KOPIN CORP

Previous wording

*Revenues.*For the three months ended March 29, 2025 and March 30, 2024, our revenues by display application, which include product sales and amounts earned from research and development contracts (“R&D”), were as follows:

Current wording

*Revenues.*For the three and six months ended June 28, 2025 and June 29, 2024, our revenues by display application, which include product sales and amounts earned from research and development contracts (“R&D”), were as follows:

Previous wording

Sales of our products for Defense applications include systems used by the military both in the field and for training and simulation. The increase in Defense applications revenues in the three months ended March 29, 2025 as compared to the three months ended March 30, 2024 was primarily due to an increase in revenues from products used in thermal weapon sights and in pilot helmets partially offset by a decline in sales of training and simulation products.

Current wording

Sales of our products for Defense applications include systems used by the military both in the field and for training and simulation. The decrease in Defense applications revenues in the three months ended June 28, 2025 as compared to the three months ended June 29, 2024 was primarily due to a decrease in revenues from products used in thermal weapon sights and pilot helmets. The decrease in Defense applications revenues in the six months ended June 28, 2025 as compared to the six months ended June 29, 2024 was primarily due to a decrease in revenues from products used in thermal weapon sights and training and simulation which was partially offset by an increase in sales from products used in pilot helmets.

Previous wording

Industrial applications revenue represents customers who purchase our display products for use in 3D metrology equipment and headsets used for applications in manufacturing, distribution, and public safety. Our 3D metrology customers are primarily located in Asia and sell to Asian contract manufacturers who use the 3D metrology machines for quality control purposes. The decrease in Industrial applications revenues for the three months ended March 29, 2025 as compared to the three months ended March 30, 2024 was primarily due to a decline in sales of products for 3D metrology.

Current wording

Industrial applications revenue represents customers who purchase our display products for use in 3D metrology equipment and headsets used for applications in manufacturing, distribution, and public safety. Our 3D metrology customers are primarily located in Asia and sell to Asian contract manufacturers who use the 3D metrology machines for quality control purposes. The increase in Industrial applications revenues for the three and six months ended June 28, 2025 as compared to the three months ended June 29, 2024 was primarily due to an increase in revenues from products used in a public safety application which was partially offset by a decline in products used for 3D automated optical inspection.

Previous wording

R&D revenues increased in the three months ended March 29, 2025 as compared to the three months ended March 30, 2024 primarily due to increases in funding for U.S. defense programs.

Current wording

R&D revenues decreased in the three and six months ended June 28, 2025 as compared to the three and six months ended June 29, 2024 primarily due to decreases in funding for U.S. defense programs.

Previous wording

The decrease in license and royalty revenue in the first quarter ending March 29, 2025 compared to the first quarter ended March 20, 2024 is due to a decrease in royalties earned under IP license agreements for industrial wearable headsets.

Current wording

The decrease in license and royalty revenue in the three and six months ended June 28, 2025 as compared to the three and six months ended June 29, 2024 is due to a decrease in royalties earned under IP license agreements for industrial wearable headsets.

Previous wording

Our international revenues, which are primarily our sales of our products into the 3D AOI market and which comprise the majority of our Industrial sales category, represented 4% and 9% of total revenues for the three months ended March 29, 2025 and March 30, 2024, respectively. These sales are primarily made by Kopin Europe, Ltd. our wholly-owned Scottish subsidiary into Asian markets. We have not taken any protective measures against exchange rate fluctuations, such as purchasing hedging instruments with respect to such fluctuations, because of the historically stable exchange rate between the British Pound Sterling (the functional currency of our U.K. subsidiary) and the U.S. dollar. Foreign currency translation impact on our results, if material, is described in further detail under “Item 3. Quantitative and Qualitative Disclosures About Market Risk” section below.

Current wording

Our international revenues, which are primarily our sales of our products into the 3D AOI market and which comprise the majority of our Industrial sales category, represented 3% and 4% of total revenues for the three and six months ended June 28, 2025, respectively, and 7% and 8% of total revenues for the three and six months ended June 29, 2024, respectively. These sales are primarily made by Kopin Europe, Ltd. our wholly-owned Scottish subsidiary in Asian markets. We have not taken any protective measures against exchange rate fluctuations, such as purchasing hedging instruments with respect to such fluctuations, because of the historically stable exchange rate between the British Pound Sterling (the functional currency of our U.K. subsidiary) and the U.S. dollar. Foreign currency translation impact on our results, if material, is described in further detail under “Item 3. Quantitative and Qualitative Disclosures About Market Risk” section below.

Previous wording

*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 months ended March 29, 2025 and March 30, 2024 were as follows:

Current wording

*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 28, 2025 and June 29, 2024 were as follows:

Previous wording

The decrease in cost of product revenue as a percent of net product revenues for the three months ended March 29, 2025 as compared to the three months ended March 30, 2024 was due to a decrease in excess and obsolete reserves.

Current wording

The increase in cost of product revenue as a percent of net product revenues for the three months ended June 28, 2025 as compared to the three months ended June 29, 2024 was due to decreased unit volume of revenue for the three months ended June 28, 2025 as compared to the three months ended June 29, 2024 which resulted in the under absorption of overhead which was partially offset by decreases in excess and obsolete reserves and warranty reserves. Cost of product revenues as a percentage of net product revenues for the six months ended June 28, 2025, as compared to the six months ended June 29, 2024 was essentially flat.

Previous wording

The issues associated with the global shortage of semiconductor circuit chips and other raw materials decreased in 2024 as compared to 2023 and 2022. However, we have identified several semiconductor components which continue to have long lead delivery times. We continue to search for and procure all necessary components from our current vendors and new alternative vendors. In certain situations, we can obtain the components but at a significantly increased cost. The inability to procure a single component will prevent the completion of our product and the ability to sell the product. Our products go through extensive qualification processes and therefore our customers may not accept a replacement component. We are unable to determine if we will be able to obtain all necessary components for fiscal 2025. If we are unable to obtain all necessary components, we may be required to stop production, which would negatively affect our cash flow and results of operations. In addition, we depend on a Taiwanese foundry for the manufacture of integrated circuits for our AMLCD display products and on Chinese, Korean, and European foundries for our OLED display products. If there was a disruption of supply from these foundries it would take a significant period of time to identify, and qualify, if possible, a new source.

Current wording

The issues associated with the global shortage of semiconductor circuit chips and other raw materials decreased in 2024 as compared to 2023 and 2022. However, we have identified several semiconductor components which continue to have long lead delivery times. We continue to search for and procure all necessary components from our current vendors and new alternative vendors. In certain situations, we can obtain the components but at a significantly increased cost. The inability to procure a single component will prevent the completion of our product and the ability to sell the product. Our products go through extensive qualification processes and therefore our customers may not accept a replacement component. If we are unable to obtain all necessary components, we may be required to stop production, which would negatively affect our cash flow and results of operations. In addition, we depend on a Taiwanese foundry for the manufacture of integrated circuits for our AMLCD display products and on Chinese, Korean, and European foundries for our OLED display products. If there was a disruption of supply from these foundries it would take a significant period of time to identify, and qualify, if possible, a new source.

Previous wording

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 2025, we expect our R&D expenditures to be related to our display products, overlay weapon sights and OLED display technologies. Funded and internal R&D expenses are combined in research and development expenses in the condensed consolidated statement of operations. R&D expenses for the three months ended March 29, 2025 and March 30, 2024 were as follows:

Current wording

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 2025, we expect our R&D expenditures to be related to our display products, overlay weapon sight modules and production automation. Funded and internal R&D expenses are combined in research and development expenses in the condensed consolidated statement of operations. R&D expenses for the three and six months ended June 28, 2025 and June 29, 2024 were as follows:

Previous wording

Funded R&D expense for the three months ended March 29, 2025 decreased as compared to the three months ended March 30, 2024 primarily due to decreased spending on U.S. defense programs and programs previously in development are transitioning into production. Internal R&D expense decreased due to an increase in process improvements.

Current wording

Funded R&D expense for the three and six months ended June 28, 2025 decreased as compared to the three and six months ended June 29, 2024 primarily due to decreased spending on U.S. defense programs and programs previously in development are transitioning into production. Internal R&D expense increased due to an increase in internally developed technology focused on future process improvements.

Previous wording

Selling, General and Administrative. Selling, general and administrative (“S,G&A”) expenses consist of the expenses incurred by our sales and marketing personnel and related expenses, and administrative and general corporate expenses. S,G&A expenses for the three months ended March 29, 2025 and March 30, 2024 were as follows:

Current wording

Selling, General and Administrative. Selling, general and administrative (“S,G&A”) expenses consist of the expenses incurred by our sales and marketing personnel and related expenses, and administrative and general corporate expenses. S,G&A expenses for the three and six months ended June 28, 2025 and June 29, 2024 were as follows:

Previous wording

S,G&A decreased for the three months ended March 29, 2025 as compared to the three months ended March 30, 2024 primarily due to a decrease in legal fees of $2.9 million.

Current wording

S,G&A decreased for the three and six months ended June 28, 2025 as compared to the three and six months ended June 29, 2024 primarily due to a decrease in legal fees partially offset by an increase in non-cash stock-based compensation.

Previous wording

*Other Income, net.*Other income, net, is primarily composed of interest income, foreign currency transactions, gains on fair value recording of investments and remeasurement gains and losses incurred by our U.K.-based subsidiary and other non-operating income items. Other income, net, for the three months ended March 29, 2025 and March 30, 2024 were as follows:

Current wording

*Other Income, net.*Other income, net, is primarily composed of interest income, foreign currency transactions, gains on fair value recording of investments and remeasurement gains and losses incurred by our U.K.-based subsidiary and other non-operating income items. Other income, net, for the three and six months ended June 28, 2025 and June 29, 2024 were as follows:

Previous wording

During the three months ended March 29, 2025, we sold an investment for a gain of approximately $0.3 million. In addition, interest income increased approximately $0.3 million for the three months ended March 29, 2025 as compared to the three months ended March 30, 2024. During the three months ended March 29, 2025 and March 30, 2024, we recorded foreign currency gains of approximately $0.1 million.

Current wording

During the six months ended June 28, 2025, we sold an investment for a gain of approximately $0.3 million, respectively. Interest income increased approximately $0.1 million and $0.4 million for the three and six months ended June 28, 2025, respectively, as compared to the three and six months ended June 29, 2024. During the three and six months ended June 28, 2025, we recorded foreign currency gains of less than $0.1 million and approximately $0.1 million, respectively. During the three and six months ended June 29, 2024, we recorded foreign currency gains of less than $0.1 million and foreign currency losses of less than $0.1 million, respectively. Other income (expense), net includes $0 and $0.7 million of impairment losses on equity investments for the second quarter of 2025 and the second quarter of 2024, respectively.

Previous wording

Tax Provision. We recorded a provision for income taxes of less than $0.1 million and $0 in the three months ended March 29, 2025 and March 30, 2024, respectively.

Current wording

Tax Provision. We recorded a provision for income taxes of less than $0.1 million and approximately $0.1 million in the three and six months ended June 28, 2025, respectively. We recorded a provision for income taxes of $0 in the three and six months ended June 29, 2024

Previous wording

Net Loss. We incurred a net loss of $3.1 million during the three months ended March 29, 2025 compared to a net loss of $32.5 million during the three months ended March 30, 2024. The decrease in the net loss during the three months ended March 29, 2025 compared to the three months ended March 30, 2024 was primarily due to the accrual of litigation damages and legal fees for the three months ended March 30, 2024 in addition to more effective expense management during the three months ended March 29, 2025.

Current wording

Net Loss. We incurred net losses of $5.2 million and $8.3 million during the three and six months ended June 28, 2025, respectively, compared to net losses of $5.9 million and $38.5 million during the three and six months ended June 29, 2024, respectively. The decrease in net loss during the three months ended June 28, 2025 compared to the three months ended June 29, 2024 was primarily due to a decrease in legal fees. The decrease in the net loss during the six months ended June 28, 2025 compared to the six months ended June 29, 2024 was primarily due to accrued litigation damages and legal fees.

Previous wording

At March 29, 2025 and December 28, 2024, we had cash and cash equivalents, including restricted cash, and marketable securities of $32.6 million and working capital of $16.2 million compared to $36.6 million and $18.9 million, respectively.

Current wording

At June 28, 2025 and December 28, 2024, we had cash and cash equivalents, including restricted cash, and marketable securities of $27.8 million and working capital of $11.2 million compared to $36.6 million and $18.9 million, respectively.

Previous wording

The increase in cash, cash equivalents, and restricted cash for the three months ended March 29, 2025 was primarily due to proceeds from the sale of marketable securities of $4.6 million partially offset by cash used in operations of $3.4 million. The increase in cash, cash equivalents, and restricted cash for the three months ended March 30, 2024 was primarily due to net proceeds from the sale of common stock of $7.2 million and marketable securities of $4.5 million partially offset by cash used in operations of $3.1 million. For the three months ended March 29, 2025, cash used in operating activities consisted of a net loss from operations of $3.1 million and net cash used to fund changes in operating assets and liabilities of $1.9 million, which were partially offset by non-cash charges totaling $1.6 million, which was primarily related to stock-based compensation, depreciation, and inventory reserves. For the three months ended March 30, 2024, cash used in operating activities consisted of a net loss from operations of $32.5 million partially offset by net cash provided by changes in operating assets and liabilities of $2.9 million and non-cash charges totaling $26.5 million, which was primarily related to accrued litigation damages, stock-based compensation, depreciation, and inventory reserves. 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, the timing of when we recognize revenue, 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.

Current wording

The increase in cash, cash equivalents, and restricted cash for the six months ended June 28, 2025 was primarily due to proceeds from the sales of marketable securities of $34.0 million partially offset by purchases of marketable securities of $15.2 million, cash used in operations of $7.6 million, capital expenditures of $1.2 million and proceeds from the sale of an equity investment of $0.3 million. The increase in cash, cash equivalents, and restricted cash for the three months ended June 29, 2024 was primarily due to proceeds from the sale of common stock of $7.2 million and marketable securities of $5.3 million partially offset by cash used in operations of $6.2 million, purchases of marketable securities of $1.1 million, and capital expenditures of $0.3 million. For the six months ended June 28, 2025, cash used in operating activities consisted of a net loss of $8.3 million and net cash used to fund changes in operating assets and liabilities of $1.8 million, which were partially offset by non-cash charges totaling $2.5 million, which was primarily related to stock-based compensation, depreciation, and inventory reserves. For the six months ended June 29, 2024, cash used in operating activities consisted of a net loss from operations of $38.5 million partially offset by net cash provided by changes in operating assets and liabilities of $3.9 million and non-cash charges totaling $28.3 million, which was primarily related to accrued litigation damages, stock-based compensation, inventory reserves, and depreciation. 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, the timing of when we recognize revenue, 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.

Previous wording

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. We have incurred net losses of $43.9 million and net cash outflows from operations of $14.2 million for the fiscal year ended 2024. We incurred a net loss of $3.1 million for the three months ended March 29, 2025 and net cash outflows from operations of $3.4 million. In addition, we have experienced a significant decline in our cash and cash equivalents and marketable securities over the last several years, which was primarily a result of funding operating losses. As described in Note 14 Litigation, on April 22, 2024, the jury verdict was entered against us awarding approximately $5.1 million in damages as well as recommending $19.7 million in disgorgement and exemplary damages. While no final judgment has been issued by the Court, the Court will take that recommendation under advisement and will rule in its final judgment on the final amount after briefing on the issues. We have argued that the damages, disgorgement and exemplary damages should be reduced or eliminated. Final briefing on the issued occurred on October 29, 2024. We are also considering the appeal of any award in a final judgment. The $5.1 million in damages and $19.7 million in disgorgement and exemplary damages were accrued for as of March 29, 2025 and December 28, 2024. We had $32.6 million of cash and cash equivalents, restricted cash, and marketable securities at March 29, 2025.

Current wording

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. We have incurred net losses of $43.9 million and net cash outflows from operations of $14.2 million for the fiscal year ended 2024. We incurred a net loss of $8.3 million for the six months ended June 28, 2025 and net cash outflows from operations of $7.6 million. In addition, we have experienced a significant decline in our cash and cash equivalents and marketable securities over the last several years, which was primarily a result of funding operating losses. As described in Note 14 Litigation, on April 22, 2024, the jury verdict was entered against us awarding approximately $5.1 million in damages as well as recommending $19.7 million in disgorgement and exemplary damages. While no final judgment has been issued by the Court, the Court will take that recommendation under advisement and will rule in its final judgment on the final amount after briefing on the issues. We have argued that the damages, disgorgement and exemplary damages should be reduced or eliminated. Final briefing on the issued occurred on October 29, 2024. We are also considering the appeal of any award in a final judgment. The $5.1 million in damages and $19.7 million in disgorgement and exemplary damages were accrued for as of June 28, 2025 and December 28, 2024. We had $27.8 million of cash and cash equivalents, restricted cash, and marketable securities at June 28, 2025.

Previous wording

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 28, 2024, as amended.

Current wording

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 28, 2024, as amended. There have been no material changes to our critical accounting policies and estimates since December 28, 2024.