Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | |
Dec. 30, 2017 | Mar. 01, 2018 | |
Document And Entity Information | ||
Entity Registrant Name | CPS TECHNOLOGIES CORP/DE/ | |
Entity Central Index Key | 814,676 | |
Document Type | 10-K | |
Document Period End Date | Dec. 30, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-30 | |
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 | $ 13,000,000 | |
Entity Common Stock, Shares Outstanding | 13,203,436 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | FY |
Balance Sheets
Balance Sheets - USD ($) | 12 Months Ended | |
Dec. 30, 2017 | Dec. 31, 2016 | |
Current assets: | ||
Cash and cash equivalents | $ 1,339,572 | $ 3,407,760 |
Accounts receivable-trade, net | 2,943,373 | 1,959,606 |
Inventories, net | 2,109,513 | 1,970,961 |
Prepaid expenses and other current assets | 101,086 | 88,443 |
Total current assets | 6,493,544 | 7,426,770 |
Property and equipment: | ||
Production equipment | 9,299,515 | 9,046,846 |
Furniture and office equipment | 499,679 | 412,412 |
Leasehold improvements | 891,817 | 886,582 |
Total cost | 10,691,011 | 10,345,840 |
Accumulated depreciation and amortization | (9,287,006) | (8,720,219) |
Construction in progress | 86,493 | 158,006 |
Net property and equipment | 1,490,498 | 1,783,627 |
Deferred taxes | 3,038,666 | 2,827,349 |
Total assets | 11,022,708 | 12,037,746 |
Current liabilities: | ||
Accounts payable | 946,385 | 662,482 |
Accrued expenses | 655,489 | 623,959 |
Deferred revenue | 100,000 | |
Total current liabilities | $ 1,701,874 | 1,286,441 |
Commitments & Contingencies (note 4) | (4) Commitments & Contingencies Operating Lease Obligations In February 2018, the Company signed a lease for the Norton facilities through February 2021. The leased facilities comprise approximately 38 thousand square feet. 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 $152 thousand. In February 2011, the Company entered into a lease for an additional 13.8 thousand square feet in Attleboro, MA. The lease terms have been for one year and have been renewed annually. The current lease expires in February 2019 and the Company believes that this can be extended on similar terms for a year or more. Annual rental payments are $83 thousand. Future minimum rental payments over the terms of the lease agreements are approximately as follows: Fiscal year: 2018 $ 235,200 2019 166,200 2020 152,400 2021 25,400 $ 579,200 Loss contingency The Company manufactures baseplates for power module manufacturers. Most baseplates manufactured by CPS require a nickel coating be applied to the baseplate (“Ni plating”). CPS warranties its baseplates meet the Ni plating specifications required by our customers, and we flow this requirement to our Ni plating vendors. On January 24, 2018 the Company received a “Claim and Non-Conformance Notification” from one of its European customers relating to the Ni plating on our baseplates. Upon investigation, it was determined that one employee of the Ni plating vendor used by CPS had deviated from the prescribed work instruction for Ni plating from mid-September 2017 until mid-January 2018. The Company's Ni plating vendor has acknowledged this violation and is committed to correcting the problem. In the case of affected baseplates, which have not been assembled into modules, it is a straight-forward process for the Ni plating vendor to rework these baseplates. The larger issue is baseplates that have already been assembled into modules. During this four-month period approximately 15,000 baseplates from this Ni plating vendor were assembled into modules; only a small portion of these baseplates are affected. In alerting the Company to “non-conformance” the customer stated that it “may incur several additional expenses, costs and consequential damages due to this non-conformity.” The notification went on to say that “the exact total value of such expenses, costs and consequential damages cannot be calculated until the quality issue will be completely solved.” Although the Company expects this issue to be resolved amicably, there is a possibility that this could result in legal proceedings. The Company is working closely with its customer and its Ni plating vendor to correct the situation and has informed its insurer of potential claims and the Ni plating vendor has done the same with its insurer. The Company believes that it is possible that damages will be assessed but it is not possible at this time to quantify the potential financial impact, especially when insurance is considered. No amounts for damages have been recorded in the accompanying financial statements related to this situation. | |
Stockholders Equity: | ||
Common stock, $0.01 par value, authorized 20,000,000 shares; issued 13,423,492 shares; outstanding 13,203,436; at December 30, 2017 and December 31, 2016, respectively | $ 134,235 | 134,235 |
Additional paid-in capital | 35,739,916 | 35,452,685 |
Accumulated deficit | (26,036,264) | (24,318,562) |
Less cost of 220,056 common shares repurchased at December 30, 2017 and December 31, 2016 | (517,053) | (517,053) |
Total stockholders equity | 9,320,834 | 10,751,305 |
Total liabilities and stockholders equity | $ 11,022,708 | $ 12,037,746 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - $ / shares | Dec. 30, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Common stock, authorized shares | 20,000,000 | 20,000,000 |
Common stock, issued shares | 13,423,492 | 13,423,492 |
Common stock, outstanding shares | 13,203,436 | 13,203,436 |
Common stock, par value | $ .01 | $ .01 |
Statements of Operations
Statements of Operations - USD ($) | 12 Months Ended | ||
Dec. 30, 2017 | Dec. 31, 2016 | Dec. 26, 2015 | |
Revenues: | |||
Product sales | $ 14,577,183 | $ 15,351,053 | $ 21,719,427 |
Research and development under cooperative agreement | 42,254 | ||
Total revenues | 14,577,183 | 15,351,053 | 21,761,681 |
Cost of product sales | 12,919,065 | 13,195,501 | 17,061,720 |
Cost of research and development under cooperative agreement | 34,970 | ||
Gross margin | 1,658,118 | 2,155,552 | 4,664,991 |
Selling, general, and administrative expenses | 3,609,328 | 3,336,631 | 4,045,834 |
Income (loss) from operations | (1,951,210) | (1,181,079) | 619,157 |
Other income | 11,476 | 51,318 | 5,694 |
Income (loss) before income tax | (1,939,734) | (1,129,761) | 624,851 |
Income tax provision (benefit) | (222,032) | (679,144) | 174,232 |
Net income (loss) | $ (1,717,702) | $ (453,617) | $ 450,619 |
Net income (loss) per basic common share | $ (0.13) | $ (0.03) | $ 0.03 |
Weighted average number of basic common shares outstanding | 13,203,436 | 13,201,284 | 13,180,428 |
Net income (loss) per diluted common share | $ (0.13) | $ (0.03) | $ 0.03 |
Weighted average number of diluted common shares outstanding | 13,203,436 | 13,201,284 | 13,639,074 |
Statements of Cash Flows
Statements of Cash Flows - USD ($) | 12 Months Ended | ||
Dec. 30, 2017 | Dec. 31, 2016 | Dec. 26, 2015 | |
Cash flows from operating activities: | |||
Net income (loss) | $ (1,717,702) | $ (453,617) | $ 450,619 |
Adjustments to reconcile net income (loss) to cash provided (used) by operating activities: | |||
Share-based compensation | 287,231 | 193,117 | 283,507 |
Depreciation and amortization | 566,787 | 550,761 | 545,673 |
Deferred taxes | (211,317) | (673,785) | 176,063 |
Excess tax benefit from stock options exercised | (2,815) | (26,347) | |
Gain on sale of property and equipment | (40,000) | ||
Changes in operating assets and liabilities: | |||
Accounts receivable – trade, net | (983,767) | 1,612,873 | 16,712 |
Inventories | (138,552) | 661,483 | (103,490) |
Prepaid expenses and other current assets | (12,643) | 16,318 | 62,022 |
Accounts payable | 283,903 | (960,082) | 270,146 |
Accrued expenses | 31,530 | (307,957) | (117,700) |
Deferred revenue | 100,000 | ||
Net cash provided (used) by operating activities | (1,794,530) | 596,296 | 1,557,205 |
Cash flows from investing activities: | |||
Purchases of property and equipment | (273,658) | (645,835) | (476,683) |
Proceeds from sale of property and equipment | 40,000 | ||
Net cash used by investing activities | (273,658) | (605,835) | (476,683) |
Cash flows from financing activities: | |||
Excess tax benefit from stock options exercised | 2,815 | 26,347 | |
Proceeds from issuance of common stock | 11,835 | 172,670 | |
Repurchase of common stock | (10,000) | (172,470) | |
Net cash provided by financing activities | 4,650 | 26,547 | |
Net increase (decrease) in cash and cash equivalents | (2,068,188) | (4,889) | 1,107,069 |
Cash and cash equivalents at beginning of year | 3,407,760 | 3,412,649 | 2,305,580 |
Cash and cash equivalents at end of year | 1,339,572 | 3,407,760 | 3,412,649 |
Supplemental cash flow information: | |||
Income taxes paid, net of refund | $ 436 | $ 436 | $ 12,005 |
Shareholders Equity
Shareholders Equity - USD ($) | Common Stock | Additional Paid-In Capital | Retained Earnings / Accumulated Deficit | Comprehensive Income / Loss | Treasury Stock | Total |
Beginning balance, stockholders equity at Dec. 27, 2014 | $ 10,246,482 | |||||
Beginning balance, shares at Dec. 27, 2014 | 13,293,092 | 13,293,092 | ||||
Beginning balance, par value of shares issued at Dec. 27, 2014 | $ 132,931 | $ 132,931 | ||||
Share-based compensation expense | $ 283,507 | |||||
Tax benefit from exercise of stock options | 26,347 | 26,347 | ||||
Repurchase of common stock | 172,470 | $ (172,470) | ||||
Issuance of common stock pursuant to exercise of stock options | 172,670 | |||||
Net income(loss) | $ 450,619 | 450,619 | ||||
Ending balance, stockholders equity at Dec. 26, 2015 | 171,478 | $ 11,007,155 | ||||
Ending Ending balance, shares at Dec. 26, 2015 | 119,200 | 13,412,292 | ||||
Ending balance, par value shares issued at Dec. 26, 2015 | $ 1,192 | $ 134,123 | ||||
Share-based compensation expense | 193,117 | |||||
Tax benefit from exercise of stock options | 2,815 | 2,815 | ||||
Repurchase of common stock | $ 10,000 | $ (10,000) | ||||
Issuance of common stock pursuant to exercise of stock options | 11,835 | |||||
Net income(loss) | (453,617) | (453,617) | ||||
Ending balance, stockholders equity at Dec. 31, 2016 | $ 10,751,305 | |||||
Ending Ending balance, shares at Dec. 31, 2016 | 13,423,492 | |||||
Ending balance, par value shares issued at Dec. 31, 2016 | $ 134,235 | |||||
Share-based compensation expense | 287,231 | |||||
Tax benefit from exercise of stock options | ||||||
Issuance of common stock pursuant to exercise of stock options | ||||||
Net income(loss) | $ (1,717,702) | (1,717,702) | ||||
Ending balance, stockholders equity at Dec. 30, 2017 | $ 9,320,834 | |||||
Ending Ending balance, shares at Dec. 30, 2017 | 13,423,492 | |||||
Ending balance, par value shares issued at Dec. 30, 2017 | $ 134,235 |
(1) Nature of Business
(1) Nature of Business | 12 Months Ended |
Dec. 30, 2017 | |
Accounting Policies [Abstract] | |
(1) Nature of Business | (1) Nature of Business CPS Technologies Corporation (the ‘Company’ or ‘CPS’) provides advanced material solutions to the transportation, automotive, energy, computing/internet, telecommunications, aerospace, defense and oil and gas end markets. Our primary material solution is metal matrix composites. We design, manufacture and sell custom metal matrix composite components which improve the performance and reliability of systems in these end markets. |
(2) Summary of Significant Acco
(2) Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 30, 2017 | |
Accounting Policies [Abstract] | |
(2) Summary of Significant Accounting Policies | (2) Summary of Significant Accounting Policies (2)(a) Cash and Cash Equivalents The Company considers all highly liquid investments with a maturity of three months or less at the date of purchase to be cash equivalents. (2)(b) Accounts Receivable The Company reports its accounts receivable at the invoiced amount less an allowance for doubtful accounts. The Company’s management provides appropriate provisions for uncollectible accounts based upon factors surrounding the credit risk and activity of specific customers, historical trends, economic conditions and other information. Adjustments to the allowance are charged to operations in the period in which information becomes available that may affect the allowance. Sales returns are offset against the related amounts invoiced in accounts receivable. (2)(c) Inventories Inventories are stated at the lower of cost, as determined under the first-in, first-out method (FIFO), or net realizable value. A reserve for obsolete inventories is based on factors regarding the sales and usage of such inventories, including inventories manufactured for specific customers. The Company’s general obsolescence policy is to write off obsolete inventory when there has been no activity on a particular part for a twelve month period and there are no pending customer orders. (2)(d) Property and Equipment Property and equipment are stated at cost. Depreciation of equipment is calculated on a straight-line basis over the estimated useful life, generally five years for production equipment and three to five years for furniture and office equipment. Amortization of equipment under capital leases is calculated on a straight-line basis over the shorter of the life of the lease or the estimated useful life of the equipment. Maintenance and repairs are charged to expense as incurred. Upon retirement or sale, the cost and related accumulated depreciation or amortization are removed from their respective accounts. Any gains or losses on the disposition of property and equipment are included in the results of operations in the period in which they occur. (2)(e) Impairment of Long-Lived Assets The Company reviews long-lived assets for impairment whenever circumstances and situations change such that there is an indication that the carrying amounts may not be recovered. Recoverability is assessed based on estimated undiscounted future cash flows. As of December 30, 2017 and December 31, 2016, the Company believes that there has been no impairment of its long-lived assets. (2)(f) Revenue Recognition The Company recognizes revenue when the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services rendered; (3) the price to the buyer is fixed or determinable; and (4) collectability is reasonably assured. Amounts collected before these criteria are met are recorded as deferred revenue. Shipping terms are customarily EXW (Ex-works), shipping point which terms are consistent with “FOB Shipping Point”. Revenues for products sold in the normal course of business are recognized upon shipment when delivery terms are EXW shipping point and all other revenue recognition criteria have been met. The Company has entered into consigned inventory agreements with a few customers. For products shipped under consigned inventory agreements, the Company recognizes revenue when either the customer notifies CPS that they have picked the product from the consigned inventory or, in some cases, when sixty days have elapsed from the date the shipment arrives at the customer’s location. In 2008, the Company entered into a cooperative agreement with the US Army Research Laboratory to perform research and development concerning hybrid metal matrix composite encapsulated ceramic armor technology. The Cooperative Agreement was a four-year agreement, recently expired March 31, 2015, which was 95% funded by the US Department of Defense and 5% funded by CPS. Revenues from this Cooperative Agreement were recognized proportionally as costs were incurred. We were reimbursed for reasonable and allocable costs up to the reimbursement limits set by the Cooperative Agreement. All payments to the Company for work performed on this Cooperative Agreement are subject to audit and adjustment by the Defense Contract Audit Agency. Adjustments, if any, are recognized in the period made. (2)(g) Research and Development Costs In 2015, costs incurred related to funding under the Cooperative Agreement totaled $42 thousand of which 100% was reimbursed by the U.S. Army and was recorded as revenue. This revenue of $42 thousand resulted in a gross margin of $8 thousand. In 2016 and 2017, no costs were incurred as the contract expired on March 31, 2015. (2)(h) Income Taxes Deferred tax assets and liabilities are based on the net tax effects of tax credits, operating loss carryforwards and temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The Company considers many factors in assessing whether or not a valuation allowance for its Deferred Tax asset is warranted. On the positive side, the Company considered such factors as its: history of taxable earnings (three of the last five years had operating profits), global customer base consisting of large companies with significant resources, current products and their expected life, technological advantages, potential for price increases, trend of improved manufacturing efficiencies and the magnitude of the Deferred Tax Asset compared with the Company’s expectation of future earnings over the remaining life of the asset. On the negative side, the Company considered such factors as: the global economic environment, the Company’s ability to absorb additional periods of operating losses and negative cash flow and the potential for the technological breakthroughs and substitution of the Company’s products by lower cost solutions. The Company’s policy is to recognize interest and penalties related to income tax matters in income tax expense. As of December 30 2017 and December 31, 2016, the Company has no accruals for interest or penalties related to income tax matters. The Company does not have any uncertain tax positions at December 30, 2017 or December 31, 2016 which required accrual or disclosure. (2)(i) Net Income (Loss) Per Common 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 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. (2)(j) Reclassification Certain amounts in prior year’s financial statements have been reclassified to conform to the current year’s presentation. (2)(k) Recent Accounting Pronouncements In May 2014, the FASB issued Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers. This update provides a comprehensive new revenue recognition model that requires revenue to be recognized in a manner to depict the transfer of goods or services to a customer at an amount that reflects the consideration expected to be received in exchange for those goods or services. In August 2015, the FASB modified ASU 2014-09 to be effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period and allows for either full retrospective or modified retrospective application. This standard is effective for the Company for fiscal year 2018. In implementing the new standard the Company applied the amendment to each prior reporting period presented. In February 2016 the FASB issued ASU No. 2016-02, Leases, which requires a lessee to recognize lease liabilities for the lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis, and right-of-use assets, representing the lessee’s right to use, or control the use of, specified assets for the lease term. Additionally, the new guidance has simplified accounting for sale and leaseback transactions. Lessor accounting is largely unchanged. The ASU is effective for fiscal years beginning after December 15, 2018. It is expected that assets and liabilities will increase based upon the present value of remaining lease payments for leases in place at the adoption date and such amounts may be material to the financial statements depending on terms of any lease renewals and other operating leases entered into. (2)(l) Use of Estimates in the Preparation of Financial Statements 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 the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the amounts of revenues and expenses recorded during the reporting period. Such estimates are adjusted by management periodically as a result of existing or anticipated economic changes which effect, or may effect, the Company’s financial statements. Actual results could differ from these estimates. (2)(m) Fiscal Year-End The Company’s fiscal year end is the last Saturday in December which could result in a 52 or 53 week year. Fiscal years 2017 and 2015 consisted of 52 weeks while 2016 consisted of 53 weeks. (2)(n) 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, 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 stock options granted. In the first quarter of fiscal 2017, the Company prospectively adopted the provisions of ASU 2016-09, and, as such, the cash flow from tax benefits that are a result of tax deductions in excess of the compensation cost recognized for those options (excess tax benefits) is classified with other income tax cash flows as an operating activity for the year ended December 30, 2017. Tax deductions from certain stock option exercises are treated as being realized when they reduce tax expense and taxes payable in accordance with relevant tax law. (2)(o) Segment Reporting The Company views its operations and manages its business as one segment. The Company produces and sells advanced material solutions, primarily metal matrix composites, to assemblers of high density electronics and other specialty components and subassemblies. The Company also assembles housings and packages for hybrid circuits, selling to the same customers mentioned above. These customers represent a single market or segment with similar stringent and well-defined requirements. The Company’s customers, in turn, sell the components and subassemblies which incorporate the products into many different end markets, however, these end markets are two to three levels removed from the Company. The Company makes operating decisions and assesses financial performance only for the Company as a whole and does not make operating decisions or assess financial performance by the end markets which ultimately use the products. The Cooperative Agreement the Company entered into with the Army Research Laboratory in 2008 and the sale of structural components to the oil and gas industry uses the same equipment and personnel as does the Company’s electronics business described above and does not represent a separate business segment. |
(3) Inventories
(3) Inventories | 12 Months Ended |
Dec. 30, 2017 | |
Inventory Disclosure [Abstract] | |
(3) Inventories | (3) Inventories As of December 30, 2017 and December 31, 2016 inventories consisted of the following: 2017 2016 Raw materials $ 478,567 $ 398,994 Work in process 1,003,285 1,089,496 Finished goods 1,014,023 1,032,971 Gross Inventory 2,495,875 2,521,461 Reserve for obsolescence (386,362) (550,500) Total $ 2,109,513 $ 1,970,961 |
(4) Commitments & Contingencies
(4) Commitments & Contingencies | 12 Months Ended |
Dec. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
(4) Commitments & Contingencies | (4) Commitments & Contingencies Operating Lease Obligations In February 2018, the Company signed a lease for the Norton facilities through February 2021. The leased facilities comprise approximately 38 thousand square feet. 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 $152 thousand. In February 2011, the Company entered into a lease for an additional 13.8 thousand square feet in Attleboro, MA. The lease terms have been for one year and have been renewed annually. The current lease expires in February 2019 and the Company believes that this can be extended on similar terms for a year or more. Annual rental payments are $83 thousand. Future minimum rental payments over the terms of the lease agreements are approximately as follows: Fiscal year: 2018 $ 235,200 2019 166,200 2020 152,400 2021 25,400 $ 579,200 Loss contingency The Company manufactures baseplates for power module manufacturers. Most baseplates manufactured by CPS require a nickel coating be applied to the baseplate (“Ni plating”). CPS warranties its baseplates meet the Ni plating specifications required by our customers, and we flow this requirement to our Ni plating vendors. On January 24, 2018 the Company received a “Claim and Non-Conformance Notification” from one of its European customers relating to the Ni plating on our baseplates. Upon investigation, it was determined that one employee of the Ni plating vendor used by CPS had deviated from the prescribed work instruction for Ni plating from mid-September 2017 until mid-January 2018. The Company's Ni plating vendor has acknowledged this violation and is committed to correcting the problem. In the case of affected baseplates, which have not been assembled into modules, it is a straight-forward process for the Ni plating vendor to rework these baseplates. The larger issue is baseplates that have already been assembled into modules. During this four-month period approximately 15,000 baseplates from this Ni plating vendor were assembled into modules; only a small portion of these baseplates are affected. In alerting the Company to “non-conformance” the customer stated that it “may incur several additional expenses, costs and consequential damages due to this non-conformity.” The notification went on to say that “the exact total value of such expenses, costs and consequential damages cannot be calculated until the quality issue will be completely solved.” Although the Company expects this issue to be resolved amicably, there is a possibility that this could result in legal proceedings. The Company is working closely with its customer and its Ni plating vendor to correct the situation and has informed its insurer of potential claims and the Ni plating vendor has done the same with its insurer. The Company believes that it is possible that damages will be assessed but it is not possible at this time to quantify the potential financial impact, especially when insurance is considered. No amounts for damages have been recorded in the accompanying financial statements related to this situation. |
(5) Share-Based Compensation Pl
(5) Share-Based Compensation Plans | 12 Months Ended |
Dec. 30, 2017 | |
Retirement Benefits [Abstract] | |
(5) Share-Based Compensation Plans | (5) Share-Based Compensation Plans The Company adopted the 2009 Stock Incentive Plan ("2009 Plan") on December 10, 2009. Under the terms of the 2009 Plan all of the Company’s employees, officers, directors, consultants and advisors are eligible to be granted options, restricted stock awards, or other stock-based awards. Some outstanding options are nonstatutory stock options; some are incentive stock options. All options granted are exercisable at the fair market value of the stock on the date of grant, and expire ten years from the date of grant. The options granted to employees generally vest in equal annual installments over a five-year period. The options granted to directors generally vest immediately on date of grant. Under the 2009 Plan a total of 2,856,100 shares of common stock are available for issuance, of which 1,189,195 shares remain available for grant as of December 30, 2017. As of December 30, 2017, the 2009 Plan is the only stock option plan from which awards can be made as all other option plans have expired. As of December 30, 2017 there are 8,000 options outstanding under the 1999 Plan. A summary of stock option activity for all the above plans as of December 30, 2017 and changes during the year then ended is presented below: Weighted Weighted Average Remaining Aggregate Exercise Contractual Intrinsic Shares Price Life (years) Value Outstanding at beginning of year 1,557,905 $ 1.79 Granted 167,500 $ 1.58 Exercised — — Forfeited (50,500 ) $ 1.78 Expired (8,000 ) $ 2.17 Outstanding at end of year 1,666,905 $ 1.77 5.2 $ 266,667 ======== ===== === ======== Options exercisable at year-end 1,230,905 $ 1.73 4.3 $ 207,455 ======== ===== === ======== No options were exercised during fiscal 2017. The total intrinsic value of options exercised during fiscal years 2016 and 2015 was $19,592 and $141,520, respectively. Cash received from option exercises under all share-based payment arrangements was $11,836, and $172,670, for the years ended December 31, 2016 and December 26, 2015, respectively. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model. The following table presents the annualized weighted average values of the significant assumptions used to estimate the fair values of the options granted during 2017 and 2016: 2017 2016 Risk-free interest rate 2.08-2.23% 1.39-1.53% Expected life in years 6.1 6.3 Expected volatility 54% 53% Expected dividend yield 0 0 Weighted average fair value of grants $ .84 $ .85 All options are granted with an exercise price equal to the fair market value of the underlying common stock on the date of grant. The Company recognized $287,231, $193,117 and $283,507 as compensation expense related to total stock options outstanding in 2017, 2016 and 2015, respectively. As of December 30, 2017, there was $282,389 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 3.2 years. |
(6) Accrued Expenses
(6) Accrued Expenses | 12 Months Ended |
Dec. 30, 2017 | |
Payables and Accruals [Abstract] | |
(6) Accrued Expenses | (6) Accrued Expenses Accrued expenses at December 30, 2017 and December 31, 2016 consist of the following: 2017 2016 Accrued legal and accounting $ 78,925 $ 87,690 Accrued payroll and related 455,518 456,063 Accrued other 121,046 80,206 $ 655,489 $ 623,959 |
(7) Revolving Line of Credit
(7) Revolving Line of Credit | 12 Months Ended |
Dec. 30, 2017 | |
Notes to Financial Statements | |
(7) Revolving Line of Credit | (7) Revolving Line of Credit In June 2017, the Company renewed its $1.5 million revolving line of credit line with Santander Bank. The agreement matures at the end of May 2018. The LOC is secured by the accounts receivable and other assets of the Company and has an interest rate of prime plus 100 basis points. Under the terms of the agreement, the Company is required to maintain its operating accounts with Santander Bank. The Company is also subject to certain financial covenants. These include specific earnings levels, targeted current ratios and targeted debt to tangible net worth ratios at the end of subsequent quarters. At December 30, 2017, the Company was in compliance with all existing covenants. Also, at December 30, 2017, the Company had no borrowings under this LOC and its borrowing base at the time would have permitted $1.5 million to have been borrowed. |
(8) Income Taxes
(8) Income Taxes | 12 Months Ended |
Dec. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
(8) Income Taxes | (8) Income Taxes Components of income tax expense (benefit) for each year are as follows: 2017 2016 2015 Current Federal $ (6,529) $ — $ (2,286) State (4,186) 456 456 Current income tax provision (benefit): (10,715) 456 (1,830) Deferred: United States: Federal (246,458) (526,922) 168,371 State 35,597 (149,678) 7,691 Deferred income tax provision (benefit), net (211,317) (676,600) 176,062 Total $ (222,032) $ (676,144) $ 174,232 Deferred tax assets as of December 30, 2017 and December 31, 2016 are as follows: December 30, 2017 December 31, 2016 Deferred Tax Assets: Net operating loss carryforwards $ 634,000 $ 363,000 Stock compensation 478,000 628,000 Credit carryforwards 1,494,000 1,265,000 Inventory 235,000 369,000 Accrued liabilities 20,000 27,000 Depreciation 175,000 171,000 Other 3,000 4,000 Gross deferred tax assets 3,039,000 2,827,000 Valuation allowance — — Net deferred tax assets $ 3,039,000 $ 2,827,000 At December 30, 2017 and December 31, 2016 the Company had net operating loss carryforwards of approximately $2,367,000 and $923,000, respectively, available to offset future income for U.S. Federal income tax purposes. On December 22, 2017, the President of the United States signed into law the Tax Cuts and Jobs Act (“the Act”). The Act makes significant changes to the U.S. tax code including the following: · Reduction of the corporate federal income tax rate from 35% to 21%; · Repeal of the domestic manufacturing deduction; · Repeal of the corporate alternative minimum tax; · Acceleration of business asset expensing. Due to the Act, U.S. deferred tax assets and liabilities were re-measured from 35% to 21% resulting in an additional expense of $680,000 in the fourth quarter of 2017. A valuation allowance 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. The Company believes that it will generate sufficient future taxable income to realize the tax benefits related to the remaining deferred tax assets. Current projections of future taxable income, including the reversal of temporary differences, reflect the Company’s belief that it has attractive growth opportunities and a favorable cost structure. These projections support the conclusion that the Company will generate taxable income sufficient to utilize the losses before they expire. A summary of the change in the deferred tax asset is as follows: 2017 2016 2015 Balance at beginning of year $ 2,827,349 $ 2,150,749 $ 2,300,465 Deferred tax (expense) benefit 211,317 676,600 (149,716) Balance at end of year $ 3,038,666 $ 2,827,349 $ 2, 150,749 Income tax expense is different from the amounts computed by applying the U.S. federal statutory income tax rate of 34 percent to pretax income as a result of the following: 2017 2016 2015 Tax at statutory rate $ (660,000) $ (384,000) $ 212,000 State tax, net of federal benefit 450 450 450 Net operating loss and credit carryforwards (282,450) (249,450) (34,450) Effect of tax cuts and jobs act 628,000 — — Other 92,000 (43,000) (4,000) Total $ (222,000) $ (676,000) $ 174,000 The Company’s income tax filings are subject to review and examination by federal and state taxing authorities. The Company is currently open to audit under the applicable statutes of limitations for the years 2014 through 2017. |
(9) Retirement Savings Plan
(9) Retirement Savings Plan | 12 Months Ended |
Dec. 30, 2017 | |
Retirement Benefits [Abstract] | |
(9) Retirement Savings Plan | (9) Retirement Savings Plan The Company sponsors a Retirement Savings Plan (the ‘Plan’) under the provisions of Section 401 of the Internal Revenue Code. Employees, as defined in the Plan, are eligible to participate in the Plan after 30 days of employment. Under the terms of the Plan, the Company may match employee contributions under such method as described in the Plan and as determined each year by the Board of Directors. During 2017 and 2016 the Company did not offer a 401k match. The Company recognized $120,000 of expense in 2015 for the Company match. |
(10) Concentrations of Credit R
(10) Concentrations of Credit Risk Significant Customers and Geographic Information | 12 Months Ended |
Dec. 30, 2017 | |
Risks and Uncertainties [Abstract] | |
(10) Concentrations of Credit Risk Significant Customers and Geographic Information | (10) Concentrations of Credit Risk, Significant Customers and Geographic Information Financial instruments which subject the Company to concentrations of credit risk consist principally of cash, cash equivalents and trade accounts receivable. The Company maintains such cash deposits in a high credit quality financial institution. The Company extends credit to customers who consist principally of microelectronics systems companies in the United States, Europe and Asia. The Company generally does not require collateral or other security as a condition of sale rather relying on credit approval, balance limitation and monitoring procedures to control credit risk of trade accounts receivable. Management conducts on-going credit evaluations of its customers, and historically the Company has not experienced any significant credit-related losses with respect to its trade accounts receivable. Revenues from significant customers as a percentage of total revenues in 2017, 2016 and 2015 were as follows: Percent of Total Revenues Significant Customer 2017 2016 2015 A 28% 19% 27% B 14% 19% 23% C 9% 10% 10% D 13% <10% <10% As of December 30, 2017, the Company had trade accounts receivable due from these four customers that accounted for 68% of total trade accounts receivable as of that date. No other customer balances constitute 10% or more of accounts receivable at December 30, 2017. Management believes that any credit risks have been properly provided for in the accompanying financial statements. The Company’s revenue was derived from the following countries in 2017, 2016, and 2015: Percent of Total Revenues Country 2017 2016 2015 United States of America 30% 29% 21% Germany 42% 38% 50% Other 28% 33% 29% Many of the Company’s customers based in the United States conduct design, purchasing and payable functions in the United States, but manufacture overseas. Revenue generated from shipments made to customers’ locations outside the United States accounted for 70%, 71% and 79% of total revenue in 2017, 2016 and 2015, respectively. All of the Company’s long-lived assets and operations are located in the United States. |
(11) Net Income (Loss) Per Shar
(11) Net Income (Loss) Per Share | 12 Months Ended |
Dec. 30, 2017 | |
Earnings Per Share [Abstract] | |
(11) Net Income (Loss) Per Share | (11) Net Income (Loss) Per Share The following reconciles the basic and diluted net income (loss) per share calculations. For the years ended Dec. 30, Dec. 31, Dec. 26, 2017 2016 2015 Basic Computation: Numerator: Net income (loss) $ (1,717,702) $ (453,617) $ 450,619 Denominator: Weighted average common shares outstanding 13,203,436 13,201,284 13,180,428 Basic net income (loss) per share $ (0.13) $ (0.03) $ 0.03 Diluted Computation: Numerator: Net income (loss) $ (1,717,702) $ (453,617) $ 450,619 Denominator: Weighted average common shares outstanding 13,203,436 13,201,284 13,180,428 Stock options — — 458,646 Total shares 13,203,436 13,201,284 13,639,074 Diluted net income (loss) per share $ (0.13) $ (0.03) $ 0.03 The total number of anti-dilutive shares at December 30, 2017 and December 31, 2016 was 1,450,105 and 1,221,105, respectively. |
(12) Allowance for Doubtful Acc
(12) Allowance for Doubtful Accounts | 12 Months Ended |
Dec. 30, 2017 | |
Receivables [Abstract] | |
(12) Allowance for Doubtful Accounts | (12) Allowance for Doubtful Accounts Activity in the allowance for doubtful account was as follows for fiscal years 2017, 2016, and 2015: 2017 2016 2015 Beginning balance $ 10,000 $ 10,000 $ 10,000 Provision for bad debt — — — Charge-offs — — — Ending balance $ 10,000 $ 10,000 $ 10,000 |
(2) Summary of Significant Ac19
(2) Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 30, 2017 | |
Accounting Policies [Abstract] | |
(2)(a) Cash and Cash Equivalents | (2)(a) Cash and Cash Equivalents The Company considers all highly liquid investments with a maturity of three months or less at the date of purchase to be cash equivalents. |
(2)(b) Accounts Receivable | (2)(b) Accounts Receivable The Company reports its accounts receivable at the invoiced amount less an allowance for doubtful accounts. The Company’s management provides appropriate provisions for uncollectible accounts based upon factors surrounding the credit risk and activity of specific customers, historical trends, economic conditions and other information. Adjustments to the allowance are charged to operations in the period in which information becomes available that may affect the allowance. Sales returns are offset against the related amounts invoiced in accounts receivable. |
(2)(c) Inventories | (2)(c) Inventories Inventories are stated at the lower of cost, as determined under the first-in, first-out method (FIFO), or net realizable value. A reserve for obsolete inventories is based on factors regarding the sales and usage of such inventories, including inventories manufactured for specific customers. The Company’s general obsolescence policy is to write off obsolete inventory when there has been no activity on a particular part for a twelve month period and there are no pending customer orders. |
(2)(d) Property and Equipment | (2)(d) Property and Equipment Property and equipment are stated at cost. Depreciation of equipment is calculated on a straight-line basis over the estimated useful life, generally five years for production equipment and three to five years for furniture and office equipment. Amortization of equipment under capital leases is calculated on a straight-line basis over the shorter of the life of the lease or the estimated useful life of the equipment. Maintenance and repairs are charged to expense as incurred. Upon retirement or sale, the cost and related accumulated depreciation or amortization are removed from their respective accounts. Any gains or losses on the disposition of property and equipment are included in the results of operations in the period in which they occur. |
(2)(e) Impairment of Long-Lived Assets | (2)(e) Impairment of Long-Lived Assets The Company reviews long-lived assets for impairment whenever circumstances and situations change such that there is an indication that the carrying amounts may not be recovered. Recoverability is assessed based on estimated undiscounted future cash flows. As of December 30, 2017 and December 31, 2016, the Company believes that there has been no impairment of its long-lived assets. |
(2)(f) Revenue Recognition | (2)(f) Revenue Recognition The Company recognizes revenue when the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services rendered; (3) the price to the buyer is fixed or determinable; and (4) collectability is reasonably assured. Amounts collected before these criteria are met are recorded as deferred revenue. Shipping terms are customarily EXW (Ex-works), shipping point which terms are consistent with “FOB Shipping Point”. Revenues for products sold in the normal course of business are recognized upon shipment when delivery terms are EXW shipping point and all other revenue recognition criteria have been met. The Company has entered into consigned inventory agreements with a few customers. For products shipped under consigned inventory agreements, the Company recognizes revenue when either the customer notifies CPS that they have picked the product from the consigned inventory or, in some cases, when sixty days have elapsed from the date the shipment arrives at the customer’s location. In 2008, the Company entered into a cooperative agreement with the US Army Research Laboratory to perform research and development concerning hybrid metal matrix composite encapsulated ceramic armor technology. The Cooperative Agreement was a four-year agreement, recently expired March 31, 2015, which was 95% funded by the US Department of Defense and 5% funded by CPS. Revenues from this Cooperative Agreement were recognized proportionally as costs were incurred. We were reimbursed for reasonable and allocable costs up to the reimbursement limits set by the Cooperative Agreement. All payments to the Company for work performed on this Cooperative Agreement are subject to audit and adjustment by the Defense Contract Audit Agency. Adjustments, if any, are recognized in the period made. |
(2)(g) Research and Development Costs | (2)(g) Research and Development Costs In 2015, costs incurred related to funding under the Cooperative Agreement totaled $42 thousand of which 100% was reimbursed by the U.S. Army and was recorded as revenue. This revenue of $42 thousand resulted in a gross margin of $8 thousand. In 2016 and 2017, no costs were incurred as the contract expired on March 31, 2015. |
(2)(h) Income Taxes | (2)(h) Income Taxes Deferred tax assets and liabilities are based on the net tax effects of tax credits, operating loss carryforwards and temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The Company considers many factors in assessing whether or not a valuation allowance for its Deferred Tax asset is warranted. On the positive side, the Company considered such factors as its: history of taxable earnings (three of the last five years had operating profits), global customer base consisting of large companies with significant resources, current products and their expected life, technological advantages, potential for price increases, trend of improved manufacturing efficiencies and the magnitude of the Deferred Tax Asset compared with the Company’s expectation of future earnings over the remaining life of the asset. On the negative side, the Company considered such factors as: the global economic environment, the Company’s ability to absorb additional periods of operating losses and negative cash flow and the potential for the technological breakthroughs and substitution of the Company’s products by lower cost solutions. The Company’s policy is to recognize interest and penalties related to income tax matters in income tax expense. As of December 30 2017 and December 31, 2016, the Company has no accruals for interest or penalties related to income tax matters. The Company does not have any uncertain tax positions at December 30, 2017 or December 31, 2016 which required accrual or disclosure. |
(2)(i) Net Income (Loss) Per Common Share | (2)(i) Net Income (Loss) Per Common 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 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. |
(2)(j) Reclassification | (2)(j) Reclassification Certain amounts in prior year’s financial statements have been reclassified to conform to the current year’s presentation. |
(2)(k) Recent Accounting Pronouncements | (2)(k) Recent Accounting Pronouncements In May 2014, the FASB issued Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers. This update provides a comprehensive new revenue recognition model that requires revenue to be recognized in a manner to depict the transfer of goods or services to a customer at an amount that reflects the consideration expected to be received in exchange for those goods or services. In August 2015, the FASB modified ASU 2014-09 to be effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period and allows for either full retrospective or modified retrospective application. This standard is effective for the Company for fiscal year 2018. In implementing the new standard the Company applied the amendment to each prior reporting period presented. In February 2016 the FASB issued ASU No. 2016-02, Leases, which requires a lessee to recognize lease liabilities for the lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis, and right-of-use assets, representing the lessee’s right to use, or control the use of, specified assets for the lease term. Additionally, the new guidance has simplified accounting for sale and leaseback transactions. Lessor accounting is largely unchanged. The ASU is effective for fiscal years beginning after December 15, 2018. It is expected that assets and liabilities will increase based upon the present value of remaining lease payments for leases in place at the adoption date and such amounts may be material to the financial statements depending on terms of any lease renewals and other operating leases entered into. (2)(l) Use of Estimates in the Preparation of Financial Statements 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 the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the amounts of revenues and expenses recorded during the reporting period. Such estimates are adjusted by management periodically as a result of existing or anticipated economic changes which effect, or may effect, the Company’s financial statements. Actual results could differ from these estimates. |
(2)(m) Fiscal Year-End | (2)(m) Fiscal Year-End The Company’s fiscal year end is the last Saturday in December which could result in a 52 or 53 week year. Fiscal years 2017 and 2015 consisted of 52 weeks while 2016 consisted of 53 weeks. |
(2)(n) Share-Based Payments | (2)(n) 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, 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 stock options granted. In the first quarter of fiscal 2017, the Company prospectively adopted the provisions of ASU 2016-09, and, as such, the cash flow from tax benefits that are a result of tax deductions in excess of the compensation cost recognized for those options (excess tax benefits) is classified with other income tax cash flows as an operating activity for the year ended December 30, 2017. Tax deductions from certain stock option exercises are treated as being realized when they reduce tax expense and taxes payable in accordance with relevant tax law. |
(2)(o) Segment Reporting | (2)(o) Segment Reporting The Company views its operations and manages its business as one segment. The Company produces and sells advanced material solutions, primarily metal matrix composites, to assemblers of high density electronics and other specialty components and subassemblies. The Company also assembles housings and packages for hybrid circuits, selling to the same customers mentioned above. These customers represent a single market or segment with similar stringent and well-defined requirements. The Company’s customers, in turn, sell the components and subassemblies which incorporate the products into many different end markets, however, these end markets are two to three levels removed from the Company. The Company makes operating decisions and assesses financial performance only for the Company as a whole and does not make operating decisions or assess financial performance by the end markets which ultimately use the products. The Cooperative Agreement the Company entered into with the Army Research Laboratory in 2008 and the sale of structural components to the oil and gas industry uses the same equipment and personnel as does the Company’s electronics business described above and does not represent a separate business segment. |
(3) Inventories (Tables)
(3) Inventories (Tables) | 12 Months Ended |
Dec. 30, 2017 | |
Inventory Disclosure [Abstract] | |
Inventories | 2017 2016 Raw materials $ 478,567 $ 398,994 Work in process 1,003,285 1,089,496 Finished goods 1,014,023 1,032,971 Gross Inventory 2,495,875 2,521,461 Reserve for obsolescence (386,362) (550,500) Total $ 2,109,513 $ 1,970,961 |
(4) Commitments & Contingenci21
(4) Commitments & Contingencies (Tables) | 12 Months Ended |
Dec. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Operating Lease Obligations | 2018 $ 235,200 2019 166,200 2020 152,400 2021 25,400 $ 579,200 |
(5) Share-Based Compensation 22
(5) Share-Based Compensation Plans (Tables) | 12 Months Ended |
Dec. 30, 2017 | |
Retirement Benefits [Abstract] | |
Stock Option Activity | Weighted Weighted Average Remaining Aggregate Exercise Contractual Intrinsic Shares Price Life (years) Value Outstanding at beginning of year 1,557,905 $ 1.79 Granted 167,500 $ 1.58 Exercised — — Forfeited (50,500 ) $ 1.78 Expired (8,000 ) $ 2.17 Outstanding at end of year 1,666,905 $ 1.77 5.2 $ 266,667 ======== ===== === ======== Options exercisable at year-end 1,230,905 $ 1.73 4.3 $ 207,455 ======== ===== === ======== |
Annualized weighted average values of the significant assumptions used to estimate the fair values of options granted during 2017 and 2016 | 2017 2016 Risk-free interest rate 2.08-2.23% 1.39-1.53% Expected life in years 6.1 6.3 Expected volatility 54% 53% Expected dividend yield 0 0 Weighted average fair value of grants $ .84 $ .85 |
(6) Accrued Expenses (Tables)
(6) Accrued Expenses (Tables) | 12 Months Ended |
Dec. 30, 2017 | |
Payables and Accruals [Abstract] | |
Schedule of accrued expenses | 2017 2016 Accrued legal and accounting $ 78,925 $ 87,690 Accrued payroll and related 455,518 456,063 Accrued other 121,046 80,206 $ 655,489 $ 623,959 |
(8) Income Taxes (Tables)
(8) Income Taxes (Tables) | 12 Months Ended |
Dec. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Components of income tax expense (benefit) for each year | 2017 2016 2015 Current Federal $ (6,529) $ — $ (2,286) State (4,186) 456 456 Current income tax provision (benefit): (10,715) 456 (1,830) Deferred: United States: Federal (246,458) (526,922) 168,371 State 35,597 (149,678) 7,691 Deferred income tax provision (benefit), net (211,317) (676,600) 176,062 Total $ (222,032) $ (676,144) $ 174,232 |
Deferred tax assets | December 30, 2017 December 31, 2016 Deferred Tax Assets: Net operating loss carryforwards $ 634,000 $ 363,000 Stock compensation 478,000 628,000 Credit carryforwards 1,494,000 1,265,000 Inventory 235,000 369,000 Accrued liabilities 20,000 27,000 Depreciation 175,000 171,000 Other 3,000 4,000 Gross deferred tax assets 3,039,000 2,827,000 Valuation allowance — — Net deferred tax assets $ 3,039,000 $ 2,827,000 |
A summary of the change in the deferred tax asset | 2017 2016 2015 Balance at beginning of year $ 2,827,349 $ 2,150,749 $ 2,300,465 Deferred tax (expense) benefit 211,317 676,600 (149,716) Balance at end of year $ 3,038,666 $ 2,827,349 $ 2, 150,749 |
Income tax expense is different from the amounts computed by applying the U.S. federal statutory income tax rate of 34 percent to pretax income as a result of the following | 2017 2016 2015 Tax at statutory rate $ (660,000) $ (384,000) $ 212,000 State tax, net of federal benefit 450 450 450 Net operating loss and credit carryforwards (282,450) (249,450) (34,450) Effect of tax cuts and jobs act 628,000 — — Other 92,000 (43,000) (4,000) Total $ (222,000) $ (676,000) $ 174,000 |
(10) Concentrations of Credit25
(10) Concentrations of Credit Risk Significant Customers and Geographic Information (Tables) | 12 Months Ended |
Dec. 30, 2017 | |
Risks and Uncertainties [Abstract] | |
Revenues from significant customers as a percent of total revenues in 2017, 2016 and 2015 | Percent of Total Revenues Significant Customer 2017 2016 2015 A 28% 19% 27% B 14% 19% 23% C 9% 10% 10% D 13% <10% <10% |
The Company's revenue wasderived from the following countries in 2017, 2016 and 2015 | Percent of Total Revenues Country 2017 2016 2015 United States of America 30% 29% 21% Germany 42% 38% 50% Other 28% 33% 29% |
(11) Net Income (Loss) Per Sh26
(11) Net Income (Loss) Per Share (Tables) | 12 Months Ended |
Dec. 30, 2017 | |
Earnings Per Share [Abstract] | |
Net Income (Loss) Per Share Basic and Diluted | For the years ended Dec. 30, Dec. 31, Dec. 26, 2017 2016 2015 Basic Computation: Numerator: Net income (loss) $ (1,717,702) $ (453,617) $ 450,619 Denominator: Weighted average common shares outstanding 13,203,436 13,201,284 13,180,428 Basic net income (loss) per share $ (0.13) $ (0.03) $ 0.03 Diluted Computation: Numerator: Net income (loss) $ (1,717,702) $ (453,617) $ 450,619 Denominator: Weighted average common shares outstanding 13,203,436 13,201,284 13,180,428 Stock options — — 458,646 Total shares 13,203,436 13,201,284 13,639,074 Diluted net income (loss) per share $ (0.13) $ (0.03) $ 0.03 |
(3) Inventories - Inventories (
(3) Inventories - Inventories (Details) - USD ($) | Dec. 30, 2017 | Dec. 31, 2016 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 478,567 | $ 398,994 |
Work in process | 1,003,285 | 1,089,496 |
Finished goods | 1,014,023 | 1,032,971 |
Gross Inventory | 2,495,875 | 2,521,461 |
Reserve for obsolescence | (386,362) | (550,500) |
Total | $ 2,109,513 | $ 1,970,961 |
(4) Commitments & Contingenci28
(4) Commitments & Contingencies - Operating Lease Obligations (Details) | Dec. 30, 2017USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2,018 | $ 235,200 |
2,019 | 166,200 |
2,020 | 152,400 |
2,021 | 25,400 |
Total | $ 579,200 |
(5) Share-Based Compensation 29
(5) Share-Based Compensation Plans - Stock Option Activity (Details) | 12 Months Ended |
Dec. 30, 2017USD ($)shares | |
Retirement Benefits [Abstract] | |
Outstanding at beginning of year | 1,557,905 |
Granted | 167,500 |
Exercised | |
Forfeited | (50,500) |
Expired | (8,000) |
Outstanding at end of year | 1,666,905 |
Options exercisable at year-end | 1,230,905 |
Aggregate Intrinsic Value Outstanding at end of year | $ | $ 266,667 |
Aggregate Intrinsic Value Outstanding Exercisable at end of year | $ | $ 207,455 |
Weighted remaining contractual life outstanding | 5 years 73 days |
Weighted remaining contractual life outstanding exercisable | 4 years 109 days 12 hours |
(5) Share-Based Compensation 30
(5) Share-Based Compensation Plans - Annualized weighted average values of the significant assumptions used to estimate the fair values of options granted during 2017 and 2016 (Details) - $ / shares | 12 Months Ended | |
Dec. 30, 2017 | Dec. 31, 2016 | |
Retirement Benefits [Abstract] | ||
Risk-free interest rate low | 2.08% | 1.39% |
Risk-free interest rate high | 2.30% | 1.53% |
Expected life in years | 6 years | 6 years |
Expected volatility | 54.00% | 53.00% |
Expected dividend yield | $ 0 | $ 0 |
Weighted average fair value of grants | $ .84 | $ .85 |
(6) Accrued Expenses - Schedule
(6) Accrued Expenses - Schedule of accrued expenses (Details) - USD ($) | Dec. 30, 2017 | Dec. 31, 2016 |
Payables and Accruals [Abstract] | ||
Accrued legal and accounting | $ 78,925 | $ 87,690 |
Accrued payroll and related | 455,518 | 456,063 |
Accrued other | 121,046 | 80,206 |
Total | $ 655,489 | $ 623,959 |
(8) Income Taxes - Components o
(8) Income Taxes - Components of income tax expense (benefit) for each year (Details) - USD ($) | 12 Months Ended | ||
Dec. 30, 2017 | Dec. 31, 2016 | Dec. 26, 2015 | |
Current | |||
Federal | $ (6,529) | $ (2,286) | |
State | (4,186) | 456 | 456 |
Current income tax provision (benefit): | (10,715) | 456 | (1,830) |
Deferred: | |||
Federal | (246,458) | (526,922) | 168,371 |
State | 35,141 | (149,678) | 7,691 |
Deferred income tax provision (benefit), net | (211,317) | (676,600) | 176,062 |
Total | $ (222,032) | $ (676,144) | $ 174,232 |
(8) Income Taxes - Deferred tax
(8) Income Taxes - Deferred tax assets (Details) - USD ($) | Dec. 30, 2017 | Dec. 31, 2016 |
Deferred Tax Assets: | ||
Net operating loss carryforwards | $ 634,000 | $ 363,000 |
Stock compensation | 478,000 | 628,000 |
Credit carryforwards | 1,494,000 | 1,265,000 |
Inventory | 235,000 | 369,000 |
Accrued liabilities | 20,000 | 27,000 |
Depreciation | 175,000 | 171,000 |
Other | 3,000 | 4,000 |
Gross deferred tax assets | 3,039,000 | 2,827,000 |
Valuation allowance | ||
Net deferred tax assets | $ 3,039,000 | $ 2,827,000 |
(8) Income Taxes - A summary of
(8) Income Taxes - A summary of the change in the deferred tax asset (Details) - USD ($) | 12 Months Ended | ||
Dec. 30, 2017 | Dec. 31, 2016 | Dec. 26, 2015 | |
Income Tax Disclosure [Abstract] | |||
Balance at beginning of year | $ 2,827,349 | $ 2,150,749 | $ 2,300,465 |
Deferred tax (expense) benefit | 211,317 | 676,600 | (149,716) |
Balance at end of year | $ 3,038,666 | $ 2,827,349 | $ 2,150,749 |
(10) Concentrations of Credit35
(10) Concentrations of Credit Risk Significant Customers and Geographic Information - Revenues from significant customers as a percent of total revenues in 2017, 2016 and 2015 (Details) | 12 Months Ended | ||
Dec. 30, 2017 | Dec. 31, 2016 | Dec. 26, 2015 | |
Percent of Total Revenues Significant Customer | |||
A | 28.00% | 19.00% | 27.00% |
B | 14.00% | 19.00% | 23.00% |
C | 9.00% | 10.00% | 10.00% |
D | 13.00% |
(10) Concentrations of Credit36
(10) Concentrations of Credit Risk Significant Customers and Geographic Information (Details) | 12 Months Ended | ||
Dec. 30, 2017 | Dec. 31, 2016 | Dec. 26, 2015 | |
Percent of Total Revenues Country | |||
United States of America | 30.00% | 29.00% | 21.00% |
Germany | 42.00% | 38.00% | 50.00% |
Other | 28.00% | 33.00% | 29.00% |
(11) Net Income (Loss) Per Sh37
(11) Net Income (Loss) Per Share - Net Income (Loss) Per Share Basic and Diluted (Details) - USD ($) | 12 Months Ended | ||
Dec. 30, 2017 | Dec. 31, 2016 | Dec. 26, 2015 | |
Basic Computation: | |||
Net income (loss) | $ (1,717,702) | $ (453,617) | $ 450,619 |
Weighted average common shares outstanding | 13,203,436 | 13,201,284 | 13,180,428 |
Basic net income (loss) per share | $ (0.13) | $ (0.03) | $ 0.03 |
Diluted Computation: | |||
Net income (loss) | $ (1,717,702) | $ (453,617) | $ 450,619 |
Weighted average common shares outstanding | 13,203,436 | 13,201,284 | 13,180,428 |
Stock options | $ 458,646 | ||
Total shares | 13,203,436 | 13,201,284 | 13,639,074 |
Diluted net income (loss) per share | $ (0.13) | $ (0.03) | $ 0.03 |