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, medical, professional and consumer products. Kopin’s portfolio includes microdisplays, display modules, eyepiece assemblies, image projection modules, and vehicle mounted and head-mounted display systems that incorporate ultra-small high-resolution Active Matrix Liquid Crystal displays (“AMLCD”), Ferroelectric Liquid Crystal on Silicon (“FLCoS”) displays, MicroLED displays (“µLED”) and Organic Light Emitting Diode (“OLED”) displays, a variety of optics, and low-power ASICs.

1. BASIS OF PRESENTATION

The condensed consolidated financial statements of Kopin Corporation as of March 28, 2026 and for the three month periods ended March 28, 2026 and March 29, 2025 are unaudited and include all normal recurring adjustments that, in the opinion of management, are necessary to present fairly the results of operations for the periods then ended. These condensed consolidated financial statements should be read in conjunction with the Company’s financial statements and notes thereto, included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 27, 2025, as amended. The results of the Company’s operations for any interim period are not necessarily indicative of the results of the Company’s operations for any other interim period or for a full fiscal year. As used in this report, the terms “we”, “us”, “our”, “Kopin” and the “Company” mean Kopin Corporation and its subsidiaries, unless the context indicates another meaning.

Principles of Consolidation

The condensed consolidated financial statements for the three-month periods ended March 28, 2026 and March 29, 2025 include the accounts of Kopin Corporation and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated.

As of October 16, 2025, the Company no longer has a controlling financial interest in Kopin Europe Ltd. and the assets and liabilities and operations of Kopin Europe Ltd. were deconsolidated (“Deconsolidation”). The assets and liabilities of Kopin Europe Ltd. are no longer included within the Company’s December 27, 2025 consolidated balance sheet. Any discussions related to results, operations, and accounting policies associated with Kopin Europe Ltd. are referring to the periods prior to Deconsolidation. Subsequent to Deconsolidation, the Company accounted for our equity ownership interest in Kopin Europe Ltd. under the equity method of accounting using the fair value option under ASC 825,Financial Instruments (“ASC 825”), (See Note 3, “Strategic Investment from Theon”).

Liquidity

The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company incurred a net loss of $3.8 million and net cash outflows from operations of $0.8 million for the three months ended March, 28, 2026. The Company’s net cash outflows from operations were partially a result of funding its ongoing investments in research and development, which management believes will continue, and production inefficiencies.

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 16 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 March 28, 2026, the Company had $34.1 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. Nonetheless, we monitor the capital markets on an ongoing basis and may consider raising capital if favorable market conditions develop. If our actual results are less than projected or we need to raise capital for additional liquidity, we may be required to do additional equity financings, reduce expenses or enter into a strategic transaction. However, we can make no assurance that we will be able to raise additional capital, reduce expenses sufficiently, or enter into a strategic transaction on terms acceptable to us, or at all.

Revenue Recognition

Substantially all the Company’s product and license and other revenues are derived from the sales of components and subassemblies and the license of intellectual property for use in defense and industrial applications. The Company also has development contracts for the design, manufacture and or modification of products for the U.S. Government or prime contractors for the U.S. Government and for customers that expect to sell into the defense markets. The Company may offer technologies developed under these defense research and development contracts in products sold to industrial, medical and consumer markets. The Company’s contracts with the U.S. Government are typically subject to the Federal Acquisition Regulations (“FAR”) and are priced based on estimated or actual costs of producing goods. The FAR provides guidance on the types of costs that are allowable in establishing prices for goods provided under U.S. Government contracts. The pricing for non-U.S. Government contracts is based on the specific negotiations with each customer.

In accordance with ASC 606 Revenue from Contracts with Customers (“ASC 606”), revenue is recognized when a customer obtains control of promised products, and the amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for these products and excludes taxes collected from customers which are subsequently remitted to government authorities. Pursuant to the contract terms, shipping and handling activities occur prior to the transfer of control of the Company’s products to customers and are therefore accounted for as fulfillment costs rather than as a separate performance obligation.

The Company applies the following five steps to guide revenue recognition:

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 March 28, 2026, the aggregate amount of the transaction price allocated to remaining performance obligations was $12.2 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 $7.2 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. Grant contract assets include unbilled amounts resulting from recognized grant revenues in excess of billings. Grant contract assets are generally classified as current assets in the consolidated balance sheet. Costs associated with such grants are recorded as a component of funded research and development expenses in the consolidated statements of operations.

Collaborative Arrangements

At the inception of an agreement, the Company evaluates if an agreement is a collaborative arrangement within the scope of ASC 808,Collaborative Arrangements (“ASC 808”). For collaborative arrangements that fall within the scope of ASC 808, the Company first determines which elements of the collaboration are deemed to be a performance obligation with a customer within the scope of ASC 606. For elements of collaboration arrangements that are accounted for pursuant to ASC 808 and are subject to the guidance in ASC 606, the Company applies the revenue recognition model under ASC 606 or other guidance, as deemed appropriate. The Company generally recognizes proceeds under collaborative arrangements within the scope of ASC 808 using a cost-to-cost methodology consistent with the underlying project economics within Collaboration revenues in the consolidated statements of operations. Proceeds received before recognition of the related collaboration revenues are recorded as deferred collaboration income within Other current liabilities in the consolidated balance sheet. Costs associated with such arrangements are recorded as a component of funded research and development expenses in the consolidated statements of operations.

2. ACCOUNTING STANDARDS

Recently Issued Accounting Pronouncements

In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2024-03,Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (“ASU 2024-03”), which requires disaggregated disclosure of income statement expenses for public business entities (“PBEs”). The ASU does not change the expense captions an entity presents on the face of the income statement; rather, it requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial statements. ASU 2024-03 is effective for all PBEs for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact that this guidance will have on the presentation of its consolidated financial statements and accompanying notes.

In September 2025, the FASB issued ASU No. 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software (“ASU 2025-6”). ASU 2025-06 changes the accounting for internal-use software under Accounting Standards Codification (“ASC”) 350-40. ASU 2025-06 clarifies when to begin capitalizing costs. ASU 2025-06 is effective for interim and annual periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of this standard on its consolidated financial statements and accompanying notes.

**3. 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. Accordingly, it was determined that for accounting purposes the Company is not the primary beneficiary and elected to account for its equity method investment in Kopin Europe at fair value (Refer to Note 4 for further information).

The License and Collaboration Agreement between Kopin Corporation, Kopin Europe, and Theon, together with associated side letters, established a framework for joint development and commercialization of multiple product categories, including the DarkWave module, DarkWave subsystem, Theon End Product, certain MicroLED displays, and OLED displays. As of March 28, 2026 total committed funding received by Kopin Corporation from Theon under the LCA was $1.0 million. During the three months ended March 28, 2026, $0.3 million was recognized as Collaboration arrangement income in the Condensed Consolidated Statements of Operations.

4. 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 three months ended March 28, 2026:

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 March 28, 2026 and December 27, 2025 with the exception of the bonded restricted cash, is invested in a certificate of deposit and money market funds. Investments in available-for-sale marketable securities are as follows at March 28, 2026 and December 27, 2025:

The contractual maturity of the Company’s marketable debt securities were less than three months as of March 28, 2026 and less than one year as of December 27, 2025.

Equity Investments

The Company’s equity investments consisted of the following at March 28, 2026 and December 27, 2025:

Equity Investments- Measurement Alternative

Equity investments rarely traded or not quoted will generally have less (or no) pricing observability and a higher degree of judgment utilized in measuring fair value. Initial measurement of equity investments occurs when an observable price for the equity investment is available. The Company adopted the measurement alternative for equity investments without readily determinable fair values, which is often referred to as cost method investments, adjusted for changes in observable market transaction. As a result, these investments are revalued upon occurrence of an observable price change for similar investments and for impairments. As of March 28, 2026 and December 27, 2025, the carrying value of these equity investments was $3.4 million and $2.2 million, respectively.

The Company has an equity investment in RealWear Inc. In the first quarter of 2025, the Company reviewed the financial condition and as a result, the Company recorded an impairment charge of less than $0.1 million. As of March 28, 2026, the Company owns an approximate 2.8% interest in this investment and the investment is valued at $0.1 million at March 28, 2026 and December 27, 2025.

The Company has an equity investment in Solos Incorporation (“Solos Inc.”). The carrying value of this equity investment was $0 and $0.2 million at March 28, 2026 and December 27, 2025 respectively.

The Company has an equity investment in HMDmd, a medical device company. The carrying value of this equity investment was $0.3 million at March 28, 2026 and December 27, 2025.

The Company has an equity interest in a Lenovo New Vision which it acquired through purchasing capital and contributing certain intellectual property. As of March 28, 2026, the Company owned an approximate 10% interest in this investment and the carrying value of this equity investment was $3.0 million at March 28, 2026 and $1.5 million at December 27, 2025.

Equity Investment – At Fair Value

The Company owns a minority interest in Global Communication Semiconductors, Inc. which is traded on the Taipei Exchange. The carrying value of this investment was $2.3 million and $1.2 million at March 28, 2026 and December 27, 2025, 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, it was determined that 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 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 25.5%. The estimated fair value of this investment was $9.1 million at March 28, 2026.

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 $5.7 million at March 28, 2026 and 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 fair value is measured using level 3 methodologies in the fair value hierarchy in accordance with ASC 820, including an expected term of between 0.1 and 5.8 years and an expected market yield between 13.00% and 17.00% as of the three months ended March 28, 2026. The estimated fair value of this investment was $4.9 million and $5.1 million at March 28, 2026 and December 27, 2025 respectively.

5. ACCOUNTS RECEIVABLE, NET

Accounts receivable consisted of the following:

Changes to the allowance for credit losses for the three months ended March 28, 2026 were as follows:

6. INVENTORY

Inventories are stated at standard cost adjusted to approximate the lower of cost (first-in, first-out method) or net realizable value and consist of the following at March 28, 2026 and December 27, 2025:

The Company recorded approximately $0.1 million of inventory adjustments for the three months ended March 28, 2026, primarily related to the scrapping of obsolete and excess inventory. These adjustments are recorded in the Consolidated Statement of Operations within Cost of Product Revenues.

7. NET LOSS PER SHARE

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:

8**. SERIES A CONVERTIBLE PREFERRED STOCK**

As of March 28, 2026 and 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 March 28, 2026, 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.

9. STOCKHOLDERS’ EQUITY AND STOCK-BASED COMPENSATION

Registered sale of equity securities

On September 29, 2025, the Company entered into a securities purchase agreement (the “Purchase Agreement”) for a private investment in public equity financing (the “PIPE”) for 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.

Non-Vested Restricted Common Stock

Restricted stock activity for the three-month period ended March 28, 2026 was as follows:

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 and stock options awards for the three months ended March 28, 2026 and March 29, 2025 (no tax benefits were recognized):

Unrecognized compensation expense for non-vested restricted common stock as of March 28, 2026 totaled $10.7 million and is expected to be recognized over a weighted average period of approximately two and a half years.

Stock Options

During the three months ended March 28, 2026, an option award for 724,638 shares of the Company’s common stock was granted to the Chief Executive Officer. These options have a strike price of $3.21 and vest over a 4 year period. During the three months ended March 28, 2026, the Company recorded incremental stock-based compensation of less than $0.1 million as a result of the granting of stock option awards. As of March 28, 2026, there was approximately $1.8 million of unrecognized compensation cost related to unvested options. The cost is expected to be recognized over a weighted average period of 3.5 years.

The fair value of this options award was estimated using the Black-Scholes model using the following assumptions and had the following fair values:

The Company’s 2026 average expected volatility and average expected life is based on the average of the Company’s historical information. The risk-free rate is based on the rate of U.S. Treasury zero-coupon issues with a remaining term equal to the expected life of option grants. The Company has paid no dividends on its common stock in the past and does not anticipate paying any dividends in the future.

A summary of stock option activity for the period ended March 28, 2026 is as follows:

10. ACCRUED WARRANTY

The Company typically warrants its products against defect for 12 to 18 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 the three months ended March 28, 2026 were as follows:

**11. INCOME TAXES **

The Company recorded a provision for income taxes of less than $0.1 million in the three months ended March 28, 2026 and March 29, 2025, respectively. As of March 28, 2026, the Company has available for tax purposes U.S. federal net operating loss carryforwards (“NOLs”) of approximately $119.1 million expiring 2026 through 2038 and $136.3 million that have an unlimited carryover period. The Company has recognized a full valuation allowance on its domestic and certain foreign net deferred tax assets due to the uncertainty of the realization of such assets. The Company recognizes both accrued interest and penalties related to its uncertain tax positions related to intercompany loan interest and potential transfer pricing exposure related to its foreign subsidiaries.

12. CONTRACT ASSETS AND LIABILITIES

Contract assets include unbilled amounts typically resulting from sales under contracts when the cost-to-cost method of revenue recognition is utilized and revenue recognized from customer arrangements, including licensing, exceeds the amount billed to the customer, and right to payment is not just subject to the passage of time. Amounts may not exceed their net realizable value. Contract assets are generally classified as current. The Company classifies the noncurrent portion of contract assets under Other assets in its condensed consolidated balance sheets.

Contract liabilities consist of advance payments and billings in excess of revenue recognized for the contract.

Net contract assets (liabilities) consisted of the following:

The $0.1 million increase in the Company’s ASC 606 contract assets at March 28, 2026 as compared to December 27, 2025 was primarily due to an increase in amounts incurred for production of defense products.

The $0.2 million decrease in the Company’s contract liabilities from December 27, 2025 to March 28, 2026 was primarily due to satisfaction of performance obligations that were paid in advance.

The Company records ASC 606 contract assets or contract liabilities on a contract-by-contract basis. The Company records a contract asset for unbilled revenue when the Company’s performance exceeds amounts billed. The Company classifies the contract asset as either current or non-current based on the expected timing of the Company’s right to bill under the terms of the contract, which the Company expects to be able to bill for within one year.

Contract liabilities consist of payments received in advance of product shipment. The liability is removed with shipment of the product.

In the three months ended March 28, 2026, the Company recognized revenue of $0.6 million related to its contract liabilities at December 27, 2025. In the three months ended March 29, 2025, the Company recognized revenue of $0.1 million related to its contract liabilities at December 28, 2024.

The Company did not recognize impairment losses on its contract assets in the three months ended March 28, 2026, or the years ended December 27, 2025 or December 28, 2024.

The $0.8 million increase in Grant income receivables as of March 28, 2026 compared to December 27, 2025 reflects revenue in excess of billings during the three months ended March 28, 2026.

The $2.7 million decrease in Deferred grant income as of March 28, 2026 compared to December 27, 2025 reflects the recognition of previously deferred amounts upon satisfaction of the related grant conditions during the three months ended March, 28, 2026.

13. LEASES

The Company enters into operating leases primarily for: real estate, including for manufacturing, engineering, research, administration and sales facilities, and information technology (“IT”) equipment. At March 28, 2026 and December 27, 2025, the Company did not have any finance leases. Approximately all of its future lease commitments, and related lease liability, relate to the Company’s real estate leases. Some of the Company’s leases include options to extend or terminate the lease.

The components of lease expense were as follows:

At March 28, 2026, the Company’s future lease payments under non-cancellable leases were as follows:

The Company’s lease liabilities recognized in the Company’s condensed consolidated balance sheet at March 28, 2026 were as follows:

Supplemental cash flow information related to leases was as follows:

Other information related to leases was as follows:

14. 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. Revenues, expenses, and assets requiring disclosure in accordance with ASC 280, Segment Reporting, are also included in the accompanying Condensed Consolidated Financial Statements. See the Condensed Consolidated Statements of Operations for the three months ended March 28, 2026 and March 29, 2025 and the Consolidated Balance Sheets as of March 28, 2026 and December 27, 2025, for details.

Total long-lived assets by country at March 28, 2026 and December 27, 2025 were:

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

During the three months ended March 28, 2026 and March 29, 2025, the Company derived its sales from the following geographies:

During the three months ended March 28, 2026 and March 29, 2025, the Company derived its sales from the following display applications:

15. 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.

16. 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, 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 March 28, 2026 and December 27, 2025, the Company has accrued $19.7 million for the judgment within Accrued litigation liability and has accrued approximately $0.4 million and $0.3 million, respectively, in related interest within Other accrued liabilities.

17. 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 March 28, 2026, 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 March 28, 2026.

On October 16, 2025, Theon became a related party of the Company following its equity investment in Kopin Europe Limited (“Kopin Europe”), the Company’s majority-owned subsidiary, pursuant to a Subscription Agreement under which Theon subscribed for 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 the three-month periods ended March 28, 2026 and March 29, 2025, the Company had the following transactions with related parties:

At March 28, 2026 and December 27, 2025, the Company had the following receivables and payables with related parties:

18. SUBSEQUENT EVENTS

On April 27, 2026, the Company entered into a Joint Development & License Agreement with Fabric.AI, Inc. (formerly StableX Technologies, Inc.) (“Fabric AI”), under which the parties agreed to jointly develop and commercialize certain GPU to GPU connectivity technologies. Fabric.AI is obligated to fund up to $15 million of development activities through successful demonstration, with additional production related funding subject to further negotiation. The agreement provides for joint ownership of Project Technology and includes the issuance of Convertible Preferred Stock to Kopin designed to give Kopin approximately 19.99% of Fabric.AI’s post financing equity capitalization.

On the same date, the Company also executed a Commercial Supply Agreement with Fabric.AI. Under this agreement, Kopin will manufacture and supply Products incorporating the jointly developed Project Technology, and Fabric.AI will act as the exclusive commercial market seller. The agreement outlines exclusivity terms, supply obligations, and a process for establishing manufacturing ramp up plans, pricing, and forecasting.