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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the period ended September 27, 2025
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
CPS TECHNOLOGIES CORP.
(Exact Name of Registrant as Specified in its Charter)
|
Delaware |
04-2832509 |
|
111 South Worcester Street |
02766-2102 |
(508) 222-0614
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. ☒ Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). ☒ Yes ☐ No
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 ☐ | Non-accelerated filer ☒ | Smaller reporting company ☒ |
| 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 (15U.S.C. 7262(b)) by the registered public 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):
☐Yes ☒ No
Securities registered pursuant to Section 12(b) of the Act:
|
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
|
Common Stock, $0.01 par value |
CPSH |
NASDAQ Capital Markets |
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 20, 2025: 17,979,277.
PART I FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS (Unaudited)
CPS TECHNOLOGIES CORP.
Balance Sheets (Unaudited)
|
September 27, 2025 |
December 28, 2024 |
|||||||
|
ASSETS |
||||||||
|
Current assets: |
||||||||
|
Cash and cash equivalents |
$ | 3,234,142 | $ | 3,280,687 | ||||
|
Marketable securities, at fair value |
1,054,079 | 1,031,001 | ||||||
|
Accounts receivable-trade |
5,400,080 | 4,858,208 | ||||||
|
Accounts receivable-other |
376,652 | 177,068 | ||||||
|
Inventories, net |
5,383,680 | 4,331,066 | ||||||
|
Prepaid expenses and other current assets |
328,249 | 480,986 | ||||||
|
Total current assets |
15,776,882 | 14,159,016 | ||||||
|
Property and equipment: |
||||||||
|
Production equipment |
10,599,479 | 10,382,379 | ||||||
|
Furniture and office equipment |
910,310 | 891,921 | ||||||
|
Leasehold improvements |
997,830 | 997,830 | ||||||
|
Total cost |
12,507,619 | 12,272,130 | ||||||
|
Accumulated depreciation and amortization |
(10,737,391 | ) | (10,377,756 | ) | ||||
|
Construction in progress |
216,193 | 108,874 | ||||||
|
Net property and equipment |
1,986,421 | 2,003,248 | ||||||
|
Net intangible assets |
23,746 | - | ||||||
|
Right-of-use lease asset |
370,000 | 186,000 | ||||||
|
Deferred taxes, net |
2,279,253 | 2,528,682 | ||||||
|
Total Assets |
$ | 20,436,302 | 18,876,946 | |||||
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
|
Current liabilities: |
||||||||
|
Note payable, current portion |
- | 8,130 | ||||||
|
Accounts payable |
3,530,052 | 3,053,712 | ||||||
|
Accrued expenses |
1,298,268 | 913,279 | ||||||
|
Deferred revenue |
74,257 | 172,429 | ||||||
|
Lease liability, current portion |
161,000 | 160,000 | ||||||
|
Total current liabilities |
5,063,577 | 4,307,550 | ||||||
|
Deferred revenue – long term |
31,277 | 31,277 | ||||||
|
Long term lease liability |
209,000 | 26,000 | ||||||
|
Total liabilities |
5,303,854 | 4,364,827 | ||||||
|
Commitments & Contingencies |
||||||||
|
Stockholders’ equity: |
||||||||
|
Common stock, $0.01 par value, authorized 20,000,000 shares; issued 14,666,987 and 14,661,487 shares; outstanding 14,529,277 and 14,525,960 shares at September 27, 2025 and December 28, 2024, respectively |
146,670 | 146,615 | ||||||
|
Additional paid-in capital |
40,809,151 | 40,580,387 | ||||||
|
Accumulated other comprehensive income |
7,176 | 15,500 | ||||||
|
Accumulated deficit |
(25,482,486 | ) | (25,890,245 | ) | ||||
|
Less cost of 137,710 and 135,527 common shares repurchased at each September 27, 2025 and December 28, 2024, respectively |
(348,063 | ) | (340,138 | ) | ||||
|
Total stockholders’ equity |
15,132,448 | 14,512,119 | ||||||
|
Total liabilities and stockholders’ equity |
$ | 20,436,302 | $ | 18,876,946 | ||||
See accompanying notes to financial statements.
CPS TECHNOLOGIES CORP.
Statements of Operations and Other Comprehensive Income (Loss) (Unaudited)
|
Three Months Ended |
Nine Months Ended |
|||||||||||||||
|
September 27, 2025 |
September 28, 2024 |
September 27, 2025 |
September 28, 2024 |
|||||||||||||
|
Product sales |
$ | 8,803,695 | $ | 4,247,116 | $ | 24,388,272 | $ | 15,190,063 | ||||||||
|
Cost of product sales |
7,301,129 | 4,770,548 | 20,318,390 | 15,037,177 | ||||||||||||
|
Gross profit |
1,502,566 | (523,432 | ) | 4,069,882 | 152,886 | |||||||||||
|
Selling, general, and administrative expenses |
1,226,484 | 963,064 | 3,527,223 | 3,214,831 | ||||||||||||
|
Income (loss) from operations |
276,082 | (1,486,496 | ) | 542,659 | (3,061,945 | ) | ||||||||||
|
Other income, net |
45,483 | 70,974 | 114,985 | 241,845 | ||||||||||||
|
Net income (loss) before income taxes |
321,565 | (1,415,522 | ) | 657,644 | (2,820,100 | ) | ||||||||||
|
Income tax provision (benefit) |
113,601 | (372,683 | ) | 249,885 | (679,803 | ) | ||||||||||
|
Net income (loss) |
$ | 207,964 | $ | (1,042,839 | ) | $ | 407,759 | $ | (2,140,297 | ) | ||||||
|
Other comprehensive income |
||||||||||||||||
|
Net unrealized gains (losses) on available for sale securities |
(2,293 | ) | 8,745 | 7,913 | 17,446 | |||||||||||
|
Reclassification adjustment for gains included in net income |
- | - | (16,237 | ) | - | |||||||||||
|
Total other comprehensive income (loss) |
(2,293 | ) | 8,745 | (8,324 | ) | 17,446 | ||||||||||
|
Comprehensive income (loss) |
205,671 | (1,034,094 | ) | 399,435 | (2,122,851 | ) | ||||||||||
|
Net income (loss) per basic common share |
$ | 0.01 | $ | (0.07 | ) | $ | 0.03 | $ | (0.15 | ) | ||||||
|
Weighted average number of basic common shares outstanding |
14,527,126 | 14,525,664 | 14,526,349 | 14,521,365 | ||||||||||||
|
Net income (loss) per diluted common share |
$ | 0.01 | $ | (0.07 | ) | $ | 0.03 | $ | (0.15 | ) | ||||||
|
Weighted average number of diluted common shares outstanding |
14,674,384 | 14,525,664 | 14,598,576 | 14,521,365 | ||||||||||||
See accompanying notes to financial statements.
CPS TECHNOLOGIES CORP.
STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 27, 2025 AND SEPTEMBER 28, 2024
|
Common Stock |
||||||||||||||||||||||||||||
|
Number of shares issued |
Par Value |
Additional paid-in capital |
Accumulated other comprehensive income |
Accumulated deficit |
Stock repurchased |
Total stockholders’ equity |
||||||||||||||||||||||
|
Balance at June 28, 2025 |
14,661,487 | $ | 146,615 | $ | 40,751,927 | $ | 9,469 | $ | (25,690,450 | ) | $ | (340,138 | ) | $ | 14,877,423 | |||||||||||||
|
Share-based compensation expense |
-- | -- | 49,354 | -- | -- | -- | 49,354 | |||||||||||||||||||||
|
Employee option exercises |
5,500 | 55 | 7,870 | -- | -- | (7,925 | ) | -- | ||||||||||||||||||||
|
Other comprehensive loss |
-- | -- | -- | (2,293 | ) | -- | -- | (2,293 | ) | |||||||||||||||||||
|
Net income |
-- | -- | -- | -- | 207,964 | -- | 207,964 | |||||||||||||||||||||
|
Balance at September 27, 2025 |
14,666,987 | $ | 146,670 | $ | 40,809,151 | $ | 7,176 | $ | (25,482,486 | ) | $ | (348,063 | ) | $ | 15,132,448 | |||||||||||||
|
Common Stock |
||||||||||||||||||||||||||||
|
Number of shares issued |
Par Value |
Additional paid-in capital |
Accumulated other comprehensive income |
Accumulated deficit |
Stock repurchased |
Total stockholders’ equity |
||||||||||||||||||||||
|
Balance at December 28, 2024 |
14,661,487 | $ | 146,615 | $ | 40,580,387 | $ | 15,500 | $ | (25,890,245 | ) | $ | (340,138 | ) | $ | 14,512,119 | |||||||||||||
|
Share-based compensation expense |
-- | -- | 220,894 | -- | -- | -- | 220,894 | |||||||||||||||||||||
|
Employee option exercises |
5,500 | 55 | 7,870 | -- | -- | (7,925 | ) | -- | ||||||||||||||||||||
|
Net unrealized gains on available for sale securities |
-- | -- | -- | 7,913 | -- | -- | 7,913 | |||||||||||||||||||||
|
Reclassification adjustment for gains included in net income |
-- | -- | -- | (16,237 | ) | -- | -- | (16,237 | ) | |||||||||||||||||||
|
Net income |
-- | -- | -- | -- | 407,759 | -- | 407,759 | |||||||||||||||||||||
|
Balance at September 27, 2025 |
14,666,987 | $ | 146,670 | $ | 40,809,151 | $ | 7,176 | $ | (25,482,486 | ) | $ | (348,063 | ) | $ | 15,132,448 | |||||||||||||
|
Common Stock |
||||||||||||||||||||||||||||
|
Number of shares issued |
Par Value |
Additional paid-in capital |
Accumulated other comprehensive income |
Accumulated deficit |
Stock repurchased |
Total stockholders’ equity |
||||||||||||||||||||||
|
Balance at June 29, 2024 |
14,601,487 | $ | 146,015 | $ | 40,386,335 | $ | 8,701 | $ | (23,852,254 | ) | $ | (250,138 | ) | $ | 16,438,659 | |||||||||||||
|
Share-based compensation expense |
-- | -- | 44,480 | -- | -- | -- | 44,480 | |||||||||||||||||||||
|
Employee option exercises |
60,000 | 600 | 89,400 | -- | -- | (90,000 | ) | -- | ||||||||||||||||||||
|
Other comprehensive income |
-- | -- | -- | 8,745 | -- | -- | 8,745 | |||||||||||||||||||||
|
Net loss |
-- | -- | -- | -- | (1,042,839 | ) | -- | (1,042,839 | ) | |||||||||||||||||||
|
Balance at September 28, 2024 |
14,661,487 | $ | 146,615 | $ | 40,520,215 | $ | 17,446 | $ | (24,895,093 | ) | $ | (340,138 | ) | $ | 15,449,045 | |||||||||||||
|
Common Stock |
||||||||||||||||||||||||||||
|
Number of shares issued |
Par Value |
Additional paid-in capital |
Accumulated other comprehensive income |
Accumulated deficit |
Stock repurchased |
Total stockholders’ equity |
||||||||||||||||||||||
|
Balance at December 30, 2023 |
14,601,487 | $ | 146,015 | $ | 40,180,893 | $ | -- | $ | (22,754,796 | ) | $ | (250,138 | ) | $ | 17,321,974 | |||||||||||||
|
Share-based compensation expense |
-- | -- | 249,922 | -- | -- | -- | 249,922 | |||||||||||||||||||||
|
Employee option exercises |
60,000 | 600 | 89,400 | -- | -- | (90,000 | ) | -- | ||||||||||||||||||||
|
Other comprehensive income |
-- | -- | -- | 17,446 | -- | -- | 17,446 | |||||||||||||||||||||
|
Net loss |
-- | -- | -- | -- | (2,140,297 | ) | -- | (2,140,297 | ) | |||||||||||||||||||
|
Balance at September 28, 2024 |
14,661,487 | $ | 146,615 | $ | 40,520,215 | $ | 17,446 | $ | (24,895,093 | ) | $ | (340,138 | ) | $ | 15,449,045 | |||||||||||||
See accompanying notes to financial statements.
CPS TECHNOLOGIES CORP.
Statements of Cash Flows (Unaudited)
|
Nine Months Ended |
||||||||
|
September 27, |
September 28, |
|||||||
|
2025 |
2024 |
|||||||
|
Cash flows from operating activities: |
||||||||
|
Net income (loss) |
$ | 407,759 | $ | (2,140,297 | ) | |||
|
Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities: |
||||||||
|
Depreciation and amortization |
458,478 | 369,698 | ||||||
|
Share-based compensation |
220,894 | 249,922 | ||||||
|
Realized gain on sale of marketable securities |
(11,470 | ) | -- | |||||
|
Deferred taxes |
249,429 | (680,259 | ) | |||||
|
Changes in: |
||||||||
|
Accounts receivable-trade |
(541,872 | ) | 734,606 | |||||
|
Accounts receivable-other |
(199,584 | ) | (279,122 | ) | ||||
|
Inventories |
(1,052,615 | ) | 148,518 | |||||
|
Prepaid expenses and other current assets |
152,736 | (145,063 | ) | |||||
|
Accounts payable |
476,340 | (38,030 | ) | |||||
|
Accrued expenses |
384,991 | (234,379 | ) | |||||
|
Deferred revenue |
(98,171 | ) | (91,343 | ) | ||||
|
Net cash provided by (used in) operating activities |
446,915 | (2,105,749 | ) | |||||
|
Cash flows from investing activities- |
||||||||
|
Purchases of property and equipment |
(439,492 | ) | (895,868 | ) | ||||
|
Acquisition cost of patents and trademarks |
(25,905 | ) | -- | |||||
|
Proceeds from sale of marketable securities |
1,027,000 | -- | ||||||
|
Purchase of marketable securities |
(1,046,933 | ) | (1,003,506 | ) | ||||
|
Net cash used in investing activities |
(485,330 | ) | (1,899,374 | ) | ||||
|
Cash flows from financing activities: |
||||||||
|
Payments on note payable |
(8,130 | ) | (34,784 | ) | ||||
|
Net cash used in financing activities |
(8,130 | ) | (34,784 | ) | ||||
|
Net decrease in cash and cash equivalents |
(46,545 | ) | (4,039,907 | ) | ||||
|
Cash and cash equivalents at beginning of period |
3,280,687 | 8,813,626 | ||||||
|
Cash and cash equivalents and restricted cash at end of period |
$ | 3,234,142 | $ | 4,773,719 | ||||
|
Less: Restricted cash at end of period |
-- | 84,715 | ||||||
|
Cash and cash equivalents at end of period |
3,234,142 | $ | 4,689,004 | |||||
|
Supplemental disclosures of cash flows information: |
||||||||
|
Cash paid for income taxes |
-- | 432 | ||||||
|
Cash paid for interest |
26 | 1,917 | ||||||
|
Supplemental disclosures of non-cash activity |
||||||||
| Disposal of fully depreciated production equipment | 96,684 | 1,896,631 | ||||||
|
Share repurchases as a reduction of stock option exercise proceeds |
7,925 | 90,000 | ||||||
See accompanying notes to financial statements.
CPS TECHNOLOGIES CORP.
Notes to Financial Statements
(Unaudited)
(1) Nature of Business
CPS Technologies Corporation (the “Company” or “CPS”) provides advanced material solutions to the electronics, power generation, automotive, defense and other industries. The Company’s primary advanced material solution is metal-matrix composites (“MMC”) 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.
Using its proprietary MMC technology, the Company also produces light-weight armor, particularly for extreme environments and heavy threat levels.
The Company also engages in research and development, in some cases government funded and in others internally funded, focused on developing new products in response to customer requirements. These products expand our offerings in existing markets and enable penetration into new 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 28, 2024 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 28, 2024 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) Marketable Securities
Investments consist of U.S. Treasury Bills with maturities up to one year. Since it is not currently managements intention to hold these debt securities until the maturity dates, these have been classified as available-for-sale (“AFS”) and are recorded on the balance sheet at fair value, with changes in fair value recorded as a component of other comprehensive income.
(4) Fair value of Marketable Securities
ASC 820, Fair Value Measurements (“ASC 820”) states that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. The three-tiered fair value hierarchy, which prioritizes which inputs should be used in measuring fair value, is comprised of: (Level I) observable inputs such as quoted prices in active markets; (Level II) inputs other than quoted prices in active markets that are observable either directly or indirectly and (Level III) unobservable inputs for which there is little or no market data. The fair value hierarchy requires the use of observable market data when available in determining fair value. CPS’ marketable securities consist solely of US Government bonds with a maturity of 12 months or less and which fall under Level II of the fair value hierarchy. The value of these bonds as of September 27, 2025 was $1,054,079 and was $1,031,001 as of December 28, 2024.
|
September 27, 2025 |
December 28, 2024 |
|||||||
|
Cost basis |
$ | 1,046,903 | $ | 1,015,501 | ||||
|
Unrealized gain |
7,176 | 15,500 | ||||||
|
Total fair value |
$ | 1,054,079 | $ | 1,031,001 | ||||
(5) 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. Had there been a profit in Q3 and year to date in 2024, the dilutive effect would have been 41,471 shares and 25,905 shares, respectively.
The following table presents the calculation of both basic and diluted EPS:
|
Three Months Ended |
Nine Months Ended |
|||||||||||||||
|
September 27, 2025 |
September 28, 2024 |
September 27, 2025 |
September 28, 2024 |
|||||||||||||
|
Basic EPS Computation: |
||||||||||||||||
|
Numerator: |
||||||||||||||||
|
Net income (loss) |
$ | 207,964 | $ | (1,042,839 | ) | $ | 407,759 | $ | (2,140,297 | ) | ||||||
|
Denominator: |
||||||||||||||||
|
Weighted average |
||||||||||||||||
|
Common shares |
||||||||||||||||
|
Outstanding |
14,527,126 | 14,525,664 | 14,526,349 | 14,521,365 | ||||||||||||
|
Basic EPS |
$ | 0.01 | $ | (0.07 | ) | $ | 0.03 | $ | (0.15 | ) | ||||||
|
Diluted EPS Computation: |
||||||||||||||||
|
Numerator: |
||||||||||||||||
|
Net income (loss) |
$ | 207,964 | $ | (1,042,839 | ) | $ | 407,759 | $ | (2,140,297 | ) | ||||||
|
Denominator: |
||||||||||||||||
|
Weighted average |
||||||||||||||||
|
Common shares |
||||||||||||||||
|
Outstanding |
14,527,126 | 14,525,664 | 14,526,349 | 14,521,365 | ||||||||||||
|
Dilutive effect of stock options |
147,257 | -- | 72,227 | -- | ||||||||||||
|
Total Shares |
14,674,384 | 14,525,664 | 14,598,576 | 14,521,365 | ||||||||||||
|
Diluted EPS |
$ | 0.01 | $ | (0.07 | ) | $ | 0.03 | $ | (0.15 | ) | ||||||
(6) Commitments & Contingencies
Commitments
Operating Leases
The Company has one real estate lease now expiring in February 2028. In August 2025 the Company exercised its option to extend the lease term for two additional years. 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 2028 (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 based on the present value of lease payments over the lease term using the Company’s incremental borrowing rate at commencement date, for the portion expiring in February 2026, and the option exercise date, for the final two years of the lease. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.
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 two, two year options to renew the lease in March 2028 and again in March 2030 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 $165 thousand to $169 thousand through maturity.
The following table presents information about the amount, timing and uncertainty of cash flows arising from the Company’s capitalized operating lease as of September 27, 2025:
|
(Dollars in Thousands) |
September 27, 2025 |
|||
|
Maturity of capitalized lease liabilities |
Lease payments |
|||
|
2025 |
41 | |||
|
2026 |
168 | |||
|
2027 |
169 | |||
|
2028 |
28 | |||
|
Total undiscounted operating lease payments |
$ | 406 | ||
|
Less: Imputed interest |
(36 | ) | ||
|
Present value of operating lease liability |
$ | 370 | ||
|
Balance Sheet Classification |
||||
|
Current lease liability |
$ | 161 | ||
|
Long-term lease liability |
209 | |||
|
Total operating lease liability |
$ | 370 | ||
|
Other Information |
||||
|
Remaining lease term for capitalized operating lease (months) |
29 | |||
|
Discount rate for capitalized operating leases |
7.3 | % | ||
Operating Lease Costs and Cash Flows
Operating lease cost and cash paid was $41 thousand during the third quarter of 2025 and $124 thousand for the nine months ended September 27, 2025. These costs are related to its long-term operating lease. All other short-term leases were immaterial.
Finance Leases
The company does not have any finance leases.
(7) 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 quarter ended September 27, 2025, no stock options were granted to employees under the Company’s 2020 Equity Incentive Plan Stock Incentive Plan (the “Plan”) and no stock options were granted to outside directors during the quarter ended September 27, 2025. For the nine months ended September 27, 2025 a total of 115,000 stock options and 75,000 stock options were granted to employees and directors, respectively. During the quarter ended September 28, 2024, no stock options were granted to employees under the Company’s 2020 Equity Incentive Plan Stock Incentive Plan (the “Plan”) and no stock options were granted to outside directors during the quarter ended September 28, 2024. For the nine months ended September 28, 2024 a total of 135,500 stock options and 75,000 stock options were granted to employees and directors, respectively.
During the three and nine months ended September 27, 2025, there were 5,500 options exercised and corresponding shares issued at a weighted average price of $1.44. During the three and nine months ended September 28, 2024, there were 60,000 options exercised and corresponding shares issued at a weighted average price of $1.50.
During the three and nine months ended September 27, 2025, the Company repurchased 2,183 shares for employees to facilitate their exercise of stock options. During the three and nine months ended September 28, 2024, the Company repurchased 53,255 shares for employees to facilitate their exercise of stock options.
There were also 1,077,800 options outstanding at a weighted average price of $2.45 with a weighted average remaining term of 7.13 years as of September 27, 2025, and there were 635,500 options exercisable at a weighted average price of $2.45 with a weighted average remaining term of 6.37 years as of September 27, 2025. The Plan, as amended, is authorized to issue 1,500,000 shares of common stock. As of September 27, 2025, there were 421,400 shares available for future grants under the 2020 Plan and 138,900 shares outstanding under the 2009 Plan. As of September 28, 2024, there were 626,400 shares available for future grants under the 2020 Plan and 248,400 shares outstanding under the 2009 Plan.
As of September 27, 2025, there was $509 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 2.68 years.
During the three and nine months ended September 27, 2025, the Company recognized $49,354 and $220,894, respectively, as shared-based compensation expense related to previously granted shares under the Plan.
During the three and nine months ended September 28, 2024, the Company recognized $44,480 and $249,922, respectively, as shared-based compensation expense related to previously granted shares under the Plan.
(8) Inventories
Inventories consist of the following:
|
September 27, |
December 28, |
|||||||
|
2025 |
2024 |
|||||||
|
Raw materials |
$ | 2,422,339 | $ | 2,625,305 | ||||
|
Work in process |
3,175,806 | 1,880,396 | ||||||
|
Finished goods |
328,395 | 343,722 | ||||||
|
Total inventory |
5,926,541 | 4,849,423 | ||||||
|
Reserve for obsolescence |
(542,860 | ) | (518,357 | ) | ||||
|
Inventories, net |
$ | 5,383,680 | $ | 4,331,066 | ||||
(9) Accrued Expenses
Accrued expenses consist of the following:
|
September 27, |
December 28, |
|||||||
|
2025 |
2024 |
|||||||
|
Accrued legal and accounting |
$ | 96,450 | $ | 138,600 | ||||
|
Accrued payroll and related expenses |
635,051 | 254,737 | ||||||
|
Accrued product returns |
465,696 | 429,617 | ||||||
|
Accrued other |
101,071 | 90,325 | ||||||
| $ | 1,298,268 | $ | 913,279 | |||||
(10) Line of Credit
The Company has a $3.0 million revolving line of credit (LOC) with Rockland Trust Company. The LOC is secured by the accounts receivable and other assets of the Company and has an interest rate of the National Prime Rate as published by the Wall Street Journal (7.25% at September 27, 2025). On September 27, 2025, the Company had $0 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 remains in effect and has been extended to August 5, 2026.
(11) Segment Reporting
The Company views its operations and manages its business as one segment. The Company produces and sells advanced material solutions, primarily metal matrix composites, to assemblers of high density electronics and other specialty components and subassemblies. The Company also assembles housings and packages for hybrid circuits, selling to the same customers mentioned above. These customers represent a single market or segment with similar stringent and well-defined requirements. The Company’s customers, in turn, sell the components and subassemblies which incorporate the products into many different end markets, however, these end markets are two to three levels removed from the Company. The Company also sells armor strike faces to armor manufacturers, using the same manufacturing process used in its other product solutions. The Company makes operating decisions and assesses financial performance only for the Company as a whole and does not make operating decisions or assess financial performance by the end markets which ultimately use the products. Our chief operating decision maker (CODM) is Brian Mackey, our President and CEO. The Company's CODM regularly reviews financial information presented and does not evaluate the Company's operating segment using asset or liability information. Instead, the CODM uses revenue, gross margin, and net income or loss to allocate operating and capital resources and assess performance by comparing actual results to historical results and previously forecasted financial information.
The following table presents segment information for the Company's single reporting segment:
| Three Months Ended | Nine Months Ended | |||||||||||||||
|
September 27, 2025 |
September 28, 2024 |
September 27, 2025 |
September 28, 2024 |
|||||||||||||
|
Product Sales |
$ | 8,803,695 | $ | 4,247,116 | $ | 24,388,272 | $ | 15,190,063 | ||||||||
|
Cost of product sales |
7,301,129 | 4,770,548 | 20,318,390 | 15,037,177 | ||||||||||||
|
Gross profit (loss) |
1,502,566 | (523,432 | ) | 4,069,882 | 152,886 | |||||||||||
|
Selling, general, and administrative expenses |
1,226,484 | 963,064 | 3,527,223 | 3,214,831 | ||||||||||||
|
Income (loss) from operations |
276,082 | (1,486,496 | ) | 542,659 | (3,061,945 | ) | ||||||||||
|
Other income, net |
45,483 | 70,974 | 114,985 | 241,845 | ||||||||||||
|
Income (loss) before income taxes |
321,565 | (1,415,522 | ) | 657,644 | (2,820,100 | ) | ||||||||||
|
Income tax provision (benefit) |
113,601 | (372,683 | ) | 249,885 | (679,803 | ) | ||||||||||
|
Net income (loss) |
$ | 207,964 | $ | (1,042,839 | ) | $ | 407,759 | $ | (2,140,297 | ) | ||||||
(12) 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. Management has determined that a valuation allowance is not needed as it expects that the deferred tax asset will be fully utilized.
For the three and nine months ended September 27, 2025 the deferred tax asset was decreased $113,601 and $249,429 for the estimated tax provision for Q3 and year to date net income, respectively.
(13) Enactment of the One Big Beautiful Bill Act
On July 4, 2025, the President signed into law the One Big Beautiful Bill Act (Public Law 119-21), which includes significant modifications to the Internal Revenue Code. The legislation permanently extends and modifies key provisions of the Tax Cuts and Jobs Act of 2017 and introduces new deductions and credits applicable to both individuals and businesses.
Key provisions relevant to the Company include:
Restoration of Immediate Expensing for Domestic Research and Experimental (“R&E”) Expenditures: Effective for tax years beginning after December 31, 2024, domestic R&E expenditures may be immediately expensed under new Section 174A, reversing the prior capitalization and amortization requirement. This change may materially impact the Company’s deferred tax assets and current tax expense depending on the volume of qualifying expenditures.
During Q3 2025, the Company expensed $899,728 of unamortized Section 174 R&E expenditures.
It is anticipated that the unamortized Section 174 R&E expenditures at Q2 2025 will be expensed as follows (subject to further analyses and discussions):
|
2025 |
2026 |
Total |
Rationale |
||||||||||
|
Q4 2025 |
187,193 | - | 187,193 |
Expense 12.5% of 2022-2024 |
|||||||||
|
Q1 2026 |
- | 187,193 | 187,193 |
Expense 12.5% of 2022-2024 |
|||||||||
|
Q2 2026 |
- | 187,193 | 187,193 |
Expense 12.5% of 2022-2024 |
|||||||||
|
Q3 2026 |
- | 187,193 | 187,193 |
Expense 12.5% of 2022-2024 |
|||||||||
|
Q4 2026 |
- | 187,193 | 187,193 |
Expense 12.5% of 2022-2024 |
|||||||||
|
Totals |
187,193 | 748,772 | 935,965 | ||||||||||
Enhancement of Section 179 Expensing: The maximum Section 179 deduction is increased to $2.5 million, with a phase-out threshold beginning at $4 million. This expansion is expected to accelerate tax deductions for qualifying property and benefit capital investment strategies.
Permanent Reinstatement of 100% Bonus Depreciation: For qualified property acquired and placed in service after January 19, 2025, the Company may elect full expensing under Section 168(k), which is expected to accelerate tax deductions and reduce taxable income in applicable periods.
Modifications to FDII (now FDDEI): The deduction under Section 250 for foreign-derived intangible income is reduced to 33.34%, and eligibility criteria are narrowed. These changes may impact export-related tax incentives and deferred tax projections tied to U.S.-held IP.
The Company is currently evaluating the impact of these provisions on its financial statements and tax positions. While the changes are not expected to materially affect prior period results, they may influence future effective tax rates, deferred tax balances, and cash tax obligations. The Company will incorporate these changes into its tax planning and provision calculations for fiscal year 2025 and beyond. However, the full effect of these provisions will depend on the Company's future capital expenditures, R&E activities, financing arrangements, and international operations. The Company will incorporate these changes into its tax provision and planning beginning in fiscal year 2025.
(14) Subsequent Events: Equity capital raise
On October 8, 2025 the Company closed an equity raise underwritten by Roth Capital Partners (“Roth”). Roth acquired 3,450,000 shares of the Company’s common stock at a price of $3.00 per share. The net proceeds to the Company were $9,540,025. Had the transaction occurred on the final day of the fiscal quarter, September 27, 2025, the balance sheet would have appeared as follows (changes are italicized):
CPS TECHNOLOGIES CORP.
Balance Sheets (Unaudited)
|
September 27, 2025 |
December 28, 2024 |
|||||||
|
ASSETS |
||||||||
|
Current assets: |
||||||||
|
Cash and cash equivalents |
$ | 12,774,167 | $ | 3,280,687 | ||||
|
Marketable securities, at fair value |
1,054,079 | 1,031,001 | ||||||
|
Accounts receivable-trade |
5,400,080 | 4,858,208 | ||||||
|
Accounts receivable-other |
376,652 | 177,068 | ||||||
|
Inventories, net |
5,383,680 | 4,331,066 | ||||||
|
Prepaid expenses and other current assets |
328,249 | 480,986 | ||||||
|
Total current assets |
25,316,907 | 14,159,016 | ||||||
|
Property and equipment: |
||||||||
|
Production equipment |
10,599,479 | 10,382,379 | ||||||
|
Furniture and office equipment |
910,310 | 891,921 | ||||||
|
Leasehold improvements |
997,830 | 997,830 | ||||||
|
Total cost |
12,507,619 | 12,272,130 | ||||||
|
Accumulated depreciation and amortization |
(10,737,391 | ) | (10,377,756 | ) | ||||
|
Construction in progress |
216,193 | 108,874 | ||||||
|
Net property and equipment |
1,986,421 | 2,003,248 | ||||||
|
Net Intangible assets |
23,746 | - | ||||||
|
Right-of-use lease asset |
370,000 | 186,000 | ||||||
|
Deferred taxes, net |
2,279,253 | 2,528,682 | ||||||
|
Total Assets |
$ | 29,976,327 | 18,876,946 | |||||
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
|
Current liabilities: |
||||||||
|
Note payable, current portion |
- | 8,130 | ||||||
|
Accounts payable |
3,530,052 | 3,053,712 | ||||||
|
Accrued expenses |
1,298,268 | 913,279 | ||||||
|
Deferred revenue |
74,257 | 172,429 | ||||||
|
Lease liability, current portion |
161,000 | 160,000 | ||||||
|
Total current liabilities |
5,063,577 | 4,307,550 | ||||||
|
Deferred revenue – long term |
31,277 | 31,277 | ||||||
|
Long term lease liability |
209,000 | 26,000 | ||||||
|
Total liabilities |
5,303,854 | 4,364,827 | ||||||
|
Commitments & Contingencies |
||||||||
|
Stockholders’ equity: |
||||||||
|
Common stock, $0.01 par value, authorized 20,000,000 shares; issued 18,116,987 shares and 14,661,487; outstanding 17,979,277 and 14,525,960 shares at September 27, 2025 and December 28, 2024, respectively |
181,170 | 146,615 | ||||||
|
Additional paid-in capital |
50,314,676 | 40,580,387 | ||||||
|
Accumulated other comprehensive income |
7,176 | 15,500 | ||||||
|
Accumulated deficit |
(25,482,486 | ) | (25,890,245 | ) | ||||
|
Less cost of 137,710 and 135,527 common shares repurchased at each September 27, 2025 and December 28, 2024, respectively |
(348,063 | ) | (340,138 | ) | ||||
|
Total stockholders’ equity |
24,672,473 | 14,512,119 | ||||||
|
Total liabilities and stockholders’ equity |
$ | 29,976,327 | $ | 18,876,946 | ||||
|
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 28, 2024 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 Russian invasion of Ukraine and other conflicts and potential conflicts throughout the world and the impact of a strong dollar on the prices the Company charges to foreign customers, 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 28, 2024, 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 28, 2024.
On July 4, 2025, the One Big Beautiful Bill Act (Public Law 119-21) was enacted, introducing significant changes to the Internal Revenue Code that affect the Company’s tax accounting estimates. These changes involve a high degree of estimation uncertainty and are reasonably likely to have a material impact on the Company’s financial condition and results of operations.
Key areas of estimation affected include:
Deferred Tax Asset Realizability: The restoration of immediate expensing for domestic R&E expenditures under new Section 174A and enhanced Section 179 limits may materially alter the timing and magnitude of deductible expenses. The Company is reassessing the realizability of deferred tax assets tied to prior capitalization regimes and evaluating the sensitivity of future reversals.
International Tax Provisions (NeCTIe and FDDEI): The restructuring of GILTI and FDII regimes introduces new deduction rates, foreign tax credit limitations, and eligibility criteria. These changes affect the Company’s assumptions regarding foreign income inclusions, expense allocations, and valuation allowances. Estimation uncertainty arises from forecasting foreign earnings, tax credit utilization, and jurisdictional tax rates.
Bonus Depreciation and Enhancement of Section 179 Expensing: The reinstatement of 100% bonus depreciation and enhancement of Section 179 requires updated modeling of book-tax differences and deferred balances. The Company is evaluating the impact on capital expenditure forecasts and financing strategies, which may materially affect deferred tax liabilities and effective tax rate projections.
The Company’s critical accounting estimates related to income taxes are subject to change as further guidance is issued and as the Company refines its tax planning strategies. Management continues to monitor developments and will update assumptions and disclosures as necessary.
Overview
Products we provide include baseplates for power electronics 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 lightweight 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 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 Third Fiscal Quarter of 2025 (Q3 2025) Compared to the Third Fiscal Quarter of 2024 (Q3 2024); (all $ in 000’s)
Revenues totaled $8,804 in Q3 2025 compared with $4,247 generated in Q3 2024, an increase of 107%. Growing demand in our MMC and hermetic packages product lines has significantly increased compared to last year. In September 2024 the Company added a third shift in order to meet this growing demand. In addition, the company received significantly more funding under the federal government’s Small Business Innovation Research ("SBIR") program in Q3 of 2025 as compared to Q3 2024. Lastly, significant increases in the price of gold, which costs are billed to our customers, also contributed to this increase.
Gross profit in Q3 2025 totaled $1,503 or 17% of sales. This compares with a gross loss in Q3 2024 of $523 or -12% of sales. This percentage increase was due to several factors including the impact of fixed costs on significantly higher revenues, as well as training costs for our new third shift employees during Q3 of 2024.
Selling, general and administrative (SG&A) expenses totaled $1,226 in Q3 2025 compared with SG&A expenses of $963 in Q3 2024. This increase was due to several factors including, the increase in variable compensation as a result of stronger results from operations in Q3 2025 as compared to Q3 2024, the weakening of the U.S. dollar relative to the Euro and its impact on our costs with European vendors, and increased commission costs due to higher revenue.
The Company experienced an operating profit of $276 in Q3 2025 compared with an operating loss of $1,486 in Q3 2024. This increase was a result of the increased gross margin, partially offset by the increase in SG&A expenses. Net after tax income was $208 in Q3 2025 compared to an after tax loss of $1,043 in Q3 2024.
Results of Operations for the First Nine Months of 2025 Compared to the First Nine Months of 2024 (all $ in 000s)
Total revenue was $24,388 in the first nine months of 2025, a 61% increase compared with total revenue of $15,190 in the first nine months of 2024. In spite of the completion of our armor order for the U.S. Navy during 2024, growing demand in our other product lines has significantly increased in 2025 compared to last year. In September 2024 the Company added a third shift in order to meet this growing demand. In addition, the company received significantly more funding under the federal government’s SBIR program in 2025 as compared to 2024. Lastly, significant increases in the price of gold, which costs are billed to our customers, also contributed to this increase.
Gross profit in the first nine months of 2025 totaled $4,070 or 17% of sales. In the first nine months of 2024 gross margin totaled $153 or 1% of sales. This percentage increase was due to several factors including the impact of fixed costs on significantly higher revenues, as well as abnormally low production yield levels in some of our hermetic package products during 2024.
Selling, general and administrative (SG&A) expenses were $3,527 during the first nine months of 2025, up 10% compared with SG&A expenses of $3,215 in the first nine months of 2024. Increased variable compensation accruals and increased commissions, both due to significantly increased revenue were partially offset by a reduction in accounting and legal fees as well as the cost of a settlement with a former outside consultant in 2024.
During the first nine months of 2025, the Company had net other income of $115. This compares with net other income of $242 realized during the first nine months of 2024. The decrease in net other income is primarily due to reduced cash balances in the first nine months of 2025 as compared to 2024.
In the first nine months of 2025 the Company had operating income of $543 compared with an operating loss $3,062 in the same period last year. The net income for the first nine months of 2025 totaled $408 versus a net loss of $2,140 in the first nine months of 2024.
CPS does not rely on raw materials from Ukraine, Russia, Israel or Gaza. 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 these conflicts.
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. Further, several of our larger customers buy from our major competitor in Japan. The impact of the fluctuation of foreign exchange rates can create situations where our pricing to foreign customers can either more or less competitive as compared to our Japanese competitor.
We are beginning to see an impact of tariffs on our cost structure. While many of our raw materials are sourced domestically, we are seeing instances where the domestic supplier is able to raise prices due to the impact of tariffs on prices charged by their foreign competitors. While the overall impact of these costs increases is relatively small, they are still enough to impact our margins. Given that our major competitor is from outside the U.S., our ability to pass on these cost increases to our foreign customers is somewhat limited.
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 liquid assets at September 27, 2025 consist of cash and cash equivalents of $3,234 and marketable debt securities with a fair value of $1,054. This compares to cash and cash equivalents at December 28, 2024 of $3,281 and $1,031 marketable debt securities held at December 28, 2024. We have recovered from our low cash position near the end of Q1 2025 of $1,930. We expect the trend of cash growth from operations to continue.
Trade accounts receivable at September 27, 2025 totaled $5,400 compared with $4,858 at December 28, 2024. Days Sales Outstanding (DSO) decreased from 75 days at the end of 2024 to 55 days at the end of Q3 2025. The decrease in DSO was due to increasing sales volumes as we neared the end of 2024. As a result our receivables at the end of 2024 were a higher percentage of receivables than if revenue was spread out evenly during the period. The accounts receivable balances at December 28, 2024, and September 27, 2025, are both net of an allowance for doubtful accounts of $10.
Inventories totaled $5,384 at September 27, 2025 compared with inventory totaling $4,331 at December 28, 2024. The inventory turnover in the most recent four quarters ending Q3 2025 was 5.2 times (based on a 5 quarter end average) compared with 4.8 times averaged during the four quarters of 2024.
On October 8, 2025 the Company closed an equity raise underwritten by Roth Capital Partners (“Roth”). Roth acquired 3,450,000 shares of the Company’s common stock at a price of $3.00 per share. The net proceeds to the Company were $9,540,025. Due to increased customer demand for our core products, the potential growth of our new product lines (AlMax ® fiber reinforced aluminum, radiation shielding, and others), possible new armor orders, and expanding product development efforts, the Company is actively searching for a larger facility near our current location which will enable us to meet these demands. The proceeds of our equity raise will enable us to pay for the costs to relocate to a different facility, the fit up of the larger facility, and the capital expenditures for the equipment necessary to accommodate this expected growth.
The Company expects it will continue to be able to fund its operations for the remainder of 2025 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)
The Company has a line of credit (LOC) in the amount of $3.0 million with Rockland Trust Company. The LOC is secured by the accounts receivable and other assets of the Company and has an interest rate of the National Prime Rate as published by the Wall Street Journal (7.25% on 9/27/2025). On September 27, 2025, the Company had $0 of borrowings under this LOC and its borrowing base at the time would have permitted an additional $3.0 million 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. This note was paid in full in the first quarter of 2025.
The Company has one real estate lease expiring in February 2028. 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 6, Leases)
|
ITEM 3 |
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
The Company is not significantly exposed to the direct impact of interest rate changes or foreign currency fluctuations. Nevertheless, one of the Company’s major competitors is located in Japan. The relative strength of the US dollar versus the Japanese yen can have a negative impact on the Company’s ability to raise prices when necessary to offset increasing costs. 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 and the impact of tariffs on our costs is an area where we have seen some affect on our business. We have seen 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. Fortunately, raw materials make up a smaller portion of our overall costs. While they provide a headwind to our profitability, they are a relatively small factor in that total equation. As inflation continues or new tariffs are put in place, our ability to continue to absorb higher costs by raising customer prices cannot be guaranteed.
|
ITEM 4 |
CONTROLS AND PROCEDURES |
(a) The Company’s Chief Executive Officer and Chief Financial Officer have 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 2024 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: October 31, 2025
/s/Brian T. Mackey
Brian T. Mackey
President and Chief Executive Officer
Date: October 31, 2025
/s/ Charles K. Griffith Jr.
Charles K. Griffith Jr.
Chief Financial Officer
Exhibit 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Brian T. Mackey, 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: October 31, 2025
/s/ Brian T. Mackey
Brian T. Mackey
President and Chief Executive Officer
Exhibit 31.2
CERTIFICATION OF CHIEF EXECUTIVE 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: October 31, 2025
/s/ Charles K. Griffith Jr.
Charles K. Griffith Jr.
Chief Financial Officer
Exhibit 32.1
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 quarter ended September 27, 2025 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Brian T. Mackey, President and Chief Executive Officer of the Company, and I, Charles K. Griffith Jr., 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: October 31, 2025
/s/ Brian T. Mackey
Brian T. Mackey
President and Chief Executive Officer
Date: October 31, 2025
/s/ Charles K. Griffith Jr.
Charles K. Griffith Jr.
Chief Financial Officer