Kopin Provides Business Update and First Quarter 2017 Operating Results

Kopin Corporation (NASDAQ:KOPN),
a leading developer of innovative wearable computing technologies and
solutions, today provided an update on its business initiatives and
reported financial results for the first quarter of 2017 ended April 1,
2017.

“We continued to make strong progress in the first quarter as we shift
our focus from development to commercialization of our optics, displays,
and system technology for virtual reality (VR) and augmented reality
(AR),” said John C.C. Fan, President and CEO of Kopin. “Goertek has
completed its $24.6M investment in Kopin’s common stock. Furthermore,
our partnership with Goertek, the leading manufacturer of wearable
systems globally, is on track to produce three headsets by year end
2017. These headsets will include a combination of our Pupil™ optics,
Pearl™ optics and Whisper™ voice technology. Goertek is also working
with us to include our innovative components in other wearable systems
as they work with many global companies. In addition we are delighted
that our Solos™ cycling headset is shipping to our Kickstarter customers
and the preliminary response has been very positive. We are now working
with Goertek on the next generation of Solos to advance the capabilities
of the cycling version as well as adjusting the configuration to target
other fitness applications such as running.

“The announcement of our new Lightning™ 2K by 2K OLED micro displays at
CES last January has created great excitement, resulting in productive
meetings with many global companies which are interested in VR and AR.
Our 2K by 2K OLED display is designed to be the best in the world for VR
applications, and with strong interest and encouragement from the
market, we have taken steps to provide increased performance and
manufacturing capacity for our OLED displays. Kopin’s OLED display uses
a fab-less business model for both front-end Si backplane processing and
back-end OLED deposition. The Si backplane processing is readily
available, while the capacity for OLED deposition on Si has been
limited. To address the near term demand for our OLED micro displays we
announced an agreement with Yunnan Olightek Optoelectronics Technology
Co. Ltd. (Olightek), the largest OLED-on-Si manufacturer in China, to
jointly procure an advanced production OLED deposition machine. This
machine will be ready for volume production by early next year, with
Kopin entitled to 50% of the capacity. For even larger volume capacity
and product capabilities, we have partnered with Olightek and BOE
Technology Group Ltd. (BOE), a world leader in the manufacture of liquid
crystal and OLED on glass displays, to create the world’s largest
OLED-on-Silicon manufacturing center. This high volume facility is
expected to be on-line within two years, which should match the ramp in
demand expected from VR and AR manufacturers around the world.

“The military business also continued on track in the first quarter. The
F-35 Joint Strike program, with Kopin providing displays for the AR
helmets used by the fighter pilots, is ramping on schedule. The cadence
for the Family of Weapon Sight programs is also on track for Kopin to
provide weapon sight eyepiece assemblies. We are shipping under the low
rate initial production (LRIP) segment of the FWS-I and expect full
production late this year. Under the Crew Served award we will begin the
development phase later this year. Also we are optimistic that Kopin is
positioned to win additional awards that might develop under the current
budget with its increased military spend.

“During the first quarter we acquired a small company in Virginia that
develops and manufactures simulation and test equipment for military and
industrial applications. This company’s products fit in nicely with our
military and 3D test equipment products.

“We have devoted the past four years to transform from an LCD component
company into a wearable components and systems supplier. We are pleased
with the progress and advances in our LCD and OLED micro displays, in
our innovative optics, in our unique wearable systems know-how, and in
our Whisper voice technology. Initially designed for wearable headset
systems, the Whisper technology is being enhanced for far-field
applications such as in-home IOT. We believe our Whisper technology will
be able to demonstrate benefits for far-field applications by the end of
the year. In addition, the novel Simax lithium-ion batteries have passed
all the certification tests, and Hitachi Maxwell and Kopin are exploring
volume production alternatives.

“Finally, the approximately $25 million investment from Goertek
strengthened our financial position, and is helping fund the investment
to commercialize and market our technology. Either through licensing
system designs, selling our proprietary components, or even providing
the full systems such as Solos, Kopin is well positioned as the VR and
AR markets begin to accelerate,” concluded Dr. Fan.

First Quarter Financial Results

Total revenues for the first quarter ended April 1, 2017, were $4.4
million, compared with $6.1 million for the first quarter ended
March 26, 2016. Included in the first quarter of 2017 was approximately
$400,000 of revenues from the acquired company. Sales of products for
Wearable applications were $0.7 million for the first quarter of 2017 as
compared to $2.6 million in the first quarter of 2016. The decrease was
primarily attributable to customers who use our products for drone
applications. The customers are shifting into two of our higher
resolution displays, and the revenues are expected to recover, and
increase beginning in Q2.

Research and development (R&D) expenses for the first quarter of 2017
were $4.3 million compared with $4.0 million for the first quarter of
2016.

Selling, general and administrative (S,G&A) expenses were $5.6 million
for the first quarter of 2017 as compared with approximately $3.8
million for the same period in 2016. Selling, general and administrative
expense increased for the three months ended April 1, 2017 as compared
to the same period in 2016, reflecting an increase in legal and
accounting cost incurred in the investigation of the fraud at our Korean
subsidiary and an increase in stock-based compensation costs. Operating
expenses are expected to remain largely flat with full year 2016.

The Company recorded a tax benefit of approximately $1.1 million for the
three months ended April 1, 2017 as compared to a tax provision of
approximately $0.1 million for the same period in the prior year. As a
result of the acquisition the Company recorded net deferred tax
liabilities of approximately $1.0 million which resulted in the Company
reducing the valuation allowance on its net deferred tax assets. The
reduction in the valuation allowance was recorded as a tax benefit in
the tax provision.

Net loss for the first quarter of 2017 was $7.9 million, or $0.12 per
share, compared with net loss of $6.9 million, or $0.11 per share, for
the first quarter of 2016. Included in the results of the first quarter
of 2017 was a $0.3 million gain from the mark to market of a warrant
that the company acquired as part of a license of its technology.

We have maintained our strong financial position. Net cash used in
operating activities for the three months ended April 1, 2017 was
approximately $6.6 million. Kopin’s cash and equivalents and marketable
securities were approximately $67.8 million at April 1, 2017 as compared
to $77.2 million at December 31, 2016 and we have no long-term debt. On
April 20, 2017 we completed the sale of 7,589,000 shares of our common
stock to Goertek Inc. for approximately $24.6 million.

During the first quarter of 2017 we had 5 patents granted and filed for
6 new applications. Overall we have over 300 patents and patents
pending, almost all of which are related to wearable applications.

All amounts above are estimates and readers should refer to our Form
10-Q for the quarter ended April 1, 2017, for final disposition.

Financial Results Conference Call

In conjunction with its first quarter 2017 financial results, Kopin will
host a teleconference call for investors and analysts at 8:30 a.m.
ET today. To participate, please dial (877) 709-8150 (U.S. and Canada)
or (201) 689-8354 (International). The call will also be available as a
live and archived audio webcast on the “Investors” section of
the Kopin website, www.kopin.com.

About Kopin

Kopin Corporation is a leading developer and provider of innovative
wearable technologies and solutions for integration into head-worn
computing and display systems to military, industrial and consumer
customers. Kopin’s technology portfolio includes ultra-small displays,
optics, speech enhancement technology, system and hands-free control
software, low-power ASICs, and ergonomically designed smart headset
reference systems. Kopin’s proprietary components and technology are
protected by more than 300 global patents and patents pending. For more
information, please visit Kopin’s website at www.kopin.com.

Kopin, Lightning, Pearl, Pupil, Solos, and Whisper are trademarks
of Kopin Corporation.

Forward-Looking Statements

Statements in this press release may be considered “forward-looking”
statements under the “Safe Harbor” provisions of the Private Securities
Litigation Reform Act of 1995. These include, without limitation,
statements relating to our belief that we continued to make strong
progress in the first quarter as we shift our focus from development to
commercialization of our optics, displays, and system technology for
virtual reality (VR) and augmented reality (AR); our belief that our
partnership with Goertek is on track to produce three headsets by year
end 2017;our belief that these headsets will include a
combination of our Pupil™ optics , Pearl™ optics and Whisper™ chip voice
technology;our belief that Goertek is also working with us to
include our innovative components into wearables systems as they are
working with many global companies;our belief that working with
Goertek on the next generation of Solos will advance the capabilities of
the cycling version as well as adjusting the configuration to create a
Solos targeted to other fitness applications, such as running; our
agreement with Olightek Yunnan that we will jointly procure an advanced
production OLED deposition machine; our expectation that the machine we
purchase with Olightek Yunnan will be ready for volume production by
early next year; our expectation that the OLED-on-Silicon manufacturing
center being built with Olightek and BOE Technology Group LTD (BOE)will
be on-line within two years; our expectation that theOLED-on-Silicon
manufacturing center should match the expected growing demands for VR
and AR manufacturers around the world;our expectation that there
will be growing demands for VR and AR manufacturers around the world;
our expectation that the FWS-I will be full production late this year;our expectation that the Crew Served program will begin the
development phase later this year;our belief that if the current
administration’s budget is passed, we are well positioned to benefit
from new awards; our belief that our Whisper technology will be able to
demonstrate benefits forfar-field applications by the end of the
year; our belief that Kopin is well positioned as the VR and AR markets
begin to accelerate; and our expectation that customers are shifting
into two of our higher resolution displays, and that revenues are
expected to recover and grow starting Q2; our expectation that our
operating expenses are expected to remain largely flat with 2016.. These
statements involve a number of risks and uncertainties that could cause
actual results to differ materially from those expressed in the
forward-looking statements. These risks and uncertainties include, but
are not limited to, the following: We may not be able to commercialize
our products for the VR and AR markets; our partnership with Goertek may
not produce three headsets by year end 2017;if we do develop
three headsets they may notinclude a combination of or any of
our Pupil optics , Pearl optics and Whisper chip voice technology;Goertek
may not include our innovative components into wearables systems;
working with Goertek on the next generation of Solos may not advance the
capabilities of the cycling version or adjust the configuration to
create a Solos targeted to other fitness applications, such as running;
we might not procure an advanced production OLED deposition machine with
Olightek Yunnan; if we are able to purchase a machine with Olightek
Yunnan, such machine may not be ready for volume production by early
next year; the OLED-on-Silicon manufacturing center being built with
Olightek and BOE Technology Group LTD (BOE)may not be on-line
within two years; theOLED-on-Silicon manufacturing center may
not be running in time for the expected growing demands for VR and AR
manufacturers around the world;there may not be growing demands
for VR and AR manufacturers around the world; the FWS-I may not be in
full production late this year;we may designed our of the FWS-I;
the Crew Served program may not begin the development phase later this
year;we may not be awarded contracts under the FWS-I and Crew
Served programs; the current administration’s budget does not pass, or
if it is passed, we may not benefit from an increase to the military
budget; we may not be able to demonstrate Whisper technology benefits forfar-field applications by the end of the year; we may not be well
positioned as the VR and AR markets begin to accelerate; our progress
may not lead to the growth of the AR and VR markets; the AR and VR
markets may take longer to develop than we anticipate; there may be no
demand for our AR and VR products; our customers may not shift into two
of our higher resolution displays, and revenues do not recover or grow
starting in Q2; our operating expenses do not remainlargely flat
with 2016 our R&D expense is not lower; and other risk factors and
cautionary statements listed in Kopin’s periodic reports and
registration statements filed with the Securities and Exchange
Commission, including the Annual Report on Form 10-K for the 12 months
ended December 31, 2016, and Kopin’s subsequent filings with
the Securities and Exchange Commission. You should not place undue
reliance on any forward-looking statements, which are based only on
information currently available to Kopin and only as of the date on
which they are made. We undertake no obligation to update any of these
forward-looking statements to reflect events or circumstances occurring
after the date of this release.

View source version on businesswire.com: http://www.businesswire.com/news/home/20170509005684/en/

Kopin Corporation
Richard Sneider, 508-870-5959
Treasurer
and Chief Financial Officer
Richard_Sneider@kopin.com
or
Market
Street Partners
Joann Horne, 415-445-3233
JHorne@marketstreetpartners.com