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 July 1, 2023

☐	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 August 4, 2023
Common Stock, par value $0.01		114,295,151

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 July 1, 2023 (Unaudited) and December 31, 2022	3

	Condensed Consolidated Statements of Operations (Unaudited) for the three and six months ended July 1, 2023 and June 25, 2022	4

	Condensed Consolidated Statements of Comprehensive Loss (Unaudited) for the three and six months ended July 1, 2023 and June 25, 2022	5

	Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) for the three and six months ended July 1, 2023 and June 25, 2022	6

	Condensed Consolidated Statements of Cash Flows (Unaudited) for the six months ended July 1, 2023 and June 25, 2022	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	23

Part II – Other Information		24

Item 1.	Legal Proceedings	24

Item 1A.	Risk Factors	24

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	25

Item 6.	Exhibits	25

Signatures		26

Part 1. FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements (Unaudited)

KOPIN CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


	July 1, 2023			December 31, 2022
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	10,106,668		$	8,258,878
Marketable debt securities, at fair value		15,563,133			4,388,778
Accounts receivable, net of allowance of $1,103,000 in 2023 and $303,000 in 2022		6,171,241			6,537,891
Contract assets and unbilled receivables		4,108,406			4,068,364
Inventory		7,878,018			6,426,400
Prepaid taxes		176,085			105,495
Prepaid expenses and other current assets		1,917,503			1,074,867
Total current assets		45,921,054			30,860,673
Property, plant and equipment, net		1,800,346			1,831,641
Operating lease right-of-use assets		2,847,836			3,168,520
Other assets		169,132			170,132
Equity investments		4,626,081			7,721,206
Total assets	$	55,364,449		$	43,752,172

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	6,506,987		$	5,438,980
Accrued payroll and expenses		1,912,188			2,879,139
Accrued warranty		2,165,000			1,966,000
Contract liabilities and billings in excess of revenues earned		554,967			930,500
Operating lease liabilities		796,073			786,928
Accrued post-retirement benefits		790,000			790,000
Other accrued liabilities		1,642,432			1,182,346
Customer deposits		78,883			—
Deferred tax liabilities		462,985			482,739
Total current liabilities		14,909,515			14,456,632
Noncurrent contract liabilities and asset retirement obligations		260,242			248,284
Operating lease liabilities, net of current portion		2,182,886			2,576,883
Accrued post-retirement benefits, net of current portion		694,996			1,110,000
Other long-term obligations, net of current portion		1,390,705			1,369,758
Total liabilities		19,438,344			19,761,557
Commitments and contingencies		-			-
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 114,365,786 shares in 2023 and 94,920,060 shares in 2022; outstanding 110,305,990 in 2023 and 92,883,524 in 2022, respectively		1,103,765			929,540
Additional paid-in capital		382,941,171			360,567,631
Treasury stock (70,635 shares in 2023 and 2022, at cost)		(103,127	)		(103,127	)
Accumulated other comprehensive income		1,200,045			1,176,068
Accumulated deficit		(349,215,749	)		(338,406,815	)
Total Kopin Corporation stockholders’ equity		35,926,105			24,163,297
Noncontrolling interest		—			(172,682	)
Total Kopin Corporation stockholders’ equity		35,926,105			23,990,615
Total liabilities and stockholders’ equity	$	55,364,449		$	43,752,172

See notes to unaudited condensed consolidated financial statements

KOPIN CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


	Three months ended			Three months ended			Six months ended			Six months ended
	July 1, 2023			June 25, 2022			July 1, 2023			June 25, 2022
Revenues:
Net product revenues	$	6,011,393		$	9,003,658		$	13,666,109		$	15,511,186
Research and development revenues		3,884,225			2,806,109			6,780,676			7,714,142
Other revenues		564,238			99,265			771,262			262,126
Total revenues		10,459,856			11,909,032			21,218,047			23,487,454
Expenses:
Cost of product revenues		5,697,063			7,906,250			12,321,164			15,689,129
Research and development		3,132,259			5,145,375			5,444,476			10,553,988
Selling, general and administration		6,466,120			4,327,468			11,114,250			8,792,016
Total expenses		15,295,442			17,379,093			28,879,890			35,035,133
Loss from operations		(4,835,586	)		(5,470,061	)		(7,661,843	)		(11,547,679	)
Other (expense) income
Interest income		222,700			12,552			324,465			19,532
Other income (expense), net		35,765			(3,586	)		72,795			(4,727	)
(Loss) gain on investments		(3,327,347	)		—			(3,327,347	)		4,700,000
Foreign currency transaction losses		(236,911	)		(150,094	)		(139,004	)		(114,979	)
Total other (expense) income		(3,305,793	)		(141,128	)		(3,069,091	)		4,599,826
Loss before provision for income taxes and net loss attributable to noncontrolling interest		(8,141,379	)		(5,611,189	)		(10,730,934	)		(6,947,853	)
Tax provision		(39,000	)		(36,000	)		(78,000	)		(72,000	)
Net loss		(8,180,379	)		(5,647,189	)		(10,808,934	)		(7,019,853	)
Net loss attributable to the noncontrolling interest		—			257			—			280
Net loss attributable to Kopin Corporation	$	(8,180,379	)	$	(5,646,932	)	$	(10,808,934	)	$	(7,019,573	)
Net loss per share
Basic and diluted	$	(0.07	)	$	(0.06	)	$	(0.10	)	$	(0.08	)
Weighted average number of common shares outstanding
Basic and diluted		109,911,244			90,300,999			107,473,813			90,211,742

See notes to unaudited condensed consolidated financial statements

KOPIN CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited)


	Three months ended			Three months ended			Six months ended			Six months ended
	July 1, 2023			June 25, 2022			July 1, 2023			June 25, 2022
Net loss	$	(8,180,379	)	$	(5,647,189	)	$	(10,808,934	)	$	(7,019,853	)
Other comprehensive loss, net of tax:
Foreign currency translation adjustments		32,190			(35,421	)		42,184			(41,353	)
Unrealized holding loss on marketable securities		(14,440	)		(71,329	)		(18,207	)		(178,779	)
Reclassification of holding losses in net loss		—			—			—			(522	)
Other comprehensive income (loss), net of tax		17,750			(106,750	)		23,977			(220,654	)
Comprehensive loss		(8,162,629	)		(5,753,939	)		(10,784,957	)		(7,240,507	)
Comprehensive loss attributable to the noncontrolling interest		—			257			—			280
Comprehensive loss attributable to Kopin Corporation	$	(8,162,629	)	$	(5,753,682	)	$	(10,784,957	)	$	(7,240,227	)

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 31, 2022		92,954,159	$	929,540	$	360,567,631		$	(103,127	)	$	1,176,068	$	(338,406,815	)	$	24,163,297		$	(172,682	)	$	23,990,615
Vesting of restricted stock		17,500		175		(175	)		-			-		-			-			-			-
Stock-based compensation expense		-		-		194,190			-			-		-			194,190			-			194,190
Other comprehensive income		-		-		-			-			6,227		-			6,227			-			6,227
Issuance of common stock and pre-funded warrants, net of costs		17,000,000		170,000		21,165,000			-			-		-			21,335,000			-			21,335,000
Acquisition of noncontrolling interest		-		-		(172,682	)		-			-		-			(172,682	)		172,682			-
Net loss		-		-		-			-			-		(2,628,555	)		(2,628,555	)		-			(2,628,555	)
Balance, April 1, 2023		109,971,659	$	1,099,715	$	381,753,964		$	(103,127	)	$	1,182,295	$	(341,035,370	)	$	42,897,477		$	-		$	42,897,477
Vesting of restricted stock		404,966		4,050		(4,050	)		-			-		-			-			-			-
Stock-based compensation expense		-		-		1,191,257			-			-		-			1,191,257			-			1,191,257
Other comprehensive income		-		-		-			-			17,750		-			17,750			-			17,750
Net loss		-		-		-			-			-		(8,180,379	)		(8,180,379	)		-			(8,180,379	)
Balance, July 1, 2023		110,376,625	$	1,103,765	$	382,941,171		$	(103,127	)	$	1,200,045	$	(349,215,749	)	$	35,926,105		$	-		$	35,926,105

	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
Vesting of restricted stock		154,421		1,544		(1,544	)		-			-			-			-			-			-
Stock-based compensation expense		-		-		656,073			-			-			-			656,073			-			656,073
Other comprehensive loss		-		-		-			-			(113,906	)		-			(113,906	)		-			(113,906	)
Restricted stock for tax withholding obligations		-		-		-			(95,613	)		-			-			(95,613	)		-			(95,613	)
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
Balance		90,223,590	$	902,235	$	357,585,686		$	(461,723	)	$	1,300,445		$	(320,453,539	)	$	38,873,104		$	(172,357	)	$	38,700,747
Vesting of restricted stock		50,000		500		(500	)		-			-			-			-			-			-
Stock-based compensation expense		-		-		417,033			-			-			-			417,033			-			417,033
Other comprehensive loss		-		-		-			-			(106,750	)		-			(106,750	)		-			(106,750	)
Sale of registered stock		1,529,047		15,290		1,550,092			461,723			-			-			2,027,105			-			2,027,105
Net loss		-		-		-			-			-			(5,646,932	)		(5,646,932	)		(257	)		(5,647,189	)
Balance, June 25, 2022