STOCKHOLDERS' EQUITY AND STOCK-BASED COMPENSATION

On April 20, 2017, the Company sold 7,589,000 shares of unregistered common stock to Goertek Inc. for $24,664,250 ($3.25 per share). This represents approximately 10.1% of Kopin’s total outstanding shares of common stock as of the date of purchase. In addition, Kopin and Goertek have entered into agreements to jointly develop and commercialize a range of technologies and wearable products. Goertek is a leading innovative global technology company headquartered in Weifang, China that designs and manufactures a range of consumer electronics products for brand customers including wearables, virtual and augmented reality headsets, and audio products. The transaction was accounted for under FASB ASC 505-30 "Treasury Stock", and the loss on the sale of the treasury stock of approximately $0.8 million was charged to retained earnings. See "Note 13. Amounts Due To/Due From Affiliates" for additional discussion around agreements with Goertek.

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 which 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 which 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. Some of the restricted stock awards vest upon our stock price achieving certain levels. These awards are referred to as Liability Awards and are mark-to-market. Accordingly in some periods there is expense and in other periods the expense may reverse. The Company recognizes compensation costs on a straight-line basis over the requisite service period for time-vested awards.



	Shares		Weighted Average Grant Fair Value
Balance, December 31, 2016	3,007,674		$	3.21
Granted	120,000		3.44
Forfeited	(98,800	)	3.17
Vested	(60,000	)	1.70
Balance, September 30, 2017	2,968,874		$	3.26

Stock-Based Compensation

The following table summarizes stock-based compensation expense within each of the categories below as it relates to non-vested restricted common stock awards for the three and nine months ended September 30, 2017 and September 24, 2016 (no tax benefits were recognized):



	Three Months Ended				Nine Months Ended
	September 30, 2017		September 24, 2016		September 30, 2017		September 24, 2016
Cost of product revenues	$	142,604	$	136,420	$	405,778	$	426,357
Research and development	203,288		129,308		616,500		378,156
Selling, general and administrative	676,137		262,700		1,967,879		674,968
Total	$	1,022,029	$	528,428	$	2,990,157	$	1,479,481

Unrecognized compensation expense for non-vested restricted common stock as of September 30, 2017 totaled $3.8 million and is expected to be recognized over a weighted average period of approximately two years.

The selling, general and administrative expense includes Liability Awards and the increase in expense for the nine months ended September 30, 2017 as compared to September 24, 2016 is partially the result of a higher stock price of the Company at September 30, 2017 as compared to September 24, 2016. Included in Other accrued liabilities is $1.6 million in deferred compensation from equity awards which are classified as Liability Awards.