Document and Entity Information

9 Months Ended

Sep. 24, 2016

Nov. 4, 2016

Document Documentand Entity Information [Abstract]

Document Type

10-Q

Amendment Flag

false

Document Period End Date

Sep. 24, 2016

Document Fiscal Year Focus

2016

Document Fiscal Period Focus

Q3

Trading Symbol

KOPN

Entity Registrant Name

KOPIN CORP

Entity Central Index Key

0000771266

Current Fiscal Year End Date

--12-31

Entity Filer Category

Accelerated Filer

Entity Common Stock, Shares Outstanding

66,740,502

CONDENSED CONSOLIDATED BALANCE SHEETS (USD $)

Sep. 24, 2016

Dec. 26, 2015

Current assets:

Cash and equivalents

$ 20,998,402

$ 19,767,889

Marketable debt securities, at fair value

63,034,380

60,942,891

Accounts receivable, net of allowance of $153,000 in 2016 and 2015, respectively

1,666,306

1,487,633

Unbilled receivables

94,970

87,340

Inventory

3,197,984

2,512,473

Prepaid taxes

94,623

437,586

Prepaid expenses and other current assets

986,126

920,410

Note receivable

0

15,000,000

Total current assets

90,072,791

101,156,222

Property, plant and equipment, net

2,936,621

2,677,103

Goodwill

869,984

946,082

Other assets

618,563

461,416

Real Estate Held-for-sale

0

819,263

Total assets

94,497,959

106,060,086

Current liabilities:

Accounts payable

3,888,707

3,959,704

Accrued payroll and expenses

1,815,618

1,631,292

Accrued warranty

518,000

Billings in excess of revenue earned

1,274,826

1,407,566

Other accrued liabilities

3,152,649

2,553,282

Deferred tax liabilities

2,547,717

1,207,000

Deferred tax liabilities

13,197,517

11,276,844

Asset retirement obligations

259,404

298,463

Commitments and contingencies

Stockholders' equity:

Preferred stock, par value $.01 per share: authorized, 3,000 shares; none issued

0

Common stock, par value $.01 per share: authorized, 120,000,000 shares; issued 78,842,759 shares in 2016 and 78,271,659 shares in 2015; outstanding 64,047,985 shares in 2016 and 63,977,385 shares in 2015

761,502

760,796

Additional paid-in capital

328,339,749

326,558,527

Treasury stock (12,102,258 shares in 2016 and 2015, respectively, at cost)

(42,741,551)

Accumulated other comprehensive income

3,307,825

771,774

Accumulated deficit

(208,852,911)

(190,608,671)

Total Kopin Corporation stockholders’ equity

80,814,614

94,740,875

Noncontrolling interest

226,424

(256,096)

Total stockholders’ equity

81,041,038

94,484,779

Total liabilities and stockholders’ equity

$ 94,497,959

$ 106,060,086

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)

Sep. 24, 2016

Dec. 26, 2015

Statement of Financial Position [Abstract]

Accounts receivable, allowance

$ 153,000

Preferred stock, par value

$ 0.01

Preferred stock, authorized

3,000

Preferred stock, issued

0

Common stock, par value

$ 0.01

Common stock, authorized

120,000,000

Common stock, issued

78,842,759

78,271,659

Common stock, outstanding

64,047,985

63,977,385

Treasury stock, shares

12,102,258

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (USD $)

3 Months Ended

9 Months Ended

Sep. 24, 2016

Sep. 26, 2015

Sep. 24, 2016

Sep. 26, 2015

Revenues:

Net product revenues

$ 5,522,584

$ 7,119,145

$ 15,597,247

$ 23,734,238

Research and development revenues

272,222

881,781

671,972

3,708,286

Total revenues

5,794,806

8,000,926

16,269,219

27,442,524

Expenses:

Cost of product revenues

4,573,581

5,357,217

13,856,469

17,000,729

Research and development

4,123,268

4,008,391

12,282,620

13,752,593

Selling, general and administration

3,980,605

4,558,609

12,023,717

14,053,050

Gain (Loss) on Disposition of Property Plant Equipment

0

(7,700,522)

0

Total expenses

12,677,454

13,924,217

30,462,284

44,806,372

Loss from operations

(6,882,648)

(5,923,291)

(14,193,065)

(17,363,848)

Other income and expense:

Interest income

191,472

175,803

532,185

584,364

Other (expense) income, net

(257,384)

42,137

(415,758)

87,404

Foreign currency transaction (losses) gains

(1,124,526)

623,999

(1,581,962)

973,548

Unusual or Infrequent Item, or Both, Net (Gain) Loss

(47,000)

Gain on sale of investments

0

357,202

0

7,960,022

Total other income and expense

(1,190,438)

1,199,141

(1,465,535)

9,605,338

Loss before (provision) benefit for income taxes, equity loss in unconsolidated affiliate and net (income) loss attributable to noncontrolling interest

(8,073,086)

(4,724,150)

(15,658,600)

(7,758,510)

Tax (provision) benefit

(114,000)

62,500

(2,218,000)

37,500

Loss before equity loss in unconsolidated affiliate and net loss (income) attributable to noncontrolling interest

(8,187,086)

(4,661,650)

(17,876,600)

(7,721,010)

Equity loss in unconsolidated affiliate

0

(47,443)

Net loss

(8,187,086)

(4,661,650)

(17,876,600)

(7,768,453)

Net loss (income) attributable to the noncontrolling interest

69,782

(13,690)

(367,640)

36,094

Net loss attributable to the controlling interest

$ (8,117,304)

$ (4,675,340)

$ (18,244,240)

$ (7,732,359)

Net (loss) income per share

Earnings Per Share, Basic

$ (0.13)

$ (0.07)

$ (0.29)

$ (0.12)

Earnings Per Share, Diluted

$ (0.13)

$ (0.07)

$ (0.29)

$ (0.12)

Weighted average number of common shares

Weighted average common shares outstanding, basic

64,047,852

63,068,321

64,012,490

63,072,668

Weighted average common shares outstanding, diluted

64,047,852

63,068,321

64,012,490

63,072,668

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (USD $)

3 Months Ended

9 Months Ended

Sep. 24, 2016

Sep. 26, 2015

Sep. 24, 2016

Sep. 26, 2015

Statement of Comprehensive Income [Abstract]

Net loss

$ (8,187,086)

$ (4,661,650)

$ (17,876,600)

$ (7,768,453)

Foreign currency translation adjustments

1,718,596

(886,963)

2,362,552

(1,442,185)

Holding (loss) gain on marketable securities

(73,443)

(416,768)

336,663

908,756

Reclassifications of gains in net (loss) income

(14,092)

(422,489)

(48,284)

(821,835)

Other Comprehensive Income (Loss), Net of Tax

1,631,061

(1,726,220)

2,650,931

(1,355,264)

Comprehensive (loss) income

(6,556,025)

(6,387,870)

(15,225,669)

(9,123,717)

Comprehensive loss (income) attributable to the noncontrolling interest

(19,656)

95,056

(482,520)

76,330

Comprehensive (loss) income attributable to controlling interest

$ (6,575,681)

$ (6,292,814)

$ (15,708,189)

$ (9,047,387)

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (USD $)

Total

Common Stock

Additional Paid-in Capital

Treasury Stock

Accumulated Other Comprehensive Income

Accumulated Deficit

Noncontrolling Interest

Stockholders' Equity, Total [Member]

Beginning Balance at Dec. 26, 2015

$ 94,484,779

$ 760,796

$ 326,558,527

$ (42,741,551)

$ 771,774

$ (190,608,671)

$ (256,096)

$ 94,740,875

Beginning Balance (in shares) at Dec. 26, 2015

76,079,643

Stock-based compensation

1,791,081

Adjustments To Additional Paid In Capital Other Shares

75,000

Adjustments to Additional Paid in Capital, Other

750

(750)

Other Comprehensive Income (Loss), Unrealized Holding Gain (Loss) on Securities Arising During Period, Net of Tax

2,650,931

2,536,051

114,880

2,536,051

Shares Paid for Tax Withholding for Share Based Compensation

(4,400)

Settlements of restricted stock for tax withholding obligations

(9,153)

(44)

(9,109)

(9,153)

Net loss

(17,876,600)

(18,244,240)

367,640

(18,244,240)

Ending Balance at Sep. 24, 2016

$ 81,041,038

$ 761,502

$ 328,339,749

$ (42,741,551)

$ 3,307,825

$ (208,852,911)

$ 226,424

$ 80,814,614

Ending Balance (in shares) at Sep. 24, 2016

76,150,243

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)

9 Months Ended

Sep. 24, 2016

Sep. 26, 2015

Cash flows from operating activities:

Net loss

$ (17,876,600)

$ (7,768,453)

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

Depreciation and amortization

949,854

1,860,300

Accretion (amortization) of premium or discount on marketable debt securities

104,282

291,252

Stock-based compensation

1,479,481

2,786,494

Foreign currency losses (gains)

1,715,901

(1,012,904)

Provision for Doubtful Accounts

0

74,500

Deferred Income Tax Expense (Benefit)

1,192,128

(75,000)

Gain (Loss) on Disposition of Property Plant Equipment

(7,700,522)

0

Gain on sale of investments

0

(7,960,022)

Adjustments, Noncash Items, to Reconcile Net Income (Loss) to Cash Provided by (Used in) Operating Activities

503,115

1,405,369

Changes in assets and liabilities:

Accounts receivable

(524,084)

1,398,155

Inventory

(1,231,705)

88,853

Increase (Decrease) in Prepaid Expense and Other Assets

(213,028)

(71,409)

Accounts payable and accrued expenses

1,271,171

(2,349,429)

Billings in excess of revenue earned

(132,740)

1,048,675

Net cash used in operating activities

(20,036,691)

(10,140,801)

Cash flows from investing activities:

Other assets

(7,801)

17,063

Capital expenditures

(329,414)

(993,299)

Proceeds from sale of marketable debt securities

43,836,978

18,483,666

Purchase of marketable debt securities

(45,905,075)

(14,465,311)

Proceeds from sale of investments

0

7,960,022

Proceeds from Sale of Buildings

8,106,819

0

Proceeds from Divestiture of Businesses

15,000,000

0

Net cash provided by investing activities

20,701,507

11,002,141

Net cash used in financing activities

Proceeds from Stock Options Exercised

0

86,047

Settlements of restricted stock for tax withholding obligations

(9,153)

(459,609)

Net cash used in financing activities

(9,153)

(373,562)

Effect of exchange rate changes on cash

574,850

(146,096)

Net increase in cash and equivalents

1,230,513

341,682

Cash and equivalents:

Beginning of period

19,767,889

14,635,801

End of period

20,998,402

Supplemental disclosure of cash flow information:

Income taxes paid

366,000

57,000

Supplemental schedule of noncash investing activities:

Construction in progress included in accrued expenses

0

Non cash proceeds from exercise of warrants

$ 0

$ 1,330,000,000

BASIS OF PRESENTATION

Basis of Accounting [Text Block]

BASIS OF PRESENTATION

The condensed consolidated financial statements of Kopin Corporation (the Company) as of September 24, 2016 and for the three and nine months ended September 24, 2016 and September 26, 2015 are unaudited and include all adjustments which, in the opinion of management, are necessary to present fairly the results of operations for the periods then ended. These condensed consolidated financial statements should be read in conjunction with the Company’s financial statements and notes thereto, included in the Company’s Annual Report on Form 10-K for the year ended December 26, 2015. The results of the Company's operations for any interim period are not necessarily indicative of the results of the Company's operations for any other interim period or for a full fiscal year.

In June 2016, the Company’s subsidiary Kowon sold its plant and the land on which the plant resided for 9.5 billion KRW (approximately $8.1 million on the closing date). Kowon had ceased its production activities at the facility in 2013. The plant and land had a cost basis of approximately $0.4 million. Accordingly, the Company recorded a gain on the sale of the plant and land of $7.7 million.

Recently Issued Accounting Pronouncements

Revenue from Contracts with Customers

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606). This new standard outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. In addition, ASU 2014-09 provides guidance on accounting for certain revenue-related costs including, but not limited to, when to capitalize costs associated with obtaining and fulfilling a contract. The standard also requires certain new disclosures. The standard was effective for annual and interim reporting periods beginning after December 15, 2016.

In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers. The amendments in this ASU defer the effective date of ASU 2014-09. Public companies should apply the guidance in ASU 2014-09 to annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Early adoption is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company is currently evaluating the expected impact of this new guidance on its consolidated financial statements and available adoption methods.

Leases

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). This new standard requires lessees to recognize a lease liability and a right-of-use asset on the balance sheet and aligns many of the underlying principles of the new lessor model with those in Topic 606, Revenue from Contracts with Customers. Lessees (for capital and operating leases) and lessors (for sales-type, direct financing, and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. Lessees and lessors may not apply a full retrospective transition approach.The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted for all public business entities and all nonpublic business entities. The Company is currently evaluating the expected impact of this new guidance on its consolidated financial statements and available adoption methods.

Compensation-Stock Compensation

In March 2016, the FASB issued ASU No. 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. This guidance is intended to simplify the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. The amendments in this update are effective for financial statements issued for annual periods beginning after December 15, 2016, including interim periods within those annual periods, and early application is permitted as of the beginning of an interim or annual reporting period. The Company is currently evaluating the expected impact of this new guidance on its consolidated financial statements and available adoption methods.

Statement of Comprehensive Income

During the nine months ended September 24, 2016, the change in the Company's accumulated other comprehensive income was net of $2.4 million foreign currency translation adjustments and $0.3 million unrealized holding gains on marketable securities.

CASH AND EQUIVALENTS AND MARKETABLE SECURITIES

The Company considers all highly liquid, short-term debt instruments with original maturities of three months or less to be cash equivalents.

Marketable debt securities consist primarily of certificates of deposit, medium-term corporate debt, and U.S. government and agency backed securities. The Company classifies these marketable debt securities as available-for-sale in “Marketable Debt Securities.” The Company records the amortization of premium and accretion of discount on marketable debt securities in the results of operations.

The Company uses the specific identification method as a basis for determining cost and calculating realized gains and losses with respect to marketable debt securities. The gross gains and losses realized related to sales and maturities of marketable debt securities were not material during the three and nine months ended September 24, 2016 and the year ended December 26, 2015.

Investments in available-for-sale marketable debt securities are as follows at September 24, 2016 and December 26, 2015:



	Amortized Cost				Unrealized Gains				Unrealized Losses						Fair Value
	2016		2015		2016		2015		2016			2015			2016		2015
U.S. government and agency backed securities	$	42,366,974	$	46,586,224	$	71,208	$	—	$	—		$	(121,561	)	$	42,438,182	$	46,464,663
Corporate debt and certificates of deposit	20,654,599		14,534,247		—		—		(58,401		)	(56,019		)	20,596,198		14,478,228
Total	$	63,021,573	$	61,120,471	$	71,208	$	—	$	(58,401	)	$	(177,580	)	$	63,034,380	$	60,942,891

The contractual maturity of the Company’s marketable debt securities is as follows at September 24, 2016:



	Less than One year		One to Five years		Greater than Five years		Total
U.S. government and agency backed securities	$	16,904,660	$	18,479,622	$	7,053,900	$	42,438,182
Corporate debt and certificates of deposit	16,491,826		4,104,372		—		20,596,198
Total	$	33,396,486	$	22,583,994	$	7,053,900	$	63,034,380

The Company conducts a review of its marketable debt securities on a quarterly basis for the presence of other-than-temporary impairment (OTTI). The Company assesses whether OTTI is present when the fair value of a debt security is less than its amortized cost basis at the balance sheet date. Under these circumstances OTTI is considered to have occurred (1) if the Company intends to sell the security before recovery of its amortized cost basis; (2) if it is “more likely than not” the Company will be required to sell the security before recovery of its amortized cost basis; or (3) the present value of expected cash flows is not sufficient to recover the entire amortized cost basis.

The Company further estimates the amount of OTTI resulting from a decline in the creditworthiness of the issuer (credit-related OTTI) and the amount of non credit-related OTTI. Non credit-related OTTI can be caused by such factors as market illiquidity. Credit-related OTTI is recognized in earnings while non credit-related OTTI on securities not expected to be sold is recognized in other comprehensive income (loss). The Company did not record an OTTI for the three and nine months ended September 24, 2016 and September 26, 2015.

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. An investment is categorized as Level 3 if its fair value is based on assumptions developed by the Company about what a market participant would use in pricing the assets.

The following table details the fair value measurements of the Company’s financial assets:



			Fair Value Measurement September 24, 2016 Using:
	Total		Level 1		Level 2		Level 3
Cash and Equivalents	$	20,998,402	$	20,998,402	$	—	$	—
U.S. Government Securities	42,438,182		11,643,390		30,794,792		—
Corporate Debt	8,491,436		—		8,491,436		—
Certificates of Deposit	12,104,762		—		12,104,762		—
GCS Holdings	329,767		329,767		—		—
	$	84,362,549	$	32,971,559	$	51,390,990	$	—


			Fair Value Measurement December 26, 2015 Using:
	Total		Level 1		Level 2		Level 3
Cash and Equivalents	$	19,767,889	$	19,767,889	$	—	$	—
U.S. Government Securities	46,464,663		16,381,152		30,083,511		—
Corporate Debt	6,886,495		—		6,886,495		—
Certificates of Deposit	7,591,733		—		7,591,733		—
GCS Holdings	232,037		232,037		—		—
	$	80,942,817	$	36,381,078	$	44,561,739	$	—

The corporate debt consists of floating rate notes with a maturity that is over multiple years but has interest rates which are reset every three months based on the then-current three month London Interbank Offering Rate (three month Libor). The Company validates the fair market values of the financial instruments above by using discounted cash flow models, obtaining independent pricing of the securities or through the use of a model which incorporates the three month Libor, the credit default swap rate of the issuer and the bid and ask price spread of the same or similar investments which are traded on several markets.

The carrying amounts of cash and equivalents, accounts receivable, accounts payable and accrued liabilities approximate fair value because of their short-term nature. If accrued liabilities were carried at fair value, these would be classified as Level 2 in the fair value hierarchy.

INVENTORY

Inventory

INVENTORY

Inventory is stated at the lower of cost (determined on the first-in, first-out) or market and consists of the following at September 24, 2016 and December 26, 2015:



	September 24, 2016		December 26, 2015
Raw materials	$	1,786,401	$	844,475
Work-in-process	1,242,020		1,281,891
Finished goods	169,563		386,107
	$	3,197,984	$	2,512,473

NET (LOSS) INCOME PER SHARE

Net (loss) Income per share

NET LOSS PER SHARE

Basic net loss per share is computed using the weighted average number of shares of common stock outstanding during the period less any non-vested restricted shares. Diluted earnings per common share, if applicable, is calculated using weighted average shares outstanding and contingently issuable shares, less weighted average shares reacquired during the period. The net outstanding shares are adjusted for the dilutive effect of shares issuable upon the assumed conversion of the Company’s common stock equivalents, which consist of outstanding stock options and non-vested restricted stock units.

Weighted average common shares outstanding used to calculate basic and diluted earnings per share are as follows:



	Three Months Ended		Nine Months Ended
	September 24, 2016	September 26, 2015	September 24, 2016	September 26, 2015
Weighted average common shares outstanding-basic	64,047,852	63,068,321	64,012,490	63,072,668
Stock options and non-vested restricted common stock	—	—	—	—
Weighted average common shares outstanding-diluted	64,047,852	63,068,321	64,012,490	63,072,668

The following were not included in weighted average common shares outstanding-diluted because they are anti-dilutive or performance or market conditions had not been met at the end of the period:



	Three Months Ended		Nine Months Ended
	September 24, 2016	September 26, 2015	September 24, 2016	September 26, 2015
Non-vested restricted common stock	2,692,516	2,924,811	2,692,516	2,924,811

STOCK-BASED COMPENSATION

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 which 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 which 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. The Company recognizes compensation costs on a straight-line basis over the requisite service period for time-vested awards.

Non-Vested Restricted Common Stock



	Shares		Weighted Average Grant Fair Value
Balance, December 26, 2015	2,192,016		$	3.82
Granted	634,500		1.88
Forfeited	(59,000	)	3.14
Vested	(75,000	)	3.60
Balance, September 24, 2016	2,692,516		$	3.38

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 nine months ended September 24, 2016 and September 26, 2015 (no tax benefits were recognized):



	Nine Months Ended
	September 24, 2016		September 26, 2015
Cost of component revenues	$	426,357	$	620,494
Research and development	378,156		669,605
Selling, general and administrative	674,968		1,496,395
Total	$	1,479,481	$	2,786,494

Unrecognized compensation expense for non-vested restricted common stock as of September 24, 2016 totaled $3.8 million and is expected to be recognized over a weighted average period of approximately two years.

OTHER ASSETS AND AMOUNTS DUE TO / FROM AFFILIATES

OTHER ASSETS AND NOTE RECEIVABLE

In January 2016, the Company received the final $15.0 million payment resulting from the sale of its III-V product line and its investment in KTC.

On February 25, 2015, the Company acquired approximately 251,000 shares of Vuzix Corporation (Vuzix) common stock through a cashless exercise of warrants. The Company received the warrants in August 2013 as part of a restructuring of debt owed by Vuzix to the Company. Upon receipt of the warrants, the Company should have recorded the value of the warrant of approximately $352,000 in its consolidated financial statements. Subsequently, the Company should have marked to market the warrants at the end of each reporting period. Had the Company recorded the warrants in its consolidated financial statements and marked to market the warrants as of December 28, 2013 and December 27, 2014, the Company would have recorded gains in its statement of operations of approximately $646,000 and $171,000, respectively. In the first quarter of 2015, the Company recorded the warrants in its consolidated financial statements and as a result recorded a gain of approximately $1.3 million with $817,000 attributed to prior periods. The value of the warrants as of August 2013, December 28, 2013 and December 27, 2014 was determined using the Black-Scholes pricing model. The Company does not believe the unrecorded gains were material to the consolidated financial statements as the loss from operations for the fiscal years ended December 28, 2013 and December 27, 2014 were $35.9 million and $28.5 million, respectively.

GOODWILL AND INTANGIBLES (Notes)

Goodwill and Intangible Assets Disclosure [Text Block]


8.	GOODWILL

The Company’s goodwill balance is as follows:



Balance, December 26, 2015	$	946,082
Change due to exchange rate fluctuations	(76,098		)
Balance, September 24, 2016	$	869,984

ACCRUED WARRANTY

The Company typically warrants its products against defect for 12 months. A provision for estimated future costs and estimated returns for credit relating to such warranty is recorded in the period when product is shipped and revenue recognized, and is updated as additional information becomes available. The Company’s estimate of future costs to satisfy warranty obligations is based primarily on historical warranty expense experienced and a provision for potential future product failures. Changes in the accrued warranty for the nine months ended September 24, 2016 are as follows:



Balance, December 26, 2015	$	518,000
Additions	442,305
Claims	(442,305		)
Balance, September 24, 2016	$	518,000

INCOME TAXES

The Company’s tax provison of approximately $114,000 for the three months ended September 24, 2016 represents $14,000 of state income tax and $0.1 million of foreign income taxes including interest income on intercompany loan and net movement in estimated foreign withholding. The Company's tax provision of approximately $2.2 million for the nine months ended September 24, 2016 represents $1.0 million of income taxes on the gain on the sale of Kowon’s plant and land, $1.2 million of net movement in estimated foreign withholding on anticipated future remitted earnings of a foreign subsidiary, and $22,000 in state income taxes. The Company’s tax benefit of approximately $62,500 and $37,500 for the three and nine month periods ended September 26, 2015 represents the net movement in estimated foreign withholding on anticipated future remitted earnings of an international subsidiary and state taxes.

As of September 24, 2016, the Company has available for tax purposes U.S. federal NOLs of approximately $105 million expiring through 2035. The Company has recognized a full valuation allowance on its domestic and certain foreign net deferred tax assets due to the uncertainty of realization of such assets. The Company has not historically recorded, nor does it intend to record the tax benefits from stock awards until realized. Unrecorded benefits from stock awards approximate $10 million.

The Company’s income tax returns have not been examined by the Internal Revenue Service and are subject to examination for all years since 2001. State income tax returns are generally subject to examination for a period of 3 to 5 years after filing of the respective return. The state impact of any federal changes remains subject to examination by various states for a period of up to one year after formal notification to the states.

SEGMENTS AND GEOGRAPHICAL INFORMATION

The Company’s chief operating decision maker is its Chief Executive Officer. The Company has determined it has two reportable segments, FDD, the manufacturer of its reflective display products for test and simulation products, and Kopin, which is comprised of Kopin Corporation, Kowon, Kopin Software Ltd. and eMDT. The following table presents the Company’s reportable segment results (in thousands):



	Three Months Ended
	September 24, 2016									September 26, 2015
	Kopin			FDD			Total			Kopin			FDD			Total

Revenues	$	4,707		$	1,087		$	5,794		$	7,036		$	965		$	8,001
Net loss attributable to the controlling interest	(7,982		)	(216		)	(8,198		)	(4,029		)	(646		)	(4,675		)



	Nine Months Ended
	September 24, 2016									September 26, 2015
	Kopin			FDD			Total			Kopin			FDD			Total

Revenues	$	13,176		$	3,093		$	16,269		$	24,800		$	2,643		$	27,443
Net loss attributable to the controlling interest	(17,628		)	(616		)	(18,244		)	(6,548		)	(1,184		)	(7,732		)
Total assets	92,799			1,699			94,498			113,510			1,367			114,877
Long-lived assets	2,937			—			2,937			3,550			92			3,642

The total assets of Kopin are net of $6.2 million and $5.8 million in intercompany loans to FDD as of September 24, 2016 and September 26, 2015, respectively.

During the three and nine month periods ended September 24, 2016 and September 26, 2015, the Company derived its sales from the following geographies (as a percentage of net revenues):



	Three Months Ended				Nine Months Ended
	September 24, 2016		September 26, 2015		September 24, 2016		September 26, 2015
United States	49	%	68	%	36	%	73	%
Others	—	%	—	%	—	%	1	%
Americas	49	%	68	%	36	%	74	%
Asia-Pacific	37	%	22	%	48	%	19	%
Europe	14	%	10	%	16	%	7	%
Total Revenues	100	%	100	%	100	%	100	%

LITIGATION

The Company may engage in legal proceedings arising in the ordinary course of business. Claims, suits, investigations and proceedings are inherently uncertain and it is not possible to predict the ultimate outcome of such matters and our business, financial condition, results of operations or cash flows could be affected in any particular period.

EMBEZZLEMENT (Notes)

Unusual or Infrequent Items, or Both, Disclosure [Text Block]


	EMBEZZLEMENT

During the third quarter of 2016, the Company discovered embezzlement activities at its Korean subsidiary. Based upon the results of forensic investigation procedures, we identified that the embezzlement activities occurred from fiscal year 2011 through fiscal year 2016. The embezzlement resulted in a total theft loss of $1,589,000 over that period and will result in the immaterial restatement of previously issued annual financial statements and unaudited quarterly financial information in the Company’s 2016 annual report on Form 10-K.

In the three and nine month periods ended September 26, 2016, the Company has recorded in Other (expense) income, embezzlement expense of approximately $200,000 and $420,000, respectively, representing the total amount of theft loss that occurred in the first nine months of fiscal 2016. Of that amount, $114,000 had previously been expensed, although misclassified ($47,000 as Cost of component revenues and $67,000 as Foreign currency transaction losses), and $86,000 had been incurred but not yet recorded in the first two quarters of 2016. Accordingly, the embezzlement expense recorded in the accompanying financial statements includes the effects of correcting those misstatements. The Company will restate the above referenced first and second quarter 2016 amounts when they are next presented as comparative balances in its first and second quarter reports on Form 10-Q for fiscal 2017.

The family of the embezzler has contributed certain assets as reparations. In addition, the Company has insurance to cover employee fraud. Whether the Company can collect the insurance and keep the assets is pending civil and criminal investigations against the embezzler. The value of the assets recovered, if any, will be recorded during the period in which settlement is determined to be probable.

SUBSEQUENT EVENTS (Notes)

Subsequent Events [Text Block]

SUBSEQUENT EVENTS

Subsequent to September 24, 2016, we entered into two strategic agreements.

The first agreement established a strategic relationship with a Chinese company under which the Company and the Chinese Company will provide services for each other and jointly develop and manufacture products. In addition the Chinese company will acquire 7,589,000 shares of unregistered stock of the Company for approximately USD $24.7 million.

The second agreement established a joint venture (JV Agreement) in China. Under the terms of the JV Agreement the Company will contribute certain intellectual property and the equivalent of USD $1 million in Renminbi for a minority equity ownership. The purpose of the joint venture is to develop and market wearable products.

Both transactions are subject to standard closing conditions and government approval.

CASH AND EQUIVALENTS AND MARKETABLE SECURITIES (Tables)

Cash Cash Equivalents and Marketable Securities Table

Investments in available-for-sale marketable debt securities are as follows at September 24, 2016 and December 26, 2015:



	Amortized Cost				Unrealized Gains				Unrealized Losses						Fair Value
	2016		2015		2016		2015		2016			2015			2016		2015
U.S. government and agency backed securities	$	42,366,974	$	46,586,224	$	71,208	$	—	$	—		$	(121,561	)	$	42,438,182	$	46,464,663
Corporate debt and certificates of deposit	20,654,599		14,534,247		—		—		(58,401		)	(56,019		)	20,596,198		14,478,228
Total	$	63,021,573	$	61,120,471	$	71,208	$	—	$	(58,401	)	$	(177,580	)	$	63,034,380	$	60,942,891

Marketable Debt Securities

The contractual maturity of the Company’s marketable debt securities is as follows at September 24, 2016:



	Less than One year		One to Five years		Greater than Five years		Total
U.S. government and agency backed securities	$	16,904,660	$	18,479,622	$	7,053,900	$	42,438,182
Corporate debt and certificates of deposit	16,491,826		4,104,372		—		20,596,198
Total	$	33,396,486	$	22,583,994	$	7,053,900	$	63,034,380

FAIR VALUE MEASUREMENTS (Tables)

Fair Value Measurements of Financial Instruments

The following table details the fair value measurements of the Company’s financial assets:



			Fair Value Measurement September 24, 2016 Using:
	Total		Level 1		Level 2		Level 3
Cash and Equivalents	$	20,998,402	$	20,998,402	$	—	$	—
U.S. Government Securities	42,438,182		11,643,390		30,794,792		—
Corporate Debt	8,491,436		—		8,491,436		—
Certificates of Deposit	12,104,762		—		12,104,762		—
GCS Holdings	329,767		329,767		—		—
	$	84,362,549	$	32,971,559	$	51,390,990	$	—


			Fair Value Measurement December 26, 2015 Using:
	Total		Level 1		Level 2		Level 3
Cash and Equivalents	$	19,767,889	$	19,767,889	$	—	$	—
U.S. Government Securities	46,464,663		16,381,152		30,083,511		—
Corporate Debt	6,886,495		—		6,886,495		—
Certificates of Deposit	7,591,733		—		7,591,733		—
GCS Holdings	232,037		232,037		—		—
	$	80,942,817	$	36,381,078	$	44,561,739	$	—

INVENTORY (Tables)

Inventory Stated at the Lower of Cost or Market

Inventory is stated at the lower of cost (determined on the first-in, first-out) or market and consists of the following at September 24, 2016 and December 26, 2015:



	September 24, 2016		December 26, 2015
Raw materials	$	1,786,401	$	844,475
Work-in-process	1,242,020		1,281,891
Finished goods	169,563		386,107
	$	3,197,984	$	2,512,473

NET (LOSS) INCOME PER SHARE (Tables)

Weighted Average Common Shares Outstanding

Weighted average common shares outstanding used to calculate basic and diluted earnings per share are as follows:



	Three Months Ended		Nine Months Ended
	September 24, 2016	September 26, 2015	September 24, 2016	September 26, 2015
Weighted average common shares outstanding-basic	64,047,852	63,068,321	64,012,490	63,072,668
Stock options and non-vested restricted common stock	—	—	—	—
Weighted average common shares outstanding-diluted	64,047,852	63,068,321	64,012,490	63,072,668

Weighted Average Common Shares Outstanding-Diluted

The following were not included in weighted average common shares outstanding-diluted because they are anti-dilutive or performance or market conditions had not been met at the end of the period:



	Three Months Ended		Nine Months Ended
	September 24, 2016	September 26, 2015	September 24, 2016	September 26, 2015
Non-vested restricted common stock	2,692,516	2,924,811	2,692,516	2,924,811

STOCK-BASED COMPENSATION (Tables)

NonVested Restricted Common Stock



	Shares		Weighted Average Grant Fair Value
Balance, December 26, 2015	2,192,016		$	3.82
Granted	634,500		1.88
Forfeited	(59,000	)	3.14
Vested	(75,000	)	3.60
Balance, September 24, 2016	2,692,516		$	3.38

Stock-Based Compensation Expense

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 nine months ended September 24, 2016 and September 26, 2015 (no tax benefits were recognized):



	Nine Months Ended
	September 24, 2016		September 26, 2015
Cost of component revenues	$	426,357	$	620,494
Research and development	378,156		669,605
Selling, general and administrative	674,968		1,496,395
Total	$	1,479,481	$	2,786,494

GOODWILL AND INTANGIBLES (Tables)

Schedule of Intangible Assets and Goodwill [Table Text Block]

The Company’s goodwill balance is as follows:



Balance, December 26, 2015	$	946,082
Change due to exchange rate fluctuations	(76,098		)
Balance, September 24, 2016	$	869,984

ACCRUED WARRANTY (Tables)

Accrued Warranty

Changes in the accrued warranty for the nine months ended September 24, 2016 are as follows:



Balance, December 26, 2015	$	518,000
Additions	442,305
Claims	(442,305		)
Balance, September 24, 2016	$	518,000

SEGMENTS AND GEOGRAPHICAL INFORMATION (Tables)

Schedule of Segment Reporting Information, by Segment [Table Text Block]

The following table presents the Company’s reportable segment results (in thousands):



	Three Months Ended
	September 24, 2016									September 26, 2015
	Kopin			FDD			Total			Kopin			FDD			Total

Revenues	$	4,707		$	1,087		$	5,794		$	7,036		$	965		$	8,001
Net loss attributable to the controlling interest	(7,982		)	(216		)	(8,198		)	(4,029		)	(646		)	(4,675		)



	Nine Months Ended
	September 24, 2016									September 26, 2015
	Kopin			FDD			Total			Kopin			FDD			Total

Revenues	$	13,176		$	3,093		$	16,269		$	24,800		$	2,643		$	27,443
Net loss attributable to the controlling interest	(17,628		)	(616		)	(18,244		)	(6,548		)	(1,184		)	(7,732		)
Total assets	92,799			1,699			94,498			113,510			1,367			114,877
Long-lived assets	2,937			—			2,937			3,550			92			3,642

Percentage of Net Revenues by Geographies

During the three and nine month periods ended September 24, 2016 and September 26, 2015, the Company derived its sales from the following geographies (as a percentage of net revenues):



	Three Months Ended				Nine Months Ended
	September 24, 2016		September 26, 2015		September 24, 2016		September 26, 2015
United States	49	%	68	%	36	%	73	%
Others	—	%	—	%	—	%	1	%
Americas	49	%	68	%	36	%	74	%
Asia-Pacific	37	%	22	%	48	%	19	%
Europe	14	%	10	%	16	%	7	%
Total Revenues	100	%	100	%	100	%	100	%

BASIS OF PRESENTATION (Details)

3 Months Ended

9 Months Ended

Sep. 24, 2016

USD ($)

Sep. 26, 2015

USD ($)

Sep. 24, 2016

USD ($)

Sep. 26, 2015

USD ($)

Sep. 24, 2016

KRW (?)

Sep. 24, 2016

Accumulated Translation Adjustment

USD ($)

Sep. 24, 2016

Accumulated Net Unrealized Investment Gain (Loss)

USD ($)

Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items]

Disposal Group, Including Discontinued Operation, Consideration

$ 0

? 9,500,000,000

Land Available-for-sale

400,000

Gain (Loss) on Disposition of Property Plant Equipment

0

7,700,522

0

Accumulated Other Comprehensive Income (Loss), Foreign Currency Translation Adjustment, Net of Tax

2,400,000

Other Comprehensive Income (Loss), Unrealized Holding Gain (Loss) on Securities Arising During Period, Net of Tax

$ 2,650,931

$ 300,000

CASH AND EQUIVALENTS AND MARKETABLE SECURITIES (Details) (USD $)

Sep. 24, 2016

Dec. 26, 2015

Schedule of Available-for-sale Securities [Line Items]

Available-for-sale Debt Securities, Amortized Cost Basis

$ 63,021,573

$ 61,120,471

Unrealized Gains

71,208

0

Unrealized Losses

(58,401)

(177,580)

Fair Value

63,034,380

60,942,891

Available-for-sale Securities, Debt Maturities, Fair Value, Fiscal Year Maturity [Abstract]

Less than one year

33,396,486

One to five years

22,583,994

Greater than five years

7,053,900

Available-for-sale Securities

63,034,380

U.S. government and agency backed securities

Schedule of Available-for-sale Securities [Line Items]

Available-for-sale Debt Securities, Amortized Cost Basis

42,366,974

46,586,224

Unrealized Gains

71,208

0

Unrealized Losses

0

(121,561)

Fair Value

42,438,182

46,464,663

Available-for-sale Securities, Debt Maturities, Fair Value, Fiscal Year Maturity [Abstract]

Less than one year

16,904,660

One to five years

18,479,622

Greater than five years

7,053,900

Available-for-sale Securities

42,438,182

Corporate debt and certificates of deposit

Schedule of Available-for-sale Securities [Line Items]

Available-for-sale Debt Securities, Amortized Cost Basis

20,654,599

14,534,247

Unrealized Gains

0

Unrealized Losses

(58,401)

(56,019)

Fair Value

20,596,198

14,478,228

Available-for-sale Securities, Debt Maturities, Fair Value, Fiscal Year Maturity [Abstract]

Less than one year

16,491,826

One to five years

4,104,372

Greater than five years

0

Available-for-sale Securities

$ 20,596,198

FAIR VALUE MEASUREMENTS (Details) (USD $)

Sep. 24, 2016

Dec. 26, 2015

Fair Value Measurements [Line Items]