Stockholders’ Equity and Stock-Based Compensation

12 Months Ended

Dec. 26, 2020

Equity [Abstract]

Stockholders’ Equity and Stock-Based Compensation

8. Stockholders’ Equity and Stock-Based Compensation

Sale of Treasury Stock:

During the three months and year ended December 26, 2020, the Company sold 1,949,101 shares of its common stock for approximately $3.8 million, net of offering expenses, through the sale of shares under its At The Market Offering Agreement, dated December 14, 2018. Commissions paid were approximately $120,000. The Company intends to use the net proceeds from sales made under the ATM offering for working capital and other general corporate purposes.

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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Restricted Stock Awards

In 2020, the Company adopted a 2020 Equity Incentive Plan (“2020 Equity Plan”) which authorized the issuance of shares of common stock to employees, non-employees, and the Board. The 2020 Equity Plan was a successor to the Company’s 2010 Equity Incentive Plan (“2010 Equity Plan”). The number of shares authorized under the 2020 Equity Plan was 4,000,000 shares of Company Stock. In addition, shares of the Company Stock underlying any outstanding award granted under the 2010 Equity Plan that expires, or is terminated, surrendered or forfeited for any reason without issuance of such shares shall be available for the award of new Grants under this Plan. As of December 26, 2020, the Company has approximately 2.4 million shares of common stock authorized and available for issuance under the Company’s 2020 Equity Plan.

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 periods ranging from one to five 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 30, 2017		2,629,274		$	3.31
Granted		1,549,000			2.25
Forfeited		(872,025	)		3.78
Vested		(1,093,000	)		3.05
Outstanding 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
Granted		2,381,000			1.42
Forfeited		(153,595	)		1.71
Vested		(1,038,655	)		0.96
Balance at December 26, 2020		3,051,874		$	1.67

On December 31, 2020 (fiscal year beginning 2021), the Company amended the employment agreement with our CEO Dr. John Fan to expire on December 24, 2022 and as part of the amendment issued five tranches of 188,000 shares of restricted stock grants. The grants will vest upon the achievement of the Company’s stock price reaching certain levels for 20 consecutive trading day period following the grant date. The Company used a Monte Carlo model to determine the estimated fair value of the awards. Total compensation expense resulting from the awards is approximately $2.1 million. The Company’s stock price met the required levels in the first quarter of fiscal year 2021 and the total stock compensation expense was recognized in the first quarter of fiscal year 2021. All of the grants are subject to certain acceleration events and terminate on December 24, 2022. The following table describes inputs used to calculate fair value of the restricted stock grants:

Expected volatility	94.2	%
Interest rate	0.2	%
Expected life (years)	0.7
Dividend yield	—	%

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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 2020, 2019 and 2018 (no tax benefits were recognized):

	2020		2019		2018
Cost of product revenues	$	113,517	$	102,629	$	418,605
Research and development		204,599		295,872		725,112
Selling, general and administrative		503,006		1,658,899		3,647,337
Total	$	821,122	$	2,057,400	$	4,791,054

Unrecognized compensation expense for non-vested restricted common stock as of December 26, 2020 totaled $2.0 million and is expected to be recognized over a weighted average period of approximately four years.