<PAGE> 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 March 29, 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
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, 1996: 7,780,766.
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CERAMICS PROCESS SYSTEMS CORPORATION
Form 10-Q
For The Fiscal Quarter Ended March 29, 1997
Index
PART I: FINANCIAL INFORMATION Page
Item 1: Consolidated Financial Statements 3-8
Consolidated Balance Sheets as of
March 29, 1997 and December 28, 1996 3-4
Consolidated Statements of Operations
for the fiscal quarters ended March 29,
1997 and March 30, 1996 5
Consolidated Statements of Cash Flows
for the fiscal quarters ended March 29,
1997 and March 30, 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 11
<PAGE> 3
PART I FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
<TABLE>
CERAMICS PROCESS SYSTEMS CORPORATION
Consolidated Balance Sheets
March 29, December 28,
1997 1996
<S> <C> <C>
ASSETS
Current Assets:
Cash $ 43,221 $ 113,331
Accounts receivable, trade 235,253 141,035
Inventories 84,277 156,445
Prepaid expenses 9,964 1,340
Other current assets - -
---------- ----------
Total current assets 372,715 412,151
---------- ----------
Property and equipment:
Production equipment 1,160,684 1,145,003
Furniture and office equipment 60,403 60,403
---------- ----------
1,221,087 1,205,406
Less accumulated depreciation (857,414) (824,667)
---------- ----------
Net property and equipment 363,673 380,739
---------- ----------
Deposits 2,337 2,337
---------- ----------
Total Assets $ 738,724 $ 795,227
========== ==========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
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<TABLE>
CERAMICS PROCESS SYSTEMS CORPORATION
Consolidated Balance Sheets (continued)
March 29, December 28,
1997 1996
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT)
Current liabilities:
Accounts payable $ 172,504 $ 128,762
Accrued expenses 749,438 789,766
Deferred revenue 193,197 355,987
Notes payable 450,000 450,000
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 16,487 17,383
------------ ------------
Total current liabilities 2,645,321 2,519,751
Obligations under capital
leases less current portion 83,326 87,999
------------ ------------
Total Liabilities 3,534,952 3,699,897
------------ ------------
Stockholders' Equity (Deficit)
Common stock, $0.01 par value.
Authorized 15,000,000 shares;
issued 7,780,766 shares at March
29, 1997 and December 28, 1996 77,808 77,808
Additional paid-in capital 30,457,384 30,457,384
Accumulated deficit (33,270,584) (32,379,027)
------------ ------------
(2,735,392) (2,843,835)
Less treasury stock, at cost,
22,883 common shares at March
29, 1997 and December 28, 1996 (60,835) (60,835)
------------ ------------
Total shareholders' equity
(deficit) (2,796,227) (2,904,670)
------------ ------------
Total Liabilities and
Stockholders' Equity
(Deficit) $ 738,725 $ 795,227
============ ============
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
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<TABLE>
CERAMICS PROCESS SYSTEMS CORPORATION
Consolidated Statements of Operations
Fiscal Quarters Ended
March 29, March 30,
1997 1996
<S> <C> <C>
Revenue:
Product sales $ 937,609 $ 386,482
License agreements - -
---------- -----------
Total revenue 937,609 386,482
========== ===========
Operating expenses:
Cost of product sales 634,264 409,908
Selling, general, and
administrative 129,933 115,505
---------- -----------
Total operating expenses 764,197 525,413
---------- -----------
Operating income (loss) 173,412 (138,931)
Other income (expense), net (64,969) (58,752)
Net income (loss) $ 108,443 $ (197,683)
========== ===========
Net income (loss) per share $ 0.01 $ (0.03)
---------- -----------
Weighted average number of
common and common
equivalent shares
outstanding 8,111,227 7,757,883
========== ===========
See accompanying notes to consolidated financial statements.
</TABLE>
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<TABLE>
CERAMICS PROCESS SYSTEMS CORPORATION
Consolidated Statements of Cash Flows
Fiscal Quarters Ended
March 29, March 30,
1997 1996
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 108,443 $(197,683)
Adjustments to reconcile net loss to
cash provided by (used in)
operating activities:
Depreciation 26,400 26,400
Amortization 6,347 -
Loss (gain) on disposal of equipment - -
Loss on investment - -
Changes in assets and liabilities:
Accounts receivable, trade (94,218) 40,380
Inventories 72,168 (20,000)
Prepaid expenses (8,624) 1,300
Other current assets - 175
Accounts payable 43,742 45,939
Accrued expenses (28,678) 79,631
Deferred revenue (174,440) -
--------- ----------
Net cash used in
operating activities (48,860) (23,858)
--------- ----------
Cash flows from investing activities:
Proceeds from sale of assets - -
Additions to property and equipment (15,681) (6,810)
Investment in joint venture - -
Deposits - (375)
Net cash used in investing
activities (15,681) (7,185)
--------- ----------
Cash flows from financing activities:
Principal payments of capital lease
obligations (5,570) -
Proceeds from issuance of notes payable - -
Proceeds from issuance of common stock - -
--------- ---------
Net cash provided by (used in)
financing activities (5,570) -
--------- ---------
Net increase (decrease) in cash (70,110) (31,043)
Cash at beginning of quarter 113,331 32,127
--------- ----------
Cash at end of quarter $ 43,221 $ 1,084
========= ==========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> 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 March 29, 1997 and March 30, 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.
<PAGE> 8
(4) Inventory
Inventories consist of the following:
March 29, December 28,
1997 1996
Raw Materials $ 37,424 $ 39,412
Work in process 46,853 85,933
Finished goods - 31,100
--------- ----------
$ 84,277 $ 156,445
========= ==========
(5) Accrued Expenses
Accrued expenses consist of the following:
March 29, December 28,
1997 1996
Accrued legal and
accounting $ 150,723 $ 161,267
Accrued interest 491,408 445,450
Accrued payroll 65,584 79,170
Due to Kilburn Isotronics 19,327 24,694
Accrued other 215,593 435,172
--------- ----------
$ 942,635 $1,145,753
========= ==========
<PAGE> 9
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 $108 thousand in the first
fiscal quarter of 1997 compared with a net loss of $198 thousand
in the first fiscal quarter of 1996. The Company's cash balance
at March 29, 1997 and at December 28, 1996 was $43 thousand and
$113 thousand, respectively.
The improvement in the Company's overall financial
performance in the first fiscal quarter of 1997 versus the first fiscal
quarter of 1996 was primarily attributable to increased shipments of
the Company's metal-matrix composites for use in wireless
telecommunication applications.
The Company's entire operations are currently housed in a leased
facility in Chartley, Massachusetts.
Through the first four 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.
<PAGE> 9
Results of Operations
- ---------------------
The growth in revenue from the first fiscal quarter of 1996 to
the first fiscal quarter of 1997 was primarily due to increased shipments
of the Company's metal-matrix composites for use in wireless
telecommunication applications. Customer demand increased while
unit manufacturing costs declined, resulting in both revenue growth
and improved profitability. In the first fiscal quarter of 1997, a
majority of the Company's revenue was derived from shipments of products
in recurring production, whereas in the first fiscal quarter of 1996,
a majority of the Company's revenue was derived from shipments of
prototype products which were not in recurring production.
The Company's total revenue in the first fiscal quarter of 1997 was
$938 thousand, a 142% increase over revenue in the first fiscal quarter
of 1996 of $386 thousand. Total operating expenses in the first fiscal
quarter of 1997 were $764 thousand, a 45% increase over operating expenses
in the first fiscal quarter of 1996 of $525 thousand.
Of the $239 thousand increase in operating expenses between the
first fiscal quarter of 1997 and the first fiscal quarter of 1996, $14
thousand related to selling, general and administrative expenses, and
$224 related to cost of sales. The increase in cost of sales related
primarily to increased unit volume. Other expense during the quarter
consisted almost exclusively of interest expense.
The cumulative effect of these revenues and costs resulted
in a net income of $108 thousand, or $0.01 per share, in the
first fiscal quarter of 1997, versus a net loss of $198 thousand,
or $0.03 loss per share, in the first fiscal quarter of 1996.
<PAGE> 10
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> 11
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 14, 1997 /s/Grant C. Bennett
Grant C. Bennett
President and Treasurer
(Principal Executive
Officer)
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<ARTICLE> 5
<LEGEND>
This schedule cotains 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 March 29, 1997
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-27-1997
<PERIOD-END> MAR-29-1997
<CASH> 43,221
<SECURITIES> 0
<RECEIVABLES> 235,253
<ALLOWANCES> 0
<INVENTORY> 84,277
<CURRENT-ASSETS> 372,715
<PP&E> 363,673
<DEPRECIATION> 857,414
<TOTAL-ASSETS> 738,724
<CURRENT-LIABILITIES> 3,451,626
<BONDS> 0
0
0
<COMMON> 7,780,766
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 738,725
<SALES> 937,609
<TOTAL-REVENUES> 937,609
<CGS> 634,264
<TOTAL-COSTS> 764,197
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 64,969
<INCOME-PRETAX> 108,443
<INCOME-TAX> 0
<INCOME-CONTINUING> 108,443
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 108,443
<EPS-PRIMARY> 0.01
<EPS-DILUTED> 0.01
</TABLE>
