Stockholders' Equity and Stock-Based Compensation

12 Months Ended

Dec. 28, 2019

Share-based Payment Arrangement [Abstract]

Stockholders' Equity and Stock-Based Compensation

Stockholders’ Equity and Stock-Based Compensation

Registered Sale of Equity Securities

On March 15, 2019, the Company sold 7.3 million shares of registered common stock for gross proceeds of $8.0 million ($1.10 per share), before deducting underwriting discounts and offering expenses paid by the Company of $0.7 million. This represented approximately 8.9% of Kopin's total outstanding shares of common stock as of the date of purchase. The net proceeds from the offering were used for general corporate purposes, including working capital. On April 10, 2019, the Company sold 0.7 million shares of registered common stock for gross proceeds of $0.8 million ($1.10 per share), before deducting underwriting discounts and offering expenses paid by the Company of less than $0.1 million, pursuant to the partial exercise of the underwriters' overallotment option in connection with its March 15, 2019 public offering. This represented approximately 0.8% of Kopin's total outstanding shares of common stock as of the date of purchase.

Sale of Unregistered Common Stock

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. The transaction was accounted for under 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 17. Related Party Transactions for additional discussion around agreements with Goertek.

Restricted Stock Awards

In 2010, the Company adopted a 2010 Equity Incentive Plan ("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 14,100,000 as of December 28, 2019. 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 28, 2019, the Company has approximately 1.4 million shares of common stock authorized and available for issuance under the Company’s 2010 Equity Plan of which 0.5 million shares are committed to be issued for 2020 incentive program.

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.



	Shares		Weighted Average Grant Fair Value
Outstanding 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
Outstanding at December 30, 2017	2,629,274		3.31
Granted	1,549,000		2.25
Forfeited	(872,025	)	3.78
Vested	(1,093,000	)	3.05
Balance at December 29, 2018	2,213,249		2.51
Granted	645,000		0.57
Forfeited	(355,625	)	2.95
Vested	(639,500	)	2.98
Balance at December 28, 2019	1,863,124		$	1.60

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. The following table describes inputs used to calculate fair value of the restricted stock grants:



	For the period ended December 29, 2018
Performance price target	$	5.25		$	6.00		$	7.00
Expected volatility	48.3		%	48.3		%	48.3		%
Interest rate	1.97		%	1.97		%	1.97		%
Expected life (years)	2			2			2
Dividend yield	—		%	—		%	—		%

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 2019, 2018 and 2017 (no tax benefits were recognized):



	2019		2018		2017
Cost of product revenues	$	102,629	$	418,605	$	490,481
Research and development	295,872		725,112		799,485
Selling, general and administrative	1,658,899		3,647,337		1,006,165
Total	$	2,057,400	$	4,791,054	$	2,296,131

Unrecognized compensation expense for non-vested restricted common stock as of December 28, 2019 totaled $0.9 million and is expected to be recognized over a weighted average period of approximately two years.