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 represented 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. At completion of the transaction, the U.S. Government requested certain information regarding the transaction for the Committee on Foreign Investment. See Note 17. Related Party Transactions for additional discussion around agreements with Goertek.

On December 31, 2017 (fiscal year beginning 2018), the Company amended the employment agreement with our CEO Dr. John Fan to expire on December 31, 2020 and as part of the amendment issued restricted stock grants. 640,000 shares of restricted stock which will vest upon the first 20 consecutive trading day period following the grant date during which the Company's common stock trades at a price equal to or greater than $5.25, 150,000 shares of restricted stock will vest at the end of the first 20 consecutive trading day period following the grant date during which the Company’s common stock trades at a price per share equal to or greater than $6.00, and 150,000 shares of restricted common stock will vest at the end of the first 20 consecutive trading day period following the grant date during which the Company’s common stock trades at a price per share equal to or greater than $7.00. All of the grants are subject to certain acceleration events and terminate on December 31, 2020.

Restricted Stock Awards

In 2010, the Company adopted a 2010 Equity Incentive Plan (the 2010 Equity Plan) which authorized the issuance of shares of common stock to employees, non-employees, and the Board. The 2010 Equity Plan was a successor to the Company’s 2001 Equity Incentive Plan ("2001 Equity Plan") and has been subsequently amended to increase the number of authorized shares to 13,100,000 as of December 30, 2017. The number of shares authorized under the 2010 Equity Plan is the number of shares approved by the shareholders plus the number of shares of common stock which were available for grant under the 2001 Equity Plan, the number of shares of common stock which were the subject of awards outstanding under the 2001 Equity Plan and are forfeited, terminated, canceled or expire after the adoption of the 2010 Equity Plan and the number of shares of common stock delivered to the Company either in exercise of an 2001 Equity Plan award or in satisfaction of a tax withholding obligation. The term and vesting period for restricted stock awards granted under the 2010 Equity Plan are determined by the Board’s compensation committee.

As of December 30, 2017, the Company has approximately 1.3 million shares of common stock authorized and available for issuance under the Company’s 2010 Equity Plan.

The Company has issued shares of nonvested restricted common stock to certain employees. Each award requires 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 meeting performance criteria. Restricted stock activity was as follows:



	Shares		Weighted Average Grant Fair Value
Outstanding at December 27, 2014	2,551,631		$	3.75
Granted	1,255,696		3.77
Forfeited	(388,320	)	3.64
Vested	(1,226,991	)	3.68
Outstanding at December 26, 2015	2,192,016		3.82
Granted	1,663,000		2.40
Forfeited	(110,500	)	3.21
Vested	(736,842	)	3.17
Balance at December 31, 2016	3,007,674		3.21
Granted	1,152,000		3.40
Forfeited	(465,150	)	3.82
Vested	(1,065,250	)	2.90
Balance at December 30, 2017	2,629,274		$	3.31

The forfeitures in 2017 were primarily due to fact that the performance criteria related to these awards were not achieved.

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 fiscal years 2017, 2016 and 2015 (no tax benefits were recognized):



	2017		2016		2015
Cost of product revenues	$	490,481	$	561,791	$	729,715
Research and development	799,485		527,081		776,946
Selling, general and administrative	1,006,165		1,336,454		1,638,818
Total	$	2,296,131	$	2,425,326	$	3,145,479

Unrecognized compensation expense for non-vested restricted common stock as of December 30, 2017 totaled $6.0 million and is expected to be recognized over a weighted average period of approximately two years.