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Related Party Transactions
 12 Months Ended
Dec. 31, 2022
Related Party Transactions [Abstract]  
Related Party Transactions

14. Related Party Transactions

 

The Company may from time to time enter into agreements with shareholders, 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 in order to enhance its product offering.

 

The Company and Goertek have entered into agreements to jointly develop and commercialize a range of technologies and wearable products and other agreements related to promotion around certain products as well as providing designs relating to head-mounted displays.

 

The Company and RealWear, Inc. (“RealWear”) have entered into agreements where the Company has agreed to supply display modules to RealWear, and license certain intellectual property to RealWear. In conjunction with these agreements the Company received an equity interest in RealWear, one-time $1.5 million license fees and will receive royalties of future product sales. In May 2019, the Company signed an additional agreement to license certain intellectual property to Realwear for a $3.5 million license fee and additional sales-based royalties. Of the $3.5 million license fee, $2.5 million was paid upon signing of the license agreement and the other $1.0 million was paid in quarterly installments of $0.25 million. Additionally, in the second quarter of 2019, the Company made an additional equity investment in RealWear of $2.5 million as part of an equity raise by RealWear. In the fourth quarter of 2019, Kopin reviewed the financial condition and other factors of RealWear and as a result, in the fourth quarter of 2019, recorded an impairment charge of $5.2 million to reduce its investment in RealWear to zero as of December 28, 2029. 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 in RealWear of $0.5 million. As of December 31, 2022, the Company owned approximately 2.3% of RealWear.

 

On September 30, 2019, the Company entered into an Asset Purchase Agreement (the “Solos Purchase Agreement”) with Solos Technology Limited (“Solos Technology”). Pursuant to the Solos Purchase Agreement, the Company sold and licensed to Solos Technology certain assets of our SolosTM (“Solos”) product line and WhisperTM Audio (“Whisper”) technology. As consideration for the transaction the Company received 1,172,000 common shares representing a 20.0% equity stake in Solos Technology’s parent company, Solos Incorporation (“Solos Inc.”). In addition, the Company has agreed to reimburse Solos Technology for sales support provided. Solos Technology has agreed to reimburse the Company for the employee’s time spent on Solos development. As of December 31, 2022, and December 25, 2021, the Company had less than $10,000 of receivables outstanding from Solos Technology and had payables of less than $10,000 to Solos Technology.

 

The Company has warrants to purchase shares of Preferred Stock of HMDmd. The fair value of the investment was determined to be $300,000 as of December 31, 2022.

 

As of December 31, 2022, the Company’s Chairman, Dr. John C.C. Fan, has an individual ownership interest of 11.1% (10.1% fully diluted) of Solos Inc. Two of Dr. Fan’s family members and a family trust have also invested in Solos Inc., and collectively hold a 37.5% (34.4% fully diluted) ownership interest in Solos Inc.

 

During fiscal years 2022, 2021 and 2020, the Company had the following revenue with related parties:

 

   2022   2021   2020 
RealWear, Inc.  $

1,191,988

   $3,762,638   $2,678,335 
HMDmd, Inc.   473,294    656,805    — 
Revenue with related parties  $1,665,282   $4,419,443   $2,678,335 

 

At December 31, 2022 and December 25, 2021, the Company had the following receivables with related parties:

 

   December 31, 2022   December 25, 2021 
RealWear, Inc.  $171,518   $306,307 
Solos Technology   2,248    8,422 
HMDmd, Inc.   151,340    — 
Receivables with related parties  $325,106   $314,729