UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
| | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the period ended
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
CPS TECHNOLOGIES CORP.
(Exact Name of Registrant as Specified in its Charter)
| (State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) |
| (Address of principal executive offices) | (Zip Code) |
(
Registrant’s Telephone Number, including Area Code:
CPS TECHNOLOGIES CORP.
111 South Worcester Street
Norton, MA 02766-2102
Former Name, Former Address and Former Fiscal Year if Changed since Last Report
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. ☒
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer or a smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company”” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ Accelerated filer ☐
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
Yes ☐ No ☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act):
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| | | |
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 April 25, 2023:
PART I FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS (Unaudited)
CPS TECHNOLOGIES CORP.
Balance Sheets (Unaudited)
| April 1, 2023 | December 31, 2022 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable-trade, net | ||||||||
| Accounts receivable-other | ||||||||
| Inventories, net | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Property and equipment: | ||||||||
| Production equipment | ||||||||
| Furniture and office equipment | ||||||||
| Leasehold improvements | ||||||||
| Total cost | ||||||||
| Accumulated depreciation and amortization | ( | ) | ( | ) | ||||
| Construction in progress | ||||||||
| Net property and equipment | ||||||||
| Right-of-use lease asset (note 4, leases) | ||||||||
| Deferred taxes, net | ||||||||
| Total Assets | $ | |||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Note payable, current portion | ||||||||
| Accounts payable | ||||||||
| Accrued expenses | ||||||||
| Deferred revenue | ||||||||
| Lease liability, current portion | ||||||||
| Total current liabilities | ||||||||
| Note payable less current portion | ||||||||
| Deferred Revenue – Long term | ||||||||
| Long term lease liability | ||||||||
| Total liabilities | ||||||||
| Commitments & Contingencies | ||||||||
| Stockholders’ equity: | ||||||||
| Common stock, $ par value, authorized shares; issued and shares; outstanding and shares; at April 1, 2023 and December 31, 2022, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Less cost of and common shares repurchased at April 1, 2023 and December 31, 2022, respectively | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’equity | $ | $ | ||||||
See accompanying notes to financial statements.
CPS TECHNOLOGIES CORP.
Statements of Operations (Unaudited)
| Fiscal Quarters Ended | ||||||||
| April 1, 2023 | April 2, 2022 | |||||||
| Revenues: | ||||||||
| Product sales | $ | $ | ||||||
| Total revenues | ||||||||
| Cost of product sales | ||||||||
| Gross Margin | ||||||||
| Selling, general, and administrative expense | ||||||||
| Income from operations | ||||||||
| Other income (expense), net | ( | ) | ||||||
| Income before taxes | ||||||||
| Income tax provision | ||||||||
| Net income | $ | $ | ||||||
| Net income per basic common share | $ | $ | ||||||
| Weighted average number of basic common shares outstanding | ||||||||
| Net income per diluted common share | $ | $ | ||||||
| Weighted average number of diluted common shares outstanding | ||||||||
See accompanying notes to financial statements.
CPS TECHNOLOGIES CORPORATION
STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)
FOR THE THREE MONTHS ENDED APRIL 1, 2023 AND April 2, 2022
| Common Stock |
||||||||||||||||||||||||
| Number of shares issued |
Par Value |
Additional paid-in capital |
Accumulated deficit |
Stock repurchased |
Total stockholders’ equity |
|||||||||||||||||||
| Balance at December 31, 2022 |
$ | $ | ( |
) |
$ | ( |
) |
$ | ||||||||||||||||
| Share-based compensation expense |
— | |||||||||||||||||||||||
| Employee options exercises |
( |
) |
||||||||||||||||||||||
| Net income |
— | |||||||||||||||||||||||
| Balance at April 1, 2023 |
( |
) |
( |
) |
||||||||||||||||||||
| Balance at December 25, 2021 |
$ | $ | ( |
) |
( |
) |
||||||||||||||||||
| Share-based compensation expense |
— | |||||||||||||||||||||||
| Issuance of Common Stock |
— | ( |
) |
( |
) |
|||||||||||||||||||
| Employee options exercises |
( |
) |
||||||||||||||||||||||
| Net income |
— | |||||||||||||||||||||||
| Balance at April 2, 2022 |
( |
) |
( |
) |
||||||||||||||||||||
See accompanying notes to financial statements.
CPS TECHNOLOGIES CORP.
Statements of Cash Flows (Unaudited)
| Fiscal Quarters Ended | ||||||||
| April 1, 2023 | April 2, 2022 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ | $ | ||||||
| Adjustments to reconcile net income to cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Share-based compensation | ||||||||
| Changes in: | ||||||||
| Accounts receivable - trade | ( | ) | ( | ) | ||||
| Accounts receivable - other | ( | ) | -- | |||||
| Inventories | ( | |||||||
| Prepaid expenses and other current assets | ( | ) | ( | ) | ||||
| Accounts payable | ||||||||
| Accrued expenses | ( | ) | ( | ) | ||||
| Deferred Taxes | ||||||||
| Deferred revenue | ( | ) | -- | |||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchases of property and equipment | ( | ) | ( | ) | ||||
| Proceeds from sale of property and equipment | -- | -- | ||||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities: | ||||||||
| Net borrowings on line of credit | -- | -- | ||||||
| Proceeds from exercise of employee stock options | ||||||||
| Payments on note payable | ( | ) | ( | ) | ||||
| Net cash provided by financing activities | ( | ) | ||||||
| Net decrease in cash and cash equivalents | ( | ) | ( | ) | ||||
| Cash and cash equivalents at beginning of period | ||||||||
| Cash and cash equivalents at end of period | $ | $ | ||||||
| Supplemental disclosures of cash flows information: | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Supplemental disclosures of non-cash activity: | ||||||||
| Net exercise of stock options | $ | $ | ||||||
See accompanying notes to financial statements.
CPS TECHNOLOGIES CORP.
Notes to Financial Statement
(Unaudited)
(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.
Using its proprietary MMC technology, the Company also produces light-weight armor, particularly for extreme environments and heavy threat levels.
The Company sells into several end markets including the wireless communications infrastructure market, high-performance microprocessor market, motor controller market, and other microelectronic and defense markets.
(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 31, 2022 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 31, 2022 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.cpstechnologysolutions.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 Per Common and Common Equivalent Share
Basic net income per common share is calculated by dividing net income by the weighted average number of common shares outstanding during the period. Diluted net income per common share is calculated by dividing net income 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:
| Three Months Ended |
||||||||
| April 1, 2023 |
April 2, 2022 |
|||||||
| Basic EPS Computation: |
||||||||
| Numerator: |
||||||||
| Net income |
$ | $ | ||||||
| Denominator: |
||||||||
| Weighted average |
||||||||
| Common shares |
||||||||
| Outstanding |
||||||||
| Basic EPS |
$ | $ | ||||||
| Diluted EPS Computation: |
||||||||
| Numerator: |
||||||||
| Net income |
$ | $ | ||||||
| Denominator: |
||||||||
| Weighted average |
||||||||
| Common shares |
||||||||
| Outstanding |
||||||||
| Dilutive effect of stock options |
||||||||
| Total Shares |
||||||||
| Diluted EPS |
$ | $ | ||||||
(4) Commitments & Contingencies
Commitments
Leases
The Company has one real estate lease expiring in February 2026. CPS also has a few other leases for equipment which are minor in nature and are generally short-term in duration. None of these equipment leases have been capitalized as 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.
The real estate lease expiring in 2026 (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 April 1, 2023 based on the present value of lease payments over the lease term using the Company’s incremental borrowing rate at commencement date. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.
Operating Leases
The Norton facility lease comprises approximately
The following table presents information about the amount, timing and uncertainty of cash flows arising from the Company’s capitalized operating leases as of April 1, 2023
| (Dollars in Thousands) | April 1, 2023 | |||
| Maturity of capitalized lease liabilities | Lease payments | |||
| Remaining 2023 | ||||
| 2024 | ||||
| 2025 | ||||
| 2026 | ||||
| Total undiscounted operating lease payments | $ | |||
| Less: Imputed interest | ( | ) | ||
| Present value of operating lease liability | $ | |||
| Balance Sheet Classification | ||||
| Current lease liability | $ | |||
| Long-term lease liability | ||||
| Total operating lease liability | $ | |||
| Other Information | ||||
| Weighted-average remaining lease term for capitalized operating leases (in months) | ||||
| Weighted-average discount rate for capitalized operating leases | % | |||
Operating Lease Costs and Cash Flows
Operating lease cost and cash paid was $
Finance Leases
The company does not have any finance leases.
(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 April 1, 2023 and April 2, 2022, a total of
During the quarter ended April 1, 2023, there were
During the quarter ended April 1, 2023, the Company repurchased
There were also
As of April 1, 2023, there was $
During the quarters ended April 1, 2023 and April 2, 2022, the Company recognized approximately $
(6) Inventories
Inventories consist of the following:
| April 1, 2023 |
December 31, 2022 |
|||||||
| Raw materials |
$ | $ | ||||||
| Work in process |
||||||||
| Finished goods |
||||||||
| Gross inventory |
||||||||
| Reserve for obsolescence |
( |
) |
( |
) |
||||
| Inventories, net |
$ | $ | ||||||
(7) Accrued Expenses
Accrued expenses consist of the following:
| April 1, 2023 | December 31, 2022 | |||||||
| Accrued legal and accounting | $ | $ | ||||||
| Accrued payroll and related expenses | ||||||||
| Accrued other | ||||||||
| Total Accrued Expenses | $ | $ | ||||||
(8) Line of Credit
In September 2019, the Company entered into a revolving line of credit (LOC) with Massachusetts Business Development Corporation (BDC) in the amount of $
The line of credit is subject to certain financial covenants, all of which have been met.
(9) Note Payable
In March 2020, the Company acquired inspection equipment for a price of $
The aggregate maturities of the notes payable based on the payment terms of the agreement are as follows:
| Remaining in: |
| |||
| FY 2023 | ||||
| FY 2024 | $ | |||
| FY 2025 | $ | |||
| Total | ||||
Total interest expense on notes payable during Q1 2023 was $
(10) 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 2018, the Company established a valuation allowance reserve, as it is judged more likely than not that all or a portion of its deferred tax assets will not be utilized before they expire. This decision was reached after giving greater weight to the Company’s losses in recent years as compared to its forecasts.
In September 2021 this decision was reevaluated in light of the Company’s recent profitability and its forecasts for future profitability. The Company concluded that it is “more likely than not” that the Company will be able to fully utilize the deferred tax asset. This reversal of the valuation allowance was made net of the expected tax liability for 2021. For the first quarter of 2023 a charge against the deferred tax asset of $
| ITEM 2 |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
The following discussion and analysis of financial condition and results of operations is based upon and should be read in conjunction with the financial statements of the Company and notes thereto included in this report and the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 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.cpstechnologysolutions.com.
Forward-Looking Statements
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. This includes the impact of the COVID-19 pandemic and the Russian invasion of Ukraine, which are discussed in Item 3 of this report. 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.
Critical Accounting Policies
The critical accounting policies utilized by the Company in preparation of the accompanying financial statements are set forth in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations”. There have been no material changes to these policies since December 31, 2022.
Overview
Products we provide include baseplates for motor controllers used in high-speed electric trains, subway cars, wind turbines, and hybrid and electric vehicles. We provide baseplates and housings used in radar, satellite and avionics applications. We provide lids and heat spreaders used with high performance integrated circuits for use in internet switches and routers. We provide baseplates and housings used in modules built with Wide Band Gap Semiconductors like Silicon Carbide (“SiC”) and Gallium Nitride (“GaN”), collectively Metal Matrix Composites (“MMC”). CPS also assembles housings and packages for hybrid circuits. These housings and packages may include MMC components; they may include components made of more traditional materials such as aluminum, cold rolled steel and Kovar. Using its proprietary MMC technology, the Company also produces light-weight vehicle armor, particularly for extreme environments and heavy threat levels.
CPS’s products are custom rather than catalog items. They are made to customers’ designs and are used as components in systems built and sold by our customers. At any point in time our product mix will consist of some products with on-going production demand, and some products which are in the prototyping or evaluation stages at our customers. The Company seeks to have a portfolio of products which include products in every stage of the technology adoption lifecycle at our customers. CPS’ growth is dependent upon the level of demand for those products already in production, as well as its success in achieving new "design wins" for future products.
As a manufacturer of highly technical and custom products, the Company incurs fixed costs needed to support the business, but which do not vary significantly with changes in sales volume. These costs include the fixed costs of applications such as engineering, tooling design and fabrication, process engineering, and others. Accordingly, particularly given our current size, changes in sales volume generally result in even greater changes in financial performance on a percentage basis as fixed costs are spread over a larger or smaller base. Sales volume is therefore a key financial metric used by management.
The Company believes the underlying demand for MMC, housings for hybrid circuits and our proprietary armor solution is growing as the electronics and other industries seek higher performance, higher reliability, and reduced costs. CPS believes that the Company is well positioned to offer our solutions to current and new customers as these demands grow.
CPS was incorporated in Massachusetts in 1984 as Ceramics Process Systems Corporation and reincorporated in Delaware in April 1987 through a merger into a wholly-owned Delaware subsidiary organized for purposes of the reincorporation. In July 1987, CPS completed our initial public offering of 1.5 million shares of our Common Stock. In March 2007, we changed our name from Ceramics Process Systems Corporation to CPS Technologies Corporation.
Results of Operations for the First Fiscal Quarter of 2023 (Q1 2023) Compared to the First Fiscal Quarter of 2022 (Q1 2022); (all $ in 000’s)
Revenues totaled $7,100 in Q1 2023 compared with $6,653 generated in Q1 2022, an increase of 7%. Two factors in particular contributed to this growth. One of our largest customers, which was particularly hard hit by the Covid-19 pandemic, has continued to grow as that pandemic has subsided. Additionally, our shipments of armor for the US Navy also saw significant growth from 2022 to 2023.
Gross margin in Q1 2023 totaled $2,245 or 32% of sales. This compares with gross margin in Q1 2022 of $1,963 or 30% of sales. This moderate percentage increase was due to the company’s continuing efforts to improve manufacturing efficiencies as well as the impact of higher sales volumes on fixed costs.
Selling, general and administrative (SG&A) expenses totaled $1,551 in Q1 2023 compared with SG&A expenses of $1,416 in Q1 2022. There were two primary reasons for this increase. First there was a significant increase in travel expenses. In 2022 we were just beginning to come out of the Covid-19 pandemic. Many conferences continued to be virtual and many customers continued to prohibit outside visitors. In 2023 this has changed thus our business development team, in particular, have been doing significantly more travel than a year ago. Secondly, the company increased its 401k matching formula in 2023 resulting in increased payroll costs.
The Company experienced an operating profit of $694 in Q1 2023 compared with an operating profit of $547 in Q1 2022, an increase of 27%. This increase was a result of the increased gross margin, partially offset by the increase in SG&A expenses.
The Company has had extremely minimal sales to both Russia and Ukraine over the last several years, the loss of which would be immaterial to these financial statements. Neither does CPS rely on raw materials from that part of the world. As a result, we do not believe that the Russian invasion of Ukraine will have a direct impact on our results. Nevertheless, there could be an indirect impact regarding supply chain and inflationary issues as a result of this war.
Inflation has had an impact on our costs. Thus far, we have been able to pass along these increases to our customers, but there is no guarantee that we will be able to continue this in the future. In addition, there is often a lag between when the costs increase and when we can adjust customer prices. Some of our larger customers will have pricing agreements, typically for one year, and we must wait for those agreements to end before making any pricing adjustments. Wage increases are also part of the inflation impact. We have instituted a combination of wage increases as well as richer benefits, such as the increased 401k match mentioned above, in order to retain the folks making up our workforce.
These factors combine to create a higher degree of uncertainty regarding future financial performance.
Liquidity and Capital Resources (all $ in 000’s unless noted)
The Company’s cash and cash equivalents at April 1, 2023 totaled $7,370. This compares to cash and cash equivalents at December 31, 2022 of $8,267. The decrease in cash was due primarily to increases in accounts receivable and significant reductions in deferred revenue offset by net profit.
Accounts receivable at April 1, 2023 totaled $5,415 compared with $4,464 at December 31, 2022. Days Sales Outstanding (DSO) increased from 56 days at the end of 2022 to 60 days at the end of Q1 2023. The increase in DSO was due to the inclusion of deferred revenue of $0.6M in the year end accounts receivable balance, which was collected during Q1 2023. The accounts receivable balances at December 31, 2022, and April 1, 2023 were both net of an allowance for doubtful accounts of $10.
Inventories totaled $4,693 at April 1, 2023 compared with inventory totaling $4,876 at December 31, 2022. The inventory turnover in the most recent four quarters ending Q1 2023 was 4.1 times (based on a 5 point average) compared with 4.2 times averaged during the four quarters of 2021.
The Company financed its increase in non-cash working capital in Q1 2023 from its profit and usage of cash on hand. The Company expects it will continue to be able to fund its operations for the remainder of 2023 from operations and existing cash balances.
The Company continues to sell to a limited number of customers and the loss of any one of these customers could cause the Company to require additional external financing. Failure to generate sufficient revenues, raise additional capital or reduce certain discretionary spending could have a material adverse effect on the Company’s ability to achieve its business objectives.
Management believes that existing cash balances will be sufficient to fund our cash requirements for the foreseeable future. However, there is no assurance that we will be able to generate sufficient revenues or reduce certain discretionary spending in the event that planned operational goals are not met such that we will be able to meet our obligations as they become due.
Contractual Obligations (all $ in 000’s unless otherwise noted)
In September 2019, the Company entered into revolving line of credit (LOC) with Massachusetts Business Development Corporation (BDC) in the amount of $2.5 million. This agreement was amended in May 2020 to increase the line to $3.0 million. The agreement includes a demand note allowing the Lender to call the loan at any time. The Company 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 550 basis points. The Company was in compliance with all debt covenants as of April 1, 2023, had $0 borrowings under this LOC and its borrowing base at the time would have permitted $3.0 to have been borrowed.
In March 2020, the company acquired a scanning acoustic microscope for a price of $208 thousand. The full amount was financed through a 5 year note payable with a financing company. 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%
The Company has one real estate lease expiring in February 2026. 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. (Note 4, Leases)
| ITEM 3 |
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
The Company is not significantly exposed to the impact of interest rate changes or foreign currency fluctuations. The Company has not used derivative financial instruments.
Although CPS has not been directly impacted by the war in Ukraine, potential supply chain disruptions and its impact on energy costs are areas where we could be impacted in the future.
Inflation is an area where we have seen some impact on our business. We have seen significant price increases in commodity raw materials, such as aluminum, as well as increases in other costs of doing business. As we receive new orders we have been able to pass on most of these costs to our customers. In the case of longer term pricing agreements, we have been able to pass on some of these costs through surcharges and in other ways to mitigate the impact on our profit. As inflation continues, our ability to continue to absorb higher costs by raising customer prices cannot be guaranteed.
| ITEM 4 |
CONTROLS AND PROCEDURES |
(a) The Company’s Acting President and Chief Financial Officer has evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-14(c) and 15d - 14(c) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this Form 10-Q (the “Evaluation Date”). Based on such evaluation, such officers have concluded that, as of the Evaluation Date, 1) the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in reports the Company files under the Securities Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and 2) the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed in the reports that the Company files or submits under the Exchange Act is accumulated and communicated to our management, including our chief executive officer and chief financial officer, to allow timely decisions regarding required disclosure.
(b) Changes in Internal Controls. There has been no change in our internal control over financial reporting that occurred during our most recent fiscal quarter that has materially affected or is reasonably likely to materially affect our internal control over financial reporting.
PART II OTHER INFORMATION
| ITEM 1 |
LEGAL PROCEEDINGS |
None.
| ITEM 1A |
RISK FACTORS |
There have been no material changes to the risk factors as discussed in our 2022 Form 10-K.
| ITEM 2 |
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS. None. |
| ITEM 3 |
DEFAULTS UPON SENIOR SECURITIES |
None.
| ITEM 4 |
MINE SAFETY DISCLOSURES |
Not applicable.
| ITEM 5 |
OTHER INFORMATION |
Not applicable.
| ITEM 6 |
EXHIBITS AND REPORTS ON FORM 8-K: |
| (a) |
Exhibits: |
101.INS Inline XBRL Instance Document
101.SCH Inline XBRL Taxonomy Extension Schema Document
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document
104 Cover Page Interactive Data File (embedded within the Inline XBRL and contained in Exhibit 101)
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.
CPS TECHNOLOGIES CORPORATION
(Registrant)
Date: May 8, 2023
/s/ Charles K. Griffith Jr.
Charles K. Griffith Jr.
Acting President and Chief Financial Officer
CERTIFICATION OF ACTING PRESIDENT AND CHIEF FINANCIAL OFFICER
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Charles K. Griffith Jr., certify that:
I have reviewed this quarterly report on Form 10-Q;
Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
The registrant`s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant`s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this quarterly report based on such evaluation (the "Evaluation Date"); and
d) Disclosed in this quarterly report any change in the registrant`s internal control over financial reporting that occurred during the registrant`s most recent fiscal quarter that has materially affected or is reasonably like to materially affect, the registrant`s internal control over financial reporting.
The registrant`s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant`s auditors and the audit committee of the registrant`s board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant`s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant`s internal control over financial reporting.
Date: May 9, 2023
/s/ Charles K. Griffith Jr.
Charles K. Griffith Jr.
Acting President and Chief Financial Officer
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of CPS Technologies Corporation (the "Company") on Form 10-Q for the three month period ended April 1, 2023 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Charles K. Griffith Jr., Acting President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: May 9, 2023
/s/ Charles K. Griffith Jr.
Charles K. Griffith Jr.
Acting President and Chief Financial Officer
Balance Sheets (Unaudited) (Parentheticals) - $ / shares |
Apr. 01, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
| Common stock, authorized shares (in shares) | 20,000,000 | 20,000,000 |
| Common stock, issued shares (in shares) | 14,467,487 | 14,457,186 |
| Common stock, outstanding shares (in shares) | 14,460,486 | 14,450,470 |
| Treasury Stock, Common, Shares | 10,301 | 10,016 |
Statements of Operations (Unaudited) - USD ($) |
3 Months Ended | |
|---|---|---|
Apr. 01, 2023 |
Apr. 02, 2022 |
|
| Revenues: | ||
| Product sales | $ 7,100,267 | $ 6,652,714 |
| Total revenues | 7,100,267 | 6,652,714 |
| Cost of product sales | 4,855,564 | 4,689,224 |
| Gross Margin | 2,244,703 | 1,963,490 |
| Selling, general, and administrative expense | 1,550,522 | 1,416,393 |
| Income from operations | 694,181 | 547,097 |
| Other income (expense), net | 15,590 | (1,913) |
| Income before taxes | 709,771 | 545,184 |
| Income tax provision | 250,570 | 125,748 |
| Net income | $ 459,201 | $ 419,436 |
| Net income per basic common share (in dollars per share) | $ 0.03 | $ 0.03 |
| Weighted average number of basic common shares outstanding (in shares) | 14,452,284 | 14,389,857 |
| Net income per diluted common share (in dollars per share) | $ 0.03 | $ 0.03 |
| Weighted average number of diluted common shares outstanding (in shares) | 14,639,600 | 14,657,939 |
Statements of Stockholders' Equity (Unaudited) - USD ($) |
Common Stock [Member] |
Additional Paid-in Capital [Member] |
Retained Earnings [Member] |
Treasury Stock, Common [Member] |
Total |
|---|---|---|---|---|---|
| Balance (in shares) at Dec. 25, 2021 | 14,350,786 | ||||
| Balance at Dec. 25, 2021 | $ 143,508 | $ 39,281,810 | $ (26,256,492) | $ (2,515) | $ 13,166,311 |
| Share-based compensation expense | $ 0 | 124,471 | 0 | 0 | $ 124,471 |
| Employee options exercises (in shares) | 72,700 | 72,700 | |||
| Employee options exercises | $ 727 | 150,308 | 0 | (3,108) | $ 147,927 |
| Net income | 0 | 0 | 419,436 | 0 | 419,436 |
| Issuance of Common Stock | $ 0 | (9,614) | 0 | 0 | (9,614) |
| Balance (in shares) at Apr. 02, 2022 | 14,423,486 | ||||
| Balance at Apr. 02, 2022 | $ 144,235 | 39,546,975 | (25,837,056) | (5,623) | 13,848,531 |
| Balance (in shares) at Dec. 31, 2022 | 14,460,486 | ||||
| Balance at Dec. 31, 2022 | $ 144,605 | 39,726,851 | (24,125,092) | (40,848) | 15,705,516 |
| Share-based compensation expense | $ 0 | 130,441 | 0 | 0 | $ 130,441 |
| Employee options exercises (in shares) | 7,001 | 7,001 | |||
| Employee options exercises | $ 70 | 10,215 | 0 | (790) | $ 9,495 |
| Net income | $ 0 | 0 | 459,201 | 0 | 459,201 |
| Balance (in shares) at Apr. 01, 2023 | 14,467,487 | ||||
| Balance at Apr. 01, 2023 | $ 144,675 | $ 39,867,507 | $ (23,665,891) | $ (41,638) | $ 16,304,653 |
Note 1 - Nature of Business |
3 Months Ended |
|---|---|
Apr. 01, 2023 | |
| Notes to Financial Statements | |
| Business Description and Basis of Presentation [Text Block] |
(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.
Using its proprietary MMC technology, the Company also produces light-weight armor, particularly for extreme environments and heavy threat levels.
The Company sells into several end markets including the wireless communications infrastructure market, high-performance microprocessor market, motor controller market, and other microelectronic and defense markets.
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Note 2 - Summary of Significant Accounting Policies |
3 Months Ended |
|---|---|
Apr. 01, 2023 | |
| Notes to Financial Statements | |
| Significant Accounting Policies [Text Block] |
(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 31, 2022 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 31, 2022 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.cpstechnologysolutions.com.
The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year.
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Note 3 - Net Income Per Common and Common Equivalent Share |
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Apr. 01, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Notes to Financial Statements | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Earnings Per Share [Text Block] |
(3) Net Income Per Common and Common Equivalent Share Basic net income per common share is calculated by dividing net income by the weighted average number of common shares outstanding during the period. Diluted net income per common share is calculated by dividing net income 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:
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Note 4 - Commitments & Contingencies |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Apr. 01, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Notes to Financial Statements | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commitments and Contingencies Disclosure [Text Block] |
(4) Commitments & Contingencies
Commitments
Leases The Company has one real estate lease expiring in February 2026. CPS also has a few other leases for equipment which are minor in nature and are generally short-term in duration. None of these equipment leases have been capitalized as 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.
The real estate lease expiring in 2026 (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 April 1, 2023 based on the present value of lease payments over the lease term using the Company’s incremental borrowing rate at commencement date. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.
Operating Leases The Norton facility lease comprises approximately 38 thousand square feet. The lease is 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 renew the lease starting in March 2026 through February 2032. The Company is not reasonably certain these extensions will be exercised at this time, and therefore are not included in the lease asset or liability. Annual rental payments range from $152 thousand to $165 thousand through maturity.
The following table presents information about the amount, timing and uncertainty of cash flows arising from the Company’s capitalized operating leases as of April 1, 2023
Operating Lease Costs and Cash Flows Operating lease cost and cash paid was $41 thousand during the first quarter of 2023. 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.
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Note 5 - Share-based Payments |
3 Months Ended |
|---|---|
Apr. 01, 2023 | |
| Notes to Financial Statements | |
| Share-Based Payment Arrangement [Text Block] |
(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 April 1, 2023 and April 2, 2022, a total of 0 and 170,000 stock options, respectively, were granted to employees under the Company’s 2020 Equity Incentive Plan (the “Plan”) and a total of 50,000 and 38,000 stock options, respectively, were granted to outside directors during the quarters ended April 1, 2023 and April 2, 2022.
During the quarter ended April 1, 2023, there were 7,001 options exercised and corresponding shares issued at a weighted average price of $1.47. During the quarter ended April 2, 2022, there were 72,700 options exercised and corresponding shares issued at a weighted average price of $2.08.
During the quarter ended April 1, 2023, the Company repurchased 285 shares for employees to facilitate their exercise of stock options. During the quarter ended April 2, 2022, the Company repurchased 840 shares for employees to facilitate their exercise of stock options.
There were also 1,004,400 options outstanding at a weighted average price of $2.51 with a weighted average remaining term of 6.10 years as of April 1, 2023, and there were 971,600 options outstanding at a weighted average price of $2.37 with a weighted average remaining term of 6.67 years as of April 2, 2022. The Plan, as amended, is authorized to issue 1,500,000 shares of common stock. As of April 1, 2023, there were 865,800 shares available for future grants. 639,100 grants remain exercisable under the Company’s Equity Incentive Plans.
As of April 1, 2023, there was $523 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 1.41 years.
During the quarters ended April 1, 2023 and April 2, 2022, the Company recognized approximately $130 thousand and $124 thousand, respectively, as shared-based compensation expense related to previously granted shares under the Plan.
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Note 6 - Inventories |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Apr. 01, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Notes to Financial Statements | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Inventory Disclosure [Text Block] |
(6) Inventories Inventories consist of the following:
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Note 7 - Accrued Expenses |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Notes to Financial Statements | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounts Payable and Accrued Liabilities Disclosure [Text Block] |
(7) Accrued Expenses Accrued expenses consist of the following:
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Note 8 - Line of Credit |
3 Months Ended |
|---|---|
Apr. 01, 2023 | |
| Notes to Financial Statements | |
| Debt Disclosure [Text Block] |
(8) Line of Credit In September 2019, the Company entered into a revolving line of credit (LOC) with Massachusetts Business Development Corporation (BDC) in the amount of $2.5 million. The agreement includes a demand note allowing the Lender to call the loan at any time. The Company may terminate the agreement without a termination fee after 3 years. In May of 2020 this credit line was increased to $3.0 million. The LOC is secured by the accounts receivable and other assets of the Company and has an interest rate of LIBOR plus 550 basis points. On April 1, 2023, the Company had $0 thousand of borrowings under this LOC and its borrowing base at the time would have permitted an additional $3.0 million to have been borrowed.
The line of credit is subject to certain financial covenants, all of which have been met.
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Note 9 - Notes Payable |
3 Months Ended | |||||||||||||||||||||||||
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Apr. 01, 2023 | ||||||||||||||||||||||||||
| Notes to Financial Statements | ||||||||||||||||||||||||||
| Long-Term Debt [Text Block] |
(9) Note Payable In March 2020, the Company acquired inspection equipment for a price of $208 thousand. The full amount was financed through a 5 year note payable with a party equipment finance company. The note is collateralized by the equipment and is being paid in monthly installments of $4 thousand, consisting of principal plus interest at a rate of 6.47%.
The aggregate maturities of the notes payable based on the payment terms of the agreement are as follows:
Total interest expense on notes payable during Q1 2023 was $1,538 compared to $2,269 in Q1 2022.
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Note 10 - Income Taxes |
3 Months Ended |
|---|---|
Apr. 01, 2023 | |
| Notes to Financial Statements | |
| Income Tax Disclosure [Text Block] |
(10) 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 2018, the Company established a valuation allowance reserve, as it is judged more likely than not that all or a portion of its deferred tax assets will not be utilized before they expire. This decision was reached after giving greater weight to the Company’s losses in recent years as compared to its forecasts.
In September 2021 this decision was reevaluated in light of the Company’s recent profitability and its forecasts for future profitability. The Company concluded that it is “more likely than not” that the Company will be able to fully utilize the deferred tax asset. This reversal of the valuation allowance was made net of the expected tax liability for 2021. For the first quarter of 2023 a charge against the deferred tax asset of $226 for the estimated tax liability on Q1 income was made. |
Note 3 - Net Income Per Common and Common Equivalent Share (Tables) |
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| Notes Tables | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Earnings Per Share, Basic and Diluted [Table Text Block] |
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Note 4 - Commitments & Contingencies (Tables) |
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| Notes Tables | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Lessee, Operating Lease, Liability, to be Paid, Maturity [Table Text Block] |
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Note 6 - Inventories (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Apr. 01, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Notes Tables | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Inventory, Current [Table Text Block] |
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Note 7 - Accrued Expenses (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Apr. 01, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Notes Tables | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Accrued Liabilities [Table Text Block] |
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Note 9 - Notes Payable (Tables) |
3 Months Ended | |||||||||||||||||||||||||
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Apr. 01, 2023 | ||||||||||||||||||||||||||
| Notes Tables | ||||||||||||||||||||||||||
| Schedule of Maturities of Long-Term Debt [Table Text Block] |
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Note 3 - Net Income Per Common and Common Equivalent Share - Basic and Diluted Earnings Per Share (Details) - USD ($) |
3 Months Ended | |
|---|---|---|
Apr. 01, 2023 |
Apr. 02, 2022 |
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| Basic EPS Computation: | ||
| Net income | $ 459,201 | $ 419,436 |
| Weighted average common shares outstanding (in shares) | 14,452,284 | 14,389,857 |
| Basic EPS (in dollars per share) | $ 0.03 | $ 0.03 |
| Diluted EPS Computation: | ||
| Net income | $ 459,201 | $ 419,436 |
| Weighted average common shares outstanding (in shares) | 14,452,284 | 14,389,857 |
| Dilutive effect of stock options (in shares) | 187,316 | 268,082 |
| Total Shares (in shares) | 14,639,600 | 14,657,939 |
| Diluted EPS (in dollars per share) | $ 0.03 | $ 0.03 |
Note 4 - Commitments & Contingencies (Details Textual) ft² in Thousands, $ in Thousands |
3 Months Ended |
|---|---|
|
Apr. 01, 2023
USD ($)
ft²
| |
| Area of Real Estate Property (Square Foot) | ft² | 38 |
| Norton Facility [Member] | |
| Operating Lease, Expense | $ 41 |
| Minimum [Member] | |
| Lessee, Operating Lease, Annual Rent Payments | 152 |
| Maximum [Member] | |
| Lessee, Operating Lease, Annual Rent Payments | $ 165 |
Note 4 - Commitments & Contingencies - Maturity of Capitalized Lease Liabilities (Details) - USD ($) |
Apr. 01, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Remaining 2023 | $ 121,000 | |
| 2024 | 165,000 | |
| 2025 | 165,000 | |
| 2026 | 28,000 | |
| Total undiscounted operating lease payments | 479,000 | |
| Less: Imputed interest | (46,000) | |
| Present value of operating lease liability | 433,000 | |
| Current lease liability | 157,000 | $ 157,000 |
| Long-term lease liability | 276,000 | $ 309,000 |
| Total operating lease liability | $ 433,000 | |
| Weighted-average remaining lease term for capitalized operating leases (in months) (Year) | 35 years | |
| Weighted-average discount rate for capitalized operating leases | 6.60% |
Note 6 - Inventories - Inventories (Details) - USD ($) |
Apr. 01, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Raw materials | $ 2,732,661 | $ 2,645,442 |
| Work in process | 1,726,410 | 1,863,512 |
| Finished goods | 483,009 | 525,872 |
| Gross inventory | 4,942,081 | 5,034,826 |
| Reserve for obsolescence | (249,425) | (158,925) |
| Inventories, net | $ 4,692,655 | $ 4,875,901 |
Note 7 - Accrued Expenses - Accrued Expenses (Details) - USD ($) |
Apr. 01, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Accrued legal and accounting | $ 32,500 | $ 35,398 |
| Accrued payroll and related expenses | 576,532 | 760,305 |
| Accrued other | 122,422 | 25,153 |
| Total Accrued Expenses | $ 731,454 | $ 820,856 |
Note 8 - Line of Credit (Details Textual) - Massachusetts Business Development Corporation [Member] - Revolving Credit Facility [Member] - USD ($) $ in Thousands |
1 Months Ended | |||
|---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2019 |
Apr. 01, 2023 |
May 31, 2020 |
|
| Line of Credit Facility, Maximum Borrowing Capacity | $ 2,500 | $ 2,500 | $ 3,000 | |
| Debt Instrument, Termination Period (Year) | 3 years | |||
| Long-term Line of Credit, Total | $ 0 | |||
| Line of Credit Facility, Remaining Borrowing Capacity | $ 3,000 | |||
| London Interbank Offered Rate (LIBOR) 1 [Member] | ||||
| Debt Instrument, Basis Spread on Variable Rate | 5.50% |
Note 9 - Notes Payable (Details Textual) - USD ($) |
1 Months Ended | 3 Months Ended | |||
|---|---|---|---|---|---|
Sep. 30, 2019 |
Mar. 31, 2020 |
Apr. 01, 2023 |
Apr. 02, 2022 |
Dec. 31, 2022 |
|
| Property, Plant and Equipment, Gross, Ending Balance | $ 12,838,876 | $ 12,708,959 | |||
| Interest Expense, Debt | $ 1,538 | $ 2,269 | |||
| Massachusetts Business Development Corporation [Member] | Revolving Credit Facility [Member] | |||||
| Debt Instrument, Termination Period (Year) | 3 years | ||||
| Microscope Note Payable [Member] | |||||
| Debt Instrument, Term (Year) | 5 years | ||||
| Debt Instrument, Periodic Payment, Total | $ 4,000 | ||||
| Debt Instrument, Interest Rate, Stated Percentage | 6.47% | ||||
| Sonoscan Ultrasound Microscope [Member] | |||||
| Property, Plant and Equipment, Gross, Ending Balance | $ 208,000 | ||||
Note 9 - Note Payable - Note Payable Maturities (Details) |
Apr. 01, 2023
USD ($)
|
|---|---|
| FY 2023 | $ 33,016 |
| FY 2024 | 46,757 |
| FY 2025 | 8,090 |
| Total | $ 87,863 |
Note 10 - Income Taxes (Details Textual) |
3 Months Ended |
|---|---|
|
Apr. 01, 2023
USD ($)
| |
| Valuation Allowance, Deferred Tax Asset, Increase (Decrease), Amount | $ 226 |
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