UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 24, 2022

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____

Commission file number 0-19882

KOPIN CORPORATION

(Exact name of registrant as specified in its charter)

Delaware		04-2833935
State or other jurisdiction of incorporation or organization		(I.R.S. Employer Identification No.)

125 North Drive, Westborough, MA		01581-3335
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (508) 870-5959

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, par value $0.01		KOPN		Nasdaq Capital Market

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class		Outstanding as of October 28, 2022
Common Stock, par value $0.01		95,124,458

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ☐ No ☒

Kopin Corporation

INDEX

		Page No.
Part I – Financial Information

Item 1.	Condensed Consolidated Financial Statements (Unaudited)	3

	Condensed Consolidated Balance Sheets at September 24, 2022 (Unaudited) and December 25, 2021	3

	Condensed Consolidated Statements of Operations (Unaudited) for the three and nine months ended September 24, 2022 and September 25, 2021	4

	Condensed Consolidated Statements of Comprehensive Loss (Unaudited) for the three and nine months ended September 24, 2022 and September 25, 2021	5

	Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) for the three and nine months ended September 24, 2022 and September 25, 2021	6

	Condensed Consolidated Statements of Cash Flows (Unaudited) for the nine months ended September 24, 2022 and September 25, 2021	7

	Notes to Unaudited Condensed Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	23

Item 4.	Controls and Procedures	24

Part II – Other Information		25

Item 1.	Legal Proceedings	25

Item 1A.	Risk Factors	25

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	26

Item 6.	Exhibits	26

Signatures		27

Part 1. FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements (Unaudited)

KOPIN CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

	September 24, 2022			December 25, 2021

ASSETS
Current assets:
Cash and equivalents	$	9,625,414		$	26,787,931
Marketable debt securities, at fair value		5,377,595			2,507,535
Accounts receivable, net of allowance of $134,000 in 2022 and $150,000 in 2021		8,531,835			12,113,070
Contract assets and unbilled receivables		4,605,889			2,299,392
Inventory		6,660,810			6,581,139
Prepaid taxes		139,605			160,599
Prepaid expenses and other current assets		1,586,620			1,758,079
Total current assets		36,527,768			52,207,745
Property, plant and equipment, net		1,627,468			1,888,963
Operating lease right-of-use assets		3,540,073			3,828,066
Other assets		170,932			170,932
Equity investments		7,612,065			4,912,022
Total assets	$	49,478,306		$	63,007,728

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	4,936,931		$	5,483,970
Accrued payroll and expenses		2,661,645			2,413,744
Accrued warranty		1,966,000			517,000
Contract liabilities and billings in excess of revenues earned		1,097,919			4,063,031
Operating lease liabilities		761,734			701,204
Other accrued liabilities		2,893,502			1,202,635
Customer deposits		378,201			2,638,103
Deferred tax liabilities		424,433			513,417
Total current liabilities		15,120,365			17,533,104

Noncurrent contract liabilities and asset retirement obligations		225,210			288,634
Operating lease liabilities, net of current portion		2,753,885			3,108,236
Other long-term obligations		1,170,393			2,450,897
Total liabilities		19,269,853			23,380,871
Commitments and contingencies (Note 13)		-			-
Stockholders’ equity:
Preferred stock, par value $.01 per share: authorized, 3,000 shares; none issued		-			-
Common stock, par value $.01 per share: authorized, 150,000,000 shares; issued 95,107,358 shares in 2022 and 92,146,761 shares in 2021; outstanding 92,627,059 in 2022 and 89,988,528 in 2021		926,270			900,691
Additional paid-in capital		360,673,851			356,931,157
Treasury stock (80,641 shares in 2021, at cost)		-			(366,110	)
Accumulated other comprehensive income		1,030,591			1,414,351
Accumulated deficit		(332,249,645	)		(319,080,898	)
Total Kopin Corporation stockholders’ equity		30,381,067			39,799,191
Noncontrolling interest		(172,614	)		(172,334	)
Total Kopin Corporation stockholders’ equity		30,208,453			39,626,857
Total liabilities and stockholders’ equity	$	49,478,306		$	63,007,728

See notes to unaudited condensed consolidated financial statements

KOPIN CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	2022			2021			2022			2021
	Three months ended			Three months ended			Nine months ended			Nine months ended
	September 24, 2022			September 25, 2021			September 24, 2022			September 25, 2021
Revenues:
Net product revenues	$	8,254,686		$	6,591,852		$	23,765,872		$	21,089,515
Research and development and other revenues		3,474,693			4,295,321			11,450,961			11,379,282
Total revenues		11,729,379			10,887,173			35,216,833			32,468,797
Expenses:
Cost of product revenues		7,987,154			5,145,175			23,676,283			17,586,389
Research and development		3,441,405			3,751,729			13,995,393			11,055,282
Selling, general and administration		4,320,117			4,035,998			13,112,133			13,982,682
Total expenses		15,748,676			12,932,902			50,783,809			42,624,353
Loss from operations		(4,019,297	)		(2,045,729	)		(15,566,976	)		(10,155,556	)
Other (expense) income
Interest income		21,663			9,959			41,195			22,244
Other expense, net		(3,225	)		(31,529	)		(7,952	)		(33,574	)
(Loss) gain on investments		(2,000,000	)		—			2,700,000			—
Foreign currency transaction (losses) gains		(112,315	)		(29,384	)		(227,294	)		100,597
Total other (expense) income		(2,093,877	)		(50,954	)		2,505,949			89,267
Loss before provision for income taxes and net loss attributable to noncontrolling interest		(6,113,174	)		(2,096,683	)		(13,061,027	)		(10,066,289	)
Tax provision		(36,000	)		(32,000	)		(108,000	)		(97,000	)
Net loss		(6,149,174	)		(2,128,683	)		(13,169,027	)		(10,163,289	)
Net (income) loss attributable to the noncontrolling interest		—			(107	)		280			39,394
Net loss attributable to Kopin Corporation	$	(6,149,174	)	$	(2,128,790	)	$	(13,168,747	)	$	(10,123,895	)
Net loss per share
Basic and diluted	$	(0.07	)	$	(0.02	)	$	(0.14	)	$	(0.11	)
Weighted average number of common shares outstanding
Basic and diluted		93,516,231			90,517,330			91,317,288			88,903,658

See notes to unaudited condensed consolidated financial statements

KOPIN CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited)

	2022			2021			2022			2021
	Three months ended			Three months ended			Nine months ended			Nine months ended
	September 24, 2022			September 25, 2021			September 24, 2022			September 25, 2021
Net loss	$	(6,149,174	)	$	(2,128,683	)	$	(13,169,027	)	$	(10,163,289	)
Other comprehensive loss, net of tax:
Foreign currency translation adjustments		(128,994	)		9,575			(170,349	)		(44,592	)
Unrealized holding (loss) gain on marketable securities		(34,110	)		10,125			(212,889	)		(11,755	)
Reclassification of holding losses in net loss		—			—			(522	)		—
Other comprehensive (loss) income, net of tax		(163,104	)		19,700			(383,760	)		(56,347	)
Comprehensive loss		(6,312,278	)		(2,108,983	)		(13,552,787	)		(10,219,636	)
Comprehensive (income) loss attributable to the noncontrolling interest		—			(107	)		280			39,394
Comprehensive loss attributable to Kopin Corporation	$	(6,312,278	)	$	(2,109,090	)	$	(13,552,507	)	$	(10,180,242	)

See notes to unaudited condensed consolidated financial statements

KOPIN CORPORATION

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)

	Shares		Amount		Capital			Stock			Income			Deficit			Equity			Interest			Equity
	Common Stock				Additional Paid-in			Treasury			Accumulated Other Comprehensive			Accumulated			Total Kopin Corporation Stockholders’			Noncontrolling			Total Stockholders’
	Shares		Amount		Capital			Stock			Income			Deficit			Equity			Interest			Equity
Balance, December 25, 2021		90,069,169	$	900,691	$	356,931,157		$	(366,110	)	$	1,414,351		$	(319,080,898	)	$	39,799,191		$	(172,334	)	$	39,626,857
Stock-based compensation expense		-		-		656,073			-			-			-			656,073			-			656,073
Vesting of restricted stock		154,421		1,544		(1,544	)		-			-			-			-			-			-
Restricted stock for tax withholding obligations		-		-		-			(95,613	)		-			-			(95,613	)		-			(95,613	)
Other comprehensive loss		-		-		-			-			(113,906	)		-			(113,906	)		-			(113,906	)
Net loss		-		-		-			-			-			(1,372,641	)		(1,372,641	)		(23	)		(1,372,664	)
Balance, March 26, 2022		90,223,590		902,235		357,585,686			(461,723	)		1,300,445			(320,453,539	)		38,873,104			(172,357	)		38,700,747
Stock-based compensation expense		-		-		417,033			-			-			-			417,033			-			417,033
Vesting of restricted stock		50,000		500		(500	)		-			-			-			-			-			-
Sale of registered stock		1,529,047		15,290		1,550,092			461,723			-			-			2,027,105			-			2,027,105
Other comprehensive loss		-		-		-			-			(106,750	)		-			(106,750	)		-			(106,750	)
Net loss		-		-		-			-			-			(5,646,932	)		(5,646,932	)		(257	)		(5,647,189	)
Balance, June 25, 2022		91,802,637		918,025		359,552,311			-			1,193,695			(326,100,471	)		35,563,560			(172,614	)		35,390,946

Stock-based compensation expense		-		-		297,549			-			-			-			297,549			-			297,549
Vesting of restricted stock		149,422		1,495		(1,495	)		-			-			-			-			-			-
Sale of registered stock		675,000		6,750		825,486			-			-			-			832,236			-			832,236
Other comprehensive loss		-		-		-			-			(163,104	)		-			(163,104	)		-			(163,104	)
Net loss		-		-		-			-			-			(6,149,174	)		(6,149,174	)		-			(6,149,174	)
Balance, September 24, 2022		92,627,059	$	926,270	$	360,673,851		$	-		$	1,030,591		$	(332,249,645	)	$	30,381,067		$	(172,614	)	$	30,208,453

Common Stock

Additional Paid-in

Treasury

Accumulated Other Comprehensive

Accumulated

Total Kopin Corporation Stockholders’

Noncontrolling

Total Stockholders’

Amount

Capital

SEC Form 10-Q filed by Kopin Corporation