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 June 29, 1996
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:
508-222-7282
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.
[ ] Yes [X] 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 August 1,
1996: 7,917,504.
CERAMICS PROCESS SYSTEMS CORPORATION
Form 10-Q
For The Fiscal Quarter Ended June 29, 1996
Index
PART I: FINANCIAL INFORMATION Page
Item 1: Consolidated Financial Statements 3-8
Consolidated Balance Sheets as of
June 29, 1996 and December 30,
1995 3-4
Consolidated Statements of Operations
for the fiscal quarters and six-month
periods ended June 29, 1996 and
July 1, 1995 5
Consolidated Statements of Cash Flows
for the six-month periods ended June 29,
1996 and July 1, 1995 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
Financial Data Schedule 11
Signatures 12
PART I FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
<TABLE>
CERAMICS PROCESS SYSTEMS CORPORATION
Consolidated Balance Sheets
June 29, December 30,
1996 1995
<S> <C> <C>
ASSETS
Current Assets:
Cash $ 14,344 $ 32,127
Accounts receivable, trade 169,996 211,575
Inventories 40,018 29,026
Prepaid expenses 17,895 10,824
Other current assets 150 475
Total current assets 242,403 284,027
Property and equipment:
Production equipment 906,185 941,512
Furniture and office equipment 65,529 65,529
971,714 1,007,041
Less accumulated depreciation
and amortization ( 770,215) ( 765,635)
Net property and equipment 201,499 241,406
Deposits 1,328 953
Total Assets $ 445,230 $ 526,386
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
CERAMICS PROCESS SYSTEMS CORPORATION
Consolidated Balance Sheets
June 29, December 30,
1996 1995
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable $ 182,914 $ 176,494
Accrued expenses 721,138 523,257
Current portion of convertible
notes payable:
Related parties 920,000 920,000
Other 900,000 900,000
Total current liabilities 2,724,052 2,519,751
Convertible notes payable
less current portion:
Related parties -- --
Other 500,000 500,000
Total Liabilities 3,224,052 3,019,751
Stockholders' equity (deficit)
Common stock, $0.01 par value.
Authorized 15,000,000 shares;
issued 7,940,387 shares at
June 29, 1996 and 7,780,766
at December 30, 1995 79,404 77,808
Preferred stock, $.01 par value.
Authorized 5,000,000 shares;
no shares issued and outstanding -- --
Additional paid-in capital 30,480,856 30,457,384
Accumulated deficit (33,278,247) ( 32,967,722)
( 2,717,987) ( 2,432,530)
Less treasury stock, at cost,
22,883 common shares ( 60,835) ( 60,835)
Total stockholders' equity (deficit) ( 2,778,822) ( 2,493,365)
Total Liabilities and Stockholders'
Equity (Deficit) $ 445,230 $ 526,386
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
CERAMICS PROCESS SYSTEMS CORPORATION
Consolidated Statements of Operations
Six-Month Periods
Fiscal Quarters Ended Ended
June 29, July 1, June 29, July 1,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Revenue:
Product sales $ 326,727 $ 258,445 $ 713,209 $ 659,240
License agreements 85,000 -- 85,000 2,000
Total revenue 411,727 258,445 798,209 661,240
Operating expenses:
Cost of product sales 369,169 359,420 779,077 789,512
Selling, general, and
administrative 119,910 226,269 235,415 387,694
Total operating expenses 489,079 585,689 1,014,492 1,177,206
Operating income (loss) ( 77,352)( 327,244)( 216,283)( 515,966)
Other income (expense),net( 35,490)( 51,654)( 94,242)( 93,954)
Net income (loss) ($ 112,842)($ 378,898)($ 310,525)($ 609,920)
Net income (loss) per
share ($0.01) ($0.05) ($0.04) ($0.08)
Weighted average number
of common and common
equivalent shares
outstanding 7,917,504 7,690,613 7,837,694 7,646,594
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
CERAMICS PROCESS SYSTEMS CORPORATION
Consolidated Statements of Cash Flows
Six-Month Periods Ended
June 29, July 1,
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) ($ 310,525) ($ 609,920)
Adjustments to reconcile net loss
to cash provided by (used in)
operating activities:
Depreciation & amortization 52,800 68,918
Settlement of interest obligation 25,068 46,986
Gain on sale of property and
equipment ( 24,500) --
Changes in assets and liabilities:
Accounts receivable, trade 41,579 113,313
Inventories ( 10,992) 15,962
Prepaid expenses ( 7,071) 8,095
Other current assets 325 24,094
Accounts payable 6,420 ( 50,126)
Accrued expenses 197,881 ( 14,387)
Deferred revenue -- ( 6,300)
Net cash used in operating
activities ( 29,015) ( 403,365)
Cash flows from investing activities:
Additions to property and equipment ( 12,893) ( 37,706)
Disposal of property and equipment 24,500 --
Net change in deposits ( 375) 1,090
Net cash (used in) provided by
investing activities 11,232 ( 36,616)
Cash flows from financing activities:
Repayment of capital lease obligations -- ( 7,532)
Proceeds from issuance of convertible
notes payable -- 250,000
Net cash provided by financing
activities -- 242,468
Net decrease in cash ( 17,783) ( 197,513)
Cash at beginning of period 32,127 252,503
Cash at end of period $ 14,344 $ 54,990
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
CERAMICS PROCESS SYSTEMS CORPORATION
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 and composite products 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 the fiscal quarters and
six-month periods ended June 29, 1996 and July 1, 1995, and the
financial position as of December 30, 1995, 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 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:
June 29, December 30,
1996 1995
<S> <C> <C>
Raw materials $ 18,391 $ 7,399
Work in process 8,970 8,970
Finished goods 12,657 12,657
$ 40,018 $ 29,026
(5) Accrued Expenses
Accrued expenses consist of the following:
June 29, December 30,
1996 1995
Accrued legal and accounting $ 172,281 $ 150,549
Accrued interest 310,453 219,839
Accrued payroll 69,474 67,364
Due to Kilburn Isotronics 98,551 57,713
Accrued material and equipment
costs 62,979 27,792
Advances 7,400 --
$ 721,138 $ 523,257
<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 second fiscal quarter of
1996 in the amount of $113 thousand, versus a net loss of $379 thousand
in the second fiscal quarter of 1995. The Company's cash balance at
June 29, 1996 and at December 30, 1995 was $14 thousand and $32
thousand, respectively.
The Company's financial performance improved in the fiscal
quarter ended June 29, 1996, versus the similar time period in 1995,
primarily due to a $68 thousand increase in product shipments and the
receipt of $85 thousand in revenue associated with a license agreement
entered into by the Company and a customer in the second fiscal quarter
of 1996. Additionally, there was a $97 thousand decrease in total
operating expenses in the fiscal quarter ended June 29, 1996, versus the
similar 1995 time period, primarily due to a $106 thousand reduction in
selling, general and operating expenses in the second fiscal quarter of
1996.
The Company's entire operations are currently housed in a leased
facility in Chartley, Massachusetts. The Company is operating in the
Chartley facility as a tenant at will.
Through the first six months of 1996, the Company has financed its
working capital requirements through its operations. In 1996 the
Company expects that it will require working capital support from
external financing in order to meet its operating needs, 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 was $412 thousand and $798 thousand
for the fiscal quarter and six-month period ended June 29, 1996,
respectively, while total revenue for the fiscal quarter and six-month
period ended July 1, 1995 was $258 thousand and $661 thousand,
respectively. The increase in total revenue of $153 thousand and $137
thousand for the fiscal quarter and six-month period ended June 29,
1996, respectively, versus similar time periods in 1995 resulted from
increased product shipments made to meet customer demand in 1996, and
the receipt of $85 thousand in revenue from a license agreement entered
into by the Company and a customer in the second fiscal quarter of 1996.
Product sales amounted to $327 thousand and $713 thousand for the fiscal
quarter and six-month period ended June 29, 1996, respectively,
representing increases of $68 thousand and $54 thousand, respectively,
over similar 1995 time periods. License revenue amounted to $85
thousand for both the fiscal quarter and six-month period ended June 29,
1996, versus no license revenue and $2 thousand in license revenue for
the fiscal quarter and six-month period ended July 1, 1995,
respectively.
The Company's gross margin on product sales was a negative gross
margin of $42 thousand and a negative gross margin of $66 thousand for
the fiscal quarter and six-month period ended June 29, 1996,
respectively, versus negative gross margins of $101 thousand and $130
thousand for the fiscal quarter and six-month periods ended July 1,
1996, respectively. The improvement in gross margins primarily resulted
from sales of higher margin products in 1996.
Selling, general, and administrative expenses were $120 thousand
in the fiscal quarter ended June 29, 1996 versus $226 thousand in the
fiscal quarter ended July 1, 1995. Selling, general, and administrative
expenses for the six-month periods ended June 29, 1996 and July 1, 1995
were $235 thousand and $388 thousand, respectively. The decrease in
selling, general, and administrative expenses in 1996 was due to a
decrease in costs associated with personnel reductions in the third
fiscal quarter of 1995 and tighter controls over administrative costs in
1996, including insurance and travel.
Other income (expense) principally consisted of interest expense
accrued on the Company's outstanding notes payable. Total interest
expense for the quarter and six-month period ended June 29, 1996
amounted to $60 thousand and $119 thousand, respectively. Total
interest expense for the quarter and six-month period ended July 1, 1995
amounted to $53 thousand and $100 thousand, respectively.
The cumulative effect of these revenues and costs resulted in net
losses of $113 thousand, or $0.01 per share, and $311 thousand, or $0.04
per share, for the fiscal quarter and six-month period ended June 29,
1996, respectively, and net losses of $379 thousand, or $0.05 per
share, and $610 thousand, or $0.08 per share, for the fiscal quarter
and six-month period ended July 1, 1995, respectively.
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
[TYPE] EX-27
[DESCRIPTION] ART. 5 FDS FOR 3RD QUARTER 10-Q
[ARTICLE] 5
[S] [C]
[PERIOD-TYPE] 6-MOS
[FISCAL-YEAR-END] DEC-28-1996
[PERIOD-END] JUNE-29-1996
[CASH] 14,344
[SECURITIES] 0
[RECEIVABLES] 169,996
[ALLOWANCES] 0
[INVENTORY] 40,018
[CURRENT-ASSETS] 242,403
[PP&E] 971,714
[DEPRECIATION] 770,215
[TOTAL-ASSETS] 445,230
[CURRENT-LIABILITIES] 2,724,052
[BONDS] 0
[COMMON] 79,404
[PREFERRED-MANDATORY] 0
<PREFERRED 0
<OTHER-SE (2,858,226)
[TOTAL-LIABILITY-AND-EQUITY] 445,230
[SALES] 798,209
[TOTAL-REVENUES] 798,209
[CGS] 779,077
[TOTAL-COSTS] 1,014,492
[OTHER-EXPENSES] 94,242
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] 119,212
[INCOME-PRETAX] ( 310,525)
[INCOME-TAX] 0
[INCOME-CONTINUING] ( 310,525)
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] ( 310,525)
[EPS-PRIMARY] ( 0.04)
[EPS-DILUTED] ( 0.04)
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: August 2, 1996 /s/Grant C. Bennett
Grant C. Bennett
President and Director
(Principal Executive
Officer)
Date: August 2, 1996 /s/Peter F. Valentine
Peter F. Valentine
Controller and
Treasurer
(Principal Financial
and Accounting Officer)
