10-K/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-K/A

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 29, 2007

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period              to             

Commission file number 0-19882

KOPIN CORPORATION

(Exact Name of Registrant as Specified in its Charter)

Delaware	04-2833935
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

200 John Hancock Rd., Taunton, MA	02780-1042
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code:	(508) 824-6696
Securities registered pursuant to Section 12(b) of the Act:	None
Securities registered pursuant to Section 12(g) of the Act:	Common Stock, par value $.01 per share (Title of Class)
Name of Each Exchange on Which Registered	NASDAQ Global Market

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ¨    No  x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes  ¨    No  x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. (Check one):

Larger accelerated filer  ¨	Accelerated filer  x
Non-accelerated filer  ¨	Smaller reporting company  ¨

Indicate by check mark whether the registrant is a shell company (as defined in rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

As of July 30, 2007 (the last business day of the most recent second fiscal quarter) the aggregate market value of outstanding shares of voting stock held by non-affiliates of the registrant was $310,387,176.

As of March 21, 2008, 71,935,948 shares of the registrant’s Common Stock, par value $.01 per share, were issued and outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Certain information required by this Form 10-K/A is incorporated herein by reference from our Proxy Statement relating to our Annual Meeting of Shareholders to be held on or about May 20, 2008.

Explanatory Note

This amendment to Kopin Corporation’s 2007 Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 17, 2008, is made to include the unaudited 2007 financial statements of KoBrite Corporation, an approximate 28% owned unconsolidated subsidiary of Kopin.

In accordance with Rule 12b-15 promulgated under the Securities Exchange Act of 1934, the complete text of Item 15, as amended, is included herein. However, other than the inclusion of the Financial Statements of KoBrite Corporation, a signature page, the consent of Independent Auditors, and certifications required to be filed as exhibits hereto, no changes to any financial statements in the 10-K have been made.

Item 15. Exhibits and Financial Statement Schedules

(a) Documents filed as part of the Report:

(1) Consolidated Financial Statements of Kopin Corporation*:

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets

Consolidated Statements of Operations

Consolidated Statements of Comprehensive Income (Loss)

Consolidated Statements of Stockholders’ Equity

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

(2) Financial Statement Schedules:

Schedule II—Valuation and Qualifying Accounts

Schedules other than the one listed above have been omitted because of the absence of conditions under which they are required or because the required information is included in the consolidated financial statements or the notes thereto.

(3) Exhibits

3.1	Amended and Restated Certificate of Incorporation	(2	)
3.2	Amendment to Certificate of Incorporation	(7	)
3.3	Amendment to Certificate of Incorporation	(7	)
3.4	Third Amended and Restated By-laws	(10	)
4	Specimen Certificate of Common Stock	(1	)

* The Financial Statement, Schedules and Report of Independent Registered Public Accounting Firm (Report) were filed on March 17, 2008 with the Form 10-K to which this Form 10-K/A amends.

2

10.1	Form of Employee Agreement with Respect to Inventions and Proprietary Information	(1	)
10.2	1985 Incentive Stock Option Plan, as amended	(1	)*
10.3	Amended and Restated 1992 Stock Option Plan	(2	)*
10.4	1992 Stock Option Plan Amendment	(7	)*
10.5	1992 Stock Option Plan Amendment	(8	)*
10.6	Kopin Corporation 2001 Equity Incentive Plan	(9	)*
10.7	Kopin Corporation 2001 Equity Incentive Plan Amendment	(12	)*
10.8	Kopin Corporation 2001 Equity Incentive Plan Amendment	(13	)*
10.9	Kopin Corporation 2001 Equity Incentive Plan Amendment	(14	)*
10.10	Kopin Corporation 2001 Supplemental Equity Incentive Plan	(8	)*
10.11	Form of Key Employee Stock Purchase Agreement	(1	)*
10.12	License Agreement by and between the Company and Massachusetts Institute of Technology dated April 22, 1985, as amended	(1	)
10.13	Facility Lease, by and between the Company and Massachusetts Technology Park Corporation, dated October 15, 1993	(3	)
10.14	Master Sublease—Purchase Agreement, by and between the Company and Massachusetts Industrial Finance Agency, dated June 23, 1994	(4	)
10.15	Contract by and between the Company and the United States Department of Commerce, dated April 25, 1995	(5	)
10.16	Cooperative Research and Development Agreement, by and between the Company and Massachusetts Institute of Technology Lincoln Laboratory, dated June 21, 1995 (confidential portions on file with the Commission)	(5	)
10.17	Letter Agreement, by and between the Company and United Microelectronics Corporation, dated November 29, 1995 (confidential portions on file with the Commission)	(5	)
10.18	Joint Venture Agreement, by and among the Company, Kowon Technology Co., Ltd., and Korean Investors, dated as of March 3, 1998	(6	)
10.19	Fifth Amended and Restated Employment Agreement between the Company and Dr. John C.C. Fan, dated as of February 20, 2004	(11	)*
10.20	Kopin Corporation Fiscal Year 2005 Cash Bonus Plan	(15	)*
10.21	Joint Venture Agreement for Kopin Corporation, Bright LED and KTC, dated November 12, 2004	(15	)
10.22	Kopin Corporation Form of Stock Option Agreement under 2001 Equity Incentive Plan	(15	)*
10.23	Kopin Corporation 2001 Equity Incentive Plan Form of Restricted Stock Purchase Agreement	(15	)*
10.24	Kopin Corporation Fiscal Year 2006 Cash Bonus Plan	(16	)*
21.1	Subsidiaries of Kopin Corporation	(16	)*
23.1	Consent of Independent Registered Public Accounting Firm	(16	)*
23.2	Consent of Independent Auditors
31.1	Chief Executive Officer Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Chief Financial Officer Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Chief Executive Officer Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Chief Financial Officer Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
99.1	Audited Financial Statements of KoBrite Corp. and subsidiary for year ended December 31, 2006 and unaudited financial statements for the year ended December 31, 2005.
99.2	Unaudited financial statements of KoBrite Corp. for the year ended December 31, 2007.

3

* Management contract or compensatory plan required to be filed as an Exhibit to this Form 10-K.

(1) Filed as an exhibit to Registration Statement on Form S-1, File No. 33-45853, and incorporated herein by reference.

(2) Filed as an exhibit to Registration Statement on Form S-1, File No. 33-57450, and incorporated herein by reference.

(3) Filed as an exhibit to Annual Report on Form 10-K for the fiscal year ended December 31, 1993 and incorporated herein by reference.

(4) Filed as an exhibit to Quarterly Report on Form 10-Q for the quarterly period ended July 2, 1994 and incorporated herein by reference.

(5) Filed as an exhibit to Annual Report on Form 10-K for the fiscal year ended December 31, 1995 and incorporated herein by reference.

(6) Filed as an exhibit to Annual Report on Form 10-Q for the quarterly period ended June 27, 1998 and incorporated herein by reference.

(7) Filed as an exhibit to Quarterly Report on Form 10-Q for the quarterly period ended July 1, 2000 and incorporated herein by reference.

(8) Filed as an exhibit to Registration Statement on Form S-8 and incorporated herein by reference.

(9) Filed as an appendix to Proxy Statement filed on April 20, 2001 and incorporated herein by reference.

(10) Filed as an exhibit to Current Report on Form 8-K filed on October 9, 2007 and incorporated herein by reference.

(11) Filed as an exhibit to Annual Report on Form 10-K for the fiscal year ended December 31, 2003 and incorporated herein by reference.

(12) Filed as an exhibit to Registration Statement on Form S-8 filed on August 16, 2002 and incorporated herein by reference.

(13) Filed as an exhibit to Registration Statement on Form S-8 filed on March 15, 2004 and incorporated herein by reference.

(14) Filed as an exhibit to Registration Statement on Form S-8 filed on May 10, 2004 and incorporated herein by reference.

(15) Filed as an exhibit to Annual Report on Form 10-K for the fiscal year ended December 25, 2004 and incorporated herein by reference.

(16) Filed as an exhibit to Annual Report on Form 10-K for the fiscal year ended December 29, 2007 and incorporated herein by reference.

4

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

September 26, 2008
	KOPIN CORPORATION
	By:	/S/ JOHN C.C. FAN
		John C.C. Fan Chairman of the Board, Chief Executive Officer, President and Director

5

EX-23.2

Exhibit 23.2

CONSENT OF INDEPENDENT AUDITORS

We consent to the incorporation by reference in Registration Statements Nos. 33-71744, 33-88812, 33-87308, 333-46613, 333-92395, 333-49890, 333-73208, 333-98285, 333-113614, 333-115342 and 333-150258 of Kopin Corporation on Form S-8 and in Registration Statements Nos. 333-72956 and 333-55928 of Kopin Corporation on Form S-3 of our report dated March 17, 2008 relating to the consolidated financial statements of KoBrite Corporation and Subsidiary appearing in this Annual Report on Form 10-K/A of Kopin Corporation in Exhibit 99.1 for the year ended December 30, 2006.

/s/ Deloitte & Touche

Taipei, Taiwan

The Republic of China

September 23, 2008

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, John C.C. Fan, the President and Chief Executive Officer of Kopin Corporation, certify that:

1. I have reviewed this annual report on Form 10-K/A of Kopin Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4. The Registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5. The Registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Date: September 26, 2008

/S/ JOHN C.C. FAN

John C.C. Fan

President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Richard A. Sneider, the Chief Financial Officer of Kopin Corporation, certify that:

1. I have reviewed this annual report on Form 10-K/A of Kopin Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4. The Registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5. The Registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Date: September 26, 2008

/S/ RICHARD A. SNEIDER

Richard A. Sneider

Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

The certification set forth below is hereby made solely for the purpose of satisfying the requirements of Section 906 of the Sarbanes-Oxley Act of 2002 and may not be relied upon or used for any other purposes.

In connection with the Annual Report of Kopin Corporation (the “Company”) on Form 10-K/A for the fiscal year ended December 29, 2007, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, John C.C. Fan, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge: (1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

A signed original of this written statement required by Section 906 or other document authenticating, acknowledging or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

Date: September 26, 2008
By:	/S/ JOHN C.C. FAN
	John C.C. Fan President and Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

The certification set forth below is hereby made solely for the purpose of satisfying the requirements of Section 906 of the Sarbanes-Oxley Act of 2002 and may not be relied upon or used for any other purposes.

In connection with the Annual Report of Kopin Corporation (the “Company”) on Form 10-K/A for the fiscal year ended December 29, 2007, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Richard A. Sneider, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge: (1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

A signed original of this written statement required by Section 906 or other document authenticating, acknowledging or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

Date: September 26, 2008
By:	/S/ RICHARD A. SNEIDER
	Richard A. Sneider Chief Financial Officer

EX-99.1

Exhibit 99.1

KOBRITE CORPORATION AND SUBSIDIARY

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	Page
Independent auditors’ report	1
Consolidated balance sheets at December 31, 2006 and 2005 (unaudited)	2
Consolidated statements of operations for the year ended December 31, 2006 and 2005 (unaudited)	3
Consolidated statements of stockholders’ equity for the year ended December 31, 2006 and 2005 (unaudited)	4
Consolidated statements of cash flows for the year ended December 31, 2006 and 2005 (unaudited)	5
Notes to consolidated financial statements	6-12

INDEPENDENT AUDITORS’ REPORT

To the Board of Directors and Stockholders of

KoBrite Corporation

Taipei, Taiwan

We have audited the accompanying consolidated balance sheet of KoBrite Corp. and Subsidiary (the “Company”) as of December 31, 2006, and the related consolidated statements of operations, stockholders’ equity, and cash flows for the year then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2006, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the Republic of China.

Accounting principles generally accepted in the Republic of China vary in certain significant respects from accounting principles generally accepted in the United States of America. The application of the latter would have affected the determination of net loss and stockholders’ equity for the year ended December 31, 2006, to the extent summarized in Note 11.

/s/ Deloitte & Touche

Taipei, Taiwan

The Republic of China

March 17, 2008

1

KOBRITE CORPORATION AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2006 AND 2005

(In U.S. Dollars—Note 2)

	2006					2005 (Unaudited)					2006					2005 (Unaudited)
ASSETS	Amount			%		Amount			%	LIABILITIES AND STOCKHOLDERS’ EQUITY	Amount			%		Amount			%
CURRENT ASSETS (Note 2)										CURRENT LIABILITIES (Note 2)
Cash (Note 3)	$	9,140,575		43		$	5,127,523		34	Accounts payable	$	1,491,355		7		$	88,041		1
Accounts receivable (Note 2)		98,126		—			—		—	Accounts payable—related parties (Note 9)		314,253		1			3,391		—
Accounts receivable—related parties (Note 9)		1,041,896		5			—		—	Payable for purchase of equipment		86,670		—			510,933		3
Other receivable (Note 9)		32,049		—			7,015		—	Other payable		154,381		1			—		—
Inventories, net (Note 4)		1,040,462		5			67,812		1	Accrued expenses and other current liabilities		162,659		1			437,255		3
Other current assets (Note 6)		148,300		1			56,151		—
										Total current liabilities		2,209,318		10			1,039,620		7
Total current assets		11,501,408		54			5,258,501		35
										COMMITMENTS AND CONTINGENCIES (Note 10)
PROPERTY AND EQUIPMENT (Note 5)										STOCKHOLDERS’ EQUITY (Note 7)
Machinery and equipment		8,761,572		41			3,596,996		24	Common stock, par value $0.01 per share, 2,000,000,000 shares authorized, issued and outstanding		20,000,000		94			13,000,000		87
Leasehold improvements		1,345,670		6			989,534		7
Other equipment		996,066		5			837,916		5
		11,103,308		52			5,424,446		36	Additional paid-in capital		1,500,000		7			1,500,000		10
Accumulated depreciation		(1,467,165	)	(7	)		(21,337	)	—	Accumulated deficits		(2,369,459	)	(11	)		(593,856	)	(4	)
		9,636,143		45			5,403,109		36
Construction in process		112,843		1			4,216,074		28	Total stockholders’ equity		19,130,541		90			13,906,144		93
		9,748,986		46			9,619,183		64
OTHER ASSETS (Note 6)
Refundable deposits and other assets		89,465		—			68,080		1
TOTAL	$	21,339,859		100		$	14,945,764		100	TOTAL	$	21,339,859		100		$	14,945,764		100

The accompanying notes are an integral part of the consolidated financial statements.

(With Deloitte & Touche auditors’ report dated March 17, 2008)

2

KOBRITE CORPORATION AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005

(In U.S. Dollars—Note 2)

	2006					2005 (Unaudited)
	Amount			%		Amount			%
NET SALES (Note 2)	$	2,586,366		100		$	—		—
COST OF SALES (Note 8)		3,916,027		151			—		—
GROSS LOSS		(1,329,661	)	(51	)		—		—
OPERATING EXPENSES (Note 8)		616,478		24			781,847		—
LOSS FROM OPERATIONS		(1,946,139	)	(75	)		(781,847	)	—
OTHER INCOME (EXPENSE):
Interest income		141,834		5			149,141		—
Gain on foreign currency exchange, net		62,942		2			37,794		—
Other income (expense), net		(34,240	)	(1	)		3,491		—
		170,536		7			190,426		—
NET LOSS	$	(1,775,603	)	(69	)	$	(591,421	)	—

The accompanying notes are an integral part of the consolidated financial statements.

(With Deloitte & Touche auditors’ report dated March 17, 2008)

3

KOBRITE CORPORATION AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005

(In U.S. Dollars—Note 2)

	Common Stock (Note 7)			Additional Paid-In Capital (Note 7)		Accumulated Deficits (Note 7)
	Shares	Amount							Total
BALANCE ON JANUARY 1, 2005 (UNAUDITED)	800,000,000	$	8,000,000	$	—	$	(2,435	)	$	7,997,565
Issuance of common stock (unaudited)	500,000,000		5,000,000		1,500,000		—			6,500,000
Net loss for the year ended December 31, 2005 (unaudited)	—		—		—		(591,421	)		(591,421	)
BALANCE ON DECEMBER 31, 2005 (UNAUDITED)	1,300,000,000		13,000,000		1,500,000		(593,856	)		13,906,144
Issuance of common stock	700,000,000		7,000,000		—		—			7,000,000
Net loss for the year ended December 31, 2006	—		—		—		(1,775,603	)		(1,775,603	)
BALANCE ON DECEMBER 31, 2006	2,000,000,000	$	20,000,000	$	1,500,000	$	(2,369,459	)	$	19,130,541

The accompanying notes are an integral part of the consolidated financial statements.

(With Deloitte & Touche auditors’ report dated March 17, 2008)

4

KOBRITE CORPORATION AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR YEARS ENDED DECEMBER 31, 2006 AND 2005

(In U.S. Dollars—Note 2)

	2006			2005 (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(1,775,603	)	$	(591,421	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		1,457,524			21,807
Change in operating assets and liabilities:
Accounts receivable		(1,140,022	)		—
Other receivables		(25,034	)		—
Inventories, net		(972,650	)		(67,812	)
Other current assets		(92,149	)		(63,166	)
Accounts payable		1,714,176			91,432
Accrued expense and other current liabilities		(120,215	)		434,795
Net cash used in operating activities		(953,973	)		(174,365	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment		(1,999,894	)		(9,129,587	)
Additions to other assets		(33,081	)		(68,550	)
Net cash used in investing activities		(2,032,975	)		(9,198,137	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock		7,000,000			6,500,000
NET INCREASE (DECREASE) IN CASH		4,013,052			(2,872,502	)
CASH AT BEGINNING OF YEAR		5,127,523			8,000,025
CASH AT END OF YEAR	$	9,140,575		$	5,127,523
SUPPLEMENTAL DISCLOSURE OF NONCASH FLOW INFORMATION
Cash payment for acquisition of property and equipment
Acquisition of property and equipment	$	1,575,631		$	9,640,520
Less: (Increase) decrease in payable for purchase of equipment		424,263			(510,933	)
Net cash payment	$	1,999,894		$	9,129,587

The accompanying notes are an integral part of the consolidated financial statements.

(With Deloitte & Touche auditors’ report dated March 17, 2008)

5

KOBRITE CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In U.S. Dollars, Unless Stated Otherwise)

1. ORGANIZATION

KoBrite Corporation was incorporated under the International Business Company Act (“IBC Act”) incorporated in the Mauritius in November 2004 as a venture among Bright LED Electronics Corporation of Taiwan (“Bright LED”), Kopin Corporation (“Kopin”) and Kopin Taiwan Corporation (“KTC”), and certain other private investors. The main activities of KoBrite Corporation are the manufacture and sale of chips for light emitting diode (“LED”) products. KoBrite Corporation’s subsidiary, KoBrite China Corporation (“KBC”), is located in the People’s Republic of China (“PRC”) and was incorporated in April 2005.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The financial statements have been prepared in conformity with accounting principles generally accepted in the Republic of China (“ROC”). Under these principles, certain estimates and assumptions have been used for the allowance for doubtful accounts, allowance for loss on inventories, depreciation of property and equipment, impairment loss on property and equipment, loss on contingent liabilities, etc. Actual results may differ from these estimates.

Significant accounting policies are summarized as follows:

Principles of Consolidation

The accompanying consolidated financial statements include the financial statements of KoBrite Corporation and KBC (collectively, the “Company”). All significant inter-company balances and transactions have been eliminated upon consolidation. In addition, the Company evaluates its relationships with other entities to ensure whether the entities in which the Company has a controlling interest are consolidated into the Company’s financial statements at the end of each fiscal year as defined by Statement of Financial Accounting Standards (“SFAS”) No. 5, “Accounting for Investments,” and SFAS No. 7, “Consolidated Financial Statements.”

Current and Noncurrent Assets and Liabilities

Current assets include cash and those assets held primarily for trading purposes or to be realized, sold or consumed within one year from the balance sheet date. All other assets such as property and equipment are classified as noncurrent. Current liabilities are obligations incurred for trading purposes or to be settled within one year from the balance sheet date. All other liabilities are classified as noncurrent.

Cash

Cash on hand is petty cash or cash available to draw from a bank deposit and financial assets that are expected to be converted to cash, sold, or consumed within three months from the balance sheet date.

Revenue Recognition, Trade Receivables and Allowance for Doubtful Accounts

Revenue from sales of goods is recognized when the Company has transferred to the customer the significant risks and rewards of ownership of the goods, primarily upon shipment, because the earnings process has been completed and the economic benefits associated with the transaction have been realized or are realizable. Allowances for sales returns and others are generally recorded in the year the related revenue is recognized on the basis of past experience, management’s judgment, and relevant factors.

Revenue is measured at the fair value of the consideration received or receivable and represents amounts agreed between the Company and the customers for goods sold in the normal course of business. For trade receivables due within one year from the balance sheet date, as the nominal value of the consideration to be

6

received approximates its fair value and transactions are frequent, fair value of the consideration is not determined by discounting all future receipts using an imputed rate of interest.

Inventories

Inventories are stated at lower of cost or market value. Cost is determined using the weighted-average method. Market value for raw material is based on replacement cost. Market value for work in process and finished goods is based on net realizable value.

Capitalized Internal Use Software Costs

Costs of computer software are amortized by using the straight-line method over five years.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. Borrowing costs directly attributable to the acquisition or construction of property and equipment are capitalized as part of the cost of those assets. Major additions and improvements to property and equipment are capitalized, while costs of repairs and maintenance are expensed currently.

The useful lives of assets are summarized as follows:

Leasehold improvements: 10 years

Machinery and equipment: 5 years

Other equipment: 3-5 years

Property and equipment still in use beyond their original estimated useful lives are further depreciated over their newly estimated useful lives. The related cost, accumulated depreciation, and accumulated impairment losses of an item of and equipment are derecognized from the balance sheet upon its disposal. Any gain or loss on disposal of the asset is included in nonoperating income or losses in the year of disposal.

Impairment of Assets

If the recoverable amount of an asset (mainly property and equipment) is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is charged to earnings.

If an impairment loss subsequently reverses, the carrying amount of the asset is increased accordingly, but the increased carrying amount may not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset in prior years. A reversal of an impairment loss is recognized in earnings.

Retirement Plan

In accordance with local regulations in the PRC, KBC has made a monthly cash contribution of a statutory percentage of salaries and wages to the local government and recognized such contribution as a current expense. The total amount of pension expense for the Company is $9,610 in 2006.

Income Tax

According to the Mauritius Tax Law, corporations registered under the IBC Act are exempted from Mauritius income tax.

The Company uses the asset and liability method of accounting for income taxes. Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax basis and net operating loss and tax credit carryforwards. A valuation allowance is recorded to reduce deferred tax assets to an amount more likely than not to be recovered.

7

Foreign Currency Transactions

The Company’s functional currency is the US dollar. The majority of the sales revenue was derived from foreign sales priced at the US dollar. As a result, the functional currency and reporting currency are denominated in the US dollars. KoBrite Corporation and KBC record transactions in their respective local currency. The translation from the applicable foreign currency assets and liabilities to the US dollar amounts is performed using exchange rates in effect at the balance sheet date except for non-monetary assets and stockholders’ equity, which are translated at historical exchange rates. Revenue and expense accounts are translated using average exchange rates during the year. Gains and losses resulting from such translations are recognized as nonoperating income or losses.

Foreign currency transactions are translated at the rates prevailing on the transaction dates. On the balance sheet, foreign currency receivables and payables are translated at the approximate market rate of exchange prevailing on that date. Gains or losses resulting from settlement or translation are recognized as nonoperating income or losses.

3. CASH

Cash at December 31, 2006 and 2005 consisted of the following:

	December 31
	2006		2005 (Unaudited)
Cash on hand	$	22,074	$	9,590
Demand deposits		3,094,306		3,117,933
Time deposits		6,024,195		2,000,000
	$	9,140,575	$	5,127,523

4. INVENTORIES

Inventories as of December 31, 2006 and 2005 consisted of the following:

	December 31
	2006			2005 (Unaudited)
Finished goods	$	327,099		$	—
Work in process		425,816			31,575
Raw materials		325,966			45,531
		1,078,881			77,106
Less: Allowance for inventory obsolescence		(38,419	)		(9,294	)
	$	1,040,462		$	67,812

5. PROPERTY AND EQUIPMENT

The Company breaks down the accumulated depreciation of property and equipment as follows:

	December 31
	2006		2005 (Unaudited)
Machinery and equipment	$	1,163,593	$	—
Leasehold improvement		130,485		7,286
Other equipment		173,087		14,051
	$	1,467,165	$	21,337

8

6. INCOME TAXES

KoBrite Corporation is not subject to income or other taxes in Mauritius and KBC is subject to taxes of the jurisdiction where it is located. Pursuant to the PRC income tax laws prior to January 1, 2008, KBC was generally subject to Enterprise Income Taxes (“EIT”) at a statutory rate of 27%, which comprises 24% national income tax and 3% local income tax.

In March 2007, PRC government published Enterprise Income Tax Law, which unified the enacted income tax rate for domestic and foreign enterprises and was effective January 1, 2008. According to the new tax law, KBC will be forced into its first tax holiday starting 2008 regardless of its profit level, and the tax rate will change from the present EIT rate of 27% to the unified EIT rate of 25% unless KBC can obtain official approval for other tax credit.

In accordance with the tax legislations applicable to foreign investment enterprises, KBC is entitled to an exemption from PRC income tax for two years commencing from 2008 and a 50% relief from PRC income tax for the next three years. The tax holiday granted to the KBC is expected to expire in 2012.

The components of deferred income tax assets were as follows:

	December 31
	2006			2005 (Unaudited)
Deferred income tax assets, net
Net operating loss carryforwards	$	66,317		$	4,001
Depreciation		149,131			—
Spoilage		80,080			—
Startup cost		29,602			48,751
Inventory obsolescence		10,373			2,509
Sales recognition		(813	)		(806	)
Overhead allocated to inventories		(50,108	)		—
		284,582			54,455
Valuation allowance		(284,582	)		(54,455	)
Deferred tax assets, net	$	—		$	—

7. SHAREHOLDERS’ EQUITY

Common Stock and Capital Increase

In November 2004, Bright LED Electronics Corporation of Taiwan (“Bright LED”), Kopin Corporation (“Kopin”) and Kopin Taiwan Corporation (“KTC”) entered into a joint venture agreement to form KoBrite Corporation. Under the terms of the joint venture agreement, Bright LED, Kopin and KTC would subscribe to 300,000,000, 300,000,000 and 200,000,000 shares of the KoBrite Corporation’s common stock, respectively, for $0.01 per share. In 2005, KoBrite Corporation issued additional 500,000,000 shares of its common stock for $0.013 per share, resulting in an additional paid-in capital of $1,500,000.

Based on a resolution of the annual stockholders’ meeting on May 10, 2006, KoBrite Corporation increased its authorized common stock to $20,000,000. On July 31, 2006, the board of directors resolved to issue 700,000,000 new shares at $0.01 per share. The registration procedures related to these issuances have been completed.

9

Distribution of Earnings

According to the articles of incorporation, the distribution of residual earnings, net of accumulated losses from prior years, should be determined by a resolution of the directors.

8. PERSONNEL, DEPRECIATION AND AMORTIZATION EXPENSES

Personnel depreciation and amortization expenses for the year ended December 31, 2006 and 2005 were as follows:

	December 31, 2006
	Cost of Sales		Operating Expense		Total
Personnel expenses
Salaries and wages	$	231,020	$	322,634	$	553,654
Labor and health insurance		—		3,834		3,834
Pension expense		—		9,610		9,610
Other		358		4,367		4,725
	$	231,378	$	340,445	$	571,823
Depreciation	$	1,400,650	$	45,178	$	1,445,828
Amortization	$	—	$	11,696	$	11,696
	December 31, 2005 (Unaudited)
	Cost of Sales		Operating Expense		Total
Personnel expenses
Salaries and wages	$	—	$	245,923	$	245,923
Labor and health insurance		—		4,438		4,438
Pension expense		—		1,371		1,371
Other		—		8,482		8,482
	$	—	$	260,214	$	260,214
Depreciation	$	—	$	21,337	$	21,337
Amortization	$	—	$	470	$	470

9. RELATED-PARTY TRANSACTIONS

Names of the related parties and relationships:

Related Party	Relationship to the KoBrite Corporation
Kopin	Stockholder with 1 director position.
Bright LED	Stockholder with 1 director position.
KTC	Stockholder with 1 director position.
MainBright Enterprises Ltd. (“MainBright”)	A subsidiary of Bright LED.
Brite LED Corporation Dongguan (“Brite LED Dongguan”)	A subsidiary of Bright LED.

Summary of significant transactions with related parties:

In accordance with an agreement between KoBrite Corporation and KTC, certain equipment having a net book value of $1,717,063 as of December 31, 2006 was held and used on consignment by KTC. Under the

10

agreement, KTC manufactures products which and then sell to KoBrite Corporation as part of its raw material inventory.

The following is a summary of related party transactions as of and for the years ended December 31, 2006 and 2005:

	For Year Ended December 31, 2006				December 31, 2006
Related Party	Sales		Purchases		Receivables		Payables
MainBright	$	2,425,894	$	—	$	1,041,896	$	—
KTC		—		314,253		—		314,253
Brite LED Dongguan		—		—		26,730		—
	For Year Ended December 31, 2005 (Unaudited)				December 31, 2005 (Unaudited)
Related Party	Sales		Purchases		Receivables		Payables
MainBright	$	—	$	—	$	—	$	—
KTC		—		3,391		—		3,391
Brite LED Dongguan		—		—		—		—

The terms of sales to and purchases from related parties were not significantly different from those to or from third parties.

10. COMMITMENTS AND CONTINGENCIES

KBC leases facilities in Guang Dong Province, China under a non-cancellable lease through January 2010. The following is a schedule of future minimum lease payments as of December 31, 2006:

Year	Amount
2007	$	169,042
2008		169,042
2009		169,042
2010		70,434
Thereafter		—
	$	577,560

11. RECONCILIATION OF REPUBLIC OF CHINA GAAP TO UNITED STATES GAAP

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the Republic of China (“ROC GAAP”), which differ in the following respects from accounting principles generally accepted in the United States of America (“US GAAP”):

a. Purchase price allocation

In December 2004, the Company entered into an Equipment Purchase Agreement under which the Company paid $7,500,000 to Kopin for certain equipment and the performance of research and training activities. The Company ascribed the entire $7,500,000 to the value of the equipment. Under US GAAP, a portion of the purchase price would have been ascribed to the research and training activities. The Company estimated that $1,500,000 of the purchase price would have been considered payment of research and training activities and based upon the period the research and training activities occurred, the Company would have recognized $650,000 of expense in the year ended December 31, 2005 and $850,000 in the year ended December 31, 2006 under US GAAP. As a result of the allocation of $1,500,000 of the purchase price to the research and training activities, the amount

11

allocated to equipment would have decreased and, accordingly, depreciation expense would have been less under US GAAP.

b. Rent expense

The Company entered into a five year facilities lease under which the Company paid no rent for the first four months. Under US GAAP, this “free” rent period would be amortized over the entire lease period. Accordingly, the Company would have had more rent expense in the year ended December 31, 2005 and less in the year ended December 31, 2006.

The Company has incurred losses since inception and based upon the criteria established under US GAAP it could not recognize a deferred tax asset for its net operating loss carryforwards, accordingly, no tax benefit was recorded for the increase in the net loss of the Company under US GAAP.

The following reconciles consolidated net loss and stockholders’ equity under ROC GAAP as reported in the consolidated financial statements to the consolidated net loss and stockholders’ equity determined under US GAAP, giving effect to the differences listed above.

Net loss
Net loss based on ROC GAAP	$	(1,775,603	)
Adjustments which decrease the reported net loss
A. Purchase price allocation
1. Depreciation		257,501
2. Allocation of purchase price to research and training activities		(850,000	)
B. Rent expense		11,050
Net adjustments		(581,449	)
Net loss based on US GAAP	$	(2,357,052	)
Stockholders’ equity
Stockholders’ equity based on ROC GAAP	$	19,130,541
A. Purchase price allocation
1. Depreciation		257,501
2. Allocation of purchase price to research and training activities		(1,500,000	)
B. Rent expense		20,909
Stockholders’ equity based on US GAAP	$	17,908,951

The Company applies ROC SFAS No. 17, “Statement of Cash Flows.” Its objectives and principles are similar to those set out in US SFAS No. 95, “Statement of Cash Flows.” The principal differences between the two standards relate to classification to the consolidated statement of cash flows. Summarized cash flow data by operating, investing and financing activities in accordance with US SFAS No. 95 are as follows:

Cash flows as presented under US GAAP
Cash flows from operating activities	$	(1,803,973	)
Cash flows from investing activities		(1,182,975	)
Cash flows from financing activities		7,000,000
Net increase in cash	$	4,013,052

12

EX-99.2

Exhibit 99.2

KOBRITE CORPORATION AND SUBSIDIARY

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	Page
Consolidated balance sheet at December 31, 2007 (unaudited)	1
Consolidated statement of operations for the year ended December 31, 2007 (unaudited)	2
Consolidated statement of stockholders’ equity for the year ended December 31, 2007 (unaudited)	3
Consolidated statement of cash flows for the year ended December 31, 2007 (unaudited)	4
Notes to consolidated financial statements	5-13

KOBRITE CORPORATION AND SUBSIDIARY

Consolidated Balance Sheet

December 31, 2007

(in US dollars)

	2007 (unaudited)
	Amount			%
Assets
Current assets:
Cash and cash in bank (note 4)	$	4,717,496		25
Accounts receivable, net		50,998		—
Accounts receivable – related parties (note 9)		1,668,402		9
Other current financial assets		57,031		—
Inventories, net (note 5)		1,100,114		6
Other current assets		244,308		1
Total current assets		7,838,349		41
Property and equipment:
Machinery and equipment		7,192,799		38
Leasehold improvements		1,359,022		7
Other equipment		1,015,623		5
		9,567,444		50
Accumulated depreciation		(2,614,407	)	(13	)
Unfinished construction and prepayment for equipment		2,561,173		13
		9,514,210		50
Other assets:
Idled assets (note 6)		1,722,718		9
Refundable deposits and other assets		82,408		—
		1,805,126		9
Total assets	$	19,157,685		100

	2007
	Amount			%
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	793,649		4
Accounts payable – related parties (note 9)		241,300		1
Other payable – related parties (notes 7 and 9)		1,806,200		9
Accrued expenses and other current liabilities		321,278		1
Total liabilities		3,162,427		16
Stockholders’ equity (note 7):
Common stock		18,000,000		94
Capital Surplus:
Paid-in capital in excess of par value		1,350,000		7
Others		343,800		2
		1,693,800		9
Accumulated deficits		(3,698,542	)	(19	)
Total stockholders’ equity		15,995,258		84
Commitments and contingencies (note 10)
Total liabilities and stockholders’ equity	$	19,157,685		100

See accompanying notes to financial statements.

1

KOBRITE CORPORATION AND SUBSIDIARY

Consolidated Statement of Operations

Year ended December 31, 2007

(in US dollars)

	2007 (unaudited)
	Amount			%
Net sales (note 9)	$	4,865,861		100
Cost of goods sold (note 9 and 11)		5,559,050		114
Gross loss		(693,189	)	(14	)
Operating expenses (note 11)		628,144		13
Operating loss		(1,321,333	)	(27	)
Non-operating income:
Interest income		222,208		5
Gain on foreign currency exchange net		71,722		1
Other income		56,411		1
		350,341		7
Non-operating expenses and losses:
Other expenses and losses (note 6)		358,091		7
Net loss	$	(1,329,083	)	(27	)

See accompanying notes to financial statements.

2

KOBRITE CORPORATION AND SUBSIDIARY

Consolidated Statement of Changes in Stockholders’ Equity

Year ended December 31, 2007

(in US dollars)

	Common stock			Additional paid-in capital	Accumulated deficits		Total
Balance on December 31, 2006	$	20,000,000		1,500,000	(2,369,459	)	19,130,541
Purchase and cancellation of treasury stock		(2,000,000	)	193,800	—		(1,806,200	)
Net loss for 2007		—		—	(1,329,083	)	(1,329,083	)
Balance on December 31, 2007	$	18,000,000		1,693,800	(3,698,542	)	15,995,258

See accompanying notes to financial statements.

3

KOBRITE CORPORATION AND SUBSIDIARY

Consolidated Statement of Cash Flows

Year ended December 31, 2007

(in US dollars)

	2007 (unaudited)
Cash flows from operating activities:
Net loss	$	(1,329,083	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		1,828,304
Increase in accounts receivable		(579,381	)
Increase in other current assets		(120,991	)
Increase in inventories, net		(59,652	)
Increase (decrease) in accounts payable		(770,656	)
Decrease in other current liabilities		(82,429	)
Other		(2,921	)
Cash used in operating activities		(1,116,809	)
Cash flows from investing activities:
Additions to property and equipment		(3,303,516	)
Other		(2,754	)
Cash used in investing activities		(3,306,270	)
Cash flows from financing activities:
Capital injection through cash		—
Net cash provided by financing activities		—
Net increase (decrease) in cash and cash in bank		(4,423,079	)
Cash and cash in bank at beginning of period		9,140,575
Cash and cash in bank at end of period	$	4,717,496
Supplementary disclosures regarding purchase of treasury stock:
Amount of treasury stock purchased	$	1,806,200
Increase in other cash payable		(1,806,200	)
	$	—

See accompanying notes to financial statements.

4

KOBRITE CORPORATION AND SUBSIDIARY

Notes to Consolidated Financial Statements

December 31, 2007

(in US dollars)

(1) Organization

KoBrite Corporation (“the Company”) was incorporated under the International Business Company Act (“IBC Act”) in Mauritius on November 30, 2004. The main activities of the Company is investment.

KoBrite China Corp. (“KBC”) was incorporated in April 2005 in the PRC. The main activities of KBC are the manufacture and sale of chips for Light Emitting Diode (LED) products. As of December 31, 2006, the Company owned 100% of KBC’s capital, amounting to $12,492,859.

The Company and KBC are consolidated in the accompanying consolidated financials statements and are jointly called “the Consolidated Company”.

As of December 31, 2007, the number of employees hired by the Consolidated Company was 172.

(2) Summary of Significant Accounting Policies

The accounting and reporting policies adopted by the Consolidated Company conform to the related financial accounting standards of “Business Entity Accounting Act: and of the “Regulation on Business Entity Accounting Handling” and accounting principles generally accepted in the Republic of China. The significant accounting policies applied in the preparation of the consolidated financial statements are as follows:

(a) Principles of consolidation

Investees over which the Company has control power are consolidated into the Company’s financial statements at the end of every fiscal year. All significant inter-company accounts and transactions have been eliminated.

(b) Use of estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the Republic of China 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 reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

(Continued)

5

KOBRITE CORPORATION AND SUBSIDIARY

Notes to Financial Statements

(c) Foreign currency transactions

The Consolidated Company’s functional currency is the US dollar. The Company and its subsidiary record transactions in their respective local currencies. The translation from the applicable foreign currency assets and liabilities to the US dollar is performed using exchange rates in effect at the balance sheet date except for non-monetary assets and stockholders’ equity, which are translated at historical exchange rates, and revenue and expense accounts, which are translated using average exchange rates during the year. Gains and losses resulting from such translations are recognized as non-operating income or losses.

Foreign currency transactions are translated at the rates prevailing on the transaction dates. Foreign currency receivables and payables are translated at the approximate market rate of exchange prevailing on the balance sheet date. Gains or losses resulting from settlement or translation are recognized as non-operating income or losses.

(d) Distinction between current and non-current assets and liabilities

Current assets are unrestricted cash, cash equivalents and other assets to be realized in cash, sold, or consumed (prepaid items) within 12 months of the balance sheet date. Current liabilities are obligations to be paid or settled within 12 months of the balance sheet date. All other assets or liabilities are classified as non-current.

(e) Impairment of assets

The Consolidated Company assesses at each balance sheet date whether there is any indication that an asset (individual asset or cash-generating unit) other than goodwill may have been impaired. If any such indication exists, the Consolidated Company estimates the recoverable amount of the asset and recognizes impairment loss for an asset whose carrying value is higher than the recoverable amount.

(f) Inventories

Inventories are stated at the lower of cost or market value. Cost is determined using the weighted-average method. Market value for raw material is based on replacement cost. Market value for work in process and finished goods is based on net realizable value.

(g) Property and equipment

Property and equipment are stated at acquisition cost. Depreciation of property and equipment is provided using the straight-line method over the estimated useful lives of the respective assets. If the property and equipment have reached the end of their estimated useful lives but are still in use, the Company will estimate the remaining useful lives and residual values, and depreciate the remaining costs using the same method. Depreciation on leasehold improvements is provided

(Continued)

6

KOBRITE CORPORATION AND SUBSIDIARY

Notes to Financial Statements

using the straight-line method over the shorter of contract periods or estimated useful lives of the respective assets. Gains (loss) on the disposal of property and equipment are included in non-operating income (loss).

The useful lives of assets are summarized as follows:

1. Leasehold improvements: 10 years

2. Machinery and equipment: 5 years

3. Other equipment: 3~5 years

Property, plant and equipment not currently used in operations are transferred to idle assets. According to SFAS No. 1, property, plant and equipment not currently used in operations are no longer stated at the lower of carrying value or net realizable value. The cost, accumulated depreciation, and accumulated impairment of the original assets not currently used in operations are all transferred to idle assets and depreciated. Depreciation expenses of idle assets are included in non-operating expenses and losses.

(h) Intangible assets

Effective from January 1, 2007, the Company adopted SFAS No. 37 “Intangible Assets”. In accordance with SFAS No. 37, other than an intangible asset acquired by way of a government grant, which should be measured at its fair value, an intangible asset shall be measured initially at cost. After initial recognition, an intangible asset shall be measured at its cost plus revaluation increment revalued in accordance with the laws, less any accumulated amortization and any accumulated impairment losses.

The depreciable amount of an intangible asset is determined by the original cost less its residual value. Amortization is provided for by using the straight-line method over the estimated useful lives of intangible assets from the date that they are available for use. The cost of computer software for internal use is amortized by using the straight-line method over five years.

(i) Revenue recognition

Revenue derived from product sales is recognized when products are shipped and the significant risks and rewards are transferred to the buyer.

(j) Retirement plan

The major business of the Company is investment. No official employees were hired by it. In accordance with local regulations in the PRC, KBC has made a monthly cash contribution of a

(Continued)

7

KOBRITE CORPORATION AND SUBSIDIARY

Notes to Financial Statements

statutory percentage of salaries and wages to local government and recognized it as current expenses.

(k) Income tax

According to the Mauritius tax law, corporations registered under the IBC Act are exempted from Mauritius income tax.

Entities of the Consolidated Company file their income tax returns separately. The income tax expense of the Consolidated Company is the summation of the income tax expense of the Company and Subsidiary.

The Consolidated Company uses the asset and liability method of accounting for income taxes. Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax basis, and net operating loss and tax credit carryforwards. A valuation allowance is recorded to reduce deferred tax assets to an amount more likely than not to be recovered.

(l) Treasury stock

The Company accounts for the cost of purchasing its outstanding stock as “treasury stock”. A gain on the sale of treasury stock is credited to capital surplus – treasury stock. Losses are charged to capital surplus, but only to the extent of available net gains from previous sales or retirements of the same class of stock; otherwise, losses are charged to retained earnings. The cost of treasury stock is computed using the weighted-average method.

When treasury stock is retired, the weighted-average cost of the retired treasury stock is written off against the par value of the shares and the paid-in capital derived from the issuance of shares in excess of par value. If the weighted-average cost written off exceeds the sum of the par value and the paid-in capital in excess of par value, the difference is debited to capital surplus-treasury stock arising from the same class of stock or to retained earnings, and if vice versa, the difference is credited to capital surplus-treasury stock.

(3) Change in Accounting Policies and Its Effect

Effective from January 1, 2007, the Company adopted SFAS No. 37 “Intangible Assets”. In accordance with SFAS No. 37, the Company reevaluates the useful lives and the amortization method used for recognized intangible assets at the beginning of the financial year. There was no need to changed the useful lives or the amortization method.

(4) Cash and Cash in Bank

(Continued)

8

KOBRITE CORPORATION AND SUBSIDIARY

Notes to Financial Statements

	December 31, 2007 (unaudited)
Cash on hand	$	15,155
Demand deposits		2,596,682
Time deposits		2,105,659
	$	4,717,496

(5) Inventories

	December 31, 2007 (unaudited)
Raw materials	$	255,200
Work in process		666,594
Finished Goods		335,755
		1,257,549
Less: allowance for inventory obsolescence		(157,435	)
	$	1,100,114

(6) Idled assets

Parts of machinery and equipment of the Consolidated Company were idled. As of December 31, 2007, the idle assets were as follows:

	December 31, 2007 (unaudited)
Machinery and equipment	$	2,391,047
Less: accumulated depreciation		(668,329	)
	$	1,722,718

The depreciation expense of the idled assets is recorded as other expenses and losses.

(Continued)

9

KOBRITE CORPORATION AND SUBSIDIARY

Notes to Financial Statements

(7) Stockholders’ Equity

(a) Common stock and capital increase

Based on a resolution of the board of directors on May 10, 2006, the Company increased its authorized common stock to $20,000,000 and issued 700,000 thousand new shares at $0.01 per share. The registration procedures related to these issuances have been completed.

As of December 31, 2007, the total authorized common stock of the Company was $18,000,000 at a par value of USD$0.01 (dollars) per share.

(b) Treasury stock

In December 2007 the Company purchased 200,000 thousand shares of treasury stock at a total cost of $1,806,200 for the purpose of operation financing. All of treasury stock mentioned above was retired immediately and the registration procedures have been completed. The sum of the amount by which the purchasing price was lower than par value and paid-in capital in excess of par value amounted to $343,800, recorded as capital surplus-treasury stock according to the percentage of ownership of stock. Please refer to note 9(3).

(c) Distribution of earnings

According to the Company’s articles of incorporation, earnings, if any, after offsetting prior years’ deficits, can be distributed as dividends to stockholders.

(8) Income Taxes

(a) According to Mauritius tax law, the Company registered under the IBC Act are exempted from Mauritius income tax.

(b) According to the PRC Tax Law, KBC are subject to income tax at the rate of 15% and can, from the year in which they begin to make profits, be exempted from income tax in the first and second years and allowed a 50% reduction in the third to fifth years, with a minimum operating period over 10 years. However, KBC must pay back the amount of tax exemption and tax reduction if the actual operating period is less then 10 years. KBC had not made any profits yet and accrued no income tax payable in 2007 and 2006. According to amended Regulation on Enterprise Income Tax of the PRC and related policy, companies that originally used the preferential income tax rate should apply the legal income tax rate (25%) in steps within five years beginning January 1, 2008.

(9) Related-party Transactions

(Continued)

10

KOBRITE CORPORATION AND SUBSIDIARY

Notes to Financial Statements

(a) Names of the related parties and relationships

Related party	Relationship with the Company
Kopin Corporation	The Company is its investee company accounted for under equity method
Mainbright Enterprises Ltd. (MB)	The Company is its parent company’s (Bright LED Electronics Corp) investee company accounted for under equity method
Kopin Taiwan Corporation (KTC)	Before December 2006, KTC was a member of the Company’s board of directors

(b) Summary of significant transactions with related parties

1) Sales

	2007 (unaudited)
	Amount		Percentage of net sales
MB	$	4,535,934	93

Sales prices were similar to those for third-party customers. The collection period was 90 to 120 days after the sales date.

Accounts receivables resulting from the above transactions were as follows:

	2007 (unaudited)
	Amount		%
MB	$	1,668,402	97

2) Purchases

	2007 (unaudited)
	Amount		Percentage of net purchases
KTC	$	1,539,170	28

Purchase prices for raw materials were similar to those for third-party suppliers. The payment period was 90 to 120 days after the purchases date.

(Continued)

11

KOBRITE CORPORATION AND SUBSIDIARY

Notes to Financial Statements

Accounts payables resulting from the above transactions were as follows:

	2007 (unaudited)
	Amount		%
KTC	$	241,300	23

3) Stock transaction

In 2007, the Consolidated Company bought 200,000,000 shares of common stock held by KTC. As of December 31, the payable amounting to $1,806,200 was not yet paid.

(Continued)

12

KOBRITE CORPORATION AND SUBSIDIARY

Notes to Financial Statements

(10) Commitments and Contingencies

In January 2005, KBC entered into a five years lease with the government authority of Dong Guan City, Gaubo Town for the KBC’s plant. The expected rental expense to be paid in future years is summarized as follows:

Period	Amount
2008.1.1~2008.12.31	$	180,708
2009.1.1~2009.12.31		180,708
After 2009.12.31		15,059
	$	376,475

(11) Other

Employee expenses, depreciation expenses, and amortization expenses for the years ended December 31, 2007 were as follows:

	The year ended December 31, 2007 (unaudited)
	Cost of sales		Operating expense	Total
Employee expenses
Salaries and wages	$	280,513	235,912	516,425
Labor and health insurance		—	9,553	9,553
Pension expense		—	11,259	11,259
Other		54	3,167	3,221
Depreciation expenses		1,394,124	421,447	1,815,571
Amortization expenses		—	12,733	12,733

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