of operations and cash flows should not be material to our cash flows or income. It is possible that interest rate movements would increase our unrealized gain or loss on debt securities. We do not currently hedge our foreign currency exchange rate risk. We estimate that any market risk associated with our international operations or investments is unlikely to have a material adverse effect on our business, financial condition or results of operation. Our portfolio of marketable securities is subject to interest rate risk and the credit rating of our investments may be affected by the underlying financial health of the guarantors of our investments. We use silicon wafers but do not enter into forward or futures hedging contracts to mitigate against risks related to the price of silicon.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
As of June 27, 2026, the Company conducted an evaluation under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer (its principal executive officer and principal financial officer, respectively) regarding the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of June 27, 2026, as defined in Rule 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The term “disclosure controls and procedures” means controls and other procedures that are designed to ensure that information required to be disclosed by the Company in reports that we file or submit under the Exchange Act are recorded, processed, summarized and reported within the requisite time periods and that such disclosure controls and procedures were effective to ensure that information required to be disclosed by the Company in the reports that we file or submit under the Exchange Act are accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Based on that evaluation, our management concluded that, as of June 27, 2026, our disclosure controls and procedures were not effective as of June 27, 2026 due to the following material weaknesses which were disclosed in the Company’s Annual Report on Form 10-K for the year ended December 27, 2025, and continue to exist as of June 27, 2026:
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We identified control deficiencies, that when aggregated, constitute material weaknesses as follows:
| ● | Design and operating effectiveness of information technology general computer controls in the areas of user access and program change-management for certain information technology systems that are critical to capturing, processing, and reporting financial transactions. These ineffective information technology controls contributed to (i) improper segregation of duties among certain business process controls and (ii) ineffective data validation of spreadsheets and system-generated reports. |
| ● | Management identified a material weakness in the Company’s internal control over financial reporting related to the design and operation of controls over the period-end financial reporting and disclosure process. Specifically, management did not design, implement, and maintain sufficiently precise review controls, including controls over the completeness and accuracy of information used in the operation of controls and the retention of evidence of review, to achieve timely, complete, and accurate accounting and disclosures in multiple financial statement areas, including prepaid expenses and other current assets, stockholders’ equity, share-based compensation, certain investments, and income taxes. |
| ● | Management did not design and implement certain business process controls related to the revenue cycle, including appropriate controls over contract accounting reviews and completeness and accuracy of required disclosures. |
| ● | Management did not design and implement certain business process controls related to the accounting evaluation of significant unusual transactions and completeness and accuracy of required disclosures. |
Remediation Activities
Management is actively engaged in the implementation of a remediation plan to implement measures designed to improve our internal control over financial reporting to remediate these material weaknesses with oversight from the Audit Committee of the Board of Directors.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting during the quarter ended June 27, 2026, that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.
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Part II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company may engage in legal proceedings arising in the ordinary course of business. Claims, suits, investigations and proceedings are inherently uncertain, and it is not possible to predict the ultimate outcome of such matters and our business, financial condition, results of operations or cash flows could be affected in any particular period.
BlueRadios, Inc. v. Kopin Corporation, Civil Action No. 16-02052-JLK (D. Col.):
On August 12, 2016, BlueRadios, Inc. (“BlueRadios”) filed a complaint in the U.S. District Court for the District of Colorado, alleging that the Company breached a contract between it and BlueRadios concerning the design, development and commercialization micro-display products with embedded wireless technology referred to as “Golden-i,” breached the covenant of good faith and fair dealing associated with that contract, breached its fiduciary duty to BlueRadios, and misappropriated trade secrets owned by BlueRadios in violation of Colorado law (C.R.S. § 7-74-104(4)) and the Defend Trade Secrets Act (18 U.S.C. § 1836(b)(1)). BlueRadios further alleged that the Company was unjustly enriched by its alleged misconduct, BlueRadios is entitled to an accounting to determine the amount of profits obtained by the Company as a result of its alleged misconduct, and the inventorship on at least ten patents or patent applications owned by the Company need to be corrected to list BlueRadios’ employees as inventors and thereby list BlueRadios as co-assignees of the patents. BlueRadios seeks monetary, declaratory, and injunctive relief, including for alleged non-payment of engineering retainer fees.
On Monday, April 22, 2024, after a four-week trial, a jury verdict was entered finding for BlueRadios and awarding approximately $5.1 million in damages as well as recommending $19.7 million in disgorgement and exemplary damages. On May 22, 2024, the Company filed its Motion for Judgment as a Matter of Law or in the alternative for a New Trial, as well as two submissions arguing that the disgorgement and exemplary damages should not be awarded. That same day, BlueRadios filed motions seeking a permanent injunction prohibiting Kopin from selling any products that incorporate BlueRadios’ trade secrets, over $10.8 million in pre-judgment interest, and over $10.2 million in attorneys’ fees and costs. Briefing on those issues concluded on June 26, 2024. On September 25, 2024, the Company filed a supplemental brief on issue preclusion arguing that BlueRadios’ claims were untimely because of findings of fact made in BlueRadios, Inc. v. Hamilton, Brook, Smith & Reynolds, P.C., No. 1:21-cv-10488-DJC, ECF 268 (D. Mass. Sept. 18, 2024). That supplemental briefing concluded on October 29, 2024.
On September 5, 2025, a post-trial order was entered in the U.S. District Court for the District of Colorado in the matter of BlueRadios, Inc. v. Kopin Corporation, Inc. finding for the plaintiff, BlueRadios, Inc. and awarding approximately $19.7 million in damages but denying a permanent injunction and prejudgment interest. In the second quarter of 2024, the Company had estimated and accrued $24.8 million in probable and reasonably estimable damages for this matter. As a result of the post-trial order, the Company reduced the accrual to $19.7 million and recognized a benefit of $5.1 million for the reduction in the accrual in the condensed consolidated Statements of Operations for the three and nine months ended September 27, 2025.
On September 26, 2025, the Company and its lawyers entered into a Mutual Release agreement (the “Release”) in which accrued legal expenses in connection with the BlueRadios litigation were resolved. The release reduced unpaid accrued legal expenses by $3.3 million to $1.9 million as of September 27, 2025. The reduction in accrued legal fees is included within selling, general and administration in the Company’s condensed consolidated financial statements for the three and nine months ended September 27, 2025.
On October 2, 2025, the Company posted a supersedeas bond for $23.0 million which consisted of the $19.7 million judgement, legal expenses, and interest that would accrue over the expected term of the appeal. To post the bond the Company entered into loan agreements (the “Agreements”) with its bank which provides the bank with a security interest in the $23.0 million plus $1.15 million in fees for a total of $24.2 million the Company deposited with the bank. This $24.2 million is classified as Restricted Cash. The bank then issued a Letter of Credit (LOC) to a surety company who then issued the bond to the court. The Agreement provides for standard representations and warranties and allows the bank to use the $23.0 million to satisfy the LOC in the event the LOC is called.
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On October 7, 2025, the Company filed an appeal for the $19.7 million judgement against the Company in connection with the BlueRadios litigation. As of December 27, 2025, the Company has accrued $19.7 million for the judgment within Accrued litigation liability and has accrued approximately $0.3 million in related interest within Other accrued liabilities.
On June 25, 2026, BlueRadios, Inc. filed its opening and response appellate brief in the Federal Circuit, requesting that the court affirm the September 2025 judgment against Kopin Corporation for trade secret misappropriation and reverse portions of the district court's decision that denied additional damages, injunctive relief, and unpaid retainer claims. As of June 27, 2026 there are no changes in circumstances that would result in a change to the corresponding legal accrual.
Item 1A. Risk Factors
Our business and financial results are subject to numerous risks and uncertainties. As a result, the risks and uncertainties discussed in Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the fiscal year ended December 27, 2025, should be carefully considered. There have been no material changes in the assessment of our risk factors from those set forth in our Annual Report on Form 10-K for the fiscal year ended December 27, 2025.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
We did not sell any securities during the three months ended June 27, 2026 that were not registered under the Securities Act.
Item 5. Other Information
Rule 10b5-1 Trading Arrangements
During
the quarter ended June 27, 2026,
During the quarter ended June 27, 2026, a Rule 10b5-1 trading arrangement of Michael Murray, our Chairperson, Chief Executive Officer, and President, terminated pursuant to its original terms a Rule 10b5-1 trading arrangement on April 17, 2026. Mr. Murray had adopted this Rule 10b5-1 trading arrangement on November 24, 2025, pursuant to which he was permitted to sell up to 386,667 shares of the Company’s common stock pursuant to the terms of the trading arrangement. The 10b5-1 trading arrangement was scheduled to remain in effect until December 24, 2026.
During the quarter ended June 27, 2026, the following adopted a “Rule 10b5-1 trading arrangement” (as defined in Item 408 of Regulation S-K) that is intended to satisfy the affirmative defense of Rule 10b5-1(c) under the Exchange Act and our policies on insider trading:
| Name & Title | Date Adopted(1) | Aggregate Number of Shares of Common Stock to be Purchased or Sold Pursuant to Trading Arrangement | Expiration Date(2) | |||
Michael Murray Chairperson, Chief Executive Officer, President |
05/26/2026 | 158,280 | 8/25/2026 |
(1) Date of adoption of Rule 10b5-1 trading arrangements is in accordance with both the Company’s insider trading policy and applicable SEC rules and regulations.
(2) The Rule 10b5-1 trading arrangement is scheduled to expire on the date listed in the table, subject to earlier termination upon the sale of all shares subject to the Rule 10b5-1 trading arrangement, or as otherwise provided in the Rule 10b5-1 trading arrangement.
Other than as disclosed above, none of the Company’s directors or officers adopted, modified, or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” in each case as defined in Item 408 of Regulation S-K, during the quarter ended June 27, 2026.
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Item 6. Exhibits
*Filed herewith
**Furnished and not filed herewith
† Indicates a management contract or a compensatory plan, contract, or arrangement.
Attached as Exhibit 101 to this report are the following formatted in XBRL (Extensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets at June 27, 2026 (Unaudited) and December 27, 2025, (ii) Condensed Consolidated Statements of Operations (Unaudited) for the three and six months ended June 27, 2026 and June 28, 2025, (iii) Condensed Consolidated Statement of Comprehensive Loss (Unaudited) for the three and months ended June 27, 2026 and June 28, 2025, (iv) Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) for the three and six months ended June 27, 2026 and June 28, 2025, (v) Condensed Consolidated Statements of Cash Flows (Unaudited) for the six months ended June 27, 2026 and June 28, 2025, and (vi) Notes to Unaudited Condensed Consolidated Financial Statements.
| 36 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| KOPIN CORPORATION | ||
| (Registrant) | ||
| Date: August 11, 2026 | By: | /S/ MICHAEL MURRAY |
| Michael Murray | ||
| President, Chief Executive Officer | ||
| (Principal Executive Officer) | ||
| Date: August 11, 2026 | By: | /S/ ERICH MANZ |
| Erich Manz | ||
| Treasurer and Chief Financial Officer | ||
| (Principal Financial and Accounting Officer) | ||
| 37 |
Exhibit 31.1
CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
I, Michael Murray, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q for the period ended June 27, 2026, of Kopin Corporation; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report; |
| 4. | The Registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | Designed such internal control over financial reporting or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. |
| (c) | Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| (d) | Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and |
| 5. | The Registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting. |
Date: August 11, 2026
| By: | /S/ MICHAEL MURRAY | |
| Michael Murray | ||
| President and Chief Executive Officer (Principal Executive Officer) |
Exhibit 31.2
CERTIFICATION OF THE CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
I, Erich Manz, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q for the period ended June 27, 2026, of Kopin Corporation; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report; |
| 4. | The Registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | Designed such internal control over financial reporting or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. |
| (c) | Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| (d) | Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and |
| 5. | The Registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting. |
Date: August 11, 2026
| By: | /S/ ERICH MANZ | |
| Erich Manz | ||
| Chief Financial Officer (Principal Financial Officer) |
Exhibit 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
The certification set forth below is hereby made solely for the purpose of satisfying the requirements of Section 906 of the Sarbanes-Oxley Act of 2002 and may not be relied upon or used for any other purposes.
In connection with the Quarterly Report of Kopin Corporation (the “Company”) on Form 10-Q for the period ended June 27, 2026, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael Murray, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (“Section 906”), that: (1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
A signed original of this written statement required by Section 906 or other document authenticating, acknowledging or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
| Date: | August 11, 2026 | |
| By: | /S/ MICHAEL MURRAY | |
| Michael Murray | ||
President and Chief Executive Officer
(Principal Executive Officer) |
Exhibit 32.2
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
The certification set forth below is hereby made solely for the purpose of satisfying the requirements of Section 906 of the Sarbanes-Oxley Act of 2002 and may not be relied upon or used for any other purposes.
In connection with the Quarterly Report of Kopin Corporation (the “Company”) on Form 10-Q for the period ended June 27, 2026, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Erich Manz, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (“Section 906”), that: (1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
A signed original of this written statement required by Section 906 or other document authenticating, acknowledging or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
| Date: | August 11, 2026 | |
| By: | /S/ ERICH MANZ | |
| Erich Manz | ||
|
Chief Financial Officer (Principal Financial Officer)] |