Cover
Cover - shares | 3 Months Ended | |
Mar. 28, 2020 | May 08, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 28, 2020 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2020 | |
Current Fiscal Year End Date | --12-26 | |
Entity File Number | 0-16088 | |
Entity Registrant Name | CPS TECHNOLOGIES CORP/DE/ | |
Entity Central Index Key | 0000814676 | |
Entity Incorporation, State or Country Code | DE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 13,207,436 |
Balance Sheets (Unaudited)
Balance Sheets (Unaudited) - USD ($) | Mar. 28, 2020 | Dec. 28, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 122,255 | $ 133,965 |
Accounts receivable-trade, net | 5,959,224 | 4,086,945 |
Inventories, net | 3,595,338 | 3,099,824 |
Prepaid expenses and other current assets | 227,459 | 147,786 |
Total current assets | 9,904,276 | 7,468,520 |
Property and equipment: | ||
Production equipment | 9,919,484 | 9,649,169 |
Furniture and office equipment | 508,423 | 508,423 |
Leasehold improvements | 934,195 | 934,195 |
Total cost | 11,362,102 | 11,091,787 |
Accumulated depreciation and amortization | (10,224,691) | (10,110,663) |
Construction in progress | 286,891 | 255,754 |
Net property and equipment | 1,424,302 | 1,236,878 |
Right-of-use lease asset | 136,000 | 171,000 |
Deferred taxes, net | 147,873 | 147,873 |
Total Assets | 11,612,451 | 9,024,271 |
Current liabilities: | ||
Borrowings against line of credit | 1,577,506 | 1,249,588 |
Note payable, current portion | 45,980 | |
Accounts payable | 2,621,862 | 1,436,417 |
Accrued expenses | 691,921 | 815,166 |
Deferred revenue | 381,216 | 21,110 |
Lease liability, current portion | 136,000 | 148,000 |
Total current liabilities | 5,454,485 | 3,670,281 |
Note payable less current portion | 159,649 | |
Long term lease liability | 23,000 | |
Total liabilities | 5,614,134 | 3,693,281 |
Stockholders’ equity: | ||
Common stock, $0.01 par value, authorized 20,000,000 shares; issued 13,427,492 shares; outstanding 13,207,436 shares; at March 28, 2020 and December 28, 2019, respectively | 134,275 | 134,275 |
Additional paid-in capital | 36,159,874 | 36,094,201 |
Accumulated deficit | (29,778,779) | (30,380,433) |
Less cost of 220,056 common shares repurchased at March 28, 2020 and December 28, 2019, | (517,053) | (517,053) |
Total stockholders’ equity | 5,998,317 | 5,330,990 |
Total liabilities and stockholders’ equity | $ 11,612,451 | $ 9,024,271 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - $ / shares | Mar. 28, 2020 | Dec. 28, 2019 |
Statement of Financial Position [Abstract] | ||
Common stock,authorized shares | 20,000,000 | 20,000,000 |
Common stock, issued shares | 13,427,492 | 13,427,492 |
Common stock, outstanding shares | 13,207,436 | 13,207,436 |
Common stock, par value | $ .01 | $ .01 |
Statements of Operations (Unaud
Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 28, 2020 | Mar. 30, 2019 | |
Income Statement [Abstract] | ||
Product sales | $ 6,511,571 | $ 5,269,538 |
Cost of product sales | 4,961,361 | 5,110,114 |
Gross Margin | 1,550,210 | 159,424 |
Selling, general, and administrative expense | 928,590 | 903,686 |
Income (loss) from operations | 621,620 | (744,262) |
Other income (expense), net | (19,966) | 48 |
Income (loss) before taxes | 601,654 | (744,214) |
Income tax provision (benefit) | ||
Net income (loss) | $ 601,654 | $ (744,214) |
Net income (loss) per basic common share | $ 0.05 | $ (0.06) |
Weighted average number of basic common shares outstanding | 13,207,436 | 13,206,069 |
Net income (loss) per diluted common share | $ 0.05 | $ (0.06) |
Weighted average number of diluted common shares outstanding | 13,247,131 | 13,206,069 |
Shareholders Equity (Unaudited)
Shareholders Equity (Unaudited) - USD ($) | Common Stock | Additional Paid-In Capital | Comprehensive Income / Loss | Stock Repurchased | Retained Earnings / Accumulated Deficit | Total |
Beginning balance, stockholders equity at Dec. 29, 2018 | $ 5,835,521 | |||||
Beginning balance, shares at Dec. 29, 2018 | 13,425,992 | |||||
Beginning balance, par value of shares issued at Dec. 29, 2018 | $ 134,260 | |||||
Share-based compensation expense | $ 58,986 | $ 58,986 | ||||
Repurchase of common stock | ||||||
Issuance of common stock pursuant to exercise of stock options | 2,235 | |||||
Issuance of common stock pursuant to exercise of stock options, number of shares issued | 1,500 | |||||
Issuance of common stock pursuant to exercise of stock options, par value | $ 15 | |||||
Net income(loss) | $ 744,214 | (744,214) | ||||
Ending balance, stockholders equity at Mar. 30, 2019 | 5,152,543 | |||||
Ending Ending balance, shares at Mar. 30, 2019 | 13,427,492 | |||||
Ending balance, par value shares issued at Mar. 30, 2019 | $ 134,275 | |||||
Beginning balance, stockholders equity at Dec. 28, 2019 | $ 5,330,990 | $ 5,330,990 | ||||
Beginning balance, shares at Dec. 28, 2019 | 13,427,492 | |||||
Share-based compensation expense | 65,673 | $ 65,673 | ||||
Issuance of common stock pursuant to exercise of stock options | ||||||
Issuance of common stock pursuant to exercise of stock options, number of shares issued | ||||||
Issuance of common stock pursuant to exercise of stock options, par value | ||||||
Net income(loss) | $ 601,654 | 601,654 | ||||
Ending balance, stockholders equity at Mar. 28, 2020 | $ 5,998,317 | |||||
Ending Ending balance, shares at Mar. 28, 2020 | 13,427,492 | 13,427,492 | ||||
Ending balance, par value shares issued at Mar. 28, 2020 | $ 134,275 |
Statements of Cash Flows (Unaud
Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 28, 2020 | Mar. 30, 2019 | |
Cash flows from operating activities: | ||
Net income (loss) | $ 601,654 | $ (744,214) |
Adjustments to reconcile net income (loss) to cash used in operating activities: | ||
Depreciation and amortization | 128,759 | 139,465 |
Share-based compensation | 65,673 | 61,236 |
Gain on sale of property and equipment | (5,000) | |
Changes in: | ||
Accounts receivable-trade | (1,872,279) | (138,667) |
Inventories | (495,514) | 115,342 |
Prepaid expenses and other current assets | (79,673) | (47,209) |
Accounts payable | 1,185,445 | 388,619 |
Accrued expenses | (123,245) | (255,980) |
Deferred revenue | 360,106 | |
Net cash used in operating activities | (234,074) | (481,408) |
Cash flows from investing activities: | ||
Purchases of property and equipment | (107,600) | (116,327) |
Proceeds from sale of property and equipment | 5,000 | |
Net cash used in investing activities | (102,600) | (116,327) |
Cash flows from financing activities: | ||
Net borrowings on line of credit | 327,918 | 200,000 |
Payments on note payable | (2,954) | |
Net cash provided by financing activities | 324,964 | 200,000 |
Net decrease in cash and cash equivalents | (11,710) | (397,735) |
Cash and cash equivalents at beginning of period | 133,965 | 628,804 |
Cash and cash equivalents at end of period | 122,255 | 231,069 |
Supplemental disclosures of cash flows information: | ||
Cash paid for interest | 33,216 | |
Supplemental disclosures of non-cash activity: | ||
Issuance of note payable to finance equipment purchase | $ 208,583 |
(1) Nature of Business
(1) Nature of Business | 3 Months Ended |
Mar. 28, 2020 | |
Accounting Policies [Abstract] | |
(1) Nature of Business | (1) Nature of Business CPS Technologies Corporation (the “Company” or “CPS”) provides advanced material solutions to the electronics, power generation, automotive and other industries. The Company’s primary advanced material solution is metal-matrix composites which are a combination of metal and ceramic. CPS also assembles housings and packages for hybrid circuits. These housings and packages may include components made of metal-matrix composites or they may include components made of more traditional materials such as aluminum, copper-tungsten, etc. The Company sells into several end markets including the wireless communications infrastructure market, high-performance microprocessor market, motor controller market, and other microelectronic and structural markets. |
(2) Summary of Significant Acco
(2) Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 28, 2020 | |
Accounting Policies [Abstract] | |
(2) Summary of Significant Accounting Policies | (2) Summary of Significant Accounting Policies As permitted by the rules of the Securities and Exchange Commission applicable to quarterly reports on Form 10-Q, these notes are condensed and do not contain all disclosures required by generally accepted accounting principles. The accompanying financial statements are unaudited. In the opinion of management, the unaudited financial statements of CPS reflect all normal recurring adjustments which are necessary to present fairly the financial position and results of operations for such periods. The Company’s balance sheet at December 28, 2019 has been derived from the audited financial statements at that date, but does not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. For further information, refer to the financial statements and footnotes thereto included in the Registrant’s Annual Report on Form 10-K for the year ended December 28, 2019 and in CPS’s other SEC reports, which are accessible on the SEC’s website at www.sec.gov and the Company’s website at www.alsic.com. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. |
(3) Net Income (Loss) Per Commo
(3) Net Income (Loss) Per Common Equivalent Share | 3 Months Ended |
Mar. 28, 2020 | |
Earnings Per Share [Abstract] | |
(3) Net Income (Loss) Per Common Equivalent Share | (3) Net Income (Loss) Per Common and Common Equivalent Share Basic net income (loss) per common share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per common share is calculated by dividing net income (loss) by the sum of the weighted average number of common shares plus additional common shares that would have been outstanding if potential dilutive common shares had been issued for granted stock options and stock purchase rights. Common stock equivalents are excluded from the diluted calculations when a net loss is incurred as they would be anti-dilutive. The following table presents the calculation of both basic and diluted EPS: Three Months Ended March 28, March 30, 2020 2019 Basic EPS Computation: Numerator: Net income (loss) $ 601,654 $ (744,214) Denominator: Weighted average Common shares Outstanding 13,207,436 13,206,069 Basic EPS $ 0.05 $ (0.06) Diluted EPS Computation: Numerator: Net income (loss) $ 601,654 $ (744,214) Denominator: Weighted average Common shares Outstanding 13,207,436 13,206,069 Dilutive effect of stock options 39,695 — Total Shares 13,247,131 13,206,069 Diluted EPS $ 0.05 $ (0.06) |
(4) Commitments & Contingencies
(4) Commitments & Contingencies | 3 Months Ended |
Mar. 28, 2020 | |
Commitments (note 4) | |
(4) Commitments & Contingencies | (4) Commitments & Contingencies Commitments Leases The Company has two real estate leases—one expiring in February 2021 and one with an 11 month duration with options to extend additional years. Since the latter is not reasonably certain that any options will be exercised, it has not been recorded on the balance sheet. CPS also has a few other leases for equipment which are minor in nature and are generally short-term in duration. None of these have been capitalized. The lease expiring in 2021 is included as a right-of-use lease asset and corresponding lease liability on the balance sheet. This asset and liability was recognized on December 30, 2018 based on the present value of remaining lease payments over the remaining lease term using the Company’s incremental borrowing rate at commencement dates. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. Operating Leases Lease expense for operating leases is recognized on a straight-line basis over the lease term. Lease expense is included in rents on the statements of operations and is reported net of lease income. Lease income is not material to the results of operations for the quarter ended March 28, 2020. The following table presents information about the amount, timing and uncertainty of cash flows arising from the Company’s capitalized operating leases as of March 28, 2020 (Dollars in Thousands) March 28, 2020 Maturity of capitalized lease liabilities Lease payments 2020 117 2021 26 Total undiscounted operating lease payments $ 143 Less: Imputed interest (7) Present value of operating lease liability $ 136 Balance Sheet Classification Current lease liability $ 136 Long-term lease liability 0 Total operating lease liability $ 136 Other Information Weighted-average remaining lease term for capitalized operating leases 11 months Weighted-average discount rate for capitalized operating leases 6.5% Operating Lease Costs and Cash Flows Operating lease cost and cash paid was $38 thousand during the first quarter of 2020. This cost is related to its long-term operating lease. All other short-term leases were immaterial. Finance Leases The company does not have any finance leases. |
(5) Share-Based Payments
(5) Share-Based Payments | 3 Months Ended |
Mar. 28, 2020 | |
Share-based Payment Arrangement [Abstract] | |
(5) Share-Based Payments | (5) Share-Based Payments The Company measures the cost of employee services received in exchange for an award of equity instruments based on the grant date fair value of the award. That cost is recognized over the period during which an employee is required to provide services in exchange for the award, the requisite service period (usually the vesting period). The Company provides an estimate of forfeitures at initial grant date. Reductions in compensation expense associated with the forfeited options are estimated at the date of grant, and this estimated forfeiture rate is adjusted periodically based on actual forfeiture experience. The company uses the Black-Scholes option pricing model to determine the fair value of the stock options granted. During the quarters ended March 28, 2020 and March 30, 2019 a total of 59,000 and 79,000 stock options, respectively, were granted to employees under the Company’s 2020 Equity Incentive Plan and 2009 Stock Incentive Plan, respectively (collectively the “Plan”) and a total of 60,000 and 45,000 stock options, respectively, were granted to outside directors during the quarters ended March 28, 2020 and March 30, 2019 During the quarter ended March 28, 2020 there were no shares issued and during the quarter ended March 30, 2019 there were 1,500 shares issued. As of March 28, 2020, there was $198 thousand of total unrecognized compensation cost related to nonvested share-based compensation arrangements granted under the Plan; that cost is expected to be recognized over a weighted average period of 1.47 years. During the quarters ended March 28, 2020 and March 30, 2019, the Company recognized approximately $66 thousand and $59 thousand, respectively, as shared-based compensation expense related to previously granted shares under the Plan. |
(6) Inventories
(6) Inventories | 3 Months Ended |
Mar. 28, 2020 | |
Inventory Disclosure [Abstract] | |
(6) Inventories | (6) Inventories Inventories consist of the following: March 28, December 28, 2020 2019 Raw materials $ 818,501 $ 778,409 Work in process 2,005,211 1,898,916 Finished goods 1,220,988 871,861 Gross inventory 4,044,700 3,549,186 Reserve for obsolescence (449,362) (449,362) Inventories, net $ 3,595,338 $ 3,099,824 |
(7) Accrued Expenses
(7) Accrued Expenses | 3 Months Ended |
Mar. 28, 2020 | |
Payables and Accruals [Abstract] | |
(7) Accrued Expenses | (7) Accrued Expenses Accrued expenses consist of the following: March 28, December 28, 2020 2019 Accrued legal and accounting $ 28,755 $ 62,725 Accrued payroll and related expenses 508,327 518,015 Accrued other 154,839 234,426 Total Accrued Expenses $ 691,921 $ 815,166 |
(8) Line of Credit
(8) Line of Credit | 3 Months Ended |
Mar. 28, 2020 | |
Commitments (note 4) | |
(8) Line of Credit | (8) Line of Credit In September 2019, the Company entered into revolving line of credit with The Massachusetts Business Development Corporation (BDC) in the amount of $2.5 million. The agreement includes a demand note allowing the Lender to call the loan at any time. CPS may terminate the agreement without a termination fee after 3 years. The LOC is secured by the accounts receivable and other assets of the Company and has an interest rate of LIBOR plus 650 basis points. At March 28, 2020 the Company had $1.578 million of borrowings under this LOC and its borrowing base at the time would have permitted an additional $922 thousand to have been borrowed. The line of credit is subject to certain financial covenants, all of which have been met. |
(9) Note Payable
(9) Note Payable | 3 Months Ended |
Mar. 28, 2020 | |
Debt Disclosure [Abstract] | |
(9) Note Payable | (9) Note Payable In March 2020, the company acquired a Sonoscan ultrasound microscope for a price of $208. The full amount was financed through a 5 year note payable with Crest Capital Corporation. The note is collateralized by the microscope and is being paid in monthly installments of $4, consisting of principal plus interest at a rate of 6.47%. |
(10) Income Taxes
(10) Income Taxes | 3 Months Ended |
Mar. 28, 2020 | |
Income Tax Disclosure [Abstract] | |
(10) Income Taxes | (10) Income Taxes A valuation allowance against deferred tax assets is required to be established or maintained when it is "more likely than not" that all or a portion of deferred tax assets will not be realized. In December 2018, the Company established a valuation allowance reserve, as it is judged more likely than not that all or a portion of its deferred tax assets will not be utilized before they expire. This decision was reached after giving greater weight to the Company’s losses in recent years as compared to its forecasts. The Coronavirus Aid, Relief and Economic Security Act (“Act”) became law on March 27, 2020. The Act contains two provisions that provide a tax benefit to the Company. The Act suspends the current 80% limitation on the utilization of net operating losses for taxable years beginning in 2018, 2019 and 2020. The Act also allows net operating losses arising in 2018, 2019 and 2020 to be carried back five years. The Act also accelerates the ability of the Company to recover Federal alternative minimum tax credits. The Company recorded a reduction of the valuation allowance reserve of $216 thousand during the quarter ended March 28, 2020 to account for the utilization of deferred tax assets to reduce the current tax liability for the quarter ended March 28, 2020. As a result of the utilization of deferred tax assets, the Company did not record a provision for income taxes for the quarter ended March 28, 2020. |
(3) Net Income (Loss) Per Com_2
(3) Net Income (Loss) Per Common Equivalent Share (Tables) | 3 Months Ended |
Mar. 28, 2020 | |
Earnings Per Share [Abstract] | |
Calculation of basic and diluted EPS | Three Months Ended March 28, March 30, 2020 2019 Basic EPS Computation: Numerator: Net income (loss) $ 601,654 $ (744,214) Denominator: Weighted average Common shares Outstanding 13,207,436 13,206,069 Basic EPS $ 0.05 $ (0.06) Diluted EPS Computation: Numerator: Net income (loss) $ 601,654 $ (744,214) Denominator: Weighted average Common shares Outstanding 13,207,436 13,206,069 Dilutive effect of stock options 39,695 — Total Shares 13,247,131 13,206,069 Diluted EPS $ 0.05 $ (0.06) |
(4) Commitments & Contingenci_2
(4) Commitments & Contingencies (Tables) | 3 Months Ended |
Mar. 28, 2020 | |
Commitments (note 4) | |
Maturity of capitalized lease liabilities | (Dollars in Thousands) March 28, 2020 Maturity of capitalized lease liabilities Lease payments 2020 117 2021 26 Total undiscounted operating lease payments $ 143 Less: Imputed interest (7) Present value of operating lease liability $ 136 Balance Sheet Classification Current lease liability $ 136 Long-term lease liability 0 Total operating lease liability $ 136 Other Information Weighted-average remaining lease term for capitalized operating leases 11 months Weighted-average discount rate for capitalized operating leases 6.5% |
(6) Inventories (Tables)
(6) Inventories (Tables) | 3 Months Ended |
Mar. 28, 2020 | |
Inventory Disclosure [Abstract] | |
Inventories | March 28, December 28, 2020 2019 Raw materials $ 818,501 $ 778,409 Work in process 2,005,211 1,898,916 Finished goods 1,220,988 871,861 Gross inventory 4,044,700 3,549,186 Reserve for obsolescence (449,362) (449,362) Inventories, net $ 3,595,338 $ 3,099,824 |
(7) Accrued Expenses (Tables)
(7) Accrued Expenses (Tables) | 3 Months Ended |
Mar. 28, 2020 | |
Payables and Accruals [Abstract] | |
Accrued expenses | March 28, December 28, 2020 2019 Accrued legal and accounting $ 28,755 $ 62,725 Accrued payroll and related expenses 508,327 518,015 Accrued other 154,839 234,426 Total Accrued Expenses $ 691,921 $ 815,166 |
(3) Net Income (Loss) Per Com_3
(3) Net Income (Loss) Per Common Equivalent Share - Calculation of basic and diluted EPS (Details) - USD ($) | 3 Months Ended | |
Mar. 28, 2020 | Mar. 30, 2019 | |
Basic EPS Computation: | ||
Net income (loss) | $ 601,654 | $ (744,214) |
Weighted average Common shares Outstanding | 13,207,436 | 13,206,069 |
Basic EPS | $ 0.05 | $ (0.06) |
Diluted EPS Computation: | ||
Net income (loss) | $ 601,654 | $ (744,214) |
Weighted average Common shares Outstanding | 13,207,436 | 13,206,069 |
Dilutive effect of stock options | $ 39,695 | |
Total Shares | 13,247,131 | 13,206,069 |
Diluted EPS | $ 0.05 | $ (0.06) |
(4) Commitments & Contingenci_3
(4) Commitments & Contingencies - Maturity of capitalized lease liabilities (Details) | Mar. 28, 2020USD ($) |
Commitments (note 4) | |
2020 (remaining) | $ 117 |
2021 | 26 |
Total undiscounted operating lease payments | 143 |
Less: Imputed interest | (7) |
Present value of operating lease liability | 136 |
Current lease liability | 136 |
Long-term lease liability | 0 |
Total operating lease liability | $ 136 |
Weighted-average remaining lease term for capitalized operating leases | 11 months |
Weighted-average discount rate for capitalized operating leases | 650.00% |
(5) Share-Based Payments (Detai
(5) Share-Based Payments (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 28, 2020 | Mar. 30, 2019 | |
Share-based Payment Arrangement [Abstract] | ||
Stock options granted in the period | 119,000 | 124,000 |
Shares issued | 1,500 | |
Unrecognized compensation cost (in Thousands) | $ 198 | |
Weighted average period to be recognized | 1 year 1 month 17 days | |
Share-based compensation expense recognized (in Thousands) | $ 66 | $ 59 |
(6) Inventories - Inventories (
(6) Inventories - Inventories (Details) - USD ($) | Mar. 28, 2020 | Dec. 28, 2019 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 818,501 | $ 778,409 |
Work in process | 2,005,211 | 1,898,916 |
Finished goods | 1,220,988 | 871,861 |
Gross inventory | 4,044,700 | 3,549,186 |
Reserve for obsolescence | (449,362) | (449,362) |
Inventories, net | $ 3,595,338 | $ 3,099,824 |
(7) Accrued Expenses - Accrued
(7) Accrued Expenses - Accrued expenses (Details) - USD ($) | Mar. 28, 2020 | Dec. 28, 2019 |
Payables and Accruals [Abstract] | ||
Accrued legal and accounting | $ 28,755 | $ 62,725 |
Accrued payroll and related expenses | 508,327 | 518,015 |
Accrued other | 154,839 | 234,426 |
Total Accrued Expenses | $ 691,921 | $ 815,166 |
(8) Line of Credit (Details Nar
(8) Line of Credit (Details Narrative) | 3 Months Ended |
Mar. 28, 2020USD ($) | |
The Massachusetts Business Development Corporation | |
Revolving line of credit maximum borrowing capacity | $ 2,500,000 |
Line of credit agreement length (terms in years) | 3 years |
Borrowing base available | $ 1,578,000 |