KOPIN CORP, S-3, 1997-12-12

KOPIN CORP
S-3, 1997-12-12
COMMERCIAL PHYSICAL & BIOLOGICAL RESEARCH

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 12, 1997
REGISTRATION NO. 333-
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- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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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 BOULEVARD
TAUNTON, MASSACHUSETTS 02780
(508) 824-6696
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

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JOHN C.C. FAN
CHAIRMAN OF THE BOARD OF DIRECTORS, PRESIDENT AND CHIEF EXECUTIVE OFFICER
KOPIN CORPORATION
695 MYLES STANDISH BOULEVARD
TAUNTON, MASSACHUSETTS 02780
(508) 824-6696
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)

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WITH COPIES TO:
JUSTIN P. MORREALE, ESQ. WILLIAM J. SCHNOOR, JR.
JOHN J. CONCANNON III, ESQ. TESTA, HURWITZ & THIBEAULT, LLP
BINGHAM DANA LLP HIGH STREET TOWER
150 FEDERAL STREET 125 HIGH STREET
BOSTON, MA 02110 BOSTON, MA 02110
(617) 951-8000 (617) 248-7000

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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]

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CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
PROPOSED
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE TO BE OFFERING PRICE OFFERING REGISTRATION
REGISTERED REGISTERED(1) PER SHARE(2) PRICE(2) FEE
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<S> <C> <C> <C> <C>
Common Stock, $0.01 par
value................. 2,300,000 $18.25 $41,975,000 $12,390
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</TABLE>
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(1) Includes up to 300,000 shares of Common Stock which the Underwriters have
the option to purchase from the Company and certain Selling Stockholders
to cover over-allotments, if any. See "Underwriting."
(2) Estimated solely for the purpose of determining the registration fee in
accordance with Rule 457 under the Securities Act of 1933.

---------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.

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<PAGE>

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED DECEMBER 12, 1997

[LOGO]

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2,000,000 SHARES
COMMON STOCK
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Of the 2,000,000 shares of common stock, $0.01 par value (the "Common
Stock"), offered hereby (the "Offering"), 1,000,000 shares are being sold by
Kopin Corporation ("Kopin" or the "Company") and 1,000,000 shares are being
sold by a Selling Stockholder. See "Selling Stockholders." The Company will
not receive any of the proceeds from the sale of shares of Common Stock by
the Selling Stockholder.

The Company's Common Stock is quoted on the Nasdaq National Market under the
symbol "KOPN." On December 11, 1997, the last reported sale price of the
Common Stock reported on the Nasdaq National Market was $18.25 per share. See
"Price Range of Common Stock."

FOR INFORMATION CONCERNING CERTAIN RISK FACTORS WHICH SHOULD BE CONSIDERED BY
PROSPECTIVE INVESTORS, SEE "RISK FACTORS" COMMENCING ON PAGE 7.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS UNLAWFUL.

<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO PROCEEDS TO SELLING
PUBLIC DISCOUNT(1) COMPANY(2) STOCKHOLDER
<S> <C> <C> <C> <C>
Per Share $ $ $ $
Total(3) $ $ $ $
</TABLE>

(1) The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended. See "Underwriting."
(2) Before deducting expenses of this Offering of approximately $325,000
payable by the Company.
(3) The Company and certain Selling Stockholders have granted to the
Underwriters a 30-day option to purchase up to an additional 300,000
shares of Common Stock to cover over-allotments. If all such shares are
purchased, the total Price to Public, Underwriting Discount, Proceeds to
Company and Proceeds to the Selling Stockholders will be $ , $ ,
$ and $ , respectively. See "Selling Stockholders" and
"Underwriting."

The shares of Common Stock are offered by the Underwriters, subject to prior
sale, when, as and if delivered to and accepted by them, and subject to
approval of certain legal matters by counsel and certain other conditions.
The Underwriters reserve the right to withdraw, cancel or modify such offer
and to reject orders in whole or in part. It is expected that delivery of the
shares of Common Stock will be made in New York, New York against payment
therefor on or about , 1997.

DEUTSCHE MORGAN GRENFELL TUCKER ANTHONY
INCORPORATED

The date of this Prospectus is , 1997
<PAGE>

[Description of the inside front cover: the Kopin logo appears in the upper
left corner with "CyberDisplay" appearing underneath. Text in the upper right
hand corner reads, "Developer and provider of small format, high information
content, low cost AMLCDs using Kopin's proprietary Wafer-Engineering
technology for portable communications devices and other consumer electronics
products." The center of the page is a reproduction of a CyberDisplay product
underneath a U.S. dime to show scale, surrounded by pictures of four
applications incorporating the CyberDisplay product: "Cellular Phones," "Smart
Card Viewers," "Pagers" and "Cameras."]

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK.
SUCH TRANSACTIONS MAY INCLUDE STABILIZING, THE PURCHASE OF COMMON STOCK TO
COVER SYNDICATE SHORT POSITIONS AND THE IMPOSITION OF PENALTY BIDS. FOR A
DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."

IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS AND SELLING GROUP
MEMBERS MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN THE COMMON STOCK
ON THE NASDAQ NATIONAL MARKET IN ACCORDANCE WITH RULE 103 OF REGULATION M. SEE
"UNDERWRITING."
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PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and the Consolidated Financial Statements and the related Notes
thereto appearing elsewhere in this Prospectus. The Common Stock offered hereby
involves a high degree of risk. See "Risk Factors."

THE COMPANY

Kopin is a leading developer and manufacturer of advanced semiconductor
materials and small form factor displays. The Company has used its proprietary
technology to design, manufacture and market enabling products used in highly
demanding commercial wireless communications and high resolution portable
applications. The Company's customers use Kopin's products to develop and
market an improved generation of products for these target applications. In
April 1997, the Company introduced the CyberDisplay product, a miniature active
matrix liquid crystal display. A key strategy of the Company is to enter into
agreements with leading manufacturers of digital wireless handsets, pagers,
smart card viewers, digital and video cameras and other consumer electronics
devices to incorporate CyberDisplay products in their devices. To date, the
Company has entered into agreements with Motorola, Inc., Siemens Business
Communication Systems, Inc., FujiFilm Microdevices Co., Ltd. and Gemplus S.C.A.
Kopin produces advanced semiconductor wafers used by manufacturers of gallium
arsenide ("GaAs") power amplifiers and other integrated circuits for digital
wireless handsets and other high frequency communications devices. The
Company's principal semiconductor wafer product is a heterojunction bipolar
transistor ("HBT") GaAs device wafer. Kopin's largest customer for its HBT
device wafers is Rockwell International Corporation. Kopin's expertise centers
on its Wafer-Engineering technology, a process of splicing or layering selected
semiconductor materials to provide optimal performance for specific
applications. This proprietary technology enabled the development by Kopin of
the CyberDisplay product and its advanced HBT device wafers.

THE OFFERING

Common Stock offered................ 2,000,000 shares (including 1,000,000
shares by the Company and 1,000,000
shares by the Selling Stockholder)

Common Stock to be outstanding
after this Offering................. 12,091,204 shares(1)

Use of Proceeds..................... For general corporate purposes, including
capital expenditures and working capital.

Nasdaq National Market Symbol....... KOPN

3
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SUMMARY CONSOLIDATED FINANCIAL INFORMATION

(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, NINE MONTHS ENDED
-------------------------- -----------------------
SEPT. 28, SEPT. 27,
1994 1995 1996 1996 1997
------- ------- -------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Product revenues.......... $ 2,830 $ 7,161 $ 11,727 $ 8,411 $ 8,940
Research and development
revenues................. 10,453 8,628 6,291 5,278 2,563
Net loss.................. (6,694) (8,991) (21,596) (15,341) (5,279)
Net loss per share........ $ (0.72) $ (0.95) $ (1.98) $ (1.41) $ (0.48)
Common shares used in the
calculation of net loss
per share(2)............. 9,267 9,462 10,921 10,919 10,973
</TABLE>

<TABLE>
<CAPTION>
SEPTEMBER 27, 1997
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ACTUAL AS ADJUSTED(3)
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<S> <C> <C>
BALANCE SHEET DATA:
Cash and equivalents and marketable securities........... $19,865 $36,695
Working capital.......................................... 21,466 38,296
Total assets............................................. 43,785 60,615
Long-term debt, net of current portion................... 1,313 1,313
Stockholders' equity..................................... 36,556 53,386
</TABLE>
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(1) Based on the number of shares outstanding as of November 30, 1997. Excludes
an aggregate of 2,077,062 shares of Common Stock issuable upon exercise of
stock options outstanding as of November 30, 1997 at a weighted average
exercise price of $11.52 per share. See "Capitalization" and Note 9 of
Notes to Consolidated Financial Statements.
(2) See Note 1 of Notes to Consolidated Financial Statements for an explanation
of the determination of shares used in computing net loss per share.
(3) As adjusted to reflect the sale of 1,000,000 shares of Common Stock offered
by the Company hereby at an assumed public offering price of $18.25 per
share and the application of the estimated net proceeds thereof. See "Use
of Proceeds" and "Capitalization."

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Except as otherwise noted, all information in this Prospectus assumes no
exercise of the Underwriters' over-allotment option. The shares of Common Stock
offered hereby involve a high degree of risk. Investors should carefully
consider the information set forth under "Risk Factors."

4
<PAGE>

THE COMPANY

In April 1997, the Company introduced the CyberDisplay product, a miniature
active matrix liquid crystal display ("AMLCD"). The Company believes that the
CyberDisplay product is the world's smallest, high performance, high
resolution, low cost AMLCD. The CyberDisplay product is a miniature display
(0.24 inch diagonal) which uses a lens and backlight to deliver high
resolution data and video images equivalent to viewing a 20 inch monitor from
a distance of five feet. The Company believes there is an emerging and
potentially large market for small form factor displays that are capable of
displaying significant amounts of information. A key strategy of the Company
is to enter into agreements with leading manufacturers of digital wireless
handsets, pagers, smart card viewers, digital and video cameras and other
personal communications and consumer electronics devices to incorporate
CyberDisplay products in these devices. To date, the Company has entered into
agreements with Motorola, Inc. ("Motorola"), Siemens Business Communication
Systems, Inc. ("Siemens"), FujiFilm Microdevices Co., Ltd. ("FujiFilm") and
Gemplus S.C.A. ("Gemplus"). The Company believes CyberDisplay products are
well suited for high resolution, high information content applications,
including reading e-mail and facsimile messages using digital wireless
handsets and pagers, viewing images in digital cameras, viewing information
stored in smart cards and for other personal communications and consumer
electronics devices.

Kopin produces advanced device wafers used by manufacturers of GaAs power
amplifiers and other integrated circuits for digital wireless handsets and
other high frequency communications devices. The Company's principal
semiconductor wafer product is a heterojunction bipolar transistor ("HBT")
GaAs device wafer. The Company currently sells its device wafers primarily to
manufacturers of microwave integrated circuits for high performance wireless
communications devices. The Company believes that integrated circuits
manufactured using its HBT device wafers are well suited for applications that
require lower power consumption and high frequency performance. Kopin's
principal customer for its HBT device wafers is Rockwell International
Corporation ("Rockwell"). Rockwell, as well as other customers, primarily use
these HBT device wafers in the fabrication of integrated circuits used in
digital wireless handsets. The Company is actively marketing its device wafers
by working with customers who are developing integrated circuits for use in
these and other applications.

The Company's expertise centers on its Wafer-Engineering technology, a
process of splicing or layering selected semiconductor materials to provide
optimal performance for specific applications. This proprietary technology
enabled the development by Kopin of the CyberDisplay product and its advanced
HBT device wafers. The Company currently manufactures all of its device wafers
at its facility in Taunton, Massachusetts. The Company's facility in
Westborough, Massachusetts is used in the development and packaging of
CyberDisplay products. The integrated circuit portion of CyberDisplay products
are produced by United Microelectronics Corporation ("UMC"). The Company is
also establishing packaging capability for CyberDisplay products with Unipac
Optoelectronics Corp. ("Unipac"), an affiliate of UMC.

The Company was incorporated in Delaware on April 23, 1984. The Company's
principal executive offices are located at 695 Myles Standish Boulevard,
Taunton, Massachusetts 02780 and its telephone number is (508) 824-6696.

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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents filed by the Company with the Securities and
Exchange Commission (the "Commission") pursuant to the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), are incorporated in this Prospectus
by reference: (i) the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1996; and (ii) the Company's Quarterly Reports on Form 10-Q
for the quarters ended September 27, 1997, June 28, 1997 and March 29, 1997.

Each document filed by the Company pursuant to Sections 13(a), 13(c), 14 and
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering made hereby shall be deemed to be incorporated by
reference into this Prospectus and to be a part hereof from the date of filing
of such document (all such documents, and the documents enumerated above,
being hereinafter referred to as "Incorporated Documents").

Any statement contained in an Incorporated Document shall be deemed to be
modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed Incorporated
Document modifies or supersedes such statement. Any statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.

The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, including any beneficial owner, upon the written
or oral request of such person, a copy of any or all of the Incorporated
Documents, other than exhibits to such documents unless such exhibits are
specifically incorporated by reference therein. Requests for such copies
should be directed to Kopin Corporation, 695 Myles Standish Boulevard,
Taunton, Massachusetts 02780, Attention: Investor Relations (telephone: (508)
824-6696). The information relating to the Company contained in this
Prospectus does not purport to be comprehensive and should be read together
with the information contained in the Incorporated Documents.

AVAILABLE INFORMATION

The Company is subject to the informational reporting requirements of the
Exchange Act and in accordance therewith files reports, proxy statements and
other information with the Securities and Exchange Commission. Such reports,
proxy statements and other information can be inspected and copied at the
public reference facilities maintained by the Commission at Room 1024, 450
Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549, and at the
Commission's following Regional Offices: Chicago Regional Office, Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511; and
New York Regional Office, 7 World Trade Center, Suite 1300, New York, New York
10048. Copies of such material can be obtained at prescribed rates from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Judiciary Plaza, Washington, D.C. 20549. Such reports and other information
can also be reviewed through the Commission's Web site (http://www.sec.gov).

"KOPIN", the KOPIN logo, "CyberDisplay", "Wafer-Engineered" and "Wafer-
Engineering" are trademarks and servicemarks of Kopin Corporation. Other
product, company or organization names cited in this prospectus may be
trademarks or registered trademarks of their respective companies or
organizations.

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RISK FACTORS

Except for the historical information contained herein, the discussion in
this Prospectus contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, that involve risks and
uncertainties. The Company's actual results could differ materially from those
discussed here. Factors that could cause or contribute to such differences
include, but are not limited to, those discussed below, as well as those
discussed elsewhere in this Prospectus and in any documents incorporated
herein by reference. In addition to the other information in this Prospectus,
the following factors should be considered carefully in evaluating an
investment in the Common Stock offered by this Prospectus.

POTENTIAL LACK OF MARKET ACCEPTANCE. The Company's product sales have been
derived primarily from its custom Wafer-Engineered device wafers. To date, the
Company has had limited sales of its display products. The CyberDisplay
product is a miniature display which uses a lens and backlight to deliver high
resolution data and video images. The Company's success will in large part
depend on the widespread adoption of this viewing format in the marketplace as
compared to a direct view display. The Company's success will also be
dependent upon the widespread acceptance of its customers' products. The
Company's competitors are investing substantial resources in the development
and manufacture of displays using a number of different technologies. In the
event these efforts result in the development of products that offer
advantages over the Company's products, and the Company is unable to improve
its technology or develop or acquire alternative technology that is
competitive, the Company's business, results of operations and financial
condition will be materially and adversely affected. Kopin's prospective
customers for its display products are principally manufacturers in the
wireless handset, pager, digital camera, smart card and other consumer
electronics industries that would use CyberDisplay products in their products.
These companies may be reluctant to adopt Kopin's products because of
perceived risks relating to the introduction of the Company's display
technology generally, concerns about end-user acceptance of CyberDisplay
products and the complexity, reliability, usefulness and cost-effectiveness of
the Company's display products compared to traditional AMLCDs. In addition,
these companies may be reluctant to rely upon a relatively small company such
as Kopin for a critical component. There can be no assurance that the
Company's prospective customers will adopt CyberDisplay products or that the
end-users of these prospective customers will accept CyberDisplay products.
The failure of Kopin to achieve such market acceptance of CyberDisplay
products will have a material adverse effect on the Company's business,
results of operations and financial condition.

Kopin's customers for its HBT device wafer products are principally
manufacturers of integrated circuits for the telecommunications and data
communications markets. Current and prospective customers may be reluctant to
adopt Kopin's products to an extent greater than at present because of
perceived risks relating to GaAs technology generally or HBT GaAs technology
in particular. In addition, these customers may be reluctant to rely upon a
relatively small company such as Kopin for a critical component. There can be
no assurance that additional companies in Kopin's target markets will adopt
its HBT technology or that the companies that currently use the Company's HBT
device wafer products will continue to do so in the future. See "Business--
Industry Overview" and "--Products, Markets and Customers."

HISTORY OF OPERATING LOSSES; ACCUMULATED DEFICIT. The Company has not been
profitable in any quarter of its last five fiscal years. As of September 27,
1997, the Company had an accumulated deficit of $53,540,621. For the nine
months ended September 27, 1997 and for the years ended December 31, 1996,
1995 and 1994, the Company incurred net losses of $5,279,478, $21,596,364,
$8,990,999 and $6,694,257, respectively. There can be no assurance that the

7
<PAGE>

Company will achieve or maintain profitability in the future. If the Company
continues to incur losses, the Company is likely to require additional
financing and there can be no assurance that the Company would be able to
secure additional financing or that such financing will be available on
favorable terms. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and Consolidated Financial Statements.

POTENTIAL FLUCTUATIONS IN RESULTS OF OPERATIONS. The Company's quarterly and
annual results of operations are affected by a wide variety of factors that
could have a material adverse effect on total revenues and profitability from
period to period, including competitive pressures on selling prices; the
timing and cancellation of customer orders; availability of integrated circuit
foundry capacity and raw materials; fluctuations in yields; changes in product
mix; the Company's ability to introduce new products and technologies on a
timely basis; introduction of products and technologies by the Company's
competitors; market acceptance of the Company's and its customers' products;
the level of orders received which can be shipped in a quarter; the Company's
ability to successfully reduce costs; and the cyclical nature of the
semiconductor industry. Sales of end-user products incorporating the Company's
products may exhibit cyclical fluctuations based on factors such as capital
expenditure cycles of customers and new product introductions. Historically,
average selling prices in the semiconductor industry have decreased over the
life of a product, and as a result, the average selling prices of the
Company's products are likely to be subject to pricing pressures in the
future. The Company's business is characterized by short-term orders and
shipment schedules, and the Company generally permits orders to be canceled or
rescheduled without significant penalty to the customer. Due to the absence of
substantial noncancellable backlog, the Company typically plans its production
and inventory levels based on internal forecasts of customer demand, which are
highly unpredictable and can fluctuate substantially. Because the Company is
continuing to invest in capital equipment and to increase its operating
expenses for personnel and new product development, the Company's business,
results of operations and financial condition would be materially and
adversely affected if increased sales are not achieved. As a result of the
foregoing or other factors, the Company may experience fluctuations in future
results of operations on a quarterly or annual basis which could have a
material adverse effect on its business, results of operations and financial
condition. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and Consolidated Financial Statements.

SUBSTANTIAL RELIANCE ON CERTAIN CUSTOMERS. Relatively few customers account
for a substantial portion of the Company's revenues. For the nine months ended
September 27, 1997 and for the years ended December 31, 1996 and 1995,
revenues from multiple contracts with various United States governmental
agencies accounted for approximately 22%, 31% and 49%, respectively, of the
Company's total revenues. Sales to Rockwell accounted for approximately 61%,
34% and 11% of the Company's total revenues for the nine months ended
September 27, 1997, and for the years ended December 31, 1996 and 1995,
respectively. The Company expects that device wafer sales to Rockwell will
continue to represent a significant portion of the Company's revenues for the
near future. A reduction in research and development contracts from the United
States government or a reduction or delay in orders from Rockwell or the
Company's other customers, including reductions or delays due to market,
economic or competitive conditions in the semiconductor or display industries,
could have a material adverse effect on the Company's business, results of
operations and financial condition. Although some of the Company's customers
have entered into agreements obligating them to purchase a certain amount of
the Company's products, the Company's customers generally do not enter into
such agreements. In addition, customer orders generally can be canceled and
volume levels changed or delayed. The timely replacement of canceled, delayed
or reduced orders cannot be assured. The Company's results of operations have
been

8
<PAGE>

adversely affected in the past by the failure of anticipated orders to be
realized and by deferrals or cancellations of orders as a result of changes in
customer requirements. Canceled, delayed, or reduced commitments from any of
the Company's major customers, particularly Rockwell, would have a material
adverse effect on the Company's business, results of operations and financial
condition. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations," "Business--Products, Markets and Customers," "--
Sales and Marketing" and Consolidated Financial Statements.

UNCERTAIN DEMAND FOR HIGH INFORMATION CONTENT IN PORTABLE PRODUCTS. The
Company's success in the display business will depend on the availability of
cost-effective wireless applications that support customer demand for high
resolution portable displays. Deployment of higher bandwidth infrastructure
will be needed to drive the development of value added wireless services (such
as wireless e-mail, facsimile and Internet access) to increase the demand for
the Company's display products. The Company's success will depend in large
part on the widespread implementation of this infrastructure and the cost-
effectiveness to the end-user of these services. Either a delay in such
deployment or an unacceptably high cost to the consumer would delay the rate
of market adoption of products based on Kopin's display technology. See
"Business--Industry Overview" and "--Products, Markets and Customers."

DEPENDENCE ON MARKETING AND DISTRIBUTION RELATIONSHIPS. The Company has
entered into agreements with Motorola, Siemens, FujiFilm and Gemplus for the
marketing and distribution of certain of its current and anticipated display
products, and intends to continue to pursue these arrangements with other
potential customers. There can be no assurance that the Company will be
successful in maintaining current alliances or forming additional
relationships or that the Company's strategic customers will devote adequate
resources to accomplish such marketing and distribution or be successful in
such efforts. The failure of the Company to enter into these key relationships
or the failure of these customers to devote adequate resources to market or
distribute the Company's products could have a have a material adverse effect
on the Company's business, results of operations and financial condition. See
"Business--Strategy," "--Products, Markets and Customers" and "--Sales and
Marketing."

MANUFACTURING RISKS; MANUFACTURING CAPACITY LIMITATIONS. The Company is
subject to significant manufacturing risks. The manufacturing processes
utilized by the Company are highly complex and are periodically modified in an
effort to improve yields and product performance. Process changes or other
problems that occur in the complex manufacturing process can result in
interruptions in production or significantly reduced yields. From time to
time, the Company has experienced these problems, many of which are difficult
to diagnose and time-consuming or expensive to remedy. In particular, new
process technologies or new products can be subject to especially wide
variations in manufacturing yields and efficiency. There can be no assurance
that the Company will not experience manufacturing problems that result in
delays in product introduction, delivery delays or yield fluctuations,
including problems associated with increases in production volumes and
increases in the complexity of the Company's products. The Company is also
subject to the risks associated with the shortage of raw materials such as
unprocessed wafers and packaging used in the manufacture or assembly of the
Company's products. The Company's business, results of operations and
financial condition would be materially and adversely affected if it were to
experience any significant disruption in the operation of its facilities.

The Company currently manufactures all of its device wafers at its
manufacturing facility located in Taunton, Massachusetts. The Company intends
to increase its production capacity in its Taunton facility to produce device
wafers up to six inches in diameter. Along with adding production equipment,
the Company will be required to successfully hire, train and manage additional
production personnel in order to successfully increase its production capacity
in

9
<PAGE>

accordance with its time schedule. The Company has no prior experience in
producing finished six-inch device wafers. In the event the Company's
expansion plans are not implemented on a timely basis for any reason, the
Company could become subject to production capacity constraints. Such
constraints could have a material adverse effect on the Company's business,
results of operations and financial condition.

The Company has limited experience manufacturing display products. The
Company is subject to the risk that the manufacture of such a small display
may not ever be commercially viable, as Kopin believes that no other company
currently manufactures a display of a size equivalent to the CyberDisplay
product at commercial quantities and prices. The Company's fabrication
facility in Westborough, Massachusetts is used in the development and
packaging of CyberDisplay products. The integrated circuit portion of the
CyberDisplay product is commercially produced by UMC. The Company is also
establishing packaging capability of CyberDisplay products at UMC's affiliate,
Unipac. There are certain significant risks associated with the Company's
reliance on outside foundries, including the lack of control over production
capacity and delivery schedules and limited control over quality assurance,
manufacturing yields and production costs. In addition, the operations of UMC
and Unipac, both located in Taiwan, are subject to risks associated with
international commerce, including unexpected changes in legal and regulatory
requirements, changes in tariffs and trade policies, and political and
economic instability. There can be no assurance that UMC and Unipac will be
able to provide the required capacity and quality on a timely basis to meet
the Company's requirements. The Company is dependent on these third-party
manufacturers for the fabrication of integrated circuits and the packaging of
its display products. The termination or cancellation of the Company's
agreements with these companies, or the inability of these companies to
produce required components, would materially and adversely affect the
Company's ability to manufacture its products and would require the Company to
establish alternative manufacturing relationships. There can be no assurance
that the Company would be able to establish such relationships on acceptable
terms; in any event, the time required to establish such substitute
relationships could substantially delay the commercialization of the Company's
display products, which in turn, could have a material adverse effect on the
Company's business, results of operations and financial condition. See
"Business--Manufacturing and Facilities."

COMPETITION. The display market is highly competitive and is currently
dominated by large Asian electronics companies including Sharp Corporation,
Hitachi, Ltd., Seiko Corporation, Toshiba Corporation ("Toshiba"), Sony
Corporation, NEC Corporation, Sanyo Electric Co., Ltd. and Display
Technologies, Inc., a joint venture of IBM Corporation and Toshiba. Most of
these companies have substantially greater financial, technical, marketing,
manufacturing, and personnel resources than the Company. Competition in the
display field is based on price and performance characteristics, product
quality and the ability to deliver products in a timely fashion. The success
of the Company's display product offerings will also depend upon its ability
to compete against other types of more well-established products such as
traditional AMLCD-based products as well as the adoption of the CyberDisplay
product in the industry as an alternative to traditional AMLCD-based products.
There can be no assurance that the Company will be able to compete
successfully against these companies.

There are also a number of alternative display technologies in production
and under development including passive matrix liquid crystal display ("LCD"),
light emitting diode ("LED"), reflective, field emission display, plasma,
organic LED and virtual retinal displays, some of which target the high
performance small form factor display markets in which the Company's display
products are sold. There are many large and small companies that manufacture
or have in development products based on these technologies. The CyberDisplay
product will compete with other displays utilizing these and other competing
display

10
<PAGE>

technologies. There can be no assurance that the Company will be able to
compete successfully against these companies.

With respect to its device wafer products, the Company presently competes
with several companies, including The Furakawa Electric Co., Ltd., Epitronics,
Emcore Corporation, Epitaxial Products International and Hitachi Cable, as well
as integrated circuit manufacturers with in-house wafer growth capabilities,
such as TRW Inc. and Fujitsu Limited. In the device wafer business, competition
could become increasingly intense as new entrants emerge to address the high
growth markets that Kopin's products address. The production of GaAs integrated
circuits has been and continues to be more costly than the production of
silicon integrated circuits. Although the Company has reduced production costs
of its HBT device wafers by achieving higher volumes, there can be no assurance
that the Company will be able to continue to decrease production costs. In
addition, the Company believes the costs of producing GaAs integrated circuits
by its customers will continue to exceed the costs associated with the
production of competing silicon integrated circuits. As a result, the Company
must target markets where the higher cost associated with GaAs integrated
circuits is justified by their superior performance. There can be no assurance
that the Company can continue to identify markets which require performance
superior to that offered by silicon solutions or that the Company will continue
to offer products which provide superior performance to offset the cost
differentials. The GaAs materials industry has been characterized by rapid and
significant technological advances. There can be no assurance that the Company
will be able to enhance its products to include these advances on a timely
basis, if at all, or that the Company will have sufficient funds to invest in
new technologies, products or processes. See "Business--Competition."

NEW PRODUCTS AND RAPID TECHNOLOGICAL CHANGE. The advanced semiconductor wafer
and display industries have been characterized by rapid technological change
and evolving industry requirements and standards. The Company believes that
these trends will continue. The Company's ability to compete will depend upon
its ability to enhance its existing products and to develop and market new
products to meet customer requirements. Successful product commercialization
depends on a number of factors, including new product definition, timely
completion, introduction and market acceptance of the Company's products and
its customers' products. There can be no assurance that the Company will adjust
to changing market conditions or be successful in introducing products or
product enhancements on a timely basis, if at all, or that the Company will be
able to market successfully these products and product enhancements once
developed. Further, there can be no assurance that the Company's products will
not be rendered obsolete by new industry standards or changing technology. See
"Business--Product Development."

DEPENDENCE ON WIRELESS COMMUNICATIONS MARKETS. Substantially all of the
Company's product revenues are presently derived from, and are expected to
continue to be derived from, sales of products for wireless communications
applications. These markets are characterized by intense competition, rapid
technological change and short product life cycles. In addition, the wireless
communications equipment markets have undergone a period of rapid growth and
consolidation in the last few years. The Company's business, results of
operations, and financial condition would be materially and adversely affected
in the event of a significant slowdown in these markets. Products for wireless
communications applications are based on industry standards, which are
continually evolving. The emergence of new industry standards could render the
Company's products unmarketable or obsolete. There can be no assurance that the
Company will be able to successfully develop and introduce new products based
on emerging industry standards and the failure of the Company to introduce such
products on a timely basis, or at all, would have a material adverse effect on
the Company's business, results of operations and financial condition. See
"Business--Product Development."

11
<PAGE>

UNCERTAINTY RELATING TO PATENTS AND PROPRIETARY RIGHTS. The Company's
success depends in part on its ability to obtain patents and licenses and to
preserve other intellectual property rights covering its products and
manufacturing processes. To that end, the Company has obtained certain
domestic and foreign patents and intends to continue to seek patents on its
inventions when appropriate. With respect to CyberDisplay products, the
Company relies upon a combination of patent applications, patents and trade
secrets to protect its related technology and many of the applications for
these products. With respect to Wafer-Engineered materials, the Company
primarily relies on trade secrets to protect its processing technology.

The process of seeking patent protection can be time consuming and expensive
and there can be no assurance that patents will issue from currently pending
or future applications or that the Company's existing patents or any new
patents that may be issued will be sufficient in scope or strength to provide
meaningful protection or any commercial advantage to the Company. The Company
may be subject to or may initiate interference proceedings in the United
States Patent and Trademark Office, which can demand significant financial and
management resources. Patent applications in the United States are maintained
in secrecy until patents issue and since publication of discoveries in the
scientific and patent literature lags behind actual discoveries, the Company
cannot be certain that it was the first to conceive of inventions covered by
pending patent applications or the first to file patent applications on such
inventions. There can be no assurance that the Company's pending patent
applications or those of its licensors will result in issued patents or that
any issued patents will afford protection against a competitor. In addition,
there can be no assurance that others will not obtain patents that would
require the Company to license, circumvent or cease manufacturing and sales of
products covered by such patents, or that such licenses, if needed, would be
available to the Company on favorable terms, if at all.

There can be no assurance that foreign intellectual property laws will
protect the Company's intellectual property rights. Furthermore, there can be
no assurance that others will not independently develop similar products,
duplicate the Company's products or design around any patents issued to the
Company. The Company's products might infringe the patent rights of others,
whether existing now or in the future. For the same reasons, the products of
others could infringe the patent rights of the Company. Although the Company
is not aware of any pending or threatened patent litigation against the
Company, the Company may be notified, from time to time, that it could be or
is infringing certain patents and other intellectual property rights of
others. Litigation, which could result in substantial cost to, and diversion
of resources of, the Company even if the outcome is favorable to the Company,
may be necessary to enforce patents or other intellectual property rights of
the Company or to defend the Company against claimed infringement of the
rights of others. These problems can be particularly severe in foreign
countries. In the event of an adverse ruling in litigation against the Company
for patent infringement, the Company might be required to discontinue the use
of certain processes, cease the manufacture, use and sale of infringing
products, expend significant resources to develop non-infringing technology or
obtain licenses to patents of third parties covering the infringing
technology. No assurance can be given that licenses will be obtainable on
acceptable terms, or at all, or that damages for infringement will not be
assessed or that litigation will not occur. The failure to obtain necessary
licenses or other rights or litigation arising out of any such claims could
have a material adverse effect on the Company's business, results of
operations and financial condition.

In 1985, the Company obtained a license to certain patents and patent
applications from the Massachusetts Institute of Technology ("MIT") for device
wafers and related technology to make, have made, use and sell products for
the life of the patents. This license is exclusive with respect to commercial
applications until April 22, 1999 and becomes non-exclusive thereafter. There
can be no assurance that MIT will continue to license such technology to the
Company on an exclusive basis after such date. Furthermore, should MIT license
such technology to third parties,

12
<PAGE>

there can be no assurance that such licensing will not have a material adverse
effect on the Company's business, results of operations and financial
condition.

The Company also attempts to protect its proprietary information with
contractual arrangements and under trade secret laws. Company employees and
consultants generally enter into agreements containing provisions with respect
to confidentiality and the assignment of rights to inventions made by them
while in the employ of the Company. Agreements with consultants generally
provide that rights to inventions made by them while consulting for the
Company will be assigned to the Company unless such assignment is prohibited
by the terms of any agreements with their regular employers. Agreements with
employees, consultants and collaborators contain provisions intended to
protect further the confidentiality of the Company's proprietary information.
To date, the Company has had no experience in enforcing such agreements. There
can be no assurance that these agreements will not be breached, that the
Company would have adequate remedies for any breaches, or that the Company's
trade secrets will not otherwise become known or be independently developed by
competitors. See "Business--Patents, Proprietary Rights and Licenses."

DEPENDENCE ON KEY PERSONNEL. The Company's success depends in large part
upon a number of key management and technical employees. The loss of the
services of one or more key employees, including John C.C. Fan, the Company's
President and Chief Executive Officer, could have a material adverse effect on
the Company. The Company does not maintain any "key-man" insurance policies on
Dr. Fan or any other employees. In addition, the Company's success will depend
in significant part upon its ability to attract and retain highly-skilled
management, technical, and sales and marketing personnel. Competition for such
personnel is intense and there can be no assurance that the Company will be
successful in attracting and retaining such personnel. See "Business--
Employees" and "Management."

RISKS ASSOCIATED WITH MANAGING AN EXPANDING BUSINESS. Due to the level of
technical and marketing expertise necessary to support its existing and new
customers, the Company must attract highly qualified and well-trained
personnel. There may be only a limited number of persons with the requisite
skills to serve in these positions and it may become increasingly difficult
for the Company to hire such personnel. The Company has historically derived
its revenues primarily from research and development contracts with various
agencies of the federal government and sales of its device wafers. In order to
achieve its business objectives, the Company must continue to undergo
substantial changes in its operations to transition to a company which
develops and manufactures advanced semiconductor device wafer products and
small form factor displays and markets them to a broader commercial
marketplace. This transition has placed, and is expected to continue to place,
significant strain on the Company's limited administrative, operational and
financial resources. Future expansion by the Company may also significantly
strain the Company's management, manufacturing, financial and other resources,
including required spending on capital expenditures. There can be no assurance
that the Company's systems, procedures, controls and existing space will be
adequate to support the Company's operations. There can also be no assurance
that the Company will be able to finance such improvements. Failure to manage
the Company's growth properly could have a material adverse effect on the
Company's business, results of operations and financial condition. See
"Business--Strategy" and "--Sales and Marketing."

DISCRETION AS TO USE OF PROCEEDS. The principal use of proceeds from the
Offering will be for general corporate purposes, including the funding of
capital expenditures and increasing working capital. The Offering will also
provide liquidity for certain of the Company's existing stockholders. As of
the date of this Prospectus, the Company has no specific plans to use the net
proceeds from the Offering other than for general corporate purposes. The
Company may

13
<PAGE>

make acquisitions of complementary technologies, products or businesses.
However, the Company has no agreements or commitments with respect to any
acquisitions, and is not currently engaged in any negotiations for any such
acquisition. Accordingly, the Company's management will retain broad
discretion as to the allocation of the net proceeds from this offering. See
"Use of Proceeds."

RISKS ASSOCIATED WITH POSSIBLE ACQUISITIONS AND INVESTMENTS. The Company may
pursue potential acquisitions of businesses, products and technologies that
could complement or expand the Company's business. The Company currently has
no commitments or agreements with respect to any acquisitions and there can be
no assurance that the Company will be able to identify any appropriate
acquisition candidates. If the Company identifies an acquisition candidate,
there can be no assurance that the Company will be able to successfully
negotiate the terms of any such acquisition, finance such acquisition or
integrate such acquired businesses, products or technologies into the
Company's existing business and products. The negotiation of potential
acquisitions as well as the integration of an acquired business could cause
diversion of management's time and resources, and require the Company to use
proceeds from the Offering to consummate a potential acquisition. Future
acquisitions by the Company could result in potentially dilutive issuances of
equity securities, the incurrence of debt and contingent liabilities,
amortization expenses and write-downs of acquired assets. For example, the
Company recorded a write-down of $3,900,000 in 1996 associated with its
investment in Forte Technologies, Inc., a developer of virtual reality head-
mounted systems and peripherals for the computer and entertainment markets. In
addition, the Company has made, and may from time to time in the future make,
investments in companies engaged in certain aspects of the flat panel display
and electronics industries as part of its business strategy. If the Company
were to complete any acquisitions or investments in the future, there can be
no assurance that, whether or not consummated, any such acquisition or
investment would not have a material adverse effect on the Company's business,
results of operations and financial condition. See "Use of Proceeds" and
"Business--Investments in Related Businesses."

ENVIRONMENTAL REGULATION. The Company is subject to a variety of federal,
state and local governmental regulations related to the use, storage,
discharge and disposal of toxic, volatile or otherwise hazardous chemicals
used in its manufacturing process. Although the Company believes that its
activities conform to presently applicable environmental regulations, the
failure to comply with present or future regulations could result in fines
being imposed on the Company, suspension of production or a cessation of
operations. Any failure of the Company to control the use of, or adequately
restrict the discharge of, hazardous substances, or otherwise comply with
environmental regulations, could subject it to significant future liabilities.
In addition, although the Company believes that its past operations conformed
with then applicable environmental laws and regulations, there can be no
assurance that the Company has not in the past violated applicable laws or
regulations, which violations could result in remediation or other
liabilities, or that past use or disposal of environmentally sensitive
materials in conformity with then existing environmental laws and regulations
will not result in remediation or other liabilities under current or future
environmental laws or regulations. See "Business--Manufacturing and
Facilities."

STOCK PRICE VOLATILITY. The trading price of the Company's Common Stock
could be subject to wide fluctuations in response to quarter-to-quarter
variations in results of operations, announcements of technological
innovations or new products by the Company or its competitors, general
conditions in the wireless communications, semiconductor and display markets,
changes in earnings estimates by analysts, or other events or factors. In
addition, the public stock markets have experienced extreme price and trading
volume volatility in recent months. This volatility has significantly affected
the market prices of securities of many

14
<PAGE>

technology companies for reasons frequently unrelated to the operating
performance of the specific companies. These broad market fluctuations may
adversely affect the market price of the Company's Common Stock. See "Price
Range of Common Stock" and "Underwriting."

15
<PAGE>

USE OF PROCEEDS

The net proceeds to the Company from the sale of 1,000,000 shares of Common
Stock offered by the Company hereby are estimated to be approximately
$16,830,000 ($21,281,723 if the Underwriters' over-allotment option is
exercised in full) at an assumed public offering price of $18.25 and after
deducting estimated underwriting discounts and commissions and estimated
offering expenses payable by the Company. The Company will not receive any
proceeds from the sale of shares of Common Stock by the Selling Stockholders.
See "Selling Stockholders."

The principal use of proceeds from the Offering will be for general
corporate purposes, including the funding of capital expenditures and
increasing working capital. The Company intends to use the net proceeds of the
Offering for acquisition of additional manufacturing equipment and expansion
of the Company's manufacturing capabilities. The Offering will also provide
liquidity for certain of the Company's existing stockholders. In addition, the
Company may make acquisitions of complementary technologies, products or
businesses. However, the Company has no agreements or commitments with respect
to any acquisitions, and is not currently engaged in any negotiations for any
such acquisition. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations." Pending the uses described above, the
net proceeds will be invested in short-term, interest-bearing, investment-
grade securities. The Company's management will have broad discretion to
allocate proceeds of the Offering to uses that it believes are appropriate.
There can be no assurance that the proceeds of the Offering can or will be
invested to yield a positive return. See "Risk Factors--Discretion as to Use
of Proceeds."

16
<PAGE>

PRICE RANGE OF COMMON STOCK

The Company's Common Stock is traded on the Nasdaq National Market under the
symbol "KOPN." The following table sets forth, for the quarters indicated, the
range of high and low sale prices for the Common Stock as reported on the
Nasdaq National Market for the periods indicated.

<TABLE>
<CAPTION>
HIGH LOW
------- ------
<S> <C> <C>
Fiscal Year Ended December 31, 1995
First Quarter................................................. $11 3/4 $7 1/2
Second Quarter................................................ 11 1/4 7 3/4
Third Quarter................................................. 18 1/2 9 1/2
Fourth Quarter................................................ 19 3/4 14
Fiscal Year Ended December 31, 1996
First Quarter................................................. 14 3/4 9 3/4
Second Quarter................................................ 11 1/4 8 1/4
Third Quarter................................................. 10 3/4 7
Fourth Quarter................................................ 13 1/4 7 1/4
Fiscal Year Ending December 31, 1997
First Quarter................................................. 15 3/4 9 7/8
Second Quarter................................................ 16 3/4 10 1/2
Third Quarter................................................. 24 5/8 14 3/4
Fourth Quarter (through December 11, 1997).................... 29 18 1/4
</TABLE>

As of November 30, 1997, there were 252 stockholders of record of the
Company's Common Stock, not including those shares held in "street" name. On
December 11, 1997, the last reported sale price on the Nasdaq National Market
for the Company's Common Stock was $18.25 per share. These prices do not
include retail mark-ups, mark-downs or commissions.

DIVIDEND POLICY

To date, the Company has neither declared nor paid any cash dividends on
shares of its Common Stock. The Company currently intends to retain its future
earnings, if any, for reinvestment in its business and, therefore, does not
anticipate paying any cash dividends in the near future.

17
<PAGE>

CAPITALIZATION

The following table sets forth the short-term debt and capitalization of the
Company as of September 27, 1997 (i) on an actual basis and (ii) as adjusted
to give effect to the sale by the Company of the 1,000,000 shares of Common
Stock offered by the Company hereby at an assumed public offering price of
$18.25 and the application of the estimated net proceeds therefrom. This table
should be read in conjunction with the Consolidated Financial Statements of
the Company and the related Notes thereto included elsewhere in this
Prospectus.

<TABLE>
<CAPTION>
AS OF SEPTEMBER 27, 1997
----------------------------
ACTUAL AS ADJUSTED
------------ --------------
(IN THOUSANDS,
EXCEPT SHARE DATA)
<S> <C> <C>
Short-term debt, including current portion of
long-term debt.................................. $ 1,678 $ 1,678
============ ============
Long-term debt, less current portion............. 1,313 1,313
Stockholders' equity:
Preferred stock, $0.01 par value; 3,000 shares
authorized; None issued and outstanding....... -- --
Common stock, $0.01 par value, 20,000,000
shares authorized; 11,091,204 shares outstand-
ing; and 12,091,204 shares outstanding as ad-
justed(1)..................................... 111 121
Additional paid-in capital..................... 90,167 106,987
Deferred compensation.......................... (173) (173)
Marketable securities valuation................ (8) (8)
Accumulated deficit............................ (53,541) (53,541)
------------ ------------
Total stockholders' equity....................... 36,556 53,386
------------ ------------
Total capitalization............................. $ 37,869 $ 54,699
============ ============
</TABLE>
- --------
(1) Excludes as of September 27, 1997 outstanding options to purchase
2,103,186 shares of Common Stock at a weighted average exercise price of
$11.48 per share, 977,779 of which were exercisable.

18
<PAGE>

DILUTION

As of September 27, 1997, the Company had 11,091,204 shares of Common Stock
outstanding and a net tangible book value of $34,518,701 or $3.11 per share.
"Net tangible book value per share" represents the tangible net worth of the
Company (total tangible assets less total liabilities) divided by the number
of shares of Common Stock outstanding. Without taking into account any changes
in such net tangible book value after September 27, 1997, other than those
resulting from the sale by the Company of 1,000,000 shares of Common Stock
offered hereby at an assumed public offering price of $18.25 per share and
after deduction of the estimated underwriting discount and offering expenses
payable by the Company, the net tangible book value of the Company at
September 27, 1997 would have been $51,348,701 or $4.25 per share. This
represents an immediate increase in the net tangible book value of $1.14 per
share to existing stockholders and an immediate dilution of the net tangible
book value of $14.00 per share to persons purchasing the shares offered hereby
at the assumed public offering price (the "New Investors"). The following
table illustrates this per share dilution:

<TABLE>
<S> <C> <C>
Assumed public offering price per share........................... $18.25
Net tangible book value per share before offering................ $3.11
Increase attributable to New Investors........................... 1.14
-----
Net tangible book value per share after offering(1)(2)............ 4.25
------
Dilution per share to New Investors(1)(2)......................... $14.00
======
</TABLE>
- --------
(1) If the Underwriters' over-allotment option is exercised in full, dilution
per share to New Investors would be $13.73.
(2) The above calculations do not take into account the exercise of
outstanding stock options after September 27, 1997. As of September 27,
1997, there were outstanding stock options to purchase an aggregate of
2,103,186 shares of Common Stock at a weighted average exercise price of
$11.48 per share, of which 977,779 were exercisable. If the 977,779
options currently exercisable were exercised, in addition to the
Underwriters' exercise of the over-allotment option, the net tangible book
value per share would be $5.03, resulting in dilution to New Investors of
$13.22. See Note 9 of Notes to Consolidated Financial Statements.

19
<PAGE>

SELECTED CONSOLIDATED FINANCIAL DATA
The following selected consolidated financial data are qualified by the more
detailed Consolidated Financial Statements and the related Notes thereto
included elsewhere in this Prospectus, and should be read in conjunction
therewith and with the discussion under "Management's Discussion and Analysis
of Financial Condition and Results of Operations" included elsewhere in this
Prospectus. The selected consolidated financial data as of December 31, 1995
and 1996 and for the three years ended December 31, 1996 have been derived
from the Company's consolidated financial statements included elsewhere in
this Prospectus, which have been audited by Deloitte & Touche LLP, independent
auditors. The selected consolidated balance sheet data as of December 31,
1992, 1993 and 1994 and selected consolidated statements of operations data
for each of the two years in the period ended December 31, 1993 have been
derived from the Company's consolidated financial statements not included
herein, which have been audited by Deloitte & Touche LLP, independent
auditors. The selected consolidated statement of operations data shown below
for the nine months ended September 28, 1996 and September 27, 1997 and the
selected consolidated balance sheet data as of September 27, 1997 have been
derived from the Company's unaudited consolidated financial statements
included elsewhere in this Prospectus, which, in the opinion of management,
include all adjustments (consisting of normal recurring adjustments) necessary
for a fair presentation of such interim periods. The results for the nine
months ended September 27, 1997 are not necessarily indicative of results that
may be expected for the full fiscal year.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, NINE MONTHS ENDED
-------------------------------------------- -----------------------
SEPT. 28, SEPT. 27,
1992 1993 1994 1995 1996 1996 1997
------- ------- ------- ------- -------- ----------- -----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
Statement of Operations
Data:
Revenues:
Product revenues(1)... $ 2,379 $ 2,456 $ 2,830 $ 7,161 $ 11,727 $ 8,411 $ 8,940
Research and
development
revenues............. 5,086 8,642 10,453 8,628 6,291 5,278 2,563
------- ------- ------- ------- -------- -------- -------
Total revenues...... 7,465 11,098 13,283 15,789 18,018 13,689 11,503
======= ======= ======= ======= ======== ======== =======
Expenses:
Cost of product
revenues............. 1,798 1,769 1,981 6,059 9,489 7,265 5,974
Research and develop-
ment--funded pro-
grams................ 4,870 7,802 10,531 8,757 6,591 5,732 2,108
Research and develop-
ment--internal....... 1,218 2,181 4,070 6,856 9,876 7,565 6,049
General, administra-
tive and selling..... 1,694 2,591 4,575 4,013 7,070 5,304 3,257
Other................. 169 280 255 403 598 446 227
Write-down of subsidi-
ary assets........... -- -- -- -- 3,900 -- --
Non-recurring impair-
ment charge.......... -- -- -- -- 4,990 4,990 --
------- ------- ------- ------- -------- -------- -------
Total expenses...... 9,749 14,623 21,412 26,088 42,514 31,302 17,615
------- ------- ------- ------- -------- -------- -------
Loss from operations.... (2,284) (3,525) (8,129) (10,299) (24,496) (17,613) (6,112)
Other income, net....... 630 1,883 1,435 1,308 1,676 1,197 833
------- ------- ------- ------- -------- -------- -------
Loss before minority
interest............... (1,654) (1,642) (6,694) (8,991) (22,820) (16,416) (5,279)
Minority interest in
loss of subsidiary..... -- -- -- -- 1,224 1,075 --
------- ------- ------- ------- -------- -------- -------
Net loss................ $(1,654) $(1,642) $(6,694) $(8,991) $(21,596) $(15,341) $(5,279)
======= ======= ======= ======= ======== ======== =======
Net loss per share...... $ (0.27) $ (0.20) $ (0.72) $ (0.95) $ (1.98) $ (1.41) $ (0.48)
======= ======= ======= ======= ======== ======== =======
Weighted average number
of shares outstanding.. 6,219 8,242 9,267 9,462 10,921 10,919 10,973
======= ======= ======= ======= ======== ======== =======
</TABLE>

20
<PAGE>

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------------- SEPT. 27,
1992 1993 1994 1995 1996 1997
------- ------- ------- ------- ------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Balance Sheet Data:
Cash and equivalents
and marketable
securities........... $16,414 $39,231 $28,728 $41,997 $27,072 $19,865
Working capital....... 17,921 42,169 30,566 44,727 27,687 21,466
Total assets.......... 25,455 53,804 52,836 76,160 53,746 43,785
Long-term debt (net of
current portion)..... 646 103 2,235 1,605 2,793 1,313
Accumulated deficit... (9,337) (10,980) (17,674) (26,665) (48,261) (53,541)
Stockholders' equity.. 21,123 50,549 43,451 61,842 40,271 36,556
</TABLE>
- --------
(1) From 1994 through 1996, the Company made equity investments in Forte
Technologies, Inc. ("Forte"), a manufacturer of head-mounted display
systems. In May 1995, the Company obtained a controlling interest in Forte
and consolidated the financial statements of Forte with those of the
Company from June 1, 1995 through December 31, 1996. In March 1997, Forte
filed a voluntary petition seeking protection from its creditors under
Chapter 11 of the United States Bankruptcy Code. As a result of this
filing, the financial statements of Forte are not consolidated with those
of the Company in 1997. Product revenues of Forte were $3,513,147 and
$2,542,032 for the years ended December 31, 1995 and 1996, respectively,
and $2,109,198 for the nine months ended September 28, 1996. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Overview."

21
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of the financial condition and results of
operations of the Company should be read in conjunction with the Consolidated
Financial Statements and the related Notes thereto included elsewhere in this
Prospectus. Except for the historical information contained herein, the
discussion in this Prospectus contains certain forward-looking statements that
involve risks and uncertainties, such as statements of the Company's plans,
objectives, expectations and intentions. The cautionary statements made in
this Prospectus should be read as being applicable to all related forward-
looking statements wherever they appear in this Prospectus. The Company's
actual results could differ materially from those discussed here. Factors that
could cause or contribute to such differences include those discussed in "Risk
Factors," as well as those discussed elsewhere herein.

OVERVIEW

Kopin is a leading developer and manufacturer of advanced semiconductor
materials and small form factor displays. The Company was incorporated in 1984
to further develop and commercialize certain semiconductor expertise developed
at MIT. Historically, the Company has derived most of its revenues from
research and development contracts with agencies of the United States
government. Beginning in 1995, the Company experienced a significant increase
in revenues from sales of its device wafers, and in 1996, revenues from such
sales for the first time exceeded revenues from research and development
contracts. More recently, the Company has commenced sales of CyberDisplay
products. The Company has been unprofitable since inception and, at September
27, 1997, the Company had an accumulated deficit of $53,540,621.

For the years ended December 31, 1995 and 1996, the Company's consolidated
financial statements include the results of operations of Forte, a majority-
owned subsidiary of the Company. As a result of declining sales and results of
operations of Forte, the Company recorded a write-down of the value of Forte's
assets and its investment in Forte at December 31, 1996 totaling $3,900,000.
In March 1997, Forte filed a voluntary petition seeking protection from its
creditors under Chapter 11 of the United States Bankruptcy Code. As a result
of such filing, the financial statements of Forte are not consolidated with
those of the Company as of September 27, 1997 and for the nine months then
ended. In November 1997, Kaotech Corporation, a newly organized entity (of
which the Company owns approximately 19.5%), purchased substantially all of
the assets of Forte for approximately $60,000, subject to certain liens on
those assets. See "Business--Investments in Related Businesses."

The Company has two principal components of revenues: research and
development revenues and product revenues. Research and development revenues
consist primarily of development contracts with agencies of the federal
government. In 1994, the Company had research and development revenues of
$10,453,050, or 78.7% of total revenues. As management intensified its efforts
on the marketing and sales of its commercial products, research and
development revenues declined to 54.6% and 34.9% of total revenues for the
years ended December 31, 1995 and 1996, respectively, and 22.3% for the nine
months ended September 27, 1997. The Company believes that research and
development revenues will continue to decline as a percentage of total
revenues for the near future.

Historically, product revenues have consisted of sales of the Company's
device wafer products, and to a lesser extent, sales from Forte. In 1994, the
Company had product revenues of $2,830,339, or 21.3% of total revenues.
Product revenues were $7,161,236 ($3,648,089

22
<PAGE>

excluding Forte) and $11,727,081 ($9,185,049 excluding Forte) for the years
ended December 31, 1995 and 1996, and $8,411,166 ($6,301,968 excluding Forte)
and $8,940,129 for the nine months ended September 28, 1996 and September 27,
1997, respectively.

The Company recognizes revenues when a product is shipped or when a service
is performed. For certain of its products, the Company provides customers with
a twelve month warranty from the date of sale. Estimated sales return and
warranty reserves are provided at the time of sale based upon historical and
anticipated warranty costs. Revenues from long-term contracts are 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 cost or hours. Product development and research contracts which
have established prices for distinct phases are accounted for as if each phase
were a separate contract. Amounts received under long-term contracts are
recognized as revenues are earned, amounts earned on contracts in progress in
excess of billings are classified as unbilled receivables, and amounts
received in excess of amounts earned are classified as unearned revenues.
Unbilled receivables are billed based on dates stipulated in the related
agreement or in periodic installments based upon the Company's invoicing
cycle. At the time a loss on a contract becomes known, the entire amount of
the estimated ultimate loss is recognized in the financial statements.

On January 1, 1996, the Company adopted Statement of Financial Accounting
Standards (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.

RESULTS OF OPERATIONS

Nine Months Ended September 27, 1997 Compared to Nine Months Ended September
28, 1996

REVENUES. The Company's total revenues were $11,502,614 for the nine months
ended September 27, 1997 compared to $13,689,238 ($11,580,040 excluding Forte)
during the corresponding period in 1996, a decrease of $2,186,624. The
Company's product revenues were $8,940,129 for the nine months ended September
27, 1997 compared to $8,411,166 ($6,301,968 excluding Forte) during the
corresponding period in 1996, an increase of $528,963. The increase in product
revenues was due to a $2,638,161 increase in sales of HBT device wafers and
display products over the corresponding period in the prior year, partially
offset by the inclusion of Forte revenues for the nine months ended September
28, 1996. The increase in sales of the Company's device wafers was primarily
due to the increased use of these wafers in various wireless
telecommunications products, particularly by the Company's major customer,
Rockwell. Research and development revenues were $2,562,485 for the nine
months ended September 27, 1997 compared to $5,278,072 during the
corresponding period in 1996, a decrease of $2,715,587. The decrease in
research and development revenues was primarily attributable to a decrease in
contract revenues from agencies of the federal government. In 1994, the
Company received a $10,658,000 multi-year contract award from Defense Advanced
Research Projects Agency. The Company recorded revenues under this contract of
$492,000 for the nine months ended September 27, 1997 compared to $3,195,000
during the corresponding period in 1996, a decrease of $2,703,000.

COST OF PRODUCT REVENUES. Cost of product revenues, which is comprised of
materials, labor and manufacturing overhead related to the Company's products,
was $5,974,403 for the

23
<PAGE>

nine months ended September 27, 1997 compared to $7,264,732 ($4,858,213
excluding Forte) during the corresponding period in 1996. The improvement in
cost of product revenues as a percentage of product revenues in 1997 was
primarily due to increased sales of device wafers, resulting in lower unit
costs, and the inclusion in the 1996 financial results of shipments of head-
mounted display systems by Forte.

RESEARCH AND DEVELOPMENT. Research and development expenses include expenses
incurred in support of internal development programs and programs funded by
agencies of the federal government, including development programs for display
devices and products, Wafer-Engineered device wafers and head-mounted display
systems, circuit design costs, staffing, purchases of materials and laboratory
supplies, and fabrication and packaging of the Company's display products.
Funded research and development expenses were $2,107,968 for the nine months
ended September 27, 1997 compared to $5,732,158 during the corresponding period
in 1996, a decrease of $3,624,190. The decrease in funded research and
development expenses in 1997 was primarily due to a reduction in programs
funded by agencies of the federal government. Internal research and development
expenses were $6,049,001 for the nine months ended September 27, 1997 compared
to $7,564,862 ($7,106,380 excluding Forte) during the corresponding period in
1996, a decrease of $1,515,861. The decrease in internal research and
development expenses was primarily a result of reduced development costs
incurred for fabrication and packaging of the Company's display products, as
well as the inclusion of $458,482 of such expenses incurred by Forte during the
corresponding period in 1996.

GENERAL, ADMINISTRATIVE AND SELLING. 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
$3,256,782 for the nine months ended September 27, 1997 compared to $5,304,588
($3,071,150 excluding Forte) during the corresponding period in 1996, a
decrease of $2,047,806. The decrease in general, administrative and selling
expenses in 1997 was primarily due to the inclusion of expenses of $2,233,438
incurred by Forte in the nine months ended September 28, 1996. In addition,
general, administrative and selling expenses include non-cash charges for
compensation expense of $54,540 for the nine months ended September 27, 1997
compared to $35,082 in the nine months ended September 28, 1996 relating to the
issuance of certain stock options.

OTHER. Other expenses were $226,836 for the nine months ended September 27,
1997 compared to $445,675 ($207,823 excluding Forte) during the corresponding
period in 1996, a decrease of $218,839. The reduced expense in 1997 was
primarily due to amortization expense incurred in 1996 related to the goodwill
resulting from the Company's investment in Forte.

OTHER INCOME, NET. Other income, net was $832,898 for the nine months ended
September 27, 1997 compared to $1,196,581 during the corresponding period in
1996, a decrease of $363,683. The decrease in 1997 was primarily due to lower
interest income earned as a result of lower cash balances during the
corresponding period in 1996.

Year Ended December 31, 1996 Compared to Year Ended December 31, 1995

REVENUES. The Company's total revenues were $18,018,253 ($15,476,221
excluding Forte) in 1996 compared to $15,789,526 ($12,276,379 excluding Forte)
in 1995, an increase of $2,228,727. The Company's product revenues were
$11,727,081 ($9,185,049 excluding Forte) in 1996 compared to $7,161,236
($3,648,089 excluding Forte) in 1995, an increase of $4,565,845. The increase
in product revenues was primarily a result of an increase in unit sales of the
Company's HBT device wafers to customers for use in various wireless
telecommunications products. Research and development revenues were $6,291,172
in 1996 compared to $8,628,290

24
<PAGE>

in 1995, a decrease of $2,337,118. The decrease in research and development
revenues in 1996 was attributable to a reduction in contract revenues from
agencies of the federal government. In 1994, the Company received a
$10,658,000 multi-year contract award from Defense Advanced Research Projects
Agency. The Company recorded revenues under this contract of $3,441,000 in
1996 and $4,260,000 in 1995.

COST OF PRODUCT REVENUES. Cost of product revenues was $9,488,702
($6,733,054 excluding Forte) in 1996 compared to $6,059,440 ($2,880,557
excluding Forte) in 1995. The reduction in the cost of product revenues as a
percentage of product revenues in 1996 was primarily due to reduced
manufacturing start-up costs incurred in the initial production of the
Company's head-mounted display systems, and increased unit production volumes
of the Company's device wafers.

RESEARCH AND DEVELOPMENT. Funded research and development expenses were
$6,591,016 in 1996 compared to $8,756,850 in 1995, a decrease of $2,165,834,
as a result of a corresponding reduction in research and development revenues.
Internal research and development expenses were $9,876,082 ($9,278,537
excluding Forte) in 1996 compared to $6,856,437 ($6,240,299 excluding Forte)
in 1995, an increase of $3,019,645. The increase in internal research and
development expenses was primarily due to increased development of the
Company's display products, device wafers and head-mounted display systems,
including increases in circuit design costs, staffing, purchases of materials
and laboratory supplies, and fabrication and packaging of the Company's
displays.

GENERAL, ADMINISTRATIVE AND SELLING. General, administrative and selling
expenses were $7,070,275 ($4,188,658 excluding Forte) in 1996 compared to
$4,012,764 ($2,917,389 excluding Forte) in 1995, an increase of $3,057,511.
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, and increased personnel and related costs. In addition,
general, administrative and selling expenses include non-cash charges for
compensation expense of $66,776 in 1996 compared to $130,188 in 1995 relating
to the issuance of certain stock options.

OTHER. Other expenses were $597,943 ($280,807 excluding Forte) in 1996
compared to $402,554 ($289,622 excluding Forte) in 1995, an increase of
$195,389. The increase was primarily due to higher amortization expenses
incurred in 1996 related to the goodwill resulting from the Company's
investment in Forte.

OTHER INCOME, NET. Other income, net was $1,676,224 in 1996 compared to
$1,307,520 in 1995, an increase of $368,704. The increase was primarily due to
greater interest income earned as a result of higher cash balances during the
period in comparison to 1995.

Year Ended December 31, 1995 Compared to Year Ended December 31, 1994

REVENUES. The Company's total revenues were $15,789,526 ($12,276,379
excluding Forte) in 1995 compared to $13,283,389 in 1994, an increase of
$2,506,137. The Company's product revenues increased to $7,161,236 ($3,648,089
excluding Forte) in 1995 from $2,830,339 in 1994, an increase of $4,330,897.
The increase in product revenues was primarily due to an increase in sales of
the Company's device wafers and displays and sales by Forte of $3,513,147 in
1995. Research and development revenues were $8,628,290 in 1995 compared to
$10,453,050 in 1994, a decrease of $1,824,760. This decrease was primarily
attributable to a decrease in contract revenues from agencies of the federal
government.

COST OF PRODUCT REVENUES. Cost of product revenues in 1995 was $6,059,440
($2,880,557 excluding Forte) compared to $1,980,701 in 1994. The increase in
cost of product revenues as a percentage of product revenues in 1995 was
primarily due to manufacturing start-up costs incurred in the production of
head-mounted display systems by Forte.

25
<PAGE>

RESEARCH AND DEVELOPMENT. Funded research and development expenses were
$8,756,850 in 1995 compared to $10,531,491 in 1994, a decrease of $1,774,641,
as a result of a corresponding reduction in research and development revenues.
Internal research and development expenses were $6,856,437 ($6,240,299
excluding Forte) in 1995 compared to $4,070,329 in 1994, an increase of
$2,786,108. The increase in internal research and development expenses was
primarily due to increased development of the Company's display products and
device wafers, including increases in circuit design costs, staffing, purchases
of materials and supplies, and fabrication and packaging of the Company's
displays.

GENERAL, ADMINISTRATIVE AND SELLING. General, administrative and selling
expenses were $4,012,764 ($2,917,389 excluding Forte) in 1995 compared to
$4,574,806 in 1994, a decrease of $562,042. General, administrative and selling
expenses decreased as a result of the reclassifications of costs incurred
relating to the Company's lease of a manufacturing facility in October 1993,
and the modification of the facility prior to the commencement of development
and manufacturing activities. These costs were classified as cost of sales and
research and development expense in 1995 and as general and administrative in
1994.

OTHER. Other expenses were $402,554 ($289,622 excluding Forte) in 1995
compared to $255,492 ($289,622 excluding Forte) in 1994, an increase of
$147,062. The increase in 1995 was primarily due to higher amortization
expenses incurred in 1995 related to the goodwill resulting from the Company's
investment in Forte.

OTHER INCOME, NET. Other income, net was $1,307,520 in 1995 compared to
$1,435,173 in 1994, a decrease of $127,653. The decrease in 1995 was primarily
due to lower interest income earned as a result of lower cash balances during
the period in comparison to balances in 1994.

SELECTED QUARTERLY RESULTS OF OPERATIONS

The following table presents the Company's unaudited results of operations
for the seven most recently ended fiscal quarters. The Company believes that
all necessary adjustments, consisting only of normal recurring adjustments,
have been included in the amounts below to present fairly the selected
quarterly information when read in conjunction with the Consolidated Financial
Statements and the related Notes thereto included elsewhere in this Prospectus.
The Company's results from operations may vary substantially from quarter to
quarter; accordingly, the results of operations for a quarter are not
necessarily indicative of results for any subsequent quarter or for the full
year.

26
<PAGE>

<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------------------------------------------------------------------
MARCH 30, JUNE 29, SEPTEMBER 28, DECEMBER 31, MARCH 29, JUNE 28, SEPTEMBER 27,
1996 1996 1996 1996 1997 1997 1997
--------- -------- ------------- ------------ --------- -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA (UNAUDITED):
Revenues:
Product revenues....... $ 3,044 $ 2,582 $ 2,785 $ 3,316 $ 2,882 $ 3,117 $ 2,941
Research and
development revenues.. 1,729 1,696 1,853 1,013 832 764 967
------- ------- ------- ------- ------- ------- -------
Total revenues....... 4,773 4,278 4,638 4,329 3,714 3,881 3,908
------- ------- ------- ------- ------- ------- -------
Costs and expenses:
Cost of product
revenues.............. 2,708 2,225 2,332 2,224 2,111 1,972 1,891
Research and
development........... 4,711 4,492 4,093 3,170 2,804 2,749 2,604
General, administrative
and selling........... 1,944 1,967 1,394 1,766 1,086 1,102 1,069
Other.................. 135 152 159 152 76 76 75
Write-down of
subsidiary assets..... -- -- -- 3,900 -- -- --
Non-recurring
impairment charge..... 4,990 -- -- -- -- -- --
------- ------- ------- ------- ------- ------- -------
Total costs and
expenses............ 14,488 8,836 7,978 11,212 6,077 5,899 5,639
------- ------- ------- ------- ------- ------- -------
Loss from operations... (9,715) (4,558) (3,340) (6,883) (2,363) (2,018) (1,731)
Other income, net...... 437 352 408 480 262 329 242
------- ------- ------- ------- ------- ------- -------
Loss before minority
interest.............. (9,278) (4,206) (2,932) (6,403) (2,101) (1,689) (1,489)
Minority interest in
loss of subsidiary.... 557 313 205 148 -- -- --
------- ------- ------- ------- ------- ------- -------
Net loss............... $(8,721) $(3,893) $(2,727) $(6,255) $(2,101) $(1,689) $(1,489)
======= ======= ======= ======= ======= ======= =======
</TABLE>

Product revenues decreased in the quarter ended June 29, 1996 as compared to
the quarter ended March 30, 1996 as a result of decreased product revenues
from Forte. Product revenues increased in the quarter ended December 31, 1996
as compared to the quarter ended September 28, 1996 as a result of increased
shipments of the Company's device wafers and Forte's products. Product
revenues decreased in the quarter ended September 27, 1997 as compared to the
quarter ended June 28, 1997 as a result of reduced sales of device wafers.

The Company's quarterly and annual results of operations are affected by a
wide variety of factors that could have a material adverse effect on total
revenues and profitability from period to period, including competitive
pressures on selling prices; the timing and cancellation of customer orders;
availability of integrated circuit foundry capacity and raw materials;
fluctuations in yields; changes in product mix; the Company's ability to
introduce new products and technologies on a timely basis; introduction of
products and technologies by the Company's competitors; market acceptance of
the Company's and its customers' products; the level of orders received which
can be shipped in a quarter; the Company's ability to successfully reduce
costs, and the cyclical nature of the semiconductor industry. See "Risk
Factors--Potential Fluctuations in Results of Operations."

27
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

The Company has financed its operations primarily through public and private
offerings of its equity securities, research and development contract
revenues, and sales of its Wafer-Engineered device wafers and display devices
and products. As of September 27, 1997, sales of equity securities have raised
approximately $90,000,000, including $13,300,000 of net proceeds from the
Company's initial public offering in April 1992, $26,500,000 of net proceeds
from the Company's March 1993 public offering, $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 1995.

As of September 27, 1997, the Company had cash and equivalents and
marketable securities of $19,864,577 and working capital of $21,466,263
compared to $27,072,106 and $27,686,990, respectively, as of December 31,
1996. The decrease in cash and equivalents and marketable securities was
primarily due to use of cash in operations of $4,151,913 primarily as a result
of net operating losses, capital expenditures of $2,544,985 and principal
payments on long-term obligations of $1,254,878, offset by proceeds of stock
option exercises of $1,563,516. The Company also has $1,415,061 of marketable
securities held in escrow as equipment financing collateral which is shown in
"other assets".

As of December 31, 1996, the Company had cash and equivalents and marketable
securities of $27,072,106 and working capital of $27,686,990 compared to
$41,996,977 and $44,727,410 as of December 31, 1995. During 1996, cash and
equivalents and marketable securities decreased $14,832,621. The decrease in
cash and equivalents and marketable securities was primarily due to
$12,785,361 of cash used in operations primarily as a result of net operating
losses, and $3,779,919 for capital expenditures. These decreases were
partially offset by borrowings of $2,830,425 and $1,800,000 in equity
financing raised by the Company's Forte subsidiary from certain of its
minority stockholders.

The Company periodically enters into various long-term debt arrangements to
finance equipment purchases and other activities. As of September 27, 1997,
long-term debt obligations totaled $2,540,905, of which $1,228,189 is payable
in the next twelve months.

In December 1997, the Company received a commitment letter for a $5,000,000
term loan facility from a commercial lender. Under the terms of the proposed
facility, the loan would be payable on a quarterly basis with a floating
interest rate to be based on LIBOR. There can be no assurance the Company will
be able to complete this loan transaction.

In October 1993, the Company entered into a five-year lease for a 74,000
square foot manufacturing facility. This facility, which includes 10,000
square feet of environmentally controlled clean rooms, is used primarily for
the Company's production of display devices. This facility is occupied under a
lease that expires in October 1999, with renewable options for up to five
additional years at the Company's election. The Company will make lease
payments of $1,000,000 per year over the remaining term of the lease.

The Company currently expects to expend approximately $5,000,000 on capital
expenditures in 1998, primarily for the acquisition of equipment relating to
the manufacturing, packaging and testing of CyberDisplay products and
production of the Company's device wafers.

As of December 31, 1996, the Company had tax loss carryforwards of
approximately $43,650,000, which may be used to offset future taxable income.

28
<PAGE>

RECENT ACCOUNTING PRONOUNCEMENTS

On January 1, 1996, the Company adopted 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, the Company, as permitted, will continue to apply APB
Opinion No. 25, which recognizes compensation cost based on the intrinsic
value of the equity instrument awarded.

In March 1997, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 128, "Earnings Per Share," which will be effective during the fourth
quarter of 1997. The new pronouncement's requirements will not impact the
Company's previously reported loss per share.

In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income," which is effective for the Company for the period commencing January
1, 1998. SFAS No. 130 has no impact on net income and requires that certain
components of stockholders' equity from non-owner sources be reclassified and
presented as "other comprehensive income." Currently, the Company's
consolidated balance sheets contain no material components of stockholders'
equity that would be reclassified as "other comprehensive income."

In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information," which is effective for the Company for
the period commencing January 1, 1998. The impact of SFAS No. 131 on the
Company has not yet been determined.

29
<PAGE>

BUSINESS

Kopin produces advanced device wafers used by manufacturers of gallium
arsenide ("GaAs") power amplifiers and other integrated circuits for digital
wireless handsets and other high frequency communications devices. The
Company's principal semiconductor wafer product is a heterojunction bipolar
transistor ("HBT") GaAs device wafer. The Company currently sells its device
wafers primarily to manufacturers of microwave integrated circuits for high
performance wireless communications devices. The Company believes that
integrated circuits manufactured using its HBT device wafers are well suited
for applications that require lower power consumption and high frequency
performance. Kopin's principal customer for its HBT device wafers is Rockwell
International Corporation ("Rockwell"). Rockwell, as well as other customers,
primarily use these HBT device wafers in the fabrication of integrated
circuits used in digital wireless handsets. The Company is actively marketing
its device wafers by working with customers who are developing integrated
circuits for use in these and other applications.

Kopin was founded in 1984 to commercialize semiconductor expertise developed
at the Massachusetts Institute of Technology ("MIT"). The Company's technology
expertise centers on its Wafer-Engineering technology, a process of splicing
or layering selected semiconductor materials to provide optimal performance
for specific applications. With this expertise, the Company has developed a
process to produce single crystal silicon integrated circuits and transfer
those circuits to glass and other media. This proprietary technology enabled
the development of the CyberDisplay product. The Company also uses Wafer-
Engineering technology for the manufacturing of advanced HBT device wafers
that enable the production of differentiated, higher performance integrated
circuits.

The Company believes that the CyberDisplay product is the world's smallest,
high performance, high resolution, low cost AMLCD. The CyberDisplay product is
a miniature display (0.24 inch diagonal) which uses a lens and backlight to
deliver high resolution data and video images equivalent to viewing a 20 inch
monitor from a distance of five feet. The Company believes CyberDisplay
products are well-suited for high resolution, high information content
applications, including reading e-mail and facsimile messages using digital
wireless handsets and pagers, viewing images in digital cameras, viewing
information stored in smart cards and for other personal communications and
consumer electronics devices.

The Company currently manufactures all of its device wafers at its facility
in Taunton, Massachusetts. The Company's facility in Westborough,
Massachusetts is used in the development and packaging of CyberDisplay
products. The integrated circuit portion

30
<PAGE>

of CyberDisplay products are produced by United Microelectronics Corporation
("UMC"). The Company is also establishing packaging capability for
CyberDisplay products with Unipac Optoelectronics Corp. ("Unipac"), an
affiliate of UMC. The Company anticipates that it will continue to use third-
party contractors in the manufacture of CyberDisplay products.

INDUSTRY OVERVIEW

Display Products

The Company believes there is an emerging and potentially large market for
small form factor displays that are capable of displaying significant amounts
of information. Driven by consumers' desire for smaller, more compact
electronics products capable of displaying ever increasing amounts of
information, these displays are expected to be used in portable information,
imaging and communications products. To date, the growth of some of these
markets has been inhibited by the limitations of available display
technologies. To meet consumer demands for a highly portable, small form
factor, high information content display, the display must have high
resolution, low power consumption, durability, low cost and be available in
both monochrome and full color.

The markets for high resolution, small form factor displays include digital
wireless handsets, pagers, digital cameras and smart card viewers. The growth
of these markets is being driven, in part, by rapid advances in technology
that are making possible new applications. For example, advances in wireless
communications systems such as higher bandwidths and increases in intelligence
embedded in digital wireless handsets, pagers and other portable
communications devices ("PCDs") have created the potential for mobile data
users to obtain real-time, wireless access to data. An industry source
estimates that the annual worldwide production of digital wireless handsets
will exceed 174 million units by 2001. Similarly, an industry source estimates
that the annual worldwide market for pagers will exceed 57 million units by
2001. An industry source estimates that annual worldwide digital camera
shipments will exceed eight million units by 2001. The rapid growth in the use
of smart cards (semiconductor-based cards that can store large amounts of
information) throughout the world and the increased applications for the
technology is creating a demand for low cost smart card viewers that can read
and display the large amount of varied information (data and images) that can
be stored in such credit card-sized cards. An industry source estimates that
the annual shipments of smart cards will exceed 1.18 billion units by 2001.

There are several display technologies currently available. The most
commonly used technology in portable applications is based on the traditional
liquid crystal display ("LCD"), which is now in widespread use in products
requiring a solid state monochrome or color display. These displays form an
image by either transmitting or blocking light emitted from a source located
behind the LCD. The passive matrix LCD is primarily used in displays for
calculators, watches, pagers and laptop computers because of its relatively
low cost and power consumption. Its relatively low image quality, slow
response time and limited viewing angle, however, make it inadequate for many
demanding applications. In contrast, AMLCDs incorporate a transistor at every
pixel location. This allows each pixel to be turned on and off independently
which improves image quality and response time and also provides an improved
side-to-side viewing angle of the display. AMLCDs are used primarily in laptop
computers, instrumentation and projection systems.

The speed, size and leakage of the transistors in AMLCDs are the key factors
governing their suitability for use as high performance digital displays.
Currently, transistors in the active matrix are primarily formed in one of two
ways. The first method involves the use of a thin film of

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amorphous silicon grown on glass. It is termed "amorphous" because a silicon
film grown directly on glass has very high crystal disorder and low electronic
quality (the speed of electrons in amorphous silicon is approximately 500
times slower than in integrated-circuit-quality, single crystal silicon).
Consequently, amorphous silicon thin-film transistors have difficulty
achieving the speed and the gray scale dynamic range required for digital high
definition imaging systems. The other method of transistor formation utilizes
polycrystalline silicon thin films that are grown on glass at high
temperatures. This process requires special high temperature glass or
expensive quartz panels. Although better than amorphous films, polycrystalline
silicon films are not well suited for high definition, high performance
applications because the speed of electrons in these films is still
approximately 30 times slower than in integrated circuit-quality, single
crystal silicon. Both approaches currently require the development and
manufacture of large scale, active matrix integrated circuits in material that
is already formed on glass or quartz substrates, which limits the pixel
density of the resulting displays, making this approach more suitable for
larger AMLCDs. The commercial manufacture of circuits on these substrates is
currently performed in purpose-built facilities rather than in conventional
silicon integrated circuit foundries, resulting in an inability to take
advantage of low-cost manufacturing available in the silicon integrated
circuit industry.

High-information content displays require a large number of pixels, and an
equal number of transistors. For example, a conventional monochrome LCD with a
resolution of 320 x 240 pixels is comprised of 76,800 pixels (and 76,800
transistors). For conventional color LCDs, three times that number of pixels
are required to provide a color display. The generation of color images is
usually accomplished by three color filters (red, green and blue)
lithographically located over each pixel. Thus, a 320 x 240 color AMLCD
requires 230,400 transistors. Due to this requirement, current conventional
AMLCD technologies have difficulty in achieving the levels of pixel density
required in a small form factor appropriate for use in portable devices.

The Company believes that the potential for high growth PCD markets can be
realized effectively, however, only if these devices are able to present
clearly to the end-user the information they wish to access, without
compromising the form factor of the device. These devices, as well as the next
generation of digital cameras and other consumer electronics devices, require
a small display with low power consumption and rich, full color high
resolution images. To date, display technologies have been limited in
addressing these needs due to constraints with respect to size, power
consumption, resolution, cost or full color capability.

Advanced Semiconductor Device Wafers

The Company believes there is a growing need for advanced semiconductor
materials used in the manufacture of microwave integrated circuits and other
integrated circuits used in high frequency, low power applications. The demand
for these microwave integrated circuits is being driven by the rapid growth in
the wireless communications equipment industry, resulting from new
transmission technologies, such as personal communications systems ("PCS"),
wireless local loop, satellite communications, wireless local area networks
(WLANs) and local multipoint distribution system (LMDS). The increasingly
shorter product cycles of systems products in these markets is another factor
driving the growth of demand for integrated circuits used in these
applications. In addition to the cellular and PCS markets, telecommunications
and data communications equipment markets represent other significant
applications opportunities for integrated circuits with these features. The
Company believes that emerging markets for integrated circuits made from GaAs
device wafers include power devices for base station applications in broadband
wireless services, high data rate fiber optic receivers used in
telecommunications, and other specialized integrated circuits used in data
communications and other applications.

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Until recently, integrated circuits used in high frequency, low power
applications were generally constructed with hybrid solutions such as silicon
bipolar transistors or silicon metal oxide semiconductor field effect
transistors ("MOSFET"). GaAs semiconductor technology has emerged as an
effective alternative or complement to silicon in many of these high
performance applications, in particular, high frequency microwave
telecommunications systems. GaAs has inherent physical properties which allow
electrons to move up to five times faster than in silicon. This higher
electron mobility permits GaAs integrated circuits to operate at much higher
frequencies than silicon devices, or operate at the same frequency with lower
power consumption. The reduction in system power requirements is particularly
important in portable applications. The high performance characteristics of
GaAs have led to the increased use of GaAs field effect transistors ("FETs")
in a wide range of commercial systems. Hybrid solutions are relatively
inexpensive to manufacture but have lower power efficiency, while the Company
believes GaAs FET wafers have better performance characteristics than hybrid
solutions but are more costly and create greater system complexity.

Even as device manufacturers are increasingly adopting GaAs FET technology
in the manufacture of high frequency integrated circuits such as those used in
microwave applications, industry demands are calling for even greater
performance. To address the increasingly demanding requirements of the
telecommunications and data communications markets, microwave and other high
frequency integrated circuits must incorporate certain key features. These
features include simpler system design, support for higher frequencies, lower
power consumption, improved signal linearity, and effective operation at a
wider range of temperatures.

THE KOPIN SOLUTION

CyberDisplay

The Company's CyberDisplay product is a miniature display (0.24 inch
diagonal) which uses a lens and backlight to deliver high resolution data and
video images. In contrast to current passive matrix LCD and AMLCD approaches,
the CyberDisplay product utilizes high quality, single crystal silicon--the
same high quality silicon that is used in conventional integrated circuits.
This single crystal silicon is not grown on glass; rather, it is first formed
on a silicon wafer and then lifted off as a thin film using the Company's
Wafer-Engineering technology. Before it is transferred to glass, the thin film
is patterned into an integrated circuit (including the active matrix, driver
circuitry and other logic circuits) in an integrated circuit foundry, so that
the transferred layer is a fully-functional active matrix integrated circuit.
The Company's Wafer-Engineering technology enables the production of
transparent circuits, in contrast to conventional silicon circuits, which are
opaque to light. As with conventional AMLCDs, the display's imaging properties
are a result of the formation of a liquid crystal layer over the transparent
active matrix integrated circuit. The Company believes that this manufacturing
process offers several advantages over other manufacturing approaches with
regard to small form factor displays, including greater miniaturization,
reduced cost, improved reliability, full color capability and higher
definition.

[An illustration appears here captioned "CyberDisplay Manufacturing
Process," which consists of a series of six steps portraying the manufacture
of the CyberDisplay product. Each of the six steps is captioned as follows:
"1. Prepare silicon wafer," "2. Fabricate integrated circuits," "3. Transfer
onto glass," "4. Liftoff circuits from silicon wafer," "5. Fill with liquid
crystal," "6. Fabricate into individual displays."]

The Company's use of high quality single crystal silicon in the manufacture
of CyberDisplay products offers several advantages. High quality silicon
enables high speed displays which operate

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at 180 frames per second, compared to 60 frames per second for most AMLCDs. At
this higher cycle speed, the Company is able to produce full color displays
without using color filters. Colors are generated by using a backlight
comprised of three LEDs that generate a sequence of red, green and blue light.
Each pixel either blocks or transmits the colored light 180 times per second,
which allows the generation of color images without using three separate
pixels, in turn decreasing the size, weight, and power requirements of the
color display. Furthermore, the color pixels are not spatially separated as in
conventional AMLCDs, resulting in sharper color images.

The Company's display products have the additional advantage of being
fabricated using conventional integrated circuit lithography processes. These
processes enable the manufacture of smaller active matrix circuits, resulting
in comparable or higher resolution AMLCDs relative to conventional displays.
The Company expects that its display products will benefit from further
general technology advances in the design and production of integrated
circuits and AMLCDs, resulting in further improvements in resolution and
miniaturization.

The Company believes that the CyberDisplay product's lower power
consumption, high resolution, cost-effectiveness and color capability makes it
well-suited for portable, high information content applications. The Company's
customers are currently developing an improved generation of high resolution
portable products incorporating its CyberDisplay products for a number of
target applications.

Advanced Semiconductor Device Wafers

Over the past several years, the Company has developed HBT device wafers
based on its proprietary Wafer-Engineering technology. HBT device wafers,
unlike competing GaAs FET wafers, consist of a series of material layers of
atomic-level thickness, which form a vertical transistor on the wafer. This
wafer structure enables the design of integrated circuits in which individual
transistors are vertically arranged. The three-dimensional nature of an HBT
device wafer, as opposed to the two-dimensional nature of a competing GaAs FET
wafer, offers several advantages to an integrated circuit manufacturer. The
principal advantage of this vertical structure is a higher transistor density
for a given surface area, resulting in better yields and greater processing
speed. Furthermore, current limitations on optical lithography result in
transistor gate length limits (the distance an electron must travel within a
transistor) on GaAs FET wafers of approximately 0.2 microns (for commercial
volumes). In the case of HBT device wafers, the transistor gate length is
determined by the thickness of the vertical base layer, which is a function of
the device manufacturer's process expertise rather than a limitation of
current optical lithography techniques. Kopin is currently manufacturing
device wafers in commercial volumes with a vertical base layer thickness of
approximately 0.05 microns, therefore enabling the design of faster circuits.

HBT device wafers also offer other advantages over GaAs FET wafers for
certain applications. For example, power amplifier circuits based on the
Company's device wafers run on a single power supply voltage and have
excellent signal linearity and power efficiency that enable digital wireless
handset designers to eliminate certain costly components and contribute to
longer battery life. Kopin's HBT device wafers also enable the design of
integrated circuits that operate at a wider range of temperatures, especially
as temperatures increase, due to their greater resistance to noise. This
resistance is due to the higher voltages that vertical base layers support
compared to conventional gates used in GaAs FET devices. Kopin's HBT
technology, expertise and processes also offer a number of advantages when
compared to those of other manufacturers of HBT wafers, such as the uniform,
repeatable growth of atomic layers, higher frequency performance, greater
manufacturing throughput, the ability to make larger diameter HBT device
wafers, and the development of device wafers from new compounds, such as
indium gallium phosphide ("InGaP").

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STRATEGY

The Company's objective is to become a leading supplier of miniature
displays and advanced semiconductor device wafers that enable its customers to
develop and manufacture high volume, differentiated communications and
consumer electronics devices. The critical elements of the Company's strategy
include:

. TARGET COMMUNICATIONS AND CONSUMER ELECTRONICS INDUSTRIES. The Company's
products are targeted at high growth applications, including digital
wireless handsets, pagers, smart card viewers, digital and video cameras
and other electronic devices in the communications and consumer
electronics industries. The Company believes that its display and device
wafer products are well-suited for these applications and will allow its
customers to develop and market an improved generation of products for
these target industries.

. DEVELOP STRONG RELATIONSHIPS WITH STRATEGIC CUSTOMERS. The Company seeks
to develop relationships with key customers in targeted industries to
promote the use of CyberDisplay products and Kopin's device wafers. In
addition to its established device wafer customer, Rockwell, the Company
has recently entered into agreements with respect to CyberDisplay products
with Siemens, Motorola, Gemplus and FujiFilm. The Company works closely
with its customers to help them design and develop cost-effective products
based on its display and device wafer solutions. With respect to its
display products, the Company believes that these relationships will allow
the Company to increase its marketing reach and more rapidly increase its
sales volume. Furthermore, the Company believes that this anticipated
increased sales volume may result in an acceptance of the Company's
display products as an industry standard reference platform, which in turn
will serve as a greater incentive for manufacturers of portable products
and related components to integrate the Company's display products into
their products.

. MAINTAIN TECHNOLOGICAL LEADERSHIP. The Company believes that its ability
to develop innovative products based on its extensive Wafer-Engineering
technology capabilities, enhances the opportunity for growth within its
targeted markets. By continuing to invest in research and development,
Kopin is able to add to its expertise in the design of innovative, high
resolution, small form factor displays and GaAs device wafers. The Company
intends to continue to focus its development efforts on proprietary
miniature displays and advanced semiconductor device wafers, both of which
the Company believes have a broad range of applications.

. MAXIMIZE PRODUCTION EFFICIENCIES. The Company believes that its success
will depend in part on its ability to be a low cost manufacturer. The
Company continually strives to reduce the cost of its device wafers by
refining its advanced processes to increase manufacturing efficiencies
while maintaining the quality of its products. Since late 1996, the
Company has added two production lines at its device wafer facility, with
one currently operational and the other expected to become operational in
the first half of 1998.

. LEVERAGE INTEGRATED CIRCUIT AND DISPLAY INDUSTRIES' INFRASTRUCTURE. The
Company believes that an important advantage of its approach to
manufacturing CyberDisplay products is the use of standard integrated
circuit fabrication and LCD packaging technologies. This capability leads
to greater production capacity and allows the Company to reduce greatly
the substantial capital investment and significant process development
costs typically needed for the manufacture of advanced LCDs. Additionally,
the Company believes it will continue to be aided by general technological
advances in

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the design and fabrication of integrated circuits, as well as advances in
LCD technology and manufacturing processes, that can be applied to the
manufacture of its display products. This capability enables the Company
to engage third-party manufacturers for certain fabrication and packaging
of CyberDisplay products, and allows the Company to rapidly take advantage
of new technologies, cost-efficiencies and increased production
capabilities of these third-party manufacturers.

PRODUCTS, MARKETS AND CUSTOMERS

CyberDisplay

The CyberDisplay product, launched in April 1997, is a miniature (0.24 inch
diagonal) high density 320 x 240 color or monochrome AMLCD. When illuminated
by a backlight and viewed through a lens, the CyberDisplay product displays
high resolution data and video images equivalent to viewing a 20 inch diagonal
screen from a distance of five feet. Kopin sells CyberDisplay products to
customers either as a single component or together with a lens and backlight
as a unit. The Company believes that the extremely small size and high image
quality of the CyberDisplay product makes it suitable for PCDs such as digital
wireless handsets, pagers and other applications, where there is a demand for
enhanced functionality, particularly to display more information while
retaining the portability of these products.

[An illustration appears here captioned "Viewing a CyberDisplay Product,"
which consists of, from left to right, a small picture of a human face in
profile, dotted lines running from his eye out to a lens, then to the
CyberDisplay integrated circuit and backlight, then finally to a larger
picture captioned "Virtual Display."]

There are several potential applications for the CyberDisplay product.
CyberDisplay products are expected to be incorporated in PCDs to allow the
user to interactively view data such as e-mail, facsimiles, Internet web pages
and other information. The CyberDisplay product is expected to be used in
digital cameras to allow the user to view previously stored images as well as
for replacement of traditional viewfinders. The CyberDisplay product is
expected to be incorporated into smart card viewers to allow portable access
and visual review of information stored on a smart card. The Company believes
that there may be numerous other applications for CyberDisplay products,
including use in video cameras and other consumer electronics devices.

The Company's customers for CyberDisplay products are currently developing
applications for digital wireless handsets and accessories, pagers and other
portable communications devices, digital cameras and smart card viewers. The
Company's strategy is to enter into relationships with these and other
customers to expand the market for its display devices and to become an
industry standard platform. Products using CyberDisplay products are expected
to be introduced in the second half of 1998. Highlighted below are summaries
of each of Kopin's existing CyberDisplay agreements:

SIEMENS. In May 1997, the Company entered into a three-year agreement with
Siemens pursuant to which the parties will jointly develop a wireless
telephone accessory containing CyberDisplay components. Under the terms of the
agreement, Siemens is required to purchase a minimum quantity of CyberDisplay
components from the Company by September 30, 1999. In addition, the Company
granted Siemens a non-exclusive license for certain Kopin technology used in
wireless phones, accessories and related products.

MOTOROLA. In September 1997, the Company entered into a five-year agreement
with Motorola Semiconductor Product Sector pursuant to which Motorola is
required to purchase

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<PAGE>

certain minimum quantities of CyberDisplay components annually through
December 31, 2002. Under the terms of the agreement, Motorola has the right to
use and resell CyberDisplay components worldwide. Under certain circumstances,
Motorola has the right to obtain from Kopin a royalty-based license to
manufacture up to 20% of its internal requirements for CyberDisplay
components.

GEMPLUS. In October 1997, the Company entered into a three-year agreement
with Gemplus, the world's largest provider of smart cards, pursuant to which
the parties agreed to jointly develop and design a smart card personal viewing
system and collaborate with certain phone manufacturers and financial
institutions to produce products based on CyberDisplay components. Until such
time as Gemplus has met certain minimum purchase requirements, Gemplus is
required to use CyberDisplay products in applications requiring small form
factor displays. Pursuant to the agreement, each party will have a license to
make, sell, market or distribute products jointly developed under the
agreement.

FUJIFILM. In October 1997, the Company entered into a three-year agreement
with FujiFilm pursuant to which FujiFilm agreed to develop image processing
integrated circuits to interface directly with CyberDisplay products. Under
the terms of the agreement, FujiFilm has the right to use and resell
CyberDisplay components worldwide as part of a developed product, but not on a
standalone basis.

For each of the above agreements, after the expiration of the initial
period, each agreement is renewable for an additional term upon the mutual
agreement of the parties. Each agreement also provides for a management
council, consisting of appointees from each party. These management councils
will address matters of mutual interest, including marketing strategies,
manufacturing requirements and technological improvements. In addition, each
of the agreements may be terminated by the respective parties upon a material
breach of the agreement after a specified cure period.

Additionally, the Company sells its CyberDisplay products to other customers
for incorporation into their products, and has entered into development and
evaluation agreements with several companies under which these companies will
develop, for evaluation purposes, prototype digital cameras and wireless
communications products incorporating CyberDisplay products. See "Risk
Factors--Dependence on Marketing and Distribution Relationships."

Advanced Semiconductor Device Wafers

The Company develops and manufactures application specific HBT device wafers
for advanced integrated circuit applications. These device wafers are
manufactured using metal organic chemical vapor deposition ("MOCVD")
semiconductor growth techniques. The Company believes it is one of the world's
leading suppliers of HBT device wafers and is currently supporting volume
production of three-inch and four-inch device wafers, with production of six-
inch device wafers anticipated in 1998. Kopin's primary HBT device wafer
product is the aluminum gallium arsenide ("AlGaAs") emitter. Using Wafer-
Engineering technology, the Company deposits films of atomic-level thickness
on substrate materials, creating vertically oriented devices. The Company can
vary the manufacturing process to create products with different
characteristics to suit the demands of particular customers.

Using Kopin's HBT device wafers, the Company's customers have developed
power amplifiers for wireless handsets, which the Company believes have
performance advantages over GaAs FET solutions. These components, in addition
to operating at very high frequencies, have low distortion and are power
efficient. At present, the Company's HBT device wafer

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<PAGE>

products have been used predominantly in Code Division Multiple Access (CDMA)
power amplifiers, but the Company believes that these wafer products are
applicable in and can provide the same benefits to the Global System Mobile
(GSM) and Time Division Multiple Access (TDMA) markets. In particular, in
those countries where one uniform standard has not yet been adopted, the
diversity of standards requires equipment capable of operating in dual modes
and bands, which equipment is likely to require higher performance
semiconductor technology such as the Company's HBT device wafers.

The Company's device wafers are typically manufactured for customer-specific
integrated circuits. Once an integrated circuit manufacturer has designed in a
particular device wafer, the Company believes that it is difficult for the
supplier of that device wafer to be replaced with respect to that particular
integrated circuit. The Company's largest customer for its device wafers is
Rockwell, with whom the Company has collaborated on the manufacturing and
development of HBT device wafers and related integrated circuits for several
years. For the nine months ended September 27, 1997, 70% of Kopin's total
revenues were derived from the sale of GaAs device wafers. Other customers of
the Company's device wafers include Raytheon Company, Northrop Grumman
Corporation, Siemens, Mitsubishi Electric Corporation, Hewlett Packard Company
and Northern Telecom Limited. See "Risk Factors--Substantial Reliance on
Certain Customers."

SALES AND MARKETING

The Company principally sells its device wafer products directly to
integrated circuit manufacturers in the United States and Europe. Sales of the
Company's device wafers to customers in Japan are made primarily through a
foreign distributor. The Company sells CyberDisplay products to OEM customers
on a direct basis. Under the terms of its September 1997 agreement with the
Company, Motorola has commenced the marketing of CyberDisplay products on a
worldwide basis.

The Company believes that the technical nature of its products and markets
demands a commitment to close relationships with its customers. The sales and
marketing staff, assisted by the technical staff and senior management, visit
prospective and existing customers worldwide on a regular basis and stay in
close contact with customers. The Company believes that these contacts are
vital to the development of a close, long-term working relationship with its
customers, and in obtaining regular forecasts, market updates, and information
regarding technical and market trends. The Company also participates in
industry-specific trade shows and conferences.

Kopin's design and engineering staff is actively involved with a customer
during all phases of prototype design and production by providing the customer
with engineering data, up-to-date product application notes, following up with
the customer's engineers on a regular basis, and assisting in resolving
technical problems by working with the customer's engineers both on and off
site. In most cases the Company's technical staff work with each customer in
the development stage to identify potential improvements to the design of the
customer's product in parallel with the customer's effort. The Company has
established a prototype product design facility in Los Gatos, California to
assist the Company's customers in incorporating the Company's products into
their own and to reduce the time required to bring such end-products to the
marketplace. This strategy helps customers accelerate their design process,
achieve cost-effective and manufacturable designs, and ensure a smooth
transition into high volume production.

PRODUCT DEVELOPMENT

The Company believes that continued introduction of new products in its
target markets is essential to its growth. The Company has assembled a group
of highly skilled engineers to work

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internally and with its customers to continue the Company's product
development efforts. For the nine months ended September 30, 1997 and for the
years ended December 31, 1996 and 1995, the Company incurred total research
and development expenses of $8,156,969, $16,467,098 and $15,613,287,
respectively, including research and development expenses related to the
Company's internal development programs for its display products and device
wafers of $6,049,001, $9,876,082 and $6,856,437, respectively.

CyberDisplay

The Company's product development efforts are focused towards continually
enhancing the features and functions of the CyberDisplay product. A principal
focus of this effort is the Company's development of, and ability to
manufacture very small active matrix pixels, which it will use in succeeding
generations of the CyberDisplay product. The pixel size of the current
CyberDisplay product is 15 microns and the Company believes it can achieve a
pixel size of less than 10 microns in commercial production. This is in
contrast to a pixel size of approximately 100 microns in a typical laptop
computer display. The resolution of the current commercially available
CyberDisplay product is 320 x 240. The Company expects future CyberDisplay
products to have resolutions of 640 x 480 and higher. While Kopin is working
on the commercialization of even higher resolutions for the CyberDisplay
product, the Company has already demonstrated 640 x 480 and 800 x 600
resolution displays in a 0.75 inch format as well as 1,280 x 1,024 and 2,560 x
2,048 resolution displays in a 1.5 inch format. The Company is also working on
further decreasing the already low power consumption of the CyberDisplay
product by continuing to evolve its display designs to improve the power
efficiency of products which incorporate CyberDisplay products. Additional
display development efforts include further automation of final display
assembly processes, and increasing the quantity of CyberDisplay active matrix
pixel arrays processed on each wafer by further reducing the display size and
using increasingly precise manufacturing techniques.

Advanced Semiconductor Device Wafers

Kopin intends to continue developing semiconductor device wafers for
advanced integrated circuit applications from other compound materials. The
Company is working closely with several of its major customers in the
development of the next generation of device wafers, particularly with respect
to increasing the application of its InGaP technology. The Company believes
that InGaP device wafers are simpler to process and result in greater yields
for certain products made by the Company's customers. Kopin is currently
manufacturing device wafers with a layer thickness of approximately 0.05
microns, and is currently developing manufacturing processes to reduce this
thickness further. The decrease in base layer thickness will provide faster
transistor performance, thus producing faster circuits. The Company has
equipment and facilities in place to manufacture, and is currently developing
manufacturing processes for production of six-inch device wafers, in
anticipation of six-inch GaAs substrates becoming commercially available to
the Company in 1998.

Other Wafer-Engineering Technology Applications

The Company is exploring the potential for using its innovative integrated
circuit lift-off technology for other advanced electronics applications. The
Company has developed techniques to transfer thin film displays and integrated
circuits to alternative materials, such as plastic and other flexible
surfaces, which the Company believes could enable a new class of applications,
including three-dimensional stacked integrated circuits, flexible displays,
conformal electronics and next generation flexible smart cards.

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Funded Research and Development

The Company has entered into various development contracts with agencies of
the federal government. These contracts help support the continued development
of the Company's core technologies. The Company intends to continue to pursue
other federal government development contracts for applications that relate to
the Company's commercial product applications. The Company's contracts with
government agencies contain certain milestones relating to technology
development and may be terminated by the government agencies prior to
completion of funding. The Company's policy is to retain its proprietary
rights with respect to the principal commercial applications of its
technology. To the extent technology development has been funded by a federal
agency, under applicable federal laws, such agency has the right to obtain a
non-exclusive, non-transferable, irrevocable, fully-paid license to practice
or have practiced such technology for governmental use. For the nine months
ended September 27, 1997, revenues attributable to research and development
contracts was $2,562,485, and for the years ended December 31, 1996 and 1995,
totaled $6,291,172 and $8,628,290, respectively.

COMPETITION

Displays

The display market is highly competitive and is currently dominated by large
Asian electronics companies including Sharp Corporation, Hitachi, Ltd., Seiko
Corporation, Toshiba Corporation ("Toshiba"), Sony Corporation, NEC
Corporation, Sanyo Electric Co., Ltd. and Display Technologies, Inc., a joint
venture of IBM Corporation and Toshiba. The display market consists of
multiple segments, each focusing on different end-user applications applying
different technologies. Flat panel AMLCDs have experienced rapid growth as the
market for laptop computers has grown with the improvements in performance and
cost. Most of the companies that manufacture AMLCDs have substantially greater
financial, technical, marketing, manufacturing, and personnel resources than
the Company. Competition in the display field is based on price and
performance characteristics, product quality and the ability to deliver
products in a timely fashion. The success of the Company's display product
offerings will also depend upon its ability to compete against other types of
more well-established products such as traditional AMLCD-based products as
well as the adoption of the CyberDisplay product in the industry as an
alternative to traditional AMLCD-based products. There can be no assurance
that the Company will be able to compete against these companies and
technologies.

There are also a number of alternative display technologies in production
and under development including passive matrix LCD and light emitting diode
("LED"), reflective, field emission display, plasma, organic LED and virtual
retinal displays, some of which target the high performance small form factor
display markets in which the Company's display products are sold. There are
many large and small companies that manufacture or have in development
products based on these technologies. The CyberDisplay product will compete
with other displays utilizing these and other competing display technologies.
There can be no assurance that the Company will be able to compete
successfully against these companies. See "Risk Factors--Competition."

Advanced Semiconductor Device Wafers

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<PAGE>

business, competition could become increasingly intense as new entrants emerge
to address the high growth markets that Kopin's products address. The
production of GaAs integrated circuits has been and continues to be more
costly than the production of silicon integrated circuits. Although the
Company has reduced production costs of its HBT device wafers by achieving
higher volumes, there can be no assurance that the Company will be able to
continue to decrease production costs. In addition, the Company believes the
costs of producing GaAs integrated circuits by its customers will continue to
exceed the costs associated with the production of competing silicon
integrated circuits. As a result, the Company must target markets where the
higher cost associated with GaAs integrated circuits is justified by their
superior performance. There can be no assurance that the Company can continue
to identify markets which require performance superior to that offered by
silicon solutions or that the Company will continue to offer products which
provide superior performance to offset the cost differentials. The GaAs
materials industry has been characterized by rapid and significant
technological advances. There can be no assurance that the Company will be
able to enhance its products to include these advances on a timely basis, if
at all, or that the Company will have sufficient funds to invest in new
technologies or products or processes. See "Risk Factors--Competition."

PATENTS, PROPRIETARY RIGHTS AND LICENSES

An important part of the Company's product development strategy is to seek,
when appropriate, protection for its products and proprietary technology
through the use of various United States and foreign patents and contractual
arrangements. The Company intends to prosecute and defend its proprietary
technology aggressively. The Company owns more than 50 issued United States
patents and more than 50 pending United States patent applications. Many of
these United States patents and applications have counterpart foreign patents,
foreign applications or international applications through the Patent
Cooperation Treaty. In addition, the Company is exclusively licensed by MIT
under 31 issued United States patents, 5 pending United States patent
applications, and some foreign counterparts to these United States patents and
applications. The Company's United States patents expire during the period
running from December 1997 through September 2014. The United States patents
licensed to the Company by MIT expire during the period running from March
1998 through November 2011.

In 1985, the Company obtained a license from MIT to certain patents and
patent applications directed to device wafers and related technology. The
license grants to the Company a worldwide license to make, have made, use, and
sell products covered by the licensed patents for the life of these patents.
The license is exclusive with respect to commercial applications until April
22, 1999, and becomes non-exclusive thereafter. During the period of
exclusivity, the Company also has a right of first refusal to negotiate a
license for MIT improvements that fall within the claims of the licensed
patents. In 1995, the Company obtained an additional license from MIT to
certain optical technology. The license grants to the Company a worldwide
license to make, have made, use, lease and sell products covered by the
licensed patents until 2007.

41
<PAGE>

inventions covered by pending patent applications or the first to file patent
applications on such inventions. There can be no assurance that the Company's
pending patent applications or those of its licensors will result in issued
patents or that any issued patents will afford protection against a competitor.
In addition, there can be no assurance that others will not obtain patents that
the Company would need to license, circumvent or cease manufacturing and sales
of products covered by such patents, or that such licenses, if needed, would be
available to the Company on favorable terms, if at all.

There can be no assurance that foreign intellectual property laws will
protect the Company's intellectual property rights. Furthermore, there can be
no assurance that others will not independently develop similar products,
duplicate the Company's products or design around any patents issued to the
Company. The Company's products might infringe the patent rights of others,
whether existing now or in the future. For the same reasons, the products of
others could infringe the patent rights of the Company. Although the Company is
not aware of any pending or threatened patent litigation against the Company,
the Company may be notified, from time to time, that it could be or is
infringing certain patents and other intellectual property rights of others.
Litigation, which could result in substantial cost to, and diversion of
resources of, the Company even if the outcome is favorable to the Company, may
be necessary to enforce patents or other intellectual property rights of the
Company or to defend the Company against claimed infringement of the rights of
others. These problems can be particularly severe in foreign countries. In the
event of an adverse ruling in litigation against the Company for patent
infringement, the Company might be required to discontinue the use of certain
processes, cease the manufacture, use and sale of infringing products, expend
significant resources to develop non-infringing technology or obtain licenses
to patents of third parties covering the infringing technology. No assurance
can be given that licenses will be obtainable on acceptable terms, or at all,
or that damages for infringement will not be assessed or that litigation will
not occur. The failure to obtain necessary licenses or other rights or
litigation arising out of any such claims could have a material adverse effect
on the Company's business, results of operations and financial condition.

The Company also attempts to protect its proprietary information with
contractual arrangements and under trade secret laws. The Company believes that
its future success will depend primarily upon the technical expertise, creative
skills and management abilities of its officers and key employees rather than
on patent ownership. Company employees and consultants generally enter into
agreements containing provisions with respect to confidentiality and the
assignment of rights to inventions made by them while in the employ of the
Company. Agreements with consultants generally provide that rights to
inventions made by them while consulting for the Company will be assigned to
the Company unless such assignment is prohibited by the terms of any agreements
with their regular employers. Agreements with employees, consultants and
collaborators contain provisions intended to protect further the
confidentiality of the Company's proprietary information. To date, the Company
has had no experience in enforcing such agreements. There can be no assurance
that these agreements will not be breached, that the Company would have
adequate remedies for any breaches, or that the Company's trade secrets will
not otherwise become known or be independently developed by competitors. See
"Risk Factors--Uncertainty Relating to Patents and Proprietary Rights."

42
<PAGE>

MANUFACTURING AND FACILITIES

Kopin leases separate device wafer manufacturing and CyberDisplay product
fabrication facilities. The Company's device wafer manufacturing facility is
located, together with the Company's corporate headquarters, in Taunton,
Massachusetts. The Taunton facility occupies 25,100 square feet, including
6,000 square feet of contiguous environmentally controlled production clean
rooms. The Taunton facility is occupied under a lease that expires on October
31, 1998 with a two-year renewal option at the Company's election.

Kopin's CyberDisplay production facility occupies 74,000 square feet in
Westborough, Massachusetts, of which 10,000 square feet consist of contiguous
environmentally controlled production clean rooms, of which 7,000 square feet
are Class 10. This facility prepares the Wafer-Engineered silicon materials
from which the CyberDisplay products are produced. These wafers are then
fabricated into integrated circuits by Kopin's production partner, UMC, in its
foundry in Taiwan. Currently, the fabricated wafers are returned to Kopin's
facilities, where the integrated circuits are lifted off the silicon
substrates and transferred to glass using Kopin's Wafer-Engineering
technology. The transferred integrated circuits are then processed and
packaged with liquid crystal and assembled into display panels for shipment to
customers. The Westborough facility is occupied under a lease that expires in
October 1999, with renewable options for up to five additional years at the
Company's election.

In order to expand CyberDisplay production capacity, Kopin has entered into
agreements with UMC and its affiliate, Unipac, under which Unipac will
assemble and package CyberDisplay products at its facility in Taiwan. The
Company believes that the capabilities and capacity of UMC and Unipac,
together with its existing facility in Westborough, provide Kopin with
sufficient production capacity through at least 1998.

In addition to its Massachusetts facilities, Kopin leases a 5,280 square
foot design facility in Los Gatos, California for developing prototypes of
products incorporating the CyberDisplay product. This facility is occupied
under a lease that expires in November 2002.

The Company is subject to a variety of federal, state and local governmental
regulations related to the use, storage, discharge and disposal of toxic,
volatile or otherwise hazardous chemicals used in its manufacturing process.
Although the Company believes that its activities conform to presently
applicable environmental regulations, the failure to comply with present or
future regulations could result in fines being imposed on the Company,
suspension of production or a cessation of operations. See "Risk Factors--
Manufacturing Risks; Manufacturing Capacity Limitations" and "--Environmental
Regulation."

INVESTMENTS IN RELATED BUSINESSES

The Company has made certain equity investments in and loans to Forte, a
developer and manufacturer of virtual reality headsets and related
peripherals, GMT Microelectronics, Inc. ("GMT"), a merchant integrated circuit
foundry, and Kendin Semiconductor, Inc. ("Kendin"), a developer and
manufacturer of integrated circuits for smart card and data communications
applications. As a result of declining sales and results of operations of
Forte, the Company recorded a write-off of the value of the Company's
investment in Forte at December 31, 1996, totaling $3,900,000. In March 1997,
Forte filed a voluntary petition seeking protection from its creditors under
Chapter 11 of the United States Bankruptcy Code. In November 1997, Kaotech
Corporation, a newly organized entity (of which the Company owns approximately
19.5%) purchased substantially all of the assets of Forte, subject to certain
liens, for approximately $60,000. The Company's investments in GMT and Kendin
total approximately $1,100,000 and $1,575,000, respectively, representing
approximately 7% and 19.5% of the outstanding equity of

43
<PAGE>

each company, respectively. GMT and Kendin are privately held companies. As
part of its initial investment in GMT, GMT agreed to perform certain of the
Company's integrated circuit processing. The Company may from time to time
make further equity investments in these and other companies engaged in
certain aspects of the flat panel display and electronics industries as part
of its business strategy. These investments may not provide the Company with
any financial return or other benefit and there can be no assurance that any
losses by these companies or associated losses in the Company's investments
will not have a material adverse effect on the Company's business, results of
operations and financial condition. See "Risk Factors--Risks Associated with
Possible Acquisitions and Investments" and "Business--Strategy."

EMPLOYEES

As of November 26, 1997, the Company and its subsidiaries employed 110 full-
time and 6 part-time individuals. Of these, 12 hold Ph.D. degrees in Material
Science, Electrical Engineering or Physics. The Company's management and
professional employees have significant prior experience in semiconductor
materials, device wafer and display processing, manufacturing and other
related technologies. None of the Company's employees is covered by a
collective bargaining agreement. The Company considers relations with its
employees to be good. See "Risk Factors--Dependence on Key Personnel" and
"Management."

LEGAL PROCEEDINGS

In March 1997, Forte Technologies, Inc., a majority-owned subsidiary of the
Company, filed a petition in federal bankruptcy court in the Western District
of New York seeking protection from its creditors under Chapter 11 of the
United States Bankruptcy Code. The Company does not believe the bankruptcy of
Forte will have a material adverse effect on its business, results of
operations or financial condition.

The Company is not a party to any material legal proceedings.

44
<PAGE>

MANAGEMENT

Set forth below is information regarding directors and executive officers of
the Company:

<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY
---- --- -------------------------
<S> <C> <C>
John C. C. Fan.................. 54 President and Chief Executive Officer;
Chairman of the Board of Directors
Paul J. Mitchell................ 45 Treasurer and Chief Financial Officer
Bor-Yeu Tsaur................... 42 Executive Vice President--Display
Operations.
Ronald P. Gale.................. 47 Chief Technology Officer and Vice President
Jeffrey J. Jacobsen............. 44 Senior Vice President, Business Development
Daily S. Hill................... 40 Vice President--Gallium Arsenide Operations
Meth Jiaravanont................ 39 Vice President--Strategic Marketing
Glen G. Kephart................. 54 Vice President--Marketing, Display Products
Matthew J. Micci................ 41 Vice President--Sales, Gallium Arsenide
Products
Matthew M. Zavracky............. 42 Vice President--Engineering
David E. Brook(2)............... 57 Director and Secretary
Andrew H. Chapman(1)............ 42 Director
Morton Collins(1)............... 61 Director
Chi-Chia Hsieh.................. 53 Director
Vallobh Vimolvanich............. 56 Director
Michael A. Wall(2).............. 69 Director
</TABLE>
- --------
(1) Member of the Audit Committee
(2) Member of the Compensation Committee

JOHN C. C. FAN, President, Chief Executive Officer, Chairman of the Board of
Directors. Dr. Fan, a founder of the Company, has served as Chief Executive
Officer and Chairman of the Board of Directors of the Company since its
organization in April 1984. He has also served as President of the Company
since July 1990. Prior to July 1985, Dr. Fan was Associate Leader of the
Electronic Materials Group at MIT Lincoln Laboratory. Dr. Fan is the author of
numerous patents and scientific publications. Dr. Fan received a Ph.D. in
Applied Physics from Harvard University. From October 1994 to March 1997, Dr.
Fan was a member of the Board of Directors of Forte.

PAUL J. MITCHELL, Treasurer and Chief Financial Officer. Mr. Mitchell has
served as Chief Financial Officer of the Company since April 1985 and has been
Treasurer of the Company since July 1987. Mr. Mitchell is a Certified Public
Accountant. From October 1994 to March 1997, Mr. Mitchell was a member of the
Board of Directors of Forte.

BOR-YEU TSAUR, Executive Vice President--Display Operations. Dr. Tsaur
joined the Company as Executive Vice President--Display Operations in July
1997. From 1993 to 1997, Dr. Tsaur served as Group Leader, Electronic Material
Group, at MIT Lincoln Laboratory. Dr. Tsaur received a Ph.D. in Electrical
Engineering from the California Institute of Technology.

RONALD P. GALE, Chief Technology Officer and Vice President. Dr. Gale became
Chief Technology Officer in 1997. Previously, Dr. Gale served as Vice
President of the Company in several capacities since July 1985. Dr. Gale
received a Ph.D. in Materials Science and Engineering from the Massachusetts
Institute of Technology in 1978.

45
<PAGE>

JEFFREY J. JACOBSEN, Senior Vice President--Business Development. Mr.
Jacobsen joined the Company as Vice President, Business Development in
February 1990, and became Senior Vice President in 1997. From 1987 through
1989, Mr. Jacobsen served as Director of Strategic Business at OKI
Semiconductor Company, U.S.A. From September 1995 to June 1996, Mr. Jacobsen
was a member of the Board of Directors of Forte.

DAILY S. HILL, Vice President--Gallium Arsenide Operations. Mr. Hill has
served as Vice President--Gallium Arsenide Operations since July 1997. From
December 1995 to June 1997, Mr. Hill served as Director of Gallium Arsenide
Operations for the Company. From November 1987 to January 1995, Mr. Hill
served as a manager of the Company's device wafer product group.

METH JIARAVANONT, Vice President--Strategic Marketing. Mr. Jiaravanont
joined the Company as Vice President, Strategic Marketing in December 1995
pursuant to an agreement between the Company and Telecom Holding Co., Ltd.
Prior to joining the Company, Mr. Jiaravanont served as a Vice President and a
director in several different capacities for affiliates of CP Group in Asia
and North America.

GLEN G. KEPHART, Vice President--Marketing Display Products. Mr. Kephart
joined the Company as Vice President, Marketing Display Products in December
1995. Prior to joining the Company, Mr. Kephart served as General Manager,
Conference Products, for Coherent Communications Systems Corporation for four
years and previously served as a Director of National Distribution for
Motorola.

MATTHEW J. MICCI, Vice President--Sales, Gallium Arsenide Products. Mr.
Micci joined the Company in January 1988 as Regional Director of Sales and
became Vice President, Sales in July 1990. Prior to joining the Company, Mr.
Micci worked for ten years for Texas Instruments Semiconductor Group.

MATTHEW M. ZAVRACKY, Vice President--Engineering. Mr. Zavracky has served as
Vice President--Engineering since July 1997. From 1985 to 1997, Mr. Zavracky
served as Director of Engineering.

DAVID E. BROOK, Director and Secretary. Mr. Brook is a founder of the
Company and has served as a Director since 1984. Mr. Brook is the founder and
Chairman of the Board of the intellectual property law firm of Hamilton,
Brook, Smith & Reynolds, P.C. in Lexington, Massachusetts.

ANDREW H. CHAPMAN, Director. Mr. Chapman has served as a Director of the
Company since 1985. Mr. Chapman is a Managing Director of The Vertical Group,
a private investment management company, a position in which he has served
since its formation in 1988. From 1994 to 1996, Mr. Chapman also served as
Executive Vice President of Integrated Network Corporation, a privately held
telecommunications equipment company, of which he has also served as a
director.

MORTON COLLINS, Director. Dr. Collins has served as a Director of the
Company since 1985. Dr. Collins has been a General Partner of DSV Partners
III, a venture capital limited partnership, since 1981, and a General Partner
of DSV Management since 1982. Since 1985, DSV Management Ltd. has been the
General Partner of DSV Partners IV, a venture capital limited partnership. Dr.
Collins is also a director of The Liposome Company, Inc., Thermotrex
Corporation, Thermedics Detection, Inc. and a number of privately held
companies.

CHI-CHIA HSIEH, Director. Dr. Hsieh has served as a Director of the Company
since December 1995. Dr. Hsieh has been the President of Microelectronics
Technology Inc., a Taiwan

46
<PAGE>

corporation publicly traded on the Taiwan Stock Exchange and affiliated with
Telecom Holding Co., Ltd., ("Telecom"). Pursuant to a Stock Purchase Agreement
dated October 10, 1995 (the "Stock Purchase Agreement"), Telecom purchased
1,643,716 shares of the Common Stock. Under that agreement, Telecom is
entitled to designate two representatives to the Company's Board of Directors
so long as Telecom, together with its affiliates and Chia Yang
Telecommunication Limited ("Chia Yang"), a Thailand corporation (of which Dr.
Hsieh is President), hold at least 1,479,344 shares of the Common Stock. Dr.
Hsieh is one of Telecom Holding Co., Ltd.'s designees to the Company's Board
of Directors. Upon the consummation of this Offering, Telecom will have the
right to designate one representative to serve on the Company's Board of
Directors so long as Telecom, together with its affiliates and Chia Yang, hold
at least 5% of the shares of the outstanding Common Stock.

VALLOBH VIMOLVANICH, Director. Dr. Vimolvanich has served as a Director of
the Company since December 1995. Dr. Vimolvanich has been the Vice Chairman of
Telecom Asia Corporation Public Company Limited ("Telecom Asia"), a
telecommunications company listed on the Stock Exchange of Thailand, since
1991. Dr. Vimolvanich has also served as a director and President of Telecom,
a subsidiary and investment arm of Telecom Asia, since 1992. Dr. Vimolvanich
also serves as a director of several privately held telecommunications
companies including companies affiliated with Telecom Asia. Under the Stock
Purchase Agreement, Telecom is entitled to designate two representatives to
the Company's Board of Directors so long as Telecom, together with its
affiliates, hold at least 1,479,344 shares of the Common Stock. Dr.
Vimolvanich is one of Telecom Holding Co., Ltd.'s designees to the Company's
Board of Directors. Upon the consummation of this Offering, Telecom will have
the right to designate one representative to serve on the Company's Board of
Directors so long as Telecom, together with its affiliates and Chia Yang, hold
at least 5% of the shares of the outstanding Common Stock.

MICHAEL A. WALL, Director. Mr. Wall is a founder of the Company and has
served as a Director since 1984. Mr. Wall is a director of Sugen, Inc. and a
director and Chairman of Alkermes, Inc. Mr. Wall has founded, been a director
of and/or managed over a dozen high technology firms in the last three
decades, including Centocor, Inc. and Flow Laboratories, Inc.

47
<PAGE>

SELLING STOCKHOLDERS

The following table sets forth certain information regarding the beneficial
ownership of the Company's outstanding Common Stock as of November 30, 1997,
and as adjusted to reflect the sale of the Common Stock being offered hereby.
Except as otherwise indicated, the persons or entities listed below have sole
voting and investment power with respect to all shares shown as beneficially
owned by them.

<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED PRIOR TO OWNED AFTER
OFFERING(1) SHARES OFFERING(1)(2)
----------------------- BEING ----------------------
NAME OF SELLING STOCKHOLDER NUMBER PERCENT OFFERED NUMBER PERCENT
- --------------------------- ------------ ---------- --------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Telecom Holding Co.,
Ltd.(3)................ 1,643,716 14.8% 1,000,000 643,716 5.3%
Bor-Yeu Tsaur(4)........ 5,240 * 3,000 2,240 *
Jeffrey J.
Jacobsen(4)(5)......... 68,250 * 10,000 58,250 *
Daily S. Hill(4)(6)..... 13,059 * 4,000 9,059 *
Glen G. Kephart(4)(7)... 29,250 * 15,000 14,250 *
Matthew J. Micci(4)(8).. 21,041 * 2,500 18,541 *
Matthew M.
Zavracky(4)(9)......... 39,833 * 6,000 33,833 *
</TABLE>
- --------
* Less than one percent.
(1) The number of shares of Common Stock deemed outstanding prior to this
Offering includes 11,091,204 shares of Common Stock outstanding as of
November 30, 1997. Beneficial ownership is determined in accordance with
Rule 13d-3(d) promulgated by the Securities and Exchange Commission under
the Securities and Exchange Act of 1934, as amended. Shares of Common
Stock issuable pursuant to options, warrants and convertible securities,
to the extent such securities are currently exercisable or convertible
within 60 days of November 30, 1997 ("Presently Exercisable Options"), are
treated as outstanding for computing the percentage of the person holding
such securities but are not treated as outstanding for computing the
percentage of any other person. Unless otherwise noted, each person or
group identified possesses sole voting and investment power with respect
to shares, subject to community property laws where applicable. Shares not
outstanding but deemed beneficially owned by virtue of the right of a
person or group to acquire them within 60 days are treated as outstanding
only for purposes of determining the number of and percent owned by such
person or group.
(2) Adjusted to reflect the sale of 1,000,000 shares by the Company hereby.
(3) Does not include 10,374 shares representing options held by each of Dr.
Hsieh and Dr. Vimolvanich, each of whom are affiliates of Telecom, that
are currently exercisable or exercisable within 60 days.
(4) Each of the Selling Stockholders, other than Telecom, has granted the
Underwriters an option for the shares listed solely to cover over-
allotments, if any. If the Underwriters do not exercise their option with
respect to over-allotments, either in full or in part, none of such
Selling Stockholders will sell any shares hereunder.
(5) Includes 63,250 shares representing Presently Exercisable Options.
(6) Includes 13,059 shares representing Presently Exercisable Options.
(7) Includes 29,250 shares representing Presently Exercisable Options.
(8) Includes 21,016 shares representing Presently Exercisable Options.
(9) Includes 39,833 shares representing Presently Exercisable Options.

48
<PAGE>

UNDERWRITING

Under the terms and subject to the conditions contained in an Underwriting
Agreement dated the date hereof (the "Underwriting Agreement"), the
Underwriters named below (the "Underwriters"), for whom Deutsche Morgan
Grenfell, Inc. and Tucker Anthony Incorporated are acting as Representatives
(the "Representatives"), have severally agreed to purchase, and the Company
and Selling Stockholders have agreed to sell to them, severally, the
respective number of shares of Common Stock set forth opposite the names of
such Underwriters below:

<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
----------- ---------
<S> <C>
Deutsche Morgan Grenfell Inc......................................
Tucker Anthony Incorporated.......................................
---------
Total......................................................... 2,000,000
=========
</TABLE>

The Underwriting Agreement provides that the obligations of the several
Underwriters to pay for and accept delivery of the shares of Common Stock
offered hereby are subject to the approval of certain legal matters by their
counsel and to certain other conditions. The Underwriters are obligated to
take and pay for all of the shares of Common Stock offered hereby (other than
those covered by the Underwriters' over-allotment option described below) if
any such shares are taken.

The Underwriters initially propose to offer part of the shares of Common
Stock directly to the public at the public offering price set forth on the
cover page hereof and part to certain dealers at a price that represents a
concession not in excess of $ a share under the public offering price. Any
Underwriter may allow, and such dealers may reallow, a concession not in
excess of $ a share to other Underwriters or to certain dealers. After the
initial offering of the shares of Common Stock, the offering price and other
selling terms may from time to time be varied by the Representatives.

The Company and certain officers of the Company have granted to the
Underwriters an option, exercisable for thirty (30) days from the date of this
Prospectus, to purchase up to an aggregate of 300,000 additional shares of
Common Stock at the public offering price set forth on the cover page hereof,
less underwriting discounts and commissions. The Underwriters may exercise
such option solely for the purpose of covering over-allotments, if any, made
in connection with the offering of the shares of Common Stock offered hereby.
To the extent such option is exercised, each Underwriter will become
obligated, subject to certain conditions, to purchase approximately the same
percentage of such additional shares as the number set forth next to such
Underwriter's name in the preceding table bears to the total number of shares
of Common Stock set forth next to the names of all Underwriters in the
preceding table.

The Company, the Selling Stockholders and the Underwriters have agreed to
indemnify each other against certain liabilities, including liabilities under
the Securities Act.

The Company and each of its directors and executive officers have agreed
that, without the prior written consent of Deutsche Morgan Grenfell Inc. on
behalf of the Underwriters, it will not, during the period ending one hundred
and twenty (120) days after the date of this Prospectus (i) offer, pledge,
sell, contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant to purchase, or
otherwise transfer, lend or dispose of, directly or indirectly, any shares of
Common Stock or any securities convertible into or exercisable or exchangeable
for Common Stock or (ii) enter into any swap

49
<PAGE>

or other arrangement that transfers to another, in whole or in part, any of the
economic consequences of ownership of the Common Stock, whether any such
transaction described in clause (i) or (ii) above is to be settled by delivery
of Common Stock or such other securities, in cash or otherwise, except under
certain limited circumstances.

Telecom has agreed that, without the prior written consent of Deutsche Morgan
Grenfell Inc. on behalf of the Underwriters, it will not, during the period
ending ninety (90) days after the date of this Prospectus (i) offer, pledge,
sell, contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant to purchase, or
otherwise transfer, lend or dispose of, directly or indirectly, any shares of
Common Stock or any securities convertible into or exercisable or exchangeable
for Common Stock or (ii) enter into any swap or other arrangement that
transfers to another, in whole or in part, any of the economic consequences of
ownership of the Common Stock, whether any such transaction described in clause
(i) or (ii) above is to be settled by delivery of Common Stock or such other
securities, in cash or otherwise, except under certain limited circumstances.

In order to facilitate the offering of the Common Stock, the Underwriters may
engage in transactions that stabilize, maintain or otherwise affect the price
of the Common Stock. Specifically, the Underwriters may over-allot in
connection with the Offering, creating a short position in the Common Stock for
their own account. In addition, to cover over-allotments or to stabilize the
price of the Common Stock, the Underwriters may bid for, and purchase, shares
of Common Stock in the open market. Finally, the underwriting syndicate may
reclaim selling concessions allowed to an Underwriter or a dealer for
distributing the Common Stock in the Offering, if the syndicate repurchases
previously distributed Common Stock in transactions to cover syndicate short
positions, in stabilization transactions or otherwise. Any of these activities
may stabilize or maintain the market price of the Common Stock above
independent market levels. The Underwriters are not required to engage in these
activities, and may end any of these activities at any time.

The Underwriters and dealers may engage in passive market making transactions
in the Common Stock in accordance with Rule 103 of Regulation M promulgated by
the Commission. In general, a passive market maker may not bid for, or
purchase, the Common Stock at a price that exceeds the highest independent bid.
In addition, the net daily purchases made by any passive market maker generally
may not exceed 30% of its average daily trading volume in the Common Stock
during a specified two month prior period, or 200 shares, whichever is greater.
A passive market maker must identify passive market making bids as such on the
Nasdaq electronic inter-dealer reporting system. Passive market making may
stabilize or maintain the market price of the Common Stock above independent
market levels. Underwriters and dealers are not required to engage in passive
market making and may end passive market making activities at any time.

LEGAL MATTERS

The validity of the shares of Common Stock offered hereby and certain legal
matters will be passed on for the Company by Bingham Dana LLP, Boston,
Massachusetts. Certain legal matters will be passed on for the Underwriters by
Testa, Hurwitz & Thibeault, LLP, Boston, Massachusetts.

50
<PAGE>

EXPERTS

The financial statements as of December 31, 1996 and 1995 and for each of the
three years in the period ended December 31, 1996 included in this Prospectus
have been audited by Deloitte & Touche LLP, independent auditors, as stated in
their report appearing herein (which report expresses an unqualified opinion
and includes an explanatory paragraph referring to a change in the method of
accounting for the recognition of the impairment of long-lived assets and long-
lived assets to be disposed of), and have been so included in reliance upon the
report of such firm given upon their authority as experts in accounting and
auditing.

The statements in this Prospectus under the captions "Risk Factors--
Uncertainties Relating to Patents and Proprietary Rights" and "Business--
Patents, Proprietary Rights and Licenses" have been reviewed and approved by
Hamilton, Brook, Smith & Reynolds, P.C., patent counsel to the Company, as
experts on such matters, and are included herein in reliance upon that review
and approval. David E. Brook, a principal at that firm, is the Secretary and a
Director of the Company.

ADDITIONAL INFORMATION

A Registration Statement on Form S-3, including amendments thereto, relating
to the Common Stock offered by the Company has been filed with the Securities
and Exchange Commission (the "Commission"), Washington, DC 20549. This
Prospectus does not contain all of the information set forth in the
Registration Statement and the exhibits and schedules thereto. Statements
contained in this Prospectus as to the contents of any contract or any other
document referred to are not necessarily complete, and in each instance
reference is made to the copy of such contract or document filed as an exhibit
to the Registration Statement, each such statement being qualified in all
respects by such reference. For further information with respect to the Company
and the Common Stock offered hereby, reference is made to the Registration
Statement and to the exhibits and schedules thereto. A copy of the Registration
Statement may be inspected by anyone without charge at the Commission's
principal office in Washington, D.C., and copies of all or any part thereof may
be obtained from the Public Reference Section of the Commission, 450 Fifth
Street, N.W., Washington, DC 20549, upon payment of certain fees prescribed by
the Commission. The Commission maintains a World Wide Web site
(http://www.sec.gov) that contains reports, proxy and information statements
and other information regarding registrants that file electronically with the
Commission. In addition, the Common Stock of the Company is quoted on the
Nasdaq National Market. Reports and other information concerning the Company
may be inspected at the National Association of Securities Dealers, Inc., 1735
K Street, Washington, D.C.

51
<PAGE>

KOPIN CORPORATION

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Independent Auditors' Report.............................................. F-2
Consolidated Balance Sheets at December 31, 1995 and 1996 and September
27, 1997 (unaudited)..................................................... F-3
Consolidated Statements of Operations for the years ended December 31,
1994, 1995 and 1996 and the nine months ended September 28, 1996
(unaudited) and September 27, 1997 (unaudited)........................... F-4
Consolidated Statements of Stockholders' Equity for the years ended
December 31, 1994, 1995 and 1996 and the nine months ended September 27,
1997 (unaudited)......................................................... F-5
Consolidated Statements of Cash Flows for the years ended December 31,
1994, 1995 and 1996 and the nine months ended September 28, 1996
(unaudited) and September 27, 1997 (unaudited)........................... F-6
Notes to Consolidated Financial Statements................................ F-7
</TABLE>

F-1
<PAGE>

INDEPENDENT AUDITORS' REPORT

Board of Directors and Stockholders
Kopin Corporation
Taunton, Massachusetts

We have audited the accompanying consolidated balance sheets of Kopin
Corporation and Subsidiaries as of December 31, 1996 and 1995, and the related
consolidated statements of operations, stockholders' equity, and cash flows
for each of the three years in the period ended December 31, 1996. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Kopin Corporation and
Subsidiaries as of December 31, 1996 and 1995, and the results of their
operations and their cash flows for each of the three years in the period
ended December 31, 1996 in conformity with generally accepted accounting
principles.

As discussed in Note 1 to the consolidated financial statements, in 1996 the
Company changed its method of accounting for the recognition of impairment of
long-lived assets and long-lived assets to be disposed of.

/s/ Deloitte & Touche LLP

Deloitte & Touche LLP

Boston, Massachusetts
February 10, 1997 (March 7, 1997 as to Note 13)

F-2
<PAGE>

KOPIN CORPORATION

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------- SEPTEMBER 27,
1995 1996 1997
------------ ------------ -------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and equivalents............... $ 24,718,023 $ 16,511,291 $ 14,733,666
Marketable securities.............. 17,278,954 10,560,815 5,130,911
Accounts receivable, net of
allowance of $85,600, $137,400,
and $170,200
Billed............................. 3,147,846 3,650,075 2,428,541
Unbilled........................... 3,438,766 2,933,863 1,419,089
Inventory.......................... 6,402,190 3,073,643 2,573,034
Prepaid expenses and other current
assets............................ 1,984,612 1,257,781 878,577
------------ ------------ ------------
Total current assets.............. 56,970,391 37,987,468 27,163,818
------------ ------------ ------------
Equipment and improvements:
Equipment.......................... 19,258,354 20,862,918 22,554,729
Leasehold improvements............. 835,900 772,717 772,717
Furniture and fixtures............. 414,707 361,483 331,955
Equipment under construction....... 964,446 636,255 1,341,820
------------ ------------ ------------
21,473,407 22,633,373 25,001,221
Accumulated depreciation and
amortization...................... 9,902,444 11,731,828 14,094,886
------------ ------------ ------------
11,570,963 10,901,545 10,906,335
------------ ------------ ------------
Other assets........................ 3,438,334 2,962,149 3,677,985
Intangible assets................... 4,179,877 1,894,392 2,037,293
------------ ------------ ------------
TOTAL ASSETS........................ $ 76,159,565 $ 53,745,554 $ 43,785,431
============ ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Note payable....................... $ 3,000,000 $ 500,000 $ 450,000
Accounts payable................... 7,712,508 6,945,053 2,797,085
Accrued payroll and expenses....... 808,826 1,427,305 1,222,281
Current portion of long-term
obligations....................... 629,643 1,347,636 1,228,189
Current portion of unearned
revenue........................... 92,004 80,484 --
------------ ------------ ------------
Total current liabilities.......... 12,242,981 10,300,478 5,697,555
------------ ------------ ------------
Deferred rent....................... 388,833 381,166 219,166
Unearned revenue, less current
portion............................ 80,484 -- --
Long-term obligations, less current
portion............................ 1,605,050 2,793,061 1,312,716
Commitments
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, 10,915,019 shares
in 1995, 10,931,408 shares in 1996
and 11,091,204 in 1997............ 109,150 109,314 110,912
Additional paid-in capital......... 88,355,145 88,605,451 90,167,369
Deferred compensation.............. (94,482) (227,706) (173,166)
Marketable securities valuation.... 137,183 44,933 (8,500)
Deficit............................ (26,664,779) (48,261,143) (53,540,621)
------------ ------------ ------------
Total stockholders' equity......... 61,842,217 40,270,849 36,555,994
------------ ------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY............................. $ 76,159,565 $ 53,745,554 $ 43,785,431
============ ============ ============
</TABLE>

See notes to consolidated financial statements.

F-3
<PAGE>

KOPIN CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
NINE MONTHS ENDED
----------------------------
YEARS ENDED DECEMBER 31,
--------------------------------------- SEPTEMBER 28, SEPTEMBER 27,
1994 1995 1996 1996 1997
----------- ------------ ------------ ------------- -------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues:
Product revenues...... $ 2,830,339 $ 7,161,236 $ 11,727,081 $ 8,411,166 $ 8,940,129
Research and
development
revenues............. 10,453,050 8,628,290 6,291,172 5,278,072 2,562,485
----------- ------------ ------------ ------------ -----------
13,283,389 15,789,526 18,018,253 13,689,238 11,502,614
----------- ------------ ------------ ------------ -----------
Costs and expenses:
Cost of product
revenues............. 1,980,701 6,059,440 9,488,702 7,264,732 5,974,403
Research and
development--funded
programs............. 10,531,491 8,756,850 6,591,016 5,732,158 2,107,968
Research and
development--
internal............. 4,070,329 6,856,437 9,876,082 7,564,862 6,049,001
General,
administrative and
selling.............. 4,574,806 4,012,764 7,070,275 5,304,588 3,256,782
Other................. 255,492 402,554 597,943 445,675 226,836
Write-down of
subsidiary assets.... -- -- 3,900,000 -- --
Nonrecurring
impairment charge.... -- -- 4,990,412 4,990,412 --
----------- ------------ ------------ ------------ -----------
21,412,819 26,088,045 42,514,430 31,302,427 17,614,990
----------- ------------ ------------ ------------ -----------
Loss from operations.... (8,129,430) (10,298,519) (24,496,177) (17,613,189) (6,112,376)
Other income and
expense:
Interest and other
income............... 1,542,359 1,670,808 2,013,642 1,463,507 1,005,090
Interest expense...... (107,186) (363,288) (337,418) (266,926) (172,192)
----------- ------------ ------------ ------------ -----------
Loss before minority
interest............... (6,694,257) (8,990,999) (22,819,953) (16,416,608) (5,279,478)
Minority interest in
loss of subsidiary..... -- -- 1,223,589 1,075,264 --
----------- ------------ ------------ ------------ -----------
Net loss................ $(6,694,257) $ (8,990,999) $(21,596,364) $(15,341,344) $(5,279,478)
=========== ============ ============ ============ ===========
Net loss per share...... $ (0.72) $ (0.95) $ (1.98) $ (1.41) $ (0.48)
=========== ============ ============ ============ ===========
Weighted average number
of common shares
outstanding............ 9,267,315 9,461,897 10,921,138 10,918,771 10,973,323
=========== ============ ============ ============ ===========
</TABLE>

See notes to consolidated financial statements.

F-4
<PAGE>

KOPIN CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL DEFERRED
-------------------- PAID-IN COMPEN- SECURITIES TREASURY
SHARES AMOUNT CAPITAL SATION VALUATION DEFICIT STOCK TOTAL
---------- -------- ----------- --------- ---------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, January 1,
1994................... 9,231,803 $ 92,318 $61,748,948 $(312,482) $ -- $(10,979,523) $ -- $50,549,261
Issuance of common
stock................. 5,000 50 66,200 -- -- -- -- 66,250
Exercise of stock
options............... 61,908 619 64,088 -- -- -- -- 64,707
Compensation relating
to grant of stock
options............... -- -- 47,500 (47,500) -- -- -- --
Amortization of
compensation relating
to grant of stock
options............... -- -- -- 135,312 -- -- -- 135,312
Net unrealized loss on
marketable
securities............ -- -- -- -- (670,000) -- -- (670,000)
Net loss............... -- -- -- -- -- (6,694,257) -- (6,694,257)
---------- -------- ----------- --------- --------- ------------ ----------- -----------
Balance, December 31,
1994................... 9,298,711 92,987 61,926,736 (224,670) (670,000) (17,673,780) -- 43,451,273
Issuance of common
stock, net of issuance
costs of $397,143..... 1,868,716 15,687 26,325,985 -- -- -- 4,095,000 30,436,672
Purchase of common
stock................. (300,000) -- -- -- -- -- (4,095,000) (4,095,000)
Exercise of stock
options............... 47,592 476 102,424 -- -- -- -- 102,900
Amortization of
compensation relating
to grant of stock
options............... -- -- -- 130,188 -- -- -- 130,188
Net unrealized gain on
marketable
securities............ -- -- -- -- 807,183 -- -- 807,183
Net loss............... -- -- -- -- -- (8,990,999) -- (8,990,999)
---------- -------- ----------- --------- --------- ------------ ----------- -----------
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............... 16,389 164 50,306 -- -- -- -- 50,470
Compensation relating
to grant of stock
options............... -- -- 200,000 (200,000) -- -- -- --
Amortization of
compensation relating
to grant of stock
options............... -- -- -- 66,776 -- -- -- 66,776
Net unrealized loss on
marketable
securities............ -- -- -- -- (92,250) -- -- (92,250)
Net loss............... -- -- -- -- -- (21,596,364) -- (21,596,364)
---------- -------- ----------- --------- --------- ------------ ----------- -----------
Balance, December 31,
1996................... 10,931,408 109,314 88,605,451 (227,706) 44,933 (48,261,143) -- 40,270,849
Exercise of stock
options (unaudited)... 159,796 1,598 1,561,918 -- -- -- -- 1,563,516
Amortization of
compensation relating
to grant of stock
options (unaudited)... -- -- -- 54,540 -- -- -- 54,540
Net unrealized loss on
marketable securities
(unaudited)........... -- -- -- -- (53,433) -- -- (53,433)
Net loss (unaudited) .. -- -- -- -- -- (5,279,478) -- (5,279,478)
---------- -------- ----------- --------- --------- ------------ ----------- -----------
Balance, September 27,
1997 (unaudited)....... 11,091,204 $110,912 $90,167,369 $(173,166) $ (8,500) $(53,540,621) $ -- $36,555,994
========== ======== =========== ========= ========= ============ =========== ===========
</TABLE>

See notes to consolidated financial statements.

F-5
<PAGE>

KOPIN CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, NINE MONTHS ENDED
--------------------------------------- ----------------------------
SEPTEMBER 28, SEPTEMBER 27,
1994 1995 1996 1996 1997
----------- ------------ ------------ ------------- -------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from
operating activities:
Net loss.............. $(6,694,257) $ (8,990,999) $(21,596,364) $(15,341,344) $(5,279,478)
Adjustments to
reconcile net loss to
net cash used in
operating activities:
Depreciation and
amortization......... 2,043,943 2,956,322 3,499,881 2,696,171 2,589,894
Write-down of
subsidiary assets.... -- -- 3,900,000 -- --
Amortization of
compensation relating
to grant of stock
options.............. 135,312 130,188 66,776 35,082 54,540
Nonrecurring
impairment charge.... -- -- 4,990,412 4,990,412 --
Decrease in unearned
revenue.............. (92,004) (92,004) (92,004) (69,003) (80,484)
Increase (decrease) in
deferred rent........ 354,832 34,001 (7,667) 25,500 (162,000)
Gain on sale/leaseback
of capital
equipment............ (65,530) -- -- -- --
Minority interest in
loss of subsidiary... -- -- (1,223,589) (1,075,264) --
Changes in assets and
liabilities:
Accounts receivable.. (1,247,328) (1,883,623) (558,326) (1,599,988) 2,208,646
Inventory............ (1,214,769) (3,033,333) 1,480,547 812,425 139,934
Prepaid expenses and
other current
assets.............. (175,369) (861,003) (126,536) (225,179) 379,204
Intangible assets.... (713,235) (1,043,407) (1,679,221) (1,519,441) (378,786)
Accounts payable and
accrued expenses.... 3,436,911 1,356,571 (1,439,270) (293,161) (3,623,383)
----------- ------------ ------------ ------------ -----------
Net cash used in
operating
activities......... (4,231,494) (11,427,287) (12,785,361) (11,563,790) (4,151,913)
----------- ------------ ------------ ------------ -----------
Cash flows from
investing activities:
Acquisition of Forte
Technologies, Inc.,
net of cash
acquired............. -- (1,504,704) -- -- --
Marketable
securities........... 5,828,751 10,368,699 6,625,889 4,036,885 5,376,471
Other assets.......... (3,748,096) 309,762 476,185 (224,591) (715,836)
Capital expenditures.. (4,481,290) (3,755,147) (3,779,919) (2,810,827) (2,544,985)
----------- ------------ ------------ ------------ -----------
Net cash provided by
(used in) investing
activities......... (2,400,635) 5,418,610 3,322,155 1,001,467 2,115,650
----------- ------------ ------------ ------------ -----------
Cash flows from
financing activities:
Net proceeds from
issuance of common
stock................ 66,250 30,436,672 -- -- --
Purchase of common
stock................ -- (4,095,000) -- -- --
Net proceeds from
issuance of
subsidiary preferred
stock................ -- -- 1,800,000 1,800,000 --
Principal payments on
long-term
obligations.......... (503,411) (605,143) (924,421) (681,402) (1,254,878)
Proceeds from long-
term obligations..... 3,000,000 -- 2,830,425 1,692,326 --
Proceeds from note
payable.............. -- 3,000,000 500,000 500,000 450,000
Principal payment on
note payable......... -- -- (3,000,000) (3,000,000) (500,000)
Proceeds from exercise
of stock options..... 64,707 102,900 50,470 32,470 1,563,516
----------- ------------ ------------ ------------ -----------
Net cash provided by
financing
activities......... 2,627,546 28,839,429 1,256,474 343,394 258,638
----------- ------------ ------------ ------------ -----------
Net increase (decrease)
in cash and
equivalents........... (4,004,583) 22,830,752 (8,206,732) (10,218,929) (1,777,625)
Cash and equivalents:
Beginning of year..... 5,891,854 1,887,271 24,718,023 24,718,023 16,511,291
----------- ------------ ------------ ------------ -----------
End of year........... $ 1,887,271 $ 24,718,023 $ 16,511,291 $ 14,499,094 $14,733,666
=========== ============ ============ ============ ===========
Noncash investing and
financing
transactions--
Marketable securities
valuation............. $ (670,000) $ 807,183 $ (92,250) $ 130,012 $ (53,433)
Supplementary cash flow
information
--Interest paid in
cash.................. $ 168,662 $ 339,642 $ 328,824 $ 277,028 $ 172,191
</TABLE>

See notes to consolidated financial statements.

F-6
<PAGE>

KOPIN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(INFORMATION AS OF SEPTEMBER 27, 1997 AND FOR THE NINE MONTHS THEN ENDED IS
UNAUDITED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Significant estimates included within the financial statements include net
realizable value of subsidiary assets, sales return reserves, warranty
reserves, inventory reserves, allowances for doubtful accounts and the
economic life of intangible assets.

References herein to "1994", "1995", "1996" and "1997" are for and as of the
fiscal years ended December 31, 1994, 1995 and 1996 and the nine months ended
September 27, 1997, respectively.

Industry Segment

Kopin Corporation and its subsidiaries (the "Company") operate in one
industry segment which includes the development, manufacture and sale of flat
panel display products and custom Wafer-Engineered device wafers for
commercial and consumer markets, and the performance of related research and
development under contracts.

Principles of Consolidation

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. From 1994 through 1996, the
Company made equity investments in Forte Technologies, Inc. ("Forte"). In May
1995, the Company obtained a controlling interest in Forte and consolidated
the financial statements of Forte with those of the Company through December
31, 1996.

Revenue Recognition

Revenue is recognized when a product is shipped or when a service is
performed. For certain of its products, the Company provides customers with a
twelve-month warranty from the date of sale. Estimated sales return and
warranty reserves are provided at the time of sale based upon historical and
anticipated warranty costs. 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
cost or hours. Product development and research contracts which have
established prices for distinct phases are accounted for as if each phase were
a separate contract. Amounts received under long-term contracts are recognized
as revenue is earned, amounts earned on contracts in progress in excess of
billings are classified as unbilled receivables, and amounts received in
excess of amounts earned are classified as unearned revenue. Unbilled
receivables are billed based on dates stipulated in the related agreement or
in periodic installments based upon the Company's invoicing cycle. At the time
a loss on a contract becomes known, the entire amount of the estimated
ultimate loss is recognized in the financial statements.

Research and Development Costs

Research and development expenses include expenses incurred in support of
internal development programs and programs funded by agencies of the federal
government, including

F-7
<PAGE>

KOPIN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(INFORMATION AS OF SEPTEMBER 27, 1997 AND FOR
THE NINE MONTHS THEN ENDED IS UNAUDITED)

development programs for display devices and products, Wafer-Engineered device
wafers and head-mounted display systems, circuit design costs, staffing,
purchases of materials and laboratory supplies, and fabrication and packaging
of the Company's display products.

Cash and Equivalents and Marketable Securities

The Company considers all highly liquid, short-term debt instruments with a
maturity of three months or less at the date of purchase to be cash
equivalents.

Marketable securities consist primarily of commercial paper, medium-term
notes, and United States government and agency securities. Under Statement of
Financial Accounting Standards ("SFAS") No. 115, the Company classifies these
marketable securities as "available for sale," and accordingly carries them as
a current asset at market value. From time to time, the Company sells
marketable securities for working capital, capital expenditure and investment
purposes. Approximately $10,200,000 of these marketable securities mature
within one year, and substantially all the remaining marketable securities
mature within three years. Gross unrealized holding gains (losses) are
recorded in a valuation allowance in stockholders' equity.

Inventory

Inventory is stated at the lower of cost (first-in, first-out method) or
market, and consists of the following:

<TABLE>
<CAPTION>
1995 1996 1997
---------- ---------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Raw materials.............................. $3,148,467 $1,871,222 $1,651,556
Work in process............................ 2,744,337 1,036,276 789,965
Finished goods............................. 509,386 166,145 131,513
---------- ---------- ----------
$6,402,190 $3,073,643 $2,573,034
========== ========== ==========
</TABLE>

Equipment and Improvements

Equipment and improvements are recorded at cost. Depreciation and
amortization are provided using the straight-line method over the estimated
lives of the assets, generally 3 to 10 years, or, in the case of leasehold
improvements and leased equipment, over the term of the lease.

Intangible Assets

Amortization of intangible assets is on a straight-line basis over the
estimated useful lives.

Net Loss Per Share

Net loss per share data is computed using the weighted average number of
shares of common stock outstanding during the period. Common share equivalents
have not been included because the effect would be anti-dilutive.

Concentration of Credit Risk

The Company invests its excess cash in high quality government and corporate
financial instruments which bear minimal risk. The Company sells its products
to customers worldwide.

F-8
<PAGE>

KOPIN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(INFORMATION AS OF SEPTEMBER 27, 1997 AND FOR
THE NINE MONTHS THEN ENDED IS UNAUDITED)

The Company maintains a reserve for potential credit losses and such losses
have been minimal.

Fair Market Value of Financial Instruments

Financial instruments consist of current assets (except inventories),
current liabilities and long-term obligations. Current assets and current
liabilities are carried at cost which approximates fair market value. Long-
term obligations are stated at cost which approximates fair market value.

Nonrecurring Impairment 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 nonrecurring charge of $4,990,412 which included a write-down of
approximately $4,400,000 associated with the initial adoption of SFAS No. 121,
the expensing of purchased technology, and the write-off of certain previously
deferred expenses.

Stock-Based Compensation

The Company accounts for stock-based awards to employees using the intrinsic
value method in accordance with APB No. 25, "Accounting for Stock Issued to
Employees."

Interim Information

The results of operations and cash flows for the nine-month periods ended
September 28, 1996 and September 27, 1997 are not necessarily indicative of
results which would be expected for a full year. In the opinion of management,
the financial statements for the unaudited periods presented include all
adjustments necessary for a fair presentation in accordance with generally
accepted accounting principles, consisting solely of normal recurring accruals
and adjustments except for the nonrecurring impairment charge discussed above.

Reclassifications

Certain reclassifications have been made to the December 31, 1994, 1995 and
1996 amounts and to the September 28, 1996 amounts to conform to the September
27, 1997 presentation. The reclassifications consisted of presenting interest
income, other income and interest expense as Other Income and Expense. In
addition, previously reported research and development expense has been
separated into research and development-funded programs and research and
development-internal.

2. CONTRACTS

The Company has entered into research and development contracts with various
entities. The costs incurred in the performance of these contracts generally
approximate the revenues earned thereon. In May 1994, the Company entered into
a $10,658,000 thirty-month contract with an agency of the federal government.
The Company recognizes revenue on this contract in accordance with performance
of tasks and recognized revenue of $2,465,000 in 1994, $4,260,000 in 1995 and
$3,441,000 in 1996.

F-9
<PAGE>

KOPIN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(INFORMATION AS OF SEPTEMBER 27, 1997 AND FOR
THE NINE MONTHS THEN ENDED IS UNAUDITED)

3. OTHER ASSETS

Other assets consist primarily of certain marketable securities held in
escrow as collateral under the Company's 5.625% equipment promissory note
agreement as well as minority interest investments in GMT Microelectronics,
Inc. and Kendin Semiconductor Inc. These investments are carried at cost.

4. INTANGIBLE ASSETS

Intangible assets consist of the following:

<TABLE>
<CAPTION>
ESTIMATED USEFUL
LIFE (YEARS) 1995 1996 1997
---------------- ----------- ---------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
Patents and application
fees................... 10 $ 1,814,108 $1,868,481 $ 2,200,427
Licenses................ 5-12 1,630,036 881,424 900,480
Costs in excess of fair
value of net assets
acquired............... 10 1,259,423 -- --
Organization and
financing costs........ 1-5 206,915 -- --
Other deferred costs.... 5-10 377,541 9,049 --
----------- ---------- -----------
5,288,023 2,758,954 3,100,907
Less accumulated
amortization........... (1,108,146) (864,562) (1,063,614)
----------- ---------- -----------
$ 4,179,877 $1,894,392 $ 2,037,293
=========== ========== ===========
</TABLE>

5. INVESTMENT IN FORTE TECHNOLOGIES, INC.

Forte was founded in July 1994. From October 1994 through December 31, 1996,
Kopin made a series of equity investments in Forte totaling $5,750,000
resulting in an equity ownership of 59% at December 31, 1996.

At December 31, 1996, Kopin had loans outstanding to Forte of $2,433,675.
Additionally, in January 1996, Kopin guaranteed an aggregate of $1,000,000 of
equipment and working capital loans of Forte made by a senior lender. All
Kopin loans to Forte are subordinated to the loans of the senior lender. The
loans to the senior lender were paid in 1997.

As a result of declining sales and results of operations at Forte, the
Company recorded, in the fourth quarter of 1996, a write-down of Forte's
assets to their estimated net realizable value and its remaining investment in
Forte totaling $3,900,000.

6. INCOME TAXES

As of December 31, 1996, the Company has available for tax reporting
purposes, federal net operating loss and general business tax credit
carryforwards of approximately $43,650,000 and $360,000, respectively,
expiring from 2000 to 2011.

F-10
<PAGE>

KOPIN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(INFORMATION AS OF SEPTEMBER 27, 1997 AND FOR
THE NINE MONTHS THEN ENDED IS UNAUDITED)

Deferred taxes are provided to recognize the effect of temporary differences
between tax and financial reporting. Deferred income tax assets and
liabilities consist of the following:

<TABLE>
<CAPTION>
1995 1996
----------- ------------
<S> <C> <C>
DEFERRED TAX ASSETS:
Net operating loss carryforward................. $10,660,000 $ 17,900,600
Amortization of intangible assets............... 272,700 255,600
Deferred rent................................... 159,400 156,300
Other........................................... 383,000 557,700
----------- ------------
11,475,100 18,870,200
----------- ------------
DEFERRED TAX LIABILITIES:
Patent costs.................................... 704,800 766,100
Depreciation.................................... 984,900 1,107,500
Deferred financing costs........................ 92,000 --
----------- ------------
1,781,700 1,873,600
----------- ------------
Net deferred tax assets......................... 9,693,400 16,996,600
Valuation allowance............................. (9,693,400) (16,996,600)
----------- ------------
$ -- $ --
=========== ============
</TABLE>

7. NOTE PAYABLE AND LONG-TERM OBLIGATIONS

In 1997, the Company entered into a $450,000 demand note payable with a bank
bearing interest at .75% above prime, or 9.25% at September 27, 1997.

In 1996, the Company entered into a $500,000 demand note payable with a bank
bearing interest at 1.75% above prime, or 10% at December 31, 1996. The note
was collateralized by certain assets of Forte. In 1995, the Company entered
into a $3,000,000 demand note payable with a bank bearing interest at .5%
above prime. The $3,000,000 demand note and the $500,000 demand note were
repaid in 1996 and 1997, respectively.

Long-term obligations consist of the following:

<TABLE>
<CAPTION>
1995 1996 1997
---------- ---------- -----------
(UNAUDITED)
<S> <C> <C> <C>
5.625% equipment promissory note.......... $2,186,615 $1,605,050 $1,146,950
Capital lease obligations--equipment...... 48,078 1,200,000 990,900
8.19% equipment promissory note........... -- 611,224 403,055
9.02% equipment promissory note........... -- 379,509 --
Secured demand promissory note............ -- 344,914 --
---------- ---------- ----------
2,234,693 4,140,697 2,540,905
Less current portion...................... 629,643 1,347,636 1,228,189
---------- ---------- ----------
$1,605,050 $2,793,061 $1,312,716
========== ========== ==========
</TABLE>

F-11
<PAGE>

KOPIN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(INFORMATION AS OF SEPTEMBER 27, 1997 AND FOR
THE NINE MONTHS THEN ENDED IS UNAUDITED)

The 5.625% equipment promissory note requires monthly payments of principal
and interest totaling $57,477 through June 1999. The loan obligation is
specifically collateralized by the equipment financed under the agreement and
certain marketable securities. These securities are shown as other assets on
the Company's balance sheet, since they are not available for working capital
purposes.

The equipment capital lease obligations require monthly payments of
approximately $31,032 through June 2000 unless an early termination and
equipment purchase option is exercised in December 1999. The capital lease
obligations are specifically collateralized by equipment with a carrying value
of $1,200,000 at December 31, 1996.

The 8.19% equipment promissory notes require monthly payments of principal
and interest totaling $26,680 through January 1999. The loan obligations are
collateralized by the equipment financed under the agreements.

The 9.02% equipment promissory note and the secured demand promissory note
represent debt incurred by Forte to outside lenders. The 9.02% note was repaid
in 1997. The secured demand promissory note is secured by all assets of Forte,
subordinated to the loans of Forte's senior lender and certain loans to Kopin
and bears interest at 9%. As a result of Forte's petition for bankruptcy
protection on March 7, 1997, this note is no longer an obligation of the
Company.

The aggregate maturities of long-term obligations, including capital lease
obligations, as of December 31, 1996 are as follows:

<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31, AMOUNT
------------------------ ----------
<S> <C>
1997........................................................... $1,441,273
1998........................................................... 1,516,928
1999........................................................... 754,734
2000........................................................... 302,400
2001........................................................... 344,914
----------
Less: 4,360,249
Amounts representing interest................................ (219,552)
Current portion of long-term obligations..................... (1,347,636)
----------
$2,793,061
==========
</TABLE>

8. STOCKHOLDERS' EQUITY

In November 1995, the Company entered into a stock purchase agreement with
Telecom Holding Co., Ltd., an affiliate of CP Group, providing for the sale of
1,643,716 shares of its common stock at $16.50 per share. Net proceeds to the
Company were approximately $26,724,000.

In November 1995, the Company entered into an agreement with Rockwell
International under which the Company purchased 300,000 shares of its common
stock from Rockwell International at $13.65 per share.

F-12
<PAGE>

KOPIN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(INFORMATION AS OF SEPTEMBER 27, 1997 AND FOR
THE NINE MONTHS THEN ENDED IS UNAUDITED)

In December 1995, the Company entered into a stock purchase agreement with
United Microelectronics Corp. and its affiliate, Unipac Optoelectronics Corp.,
providing for the sale of 225,000 shares of its common stock at $16.50 per
share. Net proceeds to the Company were approximately $3,700,000.

9. STOCK OPTIONS

The Company's 1992 Stock Option Plan permits the granting of both
nonqualified stock options and incentive stock options. The plan covers
2,700,000 shares of common stock (including shares issued upon exercise of
options granted pursuant to, or options remaining outstanding under, the 1985
Plan). The option price of incentive stock options shall not be less than 100%
of the fair market value of the stock at the date of grant, or in the case of
certain incentive stock options, at 110% of the fair market value at the time
of the grant. Options must be exercised within a ten-year period or sooner if
so specified within the option agreement. Options granted generally vest over
four years.

In 1994, the Company adopted the Director Stock Option Plan, which provides
for the automatic granting, pursuant to a formula, of nonqualified stock
options to the Company's nonemployee directors. A maximum of 175,000 shares
are issuable under the plan.

During 1996, a total of 573,500 outstanding options were canceled in
exchange for the grant of 516,150 options with an exercise price equal to the
fair market value of the common stock on the date of grant of $8.25 per share.
These options vest over four years. During 1995, a total of 441,950
outstanding options were canceled in exchange for the grant of 412,150 options
with an exercise price equal to the fair market value of the common stock on
the date of grant of $10.00 per share. These options vest over three years.

For certain options granted, the Company recognizes as compensation expense
the excess of the fair market value of the common shares issuable upon
exercise of such options over the aggregate exercise price of such options.
This compensation expense is amortized ratably over the vesting period of each
option. For the year ended December 31, 1996, such compensation expense of
$66,776 was recorded and will aggregate to $227,706 over the remaining terms
of the options. At December 31, 1996, the Company has available 318,420 shares
of common stock for future grant under its stock option plans. A summary of
option activity is as follows:

<TABLE>
<CAPTION>
1994 1995 1996 1997
------------------- ------------------- ------------------- -------------------
WEIGHTED WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE EXERCISE
SHARES PRICE SHARES PRICE SHARES PRICE SHARES PRICE
--------- -------- --------- -------- --------- -------- --------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, beginning of
year................... 697,138 $13.20 1,250,380 $13.23 1,560,326 $12.38 1,807,966 $10.47
Options granted........ 622,650 12.04 990,250 12.61 1,126,750 9.09 546,200 14.42
Options cancelled...... (7,500) 12.93 (632,712) 15.18 (862,721) 12.47 (91,184) 11.53
Options exercised...... (61,908) 1.05 (47,592) 2.14 (16,389) 3.09 (159,796) 9.78
--------- --------- --------- ---------
Balance, end of year.... 1,250,380 $13.23 1,560,326 $12.38 1,807,966 $10.47 2,103,186 $11.48
========= ========= ========= =========
</TABLE>

F-13
<PAGE>

KOPIN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(INFORMATION AS OF SEPTEMBER 27, 1997 AND FOR
THE NINE MONTHS THEN ENDED IS UNAUDITED)

Of the 1,807,966 options outstanding at December 31, 1996, 592,287 have
exercise prices between $5.00 and $9.00, with a weighted average exercise
price of $8.20 and a weighted average remaining contractual life of 9.2 years.
Of these options, 97,447 are exercisable at a weighted average price of $8.11.
An additional 826,679 options outstanding at December 31, 1996 have exercise
prices between $9.25 and $11.75, with a weighted average exercise price of
$10.34 and a weighted average remaining contractual life of 8.3 years. Of
these options, 255,277 are exercisable at a weighted average price of $10.43.
The remaining 389,000 options have exercise prices between $12.00 and $17.25,
with a weighted average exercise price of $14.20 and a weighted average
remaining contractual life of 7.1 years. Of these options, 233,937 are
exercisable at a weighted average exercise price of $14.03. The weighted
average exercise price of all options exercisable at December 31, 1996 is
$11.48.

The Company has two fixed option plans which reserve shares of common stock
for issuance to executives, key employees and directors. The Company has
adopted the disclosure-only provisions of SFAS No. 123, "Accounting for Stock-
Based Compensation." Accordingly, no compensation cost has been recognized for
the stock option plans. Had compensation cost for the Company's two stock
option plans been determined based on the fair value at the grant date for
awards in 1996 and 1995 consistent with the provisions of SFAS No. 123, the
Company's net loss and loss per share would have been $9,281,283 or $0.98 per
share in 1995 and $22,828,070 or $2.09 per share in 1996.

The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option pricing model with the following assumptions used for
grants in 1995 and 1996: no expected dividend yield; expected volatility of
57.6% in 1995 and 61.2% in 1996; risk-free interest rate of 6.55%; and
expected lives of four years. The weighted-average fair value of options on
grant date was $6.25 in 1995 and $4.64 in 1996.

10. EMPLOYEE BENEFIT PLAN

The Company has an employee benefit plan pursuant to Section 401(k) of the
Internal Revenue Code. The plan allows employees to defer up to 15% of their
annual compensation to a current maximum of $9,500. The Company will match 50%
of all deferred compensation up to a maximum of 3% of each employee's annual
compensation. The amount charged to operations in connection with this plan
was approximately $62,000 in 1994, $69,000 in 1995, and $92,000 in 1996.

11. MAJOR CUSTOMERS

During the years ended December 31, 1994, 1995, and 1996 approximately 71%,
49%, and 31%, respectively, of the Company's revenues resulted from multiple
contracts with various agencies of the United States government. During the
period ended September 27, 1997, 22% of the Company's revenue resulted from
these contracts. These contracts are subject to termination at the election of
the relevant agency. Additionally, during the years ended December 31, 1995
and 1996 and the nine months ended September 27, 1997, approximately 11%, 34%
and 61%, respectively, of the Company's revenue resulted from sales to a
single customer.

F-14
<PAGE>

KOPIN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(INFORMATION AS OF SEPTEMBER 27, 1997 AND FOR
THE NINE MONTHS THEN ENDED IS UNAUDITED)

12. COMMITMENTS

Leases

The Company leases certain machinery and equipment, and its facilities
located in Taunton and Westborough, Massachusetts, and Los Gatos, California,
under noncancelable operating leases. The Taunton lease expires in 1998 and
has an option for a two-year extension. The Westborough lease, entered into in
1993, is a five-year lease with provisions to extend an additional five years.
The Los Gatos lease covers a five-year period terminating in 2002.
Substantially all real estate taxes, insurance and maintenance expenses under
these leases are obligations of the Company. The following is a schedule of
minimum rental commitments under noncancelable operating leases subsequent to
September 27, 1997:

<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31, AMOUNT
------------------------ ----------
<S> <C>
1997........................................................... $1,355,285
1998........................................................... 1,300,184
1999........................................................... 998,102
2000........................................................... 27,461
----------
Total minimum lease payments................................... $3,681,032
==========
</TABLE>

Costs incurred under operating leases are recorded as rent expense and
aggregated approximately $1,191,000 in 1994, $1,137,000 in 1995, $1,214,000 in
1996 and $738,000 for the nine months ended September 27, 1997.

Other Agreements

The Company has entered into various license agreements which require the
Company to pay royalties based upon a set percentage of product sales,
subject, in some cases, to certain minimum amounts. Total royalty expense
approximated, $29,700 in 1994, $36,000 in 1995, $25,500 in 1996 and $18,000
for the nine months ended September 27, 1997.

Litigation

The Company is engaged in legal proceedings arising in the ordinary course
of business. The Company believes that the ultimate outcome of these
proceedings will not have a material adverse impact on the Company's
consolidated financial position, results of operations or cash flows.

13. SUBSEQUENT EVENTS

On March 7, 1997, Forte filed a voluntary petition seeking protection from
its creditors under Chapter 11 of the United States Bankruptcy Code. The
Company does not believe this will have a material adverse effect on its
financial condition or results of operation. In conjunction with the filing,
the Company's representatives resigned from Forte's board of directors. In
addition, subsequent to March 7, 1997, the Company no longer consolidates the
results of operations or assets and liabilities of Forte.

* * * * * *

F-15
<PAGE>

[Description of the inside back cover: the Kopin logo appears in the upper
left corner with "Device Wafers" appearing underneath. Text in the upper right
hand corner reads, "Developer and provider of advanced semiconductor
application-specific Wafer-Engineered materials for high performance
communications applications." The top half of the page is captioned "Kopin's
Wafer-Engineering Technology" and provides an illustration with five bullet-
points of text:

.Splicing of dissimilar materials

.Combining desired properties of each

.Optimizes performance for specific applications

.Enables transfer of integrated circuits to glass

.Makes possible new classes of materials and devices.

The bottom half of the page is a cross-sectional diagram of a typical
heterojunction bipolar transistor device layer on the left, a GaAs Chip in the
middle, and two pictures of different models of cellular phones on the right.]
<PAGE>

NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CON-
STITUTE AN OFFER TO SELL, OR A SOLICITATION OF ANY OFFER TO BUY, THE COMMON
STOCK IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION
THAT THERE HAS NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS
OR IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary..................................................... 3
The Company............................................................ 5
Incorporation of Certain Documents by Reference........................ 6
Available Information.................................................. 6
Risk Factors........................................................... 7
Use of Proceeds........................................................ 16
Price Range of Common Stock............................................ 17
Dividend Policy........................................................ 17
Capitalization......................................................... 18
Dilution............................................................... 19
Selected Consolidated Financial Data................................... 20
Management's Discussion and Analysis of Financial Condition and Results
of Operations......................................................... 22
Business............................................................... 30
Management............................................................. 45
Selling Stockholders................................................... 48
Underwriting........................................................... 49
Legal Matters.......................................................... 50
Experts................................................................ 51
Additional Information................................................. 51
Index to Financial Statements.......................................... F-1
</TABLE>
- -------------------------------------------------------------------------------

[LOGO]

2,000,000 SHARES

COMMON STOCK

DEUTSCHE MORGAN GRENFELL

TUCKER ANTHONY
INCORPORATED

PROSPECTUS

, 1997
<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

Expenses of the Registrant in connection with the issuance and distribution
of the securities being registered, other than the underwriting discount and
commissions, are estimated as follows:

<TABLE>
<S> <C>
SEC Registration Fee........................................... $ 12,390
NASD Filing Fees............................................... 4,698
Nasdaq National Market Listing Fees............................ 17,500
Printing and Engraving Expenses................................ 100,000
Legal Fees and Expenses........................................ 185,000
Accountant's Fees and Expenses................................. 75,000
Expenses of Qualification Under State Securities Laws and NASD
Expenses, Including Attorneys' Fees........................... 15,000
Transfer Agent and Registrar's Fees............................ 2,500
Miscellaneous Costs............................................ 12,912
--------
Total(1)..................................................... $425,000
========
</TABLE>
- --------
(1) Telecom has agreed to pay $100,000 of the costs related to this Offering

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS

The Registrant's Amended and Restated Certificate of Incorporation and
Amended and Restated Bylaws include provisions to (i) eliminate the personal
liability of its directors for monetary damages resulting from breaches of
their fiduciary duty to the extent permitted by Section 102(b)(7) of the
General Corporation Law of Delaware (the "Delaware Law") and (ii) authorize
the Registrant to indemnify its directors and officers to the fullest extent
permitted by Section 145 of the Delaware Law, including circumstances in which
indemnification is otherwise discretionary. Pursuant to Section 145 of the
Delaware Law, a corporation generally has the power to indemnify its present
and former directors, officers, employees and agents against expenses incurred
by them in connection with any suit to which they are, or are threatened to be
made, a party by reason of their serving in such positions so long as they
acted in good faith and in a manner they reasonably believed to be in, or not
opposed to, the best interests of a corporation, and with respect to any
criminal action, they had no reasonable cause to believe their conduct was
unlawful. The Registrant believes that these provisions do not eliminate
liability for breach of the director's duty of loyalty to the Registrant or
its stockholders, for acts or omissions not in good faith or involving
intentional misconduct or knowing violations of law, for any transaction from
which the director derived an improper personal benefit or for any willful or
negligent payment of any unlawful dividend or any unlawful stock purchase
agreement or redemption.

The Registrant has purchased an insurance policy covering the officers and
directors of the Registrant with respect to certain liabilities arising under
the Securities Act or otherwise.

II-1
<PAGE>

ITEM 16. EXHIBITS

<TABLE>
<S> <C>
1.1 Proposed Form of Underwriting Agreement+
3.1 Amended and Restated Certificate of Incorporation*
3.2 Amended and Restated By-laws*
4.1 Reference is made to exhibits 3.1 and 3.2
4.2 Specimen Certificate of Common Stock**
5.1 Opinion of Bingham Dana LLP, with respect to the legality of the shares being registered.
23.1 Consent of Deloitte & Touche LLP, Independent Auditors of the Company
23.2 Consent of Bingham Dana LLP (included in exhibit 5.1)
23.3 Consent of Hamilton, Brook, Smith & Reynolds, P.C.
24.1 Power of Attorney. Reference is made to the signature page
27 Financial Data Schedule
</TABLE>
- --------
* Filed as an exhibit to Registration Statement on Form S-1, File No. 33-
57450, and incorporated herein by reference.
** Filed as an exhibit to Registration Statement on Form S-1, File No. 33-
45853, and incorporated herein by reference.
+ To be filed as an amendment.

ITEM 17. UNDERTAKINGS

The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial BONA FIDE offering
thereof.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers, and controlling persons of
the Registrant pursuant to the foregoing provisions, the Registrant has been
informed that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer, or controlling person of the
Registrant in the successful defense of any action, suit, or proceeding) is
asserted by such director, officer, or controlling person in connection with
the securities being registered, the Registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be governed by
the final adjudication of such issue.

The undersigned Registrant undertakes that: (1) for purposes of determining
any liability under the Securities Act of 1933, the information omitted from
the form of prospectus as filed as part of the Registration Statement in
reliance upon Rule 430A and contained in the form of prospectus filed by the
Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities
Act shall be deemed to be part of the Registration Statement as of the time it
was declared effective, and (2) for the purpose of determining any liability
under the Securities Act of 1933, each post-effective amendment that contains
a form of prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be in the initial BONA FIDE
offering thereof.

II-2
<PAGE>

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
CERTIFIES THAT IS HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF TAUNTON, COMMONWEALTH OF MASSACHUSETTS, ON THIS
12TH DAY OF DECEMBER, 1997.

Kopin Corporation

/s/ John C.C. Fan
By: _________________________________
JOHN C.C. FAN
CHAIRMAN OF THE BOARD OF
DIRECTORS, PRESIDENT AND CHIEF
EXECUTIVE OFFICER

POWER OF ATTORNEY

Each person whose signature appears below hereby appoints each of John C.C.
Fan and Paul J. Mitchell, severally, acting alone and without the other, his
true and lawful attorney-in-fact with the authority to execute in the name of
each such person, any and all amendments (including without limitation, post-
effective amendments) to this Registration Statement on Form S-3, to sign any
and all additional registration statements relating to the same offering of
securities as this Registration Statement that are filed pursuant to Rule
462(b) of the Securities Act, and to file such registration statements with
the Securities and Exchange Commission, together with any exhibits thereto and
other documents therewith, necessary or advisable to enable the registrant to
comply with the Securities Act, and any rules, regulations and requirements of
the Securities and Exchange Commission in respect thereof, which amendments
may make such other changes in the Registration Statement as the aforesaid
attorney-in-fact executing the same deems appropriate.

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.

SIGNATURE TITLE DATE

/s/ John C.C. Fan Chairman of the December 12,
- ------------------------------------- Board of Directors, 1997
JOHN C.C. FAN President and Chief
Executive Officer
(Principal
Executive Officer)

/s/ Paul J. Mitchell Chief Financial December 12,
- ------------------------------------- Officer and 1997
PAUL J. MITCHELL Treasurer
(Principal
Financial and
Accounting Officer)

II-3
<PAGE>

SIGNATURE TITLE DATE

/s/ David E. Brook Director and December 12,
- ------------------------------------- Secretary 1997
DAVID E. BROOK

/s/ Andrew H. Chapman Director December 12,
- ------------------------------------- 1997
ANDREW H. CHAPMAN

/s/ Morton Collins Director December 12,
- ------------------------------------- 1997
MORTON COLLINS

/s/ Chi-Chia Hsieh Director December 12,
- ------------------------------------- 1997
CHI-CHIA HSIEH

/s/ Vallobh Vimolvanich Director December 12,
- ------------------------------------- 1997
VALLOBH VIMOLVANICH

/s/ Michael A. Wall Director December 12,
- ------------------------------------- 1997
MICHAEL A. WALL

II-4
<PAGE>

EXHIBITS

<TABLE>
<S> <C>
1.1 Proposed Form of Underwriting Agreement+
3.1 Amended and Restated Certificate of Incorporation*
3.2 Amended and Restated By-laws*
4.1 Reference is made to exhibits 3.1 and 3.2
4.2 Specimen Certificate of Common Stock**
5.1 Opinion of Bingham Dana LLP, with respect to the legality of the shares being registered.
23.1 Consent of Deloitte & Touche LLP
23.2 Consent of Bingham Dana LLP (included in exhibit 5.1)
23.3 Consent of Hamilton, Brook, Smith & Reynolds, P.C.
24.1 Power of Attorney. Reference is made to the signature page
27 Financial Data Schedule
</TABLE>
- --------
* Filed as an exhibit to Registration Statement on Form S-1, File No. 33-
57450, and incorporated herein by reference.
** Filed as an exhibit to Registration Statement on Form S-1, File No. 33-
45853, and incorporated herein by reference.
+ To be filed as an amendment.

<PAGE>

EXHIBIT 5.1

[LETTERHEAD OF BINGHAM DANA LLP APPEARS HERE]

December 12, 1997

Kopin Corporation
695 Myles Standish Blvd.
Taunton, MA 02412

Dear Ladies and Gentlemen:

We have acted as counsel for Kopin Corporation, a Delaware corporation (the
"Company"), in connection with the registration under the Securities Act of
1933, as amended (the "Act"), of 2,000,000 shares of the Company's Common
Stock, $0.01 par value per share (the "Common Stock"), 1,000,000 shares to be
sold by certain selling shareholders (the "Outstanding Shares"), and 1,000,000
shares to be sold by the Company (the "New Shares," and referred to
hereinafter together with the Outstanding Shares as the "Firm Shares") and an
additional 259,500 shares which may be offered by the Company and an
additional 40,500 shares, which may be offered by certain selling stockholders
in order to cover over-allotments, if any, (the "Over-allotment Shares"),
pursuant to a Registration Statement on Form S-3 (as amended, the
"Registration Statement"), initially filed with the Securities Exchange
Commission on December 12, 1997.

We have reviewed the corporate proceedings of the Company with respect to
the authorization of the issuance of the Shares. We have also examined and
relied upon originals or copies, certified or otherwise identified or
authenticated to our satisfaction, of such corporate records, instruments,
agreements or other documents of the Company, and certificates of officers of
the Company as to certain factual matters, and have made such investigation of
law and have discussed with officers and representatives of the Company such
questions of fact, as we have deemed necessary or appropriate as a basis for
the opinions hereinafter expressed. In connection with the issuance of the
Outstanding Shares, we have examined and relied upon a certificate of the
Treasurer of the Company. In our examinations, we have assumed the genuineness
of all signatures, the conformity to the originals of all documents reviewed
by us as copies, the authenticity and completeness of all original documents
reviewed by us in original or copy form and the legal competence of each
individual executing any document.

We have also assumed that an Underwriting Agreement substantially in the
form of Exhibit 1.1 to the Registration Statement, by and among the Company
and the underwriters named therein (the "Underwriting Agreement"), will have
been duly executed and delivered pursuant to the authorizing resolutions of
the Board of Directors of the Company and that the Firm Shares and Over-
allotment Shares will be sold and transferred only upon the payment therefor
as provided in the Underwriting Agreement and with respect to Over-allotment
Shares subject to options, that the exercise price therefor will have been
paid to the Company pursuant to the terms of the options and the Company's
stock option plan. We have further assumed that the registration requirements
of the Act and all applicable requirements of state laws regulating the sale
of securities will have been duly satisfied.
<PAGE>

Kopin Corporation
December 12, 1997
Page 2

This opinion is limited solely to the Delaware General Corporation Law as
applied by courts located in Delaware.

Based upon and subject to the foregoing, we are of the opinion that the New
Shares and the Over-allotment Shares have been duly authorized, the
Outstanding Shares were duly authorized and are validly issued and are fully-
paid and non-assessable, and the New Shares and Over-allotment Shares, when
delivered and paid for in accordance with the provisions of the Underwriting
Agreement and the option agreements and the Company's stock option plan, as
applicable, will be validly issued, fully-paid and non-assessable.

We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to this firm under the heading
"Legal Matters" in the Registration Statement.

Very truly yours,

BINGHAM DANA LLP

<PAGE>

EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT

We consent to the use in this Registration Statement of Kopin Corporation
(the "Company") on Form S-3 of our report dated February 10, 1997 (March 7,
1997 as to note 13), appearing in the Prospectus, which is part of this
Registration Statement, and of our report dated February 10, 1997 (March 7,
1997 as to note 13) relating to the financial statement schedule included in
the Company's Annual Report on Form 10-K which is incorporated by reference in
this Registration Statement.

We also consent to the reference to us under the headings "Selected
Financial Data" and "Experts" in such Prospectus.

/s/ Deloitte & Touche LLP

Boston, Massachusetts
December 11, 1997

<PAGE>

EXHIBIT 23.3

CONSENT OF SPECIAL COUNSEL FOR KOPIN CORPORATION

We consent to the references to our firm under the caption "Experts"
contained in the Registration Statement on Form S-3 of Kopin Corporation and
the Prospectus forming a part thereof.

Hamilton, Brook, Smith & Reynolds,
P.C.

/s/ David E. Brook
By: _________________________________
David E. Brook

Dated: December 9, 1997

<PAGE>
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