Document_and_Entity_Informatio
Document and Entity Information | 6 Months Ended | |
Mar. 29, 2015 | 11-May-15 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Optex Systems Holdings Inc | |
Entity Central Index Key | 1397016 | |
Trading Symbol | opxs | |
Current Fiscal Year End Date | -19 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 170,913,943 | |
Document Type | 10-Q | |
Amendment Flag | FALSE | |
Document Period End Date | 29-Mar-15 | |
Document Fiscal Year Focus | 2015 | |
Document Fiscal Period Focus | Q2 |
Condensed_Consolidated_Balance
Condensed Consolidated Balance Sheets (USD $) | Mar. 29, 2015 | Sep. 28, 2014 |
In Thousands, unless otherwise specified | ||
Current Assets | ||
Cash | $1,115 | $1,685 |
Accounts Receivable | 1,749 | 731 |
Net Inventory | 6,300 | 5,910 |
Prepaid Expenses | 56 | 41 |
Total Current Assets | 9,220 | 8,367 |
Property and Equipment | ||
Property Plant and Equipment | 3,839 | 1,744 |
Accumulated Depreciation | -1,698 | -1,540 |
Total Property and Equipment | 2,141 | 204 |
Other Assets | ||
Intangibles | 171 | |
Prepaid Royalties - Long Term | 135 | 150 |
Security Deposits | 27 | 26 |
Total Other Assets | 333 | 176 |
Total Assets | 11,694 | 8,747 |
Current Liabilities | ||
Accounts Payable | 482 | 312 |
Accrued Expenses | 730 | 458 |
Accrued Warranties | 28 | 25 |
Customer Advance Deposits - Short Term | 594 | 1,072 |
Credit Facility | 550 | |
Total Current Liabilities | 2,384 | 1,867 |
Other Liabilities | ||
Customer Advance Deposits - Long Term | 878 | 982 |
Total Other Liabilities | 878 | 982 |
Total Liabilities | 3,262 | 2,849 |
Stockholders' Equity | ||
Common Stock - (par $0.001, 2,000,000,000 authorized, 170,913,943 shares issued and outstanding) | 171 | 171 |
Additional Paid-in-capital | 26,174 | 18,012 |
Retained (Deficit) | -17,913 | -12,285 |
Total Stockholders' Equity | 8,432 | 5,898 |
Total Liabilities and Stockholders' Equity | 11,694 | 8,747 |
Series A Preferred Stock | ||
Stockholders' Equity | ||
Preferred Stock | ||
Series B Preferred Stock | ||
Stockholders' Equity | ||
Preferred Stock |
Condensed_Consolidated_Balance1
Condensed Consolidated Balance Sheets (Parentheticals) (USD $) | Mar. 29, 2015 | Sep. 28, 2014 | Sep. 29, 2013 |
Common stock, par value (in dollars per share) | $0.00 | $0.00 | |
Common stock, shares authorized | 2,000,000,000 | 2,000,000,000 | |
Common stock, shares issued | 170,913,943 | 170,913,943 | |
Common stock, shares outstanding | 170,913,943 | 170,913,943 | 157,346,607 |
Series A Preferred Stock | |||
Preferred stock, par value (in dollars per share) | $0.00 | $0.00 | |
Preferred stock, shares authorized | 5,000 | 5,000 | |
Preferred stock, shares issued | 1,001 | 1,001 | |
Preferred stock, shares outstanding | 1,001 | 1,001 | |
Series B Preferred Stock | |||
Preferred stock, par value (in dollars per share) | $0.00 | ||
Preferred stock, shares authorized | 1,010 | 0 | |
Preferred stock, shares issued | 1,000 | 0 | |
Preferred stock, shares outstanding | 1,000 | 0 |
Condensed_Consolidated_Stateme
Condensed Consolidated Statements of Operations (Unaudited) (USD $) | 3 Months Ended | 6 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | Mar. 29, 2015 | Mar. 30, 2014 | Mar. 29, 2015 | Mar. 30, 2014 |
Income Statement [Abstract] | ||||
Revenues | $3,403 | $2,182 | $5,501 | $5,536 |
Total Cost of Sales | 3,430 | 1,818 | 5,149 | 4,555 |
Gross Margin | -27 | 364 | 352 | 981 |
General and Administrative | 810 | 577 | 1,496 | 1,205 |
Operating Loss | -837 | -213 | -1,144 | -224 |
Other Income | ||||
Gain on Purchased Asset | 2,110 | |||
Total Other Income | 2,110 | |||
Other Expenses | ||||
Change in Fair Value - Derivatives | 847 | |||
Interest Expense | -5,326 | 1 | 153 | 8 |
Total Other | -4,479 | 1 | 153 | 8 |
Income (Loss) Before Taxes | 3,642 | -214 | 813 | -232 |
Deferred Income Taxes (Benefit) | -72 | -77 | ||
Net Income (Loss) After Taxes | 3,642 | -142 | 813 | -155 |
Preferred stock dividend/premium | -6,441 | -6,441 | ||
Net loss applicable to common shareholders | ($2,799) | ($142) | ($5,628) | ($155) |
Basic and diluted income (loss) per share (in dollars per share) | ($0.02) | ($0.00) | ($0.03) | ($0.00) |
Weighted Average Common Shares Outstanding (in shares) | 170,913,943 | 160,588,050 | 170,913,943 | 158,967,329 |
Condensed_Consolidated_Stateme1
Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $) | 6 Months Ended | |
In Thousands, unless otherwise specified | Mar. 29, 2015 | Mar. 30, 2014 |
Cash flows from operating activities: | ||
Net (loss) income | $813 | ($155) |
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | ||
Depreciation and amortization | 158 | 37 |
Noncash interest expense | 143 | |
(Increase) decrease of intangible assets | -171 | |
Provision for allowance for inventory valuation | 44 | |
(Increase) decrease in deferred tax asset (net of valuation allowance) | -77 | |
Stock option compensation expense | 91 | 47 |
(Increase) decrease in accounts receivable | -1,018 | 1,849 |
(Increase) decrease in inventory (net of progress billed) | -389 | 612 |
(Increase) decrease in prepaid expenses | -15 | 1 |
(Increase) decrease in security deposits | -1 | |
Increase (decrease) in accounts payable and accrued expenses | 441 | -908 |
Increase (decrease) in accrued warranty costs | 3 | |
Increase (decrease) in customer advance deposits | -582 | -332 |
Total adjustments | -1,340 | 1,273 |
Net cash (used in) provided by operating activities | -527 | 1,118 |
Cash flows from investing activities: | ||
Purchases of property and equipment | -2,094 | |
Decrease in prepaid royalties - long term | 15 | 15 |
Net cash (used in) provided by investing activities | -2,079 | 15 |
Cash flows from financing activities: | ||
Proceeds from convertible notes issued | 1,560 | |
Debt issuance fees | -74 | |
Proceeds (to) from credit facility (net) | 550 | -858 |
Net cash provided by (used in) financing activities | 2,036 | -858 |
Net increase (decrease) in cash and cash equivalents | -570 | 275 |
Cash and cash equivalents at beginning of period | 1,685 | 882 |
Cash and cash equivalents at end of period | 1,115 | 1,157 |
Supplemental cash flow information: | ||
Cash paid for interest | 10 | 8 |
Exchange of convertible note and accrued interest to series B preferred stock | 1,629 | |
Beneficial Conversion Feature on series B preferred stock | 4,887 | |
Beneficial Conversion Feature on series A preferred stock | 1,554 | |
Exchange of preferred stock for common stock | $100 |
Organization_and_Operations
Organization and Operations | 6 Months Ended |
Mar. 29, 2015 | |
Organization, Consolidation and Presentation Of Financial Statements [Abstract] | |
Organization and Operations | Note 1 - Organization and Operations |
On March 30, 2009, Optex Systems Holdings, Inc. (formerly known as Sustut Exploration, Inc.), a Delaware corporation (“Optex Systems Holdings” or the “Company”), along with Optex Systems, Inc., a privately held Delaware corporation (“Optex Systems, Inc.”), which is a wholly-owned subsidiary of Optex Systems Holdings, entered into a reorganization agreement, pursuant to which Optex Systems, Inc. was acquired by Optex Systems Holdings in a share exchange transaction. Optex Systems Holdings became the surviving corporation. At the closing, there was a name change from Sustut Exploration, Inc. to Optex Systems Holdings, Inc., and its year end changed from December 31 to a fiscal year ending on the Sunday nearest September 30. | |
Optex Systems Holdings’ operations are based in Dallas and Richardson, Texas in leased facilities comprising approximately 93,733 square feet. As of March 29, 2015, Optex Systems Holdings operated with 77 full-time equivalent employees. | |
Optex Systems Holdings manufactures optical sighting systems and assemblies, primarily for Department of Defense and foreign military applications. 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. Optex Systems Holdings 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. On November 3, 2014, Optex Systems, Inc. purchased the assets comprising the Applied Optics Products Line of L-3 Communications, Inc., a thin film coating manufacturer for lenses used primarily in the defense industry. | |
Optex Systems Holdings is an ISO 9001:2008 certified company. | |
During the six-months ended March 29, 2015, the Company has experienced net income and a 1% decrease in revenues as compared to the six-months ended March 30, 2014. The Applied Optics Center (AOC), which the Company acquired on November 3, 2014, contributed 33% toward the current fiscal year revenue, which offset an otherwise 34% decrease in the Optex Systems Holdings base revenue excluding the acquisition. U.S. military spending has been significantly reduced as a result of the Congressional sequestration cuts to defense spending, which began in fiscal year 2013. As a result of lower U.S. government spending, the Company has continued to explore other opportunities for manufacturing outside of our traditional product lines for products which could be manufactured using our existing lines in order to fully utilize our existing capacity. Given the sizable reduction in backlog from 2014 levels, we do not anticipate being able to fully offset the reduced government spending with alternative business in the current fiscal year or in the next twelve months. | |
The Company has historically funded its operations through operations, convertible notes, preferred stock offerings and bank debt. The Company's ability to generate positive cash flows depends on a variety of factors, including the continued development and successful marketing of the Company's products. At March 29, 2015, the Company had approximately $1.1 million in cash and an outstanding payable balance of $0.5 million against our working line of credit. The line of credit allows for borrowing up to a maximum of $1 million, which fluctuates based on our open accounts receivable balance. The Company expects to continue to incur net losses for at least the next year. Successful transition to attaining profitable operations is dependent upon achieving a level of revenue adequate to support the Company’s cost structure. Management of the Company intends to manage operations commensurate with its level of working capital during the next twelve months; however, uneven revenue levels could create a working capital shortfall. In the event the Company does not successfully implement its ultimate business plan, certain assets may not be recoverable. |
Accounting_Policies
Accounting Policies | 6 Months Ended | ||||||||||||
Mar. 29, 2015 | |||||||||||||
Accounting Policies [Abstract] | |||||||||||||
Accounting Policies | Note 2 - Accounting Policies | ||||||||||||
Basis of Presentation | |||||||||||||
Principles of Consolidation: The consolidated financial statements include the accounts of Optex Systems Holdings and its wholly-owned subsidiary, Optex Systems, Inc. All significant inter-company balances and transactions have been eliminated in 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 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 Optex Systems Holdings 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 28, 2014 and other reports filed with the SEC. | |||||||||||||
The accompanying unaudited interim 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. | |||||||||||||
Use of Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statement and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from the estimates. | |||||||||||||
Inventory: Inventory is recorded at the lower of cost or market value, and adjusted, as necessary, for decreases in valuation and obsolescence. Adjustments to the valuation and obsolescence reserves are made after analyzing market conditions, current and projected sales activity, inventory costs and inventory balances to determine appropriate reserve levels. Cost is determined using the first-in first-out method. Under arrangements by which progress payments are received against certain contracts, the customer retains a security interest in the undelivered inventory identified with these contracts. Payments received for such undelivered inventory are classified as unliquidated progress payments and deducted from the gross inventory balance. As of March 29, 2015 and September 28, 2014, inventory included: | |||||||||||||
(Thousands) | |||||||||||||
29-Mar-15 | 28-Sep-14 | ||||||||||||
Raw Material | $ | 4,675 | $ | 5,136 | |||||||||
Work in Process | 2,574 | 1,854 | |||||||||||
Finished Goods | 396 | 265 | |||||||||||
Gross Inventory | $ | 7,645 | $ | 7,255 | |||||||||
Less: Inventory Reserves | (1,345 | ) | (1,345 | ) | |||||||||
Net Inventory | $ | 6,300 | $ | 5,910 | |||||||||
Net inventory increased by $390 thousand during the six months ending March 29, 2015. An increase of $940 thousand is attributable to the acquisition of the Applied Optics Center product line from L-3 on November 3, 2014, which is offset with a decrease in inventory of $550 thousand of inventory use during the period. The inventory used primarily consists of inventories purchased in prior years in support of our sighting systems product line which were shipped in the current year pursuant to the contract terms. See note 3. | |||||||||||||
Revenue Recognition: Optex Systems Holdings recognizes revenue based on the modified percentage of completion method utilizing the units-of-delivery method, in accordance with FASB ASC 605-35: | |||||||||||||
The units-of-delivery method recognizes as revenue the contract price of units of a basic production product delivered during a period and as the cost of earned revenue the costs allocable to the delivered units. Costs allocable to undelivered units are reported in the balance sheet as inventory or work in progress. The method is used in circumstances in which an entity produces units of a basic product under production-type contracts in a continuous or sequential production process to buyers’ specifications. | |||||||||||||
Optex Systems Holdings contracts are fixed price production type contracts whereby a defined order quantity is delivered to the customer during a continuous or sequential production process tailored to the buyer’s specifications (build to print). Optex Systems Holdings’ deliveries against these contracts generally occur in monthly increments across fixed delivery periods spanning from 3 to 36 months. | |||||||||||||
Optex Systems Holdings may at times have contracts that allow for invoicing based on achievement of milestone events. In such cases, Optex Systems Inc. recognizes revenue based on the milestone method in accordance with FASB ASC 605-28, as applicable. On October 24, 2011, Optex Systems, Inc. was awarded an $8.0 million contract with General Dynamics Land Systems - Canada that provided for milestone invoices up to a total of $3.9 million. Currently, there are no additional contracts providing for milestone payments. In accordance with FASB 605-28, Optex Systems, Inc. recognizes milestone payments as revenue upon completion of a substantive milestone as commensurate with the following guidelines: our performance to achieve the milestone, the milestone relates solely to past performance and is reasonable relative to all of the deliverables and payment terms within the arrangement. Milestones are not considered as substantive if any portion of the associated milestone consideration relates to the remaining deliverables in the unit of accounting. Non-substantive milestone payments are reported as a liability on the balance sheet as Short Term and Long Term Customer Advance Deposits. | |||||||||||||
Pursuant to the contract, all substantive milestones events were completed as of September 30, 2012 and as such, there was zero revenue recognized for milestones in the six months ending March 29, 2015 and March 30, 2014 and no unpaid/invoiced customer deposits related to the completed milestone events, respectively. | |||||||||||||
Customer Advance Deposits: Customer advance deposits represent amounts collected from customers in advance of shipment or revenue recognition which relate to undelivered product due to non-substantive milestone payments or other cash in advance payment terms. As of March 29, 2015, Optex Systems, Inc. had a balance of $1.5 million in customer advance deposits related to non-substantive milestone billings. The terms of the contract extend through 2017 during which time we are required to purchase the necessary materials to fulfill the delivery of products required by the contract. Of the total collected customer advance deposits, $594 thousand related to short term customer advance deposits for deliveries to occur within the next twelve months and $878 thousand related long term customer advance deposits for deliveries occurring after March 2016. During the six months ending March 29, 2015, Optex Systems Holdings liquidated $582 thousand of customer deposits for product shipped during the period. | |||||||||||||
Stock-Based Compensation: FASB ASC 718 establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services, but primarily focuses on transactions whereby an entity obtains employee services for share-based payments. FASB ASC 718 requires that the compensation cost relating to share-based payment transactions be recognized in the consolidated financial statements. That cost will be measured based on the fair value of the equity or liability instruments issued. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments. | |||||||||||||
The Company’s accounting policy for equity instruments issued to consultants and vendors in exchange for goods and services follows the provisions of FASB ASC 505-50. The measurement date for the fair value of the equity instruments issued is determined at the earlier of (i) the date at which a commitment for performance by the consultant or vendor is reached or (ii) the date at which the consultant or vendor’s performance is complete. In the case of equity instruments issued to consultants, the fair value of the equity instrument is recognized over the term of the consulting agreement. Stock-based compensation related to non-employees is accounted for based on the fair value of the related stock or options or the fair value of the services, whichever is more readily determinable in accordance with FASB ASC 718. | |||||||||||||
Derivative Financial Instruments: The Company’s objectives in using derivative financial instruments such as convertible notes are to obtain the lowest cash cost-source of funds. The company accounts for conversion options embedded in convertible notes payable in accordance with ASC 815“Derivatives and Hedging”. Further, subtopic ASC 815-15 “Embedded Derivatives” generally requires companies to bifurcate conversion options embedded in the convertible notes from their host instruments and to account for them as free standing derivative financial instruments. Derivative liabilities are recognized in the consolidated balance sheet at fair value as “Derivative Liabilities” and based on the criteria specified in FASB ASC 815-40“Derivatives and Hedging – Contracts in Entity’s own Equity”. The estimated fair value of the derivative liabilities is calculated using either the Black-Scholes-Merton, Binomial Lattice, or Monte Carlo simulation models where applicable and such estimates are revalued at each balance sheet date, with changes recorded to other income or expense as “Change in Fair Value – Derivatives” in the consolidated statement of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or equity, is evaluated at the instrument origination date and reviewed at the end of each event date (i.e. conversions, payments, etc.) and the measurement period end date for financial reporting, as applicable. Derivative instrument liabilities are classified on the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument would be required within twelve months of the balance sheet date. | |||||||||||||
Fair Value of Financial Instruments: FASB ASC 820-10, “Fair Value Measurements and Disclosures” defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The standard requires disclosure of fair value information about certain financial instruments, including, but not limited to, cash and cash equivalents, accounts receivable, refundable tax credits, prepaid expenses, accounts payable, accrued expenses, notes payable to related parties and convertible debt-related securities. ASC 820-10 applies to reported balances that are required or permitted to be measured at fair value under existing accounting pronouncements; accordingly, the standard does not require any new fair value measurements of reported balances. | |||||||||||||
ASC 820-10 emphasizes that fair value is a market-based measurement, not an entity-specific measurement. Therefore, a fair value measurement should be determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, ASC 820-10 establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy). The levels are defined below as: | |||||||||||||
· | Level 1 Valuation based on quoted market prices in active markets for identical assets or liabilities that the Company has the ability to access. | ||||||||||||
· | Level 2 Valuation based on inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly, and/or based on quoted prices for similar assets and liabilities in active markets. | ||||||||||||
· | Level 3 Valuations are unobservable inputs for the asset or liability, which is typically based on an entity’s own assumptions of what market participants would use as fair value, as there is little, if any, related market activity. | ||||||||||||
The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability | |||||||||||||
Fair value estimates are reviewed at the origination date and again at the each applicable measurement date and interim or annual financial reporting dates, as applicable financial instrument, and are based upon certain market assumptions and pertinent information available to management at those times. The carrying value of the balance sheet financial instruments included in Optex Systems Holdings’ consolidated financial statements approximated their fair values as of the reporting date. | |||||||||||||
The following table represents certain assets and liabilities of Optex Systems Holdings measured and recorded at fair value on a recurring basis and their level within the fair value hierarchy as of March 29, 2015. | |||||||||||||
(Thousands) | |||||||||||||
Level 1 | Level 2 | Level 3 | |||||||||||
Derivatives Liabilities – Long Term | $ | - | $ | - | $ | - | |||||||
(Note Conversion Feature) | |||||||||||||
As of March 29, 2015, $1.6 million of Convertible Notes Payable, which had resulted in prior period derivative liabilities of $6.1 million, were converted to Series B Preferred Stock which is outside of the scope of ASC 815-15 embedded derivatives and ASC 820-10 fair value measurement. | |||||||||||||
Beneficial Conversion Features of Convertible Securities: Conversion options that are not bifurcated as a derivative pursuant to ASC 815 and not accounted for as a separate equity component under the cash conversion guidance are evaluated to determine whether they are beneficial to the investor at inception (a beneficial conversion feature) or may become beneficial in the future due to potential adjustments. The beneficial conversion feature guidance in ASC 470-20 applies to convertible stock as well as convertible debt which are outside the scope of ASC 815. A beneficial conversion feature is defined as a nondetachable conversion feature that is in the money at the commitment date. In addition, our preferred stock issues contain conversion terms that may change upon the occurrence of a future event, such as antidilution adjustment provisions. The beneficial conversion feature guidance requires recognition of the conversion option’s in-the-money portion, the intrinsic value of the option, in equity, with an offsetting reduction to the carrying amount of the instrument. The resulting discount is amortized as a dividend over either the life of the instrument, if a stated maturity date exists, or to the earliest conversion date, if there is no stated maturity date. If the earliest conversion date is immediately upon issuance, the dividend must be recognized at inception. When there is a subsequent change to the conversion ratio based on a future occurrence, the new conversion price may trigger the recognition of an additional beneficial conversion feature on occurrence. | |||||||||||||
Optex Systems Holdings has preferred stock, convertible into common shares, containing beneficial conversion features at inception as well as potential beneficial conversion features that could be triggered by future adjustments to the conversion price. Because our preferred stock is perpetual, with no stated maturity date, and the conversions may occur any time from inception, the dividend is recognized immediately when a beneficial conversion exists at issuance. During the three and six months ending March 29, 2015, Optex Systems Holdings recognized dividends of $4.9 million on Series B preferred stock related to the beneficial conversion feature of arising from a common stock conversion rate of $0.0025 versus a current market price of $0.01 per common share. In addition, Optex Systems Holdings recognized an additional $1.5 million in dividends on Series A preferred stock related to a ratchet to the conversion price from $0.01 per common share to $0.0025 per share which was triggered by the lower conversion price upon the issuance Series B preferred stock. | |||||||||||||
Intangible Assets: Optex Systems Holdings has acquisition-related intangible assets which include the fair market value of customer order backlog as of the acquisition date. We determine the fair value of intangible assets using the income approach methodology of valuation that includes the discounted cash flow method as well as other generally accepted valuation methodologies, which requires some judgment by management. Amortization of acquisition-related intangible assets is expensed to total operating expenses as cost of sales and general and administrative expenses on a straight-line basis over their estimated useful lives, unless such lives are deemed indefinite. Amortizable intangible assets are tested for impairment based on undiscounted cash flows and, if impaired, written down to fair value based on either discounted cash flows or appraised values. The residual values and useful lives are reviewed at each balance sheet date and adjusted, if appropriate. Optex Systems Holdings identified intangible assets of $342 thousand from the acquisition of the Applied Optics Product Line from L3 on November 3, 2014 which consisted primarily of customer backlog, with an initial useful life of less than one year. As of March 29, 2015 the unamortized balance of the intangible assets was $171 thousand. See Note 4. | |||||||||||||
Intangible assets with indefinite lives are tested annually for impairment, during the fiscal fourth quarter and between annual periods, if impairment indicators exist, and are written down to fair value as required. | |||||||||||||
Income Tax/Deferred Tax: FASB ASC 740 requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on differing treatment of items for financial reporting and income tax reporting purposes. The deferred tax balances are adjusted to reflect tax rates by tax jurisdiction, based on currently enacted tax laws, which will be in effect in the years in which the temporary differences are expected to reverse. Under FASB ASC 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations. Optex Systems Holdings has recognized deferred income tax benefits on net operating loss carry-forwards to the extent Optex Systems Holdings believes it will be able to utilize them in future tax filings. The difference between the statutory income tax expense and the accounting tax expense is primarily attributable to non-deductible expenses representing permanent timing differences between book income and taxable income during the six months ended March 29, 2015. | |||||||||||||
Earnings per Share: Basic earnings per share is computed by dividing income available for common shareholders (the numerator) by the weighted average number of common shares outstanding (the denominator) for the period. Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. | |||||||||||||
The potentially dilutive securities that Optex Systems Holdings has outstanding are convertible preferred stock, stock options and warrants. In computing the dilutive effect of convertible preferred stock or debt, the numerator is adjusted to add back any convertible preferred dividends and interest on convertible debt, and the denominator is increased to assume the conversion of the number of additional common shares. Optex Systems Holdings uses the Treasury Stock Method to compute the dilutive effect of stock options and warrants. Convertible preferred stock, convertible debt, stock options and warrants that are anti-dilutive are excluded from the calculation of diluted earnings per common share. | |||||||||||||
For the three and six months ended March 29, 2015, respectively, 1,001 shares of Series A preferred stock, 1000 shares of Series B preferred stock, 62,857,649 stock options and 1,000,000 warrants were excluded from the earnings per share calculation as anti-dilutive. For the three and six months ended March 30, 2014, respectively, 1,001 shares of Series A preferred stock, 63,165,649 stock options and 1,000,000 warrants were excluded from the earnings per share calculation as anti-dilutive. |
Purchase_of_Applied_Optics_Pro
Purchase of Applied Optics Products Line | 6 Months Ended | ||||||||||||||||
Mar. 29, 2015 | |||||||||||||||||
Purchase Of Applied Optics Products Line [Abstract] | |||||||||||||||||
Purchase of Applied Optics Products Line | Note 3 Purchase of Applied Optics Products Line | ||||||||||||||||
On November 3, 2014, Optex Systems, Inc. entered into a Purchase Agreement with L-3 pursuant to which Optex Systems, Inc. purchased from L-3 the assets comprising L-3’s Applied Optics Products Line (“Purchased Assets”). Applied Optics is primarily engaged in the production, marketing and sales of precision optical assemblies utilizing thin film coating capabilities for optical systems and components primarily used for military purposes. The Purchased Assets consist of personal property, inventory, books and records, contracts, prepaid expenses and deposits, intellectual property, and governmental contracts and licenses utilized in the business comprised of the Purchased Assets. | |||||||||||||||||
The purchase price for the Purchased Assets was $1,013.1 thousand, which was paid in full at closing, plus the assumption of certain liabilities associated with the Purchased Assets in the approximate amount of $270.7. The source of funds for the acquisition consisted of Optex working capital of $213.1 thousand and an advance of $800 thousand from accredited investors which was subsequently consummated on November 17, 2014 through the private placement of convertible notes issued by Optex Systems Holdings in a transaction exempt from registration under Section 4(2) of the Securities Act. See Note 7 “Issuance of Convertible Notes”. | |||||||||||||||||
The asset acquisition met the definition of a business for business combinations under ASC 805-10-20. The following table reconciles the fair value of the acquired assets and assumed liabilities to the total purchase price of the Applied Optics Product Line Acquisition (in thousands): | |||||||||||||||||
Fair Values as of | |||||||||||||||||
3-Nov-14 | |||||||||||||||||
Fixed Assets | $ | 2,064.70 | |||||||||||||||
Inventory | 940.1 | ||||||||||||||||
Prepaid Assets/Other | 47.1 | ||||||||||||||||
Liabilities | (270.7 | ) | |||||||||||||||
Net Assets Acquired | $ | 2,781.20 | |||||||||||||||
Intangible Asset: | |||||||||||||||||
Customer Contracts/Backlog | 342.2 | ||||||||||||||||
Total Assets Acquired | $ | 3,123.40 | |||||||||||||||
Less: Cash Consideration | (1,013.1 | ) | |||||||||||||||
Gain on Bargain Purchase | $ | 2,110.30 | |||||||||||||||
The aggregate purchase consideration has been allocated to the assets and liabilities acquired, including identifiable intangible assets, based on their respective estimated fair values. The total assets acquired exceeded the total consideration paid, thus there is no goodwill associated with the asset purchase and the acquisition has been determined as a bargain purchase which requires immediate recognition of a gain on the purchased assets. The gain is reflected in earnings in Other Income on the Consolidated Statement of Operations as “Gain on Purchased Asset”. | |||||||||||||||||
The intangible assets include finite-life intangibles associated with undelivered customer backlog as of the acquisition date and was valued using the income approach methodology that includes the discounted cash flow method as well as other generally accepted valuation methodologies, which requires significant judgment by management. The cash flow projections took into effect the expected net sales from the customer backlog as of November 3, 2014 and the corresponding expenses against those sales in the respective periods. The shipments against the customer backlog are anticipated to be delivered completed between January and June of 2015, and as such, the intangible amortization against those shipments will be completed by the end of the third fiscal quarter (June) of 2015. | |||||||||||||||||
The respective estimated fair values for property plant & equipment, and fixed assets were determined by an independent third-party appraisal firm. The appraisal methods employed by the firm in arriving at the final values on all of the equipment included a combination of the “Cost Approach” the “Market Data Approach” as well as “Income Approach” on specific high historical cost assets as presented by the seller. Certain assets which had very specific military manufacturing applications were operating at less than optimal capacity due to significantly reduced government spending from historical levels related to those processes. The excess or “idle” capacity on these unique assets was considered in the appraiser’s valuation, and the appraised values adjusted downward accordingly, in consideration of the reduced revenue and corresponding limited cash flow that could reasonably be generated from these assets under the current market conditions. | |||||||||||||||||
Separate from the appraisal analysis, Optex Systems, Inc. completed a physical inventory of all raw material, work in process and finished goods inventories in their various stages of production as of the acquisition date, and conducted a thorough revaluation and review of the counted inventory carrying values giving downward consideration to any excess, obsolete, or other product inventories which were valued in excess of the expected net realizable values given the depressed market conditions. Based on the supplemental inventory review, combined with the income approach used on the excess and idle capacity assets applied by the appraiser, the company was satisfied that the third party appraisal fairly valued those assets. The total fair value appraisal for the purchased assets, before intangible assets and assumed liabilities approximated 73% of the net carrying values of those same assets on the sellers closing balance sheet as of November 3, 2014. | |||||||||||||||||
Optex Systems Holdings believes that it was able to acquire the Applied Optics Product Line for less than the fair value of its assets because of (i) its unique position as a market leader in the industry segment that directly utilizes the manufactured components specific to the Applied Optics Product Line, (ii) a previous customer/supplier relationship with the acquisition target, (iii) L-3’s intent to exit the optical coating operations, and (iv) L-3’s desire to provide for continued employment of the Applied Optics workforce. The Applied Optics Product Line had a recent history of losses, and the seller approached Optex Systems in an effort to sell the product line and exit the optical coating manufacturing business that no longer fit its strategy. With the seller's intent to exit the business segment and Optex’s position as a market leader within the same industry segment utilizing the product line capability, Optex was able to agree on a favorable purchase price with L-3 Communications. | |||||||||||||||||
The recorded gain is provisional and subject to possible changes in the next quarter. There were no contingent liabilities or consideration included as a part of the purchase transaction, and we anticipate any subsequent changes will be limited to differences in actual accounts payable invoices received subsequent to November 3, 2014 compared to estimates of those accrued operating liabilities as of the closing date. The Company continues to evaluate the purchase price allocation, including the opening fair value of inventory, property, plant & equipment, intangible assets, and accrued liabilities, which may require the Company to adjust the recorded gain. | |||||||||||||||||
As a result of the asset purchase, the company has incurred additional acquisition-related costs of approximately $40.2 thousand for legal, accounting and valuation consulting fees which have been expensed to general administrative costs. | |||||||||||||||||
The following table represents the unaudited pro forma condensed balance sheet as if the acquisition of the Applied Optics Product Line had occurred as of the beginning of the fiscal year starting on September 29, 2014: | |||||||||||||||||
Optex Systems Holdings, Inc. | |||||||||||||||||
Balance Sheet Adjusted for Applied Optics Product Line Acquisition | |||||||||||||||||
Six Months Ended | |||||||||||||||||
(Thousands) | |||||||||||||||||
(unaudited) | |||||||||||||||||
Balance Sheet | Pro forma | Pro forma | |||||||||||||||
29-Mar-15 | Adjustments | Balance Sheet | |||||||||||||||
29-Mar-15 | |||||||||||||||||
Assets | |||||||||||||||||
Current Assets | $ | 9,220 | $ | (321 | )(1) | $ | 8,899 | ||||||||||
Noncurrent Assets | 2,474 | (44 | )(2) | 2,430 | |||||||||||||
Total Assets | $ | 11,694 | $ | (365 | ) | $ | 11,329 | ||||||||||
Liabilities | |||||||||||||||||
Current Liabilities | 2,384 | (16 | )(3) | 2,368 | |||||||||||||
Noncurrent Liabilities | 878 | 878 | |||||||||||||||
Total Liabilities | 3,262 | (16 | ) | 3,246 | |||||||||||||
Equity | |||||||||||||||||
Preferred Stock Series A ($0.001 par 5,000 authorized, 1,001 shares issued and outstanding) | - | - | - | ||||||||||||||
Preferred Stock Series B ($0.001 par 1,010 authorized, 1,000 shares issued and outstanding, respectively) | - | - | |||||||||||||||
Common Stock (par $0.001, 2,000,000,000 authorized, 170,913,943 shares issued and outstanding) | 171 | - | 171 | ||||||||||||||
Additional Paid-in-capital | 26,174 | - | 26,174 | ||||||||||||||
Retained (Deficit) | (17,913 | ) | (349 | )(4) | (18,262 | ) | |||||||||||
Total Stockholders Equity | 8,432 | (349 | ) | 8,083 | |||||||||||||
Total Liabilities and Stockholders Equity | $ | 11,694 | $ | (365 | ) | $ | 11,329 | ||||||||||
Notes related to pro forma balance sheet adjustments: | |||||||||||||||||
-1 | Accounts for changes in working capital for collections against accounts receivable against October booked revenue, $69 thousand, less the estimated cash requirements for October’s cash-based operating expenses for payroll, utilities, rent, maintenance & supplies of approximately ($390) thousand. | ||||||||||||||||
-2 | Assumes one additional month of depreciation on Property, Plant & Equipment acquired in the acquisition of ($44) thousand. | ||||||||||||||||
-3 | Assumes one month of accrued property tax liability for taxes for October 2014 of ($16) thousand. | ||||||||||||||||
-4 | The change in retained earnings (deficit) is based on the October pro forma net loss. The pro forma loss was derived based on sales reported for September 29, 2014 through November 2, 2014 as reported on L-3 communications product line financial summary for Applied Optics, less the incurred direct costs (materials $46 thousand, labor, $70 thousand, and manufacturing overhead spending $255 thousand) for October 2014, adjusted for the changes in inventory of $8 thousand, plus the L3 Communications reported G&A expenses for the Applied Optics facility, excluding any L3 Communications corporate intercompany allocated costs. | ||||||||||||||||
The pro forma financial information is presented for information purposes only. Such information is based on the historical results of each company and does not reflect the actual results that would have been reported had the acquisition been completed when assumed, nor is it indicative of the future results of operations for the combined entity. The unaudited pro forma information provided herein does not reflect any operating efficiencies and/or cost savings that the Company may achieve with respect to the combined entities. | |||||||||||||||||
The following represents condensed pro forma revenue and earnings information for the three and six months ended March 29, 2015 and March 30, 2014 as if the acquisition of the Applied Optics Product Line had occurred on the first day of each of the fiscal years. | |||||||||||||||||
Unaudited, Pro forma | |||||||||||||||||
(Thousands, except share data) | |||||||||||||||||
Three Months Ending | Six Months Ending | ||||||||||||||||
29-Mar-15 | 30-Mar-14 | 29-Mar-15 | 30-Mar-14 | ||||||||||||||
Revenues | $ | 3,472 | $ | 3,466 | $ | 5,570 | $ | 7,827 | |||||||||
Net Income (Loss) applicable to common shareholders | (3,148 | ) | (1,853 | ) | (5,977 | ) | (2,013 | ) | |||||||||
Diluted earnings (loss) per share | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | |||||
Weighted Average Shares Outstanding | 170,913,943 | 160,588,050 | 170,913,943 | 158,967,329 | |||||||||||||
The unaudited, pro forma information depicted above reflects the impact of the acquisition of the Applied Optics Product Line to the revenue and operating income (loss) of the consolidated entity as of the three and six months ending March 29, 2015 and March 30, 2014, respectively, as if the acquisition had begun at the beginning of each of the fiscal years. The condensed statements of revenue and earnings exclude the impact of L-3’s corporate allocation costs to the Applied Optics Product Line for the period of September 29 through November 2, 2014, as well as the three months ending March 30, 2014. There is no expected tax effect of the pro forma adjustments for the period affected in fiscal year 2015 due to the net loss and retained deficit of Optex Systems Holdings, Inc. | |||||||||||||||||
The unaudited pro forma financial information should be read in conjunction with Optex Systems Holding Inc.’s annual report, 10K, filed with the U.S. Securities Exchange Commission for the year ended September 28, 2014 as well as the 8-K filing dated November 7, 2014 and subsequent 8-K/A filed on January 20, 2015. |
Intangible_Assets
Intangible Assets | 6 Months Ended | ||||||||||||||||
Mar. 29, 2015 | |||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||
Intangible Assets | Note 4 – Intangible Assets | ||||||||||||||||
On November 3, 2014, Optex Systems, Inc. purchased the Applied Optics Products Line, the Purchased Assets, in exchange for $1,013.1 thousand and the assumption of approximately $270.7 thousand of liabilities (see Note 3). Optex Systems, Inc. has allocated the consideration for the acquisition of the purchased assets among tangible and intangible assets acquired and liabilities assumed based upon their fair values as of the acquisition date. Assets that met the criteria for recognition as intangible assets apart from goodwill were also valued at their fair values. | |||||||||||||||||
The purchase price was assigned to the acquired interest in the assets and liabilities of Optex Systems Holdings as of November 3, 2014 as follows: | |||||||||||||||||
Assets: | |||||||||||||||||
Current assets, consisting primarily of inventory of $940.1 thousand and prepaid assets of $47.1 thousand | $ | 987.2 | |||||||||||||||
Identifiable intangible assets | 342.2 | ||||||||||||||||
Other non-current assets, principally property and equipment | 2,064.70 | ||||||||||||||||
Total assets | $ | 3,394.10 | |||||||||||||||
Liabilities: | |||||||||||||||||
Current liabilities, consisting of accounts payable of $119.4 thousand and accrued liabilities of $151.3 thousand | $ | (270.7 | ) | ||||||||||||||
Acquired net assets | $ | 3,123.40 | |||||||||||||||
The fair values of the intangible assets as of the asset transfer date consisted primarily of $342.2 thousand of undelivered customer order backlog with contracted delivery dates that will be essentially fulfilled as of quarter ended June 28, 2015. The amortization of identifiable intangible assets associated with the acquisition will be amortized on a straight line basis over the next six month period beginning on December 29, 2014 at a rate of $57.0 thousand per month pursuant to the expected order deliveries. The intangible amortization will be allocable to operating expenses as manufacturing cost of sales and general and administrative expenses at a rate of $48.5 thousand and $8.5 thousand per month, respectively, through quarter ending June 28, 2015. The identifiable intangible assets are amortized over 15 years for income tax purposes. | |||||||||||||||||
Due to the short term duration of these intangible assets, we do not anticipate subsequent impairment testing will be required. There have been no material changes to our assumptions since the acquisition date of November 3, 2014 that would indicate a change in the initial fair value estimate or future expected values during the next six months which would result in impairment. | |||||||||||||||||
A schedule of the intangible asset amortization on customer backlog is presented below by month and expense classification of general and administrative and costs of sales accounts. | |||||||||||||||||
(Thousands) | |||||||||||||||||
Amortization | COS | G&A | Total | Unamortized | |||||||||||||
Schedule | Amortization | Balance | |||||||||||||||
14-Dec | $ | - | $ | - | $ | - | $ | 342.2 | |||||||||
15-Jan | 48.5 | 8.5 | 57 | 285.2 | |||||||||||||
15-Feb | 48.5 | 8.5 | 57 | 228.2 | |||||||||||||
15-Mar | 48.5 | 8.5 | 57 | 171.2 | |||||||||||||
15-Apr | 48.5 | 8.5 | 57 | 114.2 | |||||||||||||
15-May | 48.5 | 8.5 | 57 | 57.2 | |||||||||||||
15-Jun | 48.6 | 8.6 | 57.2 | - | |||||||||||||
Total | $ | 291.1 | $ | 51.1 | $ | 342.2 | $ | - | |||||||||
During the three and six months ending March 29, 2015, $145.5 thousand had been amortized to cost of sales, and $25.5 thousand had been amortized to general and administrative expenses, respectively. As of three months ending March 29, 2015, the total unamortized balance of intangible assets was $171.2 thousand. There were no unamortized intangible assets or amortization expenses incurred in the three and six months ending March 30, 2014. |
Commitments_and_Contingencies
Commitments and Contingencies | 6 Months Ended | ||
Mar. 29, 2015 | |||
Commitments and Contingencies Disclosure [Abstract] | |||
Commitments and Contingencies | Note 5 - Commitments and Contingencies | ||
Leases | |||
Optex Systems Holdings leases its office and manufacturing facilities for Optex Systems, Inc, at 1420 Presidential Drive, Richardson, Texas under a non-cancellable operating lease expiring March 31, 2021, in addition to maintaining several non-cancellable operating leases for office and manufacturing equipment. | |||
The terms of the office and manufacturing facilities lease are as follows: | |||
O | The lease term expires March 31, 2021. | ||
O | The annual base rent rate is as follows: from 1/1/14 -3/31/14, $0.00 per square foot; from 4/1/2014 – 3/31/2016, $5.20 per square foot; from 4/1/2016 – 3/31/2018, $5.65 per square foot; from 4/1/2018 – 3/31/2019, $5.85 per square foot; and from 4/1/2019 – 3/31/2021, $6.05 per square foot; | ||
O | A $0.35 million HVAC improvement allowance is included. | ||
The current monthly base lease for the Richardson facility is $21.2 thousand per month plus an additional $7.2 thousand per month for common area maintenance charges “CAM” which are adjusted annually, for a total monthly rental expense $28.4 thousand. | |||
On November 3, 2014, in conjunction with the acquisition of AOC, Optex Systems assumed the obligations of L-3 pursuant to an “Assignment to Lease and Consent of Landlord Agreement” (the “Agreement”), dated as of October 30, 2014, between L-3, as tenant, Optex Systems, as assignee, and CABOT II TX1W04, LP, as landlord, with respect to certain Leases dated as of August 27, 1996 covering Premises located at 9839 and 9827 Chartwell Drive, respectively, Dallas, Texas (the “Premises”), as amended by First Amendments dated May 14, 2001, Second Amendments dated January 9, 2004, Third Amendments dated February 21, 2005 and the Fourth Amendment dated March 13, 2009 (such Leases as so amended being referred to as the “Applied Optics lease”). | |||
The leased facility under the Applied Optics lease assumption consists of approximately 56,633 square feet of space at the premises, with a monthly rent expense of $30.4 thousand which includes a fixed base monthly lease of approximately $23.8 thousand plus an additional $6.6 thousand per month for annually adjusted common area maintenance (“CAM”) charges. The term of the lease expires September 30, 2016, and there are four renewal options available to the tenant, each with a renewal term duration of five years. Approximately 12,000 square feet covered under the Applied Optics lease, is subleased under a separate Memorandum of Understanding dated October 27, 2014, to L-3 Communications Mobile Vision Inc. The sublease term is for November, 2014 through September, 2016. The monthly rental on the sublease is $5.1 thousand for base rent, plus $2.8 thousand per month for CAM and utility costs. The sublease is treated as a reduction in the company facilities rental and CAM expenses in the statement of operations. | |||
Total facilities rental and CAM expenses for both facility lease agreements as of the three months ended March 29, 2015 was $149.6 thousand and included only four months of expenses for the assumed lease for the Applied Optics acquisition occurring in November. The total expense for manufacturing and office equipment was $4.0 thousand. Total expense under facility lease agreements as of the three months ended March 30, 2014 was $254.0 thousand and total expense for manufacturing and office equipment was $10.9 thousand. | |||
The total combined rental expenses for both facilities is approximately $578 thousand annualized, which includes minimum lease payments of approximately $506 thousand and estimated CAM costs of approximately $166 thousand per year, offset by ($94) thousand in sublease rental receipts. As a result of the Applied Optics acquisition, the total expected increase in facilities and associated CAM expenses is approximately $271 thousand annually. | |||
Pursuant to the terms of the last amendment to the Richardson site facilities lease, there was no base rent payment due from January 1, 2014 through March 31, 2014, and the total value of the rent abatement related to the lease amendment is $63.5 thousand. As of March 29, 2015 the unamortized deferred rent was $84.0 thousand as compared to $91 thousand as of September 28, 2014. Deferred rent expense is recognized at a rate of $1.2 thousand per month over the life of the lease. |
Prepaid_Royalties
Prepaid Royalties | 6 Months Ended |
Mar. 29, 2015 | |
Prepaid Expense, Current [Abstract] | |
Prepaid Royalties | Note 6 – Prepaid Royalties |
Prepaid royalties represent payments made for the purchase of non-transferable, non-exclusive patent rights associated with a patent license. The patent license allows for development of current and future products in our digital line of periscopes. The Company is actively marketing the new periscopes internationally and completed its first international shipment utilizing this technology in 2014. The company is bidding this technology with foreign customers in anticipation of additional orders. The Company estimates the commercial life of the patent at 7 years. As of March 29, 2015, the balance of the patent license is $135.4 thousand net of accumulated amortization. The royalty expenses for the associated patent license are amortized on a straight line basis. The amortized royalty expense for the three and six months ending March 29, 2015 and March 30, 2014 was $7.5 thousand and $15 thousand, respectively. |
Debt_Financing
Debt Financing | 6 Months Ended | ||||||||||||||||
Mar. 29, 2015 | |||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||
Debt Financing | Note 7 - Debt Financing | ||||||||||||||||
Credit Facility – Avidbank | |||||||||||||||||
On May 22, 2014, the Company amended its revolving credit facility with Avidbank. The new renewable revolving maturity date is May 21, 2016. The facility provides up to $1 million in financing against eligible receivables and subject to meeting certain covenants including an asset coverage ratio test for up to two years. The material terms of the amended revolving credit facility are as follows: | |||||||||||||||||
• | The interest rate for all advances shall be the greater of 7.0% and the then in effect prime rate plus 2.5%. The additional minimum interest payment requirement per six month period is $10,000. | ||||||||||||||||
• | Interest shall be paid monthly in arrears. | ||||||||||||||||
• | The loan period is from May 22nd through May 21st of the following year, beginning with the period of May 22, 2014 through May 21, 2015 and a revolving loan maturity date of May 21, 2016, at which time any outstanding advances, and accrued and unpaid interest thereon, will be due and payable. | ||||||||||||||||
• | A renewal fee of $5,000 is due on the one year anniversary of the date of the loan agreement. | ||||||||||||||||
• | The obligations of Optex Systems, Inc. to Avidbank are secured by a first lien on all of its assets (including intellectual property assets should it have any in the future) in favor of Avidbank. | ||||||||||||||||
• | The facility contains customary events of default. Upon the occurrence of an event of default that remains uncured after any applicable cure period, Avidbank’s commitment to make further advances may terminate, and Avidbank would also be entitled to pursue other remedies against Optex Systems, Inc. and the pledged collateral. | ||||||||||||||||
• | Pursuant to a guaranty executed by Optex Systems Holdings in favor of Avidbank, Optex Systems Holdings has guaranteed all obligations of Optex Systems, Inc. to Avidbank. | ||||||||||||||||
As of March 29, 2015, the outstanding balance on the line of credit was $550 thousand. For the three and six months ended March 29, 2015, the total interest expense against the outstanding line of credit balance was $5 thousand and $10, respectively, due to the minimum interest requirement in the credit terms. For the three and six months ended March 30, 2014, the total interest expense against the outstanding line of credit balance was $1 thousand and $8 thousand, respectively. | |||||||||||||||||
Issuance of Convertible Notes | |||||||||||||||||
On November 17, 2014, Optex Systems Holdings entered into a Subscription Agreement (the “Agreement”) to sell up to $2.1 million principal amount of convertible promissory notes (“Notes”) to several accredited investors (the “Investors”) in a private placement pursuant to which the Investors purchased a series of Notes with an aggregate principal amount of $1,550 thousand. An additional convertible promissory note for $10 thousand was issued to the placement agency in consideration for placement services on the transaction. The terms are consistent for each of the notes issued as follows: | |||||||||||||||||
· | The notes bear interest at a rate of 12% per annum and mature two years after the date of the issuance. | ||||||||||||||||
· | The interest is due either in cash or, at its option, through stock, or a combination at the option of Optex Systems Holdings. | ||||||||||||||||
· | The notes are convertible at the option of the note holders at any time into shares of Optex Systems Holdings’ common stock, par value $0.001 per share (the “Common Stock”) at a conversion price equal to $.0025 per share. | ||||||||||||||||
· | All or part of the then remaining principal amount of the notes may be prepaid at any time at a price equal to 125% of the sum of the remaining principal amount of the notes to be prepaid plus all accrued and unpaid interest thereon. | ||||||||||||||||
· | The converted stock may not exceed 3.33% of beneficial ownership for any holder or attribution parties. | ||||||||||||||||
· | The agreement also requires the Optex Systems Holdings to affect a 1:350 reverse split of its common stock no later than 90 days from November 17, 2014. | ||||||||||||||||
· | The conversion price of the notes is subject to “full ratchet” anti-dilution adjustment for subsequent lower price issuances by Optex Systems Holdings, as well as customary adjustments provisions for stock splits, stock dividends, recapitalizations and the like. | ||||||||||||||||
· | The notes contain certain customary negative covenants and events of default, including, but not limited to, Optex Systems Holdings’ failure to pay principal and interest, material defaults under the other transaction documents, bankruptcy, and Optex Systems Holdings’ failure to deliver Common Stock certificates after a conversion date. | ||||||||||||||||
Pursuant to a Registration Rights Agreement, of even date, between the Company and the Investors, Optex Systems Holdings is obligated to file a registration statement with the Securities and Exchange Commission (“SEC”) registering the shares underlying the Notes for public resale by January 17, 2015 and cause such registration statement to be effective by March 17, 2015. The Company is subject to certain liquidated damages in the event it does not satisfy such obligations and other obligations under such Registration Rights Agreement. | |||||||||||||||||
All of the noteholders have waived the Company’s obligations to file a registration statement by January 17, 2015 and to effect a reverse split of its common stock by February 17, 2015. | |||||||||||||||||
Sileas Corp., the controlling shareholder of Optex Systems Holdings, also entered into a Make Whole Agreement, of even date, with the Investors for the benefit of the Company, pursuant to which, unless and until Optex Systems Holdings’ common stock is listed on the NASDAQ Capital Market, it will make payment to the investors of interest on the Notes, on any date on which interest is due and payable under the Notes, from the date of payment until the maturity date of the Notes. There is no corresponding agreement between Sileas and Optex Systems Holdings, and thus no related party transaction. | |||||||||||||||||
The securities sold to the investors were not registered under the Securities Act of 1933, as amended (the “Securities Act”), or the securities laws of any state, and were offered and sold in reliance on the exemption from registration afforded by Section 4(a)(2) under the Securities Act and/or Regulation D promulgated thereunder and corresponding provisions of state securities laws, which exempt transactions by an issuer not involving any public offering. The Investors are “accredited investors” as such term is defined in Regulation D promulgated under the Securities Act. | |||||||||||||||||
Optex incurred $74 thousand in debt issuance costs, for investment banking, legal and placements fee services, inclusive of the $10 thousand supplemental convertible note issued for placement fees. These costs are reflected in the balance sheet and cash flow statement as debt issuance costs and are amortized to interest expense across the term of the notes based on the effective interest method. For the three and six months ending March 29, 2015 the amortized interest expense related to debt issuance costs was $5 thousand and $69 thousand, respectively. | |||||||||||||||||
On March 26, 2015, Optex Systems Holdings filed a Certificate of Designation with respect to its Certificate of Incorporation to authorize a series of preferred stock known as “Series B Preferred Stock” under Article FOURTH thereof, with 1010 shares of Series B Preferred Stock issuable thereunder. The amendment was approved by the Company’s Board of Directors under Article FOURTH of its Certificate of Incorporation, as amended. The stated value of each share of Series B Preferred Stock is $1,629.16, and each share of Series B Preferred Stock is convertible into shares of the Company’s common stock at a conversion price of $0.0025. Holders of the Series B Preferred Stock receive preferential rights in the event of liquidation to other classes of preferred and common stock of the Company other than the Company’s Series A Preferred Stock. Additionally, the holders of the Series B Preferred Stock are entitled to vote together with the common stock and the Series A Preferred Stock on an “as-converted” basis. | |||||||||||||||||
On March 29, 2015, the holders of the Company’s $1,560,000 principal amount of convertible promissory notes, issued on or about November 17, 2014, converted the entire principal amount thereof and all accrued and unpaid interest thereon, into 1,000 shares of the Company’s Series B Preferred Stock. | |||||||||||||||||
Conversion Feature Derivative | |||||||||||||||||
Optex Systems Holdings reviewed the convertible note features in relation to guidance within FASB ASC 815 “Derivatives and Hedging” and subtopic ASC 815-15 “Embedded Derivatives” and determined that the conversion feature attached to the notes was an embedded derivative which was not closely and clearly related to the debt, as the changes in the fair value of the convertible stock and the interest rates on the debt were based on different economic factors. The company further concluded that the conversion feature of the notes required bifurcation from the notes for separate treatment as a derivative liability on the balance sheet and measured at fair value pursuant to FASB ASC 820-10-35-37 “Fair Value in Financial Instruments”. | |||||||||||||||||
The derivative liabilities are recognized in the consolidated balance sheet at fair value and marked to market on each conversion and reporting period. The estimated fair value of the derivative liabilities is calculated using the Monte Carlo simulation model and such estimates are revalued at each balance sheet date, with changes in fair value charged to other income or expense. | |||||||||||||||||
The convertible notes were valued at note issuance and as of March 29, 2015 with the following assumptions: | |||||||||||||||||
· | The stock projections are based on the historical volatilities for each date. These were November 17, 2014 – 202% and March 29, 2015 – 197%. The stock price projection was modeled such that it follows a geometric Brownian motion with constant drift and a constant volatility, starting with the market stock price at each valuation date. | ||||||||||||||||
· | Conversion of the notes to stock would occur after the registration requirements were met (within 120 days of issuance) and the stock price exceeded the conversion price by 200% and thereafter on a monthly basis subject to the ownership limits. | ||||||||||||||||
· | Stock Issuances which may trigger reset events would occur annually beginning June 15, 2015. | ||||||||||||||||
· | Default events would occur starting at 0% increasing by 0.25% per month to a maximum of 5%. | ||||||||||||||||
· | Interest payments would be paid in stock at the time of conversion or at maturity. | ||||||||||||||||
· | Discount rates were based on risk-free rates in effect based on the remaining term and date of each valuation and ranged from 0.54% to 0.73%. | ||||||||||||||||
The fair value for the derivative liabilities related to the convertible notes at issuance and as of March 29, 2015 is as follows: | |||||||||||||||||
Valuation Dates | |||||||||||||||||
(Thousands) | |||||||||||||||||
11/17/14 | 11/17/14 | 12/28/14 | 3/29/15 | ||||||||||||||
Investors | Brokers | Total Q1 | Total Q2 | ||||||||||||||
Notes | $ | 1,550 | $ | 10 | $ | 1,560 | $ | - | |||||||||
Derivative Value | 6,929 | 45 | 6,127 | - | |||||||||||||
Change in Fair Value – Derivatives | - | - | (847 | ) | 847 | ||||||||||||
(Mark to Market) | |||||||||||||||||
As of March 29, 2015, due to the exchange of convertible notes for Series B preferred stock, the conversion feature was valued on the balance sheet as a derivative liability of $0 thousand. For the three months and six months ending March 29, 2015, a change in fair value of ($847) thousand and $0 thousand was recorded in other expenses as a change in fair value for derivatives. | |||||||||||||||||
A summary of the total expenses reflected in the consolidated statement of operations related to the convertible notes for the six months ending March 29, 2015 is as follows: | |||||||||||||||||
Qtr 1 | Qtr 2 | Six Months | |||||||||||||||
12/28/14 | 3/29/15 | Ending | |||||||||||||||
3/29/15 | |||||||||||||||||
Interest Expense: | |||||||||||||||||
Fair market value of derivatives – Investors | $ | 6,929 | $ | (6,929 | ) | $ | - | ||||||||||
Fair market value of derivatives – Brokers | 45 | (45 | ) | - | |||||||||||||
Less: Debt discount on convertible notes – Investors | (1,550 | ) | 1,550 | - | |||||||||||||
Less: Debt discount on convertible notes – Brokers | (10 | ) | 10 | - | |||||||||||||
Fair value adjustment on convertible notes issued 11/17/14 | $ | 5,414 | $ | (5,414 | ) | $ | - | ||||||||||
Debt discount amortization | 33 | (33 | ) | - | |||||||||||||
Note interest at 12% per annum | 23 | 46 | 69 | ||||||||||||||
Debt issuance cost amortization | 4 | 70 | 74 | ||||||||||||||
Total Interest Expense (Convertible Notes) | $ | 5,474 | $ | (5,474 | ) | $ | 143 | ||||||||||
Change in Fair Value – Derivatives (gain) /loss | $ | (847 | ) | $ | 847 | $ | - | ||||||||||
As of November 17, 2014, at note inception, the fair market value of the conversion derivative exceeded the value of the convertible notes, thus a debt discount equal to the face value of the notes was established at ($1,560) thousand and the beginning note balance net of the discount was zero. There were no conversions on the notes during the three or six month period ending March 29, 2015. Due to the conversion of the notes to Series B preferred stock as of March 29, 2015, the debt discount and note balance was $0, respectively, and the unamortized debt discount was $0 on the balance sheet. During the three and six months ending March 29, 2015, note interest expense, based on the stated rate of 12% per annum, was $23 thousand and $46 thousand, respectively. The debt issuance cost expensed as interest during the three and six months ended March 29, 2015 was $4 thousand and $70 thousand, respectively. As of March 29, 2015 the unamortized balance related to the debt issuance cost was $0 on the balance sheet. |
Stock_Based_Compensation
Stock Based Compensation | 6 Months Ended | ||||||||||||||||||
Mar. 29, 2015 | |||||||||||||||||||
Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract] | |||||||||||||||||||
Stock Based Compensation | Note 8 Stock Based Compensation | ||||||||||||||||||
On March 26, 2009, the Board of Directors adopted the 2009 Stock Option Plan providing for the issuance of up to 6,000,000 shares to Optex Systems Holdings officers, directors, employees and to independent contractors who provide services to Optex Systems Holdings. In 2011, the Board of Directors amended the 2009 Stock Option Plan to increase the number of issuable shares from 6,000,000 to 50,000,000. | |||||||||||||||||||
Options granted under the 2009 Stock Option Plan vest as determined by the Board of Directors of Optex Systems Holdings or a committee set up to act as a compensation committee of the Board of Directors and terminate after the earliest of the following events: (i) expiration of the option as provided in the option agreement, (ii) 90 days following the date of termination of the employee, or (iii) ten years from the date of grant (five years from the date of grant for incentive options granted to an employee who owns more than 10% of the total combined voting power of all classes of Optex Systems Holdings stock at the date of grant). In some instances, granted stock options are immediately exercisable into restricted shares of common stock, which vest in accordance with the original terms of the related options. Optex Systems Holdings recognizes compensation expense ratably over the requisite service period. | |||||||||||||||||||
The option price of each share of common stock is determined by the Board of Directors or a committee set up to act as a compensation committee, provided that with respect to incentive stock options, the option price per share will in all cases be equal to or greater than 100% of the fair value of a share of common stock on the date of the grant, except an incentive option granted under the 2009 Stock Option Plan to a shareholder that owns more than 10% of the total combined voting power of all classes of Optex Systems Holdings’ stock, will have an exercise price of not less than 110% of the fair value of a share of common stock on the date of grant. No participant may be granted incentive stock options, which would result in shares with an aggregate fair value of more than $100,000 first becoming exercisable in one calendar year. | |||||||||||||||||||
On December 19, 2013, the Board of Directors of Optex Systems Holdings, Inc. authorized an amendment to its Stock Option Plan to increase the number of issuable shares from 50,000,000 to 75,000,000 and authorized the grant of 20,000,000 options to three board members and a grant of 5,000,000 to an Optex Systems Holdings officer. The options have an exercise price of $0.01 per share with each grant to vest 25% per year over four years for each year with which the grantee is still employed by or serving as a director of Optex Systems Holdings, Inc. (with all unvested options automatically expiring on the date of termination of employment by or service as a director of Optex Systems Holdings, Inc.) and all unvested options immediately vesting upon a change of control due to a merger or acquisition of the Company. On November 19, 2014, Merrick Okamoto resigned as its Chairman of the Board and as a Director. In recognition of his service, 7,500,000 of his unvested stock options were deemed to vest immediately, and the termination date of all 10,000,000 of his stock options was extended to December 31, 2018. | |||||||||||||||||||
Optex Systems Holdings recorded compensation costs for options and shares granted under the plan amounting to for $25 thousand and $66 for the three and six months ended March 29, 2015, respectively, and $29 thousand and $47 thousand for the three and six months ended March 30, 2014, respectively. The $91 thousand of compensation expense recorded during the months ending March 29, 2015 included $57 thousand of expenses directly attributable to the early vesting of 7,500,000 shares on the resignation of the Chairman of the Board on November 19, 2014. A deduction is not allowed for income tax purposes until nonqualified options are exercised. The amount of this deduction will be the difference between the fair value of Optex Systems Holdings’ common stock and the exercise price at the date of exercise. For the three months ended March 29, 2015 and March 30, 2014, the estimated deferred tax assets related to option compensation costs were $9 thousand and $31 thousand, respectively. | |||||||||||||||||||
Optex Systems Holdings records its stock based compensation expense in accordance with ASC 718-10, “Compensation – Stock Compensation”. In estimating the value of stock options issued, management has valued the options at their date of grant utilizing the Black-Scholes-Merton option pricing model. For options issued on December 19, 2013, the fair value of the underlying shares was determined based on the closing price of Optex Systems Holdings’ publicly-traded shares as of December 19, 2013. Further, Optex Systems Holdings used an expected volatility of 354.4% which was calculated using the historical Optex Systems Holdings stock prices over the prior 36 month trading period. Estimation of these equity instruments’ fair value is affected by our stock price, as well as assumptions regarding subjective and complex variables such as employee exercise behavior and our expected stock price volatility over the term of the award. As our assumptions are based on historical information, judgment is required to determine if historical trends are fair indicators of future outcomes. | |||||||||||||||||||
The risk-free interest rates used of 1.1% to 2.3% were determined based on the implied yield available on U.S. Treasury issues with an equivalent term approximating the expected life of the options of 4.5 to 7 years depending on the date of the grant and expected life of the options. The expected life of options used was based on the contractual life of the option grant. Optex Systems Holdings determined the expected dividend rate based on the assumption and expectation that earnings generated from operations are not expected to be adequate to allow for the payment of dividends in the near future and the assumption that Optex Systems Holdings does not presently have any intention of paying cash dividends on its common stock. | |||||||||||||||||||
Optex Systems Holdings has granted stock options to officers and employees as follows: | |||||||||||||||||||
Date of | Shares | Exercise | Shares Outstanding | Expiration | Vesting | ||||||||||||||
Grant | Granted | Price | As of 3/29/15 | Date | Date | ||||||||||||||
3/30/09 | 480,981 | $ | 0.15 | 480,981 | 3/29/16 | 3/30/10 | |||||||||||||
3/30/09 | 466,834 | $ | 0.15 | 466,834 | 3/29/16 | 3/30/11 | |||||||||||||
3/30/09 | 466,834 | $ | 0.15 | 466,834 | 3/29/16 | 3/30/12 | |||||||||||||
5/14/09 | 316,750 | $ | 0.15 | 268,250 | 5/13/16 | 5/14/10 | |||||||||||||
5/14/09 | 316,750 | $ | 0.15 | 268,250 | 5/13/16 | 5/14/11 | |||||||||||||
5/14/09 | 316,750 | $ | 0.15 | 268,250 | 5/13/16 | 5/14/12 | |||||||||||||
5/14/09 | 316,750 | $ | 0.15 | 268,250 | 5/13/16 | 5/14/13 | |||||||||||||
12/9/11 | 11,517,500 | $ | 0.01 | 8,842,500 | 12/8/18 | 12/8/12 | |||||||||||||
12/9/11 | 11,517,500 | $ | 0.01 | 8,842,500 | 12/8/18 | 12/8/13 | |||||||||||||
12/9/11 | 11,517,500 | $ | 0.01 | 8,842,500 | 12/8/18 | 12/8/14 | |||||||||||||
12/9/11 | 11,517,500 | $ | 0.01 | 8,842,500 | 12/8/18 | 12/8/15 | |||||||||||||
12/19/13 | 6,250,000 | $ | 0.01 | 10,000,000 | 12/18/20 | 12/8/14 | |||||||||||||
12/19/13 | 6,250,000 | $ | 0.01 | 5,000,000 | 12/18/20 | 12/8/15 | |||||||||||||
12/19/13 | 6,250,000 | $ | 0.01 | 5,000,000 | 12/18/20 | 12/8/16 | |||||||||||||
12/19/13 | 6,250,000 | $ | 0.01 | 5,000,000 | 12/18/20 | 12/8/17 | |||||||||||||
Total | 73,751,649 | 62,857,649 | |||||||||||||||||
The following table summarizes the status of Optex Systems Holdings’ aggregate stock options granted under the incentive stock option plan: | |||||||||||||||||||
Number | Weighted | ||||||||||||||||||
of Shares | Average | Weighted | Aggregate | ||||||||||||||||
Remaining | Fair | Average | Value | ||||||||||||||||
Subject to Exercise | Options | Value | Life (Years) | (Thousands) | |||||||||||||||
Outstanding as of September 29, 2013 | 484,247,649 | $ | — | 3.56 | — | ||||||||||||||
Granted – 2014 | 25,000,000 | $ | 0.01 | 5.22 | $ | 200 | |||||||||||||
Forfeited – 2014 | (5,336,000 | ) | $ | — | — | ||||||||||||||
Exercised – 2014 | (5,000,000 | ) | $ | 0.01 | — | ||||||||||||||
Outstanding as of September 28, 2014 | 62,911,649 | $ | — | 3.41 | — | ||||||||||||||
Granted – 2015 | — | $ | $ | ||||||||||||||||
Forfeited – 2015 | (54,000 | ) | $ | — | |||||||||||||||
Exercised – 2015 | — | $ | — | ||||||||||||||||
Outstanding as of March 29, 2015 | 62,857,649 | 2.8 | $ | — | |||||||||||||||
Exercisable as of September 28, 2014 | 20,201,649 | $ | — | 1.76 | $ | — | |||||||||||||
Exercisable as of March 29, 2015 | 40,265,149 | $ | — | 1.91 | $ | — | |||||||||||||
There were zero and 25,000,000 options granted in the three months ended March 29, 2015 and March 30, 2014, respectively. | |||||||||||||||||||
The following table summarizes the status of Optex Systems Holdings’ aggregate non-vested shares granted under the 2009 Stock Option Plan: | |||||||||||||||||||
Number of | Weighted- | ||||||||||||||||||
Non-vested | Average | ||||||||||||||||||
Shares | Grant- | ||||||||||||||||||
Subject to | Date | ||||||||||||||||||
Options | Fair Value | ||||||||||||||||||
Non-vested as of September 29, 2013 | 30,547,500 | $ | 0.01 | ||||||||||||||||
Non-vested granted — year ended September 28, 2014 | 25,000,000 | $ | 0.01 | ||||||||||||||||
Vested — year ended September 28, 2014 | (7,501,500 | ) | $ | 0.01 | |||||||||||||||
Forfeited — year ended September 28, 2014 | (5,336,000 | ) | $ | ||||||||||||||||
Non-vested as of September 28, 2014 | 42,710,000 | $ | 0.01 | ||||||||||||||||
Non-vested granted — six months ended March 29, 2015 | — | $ | — | ||||||||||||||||
Vested — six months ended March 29, 2015 | (20,063,500 | ) | $ | 0.01 | |||||||||||||||
Forfeited — six months ended March 29, 2015 | (54,000 | ) | $ | — | |||||||||||||||
Non-vested as of March 29, 2015 | 22,592,500 | $ | 0.01 | ||||||||||||||||
As of March 29, 2015, the unrecognized compensation cost for non-vested share based compensation arrangements granted under the plan was approximately $184 thousand. These costs are expected to be recognized on a straight line basis through December 2017. | |||||||||||||||||||
Warrant Agreements: Optex Systems Holdings calculates the fair value of warrants issued with debt or preferred stock using the Black-Scholes-Merton valuation method. The total proceeds received in the sale of debt or preferred stock and related warrants are allocated among these financial instruments based on their relative fair values. The discount arising from assigning a portion of the total proceeds to the warrants issued is recognized as interest expense for debt from the date of issuance to the earlier of the maturity date of the debt or the conversion dates using the effective yield method. | |||||||||||||||||||
As of March 29, 2015, Optex Systems Holdings had the following warrants outstanding: | |||||||||||||||||||
Grant Date | Warrants | Exercise | Outstanding | Expiration | Term | ||||||||||||||
Granted | Price | as of | Date | ||||||||||||||||
12/29/13 | |||||||||||||||||||
Avidbank- Line of Credit | 3/4/10 | 1,000,000 | $ | 0.1 | 1,000,000 | 3/3/16 | 6 years | ||||||||||||
Total Warrants | 1,000,000 | 1,000,000 | |||||||||||||||||
During the three and six months ended March 29, 2015 and the three and six months ended March 30, 2014, Optex Systems Holdings recorded zero interest expense related to the outstanding warrants. Interest expense related to outstanding warrants was fully amortized as of September 28, 2014. On March 29, 2014, 3,447,000 warrants related to the March 30, 2009 private placement expired unexercised. |
Stockholders_Equity
Stockholders Equity | 6 Months Ended |
Mar. 29, 2015 | |
Stockholders Equity Note [Abstract] | |
Stockholder's Equity | Note 9 Stockholder’s Equity |
Common stock: | |
As of September 29, 2013, Optex Systems had 157,346,607 common shares outstanding. During the twelve months ending September 28, 2014, Alpha Capital Anstalt converted 14.58 shares of Series A preferred stock at a stated value of $6,860 into 10,000,000 shares of its Common Stock at a conversion price of $0.01 per share for a converted value of $100,000 and a former director exercised 5,000,000 options at $0.01 per share in a net exchange for 3,567,336 common shares. The outstanding common shares as of September 28, 2014 and as of March 29, 2015 were 170,913,943. On March 29, 2015, we issued 1000 shares of our series B preferred stock. There were no other issuances of common or preferred stock during the three months and six months ended March 29, 2015. During the three and six months ended March 30, 2014 there were no new issues of common or preferred stock. | |
Series A preferred stock | |
Optex Systems Holdings has filed a Certificate of Designation with the Secretary of State of the State of Delaware authorizing a series of preferred stock, under its articles of incorporation, known as “Series A preferred stock”. The Certificate of Designation currently sets forth the following terms for the Series A preferred stock: (i) number of authorized shares: 1,027; (ii) per share stated value: $6,860; (iii) liquidation preference per share: stated value; (iv) conversion price: $0.15 per share as adjusted from time to time; and (v) voting rights: votes along with the common stock on an as converted basis with one vote per share. The conversion price was subsequently reset to $0.01 per share as discussed below. | |
The Series A preferred stock entitles the holders to receive cumulative dividends at the rate of 6% per annum, payable in cash at the discretion of Board of Directors. Each share of preferred stock is immediately convertible into common shares at the option of the holder which entitles the holder to receive the equivalent number of common shares equal to the stated value of the preferred shares divided by the conversion price, which was initially set at $0.15 per share. The dividends were subsequently waived and the price per share was reset to $0.01 on February 21, 2012 as discussed below. On November 17, 2014 an exercise price per share ratchet was triggered by the issuance of convertible notes with a lower conversion price and the exercise price was reset to $0.0025 per common share. | |
Holders of preferred shares receive preferential rights in the event of liquidation. Additionally the preferred stock shareholders are entitled to vote together with the common stock on an “as-converted” basis. | |
As of April 1, 2012, the preferred shareholders agreed to waive the past dividends in arrears through March 30, 2014 of $884 thousand in exchange for an increase in the stated value to $6,860. On February 21, 2012, in connection with the purchase of the 5,000,000 shares of common stock of Optex Systems Holdings by Alpha Capital, the preferred shareholders executed an irrevocable waiver for any and all previously accrued and outstanding dividends and the right to receive any future dividends on the Series A Preferred Stock. The per share conversion price of the Optex Systems Holdings’ Series A Preferred Stock has been automatically reset to $0.01 per share in accordance with the reset provision as set forth in paragraph 4(d)(ii) of the Series Designation for the Optex Systems Holdings’ Series A Preferred Stock. The total amount of dividends waived as a result of the February 21, 2012 waiver is $213 thousand. As of the three months ended March 29, 2015 and March 30, 2014, there were no preferred dividends payable. As of September 28, 2014 and March 29, 2015 as a result of the executed waiver dated February 21, 2012, there were no dividends in arrears on preferred shares and no future dividends will accrue on the preferred shares. | |
On March 19, 2013, Alpha Capital Anstalt converted 7.29 shares of Series A preferred stock at a stated value of $6,860 into 5,000,000 shares of its Common Stock at a conversion price of $0.01 per share for a total converted value of $50,000. On February 11, 2014 and March 24, 2014, Alpha Capital Anstalt converted 7.29 shares of Series A preferred stock at a stated value of $6,860 into 5,000,000 shares of its Common Stock at a conversion price of $0.01 per share for a converted value of $50,000 each transaction, respectively. As a result of the conversions, Optex Systems had 1,001 of preferred shares outstanding as of March 29, 2015 and 1,001 of preferred shares outstanding as of September 28, 2014 respectively. | |
As of April 3, 2015, a majority in interest of the holders of the Series A preferred stock has waived the right to convert its Series A preferred stock into Company common shares until such a time as a reverse stock split of the Company’s stock is effected in sufficient ratio to accommodate full conversion of both Series A and Series B preferred stock from authorized and unissued shares. Based on the price reset from $0.01 to $0.0025 per common share, there are 75.5 shares of preferred stock with a beneficial conversion feature, “in the money”, which are subject immediate conversion at the discretion of the holder. In the three and six months ending March 29, 2015, Optex Systems Holdings has recognized a $1.5 million adjustment to retained earnings for dividends for the intrinsic value of the beneficial conversion feature for the 75.5 preferred shares issued and not covered the by the conversion waiver. The remaining 926 outstanding Series A preferred shares will become convertible to common shares based on a future event and are subject to an additional $19.1 million retained earnings adjustment for dividends on the earliest potential conversion date when as they become convertible. | |
As these shares are subject to the potential for further adjustments to the conversion ratio based on future occurrences, any new conversion price reset may trigger recognition of an additional beneficial conversion feature on occurrence. | |
Series B Preferred Stock | |
On March 26, 2015, Optex Systems Holdings filed a Certificate of Designation with the Secretary of State of the State of Delaware authorizing a series of preferred stock, under its articles of incorporation, known as “Series B preferred stock”. The Certificate of Designation currently sets forth the following terms for the Series B preferred stock: (i) number of authorized shares: 1,010; (ii) per share stated value: $1629.16; (iii) liquidation preference per share, other than Series A preferred stock: stated value; (iv) conversion price: $0.0025 per share as adjusted from time to time; and (v) voting rights: votes along with the common stock on an as converted basis with one vote per share. The conversion price was subsequently reset to $0.01 per share as discussed below. | |
On March 29, 2015, the holders of the Company’s $1,560,000 principal amount of convertible promissory notes, issued on or about November 17, 2014, converted the entire principal amount thereof and all accrued and unpaid interest thereon, into 1,000 shares of the Company’s Series B Preferred Stock. | |
Each share of preferred stock is immediately convertible into common shares at the option of the holder which entitles the holder to receive the equivalent number of common shares equal to the stated value of the preferred shares divided by the conversion price, which is initially set at $0.0025 per share. | |
At the time of issuance, the market value of the common stock was $0.01. As the conversion rate of $0.0025 was below the market price, the issued preferred series B stock contained a beneficial conversion feature. As the series B preferred stock is immediately convertible with no stated maturity date, Optex Systems Holdings recognized a retained earnings adjustment for the intrinsic value, “in the money portion”, of the conversion options at inception. For the three and six months ending March 29, 2015 Optex Systems Holdings recognized a retained earnings dividends adjustment of $4.9 million, which represented the intrinsic value of the options at the commitment date. | |
As these shares are subject to the potential for further adjustments to the conversion ratio based on future occurrences, any new conversion price reset may trigger recognition of an additional beneficial conversion feature on occurrence. |
Subsequent_Events
Subsequent Events | 6 Months Ended |
Mar. 29, 2015 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 10 Subsequent Events |
On May 5, 2015, Optex Systems Holdings, Inc. (the “Company”) received a written notification from OTC Markets that its bid price for its common stock closed below $0.01 for more than 30 consecutive calendar days and no longer meets the Standards for Continued Eligibility for OTCQB as set forth in Section 2.3(2) of the OTCQB Standards. | |
The notification does not result in the immediate removal of the Company's common stock, and its common stock will continue to trade uninterrupted on the OTCQB. | |
Pursuant to the OTCQB Standards, the Company has been granted a period of 180 calendar days in which to regain compliance with this minimum bid price standard. The 180 calendar day grace period ends on November 1, 2015, and if the Company’s bid price has not closed at or above $0.01 for any ten consecutive trading day period, then its common stock shall be removed from the OTCQB marketplace. |
Accounting_Policies_Policies
Accounting Policies (Policies) | 6 Months Ended | ||||||||||||
Mar. 29, 2015 | |||||||||||||
Accounting Policies [Abstract] | |||||||||||||
Principles of Consolidation | Principles of Consolidation: The consolidated financial statements include the accounts of Optex Systems Holdings and its wholly-owned subsidiary, Optex Systems, Inc. All significant inter-company balances and transactions have been eliminated in 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 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 Optex Systems Holdings 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 28, 2014 and other reports filed with the SEC. | |||||||||||||
The accompanying unaudited interim 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. | |||||||||||||
Use of Estimates | Use of Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statement and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from the estimates. | ||||||||||||
Inventory | Inventory: Inventory is recorded at the lower of cost or market value, and adjusted, as necessary, for decreases in valuation and obsolescence. Adjustments to the valuation and obsolescence reserves are made after analyzing market conditions, current and projected sales activity, inventory costs and inventory balances to determine appropriate reserve levels. Cost is determined using the first-in first-out method. Under arrangements by which progress payments are received against certain contracts, the customer retains a security interest in the undelivered inventory identified with these contracts. Payments received for such undelivered inventory are classified as unliquidated progress payments and deducted from the gross inventory balance. As of March 29, 2015 and September 28, 2014, inventory included: | ||||||||||||
(Thousands) | |||||||||||||
29-Mar-15 | 28-Sep-14 | ||||||||||||
Raw Material | $ | 4,675 | $ | 5,136 | |||||||||
Work in Process | 2,574 | 1,854 | |||||||||||
Finished Goods | 396 | 265 | |||||||||||
Gross Inventory | $ | 7,645 | $ | 7,255 | |||||||||
Less: Inventory Reserves | (1,345 | ) | (1,345 | ) | |||||||||
Net Inventory | $ | 6,300 | $ | 5,910 | |||||||||
Net inventory increased by $390 thousand during the six months ending March 29, 2015. An increase of $940 thousand is attributable to the acquisition of the Applied Optics Center product line from L-3 on November 3, 2014, which is offset with a decrease in inventory of $550 thousand of inventory use during the period. The inventory used primarily consists of inventories purchased in prior years in support of our sighting systems product line which were shipped in the current year pursuant to the contract terms. See note 3. | |||||||||||||
Revenue Recognition | Revenue Recognition: Optex Systems Holdings recognizes revenue based on the modified percentage of completion method utilizing the units-of-delivery method, in accordance with FASB ASC 605-35: | ||||||||||||
The units-of-delivery method recognizes as revenue the contract price of units of a basic production product delivered during a period and as the cost of earned revenue the costs allocable to the delivered units. Costs allocable to undelivered units are reported in the balance sheet as inventory or work in progress. The method is used in circumstances in which an entity produces units of a basic product under production-type contracts in a continuous or sequential production process to buyers’ specifications. | |||||||||||||
Optex Systems Holdings contracts are fixed price production type contracts whereby a defined order quantity is delivered to the customer during a continuous or sequential production process tailored to the buyer’s specifications (build to print). Optex Systems Holdings’ deliveries against these contracts generally occur in monthly increments across fixed delivery periods spanning from 3 to 36 months. | |||||||||||||
Optex Systems Holdings may at times have contracts that allow for invoicing based on achievement of milestone events. In such cases, Optex Systems Inc. recognizes revenue based on the milestone method in accordance with FASB ASC 605-28, as applicable. On October 24, 2011, Optex Systems, Inc. was awarded an $8.0 million contract with General Dynamics Land Systems - Canada that provided for milestone invoices up to a total of $3.9 million. Currently, there are no additional contracts providing for milestone payments. In accordance with FASB 605-28, Optex Systems, Inc. recognizes milestone payments as revenue upon completion of a substantive milestone as commensurate with the following guidelines: our performance to achieve the milestone, the milestone relates solely to past performance and is reasonable relative to all of the deliverables and payment terms within the arrangement. Milestones are not considered as substantive if any portion of the associated milestone consideration relates to the remaining deliverables in the unit of accounting. Non-substantive milestone payments are reported as a liability on the balance sheet as Short Term and Long Term Customer Advance Deposits. | |||||||||||||
Pursuant to the contract, all substantive milestones events were completed as of September 30, 2012 and as such, there was zero revenue recognized for milestones in the six months ending March 29, 2015 and March 30, 2014 and no unpaid/invoiced customer deposits related to the completed milestone events, respectively. | |||||||||||||
Customer Advance Deposits | Customer Advance Deposits: Customer advance deposits represent amounts collected from customers in advance of shipment or revenue recognition which relate to undelivered product due to non-substantive milestone payments or other cash in advance payment terms. As of March 29, 2015, Optex Systems, Inc. had a balance of $1.5 million in customer advance deposits related to non-substantive milestone billings. The terms of the contract extend through 2017 during which time we are required to purchase the necessary materials to fulfill the delivery of products required by the contract. Of the total collected customer advance deposits, $594 thousand related to short term customer advance deposits for deliveries to occur within the next twelve months and $878 thousand related long term customer advance deposits for deliveries occurring after March 2016. During the six months ending March 29, 2015, Optex Systems Holdings liquidated $582 thousand of customer deposits for product shipped during the period. | ||||||||||||
Stock-Based Compensation | Stock-Based Compensation: FASB ASC 718 establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services, but primarily focuses on transactions whereby an entity obtains employee services for share-based payments. FASB ASC 718 requires that the compensation cost relating to share-based payment transactions be recognized in the consolidated financial statements. That cost will be measured based on the fair value of the equity or liability instruments issued. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments. | ||||||||||||
The Company’s accounting policy for equity instruments issued to consultants and vendors in exchange for goods and services follows the provisions of FASB ASC 505-50. The measurement date for the fair value of the equity instruments issued is determined at the earlier of (i) the date at which a commitment for performance by the consultant or vendor is reached or (ii) the date at which the consultant or vendor’s performance is complete. In the case of equity instruments issued to consultants, the fair value of the equity instrument is recognized over the term of the consulting agreement. Stock-based compensation related to non-employees is accounted for based on the fair value of the related stock or options or the fair value of the services, whichever is more readily determinable in accordance with FASB ASC 718. | |||||||||||||
Derivative Financial Instruments | Derivative Financial Instruments: The Company’s objectives in using derivative financial instruments such as convertible notes are to obtain the lowest cash cost-source of funds. The company accounts for conversion options embedded in convertible notes payable in accordance with ASC 815“Derivatives and Hedging”. Further, subtopic ASC 815-15 “Embedded Derivatives” generally requires companies to bifurcate conversion options embedded in the convertible notes from their host instruments and to account for them as free standing derivative financial instruments. Derivative liabilities are recognized in the consolidated balance sheet at fair value as “Derivative Liabilities” and based on the criteria specified in FASB ASC 815-40“Derivatives and Hedging – Contracts in Entity’s own Equity”. The estimated fair value of the derivative liabilities is calculated using either the Black-Scholes-Merton, Binomial Lattice, or Monte Carlo simulation models where applicable and such estimates are revalued at each balance sheet date, with changes recorded to other income or expense as “Change in Fair Value – Derivatives” in the consolidated statement of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or equity, is evaluated at the instrument origination date and reviewed at the end of each event date (i.e. conversions, payments, etc.) and the measurement period end date for financial reporting, as applicable. Derivative instrument liabilities are classified on the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument would be required within twelve months of the balance sheet date. | ||||||||||||
Fair Value of Financial Instruments | Fair Value of Financial Instruments: FASB ASC 820-10, “Fair Value Measurements and Disclosures” defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The standard requires disclosure of fair value information about certain financial instruments, including, but not limited to, cash and cash equivalents, accounts receivable, refundable tax credits, prepaid expenses, accounts payable, accrued expenses, notes payable to related parties and convertible debt-related securities. ASC 820-10 applies to reported balances that are required or permitted to be measured at fair value under existing accounting pronouncements; accordingly, the standard does not require any new fair value measurements of reported balances. | ||||||||||||
ASC 820-10 emphasizes that fair value is a market-based measurement, not an entity-specific measurement. Therefore, a fair value measurement should be determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, ASC 820-10 establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy). The levels are defined below as: | |||||||||||||
· | Level 1 Valuation based on quoted market prices in active markets for identical assets or liabilities that the Company has the ability to access. | ||||||||||||
· | Level 2 Valuation based on inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly, and/or based on quoted prices for similar assets and liabilities in active markets. | ||||||||||||
· | Level 3 Valuations are unobservable inputs for the asset or liability, which is typically based on an entity’s own assumptions of what market participants would use as fair value, as there is little, if any, related market activity. | ||||||||||||
The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability | |||||||||||||
Fair value estimates are reviewed at the origination date and again at the each applicable measurement date and interim or annual financial reporting dates, as applicable financial instrument, and are based upon certain market assumptions and pertinent information available to management at those times. The carrying value of the balance sheet financial instruments included in Optex Systems Holdings’ consolidated financial statements approximated their fair values as of the reporting date. | |||||||||||||
The following table represents certain assets and liabilities of Optex Systems Holdings measured and recorded at fair value on a recurring basis and their level within the fair value hierarchy as of March 29, 2015. | |||||||||||||
(Thousands) | |||||||||||||
Level 1 | Level 2 | Level 3 | |||||||||||
Derivatives Liabilities – Long Term | $ | - | $ | - | $ | - | |||||||
(Note Conversion Feature) | |||||||||||||
As of March 29, 2015, $1.6 million of Convertible Notes Payable, which had resulted in prior period derivative liabilities of $6.1 million, were converted to Series B Preferred Stock which is outside of the scope of ASC 815-15 embedded derivatives and ASC 820-10 fair value measurement. | |||||||||||||
Beneficial Conversion Features of Convertible Securities | Beneficial Conversion Features of Convertible Securities: Conversion options that are not bifurcated as a derivative pursuant to ASC 815 and not accounted for as a separate equity component under the cash conversion guidance are evaluated to determine whether they are beneficial to the investor at inception (a beneficial conversion feature) or may become beneficial in the future due to potential adjustments. The beneficial conversion feature guidance in ASC 470-20 applies to convertible stock as well as convertible debt which are outside the scope of ASC 815. A beneficial conversion feature is defined as a nondetachable conversion feature that is in the money at the commitment date. In addition, our preferred stock issues contain conversion terms that may change upon the occurrence of a future event, such as antidilution adjustment provisions. The beneficial conversion feature guidance requires recognition of the conversion option’s in-the-money portion, the intrinsic value of the option, in equity, with an offsetting reduction to the carrying amount of the instrument. The resulting discount is amortized as a dividend over either the life of the instrument, if a stated maturity date exists, or to the earliest conversion date, if there is no stated maturity date. If the earliest conversion date is immediately upon issuance, the dividend must be recognized at inception. When there is a subsequent change to the conversion ratio based on a future occurrence, the new conversion price may trigger the recognition of an additional beneficial conversion feature on occurrence. | ||||||||||||
Optex Systems Holdings has preferred stock, convertible into common shares, containing beneficial conversion features at inception as well as potential beneficial conversion features that could be triggered by future adjustments to the conversion price. Because our preferred stock is perpetual, with no stated maturity date, and the conversions may occur any time from inception, the dividend is recognized immediately when a beneficial conversion exists at issuance. During the three and six months ending March 29, 2015, Optex Systems Holdings recognized dividends of $4.9 million on Series B preferred stock related to the beneficial conversion feature of arising from a common stock conversion rate of $0.0025 versus a current market price of $0.01 per common share. In addition, Optex Systems Holdings recognized an additional $1.5 million in dividends on Series A preferred stock related to a ratchet to the conversion price from $0.01 per common share to $0.0025 per share which was triggered by the lower conversion price upon the issuance Series B preferred stock. | |||||||||||||
Intangible Assets | Intangible Assets: Optex Systems Holdings has acquisition-related intangible assets which include the fair market value of customer order backlog as of the acquisition date. We determine the fair value of intangible assets using the income approach methodology of valuation that includes the discounted cash flow method as well as other generally accepted valuation methodologies, which requires some judgment by management. Amortization of acquisition-related intangible assets is expensed to total operating expenses as cost of sales and general and administrative expenses on a straight-line basis over their estimated useful lives, unless such lives are deemed indefinite. Amortizable intangible assets are tested for impairment based on undiscounted cash flows and, if impaired, written down to fair value based on either discounted cash flows or appraised values. The residual values and useful lives are reviewed at each balance sheet date and adjusted, if appropriate. Optex Systems Holdings identified intangible assets of $342 thousand from the acquisition of the Applied Optics Product Line from L3 on November 3, 2014 which consisted primarily of customer backlog, with an initial useful life of less than one year. As of March 29, 2015 the unamortized balance of the intangible assets was $171 thousand. See Note 4. | ||||||||||||
Intangible assets with indefinite lives are tested annually for impairment, during the fiscal fourth quarter and between annual periods, if impairment indicators exist, and are written down to fair value as required. | |||||||||||||
Income Tax/Deferred Tax | Income Tax/Deferred Tax: FASB ASC 740 requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on differing treatment of items for financial reporting and income tax reporting purposes. The deferred tax balances are adjusted to reflect tax rates by tax jurisdiction, based on currently enacted tax laws, which will be in effect in the years in which the temporary differences are expected to reverse. Under FASB ASC 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations. Optex Systems Holdings has recognized deferred income tax benefits on net operating loss carry-forwards to the extent Optex Systems Holdings believes it will be able to utilize them in future tax filings. The difference between the statutory income tax expense and the accounting tax expense is primarily attributable to non-deductible expenses representing permanent timing differences between book income and taxable income during the six months ended March 29, 2015. | ||||||||||||
Earnings per Share | Earnings per Share: Basic earnings per share is computed by dividing income available for common shareholders (the numerator) by the weighted average number of common shares outstanding (the denominator) for the period. Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. | ||||||||||||
The potentially dilutive securities that Optex Systems Holdings has outstanding are convertible preferred stock, stock options and warrants. In computing the dilutive effect of convertible preferred stock or debt, the numerator is adjusted to add back any convertible preferred dividends and interest on convertible debt, and the denominator is increased to assume the conversion of the number of additional common shares. Optex Systems Holdings uses the Treasury Stock Method to compute the dilutive effect of stock options and warrants. Convertible preferred stock, convertible debt, stock options and warrants that are anti-dilutive are excluded from the calculation of diluted earnings per common share. | |||||||||||||
For the three and six months ended March 29, 2015, respectively, 1,001 shares of Series A preferred stock, 1000 shares of Series B preferred stock, 62,857,649 stock options and 1,000,000 warrants were excluded from the earnings per share calculation as anti-dilutive. For the three and six months ended March 30, 2014, respectively, 1,001 shares of Series A preferred stock, 63,165,649 stock options and 1,000,000 warrants were excluded from the earnings per share calculation as anti-dilutive. |
Accounting_Policies_Tables
Accounting Policies (Tables) | 6 Months Ended | ||||||||||||
Mar. 29, 2015 | |||||||||||||
Accounting Policies [Abstract] | |||||||||||||
Schedule of inventory | (Thousands) | ||||||||||||
29-Mar-15 | 28-Sep-14 | ||||||||||||
Raw Material | $ | 4,675 | $ | 5,136 | |||||||||
Work in Process | 2,574 | 1,854 | |||||||||||
Finished Goods | 396 | 265 | |||||||||||
Gross Inventory | $ | 7,645 | $ | 7,255 | |||||||||
Less: Inventory Reserves | (1,345 | ) | (1,345 | ) | |||||||||
Net Inventory | $ | 6,300 | $ | 5,910 | |||||||||
Schedule of certain assets and liabilities measured and recorded at fair value on a recurring basis | (Thousands) | ||||||||||||
Level 1 | Level 2 | Level 3 | |||||||||||
Derivatives Liabilities – Long Term | $ | - | $ | - | $ | - | |||||||
(Note Conversion Feature) | |||||||||||||
Purchase_of_Applied_Optics_Pro1
Purchase of Applied Optics Products Line (Tables) | 6 Months Ended | ||||||||||||||||
Mar. 29, 2015 | |||||||||||||||||
Purchase Of Applied Optics Products Line [Abstract] | |||||||||||||||||
Schedule of fair value of the acquired assets and assumed liabilities | Fair Values as of | ||||||||||||||||
3-Nov-14 | |||||||||||||||||
Fixed Assets | $ | 2,064.70 | |||||||||||||||
Inventory | 940.1 | ||||||||||||||||
Prepaid Assets/Other | 47.1 | ||||||||||||||||
Liabilities | (270.7 | ) | |||||||||||||||
Net Assets Acquired | $ | 2,781.20 | |||||||||||||||
Intangible Asset: | |||||||||||||||||
Customer Contracts/Backlog | 342.2 | ||||||||||||||||
Total Assets Acquired | $ | 3,123.40 | |||||||||||||||
Less: Cash Consideration | (1,013.1 | ) | |||||||||||||||
Gain on Bargain Purchase | $ | 2,110.30 | |||||||||||||||
Schedule of pro forma condensed balance sheet and revenue and earnings information | Optex Systems Holdings, Inc. | ||||||||||||||||
Balance Sheet Adjusted for Applied Optics Product Line Acquisition | |||||||||||||||||
Six Months Ended | |||||||||||||||||
(Thousands) | |||||||||||||||||
(unaudited) | |||||||||||||||||
Balance Sheet | Pro forma | Pro forma | |||||||||||||||
29-Mar-15 | Adjustments | Balance Sheet | |||||||||||||||
29-Mar-15 | |||||||||||||||||
Assets | |||||||||||||||||
Current Assets | $ | 9,220 | $ | (321 | )(1) | $ | 8,899 | ||||||||||
Noncurrent Assets | 2,474 | (44 | )(2) | 2,430 | |||||||||||||
Total Assets | $ | 11,694 | $ | (365 | ) | $ | 11,329 | ||||||||||
Liabilities | |||||||||||||||||
Current Liabilities | 2,384 | (16 | )(3) | 2,368 | |||||||||||||
Noncurrent Liabilities | 878 | 878 | |||||||||||||||
Total Liabilities | 3,262 | (16 | ) | 3,246 | |||||||||||||
Equity | |||||||||||||||||
Preferred Stock Series A ($0.001 par 5,000 authorized, 1,001 shares issued and outstanding) | - | - | - | ||||||||||||||
Preferred Stock Series B ($0.001 par 1,010 authorized, 1,000 shares issued and outstanding, respectively) | - | - | |||||||||||||||
Common Stock (par $0.001, 2,000,000,000 authorized, 170,913,943 shares issued and outstanding) | 171 | - | 171 | ||||||||||||||
Additional Paid-in-capital | 26,174 | - | 26,174 | ||||||||||||||
Retained (Deficit) | (17,913 | ) | (349 | )(4) | (18,262 | ) | |||||||||||
Total Stockholders Equity | 8,432 | (349 | ) | 8,083 | |||||||||||||
Total Liabilities and Stockholders Equity | $ | 11,694 | $ | (365 | ) | $ | 11,329 | ||||||||||
Notes related to pro forma balance sheet adjustments: | |||||||||||||||||
-1 | Accounts for changes in working capital for collections against accounts receivable against October booked revenue, $69 thousand, less the estimated cash requirements for October’s cash-based operating expenses for payroll, utilities, rent, maintenance & supplies of approximately ($390) thousand. | ||||||||||||||||
-2 | Assumes one additional month of depreciation on Property, Plant & Equipment acquired in the acquisition of ($44) thousand. | ||||||||||||||||
-3 | Assumes one month of accrued property tax liability for taxes for October 2014 of ($16) thousand. | ||||||||||||||||
-4 | The change in retained earnings (deficit) is based on the October pro forma net loss. The pro forma loss was derived based on sales reported for September 29, 2014 through November 2, 2014 as reported on L-3 communications product line financial summary for Applied Optics, less the incurred direct costs (materials $46 thousand, labor, $70 thousand, and manufacturing overhead spending $255 thousand) for October 2014, adjusted for the changes in inventory of $8 thousand, plus the L3 Communications reported G&A expenses for the Applied Optics facility, excluding any L3 Communications corporate intercompany allocated costs. | ||||||||||||||||
The pro forma financial information is presented for information purposes only. Such information is based on the historical results of each company and does not reflect the actual results that would have been reported had the acquisition been completed when assumed, nor is it indicative of the future results of operations for the combined entity. The unaudited pro forma information provided herein does not reflect any operating efficiencies and/or cost savings that the Company may achieve with respect to the combined entities. | |||||||||||||||||
The following represents condensed pro forma revenue and earnings information for the three and six months ended March 29, 2015 and March 30, 2014 as if the acquisition of the Applied Optics Product Line had occurred on the first day of each of the fiscal years. | |||||||||||||||||
Unaudited, Pro forma | |||||||||||||||||
(Thousands, except share data) | |||||||||||||||||
Three Months Ending | Six Months Ending | ||||||||||||||||
29-Mar-15 | 30-Mar-14 | 29-Mar-15 | 30-Mar-14 | ||||||||||||||
Revenues | $ | 3,472 | $ | 3,466 | $ | 5,570 | $ | 7,827 | |||||||||
Net Income (Loss) applicable to common shareholders | (3,148 | ) | (1,853 | ) | (5,977 | ) | (2,013 | ) | |||||||||
Diluted earnings (loss) per share | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | |||||
Weighted Average Shares Outstanding | 170,913,943 | 160,588,050 | 170,913,943 | 158,967,329 |
Intangible_Assets_Tables
Intangible Assets (Tables) | 6 Months Ended | ||||||||||||||||
Mar. 29, 2015 | |||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||
Schedule of purchase price was assigned to the acquired interest in the assets and liabilities | Assets: | ||||||||||||||||
Current assets, consisting primarily of inventory of $940.1 thousand and prepaid assets of $47.1 thousand | $ | 987.2 | |||||||||||||||
Identifiable intangible assets | 342.2 | ||||||||||||||||
Other non-current assets, principally property and equipment | 2,064.70 | ||||||||||||||||
Total assets | $ | 3,394.10 | |||||||||||||||
Liabilities: | |||||||||||||||||
Current liabilities, consisting of accounts payable of $119.4 thousand and accrued liabilities of $151.3 thousand | $ | (270.7 | ) | ||||||||||||||
Acquired net assets | $ | 3,123.40 | |||||||||||||||
Schedule of the intangible asset amortization on customer backlog | (Thousands) | ||||||||||||||||
Amortization | COS | G&A | Total | Unamortized | |||||||||||||
Schedule | Amortization | Balance | |||||||||||||||
14-Dec | $ | - | $ | - | $ | - | $ | 342.2 | |||||||||
15-Jan | 48.5 | 8.5 | 57 | 285.2 | |||||||||||||
15-Feb | 48.5 | 8.5 | 57 | 228.2 | |||||||||||||
15-Mar | 48.5 | 8.5 | 57 | 171.2 | |||||||||||||
15-Apr | 48.5 | 8.5 | 57 | 114.2 | |||||||||||||
15-May | 48.5 | 8.5 | 57 | 57.2 | |||||||||||||
15-Jun | 48.6 | 8.6 | 57.2 | - | |||||||||||||
Total | $ | 291.1 | $ | 51.1 | $ | 342.2 | $ | - | |||||||||
Debt_Financing_Tables
Debt Financing (Tables) | 6 Months Ended | ||||||||||||||||
Mar. 29, 2015 | |||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||
Schedule of fair value for the derivative liabilities related to the convertible notes | |||||||||||||||||
Valuation Dates | |||||||||||||||||
(Thousands) | |||||||||||||||||
11/17/14 | 11/17/14 | 12/28/14 | 3/29/15 | ||||||||||||||
Investors | Brokers | Total Q1 | Total Q2 | ||||||||||||||
Notes | $ | 1,550 | $ | 10 | $ | 1,560 | $ | - | |||||||||
Derivative Value | 6,929 | 45 | 6,127 | - | |||||||||||||
Change in Fair Value – Derivatives | - | - | (847 | ) | 847 | ||||||||||||
(Mark to Market) | |||||||||||||||||
Schedule of total expenses reflected consolidated statement of operations related to convertible notes | Qtr 1 | Qtr 2 | Six Months | ||||||||||||||
12/28/14 | 3/29/15 | Ending | |||||||||||||||
3/29/15 | |||||||||||||||||
Interest Expense: | |||||||||||||||||
Fair market value of derivatives – Investors | $ | 6,929 | $ | (6,929 | ) | $ | - | ||||||||||
Fair market value of derivatives – Brokers | 45 | (45 | ) | - | |||||||||||||
Less: Debt discount on convertible notes – Investors | (1,550 | ) | 1,550 | - | |||||||||||||
Less: Debt discount on convertible notes – Brokers | (10 | ) | 10 | - | |||||||||||||
Fair value adjustment on convertible notes issued 11/17/14 | $ | 5,414 | $ | (5,414 | ) | $ | - | ||||||||||
Debt discount amortization | 33 | (33 | ) | - | |||||||||||||
Note interest at 12% per annum | 23 | 46 | 69 | ||||||||||||||
Debt issuance cost amortization | 4 | 70 | 74 | ||||||||||||||
Total Interest Expense (Convertible Notes) | $ | 5,474 | $ | (5,474 | ) | $ | 143 | ||||||||||
Change in Fair Value – Derivatives (gain) /loss | $ | (847 | ) | $ | 847 | $ | - |
Stock_Based_Compensation_Table
Stock Based Compensation (Tables) | 6 Months Ended | ||||||||||||||||||
Mar. 29, 2015 | |||||||||||||||||||
Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract] | |||||||||||||||||||
Schedule of stock options granted to officers and employees | |||||||||||||||||||
Date of | Shares | Exercise | Shares Outstanding | Expiration | Vesting | ||||||||||||||
Grant | Granted | Price | As of 3/29/15 | Date | Date | ||||||||||||||
3/30/09 | 480,981 | $ | 0.15 | 480,981 | 3/29/16 | 3/30/10 | |||||||||||||
3/30/09 | 466,834 | $ | 0.15 | 466,834 | 3/29/16 | 3/30/11 | |||||||||||||
3/30/09 | 466,834 | $ | 0.15 | 466,834 | 3/29/16 | 3/30/12 | |||||||||||||
5/14/09 | 316,750 | $ | 0.15 | 268,250 | 5/13/16 | 5/14/10 | |||||||||||||
5/14/09 | 316,750 | $ | 0.15 | 268,250 | 5/13/16 | 5/14/11 | |||||||||||||
5/14/09 | 316,750 | $ | 0.15 | 268,250 | 5/13/16 | 5/14/12 | |||||||||||||
5/14/09 | 316,750 | $ | 0.15 | 268,250 | 5/13/16 | 5/14/13 | |||||||||||||
12/9/11 | 11,517,500 | $ | 0.01 | 8,842,500 | 12/8/18 | 12/8/12 | |||||||||||||
12/9/11 | 11,517,500 | $ | 0.01 | 8,842,500 | 12/8/18 | 12/8/13 | |||||||||||||
12/9/11 | 11,517,500 | $ | 0.01 | 8,842,500 | 12/8/18 | 12/8/14 | |||||||||||||
12/9/11 | 11,517,500 | $ | 0.01 | 8,842,500 | 12/8/18 | 12/8/15 | |||||||||||||
12/19/13 | 6,250,000 | $ | 0.01 | 10,000,000 | 12/18/20 | 12/8/14 | |||||||||||||
12/19/13 | 6,250,000 | $ | 0.01 | 5,000,000 | 12/18/20 | 12/8/15 | |||||||||||||
12/19/13 | 6,250,000 | $ | 0.01 | 5,000,000 | 12/18/20 | 12/8/16 | |||||||||||||
12/19/13 | 6,250,000 | $ | 0.01 | 5,000,000 | 12/18/20 | 12/8/17 | |||||||||||||
Total | 73,751,649 | 62,857,649 | |||||||||||||||||
Schedule of aggregate stock options granted under the incentive stock option plan | |||||||||||||||||||
Number | Weighted | ||||||||||||||||||
of Shares | Average | Weighted | Aggregate | ||||||||||||||||
Remaining | Fair | Average | Value | ||||||||||||||||
Subject to Exercise | Options | Value | Life (Years) | (Thousands) | |||||||||||||||
Outstanding as of September 29, 2013 | 484,247,649 | $ | — | 3.56 | — | ||||||||||||||
Granted – 2014 | 25,000,000 | $ | 0.01 | 5.22 | $ | 200 | |||||||||||||
Forfeited – 2014 | (5,336,000 | ) | $ | — | — | ||||||||||||||
Exercised – 2014 | (5,000,000 | ) | $ | 0.01 | — | ||||||||||||||
Outstanding as of September 28, 2014 | 62,911,649 | $ | — | 3.41 | — | ||||||||||||||
Granted – 2015 | — | $ | $ | ||||||||||||||||
Forfeited – 2015 | (54,000 | ) | $ | — | |||||||||||||||
Exercised – 2015 | — | $ | — | ||||||||||||||||
Outstanding as of March 29, 2015 | 62,857,649 | 2.8 | $ | — | |||||||||||||||
Exercisable as of September 28, 2014 | 20,201,649 | $ | — | 1.76 | $ | — | |||||||||||||
Exercisable as of March 29, 2015 | 40,265,149 | $ | — | 1.91 | $ | — | |||||||||||||
Schedule of aggregate non-vested shares granted under the 2009 Stock Option Plan | |||||||||||||||||||
Number of | Weighted- | ||||||||||||||||||
Non-vested | Average | ||||||||||||||||||
Shares | Grant- | ||||||||||||||||||
Subject to | Date | ||||||||||||||||||
Options | Fair Value | ||||||||||||||||||
Non-vested as of September 29, 2013 | 30,547,500 | $ | 0.01 | ||||||||||||||||
Non-vested granted — year ended September 28, 2014 | 25,000,000 | $ | 0.01 | ||||||||||||||||
Vested — year ended September 28, 2014 | (7,501,500 | ) | $ | 0.01 | |||||||||||||||
Forfeited — year ended September 28, 2014 | (5,336,000 | ) | $ | ||||||||||||||||
Non-vested as of September 28, 2014 | 42,710,000 | $ | 0.01 | ||||||||||||||||
Non-vested granted — six months ended March 29, 2015 | — | $ | — | ||||||||||||||||
Vested — six months ended March 29, 2015 | (20,063,500 | ) | $ | 0.01 | |||||||||||||||
Forfeited — six months ended March 29, 2015 | (54,000 | ) | $ | — | |||||||||||||||
Non-vested as of March 29, 2015 | 22,592,500 | $ | 0.01 | ||||||||||||||||
Schedule of warrants outstanding | |||||||||||||||||||
Grant Date | Warrants | Exercise | Outstanding | Expiration | Term | ||||||||||||||
Granted | Price | as of | Date | ||||||||||||||||
12/29/13 | |||||||||||||||||||
Avidbank- Line of Credit | 3/4/10 | 1,000,000 | $ | 0.1 | 1,000,000 | 3/3/16 | 6 years | ||||||||||||
Total Warrants | 1,000,000 | 1,000,000 | |||||||||||||||||
Organization_and_Operations_De
Organization and Operations (Detail Textuals) (USD $) | 6 Months Ended | |||||
Mar. 29, 2015 | Dec. 28, 2014 | Sep. 29, 2014 | Sep. 28, 2014 | Mar. 30, 2014 | Sep. 30, 2013 | |
sqft | ||||||
Employee | ||||||
Organization And Operations [Line Items] | ||||||
Leased facility (in Square Feet) | 93,733 | |||||
Entity Number Of Employees | 77 | |||||
Percentage of decrease in revenues | 1.00% | |||||
Cash | $1,115,000 | $1,685,000 | $1,685,000 | $1,157,000 | $882,000 | |
Working line of credit | 1,000,000 | |||||
Outstanding payable balance | $482,000 | $312,000 | ||||
Reduction in revenue | 34.00% | |||||
Applied Optics Center [Member] | ||||||
Organization And Operations [Line Items] | ||||||
Percent of revenue contribution | 33.00% |
Accounting_Policies_Details
Accounting Policies (Details) (USD $) | Mar. 29, 2015 | Sep. 28, 2014 |
In Thousands, unless otherwise specified | ||
Accounting Policies [Abstract] | ||
Raw Material | $4,675 | $5,136 |
Work in Process | 2,574 | 1,854 |
Finished Goods | 396 | 265 |
Gross Inventory | 7,645 | 7,255 |
Less: Inventory Reserves | -1,345 | -1,345 |
Net Inventory | $6,300 | $5,910 |
Accounting_Policies_Details_1
Accounting Policies (Details 1) (Fair value on recurring basis, USD $) | Mar. 29, 2015 |
Level 1 | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |
Derivatives Liabilities - Long Term | |
Level 2 | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |
Derivatives Liabilities - Long Term | |
Level 3 | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |
Derivatives Liabilities - Long Term |
Accounting_Policies_Detail_Tex
Accounting Policies (Detail Textuals) (USD $) | 0 Months Ended | 6 Months Ended | 1 Months Ended | 3 Months Ended | |||
Nov. 03, 2014 | Mar. 29, 2015 | Mar. 30, 2014 | Oct. 24, 2014 | Mar. 29, 2015 | Mar. 30, 2014 | Sep. 28, 2014 | |
Accounting Policies [Line Items] | |||||||
Net increase (decrease) inventory | $550,000 | $390,000 | |||||
Liquidation of customer deposit | 582,000 | ||||||
Convertible notes payable | 1,600,000 | 1,600,000 | |||||
Derivative liabilities | 6,100,000 | 6,100,000 | |||||
Common stock convertible conversion price | $0.01 | 0.01 | |||||
Additional dividend on preferred stock | 1,500,000 | 1,500,000 | |||||
Lower conversion price on the issuance | $0.00 | 0.0025 | |||||
Revenue recognized for milestones | 0 | 0 | |||||
Customer advances and deposits | 1,500,000 | 1,500,000 | |||||
Short term customer advance deposits for next twelve months | 594,000 | 594,000 | 1,072,000 | ||||
Long term customer advance deposits after March 2016 | 878,000 | 878,000 | 982,000 | ||||
Amortizable intangible assets | 342,000 | ||||||
Depreciation method | less than one year | ||||||
Unamortized intangible assets | 171,000 | ||||||
L-3 Communications Applied Optics Products Line ("Purchased Assets") | |||||||
Accounting Policies [Line Items] | |||||||
Net increase (decrease) inventory | 940,000 | ||||||
Minimum | |||||||
Accounting Policies [Line Items] | |||||||
Delivery period | 3 months | ||||||
Maximum | |||||||
Accounting Policies [Line Items] | |||||||
Delivery period | 36 months | ||||||
General Dynamics | |||||||
Accounting Policies [Line Items] | |||||||
Contract amount in milestone event | 8,000,000 | ||||||
Maximum amount of invoices for milestone event | 3,900,000 | ||||||
Series A Preferred Stock | |||||||
Accounting Policies [Line Items] | |||||||
Antidilutive securities excluded from computation of earnings per share, amount | 1,001 | 1,001 | 1,001 | 1,001 | |||
Stock Options | |||||||
Accounting Policies [Line Items] | |||||||
Antidilutive securities excluded from computation of earnings per share, amount | 62,857,649 | 63,165,649 | 62,857,649 | 63,165,649 | |||
Warrants | |||||||
Accounting Policies [Line Items] | |||||||
Antidilutive securities excluded from computation of earnings per share, amount | 1,000,000 | 1,000,000 | 1,000,000 | 1,000,000 | |||
Series B Preferred Stock | |||||||
Accounting Policies [Line Items] | |||||||
Dividend on preferred stock recognized | $4,900,000 | ||||||
Common stock convertible conversion price | $0.00 | 0.0025 | |||||
Conversion Rate Market Price Current | $0.01 | 0.01 | |||||
Antidilutive securities excluded from computation of earnings per share, amount | 1,000 | 1,000 |
Purchase_of_Applied_Optics_Pro2
Purchase of Applied Optics Products Line (Details) (USD $) | 0 Months Ended |
Nov. 03, 2014 | |
Business Acquisition [Line Items] | |
Inventory | $940,100 |
Prepaid Assets/Other | 47,100 |
L-3 Communications, Inc. ("L-3") | |
Business Acquisition [Line Items] | |
Fixed Assets | 2,064,700 |
Inventory | 940,100 |
Prepaid Assets/Other | 47,100 |
Liabilities | -270,700 |
Net Assets Acquired | 2,781,200 |
Intangible Asset: | |
Customer Contracts/Backlog | 342,200 |
Total Assets Acquired | 3,123,400 |
Less: Cash Consideration | -1,013,100 |
Gain on Bargain Purchase | $2,110,300 |
Purchase_of_Applied_Optics_Pro3
Purchase of Applied Optics Products Line (Details 1) (USD $) | 6 Months Ended | ||
In Thousands, unless otherwise specified | Mar. 29, 2015 | Sep. 28, 2014 | |
Assets | |||
Current Assets | $9,220 | $8,367 | |
Total Assets | 11,694 | 8,747 | |
Liabilities | |||
Current Liabilities | 2,384 | 1,867 | |
Total Liabilities | 3,262 | 2,849 | |
Equity | |||
Common Stock (par $0.001, 2,000,000,000 authorized, 170,913,943 shares issued and outstanding) | 171 | 171 | |
Retained (Deficit) | -17,913 | -12,285 | |
Total Stockholders' Equity | 8,432 | 5,898 | |
Total Liabilities and Stockholders' Equity | 11,694 | 8,747 | |
L-3 Communications Applied Optics Products Line ("Purchased Assets") | |||
Assets | |||
Current Assets | 9,220 | ||
Noncurrent Assets | 2,474 | ||
Total Assets | 11,694 | ||
Liabilities | |||
Current Liabilities | 2,384 | ||
Noncurrent Liabilities | 878 | ||
Total Liabilities | 3,262 | ||
Equity | |||
Preferred Stock Series A ($0.001 par 5,000 authorized, 1,001 shares issued and outstanding) | |||
Preferred Stock Series B ($0.001 par 1,010 authorized, 1,000 shares issued and outstanding, respectively) | |||
Common Stock (par $0.001, 2,000,000,000 authorized, 170,913,943 shares issued and outstanding) | 171 | ||
Additional Paid-in-capital | 26,174 | ||
Retained (Deficit) | -17,913 | ||
Total Stockholders' Equity | 8,432 | ||
Total Liabilities and Stockholders' Equity | 11,694 | ||
Current Assets | -321 | [1] | |
Noncurrent Assets | -44 | [2] | |
Total Assets | -365 | ||
Current Liabilities | -16 | [3] | |
Noncurrent Liabilities | |||
Total Liabilities | -16 | ||
Preferred Stock Series A ($0.001 par 5,000 authorized, 1,001 shares issued and outstanding) | |||
Preferred Stock Series B ($0.001 par 1,010 authorized, 1,000 shares issued and outstanding, respectively) | |||
Common Stock (par $0.001, 2,000,000,000 authorized, 170,913,943 shares issued and outstanding) | |||
Additional Paid-in-capital | |||
Retained (Deficit) | -349 | [4] | |
Total Stockholders' Equity | -349 | ||
Total Liabilities and Stockholders' Equity | -365 | ||
L-3 Communications Applied Optics Products Line ("Purchased Assets") | Pro forma Adjustments | |||
Assets | |||
Current Assets | 8,899 | ||
Noncurrent Assets | 2,430 | ||
Total Assets | 11,329 | ||
Liabilities | |||
Current Liabilities | 2,368 | ||
Noncurrent Liabilities | 878 | ||
Total Liabilities | 3,246 | ||
Equity | |||
Preferred Stock Series A ($0.001 par 5,000 authorized, 1,001 shares issued and outstanding) | |||
Preferred Stock Series B ($0.001 par 1,010 authorized, 1,000 shares issued and outstanding, respectively) | |||
Common Stock (par $0.001, 2,000,000,000 authorized, 170,913,943 shares issued and outstanding) | 171 | ||
Additional Paid-in-capital | 26,174 | ||
Retained (Deficit) | -18,262 | ||
Total Stockholders' Equity | 8,083 | ||
Total Liabilities and Stockholders' Equity | $11,329 | ||
[1] | Accounts for changes in working capital for collections against accounts receivable against October booked revenue, $69 thousand, less the estimated cash requirements for October's cash-based operating expenses for payroll, utilities, rent, maintenance & supplies of approximately ($390) thousand. | ||
[2] | Assumes one additional month of depreciation on Property, Plant & Equipment acquired in the acquisition of ($44) thousand. | ||
[3] | Assumes one month of accrued property tax liability for taxes for October 2014 of ($16) thousand. | ||
[4] | The change in retained earnings (deficit) is based on the October pro forma net loss. The pro forma loss was derived based on sales reported for September 29, 2014 through November 2, 2014 as reported on L-3 communications product line financial summary for Applied Optics, less the incurred direct costs (materials $46 thousand, labor, $70 thousand, and manufacturing overhead spending $255 thousand) for October 2014, adjusted for the changes in inventory of $8 thousand, plus the L3 Communications reported G&A expenses for the Applied Optics facility, excluding any L3 Communications corporate intercompany allocated costs. |
Purchase_of_Applied_Optics_Pro4
Purchase of Applied Optics Products Line (Parentheticals) (Details 1) (USD $) | Mar. 29, 2015 | Sep. 28, 2014 | Sep. 29, 2013 |
Common stock, par value (in dollars per share) | $0.00 | $0.00 | |
Common stock, shares authorized | 2,000,000,000 | 2,000,000,000 | |
Common stock, shares issued | 170,913,943 | 170,913,943 | |
Common stock, shares outstanding | 170,913,943 | 170,913,943 | 157,346,607 |
L-3 Communications Applied Optics Products Line ("Purchased Assets") | |||
Common stock, par value (in dollars per share) | $0.00 | $0.00 | |
Common stock, shares authorized | 2,000,000,000 | 2,000,000,000 | |
Common stock, shares issued | 170,913,943 | 170,913,943 | |
Common stock, shares outstanding | 157,346,607 | 157,346,607 | |
Series A Preferred Stock | |||
Preferred stock, par value (in dollars per share) | $0.00 | $0.00 | |
Preferred stock, shares authorized | 5,000 | 5,000 | |
Preferred stock, shares issued | 1,001 | 1,001 | |
Preferred stock, shares outstanding | 1,001 | 1,001 | |
Series A Preferred Stock | L-3 Communications Applied Optics Products Line ("Purchased Assets") | |||
Preferred stock, par value (in dollars per share) | $0.00 | $0.00 | |
Preferred stock, shares authorized | 5,000 | 5,000 | |
Preferred stock, shares issued | 1,001 | 1,001 | |
Preferred stock, shares outstanding | 1,001 | 1,001 | |
Series B Preferred Stock | |||
Preferred stock, par value (in dollars per share) | $0.00 | ||
Preferred stock, shares authorized | 1,010 | 0 | |
Preferred stock, shares issued | 1,000 | 0 | |
Preferred stock, shares outstanding | 1,000 | 0 | |
Series B Preferred Stock | L-3 Communications Applied Optics Products Line ("Purchased Assets") | |||
Preferred stock, par value (in dollars per share) | $0.00 | $0.00 | |
Preferred stock, shares authorized | 1,010 | 1,010 | |
Preferred stock, shares issued | 1,000 | 1,000 | |
Preferred stock, shares outstanding | 1,000 | 1,000 |
Purchase_of_Applied_Optics_Pro5
Purchase of Applied Optics Products Line (Parentheticals 1) (Details 1) (L-3 Communications Applied Optics Products Line ("Purchased Assets"), USD $) | 6 Months Ended |
In Thousands, unless otherwise specified | Mar. 29, 2015 |
L-3 Communications Applied Optics Products Line ("Purchased Assets") | |
Business Acquisition [Line Items] | |
Pro forma changes in working capital for collections against accounts receivable | $69 |
Estimated cash requirements for October's cash based operating expenses | -390 |
Pro forma adjustments of depreciation on Property, Plant & Equipment acquired | -44 |
Pro forma adjustments of accrued property tax liability for taxes for October 2014 | -16 |
Business Combination, Pro Forma Adjustments, Direct Materials | 46 |
Business Combination, Pro Forma Adjustments, Direct Labor | 70 |
Business Combination, Pro Forma Adjustments, Manufacturing overhead | 255 |
Business Combination, Pro Forma Adjustments, Inventory | $8 |
Purchase_of_Applied_Optics_Pro6
Purchase of Applied Optics Products Line (Details 2) (L-3 Communications Applied Optics Products Line ("Purchased Assets"), USD $) | 3 Months Ended | 6 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | Mar. 29, 2015 | Mar. 30, 2014 | Mar. 29, 2015 | Mar. 30, 2014 |
L-3 Communications Applied Optics Products Line ("Purchased Assets") | ||||
Business Acquisition [Line Items] | ||||
Revenues | $3,472 | $3,466 | $5,570 | $7,827 |
Net Income (Loss) applicable to common shareholders | ($3,148) | ($1,853) | ($5,977) | ($2,013) |
Diluted earnings (loss) per share (in dollars per share) | $0 | $0 | $0 | $0 |
Weighted Average Shares Outstanding (in shares) | 170,913,943 | 160,588,050 | 170,913,943 | 158,967,329 |
Purchase_of_Applied_Optics_Pro7
Purchase of Applied Optics Products Line (Detail Textuals) (L-3 Communications Applied Optics Products Line ("Purchased Assets"), USD $) | 0 Months Ended |
Nov. 03, 2014 | |
L-3 Communications Applied Optics Products Line ("Purchased Assets") | |
Business Acquisition [Line Items] | |
Purchase price paid | $1,013,100 |
Liabilities assumed | 270,700 |
Working capital surplus | 213,100 |
Advance from accredited investors | 800,000 |
Approximate percentage of net carrying value of assets for fair value appraisal | 73.00% |
Acquisition-related costs | $40,200 |
Intangible_Assets_Details
Intangible Assets (Details) (L-3 Communications, Inc. ("L-3"), USD $) | Nov. 03, 2014 |
L-3 Communications, Inc. ("L-3") | |
Assets: | |
Current assets, consisting primarily of inventory of $940.1 thousand and prepaid assets of $47.1 thousand | $987,200 |
Identifiable intangible assets | 342,200 |
Other non-current assets, principally property and equipment | 2,064,700 |
Total assets | 3,394,100 |
Liabilities: | |
Current liabilities, consisting of accounts payable of $119.4 thousand and accrued liabilities of $151.3 thousand | -270,700 |
Acquired net assets | $3,123,400 |
Intangible_Assets_Parenthetica
Intangible Assets (Parentheticals) (Details) (USD $) | Nov. 03, 2014 |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Inventory | $940,100 |
Prepaid assets | 47,100 |
Accounts payable | 119,400 |
Accrued liabilities | $151,300 |
Intangible_Assets_Details_1
Intangible Assets (Details 1) (USD $) | 0 Months Ended | 6 Months Ended |
Nov. 03, 2014 | Mar. 29, 2015 | |
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Total Amortization | $342,000 | |
Customer backlog | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Total Amortization | 342,200 | |
Unamortized Balance | ||
Customer backlog | Dec-14 | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Total Amortization | ||
Unamortized Balance | 342,200 | |
Customer backlog | Jan-15 | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Total Amortization | 57,000 | |
Unamortized Balance | 285,200 | |
Customer backlog | Feb-15 | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Total Amortization | 57,000 | |
Unamortized Balance | 228,200 | |
Customer backlog | Mar-15 | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Total Amortization | 57,000 | |
Unamortized Balance | 171,200 | |
Customer backlog | Apr-15 | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Total Amortization | 57,000 | |
Unamortized Balance | 114,200 | |
Customer backlog | May-15 | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Total Amortization | 57,000 | |
Unamortized Balance | 57,200 | |
Customer backlog | Jun-15 | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Total Amortization | 57,200 | |
Unamortized Balance | ||
Customer backlog | COS | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Total Amortization | 291,100 | |
Customer backlog | COS | Dec-14 | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Total Amortization | ||
Customer backlog | COS | Jan-15 | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Total Amortization | 48,500 | |
Customer backlog | COS | Feb-15 | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Total Amortization | 48,500 | |
Customer backlog | COS | Mar-15 | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Total Amortization | 48,500 | |
Customer backlog | COS | Apr-15 | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Total Amortization | 48,500 | |
Customer backlog | COS | May-15 | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Total Amortization | 48,500 | |
Customer backlog | COS | Jun-15 | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Total Amortization | 48,600 | |
Customer backlog | G&A | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Total Amortization | 51,100 | |
Customer backlog | G&A | Dec-14 | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Total Amortization | ||
Customer backlog | G&A | Jan-15 | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Total Amortization | 8,500 | |
Customer backlog | G&A | Feb-15 | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Total Amortization | 8,500 | |
Customer backlog | G&A | Mar-15 | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Total Amortization | 8,500 | |
Customer backlog | G&A | Apr-15 | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Total Amortization | 8,500 | |
Customer backlog | G&A | May-15 | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Total Amortization | 8,500 | |
Customer backlog | G&A | Jun-15 | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Total Amortization | $8,600 |
Intangible_Assets_Detail_Textu
Intangible Assets (Detail Textuals) (L-3 Communications, Inc. ("L-3"), USD $) | 0 Months Ended |
Nov. 03, 2014 | |
L-3 Communications, Inc. ("L-3") | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Purchase price paid | $1,013,100 |
Liabilities assumed | $270,700 |
Intangible_Assets_Detail_Textu1
Intangible Assets (Detail Textuals 1) (USD $) | 0 Months Ended | 6 Months Ended | 3 Months Ended |
Nov. 03, 2014 | Mar. 29, 2015 | Mar. 29, 2015 | |
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Fair value of intangible assets | $171,000 | ||
Amortizable intangible assets | 342,000 | ||
L-3 Communications, Inc. ("L-3") | |||
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Fair value of intangible assets | 342,200 | ||
Method of amortization of intangible assets | straight line basis | ||
Amortizable intangible assets | 57,000 | ||
Amortization period | 15 years | ||
Unamortized Balance | 171,200 | 171,200 | |
L-3 Communications, Inc. ("L-3") | Manufacturing cost of sale | |||
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Amortizable intangible assets | 48,500 | 145,500 | |
L-3 Communications, Inc. ("L-3") | General and administrative expense | |||
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Amortizable intangible assets | $8,500 | $25,500 |
Commitments_and_Contingencies_
Commitments and Contingencies (Detail Textuals) (USD $) | 6 Months Ended |
In Millions, unless otherwise specified | Mar. 29, 2015 |
Commitment And Contingencies [Line Items] | |
HVAC improvement allowance | $0.35 |
From 1/1/14 - 3/31/14 | |
Commitment And Contingencies [Line Items] | |
Annual base rent rate per square foot | 0 |
From 4/1/2014 - 3/31/2016 | |
Commitment And Contingencies [Line Items] | |
Annual base rent rate per square foot | 5.2 |
from 4/1/2016 - 3/31/2018 | |
Commitment And Contingencies [Line Items] | |
Annual base rent rate per square foot | 5.65 |
From 4/1/2018 - 3/31/2019 | |
Commitment And Contingencies [Line Items] | |
Annual base rent rate per square foot | 5.85 |
From 4/1/2019 - 3/31/2021 | |
Commitment And Contingencies [Line Items] | |
Annual base rent rate per square foot | 6.05 |
Commitments_and_Contingencies_1
Commitments and Contingencies (Detail Textuals 1) (USD $) | 0 Months Ended | 3 Months Ended | 6 Months Ended | |
Nov. 03, 2014 | Mar. 30, 2014 | Mar. 29, 2015 | Sep. 28, 2014 | |
sqft | ||||
Commitments and Contingencies Disclosure [Abstract] | ||||
Lease expiration date | 30-Sep-16 | |||
Base rent payment per month | $23,800 | $21,200 | ||
Additional operating lease rent expense | 6,600 | 7,200 | ||
Total monthly rental expense | 30,400 | 28,400 | ||
Space of leased premises (in square feet) | 56,633 | |||
Monthly minimum rent expense | 506,000 | |||
Operating lease renewal term | 5 years | |||
Area of land under sublease | 12,000 | |||
Sublease and rental expense | 5,100 | |||
Additional sublease and rental expense | 2,800 | |||
Operating leases, rent expense | 254,000 | 149,600 | ||
Manufacturing and office equipment expenses | 10,900 | 4,000 | ||
Operating Lease Combined Rental Expenses | 578,000 | |||
Estimated common area maintenance costs | 166,000 | |||
Sublease rental receipts | 94,000 | |||
Increase decrease in lease expenses and associated common area maintenance expenses | 271,000 | |||
Total value of rent abatement | 63,500 | |||
Unamortized deferred rent | 84,000 | 91,000 | ||
Deferred rent expense amortized per month | $1,200 |
Prepaid_Royalties_Detail_Textu
Prepaid Royalties (Detail Textuals) (USD $) | 3 Months Ended | 6 Months Ended | |||
Mar. 29, 2015 | Mar. 30, 2014 | Mar. 29, 2015 | Mar. 30, 2014 | Sep. 28, 2014 | |
Finite-Lived Intangible Assets [Line Items] | |||||
Balance of the patent license | $135,000 | $135,000 | $150,000 | ||
Patent Licence | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Finite-Lived Intangible Asset, Useful Life | 7 years | ||||
Finite-Lived Intangible Assets, Amortization Method | straight line basis | ||||
Royalty Expense | 7,500 | 7,500 | 15,000 | 15,000 | |
Prepaid Royalties Noncurrent Two | $135,400 | $135,400 |
Debt_Financing_Details
Debt Financing (Details) (USD $) | 3 Months Ended | 6 Months Ended | 3 Months Ended | 1 Months Ended | |
In Thousands, unless otherwise specified | Mar. 29, 2015 | Mar. 29, 2015 | Mar. 30, 2014 | Dec. 28, 2014 | Nov. 17, 2014 |
Debt Instrument [Line Items] | |||||
Derivative Value | $0 | $0 | $6,127 | ||
Change in Fair Value - Derivatives | -847 | ||||
Convertible promissory note | |||||
Debt Instrument [Line Items] | |||||
Notes | 1,560 | ||||
Derivative Value | 0 | 0 | 6,127 | ||
Change in Fair Value - Derivatives | 847 | -847 | |||
Convertible promissory note | Investors | |||||
Debt Instrument [Line Items] | |||||
Notes | 1,550 | ||||
Derivative Value | -6,929 | -6,929 | 6,929 | 6,929 | |
Change in Fair Value - Derivatives | |||||
Convertible promissory note | Brokers | |||||
Debt Instrument [Line Items] | |||||
Notes | 10 | ||||
Derivative Value | -45 | -45 | 45 | 45 | |
Change in Fair Value - Derivatives |
Debt_Financing_Details_1
Debt Financing (Details 1) (USD $) | 3 Months Ended | 6 Months Ended | 3 Months Ended | 1 Months Ended | |
In Thousands, unless otherwise specified | Mar. 29, 2015 | Mar. 29, 2015 | Mar. 30, 2014 | Dec. 28, 2014 | Nov. 17, 2014 |
Interest Expense: | |||||
Fair market value of derivatives | $0 | $0 | $6,127 | ||
Debt discount on convertible notes | 0 | 0 | |||
Change in Fair Value - Derivatives (gain) /loss | -847 | ||||
Convertible debt | |||||
Interest Expense: | |||||
Fair market value of derivatives | 0 | 0 | 6,127 | ||
Debt discount on convertible notes | -1,527 | -1,560 | |||
Fair value adjustment on convertible notes issued 11/17/14 | -5,414 | 5,414 | |||
Debt discount amortization | -33 | 33 | |||
Note interest at 12% per annum | 46 | 69 | 23 | ||
Debt issuance cost amortization | 70 | 74 | 4 | ||
Total Interest Expense (Convertible Notes) | -5,474 | 143 | 5,474 | ||
Change in Fair Value - Derivatives (gain) /loss | 847 | -847 | |||
Convertible debt | Investors | |||||
Interest Expense: | |||||
Fair market value of derivatives | -6,929 | -6,929 | 6,929 | 6,929 | |
Debt discount on convertible notes | 1,550 | 1,550 | -1,550 | ||
Change in Fair Value - Derivatives (gain) /loss | |||||
Convertible debt | Brokers | |||||
Interest Expense: | |||||
Fair market value of derivatives | -45 | -45 | 45 | 45 | |
Debt discount on convertible notes | 10 | 10 | -10 | ||
Change in Fair Value - Derivatives (gain) /loss |
Debt_Financing_Detail_Textuals
Debt Financing (Detail Textuals) (USD $) | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||
22-May-14 | Mar. 29, 2015 | Mar. 30, 2014 | Mar. 29, 2015 | Mar. 30, 2014 | Dec. 28, 2014 | |
Debt Instrument [Line Items] | ||||||
Line of credit facility, maximum borrowing capacity | $1,000,000 | |||||
Revolving Credit Facility | Avidbank | ||||||
Debt Instrument [Line Items] | ||||||
Line of credit facility, maximum borrowing capacity | 1,000,000 | |||||
Line of credit facility, expiration date | 21-May-16 | |||||
Line of credit facility maturity term | 2 years | |||||
Line of credit facility, interest rate description | Greater of 7.0% and the then in effect prime rate plus 2.5%. | |||||
Line of credit facility, description | The loan period is from May 22nd through May 21st of the following year, beginning with the period of May 22, 2014 through May 21, 2015 and a revolving loan maturity date of May 21, 2016, at which time any outstanding advances, and accrued and unpaid interest thereon, will be due and payable. | |||||
Line of credit facility renewal fees due on the one year anniversary of the date of the loan agreement | 5,000 | |||||
Line of credit facility, amount outstanding | 550,000 | 550,000 | ||||
Interest expense | 5,000 | 1,000 | 10,000 | 8,000 | ||
Revolving Credit Facility | Avidbank | Minimum | ||||||
Debt Instrument [Line Items] | ||||||
Line of credit facility, periodic payment, interest | $10,000 |
Debt_Financing_Detail_Textuals1
Debt Financing (Detail Textuals 1) (USD $) | 3 Months Ended | 6 Months Ended | 3 Months Ended | 1 Months Ended | |
Dec. 28, 2014 | Mar. 29, 2015 | Mar. 29, 2015 | Nov. 17, 2014 | Sep. 28, 2014 | |
Debt Instrument [Line Items] | |||||
Proceeds from convertible notes issued | $1,560,000 | $1,560,000 | |||
Common stock, par value (in dollars per share) | $0.00 | $0.00 | $0.00 | ||
Convertible promissory note | |||||
Debt Instrument [Line Items] | |||||
Principal amount | 1,560,000 | 1,560,000 | |||
Interest rate on notes | 12.00% | 12.00% | |||
Amortized interest expense related to debt issuance costs | 70,000 | 4,000 | |||
Subscription Agreement | Convertible promissory note | |||||
Debt Instrument [Line Items] | |||||
Principal amount | 2,100,000 | ||||
Interest rate on notes | 12.00% | ||||
Maturity period of notes | 2 years | ||||
Common stock, par value (in dollars per share) | $0.00 | ||||
Conversion price of stock per share (in dollars per share) | $0.00 | ||||
Prepayment terms | All or part of the then remaining principal amount of the notes may be prepaid at any time at a price equal to 125% of the sum of the remaining principal amount of the notes to be prepaid plus all accrued and unpaid interest thereon. | ||||
Prepayment percentage of principal and unpaid interest | 125.00% | ||||
Reverse stock split ratio | 1:350 reverse split | ||||
Reverse Stock Split maximum effective days | 90 days | ||||
Debt issuance cost | 74,000 | ||||
Placement Fees | 10,000 | ||||
Amortized interest expense related to debt issuance costs | 69,000 | 5,000 | |||
Subscription Agreement | Convertible promissory note | Maximum | |||||
Debt Instrument [Line Items] | |||||
Maximum beneficial ownership | 3.33% | ||||
Subscription Agreement | Convertible promissory note | Accredited investors | |||||
Debt Instrument [Line Items] | |||||
Principal amount | 1,550,000 | ||||
Subscription Agreement | Convertible promissory note | Placement Agency | |||||
Debt Instrument [Line Items] | |||||
Proceeds from convertible notes issued | $10,000 |
Debt_Financing_Details_Textual
Debt Financing (Details Textuals 2) (USD $) | 3 Months Ended | 6 Months Ended | 1 Months Ended | 3 Months Ended | |||
Mar. 29, 2015 | Mar. 29, 2015 | Mar. 30, 2014 | Nov. 17, 2014 | Dec. 28, 2014 | Mar. 26, 2015 | Sep. 28, 2014 | |
Debt Instrument [Line Items] | |||||||
Derivative Value | $0 | $0 | $6,127,000 | ||||
Change in Fair Value - Derivatives | -847,000 | ||||||
Unamortized debt discount | 0 | 0 | |||||
Note balance | |||||||
Convertible notes payable (net of discount) | 33,000 | ||||||
Conversion price (in dollars per share) | $0.01 | $0.01 | |||||
Series B Preferred Stock [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Preferred stock, shares authorized | 1,010 | 1,010 | 0 | ||||
Stated value of each share | $0.01 | $0.01 | $1,629.16 | ||||
Conversion price (in dollars per share) | $0.00 | $0.00 | |||||
Stock issued upon conversion of debt | 1,000 | ||||||
Convertible promissory note | |||||||
Debt Instrument [Line Items] | |||||||
Stock projections historical volatilities | 197.00% | 202.00% | |||||
Percentage of Stock price exceed conversion price | 200.00% | ||||||
Default event occurring increase percentage | 0.25% | ||||||
Derivative Value | 0 | 0 | 6,127,000 | ||||
Change in Fair Value - Derivatives | 847,000 | -847,000 | |||||
Unamortized debt discount | -1,560,000 | -1,527,000 | |||||
Note balance | 1,560,000 | ||||||
Convertible notes payable (net of discount) | 33,000 | ||||||
Interest rate on notes | 12.00% | 12.00% | |||||
Interest expense notes payable | 23,000 | 46,000 | |||||
Amortized interest expense related to debt issuance costs | 4,000 | 70,000 | |||||
Unamortized debt issuance costs | |||||||
Principal amount | $1,560,000 | $1,560,000 | |||||
Convertible promissory note | Minimum | |||||||
Debt Instrument [Line Items] | |||||||
Default event occurring percentage | 0.00% | ||||||
Discount rates based on risk-free rate | 0.54% | ||||||
Convertible promissory note | Maximum | |||||||
Debt Instrument [Line Items] | |||||||
Default event occurring percentage | 5.00% | ||||||
Discount rates based on risk-free rate | 0.73% |
Stock_Based_Compensation_Detai
Stock Based Compensation (Details) (USD $) | 6 Months Ended |
Mar. 29, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Shares Granted | 73,751,649 |
Shares Outstanding | 62,857,649 |
Stock Option Plan 2009 - March, 2010 Vesting | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Date of Grant | 30-Mar-09 |
Shares Granted | 480,981 |
Exercise Price | 0.15 |
Shares Outstanding | 480,981 |
Expiration Date | 29-Mar-16 |
Vesting Date | 30-Mar-10 |
Stock Option Plan 2009 - March, 2011 Vesting | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Date of Grant | 30-Mar-09 |
Shares Granted | 466,834 |
Exercise Price | 0.15 |
Shares Outstanding | 466,834 |
Expiration Date | 29-Mar-16 |
Vesting Date | 30-Mar-11 |
Stock Option Plan 2009 - March, 2012 Vesting | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Date of Grant | 30-Mar-09 |
Shares Granted | 466,834 |
Exercise Price | 0.15 |
Shares Outstanding | 466,834 |
Expiration Date | 29-Mar-16 |
Vesting Date | 30-Mar-12 |
Stock Option Plan 2009 - May, 2010 Vesting | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Date of Grant | 14-May-09 |
Shares Granted | 316,750 |
Exercise Price | 0.15 |
Shares Outstanding | 268,250 |
Expiration Date | 13-May-16 |
Vesting Date | 14-May-10 |
Stock Option Plan 2009 - May, 2011 Vesting | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Date of Grant | 14-May-09 |
Shares Granted | 316,750 |
Exercise Price | 0.15 |
Shares Outstanding | 268,250 |
Expiration Date | 13-May-16 |
Vesting Date | 14-May-11 |
Stock Option Plan 2009 - May, 2012 Vesting | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Date of Grant | 14-May-09 |
Shares Granted | 316,750 |
Exercise Price | 0.15 |
Shares Outstanding | 268,250 |
Expiration Date | 13-May-16 |
Vesting Date | 14-May-12 |
Stock Option Plan 2009 - May, 2013 Vesting | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Date of Grant | 14-May-09 |
Shares Granted | 316,750 |
Exercise Price | 0.15 |
Shares Outstanding | 268,250 |
Expiration Date | 13-May-16 |
Vesting Date | 14-May-13 |
Stock Option Plan 2011 Dec 2012 Vesting | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Date of Grant | 9-Dec-11 |
Shares Granted | 11,517,500 |
Exercise Price | 0.01 |
Shares Outstanding | 8,842,500 |
Expiration Date | 8-Dec-18 |
Vesting Date | 8-Dec-12 |
Stock Option Plan 2011 Dec 2013 Vesting | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Date of Grant | 9-Dec-11 |
Shares Granted | 11,517,500 |
Exercise Price | 0.01 |
Shares Outstanding | 8,842,500 |
Expiration Date | 8-Dec-18 |
Vesting Date | 8-Dec-13 |
Stock Option Plan 2011 Dec 2014 Vesting | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Date of Grant | 9-Dec-11 |
Shares Granted | 11,517,500 |
Exercise Price | 0.01 |
Shares Outstanding | 8,842,500 |
Expiration Date | 8-Dec-18 |
Vesting Date | 8-Dec-14 |
Stock Option Plan 2011 Dec 2015 Vesting | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Date of Grant | 9-Dec-11 |
Shares Granted | 11,517,500 |
Exercise Price | 0.01 |
Shares Outstanding | 8,842,500 |
Expiration Date | 8-Dec-18 |
Vesting Date | 8-Dec-15 |
Stock Option Plan 2013 Dec 2014 Vesting | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Date of Grant | 19-Dec-13 |
Shares Granted | 6,250,000 |
Exercise Price | 0.01 |
Shares Outstanding | 10,000,000 |
Expiration Date | 18-Dec-20 |
Vesting Date | 8-Dec-14 |
Stock Option Plan 2013 Dec 2015 Vesting | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Date of Grant | 19-Dec-13 |
Shares Granted | 6,250,000 |
Exercise Price | 0.01 |
Shares Outstanding | 5,000,000 |
Expiration Date | 18-Dec-20 |
Vesting Date | 8-Dec-15 |
Stock Option Plan 2013 Dec 2016 Vesting | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Date of Grant | 19-Dec-13 |
Shares Granted | 6,250,000 |
Exercise Price | 0.01 |
Shares Outstanding | 5,000,000 |
Expiration Date | 18-Dec-20 |
Vesting Date | 8-Dec-16 |
Stock Option Plan 2013 Dec 2017 Vesting | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Date of Grant | 19-Dec-13 |
Shares Granted | 6,250,000 |
Exercise Price | 0.01 |
Shares Outstanding | 5,000,000 |
Expiration Date | 18-Dec-20 |
Vesting Date | 8-Dec-17 |
Stock_Based_Compensation_Detai1
Stock Based Compensation (Details 1) (USD $) | 6 Months Ended | 12 Months Ended |
In Thousands, except Share data, unless otherwise specified | Mar. 29, 2015 | Sep. 28, 2014 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | ||
Number of Shares Remaining Option, Granted | 73,751,649 | |
Number of Shares Remaining Option, Outstanding - Ending Balance | 62,857,649 | |
Incentive Stock Option Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | ||
Number of Shares Remaining Option, Outstanding - Beginning Balance | 62,911,649 | 484,247,649 |
Number of Shares Remaining Option, Granted | 25,000,000 | |
Number of Shares Remaining Option, Forfeited | -54,000 | -5,336,000 |
Number of shares remaining option, exercised | -5,000,000 | |
Number of Shares Remaining Option, Outstanding - Ending Balance | 62,857,649 | 62,911,649 |
Number of shares remaining option, exercisable | 40,265,149 | 20,201,649 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract] | ||
Weighted Average Fair Value, Outstanding - Beginning Balance | ||
Weighted Average Fair Value, Granted | $0.01 | |
Weighted Average Fair Value, Forfeited | ||
Weighted Average Fair Value, Exercised | $0.01 | |
Weighted Average Fair Value, Outstanding - Ending Balance | ||
Weighted Average Fair Value, Exercisable | ||
Share Based Compensation Arrangement By Share Based Payment Award Options Weighted Average Life [Abstract] | ||
Weighted Average Life (Years), Outstanding | 3 years 4 months 28 days | 3 years 6 months 22 days |
Weighted Average Life (Years) Granted | 5 years 2 months 19 days | |
Weighted Average Life (Years) Exercisable | 2 years 9 months 18 days | 3 years 4 months 28 days |
Share Based Compensation Arrangement By Share Based Payment Award Options Aggregate Value [Roll Forward] | ||
Aggregate Value, Outstanding - Beginning Balance | ||
Aggregate Value, Granted | 200 | |
Aggregate Value, Forfeited | ||
Aggregate Value, Exercised | ||
Aggregate Value, Outstanding - Ending Balance | ||
Aggregate Value, Exercisable |
Stock_Based_Compensation_Detai2
Stock Based Compensation (Details 2) (2009 Stock Option Plan, USD $) | 6 Months Ended | 12 Months Ended |
Mar. 29, 2015 | Sep. 28, 2014 | |
2009 Stock Option Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Number of Shares [Roll Forward] | ||
Number of Non- vested Shares Subject to Options, Beginning balance | 42,710,000 | 30,547,500 |
Number of Non- vested Shares Subject to Options, Non-vested granted | 25,000,000 | |
Number of Non- vested Shares Subject to Options, Vested | -20,063,500 | -7,501,500 |
Number of Non- vested Shares Subject to Options, Forfeited | -54,000 | -5,336,000 |
Number of Non- vested Shares Subject to Options, Ending balance | 22,592,500 | 42,710,000 |
Share Based Compensation Arrangement By Share Based Payment Award Nonvested Options Weighted Average Grant Date Fair Value [Roll Forward] | ||
Weighted - Average Grant- Date Fair Value, Non-vested Options, Beginning balance | $0.01 | $0.01 |
Weighted - Average Grant- Date Fair Value, Non-vested granted | $0.01 | |
Weighted - Average Grant- Date Fair Value, Vested | $0.01 | $0.01 |
Weighted - Average Grant- Date Fair Value, Forfeited | ||
Weighted - Average Grant- Date Fair Value, Non-vested Options, Ending balance | $0.01 | $0.01 |
Stock_Based_Compensation_Detai3
Stock Based Compensation (Details 3) (USD $) | 6 Months Ended |
Mar. 29, 2015 | |
Class of Warrant or Right [Line Items] | |
Warrants Granted | 1,000,000 |
Outstanding | 1,000,000 |
Avidbank- Line Of Credit | |
Class of Warrant or Right [Line Items] | |
Grant Date | 4-Mar-10 |
Warrants Granted | 1,000,000 |
Exercise price of warrants | 0.1 |
Outstanding | 1,000,000 |
Expiration Date | 3-Mar-16 |
Term | 6 years |
Stock_Based_Compensation_Detai4
Stock Based Compensation (Detail Textuals) (USD $) | 1 Months Ended | 6 Months Ended | 3 Months Ended | 1 Months Ended | 12 Months Ended | |||||
Mar. 29, 2014 | Mar. 29, 2015 | Mar. 30, 2014 | Mar. 29, 2015 | Mar. 30, 2014 | Nov. 19, 2014 | Dec. 19, 2013 | Sep. 28, 2014 | Dec. 09, 2011 | Mar. 26, 2009 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Stock option compensation expense | $91,000 | $47,000 | ||||||||
Number of shares remaining option, granted | 73,751,649 | |||||||||
Expenses directly attributable to the early vesting shares | 57,000 | |||||||||
Unrecognized compensation cost related to non-vested share based compensation | 184,000 | 184,000 | ||||||||
Outstanding warrants expired unexercised | 3,447,000 | |||||||||
Minimum | Stock Options | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Expected term | 4 years 6 months | |||||||||
Maximum | Stock Options | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Expected term | 7 years | |||||||||
Option Compensation Costs | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Deferred income tax expense (benefit) | 9,000 | 31,000 | ||||||||
Merrick Okamoto | Stock Options | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Number of Non- vested Shares Subject to Options, Vested | 7,500,000 | |||||||||
Extended stock option till termination date | 10,000,000 | |||||||||
2009 Stock Option Plan | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Share-based compensation arrangement by share-based payment award, number of shares authorized | 75,000,000 | 50,000,000 | 6,000,000 | |||||||
Condition 1 | expiration of the option as provided in the option agreement | |||||||||
Condition 2 | 90 days following the date of termination of the employee | |||||||||
Condition 3 | ten years from the date of grant (five years from the date of grant for incentive options granted to an employee who owns more than 10% of the total combined voting power of all classes of Optex Systems Holdings stock at the date of grant) | |||||||||
Revised condition | each grant to vest 25% per year over four years for each year with which the grantee is still employed by or serving as a director of Optex Systems Holdings, Inc. (with all unvested options automatically expiring on the date of termination of employment by or service as a director of Optex Systems Holdings, Inc.) and all unvested options immediately vesting upon a change of control due to a merger or acquisition of the Company. | |||||||||
Minimum percentage of voting power for incentive options granted | 10.00% | |||||||||
Percentage of price per share of fair value of common stock on date of grant | 100.00% | |||||||||
Minimum percentage of exercise price per share of fair value of common stock on date of grant | 110.00% | |||||||||
Maximum amount of fair value of stock options exercisable | 100,000 | |||||||||
Expected volatility rate | 354.40% | |||||||||
Trading period of holdings of stock prices | 36 months | |||||||||
Stock option compensation expense | $66,000 | $47,000 | $25,000 | $29,000 | ||||||
Risk free interest rate, minimum | 1.10% | |||||||||
Risk free interest rate, maximum | 2.30% | |||||||||
Number of shares remaining option, granted | 0 | 25,000,000 | ||||||||
Number of Non- vested Shares Subject to Options, Vested | 20,063,500 | 7,501,500 | ||||||||
Exercise price of authorized stock options | $0.01 | |||||||||
2009 Stock Option Plan | Executive Officers | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Share-based compensation arrangement by share-based payment award, number of shares authorized | 5,000,000 | |||||||||
2009 Stock Option Plan | Three board members | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Share-based compensation arrangement by share-based payment award, number of shares authorized | 20,000,000 |
Stockholders_Equity_Detail_Tex
Stockholders Equity (Detail Textuals) (USD $) | 6 Months Ended | 12 Months Ended | 3 Months Ended | 1 Months Ended | 0 Months Ended | 1 Months Ended | |||||
Mar. 29, 2015 | Sep. 28, 2014 | Mar. 29, 2015 | Mar. 24, 2014 | Feb. 11, 2014 | Mar. 19, 2013 | Feb. 21, 2012 | Sep. 29, 2013 | Nov. 17, 2014 | Apr. 01, 2012 | Mar. 26, 2015 | |
Schedule Of Stockholders Equity [Line Items] | |||||||||||
Common stock, shares outstanding | 170,913,943 | 170,913,943 | 170,913,943 | 157,346,607 | |||||||
Stated value of preferred stock converted | $4,887,000 | ||||||||||
Common stock convertible conversion price | $0.01 | $0.01 | |||||||||
Common Stock, Shares, Issued | 170,913,943 | 170,913,943 | 170,913,943 | ||||||||
Common stock, shares authorized | 2,000,000,000 | 2,000,000,000 | 2,000,000,000 | ||||||||
Conversion price per share as adjusted from time to time of stock | $0.00 | $0.00 | |||||||||
Common Stock | |||||||||||
Schedule Of Stockholders Equity [Line Items] | |||||||||||
Common stock, shares outstanding | 157,346,607 | ||||||||||
Common Stock | Former director | |||||||||||
Schedule Of Stockholders Equity [Line Items] | |||||||||||
Number of stock options exercised | 5,000,000 | ||||||||||
Number of stock issued | 3,567,336 | ||||||||||
Stock issuance price per share | $0.01 | ||||||||||
Series A Preferred Stock | |||||||||||
Schedule Of Stockholders Equity [Line Items] | |||||||||||
Stated value of preferred stock converted | 6,860 | ||||||||||
Preferred stock, shares issued | 1,001 | 1,001 | 1,001 | ||||||||
Number Of Preferred Stock Shares Authorized | 1,027 | 1,027 | |||||||||
Preferred stock, shares authorized | 5,000 | 5,000 | 5,000 | ||||||||
Preferred stock, par value (in dollars per share) | $0.00 | $0.00 | $0.00 | ||||||||
Preferred stock, shares outstanding | 1,001 | 1,001 | 1,001 | ||||||||
Conversion price per share as adjusted from time to time of stock | $0.15 | $0.15 | |||||||||
Conversion price per share reset | $0.01 | $0.01 | $0.00 | ||||||||
Rate of cumulative dividends | 6.00% | ||||||||||
Dividends arrears in exchange for increase in stated value | 884,000 | ||||||||||
Increase in stated value of preferred stock | 6,860 | ||||||||||
Dividends, preferred stock | 1,500,000 | 1,500,000 | |||||||||
Series B Preferred Stock | |||||||||||
Schedule Of Stockholders Equity [Line Items] | |||||||||||
Stated value of preferred stock converted | 1,629.16 | ||||||||||
Common stock convertible conversion price | $0.00 | $0.00 | |||||||||
Preferred stock, shares issued | 1,000 | 0 | 1,000 | ||||||||
Preferred stock, shares authorized | 1,010 | 0 | 1,010 | ||||||||
Preferred stock, par value (in dollars per share) | $0.00 | $0.00 | |||||||||
Preferred stock, shares outstanding | 1,000 | 0 | 1,000 | ||||||||
Dividends, preferred stock | 4,900,000 | 4,900,000 | |||||||||
Alpha Capital Anstalt | Series A Preferred Stock | |||||||||||
Schedule Of Stockholders Equity [Line Items] | |||||||||||
Number of preferred stock converted | 14.58 | 7.29 | 7.29 | 7.29 | |||||||
Stated value of preferred stock converted | 6,860 | 6,860 | 6,860 | 6,860 | |||||||
Common stock issued upon conversion of preferred stock | 10,000,000 | 5,000,000 | 5,000,000 | 5,000,000 | |||||||
Common stock convertible conversion price | $0.01 | $0.01 | $0.01 | $0.01 | |||||||
Conversion of stock, amount issued | 100,000 | 50,000 | 50,000 | 50,000 | |||||||
Common Stock, Shares, Issued | 5,000,000 | ||||||||||
Dividends preferred stock waived | $213,000 | ||||||||||
Conversion price per share reset | $0.01 |
Stockholders_Equity_Detail_Tex1
Stockholders Equity (Detail Textuals 1) (USD $) | 3 Months Ended | 6 Months Ended | 0 Months Ended | |||
Mar. 29, 2015 | Mar. 29, 2015 | Apr. 03, 2015 | Sep. 28, 2014 | Mar. 26, 2015 | 5-May-15 | |
Stockholders Equity [Line Items] | ||||||
Conversion price (in dollars per share) | $0.01 | $0.01 | ||||
Convertible debt | ||||||
Stockholders Equity [Line Items] | ||||||
Principal amount | $1,560,000 | $1,560,000 | ||||
Series A Preferred Stock | ||||||
Stockholders Equity [Line Items] | ||||||
Dividend on preferred stock recognized | 1,500,000 | 1,500,000 | ||||
Preferred stock, shares outstanding | 1,001 | 1,001 | 1,001 | |||
Preferred Stock, Shares Authorized | 5,000 | 5,000 | 5,000 | |||
Series B Preferred Stock | ||||||
Stockholders Equity [Line Items] | ||||||
Conversion price (in dollars per share) | 0.0025 | $0.00 | ||||
Dividend on preferred stock recognized | 4,900,000 | 4,900,000 | ||||
Preferred stock, shares outstanding | 1,000 | 1,000 | 0 | |||
Preferred Stock, Shares Authorized | 1,010 | 1,010 | 0 | |||
Share price | $0.01 | $0.01 | $1,629.16 | |||
Stock issued upon conversion of debt | 1,000 | |||||
Subsequent Event | ||||||
Stockholders Equity [Line Items] | ||||||
Share price | $0.01 | |||||
Subsequent Event | Series A Preferred Stock | ||||||
Stockholders Equity [Line Items] | ||||||
Conversion price (in dollars per share) | $0.01 | $0.01 | $0.00 | |||
Preferred Stock With Beneficial Conversion Feature | 75.5 | |||||
Preferred stock, shares outstanding | 926 | |||||
Additional retained earnings adjustment for dividend | $19,100,000 |
Subsequent_Events_Details
Subsequent Events (Details) (Subsequent Event, USD $) | 0 Months Ended |
5-May-15 | |
Day | |
Subsequent Event | |
Subsequent Event [Line Items] | |
Share price | $0.01 |
Bid price for consecutive calendar days | 30 |
Number calendar days granted to regain compliance | 180 |