KOPIN CORP

Previous wording

We have identified the following important factors that could cause actual results to differ materially from those discussed in our forward-looking statements. Such factors may be in addition to the risks described in Part I, Item 1A. “Risk Factors;” Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations;” and other parts of our Annual Report on Form 10-K for the fiscal year ended December 27, 2025, as amended. These factors include: our ability to source semiconductor components and other raw materials used in the manufacturing of our products amidst continued intermittent shortages, including from new and alternative suppliers; our ability to prosecute and defend our proprietary technology aggressively or successfully; our ability to recruit and retain personnel with experience and expertise relevant to our business; our ability to invest in research and development to achieve profitability even during periods when we are not profitable; any disruptions or delays in our supply chains, particularly with respect to semiconductor components, whether resulting from regional or global geopolitical developments, changes imposed by the new U.S. presidential administration, or otherwise; costs and outcomes relating to any disputes, governmental inquiries or investigations, regulatory proceedings, legal proceedings or litigation; our ability to continue to introduce new products in our target markets; our ability to generate revenue growth and positive cash flow, and reach profitability; the strengthening of the U.S. dollar and its effects on the price of our products in foreign markets; the impact of new regulations and customer demands relating to conflict minerals; our ability to obtain a competitive advantage in the wearable technologies market through our extensive portfolio of patents, trade secrets and non-patented know-how; our ability to grow within our targeted markets; the importance of small form factor displays in the development of defense, consumer, and industrial products such as thermal weapon sights, safety equipment, virtual and augmented reality gaming, training and simulation products and metrology tools; the suitability of our properties for our needs for the foreseeable future; and our need to achieve and maintain positive cash flow and profitability.

Current wording

We have identified the following important factors that could cause actual results to differ materially from those discussed in our forward-looking statements. Such factors may be in addition to the risks described in Part I, Item 1A. “Risk Factors;” Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations;” and other parts of our Annual Report on Form 10-K for the fiscal year ended December 27, 2025, as amended. These factors include: our ability to source semiconductor components and other raw materials used in the manufacturing of our products amidst continued intermittent shortages, including from new and alternative suppliers; our ability to prosecute and defend our proprietary technology aggressively or successfully; our ability to recruit and retain personnel with experience and expertise relevant to our business; our ability to invest in research and development to achieve profitability even during periods when we are not profitable; any disruptions or delays in our supply chains, particularly with respect to semiconductor components, whether resulting from regional or global geopolitical developments, changes imposed by the current U.S. presidential administration, or otherwise; costs and outcomes relating to any disputes, governmental inquiries or investigations, regulatory proceedings, legal proceedings or litigation; our ability to continue to introduce new products in our target markets; our ability to generate revenue growth and positive cash flow, and reach profitability; the strengthening of the U.S. dollar and its effects on the price of our products in foreign markets; the impact of new regulations and customer demands relating to conflict minerals; our ability to obtain a competitive advantage in the wearable technologies market through our extensive portfolio of patents, trade secrets and non-patented know-how; our ability to grow within our targeted markets; the importance of small form factor displays in the development of defense, consumer, and industrial products such as thermal weapon sights, safety equipment, virtual and augmented reality gaming, training and simulation products and metrology tools; the suitability of our properties for our needs for the foreseeable future; and our need to achieve and maintain positive cash flow and profitability.

Previous wording

*Revenues.*For the three and six months ended June 27, 2026 and June 28, 2025, our revenues by display application, which include product sales and amounts earned from research and development contracts (“R&D”), were as follows:

Current wording

*Revenues.*For the three and nine months ended September 26, 2026 and September 27, 2025, our revenues by display application, which include product sales and amounts earned from research and development contracts (“R&D”), grants and collaboration arrangements, were as follows:

Previous wording

Sales of our products for Defense applications include systems used by the military both in the field and for training and simulation. Sales of our products for Defense applications may be for a one-time purchase or for programs that run for several years. Revenues from product sales to defense customers increased in the three months ended June 27, 2026 as compared to the three months ended June 28, 2025, primarily due to higher production volumes of our products for thermal weapon sight applications and liquid crystal displays. The decrease in Defense applications revenues in the six months ended June 27, 2026 as compared to the six months ended June 28, 2025 was primarily related to a decrease in revenue from products used in thermal weapon sights and liquid crystal displays.

Current wording

Sales of our products for Defense applications include systems used by the military both in the field and for training and simulation. Sales of our products for Defense applications may be for a one-time purchase or for programs that run for several years. Revenues from product sales to defense customers decreased in the three and nine months ended September 26, 2026 as compared to the three and nine months ended September 27, 2025, primarily related to a decrease in revenue from products used in thermal weapon sights.

Previous wording

R&D revenues increased in the three and six months ended June 27, 2026 as compared to the three and six months ended June 28, 2025 primarily due to the Company’s progress on the Phase 2 Off-the-Visor Heads-Up Display program with the U.S. Army and due to the start of the development program with Fabric.AI entered into on April 27, 2026 to develop and commercialize certain GPU to GPU connectivity technologies. These contracts typically reimburse us for direct costs and allocated overhead and selling, general and administrative costs and in some cases profit.

Current wording

R&D revenues increased by $4.5 million and $5.8 million in the three and nine months ended September 26, 2026, respectively, as compared to the three and nine months ended September 27, 2025 primarily due to the Company’s start of the development program with Fabric.AI entered into on April 27, 2026 to develop and commercialize certain GPU to GPU connectivity technologies. These contracts typically reimburse us for direct costs and allocated overhead and selling, general and administrative costs and in some cases profit.

Previous wording

The slight increase in license and royalty revenue in the three months ended June 27, 2026 as compared to the three months ended June 28, 2025 is due to a increase in royalties earned under IP license agreements for industrial wearable headsets.

Current wording

The $0.5 million increase in license and royalty revenue in the three and nine months ended September 26, 2026 as compared to the three and nine months ended September 27, 2025 is due to an increase in license revenue earned under IP license agreements for industrial wearable headsets.

Previous wording

Grant revenues increased in the three and six months ended June 27, 2026 as compared to the three and six months ended June 28, 2025 in connection with the Company’s government grant, awarded in the fourth quarter of 2025, for the development of ultra-bright, full color MicroLED displays optimized for ground soldier augmented reality applications.

Current wording

Grant revenues increased in the three and nine months ended September 26, 2026 as compared to the three and nine months ended September 27, 2025 in connection with the Company’s government grant, awarded in the fourth quarter of 2025, for the development of ultra-bright, full color MicroLED displays optimized for ground soldier augmented reality applications.

Previous wording

Collaboration revenues increased in the three and six months ended June 27, 2026 as compared to the three and six months ended June 28, 2025 as a result of the Company’s strategic partnership, initiated in the fourth quarter of 2025, to develop the next generation clip on with augmented reality and thermal integration capabilities based on the Company’s micro-display technology.

Current wording

Collaboration revenues increased in the nine months ended September 26, 2026 as compared to the nine months ended September 27, 2025 as a result of the Company’s strategic partnership, initiated in the fourth quarter of 2025, to develop the next generation clip on with augmented reality and thermal integration capabilities based on the Company’s micro-display technology.

Previous wording

*Cost of Product Revenues.*Cost of product revenues, which is comprised of materials, labor and manufacturing overhead related to the production of our products for the three and six months ended June 27, 2026 and June 28, 2025 were as follows:

Current wording

*Cost of Product Revenues.*Cost of product revenues, which is comprised of materials, labor and manufacturing overhead related to the production of our products for the three and nine months ended September 26, 2026 and September 27, 2025 were as follows:

Previous wording

The decrease in cost of product revenues as a percentage of net product revenues for the three months ended June 27, 2026, compared to the three months ended June 28, 2025, was primarily attributable to product mix. Cost of product revenues as a percentage of net product revenues increased during the six months ended June 27, 2026 as compared to the six months ended June 28, 2025 primarily attributable to reduced production efficiency during the first three months of 2026.

Current wording

The decrease in cost of product revenues as a percentage of net product revenues for the three months ended September 26, 2026, as compared to the three months ended September 27, 2025, was primarily attributable to production efficiency improvements. The increase in cost of product revenues as a percentage of net product revenues during the nine months ended September 26, 2026, as compared to the nine months ended September 27, 2025, was primarily attributable to reduced production efficiency during the first three months of 2026.

Previous wording

Research and Development. R&D expenses are incurred in support of internal display development programs and programs funded by agencies or prime contractors of the U.S. Government and commercial partners. R&D costs include staffing, purchases of materials and laboratory supplies, circuit design costs, fabrication and packaging of display products, and overhead. In fiscal year 2026, we expect our R&D expenditures to be related to our display products, overlay weapon sights and OLED display technologies. R&D expenses for the three and six months ended June 27, 2026 and June 28, 2025 were as follows:

Current wording

Research and Development. R&D expenses are incurred in support of internal display development programs and programs funded by agencies or prime contractors of the U.S. Government and commercial partners. R&D costs include staffing, purchases of materials and laboratory supplies, circuit design costs, fabrication and packaging of display products, and overhead. In fiscal year 2026, we expect our R&D expenditures to be related to our display products, overlay weapon sights and OLED display technologies. R&D expenses for the three and nine months ended September 26, 2026 and September 27, 2025 were as follows:

Previous wording

Funded R&D expense for the three and six months ended June 27, 2026 increased as compared to the three and six months ended June 28, 2025 primarily due to the Company’s government grant for the development of ultra-bright, full color MicroLED displays optimized for ground soldier augmented reality applications. Funded R&D expense includes costs related to grant and collaboration income. Internal R&D expense decreased for the three and six month ended June 27, 2026 as compared to the three and six months ended June 28, 2025 primarily due to lower labor hours spent on internal research and development activities.

Current wording

Funded R&D expense for the three and nine months ended September 26, 2026 increased as compared to the three and nine months ended September 27, 2025 primarily due to the Company’s government grant for the development of ultra-bright, full color MicroLED displays optimized for ground soldier augmented reality applications and the development program with Fabric.AI to develop and commercialize certain GPU to GPU connectivity technologies. Funded R&D expense includes costs related to grant and collaboration income. Internal R&D expense decreased for the three and nine months ended September 26, 2026 as compared to the three and nine months ended September 27, 2025 primarily due to lower labor hours spent on internal research and development activities.

Previous wording

Selling, General and Administrative. Selling, general and administrative (“SG&A”) expenses consist of the expenses incurred by our sales and marketing personnel and related expenses, and administrative and general corporate expenses. SG&A expenses for the three and six months ended June 27, 2026 and June 28, 2025 were as follows:

Current wording

Selling, General and Administrative. Selling, general and administrative (“SG&A”) expenses consist of the expenses incurred by our sales and marketing personnel and related expenses, and administrative and general corporate expenses. SG&A expenses for the three and nine months ended September 26, 2026 and September 27, 2025 were as follows:

Previous wording

SG&A increased for the three and six months ended June 27, 2026 as compared to the three and six months ended June 28, 2025 primarily due to increases in professional fees and accrued performance-based compensation.

Current wording

SG&A increased by $5.0 million and $6.6 million in the three and nine months ended September 26, 2026, respectively, as compared to the three and nine months ended September 27, 2025 primarily due to increases in professional fees and accrued performance-based compensation. In the three months ended September 27, 2025, there was a reduction of accrued legal fees in the amount of approximately $3.3 million.

Previous wording

*Other Income, net.*Other income, net, is primarily composed of interest income, foreign currency transactions, gains on fair value recording of investments and other non-operating income items. Other income, net, for the three and six months ended June 27, 2026 and June 28, 2025 were as follows:

Current wording

*Other Income (expense), net.*Other income (expense), net, is primarily composed of interest income, foreign currency transactions, gains on fair value recording of investments and other non-operating income items. Other income (expense), net, for the three and nine months ended September 26, 2026 and September 27, 2025 were as follows:

Previous wording

Tax Provision. We recorded a benefit for income taxes of approximately $2.1 million in the three months ended June 27, 2026 due to the expiration of the statute of limitation of an uncertain tax position. We recorded a provision for income taxes of approximately $0.1 million for the three and six months ended June 28, 2025.

Current wording

Tax Provision. We recorded a benefit for income taxes of approximately $2.1 million in the three months ended June 27, 2026 due to the expiration of the statute of limitations of an uncertain tax position. We recorded a provision for income taxes of approximately $0.1 million and $0.2 million in the three and nine months ended September 27, 2025, respectively.

Previous wording

Net Income (Loss). We had a net income of $0.8 million and a net loss of $2.9 million during the three and six months ended June 27, 2026, respectively compared to net losses of $5.2 million and $8.3 million during the three and six months ended June 28, 2025. The decrease in the net loss during the three months ended June 27, 2026 compared to the three months ended June 28, 2025 was due to gains on investments of $2.3 million, a $2.1 million tax credit, and increase in total revenues. The decrease in the net loss during the six months ended June 27, 2026 compared to the six months ended June 28, 2025 was primarily due to a gain on investments.

Current wording

Net (Loss)/Income. We had net losses of $3.4 million and $6.3 million during the three and nine months ended September 26, 2026, respectively, compared to a net income of $4.1 million and net loss of $4.2 million during the three and nine months ended September 27, 2025, respectively. The increase in the net loss during the three months ended September 26, 2026 compared to the three months ended September 27, 2025 was due to the $5.1 million litigation accrual reversal in the third quarter of 2025 and $2.3 million increase in losses on investments. The increase in the net loss during the nine months ended September 26, 2026 compared to the nine months ended September 27, 2025 was primarily due to the $5.1 million litigation accrual reversal in the third quarter of 2025 partially offset by a $2.1 million tax credit in the nine-months ended September 26, 2026.

Previous wording

On June 27, 2026 and December 27, 2025, we had cash and cash equivalents, including restricted cash, and marketable securities of $50.3 million and working capital, excluding restricted cash, of $17.5 million compared to $61.6 million and $33.6 million, respectively.

Current wording

On September 26, 2026 and December 27, 2025, we had cash and cash equivalents, including restricted cash, and marketable securities of $51.3 million and working capital, excluding restricted cash, of $16.7 million compared to $61.6 million and $32.5 million, respectively.

Previous wording

For the six months ended June 27, 2026 and June 28, 2025, cash used in operating activities consisted primarily of a net losses from operations of $2.9 million and $8.3 million respectively. For the six months ended June 27, 2026, net cash used in investing activities in the amount of $5.1 million consisted of capital expenditures. For the six months ended June 28, 2025 cash provided by investing activities was primarily related to net proceeds from the sale of marketable securities. We expect that net cash used for or provided by operating activities to fluctuate in future periods as a result of a number of factors, including fluctuations in our operating results and changes in components of working capital. Our cash and cash equivalents and liquidity could be adversely affected by any amounts that become payable in connection with any adverse results from any litigation we are, or may become, involved in. The change in financing activities was the settlements of restricted stock for tax witholding obligations for $1.1 million.

Current wording

For the nine months ended September 26, 2026 cash used in operating activities consisted primarily of net losses from operations of $6.3 million and non-cash charges of $0.6 million, partially offset by cash inflows from changes in operating assets and liabilities of $4.2 million. For the nine months ended September 27, 2025, cash used in operating activities consisted of a net loss of $4.2 million, net cash used in operating assets and liabilities of $3.0 million and non-cash charges of $0.5 million. For the nine months ended September 26, 2026, net cash used in investing activities in the amount of $6.5 million consisted of capital expenditures. For the nine months ended September 27, 2025, cash provided by investing activities was primarily related to net proceeds from the sale of marketable securities. We expect that net cash used for or provided by operating activities to fluctuate in future periods as a result of a number of factors, including fluctuations in our operating results and changes in components of working capital. Our cash and cash equivalents and liquidity could be adversely affected by any amounts that become payable in connection with any adverse results from any litigation we are, or may become, involved in. For the nine months ended September 26, 2026, the change in financing activities was the settlements of restricted stock for tax withholding obligations for $1.1 million.

Previous wording

On October 16, 2025, the Company completed a $15 million strategic investment with Theon Under the terms of the Agreements, Theon acquired a 49% interest in Kopin’s subsidiary, Kopin Europe Ltd. for $8.0 million and the parties entered into a licensing and development agreement and funding agreements relating to the joint development of military products. In addition, Theon purchased $7.0 million worth of shares of Series A Convertible Preferred Stock, par value $0.01 per share, of the Company (the “Preferred Stock”). Each share of the Preferred Stock was convertible into shares of common stock, par value $0.01 per share, of the Company (the “Common Stock”) at an initial fixed conversion price of $3.00 per share, pursuant to the terms of the Certificate of Designation for Series A Convertible Preferred Stock of the Company (the “Certificate of Designations”). The Company had the ability to force the conversion of the preferred stock into common stock once the Company’s common stock trades at $5.50 per share or higher for 10 Trading Days (as defined in the Certificate of Designation) within a 30 consecutive Trading Day period. The Preferred Stock will carried an annual dividend of at the base rate dividend rate of 4%, 2% payable in cash and 2% payable in stock. With the close of this transaction, Kopin Europe Ltd. was deconsolidated from the Company’s consolidated financial statements. The consolidated statement of operations therefore includes nine months and sixteen days of activity related to Kopin Europe Ltd. The assets and liabilities of Kopin Europe Ltd. are no longer included within the Company’s consolidated balance sheets. Any discussions related to results, operations, and accounting policies associated with Kopin Europe Ltd. are referring to the current period through this transaction and prior periods as consolidated.

Current wording

On October 16, 2025, the Company completed a $15 million strategic investment with Theon. Under the terms of the Agreements, Theon acquired a 49% interest in Kopin’s subsidiary, Kopin Europe Ltd. for $8.0 million and the parties entered into a licensing and development agreement and funding agreements relating to the joint development of military products. In addition, Theon purchased $7.0 million worth of shares of Series A Convertible Preferred Stock, par value $0.01 per share, of the Company (the “Preferred Stock”). Each share of the Preferred Stock was convertible into shares of common stock, par value $0.01 per share, of the Company (the “Common Stock”) at an initial fixed conversion price of $3.00 per share, pursuant to the terms of the Certificate of Designation for Series A Convertible Preferred Stock of the Company (the “Certificate of Designations”). The Company had the ability to force the conversion of the preferred stock into common stock once the Company’s common stock trades at $5.50 per share or higher for 10 Trading Days (as defined in the Certificate of Designation) within a 30 consecutive Trading Day period. The Preferred Stock carried an annual dividend of at the base rate of 4%, 2% payable in cash and 2% payable in stock. With the close of this transaction, Kopin Europe Ltd. was deconsolidated from the Company’s consolidated financial statements. Therefore, the condensed consolidated statements of operations for the three and nine months ended September 26, 2026 and September 27, 2025 only includes the activity related to Kopin Europe Ltd. during the nine months ended September 27, 2025. The assets and liabilities of Kopin Europe Ltd. are no longer included within the Company’s condensed balance sheets.

Previous wording

The domestic locations balance of $50.3 million and $61.6 million for the period ended June 27, 2026 and fiscal year ended 2025 includes $25.4 million and $25.3 million of restricted cash as of June 27, 2026 and December 27, 2025 respectively, that is not available for current operating use.

Current wording

The domestic locations balance of cash, cash equivalents, and restricted cash of $51.3 million and $61.6 million for the period ended September 26, 2026 and fiscal year ended December 27, 2025 includes $25.5 million and $25.3 million of restricted cash as of September 26, 2026 and December 27, 2025, respectively, that is not available for current operating use.

Previous wording

The manufacturing operations at our Korean facility, Kowon, have ceased and Kowon was liquidated at fiscal year ended 2018. As of December 27, 2025 we had recorded deferred tax liabilities for any additional withholding tax that may be due to the Korean government upon Kowon’s final tax return acceptance. The statue of limitations expired during the three months ended June 27, 2026 and reversed the deferred tax liability of $2.1 million as of June 27, 2026.

Current wording

The manufacturing operations at our Korean facility, Kowon, have ceased and Kowon was liquidated at fiscal year ended 2018. As of December 27, 2025 we had recorded deferred tax liabilities for any additional withholding tax that may be due to the Korean government upon Kowon’s final tax return acceptance. The statute of limitations expired during the three months ended June 27, 2026 and we reversed the deferred tax liability of $2.1 million as of September 26, 2026.

Previous wording

We expect to expend between $5.0 million and $6.5 million on capital expenditures in the second half of 2026.

Current wording

We expect to expend between $1.0 million and $1.5 million on capital expenditures for the remainder of 2026.

Previous wording

We had net income of $0.8 million and a net loss of $2.9 million for the three and six months ended June 27, 2026 and a net loss of $2.6 million in fiscal year 2025, and net cash outflows used in operations of $5.1 million and $15.5 million for the six months ended June 27, 2026 and for the fiscal year ended 2025, respectively. Moreover, the Company has posted a bond to satisfy the court’s verdict of $19.7 million in damages and anticipated accrued interest in the matter of BlueRadios vs. Kopin Corporation, Inc. should the Company’s appeal be unsuccessful (refer to Note 17 of our consolidated financial statements for more information). As of June 27, 2026, the Company had $24.9 million of cash and cash equivalents (excluding restricted cash), which the Company believes is sufficient to support its operations and satisfy its obligations for at least the next twelve months from the issuance of these financial statements. We estimate we will have sufficient liquidity to fund operations into the fourth quarter of 2027. Nonetheless, we monitor the capital markets on an ongoing basis and may consider raising capital if favorable market conditions develop. If our actual results are less than projected or we need to raise capital for additional liquidity, we may be required to do additional equity financing, reduce expenses or enter into a strategic transaction. However, we can make no assurance that we will be able to raise additional capital, reduce expenses sufficiently, or enter into a strategic transaction on terms acceptable to us, or at all.

Current wording

As of September 26, 2026, the Company had $25.8 million of cash and cash equivalents (excluding restricted cash), which the Company believes is sufficient to support its operations and satisfy its obligations for at least the next twelve months from the issuance of these financial statements. We estimate we will have sufficient liquidity to fund operations beyond the fourth quarter of 2027. Nonetheless, we monitor the capital markets on an ongoing basis and may consider raising capital if favorable market conditions develop. If our actual results are less than projected or we need to raise capital for additional liquidity, we may be required to do additional equity financing, reduce expenses or enter into a strategic transaction. However, we can make no assurance that we will be able to raise additional capital, reduce expenses sufficiently, or enter into a strategic transaction on terms acceptable to us, or at all.