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Financial Instruments | 12 Months Ended
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Dec. 28, 2024
Investments, All Other Investments [Abstract] |
Financial Instruments | 5. Financial Instruments Fair Value Measurements Financial instruments are categorized as Level 1, Level 2 or Level 3 based upon the method by which their fair value is computed. An investment is categorized as Level 1 when its fair value is based on unadjusted quoted prices in active markets for identical assets that the Company has the ability to access at the measurement date. An investment is categorized as Level 2 if its fair market value is based on quoted market prices for similar assets in active markets, quoted prices for identical or similar assets in markets that are not active, based on observable inputs such as interest rates, yield curves, or derived from or corroborated by observable market data by correlation or other means. The Company’s Level 2 investments are based on a yield to maturity models and market interest rates. An investment is categorized as Level 3 if its fair value is based on unobservable inputs for the asset. The following table details the recurring fair value measurements of the Company’s financial assets: Schedule of Fair Value Measurements of Financial Assets
|  | Total |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |
|  |  |  |  | Fair Value Measurement at December 28, 2024 Using: |
|  | Total |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |
Cash equivalents |  | $ | 12,438,130 |  |  | $ | 11,592,842 |  |  | $ | 845,288 |  |  | $ | — |
U.S. Government and agency backed securities |  |  | 17,436,195 |  |  |  | 1,995,520 |  |  |  | 15,440,675 |  |  |  | — |
Certificates of deposit |  |  | 4,483,463 |  |  |  | — |  |  |  | 4,483,463 |  |  |  | — |
Equity Investments |  |  | 699,176 |  |  |  | 699,176 |  |  |  | — |  |  |  | — |
Financial instruments, owned, at fair value |  | $ | 35,056,964 |  |  | $ | 14,287,538 |  |  | $ | 20,769,426 |  |  | $ | — |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
|  | Total |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |
|  |  |  |  | Fair Value Measurement at December 30, 2023 Using: |
|  | Total |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |
Cash equivalents |  | $ | 5,079,605 |  |  | $ | 5,079,605 |  |  | $ | — |  |  | $ | — |
U.S. Government and agency backed securities |  |  | 4,474,375 |  |  |  | — |  |  |  | 4,474,375 |  |  |  | — |
Certificates of deposit |  |  | 7,717,625 |  |  |  | — |  |  |  | 7,717,625 |  |  |  | — |
Equity Investments |  |  | 4,688,522 |  |  |  | 174,178 |  |  |  | — |  |  |  | 4,514,344 |
Financial instruments, owned, at fair value |  | $ | 21,960,127 |  |  | $ | 5,253,783 |  |  | $ | 12,192,000 |  |  | $ | 4,514,344 |
The carrying amounts of cash and cash equivalents, restricted cash, accounts receivable, accounts payable and accrued liabilities approximate fair value because of their short-term nature. Marketable Securities The Company validates the fair market values of the financial instruments below by using a model that incorporates current interest rates and remaining term. The restricted cash balance at December 28, 2024 is invested in a certificate of deposit and money market funds. The restricted cash balance that is invested in a certificate of deposit is classified as a Corporate debt available-for-sale marketable security. Investments in available-for-sale marketable securities are as follows at December 28, 2024 and December 30, 2023: Schedule of Available-for-sale Marketable Debt Securities
|  | Amortized Cost |  | Unrealized Gain (Losses) |  | Fair Value
|  | 2024 |  | 2023 |  | 2024 |  | 2023 |  | 2024 |  | 2023
U.S. Government and agency backed securities |  | $ | 17,243,599 |  |  | $ | 4,500,030 |  |  | $ | 192,596 |  |  | $ | (25,655 | ) |  | $ | 17,436,195 |  |  | $ | 4,474,375 |
Corporate debt |  |  | 4,480,096 |  |  |  | 7,750,174 |  |  |  | 3,367 |  |  |  | (32,549 | ) |  |  | 4,483,463 |  |  |  | 7,717,625 |
Total |  | $ | 21,723,695 |  |  | $ | 12,250,204 |  |  | $ | 195,963 |  |  | $ | (58,204 | ) |  | $ | 21,919,658 |  |  | $ | 12,192,000 |
The contractual maturity of the Company’s marketable debt securities is as follows at December 28, 2024: Schedule of Contractual Maturity
|  | Less than One year |  |  | One to Five years |  |  | Total |
U.S. Government and agency backed securities |  | $ | 17,436,195 |  |  | $ | — |  |  | $ | 17,436,195 |
Corporate debt |  |  | 4,483,463 |  |  |  | — |  |  |  | 4,483,463 |
Equity Investments Equity investments rarely traded or not quoted will generally have less (or no) pricing observability and a higher degree of judgment utilized in measuring fair value. Initial measurement of equity investments occurs when an observable price for the equity investment is available. The Company adopted the measurement alternative for equity investments without readily determinable fair values, which is often referred to as cost method investments , adjusted for changes in observable market transaction. As a result, these investments are revalued upon occurrence of an observable price change for similar investments and for impairments. As of December 28, 2024 and December 28, 2023, the carrying value of these equity investments was $0.9 million and $4.5 million, respectively. On January 5, 2023, the Company entered into a Technology License Agreement and an Asset Purchase Agreement (the “LST Agreements”) with Lightning Silicon Technology, Inc. (“LST”). Pursuant to the LST Agreements, the Company issued a license to LST for certain technology associated with its organic light emitting technology, transferred in-process development contracts with two customers and accounts receivables that the Company had previously determined were not collectible. The technology license agreement provides for Kopin to transfer certain patents to LST if LST achieves certain milestones, however upon transfer Kopin will receive a license to the technology. To the extent LST makes improvements to the technology licensed from Kopin, Kopin will receive a license for these improvements for certain markets. Kopin is not obligated to provide any additional funding support to LST. As consideration for the transaction, the Company received 18,000,000 common shares representing a 20.0% equity stake in LST. The Company has recorded its investment in LST at $0 as of December 28, 2024 and December 30, 2023. The Company receives a royalty based on unit sales of products that utilize the technology licensed. Royalty received to date has been de minimis. Drs. John Fan, the Company’s former President and CEO and former Chairman of the Board, Boryeu Tsaur, a former Executive Vice President of the Company and Hong Choi, the Company’s former Chief Technology Officer terminated their employment with the Company and became investors in and members of the management team of LST. Dr. Fan is the Founder of LST. As a result of this transaction, in 2022 the Company wrote off the two operating lease assets associated with facilities used for the development of the Company’s organic light emitting diode (“OLED”) products. The Company has an equity interest in a Lenovo New Vision which it acquired through purchasing capital and contributing certain intellectual property totalling $3.9 million on December 25, 2021. In the third quarter of 2022, the Company reviewed the financial condition of its equity interest in the company and, as a result of valuing the investment through discounted cash flow and guideline public company methods, recorded an impairment charge of $2.0 million to reduce the value of its investment. The investment is denominated in Chinese Yuan and for the years ended December 28, 2024, December 30, 2023 and December 31, 2022, the Company recorded approximately $0, $0.2 million and $0.3 million of changes in investment value, respectively, due to a fluctuation in the foreign exchange rate. As of December 28, 2024, the Company owned an approximate 10% interest in this investment and the carrying value of this equity investment was $1.5 million at December 28, 2024 and December 30, 2023. In 2017 the Company received a warrant to acquire equity in RealWear Inc. (RealWear) as part of the licensing of technology to the customer. The Company exercised the warrant in 2018 and made additional investments. In the fourth quarter of 2019, the Company reviewed the financial condition and other factors of the customer and, as a result, the Company recorded an impairment charge to reduce its investment in the customer to $0. In the first quarter of 2022, RealWear 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 of $0.5 million. In the second quarter of 2023, the Company received shares valued at approximately $0.4 million as payment of royalties. In the second quarter of 2023, the Company reviewed the financial condition and an observable price point in an equity transaction, and as a result, the Company recorded an impairment charge of $3.1 million to reduce the value of the investment to $2.5 million. In the second quarter of 2024, the Company reviewed the financial condition and an observable price point in an equity transaction, and as a result, recorded impairment charges of $0.7 million. In the fourth quarter of 2024, RealWear entered into a merger agreement and based upon the information provided, in the third quarter of 2024, the Company recorded an impairment charge of $1.1 million, reducing the value of the investment to $0.7 million. In the fourth quarter of 2024 RealWear completed its merger, subject to post closing events. The Company performed a valuation of the investment based on the merger agreement, available financial statements and projections, assumptions on the post-closing events and the resulting dilution, and 100% volatility, a risk-free interest rate of 4.5% and an expected term of one year and recorded a write up in the RealWear investment of $0.2 million. As of December 28, 2024, the Company owns an approximate 1.8% interest in this investment and the investment is valued at $0.9 million. The valuation performed by the Company was categorized within level 3 in the fair value hierarchy in accordance with ASC 820. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) On September 30, 2019 the Company entered into an Asset Purchase Agreement (the “Solos Purchase Agreement”) pursuant to which the Company sold and licensed certain assets of the Company’s SolosTM (“Solos”) product line and WhisperTM Audio (“Whisper”) technology. As consideration for the transaction the Company received a 20.0% equity stake in Solos Incorporation (“Solos Inc.”). The Company’s 20.0% equity stake will be maintained until Solos Inc. has raised a total of $7.5 million in equity financing. The Company receives a royalty in the single digits on the net sales amount of Solos products for a three-year period, after the commencement of commercial production. The Company has performed the analysis and identified Solos Technology as a variable interest entity that should not be consolidated by Kopin, as Kopin is not the primary beneficiary of the entity. Kopin is not obligated to provide any additional funding support to Solos, and its potential loss exposure is the value of the investment recorded on its books. Based on the price paid for equity by the other 80.0% owners of Solos, volatility based on a peer group and assumptions about the risk-free interest rate, the Company estimated the fair value of its equity holdings at $0.6 million and in 2019 recorded a $0.6 million gain on its investment for this equity transaction as the basis of assets transferred was zero. In the second quarter of 2023, the Company reviewed the financial condition and other factors of the customer and, as a result, the Company recorded an impairment charge of $0.2 million to reduce its investment in the customer to $0.2 million. The investment balance is $0.2 million as of December 28, 2024.

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- Definition The entire disclosure for financial instruments. This disclosure includes, but is not limited to, fair value measurements of short and long term marketable securities, international currencies forward contracts, and auction rate securities. Financial instruments may include hedging and non-hedging currency exchange instruments, derivatives, securitizations and securities available for sale at fair value. Also included are investment results, realized and unrealized gains and losses as well as impairments and risk management disclosures. + References No definition available. + Details
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