SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR l5(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 29, 1996 Commission file number 0-19882 KOPIN CORPORATION ----------------- (Exact name of registrant as specified in its charter) DELAWARE 04-2833935 -------- ---------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 695 MYLES STANDISH BLVD.,TAUNTON, MA 02780-1042 ------------------------------------ ---------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (508) 824-6696 -------------- Not Applicable -------------- Former name, former address, and former fiscal year, if changed since last report Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or l5(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 such filing requirements for the past 90 days. Yes X No __ --- Applicable only to corporate issuers: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding as of July 31, 1996 ----- ------------------------------- Common Stock, par value $ .01 10,919,207
KOPIN CORPORATION INDEX ----- Page No. ------- PART I - FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheets at 3 June 29, 1996 and December 31, 1995 Consolidated Statements of Operations for the 4 Three and six months ended June 29, 1996 and July 1, 1995 Consolidated Statements of Stockholders' Equity for the Six months ended June 29, 1996 and July 1, 1995 5 Consolidated Statements of Cash Flows for the 6 Six months ended June 29, 1996 and July 1, 1995 Notes to Consolidated Financial Statements 7 Item 2. Management's Discussion and Analysis of Financial Condition 9 and Results of Operations 9 PART II - OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security-Holders 12 Item 6. Exhibits and Reports on Form 8-K 12 SIGNATURES 13 2
KOPIN CORPORATION CONSOLIDATED BALANCE SHEETS (UNAUDITED) <TABLE> <CAPTION> June 29, 1996 December 31, 1995 -------------- ----------------- <S> <C> <C> ASSETS - --------------------------- Current assets: Cash and equivalents $18,735,343 $ 24,718,023 Marketable securities 13,288,442 17,278,954 Accounts receivable, net of allowance of $109,600 and $85,600 Billed 4,899,854 3,147,846 Unbilled 3,255,681 3,438,766 Inventory 6,851,140 6,402,190 Prepaid expenses and other current assets 1,374,502 1,984,612 ------------ ------------- Total current assets 48,404,962 56,970,391 Equipment and improvements: Equipment 19,386,479 19,258,354 Leasehold improvements 840,814 835,900 Furniture and fixtures 426,816 414,707 Equipment under construction 1,358,657 964,446 ------------ ------------- 22,012,766 21,473,407 Accumulated depreciation and amortization 10,634,744 9,902,444 ------------ ------------- 11,378,022 11,570,963 Other assets 3,167,241 3,438,334 Intangible assets 2,903,102 4,179,877 ------------ ------------- Total assets $65,853,327 $ 76,159,565 ============ ============= LIABILITIES AND STOCKHOLDERS' EQUITY - --------------------------- Current liabilities: Notes payable $ 500,000 $ 3,000,000 Accounts payable 9,999,737 7,712,508 Accrued payroll and expenses 1,288,719 808,826 Current portion of long-term obligations 980,179 629,643 Current portion of unearned revenue 92,004 92,004 ------------ ------------- Total current liabilities 12,860,639 12,242,981 Deferred rent 405,833 388,833 Unearned revenue, less current portion 34,482 80,484 Long-term obligations, less current portion 2,291,898 1,605,050 Minority interest 929,925 - Stockholders' equity: Preferred stock, par value $.01 per share: Authorized, 3,000 shares; none issued and outstanding Common stock, par value $.01 per share: Authorized, 20,000,000 shares; issued 10,918,832 shares in 1996 and 10,915,019 shares in 1995 109,188 109,150 Additional paid-in capital 88,362,132 88,355,145 Deferred compensation (71,094) (94,482) Marketable securities valuation 209,195 137,183 Accumulated deficit (39,278,871) (26,664,779) ------------- ------------ Total stockholders' equity 49,330,550 61,842,217 ------------ ------------- Total liabilities and stockholders' equity $65,853,327 $ 76,159,565 ============ ============= </TABLE> See notes to consolidated financial statements. 3
KOPIN CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) <TABLE> <CAPTION> Three Months Ended Six Months Ended ------------------ ---------------- June 29 July 1 June 29 July 1 1996 1995 1996 1995 -------------- -------------- --------------- ------------- <S> <C> <C> <C> <C> Revenue: Product sales $ 2,582,490 $ 1,018,082 $ 5,626,256 $ 1,601,657 Research and development 1,695,900 2,341,146 3,425,372 4,316,292 Interest and other income 445,785 466,351 1,006,181 912,322 ------------- ------------- -------------- ------------ 4,724,175 3,825,579 10,057,809 6,830,271 ------------- ------------- -------------- ------------ Costs and expenses: Cost of sales 2,225,152 862,768 4,933,070 1,406,726 Research and development 4,492,359 4,224,977 9,203,328 8,336,649 General, administrative and selling 1,966,955 848,735 3,910,611 1,574,596 Interest 93,309 99,150 217,518 153,681 Other 152,268 64,713 287,037 133,266 Non-recurring charge -- -- 4,990,412 -- ------------- ------------- -------------- ------------ 8,930,043 6,100,343 23,541,976 11,604,918 ------------- ------------- -------------- ------------ Loss before minority interest (4,205,868) (2,274,764) (13,484,167) ( 4,774,647) Minority interest in loss of subsidiary 312,829 -- 870,075 -- ------------- ------------- -------------- ------------ Net loss ($ 3,893,039) ($ 2,274,764) ($ 12,614,092) ($4,774,647) ============= ============= ============== ============ Net loss per share ($ .36) ($ .24) ($ 1.16) ($ .51) ============= ============= ============== ============ Weighted average number of common shares outstanding 10,918,750 9,301,763 10,917,304 9,300,361 ============= ============= ============== ============ </TABLE> See notes to consolidated financial statements. 4
KOPIN CORPORATION CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY SIX MONTHS ENDED JUNE 29, 1996 AND JULY 1, 1995 (UNAUDITED) <TABLE> <CAPTION> Additional Common Stock Paid-in Deferred Securities ---------- -------- Shares Amount Capital Compensation Valuation Deficit Total ---------- -------- ----------- ------------- ----------- ------------- ----------- <S> <C> <C> <C> <C> <C> <C> <C> Balance, December 31, 1994 9,298,711 $ 92,987 $61,926,736 ($224,670) ($670,000) ($17,673,780) $ 43,451,273 Exercise of stock options 4,750 48 4,703 -- -- -- 4,751 Amortization of compensation relating to grant of stock options -- -- -- 65,094 -- -- 65,094 Net unrealized gain on marketable securities -- -- -- -- 420,000 -- 420,000 Net loss for the six month period ended July 1, 1995 -- -- -- -- -- (4,774,647) (4,774,647) ---------- -------- ----------- ------------ ---------- ------------ ------------ Balance, July 1, 1995 9,303,461 $ 93,035 $61,931,439 ($ 159,576) ($250,000) ($22,448,427) $ 39,166,471 ========== ======== =========== ============ ========== ============ ============ Balance, December 31, 1995 10,915,019 $109,150 $88,355,145 ($94,482) $ 137,183 ($26,664,779) $ 61,842,217 Exercise of stock options 3,813 38 6,987 -- -- -- 7,025 Amortization of compensation relating to grant of stock options -- -- -- 23,388 -- -- 23,388 Net unrealized gain on marketable securities -- -- -- -- 72,012 -- 72,012 Net loss for the six month period ended June 29, 1996 -- -- -- -- -- (12,614,092) (12,614,092) ---------- -------- ----------- ------------ ---------- ------------ ------------ Balance, June 29, 1996 10,918,832 $109,188 $88,362,132 ($ 71,094) $ 209,195 ($39,278,871) $ 49,330,550 ========== ======== =========== ============ ========== ============ ============ </TABLE> See notes to consolidated financial statements. 5
KOPIN CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) <TABLE> <CAPTION> Six Months Ended June 29 July 1 1996 1995 -------------- -------------- <S> <C> <C> Cash flows from operating activities: Net loss ($12,614,092) ($ 4,774,647) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 1,796,893 1,422,306 Amortization of compensation relating to grant of stock options 23,388 65,094 Non-recurring charge 4,990,412 - Loss on equity investment - 411,181 Decrease in unearned revenue (46,002) (46,002) Increase in accrued rent 17,000 17,001 Minority interest in loss of (870,075) - subsidiary Changes in assets and liabilities: Accounts receivable (1,568,923) (316,286) Inventory (448,950) (586,555) Prepaid expenses and other (243,257) (499,500) current assets Intangible assets (1,455,500) (151,815) Accounts payable and accrued 1,867,122 1,252,946 expenses ------------- ------------- Net cash used in operating (8,551,984) (3,206,277) activities ------------- ------------- Cash flows from investing activities: Acquisition of Forte Technologies, Inc., net of cash acquired - (1,284,358) Marketable securities 4,062,524 2,380,320 Other assets 271,093 (815,569) Capital expenditures (2,108,722) (1,505,612) ------------- ------------- Net cash provided by (used in) 2,224,895 (1,225,219) investing activities ------------- ------------- Cash flows from financing activities: Net proceeds from issuance of subsidiary preferred stock 1,800,000 - Proceeds from notes payable 500,000 3,000,000 Principal payment on notes payable (3,000,000) - Proceeds from long-term obligations 1,503,025 - Principal payment on long-term (465,641) (298,680) obligations Proceeds from exercise of stock 7,025 4,751 options ------------- ------------- Net cash provided by financing 344,409 2,706,071 activities ------------- ------------- Net decrease in cash and equivalents (5,982,680) (1,725,425) Cash and equivalents, beginning of 24,718,023 1,887,271 period ------------- ------------- Cash and equivalents, end of period $ 18,735,343 $ 161,846 ============= ============= Non-cash investing and financing transactions: Marketable securities valuation $ 72,012 $ 420,000 Supplementary information -Interest $ 177,136 $ 168,987 paid in cash </TABLE> See notes to consolidated financial statements. 6
KOPIN CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. BASIS OF PRESENTATION --------------------- The financial statements for the six month periods ended June 29, 1996 and July 1, 1995 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. All such adjustments are of a normal recurring nature. These financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission (File No. 0-19882) for the year ended December 31, 1995. 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. Certain reclassifications have been made to be in conformity with the current year presentation. The consolidated financial statements include the accounts of the Company and its wholly-owned and majority-owned subsidiaries. All intercompany transactions and balances have been eliminated. In 1994, the Company made equity investments in Forte Technologies, Inc. In May 1995, the Company obtained a controlling interest in Forte and has consolidated the financial statements of Forte with those of the Company since that date. 2. NET LOSS PER SHARE ------------------ Net loss per share is computed using the weighted average number of common shares outstanding during the period. Common share equivalents have not been included because the effect would be anti-dilutive. 3. INVESTMENT IN FORTE TECHNOLOGIES, INC. AND MINORITY INTEREST ------------------------------------------------------------ In October 1994, Kopin acquired a 31% equity interest in Forte Technologies, Inc., a developer and manufacturer of virtual reality head-mounted systems. During 1995, Kopin made a series of additional equity investments in and loans to Forte which resulted in an aggregate equity investment totaling $4,750,000 and loans outstanding of $1,750,000 at December 31, 1995. In January 1996, Kopin converted a $1,000,000 loan outstanding to Forte as part of a $2,800,000 private equity offering of Forte common stock. Net proceeds to Forte totaled $1,800,000 from minority investors. Additionally, in January 1996, Kopin guaranteed an aggregate of $1,000,000 of equipment and working capital loans obtained by Forte from a senior lender and agreed to subordinate its remaining $750,000 loan to Forte to the equipment and working capital loans. In June 1996, Kopin entered into a subordinated debt agreement with Forte as part of a $2,118,000 subordinated debt financing pursuant to which Kopin purchased as part of the initial closing $841,837 of subordinated notes and warrants. At June 29, 1996, Kopin held a 59% equity ownership in Forte. 4. NOTE PAYABLE AND LONG-TERM OBLIGATIONS -------------------------------------- In 1995, the Company entered into a $3,000,000 demand note agreement with a bank which bears interest at 1/2% above prime. In May 1996, the note was repaid in full. During the three months ended March 30, 1996, the Company entered into two separate equipment financing agreements totaling approximately $1,286,000 as well as a $500,000 demand note agreement. 7
5. NON-RECURRING CHARGE -------------------- On January 1, 1996 , the Company adopted SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed Of ." This Statement establishes accounting standards for the carrying value of long-lived and certain identifiable intangible assets. In January 1996, the Company incurred a non-recurring charge of $4,990,412 which included a write-down associated with the initial adoption of SFAS No.121, the expensing of purchased technology, and the write-off of certain previously deferred expenses. 6. RECENT PRONOUNCEMENTS --------------------- In October 1995, the Financial Accounting Standards Board issued SFAS No. 123, "Accounting for Stock-Based Compensation," which was effective for the Company beginning January 1, 1996. SFAS No.123 requires expanded disclosures of stock- based compensation arrangements with employees and encourages (but does not require) compensation costs to be measured based upon the fair value of the equity instrument awarded. However, companies are permitted to continue to apply APB Opinion No. 25, which recognizes compensation cost based on the intrinsic value of the equity instrument awarded. The Company will continue to apply APB Opinion No. 25 to its stock based compensation awards to employees and will disclose the required pro forma effect on net income and earnings per share in the Company's year ended December 31, 1996 financial statements. 8
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND --------------------------------------------------------------- RESULTS OF OPERATIONS --------------------- Kopin Corporation and its subsidiaries ("the Company") are engaged in the development, manufacture and sale of flat panel display devices and products, and custom wafer-engineered electronic materials for commercial and consumer markets. To date, the Company's revenue has been derived primarily from development contracts with commercial companies and agencies of the federal government, as well as from sales of its custom wafer-engineered materials and flat panel display devices and products. RESULTS OF OPERATIONS The Company's research and development and product sale revenue was $4,278,390 and $9,051,628 during the three and six months ended June 29, 1996 compared to $3,359,228 and $5,917,949 earned during the corresponding periods in the prior year, an increase of $919,162 or 27% for the three months and $3,133,679 or 53% for the six months ended June 29, 1996. Research and development revenue decreased 28% to $1,695,900 for the three months ended June 29, 1996 from $2,341,146 in the prior year and decreased 21% to $3,425,372 for the six months ended June 29, 1996 from $4,316,292 in the prior year. The change in 1996 research and development revenue was primarily attributable to a decrease in contract revenue from agencies of the federal government. The Company's product sales increased 154% to $2,582,490 during the three months ended June 29, 1996 from $1,018,082 in the prior year and increased 251% to $5,626,256 for the six months ended June 29, 1996 from $1,601,657 during the corresponding period in the prior year. The sales increase was primarily due to initial sales of the Company's head-mounted display products and an increase in unit sales of the Company's wafer-engineered materials. The increase in unit sales of the Company's wafer-engineered materials is primarily due to the increase in demand for these materials for use in various wireless telecommunications products. Interest and other income was $445,785 and $1,006,181 for the three and six months ended June 29, 1996 compared to $466,351 and $912,322 during the corresponding period in 1995. The changes in 1996 from the corresponding periods in the prior year reflect higher cash balances with shorter durations of maturity. The Company's total operating expenses were $8,930,043 for the three months ended June 29, 1996 and $23,541,976 for the six months then ended compared to $6,100,343 and $11,604,918 for the same periods in the prior year. The increase of $2,829,700 or 46% for the three months ended June 29, 1996 and $11,937,058 or 103% for the six months then ended was primarily due to the increase in cost of sales associated with higher sales volume of wafer-engineered materials and display products, increased costs incurred for internal development programs, personnel increases and increased sales and marketing costs for the Company's head-mounted display products. Additionally, the six months ended June 29, 1996 included an increase of $4,990,412 related to a non-recurring charge for the write- down of certain intangible and long-lived assets in connection with the Company's adoption of the provisions of Statement of Financial Accounting Standards No. 121, the expensing of purchased technology, and the write- off of certain previously deferred expenses. Cost of sales, which is comprised of materials, labor and manufacturing overhead, were approximately 86% and 88% of product sales for the three and six months ended June 29, 1996, respectively, compared to approximately 85% and 88% of product sales for the corresponding periods in the prior year. Reducing cost of sales as a percentage of sales for the Company's products is generally dependent on achieving manufacturing economies of scale in order to manufacture at a lower per unit basis. Research and development expenses include expenses incurred in support of internal development programs and programs funded by agencies of the federal government. Total research and development expenses for the three and six months ended June 29, 1996 were $4,492,359 and $9,203,328 compared to $4,224,977 and $8,336,649 during the corresponding periods in 1995. The increases of $267,382 or 6% for the three months and $866,679 or 10% for the six months then ended were primarily due to increased activity in the Company's internal development programs for electronic imaging devices and display products, wafer-engineered materials and head-mounted display systems, including increases in circuit design costs, staffing, purchases of materials and laboratory supplies, subcontractor development work, and fabrication and packaging of the Company's SMART SLIDE imaging devices. These increases were partially offset by a reduction in research and development expenses incurred in support of programs funded by agencies of the federal government. 9
General, administrative and selling expenses consist of the expenses incurred by the Company's business development and sales personnel, marketing expenses, and administrative and general corporate expenses. General, administrative and selling expenses were $1,966,955 and $3,910,611 for the three and six months ended June 29, 1996, compared to $848,735 and $1,574,596 for the corresponding periods in the prior year. The increase in general, administrative and selling expenses in 1996 was primarily due to increases in display product marketing costs, advertising and trade show costs, as well as increased personnel and related costs. In addition, general and administrative expenses include non-cash charges for compensation expense of $11,694 and $23,388 for the three and six months ended June 29, 1996, relating to the issuance of certain stock options. The Company expects to incur additional increases in general, administrative and selling expenses in the future as it commercializes its imaging devices and display products. During 1995, the Company adopted SFAS No. 107, "Disclosure About Fair Value of Financial Instruments," effective January 1, 1995, as required. The effect of this adoption had no material impact on the Company's financial statements. On January 1, 1996 , the Company adopted SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed Of ." This Statement establishes accounting standards for the carrying value of long-lived and certain identifiable intangible assets. In January 1996, the Company incurred a non-recurring charge of $4,990,412 which included a write-down associated with the initial adoption of SFAS No.121, the expensing of purchased technology, and the write-off of certain previously deferred expenses. In October 1995, the Financial Accounting Standards Board issued SFAS No. 123, "Accounting for Stock-Based Compensation," which was effective for the Company beginning January 1, 1996. SFAS No.123 requires expanded disclosures of stock-based compensation arrangements with employees and encourages (but does not require) compensation costs to be measured based upon the fair value of the equity instrument awarded. However, companies are permitted to continue to apply APB Opinion No. 25, which recognizes compensation cost based on the intrinsic value of the equity instrument awarded. The Company will continue to apply APB Opinion No. 25 to its stock based compensation awards to employees and will disclose the required pro forma effect on net income and earnings per share in the Company's year ended December 31, 1996 financial statements. LIQUIDITY AND CAPITAL RESOURCES The Company has financed its operations primarily through private placements of its equity securities, the initial public offering of its common stock in April 1992, another public offering in March 1993, research and development revenue, and sales of its custom wafer-engineered materials and flat panel display devices and products. The Company has an unused line of credit of $500,000 at June 29, 1996. The Company periodically enters into loan agreements to finance equipment purchases and other activities. As of June 29, 1996, sales of equity securities have raised approximately $92,500,000, including $13,300,000 of net proceeds from the Company's initial public offering, $26,500,000 of net proceeds from the Company's March 1993 public offering, $3,300,000 from a private stock sale in November 1992, $4,375,000 from the exercise of a 625,000 share stock warrant in December 1993, and $30,437,000 from private stock sales to Telecom Holding Co., Ltd. and United Microelectronics Corporation and its affiliate in the fourth quarter of 1995. As of June 29, 1996, the Company had cash and equivalents and marketable securities of $32,023,785 and working capital of $35,544,323 compared to $41,996,977 and $44,727,410 as of December 31, 1995. The decrease in cash and equivalents and marketable securities is primarily due to $8,551,984 of cash used in operations and $2,108,722 for capital expenditures. These decreases were partially offset by borrowings of $1,503,025 and $1,800,000 in equity financing raised by one of the Company's subsidiaries from certain of its minority stockholders. The Company also has approximately $1,954,000 of marketable securities held in escrow as equipment financing collateral which is shown in other assets. Revenue from long-term contracts is recognized on the percentage- of-completion method of accounting as work is performed, based upon the ratio that incurred costs or hours bear to estimated total completion costs or hours. Amounts received under long-term contracts are recognized as revenue is earned, and amounts earned on contracts in progress in excess of billings are classified as unbilled receivables. Unbilled receivables are billed based on dates stipulated in the related agreement or in periodic installments based upon the Company's invoicing cycle. 10
The Company periodically enters into various long-term debt arrangements in connection with acquisition of certain capital equipment. During the six months ended June 29, 1996, the Company entered into two separate equipment financing agreements and a subordinated debt agreement totaling $1,503,025. As of June 29, 1996, total long-term debt obligations totaled $3,272,077, of which $980,179 is payable in 1996. Additionally, in January 1996, the Company entered into a $500,000 demand note agreement. In October 1993, the Company entered into a five-year lease for a 74,000 square foot manufacturing facility. This facility, which includes 7,000 square feet of environmentally controlled clean rooms, is being used for expansion of the Company's manufacturing capabilities for production of wafer-engineered materials and electronic imaging devices. The Company will make lease payments of approximately $4.0 million over the five-year term. The Company expects to expend approximately $8,000,000 over the next 36 months on equipment primarily related to development and manufacturing of electronic imaging devices and display products and wafer-engineered electronic materials. Of this amount, the Company expects to use approximately $3,000,000 in 1996, $3,000,000 in 1997, and $2,000,000 in 1998 for capital equipment and expansion of the Company's manufacturing capabilities. Of these amounts, approximately $6,000,000 is expected to be used for expansion of manufacturing equipment required for development and manufacturing of electronic imaging devices and display products, and wafer-engineered materials, and the balance is expected to be used for the acquisition of laboratory and testing equipment and general facility upgrades. The Company also expects to use approximately $3,000,000 for development of advanced display circuit designs for its electronic imaging devices. The Company expects to incur significant additional research and development and other costs, including costs related to the development and commercialization of its electronic imaging devices and display products. The Company's future capital requirements will depend on many factors involving risks and uncertainties, including the establishment of collaborative arrangements, the cost of manufacturing facilities, commercialization activities and arrangements, continued scientific progress in its imaging device and display product development programs, the magnitude of these programs, the costs involved in filing, prosecuting and enforcing patent claims, and competing technological and market developments. In October 1994, the Company made an equity investment of $1,000,000 in Forte Technologies, Inc., a developer and manufacturer of virtual reality head-mounted systems. Subsequently, the Company has made a series of additional equity investments in Forte totaling $4,750,000, increasing its equity ownership to 59% at June 29, 1996. From time to time, Kopin may make equity and nonequity investments in other companies, including Forte, engaged in certain aspects of the flat panel display and electronics industries as part of its business strategy. The Company believes that its present cash and equivalents and marketable securities will be adequate to finance its anticipated operating and capital requirements and to meet liquidity needs through at least fiscal 1997. FUTURE OPERATING RESULTS Certain of the statements contained in this Form 10-Q, including Management's Discussion and Analysis of Financial Condition and Results of Operations, are forward-looking statements that involve risks and uncertainties. In addition to the risks and uncertainties set forth in this Form 10-Q, other factors that could cause actual results to differ materially include the following: general economic and business conditions and growth in the flat panel display industry, the impact of competitive products and pricing, availability of third party components, availability of integrated circuit fabrication facilities, cost and yields associated with production of the Company's SMART SLIDE imaging devices, and the risk factors listed from time to time in the Company's periodic reports filed with the Securities and Exchange Commission, including but not limited to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1995. 11
PART II. OTHER INFORMATION Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS On May 23, 1996, the Company held its Annual Meeting of Stockholders to consider and vote upon the following three proposals: (1) A proposal to elect (8) directors of the Company to serve until the next Annual of Meeting of Stockholders and until their successors are duly elected and qualified. (2) A proposal to ratify the amendment to the Company's 1992 Stock Option Plan increasing the number of shares authorized for issuance under the Plan. (3) A proposal to ratify the appointment of Deloitte & Touche LLP as independent accountants of the Company for the current fiscal year. Results with respect to the voting on each of the proposals were as follows: <TABLE> <CAPTION> For Withheld Authority ------- ------------------- <S> <C> <C> Proposal 1: John C.C. Fan 9,312,882 226,180 David E. Brook 9,312,882 226,180 Andrew H. Chapman 9,312,882 226,180 Morton Collins 9,312,882 226,180 Anthony B. Evnin 9,312,882 226,180 Chi Chia Hsieh 9,313,282 225,780 Michael A. Wall 9,312,882 226,180 Vallobh Vimolvanich 9,313,282 225,780 </TABLE> Proposal 2: 5,635,673 votes for; 931,847 votes against:46,228 abstentions; and 2,925,314 broker non-votes. Proposal 3: 9,448,709 votes for; 53,858 votes against; and 36,495 abstentions Item 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 10.3 Amendment to 1992 Stock Option Plan 10.53 Securities Purchase Agreement, by and between Forte Technologies, Inc. and Investors, dated June 27, 1996. 27 Financial Data Schedule (b) Reports on Form 8-K none 12
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: August 10, 1996 By: /s/ John C.C. Fan -------------------------------------- President, Chief Executive Officer and Chairman of the Board of Directors (Principal Executive Officer) Date: August 10, 1996 By: /s/ Paul J. Mitchell ------------------------------------ Paul J. Mitchell Treasurer and Chief Financial Officer (Principal Financial and Accounting Officer) 13