Kopin Corporation Reports Financial Results for the Fourth Quarter and Full Year 2022

• Full year 2022 revenues increased 3.8% compared to 2021
• January 2023 capital raise solidified balance sheet for announced restructuring efforts

WESTBOROUGH, Mass.–(BUSINESS WIRE)–Kopin Corporation (“Kopin” or “the Company”) (Nasdaq: KOPN), a leading provider of high-resolution micro-displays and sub-systems for defense, enterprise and consumer augmented reality, virtual reality and mixed reality systems, today reported financial results for the fourth quarter and full year ended December 31, 2022.

“2022 was an instrumental year in Kopin’s evolution to becoming a leading provider of specialized solutions combining advanced microdisplay and optics technologies,” said Michael Murray, Kopin’s CEO. “While we continued to develop leading edge technologies for the various markets we serve over the last few years, we believed that a fundamental shift was required for our business to prosper over the long term. Since I became CEO in September of 2022, we have taken several steps towards operational improvements. My immediate focus is on yield improvements, on time and in full deliveries as well as cost controls, leading to improved margins and cash flow.”

Murray continued, “As we move into 2023, I see numerous long-term opportunities to drive revenue growth in our defense and industrial markets but we must establish operational excellence for this to be profitable growth. In addition to our operational improvements, we are focusing our business development efforts on offering our higher value added integrated optical display assemblies, which are critical to increasing the applications for AR/VR/MR, among other opportunities.”

“Technology has always been at the heart of Kopin’s success and we will continue executing on our vision to provide our global customers with brilliance in innovation, design and performance paired with a renewed focus on operational excellence,” concluded Murray.

Fourth Quarter Financial Results

Total revenues for the fourth quarter ended December 31, 2022 were $12.2 million, compared to $13.2 million for the fourth quarter ended December 25, 2021, an 8% decrease. Year-over-year product revenues were essentially flat with defense product revenues increasing by $1.2 million or 19.6% year over year while industrial product revenues decreased approximately $1.1 million or 46%, year over year. Fourth quarter 2022 funded research and development declined by $1.0 million or 24% as certain development programs moved into low rate initial production.

Cost of Product Revenues for the fourth quarter of 2022 was $8.9 million, or 103% of net product revenues, compared with $7.5 million, or 85% of net product revenues, for the fourth quarter of 2021. The higher cost of product revenues as a percentage of net product revenues was partially due to an increase in material usage related to the quality issues.

Research and Development (R&D) expenses for the fourth quarter of 2022 were $4.7 million compared to $5.2 million for the fourth quarter of 2021, an 11% decrease year over year. The decrease in 2022 fourth quarter R&D expense as compared to the prior year was due to lower funded R&D expenses partially offset by higher internal R&D expenses. With the previously announced spin-off of certain organic light emitting diode (OLED) activities to Lightning Silicon, the Company expects internal R&D activities to decline in 2023.

Selling, General and Administration (SG&A) expenses were $4.9 million for the fourth quarter of 2022, compared to $4.1 million for the fourth quarter of 2021. The increase was primarily due to an increase in compensation and professional fees, which were partially offset by lower stock-based compensation.

Net Loss Attributable to Kopin Corporation for the fourth quarter of 2022 was $6.2 million, or $0.07 per share, compared with Net Loss Attributable to Kopin Corporation of $3.3 million, or $0.04 per share, for the fourth quarter of 2021.

Full Year Financial Results

Total revenues for the year ended December 31, 2022 were $47.4 million, compared to $45.7 million for the year ended December 25, 2021, a 3.8% year-over-year increase.

Cost of Product Revenues for 2022 were $32.6 million, or 100% of net product revenues, compared with $25.1 million, or 84% of net product revenues in the prior year. Cost of product revenues increased as a percentage of revenues in 2022 as compared to 2021 primarily due to excess material costs associated with quality issues, increased raw material prices and inefficiencies caused by supply chain disruptions.

R&D expenses for 2022 were $18.7 million compared to $16.3 million for 2021, a 15% increase year over year. The increase in R&D expense as compared to the prior year was seen in both funded and internal R&D. Funded R&D expenses were $10.3 million for 2022 as compared to $10.0 million for 2021, a 3% increase. Internal R&D expenses were $8.4 million for 2022 as compared to $6.3 million for 2021, a 33% increase. Internal R&D expense for 2022 increased as compared to the prior year primarily due to increase OLED development.

Selling, General and Administration (SG&A) expenses were $18.0 million for year 2022, compared to $18.1 million for the year 2021. SG&A for 2022 had increases as compared to 2021 in professional and compensation costs which were offset by lower non-cash stock-based compensation.

Other income for fiscal years 2022 and 2021 were income of $2.6 million and $436,000, respectively. In 2022 Kopin recorded a write up of an investment of $4.7 million and a write-down of $2 million in another investment.

Net Loss Attributable to Kopin Corporation for the year 2022 was $19.3 million, or $0.21 per share, compared with Net Loss Attributable to Kopin Corporation of $13.4 million, or $0.15 per share, for the year 2021.

Net Cash Used in Operating Activities for 2022 was approximately $17.7 million. Kopin’s cash and equivalents and marketable securities were approximately $12.6 million at December 31, 2022 as compared to $29.3 million at December 25, 2021.

During 2022, the Company sold 2,330,436 shares of common stock through our existing At-The-Market program (ATM), which was entered into in March 2021, for gross proceeds of $2.9 million before deducting broker expenses of less than $100,000.

Subsequent to year end the Company completed a capital raise wherein 17 million shares of Kopin common stock were sold and prefunded warrants for another 6 million shares were issued. The net proceeds were approximately $21.5 million.

All amounts above are estimates and readers should refer to the Form 10-K for the year ended December 31, 2022, for final disposition as well as important risk factors.

About Kopin

Kopin Corporation is a leading developer and provider of high-performance application-specific optical solutions consisting of high-resolution microdisplays, microdisplays subassemblies and related components for defense, enterprise, industrial, and consumer products. Our products are used for soldier, avionic, armored vehicle, and training & simulation defense applications; industrial, public safety and medical headsets; 3D optical inspection systems; and consumer augmented reality (“AR”) and virtual reality (“VR”) wearable headsets systems. For more information, please visit Kopin’s website at www.kopin.com.

Kopin is a trademark of Kopin Corporation.

Forward-Looking Statements

Statements in this press release may be considered “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which are subject to the safe harbor created by such sections. Words such as “expects,” “believes,” “can,” “will,” “estimates,” and variations of such words and similar expressions, and the negatives thereof, are intended to identify such forward-looking statements. We caution readers not to place undue reliance on any such “forward-looking statements,” which speak only as of the date made, and advise readers that these forward-looking statements are not guarantees of future performance and involve certain risks, uncertainties, estimates, and assumptions by us that are difficult to predict. These forward-looking statements include statements with respect to our opportunities to drive long term revenue growth; our ability to continue executing on our vision; and our expectation that internal research and development expenses will decline in 2023. Various factors, some of which are beyond our control, could cause actual results to differ materially from those expressed in, or implied by, such forward-looking statements. All such forward-looking statements, whether written or oral, and whether made by us or on our behalf, are expressly qualified by these cautionary statements and any other cautionary statements that may accompany the forward-looking statements. In addition, we disclaim any obligation to update any forward-looking statements to reflect events or circumstances after the date of this press release, except as may otherwise be required by the federal securities laws. These forward-looking statements are only predictions, subject to risks and uncertainties, and actual results could differ materially from those discussed. Important factors that could affect performance and cause results to differ materially from management’s expectations are described in our Annual Report on Form 10-K, or as updated from time to time in our Securities and Exchange Commission filings.

Contacts

For Investor Relations
Kopin Corporation

Richard Sneider
Treasurer and Chief Financial Officer

rsneider@kopin.com

MZ Contact
Brian M. Prenoveau, CFA

MZ Group – MZ North America

KOPN@mzgroup.us
+561 489 5315