Summary of Kopin (KOPN) FY Conference Call - August 13, 2025 Company Overview - **Company**: Kopin Corporation (KOPN) - **Industry**: Optical display solutions, semiconductor manufacturing - **CEO**: Michael Murray Key Points and Arguments 1. **Transformational Stage**: Kopin is currently in a transformational stage, focusing on application-specific solutions for tier one customers [5][8] 2. **Microdisplay Profitability**: No semiconductor manufacturer in the microdisplay sector is currently profitable, including major players like Sony, Samsung, and LG [6] 3. **Yield Challenges**: The yield rates in microdisplay manufacturing are significantly lower than in other semiconductor sectors, with 25-50% considered good [7] 4. **Partnership with Theon**: Kopin has formed a partnership with Theon International, a $1.7 billion corporation, to enhance production capabilities and profitability [9][11] 5. **Financial Impact of Theon Partnership**: The partnership is expected to add $15 million to Kopin's balance sheet, increasing cash reserves to over $40 million [13] 6. **ESG Strategy**: Kopin has initiated its first ESG strategy, which is crucial for attracting passive ETF flows and aligns with its recent inclusion in the Russell 2000 and 3000 indices [16] 7. **Innovative Microdisplay Technology**: Kopin has developed a new AI-enabled microdisplay that adjusts brightness and contrast dynamically, enhancing user experience [17][22] 8. **Defense Contracts**: Kopin is involved in significant defense contracts, including the Stinger missile program, which could lead to substantial revenue [27][31] 9. **Revenue Projections**: The company anticipates reaching $100 million in revenue by 2027-2028, with 25% expected from international markets [52] 10. **Soldier Borne Mission Command (SBMC)**: Winning the SBMC contract could yield $500-$750 million in revenue over ten years, contingent on successful prototype development [31][56] Additional Important Information 1. **Market Size**: NATO countries are projected to spend over $1 trillion on defense, with the U.S. Department of Defense spending $1.3 billion [41] 2. **R&D Orders**: Kopin is tracking $20 million in research and development orders expected in the current quarter, which is critical for revenue generation [46] 3. **Leadership Transition**: CFO Rich Schneider is retiring, and Eric Manns will take over, marking a significant leadership change [47] 4. **Quality Improvement**: The company has achieved a quality rate of 97%, indicating significant operational improvements [44] 5. **Patents and Technology**: Kopin holds six patents in AI-enabled microdisplays, positioning itself as a leader in this niche technology [42] This summary encapsulates the key insights from the conference call, highlighting Kopin's strategic direction, financial outlook, and technological advancements in the optical display and semiconductor industry.

Financial Data and Key Metrics Changes - Total revenues for Q2 2025 were $8.5 million, down from $12.3 million in the prior year, primarily due to government budgeting processes impacting orders [18] - Product revenues decreased to $7.5 million from $11.1 million in Q2 2024 [18] - Funded research and development revenues fell by $900,000 to $300,000, attributed to the completion of the CR3 medical headset development [19] - The net loss for Q2 2025 was $5.2 million or $0.03 per share, compared to a net loss of $5.9 million or $0.05 per share in Q2 2024 [21][22] Business Line Data and Key Metrics Changes - R&D expenses increased to $1.9 million, up approximately $100,000 from the previous year, with internal R&D expenses rising by $300,000 [20] - SG&A expenses were $7.9 million in Q2 2025, compared to $7.3 million in Q2 2024, primarily due to a decrease in legal fees [20] Market Data and Key Metrics Changes - The European nations and NATO allies are projected to spend over $1 trillion in defense spending, making this region critical for growth [6] - The partnership with Theon is expected to drive increased revenue and market share in Europe, Southeast Asia, and with NATO allies [5][6] Company Strategy and Development Direction - The company is focusing on application-specific solutions and has a strategic partnership with Theon International to enhance its market position [5][9] - A three-year strategic plan has been developed with Theon for revenue growth and technology sharing [9] - The company aims to capitalize on macro trends in defense spending and technology advancements [7][10] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that Q2 2025 did not meet expectations due to government budget uncertainty but noted that the order book is recovering [10] - The company is optimistic about future revenue recognition from delayed orders and expects significant R&D awards soon [11] - Management emphasized the importance of their technology in enhancing soldier safety and the evolving nature of warfare [16][47] Other Important Information - The company introduced its first phase of optical inspection, which is expected to save significant operating expenses and improve throughput [11] - The new AI-enabled neural display hardware prototype is a significant technological advancement for the company [12] Q&A Session Summary Question: Size of the opportunity with Theon - Management indicated that there are multiple opportunities, including internal spending on microdisplays and application-specific solutions like DayVAS and DarkWave [27][28] Question: Book to bill number for Q2 - Management confirmed a positive book to bill ratio for Q2, although it was lower than expected, with a significant amount of funded R&D orders anticipated [32] Question: Automation and gross margin advantages - Management reported that the introduction of optical inspection solutions is expected to yield operational expense recovery and further automation is planned for Q4 [36][37]

Core Insights - Theon International Plc is launching the THEON NEXT initiative, focusing on strategic investments and partnerships to develop next-generation soldier systems through targeted collaborations and co-development efforts [1][2] Investment and Partnerships - THEON is making four significant investments and partnerships in the US and Europe, reinforcing its commitment to innovation and transatlantic cooperation in defense technologies [2][3] - A total investment of $15 million in Kopin Corporation includes a $7 million interest-bearing loan and an $8 million capital increase for a 49% stake in Kopin's Scottish subsidiary, aimed at co-developing AR-enabled systems [3][4] - A two-year renewable supply agreement has been signed with eMagin for OLED micro-displays, which are critical for THEON's products [7] - A strategic partnership with ALEREON will integrate Ultra-Wide-Band technology into THEON's A.R.M.E.D. product line, enhancing secure communication capabilities [8] - THEON is investing €5 million in Varjo Technologies Oy, a Finnish company specializing in VR and MR technologies, to support the development of high-tech products for defense applications [9] Technological Focus - The initiative emphasizes three critical technologies: Augmented and Virtual Reality software, micro-displays, and near-range wireless connectivity, which are essential for next-generation soldier systems [5] - THEON's A.R.M.E.D. product line is positioned to leverage these technologies, enhancing operational effectiveness in modern warfare [10] Strategic Goals - Theon aims to maintain its leadership in man-portable electro-optics while fostering US-European industrial cooperation [2][10] - The company plans to expand its operations into Germany and Belgium, establishing a thermal/digital hub in the EU [10] Leadership Statements - The CEO of THEON highlighted the importance of these partnerships in advancing the development of soldier-borne systems and enhancing operational capabilities [10] - The CFO noted that these strategic agreements represent a financially efficient investment approach, with a total investment of €25 million expected to yield quick returns [10]

[General Information](index=1&type=section&id=General%20Information) This section provides fundamental identification details of Kopin Corporation, including its registration and securities information [Registrant Details](index=1&type=section&id=Registrant%20Details) This section provides the core identification details for Kopin Corporation, including its state of incorporation, SEC file number, and principal executive office address - Registrant Name: **KOPIN CORPORATION**[1](index=1&type=chunk) - State of Incorporation: **Delaware**[1](index=1&type=chunk) - Principal Executive Offices: **125 North Drive, Westborough, MA 01581**[1](index=1&type=chunk) [Securities and Filing Status](index=1&type=section&id=Securities%20and%20Filing%20Status) This section details the company's registered securities and confirms its status regarding emerging growth company provisions Registered Securities | Title of each class | Trading Symbol | Name of each exchange on which registered | | :------------------ | :------------- | :---------------------------------------- | | Common Stock, par value $0.01 | KOPN | Nasdaq Capital Market | - Kopin Corporation is not an emerging growth company[3](index=3&type=chunk) [Item 2.02. Results of Operations and Financial Condition](index=2&type=section&id=Item%202.02.%20Results%20of%20Operations%20and%20Financial%20Condition) This section details the announcement of Kopin Corporation's financial results for the first quarter of 2025 [First Quarter 2025 Financial Results Announcement](index=2&type=section&id=First%20Quarter%202025%20Financial%20Results%20Announcement) Kopin Corporation announced its financial results for the first quarter ended March 29, 2025, via a press release issued on May 13, 2025, which is attached as Exhibit 99.1 to this Form 8-K - Kopin Corporation issued a press release on **May 13, 2025**, announcing financial results for the first quarter ended **March 29, 2025**[4](index=4&type=chunk) - The press release is attached as **Exhibit 99.1** to this Current Report on Form 8-K and incorporated by reference[4](index=4&type=chunk) [Item 9.01. Financial Statements and Exhibits](index=2&type=section&id=Item%209.01.%20Financial%20Statements%20and%20Exhibits) This section provides an index of all financial statements and exhibits filed with the report [Exhibit Index](index=2&type=section&id=Exhibit%20Index) This section lists the exhibits filed with the Form 8-K, primarily the press release detailing the first quarter 2025 financial results and the interactive data file Exhibits Filed | Exhibit | Description | | :------ | :----------------------------------------------------------------------- | | 99.1 | Press Release dated May 13, 2025, entitled, "Kopin Reports Financial Results for the First Quarter 2025" | | 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | [Signature](index=3&type=section&id=SIGNATURE) This section confirms the official signing and authorization of the report by Kopin Corporation's designated officer [Report Authorization](index=3&type=section&id=Report%20Authorization) The report was duly signed on behalf of Kopin Corporation by its Treasurer and Chief Financial Officer, Richard A. Sneider, on July 15, 2025 - The report was signed by **Richard A. Sneider**, Treasurer and Chief Financial Officer (Principal Financial and Accounting Officer)[10](index=10&type=chunk) - Date of signing: **July 15, 2025**[10](index=10&type=chunk)

Company Overview - Kopin is a leading provider of specialized application-specific optical solutions for high-performance and mission-critical AR and VR applications[7] - The MicroDisplay market is forecasted to reach $6 billion in 2028 with a 20% CAGR[9] - Kopin is the 1 MicroDisplay provider for attractive end markets in defense, enterprise & industrial, and consumer sectors[9] - Kopin has deeply ingrained, long-tenured relationships with global market leaders with strategic focus on existing and emerging high-performance defense (90%), enterprise & industrial and consumer applications (10%)[9] Market Opportunity - The Department of Defense budget request for 2025 is $849.8 billion[17] - The global AR/VR market is expected to reach $71.2 billion in 2029, with AR at $29.6 billion (18% CAGR) and VR at $12.9 billion (23.2% CAGR)[52] - The global MicroDisplay market is projected to reach $9.2 billion in 2030 with a 17.6% CAGR[51] Technology and Products - Kopin offers a proprietary MicroDisplay portfolio including OLED, LCOS, µLED, and AMLCD MicroDisplays[19] - Existing programs in production & development represent approximately $70 million in revenue potential[40] - Kopin's µLED MicroDisplay has the potential for significantly higher brightness than OLED (up to 40x higher)[49] Intellectual Property and Manufacturing - Kopin has an extensive IP portfolio with over 200 pending or issued patents[57] - Kopin has manufacturing facilities in the United States and the United Kingdom[24]

Industry Overview - The AR/VR industry has faced a challenging journey towards commercialization, with many startups and established tech giants attempting to succeed but ultimately failing [1]. Investment Insights - Private investors are seeking value in the AR/VR sector, looking for opportunities with exponential growth potential [1]. - A preference for long and highly concentrated positions is noted, emphasizing the importance of thorough research to identify winning investments [1].

Group 1 - Kopin Corporation held its Q1 2025 Earnings Conference Call on May 13, 2025, with key participants including CEO Michael Murray and CFO Richard Sneider [1][2][6] - The call included forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995, highlighting the company's expectations and projections [4][5] - The company acknowledged potential risks that could affect actual results, including product demand and market conditions [4][5]

Financial Data and Key Metrics Changes - Total revenues for Q1 2025 were $10.5 million, a 5% increase from $10 million in the prior year [20] - Product revenues were $9.2 million, essentially flat compared to $9 million in Q1 2024 [20] - Funded research and development revenues increased by 37% to $1.2 million from $900,000 in Q1 2024 [20] - The net loss for Q1 2025 was $3.1 million or $0.02 per share, compared to a net loss of $32.5 million or $0.27 per share in Q1 2024 [22] Business Line Data and Key Metrics Changes - Cost of product revenues decreased to $7.6 million or 83% of net product revenues, down from $8.5 million or 95% in Q1 2024, attributed to improved manufacturing quality [21] - R&D expenses were $2.1 million, a slight increase from the previous year [21] - SG&A expenses decreased to $4.7 million from $7.2 million in Q1 2024, primarily due to a reduction in legal fees [22] Market Data and Key Metrics Changes - The company is focusing on defense as a primary market, with significant increases in global defense budgets due to rising geopolitical tensions [7][8] - The U.S. administration plans to spend $1 trillion on defense next year, with similar commitments from Europe, Japan, and Korea [8] Company Strategy and Development Direction - The company aims to achieve $75 million in revenue by 2027, with expected revenue for 2025 between $52 million and $55 million [10] - Strategic initiatives include the implementation of AI-assisted factory and process automation to improve manufacturing efficiencies [13] - The company is transitioning from being a microdisplay supplier to a trusted partner for leading defense firms, focusing on application-specific solutions [17] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future growth, citing a strong pipeline of opportunities and improvements in operations and manufacturing [16][24] - The company anticipates a stronger second half of 2025 compared to the first half, with expectations for increased orders and revenue [57] Other Important Information - The company announced approximately $28 million in new contract wins in Q1 2025, with a book-to-bill ratio of better than 2.8 to 1 [15] - The CR3 medical headset is entering full production, aimed at improving patient outcomes in surgical practices [17] Q&A Session Summary Question: Can you provide more detail on international opportunities? - Management highlighted Europe as a critical growth area, with significant spending and opportunities in the UK and Europe, followed by Korea and Japan [27][28] Question: What is the timeline for automation activities to impact gross margins? - Management expects new automation systems for quality control to be online by June, which should improve gross margins significantly [30][32] Question: Can you clarify revenue guidance for 2025? - Management indicated a conservative approach to guidance due to geopolitical trade issues but expects double-digit growth [36][38] Question: What progress has been made on Neuralink? - Management is working on a demonstrable neural display and expects to have updates in the near future [41][43] Question: What is the current quoting activity and order patterns? - Management noted improved order flow in Q2 after initial struggles in Q1, with several new orders expected soon [47][49]

Financial Data and Key Metrics Changes - Total revenues for Q1 2025 were $10.5 million, a 5% increase from $10 million in the prior year [19] - Product revenues were essentially flat at $9.2 million compared to $9 million in Q1 2024 [19] - Funded research and development revenues increased by 37% to $1.2 million from $900,000 in Q1 2024 [19] - The net loss for Q1 2025 was $3.1 million or $0.02 per share, compared to a net loss of $32.5 million or $0.27 per share in Q1 2024 [21] Business Line Data and Key Metrics Changes - Cost of product revenues decreased to $7.6 million or 83% of net product revenues, down from $8.5 million or 95% in Q1 2024, attributed to improved manufacturing quality [20] - R&D expenses were $2.1 million, a slight increase from the previous year [20] - SG&A expenses decreased significantly to $4.7 million from $7.2 million, primarily due to reduced legal fees [21] Market Data and Key Metrics Changes - The company is focusing on defense as a primary growth area, with increased global defense budgets, particularly in the U.S., Europe, Japan, and Korea [5][6] - The U.S. administration plans to spend $1 trillion on defense next year, with similar commitments from Europe and other nations [6] Company Strategy and Development Direction - The company aims to achieve $75 million in revenue by 2027, up from $50 million in 2024, with expected revenue for 2025 between $52 million and $55 million [9] - Strategic initiatives include the implementation of AI-assisted factory and process automation to improve manufacturing efficiencies [12] - The company is transitioning from being a supplier of microdisplays to a trusted partner for leading defense firms, focusing on bespoke solutions [16] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future growth, citing a strong pipeline of opportunities and improvements in operations and manufacturing [15][23] - The geopolitical environment is seen as a driver for increased demand for the company's products, particularly in defense [16] - The company anticipates a stronger second half of 2025 compared to the first half, both in terms of orders and revenue [54] Other Important Information - The company announced approximately $28 million in new contract wins in Q1 2025, with a book-to-bill ratio of better than 2.8 to 1 [13] - The CR3 medical headset is entering full production, aimed at improving patient outcomes in surgical practices [16] Q&A Session Summary Question: Can you provide more detail on international opportunities? - Management highlighted Europe as a critical growth area, with significant opportunities in the UK and potential partnerships in Korea and Japan [26][27] Question: When can automation activities be expected to impact gross margins? - New automation systems for quality control are expected to be online by June, which should improve gross margins significantly [30][32] Question: Can you clarify revenue guidance for 2025? - Management indicated a conservative approach to guidance due to geopolitical trade issues but expects double-digit growth [36][37] Question: What progress has been made on Neuralink? - The company is working on a demonstrable neural display and expects to showcase it soon [42] Question: What is the current quoting activity and order patterns? - After a slow start in Q1, order flow has improved significantly in Q2, with expectations for continued growth [46][48]

Financial Data and Key Metrics Changes - Copen Corporation reported a record revenue growth of 25% year-over-year for 2024, with fourth-quarter revenue increasing by 71% compared to 2023 [10][31] - The net loss for Q4 2024 was $1.9 million, or $0.01 per share, compared to a net loss of $6.5 million, or $0.06 per share in Q4 2023 [34] - For the full year 2024, total revenues were $50.3 million, up from $40.4 million in 2023, with product revenues increasing to $43.6 million from $25.9 million [35][38] Business Line Data and Key Metrics Changes - Product revenues for Q4 2024 were $12.6 million, compared to $6.8 million in Q4 2023, driven by a nearly 100% increase in defense product revenues [31][32] - R&D expenses for Q4 2024 were $3.1 million, up from $2.2 million in the previous year, primarily due to costs associated with establishing OLED deposition capabilities [33] Market Data and Key Metrics Changes - The company noted a significant increase in demand for optical systems and soldier-worn systems globally, particularly in Europe and the United States [57] - Copen is actively pursuing government funding requests exceeding $100 million, indicating strong market engagement despite potential budget cuts [55] Company Strategy and Development Direction - Copen is focused on its "One Copen" strategy, which aims to unify operations and reduce redundancies while enhancing capabilities in defense and consumer markets [12][16] - The company is implementing AI-assisted factory and process automation to improve manufacturing efficiency and reduce costs, with a goal of achieving at least $75 million in annual revenue by 2027 [20][18] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for 2025, projecting revenue between $52 million and $55 million despite geopolitical and supply chain uncertainties [14] - The company is confident in its ability to navigate tariff impacts due to its strategic initiatives and dual supply chains for OLED displays [15][16] Other Important Information - Copen has made significant progress in its neural display technology, with plans to demonstrate it in a headset within the year [44] - The company has been awarded a multi-million dollar R&D contract for a new optical prototype for the Army, highlighting its ongoing innovation efforts [25] Q&A Session Summary Question: Technical improvements in neural display and commercial readiness - Management confirmed that neural display technology is demonstrable and plans to showcase it in a headset soon [44][45] Question: Expectations for OPEX development in 2025 - OPEX is expected to be in the range of $10 to $12 million for SG&A, with internal R&D targeted at 7% of revenues [48] Question: Impact of government changes on customer engagements - Management reported no significant impacts from government budget cuts and noted an increase in training and simulation requests, indicating strong demand [56][57] Question: Gross margin dynamics and future estimates - Management acknowledged a slight decrease in gross margin due to inefficiencies in scaling production but expects margin expansion throughout 2025 [70][80] Question: Update on the lawsuit - No updates were provided on the lawsuit, but management expressed confidence in reducing damages and managing legal costs moving forward [82][90]