Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Mar. 28, 2021 | May 07, 2021 | |
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 | Mar. 28, 2021 | |
Current Fiscal Year End Date | --09-27 | |
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 | 8,334,995 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2021 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Mar. 28, 2021 | Sep. 27, 2020 | |
ASSETS | |||
Cash and Cash Equivalents | $ 3,880,000 | $ 4,700,000 | |
Accounts Receivable, Net | 2,031,000 | 2,953,000 | |
Inventory, Net | 8,993,000 | 8,791,000 | |
Prepaid Expenses | 158,000 | 229,000 | |
Current Assets | 15,062,000 | 16,673,000 | |
Property and Equipment, Net | 1,005,000 | 1,006,000 | |
Other Assets | |||
Deferred Tax Asset | 1,195,000 | 1,227,000 | |
Right-of-use Asset | 3,842,000 | [1] | 1,416,000 |
Security Deposits | 23,000 | 23,000 | |
Other Assets | 5,060,000 | 2,666,000 | |
Total Assets | 21,127,000 | 20,345,000 | |
Current Liabilities | |||
Accounts Payable | 537,000 | 833,000 | |
Operating Lease Liability | 477,000 | 417,000 | |
Accrued Expenses | 812,000 | 1,077,000 | |
Warrant Liability | 1,686,000 | 2,544,000 | |
Accrued Warranty Costs | 63,000 | 83,000 | |
Customer Advance Deposits | 1,000 | ||
Current Liabilities | 3,575,000 | 4,955,000 | |
Other Liabilities | |||
Credit Facility - Long Term | 377,000 | 377,000 | |
Operating Lease Liability, net of current portion | 3,374,000 | 1,037,000 | |
Other Liabilities | 3,751,000 | 1,414,000 | |
Total Liabilities | 7,326,000 | 6,369,000 | |
Commitments and Contingencies | |||
Stockholders' Equity | |||
Common Stock - ($0.001 par, 2,000,000,000 authorized, 8,854,261 and 8,795,869 shares issued, and 8,373,594 and 8,690,136 outstanding, respectively) | 9,000 | 9,000 | |
Treasury Stock (at cost, 480,667 shares and 105,733 shares held, respectively) | (930,000) | (200,000) | |
Additional Paid in capital | 26,346,000 | 26,276,000 | |
Accumulated Deficit | (11,624,000) | (12,109,000) | |
Stockholders' Equity | 13,801,000 | 13,976,000 | |
Total Liabilities and Stockholders' Equity | $ 21,127,000 | $ 20,345,000 | |
[1] | Includes $9 thousand of unamortized deferred rent for the Applied Optics Lease term expiring on October 31, 2021. |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 28, 2021 | Sep. 27, 2020 |
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 | 8,854,261 | 8,795,869 |
Common stock, shares outstanding | 8,373,594 | 8,690,136 |
Treasury stock, shares | 480,667 | 105,733 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Mar. 28, 2021 | Mar. 29, 2020 | Mar. 28, 2021 | Mar. 29, 2020 | |
Income Statement [Abstract] | ||||
Revenue | $ 4,246 | $ 6,947 | $ 8,717 | $ 12,833 |
Cost of Sales | 3,868 | 5,328 | 7,504 | 9,747 |
Gross Margin | 378 | 1,619 | 1,213 | 3,086 |
General and Administrative Expense | 792 | 838 | 1,548 | 1,587 |
Operating Income (Loss) | (414) | 781 | (335) | 1,499 |
Gain (Loss) on Change in Fair Value of Warrants | (169) | 1,332 | 858 | 81 |
Interest Expense | (2) | (6) | (5) | (11) |
Other Income (Expense) | (171) | 1,326 | 853 | 70 |
Income (Loss) Before Taxes | (585) | 2,107 | 518 | 1,569 |
Income Tax Expense, net | 17 | 163 | 33 | 304 |
Net Income (Loss) | (602) | 1,944 | 485 | 1,265 |
Deemed dividends on participating securities | (633) | (162) | (413) | |
Net income (loss) applicable to common shareholders | $ (602) | $ 1,311 | $ 323 | $ 852 |
Basic income (loss) per share | $ (0.07) | $ 0.15 | $ 0.04 | $ 0.10 |
Weighted Average Common Shares Outstanding - basic | 8,214,481 | 8,549,437 | 8,256,879 | 8,522,653 |
Diluted income (loss) per share | $ (0.07) | $ 0.15 | $ 0.04 | $ 0.10 |
Weighted Average Common Shares Outstanding - diluted | 8,214,481 | 8,604,446 | 8,369,763 | 8,607,460 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Mar. 28, 2021 | Mar. 29, 2020 | |
Cash Flows from Operating Activities: | ||
Net Income | $ 485 | $ 1,265 |
Adjustments to Reconcile Net Income to Net Cash provided by Operating Activities: | ||
Depreciation and Amortization | 128 | 125 |
Gain on Change in Fair Value of Warrants | (858) | (81) |
Stock Compensation Expense | 114 | 57 |
Deferred Tax | 33 | 111 |
Accounts Receivable | 922 | (860) |
Inventory | (202) | 725 |
Prepaid Expenses | 71 | 191 |
Leases | (29) | (20) |
Accounts Payable and Accrued Expenses | (561) | (817) |
Accrued Warranty Costs | (20) | 59 |
Customer Advance Deposits | (1) | (3) |
Total Adjustments | (403) | (513) |
Net Cash provided by Operating Activities | 82 | 752 |
Cash Flows used in Investing Activities | ||
Purchases of Property and Equipment | (128) | (96) |
Net Cash used in Investing Activities | (128) | (96) |
Cash Flows used in Financing Activities | ||
Cash Paid for Taxes Withheld On Net Settled Restricted Stock Unit Share Issue | (44) | (54) |
Stock Repurchase | (730) | |
Net Cash used in Financing Activities | (774) | (54) |
Net Increase (Decrease) in Cash and Cash Equivalents | (820) | 602 |
Cash and Cash Equivalents at Beginning of Period | 4,700 | 1,068 |
Cash and Cash Equivalents at End of Period | 3,880 | 1,670 |
Non Cash Transactions: | ||
Right-of-Use Asset | 3,688 | 1,811 |
Operating Lease Liabilities | (3,688) | (1,894) |
Cash Transactions: | ||
Cash Paid for Taxes | 48 | 152 |
Cash Paid for Interest | $ 5 | $ 11 |
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. 29, 2019 | $ 8 | $ 26,134 | $ (13,934) | $ 12,208 | ||
Beginning balance, shares at Sep. 29, 2019 | 8,436,422 | |||||
Stock Compensation Expense | 57 | 57 | ||||
Vested restricted stock units issued net of tax withholding | (54) | (54) | ||||
Vested restricted stock units issued net of tax withholding, shares | 59,447 | |||||
Net income (loss) | 1,265 | 1,265 | ||||
Ending balance at Mar. 29, 2020 | $ 8 | 26,137 | (12,669) | 13,476 | ||
Ending balance, shares at Mar. 29, 2020 | 8,495,869 | |||||
Beginning balance at Dec. 29, 2019 | $ 8 | 26,160 | (14,613) | 11,555 | ||
Beginning balance, shares at Dec. 29, 2019 | 8,436,422 | |||||
Stock Compensation Expense | 31 | 31 | ||||
Vested restricted stock units issued net of tax withholding | (54) | (54) | ||||
Vested restricted stock units issued net of tax withholding, shares | 59,447 | |||||
Net income (loss) | 1,944 | 1,944 | ||||
Ending balance at Mar. 29, 2020 | $ 8 | 26,137 | (12,669) | 13,476 | ||
Ending balance, shares at Mar. 29, 2020 | 8,495,869 | |||||
Beginning balance at Sep. 27, 2020 | $ 9 | $ (200) | 26,276 | (12,109) | 13,976 | |
Beginning balance, shares at Sep. 27, 2020 | 8,795,869 | 105,733 | ||||
Stock Compensation Expense | 114 | 114 | ||||
Vested restricted stock units issued net of tax withholding | (44) | (44) | ||||
Vested restricted stock units issued net of tax withholding, shares | 58,392 | |||||
Common Stock Repurchase | [1] | $ (730) | (730) | |||
Common Stock Repurchase, shares | [1] | 374,934 | ||||
Net income (loss) | 485 | 485 | ||||
Ending balance at Mar. 28, 2021 | $ 9 | $ (930) | 26,346 | (11,624) | 13,801 | |
Ending balance, shares at Mar. 28, 2021 | 8,854,261 | 480,667 | ||||
Beginning balance at Dec. 27, 2020 | $ 9 | $ (615) | 26,333 | (11,022) | 14,705 | |
Beginning balance, shares at Dec. 27, 2020 | 8,795,869 | 314,325 | ||||
Stock Compensation Expense | 57 | 57 | ||||
Vested restricted stock units issued net of tax withholding | (44) | (44) | ||||
Vested restricted stock units issued net of tax withholding, shares | 58,392 | |||||
Common Stock Repurchase | [1] | $ (315) | (315) | |||
Common Stock Repurchase, shares | [1] | 166,342 | ||||
Net income (loss) | (602) | (602) | ||||
Ending balance at Mar. 28, 2021 | $ 9 | $ (930) | $ 26,346 | $ (11,624) | $ 13,801 | |
Ending balance, shares at Mar. 28, 2021 | 8,854,261 | 480,667 | ||||
[1] | Common shares repurchased in the open market through March 28, 2021 and held in treasury stock using the cost method. |
Organization and Operations
Organization and Operations | 6 Months Ended |
Mar. 28, 2021 | |
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, 25%, three major U.S. defense contractors, 31%, 13% and 9%, one commercial customer 5%, and all other customers, 17%. Approximately 89% of the total company revenue is generated from domestic customers and 11% is derived from foreign customers. Optex Systems Holdings’ operations are based in Dallas and Richardson, Texas in leased facilities comprising 93,967 square feet. As of March 28, 2021, Optex Systems Holdings operated with 85 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 distribute vaccines 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. During the last twelve months, we have experienced a significant reduction in new orders and ending customer backlog across all but one of our product lines. We attribute the lower orders to a combination of factors including a COVID-19 driven slow-down of contract awards for both U.S. military sales and foreign military sales (FMS), combined with some shifting in defense spending budget allocations in US military sales and FMS away from Army ground system vehicles toward other military agency applications. Due to the significant level of uncertainty surrounding the pandemic and its impact to our customers and the defense supply chain, we are unable to ascertain the impact further delays in contract awards and customer orders may have on our total fiscal year 2021 revenues. We have experienced a reduction of 32% in revenue volume during the first six months of fiscal year 2021, as compared to the first six months of fiscal year 2020. We have experienced a recent increase in proposal requests, and anticipate an increase in orders over the next six to twelve months, however the timing and nature of new orders in the near term cannot be determined. Any continued delays in customer orders over the next three months could further impact our total fiscal year 2021 revenue and profitability during the second half. We have implemented several cost-saving initiatives during the first and second quarters, including reductions in force, employee compensation and discretionary spending. We are reviewing additional cost reductions during the next sixty to ninety days as required to further minimize the impact of any sustained delays in customer orders beyond the first six months of fiscal year 2021. |
Accounting Policies
Accounting Policies | 6 Months Ended |
Mar. 28, 2021 | |
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 27, 2020 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: Inventory: (Thousands) March 28, 2021 September 27, 2020 Raw Material $ 4,855 $ 5,506 Work in Process 3,974 3,214 Finished Goods 731 638 Gross Inventory $ 9,560 $ 9,358 Less: Inventory Reserves (567 ) (567 ) Net Inventory $ 8,993 $ 8,791 Concentration of Credit Risk: Accrued Warranties: Three months ended Six months ended March 28, 2021 March 29, 2020 March 28, 2021 March 29, 2020 Beginning balance $ 49 $ 75 $ 83 $ 46 Incurred costs for warranties satisfied during the period (25 ) (68 ) - Warranty Expenses: Warranties reserved for new product shipped during the period (1) 5 36 9 56 Change in estimate for pre-existing warranty liabilities (2) 34 (6 ) 39 3 Warranty Expense 39 30 48 59 Ending balance $ 63 $ 105 $ 63 $ 105 (1) Warranty expenses accrued to cost of sales (based on current period shipments and historical warranty return rate. (2) Changes in estimated warranty liabilities for associated with the period end customer returned warranty backlog or repaired/replaced warranty units which were shipped to the customer during the 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 six-month periods ended March 28, 2021 and March 29, 2020, there was $0 and $1 thousand in 2021 and $3 and $3 thousand in 2020 of revenue recognized from customer deposit liabilities (deferred contract revenue). As of March 28, 2021, there are no customer deposit liabilities. As of the six months ended March 28, 2021, 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 six months ended March 28, 2021, there were no declared dividends and $0 and $162 thousand in allocated undistributed earnings attributable to the participating warrants, respectively. During the three and six months ended March 29, 2020, there were no declared dividends, and $633 thousand and $413 thousand in undistributed earnings attributable to participating warrants, respectively. 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 March 28, 2021, 99,000 unvested restricted stock units (which convert to 15,018 incremental shares) and 240,000 shares of unvested restricted stock (which convert to 36,407 incremental shares) were excluded in the diluted earnings per share calculation due to the net loss during the period. For the six months ended March 28, 2021, 99,000 unvested restricted stock units (which convert to 31,129 incremental shares) and 240,000 restricted shares (which convert to 81,755 incremental shares) were included in the diluted earnings per share calculation. For the three and six-months ended March 29, 2020, 182,000 unvested restricted stock units (which convert to 55,009 and 84,807 incremental shares for the three and six-months, respectively) were included in the diluted earnings per share calculation. For the three and six-months ended March 28, 2021 and the three and six-months ending March 29, 2020, 4,125,200 warrants were excluded from the diluted earnings per share calculation due to the antidilutive effect of the undistributed earnings. |
Segment Reporting
Segment Reporting | 6 Months Ended |
Mar. 28, 2021 | |
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 85% domestic military customers and 15% foreign military customers. For the six months ending March 28, 2021, the Optex segment revenue is derived from the U.S. government, 25%, and two major U.S. defense contractors representing 24% and 13%, 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 March 28, 2021, the Richardson facility operated with 53 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 22% and military sales to prime and subcontracted customers represent 78% of the external segment revenue. Approximately 76% of the AOC revenue is derived from external customers and approximately 24% is related to intersegment sales to Optex Systems in support of military contracts. For the six months ended March 28, 2021, the AOC segment revenue from two major defense contractors represents approximately 9%, and 7% of the Company’s consolidated revenue, respectively, and revenue from one commercial customer represents 5% of the Company’s consolidated revenue. The Applied Optics Center is located in Dallas, Texas with leased premises consisting of approximately 44,867 square feet of space. As of March 28, 2021, AOC operated with 32 full time equivalent employees in a single shift operation. The financial tables below present the information for each of the reportable segment’s 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 (thousands) Three months ended March 28, 2021 Optex Systems Richardson Applied Optics Center Dallas Other (non-allocated costs and intersegment eliminations) Consolidated Total Revenues from external customers $ 2,805 $ 1,441 $ - $ 4,246 Intersegment revenues - 530 (530 ) - Total Revenue $ 2,805 $ 1,971 $ (530 ) $ 4,246 Interest expense $ - $ - $ 2 $ 2 Depreciation and Amortization $ 10 $ 55 $ - $ 65 Loss before taxes $ (189 ) $ (168 ) $ (228 ) $ (585 ) Other significant noncash items: Allocated home office expense $ (153 ) $ 153 $ - $ - Loss on change in fair value of warrants $ - $ - $ 169 $ 169 Stock compensation expense $ - $ - $ 57 $ 57 Warranty Expense $ - $ 39 $ - $ 39 Segment Assets $ 14,820 $ 6,307 $ - $ 21,127 Expenditures for segment assets $ - $ 47 $ - $ 47 Reportable Segment Financial Information Three months ended March 29, 2020 Optex Systems Richardson Applied Optics Center Dallas Other (non-allocated costs and intersegment eliminations) Consolidated Total Revenues from external customers $ 4,422 $ 2,525 $ - $ 6,947 Intersegment revenues - 407 (407 ) - Total Revenue $ 4,422 $ 2,932 $ (407 ) $ 6,947 Interest expense $ - $ - $ 6 $ 6 Depreciation and Amortization $ 8 $ 51 $ - $ 59 Income before taxes $ 568 $ 244 $ 1,295 $ 2,107 Other significant noncash items: Allocated home office expense $ (170 ) $ 170 $ - $ - Gain on Change in Fair Value of Warrants $ - $ - $ (1,332 ) $ (1,332 ) Stock option compensation expense $ - $ - $ 31 $ 31 Warranty Expense $ - $ 30 $ - $ 30 Segment Assets $ 12,793 $ 6,784 $ - $ 19,577 Expenditures for segment assets $ 33 $ 34 $ - $ 67 Reportable Segment Financial Information Six months ended March 28, 2021 Optex Systems Applied Optics Center Other Consolidated Revenues from external customers $ 5,833 $ 2,884 $ - $ 8,717 Intersegment revenues - 896 (896 ) - Total Revenue $ 5,833 $ 3,780 $ (896 ) $ 8,717 Interest expense $ - $ - $ 5 $ 5 Depreciation and Amortization $ 21 $ 107 $ - $ 128 Income (loss) before taxes $ 24 $ (245 ) $ 739 $ 518 Other significant noncash items: Allocated home office expense $ (353 ) $ 353 $ - $ - Gain on change in fair value of warrants $ - $ - $ (858 ) $ (858 ) Stock compensation expense $ - $ - $ 114 $ 114 Warranty expense $ - $ 48 $ - $ 48 Segment Assets $ 14,820 $ 6,307 $ - $ 21,127 Expenditures for segment assets $ 20 $ 108 $ - $ 128 Reportable Segment Financial Information Six months ended March 29, 2020 Optex Systems Applied Optics Center Other Consolidated Revenues from external customers $ 8,066 $ 4,767 $ - $ 12,833 Intersegment revenues - 780 (780 ) - Total Revenue $ 8,066 $ 5,547 $ (780 ) $ 12,833 Interest expense $ - $ - $ 11 $ 11 Depreciation and Amortization $ 15 $ 110 $ - $ 125 Income before taxes $ 1,050 $ 506 $ 13 $ 1,569 Other significant noncash items: Allocated home office expense $ (340 ) $ 340 $ - $ - Gain on change in fair value of warrants $ - $ - $ (81 ) $ (81 ) Stock option compensation expense $ - $ - $ 57 $ 57 Warranty Expense $ - $ 59 $ - $ 59 Segment Assets $ 12,793 $ 6,784 $ - $ 19,577 Expenditures for segment assets $ 46 $ 50 $ - $ 96 |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Mar. 28, 2021 | |
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. The previous lease expired March 31, 2021 and the monthly base rent was $24.6 thousand through March 31, 2021. On January 11, 2021 the Company executed a sixth amendment extending the terms of its Optex Systems, Richardson location lease for eighty-six (86) months, commencing on April 1, 2021 and ending on May 31, 2028. The initial base rent is set at $25.3 thousand and escalates 3% each year thereafter on April 1, each year. The initial term includes 2 months of rent abatement for April and May 2021. The monthly rent includes approximately $11.6 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. The monthly base rent is $21.9 thousand through October 31, 2021. Our obligations to make payments under the lease are secured by a $125,000 standby letter of credit. On January 11, 2021 the Company executed a first amendment extending the terms of its current Applied Optics Center, Dallas location lease for eighty-six (86) months, commencing on November 1, 2021 and ending on December 31, 2028. The initial base rent is set at $23.6 thousand as of January 1, 2022 and escalates 2.75% each year thereafter on January 1, each year. The initial term includes 2 months of rent abatement for November and December of 2021. The amendment provides for a five-year renewal option at the end of the lease term at the greater of the then “prevailing rental rate” or the then current base rent rate. The monthly rent includes approximately $7.8 thousand for additional CAM, to be adjusted annually based on actual expenses incurred by the landlord. 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, which represented the present value of future lease payments for the term of the equipment lease and both segment facility leases and which assumed the exercise of a five-year renewal option at the Applied Optics Center as of November 1, 2021. Execution of the new lease amendments for the Dallas and Richardson facilities on January 11, 2021 resulted in the balance sheet recognition of a right-of-use asset of $3.7 million and corresponding operating lease liabilities of approximately $3.7 million during the three months ended March 28, 2021. As of March 28, 2021, 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 Richardson Applied Optics Center Office Equipment Consolidated Fiscal Year Facility Lease Payments Facility Lease Payments Lease Payments Total Lease Payments Total Variable CAM Estimate 2021 Base year lease $ 101 $ 131 $ 9 $ 241 $ 116 2022 Base year lease 308 234 5 547 237 2023 Base year lease 317 288 605 242 2024 Base year lease 327 296 623 247 2025 Base year lease 336 305 641 252 2026 Base year lease 346 313 659 257 2027 Base year lease 357 322 679 262 2028 Base year lease 241 330 571 188 2029 Base year lease - 83 83 27 Total base lease payments $ 2,333 $ 2,302 $ 14 $ 4,649 $ 1,828 Imputed interest on lease payments (1) (387 ) (410 ) (1 ) (798 ) Total Operating Lease Liability (2) $ 1,946 $ 1,892 $ 13 $ 3,851 Right-of-use Asset (3) $ 1,946 $ 1,883 $ 13 $ 3,842 (1) Assumes a discount borrowing rate of 5.0% on the new lease amendments effective as of January 11, 2021 and 7.5% on the remaining lease term for the Applied Optics Dallas facility through October 31, 2021. (2) Short-term and Long-term portion of Operating Lease Liability is $477 thousand and $3,374 thousand, respectively. (3) Includes $9 thousand of unamortized deferred rent for the Applied Optics Lease term expiring on October 31, 2021. Total facilities rental and CAM expense for both facility lease agreements as of the three and six months ended March 28, 2021 was $183 thousand and $361 thousand, respectively. Total facilities rental and CAM expense for both facility lease agreements as of the three and six months ended March 29, 2020 was $179 thousand and $354 thousand, respectively. Total office equipment rentals included in operating expenses was $5 thousand and $9 thousand for the three and six months ended March 28, 2021, respectively. Total office equipment rentals included in operating expenses was $6 thousand and $12 thousand for the three and six months ended March 29, 2020, respectively. |
Debt Financing
Debt Financing | 6 Months Ended |
Mar. 28, 2021 | |
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 variable based on BBVA’s Prime Rate plus a margin of -0.250%, initially set at 3% at loan origination, 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 March 28, 2021, 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 March 28, 2021 and September 27, 2020. |
Warrant Liabilities
Warrant Liabilities | 6 Months Ended |
Mar. 28, 2021 | |
Warrants and Rights Note Disclosure [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 29, 2019 Period ended September 27, 2020 Period ended March 29, 2020 Period ended March 28, 2021 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) $ 1.56 $ 1.96 $ 1.67 $ 1.84 Interest Rate (annual) (3) 1.63 % 0.12 % 0.33 % 0.04 % Volatility (annual) 53.66 % 51.67 % 51.04 % 45.12 % Time to Maturity (Years) 1.9 0.9 1.4 0.4 Calculated fair value per share $ 0.49 $ 0.62 $ 0.47 $ 0.41 ( 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 9/29/2019 4,125,200 $ 0.49 $ 2,036 Gain on Change in Fair Value of Warrant Liability (81 ) Fair Value as of period ended 3/29/2020 4,125,200 $ 0.47 1,955 Fair Value as of period ended 9/27/2020 4,125,200 $ 0.62 $ 2,544 Gain on Change in Fair Value of Warrant Liability (858 ) Fair Value as of period ended 3/28/2021 4,125,200 $ 0.41 $ 1,686 During the three and six months ended March 28, 2021 and March 29, 2020, there were no new issues or exercises of existing warrants. 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 | 6 Months Ended |
Mar. 28, 2021 | |
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. There were no new grants of stock options during the three months ended March 28, 2021. As of March 28, 2021, 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: Restricted Stock Units Weighted Average Grant Date Fair Value Restricted Shares Weighted Average Grant Date Fair Value Outstanding at September 29, 2019 216,500 $ 1.29 — — Granted 50,000 $ 2.13 300,000 $ 1.75 Vested (84,500 ) $ 1.25 — — Forfeited - — — — Outstanding at September 27, 2020 182,000 $ 1.54 300,000 $ 1.75 Granted — — — — Vested (83,000 ) 1.49 (60,000 ) 1.75 Forfeited — — — — Outstanding at March 28, 2021 99,000 $ 1.59 240,000 $ 1.75 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 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 January 2, 2021, the Company issued 58,392 common shares to directors and officers, net of tax withholding of $44 thousand, in settlement of 83,000 restricted stock units which vested on January 1, 2021. 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 Six months ended As of period ended March 28, 2021 March 29, 2020 March 28, 2021 March 29, 2020 March 28, 2021 September 27, 2020 Restricted Shares $ 26 $ - $ 52 $ - $ 394 $ 446 Restricted Stock Units 31 31 62 57 127 188 Total Stock Compensation $ 57 $ 31 $ 114 $ 57 $ 521 $ 634 |
Stockholders' Equity
Stockholders' Equity | 6 Months Ended |
Mar. 28, 2021 | |
Equity [Abstract] | |
Stockholders' Equity | Note 8 Stockholders’ Equity Dividends As of the six months ended March 28, 2021 and the twelve months ended September 27, 2020, there were no declared or outstanding dividends payable. Common stock 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 six months ended March 28, 2021, there were 374,934 common shares repurchased through the program at a cost of $730 thousand. As of March 28, 2021, the Company has repurchased 480,667 shares at a total cost of $930 thousand against the stock repurchase plan, with a remaining balance of $70 thousand. The shares have been returned to the Treasury. A summary of the purchases under the plan follows: (Thousands, except share and price per share data) Fiscal Period Total number of shares purchased Total purchase cost Average price paid per share (with commission) Maximum dollar value that may yet be purchased under the plan May 24, 2020 through June 28, 2020 34,243 $ 63 $ 1.84 $ 937 June 29, 2020 through July 26, 2020 6,806 13 1.89 924 July 27, 2020 through August 23, 2020 10,688 21 1.96 903 August 23, 2020 through September 27, 2020 53,996 103 1.90 800 Total shares repurchased as of September 27, 2020 105,733 $ 200 $ 1.89 $ 800 September 28, 2020 through October 25, 2020 20,948 42 2.01 758 October 26, 2020 through November 22, 2020 129,245 265 2.05 493 November 23, 2020 through December 27, 2020 58,399 109 1.86 384 December 28, 2020 through January 24, 2021 40,362 73 1.80 312 January 25, 2021 through February 21, 2021 52,180 101 1.94 211 February 22, 2021 through March 28, 2021 73,800 140 1.90 70 Total shares repurchased as of March 28, 2021 480,667 $ 930 $ 1.93 $ 70 As of September 27, 2020, and March 28, 2021, the total outstanding common shares were 8,690,136 and 8,373,594, respectively. As of September 27, 2020, and March 28, 2021, the total issued common shares were 8,795,869 and 8,854,261. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Mar. 28, 2021 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 9 Subsequent Events None. |
Accounting Policies (Policies)
Accounting Policies (Policies) | 6 Months Ended |
Mar. 28, 2021 | |
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 27, 2020 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: |
Inventory | Inventory: (Thousands) March 28, 2021 September 27, 2020 Raw Material $ 4,855 $ 5,506 Work in Process 3,974 3,214 Finished Goods 731 638 Gross Inventory $ 9,560 $ 9,358 Less: Inventory Reserves (567 ) (567 ) Net Inventory $ 8,993 $ 8,791 |
Concentration of Credit Risk | Concentration of Credit Risk: |
Accrued Warranties | Accrued Warranties: Three months ended Six months ended March 28, 2021 March 29, 2020 March 28, 2021 March 29, 2020 Beginning balance $ 49 $ 75 $ 83 $ 46 Incurred costs for warranties satisfied during the period (25 ) (68 ) - Warranty Expenses: Warranties reserved for new product shipped during the period (1) 5 36 9 56 Change in estimate for pre-existing warranty liabilities (2) 34 (6 ) 39 3 Warranty Expense 39 30 48 59 Ending balance $ 63 $ 105 $ 63 $ 105 (1) Warranty expenses accrued to cost of sales (based on current period shipments and historical warranty return rate. (2) Changes in estimated warranty liabilities for associated with the period end customer returned warranty backlog or repaired/replaced warranty units which were shipped to the customer during the 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 six-month periods ended March 28, 2021 and March 29, 2020, there was $0 and $1 thousand in 2021 and $3 and $3 thousand in 2020 of revenue recognized from customer deposit liabilities (deferred contract revenue). As of March 28, 2021, there are no customer deposit liabilities. As of the six months ended March 28, 2021, 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 six months ended March 28, 2021, there were no declared dividends and $0 and $163 thousand in allocated undistributed earnings attributable to the participating warrants, respectively. During the three and six months ended March 29, 2020, there were no declared dividends, and $633 thousand and $413 thousand in undistributed earnings attributable to participating warrants, respectively. 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 March 28, 2021, 99,000 unvested restricted stock units (which convert to 15,018 incremental shares) and 240,000 shares of unvested restricted stock (which convert to 36,407 incremental shares) were excluded in the diluted earnings per share calculation due to the net loss during the period. For the six months ended March 28, 2021, 99,000 unvested restricted stock units (which convert to 31,129 incremental shares) and 240,000 restricted shares (which convert to 81,755 incremental shares) were included in the diluted earnings per share calculation. For the three and six-months ended March 29, 2020, 182,000 unvested restricted stock units (which convert to 55,009 and 84,807 incremental shares for the three and six-months, respectively) were included in the diluted earnings per share calculation. For the three and six-months ended March 28, 2021 and the three and six-months ending March 29, 2020, 4,125,200 warrants were excluded from the diluted earnings per share calculation due to the antidilutive effect of the undistributed earnings. |
Accounting Policies (Tables)
Accounting Policies (Tables) | 6 Months Ended |
Mar. 28, 2021 | |
Accounting Policies [Abstract] | |
Schedule of Inventory | As of March 28, 2021, and September 27, 2020, inventory included: (Thousands) March 28, 2021 September 27, 2020 Raw Material $ 4,855 $ 5,506 Work in Process 3,974 3,214 Finished Goods 731 638 Gross Inventory $ 9,560 $ 9,358 Less: Inventory Reserves (567 ) (567 ) Net Inventory $ 8,993 $ 8,791 |
Schedule of Warranty Reserves | As of March 28, 2021, and September 27, 2020, the Company had warranty reserve balances of $63 thousand and $83 thousand, respectively. Three months ended Six months ended March 28, 2021 March 29, 2020 March 28, 2021 March 29, 2020 Beginning balance $ 49 $ 75 $ 83 $ 46 Incurred costs for warranties satisfied during the period (25 ) (68 ) - Warranty Expenses: Warranties reserved for new product shipped during the period (1) 5 36 9 56 Change in estimate for pre-existing warranty liabilities (2) 34 (6 ) 39 3 Warranty Expense 39 30 48 59 Ending balance $ 63 $ 105 $ 63 $ 105 (1) Warranty expenses accrued to cost of sales (based on current period shipments and historical warranty return rate. (2) Changes in estimated warranty liabilities for associated with the period end customer returned warranty backlog or repaired/replaced warranty units which were shipped to the customer during the period. |
Segment Reporting (Tables)
Segment Reporting (Tables) | 6 Months Ended |
Mar. 28, 2021 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information | The financial tables below present the information for each of the reportable segment’s 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 (thousands) Three months ended March 28, 2021 Optex Systems Richardson Applied Optics Center Dallas Other (non-allocated costs and intersegment eliminations) Consolidated Total Revenues from external customers $ 2,805 $ 1,441 $ - $ 4,246 Intersegment revenues - 530 (530 ) - Total Revenue $ 2,805 $ 1,971 $ (530 ) $ 4,246 Interest expense $ - $ - $ 2 $ 2 Depreciation and Amortization $ 10 $ 55 $ - $ 65 Loss before taxes $ (189 ) $ (168 ) $ (228 ) $ (585 ) Other significant noncash items: Allocated home office expense $ (153 ) $ 153 $ - $ - Loss on change in fair value of warrants $ - $ - $ 169 $ 169 Stock compensation expense $ - $ - $ 57 $ 57 Warranty Expense $ - $ 39 $ - $ 39 Segment Assets $ 14,820 $ 6,307 $ - $ 21,127 Expenditures for segment assets $ - $ 47 $ - $ 47 Reportable Segment Financial Information Three months ended March 29, 2020 Optex Systems Richardson Applied Optics Center Dallas Other (non-allocated costs and intersegment eliminations) Consolidated Total Revenues from external customers $ 4,422 $ 2,525 $ - $ 6,947 Intersegment revenues - 407 (407 ) - Total Revenue $ 4,422 $ 2,932 $ (407 ) $ 6,947 Interest expense $ - $ - $ 6 $ 6 Depreciation and Amortization $ 8 $ 51 $ - $ 59 Income before taxes $ 568 $ 244 $ 1,295 $ 2,107 Other significant noncash items: Allocated home office expense $ (170 ) $ 170 $ - $ - Gain on Change in Fair Value of Warrants $ - $ - $ (1,332 ) $ (1,332 ) Stock option compensation expense $ - $ - $ 31 $ 31 Warranty Expense $ - $ 30 $ - $ 30 Segment Assets $ 12,793 $ 6,784 $ - $ 19,577 Expenditures for segment assets $ 33 $ 34 $ - $ 67 Reportable Segment Financial Information Six months ended March 28, 2021 Optex Systems Applied Optics Center Other Consolidated Revenues from external customers $ 5,833 $ 2,884 $ - $ 8,717 Intersegment revenues - 896 (896 ) - Total Revenue $ 5,833 $ 3,780 $ (896 ) $ 8,717 Interest expense $ - $ - $ 5 $ 5 Depreciation and Amortization $ 21 $ 107 $ - $ 128 Income (loss) before taxes $ 24 $ (245 ) $ 739 $ 518 Other significant noncash items: Allocated home office expense $ (353 ) $ 353 $ - $ - Gain on change in fair value of warrants $ - $ - $ (858 ) $ (858 ) Stock compensation expense $ - $ - $ 114 $ 114 Warranty expense $ - $ 48 $ - $ 48 Segment Assets $ 14,820 $ 6,307 $ - $ 21,127 Expenditures for segment assets $ 20 $ 108 $ - $ 128 Reportable Segment Financial Information Six months ended March 29, 2020 Optex Systems Applied Optics Center Other Consolidated Revenues from external customers $ 8,066 $ 4,767 $ - $ 12,833 Intersegment revenues - 780 (780 ) - Total Revenue $ 8,066 $ 5,547 $ (780 ) $ 12,833 Interest expense $ - $ - $ 11 $ 11 Depreciation and Amortization $ 15 $ 110 $ - $ 125 Income before taxes $ 1,050 $ 506 $ 13 $ 1,569 Other significant noncash items: Allocated home office expense $ (340 ) $ 340 $ - $ - Gain on change in fair value of warrants $ - $ - $ (81 ) $ (81 ) Stock option compensation expense $ - $ - $ 57 $ 57 Warranty Expense $ - $ 59 $ - $ 59 Segment Assets $ 12,793 $ 6,784 $ - $ 19,577 Expenditures for segment assets $ 46 $ 50 $ - $ 96 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 6 Months Ended |
Mar. 28, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Non-cancellable Operating Leases Minimum Payments | As of March 28, 2021, 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 Richardson Applied Optics Center Office Equipment Consolidated Fiscal Year Facility Lease Payments Facility Lease Payments Lease Payments Total Lease Payments Total Variable CAM Estimate 2021 Base year lease $ 101 $ 131 $ 9 $ 241 $ 116 2022 Base year lease 308 234 5 547 237 2023 Base year lease 317 288 605 242 2024 Base year lease 327 296 623 247 2025 Base year lease 336 305 641 252 2026 Base year lease 346 313 659 257 2027 Base year lease 357 322 679 262 2028 Base year lease 241 330 571 188 2029 Base year lease - 83 83 27 Total base lease payments $ 2,333 $ 2,302 $ 14 $ 4,649 $ 1,828 Imputed interest on lease payments (1) (387 ) (410 ) (1 ) (798 ) Total Operating Lease Liability (2) $ 1,946 $ 1,892 $ 13 $ 3,851 Right-of-use Asset (3) $ 1,946 $ 1,883 $ 13 $ 3,842 (1) Assumes a discount borrowing rate of 5.0% on the new lease amendments effective as of January 11, 2021 and 7.5% on the remaining lease term for the Applied Optics Dallas facility through October 31, 2021. (2) Short-term and Long-term portion of Operating Lease Liability is $477 thousand and $3,374 thousand, respectively. (3) Includes $9 thousand of unamortized deferred rent for the Applied Optics Lease term expiring on October 31, 2021. |
Warrant Liabilities (Tables)
Warrant Liabilities (Tables) | 6 Months Ended |
Mar. 28, 2021 | |
Warrants and Rights Note Disclosure [Abstract] | |
Schedule of Fair Value Warrant Liabilities | Significant inputs into the respective model at the reporting period measurement dates are as follows: Valuation Assumptions Period ended September 29, 2019 Period ended September 27, 2020 Period ended March 29, 2020 Period ended March 28, 2021 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) $ 1.56 $ 1.96 $ 1.67 $ 1.84 Interest Rate (annual) (3) 1.63 % 0.12 % 0.33 % 0.04 % Volatility (annual) 53.66 % 51.67 % 51.04 % 45.12 % Time to Maturity (Years) 1.9 0.9 1.4 0.4 Calculated fair value per share $ 0.49 $ 0.62 $ 0.47 $ 0.41 ( 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 9/29/2019 4,125,200 $ 0.49 $ 2,036 Gain on Change in Fair Value of Warrant Liability (81 ) Fair Value as of period ended 3/29/2020 4,125,200 $ 0.47 1,955 Fair Value as of period ended 9/27/2020 4,125,200 $ 0.62 $ 2,544 Gain on Change in Fair Value of Warrant Liability (858 ) Fair Value as of period ended 3/28/2021 4,125,200 $ 0.41 $ 1,686 |
Stock Based Compensation (Table
Stock Based Compensation (Tables) | 6 Months Ended |
Mar. 28, 2021 | |
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: Restricted Stock Units Weighted Average Grant Date Fair Value Restricted Shares Weighted Average Grant Date Fair Value Outstanding at September 29, 2019 216,500 $ 1.29 — — Granted 50,000 $ 2.13 300,000 $ 1.75 Vested (84,500 ) $ 1.25 — — Forfeited - — — — Outstanding at September 27, 2020 182,000 $ 1.54 300,000 $ 1.75 Granted — — — — Vested (83,000 ) 1.49 (60,000 ) 1.75 Forfeited — — — — Outstanding at March 28, 2021 99,000 $ 1.59 240,000 $ 1.75 |
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 Six months ended As of period ended March 28, 2021 March 29, 2020 March 28, 2021 March 29, 2020 March 28, 2021 September 27, 2020 Restricted Shares $ 26 $ - $ 52 $ - $ 394 $ 446 Restricted Stock Units 31 31 62 57 127 188 Total Stock Compensation $ 57 $ 31 $ 114 $ 57 $ 521 $ 634 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 6 Months Ended |
Mar. 28, 2021 | |
Equity [Abstract] | |
Summary of Purchases Under Plan | A summary of the purchases under the plan follows: (Thousands, except share and price per share data) Fiscal Period Total number of shares purchased Total purchase cost Average price paid per share (with commission) Maximum dollar value that may yet be purchased under the plan May 24, 2020 through June 28, 2020 34,243 $ 63 $ 1.84 $ 937 June 29, 2020 through July 26, 2020 6,806 13 1.89 924 July 27, 2020 through August 23, 2020 10,688 21 1.96 903 August 23, 2020 through September 27, 2020 53,996 103 1.90 800 Total shares repurchased as of September 27, 2020 105,733 $ 200 $ 1.89 $ 800 September 28, 2020 through October 25, 2020 20,948 42 2.01 758 October 26, 2020 through November 22, 2020 129,245 265 2.05 493 November 23, 2020 through December 27, 2020 58,399 109 1.86 384 December 28, 2020 through January 24, 2021 40,362 73 1.80 312 January 25, 2021 through February 21, 2021 52,180 101 1.94 211 February 22, 2021 through March 28, 2021 73,800 140 1.90 70 Total shares repurchased as of March 28, 2021 480,667 $ 930 $ 1.93 $ 70 |
Organization and Operations (De
Organization and Operations (Details Narrative) | 6 Months Ended |
Mar. 28, 2021ft² | |
Leased facility | 93,967 |
Revenue description | We have experienced a reduction of 32% in revenue volume during the first six months of fiscal year 2021 |
Revenue [Member] | Domestic Customers [Member] | |
Percentage of revenue | 89.00% |
Revenue [Member] | Foreign Customers [Member] | |
Percentage of revenue | 11.00% |
U.S. government [Member] | Revenue [Member] | |
Percentage of revenue | 25.00% |
U.S Defense Contractor One [Member] | Revenue [Member] | |
Percentage of revenue | 31.00% |
U.S Defense Contractor Two [Member] | Revenue [Member] | |
Percentage of revenue | 13.00% |
U.S Defense Contractor Three [Member] | Revenue [Member] | |
Percentage of revenue | 9.00% |
U.S Defense Contractor Four [Member] | Revenue [Member] | |
Percentage of revenue | 5.00% |
All Other Customers [Member] | Revenue [Member] | |
Percentage of revenue | 17.00% |
Accounting Policies (Details Na
Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||||||||||
Mar. 28, 2021 | Mar. 29, 2020 | Mar. 28, 2021 | Mar. 29, 2020 | Dec. 27, 2020 | Sep. 27, 2020 | Dec. 29, 2019 | Sep. 29, 2019 | Sep. 27, 2019 | ||||
Right-of-use asset | $ 3,842,000 | [1] | $ 3,842,000 | [1] | $ 1,416,000 | $ 1,800,000 | ||||||
Lease liability | 3,851,000 | [2] | 3,851,000 | [2] | 1,336,000 | [2] | $ 1,900,000 | |||||
Warranty reserve | 63,000 | $ 105,000 | 63,000 | $ 105,000 | $ 49,000 | 83,000 | $ 75,000 | $ 46,000 | ||||
Revenue | 4,246,000 | 6,947,000 | 8,717,000 | 12,833,000 | ||||||||
Valuation allowance | 1,000,000 | 1,000,000 | $ 1,200,000 | |||||||||
Warrant [Member] | ||||||||||||
Declared Dividends | ||||||||||||
Allocated undistributed earnings | $ 0 | 633,000 | $ 162,000 | 413,000 | ||||||||
Number of stock option were included as dilutive | 4,125,200 | 4,125,200 | ||||||||||
Unvested Restricted Stock Units [Member] | ||||||||||||
Number of stock option were included as dilutive | 99,000 | 240,000 | ||||||||||
Number of stock units were incremental dilutive shares | 15,018 | 81,755 | ||||||||||
Unvested Restricted Stock [Member] | ||||||||||||
Number of stock option were included as dilutive | 240,000 | 99,000 | ||||||||||
Number of stock units were incremental dilutive shares | 36,407 | 31,129 | ||||||||||
Service Contract [Member] | ||||||||||||
Revenue | $ 120,000 | 113,000 | $ 240,000 | 226,000 | ||||||||
Customer Deposit Liabilities [Member] | ||||||||||||
Revenue | 0 | $ 3,000 | $ 1,000 | $ 3,000 | ||||||||
Revenue [Member] | U.S. Government Agencies [Member] | ||||||||||||
Concentration risk percentage | 16.00% | |||||||||||
Revenue [Member] | Major U.S Defense Contractor One [Member] | ||||||||||||
Concentration risk percentage | 46.00% | |||||||||||
Revenue [Member] | Major U.S Defense Contractor Two [Member] | ||||||||||||
Concentration risk percentage | 11.00% | |||||||||||
Revenue [Member] | Major U.S Defense Contractor Three [Member] | ||||||||||||
Concentration risk percentage | 9.00% | |||||||||||
Revenue [Member] | Major U.S Defense Contractor Three [Member] | One Commercial Customer [Member] | ||||||||||||
Concentration risk percentage | 5.00% | |||||||||||
Revenue [Member] | All Other Customers [Member] | ||||||||||||
Concentration risk percentage | 13.00% | |||||||||||
November 1, 2021 [Member] | ||||||||||||
Right-of-use asset | 3,700,000 | $ 3,700,000 | ||||||||||
Lease liability | $ 3,700,000 | $ 3,700,000 | ||||||||||
[1] | Includes $9 thousand of unamortized deferred rent for the Applied Optics Lease term expiring on October 31, 2021. | |||||||||||
[2] | Short-term and Long-term portion of Operating Lease Liability is $477 thousand and $3,374 thousand, respectively. |
Accounting Policies - Schedule
Accounting Policies - Schedule of Inventory (Details) - USD ($) $ in Thousands | Mar. 28, 2021 | Sep. 27, 2020 |
Accounting Policies [Abstract] | ||
Raw Material | $ 4,855 | $ 5,506 |
Work in Process | 3,974 | 3,214 |
Finished Goods | 731 | 638 |
Gross Inventory | 9,560 | 9,358 |
Less: Inventory Reserves | (567) | (567) |
Net Inventory | $ 8,993 | $ 8,791 |
Accounting Policies - Schedul_2
Accounting Policies - Schedule of Warranty Reserves (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Mar. 28, 2021 | Mar. 29, 2020 | Mar. 28, 2021 | Mar. 29, 2020 | ||
Accounting Policies [Abstract] | |||||
Beginning balance | $ 49 | $ 75 | $ 83 | $ 46 | |
Incurred costs for warranties satisfied during the period | (25) | (68) | |||
Warranties reserved for new product shipped during the period | [1] | 5 | 36 | 9 | 56 |
Change in estimate for pre-existing warranty liabilities | [2] | 34 | (6) | 39 | 3 |
Warranty Expense | 39 | 30 | 48 | 59 | |
Ending balance | $ 63 | $ 105 | $ 63 | $ 105 | |
[1] | Warranty expenses accrued to cost of sales (based on current period shipments and historical warranty return rate. | ||||
[2] | Changes in estimated warranty liabilities for associated with the period end customer returned warranty backlog or repaired/replaced warranty units which were shipped to the customer during the period. |
Segment Reporting (Details Narr
Segment Reporting (Details Narrative) | 6 Months Ended |
Mar. 28, 2021ft² | |
Leased facilities | 93,967 |
Optex Systems (OPX) - Richardson, Texas [Member] | |
Leased facilities | 49,100 |
Applied Optics Center (AOC) - Dallas [Member] | |
Leased facilities | 44,867 |
Domestic Military Customers [Member] | Optex Systems (OPX) - Richardson, Texas [Member] | Revenue [Member] | |
Percentage of revenue | 85.00% |
Foreign Military Customers [Member] | Optex Systems (OPX) - Richardson, Texas [Member] | Revenue [Member] | |
Percentage of revenue | 15.00% |
U.S. government [Member] | Revenue [Member] | |
Percentage of revenue | 25.00% |
U.S. government [Member] | Optex Systems (OPX) - Richardson, Texas [Member] | Revenue [Member] | |
Percentage of revenue | 25.00% |
U.S. government [Member] | Applied Optics Center (AOC) - Dallas [Member] | Revenue [Member] | |
Percentage of revenue | 24.00% |
U.S Defense Contractor One [Member] | Revenue [Member] | |
Percentage of revenue | 31.00% |
U.S Defense Contractor One [Member] | Optex Systems (OPX) - Richardson, Texas [Member] | Revenue [Member] | |
Percentage of revenue | 24.00% |
U.S Defense Contractor Two [Member] | Revenue [Member] | |
Percentage of revenue | 13.00% |
U.S Defense Contractor Two [Member] | Optex Systems (OPX) - Richardson, Texas [Member] | Revenue [Member] | |
Percentage of revenue | 13.00% |
Commercial Customers [Member] | Applied Optics Center (AOC) - Dallas [Member] | Revenue [Member] | |
Percentage of revenue | 22.00% |
Subcontracted Customers [Member] | Applied Optics Center (AOC) - Dallas [Member] | Revenue [Member] | |
Percentage of revenue | 78.00% |
Revenues from External Customers [Member] | Applied Optics Center (AOC) - Dallas [Member] | Revenue [Member] | |
Percentage of revenue | 76.00% |
One Major Commercial Customers [Member] | Applied Optics Center (AOC) - Dallas [Member] | Revenue [Member] | |
Percentage of revenue | 9.00% |
Two Major Defense Contractors [Member] | Applied Optics Center (AOC) - Dallas [Member] | Revenue [Member] | |
Percentage of revenue | 7.00% |
Three Major Defense Contractors [Member] | Applied Optics Center (AOC) - Dallas [Member] | Revenue [Member] | |
Percentage of revenue | 5.00% |
Segment Reporting - Schedule of
Segment Reporting - Schedule of Segment Reporting Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Mar. 28, 2021 | Mar. 29, 2020 | Mar. 28, 2021 | Mar. 29, 2020 | |
Total Revenue | $ 4,246 | $ 6,947 | $ 8,717 | $ 12,833 |
Interest expense | 2 | 6 | 5 | 11 |
Depreciation and Amortization | 65 | 59 | 128 | 125 |
Income (loss) before taxes | (585) | 2,107 | 518 | 1,569 |
Allocated home office expense | ||||
Loss (Gain) on change in fair value of warrants | 169 | (1,332) | (858) | (81) |
Stock compensation expense | 57 | 31 | 114 | 57 |
Warranty Expense | 39 | 30 | 48 | 59 |
Segment Assets | 21,127 | 19,577 | 21,127 | |
Expenditures for segment assets | 47 | 67 | 128 | 96 |
Other (Non Allocated Costs and Intersegment Eliminations) [Member] | ||||
Total Revenue | (530) | (407) | (896) | (780) |
Optex Systems (OPX) - Richardson, Texas [Member] | ||||
Total Revenue | 2,805 | 4,422 | 5,833 | 8,066 |
Applied Optics Center (AOC) - Dallas [Member] | ||||
Total Revenue | 1,971 | 2,932 | 3,780 | 5,547 |
Revenues from External Customers [Member] | ||||
Total Revenue | 4,246 | 6,947 | 8,717 | 12,833 |
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 | 2,805 | 4,422 | 5,833 | 8,066 |
Revenues from External Customers [Member] | Applied Optics Center (AOC) - Dallas [Member] | ||||
Total Revenue | 1,441 | 2,525 | 2,884 | 4,767 |
Intersegment revenues [Member] | ||||
Total Revenue | ||||
Intersegment revenues [Member] | Other (Non Allocated Costs and Intersegment Eliminations) [Member] | ||||
Total Revenue | (530) | (407) | (896) | (780) |
Intersegment revenues [Member] | Optex Systems (OPX) - Richardson, Texas [Member] | ||||
Total Revenue | ||||
Intersegment revenues [Member] | Applied Optics Center (AOC) - Dallas [Member] | ||||
Total Revenue | $ 530 | $ 407 | $ 896 | $ 780 |
Commitments and Contingencies_2
Commitments and Contingencies (Details Narrative) | Jan. 11, 2021USD ($) | Mar. 28, 2021USD ($)ft² | Mar. 29, 2020USD ($) | Mar. 28, 2021USD ($)ft² | Mar. 27, 2021USD ($) | Mar. 29, 2020USD ($) | Sep. 27, 2020USD ($) | Sep. 27, 2019USD ($) | ||||
Area of land | ft² | 93,967 | 93,967 | ||||||||||
Expiration date | Oct. 31, 2021 | |||||||||||
Monthly base rent | $ 11,000 | |||||||||||
Least cost for equipment | $ 5,000 | $ 6,000 | 9,000 | $ 12,000 | ||||||||
Right of use asset | 3,842,000 | [1] | 3,842,000 | [1] | $ 1,416,000 | $ 1,800,000 | ||||||
Operating lease liability | 3,851,000 | [2] | 3,851,000 | [2] | $ 1,336,000 | [2] | $ 1,900,000 | |||||
Current Lease Agreement [Member] | ||||||||||||
Lease description | The Company executed a first amendment extending the terms of its current Applied Optics Center, Dallas location lease for eighty-six (86) months, commencing on November 1, 2021 and ending on December 31, 2028. The initial base rent is set at $23.6 thousand as of January 1, 2022 and escalates 2.75% each year thereafter on January 1, each year. The initial term includes 2 months of rent abatement for November and December of 2021. The amendment provides for a five-year renewal option at the end of the lease term at the greater of the then "prevailing rental rate" or the then current base rent rate. | |||||||||||
Monthly base rent | $ 23,600 | |||||||||||
Esclated percentage | 2.75% | |||||||||||
Facility Lease Agreement [Member] | ||||||||||||
Rent expenses | 18,300 | $ 17,900 | $ 36,100 | $ 354,000 | ||||||||
October 1, 2018 through December 31, 2021 [Member] | ||||||||||||
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 equipment | $ 1,500 | |||||||||||
November 1, 2021 [Member] | ||||||||||||
Right of use asset | 3,700,000 | $ 3,700,000 | ||||||||||
Operating lease liability | $ 3,700,000 | $ 3,700,000 | ||||||||||
Renewal term | 5 years | 5 years | ||||||||||
Applied Optics Center (AOC) - Dallas [Member] | ||||||||||||
Area of land | ft² | 44,867 | 44,867 | ||||||||||
Expiration date | Mar. 31, 2021 | |||||||||||
Lease description | The monthly base rent was $24.6 thousand through March 31, 2021. On January 11, 2021 the Company executed a sixth amendment extending the terms of its Optex Systems, Richardson location lease for eighty-six (86) months, commencing on April 1, 2021 and ending on May 31, 2028. The initial base rent is set at $25.3 thousand and escalates 3% each year thereafter on April 1, each year. | |||||||||||
Monthly base rent | $ 116,000 | |||||||||||
Right of use asset | [1] | $ 1,892,000 | 1,892,000 | |||||||||
Operating lease liability | [2] | $ 1,892,000 | $ 1,892,000 | |||||||||
Optex Systems (OPX) - Chartwell Drive, Dallas, Texas [Member] | ||||||||||||
Area of land | ft² | 44,867 | 44,867 | ||||||||||
Expiration date | Oct. 31, 2021 | |||||||||||
Lease description | The monthly base rent is $21.9 thousand through October 31, 2021. | |||||||||||
Monthly base rent | $ 7,800 | |||||||||||
[1] | Includes $9 thousand of unamortized deferred rent for the Applied Optics Lease term expiring on October 31, 2021. | |||||||||||
[2] | Short-term and Long-term portion of Operating Lease Liability is $477 thousand and $3,374 thousand, respectively. |
Commitments and Contingencies -
Commitments and Contingencies - Schedule of Non-cancellable Operating Leases Minimum Payments (Details) - USD ($) | Mar. 28, 2021 | Sep. 27, 2020 | Sep. 27, 2019 | |||
2021 Base year lease | $ 241,000 | |||||
2022 Base year lease | 547,000 | |||||
2023 Base year lease | 605,000 | |||||
2024 Base year lease | 623,000 | |||||
2025 Base year lease | 641,000 | |||||
2026 Base year lease | 659,000 | |||||
2027 Base year lease | 679,000 | |||||
2028 Base year lease | 571,000 | |||||
2029 Base year lease | 83,000 | |||||
Total base lease payments | 4,649,000 | |||||
Imputed interest on lease payments | [1] | (798,000) | ||||
Total Operating Lease Liability | 3,851,000 | [2] | $ 1,336,000 | [2] | $ 1,900,000 | |
Right-of-use Asset | 3,842,000 | [3] | $ 1,416,000 | $ 1,800,000 | ||
Office Equipment [Member] | ||||||
2021 Base year lease | 9,000 | |||||
2022 Base year lease | 5,000 | |||||
Total base lease payments | 14,000 | |||||
Imputed interest on lease payments | [1] | (1,000) | ||||
Total Operating Lease Liability | [2] | 13,000 | ||||
Right-of-use Asset | [3] | 13,000 | ||||
Common Area Maintenance Estimate [Member] | ||||||
2021 Base year lease | 116,000 | |||||
2022 Base year lease | 237,000 | |||||
2023 Base year lease | 242,000 | |||||
2024 Base year lease | 247,000 | |||||
2025 Base year lease | 252,000 | |||||
2026 Base year lease | 257,000 | |||||
2027 Base year lease | 262,000 | |||||
2028 Base year lease | 188,000 | |||||
2029 Base year lease | 27,000 | |||||
Total base lease payments | 1,828,000 | |||||
Optex Systems (OPX) - Richardson, Texas [Member] | ||||||
2021 Base year lease | 101,000 | |||||
2022 Base year lease | 308,000 | |||||
2023 Base year lease | 317,000 | |||||
2024 Base year lease | 327,000 | |||||
2025 Base year lease | 336,000 | |||||
2026 Base year lease | 346,000 | |||||
2027 Base year lease | 357,000 | |||||
2028 Base year lease | 241,000 | |||||
2029 Base year lease | ||||||
Total base lease payments | 2,333,000 | |||||
Imputed interest on lease payments | [1] | (387,000) | ||||
Total Operating Lease Liability | [2] | 1,946,000 | ||||
Right-of-use Asset | [3] | 1,946,000 | ||||
Applied Optics Center (AOC) - Dallas [Member] | ||||||
2021 Base year lease | 131,000 | |||||
2022 Base year lease | 234,000 | |||||
2023 Base year lease | 288,000 | |||||
2024 Base year lease | 296,000 | |||||
2025 Base year lease | 305,000 | |||||
2026 Base year lease | 313,000 | |||||
2027 Base year lease | 322,000 | |||||
2028 Base year lease | 330,000 | |||||
2029 Base year lease | 83,000 | |||||
Total base lease payments | 2,302,000 | |||||
Imputed interest on lease payments | [1] | (410,000) | ||||
Total Operating Lease Liability | [2] | 1,892,000 | ||||
Right-of-use Asset | [3] | $ 1,892,000 | ||||
[1] | Assumes a discount borrowing rate of 5.0% on the new lease amendments effective as of January 11, 2021 and 7.5% on the remaining lease term for the Applied Optics Dallas facility through October 31, 2021. | |||||
[2] | Short-term and Long-term portion of Operating Lease Liability is $477 thousand and $3,374 thousand, respectively. | |||||
[3] | Includes $9 thousand of unamortized deferred rent for the Applied Optics Lease term expiring on October 31, 2021. |
Commitments and Contingencies_3
Commitments and Contingencies - Schedule of Non-cancellable Operating Leases Minimum Payments (Details) (Parenthetical) - USD ($) $ in Thousands | 6 Months Ended | |
Mar. 28, 2021 | Sep. 27, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Borrowing discount rate | 5.00% | |
Lease options exercised description | Assumes a discount borrowing rate of 5.0% on the new lease amendments effective as of January 11, 2021 and 7.5% on the remaining lease term for the Applied Optics Dallas facility through October 31, 2021. | |
Short-term operating lease | $ 477 | $ 417 |
Long-term operating lease | 3,374 | $ 1,037 |
Rent | $ 11 | |
Lease term expiring | Oct. 31, 2021 |
Debt Financing (Details Narrati
Debt Financing (Details Narrative) - Revolving Credit Facility [Member] - USD ($) $ in Thousands | Apr. 16, 2020 | Mar. 28, 2021 | Sep. 27, 2020 |
Outstanding principal balance | $ 377 | $ 377 | |
BBVA [Member] | |||
Line of credit principle amount | $ 2,250 | ||
Maturity date | Apr. 15, 2022 | ||
Line of credit interest percentage | 3.00% | ||
Description of term period | 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 March 28, 2021, the Company was in compliance with the covenants. | ||
Litigation Fee | $ 10 | ||
BBVA [Member] | Prime Rate Plus [Member] | |||
Line of credit interest percentage | 0.25% |
Warrant Liabilities (Details Na
Warrant Liabilities (Details Narrative) - New Shareholders [Member] - Underwriter [Member] | Aug. 26, 2016$ / sharesshares |
Warrants issued | shares | 4,323,135 |
Exercise price of warrants | $ / shares | $ 1.50 |
Termination date | Aug. 26, 2021 |
Warrant Liabilities - Schedule
Warrant Liabilities - Schedule of Fair Value Warrant Liabilities (Details) - Warrant [Member] | Mar. 29, 2021$ / shares | Mar. 28, 2021Employee$ / shares | Sep. 27, 2020$ / shares | Sep. 29, 2019$ / shares | ||||
Exercise Price | $ 1.50 | [1] | $ 1.50 | [2] | $ 1.50 | [1] | $ 1.50 | [1] |
Warrant Expiration Date | Aug. 26, 2021 | [1] | Aug. 26, 2021 | [2] | Aug. 26, 2021 | [1] | Aug. 26, 2021 | [1] |
Stock Price | $ 1.67 | [3] | $ 1.84 | [4] | $ 1.96 | [3] | $ 1.56 | [3] |
Time to Maturity (Years) | 1 year 4 months 24 days | 10 months 25 days | 1 year 10 months 25 days | |||||
Calculated fair value per share | $ 0.47 | $ 0.62 | $ 0.49 | |||||
Interest Rate (Annual) [Member] | ||||||||
Fair value measurement input | 0.33 | [5] | 0.04 | [6] | 0.12 | [5] | 1.63 | [5] |
Time to Maturity (Years) | 4 months 24 days | |||||||
Calculated fair value per share | $ 0.41 | |||||||
Volatility (Annual) [Member] | ||||||||
Fair value measurement input | 51.04 | 45.12 | 51.67 | 53.66 | ||||
[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 terms provided in the warrant agreement to purchase common stock of Optex Systems Holdings, Inc. dated August 26, 2016. | |||||||
[3] | Based on the trading value of common stock of Optex Systems Holdings, Inc. as of each presented period ended date. | |||||||
[4] | Based on the trading value of common stock of Optex Systems Holdings, Inc. as of each presented period ended date. | |||||||
[5] | Interest rate for U.S. Treasury Bonds as each presented period ended date, as published by the U.S. Federal Reserve. | |||||||
[6] | Interest rate for U.S. Treasury Bonds as each presented period ended date, as published by the U.S. Federal Reserve. |
Warrant Liabilities - Summary o
Warrant Liabilities - Summary of Warrants Outstanding and Fair Values (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Mar. 28, 2021 | Mar. 29, 2020 | Mar. 28, 2021 | Mar. 29, 2020 | |
Gain on Change in Fair Value of Warrant Liability | $ 169 | $ (1,332) | $ (858) | $ (81) |
Warrant [Member] | ||||
Warrant liability, fair value outstanding beginning | 4,125,200 | 4,125,200 | ||
Warrant liability, Gain on Change in Fair Value of Warrant Liability | ||||
Warrant liability, fair value outstanding ending | 4,125,200 | 4,125,200 | 4,125,200 | 4,125,200 |
Fair Value per Share, beginning | $ 0.62 | $ 0.49 | ||
Fair Value per Share, Gain on Change in Fair Value of Warrant Liability | ||||
Fair Value per Share, ending | $ 0.41 | $ 0.47 | $ 0.41 | $ 0.47 |
Fair value of warrant liability, beginning | $ 2,544 | $ 2,036 | ||
Gain on Change in Fair Value of Warrant Liability | (858) | (81) | ||
Fair value of warrant liability, ending | $ 1,686 | $ 1,955 | $ 1,686 | $ 1,955 |
Stock Based Compensation (Detai
Stock Based Compensation (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | Jan. 02, 2021 | Apr. 30, 2020 | Feb. 17, 2020 | Jan. 07, 2020 | Jan. 02, 2020 | Mar. 28, 2021 |
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 | |||||
Directors and Officers [Member] | ||||||
Number of shares issued during the period, shares | 58,392 | |||||
Vested restricted stock units issued net of tax withholding | $ 44 | |||||
Vested restricted stock units issued net of tax withholding, shares | 83,000 | |||||
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. | |||||
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 | |||||
Director [Member] | ||||||
Vested restricted stock units issued net of tax withholding, shares | 60,000 | |||||
Stock Option [Member] | ||||||
Number of options, shares granted | ||||||
2009 Stock Option Plan [Member] | ||||||
Number of share authorized | 75,000 | |||||
Stock options outstanding | ||||||
2016 Restricted Stock Unit Plan [Member] | ||||||
Vesting period of shares | 3 years | |||||
Amortization of grant date fair market value | $ 107 | |||||
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 price at grant date | $ 2.13 |
Stock Based Compensation - Sche
Stock Based Compensation - Schedule of Aggregate Non-vested Restricted Stock Units Granted (Details) - 2016 Restricted Stock Unit Plan [Member] - $ / shares | 6 Months Ended | 12 Months Ended |
Mar. 28, 2021 | Sep. 27, 2020 | |
Restricted Stock Units [Member] | ||
Restricted Stock Unit Shares, Beginning balance | 182,000 | 216,500 |
Restricted Stock Unit Shares, Granted | 50,000 | |
Restricted Stock Unit Shares, Vested | (83,000) | (84,500) |
Restricted Stock Unit Shares, Forfeited | ||
Restricted Stock Unit Shares, Ending balance | 99,000 | 182,000 |
Weighted Average Grant Date Fair Value, Beginning balance | $ 1.54 | $ 1.29 |
Weighted Average Grant Date Fair Value, Granted | 2.13 | |
Weighted Average Grant Date Fair Value, Vested | 1.49 | 1.25 |
Weighted Average Grant Date Fair Value, Forfeited | ||
Weighted Average Grant Date Fair Value, Ending balance | $ 1.59 | $ 1.54 |
Restricted Stock [Member] | ||
Restricted Stock Unit Shares, Beginning balance | 300,000 | |
Restricted Stock Unit Shares, Granted | 300,000 | |
Restricted Stock Unit Shares, Vested | (60,000) | |
Restricted Stock Unit Shares, Forfeited | ||
Restricted Stock Unit Shares, Ending balance | 240,000 | 300,000 |
Weighted Average Grant Date Fair Value, Beginning balance | $ 1.75 | |
Weighted Average Grant Date Fair Value, Granted | 1.75 | |
Weighted Average Grant Date Fair Value, Vested | 1.75 | |
Weighted Average Grant Date Fair Value, Forfeited | ||
Weighted Average Grant Date Fair Value, Ending balance | $ 1.75 | $ 1.75 |
Stock Based Compensation - Sc_2
Stock Based Compensation - Schedule of Unrecognized Compensation Costs (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Mar. 28, 2021 | Mar. 29, 2020 | Mar. 28, 2021 | Mar. 29, 2020 | Sep. 27, 2020 | |
Recognized Compensation Expense | $ 57 | $ 31 | $ 114 | $ 57 | |
Unrecognized Compensation Expense | 521 | 521 | $ 634 | ||
Restricted Stock [Member] | |||||
Recognized Compensation Expense | 26 | 52 | |||
Unrecognized Compensation Expense | 394 | 394 | 446 | ||
Restricted Stock Units [Member] | |||||
Recognized Compensation Expense | 31 | $ 31 | 62 | $ 57 | |
Unrecognized Compensation Expense | $ 127 | $ 127 | $ 188 |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Mar. 28, 2021 | Mar. 28, 2021 | Sep. 27, 2020 | Jun. 08, 2020 | ||
Stock repurchase program, authorized amount | $ 1,000 | ||||
Stock repurchased during the period, value | [1] | $ 315 | $ 730 | ||
Common stock, shares outstanding | 8,373,594 | 8,373,594 | 8,690,136 | ||
Common stock, shares issued | 8,854,261 | 8,854,261 | 8,795,869 | ||
Stock Repurchase Plan [Member] | |||||
Stock repurchased during the period | 480,667 | ||||
Stock repurchased during the period, value | $ 930 | ||||
Treasury Stock [Member] | |||||
Stock repurchased during the period | [1] | 166,342 | 374,934 | ||
Stock repurchased during the period, value | [1] | $ 315 | $ 730 | ||
Treasury Stock [Member] | Stock Repurchase Plan [Member] | |||||
Stock repurchased during the period, value | $ 70 | ||||
[1] | Common shares repurchased in the open market through March 28, 2021 and held in treasury stock using the cost method. |
Stockholders' Equity - Summary
Stockholders' Equity - Summary of Purchases Under Plan (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 6 Months Ended | 12 Months Ended | |||||||
Mar. 27, 2021 | Nov. 22, 2020 | Oct. 25, 2020 | Sep. 27, 2020 | Aug. 23, 2020 | Jul. 26, 2020 | Jun. 28, 2020 | Mar. 27, 2021 | Sep. 27, 2020 | Mar. 28, 2021 | |
Total number of shares purchased | 58,399 | 129,245 | 20,948 | 53,996 | 10,688 | 6,806 | 34,243 | |||
Total purchase cost | $ 108 | $ 265 | $ 42 | $ 103 | $ 21 | $ 13 | $ 63 | |||
Average price paid per share | $ 2.05 | $ 2.01 | $ 1.90 | $ 1.96 | $ 1.89 | $ 1.84 | $ 1.90 | $ 1.86 | ||
Maximum dollar value that may yet be purchased under the plan | $ 385 | $ 493 | $ 758 | $ 800 | $ 903 | $ 924 | $ 937 | |||
Shares Repurchased [Member] | ||||||||||
Total number of shares purchased | 314,325 | 105,733 | ||||||||
Total purchase cost | $ 615 | $ 200 | ||||||||
Average price paid per share | $ 1.96 | $ 1.89 | $ 1.96 | $ 1.89 | ||||||
Maximum dollar value that may yet be purchased under the plan | $ 385 | $ 800 |