CPS Technologies (CPSH) 10-Q 14 May 19 2019 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - USD ($)	3 Months Ended
	Mar. 30, 2019	May 10, 2019
Document And Entity Information
Entity Registrant Name	CPS TECHNOLOGIES CORP/DE/
Entity Central Index Key	0000814676
Document Type	10-Q
Document Period End Date	Mar. 30, 2019
Amendment Flag	false
Current Fiscal Year End Date	--12-28
Is Entity's Reporting Status Current?	Yes
Is Entity Emerging Growth Company?	false
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Public Float		$ 11,000,000
Entity Common Stock, Shares Outstanding		13,207,436
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2019

Balance Sheets (Unaudited)

Balance Sheets (Unaudited) - USD ($)	3 Months Ended
	Mar. 30, 2019	Dec. 29, 2018
Current assets:
Cash and cash equivalents	$ 231,069	$ 628,804
Accounts receivable-trade, net	3,191,758	3,053,091
Inventories, net	3,077,591	3,192,933
Prepaid expenses and other current assets	203,547	156,338
Total current assets	6,703,965	7,031,166
Property and equipment:
Production equipment	9,571,484	9,550,043
Furniture and office equipment	525,055	519,779
Leasehold improvements	891,817	891,817
Total cost	10,988,356	10,961,639
Accumulated depreciation and amortization	(9,862,234)	(9,722,767)
Construction in progress	123,926	34,314
Net property and equipment	1,250,048	1,273,186
Right-of-use lease asset (note 4, leases)	276,000
Deferred taxes, net	186,747	186,747
Total Assets	8,416,760	8,491,099
Current liabilities:
Line of credit	200,000
Accounts payable	2,068,882	1,680,263
Accrued expenses	719,335	975,315
Current portion lease liability	148,000
Total current liabilities	3,136,217	2,655,578
Long term lease liability	128,000
Total liabilities	$ 3,264,217	2,655,578
Commitments (note 4)	(4) Commitments & Contingencies Commitments Leases The lease expiring in 2021 (the “Norton facility lease’) is included as a right-of-use lease asset and corresponding lease liability on the balance sheet. This asset and liability was recognized on December 30, 2018 based on the present value of remaining lease payments over the remaining lease term using the Company’s incremental borrowing rate at commencement dates. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. Operating Leases The following table presents information about the amount, timing and uncertainty of cash flows arising from the Company’s capitalized operating leases as of March 30, 2019 (Dollars in Thousands) March 30, 2019 Maturity of capitalized lease liabilities Lease payments 2019 (remaining) $ 114 2020 152 2021 26 Total undiscounted operating lease payments $ 292 Less: Imputed interest (16) Present value of operating lease liability $ 276 Additionally, the Company has no short-term lease commitments not reflected in the schedule above and not recorded as a right-of-use asset in accordance with the Company’s accounting policy. Balance Sheet Classification Current lease liability (recorded in other current liabilities) $ 148 Long-term lease liability 128 Total operating lease liability $ 276 Other Information Weighted-average remaining lease term for capitalized operating leases 13 months Weighted-average discount rate for capitalized operating leases 6.5% Cash Flows An initial right-of-use asset of $310 thousand was recognized as a non-cash asset addition with the adoption of the new lease accounting standard. Cash paid for the amounts included in the present value of operating lease liabilities was $38 thousand during the first quarter 2019 and is included in operating cash flows. Operating Lease Costs Operating lease cost was $38 thousand during the first quarter of 2019. This cost is related to its long-term operating lease. All other short-term leases were immaterial. Finance Leases The company does not have any finance leases. 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 13,427,492 and 13,425,992 shares; outstanding 13,207,436 and 13,205,936 shares; at March 30, 2019 and December 29, 2018,	$ 134,275	134,260
Additional paid-in capital	36,021,766	35,960,545
Accumulated deficit	(30,486,445)	(29,742,231)
Less cost of 220,056 common shares repurchased at March 30, 2019 and December 29, 2018	(517,053)	(517,053)
Total stockholders’ equity	5,152,543	5,835,521
Total liabilities and stockholders’ equity	$ 8,416,760	$ 8,491,099

Balance Sheets (Parenthetical)

Balance Sheets (Parenthetical) - $ / shares	Mar. 30, 2019	Dec. 29, 2018
Statement of Financial Position [Abstract]
Common stock, authorized shares	20,000,000	20,000,000
Common stock, issued shares	13,427,492	13,425,992
Common stock, outstanding shares	13,207,436	13,205,936
Common stock, par value	$ .01	$ .01

Statements of Operations (Unaud

Statements of Operations (Unaudited) - USD ($)	3 Months Ended
	Mar. 30, 2019	Mar. 31, 2018
Revenues:
Product sales	$ 5,269,538	$ 4,155,004
Total revenues	5,269,538	4,155,004
Cost of product sales	5,110,114	4,011,131
Gross Margin	159,424	143,873
Selling, general, and administrative expense	903,686	908,117
Income (loss) from operations	(744,262)	(764,244)
Other income, net	48	58
Income (loss) before taxes	(744,214)	(764,186)
Income tax provision (benefit)		(190,000)
Net income (loss)	$ (744,214)	$ (574,186)
Net income (loss) per basic common share	$ (0.06)	$ (0.04)
Weighted average number of basic common shares outstanding	13,206,069	13,203,436
Net income (loss) per diluted common share	$ (0.06)	$ (0.04)
Weighted average number of diluted common shares outstanding	13,206,069	13,203,436

Statements of Cash Flows (Unaud

Statements of Cash Flows (Unaudited) - USD ($)	3 Months Ended
	Mar. 30, 2019	Mar. 31, 2018
Cash flows from operating activities:
Net loss	$ (744,214)	$ (574,186)
Adjustments to reconcile net loss to cash provided by (used in) operating activities:
Depreciation and amortization	139,465	142,104
Share-based compensation	61,236	72,028
Deferred taxes		(190,000)
Changes in:
Accounts receivable-trade	(138,667)	(638,432)
Inventories	115,342	(902,519)
Prepaid expenses and other current assets	(47,209)	344
Accounts payable	388,619	942,191
Accrued expenses	(255,980)	82,228
Net cash used in operating activities	(481,408)	(1,066,242)
Cash flows from investing activities:
Purchases of property and equipment	(116,327)	(142,750)
Net cash used in investing activities	(116,327)	(142,750)
Cash flows from financing activities:
Net borrowings on line of credit	200,000
Net cash used in investing financing activities	200,000
Net decrease in cash and cash equivalents	(397,735)	(1,208,992)
Cash and cash equivalents at beginning of period	628,804	1,339,572
Cash and cash equivalents at end of period	$ 231,069	$ 130,580

Shareholders Equity (Unaudited)

Shareholders Equity (Unaudited) - USD ($)	Common Stock	Treasury Stock	Additional Paid-In Capital	Comprehensive Income / Loss	Retained Earnings / Accumulated Deficit	Total
Beginning balance, stockholders equity at Dec. 30, 2017					$ 9,320,834
Beginning balance, shares at Dec. 30, 2017	13,423,492
Beginning balance, par value of shares issued at Dec. 30, 2017	$ 134,235
Share-based compensation expense			$ 72,027			$ 72
Tax benefit from exercise of stock options
Repurchase of common stock
Issuance of common stock pursuant to exercise of stock options
Issuance of common stock pursuant to exercise of stock options, number of shares issued
Issuance of common stock pursuant to exercise of stock options, par value
Net income(loss)				$ 574,186		(574,186)
Ending balance, stockholders equity at Mar. 31, 2018						$ 8,818,675
Ending Ending balance, shares at Mar. 31, 2018	1,342,392					13,423,492
Ending balance, par value shares issued at Mar. 31, 2018	$ 134,235					$ 124,235
Beginning balance, stockholders equity at Dec. 29, 2018					$ 5,835,521	$ 5,835,521
Beginning balance, shares at Dec. 29, 2018	13,425,992					13,425,992
Beginning balance, par value of shares issued at Dec. 29, 2018	$ 134,260
Share-based compensation expense			58,986			$ 59
Repurchase of common stock
Issuance of common stock pursuant to exercise of stock options			$ 2,235
Issuance of common stock pursuant to exercise of stock options, number of shares issued	1,500
Issuance of common stock pursuant to exercise of stock options, par value	$ 15
Net income(loss)				$ 744,214		(744,214)
Ending balance, stockholders equity at Mar. 30, 2019						$ 5,152,543
Ending Ending balance, shares at Mar. 30, 2019	13,427,492					13,427,492
Ending balance, par value shares issued at Mar. 30, 2019	$ 134,275					$ 134,275

(1) Nature of Business

(1) Nature of Business	3 Months Ended
	Mar. 30, 2019
Accounting Policies [Abstract]
(1) Nature of Business	(1) Nature of Business CPS Technologies Corporation (the “Company” or “CPS”) provides advanced material solutions to the electronics, power generation, automotive and other industries. The Company’s primary advanced material solution is metal-matrix composites which are a combination of metal and ceramic. CPS also assembles housings and packages for hybrid circuits. These housings and packages may include components made of metal-matrix composites or they may include components made of more traditional materials such as aluminum, copper-tungsten, etc. The Company sells into several end markets including the wireless communications infrastructure market, high-performance microprocessor market, motor controller market, and other microelectronic and structural markets.

(2) Summary of Significant Acco

(2) Summary of Significant Accounting Policies	3 Months Ended
	Mar. 30, 2019
Accounting Policies [Abstract]
(2) Summary of Significant Accounting Policies	(2) Summary of Significant Accounting Policies As permitted by the rules of the Securities and Exchange Commission applicable to quarterly reports on Form 10-Q, these notes are condensed and do not contain all disclosures required by generally accepted accounting principles. The accompanying financial statements are unaudited. In the opinion of management, the unaudited financial statements of CPS reflect all normal recurring adjustments which are necessary to present fairly the financial position and results of operations for such periods. The Company’s balance sheet at December 29, 2018 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 29, 2018 and in CPS’s other SEC reports, which are accessible on the SEC’s website at www.sec.gov and the Company’s website at www.alsic.com. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. New Accounting Pronouncements Pronouncements adopted in 2019 The Company adopted Accounting Standards Codification (ASC) 842 for leases effective at the beginning of the fiscal year, December 30, 2018, using the cumulative-effect adjustment transition method, which applies the provisions of the standard at the effective date without adjusting the comparative periods presented. The Company elected an accounting policy for short-term leases, which allows lessees to avoid recognizing right-of-use assets and liabilities for leases with terms of 12 months or fewer. We have lease agreements with lease and non-lease components, which are generally accounted for separately. We have not elected the practical expedient to account for lease and non-lease components as one lease component. The Company has elected certain practical expedients upon adoption and therefore has not reassessed whether any expired or existing contracts contain leases, has not reassessed the lease classification for any expired or existing leases and has not reassessed initial direct costs for any existing leases. Adoption of the standard resulted in the recognition of operating lease right-of-use assets and corresponding lease liabilities of $310 thousand on the consolidated balance sheet as of December 30, 2018. The standard did not materially impact operating results or liquidity. Disclosures related to the amount, timing and uncertainty of cash flows arising from leases are included in Note 4, Leases.

(3) Net Income (Loss) Per Commo

(3) Net Income (Loss) Per Common and Common Equivalent Share	3 Months Ended
	Mar. 30, 2019
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	3 Months Ended
	Mar. 30, 2019
Commitments and Contingencies Disclosure [Abstract]
(4) Commitments & Contingencies	(4) Commitments & Contingencies Commitments Leases The lease expiring in 2021 (the “Norton facility lease’) is included as a right-of-use lease asset and corresponding lease liability on the balance sheet. This asset and liability was recognized on December 30, 2018 based on the present value of remaining lease payments over the remaining lease term using the Company’s incremental borrowing rate at commencement dates. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. Operating Leases The following table presents information about the amount, timing and uncertainty of cash flows arising from the Company’s capitalized operating leases as of March 30, 2019 (Dollars in Thousands) March 30, 2019 Maturity of capitalized lease liabilities Lease payments 2019 (remaining) $ 114 2020 152 2021 26 Total undiscounted operating lease payments $ 292 Less: Imputed interest (16) Present value of operating lease liability $ 276 Additionally, the Company has no short-term lease commitments not reflected in the schedule above and not recorded as a right-of-use asset in accordance with the Company’s accounting policy. Balance Sheet Classification Current lease liability (recorded in other current liabilities) $ 148 Long-term lease liability 128 Total operating lease liability $ 276 Other Information Weighted-average remaining lease term for capitalized operating leases 13 months Weighted-average discount rate for capitalized operating leases 6.5% Cash Flows An initial right-of-use asset of $310 thousand was recognized as a non-cash asset addition with the adoption of the new lease accounting standard. Cash paid for the amounts included in the present value of operating lease liabilities was $38 thousand during the first quarter 2019 and is included in operating cash flows. Operating Lease Costs Operating lease cost was $38 thousand during the first quarter of 2019. This cost is related to its long-term operating lease. All other short-term leases were immaterial. Finance Leases The company does not have any finance leases. 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 Payments

(5) Share-Based Payments	3 Months Ended
	Mar. 30, 2019
Share-based Payment Arrangement [Abstract]
(5) Share-Based Payments	(5) Share-Based Payments The Company measures the cost of employee services received in exchange for an award of equity instruments based on the grant date fair value of the award. That cost is recognized over the period during which an employee is required to provide services in exchange for the award, the requisite service period (usually the vesting period). The Company provides an estimate of forfeitures at initial grant date. Reductions in compensation expense associated with the forfeited options are estimated at the date of grant, and this estimated forfeiture rate is adjusted periodically based on actual forfeiture experience. The company uses the Black-Scholes option pricing model to determine the fair value of the stock options granted. During the quarters ended March 30, 2019 and March 31, 2018 a total of 79,000 and 113,000 stock options, respectively, were granted to employees under the Company’s 2009 Stock Incentive Plan (the “Plan) and a total of 45,000 stock options were granted to outside directors during each of the quarters ended. During the quarter ended March 30, 2019 there were 1,500 shares issued and during the quarter ended March 31, 2018 there were no shares issued. As of March 30, 2019, there was $270 thousand of total unrecognized compensation cost related to nonvested share-based compensation arrangements granted under the Plan; that cost is expected to be recognized over a weighted average period of 1.92 years. During the quarters ended March 30, 2019 and March 31, 2018, the Company recognized approximately $59 thousand and $72 thousand, respectively, as shared-based compensation expense related to previously granted shares under the Plan.

(6) Inventories

(6) Inventories	3 Months Ended
	Mar. 30, 2019
Inventory Disclosure [Abstract]
(6) Inventories	(6) Inventories Inventories consist of the following: March 30, December 29, 2019 2018 Raw materials $ 707,288 $ 706,982 Work in process 2,233,664 2,248,370 Finished goods 633,001 693,943 Gross inventory 3,573,953 3,649,295 Reserve for obsolescence (496,362) (456,362) Inventories, net $ 3,077,591 $ 3,1921,933

(7) Accrued Expenses

(7) Accrued Expenses	3 Months Ended
	Mar. 30, 2019
Payables and Accruals [Abstract]
(7) Accrued Expenses	(7) Accrued Expenses Accrued expenses consist of the following: March 30, December 29, 2019 2018 Accrued legal and accounting $ 33,000 $ 67,000 Accrued payroll and related expenses 521,706 594,641 Accrued other 164,629 313,674 Total Accrued Expenses $ 719,335 $ 975,315

(8) Line of Credit

(8) Line of Credit	3 Months Ended
	Mar. 30, 2019
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, targeted current ratios and targeted debt to tangible net worth ratios at the end of subsequent quarters. At March 30, 2019, the net loss for the quarter exceeded the earnings covenant. A waiver to maintain compliance with the loan agreement was obtained on May 13, 2019. Also, at March 30, 2019 the Company had $200 thousand borrowings under this LOC and its borrowing

(9) Income Taxes

(9) Income Taxes	3 Months Ended
	Mar. 30, 2019
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. In December the Company established a valuation reserve as it is judged more likely than not that all or a portion of the tax credits will not be used before they expire. This decision was reached after giving greater weight to its losses over the previous three years compared with its forecast of the future. The Company recorded a deferred tax benefit of $156 thousand for federal income taxes and a deferred tax benefit of $64 thousand for state income taxes towards the valuation reserve during the quarter ended March 30, 2019. The Company has determined that it is more likely than not that all or a portion of this deferred tax benefit will not be realized. As a result, the Company has recorded an increase to the valuation allowance of $220 thousand to fully-offset the deferred tax benefit. The Company recorded a tax benefit of $160 thousand for federal taxes and a tax benefit of $30 thousand for state income taxes during the quarter ended March 31, 2018.

(10) Subsequent Events

(10) Subsequent Events	3 Months Ended
	Mar. 30, 2019
Subsequent Events [Abstract]
(10) Subsequent Events	(10) Subsequent Events In April 2019 the Company hired a Chief Financial Officer who assumed the position effective May 6, 2019. Mr. Griffith replaces Ralph Norwood as CFO, who retired from the Company effective May 6, 2019. The terms of the offer letter include a base salary as well as a performance based compensation. In addition, the Chief Financial Officer was granted stock options to purchase 75,000 shares of the Company`s common stock

(2) Summary of Significant Ac_2

(2) Summary of Significant Accounting Policies (Policies)	3 Months Ended
	Mar. 30, 2019
Accounting Policies [Abstract]
New Accounting Pronouncements	New Accounting Pronouncements Pronouncements adopted in 2019 The Company adopted Accounting Standards Codification (ASC) 842 for leases effective at the beginning of the fiscal year, December 30, 2018, using the cumulative-effect adjustment transition method, which applies the provisions of the standard at the effective date without adjusting the comparative periods presented. The Company elected an accounting policy for short-term leases, which allows lessees to avoid recognizing right-of-use assets and liabilities for leases with terms of 12 months or fewer. We have lease agreements with lease and non-lease components, which are generally accounted for separately. We have not elected the practical expedient to account for lease and non-lease components as one lease component. The Company has elected certain practical expedients upon adoption and therefore has not reassessed whether any expired or existing contracts contain leases, has not reassessed the lease classification for any expired or existing leases and has not reassessed initial direct costs for any existing leases. Adoption of the standard resulted in the recognition of operating lease right-of-use assets and corresponding lease liabilities of $310 thousand on the consolidated balance sheet as of December 30, 2018. The standard did not materially impact operating results or liquidity. Disclosures related to the amount, timing and uncertainty of cash flows arising from leases are included in Note 4, Leases.

(4) Commitments & Contingenci_2

(4) Commitments & Contingencies (Tables)	3 Months Ended
	Mar. 30, 2019
Commitments and Contingencies Disclosure [Abstract]
Maturity of capitalized lease liabilities	(Dollars in Thousands) March 30, 2019 Maturity of capitalized lease liabilities Lease payments 2019 (remaining) $ 114 2020 152 2021 26 Total undiscounted operating lease payments $ 292 Less: Imputed interest (16) Present value of operating lease liability $ 276 Additionally, the Company has no short-term lease commitments not reflected in the schedule above and not recorded as a right-of-use asset in accordance with the Company’s accounting policy. Balance Sheet Classification Current lease liability (recorded in other current liabilities) $ 148 Long-term lease liability 128 Total operating lease liability $ 276 Other Information Weighted-average remaining lease term for capitalized operating leases 13 months Weighted-average discount rate for capitalized operating leases 6.5%

(6) Inventories (Tables)

(6) Inventories (Tables)	3 Months Ended
	Mar. 30, 2019
Inventory Disclosure [Abstract]
Inventories	March 30, December 29, 2019 2018 Raw materials $ 707,288 $ 706,982 Work in process 2,233,664 2,248,370 Finished goods 633,001 693,943 Gross inventory 3,573,953 3,649,295 Reserve for obsolescence (496,362) (456,362) Inventories, net $ 3,077,591 $ 3,1921,933

(7) Accrued Expenses (Tables)

(7) Accrued Expenses (Tables)	3 Months Ended
	Mar. 30, 2019
Payables and Accruals [Abstract]
Accrued expenses	March 30, December 29, 2019 2018 Accrued legal and accounting $ 33,000 $ 67,000 Accrued payroll and related expenses 521,706 594,641 Accrued other 164,629 313,674 Total Accrued Expenses $ 719,335 $ 975,315

(4) Commitments & Contingenci_3

(4) Commitments & Contingencies - Maturity of capitalized lease liabilities (Details)	3 Months Ended
	Mar. 30, 2019USD ($)
Commitments and Contingencies Disclosure [Abstract]
Maturity of capitalized lease liabilities (Dollars in Thousands)	(Dollars in Thousands) March 30, 2019 Maturity of capitalized lease liabilities Lease payments 2019 (remaining) $ 114 2020 152 2021 26 Total undiscounted operating lease payments $ 292 Less: Imputed interest (16) Present value of operating lease liability $ 276 Additionally, the Company has no short-term lease commitments not reflected in the schedule above and not recorded as a right-of-use asset in accordance with the Company’s accounting policy. Balance Sheet Classification Current lease liability (recorded in other current liabilities) $ 148 Long-term lease liability 128 Total operating lease liability $ 276 Other Information Weighted-average remaining lease term for capitalized operating leases 13 months Weighted-average discount rate for capitalized operating leases 6.5%
2019 (remaining)	$ 114
2020	152
2021	26
Total undiscounted operating lease payments	292
Less: Imputed interest	(16)
Present value of operating lease liability	$ 276
Balance Sheet Classification	(Dollars in Thousands) March 30, 2019 Maturity of capitalized lease liabilities Lease payments 2019 (remaining) $ 114 2020 152 2021 26 Total undiscounted operating lease payments $ 292 Less: Imputed interest (16) Present value of operating lease liability $ 276 Additionally, the Company has no short-term lease commitments not reflected in the schedule above and not recorded as a right-of-use asset in accordance with the Company’s accounting policy. Balance Sheet Classification Current lease liability (recorded in other current liabilities) $ 148 Long-term lease liability 128 Total operating lease liability $ 276 Other Information Weighted-average remaining lease term for capitalized operating leases 13 months Weighted-average discount rate for capitalized operating leases 6.5%
Current lease liability (recorded in other current liabilities)	$ 148
Long-term lease liability	128
Total operating lease liability	$ 276
Weighted-average remaining lease term for capitalized operating leases	13 months
Weighted-average discount rate for capitalized operating leases	650.00%

(6) Inventories - Inventories (

(6) Inventories - Inventories (Details) - USD ($)	Mar. 30, 2019	Dec. 29, 2018
Inventory Disclosure [Abstract]
Raw materials	$ 707,288	$ 706,982
Work in process	2,233,664	2,248,370
Finished goods	633,001	693,943
Gross inventory	3,573,953	3,649,295
Reserve for obsolescence	(496,362)	(456,362)
Inventories, net	$ 3,077,591	$ 3,192,933

(7) Accrued Expenses - Accrued

(7) Accrued Expenses - Accrued expenses (Details) - USD ($)	Mar. 30, 2019	Dec. 29, 2018
Payables and Accruals [Abstract]
Accrued legal and accounting	$ 33,000	$ 67,000
Accrued payroll and related expenses	521,706	594,641
Accrued other	164,629	313,674
Total Accrued Expenses	$ 719,335	$ 975,315

(5) Share-Based Payments (Detai

(5) Share-Based Payments (Details Narrative) - USD ($)	3 Months Ended
	Mar. 30, 2019	Mar. 31, 2018
Share-based Payment Arrangement [Abstract]
Options granted during the quarters	124,000	113,000
Shares issued	1,500
Compensation expense recognized during the period (in $000's)	$ 59	$ 72