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 25, 2021

☐	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 November 2, 2021
Common Stock, par value $0.01		92,190,206

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 25, 2021 (Unaudited) and December 26, 2020	3

	Condensed Consolidated Statements of Operations (Unaudited) for the three and nine months ended September 25, 2021 and September 26, 2020	4

	Condensed Consolidated Statements of Comprehensive Loss (Unaudited) for the three and nine months ended September 25, 2021 and September 26, 2020	5

	Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) for the three and nine months ended September 25, 2021 and September 26, 2020	6

	Condensed Consolidated Statements of Cash Flows (Unaudited) for the nine months ended September 25, 2021 and September 26, 2020	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 25, 2021			December 26, 2020

ASSETS
Current assets:
Cash and equivalents	$	28,349,798		$	17,112,869
Marketable debt securities, at fair value		3,413,889			3,635,681
Accounts receivable, net of allowance of $264,000 in 2021 and $175,000 in 2020		7,348,721			9,260,865
Contract assets and unbilled receivables		2,792,901			3,521,753
Inventory		6,739,017			4,455,756
Prepaid taxes		235,944			205,568
Prepaid expenses and other current assets		1,763,904			1,263,688
Total current assets		50,644,174			39,456,180
Property, plant and equipment, net		1,855,451			1,626,930
Operating lease right-of-use assets		1,719,089			1,780,039
Other assets		170,932			162,473
Equity investments		4,559,756			4,523,525
Total assets	$	58,949,402		$	47,549,147

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	3,635,708		$	5,606,910
Accrued payroll and expenses		2,414,462			1,977,851
Accrued warranty		515,000			508,000
Contract liabilities and billings in excess of revenues earned		1,269,523			1,493,847
Operating lease liabilities		889,076			982,375
Other accrued liabilities		2,294,564			1,809,495
Customer deposits		2,167,228			3,950,031
Deferred tax liabilities		514,000			554,000
Total current liabilities		13,699,561			16,882,509
Noncurrent contract liabilities and asset retirement obligations		301,826			276,409
Operating lease liabilities, net of current portion		812,351			821,306
Other long-term obligations		1,271,178			1,270,328
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 92,175,206 shares in 2021 and 91,059,407 shares in 2020; outstanding 89,546,489 in 2021 and 85,443,378 in 2020, respectively		895,464			880,075
Additional paid-in capital		356,489,085			341,512,893
Treasury stock (2,564,155 shares in 2020, at cost)		-			(9,793,946	)
Accumulated other comprehensive income		1,428,087			1,484,434
Accumulated deficit		(315,771,920	)		(305,648,025	)
Total Kopin Corporation stockholders’ equity		43,040,716			28,435,431
Noncontrolling interest		(176,230	)		(136,836	)
Total Kopin Corporation stockholders’ equity		42,864,486			28,298,595
Total liabilities and stockholders’ equity	$	58,949,402		$	47,549,147

See notes to unaudited condensed consolidated financial statements

KOPIN CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three months ended			Three months ended			Nine months ended			Nine months ended
	September 25, 2021			September 26, 2020			September 25, 2021			September 26, 2020
Revenues:
Net product revenues	$	6,591,852		$	6,487,581		$	21,089,515		$	19,077,090
Research and development and other revenues		4,295,321			3,025,171			11,379,282			7,128,913
Total revenues		10,887,173			9,512,752			32,468,797			26,206,003
Expenses:
Cost of product revenues		5,145,175			4,825,032			17,586,389			15,252,456
Research and development		3,751,729			2,715,868			11,055,282			7,276,770
Selling, general and administration		4,035,998			3,079,567			13,982,682			9,421,024
Total expenses		12,932,902			10,620,467			42,624,353			31,950,250
Loss from operations		(2,045,729	)		(1,107,715	)		(10,155,556	)		(5,744,247	)
Other (expense) income:
Interest income		9,959			12,751			22,244			120,187
Other expense, net		(31,529	)		(28,600	)		(33,574	)		(65,680	)
Foreign currency transaction (losses) gains		(29,384	)		183,795			100,597			20,797
Total other income and expense		(50,954	)		167,946			89,267			75,304
Loss before provision for income taxes and net loss attributable to noncontrolling interest		(2,096,683	)		(939,769	)		(10,066,289	)		(5,668,943	)
Tax provision		(32,000	)		(29,000	)		(97,000	)		(100,000	)
Net loss		(2,128,683	)		(968,769	)		(10,163,289	)		(5,768,943	)
Net (income) loss attributable to the noncontrolling interest		(107	)		11,329			39,394			94,443
Net loss attributable to Kopin Corporation	$	(2,128,790	)	$	(957,440	)	$	(10,123,895	)	$	(5,674,500	)
Net loss per share
Basic and diluted	$	(0.02	)	$	(0.01	)	$	(0.11	)	$	(0.07	)
Weighted average number of common shares outstanding
Basic and diluted		90,517,330			82,596,416			88,903,658			82,567,401

See notes to unaudited condensed consolidated financial statements

KOPIN CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited)

	Three months ended			Three months ended			Nine months ended			Nine months ended
	September 25, 2021			September 26, 2020			September 25, 2021			September 26, 2020
Net loss	$	(2,128,683	)	$	(968,769	)	$	(10,163,289	)	$	(5,768,943	)
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments		9,575			(82,815	)		(44,592	)		69,228
Unrealized holding gain (loss) on marketable securities		10,125			(21,725	)		(11,755	)		(204,404	)
Reclassification of holding losses in net loss		—			—			—			(21,028	)
Other comprehensive income (loss), net of tax		19,700			(104,540	)		(56,347	)		(156,204	)
Comprehensive loss		(2,108,983	)		(1,073,309	)		(10,219,636	)		(5,925,147	)
Comprehensive (income) loss attributable to the noncontrolling interest		(107	)		11,329			39,394			94,443
Comprehensive loss attributable to Kopin Corporation	$	(2,109,090	)	$	(1,061,980	)	$	(10,180,242	)	$	(5,830,704	)

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 26, 2020		88,007,535		$	880,075		$	341,512,893		$	(9,793,946	)	$	1,484,434		$	(305,648,025	)	$	28,435,431		$	(136,836	)	$	28,298,595
Stock-based compensation expense		-			-			2,610,166			-			-			-			2,610,166			-			2,610,166
Vesting of restricted stock		950,000			9,500			(9,500	)		-			-			-			-			-			-
Sale of registered stock		-			-			6,336,470			9,183,614			-			-			15,520,084			-			15,520,084
Sale of registered stock, shares
Restricted stock for tax withholding obligations		(3,586	)		(37	)		(32,668	)		-			-			-			(32,705	)		-			(32,705	)
Other comprehensive loss		-			-			-			-			(19,556	)		-			(19,556	)		-			(19,556	)
Net loss		-			-			-			-			-			(4,146,238	)		(4,146,238	)		(39,485	)		(4,185,723	)
Balance, March 27, 2021		88,953,949			889,538			350,417,361			(610,332	)		1,464,878			(309,794,263	)		42,367,182			(176,321	)		42,190,861
Stock-based compensation expense		-			-			514,509			-			-			-			514,509			-			514,509
Vesting of restricted stock		60,000			600			(600	)		-			-			-			-			-			-
Sale of registered stock		-			-			487,714			352,680			-			-			840,394			-			840,394
Other comprehensive loss		-			-			-			-			(56,491	)		-			(56,491	)		-			(56,491	)
Net loss		-			-			-			-			-			(3,848,867	)		(3,848,867	)		(16	)		(3,848,883	)
Balance, June 26, 2021		89,013,949		$	890,138		$	351,418,984		$	(257,652	)	$	1,408,387		$	(313,643,130	)	$	39,816,727		$	(176,337	)	$	39,640,390
Stock-based compensation expense		-			-			642,184			-			-			-			642,184			-			642,184
Sale of registered stock		532,540			5,326			4,427,917			257,652			-			-

SEC Form 10-Q filed by Kopin Corporation