Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Jun. 28, 2020 | Aug. 11, 2020 | |
Cover [Abstract] | ||
Entity Registrant Name | Optex Systems Holdings Inc | |
Entity Central Index Key | 0001397016 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 28, 2020 | |
Current Fiscal Year End Date | --09-29 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business Flag | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock Shares Outstanding | 8,761,626 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2020 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 28, 2020 | Sep. 29, 2019 |
ASSETS | ||
Cash and Cash Equivalents | $ 2,788 | $ 1,068 |
Accounts Receivable, Net | 2,977 | 3,066 |
Inventory, Net | 10,203 | 10,535 |
Prepaid Expenses | 279 | 348 |
Current Assets | 16,247 | 15,017 |
Property and Equipment, Net | 1,067 | 1,102 |
Other Assets | ||
Deferred Tax Asset | 1,270 | 1,414 |
Right-of-use Asset | 1,517 | |
Security Deposits | 23 | 23 |
Other Assets | 2,810 | 1,437 |
Total Assets | 20,124 | 17,556 |
Current Liabilities | ||
Accounts Payable | 1,058 | 1,833 |
Operating Lease Liability | 485 | |
Accrued Expenses | 1,090 | 1,180 |
Accrued Warranty Costs | 111 | 46 |
Credit Facility | 250 | |
Customer Advance Deposits | 3 | |
Current Liabilities | 2,744 | 3,312 |
Credit Facility - Long Term | 377 | |
Operating Lease Liability - Long Term | 1,083 | |
Warrant Liability | 2,540 | 2,036 |
Total Liabilities | 6,744 | 5,348 |
Commitments and Contingencies | ||
Stockholders' Equity | ||
Common Stock - ($0.001 par, 2,000,000,000 authorized, 8,795,869 and 8,436,422 shares issued, and 8,761,626 and 8,436,422 outstanding, respectively) | 9 | 8 |
Treasury Stock (at cost, 34,243 shares and zero shares held, respectively) | (64) | |
Additional Paid in capital | 26,199 | 26,134 |
Accumulated Deficit | (12,764) | (13,934) |
Stockholders' Equity | 13,380 | 12,208 |
Total Liabilities and Stockholders' Equity | $ 20,124 | $ 17,556 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Jun. 28, 2020 | Sep. 29, 2019 |
Statement of Financial Position [Abstract] | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 2,000,000,000 | 2,000,000,000 |
Common stock, shares issued | 8,795,869 | 8,436,422 |
Common stock, shares outstanding | 8,761,626 | 8,436,422 |
Treasury stock, shares | 34,243 | 0 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Jun. 28, 2020 | Jun. 30, 2019 | Jun. 28, 2020 | Jun. 30, 2019 | |
Income Statement [Abstract] | ||||
Revenue | $ 5,849 | $ 5,347 | $ 18,682 | $ 18,325 |
Cost of Sales | 4,368 | 4,274 | 14,114 | 13,829 |
Gross Margin | 1,481 | 1,073 | 4,568 | 4,496 |
General and Administrative Expense | 855 | 808 | 2,442 | 2,350 |
Operating Income | 626 | 265 | 2,126 | 2,146 |
(Loss) Gain on Change in Fair Value of Warrants | (585) | 81 | (504) | (465) |
Interest Expense | (5) | (5) | (17) | (17) |
Other (Expense) Income | (590) | 76 | (521) | (482) |
Income Before Taxes | 36 | 341 | 1,605 | 1,664 |
Income Tax Expense (Benefit), net | 131 | (35) | 435 | 236 |
Net (Loss) Income | (95) | 376 | 1,170 | 1,428 |
Deemed dividends on participating securities | (124) | (372) | (471) | |
Net (loss) income applicable to common shareholders | $ (95) | $ 252 | $ 798 | $ 957 |
Basic (loss) income per share | $ (0.01) | $ 0.03 | $ 0.09 | $ 0.11 |
Weighted Average Common Shares Outstanding - basic | 8,491,803 | 8,398,314 | 8,472,739 | 8,372,918 |
Diluted (loss) income per share | $ (0.01) | $ 0.03 | $ 0.09 | $ 0.11 |
Weighted Average Common Shares Outstanding - diluted | 8,491,803 | 9,649,660 | 8,596,745 | 9,114,055 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Jun. 28, 2020 | Jun. 30, 2019 | |
Cash Flows from Operating Activities: | ||
Net Income | $ 1,170 | $ 1,428 |
Adjustments to Reconcile Net Income to Net Cash provided by (used in) Operating Activities: | ||
Depreciation and Amortization | 185 | 255 |
Loss on Change in Fair Value of Warrants | 504 | 465 |
Stock Compensation Expense | 120 | 84 |
Deferred Tax | 144 | |
(Gain) On Sale of Fixed Assets | (3) | |
Accounts Receivable | 89 | 273 |
Inventory, net | 332 | (1,939) |
Prepaid Expenses | 69 | (177) |
Accounts Payable and Accrued Expenses | (814) | (38) |
Federal Income Taxes Payable | (22) | |
Accrued Warranty Costs | 65 | (60) |
Prepaid Royalties | 23 | |
Customer Advance Deposits | (3) | (304) |
Increase (Decrease) In Accrued Estimated Loss On Contracts | ||
Total Adjustments | 691 | (1,443) |
Net Cash provided by (used in) Operating Activities | 1,861 | (15) |
Cash Flows used in Investing Activities | ||
Purchases of Property and Equipment | (150) | (136) |
Proceeds From Sale of Fixed Assets | 4 | |
Net Cash used in Investing Activities | (150) | (132) |
Cash Flows provided by (used in) Financing Activities | ||
Cash Paid for Taxes Withheld On Net Settled Restricted Stock Unit Share Issue | (54) | (37) |
Borrowings from payments (to) Credit Facility | 127 | (50) |
Proceeds from Warrant Exercise | 72 | |
Warrant Repurchase | (75) | |
Stock Repurchase | (64) | |
Net Cash provided by (used in) Financing Activities | 9 | (90) |
Net Increase (Decrease) in Cash and Cash Equivalents | 1,720 | (237) |
Cash and Cash Equivalents at Beginning of Year | 1,068 | 1,133 |
Cash and Cash Equivalents at End of Period | 2,788 | 896 |
Non Cash Transactions: | ||
Right-of-Use Asset | 1,811 | |
Operating Lease Liabilities | (1,894) | |
Cash Paid for Taxes | 289 | 360 |
Cash Paid for Interest | $ 16 | $ 18 |
Consolidated Statement of Stock
Consolidated Statement of Stockholders' Equity - USD ($) $ in Thousands | Common Stock [Member] | Treasury Stock [Member] | Additional Paid in Capital [Member] | Retained Earnings [Member] | Total | |||
Beginning balance at Sep. 30, 2018 | $ 8 | $ 25,938 | $ (19,602) | $ 6,344 | ||||
Beginning balance, shares at Sep. 30, 2018 | 8,333,353 | |||||||
Stock Compensation Expense | 84 | 84 | ||||||
Vested restricted stock units issued net of tax withholding | (37) | (37) | ||||||
Vested restricted stock units issued net of tax withholding, shares | 55,565 | |||||||
Exercise of Warrants for Common Shares at $1.50 | [1] | 120 | 120 | |||||
Exercise of Warrants for Common Shares at $1.50, shares | [1] | 47,504 | ||||||
Net income | 1,428 | 1,428 | ||||||
Ending balance at Jun. 30, 2019 | $ 8 | 26,105 | (18,174) | 7,939 | ||||
Ending balance, shares at Jun. 30, 2019 | 8,436,422 | |||||||
Beginning balance at Mar. 31, 2019 | $ 8 | 25,959 | (18,550) | 7,417 | ||||
Beginning balance, shares at Mar. 31, 2019 | 8,388,918 | |||||||
Stock Compensation Expense | 26 | 26 | ||||||
Exercise of Warrants for Common Shares at $1.50 | [1] | 120 | 120 | |||||
Exercise of Warrants for Common Shares at $1.50, shares | [1] | 47,504 | ||||||
Net income | 376 | 376 | ||||||
Ending balance at Jun. 30, 2019 | $ 8 | 26,105 | (18,174) | 7,939 | ||||
Ending balance, shares at Jun. 30, 2019 | 8,436,422 | |||||||
Beginning balance at Sep. 29, 2019 | $ 8 | 26,134 | (13,934) | 12,208 | ||||
Beginning balance, shares at Sep. 29, 2019 | 8,436,422 | |||||||
Stock Compensation Expense | 120 | |||||||
Vested restricted stock units issued net of tax withholding | (54) | |||||||
Vested restricted stock units issued net of tax withholding, shares | 59,447 | |||||||
Restricted Board Shares Issued | [2] | $ 1 | (1) | |||||
Restricted Board Shares Issued, shares | [2] | 300,000 | ||||||
Common Stock Repurchase | [3] | $ (64) | $ (64) | |||||
Common Stock Repurchase, shares | [3] | 34,243 | [3] | 34,243 | ||||
Net income | 1,170 | $ 1,170 | ||||||
Ending balance at Jun. 28, 2020 | $ 9 | $ (64) | 26,199 | (12,764) | 13,380 | |||
Ending balance, shares at Jun. 28, 2020 | 8,795,869 | 34,243 | ||||||
Beginning balance at Mar. 29, 2020 | $ 8 | 26,137 | (12,669) | 13,476 | ||||
Beginning balance, shares at Mar. 29, 2020 | 8,495,869 | |||||||
Stock Compensation Expense | 63 | 63 | ||||||
Restricted Board Shares Issued | [2] | $ 1 | (1) | |||||
Restricted Board Shares Issued, shares | [2] | 300,000 | ||||||
Common Stock Repurchase | [3] | $ (64) | $ (64) | |||||
Common Stock Repurchase, shares | [3] | 34,243 | [3] | 34,243 | ||||
Net income | (95) | $ (95) | ||||||
Ending balance at Jun. 28, 2020 | $ 9 | $ (64) | $ 26,199 | $ (12,764) | $ 13,380 | |||
Ending balance, shares at Jun. 28, 2020 | 8,795,869 | 34,243 | ||||||
[1] | Exercise of warrants for gross proceeds of $72 thousand and a warranty liability fair market value of $48 thousand as of the exercise date. | |||||||
[2] | 100,000 restricted common shares issued to each of the Independent Board of Directors (Rimmy Malhotra, Dale Lehman, Larry Hagenbuch) on April 30, 2020 with 20% vesting as of each January 1 each year over a five-year period. The value of the shares at issue date is $525,000 for 300,000 shares to be amortized over the vesting period. | |||||||
[3] | Common shares repurchased in the open market between June 11, 2020 and June 26, 2020 for $64 thousand and held in treasury stock using the cost method. |
Consolidated Statement of Sto_2
Consolidated Statement of Stockholders' Equity (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Jun. 28, 2020 | Jun. 28, 2020 | ||
Gross proceeds for exercise of warrants | |||
Restricted common shares issued, value | [1] | ||
Common shares repurchased | [2] | $ 64 | $ 64 |
Independent Board of Directors [Member] | |||
Restricted common shares issued, shares | 100,000 | 100,000 | |
Share-based compensation vesting percentage | 20.00% | 20.00% | |
Share-based compensation vesting period | 5 years | 5 years | |
Restricted common shares issued, value | $ 525 | $ 525 | |
Amortized over the vesting period, shares | 300,000 | 300,000 | |
Warrant [Member] | |||
Gross proceeds for exercise of warrants | $ 72 | $ 72 | |
Fair market value of warranty liability | $ 48 | $ 48 | |
[1] | 100,000 restricted common shares issued to each of the Independent Board of Directors (Rimmy Malhotra, Dale Lehman, Larry Hagenbuch) on April 30, 2020 with 20% vesting as of each January 1 each year over a five-year period. The value of the shares at issue date is $525,000 for 300,000 shares to be amortized over the vesting period. | ||
[2] | Common shares repurchased in the open market between June 11, 2020 and June 26, 2020 for $64 thousand and held in treasury stock using the cost method. |
Organization and Operations
Organization and Operations | 9 Months Ended |
Jun. 28, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Operations | Note 1 - Organization and Operations Optex Systems Holdings, Inc. (the “Company”) manufactures optical sighting systems and assemblies for the U.S. Department of Defense, foreign military applications and commercial markets. Its products are installed on a variety of U.S. military land vehicles, such as the Abrams and Bradley fighting vehicles, light armored and advanced security vehicles, and have been selected for installation on the Stryker family of vehicles. The Company also manufactures and delivers numerous periscope configurations, rifle and surveillance sights and night vision optical assemblies. Optex Systems Holdings’ products consist primarily of build to customer print products that are delivered both directly to the military and to other defense prime contractors or commercial customers. The Company’s consolidated revenues are derived from the U.S. government, 53%, three major U.S defense contractors, 19%, and 6% and 6%, one commercial customer, 9%, and all other customers, 7%. Approximately 95% of the total company revenue is generated from domestic customers and 5% is derived from a Canadian customer. Optex Systems Holdings’ operations are based in Dallas and Richardson, Texas in leased facilities comprising 93,967 square feet. As of June 28, 2020, Optex Systems Holdings operated with 109 full-time equivalent employees. We may be at risk as a result of the current COVID-19 pandemic. Risks that could affect our business include the duration and scope of the COVID-19 pandemic and the impact on the demand for our products; actions by governments, businesses and individuals taken in response to the pandemic; the length of time of the COVID-19 pandemic and the possibility of its reoccurrence; the timing required to develop effective treatments and a vaccine in the event of future outbreaks; the eventual impact of the pandemic and actions taken in response to the pandemic on global and regional economies; and the pace of recovery when the COVID-19 pandemic subsides. Optex Systems Holdings, Inc. is defined as essential critical infrastructure as a defense contractor under the guidance of the federal, state and local authorities for both our Optex Systems (Richardson, TX), and Applied Optics Center (Dallas, TX) operating segments. As such, the Company continues to remain open during the COVID-19 shelter in place orders and closures. To date, we have experienced minimal disruption as a result of the pandemic. While we anticipate the possibility of some unforeseen operational impacts during the next six to twelve months related to travel restrictions, illness, or interruptions with our customer or supply chain, we believe we are in a strong position to mitigate any significant adverse financial impacts to the current fiscal year ending September 27, 2020. |
Accounting Policies
Accounting Policies | 9 Months Ended |
Jun. 28, 2020 | |
Accounting Policies [Abstract] | |
Accounting Policies | Note 2 - Accounting Policies Basis of Presentation Principles of Consolidation: The condensed consolidated financial statements of Optex Systems Holdings included herein have been prepared by Optex Systems Holdings, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in conjunction with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. These condensed consolidated financial statements should be read in conjunction with the annual audited consolidated financial statements and the notes thereto included in the Optex Systems Holdings’ Form 10-K for the year ended September 29, 2019 and other reports filed with the SEC. The accompanying unaudited interim condensed consolidated financial statements reflect all adjustments of a normal and recurring nature which are, in the opinion of management, necessary to present fairly the financial position, results of operations and cash flows of Optex Systems Holdings for the interim periods presented. The results of operations for these periods are not necessarily comparable to, or indicative of, results of any other interim period or for the fiscal year taken as a whole. Certain information that is not required for interim financial reporting purposes has been omitted. Leases: Leases (Topic 842). Inventory: (Thousands) June 28, 2020 September 29, 2019 Raw Material $ 6,515 $ 7,395 Work in Process 3,853 3,599 Finished Goods 460 254 Gross Inventory $ 10,828 $ 11,248 Less: Inventory Reserves (625 ) (713 ) Net Inventory $ 10,203 $ 10,535 Concentration of Credit Risk: Accrued Warranties: Three months ended Nine months ended June 28, June 30, June 28, June 30, Beginning balance $ 105 $ 91 $ 46 $ 101 Incurred costs for warranties satisfied during the period (16 ) (62 ) (16 ) (89 ) Warranty Expenses: Warranties reserved for new product shipped during the period (1) 22 2 78 54 Change in estimate for pre-existing warranty liabilities (2) - 10 3 (25 ) Warranty Expense 22 12 81 29 Ending balance $ 111 $ 41 $ 111 $ 41 (1) Warranty expenses accrued to cost of sales (based on current period shipments and historical warranty return rate). (2) Changes in estimated warranty liabilities recognized in cost of sales associated with: the period end customer returned warranty backlog, or the actual costs of repaired/replaced warranty units which were shipped to the customer during the current period. Use of Estimates: Fair Value of Financial Instruments: The carrying value of cash and cash equivalents, accounts receivable and accounts payable, are carried at, or approximate, fair value as of the reporting date because of their short-term nature. The credit facility is reported at fair value as it bears market rates of interest. Fair values for the Company’s warrant liabilities and derivatives are estimated by utilizing valuation models that consider current and expected stock prices, volatility, dividends, market interest rates, forward yield curves and discount rates. Such amounts and the recognition of such amounts are subject to significant estimates that may change in the future. The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value and requires that assets and liabilities carried at fair value be classified and disclosed in one of the following three categories: Level 1: Quoted market prices in active markets for identical assets or liabilities. Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data. Level 3: Unobservable inputs reflecting the reporting entity’s own assumptions. The accounting guidance establishes a hierarchy which requires an entity to maximize the use of quoted market prices and minimize the use of unobservable inputs. An asset or liability’s level is based on the lowest level of input that is significant to the fair value measurement. Fair value estimates are reviewed at the origination date and again at each applicable measurement date and interim or annual financial reporting dates, as applicable for the financial instrument, and are based upon certain market assumptions and pertinent information available to management at those times. The methods and significant inputs and assumptions utilized in estimating the fair value of the warrant liabilities, as well as the respective hierarchy designations are discussed further in Note 6 “Warrant Liabilities”. The warrant liability measurement is considered a Level 3 measurement based on the availability of market data and inputs and the significance of any unobservable inputs as of the measurement date. Revenue Recognition: During the three and nine month periods ended June 28, 2020 there was zero and $3 thousand of revenue recognized from customer deposit liabilities (deferred contract revenue). As of June 28, 2020, there are no customer deposit liabilities. As of the three and nine months ended June 28, 2020, there are no sales commissions or other significant deferred contract costs. Income Tax/Deferred Tax: Earnings per Share: A significant number of our outstanding warrants are participating securities which share dividend distributions and the allocation of any undistributed earnings (deemed dividends) with our common shareholders. During the three and nine months ended June 28, 2020, there were no declared dividends and $0 thousand and $372 thousand in allocated undistributed earnings attributable to the participating warrants, respectively. During the three and nine months ended June 30, 2019, there were no declared dividends, and $124 thousand and $471 thousand in undistributed earnings attributable to participating warrants. The Company has potentially dilutive securities outstanding which include unvested restricted stock units, stock options and warrants. In computing the dilutive effect of warrants, the numerator is adjusted to add back any deemed dividends on participating securities (warrants) and the denominator is increased to assume the conversion of the number of additional incremental common shares. The Company uses the Treasury Stock Method to compute the dilutive effect of any dilutive shares. Unvested restricted stock units, stock options and warrants that are anti-dilutive are excluded from the calculation of diluted earnings per common share. For the three months ended June 28, 2020, 182,000 unvested restricted stock units and 300,000 shares of unvested restricted stock (which convert 210,112 incremental shares) were excluded from the diluted earnings per share calculation as antidilutive due to the net loss. For the nine months ended June 28, 2020, 182,000 unvested restricted stock units and 300,000 shares of unvested restricted stock (which convert 124,007 incremental shares) were included in the diluted earnings per share calculation. For three and nine months ended June 28, 2020, 4,125,200 warrants were excluded from the diluted earnings per share calculation due to the antidilutive effect of the undistributed earnings. For three and nine months ended June 30, 2019, 4,125,200 warrants (which convert to 1,150,296 and 634,692 incremental dilutive shares for the three and nine months, respectively) and 216,500 unvested restricted stock units (which converts to 101,050 and 106,445 incremental dilutive shares for the three and nine months, respectively), were included in the diluted earnings per share calculation as dilutive, and 25,000 stock options were excluded from the earnings per share calculation as antidilutive as they were “out of the money” and not exercisable during the period. |
Segment Reporting
Segment Reporting | 9 Months Ended |
Jun. 28, 2020 | |
Segment Reporting [Abstract] | |
Segment Reporting | Note 3 - Segment Reporting The Company’s reportable segments are strategic businesses offering similar products to similar markets and customers; however, the companies are operated and managed separately due to differences in manufacturing technology, equipment, geographic location, and specific product mix. Applied Optics Center was acquired as a unit, and the management at the time of the acquisition was retained. Both the Applied Optics Center and Optex Systems – Richardson operate as reportable segments under the Optex Systems, Inc. corporate umbrella. The Applied Optics Center segment also serves as the key supplier of laser coated filters used in the production of periscope assemblies for the Optex Systems-Richardson (“Optex Systems”) segment. Intersegment sales and transfers are accounted for at annually agreed to pricing rates based on estimated segment product cost, which includes segment direct manufacturing and general and administrative costs, but exclude profits that would apply to third party external customers. Optex Systems (OPX) – Richardson, Texas The Optex Systems segment revenue is comprised of approximately 92% domestic military customers and 8% foreign military customers. For the nine months ending June 28, 2020, the Optex segment revenue is derived from the U.S. government, 42%, and two major U.S. defense contractors representing 15% and 6%, of the Company’s consolidated revenue, respectively. Optex Systems is located in Richardson Texas, with leased premises consisting of approximately 49,100 square feet. As of June 28, 2020, the Richardson facility operated with 72 full time equivalent employees in a single shift operation. Optex Systems, Richardson serves as the home office for both the Optex Systems and Applied Optics Center segments. Applied Optics Center (AOC) – Dallas, Texas The Applied Optics Center serves primarily domestic U.S. customers. Sales to commercial customers represent 28% and military sales to prime and subcontracted customers represent 72% of the external segment revenue. Approximately 85% of the AOC revenue is derived from external customers and approximately 15% is related to intersegment sales to Optex Systems in support of military contracts. For the nine months ended June 28, 2020, the AOC segment revenue from the U.S. government, one major commercial customer, and one major defense contractor represents approximately 11%, 9% and 6% of the Company’s consolidated revenue, respectively. The Applied Optics Center is located in Dallas, Texas with leased premises consisting of approximately 44,867 square feet of space. As of June 28, 2020, AOC operated with 37 full time equivalent employees in a single shift operation. The financial tables below present the information for each of the reportable segments profit or loss as well as segment assets for each year. The Company does not allocate interest expense, income taxes or unusual items to segments. Reportable Segment Financial Information Three months ended June 28, 2020 Optex Systems Applied Optics Other Consolidated Revenues from external customers $ 3,851 $ 1,998 $ - $ 5,849 Intersegment revenues - 421 (421 ) - Total Revenue $ 3,851 $ 2,419 $ (421 ) $ 5,849 Interest expense $ - $ - $ 5 $ 5 Depreciation and Amortization $ 10 $ 51 $ - $ 61 Income before taxes $ 97 $ 592 $ (653 ) $ 36 Other significant noncash items: Allocated home office expense $ (170 ) $ 170 $ - $ - Loss on change in fair value of warrants $ - $ - $ 585 $ 585 Stock compensation expense $ - $ - $ 63 $ 63 Warranty Expense $ - $ 22 $ - $ 22 Segment Assets $ 13,602 $ 6,522 $ - $ 20,124 Expenditures for segment assets $ 54 $ - $ - $ 54 Reportable Segment Financial Information Three months ended June 30, 2019 Optex Systems Applied Optics Other Consolidated Revenues from external customers $ 3,571 $ 1,776 $ - $ 5,347 Intersegment revenues - 622 (622 ) - Total Revenue $ 3,571 $ 2,398 $ (622 ) $ 5,347 Interest expense $ - $ - $ 5 $ 5 Depreciation and Amortization $ 7 $ 79 $ - $ 86 Income before taxes $ 95 $ 196 $ 50 $ 341 Other significant noncash items: Allocated home office expense $ (171 ) $ 171 $ - $ - Gain on Change in Fair Value of Warrants $ - $ - $ (81 ) $ (81 ) Stock option compensation expense $ - $ - $ 26 $ 26 Royalty expense amortization $ 8 $ - $ - $ 8 Warranty Expense $ - $ 12 $ - $ 12 Segment Assets $ 9,606 $ 4,545 $ - $ 14,151 Expenditures for segment assets $ 39 $ 1 $ - $ 40 Reportable Segment Financial Information Nine months ended June 28, 2020 Optex Systems Applied Optics Other Consolidated Revenues from external customers $ 11,917 $ 6,765 $ - $ 18,682 Intersegment revenues - 1,202 (1,202 ) - Total Revenue $ 11,917 $ 7,967 $ (1,202 ) $ 18,682 Interest expense $ - $ - $ 17 $ 17 Depreciation and Amortization $ 24 $ 161 $ - $ 185 Income before taxes $ 1,148 $ 1,098 $ (641 ) $ 1,605 Other significant noncash items: Allocated home office expense $ (510 ) $ 510 $ - $ - Loss on change in fair value of warrants $ - $ - $ 504 $ 504 Stock compensation expense $ - $ - $ 120 $ 120 Warranty expense $ - $ 81 $ - $ 81 Segment Assets $ 13,602 $ 6,522 $ - $ 20,124 Expenditures for segment assets $ 100 $ 50 $ - $ 150 Reportable Segment Financial Information Nine months ended June 30, 2019 Optex Applied Optics Other Consolidated Revenues from external customers $ 12,047 $ 6,278 $ - $ 18,325 Intersegment revenues - 1,432 (1,432 ) - Total Revenue $ 12,047 $ 7,710 $ (1,432 ) $ 18,325 Interest expense $ - $ - $ 17 $ 17 Depreciation and Amortization $ 23 $ 232 $ - $ 255 Income before taxes $ 1,326 $ 904 $ (566 ) $ 1,664 Other significant noncash items: Allocated home office expense $ (512 ) $ 512 $ - $ - Loss on change in fair value of warrants $ - $ - $ 465 $ 465 Stock option compensation expense $ - $ - $ 84 $ 84 Royalty expense amortization $ 23 $ - $ - $ 23 Warranty Expense $ - $ 29 $ - $ 29 Segment Assets $ 9,606 $ 4,545 $ - $ 14,151 Expenditures for segment assets $ 43 $ 93 $ - $ 136 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Jun. 28, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 4 - Commitments and Contingencies Non-cancellable Operating Leases Optex Systems Holdings leases its office and manufacturing facilities for the Optex Systems, Inc., Richardson address and the Applied Optics Center Dallas address, as well as certain office equipment under non-cancellable operating leases. The leased facility under Optex Systems Inc. at 1420 Presidential Drive, Richardson, Texas consists of 49,100 square feet of space and expires March 31, 2021. The monthly base rent was $23.0 thousand through June 30, 2019 with annual rental payment inflationary increases between 3.4% and 4.8% occurring April 1, each year. The monthly rent includes approximately $11 thousand for additional Common Area Maintenance (CAM) fees and taxes, to be adjusted annually based on actual expenses incurred by the landlord. The leased facility under the Applied Optics Center at 9839 and 9827 Chartwell Drive, Dallas, Texas, consists of 44,867 square feet of space at the premises. The current lease term will expire on October 31, 2021, with two renewal options available to the tenant, each with a renewal term duration of five years. The monthly base rent was $20.0 thousand through September 30, 2018 and escalates approximately 3% October 1, each year thereafter through 2021. The lease includes a one-month base rent abatement for October 1 through October 31, 2016 for $19.4 thousand. The monthly rent includes approximately $6.7 thousand for additional CAM, to be adjusted annually based on actual expenses incurred by the landlord. Our obligations to make payments under the lease are secured by a $125,000 standby letter of credit. The Company has one non-cancellable office equipment lease with a commencement date of October 1, 2018 and a term of 39 months. The lease cost for the equipment is $1.5 thousand per month from October 1, 2018 through December 31, 2021. Optex Systems Holdings adopted the provisions of ASC Topic 842 “Leases” as of the fiscal year beginning on September 30, 2019. Optex Systems Holdings has two significant operating facilities leases and one equipment lease which extends beyond twelve months and fall under the guidance of ASC Topic 842. Adoption of ASC Topic 842 resulted in the balance sheet recognition of a right-of-use asset of $1.8 million and corresponding operating lease liabilities of approximately $1.9 million as of September 30, 2019, representing the present value of future lease payments for the term of the equipment lease and both segment facility leases and which assumes the exercise of a five year renewal option at the Applied Optics Center as of November 1, 2021. As of June 28, 2020, the remaining minimum lease and estimated CAM payments under the non-cancelable office and facility space leases are as follows: Non-cancellable Operating Leases (Thousands) Optex Applied Optics Office Consolidated Fiscal Year Facility Facility Lease Total Lease Total 2020 Base year lease $ 74 $ 64 $ 5 $ 143 $ 53 2021 Base year lease 148 263 18 429 149 2022 Base year lease - 22 5 27 7 Total base lease payments $ 222 $ 349 $ 28 $ 599 $ 209 2022-2026 Lease option-assumed exercise (2) - 1,312 - 1,312 Total lease payments $ 222 $ 1,661 $ 28 $ 1,911 Imputed interest on lease payments (1) (6 ) (335 ) (2 ) (343 ) Total Operating Lease Liability (3) $ 216 $ 1,326 $ 26 $ 1,568 Right-of-use Asset $ 186 $ 1,305 $ 26 $ 1,517 (1) Assumes a discount borrowing rate of 7.5%. (2) Assumes only one of the two five year options are exercised. The Company believes it is reasonably certain to exercise the first of the two 5 year options but believes the additional 5 year option falls outside of the range of reasonable predicability. (3) Short-term and Long-term portion of Operating Lease Liability is $485 thousand and $1,083 thousand, respectively. Total facilities rental and CAM expense for both facility lease agreements as of the three and nine months ended June 28, 2020 was $187 thousand and $541 thousand, respectively. Total expense under facility lease agreements as of the three and nine months ended June 30, 2019 was $175 thousand and $523 thousand, respectively. Total office equipment rentals included in operating expenses was $7 thousand and $19 thousand for the three and nine months ended June 28, 2020 and $6 thousand and $23 thousand for the three and nine months ended June 30, 2019, respectively. As of September 29, 2019, there was $83 thousand in unamortized deferred rent included in accrued liabilities which was reclassed to the right of use asset on adoption of ASC842. |
Debt Financing
Debt Financing | 9 Months Ended |
Jun. 28, 2020 | |
Debt Disclosure [Abstract] | |
Debt Financing | Note 5 - Debt Financing Credit Facility On April 16, 2020, the Company terminated its facility with Avidbank and entered into a new facility with BBVA USA. On April 16, 2020, Optex Systems Holdings, Inc. and its subsidiary, Optex Systems, Inc. (“Optex”, and with the Company, the “Borrower”) entered into a line of credit facility (the “Facility”) with BBVA, USA (“BBVA”) The substantive terms are as follows: ● The principal amount of the Facility is $2.25 million. The Facility matures on April 15, 2022. The interest rate is BBVA’s Prime Rate and is fixed at 3% for the first year, and all accrued and unpaid interest is payable monthly in arrears starting on May 15, 2020; and the principal amount is due in full with all accrued and unpaid interest and any other fees on April 15, 2022. ● There are commercially standard covenants including, but not limited to, covenants regarding maintenance of corporate existence, not incurring other indebtedness except trade debt, not changing more than 25% stock ownership of Borrower, and a Fixed Charge Coverage Ratio of 1.25:1, with the Fixed Charge Coverage Ratio defined as (earnings before taxes, amortization, depreciation, amortization and rent expense less cash taxes, distribution, dividends and fair value of warrants) divided by (current maturities on long term debt plus interest expense plus rent expense). As of June 28, 2020, the Company was in compliance with the covenants. ● The Facility contains commercially standard events of default including, but not limited to, not making payments when due; incurring a judgment of $10,000 or more not covered by insurance; not maintaining collateral and the like. ● The Facility is secured by a first lien on all of the assets of Borrower. The outstanding balance on the facility was $377 thousand as of June 28, 2020. |
Warrant Liabilities
Warrant Liabilities | 9 Months Ended |
Jun. 28, 2020 | |
Warrant Liabilities [Abstract] | |
Warrant Liabilities | Note 6-Warrant Liabilities On August 26, 2016, Optex Systems Holdings, Inc. issued 4,323,135 warrants to new shareholders and the underwriter, in connection with a public share offering. The warrants entitle the holder to purchase one share of our common stock at an exercise price equal to $1.50 per share at any time on or after August 26, 2016 (the “Initial Exercise Date”) and on or prior to the close of business on August 26, 2021 (the “Termination Date”). The Company determined that these warrants are free standing financial instruments that are legally detachable and separately exercisable from the common stock included in the public share offering. Management also determined that the warrants are puttable for cash upon a fundamental transaction at the option of the holder and as such required classification as a liability pursuant to ASC 480 “Distinguishing Liabilities from Equity” The fair value of the warrant liabilities presented below were measured using a Black Scholes Merton (BSM) valuation model. Significant inputs into the respective model at the reporting period measurement dates are as follows: Valuation Assumptions Period ended September 30, Period ended June 30, 2019 Period ended September 29, 2019 Period ended June 28, 2020 Exercise Price (1) $ 1.50 $ 1.50 $ 1.50 $ 1.50 Warrant Expiration Date (1) 8/26/2021 8/26/2021 8/26/2021 8/26/2021 Stock Price (2) $ 1.71 $ 2.06 $ 1.56 $ 1.90 Interest Rate (annual) (3) 2.88 % 1.78 % 1.63 % 0.17 % Volatility (annual) 64.05 % 57.56 % 53.66 % 52.82 % Time to Maturity (Years) 2.9 2.2 1.9 1.2 Calculated fair value per share $ 0.82 $ 0.93 $ 0.49 $ 0.62 ( 1) Based on the terms provided in the warrant agreement to purchase common stock of Optex Systems Holdings, Inc. dated August 26, 2016. (2) Based on the trading value of common stock of Optex Systems Holdings, Inc. as of each presented period ended date. (3) Interest rate for U.S. Treasury Bonds as each presented period ended date, as published by the U.S. Federal Reserve. The warrants outstanding and fair values at each of the respective valuation dates are summarized below: Warrant Liability Warrants Outstanding Fair Value per Share Fair Value (000’s) Fair Value as of period ended 9/30/2018 4,260,785 $ 0.82 $ 3,500 Reclassification to additional paid in capital upon exercise of warrants (1) (47,504 ) (48 ) Warrant buyback and cancellation (2) (88,081 ) (72 ) Loss on Change in Fair Value of Warrant Liability 465 Fair Value as of period ended 6/30/2019 4,125,200 $ 0.93 3,845 Fair Value as of period ended 9/29/2019 4,125,200 $ 0.49 $ 2,036 Loss on Change in Fair Value of Warrant Liability 504 Fair Value as of period ended 6/28/2020 4,125,200 $ 0.62 $ 2,540 (1) Exercise of warrants for gross proceeds of $72 thousand and a warrant liability fair market value of $48 thousand as of the exercise date. (2) Buyback of 88,081 warrants at $0.85 per warrant for total consideration of ($75) thousand and a warrant liability fair market value of $72 thousand. During the nine months ended June 28, 2020 there were no new issues or exercises of existing warrants. During the nine months ended June 30, 2019, 47,504 warrants were exercised, and 88,081 warrants were repurchased from the holders and cancelled. During the nine months ended June 28, 2020 and June 30, 2019, the Company recognized a $504 thousand and a $465 thousand loss on the change in fair value of warrants, respectively. The warrant liabilities are considered Level 3 liabilities on the fair value hierarchy as the determination of fair value includes various assumptions about future activities and the Company’s stock prices and historical volatility as inputs. |
Stock Based Compensation
Stock Based Compensation | 9 Months Ended |
Jun. 28, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Stock Based Compensation | Note 7-Stock Based Compensation Stock Options issued to Employees, Officers and Directors The Optex Systems Holdings 2009 Stock Option Plan provides for the issuance of up to 75,000 shares to the Company’s officers, directors, employees and to independent contractors who provide services to Optex Systems Holdings as either incentive or non-statutory stock options determined at the time of grant. As of September 29, 2019, there were 25,000 fully vested stock options outstanding at an exercise price of $10 per share and an expiration date of December 18, 2020. During the nine months ended June 28, 2020, all of the 25,000 outstanding stock options were repurchased at $0.01 per option for a total transaction of $250. There were no new grants of stock options during the nine months ended June 28, 2020. As of June 28, 2020, there are zero stock options outstanding. Restricted Stock Units issued to Officers and Employees The following table summarizes the status of Optex Systems Holdings’ aggregate non-vested restricted stock units granted under the Company’s 2016 Restricted Stock Unit Plan: Outstanding Outstanding Unvested as of October 1, 2018 99,000 - Granted - year ended September 29, 2019 200,000 - Vested - year ended September 29, 2019 (82,500 ) - Unvested as of September 29, 2019 216,500 - Granted – nine months ended June 28, 2020 50,000 300,000 Vested - nine months ended June 28, 2020 (84,500 ) - Unvested as of June 28, 2020 182,000 300,000 On January 2, 2019, the Company granted 150,000 and 50,000 restricted stock units with a January 2, 2019 grant date, to Danny Schoening and Karen Hawkins, respectively, vesting as of January 1 each year subsequent to the grant date over a three-year period at a rate of 34% in year one, and 33% each year thereafter. The stock price at grant date was $1.32 per share. The Company will amortize the grant date fair market value of $264 thousand to stock compensation expense on a straight-line basis across the three-year vesting period beginning on January 2, 2019. On January 7, 2019, the Company issued 55,565 common shares to three directors and officers, net of tax withholding of $37 thousand, in settlement of 82,500 restricted stock units which vested on January 1, 2019. On January 7, 2020, the Company issued 59,447 common shares to one director and two officers, net of tax withholding of $54 thousand, in settlement of 84,500 restricted stock units which vested on January 1, 2020. On February 17, 2020, the Company granted 50,000 restricted stock units to Bill Bates, General Manager of the Applied Optics Center. The restricted stock units vest as of January 1 each year subsequent to the grant date over a three-year period at a rate of 34% in year one, and 33% each year thereafter. The stock price at grant date was $2.13 per share. The Company will amortize the grant date fair market value of $107 thousand to stock compensation expense on a straight-line basis across the three-year vesting period beginning on February 17, 2020. On April 30, 2020, the Optex Systems Holdings, Inc. Board of Directors held a meeting and voted to increase the annual board compensation for the three independent directors from $22,000 to $36,000 with an effective date of January 1, 2020, in addition to granting 100,000 restricted shares to each independent director which shall vest at a rate of 20% per year (20,000 shares) each January 1 st Stock Based Compensation Expense Equity compensation is amortized based on a straight-line basis across the vesting or service period as applicable. The recorded compensation costs for options and shares granted and restricted stock units awarded as well as the unrecognized compensation costs are summarized in the table below: Stock Compensation (thousands) Recognized Compensation Expense Unrecognized Compensation Expense Three months ended Nine Months ended As of period ended June 28, June 30, June 28, June 30, June 28, September 29, Restricted Shares $ 31 $ - $ 31 $ - $ 494 $ - Restricted Stock Units 32 26 89 92 219 200 Total Stock Compensation $ 63 $ 26 $ 120 $ 84 $ 713 $ 200 |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Jun. 28, 2020 | |
Equity [Abstract] | |
Stockholders' Equity | Note 8 Stockholders’ Equity Dividends As of the three and nine months ended June 28, 2020 and the twelve months ended September 29, 2019, there were no declared or outstanding dividends payable. Common stock During the three and nine months ended June 28, 2020, there were 59,447 issues of common shares in settlement of the restricted stock units vesting on January 1, 2020 and 300,000 restricted shares issued to independent board members on April 30, 2020. As of September 29, 2019, and June 28, 2020, the total issued common shares were 8,436,422 and 8,795,869, respectively. On June 8, 2020 the Company announced authorization for a $1 million stock repurchase program. The shares authorized to be repurchased under the new repurchase program may be purchased from time to time at prevailing market prices, through open market or in negotiated transactions, depending upon market conditions and subject to Rule 10b-18 as promulgated by the SEC. During the three months and nine months ended June 28, 2020, there were 34,243 common shares repurchased through the program at a cost of $64 thousand. The shares have been returned to the Treasury. As of September 29, 2019, and June 28, 2020, the total outstanding common shares were 8,436,422 and 8,761,626, respectively. As of and June 28, 2020, there are 34,243 shares held in Treasury Stock. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Jun. 28, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 9 Subsequent Events None. |
Accounting Policies (Policies)
Accounting Policies (Policies) | 9 Months Ended |
Jun. 28, 2020 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation: The condensed consolidated financial statements of Optex Systems Holdings included herein have been prepared by Optex Systems Holdings, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in conjunction with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. These condensed consolidated financial statements should be read in conjunction with the annual audited consolidated financial statements and the notes thereto included in the Optex Systems Holdings’ Form 10-K for the year ended September 29, 2019 and other reports filed with the SEC. The accompanying unaudited interim condensed consolidated financial statements reflect all adjustments of a normal and recurring nature which are, in the opinion of management, necessary to present fairly the financial position, results of operations and cash flows of Optex Systems Holdings for the interim periods presented. The results of operations for these periods are not necessarily comparable to, or indicative of, results of any other interim period or for the fiscal year taken as a whole. Certain information that is not required for interim financial reporting purposes has been omitted. |
Leases | Leases: Leases (Topic 842). |
Inventory | Inventory: (Thousands) June 28, 2020 September 29, 2019 Raw Material $ 6,515 $ 7,395 Work in Process 3,853 3,599 Finished Goods 460 254 Gross Inventory $ 10,828 $ 11,248 Less: Inventory Reserves (625 ) (713 ) Net Inventory $ 10,203 $ 10,535 |
Concentration of Credit Risk | Concentration of Credit Risk: |
Accrued Warranties | Accrued Warranties: Three months ended Nine months ended June 28, June 30, June 28, June 30, Beginning balance $ 105 $ 91 $ 46 $ 101 Incurred costs for warranties satisfied during the period (16 ) (62 ) (16 ) (89 ) Warranty Expenses: Warranties reserved for new product shipped during the period (1) 22 2 78 54 Change in estimate for pre-existing warranty liabilities (2) - 10 3 (25 ) Warranty Expense 22 12 81 29 Ending balance $ 111 $ 41 $ 111 $ 41 (1) Warranty expenses accrued to cost of sales (based on current period shipments and historical warranty return rate). (2) Changes in estimated warranty liabilities recognized in cost of sales associated with: the period end customer returned warranty backlog, or the actual costs of repaired/replaced warranty units which were shipped to the customer during the current period. |
Use of Estimates | Use of Estimates: |
Fair Value of Financial Instruments | Fair Value of Financial Instruments: The carrying value of cash and cash equivalents, accounts receivable and accounts payable, are carried at, or approximate, fair value as of the reporting date because of their short-term nature. The credit facility is reported at fair value as it bears market rates of interest. Fair values for the Company’s warrant liabilities and derivatives are estimated by utilizing valuation models that consider current and expected stock prices, volatility, dividends, market interest rates, forward yield curves and discount rates. Such amounts and the recognition of such amounts are subject to significant estimates that may change in the future. The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value and requires that assets and liabilities carried at fair value be classified and disclosed in one of the following three categories: Level 1: Quoted market prices in active markets for identical assets or liabilities. Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data. Level 3: Unobservable inputs reflecting the reporting entity’s own assumptions. The accounting guidance establishes a hierarchy which requires an entity to maximize the use of quoted market prices and minimize the use of unobservable inputs. An asset or liability’s level is based on the lowest level of input that is significant to the fair value measurement. Fair value estimates are reviewed at the origination date and again at each applicable measurement date and interim or annual financial reporting dates, as applicable for the financial instrument, and are based upon certain market assumptions and pertinent information available to management at those times. The methods and significant inputs and assumptions utilized in estimating the fair value of the warrant liabilities, as well as the respective hierarchy designations are discussed further in Note 6 “Warrant Liabilities”. The warrant liability measurement is considered a Level 3 measurement based on the availability of market data and inputs and the significance of any unobservable inputs as of the measurement date. |
Revenue Recognition | Revenue Recognition: During the three and nine month periods ended June 28, 2020 there was zero and $3 thousand of revenue recognized from customer deposit liabilities (deferred contract revenue). As of June 28, 2020, there are no customer deposit liabilities. As of the three and nine months ended June 28, 2020, there are no sales commissions or other significant deferred contract costs. |
Income Tax/Deferred Tax | Income Tax/Deferred Tax: |
Earnings Per Share | Earnings per Share: A significant number of our outstanding warrants are participating securities which share dividend distributions and the allocation of any undistributed earnings (deemed dividends) with our common shareholders. During the three and nine months ended June 28, 2020, there were no declared dividends and $0 thousand and $372 thousand in allocated undistributed earnings attributable to the participating warrants, respectively. During the three and nine months ended June 30, 2019, there were no declared dividends, and $124 thousand and $471 thousand in undistributed earnings attributable to participating warrants. The Company has potentially dilutive securities outstanding which include unvested restricted stock units, stock options and warrants. In computing the dilutive effect of warrants, the numerator is adjusted to add back any deemed dividends on participating securities (warrants) and the denominator is increased to assume the conversion of the number of additional incremental common shares. The Company uses the Treasury Stock Method to compute the dilutive effect of any dilutive shares. Unvested restricted stock units, stock options and warrants that are anti-dilutive are excluded from the calculation of diluted earnings per common share. For the three months ended June 28, 2020, 182,000 unvested restricted stock units and 300,000 shares of unvested restricted stock (which convert 210,112 incremental shares) were excluded from the diluted earnings per share calculation as antidilutive due to the net loss. For the nine months ended June 28, 2020, 182,000 unvested restricted stock units and 300,000 shares of unvested restricted stock (which convert 124,007 incremental shares) were included in the diluted earnings per share calculation. For three and nine months ended June 28, 2020, 4,125,200 warrants were excluded from the diluted earnings per share calculation due to the antidilutive effect of the undistributed earnings. For three and nine months ended June 30, 2019, 4,125,200 warrants (which convert to 1,150,296 and 634,692 incremental dilutive shares for the three and nine months, respectively) and 216,500 unvested restricted stock units (which converts to 101,050 and 106,445 incremental dilutive shares for the three and nine months, respectively), were included in the diluted earnings per share calculation as dilutive, and 25,000 stock options were excluded from the earnings per share calculation as antidilutive as they were “out of the money” and not exercisable during the period. |
Accounting Policies (Tables)
Accounting Policies (Tables) | 9 Months Ended |
Jun. 28, 2020 | |
Accounting Policies [Abstract] | |
Schedule of Inventory | Inventory: (Thousands) June 28, 2020 September 29, 2019 Raw Material $ 6,515 $ 7,395 Work in Process 3,853 3,599 Finished Goods 460 254 Gross Inventory $ 10,828 $ 11,248 Less: Inventory Reserves (625 ) (713 ) Net Inventory $ 10,203 $ 10,535 |
Schedule of Warranty Reserves | Three months ended Nine months ended June 28, June 30, June 28, June 30, Beginning balance $ 105 $ 91 $ 46 $ 101 Incurred costs for warranties satisfied during the period (16 ) (62 ) (16 ) (89 ) Warranty Expenses: Warranties reserved for new product shipped during the period (1) 22 2 78 54 Change in estimate for pre-existing warranty liabilities (2) - 10 3 (25 ) Warranty Expense 22 12 81 29 Ending balance $ 111 $ 41 $ 111 $ 41 (1) Warranty expenses accrued to cost of sales (based on current period shipments and historical warranty return rate). (2) Changes in estimated warranty liabilities recognized in cost of sales associated with: the period end customer returned warranty backlog, or the actual costs of repaired/replaced warranty units which were shipped to the customer during the current period. |
Segment Reporting (Tables)
Segment Reporting (Tables) | 9 Months Ended |
Jun. 28, 2020 | |
Segment Reporting [Abstract] | |
Schedule of Information for Each of the Reportable Segments Profit or Loss as Well as Segment Assets for Each Year | The financial tables below present the information for each of the reportable segments profit or loss as well as segment assets for each year. The Company does not allocate interest expense, income taxes or unusual items to segments. Reportable Segment Financial Information Three months ended June 28, 2020 Optex Systems Applied Optics Other Consolidated Revenues from external customers $ 3,851 $ 1,998 $ - $ 5,849 Intersegment revenues - 421 (421 ) - Total Revenue $ 3,851 $ 2,419 $ (421 ) $ 5,849 Interest expense $ - $ - $ 5 $ 5 Depreciation and Amortization $ 10 $ 51 $ - $ 61 Income before taxes $ 97 $ 592 $ (653 ) $ 36 Other significant noncash items: Allocated home office expense $ (170 ) $ 170 $ - $ - Loss on change in fair value of warrants $ - $ - $ 585 $ 585 Stock compensation expense $ - $ - $ 63 $ 63 Warranty Expense $ - $ 22 $ - $ 22 Segment Assets $ 13,602 $ 6,522 $ - $ 20,124 Expenditures for segment assets $ 54 $ - $ - $ 54 Reportable Segment Financial Information Three months ended June 30, 2019 Optex Systems Applied Optics Other Consolidated Revenues from external customers $ 3,571 $ 1,776 $ - $ 5,347 Intersegment revenues - 622 (622 ) - Total Revenue $ 3,571 $ 2,398 $ (622 ) $ 5,347 Interest expense $ - $ - $ 5 $ 5 Depreciation and Amortization $ 7 $ 79 $ - $ 86 Income before taxes $ 95 $ 196 $ 50 $ 341 Other significant noncash items: Allocated home office expense $ (171 ) $ 171 $ - $ - Gain on Change in Fair Value of Warrants $ - $ - $ (81 ) $ (81 ) Stock option compensation expense $ - $ - $ 26 $ 26 Royalty expense amortization $ 8 $ - $ - $ 8 Warranty Expense $ - $ 12 $ - $ 12 Segment Assets $ 9,606 $ 4,545 $ - $ 14,151 Expenditures for segment assets $ 39 $ 1 $ - $ 40 Reportable Segment Financial Information Nine months ended June 28, 2020 Optex Systems Applied Optics Other Consolidated Revenues from external customers $ 11,917 $ 6,765 $ - $ 18,682 Intersegment revenues - 1,202 (1,202 ) - Total Revenue $ 11,917 $ 7,967 $ (1,202 ) $ 18,682 Interest expense $ - $ - $ 17 $ 17 Depreciation and Amortization $ 24 $ 161 $ - $ 185 Income before taxes $ 1,148 $ 1,098 $ (641 ) $ 1,605 Other significant noncash items: Allocated home office expense $ (510 ) $ 510 $ - $ - Loss on change in fair value of warrants $ - $ - $ 504 $ 504 Stock compensation expense $ - $ - $ 120 $ 120 Warranty expense $ - $ 81 $ - $ 81 Segment Assets $ 13,602 $ 6,522 $ - $ 20,124 Expenditures for segment assets $ 100 $ 50 $ - $ 150 Reportable Segment Financial Information Nine months ended June 30, 2019 Optex Applied Optics Other Consolidated Revenues from external customers $ 12,047 $ 6,278 $ - $ 18,325 Intersegment revenues - 1,432 (1,432 ) - Total Revenue $ 12,047 $ 7,710 $ (1,432 ) $ 18,325 Interest expense $ - $ - $ 17 $ 17 Depreciation and Amortization $ 23 $ 232 $ - $ 255 Income before taxes $ 1,326 $ 904 $ (566 ) $ 1,664 Other significant noncash items: Allocated home office expense $ (512 ) $ 512 $ - $ - Loss on change in fair value of warrants $ - $ - $ 465 $ 465 Stock option compensation expense $ - $ - $ 84 $ 84 Royalty expense amortization $ 23 $ - $ - $ 23 Warranty Expense $ - $ 29 $ - $ 29 Segment Assets $ 9,606 $ 4,545 $ - $ 14,151 Expenditures for segment assets $ 43 $ 93 $ - $ 136 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Jun. 28, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Non-cancellable Operating Leases Minimum Payments | As of June 28, 2020, the remaining minimum lease and estimated CAM payments under the non-cancelable office and facility space leases are as follows: Non-cancellable Operating Leases (Thousands) Optex Applied Optics Office Consolidated Fiscal Year Facility Facility Lease Total Lease Total 2020 Base year lease $ 74 $ 64 $ 5 $ 143 $ 53 2021 Base year lease 148 263 18 429 149 2022 Base year lease - 22 5 27 7 Total base lease payments $ 222 $ 349 $ 28 $ 599 $ 209 2022-2026 Lease option-assumed exercise (2) - 1,312 - 1,312 Total lease payments $ 222 $ 1,661 $ 28 $ 1,911 Imputed interest on lease payments (1) (6 ) (335 ) (2 ) (343 ) Total Operating Lease Liability (3) $ 216 $ 1,326 $ 26 $ 1,568 Right-of-use Asset $ 186 $ 1,305 $ 26 $ 1,517 (1) Assumes a discount borrowing rate of 7.5%. (2) Assumes only one of the two five year options are exercised. The Company believes it is reasonably certain to exercise the first of the two 5 year options but believes the additional 5 year option falls outside of the range of reasonable predicability. (3) Short-term and Long-term portion of Operating Lease Liability is $485 thousand and $1,083 thousand, respectively. |
Warrant Liabilities (Tables)
Warrant Liabilities (Tables) | 9 Months Ended |
Jun. 28, 2020 | |
Warrant Liabilities [Abstract] | |
Schedule of Fair Value Warrant Liabilities | The fair value of the warrant liabilities presented below were measured using a Black Scholes Merton (BSM) valuation model. Significant inputs into the respective model at the reporting period measurement dates are as follows: Valuation Assumptions Period ended September 30, Period ended June 30, 2019 Period ended September 29, 2019 Period ended June 28, 2020 Exercise Price (1) $ 1.50 $ 1.50 $ 1.50 $ 1.50 Warrant Expiration Date (1) 8/26/2021 8/26/2021 8/26/2021 8/26/2021 Stock Price (2) $ 1.71 $ 2.06 $ 1.56 $ 1.90 Interest Rate (annual) (3) 2.88 % 1.78 % 1.63 % 0.17 % Volatility (annual) 64.05 % 57.56 % 53.66 % 52.82 % Time to Maturity (Years) 2.9 2.2 1.9 1.2 Calculated fair value per share $ 0.82 $ 0.93 $ 0.49 $ 0.62 ( 1) Based on the terms provided in the warrant agreement to purchase common stock of Optex Systems Holdings, Inc. dated August 26, 2016. (2) Based on the trading value of common stock of Optex Systems Holdings, Inc. as of each presented period ended date. (3) Interest rate for U.S. Treasury Bonds as each presented period ended date, as published by the U.S. Federal Reserve. |
Summary of Warrants Outstanding and Fair Values | The warrants outstanding and fair values at each of the respective valuation dates are summarized below: Warrant Liability Warrants Outstanding Fair Value per Share Fair Value (000’s) Fair Value as of period ended 9/30/2018 4,260,785 $ 0.82 $ 3,500 Reclassification to additional paid in capital upon exercise of warrants (1) (47,504 ) (48 ) Warrant buyback and cancellation (2) (88,081 ) (72 ) Loss on Change in Fair Value of Warrant Liability 465 Fair Value as of period ended 6/30/2019 4,125,200 $ 0.93 3,845 Fair Value as of period ended 9/29/2019 4,125,200 $ 0.49 $ 2,036 Loss on Change in Fair Value of Warrant Liability 504 Fair Value as of period ended 6/28/2020 4,125,200 $ 0.62 $ 2,540 (1) Exercise of warrants for gross proceeds of $72 thousand and a warrant liability fair market value of $48 thousand as of the exercise date. (2) Buyback of 88,081 warrants at $0.85 per warrant for total consideration of ($75) thousand and a warrant liability fair market value of $72 thousand. |
Stock Based Compensation (Table
Stock Based Compensation (Tables) | 9 Months Ended |
Jun. 28, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of Aggregate Non-vested Restricted Stock Units Granted | The following table summarizes the status of Optex Systems Holdings’ aggregate non-vested restricted stock units granted under the Company’s 2016 Restricted Stock Unit Plan: Outstanding Outstanding Unvested as of October 1, 2018 99,000 - Granted - year ended September 29, 2019 200,000 - Vested - year ended September 29, 2019 (82,500 ) - Unvested as of September 29, 2019 216,500 - Granted – nine months ended June 28, 2020 50,000 300,000 Vested - nine months ended June 28, 2020 (84,500 ) - Unvested as of June 28, 2020 182,000 300,000 |
Schedule of Unrecognized Compensation Costs | The recorded compensation costs for options and shares granted and restricted stock units awarded as well as the unrecognized compensation costs are summarized in the table below: Stock Compensation (thousands) Recognized Compensation Expense Unrecognized Compensation Expense Three months ended Nine Months ended As of period ended June 28, June 30, June 28, June 30, June 28, September 29, Restricted Shares $ 31 $ - $ 31 $ - $ 494 $ - Restricted Stock Units 32 26 89 92 219 200 Total Stock Compensation $ 63 $ 26 $ 120 $ 84 $ 713 $ 200 |
Organization and Operations (De
Organization and Operations (Details Narrative) | 9 Months Ended |
Jun. 28, 2020ft²Employee | |
Leased facility (in square feet) | ft² | 93,967 |
Number of employees | Employee | 109 |
Revenue [Member] | Domestic Military Customers [Member] | |
Percentage of revenue | 95.00% |
Revenue [Member] | Canada [Member] | |
Percentage of revenue | 5.00% |
U.S. government [Member] | Revenue [Member] | |
Percentage of revenue | 53.00% |
U.S Defense Contractor One [Member] | Revenue [Member] | |
Percentage of revenue | 19.00% |
U.S Defense Contractor Two [Member] | Revenue [Member] | |
Percentage of revenue | 6.00% |
U.S Defense Contractor Three [Member] | Revenue [Member] | |
Percentage of revenue | 6.00% |
One Commercial Customer [Member] | Revenue [Member] | |
Percentage of revenue | 9.00% |
All Other Customers [Member] | Revenue [Member] | |
Percentage of revenue | 7.00% |
Accounting Policies (Details Na
Accounting Policies (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||||
Jun. 28, 2020 | Jun. 30, 2019 | Jun. 28, 2020 | Jun. 30, 2019 | Mar. 29, 2020 | Oct. 01, 2019 | Sep. 29, 2019 | Mar. 31, 2019 | Sep. 30, 2018 | ||
Right of use asset | $ 1,517 | $ 1,517 | ||||||||
Operating lease liability | [1] | 1,568 | 1,568 | |||||||
Warranty reserve | 111 | $ 41 | 111 | $ 41 | $ 105 | 46 | $ 91 | $ 101 | ||
Deferred contract revenue | 0 | 3 | ||||||||
Refund of customer deposit | ||||||||||
Liabilities for customer deposit | ||||||||||
Valuation allowance | (1,000) | (1,000) | (1,000) | |||||||
Deferred tax assets gross | 2,300 | 2,300 | $ 2,400 | |||||||
Net operating loss carryforward | 100 | 100 | ||||||||
Declared dividends | 0 | 0 | 0 | 0 | ||||||
Allocated undistributed earnings | $ 0 | $ 124 | $ 372 | $ 471 | ||||||
Number of stock units were included as dilutive | 8,491,803 | 9,649,660 | 8,596,745 | 9,114,055 | ||||||
Unvested Restricted Stock Units [Member] | ||||||||||
Number of stock units were included as dilutive | 182,000 | 182,000 | 216,500 | |||||||
Number of stock units were incremental dilutive shares | 210,112 | 124,007 | 106,445 | |||||||
Unvested Restricted Stock [Member] | ||||||||||
Number of stock units were included as dilutive | 300,000 | 300,000 | ||||||||
Warrant [Member] | ||||||||||
Number of stock units were included as dilutive | 4,125,200 | 4,125,200 | 4,125,200 | 4,125,200 | ||||||
Number of stock units were incremental dilutive shares | 634,692 | 634,692 | ||||||||
Restricted Shares [Member] | ||||||||||
Number of stock units were included as dilutive | 216,500 | |||||||||
Number of stock units were incremental dilutive shares | 1,150,296 | |||||||||
Stock Option [Member] | ||||||||||
Number of stock units were included as dilutive | 25,000 | 25,000 | ||||||||
Revenue [Member] | U.S. Government Agencies [Member] | ||||||||||
Concentration risk percentage | 31.20% | |||||||||
Revenue [Member] | Major U.S Defense Contractor One [Member] | ||||||||||
Concentration risk percentage | 33.50% | |||||||||
Revenue [Member] | Major U.S Defense Contractor Two [Member] | ||||||||||
Concentration risk percentage | 10.10% | |||||||||
Revenue [Member] | Major U.S Defense Contractor Three [Member] | ||||||||||
Concentration risk percentage | 8.20% | |||||||||
Revenue [Member] | Major Commercial Customer One [Member] | ||||||||||
Concentration risk percentage | 9.60% | |||||||||
Revenue [Member] | All Other Customers [Member] | ||||||||||
Concentration risk percentage | 7.40% | |||||||||
Accounting Standards Update 2016-02 [Member] | ||||||||||
Right of use asset | $ 1,800 | |||||||||
Operating lease liability | $ 1,900 | |||||||||
Lease renewal term | 5 years | 5 years | 5 years | |||||||
[1] | Short-term and Long-term portion of Operating Lease Liability is $485 thousand and $1,083 thousand, respectively |
Accounting Policies - Schedule
Accounting Policies - Schedule of Inventory (Details) - USD ($) $ in Thousands | Jun. 28, 2020 | Sep. 29, 2019 |
Accounting Policies [Abstract] | ||
Raw Material | $ 6,515 | $ 7,395 |
Work in Process | 3,853 | 3,599 |
Finished Goods | 460 | 254 |
Gross Inventory | 10,828 | 11,248 |
Less: Inventory Reserves | (625) | (713) |
Net Inventory | $ 10,203 | $ 10,535 |
Accounting Policies - Schedul_2
Accounting Policies - Schedule of Warranty Reserves (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Jun. 28, 2020 | Jun. 30, 2019 | Jun. 28, 2020 | Jun. 30, 2019 | ||
Accounting Policies [Abstract] | |||||
Beginning balance | $ 105 | $ 91 | $ 46 | $ 101 | |
Incurred costs for warranties satisfied during the period | (16) | (62) | (16) | (89) | |
Warranties reserved for new product shipped during the period | [1] | 22 | 2 | 78 | 54 |
Change in estimate for pre-existing warranty liabilities | [2] | 10 | 3 | (25) | |
Warranty Expense | 22 | 12 | 81 | 29 | |
Ending balance | $ 111 | $ 41 | $ 111 | $ 41 | |
[1] | Warranty expenses accrued to cost of sales (based on current period shipments and historical warranty return rate). | ||||
[2] | Changes in estimated warranty liabilities recognized in cost of sales associated with: the period end customer returned warranty backlog, or the actual costs of repaired/replaced warranty units which were shipped to the customer during the current period. |
Segment Reporting (Details Narr
Segment Reporting (Details Narrative) | 9 Months Ended |
Jun. 28, 2020ft²Employee | |
Number of employees | 109 |
Optex Systems (OPX) - Richardson, Texas [Member] | |
Leased facilities | ft² | 49,100 |
Number of employees | 72 |
Applied Optics Center (AOC) - Dallas [Member] | |
Leased facilities | ft² | 44,867 |
Number of employees | 37 |
Domestic Military Customers [Member] | Optex Systems (OPX) - Richardson, Texas [Member] | Revenue [Member] | |
Percentage of revenue | 92.00% |
Foreign Military Customers [Member] | Optex Systems (OPX) - Richardson, Texas [Member] | Revenue [Member] | |
Percentage of revenue | 8.00% |
U.S. government [Member] | Revenue [Member] | |
Percentage of revenue | 53.00% |
U.S. government [Member] | Optex Systems (OPX) - Richardson, Texas [Member] | Revenue [Member] | |
Percentage of revenue | 42.00% |
U.S. government [Member] | Applied Optics Center (AOC) - Dallas [Member] | Revenue [Member] | |
Percentage of revenue | 11.00% |
U.S Defense Contractor One [Member] | Revenue [Member] | |
Percentage of revenue | 19.00% |
U.S Defense Contractor One [Member] | Optex Systems (OPX) - Richardson, Texas [Member] | Revenue [Member] | |
Percentage of revenue | 15.00% |
U.S Defense Contractor Two [Member] | Revenue [Member] | |
Percentage of revenue | 6.00% |
U.S Defense Contractor Two [Member] | Optex Systems (OPX) - Richardson, Texas [Member] | Revenue [Member] | |
Percentage of revenue | 6.00% |
Commercial Customers [Member] | Applied Optics Center (AOC) - Dallas [Member] | Revenue [Member] | |
Percentage of revenue | 28.00% |
Subcontracted Customers [Member] | Applied Optics Center (AOC) - Dallas [Member] | Revenue [Member] | |
Percentage of revenue | 72.00% |
Revenues from External Customers [Member] | Applied Optics Center (AOC) - Dallas [Member] | Revenue [Member] | |
Percentage of revenue | 85.00% |
Military Contracts [Member] | Applied Optics Center (AOC) - Dallas [Member] | Intersegment Sales Revenue [Member] | |
Percentage of revenue | 15.00% |
One Major Commercial Customers [Member] | Applied Optics Center (AOC) - Dallas [Member] | Revenue [Member] | |
Percentage of revenue | 9.00% |
One Major Defense Contractor [Member] | Applied Optics Center (AOC) - Dallas [Member] | Revenue [Member] | |
Percentage of revenue | 6.00% |
Segment Reporting - Schedule of
Segment Reporting - Schedule of Information for Each of the Reportable Segments Profit or Loss as Well as Segment Assets for Each Year (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Jun. 28, 2020 | Jun. 30, 2019 | Jun. 28, 2020 | Jun. 30, 2019 | |
Total Revenue | $ 5,849 | $ 5,347 | $ 18,682 | $ 18,325 |
Interest expense | 5 | 5 | 17 | 17 |
Depreciation and Amortization | 61 | 86 | 185 | 255 |
Income before taxes | 36 | 341 | 1,605 | 1,664 |
Allocated home office expense | ||||
Gain (loss) on change in fair value of warrants | (585) | 81 | (504) | (465) |
Stock compensation expense | 63 | 26 | 120 | 84 |
Royalty expense amortization | 8 | 23 | ||
Warranty Expense | 22 | 12 | 81 | 29 |
Segment Assets | 20,124 | 14,151 | 20,124 | 14,151 |
Expenditures for segment assets | 54 | 40 | 150 | 136 |
Other (Non Allocated Costs and Intersegment Eliminations) [Member] | ||||
Total Revenue | (421) | (622) | (1,202) | (1,432) |
Interest expense | 5 | 5 | 17 | 17 |
Depreciation and Amortization | ||||
Income before taxes | (653) | 50 | (641) | (566) |
Allocated home office expense | ||||
Gain (loss) on change in fair value of warrants | 585 | 81 | (504) | (465) |
Stock compensation expense | 63 | 26 | 120 | 84 |
Royalty expense amortization | ||||
Warranty Expense | ||||
Segment Assets | ||||
Expenditures for segment assets | ||||
Optex Systems (OPX) - Richardson, Texas [Member] | ||||
Total Revenue | 3,851 | 3,571 | 11,917 | 12,047 |
Interest expense | ||||
Depreciation and Amortization | 10 | 7 | 24 | 23 |
Income before taxes | 97 | 95 | 1,148 | 1,326 |
Allocated home office expense | (170) | (171) | (510) | (512) |
Gain (loss) on change in fair value of warrants | ||||
Stock compensation expense | ||||
Royalty expense amortization | 8 | 23 | ||
Warranty Expense | ||||
Segment Assets | 13,602 | 9,606 | 13,602 | 9,606 |
Expenditures for segment assets | 54 | 39 | 100 | 43 |
Applied Optics Center (AOC) - Dallas [Member] | ||||
Total Revenue | 2,419 | 2,398 | 7,967 | 7,710 |
Interest expense | ||||
Depreciation and Amortization | 51 | 79 | 161 | 232 |
Income before taxes | 592 | 196 | 1,098 | 904 |
Allocated home office expense | 170 | 171 | 510 | 512 |
Gain (loss) on change in fair value of warrants | ||||
Stock compensation expense | ||||
Royalty expense amortization | ||||
Warranty Expense | 22 | 12 | 81 | 29 |
Segment Assets | 6,522 | 4,545 | 6,522 | 4,545 |
Expenditures for segment assets | 1 | 50 | 93 | |
Revenues from External Customers [Member] | ||||
Total Revenue | 5,849 | 5,347 | 18,682 | 18,325 |
Revenues from External Customers [Member] | Other (Non Allocated Costs and Intersegment Eliminations) [Member] | ||||
Total Revenue | ||||
Revenues from External Customers [Member] | Optex Systems (OPX) - Richardson, Texas [Member] | ||||
Total Revenue | 3,851 | 3,571 | 11,917 | 12,047 |
Revenues from External Customers [Member] | Applied Optics Center (AOC) - Dallas [Member] | ||||
Total Revenue | 1,998 | 1,776 | 6,765 | 6,278 |
Intersegment revenues [Member] | ||||
Total Revenue | ||||
Intersegment revenues [Member] | Other (Non Allocated Costs and Intersegment Eliminations) [Member] | ||||
Total Revenue | (421) | (622) | (1,202) | (1,432) |
Intersegment revenues [Member] | Optex Systems (OPX) - Richardson, Texas [Member] | ||||
Total Revenue | ||||
Intersegment revenues [Member] | Applied Optics Center (AOC) - Dallas [Member] | ||||
Total Revenue | $ 421 | $ 622 | $ 1,202 | $ 1,432 |
Commitments and Contingencies_2
Commitments and Contingencies (Details Narrative) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||||||
Jun. 30, 2019USD ($) | Oct. 31, 2016USD ($) | Jun. 28, 2020USD ($)ft² | Jun. 30, 2019USD ($) | Jun. 28, 2020USD ($)ft² | Jun. 30, 2019USD ($) | Sep. 30, 2018USD ($) | Oct. 31, 2019USD ($) | Oct. 01, 2019USD ($) | Sep. 29, 2019USD ($) | Sep. 29, 2018USD ($) | ||
Lease description | The Company has one non-cancellable office equipment lease with a commencement date of October 1, 2018 and a term of 39 months. The lease cost for the equipment is $1.5 thousand per month from October 1, 2018 through December 31, 2021. | |||||||||||
Least cost for the equipment | $ 7 | $ 6 | $ 19 | $ 23 | ||||||||
Right of use asset | 1,517 | 1,517 | ||||||||||
Operating lease liability | [1] | 1,568 | 1,568 | |||||||||
Total facilities rental and CAM expense | 187 | 541 | ||||||||||
Right of Use Assets [Member] | ||||||||||||
Unamortized deferred rent | $ 83 | |||||||||||
Facility Lease Agreement [Member] | ||||||||||||
Total facilities rental and CAM expense | $ 175 | $ 523 | ||||||||||
Accounting Standards Update 2016-02 [Member] | ||||||||||||
Renewal term | 5 years | 5 years | 5 years | |||||||||
Right of use asset | $ 1,800 | |||||||||||
Operating lease liability | $ 1,900 | |||||||||||
October 1, 2018 through December 31, 2021 [Member] | ||||||||||||
Least cost for the equipment | $ 1,500 | |||||||||||
Right of use asset | $ 1,800 | |||||||||||
Operating lease liability | $ 1,900 | |||||||||||
Optex Systems (OPX) - Richardson, Texas [Member] | ||||||||||||
Area of land | ft² | 49,100 | 49,100 | ||||||||||
Expiration date | Mar. 31, 2021 | |||||||||||
Monthly base rent | $ 23 | $ 11 | ||||||||||
Lease description | The monthly base rent was $23.0 thousand through March 31, 2019, and annual rental payment inflationary increases between 3.4% and 4.8% occurring April 1, each year. | |||||||||||
Right of use asset | $ 186 | $ 186 | ||||||||||
Operating lease liability | [1] | $ 216 | $ 216 | |||||||||
Applied Optics Center (AOC) - Dallas [Member] | ||||||||||||
Area of land | ft² | 44,867 | 44,867 | ||||||||||
Expiration date | Oct. 31, 2021 | |||||||||||
Monthly base rent | $ 194 | $ 67 | $ 20 | |||||||||
Lease description | The monthly base rent was $20.0 thousand through September 30, 2018 and escalates approximately 3% October 1, each year thereafter through 2021. | |||||||||||
Renewal term | 5 years | 5 years | ||||||||||
Secured letter of credit | $ 250 | |||||||||||
Remaining borrowing capacity | $ 125 | |||||||||||
Right of use asset | $ 1,305 | $ 1,305 | ||||||||||
Operating lease liability | [1] | $ 1,326 | $ 1,326 | |||||||||
[1] | Short-term and Long-term portion of Operating Lease Liability is $485 thousand and $1,083 thousand, respectively |
Commitments and Contingencies -
Commitments and Contingencies - Schedule of Non-cancellable Operating Leases Minimum Payments (Details) - USD ($) $ in Thousands | Jun. 28, 2020 | Sep. 29, 2019 | |
2020 Base year lease | $ 143 | ||
2021 Base year lease | 429 | ||
2022 Base year lease | 27 | ||
Total base lease payments | 599 | ||
2022-2026 Lease option-assumed exercise | [1] | 1,312 | |
Total lease payments | 1,911 | ||
Imputed interest on lease payments | [2] | (343) | |
Total Operating Lease Liability | [3] | 1,568 | |
Right-of-use Asset | 1,517 | ||
Office Equipment [Member] | |||
2020 Base year lease | 5 | ||
2021 Base year lease | 18 | ||
2022 Base year lease | 5 | ||
Total base lease payments | 28 | ||
2022-2026 Lease option-assumed exercise | [1] | ||
Total lease payments | 28 | ||
Imputed interest on lease payments | [2] | (2) | |
Total Operating Lease Liability | [3] | 26 | |
Right-of-use Asset | 26 | ||
Common Area Maintenance Estimate [Member] | |||
2020 Base year lease | 53 | ||
2021 Base year lease | 149 | ||
2022 Base year lease | 7 | ||
Total base lease payments | 209 | ||
Optex Systems (OPX) - Richardson, Texas [Member] | |||
2020 Base year lease | 74 | ||
2021 Base year lease | 148 | ||
2022 Base year lease | |||
Total base lease payments | 222 | ||
2022-2026 Lease option-assumed exercise | [1] | ||
Total lease payments | 222 | ||
Imputed interest on lease payments | [2] | (6) | |
Total Operating Lease Liability | [3] | 216 | |
Right-of-use Asset | 186 | ||
Applied Optics Center (AOC) - Dallas [Member] | |||
2020 Base year lease | 64 | ||
2021 Base year lease | 263 | ||
2022 Base year lease | 22 | ||
Total base lease payments | 349 | ||
2022-2026 Lease option-assumed exercise | [1] | 1,312 | |
Total lease payments | 1,661 | ||
Imputed interest on lease payments | [2] | (335) | |
Total Operating Lease Liability | [3] | 1,326 | |
Right-of-use Asset | $ 1,305 | ||
[1] | Assumes only one of the two five year options are exercised. The Company believes it is reasonably certain to exercise the first of the two 5 year options but believes the additional 5 year option falls outside of the range of reasonable predictability. | ||
[2] | Assumes a discount borrowing rate of 7.5%. | ||
[3] | Short-term and Long-term portion of Operating Lease Liability is $485 thousand and $1,083 thousand, respectively |
Commitments and Contingencies_3
Commitments and Contingencies - Schedule of Non-cancellable Operating Leases Minimum Payments (Details) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Jun. 28, 2020 | Sep. 29, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Borrowing discount rate | 7.50% | |
Lease options exercised description | Assumes only one of the two five year options are exercised. The Company believes it is reasonably certain to exercise the first of the two 5 year options but believes the additional 5 year option falls outside of the range of reasonable predicability. | |
Short-term operating lease | $ 485 | |
Long-term operating lease | $ 1,083 |
Debt Financing (Details Narrati
Debt Financing (Details Narrative) - BBVA [Member] - Revolving Credit Facility [Member] - USD ($) $ in Thousands | Apr. 16, 2020 | Jun. 28, 2020 |
Lineof credit principle amount | $ 2,250 | |
Line of credit interest percentage | 3.00% | |
Maturity date | Apr. 21, 2020 | |
Line of credit Description | There are commercially standard covenants including, but not limited to, covenants regarding maintenance of corporate existence, not incurring other indebtedness except trade debt, not changing more than 25% stock ownership of Borrower, and a Fixed Charge Coverage Ratio of 1.25:1 | |
Litigation Fee | $ 10 | |
Outstanding principal balance | $ 377 |
Warrant Liabilities (Details Na
Warrant Liabilities (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | Aug. 26, 2016 | Jun. 28, 2020 | Mar. 29, 2020 | Jun. 28, 2020 | Jun. 30, 2019 | Sep. 29, 2019 | [1] | Sep. 30, 2018 | [1] | ||
Exercise price of warrants | $ 0.85 | ||||||||||
New Shareholders [Member] | Underwriter [Member] | |||||||||||
Warrants issued | 4,323,135 | ||||||||||
Exercise price of warrants | $ 1.50 | ||||||||||
Termination date | Aug. 26, 2021 | ||||||||||
Warrant [Member] | |||||||||||
Exercise price of warrants | $ 1.50 | [1] | $ 1.50 | [1] | $ 1.50 | $ 1.50 | $ 1.50 | ||||
Fair value of warrant liability | $ 48 | $ (75) | $ 48 | $ (48) | |||||||
Number of warrants exercised shares | 0 | 47,504 | |||||||||
Number of warrants repurchased or cancelled | 88,081 | 88,081 | |||||||||
[1] | Based on the terms provided in the warrant agreement to purchase common stock of Optex Systems Holdings, Inc. dated August 26, 2016. |
Warrant Liabilities - Schedule
Warrant Liabilities - Schedule of Fair Value Warrant Liabilities (Details) | Jun. 28, 2020Employee$ / shares | Mar. 29, 2020$ / shares | Sep. 29, 2019Employee$ / shares | Jun. 30, 2019Employee$ / shares | Sep. 30, 2018Employee$ / shares | |||||
Exercise Price | $ 0.85 | |||||||||
Warrant [Member] | ||||||||||
Exercise Price | $ 1.50 | [1] | $ 1.50 | [1] | $ 1.50 | $ 1.50 | [1] | |||
Warrant Expiration Date | Aug. 26, 2021 | [1] | Aug. 26, 2021 | [1] | Aug. 26, 2021 | Aug. 26, 2021 | [1] | |||
Stock Price | $ 1.90 | $ 1.56 | $ 2.06 | [2] | $ 1.71 | |||||
Time to Maturity (Years) | 1 year 153 days | 1 year 10 months 25 days | 2 years 153 days | 2 years 10 months 25 days | ||||||
Calculated fair value per share | $ 0.62 | $ 0.49 | $ 0.93 | $ 0.82 | ||||||
Warrant [Member] | Interest Rate (Annual) [Member] | ||||||||||
Fair value measurement input | Employee | [3] | 0.17 | 1.63 | 1.78 | 2.88 | |||||
Warrant [Member] | Volatility (Annual) [Member] | ||||||||||
Fair value measurement input | Employee | 52.82 | 53.66 | 57.56 | 64.05 | ||||||
[1] | Based on the terms provided in the warrant agreement to purchase common stock of Optex Systems Holdings, Inc. dated August 26, 2016. | |||||||||
[2] | Based on the trading value of common stock of Optex Systems Holdings, Inc. as of each presented period ended date. | |||||||||
[3] | Interest rate for U.S. Treasury Bonds as each presented period ended date, as published by the U.S. Federal Reserve. |
Warrant Liabilities - Summary
Warrant Liabilities - Summary of Warrants Outstanding and Fair Values (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | 9 Months Ended | |||
Jun. 28, 2020 | Jun. 30, 2019 | Mar. 29, 2020 | Jun. 28, 2020 | Jun. 30, 2019 | ||
(Loss) Gain on Change in Fair Value of Warrant Liability | $ 585 | $ (81) | $ 504 | $ 465 | ||
Warrant [Member] | ||||||
Warrant liability, fair value outstanding beginning | 4,125,200 | 4,125,200 | 4,260,785 | |||
Reclassification to additional paid in capital upon exercise of warrants | [1] | (47,504) | ||||
Warrant buyback and cancellation | [2] | (88,081) | ||||
Warrant liability, fair value outstanding ending | 4,125,200 | 4,125,200 | 4,125,200 | 4,125,200 | ||
Fair Value per Share, beginning | $ 0.49 | $ 0.49 | $ 0.82 | |||
Fair Value per Share, ending | $ 0.62 | $ 0.93 | $ 0.62 | $ 0.93 | ||
Fair value of warrant liability, beginning | $ 2,036 | $ 2,036 | $ 3,500 | |||
Reclassification to additional paid in capital upon exercise of warrants Fair value | $ 48 | $ (75) | 48 | (48) | ||
Warrant buyback and cancellation fair value | (72) | |||||
(Loss) Gain on Change in Fair Value of Warrant Liability | 504 | 465 | ||||
Fair value of warrant liability, ending | $ 2,540 | $ 3,845 | $ 2,540 | $ 3,845 | ||
[1] | Exercise of warrants for gross proceeds of $72 thousand and a warrant liability fair market value of $48 thousand as of the exercise date | |||||
[2] | Buyback of 88,081 warrants at $0.85 per warrant for total consideration of ($75) thousand and a warrant liability fair market value of $72 thousand |
Warrant Liabilities - Summar_2
Warrant Liabilities - Summary of Warrants Outstanding and Fair Values (Details) (Parenthetical) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | 9 Months Ended | |||||||
Jun. 28, 2020 | Mar. 29, 2020 | Jun. 28, 2020 | Jun. 30, 2019 | Sep. 29, 2019 | [1] | Sep. 30, 2018 | [1] | |||
Proceeds from warrant exercised | $ 72 | |||||||||
Exercise price | $ 0.85 | |||||||||
Warrant [Member] | ||||||||||
Proceeds from warrant exercised | $ 72 | $ 72 | 72 | 72 | ||||||
Fair value of warrant liability | $ 48 | $ (75) | $ 48 | $ (48) | ||||||
Warrant buyback and cancellation | 88,081 | 88,081 | ||||||||
Exercise price | $ 1.50 | [1] | $ 1.50 | [1] | $ 1.50 | $ 1.50 | $ 1.50 | |||
[1] | Based on the terms provided in the warrant agreement to purchase common stock of Optex Systems Holdings, Inc. dated August 26, 2016. |
Stock Based Compensation (Detai
Stock Based Compensation (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | Apr. 30, 2020 | Feb. 17, 2020 | Jan. 07, 2020 | Jan. 02, 2020 | Jan. 07, 2019 | Jan. 02, 2019 | Jun. 28, 2020 | Sep. 29, 2019 |
Shares outstanding | 8,761,626 | 8,436,422 | ||||||
Three Directors and Officers [Member] | ||||||||
Number of shares issued during the period, shares | 55,565 | |||||||
Vested restricted stock units issued net of tax withholding | $ 37 | |||||||
Vested restricted stock units issued net of tax withholding, shares | 82,500 | |||||||
One Directors and Two Officers [Member] | ||||||||
Number of shares issued during the period, shares | 59,447 | |||||||
Vested restricted stock units issued net of tax withholding | $ 54 | |||||||
Vested restricted stock units issued net of tax withholding, shares | 84,500 | |||||||
Three Independent Directors [Member] | ||||||||
Number of non-vested shares granted | 100,000 | |||||||
Vesting period of shares | 5 years | 5 years | ||||||
Restricted shares description | An effective date of January 1, 2020, in addition to granting 100,000 restricted shares to each independent director which shall vest at a rate of 20% per year (20,000 shares) each January 1st, over the next five years, through January 1, 2025. | |||||||
Share-based compensation vesting percentage | 20.00% | |||||||
Stock issued during period shares share based compensation | 300,000 | |||||||
Stock issued during period value share based compensation | $ 525 | |||||||
Shares issued price per share | $ 1.75 | |||||||
Three Independent Directors [Member] | Minimum [Member] | ||||||||
Share based compensation | $ 22 | |||||||
Three Independent Directors [Member] | Maximum [Member] | ||||||||
Share based compensation | $ 36 | |||||||
2009 Stock Option Plan [Member] | ||||||||
Number of share authorized | 75,000 | |||||||
Fully vested stock options outstanding | 25,000 | 25,000 | ||||||
Exercise price | $ 10 | |||||||
Expiration date | Dec. 18, 2020 | |||||||
Stock options repurchased price per share | $ 0.01 | |||||||
Total transaction amount | $ 250 | |||||||
Number of remaining options, shares granted | ||||||||
Shares outstanding | ||||||||
2016 Restricted Stock Unit Plan [Member] | ||||||||
Vesting period of shares | 3 years | 3 years | ||||||
Stock price at grant date | $ 2.13 | $ 1.32 | ||||||
Amortization of grant date fair market value | $ 107 | $ 264 | ||||||
2016 Restricted Stock Unit Plan [Member] | Mr.Danny Schoening [Member] | ||||||||
Number of non-vested shares granted | 150,000 | |||||||
Vesting period of shares | 3 years | |||||||
Vesting percentage, next twelve months | 34.00% | |||||||
Vesting percentage, thereafter | 33.00% | |||||||
2016 Restricted Stock Unit Plan [Member] | Mr.Karen Hawkins [Member] | ||||||||
Number of non-vested shares granted | 50,000 | |||||||
Vesting period of shares | 3 years | |||||||
Vesting percentage, next twelve months | 34.00% | |||||||
Vesting percentage, thereafter | 33.00% | |||||||
2016 Restricted Stock Unit Plan [Member] | Bill Gates [Member] | ||||||||
Number of non-vested shares granted | 50,000 | |||||||
Vesting period of shares | 3 years | |||||||
Vesting percentage, next twelve months | 34.00% | |||||||
Vesting percentage, thereafter | 33.00% |
Stock Based Compensation - Sche
Stock Based Compensation - Schedule of Aggregate Non-vested Restricted Stock Units Granted (Details) - shares | 3 Months Ended | 9 Months Ended | 12 Months Ended |
Jun. 28, 2020 | Jun. 28, 2020 | Sep. 29, 2019 | |
Restricted Stock Units (RSUs) [Member] | |||
Outstanding Unvested Shares, Vested | (59,447) | (59,447) | |
2016 Restricted Stock Unit Plan [Member] | Restricted Stock Units (RSUs) [Member] | |||
Outstanding Unvested Shares, Beginning balance | 216,500 | 99,000 | |
Outstanding Unvested Shares, Granted | 50,000 | 200,000 | |
Outstanding Unvested Shares, Vested | (84,500) | (82,500) | |
Outstanding Unvested Shares, Ending balance | 182,000 | 182,000 | 216,500 |
2016 Restricted Stock Unit Plan [Member] | Restricted Shares [Member] | |||
Outstanding Unvested Shares, Beginning balance | |||
Outstanding Unvested Shares, Granted | 300,000 | ||
Outstanding Unvested Shares, Vested | |||
Outstanding Unvested Shares, Ending balance | 300,000 | 300,000 |
Stock Based Compensation - Sc_2
Stock Based Compensation - Schedule of Unrecognized Compensation Costs (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Jun. 28, 2020 | Jun. 30, 2019 | Jun. 28, 2020 | Jun. 30, 2019 | Sep. 29, 2019 | |
Recognized Compensation Expense | $ 63 | $ 26 | $ 120 | $ 84 | |
Unrecognized Compensation Expense | 713 | 713 | $ 200 | ||
Restricted Shares [Member] | |||||
Recognized Compensation Expense | 31 | 31 | |||
Unrecognized Compensation Expense | 494 | 494 | |||
Restricted Stock Units (RSUs) [Member] | |||||
Recognized Compensation Expense | 32 | $ 26 | 89 | $ 92 | |
Unrecognized Compensation Expense | $ 219 | $ 219 | $ 200 |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - USD ($) $ in Thousands | Jun. 26, 2020 | Jun. 11, 2020 | Apr. 30, 2020 | Jun. 28, 2020 | Jun. 28, 2020 | Sep. 29, 2019 | Jun. 08, 2020 | ||
Dividends declared, amount | |||||||||
Common shares issued | 8,795,869 | 8,795,869 | 8,436,422 | ||||||
Stock repurchase program, authorized amount | $ 1,000 | ||||||||
Stock repurchased during the period | 34,243 | 34,243 | |||||||
Stock repurchased during the period, value | $ 64 | $ 64 | $ 64 | [1] | $ 64 | [1] | |||
Common shares outstanding | 8,761,626 | 8,761,626 | 8,436,422 | ||||||
Treasury stock, shares | 34,243 | 34,243 | 0 | ||||||
Independent Board Members [Member] | |||||||||
Issuance of common stock vesting | 300,000 | ||||||||
Restricted Stock Units (RSUs) [Member] | |||||||||
Issuance of common stock vesting | 59,447 | 59,447 | |||||||
[1] | Common shares repurchased in the open market between June 11, 2020 and June 26, 2020 for $64 thousand and held in treasury stock using the cost method. |