UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the quarterly period ended
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _____ to _____
Commission
file number
(Exact name of registrant as specified in its charter)
State or other jurisdiction of incorporation or organization |
(I.R.S. Employer Identification No.) | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s
telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
| Class | Outstanding as of August 4, 2023 | |
| Common Stock, par value $0.01 |
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 filing requirements for the past 90 days.
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ | |
| ☒ | Smaller reporting company | |||
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ☐
Kopin Corporation
INDEX
| 2 |
Part 1. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements (Unaudited)
KOPIN CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
| July 1, 2023 | December 31, 2022 | |||||||
| (unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Marketable debt securities, at fair value | ||||||||
| Accounts receivable, net of allowance of $ | ||||||||
| Contract assets and unbilled receivables | ||||||||
| Inventory | ||||||||
| Prepaid taxes | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Property, plant and equipment, net | ||||||||
| Operating lease right-of-use assets | ||||||||
| Other assets | ||||||||
| Equity investments | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued payroll and expenses | ||||||||
| Accrued warranty | ||||||||
| Contract liabilities and billings in excess of revenues earned | ||||||||
| Operating lease liabilities | ||||||||
| Accrued post-retirement benefits | ||||||||
| Other accrued liabilities | ||||||||
| Customer deposits | ||||||||
| Deferred tax liabilities | ||||||||
| Total current liabilities | ||||||||
| Noncurrent contract liabilities and asset retirement obligations | ||||||||
| Operating lease liabilities, net of current portion | ||||||||
| Accrued post-retirement benefits, net of current portion | ||||||||
| Other long-term obligations, net of current portion | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies | ||||||||
| Stockholders’ equity: | ||||||||
| Preferred stock, par value $ per share: authorized, shares; issued | ||||||||
| Common stock, par value $ per share: authorized, shares; issued shares in 2023 and shares in 2022; outstanding in 2023 and in 2022, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Treasury stock ( shares in 2023 and 2022, at cost) | ( | ) | ( | ) | ||||
| Accumulated other comprehensive income | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Kopin Corporation stockholders’ equity | ||||||||
| Noncontrolling interest | ( | ) | ||||||
| Total Kopin Corporation stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
See notes to unaudited condensed consolidated financial statements
| 3 |
KOPIN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended | Three months ended | Six months ended | Six months ended | |||||||||||||
| July 1, 2023 | June 25, 2022 | July 1, 2023 | June 25, 2022 | |||||||||||||
| Revenues: | ||||||||||||||||
| Net product revenues | $ | $ | $ | $ | ||||||||||||
| Research and development revenues | ||||||||||||||||
| Other revenues | ||||||||||||||||
| Total revenues | ||||||||||||||||
| Expenses: | ||||||||||||||||
| Cost of product revenues | ||||||||||||||||
| Research and development | ||||||||||||||||
| Selling, general and administration | ||||||||||||||||
| Total expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other (expense) income | ||||||||||||||||
| Interest income | ||||||||||||||||
| Other income (expense), net | ( | ) | ( | ) | ||||||||||||
| (Loss) gain on investments | ( | ) | ( | ) | ||||||||||||
| Foreign currency transaction losses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total other (expense) income | ( | ) | ( | ) | ( | ) | ||||||||||
| Loss before provision for income taxes and net loss attributable to noncontrolling interest | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Tax provision | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss attributable to the noncontrolling interest | ||||||||||||||||
| Net loss attributable to Kopin Corporation | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net loss per share | ||||||||||||||||
| Basic and diluted | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
| Weighted average number of common shares outstanding | ||||||||||||||||
| Basic and diluted | ||||||||||||||||
See notes to unaudited condensed consolidated financial statements
| 4 |
KOPIN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Unaudited)
Three months ended | Three months ended | Six months ended | Six months ended | |||||||||||||
| July 1, 2023 | June 25, 2022 | July 1, 2023 | June 25, 2022 | |||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Other comprehensive loss, net of tax: | ||||||||||||||||
| Foreign currency translation adjustments | ( | ) | ( | ) | ||||||||||||
| Unrealized holding loss on marketable securities | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Reclassification of holding losses in net loss | ( | ) | ||||||||||||||
| Other comprehensive income (loss), net of tax | ( | ) | ( | ) | ||||||||||||
| Comprehensive loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Comprehensive loss attributable to the noncontrolling interest | ||||||||||||||||
| Comprehensive loss attributable to Kopin Corporation | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
See notes to unaudited condensed consolidated financial statements
| 5 |
KOPIN CORPORATION
Condensed Consolidated Statements of Stockholders’ Equity
(Unaudited)
| Common Stock | Additional Paid-in | Treasury | Accumulated Other Comprehensive | Accumulated | Total Kopin Corporation Stockholders’ | Noncontrolling | Total Stockholders’ | |||||||||||||||||||||||||||||
| Shares | Amount | Capital | Stock | Income | Deficit | Equity | Interest | Equity | ||||||||||||||||||||||||||||
| Balance, December 31, 2022 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||||||
| Vesting of restricted stock | ( | ) | ||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | - | |||||||||||||||||||||||||||||||||||
| Other comprehensive income | - | |||||||||||||||||||||||||||||||||||
| Issuance of common stock and pre-funded warrants, net of costs | ||||||||||||||||||||||||||||||||||||
| Acquisition of noncontrolling interest | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Balance, April 1, 2023 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | $ | ||||||||||||||||||||||||
| Vesting of restricted stock | ( | ) | ||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | - | |||||||||||||||||||||||||||||||||||
| Other comprehensive income | - | |||||||||||||||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Balance, July 1, 2023 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | $ | ||||||||||||||||||||||||
| Common Stock | Additional Paid-in | Treasury | Accumulated Other Comprehensive | Accumulated | Total Kopin Corporation Stockholders’ | Noncontrolling | Total Stockholders’ | |||||||||||||||||||||||||||||
| Shares | Amount | Capital | Stock | Income | Deficit | Equity | Interest | Equity | ||||||||||||||||||||||||||||
| Balance, December 25, 2021 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||||||
| Vesting of restricted stock | ( | ) | ||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | - | |||||||||||||||||||||||||||||||||||
| Other comprehensive loss | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Restricted stock for tax withholding obligations | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Net loss | - | ( | ) | $ | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance, March 26, 2022 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||||||
| Vesting of restricted stock | ( | ) | ||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | - | |||||||||||||||||||||||||||||||||||
| Other comprehensive loss | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Sale of registered stock | ||||||||||||||||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||
| Balance, June 25, 2022 | $ | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||||||||
See notes to unaudited condensed consolidated financial statements
| 6 |
KOPIN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Six months ended | Six months ended | |||||||
| July 1, 2023 | June 25, 2022 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Accretion of premium or discount on marketable debt securities | ||||||||
| Stock-based compensation | ||||||||
| Foreign currency losses | ||||||||
| Change in allowance for credit losses | ( | ) | ||||||
| Write-off of excess inventory | ||||||||
| Investment impairment (unrealized gains on investments) | ( | ) | ||||||
| Loss on sale of property and plant | ||||||||
| Income taxes | ||||||||
| Changes in other non-cash items | ||||||||
| Changes in assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Contract assets and unbilled receivables | ( | ) | ( | ) | ||||
| Inventory | ( | ) | ( | ) | ||||
| Prepaid expenses, other current assets and other assets | ( | ) | ( | ) | ||||
| Accounts payable and accrued expenses | ( | ) | ||||||
| Contract liabilities and billings in excess of revenue earned | ( | ) | ( | ) | ||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities: | ||||||||
| Other assets | ( | ) | ||||||
| Capital expenditures | ( | ) | ( | ) | ||||
| Equity investment purchase | ( | ) | ||||||
| Proceeds from sale of marketable debt securities | ||||||||
| Purchases of marketable debt securities | ( | ) | ( | ) | ||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities: | ||||||||
| Sale of treasury stock, net of costs | ||||||||
| Issuance of common stock and pre-funded warrants, net of costs | ||||||||
| Settlements of restricted stock for tax withholding obligations | ( | ) | ||||||
| Net cash provided by financing activities | ||||||||
| Effect of exchange rate changes on cash | ( | ) | ||||||
| Net increase (decrease) in cash and cash equivalents | ( | ) | ||||||
| Cash and cash equivalents: | ||||||||
| Beginning of period | ||||||||
| End of period | $ | $ | ||||||
See notes to unaudited condensed consolidated financial statements
| 7 |
KOPIN CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The condensed consolidated financial statements of Kopin Corporation as of July 1, 2023 and for the six month periods ended July 1, 2023 and June 25, 2022 are unaudited and include all adjustments that, in the opinion of management, are necessary to present fairly the results of operations for the periods then ended. These condensed consolidated financial statements should be read in conjunction with the Company’s financial statements and notes thereto, included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022. The results of the Company’s operations for any interim period are not necessarily indicative of the results of the Company’s operations for any other interim period or for a full fiscal year. As used in this report, the terms “we”, “us”, “our”, “Kopin” and the “Company” mean Kopin Corporation and its subsidiaries, unless the context indicates another meaning.
The
condensed consolidated financial statements for the six months ended July 1, 2023 include the accounts of Kopin Corporation and its
wholly owned subsidiaries. The condensed consolidated financial statements for the six months ended June 25, 2022 include the
accounts of Kopin Corporation and its wholly owned subsidiaries. Net loss attributable to noncontrolling interest in the
Company’s condensed consolidated statements of operations for the six months ended June 25, 2022 represents the
The Company’s current strategy is to continue to invest in research and development, even during unprofitable periods, which may result in the Company continuing to incur net losses and negative cash flows from operations. If the Company is unable to achieve and maintain positive cash flows and profitability in the foreseeable future, its financial condition may ultimately be materially adversely affected such that management may be required to reduce operating expenses, including investments in research and development, or raise additional capital. While there can be no assurance the Company will be able to successfully reduce operating expenses or raise additional capital, management believes its historical success in managing cash flows and obtaining capital will continue in the foreseeable future.
On
January 5, 2023, the Company entered into a Technology License Agreement and an Asset Purchase Agreement (the “LST Agreements”)
with Lightning Silicon Technology, Inc. (“LST”). Pursuant to the LST Agreements, the Company issued a license to LST for
certain technology associated with our Organic Light Emitting Technology, transferred in-process development contracts with two customers
and accounts receivables that the Company had previously determined were not collectible. The technology license agreement provides for
Kopin to transfer certain patents to LST if LST achieves certain milestones; however upon transfer, Kopin will receive a license to the
technology. To the extent LST makes improvements to the technology licensed from Kopin, Kopin will receive a license for these improvements
for certain markets. Kopin is not obligated to provide any additional funding support to LST. As consideration for the transaction, the
Company received preferred shares in LST, which the Company determined
had no fair value as of the transaction date or as of July 1, 2023. While these shares represent a
On
January 27, 2023, the Company sold shares of common stock and pre-funded warrants to purchase up to
| 8 |
2. ACCOUNTING STANDARDS
ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments became effective for smaller reporting companies for fiscal years beginning after December 15, 2022. The amendments in ASU 2016-13 are intended to provide more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. The Company adopted this standard on January 1, 2023 and there was not a material impact.
3. CASH AND CASH EQUIVALENTS AND MARKETABLE DEBT SECURITIES
The Company considers all highly liquid, short-term debt instruments with original maturities of three months or less to be cash equivalents.
Marketable debt securities consist primarily of commercial paper, medium-term corporate notes, and U.S. government and agency backed securities. The Company classifies these marketable debt securities as available-for-sale at fair value in “Marketable debt securities, at fair value.” The Company records the amortization of premium and accretion of discounts on marketable debt securities in the results of operations.
The Company uses the specific identification method as a basis for determining cost and calculating realized gains and losses with respect to marketable debt securities. The gross gains and losses realized related to sales and maturities of marketable debt securities were not material during the three and six months ended July 1, 2023 and June 25, 2022.
Investments in available-for-sale marketable debt securities were as follows at July 1, 2023 and December 31, 2022:
| Amortized Cost | Unrealized (Losses) Gains | Fair Value | ||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||
| U.S. government and agency backed securities | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ||||||||||||||
| Corporate debt and certificates of deposit | ( | ) | ( | ) | ||||||||||||||||||||
| Total | $ | | $ | | $ | ( | ) | $ | ( | ) | $ | | $ | | ||||||||||
The contractual maturity of the Company’s marketable debt securities was as follows at July 1, 2023:
| Less than One year | One to Five years | Total | ||||||||||
| U.S. government and agency backed securities | $ | $ | $ | |||||||||
| Corporate debt and certificates of deposit | ||||||||||||
| Total | $ | $ | $ | |||||||||
| 9 |
4. FAIR VALUE MEASUREMENTS
Financial instruments are categorized as Level 1, Level 2 or Level 3 based upon the method by which their fair value is computed. An investment is categorized as Level 1 when its fair value is based on unadjusted quoted prices in active markets for identical assets that the Company has the ability to access at the measurement date. An investment is categorized as Level 2 if its fair market value is based on quoted market prices for similar assets in active markets, quoted prices for identical or similar assets in markets that are not active, based on observable inputs such as interest rates, yield curves, or derived from or corroborated by observable market data by correlation or other means. An investment is categorized as Level 3 if its fair value is based on assumptions developed by the Company about what a market participant would use in pricing the assets.
The following table details the fair value measurements of the Company’s financial assets:
| Fair Value Measurement at July 1, 2023 Using: | ||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | |||||||||||||
| Cash and cash equivalents | $ | $ | $ | $ | ||||||||||||
| U.S. government securities | ||||||||||||||||
| Certificates of deposit | ||||||||||||||||
| Equity investments | ||||||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Fair Value Measurement at December 31, 2022 Using: | ||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | |||||||||||||
| Cash and cash equivalents | $ | $ | $ | $ | ||||||||||||
| U.S. government securities | ||||||||||||||||
| Corporate debt | ||||||||||||||||
| Certificates of deposit | ||||||||||||||||
| Equity investments | ||||||||||||||||
| $ | $ | $ | $ | |||||||||||||
| 10 |
Transfers between levels of the fair value hierarchy are reported at the beginning of the reporting period in which they occur. Changes in Level 3 investments were as follows:
| December 31, 2022 | Net unrealized losses | Foreign currency losses |
Purchases, issuances and settlements | July 1, 2023 | ||||||||||||||||
| Equity investments | $ | $ | ( | ) | $ | ( |
) | $ | $ | |||||||||||
The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate fair value because of their short-term nature. If accrued liabilities were carried at fair value, these would be classified as Level 2 in the fair value hierarchy.
Marketable Debt Securities
Corporate debt consists of floating rate notes with a maturity that is over multiple years but has interest rates that are reset every three months based on the then-current three-month London Interbank Offering Rate (“Three-month Libor”). The Company validates the fair market values of the financial instruments above by using discounted cash flow models, obtaining independent pricing of the securities or through the use of a model that incorporates the Three-month Libor, the credit default swap rate of the issuer and the bid and ask price spread of the same or similar investments which are traded on several markets.
Equity Investments
From
2017 through 2019, the Company made several equity investments in a customer. In the fourth quarter of 2019, the Company reviewed
the financial condition and other factors of the customer and, as a result, recorded an impairment charge of $
On
September 30, 2019, the Company entered into an Asset Purchase Agreement pursuant to which
the Company sold and licensed certain assets of our SolosTM product line and WhisperTM Audio technology.
During
the three and six months ended July 1, 2023, the Company recorded less than $
5. ACCOUNTS RECEIVABLE, NET
Accounts receivable consisted of the following:
| July 1, 2023 | December 31, 2022 | |||||||
| Accounts receivable | $ | 7,274,241 | $ | 6,840,891 | ||||
| Less — allowance for credit losses | (1,103,000 | ) | (303,000 | ) | ||||
| Total | $ | 6,171,241 | $ | 6,537,891 | ||||
Changes to the allowance for credit losses for the six months ended July 1, 2023 were as follows:
| Balance, December 31, 2022 | $ | |||
| Additions | ||||
| Write-offs | ( | ) | ||
| Balance, July 1, 2023 | $ |
6. INVENTORY
Inventories are stated at standard cost adjusted to approximate the lower of cost (first-in, first-out method) or net realizable value and consist of the following at July 1, 2023 and December 31, 2022:
| July 1, 2023 | December 31, 2022 | |||||||
| Raw materials | $ | $ | ||||||
| Work-in-process | ||||||||
| Finished goods | ||||||||
| Total | $ | $ | ||||||
| 11 |
Basic net loss per share is computed using the weighted-average number of shares of common stock outstanding during the period less any unvested restricted shares. Diluted net loss per share is calculated using weighted-average shares outstanding and contingently issuable shares, less weighted-average shares reacquired during the period. The net outstanding shares are adjusted for the dilutive effect of shares issuable upon the assumed conversion of the Company’s common stock equivalents, which consist of unvested restricted stock.
| Three Months Ended | Three Months Ended | Six Months Ended | Six Months Ended | |||||||||||||
| July 1, 2023 | June 25, 2022 | July 1, 2023 | June 25, 2022 | |||||||||||||
| Non-vested restricted common stock | ||||||||||||||||
Registered sale of equity securities
On
January 27, 2023, the Company sold shares of common stock and pre-funded warrants to purchase up to
During
the three months ended June 25, 2022, the Company sold million shares of common stock and million shares of treasury stock for gross proceeds
of $
Non-Vested Restricted Common Stock
The fair value of non-vested restricted common stock awards is generally the market value of the Company’s common stock on the date of grant. The non-vested restricted common stock awards require the employee to fulfill certain obligations, including remaining employed by the Company for one, two or four years (the vesting period) and in certain cases also require meeting either performance criteria or the Company’s stock achieving a certain price. For non-vested restricted common stock awards that solely require the recipient to remain employed with the Company, the stock compensation expense is amortized over the anticipated service period. For non-vested restricted common stock awards that require the achievement of performance criteria, the Company reviews the probability of achieving the performance goals on a periodic basis. If the Company determines that it is probable that the performance criteria will be achieved, the amount of compensation cost derived for the performance goal is amortized over the anticipated service period. If the performance criteria are not met, no compensation cost is recognized and any previously recognized compensation cost is reversed.
The Company granted and restricted stock units to its employees, executives and the Board of Directors in the six months ended July 1, 2023 and June 25, 2022, respectively. shares of the shares are time-based and will vest on average over three equal annual installments. shares of the shares will vest upon the successful achievement of certain fiscal year 2023 milestones. The fair value of the restricted stock units was based on the fair market value of the Company’s stock on the date of grant. The time-based shares are expensed over the service period and the milestone based shares are expensed based upon the probability of achievement.
Restricted stock activity for the six months ended July 1, 2023 was as follows:
| Weighted Average | ||||||||
| Shares | Grant Fair Value | |||||||
| Balance, December 31, 2022 | $ | |||||||
| Granted | ||||||||
| Forfeited | ( | ) | ||||||
| Vested | ( | ) | ||||||
| Balance, July 1, 2023 | $ | |||||||
| 12 |
Stock-Based Compensation
| Three Months Ended | Three Months Ended | Six Months Ended | Six Months Ended | |||||||||||||
| July 1, 2023 | June 25, 2022 | July 1, 2023 | June 25, 2022 | |||||||||||||
| Cost of product revenues | $ | $ | $ | $ | ||||||||||||
| Research and development | ||||||||||||||||
| Selling, general and administrative | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
Unrecognized compensation expense for non-vested restricted common stock as of July 1, 2023 totaled $ million and is expected to be recognized over a weighted average period of approximately .
9. ACCRUED WARRANTY
| Balance, December 31, 2022 | $ | |||
| Additions | ||||
| Claims | ( | ) | ||
| Balance, July 1, 2023 | $ |
Extended Warranties
| 13 |
10. INCOME TAXES
The
Company recorded a provision for income taxes of less than $
11. CONTRACT ASSETS AND LIABILITIES
Contract assets include unbilled amounts typically resulting from sales under contracts when the cost-to-cost method of revenue recognition is utilized and revenue recognized from customer arrangements, including licensing, exceeds the amount billed to the customer, and right to payment is not just subject to the passage of time. Amounts may not exceed their net realizable value. Contract assets are generally classified as current. The Company classifies the noncurrent portion of contract assets under other assets in its condensed consolidated balance sheets.
Contract liabilities consist of advance payments and billings in excess of cost incurred and deferred revenue.
Net contract assets (liabilities) consisted of the following:
| July 1, 2023 | December 31, 2022 | $ Change | % Change | |||||||||||||
| Contract assets —current | $ | $ | $ | % | ||||||||||||
| Contract liabilities—current | ( | ) | ( | ) | ( | )% | ||||||||||
| Contract liabilities—noncurrent | ( | ) | ( | ) | ( | ) | % | |||||||||
| Net contract assets | $ | $ | $ | % | ||||||||||||
The
$
In
the three and six months ended July 1, 2023, the Company recognized revenue of $
The Company did not recognize impairment losses on our contract assets in the three or six months ended July 1, 2023 or June 25, 2022.
Performance Obligations
The Company’s revenue recognition related to performance obligations that were satisfied at a point in time and over time were as follows:
| Three months ended | Three months ended | Six months ended | Six months ended | |||||||||||||
| July 1, 2023 | June 25, 2022 | July 1, 2023 | June 25, 2022 | |||||||||||||
| Point in time | % | % | % | % | ||||||||||||
| Over time | % | % | % | % | ||||||||||||
Remaining
performance obligations represent the transaction price of orders for which work has not been performed and excludes unexercised contract
options and potential orders under ordering-type contracts (e.g., indefinite-delivery, indefinite-quantity (“IDIQ”)). As
of July 1, 2023, the aggregate amount of the transaction price allocated to remaining performance obligations was $
| 14 |
12. LEASES
The Company enters into operating leases primarily for: real estate, including for manufacturing, engineering, research, administration and sales facilities, and information technology (“IT”) equipment. At July 1, 2023 and December 31, 2022, the Company did not have any finance leases. Approximately all of our future lease commitments, and related lease liability, relate to the Company’s real estate leases. Some of the Company’s leases include options to extend or terminate the lease.
The components of lease expense were as follows:
| Three Months Ended | Three Months Ended | Six Months Ended | Six Months Ended | |||||||||||||
| July 1, 2023 | June 25, 2022 | July 1, 2023 | June 25, 2022 | |||||||||||||
| Operating lease cost | $ | $ | $ | $ | ||||||||||||
At July 1, 2023, the Company’s future lease payments under non-cancellable leases were as follows:
| 2023 (excluding the six months ended July 1, 2023) | $ | |||
| 2024 | ||||
| 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| Thereafter | ||||
| Total future lease payments | ||||
| Less imputed interest | ( | ) | ||
| Total | $ |
The Company’s lease liabilities recognized in the Company’s condensed consolidated balance sheets at July 1, 2023 were as follows:
| July 1, 2023 | ||||
| Operating lease liabilities - current | $ | |||
| Operating lease liabilities - noncurrent | ||||
| Total lease liabilities | $ | |||
Supplemental cash flow information related to leases was as follows:
| Six months ended | ||||
| July 1, 2023 | ||||
| Cash paid for amounts included in the measurement of operating lease liabilities | $ | |||
Other information related to leases was as follows:
| July 1, 2023 | ||||
| Weighted Average Discount Rate - Operating Leases | % | |||
| Weighted Average Remaining Lease Term - Operating Leases (in years) | ||||
| 15 |
13. SEGMENTS AND DISAGGREGATION OF REVENUE
We continually monitor and review our segment reporting structure in accordance with authoritative guidance to determine if any changes have occurred that would affect our reportable segments. We report under one segment, as our Chief Executive Officer, who is our chief operating decision maker (“CODM”), reviews results on a total company basis.
Total long-lived assets by country at July 1, 2023 and December 31, 2022 were:
| Total Long-lived Assets (in thousands) | July 1, 2023 | December 31, 2022 | ||||||
| United States | $ | $ | ||||||
| United Kingdom | ||||||||
| Total | $ | $ | ||||||
We disaggregate our revenue from contracts with customers by geographic location and by display application, as we believe it best depicts how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors.
During the three and six months ended July 1, 2023 and June 25, 2022, the Company derived its sales from the following geographies:
| Three months ended | Three months ended | Six months ended | Six months ended | |||||||||||||||||||||||||||||
| July 1, 2023 | June 25, 2022 | July 1, 2023 | June 25, 2022 | |||||||||||||||||||||||||||||
| (In thousands, except percentages) | Revenue | % of Total | Revenue | % of Total | Revenue | % of Total | Revenue | % of Total | ||||||||||||||||||||||||
| United States | $ | % | $ | % | $ | % | $ | % | ||||||||||||||||||||||||
| Other Americas | ||||||||||||||||||||||||||||||||
| Total Americas | ||||||||||||||||||||||||||||||||
| Asia - Pacific | ||||||||||||||||||||||||||||||||
| Europe | ||||||||||||||||||||||||||||||||
| Total Revenues | $ | | % | $ | % | $ | | % | $ | % | ||||||||||||||||||||||
During the three and six months ended July 1, 2023 and June 25, 2022, the Company derived its sales from the following display applications:
| Three months ended | Three months ended | Six months ended | Six months ended | |||||||||||||
| (In thousands) | July 1, 2023 | June 25, 2022 | July 1, 2023 | June 25, 2022 | ||||||||||||
| Defense | $ | $ | $ | $ | ||||||||||||
| Industrial | ||||||||||||||||
| Consumer | ||||||||||||||||
| R&D | ||||||||||||||||
| License and royalties | ||||||||||||||||
| Total Revenues | $ | $ | $ | $ | ||||||||||||
14. LITIGATION
The Company may engage in legal proceedings arising in the ordinary course of business. Claims, suits, investigations, and proceedings are inherently uncertain and it is not possible to predict the ultimate outcome of such matters and our business, financial condition, results of operations or cash flows could be affected in any particular period.
BlueRadios, Inc. v. Kopin Corporation, Civil Action No. 16-02052-JLK (D. Col.):
On August 12, 2016, BlueRadios, Inc. (“BlueRadios”) filed a complaint in the U.S. District Court for the District of Colorado, alleging that the Company breached a contract between it and BlueRadios concerning an alleged joint venture between the Company and BlueRadios to design, develop and commercialize micro-display products with embedded wireless technology referred to as “Golden-i” breached the covenant of good faith and fair dealing associated with that contract, breached its fiduciary duty to BlueRadios, and misappropriated trade secrets owned by BlueRadios in violation of Colorado law (C.R.S. § 7-74-104(4)) and the Defend Trade Secrets Act (18 U.S.C. § 1836(b)(1)). BlueRadios further alleges that the Company was unjustly enriched by its alleged misconduct, BlueRadios is entitled to an accounting to determine the amount of profits obtained by the Company as a result of its alleged misconduct, and the inventorship on at least ten patents or patent applications owned by the Company need to be corrected to list BlueRadios’ employees as inventors and thereby list BlueRadios as co-assignees of the patents. BlueRadios seeks monetary, declaratory, and injunctive relief, including for alleged non-payment of engineering retainer fees.
On October 11, 2016, the Company filed its Answer and Affirmative Defenses. The parties completed expert depositions on November 15, 2019. On December 2, 2019, the Company filed a Motion for Partial Summary Judgment requesting the Court dismiss counts 2-7 in their entirety and counts 1 and 8 in part. BlueRadios also filed a Motion for Partial Summary Judgment alleging it is the co-owner of U.S. Patent No. 8,909,296. Responses to the Motions for Partial Summary Judgment were filed on January 15, 2020, and replies were filed on February 19, 2020. On September 25, 2020, the Court denied BlueRadios’ Motion for Partial Summary Judgment. On August 3, 2022, the Court granted the Company’s Motion for Partial Summary Judgment by dismissing counts 3, 6, 7, punitive damages under count 2, and count 8 as it relates to patent applications, and denying the motion as it relates to counts 1, 4, and 5, and the remainder of counts 2 and 8. The Court also ordered discovery reopened for certain limited purposes. A trial date was set by the Court for January 22 – February 5, 2024. The Company has not concluded a loss from this matter is probable; therefore, we have not recorded an accrual for litigation or claims related to this matter for the period ended July 1, 2023. The Company will continue to evaluate information as it becomes known and will record an estimate for losses at the time or times when it is both probable that a loss has been incurred and the amount of the loss is reasonably estimable.
| 16 |
15. RELATED PARTY TRANSACTIONS
The Company may from time to time enter into agreements with stockholders, affiliates and other companies engaged in certain aspects of the display, electronics, optical and software industries as part of our business strategy. In addition, the wearable computing product market is relatively new and there may be other technologies the Company needs to purchase from affiliates to enhance its product offering.
During the three and six months ended July 1, 2023 and June 25, 2022, the Company had the following transactions with related parties:
| Three Months Ended | ||||||||||||||||
| July 1, 2023 | June 25, 2022 | |||||||||||||||
| Sales | Purchases | Sales | Purchases | |||||||||||||
| RealWear, Inc. | $ | $ | $ | $ | ||||||||||||
| HMDmd, Inc. | ||||||||||||||||
| Lightning Silicon Technology, Inc. | ||||||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Six Months Ended | ||||||||||||||||
| July 1, 2023 | June 25, 2022 | |||||||||||||||
| Sales | Purchases | Sales | Purchases | |||||||||||||
| RealWear, Inc. | $ | $ | $ | $ | ||||||||||||
| HMDmd, Inc. | ||||||||||||||||
| Lightning Silicon Technology, Inc. | ||||||||||||||||
| $ | $ | $ | $ | |||||||||||||
At July 1, 2023 and December 31, 2022, the Company had the following receivables from and payables to related parties:
| July 1, 2023 | December 31, 2022 | |||||||||||||||
| Receivables | Payables | Receivables | Payables | |||||||||||||
| RealWear, Inc. | $ | $ | $ | $ | ||||||||||||
| HMDmd, Inc. | ||||||||||||||||
| Solos Technology | ||||||||||||||||
| Lightning Silicon Technology, Inc. | ||||||||||||||||
| $ | $ | $ | $ | |||||||||||||
| 17 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which are subject to the safe harbor created by such sections. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “could,” “would,” “seeks,” “estimates,” and variations of such words and similar expressions, and the negatives thereof, are intended to identify such forward-looking statements. We caution readers not to place undue reliance on any such “forward-looking statements,” which speak only as of the date made, and advise readers that these forward-looking statements are not guarantees of future performance and involve certain risks, uncertainties, estimates, and assumptions by us that are difficult to predict. Various factors, some of which are beyond our control, could cause actual results to differ materially from those expressed in, or implied by, such forward-looking statements. All such forward-looking statements, whether written or oral, and whether made by us or on our behalf, are expressly qualified by these cautionary statements and any other cautionary statements which may accompany the forward-looking statements. In addition, we disclaim any obligation to update any forward-looking statements to reflect events or circumstances after the date of this report, except as may otherwise be required by the federal securities laws.
We have identified the following important factors that could cause actual results to differ materially from those discussed in our forward-looking statements. Such factors may be in addition to the risks described in Part I, Item 1A, “Risk Factors;” Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations; and other parts of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022. These factors include: our ability to source semiconductor components and other raw materials used in the manufacturing of our products; our ability to prosecute and defend our proprietary technology aggressively or successfully; our ability to retain personnel with experience and expertise relevant to our business; our ability to invest in research and development to achieve profitability even during periods when we are not profitable; our ability to continue to introduce new products in our target markets; our ability to generate revenue growth and positive cash flow, and reach profitability; the strengthening of the U.S. dollar and its effects on the price of our products in foreign markets; the impact of new regulations and customer demands relating to conflict minerals; our ability to obtain a competitive advantage in the wearable technologies market through our extensive portfolio of patents, trade secrets and non-patented know-how; our ability to grow within our targeted markets; the importance of small form factor displays in the development of defense, consumer, and industrial products such as thermal weapon sights, safety equipment, virtual and augmented reality gaming, training and simulation products and metrology tools; the suitability of our properties for our needs for the foreseeable future; our expectation not to pay cash dividends for the foreseeable future and to retain earnings for the development of our businesses; our need to achieve and maintain positive cash flow and profitability; and our expectation that if we do not achieve and maintain positive cash flow and profitability; our financial condition will ultimately be materially adversely affected, and we will be required to reduce expenses, including our investments in research and development or raise additional capital and our ability to support our operations and capital needs for at least the next twelve months through our available cash resources.
Overview
We are a leading developer, manufacturer and seller of miniature displays and optical lenses (our “components”) for sale as individual displays, components, modules or higher-level subassemblies. We also license our intellectual property through technology license agreements. Our component products are used in highly demanding high-resolution portable military, enterprise and consumer electronic applications, training and simulation equipment and 3D metrology equipment. Our products enable our customers to develop and market an improved generation of products for these target applications.
| 18 |
The following discussion should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 and our unaudited condensed consolidated financial statements included in this Form 10-Q.
Results of Operations
Our interim period results of operations and period-to-period comparisons of such results may not be indicative of our future operating results. Additionally, we use a fiscal calendar, which may result in differences in the number of work days in the current and comparable prior interim periods and could affect period-to-period comparisons. The following discussions of comparative results among periods, including the discussion of results by display application, should be viewed in this context.
Revenues. For the three and six months ended July 1, 2023 and June 25, 2022, our revenues by display application, which include product sales and amounts earned from research and development contracts (“R&D”), were as follows:
| Three months ended | Three months ended | Six months ended | Six months ended | |||||||||||||
| (In thousands) | July 1, 2023 | June 25, 2022 | July 1, 2023 | June 25, 2022 | ||||||||||||
| Defense | $ | 5,067 | $ | 7,087 | $ | 11,487 | $ | 11,844 | ||||||||
| Industrial | 884 | 1,633 | 1,808 | 3,162 | ||||||||||||
| Consumer | 59 | 284 | 370 | 505 | ||||||||||||
| R&D | 3,884 | 2,806 | 6,780 | 7,714 | ||||||||||||
| License and royalties | 566 | 99 | 773 | 262 | ||||||||||||
| Total Revenues | $ | 10,460 | $ | 11,909 | $ | 21,218 | $ | 23,487 | ||||||||
Sales of our products for Defense applications include systems used by the military both in the field and for training and simulation. The decrease in Defense applications revenues for the three months ended July 1, 2023 as compared to the three months ended June 25, 2022 was primarily due to decreases in revenues from products used in pilot helmets and thermal weapon sight systems for soldiers. The decrease in Defense applications revenues for the six months ended July 1, 2023 as compared to the six months ended June 25, 2022 was primarily due to decreases in revenues from products used in thermal weapon sight systems for soldiers partially offset by an increase in sales of our products for pilot helmets.
| 19 |
Industrial applications revenue represents customers who purchase our display products for use in 3D metrology equipment and headsets used for applications in manufacturing, distribution and public safety. Our 3D metrology customers are primarily located in Asia and sell to Asian contract manufacturers who use the 3D metrology machines for quality control purposes. The decreases in Industrial applications revenues for the three and six months ended July 1, 2023 as compared to the three and six months ended June 25, 2022 was due to a decline in sales of products for use in 3D metrology equipment and headsets.
Our displays for Consumer applications are used primarily in thermal imaging products and recreational rifles and hand-held scopes. The decreases in Consumer applications revenues for the three and six months ended July 1, 2023 as compared to the three and six months ended June 25, 2022 were primarily due to a decrease in sales for hand-held thermal imagers.
R&D revenues increased in the three months ended July 1, 2023 as compared to the three months ended June 25, 2022 primarily due to an increase in funding for display systems initially used in U.S. defense programs. R&D revenues decreased in the six months ended July 1, 2023 as compared to the six months ended June 25, 2022 primarily due to a decrease in funding for U.S. defense programs as certain programs transitioned to production programs.
On January 5, 2023, the Company entered into a Technology License Agreement and an Asset Purchase Agreement (the “LST Agreements”) with Lightning Silicon Technology, Inc. (“LST”). Pursuant to the LST Agreements, the Company transferred in-process development contracts with two customers. Included in R&D revenues for the six months ended July 1, 2023 and June 25, 2022 is approximately $500,000 and $400,000, respectively, related to OLED development programs with the transferred development contracts.
International revenues represented 14% and 15% of total revenues for the three and six months ended July 1, 2023, respectively, and 16% and 18% of total revenues for the three and six months ended June 25, 2022, respectively. We categorize our revenues as either domestic or international based upon the delivery destination of our product. For example, if the customer is located in Asia or if a U.S. customer has its Asian contract manufacturer order product from us and we deliver the product to Asia, we categorize both these sales as international. In addition, if we earn royalties on sales from a customer, the royalties are categorized as domestic or international based on how the product revenues are categorized. The decrease in international revenues was a result of a decrease in sales of products for 3D AOI metrology equipment and industrial wearable headset applications. Our international sales are primarily denominated in U.S. currency. Consequently, a strengthening of the U.S. dollar could increase the price in local currencies of our products in foreign markets and make our products relatively more expensive than competitors’ products that are denominated in local currencies, which could lead to a reduction in sales or profitability in those foreign markets. We have not taken any protective measures against exchange rate fluctuations, such as purchasing hedging instruments with respect to such fluctuations, because of the historically stable exchange rate between the British Pound Sterling (the functional currency of our U.K. subsidiary) and the U.S. dollar. Foreign currency translation impact on our results, if material, is described in further detail under “Item 3. Quantitative and Qualitative Disclosures About Market Risk” section below.
Cost of Product Revenues. Cost of product revenues, which is comprised of materials, labor and manufacturing overhead related to the production of our products for the three and six months ended July 1, 2023 and June 25, 2022, were as follows:
| Three Months Ended | Three Months Ended | Six Months Ended | Six Months Ended | |||||||||||||
| (In thousands, except for percentages) | July 1, 2023 | June 25, 2022 | July 1, 2023 | June 25, 2022 | ||||||||||||
| Cost of product revenues | $ | 5,697 | $ | 7,906 | $ | 12,321 | $ | 15,689 | ||||||||
| Cost of product revenues as a % of net product revenues | 95 | % | 88 | % | 90 | % | 101 | % | ||||||||
The increase in cost of product revenues as a percentage of net product revenues for the three months ended July 1, 2023, as compared to the three months ended June 25, 2022, was primarily due to lower efficiencies from reduced product sale volumes. The decrease in cost of product revenues as a percentage of net product revenues for the six months ended July 1, 2023, as compared to the six months ended June 25, 2022, was primarily due to lower labor costs as a result of a reduction in force in the first quarter of 2023 and lower material costs for warranty issues of approximately $450,000.
During 2021, we became aware of global shortages of semiconductor components. During 2022, our manufacturing was impacted by a shortage of several semiconductor components from our normal vendors that are necessary to manufacture our products. For some components we were able to identify and use other sources for the components but for some components primarily used in defense related products, we were able to avail ourselves of alternate components because their use would have required a requalification of our product by our customer. The shortage of certain semiconductor components situation is very dynamic, and we rely on our vendors to provide information about the vendors that they use.
| 20 |
Research and Development. R&D expenses are incurred in support of internal display development programs and programs funded by agencies or prime contractors of the U.S. government and commercial partners. R&D costs include staffing, purchases of materials and laboratory supplies, circuit design costs, fabrication, and packaging of display products, and overhead. In fiscal year 2023, we expect our R&D expenditures to be related to our display products, overlay weapon sights and OLED display technologies. Funded and internal R&D expenses are combined in research and development expenses in the condensed consolidated statement of operations. R&D expenses for the three and six months ended July 1, 2023 and June 25, 2022 were as follows:
| Three Months Ended | Three Months Ended | Six Months Ended | Six Months Ended | |||||||||||||
| (In thousands) | July 1, 2023 | June 25, 2022 | July 1, 2023 | June 25, 2022 | ||||||||||||
| Funded | $ | 2,193 | $ | 3,181 | $ | 3,834 | $ | 6,548 | ||||||||
| Internal | 939 | 1,964 | 1,610 | 4,006 | ||||||||||||
| Total research and development expense | $ | 3,132 | $ | 5,145 | $ | 5,444 | $ | 10,554 | ||||||||
Funded R&D expense for the three and six months ended July 1, 2023 decreased as compared to the three and six months ended June 25, 2022 primarily due to decreased spending on U.S. defense programs as certain programs transitioned to production programs. Internal R&D expenses for the three and six months ended July 1, 2023 decreased compared to the three and six months ended June 25, 2022 primarily due to a decrease in OLED development costs.
On January 5, 2023, the Company entered into the LST Agreements with LST. Drs. John Fan, the Company’s former President, CEO, and Chairman of the Board, Boryeu Tsaur, a former Executive Vice President of the Company and Hong Choi, the Company’s former Chief Technology Officer, terminated their employment with the Company and became investors in and members of the management team of LST. In addition, approximately 20 employees terminated their employment with the Company and joined LST. These individuals were primarily involved with internal R&D projects and the termination of the programs they were working on and their employment is the primary reason for the decrease in internal R&D expense.
Selling, General and Administrative. Selling, general and administrative (“S,G&A”) expenses consist of the expenses incurred by our sales and marketing personnel and related expenses, and administrative and general corporate expenses. S,G&A expenses for the three and six months ended July 1, 2023 and June 25, 2022 were as follows:
| Three Months Ended | Three Months Ended | Six Months Ended | Six Months Ended | |||||||||||||
| (In thousands, except for percentages) | July 1, 2023 | June 25, 2022 | July 1, 2023 | June 25, 2022 | ||||||||||||
| Selling, general and administration expense | $ | 6,466 | $ | 4,327 | $ | 11,114 | $ | 8,792 | ||||||||
| Selling, general and administration expense as a % of revenues | 62 | % | 36 | % | 52 | % | 37 | % | ||||||||
The increase in S,G&A expense for the three months ended July 1, 2023, as compared to the three months ended June 25, 2022, was primarily due to an increase in legal expense, stock compensation, and credit loss expense partially offset by lower information technology and cash compensation and benefits expense. The increase in S,G&A expense for the six months ended July 1, 2023, as compared to the six months ended June 25, 2022, was primarily due to an increase in legal expense, stock compensation and credit loss expense partially offset by lower information technology, insurance, and cash compensation and benefits expense.
Other Income (Expense), net. Other income (expense), net, is primarily composed of interest income, foreign currency transaction and remeasurement gains and losses incurred by our U.K.-based subsidiary and other non-operating income items. Other income (expense), net, for the three and six months ended July 1, 2023 and June 25, 2022 was as follows:
| Three Months Ended | Three Months Ended | Six Months Ended | Six Months Ended | |||||||||||||
| (In thousands) | July 1, 2023 | June 25, 2022 | July 1, 2023 | June 25, 2022 | ||||||||||||
| Other (expense) income, net | $ | (3,306 | ) | $ | (141 | ) | $ | (3,069 | ) | $ | 4,600 | |||||
During the three and six months ended July 1, 2023 and June 25, 2022, we recorded foreign currency losses of $0.2 million and $0.1 million. Other expense for the second quarter of 2023 includes $3.3 million of impairment losses on equity investments. Other income for the first quarter of 2022 includes a gain of $4.7 million resulting from an observable price change in an equity investment.
Tax Provision. We recorded a provision for income taxes of less than $0.1 million in the three and six months ended July 1, 2023 and June 25, 2022.
Net Loss Attributable to Noncontrolling Interest. In the first quarter of 2023, we acquired the remaining interest in eMDT America (“eMDT”). Net loss attributable to noncontrolling interest on our condensed consolidated statements of operations represents the 20% portion of the results of operations of eMDT which is allocated to the stockholders of the equity interests not owned by us in 2022. The change in net loss attributable to noncontrolling interest is the result of the change in the results of operations of eMDT for the three and six months ended June 25, 2022.
| 21 |
Net Loss Attributable to Kopin Corporation. We incurred net losses attributable to Kopin Corporation of $8.2 million and $10.8 million during the three and six months ended July 1, 2023, respectively, compared to net losses attributable to Kopin Corporation of $5.6 million and $7.0 million during the three and six months ended June 25, 2022, respectively. The increase in the net loss attributable to Kopin Corporation during the three and six months ended July 1, 2023 compared to the three and six months ended June 25, 2022 is primarily due to the impairment losses on equity investments.
Liquidity and Capital Resources
At July 1, 2023 and December 31, 2022, we had cash and cash equivalents and marketable debt securities of $25.7 million and $12.6 million, respectively, and working capital of $31.0 million and $16.4 million, respectively. The change in cash and cash equivalents and marketable securities was primarily due to gross proceeds of $22.9 million received from the sale of 17,000,000 shares of common stock and the pre-funded warrants to purchase up to 6,000,000 shares of common stock at a public offering price of $0.99 per share. The reader is referred to Note 8 Stockholders’ Equity and Stock-Based Compensation.
We believe that our existing cash and cash equivalents will be adequate to satisfy our current operating plans for at least the next twelve months from the issuance of these financial statements. We have in the past sold equity securities through at-the-market equity offerings and in the traditional fashion of significant equity offerings. Nonetheless, management monitors the capital markets on an ongoing basis and may consider raising capital if favorable market conditions develop. If our actual results are less than projected or we need to raise capital for additional liquidity, we may be required to do additional equity financing, reduce expenses, or enter into a strategic transaction. However, management can make no assurance that we will be able to raise additional capital, reduce expenses sufficiently, or enter into a strategic transaction on terms acceptable to us, or at all.
During the three months ended June 25, 2022, we sold 1.5 million shares of common stock and 0.2 million shares of treasury stock for gross proceeds of $2.1 million (average of $1.26 per share) before deducting broker expenses paid by us of less than $0.1 million, pursuant to the Company’s At-The-Market Equity Offering Sales Agreement dated as of March 5, 2021 (the “ATM Agreement”) with Stifel, Nicolaus & Company, Incorporated, as agent, under which we may sell up to $50 million of our common stock. We have approximately $41.4 million worth of common stock remaining available for sale under the ATM Agreement.
Cash and cash equivalents and marketable debt securities held in U.S. dollars at July 1, 2023 and December 31, 2022 were as follows:
| July 1, 2023 | December 31, 2022 | |||||||
| Domestic locations | $ | 25,328,421 | $ | 11,778,324 | ||||
| International locations | 43,790 | 629,793 | ||||||
| Subtotal cash and cash equivalents marketable debt securities held in U.S. dollars | 25,372,211 | 12,408,117 | ||||||
| Cash and cash equivalents held in other currencies and converted to U.S. dollars | 297,590 | 239,539 | ||||||
| Total cash and cash equivalents and marketable debt securities | $ | 25,669,801 | $ | 12,647,656 | ||||
| 22 |
We have no plans to repatriate the cash and cash equivalents held in our foreign subsidiary Forth Dimension Displays, Ltd. and, as such, we have not recorded any deferred tax liability with respect to such cash.
We expect to expend between $1.0 million and $2.0 million on capital expenditures in 2023.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
We invest our excess cash in high-quality U.S. government, government-backed (e.g., Fannie Mae, FDIC guaranteed bonds and certificates of deposit) and corporate debt instruments, which bear lower levels of relative risk. We believe that the effect, if any, of reasonably possible near-term changes in interest rates on our financial position, results of operations and cash flows should not be material to our cash flows or income. It is possible that interest rate movements would increase our unrealized gain or loss on debt securities. We are exposed to changes in foreign currency exchange rates primarily through our translation of our foreign subsidiaries’ financial position, results of operations, and transaction gains and losses as a result of non-U.S. dollar denominated cash flows related to business activities in Europe, and remeasurement of U.S. dollars to the British pound, the functional currency of our U.K. subsidiaries. We are also exposed to the effects of exchange rates in the purchase of certain raw materials, which are in U.S. dollars, but the price on future purchases is subject to change based on the relationship of the Japanese yen to the U.S. dollar. We do not currently hedge our foreign currency exchange rate risk. We estimate that any market risk associated with our international operations or investments is unlikely to have a material adverse effect on our business, financial condition, or results of operation. Our portfolio of marketable debt securities is subject to interest rate risk although our intent is to hold securities until maturity. The credit rating of our investments may be affected by the underlying financial health of the guarantors of our investments. We use silicon wafers but do not enter into forward or futures hedging contracts to mitigate against risks related to the price of silicon.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
As of July 1, 2023, the Company conducted an evaluation under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer (its principal executive officer and principal financial officer, respectively) regarding the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of July 1, 2023, as defined in Rule 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The term “disclosure controls and procedures” means controls and other procedures that are designed to ensure that information required to be disclosed by the Company in reports that we file or submit under the Exchange Act are recorded, processed, summarized and reported within the requisite time periods and that such disclosure controls and procedures were effective to ensure that information required to be disclosed by the Company in the reports that we file or submit under the Exchange Act are accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Based on that evaluation, our management concluded that, as of July 1, 2023, our disclosure controls and procedures were effective in ensuring that material information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, including ensuring that such material information is accumulated and communicated to our management, including our principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There have been no changes in the Company’s internal control over financial reporting that occurred during the quarter ended July 1, 2023 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
| 23 |
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company may engage in legal proceedings arising in the ordinary course of business. Claims, suits, investigations, and proceedings are inherently uncertain and it is not possible to predict the ultimate outcome of such matters and our business, financial condition, results of operations or cash flows could be affected in any particular period.
BlueRadios, Inc. v. Kopin Corporation, Civil Action No. 16-02052-JLK (D. Col.):
On August 12, 2016, BlueRadios, Inc. (“BlueRadios”) filed a complaint in the U.S. District Court for the District of Colorado, alleging that the Company breached a contract between it and BlueRadios concerning an alleged joint venture between the Company and BlueRadios to design, develop and commercialize micro-display products with embedded wireless technology referred to as “Golden-i” breached the covenant of good faith and fair dealing associated with that contract, breached its fiduciary duty to BlueRadios, and misappropriated trade secrets owned by BlueRadios in violation of Colorado law (C.R.S. § 7-74-104(4)) and the Defend Trade Secrets Act (18 U.S.C. § 1836(b)(1)). BlueRadios further alleges that the Company was unjustly enriched by its alleged misconduct, BlueRadios is entitled to an accounting to determine the amount of profits obtained by the Company as a result of its alleged misconduct, and the inventorship on at least ten patents or patent applications owned by the Company need to be corrected to list BlueRadios’ employees as inventors and thereby list BlueRadios as co-assignees of the patents. BlueRadios seeks monetary, declaratory, and injunctive relief, including for alleged non-payment of engineering retainer fees.
On October 11, 2016, the Company filed its Answer and Affirmative Defenses. The parties completed expert depositions on November 15, 2019. On December 2, 2019, the Company filed a Motion for Partial Summary Judgment requesting the Court dismiss counts 2-7 in their entirety and counts 1 and 8 in part. BlueRadios also filed a Motion for Partial Summary Judgment alleging it is the co-owner of U.S. Patent No. 8,909,296. Responses to the Motions for Partial Summary Judgment were filed on January 15, 2020, and replies were filed on February 19, 2020. On September 25, 2020, the Court denied BlueRadios’ Motion for Partial Summary Judgment. On August 3, 2022, the Court granted the Company’s Motion for Partial Summary Judgment by dismissing counts 3, 6, 7, punitive damages under count 2, and count 8 as it relates to patent applications, and denying the motion as it relates to counts 1, 4, and 5, and the remainder of counts 2 and 8. The Court also ordered discovery reopened for certain limited purposes. A trial date was set by the Court for January 22 – February 5, 2024. The Company has not concluded a loss from this matter is probable; therefore, we have not recorded an accrual for litigation or claims related to this matter for the period ended July 1, 2023. The Company will continue to evaluate information as it becomes known and will record an estimate for losses at the time or times when it is both probable that a loss has been incurred and the amount of the loss is reasonably estimable.
Item 1A. Risk Factors
Our business and financial results are subject to numerous risks and uncertainties. As a result, the risks and uncertainties discussed in Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 should be carefully considered. There have been no material changes in the assessment of our risk factors from those set forth in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.
| 24 |
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
We did not sell any securities during the six months ended July 1, 2023 that were not registered under the Securities Act.
Item 5. Other Information
None of the Company’s directors or officers adopted, modified, or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the Company’s fiscal quarter ended July 1, 2023.
Item 6. Exhibits
| * | Submitted electronically herewith |
| ** | Furnished and not filed herewith |
Attached as Exhibit 101 to this report are the following formatted in XBRL (Extensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets at July 1, 2023 (Unaudited) and December 31, 2022, (ii) Condensed Consolidated Statements of Operations (Unaudited) for the three and six months ended July 1, 2023 and June 25, 2022, (iii) Condensed Consolidated Statements of Comprehensive Loss (Unaudited) for the three and six months ended July 1, 2023 and June 25, 2022, (iv) Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) for the three and six months ended July 1, 2023 and June 25, 2022, (v) Condensed Consolidated Statements of Cash Flows (Unaudited) for the six months ended July 1, 2023 and June 25, 2022, and (vi) Notes to Unaudited Condensed Consolidated Financial Statements.
| 25 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
KOPIN CORPORATION (Registrant) | ||
| Date: August 11, 2023 | By: | /S/ MICHAEL MURRAY |
| Michael Murray | ||
| President, Chief Executive Officer | ||
| (Principal Executive Officer) | ||
| Date: August 11, 2023 | By: | /S/ RICHARD A. SNEIDER |
| Richard A. Sneider | ||
| Treasurer and Chief Financial Officer | ||
| (Principal Financial and Accounting Officer) | ||
| 26 |
Exhibit 31.1
CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
I, Michael Murray, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q for the period ended July 1, 2023, 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: August 11, 2023
| By: | /S/ MICHAEL MURRAY | |
| Michael Murray | ||
| President and Chief Executive Officer |
Exhibit 31.2
CERTIFICATION OF THE CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
I, Richard A. Sneider, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q for the period ended July 1, 2023, 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: August 11, 2023
| By: | /S/ RICHARD A. SNEIDER | |
| Richard A. Sneider | ||
| Chief Financial Officer |
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 Quarterly Report of Kopin Corporation (the “Company”) on Form 10-Q for the period ended July 1, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael Murray, 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: (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: August 11, 2023 | ||
| By: | /S/ MICHAEL MURRAY | |
| Michael Murray | ||
| President and Chief Executive Officer | ||
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 Quarterly Report of Kopin Corporation (the “Company”) on Form 10-Q for the period ended July 1, 2023, 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: (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: August 11, 2023 | ||
| By: | /S/ RICHARD A. SNEIDER | |
| Richard A. Sneider | ||
| Chief Financial Officer | ||
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) |
Jul. 01, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Statement of Financial Position [Abstract] | ||
| Accounts receivable, allowance | $ 1,103,000 | $ 303,000 |
| Preferred stock, par value | $ 0.01 | $ 0.01 |
| Preferred stock, shares authorized | 3,000 | 3,000 |
| Preferred stock, shares issued | 0 | 0 |
| Common stock, par value | $ 0.01 | $ 0.01 |
| Common stock, shares authorized | 150,000,000 | 150,000,000 |
| Common stock, shares issued | 114,365,786 | 94,920,060 |
| Common stock, shares outstanding | 110,305,990 | 92,883,524 |
| Treasury stock, shares | 70,635 | 70,635 |
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jul. 01, 2023 |
Jun. 25, 2022 |
Jul. 01, 2023 |
Jun. 25, 2022 |
|
| Revenues: | ||||
| Total revenues | $ 10,459,856 | $ 11,909,032 | $ 21,218,047 | $ 23,487,454 |
| Expenses: | ||||
| Cost of product revenues | 5,697,063 | 7,906,250 | 12,321,164 | 15,689,129 |
| Research and development | 3,132,259 | 5,145,375 | 5,444,476 | 10,553,988 |
| Selling, general and administration | 6,466,120 | 4,327,468 | 11,114,250 | 8,792,016 |
| Total expenses | 15,295,442 | 17,379,093 | 28,879,890 | 35,035,133 |
| Loss from operations | (4,835,586) | (5,470,061) | (7,661,843) | (11,547,679) |
| Other (expense) income | ||||
| Interest income | 222,700 | 12,552 | 324,465 | 19,532 |
| Other income (expense), net | 35,765 | (3,586) | 72,795 | (4,727) |
| (Loss) gain on investments | (3,327,347) | (3,327,347) | 4,700,000 | |
| Foreign currency transaction losses | (236,911) | (150,094) | (139,004) | (114,979) |
| Total other (expense) income | (3,305,793) | (141,128) | (3,069,091) | 4,599,826 |
| Loss before provision for income taxes and net loss attributable to noncontrolling interest | (8,141,379) | (5,611,189) | (10,730,934) | (6,947,853) |
| Tax provision | (39,000) | (36,000) | (78,000) | (72,000) |
| Net loss | (8,180,379) | (5,647,189) | (10,808,934) | (7,019,853) |
| Net loss attributable to the noncontrolling interest | 257 | 280 | ||
| Net loss attributable to Kopin Corporation | $ (8,180,379) | $ (5,646,932) | $ (10,808,934) | $ (7,019,573) |
| Net loss per share | ||||
| Basic | $ (0.07) | $ (0.06) | $ (0.08) | |
| Diluted | $ (0.07) | $ (0.06) | $ (0.10) | $ (0.08) |
| Weighted average number of common shares outstanding | ||||
| Basic | 109,911,244 | 90,300,999 | 107,473,813 | 90,211,742 |
| Diluted | 109,911,244 | 90,300,999 | 107,473,813 | 90,211,742 |
| Net Product Revenues [Member] | ||||
| Revenues: | ||||
| Total revenues | $ 6,011,393 | $ 9,003,658 | $ 13,666,109 | $ 15,511,186 |
| Research And Development Revenues [Member] | ||||
| Revenues: | ||||
| Total revenues | 3,884,225 | 2,806,109 | 6,780,676 | 7,714,142 |
| Other Revenues [Member] | ||||
| Revenues: | ||||
| Total revenues | $ 564,238 | $ 99,265 | $ 771,262 | $ 262,126 |
Condensed Consolidated Statements of Comprehensive Loss (Unaudited) - USD ($) |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jul. 01, 2023 |
Jun. 25, 2022 |
Jul. 01, 2023 |
Jun. 25, 2022 |
|
| Income Statement [Abstract] | ||||
| Net loss | $ (8,180,379) | $ (5,647,189) | $ (10,808,934) | $ (7,019,853) |
| Other comprehensive loss, net of tax: | ||||
| Foreign currency translation adjustments | 32,190 | (35,421) | 42,184 | (41,353) |
| Unrealized holding loss on marketable securities | (14,440) | (71,329) | (18,207) | (178,779) |
| Reclassification of holding losses in net loss | (522) | |||
| Other comprehensive income (loss), net of tax | 17,750 | (106,750) | 23,977 | (220,654) |
| Comprehensive loss | (8,162,629) | (5,753,939) | (10,784,957) | (7,240,507) |
| Comprehensive loss attributable to the noncontrolling interest | 257 | 280 | ||
| Comprehensive loss attributable to Kopin Corporation | $ (8,162,629) | $ (5,753,682) | $ (10,784,957) | $ (7,240,227) |
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) |
Common Stock [Member] |
Additional Paid-in Capital [Member] |
Treasury Stock, Common [Member] |
AOCI Attributable to Parent [Member] |
Retained Earnings [Member] |
Parent [Member] |
Noncontrolling Interest [Member] |
Total |
|---|---|---|---|---|---|---|---|---|
| Balance at Dec. 25, 2021 | $ 900,691 | $ 356,931,157 | $ (366,110) | $ 1,414,351 | $ (319,080,898) | $ 39,799,191 | $ (172,334) | $ 39,626,857 |
| Balance, shares at Dec. 25, 2021 | 90,069,169 | |||||||
| Vesting of restricted stock | $ 1,544 | (1,544) | ||||||
| Vesting of restricted stock, shares | 154,421 | |||||||
| Stock-based compensation expense | 656,073 | 656,073 | 656,073 | |||||
| Other comprehensive loss | (113,906) | (113,906) | (113,906) | |||||
| Net loss | (1,372,641) | (1,372,641) | (23) | (1,372,664) | ||||
| Restricted stock for tax withholding obligations | (95,613) | (95,613) | (95,613) | |||||
| Balance at Mar. 26, 2022 | $ 902,235 | 357,585,686 | (461,723) | 1,300,445 | (320,453,539) | 38,873,104 | (172,357) | 38,700,747 |
| Balance, shares at Mar. 26, 2022 | 90,223,590 | |||||||
| Balance at Dec. 25, 2021 | $ 900,691 | 356,931,157 | (366,110) | 1,414,351 | (319,080,898) | 39,799,191 | (172,334) | 39,626,857 |
| Balance, shares at Dec. 25, 2021 | 90,069,169 | |||||||
| Other comprehensive loss | (220,654) | |||||||
| Net loss | (7,019,853) | |||||||
| Balance at Jun. 25, 2022 | $ 918,025 | 359,552,311 | 1,193,695 | (326,100,471) | 35,563,560 | (172,614) | 35,390,946 | |
| Balance, shares at Jun. 25, 2022 | 91,802,637 | |||||||
| Balance at Mar. 26, 2022 | $ 902,235 | 357,585,686 | (461,723) | 1,300,445 | (320,453,539) | 38,873,104 | (172,357) | 38,700,747 |
| Balance, shares at Mar. 26, 2022 | 90,223,590 | |||||||
| Vesting of restricted stock | $ 500 | (500) | ||||||
| Vesting of restricted stock, shares | 50,000 | |||||||
| Stock-based compensation expense | 417,033 | 417,033 | 417,033 | |||||
| Other comprehensive loss | (106,750) | (106,750) | (106,750) | |||||
| Issuance of common stock and pre-funded warrants, net of costs | 41,400,000 | |||||||
| Net loss | (5,646,932) | (5,646,932) | (257) | (5,647,189) | ||||
| Sale of registered stock | $ 15,290 | 1,550,092 | 461,723 | 2,027,105 | 2,027,105 | |||
| Sale of registered stock, shares | 1,529,047 | |||||||
| Balance at Jun. 25, 2022 | $ 918,025 | 359,552,311 | 1,193,695 | (326,100,471) | 35,563,560 | (172,614) | 35,390,946 | |
| Balance, shares at Jun. 25, 2022 | 91,802,637 | |||||||
| Balance at Dec. 31, 2022 | $ 929,540 | 360,567,631 | (103,127) | 1,176,068 | (338,406,815) | 24,163,297 | (172,682) | 23,990,615 |
| Balance, shares at Dec. 31, 2022 | 92,954,159 | |||||||
| Vesting of restricted stock | $ 175 | (175) | ||||||
| Vesting of restricted stock, shares | 17,500 | |||||||
| Stock-based compensation expense | 194,190 | 194,190 | 194,190 | |||||
| Other comprehensive loss | 6,227 | 6,227 | 6,227 | |||||
| Issuance of common stock and pre-funded warrants, net of costs | $ 170,000 | 21,165,000 | 21,335,000 | 21,335,000 | ||||
| Issuance of common stock and pre-funded warrants, net of costs, shares | 17,000,000 | |||||||
| Acquisition of noncontrolling interest | (172,682) | (172,682) | 172,682 | |||||
| Net loss | (2,628,555) | (2,628,555) | (2,628,555) | |||||
| Balance at Apr. 01, 2023 | $ 1,099,715 | 381,753,964 | (103,127) | 1,182,295 | (341,035,370) | 42,897,477 | 42,897,477 | |
| Balance, shares at Apr. 01, 2023 | 109,971,659 | |||||||
| Balance at Dec. 31, 2022 | $ 929,540 | 360,567,631 | (103,127) | 1,176,068 | (338,406,815) | 24,163,297 | (172,682) | 23,990,615 |
| Balance, shares at Dec. 31, 2022 | 92,954,159 | |||||||
| Other comprehensive loss | 23,977 | |||||||
| Net loss | (10,808,934) | |||||||
| Balance at Jul. 01, 2023 | $ 1,103,765 | 382,941,171 | (103,127) | 1,200,045 | (349,215,749) | 35,926,105 | 35,926,105 | |
| Balance, shares at Jul. 01, 2023 | 110,376,625 | |||||||
| Balance at Apr. 01, 2023 | $ 1,099,715 | 381,753,964 | (103,127) | 1,182,295 | (341,035,370) | 42,897,477 | 42,897,477 | |
| Balance, shares at Apr. 01, 2023 | 109,971,659 | |||||||
| Vesting of restricted stock | $ 4,050 | (4,050) | ||||||
| Vesting of restricted stock, shares | 404,966 | |||||||
| Stock-based compensation expense | 1,191,257 | 1,191,257 | 1,191,257 | |||||
| Other comprehensive loss | 17,750 | 17,750 | 17,750 | |||||
| Net loss | (8,180,379) | (8,180,379) | (8,180,379) | |||||
| Balance at Jul. 01, 2023 | $ 1,103,765 | $ 382,941,171 | $ (103,127) | $ 1,200,045 | $ (349,215,749) | $ 35,926,105 | $ 35,926,105 | |
| Balance, shares at Jul. 01, 2023 | 110,376,625 |
BASIS OF PRESENTATION |
6 Months Ended |
|---|---|
Jul. 01, 2023 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| BASIS OF PRESENTATION | 1. BASIS OF PRESENTATION
The condensed consolidated financial statements of Kopin Corporation as of July 1, 2023 and for the six month periods ended July 1, 2023 and June 25, 2022 are unaudited and include all adjustments that, in the opinion of management, are necessary to present fairly the results of operations for the periods then ended. These condensed consolidated financial statements should be read in conjunction with the Company’s financial statements and notes thereto, included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022. The results of the Company’s operations for any interim period are not necessarily indicative of the results of the Company’s operations for any other interim period or for a full fiscal year. As used in this report, the terms “we”, “us”, “our”, “Kopin” and the “Company” mean Kopin Corporation and its subsidiaries, unless the context indicates another meaning.
The condensed consolidated financial statements for the six months ended July 1, 2023 include the accounts of Kopin Corporation and its wholly owned subsidiaries. The condensed consolidated financial statements for the six months ended June 25, 2022 include the accounts of Kopin Corporation and its wholly owned subsidiaries. Net loss attributable to noncontrolling interest in the Company’s condensed consolidated statements of operations for the six months ended June 25, 2022 represents the 20% of the results of operations of a former partially owned subsidiary which is allocated to the shareholders of the equity interests not owned by the Company. All intercompany transactions and balances have been eliminated.
The Company’s current strategy is to continue to invest in research and development, even during unprofitable periods, which may result in the Company continuing to incur net losses and negative cash flows from operations. If the Company is unable to achieve and maintain positive cash flows and profitability in the foreseeable future, its financial condition may ultimately be materially adversely affected such that management may be required to reduce operating expenses, including investments in research and development, or raise additional capital. While there can be no assurance the Company will be able to successfully reduce operating expenses or raise additional capital, management believes its historical success in managing cash flows and obtaining capital will continue in the foreseeable future.
On January 5, 2023, the Company entered into a Technology License Agreement and an Asset Purchase Agreement (the “LST Agreements”) with Lightning Silicon Technology, Inc. (“LST”). Pursuant to the LST Agreements, the Company issued a license to LST for certain technology associated with our Organic Light Emitting Technology, transferred in-process development contracts with two customers and accounts receivables that the Company had previously determined were not collectible. The technology license agreement provides for Kopin to transfer certain patents to LST if LST achieves certain milestones; however upon transfer, Kopin will receive a license to the technology. To the extent LST makes improvements to the technology licensed from Kopin, Kopin will receive a license for these improvements for certain markets. Kopin is not obligated to provide any additional funding support to LST. As consideration for the transaction, the Company received preferred shares in LST, which the Company determined had no fair value as of the transaction date or as of July 1, 2023. While these shares represent a 20.0% equity stake in LST, they do not provide the Company with voting rights to elect LST’s Governance Board. The Company will also receive a royalty based on unit sales of products that utilize the technology licensed. Drs. John Fan, the Company’s former President, CEO and Chairman of the Board, Boryeu Tsaur, a former Executive Vice President of the Company and Hong Choi, the Company’s former Chief Technology Officer terminated their employment with the Company and became investors in and members of the management team of LST. Dr. Fan is the Founder of LST. As a result of this transaction, in 2022 the Company wrote off the two operating lease assets associated with facilities used for the development of our organic light emitting diode (OLED) products.
On January 27, 2023, the Company sold shares of common stock and pre-funded warrants to purchase up to 6,000,000 shares of common stock at a public offering price of $ per share for net proceeds of approximately $21.4 million. The Company believes that its existing cash, cash equivalents, will be adequate to satisfy its current operating plans for at least the next twelve months from the issuance of these financial statements. The Company has in the past sold equity securities through at-the-market equity offerings and in the traditional fashion of significant equity offerings. Nonetheless, management monitors the capital markets on an ongoing basis and may consider raising capital if favorable market conditions develop. If the Company’s actual results are less than projected or the Company needs to raise capital for additional liquidity, the Company may be required to do additional equity financings, reduce expenses, or enter into a strategic transaction. However, management can make no assurance that the Company will be able to raise additional capital, reduce expenses sufficiently, or enter into a strategic transaction on terms acceptable to the Company, or at all.
|
ACCOUNTING STANDARDS |
6 Months Ended |
|---|---|
Jul. 01, 2023 | |
| Accounting Policies [Abstract] | |
| ACCOUNTING STANDARDS | 2. ACCOUNTING STANDARDS
ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments became effective for smaller reporting companies for fiscal years beginning after December 15, 2022. The amendments in ASU 2016-13 are intended to provide more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. The Company adopted this standard on January 1, 2023 and there was not a material impact.
|
CASH AND CASH EQUIVALENTS AND MARKETABLE DEBT SECURITIES |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 01, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cash and Cash Equivalents [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| CASH AND CASH EQUIVALENTS AND MARKETABLE DEBT SECURITIES | 3. CASH AND CASH EQUIVALENTS AND MARKETABLE DEBT SECURITIES
The Company considers all highly liquid, short-term debt instruments with original maturities of three months or less to be cash equivalents.
Marketable debt securities consist primarily of commercial paper, medium-term corporate notes, and U.S. government and agency backed securities. The Company classifies these marketable debt securities as available-for-sale at fair value in “Marketable debt securities, at fair value.” The Company records the amortization of premium and accretion of discounts on marketable debt securities in the results of operations.
The Company uses the specific identification method as a basis for determining cost and calculating realized gains and losses with respect to marketable debt securities. The gross gains and losses realized related to sales and maturities of marketable debt securities were not material during the three and six months ended July 1, 2023 and June 25, 2022.
Investments in available-for-sale marketable debt securities were as follows at July 1, 2023 and December 31, 2022:
The contractual maturity of the Company’s marketable debt securities was as follows at July 1, 2023:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE MEASUREMENTS |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 01, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| FAIR VALUE MEASUREMENTS | 4. FAIR VALUE MEASUREMENTS
Financial instruments are categorized as Level 1, Level 2 or Level 3 based upon the method by which their fair value is computed. An investment is categorized as Level 1 when its fair value is based on unadjusted quoted prices in active markets for identical assets that the Company has the ability to access at the measurement date. An investment is categorized as Level 2 if its fair market value is based on quoted market prices for similar assets in active markets, quoted prices for identical or similar assets in markets that are not active, based on observable inputs such as interest rates, yield curves, or derived from or corroborated by observable market data by correlation or other means. An investment is categorized as Level 3 if its fair value is based on assumptions developed by the Company about what a market participant would use in pricing the assets.
The following table details the fair value measurements of the Company’s financial assets:
Transfers between levels of the fair value hierarchy are reported at the beginning of the reporting period in which they occur. Changes in Level 3 investments were as follows:
The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate fair value because of their short-term nature. If accrued liabilities were carried at fair value, these would be classified as Level 2 in the fair value hierarchy.
Marketable Debt Securities
Corporate debt consists of floating rate notes with a maturity that is over multiple years but has interest rates that are reset every three months based on the then-current three-month London Interbank Offering Rate (“Three-month Libor”). The Company validates the fair market values of the financial instruments above by using discounted cash flow models, obtaining independent pricing of the securities or through the use of a model that incorporates the Three-month Libor, the credit default swap rate of the issuer and the bid and ask price spread of the same or similar investments which are traded on several markets.
Equity Investments
From 2017 through 2019, the Company made several equity investments in a customer. In the fourth quarter of 2019, the Company reviewed the financial condition and other factors of the customer and, as a result, recorded an impairment charge of $5.2 million to reduce its investment in the customer to zero as of December 28, 2019. In the first quarter of 2022 the customer raised additional equity capital and based on an observable price change of the customer’s share prices and terms of the equity sale the Company remeasured the fair market value of its investment and recorded a gain of $4.7 million. In the second quarter of 2022, the Company made an additional equity investment of $0.5 million. During the quarter ended July 1, 2023, the Company received common stock of the equity investment valued at approximately $0.4 million for the payment of royalties. The Company also performed an impairment evaluation and as a result recorded an impairment charge of approximately $3.1 million. As of July 1, 2023, the Company owned an approximate 3.4% interest in this investment.
On September 30, 2019, the Company entered into an Asset Purchase Agreement pursuant to which the Company sold and licensed certain assets of our SolosTM product line and WhisperTM Audio technology. As consideration for the transaction, the Company received a 20.0% equity stake in Solos Incorporation (“Solos Inc.”). The Company’s 20.0% equity stake will be maintained until Solos Inc. has raised a total of $7.5 million in equity financing. Based on the price paid for equity by the other 80.0% owners of Solos Inc. and other factors, the Company estimated the fair value of its equity holdings at $0.6 million and in 2019 recorded a $0.6 million gain on its investment for this equity transaction as the basis of assets transferred was zero. The investment was written down to $0.4 million as a result of an impairment analysis and write down performed in 2020. In the second quarter ending July 1, 2023 the Company reviewed its investment and wrote-down the investment to $0.2 million.
During the three and six months ended July 1, 2023, the Company recorded less than $0.2 million of unrealized losses on an equity interest in a company due to a fluctuation in the foreign exchange rate.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACCOUNTS RECEIVABLE, NET |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 01, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ACCOUNTS RECEIVABLE, NET | 5. ACCOUNTS RECEIVABLE, NET
Accounts receivable consisted of the following:
Changes to the allowance for credit losses for the six months ended July 1, 2023 were as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVENTORY |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 01, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||
| Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
| INVENTORY | 6. INVENTORY
Inventories are stated at standard cost adjusted to approximate the lower of cost (first-in, first-out method) or net realizable value and consist of the following at July 1, 2023 and December 31, 2022:
|
|||||||||||||||||||||||||||||||||||||||||||||
NET LOSS PER SHARE |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 01, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss per share | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| NET LOSS PER SHARE |
Basic net loss per share is computed using the weighted-average number of shares of common stock outstanding during the period less any unvested restricted shares. Diluted net loss per share is calculated using weighted-average shares outstanding and contingently issuable shares, less weighted-average shares reacquired during the period. The net outstanding shares are adjusted for the dilutive effect of shares issuable upon the assumed conversion of the Company’s common stock equivalents, which consist of unvested restricted stock.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||
STOCKHOLDERS’ EQUITY AND STOCK-BASED COMPENSATION |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 01, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| STOCKHOLDERS’ EQUITY AND STOCK-BASED COMPENSATION |
Registered sale of equity securities
On January 27, 2023, the Company sold shares of common stock and pre-funded warrants to purchase up to 6,000,000 shares of common stock at a public offering price of $ per pre-funded warrant, for gross proceeds of $22.9 million before deducting underwriting discounts and offering expenses paid by the Company of $1.5 million. The offering price of the pre-funded warrant equals the public offering price per share of the common stock less the $0.01 per share exercise price of each pre-funded warrant.
During the three months ended June 25, 2022, the Company sold million shares of common stock and million shares of treasury stock for gross proceeds of $2.1 million (average of $ per share) before deducting broker expenses paid by us of less than $ million, pursuant to the Company’s At-The-Market Equity Offering Sales Agreement dated as of March 5, 2021 (the” ATM Agreement”) with Stifel, Nicolaus & Company, Incorporated, as agent, under which we may sell up to $50 million of our common stock. The Company has approximately $41.4 million worth of common stock remaining available for sale under the ATM Agreement.
Non-Vested Restricted Common Stock
The fair value of non-vested restricted common stock awards is generally the market value of the Company’s common stock on the date of grant. The non-vested restricted common stock awards require the employee to fulfill certain obligations, including remaining employed by the Company for one, two or four years (the vesting period) and in certain cases also require meeting either performance criteria or the Company’s stock achieving a certain price. For non-vested restricted common stock awards that solely require the recipient to remain employed with the Company, the stock compensation expense is amortized over the anticipated service period. For non-vested restricted common stock awards that require the achievement of performance criteria, the Company reviews the probability of achieving the performance goals on a periodic basis. If the Company determines that it is probable that the performance criteria will be achieved, the amount of compensation cost derived for the performance goal is amortized over the anticipated service period. If the performance criteria are not met, no compensation cost is recognized and any previously recognized compensation cost is reversed.
The Company granted and restricted stock units to its employees, executives and the Board of Directors in the six months ended July 1, 2023 and June 25, 2022, respectively. shares of the shares are time-based and will vest on average over three equal annual installments. shares of the shares will vest upon the successful achievement of certain fiscal year 2023 milestones. The fair value of the restricted stock units was based on the fair market value of the Company’s stock on the date of grant. The time-based shares are expensed over the service period and the milestone based shares are expensed based upon the probability of achievement.
Restricted stock activity for the six months ended July 1, 2023 was as follows:
Stock-Based Compensation
Unrecognized compensation expense for non-vested restricted common stock as of July 1, 2023 totaled $ million and is expected to be recognized over a weighted average period of approximately .
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACCRUED WARRANTY |
6 Months Ended | ||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 01, 2023 | |||||||||||||||||||||
| Guarantees and Product Warranties [Abstract] | |||||||||||||||||||||
| ACCRUED WARRANTY | 9. ACCRUED WARRANTY
The Company typically warrants its products against defect for 12 to 18 months, however, for certain products a customer may purchase an extended warranty. A provision for estimated future costs and estimated returns for credit relating to such warranty is recorded in the period when product is shipped and revenue is recognized and is updated as additional information becomes available. The Company’s estimate of future costs to satisfy warranty obligations is based primarily on historical warranty expense experienced and a provision for potential future product failures. Changes in the accrued warranty for the six months ended July 1, 2023 were as follows:
Extended Warranties
Deferred revenue represents the purchase of extended warranties by the Company’s customers. The Company recognizes revenue from an extended warranty on the straight-line method over the life of the extended warranty, which is typically 12 to 15 months beyond the standard 12 to 18 month warranty. The Company classifies the current portion of deferred revenue under Other accrued liabilities in its condensed consolidated balance sheets. At July 1, 2023, the Company had less than $0.1 million of deferred revenue related to extended warranties.
|
INCOME TAXES |
6 Months Ended |
|---|---|
Jul. 01, 2023 | |
| Income Tax Disclosure [Abstract] | |
| INCOME TAXES | 10. INCOME TAXES
The Company recorded a provision for income taxes of less than $0.1 million in each of the three and six months ended July 1, 2023 and June 25, 2022, respectively. As of July 1, 2023, the Company has available for tax purposes U.S. federal net operating loss carryforwards (“NOLs”) of approximately $135.5 million expiring 2023 through 2038 and $93.1 million that have an unlimited carryover period. Under the provisions of Section 382, certain substantial changes in Kopin’s ownership may limit in the future the amount of net operating loss carryforwards that could be used annually to offset future taxable income and income tax liability. The Company has recognized a full valuation allowance on its domestic and certain foreign net deferred tax assets due to the uncertainty of realization of such assets. The Company recognizes both accrued interest and penalties related to its uncertain tax positions related to intercompany loan interest and potential transfer pricing exposure related to its foreign subsidiaries.
|
CONTRACT ASSETS AND LIABILITIES |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 01, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Contract Assets And Liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| CONTRACT ASSETS AND LIABILITIES | 11. CONTRACT ASSETS AND LIABILITIES
Contract assets include unbilled amounts typically resulting from sales under contracts when the cost-to-cost method of revenue recognition is utilized and revenue recognized from customer arrangements, including licensing, exceeds the amount billed to the customer, and right to payment is not just subject to the passage of time. Amounts may not exceed their net realizable value. Contract assets are generally classified as current. The Company classifies the noncurrent portion of contract assets under other assets in its condensed consolidated balance sheets.
Contract liabilities consist of advance payments and billings in excess of cost incurred and deferred revenue.
Net contract assets (liabilities) consisted of the following:
The $0.4 million increase in the Company’s net contract assets at July 1, 2023 as compared to December 31, 2022 was primarily due to a change in its fixed price contracts with the U.S. government that resulted in revenue recognized in excess of amounts billed and product revenue recognized over time for defense programs.
In the three and six months ended July 1, 2023, the Company recognized revenue of $0.1 million and $0.6 million, respectively, related to our contract liabilities at December 31, 2022. In the three and six months ended June 25, 2022, the Company recognized revenue of $2.9 million and $0.2 million, respectively, related to our contract liabilities at December 25, 2021.
The Company did not recognize impairment losses on our contract assets in the three or six months ended July 1, 2023 or June 25, 2022.
Performance Obligations
The Company’s revenue recognition related to performance obligations that were satisfied at a point in time and over time were as follows:
Remaining performance obligations represent the transaction price of orders for which work has not been performed and excludes unexercised contract options and potential orders under ordering-type contracts (e.g., indefinite-delivery, indefinite-quantity (“IDIQ”)). As of July 1, 2023, the aggregate amount of the transaction price allocated to remaining performance obligations was $14.6 million which the Company expects to recognize over the next 12 months. The remaining performance obligations represent amounts to be earned under government contracts, which are subject to cancellation.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LEASES |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 01, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Leases | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| LEASES | 12. LEASES
The Company enters into operating leases primarily for: real estate, including for manufacturing, engineering, research, administration and sales facilities, and information technology (“IT”) equipment. At July 1, 2023 and December 31, 2022, the Company did not have any finance leases. Approximately all of our future lease commitments, and related lease liability, relate to the Company’s real estate leases. Some of the Company’s leases include options to extend or terminate the lease.
The components of lease expense were as follows:
At July 1, 2023, the Company’s future lease payments under non-cancellable leases were as follows:
The Company’s lease liabilities recognized in the Company’s condensed consolidated balance sheets at July 1, 2023 were as follows:
Supplemental cash flow information related to leases was as follows:
Other information related to leases was as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENTS AND DISAGGREGATION OF REVENUE |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 01, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SEGMENTS AND DISAGGREGATION OF REVENUE | 13. SEGMENTS AND DISAGGREGATION OF REVENUE
We continually monitor and review our segment reporting structure in accordance with authoritative guidance to determine if any changes have occurred that would affect our reportable segments. We report under one segment, as our Chief Executive Officer, who is our chief operating decision maker (“CODM”), reviews results on a total company basis.
Total long-lived assets by country at July 1, 2023 and December 31, 2022 were:
We disaggregate our revenue from contracts with customers by geographic location and by display application, as we believe it best depicts how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors.
During the three and six months ended July 1, 2023 and June 25, 2022, the Company derived its sales from the following geographies:
During the three and six months ended July 1, 2023 and June 25, 2022, the Company derived its sales from the following display applications:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LITIGATION |
6 Months Ended |
|---|---|
Jul. 01, 2023 | |
| Commitments and Contingencies Disclosure [Abstract] | |
| LITIGATION | 14. LITIGATION
The Company may engage in legal proceedings arising in the ordinary course of business. Claims, suits, investigations, and proceedings are inherently uncertain and it is not possible to predict the ultimate outcome of such matters and our business, financial condition, results of operations or cash flows could be affected in any particular period.
BlueRadios, Inc. v. Kopin Corporation, Civil Action No. 16-02052-JLK (D. Col.):
On August 12, 2016, BlueRadios, Inc. (“BlueRadios”) filed a complaint in the U.S. District Court for the District of Colorado, alleging that the Company breached a contract between it and BlueRadios concerning an alleged joint venture between the Company and BlueRadios to design, develop and commercialize micro-display products with embedded wireless technology referred to as “Golden-i” breached the covenant of good faith and fair dealing associated with that contract, breached its fiduciary duty to BlueRadios, and misappropriated trade secrets owned by BlueRadios in violation of Colorado law (C.R.S. § 7-74-104(4)) and the Defend Trade Secrets Act (18 U.S.C. § 1836(b)(1)). BlueRadios further alleges that the Company was unjustly enriched by its alleged misconduct, BlueRadios is entitled to an accounting to determine the amount of profits obtained by the Company as a result of its alleged misconduct, and the inventorship on at least ten patents or patent applications owned by the Company need to be corrected to list BlueRadios’ employees as inventors and thereby list BlueRadios as co-assignees of the patents. BlueRadios seeks monetary, declaratory, and injunctive relief, including for alleged non-payment of engineering retainer fees.
On October 11, 2016, the Company filed its Answer and Affirmative Defenses. The parties completed expert depositions on November 15, 2019. On December 2, 2019, the Company filed a Motion for Partial Summary Judgment requesting the Court dismiss counts 2-7 in their entirety and counts 1 and 8 in part. BlueRadios also filed a Motion for Partial Summary Judgment alleging it is the co-owner of U.S. Patent No. 8,909,296. Responses to the Motions for Partial Summary Judgment were filed on January 15, 2020, and replies were filed on February 19, 2020. On September 25, 2020, the Court denied BlueRadios’ Motion for Partial Summary Judgment. On August 3, 2022, the Court granted the Company’s Motion for Partial Summary Judgment by dismissing counts 3, 6, 7, punitive damages under count 2, and count 8 as it relates to patent applications, and denying the motion as it relates to counts 1, 4, and 5, and the remainder of counts 2 and 8. The Court also ordered discovery reopened for certain limited purposes. A trial date was set by the Court for January 22 – February 5, 2024. The Company has not concluded a loss from this matter is probable; therefore, we have not recorded an accrual for litigation or claims related to this matter for the period ended July 1, 2023. The Company will continue to evaluate information as it becomes known and will record an estimate for losses at the time or times when it is both probable that a loss has been incurred and the amount of the loss is reasonably estimable.
|
RELATED PARTY TRANSACTIONS |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 01, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Related Party Transactions [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| RELATED PARTY TRANSACTIONS | 15. RELATED PARTY TRANSACTIONS
The Company may from time to time enter into agreements with stockholders, affiliates and other companies engaged in certain aspects of the display, electronics, optical and software industries as part of our business strategy. In addition, the wearable computing product market is relatively new and there may be other technologies the Company needs to purchase from affiliates to enhance its product offering.
During the three and six months ended July 1, 2023 and June 25, 2022, the Company had the following transactions with related parties:
At July 1, 2023 and December 31, 2022, the Company had the following receivables from and payables to related parties:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CASH AND CASH EQUIVALENTS AND MARKETABLE DEBT SECURITIES (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 01, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cash and Cash Equivalents [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF AVAILABLE-FOR-SALE MARKETABLE DEBT SECURITIES | Investments in available-for-sale marketable debt securities were as follows at July 1, 2023 and December 31, 2022:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF MARKETABLE DEBT SECURITIES | The contractual maturity of the Company’s marketable debt securities was as follows at July 1, 2023:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE MEASUREMENTS (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 01, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF FAIR VALUE MEASUREMENTS OF FINANCIAL ASSETS | The following table details the fair value measurements of the Company’s financial assets:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF FAIR VALUE, LIABILITIES MEASURED ON RECURRING BASIS | Transfers between levels of the fair value hierarchy are reported at the beginning of the reporting period in which they occur. Changes in Level 3 investments were as follows:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACCOUNTS RECEIVABLE, NET (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 01, 2023 | |||||||||||||||||||||||||||||||||||||
| Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||
| SCHEDULE OF ACCOUNTS RECEIVABLE | Accounts receivable consisted of the following:
|
||||||||||||||||||||||||||||||||||||
| SCHEDULE OF CHANGE IN ALLOWANCE FOR CREDIT LOSSES | Changes to the allowance for credit losses for the six months ended July 1, 2023 were as follows:
|
||||||||||||||||||||||||||||||||||||
INVENTORY (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 01, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||
| Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF INVENTORY | Inventories are stated at standard cost adjusted to approximate the lower of cost (first-in, first-out method) or net realizable value and consist of the following at July 1, 2023 and December 31, 2022:
|
|||||||||||||||||||||||||||||||||||||||||||||
NET LOSS PER SHARE (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 01, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss per share | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING DILUTED |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||
STOCKHOLDERS’ EQUITY AND STOCK-BASED COMPENSATION (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 01, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF NON-VESTED RESTRICTED STOCK ACTIVITY | Restricted stock activity for the six months ended July 1, 2023 was as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF STOCK-BASED COMPENSATION EXPENSE |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACCRUED WARRANTY (Tables) |
6 Months Ended | ||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 01, 2023 | |||||||||||||||||||||
| Guarantees and Product Warranties [Abstract] | |||||||||||||||||||||
| SCHEDULE OF ACCRUED WARRANTY |
|
CONTRACT ASSETS AND LIABILITIES (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 01, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Contract Assets And Liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF CONTRACT WITH CUSTOMER, ASSET AND LIABILITY | Net contract assets (liabilities) consisted of the following:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF SATISFACTION OF PERFORMANCE OBLIGATION | The Company’s revenue recognition related to performance obligations that were satisfied at a point in time and over time were as follows:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LEASES (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 01, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Leases | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF LEASE EXPENSE | The components of lease expense were as follows:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF FUTURE LEASE PAYMENT UNDER NON-CANCELLABLE LEASE | At July 1, 2023, the Company’s future lease payments under non-cancellable leases were as follows:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF OPERATING LEASE PAYMENTS RECOGNIZED IN CONSOLIDATED BALANCE SHEETS | The Company’s lease liabilities recognized in the Company’s condensed consolidated balance sheets at July 1, 2023 were as follows:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF SUPPLEMENTAL INFORMATION RELATED TO LEASES | Supplemental cash flow information related to leases was as follows:
Other information related to leases was as follows:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENTS AND DISAGGREGATION OF REVENUE (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 01, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF LONG-LIVED ASSETS BY GEOGRAPHIC AREAS | Total long-lived assets by country at July 1, 2023 and December 31, 2022 were:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF SEGMENT INFORMATION BY REVENUE TYPE | During the three and six months ended July 1, 2023 and June 25, 2022, the Company derived its sales from the following geographies:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF SEGMENT REPORTING INFORMATION, BY SEGMENT | During the three and six months ended July 1, 2023 and June 25, 2022, the Company derived its sales from the following display applications:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
RELATED PARTY TRANSACTIONS (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 01, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Related Party Transactions [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF TRANSACTIONS WITH RELATED PARTIES | During the three and six months ended July 1, 2023 and June 25, 2022, the Company had the following transactions with related parties:
At July 1, 2023 and December 31, 2022, the Company had the following receivables from and payables to related parties:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SCHEDULE OF AVAILABLE-FOR-SALE MARKETABLE DEBT SECURITIES (Details) - USD ($) |
Jul. 01, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items] | ||
| Amortized Cost | $ 15,657,880 | $ 4,500,018 |
| Unrealized Losses | (94,747) | (111,240) |
| Fair Value | 15,563,133 | 4,388,778 |
| U.S. Government and Agency Backed Securities [Member] | ||
| Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items] | ||
| Amortized Cost | 8,407,706 | 2,500,006 |
| Unrealized Losses | (14,421) | (102,276) |
| Fair Value | 8,393,285 | 2,397,730 |
| Corporate Debt and Certificates of Deposit [Member] | ||
| Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items] | ||
| Amortized Cost | 7,250,174 | 2,000,012 |
| Unrealized Losses | (80,326) | (8,964) |
| Fair Value | $ 7,169,848 | $ 1,991,048 |
SCHEDULE OF MARKETABLE DEBT SECURITIES (Details) - USD ($) |
Jul. 01, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items] | ||
| Less than One year | $ 8,660,263 | |
| One to Five Years | 6,902,870 | |
| Total | 15,563,133 | $ 4,388,778 |
| U.S. Government and Agency Backed Securities [Member] | ||
| Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items] | ||
| Less than One year | 6,423,450 | |
| One to Five Years | 1,969,835 | |
| Total | 8,393,285 | $ 2,397,730 |
| Corporate Debt And Certificate Of Deposit [Member] | ||
| Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items] | ||
| Less than One year | 2,236,813 | |
| One to Five Years | 4,933,035 | |
| Total | $ 7,169,848 |
SCHEDULE OF FAIR VALUE, LIABILITIES MEASURED ON RECURRING BASIS (Details) - Equity Investments [Member] |
6 Months Ended |
|---|---|
|
Jul. 01, 2023
USD ($)
| |
| Fair Value, off-Balance-Sheet Risks, Disclosure Information [Line Items] | |
| Financial instrument fair value, beginning | $ 7,508,190 |
| Net unrealized gains | (3,327,347) |
| Foreign currency losses | (172,532) |
| Purchases, issuances and settlements | 439,454 |
| Financial instrument fair value, ending | $ 4,447,765 |
FAIR VALUE MEASUREMENTS (Details Narrative) - USD ($) |
3 Months Ended | 6 Months Ended | |||
|---|---|---|---|---|---|
Sep. 30, 2019 |
Mar. 26, 2022 |
Dec. 28, 2019 |
Jul. 01, 2023 |
Jun. 25, 2022 |
|
| Impairment charge | $ 5,200,000 | $ 3,100,000 | |||
| Investment | $ 0 | ||||
| Gain on investment | $ 4,700,000 | ||||
| Additional equity investment | $ 500,000 | ||||
| Payments for royalties | 400,000 | ||||
| Inventory write down | 292,405 | $ 1,454,688 | |||
| Unrealized gain on equity interest | 200,000 | ||||
| Asset Purchase Agreement [Member] | |||||
| Sale of Stock, Description of Transaction | As consideration for the transaction, the Company received a 20.0% equity stake in Solos Incorporation (“Solos Inc.”). The Company’s 20.0% equity stake will be maintained until Solos Inc. has raised a total of $7.5 million in equity financing. Based on the price paid for equity by the other 80.0% owners of Solos Inc. and other factors, the Company estimated the fair value of its equity holdings at $0.6 million and in 2019 recorded a $0.6 million gain on its investment for this equity transaction as the basis of assets transferred was zero. The investment was written down to $0.4 million as a result of an impairment analysis and write down performed in 2020. | ||||
| Equity Method Investment, Aggregate Cost | $ 7,500,000 | ||||
| Investment Owned, Fair Value | 600,000 | ||||
| Realized Investment Gains (Losses) | 600,000 | ||||
| Investment owned | $ 400,000 | ||||
| Inventory write down | $ 200,000 | ||||
| Equity Investment [Member] | |||||
| Equity investment owned percentage | 3.40% | ||||
SCHEDULE OF ACCOUNTS RECEIVABLE (Details) - USD ($) |
Jul. 01, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Receivables [Abstract] | ||
| Less — allowance for credit losses | $ 1,103,000 | $ 303,000 |
| Total | $ 6,171,241 | $ 6,537,891 |
SCHEDULE OF CHANGE IN ALLOWANCE FOR CREDIT LOSSES (Details) |
6 Months Ended |
|---|---|
|
Jul. 01, 2023
USD ($)
| |
| Receivables [Abstract] | |
| Balance, December 31, 2022 | $ 303,000 |
| Additions | 829,000 |
| Write-offs | (29,000) |
| Balance, July 1, 2023 | $ 1,103,000 |
SCHEDULE OF INVENTORY (Details) - USD ($) |
Jul. 01, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Inventory Disclosure [Abstract] | ||
| Raw materials | $ 4,907,401 | $ 4,285,757 |
| Work-in-process | 2,053,581 | 1,735,454 |
| Finished goods | 917,036 | 405,189 |
| Total | $ 7,878,018 | $ 6,426,400 |
SCHEDULE OF WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING DILUTED (Details) - shares |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jul. 01, 2023 |
Jun. 25, 2022 |
Jul. 01, 2023 |
Jun. 25, 2022 |
|
| Net loss per share | ||||
| Non-vested restricted common stock | 3,989,161 | 1,824,723 | 3,989,161 | 1,824,723 |
SCHEDULE OF NON-VESTED RESTRICTED STOCK ACTIVITY (Details) |
6 Months Ended |
|---|---|
|
Jul. 01, 2023
$ / shares
shares
| |
| Equity [Abstract] | |
| Number of shares, restricted stock outstanding beginning | shares | 1,965,901 |
| Weighted average grant date fair value, restricted stock outstanding beginning | $ / shares | $ 2.22 |
| Number of shares, restricted stock granted | shares | 3,136,844 |
| Weighted average grant date fair value, restricted stock granted | $ / shares | $ 1.58 |
| Number of shares, restricted stock forfeited | shares | (691,118) |
| Weighted average grant date fair value, restricted stock forfeited | $ / shares | $ 3.03 |
| Number of shares, restricted stock vested | shares | (422,466) |
| Weighted average grant date fair value, restricted stock vested | $ / shares | $ 1.58 |
| Number of shares, restricted stock outstanding ending | shares | 3,989,161 |
| Weighted average grant date fair value, restricted stock outstanding ending | $ / shares | $ 1.65 |
SCHEDULE OF STOCK-BASED COMPENSATION EXPENSE (Details) - USD ($) |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jul. 01, 2023 |
Jun. 25, 2022 |
Jul. 01, 2023 |
Jun. 25, 2022 |
|
| Total | $ 1,191,258 | $ 417,033 | $ 1,385,449 | $ 1,073,106 |
| Cost of Sales [Member] | ||||
| Total | 427,323 | 11,713 | 453,541 | 78,381 |
| Research and Development Expense [Member] | ||||
| Total | 322,294 | 108,347 | 339,168 | 255,726 |
| Selling, General and Administrative Expenses [Member] | ||||
| Total | $ 441,641 | $ 296,973 | $ 592,740 | $ 738,999 |
SCHEDULE OF ACCRUED WARRANTY (Details) |
6 Months Ended |
|---|---|
|
Jul. 01, 2023
USD ($)
| |
| Guarantees and Product Warranties [Abstract] | |
| Balance, December 31, 2022 | $ 1,966,000 |
| Additions | 448,000 |
| Claims | (249,000) |
| Balance, July 1, 2023 | $ 2,165,000 |
ACCRUED WARRANTY (Details Narrative) $ in Millions |
6 Months Ended |
|---|---|
|
Jul. 01, 2023
USD ($)
| |
| Revenue Benchmark [Member] | |
| Extended product warranty description | Deferred revenue represents the purchase of extended warranties by the Company’s customers. The Company recognizes revenue from an extended warranty on the straight-line method over the life of the extended warranty, which is typically 12 to 15 months |
| Standard product warranty description | standard 12 to 18 month warranty |
| Warrant [Member] | |
| Extended product warranty description | The Company typically warrants its products against defect for 12 to 18 months |
| Deferred revenue | $ 0.1 |
INCOME TAXES (Details Narrative) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jul. 01, 2023 |
Jun. 25, 2022 |
Jul. 01, 2023 |
Jun. 25, 2022 |
|
| Income Tax Disclosure [Abstract] | ||||
| Current income tax expense (benefit) | $ 0.1 | $ 0.1 | $ 0.1 | $ 0.1 |
| Operating loss carryforwards | 135.5 | 135.5 | ||
| Operating loss carryforwards unlimited | $ 93.1 | $ 93.1 | ||
SCHEDULE OF CONTRACT WITH CUSTOMER, ASSET AND LIABILITY (Details) - USD ($) |
6 Months Ended | |
|---|---|---|
Jul. 01, 2023 |
Dec. 31, 2022 |
|
| Contract Assets And Liabilities | ||
| Contract assets and unbilled receivables | $ 4,108,406 | $ 4,068,364 |
| Change in contract assets and unbilled receivables | $ 40,042 | |
| Percentage of change in contract assets-current | 1.00% | |
| Contract liabilities and billings in excess of revenue earned | $ (554,967) | (930,500) |
| Change Contract liabilities and billings in excess of revenue earned | $ 375,533 | |
| Percentage Contract liabilities and billings in excess of revenue earned | (40.00%) | |
| Contract liabilities-noncurrent | $ (6,224) | (6,190) |
| Change in contract liabilities-noncurrent | $ (34) | |
| Percentage of change in contract liabilities-noncurrent | 1.00% | |
| Net contract assets | $ 3,547,215 | $ 3,131,674 |
| Change in Net contract assets | $ 415,541 | |
| Percentage of change in Net contract assets | 13.00% |
SCHEDULE OF SATISFACTION OF PERFORMANCE OBLIGATION (Details) |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jul. 01, 2023 |
Jun. 25, 2022 |
Jul. 01, 2023 |
Jun. 25, 2022 |
|
| Transferred at Point in Time [Member] | ||||
| Disaggregation of Revenue [Line Items] | ||||
| Performance obligation percentage | 31.00% | 17.00% | 28.00% | 18.00% |
| Transferred over Time [Member] | ||||
| Disaggregation of Revenue [Line Items] | ||||
| Performance obligation percentage | 69.00% | 83.00% | 72.00% | 82.00% |
CONTRACT ASSETS AND LIABILITIES (Details Narrative) - USD ($) |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jul. 01, 2023 |
Jun. 25, 2022 |
Jul. 01, 2023 |
Jun. 25, 2022 |
|
| Contract Assets And Liabilities | ||||
| Change in net contract assets | $ 415,541 | |||
| Contract with customer, liability, revenue recognized | $ 100,000 | $ 2,900,000 | 600,000 | $ 200,000 |
| Revenue, remaining performance obligation, amount | $ 14,600,000 | $ 14,600,000 | ||
SCHEDULE OF LEASE EXPENSE (Details) - USD ($) |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jul. 01, 2023 |
Jun. 25, 2022 |
Jul. 01, 2023 |
Jun. 25, 2022 |
|
| Leases | ||||
| Operating lease cost | $ 217,863 | $ 250,361 | $ 432,426 | $ 499,864 |
SCHEDULE OF FUTURE LEASE PAYMENT UNDER NON-CANCELLABLE LEASE (Details) |
Jul. 01, 2023
USD ($)
|
|---|---|
| Leases | |
| 2023 (excluding the six months ended July 1, 2023) | $ 483,463 |
| 2024 | 898,459 |
| 2025 | 639,281 |
| 2026 | 604,000 |
| 2027 | 604,000 |
| Thereafter | 201,333 |
| Total future lease payments | 3,430,536 |
| Less imputed interest | (451,577) |
| Total | $ 2,978,959 |
SCHEDULE OF OPERATING LEASE PAYMENTS RECOGNIZED IN CONSOLIDATED BALANCE SHEETS (Details) - USD ($) |
Jul. 01, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Leases | ||
| Operating lease liabilities - current | $ 796,073 | $ 786,928 |
| Operating lease liabilities - noncurrent | 2,182,886 | $ 2,576,883 |
| Total | $ 2,978,959 |
SCHEDULE OF SUPPLEMENTAL INFORMATION RELATED TO LEASES (Details) |
6 Months Ended |
|---|---|
|
Jul. 01, 2023
USD ($)
| |
| Leases | |
| Cash paid for amounts included in the measurement of operating lease liabilities | $ 496,691 |
| Weighted Average Discount Rate - Operating Leases | 6.00% |
| Weighted Average Remaining Lease Term-Operating Leases (in years) | 4 years 3 months 10 days |
SCHEDULE OF LONG-LIVED ASSETS BY GEOGRAPHIC AREAS (Details) - USD ($) $ in Thousands |
Jun. 01, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Revenues from External Customers and Long-Lived Assets [Line Items] | ||
| Total | $ 4,648 | $ 5,000 |
| UNITED STATES | ||
| Revenues from External Customers and Long-Lived Assets [Line Items] | ||
| Total | 4,320 | 4,604 |
| UNITED KINGDOM | ||
| Revenues from External Customers and Long-Lived Assets [Line Items] | ||
| Total | $ 328 | $ 396 |
SCHEDULE OF SEGMENT REPORTING INFORMATION, BY SEGMENT (Details) - USD ($) |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jul. 01, 2023 |
Jun. 25, 2022 |
Jul. 01, 2023 |
Jun. 25, 2022 |
|
| Revenue from External Customer [Line Items] | ||||
| Total Revenues | $ 10,459,856 | $ 11,909,032 | $ 21,218,047 | $ 23,487,454 |
| Defense [Member] | ||||
| Revenue from External Customer [Line Items] | ||||
| Total Revenues | 5,067,000 | 7,087,000 | 11,487,000 | 11,844,000 |
| Industrial [Member] | ||||
| Revenue from External Customer [Line Items] | ||||
| Total Revenues | 884,000 | 1,633,000 | 1,808,000 | 3,162,000 |
| Consumer [Member] | ||||
| Revenue from External Customer [Line Items] | ||||
| Total Revenues | 59,000 | 284,000 | 370,000 | 505,000 |
| Research and Development [Member] | ||||
| Revenue from External Customer [Line Items] | ||||
| Total Revenues | 3,884,000 | 2,806,000 | 6,780,000 | 7,714,000 |
| License and Royalties [Member] | ||||
| Revenue from External Customer [Line Items] | ||||
| Total Revenues | $ 566,000 | $ 99,000 | $ 773,000 | $ 262,000 |
SCHEDULE OF TRANSACTIONS WITH RELATED PARTIES (Details) - USD ($) |
3 Months Ended | 6 Months Ended | |||
|---|---|---|---|---|---|
Jul. 01, 2023 |
Jun. 25, 2022 |
Jul. 01, 2023 |
Jun. 25, 2022 |
Dec. 31, 2022 |
|
| Related Party Transaction [Line Items] | |||||
| Sales | $ 798,901 | $ 157,730 | $ 1,272,401 | $ 781,947 | |
| Purchase | 168,800 | 208,055 | |||
| Receivables | 227,611 | 227,611 | $ 325,106 | ||
| Payables | 193,800 | 193,800 | |||
| RealWear, Inc. [Member] | |||||
| Related Party Transaction [Line Items] | |||||
| Sales | 562,622 | 94,805 | 769,646 | 719,022 | |
| Purchase | |||||
| Receivables | 123,168 | 123,168 | 171,518 | ||
| Payables | |||||
| HMDMd Inc [Member] | |||||
| Related Party Transaction [Line Items] | |||||
| Sales | 236,279 | 62,925 | 502,755 | 62,925 | |
| Purchase | |||||
| Receivables | 92,752 | 92,752 | 151,340 | ||
| Payables | |||||
| Lightning Silicon Techonology Inc [Member] | |||||
| Related Party Transaction [Line Items] | |||||
| Sales | |||||
| Purchase | 168,800 | 208,055 | |||
| Receivables | 10,396 | 10,396 | |||
| Payables | 193,800 | 193,800 | |||
| Solos Technology [Member] | |||||
| Related Party Transaction [Line Items] | |||||
| Receivables | 1,295 | 1,295 | 2,248 | ||
| Payables | |||||
5;R9+:P"B,F4<#W WQR0WQ!457=E4(LSA&DH_%$"RCEBX1
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MI (ENE9VRNZ'8^U?:\4 K_+@G90;R=[:ZM5&XXR5,MR!-00RR(WFSFIVJVF
MS/YFN'JYOAE1;[DBIC3QO"!5Y[1#5:,V8]]&,')5CEHS:6AP*Y<)3