| Price | 0.71 | EPS | -0 | |
| Shares | 82 | P/E | -2 | |
| MCap | 58 | P/FCF | -3 | |
| Net Debt | -9 | EBIT | -33 | |
| TEV | 50 | TEV/EBIT | -1 | TTM 2019-09-30, in MM, except price, ratios |
| 10-Q | 2020-09-26 | Filed 2020-11-05 |
| 10-Q | 2020-06-27 | Filed 2020-08-06 |
| 10-Q | 2020-03-28 | Filed 2020-05-07 |
| 10-K | 2019-12-28 | Filed 2020-03-11 |
| 10-Q | 2019-09-28 | Filed 2019-11-07 |
| 10-Q | 2019-06-29 | Filed 2019-08-08 |
| 10-Q | 2019-03-30 | Filed 2019-05-09 |
| 10-K | 2018-12-29 | Filed 2019-03-14 |
| 10-Q | 2018-09-29 | Filed 2018-11-08 |
| 10-Q | 2018-06-30 | Filed 2018-08-09 |
| 10-Q | 2018-03-31 | Filed 2018-05-10 |
| 10-K | 2017-12-30 | Filed 2018-03-23 |
| 10-Q | 2017-09-30 | Filed 2017-11-09 |
| 10-Q | 2017-07-01 | Filed 2017-08-10 |
| 10-Q | 2017-04-01 | Filed 2017-05-11 |
| 10-K | 2016-12-31 | Filed 2017-03-23 |
| 10-K | 2016-09-24 | Filed 2017-03-23 |
| 10-Q | 2016-06-25 | Filed 2016-08-03 |
| 10-Q | 2016-03-26 | Filed 2016-05-04 |
| 10-K | 2015-12-26 | Filed 2016-03-04 |
| 10-Q | 2015-09-26 | Filed 2015-11-05 |
| 10-Q | 2015-06-27 | Filed 2015-08-06 |
| 10-Q | 2015-03-28 | Filed 2015-05-11 |
| 10-K | 2014-12-27 | Filed 2015-03-12 |
| 10-Q | 2014-09-27 | Filed 2014-11-06 |
| 10-Q | 2014-06-28 | Filed 2014-08-07 |
| 10-Q | 2014-03-29 | Filed 2014-05-08 |
| 10-K | 2013-12-28 | Filed 2014-03-17 |
| 10-Q | 2013-09-28 | Filed 2013-11-05 |
| 10-Q | 2013-06-29 | Filed 2013-08-08 |
| 10-Q | 2013-03-30 | Filed 2013-05-09 |
| 10-K | 2012-12-29 | Filed 2013-03-18 |
| 10-Q | 2012-09-29 | Filed 2012-11-08 |
| 10-Q | 2012-06-30 | Filed 2012-08-09 |
| 10-Q | 2012-03-31 | Filed 2012-05-10 |
| 10-K | 2011-12-31 | Filed 2012-03-15 |
| 10-Q | 2011-09-24 | Filed 2011-11-03 |
| 10-Q | 2011-06-25 | Filed 2011-08-04 |
| 10-Q | 2011-03-26 | Filed 2011-05-05 |
| 10-K | 2010-12-25 | Filed 2011-03-10 |
| 10-Q | 2010-09-25 | Filed 2010-11-03 |
| 10-Q | 2010-06-26 | Filed 2010-08-03 |
| 10-Q | 2010-03-27 | Filed 2010-05-04 |
| 10-K | 2009-12-26 | Filed 2010-03-08 |
| 8-K | 2020-11-03 | |
| 8-K | 2020-08-04 | |
| 8-K | 2020-05-18 | |
| 8-K | 2020-05-05 | |
| 8-K | 2020-04-21 | |
| 8-K | 2020-04-17 | |
| 8-K | 2020-04-08 | |
| 8-K | 2020-03-10 | |
| 8-K | 2020-03-02 | |
| 8-K | 2019-11-22 | |
| 8-K | 2019-11-07 | |
| 8-K | 2019-10-09 | |
| 8-K | 2019-10-07 | |
| 8-K | 2019-09-30 | |
| 8-K | 2019-08-08 | |
| 8-K | 2019-05-21 | |
| 8-K | 2019-05-07 | |
| 8-K | 2019-04-12 | |
| 8-K | 2019-04-10 | |
| 8-K | 2019-03-19 | |
| 8-K | 2019-03-15 | |
| 8-K | 2019-03-15 | |
| 8-K | 2019-03-14 | |
| 8-K | 2019-03-12 | |
| 8-K | 2019-02-08 | |
| 8-K | 2019-01-17 | |
| 8-K | 2018-11-08 | |
| 8-K | 2018-08-06 | |
| 8-K | 2018-05-09 | |
| 8-K | 2018-05-08 | |
| 8-K | 2018-03-08 | |
| 8-K | 2018-01-04 |
| Part 1. Financial Information |
| Item 1. Condensed Consolidated Financial Statements (Unaudited) |
| Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations |
| Item 3. Quantitative and Qualitative Disclosures About Market Risk |
| Item 4. Controls and Procedures |
| Part II. Other Information |
| Item 1. Legal Proceedings |
| Item 1A. Risk Factors |
| Item 2. Unregistered Sales of Equity Securities and Use of Proceeds |
| Item 6. Exhibits |
| EX-31.1 | ex31-1.htm |
| EX-31.2 | ex31-2.htm |
| EX-32.1 | ex32-1.htm |
| EX-32.2 | ex32-2.htm |
| Balance Sheet | Income Statement | Cash Flow |
|---|---|---|
|
Assets, Equity
|
Rev, G Profit, Net Income
|
Ops, Inv, Fin
|
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _____ to _____
Commission file number
(Exact name of registrant as specified in its charter)
State or other jurisdiction of incorporation or organization | (I.R.S. Employer Identification No.) | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code:
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☒ | |
| Non-accelerated filer | ☐ | Smaller reporting company | ||
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ☐
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
| Class | Outstanding as of Nov 4, 2020 | |
| Common Stock, par value $0.01 |
Kopin Corporation
INDEX
| 2 |
Part 1. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements (Unaudited)
KOPIN CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
| September 26, 2020 | December 28, 2019 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and equivalents | $ | $ | ||||||
| Marketable debt securities, at fair value | ||||||||
| Accounts receivable, net of allowance of $ | ||||||||
| Contract assets and unbilled receivables | ||||||||
| Inventory | ||||||||
| Prepaid taxes | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Property, plant and equipment, net | ||||||||
| Operating lease right-of-use assets | ||||||||
| Other assets | ||||||||
| Equity investments | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued payroll and expenses | ||||||||
| Accrued warranty | ||||||||
| Contract liabilities and billings in excess of revenues earned | ||||||||
| Operating lease liabilities | ||||||||
| Other accrued liabilities | ||||||||
| Customer deposits | ||||||||
| Taxes payable | ||||||||
| Total current liabilities | ||||||||
| Noncurrent contract liabilities and asset retirement obligations | ||||||||
| Operating lease liabilities, net of current portion | ||||||||
| Other long-term obligations | ||||||||
| Commitments and contingencies (Note 13) | ||||||||
| Stockholders’ equity: | ||||||||
| Preferred stock, par value $ per share: authorized, shares; issued | - | - | ||||||
| Common stock, par value $per share: authorized, shares; issued shares in 2020 and shares in 2019; outstanding in 2020 and in 2019, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Treasury stock ( shares in 2020 and 2019, at cost) | ( | ) | ( | ) | ||||
| Accumulated other comprehensive income | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Kopin Corporation stockholders’ equity | ||||||||
| Noncontrolling interest | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
See notes to unaudited condensed consolidated financial statements
| 3 |
KOPIN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| Three Months Ended | Nine Months Ended | |||||||||||||||
September 26, 2020 | September 28, 2019 | September 26, 2020 | September 28, 2019 | |||||||||||||
| Revenues: | ||||||||||||||||
| Net product revenues | $ | $ | $ | $ | ||||||||||||
| Research and development and other revenues | ||||||||||||||||
| Expenses: | ||||||||||||||||
| Cost of product revenues | ||||||||||||||||
| Research and development | ||||||||||||||||
| Selling, general and administration | ||||||||||||||||
| Impairment of goodwill | - | - | ||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expense): | ||||||||||||||||
| Interest income | ||||||||||||||||
| Other expense, net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Foreign currency transaction gains (losses) | ( | ) | ( | ) | ||||||||||||
| Gain on investments | - | - | - | |||||||||||||
| ( | ) | |||||||||||||||
| Loss before provision for income taxes and net loss (income) attributable to noncontrolling interest | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Tax provision | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss (income) attributable to the noncontrolling interest | ( | ) | ( | ) | ||||||||||||
| Net loss attributable to Kopin Corporation | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net loss per share | ||||||||||||||||
| Basic and diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average number of common shares outstanding | ||||||||||||||||
| Basic and diluted | ||||||||||||||||
See notes to unaudited condensed consolidated financial statements
| 4 |
KOPIN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Unaudited)
| Three Months Ended | Nine Months Ended | |||||||||||||||
September 26, 2020 | September 28, 2019 | September 26, 2020 | September 28, 2019 | |||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Other comprehensive (loss) income, net of tax: | ||||||||||||||||
| Foreign currency translation adjustments | ( | ) | ( | ) | ( | ) | ||||||||||
| Unrealized holding (loss) gain on marketable securities | ( | ) | ( | ) | ||||||||||||
| Reclassification of holding losses in net loss | ( | ) | ( | ) | ( | ) | ||||||||||
| Other comprehensive (loss) income, net of tax | ( | ) | ( | ) | ||||||||||||
| Comprehensive loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Comprehensive loss (income) attributable to the noncontrolling interest | ( | ) | ( | ) | ||||||||||||
| Comprehensive loss attributable to Kopin Corporation | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
See notes to unaudited condensed consolidated financial statements
| 5 |
KOPIN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)
| Common Stock | Additional Paid-in | Treasury | Accumulated Other Comprehensive | Accumulated | Total Kopin Corporation Stockholders’ | Noncontrolling | Total Stockholders’ | |||||||||||||||||||||||||||||
| Shares | Amount | Capital | Stock | Income | Deficit | Equity | Interest | Equity | ||||||||||||||||||||||||||||
| Balance, December 28, 2019 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||||||
| Stock-based compensation expense | - | - | - | - | - | - | ||||||||||||||||||||||||||||||
| Other comprehensive loss | - | - | - | - | ( | ) | - | ( | ) | - | ( | ) | ||||||||||||||||||||||||
| Net loss | - | - | - | - | - | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||
| Balance, March 28, 2020 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||||||
| Stock-based compensation expense | - | - | - | - | - | - | ||||||||||||||||||||||||||||||
| Vesting of restricted stock | ( | ) | - | - | - | - | - | - | ||||||||||||||||||||||||||||
| Other comprehensive Income | - | - | - | - | - | - | ||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||
| Balance, June 27, 2020 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||||||
| Stock-based compensation expense | - | - | - | - | - | - | ||||||||||||||||||||||||||||||
| Other comprehensive loss | - | - | - | - | ( | ) | - | ( | ) | - | ( | ) | ||||||||||||||||||||||||
| Net loss | - | - | - | - | - | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||
| Balance, September 26, 2020 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||||||
| Common Stock | Additional Paid-in | Treasury | Accumulated Other Comprehensive | Accumulated | Total Kopin Corporation Stockholders’ | Noncontrolling | Total Stockholders’ | |||||||||||||||||||||||||||||
| Shares | Amount | Capital | Stock | Income | Deficit | Equity | Interest | Equity | ||||||||||||||||||||||||||||
| Balance, December 29, 2018 | $ | | $ | | $ | ( | $ | | $ | ( | $ | | $ | ( | $ | | ||||||||||||||||||||
| Stock-based compensation expense | - | - | - | - | - | - | ||||||||||||||||||||||||||||||
| Vesting of restricted stock | ( | ) | - | - | - | - | - | - | ||||||||||||||||||||||||||||
| Repurchases of restricted stock to satisfy tax withholding obligations | ( | ) | ( | ) | ( | ) | - | - | - | ( | ) | - | ( | ) | ||||||||||||||||||||||
| Other comprehensive income | - | - | - | - | - | - | ||||||||||||||||||||||||||||||
| Sale of registered stock | - | - | - | - | ||||||||||||||||||||||||||||||||
| Net (loss) income | - | - | - | - | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||
| Balance, March 30, 2019 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||||||
| Stock-based compensation expense | - | - | - | - | - | - | ||||||||||||||||||||||||||||||
| Vesting of restricted stock | ( | ) | - | - | - | - | - | - | ||||||||||||||||||||||||||||
| Other comprehensive income | - | - | - | - | - | - | ||||||||||||||||||||||||||||||
| Sale of registered stock | - | - | - | - | ||||||||||||||||||||||||||||||||
| Net (loss) income | - | - | - | - | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||
| Balance, June 29, 2019 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||||||
| Stock-based compensation expense | - | - | - | - | - | - | ||||||||||||||||||||||||||||||
| Other comprehensive income | - | - | - | - | - | - | ||||||||||||||||||||||||||||||
| Net (loss) income | - | - | - | - | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||
| Balance, September 28, 2019 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | $ | ||||||||||||||||||||||||
See notes to unaudited condensed consolidated financial statements
| 6 |
KOPIN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Nine Months Ended | ||||||||
| September 26, 2020 | September 28, 2019 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Accretion of premium or discount on marketable debt securities | ||||||||
Recovery of impairment on marketable debt securities | ( | |||||||
| Stock-based compensation | ||||||||
| Foreign currency (gains) losses | ( | ) | ||||||
| Change in allowance for bad debt | ( | ) | ( | ) | ||||
| Unrealized gain on investments | ( | ) | ||||||
| Deferred income taxes | ||||||||
| Loss on disposal of plant and equipment | ||||||||
| Impairment of goodwill | ||||||||
| Write-off of inventory | ||||||||
| Other non-cash items | ( | ) | ||||||
| Changes in assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Contract assets | ( | ) | ||||||
| Inventory | ( | ) | ( | ) | ||||
| Prepaid expenses and other current assets | ( | ) | ||||||
| Accounts payable and accrued expenses | ( | ) | ||||||
| Billings in excess of revenue earned | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities: | ||||||||
| Other assets | ( | ) | ||||||
| Capital expenditures | ( | ) | ( | ) | ||||
| Proceeds from sale of marketable debt securities | ||||||||
| Cash paid for equity investment | ( | ) | ||||||
| Net cash provided by investing activities | ||||||||
| Cash flows from financing activities: | ||||||||
| Paycheck protection program loan receipt | ||||||||
| Paycheck protection program loan repayment | ( | ) | ||||||
| Sale of registered stock | ||||||||
| Settlements of restricted stock for tax withholding obligations | ( | ) | ||||||
| Net cash provided by financing activities | ||||||||
| Effect of exchange rate changes on cash | ( | ) | ( | ) | ||||
| Net increase (decrease) in cash and cash equivalents | ( | ) | ||||||
| Cash and cash equivalents: | ||||||||
| Beginning of period | ||||||||
| End of period | $ | $ | ||||||
See notes to unaudited condensed consolidated financial statements
| 7 |
KOPIN CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The condensed consolidated financial statements of Kopin Corporation as of September 26, 2020 and for the three and nine month periods ended September 26, 2020 and September 28, 2019 are unaudited and include all adjustments that, 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 fiscal year ended December 28, 2019. 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. The December 28, 2019 consolidated balance sheet data was derived from audited financial statements, but certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with Generally Accepted Accounting Principles (GAAP) have been condensed or omitted. The Company reclassified certain prior period amounts to conform to the current period presentation. As used in this report, the terms “we”, “us”, “our”, “Kopin” and the “Company” mean Kopin Corporation and its subsidiaries, unless the context indicates another meaning.
Going Concern
The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company incurred net losses of $
The Company’s products are targeted towards the defense and industrial/enterprise wearable markets. Management believes the industrial wearable market is still developing and cannot predict how long it will take to develop or if the Company’s products will be accepted. In addition, the Company’s current strategy is to continue to invest in research and development, even during unprofitable periods, which may result in the Company continuing to incur net losses and negative cash flows from operations. If the Company is unable to achieve and maintain positive cash flows and profitability in the foreseeable future, its financial condition may ultimately be materially adversely affected such that management may be required to reduce operating expenses, including investments in research and development, or raise additional capital. While there can be no assurance the Company will be able to successfully reduce operating expenses or raise additional capital, management believes its historical success in managing cash flows and obtaining capital will continue in the foreseeable future.
The COVID-19 pandemic has negatively impacted the global and national economy, disrupted global supply chains, and created significant volatility in and disruption of financial markets. The extent of the impact of the COVID-19 pandemic on the Company’s operational and financial performance, including the ability to execute business strategies and initiatives in the expected time frame to date has been limited. The future impact of the COVID-19 pandemic on the Company’s operational and financial performance will depend on future developments, including the duration and spread of the pandemic and related restrictions on travel and transportation, all of which are uncertain and cannot be predicted at this time. An extended period of global supply chain and economic disruption could materially affect the Company’s business, results of operations, financial condition, and access to sources of liquidity. In this regard, the CARES Act established a Paycheck Protection Program (PPP), whereby certain small businesses are eligible for a loan to fund payroll expenses, rent, and related costs. During the second quarter ended June 27, 2020 the Company received loans under the PPP but subsequently voluntarily terminated and repaid the PPP Loans of $
| 8 |
2. ACCOUNTING STANDARDS
Accounting Standards Issued But Not Yet Adopted
In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which requires measurement and recognition of expected credit losses for financial assets held. In November 2019, the FASB issued ASU 2019-10 that has extended the effective date of ASU 2016-13 for Smaller Reporting Entities to fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022. The Company is currently evaluating ASU 2016-13 and its impact on our consolidated financial statements.
3. CASH AND CASH EQUIVALENTS AND MARKETABLE DEBT 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 commercial paper, medium-term corporate notes, and U.S. government and agency backed securities. The Company classifies these marketable debt securities as available-for-sale at fair value in “Marketable debt securities, at fair value.” The Company records the amortization of premium and accretion of discounts 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 26, 2020 and September 28, 2019.
Investments in available-for-sale marketable debt securities were as follows at September 26, 2020 and December 28, 2019:
| Amortized Cost | Unrealized Gains | Unrealized Losses | Fair Value | |||||||||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||||
| U.S. government and agency backed securities | $ | $ | $ | $ | - | $ | - | $ | ( | ) | $ | $ | ||||||||||||||||||||
| Corporate Debt | ( | ) | ||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | ( | ) | $ | $ | ||||||||||||||||||||||
The contractual maturity of the Company’s marketable debt securities was as follows at September 26, 2020
| Less than One year | One to Five Years | Total | ||||||||||
| U.S. government and agency backed securities | $ | $ | $ | |||||||||
| Corporate debt | ||||||||||||
| Total | $ | $ | $ | |||||||||
| 9 |
4. 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 26, 2020 Using: | ||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | |||||||||||||
| Cash and Cash Equivalents | $ | $ | $ | $ | ||||||||||||
| U.S. Government Securities | ||||||||||||||||
| Corporate Debt | ||||||||||||||||
| Equity Investments | ||||||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Fair Value Measurement at December 28, 2019 Using: | ||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | |||||||||||||
| Cash and Cash Equivalents | $ | $ | $ | $ | ||||||||||||
| U.S. Government Securities | ||||||||||||||||
| Corporate Debt | ||||||||||||||||
| Equity Investments | ||||||||||||||||
| $ | $ | $ | $ | |||||||||||||
| 10 |
Transfers between levels of the fair value hierarchy are reported at the beginning of the reporting period in which they occur. Changes in Level 3 investments were as follows:
| December 28, 2019 | Net unrealized gains | Impairment Charge | September 26, 2020 | |||||||||||||
| Equity Investments | $ | $ | $ | ( | ) | $ | ||||||||||
The carrying amounts of cash and cash 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.
Marketable Debt Securities
The corporate debt consists of floating rate notes with a maturity that is over multiple years but has interest rates that 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 that 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.
Equity Investments
The Company acquired an equity interest in a company in the first quarter of 2018 through a $
In 2017 the Company had a warrant to acquire up to
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 our SolosTM (“Solos”) product line and WhisperTM Audio (“Whisper”) technology. As consideration for the transaction the Company received a
5. INVENTORY
Inventories are stated at standard cost adjusted to approximate the lower of cost (first-in, first-out method) or net realizable value and consist of the following at September 26, 2020 and December 28, 2019:
| September 26, 2020 | December 28, 2019 | |||||||
| Raw materials | $ | $ | ||||||
| Work-in-process | ||||||||
| Finished goods | ||||||||
| Total | $ | $ | ||||||
| 11 |
Basic net loss per share is computed using the weighted-average number of shares of common stock outstanding during the period less any unvested restricted shares. Diluted net loss per share 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 unvested restricted stock.
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 26, 2020 | September 28, 2019 | September 26, 2020 | September 28, 2019 | |||||||||||||
| Non-vested restricted common stock | ||||||||||||||||
Restricted Stock Awards
In May of 2020, the Company adopted a 2020 Equity Incentive Plan (“2020 Equity Plan”) which authorizes 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 to be issued under the 2020 Equity Plan is four million shares plus shares of the common 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.
Registered sale of equity securities
On March 15, 2019 and April 10, 2019, the Company sold million shares and million shares, respectively, of registered common stock for aggregate gross proceeds of $
Non-Vested Restricted Common Stock
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.
Restricted stock activity was as follows:
| Weighted Average | ||||||||
| Shares | ||||||||