-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RtLw0xgfOXgB7o7UKg8hfcEVjoGrM8SEqlDQIOqQSBE7GpZLvRCs/Y9xFB3LfaNx GpEgla92mlmoEHThtvJeNg== 0000814676-95-000010.txt : 19951027 0000814676-95-000010.hdr.sgml : 19951027 ACCESSION NUMBER: 0000814676-95-000010 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951026 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: CERAMICS PROCESS SYSTEMS CORP/DE/ CENTRAL INDEX KEY: 0000814676 STANDARD INDUSTRIAL CLASSIFICATION: POTTERY & RELATED PRODUCTS [3260] IRS NUMBER: 042832509 STATE OF INCORPORATION: DE FISCAL YEAR END: 1229 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-16088 FILM NUMBER: 95584356 BUSINESS ADDRESS: STREET 1: 111 S WORCESTER ST PO BOX 338 STREET 2: C/O KILBURN ISOTRONICS INC CITY: CHARTLEY STATE: MA ZIP: 02712 BUSINESS PHONE: 5082227282 MAIL ADDRESS: STREET 1: 111 SOUTH WORCESTER STREET STREET 2: PO BOX 338 CITY: CHARTLEY STATE: MA ZIP: 02712 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the period ended September 30, 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 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. [X] Yes [ ] No APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Number of shares of common stock outstanding as of October 19, 1995: 7,757,856. CERAMICS PROCESS SYSTEMS CORPORATION Form 10-Q For The Fiscal Quarter Ended September 30, 1995 Index PART I: FINANCIAL INFORMATION Page Item 1: Consolidated Financial Statements 3-8 Consolidated Balance Sheets as of September 30, 1995 and December 31, 1994 3-4 Consolidated Statements of Operations for the fiscal quarters and nine-month periods ended September 30, 1995 and October 1, 1994 5 Consolidated Statements of Cash Flows for the nine-month periods ended September 30, 1995 and October 1, 1994 6 Notes to Consolidated Financial Statements 7-8 Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations 8-10 PART II: OTHER INFORMATION Items 1-6 11 Financial Data Schedule 12 Signatures 13 PART I FINANCIAL INFORMATION ITEM 1 FINANCIAL STATEMENTS CERAMICS PROCESS SYSTEMS CORPORATION Consolidated Balance Sheets September 30, December 31, 1995 1994 ASSETS Current Assets: Cash $ 33,291 $ 252,503 Accounts receivable, trade 149,262 243,128 Inventories 60,115 56,126 Prepaid expenses 22,108 28,143 Other current assets 250 24,519 Total current assets 265,026 604,419 Property and equipment: Production equipment 1,023,900 1,077,584 Furniture and office equipment 82,963 72,926 1,106,863 1,150,510 Less accumulated depreciation and amortization 841,668 825,677 Net property and equipment 265,195 324,833 Deposits 1,053 2,623 Total Assets $ 531,274 $ 931,875 See accompanying notes to consolidated financial statements.
CERAMICS PROCESS SYSTEMS CORPORATION Consolidated Balance Sheets September 30, December 31, 1995 1994 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) Current liabilities: Accounts payable $ 120,908 $ 168,623 Accrued expenses 360,865 337,182 Current portion of convertible notes payable: Related parties 920,000 125,000 Other 900,000 125,000 Current portion of obligations under capital leases -- 7,532 Current portion of deferred revenue -- 6,300 Total current liabilities 2,301,773 769,637 Convertible notes payable less current portion: Related parties -- 795,000 Other 500,000 825,000 Total Liabilities 2,801,773 2,389,637 Stockholders' equity (deficit) Common stock, $0.01 par value. Authorized 15,000,000 shares; issued 7,780,739 shares at September 30, 1995 and 7,610,786 at December 31, 1994 77,807 76,108 Preferred stock, $.01 par value. Authorized 5,000,000 shares; no shares issued and outstanding -- -- Additional paid-in capital 30,457,520 30,387,166 Accumulated deficit (32,744,991) (31,860,201) ( 2,209,664) ( 1,396,927) Less treasury stock, at cost, 22,883 common shares ( 60,835) ( 60,835) Total stockholders' equity (deficit) ( 2,270,499) ( 1,457,762) Total Liabilities and Stockholders' Equity (Deficit) $ 531,274 $ 931,875 See accompanying notes to consolidated financial statements.
CERAMICS PROCESS SYSTEMS CORPORATION Consolidated Statements of Operations Fiscal Quarters Ended Nine-Month Periods Ended Sept. 30, Oct. 1, Sept. 30, Oct. 1, 1995 1994 1995 1994 Revenue: Product sales $244,799 $253,877 $ 904,039 $ 758,370 Collaborative development agreements -- -- -- 29,613 License agreements -- -- 2,000 2,000 Total revenue 244,799 253,877 906,039 789,983 Operating expenses Cost of product sales 346,812 396,470 1,136,324 1,213,266 Research, development, and engineering -- 1,873 -- 34,009 Selling, general, and administrative 116,019 251,976 503,713 643,093 Total operating expenses 462,831 650,319 1,640,037 1,890,368 Operating income (loss) ( 218,032) ( 396,442)( 733,998)( 1,100,385) Other income (expense),net ( 56,838) 5,443 ( 150,792) 9,305 Net income (loss) ($274,870) ($390,999)($ 884,790)($1,091,080) Net income (loss) per share ($0.04) ($0.05) ($0.12) ($0.14) Weighted average number of common and common equivalent shares outstanding 7,690,613 7,587,903 7,659,800 7,577,548 See accompanying notes to consolidated financial statements.
CERAMICS PROCESS SYSTEMS CORPORATION Consolidated Statements of Cash Flows Nine-Month Periods Ended September 30, October 1, 1995 1994 Cash flows from operating activities: Net income (loss) ($884,790) ($1,091,080) Adjustments to reconcile net loss to cash provided by (used in) operating activities: Depreciation & amortization 98,917 133,184 Settlement of interest obligation 72,053 -- Gain on sale of property and equipment -- ( 40,878) Changes in assets and liabilities: Accounts receivable, trade 93,866 358,016 Inventories ( 3,989) 15,701 Prepaid expenses 6,035 ( 21,479) Other current assets 24,269 -- Accounts payable ( 47,715) 17,240 Accrued expenses 23,683 ( 57,237) Deferred revenue ( 6,300) -- Due to customer -- ( 176,528) Due to Kilburn Isotronics, Inc. -- 108,614 Net cash used in operating activities ( 623,971) ( 754,447) Cash flows from investing activities: Additions to property and equipment ( 39,279) ( 565,233) Disposal of property and equipment -- 40,878 Net change in deposits 1,570 20,987 Net cash used in investing activities ( 37,709) ( 503,368) Cash flows from financing activities: Repayment of capital lease obligations ( 7,532) ( 21,306) Proceeds from issuance of convertible notes payable 450,000 1,182,000 Proceeds from issuance of common stock -- 10,355 Net cash provided by financing activities 442,468 1,171,049 Net decrease in cash ( 219,212) ( 86,766) Cash at beginning of period 252,503 89,333 Cash at end of period $ 33,291 $ 2,567 See accompanying notes to consolidated financial statements.
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 products for the microelectronics 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 nine-month periods ended September 30, 1995 and October 1, 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. Certain amounts in the financial statements for the nine-month period ended October 1, 1994 have been reclassified to conform to the presentation of the financial statements for the nine-month period ended September 30, 1995. 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. (4) Inventory Inventories consist of the following: September 30, December 31, 1995 1994 Raw materials $ 36,888 $ 8,039 Work in process 9,455 39,642 Finished goods 13,772 8,445 $ 60,115 $ 56,126 (5) Accrued Expenses Accrued expenses consist of the following: September 30, December 31, 1995 1994 Accrued legal and accounting $ 132,675 $ 174,428 Accrued interest 161,999 79,311 Accrued payroll 34,328 74,029 Accrued other 31,863 9,414 $ 360,865 $ 337,182
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Financial Condition The Company incurred a net loss in the third fiscal quarter of 1995 in the amount of $275 thousand, versus a net loss of $391 thousand in the third fiscal quarter of 1994. The Company's cash balance at September 30, 1995 and at December 31, 1994 was $33 thousand and $253 thousand, respectively. The Company's operational performance improved for both the fiscal quarter and nine-month period ended September 30, 1995, versus similar time periods in 1994, primarily because its facilities in Chartley, Massachusetts were fully operational in 1995, whereas the Company was in the process of relocating to Chartley during most of the first nine months of 1994. The Company is operating at the Chartley facility as a tenant at will. 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. These convertible notes are subordinated to all other indebtedness of the Company. In March, 1995 the Company received proceeds of $250 thousand through the issuance of a promissory note to Aavid Thermal Technologies, Inc. ("Aavid"), secured by all of the Company's assets, in connection with a letter of intent entered into between the Company and Aavid. The letter of intent expired April 30, 1995. In the third fiscal quarter of 1995 the Company received a total of $200,000 through the issuance of interest bearing debt agreements to an investor. The total interest cost associated with debt instruments in the third fiscal quarter of 1995 and the nine-month period ended September 30, 1995 amounted to $155 thousand and $56 thousand, respectively. 3,944,936 shares of common stock at September 30, 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 with exercise dates ranging through July 30, 1996, for the purchase 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 common stock were outstanding at September 30, 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 when needed, or on terms acceptable to the Company. Results of Operations The Company's total revenue remained constant at approximately $250 thousand in the third fiscal quarters of 1995 and 1994, and consisted entirely of product sales. Total revenue for the nine-month period ended September 30, 1995 was $906 thousand, an increase of $116 thousand from total revenue of $790 thousand for the nine-month period ended October 1, 1994. This increase consisted of a $146 thousand increase in product sales, from $758 thousand for the nine-month period ended October 1, 1994 to $904 thousand for the nine-month period ended September 30, 1995, partially offset by a $30 thousand decrease in collaborative development revenue, from $30 thousand for the nine-month period ended October 1, 1994 to no collaborative revenue for the nine- month period ended September 30, 1995. The increase in product sales for the nine-month period ended September 30, 1995 versus the similar 1994 time period was primarily due to the fact that the Company's facilities in Chartley, Massachusetts were fully operational in 1995, whereas the Company was in the process of relocating during most of the first nine months of 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 $41 thousand, to a negative gross margin of $102 thousand in the third fiscal quarter of 1995, from a negative $143 thousand gross margin in the third fiscal quarter of 1994. The Company's gross margin on product sales increased $223 thousand, to a negative gross margin of $232 thousand for the nine-month period ended September 30, 1995, from a negative gross margin of $455 thousand for the nine-month period ended October 1, 1994. The Company earned no collaborative development revenue for the nine-month period ended September 30, 1995, and consequently incurred no related research, development, and engineering costs for the same time period. Research development and engineering costs for the fiscal quarter and nine-month period ended October 1, 1994 were $2 thousand and $34 thousand, respectively. Selling, general, and administrative expenses decreased $136 thousand to $116 thousand in the third fiscal quarter of 1995, from $252 thousand in the third fiscal quarter of 1994, primarily due to a $65 thousand reduction in the Company's legal and accounting fees in the third fiscal quarter of 1995 from the similar time period in 1994, and proceeds of $34 thousand received from a property insurance settlement in the third fiscal quarter of 1995. The cumulative effect of these revenues and costs resulted in net losses of $275 thousand, or $0.04 per share, and $885 thousand, or $0.12 per share, for the fiscal quarter and nine-month period ended September 30, 1995, respectively, and net losses of $391 thousand, or $0.05 per share, and $1,091 thousand, or $0.14 per share, for the fiscal quarter and nine-month period ended October 1, 1994, 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 [PERIOD-TYPE] 9-MOS [FISCAL-YEAR-END] DEC-30-1995 [PERIOD-END] SEPT-30-1995 [CASH] 33,291 [SECURITIES] 0 [RECEIVABLES] 149,262 [ALLOWANCES] 0 [INVENTORY] 60,115 [CURRENT-ASSETS] 265,026 [PP&E] 1,106,863 [DEPRECIATION] 841,668 [TOTAL-ASSETS] 531,274 [CURRENT-LIABILITIES] 2,301,773 [BONDS] 0 [COMMON] 77,807 [PREFERRED-MANDATORY] 0 [PREFERRED] 0 [OTHER-SE] (2,348,306) [TOTAL-LIABILITY-AND-EQUITY] 531,274 [SALES] 906,039 [TOTAL-REVENUES] 906,039 [CGS] 1,136,324 [TOTAL-COSTS] 1,640,037 [OTHER-EXPENSES] 150,792 [LOSS-PROVISION] 0 [INTEREST-EXPENSE] 157,643 [INCOME-PRETAX] ( 884,790) [INCOME-TAX] 0 [INCOME-CONTINUING] ( 884,790) [DISCONTINUED] 0 [EXTRAORDINARY] 0 [CHANGES] 0 [NET-INCOME] ( 884,790) [EPS-PRIMARY] ( 0.12) [EPS-DILUTED] ( 0.12)
SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Ceramics Process Systems Corporation (Registrant) Date: October 26, 1995 /s/Grant C. Bennett Grant C. Bennett President and Director (Principal Executive Officer) Date: October 26, 1995 /s/Peter F. Valentine Peter F. Valentine Controller and Treasurer (Principal Financial and Accounting Officer) -----END PRIVACY-ENHANCED MESSAGE-----