Kopin Corporation — Third Quarter 2026 Earnings Summary

Financial Performance:

• Total revenues increased 52% year-over-year to $18.2 million for Q3 2026, compared to $12.0 million in Q3 2025, and rose 43% sequentially from $12.7 million in Q2 2026.
• Cost of product revenues was $6.4 million (73% of net product revenues) in Q3 2026, down from $8.4 million (79% of net product revenues) in Q3 2025 and $6.6 million in Q2 2026.
• Operating expenses were $12.3 million in Q3 2026, up 28% sequentially from $9.7 million in Q2 2026, but down 800 basis points relative to revenue growth; year-over-year expenses were higher than $4.1 million in Q3 2025 due to a $3.3 million reduction in accrued legal fees in the prior year period.
• Loss from operations narrowed to $0.5 million in Q3 2026, a $3.0 million sequential improvement from a $3.5 million loss in Q2 2026; Q3 2025 reported $4.5 million income from operations, which included a $5.1 million gain on legal contingency.
• Net loss was $3.4 million ($0.02 per share) for Q3 2026, compared to net income of $4.1 million ($0.02 per share) in Q3 2025; the Q3 2026 loss included approximately $2.7 million in net losses on investments reflecting non-cash fair value changes in strategic equity investments.
• Cash and cash equivalents were $25.8 million as of September 26, 2026, up from $24.9 million in Q2 2026; total cash, restricted cash, and marketable securities totaled $51.3 million, including $25.5 million restricted cash ($24.2 million collateralizing a supersedeas bond).
• Cash provided by operating activities was approximately $2.4 million in Q3 2026, reducing net cash used in operating activities for the first nine months of 2026 to $2.7 million.
• Capital expenditures were $1.4 million in Q3 2026.

Guidance and Future Outlook:

• Management expects a strong second half of the year and meaningful progress toward sustainable GAAP profitability.
• Color MicroLED technology manufacturing is on track for mid-2027.
• Neural I/o™ is on schedule for its first public demonstration at CES in January 2027, followed by a demonstration at SPIE Photonics West.

Business Segments and Product Lines:

• Defense segment revenue was $8.46 million in Q3 2026, down from $9.93 million in Q3 2025; year-to-date defense revenue was $21.08 million compared to $24.62 million in the prior year period.
• Industrial segment revenue was $52,155 in Q3 2026, down from $749,400 in Q3 2025; year-to-date industrial revenue was $119,873 compared to $2.17 million in the prior year period.
• Medical segment revenue was $279,664 in Q3 2026, up from $1,000 in Q3 2025; year-to-date medical revenue was $605,846 compared to $574,000 in the prior year period.
• Research and development revenue was $5.68 million in Q3 2026, up from $1.20 million in Q3 2025; year-to-date R&D revenue was $9.14 million compared to $3.34 million in the prior year period.
• Grant revenue was $3.10 million in Q3 2026, compared to $0 in Q3 2025; year-to-date grant revenue was $9.14 million compared to $0 in the prior year period.
• License and royalties revenue was $605,900 in Q3 2026, up from $68,754 in Q3 2025; year-to-date license and royalties revenue was $726,826 compared to $189,234 in the prior year period.
• Collaboration arrangement income was $0 in Q3 2026, compared to $0 in Q3 2025; year-to-date collaboration income was $601,089 compared to $0 in the prior year period.
• Received an $800,000 grant from the Massachusetts Manufacturing Innovation Initiative (M2I2) to install advanced capital equipment for domestic MicroLED and Neural I/o™ manufacturing.
• Received a $2.4 million order for OLED microdisplays from a new international thermal weapon sight manufacturer, with deliveries scheduled to begin in Q4 2026.
• Introduced an expanded first-person viewer (FPV) evaluation kit lineup at AUSA 2026 and received prototype headset orders from more than a dozen new Sentinel FPV™ customers for the Drone Dominance Program and U.S. government law enforcement agencies.

Market and Competitive Landscape:

• Secured an additional $18.6 million sole-source award from the Office of the Secretary of War through the U.S. Army Contracting Command under the Industrial Base Analysis and Sustainment (IBAS) program, bringing cumulative IBAS funding for color MicroLED technology to $34 million.
• Named Manufacturer of the Year by the Massachusetts Legislative Manufacturing Caucus.
• Advanced Neural I/o™, co-developed with Fabric.AI, published a white paper modeling up to 1.6 times greater useful data throughput from the same number of GPUs in a "SerDes-Free World."

Risks and Challenges:

• The company faces risks related to litigation, evidenced by $19.7 million in accrued litigation damages on the balance sheet and a $24.2 million restricted cash portion of total cash reserves collateralizing a supersedeas bond for a litigation appeal.
• Strategic equity investments resulted in non-cash fair value losses of approximately $2.7 million in Q3 2026.
• Forward-looking statements regarding product manufacturing and demonstrations are subject to risks, uncertainties, and assumptions that could cause actual results to differ materially.

Management Commentary and Tone:

• CEO Michael Murray stated that Q3 revenue growth was driven by funded development programs moving from R&D into production, noting the IBAS award keeps the company on track for MicroLED manufacturing in mid-2027.
• CFO Erich Manz highlighted the scaling of funded development programs and growing operating leverage, expressing expectation for a strong second half and progress toward sustainable GAAP profitability.

Other Key Points:

• The Company's total assets were $105.5 million as of September 26, 2026, compared to $108.4 million as of December 27, 2025.
• Contract liabilities increased to $6.04 million as of September 26, 2026, from $1.17 million as of December 27, 2025.
• Plant and equipment, net, increased to $8.51 million as of September 26, 2026, from $2.62 million as of December 27, 2025.
• Equity investments increased to $9.47 million as of September 26, 2026, from $3.46 million as of December 27, 2025.
• Series A redeemable convertible preferred stock was $0 as of September 26, 2026, compared to $7.56 million as of December 27, 2025.
• Total stockholders' equity was $67.0 million as of September 26, 2026, up from $64.1 million as of December 27, 2025.