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 April 1, 1995
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
Identification No.)
of Incorporation or Organization)
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-
7282
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 May
1, 1995: 7,690,613.
CERAMICS PROCESS SYSTEMS CORPORATION
Form 10-Q
For The Fiscal Quarter Ended April 1, 1995
Index
PART I: FINANCIAL INFORMATION Page
Item 1: Consolidated Financial
Statements 3-6
Consolidated Balance Sheets as of 3-4
April 1, 1995 and April 2, 1994
Consolidated Statements of Operations 5
for the fiscal quarters ended
April 1, 1995 and April 2, 1994
Consolidated Statements of Cash Flows 6
for the fiscal quarters ended April 1,
1995 and April 2, 1994
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 11
<PAGE>
PART I FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
<TABLE>
CERAMICS PROCESS SYSTEMS CORPORATION
Consolidated Balance Sheets
April 1, December 31,
1995 1994
<S> <C> <C>
ASSETS
Current Assets:
Cash $ 259,244 $ 252,503
Accounts receivable, trade 233,192 243,128
Inventories 55,447 56,126
Prepaid expenses 28,702 28,143
Other current assets 16,000 24,519
Total current assets 592,585 604,419
Property and equipment:
Production equipment 1,007,096 1,077,584
Furniture and office equipment 76,946 72,926
1,084,042 1,150,510
Less accumulated depreciation 782,318 825,677
Net property and equipment 301,724 324,833
Deposits 1,533 2,623
Total Assets $ 895,842 $ 931,875
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
CERAMICS PROCESS SYSTEMS CORPORATION
Consolidated Balance Sheets
April 1, December 31,
1995 1994
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable $ 122,562 $ 168,623
Accrued expenses 295,078 337,182
Current portion of convertible
notes payable:
Related parties 245,000 125,000
Other 375,000 125,000
Current portion of obligations
under capital leases -- 7,532
Current portion of deferred revenue -- 6,300
Total current liabilities 1,037,640 769,637
Convertible notes payable less current
portion:
Related parties 675,000 795,000
Other 825,000 825,000
Total Liabilities 2,537,640 2,389,637
Stockholders' Equity (Deficit)
Common stock, $0.01 par value.
Authorized 15,000,000 shares;
issued 7,713,469 shares at
April 1, 1995 and 7,610,786
at December 31, 1994 77,135 76,108
Preferred stock, $.01 par value.
Authorized 5,000,000 shares;
no shares issued and outstanding -- --
Additional paid-in capital 30,433,125 30,387,166
Accumulated deficit (32,091,223) (31,860,201)
(1,580,963) (1,396,927)
Less treasury stock, at cost,
22,883 common shares (60,835) (60,835)
Total stockholders' equity
(deficit) (1,641,798) (1,457,762)
Total Liabilities and
Stockholders' Equity
(Deficit) $ 895,842 $ 931,875
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
CERAMICS PROCESS SYSTEMS CORPORATION
Consolidated Statements of Operations
Fiscal Quarters Ended
April 1, April 2,
1995 1994
<S> <C> <C>
Revenue:
Product sales $ 400,795 $ 347,108
Collaborative development
agreements -- 13,856
License agreements 2,000 2,000
Total revenue 402,795 362,964
Operating expenses:
Cost of product sales 430,092 502,891
Research, development,
and engineering -- 10,702
Selling, general, and
administrative 161,425 189,348
Total operating expenses 591,517 702,941
Operating income (loss) (188,722) (339,977)
Other income (expense), net (42,300) 15,904
Net income (loss) ($231,022) $ (324,073)
Net income (loss) per share ($0.03) ($0.04)
Weighted average number of
common and common equivalent
shares outstanding 7,587,903 7,567,193
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
CERAMICS PROCESS SYSTEMS CORPORATION
Consolidated Statements of Cash Flows
Fiscal Quarters Ended
April 1, April 2,
1995 1994
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) ($231,022) ($324,073)
Adjustments to reconcile net loss to
cash provided by (used in)
operating activities:
Depreciation & amortization 39,568 47,461
Settlement of interest obligation 46,986 --
Gain on sale of property and equipment -- (17,994)
Changes in assets and liabilities:
Accounts receivable, trade 9,936 272,279
Inventories 679 59,345
Prepaid expenses (559) (7,581)
Other current assets 8,519 --
Accounts payable (46,061) 32,106
Accrued expenses (42,104) (157,594)
Deferred revenue (6,300) --
Due to customer -- (51,919)
Due to Kilburn Isotronics, Inc. -- 116,682
Net cash used in
operating activities (220,358) (31,288)
Cash flows from investing activities:
Additions to property and equipment (16,459) (284,481)
Disposal of property and equipment -- 17,994
Net change in deposits 1,090 (58)
Net cash used in investing
activities (15,369) (266,545)
Cash flows from financing activities:
Repayment of capital lease obligations (7,532) (6,963)
Proceeds from issuance of convertible
notes payable 250,000 230,200
Net cash provided by
financing activities 242,468 223,237
Net increase (decrease) in cash 6,741 (74,596)
Cash at beginning of quarter 252,503 89,333
Cash at end of quarter $ 259,244 $14,737
<FN>
See accompanying notes to consolidated financial statements.<PAGE>
CERAMICS PROCESS SYSTEMS CORPORATION
</TABLE>
Notes to Consolidated Financial Statements
(Unaudited)
(1) Nature of Business
Ceramics Process Systems Corporation ("CPS" or "the
Company"), incorporated on June 19, 1984, is engaged in the
design, development, and manufacture of advanced ceramic products
and composites for the electronics and defense industries.
(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 fiscal quarters
ended April 1, 1995 and April 2, 1994 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
interim 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 Loss per Share
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.
<TABLE>
(4) Inventory
Inventories consist of the following:
April 1, December 31,
1995 1994
<S> <C> <C>
Raw Materials $ 11,070 $ 8,039
Work in process 35,192 39,642
Finished goods 9,185 8,445
$ 55,447 $ 56,126
(5) Accrued Expenses
Accrued expenses consist of the following:
April 1, December 31,
1995 1994
Accrued legal and
accounting $ 162,978 $ 174,428
Accrued interest 78,946 79,311
Accrued payroll 37,860 74,029
Accrued other 15,294 9,414
$ 295,078 $ 337,182
<FN>
</TABLE>
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Financial Condition
The Company incurred a net loss in the first fiscal
quarter of 1995 in the amount of $0.2 million, versus a
net loss of $0.3 million in the first fiscal quarter of 1994.
The Company's cash balance at April 1, 1995 and at December 31,
1994 was $0.3 million.
The improvement in the Company's financial performance in
the first fiscal quarter of 1995 versus the first fiscal quarter
of 1994 was primarily attributable to the fact that the Company's
facilities in Chartley, Massachusetts were fully operational
inthe first quarter of 1995, whereas the Company was in the
process of relocating in the first quarter 1994. The Company is
operating at the Chartley facility as a tenant at will.
During 1993, the Company entered into a five-year lease
agreement for a facility in Hopkinton, Massachusetts. In 1994,
this facility was used for storage and warehousing, and in 1995,
the Company reached an agreement with the lessor to terminate the
lease effective January 31, 1995.
During 1994, the Company received proceeds of $1.9 million
from the issuance of interest bearing debt agreements to
existing shareholders and other investors, convertible to shares
of the Company's Common Stock at a conversion price of $0.50 per
share. The convertible notes are subordinated to all other
indebtedness of the Company. In March, 1995 the Company entered
into a letter of intent with Aavid Thermal Technologies, Inc.
('Aavid'), whereby subject to certain terms and conditions, the
Company will receive proceeds of up to $2.0 million from Aavid
through March 31, 1996, in exchange for a combination of shares
of the Company's Common Stock and debt agreements with conversion
privileges for shares of the Company's Common Stock, the
cumulative effect of which would allow Aavid to purchase up to
four million shares of the Company's Common Stock. Through May
1, 1995 the Company received proceeds of $250 thousand from
Aavid. The total interest cost associated with debt instruments
in the first fiscal quarter of 1995 amounted to $47 thousand.
4,397,892 shares of Common Stock at April 1, 1995 are reserved
for the conversion of convertible notes and related accrued
interest.
In 1994, in connection with the issuance of selected
convertible notes payable, the Company issued warrants
exercisable as of the date of the notes payable, for the purchase
of shares of the Company's Common Stock at a price of $0.50 per
share. Warrants for the purchase of 410,628 shares of the
Company's were outstanding at April 1, 1995.
Although the Company has historically made timely payments
to its trade creditors, in 1995 it expects to continue to require
working capital support for its operations from external
financing, and there is no assurance that adequate funds will be
available or on terms acceptable to the Company.
Results of Operations
The Company's total revenue increased $40 thousand, to $403
thousand in the first fiscal quarter of 1995, from total revenue
of $363 in the first fiscal quarter of 1994. This increase
consisted of a $54 thousand increase in product sales, from $347
thousand in the first fiscal quarter of 1994 to $401 thousand in
the first fiscal quarter of 1995, partially offset by a $14
thousand decrease in collaborative development revenue, from $14
thousand in the first fiscal quarter of 1994, to no collaborative
development revenue in the first fiscal quarter of 1995.
The increase in product sales in the first fiscal quarter
of 1995 versus the first fiscal quarter of 1994 was primarily
due to the fact that the Company's facilities in Chartley,
Massachusetts were fully operational in the first quarter 1995,
whereas the Company was in the process of relocating in the first
quarter 1994. The relocation also resulted in a series of
operational and manufacturing inefficiencies which had a
negative effect on the Company's gross margin on product
sales in 1994. The Company's gross margin on product sales
increased $126 thousand, to a negative gross margin of $29
thousand in the first fiscal quarter of 1995, from a negative
$155 thousand gross margin in the first fiscal quarter of 1994.
The decline in collaborative development and license
revenue in the first fiscal quarter of 1995 from the first
fiscal quarter of 1994 resulted from the completion of a
funded program in thefirst quarter of 1994, which comprised
all of the collaborative development revenue in that quarter.
Research, development, and engineering costs decreased $11
thousand, from $11 thousand in the first fiscal quarter of 1994,
to no research, development, and engineering costs in the first
fiscal quarter of 1995, the result of a decline in collaborative
development revenue. Selling, general, and administrative costs
decreased $28 thousand, from $189 thousand in the first fiscal
quarter of 1994, to $161 thousand in the first fiscal quarter of
1995, reflecting a continued emphasis on administrative cost
controls.
The cumulative effect of these revenues and costs resulted
in a net loss of $231 thousand, or $0.03 loss per share, in the
first fiscal quarter of 1995, versus a net loss of $324 thousand,
or $0.04 loss per share, in the first fiscal quarter of 1994.
<PAGE>
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
<PAGE>
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: May 22, 1995 /s/Grant C. Bennett
Grant C. Bennett
President and Director
(Principal Executive
Officer)
Date: May 22, 1995 /s/Peter F. Valentine
Peter F. Valentine
Controller and
Treasurer
(Principal Financial
and Accounting Officer)
