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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

		
 	 	
  FORM 10-Q

		

	
		
x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934	
For the quarterly period ended March 28, 2015
or

		
¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934	
For the transition period from              to             
Commission file number 0-19882

		
 	 	
  KOPIN CORPORATION
(Exact name of registrant as specified in its charter)

		

	
			
Delaware	 	04-2833935	
State or other jurisdiction of
incorporation or organization	 	(I.R.S. Employer
Identification No.)	
 	 	 	
125 North Drive, Westborough, MA	 	01581-3335	
(Address of principal executive offices)	 	(Zip Code)	
Registrant’s telephone number, including area code: (508) 870-5959

		
 	 	
 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to filing requirements for the past 90 days.    Yes   x    No   ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes     x     No   ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

						
Large accelerated filer	 	¨	Accelerated filer	 	x	
Non-accelerated filer	 	¨	Smaller reporting company	 	¨	
Indicate by check mark whether the registrant is a shell company (as defined in rule 12b-2 of the Exchange Act).    Yes   ¨    No   x
Indicate the number of shares outstanding of each issuer’s classes of common stock, as of the latest practicable date.

				
Class	Outstanding as of May 8, 2015	 	
Common Stock, par value $.01	66,495,779	 	

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Kopin Corporation
INDEX

	

 	 	Page
No.	
Part I – Financial Information	 	
Item 1.	Condensed Consolidated Financial Statements (Unaudited):	3	
 	Condensed Consolidated Balance Sheets at March 28, 2015 (Unaudited) and December 27, 2014	4	
 	Condensed Consolidated Statements of Operations (Unaudited) for the three months ended March 28, 2015 and March 29, 2014	4	
 	Condensed Consolidated Statements of Comprehensive Loss (Unaudited) for the three months ended March 28, 2015 and March 29, 2014	5	
 	Condensed Consolidated Statements of Stockholders' Equity (Unaudited) for the three months ended March 28, 2015	6	
 	Condensed Consolidated Statements of Cash Flows (Unaudited) for the three months ended March 28, 2015 and March 29, 2014	7	
 	Notes to Unaudited Condensed Consolidated Financial Statements	8	
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15	
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	20	
Item 4.	Controls and Procedures	20	
 	 	 	
Part II – Other Information	21	
Item 1.	Legal Proceedings	21	
Item 1A.	Risk Factors	21	
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	21	
Item 6.	Exhibits	22	
Signatures	 	23	

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Part 1: FINANCIAL INFORMATION

Item 1:	Condensed Consolidated Financial Statements (Unaudited)	

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KOPIN CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

	
								
 	March 28,
2015	 	December 27,
2014	
ASSETS	 	 	 	
Current assets:	 	 	 	
Cash and equivalents	$	12,460,936		 	$	14,635,801		
Marketable debt securities, at fair value	74,685,260		 	76,223,135		
Accounts receivable, net of allowance of $191,000 and $266,000 in 2015 and 2014, respectively	4,420,993		 	3,758,832		
Unbilled receivables	160,126		 	43,492		
Inventory	3,654,213		 	4,081,886		
Prepaid taxes	65,157		 	378,637		
Prepaid expenses and other current assets	787,121		 	802,837		
Notes receivable	14,950,003		 	—		
Total current assets	111,183,809		 	99,924,620		
Property, plant and equipment, net	4,246,687		 	4,589,421		
Goodwill	947,450		 	976,451		
Intangible assets, net	462,570		 	616,759		
Other assets	2,366,581		 	1,900,828		
Notes receivable	—		 	14,933,335		
Total assets	$	119,207,097		 	$	122,941,414		
LIABILITIES AND STOCKHOLDERS’ EQUITY	 	 	 	
Current liabilities:	 	 	 	
Accounts payable	$	3,524,566		 	$	5,503,734		
Accrued payroll and expenses	1,268,813		 	1,985,691		
Accrued warranty	716,000		 	716,000		
Billings in excess of revenue earned	2,343,920		 	586,471		
Other accrued liabilities	2,864,213		 	3,169,028		
Deferred tax liabilities	1,282,000		 	1,282,000		
Total current liabilities	11,999,512		 	13,242,924		
Asset retirement obligations	297,309		 	311,187		
Commitments and contingencies		 		
Stockholders’ equity:	 	 	 	
Preferred stock, par value $.01 per share: authorized, 3,000 shares; none issued	—		 	—		
Common stock, par value $.01 per share: authorized, 120,000,000 shares; issued 78,533,036 shares in 2015 and 77,731,604 shares in 2014; outstanding 63,088,667 shares in 2015 and 63,077,715 shares in 2014	751,909		 	751,832		
Additional paid-in capital	325,499,893		 	324,625,694		
Treasury stock (12,102,258 shares in 2015 and 2014, respectively, at cost)	(42,741,551	)	 	(42,741,551	)	
Accumulated other comprehensive income	3,620,914		 	3,126,239		
Accumulated deficit	(179,753,247	)	 	(175,915,255	)	
Total Kopin Corporation stockholders’ equity	107,377,918		 	109,846,959		
Noncontrolling interest	(467,642	)	 	(459,656	)	
Total stockholders’ equity	106,910,276		 	109,387,303		
Total liabilities and stockholders’ equity	$	119,207,097		 	$	122,941,414		
                                          
See notes to unaudited condensed consolidated financial statements

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KOPIN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

								
 	Three Months Ended	
 	March 28,
2015	 	March 29,
2014	
Revenues:	 	 	 	
Net component revenues	$	7,128,369		 	$	4,227,760		
Research and development revenues	1,456,622		 	467,010		
 	8,584,991		 	4,694,770		
Expenses:	 	 	 	
Cost of component revenues	5,283,733		 	4,225,449		
Research and development	4,860,192		 	5,086,284		
Selling, general and administration	4,386,215		 	4,996,802		
 	14,530,140		 	14,308,535		
Loss from operations	(5,945,149	)	 	(9,613,765	)	
Other income and expense:	 	 	 	
Interest income	209,664		 	238,172		
Other income, net	19,510		 	59,828		
Foreign currency transaction (losses) gains	(179,589	)	 	181,751		
Gain on sale of investments	2,142,421		 	—		
 	2,192,006		 	479,751		
Loss before (provision) benefit for income taxes, equity loss in unconsolidated affiliate and net income attributable to noncontrolling interest	(3,753,143	)	 	(9,134,014	)	
Tax (provision) benefit	(12,500	)	 	143,000		
Loss before equity loss in unconsolidated affiliate and net income attributable to noncontrolling interest	(3,765,643	)	 	(8,991,014	)	
Equity loss in unconsolidated affiliate	(47,443	)	 	(102,305	)	
Net loss	(3,813,086	)	 	(9,093,319	)	
Net income attributable to the noncontrolling interest	(24,906	)	 	(41,097	)	
Net loss attributable to the controlling interest	$	(3,837,992	)	 	$	(9,134,416	)	
Net loss per share	 	 	 	
Basic	$	(0.06	)	 	$	(0.15	)	
Diluted	$	(0.06	)	 	$	(0.15	)	
Weighted average number of common shares outstanding:	 	 	 	
Basic	63,083,652		 	62,530,202		
Diluted	63,083,652		 	62,530,202		
See notes to unaudited condensed consolidated financial statements

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KOPIN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Unaudited)

	
								
 	Three Months Ended	
 	March 28, 2015	 	March 29, 2014	
Net loss	$	(3,813,086	)	 	$	(9,093,319	)	
Other comprehensive loss:	 	 	 	
     Foreign currency translation adjustments	14,422		 	(859,599	)	
     Unrealized holding gain on marketable securities	824,922		 	183,441		
     Reclassifications of loss in net loss	(377,561	)	 	(14,085	)	
Other comprehensive income (loss)	461,783		 	(690,243	)	
Comprehensive loss	$	(3,351,303	)	 	$	(9,783,562	)	
Comprehensive gain attributable to the noncontrolling interest	57,798		 	8,986		
Comprehensive loss attributable to controlling interest	$	(3,293,505	)	 	$	(9,774,576	)	
See notes to unaudited condensed consolidated financial statements

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KOPIN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)

	
																																			
 	Common Stock	 	Additional
Paid-in Capital	 	Treasury Stock	 	Accumulated
Other
Comprehensive Income	 	Accumulated Deficit	 	Total Kopin
Corporation
Stockholders’ Equity	 	Noncontrolling Interest	 	Total
Stockholders’ Equity	
 	Shares	 	Amount	 		 		 		 		 		 		 		
Balance, December 27, 2014	75,183,207		 	$	751,832		 	$	324,625,694		 	$	(42,741,551	)	 	$	3,126,239		 	$	(175,915,255	)	 	$	109,846,959		 	$	(459,656	)	 	$	109,387,303		
Stock-based compensation	—		 	—		 	874,276		 	—		 	—		 	—		 	874,276		 	—		 	874,276		
Other comprehensive income (loss)	—		 	—		 	—		 	—		 	494,675		 	—		 	494,675		 	(32,892	)	 	461,783		
Exercise of stock warrants	7,718		 	77		 	(77	)	 	—		 	—		 	—		 	—		 	—		 	—		
Net loss	—		 	—		 	—		 	—		 	—		 	(3,837,992	)	 	(3,837,992	)	 	24,906		 	(3,813,086	)	
Balance, March 28, 2015	75,190,925		 	$	751,909		 	$	325,499,893		 	$	(42,741,551	)	 	$	3,620,914		 	$	(179,753,247	)	 	$	107,377,918		 	$	(467,642	)	 	$	106,910,276		
See notes to unaudited condensed consolidated financial statements

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KOPIN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

	
								
 	Three months ended	
 	March 28,
2015	 	March 29,
2014	
Cash flows from operating activities:	 	 	 	
Net loss	$	(3,813,086	)	 	$	(9,093,319	)	
Adjustments to reconcile net loss to net cash used in operating activities:	 	 	 	
Depreciation and amortization	681,899		 	932,974		
Amortization of premium or discount on marketable debt securities	20,645		 	17,300		
Stock-based compensation	997,464		 	1,126,957		
Gain on sale of investments	(2,142,421	)	 	—		
Loss in unconsolidated affiliate	—		 	102,305		
Deferred income taxes	—		 	(122,359	)	
Foreign currency losses (gains)	137,074		 	(157,642	)	
Change in allowance for bad debt	(74,500	)	 	14,679		
Other non-cash items	548,627		 	233,078		
Changes in assets and liabilities:	 	 	 	
Accounts receivable	(696,222	)	 	122,945		
Inventory	(140,810	)	 	487,156		
Prepaid expenses and other current assets	168,651		 	578,444		
Accounts payable and accrued expenses	(3,071,919	)	 	(504,810	)	
Billings in excess of revenue earned	1,907,449		 	117,491		
Net cash used in operating activities	(5,477,149	)	 	(6,144,801	)	
Cash flows from investing activities:	 	 	 	
Other assets	(8,250	)	 	(14,127	)	
Capital expenditures	(314,400	)	 	(444,372	)	
Proceeds from sale of marketable debt securities	3,805,945		 	13,267,391		
Purchase of marketable debt securities	(2,073,061	)	 	(8,444,398	)	
Proceeds from sale of investments	1,869,804		 	—		
Proceeds from sale of equipment	—		 	—		
Net cash provided by investing activities	3,280,038		 	4,364,494		
Cash flows from financing activities:	 	 	 	
Treasury stock purchases	—		 	(298,619	)	
Proceeds from exercise of stock options	—		 	128,441		
Net cash used in financing activities	—		 	(170,178	)	
Effect of exchange rate changes on cash	22,246		 	5,429		
Net decrease in cash and equivalents	(2,174,865	)	 	(1,945,056	)	
Cash and equivalents:	 	 	 	
Beginning of period	14,635,801		 	16,756,666		
End of period	$	12,460,936		 	$	14,811,610		
Supplemental disclosure of cash flow information:	 	 	 	
Income taxes paid	$	50,000		 	$	57,000		
Supplemental schedule of noncash investing activities:	 	 	 	
Construction in progress included in accrued expenses	$	150,000		 	$	232,000		
         Non cash proceeds from exercise of warrants	$	1,330,000		 	$	—		

See notes to unaudited condensed consolidated financial statements
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KOPIN CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.	BASIS OF PRESENTATION	
The accompanying condensed consolidated financial statements include the accounts of Kopin Corporation, its wholly-owned subsidiaries, Kowon Technology Co., Ltd. (Kowon), a majority owned ( 93% ) subsidiary located in Korea, Intoware Ltd. (Intoware), a majority owned ( 58% ) subsidiary located in the United Kingdom, and eMDT America Inc. (eMDT), a majority owned ( 80% ) subsidiary located in California (collectively, the Company). Ownership interests of Kowon, Intoware and eMDT not attributable to the Company are referred to as noncontrolling interests. All intercompany transactions and balances have been eliminated. The condensed consolidated financial statements for the three months ended March 28, 2015 and March 29, 2014 are unaudited and include all adjustments which, in the opinion of management, are necessary to present fairly the results of operations for the periods then ended. These condensed consolidated financial statements should be read in conjunction with the Company’s financial statements and notes thereto, included in the Company’s Annual Report on Form 10-K for the year ended December 27, 2014 .
The Company ceased its production activities at its Kowon facility in 2013 , but as of March 28, 2015 the closure of this facility did not meet the criteria for assets held for sale.
During the second quarter of 2014 , the Company paid approximately $0.3 million to acquire an additional 29% ownership in its eMDT subsidiary.
The results of the Company's operations for any interim period are not necessarily indicative of the results of the Company's operations for any other interim period or for a full fiscal year.
During the three months ended March 28, 2015 , the change in the Company's accumulated other comprehensive income was the net of $ 0.1 million foreign currency translation adjustment, $0.8 million unrealized holding gains on marketable securities and $(0.4) million of reclassified holding gains.

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2.	CASH AND EQUIVALENTS AND MARKETABLE SECURITIES	
The Company considers all highly liquid, short-term debt instruments with original maturities of three months or less to be cash equivalents.
Marketable debt securities consist primarily of certificates of deposit, medium-term corporate debt, and United States government and agency backed securities. The Company classifies these marketable debt securities as available-for-sale in “Marketable Debt Securities”. The Company records the amortization of premium and accretion of discount on marketable debt securities in the results of operations.
The Company uses the specific identification method as a basis for determining cost and calculating realized gains and losses with respect to marketable debt securities. The gross gains and losses realized related to sales and maturities of marketable debt securities were not material during the three months ended March 28, 2015 and the year ended December 27, 2014 .
Investments in available-for-sale marketable debt securities are as follows at March 28, 2015 and December 27, 2014 :

																																
 	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value	
 	2015		2014		2015		2014		2015		2014		2015		2014	
U.S. government and agency backed securities	$	55,667,125			$	57,897,914			$	73,752			$	—			$	—			$	(200,772	)		$	55,740,877			$	57,697,142		
Corporate debt and certificates of deposit	18,995,265			18,564,823			—			—			(50,882	)		(38,830	)		18,944,383			18,525,993		
Total	$	74,662,390		 	$	76,462,737		 	$	73,752		 	$	—		 	$	(50,882	)	 	$	(239,602	)	 	$	74,685,260		 	$	76,223,135		
The contractual maturity of the Company’s marketable debt securities is as follows at March 28, 2015 :

																
 	Less than
One year	 	One to
Five years	 	Greater than
Five years	 	Total	
U.S. government and agency backed securities	$	11,150,469		 	$	36,937,584		 	$	7,652,824		 	$	55,740,877		
Corporate debt and certificates of deposit	15,740,959		 	2,255,924		 	947,500		 	18,944,383		
Total	$	26,891,428		 	$	39,193,508		 	$	8,600,324		 	$	74,685,260		
The Company conducts a review of its marketable debt securities on a quarterly basis for the presence of other-than-temporary impairment (OTTI). The Company assesses whether OTTI is present when the fair value of a debt security is less than its amortized cost basis at the balance sheet date. Under these circumstances OTTI is considered to have occurred (1) if the Company intends to sell the security before recovery of its amortized cost basis; (2) if it is “more likely than not” the Company will be required to sell the security before recovery of its amortized cost basis; or (3) the present value of expected cash flows is not sufficient to recover the entire amortized cost basis.
The Company further estimates the amount of OTTI resulting from a decline in the credit worthiness of the issuer (credit-related OTTI) and the amount of non credit-related OTTI. Noncredit-related OTTI can be caused by such factors as market illiquidity. Credit-related OTTI is recognized in earnings while noncredit-related OTTI on securities not expected to be sold is recognized in other comprehensive income (loss). The Company did not record an OTTI for the three months ended March 28, 2015 and March 29, 2014 .

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3.	FAIR VALUE MEASUREMENTS	
Financial instruments are categorized as Level 1, Level 2 or Level 3 based upon the method by which their fair value is computed. An investment is categorized as Level 1 when its fair value is based on unadjusted quoted prices in active markets for identical assets that the Company has the ability to access at the measurement date. An investment is categorized as Level 2 if its fair market value is based on quoted market prices for similar assets in active markets, quoted prices for identical or similar assets in markets that are not active, based on observable inputs such as interest rates, yield curves, or derived from or corroborated by observable market data by correlation or other means. An investment is categorized as Level 3 if its fair value is based on assumptions developed by the Company about what a market participant would use in pricing the assets.
The following table details the fair value measurements of the Company’s financial assets:

																
 	 	 	Fair Value Measurement March 28, 2015 Using:	
 	 	 	Level 1	 	Level 2	 	Level 3	
Cash and Equivalents	$	12,460,936		 	$	12,460,936		 	$	—		 	$	—		
U.S. Government Securities	55,740,877		 	19,065,259		 	36,675,618		 	—		
Corporate Debt	6,779,034		 	—		 	6,779,034		 	—		
Certificates of Deposit	12,165,349		 	—		 	12,165,349		 	—		
Vuzix Corporation	1,908,957		 	1,908,957		 	—		 	—		
GCS Holdings	229,673		 	229,673		 	—		 	—		
 	$	89,284,826		 	$	33,664,825		 	$	55,620,001		 	$	—		

 	 	 	Fair Value Measurement December 27, 2014 Using:	
 	 	 	Level 1	 	Level 2	 	Level 3	
Cash and Equivalents	$	14,635,802		 	$	14,635,802		 	$	—		 	$	—		
U.S. Government Securities	57,697,142		 	21,218,340		 	36,478,802		 	—		
Corporate Debt	5,970,983		 	—		 	5,970,983		 	—		
Certificates of Deposit	12,555,010		 	—		 	12,555,010		 	—		
Vuzix Corporation	1,500,777		 	1,500,777		 	—		 	—		
GCS Holdings	180,347		 	180,347		 	—		 	—		
 	$	92,540,061		 	$	37,535,266		 	$	55,004,795		 	$	—		
The corporate debt consists of floating rate notes with a maturity that is over multiple years but has interest rates which are reset every three months based on the then current three month London Interbank Offering Rate (three month Libor). The Company validates the fair market values of the financial instruments above by using discounted cash flow models, obtaining independent pricing of the securities or through the use of a model which incorporates the three month Libor, the credit default swap rate of the issuer and the bid and ask price spread of the same or similar investments which are traded on several markets.
The carrying amounts of cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate fair value because of their short-term nature.  If accrued liabilities were carried at fair value, these would be classified as Level 2 in the fair value hierarchy.

4.	 INVENTORY	
Inventory is stated at the lower of cost (determined on the first-in, first-out) or market and consists of the following at March 28, 2015 and December 27, 2014 :

								
 	March 28,
2015	 	December 27,
2014	
Raw materials	$	1,401,645		 	$	2,057,202		
Work-in-process	1,860,264		 	1,551,799		
Finished goods	392,304		 	472,885		
 	$	3,654,213		 	$	4,081,886		

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5. 	NET (LOSS) INCOME PER SHARE	
Basic net (loss) income per share is computed using the weighted average number of shares of common stock outstanding during the period less any non-vested restricted shares. Diluted earnings per common share, if applicable, is calculated using weighted average shares outstanding and contingently issuable shares, less weighted average shares reacquired during the period. The net outstanding shares are adjusted for the dilutive effect of shares issuable upon the assumed conversion of the Company’s common stock equivalents, which consist of outstanding stock options and unvested restricted stock units.
Weighted average common shares outstanding used to calculate earnings per share are as follows:

						
 	Three Months Ended	
 	March 28, 2015	 	March 29, 2014	
Weighted average common shares outstanding-basic	63,083,652		 	62,530,202		
Stock options and non-vested restricted common stock	—		 	—		
Weighted average common shares outstanding-diluted	63,083,652		 	62,530,202		
The following were not included in weighted average common shares outstanding-diluted because they are anti-dilutive or performance or market conditions had not been met at the end of the period.

						
 	March 28, 2015	 	March 29, 2014	
Non-vested restricted common stock	3,342,111		 	3,349,148		
Stock options	130,000		 	524,600		
Total	3,472,111		 	3,873,748		
Not included in weighted average common shares outstanding-diluted are the warrants to purchase 148,000 shares of the Company’s common stock for $3.49 per share.

6.	STOCK-BASED COMPENSATION	
The fair value of non-vested restricted common stock awards is generally the market value of the Company’s common stock on the date of grant. The non-vested common stock awards require the employee to fulfill certain obligations, including remaining employed by the Company for one , two or four years (the vesting period) and in certain cases also require meeting either performance criteria or the Company’s stock achieving a certain price. For non-vested restricted common stock awards which solely require the recipient to remain employed with the Company, the stock compensation expense is amortized over the anticipated service period. For non-vested restricted common stock awards which require the achievement of performance criteria, the Company reviews the probability of achieving the performance goals on a periodic basis. If the Company determines that it is probable that the performance criteria will be achieved, the amount of compensation cost derived for the performance goal is amortized over the anticipated service period. If the performance criteria are not met, no compensation cost is recognized and any previously recognized compensation cost is reversed. The Company recognizes compensation costs on a straight-line basis over the requisite service period for time-vested awards.
On February 13, 2015 , the Company modified the termination date of certain restricted stock grants previously made to Dr. Fan, the Company’s President and Chief Executive Officer. In 201 1, the Company granted Dr. Fan 260,000 shares of restricted stock which will vest upon the first 10 consecutive trading day period following the grant date during which the Company's common stock trades at a price equal to or greater than $5.25 subject to acceleration upon the occurrence of an acceleration event. This grant was originally set to terminate on September 12, 2016 . In  2013 , the Company granted compensation awards to its Dr. Fan that consisted of two grants of  150,000  shares of restricted stock each. One of the grants will vest at the end of the first  10  consecutive trading day period following the grant date during which the Company’s common stock trades at a price per share equal to or greater than  $6.00 . The other award will vest at the end of the first  10  consecutive trading day period following the grant date during which the Company’s common stock trades at a price per share equal to or greater than  $7.00 . Both are due to expire in 2023 . On December 31, 2014 , Dr. Fan entered into a 3 year employment agreement with the Company which expires on December 31, 2017 . The Company has amended the three grants to now terminate on December 31, 2017 , to be consistent with Dr. Fan's employment agreement.

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A summary of stock option award activity under the equity plans as of March 28, 2015 and changes during the three month period then ended is as follows (all options were vested as of March 28, 2015 ): 

							
 	Three months ended March 28, 2015	
 	Shares	 	Weighted
Average
Exercise
Price	
Balance, December 27, 2014	130,500		 	$	3.49		
Options forfeited/canceled	(500	)	 	3.87		
Options exercised	—		 	—		
Balance, all exercisable, March 28, 2015	130,000		 	$	3.49		
The weighted average remaining contractual life of the outstanding options is less than one year. The Company has issued warrants to purchase 148,000 shares of the Company’s common stock for $3.49 per share.

Non-Vested Restricted Common Stock
A summary of the activity for non-vested restricted common stock awards as of March 28, 2015 and changes during the three month period then ended is presented below:

							
 	Shares	 	Weighted
Average
Grant
Fair
Value	
Balance, December 27, 2014	2,551,631		 	$	3.75		
Granted	919,000		 	3.92		
Forfeited	(128,520	)	 	3.75		
Vested	—		 	—		
Balance, March 28, 2015	3,342,111		 	$	3.80		
Included within the non-vested restricted common stock table above is 50,000 awards granted for which the performance conditions have yet to be determined and therefore a grant date has not yet been established for the award.  No stock-based compensation expense has been recorded relating to this award during the three month period ended March 28, 2015 .

Subsequent to the year ended December 27, 2014 , the Company identified an error in its calculation of the weighted average grant fair value of issued restricted stock outstanding as of December 27, 2014 . The Company had disclosed a weighted average grant fair value of $4.41 in its Form 10-K for the year ended December 27, 2014 , however the correct weighted average fair value was $3.75 . The Company has revised the amount within the quarter ended March 28, 2015 .

Stock-Based Compensation
The following table summarizes stock-based compensation expense within each of the categories below as it relates to non-vested restricted common stock awards for the three months ended March 28, 2015 and March 29, 2014 (no tax benefits were recognized):

								
 	Three Months Ended	
 	March 28,
2015	 	March 29,
2014	
Cost of component revenues	$	199,239		 	$	230,333		
Research and development	234,406		 	332,463		
Selling, general and administrative	563,819		 	564,161		
Total	$	997,464		 	$	1,126,957		
Unrecognized compensation expense for non-vested restricted common stock as of March 28, 2015 totaled $6.2 million and is expected to be recognized over a weighted average period of three years.

7. 	OTHER ASSETS AND NOTE RECEIVABLE	
During the second quarter of 2014, the Company wrote-off its $1.3 million investment in Kobrite. Prior to the write-off, the Company accounted for its 12% ownership interest using the equity method. One of the Company’s directors is a member of the Board of Directors of Bright LED, principal investor of KoBrite.

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The Company has recorded a $14.9 million note receivable resulting from the sale of its III-V product line and its investment in KTC, which is due January 16, 2016 . The receivable is collateralized by certain assets of the buyer of the III-V product line. The buyer has outstanding debt and the repayment of the receivable is subject to the buyer remaining within its debt compliance obligations at the time of repayment.

As of March 28, 2015 the Company had an investment in GCS Holdings with a fair market value of $0.2 million and an adjusted cost basis of $0.0 million . As of December 27, 2014 , GCS Holdings had a fair market value of $0.2 million , with an adjusted cost basis of $0.0 million .

As of December 27, 2014 , the Company had an investment in Vuzix Corporation (“Vuzix”) with a fair market value of $1.5 million and adjusted cost basis of $0.0 million . On February 25, 2015 , the Company acquired approximately 251,000 shares of Vuzix common stock through a cashless exercise of warrants. The Company received the warrants in August 2013 as part of a restructuring of debt owed by Vuzix to the Company. Upon receipt of the warrants, the Company should have recorded the value of the warrant of approximately $352,000 in its consolidated financial statements. Subsequently, the Company should have marked to market the warrants at the end of each reporting period. Had the Company recorded the warrants in its consolidated financial statements and marked to market the warrants as of December 28, 2013 and December 27, 2014 , the Company would have recorded gains in its statement of operations of approximately $646,000 and $171,000 , respectively. In the first quarter of 2015 , the Company recorded the warrants in its consolidated financial statements and as a result recorded a gain of approximately $1.3 million with $817,000 attributed to prior periods. The value of the warrants as of August 2013 , December 28, 2013 and December 27, 2014 was determined using the Black-Scholes pricing model. The Company does not believe the unrecorded gains were material to the consolidated financial statements as the loss from operations for the fiscal years ended December 28, 2013 and December 27, 2014 were $35.9 million and $28.7 million , respectively. As of March 28, 2015 , the Company’s investment in Vuzix had a fair market value of $1.9 million with adjusted cost basis of $0.3 million .
		
8. 	ACCRUED WARRANTY	
The Company typically warrants its products against defect for 12 months . A provision for estimated future costs and estimated returns for credit relating to warranty is recorded in the period when product is shipped and revenue recognized, and is updated as additional information becomes available. The Company’s estimate of future costs to satisfy warranty obligations is based primarily on historical warranty expense experienced and a provision for potential future product failures. Changes in the accrued warranty for the three months ended March 28, 2015 are as follows:

				
Balance, December 27, 2014	$	716,000		
Additions	128,000		
Claim and reversals	(128,000	)	
Balance, March 28, 2015	$	716,000		

9.	INCOME TAXES	
The Company’s tax provision of approximately $12,500 for the three month period ended March 28, 2015 represents the net movement in estimated foreign withholding on anticipated future remitted earnings of an international subsidiary and state taxes. The Company’s tax benefit of approximately $143,000 for the three month period ended March 29, 2014 represents a reduction in estimated foreign withholding taxes due on an international subsidiary.
As of March 28, 2015 , the Company has available for tax purposes U.S. federal NOLs of approximately $71 million expiring through 2034. The Company has recognized a full valuation allowance on its domestic and certain foreign net deferred tax assets due to the uncertainty of realization of such assets. The Company has not historically recorded, nor does it intend to record the tax benefits from stock awards until realized. Unrecorded benefits from stock awards approximate $10 million .
The Company’s income tax returns have not been examined by the Internal Revenue Service and are subject to examination for all years since 2001. State income tax returns are generally subject to examination for a period of 3 to 5 years after filing of the respective return. The state impact of any federal changes remains subject to examination by various states for a period of up to one year after formal notification to the states.

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10. 	SEGMENTS AND GEOGRAPHICAL INFORMATION	
The Company’s chief operating decision maker is its Chief Executive Officer. The Company has determined it has two reportable segments, FDD, the manufacturer of its reflective display products for test and simulation products, and Kopin, which is comprised of Kopin Corporation, Kowon, Intoware and eMDT. The following table presents the Company’s reportable segment results (in thousands):

												
 	Three Months Ended	
 	March 28, 2015	
 	Kopin	 	FDD	 	Total	
 	 	 	 	 	 	
Revenues	$	7,586		 	$	999		 	$	8,585		
Net loss attributable to the controlling interest	(3,373	)	 	(465	)	 	(3,838	)	
Total assets	117,684		 	1,523		 	119,207		
Long-lived assets	4,067		 	180		 	4,247		
The total assets of Kopin is net of $5.2 million and $5.0 million in intercompany loans to FDD as of March 28, 2015 and December 27, 2014 , respectively.

												
 	Three Months Ended	
 	March 29, 2014	
 	Kopin	 	FDD	 	Total	
 	 	 	 	 	 	
Revenues	$	3,902		 	$	793		 	$	4,695		
Net loss attributable to the controlling interest	(8,624	)	 	(510	)	 	(9,134	)	
Total assets	135,080		 	2,014		 	137,094		
Long-lived assets	4,927		 	423		 	5,350		
During the three month periods ended March 28, 2015 and March 29, 2014 , the Company derived its sales from the following geographies (as a percentage of net revenues): 

						
 	Three Months Ended	
 	March 28, 2015	 	March 29, 2014	
United States	74	%	 	37	%	
Others	2	%	 	—	%	
        Americas	76	%	 	37	%	
Asia-Pacific	16	%	 	47	%	
Europe	8	%	 	16	%	
       Total Revenues	100	%	 	100	%	

		
11. 	LITIGATION	
The Company may engage in legal proceedings arising in the ordinary course of business. Claims, suits, investigations and proceedings are inherently uncertain and it is not possible to predict the ultimate outcome of such matters and our business, financial condition, results of operations or cash flows could be affected in any particular period.

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Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	
Forward Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995, including, without limitation, statements made relating to our expectation that we will continue to pursue other U.S. government development contracts for applications that relate to our commercial product applications; our expectation that we will prosecute and defend our proprietary technology aggressively; our belief that it is important to retain personnel with experience and expertise relevant to our business; our belief that our products are targeted towards markets that are still developing and our competitive strength is creating new technologies; our belief that it is important to invest in research and development to achieve profitability even during periods when we are not profitable; our belief that we are a leading developer and manufacturer of advanced miniature displays; our belief that our products enable our customers to develop and market an improved generation of products; our belief that the technical nature of our products and markets demands a commitment to close relationships with our customers; our belief that our Golden-i industrial reference design will provide for increased worker productivity, safety and improved manufacturing quality; our belief that our wearable technology will be embraced by consumers and commercial users and our ability to develop and expand our wearable technologies and to market and license our wearable technologies will be important for our revenue growth and ability to achieve profitability and positive cash flow; the impact of the timing of development of the market segment for our wearable computing products on our ability to grow revenues; our expectation that we will incur significant development and marketing costs in 2015 to commercialize our wearable technologies; our statement that we may make equity investments in companies; our expectation that the cash and marketable debt securities held by Kowon will eventually be remitted back to the U.S.; our expectation that the U.S. government will significantly reduce funding for programs through which we sell high margin military products; our expectation that orders for our products for use in thermal weapon sights will decline for the remainder of 2015; our expectation that orders for our products for use in DSC applications will decline for the remainder of 2015; our expectation that sales of our products for use in 3D metrology applications will increase in 2015 as compared to 2014; our belief that a strengthening of the U.S. dollar could increase the price of our products in foreign markets; the impact of new regulations relating to conflict minerals on customer demands and increased costs related to compliance with such regulations; our belief that our future success will depend primarily upon the technical expertise, creative skills and management abilities of our officers and key employees rather than on patent ownership; our belief that our extensive portfolio of patents, trade secrets and non-patented know-how provides us with a competitive advantage in the wearable technologies market; our belief that our ability to develop innovative products enhances our opportunity to grow within our targeted markets; our belief that continued introduction of new products in our target markets is essential to our growth; our expectation that our display products will benefit from further general technological advances in the design and production of integrated circuits and active matrix LCDs, resulting in further improvements in resolution and miniaturization; our belief that our manufacturing process offers greater miniaturization, reduced cost, higher pixel density, full color capability and lower power consumption compared to conventional active matrix LCD manufacturing approaches; our expectation not to pay cash dividends for the foreseeable future and to retain earnings for the development of our businesses; our expectation that we will expend betwe en $2.0 million and $3.0 million on capital expenditures over the next twelve months; our expectation that competition will increase; our belief that small form factor displays will be a critical component in the development of advanced wireless communications systems; our belief that wireless handset makers are looking to create products that complement or eventually replace wireless handsets; our belief that general technological advances in the design and fabrication of integrated circuits, LCD technology and LCD manufacturing processes will allow us to continue to enhance our display product manufacturing process; our belief that continued introduction of new products in our target markets is essential to our growth; our belief that our available cash resources will support our operations and capital needs for at least the next twelve months; our expectation that we will have taxes based on federal alternative minimum tax rules and on our foreign operations in 2015; our expectation that we will have a state tax provision in 2015; our expectation that the adoption of certain accounting standards will not have a material impact on our financial position or results of operations; our belief that our business is not disproportionately affected by climate change regulations; our belief that our operations have not been materially affected by inflation; and our belief that the effect, if any, of reasonably possible near-term changes in interest rates on our financial position, results of operations, and cash flows should not be material. These forward-looking statements are based on current expectations, estimates, forecasts and projections about the industries in which we operate, management's beliefs, and assumptions made by management. In addition, other written or oral statements, which constitute forward-looking statements, may be made by or on behalf of us. Words such as “expects”, “anticipates”, “intends”, “plans”, “believes”, “could”, “seeks”, “estimates”, and variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions, which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements, whether as a result of new information, future events or otherwise. Factors that could cause or contribute to such differences in outcomes and results include, but are not limited to, those discussed below in Item 1A and those set forth in our other periodic filings filed with the Securities and Exchange Commission. Except as required by law, we do not intend to update any forward-looking statements even if new information becomes available or other events occur in the future.

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Critical Accounting Policies
Management's discussion and analysis of our financial condition and results of operations are based upon our unaudited condensed consolidated financial statements. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amount of assets, liabilities, revenues and expenses and related disclosures of contingent assets and liabilities. We continually evaluate our estimates used in the preparation of our financial statements, including those related to revenue recognition under the percentage of completion method, bad debts, inventories, warranty reserves, investment valuations, valuation of stock compensation awards and recoverability of deferred tax assets. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about carrying values of assets and liabilities that are not apparent from other sources. Actual results will most likely differ from these estimates. Further detail regarding our critical accounting policies can be found in “Item 7. Management Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 27, 2014 .
Business Matters
We were incorporated in Delaware in 1984 and offer Kopin Wearable technology, a collection of component technologies and software which can be integrated to create headset reference designs which use voice as the user interface and through the use of wireless technologies can contact other users or information from the cloud. Our customers can license the reference design or purchase our components individually.
Our Kowon facility is for sale and when it is sold we anticipate that a final determination of the value of the shares held by the minority shareholders will be made and we will purchase these shares. The sale of the facility does not meet the criteria for assets held for sale based on the anticipated time to sell the facility.
Kopin Wearable technology includes proprietary hardware technologies and software which can be integrated to create wearable products and reference designs which use voice as the primary user interface and through the use of wireless technologies can contact other users or information from the cloud. The headset reference designs range from a consumer-oriented headset which resembles typical eyeglasses but include voice and audio capabilities allowing the user to communicate with other users to our industrial headset reference design, called Golden-i, which is essentially a complete head-worn computer that includes an optical pod with one of our display products, a microprocessor, battery, camera, memory and various commercially available software packages that we license, such as Microsoft Windows CE or Android, Nuance Dragon NaturallySpeaking, and Hillcrest Labs motion control. Our headset reference designs utilize operating system software we developed and may include our proprietary noise cancellation technologies. The optical pod allows enterprise users to view information such as WEB data, technical diagrams, streaming video or face-to-face communication, and consumer users to view information such as emails, text messages, maps or biometric data at a comfortable “normal” size because of our specialized optics. When viewing certain information the user is capable of zooming in to see finer details or zooming out to see a larger perspective. Some headset reference designs have a camera feature which enables the consumer and enterprise users to take pictures or stream live video to a remote subject matter expert so that both the user and expert can analyze an issue at the same time and collaboratively identify and implement a solution.
We believe Kopin’s Wearable technology will enable easier and more convenient access to the content individuals carry in their smartphones or “in the cloud” and will be embraced by both consumers and commercial users. For commercial users, we believe increased productivity, safety and improved manufacturing quality through more efficient issue resolution and improved communication will drive adoption. Kopin Wearable reference designs are targeted for markets where the user needs a much greater range of functionality than is typically provided by wireless devices such as handsets, smart phones, tablets or Bluetooth headsets and either due to the requirements of their usage patterns, occupation, or for improved productivity the user is better served with voice recognition as the primary interface as opposed to a touch screen or keyboard.
The components we offer include micro displays, backlights, optic, and noise cancellation technologies. Our principal display products are miniature high density color or monochrome active matrix LCDs with resolutions which range from approximately 320 x 240 resolution to 2048 x 2048 resolution sold in either a transmissive or reflective format. We sell our displays individually, in an Electronic Viewfinder (EVF) which includes a single display, backlight and optics in a plastic housing or in a Higher-Level Assembly (HLA) which contain a display, light emitting diode based illumination, optics, and electronics in a sealed housing. EVFs are sold to commercial and industrial customers and HLA’s are specifically configured and sold to military customers.
Our transmissive display products, which we refer to as CyberDisplay™ products, utilize high quality, single crystal silicon-the same high quality silicon used in conventional integrated circuits. This single crystal silicon is not grown on glass; rather, it is first formed on a silicon wafer and patterned into an integrated circuit (including the active matrix, driver circuitry and other logic circuits) in an integrated circuit foundry. The silicon wafer is then sent to our Westborough, Massachusetts facility and the integrated circuit is lifted off as a thin film and transferred to glass using our proprietary Wafer™ Engineering

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technology, so that the transferred layer is a fully functional active matrix integrated circuit which now resides on a transparent substrate.
Our reflective LCOS displays products are miniature high density dual mode color sequential/monochrome reflective micro displays manufactured at our facility in Scotland, U.K. Our reflective displays are based on a proprietary, very high-speed, ferroelectric liquid crystal on silicon (FLCOS) platform. Our digital software and logic based drive electronics combined with the very fast switching binary liquid crystal enables our micro display to process images purely digitally and create red, green and blue gray scale in the time domain. This architecture has major advantages in visual performance over other liquid crystal, organic light-emitting diode and MEMS based technologies: precisely controlled full color or monochrome gray scale is achieved on a matrix of undivided high fill factor pixels, motion artifacts are reduced to an insignificant level and there are no sub-pixels, no moving mirrors and no analog conversions to detract from the quality of the image.
We have three sources of revenues: component revenues, which are our primary source of revenues, research and development (R&D) revenues primarily from development contracts with agencies or prime contractors of the U.S government and commercial enterprises and license revenues from our reference designs. To date our license revenues have been de minimis. For the three months ended March 28, 2015 , R&D revenues were $1.5 million, or 17% of total revenue. This contrasted with $0.5 million or 11% of total revenue for the corresponding period in 2014 .
  Results of Operations
The three month periods ended March 28, 2015 and March 29, 2014 are referred to as 2015 and 2014 , respectively. The year ended period December 27, 2014 is referred to as fiscal year 2014 .
Revenues.  For the three month periods ended March 28, 2015 and March 29, 2014 , our revenues, which include component sales and amounts earned from research and development contracts, were as follows (in millions):

								
 	Three Months Ended	
Display Revenues by Category	March 28, 2015	 	March 29, 2014	
Military Applications	$	4.6		 	$	1.0		
Wearable Applications	1.1		 	1.6		
Industrial Applications	1.1		 	0.8		
Consumer Applications	0.3		 	0.8		
Research & Development	1.5		 	0.5		
Total	$	8.6		 	$	4.7		
Sales of our products for Military Applications increased in 2015 as compared to 2014 because of an increase in demand from the U.S. government for our products that are used in thermal weapon sights. We expect orders for our products for use in thermal weapon sights to decline for the remainder of 2015. Consumer Applications primarily represents customers who purchase our products for digital still camera (DSC) applications. We expect orders for our products for use in DSC applications to decline for the remainder of 2015. Industrial Applications represents customers who purchase display products for use in equipment such as 3D metrology. We expect an increase in the sales of our products for use in 3D metrology applications in 2015 as compared to 2014. For the first quarter of 2015 a substantial portion of our Research & Development revenue was earned from customers funding development efforts associated with Wearable Applications. Wearable Applications represents sales of our components for products that are worn on the body for other than Military Applications. The increase in Wearable Applications revenues in 2015 as compared to 2014 is as a result of both increased sales to existing customers and obtaining new customers.
We have developed headworn, voice and gesture controlled, hands-free cloud computing reference designs that have an optical pod which includes our microdisplay, a backlight and an optical lens. We refer to the headset reference designs and other technologies we have developed as Kopin Wearable technologies. We offer to license the headset reference designs and sell our components. To date licensing revenues have been de minimis and sales of our components are shown in the table above under Wearable Applications. We believe our ability to develop and expand the Kopin Wearable technologies and to market and license the Kopin Wearable technologies will be important for us to achieve revenue growth, positive cash flow and to achieve profitability. This is the first product that we have developed that has a significant software component. We expect to incur significant development and marketing costs in fiscal year 2015 to commercialize the Kopin Wearable technologies.
International sales represented 26% and 63% of product revenues for the three months ended March 28, 2015 and March 29, 2014 , respectively. Our international sales are primarily denominated in U.S. currency. Consequently, a strengthening of the U.S. dollar could increase the price in local currencies of our products in foreign markets and make our

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products relatively more expensive than competitors' products that are denominated in local currencies, leading to a reduction in sales or profitability in those foreign markets. In addition, our Korean subsidiary, Kowon, holds U.S. dollars. As a result, our financial position and results of operations are subject to exchange rate fluctuation in transactional and functional currency. We have not taken any protective measures against exchange rate fluctuations, such as purchasing hedging instruments with respect to such fluctuations, because of the historically stable exchange rate between the Japanese yen, Korean won and the U.S. dollar.

Cost of Component Revenues.

								
 	Three Months Ended	
 	March 28, 2015	 	March 29, 2014	
Cost of component revenues (in millions):	$	5.3		 	$	4.2		
Cost of component revenues as a % of net component revenues	74.1	%	 	100.0	%	
Cost of component revenues, which is comprised of materials, labor and manufacturing overhead related to the production of our products decreased as a percentage of revenues in 2015 as compared to 2014 due an increase in sales of military products which have higher gross margins as compared to our other products.
Research and Development.  Research and development (R&D) expenses are incurred in support of internal development programs or programs funded by agencies or prime contractors of the U.S. government and commercial partners. In fiscal year 2015, our R&D expenditures will be related to our display products and wearable technologies. R&D revenues associated with funded programs are presented separately in revenue in the statement of operations. Research and development costs include staffing, purchases of materials and laboratory supplies, circuit design costs, fabrication and packaging of display products, and overhead. For the three months ended March 28, 2015 and March 29, 2014 , R&D expense was as follows (in millions):

								
 	Three Months Ended	
 	March 28, 2015	 	March 29, 2014	
Funded	$	1.5		 	$	0.9		
Internal	3.4		 	4.2		
Total research and development expense	$	4.9		 	$	5.1		
R&D expense for the three months ended March 28, 2015 was essentially flat as compared to the prior year. Internal R&D cost decreased and Funded R&D cost increased for the three months ended March 28, 2015, as more resources were allocated to support funded programs as compared to the same period in the prior year.
Selling, General and Administrative.  Selling, general and administrative (S,G&A) expenses consist of the expenses incurred by our sales and marketing personnel and related expenses, and administrative and general corporate expenses.

								
 	Three Months Ended	
 	March 28, 2015	 	March 29, 2014	
Selling, general and administration expense (in millions):	$	4.4		 	$	5.0		
Selling, general and administration expense as a % of revenues	47.4	%	 	106.4	%	
S,G&A expenses declined in the first quarter of 2015 as compared to the same quarter in 2014 primarily as a result of lower professional fees and patent expenses.

Other Income and Expense

								
 	Three Months Ended	
 	March 28, 2015	 	March 29, 2014	
Other income and expense (in millions):	$	2.1		 	$	0.5		
Other income and expense, net, is primarily composed of interest income, foreign currency transaction and remeasurement gains and losses incurred by our Korean and UK-based subsidiaries and gains and losses resulting from the

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impairment or sale of investments. During the three months ended March 28, 2015 we sold shares of an investment and recorded a $2.1 million gain. During the three months ended March 28, 2015 and March 29, 2014 , we recorded $0.2 million of foreign currency losses and $0.2 million of foreign currency gains, respectively. For the three months ended March 28, 2015, we recorded a non-cash gain of $1.3 million as a result of recording warrants determined to be derivative assets. We received the warrants in August 2013 as part of a restructuring of debt owed by a company to us. Upon receipt of the warrants, we should have recorded the value of the warrants of approximately $352,000 in our consolidated financial statements. Subsequently, we should have marked to market the warrants at the end of each reporting period. Had we recorded the warrants in our consolidated consolidated financial statements and marked to market the warrants as of December 28, 2013 and December 27, 2014, we would have recorded gains in our Statement of Operations of approximately $646,000 and $171,000, respectively. In the first quarter of 2015, we recorded the warrants in our consolidated financial statements and as a result recorded a gain of approximately $1.3 million with $817,000 attributed to prior periods. 
Equity Losses in Unconsolidated Affiliates.  For the three months ended March 29, 2014 , the equity loss in unconsolidated affiliate consists of our approximate 12% share of the losses of KoBrite, incurred prior to our writing the investment off.
Tax Provision.  For the three months ended March 28, 2015 , we recorded a tax provision of $12,500 for estimated state taxes as compared to a tax benefit of $143,000 for the three months ended March 29, 2014 . The tax benefit recorded for the three month period ended March 29, 2014 was a result of the net movement in estimated foreign withholding on anticipated future remitted earnings of an international subsidiary.
Net Income Attributable to Noncontrolling Interest.  We own approximately 93% of the equity of Kowon, approximately 58% of the equity of Intoware, and 80% of the equity of eMDT. Net loss attributable to noncontrolling interest on our consolidated statement of operations represents the portion of the results of operations of our majority owned subsidiaries which is allocated to the shareholders of the equity interests not owned by us. The change in net income attributable to noncontrolling interest is the result of the change in the results of operations of Kowon, Intoware and eMDT for the three month period ended March 28, 2015 .
Liquidity and Capital Resources
As of March 28, 2015 , we had cash and equivalents and marketable securities of $87.1 million and working capital of $99.2 million compared to $90.9 million and $86.7 million, respectively, as of December 27, 2014 . The change in cash and equivalents and marketable securities was primarily due to net outflow of cash used in operating activities of $5.5 million, partially offset by cash provided by investing activities of $3.3 million.
Cash and marketable debt securities held in U.S. dollars:

				
 	 	
Domestic	$	74,206,829		
Foreign	10,642,660		
Subtotal cash and marketable debt securities	84,849,489		
Cash and marketable debt securities held in other currencies and converted to U.S. dollars	2,296,707		
Total cash and marketable debt securities	$	87,146,196		
We have no plans to repatriate the cash and marketable debt securities held in our foreign subsidiaries FDD and Intoware and, as such, we have not recorded any deferred tax liability with respect to such cash. The operations at our Korean facility, Kowon, have ceased. Kowon has approximately $12.0 million of cash and marketable debt securities which we anticipate will eventually be remitted to the U.S. and, accordingly, we have recorded deferred tax liabilities associated with its unremitted earnings.
We lease facilities located in Westborough, Massachusetts, Santa Clara, California and Scotts Valley, California under non-cancelable operating leases. The Westborough, Santa Clara and the Scotts Valley leases expire in 2023, 2016 and 2015, respectively.
We lease a facility in Dalgety Bay, Scotland which expires in 2016, and also lease two facilities in Nottingham, United Kingdom, which expire in 2016 and 2017.
We expect to expend between $2 million and $3 million on capital expenditures over the next twelve months.
As of March 28, 2015 , we had U.S. federal and state tax loss carry-forwards, which may be used to offset U.S. future federal and state taxable income. We also had tax loss carry-forwards generated in our foreign subsidiaries which may be used

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to offset future foreign taxable income. We may be subject to alternative minimum taxes, foreign taxes and state income taxes depending on our taxable income and sources of taxable income.
Historically, we have financed our operations primarily through public and private placements of our equity securities and cash generated from operations. We believe our available cash resources will support our operations and capital needs for at least the next twelve months.
Seasonality
There has been no seasonal pattern to our sales in fiscal years 2015 and 2014.
Contractual Obligations
The following is a summary of our contractual payment obligations for operating leases as of March 28, 2015 :

																						
Contractual Obligations	Total	 	Less than 1 year	 	1-3 Years	 	3-5 years	 	More than 5 years	
Operating Lease Obligations	$	6,122,000		 	$	1,238,000		—		$	2,276,000		 	$	1,915,000		693		$	693,000		

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	
We invest our excess cash in high-quality U.S. government, government-backed (Fannie Mae, FDIC guaranteed bonds and certificates of deposit) and corporate debt instruments, which bear lower levels of relative risk. We believe that the effect, if any, of reasonably possible near-term changes in interest rates on our financial position, results of operations, and cash flows should not be material to our cash flows or income. It is possible that interest rate movements would increase our unrealized gain or loss on interest rate securities. We are exposed to changes in foreign currency exchange rates primarily through our translation of our foreign subsidiaries' financial position, results of operations, and transaction gains and losses as a result of non U.S. dollar denominated cash flows related to business activities in Asia and Europe, and remeasurement of U.S. dollars to the functional currency of our U.K. and Kowon subsidiaries. We are also exposed to the effects of exchange rates in the purchase of certain raw materials which are in U.S. dollars but the price on future purchases is subject to change based on the relationship of the Japanese Yen to the U.S. dollar. We do not currently hedge our foreign currency exchange rate risk. We estimate that any market risk associated with our international operations is unlikely to have a material adverse effect on our business, financial condition or results of operation. Our portfolio of marketable debt securities is subject to interest rate risk although our intent is to hold securities until maturity. The credit rating of our investments may be affected by the underlying financial health of the guarantors of our investments. We use silicon wafers but do not enter into forward or futures hedging contracts.
		
Item 4.	Controls and Procedures	
Evaluation of Disclosure Controls and Procedures
Based on an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, as of the end of the period covered by this Quarterly Report on Form 10-Q, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)) were not effective. This conclusion was based on the existence of the material weakness in our internal control over financial reporting previously disclosed and discussed below and as more fully discussed in our Annual Report on Form 10-K for the year ended December 27, 2014.
As disclosed in our Annual Report on Form 10-K, Item 9A, for the year ended December 27, 2014, our management concluded that our internal control over financial reporting was not effective at December 27, 2014. We are actively engaged in the implementation of a remediation plan to ensure that controls contributing to this material weakness are designed appropriately and will operate effectively. We expect that our remediation efforts will continue, although the material weakness will not be considered remediated until our controls are operational for a period of time, tested and management concludes that these controls are operating effectively.
Notwithstanding the identified material weakness and management’s assessment that internal control over financial reporting was ineffective as of March 28, 2015, management believes that the consolidated financial statements contained in this Quarterly Report on Form 10-Q fairly present, in all material respects, our financial condition, results of operations and cash flows for the periods presented in conformity with accounting principles generally accepted in the United States of America.

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Changes in Internal Control over Financial Reporting
There were no changes in the Company’s internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that was conducted during the quarter ended March 28, 2015 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting, except for our remediation efforts described above.
Part II. OTHER INFORMATION

Item 1.	Legal Proceedings	
We may engage in legal proceedings arising in the ordinary course of business. Claims, suits, investigations and proceedings are inherently uncertain and it is not possible to predict the ultimate outcome of such matters and our business, financial condition, results of operations or cash flows could be affected in any particular period.
		
Item 1A.	Risk Factors	
In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for our fiscal year ended December 27, 2014 . The risks discussed in our Annual Report on Form 10-K could materially affect our business, financial condition and future results. The risks described in our Annual Report on Form 10-K are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition or operating results.
		
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	
Sale of Unregistered Securities
In the past three years we have not sold any securities which were not registered under the Securities Act.
Use of Proceeds
The information required by this item regarding use of proceeds by the Company is reported herein in Part 1, Item 2 under “Liquidity and Capital Resources”.  

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Item 6.	Exhibits	

			
Exhibit
No.	 	Description	
3.1	 	Amended and Restated Certificate of Incorporation (1)	
3.2	 	Amendment to Certificate of Incorporation (2)	
3.3	 	Amendment to Certificate of Incorporation (2)	
3.4	 	Fourth Amended and Restated By-laws (3)	
10.12	 	Eighth Amended and Restated Employment Agreement between the Company and Dr. John C.C. Fan, dated as of December 31, 2014 *	
31.1	 	Certification of John C.C. Fan, Chief Executive Officer, filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350) *	
31.2	 	Certification of Richard A. Sneider, Chief Financial Officer, filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350) *	
32.1	 	Certification of John C.C. Fan, Chief Executive Officer, furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350) **	
32.2	 	Certification of Richard A. Sneider, Chief Financial Officer, furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350) **	
101.INS	 	XBRL Instance Document*	
101.SCH	 	XBRL Taxonomy Extension Schema Document*	
101.CAL	 	XBRL Taxonomy Calculation Linkbase Document*	
101.DEF	 	XBRL Taxonomy Extension Definition Linkbase Document*	
101.LAB	 	XBRL Taxonomy Label Linkbase Document*	
101.PRE	 	XBRL Taxonomy Presentation Linkbase Document*	

 *	Submitted electronically herewith	
		
**	Furnished and not filed herewith	
		
(1)	Filed as an exhibit to Registration Statement on Form S-1, File No. 33-57450, and incorporated herein by reference.	
		
(2)	Filed as an exhibit to Quarterly Report on Form 10-Q for the quarterly period July 1, 2000 and incorporated herein by reference.	
		
(3)	Filed as an exhibit to Current Report on Form 8-K filed on December 12, 2008 and incorporated herein by reference.	
Attached as Exhibit 101 to this report are the following formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Balance Sheets at March 28, 2015 and December 27, 2014 , (ii) Consolidated Statements of Operations for the three months ended March 28, 2015 and March 29, 2014 , (iii) Consolidated Statement of Comprehensive Loss for the three months ended March 28, 2015 and March 29, 2014 , (iv) Consolidated Statements of Stockholders’ Equity for the three months ended March 28, 2015 , (v) Consolidated Statements of Cash Flows for the three months ended March 28, 2015 and March 29, 2014 , and (vi) Notes to Unaudited Condensed Consolidated Financial Statements.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

					
 	 	 	KOPIN CORPORATION
(Registrant)	
 	 	 	 	 	
Date:	May 11, 2015	 	By:	/ S /    John C.C. Fan         	
 	 	 	 	John C.C. Fan	
 	 	 	 	President, Chief Executive Officer and
Chairman of the Board of Directors	
 	 	 	 	(Principal Executive Officer)	
 	 	 	 	 	
Date:	May 11, 2015	 	By:	/ S /    R ICHARD  A. S NEIDER        	
 	 	 	 	Richard A. Sneider	
 	 	 	 	Treasurer and Chief Financial Officer	
 	 	 	 	(Principal Financial and Accounting Officer)	

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EIGHTH AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS AGREEMENT, entered into as of the 31st day of December, 2014, amends and restates the Seventh Amended and Restated Agreement, dated as of the 8th day of December 2010, by and between KOPIN CORPORATION, a Delaware corporation with its principal place of business at 125 North Drive, Westborough, MA 01581 (the “ Employer ”), and John C. C. Fan , (the “ Employee ”), as first amended and restated as of May 1, 1995.
1. Freedom to Contract . The Employee represents that he is free to enter into this Agreement, that he has not made and will not make any agreements in conflict with this Agreement, and will not disclose to the Employer, or use for the Employer’s benefit, any trade secrets or confidential information now or hereafter in the Employee’s possession which is the property of any other party.
2. Employment . The Employer hereby employs the Employee, and the Employee hereby accepts his employment by the Employer, upon the terms and conditions set forth herein.
3. Effective Date and Term . This Agreement shall take effect as of January 1, 2015 (the “ Effective Date ”), and shall continue thereafter in full force and effect through December 31, 2017, unless terminated prior to such time in accordance with the provisions of this Agreement (the “ Employment Term ”).
4. Title and Duties; Extent of Services . The Employee shall promote the business and affairs of the Employer as President and Chief Executive Officer of the Employer, with responsibility for performing such duties consistent with such position as the Board of Directors may from time to time designate. As long as he is employed hereunder, the Employee shall also continue to serve, if nominated by the Nominating Committee of the Board of Directors and elected by the Shareholders, as a member of the Board of Directors of the Employer.
5. Termination Rights of the Parties . The employment of the Employee by the Employer under this Agreement may be terminated at any time by either the Employee or Employer upon 30 days’ prior written notice of such termination to the other.
6. Compensation . Employee shall continue to be paid a salary at an annual rate of Five Hundred Twenty-Five Thousand Dollars ($525,000) on the regularly scheduled pay dates for executives. Subject to Section 9, the Board of Directors, in its sole discretion, shall have the absolute right to determine the Employee’s salary and benefits for each subsequent fiscal year during the term hereof; provided that in no event shall such salary or such benefits be reduced during the Employment Term unless the Employer implements a substantially similar reduction for all senior executive employees of the Employer. The Employer agrees to diligently review and consider alternative means of providing the Employee with additional tax advantaged compensation.
7. Inventions and Proprietary Information .

7.1 Inventions . Employee shall inform the Employer using the established procedures promptly and fully of all     inventions, improvements, discoveries, know-how, designs, processes, formulae and techniques, and any related suggestions and ideas (hereinafter “Inventions”), whether patentable or not, which are solely or jointly conceived or made by Employee, during the period of Employee’s employment by the Employer, whether during or out of Employee’s usual hours of work. The Employer shall own all right, title and interest to those inventions (hereinafter “Employer Inventions”) which are: (a) within the scope of the Employer’s business, which includes areas in which research is being conducted and areas of technical or market investigation; and/or (b) related to work done for the Employer by Employee. Employee hereby assigns and agrees to assign to the Employer Employee’s entire right, title and interest in all Employer Inventions and any patents, design patents, and any other forms of intellectual property resulting therefrom. Employee shall protect the Employer’s right to patent Employee’s Employer Inventions by keeping written records, which are witnessed and dated, concerning dates of conception and reduction to practice, and Employee shall not publish information concerning Employer Inventions without prior approval from the Employer. Employee shall also, during and after Employee’s employment, execute such written instruments and render such other assistance as the Employer shall reasonably request to obtain and maintain patents, design patents, or other forms of protection on any Employer Inventions and to vest and confirm in the Employer its entire right, title and interest therein. In this regard, Employee shall be reimbursed by the Employer for actual expenses incurred and, if no longer an employee of the Employer, shall be reasonably compensated for assistance rendered.

7.2 Proprietary Information .
(a) Employee understands that as a consequence of Employee’s employment by the Employer, proprietary data and confidential information (both hereinafter referred to as “ Information ”) relating to the business of the Employer may be disclosed to Employee or developed by Employee which is not generally known in the Employer’s trade and

which is of considerable value to the Employer. Such Information includes, without limitation, information about trade secrets, the Employer Inventions (as previously defined), patents, licenses, research projects, costs, profits, markets, sales, customer lists, plans for future development, and any other information of a similar nature to the extent not generally known in the trade. Employee acknowledges and agrees that Employee’s relationship to the Employer with respect to such Information shall be fiduciary in nature. Employee shall not make any use of any such Information except in the performance of Employee’s work for the Employer; Employee shall maintain such Information in confidence; and Employee shall not disclose to any person not employed by the Employer any such Information at any time either during or after Employee’s employment or use any such Information in connection with other employment, except as authorized, in writing, by a duly empowered officer of the Employer.
(b) Employee shall deliver promptly to the Employer on termination of Employee’s employment, or at any time the Employer so requests, all memoranda, notes, records, reports, manuals, drawings, blueprints, plans, customer lists, pricing and/or cost data, and all other property or materials belonging to the Employer, including all copies thereof, which Employee then possesses or has under Employee’s control.
(c) Employee covenants that there are no Inventions and/or patents within the scope of the Employer’s business in which Employee held an interest prior to the date of this Agreement and which are not subject to this Agreement.

7.3 Remedies . Employee recognizes that irreparable injury may result to the Employer, its business and property, in the event of a breach of any of the agreements, assurances and understandings contained herein. Employee further recognizes that in the event of such a breach, or the substantial likelihood that such a breach will occur, the Employer intends to take legal action, and to seek injunctive relief if available, in accordance with the language and spirit of this Agreement in order to protect fully its interests and property. For the period beginning with the consummation of a Change in Control, the Employer agrees to pay as incurred, to the full extent permitted by law, all legal fees and expenses which the Employee may reasonably incur as a result of any contest, dispute or litigation by the Employee or others of the validity or enforcement of, or liability under, any provision of this Agreement unless the Employee is not the prevailing party in such contest, dispute or litigation in which event the Employee shall also repay any legal fees or expenses previously advanced by the Employer in the same connection.
8. Covenant Not to Compete .
(a) The Employee recognizes that the Employer is engaged in the development and sale of wearable hands-free voice and gesture controlled wireless computing and communication headsets in Massachusetts and throughout the United States and the world and in the development of liquid crystal electronic imaging devices and display products based thereon (collectively, the “ Principal Business ”). In the event of the termination of the Employee’s employment hereunder, voluntarily or involuntarily, and so long as the Employer is not in material breach of its obligations to the Employee hereunder, the Employee agrees that, for a period of twelve (12) months from the date of such termination, he will neither (i) engage in the Principal Business directly for himself, or in conjunction with or on behalf of any commercial entity, or (ii) work as an employee in the Principal Business for any commercial entity, where either (A) the Employee’s duties in the course of any such activities would be substantially similar to those he has performed for the Employer hereunder or (B) the Employee’s duties in the course of such activities would involve disclosure or use of any confidential or proprietary information relating to the business of the Employer which he may in any way acquire by reason of his employment by the Employer. The Employee’s obligation under this Section 8 shall extend to all geographical areas of the United States and the world in which the Employer, as set forth above, carries on business, either directly or indirectly, including, but not limited to, places where the Employer has a place of business, has employees or representatives, or has advertised or sold any products during the time period specified in this section.
(b) The Employee further agrees that for a period of twelve (12) months from the date of termination of his employment, he will not on behalf of himself or any commercial competitor of the Employer, compete for, or engage in the solicitation of, with respect to the Employer’s products or services, any commercial customer of the Employer, that he has, during the one year immediately preceding such termination, solicited or serviced on behalf of the Employer or that has been so solicited or serviced, during such period, by any person under the Employee’s supervision.
(c) The Employee further agrees that for a period of twelve (12) months after the date of termination of his employment, he will not, on behalf of himself or any other commercial competitor of the Employer, solicit or attempt to solicit for employment, recruit or hire any employee or independent contractors of the Employer (or any person who was an employee or independent contractor of the Employer during the six (6) month period prior to such activity by the Employee), or induce, attempt to induce or encourage any such person to terminate his or her association with the Employer.
(d) In the event of any violation of the foregoing provisions of this Section 8, the Employer shall be entitled, in addition to any other rights or remedies it may have, to injunctive relief, it being agreed that the damages which the Employer would sustain upon any such violation are difficult or impossible to ascertain in advance and that the Employee’s violations may cause irreparable harm to the Employer.
9. Post-Termination and Related Matters .
1. Termination by Employer without Cause; Resignation for Good Reason . If prior to the expiration of the Employment Term (i) the Employee is terminated by the Employer without Cause (as defined in Section 9.2(b) below) other than by reason of disability, (ii) the Employee dies, or (iii) the Employee resigns for Good Reason (as defined in Section 9.2(c)

below) within twelve (12) months following a Change in Control (as defined in Section 9.2(d) below) of the Employer, Employer shall pay the following amounts and provide the following benefits to the Employee:
(a) an amount equal to the sum of the Employee’s earned but unpaid base salary and pro-rated annual bonus through the date of Employee’s termination, which prorated annual bonus shall be calculated by reference to his then current year’s target annual bonus, the base salary portion of such amount shall be paid on the Employer’s next regularly scheduled pay date for executives following the Termination Date, and the bonus portion of such amount shall be paid within thirty (30) days following the Termination Date;
(b) $1,500,000, which amount will be paid to Employee in twenty-four (24) equal monthly installments during the two-year period following the Termination Date commencing with the next regularly scheduled pay date for executives following the Termination Date;
(c) an amount equal to the value of Employee’s accrued but unpaid vacation days, which amount shall be paid on the Employer’s next regularly scheduled pay date for executives following the Termination Date;
(d) $30,000 per year (commencing with the next regularly scheduled pay date for executives following the Termination Date) for ten (10) years following the Employee’s Termination Date to enable the Employee (or, in the event of the death of the Employee, his spouse) to purchase for himself and his spouse supplemental health insurance coverage (including Medicare Part B, Medicare Part D, and Medigap coverage) beyond the coverage that they may obtain from Medicare Part A; and
(e) immediately vest all options to purchase Employer Stock, all stock appreciation rights, all restricted stock awards, and any other compensatory equity awards, granted by the Employer to the Employee.
Any amounts payable under this Section 9.1 shall be subject to applicable tax withholding. It is the intention of the parties that this Agreement comply with and be interpreted in accordance with Section 409A of the Internal Revenue Code of 1986, as amended and the United States Department of Treasury regulations and other guidance issued thereunder (collectively, “ Section 409A ”). Each payment in a series of payments provided to the Employee pursuant to this Agreement will be deemed a separate payment for purposes of Section 409A. If any amount payable under this Agreement upon a termination of employment is determined by the Employer to constitute nonqualified deferred compensation for purposes of Section 409A (after taking into account the short-term deferral exception and the involuntary separation pay exception of the regulations promulgated under Section 409A which are hereby incorporated by reference), such amount shall not be paid unless and until the Employee's termination of employment also constitutes a “separation from service” from the Employer for purposes of Section 409A. In the event that the Employee is determined by the Employer to be a “specified employee” for purposes of Section 409A at the time of his separation from service with the Employer, then any payments of nonqualified deferred compensation (after giving effect to any exemptions available under Section 409A) otherwise payable to the Employee during the first six (6) months following his separation from service shall be delayed and paid in a lump sum upon the earlier of (x) the Employee’s date of death, or (y) the first day of the seventh month following the Employee’s separation from service, together with interest on such delayed payments at the prime rate as published in the Eastern edition of The Wall Street Journal on the business day immediately preceding the Employee’s separation from service and the balance of the installments (if any) will be payable in accordance with their original schedule. To the extent any expense, reimbursement or in-kind benefit provided to the Employee constitutes nonqualified deferred compensation for purposes of Section 409A, (i) the amount of any expense eligible for reimbursement or the provision of any in-kind benefit with respect to any calendar year shall not affect the amount of expense eligible for reimbursement or the amount of in-kind benefit provided to the Employee in any other calendar year, (ii) the reimbursements for expenses for which the Employee is entitled to be reimbursed shall be made on or before the last day of the calendar year following the calendar year in which the applicable expense is incurred, and (iii) the right to payment or reimbursement or in-kind benefits hereunder may not be subject to liquidation for any other benefit.

2. Other.
(a) “ Termination Date ” shall mean the earlier of (i) the expiration of the Employment Term, or (ii) the date the Employee’s employment is terminated (x) by his death, then the date of his death, (y) by his long-term disability, then the date of his occurrence of his long-term disability, or (z) for any other reason (including the Employee’s resignation for Good Reason following a Change in Control), then the date on which such termination of employment is to be effective pursuant to the notice of termination to be given by the party terminating the relationship.
(b) “ Cause ” shall mean (i) willful misconduct in the performance of Employee’s duties and responsibilities, (ii) willful nonperformance of Employee’s duties and responsibilities, (iii) willful contravention of written instructions of the Board of Directors of the Employer, (iv) breach by Employee of a material term of this Agreement, (v) Employee’s breach of trust, duty of loyalty or fiduciary duty owed to the Employer, Employer’s Board of Directors or Employer’s shareholders, of (vi) Employee’s conviction of, or written admission or plea of nolo contendere to, a felony or crime of moral turpitude, or Employee’s imprisonment for any crime; provided , however , that such termination may not occur until thirty (30) days after Employer’s Board of Directors has given Employee a written notice specifying the ground(s) for such termination for Cause and an opportunity during such thirty (30) day notice period to have a hearing concerning such notice before the Board of Directors of the Employer, and then only if the Employee has failed to cure the Cause giving rise to such potential termination, if such Cause is curable. Any Cause that results in adverse publicity concerning the Employer or

damage to the Employer’s business or reputation shall be deemed to be incurable.
(c) “ Good Reason ” shall mean the occurrence, without the Employee’s written consent, of any of the following events or circumstances:
(i) the assignment to the Employee of duties that are inconsistent in any material respect with the Employee’s position (including status, offices, titles, and reporting requirements), authority, or responsibilities, or any other action or omission by the Employer that results in a material diminution in such position, authority, or responsibility, including the failure to appoint Employee as the Chief Executive Officer of the combined or acquiring entity reporting to its Board of Directors following a Change in Control;
(ii) a reduction in the Employee’s base salary, other than as part of a similar reduction in base salary for all senior executive employees of the Employer but not to exceed 15% of the Employee’s base salary;
(iii) the failure by the Employer to (1) continue in effect any material compensation or benefit plan or program in which the Employee participates, or that is applicable to the Employee, unless an equitable arrangement providing substantially similar benefits in the aggregate (embodied in an ongoing substitute or alternative plan) has been made with respect to such plan or program, (2) continue the Employee’s participation therein (or in such substitute or alternative plan) on a basis not materially less favorable, in terms of the monetary value of benefits provided , or (3) award annual bonuses to the Employee in amounts and in a manner substantially consistent with the Employer’s past practice in light of the Employer’s financial performance;
(iv) a change by the Employer in the location at which the Employee performs the Employee’s principal duties for the Employer to a new location that is both: (1) further from the Employee’s principal residence, and (2) more than 50 miles from the location at which the Employee performed the Employee’s principal duties for the Employer;
(v) the failure of the Employer to obtain the agreement from any successor to the Employer to assume and agree to perform this Agreement, as required by Section 9.3;
(vi) any failure of the Employer to pay or provide to the Employee any portion of the Employee’s compensation or benefits within seven (7) days of the date such compensation or benefits are due, unless such failure to pay is inadvertent and is cured within thirty (30) days with interest at LIBOR plus 2%; or
(vii) any material breach by the Employer of this Agreement.
A termination by the Employee for Good Reason may not occur until thirty (30) days after the Employee has given the Board of Directors written notice specifying the ground(s) for such termination for Good Reason and an opportunity during such thirty (30) day notice period for the Board of Directors of the Employer to discuss such notice with the Employee, and then only if the Employer has failed to cure the event or circumstance (including compensation for any losses or damages resulting therefrom) giving rise to such Good Reason, if such Good Reason is curable.
(d) “ Change in Control ” shall mean:
(i) The acquisition by any individual, entity, or group within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”) (a “ Person ”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or more of either (1) the then outstanding shares of the common stock of the Employer (“ Stock ”), or (2) the combined voting power of the then outstanding securities of the Employer ordinarily having the right to vote at elections of directors (“ Outstanding Employer Voting Securities ”); provided, however, that the following acquisitions shall not constitute a Change in Control under this Section 9(d)(i): (A) any acquisition directly from the Employer (excluding an acquisition by virtue of the exercise of a conversion privilege), (B) any acquisition by the Employer or by any corporation controlled by the Employer; (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Employer or any corporation controlled by the Employer; or (D) any acquisition by any corporation pursuant to a consolidation or merger, if, following such consolidation or merger, the conditions described in clauses (1), (2) and (3) of paragraph (iii) of this Section 9(d) are satisfied; or
(ii) Individuals who, as of the date hereof or of the most recent renewal hereof, constitute the Board of Directors (the “ Incumbent Board ”) ceasing for any reason to constitute at least a majority of the Board of Directors; provided, however, that any individual becoming a director (other than a director designated by a Person who has entered into an agreement with the Employer to effect a transaction described in paragraphs (i) or (iii) of this Section 9(d)) subsequent to the date hereof whose election, or nomination for election by the Employer’s shareholders, was approved by a vote or resolution of at least a majority of the directors then composing the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-1l of Regulation 14A promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board of Directors; or
(iii) The consummation of the transactions contemplated by a resolution of the Board of Directors approving an agreement of consolidation of the Employer with or merger of the Employer into another corporation or business entity in each case, unless, following such consolidation, or merger, (1) more than 50% of, respectively, the then outstanding shares of common stock of the corporation resulting from such consolidation or merger and/or the combined voting power of the then outstanding voting securities of such corporation or business entity entitled to vote generally in the election

of directors (or other persons having the general power to direct the affairs of such entity) is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Stock and Outstanding Employer Voting Securities immediately prior to such consolidation or merger in substantially the same proportions as their ownership, immediately prior to such consolidation or merger, of the Stock and Outstanding Employer Voting Securities, as the case may be, (2) no Person (excluding the Employer, any employee benefit plan (or related trust) of the Employer or such corporation or other business entity resulting from such consolidation or merger) and any Person beneficially owning, immediately prior to such consolidation or merger, directly or indirectly, 50% or more of the Stock or Outstanding Employer Voting Securities, as the case may be, beneficially owns, directly or indirectly, 50% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such consolidation or merger and/or the combined voting power of the then outstanding voting securities of such corporation or business entity entitled to vote generally in the election of its directors (or other persons having the general power to direct the affairs of such entity) and (3) at least a majority of the members of the board of directors (or other group of persons having the general power to direct the affairs of the corporation or other business entity) resulting from such consolidation or merger were members of the Incumbent Board at the time of the execution of the initial agreement providing for such consolidation or merger; provided, that any right to receive compensation pursuant to Section 9 above which shall vest by reason of the action of the Board of Directors pursuant to this paragraph (iii) shall be divested upon (A) the rejection of such agreement of consolidation or merger by the stockholders of the Employer or (B) its abandonment by either party thereto in accordance with its terms; or
(iv) The consummation of the transactions contemplated by the adoption by the requisite majority of the whole Board of Directors, or by the holders of such majority of stock of the Employer as is required by law or by the Certificate of incorporation or By-Laws of the Employer as then in effect, of a resolution or consent authorizing (1) the dissolution of the Employer or (2) the sale or other disposition of all or substantially all of the assets of the Employer, other than to a corporation or other business entity with respect to which, following the such sale or other disposition, (A) more than 50% of, respectively, the then outstanding shares of common stock of such corporation and/or the combined voting power of the outstanding voting securities of such corporation or other entity to vote generally in the election of its directors (or other persons have the general power to direct its affairs) is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Stock and Outstanding Employer Voting Securities immediately prior to such sale or other disposition in substantially the same proportion as their ownership, immediately prior to such sale or other disposition, of the Stock and/or Outstanding Employer Voting Securities, as the case may be, (B) no Person (excluding the Employer and any employee benefit plan (or related trust) of the Employer or such corporation or other business entity) and any Person beneficially owning, immediately prior to such sale or other disposition, directly or indirectly, 50% or more of the Stock and/or Outstanding Employer Voting Securities, as the case may be, beneficially owns, directly or indirectly, 50% or more of, respectively, the then outstanding shares of common stock of such corporation and/or the combined voting power of the then outstanding voting securities of such corporation or other business entity entitled to vote generally in the election of directors (or other persons having the general power to direct its affairs), and (C) at least a majority of the members of the board of directors or group of persons having the general power to direct the affairs of such corporation or other entity were members of the Incumbent Board at the time of the execution of the initial agreement of action of the Board of Directors providing for such sale or other disposition of assets of the Employer; provided, that any right to receive compensation pursuant to Section 9 above which shall vest by reason of the action of the Board of Directors or the stockholders pursuant to this subsection shall be divested upon the abandonment by the Employer of such dissolution, or such sale of or other disposition of assets, as the case may be.
3. Successor. The failure of any successor (whether direct or indirect, by purchase, merger, consolidation, or otherwise) to all or substantially all of the business or assets of the Employer to assume this Agreement or to perform the Employer’s obligations under this Agreement shall, at the election of the Employee, be deemed to constitute a termination of the Employee by the Employer without Cause.
4. Mitigation . The Employee shall not be required to mitigate the amount of any payment or benefits provided for in this Agreement by seeking other employment or otherwise. Further, the amount of any payment or benefits provided for in this Agreement shall not be reduced by any compensation earned by the Employee as a result of employment by another employer, by retirement benefits, by offset against any amount claimed to be owed by the Employee to the Employer or otherwise.
5. Indemnification . To the maximum extent permitted under Delaware law as from time to time in effect, the Employer shall indemnify the Employee and hold him harmless from, against, and in respect of any and all damages, deficiencies, actions, suits, proceedings, demands, assessments, excise taxes, judgments, claims, losses, costs, expenses, obligations, and liabilities arising from or relating to the performance of the Employee’s duties and responsibilities under this Agreement. To the maximum extent permitted under Delaware law, the Company shall advance all expenses incurred by or on behalf of the Employee in connection with any proceeding arising in connection with the Employer’s obligations under this Section 9.5 within thirty (30) days after the receipt by the Company of a statement or statements from the Employee requesting such advance or advances from time to time, whether prior to or after final disposition of such proceeding. Such statement or statements shall reasonably evidence the expenses incurred by the Employee and shall include or be preceded or accompanied by a written undertaking by or on behalf of the Employee to repay any expenses advanced if it shall ultimately be determined

that the Employee is not entitled to be indemnified against such expenses.
6. D&O Coverage . For so long as, and only for so long as, the Employer continues to maintain directors’ and officers’ liability insurance, the Employer shall maintain a policy covering the Employee in the amount of $5,000,000 in the aggregate, or such greater amount of coverage as may be provided by the Employer to directors and officers generally after the Effective Date. The Employer will also use commercially reasonable efforts to obtain coverage for Employee under any such policy for six (6) years after Employee ceases being an officer or director.
7. Employer’s Obligations Upon Non-Renewal . If the parties do not extend or renew this Agreement upon the expiration of the Employment Term on terms that are, in the aggregate, comparable to the terms of this Agreement, then the Employer shall pay to the Employee the amounts and provide the benefits (including vesting of equity awards) described in Section 9.1 of this Agreement as if the Employee had been terminated by the Employer without Cause. The obligations and rights of the parties to this Agreement under Sections 7 through 10 of this Agreement shall survive the expiration of this Agreement.
10. Provisions of General Application .
1. Governing Law . This Agreement and the rights and obligations of the parties hereunder shall be construed, interpreted and determined in accordance with the laws of the Commonwealth of Massachusetts.
2. Counterparts . This Agreement may be executed in any number of counterparts, each of which shall be an original and all of which, taken together, shall constitute one and the same instrument. In making proof of this Agreement it shall not be necessary to produce or account for more than one such counterpart.
3. Other Agreements . This Agreement represents the entire understanding and agreement between the parties as to the subject matter hereof. No prior, concurrent or subsequent agreement, whether written or oral, shall be construed to change, amend, alter, repeal or invalidate this Agreement, unless this Agreement is specifically identified in and made subject to such other written agreement.
4. Amendment . This Agreement may be amended only by a written instrument executed in one or more counterparts by the parties hereto.
5. Waiver . No consent to or waiver of any breach or default in the performance of any obligation hereunder shall be deemed or construed to be a consent to or waiver of any other breach or default in the performance of any of the same or any other obligation hereunder. Failure on the part of either party to complain of any act or failure to act of the other party or to declare the other party in default, irrespective of the duration of such failure, shall not constitute a waiver or rights hereunder and no waiver hereunder shall be effective unless it is in writing, executed by the party waiving the breach or default hereunder.
6. Headings . The headings of sections and subsections of this Agreement have been inserted for convenience of reference only and shall not be deemed to be a part of this Agreement or to affect the meaning of any of its provisions.
7. Severability . If any provision of this Agreement shall, in whole or in part, prove to be invalid for any reason, such invalidity shall affect only the portion of such provision which shall be invalid, and in all other respects this Agreement shall stand as if such invalid provision, or the invalid portion thereof, had not been a part hereof.
8. Notices and Other Communications . All notices and other communications required hereunder shall be effective if in writing and if delivered or sent by certified or registered mail, return receipt requested (a) if to the Employee, at his residence address first set forth above, with a copy to Arthur S. Meyers, Choate, Hall & Stewart LLP, Two International Place, Boston, MA 02110, and (b) if to the Employer, at 125 North Drive, Westborough, MA 01581, Attention: Chief Financial Officer, with a copy to John J. Concannon, III, Esq., Morgan, Lewis & Bockius, LLP, One Federal Street, Boston, MA 02110, or to such other persons or addresses as the parties hereto may specify by a written notice to the other from time to time.

IN WITNESS WHEREOF, this Agreement has been executed by the Employer, by its duly authorized officer, and by the Employee, as of the date first above written.

				
Date: December 31, 2014	 	 	 	
 	 	 	 	
Employer:	 	 	Employee:	
KOPIN CORPORATION	By:	 	/ S /    JOHN C.C. FAN   	
Morton Collins	 	 	John C.C Fan	
 	 	 	Chief Executive Officer	

Exhibit 31.1
CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
I, John C.C. Fan, certify that:
		
1.	I have reviewed this quarterly report on Form 10-Q of Kopin Corporation;	
		
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;	
		
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;	
		
4.	The Registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:	

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;	
		
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.	
		
(c)	Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and	
		
(d)	Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and	
		
5.	The Registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):	

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and	
		
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.	
Date:  May 11, 2015

	

By:	 	/ S /    J OHN  C.C. F AN        	
 	 	John C.C. Fan	
 	 	President and Chief Executive Officer	

Exhibit 31.2
CERTIFICATION OF THE CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
I, Richard A. Sneider, certify that:
		
1.	I have reviewed this quarterly report on Form 10-Q of Kopin Corporation;	
		
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;	
		
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;	
		
4.	The Registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:	

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;	
		
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.	
		
(c)	Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and	
		
(d)	Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and	
		
5.	The Registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):	

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and	
		
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.	
Date: May 11, 2015

	

By:	 	/ S /    R ICHARD  A. S NEIDER        	
 	 	Richard A. Sneider	
 	 	Chief Financial Officer	

Exhibit 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
The certification set forth below is hereby made solely for the purpose of satisfying the requirements of Section 906 of the Sarbanes-Oxley Act of 2002 and may not be relied upon or used for any other purposes.
In connection with the Quarterly Report of Kopin Corporation (the “Company”) on Form 10-Q for the period ended March 28, 2015 , as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, John C.C. Fan, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
A signed original of this written statement required by Section 906 or other document authenticating, acknowledging or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

	

 	Date:	May 11, 2015	
 	 	 	 	
 	By:	 	/ S /    J OHN  C.C. F AN        	
 	 	 	John C.C. Fan	
 	 	 	President and Chief Executive Officer	

Exhibit 32.2
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
The certification set forth below is hereby made solely for the purpose of satisfying the requirements of Section 906 of the Sarbanes-Oxley Act of 2002 and may not be relied upon or used for any other purposes.
In connection with the Quarterly Report of Kopin Corporation (the “Company”) on Form 10-Q for the period ended March 28, 2015 , as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Richard A. Sneider, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
A signed original of this written statement required by Section 906 or other document authenticating, acknowledging or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

	

 	Date:	May 11, 2015	
 	 	 	 	
 	By:	 	/ S /    R ICHARD  A. S NEIDER        	
 	 	 	Richard A. Sneider	
 	 	 	Chief Financial Officer