KOPIN CORP

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, 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. Summary of Significant Accounting Policies

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. As used in these notes, the terms “we,” “us,” “our,” “Kopin” and the “Company” mean Kopin Corporation and its consolidated subsidiaries, unless the context indicates another meaning.

Basis of Presentation

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The accompanying consolidated financial statements reflect the operations of Kopin Corporation and its consolidated subsidiaries.

Fiscal Year

The Company’s fiscal year ends on the last Saturday in December. The fiscal years ended December 27, 2025, December 28, 2024, and December 30, 2023, include 52 weeks, and are referred to as fiscal years 2025 and 2024, respectively, herein.

Principles of Consolidation

The consolidated financial statements include the accounts of Kopin Corporation and its consolidated subsidiaries. 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 consolidated statement of operations therefore includes nine months and sixteen days of activity related to Kopin Europe Ltd. prior to 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 2, “Strategic Investment from Theon”). All intercompany transactions and balances have been eliminated.

Liquidity

The accompanying 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 has incurred net income of $2.6 million and net cash outflows from operations of $15.5 million for the fiscal year ended December 27, 2025.

As of December 28, 2024, the Company had $24.7 million accrued related to a jury verdict in the matter of Blue Radios Inc. v. Kopin Corporation (see Note 14 Litigation). On September 5, 2025, a post-trial order for $19.7 million was awarded. As a result, the Company reduced the accrual to $19.7 million and recognized a benefit of $5.1 million in the consolidated Statements of Operations for the fiscal year ended December 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 Company’s appeal to the verdict. To post the bond, the Company deposited $24.2 million in the bank, which consists of $23.0 million plus judgement, fees, and interest and $1.15 million in additional fees. The bank then issued a letter of credit to a surety company who then issued the bond to the court.

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 $51.2 million during the fiscal year ended December 27, 2025, through the issuance of common stock, pre-funded warrants and preferred stock. As of December 27, 2025, the Company had $36.4 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.

Revenue Recognition

Substantially all of 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:

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.

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:

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 December 27, 2025, the aggregate amount of the transaction price allocated to remaining performance obligations was $35 million, which the Company expects to recognize revenue over the next 12 months. The remaining performance obligations expected to be recognized beyond 12 months of $8.2 million represent amounts to be earned under government contracts, which are subject to cancellation.

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. 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.

Research and Development Costs

Research and development expenses are incurred in support of internal display product development programs or programs funded by agencies or prime contractors of the U.S. Government and commercial partners, Government Grants and Collaborative Arrangements. Research and development costs include staffing, purchases of materials and laboratory supplies, circuit design costs, fabrication and packaging of experimental display products, and overhead, and are expensed immediately.

Cash, Cash Equivalents and Restricted Cash

The Company considers all highly liquid, short-term debt instruments with original maturities of three months or less to be cash equivalents.

At December 27, 2025, the Company held approximately $24.2 million of restricted cash related to a bond to satisfy potential amounts to be paid for the Blue Radio litigation (seeLiquidity above and Note 14 Litigation). At December 27, 2025, and December 28, 2024, the Company held restricted cash of approximately $1.1 million, that serves as collateral for a standby letter of credit in the same amount in accordance with a contractual agreement with a vendor.

The Company maintains its cash deposits with high-quality financial institutions. From time to time, the Company’s cash balances exceed the Federal Deposit Insurance Corporation (FDIC) insurance limits. The Company manages this credit risk by monitoring the financial stability of the institutions and has not incurred any losses on these deposits to date.

Marketable Securities

Marketable securities consist of corporate notes and U.S. Government and agency-backed securities. The Company classifies these marketable securities as available-for-sale at fair value in “Marketable securities, at fair value” in the consolidated balance sheets, with unrealized gains and losses reported as a component of other comprehensive income (loss). The Company records the amortization of premiums and accretion of discounts on marketable securities in the results of operations.

The Company uses the specific identification method as a basis for determining cost and calculating realized gains and losses with respect to marketable securities. The gross gains and losses realized related to sales and maturities of marketable securities were not material during the fiscal years ended 2025 and 2024.

For our available-for-sale debt securities in an unrealized loss position, we determine whether a credit loss exists. In this assessment, among other factors, we consider the extent to which the fair value is less than the amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security. If factors indicate a credit loss exists, an allowance for credit loss is recorded to other income (loss), net, limited by the amount that the fair value is less than the amortized cost basis. The Company excludes the applicable accrued interest from both the fair value and amortized costs basis of the Company’s available-for-sale securities for purposes of identifying and measuring an impairment. Accrued interest receivable on available-for-sale securities is recorded within prepaid and other assets on the consolidated balance sheets. The Company made an accounting policy election to (1) not measure an allowance for credit loss for accrued interest receivable, and (2) to write off any uncollectible accrued interest receivable as a reversal of interest income in a timely manner, which the Company considers to be in the period in which it determines the accrued interest will not be collected.

Accounts Receivable and Allowance for Credit Losses

Accounts receivable are presented net of any necessary allowance(s) for credit losses. Receivables are recorded at the invoiced amount and generally do not bear interest. When necessary, an allowance for credit losses is established based on prior experience and other factors which, in management’s judgment, deserve consideration in estimating bad debts, including reasonable and supportable forecasts of future economic conditions that may affect the collectability of the portfolio. Management assesses the collectability of the customer’s account based on current aging status, collection history, and financial condition. Based on a review of these factors, management establishes or adjusts the allowance for specific customers and the entire accounts receivable portfolio. All credit losses relate to ASC 606 receivables and contract assets.

Fair Value of Financial Instruments

Financial instruments consist of marketable securities, equity investments, accounts receivable, loans receivable and certain current liabilities. Accounts receivable and certain current liabilities are carried at cost, which approximates fair value due to their short-term nature. Marketable debt securities are recorded at fair value with unrealized gains and losses reported in other comprehensive income or loss. Marketable equity securities are recorded at fair value with unrealized gains and losses reported in gain (loss) on investments. Other receivables are recorded at fair value since the Company has elected to account for the specific instrument outstanding using the fair value option under ASC 825. Equity investments without a readily determinable fair value are recorded using the cost method, adjusted for changes in observable market transactions. The Company has elected to account for its investment in and loan receivable from Kopin Europe Ltd. using the fair value option under ASC 825.

Inventory

Inventories are stated at standard cost adjusted to approximate the lower of cost or net realizable value. The Company adjusts inventory carrying value for the estimated difference between the cost of inventory and the estimated net realizable value based upon assumptions about future demand and inventory status. The Company fully reserves for inventory deemed obsolete. The Company performs periodic reviews of inventory items to identify excess inventories on-hand by comparing on-hand balances to anticipated usage using recent historical activity as well as judgements and estimates about anticipated or forecasted demand. If estimates of customer demand diminish further or market conditions become less favorable than those projected by the Company, additional inventory adjustments may be required, subject to judgement and estimation. At the point of a loss recognition, a new, lower cost basis for that inventory is established, and subsequent changes in facts and circumstances do not result in the restoration or increase in that newly established basis.

Inventory consists of the following at December 27, 2025 and December 28, 2024:

The Company provided for additional reserves of approximately $1.0 million and $2.4 million for the years ended December 27, 2025 and December 28, 2024. The inventory adjustments were primarily due to scrapping of obsolete and excess inventory. The inventory adjustments are recorded in the Consolidated Statement of Operations within Cost of Product Revenues.

Property, Plant and Equipment

Property, plant and equipment are recorded at cost. Depreciation and amortization are provided using the straight-line method over the estimated useful lives of the assets, generally 3 to 5 years. Leasehold improvements and leased equipment are amortized over the remaining lease term or the useful life of the improvement or equipment. As discussed below, obligations for asset retirement are accrued at the time property, plant and equipment are initially purchased or as such obligations are generated from use.

Recognition and Measurement of Financial Assets and Liabilities

The Company periodically makes equity investments in private companies, which require estimates and judgment in determining their value. Equity investments in private companies over which the Company does not have significant influence are accounted for under the measurement alternative for equity investments without readily determinable fair values, which is often referred to as the “cost method,” adjusted for changes in observable market transactions.

When assessing investments in private companies for impairment, the Company considers such factors as, among other things, the share price from the investee’s latest financing round, the performance of the investee in relation to its operating targets and business plan, the investee’s revenue and cost trends, its liquidity and cash position, including cash burn rate, and the market acceptance of the investee’s products and services.

Equity investments over which the Company has significant influence, generally presumed when the Company owns 20% or more of the investee’s voting interests, are accounted for using the equity method of accounting.

Product Warranty

The Company generally sells products with a limited warranty of product quality and a limited indemnification of customers against intellectual property infringement claims related to the Company’s products. The Company accrues for known warranty and indemnification issues if a loss is probable and can be reasonably estimated and accrues for estimated incurred but unidentified issues based on historical activity.

Extended Warranties

The Company recognizes revenue from an extended warranty on the straight-line method over the life of the extended warranty, which is typically 12 to 18 months beyond the standard 12-month warranty. The Company classifies the current portion of extended warranties under Contract liabilities and billings in excess of revenue earned and the noncurrent portion of extended warranties under Noncurrent contract liabilities and asset retirement obligations in its consolidated balance sheets. The Company had less than $0.1 million of contract liabilities related to extended warranties at December 27, 2025 and December 28, 2024.

Asset Retirement Obligations

Included in Other long-term liabilities, net of current portion are asset retirement obligations (“ARO”) liabilities of $0 and $0.4 million at December 27, 2025 and December 28, 2024, respectively as reported on the Consolidated Balance Sheets as Noncurrent contract liabilities and asset retirement obligations. This represents the legal obligations associated with the retirement of the Company’s assets when the timing and/or method of settling the obligation are conditional on a future event that may or may not be within the control of the Company. Changes in ARO liabilities for fiscal years 2025 and 2024 are as follows:

Due to the Deconsolidation of Kopin Europe in 2025, the ARO was reduced tozero during the year ended December 27, 2025.

Income Taxes

The consolidated financial statements reflect provisions for federal, state, local and foreign income taxes. The Company recognizes deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis, as well as operating loss and tax credit carryforwards. The Company measures deferred tax assets and liabilities using enacted tax rates expected to apply to taxable income in the years in which those temporary differences and carryforwards are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company provides valuation allowances if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

The 2017 Tax Cuts and Jobs Act imposed a U.S. tax on global intangible low taxed income (“GILTI”) that is earned by certain foreign affiliates owned by a U.S. shareholder. The Company has made a policy election to treat future taxes related to GILTI as a current period expense in the reporting period in which the tax is incurred.

Foreign Currency

The reporting currency of the Company is U.S. dollars. Assets and liabilities of non-U.S. operations where the functional currency is other than the U.S. dollar is translated from the functional currency into U.S. dollars at year end exchange rates, and revenues and expenses are translated at average rates prevailing during the year. Resulting translation adjustments are accumulated as part of accumulated other comprehensive income (loss). Transaction gains or losses are recognized in income or loss in the period in which they occur.

Net Income (Loss) Per Share Attributable to Common Stockholders

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.

Weighted average common shares outstanding used to calculate earnings per share are as follows:

The following potentially dilutive common stock equivalents outstanding at the period-end were excluded from the computation of diluted net loss per share attributable to common stockholders for the periods indicated because including them would have had an anti-dilutive effect:

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentration of credit risk other than marketable securities consist principally of trade accounts receivable. Trade receivables are primarily derived from sales to manufacturers of components and subassemblies for defense applications. Concentration of credit risk with respect to accounts receivable is limited to certain customers to whom we make substantial sales. To reduce risk, we routinely assess the financial strength of our customers and, as a consequence, believe that our accounts receivable credit risk exposure is limited. Management assesses the collectability of the customer’s account based on current aging status, collection history, and financial condition. Based on a review of these factors, management establishes or adjusts the allowance for specific customers and the entire accounts receivable portfolio. The Company sells its products to customers worldwide and generally does not require collateral.

The Company primarily invests its excess cash in government-backed and corporate debt securities that management believes to be of high creditworthiness, which bear lower levels of relative credit risk. The Company relies on rating agencies to ascertain the creditworthiness of its marketable securities and, where applicable, guarantees made by the Federal Deposit Insurance Company.

Stock-Based Compensation

The fair value of nonvested restricted common stock awards is generally the quoted price of the Company’s equity shares on the date of grant. The nonvested restricted common stock awards require the employee to fulfil certain obligations, including remaining employed bythe Company for periods ranging from one to five years (the vesting period) and in certain cases also require meeting performance criteria. The performance criteria primarily consist of the achievement of established milestones. For nonvested restricted common stock awards which solely require the recipient to remain employed with the Company, the stock compensation expense is amortized over the anticipated service period. For nonvested restricted common stock awards which require the achievement of performance criteria, the Company reviews the probability of achieving the performance goals on a periodic basis. If the Company determines that it is probable that the performance criteria will be achieved, the amount of compensation cost derived for the performance goal is amortized over the service period. If the performance criteria are not met, no compensation cost is recognized, and any previously recognized compensation cost is reversed. The Company recognizes compensation costs on a straight-line basis over the requisite service period for time vested awards. We have elected to account for forfeitures as they occur.

The Company also grants stock options to employees and directors. Stock options are generally granted with an exercise price equal to the fair market value of the Company’s common stock on the date of grant, however, during the current year the Company approved a grant with an exercise price that was below the fair market value on the grant date.

The options typically vest over service periods of one to four years and generally expire ten years from the date of grant. The fair value of stock option awards is estimated on the date of grant using the Black-Scholes option pricing model. Assumptions used in this model include expected volatility, expected term of the option, risk-free interest rate, and expected dividend yield. These assumptions are based on historical data, peer company information, and other factors considered relevant at the time of valuation. For stock options that vest based solely on service, compensation cost is recognized on a straight-line basis over the requisite service period. For stock options containing performance conditions, the Company assesses the probability of achieving those conditions each reporting period. If achievement is considered probable, related compensation cost is recognized over the requisite service period; if not, previously recognized compensation cost is reversed. We have elected to account for forfeitures as they occur.

Convertible Preferred Stock

The Company classifies convertible preferred stock as temporary equity in the accompanying consolidated balance sheet due to terms that conditionally require redemption of the shares if, upon conversion, share settlement is not available due to beneficial ownership limitations. The Company considers such instruments currently redeemable and adjusts the carrying value of the convertible preferred stock to its corresponding redemption value, if such amount is greater than its initial carrying value. Dividends payable in cash are accrued as a liability and dividends payable in-kind are accumulated to the carrying value of the convertible preferred stock since such dividends accrue and accumulate semi-annually whether or not declared by the board of directors or whether or not the Company has funds legally available for the payment of such dividends.

Comprehensive Income (Loss)

Comprehensive income (loss) is the total of net (loss) income and all other non-owner changes in equity including such items as unrealized holding (losses) gains on marketable debt securities classified as available-for-sale and foreign currency translation adjustments.

The components of accumulated other comprehensive income (loss) are as follows:

Impairment of Long-Lived Assets

The Company evaluates its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. Examples of such triggering events applicable to the Company’s assets include, but are not limited to, a significant decrease in the market price of a long-lived asset or asset group, a current-period operating or cash flow loss combined with a history of operating or cash flow losses, a projection or forecast that demonstrates continuing losses associated with the use of a long-lived asset or asset group, or adverse industry or economic trends. If any indicator of impairment exists, the Company would then assess the recoverability of the affected long-lived assets by determining whether the carrying value of the asset group can be recovered through undiscounted future operating cash flows. If impairment is indicated, the Company would estimate the asset group’s fair value using future discounted cash flows associated with the use of the asset group and adjust the carrying value of the asset group accordingly. Given the Company’s history of negative operating losses and negative operating cash flows, the Company performed an analysis of its long-lived assets for fiscal years 2025 and 2024. Upon completion of its assessment, the Company did not identify an impairment charge on its long-lived assets for the years ended December 27, 2025 or December 28, 2024.

Leases

The Company determines if an arrangement is a lease or contains an embedded lease at inception. For lease arrangements with both lease and non-lease components (e.g., common-area maintenance costs), the Company accounts for the non-lease components separately.

All of the Company’s leases are operating leases. Operating lease right-of-use assets (“ROU”) and operating lease liabilities are recognized based on the present value of future lease payments over the lease term at the commencement date. The operating lease right-of-use assets also include any initial direct costs and any lease payments made at or before the commencement date and are reduced for any unrestricted incentives received at or before the commencement date.

For the majority of the Company’s leases, the discount rate used to determine the present value of the lease payments is the Company’s incremental borrowing rate at the lease commencement date, as the implicit rate is not readily determinable. The discount rate represents a risk-adjusted rate on a secured basis and is the rate at which the Company would borrow funds to satisfy the scheduled lease liability payment streams commensurate with the lease term. For new or renewed leases, the discount rate is determined using available data at lease commencement and based on the lease term including any reasonably certain renewal periods.

Some of the Company’s leases include options to extend or terminate the lease. The Company includes these options in the recognition of the Company’s ROU assets and lease liabilities when it is reasonably certain that the Company will exercise the option. In most cases, the Company has concluded that renewal and early termination options are not reasonably certain of being exercised by the Company (and thus not included in its ROU asset and lease liability) unless there is an economic, financial or business reason to do so. None of the Company’s leases include variable lease-related payments, such as escalation clauses based on the consumer price index (“CPI”) rates or residual guarantees.

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. The Company is currently evaluating the impact of this standard on its consolidated financial statements and accompanying notes.

Recently Adopted Accounting Pronouncements

In December 2023, the FASB issued ASU No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”). ASU 2023-09 requires more disaggregated income tax disclosures, including additional information in the rate reconciliation and additional disclosures about income taxes paid. ASU 2023-09 became effective for the Company for the fiscal year ending December 27, 2025. The Company adopted ASU 2023-09 retroactively for the annual periods ended December 27, 2025 and December 28, 2024. As a result, the 2025 and 2024 annual financial statements reflect the new disclosure requirements, including enhanced rate reconciliation and disaggregated income tax payment information. Consistent with the standard’s prospective transition guidance, prior-period disclosures continue to be presented under the previous requirements. The adoption did not have an impact on the Company’s consolidated financial position, results of operations, or cash flows; however, it resulted in expanded income tax disclosures beginning in 2025.

In December 2025, the FASB issued ASU No. 2025-10,Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities (“ASU 2025-10”), to provide guidance on how business entities should recognize, measure, and present government grants received. The Company early adopted ASC 2025-10 using the modified prospective approach and applied the amendments to grants that were entered after and grants that were not complete as of December 29, 2024. The adoption of ASU 2025-10 did not have a material effect on the Company’s accounting for government grants.

2. Strategic Investment from Theon

On August 8, 2025, Kopin Corporation announced certain strategic agreements (collectively, the “Agreements”) for an aggregate of $15 million strategic investment from Theon International Plc (“Theon”). The Agreements closed on October 16, 2025, upon resolution of all related closing conditions, and the following related transactions were consummated:

As a result of the sale of equity interests in Kopin Europe Ltd. and the existence of certain substantive participating rights provided to Theon, Kopin Corporation lost its controlling financial interest in Kopin Europe Ltd., a variable interest entity, as of October 16, 2025. While the Company has the right to receive benefits from, and the obligation to absorb losses of, Kopin Europe that could be potentially significant, the Company does not have the power to direct the activities that most significantly impact Kopin Europe’s economic performance. In making this determination, management considered, among other factors, the governance provisions in the shareholder agreement, the substantive decision making rights held by Theon, the nature of the activities that most significantly affect Kopin Europe’s economic performance, and our exposure to Kopin Europe’s economics following the transaction. Decisions regarding those significant activities require the consent of both Kopin and Theon. Accordingly, the Company is not the primary beneficiary and elected to account for its equity method investment in Kopin Europe at fair value. The Company’s maximum exposure to loss related to its involvement with Kopin Europe as of December 27, 2025 consists of the carrying value of its investment of $8.9 million and other receivable of $5.1 million. The Company does not have any guarantees, contractual funding commitments, or other obligations to provide additional financial support to Kopin Europe beyond its current investment and loan.

The Company recognized a gain upon deconsolidation of $11.1 million, inclusive of the fair value of the Company’s retained minority interest, of $8.6 million, adjusted for the (i)gain on the write-off of the $2.4 million in the carrying value associated with assets and liabilities, (ii) recognition of $1.0 million cumulative translation gain, and (iii) ($0.9) million fair value adjustment of the Kopin Corporation receivable retained in Kopin Europe Ltd.

The most significant carrying amounts of the various assets and liabilities that were deconsolidated were $0.4 million of cash and cash equivalents, $1.2 million of inventory, $1.7 million of prepaid and other current assets, $0.5 million of accounts receivable, $0.4 million of accounts payable and accrued liabilities, and $5.5 million of liabilities. There were no other material impacts to the Consolidated Balance Sheets resulting from the deconsolidation.

The Company identified two liability-classified forward contracts related to the firm commitments to sell Series A Convertible Preferred Stock of Kopin Corporation and ordinary shares of Kopin Europe Ltd. which required mark-to-market treatment from August 8, 2025 through settlement on October 16, 2025, resulting in an aggregate change in fair value of $0.8 million recorded in the statements of operations within gain (loss) on investments during the year ended December 27, 2025.

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. To facilitate activities contemplated by the LCA, the parties executed a series of cross-licensing arrangements under which each party grants the others non-exclusive, royalty-free, fully paid-up licenses to use their respective intellectual property rights for the development, manufacture, promotion, and sale of products, including combined products resulting from the development efforts. All licensed intellectual property rights remain the exclusive property of the respective licensor, and no party has the right to sublicense the rights granted to it under these arrangements. Jointly developed intellectual property resulting from the LCA will be jointly owned in equal parts and shall not be licensed to third parties without the consent of at least 60% of Kopin Europe’s shareholders. As of December 31, 2025, total committed funding received by Kopin Corporation from Theon under the LCA was $1.0 million, of which approximately $0.4 million was recognized as Collaboration revenue in the consolidated statement of operations.

3. Property, Plant and Equipment

Property, plant and equipment consisted of the following at December 27, 2025 and December 28, 2024:

Depreciation expense was approximately $0.6 million for fiscal years 2025 and 2024.

4. Leases

The Company enters into operating leases primarily for manufacturing, engineering, research, administration and sales facilities, and information technology (“IT”) equipment. At December 27, 2025 and December 28, 2024, the Company did not have any finance leases. Almost all of the Company’s future lease commitments, and related lease liability, relate to the Company’s facility leases. Some of the Company’s leases include options to extend or terminate the lease.

At December 27, 2025 the Company’s future lease payments under non-cancellable leases were as follows:

Cash paid for operating cash flows from operating leases:

Other information related to leases was as follows:

5. Contract Assets and Liabilities

Contract assets (liabilities) consisted of the following:

The contract asset balance as of December 30, 2023, was $3.4 million. The contract liability balance as of December 30, 2023 was $0.9 million. The accounts receivable balance as of December 30, 2023, was $9.7 million.

The $0.9 million decrease in the Company’s contract assets from December 28, 2024, to December 27, 2025, was primarily due to a decrease in amounts owed from customers for whom we produce products for defense applications.

The $1.1 million increase in the Company’s contract liabilities from December 28, 2024, to December 27, 2025, was primarily due to an increase in billings in excess of revenues earned on the Company’s research and development contracts.

The Company records ASC 606 contract assets or contract liabilities and deferred grant income on a contract-by-contract basis. The Company records a contract asset for unbilled revenue when the Company’s performance exceeds amounts billed or billable. 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 Company recognized revenue of approximately $0.1 million, and $0.9 million during fiscal 2025 and 2024, that was included in the opening contract liabilities as of December 27, 2025 and December 28, 2024, respectively. There was no revenue recognized from performance obligations satisfied in prior periods.

The Company did not recognize impairment losses on its contract assets during the years ended December 27, 2025 and December 28, 2024.

6. 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:

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 twelve months ended December 27, 2025:

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 $0.5 million certificates of deposit included in restricted cash and cash equivalents at December 27, 2025.

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 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 December 27, 2025 and December 28, 2024:

The contractual maturity of the Company’s marketable debt securities were less than three months as of December 27, 2025 and less than one year as of December 28, 2024

No allowance for credit losses was recorded on available-for-sale marketable debt securities.

Equity Investments

The Company’s equity investments consisted of the following at December 27, 2025 and December 28, 2024:

• 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. 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 transactions. As a result, these investments are revalued upon occurrence of an observable price change for similar investments and for impairments. As of December 27, 2025 and December 28, 2024, the carrying value of these equity investments was $2.2 million and $2.9 million, respectively.

The Company has an equity investment in RealWear Inc. In the fourth quarter of 2025, the Company received shares valued at approximately $0.4 million as payment of royalties. The Company reviewed the financial condition and observable market transactions and recorded an impairment charge of $0.9 million and $1.8 million within gain (loss) on investments during the years ended December 27, 2025 and December 28, 2024, respectively. As of December 27, 2025, the Company has an approximate 2.8% interest in this investment which has carrying value of $0.1 million. The fair value of this investment, which is not measured at fair value on a recurring basis, approximates its carrying value at December 27, 2025, using level 3 methodologies in the fair value hierarchy in accordance with ASC 820.

In 2019, the Company entered into an Asset Purchase Agreement (the “Solos Purchase Agreement”) pursuant to which the Company sold and licensed certain assets of the Company’s Solos TM (“Solos”) product line and Whisper TMAudio (“Whisper”) technology. As consideration for the transaction the Company received a 20.0% equity stake in Solos Incorporation (“Solos Inc.”). The Company’s 20.0% equity stake will be maintained until Solos Inc. has raised a total of $7.5 million in equity financing. The Company receives a royalty in the single digits on the net sales amount of Solos products for a three-year period, after the commencement of commercial production. The Company has performed the analysis and identified Solos Technology as a variable interest entity that should not be consolidated by Kopin, as Kopin is not the primary beneficiary of the entity. Kopin is not obligated to provide any additional funding support to Solos, and its potential loss exposure is the value of the investment recorded on its books. The investment’s carrying value is $0.2 million as of December 27, 2025 and December 28, 2024.

The Company has an equity investment in HMDmd, a medical device company. The carrying value of this equity investment was $0.3 million at December 27, 2025 and December 28, 2024.

The Company has an equity interest in a Lenovo New Vision which is denominated in Chinese Yuan and for the years ended December 27, 2025 and December 28, 2024, the Company recorded approximately $0.1 million and $0.2 million of changes in investment value, respectively, due to a fluctuation in the foreign exchange rate. As of December 27, 2025 the Company owns an approximate 10% interest in this investment and the carrying value was $1.5 million at December 27, 2025 and December 28, 2024.

Equity Investment – At Fair Value

In 2000 Kopin Corporation acquired 525,000 shares of Global Communication Semiconductors, Inc. (“GCS”) for $1,050,000. GCS was a customer of Kopin HBT wafers. On September 15, 2014, GCS had an initial public offering on the Taipei Exchange. As of December 27, 2025 the Company owns an approximate 10% interest in this investment and the carrying value was $2.3 million and $1.7 million at December 27, 2025 and December 28, 2024, respectively.

Equity-Method Investment, At Fair Value

On October 16, 2025, the Company completed a $15 million strategic investment from Theon International Plc which included the sale of a 49% interest in Kopin’s subsidiary, Kopin Europe Ltd., to Theon International Plc. for $8.0 million. Following the transaction, the Company no longer has a controlling financial interest in Kopin Europe Ltd., and the Company’s 51% equity interest is accounted for as an equity-method investment within the scope of ASC 323. The Company has elected to account for its equity interest in Kopin Europe Ltd. using the fair value option under ASC 825. 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 estimated fair value of this investment upon recognition and December 27, 2025, was $8.6 million and $8.9 million, resulting in a change of fair value of $0.3 million recognized in earnings during the year ended December 27, 2025. The fair value of this investment was measured using level 3 methodologies in the fair value hierarchy in accordance with ASC 820, including discounted cash flows and an estimated discount rate of 24.75%.

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 2.0% and the outstanding balance was approximately $5.5 million as of December 27, 2025. The Company has elected to account for this specific instrument using the fair value option under ASC 825. 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 estimated fair value of this loan receivable upon recognition and at December 27, 2025, was $4.6 million and $5.1 million, resulting in a change of fair value of $0.5 million recognized in earnings during the year ended December 27, 2025. The fair value was measured using level 3 methodologies in the fair value hierarchy in accordance with ASC 820, including an expected term of between 0.1 and 3.7 years and an expected market yield between 11.75% and 16.00% during the year ended December 27, 2025.

7. Series A Convertible Preferred Stock

As of December 27, 2025, the authorized capital stock of the Company included 3,000 shares of $0.01 par value preferred stock, of which 1,500 shares have been designated as Series A convertible preferred stock.

On October 16, 2025, the Company issued and sold 1,000 shares of Series A convertible preferred stock at a price of $7,000 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.

As of December 27, 2025, the holders of the convertible preferred stock have the following rights and preferences:

Voting Rights—

The holders of the Series A convertible preferred stock are entitled to vote as a single class with the holders of the Company’s common stock with one vote for each share of common stock that the preferred stock is convertible into.

Dividends—

On each January 1 and July 1 of each year, the Company shall (a) pay a cash dividend at a rate of 2% per annum and (b) allow paid-in-kind dividends to accrue at a rate of 2% per annum. The dividend rates shall increase to 3% per annum upon certain events of noncompliance. Dividends on preferred stock shall accrue and accumulate whether or not declared and whether or not the Company has funds legally available for the payment of such dividends and shall compound semi-annually to the extent not paid in cash on or prior to such payment date.

Liquidation Rights—

In the event of any voluntary or involuntary liquidation, the holders of preferred stock are entitled to receive an amount equal to the greater of (a) the sum of (i) the purchase price per share and (ii) the accrued dividends on such share as of the liquidation or (b) an amount per share as would have been payable had all shares of preferred stock been converted into common stock immediately prior to such event.

After payment of such liquidation preferences, holders of common stock receive the remaining assets of the Company available for distribution to its stockholders.

Conversion—

The holders of the preferred stock may elect to convert shares of preferred stock into common stock at any time. Upon a holder’s election, each share of preferred stock shall be converted into such number of shares of common stock equal to the quotient of (a) the sum of (i) the purchase price per share and (ii) the accrued dividends on such share as of the conversion date, divided by (b) the optional conversion price in effect at the time of conversion, which is originally set at $3.00, adjustable for certain dilutive events.

The preferred stock may also be converted, at the Company’s election, if the trading price of the Company’s common stock is $5.50 or more (adjustable for certain dilutive events) forten trading days during anythirty consecutive trading day period. Upon the Company’s election, each share of preferred stock shall be converted into such number of shares of common stock equal to the quotient of (a) the sum of (i) the purchase price per share and (ii) the accrued dividends on such share as of the conversion date, divided by (b) the mandatory conversion price in effect at the time of conversion, which is originally set at $4.40, adjustable for certain dilutive events.

If either an optional or mandatory conversion would result in the holders of the Series A convertible preferred stock beneficially owning greater than 9.99% of the common stock issued and outstanding, the Company must pay, in lieu of shares, an amount of cash per share equal to the volume weighted average per share price of a share of common stock on the trading day immediately preceding the conversion date and the relevant shares of preferred stock shall be deemed converted.

Redemption—

The preferred stock is redeemable at the election of the holders and is therefore classified outside of permanent equity. Upon the occurrence of certain events constituting a change of control, the Company has the option to redeem the preferred stock for an amount equal to the sum of (i) the purchase price per share and (ii) the accrued dividends on such share as of the redemption date. The Company shall not consummate an event constituting a change of control unless the Company provides each holder the option to receive an amount equal to the greater of (a)150% of the sum of (i) the purchase price per share and (ii) the accrued dividends on such share as of the liquidation or (b) an amount per share as would have been payable had all shares of preferred stock been converted into common stock immediately prior to such event.

**8. Stockholders’ Equity and Stock-Based Compensation **

Sale of Equity Securities

In the first quarter of 2024, the Company sold 3,080,000 shares of common stock for gross proceeds of $7,466,755 (average of $2.42 per share) before deducting broker expenses paid by the Company of approximately $0.2 million, pursuant to the Company’s then effective At-The-Market Equity Offering Sales Agreement (the “ATM Agreement”) with Stifel, Nicolaus & Company, Incorporated, (“Stifel”) as agent. The ATM Agreement terminated in the three months ended March 30, 2024.

On September 23, 2024, the Company sold 37,550,000 shares of common stock and pre-funded warrants to purchase up to 4,000,000 shares of common stock at a public offering price of $0.64 per pre-funded warrant and received gross proceeds of $27.0 million before deducting underwriting discounts and offering expenses paid by the Company of $1.8 million. The offering price of the pre-funded warrant equals the public offering price per share of the common stock less the $0.01 per share exercise price of each pre-funded warrant. On September 30, 2024, the Company sold 2,405,000 shares of common stock and received gross proceeds of $1.6 million.

On June 6, 2024, the Company’s shareholders approved an amendment to the Company’s Amended and Restated Certificate of Incorporation (the “Charter”) to increase the number of authorized shares of the Company’s common stock, par value $0.01 per share, from 150,000,000 shares to 200,000,000 shares. On June 26, 2025, the Company’s shareholders approved an amendment to the Charter to increase the number of authorized shares of the Company’s common stock, par value $0.01 per share, from 200,000,000 shares to 275,000,000 shares.

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 offering expenses payable by the Company. The transaction was consummated on September 30, 2025.

The pre-funded warrants issued in 2024 and prior years are classified as a component of permanent equity in the Company’s Consolidated Balance Sheets as they are freestanding financial instruments that are immediately exercisable, do not embody an obligation for the Company to repurchase its own shares, and permit the holders to receive a fixed number of shares of common stock upon exercise. All of the shares underlying the pre-funded warrants have been included in the weighted-average number of shares of common stock used to calculate net loss per share, basic and diluted, attributable to common stockholders as the shares may be issued for little or no consideration, are fully vested, and are exercisable after the original issuance date of the pre-funded warrants. As of December 27, 2025, none of the pre-funded warrants had been exercised.

The table below summarizes pre-funded warrants activity:

Restricted Stock Awards

In 2020, the Company adopted the 2020 Equity Incentive Plan (“2020 Equity Plan”) which authorized the issuance of shares of common stock to employees, certain consultants and advisors who perform services for the Company, and non-employee members of the Board. The 2020 Equity Plan is a successor to the Company’s 2010 Equity Incentive Plan (“2010 Equity Plan”). The number of shares authorized under the 2020 Equity Plan was 4,000,000 shares of common stock, which has since been amended to authorize the issuance of 11,000,000 shares of common stock. In addition, shares of common stock underlying any outstanding award granted under the 2010 Equity Plan that expires, or is terminated, surrendered or forfeited for any reason without issuance of such shares shall be available for the award of new grants under the 2020 Plan. As of December 27, 2025, the Company has approximately 5.5 million shares of common stock authorized and available for issuance under the Company’s 2020 Equity Plan.

The fair value of non-vested restricted common stock awards is generally the market value of the Company’s common stock on the date of grant. The non-vested restricted common stock awards require the employee to fulfil certain obligations, including remaining employed bythe Company for periods ranging from one to five years (the vesting period) and in certain cases also require meeting either performance criteria. For non-vested restricted common stock awards that solely require the recipient to remain employed with the Company, the stock compensation expense is amortized over the requisite service period. For non-vested restricted common stock awards that require the achievement of performance criteria, the Company reviews the probability of achieving the performance goals on a periodic basis. If the Company determines that it is probable that the performance criteria will be achieved, the amount of compensation cost derived for the performance goal is amortized over the anticipated service period. If the performance criteria are not met, no compensation cost is recognized and any previously recognized compensation cost is reversed.

The total grant-date fair value of restricted stock awards vested was $3.6 million and $3.0 million for the fiscal years ended 2025 and 2024.

Stock-Based Compensation

The following table summarizes stock-based compensation expense within each of the categories below as it relates to non-vested restricted common stock awards for the fiscal years 2025 and 2024 (no tax benefits were recognized):

Unrecognized compensation expense for non-vested restricted common stock as of December 27, 2025 totaled $7.6 million and is expected to be recognized over a weighted average period of approximately 2 years.

Stock Options

During the first quarter of 2025, an option award for 591,366 shares of the Company’s common stock was granted to the Chief Executive Officer. These options have a strike price of $1.76 and vest over a 4-year period. In 2025, the Company recorded incremental stock-based compensation of $0.1 million as a result of the granting of stock option awards. The remaining unrecognized compensation cost of $0.4 million is expected to be recognized over the remaining vesting period of 3 years. The fair value of this option award was estimated using the Black-Scholes model using the following assumptions and had the following fair values:

The Company’s 2025 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.

A summary of stock option activity for the fiscal year is as follows:

9. Concentrations of Risk

Ongoing credit evaluations of customers’ financial condition are performed and collateral, such as letters of credit, are generally not required. Customer’s accounts receivable balance as a percentage of total accounts receivable was as follows:

The Company had product sales to defense customers for 2025 and 2024 of 74% and 82%of total revenues, respectively.

The Company had revenue from funded research and development contracts for 2025 and 2024 of 12% and 12% of total revenues, respectively.

Sales to significant customers for fiscal years 2025 and 2024, as a percentage of total revenues, are as follows:

10. Income Taxes

The provision for income taxes from continuing operations consists of the following for the fiscal years indicated:

The following table sets forth the changes in the Company’s balance of unrecognized tax benefits, including interest and penalties, for the year ended:

U.S. GAAP requires applying a ‘more likely than not’ threshold to the recognition and derecognition of uncertain tax positions either taken or expected to be taken on the Company’s income tax returns. The total amount of the Company’s gross tax liability for tax positions that may not be sustained under a ‘more likely than not’ threshold, excluding interest and penalties, amounts to $0.8 million as of December 27, 2025, and December 28, 2024. The Company’s policy regarding the classification of interest and penalties is to include these amounts as a component of income tax expense. The total amount of accrued interest and penalties related to the Company’s unrecognized tax benefits, adjusted for the impact of foreign exchange gains and losses, was $1.3 million and $1.1 million as of December 27, 2025, and December 28, 2024.

The actual income tax provisions reported from operations are different from those which would have been computed by applying the federal statutory tax rate to loss before income tax provision. A reconciliation from the U.S. statutory federal income tax rate to the effective income tax rate is as follows:

The Company incurred tax provisions of $208,000 and $170,000 for the fiscal years ended December 27, 2025, and December 28, 2024, respectively, primarily due to accrual of additional liabilities related to uncertain tax positions associated with transfer pricing with a former foreign subsidiary.

In fiscal year 2025 the Company deconsolidated its Kopin Europe, Ltd. Subsidiary. As a result of the deconsolidation the Company’s investment in Kopin Europe, Ltd and its loan receivable from Kopin Europe, Ltd. The entity’s deferred tax assets and offsetting valuation allowance are no longer included in the deferred table. A deferred tax liability was recognized for the book tax difference in the remaining ownership of 51%, the investment in Kopin Europe. No taxable gain or loss was recognized on the deconsolidation as this was not considered a taxable event for tax purposes.

The decrease in the federal net operating loss carryforward for fiscal year ended December 28, 2024, was due to the expiration of net operating loss carryforwards partially offset by loss carryforwards generated in Fiscal year December 28, 2024.

During the fiscal year ended December 27, 2025, the were no foreign effects due to the deconsolidation or Kopin Europe. For December 28, 2024, the change in the foreign effects categories was attributable to changes in the valuation allowance of deferred tax assets at Kopin Europe Ltd.

Pretax income (loss) from operations for the fiscal years ended 2025 and 2024:

Deferred income taxes are provided to recognize the effect of temporary differences between tax and financial reporting. Deferred income tax assets and liabilities consist of the following:

Changes in the valuation allowance was as follows:

The increase in the federal and state net operating loss carryforward for fiscal year ended December 27, 2025 was due to the loss from operation adjusted for litigation accrual and certain legal expenses being disallowed in computing the taxable loss, prior years research & development expenses that had been capitalized being expensed in fiscal year 2025, and equity compensation tax expense being greater than the amount recorded under U.S.GAAP. In addition to the loss from operations, the higher state net operating loss carryforwards for the fiscal year December 27, 2025 was also due to a change in the mix of sales in the states the Company sold in fiscal 2025 which have different rates than the state the Company is located in.

The valuation allowance was approximately $84.2 million and $83.8 million at December 27, 2025 and December 28, 2024, respectively, primarily driven by U.S. net operating loss carryforwards (“NOLs”) and tax credits. Based on the available evidence it is more likely than not the deferred tax assets will not be realized.

As of December 27, 2025, the Company has available for tax purposes NOLs of $120.1 million expiring in 2025 through 2038 and $136.4 million that have an unlimited carryover period however only 80% of taxable income can be offset through the use of NOL’s in a particular year. The Company has recognized a full valuation allowance on its net deferred tax assets as the Company has concluded that such assets are not more likely than not to be realized.

Net operating losses were not utilized in 2025 and 2024 to offset federal and state taxes

There were no payments for income taxes for the fiscal years ended December 27, 2025 and December 28, 2024.

Under the provisions of Section 382, certain substantial changes in Kopin’s ownership may limit in the future the amount of net operating loss carryforwards that could be used annually to offset future taxable income and income tax liability. During the year end December 27, 2025, Kopin performed a Section 382 review of its net operating loss carryforwards and determined there was no limitation as of December 27, 2025.

The Company files tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Company is subject to examination by federal and state jurisdictions, where applicable. The statute of limitations for assessment by the Internal Revenue Service remains open for all years from 2022 to the present. The Company’s tax attributes related to years prior to 2022 can still be adjusted under audit. State income tax returns are generally subject to examination for a period of three to five years after filing of the respective return. The state impact of any federal changes remains subject to examination by various states for a period of up to one year after formal notification to the states. The Company is not currently under examination in these jurisdictions.

International jurisdictions have statutes of limitations generally ranging from three to twenty years after filing of the respective return. Years still open to examination by tax authorities in major jurisdictions include Korea, which is expiring at the end of 2026, Japan (2015 onward) and the United Kingdom (2016 onward). The Company is not currently under examination in these jurisdictions.

The One Big Beautiful Bill Act (“OBBB”) was signed into law on July 4, 2025. The OBBB makes changes to U.S. corporate income tax, including immediate expensing of domestic research and development costs, with retroactive application beginning January 1, 2025; reinstating the option to claim 100% accelerated depreciation deductions on qualified property, with retroactive application beginning January 20, 2025; and international tax provisions modifying global intangible low-taxed income (“GILTI”), foreign-derived intangible income (“FDII”), and base erosion and anti-abuse tax (“BEAT”). There is no significant impact from the OBBB on the Company.

11. Accrued Warranty

The Company warrants its products against defects for 12 months, however, for certain products a customer may purchase an extended warranty. A provision for estimated future costs and estimated returns for credit relating to such warranty is recorded in the period when product is shipped and revenue is recognized and is updated as additional information becomes available. The Company’s estimate of future costs to satisfy warranty obligations is based primarily on historical warranty expense experienced and a provision for potential future product failures. Changes in the accrued warranty for fiscal years ended 2025 and 2024 are as follows:

12. Employee Benefit Plan and Post Retirement Benefit

The Company has an employee benefit plan pursuant to Section 401(k) of the Internal Revenue Code of 1986, as amended. In 2025, the plan allowed employees to defer an amount of their annual compensation up to a current maximum of $23,500 if they are under the age of 50 and $31,000 if they are over the age of 50. The Company matches 50% of all deferred compensation on the first 6% of each employee’s deferred compensation. The amount charged to operations in connection with this plan was approximately $0.4 million in fiscal year 2025 and $0.4 million in fiscal year 2024.

On September 5, 2022, John C.C. Fan, the Company’s then President and Chief Executive Officer and Chairman of the Company’s Board of Directors, notified the Company of his resignation as President and CEO effective September 6, 2022. Under the terms of his previous employment agreement Dr. Fan received $750,000 of severance payments for the fiscal year 2024 and 2023. In addition, Dr. Fan received $40,000 for medical benefits for fiscal year 2025, 2024, and 2023, and he (or his spouse) will receive $40,000 annually through 2032.

13. 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.

14. 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.

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. As of December 28, 2024, the Company had estimated and accrued $24.8 million in probable and reasonably estimable damages for this matter.

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. 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 consolidated Statements of Operations for the fiscal year ended December 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. The reduction in accrued legal fees is included within selling, general and administration in the Company’s consolidated financial statements for the fiscal year ended December 27, 2025.

On October 2, 2025, the Company posted a supersedeas bond for the amount of $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, which 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.

On October 7, 2025, Kopin Corporation (Kopin or the Company) filed an appeal of the $19.7 million judgement against the Company in the matter of Blue Radios Inc. v. Kopin Corporation. 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.

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 one operating segment and one reportable segment, as the CODM reviews financial information presented on a consolidated basis for purposes of making operating decisions, allocating resources, and evaluating financial performance.

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. Significant segment expenses are included in the accompanying Consolidated Financial Statements. See the Consolidated Statements of Operations for the fiscal years ended 2025 and 2024.

Total long-lived assets by country at December 27, 2025 and December 28, 2024 were:

The Company disaggregates its revenue from contracts with customers by geographic location and by display application based on shipments, as the Company believes it best depicts how the nature, amount, timing and uncertainty of its revenue and cash flows are affected by economic factors.

Total revenue by geographical area for the fiscal years ended December 27, 2025 and December 28, 2024:

Total revenue by display application for the fiscal years ended December 27, 2025 and December 28, 2024 was as follows:

16. 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 $1.5 million license fees, paid as of December 2019, and will receive royalties of future product sales. See Note 6 for a description of the Company’s investments in RealWear. As of December 27, 2025, the Company owned approximately 2.8% of RealWear.

The Company has warrants to purchase shares of Preferred Stock of HMDmd. The fair value of the investment was determined to be $0.3 million as of December 27, 2025.

On October 16, 2025, Theon International Plc (“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 21,281,350 ordinary shares of Kopin Europe for $8.0 million, resulting in 49% ownership of Kopin Europe.

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.

During fiscal years 2025 and 2024, the Company had the following transactions with related parties:

At December 27, 2025 and December 28, 2024, the Company had the following receivables and payables with related parties:

18. Allowance for Credit Losses

The following table sets forth activity in Kopin’s allowance for credit losses:

During fiscal year 2025, the allowance for credit losses decreased primarily as a result of significant deductions and write-offs recorded during the period. The Company recognized approximately $0.6 million in write-offs, largely attributable to legacy receivable balances that were deemed uncollectible following a reassessment of customer credit profiles and collection outcomes, and $0.4 million for the Deconsolidation of Kopin Europe.

INDEX TO EXHIBITS