-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KAnrZWd7mkRqGnhXyNI/PtX8+cGlskyAWmGnt99WoQy2Wu9XJfGGjgXBrWATTVlQ /aWAan3Kh4oUj4agVhm9mw== 0000814676-97-000006.txt : 19971028 0000814676-97-000006.hdr.sgml : 19971028 ACCESSION NUMBER: 0000814676-97-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970927 FILED AS OF DATE: 19971027 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CERAMICS PROCESS SYSTEMS CORP/DE/ CENTRAL INDEX KEY: 0000814676 STANDARD INDUSTRIAL CLASSIFICATION: POTTERY & RELATED PRODUCTS [3260] IRS NUMBER: 042832509 STATE OF INCORPORATION: DE FISCAL YEAR END: 1229 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-16088 FILM NUMBER: 97701362 BUSINESS ADDRESS: STREET 1: 111 SOUTH WORCESTER STREET STREET 2: PO BOX 338 CITY: CHARTLEY STATE: MA ZIP: 02712 BUSINESS PHONE: 508-222-0614 MAIL ADDRESS: STREET 1: 111 SOUTH WORCESTER STREET STREET 2: PO BOX 338 CITY: CHARTLEY STATE: MA ZIP: 02712 10-Q 1 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the period ended September 27, 1997 or [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to Commission file number 0-16088 CERAMICS PROCESS SYSTEMS CORPORATION (Exact Name of Registrant as Specified in its Charter) Delaware 04-2832509 (State or Other Jurisdiction (I.R.S. Employer of Incorporation or Organization) Identification No.) 111 South Worcester Street, P.O. Box 338, Chartley, Massachusetts 02712 (Address of Principal Executive Offices) (Zip Code) Registrant's Telephone Number, including Area Code: (508) 222-0614 Facsimile Number: 508-222-0220, E-Mail Address: info@alsic.com. Former Name, Former Address and Former Fiscal Year if Changed since Last Report: Not Applicable. Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period than the registrant was required to file such reports), and (2) has been subject to the filing requirements for the past 90 days. [X] Yes [ ] No APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Number of shares of common stock outstanding as of October 22, 1997: 7,802,582 2 CERAMICS PROCESS SYSTEMS CORPORATION Form 10-Q For The Fiscal Quarter Ended September 27, 1997 Index PART I: FINANCIAL INFORMATION Page Item 1: Consolidated Financial Statements 3-8 Consolidated Balance Sheets as of September 27, 1997 and December 28, 1996 3-4 Consolidated Statements of Operations for the fiscal quarters and nine-month periods ended September 27, 1997 and September 28, 1996 5 Consolidated Statements of Cash Flows for the nine-month periods ended September 27, 1997 and September 28, 1996 6 Notes to Consolidated Financial Statements 7-8 Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations 8-9 PART II: OTHER INFORMATION Items 1-6 10 Signatures 10 3 PART I FINANCIAL INFORMATION ITEM 1 FINANCIAL STATEMENTS CERAMICS PROCESS SYSTEMS CORPORATION Consolidated Balance Sheets September 27, December 28, 1997 1996 ASSETS Current Assets: Cash $464,038 $ 113,331 Accounts receivable 356,990 141,035 Inventories 146,921 156,445 Prepaid expenses 7,442 1,340 Other current assets - - ---------- ---------- Total current assets 975,391 412,151 ---------- ---------- Property and equipment: Production equipment 1,333,441 1,145,003 Furniture and office equipment 67,906 60,403 ---------- ---------- 1,401,348 1,205,406 Less accumulated depreciation and amortization (922,909) (824,667) ---------- ---------- Net property and equipment 478,439 380,739 ---------- ---------- Deposits 6,843 2,337 ---------- ---------- Total Assets $1,460,673 $ 795,227 ========== ========== See accompanying notes to consolidated financial statements. 4 CERAMICS PROCESS SYSTEMS CORPORATION Consolidated Balance Sheets (continued) September 27, December 28, 1997 1996 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) Current liabilities: Accounts payable $ 235,946 $ 128,762 Accrued expenses 571,336 789,766 Deferred revenue 270,333 355,987 Notes payable 309,225 450,000 Current portion of convertible notes payable: Related parties 260,000 260,000 Other 1,610,000 1,610,000 Current portion of obligations under capital leases 29,296 17,383 ------------ ------------ Total current liabilities 3,286,136 3,611,898 Notes payable, less current portion 86,111 - Obligations under capital leases less current portion 123,285 87,999 ------------ ------------ Total Liabilities 3,495,532 3,699,897 ------------ ------------ Stockholders' Equity (Deficit) Common stock, $0.01 par value. Authorized 15,000,000 shares; issued 7,802,582 shares at September 27, 1997 and 7,780,766 shares at December 28, 1996 78,026 77,808 Additional paid-in capital 30,461,093 30,457,384 Accumulated deficit (32,513,143) (33,379,027) ------------ ------------ (1,974,024) (2,843,835) Less treasury stock, at cost, 22,883 common shares at September 27, 1997 and December 28, 1996 (60,835) (60,835) ------------ ------------ Total shareholders' equity (deficit) (2,034,859) (2,904,670) ------------ ------------ Total Liabilities and Stockholders' Equity (Deficit) $ 1,460,673 $ 795,227 ============ ============ See accompanying notes to consolidated financial statements. 5 CERAMICS PROCESS SYSTEMS CORPORATION Consolidated Statements of Operations Fiscal Quarters Ended Nine Month Periods Ended Sept. 27, Sept. 28, Sept. 28, Sept. 29, 1997 1996 1997 1996 Revenue: Product sales $ 1,084,960 $ 581,109 $ 2,852,046 $ 1,294,317 License agreements 130,333 - 285,667 85,000 ---------- ----------- ---------- --------- Total revenue 1,215,293 581,109 3,137,713 1,379,317 ========== =========== ========== ========== Operating expenses: Cost of sales 607,137 554,218 1,707,839 1,333,294 Selling, general, and administrative 121,287 103,853 387,865 339,266 ---------- ----------- ---------- ---------- Total operating expenses 728,424 658,071 2,095,704 1,672,560 ---------- ----------- ---------- --------- Operating income (loss) 486,869 (76,962) 1,042,009 (293,243) Other income (exp.), net (52,328) (54,017) (176,125) (148,258) Net income (loss) $ 434,541 $ (130,979) 865,884 (441,501) ========== =========== ========== ========== Net income (loss) per share $ 0.05 $ (0.02) $ 0.11 $ (0.06) ---------- ----------- ---------- ---------- Weighted average number of common and common equivalent shares outstanding 8,079,585 7,917,504 8,084,907 7,853,656 ========== =========== ========== ========== See accompanying notes to consolidated financial statements. 6 CERAMICS PROCESS SYSTEMS CORPORATION Consolidated Statements of Cash Flows Nine-Month Periods Ended Sept. 27, Sept. 27, 1997 1996 Cash flows from operating activities: Net income (loss) $ 865,884 $(441,501) Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities: Depreciation and Amortization 98,242 79,200 Settlement of Interest Obligation - 25,068 Loss (gain) on disposal of equipment (1,610) (27,500) Loss on investment - - Changes in assets and liabilities: Accounts receivable, trade (215,955) (108,577) Inventories 9,524 - Prepaid expenses (6,102) (959) Other current assets - (4,641) Accounts payable 107,184 (12,664) Accrued expenses (218,430) 164,531 Deferred revenue (85,654) 426,802 --------- ---------- Net cash used in operating activities 553,083 99,759 --------- ---------- Cash flows from investing activities: Additions to property and equipment (195,942) (107,178) Disposal of property and equipment 1,610 27,500 Deposits (4,506) (375) --------- ---------- Net cash used in investing activities (198,838) (80,053) --------- ---------- Cash flows from financing activities: Proceeds from capital lease obligations 47,199 - Principal payments of Notes Payable (54,664) Proceeds from issuance of common stock 3,927 - --------- ---------- Net cash provided by (used in) financing activities (3,538) - --------- ---------- Net increase (decrease) in cash 350,707 19,706 Cash at beginning of quarter 113,331 32,127 --------- ---------- Cash at end of quarter $ 464,038 $ 51,833 ========= ========== See accompanying notes to consolidated financial statements. 7 CERAMICS PROCESS SYSTEMS CORPORATION Notes to Consolidated Financial Statement (Unaudited) (1) Nature of Business Ceramics Process Systems Corporation ("CPS" or "the Company"), incorporated on June 19, 1984, develops, manufactures and markets advanced metal-matrix composite and ceramic products for packaging and interconnecting high-density, high-performance microelectronics for microwave, telecommunications and other applications. The Company's products are used in applications where thermal management and/or lightweight are important factors in total system design. (2) Interim Consolidated 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 for the fiscal quarters ended September 27, 1997 and September 28, 1996 are unaudited. In the opinion of management, the unaudited consolidated financial statements of CPS reflect all adjustments necessary to present fairly the financial position and results of operations for such periods. The consolidated financial statements include the accounts of CPS and its wholly-owned subsidiary, CPS Superconductor Corporation. All significant intercompany balances and transactions have been eliminated. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. (3) Net Income Per Share and Net Loss Per Share Net income per share was computed based on the weighted average number of common shares outstanding during the period plus common stock equivalents which consist of options with exercise prices less than the average market price of the Company's common stock during the period. Net loss per share is computed based on the weighted average number of common shares outstanding during the period. Common stock equivalents pertaining to stock options and convertible notes payable were not considered in the calculations of net loss per share since their effect would be antidilutive. 8 (4) Inventory Inventories consist of the following: September 27, December 28, 1997 1996 Raw Materials $ 37,424 $ 39,412 Work in process 109,497 85,933 Finished goods - 31,100 --------- ---------- $ 146,921 $ 156,445 ========= ========== (5) Accrued Expenses Accrued expenses consist of the following: September 27, December 28, 1997 1996 Accrued legal and accounting $ 18,500 $ 161,267 Accrued interest 599,535 445,450 Accrued payroll 65,609 79,170 Accrued rent and utilities 8,992 24,694 Accrued other (121,300) 79,185 --------- ---------- $571,336 789,766 ========= ========== ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This Quarterly Report on Form 10-Q contains forward-looking statements that involve a number of risks and uncertainties. There are a number of factors that could cause the Company's actual results to differ materially from those forecasted or projected in such forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements which speak only as of the date hereof. The Company undertakes no obligation to publicly release the results of any revisions to these forward-looking statements which may be made to reflect events or changed circumstances after the date hereof or to reflect the occurrence of unanticipated events. Financial Condition - ------------------- The Company earned net income of $435 thousand in the third fiscal quarter of 1997 compared with a net loss of $131 thousand in the third fiscal quarter of 1996. The Company's cash balance at September 27, 1997 and at December 28, 1996 was $464 thousand and $113 thousand, respectively. 9 The improvement in the Company's overall financial performance in the third fiscal quarter of 1997 versus the third fiscal quarter of 1996 was primarily attributable to 1) increased shipments of the Company's metal-matrix composites for use in wireless telecommunication applications, and 2) licensing revenues of $130 thousand. Through the first nine months of 1997, the Company financed its working capital requirements through operations. The Company expects it will continue to be able to fund its recurring working capital requirements for the remainder of 1997 through operations. In 1996 certain notes payable matured. Although the Company seeks to modify the original terms of these notes, it is unable to repay the matured balances at this time and there is no assurance that the notes will be modified on terms acceptable to the Company. As of September 27, 1997, the principal amount of convertible notes payable was $1,870,000, and accrued interest on these convertible notes payable was $420,097. The principal and accrued interest of convertible notes payable are convertible into the Company's common stock at $0.50 per share at the option of the note holders. The interest rate on the convertible notes payable is 10% per annum. As of September 27, 1997, the total principal and accrued interest for convertible notes payable was convertible into 4,580,194 shares of the Company's common stock at the option of note holders. The Company's entire operations are currently housed in a leased facility in Chartley, Massachusetts. Results of Operations - --------------------- The growth in revenue from the third fiscal quarter of 1996 to the third fiscal quarter of 1997 was primarily due to 1) increased shipments of the Company's metal-matrix composites for use in wireless telecommunication applications, and 2) licensing revenues of $130 thousand. Unit shipments in the third fiscal quarter of 1997 were 240% higher than unit shipments in the third fiscal quarter of 1996, and 43% higher than unit shipments in the second fiscal quarter of 1997. In the third fiscal quarter of 1997 revenue from licensing agreements was $130 thousand compared with no revenue from licensing agreements in the third fiscal quarter of 1996. The Company's total revenue in the third fiscal quarter of 1997 was $1.2 million, a 109% increase over third fiscal quarter 1996 revenue of $581 thousand. Total operating expenses in the third fiscal quarter of 1997 were $728 thousand, a 11% increase over third fiscal quarter 1996 operating expenses of $658 thousand. 10 Of the $70 thousand increase in operating expenses between the third fiscal quarter of 1996 and the third fiscal quarter of 1997, $53 thousand related to cost of sales and $17 thousand related to selling, general and administrative expenses. The increase in cost of sales related to the significant increase in unit volume. Cost per unit shipped declined from the third fiscal quarter of 1996 to the third fiscal quarter of 1997 due to the change in product mix from prototype shipments to production shipments, as well as fixed costs being spread over a larger base. Other expense during the quarter consisted almost exclusively of interest expense. The cumulative effect of these revenues and costs resulted in net income of $487 thousand, or $0.05 per share, in the third fiscal quarter of 1997, versus a net loss of $131 thousand, or $0.02 loss per share, in the third fiscal quarter of 1996. PART II OTHER INFORMATION Item 1 through Item 5: None Item 6: Exhibits and Reports on Form 8-K (a) Exhibits: None (b) Reports on Form 8-K: None SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Ceramics Process Systems Corporation (Registrant) Date: October 27, 1997 /s/Grant C. Bennett Grant C. Bennett President and Treasurer (Principal Executive Officer) EX-27 2
5 This schedule contains summary financial information extracted from consolidated financial statements of Ceramics Process Systems Corporation and is qualified in its entirety by reference to such Form 10-Q for period ending September 27, 1997 3-MOS DEC-27-1997 SEP-27-1997 464,038 0 356,990 0 146,921 975,391 478,439 922,909 1,460,673 3,286,136 0 0 0 7,802,582 0 1,460,673 1,215,293 1,215,293 607,137 728,424 0 0 52,328 434,541 0 434,541 0 0 0 434,541 .05 .05
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