Cover
Cover - shares | 6 Months Ended | |
Jun. 27, 2020 | Jul. 31, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 27, 2020 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2020 | |
Current Fiscal Year End Date | --12-26 | |
Entity File Number | 0-16088 | |
Entity Registrant Name | CPS TECHNOLOGIES CORP/DE/ | |
Entity Central Index Key | 0000814676 | |
Entity Incorporation, State or Country Code | DE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 13,296,168 |
Balance Sheets (Unaudited)
Balance Sheets (Unaudited) - USD ($) | Jun. 27, 2020 | Dec. 28, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 116,612 | $ 133,965 |
Accounts receivable-trade, net | 4,975,842 | 4,086,945 |
Inventories, net | 3,872,868 | 3,099,824 |
Prepaid expenses and other current assets | 173,237 | 147,786 |
Total current assets | 9,138,559 | 7,468,520 |
Property and equipment: | ||
Production equipment | 10,008,886 | 9,649,169 |
Furniture and office equipment | 508,423 | 508,423 |
Leasehold improvements | 934,195 | 934,195 |
Total cost | 11,451,504 | 11,091,787 |
Accumulated depreciation and amortization | (10,357,620) | (10,110,663) |
Construction in progress | 320,209 | 255,754 |
Net property and equipment | 1,414,093 | 1,236,878 |
Right-of-use lease asset | 100,000 | 171,000 |
Deferred taxes, net | 147,873 | 147,873 |
Total assets | 10,800,525 | 9,024,271 |
Current liabilities: | ||
Borrowings against line of credit | 1,026,765 | 1,249,588 |
Note payable, current portion | 37,311 | |
Accounts payable | 1,770,160 | 1,436,417 |
Accrued expenses | 908,994 | 815,166 |
Deferred revenue | 482,997 | 21,110 |
Lease liability, current portion | 100,000 | 148,000 |
Total current liabilities | 4,326,227 | 3,670,281 |
Note payable less current portion | 159,360 | |
Long term lease liability | 23,000 | |
Total liabilities | 4,485,587 | 3,693,281 |
Stockholders` equity: | ||
Common stock, $0.01 par value, authorized 20,000,000 shares; issued 13,427,492; outstanding 13,207,436; at June 27, 2020 and December 28, 2019; | 134,275 | 134,275 |
Additional paid-in capital | 36,177,264 | 36,094,201 |
Accumulated deficit | (29,479,548) | (30,380,433) |
Less cost of 220,056 common shares repurchased at June 27, 2020 and December 28, 2019 | (517,053) | (517,053) |
Total stockholders` equity | 6,314,938 | 5,330,990 |
Total liabilities and stockholders` equity | $ 10,800,525 | $ 9,024,271 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - $ / shares | Jun. 27, 2020 | Dec. 28, 2019 |
Statement of Financial Position [Abstract] | ||
Common stock,authorized shares | 20,000,000 | 20,000,000 |
Common stock, issued shares | 13,427,492 | 13,427,492 |
Common stock, outstanding shares | 13,207,436 | 13,207,436 |
Common stock, par value | $ .01 | $ .01 |
Statements of Operations (Unaud
Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 27, 2020 | Jun. 29, 2019 | Jun. 27, 2020 | Jun. 29, 2019 | |
Income Statement [Abstract] | ||||
Product sales | $ 5,758,015 | $ 6,366,951 | $ 12,269,586 | $ 11,636,489 |
Cost of product sales | 4,574,686 | 5,191,964 | 9,536,047 | 10,302,078 |
Gross Margin | 1,183,329 | 1,174,987 | 2,733,539 | 1,334,411 |
Selling, general, and administrative expense | 852,773 | 917,079 | 1,781,362 | 1,820,765 |
Income (loss) from operations | 330,556 | 257,908 | 952,176 | (486,354) |
Interest income (expense), net | (31,325) | (7,310) | (51,291) | (7,261) |
Net income (loss) before income tax | 299,231 | 250,598 | 900,885 | (493,615) |
Income tax provision (benefit) | ||||
Net income (loss) | $ 299,231 | $ 250,598 | $ 900,885 | $ (493,615) |
Net income (loss) per basic common share | $ .02 | $ 0.02 | $ 0.07 | $ (0.04) |
Weighted average number of basic common shares outstanding | 13,207,436 | 13,206,069 | 13,207,436 | 13,206,756 |
Net income (loss) per diluted common share | $ 0.03 | $ 0.02 | $ 0.07 | $ (0.04) |
Weighted average number of diluted common shares outstanding | 13,259,783 | 13,260,261 | 13,253,457 | 13,206,756 |
Shareholders Equity (Unaudited)
Shareholders Equity (Unaudited) - USD ($) | Common Stock | Additional Paid-In Capital | Retained Earnings / Accumulated Deficit | Total |
Beginning balance, stockholders equity at Dec. 29, 2018 | $ 5,835,521 | |||
Beginning balance, shares at Dec. 29, 2018 | 13,425,992 | |||
Beginning balance, par value of shares issued at Dec. 29, 2018 | $ 134,260 | |||
Share-based compensation expense | $ 85,397 | |||
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) | 493,615 | $ (493,615) | ||
Ending balance, stockholders equity at Jun. 29, 2019 | 5,429,553 | |||
Ending balance, shares at Jun. 29, 2019 | 13,427,492 | |||
Ending balance, par value shares issued at Jun. 29, 2019 | $ 134,275 | |||
Beginning balance, stockholders equity at Dec. 28, 2019 | $ 5,330,990 | |||
Beginning balance, shares at Dec. 28, 2019 | 13,427,492 | 13,427,492 | ||
Beginning balance, par value of shares issued at Dec. 28, 2019 | $ 134,275 | |||
Share-based compensation expense | $ 83,063 | |||
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) | $ 900,885 | $ 900,885 | ||
Ending balance, stockholders equity at Jun. 27, 2020 | $ 6,314,938 | |||
Ending balance, shares at Jun. 27, 2020 | 13,427,492 | 13,427,492 | ||
Ending balance, par value shares issued at Jun. 27, 2020 | $ 134,275 |
Statements of Cash Flows (Unaud
Statements of Cash Flows (Unaudited) - USD ($) | 6 Months Ended | |
Jun. 27, 2020 | Jun. 29, 2019 | |
Cash flows from operating activities: | ||
Net income (loss) | $ 900,885 | $ (493,615) |
Adjustments to reconcile net income(loss) to cash provided by (used in) operating activities: | ||
Depreciation and amortization | 261,688 | 278,369 |
Share-based compensation | 83,063 | 87,647 |
Gain on sale of property and equipment | (5,000) | |
Changes in: | ||
Accounts receivable-trade | (888,897) | (1,057,298) |
Inventories | (773,044) | 292,034 |
Prepaid expenses and other current assets | (25,451) | (64,304) |
Accounts payable | 333,743 | 4,819 |
Accrued expenses | 93,828 | (148,844) |
Deferred revenue | 461,887 | |
Net cash provided by (used in) operating activities | 442,702 | (1,101,192) |
Cash flows from investing activities: | ||
Purchases of property and equipment | (233,270) | (166,011) |
Proceeds from sale of property and equipment | 5,000 | |
Net cash used in investing activities | (228,270) | (166,011) |
Cash flows from financing activities: | ||
Net borrowings on line of credit | (222,823) | 800,000 |
Payments on note payable | (8,962) | |
Net cash provided by (used in) financing activities | (231,785) | 800,000 |
Net decrease in cash and cash equivalents | (17,353) | (467,203) |
Cash and cash equivalents at beginning of period | 133,965 | 628,804 |
Cash and cash equivalents at end of period | 116,612 | 161,601 |
Supplemental disclosures of cash flows information: | ||
Cash paid for interest | 65,741 | |
Supplemental disclosures of non-cash activity: | ||
Issuance of note payable to finance equipment purchase | $ 208,583 |
(1) Nature of Business
(1) Nature of Business | 6 Months Ended |
Jun. 27, 2020 | |
Accounting Policies [Abstract] | |
(1) Nature of Business | (1) Nature of Business CPS Technologies Corporation (the “Company” or “CPS”) provides advanced material solutions to the electronics, power generation, automotive and other industries. The Company’s primary advanced material solution is metal-matrix composites (MMC’s) 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 | 6 Months Ended |
Jun. 27, 2020 | |
Accounting Policies [Abstract] | |
(2) Summary of Significant Accounting Policies | (2) Summary of Significant Accounting Policies As permitted by the rules of the Securities and Exchange Commission applicable to quarterly reports on Form 10-Q, these notes are condensed and do not contain all disclosures required by generally accepted accounting principles. The accompanying financial statements are unaudited. In the opinion of management, the unaudited financial statements of CPS reflect all normal recurring adjustments which are necessary to present fairly the financial position and results of operations for such periods. The Company’s balance sheet at December 28, 2019 has been derived from the audited financial statements at that date, but does not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. For further information, refer to the financial statements and footnotes thereto included in the Registrant’s Annual Report on Form 10-K for the year ended December 28, 2019 and in CPS’s other SEC reports, which are accessible on the SEC’s website at www.sec.gov and the Company’s website at www.alsic.com. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. |
(3) Net Income (Loss) Per Commo
(3) Net Income (Loss) Per Common and Common Equivalent Share | 6 Months Ended |
Jun. 27, 2020 | |
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. The following table presents the calculation of both basic and diluted EPS: June 27, June 29, June 27, June 29, 2020 2019 2020 2019 Basic EPS Computation: Numerator: Net income (loss) $ 299,231 $ 250,598 $ 900,885 $ (493,615) Denominator: Weighted average Common shares Outstanding 13,207,436 13,206,069 13,207,436 13,206,756 Basic EPS $ 0.02 $ 0.02 $ 0.07 $ (0.04) Diluted EPS Computation: Numerator: Net income (loss) $ 299,231 $ 250,598 $ 900,885 $ (493,615) Denominator: Weighted average Common shares Outstanding 13,207,436 13,206,069 13,207,436 13,206,756 Dilutive effect of stock options 52,347 54,192 46,021 — Total Shares 13,259,783 13,260,261 13,253,457 13,206,756 Diluted EPS $ 0.02 $ 0.02 $ 0.07 $ (0.04) |
(4) Commitments & Contingencies
(4) Commitments & Contingencies | 6 Months Ended |
Jun. 27, 2020 | |
Commitments (note 4) | |
(4) Commitments & Contingencies | (4) Commitments & Contingencies Commitments Leases The Company has two real estate leases—one expiring in February 2021 and one with an 11 month duration with options to extend additional years. Since the latter is not reasonably certain that any options will be exercised, it has not been recorded on the balance sheet. CPS also has a few other leases for equipment which are minor in nature and are generally short-term in duration. None of these have been capitalized. The lease expiring in 2021 is included as a right-of-use lease asset and corresponding lease liability on the balance sheet. This asset and liability was recognized on December 30, 2018 based on the present value of remaining lease payments over the remaining lease term using the Company’s incremental borrowing rate at commencement dates. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. Lease expense for operating leases is recognized on a straight-line basis over the lease term. Lease expense is allocated between Cost of Product Sales and Selling, General and Administrative Expense in the income statement. The following table presents information about the amount, timing and uncertainty of cash flows arising from the Company’s capitalized operating leases as of June 27, 2020 (Dollars in Thousands) June 27, 2020 Maturity of capitalized lease liabilities Lease payments 2020 $ 76 2021 26 Total undiscounted operating lease payments $ 102 Less: Imputed interest (2) Present value of operating lease liability $ 100 Additionally, the Company has 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) $ 100 Total operating lease liability $ 100 Other Information Weighted-average remaining lease term for capitalized operating leases 8 months Weighted-average discount rate for capitalized operating leases 6.5% Operating Lease Costs and Cash Flows Operating lease cost and cash paid was $76 thousand during the first half year of 2020. This cost is related to its long-term operating lease. All other short-term leases were immaterial. Finance Leases The company does not have any finance leases. |
(5) Share-Based Payments
(5) Share-Based Payments | 6 Months Ended |
Jun. 27, 2020 | |
Share-based Payment Arrangement [Abstract] | |
(5) Share-Based Payments | (5) Share-Based Payments The Company measures the cost of employee services received in exchange for an award of equity instruments based on the grant date fair value of the award. That cost is recognized over the period during which an employee is required to provide services in exchange for the award, the requisite service period (usually the vesting period). The Company provides an estimate of forfeitures at initial grant date. Reductions in compensation expense associated with the forfeited options are estimated at the date of grant, and this estimated forfeiture rate is adjusted periodically based on actual forfeiture experience. The company uses the Black-Scholes option pricing model to determine the fair value of the stock options granted. During the quarters ended June 27, 2020 and June 29, 2019 a total of 0 and 75,000 stock options, respectively, were granted to employees under the Company’s 2020 Equity Incentive Plan and 2009 Stock Incentive Plan, respectively (collectively the “Plan”) During the quarters ended June 27, 2020 and June 29, 2019 there were no shares issued. During the three and six months ended June 27, 2020, the Company recognized $17,390 and $83,063, respectively, as shared-based compensation expense related to previously granted shares under the Plan. During the three and six months ended June 29, 2019, the Company recognized $26,411 and $85,397, respectively, as shared-based compensation expense related to previously granted shares under the Plan. |
(6) Inventories
(6) Inventories | 6 Months Ended |
Jun. 27, 2020 | |
Inventory Disclosure [Abstract] | |
(6) Inventories | (6) Inventories Inventories consist of the following: June 27, December 28, 2020 2019 Raw materials $ 941,757 $ 778,409 Work in process 1,997,260 1,898,916 Finished goods 1,383,213 871,861 Total inventory 4,322,230 3,549,186 Reserve for obsolescence (449,362) (449,362) Inventories, net $ 3,872,868 $ 3,099,824 |
(7) Acccrued Expenses
(7) Acccrued Expenses | 6 Months Ended |
Jun. 27, 2020 | |
Payables and Accruals [Abstract] | |
(7) Accrued Expenses | (7) Accrued Expenses Accrued expenses consist of the following: June 27, December 28, 2020 2019 Accrued legal and accounting $ 42,255 $ 62,725 Accrued payroll and related expenses 755,148 518,015 Accrued other 111,591 234,426 $ 908,994 $ 815,166 |
(8) Line of Credit
(8) Line of Credit | 6 Months Ended |
Jun. 27, 2020 | |
Commitments (note 4) | |
(8) Line of Credit | (8) Line of Credit In September 2019, the Company entered into revolving line of credit with The Massachusetts Business Development Corporation (BDC) in the amount of $2.5 million. In May of 2020 this credit line was increased to $3.0 million. The agreement includes a demand note allowing the Lender to call the loan at any time. CPS may terminate the agreement without a termination fee after 3 years. The LOC is secured by the accounts receivable and other assets of the Company and has an interest rate of LIBOR plus 650 basis points. At June 27, 2020 the Company had $1.027 million of borrowings under this LOC and its borrowing base at the time would have permitted an additional $1.973 million to have been borrowed. The line of credit is subject to certain financial covenants, all of which have been met or waived. |
(9) Note Payable
(9) Note Payable | 6 Months Ended |
Jun. 27, 2020 | |
Debt Disclosure [Abstract] | |
(9) Note Payable | (9) Note Payable In March 2020, the company acquired a Sonoscan ultrasound microscope for a price of $208 thousand. The full amount was financed through a 5 year note payable with Crest Capital Corporation. The note is collateralized by the microscope and is being paid in monthly installments of $4 thousand, consisting of principal plus interest at a rate of 6.47%. |
(3) Net Income (Loss) Per Com_2
(3) Net Income (Loss) Per Common and Common Equivalent Share (Tables) | 6 Months Ended |
Jun. 27, 2020 | |
Earnings Per Share [Abstract] | |
Calculation of both basic and diluted EPS | June 27, June 29, June 27, June 29, 2020 2019 2020 2019 Basic EPS Computation: Numerator: Net income (loss) $ 299,231 $ 250,598 $ 900,885 $ (493,615) Denominator: Weighted average Common shares Outstanding 13,207,436 13,206,069 13,207,436 13,206,756 Basic EPS $ 0.02 $ 0.02 $ 0.07 $ (0.04) Diluted EPS Computation: Numerator: Net income (loss) $ 299,231 $ 250,598 $ 900,885 $ (493,615) Denominator: Weighted average Common shares Outstanding 13,207,436 13,206,069 13,207,436 13,206,756 Dilutive effect of stock options 52,347 54,192 46,021 — Total Shares 13,259,783 13,260,261 13,253,457 13,206,756 Diluted EPS $ 0.02 $ 0.02 $ 0.07 $ (0.04) |
(4) Commitments & Contingenci_2
(4) Commitments & Contingencies (Tables) | 6 Months Ended |
Jun. 27, 2020 | |
Commitments (note 4) | |
Maturity of capitalized lease liabilities | (Dollars in Thousands) June 27, 2020 Maturity of capitalized lease liabilities Lease payments 2020 $ 76 2021 26 Total undiscounted operating lease payments $ 102 Less: Imputed interest (2) Present value of operating lease liability $ 100 Additionally, the Company has 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) $ 100 Total operating lease liability $ 100 Other Information Weighted-average remaining lease term for capitalized operating leases 8 months Weighted-average discount rate for capitalized operating leases 6.5% |
(6) Inventories (Tables)
(6) Inventories (Tables) | 6 Months Ended |
Jun. 27, 2020 | |
Inventory Disclosure [Abstract] | |
Inventories | June 27, December 28, 2020 2019 Raw materials $ 941,757 $ 778,409 Work in process 1,997,260 1,898,916 Finished goods 1,383,213 871,861 Total inventory 4,322,230 3,549,186 Reserve for obsolescence (449,362) (449,362) Inventories, net $ 3,872,868 $ 3,099,824 |
(7) Acccrued Expenses (Tables)
(7) Acccrued Expenses (Tables) | 6 Months Ended |
Jun. 27, 2020 | |
Payables and Accruals [Abstract] | |
Accrued expenses | June 27, December 28, 2020 2019 Accrued legal and accounting $ 42,255 $ 62,725 Accrued payroll and related expenses 755,148 518,015 Accrued other 111,591 234,426 $ 908,994 $ 815,166 |
(3) Net Income (Loss) Per Com_3
(3) Net Income (Loss) Per Common and Common Equivalent Share - Calculation of both basic and diluted EPS (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 27, 2020 | Jun. 29, 2019 | Jun. 27, 2020 | Jun. 29, 2019 | |
Basic EPS Computation: | ||||
Net income (loss) | $ 299,231 | $ 250,598 | $ 900,885 | $ (493,615) |
Weighted average Common shares Outstanding | 13,207,436 | 13,206,069 | 13,207,436 | 13,206,756 |
Basic EPS | $ .02 | $ 0.02 | $ 0.07 | $ (0.04) |
Diluted EPS Computation: | ||||
Net income (loss) | $ 299,231 | $ 250,598 | $ 900,885 | $ (493,615) |
Weighted average Common shares Outstanding | 13,207,436 | 13,206,069 | 13,207,436 | 13,206,756 |
Dilutive effect of stock options | $ 52,347 | $ 54,192 | $ 46,021 | |
Total Shares | 13,259,783 | 13,260,261 | 13,253,457 | 13,206,756 |
Diluted EPS | $ 0.03 | $ 0.02 | $ 0.07 | $ (0.04) |
(4) Commitments & Contingenci_3
(4) Commitments & Contingencies - Maturity of capitalized lease liabilities (Details) | Jun. 27, 2020USD ($) |
Commitments (note 4) | |
2020 | $ 76 |
2021 | 26 |
Total undiscounted operating lease payments | 102 |
Less: Imputed interest | (2) |
Present value of operating lease liability | 100 |
Current lease liability (recorded in other current liabilities) | 100 |
Total operating lease liability | $ 100 |
Weighted-average remaining lease term for capitalized operating leases | 8 months |
Weighted-average discount rate for capitalized operating leases | 650.00% |
(5) Share-Based Payments (Detai
(5) Share-Based Payments (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 27, 2020 | Jun. 29, 2019 | Jun. 27, 2020 | Jun. 29, 2019 | |
Share-based Payment Arrangement [Abstract] | ||||
Stock options granted in the period | 75,000 | |||
Share-based compensation expense recognized | $ 17,390 | $ 26,411 | $ 83,063 | $ 85,397 |
(6) Inventories - Inventories (
(6) Inventories - Inventories (Details) - USD ($) | Jun. 27, 2020 | Dec. 28, 2019 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 941,757 | $ 778,409 |
Work in process | 1,997,260 | 1,898,916 |
Finished goods | 1,383,213 | 871,861 |
Gross inventory | 4,322,230 | 3,549,186 |
Reserve for obsolescence | (449,362) | (449,362) |
Inventories, net | $ 3,872,868 | $ 3,099,824 |
(7) Acccrued Expenses - Accrued
(7) Acccrued Expenses - Accrued expenses (Details) - USD ($) | Jun. 27, 2020 | Dec. 28, 2019 |
Payables and Accruals [Abstract] | ||
Accrued legal and accounting | $ 42,255 | $ 62,725 |
Accrued payroll and related expenses | 755,148 | 518,015 |
Accrued other | 111,591 | 234,426 |
Total Accrued Expenses | $ 908,994 | $ 815,166 |
(8) Line of Credit (Details Nar
(8) Line of Credit (Details Narrative) | 6 Months Ended |
Jun. 27, 2020USD ($) | |
Massachusetts Business Development Corporation (BDC) | |
Revolving line of credit maximum borrowing capacity | $ 3,000,000 |
Line of credit agreement length (terms in years) | 3 years |
Borrowing base available | $ 1,973,000 |