CPS Technologies (CPSH) 10-Q 7 Nov 13 2013 Q3 Quarterly report Financial data

Document_and_Entity_Informatio

Document and Entity Information (USD $)	3 Months Ended
	Sep. 28, 2013	Oct. 25, 2013
Document And Entity Information	'	'
Entity Registrant Name	'CPS Technologies Corp/DE/	'
Entity Central Index Key	'0000814676	'
Document Type	'10-Q	'
Document Period End Date	28-Sep-13	'
Amendment Flag	'false	'
Current Fiscal Year End Date	'--12-28	'
Is Entity a Well-known Seasoned Issuer?	'No	'
Is Entity a Voluntary Filer?	'No	'
Is Entity's Reporting Status Current?	'Yes	'
Entity Filer Category	'Smaller Reporting Company	'
Entity Public Float	'	$16,000,000
Entity Common Stock, Shares Outstanding	'	13,061,974
Document Fiscal Period Focus	'Q3	'
Document Fiscal Year Focus	'2013	'

Balance_Sheets_Unaudited

Balance Sheets (Unaudited) (USD $)	3 Months Ended
	Sep. 28, 2013	Dec. 29, 2012
Current assets:	'	'
Cash and cash equivalents	$595,753	$306,854
Accounts receivable-trade, net	4,223,095	2,876,149
Inventories, net	2,048,860	2,457,315
Prepaid expenses and other current assets	173,368	140,723
Deferred taxes	160,378	354,825
Total current assets	7,201,454	6,135,866
Property and equipment:	'	'
Production equipment	7,550,480	7,430,783
Furniture and office equipment	362,740	354,490
Leasehold improvements	735,099	735,099
Total cost	8,648,319	8,520,372
Accumulated depreciation and amortization	-7,328,946	-6,877,285
Construction in progress	527,332	138,133
Net property and equipment	1,846,705	1,781,220
Deferred taxes, non-current portion	2,432,148	2,432,148
Total assets	11,480,307	10,349,234
Current liabilities:	'	'
Line of credit	'	500,000
Equipment lease line of credit	163,155	'
Accounts payable	1,537,597	1,179,313
Accrued expenses	1,160,693	938,043
Current portion of obligations under capital leases	82,555	123,366
Total current liabilities	2,944,000	2,740,722
Obligations under capital leases, net of current portion	14,117	76,372
Total liabilities	2,958,117	2,817,094
Commitments (note 9)	'	'
	(9) Commitments
	In July 2006, the Company entered into a lease for its current operating facilities of approximately 37,520 square feet of rentable space located on approximately seven acres at its current site in Norton, MA. The term of the lease is ten years. The lease is a triple net lease wherein the Company is responsible for payment of all real estate taxes, operating costs and utilities. The Company also has an option to buy the property and a first right of refusal during the term of the lease. Annual rental payments are $100 thousand in year one increasing to $150 thousand in year ten.
	In February 2011, the Company entered into a one-year lease, with five options to renew for one year periods, for approximately 13,800 square feet of rentable space inside a larger building located at 79 Walton Street, Attleboro, Massachusetts. Monthly rent, which includes utilities, is $7 thousand. In October 2013, the Company renewed the lease through February, 2015.
Stockholders equity:	'	'
Common stock, $0.01 par value, authorized 15,000,000 shares; issued 13,165,042 and 12,928,042 shares; outstanding 13,061,974 and 12,871,859 shares; at September 28, 2013 and December 29, 2012, respectively	131,650	129,281
Additional paid-in capital	34,192,484	33,821,961
Accumulated deficit	-25,594,159	-26,284,787
Less cost of 103,068 and 56,283 common shares repurchased at September 28, 2013 and December 29, 2012, respectively	-207,785	-134,315
Total stockholders equity	8,522,190	7,532,140
Total liabilities and stockholders equity	$11,480,307	$10,349,234

Balance_Sheets_Parenthetical

Balance Sheets (Parenthetical) (USD $)	Sep. 28, 2013	Dec. 29, 2012
Statement of Financial Position [Abstract]	'	'
Common Stock, authorized shares	15,000,000	15,000,000
Common Stock, issued shares	13,165,042	12,928,042
Common Stock, outstanding shares	13,061,974	12,871,859
Common Stock, par value	$0.01	$0.01

Statements_of_Operations_Unaud

Statements of Operations (Unaudited) (USD $)	3 Months Ended		9 Months Ended
	Sep. 28, 2013	Sep. 29, 2012	Sep. 30, 2013	Sep. 29, 2012
Income Statement [Abstract]	'	'	'	'
Product sales	$5,918,725	$2,605,465	$16,072,889	$9,477,790
Research and development under cooperative agreement	55,764	138,716	233,220	449,432
Total Revenues	5,974,489	2,744,181	16,306,109	9,927,222
Cost of product sales	4,209,683	2,862,384	12,116,150	9,620,401
Cost of research and development under cooperative agreement	46,654	117,904	194,072	383,789
Gross Margin	1,718,152	-236,107	3,995,887	-76,968
Selling, general and administrative expense	1,059,033	641,046	2,967,066	2,294,778
Operating income (loss)	659,119	-877,153	1,028,821	-2,371,746
Interest expense, net	-3,603	-4,792	-26,473	-16,258
Net income (loss) before income tax expense (benefit)	655,516	-881,945	1,002,348	-2,388,004
Income tax expense (benefit)	204,000	-351,000	311,720	-950,000
Net income (loss)	$451,516	($530,945)	$690,628	($1,438,004)
Net income (loss) per basic common share	$0.03	($0.04)	$0.05	($0.11)
Weighted average number of basic common shares outstanding	13,198,506	12,871,659	13,010,591	12,868,934
Net income (loss) per diluted common share	$0.03	($0.04)	$0.05	($0.11)
Weighted average number of diluted common shares outstanding	13,522,495	12,871,659	13,242,069	12,868,934

Statements_of_Cash_Flows

Statements of Cash Flows (USD $)	9 Months Ended
	Sep. 28, 2013	Sep. 29, 2012
Cash flows from operating activities:	'	'
Net income (loss)	$690,628	($1,438,004)
Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities	'	'
Depreciation & amortization	451,663	556,653
Share-based compensation	182,150	168,378
Provision for bad debts and sales returns	'	15,000
Write off of construction in process	'	12,720
Deferred taxes	311,720	-950,000
Excess tax benefit from stock options exercised	-117,273	'
Accounts receivable-trade, net	-1,346,946	996,882
Inventories	408,455	-162,631
Prepaid expenses	-32,645	-3,199
Accounts payable	358,284	-363,350
Accrued expenses	222,650	215,908
Net cash provided by (used in) operating activities	1,128,686	-951,643
Cash flows from investing activities:	'	'
Purchases of property and equipment	-517,148	-205,677
Net cash used in investing activities	-517,148	-205,677
Cash flows from financing activities:	'	'
Payment of capital lease obligations	-103,066	-173,123
Proceeds from equipment lease line	163,155	'
Proceeds (repayments) of line of credit, net	-500,000	400,000
Proceeds from issuance of common stock	73,469	9,178
Excess tax benefit from stock options exercised	117,273	'
Repurchase of common stock	-73,470	'
Net cash provided by (used in) financing activities	-322,639	236,055
Net increase (decrease) in cash and cash equivalents	288,899	-921,265
Cash and cash equivalents at beginning of period	306,854	1,142,429
Cash and cash equivalents at end of period	595,753	221,164
Supplemental cash flow information:	'	'
Cash paid for taxes, net of refunds	'	'
Interest paid	$26,473	$16,258

Nature_of_business

Nature of business	3 Months Ended
	Sep. 28, 2013
Accounting Policies [Abstract]	'
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 and copper-tungsten.
	In 2008 the Company also entered into a cooperative agreement with the U.S. Army to further develop its composite technology to produce armor.

Interim_Financial_Statements

Interim Financial Statements	3 Months Ended
	Sep. 28, 2013
Quarterly Financial Information Disclosure [Abstract]	'
Interim Financial Statements	'
	(2) Interim Financial Statements
	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 29, 2012 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. Certain items in the 2012 financial statements have been reclassified to conform with the 2013 presentation.
	For further information, refer to the financial statements and footnotes thereto included CPS’s Annual Report on Form 10-K for the year ended December 29, 2012.
	The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year.
	The Company’s second fiscal quarter end is the Saturday closest to June 30th, which could result in a 13 or 14 week fiscal quarter. The second quarters for fiscal 2012 and 2013 each consisted of 13 weeks.

Net_Income_Loss_Per_Common_and

Net Income (Loss) Per Common and Common Equivalent Share	3 Months Ended
	Sep. 28, 2013
Earnings Per Share [Abstract]	'
Net Income (Loss) Per Common and Common Equivalent Share	'
	(3) Net Income (Loss) Per Common and Common Equivalent Share
	Basic net income or loss per common share is calculated by dividing net income or 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 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 option 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					Nine-Months Ended
		September 28,		September 29,			September 28,		September 29,
		2013		2012			2013		2012
	Basic EPS Computation:
	Numerator:
	Net income (loss)	$	451,516	$	(530,945	)	$	690,628	$	(1,438,004	)
	Denominator:
	Weighted average
	Common shares
	Outstanding		13,198,506		12,871,659			13,010,591		12,868,934
	Basic EPS	$	0.03	$	(0.04	)	$	0.05	$	(0.11	)
	Diluted EPS Computation:
	Numerator:
	Net income (loss)	$	451,516	$	(530,945	)	$	690,628	$	(1,438,004	)
	Denominator:
	Weighted average
	Common shares
	Outstanding		13,198,506		12,871,659			13,010,591		12,868,934
	Dilutive effect of stock options		323,989		—			231,478		—
	Total Shares		13,522,495		12,871,659			13,242,069		12,868,934
	Diluted EPS	$	0.03	$	(0.04	)	$	0.05	$	(0.11	)

ShareBased_Payments

Share-Based Payments	3 Months Ended
	Sep. 28, 2013
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]	'
Share-Based Payments	'
	(4) 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.
	There were no stock options granted under the Company’s 2009 Stock Incentive Plan (the “Plan”) during the quarters ended September 28, 2013 and September 29, 2012. During the three and nine months ended September 28, 2013 the Company recognized $66,385 and $182,150, respectively as share-based compensation expense related to previously granted shares under the Plan.
	During the three and nine months ended September 29, 2012 the Company recognized $55,127 and $168,378, respectively, as share-based compensation expense related to previously granted shares under the Plan.
	There were no option exercises during the quarter ended September 28, 2013 and September 29, 2012. No options expired during the quarters ended September 28, 2013 and September 29, 2012.

Inventories

Inventories	3 Months Ended
	Sep. 28, 2013
Inventory Disclosure [Abstract]	'
Inventories	'
	(5) Inventories
	Inventories consist of the following:
		September 28,			December 29,
		2013			2012
	Raw materials	$	405,223		$	312,213
	Work in process		1,106,263			1,145,843
	Finished goods		914,374			1,306,259
	Total inventory		2,425,860			2,764,315
	Reserve for obsolescence		(377,000	)		(307,000	)
	Inventories, net	$	2,048,860		$	2,457,315

Accrued_Expenses

Accrued Expenses	3 Months Ended
	Sep. 28, 2013
Payables and Accruals [Abstract]	'
Accrued Expenses	'
	(6) Accrued Expenses
	Accrued expenses consist of the following:
		September 28,		December 29,
		2013		2012
	Accrued legal and accounting	$	114,575	$	92,000
	Accrued payroll		819,530		388,029
	Accrued other		226,588		458,014
		$	1,160,693	$	938,043

Line_of_Credit_and_Equipment_L

Line of Credit and Equipment Lease Facility Agreements	3 Months Ended
	Sep. 28, 2013
Debt Disclosure [Abstract]	'
Line of Credit and Equipment Lease Facility Agreements	'

Income_Taxes

Income Taxes	3 Months Ended
	Sep. 28, 2013
Income Tax Disclosure [Abstract]	'
Income Taxes	'
	(8) Income Taxes
	At December 29, 2012, the Company had approximately $3,303 thousand of net operating loss carryforwards available to offset future income for U.S. Federal income tax purpose.
	The Company recorded a tax expense of $159 thousand and $242 thousand for federal income taxes and a tax expense of $45 thousand and $69 thousand for state income taxes during the three and nine months ended September 28, 2013.
	The Company has a current and non-current deferred tax asset aggregating $2,593 thousand and $2,787 thousand on the Company`s balance sheet at September 28, 2013 and December 29, 2012, respectively. The Company believes that it will generate sufficient future taxable income to realize the tax benefits related to the remaining deferred tax assets and as such no valuation allowance has been provided against the deferred tax asset.

Commitments

Commitments	3 Months Ended
	Sep. 28, 2013
Commitments and Contingencies Disclosure [Abstract]	'
Commitments	'
	(9) Commitments
	In July 2006, the Company entered into a lease for its current operating facilities of approximately 37,520 square feet of rentable space located on approximately seven acres at its current site in Norton, MA. The term of the lease is ten years. The lease is a triple net lease wherein the Company is responsible for payment of all real estate taxes, operating costs and utilities. The Company also has an option to buy the property and a first right of refusal during the term of the lease. Annual rental payments are $100 thousand in year one increasing to $150 thousand in year ten.
	In February 2011, the Company entered into a one-year lease, with five options to renew for one year periods, for approximately 13,800 square feet of rentable space inside a larger building located at 79 Walton Street, Attleboro, Massachusetts. Monthly rent, which includes utilities, is $7 thousand. In October 2013, the Company renewed the lease through February, 2015.

Net_Income_Loss_Per_Common_and1

Net Income (Loss) Per Common and Common Equivalent Share (Tables)	3 Months Ended
	Sep. 28, 2013
Earnings Per Share [Abstract]	'
Basic and Diluted Earnings Per Share	'
		Three Months Ended					Nine-Months Ended
		September 28,		September 29,			September 28,		September 29,
		2013		2012			2013		2012
	Basic EPS Computation:
	Numerator:
	Net income (loss)	$	451,516	$	(530,945	)	$	690,628	$	(1,438,004	)
	Denominator:
	Weighted average
	Common shares
	Outstanding		13,198,506		12,871,659			13,010,591		12,868,934
	Basic EPS	$	0.03	$	(0.04	)	$	0.05	$	(0.11	)
	Diluted EPS Computation:
	Numerator:
	Net income (loss)	$	451,516	$	(530,945	)	$	690,628	$	(1,438,004	)
	Denominator:
	Weighted average
	Common shares
	Outstanding		13,198,506		12,871,659			13,010,591		12,868,934
	Dilutive effect of stock options		323,989		—			231,478		—
	Total Shares		13,522,495		12,871,659			13,242,069		12,868,934
	Diluted EPS	$	0.03	$	(0.04	)	$	0.05	$	(0.11	)

Inventories_Tables

Inventories (Tables)	3 Months Ended
	Sep. 28, 2013
Inventory Disclosure [Abstract]	'
Inventories	'
		September 28,			December 29,
		2013			2012
	Raw materials	$	405,223		$	312,213
	Work in process		1,106,263			1,145,843
	Finished goods		914,374			1,306,259
	Total inventory		2,425,860			2,764,315
	Reserve for obsolescence		(377,000	)		(307,000	)
	Inventories, net	$	2,048,860		$	2,457,315

Accrued_Expenses_Tables

Accrued Expenses (Tables)	3 Months Ended
	Sep. 28, 2013
Payables and Accruals [Abstract]	'
Accrued Expenses	'
		September 28,		December 29,
		2013		2012
	Accrued legal and accounting	$	114,575	$	92,000
	Accrued payroll		819,530		388,029
	Accrued other		226,588		458,014
		$	1,160,693	$	938,043