KOPIN CORP (KOPN) Business

Item 1. Business

Overview

Corporate
Background and Market Presence

As
used herein, the terms “Company,” “we,” “us,” or “our” refer to Kopin Corporation, a
Delaware corporation.

Kopin
Corporation, a Delaware corporation, incorporated in 1984, and is headquartered in Westborough, Massachusetts, is a leader of innovative microdisplay technologies and optical systems, catering to defense, enterprise, industrial, consumer, and medical sectors.
Our portfolio includes four types of miniature active-matrix liquid crystal
displays (“AMLCDs”), liquid crystal on silicon (“LCOS”) displays, organic light emitting diode (“OLED”)
displays, and emerging micro light emitting diode (“MicroLED”) displays, in addition to optics, electronics, and housings
for subsystems which we call Application Specific Optical Solutions (“ASOS”). These microdisplays and subsystem solutions
are all geared toward enhancing human performance when it matters most – in critical applications.

We are developing patent pending fifth-generation MicroDisplay called NeuralDisplay™. The display is a bi-directional, human-in-the-loop and artificial intelligence enabled backplane that can be manufactured into
microdisplays using either OLED or MicroLED deposition technology. The Company continues to research bi-directional sensing capabilities with potential partners, customers and investors.

While
microdisplays remain a core competency for Kopin, we also bring value to our customers through the design and manufacture of high-performance
subsystems of application-specific solutions (“ASOS”) which include optics, electronics, and housings that are designed to meet the rigorous performance, size, weight,
power, and cost requirements of the applications into which they are used.

These
products are critical for applications ranging from weapon mounted thermal sights to spatial computing devices and medical headsets.
We have been supplying our microdisplays and ASOS to the U.S. Department of War for many years for solider centric systems, rotary and
fixed wing aircraft and are developing products for armored vehicles and soldier carried missile systems. Our market reach now extends
globally, with significant operations in the Americas, Asia-Pacific, and Europe. This global footprint and strategic focus underscores
our capability to serve diverse and demanding markets, particularly in defense, where it supports both U.S. and international customers
with development and production programs.

During 2025,
Kopin received a significant and strategic Industrial Analysis and Sustainment Act (IBAS) award from the Secretary of War to
research and develop color MicroLED technology for soldier borne systems, heads up displays and other imaging applications within
aircraft and automotive applications. The Company expects to receive additional government funding to further the technology and establish domestic
full-rate productions within 2026 and beyond.

Strategic
Initiatives and Recent Developments

Our
strategy is to expand our offerings from selling individual display components to integrated, higher-value complete solutions,
including headsets and subsystems This direction is supported by our proprietary technologies, enabling the design and manufacture
of high-performance, rugged systems. The additional capability of offering complete solutions to our customers by offering a
seamless integration of components, ensuring optimal performance and ease of use. This is a critical differentiator, as competitors
do not typically provide integrated subassemblies or headsets.

Our
ability to meet specific customer needs is enhanced by our proprietary technologies, which include over 200 patents and patent applications
covering microdisplays, optics, and related systems, providing a significant intellectual property advantage. Our technological edge allows us to develop products that are not only high-resolution and low power but also rugged enough for
defense applications, such as pilot helmets and armored vehicle targeting systems.

The
Company’s competitive edge is further strengthened by our focus on application-specific solutions, which cater to the unique requirements
of each market segment. For example, in the industrial sector, we license wireless headset reference designs that integrate displays
and optics for field service personnel, enhancing productivity. Similarly, in the medical field our stereoscopic 3D high-resolution headset
is used by surgeons to provide comfortable and convenient visual support.

4

ONE
Kopin Strategic Initiative and Rebranding

In
alignment with our “ONE Kopin” strategic initiative, we have completed this strategic initiative to reorganize and streamline
our operations. The initiative included a rebranding effort to unify our corporate identity, and as announced in recent
corporate organizational updates.

Our
unified business now operates through various market and technology groups, strategically located across multiple sites to support our
global operations. These groups are organized by market segments (e.g., defense, industrial, consumer) and technology areas (e.g., AMLCD,
FLCOS, OLED, MicroLED), with locations including Westborough, Massachusetts, Dalgety Bay, Scotland, and Reston, Virginia.

In
addition to unifying our operations, we have also expanded and unified our sales and business development team, substantially increasing
our investment in new customer acquisitions, existing customer revenue and margin enhancement, and diversification of our customer base.
In the defense, medical and industrial segments that we serve, product development cycles and transitions from development to manufacturing
are lengthy. Therefore, maintaining a robust pipeline of active customer-funded development programs that will evolve into production
programs is a critical part of growing revenues and expanding our customer base. In conjunction with our portfolio of unique microdisplays
and ASOS, we have also invested in our sales and business development group – nearly doubling the resources focused on
acquisition of new customers and programs over the past 12 months.

This
reorganization is designed to improve coordination and innovation, leveraging the strengths of each division under a single umbrella,
and growing and diversify our customer base. Our multiple locations ensure global reach, supporting customers in the Americas, Asia-Pacific,
and Europe as these regions become more focused on sovereign defense spending, medical research and semiconductor developments.

Product
Portfolio and Technological Edge

Our
product lineup is diverse, with four micro-display technologies inclusive of both off-the-shelf and custom products, as well as complete
headset solutions for training & simulation and medical applications, and ASOS sub-systems.

Manufacturing
processes vary. For example, AMLCDs are designed in Westborough, then initial manufacturing steps occur in Taiwan and then the product
is completed in Westborough, while FLCOS products are handled by our facility in Dalgety Bay, Scotland. Our OLED displays are designed
in Westborough, the initial manufacturing occurs in South Korea, then they are completed in Europe or Asia. These displays are sold separately
or integrated into subassemblies, including binocular modules and higher-level assemblies (“HLAs”) for defense, used in applications
like weapon sights, pilot helmets, and training headsets.

Our
development of OLED and MicroLED displays, including color and monochrome variants with capabilities such as NeuralDisplay™ Artificial
Intelligence (“AI”) based eye-tracking, signifies our forward-looking approach to deliver new capabilities designed to optimize
human performance. Additionally, we offer display drivers, application-specific integrated circuits (“ASICS”),
optical lenses, and backlights, manufactured by third parties, complementing its core offerings.

Revenue
Streams and Market Opportunities

Revenue
generation derives primarily from the sale of displays, optical components, and ASOS that we manufacture for defense, industrial,
medical and training and simulation applications, alongside customer-funded development contracts for U.S. defense programs. This
dual revenue stream ensures stability and growth potential. Most of the programs designed for these market segments tend to run for
extended time periods, potentially yielding multiple years of revenue and margin streams.

We
are particularly well-positioned for the emerging augmented reality (“AR”) and virtual reality (“VR”) markets,
leveraging our technology and intellectual property. Our unique position as the only known USA-based provider offering AMLCDs, LCOS,
OLED and MicroOLED Displays, combined with optics, enhances our ability to offer the market a leading solution for each unique application,
serving customers based on their specific needs. This is a significant competitive advantage for us. The addition of AI Enabled backplane
architectures and pending patent applications in this area puts us at the forefront of display technology for consumer and defense applications.

Research
and Development Focus

Internally
funded research and development is concentrated on advancing OLED, MicroLED, and other display technologies such as bi-directional pixel
architectures and software defined, AI enabled backplane architectures. Historically, we have invested in headset systems for emerging
industrial and consumer markets, now licensed under agreements that may include royalties and purchase commitments. We believe this licensing
strategy results in revenue from past innovations while freeing resources for new developments.

Funded
Research and Development

We
have entered various development contracts with agencies and prime contractors of the U.S. Government and commercial customers.
These contracts help support the continued development of our core and new higher risk technologies which the Company requires either financial or application support to further develop. A substantial percentage of
our revenue derives from Funded Research and Development, focusing on developing custom product solutions, particularly for the U.S.
defense industry. These programs are typically fixed price and span several years, aiming for production orders post-design
completion and are cancellable at short notice. The knowledge gained, as per corporate strategy outlines, enhances our expertise,
positioning us for future business opportunities. The potential for technologies developed for defense to eventually transition to
commercial and consumer applications underscores long-term growth prospects.

5

Operational
Flexibility and Market Adaptability

A
key aspect of our operations is our flexibility in sourcing, purchasing, and developing display backplanes and deposition solutions from
other companies for integration with proprietary optics and headset designs, particularly in new or cost-sensitive markets. This adaptability
ensures competitiveness and responsiveness to market dynamics, geo-political conflicts, tariffs, and US Department of War and Asian and
European defense requirements for country-of-origin and source of supply requirements.

We
have shifted our business development efforts to focus on markets where we have a greater competitive advantage and as a result
revenues from defense applications remain a majority of our revenues. Sales to significant non-affiliated customers for fiscal years 2025 and 2024,
as a percentage of total revenues, were as follows:

Our
fiscal year ends on the last Saturday in December. The fiscal years ended December 27, 2025 and December 28, 2024, are referred to
herein as fiscal years 2025 and 2024, respectively.

Augmented
and Virtual Reality

Kopin, a leader in optical solutions, has expressed views on the future of augmented reality (“AR”) and virtual reality
(“VR”) in defense, industrial, and consumer sectors. Our opinion on these technologies reflects current market dynamics and
technological advancements. The focus is on the adoption trends, necessary technological developments, and the ongoing challenge of balancing
performance and cost in display technologies.

Industry
Overview and Market Interest

We
believe, and current trends support, that defense, industrial, and consumer companies are increasingly integrating AR and VR into
their operations, which we believe positions us very well for business expansion given our expertise in these technologies.
Furthermore, sovereign technology developments are required for USA and NATO customers. These technologies are viewed as innovative
applications and computing platforms, transforming how sectors operate. For instance:

This
widespread interest underscores the potential for AR and VR to become mainstream, but their growth is contingent on several technological
advancements.

Necessary
Technological Advancements

For
AR and VR markets to mature and expand, sustained investment and innovation are required in the following areas:

Our
updated opinion reflects a robust and growing interest in AR and VR across defense, industrial, and consumer sectors. The path to widespread
adoption hinges on continuous innovation in display technology, optics, application software, and software integration, with a particular
emphasis on balancing performance and cost. The integration of advanced bi-directional, human-in-the-loop sensing, coupled with low power,
edge node algorithms will also be required to enable the performance requirements for Defense, Consumer and Medical applications.

6

Our
Solution and Technology

Kopin
Corporation is a leader in high-performance optical solutions, focusing on microdisplays and related technologies for various markets.
We design and manufacture small form factor displays, including AMLCDs, LCOS, OLED, and developing MicroLED, along with optical lenses,
backlights, and ASICs. The Company recently invented a fifth generation microdisplay architecture, NeuralDisplay™ which includes
bi-directional, human-in-the-loop and AI-based algorithms resident within the backplane of the display. This technological advancement
can be utilized with either OLED or MicroLED depositions. These components are used in defense, industrial, medical, and consumer applications,
offering complete solutions that include subassemblies and headsets. Other bi-directional architecture research was started midyear which
may prove interesting for several current and new markets.

Products
and Applications

Our
displays are critical for near-eye applications, such as thermal weapon sights and pilot helmets in defense, wearable headsets for field
service in industry, surgeon headsets in medical fields, and spatial computing devices for consumers. Their subassemblies combine displays,
optics, and electronics, designed to survive extreme conditions like weapon fire shock and vibration, while headsets are standalone products,
our displays and subsystems are integrated into the finished products built by our customers.

Competitive
Edge

A
critical aspect of our business is our ability to offer tailored and complete solutions, not just displays, which differentiate us
from competitors. We offer active-matrix liquid crystal, organic light emitting diode, ferroelectic liquid crystal on silicon and
organic light emitting diode microdisplays as stand-alone products and in modules and subassemblies which include our optics and
electronics. Furthermore, we believe we are the only small domestic business that offers five variants of microdisplay technologies
which provide a vast array of technological options for customers’ application needs. A “small business” as
defined in U.S. procurement may receive preferential treatment in awarding contracts. We can assist customers with choosing and
customizing the right display architecture for their unique application as compared to competitors who only offer one technology,
for all applications. Specifically, our strategy enables us to design products for rugged environments, a key advantage in defense
and industrial markets, while offering these solutions to be manufactured in multiple locations within the USA and
Europe.

Detailed
Analysis of Kopin Corporation’s Technology and Market Position

Kopin
Corporation, a leader in optical solutions, is recognized for our advanced microdisplay technologies and related products, catering to
defense, industrial, medical, and emerging consumer AR and VR markets. This analysis, prepared as of March 2026, provides a comprehensive
overview of the Company’s technology, products, strategy, and market position. The focus is on detailing the Company’s capabilities,
competitive advantages, and potential risks, ensuring a thorough understanding of potential investment decisions.

Corporate
Background and Technology Portfolio

We
design and manufacture a range of small form factor displays, including AMLCDs, LCOS displays, OLED displays, and are developing MicroLED
displays. These displays are complemented by optical lenses, backlights, and ASICs, forming the backbone of our product offerings.

Our
technology extends beyond individual components to include subassemblies and headsets, which integrate displays, optics, and electronics.
These products are designed to withstand extreme environmental conditions, such as the shock and vibration experienced in weapons fire,
making them particularly suitable for defense applications. This capability is a critical differentiator, as it ensures reliability in
rugged environments, a key requirement for defense, medical and industrial customers.

Our
AMLCDs, branded as CyberDisplay® products, utilize a proprietary process involving the transfer of integrated circuits from
silicon wafers to glass. This process, detailed in corporate disclosures, enables greater miniaturization, higher pixel density, lower
power consumption, and higher brightness compared to conventional active-matrix LCDs. The manufacturing involves initial steps at foundries
in Taiwan, with final assembly at our facility in Westborough, Massachusetts, as noted in recent financial reports.

LCOS displays, manufactured by
Kopin Europe Limited (“KEL”) in Scotland, are reflective and used in 3D optical inspection equipment, offering high-speed,
high-density imaging capabilities.

OLED
displays, with their emissive nature, provide high contrast and fast response times, making them ideal for AR and VR applications.
We have recently launched a new OLED display with improved brightness and resolution, aimed at the AR/VR market, as announced in November
2024.

MicroLED
displays are in development, promising high brightness, wide viewing angle, excellent contrast, and potentially low cost. We received
a patent for our MicroLED manufacturing process in September 2024, which is expected to enhance production efficiency and reduce costs,
positioning the Company for future growth in this emerging technology. Through the Department of War, Kopin received funding for advanced
research and development for a color MicroLED which are expected to be designed and built to the US Army specifications for various soldier borne
systems. The Company will also adapt this display architecture for other potential markets like aviation, automotive and advanced AI
computing applications.

NeuralDisplay™
architecture is a software-based development focused on integrating bi-directional sensing into the subpixel of either an OLED or
MicroLED display. We believe this patent pending technology will reduce the size, weight, power consumption of consumer and defense AR
solutions by reducing several cameras which are required for eye-tracking, gaze, and dynamic brightness and contrast controls. The display
system is being designed to utilize software and AI, accelerating algorithms to adjust the display image and thereby reduce nausea, latency,
and overall system weight which will increase user comfort and battery life.

7

Product
Offerings and Applications

Our
products are utilized across multiple sectors, each with specific applications:

Our
subassemblies, such as HLAs for defense, combine displays, optics, and electronics in sealed housings, designed for exact tolerances
to meet rugged environment requirements. Headsets, on the other hand, are standalone products that interface with larger systems, requiring
significant know-how in design, materials selection, assembly, and testing.

Manufacturing
and Supply Chain

Our
manufacturing process varies by product. AMLCDs involve initial fabrication at Taiwan foundries, with final assembly in Westborough,
Massachusetts, using proprietary Wafer Engineering technology while our LCOS displays similarly start with silicon wafers fabricated
at Taiwan foundries and are then completed at Kopin Europe Limited in Scotland. For OLED displays, we design the critical backplane
and outsource the deposition process to various foundries, with final assembly ans test at Kopin facilities.

Optical
lenses and backlights are either developed internally or licensed, with third-party manufacturing used to meet specifications. This approach
reduces investment in plants and equipment, allowing us to stay agile and adapt to technological advancements.

Our
ASOS products are currently manufactured using a significant amount of direct labor. However, we have implemented initiatives to automate
many of the processes required to manufacture the products. For example, we removed human defect inspection of lenses and changed the
process to use camera inspection.

Strategy
and Market Expansion

Our
strategy is centered on participating in U.S. defense development programs, funded by government agencies and prime contractors, to develop
leading-edge microdisplay technologies. This approach supplements internal R&D budgets and enhances expertise, with revenues from
these contracts contributing significantly to past years.

We
also utilize Small Business Innovation Research (“SBIR”) and Cooperative Research & Development Awards (“CRADA”)
to work with Defense end-users directly to learn, develop, demonstrate, and commercialize new technologies.

The
knowledge gained is leveraged for industrial, medical, and consumer applications, aiming to diversify revenue streams. We maintain a
broad intellectual property portfolio, with approximately 200 patents and patent applications, covering microdisplays, optics, and related
technologies, which we believe provides a technology and manufacturing platform competitive advantage.

We
are also developing software-defined backplanes with AI capabilities, known as NeuralDisplay™, to address specific use cases in
defense and consumer markets, indicating a forward-looking approach to innovation, as mentioned in recent product development updates.

8

Markets,
Customers, and Financial Performance

Our
primary market is defense, with significant customers including Collins Aerospace and DRS Network & Imaging Systems LLC. In fiscal
year 2025, defense sales (excluding R&D contracts) accounted for 74% of total revenue, down from 82% in 2024, but maintaining
a strong reliance on this sector. These results were a by-product of an intentional strategic shift in market focus, which we believe
is already proving successful. Kopin continues to expand our focus into growing markets which are geographic expansions and new market verticals
to lessen our dependency and concentration in North American Defense customers to promote further stability, higher margins and growth.

Industrial
and medical markets are growing, with customers like HMDmD, expanding our customer base. Research and development revenues,
primarily from U.S. Government contracts, accounted for 12% of total revenues in 2025 and 2024. The
Company generally seeks a balance between research and development to low-rate initial production (“LRIP”) sales, with
the overall intent of shifting more to LRIP

Financially,
we reported a 22% revenue decrease in fiscal year 2025 compared to 2024, driven by defense product sales, and are progressing towards
profitability with a reduced net loss, indicating operational improvements, as noted in market analyses.

Competition
and Risks

The
general commercial display market is highly competitive, and we face competition from large Asian electronics companies such as AUO,
BOE Technology Group, Himax, LG Display, Samsung, Sharp, and Sony in the near eye microdisplay sector. We cannot be certain that we will
be able to compete against these companies and technologies, or that consumers will accept the use of such eyewear in general or our
customers’ product form factor specifically.

The
Company differentiates itself from its competitors by offering a USA small business, designed and built, complete solutions, including
displays, optics, and electronics such as MicroLED, OLED, LCOS and AMLCD, that are tailored to application specific solutions. Furthermore,
the Company is the only USA-based, small business which offers five variants of microdisplay technologies, which provide a vast array
of technological options for customers’ application needs. The Company can assist customers to choose the right display architecture
for the application versus competitors who only offer one technology for all applications. Specifically, the Company’s strategy
enables it to design products for rugged environments, a key advantage in defense and industrial markets, while offering these solutions
to be manufactured in multiple locations within the USA and Europe.

Key
risks include dependence on major customers, such as DRS Network & Imaging Systems LLC comprising 63% of revenues in 2025 and therefore
posing a concentration risk. The need for continuous innovation in a rapidly evolving technology market and managing complex supply chains
to maintain high production yields for defense subassemblies are additional challenges.

Recent
Developments and Future Outlook

Kopin
was awarded a transformative $15.4M order to develop sovereign manufacturing capability for color MicroLED displays on September 11, 2025. This program
will focus on establishing Kopin’s production capabilities for MicroLED displays in the USA, with the initial display product
for use in soldier borne systems. This program enhances Kopin’s position as a supplier of critical MicroLED display
technology for US defense programs and is funded by the office of the Secretary of War and the US Army under the Industrial Base
Analysis and Sustainment (IBAS) program.

During
the fourth quarter, Theon International posted a $23M commitment including previously announced $15M investment and additional $8M planned
for development of Military-grade MicroLED display and other products.

Further financing developments included several new partnerships with major defense contractors in the US such as
Ondas and Unusual Machines, and in Europe including Theon International. These firms participated in Kopin’s recent $41M private placement fundraising
activity and are strategic investors, with the desire to develop or co-develop defense solutions with Kopin.

The
Company received several recurring awards for thermal weapon sight modules, training and simulation systems and displays and display modules
for military pilot helmet HUD (head-up display) systems, including Kopin’s first production order for MicroLED displays which has
been qualified and will be deployed in a fielded combat jet program.

A strategic aspect with regards to geopolitical
uncertainties, uncertainties with respect to tariffs and sovereign sources of supply for US DoW and European Department of Defense, is
our flexibility in manufacturing, using third-party foundries for OLED and MicroLED displays, which reduces capital expenditure and allows
for scalability.

Kopin Europe, Limited (“KEL”) is in the process of expanding its capabilities beyond the manufacture of FLCOS
microdisplays and 3DAOI structure light systems to include the back-end manufacture and test of both OLED displays and MicroLED displays,
as well as Higher-level assemblies which are modules of sub-systems that include a micro-display, optics, electronics and housing that
we sell to prime contractors to include in their finished products. This capability within the territories of the EU, at KEL, has strong
appeal for the European military establishment (both prime contractors and the various ministries of defense) who are looking to source
their technology and products closer to home, and put Kopin Europe in a strong position for future growth.

Patents,
Proprietary Rights and Licenses

An
important part of our product development strategy is to seek, when appropriate, protection for our products and proprietary technology
using various U.S. and foreign patents and contractual arrangements. We intend to prosecute and defend our proprietary technology aggressively.
Many of our U.S. patents and applications have counterpart foreign patents, foreign patent applications or international patent applications
through the Patent Cooperation Treaty. Although we believe that our patents or other proprietary products and processes do not infringe
upon the intellectual property rights of any third parties, third parties may assert infringement claims against us from time to time.

Human
Capital Resources

As of December 27, 2025, our consolidated business employed 145 full-time employees
in the U.S. Of these employees, 3 hold Ph.D. degrees in Material Science, Electrical Engineering or Physics. Our management and professional
employees have significant prior experience in semiconductor materials, device transistor and display processing, optical design, manufacturing,
and other related technologies. None of our employees are covered by a collective bargaining agreement. We have policies to prevent discrimination
based on gender, race, ethnicity, nationality, religion, sexual orientation, gender identity or gender expression. We take affirmative
action to ensure that applicants are hired, and that employees are treated during employment without regard to their race, ethnicity,
religion, sex, or national origin. We also take affirmative action to employ and advance veterans in employment. We consider relations
with our employees to be good.

9

In
2004, we finalized and adopted a Code of Business Conduct and Ethics regarding the standards of conduct of our directors, officers and
employees. The code is reviewed and updated periodically by our Board of Directors and is available on our website at www.kopin.com.

Corporate Social Responsibility

We
strive to create and maintain a working environment that fosters honesty and hard work and rewards all of our employees’ hard work.
We endeavor to make Kopin Corporation a place people are proud to be associated with. Our initial process for strategy creation includes work
by a cross-functional ESG team of leaders representing operations, human resources, supply chain, finance, marketing, and facilities
departments. We also utilize third-party facilities, environmental and legal consulting services. These third-party consultants are assisting
us in creating an ESG materiality assessment from which we can develop a baseline assessment for monitoring our progress. Our progress
in creating our ESG strategy and other related activities is reported to the Board of Directors.

We
provide recurring company-wide communication of our formalized values, a summary of which are:

We
are not a member of the Responsible Business Alliance (“RBA”); however, we have utilized the themes of the RBA Code of Conduct
to supplement our Code of Ethics, including the RBA Code of Conduct’s five critical areas of corporate social responsibility: labor,
health and safety, environment, management systems, and ethics. We believe that by following the values noted above and doing our part
in each of these areas, we can achieve our business objectives and long-term stockholder value. For additional information, see “Item
1 – Business: Human Capital Resources” in this Annual Report on Form 10-K.

We
strive to create a workplace based on the following principles and goals:

Care
for Our People

●
We believe in upholding the principles of human rights, worker safety, and observing fair labor practices within our organization.

●
We respect different viewpoints and perspectives, and ultimately individual thoughts create innovation and achieve better results. We
continually evaluate how we provide organizational training, formalize company values, and revitalize recruitment strategy.

●
We are committed to employee safety. We have installed safety protocols and monitoring systems. We have periodic audits by third parties
to test our systems and perform preventive maintenance. Our policies prohibit an employee from being alone in our production facilities
or in unsupervised areas of our facilities.

Environmental
Responsibility

●
We are committed to protecting the natural environment and our community by complying with all applicable legal and regulatory requirements.
We maintain an environmental management system and a specific framework for implementing relevant sustainable practices.

●
We ask our employees to help us contribute towards environmental sustainability by looking for opportunities to conserve energy, reduce
consumption of natural resources, preserve air and water quality, manage waste properly, reuse and recycle, and reduce the use of toxic
substances in our operations where possible, including, in particular, in our clean room and lab facilities. Our clean room facility
emissions are less than permitting and reporting thresholds, and we track emissions monthly to verify compliance with the regulations.

●
We look for ways to reduce energy consumption in our facilities around the world, including upgrades and/or retrofits to smart heating,
ventilation, and air conditioning systems. For instance, we have installed variable speed fans, which only turn on based on various metrics,
thereby reducing energy usage.

Ethics
& Corporate Responsibility

●
We are committed to ensuring ethical organizational governance and embracing diversity and inclusion in the board room and throughout
the organization.

●
We are committed to observing fair, transparent, and accountable operating practices.

●
We seek to create and foster a healthy, balanced, and ethical work environment for everyone in our organization. To this end, we promote
an ethical organizational culture and encourage all employees to raise questions or concerns about actual or potential ethical issues
and Company policies and to offer suggestions about how we can make our organization better. We have a Whistleblower Ethics Hotline that
includes global telephone access and online access. We have an independent third party periodically test the Whistleblower Ethics Hotline.

Supply
Chain Responsibility

●
We intend to request that our suppliers adhere to the RBA Code of Conduct or its equivalent by flowing this requirement through our commercial
contracts.

●
We also adhere to Rule 13p-1 under the Exchange Act and support efforts to avoid sourcing conflict minerals that directly or indirectly
finance, or benefit armed groups in the Democratic Republic of Congo and in adjoining countries. Consistent with the Organization for
Economic Co-operation and Development Due Diligence Guidance concerning conflict minerals, we adopted the Conflict-Free Sourcing Initiative
Due Diligence reporting process and seek to obtain conflict minerals content declarations from our suppliers each year, to promote supply chain transparency. We do not directly source tin, tantalum, tungsten, or gold (collectively referred to as 3TG) from
mines, smelters or refiners, and we are, in most cases, several or more levels removed from these supply chain participants.

10

Government
Regulations

Our
business is subject to extensive regulation in the industries we serve. We deal with numerous U.S. Government agencies and entities,
including but not limited to branches of the Department of War (“DoW”).

U.S.
defense contractors are among our largest customers, representing a substantial majority of our total revenues. The U.S. Government may
terminate a contract with us or our customers either “for convenience” (for instance, due to a change in its perceived needs)
or if we default due to our failure or the failure of a general or subcontractor to perform under the contract. If the federal government
terminates a contract with one of our customers, our contract with our customers would entitle us to recover only our incurred or committed
costs, settlement expenses and possibly profit on the work completed prior to termination. However, under certain circumstances, our
recovery costs upon termination for convenience of such a contract may be limited. If terminated by the government because of our default,
we could be liable for payments made to us for undelivered goods or services, additional costs the government incurs in acquiring undelivered
goods or services from another source, and any other damages it suffers.

In
addition, we are subject to a variety of federal, state and local governmental regulations including the use, storage, discharge and
disposal of toxic, volatile or otherwise hazardous chemicals used in our manufacturing process. Failure to comply with present or future
regulations could result in fines being imposed on us, suspension of production or cessation of operations. Any failure on our part to
control the use of, or adequately restrict the discharge of hazardous substances, or otherwise comply with environmental regulations,
could subject us to significant future liabilities. We also cannot be certain that past use or disposal of environmentally sensitive
materials in conformity with the existing environmental laws and regulations will protect us from required remediation or other liabilities
under current or future environmental laws or regulations. Certain chemicals we import are subject to regulation by the U.S. Government.
If we or our suppliers do not comply with applicable laws, we could be subject to adverse government actions and may not be able to import
critical supplies.

The
costs, burdens, and/or impacts of complying with federal and state regulations could be an expensive and time-consuming process, and
failure to comply with any such legal requirements could have a significant impact on our financial position, results of operations,
and cash flows.

We
are also subject to federal International Traffic in Arms Regulations (“ITAR”) laws which regulate the protection (cybersecurity)
and export of technical data and export of products to other nations that may use such data or products for defense purposes. Cybersecurity
and data security and protection laws and regulations are evolving and present increasing compliance challenges, which may increase our
costs, affect our competitiveness, cause reputational harm, and expose us to substantial fines or other penalties. Failure to comply
with present or future regulations could result in fines being imposed on us, suspension of production, or a cessation of operations.
Any failure on our part to obtain any required licenses for the export of technical data and/or export of our products, or to otherwise
comply with ITAR, could subject us to significant future liabilities.

We
are also subject to federal importation laws that regulate the importation of raw materials and equipment from other nations that are
used in our products. Failure to comply with present or future regulations could result in fines being imposed on us, suspension of production,
or a cessation of operations.

Investments
in Related Businesses

On
September 30, 2019, we entered into an Asset Purchase Agreement with Solos Technology Limited (“Solos Technology”), pursuant
to which we sold and licensed certain assets of our Solos product line and Whisper Audio (“Whisper”) technology. As consideration
for the transaction, we received 1,172,000 common shares representing a 20.0% equity stake in Solos Technology’s parent company,
Solos Incorporation (“Solos Inc.”). Our 20.0% equity stake will be maintained until Solos Inc. has raised a total of $7.5
million in equity financing after which we will need to participate in future equity offerings, or our ownership percentage will be diluted.

We
acquired an equity interest in Lenovo New Vision in the first quarter of 2018 for $1.0 million and the contribution of certain
intellectual property. As of December 27, 2025, we have approximately 10% interest in this investment and the carrying value of
our investment is $1.5 million.

11

We
acquired the right to an equity interest in HMDmd, a medical device company in 2021. As of December
27, 2025, the carrying value of this investment is $0.3 million.

As
of December 27, 2025, we own 100% of the outstanding common stock of Kopin Virginia, Inc. (formerly NVIS, Inc), and e-MDT
America Inc. (“eMDT”) and we consolidate each of their financial results within our consolidated financial statements.

We
terminated operations of our subsidiary, Kopin Software Ltd., in the third quarter of 2019 and are in the process of liquidating it.

On
January 5, 2023, the Company entered into a Technology License Agreement and an Asset Purchase Agreement (the “LST Agreements”)
with Lightning Silicon Technology, Inc (“LST”). Pursuant to the LST Agreements, the Company issued a license to LST for certain
technology associated with our Organic Light Emitting Technology, transferred in-process development contracts with two customers and
accounts receivables that the Company had previously determined were not collectible. As consideration for the transaction, the Company
received 18,000,000 common shares representing a 20.0% equity stake in LST. The Company will also receive a royalty based on unit sales of products that utilize the technology licensed.

We
may from time to time make further equity investments in these and other companies engaged in certain aspects of the display, electronics,
optical and software industries as part of our business strategy. In addition, the wearable computing product market is relatively new
and there may be other technologies we need to invest in to enhance our product offering. These investments may not provide us with any
financial return or other benefit, and any losses by these companies or associated losses in our investments may negatively impact on
our operating results.

Sources
and Availability of Raw Materials and Components

We
rely on third-party independent contractors for certain integrated circuit chip sets, backlights and other critical raw materials such
as special glasses, wafers and chemicals. In addition, our CyberDisplay subassemblies, HLAs, binocular display modules, and other modules
include lenses, backlights, printed circuit boards and other components that we purchase from third-party suppliers. Some of these third-party
contractors and suppliers are small companies with limited financial resources. In addition, our defense customers typically buy a small
number of units, which prevents us from qualifying and buying components economically from multiple vendors. As a result, we are highly
dependent on the select number of third-party contractors and suppliers.

Availability
of Information

We
make available free of charge through our website, www.kopin.com, our Annual Reports on Form 10-K and other reports that we file or furnish
with the SEC as soon as reasonably practicable after they are filed or furnished, as well as certain of our corporate governance policies,
including the charters for the Board of Directors’ audit, compensation, and nominating and corporate governance committees and
our code of ethics, corporate governance guidelines and whistleblower policy. We will also provide any person without charge, upon request,
a copy of any of the foregoing materials. Any such request must be made in writing to us, c/o Investor Relations, Kopin Corporation,
125 North Drive, Westborough, MA, 01581.