Sidoti2021 Fall Virtual Investor Conference

Sidoti 2021 FallVirtual Investor Conference

SAFE HARBOR STATEMENT

This document contains forward-looking statements. The words “believe,” “may,” “will,” “potentially,” “estimate,” “continue,” “anticipate,” “intend,” “could,” “would,” “project,” “plan,” “expect” and similar expressions that convey uncertainty of future events or outcomes are intended to identify forward-looking statements. Forward-looking statements may address the following subjects among others: growth forecast for the global microdisplay market; opportunities related to new and existing augmented reality/virtual reality (“AR/VR”) applications; the role that microdisplays are expected to play in the wearables and AR/VR market; growing demand for fixed-wing combat aircrafts; growth forecast for the riflescopes market and the U.S. armored vehicles market; expectations of long-term growth based on our current pipeline of programs; and future growth drivers for the AR/VR markets and our position to capitalize thereon. Forward-looking statements are inherently subject to risks and uncertainties which could cause actual results to differ materially from those in the forward-looking statements, including, without limitation, the following: our expectation that some products that are currently in R&D to go into production; our expectation that our new products to start at lower yields and for us to improve these yields over time; our expectation that our 2021 cost of product revenues as a percentage of product revenues to be negatively affected by new products; our expectation that we will to incur significant development costs in fiscal year 2021 to develop OLED display products and defense products; our ability to obtain raw materials and other goods as well as services from our suppliers as needed; the potential for customers to choose our competitors as their supplier; our ability to prosecute and defend our proprietary technology aggressively or successfully; our ability to retain personnel with experience and expertise relevant to our business; our ability to invest in research and development to achieve profitability even during periods when we are not profitable; our ability to continue to introduce new products in our target markets; our ability to generate revenue growth and positive cash flow, and reach profitability; the strengthening of the U.S. dollar and its effects on the price of our products in foreign markets; the impact of new regulations and customer demands relating to conflict minerals; our ability to obtain a competitive advantage in the wearable technologies market through our extensive portfolio of patents, trade secrets and non-patented know-how; our ability to grow within our targeted markets; the importance of small form factor displays in the development of defense, consumer, and industrial products such as thermal weapon sights, safety equipment, virtual and augmented reality gaming, training and simulation products and metrology tools; the suitability of our properties for our needs for the foreseeable future; our expectation not to pay cash dividends for the foreseeable future and to retain earnings for the development of our businesses; if we do not soon achieve and maintain positive cash flow and profitability, our financial condition will ultimately be materially adversely affected, and we will be required to reduce expenses, including our investments in research and development or raise additional capital; and our ability to support our operations and capital needs for at least the next twelve months through our available cash resources. Additional factors that could cause actual results to differ materially from those anticipated by our forward-looking statements are under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our most recent Annual Report (Form 10-K) or Quarterly Report (Form 10-Q) filed with the Securities and Exchange Commission. Forward-looking statements are made as of the date of this document, and we expressly disclaim any obligation or undertaking to update forward-looking statements except as otherwise required by the federal securities laws.

We may refer to information regarding potential markets for products and other industry data. We believe that all such information has been obtained from reliable sources that are customarily relied upon by companies in our industry. However, we have not independently verified any such information.

Kopin Confidential 2

KOPIN AT A GLANCE


Focus Leading provider of specialized solutions combining advanced microdisplay and optics technologies

Target Markets 2021 Defense (72%) and industrial/enterprise/consumer (28%) with sole source status on a number of key programs

Market Size Global microdisplay TAM forecasted to grow from $972M in 2018 to over $3.6B in 2025(2)

Patents >200 (primarily related to wearables)

Financials LTM (6/26/21) revenue of $45.0 million; clean balance sheet with no debt

Headquarters Westborough, MA

Focus

End Markets(1)

Market Size

Patents

Financials

Headquarters

(1) Percentages based on LTM (6/26/21) revenue. Defense includes research and development programs. Industrial/enterprise/consumer includes royalty and license fees. (2) Source: MarketsandMarkets Analysis, Microdisplay Market with COVID-19 Impact Analysis (July 2020).

Customers

REPRESENTATIVE PRODUCTS AND END PRODUCTS


Kopin Products: Displays, Modules and Subassemblies

Displays Modules

Customer End Products

Dust-Free Module

Subassemblies

Defense

Enterprise

Consumer

TIER 1 CUSTOMER BASE

Defense

Enterprise/Ind.

Consumer

New Vision


PROPRIETARY AMLCD MICRODISPLAY MANUFACTURING TECHNOLOGY

High Brightness LCD for Outdoor Applications

Lens CyberDisplay

Virtual Image

Si IC LCD CyberDisplay


Friend/FOE

875m

230.63° 37 23.516 122 02.625

WHY CUSTOMERS CHOOSE KOPIN – WE SOLVE PROBLEMS LIKE THIS

GPS & Compass

=

Maintain Fixed Reticle

High ResolutionDVO Always Available

DVO Stays on WeaponRetains Boresight

Visual and Sensor FusionSWIR, Thermal, I2

Target ID

Rapid Targeting

> First Shot Accuracy

Active Target ReticleWind & Range

Generic Display Engine

RetrofitRevisedOptics

+


Kopin is the only company that offers solutions addressing applications requiring leading edge expertise in microdisplays and optics

GROWTH DRIVER: MILITARYSOLE SOURCE SUPPLIER ON KEY DEFENSE PROGRAMS IN PRODUCTION

F-35 Strike FighterLCDs for pilot helmet visor

• World’s most advanced jet fighter• Announced $2.7M follow-on order in April 2020• Program scheduled for production through 2030 –

early innings of monetization

U.S. Army FWS-ILCD eyepiece assemblies for next-gen thermal imaging rifle sights

• Selected by one of two prime contractors• Program – early innings of monetization

Best-in-class, ruggedized technology enables sole source position on key Defense programs

Program CommentaryCustomer Kopin ProductSole

Source Supplier*

* Sole source supplier to prime contractor. Kopin Confidential 8

L3Harris NGSW-FCU.S. Army Helicopters

Full color LCD displays for helicopter pilots

U.S. Army M1A2

Sole Source Supplier*

Replacing CRTs with modern displaysFWS-CS

Sole Source Supplier*

Largest pipeline of programs in development in Kopin’s history sets the stage for long-term growth

GROWTH DRIVER MILITARY:STRONG MOMENTUM IN DEFENSE – PROGRAMS IN LRIP & DEVELOPMENT

* Represents sole source supplier to prime contractor. Kopin Confidential 9

Classified

Classified

SEPv4

GROWTH DRIVER ENTERPRISE AND INDUSTRIAL MARKETS

• Voice and gesture-controlled wearable devices• Provides actionable workflow insights from the “ground floor”

to the remote / distributed workforce

• Enables firefighters to see through smoke and measure temperature through integrated display in helmet

• In production with customers including Google, Vuzix, Realwear

• In production with 3M Scott Fire & Safety• In development with Chinese and European helmet

manufacturers

Google Glass Realwear hmt-1® 3M Scott Sight®

Enterprise and Industrial Public Safety


Rep

rese

ntat

ive

Prod

ucts

Use

Cas

esSt

atus

GROWTH DRIVER CONSUMER: AR/VR REPRESENTS AN ENORMOUS MARKET OPPORTUNITY

(1) Source: IDC, Worldwide Augmented and Virtual Reality Spending Guide.

Enterprise & Consumer AR/VR in Early Stages of Adoption

Adoption

Time

Early Adoption

Mass Adoption

Select AR/VR Players and Products

$11B

$103B

2019 2023

Global Spending on AR/VR(1)

4-year CAGR: 77% Today

Google Glass is a small, lightweight wearable computer with a transparent display Oculus is a head mounted

device that allows users to interact with 3D virtual

environments

Co-developed with Kopin; first VR glasses to support

HDR and designed for commercial applications

VRGlasses


Xiaomi Smart Glasses is able to display messages and notifications, make calls, navigate, capture photos, and translate text

Audio Glasses have sensors and hidden speakers, which pipe music to your ears.

The frames feature two-front facing cameras for capturing video and photos

Novel Anode Structure

Light Extraction Structure

GROWTH DRIVER CONSUMER: DIFFERENTIATED OLED TECHNOLOGY

IP 1

IP 3

IP 2

R G B

Double-Stack OLED StructureCore Intellectual Property

Color Filters

“White” OLED Emitter Layers

High Performance Si BackplaneEmbedded pixel array, row/column driver,

video input and processing, and programmable control

Anode

Cathode

Anode

Cathode

Charge Generation

Si Circuits

Double-StackOLED

Structure

Light Out

• Two OLED structures connected in series• Electron/hole pairs generate photons twice• Much higher efficiency than single stack

‒ Higher brightness at the same current‒ Much longer lifetime at high brightness


Proprietary backplane technology enables double-stack OLED displays and brightness required for Consumer AR

13

• LED microdisplay has potential for even higher brightness than OLED• Hybrid integration of Si backplane and InGaN LED Arrays by wafer

scale bonding• Si backplane and LED wafers processed separately

• Kopin Initially Developing a Monochrome Display• Color LED microdisplay is much more complex

• Blue LED arrays converted to Green and Red arrays via quantum dots• Efficiency of color conversion not high and lifetime is short

Epitaxial Growth LED Processing Kopin Backplane

Kopin Backplane

LED MICRODISPLAYS

COMPREHENSIVE IP PORTFOLIO

Breakdown of Patents

>200 pending or issued patents

Majority of patents are related to wearables

>20 patents related to OLED backplane technology

Headset

Display

ErgonomicDesignOptics

Other


BALANCE SHEET

Source: Public filings.Note: Financial statistics are rounded and may not exactly sum to the total as a result.

Cash and marketable securities $30.8

Accounts receivable 7.4

Inventory 6.3

Other current assets 5.5

PP&E and ROU 3.1

Equity investments 4.5

Other long-term assets 0.2

Total Assets $57.8

Accounts payable 5.1

Accrued expense and other 10.2

Operating lease liabilities 0.8

Long term liabilities 2.1

Total equity 39.6

Total Liabilities & equity $57.8

($ in millions)

6/26/21


INCOME STATEMENT HIGHLIGHTS

16

Q2 2021 Q2 2020

Revenue $9.9 $8.8

Gross profit (1) 0.9 1.9

R&D 3.9 2.2

SG&A 4.0 2.9

Operating loss (4.1) (1.1)

Net loss (3.8) (1.1)

Net loss per share (basic & diluted) $(0.04) $(0.01)

($ in millions, except per share amounts)

(1) Gross profit is calculated as net product revenues less cost of product revenues

CONCLUSION – INVESTMENT HIGHLIGHTS

Unique Market Position: Only player in the market that offers solutions addressing applications requiring leading edge expertise in microdisplays and optics1

Industry Leader: #1 microdisplay provider for defense and industrial end markets, serving as sole source supplier on a number of key programs, with critical technology and partnerships in place to drive growth in enterprise and consumer AR/VR

2

Attractive End Markets: Strong funding for key defense programs with high barriers to entry driven by secular tailwinds; enormous opportunity in enterprise and consumer AR/VR applications on the horizon3

Tier 1 Customer Base: Representative customers include Collins Aerospace, General Dynamics, Google, L3Harris, Leonardo DRS, Lockheed Martin, Realwear, and 3M Scott Fire & Safety4

Rich IP Portfolio: >200 patents and patent applications worldwide with core focus on wearables5


Sidoti2021 Fall Virtual Investor Conference

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