Document and Entity Information
Document and Entity Information - USD ($) | 9 Months Ended | |
Sep. 29, 2018 | Nov. 07, 2018 | |
Document And Entity Information | ||
Entity Registrant Name | CPS TECHNOLOGIES CORP/DE/ | |
Entity Central Index Key | 814,676 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 29, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-29 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Public Float | $ 11,000,000 | |
Entity Common Stock, Shares Outstanding | 13,203,436 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,018 | |
Entity Small Business | true | |
Is Entity Emerging Growth Company | false |
Balance Sheets (Unaudited)
Balance Sheets (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 29, 2018 | Dec. 30, 2017 | |
Current assets: | ||
Cash and cash equivalents | $ 87,976 | $ 1,339,572 |
Accounts receivable- trade, net of allowance for doubtful accounts of $10,000 | 3,902,117 | 2,943,373 |
Inventories, net | 3,571,276 | 2,109,513 |
Prepaid expenses and other current assets | 108,993 | 101,086 |
Total current assets | 7,670,362 | 6,493,544 |
Property and equipment: | ||
Production equipment | 9,195,059 | 9,299,515 |
Furniture and office equipment | 518,370 | 499,679 |
Leasehold improvements | 891,816 | 891,817 |
Total cost | 10,605,245 | 10,691,011 |
Accumulated depreciation and amortization | (9,566,102) | (9,287,006) |
Construction in progress | 383,432 | 86,493 |
Net property and equipment | 1,422,575 | 1,490,498 |
Deferred taxes | 3,313,666 | 3,038,666 |
Total assets | 12,406,603 | 11,022,708 |
Current liabilities: | ||
Line of Credit | 900,000 | |
Accounts payable | 1,992,992 | 946,385 |
Accrued expenses | 902,576 | 655,489 |
Deferred revenue | 100,000 | |
Total current liabilities | $ 3,795,568 | 1,701,874 |
Commitments (note 4) | (4) Commitments & Contingencies Commitments 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. Annual rental payments are $83 thousand. 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 to meet the Ni plating specifications required by our customers, and flows this requirement to its 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 acknowledged this violation and worked with the customer to resolve the problem. In the case of affected baseplates, which have not been assembled into modules, it was a straight-forward process for the Ni plating vendor to rework these baseplates and this work has been completed. The relavent 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. On April 11, 2018 the Company received a “Follow-up Claim and Non-Conformance Notification” from the European customer. The customer estimated the total value of the claim to be $1.0 million “as of today”, and reserves the right to claim additional damages in the future. The Company has informed its insurer of this claim and the Ni plating vendor has done the same with its insurer. The Company believes that it is not possible at this time to quantify the potential financial impact, if any, to the Company. No amounts for damages have been recorded in the accompanying financial statements. Although the Company expects this issue to be resolved amicably, there is a possibility that this could result in legal proceedings. | |
Stockholders’ equity: | ||
Common stock, $0.01 par value, authorized 20,000,000 shares; issued 13,423,492; outstanding 13,203,436; at September 29, 2018 and December 30, 2017 | $ 134,235 | 134,235 |
Additional paid-in capital | 35,875,614 | 35,739,916 |
Accumulated deficit | (26,881,761) | (26,036,264) |
Less cost of 220,056 common shares repurchased at September 29, 2018 and December 30, 2017 | (517,053) | (517,053) |
Total stockholders’ equity | 8,611,035 | 9,320,834 |
Total liabilities and stockholders equity | $ 12,406,603 | $ 11,022,708 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - $ / shares | Sep. 29, 2018 | Dec. 30, 2017 |
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 (Unaud
Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 29, 2018 | Sep. 30, 2017 | Sep. 29, 2018 | Sep. 30, 2017 | |
Revenues: | ||||
Product sales | $ 6,116,448 | $ 4,211,962 | $ 15,500,173 | $ 10,781,175 |
Total Revenues | 6,116,448 | 4,211,962 | 15,500,173 | 10,781,175 |
Cost of product sales | 5,152,598 | 3,450,915 | 13,786,762 | 9,686,103 |
Gross Margin | 963,850 | 761,047 | 1,713,411 | 1,095,072 |
Selling, general and administrative expense | 982,765 | 743,634 | 2,822,240 | 2,650,526 |
Operating income (loss) | (18,915) | 17,413 | (1,108,829) | (1,555,454) |
Interest income (expense), net | (13,679) | 2,815 | (25,313) | 8,065 |
Other income | 13,645 | 13,645 | ||
Net income (loss) before income tax expense | (18,949) | 20,228 | (1,120,497) | (1,547,389) |
Income tax (benefit) expense | (5,000) | 7,000 | (275,000) | (623,000) |
Net income (loss) | $ (13,949) | $ 13,228 | $ (845,497) | $ (924,389) |
Net income (loss) per basic common share | $ 0 | $ 0 | $ (0.06) | $ (0.07) |
Weighted average number of basic common shares outstanding | 13,203,436 | 13,203,436 | 13,203,436 | 13,203,436 |
Net income (loss) per diluted common share | $ 0 | $ 0 | $ (0.06) | $ (0.07) |
Weighted average number of diluted common shares outstanding | 13,203,436 | 13,229,868 | 13,203,436 | 13,203,436 |
Statements of Cash Flows (Unaud
Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 29, 2018 | Sep. 30, 2017 | |
Cash flows from operating activities: | ||
Net loss | $ (845,497) | $ (924,389) |
Adjustments to reconcile net loss to cash provided by (used in) operating activities | ||
Depreciation & amortization | 411,499 | 412,982 |
Share-based compensation | 135,698 | 149,068 |
Deferred taxes | (275,000) | (623,000) |
Gain on sale of property and equipment | (13,645) | |
Changes in: | ||
Accounts receivable-trade | (958,744) | (1,074,569) |
Inventories | (1,461,763) | 295,623 |
Prepaid expenses | (7,907) | 8,864 |
Accounts payable | 1,046,607 | 174,735 |
Deferred revenue | (100,000) | |
Accrued expenses | 247,087 | (8,075) |
Net cash provided by (used in) operating activities | (1,821,665) | (1,588,761) |
Cash flows from investing activities: | ||
Purchases of property and equipment | (343,576) | (129,389) |
Proceeds from sale of property and equipment | 13,645 | |
Net cash provided by (used in) investing activities | (329,931) | (129,389) |
Cash flows from financing activities: | ||
Net borrowings on line of credit | 900,000 | |
Net cash provided by (used in) financing activities | 900,000 | |
Net increase (decrease) in cash and cash equivalents | (1,251,596) | (1,718,150) |
Cash and cash equivalents at beginning of period | 1,339,572 | 3,407,760 |
Cash and cash equivalents at end of period | 87,976 | 1,689,610 |
Supplemental cash flow information: | ||
Cash paid for taxes, net of refunds | $ 486 |
(1) Nature of Business
(1) Nature of Business | 9 Months Ended |
Sep. 29, 2018 | |
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 | 9 Months Ended |
Sep. 29, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
(2) Summary of significant Accounting Polocies | (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 30, 2017 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 30, 2017. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Revenue Recognition - Change in Accounting Policy The Company adopted Accounting Standards Codification (ASC) 606, “Revenue from Contracts with Customers” in fiscal 2018. The core principle of ASC 606 is to recognize revenue in a manner that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The framework in support of this core principle includes: (1) identifying the contract with the customer; (2) identifying the performance obligations in the contract; (3) determining the transaction price; (4) allocating the transaction price to the performance obligations; and (5) recognizing revenue when (or as) the performance obligations are satisfied. The adoption of FASB ASC Topic 606 did not have a material impact on the Company’s financial statements and no cumulative catch-up adjustment was required. Identifying the Contract with the Customer The Company identifies contracts with customers as agreements that create enforceable rights and obligations. In the case of a few large customers the Company has executed long-term Master Sales Agreements (“MSA”). These are umbrella agreements which typically define the terms and conditions under which a customer can order goods from CPS. These in themselves do not constitute a contract as no products are committed to be transferred and the customer has no obligation to make payments. The Company contract is only enforceable once both parties have approved it, and is usually in the form of a written purchase order from a customer combined with acknowledgement from the Company. In cases without an MSA, the customer submits a blueprint for a product, the Company provides a quote and the customer responds with a purchase order. In these cases the Company’s acceptance of the purchase order constitutes an enforceable contract. Identifying the Performance Obligations in the Contract For each contract, the Company considers the promise to transfer products, each of which are distinct, to be the identified performance obligations. Shipping and handling activities for which the Company is responsible are not a separate promised service but instead are activities to fulfill the entity’s promise to transfer goods. Shipping and handling fees will be recognized at the same time as the related performance obligations are satisfied. The Company provides an assurance-type warranty. This guarantees that the product functions as promised and meets specifications. Under its terms and conditions the Company offers a 30 day warranty and replaces defective or non-conforming products. The expense of replacement is recorded at the time the Company agrees to replace a defective or non-conforming product. This assurance type warranty is not considered to be a distinct performance obligation. Determining the Transaction Price The Company determines the transaction price as the amount of consideration specified in the contract that it expects to receive in exchange for transferring promised goods to the customer. Amounts collected from customers for sales value added and other taxes are excluded from the transaction prices. Product sales are recorded net of trade discounts and sales returns. If a contract includes a variable amount, such as a rebate, then the Company estimates the transaction price using either the expected value or the most likely amount of consideration to be received, depending upon the specific facts and circumstances. The Company includes estimated variable consideration in the transaction price only to the extent it is probable that a significant reversal of revenue will not occur when the uncertainty is resolved. The Company updates its estimate of variable consideration at the end of each reporting period to reflect changes in facts and circumstances. When credit is granted to customers, payment is typically due 30 to 90 days from billing and accordingly our contracts with customers do not include a significant financing component. Allocating the Transaction Price to the Performance Obligations In virtually all cases the transaction price is tied to a specific product in the contract obviating the need for any allocation. Recognizing Revenue When (or as) the Performance Obligations are Satisfied The Company recognizes revenue at the point in time when it transfers control of the promised goods or services to the customer, which typically occurs once the product has shipped or has been delivered to the customer. Occasionally, for the purpose of insuring a steady flow of product, the Company ships products on consignment. In these instances, delivery is deemed to have occurred when the customer pulls inventory out of the warehouse for use in their production, or upon a specified period of time as agreed upon by both parties. The Company generally expenses sales commissions when incurred because the amortization period would have been one year or less. The costs are recorded within, selling, general and administrative expenses. The Company does not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less Recent Issued Accounting Pronouncements Not Yet Effective 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. |
(3) Net Income (Loss) Per Commo
(3) Net Income (Loss) Per Common and Common Equivalent Share | 9 Months Ended |
Sep. 29, 2018 | |
Earnings Per Share [Abstract] | |
(3) Net Income (Loss) Per Common and 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. |
(4) Commitments & Contingencies
(4) Commitments & Contingencies | 9 Months Ended |
Sep. 29, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
(4) Commitments & Contingencies | (4) Commitments & Contingencies Commitments 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. Annual rental payments are $83 thousand. 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 to meet the Ni plating specifications required by our customers, and flows this requirement to its 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 acknowledged this violation and worked with the customer to resolve the problem. In the case of affected baseplates, which have not been assembled into modules, it was a straight-forward process for the Ni plating vendor to rework these baseplates and this work has been completed. The relavent 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. On April 11, 2018 the Company received a “Follow-up Claim and Non-Conformance Notification” from the European customer. The customer estimated the total value of the claim to be $1.0 million “as of today”, and reserves the right to claim additional damages in the future. The Company has informed its insurer of this claim and the Ni plating vendor has done the same with its insurer. The Company believes that it is not possible at this time to quantify the potential financial impact, if any, to the Company. No amounts for damages have been recorded in the accompanying financial statements. Although the Company expects this issue to be resolved amicably, there is a possibility that this could result in legal proceedings. |
(5) Share-Based Payments
(5) Share-Based Payments | 9 Months Ended |
Sep. 29, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [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. There were no stock options granted or issued under the Plan during the quarters ended September 29, 2018 and September 30, 2017. During the quarter ended September 29, 2018, 18,600 options were forfeited and 8,000 options expired. During the quarter ended September 30, 2017, 24,000 options were forfeited. During the quarters ended September 29, 2018 and September 30, 2017 there were no shares repurchased. During the three and nine months ended September 29, 2018 the Company recognized approximately $33 thousand and $136 thousand, respectively as share-based compensation expense related to previously granted shares under the Plan. These amounts are included as a component of selling, general and administrative expenses in the statement of operations. During the three and nine months ended September 30, 2017 the Company recognized approximately $37 thousand and $149 thousand, respectively as share-based compensation expense related to previously granted shares under the Plan. These amounts are included as a component of selling, general and administrative expenses in the statement of operations. |
(6) Inventories
(6) Inventories | 9 Months Ended |
Sep. 29, 2018 | |
Inventory Disclosure [Abstract] | |
(6) Inventories | (6) Inventories Inventories consist of the following: September 29, December 30, 2018 2017 Raw materials $ 662,720 $ 478,567 Work in process 2,306,340 1,003,285 Finished goods 988,578 1,014,023 Total inventory 3,957,638 2,495,875 Reserve for obsolescence (386,362) (386,362) Inventories, net $ 3,571,276 $ 2,109,513 |
(7) Accrued Expenses
(7) Accrued Expenses | 9 Months Ended |
Sep. 29, 2018 | |
Payables and Accruals [Abstract] | |
(7) Accrued Expenses | (7) Accrued Expenses Accrued expenses consist of the following: September 29, December 30, 2018 2017 Accrued legal and accounting $ 78,250 $ 78,925 Accrued payroll 601,105 455,518 Accrued other 223,221 121,046 $ 902,576 $ 655,489 |
(8) Line of Credit
(8) Line of Credit | 9 Months Ended |
Sep. 29, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
(8) Line of Credit | (8) Line of Credit In early November 2018, the Company renewed its $1.5 million revolving line of credit line with Santander Bank. The agreement will mature on June 30, 2019. 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, a targeted current ratio and a targeted debt to tangible net worth ratio at the end of subsequent quarters. At September 29, 2018, the Company was in compliance with all existing covenants. Also, at September 29, 2018 the Company had $900 thousand of borrowings under this LOC and its borrowing base at the time would have permitted an additional $600 thousand to have been borrowed. |
(9) Income Taxes
(9) Income Taxes | 9 Months Ended |
Sep. 29, 2018 | |
Income Tax Disclosure [Abstract] | |
(9) Income Taxes | (9) 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. 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. The Company recorded a tax benefit of $4 thousand and tax benefit of $231 thousand for federal income taxes during the three and nine months ended September 29, 2018, respectively. The Company recorded a tax benefit of $1 thousand and a tax benefit of $44 thousand for state income taxes during the three and nine months ended September 29, 2018, respectively. The Company recorded a tax expense of $5 thousand and tax benefit of $495 thousand for federal income taxes during the three and nine months ended September 30, 2017, respectively. The Company recorded a tax expense of $2 thousand and a tax benefit of $128 thousand for state income taxes during the three and nine months ended September 30, 2017, respectively. |
(2) Summary of significant Ac_2
(2) Summary of significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 29, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Revenue Recognition - Change in Accounting Policy | Revenue Recognition - Change in Accounting Policy The Company adopted Accounting Standards Codification (ASC) 606, “Revenue from Contracts with Customers” in fiscal 2018. The core principle of ASC 606 is to recognize revenue in a manner that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The framework in support of this core principle includes: (1) identifying the contract with the customer; (2) identifying the performance obligations in the contract; (3) determining the transaction price; (4) allocating the transaction price to the performance obligations; and (5) recognizing revenue when (or as) the performance obligations are satisfied. The adoption of FASB ASC Topic 606 did not have a material impact on the Company’s financial statements and no cumulative catch-up adjustment was required. Identifying the Contract with the Customer The Company identifies contracts with customers as agreements that create enforceable rights and obligations. In the case of a few large customers the Company has executed long-term Master Sales Agreements (“MSA”). These are umbrella agreements which typically define the terms and conditions under which a customer can order goods from CPS. These in themselves do not constitute a contract as no products are committed to be transferred and the customer has no obligation to make payments. The Company contract is only enforceable once both parties have approved it, and is usually in the form of a written purchase order from a customer combined with acknowledgement from the Company. In cases without an MSA, the customer submits a blueprint for a product, the Company provides a quote and the customer responds with a purchase order. In these cases the Company’s acceptance of the purchase order constitutes an enforceable contract. Identifying the Performance Obligations in the Contract For each contract, the Company considers the promise to transfer products, each of which are distinct, to be the identified performance obligations. Shipping and handling activities for which the Company is responsible are not a separate promised service but instead are activities to fulfill the entity’s promise to transfer goods. Shipping and handling fees will be recognized at the same time as the related performance obligations are satisfied. The Company provides an assurance-type warranty. This guarantees that the product functions as promised and meets specifications. Under its terms and conditions the Company offers a 30 day warranty and replaces defective or non-conforming products. The expense of replacement is recorded at the time the Company agrees to replace a defective or non-conforming product. This assurance type warranty is not considered to be a distinct performance obligation. Determining the Transaction Price The Company determines the transaction price as the amount of consideration specified in the contract that it expects to receive in exchange for transferring promised goods to the customer. Amounts collected from customers for sales value added and other taxes are excluded from the transaction prices. Product sales are recorded net of trade discounts and sales returns. If a contract includes a variable amount, such as a rebate, then the Company estimates the transaction price using either the expected value or the most likely amount of consideration to be received, depending upon the specific facts and circumstances. The Company includes estimated variable consideration in the transaction price only to the extent it is probable that a significant reversal of revenue will not occur when the uncertainty is resolved. The Company updates its estimate of variable consideration at the end of each reporting period to reflect changes in facts and circumstances. When credit is granted to customers, payment is typically due 30 to 90 days from billing and accordingly our contracts with customers do not include a significant financing component. Allocating the Transaction Price to the Performance Obligations In virtually all cases the transaction price is tied to a specific product in the contract obviating the need for any allocation. Recognizing Revenue When (or as) the Performance Obligations are Satisfied The Company recognizes revenue at the point in time when it transfers control of the promised goods or services to the customer, which typically occurs once the product has shipped or has been delivered to the customer. Occasionally, for the purpose of insuring a steady flow of product, the Company ships products on consignment. In these instances, delivery is deemed to have occurred when the customer pulls inventory out of the warehouse for use in their production, or upon a specified period of time as agreed upon by both parties. The Company generally expenses sales commissions when incurred because the amortization period would have been one year or less. The costs are recorded within, selling, general and administrative expenses. The Company does not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less Recent Issued Accounting Pronouncements Not Yet Effective 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. |
(6) Inventories (Tables)
(6) Inventories (Tables) | 9 Months Ended |
Sep. 29, 2018 | |
Inventory Disclosure [Abstract] | |
Inventories | September 29, December 30, 2018 2017 Raw materials $ 662,720 $ 478,567 Work in process 2,306,340 1,003,285 Finished goods 988,578 1,014,023 Total inventory 3,957,638 2,495,875 Reserve for obsolescence (386,362) (386,362) Inventories, net $ 3,571,276 $ 2,109,513 |
(7) Accrued Expenses (Tables)
(7) Accrued Expenses (Tables) | 9 Months Ended |
Sep. 29, 2018 | |
Payables and Accruals [Abstract] | |
Accrued Expenses | September 29, December 30, 2018 2017 Accrued legal and accounting $ 78,250 $ 78,925 Accrued payroll 601,105 455,518 Accrued other 223,221 121,046 $ 902,576 $ 655,489 |
(6) Inventories - Inventories (
(6) Inventories - Inventories (Details) - USD ($) | Sep. 29, 2018 | Dec. 30, 2017 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 662,720 | $ 478,567 |
Work in process | 2,306,340 | 1,003,285 |
Finished goods | 988,578 | 1,014,023 |
Total inventory | 3,957,638 | 2,495,875 |
Reserve for obsolescence | (386,362) | (386,362) |
Inventories, net | $ 3,571,276 | $ 2,109,513 |
(7) Accrued Expenses - Accrued
(7) Accrued Expenses - Accrued Expenses (Details) - USD ($) | Sep. 29, 2018 | Dec. 30, 2017 |
Payables and Accruals [Abstract] | ||
Accrued legal and accounting | $ 78,250 | $ 78,925 |
Accrued payroll | 601,105 | 455,518 |
Accrued other | 223,221 | 121,046 |
Total Accrued expenses | $ 902,576 | $ 655,489 |
(5) Share-Based Payments (Detai
(5) Share-Based Payments (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 29, 2018 | Sep. 30, 2017 | Sep. 29, 2018 | Sep. 30, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||
Forfeitures | 18,600 | 24,000 | ||
Expirations | 8,000 | |||
Share-based compensation expense | $ 33 | $ 37 | $ 136 | $ 149 |
(9) Income Taxes (Details Narra
(9) Income Taxes (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 29, 2018 | Sep. 30, 2017 | Sep. 29, 2018 | Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | ||||
Federal income tax benefit recorded (000s) | $ 4 | $ 5 | $ 231 | $ 495 |
State income tax benefit recorded (000s) | $ 1 | $ 2 | $ 44 | $ 128 |