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Constituent Review
J. Andrew Braswell, Equity Analyst Newbridge Institutional Research Data as of 3-30-07		Quote/News
		Nano Electronics

Review
1/9/07- KOPN announced that a range of mobile video products enabled by its Digital iVision™ technology would be featured at the Consumer Electronics Show (CES), held this week in Las Vegas. Icuiti will unveil several new video eyewear products utilizing KOPN display, including the iWEAR™ VR920, AV920, for iPod and AV230 models. MicroOptical will demonstrate its myvu™ video eyewear, which is designed specifically for the iPod and features two CyberDisplay 230K microdisplays. Both Icuiti and MicroOptical received CES Innovations Awards in the “Portable Electronics: Audio/Video” category.

1/23/07- Said that it had increased production volume in support of its previously announced contracts to supply microdisplays for the U.S. Army’s Thermal Weapon Sight (TWS-II) program. The company is now producing more than 1,000 systems per month under the program, which provides for the production of up to 60,000 units over 4-5 years.

2/26/07- Announced that it had received notification from Nasdaq that, subject to certain conditions, it will stay the delisting of KOPN common shares. The company has been unable to timely file its 10-Q for the period ended 9/30/06 due to an ongoing internal review of historical stock options grant practices. The conditions require that KOPN provides the Nasdaq Hearings Department with the investigation committee’s final report by 4/11/07 and that it becomes current in its filings by 5/14/07.

3/6/07- Reported limited financial results for Q4 and the year ended 12/31/06 after the close. Due to the ongoing internal options investigation and resulting delinquency in the company’s quarterly filings, we suspended our rating and price target and placed our estimates under review on 11/9/06. For Q4, KOPN reported total revenue of $17.9M (-28% Y/Y), within the guidance range of $17.5M-$19.0M.

3/15/07- Announced the release of an advanced display controller chip (A910) and evaluation kits for its high resolution, full-color microdisplays. The A910 can drive two CyberDisplay® WVGA LV (854 x 480 resolution) or SVGA LV (800 x 600) displays, either in 2D or 3D stereoscopic mode at frame rates up to 60 Hz. It can also drive one CyberDisplay SXGA LV (1280 x 1024) display. The evaluation kit comprises a display, a compact reference design board (1.5 x 1.5 inches) containing an A910 chip, and associated documentation.

3/22/07- Said that it had received an Additional Staff Determination letter from Nasdaq indicating that the company is not in compliance with continued listing requirements because it did not timely file its 10-K for 2006.

3/28/07- Announced that its electronic viewfinder (EVF) was selected for use by Olympus in its SP-550 UZ, the first ultra-wide (18x) zoom digital camera. The camera went on sale last month at a retail price of $500.

Commentary
Having lost a third of if its value in 2006, KOPN stock ended Q1 lower by another 5%. Our rating, price target and estimates remain suspended pending the completion of the internal options investigation and the company becoming current in its filings. We continue to be surprised at how well the stock has held up under the specter of potential restatements, delisting and/or discovery of management malfeasance. In fact, since the internal options review was disclosed on 11/1/06, shares are essentially unchanged. The military TWS II display supply contract is back at full swing, as CyberDisplay revenue in Q4 was up 59% sequentially, though still down 22% Y/Y. The design-in by Olympus for its new digital camera should help non-military display sales going forward, but there need to be more such deals. KOPN set 2007 revenue guidance at $80M-$90M, and said it would no longer issue quarterly projections. The midpoint of the revenue guidance range implies 20% Y/Y top line growth in 2007.