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BUSINESS COMBINATION (Notes)
 3 Months Ended
Apr. 01, 2017
Business Acquisition [Line Items]  
Business Combination Disclosure [Text Block]
10.
BUSINESS COMBINATION
In March 2017, the Company purchased 100% of the outstanding common stock of a company for $3.7 million. Additional payments of up to $2.0 million may be required if certain future operating performance milestones are met and the selling shareholders remain employed through March 2020. As there is requirement to remain employed to earn the contingent payments, they will be treated as compensation expense. Commencing on the date of acquisition, the Company consolidated the financial results of the acquired company. The identifiable assets acquired and liabilities assumed at the acquisition date have been recognized at fair value of the acquired company.

 The allocation of the purchase price is as follows:
 
 
Cash and marketable securities
$
2,600

Accounts receivable
490,700

Inventory
768,400

Other identifiable assets
46,800

Order backlog
840,000

Customer relationships
1,000,000

Developed technology
460,000

Trademark portfolio
160,000

Current liabilities
(480,500
)
Net deferred tax liabilities
(1,084,000
)
Goodwill
1,477,000

Total
$
3,681,000



 
The Company’s goodwill balance is as follows:
 
Kopin
 
Industrial
 
Total
Balance, December 31, 2016
$
844,023

 
$
—

 
$
844,023

March 2017 acquisition
—

 
1,477,000

 
1,477,000

Change due to exchange rate fluctuations
5,925

 
—

 
5,925

Balance, April 1, 2017
$
849,948

 
$
1,477,000

 
$
2,326,948


The identified intangible assets will be amortized on a straight-line basis over the following lives, in years:
Order backlog
1

Customer relationships
2

Developed technology
2

Trademark portfolio
2


The Company recognized $0.2 million in amortization for the three months ended April 1, 2017 related to its intangible assets. In conjunction with the acquisition the Company recorded deferred tax liabilities of approximately $1.1 million associated with the future non-deductible amortization of the intangible assets. These deferred tax liabilities can be used to offset the Company’s net deferred tax assets in future years. The Company reduced the valuation allowance on its net deferred tax assets in the amount of $1.1 million and such reduction was recognized as a benefit for income taxes for the three month period ended April 1, 2017. Acquisition expenses were approximately $0.2 million and are recorded in selling, general and administration expenses.
The following unaudited supplemental pro forma disclosures are provided for the three month periods ended April 1, 2017 and March 26, 2016, assuming the acquisition of the company had occurred as of December 26, 2015. All intercompany transactions have been eliminated.
 
Three months ended
 
April 1,
2017
 
March 26,
2016
Revenues
$
4,982,000

 
$
6,374,000

Net loss
(8,553,000
)
 
(7,312,000
)

For the three month period ended April 1, 2017 the revenues and net loss from the acquired company were $396,000 and $78,000, respectively.
In March 2017, the Company purchased 100% of the outstanding common stock of a company for $3.7 million. Additional payments of up to $2.0 million may be required if certain future operating performance milestones are met and the selling shareholders remain employed through March 2020. As there is requirement to remain employed to earn the contingent payments, they will be treated as compensation expense. Commencing on the date of acquisition, the Company consolidated the financial results of the acquired company. The identifiable assets acquired and liabilities assumed at the acquisition date have been recognized at fair value of the acquired company.

 The allocation of the purchase price is as follows:
 
 
Cash and marketable securities
$
2,600

Accounts receivable
490,700

Inventory
768,400

Other identifiable assets
46,800

Order backlog
840,000

Customer relationships
1,000,000

Developed technology
460,000

Trademark portfolio
160,000

Current liabilities
(480,500
)
Net deferred tax liabilities
(1,084,000
)
Goodwill
1,477,000

Total
$
3,681,000



 
The Company’s goodwill balance is as follows:
 
Kopin
 
Industrial
 
Total
Balance, December 31, 2016
$
844,023

 
$
—

 
$
844,023

March 2017 acquisition
—

 
1,477,000

 
1,477,000

Change due to exchange rate fluctuations
5,925

 
—

 
5,925

Balance, April 1, 2017
$
849,948

 
$
1,477,000

 
$
2,326,948


The identified intangible assets will be amortized on a straight-line basis over the following lives, in years:
Order backlog
1

Customer relationships
2

Developed technology
2

Trademark portfolio
2


The Company recognized $0.2 million in amortization for the three months ended April 1, 2017 related to its intangible assets. In conjunction with the acquisition the Company recorded deferred tax liabilities of approximately $1.1 million associated with the future non-deductible amortization of the intangible assets. These deferred tax liabilities can be used to offset the Company’s net deferred tax assets in future years. The Company reduced the valuation allowance on its net deferred tax assets in the amount of $1.1 million and such reduction was recognized as a benefit for income taxes for the three month period ended April 1, 2017. Acquisition expenses were approximately $0.2 million and are recorded in selling, general and administration expenses.
The following unaudited supplemental pro forma disclosures are provided for the three month periods ended April 1, 2017 and March 26, 2016, assuming the acquisition of the company had occurred as of December 26, 2015. All intercompany transactions have been eliminated.
 
Three months ended
 
April 1,
2017
 
March 26,
2016
Revenues
$
4,982,000

 
$
6,374,000

Net loss
(8,553,000
)
 
(7,312,000
)

For the three month period ended April 1, 2017 the revenues and net loss from the acquired company were $396,000 and $78,000, respectively.